Cold Showers Are a Thing? Come on, Guys

Cold Showers Are a Thing? Come on, Guys

Back in the day, I read the Early Retirement Extreme book, which mostly is just a testament of how smart the author thinks he is. I suppose there are some tips in there, too.

Aside: the favorite part of the book was when the guy hinted for about 200 pages on how good his investing acumen was and then he just glossed over it by saying “investing is so easy for me I don’t even have to explain it.” OH BABY THAT’S GOOD BULLSHITTIN’.

Anyhoo, one of the suggestions from that book was to work on limiting yourself the basic necessities we’ve all decided are needed. For instance, you should turn your heat way down and then sleep in a tent in the living room. The tent keeps heat in, see, which frees you from heating the rest of the house you don’t use.

I swear this was an actual suggestion! Made with a straight face and everything!

Another suggestion was the one we’re going to focus on today. Everyone should take cold showers. Not just for the savings, though. But mostly so they can push their bodies and prove they’re no match for the MAN who’s constantly trying to keep us down. And too warm.

Yes, really. We’re going to be talking about cold showers. And not the kind I have to take after a Taylor Swift music video, either.

The FIRE crowd strikes again

Look, I’d love to stop ragging on the FIRE crowd. I really would. And in their defense, most of them are perfectly nice people who would laugh in your face if you ever suggested they start taking cold showers to save money. But there’s a persistent small minority that insist on doing this kind of dumb stuff to retire 14 minutes earlier.

(Italics man is telling me it would be a bad idea to show the exact tweet that motivated this. Jerk.)

One of the big knocks against the FIRE crowd is when they start making huge sacrifices in order to achieve this dream The Early Retirement Extreme guy and his sleeping in a tent is just one example. A certain facial hair blogger rides his bike everywhere all while mocking people who drive. Then he goes and buys an electric car, apparently without irony. Cold showers are another.

Then, one member of the group gets their story picked up on a major media outlet. The commenters on that piece focus on whatever outrageous thing is being done to save money. This is by design, of course, and everyone’s in on it. Then they retreat to their own blogs and complain about how the haters “don’t get it” and are “jealous.”

Let me set the record straight. You don’t have to take cold showers to retire early. Why? Because they don’t matter.

The number one thing you can do to make all of your financial dreams come true is earn more money. Increasing your top line is, in theory anyway, limitless. Most of us don’t want to work 16 hours a day, so we find the highest paying job we can and turn to passive income to make us money while we sleep.

Next, you need to cut expenses. You might move to a small community like we did. Or you can live in a place much smaller than average. Moving close enough to work to walk will usually end up saving you a bunch of money, too. And for a lot of people (myself included), renting likely ends up cheaper than buying. Combine a bunch of these big picture things and you end up saving a lot of money. Potentially a thousand dollars a month. Or even more.

Meanwhile, how much is taking a cold shower going to save you? We’re talking about $10 a month, tops.

I can’t believe I’m saying this, but let’s think about showers for a second here. Is it really the hot water that costs the money? Or is it taking a 10 minute shower because the water feels good? If it’s the latter, good news! I have a solution that doesn’t involve freezing your balls off to save literally a few bucks.

God let’s wrap this thing up

The important lesson here is you only have to sacrifice a certain amount to make your financial dreams a reality. If you’re really considering taking cold showers to save $100 a year, find a way to earn $200 more instead. You’ll be happier in the long run.

The Somewhat Crazy Tale of My AutoModular Investment

The Somewhat Crazy Tale of My AutoModular Investment

I promise, this will be the last one of these posts for a while. P.S. please read how my Danier Leather investment didn’t end up being a total disaster despite the company entering bankruptcy protection.

Let’s recap. I purchased 3,500 Automodular shares back in 2013. Here’s where I wrote about it. Long story short, I bought 3,500 shares at an average cost of $2.25 per share.

The company eventually lost its only customer (don’t worry, I knew that going into the investment) and languished as a zombie company. It just sort of existed and didn’t do anything. Shareholders were slowly losing out because it was maintaining its listing on the stock exchange and paying top execs to still work, albeit at a greatly reduced salary. Still, money was going out the door at a slow pace, which is never good.

The main reason for not just shutting down and returning money to shareholders was an outstanding lawsuit launched against General Motors after that company severed its parts agreement back in 2012. AutoModular was seeking $20 million for breach of contract. These things move slowly. The original lawsuit was filed back in 2015 and it didn’t actually get settled until a few months ago. More on that, later.

So what happened?

Let’s start back in 2015, when the company announced a tender offer for up to $15 million worth of shares. That was about a third of the market cap at the time. The company offered to pay between $2.55 and $2.65 per share. It would buy all the shares at $2.55 first, then move onto the ones offered for $2.60. If there were any left after that, it would pay $2.65. This is a dutch auction type of buyback. The other kind is when the company just offers to pay a set price.

