This fall, I will be taking the CMA Ontario Accelerated Program (AP). It is an intense program that runs from September to March. In additional to accounting, the program covers a number of other topics. Beyond the obvious professional reasons for pursuing the program, I also think It will serve as an introduction to other parts of the business world that I have never studied before.
In advance of the program starting, I have been assigned a substantial refresher textbook. Coming in the form of a 140 page PDF, the Introductory Financial Accounting Review book will come in very helpful. Despite being a small book, it comes packed with problem sets and illustrations. Some of the details have faded since I last studied these topics, so I appreciate the refresher. It reminds me, in a good way, of those MBA programs that assign pre-degree work to help students boost their technical skills and knowledge.
Cal Newport, author of the Study Hacks blog and several other books, has inspried me with some very specific advice on studying. I’m looking forward to putting it to good use. Lately, I’m finding that I very much appreciate case study and skill oriented blogs. Perhaps I’ll share more on that front as I continue through the CMA program.
On the commute home today, I experienced a moment of podcast heaven. Not only did I learn about a field that I know relatively little about (American manufacturing), but I learned about on an episode of EconTalk (Adam Davidson on Manufacturing) where the guest was Adam Davidson, one of the main reporters from NPR’s Planet Money. If you’re interested in getting some genuinely well informed perspective on the current state of manufacturing, it is well worth a listen. However, I was not content merely to listen to the podcast. I wanted to get some context for the state of manufacturing in Canada.
There’s a well known story in the media that manufacturing (especially manufacturing employment) is disappearing in North America. That story is even more pronounced in Ontario which was historically a major centre of manufacturing activity. If you focus on the percentage of jobs in manufacturing, the trend is clearly going down. Consider the following graph from Statistics Canada from a 2009 report called, Trends in manufacturing employment
Chart B Manufacturing’s share of employment has fallen sharply since the turn of the century
Even as the quantity of manufacturing jobs continue to drop, there are significant opportunities. For example, skilled machinists and technicians who understand CNC programming and other high end manufacturing techniques can find good jobs. Adam Davidson, rapidly becoming one of my favourite economics reporters, has reported on manufacturing jobs that pay “$30/hour” (roughly $60,000 per year) in his excellent article in the Atlantic Making It in America. Davidson comments on one American factory that still has classic lower skilled manufacturing jobs (i.e. annual pay around $27,000 a year). The only reason that category of job continues to exist is the cost of switching to machines is still too high. Manufacturing employment isn’t quite gone but it is rapidly splintering into two categories: higher skilled positions (require several years of technical training, specialized knowledge, etc) and lower skilled positions that will likely continue to decline.
Last week, I read Tim Cestnick’s article in the Globe & Mail about freezing assets and one aspect of the article has had me thinking. In the article, Cestnick refers an interesting way of holding real estate:
Paul owns the shares of a corporation that holds rental properties that he’s been accumulating over the years. The value of these properties is about $5-million today (net of any mortgages). He expects these properties to continue to grow in value in the future. Paul doesn’t need the income from these properties to support his lifestyle.
This strikes me as interesting way to overcome a long standing problem with real estate. Even though it does has some promising aspects, I do not think it is a good way to hold a significant portion of one’s assets. Despite its flaws, I think real estate has a valid place in our lives.
Here are the five significant disadvantages I see with real estate investing. For purposes of this analysis, I will focus on residential rental properties specifically:
- Illiquid: how easy is it to sell real estate? Selling a condo unit in Vancouver might not take long but you can’t always count on such a hot market.
- Non-divisable: if you own 1000 shares of a stock (or a mutual fund or an ETF), you can sell part of that holding and retain the rest. Partial selling in real estate is much, much more difficult.
- Transaction costs: one can sell shares and ETF units through a discount broker for a $10 commission. What are the transaction costs to sell a $500,000 property? When you factor in commissions, legal fees and the like, it’s easily 5% of the purchase price. For more background on this, read Toronto real estate lawyer Stanley Clapp comments on some of the hidden costs of buying real estate.
- Risk: If you are running rental properties, you take the risk of evaluating tenants. Tenants also pose the risk of property damage though that can partially mitigated through insurance and a well written lease (and damage deposit).
