The Long And Winding Road.

* This memory is a continuation of the ‘Nortel Networks A Bankrupt Behemoth’ memory.

“You'll never find your gold on a sandy beach. You'll never drill for oil on a city street. I know you're looking for a ruby in a mountain of rocks. But there ain't no Coup de Ville hiding at the bottom of a Cracker Jack box.” Meatloaf ‘Two Out Of Three Ain’t Bad’ - 1977

I guess my journey onwards to financial freedom would best be described in the title of the 1970 Beetles hit ‘The Long and Winding Road’. There were so many twists and turns along the way, it would have seen the average investor just simply throwing in the towel. Seriously, I still can’t believe I stuck it out for so long and I have detailed many of those twist and turns in two of my previous memories on this blog, ‘The World’s Biggest Casino’ and ‘Nortel Networks A Bankrupt Behemoth’.

Growing up living on welfare in a Toronto housing project financial freedom seemed like nothing but a distant unattainable fantasy. I just assumed I was destined to live my life in subsidized housing, employed in unskilled dead end low paying jobs while struggling daily to get by. Afterall, it was the only life I knew back then. There was never any guidance for me to step out from under the ‘welfare white trash’ cycle us Jungle bunnies were often labeled as. All that my mother ever wanted was for my brother and me to become a devout Jehovah’s Witness like herself.

It wasn’t until I was married and in my early thirties before I realized we were never going to have financial freedom unless I took some risks. It wasn’t like I had earned a degree and I was enjoying a successful lucrative career. And there most certainly wasn’t any family money waiting in the wings for me to someday inherit. Both of my parents died penniless.

Wait back up a bit.

Actually that is not completely true. About ten years after my father’s death in 1981 I was hunted down by a gentleman who called himself an estate locator. He explained that since my parents were legally divorced and I was the firstborn child then I was legally entitled to a large sum of money. I was intrigued and right away I assumed it was my father’s old bank account. I had heard that there were thousands upon thousands of inactive bank accounts in Canada worth millions upon millions of dollars just sitting dormant waiting to be claimed.

Back in 1992 the Bank of Canada published the names of all inactive bank accounts after ten years of inactivity. The estate locator told me that he would only divulge the information if I agreed to pay him 25% of whatever the amount of money I received. I told him that I would. We agreed that he would send me a contract and once I signed it and mailed it back to him only then would he tell me where the money was. He told me it could take up to six months before I got the money.

In the meantime and before I signed the contract I went to the library (there was no internet back in 1992) to search the semi-annual Bank of Canada publication containing all unclaimed bank accounts along with the balances. The two books were the size of a couple Toronto phone books. There was literally millions of dollars scattered right across the country just waiting to be claimed. I found nothing relating to my deceased father so I signed the contract and sent it back to the estate locator.

Sure enough it was indeed a dormant bank account on the same street where my father worked at the time of his death. There was approx. $4500 that I was legally entitled to and I agreed to share this money with my brother. The reason why I never found the account at the library was because the Canadian Imperial Bank of Commerce had spelled my father’s name wrong on the paperwork. Anyways after all the legal fees were paid and after sending the estate locator his money my brother and I split the remaining $3000. So I guess my father did not die penniless afterall.

It was also around this time that my daughter Stephanie was a baby. I quickly realized we needed to buckle down and start seriously investing for our future. The bigger the risk the larger the potential reward and money doesn’t grow on trees would become my personal mantra. Although Bonnie and I both had decent well above average incomes we always lived paycheck to paycheck and for the most part we had no savings in the bank. Bonnie was absolutely terrible with money spending every cent she earned and then some. She could never comprehend during our eighteen year marriage how even the simplest of money lessons will eventually have a huge impact on your financial future either good or bad.

I guess I really shouldn’t complain too much because I was able to exit my marriage to Bonnie completely unscathed financially.

After my divorce I vowed to myself that I would never again be put in a position where I could potentially lose any of my assets. I knew that I was extremely lucky the first time and I might not be so lucky the next time around. During my second relationship, Janine and I treated each other more as business partners than spouses. Everything regarding our mutual expenses was split 50/50 and we never had a joint bank account.

I loved Janine and we were engaged to be married, but after a second red flag popped up where she had deceived me regarding her finances I knew deep down in my heart we would never be getting married. Thankfully I had never disclosed to Janine during our time together my true net worth and after a decade together she too left with nothing more than what she was legally entitled to. Once again I exited my relationship for the most part unscathed financially.

I know to an outsider reading this it might sound as if money ruled my life and to a certain degree you are probably right. I grew up on welfare, I know what it is like to have no money whatsoever and I know what it is like to struggle with nothing more than life’s basic necessities. It is the road that as an adult I did not want to travel down, nor was I willing to travel down. Had both the woman in my life not been so eager to pile on personal debt I am pretty sure things would have ended a lot differently.

Then again maybe not, as it turned out they were also both liars and cheaters.

They say money does not buy happiness and trust me I know this to be 100% true. However, I would rather be on my own and have money than to be in a relationship with someone who sees no reason whatsoever to prepare financially for the future, our future.

Period.

For me the key to my financial independence was simply one word, patience.

After I split up with Janine I was invested in probably the two most volatile sectors on the TSX, gold and energy. The three companies I was invested in were all good solid small cap companies, but their stock prices cratered after both the oil and gold price plummeted around 2014. I had vowed to myself I would be patient and not sell my stocks at a loss. And just like the Nortel fiasco I continued to slowly accumulate shares while lowering my overall average cost price. I knew that both gold and oil prices would eventually recover because they always did.

