Plus: A different kind of bear market November 21, 2022 Made in Canada IN THIS ISSUE Estimated read time: 6 min 🇨🇳 China’s booming market 🫣 FTX’s contagion 🌊 A waterfall’s financial insight? WHAT HAPPENED LAST WEEK The waterfall method has nothing to do with a barrel and a moment of shortsighted glory. It’s a six-step financial plan that works for every human, no matter how much money they have. See the Big Important Story below to learn more. | Getty Images THE WEEK IN MARKETS The markets took a trip to snoozeville this week. Pretty much everything was flat – NASDAQ, S&P, TSX, even (even!) crypto. If you felt relieved to take a breather, you probably ain’t alone. The markets have been very sensitive of late – shooting up at the hint of good news (remember the summer rally?) and diving at any down signal (who can forget the despair of September?). But the funny thing is, if you squint hard enough, the last three months have actually been a (very uncomfortable) trip to snoozeville: stocks and crypto are close to where they were in June. Which may be because, big picture, investors are deeply unsure how stocks should be priced, mostly because of uncertainty around inflation. At some point, of course, the sojourn will end. Like a coin spinning on its side, things will fall one way or another. In the meantime, everyone will be guessing which way it all goes. THE WEEK IN ONE NUMBER 103 months (Or 8.5 years.) That’s the longest jail sentence any banker received for charges related to the ’08 global financial crisis. Elizabeth “Bad Blood” Holmes, the founder of blood-test startup Theranos, received a 135-month (11.25-year) sentence Friday. IMPORTANT After FTX, the crypto bank run decided to take a few more laps. BlockFi, a lending platform FTX “saved” this past summer, is talking bankruptcy. Genesis, a trading firm with “significant exposure” to FTX, stopped withdrawals and asked for a US$1 billion loan. That (along with a terribly timed server outage) caused a mini-run at Gemini, since Genesis provides interest payments for Gemini Earn. And Solana, a currency closely tied with FTX, is down more than 65%. It’s all left some folks wondering: is this crypto’s version of 2008, with fewer suits and much worse haircuts? Big Oil's big ol' profits might get (a little) less big. Since Canada has only hit its emissions goals, well, never, Ottawa stepped up the pressure last week at the COP27 climate conference in Egypt, promising a new emissions cap or carbon tax on the oil and gas industry by spring. Covid Zero isn’t over, but Chinese markets are no longer socially distancing themselves from gains. After tanking all year, major Chinese indices are up by 10–30% for November. Why? President Xi is showing signs of finally ending the extreme Covid policy that’s strangling the local market. And it doesn’t hurt that he and Biden managed to smile in the same room, hinting there’s a chance he might even lower the middle finger he’s held up so long toward the West. INTERESTING Walmart is one of the few retailers dreaming of a white green Christmas. Last week, America’s largest private employer beat its quarterly revenue and sales estimates. But whatever, so did lots of companies. The big news is that — unlike Amazon, Target, and a bunch of other retailers — the supercentre actually increased expectations for its end-of-year haul. Taking advantage of a different kind of bear market, Grindr successfully IPO’d. What’s more impressive than the nearly US$400 million the app raised when IPOs have all but dried up is that it did so via SPAC — a pandemic-popular-turned-widely ineffective move that allows a company to go public with less scrutiny. Meta and Snap don’t need to wonder where their ad sales went. TikTok, the app you can’t go to the bathroom without, said it is on track to earn US$10 billion this year — 2.5x last year’s take(Tok). THE FOMO INDEX by Stacey Woods IMPORTANT 🐦 Elon reinstates Trump's Twitter account. Still no sign of an edit button. Source 🎟️ You-ou are never ever getting back together with your life savings: some T-Swift tickets going for US$33k. Source 💊 Ottawa importing kids’ pain and fever meds to solve shortage. Should be fine. The ad said “new in box.” Source 😅 Calgary-based crypto exchange Bitvo says it won’t be acquired by FTX. Yeah, we figured. Source CRASH & BURN TO THE MOON 🐑 Flock of sheep in Mongolia walking in perfect circle since Nov. 4 must be at some sort of ovine rave. Source 🍺 Soaring barley prices force Canadian beer makers to ask tough questions like: What other starches can get you drunk? Source 📦 Amazon drones coming later this year will drop packages from 12 feet high, or what Canada Post calls “standard delivery.” Source 🩴 Steve Jobs’ Birkenstocks sell for US$200k. Turtleneck, dad jeans