Riding in the rain really isn't that bad. Having fenders helps a lot. The biggest potential issue is probably if it rains while cold out - this can make your body very cold very fast. Hands, feet, and head are most at risk.
The annoyance things are:
- your clothes getting all wet (Especially shoes). It's not so bad if you're on the way home, or if you're wearing good rain gear
- road spray stain on the back of your pants / shirt (if you don't have fenders)
- needing to clean your bike and re-lube the chain afterwords
BlueNote's Journal
Re: BlueNote's Journal
I rode the bike to work today with my make shift pannier bag, it worked great. However when it was time to go home the biggest storm of the year was going at peak rage outside. I left the bike in the nice , security watched parking garage in my office building locked to a bike rack and my wife drove me home.
Proper rain gear is probably a good idea. With rain gear I could have easily waited out the dangerous part of the storm and then biked home. I already have a rain suit and I could use a heavy duty garbage bag to cover up my leather bag. I will have to remember this for next time.
I picked up "One Up on Wall Street" by Peter Lynch and "What Works on Wall Street" by James P OShaughnessy, from the library of course. The former is a straight forward soft cover the latter a text book sized hard cover laden with stats and data. I will post a little book review when I am done with them.
Here is a nice little freebie that most people in Toronto overlook. If you have a Toronto Public Library card you get free online access to Value line (stock, bond type reports), with a ton of extras, 100% subsidized by the tax payer. Normally this costs hundreds or thousands of dollars a year but it's free just for being a Torontonian. You don't have to go to the library to use it you just login to the library website and access it through a proxy server.
Proper rain gear is probably a good idea. With rain gear I could have easily waited out the dangerous part of the storm and then biked home. I already have a rain suit and I could use a heavy duty garbage bag to cover up my leather bag. I will have to remember this for next time.
I picked up "One Up on Wall Street" by Peter Lynch and "What Works on Wall Street" by James P OShaughnessy, from the library of course. The former is a straight forward soft cover the latter a text book sized hard cover laden with stats and data. I will post a little book review when I am done with them.
Here is a nice little freebie that most people in Toronto overlook. If you have a Toronto Public Library card you get free online access to Value line (stock, bond type reports), with a ton of extras, 100% subsidized by the tax payer. Normally this costs hundreds or thousands of dollars a year but it's free just for being a Torontonian. You don't have to go to the library to use it you just login to the library website and access it through a proxy server.
Re: BlueNote's Journal
Personal Financial Ratio's
I was thinking of a good way to represent personal financial data. I think ratio's are great, they seem to work great in business. I use ratios all the time as a financial professional to convey information quickly.
I have some ideas for this that I am going to test out and will report back on.
RRSP's
An RRSP is roughly equivalent to an American 401k. Money in it is considered pre-tax and isn't taxed until withdrawn.
I have been researching the tax implications of extreme early retirement for Canadians. I like that I can use my RRSP to avoid dividend witholding taxes on US stocks due to a special provision in the US/Canada tax treaty. However if I own US stocks outside of an RRSP taxes will be witheld and I will not be eligible for special tax treatment that Canadian dividends get. Even inside of the RRSP the US dividends are taxed at my marginal rate when I withdraw them from the tax sheltered account.
There is a process where Canadian dividend income is taxed very favourably: http://www.theglobeandmail.com/globe-in ... le4085748/
Due to this dividend tax credit and the built in tax breaks on low income earners in Canada I could pay a very low tax rate on an income of 40k ( a very high ERE income) in dividends. Here is a tool you can run some scenarios of your own: http://www.knowledgebureau.com/index.ph ... estimator/
Since I want my main source of retirement income to be stock dividends I think that my portfolio should be 60-70% Canadian content and 30% US and global content. The global content will be almost exclusively American to take advantage of the withholding tax exception. I have an RRSP/Pension matching system through my work that is more heavily weighted to non North American stocks but I can't really touch it until I am 55 so I just used a simple allocate and index strategy with it. If history rhymes I should get a nice raise in a couple of decades.
Net Worth Update
I have increased my networth to 27k this month. I was able to save about 700 bucks from last month despite my $350 bike purchase and $600 one time tax bill. This month should be a good one. The monthly expense forecast is as follows:
chequing account: 4,148.30
transfer one half of pay check to retirement account: -1,804
transfer $700 of last months savings to retirement account: -500
Balance in Chequing account: 1844
Expenses
Rent 625
Groceries / household 300
Gas 92.25
Car insurance 91.17
Home insurance 13.23
TTC 20
Mobile Phone 54
Vacay (preplanned with my wife for October) 357
clothing / other 42
personal items 0
gifts 67
car maintenance 50
entertainment
Total Expenses 1,712
Forecasted balance in account at end of month: $132
Around $150 of pre tax income is automatically placed in an account which will be matched at around 60% by my employer.
54% savings rate, not too bad for a rookie. I am working on ways to bring that up. As you can see my expenses are ripe for improvements.
I need to set up a nice spreadsheet with my personal balance sheet (networth), profit and loss statement, years to early retirement etc. but it's not a critical thing right now, my main objective is getting the savings rate higher and higher.
I was thinking of a good way to represent personal financial data. I think ratio's are great, they seem to work great in business. I use ratios all the time as a financial professional to convey information quickly.
I have some ideas for this that I am going to test out and will report back on.
RRSP's
An RRSP is roughly equivalent to an American 401k. Money in it is considered pre-tax and isn't taxed until withdrawn.
I have been researching the tax implications of extreme early retirement for Canadians. I like that I can use my RRSP to avoid dividend witholding taxes on US stocks due to a special provision in the US/Canada tax treaty. However if I own US stocks outside of an RRSP taxes will be witheld and I will not be eligible for special tax treatment that Canadian dividends get. Even inside of the RRSP the US dividends are taxed at my marginal rate when I withdraw them from the tax sheltered account.
