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BEWARE: If you don’t get off on boring “NUMBERS” stuff…

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… then click your way out of here right now.

Go jack up on some TRUMP’ed up FAKE NEWS and make your day happier. The enticing blood in the streets is found on other sites!

OK, let’s move on, my fellow Numbers’ Nerds.

It’s approaching the end of the year, days are staggeringly short, and the perturbed cats are perched at the back door, yowling at me because it’s cold outside, as if I’m God and have control over the outdoor temperatures.

All of this tells me the year 2017 is winding down and I have to look hard in the investing mirror and ask myself the tough question… who is the fairest investor of all?

I know that no song sounds the same to any two people. No investment looks as golden to any two people. We see the world through ourselves.

I’ve been an avid stock market participant since I was 10 years old in my Parkdale Steelers’ hockey pads, and so it’s a critically important question now that I’m on the “R” (shhhh, retirement) payroll.

Larry… I say to myself… Do I add value to my financial investments, or should I take a back seat and let someone else with “credentials” make the decisions about my New Worth and living income?

It’s a question I nervously skirt around, afraid of knowing the answer because I truly love reading investment reports, digging into Balance Sheets and Income Statements, deciphering and calculating to see if my choices are “value-adding” or “value-destructing”.

For sure it’s Number’s Nerd stuff.

Numerotica.

I’ve previously stated here that my annual goal of ROI (return on investment) or change in Net Worth is 15%.

ACTUAL Annual Returns? 1 year … 12.0%  –  3 year… 16.1%  –  5 year… 11.2%  –  10 year… 11.4%

There’s the nasty truth… Warren Buffett need not worry about being dethroned. I’ve modestly underperformed my 15% goal in every category except the 3-year return.

This year would be highly positive and I’d be bouncing off the clouds… except… the exchange differential between the US$ and CAN$ has narrowed sharply which has shaved nearly 10% off my returns (most of my stocks are U.S. based), leaving me… drum roll please… only ahead by about 6% at this point in the calendar year.

Cleese bring Monsieur a bucket

Bring Monsieur a bucket…

OK, I’m disappointed but not crushed.

I know that I need to eke out a return of at least 7-8% each year so that I don’t impinge on the principal value of what we’ve saved and invested for decades.

From this perspective, I’ve done OK as the upward momentum has been sustained, just not blown out of the water which I would truly prefer. Wouldn’t we all?

And now I’ve gone and added pressure to my decision-making in the last 6 months by boosting my goal returns to 20%, without sacrificing quality, safety, and security.

This means more diligence, more disciplined searching and selection.

In my earlier financier alter-ego, I scoured for quality undervalued stocks (that pay dividends) that I felt should provide a decent return with no quantitative idea of what “decent” really meant.

“Yeah, that company is kinda undervalued by most financial metrics, so I’ll buy some”.

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But now… now… I’ve nailed down my idea of what my bottom line expectation is for any investment I hit the BUY order on.

Bottom line? If the company I’m sussing out doesn’t have at least a 40% discount to its historical price based on reasonable assumptions, then I move onwards, seeking out the next possibility.

This narrows my selection list dramatically, ruling out tons of amazing quality companies that have produced fantastic returns…

FACEBOOK is a perfect example. I used to own Facebook but it stubbornly – happily – went up and up and up. FB is a great company with stupendous profits and return on equity, but then I looked at its price on the market and saw that it was sky-high relative to those returns.

SELL, I cried out. Great company, but not a great price to buy or own.

Here’s how I see it: It’s like if I wanted the new iPhone X and one day it was priced at $600. Then the following week, Apple decided to boost the selling price to $1400. Sure, it’s a great purchase at a $600 price, but I’m not going to lay down $1400, even though millions of others likely would. It’s about discipline.

A few other current classic examples of “too richly valued for my blood”? GOOGLE, Microsoft, 3M & McDonalds… great companies all for years or decades but too expensive to invest in at today’s prices. I do own Apple, Disney, Microsoft, Deere and United Technologies but wouldn’t add any more at today’s prices.