standing by. Source WHO CARES FROM OUR SPONSOR Auto-Deposits are Foolproof 💰 We know, because we write about it all the time: trying to time the market doesn't work. The good news is that the smartest way to invest is also the easiest: automate it. Turn on auto-deposits and take the guesswork (and dumb decisions) out of the equation. Set up auto-deposits WHAT’S UP THIS WEEK Zoom goes off mute to share its latest earnings (Monday). Time to find out just how many of us switched to Google Meet to save money. Black Friday (umm ... Friday). Not sure why it needs to be said, but: that $4 hand towel is rarely worth a fistfight. THE BIG IMPORTANT STORY PERSONAL FINANCE A Six-Step Financial Plan for Every Human (or at Least Every Canadian) It’s a tough time to know what the right financial move is. Interest rates are soaring, while equities markets are in bearish territory, while bonds are tanking, while crypto is — going through something. It’s easy to forget that there are smart things that you can do right now regardless of the uncertainty. There’s this concept we talk about amongst ourselves at the TLDR offices called the waterfall method, which tells you what to do with your money no matter how much you have. And it’s simple. Imagine a bunch of tiered pools: your money (the water) has to fill up one before cascading into the next. Here’s how it flows. 1. Kill high-interest debt. Do you have any debt with an interest rate above 7ish%? (If you have credit-card debt, you likely do!) If so, pay it down first. Why? Well, odds are that any returns you make from investing will be less than the interest you pay on your debts, which sort of defeats the whole purpose. 2. Build an emergency fund. OK, so you’ve paid off your high-interest debt. Time to invest, right? Almost. First, you should stash away three to six months of living expenses in a savings account or somewhere else low risk. That way, if you get fired or your car spontaneously combusts, you’ll have enough liquid cash to ride things out without taking on ... high-interest debt. Which would put you back at step one. 3. Maximize your employer match. At last! It’s time to invest! So, where to begin? If your employer matches contributions to a Group Retirement Savings Plan (GRSP), start there. You can contribute as much as 18% of your income, and employers typically match 3–6%. For example: if you made $60K and your company matches 5% of your salary — your company will give you an extra $3,000 in income to put toward retirement. Not taking advantage is like refusing 5% of your salary. 4. Max out your tax-advantaged accounts. The government, as an incentive to save for retirement, offers two special investment accounts. An RRSP reduces your declarable income so that you pay less tax now, while with a TFSA your proceeds aren’t taxed, so you pay less tax later. (We’ve got a guide that explains the differences in greater detail.) If you invest outside these accounts, you’re voluntarily paying more taxes. 5. Pay down low-interest debts. Once your TFSA or RRSP is maxed out, consider paying down your lower-interest debts, like a mortgage or student loans, since these debts still have interest that can negate your investment gains. It’s hard to be super prescriptive about whether this is the right move for you, because it depends on your debt situation, but definitely look at your interest rates and your investment expectations. We published a nifty guide (scroll to the bottom) about paying down your mortgage versus investing that might be helpful. 6. Invest in yourself! Or in your kids! If you’ve reached step six, congrats! You’re now officially a fiscally minded, expert-level adult. Now you can scheme about what to do with the rest of your money. You can put some in a personal investment account, say. Or save for a new house. Or sock away money for your kid’s college. Whatever gets you excited! — Sarah Rieger SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! FOLLOW US If you love TLDR (or even just like it a little) and you haven’t fled Twitter yet, follow @Wealthsimple for money news, bad jokes, and non-boring financial insight. OTHER VERY GOOD READS 🤔 The Curious Case of FTX’s “Company Therapist” A therapist who sought “dating options” for employees | Vice 🐀 I Can’t Shut Up About How Rats Can Dance Those rodents have rhythm | The Cut 🌊 The Demon River A B.C. flood that laid waste to homes and cost lives | Hakai THE WISDOM OF TWITTER The biggest FTX lesson: don’t give billions to guys in short pants. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Brennan Doherty (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Sara Black McCulloch (fact checker), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. 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