Issue #29 - Fraud in Venezuela! How to talk about money with your spouse | What a 10% return actually looks like | Download my real estate calculator!
Aug 02, 2024Read time: 4 minutes
Last week I wrote a lengthy introduction about the then upcoming Election in Venezuela, which has now transpired - a complete fraud by the incumbent dictator Nicolás Maduro as Edmundo González won 70% to 30% in an absolute landslide.
And yet that evening Maduro got on TV and told the people he won 51% to 40%. Ballot boxes were stolen by armed thugs during election day and voting appeared to be halted in certain areas.
For new subscribers, Mj and I got back from Venezuela last Tuesday, before the election. While it would have been interesting to be there and Mj would have liked to vote, she knew something could happen and we may not have been able to leave. In fact, as of this week, the same flight to Panama we took last week is now cancelled, among many others.
Her sister/parents and extended family all there and going through it now. They are in the streets every day, kids and all. Thankfully, the protesting in their city Valencia is relatively peaceful and hope for change is vibrating through everyone.
Yes, there does seem to be a palpable vibe from the people and the rest of the world that this time may be different...You see a massive amount of social media attention (not so much on mainstream TV) sharing support for the real winner. But it’s hard to interpret what you see on social media as to how things might turn out... We will get sent a video of two army generals declaring the new leader and that the armed forces need to follow suit, for they should be protecting the people, not hurting them. Then you realize later, these are exiled Generals that have been in Miami for decade and have no sway on the ground in Vzla. Then you see videos of intense gunfire in certain areas. Maria Corina posted a tweet on X denouncing Maduro's cruelty as more than 177 arbitrary arrests, 11 disappearances, and 16 murders have transpired. Then videos of Maduro on TV declaring Elon Musk as their enemy number 1.
Note: while we hear mostly from Maria Corina since she is the pioneer and leader of the opposition movement, it is actually her nominee Edmundo González who is the "official opposition" president. In January 2024, Maria was banned for 15 years from running for President by the country's highest court - a preemptive move by Maduro as he feared her uprising; ironically, she used this to her advantage and mobilized the Venezuelan people in an epic way.
Anyway, Mj’s sister Veronica hopes that this is time is different. But admittedly says, they have no clue if change will actually occur.
Mj seems to be more realistic and keeps reminding me: Eddie, it's the same movie every time: like before, we (the opposition) won in a landslide, but Maduro says he won, he controls the army, protesting and rioting ensues, and nothing will change. Maduro will stay in power.
Back in 2019 the opposition winner, Guaido, won, no contest. The people of VZLA and 50 countries worldwide incl US and CA recognized him as the President. For two years this went on. But Maduro stayed in the proverbial White House and continued his regime. And eventually, Guaido had to escape to Miami.
The US officially denounced Maduro yesterday and is recognizing the opposition as the true winner.
Maria Corina has called for protests on Saturday as the US supports the opposition claim.
Everyone pray for the people.
1. Personal Finance
Money is a bad word - or at least that’s what most people are taught.
Because no one ever talks about it. Not at the dinner table, not at school, not in friend groups. So they grow up without prioritizing it and never develop a good emotional relationship with it. Even though life happens and everyone soon or later learns it is absolutely critical for survival, but to also buy things for fun.
And in my experience, it is easily apparent who has a good relationship with it by observing newly married couples talk about money.
Life, necessities, goals and dream, all require money to achieve them.
Two weeks ago in my brother and sister in-laws apartment in Venezuela, I spent some time teaching them about investing and diversifying and the power of compound interest.
It turned quickly from a 20 minute discussion to a four hour long 'sobre mesa' conversation about life, goals and dreams, and critically, money.
Ramon and Veronica, asked me questions like
-how much is a good amount to retire on?
-what is a good amount to spend each month?
-how much should we leave our kids?
These are very common questions that I've received throughout my career as a Portfolio Manager.
They are great questions - no question is a bad question - but I would respond not with an answer to the query but a question back, such as:
-when do you want to retire?
-what is important to you when you retire?
-do you see yourself "working" in retirement?
-what are your goals and dreams now and in the future?
-do you want to be travelling a lot and taking your family around the word?
-do you want to give your kids millions or just enough to buy a house or nothing at all?
The interesting thing is that, for each question, they had completely different answers. Which then ensued with a wonderful, open, back-and-forth conversation between husband and wife. They learned so much about each other in those few hours which will now provide a mutual understanding of where they are coming when it comes to decision making, habits, business efforts, traveling, childcare, and just livin.
It was a real treat to witness and participate in, though my role was merely moderator, adding much of nothing except more questions for them to elaborate upon themselves.
They now understand, based on each others goals and dreams, how to think about what they have now (net worth statement), income and expenses (budget), and how much money they might want to spend now and later in life.
After some time, they made a few very concrete statements:
- we want to retire at 55 and spend $20,000/month.
- we also want to pay $120,000 for each of our three kids' university education.
- we want a $5,000,000 portfolio in retirement.
They asked, Eddie, we have X today, we want to spend X in retirement, how much do we need to invest every month to achieve that goal at age X?
I'd punch the numbers into my calculators (included with the Simply Investing Masterclass course). The numbers would be surprising, because they've not seen these calculations before. After the initial shock - they understood how the numbers work.
And they didn't spend much time trying to understand the algebra behind the equations. They simply looked at the results, then looked at each other and said "ok, this is what we have to do, and we're going to start now".
If you are young, married, or soon to be married, have the conversation about money - income, spending, saving, future, etc. Put it all on the table. It might feel awkward at first, but push through. Spend the time to listen to each other, because each goal and dream is valid.
But so too are the calculations required to get there.
2. Stock Markets
Investing in stocks is hard because your mind and emotions will be tested every day, every week, every year, with news headlines and stock market pullbacks.
EVERY SINGLE YEAR there will be something that causes stocks to decline.
The point is not to care what causes the decline, but to maintain composure and stick to your long term investing strategy.
Don't let the fools on CNBC or CNN or your colleague that is all jacked up on NVIDIA stock convince you otherwise.
By the way, other assets like your house and your business fluctuate just as much, but you don’t realize it. Because there isn’t a daily market structure flashing green and red real-time prices at you on TV every second.
3. Real Estate
Every year I look at hundreds of millions of dollars worth of possible real estate transactions.
It is WAY too time consuming to download every single rent roll, input all the tenant details and work through the entire model scope to then find out a deal isn't worth pursuing because the numbers don't work.
So, a few years ago, I designed this quick and dirty calculator that takes 5 minutes to input broad data points and see if something is worth diving into.
If you or someone you know wants to use the calculator, you can send them this email and click here to download.
It should be pretty self explanatory - pink coded cells are inputs (toggles), black coded cells are formula based.
If you have any questions how to use it, let me know!
1 Quote
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
- Winston Churchill
A Question
Anyone been on a cruise to Alaska? Curious about your experience! I like the idea of Alaska, I hear there are last minute deals, and a cruise for Mj and Julia & I would be good because we can toss Julia in the state room at 7pm and mommy and daddy can enjoy a bit of night life cruise action but knowing we can go check on her quickly if we see her crying on the baby monitor :)
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Thank you
Eddie Gudewill, CFA
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