Blessed by the Potato

Sometimes sites have contests where you just give your email address or whatever to participate, and sometimes they’re a little more ingenious and want you to link to them. Here are my entries for a few recent ones:

Celebrate the SPF 1 year anniversary giveaway at Sustainable Personal Finance where you can win an iPad 2 package (co-sponsored by Prairie Eco Thrifter), a bunch of green tech gizmos and cash.

Next up is Krystal Yee’s financial bucket list contest. My bucket list is pretty simple: I’ve already got the debt paid back, and fairly recently acquired a reliable & efficient car that will last me for years, so all that’s left is to beef up the emergency fund and continue down the long road to financial independence and retirement! Oh, and death ray research funding. Got to keep a well-stocked lab on the financial bucket list, it’s a must. The $500 Give Me Back My Five Bucks competition, sponsored by Life Insurance Finder, the life insurance experts.

A bit of a strange article in the Globe says that: “Mr. Cowen believes that overcoming stagnation will require an increase in the social status of scientists relative to other professions, so that our best and brightest will not prefer law or finance or view university science and math as a prerequisite for careers in medicine or dentistry.” I don’t think the social status of scientists is the problem, unless that’s code for “paying them better and revamping the career path.”

Now, I could probably get behind a “science tax” but I don’t think it has a snowball’s chance in hell in the real world. Heck, it would probably be counter-productive, and lead to public outrage against science.

So aside from paying them better, what do you think could be done to “raise the social status” of scientists?

In case you forgot, I wrote a short book about investing on your own, and now it’s time to contrive all sorts of ways to oh-so-casually talk about it.

What inspired you to write a book?

Wow, that is a surprisingly long story, but the short answer is that it happened quite by accident.

You see, I was helping a couple friends out with their investments, guiding them towards a do-it-yourself approach with index funds. On several occassions I sat down with someone and went through a little hour-or-two long tutorial session, after which they would know enough about index funds to get going, and perhaps read one of the many existing books on investing. The problem was, when I’d check in weeks or months later, these guys wouldn’t have changed anything about their investment approach.

They might fully agree that they wanted to save fees, that they wanted to do index investing, and that they weren’t necessarily thrilled with the value-for-money they were getting from their “advisors” (or worse, bank branch mutual fund salescritters). The problem was, they didn’t need a 300-page book explaining why index investing was a smarter approach, they needed someone to hold their hand and guide them towards taking the first few steps on their own. Less theory, more practical how-to. One huge “service” provided by the advisors and the 2.5%-MER mutual funds was that all they had to do was walk in with a cheque on “RRSP day” and that was it. Someone was there to hold their hand and say that they were going to make it so terribly easy and painless to go through the process. My friends were getting hung up on taking that first leap towards setting up an account, and needed someone to show them how to make a trade, what a limit vs market order was, all that sort of thing.

So I helped guide them, standing over their shoulder, or on the phone, or even just available by email if they had a question so that they could take that first step to becoming a DIY-er in confidence. At that point I realized that there might be a call for just such a service: not necessarily an ongoing relationship, but someone to bounce ideas off of, to help reconcile conflicting information they may be getting from their “how to invest now” books (which get especially confusing for Canadians reading books from American authors telling them that the first thing they absolutely must do is set up a 401k, and no idea how to do that in Canada…), and to help show them how to execute transactions on their own.

Not a financial planner, or a sales position: I didn’t want to touch their money (except for a small fee for myself), I wanted them to have full-control. More like tech support and education. And that’s exactly the service I went and set up: investment education & support services.

I was in the process of setting up my new website for this little education & support service side-business when I decided I should have a robust and helpful resources section. So, largely cut-off from the world at the cottage, hot off handing in my PhD thesis, I started to write those resource articles. And write, and write… until pretty soon I was looking at a book.

And that’s the story of where the inspiration for writing a book came from: helping my friend out who “had a guy” and didn’t really want to keep paying “his guy” hundreds of dollars a year to do the investment stuff for him, but just didn’t know how to do it himself. And me realizing that his story was absolutely typical, and that lots of people could use exactly the same kind of helping hand to boostrap themselves towards full self-directed status.

Why isn’t the book available on the Kobo store?

