Investing in Dividend Paying Equities - a strategy well worth considering

I never used to pay much attention to investing in dividend stocks. There are a few reasons for this:

• For many years I enjoyed very satisfying annual returns by speculating in precious metals, oil and upstart companies - the potential for capital gains was my sole focus.
  
• I had a strong financial foundation and mental appetite which positioned me to assume a fair degree of risk and volatility. I had spent years in preparing a sound basis for investing in this style. For example, through years of living frugally and making wise life decisions, we were in the position of having no debt, major savings, and defined benefit pension plans .... these circumstances were the result of conscious choices – not “accidents”.
  

However, in recent years, I have started to pay more attention to dividend income. Why?

• a “sense” that dividend income will enhance the performance of my portfolios in the current environment of slow economic growth.
  
• a desire to spend less time in managing my portfolios i.e. it takes considerable effort to discover and manage investments in promising enterprises such as Questor Technologies, Polaris Minerals and the like as opposed falling into long-term relationships with “steady eddies” such as Nestle, Johnson & Johnson, and the North West Company, companies which have been in my portfolios for many years.
  
• my past experience of “being paid” to wait patiently for undervalued stocks to be recognized finally by Mr. Market. In several instances, dividend income compensated for declines in share prices thereby facilitating the wait for better times.
  
• a growing realization of the beneficial tax treatment accorded to dividend income as compared to other types of investment income.
  
• a comparison of the long-term performance of “dividend aristocrats” in relation to other companies listed on stock exchanges (the best of 'em are generally less volatile, especially if they have sound financials and great management).
  

The Ramble

Most sailors take every opportunity to visit other craft in the fleet. It's part of the social routine of life afloat. Moreover, it affords one with the opportunity to learn about equipment and sailing techniques in a hands-on fashion ... most skippers are very willing to share their views. Over time, however, I've learned to take such “advice” with a fair degree of skepticism i.e. get three sailors together and you will receive four opinions.

There is only one person whose nautical advice I accept unconditionally – he's one of the smartest people I know. He has a very original mind, technical skills acquired through training as an engineer and decades of tinkering, and a mindset shaped by more than 40 years afloat – often in wilderness settings. Most important, his approach to boating resonates with me.

I have yet to encounter someone like him in the world of dividend investing, but the search continues. It is all a matter of “mental fit” - finding someone whose approach is congruent with mine.

In light of this, I decided to learn more about dividend investing by taking an approach akin to the “analysis of extremes” - a technique I used many years ago while writing a post graduate thesis. In brief, the approach seeks to understand a phenomenon by examining the extremes of behaviour – in my case, patterns of recreational travel which could not be explained entirely by distance decay models which assume normal statistical distributions of travel data. In essence, I analyzed the “outliers” in my data set through the use of non-parametric statistics. I learned a lot. By combining an analysis of extremes with an examination of normally distributed data, I was able to develop a more robust understanding of travel patterns than with a more conventional uni-dimensional approach.

This experience was not forgotten and I have used it to advantage on many occasions.

I decided to give it a try in my quest to broaden my knowledge of investing - to focus on the “extremes”: individuals who focus narrowly on investing for dividend income.

As a result, I started a program of reading (more about that in later posts) and visiting the web sites of a few individuals who focus narrowly on investing in dividend stocks.

Here are a few of the most useful sites – useful in the sense that they provide a list of potential candidates for further investigation. I will not review them in detail.

For Canadian stocks:

Michael Weber is a 20-something accountant who is very open about sharing his ideas and the contents of his portfolio. He maintains a Canadian Dividend All-Star List which is useful as a start for in-depth research on potentially profitable investments. Although he does not swing a big line at present, he is laying the foundations for a sound financial future. Well worth reading. Much of his approach is based on the work of David Fish (see below). Weber also provides some links to a few useful web sites of interest to dividend investors. http://www.dividendgrowthinvestingandretirement.com

For U.S. stocks:

David Fish is followed widely, and for a good reason. He thinks well and writes clearly. I subscribed to his blog immediately upon encountering it. http://seekingalpha.com/author/david-fish/instablog

Rising Dividend Investing is another blog worth following. Ever wonder about the relationship between rising stock prices and the importance of dividends in total returns over the long term? Here's one take:

The most important element of dividend investing is the statistically significant long-term relationship between dividend growth and price growth. Understanding this relationship is the key to unlocking the true power of dividend investing.

http://risingdividendinvesting.blogspot.ca

The DIV-Net is a very useful site in that it provides links to 21 other sites focused on dividend investing. It is well worth visiting.
http://www.thediv-net.com

For General Information

The DRIP Investing Resource Center provides a wealth of information about dividend investing. Make sure to visit the following sections of the site: Research, and Books.
The American Association of Individual Investors is a valuable source of information. Since joining it, I have experimented with some of its 60 stock screeners, a few of which are especially relevant for investigating potential acquisitions in the search for dividend-paying equities. http://www.aaii.com/stock-screens

Some General Observations

In my research to date, the I have marked the following waypoints to guide my dividend investment voyage:

• A company's past record of uninterrupted dividend payments and increases is somewhat indicative of its resilience over time.
  
• Dividends paid out by strong companies will generally continue (and sometimes, even increase) during economic downturns, thereby providing a constant source of income.
  
• It is imperative to undertake one's due diligence before even thinking about investing in Dividend All-Stars and other candidates.
  
• Diversification among various sectors of the economy is very important.
  
• My time horizon with dividends is in the area of decades. I am prepared to endure volatility provided that I have faith in the fundamentals of a company.
  

I have yet to embrace the benefits of dividend re-investment plans (DRIPS) – one way to re-invest dividend income painlessly and economically. I'll start my voyage by visiting sites such as:
http://www.dripprimer.ca/

http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/dividend-investing/good-to-the-last-drip-five-ways-to-reinvest/article13259774/comments/
(The reader comments for the above-noted article are far more revealing than the article itself.)

http://www.canadiansecuritieslaw.com/2012/05/articles/securities-distribution-tradin/stock-dividend-programs-is-it-time-to-turn-off-the-drip/

Dividend History is an interesting site. It describes itself as follows:

Here you'll find dividend information and dividend paying stocks with complete payout histories, increase announcements, growth, yield and much more.  

