Created: 1995.06.07 | Last updated: 2010.10.24
I used to list all my "current" investments so people could copy. These days I only put the occasional one in here that may be appropriate for a lot of people. And further down, there is lots of free advice.
If you want to see what I'm doing and what you might be able to participate in, go to my business section, the "What New Company" link.
And for some free advice ... This is now just a few random notes of investment advise. No charge. No warrantee. But I can say it is advice that I almost always follow myself.
Some investment advisors say "I don't invest in what I recommend because that would be a conflict of interest." They then proceed to sell you something which, in many cases, they really would not invest their own money in - they know it is a sham! My stance all along was - I say bologna and took the exact opposite approach. I didn't recommend something unless I was also putting a significant amount of my money where my mouth is. I know it's not a perfect solution because some argue it is a conflict of interest to recommend what I've already spent a lot of money on, but I think on the whole, it is the best one - better than saying - I didn't put any of MY money in, but you should. We'll have to see where the legal ramifications fall out over the next few years.
FWIW: I have always ONLY included places I was personally also investing or investigating on these pages, and other than helping people decide on the best options for their personal residences, I can't think of any options I've recommended unless I was first invested in it.
One valid and I think important question is: What is my track record?
The answer is as follows:
So where am "I" putting this type of money these days?
Of course the obvious thought is - a company that is doing Land investments/development - wouldn't that make the most sense? And I would have to say- Yes, it can, and yes I am. But I'm still going to be careful about how I go about it.
THEY say - you can't lose with land: While many people make ridiculous statements like "you can't lose with land" or "land always goes up in value" or, I really heard this one in April 2008- from someone who should have known better "land always goes up in value, on average 30% per annum. You can't lose with land." Baloney! (And worse - he was talking about Calgary). You can lose with anything even land. The fact that "...land - they aren't making any more of it" is truthful, it doesn't mean that it will go up in value in a way that is profitable, and you can't deny that land values go DOWN. I am writing this in 2008 - I sold anything to do with land holdings in the US just months before the sub-prime crisis hit - and everyone I knew was telling me I was crazy because land values couldn't go down. I'm also holding off buying land in Calgary and area - just 3 months ago, people were saying "land may go flat in price, but it won't drop" while I was saying "land might stay flat, but it will probably go down". The properties I'm looking at have dropped significantly in the last 2 months - and I think they may go down even further so I'm not buying yet. My point is not that I was correct in my timing, my point is that the statement you can't lose with land is false.
So ... yes, I am really excited about doing company/land investment together. But I'm only doing it where and when I think there is a realistic chance of making enough money from it to be worth the risk.
Here is a treatise I wrote on the subject:(updated)
I am absolutely amazed at how many people tell me "you can never go wrong with land" "land is a guaranteed investment" "land always goes up in value". I've heard this from people who don't invest (and probably shouldn't until they understand what they are doing better), I've heard this from people who have lost their shirts in the stock market and figure they now know what they should do. I've heard it from land bankers, from business men. I even heard it in Calgary in mid 2008, after some housing prices had collapsed - from a business man in the industry. When I confronted him with the facts he dismissed it as a short term aberration, that if you wait LONG ENOUGH it will always go up in value.
Well, it's that "LONG ENOUGH" issue that makes all the other statements a load af hooey.\ I have done extremely well with land. But I have typically spent 3-5 years studying a market, at least casually, before I buy land. I, through companies I own or companies I influence (advise/consult with), have bought land in several countries in the world. My banker was surprised to find out that I sold all my US land and land related holdings several months before the "sub-prime" debacle of 2007/2008 hit. She wanted to know how I knew to get out in time - I said I simply paid attention, and showed her what I was paying attention to.
So, I expect Land, Land development, Land banking to be a significant percentage of my portfolio and the portfolios for companies I manage and other institutions I volunteer on, but I will NEVER EVER take the attitude that "you can't go wrong with land". I acknowledge that done with a little bit of care it is the BEST way to make a lot of money, but I also acknowledge that you can lose a lot of money if you don't do it right.