You may recall when I first announced the project that the Kobo store was at the top of the list of where I wanted to sell the book. I’m still working on that, though maybe not all that hard at the moment. Basically, Amazon’s self-publishing route with Kindle was really straightforward and automated: once I had the book written and converted into the proper format (ironically, ePub, though the Kindle itself doesn’t read ePub), I just had to sign up online with them and upload my file. Within a day or so, I was live on the Kindle store.

For Kobo, it’s a manual process, and they’d prefer to only deal with people with more books. They said they would be willing to host me if I could help streamline things by providing them with a properly formatted XML file with all the meta data for the book, which I’m happy to do… except they don’t have a template to work from. They did refer me to the standard, but after about an hour of trying to understand how to create a file from scratch I gave up. They recommended that I use one of their publishing partners to get my book into the Kobo store, but all of them charged a not-insignificant fee to get listed, and so far I have no idea if my book will ever make that much, and I’d prefer to not be out-of-pocket trying to get this thing out (especially with recent budget issues here). Now, these partners do have some value-added services, notably getting the book into a bunch of different online stores (like Barnes & Noble, Apple, Sony, etc., etc.) and converting the book from a Word doc to an ePub file. Except my market is Canada only — if it was a novel or something more universal, those might be useful features, but they’re not. I was mostly interested in the Kobo store because the major Canadian bookstore owns Kobo, so it has good penetration here (whereas the Nook and Sony e-reader, not so much). And, I had already done all the hard work of converting the book to ePub, including tracking down and stomping most of the inevitable bugs. I didn’t want to pay someone else to repeat the work, and possibly have to go through the bug-stomping exercise again. So for now, I’m not worrying about Kobo, though I would eventually like to be available there, as well. If you have a Kobo, you can buy directly from me and included in the package is both a PDF that’s formatted for a 6″ e-reader, and an ePub file.

How’s it going so far?

In absolute numbers, the book sales haven’t been stunning — I’m not exactly positioned to quit my job or even pay my hosting bill from them (and indeed, if I had paid to get an ePub created and get into the Kobo store, I’d still be underwater). But considering I haven’t really started promoting on other sites at all, I’d say that’s pretty good. Really the only mention of it at all was here, and at the 3 link-round-ups at CC, MSB, and FU. What’s interesting is that I spent so much time learning an open-source e-commerce thingamajig so that people could go through the checkout themselves and get instant digital download, and so far nobody has chosen that option: all sales have been through Amazon (~40%) or through the one-step PayPal buy now button (where I then email the files later, ~60% of sales). More importantly, so far all the feedback has been really positive, some of which I’ve been allowed to share. Of course, most people don’t provide feedback spontaneously (and even those I asked haven’t all replied). Perhaps it would be fair to assume that some of those that didn’t like the book just didn’t want to say so, but so far I’m really feeling good about the fact that people are liking it and finding it useful, even if it’s not making me rich in the process :)

How do I buy the book again?

It’s very easy, and you have a few choices:

Visit the book’s page here and buy directly from me.

Visit Amazon’s Kindle store and buy it from them for the Kindle, or a compatible reader app for your smartphone, tablet, or computer.

Or if you just want a one-step process, click the buy now link below and I’ll email you the PDF and ePub.

Putting a document up on SEDAR with “redacted” sections may not be working as well as you hoped at keeping certain information confidential if you just “redact” the information by changing the font colour to match the background. Though I’m not quite sure why you had to redact that the company’s directors will have their insurance policies extended for a term of 6 years. Real top-secret stuff there, guys.

The weight loss plan was more-or-less on track up until Halloween. Then, as a small mercy for my ego, I stopped weighing myself for a bit. Today I see that I either lost the excess, or managed to stay steady through the last few weeks. Which is good, because now a whole new doctor is telling me that all my problems will go away if I just lose a bit of weight.

Canadian Capitalist raises a good question: where are the financial plans? Many people are with advisors/mutual fund sales people who take trailer fees and whatnot, but aren’t actually providing plans.

Netbug asked a good question: what should be in a financial plan? I hope to have some kind of answer to that soon.