Stock data is currently being added to the database focusing on NYSE, Nasdaq, TSX, LSE and ASX exchanges.

http://dividendhistory.org

It stands out from its peers in that it has dividend information for stocks listed in the UK, Australia and North America. It also presents weekly dividend reports:

Dividend Reports are published every Friday. They are intended to help build a balanced portfolio of dividend paying stocks in each sector. Reports are shown in a newspaper style list that is grouped by category and ordered by market cap so companies can be compared with their peers. Fundamentals such as PE and PB are included with percentages changed for various time periods and 52wk high/lows to help buy on the dips. 


These are some of the most useful sites of the many I have visited on this voyage.  I will supplement them by some focused reading of some of the classic texts on the topic.  They can be found easily by searching on the web.

If you look at the performance of equities in the Financial Log Book, you will see that some of the very sound dividend-paying companies have done wonderfully well in recent years.  Some of them such as Waterfurnace, Rocky Mountain Equipment, CN, North West Company, Deere, and ABB have become core elements of the portfolios I manage.  

While I will always keep an eye out for young, promising companies such as Kelso Technologies and speculate from time to time in precious metals and the like, dividend-paying companies will assume an increasingly greater role in my portfolios.  

The Wonders of Cleveland - A Cultural Treasure

Poor Cleveland – once a thriving industrial centre, it now has the dubious record of losing more jobs than any other major metropolitan area in the U.S. in past months. http://www.cleveland.com/business/index.ssf/2014/01/greater_cleveland_sheds_more_j.html#incart_river.

On the other hand, it is one of the most livable cities in America. Given the resilience of Americans and their innate ability to re-invent themselves, I fully expect that Cleveland will renew itself ... but in a much form much different from its previous incarnation.

We visited Cleveland two years ago as part of a junket to Chicago where I bought a generator for the boat and financed the trip with the “savings” over the price of the same item in Ontario. (An understanding Canada Customs agent waived the duty after we were very up front about declaring the value of the item at the border. We've had much the same experience in declaring excess bottles of wine on our return from trips to France ... but that's another story.)

I chatted to a friend while planning the trip and he (a very able curator and evaluator of middle eastern antiquities) urged me to visit The Cleveland Museum of Art.

http://www.clevelandart.org

At one point, he said, the museum's annual budget for acquisitions exceeded that of the Metropolitan Museum of Art in NYC. And it shows! According to my friend, it ranks among the top five art museums in the U.S. Here is a brief outline of the museum and its collections:

http://en.wikipedia.org/wiki/Cleveland_Museum_of_Art

We were enthralled by the collections of modern European art and older European painting and sculpture, modern American ... and a real highlight (to me), its exceptional collection of European armour and weaponry ... no doubt a legacy of the steel magnates who supported the museum.

Another surprise ... admission is free. And the museum is a wonderful place to “do lunch”. We spent about six hours there and left with the feeling that we had only touched on what the museum had to offer.

For a change of pace, it would be foolish to leave Cleveland without visiting the Rock and Roll Hall of Fame, the USS Cod (WW2 submarine where you can scramble about the narrow passage ways), and the often-overlooked Wade Memorial Chapel in the Lake View Cemetery. Click on the following link to see why: http://www.lakeviewcemetery.com/wadechapel.php It's a place to slow down and immerse yourself in the wonders of an exquisite Louis Comfort Tiffany interior.  A hint: take binoculars!

Next time we visit, we will make sure to spend a few hours at Progressive Field, home of Cleveland Indians. Trip Advisor provides an excellent synopsis of attractions in Cleveland:

http://www.tripadvisor.ca/Attractions-g50207-Activities-Cleveland_Ohio.html

The "Rust Belt" has been laid low by massive change in the steel industry and tool manufacturing.  Nowhere is this more evident than in Cleveland: large empty spaces once occupied by thriving factories; derelict homes and very depressed prices in even the toniest neighbourhoods and a declining population.

Like many other American cities in similar circumstances, Cleveland is forthright about recognizing its challenges.  Here is a synopsis of the strategies it is promoting to improve its situation:

http://planning.city.cleveland.oh.us/cwp/ed_plicy.php

As an investor, I am very interesting in following developments in Cleveland and other cities in the Rust Belt.  It's the result of faith in American ingenuity and resiliency and the investor's dictum to "look where others ain't".  

In the meantime, I'll enjoy the wonderful cultural attractions of Cleveland, Toledo (yes, it has a very significant museum), Akron and the lands in-between.  

Taking the Pulse and Thoughts About Market Inefficiency

Sometimes you come across a tidbit which is so good that you decide on the moment: "this is so good that I have to share it with everyone".

A recent entry from Greenbakd is a case in point.
http://greenbackd.com/2014/01/20/lose-as-little-money-as-possible/

The author, Tobias Carlisle, has shared a wonderful speech by Dean LeBaron, which, in turn, was shared with him by Wesley Gray and David Foulke who maintain a blog entitled, Turnkey Analyst.
http://turnkeyanalyst.com/2013/02/28/dean-williams-maybe-youre-trying-too-hard/

Highlights of the speech are noted in the link above.

Here's my take on highlights of the speech:

Confidence with a forecast rise with the amount of information that goes into it. But the accuracy of the forecast stays the same. 

The tendency towards average profitability is a fundamental, if not the fundamental principle of competitive markets ... it can be a powerful investment tool. 

Mr. LeBaron offers view on the three routes to success in investing:

1. Simplicity 
2. Consistency
3. Tolerance for Nonsense & A Beginners Mind

I've printed his speech and the pages now sit by the computer in a folder entitled, Compulsory Repeated Reading.  There are very few articles in that folder ... this is one of them.  

The full text of Mr. LeBaron's speech is available here:
http://turnkeyanalyst.com/wp-content/uploads/2013/02/Williams-Trying_too_Hard.pdf

What to know what Mr. LeBaron's strategy is today?  Click on this:
http://blogs.wsj.com/moneybeat/2014/01/17/new-warnings-from-an-investing-pioneer/

In Mr. LeBaron’s view, the easy-money policies of central banks, including the Fed, have created what he calls “administrative markets”–in which prices are set at least partly by government policy rather than by market forces.

But, he worries, that can’t last forever. “In complex systems, the dynamics are predictable but the timing isn’t,” he says. “It’s like adding a grain of sand one at a time to a pile: You can’t tell when it will collapse, but you know it will.”

