Investing vs. Speculating

Investing vs. Speculating

It is probably a good idea to explain what is “investing” and how do we distinguish “investing” from “speculating”. We can define investing as a method of purchasing assets in order to gain profit in the form of reasonably predictable income (dividends, rental, interest) and/or appreciation over the long term. It is definition of the time period for the investment return and the predictability of the returns that often distinguish an investment from a speculation. An excellent analogy from the first Superman movie comes to mind. When the evil Luthor bought land in Arizona with the idea that California would soon slide into the ocean, thereby quickly producing far more valuable beach-front property, he was speculating. Had he bought such land as a long-term holding after examining migration patterns, housing construction trends and the availability of water supplies, he would probably be regarded as investing – particularly if he viewed the purchase as likely to produce a dependable future stream of cash returns.

At this point we should remember that just to stay even, our investments have to produce a rate of return equal to inflation. It is thus clear that if we are to cope with even a mild inflation, we must undertake investment strategies that maintain our real purchasing power; otherwise we are doomed to an ever-decreasing standard of living.

“It’s good to have a special price to pay for the future and it will pay you in return, in the exact way you would wish to be paid.” (Auliq Ice). New York Penn Station. Photo by Elena

Investing requires a lot of work, make no mistake about it. And even if you trust all your funds to an investment adviser or to a mutual fund, you still have to know which adviser or which fund is most suitable to handle your money. Armed with the information contained in many books about the matter, you should find it a bit easier to make your investment decisions.

Most important of all, however, is the fact that investing is fun. It’s fun to pit your intellect against that of the vast investment community and to find yourself rewarded with an increase in assets. It’s exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. And it’s also stimulating to learn about new ideas for services and products, and innovations in the forms of financial investments. A successful investor is generally a well-rounded individual who puts a natural curiosity and an intellectual interest to work to earn more money.

Advice for Investors

Many people say that the individual investor has scarcely a chance today against Wall Street`s pros. They point to techniques the pros use as “program trading” or “portfolio insurance”. They read new reports of mammoth takeovers, leveraged buyouts, and the highly profitable activities of well-financed arbitrageurs. All this suggests that there is no longer any room for the individual investor in today`s institutionalized markets.

Nothing could be further from the truth. Everyone can do as well as experts, and perhaps even better. In fact, over the past thirty years or so we have become accustomed to accept the rapid pace of technological change in our environment. Innovations, such as microwave ovens, cable TV, cellular smartphones, medical advances from organ transplants and laser surgery to nonsurgical methods of treating kidney stones and unclogging arteries have materially affected the life we used to live.

Financial innovation over the same period has been equally rapid. In the 1970s we did not have money market funds, automatic tellers, NOW accounts,  tax-exempt funds, index mutual funds, floating-rate notes, S&P index futures and options, zero-coupon bonds, , trading techniques such as “portfolio insurance” or “program trading”, just to mention a few of the changes that have occurred in the financial environment.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.

Trivia about Iceland

Trivia about Iceland

Icelandic Gods

Óðinn – Oldest of the Gods, very wise but sometimes tricky; God of wisdom and magic, strategy in warfare, travellers, merchants and poets.

Baldur – Kindest of the Gods, killed by his brother through the treachery of Loki.

Heimdallur – Has incredible sight and hearing; guards the rainbow bridge that lies into the land of the Gods.

Tyr – Bravest of the gods; God of warfare.

Freyja – Most beautiful among the Gods; Goddess of love and fertility.

Frigg – Goddess of homes and families.

Loki – Half-God; clever, but mischievous and arrogant and often causes trouble among the Gods.

Þór – Strongest of the Gods and their defender against evil forces. God of Thuner and Rain.

Höður – A blind God; brother of Baldur and deceived by Loki into killing him.

Bragi – God of poetry and literature.

The Fenris wolf – A giant hound, son of the Half-God Loki and a giantess; destined to devour Óðinn at the end of the world.

Hel – Goddess of the dead and sickly, queen of the Underworld.

Sleipnir – The eight-legged horse of Óðinn, born to the Half-God Loki in the shape of a mare.

Freyr God of Nature, Fertility and Harvests.

