As a simple rule, the more reliable a company's earnings are, the "safer" the investment. However, one of the dangers of a company that can...

A. Provide a forecast of earnings to the investment community
B. Report earnings that equals its forecast

...may over time become obsessed with its ability to do A & B consistently and massage its liability provisions and revenue recognition themes to achieve these results. This is an example of "cooking the books".

I would rather the earnings be "lumpy" and grow at 15 percent over time, than be "smooth" and grow at 10 percent.

I would rather the earnings be "honest" and have a bad quarter, than take a "bath" and have a terrible quarter, complete with restructuring charges and other so-called "one-time" events, in order to sandbag for smoothing future earnings.

Recently I purchased stock in a construction company that I believe has a stellar business, at a price that I believe was significantly below its Intrinsic Value. The past quarter disappointed versus Analysts Consensus and versus the prior year quarter. At first I was upset that the stock price fell, but in stepping back and looking at the bigger picture, the dramatic fall in the stock price was a good chance to "double down" and buy more stock at even more attractive prices, so I did so.

Last year I sold my business and stowed my work clothes into the closet. This year I opened my wallet and bought clothes for my current "retired" life. A lot of clothing information is available on the web. However, I learned more about fashion as a teenager from my older cousin in New York.

I added 8 sport coats, 6 casual pants, 5 dress shirts, 10 pairs of socks, 1 vest, 2 sweaters, 1 trench coat, 1 scarf, 6 pairs of shoes, 2 pairs of boots

To add longevity, I bought well-made clothes, I avoided "This Year's Color" and stayed within the frame of traditional pieces in a modern trim style.

I finished this month and will not buy another item for the next few years. Quality menswear can last several years and styles are slow to evolve.

Used the Google Books function to read most parts of this excellent book. Some of the ideas John crystallized for me were:

1. Buy Low Sell High stock strategies are too much work for the individual investor for making money. It places the responsibility for making money on the investor, rather than on the business.

2. A Stocks value may be calculated as stock's earnings divided by required profit rate.
V = E/i

3. For Stocks that grow their dividend, value may be calculated as earnings divided by the net of (required profit rate minus dividend growth rate).
V = E/(i - r)

4. Warren Buffet bought Dairy Queen, Nebraska Furniture Mart and Sees Candies for their earnings power and for their dividends. By purchasing whole companies, Mister Market cannot be used to realize the wealth from these businesses. Instead, wealth arrives through the Earnings that they produce and the Dividends that they pay each year. The cash these businesses generate become Berkshire Hathaway's cash - in the truest sense they are Dividend paying companies paying 100% to BH.

After reading The Dividend Playbook I realized the virtue of continuously reinvesting the dividends my family receive. I used to think "let me accumulate pools of dividend cash and then let me decide what to buy with the money when the price is right".

The best reasons for enrolling in Dividend Re-Investment Programs for me are:

1. We do not need the cash for these dividends now.
2. The DRIPs allow the repurchase of shares at zero commission.
3. Dollar-Cost averaging principles of accumulation are favorable vs market timing.
4. Compounded rates of return are possible through increasing the number of dividend paying shares.

Now that I am enrolled in DRIPs I am more inclined to seek out companies that pay stable and RISING dividends. I'm on the right track.

Eventually that is my goal too...I have a family of stocks that I am interested in and want to do intial purchases for all of them. Once I have bought all the stocks that I like I intend to add money towards them yearly and hope to use them as an income stream when I "retire". I have heard so much bad stuff about choosing that and of course the taxes and dca. But I am not going to let that deter me. I have a ways to go before I do that, but I definitely would like to hear more about your DRIPS.

I repaid my Home Buyers Plan by putting money back into my RRSP. Although the required amount was a fraction of the outstanding amount, I paid the whole $1500 as I had the cash available.

The next decision: what to do with the $1500 cash that is sitting in the RRSP?

Hey Rick,

Regarding your RRSP and the HBP repayment: when it comes time to do your taxes in another month or so, I'd suggest you only designate the minimum required amount of your contribution as HBP "repayment," and leave the rest of the $1,500 as a new contribution.

