Book Review and Giveaway: The Value of Simple

(Plus links. Stay tuned for them at the bottom.)

Friend of the blog John Robertson (author at Holy Potato, AKA one of the blogs I link to every week) wrote a small little e-book a couple of years ago, called Potato’s  I reviewed it here. It was a nice little guide explaining the basics of RRSPs, TFSAs, and all that jazz. I’m sure my shout-out led to him selling thousands of books.

Well, apparently that wasn’t good enough for him. Like some sort of ambitious guy, he basically scrapped it and started over, creating a much more in depth volume, calling it The Value of Simple. Like the first book, it’s aimed at beginning Canadian investors, going through all the steps needed to go from schmoe who can’t invest or even tie his own shoelaces to Captain Handsome who knows his way around a balance sheet, if the ladies know what I mean.*

*Your results may vary.

Included are step-by-step guides to:

  • The basics of investing, including asset classes, and the different types of accounts
  • An extremely detailed guide to opening TD E-Series accounts, Tangerine Streetwise mutual fund accounts, and Questrade accounts.
  • Even more detailed guides to trading ETFs or funds for each type of account. There are pictures.
  • Figuring out when to invest in a RRSP or a TFSA.
  • Transferring funds between brokers
  • Asset allocation
  • Rebalancing
  • And so on

Like The Wealthy Barber, The Value of Simple is a great book to give to your brother, kid, friend, co-worker, or mistress who knows nothing about investing. It lays out the basics without going into the painstaking detail that makes people throw up their hands and not want to bother.

The only thing I didn’t like (and I fully admit this is nitpicking a little) is the section on something called Norbit’s Gambit. That’s when you buy the U.S. version of a stock or ETF on the Toronto Stock Exchange and then sell the Canadian version, which should give the investor a cheap and easy way to exchange U.S. Dollars to Canadian ones.

There’s nothing wrong with the advice, except I don’t think it belongs in a book that’s called The Value of Simple. But really, that’s the only thing I’d change. It’s a good enough read, and it makes a good gift for someone you know who’s just getting started with this stuff. Getting them to read it might be a different challenge. I suggest holding their eyes open with toothpicks. Hey, it works in cartoons.

The book isn’t officially out until December 1st, but I’m pretty sure John is happy to take your money beforehand.

Or, if you’re a cheap-ass like me, John has graciously offered a copy to give away. So, if you’re in the market for a free book (and a free gift from Nelson), just go ahead and leave a comment. We’ll leave the contest open for a week, so get crackin’, yo.

Time for links

Sandi Martin decided to blog again, after approximately 8.4 years of doing other things (it says she’s a fee-only financial planner. Whatever that is.) like clouding up my Facebook feed with pictures of her children. Anyway, she has some thoughts about the new bunch of robo-advisors, which I am only just realizing aren’t Robocop.

Over at Earn. Save. Grow. (AKA the crappy cousin of Boomer and Echo), our homey Robb asks who is to blame for your financial woes. I blame the patriarchy, and cute squirrels, in that order.

Don’t Quit Your Day Job has some pretty shocking stories about asset forfeiture, which is a pretty boring term that really means “when the government steals crap from you because they feel like it.” The story about the guys who beat Las Vegas video poker is especially good. Land of the free my ass, America.

I wrote more words about Penn West Energy over at Motley Fool. I picked up some shares at $4.72 at the beginning of last week. They are now at $5.00. I am a jenius.

I also wrote about Fairfax Financial, which is a lot like Berkshire Hathaway. Prem Watsa is the guy in charge, and he’s pretty interesting. Plus, he owns Reitmans, BlackBerry, and Penn West. Just like me! We’re practically besties.

A few weeks ago, a guy by the name of Anton Ivanov was making headlines on prominent finance sites for being a 27-year old “self-made” millionaire. It turns out he was lying about the self-made part. Check out this story for all the cringe-inducing details.

(Budgets are Sexy also wrote about this guy)

Earlier in the week I wrote about a tiny micro cap called Jaguar Financial. I am now the proud owner of 58,000 (Edit: 54,000, not 58,000) shares. So yes, I just bought more BlackBerry.

