Weekend Reading – December 20, 2014

happyweekendWe’re now just a few days away from Christmas. What a beautiful time of year, right? Although I don’t get the festive cold and snow down here in Florida, it’s still a great time to be thankful for what you have, spend time with family, and reflect on the year.

I know I’ve had a wonderful 2014. It’s been extremely difficult at times, and I’ve lost some relationships along the way. But I’ve gained a lot as well – now six months into writing for a living, engaged, and happier than I’ve ever been. Life is very good.

I took some time off yesterday to really soak up the great weather we’ve been getting by spending some time out and about. Luckily, I was able to finish some of my projects ahead of time, which afforded me some time to leisurely spend my day however I wanted to. Though I’m not financially independent yet, being able to take an entire Friday off to do whatever is surely a joy that’s reserved for few. So I grabbed some lunch at this great deli up the road before taking a couple of hours to spend time downtown with an iced coffee in my hand. It just so happens that I stumbled upon a carriage that the downtown Wells Fargo branch had set up outside of their office. As a shareholder, I certainly appreciated the beauty and history. So I snapped a picture. Now, I’m sporting a rickety, cracked iPhone 3G, so the picture quality isn’t the best. But I figured I’d share the pic with you readers anyway.

wellscarriage

This will likely be the last compilation of reading material for the year. I’ve been saving some great articles, so this one may be a bit longer than normal.

Looking forward, I’m excited to finish 2014 strong. I’m going to be reviewing my goals here pretty soon before releasing my goals for 2015. And I also have a goals-related post that should go live tomorrow. So look out for that.

In the meanwhile, I’m including a list of great articles that I recently read and enjoyed. I hope you readers find some value in them as well. Have a great weekend!

These 5 Dividend Growers Just Announced Dividend Hikes
I wrote about five different dividend growth stocks that recently announced dividend increases. Nothing like getting a raise for doing nothing at all.

Wells Fargo Is a Big Winner in Lending Club IPO
Speaking of Wells Fargo & Co. (WFC), it appears they did well with the LendingClub Corp. (LC) IPO. This is an example of some of the things I’ve discussed before. By investing in wonderful businesses, you can often do well with everything else that’s going on around you. Instead of betting directly on an IPO, I profit indirectly through WFC (with a lot less risk). Another example of this is that I don’t need to worry about investing directly in a Chinese company to gain access to that market because many of the multinational blue chips I own a chunk of already do some business there (which will likely grow over time).

Dividend Growth Investing FAQ
David Van Knapp put together this really solid Q&A on dividend growth investing over at Seeking Alpha. A lot of this is basic information, but it’s always nice to brush up on some of this stuff. And any beginners out there in the readership will find particular value in this article.

Should I hold on to American Realty Capital Properties (ARCP)?
Dividend Growth Investor ran through some reasons to either hold or sell ARCP at this point. Seems like he went through the same process as I did, before I decided to finally cut my loss and move on. He largely came to the same conclusion as I did.

Those Who Like Money, and Those Who Like Things
J. Money linked out to an excellent documentary titled “Without Bound – Perspectives on Mobile Living“. The paraphrase by one of the participants is one of the best I’ve come across:

I find there’s two sorts of people – people who like money, and people who like things. The ones who have the things don’t have any money, and the people who like the money don’t have a lot of things. I’d rather have the money than the stuff. Because money buys me freedom. freedom of choices, freedom of movement, freedom to do what I want to do.

Amen!

These 9 Dividend Growth Stocks Go Ex-Dividend Next Week
I put together a list of dividend growth stocks that go ex-dividend next week and highlighted one in particular that seems like a great bet here. If the featured stock wasn’t already such a large position for me, I’d be buying more.

The Middle East Has A Huge Advantage In The Global Oil Market
I thought this article was pretty insightful on what’s going on right now. The included chart on the cost of production was really interesting. You can see the cost across oilsands is particularly expensive, which is relevant for some of the Canadian producers.

