In My First Stock, we talk to Canadians about the first stock they owned and how the experience shaped how they invest today.
Raj Lala, chief executive officer of Evolve Funds
First stock: Canadian Imperial Bank of Commerce
I bought it in 1996, after taking my first job at AIC Investment Planning Ltd., which is now part of Manulife Investment Management. A well-seasoned sales rep from one of the mutual fund companies we worked with took me for coffee and told me I should consider investing in stocks of companies whose products I know and am familiar with. It was also an investing strategy I read about in a book by well-known American investor Peter Lynch. I was a long-time customer of CIBC, with a savings account and a student loan, so I decided to buy the stock.
I bought about $6,000 worth of CIBC shares at the time. It went against the philosophy of paying down your debt before you start investing, but I got excited about the opportunity to start buying stocks. I remember thinking when, not if, the stock doubles, I will sell half and use the gain to pay down my student debt.
It actually did double after about 18 months, so I sold half and paid off some of my student debt. I sold the other half a year later and used the proceeds to buy my first car, a used Honda Acura Integra.
It was a great experience. I bought bank stocks again in 2009, after the global financial crisis. Eventually, I migrated those over into ETFs [exchange-traded funds] in 2014.
What did you learn from the experience?
The Peter Lynch concept of buying stock in companies or products you’re using or others are using is very simple but makes a lot of sense. I also learned about the benefits of investing in companies with strong market share, staying power, and major barriers to entry for somebody else to come in. I often ask myself: Do I like the company, or do I like the sector? Most of my portfolio today is in ETFs, which makes sense, given what I do for a living.
What’s your advice for someone buying their first stock or ETF?
We’re in interesting times with rapidly rising inflation and interest rates and their effect on the stock markets. It’s probably been the first time that many young investors have faced a real challenge in the markets; up until the beginning of this year, we were in a long-term, secular bull market. We appear to be entering a recessionary environment, so investors need to look at companies or sectors that they believe will be more resilient. To me, that includes sectors such as health care, which historically has fallen much less and recovered much faster than the broader market in a recessionary environment. I also love technology stocks, even though the sector has been one of the hardest hit this year. It’s about picking the right companies. I think people will need to go into the weeds and find quality companies with staying power.
As told to Brenda Bouw
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