Wednesday, August 31, 2005

Closing the month of August and a few articles

The devastation caused by Hurricane Katrina is unbelievable. I'm sure everyone has seen the news. The hurricane has caused not only drastic effects for the people there, but it will affect everyone as gas prices are rising fast and the stock market is jittery. Just one chart to look at: BMHC. I guess some people are finding a company that will benefit from the hurricane.

Two articles for today: MasterCard is going public. The other article is a bit longer but it deals with the Chinese economy. It's more of an economics article, but I thought it was interesting.

August is over with and I'm starting my month to month tracking of my net worth. I was previously just posting a net worth from time to time, but I'm going to do it on a monthly basis from now on. I need to get some sleep so I'll just a total.

August Net Worth: $27,519

Amount left towards end of 2005 goal: $4,481
I've completed 86% of my goal so far.

One side note: I finished my last reading assignment for the CFA test. Now I just have to finish typing up notes for the last few sections and then start studying more in depth and completing the problems. About 3 more months to go.

Tuesday, August 30, 2005

Random Things

I've been reading more on technical analysis at work, and some of it is actually pretty interesting.
I tried reading about technical analysis awhile ago, but I couldn't get into it. It seemed too subjective: is this a pennant, a flag, a hammer, what? I would see some charts where one guy argues that the graph is bullish, while the other guy (using different indicators) argues that the graph is bearish. I guess the same could be kind of said for stocks (like a value investor vs. a growth investor), but it just seemed odd arguing about one part of a graph.

The book I read at work, Stan Weinstein's Secrets for Profiting in Bull and Bear Markets, doesn't get into the flags, pennants, and things like that. Besides the incredibly cheesy cover, I did learn some new things. I won't go into too much detail because I want to mention other things, but I might recap the book in a later post. He deals with moving averages, relative strength, and volume. Those are the three main things and he uses support and resistance areas to make some decisions.

I've since finished the book and my next task is looking at graphs and learning the ins and outs of Reuters Bridge Station. This program is incredible. It's a software program, but it's also connected to a Reuters server for real time info. Anyways, this program has practically everything you could think of. The amount of topics and choices seems like a little too much, but I'm slowly making my way through the program.

I transferred money over from my ING account to my bank account. The funds hit the account today, so then I will transfer money to my Roth account. I'm also done with the forms for my new brokerage, Think or Swim, but I had a problem with my printer today. I'm going to print them tomorrow and hopefully get things set up. I already downloaded the software and set up my account, so now I just need to send the paperwork. I think this will also motivate me to study options more in depth, which leads to my next random thought.

After struggling through the Bond book for the CFA, I'm almost done with my reading. I have a few chapters in the derivatives book and then one more section. Going to work everyday has drastically slowed down my process, and I need to step it up! My goal is to finish the reading by the end of the weekend.

I've also added "5 Key Lessons from Top Money Managers" to my reading list. I tend to read many books at the same time so I think I should get to this book fairly soon.

Time to finish up some CFA reading.

Monday, August 29, 2005

August Expenses

Well August isn't really over with, but I had time today to calculate my total expenses for this month. I decided to track my expenses as well as my net worth on a month to month basis so I can see how I'm spending my money and the growth of my net worth (that will come at the end of August, since I will get paid).

Total expenses came out to about $940 for this month. This figure is on the high side (considering practically no bills needed to be paid) because this weekend I went on a weekend vacation that ended up costing around $400. The vacation was definitely worth it though, since I had a great time (and some interesting moments) and it was relaxing.

If I take out the vacation then expenses would be $540 for the month. I think this is an okay figure, but I want to cut back on my lunch expense from work. They buy us lunch on Fridays, but I usually buy my own at least three out of the other four days. This adds up to about $20 a week. I think I should be able to reverse this situation by taking my lunch at least three days per week, eating out once, and then getting the free lunch. I think I should be able to lower my expenses by $80 or so.

On a side note: I do want to save money, but I also want to have some fun. So I'll spend money on things that I think are worth it (this means that even if I could afford a laptop this month, it will make no sense to buy it).

