Monday, September 26, 2016

Side Gig and Thoughts on Wells Fargo

Hi everyone,

I wanted to apologize for taking some time off from writing.  Things are very crazy in my life right now, and unfortunately the blog has been the lower hanging fruit that had to be put on pause for a bit. That said, I wanted to put out a few quick notes:

First, I took on a second job (a side gig, if you will), which should help boost income (at least a little), and to be honest, it is much more profitable than blogging, which was really only a few dollars per month!...Hence the lack of articles lately.  We'll see how things go over these next few months, but I anticipate that writing will be lighter up until the new year, when I will once again have more free time and can return to bi-weekly articles.  Until then, I still will publish the following:

* Monthly Passive Income Reports (September will be published in a few days. Very interesting, and frustrating month!)

*Monthly Income/Expenses Reports

*Q3 Review

* Yearly Review

*2017 Goals

*Perhaps one or two additional articles

Please stay with me through this brief transition!

Secondly, I wanted to offer my thoughts on what has happened with Wells Fargo recently.  As many of you know, I initiated a position in the stock at $48.50, watched it go up to 50, only to have some very negative news about opening fake customer accounts to boost their cross-selling of products hit the headlines and greatly hurt the stock. Then, a few days later there was even some Congressional pressure for the CEO to step down.  The stock is now trading around $45.  Here's my take:

Though I like Wells Fargo, I like it less now, but I still think the valuation is attractive.  Here me out for how that can make sense.  "Clearly recent headlines surrounding retail banking sales practices at WFC are a black eye for a company with a great long-term fundamental track record; however, we think the market's extraction of ~$25B in WFC market value related to a $2.6M revenue loss to be excessive," said one analyst at Baird.  I agree.  It is a complete overreaction; as the numbers themselves prove it.  You have to multiply 2.6M times almost 10,000 to get 25B.  That seems harsh.

Still, I find it frustrating that as an investor with no knowledge of these practices going on, that I now have to wait for the stock to recover at least to $48.50 for me to exit without a loss.  That is frustrating, and to be honest, a bit unfair.

Or is it?

I decided to enter into a sole position (i.e. a single stock) and therefore I assume all "specific risk", or diversifiable risk, in the company that I choose.  I happened to choose WFC slightly before somewhat of a scandal.

And herein lies the point of why I prefer mutual funds for the majority of my holdings.  With a market index fund, I can diversify away all risk (such as a Wells Fargo retail banking scandal) and only have systematic risk remaining.

Sure I like WFC and think it offers a healthy return at current prices.

But is there another scandal going on that hasn't been found out yet?  Could this happen to ANY company and eventually cause the dividend to be cut or decreased?

The answer is yes.

Diversify your income streams is my takeaway lesson thus far in this trade.  Sometimes firm-specific risk is greater than what it seems.

Thanks for reading,

Passive Income Dude

Thursday, September 15, 2016

YouTube Intelligence: Rise and Shine

"For what is each day but a series of conflicts between the right way.....and the easy way.  ...Welcome to the Grind."

"You are a lion in a field of lions!! All hunting the same elusive prey with a desperate starvation that says VICTORY is the only thing that can keep you alive."

If you need some motivation to get up and get to work, this "Rise and Shine" video is definitely for you.  I've listened to it hundreds of times now, but believe it or not, I've never actually watched the video, as I think it distracts me from listening to the audio and internalizing the actual words.

Check out this video heed its wisdom! No doubt you walk away motivated and ready to ACHIEVE more! 

Bottom Line: 3 minutes 24 seconds of amazing wisdom motivation, definitely worth listening to.

Here is the link: 


What do you think?  Thanks for reading,

Passive Income Dude

Monday, September 12, 2016

Must Read Series: The Richest Man In Babylon

Hello all! This is the second of my "Must Read" category, and I am excited to share this content with you.
What I would like to do with my "Must Read" page is two things:

1) Provide you a list of investing books that I personally have read and think ARE VERY VALUABLE for you to read as well.  I want this list only to be on books that are definitely worth your time reading.

2) Give you an overview of KEY TAKEAWAYS so that if you don't have time to read it, you will be much smarter after reading this post.

To continue this series, my second recommendation is The Richest Man In Babylon by George S. Clason.  I have read this book from cover to cover at least three times (lost count!) and think it is a must read if you want to get serious about building wealth.  Difficulty score: 2/10.

Friday, September 9, 2016

Income/Expenses: August 2016

One of my favorite posts of the month! It's very personal and helps keep me extremely accountable!

I think it takes a little bit of guts to share your income and expenses openly with the world. But that said, I think there is value for both of us in reading this post. I will do a similar post every month.

Listed below is a detailed display of all income and expenses for the month of August 2016. Still some things to work on, but great progress despite some obstacles.  See what you think!

Monday, September 5, 2016

Why I Went $34,000 Into Debt With My Family

This picture is pretty accurate.  Debt is such a burden and literally sometimes feels like a weight being carried on your back.

(At least, certain kinds of debt can feel that way!)

In this post I will describe why in 2015 I borrowed $20,000 from my Father-in-law, and then in 2016 I borrowed $14,000 from my own Father.

Now, I am thankful to have had the option to borrow from them and the family support that they provided to help me when I was in need, but I don't like that I had to borrow from them in the first place, and I am greatly looking forward to paying them back.  Paying them back is one of my primary goals, listed here.  Read on,

Friday, September 2, 2016

Passive Income Report: August 2016

It is time again for my Monthly Progress Review.

In each progress review I will list a summary of all dividends I received, the rental income I received, and any purchases I made from that particular month.

This monthly report covers August 2016.  

I hope you enjoy these posts and that we can learn how to grow our passive income streams and build real long-term wealth together! 

This really was a great month for me, for which I am very thankful again for multiple income streams.  Read More to see how I earned $658.05 this month in passive income,

Thursday, September 1, 2016

Recent Buy: WFC

For those that follow my Portfolio, you may have noticed that after last month's update my cash position actually became my 9th largest holding (out of 17) due to my sale of American Electric Power for a total return of 24% and my strong belief that the stock market is overvalued mostly.

9th out of 17 is relatively high for a cash holding, and so I recently wrote towards the end of July about considering Wells Fargo as one of the few remaining high quality, value purchases out there.  I still believe this to be the case and consequently acted.

Over the last week or so I had watched the stock move sideways in a tight 48.5 range (shown below) for about five trading days or so, and I knew that I had to pull the trigger if I was going to do it.

I thought the stock was definitely going to move one way or the other (to be honest I wasn't certain it'd be up!), and I missed my opportunity to get it in the high 47s earlier in August, (though I did mention in my article that it might drop into the 47s).  Anyway, in the end, I purchased it right before its most recent jump into the 50s. Here are the details of my trade:

# of Shares Purchased: 87
Purchase Price: $48.60
Yesterday's close price: $50.80

Thankfully I got in before this recent pop in share price as shown below, though I don't think it will stay as high as it is now nor do I intend to sell anytime soon, so it is basically a mute point. Nonetheless, I still think WFC is valued in the Low 60s, high 50s, giving me sufficient cushion at the stated entry price.  Add to that a 3% yield, and increasing rate probabilities and you've got a pretty good total return I think.

What do you think? Often I stay away from financials. I know many have recommended Canadian banks, which I have not acted upon yet but am definitely interested.

Thanks for reading!

Passive Income Dude