Well with the largest bank failure in history now in the books, as Wamu is seized and sold by the FDIC, we may now have a bottom in the financials. By all measures and calculations this is the largest financial meltdown in history and could only reach a bottom after having the largest bank failure in history. Another sign we may be at the bottom is the greatest investor in our lifetimes, Warren Buffett, investing $5 billion in Goldman Sachs. Also if they pass the 700 billion dollar bailout as currently proposed, it would ensure the rest of the big banks will be on the road to profitability once again.
So what does this bottom mean and how can this help us make some money? Let's take a cue from Buffett and begin investing in good dividend paying financial stocks. Be sure to look at preferred shares of the major banks to invest in such as Wells Fargo, Bank of America, JP Morgan, US Bank, and Goldman Sachs. Sticking to preferred shares will decrease the chance your dividend will be cut and should be a lot less volatile than the regular shares. Staying with the big boys should ensure that your shares will benefit most if the bailout goes through.
Do you think this is a bottom in the financials?
Do you know how to find preferred share information?
Thursday, September 25, 2008
Monday, June 30, 2008
Recession or Depression?
What Recession?
If you follow the financial news stations such as CNBC or Bloomberg you may believe what the so called experts and Federal Reserve board members tell us, that we are not in a recession yet. Their problem recognizing the trouble we are in may not be entirely due to ignorance but may be due to the standard definition of a recession that has been accepted by most everyone. Their "official" definition is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters. This definition is flawed to me and it should be for you as well for two main reasons. First, this definition does not take into consideration changes in other variables such as the housing market collapse or the banking catastrophe. It also ignores any changes in the unemployment rate or consumer confidence. Second, by using quarterly data this definition makes it difficult to pinpoint when a recession begins, when we are in a recession, and when it ends. Just think, we will be at least six to eight months into a recession before any of the "experts" admit we are in trouble.
Depression
One side effect of this inaccurate way of accounting for recessions is that by the time we admit the recession we are in it could be too late and cause a depression. I know most people think that the "great depression" happened long ago and things have changed so much since then that it won't or can't happen again; Well they are wrong. Much of the data out there says we are in a recession and headed for a depression. The housing slump we are in currently is the worst since the great depression and will only continue to get worse before it gets better. June's market decline was the biggest one month decline since 1930, we all know what was going on at that time! The market isn't done going down either, with growth slowing and no new money being used to finance risky ventures there is nothing to drive the market higher.
Recession or Depression?
So what do you think about the economy here in the U.S.? Do you believe the experts or can you read the writing on the wall? Is your portfolio setup to make money in this recession, is it prepared to grow in a depression? Most people think that a recession or even depression means you have to just "weather the storm" or just minimize your losses, but in fact you need to be more agressive as you can create even more wealth during tough times if you can read the situation ahead of everyone else and position your portfolio to take advantage of it. Just think, as the market fell over 3% last week commodities gained over 4%, some saw it as a bloodbath while Other, myself included, had a great week.
Wednesday, June 11, 2008
More Than Just a China Play
Commodities
If you have been following this blog at all or have talked to me about investing this past year you know how bullish I have been on Commodities. They are more than just a weak dollar play or a China play they are a world play. Demand for the actual products are growing daily as is the demand for investment products to take advantage of this long term cycle all over the world. China has been circling the world looking for any commodities they can purchase as they know how important they will be for future growth in the country.
China's Growth
At it's current pace China will overtake the U.S. as the world's largest economy within the next ten to fifteen years. What this means is that China's economy will roughly double in size compared to today. This in turn will mean their consumption of commodities will roughly double as well. Can the world support this demand? Can their growing population just consume less? The answer to both questions is no. this leaves us with an environment in which all commodities they need for their countries growth will become more and more scarce the world over. We all know what happens when food, oil, or raw materials become more scarce, that's right, prices go up.
How to Play
I own various commodity plays and find that the easiest way to play is through the ETF: GSG. It is a commodity index ETF that everyone should have in their portfolio to take advantage of this global play. If you want to look at specific areas try RJA for agriculture, USO for oil, GLD for gold, SLV for silver, and one that I think might do better than oil percentage wise is UNG for natural gas.
Question?
Does anyone know who was the world's largest economy before the U.S. took over the #1 spot sometime around 1875?
Full disclosure: I own or am currently trading GSG, GLD, SLV, RJA
Wednesday, May 14, 2008
Buying and Selling
While one could make a case either way, investing in this day and age one can't rely on buying and holding as an effective, sure fire method of creating wealth anymore. There are a couple of major factors that make this the case.
1) CEO's are given more monetary incentive than ever before to take gigantic risks to make money for the company. The problem with this is there is no positive results needed to make the money. Just look at Wamu as one example where the top executives were given great compensation for taking risks that ended up destroying the shareholders value and creating enormous write downs for the company. Even as they announced major problems with the risks they had taken they were paying themselves enormous sums of money as if they had done a great job! This is ridiculous and will only continue as there is no accountability for the end result of their bonus driven risk taking.
2) With the advent of the IRA one can make profitable trades in and out of stocks with tax deferred until you need the money. So you can get the tax advantages of buying and holding with the added bonus of being able to respond to changes in the economy through buying and selling. I personally do most of my "trading" exclusively in my IRA account, if you don't have one yet you are missing out big time.
3) Average annual returns, although advertised at 10% or more by financial advisers is actually closer to 5% if you look at the history of the market during the 20th century*. Guess what the compounded annual return has been so far this 21st century, less than 3%*!! With inflation rising to 5% and beyond many times during the same period you actually are losing purchasing power some years further diminishing the returns of investors who buy and hold. Furthermore our economy has seen it's best days and these returns will only get smaller over time if the first 8 years of this century are any indication.
