Comment on DividendMantra.com’s podcast Chasing Financial Freedom Episode 4

I was going to put this on dividendmantra.com but it ended up being too long to post! I have not written much about my experiences in Thailand or even much about investing as I do not really want to be tied to a blog and do not need to make any money from it at this time. I just don’t really feel the need to blog all the time as I find so much stuff out there that I would have could have written and or that I benefit from that I would rather let those guys who do it so well (like dividendmantra.com one of the best in my opinion if not THE best!) do it. At any rate this comment is on the post here: http://www.dividendmantra.com/2013/09/the-chasing-financial-freedom-podcast.html

I love the Ramen noodle story! I have been in Thailand for a little over 2 years and with my girlfriend who does not understand finance or investing at all, or so I thought! I actually opened a brokerage account in Thailand and made 10 purchases of some of the best stocks I could find, though they behave quite differently from US stocks they do produce dividends. Well my girlfriend did not appreciate or understand much and was afraid I would lose that money (the total account has the equivalent of about 1.5 positions in my overall holdings which is around 1% at this time, so not much of a problem if I lost it all or 30% or…or…or). I assured her if I lost it all it would not hurt too much and that there will be dividends of around average 3.5% and I gave her a little calculation of what that would be in terms of income, which didn’t move her much whereas at the same time she would not be able to conceive of anything that would pay almost 300Baht per month steadily no matter what. Quite a foreign concept! But Asians love to save and those that do not understand and appreciate the concept of saving. Unfortunately in Thailand necessity usually outweighs any average savings plan and most of the normal people are in debt, just like in the USA! At one point I told her I was going to sell all my Thai stocks and she was glad. Then she asked when and I said in 2 or 3 years after I see how they fare and she was what?! 2 or 3 years?! I said yes, you do not understand investing, you must do like that, not shift every short time span!

So I really thought she was not getting it until she made a comment a few weeks ago. She said she was watching this psychic show she likes and she had a realization that my dividend investing would really start to pan out next year, something like that. We don’t speak any English together so everything in is Thai and sometimes things get lost in the translation and/or the way we think just doesn’t work in that language, which is actually fun for me! So she said that and I thought wow!, it must be sinking in a bit though I really have not pushed the issue of her knowing about what my financial goals are as they are lofty.

As for my girlfriend being a negative influence on my finances. That just cannot happen at this point. I am very committed and we basically have a pretty set spending pattern which is quite lower than if I lived alone in complete isolation back in Los Angeles! But girlfriend is not a spend thrift. One thing I noticed about her when we first met was that she would go shopping and spend a lot of time and buy nothing! Then she would talk about what she wanted and also not buy it, for about 3+ months! And there were usually a few things she was thinking about and talking about at any given time. And then some time after 3 months she might pull the trigger and buy one of those things, or not. I thought that was a remarkable trait and decided to watch it and not try to push on it or her shopping and desires and all that. Once I went out and bought one of the things she was thinking about and gave it to her (a medium price cell phone, under 5000baht or around $145usd). Well she complained that it was not the one she wanted and ended up giving it away to someone! So from then on I never butt into her business when it comes to those purchases or shopping items, but I do interact with her about them when, especially now, she asks my opinion or this or that as she is going through her mental shopping list! The truth of the matter and the bottom line in the whole situation is if she decided to pull the trigger on every single item, all at once, at any given time, it would not affect our finances by much and definitely would not cause any pain or worry so things are just fine in that area. That is not the usual pattern of those trying to cope with Thai culture and spending habits though, so be careful if you want to tread there!

By the way I always have some vegan Ramen noodles on hand and most of the time some vegan sausages or fake meat that can be added to the noodles for a bit of a meaty taste. They are very cheap here and the fake meat is also relatively inexpensive (around $3 us per package which lasts me around a week).

