1500 Portfolio, Part 2: Rare Leadership

Last week, I started telling you how some insights led me to purchase three stocks that have done really well. Today, I tell you about another strategy I have.

Again, this is not advice. This is just me being transparent and showing you how my brain works. In a lot of ways, my belief system around investing has changed and this portfolio is a relic that points to past thinking. Most of these purchases were made years ago. The oldest, Google, I bought exactly 10 years ago today in its unusual IPO.

I’ll never be a CEO, CIO, VP, director or anything close to that. I’m glad, too. I have good friends who have ascended to those roles at their company and they bring home a hefty paycheck. However, nothing comes for free. A friend who was promoted to a director at a large retailer last year put in 80 hours a week for months on end. His two kids missed their father. I can’t live with the tradeoffs that I’d have to make to climb to a corporate leadership position.

There are lots of other things that I want to do with my life besides earn a paycheck. I’m thrilled that my ego doesn’t demand a position where I manage people or have a fancy title. I love programming. If I just wrote code for the rest of my working life, that would make me really happy.

Just because I won’t ever be a director or VP doesn’t mean that I don’t know a good leader when I see one. Today, I’ll tell you about some of the people in business who I admire most and what investments I’ve made as a result. Continue reading

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Ask the Reader: Should we rent and flip?

An awful kitchen makes for a great flip candidate.

An awful kitchen makes for a great flip candidate.

Last week, I asked you about your rules for landlording. In the past, I put a lot of emphasis on the credit report. A fellow landlord told me he thinks the rental history is just as important. Here is what you think:

Mario (a seasoned landlord) from Debt Blag had this to say:

…rental history has been a better predictor of how reliable a tenant they’ll be than credit score.

I think about it this way: The only reason credit scores even exist is because we all needed a way to figure out how much to trust someone when nothing tangible is at stake other than being able to borrow again in the future.

Very wise words. I had never thought about it like this, but it makes perfect sense.

Reader Chris mentioned this: Continue reading

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10 Questions and a Pizza Place with My UnhoardED Life

This is the 37th edition of our periodic guest post series called 10 Questions and a Pizza Place. (The 1500′s are pizza fanatics.) We have a list of 17 questions we pose to fellow financial bloggers, and they are free to pick and choose 10 or answer all 17. Let us know if you would like to be featured in a future edition of 10 Questions.

Today’s post features Zoe from My UnhoardED Life. Her blog is a very open and honest view of a childhood overshadowed by hoarding, her inability to deal with that at such a young age, and her eventual turn to an eating disorder to help her cope. She now lives her life trying to recover in a healthy way and shares her experiences with her readers.

Mrs. 1500′s parents like their things and her brother could almost qualify for the hoarding TV shows. She is waging her own battle against accumulation, and it is slow going. Progress is made every day, but measured in inches, rather than feet.

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Tell me about your blog and why it’s great.
My blog is a recovery blog – recovering from an eating disorder and recovering from growing up as the child of hoarders. I picked up many of my parents’ compulsive saving and shopping habits, so my blog talks about why I spend money on wasteful things and why and collect things. I’m trying to teach myself how to make better decisions. Hopefully others can learn from my mistakes. Continue reading

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Thursday Rant: How the poor back-load their lives with front-loader washing machines

Not so ugly!

Still not done, but no longer ugly!

I wasn’t going to post today as we’re very, very busy with lots of different projects. We’re trying to finish up the outside of Uglyhouse our house before the cold weather sets in and it’s consuming vast amounts of time. However, I saw a picture today on an acquaintance’s facebook feed that drove me to post.

I didn’t grow up in poverty, but we weren’t too far away from it. Our lower, middle class lifestyle was filled with financial struggles. My dad was frequently laid off when construction season slowed in the winter and money became an instant struggle. I noticed the same problems with my neighbors and friends.

I now realize most of the problems in my family and these others were due to lifestyle inflation. When work was abundant and good money was flowing in, my parents immediately found ways to spend it. The most dramatic example was when my parents blew a $400,000 inheritance in a just a couple years. I learned from the mistakes and vowed not to repeat them. Struggling with money hurts in a bad way. Continue reading

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1500 Portfolio, Part 1: Rare Insights

Today, I start telling you about my portfolio. I’m going to do it in three parts:

  • Part One, Rare Insights: This is today. I’ll tell you about my three biggest stock holdings in detail. Once in a while, I think I see something that others don’t and take advanage.
  • Part Two, Rare Leadership: A big part of success in life is associating yourself with the right people. Good people will take you to the stars. Bad people will drag you down to the gutter with them. Sometimes, finding good people is not easy, but not impossible. Owning companies with great leadership is no different. I’ll tell you how I identify great leaders and which stocks I’ve purchased as a result.
  • Part Three, The Future: I’ll reveal the rest of my portfolio and tell you about my future plans.

