Investment Analysis Review on Coke

Posted by Canadian Dream on January 21, 2009

Well Brad the blogger behind the blog, Triaging My Way to Financial Success, is offering a detailed analysis of certain companines on his website. I was given a copy of one on Coke to do a review on. To give you an idea of what the document looks like here is a part copy of the full analysis and here is a list of the other reports available.

Now generally speaking I think most stock analysis available on the web is garbage. It’s always too short and too little detail to help anyone make a decent decision (of course there are some exceptions). So out of curiosity to see a more full blown analysis I agreed to do this review. I have to admit I was somewhat surprised on the amount of detail research Brad did to come up with the report. The full report is 14 pages long and has a very in depth discussion of Coke’s business model, their management and a valuation (including a spreadsheet of past performance data).

Despite being cynical, at the start, I had to admit I was impressed on the depth of the discussion and the obvious amount of research which went into the report. Brad worked hard to come up with a good analysis of the stock and even provided some good comparison to Pepsi.

Now Brad isn’t doing this for his health, but rather he is trying to sell these detailed analysis for $19 per report or $125 for a full year subscription (or eight reports a year). I can respect a blogger that tries to take his passion and turn it into a product. After all I’m at page 33 of my book manuscript.

Yet the question is would I personally buy these reports. The answer is no. First off I’m not currently interested in most the companies he has previous researched at this time. Second I feel the price is a bit on the high side.  Now discussing this with Brad his logic was the cost should be equal to the cost of one trade to buy the stock, which seems logical but I disagree.  For $20 I can often get an entire paperback book on a subject, so why would pay that for just one 14 page report and a spreadsheet?  Now the report is good with a lot of great detail, but I still would find it hard to buy it myself at that price.

So have any of you ever bought analysis research before?  What did you buy and what did you think of it?

Inflation: Good for Government, but Bad for You

Posted by Canadian Dream on January 20, 2009

So last week I reviewed the book Crash Proof which I mention had some fairly interesting ideas on inflation and the CPI (Consumer Price Index) in the US. Since some of that material was too much to cover in one post I decided to do a follow up post.

So why would a government actually want inflation, well here are the five reasons from the book:

1. It makes government debt more manageable. Basically future dollars are worth less so paying it back debt gets easier.
2. In a country full of debt heavy consumers the government will follow the will of the people to help keep polices that are hospitable to debtors.
3. Inflation finances social programs that voters demand but avoids raising taxes to pay for them. Basically just print more money or issue more bonds to cover what you need.
4. Inflationary spending is confused with economic growth, which makes things look better than they are. Now this I can believe because the CPI in the US is basically garbage for a number.
5. Inflation causes the nominal asset prices to rise, which gives the illusion of wealth creation to people who own stocks and real estate. Even when it actually reduces their purchasing power.

Now the other side of the coin is why would a government than proceed to under report inflation via the CIP. Well here’s another five reasons:

1. Under reporting inflation keeps interest rates lower, which makes the national debt cheaper.
2. Social Security payments and other benefits index to the CPI cost less for the government to pay.
3. Income tax brackets and personal exceptions are indexed to the CPI. So the government gets to keep more of your money.
4. Lower inflation premiums on inflation adjusted long term debt cost less and keeps interest rates low for the government and for the consumer. This lets the high debt levels for the average person to keep rising.
5. In the case of TIPS (Treasury Inflation Protected Securities), less money has to be paid out to people to cover the CPI portion.

Of course anyone with an ounce of sense would realize a program like this would finally result that deck of cards called the US economy falling down and then there could be hell to pay. So that fact most governments are desperately borrowing more money to keep things moving in their economies are ironically setting themselves up for future problems. Of course on the other side letting a recession of this size just take its course naturally could take a very long time to recover without some stimulus package. Basically in a nut shell we are damned no matter what we do.  Now don’t you feel better about our governments shoveling out billions of dollars? *grin*

The Layoff Survival Guide

Posted by Canadian Dream on January 19, 2009

So with the job loses continuing to grow I thought I should likely dust off an old experience of mine and give you some insights into being layoff.  Yep, I was layoff towards the start of my career.

You see a layoff notice has two parts to it.  One part is fairly easy to deal with: the money side.  The other, the emotional side is much more complex and difficult to deal with.  So from being there myself this is my guide to surviving a layoff.