Michael James had two posts recently on whether the leveraged ETFs add to market volatility (spoiler: they do) and also demonstrating that two asset classes can be non-correlated (even anti-correlated) even if both have positive returns: you don’t have to have one go down while the other goes up. See his posts for the full explanations.

The CRTC has released its UBB decision, and Michael Geist has a good summary. I slightly disagree with him here: “In a nutshell, solving wholesale UBB was never enough. The retail issues that truly sparked the public outrage have been left largely unchecked.” The retail UBB (i.e.: Bell applying UBB charges to its own customers) issue is what’s fuelling much of the outrage, and it’s a disgraceful, greedy practice in its current form that turns Canada into an Internet backwater. But, reversing the wholesale UBB is (barely) enough — the original CRTC decision to go to a “retail-plus” model was so ridiculously stupid I had to write multiple blog posts and send them a 5-page letter against it. So removing that and allowing competition does at least allow consumers some choice: as much as I’d love to more forcefully regulate the oligopoly (in many markets, the duopoly) of major internet providers, the government has chosen to use competition as the tool for ensuring fairness, and this new framework does allow for competition to occur once again, though in practice that is only taking place at the margins. I don’t fully agree, but can see the logic behind the sentiment that “if Bell wants to gouge their customers, that is their business” as long as those customers have a legitimate alternative choice. The full release is here (it was TL;DR for me, so far I’ve relied on summaries, including the aforelinked Michael Geist one).

Teksavvy’s response indicates that they liked the model/framework of the wholesale pricing, but not the prices.

The Sino-Forest independent committee has released its interim report. I don’t even know what I was hoping to find in there (if it’s a fraud, I would feel justified in dumping it; if it’s not, I wouldn’t feel so bad for buying in the first place), but I didn’t really follow the bits about the forestry ownership when trying to skim it, and I don’t feel much like taking the time to read it slowly. They seem to think the cash is there, which is something, but a few months too late.

SMBC explains why it is that cats know to sit on important things.

Several sites included links back to the book announcement in their round-ups, including:

Canadian Capitalist, though he didn’t add any flavour commentary, so either he hasn’t found time to read his copy, or he didn’t like it. [It is at this point that Wayfare will point out what a terrible salesman I am]. Also, Money Smarts Blog, and Financial Uproar plugged it as well, and I didn’t even beg (much)! :)

I first got interested in Indigo as a potential value investment in the spring, and ended up buying some at $13. It’s fallen a lot since then, and I averaged down once on the way down, so my average cost is in the $11 range (yesterday’s close was a painful $6.73).

My investment thesis was based on two planks: that Indigo would continue to be a profitable company for some time, even if just barely (this has not been a good year for that), and that Kobo was not being properly valued on their balance sheet and would be a source of value.

Well, one out of two ain’t bad: Indigo announced today that they are selling their stake in Kobo for what amounts to about $6/share. The whole company was barely selling for that today, so I anticipate that it should be a big day tomorrow on the news, possibly it’ll hit $11-12. Unfortunately with one of the value planks taken away, and the other not quite going according to plan, I will likely start looking for an exit, and in the end may barely break even.

As for that target price of mine: since the company hasn’t managed to stay profitable so far this year (though the big holiday quarter is yet to come), there’s no reason to pay a premium above tangible book, which would be ~$4.25 on the balance sheet plus an additional $6 from the Kobo sale.

Update:

I really thought the Kobo sale was to create shareholder value, and was expecting a special dividend out of it or something. Instead we get this:

After making a $315-million (U.S.) deal to sell e-reader maker Kobo Inc., Ms. Reisman is in a stronger position to make acquisitions and expand non-book ventures, to offset Indigo’s shrinking book business. She will invest heavily to shore up her new product design and development studio in New York City, which is focused on home decor and gift items.

One direction she won’t be heading: handing out some of the Kobo windfall to shareholders in the form of a dividend.

Ms. Reisman said that in expanding into affordable gifts and home items, she’s counting on creating “an experience” for the customer.

“I’m not interested in selling a bowl,” she said. “That’s not the business I’m going to be in. I am interested in creating an experience around the table for the customer … There is so much about what inspired and created Apple – the conviction about creating an end experience for the consumer … the commitment to beauty and simplicity.”

