So I posted my Final Net Worth Update for 2006, which I actually started writing on 15 December, a few moments ago. Once I hit publish, I expected it to show up as the most recent post. Apparently, Blogger is not *quite* that intelligent. Fuggg man! Anyway, go check it out through the above link and comment (if you want).
Damn!
Sunday, December 31, 2006
Blog Recommendation - All About Alpha
Considering that this blog is about a regular guy in search of alpha, how better to end the year than with a recommendation for a blog that is All About Alpha. I'm sure many of my readers are familiar with this one. For those who aren't, go check it out now! A very research oriented blog, almost academic even, except for the real world experience of the host, the aptly named Alpha Male. As he describes the site, its not just a blog but also a portal for dedicated to "alpha-centric investing strategies". Man, does it ever fulfill that role! I'll be increasing my reading over here over the course of the coming months, no doubt!
I've got a few more queued up, because I realized I hadn't actually written any recos in recent memory. As I find them and find value in them, I'll bring them to you.
Until next time, gentle readers...
I've got a few more queued up, because I realized I hadn't actually written any recos in recent memory. As I find them and find value in them, I'll bring them to you.
Until next time, gentle readers...
Friday, December 29, 2006
Alpha and Wealth Preservation
I can't help but laugh when looking at the ads that Google serves alongside these posts. Its not their fault. But still - the billionaire's secret? Ha! Like the average billionaire became a billionaire because of hedge funds.
And that is what I want to talk about in this post.
It seems to me that most alternative investments are tools of wealth preservation as opposed to wealth creation. Now, that is not to say there is anything wrong with wealth preservation. If you have it, you probably intend to pass it down to your progeny, or their heirs, or your favorite charity or whomever. That's all good and fine. Most people want to preserve their wealth, no matter how much or little they have. But the notion that hedge funds serve to make the wealthy extremely wealthier is lost on me. With the possible exception of hedge fund managers, I just don't see it.
Most of the billionaires that I can think of became wealthy from a business of some sort, an observation pointed out by John Mauldin recently. Not all, but most. That business served as the vehicle which led these people to alternative investment strategies/managers as well as asset protection systems, among other things.
I often get the feeling that people think that finding the right investment will automagically catapault one into the pantheon of the high net worth. For most people, however, it is is a slog. That slog may take more or less time for various reasons, but it is still work. Although I like investing as much as the next guy (hopefully, the next guy agrees), I remember stating early on that my portfolio is built on a somewhat aggressive asset allocation model that I follow rather strictly. No real science behind it, and not an exorbitant amount of trading. (But more than the average bear's portfolio, eh Boo-Boo.)
Now, when I am trading, I do seek alpha. Isn't that what we all would like from our investments - absolute, positive, risk- and inflation-adjusted returns as measured against a relevant benchmark? Most of the time, I don't hit it. I'm still learning. But that's where money management comes in. I'm playing with amounts that will sting, but not kill, me if they disappear. Sometimes I make the numbers, sometimes I don't. But real wealth won't come from this, not as things stand now. I don't consider a few million to be wealth - apologies to the millionaires I may offend with that remark. I personally want wealth - as in, *stupid* amounts of money. Enough to swim in like Scrooge McDuck! Enough that American Express gives me a card more exclusive than the Centurion, because I'm the only person on the planet with it! And I'm willing to work really hard for a few years to get there. I see it coming in fits and starts. A few million here, a few more millions there. Then a billion, then more billions. That's ok.
Here's something else to think about. For your average hedgie, isn't trading a job? I mean, I would hope they enjoy their job and that compels them to be outstanding at it, but it is a job. They report to their investment committees, investors, LPs or whomever. Its work. Its just work using OPM to generate the returns, and with a helluva compensation schedule. (Come on, how can you not like the idea of 2 and 20 or better?) But it is still a job.
I'm done with jobs, personally. I've committed myself to working my last job. While the alpha that hedge fund and private equity generate is nice, for me, its not the end all be all. I'm after real wealth. And for that, real work is involved. Seems pretty straightforward to me.
I think I might have been rambling. Hopefully, enough of a point comes through to make sense to someone. If not, that's what comments are for.
Until next time...
And that is what I want to talk about in this post.
It seems to me that most alternative investments are tools of wealth preservation as opposed to wealth creation. Now, that is not to say there is anything wrong with wealth preservation. If you have it, you probably intend to pass it down to your progeny, or their heirs, or your favorite charity or whomever. That's all good and fine. Most people want to preserve their wealth, no matter how much or little they have. But the notion that hedge funds serve to make the wealthy extremely wealthier is lost on me. With the possible exception of hedge fund managers, I just don't see it.
Most of the billionaires that I can think of became wealthy from a business of some sort, an observation pointed out by John Mauldin recently. Not all, but most. That business served as the vehicle which led these people to alternative investment strategies/managers as well as asset protection systems, among other things.
I often get the feeling that people think that finding the right investment will automagically catapault one into the pantheon of the high net worth. For most people, however, it is is a slog. That slog may take more or less time for various reasons, but it is still work. Although I like investing as much as the next guy (hopefully, the next guy agrees), I remember stating early on that my portfolio is built on a somewhat aggressive asset allocation model that I follow rather strictly. No real science behind it, and not an exorbitant amount of trading. (But more than the average bear's portfolio, eh Boo-Boo.)
Now, when I am trading, I do seek alpha. Isn't that what we all would like from our investments - absolute, positive, risk- and inflation-adjusted returns as measured against a relevant benchmark? Most of the time, I don't hit it. I'm still learning. But that's where money management comes in. I'm playing with amounts that will sting, but not kill, me if they disappear. Sometimes I make the numbers, sometimes I don't. But real wealth won't come from this, not as things stand now. I don't consider a few million to be wealth - apologies to the millionaires I may offend with that remark. I personally want wealth - as in, *stupid* amounts of money. Enough to swim in like Scrooge McDuck! Enough that American Express gives me a card more exclusive than the Centurion, because I'm the only person on the planet with it! And I'm willing to work really hard for a few years to get there. I see it coming in fits and starts. A few million here, a few more millions there. Then a billion, then more billions. That's ok.
Here's something else to think about. For your average hedgie, isn't trading a job? I mean, I would hope they enjoy their job and that compels them to be outstanding at it, but it is a job. They report to their investment committees, investors, LPs or whomever. Its work. Its just work using OPM to generate the returns, and with a helluva compensation schedule. (Come on, how can you not like the idea of 2 and 20 or better?) But it is still a job.
I'm done with jobs, personally. I've committed myself to working my last job. While the alpha that hedge fund and private equity generate is nice, for me, its not the end all be all. I'm after real wealth. And for that, real work is involved. Seems pretty straightforward to me.
I think I might have been rambling. Hopefully, enough of a point comes through to make sense to someone. If not, that's what comments are for.
Until next time...
The Specter of Deflation
Just received the latest "Bull! Not bull" from Michael Nystrom. This one is better than average (where average is pretty damn good) and is entitled "The Specter of Deflation". Some very good points and references are included, more than usual, and the piece is a bit meatier. All in all, an excellent read.
So now I am thinking about the role of the Federal Reserve in credit expansion, and how one can prepare for "the next leg down". This would be the time to have plenty of cash on hand. Gold and silver benefit from inflationary pressures moreso than deflationary ones, but in the long term, I think they are solid holdings. I plan to acquire some of both in the near future, along with balancing my portfolio holdings for more emerging market and international exposure (un-hedged). I think dollar denominated assets are far riskier than international assets, at least to my untrained eye. While the US will take a significant hit, I think many other markets will shake it off, or at least weather the storm better. (Think commodity based economies.) As liquidity (can I use that word?) drains out of US assets, I expect some of it to find a home overseas. Maybe even in Thailand. (Ha ha ha!)
Anyway, I'll have a last net worth update for the year in the next few days. It should come in around 84K, maybe 85K but that is seriously pushing it. I may also have a few thoughts about wealth preservation and the role of alpha in achieving it; we'll see if I can get that one to gel.
Until next time...
So now I am thinking about the role of the Federal Reserve in credit expansion, and how one can prepare for "the next leg down". This would be the time to have plenty of cash on hand. Gold and silver benefit from inflationary pressures moreso than deflationary ones, but in the long term, I think they are solid holdings. I plan to acquire some of both in the near future, along with balancing my portfolio holdings for more emerging market and international exposure (un-hedged). I think dollar denominated assets are far riskier than international assets, at least to my untrained eye. While the US will take a significant hit, I think many other markets will shake it off, or at least weather the storm better. (Think commodity based economies.) As liquidity (can I use that word?) drains out of US assets, I expect some of it to find a home overseas. Maybe even in Thailand. (Ha ha ha!)
Anyway, I'll have a last net worth update for the year in the next few days. It should come in around 84K, maybe 85K but that is seriously pushing it. I may also have a few thoughts about wealth preservation and the role of alpha in achieving it; we'll see if I can get that one to gel.
Until next time...
Thursday, December 28, 2006
Water futures?
After my diatribe the other day, I started thinking seriously about the future of obtaining water on this planet. I'm curious how come we haven't yet seen a futures contract on the delivery of water come into existence. I imagine that someone in the wonderful world of derivatives has considered or maybe even tested such a concept. Maybe water is still too plentiful for this to work now? However, I have the distinct feeling that such a futures contract is not too far off on the horizon, say within 10 years. As water becomes scarcer, Wall Street will inevitably find a way to monetize and hedge that scarcity. Financial engineering at its best!
Tuesday, December 26, 2006
Oil futures prices dropping on warm weather
Well, of course the oil futures are getting kicked in the nuts - blame global warming. Look, whether you believe in it or not really isn't important. Its happening. Maybe you'll believe in it after your beach house washes away into the ocean. Ha ha! I won't have any remorse for your loss. (That's my Capricorn ascendant speaking, but that's how we feel.)
Anyway, checking out this piece over at Bloomberg and I got to thinking about this. The other week I watched "An Inconvenient Truth". Powerful stuff, indeed.
My questions for all the people who don't believe in global warming are [1] why don't you believe it and [2] if it just happens to be even a little bit true, on what other planet do you and your progeny expect to live? Friggin' morons.
Honestly, I figure most Republicans could give a shit about the condition of the planet since they won't have to live here after they die, right? Fuck it, its their children's and grandchildren's problem. (The whole baby boomer generation so entirely fucked up this country, IMO. But I swear there is a special circle of hell for Republicans, the vanguard of Satan's army.) But hey, I still live here and I don't have a weekend getaway spot on Mars. If you fall into the same category (which I imagine is most everyone on this planet), then you have a responsibility to be a steward of the planet.