Also, and going back to the issue of the other people we live with, my girlfriend has made some interesting comments along the way. I have not pressed too hard to do any local business in Thailand because a) I make enough online actually too much to be interested in most of the local options, income wise and b) I see a lot of foreigners waste a lot of money on these local businesses just on a whim and I do not want to contribute to that sort of activity. And so I said from the beginning, to my girlfriend, if she wanted to do any type of business and had a good plan I was willing to look into it and potentially fund it. She has not discussed much but every once in a while has a notion to do something. Recently we saw some new 2 story building additions going on on the outskirts of town and/or a few KM (kilometers) out and she commented that she was thinking about grabbing one and starting a business there. So I gave her some encouraging words and let her know when she had a good plan we would look into it. That thought may come up again in a few weeks to a month if she is really interested, or it might just not come up for three or four months and/or might turn into something else. I give her that space and don’t mess around there and if anything real comes up we can deal with it. No need to be too critical or negative at all just ready for action if the time is right!

I have a lot more to say but will refrain, too much already, best regards!

Sirius XM will not quit! – SIRI

http://seekingalpha.com/article/1453111-time-to-bail-on-pandora-buy-sirius-xm?source=yahoo
I bought SIRI years ago because this nutty guy was running around our community screaming at people to buy it. The shares I own now are almost zero cost or perhaps sub zero because I cashed out a few times, I thought I was going to sell it recently but when I looked at things they just won’t quit. They just started putting them in used cars, for example, and it doubled their market penetration! And I still think radio is boring…!
The moral of the story? Find that nutty guy and buy a position in whatever he is screaming about today!
;)

UPDATE: I think in order to be less vague and give readers more inspiration I should give the real data on SIRI, however, I do not want to get in trouble for disclosure as it might be considered advice. I see all these guys with disclosures about their postings are only for inspiration and not intended for advice and so forth but how does that change the message? Actually I was going to disclose the numbers here but will not just suffice it to say my portfolio shows a 1363.99% gain (not realized) as of today 2013-07-16 and I believe I bought it, sold enough to take my cost back plus around a 50% profit and held that…so please find us another nutty village stock screamer!

PS – I have a trailing stop on SIRI and most of my holdings. If it closes below 25% of the highest close I cash it in and lock in my profit, closing the position. In the case of SIRI I would at least leave my original cost invested and consider it a “free” position! Actually I would keep whatever I consider a “full position” based on my diversification model in SIRI and just hold it forever. At this point SIRI’s value is higher than 4 “full position” sizes so that would work out to me grabbing more than 75% of the value and leaving the under 25% there as a position and kind of a tribute to the original holding. I usually never buy any company unless I understand their business and revenue model, market demand and other fundamentals like balance and income sheet and so forth. So whereas I would like to dump all of it coldly on a trailing stop issue on something that I admire as much as SIRI and many others I hold it would suffice to grab everything above a “full position” (at the time of this writing 1-2% of my entire portfolio) and just keep tabs on the business. Also it should be noted that if the stock prices drop more than a certain amount and the fundamentals are strong and the price starts to trend up it is a great time to buy more.

 

2013 My Year to Learn (or relearn) about Investing!

I believe it better to discuss one of my Year End resolutions (new year’s resolution) in May then in December or January 2012/2013! I have had almost a half a year to work with it by now and the added hindsight really makes a difference!

Background:

I started investing in financial markets 3 times in my life so far, this is what I consider the third time around. Each time I have done this in hindsight I had good experiences, even in the light of the first one which I really didn’t have my head around at all.

The first time was when I wanted to marry a certain woman. Her parents insisted we had life insurance which ended up being life, health (medical) and automatic mutual fund investments. We met with an agent who made recommendations and I just went with whatever he said without doing much research at all. After 10 years I wanted to review the life insurance and some other aspects which led to me looking into the study of what mutual funds I had purchased and their performance and so forth. At this point I had major questions and the agent simply could not answer them. It was not that he wouldn’t, it was just his realm of experience and what was available to him as an exclusive rep were that limited. I discovered the returns on the funds were ok at best and that I could have done a lot better had I studied for a while prior to making that run! I ending up liquidating most of these in the course of starting and operating a business which ended up being sold an providing a windfall.

Around that time I received a small windfall from a sale of a business so had some finances to work with, I only wish I had stayed that course as it was looking very good! This is the second time around which I will get into a bit below:

The second time around I started with a different guy. A financial adviser who had worked for a large hedge fund so had varied market experience under his belt. We defined some objectives and position sizes and executed some trades, those trades did very well but due to other circumstances I was forced to sell 95% of them not according to plan! At the same time I started to privately study investing and ran into an interesting book called The Meister Plan which basically gave a portfolio of World Dominating Dividend Growers (WDDG) and said do dollar cost averaging with a set amount every month and only put more in, never less, and don’t stop and at some point the group of stocks will take care of you. I started this course in conjunction with a few Mutual Funds I liked through some of my other research. All of this went extremely well until the culmination of the event which forced me to sell the 95% prematurely reached its head and wiped out the rest of my investments!

