A New Attitude (to consumer prices and stock ownership)

Depositphotos_56539371_s-2015By Michael Drak

Special to the Financial Independence Hub

Years ago when I was a child I fondly remember collecting old baseball and hockey cards. The good ones — the “keepers” — were secured by an elastic band and stored in an old dented tin box that occupied a special place on the shelf in my room.

The other cards — the “regulars” — were used in competition with the other kids at school. One of our favourite games was “closies.” Whoever managed to get his card closest to a wall won all the cards. Life sure was a lot simpler and cheaper back then.

These days my card collecting has been replaced by stock collecting. I constantly search out high-quality dividend-paying stocks to add to my portfolio. With everything being electronic I can’t keep anything in the old tin box that I still have but I guess that’s progress, as they like to say.

A New Investing Approach is Born

For many years I used to get upset at some industries because in my mind I knew they had me as I basically had no other choice but to purchase their product. A good example would be the gas retailers. I drive a car so therefore I need to buy gas, there is no escaping this fact. The gas retailers know this, they are very smart and I always thought they took advantage of our special relationship by inflating the price of fuel.

One day it came to me that instead of complaining about them I should buy their stock. Instead of getting irritated every time they raised gas prices because a hurricane was about to hit the refineries again in Texas or whatever, I started to feel good about things. This time I was on the right side of the equation and this revelation resulted in an immediate change in attitude for me. Instead of swearing a little under my breath while pumping gas I now smile every time I hear prices are going up or hear other people complain about how the industry is gouging them. Gouge away, I say, it’s free enterprise after all! Funny how things work when you think right.

I Used to Almost Cry Hearing That Stupid Recording Over and Over!

I’ve been able to transfer my positive attitude to other industries as well. Just the other day I was forced to wait on the phone for over an hour to talk to a service rep to buy a flight on my points card. But did I get mad listening to their message over and over that due to a unusual high level of call activity wait times were extended but I was a valued client and they would get to me in the next moment? No way, because I own their stock and know they have cut staff to make more money; more money for them means more money for me!

The Black Sheep of the Family

Carving the thanksgiving turkey (close up view)

While living at the retirement home my mum used to enjoy telling her friends I was the black sheep of the family. I’m a long time banker and she never forgave them when they decided one day to take away some senior benefits they used to provide. Being a banker put me in a vulnerable position and maybe that was the reason for me never getting a turkey leg at Thanksgiving dinner.

My mum loves to compare her bank to the house in Vegas and as she likes to say the house never loses. Her and her friends came up with the theory that banks have the power to tax like the government and believe me these ladies don’t like paying taxes. In the banks’ case they simply raise service charges and most people just shrug their shoulders, make a little face and pay.

It’s the Canadian way, my mum says. Reminds me of the story of frogs in a pot of water on a stove. If you turn the heat up slowly they never catch on until it’s too late. But the attitude of my mum and her friends changed after they bought some bank stocks. Now they love it when the bank wants to charge them for copies of cheques or raise the rate for their safety deposit box. Funny how a person’s attitude changes when you become the house!

To Change or Not Change, that is the Question

When you think about it people are funny in that they avoid doing something even though they know in their hearts that it’s the right thing to do. Change requires effort and the effort needed to make the required change often is perceived as being too high for the benefit received.

A good example of this is when you buy a product with a mail-in rebate. The company knows that human nature being the way it is will result in less than 100% of the rebates being mailed back in for the refund. They know what level of rebate to offer so the odds of you actually mailing it in is in their favour, not yours. (Don’t even get me started on points cards and the like.)

But now none of this bothers my mum or me anymore since we became owners of the stocks of some of these companies. Every time we receive a dividend or hear about a dividend increase we just smile. I expect to finally get a turkey leg at Thanksgiving this year!

Drak-2014Mike Drak is part of the Komitas Mastromartino Wealth Management Group at RBC Dominion Securities, based in Toronto. He is currently writing a book with Jonathan Chevreau about some of the themes mentioned in the above blog and at the Financial Independence Hub in general. He can be reached at michael.drak@yahoo.ca.

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