My personal experience this winter has shown that some unnatural shit is happening. I live in an OLD apartment complex. Its convenient to work, its inexpensive, but damn is it old. So old that it has a real problem with spider infestation. I've killed an average of 1 spider per week, and sometimes 2 - 3 per day. Now, by this point in the seasonal cycle, I figure that most of these little bastards should have died off in the cold. Unfortunately, I don't think the temperature has been cold enough to kill off the eggs, the baby spiders, and most importantly their *food*, to restrain their breeding. So even 1 week before Christmas, in the northern Maryland suburbs of Washington, DC, I'm killing spiders. And not small spiders, but spiders 1 - 1.5 inches tip-to-tip. That's a bloody big ass spider for the middle of winter. Nevermind walking through swarms of gnats in the middle of December. WTF?
Anyway, whether you believe Al Gore's position in "An Inconvenient Truth", or not, is irrelevant. If you haven't noticed that things are changing, and not for the better, then you're either blind and stupid, or irresponsible at best and evil at worst. There clearly is not a lot of time to affect change on this matter.
I didn't mean to turn this into a screed, political or otherwise. I'm just commenting on my experience, which is my reality. And I know I'm not the only one. While investing in futures is all good, think about something...the reason wheat futures have had the kind of action they have had this year is because of a drought. As in, the lack of water. Heat causes water to evaporate (if you didn't know). So if the temperature of the planet rises, then water evaporates, and there is less water available for purposes that are near and dear to all of our hearts (for those in possession of one). Uses such as DRINKING water. Expect the water wars to come soon. Military conflicts for oil were nothing. And the funny part is, the US is so beholden to oil (which we are able to get reliably in declining quantities) that with the inevitable price increases in petroleum goods, we won't even be able to afford to fight for the most important resource on the planet - WATER! What a dumbass trade to make.
No global warming, my ass.
Okie, I go now.
Anyway, checking out this piece over at Bloomberg and I got to thinking about this. The other week I watched "An Inconvenient Truth". Powerful stuff, indeed.
My questions for all the people who don't believe in global warming are [1] why don't you believe it and [2] if it just happens to be even a little bit true, on what other planet do you and your progeny expect to live? Friggin' morons.
Honestly, I figure most Republicans could give a shit about the condition of the planet since they won't have to live here after they die, right? Fuck it, its their children's and grandchildren's problem. (The whole baby boomer generation so entirely fucked up this country, IMO. But I swear there is a special circle of hell for Republicans, the vanguard of Satan's army.) But hey, I still live here and I don't have a weekend getaway spot on Mars. If you fall into the same category (which I imagine is most everyone on this planet), then you have a responsibility to be a steward of the planet.
My personal experience this winter has shown that some unnatural shit is happening. I live in an OLD apartment complex. Its convenient to work, its inexpensive, but damn is it old. So old that it has a real problem with spider infestation. I've killed an average of 1 spider per week, and sometimes 2 - 3 per day. Now, by this point in the seasonal cycle, I figure that most of these little bastards should have died off in the cold. Unfortunately, I don't think the temperature has been cold enough to kill off the eggs, the baby spiders, and most importantly their *food*, to restrain their breeding. So even 1 week before Christmas, in the northern Maryland suburbs of Washington, DC, I'm killing spiders. And not small spiders, but spiders 1 - 1.5 inches tip-to-tip. That's a bloody big ass spider for the middle of winter. Nevermind walking through swarms of gnats in the middle of December. WTF?
Anyway, whether you believe Al Gore's position in "An Inconvenient Truth", or not, is irrelevant. If you haven't noticed that things are changing, and not for the better, then you're either blind and stupid, or irresponsible at best and evil at worst. There clearly is not a lot of time to affect change on this matter.
I didn't mean to turn this into a screed, political or otherwise. I'm just commenting on my experience, which is my reality. And I know I'm not the only one. While investing in futures is all good, think about something...the reason wheat futures have had the kind of action they have had this year is because of a drought. As in, the lack of water. Heat causes water to evaporate (if you didn't know). So if the temperature of the planet rises, then water evaporates, and there is less water available for purposes that are near and dear to all of our hearts (for those in possession of one). Uses such as DRINKING water. Expect the water wars to come soon. Military conflicts for oil were nothing. And the funny part is, the US is so beholden to oil (which we are able to get reliably in declining quantities) that with the inevitable price increases in petroleum goods, we won't even be able to afford to fight for the most important resource on the planet - WATER! What a dumbass trade to make.
No global warming, my ass.
Okie, I go now.
2007 Goals
I was looking around the blogosphere to see who, if anyone, has updated their blogs recently. Over at Blueprint for Financial Prosperity, I found a post for Jim's 2007 goals. Now, part of me says that this is a bit ridiculous, and part of me says that the information is too private. However, you can't be held accountable if no one knows what you are supposed to be held accountable FOR. So no matter how absurd doing this might seem to my ego, I'm going to do it anyway. In following with Jim's thoughts, I added "stretch" goals, and boy, do they *ever* seem to be stretches. But hey, to paraphrase T. Harv Eker, your bank account can only grow to the extent that you do. (Actually, that may be a direct quote, but I don't have the book here with me. *shrug*)
Regular Goals –
Personal: Accumulate $50,000 in emergency funds (31 Dec 2007)
Personal: Achieve net worth of $150,000 (31 Dec 2007)
Personal: Have saved $15,000 for house down payment (31 Dec 2007)
Personal: Obtain Certified System Administrator for Solaris 10 (31 Mar 2007)
Business: Achieve $50,000 in revenue in my new venture (31 Dec 2007)
Business: Be directly responsible for acquiring 5 properties for my real estate partnership (31 Dec 2007)
Stretch Goals –
Personal: Read 100 books (31 Dec 2007)
Personal: Learn to drive a manual transmission (30 Jun 2007)
Personal: Attend Skip Barber driving school (31 Dec 2007)
Personal: Obtain Oracle Certified Administrator certification for Oracle 10g (30 Jun 2007)
Business: Purchase 1 multi-unit rental property w/ a monthly cash flow in excess of $1000 (31 Dec 2007)
Business: Achieve $100,000 in revenue in my new venture (31 Dec 2007)
Regular Goals –
Personal: Accumulate $50,000 in emergency funds (31 Dec 2007)
Personal: Achieve net worth of $150,000 (31 Dec 2007)
Personal: Have saved $15,000 for house down payment (31 Dec 2007)
Personal: Obtain Certified System Administrator for Solaris 10 (31 Mar 2007)
Business: Achieve $50,000 in revenue in my new venture (31 Dec 2007)
Business: Be directly responsible for acquiring 5 properties for my real estate partnership (31 Dec 2007)
Stretch Goals –
Personal: Read 100 books (31 Dec 2007)
Personal: Learn to drive a manual transmission (30 Jun 2007)
Personal: Attend Skip Barber driving school (31 Dec 2007)
Personal: Obtain Oracle Certified Administrator certification for Oracle 10g (30 Jun 2007)
Business: Purchase 1 multi-unit rental property w/ a monthly cash flow in excess of $1000 (31 Dec 2007)
Business: Achieve $100,000 in revenue in my new venture (31 Dec 2007)
Elevator Pitch
On Christmas day, I finally started talking about my new venture. Not widely, mind you, and I won't go into details on this blog, but I will discuss certain aspects of the business as openly as I can.
I spent most of my time pitching to my aunts and uncles. I figure that at some point in the not-too-distant future, my partner and I will need some level of outside financing. While discussing this with one of my advisors, it made more sense to start with friends and family investment as opposed to institutional (read: venture capital) financing. So I began giving impromptu demos of the current state of the software with my uncles and cousin. We're not ready yet but I figure I should start working on these skills to be ready when the point in time comes to really start pitching. I did get some questions that I was a bit unprepared for, and while I feel I navigated them well, I need to be less "on my feet" and more "ahead of time". I need to be able to present my answers and rebuttals quickly after having prepared for those questions instead of improvising. Its funny because I don't think well "on my feet" anyway, and I never have. But I think this idea, this business, has consumed me so much over the last few weeks that these answers are becoming second nature. Now I need to cement them and make them automatic.
Clearly, this preparation could become a full time job. But as the brother of a friend of mine said to me as a freshman in college, "if you want something you've never had before, you have to do something you've never done before." So I'll start practicing my pitch along with working out the business plan details.
As for the product, it is coming along nicely. My partner has been very productive in the last few weeks. She's great! This is moving so much faster than I imagined. 9 figures, here we come!!!
So until next time...
I spent most of my time pitching to my aunts and uncles. I figure that at some point in the not-too-distant future, my partner and I will need some level of outside financing. While discussing this with one of my advisors, it made more sense to start with friends and family investment as opposed to institutional (read: venture capital) financing. So I began giving impromptu demos of the current state of the software with my uncles and cousin. We're not ready yet but I figure I should start working on these skills to be ready when the point in time comes to really start pitching. I did get some questions that I was a bit unprepared for, and while I feel I navigated them well, I need to be less "on my feet" and more "ahead of time". I need to be able to present my answers and rebuttals quickly after having prepared for those questions instead of improvising. Its funny because I don't think well "on my feet" anyway, and I never have. But I think this idea, this business, has consumed me so much over the last few weeks that these answers are becoming second nature. Now I need to cement them and make them automatic.
Clearly, this preparation could become a full time job. But as the brother of a friend of mine said to me as a freshman in college, "if you want something you've never had before, you have to do something you've never done before." So I'll start practicing my pitch along with working out the business plan details.
As for the product, it is coming along nicely. My partner has been very productive in the last few weeks. She's great! This is moving so much faster than I imagined. 9 figures, here we come!!!
So until next time...
Friday, December 22, 2006
Getting Back Up to Speed
As you can probably imagine, my posting will be spotty over the next few days. I meant to kick this one out earlier, but I spent the vast majority of the day sleeping.
Anyway, Michael Nystrom has posted his "predictions" for 2007, which was an interesting read. Mauldin also sent out his latest newsletters, but I can't link to his site from this crappy BellSouth DSL line.
(Man, why can't these cock knockers get their game together? Can't someone steal the "high speed" connectivity game from these fools, PLEASE!?!?!?!? This is soooo painful. Is it even possible to make a living in any online business living in the southest U.S.? Fugggg, man! But I digress.)
