QCash, the 37 year old millionaire and regular guest writer, has humbly admitted to losing over $200,000 in the markets over the past couple months and explains why he’s not worried.

On or about August 31st, my net worth statement showed a value of $1,834,000.  As of today (Oct 7), my net worth is $1,625,000. A drop of of just over $200,000 in less than a month.

However, I am not on a window sill right now pondering if I should end it all.  In fact, I have been sleeping incredibly well.  Why?  Am I some sort of financial masochist? (Come on market, beat me, beat me, whip my investments like the bad boys they are!) No.  In actual fact, I am disappointed but not despondent.

Here are 7 reasons why I’m not too worried about the current bear market:

1) Diversification

How many times have we heard this old chestnut? But in actual fact, my losses would have been much higher had I been fully invested in growth stocks or equities. My portfolio includes real estate (both personal and through REITs), income trusts, mutual funds (though fewer than before), equities and cash. I would be remiss if I did not point out that other than through some balanced funds, I hold no bonds.

2) No Debt

Well, this is not entirely true. As I have mentioned previously, I have a HELOC that I used to purchase some of my income generation portfolio. The value of those investments is now less than my HELOC balance and if I were forced to liquidate my income generating portfolio, I would find myself in a little bit of trouble.

However, I have no other debts and the income from my portfolio more than covers my interest payments (which would be the minimum I would have to pay and are tax-deductible). Having no other consumer debt means none of my income is going to servicing debts.

3) I Don’t Rely on Capital Gains

My portfolio is structured to provide income through distributions and dividends. I am not one required to sell my assets to sustain my lifestyle. So the $200K is a paper loss, much as it was a paper gain a couple of months ago. What I do have to do is pay a little more attention to ensure none of my holdings are planning to cut or suspend there dividends/distributions. This requires a little more homework, but I am prepared to do that while all the blood-letting is going on.

4) Conservative Portfolio

When I decided to take super early retirement, I decided (or better yet, my wife told me) that she wanted to sleep well at night too. She is super risk averse (and she points out that we would have been further ahead if we put all our money in GICs :-) So, I have not made any investments more than 5% of my total portfolio (not withstanding real estate). To that end, should a company go under or stop distributions, I would be out a small portion of my overall monthly income.

5) I Can Still Work

I am young, energetic and still have earning potential. If I were in incredibly dire straights, I could go back to work full time or part time. I have that flexibility and I am not afraid of work. I just prefer not to :-)

6) Don’t Panic

In the words of the immortal Douglas Adams, “Don’t Panic”. The meltdown and bailout has occurred. This too, shall pass. The financial markets will emerge stronger and better regulated. The winners will continue to earn money and the losers will fade away. Banks will stop loaning money to people who can’t afford it and will have to return to sound business making decisions. Focus will once again return to emerging markets and we will all be forced to stop funding our standard of living on our collective credit cards.

7) This is not the US

I hate to parrot our Prime Minister, but at the end of the day, our banking sector is much more heavily regulated than the US. Our banks have some exposure to the ABCP market and sub-prime mess, but they were earning billions of dollars in Canada before they made the foray into that area and will continue to make billions of dollars. Most of the losses are write-downs which haven’t affected their cash positions. Mortgages they have written are generally insured by CHMC in high risk scenarios and they are covered.

Just my thoughts on the current state of the markets. I am not an expert, so take what I say with a grain of salt.

In the meantime, sleep well and dream of large bulls.

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Thats it! You have built yourself to a level that a lot of people aspire too! I am one of those, and plan on building my investments to provide an income over capital gains.


Have you figured out your threshold point for going back to work? Is it based on a certain income level from your investments or a certain net worth? Or will you just go with your gut?


I like your long-term approach of thinking. For most people this is the first bear market they have experienced so they are listening to so called gurus which proclaim that the world is coming to an end.

Good Luck in your investments!

Dividend Growth Investor

Tom – believe me I say I experience the roller coaster approach and sometimes I second guess myself, but ultimately, monthly/quarterly income at a level I find sustainable is enough to let me sleep soundly at night.

