Plus: Can big telecom learn to share? August 19, 2024 Sign Up | View online IN THIS ISSUE 8 min read 📱 CRTC’s (kinda) crackdown ☕ Starbucks’ new CEO 😌 Life insurance assurance Even if you’re not doing Tom Cruise-level stunts on the regular, life insurance might not be a bad idea. We’ll explain how to do it right. | Getty Images THE WEEK IN MARKETS We're back, baby! Remember two weeks ago, when traders were divided over whether that terrifying 12-ish-hour crash was a flash in the pan or a harbinger of bear markets to come, or perhaps even a recession? We appear to have our answer for now: all of the major indexes have already rallied back to pre-plunge levels, led by the tech-heavy Nasdaq, the most battered of the bunch during the Hot Sell-off Summer of August 5. It closed the week up 5%. The S&P: up 3.5%. The TSX: up 3%. There was also one promisingly big drop: the VIX, Wall Street's so-called "fear gauge," which plunged about 25%, is back to near-historic lows. What explains such a speedy U-turn? Lots of investors didn't get rattled by an uptick in unemployment and bought the dip instead, the panic selling stopped as fast as it started, U.S. inflation came in at a three-year low, and Walmart headlined a wave of strong earnings reports across the retail sector. WHAT HAPPENED LAST WEEK IMPORTANT Investors are betting big on September rate cuts. It might be the one conviction that hasn’t boomeranged this month. All year long, market watchers have been trying to speak interest rate cuts into existence, and all year long, the U.S. Fed (which tends to lead the way for the rest of us on fiscal policy) has stubbornly resisted. And now, with fresh data finally showing a dip below 3%, here we are. In fact, investors are anticipating not just one cut but a series of them starting this fall and totalling around 2%. The CRTC makes telecom’s Big Three an offer they can sort of refuse. The Canadian Radio-television and Telecommunications Commission ruled last week that Bell, Rogers, and Telus — which have a combined 86% market share — must offer smaller rivals access to their networks. The telecom watchdog’s goal here is to nurture more carrier options and lower our monthly phone bills by flashing its fangs at the Big Three, but experts fear the mandates might prove toothless. Why? All newly built fibre networks will be exempt for five years — an eternity for baby players to wait on hold — and there’s still no word on how much competitors will have to pay for access. INTERESTING Starbucks axes Laxman. After a 17-month tenure plagued by slumping sales, boycotts, union clashes, activist investors griping about burnt beans, a 30% plunge in stock price since November, and one infamously venti-sized Mad Money interview bomb, Starbucks CEO Laxman Narasimhan is out. His successor is a well-regarded turnaround artist: Chipotle CEO Brian Niccol, the exec responsible for wooing back customers after the chain’s food-poisoning debacle. Traders clearly think Starbucks has traded up: Niccol’s arrival gave its stock a 25% caffeine jolt and cost Chipotle a quick 8%. Once again, his job will be to work his woo-back magic. According to Bloomberg’s Amanda Mull, the coffee giant has alienated customers by focusing on drive-thrus over cozy cafes, and with staffing shortages that keep them waiting way too long for their flat whites. Did the stock markets crash this month because of … vacation? Yes! At least partially, anyway. A laundry list of factors caused the recent market carnage, but according to the Financial Times, we’ve overlooked a big one: too many OOO finance bosses chilling on the beach, leaving overmatched junior traders to rein in the chaos. Summer vacation, it turns out, has a history of catching traders with their Speedos down. All those execs scrambling back to work early, the FT further hypothesized, might also help explain why order was quickly restored. –Sarah Rieger THE FOMO INDEX by Stacey Woods IMPORTANT 🛒 Canadian Costcos crack down on membership sharing, so don’t expect any bulk snacks when freeloaders come over to watch Netflix. Source 🎵 TikTok adds group chat for up to 32 people, but if you have 31 friends, what are you doing on TikTok? Source 😈 Disney World building new “Villains Land” dedicated to Disney villains. Will feature a full-scale replica of the Disney boardroom. Source 🔥 Demand for Burning Man tickets is way down. People realizing they can have a bad trip in the mud anywhere. Source CRASH & BURN TO THE MOON 🌴 It’s called “Work From Home,” not “Work From Anywhere But Work”: 43% of Canadian remote workers not actually home. Source 🍨 Liquid Death releases hot-fudge-sundae-flavoured water. People unfamiliar with water, desserts sure to love it. Source 🎥 Deadpool & Wolverine passes US$1 billion in revenue. See what’s possible when enough people are desperate? Source 🐴 Michigan town that had a dog mayor just elected a horse mayor. Might eventually work their way down to humans. Source WHO CARES THE BIG IMPORTANT STORY BORING BUT IMPORTANT You (Probably) Need Life Insurance. And Your Work Policy Might Not Be Enough. One of the most consequential financial decisions you can make early in your tenure