After waking from my deep slumber this afternoon, I started catching up on all of my blog reading. Some interesting stuff to be found, but mostly...well, let's just say that you can tell this is the slow part of the year. Personally, I'll be glad once the holidays come to a close. I need some action, something happening. But I do welcome the downtime to get back up to speed on all facets of my life.
Right now, I'm taking a break from hacking away on my business plan. Ugggghhhh! I really can't stand writing these things, no matter how necessary they are. But I plan to do this startup RIGHT, and that means I have to suck up the pain. The sooner I get this fashioned, the better. I have some database schemas to start designing. Software architecture has been on my mind recently too.
So I think I was surfing around Going Private the other day when I found, via some other site (Abnormal Returns, IIRC, but maybe not), this blog named Accrued Interest. Very cool! A bond market blog written by a professional bond market trader. Me like bond blog! I haven't yet crawled through the archives, but I plan to get to that sometime before I leave Atlanta on Wednesday morning.
So it looks like wheat performed very nicely this past week, ending up strongly. We'll see if that continues after Christmas. The chart for the May contract looks very good though. This is one area, along with equity options, that I intend to increase my investment in during the course of 2007.
So now its time to continue my business plan writing. I have to keep this venture moving forward, as I fully expect to bring in some outside capital in the next year. Maybe not full fledged VC, but either friends and family or a small angel round of financing would be useful. I think the potential is GINORMOUS so right now, it is back to writing for the K.
Until next time, good people...Merry Christmas. (Just in case I don't post between now and then.) May the Alpha be with you!
Anyway, Michael Nystrom has posted his "predictions" for 2007, which was an interesting read. Mauldin also sent out his latest newsletters, but I can't link to his site from this crappy BellSouth DSL line.
(Man, why can't these cock knockers get their game together? Can't someone steal the "high speed" connectivity game from these fools, PLEASE!?!?!?!? This is soooo painful. Is it even possible to make a living in any online business living in the southest U.S.? Fugggg, man! But I digress.)
After waking from my deep slumber this afternoon, I started catching up on all of my blog reading. Some interesting stuff to be found, but mostly...well, let's just say that you can tell this is the slow part of the year. Personally, I'll be glad once the holidays come to a close. I need some action, something happening. But I do welcome the downtime to get back up to speed on all facets of my life.
Right now, I'm taking a break from hacking away on my business plan. Ugggghhhh! I really can't stand writing these things, no matter how necessary they are. But I plan to do this startup RIGHT, and that means I have to suck up the pain. The sooner I get this fashioned, the better. I have some database schemas to start designing. Software architecture has been on my mind recently too.
So I think I was surfing around Going Private the other day when I found, via some other site (Abnormal Returns, IIRC, but maybe not), this blog named Accrued Interest. Very cool! A bond market blog written by a professional bond market trader. Me like bond blog! I haven't yet crawled through the archives, but I plan to get to that sometime before I leave Atlanta on Wednesday morning.
So it looks like wheat performed very nicely this past week, ending up strongly. We'll see if that continues after Christmas. The chart for the May contract looks very good though. This is one area, along with equity options, that I intend to increase my investment in during the course of 2007.
So now its time to continue my business plan writing. I have to keep this venture moving forward, as I fully expect to bring in some outside capital in the next year. Maybe not full fledged VC, but either friends and family or a small angel round of financing would be useful. I think the potential is GINORMOUS so right now, it is back to writing for the K.
Until next time, good people...Merry Christmas. (Just in case I don't post between now and then.) May the Alpha be with you!
Wednesday, December 20, 2006
Last Check
Woo hoo!
I made my final payment of $4750 into my RE investment group today. (Actually yesterday, since it is almost 2 AM EST on Wednesday, 20 December.) That brings my total investment to the $11,200 required for all the members. Just under the wire, baby!
Now I will focus on rebuilding my emergency savings. Although not depressed too terribly, and I have a good 3 months worth of expenses saved, I'm working to double that by June. I put just over 1/3 of every paycheck into an HSBC Direct Online Savings account, so it shouldn't take too long to rebuild the funds. I just need to be ready for Trinidad Carnival!
From here on, I'll spend a lot more time crafting the business plan for my new venture and watching my wheat investment. Go global warming, destroying crops worldwide!
Until next...thought?
I made my final payment of $4750 into my RE investment group today. (Actually yesterday, since it is almost 2 AM EST on Wednesday, 20 December.) That brings my total investment to the $11,200 required for all the members. Just under the wire, baby!
Now I will focus on rebuilding my emergency savings. Although not depressed too terribly, and I have a good 3 months worth of expenses saved, I'm working to double that by June. I put just over 1/3 of every paycheck into an HSBC Direct Online Savings account, so it shouldn't take too long to rebuild the funds. I just need to be ready for Trinidad Carnival!
From here on, I'll spend a lot more time crafting the business plan for my new venture and watching my wheat investment. Go global warming, destroying crops worldwide!
Until next...thought?
Tuesday, December 19, 2006
Hands Off Hedge Funds
By way of Going Private, I came across this very nice piece of writing at Foreign Affairs by Sebastian Mallaby. All very good points. At least, they make sense to me.
Just working on catching up on some reading. Monday sucked ass. Why won't people just let me sleep? Damn!
Anyway, it looks like wheat got hit hard again today. Not that I noticed until tonight, but we'll see how things progress. Its a marathon, not a sprint, at least right now.
So I was just doing some scratching around my favorite equity basket case, SUNW, and found this linked from the WSJ site (of course, referring to another Dow Jones site, but still). Mind you, I have no position in SUNW; I just have been keeping tabs on them for a little while. I may or may not take a position in the future. That is TBD. However, I do think SUNW is poised to make some really positive upward moves in the near future. That is just my feeling and observation. It is going slowly, but the trend is positive.
Anyway, until the next time...which should be after my Christmas shopping is done.
Just working on catching up on some reading. Monday sucked ass. Why won't people just let me sleep? Damn!
Anyway, it looks like wheat got hit hard again today. Not that I noticed until tonight, but we'll see how things progress. Its a marathon, not a sprint, at least right now.
So I was just doing some scratching around my favorite equity basket case, SUNW, and found this linked from the WSJ site (of course, referring to another Dow Jones site, but still). Mind you, I have no position in SUNW; I just have been keeping tabs on them for a little while. I may or may not take a position in the future. That is TBD. However, I do think SUNW is poised to make some really positive upward moves in the near future. That is just my feeling and observation. It is going slowly, but the trend is positive.
Anyway, until the next time...which should be after my Christmas shopping is done.
Sunday, December 17, 2006
The Ramifications of Twilight
I finally completed "Twilight in the Desert" while working out earlier today, and all I can say is "Wow!". If that book doesn't make you re-think your relationship to oil, and the relationship of oil producing nations to the US, you're hopeless. There really is nothing else that can be said.
Matthew Simmons lays out an awesome, and logical, case for the impending end of the Saudi Arabian "Oil Miracle". Whether you're convinced is up to you but the arguments are compelling in my opinion. Once you know something, you have the choice to act on your newly found knowledge, or to ignore it, but you do the latter at your own peril.
While the book clearly states that there is no way to know with certainty when the "Oil Miracle" (whether Saudi Arabia's or any other oil producer's) will end, it is clear the end is coming. Faster than you think. A lot faster.
I plan to share this book with as many people as I can, starting with my students. If you haven't read it, you need to. Today. There are so many investment theses that I can see coming out of it, starting with investing in scarce natural resources like oil. However, the scale of the consequences of Matt Simmon's assertions is planetary. As is this. Scary stuff man.
Wow!
Now, on to the next book, "Speedwealth" by T. Harv Eker. Until next time...
Matthew Simmons lays out an awesome, and logical, case for the impending end of the Saudi Arabian "Oil Miracle". Whether you're convinced is up to you but the arguments are compelling in my opinion. Once you know something, you have the choice to act on your newly found knowledge, or to ignore it, but you do the latter at your own peril.
While the book clearly states that there is no way to know with certainty when the "Oil Miracle" (whether Saudi Arabia's or any other oil producer's) will end, it is clear the end is coming. Faster than you think. A lot faster.
I plan to share this book with as many people as I can, starting with my students. If you haven't read it, you need to. Today. There are so many investment theses that I can see coming out of it, starting with investing in scarce natural resources like oil. However, the scale of the consequences of Matt Simmon's assertions is planetary. As is this. Scary stuff man.
Wow!
Now, on to the next book, "Speedwealth" by T. Harv Eker. Until next time...
Saturday, December 16, 2006
Final Net Worth Update for 2006
I spent a little time recently rebalancing my 401(k). Not that there was a lot to do, but a little, just to make sure things were within the parameters I have set. I use the aggressive portfolio allocation recommended at www.401khelp.com. If you are an employee of a sizable US company, you should check the site out. They probably have a model portfolio for you!
Anyway, the net worth stands like this...$85,083.19 as of the end of 2006.
For comparison purposes, my net worth was $66,727.49 at the end of 2005. The YoY increase is $18,355.51, for a 27.508% increase. Not quite where I wanted to go, but a win is a win. I had hoped to get to 100K net worth by the end of this year but a lot of recreational travel and a job flip-flop in February worked against me. The travel thing I can fix (although I like to travel and I plan to keep doing it). The job thing was unavoidable. As I said in an earlier post, avoid working for Unisys if you can. I gave up all my seniority, including my 3 weeks of vacation (which is the same amount of time I had the job), to take that spot, and 6 weeks worth of 401(k) contributions as well. Ouch!
Rat bastids!
Anyway, we shall move on. I've got better things going than a low 6 figure contracting opp anyway.
Until next time...Happy New Year to all my readers. Hope its a prosperous and joyful one from beginning to end, for everyone!
Anyway, the net worth stands like this...$85,083.19 as of the end of 2006.
For comparison purposes, my net worth was $66,727.49 at the end of 2005. The YoY increase is $18,355.51, for a 27.508% increase. Not quite where I wanted to go, but a win is a win. I had hoped to get to 100K net worth by the end of this year but a lot of recreational travel and a job flip-flop in February worked against me. The travel thing I can fix (although I like to travel and I plan to keep doing it). The job thing was unavoidable. As I said in an earlier post, avoid working for Unisys if you can. I gave up all my seniority, including my 3 weeks of vacation (which is the same amount of time I had the job), to take that spot, and 6 weeks worth of 401(k) contributions as well. Ouch!