There is a process where Canadian dividend income is taxed very favourably: http://www.theglobeandmail.com/globe-in ... le4085748/
Due to this dividend tax credit and the built in tax breaks on low income earners in Canada I could pay a very low tax rate on an income of 40k ( a very high ERE income) in dividends. Here is a tool you can run some scenarios of your own: http://www.knowledgebureau.com/index.ph ... estimator/
Since I want my main source of retirement income to be stock dividends I think that my portfolio should be 60-70% Canadian content and 30% US and global content. The global content will be almost exclusively American to take advantage of the withholding tax exception. I have an RRSP/Pension matching system through my work that is more heavily weighted to non North American stocks but I can't really touch it until I am 55 so I just used a simple allocate and index strategy with it. If history rhymes I should get a nice raise in a couple of decades.
Net Worth Update
I have increased my networth to 27k this month. I was able to save about 700 bucks from last month despite my $350 bike purchase and $600 one time tax bill. This month should be a good one. The monthly expense forecast is as follows:
chequing account: 4,148.30
transfer one half of pay check to retirement account: -1,804
transfer $700 of last months savings to retirement account: -500
Balance in Chequing account: 1844
Expenses
Rent 625
Groceries / household 300
Gas 92.25
Car insurance 91.17
Home insurance 13.23
TTC 20
Mobile Phone 54
Vacay (preplanned with my wife for October) 357
clothing / other 42
personal items 0
gifts 67
car maintenance 50
entertainment
Total Expenses 1,712
Forecasted balance in account at end of month: $132
Around $150 of pre tax income is automatically placed in an account which will be matched at around 60% by my employer.
54% savings rate, not too bad for a rookie. I am working on ways to bring that up. As you can see my expenses are ripe for improvements.
I need to set up a nice spreadsheet with my personal balance sheet (networth), profit and loss statement, years to early retirement etc. but it's not a critical thing right now, my main objective is getting the savings rate higher and higher.
Re: BlueNote's Journal
21/07/2013
ER Status updates
Weight down to 225 lbs.
Riding bike to work is great
I am taking more vitamin D and B and it seems to help elevate my moods and ease my stress.
I invested 1k into McDonalds for the dividend and dividend growth potential. I also think it is fairly valued , has a wide ‘moat’ and a strong balance sheet. I am building a portfolio of stocks in various industries based on a personal value/dividend growth style of investing that I am comfortable with. I put the MCD into my RRSP so I could avoid the US withholding tax on dividends.
???Switching Company???
I could get a 25-35% a year raise by switching companies right now. I have a new head hunter contact me at least once a month offering a 40% bump to switch which I assume is the teaser rate and after negotiations it will come down to the afformentioned 25-35% rate. I am at a point in my career where people at my level (lets call it senior financial analyst) are rare and valuable and there are always lots of positions to fill. When I move higher up the ladder (finance manager, controller etc.) there is a lot more competition but right now I am in the sweet spot for an easy switch.
Switching almost always means working in downtown Toronto or Mississauga which would mean a much longer commute.
Pros and Cons
Pros
- More money
- Possible bonus (usually 10% of salary based on company and personal performance)
- Shake up the routine , less boredom
- Keep the resume from getting stale
- Learn about a new industry
- Subway commute opens up more time for reading
- Better information management systems (current company runs off of IBM mainframe Cobol programming form the 70’s and 80’s)
Cons
- difficult to impossible to bike to the downtown core from where I am
- Wife doesn’t want to move, works in Northern part of greater Toronto area
- Have to pay back $5k in subsidies that haven’t vested yet due to return on service agreement in exchange for accounting education
- Going south on the subway in the morning and North after work is very busy, almost reminds me of Osaka rush hour with everyone crammed in the subway like sardines
- Would lose RRSP matching and pension vesting at original company
It’s something that is constantly on my mind because right around when I forget about switching companies a head hunter calls my desk and throws a nice opportunity out.
I have gone for one interview about a year ago at a liquor manufacture (Beam) and got called back to another interview but turned it down for personal reasons. It would have been a plum job compared to the s@!t I deal with now vs the what they pay me.
I am kind of planning on switching next year after some of the education subsidy is vested but with the relatively huge salary figures being thrown at me the switching advantages are hard to ignore.
ER Status updates
Weight down to 225 lbs.
Riding bike to work is great
I am taking more vitamin D and B and it seems to help elevate my moods and ease my stress.
I invested 1k into McDonalds for the dividend and dividend growth potential. I also think it is fairly valued , has a wide ‘moat’ and a strong balance sheet. I am building a portfolio of stocks in various industries based on a personal value/dividend growth style of investing that I am comfortable with. I put the MCD into my RRSP so I could avoid the US withholding tax on dividends.
???Switching Company???
I could get a 25-35% a year raise by switching companies right now. I have a new head hunter contact me at least once a month offering a 40% bump to switch which I assume is the teaser rate and after negotiations it will come down to the afformentioned 25-35% rate. I am at a point in my career where people at my level (lets call it senior financial analyst) are rare and valuable and there are always lots of positions to fill. When I move higher up the ladder (finance manager, controller etc.) there is a lot more competition but right now I am in the sweet spot for an easy switch.
Switching almost always means working in downtown Toronto or Mississauga which would mean a much longer commute.
Pros and Cons
Pros
- More money
- Possible bonus (usually 10% of salary based on company and personal performance)
- Shake up the routine , less boredom
- Keep the resume from getting stale
- Learn about a new industry
- Subway commute opens up more time for reading
- Better information management systems (current company runs off of IBM mainframe Cobol programming form the 70’s and 80’s)
Cons
- difficult to impossible to bike to the downtown core from where I am
- Wife doesn’t want to move, works in Northern part of greater Toronto area
- Have to pay back $5k in subsidies that haven’t vested yet due to return on service agreement in exchange for accounting education
- Going south on the subway in the morning and North after work is very busy, almost reminds me of Osaka rush hour with everyone crammed in the subway like sardines
- Would lose RRSP matching and pension vesting at original company
It’s something that is constantly on my mind because right around when I forget about switching companies a head hunter calls my desk and throws a nice opportunity out.
I have gone for one interview about a year ago at a liquor manufacture (Beam) and got called back to another interview but turned it down for personal reasons. It would have been a plum job compared to the s@!t I deal with now vs the what they pay me.
