What the Hustler Taught Me About Banking

One of my favorite movies is “The Hustler” (the original with Paul Newman and Jackie Gleason). Mr. Newman played “Fast Eddie” Felson an up and coming hustler who wants to be a success, and his goal was to beat Minnesota Fats (played by Mr. Gleason). The movie is an intricate set of stories, one of which is the thematic premise about banking and the Hustler.

The Hustler at Amazon

The Hustler at Amazon Canada

“Always leave a mark with some money in their pocket, that way they keep coming back”

That is how banks have done it for years. Now they are finding new and more exciting ways to bleed some money out of you, but not so much that you decide to bank somewhere else (also, they are all doing it, your only other option is to put it in your mattress).

My opinion of the banks’ thinking in this area? Let me quote Fast Eddie from the Colour of Money:

“Money won is twice as sweet as money earned.”

They aren’t earning all this extra money, they are winning it off you, think about it.

Am I Just Being Bitchy ?

My apologies if I sound like I am picking on the Banks, this is actually true of all the Service Industries we deal with, especially the Cell Phone Companies, the Internet Providers, the Phone Companies, and the Insurance Companies.

Learn how the game is played, or you will get hustled.

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No I Can’t Do Anything About That

That is a direct quote from a TD representative when I asked if anything could be done about the interest rate on my Unsecured Line of Credit.

For the longest of times, this Unsecured Line of Credit was “Prime + 1.5%”, but about 2 years ago, it was raised to “Prime + 2.0%”, which while annoying, was something I could live with, however, about six months ago I got a terse piece of Snail Mail announcing, “Yeh, it will be Prime + 3.0%. I was quite irked by this (as a customer of TD), and decided the next time I was in the Bank (say to cash in an RESP) I would ask about this.

The Answer

The Answer is Always No, if you don’t ask

In the interim, my daughter got her Student Line of Credit from CIBC, which I co-signed, and she got that at Prime, so I figured I’d bring the documentation with me (to TD)  to see if I could motivate my friendly TD rep to do something about my unsecured line of credit rate.  This is where the title of this post came in to play.

First I was easily able to cash out my daughter’s RESP (as I had move all E-series Index Funds into the Money Market fund, won’t get fooled twice on that one), in a relatively quick few minutes. I then had to have my “investing profile” updated to allow me to do what I wanted in another account, again done quite quickly as the rep simply cloned the last time I did this update.

At this point I brought up my Unsecured Line of Credit and the high interest rate (in my opinion) and the fact that I have good enough credit to co-sign a loan for prime only, and the answer was short and to the point:

“No, that is an unsecured line of credit and I cannot lower that rate.”

I asked if there was any chance to discuss it, and was dismissed with, “Your Daughter has a professional line of credit loan, not the same thing, we can’t do anything for you”.  I believe I also asked if anybody else could help, but was told No. Now I have said previously, The Answer is Always No, unless you ask, but evidently it can be No even if you do ask.

Conclusions

If I remember the happy young lady at the CIBC, when she gave us the details about my daughter’s student line of credit, told me that an unsecured line of credit rate for me would have an interest rate depending on my credit rating and how much debt I carry, but she’d gladly check it out for me if I wanted her to do that. I guess I’ll be going to visit CIBC in the near future.

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Don’t Wear a Financial Red Shirt

In Star Trek (the original series) a useful heuristic for characters was that anyone wearing a Red Shirt, was most likely to die that episode.

All great ideas started (and start) with Star Trek the original series (the newer series haven’t had time to look visionary yet), are there any Financial Red Shirt ideas out there? There are a few since the Red Shirt’ed crew men were usually sent out to look at new or unknown things, so some Financial Red Shirts might be:

  • New Robo-Investor funds, with exciting new heuristics and algorithms that will Beat the Market (really  this time it’s for sure).
  • Investing in exciting new technologies like Electric Car companies (heck even Tesla’s founder Elon Musk was sure he was going to lose all his investment when he started out).
  • Going to Vegas (or even Montreal) to win some money at the Casino using a great Can’t Lose system. The Casinos would like it if you wore a Red Shirt then, so you could be easily identified.
  • Take a bunch of cash advances on all of your credit cards to buy a condo in Toronto (or Vancouver) so you can flip it for a huge profit.

