Weekly Linkfest #28

Weekly Linkfest #28

The big story in the Canadian personal finance blog-o-net this week was definitely Sean Cooper’s tire fire of an AMA (ask me anything) over on Reddit. Cooper was clearly looking for some free publicity for his upcoming book — which I reviewed and didn’t really care for — but it didn’t really go as planned after several people questioned him on the validity of his mortgage free in three years story.

The issues basically come down to one thing. Cooper stated he made around $100k a year for each of the three years it took to pay off his mortgage. But once you factor in things like taxes, groceries, house expenses, and a big renovation, it becomes obvious he only had $60,000 or $70,000 a year to throw at a $255,000 debt. The math doesn’t add up.

Sean’s explanation for the discrepancy is… well, nobody really knows. He’s pretty vague with his answers, essentially saying “guys, the numbers add up. Trust me. And no, I’m not going to disclose what I made.” People are saying that’s a pretty weak argument from a person who’s in the credibility business, which is a pretty valid take. It’s all about trust.

And then this comment showed up, which really started to grind my gears:

sean cooper ama

Pardon my french here, but there’s way too much of this kind of bullshit going on in the financial blogging sphere, and I’m tired of it. Criticizing Sean using throwaway accounts or in private messages and behind closed doors is a cowardly thing to do. If somebody thinks the guy is lying or is giving dangerous advice, own up to it.

We criticize payday loans and credit card debt and mutual funds and a million other terrible financial products on our blogs every damn day, yet when somebody presents a message we disagree with, nothing happens but whispers behind the scenes. Electrons fly back and forth with people saying to their friends “Oh. My. God. Did you just see what Nelson wrote?” Meanwhile, my comment section is more dead than Jimmy Carter.

Wait. He’s not dead? Are we sure there isn’t a Weekend at Bernie’s situation going on there?

The point is this. If somebody thinks Sean’s message will ultimately make people poorer, take a stand and say so. They have a responsibility to do so, in a way. And if a blogger is typing something out to a friend they wouldn’t say publicly, then maybe it’s time to hit the delete key. It takes courage to criticize somebody on a public platform. It doesn’t take much to talk shit behind somebody’s back.

Links I liked

1. Let’s start things off with an interesting article from Institutional Investor, highlighting the changes made by Quebec’s giant pension manager Caisse de depot under former BCE head Michael Sabia. Changes included getting out of index funds and taking a far more concentrated approach, despite managing more than $150 billion in assets.

2. This inside look at the Microsoft IPO back in 1986 is a great read for the creepy cover picture of Bill Gates alone. He looks like he’s about to slip something into your drink.

3. Mr. Dividend Growth Investor points out some myths surrounding index investing, which are very valid. Ultimately, investing comes down to consistency. Switching up your methodology because one part of your portfolio is struggling is a bad idea. If there’s one thing we can say about Dividend Growth Investor, it’s that he’s consistent.

4. Andrew Hallam continues to be one of my favorite finance writers. Here’s a piece he recently did for Asset Builder that looks at how Captain Kirk’s mindset can help your retirement.

5. TD Bank’s aggressive sales practices made the news this week, as profiled in this CBC article. One teller said “customers are prey to me. I will do anything I can to make my [sales] goals. I thought this was much ado about nothing, but TD shares slumped 5.5% on Friday because of this report. Investors think there might be another Wells Fargo situation here.

6. The funniest story of the week comes from Business Insider, who profiled a 31-year-old who paid off $220,000 in student loans in three years. Inspiring, right? There’s just one problem. She had all sorts of help from her family, including her mom giving her a job, a free condo, and a free place to live once our hero decided to rent out the condo for more income. Sacrifice is hard, yo.

7. Speaking of which, Paul over at Asset-Based Life has our previous linkee beat. He paid off $65,000 worth of student loan debt in two minutes. No, that’s totally not clickbait. Really.

8. Bitcoin crashed some 20% on Friday because the SEC rejected the much-anticipated Bitcoin ETF sponsored by the Winklevoss twins. Yes, it’s the same twins that supposedly invented Facebook because they had the idea first. I appreciate anything that knocks Bitcoin down a peg. What a dumb asset class.

9. I’m a big fan of Boomer and Echo’s so-called “four minute” portfolio, which gets its title from the amount of annual work Robb puts into it. ETF investing is supposed to be simple, and you can’t get much simpler than Robb’s two ETF approach.

10. Half Banked points out that if you really want to accelerate savings, making more money is far more important than frugality. It’s an important, timeless message that I will pound into everyone’s head until goo comes out their ears.