Rat bastids!
Anyway, we shall move on. I've got better things going than a low 6 figure contracting opp anyway.
Until next time...Happy New Year to all my readers. Hope its a prosperous and joyful one from beginning to end, for everyone!
130/30 on My Mind
This one will be short. I know its not Friday anymore (barely) on the east coast. However, this server is in California! Ha! :)
So it looks like there's been more positive movement in what. I am very happy and thankful to God for this. Take a look at this chart. See this one too. Its hard to believe I originally got into wheat in the 420 - 430 area then sold off once I had a profit. Had I let that winner run.... Let this be a lesson in not culling your winners too quickly. Let them run and use trailing stops as much as possible. Oh well. You live and you learn.
Just catching up on some reading. There will be more tomorrow night. I'll have to wait until then for the latest issue of Barron's.
Something over at Institutional Investor did catch my eye though. The 130/30 fund. I need to look into this a bit more. Its an interesting concept, but I can't work the mechanics in my head as yet. Is anyone out there reading this familiar with or knowledgeable about these? How much leverage does it take to setup a fund like this? 1.5 - 2 times? A 30% short position coupled to a 130% long. Very intriguing. I see I'm going to have to look at the cost of subscriptions to II and Alpha Magazine. I love learning new stuff, and its even better when it deals with a subject so close to my own heart!
Anyway, time to get out of this lab and get some sleep. I was up until 6:30 AM this morning hacking away on my systems. I've now got my SPARCstation 20 and Ultra 2 running, and I'll probably install NetBSD on the SS20 tonight. I do also plan to get caught up on sleep, as the coming week will be quite long.
Until next time...may the Alpha be with you!
So it looks like there's been more positive movement in what. I am very happy and thankful to God for this. Take a look at this chart. See this one too. Its hard to believe I originally got into wheat in the 420 - 430 area then sold off once I had a profit. Had I let that winner run.... Let this be a lesson in not culling your winners too quickly. Let them run and use trailing stops as much as possible. Oh well. You live and you learn.
Just catching up on some reading. There will be more tomorrow night. I'll have to wait until then for the latest issue of Barron's.
Something over at Institutional Investor did catch my eye though. The 130/30 fund. I need to look into this a bit more. Its an interesting concept, but I can't work the mechanics in my head as yet. Is anyone out there reading this familiar with or knowledgeable about these? How much leverage does it take to setup a fund like this? 1.5 - 2 times? A 30% short position coupled to a 130% long. Very intriguing. I see I'm going to have to look at the cost of subscriptions to II and Alpha Magazine. I love learning new stuff, and its even better when it deals with a subject so close to my own heart!
Anyway, time to get out of this lab and get some sleep. I was up until 6:30 AM this morning hacking away on my systems. I've now got my SPARCstation 20 and Ultra 2 running, and I'll probably install NetBSD on the SS20 tonight. I do also plan to get caught up on sleep, as the coming week will be quite long.
Until next time...may the Alpha be with you!
Thursday, December 14, 2006
Movin' On Up
That heating oil is on the move, if ever so slightly. Not that it matters to me anymore right now, but I'll continue watching the energies. Its a long term play, IMO.
Meanwhile, wheat is looking good so far today. Nice movement. Nothing special. We'll continue to monitor.
And for anyone thinking of starting any kind of business, be sure before you do. This stuff is killer. Be prepared for long nights with little to no sleep, lots of reading and document preparation, and other minutiae. Just came back from a meeting with my title company in Baltimore, and I was supposed to meet one of my partners to go take a look at a house but he was too tired from working overnight. I understand. Working the same kind of shift and trying to do anything else during the day will drain you quickly. So I guess I'll have to cancel and re-schedule to inspect that house. But right now, my feeling is that it won't get added to the portfolio. The owner looks like he has one of Kiyosaki's "alligators", and that's between him and his bank account. I don't want to take on anyone else's problems, at least not without an appropriate reduction in the price. This is a business after all.
Anyway, I'm off. Gotta finish configuring this Subversion repository for my coder and put in a little bit of work on my software business plan. And I still have some configuration work to complete on this HPC cluster and to see my doctor.
Oh, and if it seems like I'm rambling...welcome to my mind. :)
I'll follow up on things later today. Until next time...
Meanwhile, wheat is looking good so far today. Nice movement. Nothing special. We'll continue to monitor.
And for anyone thinking of starting any kind of business, be sure before you do. This stuff is killer. Be prepared for long nights with little to no sleep, lots of reading and document preparation, and other minutiae. Just came back from a meeting with my title company in Baltimore, and I was supposed to meet one of my partners to go take a look at a house but he was too tired from working overnight. I understand. Working the same kind of shift and trying to do anything else during the day will drain you quickly. So I guess I'll have to cancel and re-schedule to inspect that house. But right now, my feeling is that it won't get added to the portfolio. The owner looks like he has one of Kiyosaki's "alligators", and that's between him and his bank account. I don't want to take on anyone else's problems, at least not without an appropriate reduction in the price. This is a business after all.
Anyway, I'm off. Gotta finish configuring this Subversion repository for my coder and put in a little bit of work on my software business plan. And I still have some configuration work to complete on this HPC cluster and to see my doctor.
Oh, and if it seems like I'm rambling...welcome to my mind. :)
I'll follow up on things later today. Until next time...
Wednesday, December 13, 2006
Goldman's ART
I can think of no good reason for Goldman Sachs to launch a product like the Absolute Return Tracker (ART). They already have a fairly successful internal hedge fund operation, even if Global Alpha did get eviscerated recently. But this smacks of being a pure market share grab. I don't know, maybe to me it seems like they are imitating the wrong bank. I mean, because Merrill created a similar product means that Goldman has to do the same?
Oh well.
I guess this really means that the bloom is off the rose for hedge funds. It was bound to happen, right? Everybody and their grandmother runs a hedge fund nowadays. YOU too can invest in one. (And unbeknownest to you, you may just be doing that. Which is fine until it isn't.)
I wonder how far back the data will go that they get from this third party? And whether any of said historical data is coming out of the remains of PlusFunds, via the Refco implosion? (WSJ.com subscription req'd)
Hmmmm.
Oh well.
I guess this really means that the bloom is off the rose for hedge funds. It was bound to happen, right? Everybody and their grandmother runs a hedge fund nowadays. YOU too can invest in one. (And unbeknownest to you, you may just be doing that. Which is fine until it isn't.)
I wonder how far back the data will go that they get from this third party? And whether any of said historical data is coming out of the remains of PlusFunds, via the Refco implosion? (WSJ.com subscription req'd)
Hmmmm.
Getting All Misty
So while traipsing around the blogosphere tonight (from the comfort of my cubicle), I decided to check out Going Private to get caught up for the day. Lo and behold, what do I see but a post indicating that my beloved PE blog may or may not survive much beyond the end of the year. How saddening!
Well, things change. Of course, that won't stop me from continue to soak up Equity Private's extremely well written posts for as long as possible. (Reading the archives of Going Private was one of the most enjoyable experiences of my blog-reading life. Mildly erotic, in a certain way, but I'm kooky like that.)
Anyway, get on over to Going Private before it should disappear. (Not saying it will, but just in case.)
EP, I love you! Viva Going Private!
Well, things change. Of course, that won't stop me from continue to soak up Equity Private's extremely well written posts for as long as possible. (Reading the archives of Going Private was one of the most enjoyable experiences of my blog-reading life. Mildly erotic, in a certain way, but I'm kooky like that.)
Anyway, get on over to Going Private before it should disappear. (Not saying it will, but just in case.)
EP, I love you! Viva Going Private!
Tuesday, December 12, 2006
Taking a New Course with this Site
I'm going to work on doing something different with this blog from here on. I plan to start posting daily. Even if it is short (and most likely, in many cases, it will be), I will post SOMETHING every day. I'd like your help, dear readers, in determining the things to talk about in this space. If you want more details about my portfolio or its construction, let me know. If you want different topics than what I have typically written about, let me know. If you would like longer and deeper posts, say that. Tell me what you would like to read. I write this for you as much as for myself. I may even be able to share a bit about my new startup.
Anyway, I find myself fairly successful with regard to today's goals. I've got some money in motion that will top of my investment with my real estate partnership. Each of us was to put $10,000 into this group for an equal share of the business. I didn't have $10,000 up front so I've been on a $750/month payment schedule. However, for tax reasons, I want to get all of the funds in before the end of the year. This will also allow me to save money in my emergency account more quickly, as I won't keep draining it for various reasons (including the monthly payment into the RE business).
So taking a look at the grain futures action, I see wheat is down again. Bad, bad wheat. I decided to put on 2 call spreads on May wheat along with an outright March 550 call. From what I have seen, wheat looks like it still has some room to run.
Now, I know some of you are thinking that I'm fuggin' nuts to continue with the commodities trading. And you could be right. But considering that I save about 28% of my gross income, once you consider my 401(k) and monthly savings into an HSBC Online Savings account, I feel that I can take these kinds of risks without doing too much damage. I've worked to automate as much of my financial life as possible. Factoring in the real estate, which has grown slowly but more profitably than not, I think there is room to pursue more aggressive strategies for realizing returns. Obviously, this is not for everyone. I still have some learning to do, and I understand that. But I don't see this, even if you call it "gambling", as being completely reckless.
Okay, my pain medication is starting to kick in and its getting harder to think, nevermind type. So until next time...which will be tomorrow. :)
Peace!
Anyway, I find myself fairly successful with regard to today's goals. I've got some money in motion that will top of my investment with my real estate partnership. Each of us was to put $10,000 into this group for an equal share of the business. I didn't have $10,000 up front so I've been on a $750/month payment schedule. However, for tax reasons, I want to get all of the funds in before the end of the year. This will also allow me to save money in my emergency account more quickly, as I won't keep draining it for various reasons (including the monthly payment into the RE business).
So taking a look at the grain futures action, I see wheat is down again. Bad, bad wheat. I decided to put on 2 call spreads on May wheat along with an outright March 550 call. From what I have seen, wheat looks like it still has some room to run.
