Because, hey, we haven’t had one of these in a while. This might be fun.

I’m looking to make money by selling some of my old things. Do you have any suggestions?

Phil

Look, I’m not opposed to people selling off their unused crap. Lord know that I have enough of it, and I don’t really have much junk. If you ever want a wake up call of just how much unnecessary crap you own, just go live in a foreign country for a while. You’ll realize that you only brought over a suitcase full of stuff, and you still don’t even use it all. And then you haul it back across the ocean because, hey, no sense throwing it out.

So I get it. I really do. Selling your crap on Kijiji is a perfectly acceptable way to meet potential serial killers in public places (or at home, if you’re frisky). But for the love of God, stop tricking yourself into thinking you’re making money. You’re not. At best you’re selling assets, and even that’s a stretch. It takes a special kind of pathetic to think of clothes and televisions as assets.

When it comes to buying stuff, you exchange money for an item. Unless you’re some sort of super consumer who knows all the good deals, you’re not selling the item for anywhere close to what you paid for it. But since the $100 original price left your wallet months ago, $50 seems like found money in comparison.

Sure, you could make the argument that you “enjoyed” the use of the item for those months, and therefore the investment is justified. Don’t scoff, the whole “no college education is wasted” thing comes from the same mindset. But if you really enjoyed the item, why are you selling it?

As we all know, the attitude of buy all the things (or vacations, which have put enough people in the proverbial poorhouse as well) often goes hand-in-hand with crippling consumer debt. Which is why I have a great solution:

Be a smarter consumer in the first place.

As for where to sell your stuff, it’s not hard. Locally for the big stuff, eBay for the little stuff.

I’m looking to buy Suncor or Imperial Oil. Oil prices are down, so it’s time to load up, right?

Rob

I like where your head’s at, Robby boy. But I wouldn’t buy the two biggest oil companies in Canada.

As we all know, the health of oil companies are based on the price of crude. At this point, crude has three separate paths it can take:

1. Crude can keep going lower

2. Crude can flatline at $60

3. Crude can start creeping up

If you think crude is going to keep going lower, it’s time to avoid the whole sector. Suncor and Imperial Oil will survive the downfall, but that doesn’t mean their shares will be a good investment. They’ll just fall less than the alternatives, like Penn West.

If you think crude flatlines at $60, much of the same thing happens. The strongest in the sector will probably go up a bit, but not nearly as much as the rest of the market. At that point people might start taking what little gains are offered, pushing back down the price.

Most investors think crude will eventually recover, and are making bets accordingly. If crude goes back to $75 or $80 in 2015, the so-called stalwarts will be higher. But the high-risk laggers of the world will go much higher. Remember when I talked about coin flip investing? Oil right now has that kind of risk/reward profile.

Even if you’re not into turnaround stories, there are still some cheap big oil companies. Husky has a decent enough balance sheet, and so does Cenovus. But they’re in the oil sands, which is now considered a high cost area (true, but it’s all up front cost). And if you look hard enough, there are debt free mid-cap players with plenty of cash.

I’m looking very closely at a couple of other mid-cap names currently, and will share my findings.

Littlest Hobo theme song — great song, or greatest song?

Vanessa

She loves this song. And how can she not? It’s great.

 

You rag on dividend growth investors on Twitter sometimes. Why do you care so much?

A concerned follower

It’s not that I hate dividends. I just gave y’all a portfolio full of stocks that pay them. I’m happy to invest in stuff that regularly pays me to own it, provided that I think I’m getting the assets at a discount to fair value. Reitmans is one of my largest holdings, and it pays me a nice enough dividend.

But what gets me is when these guys do nothing but stay in their own little cocoon and celebrate the GODLINESS of the almighty growing dividend. These people have the time, see, because they don’t actually bother to research stocks. They look at the P/E ratio of Exxon Mobil, see it’s trading at 12x trailing earnings, and say OH HO HO I’M A GOING TO THE STORE TO BUY ME SOME DIVIDENDS, MARTHA. There’s no thought put into it. It’s almost as if the dividends are just there, waiting to be picked off the money tree.

The best part is when they back test their theories. They choose stocks that have done well over the last 10, 20, or 30 years, compare them to the S&P 500, and once they discover the inevitable outperformance, it gets used as a justification for buying these stocks going forward.

In response, I present this.

Screen Shot 2014-12-12 at 1.31.16 AM

 

That’s a 20-year chart for Citigroup, from 1986-2006. We all know what happened after that.

Apparently I’m the only one who used to read dividend growth blogs back in 2006-07. EVERYBODY was recommending Bank of America and Citigroup.

That’s the problem with back testing your theories. It’s one thing to try and figure out what works. But it’s completely another to just keep plugging in numbers and scenarios until you find something that fits your narrative.

Remember, looking forward is far more important than looking behind. I’m not saying that you need to identify the freaking housing bubble in advance, but just keep in mind the risks a company has going forward. No matter how good the investment looks at the time, those risks still insist.

Tell everyone, yo!