Retire by 40? Can it be done?
A reader pointed me to this article. I found it interesting because, as a mainstream article, it’s actually soft to the idea of the possibility. I remember when I first started looking into this – retiring or becoming financially independent by 40 – the mainstream media would laugh at the mere prospect. It seems that there is some kind of cultural shift happening here. Just my perspective on it. While I don’t think the article is particularly insightful in any one way, I do cringe at some of the ideas near the end of the article. It seems that some “experts” fear that people won’t find an identity once they leave the workforce. While I agree that this is a concern, I also find it troubling. It’s almost as if people are preprogrammed robots that, once they stop doing what they were programmed to do, have no other purpose in life. I find that a shame when people actually believe in that.

Is This an Efficient Market?
Although a UK perspective, this post discusses the recent moves in oil as to how it relates the efficiency of the market. I’ve long since decided that there’s no way the market can be truly efficient. I need to look no further than 6% or 7% swings in major companies from day to day, as if these companies are worth billions of dollars more or less after absolutely no changes in the underlying businesses.

Former NBA star Antoine Walker: Life after losing $110 million
Think the whole belief in “It’s not what you make, but what you keep” is bunk? Think again. I’ve said it many times before, but it deserves repeating. What you save, not what you make, will determine your odds of achieving financial independence. Saving more is more efficient than earning more and your savings rate will also be more important than your investment returns when your asset accumulation phase is a decade or less.

My 2015 Goals
It’s that time of year! Bert put together some really great and unique goals. I’m looking forward to putting together my short but focused list over the coming weeks.

Where to put your cash? A house or a stock
I’m a lifelong and loyal renter, but there’s a method behind my madness (there always is).

The real S&P composite has increased 12.2-fold from January 1890 to December 2014, or 2.03 percent per year, much less than most people would have guessed. Most of the real return in the stock market over the last century has come from dividends, not real capital gains,” said Shiller. “Home prices have increased only 1.5-fold, or only 33 basis points a year. Essentially, home price capital gains overall have amounted to virtually nothing.

And:

It would perhaps be smarter, if wealth accumulation is your goal, to rent and put money in the stock market, which has historically shown much higher returns than the housing market,” said Nobel Prize-winning economist Robert Shiller at a Standard and Poor’s conference last week.

Book Notes – Enough

Henry put a nice review together on what seems like a great book. Although I’m not an indexer, I have a lot of respect and admiration for Jack Bogle. I particularly like this quote:

Success is not the key to happiness. Happiness is the key to success.

Money Can Also Buy You Unhappiness

Another case of some sense in the mainstream media. Like I mentioned above, there appears to a shift occurring.

As folks grow older, they often stop accumulating possessions and instead start giving stuff away. You might view that as a rational strategy for those approaching the end of their life. But I view it as acquired wisdom: All those possessions start to seem like a burden that distracts from life’s pleasures.

Powerful stuff.

How one homeowner bought a home with a $1,026 Down Payment
Well, maybe I spoke too soon. This is a really depressing article. I actually thought it might have been satirical at first, but sadly that wasn’t the case. This kind of stuff is part of what got us into a financial mess less than 10 years ago.

Full Disclosure: Long WFC.

Thanks for reading.

Photo Credit: gubgib/FreeDigitalPhotos.net

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42 Comments

  1. DM,

    Thanks for adding my article to the list, I appreciate it! I am excited to read your goals article in 2015. 2014 has been a crazy year for you, but one that had about as great of an ending as anyone could have asked for. Congrats on your all of your accomplishments during the year, especially the engagement. I am most excited to see what you have in the works for next year! I am always open to sharing a goal of going to the Ohio State-Michigan game with you!

    I am about to start reading the other articles now and based on your excerpts, it looks like I have some great reads to get through this afternoon.

    By the way, you would never have guessed your phone is cracked by the picture!

    Thanks again for including my article in the list. Have a Merry Christmas!

    Bert

  2. Thank you for mentioning my post on ARCP. I kept thinking that as a long-term investor I should be holding on, and not chicken out. But then I realized I was hoping, and speculating, rather than investing. I also changed my mind because I realized that I cannot trust management – hence it is wise to sell almost everything. Changing my mind is usually tough, but I do it occasionally, especially when the evidence points otherwise.

