Monday, February 25, 2013

Thought on our spendings and about other things

  • It's February 25th and we have officially failed to managed our budget under 3.5 K$. Booo! Before being to harsh on ourselves, I have to say this is due to 3 main reasons :
  • I ordered 500 $ worth of motorcycle stuff -- I'm actually pimpin' my ride. Hence the big number under the Car and moto repair lign. 
  • My girlfriend had to put 200 $ more to buy additional bonds since it's RRSP contribution time. So our investment budget was busted!
  • We were fined 160 $ by a zealous police-woman for turning in a restricted zone. Nothing to write moma about-- and no life's were endangered at any point during this episode! It was just plain and simple lack of judgement on this woman part. Hey, the can't teach common sense in school!
  •  We had to renew our Costco membership which costs about 50 $. (I have to buy shares from Costco!)
What good comes out of this budget?

Let's try to look at the bright side of things: 

  • Pimpin' my ride means my vintage bike is worth much more now (I reckon around 3 or 4 K$). So it's good for my Net Worth.
  • The money my girlfriend used for investment purpose will grow her RRSP and Net Worth.
  • I still think the 3.5 K$ mark is attainable. (Come on! A little encouragement would help! Geez...)
  • I just received dividends from Royal Bank (RY.TO). I ended my drip program. I need the money for this non working period. RY has been doing amazingly well this past year. I bought it at 53 $ and it's now around 65 $. It's my bank and it's a position I'm very comfortable with.
  • I just finished Andre Hallam's
    book, Millionnaire Teacher, and I have to say he makes a strong argument regarding indexing. I might succumb to the temptation of buying Bond Index since there is nothing cheap to buy on the stock market at the moment.
  • Andrew Hallam owns only three funds! Talking about simplicity. The guy has a plan and sticks to it. It makes you wonder how people with a basket of over 20 stocks can effectively follow all of them. Up to this point, you might as well do like Andrew and buy the whole lot. This way you don't need to follow any of them -- and let the market do his magic without worrying at all
  • If I were a millionaire, I would probably be indexing as well, while keeping 25 % in stock picking. Hey, a guy has to have a little thrill. I'm a millionaire, no?

Wednesday, February 13, 2013

Mistakes and Graham Price

Hello Freaks!

In this process of getting richer we are bound to make mistakes. Everytime I make one, I tell myself : "you're an idiot, stop doing these rookie mistakes". But I will do it again (not always, but sometimes).

The list is now getting bigger. But I don't mind it that much. You can't control what's done. I try to remain focus on what's coming instead. I know that's pretty tacky stuff, but it's true! (don't be so stuck up -- geez...)

Here's my top five of mistakes (there is no order) :

  • Selling my three Apple shares at 120 $ (and buying only three freakin' share; what's that!). I don't want to know how much it is worth now. OK, I know!...
  • Selling my SNC-Lavalin 50 shares just because the CEO was being handcuffed on TV! (that was shocking though). What did I learn from Lynch, Buffet and so on : stick to your guns if the company is good. What did I do : I sold them like a bandit on the run! It's a pity because I had the great impulse of buying those shares while on the downslide thinking it was a great opportunity...
  • Selling my Rogers Communication 200 shares bought at 34 $ because I thought the market would come crashing the day after. I take full responsability for this dumb ass move, but I was badly influenced by people around me (I won't mention my girlfriend nor my father in-law, no no...)
La morale de l'histoire? : you are bound to make mistakes, no matter how hard you try, how much you read and how convinced you are in your strategy. We are human, and human are also very much driven by emotions. Otherwise we wouldn't 5 billions on this planet!

Graham Price

Thanks for nothing by the way. No one helped me in the least. I had to do research on Google, imagine that!

Anyway, to calculate the Graham Price you follow this equation: square root of EPS*BVPS*22.5

Don't ask for more! And the Zweig part is different... and I still couldn't figure out why he brought it up!

The important part is this one : Power Corporation (POW) is a buy at less than 32 $ (it's 26 $ right now) and has a yield of over  close to 5%.  Go get it now! Now!

This is a fantastic company: diversified and all. I know it's my holding and I preach for my Parrish, but its true.

Not to mention Barrick Gold and Suncor.

Three of my most important holdings are bargains according to Graham Price. What are you waiting for!


Saturday, February 2, 2013

Financial Goals tweakings

Hey Financial Freaks,

I have updated my Financial Goals in light of my recent cash-out and the conclusions of my last two budgets. Here are the changes:

(UpdatedTo respect, 75 % of the time, a monthly budget of less than  3 500 $. Before December 2012, I had never done a budget. I was always telling myself : « why bother, you live like you live, so make the most to pay the bills at the end of the year! » Making this first budget was a revelation: I actually found out where the money went (in food mostly!). Needless to say it forces you to make wiser choices. Restaurants have been cut off drastically. On the basis of my first thorough two budgets (December and January), I have a better idea of what comes out. Therefore, I set out a goal of spending less than 3.5 K$ per month, 75 % of the time, so 9 months out of 12. Since I failed the last month (with 4.3 K$), I have two remaining chances!

How are we going to do it? We plan on cutting drastically in :
  • Investing Money : we have already reduced this portion by almost 55 % (from 550 $ to 250 $).
  • Restaurants : we plan to reduce our Beef Tartare and Cabernet Sauvignon nights out by roughly 40 % (from 340 $ to 200 $)
  • Condo Maintenance : we are done with renovating this condo. But we will keep ourselves some dineros just in case we have some tweakings to do. So it's a 80 % reduction (from 250 $ to 50 $). 
That's about it. Seems simple, no? But yet, I foresee hardships, pain and Kraft Dinner along the way... (at least I'm a Kraft shareholder. Is that leverage?)

(Updated) To hit the 135 K $ mark in my portfolio. Right now I have roughly 129 K $ (you can check it out here). I have a lot of cash flow. I need to invest some of it in new quality stocks. But, considering the actual bull market, I will be extremely patient in that regard. So if I hit the 135 K$ mark, it might solely be because of dividend income, interests and a favourable market that will grow my actual investments; and not because of new acquisitions. Again, I don't expect a lot of new income in 2013.

Question for a Financial Freak like you (yeah you!):

Some of you calculate the Graham Price (hello Average Dividend Yield!) by obtaining the square root of the P/E ratio multiplied by the price-to-book ratio (or EPS) multiplied by 22.5. Or if you put it : SQRT (EPS * BV * 22.5) = Graham Price.

My question : where did you get that?

In the Intelligent Investor Zweig writes : "What about Graham's suggestion that you multiply the P/E ratio by the price-to-book ratio and see whether the resulting number is below 22.5 ?" (p. 375.)

According to me, this is the Graham Price, which is basically : P/E * EPS = something smaller than 22.5 = good!

Where did I miss the square root function?