Saturday, March 26, 2005

Net Worth Update

I didn't put any bets on the recent games (the winners go on to the Final Four) and I decided to cash out. My last two bets were winners: I had one bet for N Carolina to win (they won by one) and then I did a little risky bet having N Carolina and Kentucky both win (Kentucky beat Utah).
So my final total is $182.50
I could risk some on N. Carolina vs. Wisconsin, but it's not a gimme game so I'm not going to take my chance.

Net Worth Update
Cash in hand (including online betting): $282
Wamu: $291
IRA: $55
ING: $4391
Scottrade: 17,573

Total: $22,592

Cruise: I'll be leaving on Monday for one week and I think for spending money I will bring $175-$200
I had a change jar (not part of my net worth) and it turned out to be over $60, so I will use this for gas money/parking

Thursday, March 24, 2005

A few thoughts

I honestly don't know what to write about right now- I'm definitely ready for the weekend.
Okay so I decided to place a small bet on Illinois to win (they play tomorrow) and then take the winnings (if they win of course) and bet that amount on N. Carolina to win (they play on friday).
We'll see how this turns out...

How many people are reading this? I have no clue, but anyways I suggest you/everyone should check out Neville's blog (link is on the right) because he did a lotto ticket experiment that is fairly cool.

I will be looking into various ways to get more people to check out my blog, any suggestions would be appreciated! I definitely need to check out some more blogs out there, hopefully I will get to this soon.

The market was pretty mixed today. SFL was initiated a Buy from Bank of America. It was down today and I'm definitely waiting for it to drop a little more and then buy more shares.
LB had a strong day today on no news (+8.70%). I'm not really sure why it rose today, so tomorrow might have some profit taking- hopefully not too much. I originally bought this on 3/7 and it has since rose 22.32%
I have to re-evaluate my position and see if I should take my profits or hold on.

Still need to look for an options brokerage
Still need to do my taxes

There's always something to finish on my to-do list...

Wednesday, March 23, 2005

Useful Value Screen

I wanted to post a few useful screens I use at work to find stocks. One of the guys I work for is a real value oriented investor and I thought it might be helpful for investors who like value, to see the screen I use.
First, the website I use the most for screening is MSN. I think you have to download some software, but it's a great tool.
The parameters I use: Return on equity (ROE) greater than 10%, net profit margins greater than 5%, and debt/equity ratio of less than 0.70
This normally brings up tons of stocks, so I usually limit this list by using a 3 month relative strength number of less than 25.
For my example I will use Serono (SRA), which is one of the biggest biotech companies. This stock made it through my screens, and then the stock manager looked further into SRA (the screen is just a preliminary tool, you still need to do further research) when it was around $15/share. We took a position and it has since moved up a bit to the $17 range. I'm not promoting SRA or anything, I'm just using this as an example.
Okay so SRA made it through the first screen, now this is the other part.
I use the Key Statistics from Yahoo Finance
and also the 10 Year Key Ratios from MSN

I re-check the ROE, profit margins, and debt/equit ratio. Then I look at insider holdings because the stock manager wants insiders to hold a good chunk of the stock. For SRA this is over 60%, I normally check out the percent but also take into account the total Market Cap of the firm. If insider holdings is 1%, but if the market cap is 70 billion, this is still a nice chunk.

The next thing I check is the average volume, because the firm I work for usually doesn't invest in thinly traded stocks.
I also limit the p/e ratio to less than 40.
Now on to the value part. If the stock is non-financial/insurance I look at their current price/sales ratio. If the stock is financial/insurance I look at the price/book ratio.
For SRA, we take a look at the current p/s and it's at 3.06 ttm (trailing twelve months)
I then compare this number with the 10 year p/s numers found on the MSN site.
I'm looking for a current p/s ratio that is on the low end of the 10 year ratios.
(It doesn't have to have ten years worth of data, it's just that the site is called a 10 year summary).
For SRA we see that over the past years the p/s ratio has ranged from 6.8 to 19.
So based on these measures, they seem to be undervalued. The next step is to look further into the company, ratio analysis, and check if the company is healthy. Certain stocks come up and appear to be undervalued, when they are having troubles- these, of course, are the ones you want to stay away from.
I think this screen does a fairly good job of finding undervalued companies. This is definitely not for growth investors and some of the parameters used can be changed. For instance, the insider holdings- at work my boss is conservative and he wants to see major insider holdings, but it's up to the investor when it comes to this parameter.

