What did go wrong in Vardia and The portfolio status

Vardia Insurance has been on my mind for a long time, lost 50K SEK (approx. 5400 euros) in one day.
Rough day? Yes, was a used Rolex Submariner which went away over a night..

Mad? No, could only blame myself..

Before writing what did go wrong maybe it's better to say how the days went when Vardia went through Armageddon and until now.

26th February 2015, Vardia is trade stopped from request from the company and postponing the announcement of the fourth quarter earnings.

26th Feb - 4th March, a lot of speculations is going around on blogs, newspapers, forum etc. I have a really bad feeling but couldn't imagine what were to come.

3rd March 2015, due to an accounting principle which has to do with booking of sales costs makes Vardia show a loss at 219 million NOK (approx. 25 million EUR). The stock is dropping 50 percent in the opening. 

4th March, I'm liquidating my whole portfolio, including Vardia and is back to zero from my gains in Protector. 

4th March - until June 2015, my trust for the stock market is zero, lost money on Tesco on accounting principles and now this in Vardia. Have still saved a lot of money during the months, but mentally I'm not ready to go into the stock market again. 

Thinking about other investments, properties etc. but know that the stock market is where you should be to make the real money with as little risk as possible.

Deciding to take some vacation from work and really rest, get my mind together and continue the thinking. Going to Hawaii for two weeks on my saved money, to start over when I come back with a new strategy (will come back to that in a later post, but shortly a mix of index funds with stocks). 

Over to what really went wrong in Vardia and in my analysis;

As stated above, Vardias accountants had a different view on how to accrual costs, sales costs. Accordingly to Vardia they were not allowed to do accrual the sales costs anymore and had to back-calculate everything and take it as a cost, 219 million NOK was gone over a night. 

They launched a new shares issue on 275 million NOK and with an interim loan to meet the solvency requirements in Norway. This together with massive cost reductions would make them profitable..Already here I knew these money will not be enough to make them profitable. Cost reductions take at least 3-6 months before you see any impact, it's not like you stop paying your employees the next day.

Last thing I read was that they will now do a management buy out (MBO) of the sales organization to bridge until they are profitable for 30 million NOK (?). Maybe that will be enough, didn't pay that much attention but it seems it's only good for management and not for the shareholders. 

What did go wrong in my analysis? Mostly a lack of time and limited knowledge in insurance accounting. In other words, I could only blame myself..

Portfolio status today;

50 000 SEK (buy price) in Avanza Zero (bought the last month)

10 000 SEK (buy price) in DNB global index

6282 SEK per share (buy price) - 3 shares of Chipotle Mexican Grill (CMG)

745 SEK per share (buy price) - 16 shares of MasterCard (MA)

430 SEK per share (buy price) - 36 shares of Starbucks (SBUX)

Hopefully I will be posting some more now, when I'm back on my trip to financial independence! 

Will update the portfolio and trades and also get back with a post on my new strategy.

Best regards,
EWI

This should not be taken as advise as always and all the numbers on this blog could be wrong and I am not taking responsibility for anyone who uses this information.

Thoughts About Settling Down

Today I asked myself that question, what would I really do with more money or if I were financial independent?. The question is really hard to get and very vague.
The definition I have for more money are financial independence.

Let's start with financial independence, which differs a lot between people. When are you really financial independent? For me personally is that question impossible to answer because it depends on so many factors, as everything else in this world..

Wikipedia is stating that financial independence is a state a human has when he or she has sufficient wealth to live, without having to work actively for basic necessities. Often financial independent peoples assets generate more income then their expenses.
Another definition comes from a survey done 2013 by Capital One 360. The survey states that 44% of U.S adults said financial freedom meant not having any debt, 26% said it meant having enough saved for emergencies and 10% defined it as being able to retiring early.

From my point of view neither Wikipedia nor Capital One 360 has right here, just because of the simple reason that it depends so much external factors that its so hard to answer this question, especially for me at an age of 25.

Let's bring up a scenario.
I guess a lot of people like me wants to live in a nice neighborhood, fancy car and friends with the same mindset around you. In other words this neighborhood will be wealthy and to a certain extent contagious. Why? 
People with high incomes consumes a lot, which enriches corporate to small medium business and those companies will start to demand manpower. These things is pushing salaries north and then the snowball is rolling with the society as a winner and me as financial independent as a loser?

I dont know but its a good thing to think about, should you choose to settle down in a more "expensive" neighborhood or in a cheaper region like Asia for example.
I will definitely put that up on my to-do-list, what is actually financial independence for me.

Besides the philosophical thinking I am working on a general analysis of the fast food industry, which will probably be done and posted in the upcoming weeks.


Best regards,

Eighth Wonder Investing