And finally, here’s a story about a vasectomy going horribly wrong. Lots of fun mental pictures there.

Have a good weekend everyone.

Sunday Link Roundup: Some More Words About Danier Leather

Oh, Danier Leather, you will be the death of me. I will literally suffocate underneath a mountain of leather coats. At least it’ll smell nice.

On October 27th, the company released its 2015 1st quarter results. And they were, in a word, craptastic. Sales were down 20% compared to last year. The loss increased from $0.93/share last year to $1.43 this year. Gross margins fell a bunch too, from 50% to 46%, thanks to discounting to get all of the old stuff out of the stores.

Management also talked about how they’re excited about new product coming in for the holiday season, but I don’t know if I’m buying it. I was thinking of cutting my losses here, only being down some 30%.

The company is also shedding book value pretty quickly. It was over $14/share when I bought in, and it’s down to just over $11/share. It has traditionally been profitable during the Christmas quarter, so at least a good showing then could help stem the damage.

Normally, I’d look at buying more as the stock falls. I’m not even thinking about it with Danier because a) the portfolio is already too focused on Canadian retail stocks and b) the last two quarters have been that terrible. There are other retail stocks I like (Hudson’s Bay Company, which I wrote a bunch of words about looks pretty attractive), and so the temptation is there to switch.

Anyway, stupid Danier. And even Reitmans is falling lately. If y’all need me, I’ll be hanging out with the indexers.

Time for links

Let’s start things off with Holy Potato, with a post called The Paradox of Advice. We all crack jokes about all the bad advice out there on the interwebs — after all, Finance Fox’s archives are still kicking around — but nobody pays any attention to the good advice out there. And there’s a lot of it.

Last week I linked to a post by Boomer and Echo talking about leveraged investing that had me as one of the “experts” interviewed. And then I promised more thoughts on that topic. You’ll get them, soon. Until then, go read part two.

More content I created for other sites? Sure, why not. Here’s an interview I did with Mint.

Over at Sustainable Personal Finance, I wrote some tips on how to save money traveling. No, not all of them are sleep under a bridge. Some of them involve sleeping in the park. Don’t worry, hobos won’t bother you. Unless you have drugs.

The New York Times thinks we should copy the Netherlands’ pension system. Spoiler alert: it involves more in contributions, which in America would be political suicide.

Let’s finish things off with Nelly a couple of times. Here I wrote why investing in gold is a fool’s game. It references Warren Buffett, because I have an unreasonable crush on him.

And finally, here are some words about investing in uranium. There are events a transpirin’ which look to be positive for the metal.

And I’m bored. See you kids tomorrow.

Friday Link Roundup: No Deodorant Edition

I ran out of deodorant the other day.

This wasn’t a big deal, at least I naively thought. There’s a supermarket about a 15 minute walk away from our place and plenty of restaurants along the way. I figured I’d stop for lunch on the way, get me a nice new pit stick, and be back before 1 o’clock.

But, alas, it wasn’t to be. Because Korea.

I went to the supermarket, where I discovered a vast selection of soaps, body washes, shampoos, and various other cleansing products. I did not find deodorant. When I asked the nice ladies who were working in the area if the store carried any, I was met with nothing but blank stares. They probably mocked me when I left.

So I went to another store. And then another. No deodorant was found.

Frustrated, I took to the interwebs. I asked the knower of all things, Google, and it turns out that Asians don’t really have deodorant because apparently they don’t smell. Expats online said you can order it from GMarket (Korea’s Amazon) if you’re desperate, and can’t find any in a pharmacy.

I checked. Guess how much a regular stick of deodorant costs?

…Higher

…Higher

It’s $30 for deodorant. I’m not even kidding.

 

Not pictured: The bar of gold in the middle.

Not pictured: The bar of gold in the middle.

This left me with a dilemma. Do I spend $30 on something that I can get for 1/10th of the price back home, or do I come up with an alternate solution? Hell, I could get my parents to buy deodorant and ship it over here for less than $30 a stick. That’s a pretty inefficient way of doing things, but a smelly man is a desperate man.

