Easy Money Management

Updates

2010-10-05T22:01:00.001-07:00

Time to update some of my positions, first up Gold!

Gold

May 17, 2010 I posted the expectation of gold reaching $1300 for 2010 and it has blasted through that mark recently. If you have been in gold long enough to catch a double it is time to take some profits at these levels. Diversification is the key to long term investing so if you had 10-20% of your portfolio in gold as I have,it will have swollen to 20-40%!! Always re balance as portions of your portfolio need it. The cash raised from profit taking in gold can be used for equities if our stock market makes it's way back down to the bottom of the range it has been trading in the past year or so. Personally I am selling a little at this level to raise cash levels.

American Dairy (ADY)

If you took my August 18, 2010 research and opinion to "double down" on ADY at the $7 level then the 40% run up the stock has had the past month and a half was good for us both. I do still have ITM options $10 and $12.50 expiring this month but I can take a few shares off the table at a 28% profit to roll the options forward while we await the next ER. We do need to watch this one closely as there may be another short attack of the stock and unfounded fraud news from traders trying to make a buck as we saw with ONP. If you are ahead after this last run up just take your profits now and work on the next move.

Veolia Environment (VE)

All of the long term holdings I posted about on June 23, 2010 have had a good run since then except VE. It has been flat trading in a narrow range which is great for options selling, but as a long term holding we expect to see a little upward trend over the period. I still like VE and it will maintain a place in my long term holding portfolio, but need to up my selling of options on this one!

Orient Paper (ONP)

This one is a thorn in my side right now. Even though I have made good money on this one and believe the company to be in good standing it's recent performance has been lackluster to say the least. I have learned that thinly traded, small cap, foreign stocks can be manipulated by rouge traders rather easily so I must keep an eye on all of my holdings that fit this bill and watch the short positions to try and spot the news/trade coming.

China State Construction International Holdings Ltd (CCOHF.PK)

I haven't posted about this one, although I did give this one to a few friends in conversation. The reason for not posting this one is simple; It's a very risky, thinly traded, Chinese construction stock. Information is very difficult to get for this one as well. This post will be informational about my position and trades for those that may have bought after I mentioned to them or to show how risky these are to trade. Having accumulated 5000 shares over a period of time at an average cost of .385/share (yes it trades three decimal places at times) and seeing the stocks volume start to pick up I set a limit sell order at .70 for 1000 shares and sure enough the stock started rising the very next day going from .62 to .66 and finally .70 today and my order filled. Not sure who is accumulating the shares at the moment, but the volume and activity has increased substantially in the past two weeks so if you are holding and have a profit it may be time to cash some in.

ADY

2010-08-18T22:58:00.001-07:00

American Dairy (ADY) has hit the skids recently so it is time to assess our position and try to see where the stock is headed. I still have a small stock position in my investment account with shares dating back as far as my original purchase in July of '08 at a cost of $7.08/share. These shares were free as the stock quadrupled I sold most in stages along the way to lock in gains and kept a small position as a trophy and to try and keep abreast of the stock with annual reports in case I begin considering a position again. This, in addition to my analysis of the stock in its current state, should help give us a good gauge on how to go forward with this one.

My most recent re-position in ADY with my options trading account has me into 100 share at a total cost of $11.35/share and an ITM put option at $12.50. With the stock breaking it's 52 week low (closing as low as $7.69) nearly everyday it's time to decide if I should "double down" or cut my losses. My original position 2 years ago committed me to the stock only about 7% lower than where we are currently at and I believed that was a great bargain at the time so let's look at what state the company is in today as compared to then.

In 2008 ADY was coming off a tough year with EPS down quite similar to what they are in now. Price to book was about 2 for the year also similar to now. Gross profit is double what it was then and I believe the total year earnings will continue to the positive side as the people owning a majority of the shares also run the company and therefore have a vested interest in see the share price recover.

If we adjust for the Milk scare that happened in China that significantly affected ADY's revenues and earnings positively they have made a nice steady increase in revenue over the years and it looks like they are setting up for that to continue. The negative earnings report this past quarter was all due to increased expense or more specifically spending on further increasing capacity, quality, and advertising. One third of the increase was basically marketing so they are obviously trying hard to build demand since they upgraded capacity in 2009. Their raw milk costs also increased due to their maintaining quality as they made big money for having high quality product when all the others had tainted milk before in the last scare.

Bottom line is I don't foresee the negative earnings to continue through the year let alone the next quarter. Estimates are -.04, but I am betting on a positive number by next quarter. I am looking to double down at this point ahead of the next Q EPS report and if it comes back positive as I expect then I will add to the position again. If it reports negative again then I might start considering an exit at that time.

ONP Pounded to Pulp

2010-07-15T16:59:00.000-07:00

Another negative report, from someone with a disclosed short position, further perpetuating the fraud rumor concerning ONP was published today the the stock reacted and finished down just over 11%. This tug of war between people publishing negative stories while shorting the stock and those taking long positions and publishing counter reports is making ONP a volatile stock to own.

I have made enough trading ONP's ups and downs for the past year that remaining invested in the long and short end of ONP is still worthwhile for me as an investor. If you are in the same boat as me you should keep playing along on this one as the volatility can create huge profits for us on the way up as well as the way down. If you are not in the same position, have just started a position, or have only lost money with ONP with the huge volatility I suggest that you stay clear of this stock in all forms until the smoke clears. Investing in this one with only hope will cost you.

So with all this said if you are still on the same boat with me playing the volatility of ONP to make huge gains read on.

It has been very simple with options to keep churning money out of this one. A day like today we sell OTM puts, buy a small portion of shares and when we get a pop upwards we cover the puts, sell covered calls against the stock we bought, and OTM calls. Going forward I think we need to be a little more cautious until the fraud situation is cleared up. Since we have already made money on this one it is prudent to limit our losses on selling puts by selling small OTM spreads. We also should refrain from adding any more shares for now on the huge dips.

What if this fraud report has some truth to it? The shares will get slaughtered and return to the $2-$3 level that I started buying and selling at about a year ago.

What if the fraud report is found to be false and they report blow out numbers again? The shares will climb back to the $10-$12 level.