4) The last reason, that is always overlooked, is how companies still "juice" earnings through pension expenses. I won't overwhelm you with the complexity of this sham, but let me tell you that for the majority of companies in the S&P with pension plans they averaged assuming an 8% gain per year! They have the audacity to assume this return year after year even though over a quarter of their funds are in cash or bonds that yield less than 5% per year. Once this is put to rest like the options accounting mess that has taken place in recent years we will see massive restatements of earnings that will only hurt shareholders.
The only reason to buy and hold in this day and age is due to investment competency. If you have done great research and have good competency that there is a long term cycle you can take advantage of then you would buy to take advantage of that cycle and hold for the duration of the cycle. If you don't have the discipline to constantly do research on stocks, bonds, commodities, etc. (bad competency) than you shouldn't be investing in them by yourself. The best thing would be to either invest in an index fund if you are happy with average market returns, a mutual fund with a great fund manager if you like a little more risk, or buy shares of Berkshire Hathaway (brk) which is basically a no fee fund run by the greatest buy and hold investor of all time. For the record, over the last 40 years Berkshire's compounded annual gain has been 21% while the S&P, even with dividends included, has only done 10%!
In the end it is best to be diversified. I have Berkshire Hathaway shares that satisfy my buy and hold area, Asian market driven stocks to take advantage of a long term cycle of growth, and a list of stocks I am currently researching or buying/selling that takes advantage of current conditions in the economy. Also I always remember the old adage of "buy low, sell high" if you only buy and never sell you are not following the most important way to profitably invest. Why not do as I have done with Google over the years, buy it on weakness $350-$450 and sell into strength $550-$650, although I never fully liquidate my position I do reduce it when up and increase it when down.
*All compounded annual gains are calculated from the S&P 500 with dividends included.
Tuesday, April 29, 2008
Bank on China Update
I hope you were able to purchase last weeks stock China Merchants Bank Co Ltd symbol: CIHHF. We were able to make a quick 11% gain in the past week! I will be paring back on my position but the stock will continue to do well and I don't plan to completely liquidate my entire position. Stay tuned for my next China play that I am working on right now.
Sunday, April 20, 2008
Bank on China
Chinese Bank Stock
China Merchants Bank Co Ltd symbol: CIHHF (OTC). This is the best run commercial bank in China. It operates through a network of approximately 400 branches in approximately 30 cities. China Merchants Bank was founded in 1987 and is headquartered in Shenzhen, the People’s Republic of China. For the first quarter of 2008 they reported an increase in net profit of 140%!! The company said the results were mainly driven by loan growth and higher interest spread, accelerating growth in noninterest income, lower credit costs and an effective income tax rate. The simple act of borrowing money is a fairly new idea in China and credit card usage is still in its early stages as most Chinese still pay for everything in cash. China Merchants Bank has grown its credit business rapidly through innovative marketing such as a Hello Kitty fan card. Growth in this area will continue at astonishing levels as China develops a middle class way of life for it huge population. Also late last year they got the okay to open a branch in New York which might just open the door for further US expansion.
Now may be a good time to pick up some shares as many investors are looking to start buying financial stocks and this stock has been cut in half like other banks for no reason other than being in the same sector. If you have an international trading account, such as E-Trade you could pick up the companies stocks under the number 3968 on the Hong Kong exchange. If not the only way to pick some up is through the OTC market, otherwise known as pink sheets, under the symbol CIHHF. If you have any questions or comments about this latest China stock pick send me an email. Full disclosure: I am currently trading 3968 H-Shares.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
China Merchants Bank Co Ltd symbol: CIHHF (OTC). This is the best run commercial bank in China. It operates through a network of approximately 400 branches in approximately 30 cities. China Merchants Bank was founded in 1987 and is headquartered in Shenzhen, the People’s Republic of China. For the first quarter of 2008 they reported an increase in net profit of 140%!! The company said the results were mainly driven by loan growth and higher interest spread, accelerating growth in noninterest income, lower credit costs and an effective income tax rate. The simple act of borrowing money is a fairly new idea in China and credit card usage is still in its early stages as most Chinese still pay for everything in cash. China Merchants Bank has grown its credit business rapidly through innovative marketing such as a Hello Kitty fan card. Growth in this area will continue at astonishing levels as China develops a middle class way of life for it huge population. Also late last year they got the okay to open a branch in New York which might just open the door for further US expansion.
Now may be a good time to pick up some shares as many investors are looking to start buying financial stocks and this stock has been cut in half like other banks for no reason other than being in the same sector. If you have an international trading account, such as E-Trade you could pick up the companies stocks under the number 3968 on the Hong Kong exchange. If not the only way to pick some up is through the OTC market, otherwise known as pink sheets, under the symbol CIHHF. If you have any questions or comments about this latest China stock pick send me an email. Full disclosure: I am currently trading 3968 H-Shares.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Wednesday, April 16, 2008
Interesting Gas Facts
I recently received some interesting information regarding small ways to make the most out of every dollar you spend on gas. Let me know what you think.
I don't know what you guys are paying for gasoline.... but here in California we are also paying higher, up to $3.50 per gallon (AJSInvestEDIT: More like $4+ per gallon!) . But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon.. Here at the Kinder Morgan Pipeline where I work in San Jose , CA we deliver about 4 million gallons in a 24-hour period thru the pipeline One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.
Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3)stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some other liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.
Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom. Hope this will help you get the most value for your money.