Remember the only Star Trek cast member who lived wearing a Red Shirt was Scotty.

Kind of a Mail It In Monday before a Tuesday holiday.

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Finance and Gen Y

Someone asked me, “What Gen Y has brought to the table?”.

My first response was: “No World Wars good, Pay Day Loans bad, but #ADDSociety is major thing”, which translates to they haven’t had a world war (yet), however, on their watch Pay Day Loans have exploded as a concept and it seems all of society has Attention Deficit Disorder (apologies to those suffering from ADD, I do not mean to ridicule you (in specific) all of society is like that).

Generation Y

Gen Y ?

The excuses I continually get from Gen Y in specific and Gen Y wannabes is:

  • It’s too complicated so I didn’t read it
  • I have too many messages so I ignored it
  • I can only read while driving, texting, drinking coffee, watching TV and shaving
  • I can’t get anything done unless I am Multi-tasking  (when in fact it just means doing a whole bunch of things at the same time, badly)
  • Yes I do sound like a crotchety old man

I think Gen Y is going to have to deal with a very nasty time bomb as they age, namely Boomers retiring and Gen Y having to support the aging “Greatest Generation Ever” (keeping their pensions afloat, as they live longer and longer). There is going to need to be a “paradigm shift” in how all this works, because it is pretty clear that all pensions (public and private) are in trouble, and barring a horrific plague there are going to be too many people trying to live on too little money (I may be proven wrong, but I doubt it).

Will Gen Y (in most western nations) never see the Inflation and High Interest rates that I grew up with? I don’t know, it really does seem that the days of Canada Savings Bonds with 19% interest rates are long gone (1981 I do believe was the last year with that).

Remember that the Boomers (and their parents to a lesser extent) are really the first generations that has ever had the chance to retire (folks died before retiring previously), will the following generations be able to do this? That remains to be seen.

 

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Google Made You an Expert Investor ?

For the past little while there has been a determined group of folks who believe they are the next Woodward & Bernstein (read All the President’s Men to understand the reference) and if they can find something on Google or even Bing, it must be the gospel truth and thus they can base their entire lives on the basis of these findings.

Specifically the naive folks who believe that Vaccines are simply a scheme by large multinationals to make a fortune and poison our children, thus leading to the new outbreaks of Measles, and other interesting diseases (that were mostly gone from most of the world). I will simply comment that any individual wishes to argue with me that having my son Vaccinated caused him to be on the Autism spectrum, Bring it On, you are wrong.

However, this is not what I am writing about today (I could write far too much about the previous paragraph), I am writing about folks that feel that with a little bit of research they can become experts about investing. Yes, you should do plenty of research on whatever investing scheme you wish, however, this does not make you an expert. Just because I can watch a Youtube video on how to fix the rotors and brakes on my car, that does not make me a mechanic!

The people I know that have become good investors, took a while to figure out how to do it, and some folks (like me) ended up deciding that maybe we should use the simplest methods for investing and not try to “beat the market” (every time I have tried to beat the market, I ended up being the ball (not the Louisville slugger)).

Investing

Sometimes You Are the Louisville Slugger but Sometimes You are the Ball

An interesting experiment, do a Google search and figure out Warren Buffett’s investing philosophy is for Berkshire Hathaway ? Now you’ve looked it up (I would suggest if you can find anything on Blomberg you might have a good bit of detail) do you understand it? Think you can implement it? Should you?

Next question, if you can buy a “How to make a million on the market” system, what stops 100,000 other people from using that same system? Food for thought.

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