With this valuation in mind we are looking at 50% gain or loss potential. This stock once considered a great earnings growth play has been reduced to a pure speculative play by these reports and should be treated as such. If you have other speculative plays in your portfolio, particularly Chinese, it is time to cut the cord on one of them.

ADY Buy Write

2010-07-11T11:59:00.000-07:00

Last week presented a perfect opportunity to start building a position in ADY using the buy write strategy. On Wednesday night I placed orders for shares at $14.05, sell Jan $12.50 puts for $1.50, and sell Jan $17.50 calls for $1.20. These orders were all filled Thursday as the stock went below $14 a share, reaching a low of $13.71 around lunch time, and then recovering to above the $14.40 level by the end of the day, on huge volume buying! This buy write of ADY lowered my per share price to $11.35 per share or a 20% discount.

ADY remains a great value and should see more recovery in the stock price going forward as the market begins it climb back towards the top of it's range. The huge volume buying that helped the stock recover from the $13.70 level on Thursday is a good indication that there is some big money committed to this stock at this level.

Did anyone else start or add to their position last week?

得到了牛奶吗？ (got milk?)

2010-07-02T18:10:00.000-07:00

American Dairy (ADY)

I mentioned this one back in February as a stock that I would like to start a position in again at around the $20 or less range. Back in 2008 when the Chinese milk scare annihilated every milk producing company in China ADY, a stock I owned at the time, quadrupled in price due to being the only major producer of milk products unaffected by the scare. It has retreated big time since then due in part to a bad quarter at the end of 2009 and even though the company has returned to it's profitable ways, and financial quarter, the stock has not.

My fellow investor and options specialist alerted me to the fact it is now below it's 52 week low and a prime candidate for selling a put spread. The only question now is do we play conservative with a 12.5/10 spread or play confident and put our money where our mouth is with a 15/12.50 spread? If you want to try and build an actual stock position than the Jan $12.5 put for $1.30 looks nice.

The Paper Airplane Soars!

2010-07-02T17:35:00.000-07:00

ONP rebounded just as we suspected today to the tune of 43% which has to be the biggest one day percentage gain I have ever made on a single stock and produced over $1200 in gain for me! This gain was spurred by huge volume again coupled with news calling the muddy waters research a fraud. We saw this coming yesterday after reviewing the information that came from the muddy waters report, the rebuttal from ONP, and information from other analysts that have previously done research on the company. This is why we need to constantly monitor our positions on a daily basis and review our reasons for owning the stock at least weekly.

This plane still hasn't reached cruising altitude yet so don't be afraid to book your ticket to fly the second leg of the flight. ONP is still down from the point the shady fellows at muddy waters began laying their short assault on the stock which I believe to be in the $8-$8.50 range. Couple this with the other two analysts target prices of $15 and $16/share respectively and I expect it to return to the $8-$10 range again.

The orders for Tuesday:
Sell Feb 11 $10 calls for $1.15/contract
Sell Feb 11 $12.5 calls for $.70/contract
Sell more Nov $5 puts for $.70/contact

If you don't yet have a position in ONP I would consider selling the Nov $7.5 puts for $1.75

Anyone else have origami paper plays?

Orient Paper Torn to Shreds!

2010-07-01T21:21:00.000-07:00

Today Orient Paper (ONP) finished down almost 24% and was down over 30% for a period of time this morning. As you may remember I managed to book over 20% profit in this stock and also sold $12.50 calls for $1.15 per contract on my remaining shares back in April. ONP getting torn to shreds today allowed me to buy back all my $12.50 calls and $15 calls for .05 each booking $1.10 in profit for the $12.50 calls and .90 for the $15 contracts. I also sold $5 puts at $1.10 per contract. It would have been possible to get more, however I was greedy and placed a limit order at $1.50 and it didn't fill so I ended up chasing it down to $1.10.

This really shows the advantage an options seller has when investing in stocks. The shares I have remaining in ONP cost me $8.28/share at the end of March quickly went up 20+%, Which enabled me to sell a portion of shares for a quick profit, but more importantly sell OTM calls at a good premium. The $8.28/shares now are discounted by the $1.10/share I made for the $12.50 calls, .90/share made for the $15 calls and now $1.10/ share more for the $5 puts sold today. This brings my cost basis down to $5.18/share reducing my exposure to today's big plunge down to $5.09 and more importantly protecting the profit I made off of the portion of shares I sold after the 20% move up back in April!

Now for the even better stuff! The reason ONP went up in flames today was unsubstantiated claims made about the company by a couple of investors who bought heavy short positions just prior to making the claims. They preyed on a fear that most people investing in Chinese stocks area afraid of, inaccurate reporting of numbers in financial statements. You can read more about the story here . Looks to me that they succeeded and made a lot of money in doing so, but the large amount of volume as the stock started to recover from it's lows just before lunch time shows they are booking profits and the stock will recover. This will be a great opportunity for us to make even bigger profits when news that the claims made were unsubstantiated and the short positions are covered.

The Trade:
Sell the NOV $5 put for $1.00 or initiate a position at around the $5 level and wait for this paper airplane to soar!

Update: Might be too late if you didn't take advantage today! Just found this on a site posted 1hr ago, Orient Paper Inc (NYSE:ONP) shares jumped 19.65% in after hours trading on volume of 11,942 shares traded.
Anyone know how to verify the after hours pricing?
Verified by Yahoo finance:

Orient Paper, Inc. NEW Common S

(AMEX: ONP)

After Hours: 6.09 1.00 (19.65%) 7:59PM EDT

Options on Down Days

2010-06-29T19:51:00.000-07:00

With the huge stock slide today it's time to review our options basics to take advantage of these opportunities. When the market makes a big move downward like this it is prime time for selling puts for larger than normal premiums and buying back OTM calls for pennies on the dollar.

I keep a list of stocks that belong in my portfolio and use these "fire sale" days like today to try and sell puts against these securities for more money than I would have gotten otherwise. The benefits are two fold; There is a chance the stock drops more and get the stock at a huge discount or the stock rises back to normal levels and the option expires worthless and I keep the larger than normal premium.

My conservative put sale order:
VE Jan $20 for 1.05, This is one I discussed in the last post as a key long term holding that you have to own and with this sale the worst that can happen is you own the stock for $19 which is a 20% discount from todays price and would make the yield 9%!!

