Thursday, August 14, 2014

Me, Mantra and the Mantraziliers

I recently posted an answer to a post over at superstar blogger Dividend Mantra. That guy is so hot right now (must be the hairdo). 

He posts something and there there's like a zillion people answering. Mantraziliers? And he answers each and everybody. (ubiquity? or does he have a ghost writer? some sort of a Dividend Mango?)

He's like the Céline Dion of the personal finances... Well, you know what I mean. He's a nice chap anyway.

That guy is unique and original in some many ways. Take for instance his recent move : Instead of retiring to sunny Florida where he lived, he moved upstate to cold Michigan in order to eventually retire before 40. How about applying the saying « being greedy when people are wary...» in a whole different circumstance! Didn't I say superstar?

Jokes aside, I reacted to a post where he was saying he had recently bought it's shares in its 49th company!

Call it the Michigan forty niners! 49!

The number shocked me (still on heavy dose of Xanax). I had to react even it meant hurting the feelings of hundreds of Mantraziliers. I run fast.

You'll fin my answer below. But, for copyright purposes (and since I know jack as to how these things work), I suggest you go visit his blog to read his answer. As always, he answered like the gentleman he his (arghh!). Yes, he's hot.

Here's my answer below.

In my next post I will discuss the very exciting topic as how many companies should one have in its portfolio. 5, 10, 20, 30, 49 or more?

Meanwhile, I want to hear you Financial Freaks. How many do you own?


Hello Financial Freak Mantra!

Well, gotta say, you got yourself a very loyal fan base. I’m jealous. Whenever someone leaves a comment on my blog, I wear my unmoved look in front of family and friends and hurry to my computer (when the visit is gone!).

It’s like a little party! Pop the wine, let’s celebrate. (5 minutes top)

Anyway, about John Deere. Love those green mowers. How about Richard Farnsworth in the Straight Story? He finally made it to see his brother, didn’t he?

I have to say, props to you for turning your personal finances upside-down (mostly Up).

Just one worry and I will share it with you for what its worth. (after all who am I but a pathetic bloger who flees its family to read a post…)

My concern : the amount of companies you own. 49 ! Oochie Mama!
I’m thinking, up to this point, why not buy a low fee ETF; you’ll get as many (and more)? Indexing might me your path. You would save on commission. And only buy when the market is down. No?

It seems to me that the diversification you are trying to get is more or less becoming « diworsification », as Peter Lynch would put it. Studies have shown that versatility and stability is obtained with 20 blue chips companies (some argue it’s 12 to 15). Above that, it’s useless and kills the leverage you could get out of a portfolio.

There is no way (unless you are a Freak, which you may be since I suppose I should not like you!) (I do!) one can follow closely all those 49 companies. Even though they are great, you are bound to miss out on some important information.

Anyway, just a thought. Props to you for getting there

Wednesday, August 13, 2014

My rotten tomato

Hey Financial Freaks,

We all have come across a rotten tomato in our investing life (in all aspects of our life I'd say -- yes I'm thinking about you crazy woman from work!).

My rotten tomato right now is a company that not long ago was making those big Canadian Banks blush.

The money was coming in like Gold Diggers on rich men about to go six feet under.

Needless to say, it was making loads of cash.

And I am talking here about the biggest gold producing enterprise of the entire Mundo. Yes, it's Barrick Gold ( Don't mention that name! Ok, you can...

Somewhere in 2011, I figured it would be a good idea to own some gold. But buying gold is quite complicated. And once you have it in some form or another, you have to put it somewhere. I won't be digging a hole in my backyard if that's what you are implying (geez!). Besides, my family and friends are so nosy they would end up finding it. Can't barely keep a Playboy magazine secret for pete's sake. (What's a man gotta do to get some privacy!)

Anyway, I decided it would be wise to buy shares of a company that actually produce gold. I waited a little time to see a dip in Barrick's share price. Finally at 40 something, I thought it was a good entry point. Since the share price is now clocking 20 $... it wasn't such a good idea. You do the math, Einstein.

The more the share was falling the more I was buying it to diminish my average price. But the share went as low as 15 $ So I had to stop buying it somewhere. Duh!

I now own 300 shares of ABX. It's way too much for my confort. It's the company I have put the more money in. Roughly 12 K$ Ouch,  « that's got to hurt I don't care where you from » (this one is from Seinfeld)

To make matters worst, they cut their dividend. It use to have a dividend of 0. 20 $ Now it's a poor 0.05$ a share.

Yes, Barrick Gold is going through a tough time (so is me without my Playboy magazine!). But so is the price of gold. In that respect, I will hold on to my shares and wait for a decent price to let go some of my position. I need to be patient.

If it wasn't for Barrick, my portfolio would be worth 5 K$ more. Ok, time to cry now.

The whole point is : you can't have it all as an investor. There will be ups and downs. And no matter how cautious you are, and especially if you hold more than 10 or 15 companies, you are bound to end up with one rotten tomato -- or more.

Mine is Barrick. What's yours? And how are you copping with it?

Tuesday, August 5, 2014

Dividend increases and stuff like that

Hey FF,

 I will start with a question : How do you guys keep track of all the dividend increases of the companies you own? Not easy at time, no?

Well, sometimes I browse through the web and I find out. Heck, sometimes I even find out on your lousy blogs. Okay, they're not that bad. (Geez you're sensitive)

Fact is, unless you follow each semester financial results you might miss one dividend increase from time to time. And that's a pity because, like we all know, this is the kind of news that brighten your day and week! This or catching a nice trout while out fly fishing.

I see guys owning up to 50 companies and I'm like : how to they do it? (they don't!) I have a 15 and it's hard to keep track of all the changes within the company : mergers, acquisitions, etc. Once I followed a financial letter and the writer was adamant about limiting the stocks you own to 12 or 15; actually he was more leaning on the 8 number!

His rationale : if you limit yourself to strong companies that dominate their sector of activities and have a history of increasing their dividend overt time, the money you invested won't be diluted and you will have a better leverage. Like Benjamin Graham, he was also recommending to own half of your portfolio in bonds. It's other key advice : only buy stock that have fell 10% below their highest price during the year.

That pretty much means you won't buy much stock (valuable one that is) this year. I have to say I pretty much followed his advice. The guys writes a column for a french canadian newspaper, Le Devoir. If you read french (you should by the way, especially if you have been raised in Canada!), go browse through his articles. Very informative.

I can't say I have been hit with a ton of dividend increases in my portfolio lately. But some of the company I own have managed to do well on that front. Johnson and Johnson have increased their dividend for more than 50 years.. so yeah, it's on the top of my list. I bought JNJ in 2010, so that makes it 4 years in a row. Last week, Suncor has increased it's dividend for the second time in a short while. SU and JNJ are my strongest positions so I am quite happy. Royal Bank (RY) has also increased it's dividend twice this year. Conoco Philipps (COP) has also increased its dividend.

I read in the Globe and Mail that there is a strong possibility that Power Corporation (POW) and Power Financial (PWF), two holdings from the Desmarais Family, would increase their dividend this year. These two companies are managed very carefully. I have a big position in these two. So it should be interesting to see how it turns out.

The share of Canadian Pacific (CP) has reached a historic high passing through the 200$ ceiling. Will they split their stock? Or will they increase they dividend? Can't wait to see what the outcome will be. And yes, I am still bitting my hands for selling 50% of my shares while it was up at 75$... I know, I know, hold on dearly to your shares.

Do you see any dividend increase on your side?