Tuesday, February 28, 2006

Boneheaded financial move o' the day

Throwing away an unrolled cup on the opening day of Tim Hortons' Roll up the rim to win promotion? Not my finest hour

Somewhere out there, there's a janitor driving around in my car, dammit!

Monday, February 27, 2006

I want my Baby Berks

Here at growthinvalue, we're all about turning over new leaves.

So I figure if I want to get serious about shedding my get-rich-quick ways and becoming a long-term growth investor, what better way to learn than by putting my money where my mouth is and falling in line behind the man who started it all.

Warren Buffett, a.k.a. the second-richest man in the world, a.k.a. the Oracle of Omaha, a.k.a. the world's greatest investor. Surely he's the man to lead me to the promised land. Problem is, ol' Warren is notoriously stingy about giving out stock advice. In fact, the only stock advice he's ever given is "buy shares in my company and hold them."

If you don't know the story of Berkshire Hathaway, it really is a fascinating tale. Essentially, in the 1970's a young Buffet bought a bankrupt Nebraska company called Berkshire Hathaway and used it as a holding corporation to launch his investing empire. Over the years, the stock grew and grew and grew to the point that a single share in Berkshire is worth in excess of $80,000 today. 99% of investors are scared away by such a high price, so most companies would have split their shares about a million times by now. But Buffett doesn't believe in stock splitting, and has let the shares soar.

In short, I want in. But lacking 90 grand lying around between the couch cushions in my apartment, I had to go through the back door. With my tax return this year, (expected to be somewhere in the 3-4K range) I'm going to be buying a single share in a Berkshire Hathaway class B share, currently trading at a little under 3 grand. I'm still not entirely sure what the difference is between the A shares and B shares — beyond the 80 thou, that is. So I'm a little in the dark on the whole concept. And being in the dark before buying an investment goes against the GIV credo.

I'll be doing a little reading over the next few weeks. But barring some sort of major event, I'm expecting to buy my very own Baby Berk some time in March. When I'm retiring 30 years from now, I'm sure that single share will only be a small part of my portfolio. But getting to look at it every day in my online brokerage account should be an excellent reminder of the importance of thinking long term

Sunday, February 26, 2006

Where I'm starting from

To kick things off here's a quick synopsis of stocks I own. All are listed on the TSX.

Biovail (BVF)
Parlay Entertainment Inc. (PEI)
Nuvo Research Inc. (NRI)
Canwest Mediaworks Income Fund (CWM.UN)
iUnits international equity (XIN)

As you can see, these stocks are all over the map. Biovail, Parlay and NRI are vestiges of my volatile growth-stock days. The iUnits ETF was my RRSP selection this year. And the income trust I bought because it makes me feel better about my job's woeful job security. I'm a newspaper owner. I don't know why getting a cheque for $15 every month makes me feel better about looming unemployment, but it does.

I'll have more to say on why I bought each of these companies - and a few more I'm going to buy once my tax return comes in - but that's where we stand for now.

Friday, February 24, 2006

The Growth in Value Manifesto

When I was 14, my parents sat me down one Saturday and told me they had a bit of an unusual present for me. Since I was born, they'd been ferreting away the baby bonus cheques that the government was so graciously giving out at the time. Over the years, they'd added up to a somewhat impressive $2,000, which my parents decided to put into a mutual fund in my name, so that I might "learn about money" in a nebulous, Ward Cleaver sort of way.

It was the mid 1990's. And my dad, in his infinite wisdom, stuck the lot in an Asian mutual fund for me, and explained how I could track it. Initially, he retained control of the account, in case I had misguided notions of cashing it out and blowing it all on hockey cards and CDs. But based on the unholy amounts of pleasure I seemed to derive out of monitoring every microscopic uptick in my fund's value, it soon became clear that his fears were misplaced and he transferred ownership over to me.

For a few years, everything was going gangbusters. From an initial purchase price of about $15, I watched with glee as my free money soared past $25 built on the back of strong Japanese and Korean stock markets. It was getting to the point where I was pointing out all the Daewoo products for sale at Eaton's, and trying to convince my parents to buy a Toyota. Money, I reasoned, was easy.

Then, in about 1997, I came crashing back down to earth in a big way. Asian stock markets completely collapsed, and my fund — which once flirted with $30 per unit — was having trouble staying above $10 a half-year later. I was angry, and desperate to recoup my losses. I had scraped together some money saved from summer jobs, and vowed to invest in another super-volatile fund to win back what I had lost. It was by then the late 1990's and the sector I chose to do it in was high tech. I think we all know how that one ended up.

It's now 2006, and at the start of last year, I finally cashed in my original Asian mutual fund. The price? $15.50 per unit. Meaning I think it earned me a net profit of about 0.2% in a little under a decade. I don't have the heart to see what its at now (the Nikkei was up 40% in 2005) but some things never change. For whatever reason, I still dont' seem to be able to cut my losses — so says my e-business RRSP with a -83% return since I bought it in 1999.

I'm starting this blog for a number of reasons. Number one, because i've been lurking around the multitude of personal finance blogs on the Internet, and I'm so grateful for the financial education they've provided me with that I feel the need to try and reciprocate in some small way. And number two, I want a written record of my thoughts and actions in dealing with my personal finances, so I can attempt to learn from my mistakes as I go along.

The name of this blog is inspired by my own changing philosophy towards investing. At first I was a fan of those get-rich-quick, sure-fire, can't-miss Venture stocks that too often suck in greedy "growth" investors. I wanted to put $100 I saved from my allowance into something called the "stock market" and take out $5000 a few weeks later. Though I had some successes in doing that ( I somehow managed to turn $500 in Nortel into $1100 in three months a few years ago) the far more numerous spectacular failures I've had doing that have belatedly convinced me to try to find another way. I still have a bit of a soft spot for penny stocks, but in general, the companies I look at now have steady revenues, often pay dividends, but their stock price has been temporarily beaten down by bad news. Behold: the birth of a value investor. Growth in Value is my hackneyed way of reminding myself of what I'm trying to do here — rather than pissing my meagre salary away, I want to invest it so that the value of my investments will grow over time, so that one day I don't have to be a wage slave.

I predominantly invest in the stock market, because GICs and Canada Savings Bonds bore me to tears. But I do have an ING account where I keep my money while I'm waiting for the right stocks to come around.

On a personal level, I'm going to remain somewhat anonymous. I'm a 25-year-old male from Canada. And I'm a journalist by profession. Anything more than that, I want to keep private for now because from time to time I'll be talking about the people in my life. And the last thing I want to come out of this is to have people upset at me.

As per the usual disclaimer on these sorts of things, please don't take anything I write here as investment advice.

If you're just dipping your toe into the stock market, you'll find stuff you can use here. Because I was in your shoes not all that long ago. And I still don't know what I'm doing half the time. But I think people — especially young people I know — are dangerously uneducated about how money works. And it'll be a tragedy if they have to pay for that ignorance for the rest of their lives.

I'll think aloud about stocks I'm thinking of buying, or ETF's, countries, and sectors I find interesting. Home ownership — and my lack thereof — will most like be a recurrent theme. As will other finance issues like credit card and student loan debt, that often weigh on the minds of quasi-young 20-somethings.

Bottom line? Expect more questions than answers. But it should be fun. I hope you come back.