11. The execution is the hardest part, or so says Studenomics. Nobody wants to hear about the nitty gritty of starting a business or making more money. Remember that when you’re struggling to get ahead.

12. And finally, here’s a profile of a mutual fund that only invests in stocks trading under $35 a share. A bit of an odd rule, but hey, I’m interested enough to give it a link.

Stuff Nelson wrote

1. I wrote about suddenly cheap Under Armor, taking a look at whether the stock is worth checking out for value investors.

2. I recently spent some time talking to “Jerry”, a millionaire next door type who amassed a $2.5 million net worth just after his 50th birthday. Jerry is an interesting guy with a lot to say. I’ll have some more Jerry wisdom next week for y’all.

3. I also spent some time discussing whether the TSX Composite is in a giant bubble. It’s no worse than Toronto housing, anyway.

Tweet of the week

This didn’t even come from me. Way to phone it in, Nelson.

Have a good week, everyone.

Weekly Linkfest #27

Weekly Linkfest #27

Is that my worst picture yet? Vote and win… I’m being told there is no prize and you can’t actually vote. Who runs this site, anyway? Sad!

Those of you who used to read my value investing site (may it forever RIP) might remember when I wrote about Information Services Corp (TSX:ISV), a great company I thought was trading at a very attractive valuation. ISV runs the Saskatchewan land titles registry, which a fantastic business. It’s one of the true monopolies left in today’s world.

Over its last four quarters, ISV did $17 million in net income on $90 million in revenue, for net margins of 18.9%. And that was despite a crummy first quarter. 2015’s full-year results had it doing $16 million in net profit on $78 million in revenue, for net profit margins of 20.5%. That is a succulent business.

I’ve balked at buying it because I’m a cheap bastard. It was slightly over $15 when I first looked at it. It promptly rallied to $19 and change. It went from being cheap (12x free cash flow, 15x earnings) to only fairly valued (at 16x free cash flow and 20x earnings). It pained me as a value investor to pay that much for a business, even one I view as being above average.

Maybe it’s the market euphoria talking, but I threw caution into the wind on Friday and tried to pick up some shares (my order has not be filled as I write this). The last time I paid up for a good business was Pizza Pizza, and my shares are up close to 50% (including dividends) in the 1.5 years since I bought. Here’s hoping for a similar result with ISV.

What a boring name for a company. Information Services Corp. They paid some marketing firm a quarter mil to come up with that, didn’t they?

Links I liked

1. Let’s start things off with Divestor, who pointed out some of the problems with selling covered calls as an income source. Remember one simple rule if you do try such a strategy — the higher the option premium the more volatile the underlying stock is. Something something no free lunch, in other words.

2. I have a feeling I’m going to be linking to Canadian Value Stocks a lot. Here’s his latest piece on Callidus Capital, a company with a succulent shareholder’s yield of 18.7% if you include the debt repayment. Yowza. Too bad leveraged financials give me nightmares.

Speaking of leveraged financials, First National Financial (TSX:FN) is pretty cheap. I’m avoiding it because of my aforementioned dislike of leveraged financials, but it’s super cheap (8x P/E) and is growing revenue at more than 10% a year.

3. Oddball Stocks points out that if a company has very little experience in growth, it can be a killer. It really depends on management.

4. I’m a big fan of the contrarian nature Freedom 35 Blog has taken on lately. Here’s Liquid arguing that real estate in Canada is still quite affordable. I’m not sure I agree, but I do like it when somebody writes something that makes me think.

5. I discovered this older post by The Money Wizard, and I agree with every last word. A much better emergency fund than cash in the bank is liquid assets. In other words, keep your cash on hand to a minimum and invest the rest, dummy.

6. Another interesting piece from Don’t Quit Your Day Job, who points out that often a cheque cashing place is a better alternative to banks, especially for poor people. The reason? No hold periods, among others.

7. My Own Advisor points out getting a tax refund is dumb because it’s a interest free loan to the government. Low interest rates do make this a bit of a moot point, but the point is still valid. I’d like to see more of these anti-tax refund posts mention the real reason to not want a tax refund, which is opportunity cost. I suppose it’s implied.

8. Somebody collected all of Charlie Munger’s speeches into a 350-page pdf and is giving it away for free. Saj Karsan has all the details.

9. My fellow Fool.ca writer Will Ashworth thinks Torstar Corporation is extremely undervalued. He has a target price 171% higher than the current price. It seems ambitious, but I do follow his logic. I’ve looked at Torstar a few times over the years. I just can’t pull the trigger.

10. And finally, here’s a link to one of the funniest unintentional pieces of comedy in the history of the internet. It comes from Canadian Money Forum and it starts out with the claim “the biggest emerging market we will see in our lifetime is the Cannabis industry.”