TIPS ON PUMPING GAS
I don't know what you guys are paying for gasoline.... but here in California we are also paying higher, up to $3.50 per gallon (AJSInvestEDIT: More like $4+ per gallon!) . But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon.. Here at the Kinder Morgan Pipeline where I work in San Jose , CA we deliver about 4 million gallons in a 24-hour period thru the pipeline One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.
Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3)stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some other liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.
Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom. Hope this will help you get the most value for your money.
Sunday, April 13, 2008
Gold and Silver
By now you all know how bullish I have been about gold and silver and hopefully you have been able to at least start a position. Gold and silver have had an incredible run and now look poised to go on another big run.
While recently looking to purchase silver bullion it has come to my attention how severe the silver shortage is. The U.S. and Canadian mints are both having trouble buying enough silver to mint their bullion silver coins leading to a shortage and therefore an increase in prices for the coins. In case you didn't already know the U.S. no longer has a silver reserve and needs to purchase all of it's silver for production on the open market. I have started to buy silver again following the recent pullback from $20 down to the $16.80 level and so should you.
AP
Chavez Muses About Buying IMF Gold
Saturday April 12, 8:26 pm ET
Chavez Says Venezuela Could Afford to Buy Some of IMF's Gold Reserves
CARACAS, Venezuela (AP) -- Venezuelan President Hugo Chavez said Saturday that his government could afford to buy some of the International Monetary Fund's gold reserves as the Washington-based lender faces hard times.
Chavez raised that idea with a chuckle as the IMF, the lender of last resort for countries in trouble, considers trimming costs by selling off some of its gold reserves.
"Look at how the U.S. empire must be in unimpeded decline, that the International Monetary Fund ... is selling its crown jewels," Chavez said during a speech at a military parade.
"The International Monetary Fund is selling what gold it has left to be able to pay salaries," Chavez said. "We could give a loan to the Monetary Fund. ... We could buy some gold bars. ... I think they're selling gold cheap."
Chavez spoke as the IMF and World Bank were holding weekend discussions in Washington. One proposal on the agenda would trim 15 percent of the IMF's staff and sell about US$11 billion (euro7 billion) in the institutions' vast gold reserves.
A vociferous critic of the U.S. government, Chavez also has long opposed the policies of the IMF and the World Bank. He called the IMF "the financial arm of the empire."
The leftist leader spoke during a parade marking the anniversary of a failed 2002 coup that briefly drove him from power. He accuses U.S. President George W. Bush's government of being behind the coup, which U.S. officials deny.
Speaking to troops, Chavez said of the U.S.: "It's an empire in decline, but it's still very dangerous."
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Silver
While recently looking to purchase silver bullion it has come to my attention how severe the silver shortage is. The U.S. and Canadian mints are both having trouble buying enough silver to mint their bullion silver coins leading to a shortage and therefore an increase in prices for the coins. In case you didn't already know the U.S. no longer has a silver reserve and needs to purchase all of it's silver for production on the open market. I have started to buy silver again following the recent pullback from $20 down to the $16.80 level and so should you.
Gold
Gold is being pumped into the market by the IMF and other financial institutions as they try to replenish their cash reserves which has ever so slightly pressured the price lower. The scary part about this is the fact that it is being absorbed by the market so quickly and the price of gold has recovered quickly. Once this "faucet" of gold is turned off the price of gold is going to skyrocket. Also if you believe as I do that the fed will continue to sacrifice the dollar to try and save the economy this will also create a flight to gold.
What to Buy?
I recommend buying ticker symbols: SLV for silver exposure and GLD for gold exposure. You should also consider visiting your local or online coin dealer to begin purchasing actual gold or silver bullion. Full Disclosure: I currently own SLV and GLD.
Interesting Comments
Here is an interesting story I found on Yahoo regarding the IMF sale of gold:
AP
Chavez Muses About Buying IMF Gold
Saturday April 12, 8:26 pm ET
Chavez Says Venezuela Could Afford to Buy Some of IMF's Gold Reserves
CARACAS, Venezuela (AP) -- Venezuelan President Hugo Chavez said Saturday that his government could afford to buy some of the International Monetary Fund's gold reserves as the Washington-based lender faces hard times.
Chavez raised that idea with a chuckle as the IMF, the lender of last resort for countries in trouble, considers trimming costs by selling off some of its gold reserves.
"Look at how the U.S. empire must be in unimpeded decline, that the International Monetary Fund ... is selling its crown jewels," Chavez said during a speech at a military parade.
"The International Monetary Fund is selling what gold it has left to be able to pay salaries," Chavez said. "We could give a loan to the Monetary Fund. ... We could buy some gold bars. ... I think they're selling gold cheap."
Chavez spoke as the IMF and World Bank were holding weekend discussions in Washington. One proposal on the agenda would trim 15 percent of the IMF's staff and sell about US$11 billion (euro7 billion) in the institutions' vast gold reserves.
A vociferous critic of the U.S. government, Chavez also has long opposed the policies of the IMF and the World Bank. He called the IMF "the financial arm of the empire."
The leftist leader spoke during a parade marking the anniversary of a failed 2002 coup that briefly drove him from power. He accuses U.S. President George W. Bush's government of being behind the coup, which U.S. officials deny.
Speaking to troops, Chavez said of the U.S.: "It's an empire in decline, but it's still very dangerous."
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Monday, April 7, 2008
China Update and Recap
Recap
Update
Thursday, March 6, 2008
Chinese Investments
I have researched ways to invest in China and would like to focus on two interesting companies in this post. These companies should continue to do well as commodities surge ahead and the price of food staples and energy continue to rise. I chose to focus on companies whose shares can easily be purchased on American exchanges making the research, buying, and selling easy money and a good introduction to investing in China. Both companies also share interesting names that at first glance may lead you to wonder if they are in fact Chinese companies.