Now, I know some of you are thinking that I'm fuggin' nuts to continue with the commodities trading. And you could be right. But considering that I save about 28% of my gross income, once you consider my 401(k) and monthly savings into an HSBC Online Savings account, I feel that I can take these kinds of risks without doing too much damage. I've worked to automate as much of my financial life as possible. Factoring in the real estate, which has grown slowly but more profitably than not, I think there is room to pursue more aggressive strategies for realizing returns. Obviously, this is not for everyone. I still have some learning to do, and I understand that. But I don't see this, even if you call it "gambling", as being completely reckless.
Okay, my pain medication is starting to kick in and its getting harder to think, nevermind type. So until next time...which will be tomorrow. :)
Peace!
Sunday, December 10, 2006
Playing Catch Up
So I just spent the last few hours reading some of the many blogs on my usual reading list. Not all of them, not even close. There's just sooo much stuff out there. But it must be done. Thankfully, I have some free time at work.
Anyway, time for a quick reco on a web site and then I'll delve into some other random shite.
I know there are some Information Arbitrage readers out there...somewhere...hopefully. If not, then you should check it out. The posts tend to be long, the kind of posts I hope to write one day. (Hmmm. "Whatever happened to that post about the similarities between investing and good driving, K?" K: "Good question. I'll get back to you.")
Anyway, IA has some really awesome, thought provoking posts. They're not all necessarily investing related, but more so about applying intelligence to companies and markets, from which we can then discern possible investment theses, particularly in the Internet and technology spaces. At least, that's how I view it. Whether or not that's the intent of the author, Roger Ehrenberg, I find it useful just from a big, broad stroke perspective. I'm always looking for new ideas and new ways of looking at existing ideas. Needless to say, I love this site though I haven't yet used, and likely wouldn't exclusively use, it to generate investment ideas.
Anyway, go check it out.
So I finally closed out that bum heating oil trade. How sad. Literally, the front month heating oil contract go to within 1 cent of where I needed it to be for the trade to be (slightly) positive before retreating. I guess winter in Siberia hasn't been quite cold enough.
*weep*
At least my options application FINALLY arrived. It seems that my broker had the wrong address on file even though it was one of the first addresses I changed when I moved. So they sent the same stuff to the same bum address twice. Whatever happened to mail being returned undeliverable? Sheesh! Things like this make me think the USPS should be privatized (however bad a move I think that might ultimately be). It shouldn't be that bloody difficult, especially when you have a mail forward in place.
I'll spend the rest of today working on that and waiting for a response back about the house I made a verbal offer on yesterday. Yes, it was that time of the month again. I am a member of one of the larger and better known real estate investor groups in the DC area. I haven't been to a meeting since late summer however, just due to conflicting commitments. But I did manage to drag myself out of bed for Saturday's meeting, and hopefully it will result in a successful close of another investment property. We'll see how that rolls.
Anyway, more to come but its starting to get hectic here. Until next time...
Anyway, time for a quick reco on a web site and then I'll delve into some other random shite.
I know there are some Information Arbitrage readers out there...somewhere...hopefully. If not, then you should check it out. The posts tend to be long, the kind of posts I hope to write one day. (Hmmm. "Whatever happened to that post about the similarities between investing and good driving, K?" K: "Good question. I'll get back to you.")
Anyway, IA has some really awesome, thought provoking posts. They're not all necessarily investing related, but more so about applying intelligence to companies and markets, from which we can then discern possible investment theses, particularly in the Internet and technology spaces. At least, that's how I view it. Whether or not that's the intent of the author, Roger Ehrenberg, I find it useful just from a big, broad stroke perspective. I'm always looking for new ideas and new ways of looking at existing ideas. Needless to say, I love this site though I haven't yet used, and likely wouldn't exclusively use, it to generate investment ideas.
Anyway, go check it out.
So I finally closed out that bum heating oil trade. How sad. Literally, the front month heating oil contract go to within 1 cent of where I needed it to be for the trade to be (slightly) positive before retreating. I guess winter in Siberia hasn't been quite cold enough.
*weep*
At least my options application FINALLY arrived. It seems that my broker had the wrong address on file even though it was one of the first addresses I changed when I moved. So they sent the same stuff to the same bum address twice. Whatever happened to mail being returned undeliverable? Sheesh! Things like this make me think the USPS should be privatized (however bad a move I think that might ultimately be). It shouldn't be that bloody difficult, especially when you have a mail forward in place.
I'll spend the rest of today working on that and waiting for a response back about the house I made a verbal offer on yesterday. Yes, it was that time of the month again. I am a member of one of the larger and better known real estate investor groups in the DC area. I haven't been to a meeting since late summer however, just due to conflicting commitments. But I did manage to drag myself out of bed for Saturday's meeting, and hopefully it will result in a successful close of another investment property. We'll see how that rolls.
Anyway, more to come but its starting to get hectic here. Until next time...
Tuesday, December 05, 2006
Not enough time in the day
Have I ever mentioned that consulting sucks? Or maybe to be more accurate, consulting for friends sucks. Don't get me wrong, I like my friends. Maybe I'm just too nice. I give a reasonably large discounts for my consulting time to my friends, because the ones I do work for aren't in a position to pay for too many hours of my time at my full $60 per hour rate. I don't think its unreasonable. But it would sure be nice if they would listen to my advice so they don't NEED me so damn much in the first place. We'd probably all be much happier.
Anyway, I was browsing around the Bloomberg site and found a video snippet of an interview with Peter Thiel. For those who weren't paying attention (or didn't care to pay attention) to PayPal, Thiel was the co-founder and CEO of the company. He now runs a hedge fund/think tank called Clarium Capital. Anyway, I think I can get with his investment thesis. You can find the video here. Let me what you think. They also have an article about his hedge fund returns of the last few years. How's that for alpha generation!
I just want to sleep dammit! The last few days are starting to take a physical toll, with my body literally breaking down. Why won't people just let me rest? So annoying.
Anyway, I'm off to do some more reading. Lots of Bill Gross to catch up on, and an economic report about the city in which I purchased that rental property. That one is getting long in the tooth, so I need to finish it quick. And I haven't read blogs for days. This could take a while.
Until next time (as he deposits his $500 consulting check)...
Anyway, I was browsing around the Bloomberg site and found a video snippet of an interview with Peter Thiel. For those who weren't paying attention (or didn't care to pay attention) to PayPal, Thiel was the co-founder and CEO of the company. He now runs a hedge fund/think tank called Clarium Capital. Anyway, I think I can get with his investment thesis. You can find the video here. Let me what you think. They also have an article about his hedge fund returns of the last few years. How's that for alpha generation!
I just want to sleep dammit! The last few days are starting to take a physical toll, with my body literally breaking down. Why won't people just let me rest? So annoying.
Anyway, I'm off to do some more reading. Lots of Bill Gross to catch up on, and an economic report about the city in which I purchased that rental property. That one is getting long in the tooth, so I need to finish it quick. And I haven't read blogs for days. This could take a while.
Until next time (as he deposits his $500 consulting check)...
Thursday, November 30, 2006
Monthly Wrap Up
As November comes to a close, its time to take stock of where things are. It has been a long month.
For one, my net worth is in a very nice place. I finallly broke $80,000 in net worth. It has been a long journey. The next target is 90K.
My latest options play is starting to come around as well. Back in October I put in a option spread on January heating oil futures. With only a few weeks left until expiration, the trade has started moving in the desired direction. Woo hoo! I'll continue watching it today, as I may have to close out the spread soon. After I get my credit card completely paid off, I'll start moving funds back into my commodities trading account.
I made a small but successful trade on SUNW. I will continue watching that one, because I do believe there is more upside there. Maybe once I get equity options trading enabled on my brokerage account, I'll start trading calls on SUNW as well. That's the plan right now. Keep watching as I detail my adventures with SUNW.
The next big move I plan to make is on the startup front. I've got a great idea, and I think I've found the perfect partner to help me make it reality. We'll sit down tonight to discuss some of the features of our product and how to start building them together. I think this one may require outside investment in the near future, but we'll see. I plan to hold onto as much equity in this venture as possible, as the potential of this idea is, in a word, obscene.
All that said, let's keep moving and growing. I've been listening to Earl Nightingale's "The Strangest Secret" since yesterday. This came as part of a kit of materials from my membership in a local real estate investors group. I plan to continue playing this whenver I am at home, to embed its lessons into my mind. Good stuff!
Until next month...maybe...
For one, my net worth is in a very nice place. I finallly broke $80,000 in net worth. It has been a long journey. The next target is 90K.
My latest options play is starting to come around as well. Back in October I put in a option spread on January heating oil futures. With only a few weeks left until expiration, the trade has started moving in the desired direction. Woo hoo! I'll continue watching it today, as I may have to close out the spread soon. After I get my credit card completely paid off, I'll start moving funds back into my commodities trading account.
I made a small but successful trade on SUNW. I will continue watching that one, because I do believe there is more upside there. Maybe once I get equity options trading enabled on my brokerage account, I'll start trading calls on SUNW as well. That's the plan right now. Keep watching as I detail my adventures with SUNW.
The next big move I plan to make is on the startup front. I've got a great idea, and I think I've found the perfect partner to help me make it reality. We'll sit down tonight to discuss some of the features of our product and how to start building them together. I think this one may require outside investment in the near future, but we'll see. I plan to hold onto as much equity in this venture as possible, as the potential of this idea is, in a word, obscene.
All that said, let's keep moving and growing. I've been listening to Earl Nightingale's "The Strangest Secret" since yesterday. This came as part of a kit of materials from my membership in a local real estate investors group. I plan to continue playing this whenver I am at home, to embed its lessons into my mind. Good stuff!
Until next month...maybe...
Tuesday, November 28, 2006
Saturday, November 25, 2006
Status
This is just a quick status update.
Busy week. I came back from Atlanta on Tuesday. The drive was far longer than it had any right to be, but oh well.
This Millionaire Mind Intensive (MMI) was good. Although I preferred Harv's style and method, the trainer (ha!) for this MMI was good. Very relatable guy named David Wood. For those who aren't familiar with T. Harv Eker and his MMI, I would simply point you to his web site at www.peakpotentials.com as well as this post I made over on Single Ma's Fabulous Financials. (I couldn't actually find a permalink to my post, so I linked to the entire thread. Just scroll down to my comments.) While I would never consider the MMI to be an advanced course in financial management, it sets out some nice simple ways to reframe your thinking about and relationship with money. I found it helpful to focus my mind when I first took it in May. Of course, Peak Potentials is a business. I reckon that Harv has made as much, if not more, money training people to manage/invest their money than actually doing it. However, I would not say it is without value. As anyone familiar with the MMI will recall, its about taking and applying in your life the pieces that work for you and leaving the bits that don't. Eventually, I plan to take more of the courses Peak Potentials offers, but that will be at a much later time. Right now, I am focused on applying in my life what I have learned from the 2 MMIs I have attended this year.