Simply having in the back of my mind - "You CAN go wrong with land" helps me make good decisions. I hope it helps you too.
Btw, I figure there are three main times that it is a good economical idea to get into land: 1. When everyone is panicking about how badly the land prices have fallen and how there is no hope ever of recovery and the news talks about what a disaster everything is. Basically when EVERYONE knows that the prices have fallen a long way and EVERYONE things the world is about to end because of how far the prices have dropped and how there is no end in sight, that is a signal that the crisis is almost over and the prices have almost bottomed out - get ready to buy (with caution of course) because the best buying opportunities are probably either "now" or "soon". On the other hand - make sure the problem isn't systemic - Northern Michigan has been in this situation for years - the people panicking where correct - unless you are looking to live there and the cost is so cheap you are OK if you have to give it away when you are done with it. 2. When prices are rising and there is nothing particularly in the way of continued rise. 3. When an economy is booming or about to boom. and 4. (yes that is one more than 3): When you need a place to live and you plan to live in the area for a long time and the cost of renting is the same or higher than the cost of owning.
And there are 2 times to get out: 1. When land is flattening out (sales that is, not the ground) and there is a potential problem. Some would argue, but what if you are wrong (and I am sometimes) and there is another boom? I reply: who cares - don't try to be right 100% of the time, why gamble on a market that is flattening out that might come - when there is the WHOLE rest of the world to invest in - take a look at a globe - there really are more than one places to buy land in. So, when a market isn't right - switch to another market. That is why in 2007 the boards I sat on were out of US land - there were enough other options that I (technically 'they') could invest in while waiting. The signs were that it would PROBABLY be a problem (one of the BIGGEST signs was that every real estate agent I talked to said - the prices will never come down, it won't affect the prices, it may make the sales slower, it will only affect the low end housing market".) I always like to look at what the risks are if I'm wrong or right. If I was WRONG, and it did come back, I could always buy back in for the next ride up without losing much, and in the mean time, I was making money elsewhere. If I was RIGHT and it did drop, if I had my money there, I'd lose terribly. If I didn't have my money there then I'd be (statistically) making money in another market so I could buy in when it made sense. Then I looked at those and said; Since I think I'm going to be right, why risk it? 2. When land prices are dropping and people aren't really concerned that prices can drop much "It'll recover" "It's basically OK". If you are in Calgary - when the President of the Calgary Real Estate Board makes comments like "it was only a little drop, nothing to be worried about" THAT is ALWAYS (yes I exaggerate) a signal to sell quickly. Then buy back in after the prices collapse.
One HUGE key: Don't invest all your money in land in the same economic region. No matter how smart you are - you are NOT going to be correct every time. Spread it around. If you own a house in Calgary for example - you probably should not invest in land in Calgary, Lethbridge, Ft. McMurrey and possibly Edmonton until you have significant investments outside of that region. Yet what do most people do? They invest close to home where they can 'watch" their investment. Well, I don't mind watching it rise from a distance. And I really am happy if, when I am doing poorly in one area, I see a gain in another. Again, technically it isn't me - but I consider the money of the boards I sit on to be mine from a responsibility perspective. If I had everything invested in Calgary, boy would I be scared right now (May 2008). And I would be extremely disappointed that I had not sold out before January 2008. Now I know, that some people are going to jump in and buy all the land they can in Calgary when the prices hit what they think is rock bottom, say they decide in August 2009 that the prices have started to come back up, so now is the perfect time to put everything into Calgary. What happens when the Liberals get in and impose another NEP? (If you don't understand this - a quick summary: The Liberals are known for making economic decisions that hurt Alberta.) This is the eggs in one basket, in a way that you do NOT have to. Personally, I try to follow and invest in 4 or 5 markets at a time. If you don't have time for that - at least invest in TWO different markets, your local market where your house is, and one other market that is significantly different. If you are only going to invest in land in TWO areas, then: Don't buy in Texas if you own in Calgary - two big oil dependent areas. Don't buy in Canada if you already live in Canada, too dependent on one factor, the Canadian economy. Instead, buy somewhere in the US or in another country that is not directly affected by the same market factors that your home town is affected by. Personally I think a few well chosen opportunities in Latin America right now is a great choice. But you don't have to agree with my specific location belief to see the wisdom in what I am saying. The principles are strong, so go with them and make your decisions.