My August expenses came out to be about 38% of my take home pay. I'm saving the rest and still not paying rent since I haven't found an apartment yet (this is getting annoying by the way). My goal for saving (after expenses and the eventual rent cost) is to save about 40% of my take home pay ($1000/month). I think this is a high savings rate, but I also think I can accomplish this.

Thursday, August 25, 2005

Learning From My Mistakes

LB almost dropped 20% today. This was after they beat earnings too!
They said that the next quarter is going to be less than expected because of a few delays with their customers. LB said that after that quarter the rest of the year will be great. This did not help the stock price as it crashed today. It seems many people were expecting a bad quarter or at least bad news, but the news wasn't really that bad. I couldn't stand the volatility and I sold early in the day so I didn't catch all of the downside. I ended up closing the position out with a gain of about 27% gain. I'll take the decent gain over 6 months time when the market has been negative or flat, but I gave up a lot of gains within the last two weeks or so.
The only way I can learn from my mistakes is to examine them. I think too many people make mistakes, but don't take the time to learn from them. Everyone makes mistakes, but the important part is to learn from those mistakes.

1. I didn't sell after it LB hit my target. I think my original target was around 18, but I was going to let it run a bit. It ended up near the 21 level before things turned down.
2. After not selling near 21, LB started to decline on heavy volume. This was a huge sign and I even mentioned it on the blog, yet I did nothing! That was pretty stupid of me.
3. The stock dropped near the 14 level and then over a three day span it rose about 16%. If I thought about the previous two mistakes I made, I should have sold here. The 16% rise in price was nice, but the volume wasn't too great.
4. This could be a future mistake: selling right now. Fundamentally the company is sound and sales are growing. The next quarter will be a slow growing quarter, but the rest of the year should be great. After such a big drop (when I sold it was no where near -20%), there could be a nice rebound within the next few days. Honestly, I didn't want to risk it. I'll take my gains and wait out the volatility.

Other than that, all the rest of my positions had good days. SFL reported the other day (I have a few shares from a spin-off). I liked the results and it made me want to buy FRO again (probably not), but I am most likely going to add SFL to my Roth IRA and possibly my regular account. My regular account is still in a double digit gain and I think bringing in a stock with a nice yield and somewhat lower volatility than my other positions will help stabilize my portfolio for the rest of the year.
FRX went up over $2 and UNTD finally passed the $13 level. Plus EBF finished up almost 4%.
Overall I think I actually made money on the day, and I was surprised about that.

I have decided to transfer my accounts (regular and Roth) over to Think or Swim (fonzie, thanks for the heads up on this brokerage!). I checked out the site while eating lunch and I liked the site a lot. First of all, the commissions on stock and options will be cheaper. Plus, I will be able to do more option strategies. I want to be more involved in options, and this brokerage will allow me to do some of these activities (straddles, strangles, butterfly spreads, etc.). I also like the site and the trading platform. I'm going to download and fill out the forms either over the weekend (but I am going away on a mini-vacation over the weekend) or early next week.
I think this is going to be a great move.

DSL problems

No post for tonight, since I spent about two hours talking with SBC and trying to get our DSL fixed.
It's finally working, but I need to get some sleep.
Just a quick rant: the first question I asked was "is there any network problems around my area?" and they said no. Two hours later, and talking to a third person, I found out that there has been a network problem that is affecting me so there was nothing I could do to fix the dsl. Nice waste of two hours, but at least the customer service people were really nice.

Tuesday, August 23, 2005

Getting Paid to Read (and ETF's)

A few comments on the portfolio: LB has rebounded about 16% over the last few days and hopefully this will continue. FRX has been steadily climbing up as well as UNTD (which is almost hitting $13). There's nothing special with EBF and it's right in line with the S&P. If I need to free up some cash, this is probably the first thing I'm selling. I also realized that I'm going to have to free up some time (I don't know how) to find more stocks to invest in since more money should be flowing in soon.