The first company is American Dairy, Inc. ticker symbol ADY on the NYSE. This dairy company is not actually American , but a holding company for Feihe Dairy Company and a few other wholly owned subsidiaries which are all Chinese. They produce a variety of milk and soy milk products for sale in China. Their shares trade near 52 week lows as does most of the market, however, most food commodities have seen shortages and price increases and I believe ADY's products will see similar increases. They continue to grow revenues over 50% while only increasing production 35%! This will eventually trickle down to income growth and make a big impact on their stock price. Also keep in mind that everyone is looking for commodity plays, especially in BRIC countries, and will eventually find ADY in the process. Full Disclosure: I am currently purchasing shares of ADY.
The second company is Canadian Solar, ticker symbol CSIQ on the Nasdaq. This Solar company is incorporated in Canada, but conducts all of it's manufacturing operations in China. They announced great numbers and gave a great outlook for the future blowing away expectations and drove the shares higher. It's important to note that the majority of their sales are to Europe (97.3%) with only 2.3% coming from Asia and less than half a percent from the U.S.! Solar power is the future of energy and has spread like wild fire throughout Europe and Asia. In case you didn't know China uses more household solar energy per capita than any other country in the world! I would like to get in this stock around the $20/share or less price so I am waiting for the recent news to wear off before jumping on this one.
Bonus companies: I'm going to throw in a couple more Chinese solar plays. Solar was the darling of the market a year or more ago, but they have been thrown under the bus along with other energy plays over the past six months or so which has done away with all the speculators. Solar sales meanwhile have increased as the shares have gone down creating some attractive buying opportunities. Trina Solar ticker symbol TSL. This stock has been hammered despite having over 150% revenue growth and over 250% income growth! Another entry is LDK Solar ticker symbol LDK. Another stock that has been hammered even with almost 400% revenue growth and over 100% income growth!
Please take a look at the stocks mentioned in this post and leave some comments to let me know what you think, Thanks.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances
The first company is American Dairy, Inc. ticker symbol ADY on the NYSE. This dairy company is not actually American , but a holding company for Feihe Dairy Company and a few other wholly owned subsidiaries which are all Chinese. They produce a variety of milk and soy milk products for sale in China. Their shares trade near 52 week lows as does most of the market, however, most food commodities have seen shortages and price increases and I believe ADY's products will see similar increases. They continue to grow revenues over 50% while only increasing production 35%! This will eventually trickle down to income growth and make a big impact on their stock price. Also keep in mind that everyone is looking for commodity plays, especially in BRIC countries, and will eventually find ADY in the process. Full Disclosure: I am currently purchasing shares of ADY.
The second company is Canadian Solar, ticker symbol CSIQ on the Nasdaq. This Solar company is incorporated in Canada, but conducts all of it's manufacturing operations in China. They announced great numbers and gave a great outlook for the future blowing away expectations and drove the shares higher. It's important to note that the majority of their sales are to Europe (97.3%) with only 2.3% coming from Asia and less than half a percent from the U.S.! Solar power is the future of energy and has spread like wild fire throughout Europe and Asia. In case you didn't know China uses more household solar energy per capita than any other country in the world! I would like to get in this stock around the $20/share or less price so I am waiting for the recent news to wear off before jumping on this one.
Bonus companies: I'm going to throw in a couple more Chinese solar plays. Solar was the darling of the market a year or more ago, but they have been thrown under the bus along with other energy plays over the past six months or so which has done away with all the speculators. Solar sales meanwhile have increased as the shares have gone down creating some attractive buying opportunities. Trina Solar ticker symbol TSL. This stock has been hammered despite having over 150% revenue growth and over 250% income growth! Another entry is LDK Solar ticker symbol LDK. Another stock that has been hammered even with almost 400% revenue growth and over 100% income growth!
Please take a look at the stocks mentioned in this post and leave some comments to let me know what you think, Thanks.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances
Wednesday, February 13, 2008
What's in the Works?
What's in the Works?
You may be wondering what I am currently researching for investments so here is a taste of what's in the the works.
China
The most exciting area for investment that I'm researching is China. Last year I made over a 60% gain investing in Hang Seng and Shanghi market ETFs! This was after being down over 20% shortly after making the initial investment! How is that for market volitility and amazing growth potential? Being a prudent trader, profits were taken and I currently don't own any Asia specific stocks or ETFs. I am, however, now looking at individual stocks in Asia and especially investigating converting my "falling" U.S. dollars into Chinese rinmenbi and Hong Kong Dollar denominated assets which have no where to go but up. I heard an interesting analogy recently that put this opportunity into perspective; China now in 2008 is much like the United States of 1908, poised for a century of astonishing growth. Stay tuned for where and how I will be investing in China.
Property
Right now is a great opportunity to purchase property at significant discounts compared to just a year or two ago. The whole mortgage meltdown has caused mass panic by everyone, even those who are in areas that should stand the test of time. Interest rates are low and even the conforming limit has been raised making purchases in the bay area possible at low interest rates. I am currently searching daily for short sale and foreclosure opportunities in San Francisco and have found some properties that are even cash flow positive in some cases due to the discounts which is unheard of in the city by the bay. Stay tuned for more on these "fire sale" opportunities.
Strategy Lab Update
Okay, it has been a while since my last post so here is the latest update.
The strategy lab contest is too time consuming to use and not a good format for anyone to follow my trades and blogs in one spot. First off there are three different sites to visit, the strategy lab open site, the marketocracy site to manage portfolio, and a site to enter blogs for the contest. Then there isn't any easy way, that I can find, to view all of my information in one place. I have to log on Marketocracy to view my portfolio and log on to strategy lab to view blogs. The link I posted originally is supposed to be my home page for the contest to show my blogs and portfolio but it doesn't show anything!