I was enticed by this offer, so I placed a call to my broker. I won’t say directly which one it was, but it rhymes with Wu Braid. I connected with a very helpful rep who informed me there was no record of any such tender offer.

I couldn’t believe it. I gave the guy specific directions on how to find the offer online. He didn’t care, telling me that if his system didn’t have record of it then it might as well not exist. Fuming, I hung up and abandoned the whole exercise. Yes, I am a moron.

Aside: Not all of my shares would have been tendered in the auction, but most of them would have been. I probably would have sold the few stragglers in the open market shortly afterwards. I’m guessing my sale price would have averaged $2.60 or so.

The end

So I held onto my shares and watched them slowly sink down to what I paid. I remember trying to sell for $2.45 at one point but couldn’t find a buyer.

Then, at around this point last year, news. Automodular announced it had agreed to a reverse takeover from a company called HLS Therapeutics, which looked to me like a miniature version of Valeant or Concordia Health Care. Basically it acquires drugs from existing pharmaceutical companies and milks that sweet cash flow. It then uses that to take on debt and buy more drugs.

Note this might be wrong. This shows how much I researched this new company.

The terms of the agreement were that every Automodular share turned into 0.165834 share of this new company. Automodular holders would also get one preferred share for each existing common share, which would be their share of any winnings from the GM lawsuit. I ended up with 586 shares of the new company and some preferred shares which as far as I can tell have a par value of $0 and don’t trade on a stock exchange. In other words, I’m stuck with them.

Then, more news. Earlier this year (again, I’m too lazy to look up exact dates), Automodular announced a settlement with GM. After lawyer costs and whatnot, Automodular shareholders would be getting $6.3 million from the GM lawsuit. There would also be $0.7 million placed in an escrow account to cover any potential unforeseen costs. This money will be given to preferred shareholders in 2020 if there’s any left.

This translated into a $0.65 per share payout for your’s truly. Now we’re getting somewhere.

Finally, there was the matter of selling my HLS shares. I waited patiently for months for a good time to sell, but they kept trending a little downwards. Let’s throw up a chart. Note the end of the chart, when SEXY TIMES started to happen.

I wish it was up 545%.

You can ignore the first half of that chart. That was from when the shares were still Automodular. You can see the big spike, when the new company started to trade. The shares trended downwards until a couple of weeks ago, when they went sharply higher. I sold into that strength, getting out at $14.80 per share.

The best part? I still don’t know what caused the big spike. I’m not going to find out, either. That’s how regret happens, people.

Remember, each Automodular share was about 1/6th of a current HLS share. The result isn’t nearly as good as it looks.

Let’s break it down. I got:

  • $0.18 per share in dividends
  • $0.65 per share in lawsuit proceeds
  • $2.45 per share from the sale

That works out to a total of $3.28 per share. I paid $2.25 per share, giving me a profit of $1.03 per share. In total, I made a 46% profit.

The only problem? It took five years to get there. That works out to a little over 8% a year. That’s not a disaster by any means, but it’s not great either.

The bottom line

Automodular is the perfect example why I don’t do special situations stuff much anymore. Sure, it worked out, it just took a long-ass time to get there. I’d rather buy boring stocks I don’t have to keep an eye on. These days I mostly just log into my accounts every few weeks and reinvest dividends. It’s a much nicer existence, even if it doesn’t provide blog fodder like this.

Suze Orman Just Trolled The FIRE Community

Suze Orman Just Trolled The FIRE Community

You probably already heard about this, but let me clue you in if you aren’t aware of the latest drama in the ol’ PF-o-sphere.

Suze Orman (you might remember her from that time I was on her CNBC show) came out of retirement with a bang by appearing on the Afford Anything Podcast. Suze’s appearance was supposed to be used promote her latest book, but America’s favorite lesbian financial guru went off the rails and bashed the living crap out of the financial independence/retire early movement (FIRE).

Some choice quotes are as follows:

“If you only have a few hundred thousand, or a million, or two million dollars, I’m here to tell you … if a catastrophe happens, if something happens, what are you going to do? You are going to burn up alive.”

“Two million dollars is nothing. It’s nothing. It’s pennies in today’s world, to tell you the truth.”

“You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime.”

Basically, Orman’s argument boils down to this. Having a mil or two in the bank doesn’t provide nearly enough of a safety net. Early retirees have the 4% rule and whatnot behind them, but they forget about very real risks like having to care for a disabled family member, having an expensive major illness, or needing long-term care themselves. In any of those scenarios, the early retiree quickly runs out of money.