ETF's: I've ranked the ETF's from the list I posted earlier. The two on the top of the list are EEM (Diversified Emerging Markets) and IJS (S&P Small Value). The rest would be: IDU (U.S. Utilities), EWJ (Japan), and PGJ (China). Right now I'm leaning towards EEM since I have an exposure to small caps in my portfolio. It's currently in a downtrend so I might wait a little while to see if the price settles down a bit.
For this year I'm most likely going to split my contribution between EEM and SFL. I've owned SFL before and it leases tankers mainly to Frontline (it spun off from Frontline awhile back). I'm waiting to see how their second quarter went (it will be released tomorrow). If the results are stable and they comment on their dividend policy, then I'll add this to the Roth IRA. It is currently under $19 and it's yielding 9.50%.
A 50/50 split between the etf and SFl will result in an average yield of 5.27%. I'm also looking at capital appreciation from SFL as well.

Getting Paid to Read
At my work I have two main tasks: dealing with the trades in the morning and dealing with the trades after the market closes. Besides that, I work on smaller projects but the trading ones are my main tasks. The morning task usually takes a few hours while the afternoon one will take less than one hour. As you can see, I have a good amount of free time. Yesterday the head trader talked to me about technical analysis and gave me a book to read. I've read a few basic books and this one should strengthen my knowledge. So for the next few days I get to read while at work! I've been doing this for free on my own time, and now I get paid to do it- I was pretty happy about this (and also because it means they want to transition me to more of a trading position down the road, or even working with the analysts).

I also added a few blogs.

Monday, August 22, 2005

Crazy Price Increases

I don't have any stock articles to post or any comments on my portfolio. I was going to talk about how Pfizer (PFE) is at an almost 5-year low and yielding over 3.5%, but not today. Or even wonder if Merck can continue to deliver their dividends since it's yielding 5.4%. I just want to rant on some price increases.

I know everyone is complaining about gas prices so I'll let MSN take care of that (although I should be complaining since gas prices are nearing $3/gallon in the San Francisco area).
Going to the movies should be a fun time to relax. But these prices are getting out of control!
I went to the movies this weekend and two tickets, nachos, one big drink, and one medium popcorn ended up costing almost $30! This is an insane amount. I remember (alright I'm sounding old with all this "in the past" talk, but I'm only 23) movie tickets costing $5 or $6 bucks and the popcorn was a lot cheaper. With my last internship going to the movies would eat up almost 15% of my weekly paycheck. So 15% of my take home pay is gone in around two hours. Now it's a lot smaller since I have the full-time job, but it's still $30 for the movies.
Plus, one theater around here charges an extra quarter per ticket for Saturday night showings.

Another price increase that has risen dramatically is the price for parking in a garage. When I was a college freshman the garage charged $2/day. Now it's up to $2/hour and $8/day. The price quadrupled in about 5 years. Don't even get me started with parking in the financial district of San Francisco ($20/day).

Thursday, August 18, 2005

Quick Post

Just a quick post tonight. Thanks Afonso for pointing out Think or Swim for a brokerage. I've spent a little time after work checking out the site and so far it looks great! Low commission costs for stocks (minimum of $5), and really low commission rates on options. The minimum to open an account is $3500 and $0 for IRA accounts. So far, I've liked everything I've seen. Over the weekend I'm going to spend more time reviewing the site and software to see if I can find anything wrong about the site.

I've been following the story about Carl Icahn and Time Warner. This article off MSN is pretty good and it's worth checking out.

Also, the funniest Wall Street story I've seen has to do with Overstock, it's CEO, and their last conference call. I'll try to write up a detailed post about this later on, it's a very weird story!

Wednesday, August 17, 2005

Net Worth Update

I haven't calculated my net wroth in awhile, so today is the day. Plus, I just deposited my first check (direct deposit starts next paycheck).
One thing to mention, ING raised their rates to 3.30% for those interested.

Net Worth: August 17th
  • Bank: $2,689
  • In hand: $40
  • ING: $6,266
  • IRA: $53 (almost done picking ETF's, then I'll transfer money over)
  • Brokerage: $17,925
Total = $26,973

My end of year goal is $32,000, so I'm about 84% towards my goal. I think I can hit it as long as my portfolio increases a bit.