I have to give this contest format a big thumbs down!
The strategy lab contest is too time consuming to use and not a good format for anyone to follow my trades and blogs in one spot. First off there are three different sites to visit, the strategy lab open site, the marketocracy site to manage portfolio, and a site to enter blogs for the contest. Then there isn't any easy way, that I can find, to view all of my information in one place. I have to log on Marketocracy to view my portfolio and log on to strategy lab to view blogs. The link I posted originally is supposed to be my home page for the contest to show my blogs and portfolio but it doesn't show anything!
I have to give this contest format a big thumbs down!
Friday, February 1, 2008
Strategy Lab Open Day 1
Well today I found out how little I know about using the Marketocracy system. I woke up early to try and make my initial buys before work and it seemed to take ages for each page to download, maybe due to volume, so I didn't have time to fully read about trading on the system. As you will see below not all of my trades went off as planned, I wrote the notes this morning before the market opened. This weekend will provide some time to look at more opportunities to invest and plan buys for Monday.
Buy Citi Bang
Although a big move upwards has already taken place since hitting $24 a share less than a month ago. Common sense says when the Fed cuts rates banks prosper. Also remember that Citibank has taken some of the largest write downs for bad debt out of all the financial institutions so the worst may be behind Citi. And who's to say some of that bad debt won't be resurrected by all of the emergency action being taken in the economy?
Why Citibank?
On top of all of the reasons other banks have for increasing in value Citibank has an interesting break up possibility looming that would unlock even more value for the shareholders.Insider purchase by Manuel Mora at $27 of five million dollars also indicates strong belief that this stock is going higher!
I placed an order to buy at the current price listed but the purchase didn't go through. New order will be placed for "market order" on monday, might pay too much but I want to be sure the buy goes through.
Buy Googlicious
Google is on sale after narrowly missing so called expert analysts estimates. It is important to note that Google was still up substantially in profit and income. Considering the poor economic conditions everyone has been facing I guess this answers the question of how they will do in a bad economy; Better than everyone else but not as good as so called experts would like. This is a great opportunity to buy a great company. Common sense says that if you can buy the best on sale it's time to buy and I'm going to do just that.
Why is it on Sale?
Let's look at why they missed. They mentioned spending almost 700 million in capitol expenditures in the fourth quarter alone on data centers, servers, and other equipment. If anyone is following Google as a company they would know that they are currently investing heavily in the future so this isn't a bad expenditure by any means.
What Makes Sense?
They are building these giant, nuclear power plant looking, "data centers" in key locations that are paving the way to future worldwide domination of internet search, online software, and internet computing as a whole. Google also has a moat around itself, as Buffett would say, as most people use the word Google when referring to searching for anything on the internet. Common sense says we are witnessing the changing of the guard right before our eyes from Microsoft domination to Google domination and we should partake in the festivities by buying shares of GOOG.
Update: Mr. Softy fires back at Google with a bid to buy Yahoo! This gave us an even better price as the day went on to buy more GOOG.
Buy Mickey D's
This is another great company that has taken a beating in this down market and should be bought. MCD has dropped ten points over the past month since hitting its 52 week high back in December. Although MCD has already had a 5% move up in the past few days it will continue to draw in investors because of its attractive price. Common sense says when you can get a Big Mac on the dollar menu it's time to eat!
Buy SLV
Silver has been under the radar, so to speak, as the record prices in Gold and Platinum have taken all of the headlines. Silver has "quietly" gained over 15% during this period to its current level of $16.90. Does anyone know where silver was at the last time gold hit its old record of $850 in the 1980's? I do, silver was over $49 per ounce at the time! Right now gold is at an even higher level and silver is less than half of its previous high. My bullion dealer has a hard time keeping silver in stock and is convinced that silver will soon see $20+ per ounce. I have to agree with him and from its current level that would be an almost 20% gain. Common Sense says the Fed will continue to sacrifice the dollar to try and save the housing market which will result in higher precious metal prices.
Buy GLD
I will be using GLD as my "money market account" and you can see why here
Disclosure: I am currently buying, selling, and own all of the stocks mentioned above.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Thursday, January 31, 2008
Strategy Lab Open
Strategy Lab Open
I am anxiously awaiting the start of the Strategy Lab Open. This will be the first time for me to put my investment strategy to the test against other highly educated investors on a stage such as this starting on February 1, 2008. My portfolio and blog can be seen and tracked here. Generally, my investment methods are for "safer", lower risk investing that takes a little time to show returns. Hopefully, I will be able to take enough risk at times to create the big returns needed to show well in a competition like this. So follow along with me and learn the basics of my common sense investing strategies!
Common Sense Makes Money
My investment theory is simple in nature, but, not so simple to follow for people who fall victim to popular sentiment, experts, and media hype. It involves good old fashion common sense. Common sense can't be learned in a college curriculum, but can be worked on through rationalization in real life. Think about your own life and how many times "experts" or the media told you to invest in something even though you knew it didn't make sense. Did you follow the herd anyway or did you use your common sense to stay away? Common sense enabled some investors to avoid the slaughter of dot-com stocks that started in early 2000 and is making some investors a lot of money in gold and silver as the dollar is sacrificed by the Fed. Lack of common sense investing has led investors to huge losses in mortgage backed securities as all of this "junk debt" is rearing its ugly head.
What Prevents Common Sense Investing?