Another down day...

Well another down day in the markets.
I will look into selling a call option on NTE soon (either this week or next). The May 30s might bring in $.50 (since option contracts deal with 100 shares, normally, the .50 will be a total of $50).
So the option premium, adjusted for a $8.50 transaction cost, will represent a +1.74% on my original investment. The June 30s will bring in about $65, and the September 30s will bring about $140. If I choose the May 30s, then I can do this strategy every two months, but if I use the September then I will have to wait until September (assuming the stock price remains under $30) to write another option. I will also look into when NTE pays out their dividend, since this will affect the call options as well.

In terms of betting, I will most likely place a small bet ($15) on North Carolina to win. I think they have the better chance of winning, although I think Illinois has a good chance as well.
A $15 bet for N. Carolina to win will yield a total of $17.50. Doesn't seem like much, but it's a good chance of making 16.67% return in two days.
Then I will look at the match-ups for the next round, but most likely cash out.

Tuesday, March 22, 2005

Non-betting things (okay, a little betting)

The market has taken a beating lately! The Dow was down another 64 points today and the S&P was down almost 6 points.
My positions finished up (just a bit), with NTE leading the way up 1.77%
I still have a good amount of cash in my ING account and my Scottrade account and I need to invest this soon!
I was searching through stocks today at work (like usual) and came up with short list to look further into: TIF, IIG, KRB, NCC, ENH, APL, BHBC, CSE, KCS, CREE, AWC, MSS, ORB, CLFC, SIRF, DITC, TRST.
These are some that popped up, but I haven't done any research. The only good thing about a down trending market is that I might have enough time to find some stocks I like and buy them before they move up.
I'm also looking more into options and I might open up a second trading account for options (Scottrade gives only limited option capabilities). The one thing I want to look into is: buy an in-the-money (ITM) call on the QQQQ (LEAPS- I'm looking into January 06 or 07) and then sell OTM (out-the-money) calls that go out 2 months or so. I would do this every two months or so (maybe not in times of high volatility) and gain the premiums. I'll post more about this, once I research a bit more (this might be awhile).

I still haven't done my taxes- maybe soon.

Betting: I'm definitely only looking at two games this round because I have no idea about the others. Illinois (the top ranked team in the country, only one loss) is playing the underdogs of the tournament Wisconsin-Milwaukee. This team has defeated two lower seeds and they look pretty good, but I'm not sure if they are a match against the top team.
The other game is North Carolina (generally the second best team) against Villanova. N. Carolina has been the most impressive team because they have blown out their opponents in both games so far (maybe their opponents weren't too good... but it's still a blow out)
They have a great team, great players, good big men (Sean May) and have been scoring in the 90's lately.
I think if they remain confident, they can take Villanova.
Am I confident of these two games? Not really, because anything can happen at this point.
If I put a $100 two team parlay (so both teams need to win; I'm using $100 just for ease) then I would get back $133. Oh, this is good to point out: let's say I wanted to do this parlay, I should have done this yesterday because then the payout would have been over $150. This means more people have been betting Illinois to win so the payout goes down.
If I split the $100 between the two: $50 on both teams, these are the payouts.
Illinois winning = $57
N. Carolina winning = $58
Total = $115
So by taking on the extra risk of needing both teams to win, you get an extra $18, which comes out to about a +15.65% return when comparing $133 to $115
As of right now, I'm not sure what I will do. Right now I'm leaning towards the safe side and might place $10 on each team to win. We'll see...

Sunday, March 20, 2005

Round 2 Updates

This should be a short post.
So Illinois won and that's where I placed my big bet. I also went a little risky and placed a $30 four team parlay: Wisconsin, Duke, Oklahoma St, and Michigan State. All four won so I got back around $65.
I have no current bets and my stack is up to almost $124.
There have been a good number of upsets, and I'm not too sure about the next games. Right now, I'm leaning towards just cashing out with some winnings (or maybe put in one $10 bet).

