For This Investor Its All About Leverage

The Globe and Mail
Published: August 2007

AGE: 35
OCCUPATION: Vice president of eMotion Picture Studios, based in Burlington, Ont., avid investor, fifth-degree black belt in tae kwon do and former international champion.

An entrepreneur who broke into trade show video production by shotting and editing the 2003 Arnold Fitness Weekend in the United States for the now California Governor. Mr. Wilson stresses living frugally, owning real estate, maximizing registered retirement savings plans and picking bargain stocks.
"Diversify. The stock market is great but there is no better leverage on that planet that I know of more than real estate." Mr. Wilson owns a principal residence and an investment property: a condo in downtown Toronto.

From living in his in-laws' basement with his wife, son and newborn daughter in 2003, Mr. Wilson has come a long way. That year he opened an online trading account and purchased out-of-favour McDonald's Corp. initially at $12 (U.S.) a share, and continued to add to his holding. "I bought stock every chance I could and also utilized leverage to buy more stock. Over the next 12 months the stock shot up and I sold it as it approached $30. I invested approximately $7,500 in my first year. By picking a winning stock and utilizing leverage to the max, I was able to turn that into over $40,000. I used this money as a down payment on my first house, which enabled me to move my family into a much better environment."

"In 2004, I had a 600-per-cent return on investment by utilizing leverage to the max and only picking a handful of stocks which all did very well," Mr. Wilson said. "In 2005 my bubble burst and I found out that I was not the Warren Buffet I thought I was. I had a huge loss on CoolBrands that was compounded by the fact that I was leveraged to the max on that stock;" purchased for $9 (Canadian) and sold on margin calls for as low as $2.50. "In 2006 I diversified what was left of my portfolio and received 18 per cent for 2007 in stock gains."

Mr. Wilson's company has branched into search engine optimization and now considers individual companies' presence on the Web before he makes any investments in them.
McDonald's: "It was market overreaction that the stock went down as much as it did." He also utilized his knowledge of the U.S. Fast food industry to make a 22-per-cent return on Wendy's International stock. "After Dave (Thomas) died there was a market overreaction to Wendy's and I made a decent return over six months. They had good solid management and they had Tim Hortons."

"I used to be very aggressive, then I lost some money on CoolBrands and ever since then I am much more conservative." Mr. Wilson lost $30,000 on the stock in a few months.

David Chilton's the Wealthy Barber. Mr. Wilson's riff on the investing classic is to "pay your investments first." Rather than spend them, any raises or cash windfalls should go into your investment account.