Far too often people are easily swayed by popular opinion, "expert" analysts, or even worse the latest headlines. It is like a self-fulfilling prophesy when an investor hears negative remarks by fellow investors, believes in them, and begins to make bad investment decisions because of it. The same bodes true for investors that buy into "hype" and foolishly positive market sentiment that causes them to believe that they can do no wrong. If you have made a decision on an investment and believe that the reasons for making the investment are still sound use your common sense and stick with it. Next is an article I read recently, Max and the hot dog stand, that really hammers home the need for common sense investing.
Max and the Hot Dog Stand
Max worked seven days a week building the business of his little hot dog stand. He kept the place sparkling clean, offered terrific hot dogs and gave each customer a dose of friendly banter. His sales grew and grew, he reinvested his profits, hired more employees, extended his operating hours and even advertised on radio: "Max's hot dogs.... Fresh, fast and fabulous."
Business kept growing at a rapid pace. Then one day Max's son came home from college, where he was studying economics. The boy said, "Dad, don't you know there's a recession sweeping the country? You'd better ease off the expansion, fire some of your employees, reduce your operating hours and stop advertising on the radio."
"But," Max said, "Business is terrific."
"Listen to me," said the son, "This recession is real, and you'd better recognize it."
So, Max cut back on reinvesting in the business, fired many of his employees, reduced his operating hours and stopped advertising on the radio.
A few months later, the boy called from college and asked how the hot dog business was doing.
"Well," said Max, "you were right. Business is terrible. I'm glad you told me how to react to the recession."
Full Disclosure: All of the stocks that I use in this contest are stocks I am currently buying, selling, or considering buying and selling myself.
Easy Money Management's editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances
I am anxiously awaiting the start of the Strategy Lab Open. This will be the first time for me to put my investment strategy to the test against other highly educated investors on a stage such as this starting on February 1, 2008. My portfolio and blog can be seen and tracked here. Generally, my investment methods are for "safer", lower risk investing that takes a little time to show returns. Hopefully, I will be able to take enough risk at times to create the big returns needed to show well in a competition like this. So follow along with me and learn the basics of my common sense investing strategies!
Common Sense Makes Money
My investment theory is simple in nature, but, not so simple to follow for people who fall victim to popular sentiment, experts, and media hype. It involves good old fashion common sense. Common sense can't be learned in a college curriculum, but can be worked on through rationalization in real life. Think about your own life and how many times "experts" or the media told you to invest in something even though you knew it didn't make sense. Did you follow the herd anyway or did you use your common sense to stay away? Common sense enabled some investors to avoid the slaughter of dot-com stocks that started in early 2000 and is making some investors a lot of money in gold and silver as the dollar is sacrificed by the Fed. Lack of common sense investing has led investors to huge losses in mortgage backed securities as all of this "junk debt" is rearing its ugly head.
What Prevents Common Sense Investing?
Far too often people are easily swayed by popular opinion, "expert" analysts, or even worse the latest headlines. It is like a self-fulfilling prophesy when an investor hears negative remarks by fellow investors, believes in them, and begins to make bad investment decisions because of it. The same bodes true for investors that buy into "hype" and foolishly positive market sentiment that causes them to believe that they can do no wrong. If you have made a decision on an investment and believe that the reasons for making the investment are still sound use your common sense and stick with it. Next is an article I read recently, Max and the hot dog stand, that really hammers home the need for common sense investing.
Max and the Hot Dog Stand
Max worked seven days a week building the business of his little hot dog stand. He kept the place sparkling clean, offered terrific hot dogs and gave each customer a dose of friendly banter. His sales grew and grew, he reinvested his profits, hired more employees, extended his operating hours and even advertised on radio: "Max's hot dogs.... Fresh, fast and fabulous."
Business kept growing at a rapid pace. Then one day Max's son came home from college, where he was studying economics. The boy said, "Dad, don't you know there's a recession sweeping the country? You'd better ease off the expansion, fire some of your employees, reduce your operating hours and stop advertising on the radio."
"But," Max said, "Business is terrific."
"Listen to me," said the son, "This recession is real, and you'd better recognize it."
So, Max cut back on reinvesting in the business, fired many of his employees, reduced his operating hours and stopped advertising on the radio.
A few months later, the boy called from college and asked how the hot dog business was doing.
"Well," said Max, "you were right. Business is terrible. I'm glad you told me how to react to the recession."
Full Disclosure: All of the stocks that I use in this contest are stocks I am currently buying, selling, or considering buying and selling myself.
Easy Money Management's editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances
Wednesday, January 30, 2008
Investment Opportunity
Investment Opportunity - Silver
Okay so if you’ve been following along we’ve made over 17% on Citibank preferred shares (Full disclosure: I own Citi preferred shares and C), over 20% on Gold (Full disclosure: I own GLD and actual gold). I am not currently taking profit in Citi preferred shares as I would like to continue collecting that great dividend from them. I have taken some profit in GLD and gold, but, let’s face it gold is going to $1000 so I am going to stay invested in it and collect that next 7%. As I mentioned before the fed seems content with sacrificing the dollar to try and save the housing market which will continue to help these two investments and will help my next reccommendation.
Why Silver?
Silver has been "under the radar" so to speak as the record prices in Gold and Platinum have taken all of the headlines. Silver has "quietly" gained over 15% during this period to its current level of $16.75. Does anyone know where silver was at the last time gold hit its old record of $850 in the 1980's? I do, silver was over $49 per ounce at the time! Right now gold is at an even higher level and silver is less than half of its previous high. My buillion dealer has a hard time keeping silver in stock and is convinced that silver will soon see $20+ per ounce. I have to agree with him and from its current level that would be an almost 20% gain.
How to Buy Silver.
