Random Thoughts on Financial Freedom

Dear Readers,

I wanted to step away from the market news, discussion on investing and talk about the topic of “financial freedom”. This subject evokes a lot of interesting responses from the community. After all, everyone’s background and life experiences are not the same.

Financial Freedom = Retirement

The first common theme/variation of a response equates financial freedom to a point in life where you do not have to worry about making ends meet. Lot of folks simply think of this as retirement and this eventually leads into a pretty picture of a relaxing next to beach, sipping your favorite drink or whatever. I’ve got to admit, this sounds fantastic.

But after thinking about this a lot, to me this sounds just like a…..vacation.

I enjoy vacation time and some “do nothing”/”chill out” time. But if the same situation would extend over a long run, it would drive me nuts. I would probably just get sick of myself after a few days of “doing nothing”. Retirement or not, I think I would still be involved in some form of activity to keep myself engaged and mentally challenged. This drive to work on something cool and rewarding is what fuels me, and I do not think that is going to change in retirement.

Indeed, my work schedule as I get closer to retirement might change substantially. I might consider during more “consultant” like roles during the later half of my career. I might also consider stepping away from the tech industry altogether and going towards academia. I have always enjoyed teaching young students whatever I have learned from my experiences and I might even consider doing it for free. The gift of educating a young child, especially from a financially challenged background, can not only setup that child for life but can benefit a whole generation to follow. I find that thought very captivating.

Financial freedom = Escaping the 9-5 cycle

The second theme around any financial-freedom discussion is centered around of escaping the 9-5 work cycle. This has an implied assumption that almost everyone who works in their present day job, hates it for one or more reasons. They are pursuing the path of financial freedom so that they can escape this “monotonous” cycle and “use their time doing something that they actually love”.

I can understand folks hating their day jobs if they are stuck doing something that they are not really passionate about, but are doing it because pursuing other income options is not a viable option. This is indeed a difficult situation.

What I have a problem is with the broad assumption that everyone who is in a 9-5 job is expected to hate it. I am in the (supposed) minority who does NOT hate their day job. I think I was fortunate enough to realize very early in my education that I would end up with a career in engineering. And I ENJOY doing what I do. I cannot explain the thrill of seeing people using products which potentially is running a piece of software that I designed and/or contributed towards. I can actually take a bet with you that if you do a quick scan around your house, you might find atleast one such electronic product where this is true. And I am not saying this to brag or anything. I think this is largely true for large number of engineers who work with me on products or other such solutions.

Add to all this, I find the predictability around getting a periodic paycheck extremely useful. This actually helps me plan a budget and also determine how much to invest etc. In a world that is full of chaos and unpredictability, THIS one aspect is probably the biggest advantage of the 9-5 job. It helps me sleep better at night.

I also feel that a lot of the 9-5 job haters are exaggerating some of the downsides. Some common criticisms might sound something like…

  • But, you are working to fulfill someone else’s dream, aren’t you?
  • You are being told about what you need to do.
  • There is no freedom…your time is not your time…
  • You are not an owner. You are just a modern-day slave.
  • And who likes working in a cubicle anyway?

I honestly feel this is a slightly myopic perspective of the world. If one were to open up their mind a little more, they would see that most of these concerns were just hollow statements with no real substance. Let me try debunking these..

Working to fulfill someone else’s dream

Not really. Like I said, I enjoy working on engineering problems that are ultimately related to products that common people use in their day-to-day lives. This is as much my dream as it is the CEO/upper management’s dream. Great products are built by great teams of people all working towards a shared dream.

You are being told about what you need to do

Ok? So what? First of all, why is this such a bad thing? Second of all, I have always been encouraged to ask questions regarding the tasks being assigned to me to get a better context of the larger problem it is trying to solve. There have been several occasions where my immediate boss has welcomed me bringing up these questions and we have either re-scoped the task, eliminated it if it was deemed unnecessary or kept it as-is since I have understood it well. In all three cases, it has helped everyone concerned.