My risky put sale order:
RINO Dec $7.50 for .85, Owning this stock for $6.70 would be great, but be careful what you wish for with these highly volitile Chinese stocks. If you don't have a fun, high risk/high reward, speculative stock this one is worth playing.

If you sold calls 500-700 dow points ago like I did then instead of waiting for them to expire you could buy them back and book the income now. This will help you put more of your buying power to work selling more options for more premiums. If you sold a call that expires more than a month or two in the future and you can buy it back for 10% or less of the premium you paid the prudent move is to do so.

My call closing order:
ONP Nov $15 at .05, This has been a good premium provider and was discussed in a previous post. Trying to close it out after selling for .95 premium leaving me a $90 per contract profit.

Long Term Holdings

2010-06-23T15:25:00.000-07:00

Most of my posts revolve around short term trades and option plays, but now I am going to give you my long term holdings. Long term holdings are stocks I have held or plan to hold for one year or more to capture profits from long term growth trends, dividend yield, or both. Having a long term holdings portfolio in addition to a trading portfolio and options portfolio is as key to diversification as spreading your investment in different sectors of the market. The following is a list of my favorites.

Note: A majority of my long term holdings are now becoming option plays as well through selling covered calls against the stock which is the safest way to profit from options.

Provident Energy Trust: (PVX) This is a steady income machine with an almost 10% dividend yield and has a dividend distribution monthly! Great holding for tax deferred account.

Berkshire Hathaway (BRK.B) Now that the stock has split bringing the price down to an affordable level and is option-able this is a no-brain er for a long term holding as a no fee mutual fund with the best fund manager free can buy, Warren Buffett. A quick computation shows me that The operating business is worth at least $30 a share and it's Investment portfolio at least $60 a share leaving me a value of roughly $90 a share and it is only trading at around $80 right now.

Veolia Environment (VE) This is the largest water treatment company in the world meaning it's great cash flow should continue as long as the world needs water, which is forever! It's close to it's 52 week low so we should see some appreciation in the stock while we collect that 5.5% yield.

Petro China (PTR) You know my portfolio wouldn't be complete without exposure to China. PTR has huge EPS, a good steady dividend, and a strengthening Yuan that will all help this one continue it's climb higher.

China Mobile (CHL) I round out the group with my favorite of the group and another China play. This will be the big long term mover as only about 50% of the Chinese population currently have cellular service compared with close to 90% in the U.S. so look for tens of millions of new subscribers in the next year or two. As this move happens we can collect the 3.5% dividend and sell well out of the money covered call to create income. All of this companies assets and revenue are yuan based and will appreciate in value to with the yuan.

Today's Trades

2010-05-26T15:28:00.000-07:00

Visn- Sold Jan $2.5 put at .55
I have ridden this stock to $12 taken a profit and now find my self chasing this bad boy down. Already sold $5 puts that are itm big time right now and also already sold Oct $2.5 puts. When the market recovers this one will triple for us.

GSH- Sold an Oct $15 put at $1.05
Guangshen Railway Co. Ltd, This a a stock I would like to own at some point. Good dividend yield, now near a 52 wk. low, and fills a void currently in my portfolio for transportation. Buffet is a big believer in the rails and due to my affinity for Chinese stocks this is the stock for me.

PKX- Sold Nov 80/75 put spread for $1.30
Posco Korea Steel, Another stock I have been following for awhile and as stocks have been on sale as of late it's a great time to start a position. BRK is invested at around the $75 level so I am calling a "Buffet Bottom" of $75 in the stock as the lowest this baby will go before being bought back up again. Posco has over $10 per share earnings and is the worlds most efficient steel producer getting margins other steel companies dream of. This will only get better when inflation starts taking materials prices higher.

A few orders that didn't fill today:
VE Jan 22.5/20 put spread for .80
PVX Dec 5 put for .35
Rino Dec 7.5/5 put spread .85

Today's Trades

2010-05-18T18:30:00.000-07:00

VE- Veolia is a company I have held for awhile and with the recent downturn in Europe this stock is now at great discount price. Since I wouldn't mind owning a few more shares I sold a May 25 put for .25 today. They are selling for .30 right now so I might sell another one tomorrow if I can get .35 for it. If the stock remains above $25 for the next three days I get to keep the money paid to me for the option, if it dips below $25 I get the stock at a .25 discount per share. It's like selling a limit order as my buddy Paul puts it.

VISN- So if you bought this stock as recommended yesterday you made a quick 5% today! As for me I sold an OCT $2.50 put for .35 today and closed out (bought) my July $5 calls for .15 booking a nice .50 profit!

PVX- This is one of my long term holdings that has doubled for me and continues to pay a great dividend. Today I sold a DEC $5 put for .15 which if put to me would give me the stock at about a 45% discount from today's price

VISN

2010-05-17T18:53:00.000-07:00

With VISN at $3.28, an extreme discount, right now it would be worth starting a position if you don't have one already. I am placing an order to sell OCT $2.50 puts for .35 as we speak and already have a position in the stock on the long and short side. VISN has consistently beat earnings estimates and has the most unique advertising in the world. If you were considering BIDU this might be a better alternative.

Vision China Media Inc., VISN, operates an out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China. Its advertising network consists of digital television displays located on buses and in other selected locations, such as in subway trains in Beijing, that receive mobile digital television broadcasts of real-time content and advertising. The Company also operates a stationary advertising platform in subway stations in two major cities in China: Guangzhou and Shenzhen.

The only thing better than investing in this company would be to start your own version of this model here in the US! Anyone want to partner on this?

Gold

2010-05-17T18:03:00.001-07:00

Gold has gone on another 10% run since I booked some of my profits at $1100 just over a month ago so some of you may want to look at taking some off the table at this point. Although my 2010 goal is $1300 the prudent move is to book the profit on some of your position and be one of the few investors out there making profits while the market languishes.

AAPL

2010-05-17T17:49:00.001-07:00

So with only a few days left until expiration I closed my AAPL position today at $1. Even with huge blowout earnings numbers and a tidal wave of momentum I managed to make a profit on a short AAPL options trade. If you recall I sold the options for $1.65 per share and now had to pay $1 to close it out leaving me a profit of .65 per share in less than a month's time. This gives me close to a 6% return on money put at risk, taking commissions into account, in a month's time.