Al – the threshold will be income based, not networth based. I had originally planned to do this early retirement thing when I had $2M. After reading Derek Foster and a few others on income investing, I realized that I would be able to generate after-tax income similar to what I was earning. I would have to go back to work if we were no longer able to sustain our lifestyle. But I do save some of my income now, so I could last longer if need be.

DGI – Thanks. I think today’s rebound shows that the sky is not, in fact, falling. Banks in the US will have to stop lending to people who can’t afford it and growth will have to be real and sustainable, rather than consumer driven.

We will emerge stronger than before.


PS To you Canadians reading this, don’t forget to vote.

Hi Q,

A timely post I very much enjoyed it. As an investor I think I’m following the right path. Out of the 7 points you’ve mentioned, I’ve been following all but 1 of them, which is dividend investment.

Is there a broad based fund or etf that I could buy? I don’t think I would be knowledgable enough to pick individual stocks.

I’m planning to do more reading on divident investing, is there any book (from a canadian perspective) that you would recommend?

Thanks! I voted in the advanced polls.

Congrats QCash for the strong resolve. We’ve also been standing pat and adding to our positions where we can. I do feel sympathy for those close to retirement, my parents included. As a younger couple (just about 30), we’ve got plenty of time to ride it out.

Hopefully those folks close to retirement weren’t liquidating and missing on the giant rebounds we’ve been getting this week.

Brian: there are plenty of mutual funds and ETF’s that track dividend investments, and more specifically, the dividend ‘achievers’ and ‘aristocrats’ that have consistently paid out and often increased them over 10,20, 30 year periods. Now is a wonderful time to pick these up as yields are unbelievably high. Lets just hope the recession doesn’t cause them to cut or stop them.

I’ve got the iShares products, and a SPDR, YMMV, but look these up and compare with offerings from other companies.

XDV (Canadian dividend etf)
SDY (US dividend etf)

Hey Q, man it just feels good to hear someone talk about their confidence in their personal economic strategy. $200K is a ton of money to lose but I’m glad to see the rest of it is pretty well diversified. Good luck to us all!

Tyler – confidence or stubborness, your call :-)

Brian, I would never recommend a stock or dissuade someone from purchasing a security. I will tell you that I have bought EIT.UN recently, I purchased BMO and I also like the XDV. But I hold these in the context of my entire portfolio, which will be the subject of a later post wherein I will disclose all my holdings in all my accounts so you can better judge my overall position.

I would say given today’s surge, the prime minister was right that last week was a good time to buy :-)

Sampson – Absolutely, we have time to recover and again, not relying on selling assets to finance our lifestyle, we can afford to be patient.
I don’t disagree with your picks for Brian either.


Thanks for the insights. You can’t really go wrong in this market with dividends!

This was a great post! There is so much turbulence in the
market today, and people need peace of mind more than
ever. I think its great that you can “take it with a grain of salt.”
I wanted to offer your readers a link to another
blogger who is doing great work. He writes about our ‘
childhood money messages’ and how the best approach to
stability in today’s market is to resist letting these
emotions control our buying/selling habits. It is really
fascinating work, and something you should all check out.
His name is Spencer Sherman, and you can view his blog at

For those who can read the charts, it is absolutely clear that we’ve just passed the middle of the downtrend (don’t be fooled by recent short squeeze). I wonder what we are going to discuss after losing another $200K+ of “paper money”. Margin calls? Although I agree that it is not necessary to panic during market corrections, but some proper steps have to be taken after a reversal trend has been confirmed. Nobody wants to be in a situation when it is “too late to sell and to early to buy” (actually, that’s where we are right now). I fully agree with “an income over capital gain approach”, but I think it is wrong to relax and passively observe your portfolio meltdown. My rule is (and I’ve learned it in a hard way) that if today you are not to taking care of your money, tomorrow the money will not take care of you…