I went into a pharmacy and asked the guy about deodorant. He led me to a selection of 3 different products, two of which were special deodorant for extra smelly people. They were also $12-$15 for a container about half the size as your normal stick. There’s no way I’d use prescription deodorant willingly. It’s just not going to happen.

The other option was Nvidia body spray, which apparently has some sweat fighting power. It was $9.50.

And that’s why I smell like a 14-year old boy at a school dance. Stupid country.

Time for links

It’s been a little while, so I’ve got a few accumulated. They’ll help you forget about the smell.

Let’s start things off with Boomer and Echo, who asked 14 experts (and your’s truly) for advice about borrowing to invest. Look for more thoughts on this in a couple weeks.

Here’s Gail Vaz-Oxlade talking about the dream of early retirement. I enjoyed it. I can’t help it. I’m a sucker for these early retirement posts.

If you’re going to buy a house at some point in the next… uh… ever, you need to know what buyer’s brokerage agreements are. They don’t sound like much, but they could end up costing you thousands. And you’ll need that money to put a sex swing in the basement. Anyhoo, Garth Turner has the deets. About the BBA. Not the sex swing.

Over at Young and Thrifty, Kyle has some bang-on thoughts about our fascination with home equity and why it’s misplaced. It also looks like he’s coming over to the housing bubble dark side. Welcome, young teacher man. Let’s use the force to, I dunno, lift up skirts or something.

Vanessa thinks she’s a better investor that me because she did well buying some coins this one time off eBay. Yes, she supported a despicable young man stealing his grandmother’s coin collection to sell for crack. For shame.

No more time for witty commentary. Here’s Oddball Stocks on some value investing myths.

Apparently everybody was farming out their content this week. I wrote some words on a fun side hustle that can make you some extra cash and not fat.

And finally, like only he is able to do, PK from Don’t Quit Your Day Job used all sorts of fancy stats and graphs to point out that… drumroll please… people who work more generally make more money. Coulda told you that without the graphs I think, but hey. It’s still interesting.

Have a good weekend everyone.

 

 

Friday Link Roundup: An Update On MRRM

Ah, the difference a week can make.

On September 30th, when I did the quarterly update on the Uproar Fund, MRRM was smelling worse than my underpants after a light jog. The stock had sunk to $2.60 per share, significantly below my average purchase price of $3.20. I picked up an additional 900 shares personally (as in, not included in the Fund) on October 2nd, which represented 90% of the trading volume that day. I also upped the price from $2.60 to $2.70 with my limit order.

Finally, I moved the market.

And then, after hours on the 2nd, the company came out with great earnings. Revenue was up 17.7% compared to the same quarter last year, and profit surged, from a loss of $0.02 per share last year to a profit of $0.12. Business was up, rice prices declined, the company paid off about half of its outstanding debt, and it even threw us a bone with comments about continuing the strategic review, apparently even bringing in a second party.

This is all good, and it even did it while the Canadian dollar went down, which impacted margins.

Based on the results, the stock shot up to $3.28, although not on a huge amount of volume (Although, let’s be honest, this stock never does huge volume). It did 1,000 shares that day, but that was it. I’ve been putting in bids at $3.10 over the past few days, but shares haven’t budged.

Book value is $6.99/share, and the company has earned $0.22 per share over the last 12 months. Based on a $3.10 purchase price, you’re getting the company at 14 times earnings, and that drops to just 7.1 times earnings if you exclude the company’s nearly $4 million of stocks, bonds, and other investments it holds on the balance sheet. If you believe management will eventually spin some of those investments off as a special dividend (which it has repeatedly in the past, most recently in 2012), then you’ve got to like the company here.

But please don’t buy. I don’t want the competition.

Time for links

Start things off with Nelson? LET’S GET THE SEXY OUT OF THE WAY. Over at the Fool that is Motley, I took a look at Talisman Energy, a oil company that I think has potential as a long-term turnaround. Plus, Carl Icahn owns some, and that dude is the best.

More Nelson? WHY NOT. I took a look at three struggling companies and asked if they’ll last five years. One was Sears, because it’s more worthless than Bernie Madoff’s Discover card.

Boomer and Echo asks how many stocks you should own. I won’t give away the answer, but it’s more than 1 and less than 4,039,928. I tackled this a few months back too, because everything has to be about me. What? I’m a millennial.