Discipline … Discipline.

There is a flip side.

Even though markets are at all-time highs, there are still some pretty fair companies available for purchase at reasonable prices. Most names you’ll even recognize.

More often than not, these companies have a short-term reason for their prices sitting at low levels, but when examined closely, these reasons appear temporary and not permanently destructive. Well-known brand names are resilient and difficult to destroy (although not impossible, just ask the department stores).

VS sales brawl

OK, akin to a Black Friday sale, I have a set of bargain basement choices for you- some examples of undervalued and unloved stocks on today’s market (almost entirely U.S.-based; Canada, sadly, has meagre selections for my tasting enjoyment)… I’ve included their annual dividend payout in brackets after their name  :

  1. L Brands (4.8%) –

    Every man’s candy store has been the Victoria’s Secret catalogue… Bath & Body Works is icing on the cake. Despite Weinstein and Cosby and Spacey and Franken and… OMG… this page doesn’t have space for all the names… sex and sexy still sells. Vive la difference entre Mars et Venus!

  2. AMC Networks (0.0%) –

    Watched The Walking Dead lately? Yeah, me neither, too much gory blood for me, but zillions do… AMC makes TWD and a bunch of other cable shows (including previously, Mad Men and Breaking Bad)… ’nuff said…

  3. CVS Pharmacies (2.8%) –

    I’ve always been impressed by the CVS drug chain stores whenever I’ve visited the U.S…. arthritis and diabetes and ED and wrinkles mean drugs and cosmetics are staples in every age group.

  4. Penske Automotive (2.8%) –

    Luxury car (BMW, Audi, Jaguar, Porsche, Ferrari, Maserati) brand sales have a wonderful habit of staying strong regardless of economic up or down trends. Penske sells and services all of these as well as those big 18-wheeler trucks that crowd our highway lanes! Zoom Zoom!

  5. Starbucks (2.1%) –

    I would have never believed that a $5 cup of coffee or green tea could make a sustainable franchise. Boy was I wrong… $5 is the cheap cup now, and caffeine is no FAKE NEWS. I’m a regular customer now, Tim Hortons be damned!

  6. Magna International (2.0%) –

    Finally, a Canadian company in the mix that competes well internationally. If you drive ANY car today, chances are pretty good that Magna produced a sizeable chunk of the parts that surround you on your drive.

  7. J. M. Smucker (2.8%) –

    PB + J your favourite sandwich too? Actually, I prefer PB and banana, but no matter. For more than a century, Jerome Monroe Smucker’s company has placed jams and peanut butters, syrups and ice cream toppings on the tabletops of North Americans and others internationally.

  8. Cardinal Health (3.3%) –

    Specializing in the distribution of pharmaceuticals and medical products, it serves more than 100,000 locations. In addition, the company also manufactures medical and surgical products, including gloves, surgical apparel and fluid management products. Cardinal Health provides medical products to over 75 percent of hospitals in the United States. The sickness industry is very healthy…

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That’s 8 Delicious Temptations – if my enticing sweet talk has you drooling with these delectable selections, lick the peanut buttah off your fingers and investigate them for yourself.

But please don’t rely on my sterling judgment to be anything except Fool’s Gold until you’ve looked more closely yourself. I won’t rely on others out there to make my final investing decision, and neither should you.

If you’re just starting out in the investment world, I wish you wealth and wellness and healthy returns.

If you’re an older Number’s Nerd like me with a few notches on your profit & losses belt, I’m willing to suffer your slings and arrows if you disagree with my choices.

I’ll also gladly entertain any gold nuggets you’ve unearthed that I’ve overlooked.

I got wrinkles round my eyes, I got grey in my hair
I’m puttin’ on a little bit of weight but I don’t seem to care
Fool say, hey slick, you lookin’ good, lie, lie, lie
That fool in my mirror’s singin’ the same old song… Guy Clark

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For now, this fool has decided to stick with my own investment counsel… and if you managed to stick with me through today’s financial numbers’ maze… yawn…  I’d suggest a nap is in order…

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