On Wednesday, I had my first closing on an investment property! Woo hoo! Now its a matter of wrapping up some details. The process was fairly straightforward, but OMG my hand was killing me from all the signing. I need to get a stamp, because handwritten signatures are clearly not feasible over the long term if I'm going to do real estate in any volume (which I plan to do).
In the coming days, I plan to start setting up a new business. While I'm not at liberty to go into details right now, I expect that to change over time as I build it out. It looks very promising so far, so my main objective is bringing in the proper resources to make it as viable as I think it can be.
So I go now. I have to finish reading John Mauldin's latest e-mail. As well, I'm tired. Just saw Alex Bugnon live at Blues Alley in Georgetown. Good stuff, man! I have a new appreciation for his work, and I plan to keep up with him in the future.
Until next time...
Busy week. I came back from Atlanta on Tuesday. The drive was far longer than it had any right to be, but oh well.
This Millionaire Mind Intensive (MMI) was good. Although I preferred Harv's style and method, the trainer (ha!) for this MMI was good. Very relatable guy named David Wood. For those who aren't familiar with T. Harv Eker and his MMI, I would simply point you to his web site at www.peakpotentials.com as well as this post I made over on Single Ma's Fabulous Financials. (I couldn't actually find a permalink to my post, so I linked to the entire thread. Just scroll down to my comments.) While I would never consider the MMI to be an advanced course in financial management, it sets out some nice simple ways to reframe your thinking about and relationship with money. I found it helpful to focus my mind when I first took it in May. Of course, Peak Potentials is a business. I reckon that Harv has made as much, if not more, money training people to manage/invest their money than actually doing it. However, I would not say it is without value. As anyone familiar with the MMI will recall, its about taking and applying in your life the pieces that work for you and leaving the bits that don't. Eventually, I plan to take more of the courses Peak Potentials offers, but that will be at a much later time. Right now, I am focused on applying in my life what I have learned from the 2 MMIs I have attended this year.
On Wednesday, I had my first closing on an investment property! Woo hoo! Now its a matter of wrapping up some details. The process was fairly straightforward, but OMG my hand was killing me from all the signing. I need to get a stamp, because handwritten signatures are clearly not feasible over the long term if I'm going to do real estate in any volume (which I plan to do).
In the coming days, I plan to start setting up a new business. While I'm not at liberty to go into details right now, I expect that to change over time as I build it out. It looks very promising so far, so my main objective is bringing in the proper resources to make it as viable as I think it can be.
So I go now. I have to finish reading John Mauldin's latest e-mail. As well, I'm tired. Just saw Alex Bugnon live at Blues Alley in Georgetown. Good stuff, man! I have a new appreciation for his work, and I plan to keep up with him in the future.
Until next time...
Wednesday, November 22, 2006
Recommended Reading
I receive Michael Nystrom's announcement list and it is always an interesting and brief read. (The importance of brevity cannot be understated.)
Here's a nice collection of stories - 1, 2 and 3 - that he has published recently. Fascinating stuff to a part-time history buff like me, and it always helps to maintain perspective in times like these. History does rhyme, as Mark Twain apparently did not say.
Here's a nice collection of stories - 1, 2 and 3 - that he has published recently. Fascinating stuff to a part-time history buff like me, and it always helps to maintain perspective in times like these. History does rhyme, as Mark Twain apparently did not say.
Monday, November 20, 2006
Out of Town
I have to apologize for the long lag in posts. I have been in Atlanta attending T. Harv Eker's Millionaire Mind Intensive for the second time. Maybe I'll report on that later. But for now, I've got a long drive back home tomorrow so I need to get some sleep.
Until next time...
Until next time...
Saturday, November 11, 2006
Net Worth Update
Time for a breakdown.
First, I've finally broken $80,000 in net worth. It has taken a loooong time to get here, so its even sweeter! I was on a roll last year and then hit a wall around 70K, as detailed in Net Worth Hump.
Anyway, even factoring in about 2K in credit card debt that I put on for basic household expenses and my California trip, I am currently just shy of 81K in net worth. This coming Tuesday, I'll be paying off a third of that bill so that should enhance my position a bit more. Things are coming along nicely. Too bad I'm going to take a short term hit due to a car accident on Thursday night. Some woman decided to hit me instead of taking a hit, or *gasp* slowing down, when someone was going to hit her. So now my driver's door won't open on my car, and I will need to rent in order to get a vehicle to drive to Atlanta this coming Thursday.
*sigh*
Its not that its a problem. I have emergency funds for this reason. But its a damn inconvenience. I do know that that her insurance company (USAA) will be paying for all of my damages and expenses. I made sure to call the police so that there is some objective record of the events. No witnesses pulled over to give statements, however. Considering that she apologized profusely to both me, my passenger and the cops, as well as the extensive damage to my vehicle and minimal (non-existent) damage to hers, I think its clear who is at fault.
What a waste of time.
First, I've finally broken $80,000 in net worth. It has taken a loooong time to get here, so its even sweeter! I was on a roll last year and then hit a wall around 70K, as detailed in Net Worth Hump.
Anyway, even factoring in about 2K in credit card debt that I put on for basic household expenses and my California trip, I am currently just shy of 81K in net worth. This coming Tuesday, I'll be paying off a third of that bill so that should enhance my position a bit more. Things are coming along nicely. Too bad I'm going to take a short term hit due to a car accident on Thursday night. Some woman decided to hit me instead of taking a hit, or *gasp* slowing down, when someone was going to hit her. So now my driver's door won't open on my car, and I will need to rent in order to get a vehicle to drive to Atlanta this coming Thursday.
*sigh*
Its not that its a problem. I have emergency funds for this reason. But its a damn inconvenience. I do know that that her insurance company (USAA) will be paying for all of my damages and expenses. I made sure to call the police so that there is some objective record of the events. No witnesses pulled over to give statements, however. Considering that she apologized profusely to both me, my passenger and the cops, as well as the extensive damage to my vehicle and minimal (non-existent) damage to hers, I think its clear who is at fault.
What a waste of time.
Friday, November 10, 2006
The Little Book of Value Investing
Something that was sent to me by a friend. Being a value groupie at heart, I enjoyed it. Hopefully you will too. I'll have to add this to my reading list.
http://tinyurl.com/yyemse
http://tinyurl.com/yyemse
Monday, November 06, 2006
Balancing Act
Spent some time this morning working on my portfolio rebalancing. I used to do this almost monthly, if not more often, but I've scaled it back recently. I don't want to incur additional trading fees, even in the tax-deferred accounts, for constantly making portfolio changes. Just not worth it.
Its a bit funny. The old 401(k) (aka the good one) is approaching 30K on nothing less than market action. Since moving into this new 401(k) (aka the bad one), the old/good one has languished. I'm thinking about rolling it into a self-directed Roth IRA but I'd like to avoid those additional trading fees as long as possible (or reasonable anyway).
Anyway, most of the action will be in the taxable account. I'm looking at picking up some PRMSX and eventually some TREMX. These will be long term holdings to round out my international holdings. I'm a bit torn on the TREMX though and there's still a chance I will just move onto the FI side and avoid the TREMX altogether. We'll see. I'm looking for a bit of weakness in the near future to help make the purchase more palatable. But again, these aren't trades.
Speaking of which, it looks like I have to call my brokerage AGAIN and get the options trading stuff re-sent. *sigh* This is why I hate moving.
Until the next time...
Its a bit funny. The old 401(k) (aka the good one) is approaching 30K on nothing less than market action. Since moving into this new 401(k) (aka the bad one), the old/good one has languished. I'm thinking about rolling it into a self-directed Roth IRA but I'd like to avoid those additional trading fees as long as possible (or reasonable anyway).
Anyway, most of the action will be in the taxable account. I'm looking at picking up some PRMSX and eventually some TREMX. These will be long term holdings to round out my international holdings. I'm a bit torn on the TREMX though and there's still a chance I will just move onto the FI side and avoid the TREMX altogether. We'll see. I'm looking for a bit of weakness in the near future to help make the purchase more palatable. But again, these aren't trades.
Speaking of which, it looks like I have to call my brokerage AGAIN and get the options trading stuff re-sent. *sigh* This is why I hate moving.
Until the next time...
Wednesday, November 01, 2006
Goodbye SUNW
Closed out the SUNW trade. Yeah, the trade that was supposed to be a covered call play. Not a huge profit, but a profit is a profit (after taxes, too!). Now the proceeds will get shuffled into an international fund. I have one in mind, but I need to revisit my selection to make sure it is still reasonable. The fund has gone up about $5/share since I started looking at it. They only have a $2500 minimum but it may be wiser to spread the funds around to some of my other investments first. We'll see.
And the SUNW calls didn't do enough to make it worthwhile anyway. Oh well. Maybe at the end of this quarter.
And the SUNW calls didn't do enough to make it worthwhile anyway. Oh well. Maybe at the end of this quarter.
Monday, October 30, 2006
Where Was I?
I was planning on writing something before going to bed, but I got caught up returning calls about properties. Seems like a lot of people are trying to let go of houses in the Baltimore area. This is completely anecdotal, and based on my sleep deprived state of mind as well. But wow! Guess a lot of legs have alligators wrapped around them.
*shrug*
SUNW hasn't gone much of anywhere today. Oh well. To drop XLP or not to drop XLP? That is my question. But we'll worry about that after some sleep. I'm dying here.
Later all.
*shrug*
SUNW hasn't gone much of anywhere today. Oh well. To drop XLP or not to drop XLP? That is my question. But we'll worry about that after some sleep. I'm dying here.
Later all.
Tuesday, October 24, 2006
The Price of Procrastination
Just got back from working out. Feels good to get back into my routine.
Anyway, this post is about procrastination, or rather, the effects of procrastination.
How it starts is that yesterday I called my brokerage in order to get my account setup to trade equity options. This is required for the covered call play I have been salivating about for the last few weeks. Well, of course, the brokerage has to send me documents which I must read and return. These documents will be sent by postal mail. Even after I complete and return them, they have to be evaluated by the risk department to see how much margin they will extend to me. Needless to say, since I wanted to trade the options by Wed, 25 October, none of this will be in place in time. Now, I should have known better and I should have prepared in advance of this week. I can recall the machinations required to open my commodities account, where I trade options and futures. Instead, I procrastinated. And here I am, unable to write calls against Sun Microsystems as I had hoped. All because I was too lazy and not thinking ahead.