Buying silver is similar to buying gold in that you can buy the actual metal in the form of coins or bars and also in the form of an ETF
or by purchasing shares of a silver mining company. I currently own and I am buying coins, bars, and shares of SLV. If you are going to buy coins or bars please consult your professional coin dealer otherwise I think your'e best buy is shares of SLV which are actually ownership shares of silver. If you need more info on a trustworthy coin dealer or on buying silver please email me.
or by purchasing shares of a silver mining company. I currently own and I am buying coins, bars, and shares of SLV. If you are going to buy coins or bars please consult your professional coin dealer otherwise I think your'e best buy is shares of SLV which are actually ownership shares of silver. If you need more info on a trustworthy coin dealer or on buying silver please email me.Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Monday, January 28, 2008
Monday Mantra - “Managing to have a sense of humor makes it a lot easier to manage the ups and downs of the market"
Monday Mantra “Managing to have a sense of humor makes it a lot easier to manage the ups and downs of the market”
With all the attention that has been on the economy and the stock market the past few weeks, I found an article of humor that I found pretty amusing. I hope it helps you keep perspective and humor no matter the situations going on in the economy.
The Stock Market Report
Helium was up, feathers were down, paper was stationary.
Fluorescent tubing was dimmed in light trading. Knives were up sharply.
Cows steered into a bull market. Pencils lost a few points.
Hiking equipment was trailing.
Elevators rose, while escalators continued their slow decline.
Weights were up in heavy trading.
Light switches were off.
Mining equipment hit rock bottom.
Diapers remain unchanged.
Shipping lines stayed at even keel.
The market for raisins dried up.
Coca-Cola fizzled.
Caterpillar stock inched up a bit.
Sun peaked at midday.
Balloon prices were inflated.
Charmin touched a new bottom.
Batteries exploded in an attempt to recharge the market.
Sunday, January 27, 2008
Federal Reserve Rate Impact
If you have been following the recent developments with regards to the Federal Reserve rate cuts you may be wondering what it all means for us. The “emergency” rate cuts put into effect by the Fed chairman on Monday are currently creating some favorable situations in the home lending market. The most obvious impact the cuts have made is in the home equity line of credit rates. Also known in the industry as a HELOC, this type of loan enables you to open a line of credit against the value of your home. The two most common amounts of $30,000 and $50,000 have had a dramatic decrease in interest rate since the cuts. The $30k loan has gone from 6.85% last week all the way down to 6.30% this week on average. The $50k loan has gone down even lower; from 6.35% last week to 5.60% this week on average! What a time to take money out via a HELOC for investment purposes! The best news, however, may be yet to come. This week the Fed will have an “official” meeting that may result in even further rate cuts which would made a HELOC loan even more attractive.
Investing with a HELOC
While most people use a HELOC for upgrading or remodeling their current home or buying a new car the best thing to do is invest it. When rates on a HELOC drop they inevitably create a larger margin between the cost of the money and the rate of return on investing it. You could invest it in other rental property, a small business, or even use it to buy some of these stocks that are currently on sale. If you or anyone you know might be interested in learning about how to Use equity to invest
profitably please contact me via email.Friday, January 25, 2008
Make Money Now!
Prosper
I want to let everybody know that Prosper has a promotion going on right now for new lenders and borrowers! If you sign up now, by clicking on my link, you will receive $25 sign-on bonus if you are a lender and $35 if you are a borrower! If you have been “on the fence” now is the time to join. Free money, a great rate, and a great member driven financial institution are all waiting for you! With the decline of interest rates on CD’s offered by banks, this is a great way to increase your interest income. Need some more information on P2P lending or borrowing? Check out my blog from lasty November or even consider reading How to lend money to friends you've never met and as always feel free to email me if you need more information. Offer ends June 30, 2008!!
I want to let everybody know that Prosper has a promotion going on right now for new lenders and borrowers! If you sign up now, by clicking on my link, you will receive $25 sign-on bonus if you are a lender and $35 if you are a borrower! If you have been “on the fence” now is the time to join. Free money, a great rate, and a great member driven financial institution are all waiting for you! With the decline of interest rates on CD’s offered by banks, this is a great way to increase your interest income. Need some more information on P2P lending or borrowing? Check out my blog from lasty November or even consider reading How to lend money to friends you've never met
and as always feel free to email me if you need more information. Offer ends June 30, 2008!!Monday, January 21, 2008
Monday Mantra - "Buy Low, Sell High"
“Buy Low, Sell High”
Buy low and sell high is a phrase that has often been heard, but, not often followed in the investing arena. It seems like an easy rule to follow, buy stocks or real estate when they have declined in price more than value and then sell when the price advances above the value. Even experienced investors talk a good game about buying low and selling high only to actually do the opposite. Think about it; when everyone is excited about buying property or stocks it is usually when the prices are high and everyone is driving the price higher. When people are afraid or worried and selling it is when their property value is down or in decline and their stocks are down or declining. Think about your own situation; are you worried that the stock market is down 15% from its high in the past year and selling? Have you seen housing values decline 30% or more in some areas and thought about selling your home or investment property? If you followed this simple saying you would look at these situations as “fire” sales and want to be a buyer of these investments.
Buy low and sell high is a phrase that has often been heard, but, not often followed in the investing arena. It seems like an easy rule to follow, buy stocks or real estate when they have declined in price more than value and then sell when the price advances above the value. Even experienced investors talk a good game about buying low and selling high only to actually do the opposite. Think about it; when everyone is excited about buying property or stocks it is usually when the prices are high and everyone is driving the price higher. When people are afraid or worried and selling it is when their property value is down or in decline and their stocks are down or declining. Think about your own situation; are you worried that the stock market is down 15% from its high in the past year and selling? Have you seen housing values decline 30% or more in some areas and thought about selling your home or investment property? If you followed this simple saying you would look at these situations as “fire” sales and want to be a buyer of these investments.
