Plus: a margin call mess August 25, 2025 Sign Up | View online IN THIS ISSUE 8 min read 🚗 Car costs 💪 Tariff toss 💸 Margin madness Used cars are so expensive now that even this little fixer-upper is selling for $12K in Saskatchewan. | Walt Disney Pictures About last week’s edition of TLDR: perhaps you noticed the “interesting” section of the newsletter ran twice, mistakenly replacing our “important” news items? Oops-slash-sorry! We had a technical SNAFU. You can read the corrected version, which reports on data centres and our K-shaped economy, here. And a programming alert: this newsletter will be hitting your inboxes on Tuesday next week, thanks to Labour Day! Enjoy the long weekend. Now, on to this week’s edition. —The Editors THE WEEK IN MARKETS All eyes on Jackson Hole The week began with a big selloff triggered by a few words about AI from Sam Altman — well, one word in particular: "bubble" — and it ended with a big rally triggered by a few words about interest-rate cuts from U.S. Federal Reserve Chair Jerome Powell. Powell's remarks came during his annual late-summer speech in Jackson Hole, Wyoming, and he never actually used the word "cuts," but the takeaway was clear: the central bank is more concerned about the softening U.S. labour market than tariff-driven inflation, so expect a quarter-point rate cut in September. U.S. dollar borrowers exalted, the markets lit up... and everyone moved on to speculating about why Powell reversed himself, whether he waited too long, and how much a certain implacable president had gotten into his head. THE CHART OF THE WEEK WHAT HAPPENED LAST WEEK IMPORTANT Did Air Canada’s CEO blunder into giving labour a “once-in-a-generation” deal? Over a dramatic few hours last week, flight attendants went on strike, the government ordered them back, the union refused, then Air Canada’s CEO went on BNN Bloomberg and admitted that he’d made no provisions for stranded flyers because he expected the government to shut down the strike. It was a classic case of saying the quiet part out loud, and it appeared to fuel what happened next: a major concession on a long-standing labour demand — some payment for work done while on the ground. The union is also suing the government, arguing that Ottawa unfairly quashed a constitutional right to strike. Canada drops another elbow. After dumping the DST in June, Ottawa is now throwing the U.S. another bone: scrapping retaliatory tariffs on $30 billion of CUSMA-compliant goods. As Bloomberg reports, Canada was initially “one of the only countries to swiftly retaliate against U.S. protectionism,” but as we draw closer to reviewing the CUSMA trade deal, the feds seem to be de-escalating in the hopes the U.S. will do the same. INTERESTING A 22-year-old millionaire gets slammed for his WSJ op-ed slamming work-life balance. Emil Barr claims he built two companies valued at US$20 million by “eliminat[ing] work-life balance entirely and just work[ing],” and it all sounds reasonable-ish, until he reveals he “gained 80 pounds, lived on Red Bull and struggled with anxiety” — which might explain why the op-ed went viral (more than 2,000 comments so far!) and sparked a feverish discourse between the “rise and grind” and “dude relax” communities. Queer tech founders in the U.S. are eyeing moves to Canada. Canada’s tech-sector brain drain is well-documented, but according to BetaKit, that trend could be reversing for LGBTQ+ entrepreneurs. Multiple execs said that the Trump administration’s DEI rollback has frozen their fundraising, so they’re considering moving their companies north. “Investors put their hands up and turn away as soon as they see that there’s anything queer,” one founder said. LGBTQ+ founders punch above their weight, creating 36% more jobs and generating 114% more patents, according to data from startup databases like Crunchbase and PitchBook. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🤖 Research shows AI is biased toward material written by other AI. They’re sick of humans always writing those dumb stories where “man triumphs.” Source 💸 CRA wants to impose mandatory oaths and fines for lying to them. But they will let you write off regular donations to your swearing jar. Source 🧪 Australian scientists crack how to turn forever chemicals in water into fluoride. Protestors need only make slight adjustment to their signs. Source 🤗 “Job hopping” trend replaced by “job hugging.” Trendsters say it’s a must-have for the equally stylish “life clinging.” Source CRASH & BURN TO THE MOON 📺 MSNBC announces it will change its name to MS NOW. MS, MSG, MS-13 all seek to distance themselves. Source 📫 Recent deluge of Canada Post delivery notifications blamed on computer glitch. Obviously, multiple successful deliveries wouldn’t be Canada Post. Source 📖 Cambridge Dictionary adds over 6,000 new words, including “skibidi” and “tradwife.” Left out “oxfording,” which means “consulting a proper dictionary.” Source 🎛️ New Spotify tool lets you fade songs in and out, making the few people who still weren’t DJs into DJs. Source WHO CARES THE BIG IMPORTANT STORY LEVERAGE A CEO