I didn't see too many good articles today, so none to post.
HPQ posted results and investors liked what they saw by sending Hewlett Packard up 13.16%
I read a broker survey in a magazine recently (I think it was Smart Money) and it made me want to check out a few other brokerages. I'm happy with Scottrade and I used to work for them so maybe that's why I'm a little hesistant. Now I should look into other brokerages since the commission rates are basically the same, but other brokerages offer more services than Scottrade. I'm still reading up on options and Scottrade is generally conservative when it comes to options. I think I will have more/different opportunities at another brokerage.
I'll just add it to my list of things to do...

Also, I'm keeping track of my expenses and up to today for August I have spent $269. I really don't have any big bills and I'm not driving too much so gas isn't too bad. I'm not sure if this amount is high or low, but I know I didn't spend too much because I've been pretty sleepy this month! I'm going to track my monthly expenses, but I don't know if I'm going to break it out like some other blogs (bills, food, entertainment, etc.). I've been taking lunch to work a few days per week, so this will save some money.

Tuesday, August 16, 2005

"How do I start?"

A friend of mine recently asked me the question in the title of this post. He just graduated and landed a good networking job paying about $40,000 a year. He only has a limited amount of investment knowledge and has been asking me various questions. After answering his questions I told him to check out Yahoo's Finance site, because it has a decent amount of beginner articles that do a good job of explaining the topics (IRA's, index funds, etc.) I did this so he can learn a few things on his own, and then ask me any follow-up questions (which he did).

Although I answered his questions, I think the most important thing I told him was to set goals. All he needed was a pen and some paper. I think the first mistake is not writing down your goals. If you don't write them down, then it's easier to fall off track or change/forget parts of the goals. By writing the goals down, it will reinforce the process.

The other thing I told him to do was to set a major goal (he picked a monetary/retirement goal) and then break it down into little goals. Whether it's paying off debt or aiming for that first million, when you first start attaining your goal it seems so far away. Some people get discouraged right at the start because they don't think they will ever reach their target.
If you set smaller goals it will offer encouragement with the big picture.
Right now, I know I'm incredibly far away from my main goals but I know I'm within reach of my end of 2005 goal.
I think my friend is off to a great start if he continues, he will be in great shape for the future.

Monday, August 15, 2005

A smaller list of ETF's

I received my first paycheck today, and I was pretty excited. I don't have any major bills to pay off, so the majority of the money will probably go straight to ING until I can figure out what to do with it. My first goal is to get my Roth fully funded, and this will start with cutting down my list of ETF's.

I started with the previous list I linked to and began to cut some out. My list was around 25 and now I cut it down to 10. Since I'm starting off with limited funds, I will need to pick from this (suggestions are welcomed):
Prices are of Friday's close
IYK- $53/ 1.47% yield: US Consumer Non-Cyclical
IYE- $86/ 0.98% yield: US Energy
IDU- $77/ 2.63% yield: US Utilities
EEM- $79/ 1.04% : Diversified Emerging Markets
EPP- $100/ 3.09%: Pacific region minus Japan
IWN- $65/ 1.59%: Russell 2000 Small Value
IJJ- $69/ 1.33%: S&P Midcap 400 Value
IJS- $63/ 1.13%: S&P Small Value
IXG- $67/ 1.35%: Global Financials
PGJ- $15/ : China

Of course, a few of these overlap so I won't be picking Energy and Utilities.
I might put in one stock in there: SFL 9.6% yield

I should also be able to add JSDA to my main portfolio; it's around $4.60

Two articles I've read today: One talks about 11 stocks from value pros; and the other is about 9 long-shot stocks.

Hopefully sometime this week I'll be able to add a few more blogs to the right side. Some are from those who post comments, others are just from searching around.

Thursday, August 11, 2005


First of all, LB is killing my portfolio! It finished down 7.7% today on heavy volume. This has been the third straight day of decline and I'm wondering if a big holder is taking some profit off the table by selling some shares. The average volume is about 138K, but a few days in the recent past stand out. On July 27th the shares decreased 8.37% on volume of 283K, on July 29th the shares decreased 6.55% on volume of 335K, and today the price decreased 7.7% on volume of 398K.
I still think this stock has good fundamentals and I'm sitting on +60% gains, so I'm not too worried, but when my portfolio drops from the 17% range to just over 12%. I'm definitely keeping my eye on this one though.

