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DG Ruralist
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I'm 27yrs old with the best wife and 2 kids in the world! I'm a huge fan of dividend growth investing and talking about personal finance/investing in general. I believe dividends are the best way for my family to reach our long term goals, as I've seen my grandparents do the same, and it makes... More
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  • I Just Ordered My Stock Certificate Of Exxon Mobil

    Over the summer and fall of 2013, I had begun my purchasing of Exxon Mobil (NYSE:XOM). At the time, I figured that buying the world's greatest energy company under $90 per share (P/E=11) was a good idea. I prefer the diversification of the integrated oil companies and I knew that XOM had the highest ROIC of any of them. There's a reason that XOM is the biggest oil company of them all and it's not just due to the Mobil merger. They've been the best at what they do for over 100 years.

    I was quite delighted to soon afterwards hear that Mr. Buffet decided to buy a few shares himself. Since then, I've also seen news of analyst upgrades and I sense an improving positive outlook on the company.

    However, this improving outlook on XOM by other people doesn't affect my emotions or change my opinion: XOM has always been an excellent company to be part owner of and it will be for the foreseeable future. My investing philosophy is to identify the strongest, most powerful publicly traded companies on the planet and try to buy them at good prices. XOM is at the top of the heap, along with the Coca-Cola's, Nestlé's, Procter & Gamble's, and 3M's of the world.

    And as a reminder to never rid myself of these titans of industry, I placed a certificate order for 1 share of XOM.

    Although this is my first certificate request, I hope it won't be my last. A real stock certificate is a great investing tool for me, my family, and my friends, as well as being a good wall mount. We can gather 'round to discuss what this piece of paper means and why it's so important.

    A stock certificate is real: it's a legal contract between you and a corporation under the protection of the law. We must remember that stocks aren't just charts of squiggly lines that go up and down all day long. That real piece of paper entitles you to the same benefits that the Rockefeller's received in their heyday. Not only do you receive a slice of the present earnings and benefits, but you also receive ALL FUTURE benefits of that share of stock. This could be in the form of capital gains, dividends, spin-offs, voter's rights, etc., for centuries to come.

    Some people want to compare a stock certificate with a baseball card. While a baseball card of George Brett may currently be valuable or increase in value, Mr. Brett won't be sending any of his earnings your way any time soon. But some stock investors will keep receiving their dividend checks like they have for the last 100 years.

    And some day, the game of baseball may lose its overall popularity. At that point, nobody will care about baseball cards. But a huge company like Exxon Mobil will keep producing and selling energy until the human race decides to stop using energy. I predict that will be never.

    There are all sorts of discussions on the divisions of economic society: from the rich and the poor, to capital and labor, to Bourgeois and Proletariat. The key conflict centers on the notion of being a business owner or a labor worker. Communism's plan is to abolish the whole notion of a business owner and anything that shows a separation of classes. But what if everyone had the option of being on the side of the Bourgeois? What if everyone could be part owner and part laborer at the same time?

    Exxon Mobil and several other companies allow you to invest in them without any fees whatsoever. They're trying to tell us something. They're saying: put some of your hard-worked money aside to become a long-term stock investor and you too can have the same problems that the Bourgeois have.

    Disclosure: I am long XOM.

    Dec 22 11:15 PM | Link | 2 Comments
  • Dividend Investors: Be Prepared For Globalization

    A Good Read

    I highly recommend reading the book, "Shop Class for Soulcraft." It has many good points in it, but I wanted to speak specifically about how the author describes the future effect of globalization on the working class. I also wanted to share how this relates to my own life and what we can do to be best prepared.

    Outsourcing the Desk Job

    Most of us are familiar with America's storyline of outsourcing blue-collar manufacturing jobs for the past 40+ years. However, the author of "Shop Class for Soulcraft" sees the continuation of globalization affecting the white-collar worker as well. In particular, he foresees the outsourcing of accounting, technical writing, and other desk jobs. But he also foresees the work of tradesman becoming more and more valuable.

    It makes sense. You could potentially package up someone's tax forms, email the work overseas, and then end up paying a fraction of the fees that paying a professional would cost. (The professional accountant in particular is being threatened at multiple angles; not only by cheap labor, but also by technology. This would include tax software such as TurboTax.)

    However, you can't outsource to Asia building your house, fixing your drain pipe, or repairing your car. These types of trades cannot be outsourced and are immune (currently at least) from technological innovation. Since our current education system places an emphasis on "going to college", there is and will continue to be a stigma against the trades. But since the trades will still be needed, the author sees trade compensation increasing faster than other occupations. Here in Kansas it costs between $60-$90 just to have someone come to my house and take a look at my broken stuff. I shudder to think if these costs start to skyrocket. Needless to say, opening or buying your own home services company can be a great way for long term wealth.