So there you go. That's the name I've been talking about for the last few weeks. SUNW. The dot in dot com. I've been following them for a while, and based on all the things I've observed, and some things (non-specific things, mind you) I've heard about how busy my best friend has been, I think Sun is going to present some good news when they report on Thursday. Now, I could be entirely mistaken. I could be hallucinating. (Could it be the demerol?) It doesn't matter as much now. I still own the shares, and we'll see what happens. I'm looking forward to it, but if it does pan out, then I'll be kicking myself for my procrastination that will have cost me real money.
Damn.
Anyway, this post is about procrastination, or rather, the effects of procrastination.
How it starts is that yesterday I called my brokerage in order to get my account setup to trade equity options. This is required for the covered call play I have been salivating about for the last few weeks. Well, of course, the brokerage has to send me documents which I must read and return. These documents will be sent by postal mail. Even after I complete and return them, they have to be evaluated by the risk department to see how much margin they will extend to me. Needless to say, since I wanted to trade the options by Wed, 25 October, none of this will be in place in time. Now, I should have known better and I should have prepared in advance of this week. I can recall the machinations required to open my commodities account, where I trade options and futures. Instead, I procrastinated. And here I am, unable to write calls against Sun Microsystems as I had hoped. All because I was too lazy and not thinking ahead.
So there you go. That's the name I've been talking about for the last few weeks. SUNW. The dot in dot com. I've been following them for a while, and based on all the things I've observed, and some things (non-specific things, mind you) I've heard about how busy my best friend has been, I think Sun is going to present some good news when they report on Thursday. Now, I could be entirely mistaken. I could be hallucinating. (Could it be the demerol?) It doesn't matter as much now. I still own the shares, and we'll see what happens. I'm looking forward to it, but if it does pan out, then I'll be kicking myself for my procrastination that will have cost me real money.
Damn.
Monday, October 23, 2006
Weekly Recap
Last week worked out fairly well. Straightened out a few things on personal finance side, updating records for the 401(k)s and closing out the currency account. Hopefully that check is waiting for me to pick up tomorrow from my parents. (I recently moved and some postal mail is still being forwarded.) That will go toward my commodity account equity balance.
As well, I received some positive news on the real estate side. My partners and I are in the final stages of negotiating a new contract for a house to rehab and rent. That one looks fairly promising, and I'll keep you updated as that progresses. As well, I found out that another property I've had my eye on for some time can probably be acquired at a very favorable price. I'm maneuvering to put that together this week, once I can make contact with the owner. I think that one will make a very good rental as well.
As for the coming week, I'll be moving around some money from bonds that I cashed last week and managing inflows and outflows for various regular expenses. My tech stock play will finally come to fruition; we'll see how that works out. While I won't go into the name of the company just yet, I'll say that I am eyeing a covered call play which I hope to close out by week's end. While I don't expect to put too much into the position, I think it will be profitable, ex fees and commissions. In fact, now that the morning is over, I can say that we're off to a great start. I got a refund check from Comcast for $14 which I deposited along with some consulting proceeds. (Unfortunately, the currency account check has yet to arrive.) I changed my Morningstar.com subscription to annual from monthly which dropped by monthly cost to $11.25 from $14.95. And I'm about to call my equity brokerage to add the ability to trade equity options so I can make the covered call play I've been mentioning for a while.
If I haven't already said it, I again recommend reading "Twilight in the Desert" by Matt Simmons. Awesome read. Scary stuff, but hey, that's life. Better to be scared yet informed and aware than ignorant and surprised.
Peace!
As well, I received some positive news on the real estate side. My partners and I are in the final stages of negotiating a new contract for a house to rehab and rent. That one looks fairly promising, and I'll keep you updated as that progresses. As well, I found out that another property I've had my eye on for some time can probably be acquired at a very favorable price. I'm maneuvering to put that together this week, once I can make contact with the owner. I think that one will make a very good rental as well.
As for the coming week, I'll be moving around some money from bonds that I cashed last week and managing inflows and outflows for various regular expenses. My tech stock play will finally come to fruition; we'll see how that works out. While I won't go into the name of the company just yet, I'll say that I am eyeing a covered call play which I hope to close out by week's end. While I don't expect to put too much into the position, I think it will be profitable, ex fees and commissions. In fact, now that the morning is over, I can say that we're off to a great start. I got a refund check from Comcast for $14 which I deposited along with some consulting proceeds. (Unfortunately, the currency account check has yet to arrive.) I changed my Morningstar.com subscription to annual from monthly which dropped by monthly cost to $11.25 from $14.95. And I'm about to call my equity brokerage to add the ability to trade equity options so I can make the covered call play I've been mentioning for a while.
If I haven't already said it, I again recommend reading "Twilight in the Desert" by Matt Simmons. Awesome read. Scary stuff, but hey, that's life. Better to be scared yet informed and aware than ignorant and surprised.
Peace!
Sunday, October 22, 2006
I loved this thread!
Over at "The Big Picture", reminisces about the '87 crash. Fascinating stuff!
http://tinyurl.com/yby4rk
http://tinyurl.com/yby4rk
Net Worth Hump
My net worth has plateaued and I've yet to figure out what I can do to get over the hump. Last year, things were cruising along fairly well. Made some records then all of a sudden, I hit a wall. I didn't think the traveling would take the kind of toll it seems to have. I was long overdue for the trip to Trinidad for Carnival. 8 years overdue. I've taken a few other trips this year, even though my grand plan for a new job didn't quite work out as expected.
I don't know. I've never considered myself a spender, and I think most people would agree that I am frugal. I do, however, spend money on things important to me. Such as first class travel over long distances. (I have a medical condition that makes me highly susceptible to DVT, if not flat out predisposed.) Nice cars are a weakness, but I rent rather than own so as to avoid taking on a permanent expense. I've cut back my book spending. Realistically, I've cut as far as I can and save as aggressively as possible without impinging significantly on what is already a spartan lifestyle. (And if I kill another spider in my apartment, which will probably occur later today, I think I'll go nuts.)
Anyway, breaking through the 6 figure net worth barrier seems to get increasingly more difficult. I guess I need to spend more time attacking it from the increased income side as opposed to the savings side. I haven't given them equal mindshare just because the savings angle is more within reach. Something else to add to the to do list. The rest of the month of October will be used to do some deep analysis on these matters.
Aside: Don't EVER think of working for Unisys on a government contract. I'm not sure who I should be angriest at, so I pick Unisys since they ultimately hired and fired me 3 weeks later w/o having a clue what they needed. I could have stayed at my old job for all of that and kept my 3 weeks of vacation. Oh well.
I don't know. I've never considered myself a spender, and I think most people would agree that I am frugal. I do, however, spend money on things important to me. Such as first class travel over long distances. (I have a medical condition that makes me highly susceptible to DVT, if not flat out predisposed.) Nice cars are a weakness, but I rent rather than own so as to avoid taking on a permanent expense. I've cut back my book spending. Realistically, I've cut as far as I can and save as aggressively as possible without impinging significantly on what is already a spartan lifestyle. (And if I kill another spider in my apartment, which will probably occur later today, I think I'll go nuts.)
Anyway, breaking through the 6 figure net worth barrier seems to get increasingly more difficult. I guess I need to spend more time attacking it from the increased income side as opposed to the savings side. I haven't given them equal mindshare just because the savings angle is more within reach. Something else to add to the to do list. The rest of the month of October will be used to do some deep analysis on these matters.
Aside: Don't EVER think of working for Unisys on a government contract. I'm not sure who I should be angriest at, so I pick Unisys since they ultimately hired and fired me 3 weeks later w/o having a clue what they needed. I could have stayed at my old job for all of that and kept my 3 weeks of vacation. Oh well.
Sunday, October 15, 2006
INVESTools + thinkorswim
Anyone out there using INVESTools? What are your thoughts about it? I saw a piece in the latest Barron's about www.thinkorswim.com being purchased by INVESTools. Sounds like a good deal to me. A former co-worker of mine was relating very positive experiences about using INVESTools, and now they have an online brokerage component they can integrate with their educational tools.
Speaking of thinkorswim, do any readers out there use them? If so, what has been your experience with them? What kind of securities can you trade with them? Using Barron's review of online brokers from earlier this year, optionsXpress seemed to have a slightly richer offering on the web-based platform side. This new pairing looks promising from an education + trading perspective. But I need a broker with whom I can trade equity and futures options, and I don't see mention of options on futures on their site. From my read, they only offer trading on index futures. Reader thoughts on the quality of thinkorswim's offerings are much appreciated.
Speaking of thinkorswim, do any readers out there use them? If so, what has been your experience with them? What kind of securities can you trade with them? Using Barron's review of online brokers from earlier this year, optionsXpress seemed to have a slightly richer offering on the web-based platform side. This new pairing looks promising from an education + trading perspective. But I need a broker with whom I can trade equity and futures options, and I don't see mention of options on futures on their site. From my read, they only offer trading on index futures. Reader thoughts on the quality of thinkorswim's offerings are much appreciated.
John Mauldin's Insights
This will be a short one.
If you don't already subscribe to John Mauldin's e-mail newsletters, Outside The Box and Thoughts From The Frontline, then slide on over to his site and check them out. In the few short weeks I have been reading them, they have shown themselves to be very insightful and thought provoking. (Guess that makes sense for a company named InvestorsInsight Publishing.) While I don't always agree, it always makes for good reading.
Until the next time...
If you don't already subscribe to John Mauldin's e-mail newsletters, Outside The Box and Thoughts From The Frontline, then slide on over to his site and check them out. In the few short weeks I have been reading them, they have shown themselves to be very insightful and thought provoking. (Guess that makes sense for a company named InvestorsInsight Publishing.) While I don't always agree, it always makes for good reading.
Until the next time...
Tuesday, October 10, 2006
Wheat & Random Noise
*sigh*
I really shouldn't be awake right now. But while I work on this project, I have been thinking about wheat. Mainly about how I didn't hold on to it. Wheat seriously popped while I was in Cali and I figured I'd take my profits and get back in later.
Fuggin' stupid.
Lesson learned: let your winners run.