First let’s get the easier money side of the equation dealt with.

• Apply for any government benefits you are entitled to at once.  For example, people often think to apply to Employment Insurance (EI) you need your Record of Employment (ROE) from your previous employer.  Actually you don’t need the ROE to start the application.  You can even do the application online.
• Cut discretionary spending at once.  Don’t wait for things to get worse, just do it at the start and you can survive longer between jobs.  More than anything right now you need more time to get that next job.
• Start applying for new jobs.  Your goal here is not to get sucked down into self pity.  So to combat that you need something to do.  So your new job is looking for a job.  Update that resume start looking at employment ads.  Plan to apply for on average of one job a day.  Don’t worry if you only meet about half of the criteria for a job, apply anyway.  A little known fact is people often put out ads for their ideal candidate, but if you have the right personality that might train you to do the rest of the job.
• Make the backup plan.  If you are over half way through your EI claim you may want to devote a bit of time towards knowing what your options are after your claim runs out.  It’s an uncomfortable thought, but it’s much easier to know what going to happen than worry about the unknown.  You might see if you can apply for other government benefits, take a lower paying job or widen the net of your job search (perhaps it is time for a bit of career change).  You might also want to consider upgrading your training if you can get some government help.

Now here’s a look at that totally uncomfortable set of emotional issues that surround a layoff.

• It’s NOT your fault.  Really!  Now the most common thing people do is blame themselves.  Oh, it was something I did at work.  I didn’t work hard enough.  I could have kept my job if I had been nicer to someone.  The reality is the layoff likely had very little to do with you personally.  Your job was picked because sales sucked, you are in a position who’s job duties are non critical to the company or a thousand other reasons that have nothing to do with you.  Stop blaming yourself, it was not your fault.
• Don’t lash out at your ‘previous’ employer.  Another common feeling after you stop trying to blame yourself is to get angry and want to lash out at who laid you off. DON’T DO IT!  It will feel good for all of ten seconds and then you are going to regret it.  Instead suck up that anger for a minute and make sure to get a reference letter.  Keep in mind if you were part of a larger layoff you could make life easier on your old boss by writing up a letter for them that they just have to sign.  Now some people are amazed by this piece of advice, but I’ve done it before myself.  It helps your ex-boss.  Most people don’t know what you want them to say, so make it easy and write it up for them.  After all you know yourself best.  Just make sure to attach a note saying this is just a sample letter and they should feel free to write their own if they want to.
• Get out of the house.  In a very short while applying for jobs you will start to feel that constant worrying and fear.  Am I going to be ok?  What happens when I run out of EI?  Your mind will be filled with doubt, worry and fear.  This just builds up if you don’t do something about it and you could end up lashing out at loved ones.  So get out of the house and make sure to have a walk each day or something that makes sure you get some time to clear your head.  It really helps.
• Open up to someone. After having a layoff you feel a little shameful and most people don’t want to talk about it.  The reality is you just lost a central piece of your life and it hurts.  You need to talk about it.  Find someone you can trust and open up about it.  It will help, but be careful to not just complain all the time.  You need to mourn for what you lost, but at the same time too much self pity can be destructive to your life.
• Network.  Now hopefully you are past that shame feeling a bit, because you need to talk to everyone you know about looking for a job.  Tell them your looking for a job and ask if they know anyone who is hiring.  This helps extremely to boost your job search.  Why?  A lot of jobs never get to the want ads, so tap into this market and have a small army of people helping you look for a job.  The more people you tell the greater odds that someone will have heard about some place that is looking for some help.  A case in point on this, out of the seven jobs in my engineering career so far I’ve only gotten one from applying to an ad that I found in the paper.
• The cold call.  This option takes some guts to do, but again be very useful to finding a new job as it demonstrates you do have some guts.  Think about companies you would like to work for.  Now even if they are not actively looking for people give them a call.  Explain to who ever picks up the phone that you would love to work there and ask who you need to talk to about putting your resume on file.  Most companies will keep a resume on file for a few months in case something does come up.  The file saves the company the cost of full blown search for an employee, so most people check it first before putting in a want ad somewhere.

Now obviously this isn’t everything that can happen during a layoff, but hopefully this guide gets you started.  You will have ups and downs during your search.  Just keep trying and stay positive.  You will get a job eventally.  Best of luck.