Posted at 8:00 a.m.
Olivier Primeau, the Quebec businessman co-owner of the Pointe-Calumet Beachclub, has been talked about recently for a 3 million investment he has just made in a small company that holds groundwater catchment permits. in Quebec.
The company does not capture water, but says it is positioned to take advantage of any potential interest in Quebec water.
The publicly traded company, Dominion Water Reserves (DWR), is a penny stock (penny stocks in English). Companies whose stock is quoted in cents are the financial equivalent of sitting in the last benches at the back of the school bus, far from the gaze of the driver. The companies there are less regulated, untested and risky.
I don’t know if Mr. Primeau will become the Jeff Bezos of Quebec water, or if his adventure will come to nothing, or something in between.
What I do know is that this hype took DWR’s stock price from $0.10 to $0.20, a 100% rise in a matter of days. This means that many people have decided to embark on the adventure of water.
Penny stocks can make those interested in them feel like pioneers. Like taking a bucket, a shovel, and setting off for distant lands in search of gold.
And that’s exactly what they are.
The problem with speculating with penny stocks is that the risks of suffering catastrophic losses are much higher than the chances of making a profit.
If you think financial markets are volatile this year, you haven’t taken a look at the penny stock market.
The CSE index, which represents the majority of penny stocks in Canada, has lost more than 50% of its value since the start of the year, compared to 14% for the Toronto Stock Exchange.
If I put on my positive guy glasses, I tell myself that people who buy DWR shares know that they are speculating. They can do this because they have finished paying their mortgage, have made 100% contributions to their children’s RESPs, their TFSA and RRSP are full, their vehicle is paid off, and they have enough money to stop working tomorrow morning if they wanted to and have fun speculating in penny stocks to clear their minds between two Thai massages and hot yoga sessions.
But something tells me that’s not the case.
The lure of a quick gain is powerful in the financial markets. Historically, tears have far outnumbered cries of joy in this universe.
For 99% of us, the strategy to put in place to get rich is to invest your money in a diversified portfolio made up of exchange-traded funds (ETFs) indexed, that is to say which contain the shares of thousands of businesses. Why ? Because if one of these companies were to have problems and go bankrupt, it would not affect the value of the average. It would also prevent us from being stuck with all our marbles in a problematic sector or one that is experiencing a long-term decline.
It is possible to start investing with a single dollar on online brokerage platforms, including Wealthsimple Invest, RBC Investi-Clic, Idema Investments, Questrade Self-Managed Investments, and many others. In a few clicks, these platforms can build a portfolio that also includes bonds, which are less volatile financial assets than stocks, and which help keep a cool head during a stock market correction, such as the one we are currently experiencing. .
Once established, a balanced portfolio needs only one thing: to be left to work in peace.
Ten thousand dollars invested in a balanced portfolio when my son was born is worth $21,000 today. Invested when I was born, they are worth $483,000. Invested when my father was born, they are worth $7,600,000. When my grandfather was born: 85 million.
To succeed in investing does not mean to have a brilliant performance in the short term. Succeeding in investing means staying upright, with your head above water, long enough to see our assets working harder than we will ever be able to.