I noticed that in my ING account I have almost $6300 in there. I'm going to keep at least $2600 in there as my emergency fund, but the rest should be transferred out. I'll have a little over $3600 to invest and I'm most likely going to try to max out my Roth contribution with most of this money (or all). Before I transfer the money, I want to know exactly what I will be investing in (so I can at least earn some interest while I research). With this year's contribution I think I'm going to lean towards ETF's. I contemplated just picking one stock since I'm going to hold on till retirement (I was looking at Bank of America or Citigroup- BofA has been getting hit hard lately). As of right now I'm looking towards an all ETF year (but I'm still keeping my eye on JSDA, I'm waiting for the downtrend to settle down a bit and then I can add these shares to one of my accounts).
Here's some basic info on ETF's for those who need some background info.
I will be looking at this list in the coming days/weeks to figure out which ones I want to buy.

Just to highlight a few ETF's (highest year-to-date returns): the Austria Index has returned 32.5% for the year! Of course there are a good number of energy ETF's high up on the list.
Mexico, Belgium, and Sweden all have returns greater than 10%.

What ETF's should I invest in?
Right now, I have no idea. I want to start the Roth with a broad base of diversified ETF's, so I'm going to try to include some foreign ones, sector-specific ones, as well as asset class ETF's (I'll probably lean more towards the Small Value ones).

My plan is to start this weekend, as well as try to finish my CFA reading.

Wednesday, August 10, 2005

Smart Money (magazine) re-cap

My portfolio has been trending down the past few days, and my returns have drifted from around the 16% range to about 13.5% for the year. Lately I've been thinking about ways to limit my portfolio's fluctuations/risk. I'll hopefully put up a post about it in the near future, but as for now some of my ideas are: put options on indexes, having some small & micro-cap stocks in my portfolio, beta, and finding any literature on correlations of specific ETF's with the S&P 500.

I picked up the August issue of Smart Money and browsed through the issue. I just wanted to recap some of the stocks highlighted.

  • Although rising interest rates hurt banks in general, the issue highlights 3 banks worth looking into because they are big and diversified: Bank of America (BAC), JP Morgan (JPM), and US Bancorp (USB).
  • Keynote Systems (KEYN) was highlighted as a value play. It's profitable, cash flow positive, a growing, they have about $7 in cash and $1.18 in buildings/land.
  • Buffett worthy picks: BUD, Ishares Dow Jones Utilities (IDU), Sysco (SYY)
  • Bill Miller stocks: Cisco (CSCO), Citigroup (C), and Yahoo (YHOO)
  • Peter Lynch worth stocks: Conocophillips (COP), Independence Community Bank (ICBC), and Aetna (AET)
  • Sir John Templeton: Harley Davidson (HDI), Home Depot (HD), Matthews Asia-Pacific (MPACX)
  • Five stocks with nice levels of cash and cash flow: Applied Materials (AMAT), Illinois Tool Works (ITW), Kimberly-Clark (KMB), Michaels Stores (MIK), and Raytheon (RTN)

Tuesday, August 09, 2005

A Rant about 401(k)'s

My aunt recently asked for some help with her 401(k). She doesn't really know what to do, and doesn't know too much about investing or her options. She mailed me her 401k packet and I started to look over the choices. I figured there will be limited choices (seems like that's always the case) and I was right. They offer one fund per asset class/sector so one for value stocks, one for bonds, one for foreign, etc.

So my first rant is the limited number of funds. Why can't they offer a few more choices?
People are depending on 401ks for the most important financial aspect of their lives- retirement.
Preparing for retirement is incredibly important (start early) and people get only a few options to choose from.

A smaller rant (because this is just based on my aun'ts 401k) is that the returns for the funds listed aren't good at all! Based on the listed indices, only a few of the funds beat the specific index in the yearly categories. I wouldn't mind seeing a Dodge & Cox fund in here, but oh well.

My biggest rant is the expense ratios. Are you kidding me?
Most of the funds had fairly high expense ratios (north of 2%), but I need to put down two examples.