I am kind of planning on switching next year after some of the education subsidy is vested but with the relatively huge salary figures being thrown at me the switching advantages are hard to ignore.
Re: BlueNote's Journal
you could discuss the 5 k with the new company as a 'transfer bonus'. If they want you that amount won't be a problem.
I once had the same and my new employer paid my previous employer the outstanding amount without a blink.
I once had the same and my new employer paid my previous employer the outstanding amount without a blink.
-
My_Brain_Gets_Itchy
- Posts: 267
- Joined: Fri Mar 02, 2012 5:29 pm
Re: BlueNote's Journal
@Bluenote: Great to hear and read about your progress.
Waaay back when, when I still lived at home, I had to go from Finch to Union, which sounds like the commute you describe. (BTW, that commute has gotten a lot worse since then!). My mental and physical health would slowly deteriorate doing that commute.
Since then, I had always refused suburban contracts/jobs in Mississauga, Richmond Hill, etc, for those reasons, and eventually something would turn up.
It sounds like you have a very strong skill set, maybe it's possible that one of these opportunities can give you both? a salary increase and a location proximate to the core?
You are making such great progress reclaiming your health, seems like the bike habit has solidified, so it would be tough to see that go. I got to totally agree with you, that taking the bike daily, my mood these days are much much better.
Waaay back when, when I still lived at home, I had to go from Finch to Union, which sounds like the commute you describe. (BTW, that commute has gotten a lot worse since then!). My mental and physical health would slowly deteriorate doing that commute.
Since then, I had always refused suburban contracts/jobs in Mississauga, Richmond Hill, etc, for those reasons, and eventually something would turn up.
It sounds like you have a very strong skill set, maybe it's possible that one of these opportunities can give you both? a salary increase and a location proximate to the core?
You are making such great progress reclaiming your health, seems like the bike habit has solidified, so it would be tough to see that go. I got to totally agree with you, that taking the bike daily, my mood these days are much much better.
Re: BlueNote's Journal
@ rube: I have thought about this but a signing bonus seems to be hard to get when talking to the head hunters, they say to try to build it into the salary. Not that a signing bonus isn't possible but it just isn't the norm apparently. However I will probably try to do a signing bonus to cover off the 5k when I leave hopefully it works out. I bet the new company will agree to a signing bonus if I agree to suspend my performance bonus for the first year or something like that.
@ Bigato: Linked in is how I advertise myself, I like it because it's easy to update and I can see how my peers are advertising as well. I have tried monster and workopolis and never gotten a response, but linkedin has been a good fit for me.
Telecommuting isn't something that makes you look good in an interview for my type of work. More then likely the office will want to see my face and see that my butt is in their chair for 8 hours a day.
I am going to start more resistance type training as well (push ups, squats etc.)
@ My_Brain_Gets_Itchy: I think I am going to have to stop relying on the head hunters and start doing my own leg work. I live in the North York area (yes the commute would be finch to union and back
) and there has to be some decent companies headquartered around here. I know IBM is sort of close by, that would be a cool place to work and probably similar culture to my current employer. I will have to make a list of the places near by and start firing off resumes and making contacts.
@ Bigato: Linked in is how I advertise myself, I like it because it's easy to update and I can see how my peers are advertising as well. I have tried monster and workopolis and never gotten a response, but linkedin has been a good fit for me.
Telecommuting isn't something that makes you look good in an interview for my type of work. More then likely the office will want to see my face and see that my butt is in their chair for 8 hours a day.
I am going to start more resistance type training as well (push ups, squats etc.)
@ My_Brain_Gets_Itchy: I think I am going to have to stop relying on the head hunters and start doing my own leg work. I live in the North York area (yes the commute would be finch to union and back
) and there has to be some decent companies headquartered around here. I know IBM is sort of close by, that would be a cool place to work and probably similar culture to my current employer. I will have to make a list of the places near by and start firing off resumes and making contacts.Re: BlueNote's Journal
My work just announced a restructuring today and are laying off about 80 people around the country. The way the change was rolled out was a bit sloppy and is going to cause me to work (and book) a lot of overtime over the next month or two. The industry we are in is mature / declining so it's no surprise that they are reducing head count. I feel like I am on a sinking ship. I did technical support for Apple (through a third party) as part time college job. It was the opposite feeling because Apple was growing so fast that I spent about 1/4 of my time in training over a 5 year period and was always getting performance bonuses and the like even for my low level tech support job.
I am going to start looking for a new job in about 3-6 months hopefully near where I live but I could manage travelling downtown. I already work in a building that sits on top of the subway station so it's nothing to just ride my bike and lock it up in the same secure area I have been so far. Then if I end up working downtown I will have to commute via subway. I think the only part I will really dislike is coming home because I will never get a seat and I get a little motion sick from standing on the subway. If I am able to read or do something interesting on my phone I can usually shut out the other people around me and the crush of people doesn't bother me too much. Maybe I should do a dry run one day and take the train south during rush hour to see what it feels like.
I noticed that MCD market price dropped a little this week because they didn't meet earnings expectations. I consider this a deal and may consider adding to my position however I am diversifying through deposits right now and don't want to start off with a concentrated restaurant/consumer discretionary allocation. I also allocated some money to national bank of Canada (NA.TO) , which also promptly dropped in price for apparently no reason I can fathom (the market must have saw me buy it and promptly sold off). It is a Canadian bank that has a ridiculously long history of dividend performance and trades at an 11% earnings yield right now which is quite nice with the ~4.5% dividend and 40% dividend payout ratio. I have done a lot of research on NA and I am not going to go into the details but to make a long story short I will sleep well tonight owning some of it.
I am going to start looking for a new job in about 3-6 months hopefully near where I live but I could manage travelling downtown. I already work in a building that sits on top of the subway station so it's nothing to just ride my bike and lock it up in the same secure area I have been so far. Then if I end up working downtown I will have to commute via subway. I think the only part I will really dislike is coming home because I will never get a seat and I get a little motion sick from standing on the subway. If I am able to read or do something interesting on my phone I can usually shut out the other people around me and the crush of people doesn't bother me too much. Maybe I should do a dry run one day and take the train south during rush hour to see what it feels like.