Saturday, March 19, 2005

NCAA Round 1

Round 1 of the tournament is over.
The biggest upset so far happened to be with the team I needed to win. Syracuse was the heavy favorite against Vermont and they lost by 3 in over-time. Syracuse is a good team with good players, but they had way too many turnovers and had a bad couple of plays at the end.
So that ended two of my bets and overall I was down a few dollars. My big bet paid off when the three teams all won.
Before I left for dinner I decided to bet on the Michigan State/Old Dominion game. Michigan State was the favorite and I picked them to win. I went a bit risky and bet the rest of my money on one site (~$70). I come back from dinner and found out that Michigan State did win and now I'm up to $99 and overall up 20.73%
Some of the Round 2 games start tomorrow, so I will be looking into a few tonight. As of this moment I'm thinking about using $10 for a risky bet, $10 for a semi-risky bet, and the rest for some less risky bets.
The thing I don't like is that my money is with and they have minimum bets of $10. The other site I use has minimum bets of $5 and if you do 11 or 12 team parlays you can bet a minimum of $1

In one of the Comments I replied to I said I would give a poker tip. Now as some of you know there are many types of poker (I mainly play Limit Hold Em). But at casinos they have other types of games. One game that I like to play is 3 Card Poker. The rules are easy: if your three cards beat the dealers, you double your money. If your cards happen to be something good: pairs, flush (ex. three hearts), straights- then you will get a higher payout if you beat the dealer (I've run into some casinos that don't pay more unless you put a bonus bet).
The bonus bet: This is an extra optional bet you put up and it will pay out more if you beat the dealer with a pair or better. So if you have a 7,Jack, Ace and the dealer has a 3,6,9 you will win on your original bets, but will lose your bonus bet.
The bonus bet seems nice, but it actually increases the house edge. Normally the house has an edge of around 2-3% with this game, but if you play the bonus bet the house edge goes up to around 11-12%. This is a huge jump!
But that's not my tip (to not play the bonus).
Here's the tip: most (probably all) casinos are lax in a few rules. One of them is the ability to see other players cards. In three card poker there might be six people plus the dealer and most people are laughing/drinking having a good time. They don't really need to hide their cards.
Technically they are suppose to, but casinos never say anything.
Here's where you can get an edge. Let's say you have some high cards, but no pairs or anything. We'll say 8,10, Queen. This is not too good of a hand, but with more information you can gain a higher edge.
Everyone's practically showing their cards before the dealer shows and before you need to decide to match your bet (you put $5 up, get the cards, if they are good you match the $5, if not- you fold and lose your $5).
If you see lots of Kings and Aces in the other people's hands- this increases your odds because now the chance of the dealer having a higher card than a Queen is minimal. He can still beat you on pairs/straights/flushes, but those have a lower probability outcome.
So you can match your bet with a not-so-good hand.
This can of course be done the other way: if you have a semi-decent hand, but are seeing lots of low cards then the chance of the dealer having high cards go up since you have this added information.
This can save you some money, and hopefully gain some money by using this extra information.

Non-Betting Stuff
I have two future things that will add to my net worth. I should get a tax refund and my bonus is coming up within the next two weeks.
The one event that could decrease my net worth a bit is that on March 28th I'm leaving for a week long cruise! It's already been paid for so the only thing that will change my net worth are misc expenses (oh yeah, and the cruise ship has a casino and card room....)
I'll be going to Mexico from L.A.- first stop Catalina and then Ensenada- it should be fun!

Thursday, March 17, 2005

March Madness

It's March Madness time and I put in a few picks today.
I was unable to transfer more money (it will take a few days), so I only bet about $20.
I had a rough day today (lack of sleep), so I will post more about this tomorrow.
Also, my second eBay sale ended today at just over $91! So I almost tripled my money, not too shabby.

-till tomorrow

Tuesday, March 15, 2005

Some financial goal updates and etc.

Another down day in the market, so I'm looking for buys with my free cash. I also have five free commissions from some referrals I made (my parents opened up some IRA's recently) and I might use these free trades for a few quick trades in the coming weeks. I had six, but I used one today when I got rid of MLI. It was down a bit in the morning and I was feeling uncomfortable with it so I sold, and then it dropped some more. Now of course tomorrow it's going to have an up day....

NTE finished the day up 1.55% and the strength in LB surprised me, this morning it was up over 7% but only managed to finish the day up 2.86%. Tomorrow might be some profit taking, hopefully it doesn't get hid too hard- but it might since it usually has a low volume.