The reason is that in terms of portfolio performance, it makes no difference (the same amount of money ends up in your RRSP either way), but you get a bigger tax refund if you maximize the amount that is considered a "new" contribution. You've already gotten the tax refund from the money you borrowed under the HBP, so you obviously don't get any refund for repaying it, but at the same time, there's no reason to rush to pay it back any faster than required.


For sure, keep making new contributions, just only designate the minimum required as "repayment," and leave the rest as new contributions.

Hi, KOMBAT:

What you advise makes good sense for anybody who is faced with the decision of allocating between Home Buyers Plan and regular contribution dollars when paying money into the RRSP.

However, in my particular case, I have no contribution room available, because I have no Earned Income as defined by the tax rules. For instance, I have not had Income From Employment, for a number of years.

While it's nice to do proper tax planning, in my humble opinion it's nicer to be "off the grid".

RICKLEE

..an interesting article by a CFP called Reality Retirement Planning: A New Paradigm for an Old Science by Ty Bernicke. I learned about it in the Financial Webring Forum, which is my favorite Canadian online resource for quality do-it-yourself financial education.

In the article the following observations were made:

- under traditional retirement planning, consumers tend to oversave for retirement, underspend in their early years of retirement, or postpone retirement.
- in reality, household's real spending will decrease throughout retirement.

Another poster on FWF described a financial advisor's three retirement categories as:

Go Go = the early years of retirement
Go Slow = the mid years of retirement
No Go = the final years of retirement

I am currently retired in an informal sense. I am definitely in my Go Go stage.

VALUE INVESTOR
His track record as a Portfolio Manager nears fifteen percent per annum over the past thirty years. His methods resemble those of Benjamin Graham, Warren Buffett, and Charlie Munger. He used terms such as Margin of Safety, Buy the stock as if you were going to hold it forever, buy the company not just the stock, etc.

ABSOLUTE RETURNS
His funds focus on small caps. But he did not start out with that intention. When he began investing, there was no distinction among stocks between small cap and large cap. He admits small caps bear higher volatility than large caps. He focuses first on the risk and then the return decision can be made. Risks include the leverage of the company, the management, the strategy of the business, and the ways he can lose money as an investor. After those matters are addressed without concern, then the potential for making money, and large amounts of it, become permitted to be considered. And total return is what is important, not relative return. That meant the company's ability to generate profit for the shareholders, the total return, is what is desired. Relative return, that is, versus some index such as the Russell 2000, is nice too, but not the end goal.

DIVIDENDS
Charles Royce recommends the importance of dividends in the current investment era. They serve as a form of governance over a company's management. If a company develops an over-reaching husbandry of the company's cash, it is a concern, because that cash belongs to the company's owners, the shareholders.

When asked by Consuelo Mack of Wealthtrack what investment, other than the ones provided by the Guest, everyone should consider owning, Charles answered "to own a pool of quality dividend paying stocks".

I was encouraged by the advice.

..to ask a few questions about their latest quarterly results. What I love about stock investing is finding quality Managements. One of the aspects of this is the speed to which they answer my questions and the integrity with which they respond. I am satisfied that when the Market pulls down the price of a quality company, it is a pre-condition to Buy More rather than respond in Fear.

To quote an excellent money manager I listened to this past week: proper Value Investing is buying an Undervalued Company when it is Undervalued for the WRONG reasons. If the company is Undervalued for the RIGHT reasons, it is a VALUE TRAP and should be avoided.

Very clever thinking!

After years of subscribing to basic cable, our family explored the offerings of internet television. The advantages of internet television:

- more channels
- program starts and pauses and finishes at my control
- free

I canceled my basic cable, and was offered a very compelling discount to stay the status quo. I held firm and canceled anyways. Hope I never re-apply to cable ever again.

I have thought about cancelling the cable too. Yesterday I called and got another promotional price (this time for a year). What are you using and how do you like it?