Value Investing Blog

Nick's Monthly Money Report - August 2014

Welcome to this third edition of my Monthly Money Report, in which I describe the major happenings of the past month, disclose any noteworthy changes to my stock portfolio, share some valuable lessons I learned along the way, and preview the upcoming month. This edition promises to be extra super special, since I am holding a giveaway contest. Read on for details!

 

MAJOR HAPPENINGS THIS MONTH

Birthday Warren Buffett - You read that right; the best investor in the world turned a respectable 84 this Saturday. *Applause!!* Warren Buffett, sometimes referred to as "The Oracle of Omaha", is getting older, but he is still going strong. I wish him the best and sincerely hope that Warren and his brilliant mind will stay with us for a while longer.

Site move - Yup, this blog is growing in popularity and therefore visitors, which is why I decided to switch to a more powerful web host (BlueHost in case you were wondering) so I'll be able to handle all the traffic that is coming in. Thanks a lot for all your support guys! If my portfolio growth would be anywhere near the visitor count growth rate, I would soon be a very rich man haha.

Of course there are always some hiccups when transferring a website, so apologies if the site was unavailable for a couple of hours or if one of your emails got lost in the jumble. Everything should be fine again now. I also switched to a professional mail server (ElasticEmail), since even the mail server from BlueHost is unable to send out my weekly newsletter to the entire Value Spreadsheet community. There are just too many of you! :-)

About page - Not really a MAJOR happening, but I added an About page to the blog so that readers can find out who this mysterious Nick-guy is who writes these thought provoking, highly inspirational articles on this website *Ahum*. (Yes, I'm joking. I'm not that cocky :-p) Oh, and I added a search function in the sidebar of the website because of the growing number of blog posts.

LIVE webinar - The name of this website is Value Spreadsheet for a reason, and the reason is because I initially built this blog around the powerful investment tool I created, the PREMIUM Value Spreadsheet. However, during the past couple of months I have focused primarily on creating and launching my Value Investing Bootcamp video course and on creating unique content for my mailing list, until a reader told me he was interested in the PREMIUM Value Spreadsheet, but had never seen it in action…

This was a wakeup call, and therefore I decided to hold a LIVE webinar titled How to Value Stocks… The FAST Way! Way more people attended than I had anticipated, and it was great to interact with you guys on a more personal level again. Thanks everyone for being there! If you want, you can watch the recorded replay here:

 

PORTFOLIO NEWS

Ahh what a month.. the S&P500 index rose a respectable 3.75% and ended up above the psychological 2000 points mark. Of course this does not mean much for my portfolio, since I do not own index trackers, but it is a nice bridge to one of my holding which also crossed a psychological barrier this month: Apple (AAPL).



 

I first purchased AAPL at $500, then bought some more at $450 for an average purchase price of $475. This means a split-adjusted (AAPL recently did a 7-1 stock split) purchase price of about $68. This month they broke through the $100 price ceiling, which is equal to their pre-split all-time high of $700 a share. So I've had a good run so far, but am not even close to taking a profit on this one, since the intrinsic value calculation of my Value Spreadsheet tell me that there is still plenty of upside left. My current aim is $140 a share.

A few months ago I also decided to purchase some Microsoft (MSFT), since the company was sitting on a nice pile of cash, had a strong balance sheet and dividend, was attractively valued, and was chosen as a top pick by one of my Dutch value investing mentors. I also foresaw some potential catalysts, since support for Windows XP is about to be dropped, meaning many people and businesses will have to switch to a new version, and since the launch of a new Xbox is nearby.

All of this is still true, but I'm just not so certain about the valuation anymore. There are better opportunities with more upside available, that is why I decided to sell and take a decent 12.8% profit, which is less than I am aiming for, but since I earned this return in just 3.6 months time, I am still looking at a 28% annualized return. Sweet!

So what will I invest this freed-up cash in? Well, I am developing a brand-new analysis tool which will be able to tell me exactly which stock to buy out of all the stocks available on the market! Sounds good? Well, the giveaway contest I told you about in the intro has something to do with this… The tool is still under construction, so until it is finished I am holding on to my cash.