Time to update my financials:
  • WaMu $553
  • Cash in hand $55
  • ING $4,341
  • IRA $55 (actual is around $58, but I'll more than likely just keep it constant for now)
  • Scottrade $17,423 (stocks and cash)
Total: $22,427

Some updates:
I do have a $50 automatic withdrawal into my ING account and sometime this week I'll be changing this to a $75 automatic withdrawal.
I lent $300 to a good friend (I have no worries about this) so this might bring my net worth down a bit for the next few months. I should get the money back by the end of April.
I have a check for $25 that I haven't cashed yet, so this is not included.
I also made a few eBay sales. I sold some concert tickets (limited supply, huge demand- that's when you want to sell). All the costs have already been deducted from my net worth. The first sell had a total cost of $105 and it completed yesterday for $215 - a nice 105% gain.
My other auction is still going on, the total cost was $35 and it's currently at $49 with one day to go. At this price this will result in a 40% gain.
These transactions are not part of my net worth until I transfer the money from PayPal to my Wamu account.
Also, and this will be detailed shortly, I'm most likely gonna gamble a bit on the NCAA tournament. I'll be looking into some picks tonight, and hopefully post about it tomorrow.

I've come across a few blogs. One is called I just want to be rich and I think it's a pretty damn funny site. I've been reading this other blog for awhile now and it's quite popular, it's called Frugal for Life. Check them out if you have a chance!

Monday, March 14, 2005


Well, finally the markets had a decent day. Two big movers today were Genentech (DNA: +24.77%) and Hansen Natural (HANS: +26.14%).

On to my positions.
Ship Finance International (SFL): These shares are due to spin-offs from Frontline (FRO). Basically FRO's tankers went to SFL, who then lease it back to FRO and they share in some of the tanker profits. FRO still controls some SFL and they plan to spin this off to investors probably within the next half year. I have a relatively small position (20 shares), but I might add on some price drops. SFL is less volatile than FRO, and they should have a consistent dividend policy.

Nam Tai Electronics (NTE): I was looking at this one around the 18-19 level, but I was worried that a good chunk of their sales came from LCD screens, where prices have been dropping. Then last quarter's numbers came out and they were great, and they initiated a pretty high dividend policy. They had good sales growth in their other segments and even though it ran up a few dollars, I still thought it could run a little more. I ended up buying 100 shares at $23.82
Today it ended at $27.66, so it's had a good run since I've bought it (less than a month ago).
My original target was $30, but I might be moving this up to the $35 range. I'm also thinking about using a covered call strategy, which I'll hopefully detail in a future post.

My next three positions are recent buys and I took a different outlook than my previous investments. One thing I have been trying to do (on paper) is look for stocks on a rebound, buy them, and sell them after a few dollars. I've been tracking these at work and had an average gain of around 18%, so I'm hoping this continues.

Mueller Industries MLI: I'm losing about 2% on this position and it had, I think, four down days. Today it finally ended up one penny (!). I'm tempted to sell because after looking further into their financials I think I can find a better buy. Honestly, I'm hoping for a slight rebound in the market so I can re-evaluate this position.

Ennis Inc (EBF): This is definitely not a long term holding, so if this doesn't rebound soon then I'll sell. I'm in this position and MLI because I haven't found any potential long term buys lately. Ennis does a lot of office supplies and business forms/documents. It has been downtrending from 22, and it looks like it has finally settled down. It also has a 3.62% yield, so hopefully an uptrend will start. I'm about break-even on this position.

LaBarge (LB): This is one of my more riskier positions, because of the low volume. I bought 150 shares with a price target at $13. My cost basis was under $11, around $10.93
It closed today at $11.80 so I'm up around 7.96% in four days. They just announced a decent sized contract today, so that pushed it up. I'm hoping for a little upward momentum in the next few weeks.

Overall I'm not too comfortable with my positions. I do want to get out of MLI, but I will wait a few days. Basically I'm happy with NTE, cautious on LB, I want to add SFL, I want MLI and EBF to uptrend in the near future.

Stocks I'm looking at: I haven't done any screens in a few days and I missed out on some last week. I might look into NCC since it's trading at a discount against its peers and historically, but I'm not too sure.