    Globalization at Home

    How do I see globalization playing out in my own life? I currently work as a structures engineer for a large commercial aircraft company based in Europe. Being in Kansas, I am doing the outsourcing back to Europe. We have no machine shops at my location, only desks. The main benefit we offer is our large pool of experienced workers and a dedication to quality. However, once an experienced engineering office is set up in a faraway land at a cheaper price, our work may become transferable.

    Across town there is Spirit AeroSystems (NYSE:SPR), a Tier 1 supplier of aircraft structures. Last week they laid off 360 white collar workers including those in engineering. The following day there was a rumor in the paper that Britain's GKN is interested in buying Spirit. Are the two events related? It's possible. Back in 2011, GKN sold off their aerospace engineering unit to Quest Global Engineering. If GKN decides to buy Spirit or pieces of it, they may be less interested in the engineering services and more interested in the actual manufacturing.

    Spirit is the result of an asset sale by Boeing (NYSE:BA) to private equity back in 2005. A few years ago Boeing decided to move the rest of their operations out of my town and consolidate in other cities.

    All of this points to an expanded outsourcing of engineering related services. While there is and will be a need for structural engineers both nationally and globally, aerospace original equipment manufacturers (OEM) and their suppliers will continue to cut costs as much as possible. I should always have a job available to me, but at some point I may have to take a pay reduction or be asked to move across the country due to a company buyout or office closing.

    Be Prepared

    My plan is to be proactive and not let my life go down the toilet. My job may leave me someday, but I must be prepared to continue to take care of myself and my family. Here's what I have in mind.

    1. Don't depend on my employer

    I don't care what any large company says: all employees are just pieces that can be moved around. At my previous employer, having 30+ years of engineering experience made you a liability to them on two fronts: you cost too much and you spoke up too much. Younger workers solve both of these problems over the short term. But over the long term, the product quality will be reflective of the experience of its engineering.

    My suggestion is to never feel attached to a company. Enjoy your work, and perform well, but keep the company's propaganda and cheerleading emails at the wayside.

    Unlike others, I'm grateful I won't be subjected to the pension system, as I've contributed to 401k's for my short working career. This way, I can take my money with me. Nobody likes it when a company goes bankrupt and makes cuts to its pensions. I'd rather stay away from that fear. Plus, I don't have to feel chained to a company out of a need for their pension plan. If I ever consider changing jobs, then I can cross off pension as a reason for staying.

    2. Profit along with the free market

    When talking about globalization, I was describing how global companies will attempt to continue cut costs in order to make more money for their shareholders. Isn't it obvious then? Become a shareholder. I wrote an article here describing the great outlook for commercial aircraft. If you're in this industry, don't just let it blow you around. If your employer offers a 401k match or employee stock discounts or bonuses of any kind, try to take advantage of them. PS: holding lots of employee stock may be a bad idea, so limit yourself to 5%-10% of your portfolio.

    3. Learn new skills

    It is not my plan for a job cut to be the end of me. I want to stay in my town, and someday that may mean working in a different industry. Maybe that's as an electrician or carpenter. Or maybe that's as a teacher or writer. But I must keep expanding my skill set through hobbies, volunteering, or side jobs in order to be prepared. Home repair is an area where I can increase my understanding of my stuff. I figure it is much better to be master over my stuff, instead of my stuff being master over me.

    4. Keep saving and building wealth

    This goal is to go further than just having an emergency fund and a Roth IRA. If a seismic shift occurs in my job where there is a permanent reduction of pay, I want to have other assets that can pick up the slack. For some people it's having a few rental houses or a piece of farm land. For some people it's being owners of companies. When I invest in Coke (NYSE:KO), Exxon-Mobil (NYSE:XOM), or Proctor & Gamble (NYSE:PG), I know those core stocks will be there for a long time increasing their dividends at a rate faster than inflation. Hopefully we can keep our current dividends reinvested, but if something should happen to my job, we can use the dividend income to maintain our well-being without depending on government support.

    From the dawn of man until 100 years ago, investing in income-producing assets was hard. Your best bet was probably creating a small business or buying some land and renting it out (and that's only if you lived in a free-market society).

    It's so easy to build wealth in this day and age using the internet. First it takes a few clicks to do some research on your favorite company's outlook, earnings/dividends history, and valuation. Then just go to the company's investor relations website and find the forms to start purchasing a few shares of stock. Some companies allow an investment for as little as $50/month and some companies charge zero fees. You don't have to labor at running a small business or have large amounts of capital to buy rental property in order to build wealth. Start easy.

    In the year 2013 AD in the United States of America, there is no excuse for not taking care of yourself or your family. Take a look at Exxon's stock plan if you're looking to get started somewhere. As always, research diligently.

    If anybody has other ideas about how to protect oneself, please feel free to share them in the comments section.

    Disclosure: I am long XOM.

    Tags: BA, XOM, PG, KO
    Aug 07 10:44 AM | Link | Comment!
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