I have a similar view and have continued my practice of investing in "real assets".  Over the next few months, I'm going to take profits and invest some of the gains in real assets.  That's one of the reasons I sold off Powell Industries (POWL) - not so much as to any qualms about the future of the company as a desire to shift my asset mix.  Besides, one never gets poor by taking profits. 

I'll keep some of my gains in cash in order to have a stash to fund acquisitions in equities once  the "administrative markets" markets have succumbed to a different reality ... I don't think that the current state of affairs is sustainable. 

Cash will be king as will real assets.

One other thing: the notion of cyclical inefficiency - to boldly invest where others fear to invest.

To learn more about market efficiency and inefficiency, read this wonderful memo by Howard Marks.  He concludes:

How then, do I expect to find inefficiency?  My answer is while few markets demonstrate great structural inefficiency today, many exhibit a great deal of cyclical inefficiency from time to time.  Just five years ago, there were many things that people would not touch with a ten-foot pole, and as a result they offered absurdly high returns.  Most of those opportunities are gone today, but I'm sure they'll be back the next time investors turn tail and run. 
Getting Lucky

Gems from the Boffins at the Bank of Canada

I have great respect for the boffins at The Bank of Canada and Statistics Canada – agencies which have done a great service to the country. The work of these boffins is qualitatively different from the private and academic sectors and is, in my view, irreplaceable.

The breadth of topics addressed by the boffins is comprehensive – everything from the dynamics of the housing market to the economics of private digital currency. You can enter into their world via this portal: http://www.bankofcanada.ca/publications-research/research/working-papers/

For example, the forecasts of future oil prices from agencies such as the U.S. Energy Information Administration are often inaccurate. Wonder why? Aside from the difficulty caused by such a multivariate universe, there are other factors at work. To learn more, read one of the BoC recent papers, Forecasting the Real Price of Oil in a Changing World: A Forecast Combination Approach

The U.S. Energy Information Administration regularly publishes short-term forecasts of the price of crude oil. Traditionally, such out-of-sample forecasts have been largely judgmental, making them difficult to replicate and justify, and not particularly successful when compared with naïve no-change forecasts, as documented in Alquist, Kilian and Vigfusson (2013)...

First, even the most accurate forecasting models do not work equally well at all times. Second, some forecasting models work better at short horizons and others at longer horizons. Third, even the forecasting model with the lowest mean-squared prediction error (MSPE) may potentially be improved by incorporating information from other models with higher MSPEs. Fourth, one can think of forecast combinations as providing insurance against possible model misspecification and smooth structural change. We demonstrate that over the past 20 years suitably constructed real-time forecast combinations would have been more accurate than the no-change forecast at every horizon up to two years. http://www.bankofcanada.ca/2013/08/publications/research/working-paper-2013-28/

The BofC also offers a variety of useful tools: everything from currency converters, to inflation calculators, to comprehensive information on interest rates. http://www.bankofcanada.ca/rates/


Want to know why Canada's inflation target has been set to 2 percent? Read on: http://www.bankofcanada.ca/wp-content/uploads/2010/11/why_canada_inflation_target.pdf

Listen to Company Conference Calls with Scepticism .. or Better Yet ... Avoid Them

In the course of a recent visit to the web site of the Association of American Investors, I encountered a paper entitled, Playing Favorites: How Firms Prevent the Revelation of Bad News. 

Here's the synopsis:

We explore a subtle but important mechanism through which firms manipulate their information environments. We show that firms control information flow to the market through their specific organization and choreographing of earnings conference calls. Firms that “cast” their conference calls by disproportionately calling on bullish analysts tend to underperform in the future. Firms that call on more favorable analysts experience more negative future earnings surprises and more future earnings restatements. A long-short portfolio that exploits this differential firm behavior earns abnormal returns of up to 101 basis points per month. Further, firms that cast their calls have higher accruals leading up to call, barely exceed/meet earnings forecasts on the call that they cast, and in the

quarter directly following their casting tend to issue equity and have significantly more insider selling.

Click on this link to access the entire document: 

http://www.hbs.edu/faculty/Publication%20Files/14-021_d63679f9-4437-48b6-9073-ed41ba2ef9f5.pdf

When I started to listen to conference calls (which I do not do now), I was somewhat surprised by the friendly atmosphere and the rather lame questions from the assorted analysts. As one who has experienced rigorous programme audits, I had the expectation that quarterly conference calls would involve an equivalent degree of discipline and accountability.  Not so - better to wade through financial reports and, perhaps, message boards, which sometimes are not shy to reveal a company's warts and transgressions, especially shareholder unfriendly acts on the part of company executives.

Taking the Pulse ... and Mr. Not So Wonderful

I wish that there was a financial equivalent of Frank Magazine. http://en.wikipedia.org/wiki/Frank_(magazine)

As loyal subscribers, we looked forward to reading about the exploits of prominent people who should have conducted themselves in a more seemly fashion. By far, Frank was one of the best sources of entertainment in Canada. While some critics contended that the rag was scurrilous and fed off the peccadillos of vulnerable individuals, the real value of the magazine, in my opinion, was that it provided a portal for “taking the pulse” of the Canadian community – the rough and tumble of “real life” as opposed to the kaleidoscope of mirages projected by image consultants.

Recently, I came across a very interesting blog penned by the staff of Wellington Financial LP.

http://www.wellingtonfund.com/blog/#axzz2qmGeVzrG

Check out the entry for January 16, 2014 – a rather devastating commentary on the financial acumen of one prominent personality within the stable of financial commentators on CBC TV, and more lately, CNBC. I cringe at his attitude and his delivery. I much prefer thoughtful, considered commentary and above all, a capacity to recognize that one can be wrong. That January 16 entry alone incented me to subscribe to this blog. Wonderful! Highly recommended. Least you think that if focuses solely on the negatives, note that it delivers kudos as readily as it does brick bats.

In case your appetite for more commentary on the above-noted individual is not satiated, click on the following link: http://www.wellingtonfund.com/blog/2012/09/27/highlights-of-our-kevin-oleary-blog-posts/#axzz2qmU7mpDJ

I may revert to taking a morning coffee along with my flakes in order to make more time to savour this wonderful blog in addition to our local newspapers.

Powell Industries (POWL) - sold

POWL was added to the Financial Log Book on November 12, 2009 when it was priced at $36.75.

It was sold on January 1, 2014 at $61.24.

A nice gain, especially considering that the exchange rates at the time of purchase/sale were, respectively: $1.058 and $0.922.