These posts are the ones I never wanted to write. I don’t want to give anyone bad ideas, so please know that I’m not writing this to give advice or encourage you to pick stocks. You probably won’t get rich immitating my purchases. I am doing this for two reasons:

  • Transparency: This is a personal finance blog, so I need to reveal what I invest in.
  • I need to show you my thought process: Most of my money isn’t in individual stocks, but a significant amount is. I just can’t tell you what I own without a detailed explanation of why I bought it.
Charlie Munger, in duck form

Charlie Munger, in duck form

Before we get into the dirty details, I need to turn the blog over to Charlie Munger for a moment. This quote, from Poor Charlie’s Almanack (a very worthwhile read), echoes my thoughts on investing:

“Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime.

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables.

And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.”

Continue reading

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Ask the Reader: Landlord Rules

This is not the rental home we are considering or the tree-house I'm building for my children. Pretty neat though!

This is not the rental home we are considering or the tree-house I’m building for my children. Pretty neat though!

Last week, I asked you if you cared about all of the doom-and-gloom the mainstream media people on TV predicting for the stock market. I was happy to see that we all seem to be on the exact same page.

Andrew from Living Rich Cheaply had this to say:

As a long term investor in index funds and a boglehead, I don’t care about the ups and downs of the stock market as I just stay the course.

Andrew, you had me at “boglehead.” Enough said.

Kali from Common Sense Millennial had this to day:

I’m already in the habit of rarely looking at the exact value of investments.

Very wise advice. I spend FAR too much time looking at my portfolio. I recently read that Billy Beane, the amazing baseball executive, never watches the game because it would bias him. The exact same rule applies to investing.

My favorite response came from the excellent, new (reborn?) Kapitalust who threw out a Peter Lynch quote:

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

Brilliant. I have nothing to add.

Of course, the real test will be when the market does lose its cool…

Now, on to this week’s question about landlording. Continue reading

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10 Questions with Paula from Afford Anything

This is the 36th edition of our periodic guest post series called 10 Questions and a Pizza Place. (The 1500′s are pizza fanatics.) We have a list of 17 questions we pose to fellow financial bloggers, and they are free to pick and choose 10 or answer all 17. Let us know if you would like to be featured in a future edition of 10 Questions.

Today we feature Paula Pant from afford anything. Here is a quote from her About page:

I’ve traveled to 30 countries. I own six rental property units. I’m my own boss and I live on my own terms.

I don’t work in a cubicle and I never sit in rush-hour traffic. I live life exactly as I want. I’ll spend 4 hours hiking on a random Tuesday if the mood strikes. Or I’ll stay up all night writing blog posts. Or I’ll travel to Bali on a whim.

This gives me shivers. Here is someone who has seized life and is running with it.

Paula shares all of her adventures through her blog. Her posts on travel (one of our passions) are great. If you like real estate, her blog is worth reading for that alone.

We don’t solicit people to submit for this series often, but Paula was one of them*. Thank you!

afford
  • #1: Tell me about your blog and why it’s great.
Back in 2008, I quit my job, bought a one-way ticket to Egypt, and proceeded to travel the world for the next 2.5 years. When my friends heard about my escapade, they said, “I’d love to do that but I can’t afford it.”
 
But here’s the truth: They earned far more than I did. They just didn’t align their spending with their dreams. I started Afford Anything to show people that they can afford … anything! You can afford anything, but not everything, so why not spend lavishly on the things you love most?
 
  • #2: What is the worst financial mistake you made?
Being too frugal. I used to spend hours trying to save a couple of measly bucks, never realizing that I was effectively “working” for less-than-minimum-wage in pursuit of scoring cheaper soap or discounted shampoo. When I shifted my focus to turbocharging my earnings, my net worth skyrocketed. 
 
  • #3: What would you do if you inherited $1,000,000 (after taxes) today?
I’d buy a small apartment complex or 3-5 duplex/triplex/quadraplex homes. You can read it in detail in this post: If I Had $1 Million, I’d Go into Debt.
 
  • #4: What kind of car do you drive?
I’m livin’ large: I cruise town in a six-year-old Honda Civic, and I paid cash for my car. It’s  the nicest car I’ve ever driven. 
 
When I was in college, I drove a $400 car. That’s not a typo. Four hundred dollars. I negotiated the price down from the “sticker price” of $450.
 
  • #5: Who inspires you?
Hundreds of Afford Anything readers have told me that they’ve achieved some kick-awesome victory: They’ve quit their crummy cubicle job, traveled to their dream destination, launched their own business, or hustled to bring in an extra $30,000 on the side. I’m inspired by all my readers and their success stories.
 
  • #6: What is the best financial move you have made?
afford-anythingDeciding to become financially free. After I returned from world travel, I realized I might have to find a job — and vowed never, ever to succumb to that. Instead, I launched my own internet marketing business, and started investing my income into rental properties. By age 28, I was earning $35,000+ per year in completely passive rental income – after all expenses.
 
