The first dividend from United Technologies came in today. Actually, it was deposited two days ago, but I forgot to note it when I checked the accounts. I told you when I added the position to the KRIP portfolio, and then later answered questions about the valuation of the stock. It is such a small position that it isn’t really meaningful but I imagine it will grow to be something substantial over time. Shares are only a little bit below fair value right now, but buying a collection of businesses with these economics, and a history of returning surplus earning to owners in the form of dividends and buy backs, is not a particularly bad position to be in when putting together a collection of assets for a 25+ year horizon.
I woke up and had to finish one last unexpected thing on the refinance of my primary residence, which we’ll close when I get back from California. (Those of you who have been around a long time know that one of the few debts I allow my household to carry is a tax-deductible mortgage against a secured piece of real estate with ample equity.) We were supposed to already be done with it but right as we went to pay it off, the mortgage servicer transferred it to a different mortgage servicer and we had to wait several business days for the payoff quote to appear in their system. The move will drop my rate by 1.25% per annum, put an extra $5,000 to $6,000 per year in my pocket, and effectively let me go short the United States dollar for thirty years at a rate below historical inflation and considerably below the dividend yields that can be achieved on high quality oil stocks. It’s going to take all of my self-restraint not to pay it off early but it would be irrational to do so give my opportunity cost.
We went to Dick’s Sporting Goods and picked up some running shoes. The one bad thing about living in the Midwest is the fashion at most stores is designed to appeal to the masses instead of being unique. That’s why online businesses are kicking you across the floor; it’s not the sales tax advantage (which is offset by shipping in most cases.) I found one pair that I love, though, so I did get those. The rest I’m going to have to get online, which is fine since I can save money with Upromise.
The funny thing that no one except Aaron and my siblings will ever quite fully understand because they were there at the time and got to see it is that whenever I walk into a Dick’s Sporting Goods, I feel a twinge of sadness for my extended family for reasons I’ve explained in the past. They squandered what would have been tens of millions of dollars in lost wealth; gone forever, despite having a base that most Americans can only dream of possessing. Imagine going back a couple of decades ago. You wake up with a business pumping out the inflation-adjusted equivalent of seven figures in revenue, six figures in profit, hardly any debt, no meaningful competition, the Internet doesn’t exist in any substantial way, and own the real estate in which you conduct your operations so that even the lease payments are ending up back in your own pocket. It should have been a recipe for long-term compounding that ended with $30 to $50 million in stocks, bonds, and real estate after 30+ years in business. It didn’t. They screwed up, big time. They had no internal controls, lost countless amounts to embezzlement, stopped expanding beyond a single store, drained the enterprise through excessive salaries and dividends, and then closed their doors after years of running losses sustained solely by liquidating a quarter-of-a-million dollars in high quality inventory and never replacing it. By the time they woke up, it was too late. They had starved the golden goose and had to shut the doors. At this point, they had almost nothing saved. There was no capital working for them. They will retire dependent almost entirely on Social Security and odd jobs. It was a tragedy that happened solely because of a refusal to recognize reality, respond to it, and treat the enterprise with respect.
It makes me sad. It’s so pointless. I hate seeing good platforms wasted or neglected.
Afterwards, we picked up a pound of coffee and some drinks at Starbucks then headed home. We had to move the flowers back to the porches and the deck restoration project is finished.
The Dick Clark rose bush is not turning out at all like I expected, by the way. Some of them are now really dark, while other blooms are not.
This evening, I need to clean up my home study, finish some personal accounting work, go through a stack of about 100 tear sheets on companies I’m considering for one of my personal portfolios, and wrap up some other small items on projects that I track.
All in all, this has been a wonderful day. I expected to work the entire time but all of these distractions are the benefit of owning your own businesses and being able to do whatever you want. I’m so glad my life is arranged this way. Yesterday, my brother and soon-to-be-sister-in-law rang the doorbell and asked if they could camp out and watch the third season of Game of Thrones so we took the day off and watched that with them. This really is the way to live; at least for my personality. When I get obsessed with work, I more than make up for the downtime.