AAPL and ONP Updates

2010-04-23T18:58:00.000-07:00

AAPL
So with AAPL quickly hitting my max loss today there was no sense in closing the position. I will be waiting this one out hoping to catch a break unless the 260 call gets exercised against me. Options guru Paul has generously given me some ways to try and unwind this with less pain, but thanks to ONP's 10% run today I'm just going to lick my wounds and put the money into something I know better once I close it out.

ONP
"You down with ONP?" "Yea you know me!"
ONP made a huge 10% run today and 20+% run so far this month! I know some of you have taken profits and will look to ride this train next time it pulls back which would be wise to do since this one has been going on these 20% up and downs for months now. A better play would be to sell the 12.50 calls for $1.53 (bringing your cost basis down 14%!!) to lock in profits at this level and still have potential for another 15% in profits. So if you made 20+% like I have done this month on ONP you could set yourself up for a 50% gain if the stock goes to 12.50 and gets called away!
Thanks Naughty by Nature for the inspiration and Paul for the laugh today on the OPP take!

Apple

2010-04-22T22:51:00.000-07:00

Well the past two days have been ugly for people like myself standing in front of the herd. We have been trampled by the sheep, but aren't dead yet. There are still 28 days remaining on my position and since we are inching closer to my max loss at 270 I am going to ride it out for now and not close it out as planned unless the herd retreats and I can get out anywhere near even money. Since a majority of shares are institutionally owned I am looking for prudent money managers booking profits at this point to help me out. Also there is still a good chunk of time premium being paid for these calls that will erode quickly if I can make it closer to May expiration or have downward pressure on the stock.

Updates

2010-04-15T21:34:00.000-07:00

ONP
So I managed to sell the Nov 12.50 call for $1.15 against a portion of my shares this morning. This covered call is a typical safe option play to lock in some profits in case the stock slides down again as it did today. I basically was paid $115 per contact this morning to give someone the option of buying my shares for $12.50 per share between now and November. If the shares go above 12.50 and gets calles away selling at $12.50 would leave me a 34% profit. If they never get to $12.50 I still get to keep the $115 per contract! A definite easy money play if you ask me!

AAPL
So AAPL has continued the creep higher for the past few days, about 2.5%, but is still below my break-even of $161. All the news coming out seems pretty negative like the lawsuit that could stop the sale of all AAPL's touch screen device sales, the lack of 3g devices, overseas launch delay, and the fact that they just aren't selling enough Ipads to be meaningful to the bottom line. With all this the sheep keep grazing on AAPL and even have the wool to attack any naysayers! In the next coming week, with earnings on Tuesday, we will see if the sheep get slaughtered, as I expect, or if they just trample me on their way to $170. Stay tuned this should be interesting!

ONP Alert Again!

2010-04-13T18:08:00.000-07:00

ONP has made another 17% for us and we can now take profits again. Now that Ive ridden this stock up 15%+ twice I can afford to leave some on the table in case this one runs higher. If this is your first time riding this baby take at least a quarter of your profits off the table.

Update:
Just found out from my TOS and options guru Paul that ONP has hit the options market! This is huge as it opens up a lot more ways to play this one. I will be working with Paul to try and figure out how this will affect the stock and also a few play that can be made with options. at the very least I will no longer be selling my shares as I can now sell covered calls against the shares now.

Today's AAPL Trade

2010-04-12T18:16:00.000-07:00

I am putting my money where my mouth is and making a bearish bet on AAPL today.

The order filled today: Sold May 10 260/270 call spread for $1.65 credit.

This is a very short term bet that AAPL will remain below $260 or go lower ahead of earnings this month. There may also be a possibility to make another bearish bet in the day or two immediately before earnings when IV usually reacts favorably for option sales.

AAPL Ipad Sales

2010-04-11T14:30:00.000-07:00

So I am looking at the new Ipad and how it will affect the stock of AAPL and think it will be disappointing. Apple said first day sales were 300k which is about half of what a great first day of sales would have been, based on analysts estimates of 600-700k, and on par with what they estimated to be average. Another negative comment was that 75% of the first day sales were pre-order customers so only about 75k were people buying on "impulse" and might be waiting for the 3g version like myself.

I personally was at a shopping mall that first day and stopped by the apple store. There were people playing with the demo Ipads, but no hectic line or chaos as expected on the first day of release. A few customers walked out with new Ipads, but most were just there to check it out. They also didn't have the 3g version which most likely negatively affected their sales.

Apple tried to play up the "1 million downloads" to put a positive twist on the launch, but most users know that people only pay for about half of these and mostly download all the free apps they can before actually buying any.

Verdict:
I see the Ipad adding to Apple's bottom line through the sale of devices and apps, though not as significantly as the Iphone did upon it's debut. I believe the stock to be pricing in a larger impact from the Ipad than will actually be experienced in the next quarters earnings. Dare I say that Apple will not beat earnings estimates for the first time in a while? I say it will depend on the sales of the 3g device later this month.

My recommendation: If you have a nice profit on AAPL it might be time to take some off the table at the $245-250 level.

For the record: I personally don't own any AAPL positions, but I am looking at bearish options plays and will be buying an Ipad when the 3g version hits stores.

Who Pays to Store Cash?

2010-04-05T23:01:00.001-07:00

So following my gold sale I was looking for a place to store the cash while I research and sell/buy options and found that not many banks are paying to hold your cash these days. Through my search I stumbled upon Ally bank who currently pay 1.29% for savings or money market accounts which is pretty good considering what is out there now.

Ally is an online only bank that you can link to your current bank and or investment accounts and use as a cash storage earning interest. Transfers seem to go through in 1-2 business days which is normal and I haven't had trouble in the week or so I have had the account. Opening the account was also pretty easy and was complete in one week. linking accounts took 2-3 business days to verify. All in all I am happy so far in my new cash storage bank.

If you are looking for a good rate CD or have one expiring soon that you want to roll over into a higher yielding one Ally also has a good deal on that. Here is how to take advantage:
Basically I would suggest you open one of their 5 year CD's at 2.99%. This CD has an early withdrawal penalty of only two months interest which is the most lenient you will find at any bank. Cash it out after one year and you will end up with close to a 2.5% yield after the penalty. If you keep it for two years even with the minuscule penalty you would earn over 2.9%, I challenge you to find a better 12 or 24 month CD rate than that!