Besides EBF and MLI (where I'm going for a momentum play) here are some of the guidelines I use when looking for stocks.
Return on equity greater than 10%, net margins greater than 10%, cash on hand, positive cash flow from operations (and hopefully trending upwards), positive sales growth, and I do limit the price to under $35 just based on the fact that I like to take minimum positions of at least 75 shares. If the stock is greater than 35, it will make up a good portion of my total net worth.
75 shares is my minimum so I limit the percentage I pay in commission costs. I use Scottrade so my costs are $7 each way and I do want the overall commission percentage to be under 1%.

Next up: some general financial comments, comments on some blogs, and a few new updates in my financial numbers.
Until tomorrow....

Friday, March 11, 2005

A Little Background

I decided to post a little financial background.
On my 15th birthday my dad gave me a manilla envelope. Inside was one single sheet of paper that had some information. Some of the words I remember: Ruby Tuesday, 75 shares
I tried to act happy, but I had no idea what the hell the piece of paper meant. He then informed me that he received some shares of stock from an uncle and passed some on to me. He quickly told me a little (and I mean a little) about stocks and after a few minutes I was a little less confused. I now not only had a piece of paper with some words on it, I had a piece of paper worth about $250.
My dad told me that I could keep it or sell it, it was up to me. The first thing I thought about was the amount of basketball cards I could buy with $250! But in the end I did decide to sell it, but not for basketball cards.
I wanted to invest in another company since I had no idea what Ruby Tuesday did (RI: restaurant). During this time AOL was going through troubles and the stock was sliding. I read a few articles in the newspaper and I didn't think the news was bad at all. AOL was basically getting too many customers and their servers could not keep up with this huge increase in demand. Some customers complained, and articles were written about this fiasco. I thought this was a pretty good problem to have so I added some money I have saved, sold the RI, and bought 17 shares of AOL (I was unaware of the fact that by buying so few shares I was basically paying a 12.5% commission from Schwab). The price was in the low 20's and then it took off.
I sold after a couple hundred percent return, but if I held through most of the bubble- well, I try not to think about that.
I then started buying and selling various tech companies from very limited research. I would read trade magazines and if something sparked my interest I might buy it.
I made money through most of my high school years except when one tech company missed earnings my senior year. I then switched to energy stocks. Why? I can't really say because I didn't write any notes down.
This little background is turning into a big one, so I'll speed up a bit.
I did not really buy too much my first three years of college and a good chunk of my cash was going towards expenses since I only worked a little freshman year, none sophomore year, and some my junior year. During my junior year I got a new job at Scottrade and decided to really save my money and invest. In May of 2003 I had about $1,600. Since my savings was low, I did not start investing till August-September. I had a nice couple of months in REIT's due to the housing situation and I ended with a 35% gain through those last months of 2003.
My account ended the year at $8,331.
2004 led me out of REIT's (well most of them) and into some tanker stocks. I also switched jobs in February and became a portfolio management/stock analyst intern (this is my current job). My investments gained about 80% through most of 2004, but December was a hard month and I ended up +65%. My 2004 total was: $17,114 (throughout the year I also kept some cash in the account).
2005 has been a fairly good year. I haven't calculated my exact percentage lately, but the last time I checked I was up over 9.5%
YTD the S&P is down roughly 1% (exact is -0.97%)
Here are how my stocks have done (I've sold a few, which will be detailed in my next post- the returns are based on my selling price not today's ending price for the ones sold)
FRO: +22.50% (adjusted for dividends and spin-offs)
FBR: -4.43%
IMH: -7.4%
SFL: +10.73%
ELAB: +12.26%
NTE: +13.85%
My big mistake was keeping IMH (REIT) way too long, I should have got out around 25. FBR is a small position and overall my cost basis is fairly low when counting the dividends received.

I'll detail my current positions and some notes about them in my next post.

Thursday, March 10, 2005

Financial Status as of 3/10/05

Time to update my financial status. I'm still getting used to blogging, so I might change the format later on once I put in some tables, etc.