/takes bong hit

Weed cures cancer, man.

Things Nelson wrote

1. I told American investors how to collect $1,000 per month from a couple of popular REITs over at InvestorPlace.

2. I also compared gold to Bitcoin and asked which one was the better choice. Rant time: I don’t get Bitcoin, and never will. What’s the point? Your Bitcoins will never provide you an income stream. And even though the supply is tightly controlled (or so we’re told), it’ll still grow over time. It’s a dumb investment, IMO. Of course, gold isn’t much better, but at least you can get operating leverage from a gold miner.

3. Think you won’t be impacted by a Toronto housing crash because you were smart enough to take my advice and leave town? Think again, bucko. FEAR FEAR FEAR.

Tweet of the week

I really need to up my funny Twitter game.

Have a good week, everyone.

Weekly Linkfest #26

Weekly Linkfest #26

Let’s talk a little bit about childhood heroes.

There was a guy I knew as a teenager who I thought was the coolest person in the world. Here was a 35 year-old grown man who enjoyed movies, video games, pizza, and random fun weekend trips. He was kind enough to always be nice to me even when I was doing moronic kid stuff or acting like a real dumbass.

I remember going to him several times for advice over my teenage years, and he’s always have smart stuff to say. It was all pretty basic stuff in hindsight, but I sure appreciated it at the time. I remember just feeling really grateful he actually took the time to care about me and my problems. There weren’t many adults who did, at least from my (admittedly biased) perspective.

About 18 years later I ran into the guy on Facebook. I added him as a friend and moved on with my life. My feed was quickly filled with asinine political opinions, racist jokes, and other terrible nonsense. Every time he posted my respect went down a little more and a little more.

It turns out he’d suffered some hardship in his life. He wife divorced him and moved away. There were some issues at work and he’s cycled through a number of jobs since. There were even rumors of him doing some inappropriate things before he got divorced. So maybe that affected him. Or maybe I just put him on a pedestal.

A week or two later he dropped me as a friend and I haven’t heard from him since. I don’t even know if he’s still on Facebook or not. It was probably for the best.

There’s probably a lesson there about outgrowing your mentors, but I think the better one is just avoid Facebook. It’s for the best.

Links I liked

1. Let’s start things off with this story about Costco that appeared in the Financial Post. It’s a great look at a retailer that’s succeeding despite not following any of the rules of the game. Here’s a chain with no flyers, who pays its staff a decent wage, and that intentionally limited the number of skus it carries. And it’s killing it. Fascinating.

2. If you enjoyed last week’s post on Charlie Munger at the Daily Journal Corporation’s annual meeting, then you’ll want to watch these videos of him continuing to answer questions after. There are 22 videos altogether that’ll take you about an hour.

3. Speaking of Charlie Munger, Farnam Street Blog takes a look at how the underrated half of Berkshire Hathaway’s brain trust thinks. It’s filled with all sorts of fun Munger quotes if you’re into such things.

4. A long-time FU reader has set up a value investing blog, which is worth your time if you’re into such things. He wrote about a company called Input Capital that I enjoyed. I’m happy Canadian value investing blogs are popping up.

5. Warren Buffett’s annual letter is out. Read it or be square. Whoops, that’s a typo. It should be read it and be square. Financial Uproar apologizes for the error.

6. I enjoyed this post from Kapitalust about just how easy it is to ruin your reputation in five minutes. The examples alone are worth a couple minutes of your time.

7. My homie Stevonomics (we’re both cripplingly white) wrote about why he thinks real estate is a dumb investment for young guys looking to get ahead. I go back and forth on this all the time. There’s obviously big pluses on both sides of the debate. It’s fascinating.

8. Time for your weekly gold from Boomer and Echo. They point out that the key to a successful retirement isn’t cash in the bank. It’s regular multiple income streams. Should I see a shrink if passive income excites me sexually?

I should probably see a shrink anyway.

9. A helpful reminder from Don’t Quit Your Day Job is next. They point out predicting the direction of the stock market is usually pretty easy. You just take the consenting opinion and flip it. Contrarianism for the win, suckers!

10. Here’s a great story about a guy who got hired at one of the world’s most prestigious hedge funds despite never finishing college. It’s long but definitely worth your time.

11. Ever wonder how much your insurance agent makes when use them to get car insurance or home insurance? Here’s the answer.

12. And finally, here’s a fascinating look at structural unemployment in the United States and the issues facing these folks, which commonly include having a criminal record or being so poor they can’t afford to leave a dead-end town.