There is no freedom…your time is not your time…

There is some truth to this argument. This largely depends on the kind of industry you are in and the work you do. Thanks to the WFH dynamics in the post-pandemic world, I have been able to have a largely flexible work day where I can plan my personal activities and appointments around my work schedule without either one being impacted. I have been pretty lucky to have worked for bosses who were mostly hands-off and did not believe in micro-management. But I can understand that not everyone might have the same experience.

You are not an owner. You are just a modern-day slave.

This is kinda related to the “me working to fulfill someone else’s dream”. Again, good corporations will make each and every member feel like a co-owner. Sure, there might be some cases where you might not agree with the approach to solve a given problem. But usually the opposing parties, in any given discussion, also have a sound argument. And this argument about being a modern-day slave…well if you are in stuck in that mindset, then no amount of talking is going to convince you to look at it some other way.

And who likes working in a cubicle anyway?

Thanks to COVID and WFH dynamics, you no longer need to work from an office! And even if you had to work out of a office, most workspaces now have enough flexibility to allow you to take your laptop and sit anywhere you want in a building and work from there.

Granted, I might be a bit biased in that not all 9-5 jobs are like mine. There might be certain types of 9-5 jobs which are indeed terrible because of bad working hours, bad management and vitriolic work environments. But what is stopping you from quitting and finding a job where such a situation does not exist?

This is perhaps a FAR MORE important step than anything else. You need to put yourself out of toxic work environments and go find a job that is personally and professionally rewarding. In my opinion, focusing on being kick-ass at your job should be a higher priority and thinking about stock markets and investing. This allows you to command a very competitive wage, which in-turn improves your savings rate. Once you have a solid base i.e. your day job, you can then focus on long-term financial plans as well.

So what does “Financial freedom” mean to me?

I have grappled with this question a lot and it has not really led to any clear answers. But one thing is certain, I want to be in a position where I have a periodic stream of income coming into my bank account. That cash is going to give me the ability to pay my bills and live my life. This is perhaps the SINGULAR most important reason why I have chosen dividend growth investing as my investing strategy. It is perhaps the only strategy that helps in stay invested in the market, generates a passive income stream while I can focus on my day-job and do my best on that front.

If my calculations are right, I will have enough money in retirement to live life king-size. But I will continue living well below my means. Why? Because I am not envisioning a king-size life next to the beach, sipping a margarita or whatever. Personally, I find that such a life to be boring and meaningless. I might consider traveling for a bit, but I am pretty sure I will find that sickening and tiring after some time as well.

Maybe the choice to live your life your own way in retirement is what financial freedom really means? I really don’t know.


Lets talk about : Intel

Dear Readers,

I have been taking my own sweet time to process the quarterly earnings of a few companies that I wanted to give some more close attention. Typically, I only try and focus on annual earnings reports and go back several years to try and look for interesting trends. However, if there are some companies that are in the news a lot for all the wrong reasons, I decide to study the quarterly earnings as well to try and detect a trend as early as possible.

Intel (ticker: INTC) is one of the companies whose stock tanked after its recent quarterly earnings report. As an engineer who works in the semiconductor industry, I would like to believe that I have an advantage in understanding companies like Intel. With the previous management at INTC headed by Bob Swann, I could detect BS in the earnings calls and/or interviews. I could also see a management team that was just sitting on their backsides and doing nothing of significance and losing market share in the process at an alarming pace.

With Pat Gelsinger, a former engineer who learned his trade at Intel, coming in as CEO about an year ago, I was (and still am) hopeful that things would change. Obviously, with INTC so far behind the 8-ball, this turn-around is not going to be an easy task. And so that was it, I was happy to own a beaten-down company that was turn-around play.

So with all that background out of the way, let us get into the earnings report. You know that you are not going to like reading the report when it begins with the following statement from the CEO.

“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues.”

