Reflecting on a few interesting reads and listens over the past week
This was a fascinating read into the business model behind recruiting international students in Canada. It describes their journey from poor villages with limited opportunities in countries such as India, rural China, and several parts of Africa. They are essentially sold the dream of becoming a permanent resident in Canada by enrolling in a post-secondary college/university. The entire process is facilitated by agents who are paid on commission by Canadian universities and colleges. To give you a sense of how big this business model has become – the article explains that international students are responsible for almost 40 percent of all tuition fees across Canada. I suspect that number is a lot higher as you begin to remove Tier 1 universities/colleges that attract most of the local students.
The article dives into many of the challenges that these international students face. To start, these students often take on significant amounts of debt (e.g. borrowing against their family’s property) to pay for the tuition in Canada and work full-time jobs to pay for necessities while studying in Canada. Most of these international students are often exploited – working for jobs that are below minimum wage with no resemblance of workers’ rights due to their temporary visa status. The affordability of housing also forces them to get creative and pay for illegal rooming houses that take on 10-15 people (often more) in a single-detached home. The pressures of trying to graduate from school, get paid, and send money back home have led to a myriad of mental health problems amongst international students – sadly resulting in an increase in drug abuse and suicide cases.
In my opinion, the influx of international students goes beyond propping up a number of post-secondary institutions across Canada. These students are also a huge driver for Canadian immigration as a whole. If you take a look at real estate surrounding colleges and universities, they all tend to be propped up by international students. Once these students graduate, they become a key addition to the Canadian workforce – particularly minimum wage jobs.
The current/pending labor shortage in North America only increases the pressure to improve immigration – growing the need (and therefore incentive) for the system described above. Platforms (like ApplyBoard – which just raised $375M at a $3.2B valuation) will continue to emerge and intensify this process as well. Whether it’s the government, post-secondary institutions, or individual agents, the incentives are all aligned to exploit the hopes and dreams of immigrant students (and families) looking to build a better life.
Making the Boring Choice
I want to build off of a post by Joshua Brown – where he describes a new form of Fear and Greed pushing society today.
“The Fear I see these days is a fear of becoming a relic of the past. A fear of seeing your peers catapult themselves ahead of you. A fear of missing out, which has been well documented and has become the spirit of the times we live in…I would label this type of fear Insecurity. The fear of being left behind and looking like a fool.
Even the people winning – that’s not enough for them. The money is beside the point. They also need others to feel the pain of not having been right. I told you so, should’ve listened to me. The public victory laps and displays of haughtiness seem almost purposely staged to provoke hostile reactions from the crowd.” Joshua points out the overwhelming sense of Envy seen amongst people.
The combination of insecurity and envy along with the heightened sense of visibility we have into each others’ lives has pushed many of us to become an investor with the perceived need to constantly take significant risks, follow the crowd and outperform people around us.
As we zoom out and look at society as a whole, we’ve created an atmosphere that is similar to a massive multiplayer video game. We’ve also built an unhealthy fascination around the exciting plays – where one can and should earn 100%+ returns in a few days. We see this all the time on social media (Twitter, TikTok, Instagram, Reddit).
The idea of staying disciplined and making the more obvious plays that could yield a stable return profile (even if it’s effortless) feels ludicrous. It’s like going to a party and trying to read a book.
In my opinion, this has actually created an opportunity in making boring choices like investing in companies with a strong history of high ROICs and moderate growth (vs. chasing speculative stocks) or building a portfolio of single-family home rentals (vs. flipping houses). While it may require a certain level of patience, the effort to return ratio is far better. You’re also far more likely to improve quality of life – which is presumably the initial reason why people entered this frenzy in the first place.