Naturally, the FIRE community defended themselves with all the might of a certain Supreme Court Justice (TOPICAL!).

They pointed out that if anyone is prepared for such outcomes, it’s the folks who found a way to save up seven figures in a short amount of time. Sure, running out of money is always a possibility, but if that ever became a risk they’d simply go back to work. And so on. To be honest, the rebuttals were pretty boring. Suze brought up the same points everyone else has and they were easily rebuked.

Where the FIRE community failed

Long-time readers know I’m not really on the ol’ FIRE bandwagon. I lurve the idea of financial independence, even though I’m living proof it’ll mess you up. Your patience for crap will go down once you hit whatever your magic number is. Trust me.

I just hate the retire early part. Many early retirees keep busy by blogging, which is just swapping one career for another. There’s nothing wrong with that. Hell, I was a professional blogger for years. But let’s not piss in each other’s ears and say it’s raining. Even part-time bloggers aren’t retired. They’re simply free to pursue whatever they want. That’s great, but it’s not retired.

But here’s the deal, at least from my perspective. Suze brought a bunch of great points to the attention of a much larger community. And instead of acknowledging her legitimate points, they attacked her personally.

Go ahead, read the comments on that post I linked to earlier. They’re amazing. Many of them accuse Suze of not understanding the FIRE movement or the math behind it. Those especially made me laugh. The guy who pointed out the math behind all this titled his article “The Shockingly Simple Math Behind Early Retirement.” And Suze Orman, one of America’s best financial minds doesn’t understand it? Really? It’s not that hard of a concept, guys.

We also have a bunch of FIRE bloggers who have seen their index funds do nothing but go up and to the right for the better part of a decade. These people had barely graduated university the last time the market hit the shitter. Many of these guys are going to capitulate during the next 25%+ downturn. Some are even going to go back to work. Mark my words.

Speaking of going back to work, do these people realize how hard it is getting a good job at 45 with a decade-long gap on their resume? Talk to some stay-at-home moms sometime, guys. It’s not as easy as showing up the day the nuclear plant opens.

Let’s wrap this up

Ultimately, Suze’s point about early retirement was “shit will happen. Get a helmet.”

Early retirees say they’ve already planned for this. Some have, but many haven’t. It’s going to be interesting to see what happens to these folks as they try to “retire” for four or five decades. I believe most will end up just fine, but mostly because they operate small businesses that generate additional income (i.e. blogs).

But at the end of the day, here’s the lesson you should take away from this. Everybody is talking about Suze Orman right now. She took something that she’s never covered before and made it all about her. I didn’t care about Suze’s early retirement opinions two weeks ago. Nobody did. And now I’m writing a post about it. Amazing.

She successfully trolled the whole FIRE community. Suze Orman is a g.d. genius. I couldn’t be happier.

The Crazy Tale of Danier Leather’s Bankruptcy

The Crazy Tale of Danier Leather’s Bankruptcy

Long-term readers might remember my investment in Danier Leather, which, at the time, was a struggling retailer that sold leather coats, purses, handbags, and so on. Whips, probably too. OH I’M BAD.

The company had a tradition of slowly buying back its shares via tender offers, an outcome I viewed at the time as pretty likely. It would struggle along, make a little money, and then offer to buy back my shares at a nice premium. I’d sell and everyone would live happily ever after.

If I remember right, I paid about $9 per share.

We all know what happened next. Danier faced bankruptcy about a year later, thanks to the further deterioration of its market and retail’s struggles in general. I remember at the time thinking the company probably threw in the towel too early. It barely owed anything to creditors. In fact, it had been debt free up until about a month before going to donut land. I chalked it up to an odd case and moved on. It wasn’t until a couple years later until I learned my lesson once and for all — do not invest in trash retailers. I’ve since extended that ground rule to cover retailers in general. It’s serving me well.

Little did I know my initial feelings would be right. Danier had thrown in the towel too early. Here’s the story of the Danier Leather bankruptcy.

Danier’s bankruptcy

On March 21st, 2016, Danier Leather officially entered into bankruptcy proceedings. KSV Kofman Inc. was assigned as the bankruptcy trustee and Koskie Minsky LLP was assigned the task of representing Danier’s employees.

Danier had some decent assets heading into bankruptcy. It sold the lease for its largest store and headquarters to Michael Kors. It also had the option to sell other leases held in malls across Canada, although I’m not sure any were actually transferred. The company also sold intellectual assets to a firm called Rehan Marketing. The company also got some cash when it liquidated all of its inventory.

After paying the bankruptcy trustee for their work, Danier was left with approximately $36 million in cash. Just under half went back to creditors because they always get paid first. The rest — or a little more than $18 million — have been earmarked for shareholders. Thus far, some $11 million has been returned to shareholders.