Bonus: Here’s a profile of an investment firm that buys dying malls and helps to bring them back to life.

Stuff Nelson wrote

As a reminder, you can hire me to write for your blog, newspaper, or poorly-Xeroxed newsletter. Hit the ol’ contact me page to get the ball rolling. 

1. BlackBerry entered the self-driving car market with much fanfare in December 2016. I argue it’s too little, too late.

2. I also pointed out that just because Warren Buffett sold Wal-Mart doesn’t mean he’s signaling the death of retail. There are still opportunities in the sector. I won’t invest in them but it doesn’t mean you can’t.

3. I also pointed out it might be a good idea for Canadian investors to take some profits and move them to cheaper parts of the world.

Tweet of the week

A dumb tweet for a dumb holiday. I didn’t even take the day off.

Have a good week, everyone.

Weekly Linkfest #25

Weekly Linkfest #25

I rent an office in the crappiest mall imaginable that just got a whole lot worse.

This mall has two spaces for major anchor tenants. The first use to hold a Woolworth’s and then a Liquidation World, a chain which actually closed up because times were too good and it couldn’t buy cheap crap from closing stores any longer. Liquidation world shut its doors in 2007 and its space has been vacant since, with the exception of the town’s annual rummage sale and a few other one-off events.

The other big tenant is a grocery store that has been struggling for years now. Last week it finally bit the bullet and announced it was officially shutting its doors, effective at the end of the month.

It’s a bittersweet moment. I’m happy that they’re no longer burning perfect good capital to keep the location open (it was subsidized by two other profitable divisions, lumber and gasoline), but I feel bad for people who are losing their jobs. My fellow mall merchants who actually depend on foot traffic are pretty screwed, too. Who’s going to visit a mall that doesn’t have any anchor stores?

And most importantly, where am I supposed to go for snacks? I’m asking the important questions here.

The saddest part of this whole situation is, IMO, that store was run terribly. I’m convinced I could have cut the losses at least in half with a little active management and tighter controls. It was obvious for years, but instead of doing something the present management team just focused on the profitable divisions, letting the store go all to hell. It was a damn shame.

Links I liked

1. Let’s start things off with an investor nobody can accuse of not trying, Mark Charles Barnett. Mr. Barnett (who is from Florida, naturally), paid an unnamed man $10,000 to place bombs in Target stores all along the east coast. He then planned to buy depressed Target shares to make himself a tidy profit. THAT’S GOOD HUSTLE.

2. Here’s a great interview with Charles Koch, a man I’d consider one of my business heroes. It’s just too bad he felt forced to spend so much of his energy on political causes, although these days he mostly just throws money at things.

3. Speaking of videos of smart business guys, I wrote a few days ago about Charlie Munger and the Daily Journal annual meeting, which is just like the Berkshire Hathaway meeting but smaller and more fun. Here’s a video of the whole thing if you’re so inclined.

4. I think RRSP loans can be a great idea in the right circumstances. Over at Boomer and Echo, Robb talks about the subject and comes to a similar conclusion.

5. Here’s an analysis of a stock I first discovered at about $12 per share, Goeasy Ltd. They’re the company that makes unsecured loans to dirtbags charging 46% interest. Unsurprisingly, that’s a pretty good business and this is a pretty good analysis.

6. Should Ottawa let people invest their TFSAs in small business? Since most small businesses are funded by their founders, it would be a big advantage to them to allow such an investment. I’m not holding my breath, but it’s an interesting idea.

7. This week Warren Buffett’s Berkshire Hathaway announced it sold most of its Wal-Mart stake, signaling what one writer called “the end of retail as we know it.” The title is a little much, but it’s an interesting article.

8. More gold from Paul over at Asset-Based Life, the only blog I know with a dash in its title. He recently wrote about something called the “gas factor,” which is all you need to have a successful career. What’s the gas factor? Does it have to do with farts? You’ll have to click through to find out.

9. Over at Freedom 35 Blog, Liquid presents some timeless advice that certainly bears repeating. If you surround yourself with successful people, you’ll lift yourself up. It might be simple advice, but it works, dammit. I especially remember it when certain people show up and bum me out.

10. Dividend Growth Investor is a good read, even if you’re not a hardcore dividend-growth guy (like me). He recently wrote a great post on how it’s important to recognize risk when investing and embrace it, rather than avoiding it completely. He uses two tobacco stocks, Altria and Philip Morris, to illustrate his point.

11.BMO generated a lot of attention this week by declaring Toronto real estate to be officially in a bubble. Excuse my French here, but, no shit. People have been saying this for years now. BMO doing the same does nothing but confirm already entrenched biases. By the way, how’s shorting the Toronto real estate market working out for everyone? That’s what I thought.