I’m using both, the Elliot Wave Theory and Fibonacci trend lines as well as a number of other technical indicators /chart patterns. One of the indicators, which usually works with a deadly precision is a small gap up / down in the middle of the second Elliot wave. This gap represents not only middle of the second wave, but the middle point of the overall trend. Currently, the NASDAQ Composite Index chart demonstrates a book example of the Elliot Wave Theory. A small gap occurred at 1,900 points level (Oct.6th). Considering the fact that the downtrend has started @2,800 points level, the “bottom target” is… 1,000! However, by looking at 10 years chart and taking in account all these billions injected in the market, I’d say that the bottom will be around 1,200 – 1,400 points level (today we are at 1,800). Thus, some pain is still ahead of us…


The main issue that I have with SDY the US high yield dividend aristocrats is that the companies are weighted based off yield which led to an overweight of financials before their dividend cuts. In addition to that, not all of them are attractively priced. That being said, if you want to buy it and forget it I would consider purchasing equal weights in the dividend aristocrats index and rebalance once per year.


I think that Acorn is refering to the 50% technical rule which refers to securities having to retrace more than 50% of the prior move up or down before a new trend start. For example the S&P 500 fell from 1313 to 839 in its latest down leg move. Untill S&P 500 moves decisevly above 1076 points then we would keep being in a bear market..

Dividend Growth Investor,

It looks like I didn’t explain it clearly… It is not the 50% technical rule. The believe is that (and I have to admit that for me it was and is the most repeatable / reliable chart formation, which I’m always looking for) if the second Elliot Wave has been recognized and a small gap up (during a uptrend) or down (during a downtrend) occurred “inside” this wave, this gap represents the “middle point” of the second wave as well as the middle point of the overall trend REGARDLESS how far a security went up or down (more than 50% or less) compared to the previous major reversal point.

It seems to me that loosing 200K from 1.8M is not the biggest deal in the world. I know people that lost 30% of their money… and they didn’t have a lot of money to start with.

If you go from 100K to 70K, that’s a much bigger deal in my opinion. If that person isn’t losing sleep, that says a lot more to me that someone who is 37 with 1.6M.

Lazy Man and Money

Fair comment.

Most people with 100K are not generally living off that investment and have (hopefully) long term plans to keep going. A smaller portfolio like that would (again I hope) be at the growth stage and if the invester is purchasing regularly then the past couple months of turmoil are probably presenting some buying opportunities.


I am in the “smaller portfolio” group which, unfortunately, just got a whole lot smaller this past month! Gulp!

But, as I build an iron stomach, I still think this is a great time to be alive. A market such as this (a bear-with-rabies!) can really heighten your investing skills. For me it is too late to sell, and I don’t really want to either, but I am most definitely keeping my eyes on buying opportunities — although I’m sure there will be quite a few more “plummet” days to come before I actually do put more money into the market.

FT: I read an article somewhere that agreed with Acorn’s “middle-of-the-bear” comment, being on Fib’s 3rd wave of the 3rd wave — the worst wave!

Here’s a question: would it be wise to put any amount of emergency cash fund into high-yield GIC’s (eg. RBC RateAdvantage) during this market, assuming the turmoil and losses will continue?

The “middle point” happens during the 2nd wave (not the 3rd one), and you are right, the 2nd is the most severe one. In fact, one trading tactic claims that it makes sense to participate to the market run only during the 2nd wave. During the 3rd wave people will start to close their positions and establish the new ones in anticipation to the market reversal (that’s what I usually do). The reason for this is that there is not much room left for an additional gain “inside” the 3rd wave and, sometimes, the risk to get trapped is too high.
I’m not sure about this GIC business (especially using emergency cash), but, during this time, I’d recommend to you to cancel all your stop-loss orders (if you have any) for the long term investments. It is too late to sell anyway… Although it is another good excise to test your iron stomach, but also it will help to build your strong hands to hold your investment during possible market shakeouts.
Good luck…

Hey Ft,

I was wondering if you have an update from the 37 year old (he must be 38 now!) millionaire. Has he bought more stuff since Oct. 2008? I would be interesting to get an update.