ONP Alert Again!

2010-03-31T17:32:00.001-07:00

If you missed this one last week you have another chance. Last weeks buy on Monday sell on Friday netted a nice return and a buy this week should be good for another nice return after April 6.

The big news that brought the stock back down to the $8.30 level was the issue of three million shares priced at $8.25/share. This is good news for the stock as it will improve the liquidity of shares which should stimulate more volume and increase the amount of institutional investors. Also look for an analyst or two to begin covering this stock soon. Most of these shares will most likely be purchased by institutions and then resold at a nice profit.

If you are able to buy at or near this price between now and April 6 you should be in for another ride to $10. Even though I just bought and sold this stock twice already in the past month and once just last week I bought again today at $8.28.

Gold Update

2010-03-30T21:50:00.001-07:00

Well the time has come to unload some gold. After a huge run the past few years I am reducing my holdings by 10% @ $1105/oz. Although I believe gold will reach $1300/oz sometime this year I am going to start using the enormous profits made in gold to start playing with options trading. I resisted the urge to sell at $1000 twice but $1100 is just too good to let go and $1300 later this year will be my next 10% unloading point.

Alerts Updates

2010-03-28T12:55:00.000-07:00

Well in just one week ONP has risen back near the $10 level. I hope some of you were able to make some easy money on this Alert I sent out on Monday. Might be tempted to take some profits if you were able to make 10% on it last week, but I do anticipate more money to be made in this stock for the future as we can see the huge surge of volume buying that brought the stock back so quickly. This usually indicates that a large institutional buyer starting or adding to their position.

Visn on the other hand has been an option play for the week. I sold July 5 and October 5 put options for .65 and .95 cents respectively with the advice of my options guru Paul.

Two Alerts!

2010-03-22T21:48:00.000-07:00

ONP took a slide on Friday and was a great opportunity to initiate a position in the stock. Even with it bouncing back over 8% today I am trying to get in this stock before it get back to the $10 level.

VISN is another great buy right now and has option plays as well! I sold my position in this stock in November above the $9 level, after it doubled for me, and have been watching and waiting for a chance to get back in. This company has an advertising angle that is unique to any other in the world. I am going to try an option play this time to try and initiate a position and catch another double.

Paper Play

2010-02-26T19:13:00.000-08:00

So I was researching international companies to invest in and came across International Paper, symbol IP. This company is turning the corner to growth, steadily increasing cash flow, and has a great business that sells its products worldwide. It looks like with so much positive cash flow recently that they might even bring their dividend back up. My mind started wondering if there was a Chinese equivalent when I stumbled on Orient Paper.

Now Orient Paper, symbol ONP, looks incredibly cheap compared to IP, only a PE of 9 compared to IP's PE of 15, and is in a tremendous growth phase right now. ONP is well off it's 52 wk high and looks better now then it did when at it's high. They are operating at a 50% margin meaning for every ton of paper it sells they double their money! ONP revenue increased almost 70% year over year last quarter and doubled gross and net profit! Can you find any other company that is putting up growth number like these, making money, and trading at only a 9 PE? This stock is a definite buy and I am starting a position as you read this.

What do you think about the boring business of paper production? Will it get better as the economy gets better? Can you find me a better option?

China Slowing? Time to Pull Out?

2010-02-12T22:29:00.000-08:00

So all the headlines today say China is slowing lending which will slow growth and hurt our exports to them in turn slowing our recovery as well. Let's think about this rationally for a moment. What they did was increase the mandatory reserves required by lenders by a half percent. This they hope will curtail some of the wreckless lending on the part of Banks and other financial institutions similar to what happened here in the US.

The people of China don't use much if any personal credit lines as they like to pay for everything cash. Just ask the big credit card companies who have a hard time selling their wares to the Chinese people. So this move won't affect the spending habits of consumers in China in any big way.

So the question I ask is who is borrowing this "affected" credit and what sectors are the borrowers in?
Many borrowers are for real estate, won't affect our exports much, but should help to cool the inferno of a housing market they have.
Others are large companies borrowing to secure raw materials for production of products, this affects thier exports to us which are already in decline due to our depression and should help us get raw materials cheaper to make products to export to them, seems a win win for the U.S.

So I ask you, how is this small required reserve increase bad for anyones economy? If we had done anything remotely similar a few years ago we would have not had the huge bubble in housing which has bust and left us in this depression.

Hopefully these headlines will help me get some of the Chinese stocks on sale!

What I am Researching

2010-02-11T19:52:00.000-08:00

Well it's been a long time since my last post, but I am still looking in the same place for stocks to buy, China. Here's is a list of what I am currently researching:

Guangshen Railway Co. symbol GSH
Income and balance sheet look good and if Buffett thinks rails will do well in the US I can only imagine how well the rails in China will do! Chinese imports are skyrocketing as they start to use the trade surplus they have accumulated to help increase the incomes of it's people. All these imports will need the infrastructure of the rails to move these from the ports to the people and GSH will be a major beneficiary. How about an almost 3% yield to collect while you watch this rail roll?

American DairyInc. symbol ADY
This stock quadrupled for me, I took profits, no longer have a position, and now that it has retreated by about 45% I am gaining interest in building a position again. ADY is the premier Milk product company, especially for infants, in China and was not in any way involved with the tainted milk scare that happened in 2008. Looking to start a position around the $20 level.

Is this the Bottom?

2008-09-25T19:09:00.000-07:00

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?

Recession or Depression?

2008-06-30T18:01:00.000-07:00

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.

More Than Just a China Play

2008-06-11T18:34:00.001-07:00

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

Buying and Selling

2008-05-14T12:08:00.000-07:00

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.

Bank on China Update

2008-04-29T20:39:00.000-07:00

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.

Bank on China

2008-04-20T21:04:00.000-07:00

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.

Interesting Gas Facts

2008-04-16T12:09:00.000-07:00

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.

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.

Gold and Silver

2008-04-13T16:40:00.001-07:00

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.

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.

