Arlene Dickinson once used grocery money to invest in stock

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Venture capitalist Arlene Dickinson, best known for her role investing in startups on the CBC reality show Dragons’ Den, once used her grocery money to buy stock.

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Now the millionaire investor, author and businesswoman no longer needs to dip into household funds. She is general managing partner of District Ventures Capital, which is focused on the food and beverage, health and wellness and personal care categories.

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Before her rise as a venture capitalist, Dickinson started her investments off small, putting $500 (which was supposed to be her grocery money for several months) into International Business Machines Corp. (IBM) stock. She watched the stock like a hawk and sold after a month, “because I couldn’t take the stress.”

While that investment wasn’t for her, Dickinson was introduced to the idea of investment and has backed many Canadian and global companies as a result.

What follows is a condensed and edited interview with Dickinson, where she shares her thoughts about investing for people early in their investing journey.

FP: What did that first investment in IBM stock teach you?

Arlene Dickinson: Well, it was foolish because of the notion of getting rich fast. It happens to so many of us when we get in the markets in the first place that we think we’re going to make money quickly. You hear all these stories about people flipping things and making money quickly. It’s just not real.

But it got me in the door, thinking about investing, and it got me to meet my stockbroker because you needed a stockbroker then.

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I had a very long-term relationship with him as my broker and he was very good because he knew I didn’t have any money, but he hung in there with me. I put $100 in here and there every once in a while. Eventually, I had money to invest.

FP: What are your philosophies when it comes to investing?

AD: That same stock broker taught me three things. The first was that “pigs get slaughtered;” in other words, if you’re greedy, you’re going to lose. No. 2 was, “you’ll never go broke taking a profit,” which was basically saying never complain if you’ve made money. Then the third one was, “always leave some money on the table for the next guy.” That was all about making sure that you didn’t always try to sell at the top, because that’s also something that people do when they’re driven by greed. They want to sell out at the very top and that they haven’t made quite enough money yet. I still remember those three lessons he told me 35 years ago.

FP: What opportunities do you see for young people in today’s investment climate?

AD: I think that there’s definitely always going to be opportunity in the investment side of things. I think particularly now as the world is going through another shift, if you can wait until things start to get worse, then that’s always an opportunity. But you also have to have courage because when things look bad, that’s when most people want to pull out of the market. That’s generally when you probably want to enter the market. You have to have a certain personality that says, “I have hope that things are going to go back up because I believe in the fundamentals of the stock I’m buying and I believe in the fundamentals of the company.”

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I would say to young people: Just know a little bit about the industry you’re investing in and the company and do some homework and find out who their management team is and find out how the stocks performed and find out what their competitors are doing. Then, if the stock starts to come off because of market conditions or inflation or whatever is happening, be prepared to buy when other people are selling, because that’s generally when the opportunity exists. That means having some courage.

FP: How does the current investment environment differ from when you first started with your early investments?

AD: Technology has created a change in the retail market for sure and how fast transactions are happening. The big buyers that are out there, the institutional buyers, definitely control the market a lot more, I’d say, than the retail market used to. I think it’s different today. In some ways it can be considered more opportunistic because things will travel so quickly if something is happening. Things can go up and down in a nanosecond because people spread information so quickly and falsely, so you’ve really got to be careful what you’re listening to.

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FP: Do you have any tips for those looking to get into investing?

AD: People often go to the public markets when they think about investing, but I would say that the No. 1 rule is invest in yourself first. Sure, invest in public markets and in private industry, depending on how you want to diversify, but there’s a lot of opportunity backing entrepreneurs and getting involved with them — you just don’t have as much liquidity. … In the public market there’s more liquidity: You can sell quickly, so you can get in and out of it. In a private deal, you’re generally stuck until a transaction happens, but there’s a lot to be said for that, too.

But mainly, invest in yourself first. People forget that. They forget that the investment can be in their education, in their own homes, in their own businesses, in their family’s businesses. There’s lots to invest in that actually creates a lot of return in your life and people should not forget that.

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