March 10, 2005
  • Washington Mutual Account: $431
  • Roth IRA: $55
  • ING Account: $4,291
  • Securities: $10,623
  • Cash in Securities Account: $6,643
Total: $22,043

I am $2,957 away from my graduation goal of $25,000

Here are some of my savings guidelines:
  1. I try to keep my WaMu account with under $500, since this account does not pay interest. The $500 minimum is because this is the account from where I pay my bills and I also use this money for general purchases.
  2. I do have over $10,000 in cash at the moment (my securities account plus ING) and this is for the sole reason that I haven't found any suitable stocks lately. I do gain interest on the cash in my security account, but not as much as ING. I figured that if I need to buy a stock I can always buy it on margin (if the amount is over $6,643) and then transfer money over.
  3. I know I should put more in my Roth IRA, but this will wait till I get a full-time job.
  4. From my job (I'm an intern at a portfolio management firm) I take in about $207/week. I try to save roughly 65-70% of this amount (which totals $134-$144). I do this buy having an automatic savings plan through ING, where $50/week is taken. Then the rest sits in my WaMu account until this builds up a bit. Normally when this account hits the $650+ range, I transfer a chunk of it to my ING account.
Just to note: I'm not really a penny-pincher, but I don't like spending money. Let's just say if I see a pair of jeans I want, then I'll buy them (unless they are expensive of course).
I do some things on the side that brings in extra money: I play poker from time to time and this brings in some money, I do other forms of gambling as well (casino, track, sports), and I sometimes sell things on eBay.

I've beat the S&P from 2002-present, and hopefully this will continue!
My account has a good amount of cash in it because I've sold some stocks lately.
In 2003 I participated in two main trends. The low interest rates caused a big increase in home buyers and refinancing so I had some REIT's. Oil prices were increasing and oil needs to get to its destination somehow- through tankers.
My biggest winner was Frontline, an oil tanker that has spun-off a newly formed company as well as big dividends. I went in and out with this stock and multiple times had returns of over 50%.
Things I've sold recently:
My last REIT- IMH. I should have sold earlier when it topped out near $27 but unfortunately I did not. I did manage to sell around $20, with a cost basis in the low teens.
I bought Eon Labs (ELAB) in November at $23.44. This is a generic drug company that had good financials and was trading at a low price/cash flow per share when compared historically and to its peers. Well it turned out to be a good buy, because Novartis (NVS) announced they will buy ELAB at $31. I sold at around $30.50 for a nice +30% gain in less than 3 months. I did not wait till the buyout because this would take place in late 2005 and it did not offer enough of a premium (it would have added roughly 1.6% to my gains).
So now I have a chunk of cash waiting to be invested.

My next post, hopefully tomorrow, will detail some of the stocks I currently own and what I look for in stocks.
Feel free to post some comments!

From time to time I will comment on finance books I have read, online articles, or other blogs I enjoy reading.
One of the blogs I check on a daily basis is Neville's Financial Blog.
I suggest you check it out!
Also, once I get some tables on here the format of this blog will change.
I will try to keep an updated financial status on the side as well as links and titles of books you might want to check out.

The First Post (otherwise known as non-original-title post)

The idea of creating a blog has been on my mind for awhile, so I decided to do something about this. I read a few finance/savings blogs on a daily basis and I thought it was a great idea for me to start one as well.

Here's my goal for this blog: track my financial goals, sometimes rant about things that bug me, and give some info about what's going on with my life.

About me: I currently live in Northern California (the Bay Area), but I might be moving soon (more info about this later). It's an exciting and scary time in my life because I'm almost done with college. I am almost 23 and have completed my Economics degree. In this last semester, I'm finishing my Finance degree. I have been investing in stocks since the age of 15 and it has been my passion ever since. I also have other interests that include: basketball, watching sports, going to the gym, reading, listening to all types of music, checking out new places, and bowling (but I'm quite bad).

Goals: I tend to be humble when it comes to stocks and options, because I know that there's a ton of information I still need to learn. Investing is one of the areas where you can never know enough, and when you think you know a lot- something will happen to put you back in your place. But after saying that, I do have extremely high goals for myself. I want to be the best investor out there and
If I happen to fail at this I do have a back-up goal: hopefully attain $4 million by the age of 45-50 so I can retire and travel the rest of my life (5% through muni bonds would generate $200k/year, which should be plenty).
Besides these main goals, I do have smaller goals.

For college:
1. Graduate with a GPA of over 3.6 (I'm currently at a 3.68 and only have two classes to go. I should hit this goal as long as I don't screw up).
2. Have liquid savings of at least $20,000. This was the original goal, but it has now been revised to $25,000.

My next post will detail my financials.
Please post any comments you have!