China Update and Recap

2008-04-07T19:39:00.000-07:00

Recap

Hopefully some of you were able to participate with me in the 25% plus gains in American Dairy (ADY) and the huge gains made in the solar plays detailed in my post last month. Canadian Solar (CSIQ) dropped to below my entry point ($20) shortly after my post and had a huge move up at the beginning of this month thanks to great news from the sector and the industry conference. Even with the pull back recently we can book a nice 15% plus profit in just a month on this one. If you bought either of the other solar plays I mentioned Trina Solar (TSL) or LDK Solar (LDK) you made even more. Full Disclosure: I am booking SOME profits on both ADY and CSIQ to use for an upcoming China play.

Update

I have more China plays on the horizon. For my next plays I would like to get feedback from you as to what other information or topics I can include to make the posts a useful as possible. Please Email me at AJSinvest@Gmail.com

Chinese Investments

2008-03-06T14:52:00.000-08:00

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

What's in the Works?

2008-02-13T17:18:00.002-08:00

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

2008-02-13T17:07:00.000-08:00

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!

Strategy Lab Open Day 1

2008-02-01T17:07:00.000-08:00

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.

Strategy Lab Open

2008-01-31T14:17:00.000-08:00

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

Investment Opportunity

2008-01-30T19:06:00.000-08:00

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.

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 Mantra - “Managing to have a sense of humor makes it a lot easier to manage the ups and downs of the market"

2008-01-28T17:37:00.000-08:00

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.

2008-01-27T17:56:00.000-08:00

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.

Make Money Now!

2008-01-25T17:23:00.000-08:00

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!!

Monday Mantra - "Buy Low, Sell High"

2008-01-21T09:30:00.000-08:00

“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.

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.

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.

Monday Mantra - "A bird in the hand is worth two in the bush"

2008-01-14T18:54:00.000-08:00

“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.

Monday Mantra - "Time is Money"

2007-12-17T21:38:00.000-08:00

Time is Money

There is an actual way to figure how much time is worth in actual money. The formula is: V=(W((100-t)/100))/C, where V is the value of an hour, W is a person's hourly wage, t is the tax rate and C is the local cost of living. Time also equals money at work, in business, and in investing. If paid by the hour at work you will make more money the more time spent working. Spend more time in growing your business and you will gain more money from your business. Obviously the more time you spend saving, meaning the earlier you start, the more money you will end up saving and the more times your money will compound.

Opportunity cost

Time is not always accounted for with actual money, but, can be valued by what is gained by using time for things that are more important to us. For instance you might gain valuable time with friends or family that one can’t put a cost on by foregoing spending that time making extra money at work or in your investments. One also has to carefully evaluate time consuming tasks that can be delegated or contracted out which can add valuable time to one’s life. It is impossible to put a monetary value on time spent doing what makes us happy.

What does this mean to us?

This saying is never more relevant than during the holidays. I find myself wishing I had more time to shop for gifts, spend with family, finish work, and get things done around the house. We all need to evaluate the value of our time and how we spend it. Are there changes that can or even should be made for us to make the most use of our time? Are we spending too much of our time at work, at play, or doing nothing at all? As with everything in life we all need to find a balance as too much time spent doing any one thing can be detrimental to ourselves and the people around us.

Monday Mantra - Big Rocks

2007-12-10T19:55:00.001-08:00

“Big Rocks”

During a guest lecture to a class of high-achieving M.B.A. students, a time management expert announced it was “time for a quiz.” He set a one-gallon, wide mouthed Mason jar on the table and began to fill it carefully with about a dozen fist-sized rocks, one by one,. When the rocks reached the top, he asked, “Is this jar full?”

Everyone answered, “Yes.”

“Really?” asked the expert. He reached under the table and pulled out a bucket of gravel. He dumped some in and shook the jar, causing the gravel to work itself down between the big rocks. One more time, he asked, “Is this jar full?”

By now the class was on to him. “Probably not,” said one student.

“Good,” said the lecturer. Next came a bucket of sand and sure enough, it filled all the spaces left between rocks and gravel. Once more he asked the question.

This time the entire class yelled, “No” “Right,” agreed the lecturer, grabbing a pitcher of water and filling the jar to the brim.

Then he looked up at the class and asked, “What’s the point of this illustration?”

One eager beaver raised her hand and said, “The point is – no matter how full your schedule, if you try really hard, you can always fit some more things into it.”

“No,” replied the speaker. “That’s not the point. The truth this illustration teaches is:

If you don’t put the big rocks in first, you’ll never get them in at all.”

What does this mean to us?

What are your big rocks?
A project you want to accomplish? Time with loved ones? Your faith, your education, your finances? Teaching or mentoring others? At work, what are the big rocks that will make the most impact on your company’s success? And which items on your “to do” list are gravel…or sand…things to do if time permits or, better yet, to be delegated to someone else?

A warning – gravel and sand are often easier to accomplish than big rocks. They can distract us from our big rocks and allow us to pull ourselves away from tough decisions and major projects. My advice? There’s enough time to do everything, so take care of your big rocks first!

Monday Mantra - Compounding, man's greatest invention

2007-12-03T19:11:00.000-08:00

“Compounding, Man’s greatest invention”

Compounding

Many years ago Albert Einstein was asked what he thought mankind’s greatest invention was, he simply replied “compounding interest” This is one of the most brilliant human beings ever telling all of us how important this formula of compounding is for growing wealth. Compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. The act of declaring interest to be principal is called compounding.

Rule of 72

The “rule of 72” is a very easy way to figure out compounding of wealth based on a percentage return. Divide 72 by the interest rate you are earning to determine how many years it will take your money to double. For example, if you are earning 8% per year on your money it will take 9 years for your money to double in value. 72 divided by 8 equals 9. Eight percent is a decent average annual return and the number I set as a goal to beat every year. This should be easy for everyone to achieve as the average return from the stock market is said to be 10% if you invest in an index fund that tracks the market. For fun check what percentage you are earning on your money and calculate how many years it will take for it to double in value.

What does this mean to us?

The importance of compounding to us as individual investors is that we must set aside investment money for the long term and not withdraw the money earned from investing. It is necessary to compound the earnings on top of more earnings in order to maximize “mankind’s greatest invention” How much should you put away for investing? The general rule should be at least 10% of all earnings, after taxes, go into some sort of investment account. I would recommend an IRA either Roth or traditional if you qualify as the compounded earnings are tax deferred.

