Weekend Reading – Supply Chain Issues

Weekend Reading – Supply Chain Issues

Welcome to some new Weekend Reading: my supply chain issues edition.

You can check out some recent Weekend Reading editions below:

Is paying off your mortgage a mistake?

I believe some financial dividend raises are coming…

I believe cash flow is king.

Supply Chain Issues Abound

Wow, where do we start with supply chain issues…

First, let’s look at the positive. Thanks to the rollout of coronavirus vaccines, the global economy is slowly starting to emerge from the pandemic.

But there are some negatives…and issues are compounding…

The pandemic has left one very concerning issue exposed and unresolved for many manufacturers and small businesses: a very vulnerable global supply chain.

The rapid spread of the COVID-19 virus in early 2020 prompted shutdowns of industries around the world. Rightly so. We needed to get a handle on this thing. Now, nearing 2022, supply chains continue to struggle. There are international border controls and restrictions, and manufacturers and distributors of goods and services who are laying off workers through various vaccine policies (which I agree with by the way) – are compounding goods and services shortages.

Then, our climate crisis. More on that in a bit. 

The pandemic has only highlighted what I’ve know all along in my line of work: how highly interconnected but also highly sensitive global supply chains really are.

Yes, I suppose in some good ways, reliance on global supply chains is a good thing. They lower costs for many businesses – but this is often due to reduced labour costs. I think what many manufacturers and services providers are now fully realizing through the pandemic: any minor disruption in the system can have a massive domino effect. If that disruption happens, costs mount and issues compound far more than the labour costs in the first place.

I’m personally not convinced most manufacturing outsourcing has ever been worth it. Trade is always great – to a point. Businesses can and should try and thrive at home too. 

On a related topic, I know some readers of this site are not fans of any “climate change” language. I get that. But personally, I feel our collective well-being is well into a “climate crisis” situation – a situation that we’re not likely to recover from long-term. Dark words I know. 

Source: Reddit Canada – recent BC flooding disaster November 2021.

Whether you believe in the science behind this crisis is really up to you and the impacts it continues to have on our supply chains, human health and mobility, I can’t say for you. I know where I stand. I will continue to do my part. Here are some examples of our changes with more on the way:

• We’ll continue to walk to get groceries as much as we can, leaving the car at home. I might drive a few thousand km per year now. 
• We’ve downsized our home in recent years, as a lifestyle decision but also related to a footprint decision. Our condo/home is now ½ of what it used to be. That includes our utility bills.
• We try and avoid buying new plastics. We don’t adore the latest iPhones. 
• We shop at a local zero-waste grocery store often. 
• We shop local and buy in-season vegetables and fruits for local markets where possible.
• We recycle our metals.
• We take advantage of green-waste services in our building. 
• If we even decide to buy another vehicle, in 2-3 years (?), our hope is it will be either a hybrid SUV or an electric vehicle (should our condo be able to accommodate the latter) – to reduce our footprint even further.

We are far from perfect.

I don’t pretend to have a pure sustainability mindset nor behaviour. But we are making changes for the better. We’re trying. I hope you are doing your part too.

I’m not sure where you might sit on the sustainability spectrum, and I don’t know if you believe we are slowly killing our planet either. The point I am trying to make is: I think we all have a role to look out for each other, care for each other, and leave whatever you are doing today to the next generation in a slightly better place.

I’ll leave your decisions up to you.

More positive Weekend Reading!

OK, if your financial goal is to help your personal finances or your family’s personal wealth-building journey, I have some simple suggestions from dozens of articles available from the Archives:

Step 1 – automate your savings for investing. There is a better way to budget.

Step 2 – live your life and enjoy it. Life moves fast… 

Step 3 – if you ever get a raise, a promotion, or even some money provided as a gift – bank it and see #1 again.

That’s it. That’s all you ever need to do.

From the insightful Nick Maggiulli, Chief Operating Officer for Ritholtz Wealth Management LLC – here is his fear and loathing in cryptoland.

“In fact I see far too many parallels between the DotCom bubble and crypto. There is so much outrageous behavior in these markets that it is hard for me not to see it this way. On the other hand, I also say this as a partial compliment.”

Bradford DeLong is Professor of Economics at the University of California, Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations – just told everyone not to worry about inflation.

“The US is not currently in a situation where too much money is chasing too few goods, which would result in a surfeit of demand for labor and likely trigger an inflationary spiral.”

Do you believe him?

Speaking of inflation, and more, check our post on Cashflows & Portfolios about inflation, deflation and what we hope won’t really happen again – stagflation. 

Incredible work. Really. Check out The Sunday Investor for some great newsletters. I have no idea where he finds the time. 

“If you’re a Canadian-focused investor looking to catch up on the latest market news of the past week, sign up to receive my free newsletter!”

I do.

My friend Dividend Growth Investor wrote about the power of conviction.

While good, he writes:

“The first way that I manage risks is refusing to risk more than a certain percentage of total portfolio value on a given position. I believe in diversification, which means not putting all my eggs in one basket. I also do not believe in concentrating my portfolio in my best ideas, because I do not know which of my ideas today would turn out to be best ideas in 2031. I have a rough estimate, but I also want to assume that I may make mistakes, that the world is uncertain and more difficult to understand than previously believed. This is how I come up with a list of 30 – 50 companies at the very minimum. This means that I shouldn’t really have more than 2% – 3% allocated in a given company. “

I have a 5% rule: no one stock or asset much more than 5% of the overall portfolio. Unless that’s low-cost U.S. ETF VTI or QQQ or course. I’d be happy to see either ETF closer to 10-15% of my overall portfolio value. 

Always interesting when you try and make sense of the markets.

Thanks to Gen Y Money for including some of my articles in her recent round-up – follow her if not already done to be more money savvy!

Sam is flying and snowballing his dividend income. Incredible work:

“For the month of October 2021, we have received $4,090.98 of dividend income and $593.37 of income from writing options.  The total passive income for the month of October 2021 was $4,684.35.  This passive income included both incomes from dividends and option calls.”

More FREE My Own Advisor content:

How I invest in dividend paying stocks is always found here. 

I keep dozens of free Retirement essays and case studies here.

This includes how these millennials can FIRE at 50.

You can read up about low-cost ETF investing, including how I invest in some ETFs, here. 

Looking for free calculators, tools, or even my support? Check out my Helpful Sites page.

Reader question of the week (adapted slightly for the site):

Hi Mark,

Hope all is well – and you’re dividends are coming in nice!! I can’t wait for these banks to raise their dividends – it will be like a big fat raise!

OK, this might be great to post on your blog: why not just own ATCO.X and not CU stock? I own both and I probably can’t go wrong long-term owning both but curious about your thoughts and comments on this. I know you get a lot of questions but thought I’d ask!

Thanks so much Mark!

Thanks for your question.

Yeah, I can’t wait for some big-6 bank dividend increases as well. I’ve owned all 6 major banks, collectively, for almost 10 years now. My very first individual stock purchase years and years ago was Enbridge. Then I bought Bank of Montreal, Bank of Nova Scotia and Royal Bank very soon after. 

Personally, I think most big banks are going to show dividend increases in the 10-15% range. That would be quite epic for my portfolio alone. I figure anything higher will be a significant bonus!

Your question was really about owning ATCO.X vs. CU stock. Personally, if I was going to own just one and had to own just one (I don’t own either) I would likely gravitate to the former. The ATCO Group of Companies includes Canadian Utilities (CU) as one of many subsidiaries. I like that “the parent” is involved in all of the following for diversification:

As always, check out my Deals page.

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All my best,

Mark