I noticed that MCD market price dropped a little this week because they didn't meet earnings expectations. I consider this a deal and may consider adding to my position however I am diversifying through deposits right now and don't want to start off with a concentrated restaurant/consumer discretionary allocation. I also allocated some money to national bank of Canada (NA.TO) , which also promptly dropped in price for apparently no reason I can fathom (the market must have saw me buy it and promptly sold off). It is a Canadian bank that has a ridiculously long history of dividend performance and trades at an 11% earnings yield right now which is quite nice with the ~4.5% dividend and 40% dividend payout ratio. I have done a lot of research on NA and I am not going to go into the details but to make a long story short I will sleep well tonight owning some of it.
Re: BlueNote's Journal
I am limiting myself to a 10 sentence max for book reviews because I don’t think my audience would want it any longer. If anyone has a question I will provide more details.
One up on Wall Street, by Peter Lynch
Peter Lynch is one of the most successful (with some component of luck) professional investors ever with a stunning 29% annual return over 13 years of running the Magellan mutual fund. Lynch says that the individual investor has big advantages over the pros due mostly to lack of policy constraints and deep real-time knowledge of certain businesses (usually the industry you work in). Lynch advocates high growth stocks as a strategy for successful investing because they have the potential to return 2, 5 , 10 even 20 times your principle over a relatively short time frame. He emphasizes the importance of categorizing potential stock picks first and basing your analysis on the category (slow grower, fast grower, stalwart etc). Peters niche is fast growing company’s and the book details all the criteria he would want in a perfect stock like: no analysts follow it, 20-30% growth rate, small size, product customers love, a boring or mundane product, etc. Peter believes that being able to stomach market volatility is more important than how smart you are and that many people are smart enough to understand the stock market but panic and sell during big downturns (and then buy during big up turns). Lynch notes that you will see plenty of big downturns in your investing lifetime and they are almost always great buying opportunities. Lynch advocates doing a lot of homework on potential investments like visiting locations, talking to investment relations departments etc. Lynch has a section that explains his favourite quantitative analysis techniques like P/E ratio, PEG, Balance sheet analysis etc. pretty standard stuff. He says that if you don’t think you can beat the market then buy a mutual fund.
One up on Wall Street, by Peter Lynch
Peter Lynch is one of the most successful (with some component of luck) professional investors ever with a stunning 29% annual return over 13 years of running the Magellan mutual fund. Lynch says that the individual investor has big advantages over the pros due mostly to lack of policy constraints and deep real-time knowledge of certain businesses (usually the industry you work in). Lynch advocates high growth stocks as a strategy for successful investing because they have the potential to return 2, 5 , 10 even 20 times your principle over a relatively short time frame. He emphasizes the importance of categorizing potential stock picks first and basing your analysis on the category (slow grower, fast grower, stalwart etc). Peters niche is fast growing company’s and the book details all the criteria he would want in a perfect stock like: no analysts follow it, 20-30% growth rate, small size, product customers love, a boring or mundane product, etc. Peter believes that being able to stomach market volatility is more important than how smart you are and that many people are smart enough to understand the stock market but panic and sell during big downturns (and then buy during big up turns). Lynch notes that you will see plenty of big downturns in your investing lifetime and they are almost always great buying opportunities. Lynch advocates doing a lot of homework on potential investments like visiting locations, talking to investment relations departments etc. Lynch has a section that explains his favourite quantitative analysis techniques like P/E ratio, PEG, Balance sheet analysis etc. pretty standard stuff. He says that if you don’t think you can beat the market then buy a mutual fund.
Re: BlueNote's Journal
July 27
Progress Update:
Weight: 224lbs
Biking to work almost daily, 5k each way.
Eating sensible portions, no sugar and limited carbs.
On track to save a little more than 50% of my take home this week.
I am in no way less happy then I was before , in fact riding my bike to work makes me more happy. Happiness is definately up over all
If I could only use one number to describe my financial situation it would be return on equity. Equity is the same as networth, all your assets less all your liabilities. You could do a dupont analysis (http://en.wikipedia.org/wiki/DuPont_analysis) on your personal ROW and determine how much of your ROE is derived from your savings rate (profit margin), use of assets and debt. I was thinking of coming up with a spreadsheet that does this. You wouldn't have to follow standard accounting conventions and could list all your assets at market value. You could also capitalize your job income by using a multiplier or discounted cash flow analysis. It would be a good exercise and would encourage things like owning less stuff (more efficient asset usage), and higher savings rates(through frugality , income increases or both). If you are in debt it will tell you if you are using the debt wisely or not. I suspect people that invest in real estate with mortgages are able to get much better ROE then someone who just uses their line of credit or CC to buy consumer crap.
My wife is pushing back on the 50% savings rate, afraid we won’t be able to take a nice vacation each year which she really looks forward to. I am trying to convince her that when we get through the heavy work and savings phase there will be plenty of time to smell the roses. I will probably have to lead by example in order for her to understand the value of all the high savings rate but she is starting to think my savings rate is a little crazy.
Progress Update:
Weight: 224lbs
Biking to work almost daily, 5k each way.
Eating sensible portions, no sugar and limited carbs.
On track to save a little more than 50% of my take home this week.
I am in no way less happy then I was before , in fact riding my bike to work makes me more happy. Happiness is definately up over all
If I could only use one number to describe my financial situation it would be return on equity. Equity is the same as networth, all your assets less all your liabilities. You could do a dupont analysis (http://en.wikipedia.org/wiki/DuPont_analysis) on your personal ROW and determine how much of your ROE is derived from your savings rate (profit margin), use of assets and debt. I was thinking of coming up with a spreadsheet that does this. You wouldn't have to follow standard accounting conventions and could list all your assets at market value. You could also capitalize your job income by using a multiplier or discounted cash flow analysis. It would be a good exercise and would encourage things like owning less stuff (more efficient asset usage), and higher savings rates(through frugality , income increases or both). If you are in debt it will tell you if you are using the debt wisely or not. I suspect people that invest in real estate with mortgages are able to get much better ROE then someone who just uses their line of credit or CC to buy consumer crap.