- Administration: Landlords have significant legal obligations to their tenants, including requirements to repair properties and attend to tenant requests. One could hire a property management firm to handle the administration but such services are not free.
Given all these flaws, why do many people remain interested and committing to rental property as an investment? There’s rental income, there’s some comfort in owning a physical asset and there’s potentially tax advantages (though one has to be very careful on that front). I wonder if the 2008 crisis has caused many people to reevaluate their views on real estate investing. At the very least, I hope that people will consider other ways to get exposure to real estate (e.g. owning units of RioCan or other real estate investment trusts [REITs] which manage a portfolio of properties).
I’m changing the direction of this blog to focus on a new set of topics including finance, investing and marketing. I think there are challenging problems and interesting issues in all of those fields. When I say marketing here, I mean it in a Seth Godin sense. When Godin writes about marketing, it’s about ideas that spread.
Over the coming weeks and months, I’m going to share some of the books and ideas I find interesting in this space. I hope you’ll come away from this blog smarter and more inspired from having spent time here. Since all good writers read a great deal, I’d like to share some of the blogs I currently follow in the areas of finance, investing and marketing.
- NPR’s Planet Money: Planet Money is a podcast that explores the world of finance in a very compelling and original way. Ever wanted to know more about those “toxic assets” that caused so much trouble in the 2008 financial crisis? Well, the team of reporters at Planet Money actually bought one of those assets, nicknamed “Toxie.” Learn more about the troubled life of Toxie.
- Canadian Capitalist: Often regarded as THE Canadian finance blog, there’s plenty of interesting commentary and analysis here. One particular strength of the site is the emphasis on data. For example, many people considered 2011 to be a lacklustre year for investors. CC points out in his post on Asset Class Returns for 2011, that the real picture is more complicated.
As part of an effort to further systematize my personal and professional organization, I’ve recently started using Remember The Milk. I first started using it in 2008 and recently started using it again. I am finding the functionality (and the iPhone app) of the service impressive and quite flexible. That all said, it does have lack one feature that Google Calendar has: the ability to have multiple reminders. Since some tasks or activities are complex (e.g. require coordination with other people, require advance planning etc), I find multiple reminders helpful.
Assuming one is motivated to be organized (Seth Godin points out that lack of motivation, rather than lack of knowledge, often undermines productivity efforts), it is crucial to combine systems (Getting Things Done by David Allen is the classic here) with the right tools. I have used paper based agendas at various points, but at this stage I prefer to use digital systems. What I find great about seeking to improve one’s productivity and organization is the immediate benefits one receives. Executing a series of items on a properly organized to do list is satisfying.
Notes: I’ve been away from this blog for several months but I am hoping to get back into it from time to time.
I’ve been thinking about professional development lately and my views have changed in some ways. My understanding of professional development is now broader and more nuanced than before. For example, I think the professional development needs and interests of people vary depending on their organizational context and where they stand in their careers. I now also think of professional development in broader terms – improving one’s technical skills further, for example. One area where I am looking to develop my skills further is Excel and Access (e.g. I’m working on learning “Visual Basic for Applications” (VBA). Beyond that, I’m keenly working on developing my understanding of the financial industry. There is much more to learn but this is where I am focusing on these days.
As promised, I am writing a 2010 Year in Review to reflect on my accomplishments and projects of 2010. For the sake of balance (and to inspire me to move forward), I will also mention some projects where I didn’t make much progress. As I mentioned in my rushed post, I am once again inspired by Seth Godin who has written up his 2010 Year in Review post some time ago.
- Completed two consulting contracts for an investment management firm in Toronto: DONE (this work focused on classification and taxonomy): DONE
- Delivered conference presentation on Net Neutrality at the Canadian Library Association Conference in Edmonton, Alberta: DONE
- Applied for many, many, many jobs (+90): DONE
- Started an interesting full time position at a Big 5 Canadian Bank in September: DONE
- Learned the basics of the Canadian securities / investment industry by taking a CSI prep course through the University of Toronto (my blog post on the CSI course is the most popular on this blog!): DONE
- Started several paid freelance writing projects: IN PROGRESS
The Not Done Category includes:
- Finish novel started in November 2008: NOT DONE
- Wrote the CSI exam (Volume I and II): NOT DONE
- Write at least 100 blog posts in 2010: NOT DONE (not even close!)