Cash

2007-12-02T11:23:00.000-08:00

Cash

Right now is a tough time to be invested in cash. By cash I mean CD’s, money market accounts, government bonds, and actual cash whether it be under the mattress or in the bank. Interest rates are going down causing less return on cash investments and inflation is going up making that cash worth even less. The weakness in the dollar is also contributing to the need to find a better investment for the cash portion of our portfolios. In finding these alternatives you have to be weary as to the amount of risk you are willing to tolerate to avoid the eroding of your cash. I have CD’s that are ending soon and the renewal rates are much lower than what I was getting previously. If you are in a similar situation or just want to look at putting your cash in higher return investments read on.

Alternatives

Unfortunately there aren’t very many alternatives to consider that are safe enough for the cash portion of our portfolio. One option I am currently looking at is preferred stock. Preferred stock is like a hybrid stock/bond investment offered by many corporations. Many corporations are having the same problem home buyers are having right now, getting a loan. Offering preferred stock is a way to raise cash for many corporations. Preferred stocks pay a much higher dividend than normal stocks and have a higher priority when it comes to payment of those dividends. Another alternative is placing cash in the hands of a capitol management company in the form of a high dividend paying reit. One that looks attractive and that I have owned in the past is symbol NLY; with a yield over 6% per year it’s a lot better than any current short term CD offering. Also consider what I have mentioned in an earlier blog, P2P lending at prosper.

Consider

Consider what the investor group from Abu Dhabi has done investing 7.5 billion dollars in what is essentially a “super” preferred stock stake in Citigroup. Could this be a sign of what we could follow? Could this be a sign that the financials might be near a bottom? I personally am looking at the preferred shares of Citigroup which pays a nice dividend and I am already invested in Citigroup common stock which also has a good yield. There are many other preferred stock offerings out there currently with great yields, but, I would still be weary of investing in any preferred stocks that are exclusively in the housing sector. As always please feel free to email me AJSinvest@gmail.com with any questions.

Real World 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.

Investment Opportunity

2007-11-27T21:32:00.000-08:00

Money Lending

One of the most interesting sites I found last year was Prosper who facilitates person to person lending or P2P for short. Lending on prosper is a great way to get your savings to work for you. There are many different kinds of loan requests to choose from. I found it so interesting that you can “be the bank” and review peoples credit history to make informed decisions on whom to lend your hard earned money to. Another great reason I like prosper is the fact that I can earn a much higher interest rate than any fixed income security and with less risk than any other non-insured investments. They have a new system called a portfolio plan that makes it easy to start a diversified P2P lending portfolio.

Borrowing
Borrowing money on prosper can also save you money in interest charges when compared to bank or credit card rates. With current credit conditions deteriorating it is becoming more difficult to qualify for loans from institutions if you can get a loan at all. P2P lending helps Borrowers find lenders who are not constrained by these limiting factors. By joining a group on prosper you can get an even better rate because the group will stand behind you and give lenders confidence that you will repay the loan. If you are currently looking for a loan consider a loan at prosper.

Prosper

Prosper, which is based here in San Francisco, is like the ebay of person to person lending with people bidding the lowest interest they will take on their money loaned out. They really are helping us regular people “cut out the middle man” with regards to dealing with banks. They held a lenders lunch meeting, which I attended, at their old headquarters early last year shortly after launching the site to the public. It was impressive that the CEO Chris Larsen, who used to run E-loan, was on hand running the meeting and answering questions. In fact, when the company found loopholes early on they covered the losses for the early lenders to make it right! They have by far the most comprehensive P2P lending site out there at this time and it is only getting better.

My Experience

I personally have many loans, average over 13% return, and have had a low percentage of defaults. Making transfers into and out of prosper electronically is very easy although there are wait periods for certain transactions for safety purposes. While I wouldn’t suggest lending all of your savings in prosper I would suggest you take a serious look at opening an account and giving it a try. With the CD rates declining, and the uncertainty in the financial markets, you can help keep your money working for you with the tools on prosper. There is a book written about it called How to lend money to friends you never met. If you have any questions regarding P2P lending please email me.

Monday Mantra - It's not how much you make

2007-11-25T18:34:00.000-08:00

Monday Mantra

“It’s not how much you make, but, how much you keep”

The biggest factor in how much of your income you keep is centered on how much in taxes you have to pay. My research has shown me that one of the ways the rich get richer is through reducing taxes as much as possible. Imagine how much more wealthy you would be if you were able to keep some or most of that money that goes to state and federal income taxes each check.

One way to lower your taxable income is to take advantage of a traditional IRA account. Although the money you contribute to the account is after tax; the amount is deductible on your tax return at the end of the year. The account also will allow you to invest and collect tax deferred gains on those investments! Check with your accountant or tax professional to see if you can take advantage of this.

Another way to lower your taxable income is through a company sponsored 401k plan. If your employer has a 401k or profit sharing type of savings plan it behooves you to take full advantage of this pre-tax savings plan. I personally contribute the max that my company matches and I suggest you do the same. Check with your tax professional to see how you can lower your taxes by contributing to this kind of plan.

Also look into flex pay accounts if your employer offers this benefit. It allows you to set aside pre-tax dollars for use on health related expenses such as prescriptions, glasses, contacts, OTC medicine, and co-pays for doctor visits. It takes a little bit of time to calculate how much to set aside and also to request reimbursement but will save you money with less income tax taken.

Most, if not all, of the wealthy people in the United States also start, own, operate, or control some sort of business that helps them to have more control over how much of their money goes to Uncle Sam. It’s not as hard as you might think to start and run your own business. As a matter of fact you probably have numerous hobbies or interests outside of your work that can become a successful business. Once again I must suggest that you consult with your accountant or tax professional to see how starting a business can help you financially. A good book I read to get you started is

Lower Your Taxes

Don’t have a tax professional or accountant? Don’t know where to start or have further questions about any of these topics? Email me and I can help. AJSinvest@gmail.com

Monday Mantra - Rule No.1

2007-11-18T14:09:00.000-08:00

Monday Mantra – Rule No. 1

This Monday mantra comes from The Tao of Warren Buffett , a book which I received as a gift and have read over and over.