A more detailed commentary will appear in the next edition of The Financial Passage Maker in about two month's time.

Polaris Minerals Corporation - Background

The company recently reported a substantial increase in shipments in the last quarter of 2012: 1,050,000 tons as compared to 1,280,00 tons for the entirety of 2010 when construction activity was moribund.  Polaris News Release

This has been reflected in a sharp increase in PLS since the start of the year. While I am often reluctant to comment on short-term activity, I think that the recent action reflects a reawakening of the market to the potential of the company.  A resurgence in the construction industry of California may be the catalyst which unlocks the value of the company's assets.

Polaris Minerals - Background: The Descent and Emergence

The following account from ABC Funds chronicles Polaris' journey since its formation in 2005.  It's been a rocky trip but the promise of better days is on the horizon.  http://www.valueinvestigator.com/en/valuefavourites/pls.php

The Value Investigator is penned by Michael Irwin and staff, managers of the ABC Funds.  Irwin is a value investor.  I like the directness of his commentary and his ability to explain why he brings new companies into his fleet - also why he sends some on their final voyage.  It is instructive to read how he reacts to new developments in the voyages of his vessels, which he documents through periodic updates.   On several occasions, I have invested in companies as a result of learning about them on this web site ... but only after investigating them on my own.

Background to the Industry

While somewhat outdated, the following report, Market Analysis: Coastal Aggregate Development Opportunities (2004), provides an overview of the market potential for BC quarries on on the coast of British Columbia.
Development Opportunities

In reading the report and those referenced in the following text, it will be useful to frame your intake with these points in mind:

• annual production and estimated life of existing quarries
• the over-riding importance of cost of loading, transportation, unloading and movement of unloaded aggregate to destinations
• the inexorable trend for demand to exceed supply
• the conservative attitude of the construction industry with regard to the use of alternatives to either reduce or replace imported aggregates
• potential competition from sources of aggregate within Canada, the U.S. and Mexico.

Short to intermediate influences such as the recent recession in the U.S. construction industry will not alter the dynamics of these considerations over the longer term.  I suspect that this is one instances where out-of-favour companies such as Polaris Minerals will benefit significantly once the markets improve in the U.S. and potentially, in B.C. as a result of new infrastructure e.g. new port facilities. 

Aggregate Demand and Supply

In Polaris' key market area, coastal California, I have the sense that infrastructure renewal and expansion will increase.

Permitted supply is inadequate to meet demand.  The following map (click on link) shows the demand/supply imbalance.  Note the paucity of supply in coastal areas, especially the major urban centres where future demand is projected to be highest.  Map of Supply/Demand in California

While it is difficult to get reliable and current information about high quality aggregate supplies along the coastal strip of California, some generalized remarks probably reflect the current supply situation.

One study (Aggregate Supply- An Economic Assessment, California Department of Transportation, 2007) made the following observation:

According to the California Geological Survey (CGS), California has an estimated 74 billion tons of aggregate resources underlying mineral lands classified by the State Geologist. However, only about 5.3 billion tons of aggregate (7.2 percent) have actually been permitted by cities and counties for mining activities. Permitting of mining sites takes between five and ten years. At the current rate of production of 177 million tons per year, the permitted reserves will be exhausted in about 30 years. Aggregate Supply

The above-noted survey was recently updated.  2012 Update

The supply/demand situation is mapped here: Aggregate Supply

The following conditions have persisted through recent decades:

• a trend for greater haulage distances
• a steady increase in the price of aggregate with noteworthy variations in local pricing (coastal areas seem to have higher prices)
• the trend for demand to outstrip permitted supply
• a strong and consistent correlation between population growth and demand

Given the dispersed nature of settlement and community interests in preserving coastal lands, my sense is that economically viable sources of supply for the coastal belt are at a premium - thus exacerbating the situation described above.

Further the quality of Polaris' product provides it with a competitive advantage:

The quality of the aggregate being shipped in from the Polaris Minerals Canadian quarry meets the high standards set by the California Department of Transportation for use in the Bay Bridge project, meaning that it is especially strong when made into concrete. As a matter of fact, the Orca Quarry is one of only nine quarries that are certified to Caltrans specs and the only one outside of California.  (This may have changed since 2007.) http://www.baycrossings.com/dispnews.php?id=1909

The Shipping Advantage

Estimates of trucking costs vary but a general rule of thumb is that beyond a 20 to 25 mile radius of the quarry, shipping costs will start to exceed the costs of aggregate.  The following table sets out comparative costs for transporting aggregate via different modes on the west coast of the U.S. (2005 data):

http://www.ocapa.net/uploads/Hidden_Cost_Relocating_SandGravel_Mines.pf

Other Considerations

The aggregates market is competitive.  Polaris has some long-term agreements with major aggregates consumers in California which should blacken the balance sheet once the market improves as it most assuredly will over time.

Assuming that Polaris is able to exploit new opportunities, it will have to address the issue of securing additional unloading capacity in its key markets. This will be costly and the process of permitting will be challenging and lengthy.

Polaris has demonstrated its ability to secure additional financing, largely on the basis of its inherent value ... but at the cost of share dilution.

Competition from other suppliers within and outside California (most notably, Mexico) is difficult to assess.  However, like Polaris, they will have to surmount barriers to entry such as: supply agreements with consumers, securing unloading facilities, meeting the requirements for domestic permitting, and the like.  Polaris has the benefit of being able to ramp up production quickly without much additional  cost.

The price and capacity of shipping has been addressed through a revision of Polaris' contract with CSL International.  For these and other details, read Polaris' 2012 Annual Report: Annual Report

Conclusion

Polaris is a speculative investment in the sense that it is based on the company's inherent value as opposed to the current state of its balance sheet.  It has several advantages which warrant attention:

• its proven ability to survive a prolonged drought in the market for its products
• its ability to secure additional funding, even in "bad times" for the mining industry
• the absence of bothersome technical problems associated with the extraction, loading and shipment of material
• the high quality of its products, the significant volume of permitted annual extraction and the size of its reserves
• its strategic location which facilitates the economical movement of its products to a wide market (always an advantage for producers as it allows them to capitalize on pricing variations as opposed to being locked into a single market)

In short, the company is resilient and well-positioned to profit when the demand for aggregate increases.

Note:

I have PLS in the portfolios I manage.  PLS was first introduced to readers of The Financial Passage Maker in June, 2007. 