(I agree with BMO and the 4,592 other analysts that called a bubble before this, BTW. I just don’t see what good it does anyone.)

12. Bullish on Realty Income, the overvalued REIT that has more middle-aged male fans than Kate Upton? Ian Bezek just splashed cold water in your face.

13. And finally, here’s a great post on negotiation from I Will Teach You to be Rich. This is something I need to get better at, and you probably do too.

Stuff Nelson wrote

As a reminder, you can hire me to write for your blog, newspaper, or poorly-Xeroxed newsletter. Hit the ol’ contact me page to get the ball rolling. 

1. This week Prem Watsa (of Fairfax Financial) took off the company’s equity hedges after being pretty bearish for years. Good for Watsa to finally figure out betting against markets is foolish.

2. I also asked if TransAlta Corporation is Canada’s cheapest stock. Spoiler alert: probably not, but it’s still pretty damn cheap. I own a bunch of it in my TFSA.

3. With the TSX Composite hitting new all-time highs, it’s time to start talking about taking some risk off the table. I outlined a few easy ways to do so.

Tweet of the week

TWO TWEETS. Oh, I spoil you guys.

I don’t like to get too political, but can’t we all agree corporate welfare is a bad idea?

Have a good week, everyone.



Weekly Linkfest #24

Weekly Linkfest #24

After the last 92 weeks (approximately, I’m not good with clocks) of pimping my upcoming BNN appearance, I was all jazzed to finally get my handsome mug on TV WHERE IT BELONGS.

I got up early, put on a shirt with a tie (all the lady readers fan themselves), and headed down to the local CTV station. Everything was going to plan. They strapped on my mic and put my earpiece in and I was ready. It was just a matter of killing the 10 minutes or so before I was scheduled to go on air.

Then, a change of plans. The TSX Composite Index hit an all-time high on Friday morning. And I was going to talk about investments that weren’t stocks. This wouldn’t do.

So I got bumped, as they say in TV land. They filmed a segment about energy stocks instead, leaving me temporarily misplaced.

The good news is I’ll still be on TV. The segment has been taped and it will be aired. I’m just not sure when. Follow me on the Twitter for up to the minute updates on my TV debut. I’ll also make sure to link to where you can watch it online.

Links I liked

1. Let’s start things out with a profile of Marc Cohodes, who is rapidly becoming the world’s best-known short-seller. It’s an interesting piece if you’re into such things. The thing that amazed me is how personal he takes everything. He truly thinks he’s going God’s work.

2. Here’s a scary article for those of us with our own companies. It looks like the feds are about to squash a lot of the advantages to incorporating, including income splitting and the ability to grow your retained earnings. Kevin O’Leary is right. Justin Trudeau IS evil. The evilest guys are always the handsomest.

3. My homie Liquid (or, as his friends call him, Beatbox), takes a closer look at index investing and concludes that while it’s pretty good, there are some downfalls that never get brought up.

4. Here’s an interview with Ed Thorp, who used his math skills to beat Vegas before moving onto the stock market. He has an autobiography out that looks fascinating.

5. There aren’t many blogs I click on gleefully when they post an update, but Paul over at Asset Based Life is one of them. This week (Paul’s output is only about one post a week, but when it’s all good you don’t complain) he weighs in on the different ways Europeans and Americans view inheritance.

6. I’m encouraged by a few articles this week that try to throw cold water on our love of retirement. Here’s a story about a guy who decided to become a minister after his corporate life ended, and is still going strong at 76.

7. Want to watch the new Warren Buffett documentary? Here you go. I’ll post my review of it next week.

8. Boomer and Echo remind everyone to make sure you treat all of your accounts like one portfolio. So your TFSA might be filled with bonds, but that’s okay because equities are in other accounts that are taxed better.

9. Not really finance related, but I still thought it was interesting. Here’s the case for moving the New York Islanders to Hartford and bringing back the Whalers. Those old Whaler uniforms were fantastic.

10. Here’s an article from Farnam Street about why it’s valuable to work on several projects at once. The blog has a real lack of investment ideas considering it’s named after the street Warren Buffett lives on, but it’s still an entertaining read.

Stuff Nelson wrote

1. Let’s start things off with an article about why Pepsi should split into two different companies. Spoiler alert: it turns out chips are a great business.

2. I took a look at how much you’ll need to generate in dividends if you want to retire early. If you move somewhere cheap it’s not that much at all.

3. I also took a look at a number of boring stocks that could make you very rich. Or at least richer than you are today.

Tweet of the week

Have a good week, everybody.