Large Equity Index I: "it seeks investment results that correspond generally to the price and yield performance of the common stocks included in the S&P 500"...."suitable for investors who desire an option that closely tracks the performance of the S&P 500 Index"
Alright, so this is an index fund that's really not saying "index fund" although it put index in the title.
Guess what the expense ratio is? Index funds generally have really low expense ratios, which is one of the benefits. For example, Vanguard's S&P index fund (VFINX) has an expense ratio of 0.18% (according to Yahoo).
The expense ratio for the Large Equity Index: 1.34%

The next example is the Money Market fund.
Well according to the packet, this is the lowest risk of all the funds and it's just a money market fund. I would expect a fairly low expense ratio because it's a MMF and also because the returns should be small so why would there be a big expense ratio?
Total expense ratio for this one: 1.44%

That's the end of my ranting!

Monday, August 08, 2005

NFL Goals and a Few $ Items

If you have been reading my blog for awhile, then you probably know I do like to indulge in a little sports betting and gambling in general. I differ from most gamblers because I take the emotion out of the bets and I'm very conservative. I don't go for the longshots and I don't even go for those bets that will double my money. If I'm at a casino I'll play games where I think I have an edge (i.e.-poker, well this depends on the table) or if I'm betting on games I'll pick the conservative picks.

Last year I did pretty well in the NFL games and very well in the NCAA tournament. I decided that for the 2005 NFL season, I'm going to try to set up some goals. I pick the conservative games and almost always to win. This means I don't use the spreads (although they pay out better, they are riskier), but only pick who will win the games. A heavy favorite might pay out 10 cents on the dollar. Great, ten cents. But if you remembered my post (it's somewhere in the archive) that with amounts like this I look at the return. In this case this will be a 10% return in one week's time (technically it can be less than one day since you can place the bet before the game).

My Goal
I want to make conservative bets and try to average a 10% return per week by picking the heavy favorites. Part of this is subjective, since I will be picking the games and not just the highest favorite. I want to start with a set amount, try to average 10%/week for four weeks, and then take out the profit and start the fifth week at the original amount.
I'll be using $500 as my example.
Payout: with compounding the $500 will grow 10% a wee for the first four weeks. This will result in $232 of profit.
Starting on week 5 I will not use the $232 profit and start over at $500. By week 8 I will hopefully have another $232 profit and then start back at $500. This will continue till the end (note that the last segment will be 5 weeks since the season is 17 weeks in total).
Total: $1501 including my original $500, so I'm aiming for $1000 in profit.
It will be tough because one loss will drastically set back my capital, but by starting over after four weeks I will be able to protect some of my profits.
Note: I used $500 as an example and it might not be the actual value used (since I consider $500 a good amount of money).
We'll see how it goes...

Just a few other things
  • For 2005 I will be able to contribute $4000/year (which I will try to do) into a Traditional IRA. This, along with my yearly deductions from work for transportation, can reduce my taxable income by $4700 (transportation: $140/month for the rest of the year plus $4000)
  • I'm setting up monthly spreadsheets (I've seen this on a few other blogs) to track the growth of my assets as well as expenses.
  • Once I put some tables in this blog, I will be able to show the growth and explain the expenses.
  • Last week I had $103 in expenses (food, misc, entertainment, etc.)
  • 28% of these expenses were due to buying lunch at work. I might start bringing my lunch a few days per week (Fridays they give us free lunch), or buy something cheaper. This is slightly hard to do since everything is expensive in the financial district, but Subway is cheap (and healthy).

Friday, August 05, 2005

Friday Update

Just two things to say before I start my weekend.

The NFL season is going to start fairly soon and I'm going to start my betting. I plan to put a little more detail of my betting than last year and also use more capital. I'll probably post more about this as it gets closer to the season.

Insider Trading
I read this in the Journal today, ridiculous.
Options on Reebok were heavily active before the proposed acquisition with Adidas was confirmed. About 3,675 options (mostly calls) were traded, which is about 20 times the normal volume. This was on Monday, and then another 5,000 contracts traded on Tuesday.
The CBOE said they are going to look in this, but this just seems too obvious.
Just to note: if people know insider information they would rather buy options rather than the stock because of the leverage. For instance $10,000 would get you under 200 shares of Reebok, but (assuming an option premium of 2.00) it would get you 50 option contracts. With these contracts you would control 5,000 shares.