    I am keeping about 20% of my original position I have in an IRA however, since the amount is a few hundred bucks and at $10/commission to buy and sell it would cost more to get out and buy something else, than to just sit and wait. Plus, I find it easier to monitor companies by owning a few shares, rather than to just look at them. I am weird 😉

    Anyway, I hope you can keep doing your writing for the next several years and inspiring investors. One of these days in a few years I will hopefully be in a position to simply follow my passions without having to produce TPS reports at a set time every day. But who knows, we might get a nasty and prolonged bear market, and I would have to work, in order to take maximum advantage of it and load up on more quality at a cheap price?

    Good luck in 2015!

  3. i just submited my 2015 goals on my blog and I am extremely curious to see yours! I think new goals will come along the way of 2015 but thats just a joy to find more stuff to try and complete. I hope you have a fantastic (read frugal) christmas and a happy new year my man.

    Super impressed by this blog. You, together with all other Dividend bloggers out there, keep up the good year and I wish 2015 will be your best year so far!

    Best Wishes, Martin from Sweden

  4. Those little days of freedom where you get to just stop and enjoy life are what it’s all about – awesome that you can still do this without being financially independent!

    Look forward to hearing your 2015 goals and encouraging you along the way, definitely seems like 2014 has been a great one!

    Cheers,

    Jason

  5. I look forward to reading through these articles over the holiday season. You are absolutely right there are very few people who can take an entire Friday off to do what ever they want to. Must be nice! I had a great time following your progress throughout 2014 and am looking forward to see what 2015 brings for you. I’m especially excited for your review of the Berkshire Hathaway meeting.

    Best of luck,

    Mr. Captain Cash

  6. “As folks grow older, they often stop accumulating possessions and instead start giving stuff away. You might view that as a rational strategy for those approaching the end of their life. But I view it as acquired wisdom: All those possessions start to seem like a burden that distracts from life’s pleasures.”

    Amen. About the time my wife and I hit 40, we began to unaccumulate things. Yeah I know, unaccumulate isn’t a word, but it sums up the situation perfectly. We actually need very little, but we are inundated by a society with the idea that we should get more, more, more! Our house is a modest 1800 square feet, 40 years old, and I will be spending a good part of my first year of retirement fixing things up. But I like to work on the house when I’m not rushed, so it’s not a chore. Jason, you have a head start on unaccumulating things, which leads to accumulating time. And what is more valuable than time? Maybe love, but not much else.

    Best wishes,
    KeithX

  7. Hey DM –

    Quick comment about the home ownership article. I have often swayed back and forth about whether to buy a condo or not. I read the article you posted a week or so ago, and many other articles similar to it. One thing that all of them forget to mention is as a home owner you aren’t just looking for appreciation in the house. They fail to mention that most people are leveraged 5-1, leverage that would not ever get a “margin call” regardless of swings in real estate. So 1.5% annual gain in home price would actually be 7.5%, they also fail to mention that as a home owner, you are building equity through every payment you make.

    All that being said, I am a firm believer that the stock market is the best way to build wealth. I just believe these articles I read like the one you posted, as well as others, fail to mention all the aspects involved. The two most important neglected aspects are the very cheap leverage that doesn’t ever get a margin call, and you build equity with every “rent” payment you make.. I’d like to a very thoughtful indepth discussion with those involved as I am right at the point where Id like to buy a condo.

    Anyways, thanks for the reading.

  8. Hey DM,

    Nice wrap-up! It’s always nice to look at the targets for 2015 of fellow dividend investors as I work on setting my own. Very interesting content overall.

    Best,
    DividendVenture

  9. Bert,

    No problem at. Wishing you the best with the goals throughout 2015. 🙂

    It’s definitely been a crazy year. And I haven’t even discussed all that happened in Michigan. Needless to say, it’s been rather unfortunate. But I’m really thankful for all that’s happened otherwise. Been a tremendously successful year in so many ways. I’m so thankful.

    Appreciate you stopping by. Hope you’re having a great weekend!

    Cheers.

  10. DGI,

    I hear you on ARCP. It’s such a shame, because the potential to make a lot of money for a lot of people was there. It would appear that greed got in the way of good decision making.