  • #7: What is your favorite place to vacation?
Wow, that’s like asking “Who is your favorite child?” I’ve traveled to more than 30 countries, and I love each one differently. But if I had to narrow down a list of a few special places, I’d say: 
 - Bali, Indonesia; 
 - Bagan, Myanmar; 
 - Francois Peron National Park, Western Australia; 
 - Florence, Italy; 
 - Paris, France;
 - Dewa Sanzan, Japan; 
 - Manuel Antonio, Costa Rica.
 
  • #8: What’s your favorite tip for saving money?
Focus on your housing costs. Housing gobbles up about 30 percent of the average adult’s paycheck. If you can slash this one single line-item, you’ll really “move the needle.”
 
  • #9: What is your favorite pizza place (I am a pizza nut)?
Come to my house. I make a damn good thin-crust pesto pizza with brie, prosciutto and cherry tomatoes. 
 
  • #10: If you could go back in time and give yourself one piece of advice, what would it be (don’t say ‘buy Microsoft,’ everyone says that)?
Don’t worry about whether or not something will “look good on your resume.” If you’re caught up in that concern, you’re living for someone else. (In fact, you’re living for an imaginary, fictional projection of someone else.) Instead, live for yourself. Pursue your own path and be true to your own dreams.
 
Wait, wait … I can’t resist answering Question #11: 
  • Mac or PC?
Apple all the way!!!!!!

 

Thank you Paula! Show her some love on Twitter, facebook and over at Afford Anything.

 

*We also asked the new and excellent Frugalwoods to submit a 10 Questions. Stay tuned…

Continue reading

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Thursday Rant: Frugalsaurus and the American Money Trap

Have you ever heard of an Indian monkey trap? It’s a device with a hole barely large enough for a monkey to stick its hand in. You put a banana in the trap and the monkey reaches in to grab it. The monkey finds out that with its hand wrapped around the food, it can no longer remove it from the trap. The monkey is too stubborn or lacks the intelligence to let go of the food. Because it won’t let go, it is trapped and loses everything.

While you may think the monkey is acting ridiculous, I see the same behavior just about every. single. day. with the hairless, upright primates known as humans. A perfect example lives lived across the street from us. I’ll call my ex-neighbor Carol.

When we moved in, I noticed that Carol had a brand spanking new Audi A6 in her driveway. I’m a car guy, so I chatted her up:

  • Me: Whoah, Carol, pretty nice ride you have.
  • Carol <with great enthusiasm>: Oh my Audi, yeaaaaaah!!
  • Me: Looks pretty good in the black!
  • Carol: Yes, I love it. I’ve dreamed about owning one for years. It is my pride and joy!

I felt a bit sorry for Carol. Her life seemed to revolve around this 4 wheeled object. I let it go and took the high road, assuming that she was probably making a decent buck and was able to afford this $50,000 car. What a dumb assumption!

AudiThe trouble started a couple months later when I noticed Carol’s utility trailer was gone. Since she was kind enough to let us borrow it and it was very useful, I asked about it:

  • Me: Hey Carol, what happened to your trailer?
  • Carol: I hit a financial road bump, so I traded it for rent this month.

Hmmm, cracks were forming. She still had the Audi though. Continue reading

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Performance Update 19/50: Flying High in July

My main goal is to build a portfolio of $1,000,000 in 1500 days with no debt*, starting from 1/1/2013. Every month, I provide an update on my status. My goal for 2014 is to get my portfolio up to $768,536. Because we saw exceptional returns in 2013, I have accomplished this goal as well as my goal for the end of 2015. Time to look back on the month of July.

Woweee!!

Woweee!!

My portfolio continued to rock and roll in July. I started the month at $913,233 and ended at $924,818. Considering the S&P 500 had a drop of 1.6% for the month, these returns are sweet. Most of my run up was due to facebook**, a bet I made a long, long time ago. Here are the numbers as of 7/31/2014: Continue reading

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Ask the Reader: The Sky is Falling! Do you care?

Good afternoon everyone.

How I learned to stop worrying and love the 4% rule

The bull market is in the crosshairs of the mainstream financial media

The bull market is in the crosshairs of the mainstream financial media*

Last week, I asked if you believe in the 4% rule. I must admit to you that I had my own motivations when I asked the question. It is no exaggeration to say that I think about the 4% rule every single day (my brain is not normal). Like most of you, I was unsure of it. However, all of your great answers caused me to think about the 4% rule even more than I normally do and I now have come to a solution. My thoughts would take way too much time to lay out here, so I’m going to save it for another day. Sorry, I know that cliff-hangars can be a drag. Really though, you people are all great. Your answers are why I blog. Now, on to today’s question.

The Sky is Falling

While I don’t really trust and I definitely don’t act on information spouted out by the mainstream financial media, I fully admit that I enjoy reading** some of the silly articles and also listening to a variety of podcasts that they produce. Continue reading

Posted in Ask the readers | Tagged | 33 Comments