Rule No. 1

“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1” – Warren Buffett

What Does it Mean?

The secret to building wealth: Compound returns. And the more you have to start with, the more it will compound. So taking too many risks with your wealth when you're young might not be the best strategy. While we are young and careless we sometimes take risks with our money that are downright stupid. Gambling Is A Fools Game. Gambling on the latest and hottest stock every time is a risky proposition with long term consequences. To chase investments that offer a high rate of return you must also know that it comes with a high rate of risk. Bill Gates once quipped “Warren’s and my betting has always been confined to $1 bets” when talking about them playing poker together. If two billionaires take risk management this seriously, both you and I should be doing the same thing.

Mortgage

2007-11-14T19:04:00.000-08:00

Mortgage News

Are you considering refinance or home purchase? Now is a good time, if you have good credit and sufficient equity or down payment. The average 30yr. fixed rate on conforming loans is below 6%! If you currently have an adjustable rate mortgage you really need to consider locking in a low rate now while you still can. The mortgage mess appears that is will continue to get worse and banks will keep tightening their lending standards making it harder to refinance. Please email me if you would like more information on mortgage options. AJSinvest@Gmail.com

Savings

2007-11-14T10:20:00.000-08:00

Saving Basics

This, as most will agree, is step one in building wealth. We’ve all heard it before at sometime or another “It takes money to make money” While not being 100% true in all situations, I believe that this is a good indication of a persons seriousness to invest. After all if you can’t manage to save, no matter how small, how can you manage to invest no matter how small? Almost all of the books I have read about wealth building all begin with some sort of saving. Paying yourself first is a popular method of saving in most of the wealth books out there today. In the book The Richest Man in Babylon it is put best “A part of all I earn is mine to keep” this revolves around a basic savings concept of saving 10% of all monies that you take in as this should be yours to keep. Whether in the form of income from work or income from investments this simple rule should be followed. For most of us this is the hardest step in building wealth.

Saving More

Personally I have used other ways to build savings over the years on top of the 10% method. For instance a popular one for a lot of people the piggy bank approach which involves hoarding all of the spare change from your pocket or purse at the end of each day. I even throw in all of the change I find on the street, in the car, or even in the couch! It’s incredible how much money can be saved just in coins over a couple of month’s time. Even to this day I deposit $100 in the bank every couple of months just in rolled coins alone! Another method, I have been using personally, is also saving every $1 bill that is in my pocket at the end of the day. When I reach $100 the same applies, it gets deposited in the bank just like the rolled coins. Aside from these I also contribute to my companies’ 401k plan up to the limit they match and also contribute to a Roth IRA.

Invest

No matter what ways you decide on saving be sure to put those savings to work. In the classic book Rich Dad Poor Dad the author gives good definition to properly investing in assets and defines what assets are. Investing in assests with your savings puts your money to work for you! Some of these include cd’s, bonds, stocks, and lending. I will cover some ways to get this money to work for you in many upcoming investment ideas.

Ideas

If you have different savings ideas please feel free to leave a comment on how you save your wealth.

Investment Idea

2007-11-13T18:17:00.000-08:00

Investment Opportunity - Gold

The past two days have cumulated in the price of gold dropping below $800 per ounce after setting the all time high closing price less than a week ago. Many investors have very wisely cashed in some profits after gold’s big run from $670 an ounce in late August. This may be opportunity for buying on the way down as the downward pressure may continue in the near future. In the long term, however, gold should march higher on its quest towards $1000 dollars an ounce which should be attainable if the weakness of the US dollar continues. Of course really long term $1000 is the tip of the iceberg to me. If you missed out on the last big run in gold the past two months now may be the time to begin the buying process to get on board for the next run.

Dollar Weakness

The dollar index has been at an all time low; recently hitting the lowest point ever recorded since they started tracking the dollar index in 1973! This is alarming to say the least. The dollar index has recovered in the past few weeks from this all time low, but, will remain under pressure as the fed eyes another rate cut that would weaken the dollar even more. The fed appears that they are going to “sacrifice” the dollar in a last ditch effort to save the mortgage industry and in turn the housing market. A natural “safe haven” for currency weakness is gold. For more on this check out a book I have read and recommend you read Gold The once and Future Money.

Buying Gold

There are many different ways to get involved with the “gold rush” and here are the most popular. There are gold ETF’s symbols: GLD (one share represents 1/10th of an ounce of gold) and IAU. Gold mining company stocks whose profits increase with a higher spot price symbols: NEM, PDG, ABX, and AU just to name a few. You can also buy the real thing in the form of bullion coins or even bars from bullion dealers or most coin shops. As with any type of investment diversification is the best way to go.

Real World 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 Monday Mantra - "A penny saved is a penny earned"

2007-11-12T18:10:00.000-08:00

I’m sure you have heard this famous quote from Benjamin Franklin at some point in your life. "A penny saved is a penny earned" means that little by little you will save money by not spending your money. This is a good foundation to begin with when you are trying to build wealth. Not spending money has the same result as earning money, so to save a penny is the same as earning a penny. The saying compares saving money to earning money one penny at a time. Remember this saying when you are tempted to spend your hard earned money on material things that will only provide temporary satisfaction at the sacrifice of wealth that can provide a lifetime of satisfaction.

Penny Fact
Do you ever pick up a penny you see on the street? How about a nickel? A dime? Did you know that a penny minted before 1982 is currently worth .02 in copper alone? This may sound insignificant, but, think about it this way $100 of pre-1982 pennies is worth $200, $1000 worth $2000, and so on.

Welcome to the Real World of Money Management

2007-11-11T19:18:00.000-08:00

So, you've decided to manage your money and you're probably thinking "How do I get started?"
This is the question I had many years ago. To my surprise I realized that neither my parents nor school had taught me much about how to save nor how to invest what I save. My parents told me to save, but, didn't show me how nor what to do with what I saved. School taught me how to become a median income employee but not what to do with that median income. This is what began my odyssey, that continues to this day, of learning and putting to use saving and investing techniques.

The forthcoming posts of insight and advice that I currently use, am researching, or have helped me in the past, can help shed light on the real world of money management. Posts will cover savings plans, investing strategies, new financial developments, book reviews, "guru" reviews, and many other money management topics.