Ouch! I was thinking to myself “Gosh, just how bad is it going to be?”. I scroll down towards the financial statements and the numbers said it all. The Client Computing Group (essentially the processors used in the PCs) business segment’s revenue was down nearly 25%. The Data Center and AI group’s revenue was down nearly 16%. The operating income for both segments were down by 73% and 90% respectively. Furthermore, they went on to slash their full year guidance with a nearly 9-13% reduction in revenue (around $65-68B) and a 9.1% YoY decrease.

I wanted to probe each of these points a little further and so some digging around in the earnings report and the earnings call which led me to the following conclusions.

PC business

The slowdown in the PC business was attributed to OEMs reducing their inventory, per Pat, “at a rate not seen in the last decade”. I wanted to test this assumption a little bit, and so I dug around the earnings reports for AMD and Microsoft. Each of them, in one form or another, attributed to similar slowdown in OEM revenues. Some of these were due to COVID related shutdowns in China and some were due to an overall deteriorating demand during the month of June. None of this is particularly surprising. With inflation rates being sky-high, lot of consumers will be focused around cost cutting and reduced spending wherever possible.

Data Center business

The part that surprised me quite a lot was the Data Center business and the associated shortfall. One of the analysts probed Pat on the same question during the earnings call and Pat’s response was rather interesting:

The DCAI point, as I said in my formal comments, we were disappointed. Some of that was driven by the macro; it was also match set issues that we’ve been struggling with as well. And Ethernet components, power supply components, et cetera have been challenged. But as we also said, we had some of our own unique execution issues and we kept the quality bar high on Sapphire Rapids and thus we did another stepping, which was a forecast, which put some inventory and reserve issues in front of us as opposed to high ASP new product revenue.

Pat noted that NVIDIA had selected Sapphire Rapids to pair with NVIDIA’s Hopper GPU chips in their new DGX-H100 enterprise AI architecture.

So what does all this mean?

With a disastrous earnings report and the negative news all around this company, I thought it was important to step back and put things into perspective:

  1. My reasons for adding Intel to my portfolio still remain intact. I knew going in that this is a turn-around play and this turn-around is going to take a few years to play out. This intermediate period is going to be rough. What I am seeing is a manifestation of the same thesis.
  2. I have factored in the risks of this bet going “south”, and there is a good chance that this might not turn out the way I imagine. But the opportunity cost is significant and I am willing to take the risk.
  3. I cannot stress the importance of quality management. A decent company in the hands of incompetent management can push the company back several years. Unfortunately with Intel, this is exactly what happened under the previous leadership group under Bob Swann. Undoing all this and getting this ship back on track is not going to be a trivial task.
  4. My general sense speaking to a few friends who work at Intel currently is that the overall mood with Pat Gelsginer at the helm is positive and there is a lot of confidence in the current senior management. Unfortunately though, Intel is a dinosaur of a company and things move rather slowly. Obviously, this culture needs to change and this change will not happen overnight.
  5. As a person and an engineer, I like Pat. He is a good guy and he means well. I actually appreciate him coming straight to the point and acknowledging that his company has their own internal execution issues. This is far better than some other CEOs who beat around the bush and BS around. However, as an investor, ultimately I will need to see past all the smooth-talking and look at the results on the ground. I am sure Pat understands this and is attempting to correct this. Perhaps, he should take a leaf out of his own suggestion to the Congress and relay some of that dynamism to his engineering staff.

For what it is worth, I think the overall strategy of investing the $60-70 bill towards fabs is the right approach. And while this will increase capital expenditure over the next few years, it should place Intel in a good position over the long-term. I also believe that PCs are not going to go anywhere. In-fact, Satya Nadella had something very interesting to say regarding PCs in Microsoft’s last quarterly earnings:

We’ve seen a structural shift in PC demand… More than ever, people are turning to PCs to exercise their agency and unleash their creativity, whether it’s meeting in virtual reality or for remote work, writing code or collaborating in documents, livestreaming video or playing games, or for graphic design and engineering design…As new use cases are born every day, and existing ones see a resurgence, we’re experiencing a PC renaissance, with increases in time spent on PCs, and PCs per household.

