Saturday, September 3, 2011
Weekend Reading - September 3, 2011
The Labor Day weekend is upon us, and this weekend always signifies the end of summer for me. I grew up in Michigan, where season changes are a major part of life. Now that I live in Florida the beginning of fall is less pronounced. What I gain in lieu of season changes are beautiful beaches, no state income taxes, plentiful palm trees and sunshine almost every single day. It seems like a fair trade.
I didn't post any weekend reading last week due to my big move. The new apartment has been interesting. When we moved in we found the toilets run incessantly, the freezer had mold due to cut electricity, the stove wouldn't power on and the the electrical outlet for the dryer was outdated. Other than that, it's closer to public transportation and much cheaper. It's not gated and doesn't have a fancy pool, but I'm more than happy to give up some amenities in life to get out of the rat race earlier. So far, so good!
I hope all my readers have a wonderful holiday weekend. I've been splurging a bit more recently; namely on food. I took my girlfriend out to a small Chinese dinner this past Wednesday, which is unusual for us as I usually eat sandwiches during the week for dinner. After eating a refreshing meal comprised of orange chicken and lo mein noodles, I cracked my fortune cookie to reveal my future: "YOUR FINANCIAL OUTLOOK IS EXCELLENT". Thanks, fortune cookie! Tonight, we plan on going to a great sushi spot downtown.
Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.
Top 10 Finance Blogs
The Dividend Ninja highlights the top 10 financial blogs that he reads on a regular basis. I am proud to announce that Dividend Mantra was highlighted in that list. That makes me extremely proud! Thanks for the mention Ninja and I'm delighted that you enjoy reading my blog. Like I said in my comments, your blog is missing from that list!
3 Hidden Truths about Market Crashes – Why They Crash When They Are Handled By Professionals
The Dividend Guy discusses market crashes, and the truth behind them. The modern day stock market is hard to stomach at times. Robo-traders and fiber optic connections directly into the market definitely give big firms advantages over the regular Joe trading in his home office. That's why I don't trade. I buy quality companies for the long-term. When (not if) markets crash I buy additional shares. That's just me.
The debt slave revolution will not be televised
Jacob wrote a great article about the modern day debt slave and why he doesn't participate in the grand scheme to oppress the middle class. I'm rapidly disconnecting myself from this system. It is possible to navigate your way out of your 9-5 (7-6 in my case) if you're motivated enough. I'm extremely motivated. I look at it like the Matrix movies: you can take the red or the blue pill and your chosen fate will await you. It's much easier to stay "plugged in" and live your life while being told when to work and how to spend your money. It's much harder to "disconnect" and strive for the path less walked. However, I believe the rewards for living your life how you want to live it are vast.
Are Dividend Investors Benefiting from Stock Buybacks?
Dividend Growth Investor compares buybacks to dividends and I agree with his conclusions: dividends are preferred. I'd much rather receive cash and reinvest it or use it as I feel fit. Stock buybacks can unlock shareholder value if executed correctly, but again, I prefer cash. Cash is still king.
Financial Stocks Just Cannot Catch A Break
Buy Like Buffett discusses the recent decision by the U.S. Government to sue some of the largest banks in the nation over financial negligence. This is an awfully strange move, coming from the same government that was aggressively supporting the banking sector just a couple years ago. This is just one more reason to stay out of the finance sector in the short term. There is a lack of clarity and transparency as to where this sector is headed. I think some of the larger banks are a good value, but it's just hard to say when shareholders are going to reap some of the rewards of investing in them.
Wal-Mart Stores Inc (WMT) Dividend Stock Analysis
Dividend Monk provides an excellent analysis on Wal-Mart here. His articles are always tremendously insightful and I agree with his conclusions and valuations. Wal-Mart is a solid conservative pick in a dividend growth portfolio at present valuations. I'm long WMT and wouldn't mind increasing my position at present prices.
If You Only Invested Then…A Little Motivation for Now
The Dividend Pig posts some hypothetical examples of investments one could have made many years ago. The power of hindsight shows us how important it is to start investing as soon as possible. The power of compounding and time cannot be ignored! Delayed gratification doesn't bother me when I think of the kind of wealth I could have in the future. I'm living like nobody else will now so that I can live like nobody else can later.
Why I drive an 11-year-old car
My Own Advisor highlights why he drives an older car. Congrats to MOA for realizing that very little value can be attained through driving a nice car. If I ever go back to owning a car again I'll definitely follow his lead and drive around something that is at least a decade old!
Buying 1 oz. of Physical Gold (And With My BMO Gold Card)
The Wealthy Canadian discusses his first foray into purchasing physical gold. I don't know if I'll ever own precious metals or not, but if I do I'll follow his lead and it make it a VERY small portion of my overall portfolio. I much prefer owning companies that pay me (dividends) to own them. Gold actually requires that you pay out money (in the form of storage) to own it. As I get close to meeting/exceeding expenses through passive income I may end up holding physical gold as a storage of wealth. We'll see. I can see the allure of holding it in your hands, much in the same way that holding a lot of cash in your hand can be slightly intoxicating.
Harleysville Group Inc. (HGIC) Dividend Stock Analysis
D4L provides an analysis on HGIC, one of my holdings. It was interesting to get his take on this company, as he is also long on this company. He concludes that while it's trading far below his calculated fair value, he is not adding to his position due to a high payout ratio based on free cashflow. I wouldn't mind adding to my HGIC holdings, but it's already a fairly large part of my portfolio and the effects of Irene are not yet known. I'm also holding for now, but am watching.
Following Buffett Blindly Can Be Injurious To Your Wealth
MoneyCone published a great article on how following Warren Buffett may not always be the best idea. Buffett's recent investment with Bank of America was opportunistic, and something that everyday investors don't have access to. As I said in my comments, in an uncertain market he is making a certain 6% on his money with an opportunity to make more on the warrants. It's a no-brainer, but count me in among those that didn't buy BAC common stock.
Thanks for reading.