I have very little interest in investing in “an experience” or her personal New York “development studio”. Damn. I was almost starting to think I was getting good at this investing thing.

Hey, I have short book! And it’s about financial literacy/investing for yourself!

It’s called Potato’s Short Guide to DIY Investing. And it’s exactly what it sounds like: a short guide (~40 letter-sized pages; ~90 paperback/kobo-sized pages) that brings a novice investor up to speed on how to get into do-it-yourself investing. It very quickly covers what to invest in (stocks, bonds, mutual funds), where to put it (non-registered, TFSA, RRSP), how to get it there (how to set up an account, what fees to look out for), and what to think about along the way (planning, asset allocation). In other words, all the basics condensed into one little package. It focuses on low-cost index investing, but doesn’t spend much time saying why you should choose that over some other kind of investing a novice has never heard of, it just gets right into the how.

Indeed, that’s one of the most unique features of the book (that, and a light, humourous tone with pictures of bunnies): it’s exclusively for Canadians (so TFSA and RRSPs, no IRAs and 401ks) and it actually tells you how to take the next step and get started with setting up an account including screenshots from TD.

The book is inexpensive at just $5, in part because it’s self-published electronically: you can buy it either from Amazon for the Kindle, the Kobo store, or directly from me in PDF and ePub.

What’s covered?

A number of important basics are covered, including:

• The importance of investing: time & compound returns.
• Types of investments, from cash to bonds and stocks.
• Mutual funds as collections of other things like stocks & bonds, and the importance of fees.
• Stocks & risk.
• Passive investing, including four major indexes to follow.
• Historical returns and approximately how to set your expectations.
• Taxation, TFSA, and RRSP.
• What inflation is, and why it can be a big deal for your long-term plan.
• Asset allocation and rebalancing.
• Putting it into practice: opening an account and making your first purchase.

Why should I buy the book?

There are many good reasons, and none of them silly like with physical paper books (no holding up wobbly tables with this one!). In particular, it is a concise, well-written introduction to investing for the novice investor. In just a few hours you can get yourself up and running, and have an idea of what to read next to build up your knowledge base.

Saving for the future is an important part of life, but it can also be a little overwhelming, especially when it comes to investing. It’s not something the schools have prepared you for, yet getting someone else to manage your money can be costly, with advisors or mutual funds often taking 2.5% or more per year in fees – that’s a cost of $1250 for a $50,000 investment, every year.

Do-it-yourself investing and managing your own money is something that anyone can do with just a little bit of time, dedication, and education. Once you learn the basics, a passive investing strategy requires very little of your ongoing time to maintain. A few hours at tax time perhaps. A few minutes through the rest of the year as you make money and have more investments to put away.

You just need the basic knowledge to get started, and that’s exactly what the book has been written to deliver.

It’s been favourably reviewed by everyone that’s provided feedback, and not all of them are just trying to be nice to me (though to be fair, I still haven’t heard back from some reviewers). Plus, it’s not expensive, so you’re not exactly taking a big risk on it. Here’s an example review (chosen since it was spontaneous feedback from someone that doesn’t know me personally, so it should be the least biased): “I read your book over the weekend. Great summary. This exactly what I needed to start with investing.”

See? Exactly what you need. It does kind of nicely collect a lot of stuff into one spot.

Will it reveal heretofore unknown secrets of wealth, and tell me how to get rich quick? ‘Cause that’d totally be worth $5.

Unfortunately, no. There’s no special knowledge. I may have re-worded and packaged things better than others, and I may not have, but either way there’s really nothing that’s totally unique to this book. If you really want to get your information for free, pretty much everything in there is available on the web or from other books. I’d bet at least half the topics have already been covered on this very site. However, if you place much value on your time, you’d probably spend a lot more than $5 tracking it all down, especially if you weren’t quite sure where to start in the first place.

What’s the target audience?