Icelandic Landscape. Photo by Olga

An Icelandic legend

The history of the light on the rock hill Kletturinn in Saurbaer

It happened around 1940: Valdimar, who lived in Saurbaer, was on his way home. He came from a shop in Raudaloek where he bought a new hat. It was dark and he was on foot. As he approached the rocky hill, he saw a light on the Kletturinn. He looked at the light and went on towards the river, which was not a bridge to get home. In the attempt to go over the stones of the river, Valdimar fell into the river. He lost his cap in the water and it disappeared. When he got up and looke back at Kletturinn, the light had disappeared. Since then, the light has never been seen on the rocky slopes of Kletturinn.

It is a serious rule in Iceland that no changes are allowed in places where elves live. The elves do not want to be disturbed, so it’s better to have a bow around your seats. Wheter abundance, coincidence or reality, if you have angered elves one does not remain undamaged for long. The same applies to Kleturinn. It is not allowed to remove a stone and also the Strommasten, which was actually planned exactly therre had to be placed next to the hill. (Legend of Gallery and Farm cottage Saurbaer).

Icelandic Wisdom

Better weight than wisdom a traveller cannot carry. The poor man’s strength in a strange place, worth more than wealth. (From Hávamál Eddaic poems (AD 700-900).

Always rise to an early meal, but eat your fill before a feast. If you’re hungry you have no time to talk at the table. (From Hávamál Eddaic poems (AD 700-900).

Ale has too often been praised by poets. The longer you drink the less sense your mind makes of things. from Hávamál Eddaic poems (AD 700-900).

He is truly wise who’s travelled far and knows the ways of the world. He who has travelled can tell what spirit governs the men he meets. (from Hávamál Eddaic poems (AD 700-900)

Northern Lights in Iceland

The Aurora Borealis, otherwise known as the Northern Lights, are one of the finest displays in nature. The lights are caused by electrically charged particles that are emitted by the sun and interact with the earth’s magnetic field. Some of these particles are accelerated towards the earth and guided towards two zones, one near the north pole and the other one near the south pole. When these particles collide with the upper atmosphere at great speed, they cause the air to glow in the beautiful colours commonly known as the Northern Lights.

Due to Iceland’s unique geographic location, it is an excellent place for seeing the Aurora Borealis, with frequent sightings of colourful and lively light displays. The Northern Lights can be seen in a variety of shapes and colours, and are best appreciated when the sky is clear and the evenings are dark. Due to the longer daylight hours during the summer, the optimum time for seeing the lights is between September and April. Although the Northern Lights can be seen almost anywhere in Iceland, they are best appreciated in the countryside, away from the city lights and man-made illumination. For the optimal experience, many tour operators are offering a variety of Northern Lights tours, both in Reykjavík and in the countryside. For further information on tours, please visit www.tripguide.is

Grandi

Grandi

Just off the city centre lies the old harbour area. Known as Grandi (which is Icelandic for Isthmus, a narrow strip of land connecting two larger bodies of land) the land was originally just a stretch of sand connecting Reykjavík to Örfirisey island but has been added to considerably in the years since. For decades, this was simply an industrial neighbourhood with fish processing plants and shipyards, but when the new harbour by Sundalhörn was built, much of the industry was moved there leaving empty buildings in a popular area looking for a new purpose.

The conditions were perfect for an old harbour renaissance and soon enough, started using the spaces for exhibitions, designers opened workshops, students worked on start-ups and restaurants started opening up to feed all the people working there. Fast forward a few years and the Old harbour is one of the most exciting neighbourhoods in Reykjavík to visit. It still retains its dockside charm and more than a whiff of the fishing industry’s presence built a steadily growing number of museums, hip restaurants and artisan’s workshops have made their home in the vacated industrial buildings, making Grandi one of the hottest spots in the city.

Art and Culture

Art and all sorts of creative thought are a big part of life in the old harbour district. Not only is there art in the buildings in the area but outside them as well, with huge murals of street are decorating various buildings around the area and large outdoor art pieces such Olöf Nordal’s Pufan (the hillock) pleasing the eye. The old harbour is home to plenty of artist’s workshops as well as the Reykjavík School of Visual Arts and the most recent addition to the old harbour, the Marshall building. This recently refurbished herring factory is home to the Living Arts Museums, Kling & Bang Gallery, artist Olafur Eliasson’s studio and Marshall restaurant and bar.