January 2014 Edition of The Financial Passage Maker

January 2014

The Financial Passage Maker

The Voyage

1. The Financial Log Book

Some very nice gains have been recorded over the past twelve months; however, precious metals have suffered. In reviewing the holdings in precious metals, I comment on the mining cycle and risk as perceived by various players in the mining industry.

2. View From the Masthead

Many of my best discoveries in recent months have been the result of systems modelling and hierarchy theory. A preliminary sketch is provided along with how the approach was applied to the area of rail safety, especially with regard to tanker cars.

A discussion of investing in “fallen knives” digresses into a brief treatise on the wonders of the west coast of Vancouver Island and aboriginal art.

3. View From the Gun Port

No targets yet within range, although I am continuing with my research in agriculture and the refining of petroleum.

4. Recommended Reading for the Moorings

The Music of Ariel Ramirez – One of Argentina's National Treasures

1. The Financial Log Book

Entity	Initial Price/ Purchase Date	Price 2013-12-31	Gain/Loss year to date %	Gain/Loss Since Purchase %
Central Fund of Canada (CEF.A)	9.77 2007-09-04	14.03	-32.8	43.6
Silver Wheaton (SLW)	12.37 2007-09-04	21.45	-36.8	73.4
Polaris Minerals (PLS)	10.70 2007-06-01	1.8	81.5	-83.2**
Cenovus (CVE)	32.39 2010-07-27	30.4	-4.3	-6.1
Canadian National Railway (CN) *	48.88 2009-04-14	60.56	37.2	151
North West Company (NWF)	16.23 2009-05-07	25.74	19.6	58.6
Powell Industries (POWL)	36.75 2009-11-12	66.99	67.7	82.3
Waterfurnace Renewable Energy (WFI)	28.62 2010-04-12	23.99	77.4	-16.8
ABB (ABB-N)	20.18 2012-12-13	26.56	36	31.6
Oceaneering International (OII-N)	52.95 2012-12-13	78.88	50.8	48.9
Deere & Company (DE)	88.07 2013-01-03	91.33		3.7
Rocky Mountain Dealerships (RME)	11.89 2013-01-03	12.79		7.5
HollyFrontier (HFC)	47.95 2013-01-28	49.69		3.6
Titan Logix (TLA)	1.25 2013-09-11	1.27		1.6
Kelso Technologies Inc. (KLS)	2.20 2013-09-11	3.14		42.7
U.S. Silica Holdings (SLCA)	25.15 2013-09-11	34.11		35.6
Oak Tree Capital Group (OAK)	56.45 2013-10-28	58.84		4.2

*CN split 2 for 1 2013.12.02

** does not reflect impact of follow-on investment @ $.67 per share

Precious Metals and Mining Exploration

It was not a great year for precious metals. I trimmed my positions with SLW and the Central Fund significantly in order to free up cash for other investments which hold the promise of greater gains. It never hurts to take a profit.

One of the reasons for continuing to hold a small position in SLW is its strategy to acquire additional streams of gold and silver – this at a time when prices are depressed and where it can use internal sources of funding and access to a $1 billion credit facility for new purchases. I will leave it to readers to visit Silver Wheaton's website in order to learn more. Even at today's prices for gold and silver, SLW enjoys a positive cash flow.

My reason for maintaining a small position in the Central Fund of Canada is my belief that, at the present time, bullion will be a more solid “investment” than mining equities which are likely to be pounded down disproportionately by souring investor sentiment. The CEF.A is liquid and I can convert my holdings to cash quickly. There remains the potential for a substantial upside – I say this on the basis of previous experience when I invested in precious metals quite heavily when market pundits opined that gold was a relict and a thing unfit for “investment”. My experience of a few ten baggers (with mining juniors) several years ago has confirmed for me that theory and dogma, most often, do not result in fat pocketbooks. I can afford to wait.

The “gold is dead” mantra of recent months is to be ignored. It is the product of talking heads who live in societies which have not experienced major dislocation. Most of the world lives in different circumstances. With an increase in global prosperity, many people in developing countries now have the wherewithal to establish a “store of value” which cannot be devalued, frozen, or otherwise stolen by government.

I will not hesitate to speculate once again in precious metals ... but not now. At present, the industry is being hard hit by declining commodity prices and rising costs. As a result, companies are changing their operations: ore bodies are being high graded; projects are being abandoned and exploration is being cut back significantly. Investors are discouraged, especially those who have seen their holdings reduced by more than half during the past year. The management indiscretions of hormonally overloaded executives with a major disregard for risk are exacting a major hit to the share prices of former market darlings.

While researching the mining cycle, I came across a wonderful source of information, Minex Consulting: http://minexconsulting.com/index.html
It's principal, Richard Schodde, has a rare ability to present information through the use of compelling graphics. You can access many of his papers by clicking on the “publications” button on the above-noted web site. It is one of the best of breed: substantive, insightful and comprehensible. The man knows his craft.

One of the most interesting presentations addresses the state of exploration in Canada and throughout the world. It's entitled, The rising importance of Junior Explorers ... and the key challenges they face going forward. Here is the link: http://www.minexconsulting.com/publications/R%20Schodde%20Quebec%20Conf%20Nov%202013%20FINAL.pdf

Mr. Schodde makes several interesting observations, among them:

• the rising importance of juniors in the mine finding game;
• changes in exploration technology and its impact over the past century;
• the impact of rising material/labour costs in curtailing activity on the ground (i.e. it's more expensive and, with a reduced rate of discovery, there is generally less “bang for the buck” on investments in exploration ... he also compares rate of return on exploration expenditures in various countries ... while Australia may be located at the bottom of the world, it's returns from exploration expenditures sit on top;
• the notable reduction in mineral reserves in Canada over the past 30 years;
• the importance of Tier One (the mega finds) and the reduced rate at which they are being discovered in Canada;
• the concentration of major discoveries in only a few geographic areas of the globe;
• the relationship between commodities prices and exploration activity .... he really does a fine job with this; and,
• the trend for larger companies to take over mine development (not surprising given their need to replenish reserves).

I will continue to monitor the exploration cycle closely. I will pay special attention to the following:

• the advent of new technologies and geological theories which could be game changers;
• companies helmed by wise managers with great track records (it is no accident that some are “luckier” than others);
• companies with operations which could be ramped up quickly without the addition of significant capital expenditures in order to meet increased market demand; and,
• initiatives in countries where business risk is relatively low (e.g. I consider taxes, regulatory regimes, political stability, the administration of the rule of law etc.).

