Let me tell y’all a story about Norm, who might be the nicest, sweetest man I know.
I met Norm through his cousin, who I used to hang out with. Norm grew up on the family farm with his two sisters and ended up going to school for agriculture. He helped his parents out and eventually inherited the place at a relatively early age.
Farming comes with a lot of downtime — especially in the winter — so Norm tried to make a little extra money with various side hustles. But he sometimes lacked business savvy, so he was a sucker for a sales guy with a convincing pitch.
Norm fell for all sorts of MLMs over the years. He sold for Amway, Watkins, and World Financial Group, all without much success. And those are only the ones I know about. There are probably more.
He also spent thousands of dollars converting his farm trucks to propane, just to save a few cents a litre in fuel costs. The only problem was propane doesn’t work when it gets too cold, so his truck was effectively useless for a few weeks a year in the cold Alberta winter. I don’t know about you, but that’s not a trade-off I’d be willing to make.
In short, Norm made a few financial mistakes.
There are a few other stories I could tell, but I won’t. The last thing I want to do is air all of Norm’s dirty laundry here. Like I said, he’s honestly one of the best people I know.
Besides, it all ended up fine. Norm is retirement age and will soon be passing on the farm to the next generation, with a portfolio that would easily make 95% of you reading this jealous. Actually, no, scratch that. 99%.
He was successful despite not having much financial education. Hell, he wasn’t even particularly street smart. As I think back to some of Norm’s misadventures I’m a little bit astonished it turned out this well, actually.
So how did he do it? It turns out he just kept it ridiculously simple, stupid.
The power of simple decisions, compounded
Throughout all of his financial misadventures, Norm had a simple philosophy.
Whenever farmland came up for sale near his farm, he’d buy it.
Remember, Norm grew up a farmer. He knew the business intimately. Plus, it ran in his family. His grandparents came over to Canada, bought a farm, and then slowly expanded it over the years. His parents took over and they did the exact same thing.
By the time Norm came along, the strategy had been successful for 70+ years.
That’s not saying there weren’t roadblocks along the way, because there were. There are droughts in the 1920s that significantly hurt production. Just when things were getting better, the Great Depression hit. We all know about the severe droughts that hit the prairies during that time, but few people remember the terrible grasshopper infestations. Many farms didn’t have electricity or indoor plumbing until the 1950s or even 1960s. Fuel prices spiked in the 1970s and in the 1980s there was another drought.
And that’s not even mentioning the many years crop yields simply didn’t hit expectations. Or the heartbreaking frustration of watching a hailstorm destroy a particularly promising crop in July.
Norm knew the business and he knew the ups and downs. Despite the negatives and the various lean times, he knew farmland prices had done quite well over the years. He also had a deep belief he was buying up some of the best farmland in the world, backed up by both his practical experience and his mostly long-forgotten agriculture degree.
The patience he needed to pull this plan off was truly impressive. Land didn’t exactly come available at fixed intervals. He once went an entire decade without buying anything. And then, after all that waiting, two parcels near him came up for sale within months of each other.
These days, after 40 years of accumulating (plus the land he inherited), Norm owns a couple thousand acres, which he still mostly farms on his own. The value of his land recently surpassed $5,000 per acre, giving him a net worth of approximately $10M.
This is a guy who seemingly fell for every convincing MLM and who often referred to himself as “just some dumbass farmer.” All he really did was get one thing right and then took it seriously.
And what a result. I love it.
Norm shows us there are no bonus points for creativity. All that matters is the end result. They say businesses have to evolve to be successful. Norm proves that doing the same simple thing for 40+ years is also a pretty valid strategy.
Anyone can follow Norm’s plan. Sure, you might not have the expertise to buy farmland, but it doesn’t take that much to get to a competent level buying stocks or real estate. You can always embrace the ETF route if you don’t have the confidence to go out on your own. Dollar cost averaging for decades is the important part. The rest is just details.
What I wrote
Let’s start things off with the paid version of this newsletter, which publishes every Tuesday and Friday.
On Tuesday, I took a much closer look at a stock with the following characteristics:
I liked it so much I purchased some for my own portfolio, actually.
On Friday I did our usual weekly roundup, which featured:
- An in-depth analysis of Canadian bank earnings
- A profile of a stock that trades at less than 7x earnings that’s buying back gobs of its own shares
- A feature on an excellent niche business that is quietly up 100%+ in the last year, yet is still really cheap on a lot of metrics
- An update on one of my favourite boring dividend stocks, one that pays a 6%+ yield
What I really like about the Friday roundup is I can easily feature 8-10 stocks, allowing me to cover way more names than Tuesday’s deeper dives.
If you’d like to upgrade your subscription, click here.
Here on the free site I wrote about a collection of monthly paying dividend stocks, including a few under the radar names I think you’ll really enjoy hearing about. No REITs on this list, either. I like to analyze them separately.
Okay, you twisted my arm. Here’s where I profile my favourite REITs. It’s a few weeks old, but I did update it this week.
I also took a closer look at EQ Bank over on Seeking Alpha, a bank stock that has been quietly growing at a much quicker pace than its peers. Plus it trades for a much lower multiple, too. Shares sold off this week on weaker than expected earnings, a move I think represents a good long-term entry point.
What I read
Let’s start things off with probably the weirdest thing I read this week, about an Italian economist who made a fortune buying defaulted Imperial Japanese war bonds for pennies on the dollar. These were eventually honoured in full. It also looks like he pretty much put his full portfolio in this one trade.
Up next is a massive 3.5 hour podcast with Bill Ackman, hosted by Lex Fridman. Ackman is equally fascinating and polarizing, and he’s a pretty consistent butt of jokes on Twitter for his super-long posts. Personally, I think Ackman is pretty much a genius 50% of the time, and talks about galaxy brain nonsense 50% of the time. That’s a much better ratio than most people, btw, so I’m usually interested in what he has to say.
Great piece by Bloomberg about how the Ukrainian post office continues to operate even through a war.
Dividend Growth Investor is one of my all-time favourites. He’s living proof someone who embraces a Norm-esque plan for dividend growth stocks can truly do amazing things. His consistency is amazing. He wrote a really thoughtful post about generational wealth that’s worth a few minutes of your time.
Congratulations to Tawcan, who recently reported dividend income of more than $7,000 in January. Absolutely massive numbers. He’s also elite at YouTubing and fixing his various home appliances, the part of the post I especially enjoyed.
I’ve never understood why so many crap on those who get a new job every few years. A company wouldn’t hesitate to fire most of its employees if it needed to. Why should an employee somehow owe them more loyalty than they give their own people?
If I had my career to do over again, I’d definitely be more proactive in negotiating with my employer — but especially during the hiring process. Dividend Daddy has some tips on this front which I thought were helpful.
Really interesting whitepaper by BlackRock, which points out that most U.S. retirees don’t even come close to spending down their assets in retirement. It’s a fascinating look at real-life retirements, and I plan to profile it in an upcoming edition of the newsletter. Stay tuned for that.
From the Financial Times, a bearish report from UBS which says every person on the planet needs to spend $800 per year on Apple products to justify the company’s rich valuation.
That’s all I have. Have an excellent week, everyone.