Just Lost $82 Million in a Margin Call. It Taught Us a Valuable Lesson Last week, amid a lot of big Fed-related headlines, an especially curious news story caught our eye about a telecom CEO named Dave Schaeffer. For years, Schaeffer made what seemed like sound investment decisions, but he’s now learning a very painful lesson about the potential hazards of using margin — that is, buying assets with a little bit of your own money and lots of borrowed money. And his situation may not be totally unlike yours. Here’s what happened: in 1999, Schaeffer, the son of a taxi driver, founded the internet provider Cogent Communications. The company soared, and Schaeffer was savvy. As he amassed wealth, he expanded into real estate to diversify his investments. Schaeffer borrowed money — lots of it — from big banks, including JPMorgan Chase and RBC, to buy new buildings, and he used his giant stake in Cogent as collateral. He also leveraged his old buildings to buy new ones. Which is how, over three decades, he amassed a real-estate empire of 42 complexes. His problems began during COVID, when the work-from-home shift left him with insufficient office revenue to cover his tax bills. His you-know-what sandwich gained another patty of terribleness this year when Cogent’s shares plummeted by more than half. The fall raised doubts for JPM and RBC about whether Schaeffer had sufficient capital to repay his loans. Hence earlier this month, the banks did a good ole-fashioned margin call, demanding that Schaeffer fork over assets to meet their capital requirements. So far, Schaeffer has given up 84% of his stake in Cogent, totalling US$82 million. Which is extra painful, given that he hasn’t taken a salary in a decade in favour of taking stock awards. Schaeffer is in a pickle, with no clear way to repay his loans, since demand for commercial real estate is soft and Cogent’s stock is still in the toilet. He told Bloomberg, “I kind of feel like those guys in the trash compactor in Star Wars, where the walls are closing in from both sides.” Here’s the lesson: margin is a powerful tool, and for years Schaeffer used it effectively. He made good investments, borrowed against his assets, and used the profits to invest further. But when the inevitable bump in the road came, his losses cascaded and put his entire fortune at risk. Odds are slim you’ll find yourself owing millions to two megabanks, but everyday traders can land in comparably hot water. By using margin, you can make mountains of money if you invest in winners, since margin amplifies your gains! (Here’s an explainer if you need it.) But, since margin also amplifies your losses, you can vaporize vast piles of cash. That’s because if your investments lose value, your lender/brokerage can (1) demand that you put up more money, or (2) sell your positions to ensure they don’t lose the money they lent you. Schaeffer basically found himself in that situation. It’s hard to be terribly prescriptive about how much margin is too much, because the answer hinges on your risk tolerance. But you should really know what you’re doing before you take on a meaningful amount, especially if you’re invested in just a few different things. THE UPSHOT The unfortunate thing for Schaeffer is that he did a lot of things right: he bet on his company rather than take huge cash payouts, he built a quality product, and he (sort of) tried to diversify. But ultimately he made the same mistake as a lot of everyday traders: he concentrated his portfolio on a high-returning asset — commercial real estate — and he bet big on it with margin, wrongly assuming that prices would rise forever. He no doubt would have made less money had he diversified further into lower-risk assets, and he surely wishes he had now. It’s hard to build a real-estate empire by taking the slow, boring, highly diversified path to wealth, but it’s also a lot easier to stay out of the Star Wars trash compactor. —Jared Sullivan OTHER VERY GOOD READS 🏙️ The Condo Crash Profits got big, condos got smaller, and now the bubble has popped. | Maclean’s 🧹 The Big Business of Clearing Storm Debris When cleaning up creates an even bigger mess. | Grist 🏥 Performance Through Pain The health-care CEO who broke his neck and bounced back. | Invest Like the Best THE WISDOM OF SOCIAL Oh, so that’s what they mean by seed money… THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Maude Campbell (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Eva Grace Clement Cruz (editorial producer), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), and Devin Friedman (editor-in-chief). Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE TLDR is offered by Wealthsimple Media Inc. and is for informational purposes only. Any views expressed are those of the individual author and/or of Wealthsimple Media Inc., not of Wealthsimple Financial Corp or any of its other subsidiaries or affiliates. The content in TLDR is not investment advice, a recommendation to buy or sell assets or securities, nor any other kind of professional advice. 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