I will likely focus on Australia and Canada and will monitor some of the larger mining properties where further exploration could yield major benefits. (If I had been smarter years ago, I would have latched onto a company in Red Lake, Ontario which expanded its reserves significantly.)

Every year, I make it a point to read the Fraser Institute's annual Survey of Mining Companies. The survey takes the “pulse” of participants in the mining industry and their take on the viability of mining exploration and development in most jurisdictions in the world. I usually skim the report quickly to get a general snapshot and then concentrate on the narratives near the end of the report. This year's survey re-enforced my view to focus on Canada, the U.S. and Australia as well as Nordic countries. The survey is available here: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/mining-survey-2012-2013.pdf

Investing in Fallen Knives - Waterfurnace and Polaris

The stocks of these companies have performed wonderfully well over the past year.

I am now above water with WFI given the impact of my follow-on investments and accumulated dividends. I do have several worries:

• the high payout ratio for dividends, especially given the recent trend for sales figures. It may be difficult for the company to maintain its dividends at current levels;
  
• moribund sales figures - the recovery of the company will be slowed by the likelihood that natural gas prices in North America will not rise much over the next five years. In light of this, there is little incentive for homeowners to invest in energy efficient technologies such as geothermal heating and cooling.
  
• Waterfurnace has invested heavily in a joint venture in China, and I worry that the company may not have the size and leverage to resist “expropriation” by Chinese interests as has occurred with some joint mining ventures and other small enterprises seeking to establish footholds in the Chinese market.
  

I am a bit more comfortable with Polaris Minerals. It is a long-term play. There are two main drivers which will favour the company in the long run: the difficulty in bringing new supplies of high quality aggregate on line for key markets along the Pacific coast; and, the cost advantage PLS has with its deep-water loading facility and the cheapness of water-borne transportation in comparison with other modes. In other words, the economically viable market area for Polaris' products is much greater than for most other quarries. Regulatory strictures in coastal areas will make it very difficult to start up equivalent ventures.

Further, Polaris owns the Eagle Rock Quarry Project, a significant prospect with high quality aggregates and deep-water access. Although environmental permitting has expired recently, I figure that the operation can be ramped up reasonably quickly when market conditions improve. You can read access the 2005 technical report here: http://www.polarmin.com/assets/downloads/1293527794eagle-tech-report.pdf

If you visit Vancouver Island, Alberni Inlet (Eagle Rock fronts on the inlet) and Barkley Sound are not to be missed. We still remark on a wonderful day-long cruise we took several years ago from Port Alberni to Bamfield on the Pacific coast. Eagles soared overhead, and it was common to see seals feeding on migrating salmon and black bears poking about along the shoreline. Moreover, the scenery of this fiord-like channel was magnificent.

The cruise takes place on a working boat which loads and unloads cargoes from various stops along the route – everything from toilets and washing machines for lumber camps to sacks of freshly caught oysters for town. Here are the details: http://www.ladyrosemarine.com/index.html

If you are adventurous, you can rent kayaks and paddle around the Broken Islands – one of the real beauty spots on the west coast of Vancouver Island.
If you visit Port Alberni, make sure to continue your journey by land to the Pacific Rim National Park. While the seashore is spectacular, I think that the rainforest there is far more interesting. Only after visiting it did my appreciation awaken for the work of Emily Carr, one of our national treasures. Click on the following links for more information:

http://www.pc.gc.ca/pn-np/bc/pacificrim/natcul/natcul1.aspx#recipe
http://en.wikipedia.org/wiki/Emily_Carr

A visit to the Pacific Rim National Park would not be complete without a stay at the Wickaninnish Inn. It is a great base from which you can explore the Park and nearby Tofino. Without a doubt, the Inn is one of Canada's “special” hotels: architecture and rooms which capture the essence of the coastal environment, great service, a restaurant which could hold its own anywhere, and a hotel where the transition from one's room to the pristine beach and back again is magical. It's expensive – but well worth the tariff.
http://www.wickinn.com/

This is one of the best areas in Canada (my opinion) to view wildlife. The following web site depicts the range of opportunities which are available: http://www.tourismtofino.com/activities

One of the highlights of Tofino is its art galleries. The Himwitsa Native Art Gallery, First Nations owned and operated, is one of the best. Resist the urge to buy nicknacks and go with more substantive pieces – either carved masks or some of the beautifully-crafted jewelry. http://www.himwitsa.com/Shopping/default.htm

Another notable gallery, the Eagle Aerie Gallery, features the work of Henry Roy Vickers. http://www.royhenryvickers.com/artist

First Nations art now reflects the tension between the past and the present. Life-ways have changed immeasurably since European contact. The following article provides a sensitive portrayal of this transition. http://seattletimes.com/html/pacificnw/2022305265_1208coverrobertdavidsonxml.html?cmpid=2628



Oil and Gas

U.S. Silica Holdings (SLCA) has performed nicely. The following synopsis of the company is excellent:
http://seekingalpha.com/article/1827892-strengthen-your-portfolio-with-u-s-silica-potential-double-in-12-18-months

While my analysis of the company incorporated elements of the above-noted approach in the later stages, I used a different approach to identify the opportunity. See View From the Masthead.

Powell Industries (POWL)

The company's performance over the past two years has been stellar. The company has negligible long-term debt. It is cash rich. Earnings growth has been excellent.

It gets even better: on November 4, the company announced the commencement of a quarterly dividend of $0.25 – about 1.5 percent. If you take the time to review a chart of the price action since the original purchase, you will see that patience has won out. The dividend represents a 2.7 percent yield on the original purchase price of $36.75.

Kelso Technologies (KLS)

The company continues to make significant progress. Kelso was prescient in developing a product line to meet the demand for safer tanker cars. It has taken decisive steps to ramp up production of its offerings, most notably with a self-financed 44,000 square foot facility in Bonham, Texas. The production facility, scheduled for completion in mid 2014, is within easy reach of major tanker car manufacturers.
The company's investor presentation is interesting, especially pages 10 and 11 which address market opportunities and the process by which new technologies are adopted by the rail industry. (I read it for the first time in preparing this commentary.) http://www.kelsotech.com/sites/default/files/Kelso%20Corporate%20Presentation%202013%20Nov.pdf

Kelso has seasoned management with deep experience in key facets of the company's business – no coterie of ivory tower MBA clones here! The company is going through the process of listing on a major American exchange, in which case, it has the potential to spark yet more investor interest. Further, a few more analysts have started following KLS. I figure that the company has yet more room to grow but penetrating the dispersed market for trucking applications will likely be far more challenging than its foray into the rail car manufacturing industry.