In addition to the art museums and galleries, the old harbour also boasts historical and natural museums. There’s no better place for the Reykjavík Maritime Museum than the old harbour – you can smell the fresh sea air as you learn all about the fascinating story of Icelendic fishermen, who’ve been risking their lives on the open ocean for centuries. You can even take a tour of Odinn, a former Coast Guard vessel from the 1950’s, that played an important rôle in Iceland’s struggle with the UK over the rights to fish in the sea around the island. In addition to the Maritime Museum, you can visit an exhibition on the Northern Lights, a great hall with life-size models of the whales of Iceland, a volcano museum, and an exhibition of wax dioramas depicting the Viking age in Iceland.

Shopping

Amongst the interesting flora of culture and cuisine is a smatering of small workshops and quirky stores, such as designers’ workshops producing clothes, handbags, homeware and everything in between, a fashion label working with natural fabrics and delicatessen shops selling charcuterie and cheeses. You’ll even find a chocolate factory selling high-quality chocolate bars and a jeweler’s workshop. The best thing about shopping at the old harbour is that the shops and workshops are small and often you’ll have a chance to meet and chat with the designers and storeowners themselves, giving precious insight into life in Reykjavík.

Typical Icelandic nature. Photo by Olga

Eating and Drinking

Some of Reykjavík’s most exciting eateries have opened in the old harbour are in the past few years. Not only can you find fine dining, everday grub and everything in between, but there are also some specialty food stores that will make your mouth water. Try some new Nordic food, Icelandic style, or get some sourdough sandwiches that will knock your socks off.

Eating fresh Icelandic fish in the harbour surroundings is a life-affirming experience and don’t forget to stop by a cake shop or the ice cream store for some dessert. If you’ve satisfied your hunger but are still feeling thirsty, you can get some in-house brewed beer or innovative cocktails, try one with an Icelandic spirit – maybe a birch-flavoured liqueur or even Iceland’s famous Brennivin.

The Marshall Building

Originally built in 1948 as a herring factory, the Marshall building is one of the beautiful old factory buildings in the old harbour. It is one of the buildings that has gotten a new lease on life with the changes at the old harbour and today it houses the Living Art Museum, the Kling&Bang Gallery and Olafur Eliasson’s studio, as well as a restaurant which shares a name with the building. The Marshall name comes from George Marshall, an American general whose plan to build up Europe’s economy after WWII was very beneficial to Iceland’s economic growth in the 1940’s and 1950’s.

The Living Art Museum

The Living Art Museum (Nylo) is a non-profit, artist-run museum and association, venue for events, exhibitions, performances, discussions and research. Founded in 1878, the Living Art Museum was a reaction to the government’s staid vision, at the time, of what constituted art and art history, giving ground-breaking artists a voice and a venue for their experimental art. The museum has an extensive collection of Icelandic contemporary art, based on donations by members and friends of the museum. The museum has, through the years, been at the vanguard of the Icelandic art scene but has also struggled with housing and financing. With a new permanent home in the Marshall building. The Living Art Museum is once again an inspiring venue for experimental art in Iceland.

Kling & Bang

The Kling & Bang ballery was founded in 2003 by a group of artists with a goal to present art that challenges the contest and content of creative thought. The Kling & Bang group has been behind some of the most exciting and innovative exhibitions in the past few years and with the grand new exhibition space, they can continue their exciting work.

Studio Olafur Elianson

Olafur Eliasson is an Icelandic/Danish artist, whose work has been exhibited in some of the most prestigious museums and galleries all over the world. Focusing mostly on sculptures ang large scale installations, Olafur’s best known work in Iceland is the honeycomb-like glass and steel façade of the Harpa Concert Hall. His studio in Iceland will be open to the public and work in progress as well as completed works will be on display.

Marshall bar + restaurant

Artists need to eat to and the Marshall building is also home to the Marshall restaurant + bar. In a building dedicated to contemporary and ground-breaking art, the food must be exciting enough to match. Luckily, the menu at Marshall is tantalisingly appetizing, with fresh Icelandic fish and other ingredients prepared under the influence of Mediterranean cuisine. Enjoying the fresh flaours of Icelandic seafood, while looking out the large windows over the harbour is going to be the cherry on top of your visit to the old harbour

A Guide to Saving and Investing

A Guide to Saving and Investing

Saving is very important, everybody knows, we believe we can say that with certainty. But how to save? Saving requires financial discipline. The following short article aims at elucidating some of the simple rules of saving.