The price of oil and gold did eventually recover but unfortunately two of my three companies were taken over and went private. Because I had diligently lowered my average cost price my losses were not nearly as steep as they could have been and on both companies I almost broke even.

However, I did continue to own the one stock I had stumbled upon and started to buy in the $4 range back in 2011. Aura Minerals is an extremely low cost Canadian gold producer that operated mines in Brazil and Central America. The stock consistently had profits but with a small stock float, questionable management along with a low company profile it was not widely followed by any analysts in Canada. Within five years and coupled with another plunging gold price the stock crashed to .17 cents a share. I did not panic, still believing I was invested in a good profitable company so I bought 50,000 more shares. After ten years of persistent patience, a rising gold price, a new CEO and always believing the company would eventually turn itself around; I was handsomely rewarded with a huge profit on my investment.

Not too shabby if I do say so myself.

After my disastrous investment in Nortel I began to educate myself in learning how to read the financial statements of any publically traded company. It wasn’t easy but understanding a company’s quarterly financials was probably the sole reason why I was able to exit Aura Minerals with a nice tidy profit instead of a massive loss.

In 2017 I started an investment in what would eventually provide me with my biggest investment windfall. Crew Energy was a Calgary based small cap energy company with approx. 50 employees. They were just a small fish swimming unnoticed in the massive Canadian energy sector pond. The company was well run with solid experienced management but became overburdened with a little too much debt based on its revenue. Crew was continually growing production and slowly reducing debt while paying no dividends. For the average investor Crew Energy was not an attractive investment. I have never professed to be anything like the average investor and like my investment in Aura I started buying Crew shares in the $4 range. Crew like Aura Minerals had a relatively small share float and the shares were not so actively traded on the TSX.

Probably my biggest and most compelling reason for buying the stock of any public company is insider ownership.

How much skin in the game do the insiders have?

Crew Energy had almost 10% insider ownership with the CEO owning well over 8 million shares. Well, that was good enough for me to invest in the company. Afterall, if insiders don’t own shares of their own company how can they realistically expect outsiders to buy shares? You would be amazed at just how many public companies have next to nothing when it comes to insider ownership.

I would never buy stocks in any of those companies.

With the COVID pandemic hitting the world in 2020 the financial markets around the world were in freefall. Every stock on the planet either hit multi year lows or all-time lows with energy stocks especially feeling the brunt of the stock market carnage. Crew Energy hit an all-time low with a .14 cent share price as millions around the world actually believed that mankind was on the verge of extinction.

Me, not so much.

So like a gambler sitting at the table his chips piled high and with over $70k of contribution room left in my Tax Free Savings Account (TFSA) I pushed all my chips to the center of the table.

I was all in.

Within a year stock markets began to recover nicely and my shares of Crew Energy began to steadily rise above my one dollar average cost price. Crew continued to increase production and now enjoyed a very low debt to revenue ratio. Crew’s most valuable asset was its huge 250k acre land base situated in the North Eastern British Columbia Montney. The Montney is one of the world’s most prolific and cleanest natural gas deposits on the planet. Natural gas was now making headway around the world as the cleaner transition fossil fuel away from dirty oil and even much dirtier coal. I knew it was just a matter of time before Crew would be taken over by a much bigger company.

It was a rough ride for a couple years, the energy sector as a whole became the evil villain within the investment landscape. Renewable green energy was now all the rage as solar and wind companies sprouted up all around the world. Predictions that coal, oil and yes natural gas would eventually become obsolete as the planet demanded a much cleaner less toxic environment. Governments around the world including Canada set costly, unrealistic carbon emission goals costing billions of dollars worldwide. Tree huggers along with their dire predictions that fossil fuel induced climate change would destroy the planet had effectively turned investors away from fossil fuels and into green energy renewables.

Me, not so much.

I tightly held on to every one of my Crew shares and just like I knew what would eventually happen happened. Crew was gobbled up by the largest natural gas producer in Canada Tourmaline in an all-stock transaction. It was the perfect scenario for any longtime Crew shareholder as Tourmaline stock is consistently rated a strong buy by numerous analysts who follow the company. Dividends would now be the norm going forward providing me with the financial security within my TFSA I could never have imagined. Once again having patience had paid off for me and I was rewarded with a nice profit on my tax free investment.

It truly was a long and winding road since those early days during the dot com bubble when I first started buying stocks hoping to someday achieve financial freedom. I fell off the horse many times but I always got right back in the saddle. I made many mistakes along the way, but I always learned from them. There were so many times I was on the verge of throwing in the towel, but I never did and I persisted with my plan to achieving my eventual goal of financial security.

The stock market is the world’s biggest casino and I sat inside at the table for almost a quarter century. I was just a kid from the projects who grew up with nothing, but I always knew that money doesn’t grow on trees. I was just a kid from the projects who always knew that the higher the risk the larger the potential reward. I was just a kid from the projects who made his three largest wagers on three different companies, Nortel Networks, Aura Minerals and Crew Energy. I was just a kid from the projects who because I had patience two of those three wagers turned out to be diamonds in the rough and paid off quite handsomely.

And I would eventually walk out of the casino finally achieving my goal of financial freedom.

So yes as it turns out ‘two out of three ain’t bad’ afterall.

Ain’t bad at all.