Blessed by the Potato

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?

Note: the book discussed below has been superseded by The Value of Simple: A Practical Guide to Taking the Complexity Out of Investing.

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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.

Note that Kobo changed their practices, and PSGtDIYI did appear in the Kobo store, as will The Value of Simple.

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 :)

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.