Have a nice weekend!

Thursday, August 04, 2005

Sara Lee

I haven't had time to look through Sara Lee mainly because I'm still getting used to my schedule.
Sleeping in for the past three months, and then starting this job.
My schedule goes like this: I wake up at 3:45am (!) and leave the house before 5, I drive to the BART station and take the 5:21 ride and arrive at work around 5:45. I work till 3 and after transportation time I get back to my house before 4pm. I then try to do a little CFA reading (almost done with the reading), eat something, then basically I'm drained. Seriously, I'm getting sleepy by 7. I try to fall asleep around 9:30, but I've been having problems sleeping this week and I keep waking up multiple times throughout the night. As you can see, I don't have too much free time and I'm usually sleepy during this free time. A few more weeks and I think I'll get used to it.

Anyways, back to SLE. They reported a fourth-quarter loss, but said some good things in their report. They are reorganizing the company and spinning off certain units (it's clothing and coffee units). Sales were pretty bad, but I think it might be better if they become a leaner company.
They will be focusing on the units they started with and those with higher margins (like household products). They are going to bring down their debt levels and issued a $2 billion stock repurchase plan. I think a combination of these factors sent the price up, even though other parts of the report were disappointing like their sales figures. It ended the day up 2.56% and trended higher throughout the day.
I hesistated and could have bought at the $19 level, but there are risks and I need to look further into the company.

Wednesday, August 03, 2005

Seeing What the Pros Buy

The market had a fairly level day, although there were some big news (TWX, Adidas buying Reebok).
UNTD improved on last night's after-hours gains and managed to end the day up 7.93%
This pushed my overall position back into the positive side (+3%).
EBF has been showing some weakness lately, but I think I'm going to hold it.
The rest of my positions finished in the green (except FRX was flat).
Right now I'm comfortable with my positions (but cautious with EBF) and I need to find time to research more.

I'll start researching some of the stocks I've been mentioning lately and search for new candidates.
I'm bookmarking this Business Week article about companies that have upped their dividend for 25+ years. Some of these stocks will definitely be out of my price range (due to my low net worth, I can't buy 100 shares of a $70 stock, since that would take up almost 30% of my total net worth).

I read this article/interview of Timothy Vick from Sanibel Captiva Trust. The interview was pretty interesting and it detailed Vick's investment strategy that takes a lot from Buffett.
The article reminded me of something I did at my old job. We were interested in what some of the good portfolio managers were buying, but some of them were not very press-friendly.
So how would we find their holdings? (I'm not talking about big mutual funds, but lesser known firms). The one I looked into frequently was Private Capital Management, which Bruce Sherman runs. Sherman has had a fantastic track record, but it's hard to find out what they were buying.
I looked into the firm's 13F form. Any investment firm (mutual funds, investment management funds, etc.) is registered with the SEC. There might be a size limit, but I know my old firm ($250 million in assets, which is small) needed to be registered. Anyways, registered firms need to submit a quarterly form (13F) of their holdings. By examining quarter to quarter, you can see what the firm has bought or sold. By using the value figures, you can also get a decent range on the price they paid for the stock.
How to look at the 13F: Go to the SEC site, click Search for Company Filings, click Companies and Other Filers, then in Company Name put in the firm's name (Private Capital Management), next click the specific company (the PCM I want to look into is based in Florida, so I'll click the one with FL). This will list all the forms they have to submit, from here you can scroll to find the 13F or you can search by form type (which is helpful if you want to get multiple quarters without taking too much time). After you find the 13F, click that or "text" that should appear next to it. This will bring you the form. Scroll down until you start seeing a big list of holdings.
It will show the stock name, the value, and the total shares. I compared multiple quarters with each other to see what stocks they were adding or selling and it was pretty interesting.
I think this would be great for people with a long-term view. You can find a firm/manager with a strategy you agree with and then compare the 13F's to see their activity. Your price will have a lag since these are quarterly reports, but if you're holding for the long term a few months shouldn't affect the results too much.