My wife is pushing back on the 50% savings rate, afraid we won’t be able to take a nice vacation each year which she really looks forward to. I am trying to convince her that when we get through the heavy work and savings phase there will be plenty of time to smell the roses. I will probably have to lead by example in order for her to understand the value of all the high savings rate but she is starting to think my savings rate is a little crazy.
Re: BlueNote's Journal
Aug 8
Progress Update
Weight : 222 lbs
Exercise: Biking to work , walking to grocery store on weekends
Financials:
Pay day is next week
DGI Portfolio
Recently took a position in DPS and CVX in the stock market as part of my dividend growth portfolio. Currently looking at RDS.B, LO and Netlse as possible contenders for the next round. I like stocks with businesses I can understand, good economic properties (a wide moat), good management, an attractive price and a history of paying increasing amounts of dividends along with increasing earnings at around 6-8% per year on average. The market trading at a relatively high P/E ratio right now so well priced companies are in short supply IMHO.
What works on Wall Street
The book is an interesting collection of statistical correlations between certain stock picking criteria to things like returns and volatility. The author attempts to find causation for certain correlations and I think there is a lot of truth to his findings. I didn’t read the whole book , that would have been almost as boring as reading a thesaurus. I think the book has a lot of value as a reference guide and if you like reams of statistics it might be good to read it cover to cover. For example there is a dividend section with tons of stats on different approaches to investing for yield, although no data on the DGI style. The author discovered an investing strategy called “trending value” which is the best thing I read in the book. Essentially trending value combines two strategies. The first is stocks that score well over a composite of value investing metrics like p/e , p/b, p/s, etc. and of those stocks one would select issues that have been trending up over the last 6 months or so. The strategy has done very well over many periods and economic environments. The main thing in following these strategies is the discipline and intestinal fortitude to follow the strategy even when (especially when) the market is going down quickly.
Progress Update
Weight : 222 lbs
Exercise: Biking to work , walking to grocery store on weekends
Financials:
Pay day is next week
DGI Portfolio
Recently took a position in DPS and CVX in the stock market as part of my dividend growth portfolio. Currently looking at RDS.B, LO and Netlse as possible contenders for the next round. I like stocks with businesses I can understand, good economic properties (a wide moat), good management, an attractive price and a history of paying increasing amounts of dividends along with increasing earnings at around 6-8% per year on average. The market trading at a relatively high P/E ratio right now so well priced companies are in short supply IMHO.
What works on Wall Street
The book is an interesting collection of statistical correlations between certain stock picking criteria to things like returns and volatility. The author attempts to find causation for certain correlations and I think there is a lot of truth to his findings. I didn’t read the whole book , that would have been almost as boring as reading a thesaurus. I think the book has a lot of value as a reference guide and if you like reams of statistics it might be good to read it cover to cover. For example there is a dividend section with tons of stats on different approaches to investing for yield, although no data on the DGI style. The author discovered an investing strategy called “trending value” which is the best thing I read in the book. Essentially trending value combines two strategies. The first is stocks that score well over a composite of value investing metrics like p/e , p/b, p/s, etc. and of those stocks one would select issues that have been trending up over the last 6 months or so. The strategy has done very well over many periods and economic environments. The main thing in following these strategies is the discipline and intestinal fortitude to follow the strategy even when (especially when) the market is going down quickly.
Re: BlueNote's Journal
DGI Portfolio Update
I got to looking at Phillip Morris International and it has an easy to understand business, a wide moat, shareholder friendly management and is priced fairly based on my valuation. They pay a nice ~3.9% dividend and have grown the dividend substantially since they were split off from Altria. I bought some shares for the family portfolio's. I was considering Lorrilard but tobacco is a shrinking industry in the US and Phillip Morris only does business outside of the US so they probably have better long term prospects due to growth in places like latin America.
Still looking at RDS.B, someone told me I could put it in my Canadian TFSA and would not get hit with any witholding tax (British or US) I may have to buy a bit of it and run a little experiment to see if that is the case.
I got to looking at Phillip Morris International and it has an easy to understand business, a wide moat, shareholder friendly management and is priced fairly based on my valuation. They pay a nice ~3.9% dividend and have grown the dividend substantially since they were split off from Altria. I bought some shares for the family portfolio's. I was considering Lorrilard but tobacco is a shrinking industry in the US and Phillip Morris only does business outside of the US so they probably have better long term prospects due to growth in places like latin America.
Still looking at RDS.B, someone told me I could put it in my Canadian TFSA and would not get hit with any witholding tax (British or US) I may have to buy a bit of it and run a little experiment to see if that is the case.
Re: BlueNote's Journal
Delegation Experiment
I am forking over my grocery money for the next month to my wife. She does most of the grocery shopping in our household division of labour so it makes sense. I was having to constantly communicate my budgetary needs to her. I just wrote her a cheque and said I wouldn't spend a penny more on groceries until next week. I advised her that if there is a surplus she could spend it on something fun for us, giving somewhat of a motivation to be frugal. I help create the grocery list and she now knows how much money she is working with at all times and she is really good at getting deals so hopefully this works out.
ERE Stats
I am almost exactly at 50% take home savings again this month. I am socking away a lot of money for an upcoming vacation. I think once that is over I will be able to get up to 60-70% savings rate. I am also planning on looking for a new job downtown. I could bring the savings rate up to 70-80% range if I get a better paying job and keep my current spending habits.
Riding my bike to work is one of the best decisions I have made. I also live in a fairly cheap apartment and split rent with my wife which makes this easier as well.
Food costs and vacation savings are the two big controllable cost factors that I can deal with in the next 3 months. However a 15-20% salary increase by switching companies (assuming the only cost increase would be a bus/rail pass) would be by far the biggest help for my savings rate.
INTP
My MBTI type is INTP, I noticed this forum is a big INTJ magnet but there probably some INTP's sprinkled in here too. INTJ's are more action oriented then INTP types, I find INTJ's to be very productive, lots of good output. There are probably a bunch of INTP's who have thought long and hard about ERE but won't do it because of the lack of bias for action.