This means I’ve gotten $4 per share from the Danier Leather bankruptcy proceedings. I remember the stock trading at $2 per share just before it went under, which would have been a nice profit. Still, I was thrilled to be getting anything back, never mind almost 50% of my initial investment. If only my other bankruptcy would have gone so well.

The bottom line

Overall I’m very pleased at what happened here. Sure, I lost money, but the Danier Leather bankruptcy could have been a lot worse for me. I recouped some of my capital and went on to fight another day. And there’s still a tiny bit of money left over, so I could still see a little more cash come my way.

It just goes to show that, at least sometimes, bankruptcy doesn’t mean shareholders lose everything. It’s never a great outcome, but this one worked out about as well as you could hope.

The most important part is the lesson learned. I now stay away from retailers in general and make it a rule to avoid crappy businesses as well. Sometimes that’s easier said than done, but at least I’m not actively wading into these situations enticed by cheap assets.

The 5 Best Books I’ve Read This Year

The 5 Best Books I’ve Read This Year

I spend a lot of time reading. Too much of that time is spent browsing nonsense on the interwebs, but at least I salvage this by reading 25 or 30 real books a year. I’m up to 21 so far in 2018.

While I do read a lot of business books, not everything I read is about finance. I mix in a lot of history as well, along with a little sociology, psychology, and science. I almost never read fiction because it is the equivalent of reality TV. Besides, I learn stuff from almost every non-fiction book I read. A science fiction novel isn’t expanding my knowledge.

Anyhoo, here are five of the best books I’ve read thus far in 2018. These are Amazon links, so thanks in advance for the nickel if you end up buying one of these. I sure do like nickels. Dimes are okay too.

Fortune’s Children

Fortune’s Children is the best book I’ve read in a long time. I could not put it down.

When he kicked it in 1877, ol’ Cornelius Vanderbilt was the richest man in the world, worth a cool $100 million. William, his son, managed to double his old man’s fortune to $200 million by the time he died eight years later. What followed William’s death was a whirlwind of consumerism and lavish spending that would even make Paris Hilton blush. Just 50 years later a direct heir died penniless and the other members of that generation weren’t doing much better.

This book will further cement the lesson it’s not what you make, it’s what you spend that truly matters.

Oh, and you’ll love the descriptions of the parties that cost a cool $200,000 to throw. In 1890s dollars. That’s like shelling out $10 mil on a shindig today.

The Lost Continent

I’m not usually a big fan of uppity American writers who decide willingly they’d rather live in the UK, but Bill Bryson is an absolute delight. I’d wholeheartedly recommend anything he’s ever written, but I believe The Lost Continent is his best work. It’ll hook you in from the first line.

I come from Des Moines. Somebody had to. 

The Lost Continent chronicles Bryson’s return to America after a decade away. His father had recently passed away and he wanted to relive his youth by taking a road trip to all the same places he went as a kid to see if they were as good as he remembered. The result is a hilarious (and sometimes touching) tale of childhood, travel, and saying goodbye.

Shoe Dog

Not many business memoirs read like a novel, but Shoe Dog had me on the edge of my seat the entire time.

With just $50 to his name and a passion for running coursing through his veins, Phil Knight dreamed of owning his own shoe company. He eventually built Nike into the powerhouse it is today, but not without a few bumps along the way. Joined by an eclectic cast of misfits, he battles uncooperative Japanese suppliers, cash flow issues, hostile bankers, and plenty more, all standing between Nike and success. We all know how it turns out, but you’ll be amazed at the ride to get there.


At age 52, Dan Lyons was on the top of his game. A veteran and respected journalist at Newsweek, his work was widely read and he was paid well for it. Until he became the latest statistic of the media industry and found himself looking for a job.

It didn’t take him very long to find something, getting hired at Hubspot, a tech startup. Lyons writes about his adventure in Disrupted, which mostly revolves around the fact it’s painfully obvious he does not belong there. Fortunately for us, this fish out of water tale is ridiculously entertaining. When you’re not laughing you’ll be rolling your eyes at the absurdity just oozing out of Hubspot and the sector in general.

Daring to Succeed 

I am a sucker for the genre I call business biographies — which follows the life of a business just like a similar book would for a person. You probably didn’t need that little definition there, did you?

Daring to Succeed follows the path of Alimentation Couche-Tard, which grew from a single store in Montreal in 1980 to a 5,000+ location powerhouse with locations across North America, Europe, and Asia. Alain Bouchard was the mastermind behind the whole thing, but he was also helped by longtime CFO Raymond Pere and others. It is a truly inspiring book that will have you itching to start your own empire by the end.

And that’s it. Please give me your book recommendations in the comments. I like having about nine books ready to read at any point.