The book is primarily aimed at people that want to invest for themselves. It discusses a passive indexing method, and most of the information is kept at a general level: enough to get by and get started, but not enough detail to become a real specialist. So if you already have a good background knowledge in markets and how to invest on your own, you may not need the book. However, if you’ve already read a bunch of stuff on index investing, but still don’t know how to actually go about doing it, then you’d probably still find this book quite useful. In terms of ages, in my mind I was writing it for my friends, in the 20-40 age range. It talks a lot about saving and investing for the future, but does not cover how to turn around and start living off those savings once retirement actually starts. It should be appropriate for anyone who’s still in the saving phase of their life (typically, <65).

If you read the terms “TFSA, RRSP, and non-registered” in the first bit, and didn’t know what that meant, then the book is absolutely for you.

Can I see a preview?

I’ll be posting excerpts here and as guest posts on other blogs as I start promoting the book. I’ll add links here as the excerpts are posted, but in the meantime just trust that the writing quality is as good or better than the typical BbtP post (likely much better since this has gone through several revisions and reviewers).

The story behind the book.
Planning.

How do I buy the book again?

It’s very easy, and you have a few choices:

Visit the book’s page here and buy directly from me.

Visit Amazon’s Kindle store and buy it from them for the Kindle, or a compatible reader app for your smartphone, tablet, or computer. Or, if you have a Kobo or other ePub reader (Sony, etc.), then go to the Kobo store (or directly from me).

Or if you just want a one-step process, click the buy now link below and I’ll email you the PDF and ePub.

There was recently a problem with Bell’s phone lines in Markham. It had been ongoing for weeks, and though it didn’t affect me directly, I do have friends and family caught up in the problem. It’s not a constant problem: the phones become useless in the rain. So it has to be raining, which makes diagnosis tough, especially when Bell doesn’t take the issue seriously enough to send service techs out until the day after a complaint is made. Even then, many times the techs (though themselves pleasant and hard-working) didn’t seem to be fully informed: one person might complain and Bell would dispatch a tech, and another person next door would do the same, and Bell might dispatch another tech, and the techs would never be told that the problem was affecting more than one house.

In the power outage of 2003, we were without power for days. The battery backups for our radios and cell phones went dead, as would the backup batteries for a competing phone technology like a VOIP system or Rogers digital phone. But Bell’s POTS worked, and continued to keep us in touch with the power company and our relatives across the country while the blackout was resolved. It is said to have “five nines” of reliability: it works 99.999% of the time, which comes out to about 5 minutes of downtime per year.

That is the one reason we are still with Bell: the call quality and clarity is so much better than a cell phone, and the reliability cannot be touched by VOIP or digital systems.

Except for customers in Markham, where Bell has failed them. In an area spanning several blocks, affecting many customers, their phones simply stop working in the rain. Sometimes it’s merely bad quality: crackling and popping noises that drown out any attempt at talking, though perhaps in theory some communications could still be made (e.g., dialing out to 911, at least enough for them to receive caller ID information). Sometimes though, the phone fails to work entirely. No dial-tone, no ringing in, nothing.

That this has been going on as long as it has is unacceptable. I understand that intermittent problems are the worst to try to diagnose and fix, but rain, though intermittent, is not exactly beyond our ability to predict. Bell gets the weather network, too. Bell could have laid all-new wire in that neighbourhood by now, and at least should have looked ahead to the forecast and had someone standing by to try to finally solve the problem the next time it rained.

But the phones weren’t ringing in Markham. Though they are ringing in Bell’s call centre. One long-time customer has called almost 20 times now, first to get the technical problem resolved, and then to get the customer loyalty one fixed.

This doesn’t even directly affect me, but I’m pissed off. Reliability really is Bell’s only selling feature: though Robbers Rogers certainly doesn’t put too much effort into competing for POTS customers, Bell is not really all that price competitive. Certainly not for feature-laden phone packages. And people aren’t exactly staying for the cheery and helpful customer service. So when reliability is gone, what’s left? I ask Bell: how are they going to make this right?

So far, they’ve offered to refund a portion of one month’s bill: the local calling component, which was largely nonfunctional anyway. But no refund of the long distance plan (which was equally useless for much of the month), no good faith go-forward discount, no sorry-for-the-terrible-inconvenience incentive, no cash to compensate for the many cell phone minutes used up while the landline was dead in the water. In short, no admission that taking weeks to solve a problem might be anything other than par for the course.

Bell: it’s time to step it up.