Here’s a guy who thinks real estate prices in Canada are going to fall 50%. That seems a little excessive, but I am intrigued and would like to sign up for his newsletter.

I keep telling you guys, it’s not that hard to get rich. It just takes sacrifices. Pauline from Make Money Your Way tells us how she’s getting roommates to pay her mortgage (and then some) in a place she doesn’t even live anymore.

And that’s all I got. Have a good weekend everyone.

Saturday Link Roundup: An Update On Automodular

A quick note of housekeeping before we begin. I think it’s time for a different format for the Friday/weekend link dump. The stats tell me they’re not very popular, and after approximately 3 years worth of them, it’s obvious the format is getting stale. So instead, we’ll do something like I was doing for the freelance link roundups. I’ll touch on a subject that just isn’t in depth enough for its own post, and then we’ll do links. Cool? 

Let’s talk about Automodular, the company that I bought a whack of last November. I thought it was worth about $2.80 per share, based on assets on the balance sheet and the expected cash flow. The company was paying a succulent 10+% dividend, so I would be slowly be getting my cash back.

Automodular just announced it is officially closing down its plants in Oakville at the end of the year. It’s still hoping to pick up some other work in stuff like making wind turbines, but it doesn’t look likely.

So here’s where we’re at. At the end of June, the company had a book value of $2.35 per share. Earnings have slowed as Ford has begun the process of bringing some of the work in house. I did not anticipate this happening, but in hindsight it should have been obvious.

I predicted the company would make $25 million in cash flow in 2014. Though two quarters, it’s been less than $7 million. Part of that is because the company put more money aside to cover closing charges, but the fact is that business is slowing, and that’s affecting cash flow. Let’s assume just $5 million in cash flow over the last two quarters of the year to be conservative. That’s an extra $0.25 per share in cash flow.

Meaning, the company is currently worth $2.35, and I project it to earn another $0.25 in cash flow over the next six months. So if it liquidates at the end of 2014, I’m looking at $2.60 per share in assets, plus I would have collected my two $0.06/share dividends in the meantime. I’m not including additional dividends because they’d just come out of additional cash flow.

The company also has an outstanding lawsuit against GM for the way it severed the contract between the two companies back in 2010, but let’s file that under “not likely.”

So it turns out my initial analysis was a little optimistic, but it’s not looking too bad. As I type this, shares are trading at $2.16, and I think they’re worth $2.60 in just a few months. I should be buying more.

So far it looks pretty good. Not quite as good at the $2.90 I first anticipated, but still good enough for what I’m predicting to be a 23.6% return in a little over a year.

Time for links

Think it’s impossible to get a reliable car for under $5,000? You’re wrong, and the folks over at Jalopnik can prove it, with a list of 10 high quality cars you can put in your driveway for less than 50 Sir Robert Bordens. And those are on eBay. Shop around locally, and you can probably get an even better deal.

Garth Turner points out something I’ve been saying for years now. We’re throwing all sorts of resources towards teaching people financial literacy (including, according to Turner, $20 million per year from the feds) with very little to show for it. It’s embarrassing, and we’re learning nothing from it. It’s time for a different way.

Over at Motley Fool, I wrote about a Canadian way to get in on Warren Buffett’s latest purchase, auto dealerships. It’s not exactly a value stock, but there’s certainly growth potential.

I also wrote about Encana Corporation’s latest takeover, and how I’m not exactly a fan of the company diversifying back into oil.

Apparently it’s the Nelson link fest, cause it’s yet another article from yours truly. This one is over at Sustainable Personal Finance, and it covers my one tip on how to save money on nearly everything. I had to throw the nearly in there because, y’know, lawsuits. What? I get threatened with lawsuits 4 times a day.

Over at Earn Save Grow, my homeboy Robb points out how that extra 5% of your portfolio you leave aside for investing in long-shot high risk stocks is probably a bad idea, and should be invested just like the rest of your cash. I agree, but also think that the folks who don’t understand value investing think I’m doing the same thing with companies like MRRM.

And that’s about it. Have a good weekend, everyone.