Aside from the above I also completed some significant personal and financial goals but those fall outside the scope of this blog. I am also disappointed that I blogged so little in 2010 (either here or in other places). I find blogging and the process of writing to be a rewarding practice but it often seems daunting. I am also thinking of reorienting my blog away from libraries (which I still admire and value, but I don’t work in a library and I have limited day to day contact with the library world per se) and toward the world of banking, finance and economics. I am also considering adding some additional elements to this blog such as book reviews.
How was your 2010? Did you achieve what you wanted to achieve? Will 2011 be different?
With the start of a brand new year, I feel inspired to blog once more. This blog post comes to you from an Internet cafe in New York City operated by “New York Industries, Inc” and I’m in a great mood. Being in this great American metropolis never fails to inspire me.
As it has been several months since I have blogged, I am considering this blog’s direction and purpose. I am inspired by the “year in review” posts that Chris Guillebeau (Guillebeau actually has this interesting process of doing a personal/travel/business annual review that is well worth reading) and Seth Godin put up about 2010. I don’t have time to write up my thoughts in much detail right now but I feel that 2010 ended on a high note after months of struggle and difficulty.
And with that, I shall conclude.
Speaking the language of a large, complex organization is a skill that takes some time to develop. In my new role, I have been tackling the challenge of learning a great deal about how the organization operates and understanding my own role. I have been particularly struck by the great amount of abbreviations that need to be mastered and understood in the course of daily work. The organization does have an acronym dictionary available for staff (a great idea to implement if you don’t have one) but, almost by definition, it cannot cover everything. So I’m taking copious notes, asking questions and meeting with my colleagues to deepen my understanding.
This particular experience has also prompted me to reflect on my ongoing journey from student to professional, a journey that is still unfolding. Back when I was a university student, people would sometimes say one of the benefits of university study is learning how to learn. That is absolutely true! All those study habits, highly developed reading skills and so far are tremendously valuable in the world of work. I am also finding the ability to quickly asses and understand complex documents and policies to be worthwhile, even if the approach is new to me. As much as I am focused on being a professional, I still think there is much to be said for the wide ranging interests and curiousity of (good) students. Those are some of the traits that I will seek to keep.
Notes on the diagram: The above diagram is my first attempt to visualize some of the insights from the lecture I am reporting on below. The baseline on the bottom is meant to signify the possibly of forgetting or failing to invest in learning. The gentle arc I have put in place suggests that learning is the generally the focus of early life but it very much continues as one continues through life. I left out some of the more informal kinds of learning only because I did not quite know how to symbolize them or where to place them on the arc. I’m certainly open to suggestions on how the diagram could be rendered richer and morecomplete.
Earlier this week, I had the pleasure to attend a public lecture at the iSchool Institute by serial technology entrepreneur Steven Forth. His talk explored the theme of lifelong learning and the question of who owns learning and our records of this. During the wide ranging topic, he also discussed setting goals and learning plans. In reading productivity books and blogs (including the noted Getting Things Done book), I had come across some of this goal setting ideas before. However, Forth paired this system with the Strengths Finder methodology in a way I found quite engaging. Through graduate school and in other contexts, I have had an interest in learning how different people learn and this talk deepened that interest further. One aspect I had not yet previously considered was Forth’s example of how some people prefer to understand a model or abstraction first and then consider applications while others prefer to build up experience and then derive rules or a model from that.
In reflecting on the event, several questions come to mind that I would like to share with my readers:
- How should one reflect on and plan informal learning (loosely defined as learning that occurs outside the purview of formal educational institutions)?
- What is the right balance of learning goals? (in Forth’s examples, drawn from real individuals, he generally listed three major goals per year with a mix of career goals and lifestyle goals)
- Beyond funding for educational activities, how should employers support learning? (A truly complex question but one well worth exploring)
Now for some shameless self promotion! If you enjoyed this post, you might be interested to have a look at my post on the inaugural iSchool Institute given in April: The Launch of the iSchool Institute. The next iSchool public lecture, “IT Has a Great Future Potential: Is the Management Ready?” by Bruce J. Rogow on October 27 looks very promising as well; register for this free event.