Value Investing Blog

Nick's Monthly Money Report - July 2014

This is the second edition of the ongoing Money Reports I'm writing each month to discuss the developments regarding the blog and my investments, as well as lessons I've learned during the month. At the end of the reports I share my plans for the upcoming month, both to get you excited and to keep myself on course.

 

MAJOR HAPPENINGS THIS MONTH

Holidays- After the extremely hectic month of June, which was all about creating and launching my Value Investing Bootcamp video course, it was now time for some relaxation. Relaxation in the beautiful town of Vrsar, Croatia, to be precise.

Vrsar, Croatia

Since I spent two wonderful weeks in sunny Croatia, there was little time to work on the blog this month. Sorry guys, but a man needs to take it easy from time to time. However, it did gave me ample time to read some amazing books, including The Autobiography of Andrew Carnegie, one of the richest and most philanthropic men who ever lived, and a book which came highly recommended by my personal hero Tim Ferriss: Seneca - Letters from a Stoic. More on these books in the Lessons Learned section of this report.

Exclusive content for mailing list - The time that I did have available this month was spent on creating a whole series of exclusive educational content for my mailing list. This content cannot be found anywhere on the blog. This is to show my appreciation for the people who allow my words to enter their mailbox. I'll try to make sure that if you subscribe for my mailing list, I will keep providing you with valuable content regarding value investing, personal finance, and passive income on a regular basis. Hope you enjoy it!

I also asked my readers what they wanted me to write a blog post about. I've received many great ideas, and already wrote a new post based on the suggestion of a reader, titled 5 Ways to Know if the Stock Market is Overvalued or Undervalued. If you got more ideas, please let me know in the comments section below this post.

Money Tree Investing podcast - In last month's report I told you that I'm working on a brand new podcast series together with Miranda Marquit from PlantingMoneySeeds.com, Andrew Sather from eInvestingForBeginners.com, and Larry Ludwig from InvestorJunkie.com. Well, I'm excited to tell you that serious progress is being made! The official launch date is set somewhere in September, but we are already creating a dedicated podcast website and even the first couple of episodes as we speak.

Money Tree Investing Podcast Artwork

The name of the podcast will be the Money Tree Investing podcast. Each week, one of us interviews a special guest with money and investing as the central topic. After each interview there will be a panel discussion in which Miranda, Andrew, Larry and myself will go deeper into the content of the interview. Start getting excited guys, because this podcast is going to be le-gen-dary!

 

PORTFOLIO NEWS

Remember FHCO, the underfollowed micro-cap stock I mentioned in my last report? Well, FHCO has since then dropped in price like a brick thrown out of an airplane. Why? Because the company decided to suspend its lavish dividend! Many investors who were only invested in the company because of the attractive dividend yield started running towards the exit when the news broke, which pushed the stock price down 24% in just two days.

Is it a reasonable reaction to dump your shares when a company decides to suspend its dividend? As always, it depends. If a debt-laden company decides to suspend its dividend because it starts experiencing long-term fundamental problems, then a selloff is to be expected. However, FHCO's business is doing fine and they are debt-free. They suspend their dividend payments simply because they want to use that cash to expand their business and buy back shares. They want to use that cash to create some serious long-term value for shareholders, so I'm still buying!

Other than that, there wasn't anything crazy happening in my portfolio this past month.

 

LESSONS LEARNED

As I said before, I had plenty of time to read during my holiday in Croatia, and I learned a thing or two from my reading material:

"The shortest route to wealth is the contempt of wealth"- Reading Letters from a Stoic by the great philosopher Seneca reinforced many of the beliefs I already hold. The Stoics preach moderation in everything, and they argued that if you are content with less, you'll live a much happier and easier life. According to the Stoics, true happiness is found within yourself and not in external things.

It may seem counterintuitive for someone like me, who writes an investing blog for Pete's sake, to advocate a contempt for wealth, but really it is not. Because, according to Robert Kiyosaki, "wealth is a person't ability to survive so many number of days forward." So wanting less stuff, being content with a simpler life, means you make it easier for yourself to become "wealthy". This is the shortest route to wealth, because you could literally decide on this today.

"A man who dies thus rich, dies disgraced"- There is nothing wrong with money, and I don't have a big argument against capitalism, although it has its obvious flaws, but I was delighted to read the powerful essay The Gospel of Wealth by Andrew Carnegie, in which the then second-richest man in the world explained the duty of the rich to give back the majority of their fortunes to society before they die. Carnegie practiced what he preached and founded 2,509 public libraries throughout the English-speaking world, as well as Carnegie Hall and numerous other buildings and philanthropic trusts. This is what The Giving Pledge, an organization founded by Warren Buffett and Bill Gates to get billionaires to pledge their money to charity, is inspired by.

So want less, and you'll feel wealthy faster. Seriously, you do not need a more expensive car than your neighbors, a bigger house, or a shiny watch. You really don't. And if you do happen to amass a fortune, don't keep it all for yourself, but use it to make the world a slightly nicer place to live.

 

FUTURE PLANS

Looking into my crystal ball, what does the future hold? Well, in August I will mainly focus my attention on the Premium Value Spreadsheet. I will update it to a new version, add some functionality to it, create some blog posts and possibly even some videos to show you the power of this unique investment tool. Also, there will definitely be a LIVE webinar this month, which I currently have planned for the 18th of August (Save the date!). I'll send out some emails around that time to notify you. 

Besides the Premium Value Spreadsheet, I'll be working towards the exciting launch of the Money Tree Investing Podcast and would like to add an About page to the website where people can read the story of how I got started with investing and the hurdles I had to overcome (which you are probably also experiencing!).

 

SO, WHAT LESSONS DID YOU LEARN THIS MONTH?

Share it with us in the comment section, because I'm always up for some worldly wisdom.