One of the big advantages of being INTP is that I get a lot of entertainment utility (90% at least) from things like the Internet and the Library. Both of these things are really cheap (taxes and a flat fee). I think Jacob has mentioned this in the past but other types like Artisans and Guardians (SJ and SP types from MBTI) would have more trouble with ERE due to their preference for more expensive lifestyles.
I am forking over my grocery money for the next month to my wife. She does most of the grocery shopping in our household division of labour so it makes sense. I was having to constantly communicate my budgetary needs to her. I just wrote her a cheque and said I wouldn't spend a penny more on groceries until next week. I advised her that if there is a surplus she could spend it on something fun for us, giving somewhat of a motivation to be frugal. I help create the grocery list and she now knows how much money she is working with at all times and she is really good at getting deals so hopefully this works out.
ERE Stats
I am almost exactly at 50% take home savings again this month. I am socking away a lot of money for an upcoming vacation. I think once that is over I will be able to get up to 60-70% savings rate. I am also planning on looking for a new job downtown. I could bring the savings rate up to 70-80% range if I get a better paying job and keep my current spending habits.
Riding my bike to work is one of the best decisions I have made. I also live in a fairly cheap apartment and split rent with my wife which makes this easier as well.
Food costs and vacation savings are the two big controllable cost factors that I can deal with in the next 3 months. However a 15-20% salary increase by switching companies (assuming the only cost increase would be a bus/rail pass) would be by far the biggest help for my savings rate.
INTP
My MBTI type is INTP, I noticed this forum is a big INTJ magnet but there probably some INTP's sprinkled in here too. INTJ's are more action oriented then INTP types, I find INTJ's to be very productive, lots of good output. There are probably a bunch of INTP's who have thought long and hard about ERE but won't do it because of the lack of bias for action.
One of the big advantages of being INTP is that I get a lot of entertainment utility (90% at least) from things like the Internet and the Library. Both of these things are really cheap (taxes and a flat fee). I think Jacob has mentioned this in the past but other types like Artisans and Guardians (SJ and SP types from MBTI) would have more trouble with ERE due to their preference for more expensive lifestyles.
Re: BlueNote's Journal
50% savings rate "too difficult"
Apparently a 50% savings rate is considered to be "too difficult for most of us"by morningstar.
Everyone I have talked to about my 50% savings rate thinks it is really aggressive. They don't think I will be able to keep that up, citing children(don't have any yet), gifts, vacations and other things that are going to derail me. I won't tell them that 50% is like a yellow belt level achievement in the ERE community and 75-80 % would be a very meaningful achievement.
I guess I will have to keep my goal private , I don't want to alienate the people close to me.
I continue to read investment books and continue to learn more about investing. For me it really boils down to finding businesses that will compound at around 15% in the long term and have sustainable competitive advantages and pay a growing dividend. I bought some BHP billiton stock recently, they have great ROE/ ROIC and a good dividend yield that goes up regularly. The valuation seems reasnoable at this point, I think over a full business cycle one could do quite well with them but I may have to deal with some short term pain before commodity prices turn around again.
work
My boss told me she will probably be looking for a new job soon for many of the same reasons I want to. Our work has become too low paid, and unsatisfactory, the industry we are in is shrinking rapidly and there is no leadership to invest in the infrastructure needed to get our financial department modernized (COBOL running on a hierarchical database with an AS400 mainframe). A lot of the time I am just putting together my own software using VBA and spreadsheets because there is no other resources at my disposal. They worry about who will maintain these systems if I leave, too bad for them I guess.
Apparently a 50% savings rate is considered to be "too difficult for most of us"by morningstar.
Everyone I have talked to about my 50% savings rate thinks it is really aggressive. They don't think I will be able to keep that up, citing children(don't have any yet), gifts, vacations and other things that are going to derail me. I won't tell them that 50% is like a yellow belt level achievement in the ERE community and 75-80 % would be a very meaningful achievement.
I guess I will have to keep my goal private , I don't want to alienate the people close to me.
I continue to read investment books and continue to learn more about investing. For me it really boils down to finding businesses that will compound at around 15% in the long term and have sustainable competitive advantages and pay a growing dividend. I bought some BHP billiton stock recently, they have great ROE/ ROIC and a good dividend yield that goes up regularly. The valuation seems reasnoable at this point, I think over a full business cycle one could do quite well with them but I may have to deal with some short term pain before commodity prices turn around again.
work
My boss told me she will probably be looking for a new job soon for many of the same reasons I want to. Our work has become too low paid, and unsatisfactory, the industry we are in is shrinking rapidly and there is no leadership to invest in the infrastructure needed to get our financial department modernized (COBOL running on a hierarchical database with an AS400 mainframe). A lot of the time I am just putting together my own software using VBA and spreadsheets because there is no other resources at my disposal. They worry about who will maintain these systems if I leave, too bad for them I guess.
Re: BlueNote's Journal
Dividends
My new dividend growth portfolio paid me my first dividend today. $7 from Chevron. I scheduled my google calendar to remind me each day a dividend will be deposited into my account. It's a way to help reduce the knee jerk reaction of checking the prices constantly.
This is my basic stock picking process now:
1. I look at the companies ability to reinvest capital (retained earnings, debt, new equity etc.) to generate returns. I have been using a 10 year average of ROE and ROIC to select my stocks. Generally any long term ROE above 15 and ROIC above 10 will get my attention. However another probably better way to pick stocks is cash return on invested capital (CROIC) which comes as close as possible to showing how much cash a company generates as a percentage of its asset base. I investigate the companies qualitative characteristics to see if their high ROE/ROIC is caused by having a sustainable competitive advantage like being a low cost producer, brands, patents, switching costs etc.