Investing in Oil and Gas – The Big Picture

I read voraciously and, over time, have gained a respect for a few observers of the energy scene. One of them is Kurt Cobb who writes a blog entitled, Resource Insights. One of his most interesting entries is, 7 things everyone knows about energy which just ain't so. I recommend it highly. The often-hyped advent of energy independence and abundant oil and gas ignores some fundamental realities. http://resourceinsights.blogspot.ca/2013/12/7-things-everyone-knows-about-energy.html

For some time, I have been interested in the price of natural gas. Many contend that the advent of fracking will continue to depress the price of natural gas. Over the longer term, I have some doubts about this commonly held view.

I am currently exploring ways to profit from investments in natural gas producers/distributers but things are still at a very early stage. ONEOK (NYSE:OKE) is one prospect. I have the view that natural gas prices may change as North American LNG export terminals come on line and subject domestic prices to the influence of international pricing regimes.

For the time being, I will maintain some core positions in Canadian oil sands producers and some well-managed companies which provide services and products to the gas and oil patch.

2.   View From the Masthead

Using Hierarchy Theory to Identify Investment Opportunities

I was first exposed to hierarchy theory during a period of intensive research preparatory to undertaking a major effort to understand the structure, composition and function of “settled landscapes”. Unfortunately, the research program was stillborn as a result of significant budget cuts on the part of the provincial government. However, the learning was not forgotten and after a period of “creative dreaming” that I decided to apply the method to investing.

In my search for potential investments, I take a top down approach by identifying strategic themes and then drilling down to find companies which are well positioned to profit from market demand. In adopting this approach, I have been greatly influenced by “hierarchy theory”. 

To simply things greatly, hierarchy theory contends that high order processes set the parameters for the processes of things which are “lower down” in the system. For example, the harsh climate of the arctic precludes the cultivation of rice. You can read about hierarchy theory here:
http://openlandscapes.zalf.de/openlandscapeswiki_glossaries/Ecosystem%20Theories%20-%20The%20Hierarchy%20Theory%20in%20Ecology.aspx
http://www.isss.org/hierarchy.htm

There are many types of hierarchies: social organizations, economic systems, ecological systems and so on. All can be modelled in a way that describes key elements of the systems and the inter-relationships between components. In my use of the approach for investment purposes, I am particularly interested in identifying the components of systems and the inter-relationships between them – also how higher order elements can limit or create opportunities for entities which are lower in the hierarchy.

For example, in developing a systems model for the oil and gas system (which I selected for study due to the world's insatiable demand for high density, portable sources of energy), I identified the transportation of petroleum products as a sub-theme. Using mind mapping software (several apps are readily available from Google) I modelled the sub-theme and identified government regulation and railways as some of the components. 

In the model, government regulators were higher in the hierarchical order than carriers and manufacturers in the sense that they could exercise controls or set limits to the activities of lower order entities. 

In the belief that regulators would invoke more stringent controls for rail safety due to the recent spate of highly publicized train derailments, I expanded the model to explore the “rail safety system”. Once I had identified various components of the rail safety system (e.g. tank car components, signals/communication etc.), I started to look for sound companies which were well-positioned to profit by meeting the market demand. 

As a result, I invested in Trinity Industries, Kelso Technologies, and Titan Logistics. A side benefit was that I was also exposed to SLCA as I modelled the fracking system and its needs for transportation. As Forrest's mom opined, “Life is like a box of chocolates ....”

It took a few months of work and a lot of thinking. I consulted trade publications, reports/papers by industry associations, government reports, local/regional newspapers/journals in areas where equipment manufacturers were present, job listings, conference proceedings and participant lists, and the like. Only then did I start look for potential companies. Only then did I start to screen the companies on the basis of some key metrics:

• healthy balance sheets (preferably companies with no long-term debt);
  
• “winning” or superior technologies ready to go;
  
• products which satisfied a real need – preferably one that was in the early stages of the demand cycle;
  
• great management with “muddy boots”; and,
  
• staff with strong connections to the sectors served by their company.
  

I did not get into exhaustive over-analysis as I considered that many other considerations were of secondary importance. For example, it is difficult the analyze a company's prospects on the basis of past performance when its future depends on new products in its sales pipeline.

Without getting into too much detail, I find that the approach is very applicable (and effective) in the investment world for a variety of reasons:

• The upper level trends (e.g. increased demand for food due to population growth) are usually slow moving and sustained for many years. These trends, if exploited well, can lead to long-term gains for “buy and hold” type investments.
  
• Using the hierarchy approach, it is possible to build systems models to describe how the upper level trends are expressed in lower orders of the system. For example, one might wish to explore climate change in terms of the spatial expression of its impact and then to develop spatial/ecological models for agriculture at the regional level. The models could be refined by expanding on various components to estimate the likely consequences for various forms of agriculture and subsequent responses of agricultural practices to these stresses. From there, one could progress to investigating the socio-economic response, including potential business opportunities.
  
• The approach provides a framework for disciplined (often quantitative) investigations that often unearth “surprises” which may be missed by more haphazard approaches.
  
• Since upper level trends are slow moving, investors can take the time to learn and think before acting precipitously.
  
• I have discovered that I do not get too concerned about short to intermediate fluctuations in the prices of stocks of companies I have purchased using this methodology. If one identifies a long-term trend and does one's homework diligently by selecting companies which are well-positioned to exploit the trend, I believe that the longer term “drivers” will win out over time. This is why, for example, that I have managed my position with Polaris Minerals and Waterfurnace in the way I have and why I have established my positions in the petroleum transportation sector.
  
• The approach provides a structured framework for learning, understanding and appreciating one's world – things which surpass pecuniary rewards.
  