Oh, and DON'T rely on "luck" to save you. Obviously, anyone who decided 6 or so years ago to invest 100% in Calgary and then sold 100% in January 2008 made a killing and you can now consider them your personal guru for all land investing. No, THEY may be set for life now, but it doesn't mean they invested wisely and it doesn't mean that they will pick right going ahead. If I were looking for a guru, I'd prefer to find someone who invested in 3 different areas 6 years ago (Calgary being one), and he or she had a strong rationale for why each was invested in. Then, even if only 1 or 2 of the there went gangbusters, and they are now set because the other one or two did OK or maybe one of the three did poorly. While they didn't make as much money as the person who through all their money into one market, their method was much safer and, in the long run, you are likely to make more money following their advice than you are following the advice of the jackpot winner.
A CHANCE OF A LIFETIME: I'm sure you've heard this phrase. I believe, based on my experience, that a "CHANCE OF A LIFETIME" comes along about once a month. I have had the cash to take advantage of several over the past years and I'm quite pleased. I've also missed out on many because I had "too much" of my cash tied up in other chance's of a lifetime. But I'm not concerned because my money and time is being invested as wisely and knowledgeably as I was able at the time, and I am absolutely certain that, when I next have cash available, another "chance of a lifetime" will come along within a few weeks. Now, it may be true that I come across or create these much more frequently than the average person - but here's some free advice: Don't panic and assume that a chance of a lifetime will never happen to you again. Be careful and do due diligence before putting your money to work.
Similar concept: SERENDIPITY: Many people use this word incorrectly, they use it as a fancy way of saying "lucky" I've heard a much better definition though, it said that Serendipity is where preparedness meets opportunity. So what does THAT have to do with anything here? Well, simple.
Some people would call it luck. I call it Serendipity. Being READY to act when you need to.
btw. It is also easy to get hung up on the preparedness. Feeling you are never quite prepared enough. Notice I didn't say that I was CERTAIN the opportunity was right - just that I was close to certainty as is realistic. There is a BIG difference between being certain and being close enough. While most people jump without doing their research, most of the remaining ones never jump because they are never certain. But here's the kicker - if you never jump because you are never certain - then you can be certain - certain that you WILL fail.
Some people call it luck (that I jump and, usually, win). I call it Serendipting. Actually Acting when you are prepared and the opportunity presents itself.
DON'T PUT YOUR EGGS IN ONE BASKET. Ok, this one I both agree with and disagree with. It depends. When I first started out in business, if I had put my eggs in multiple baskets, I would have failed - I could barely carry 1 basket at that age and experience. So ... I put my eggs in one basket and fought like crazy to protect that basket without having to try and protect multiple baskets. But I was building my own company, my first company, and I had no family, I could fail on my own. If you have never started a company before and you are starting a company, then there are times and ways that it DOES make sense to put all your eggs in one basket so that you have a hope of keeping at least some of the eggs.