 

LESSONS LEARNED

This month I experimented with a lot of new things, routines, and mind-games. Here are some of the things I learned:

Clean your mind- Inspired by my mentor Tim Ferriss, author of the mind-stretching book The 4-Hour Workweek, I decided to try out meditation. Yes, meditation. I was also sceptical, since you immediately envision some Buddhist monk sitting in an uncomfortable pose for hours on end. Nothing was further from the truth though. Using the fantastic Headspace app, I now do a 10-minute meditation session the moment I wake up and the effects are truly wonderful! It clears my head and allows me to start my day fresh, relaxed, and ready to take on any challenge. Seriously, give it a try.

Other things Tim Ferriss recommended and which I tried were the ridiculously nutrient-dense "superfood" Pine Pollen Powder, his controversial 30-day NOBNOM challenge to increase productivity and focus, and reading up on Stoic philosophy to create an "unconquerable mind" and live a better life. I just love trying new stuff.

Never stop learning- Henry Ford said that "anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young." The phrase lifelong learning is used ever more frequently, and this is a good thing. I mean, I've been reading and practicing investing for years and years now. I am even writing articles to explain to you guys how I think this whole stock market thing works. Still, I keep learning new things every single day!

For example, the book Buffettology explained some intricate details of Warren Buffett's investment strategy which I had never really considered before, like the important difference between Benjamin Graham's Margin of Safety principle and Buffett's Annual Compounding Rate of Return. I'll send you a newsletter about this topic soon!

Also, I interviewed a good friend of mine for an upcoming podcast episode. He is a pure technical trader, and from this conversation I learned that there is a certain very interesting overlap in thinking between traders and value investors, while I thought our thinking would be polar-opposites. So always keep an open mind and never think that you know it all. There is always something new to learn!

 

FUTURE PLANS

The upcoming month will be a busy one! For starters, I'll be moving to a new house. Fun, but a lot of work. I also want to focus on improving the website further by making it more secure (SSL/HTTPS) and load faster, especially on mobile devices.

This month we've further prepared the upcoming Money Tree Investing podcast, which I'm doing together with three other financial bloggers. I created a website for the podcast and you can even listen to the first few episodes there! The official launch is Friday the 5th of September.

I'm also excited to announce that the very first guest post on this blog is being written as we speak by Paul, a reader of my newsletter who happens to know a lot about trading options. Yes, this is a blog aimed at value investing, but the strategy Paul will reveal in his post is not just complementary to value investing, but I might even go as far as suggesting that it could become my default way of entering new portfolio positions. It's that good! This post will hopefully be online on the blog somewhere next week.

To wrap this post up, let me tell you about something HUGE I am currently working on called ValueScout.. ValueScout is a new investment tool inspired by a multitude of suggestions from PREMIUM Value Spreadsheet members. These members told me they love using the spreadsheet, but also how great it would be if there was some sort of screening function.. A way to analyze not one stock at a time, but to analyze all available stocks and then rank them according to how "wonderful" they are and how cheap they are.

This powerful idea, which is in some respects similar to the screeners on GuruFocus.com, is something I have been thinking about ever since I first created Value Spreadsheet, and now it is finally starting to become a reality! I teamed up with a highly skilled programmer and am almost ready to start testing, and you can be one of the first to try it out!

That's right, I am giving away 3 seats to the exclusive closed Beta release of ValueScout. In addition, these three winners receive lifetime access to the PREMIUM Value Spreadsheet (worth $297), free access to my complete Value Investing Bootcamp video course + bonus content (worth $197), AND one year free access to the upcoming ValueScout investment tool.

All I ask in return is some feedback on how I can improve ValueScout before releasing it to the public, and a short, honest review via Skype which I can post on the website. That's all.

 

ENTER THE CONTEST

Do you want to be one of the lucky 3 to get beta access + loads of free goodies? Then all you have to do is leave a comment on this post in which you describe how a tool like this would benefit you and why you would like to use it. I'll handpick the winners next week.

Ready? Set? Go!