3.   View From the Gun Port

Conversion of $Cdn to $US
I subscribe to a financial blog entitled, Canadian Couch Potato – Your Complete Guide to Index Investing. It provides a lot of useful information, even if you are not inclined to invest in indices.
http://canadiancouchpotato.com

One of the recent entries is interesting, especially if you want to convert Canadian $ to American $ without incurring high transaction costs. The technique is called, Norbert's Gambit. You can use the technique with on-line brokerages, but note that the procedure varies slightly among brokerages. To learn more, click on the following link. Make sure to read the reader comments:
http://canadiancouchpotato.com/2013/12/03/norberts-gambit-the-complete-guide/



4. Readings for the Moorings

A Great Book on Value Investing and Thoughts About the Current "Market Action"

I have been reading a rather remarkable book on value investing: Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioural Errors by Wesley R. Gray and Tobias E. Carlisle: Wiley Finance, December 2012. Quantitative Value

It is one of the "best of breed" in the line of investment writing. It is a pleasure to read a work of this quality. The prose is concise. Arguments are developed in a logical manner, supported by the judicious use of footnotes. I especially like the thoughtful tenor of the book and its approach to addressing many of the issues which I have faced in my investment voyage e.g. paralysis through over-analysis; checklists to assist with more disciplined decision-making; the efficacy of various metrics as indicators of future performance, etc.

The philosophical foundations of the book's approach are outlined here on Mr. Carlisle's website: Greenbackd

I would be remiss not to include the website authored by Mr. Gray. It is also substantial: Turnkey Analyst

I have subscribed to their blogs.

The authors advocate a mechanistic, bottom up value approach to overcome behavioural biases on the part of investors. Their thesis is powerful - to the point where I will change my approach in two ways:

• segmenting my portfolio to include a subset which takes the mechanistic Quantitative Value approach (there's nothing like having money on the line to provide a focus to one's work); and,
• changing my top down strategic approach by incorporating some of the value analytics in the winnowing out process once I have locked onto a strategic investment theme (e.g. rail safety).

Why?

In a recent analysis of my losing investments, I attributed losses to the following:

• inadequate research e.g. some managers had shady backgrounds; others were incompetent; others were more interested in looting than growing a business;
• investing in an "idea" as opposed to a solid business; and,
• holding onto a position with the hope that things would get better - in the absence of a compelling fundamental rationale to do so (this was the biggest mistake).

To address these behaviours, I will take a more mechanistic approach for part of my portfolio and learn the method by investing real money over a period of at least three years. I find that the only way to learn an approach is by having real money on the line and I have confidence that the method advanced in the Quantitative Approach has substance to justify a change to the methodology for part of my portfolios. This marks a major change from my exclusive top-down approach.

I will also incorporate elements of the checklist which figures largely in the Quantitative Value book as part of my top down strategic approach.

If anything, I have learned not to rush impetuously into making investment decisions. I learned that the "market" will always be there and not to sacrifice my reasoned judgement when tempted by a "siren" stock that beckons to my pocketbook.

Thoughts on the Direction of the Market

There is evidence that a rising tide lifts all boats ... but does this apply in today's market? Carlisle's blog has a fascinating piece by Vitaliy Katsenelson which, among other things, would suggest not to invest in broad market indices. Here is a synopsis of Katsenelson's thesis. I share his view.

http://greenbackd.com/2013/05/13/how-earnings-grow-while-pe-ratios-contract-in-sideways-markets-vitaliy-katsenelsons-presentation-to-the-las-vegas-value-investing-congress/

The man's work is well worth reading. Among other things, he has penned The Little Book of Sideways Markets. It is on my reading list. When I first encountered Katsenelson's writings several years ago, I was a bit sceptical about his thesis, but I have changed my view over the past year. As a result, I have pared down my portfolios somewhat and have increasingly favoured dividend-paying stocks. Although I have invested in a few smaller, riskier propositions recently, I have limited my stakes and have made an effort to buy companies with sound financials and good management.

The Music of Ariel Ramirez - A National Treasure of Argentina

A few years ago while on a visit to Argentina, I was introduced to the music of Ariel Ramirez, one of Argentina's treasures. We bought a few CDs and listened to them often while staying in our apartment in La Recoleta, an upscale neighbourhood of Buenos Aires which still maintains the heady atmosphere and refined architecture of the boom times when the phrase, "rich as an Argentinian" was still operative. The music of Ramirez captures the essence of those times.

I bought a raft of piano music by Ramirez and have been exploring it over the past year. Only then did the true depth of his genius emerge for me. You can read about him here: Ariel Ramirez

Better yet, sample some of his music. I am especially fond of Alfonsina y el Mar, a tribute to Alfonsina Storni, a Swiss-born Argentine poet who drowned herself off the beach at Mar de Plata in 1937 following emotional difficulties and a diagnosis of breast cancer. The music is very emotive.
The best approach is to start with this rather sentimental version which also contains an English translation of the work.

Alfonsina y el Mar

With this experience, turn to this version which features the master himself and Mercedes Sosa, one of Argentina's greatest vocalists. Together, these musicians capture the essence of Alfonsina, a balance between deep sentimentality and the discipline of a written score ... and greater for all of that. The poor sound quality of the clip detracts only in a small measure to the greatness of their performance.

Mercedes and Ariel together

One of Ramirez' greatest achievements is his Misa Criolla. The music flows through the living spaces of many Argentinians during the Christmas season and for a good reason .... It's magnificent. A discography is readily available over the Internet and in the Wikipedia entry at the start of this entry.

Purpose of the Newsletter

The Financial Passage Maker provides ideas for people interested in building wealth. It is aimed at thinking people who have decided to take on personal responsibility for their financial well-being.

The newsletter is issued more or less quarterly, a reflection of the fact that good investment ideas are not all that plentiful ... certainly not sufficient to justify a monthly or bi-weekly report. All ideas presented in this newsletter are ones that I have invested in personally. I am not interested in filling space with observations on stocks I do not own. I eat my own cooking.

The Financial Passage Maker chronicles the messy process of building the equity portion of a financial portfolio. I hope that it will provide some useful insights and enable readers to think critically for themselves. As in all things, however, the path to financial well-being takes consistent effort coupled with humility and a knowledge of self. This can only be developed through practice over many years.

The Financial Passage Maker chronicles my voyage in the investment world. In no way do I recommend that you base your personal investment decisions on the contents of the newsletter unless you are prepared either to consult a financial adviser qualified in your area of interest or undertake due diligence on the basis of your own research - or both. Remember, in the final analysis, you are responsible for your own financial well-being. Would you have it any other way?

The Financial Passage Maker can also be accessed here where posts are added on a more frequent basis:

http://finanacialpassagemaker.blogspot.ca