What does this mean?
All investors agree that buying low and selling high is a great idea, at times this can also become buying high and selling higher. Curiously, a declining stock price or home value doesn’t seem to attract many buyers. In fact it often times results in just the opposite and even selling by people who already own it. This is contrary to the belief in buying low and selling high and even contrary to the purchasing habits of smart shoppers in general. Suppose you are shopping and find a nice watch you are interested in buying that is selling for $1500 in a jewelry store. You want the watch but as a smart shopper you want to find the best deal. If the following week the store advertised it at $1600 would you feel compelled to purchase the watch at this higher price? Unbeknownst to many investors this is exactly what they do when “panic” selling as an investment goes down and “excitement” buying as the investment goes up, the opposite of smart investing. A smart shopper would wait for that watch to go on sale for $1400 so that they may purchase $1500 worth of watch for $1400. This is just as an intelligent investor would identify an investment they want and wait until it is on sale so they can get what they want at a cheaper price.
All investors agree that buying low and selling high is a great idea, at times this can also become buying high and selling higher. Curiously, a declining stock price or home value doesn’t seem to attract many buyers. In fact it often times results in just the opposite and even selling by people who already own it. This is contrary to the belief in buying low and selling high and even contrary to the purchasing habits of smart shoppers in general. Suppose you are shopping and find a nice watch you are interested in buying that is selling for $1500 in a jewelry store. You want the watch but as a smart shopper you want to find the best deal. If the following week the store advertised it at $1600 would you feel compelled to purchase the watch at this higher price? Unbeknownst to many investors this is exactly what they do when “panic” selling as an investment goes down and “excitement” buying as the investment goes up, the opposite of smart investing. A smart shopper would wait for that watch to go on sale for $1400 so that they may purchase $1500 worth of watch for $1400. This is just as an intelligent investor would identify an investment they want and wait until it is on sale so they can get what they want at a cheaper price.
What does this mean to us?
With this mantra in mind we may want to look at current opportunities or “sales” that are going on in the stock and housing markets today. If you were looking at investing in property before there may be a good “discount” on that same property today. The same holds true for stocks. If you had your eye on a particular stock last year or even just getting started in stocks last year due to the record highs now may be a good time to invest as many good stocks are on sale right now.
What's on sale?
Currently there are many opportunities in high dividend paying trusts and preferred stocks. They are on sale right along side all of the other stocks yet still pay the same dividends they paid when the stock price was much higher resulting in a much higher yield percentage on your investment. There are also many opportunities in big city (SF, NY, Chicago, Seattle, etc.) real estate. San Francisco for example hasn’t seen a downturn in prices like much of the country but the market has turned into a buyer’s market, due to fewer buyers, and makes it a favorable time to buy.
Currently there are many opportunities in high dividend paying trusts and preferred stocks. They are on sale right along side all of the other stocks yet still pay the same dividends they paid when the stock price was much higher resulting in a much higher yield percentage on your investment. There are also many opportunities in big city (SF, NY, Chicago, Seattle, etc.) real estate. San Francisco for example hasn’t seen a downturn in prices like much of the country but the market has turned into a buyer’s market, due to fewer buyers, and makes it a favorable time to buy.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.
Monday, January 14, 2008
Monday Mantra - "A bird in the hand is worth two in the bush"
“A bird in the hand is worth two in the bush”
It is better to accept or be content with what one has than to try to get more and risk losing everything. The thing that you already have is a bird in the hand; the things you want but don't have are two (birds) in the bush. You should not risk losing what you have by trying to get something that you don't have. This phrase is very important in the world of creating and preserving wealth and it is a rule that I use often by booking profits in many types of investments. Sometimes we may miss more profits by taking the “bird in the hand” so if the investment still looks promising I will generally take part of my profits and leave the rest invested in case the “two in the bush” decide to make their way towards my hand.
In November I covered gold as an investment opportunity and a few ways we could easily invest in gold. At the time gold was down from its high and below $800 per ounce; it was a great buying opportunity that many people took advantage of. Since then gold has spiked more than 12.5% and shows no sign of slowing down on its march toward $1000. There were many forces acting upon the price of gold that suggested that we would see a spike in price. Many of these forces are still in place, but, as our Monday Mantra says we may need to book some, but not all, profits in gold while we still have them.
It is better to accept or be content with what one has than to try to get more and risk losing everything. The thing that you already have is a bird in the hand; the things you want but don't have are two (birds) in the bush. You should not risk losing what you have by trying to get something that you don't have. This phrase is very important in the world of creating and preserving wealth and it is a rule that I use often by booking profits in many types of investments. Sometimes we may miss more profits by taking the “bird in the hand” so if the investment still looks promising I will generally take part of my profits and leave the rest invested in case the “two in the bush” decide to make their way towards my hand.
In November I covered gold as an investment opportunity and a few ways we could easily invest in gold. At the time gold was down from its high and below $800 per ounce; it was a great buying opportunity that many people took advantage of. Since then gold has spiked more than 12.5% and shows no sign of slowing down on its march toward $1000. There were many forces acting upon the price of gold that suggested that we would see a spike in price. Many of these forces are still in place, but, as our Monday Mantra says we may need to book some, but not all, profits in gold while we still have them.
Easy Money Management’s editorial goal is to provide a forum for personal finance and investment ideas. My blogs and other features should not be construed as investment advice. An investor's best course of action must be based on individual circumstances.