Obviously, the more you make – the easier it is to save. But, it is possible to save on a moderate income. As the saying goes, “a penny saved, is a penny earned”.

One of the greatest living expenses is food. To save on groceries, it is practical to find a grocery store that charges less for produce. For example, in cities like Toronto, some grocery stores price their items in such a way that the bill they rake is as much as double than that of others. Coupons and buying in bulk can also be easier on the wallet.

An easy way to save is to only buy the things you truly need. In order to achieve this, it is helpful to have a written (or even a mental) list of items you want to buy before setting foot in the store. Marketing and advertising often influence spontaneous purchases and one ends spending much more than planned, and what’s more, on items that are unnecessary. Almost everyone has things in their apartments that are collecting dust, rarely or even never, being of any use.

Combining incomes with a significant other is another great way to save. Splitting the bills on rent, electricity, the Internet, groceries and so on, frees up 50% of expenses, funds that can then be saved. If you don’t have a significant other to move in with, an alternative route is to find a single or multiple roommates. Living with other people may slightly curtail your freedom and independence, but it can be seen as a sacrifice in order to save.

What to do with your savings? Photo by Elena - Jamaica, Montego Bay.

An important step in saving is opening a savings account. In Canada, the Government made it easier to save by implementing the Tax Free Savings Account (TFSA). Funds invested in this particular account, if properly invested, accumulate interest that is not taxed. Most banks have advisers who can guide one as to how to invest money.

Investing is a different, although related, subject altogether. In investing, there are two main personality types: risk-averse and risk-tolerant. As a general rule, the riskier the investment, the more likely it is to produce higher returns. For instance, GICs guarantee intact capital (so you will not lose the money you initially invested), but produce very low returns. An adviser will usually administer a questionnaire to determine the style of investment most appropriate for your goals. To illustrate, aggressive or conservative, capital growth or income generation.

The Rain - The Sun

The Rain - The Sun

The three men sat in silence inside their ThermaTech storm tent. Outside, an icy wind buffeted the shelter, threatening to tear it from its moorings. None of the men took notice; each had seen situations far more threatening than this one.

Their tent was stark white, pitched in a shallow depression, out of sight. Their communication devices, transport, and weapons were all state-of-the-art. The group leader was code-named Delta-One. He was muscular and lithe with eyes as desolate as the topography on which he was stationed.

The military chronograph on Delta-One’s wrist emitted a sharp beep. The sound coincided in perfect unison with beeps emitted from the chronographs worn by the other two men.

Another thirty minutes had passed.

It was time. Again.

The time. New Jersey. Photo by Elena

Reflexively, Delta-One left his two partners and stepped outside into the darkness and pounding wind. He scanned the moonlit horizon with infrared binoculars. As always, he focused on the structure. It was a thousand meters away—an enormous and unlikely edifice rising from the barren terrain. He and his team had been watching it for ten days now, since its construction. Delta-One had no doubt that the information inside would change the world. Lives already had been lost to protect it.

At the moment, everything looked quiet outside the structure.

The true test, however, was what was happening inside.

Delta-One reentered the tent and addressed his two fellow soldiers. “Time for a flyby.”

Both men nodded. The taller of them, Delta-Two, opened a laptop computer and turned it on. Positioning himself in front of the screen, Delta-Two placed his hand on a mechanical joystick and gave it a short jerk. A thousand meters away, hidden deep within the building, a surveillance robot the size of a mosquito received his transmission and sprang to life.

Though the latest glaciation had yet to reach its deepest cold, the sea level had already dropped hundreds of meters. In the coastal reshaping that resulted, the islands of Java and Sumatra had been joined with Southeast Asia to form a great shelf, and much of Indonesia had become a long peninsula. Similarly Australia, Tasmania, and New Guinea had been merged into a single mighty mass.

In this unique, temporary geography, there were places where the Asian landmass was separated from greater Australia by only a hundred kilometers or so.

(Rain, the novel by Elena and George).