2. If the company can compound its capital at a high rate of return through ROE and ROIC then you can make a lot of money if you buy at at a relatively low valuation and pay attention to risk. For this I look at the P/E ratio vs historicals and the earnings yield vs bond rates (2x 30 year treasuries and AAA corporate debt for example is a good hurdle). I look at the cash flow and see if it makes any sense at all vs earnings. For risk I am generally concerned with the leverage of the company and will usually only buy companies generating returns through sales volume and/or profit margins rather then other peoples money. The better the valuation the more closely the stock price will co-relate to the underlying cash generation and earnings. In addition there is the margin of safety concept that gives an investor a cushion against things like mistakes in estimates and short term market fluctuations.
3. The company needs to have a history of paying out a growing stream of dividends over at least 10 years, preferably longer, the dividend yield should be at least 3%, although I am not strict about this when the opportunity is right.
I read the annual report, I ask questions which I expect the MD&A to answer otherwise I consider that a strike against management. What they are in control of an what they are not needs to be categorized somehow (BHP billiton does a great job of this). They need to show how they are improving what they control and how they are managing what they can't (insurance, hedging, diversification of products etc.) . I am a professional accountant so I have a lot of practice putting together and reading the cash flow statement, income statement, balance sheet and other reports. I have a pretty good idea of how they flow and fit together, but I still have a lot to learn about this process. It's a good idea to review the previous years results and make sure nothing funny is going on with the numbers. For example if the company is making changes in accounting policy that if not made would make a material negative change to the earnings that that is a red flag. For example if they somehow were able to adjust the pension ROI upwards one year they could reduce the pension expense and inflate earnings. But if the ROI wasn't reasonable then they are just taking earnings from the future and using them to make today's statements look good.
That's pretty much the process, I enjoy doing it myself but some people should outsource the work through something like asset allocation indexing or a fee based advisor.
My new dividend growth portfolio paid me my first dividend today. $7 from Chevron. I scheduled my google calendar to remind me each day a dividend will be deposited into my account. It's a way to help reduce the knee jerk reaction of checking the prices constantly.
This is my basic stock picking process now:
1. I look at the companies ability to reinvest capital (retained earnings, debt, new equity etc.) to generate returns. I have been using a 10 year average of ROE and ROIC to select my stocks. Generally any long term ROE above 15 and ROIC above 10 will get my attention. However another probably better way to pick stocks is cash return on invested capital (CROIC) which comes as close as possible to showing how much cash a company generates as a percentage of its asset base. I investigate the companies qualitative characteristics to see if their high ROE/ROIC is caused by having a sustainable competitive advantage like being a low cost producer, brands, patents, switching costs etc.
2. If the company can compound its capital at a high rate of return through ROE and ROIC then you can make a lot of money if you buy at at a relatively low valuation and pay attention to risk. For this I look at the P/E ratio vs historicals and the earnings yield vs bond rates (2x 30 year treasuries and AAA corporate debt for example is a good hurdle). I look at the cash flow and see if it makes any sense at all vs earnings. For risk I am generally concerned with the leverage of the company and will usually only buy companies generating returns through sales volume and/or profit margins rather then other peoples money. The better the valuation the more closely the stock price will co-relate to the underlying cash generation and earnings. In addition there is the margin of safety concept that gives an investor a cushion against things like mistakes in estimates and short term market fluctuations.
3. The company needs to have a history of paying out a growing stream of dividends over at least 10 years, preferably longer, the dividend yield should be at least 3%, although I am not strict about this when the opportunity is right.
I read the annual report, I ask questions which I expect the MD&A to answer otherwise I consider that a strike against management. What they are in control of an what they are not needs to be categorized somehow (BHP billiton does a great job of this). They need to show how they are improving what they control and how they are managing what they can't (insurance, hedging, diversification of products etc.) . I am a professional accountant so I have a lot of practice putting together and reading the cash flow statement, income statement, balance sheet and other reports. I have a pretty good idea of how they flow and fit together, but I still have a lot to learn about this process. It's a good idea to review the previous years results and make sure nothing funny is going on with the numbers. For example if the company is making changes in accounting policy that if not made would make a material negative change to the earnings that that is a red flag. For example if they somehow were able to adjust the pension ROI upwards one year they could reduce the pension expense and inflate earnings. But if the ROI wasn't reasonable then they are just taking earnings from the future and using them to make today's statements look good.
That's pretty much the process, I enjoy doing it myself but some people should outsource the work through something like asset allocation indexing or a fee based advisor.
Re: BlueNote's Journal
I like your stock picking process. It seems like you are enjoying it a lot also. I have some reservations before trying this myself- I feel like I don't have enough time and patience to do this yet, but I'm enjoying reading your approach to this.
Right now I'm in all index based ETFs and bond ETFs with a few common stocks sprinkled in that looked like irresistible bargains. I think when my taxable portfolio gets to about 30k or 40k and I can get into enough positions to reduce the risk of common stock ownership I may attempt to re-balance into individual stocks but I don't like the idea of having to keep an eye on things.
Do you think the time trade off is worth it to cut out the management fees of ETFs? I really don't like the idea of a single company going bankrupt setting me back a hefty % of my portfolio. Do you set up stop losses? Only invest in large Market Cap with low debt / equity?
I can just imagine stocks like LO going into slow decline and over several years before you know it you have -50% return if you don't keep on it all the time (I can see why you went with PM instead, but just an example).
FYI If you ever feel like sharing your portfolio allocations one day I would be very interested to see what you are doing also.
Right now I'm in all index based ETFs and bond ETFs with a few common stocks sprinkled in that looked like irresistible bargains. I think when my taxable portfolio gets to about 30k or 40k and I can get into enough positions to reduce the risk of common stock ownership I may attempt to re-balance into individual stocks but I don't like the idea of having to keep an eye on things.
Do you think the time trade off is worth it to cut out the management fees of ETFs? I really don't like the idea of a single company going bankrupt setting me back a hefty % of my portfolio. Do you set up stop losses? Only invest in large Market Cap with low debt / equity?
I can just imagine stocks like LO going into slow decline and over several years before you know it you have -50% return if you don't keep on it all the time (I can see why you went with PM instead, but just an example).
FYI If you ever feel like sharing your portfolio allocations one day I would be very interested to see what you are doing also.