    I’m confident you’ll be exactly where you want to be very soon. Probably sooner than you may think. Saving a high rate of income and investing that excess capital intelligently puts you on the path to great wealth and income, almost irrespective of everything else that’s going on. It’s pretty much unavoidable to succeed. 🙂

    Appreciate the wishes of good luck. I wish the same for you. I think 2015 is going to be another great year!

    Best regards.

  11. Martin,

    I hope you knock your goals out of the park. It’s exciting to close out on year fairly successfully and look forward to another year of such success. 2015 should be full of opportunities. 🙂

    Appreciate the kind words very much. I put my heart and soul into the blog and its content, and I’m doing my best with the saving and investing. I’m incredibly proud of all of the success thus far. A lot of hard work and a pinch of good luck can get you a lot further than you might think.

    Thanks for stopping by. All the best in 2015!!

    Cheers.

  12. Jason,

    Absolutely. It was great just to walk around downtown and take some sunshine in like that. A wonderful preview of financial independence. 🙂

    I think we’ve all had a great 2014, for the most part. I’m hoping for even more in 2015!

    Thanks for the support. Really appreciate it. Let’s finish the year strong.

    Best regards.

  13. MCC,

    It was really great to be able to do that. I don’t get the opportunity often because I stay so busy writing, but every once in a while I’m ahead of schedule. 🙂

    Really looking forward to the BRK meeting. Should be a ton of fun. Hoping to take some great pictures and put together a thorough report on the event.

    Thanks for all the support. Wishing you the best for 2015 as well!

    Best regards.

  14. KeithX,

    Great story there. Thanks for sharing. I couldn’t agree more with your unaccumulation strategy. I can’t understand how anyone would rather have more stuff than time, but that’s just me. Time is life and life is time. Stuff is just…stuff.

    Keep on keepin’ on. 🙂

    Best wishes.

  15. took2summit,

    You may not have a margin call with a house, but a bad economy can not only lead to loss of value in your home, but also a loss of your job. That’s what happened to a lot of people during the financial crisis. Loss of income, they had a problem making payments, and then all of the sudden they couldn’t get as much out of the house as they thought they could to sell and move on. That obviously leads to disastrous results. All of the sudden, that “equity” you built is gone.

    It’s tough to compare stocks directly to home ownership, however, and Shiller notes as much in the article. I think it’s a complicated subject, but one is best off comparing the cost of the home (or condo) and ALL costs associated with it against a similar rental. I find renting is more often cheaper due to economies of scale and the ability to “right-size”. And buying a condo probably give you the worst of both worlds as far as drawbacks involved with both renting and owning. In my view, buying a condo is like buying a piece of a corporation that is going to be run by amateurs.

    I think the way to really make housing work for you is to buy a cheap house that needs work. Fix it up to your specs, which allows you a cheaper space permanently to live in, and one that also likely appreciated significantly from the price you paid.

    People often get emotional when it comes to purchasing a home, or any time it’s called out as a poor investment. It should really just be looked at as a business decision in regards to how cheap you can possibly put an attractive/acceptable roof over your head.

    Best wishes!

  16. DV,

    Glad you enjoyed the post. I tried to put some interesting articles together that cover a wide variety of topics. 🙂

    I’ll be discussing my own 2015 goals here pretty soon. Excited to see where the next year takes us all!

    Thanks for dropping by.

    Cheers!

  17. Great list of articles, really enjoyed reading Money Can Also Buy Your Unhappiness. Looking forward to an excellent 2015. Have a Merry Christmas!

  18. Hi Jason

    Thanks for including me in your review.

    The post about buying the house for such a small down payment was an eye opener, as you rightly said isn’t that one of the things that got us into the Financial Crisis?

    I am also looking forward to your review of the Berkshire Hathaway meeting, I assume you won’t be spending big at the sales from all their companies!

    Hope you have a great Christmas and look forward to following your progress in 2015.

    Best Wishes
    FI UK

  19. Jason,

    Thanks for the great articles, especially house vs stock. Do you know of any articles that compare rental property vs dividend investing for financial freedom?