as a real-life grown-up has nothing to do with investing or savings or career decisions. It’s taking out life insurance. Not the most riveting topic. If the life-insurance industry practised honesty in advertising, its motto would be: It’s dull! It’s moderately expensive! It’s morbid! But just because something’s boring doesn’t mean it’s not worth doing — unless you don’t mind the thought of people you love living under a bridge, huddled around a barrel fire, cursing your name after you’re gone. To prevent that, we put together this little primer. How do I know if I need life insurance? If you have children or a spouse or anyone who depends on you financially, then life insurance is almost certainly a good idea. That’s especially true if you have debts that those nice people would be responsible for paying. And doubly especially true if you don’t have enough cash in the bank to keep doing your part to provide for your loved ones in perpetuity. What if I’m covered through my work? It might not be enough. How much is enough? To get a ballpark figure, multiply your annual income by 15. So if you pull in $100,000 a year, you’ll probably need at least $1.5 million in coverage. A better way to arrive at a number is the DIME formula, an acronym for “Debts, Income, Mortgage, and Education.” Add your debt; your annual income multiplied by the number of years your family will need it; the balance of your mortgage; and, finally, education costs for your kiddos. Sound complicated? There are online calculators that will help you crunch the numbers. Is there a certain kind of insurance I need to get? For most people, the answer is something called term life. You pay a fixed premium every month, or maybe every year, for a set amount of time — typically 10, 20, or 30 years. And if, God forbid, you should pass away within that window, the insurer pays a predetermined amount of money to your beneficiary (i.e., your spouse or loved ones). If you’re alive and well at the end of the term, the insurance company keeps the money. People like term life because a policy usually doesn’t cost an exorbitant amount if you’re reasonably young and healthy when you take it out, and it gives you peace of mind during the time when you need it most — that is, when you’re in your prime working years and your family is growing. You said for most people. What are the other options? The other major category is called permanent insurance. There are different types — universal life, whole life, etc. The biggest difference between these policies and term life is that they typically remain in effect for as long as you pay your premiums. In other words, there’s no set window of coverage, which means beneficiaries can get a big payout even if you make it all the way to great-great-grandparent status. Many permanent life policies also have a cash-value. It’s less than what you’ve paid in premiums, but if you cancel the policy, you get that money back. You can also borrow against or withdraw from your cash value while you’re still alive. That sounds so much better. Why wouldn’t we all get permanent insurance? Because it’s a ton more expensive. Like 10 or even 20 times more expensive. And the older you get, the fewer people rely on you for financial support. That’s why, for those who do get permanent insurance, it often serves as more of an investment strategy. You’re saving money that you can borrow against, and any earnings you get on your cash value, which can include interest or dividends, are typically tax-exempt. And at the end, there’s a guaranteed return on your investment. What should I ask brokers when calling around for quotes? For term life, be sure to ask: does the policy have guaranteed premiums? (You probably want that.) Also: is the policy renewable (i.e., you don’t have to take another medical test or reapply), and is it convertible (i.e., transferable to a permanent insurance policy)? Do I really need a physical to make it all happen? If you’re looking for a policy for less than $1 million, maybe not. Otherwise, you’ll likely need to get a medical exam. Fortunately, some insurers will arrange to have a nurse come to your house or office to do it. What if my spouse decides to murder me to get the cash? Sounds intriguing, but insurance policies come with a contestability period to prevent people from taking advantage of most sorts of fatal loopholes. OTHER VERY GOOD READS ⚾ How to Start a Professional Sports Team, Win Games, and Save the Town Now the Oakland Ballers need to survive. | The Ringer 🧘 The Cult of Wellness Othership, Nutbar and the expensive, obsessive quest for a perfect life. | Toronto Life 🌩️ How Close Are the Planet’s Climate Tipping Points?* Climate change could trigger events that are impossible to reverse. | The New York Times *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. POSTS OF WISDOM That's what you get when you try to date above your asset class. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Matthew Karasz (markets editor) 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. 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. 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