Re: BlueNote's Journal
One of the main problems I had but find easier to manage with experience is the stomach part of investing. Peter Lynch said that you invest with your stomach not your brain, keeping your cool when Mr. Market is depressed is the hard part. It's hard to watch the prices go down even though I know intellectually that the price is irrelevant to me because I am only interested in the dividends short term, the price long term. More and more I think about companies in terms of a Dupont ROE analysis, it is indispensable for me. If a company is bought at a good valuation and has a moat that allows it to compound at high rates of return, over long periods the price will go up as the market properly evaluates the business. If your valuation and rate of return is better then the market then long term you should beat the market because long term the market is a "weighing machine" as Warren Buffett once put it. I just wait and collect my dividends which makes the market vacillations far less painful.pemulis wrote:I like your stock picking process. It seems like you are enjoying it a lot also. I have some reservations before trying this myself- I feel like I don't have enough time and patience to do this yet, but I'm enjoying reading your approach to this.
Right now I'm in all index based ETFs and bond ETFs with a few common stocks sprinkled in that looked like irresistible bargains. I think when my taxable portfolio gets to about 30k or 40k and I can get into enough positions to reduce the risk of common stock ownership I may attempt to re-balance into individual stocks but I don't like the idea of having to keep an eye on things.
Do you think the time trade off is worth it to cut out the management fees of ETFs? I really don't like the idea of a single company going bankrupt setting me back a hefty % of my portfolio. Do you set up stop losses? Only invest in large Market Cap with low debt / equity?
I can just imagine stocks like LO going into slow decline and over several years before you know it you have -50% return if you don't keep on it all the time (I can see why you went with PM instead, but just an example).
FYI If you ever feel like sharing your portfolio allocations one day I would be very interested to see what you are doing also.
Indexing has a ton of hard data to support it, the Trinity study being the best thing I have seen. Indexing is also a really easy way to compound, you just set it and forget it. However there is a school of thought that would say that indexing has hit the point of diminishing returns. This is because it is popular and so it follows that more people are buying up the index through ETF's and funds. When a new company is added to the index ( say SP 500) a whole bunch of ETF's and funds have to buy it because they are tracking the index. Supply and demand dictate that the price of the new index entrants will go up because of the increased demand. Therefore your valuation on those stocks will be worse then if they weren't picked up by the index. The opposite is probably true of companies dropped from the index, they could be good candidates for a value play due to decreased demand.
I do like large cap stocks for my core portfolio because they are closely followed and I can generally trust the valuations and figures reported in things like morningstar and value line because the companies are so scrutinized. That's not to say I fully agree with the analysts, I don't always agree but its good to have multiple opinions. Some of the 5 star morningstar picks are total crap in my opinion. Which is surprising because sometimes the 5 stars are spot on based on long term competive advantages and good valuations.
If I had the time I would probably look at small caps in depth because there is probably a lot better valuations out there , but I just don't have the time.
I do like low debt/equity , that's my personality coming through, I personally don't really have any debt, I think it's a shackle. During times of great turmoil , like 2008, debt financing can be hard to renew because banks and financiers don't want to take on more risk, that leaves companies with a large debt structure holding the bag on massive liability repayments. The companies with low debt avoid this trap because they can just finance everything through earnings and wait out the storm.
I don't use stop losses or anything like that. I place buy orders for the day at market though a discount broker, simple as that. I then hold unless the underlying business breaks down so much that I am no longer dealing with the same fundamental business I originally analysed. I will probably also sell if a dividend was cut or didn't grow after a reasonable amount of time.
I will share my portfolio allocations one day, its on my to do list.
Re: BlueNote's Journal
That is interesting to consider about indexing. I know it was big deal recently when Tesla's market cap got large enough to crack some of the major indexes and ETFs and Mutual Funds had to buy more to keep up, further pushing the price.
I suppose you could conclude that everything with a large market cap is slightly over valued on average.
Well anyway thanks, lots of interesting thoughts here- you seem pretty zen about investing in general.
I suppose you could conclude that everything with a large market cap is slightly over valued on average.
Well anyway thanks, lots of interesting thoughts here- you seem pretty zen about investing in general.
Re: BlueNote's Journal
Death
A friend of mine died in a motorcycle accident yesterday, he was only 41.
Death is the great equalizer it is going to get all of us at some point. Some of us sooner than when we thought was probable. I think it is important to reflect on this and realize that the fact that we have time left on this planet is an incredible stroke of luck and we should all feel a profound burst of joy for that.
Think about the odds of the” unique you” being born over someone else. The probability of that particular sperm and that egg making you is very low given the number of sperm and egg combinations produced in the average couple. Think about how lucky you were to be born in this time, with civilization advanced to the point where in the 1st world we almost all have easy access to decent food, shelter and healthcare. Think about how lucky you are to not have to worry about being killed by the elements, starvation, hostile enemies etc. The odds are vanishingly small for you to even be here at all, yet here you are working towards getting as much time as possible under your control. I don’t want to dwell on this topic but it’s probably a good idea to think about it every once in a while so that we don’t lose track of what is really important.
A friend of mine died in a motorcycle accident yesterday, he was only 41.
Death is the great equalizer it is going to get all of us at some point. Some of us sooner than when we thought was probable. I think it is important to reflect on this and realize that the fact that we have time left on this planet is an incredible stroke of luck and we should all feel a profound burst of joy for that.
Think about the odds of the” unique you” being born over someone else. The probability of that particular sperm and that egg making you is very low given the number of sperm and egg combinations produced in the average couple. Think about how lucky you were to be born in this time, with civilization advanced to the point where in the 1st world we almost all have easy access to decent food, shelter and healthcare. Think about how lucky you are to not have to worry about being killed by the elements, starvation, hostile enemies etc. The odds are vanishingly small for you to even be here at all, yet here you are working towards getting as much time as possible under your control. I don’t want to dwell on this topic but it’s probably a good idea to think about it every once in a while so that we don’t lose track of what is really important.
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jennypenny
- Posts: 6858
- Joined: Sun Jul 03, 2011 2:20 pm
Re: BlueNote's Journal
I'm sorry about your friend, BlueNote.