Indeed as an engineer, I cannot imagine not using my PC for my development/work activities. Intel is going to be a huge beneficiary if we are to believe this trend.

There was a statement in the earnings release from the Intel CFO that read as follows:

We remain fully committed to our business strategy, the long-term financial model communicated at our investor meeting and a strong and growing dividend.

While this might be a cursory statement that management is required to make to assure shareholders, I would honestly hope that Intel does NOT focus on increasing the dividend over the next few quarters and instead focus on carefully spending their cash and be very cautious. While this might sound counter-intuitive, I think this would be beneficial for both the company and the long-term shareholders in the long run.

I will continue to watch this company and hope that things turn out well over the next few quarters.

Monthly Income Update – July 2022

Dear Readers,

We are almost at the end of the summer and our family is looking forward to the start of the next school season. Work has been incredibly busy. And while all of that was going on, I was keeping a close eye on the earnings reports of certain companies that are on my watchlist. Some of these earnings reports were brutal. Several companies have gone the route of slashing their full year guidance. I also read media reports from Meta and Google that they were freezing hiring for certain positions. There is a lot to talk about as far as Q2 earnings from certain companies, so I will dedicate a separate post for that.

This post though is about my monthly dividend income earned for the month of July 2022. This was expected to be a slow month. How slow? Lets go find out.

Dividend Income Received

Sl. No.Company/ ETF (ticker)Amount
1.JP Morgan Chase (JPM)$32.31
2.Realty Income (O)$15.86
3.JP Morgan Equity Premium Income ETF (JEPI)$4.35
4.Orion Office (ONL)$0.3
5.CareTrust REIT (CTRE)$6.61
6.STAG Industrial (STAG)$3.78

So a total of 6 companies/ETFs contributed a total of $63.21 in dividend income. The highest contributor was JPM, who in their recent earnings release decided NOT to increase their quarterly dividend. More on this in a future post.

A quick point that I wanted to bring up here: the dividend income I received this month is considerably lower than that of last month. In fact, last month was a record. I know a lot of dividend investors try to spread out their investments such that they can get consistent dividend payments every month of the year. This is not something that concerns me one bit and I do not want factor that it when I choose which company to invest in. I instead choose to focus on high-quality companies that have stable cash flows, thereby ensuring a consistent dividend back to me. These dividends could come in annually, semi-annually or quarterly, it really does not matter at this point. Will it matter once I am in retirement? Maybe. But I am hopeful that by that point the snowball would have grown so much that a slow month really does not matter that much in pure dollar amount.

In any case, to supplement my dividend income for this month, I also wrote a covered call against some stocks, these stock units I earned as part of performance appraisal from my previous employer. I earned another $49.31 in option premium. While I was expecting the supply chain and inflationary pressures to impact the semiconductor industry, I was proved wrong. Intel (INTC) aside, most of the semiconductor companies that I am tracking came out with surprisingly great quarterly earnings results. This also meant that I very nearly got assigned on my covered call (yikes!). Luckily, there was some pull-back late last week. But even if this changes and my covered call gets assigned, I am not too worried as I would be selling these units at what I believe is a good value.

So, my total monthly income from all my investments was a grand total of $112.52. At the same time last year, I had earned $35.63 from my investments. Not bad for what is a slow month, eh?

Buys and Sells during the month

No sells during this month, again.

As far as buys, I decided to small tranches to my JPM position and Snap-On (SNA). It was disappointing to not see a dividend increase announcement from JPM. SNA delivered solid quarterly results once again. Following VZ’s quarterly earnings release, the stock market went crazy and the stock dropped from a cliff. This gave me an opportunity to add more shares at a very attractive dividend yield. VZ and T both suffered similarly as far as stock price, but my take on both companies is very different. This topic truly deserves a post of its own, so I will cover my thoughts there.


So a slow month, but a steady month. And that is really the mantra of this game we are playing here. Dividend growth investing is NOT a get rich quick strategy. But if you stick with the strategy long enough, the strategy will soon pay its…dividends 😉