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Charles Vaillancourt, 56, is not quite a rocket scientist. But he’s close. His master’s degree in engineering had a concentration in space-station robots and led to a career in the tech sector. He’s now chief information officer for a satellite communications company in Montreal.
One could say Mr. Vaillancourt is a smart fellow. And it shows in the performance of his tax-free savings account, started in 2009 with contributions maxed out every year thereafter.
“My TFSA has now reached $670k,” he disclosed in mid-June. “It has only a handful of stocks, which were bought as contributions allowed – and then mostly held on to.” The list includes a bank, insurance company and two ETFs: one tracking the Canadian stock market and the other tracking the U.S. market. His gains on the holdings range from 50 per cent to 230 per cent.
But the “kicker” has been the position in Flex Ltd. (FLEX-Q), a global contract manufacturer of electronics products (once called Flextronics International Ltd). Its shares have climbed more than 900 per cent since 2015.
The run-up in Flex took its TFSA weight to more than 50 per cent. Still, it remains a low percentage of his total portfolio, which includes diversified and conservative investments in non-registered and retirement accounts. He will also have a pension in retirement.
Nonetheless, he decided to recently reduce Flex’s TFSA weight by half to remain disciplined in his investing approach. As he follows the “old adage” of buying low, sale proceeds will go into cash balances to scoop up some deals during the next market correction.
When Mr. Vaillancourt finds stocks selling at bargain prices, he spends time researching them, sometimes ignoring analyst opinions. More important for him is reading annual reports and company communications.
“But the secret ingredient, I would say, is the almost adversarial relationship with my broker,” he said. “It costs me a pretty penny, but with that cost, I got a lot of stock recommendations.”
He would write down his broker’s suggestions and then do his own research. There were times when he was advised to sell certain stocks but found the story in the annual reports was compelling so he held on. There were also times he bought stocks against the broker’s advice.
Ted and his wife are income investors – so how did their TFSAs get to $1.2-million?
Yet, Mr. Vaillancourt still gives a lot of credit to his broker. They did agree, after all, on the majority of the investment decisions, and some of the advice provided by the broker delivered good gains.
In particular, he recalls his broker calling during “a few cold-sweat-inducing corrections,” excited by all the good deals to be snapped up. “I have to recognize that I would not have had the stomach to make those purchases. That’s where I see the value in my broker.”
But there is often an element of good fortune when a portfolio outperforms the market. Looking back, he sees that “it was a stroke of pure luck” that Flex was unexpectedly swept up in the recent AI craze, which enabled improvements to its manufacturing process.
“AI was clearly not part of the investment thesis when we started buying the stock around 2012. We bought because the sector was promising and Flex was the most undervalued stock in that sector.”
They stuck with it and added to the position over time until the recent decision to scale back its TFSA weight, with the last purchase taking place in 2024. “But it still would have been a very good investment even without the AI bubble.”
Mr. Vaillancourt has started using AI to assist with his investing. For example, he clicked the Gemini button on Google while viewing his portfolio on the bank’s website and asked: “What do you think of this stock portfolio for a 56-year-old Canadian who plans to retire in two to three years?”
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Some of the advice he was already working on, such as shifting from a growth focus to capital preservation. However, the answers to his questions generally left him “amazed at how easy it is to generate incredible insights.”
He uses AI mostly to get input for conversations with his broker and to study individual stocks. “But I can see others choosing to drop their full-service advisers and use AI instead,” he said.
Mr. Vaillancourt‘s stockbroker, whom he had been working with since the late nineties, recently passed away. “That was a shock and made me realize that after having saved all my life and never spent a single penny out of my savings, perhaps I should indulge a bit more.”
What an expert says
We asked John De Goey (CFP, CIM, FP Canada Fellow), a portfolio manager with Designed Wealth Management, for his thoughts on Mr. Vaillancourt’s portfolio.
Mr. Vaillancourt has a remarkable backstory. In reading through his commentary, I couldn’t help but marvel at both his commitment to a process and his remarkable success. The important thing to note, which he seems to recognize at least implicitly, is that there has been a strong dose of good fortune that has been part of the narrative. Correlation is not necessarily causation.
My impression is that Mr. Vaillancourt has “made it” in terms of financial independence. His tolerance for risk seems to be quite high, but I wonder about how long anyone in his situation should simply let his winners run.
If it were me (and I think this is true for most people), I’d say this juncture represents an opportunity to take risk off the table by repositioning some of his massive gains into something more stable. Some call it “winning by not losing.”
It seems all that’s needed to take a victory lap at this point is to move to something more conservative to preserve his good fortune in case the market turns the other way.
Larry MacDonald is the author of The Shopify Story and blogs at Shopify’s Journey.