However, most of the time the saying is correct. You should almost never put all your eggs in one basket - even if you think I give the best financial advice you have ever heard. Recently someone who knows me well told their son: Whenever you are in the car with Mr. Horwood - listen to him, he's always right. While I appreciate the compliment - I KNOW that I am NOT always right - and I act on the assumption that I AM wrong sometimes and that I MIGHT be wrong "this" time - whatever "this" time might happen to be. So, lets turn to someone whose advice I respect:
Solomon was called the Wisest man who ever lived. I believe that is true based on the definition of the word "Wise" that must have been in place at the time that Solomon was alive. (Read the whole history of him in the Bible to see why Solomon does not meet the current definition of the English word Wise.) For our purposes here, lets say that Solomon was the man who was the intellectually Wisest man who ever lived - he knew what the correct decisions were and how to make them. He said: (NIV): 'Cast your bread upon the waters, for after many days you will find it again. Give portions to seven, yes to eight, for you do not know what disaster may come upon the land.' Now, to understand this requires some knowledge about the business and world environment in Solomon's day. But it basically means this; You have to invest something to make something - you have to send it where it will help someone else before it will help you. Also, invest in a variety of options, don't gamble by investing in just one things. By sending it on 7 or 8 ships, if one or two sink or are pirated, you still make your money on the ones that made it back safely. Saying 'Seven, yes to eight" is a figure of speech that doesn't mean literally 7 or 8, but rather - a variety of choices. Not just one or two where disaster can wipe you out, but also, one person can only manage so many opportunities so you don't want to spread yourself among 100's either. After all, you want to properly evaluate EACH opportunity (ship in Solomon's advice) to see if it is a good investment, if you try too many, you will invest in lots of things that you have not done enough research and you are more likely to fail. Some people will invest in dozens of risky ventures thinking the risk will balance out - thinking about each one: it's only a small amount. And then they lose LOTS of small amounts. Also, notice that by sending it on ships, you diversify yourself geographically. So that - if something "may come upon the land" that you live on/in (so that your local investments, your job, your business are destroyed), your wider investments help mitigate that risk. In my opinion, most people have too much, percentage wise, invested in their home countries. They have their house, their job (business), bank accounts, additional land holdings, investments in the stock markets all in the same area - seems excessively risky to me. Such good advice from 3000 years ago for those that are willing to listen and look to the implications of the words, not just the small number of words we have copies of that he wrote on the subject.
CONSIDER PARTNERING WITH SOMEONE WHO SHARES YOUR ATTITUDES AND IS SOMEONE YOU TRUST: You can then share the responsibility of doing the due diligence with that person. This is especially important when you have "too little money to do all that work". By sharing the responsibility with some trusted partners, you will have a larger pool of money and spreading the work out, the amount of time and $ spent on due diligence per $ invested is reduced.
I have a few different people that I do this with to their and my benefit. For me the reasons are sometimes different than I am suggesting above, but the result is the same. It is not so much that the amount of time and $ spent on due diligence per $ invested is too much, it is that we have different talents and different things we like to do.
If, after reading everything above, you would like to partner with me. We can talk. It may be that all I can offer you is an opportunity to invest in what I'm doing, or profit from one of the things I'm then doing (currently mostly land development/deals/sales companies). And if that is all you want, fine. But if you want to be a partner, I need to get to know you very well before I can let you in on my deals as a partner. Here is why: There are several different management/decision STYLES that are effective. I have mine. While each of these STYLES are effective, at least in the right circumstances, where I have seen them fail is where 2 people with significantly different styles try to work together. That is a recipe for disaster usually. Now, that is different than my advice that you should seek partners from people with different interests, talents, experience and knowledge. I love the fact that my partners like to and are good at doing things that I don't/can't. That makes for a strong team. But STYLE is a different issue. I need to know your style before I can partner with you. Though I may be able to do business with you if your style is different. (Note: there are also Styles that are ineffective, but we aren't talking about those styles)
Some Advice beyond Dollars:
First: Preparation for later: (NET): "I also know that whatever God does will endure forever" - none of my financial advice will live forever, nothing that you do in your life will last forever, and from your personal ability to enjoy it - past your lifetime unless you invest in eternity. As a result - I strongly recommend you plan for eternity, and not just up to the day of your death.