So I took a breather for a few years and led, basically, a hand to mouth existence. At some point in time and around a year after I liquidated my last retirement fund account to loan to a friend and their business I decided to take my previously found knowledge and experience, couple it with current events and news, and begin the climb from scratch again. I began with saving 10-20% of all incoming cash until I had established an Emergency Fund (6-12 months cash expenditures budget). Then I began researching which approaches I wanted to take for the rest of the excess cash that I could scrape up.  It was at this time I read some articles on Mr Bogle and some of his writings and wanted to understand how Vanguard operated, good decision! In my opinion Vanguard is a class act brokerage in addition to being a great platform for Vanguarding (as opposed to just investing)! I purchased Vanguard funds (not ETFs) for around 2 years before I even thought to buy stocks in a Vanguard “Brokerage” account. My other brokerage activities at this point were limited to a few purchases in Etrade and some auto investments in Sharebuilder, both a decent experience though all other brokerages do not come close to the caring personal approach received from Vanguard, bar none. The declaration and attitude of Vanguard that it is owned by the clients trickles into every conversation they hold, I have never encountered a bad attitude or negative experience, it has now been just over 7 years since I opened my first Vanguard account. And I need to stop here and say:

Anyone who does not want to study markets, stocks, investment strategies and the like but wants to try to take control of their finances should open a Vanguard account and use the Target Retirement funds (begin with $1000 and put $100 or more per month in). The strategy is already built in and they don’t need to think about it. This, according to Mr Bogle, is most people and I would tend to agree after many discussions (and non-discussions) on the subject with friends and relatives, etc…

Vanguard keeps costs low through a very competitive Expense Ratio. This is accomplished, mostly, by the way Vanguard as a company was structured from the beginning. To understand the Effects of Expenses on a Portfolio follow this link for a spreadsheet.

I also have another post in which I reference a modified version which includes Indexing, International, Bond, Growth/Value and even has a Real Estate element. You can click here to learn more about that.

Recently:

So I was cruising along Vanguarding and in some large dividend stocks and around 3 months before the end of 2012 I ran into a retiree who recommended an advisory publication. I shrugged it off remembering my experiences which some others like morningstar and the motley fool (which is ok some of the time). But then at some point I had some spare time and decided to purchase a no risk subscription (3 mo seemed good to me for a test) and got hooked! The publishing is superb and the portfolio made a lot of sense so I decided to track it and ended up with 3 more of their portfolios which I am currently trying to keep pace with (plenty of ideas / limited cash to exercise with).

Summary of activities (I believe everyone should follow):

  1. Set aside 10-20% cash inflows

  2. Establish an Emergency Fund (6-12 months liveable budget) with the first cash set aside in #1

  3. Figure out how to invest the rest, if you don’t want to think about it just open a Vanguard account and use the Target Retirement.

  4. The first financial investments should be in a retirement account up to the yearly limit (max it out if you can) because these have a penalty if you want to use before retirement and because they have tax advantages.

  5. After maxing out your retirement account you can still put funds in a Vanguard Target Retirement fund or buy individual stocks or whatever strategy you want, depending on your desire to study and so forth.

At this point I can see my investments are growing. I am actively tracking 5 portfolios each with a different style and emphasis. One deals with funds, another with funds and stocks. One with sectors and trends another with world dominating dividend growers, etc and so forth. I like all the approaches and see how each one has its place for a savvy investor. I need to take a break and come back to this post later (or perhaps post a v2).

Disclosure: I currently own or have owned all stocks of ticker symbols mentioned. I am usually planing to buy more as soon as I can afford it and/or within the next 72 hours. I do not expect any statements I make to significantly alter the stock price and if it did it would not affect my decision to buy or sell any stocks or funds listed.

 

Blogging ideas to experiment and get the ideas down. Please offer suggestions so we may improve the site.