Tuesday, August 02, 2005

Market News and Emergency Fund

I really don't have enough time at work to check out any stocks or any news. I'm still learning some things, but I'm getting the hang of a few major activities.

UNM came out with a decent report, revenues and EPS beat the estimates. The last few days have been a bit tough, but I'll keep my eye on UNM.

I like reading Jim Jubak's column on MSN Money, and today he wrote about five winners from the energy bill (BTU, DE, CBI, TRP, BPL).

Avon Products announced a buyback and combined with a recent uptrend, I'm going to try to find some time to look into AVP.
Three other stocks that I might look into: FDP Fresh Del Monte. It has a nice dividend and I think it will be worth the time to look into it (the Motley Fool also wrote an article on FDP).
I found out today that Edgar is public (you know the company that has easy online access to SEC documents). I doubt I will buy it, but I want to read more about them.
The last one: Value Line. It has very popular products, and it has very little volume. The ticker is VALU. I'm just taking a quick glance and it looks like they have no debt, I'll assume conservative growth, gives off almost $2 of free cash flow, a ROE of 17%, and a profit margin of 25% (all figures taken from Yahoo Finance). Plus, it's yielding over 3%. Worth a look.

UNTD came out with a decent earnings report and it's up 4% in after-hours. Hopefully this finally turns the stock up. This is the only stock I'm losing money in (I'll break even if it opens at the +4%), but I think it still has potential.
YTD Portfolio is up +17.6%

Emergency Fund
I've read a few things about emergency funds (like on No Credit Needed), and I think it's a great idea to prepare. I'm going to use my ING account as the emergency fund holder, and I think 3 months worth of living expenses will be sufficient. Based on the rent I think I will be paying within a few months and bills, I'm estimated living expenses at $850/month. I'm going to set a rule for myself and not let my ING account go below $2,550.
It's currently above that right now, and I might transfer over the rest to my brokerage account.

Monday, August 01, 2005

First Day on the Job

Even though I started work early, I could not get a good night's sleep. I think I was just restless/anxious about starting a new job, and I kept waking up throughout the night. Then my alarm went off at 4am. I was pretty excited so I wasn't tired, but I'm feeling tired right about now (and it's not even dinner time!).

I'll share one embarrassing moment: I'm still not used to living in my parents home. Now at 4 in the morning it's pitch black dark, and I didn't want to turn any un-necessary lights on that might wake up my parents. So I tried to navigate in the dark to the kitchen and I should mention here that the house does not have a straight hallway, it's crooked. Anyways I ended up walking right into the wall. I don't know why I'm sharing this, but I thought it was funny.
Next time, I'm using a flashlight.

My first day went really well and the day went by fast. I was bombarded with new information and I tried to take lots of notes. I had to sign a bunch of papers dealing with insider trading and a long confidentiality agreement. From now on, I'll speak in general terms and I can't mention any stocks. I also have to get written consent from the compliance officer if I actually want to buy anything for my own account.

Right now my main job is to take over duties of the person in charge of Operations. It seems like she's moving more towards an Office Manager position. I'm learning all about the trading and settlement process and I think I'm picking it up fairly fast. My plan is to work hard and hopefully get the two traders to start teaching me things (a few people have pointed out that this is a possibility).

So the first day went great. The people are really nice (about sixteen other workers) and I found out about a few other perks. They can get the Wall Street Journal delivered to my home and this will save me over $100/year (since I was planning to get it anyways). Also, on Fridays lunch is paid for. The one thing that I have to get used to is that I really don't have a lunch hour. It's basically whenever you get hungry (usually around 11am for everyone) you grab something, eat it at your desk, and then continue working. I was used to having an hour off, but I'm fine with this new schedule. I'm also the youngest guy there by at least ten years.

Portfolio News
I had a great day at work, but I was barely able to check on my positions. I was happy to see that I had one of my best days ever today, with my entire portfolio increasing over 3%.
LB rebounded 4.15% (but I was hoping for better volume).
FRX finished up 2.43%
The big winner was NTE, as it finished up 10.76%
They came out with earnings, and although profits declined they had great growth in sales. This pushed the stock to $26.25