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Sunday, April 23, 2017

Anti – Collecting Premium

Posted by Dave on July 30, 2013

I am somewhat useful around the house, building or fixing things. The problem with wanting to do the various jobs is the number of tools needed to do them. For the most part, my small box of tools along with several moderately purchased power tools allows me to get most of the stuff done around the house – amounting to a total investment of about $400.

The problem I have with some of the jobs I do around the house is that they require more specialized tools. I know a lot of people (to be honest it’s all guys, the women I know tend not to have this habit) who accumulate tools. I love tools, and would love to have everything I need for every job stored somewhere in my house. One of the restrictions of living in a small townhouse with no garage is that there is nowhere to store any collection of any types.

I am constantly battling clutter in my house to start with, so adding a volume of stuff that sits around for the vast majority of time so I can pull it out maybe once a year is really not worth the precious storage space I have available for anything. I had to really sell myself on homebrewing as a hobby (it wasn’t that hard), simply because of the space it takes up – carboys, buckets, barley crushers, sanitation stuff, as well as various tubes and funnels – some of it is fairly large.

For my wife and I, having a small house keeps our “collections” of stuff in check. We use the library rather than buying books, because we know there are very few books we will ever reread. We try to keep our kitchen as gadget-free as possible, no matter how cool the thing looks on an infomercial.

From a personal finance perspective, collections of any kind of consumer good are probably not the most efficient use of dollars being spent, whatever it is (think sporting goods, media, stuffed animals, old bottles found in ditches). For me, if I can I’ll rent something for a day or two – especially if I’m unsure whether I’ll ever use it again (such as a laminate floor cutter). From my experience, you can get a higher quality item for the short-term than you would be able to afford to buy to do the same job.

The more stuff I would accumulate, the smaller my house would feel. In the past, I have been guilty of collecting things I think I’d use later when I should have given the stuff away or tossed it. I would rather pay a premium in rental fees or hire someone (in some cases) than be tripping over something 5 years from now.

Have you found yourself collecting things that sit around collecting dust in the past?

Volatility and Arbitrage

Posted by Robert on July 29, 2013

Sometimes, trading stocks is easy and fun. Sometimes, it’s difficult and painful. If I had to guess, I’d say that the market goes up about 1/2 of the time, goes down (by almost an equal amount) about 1/6 of the time, and the rest of the time it goes sideways. Looking back, we (in Canada) appear to have been stuck in “sideways” movement over the past two years. The market really hasn’t made any progress (or lost any value) over that time.

That’s not to say there haven’t been opportunities to make money. I don’t really advocate trying to time the market. Investing everything when the market is low, trying to sell at the top and buy back in at the bottom, is a fool’s game. Chances are very slim that anyone will make enough money that way to overcome the time, effort, stress and trading fees that it costs. But neither do I advocate buying and holding a group of stocks no matter what.

What makes sense to me is owning good stocks at a reasonable price. Companies (and their stock) have a “personality” that you can get to know. Some are seasonal, rising in the winter and falling in the summer (or along some other pattern). One example might be Gildan Activewear (GIL), the T-shirt maker. Some will rise (and fall) in spurts, as new products impress or disappoint. An example would be Apple (AAPL). Some companies will perform well (or poorly) according to the economic cycle. As an example, WalMart (WMT) has tended to rise as the economy fell and shoppers started seeking deals.

If you own and watch a number of companies that you are familiar with, where you are reasonably confident of their business prospects, you are likely to see opportunities arise. To use the examples above, you may own Gildan and Apple, but not Wal-Mart. The economy may begin to perform poorly, and you may see that Gildan and Apple are beginning to fall, but WalMart is beginning to rise. There is an opportunity to sell (some or all) your shares of Apple and Gildan and instead buy WalMart. I consider this to be a type of arbitrage. These companies all make up part of the market, and the market will continue to fall (or rise), but the shares you own and watch may move differently, compared to each other. When some go down and others go up, especially if there is no discernible reason, it may be an opportunity to sell high and buy low.

This works especially well for me when I invest in dividend paying stocks. Assume (for simplicity) that they all pay the same dividend. Then, after some time, some share prices fall and other rise, in response to supply and demand of the shares and no fundamental changes. I can sell the low yielding stocks (where the prices rose) and buy the higher yielding stocks (where the prices have fallen).  This helps me to sell high and buy low, as well as increasing my monthly income. This opportunity doesn’t arise often, but I watch for it and act on it when I can. Recently, I sold RPI.UN to buy RET.A. I’m now seeing RET.A rise in price, and so I’ve profited from that trade. It doesn’t always work, but when it does, it seems to be a lower risk way of profiting from the stock market.

How do you give yourself the best chance to buy low and sell high? Or do you have an entirely different investment strategy? How do you mitigate the risk?

The Vacation Report – Day 26

Posted by Tim Stobbs on July 25, 2013

So after 26 days of not working you think perhaps I would be sick of vacation and be ready to get back home and go back to work? Nope, I don’t miss work at all, but I am ready to go home.

Actually I have to confess I’ve been away from home long enough that you just adjust to your new ‘normal’ routine while on vacation.  So I sleep in every day, have coffee, read a bit, then get everyone else up.  Go have breakfast, back up the hotel room and then head off and have some very fun experiences.  Then later on have some supper and check into the hotel and repeat.

As for experiences…well we have had lots of those.  Watching a whale swim right under our boat near Newfoundland, running in the mud of the Bay of Fundy, swimming in the ocean on the North Shore of PEI, walking around Old Quebec City, and visiting Parliament Hill.  Our picture count is somewhere over 800+ now (here are a few samples).

DSCF0526 DSCF0758 DSCF0841

It’s been a very fun trip and worth every penny of what we have been spending…how much?  I have no idea.  I didn’t actually make a budget for this trip.  Rather I have a range in my head that I’m prepared to spend and then I’m not worrying about it.  This is our big reward for paying off the mortgage so I’m not worrying about pennies here.

Yet of course you can’t take the frugal out of me as we have been doing mostly picnic lunches on the trip (oddly the boys prefer those since that means more running around time).  Also we walked almost everywhere we went while in Ottawa.  Saved on parking and saw more things that way.

My point is…we like to travel and I work to do stuff like this.  Besides…my vacation has a much better view than my cubicle.  So have you ever missed work after being away for a while?