Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future to retire from their full-time job at 60.

Book Review: The Snowball Effect - 06 Jan 2019 12:15

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Published in 2016 I am a little late getting around to reading this book but I did receive it as a Christmas present (it was on my list for Santa) and was thrilled when I unwrapped it. Now that I have finished reading the book here is my take.

The book is broken up into 7 chapters but the most powerful chapters that deliver the strongest message are the first three chapters. The first chapter focuses on explaining market risks and debunking the myth that stocks always go up. He walks you through each secular bear market starting in 1906 through 2011 and shows the reader through factual data that secular bear markets are more common than secular bull markets. Being a history buff I loved how the author walks the reader through secular bear market and the historical events unfolding that influence each event.

The next two chapters focus on how dividends are an important of the market return and the power of compounding (dividend reinvesting) and like the previous chapter uses actual data to prove his points. The message of these first three chapters is fairly direct; average investors should not focus on market price but invest for dividends and let the power of compounding do its thing to give you the “Snowball Effect”

The following chapters 4 thru 7, while not as powerful as the first three, are still significant. The reason they are not as strong is that they are not intended to deliver a message. Instead these chapters walk you through the various income paying market instruments that can create the snowball effect. Chapter 4 discuses small/micro-cap dividend paying stocks, chapter 5 discuses bonds, and chapter 6 discuses covered calls (options). The final chapter 7 is a summation of his Top 100 dividend paying stocks and how to develop a portfolio and provides an extensive appendix resource listing of various stocks.

Overall I enjoyed this book and highly recommend it to anyone who is about to venture into investing, The only thing I wished the author focused on a bit more was inflation risk and dividend growth. While the author does touch on the subjects as well as their importance, it is my opinion that a couple chapters devoted to just these concepts would have made this a perfect book

If you haven't read this yet then go grab a copy. The first chapter alone was worth the price. - Comments: 0

Book Review: Common Stocks and Uncommon Profits - 18 Feb 2017 12:44

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Common Stocks and Uncommon Profits by Phillip Fisher is one of the legendary investing books that has been on my “To Read” list and I’ve finally gotten around to knocking it off.

Before I jump into my review I will start off by stating that this book is not about teaching or educating you in the use of valuation tools but is instead an overview of Fisher’s investment philosophy and how his philosophy developed over time. The latest edition is forwarded with commentary by his son Ken Fisher whose commentaries were respectful of his father but he tends to drone on too long about their family and relationship.

Overall the book is a fairly easy to read story and if you enjoy reading about historic investors and their investment philosophy for achieving that success you will enjoy the book. Personally I give it a B+ grade and thought it was a punch in the gut but validating at the same time. The book essentially starts off telling you that a main street investor does not have the access or tools to successfully invest in growth companies and should rely on an investment professional. My initial reaction to this was “oh great, another sales pitch for an investment firm” but the author does fair job of explaining why.

Fisher explains that a main street investor simply lacks the accessibility to corporate management to ask the right questions and get the answers to help with an investment decision. This is a method he refers to as “Scuttlebutt” where an investor has access to senior leaders (CEO, CFO, etc…) to ask pointed questions to evaluate items you cannot find in a company’s financial statements or annual report such as the quality of a company’s sales staff or how they treat employees. You may not agree with this but for me personally it answered why my past success in growth investing only yielded a mild return of 5.7%. This was my "punch to the gut" moment and I got the message even though I did not like what I read. It is a plain simple reality that a main street investor like myself has no inside access to look at a company beyond its financials.

The second part of the book discussed his philosophy on conservative investing which resonated a bit more with my value investment philosophy that I employ today. One of the elements he touches on that often goes overlooked is placing a company’s investment(s) in R&D, capital expenditures or even acquisitions as a fairly high weighting when evaluating a company. This is a concept I regularly employ when evaluating potential dividend growth by using tools like R&D investment trending or employing my CAPEX ratio and felt validation that I was properly employing these tools and having success.

The third and final section of the book describes how Fisher developed his initial philosophy and how it matured over time.
If you enjoy history then this final section will appeal to you.

Overall it wasn’t a bad read and some reviewers are pretty harsh stating the book is completely out of date and worthless. These comments are not entirely incorrect as the original book was written in 1958 and yes market conditions have changed since then that make some parts out of date. My answer to that is, “DUH”! In 1958 company stock buybacks were not as prevalent as they are today making earnings per share manipulation that much easier so his focus on earnings growth is a bit out of touch however like any growth number it is up to you the investor to interrogate the numbers and determine how valid is the growth and can it continue. I don’t care if its EPS or dividend growth, the same level of due diligence is required by any investor. Take this book for what it is (an investment philosophy) and don’t be so anal. - Comments: 0

Book Review: The Art of Retirement - 22 Nov 2016 22:16

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I have read quite a few financial books over the years but lately a lot of the books being published are mediocre or just plain trash. Some of this I blame on the easy route of self-publishing via Amazon and all of the self help books telling folks they can create additional income streams through publishing. But recently, I came across one book that I highly recommend for investors of any age.

When I saw "The Art of Retirement" written by Gary Williams who is a certified financial planner I had my doubts and assumed it would be nothing more than a sales pitch for his investment firm. However, I did read the inside cover which mentioned that all proceeds from the book would be donated to ALS research for finding a cure and it was this one charitable line that tugged at me to give a try.

For anyone with any investing knowledge this will not enlighten you to new investing styles, analysis, or theories. Its financial investing elements are simple and laid out for someone not familiar with investing but this is not what got me excited about the book. Instead it is the author's method of how to examine ones life and establishing goals to improving your life, creating a legacy, and inspiration for financial independence.

One of the most moving concepts he proposes is by asking yourself a simple question

"What if an artist was going to paint your life's story on the ceiling of your home? Now imagine a painter will paint a fresco of your life, what would it look like (besides the fact that when you go to sell it the new homeowners may find it creepy)? Did it capture all of your accomplishments? Your victories? Your agonies of defeat or loss? Imagine for a moment what your masterpiece of life would look like."

This one question quickly examines your life to help find what is missing and starts you down the road for developing a plan to get there which in turn will lead to a happy fulfilled life. While this book was targeted at retirement, this concept can be applied throughout ones lifetime that can help develop pre-retirement as well as retirement goals.

I wouldn't call this book life changing but it will help add clarity as to what you are saving for and to how leave a legacy to be proud of. - Comments: 0

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