  20. I really enjoyed that Budgets Are Sexy article too–such a great way to think about life. You’re reminding me that I want to watch the documentary! Too bad Frugal Hound is too large to fit in a tiny house :). Hope you have a wonderful Christmas!

  21. Nice list, glad that I clicked into this article. The CNBC article surprised me a bit, as it did you. If the mainstream media is prepared to at least entertain the idea of retiring early, that must me enough people are actually doing it, and they can no longer poo poo the idea as some pie-in-the-sky phenomenon that people “luck into”.

    You will get there. So will I. 🙂

  22. Hi DM !

    Those who like things and those who like money has pleased me a lot. Thanks for all these good links.

  23. Tawcan,

    Glad you enjoyed that one. I thought it was a great case of common sense in the mainstream media. You don’t always find that. 🙂

    Also looking forward to a great 2015 for all of us. Onward and upward!

    Cheers.

  24. IP,

    Yeah, that’s pretty interesting stuff. I certainly couldn’t live quite that extreme, but I give those folks a lot of props. The end result is a little more extreme than I’d aim for, but I respect their mindset a lot.

    Thanks for dropping by!

    Take care.

  25. FI UK,

    Absolutely. Pains me to read an article like that, since it seems like they’re highlighting how fantastic it is that this person was able to save a pretty small sum of money over years and then buy a house with that little bit of cash. Doesn’t seem like something we should be discussing as a goal for others.

    Yeah, I’m really looking forward to the BRK meeting. I hope I get within a few feet or so of Buffett, but I doubt it. Should be great just to be in the same room. 🙂

    Happy Holidays to you as well!

    Best regards.

  26. Joe,

    Hmm, I don’t know if I’ve run across any direct comparisons. Not sure if it would be apt, however, as they’re very different strategies. I would think that one could probably generate much more passive income from the same amount of capital with rental properties, if only because you’re using a ton of leverage. It would be an interesting comparison, but I think they’re vastly different from one another. The passivity of dividend growth investing is especially attractive, in my view.

    Best regards!

  27. Mrs. FW,

    Ha. It’d be a tight fit with the three of you. I think it’d probably be fun at first, but even the minimalist in me doubts that I’d enjoy living in less than 100 square feet permanently.

    Thanks for dropping by. Happy Holidays!

    Best wishes.

  28. Steve,

    Yeah, I thought it was great. I’ve had my own dealings with mainstream media, and I’ve always found a tinge of doubt there. But those hard edges are apparently softening now. And that’s most likely because this is no longer a fringe idea where you just have a few weirdos or something aiming for it. There are a lot of incredibly intelligent and well-adjusted people doing this because the alternative (working for most of your life) mostly sucks.

    We’ll see each other on the other side. 🙂

    Cheers!

  29. DM- Without Bound Documentary….the philosophy inherent in it says it all (regardless if you live mobile or not! I liken it to playing the game of monopoly (like life) and the answer or my “get out of jail card” is there IF we chose to take it! I plan to take my remaining time AND spend it wisely to my liking! I choose cash flow to enable FREEDOM baby (as Austin Powers might say) and eliminate/sell the “things” that no mean a damn! Happy Holidays

  30. mike in TX,

    Absolutely. Couldn’t agree more. The philosophy behind the lifestyle is fantastic. Even if the end result (living in an RV) isn’t really what I’m after, I think the message should be really appreciated for its value and insight. It’s about realizing that more stuff just won’t buy you the happiness you think it will. Freedom (from work, stuff, etc.) and autonomy is really where it’s at, and that’s at the heart of why we are all reaching for financial independence as soon as possible.

    Thanks for dropping by. Happy Holidays!

    Best wishes.

  31. Thanks for the PM recommendation in your Daily Trade Alert article. I have a small position now, but am looking to add to it in the coming months.

  32. EWB,

    No problem!

    I’m a big fan of PM here. I think it’s one of the best bets in its space. It’s weighed down by currency issues and some investments, but I can’t imagine this company doesn’t do well over the next 10 or 20 years. The big risk is further plain packaging mandates, in my view. So I’d put PM higher on the risk/reward scale than a typical stock, especially one in the consumer space.

    Best regards!

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