Oh well, guess missing out on big returns is the best way to learn this lesson. I can't imagine how much I would have made had I stayed long on the wheat. Even if I got in late (as in early last week).
On the asset allocation side, things look good. I'm weighing whether to roll over my old 401(k) into a self-directed Roth IRA. But the potential trading fees and commissions would hurt my regular rebalancing. And after the horror story a friend of mine told me the other week, I am loathe to roll it into my current 401(k). If I wanted to own so much damn company stock, I'd buy it on the open market like everyone else. That old 401(k) was soooo great.
*sniffle*
But I did have to go through a good exercise, figuring out (again) all my assets so I could complete this loan application. That's the price of investing in real estate, right. Slow progress is being made, but I'm still looking for a way to ramp up even faster. And hopefully my deal to sell some old speakers and amps from my DJ enterprise of a few years back will put cash in my pocket shortly.
Alpha any way you can get it, right?
Later.
I really shouldn't be awake right now. But while I work on this project, I have been thinking about wheat. Mainly about how I didn't hold on to it. Wheat seriously popped while I was in Cali and I figured I'd take my profits and get back in later.
Fuggin' stupid.
Lesson learned: let your winners run.
Oh well, guess missing out on big returns is the best way to learn this lesson. I can't imagine how much I would have made had I stayed long on the wheat. Even if I got in late (as in early last week).
On the asset allocation side, things look good. I'm weighing whether to roll over my old 401(k) into a self-directed Roth IRA. But the potential trading fees and commissions would hurt my regular rebalancing. And after the horror story a friend of mine told me the other week, I am loathe to roll it into my current 401(k). If I wanted to own so much damn company stock, I'd buy it on the open market like everyone else. That old 401(k) was soooo great.
*sniffle*
But I did have to go through a good exercise, figuring out (again) all my assets so I could complete this loan application. That's the price of investing in real estate, right. Slow progress is being made, but I'm still looking for a way to ramp up even faster. And hopefully my deal to sell some old speakers and amps from my DJ enterprise of a few years back will put cash in my pocket shortly.
Alpha any way you can get it, right?
Later.
Wednesday, October 04, 2006
I'm Back
Ok, I've been absent a while, so lets get caught up. I'm back from Orange County, CA and ready for work.
First, I have to say that the Audi A8L is a *very* nice car. If you have the chance to test drive one, I highly recommend it. I know I would have to seriously consider one if my trusty steed ever broke down. OMG!! Of course, maybe it had something to do with smokin' yuppie yugos (read: BMW 3 Series) at 120+ on the PCH Friday night. Great fun! I can't stand the 3 Series.
On the flights to and from Cali, I spent some time cuddling up with Matt Simmons' "Twilight in the Desert". Fascinating book. (Thanks, LTB. Good lookin' out!) I'm not too far in yet, and I'm sure there are tons of reviews floating around the 'Net on this book, so I won't contribute to the byte pollution with one more. But its definitely worth a read.
So I'm working on closing out my currency account. That experiment will get taken up again later. Nothing else to see here. Move along.
On the commodity side, I'm looking at coffee and possibly wheat (again) in the near future. Gold just got slaughtered so I had to get out. I do see long term upside but in this arena, it clearly doesn't pay to wait. We'll see what else looks promising. Gotta do some research before I roll out of here tonight. The currency funds will get rolled over here eventually.
On the more personal side, I need to check up on my new 401(k). I am an asset allocator after all, and with the last few hectic weeks, I've totally neglected this. And my taxable equity portfolio. We draw closer to earnings announcements for the stock I've been tracking, and I have a good feeling. Time to load up is near. I'll let you know what the play is after I have my position. Here's a hint though - it is a tech stock.
My man "G" passed along an interesting paper, which looks like it may be a dissertation (?) of some sort, about creating a stock market trend application. Looks interesting, if a bit rough. Will have to take a gander at that later this week when I have some spare cycles. But "G" always sends along good stuff to read. I wonder where he finds the time. Probably due to all that consulting work! Talk about a job that isn't. But I still love him. I'll keep you all posted if I see anything interesting in this paper. Which I'm sure I will.
So last month was a bit slow. I'm going to work on making October more robust and readable. And feel free to prompt me. I live and die by you, my readers. So let me know what works for you and what doesn't.
Peace!
First, I have to say that the Audi A8L is a *very* nice car. If you have the chance to test drive one, I highly recommend it. I know I would have to seriously consider one if my trusty steed ever broke down. OMG!! Of course, maybe it had something to do with smokin' yuppie yugos (read: BMW 3 Series) at 120+ on the PCH Friday night. Great fun! I can't stand the 3 Series.
On the flights to and from Cali, I spent some time cuddling up with Matt Simmons' "Twilight in the Desert". Fascinating book. (Thanks, LTB. Good lookin' out!) I'm not too far in yet, and I'm sure there are tons of reviews floating around the 'Net on this book, so I won't contribute to the byte pollution with one more. But its definitely worth a read.
So I'm working on closing out my currency account. That experiment will get taken up again later. Nothing else to see here. Move along.
On the commodity side, I'm looking at coffee and possibly wheat (again) in the near future. Gold just got slaughtered so I had to get out. I do see long term upside but in this arena, it clearly doesn't pay to wait. We'll see what else looks promising. Gotta do some research before I roll out of here tonight. The currency funds will get rolled over here eventually.
On the more personal side, I need to check up on my new 401(k). I am an asset allocator after all, and with the last few hectic weeks, I've totally neglected this. And my taxable equity portfolio. We draw closer to earnings announcements for the stock I've been tracking, and I have a good feeling. Time to load up is near. I'll let you know what the play is after I have my position. Here's a hint though - it is a tech stock.
My man "G" passed along an interesting paper, which looks like it may be a dissertation (?) of some sort, about creating a stock market trend application. Looks interesting, if a bit rough. Will have to take a gander at that later this week when I have some spare cycles. But "G" always sends along good stuff to read. I wonder where he finds the time. Probably due to all that consulting work! Talk about a job that isn't. But I still love him. I'll keep you all posted if I see anything interesting in this paper. Which I'm sure I will.
So last month was a bit slow. I'm going to work on making October more robust and readable. And feel free to prompt me. I live and die by you, my readers. So let me know what works for you and what doesn't.
Peace!
Friday, September 29, 2006
Hectic
I write you from southern California, where I've come to commune with some friends and just get away from things for a few days. But the search for alpha continues, and so far this week, the commodities markets are being good to me. Its all about knowing when to get out - THAT is the question. Right now, its looking like a $300 profit on the call spread that I have just authorized to close out.
Looks like Bill Gross has posted his October commentary over at pimco.com. I'll take a read later today after I wake up for good.
There's probably something else I wanted to mention here, but I'm on vacation. Once I get up and collect my thoughts, I'll figure out the rest. Hope you have a good one today!
Cheers!
Looks like Bill Gross has posted his October commentary over at pimco.com. I'll take a read later today after I wake up for good.
There's probably something else I wanted to mention here, but I'm on vacation. Once I get up and collect my thoughts, I'll figure out the rest. Hope you have a good one today!
Cheers!
Friday, September 22, 2006
Although this has nothing to do with generating alpha specifically, I just have to mention the latest FaceBook news. Is it me or is Yahoo! the acquirer of last resort? What's up with that??? And does the Microsoft ad deal still stand if they do buy out FaceBook? What's the effect on Yahoo!'s numbers if that deal changes?
(See, I could find a way to tie it all back to alpha, even if loosely! Ha!)
Okie, I go now.
(See, I could find a way to tie it all back to alpha, even if loosely! Ha!)
Okie, I go now.
Change of Direction
It has been a while since I've been able to sit down devote time to writing. I intend to be better about it in the future. Thanks for following along, those of you still with me.
The latest news is that I am in the process of getting out of my currency trading. It was an experiment who's time has ended. And it definitely not for the faint of heart or stomach. As stated in my lessons learned, part II, unless you have a lot of time (and good money management skills), stay away from currencies. Its just too dynamic and volatile a market, in my opinion, although I imagine it must be great fun to get it right.
From looking at the markets recently, its times like this that I wish I had puts on the long bond. We're not talking crash levels, but just a small dip, seems to be in order. I think Treasuries are completely overbought, but what do I know. I'm just thinking out loud.
*shrug*
Anyway, I'm going to bed. When I wake up, we'll see if my other recent call, a big tech name that we all know, continues its run. Unfortunately, I didn't have any money on that horse either. All I needed were $5 calls for anytime later this year. I think there's still some way to run in that stock, but oh man.
Time to cry myself to sleep.
The latest news is that I am in the process of getting out of my currency trading. It was an experiment who's time has ended. And it definitely not for the faint of heart or stomach. As stated in my lessons learned, part II, unless you have a lot of time (and good money management skills), stay away from currencies. Its just too dynamic and volatile a market, in my opinion, although I imagine it must be great fun to get it right.
From looking at the markets recently, its times like this that I wish I had puts on the long bond. We're not talking crash levels, but just a small dip, seems to be in order. I think Treasuries are completely overbought, but what do I know. I'm just thinking out loud.
*shrug*
Anyway, I'm going to bed. When I wake up, we'll see if my other recent call, a big tech name that we all know, continues its run. Unfortunately, I didn't have any money on that horse either. All I needed were $5 calls for anytime later this year. I think there's still some way to run in that stock, but oh man.
Time to cry myself to sleep.
Saturday, September 16, 2006
Recommended Site
Although not exactly a blog, I have to recommend Bill Gross' monthly commentaries over at www.pimco.com. This month's is quite good, but then again, all of them are. If you don't know who Bill Gross is, well, you need to get to know him now! So shoot on over and check out his musings. Entertaining always, and downright scary most of the time too, but chock full of thoughtfulness. Paul McCulley also has a monthly commentary that is worth a regular visit. Check out some of the other essays as well. The PIMCO housing project is very interesting. Now if only they had RSS feeds.
Wednesday, September 13, 2006
Apologies
Looks like I may have inadvertently caused an outage of the blog for a few hours. I attempted to publish my most recent post - Lessons Learned, Part II - while connected to a flaky network. Most of my packets appear to have been lost in the ether. I just tried refreshing the blog to get a nice blank, white page so I re-published and now things appear to be fine. To anyone who might have experienced the outage, I apologize for it.
Now back to your regularly scheduled program, already in progress...
Now back to your regularly scheduled program, already in progress...
Lessons Learned, Part II
So I explained what went wrong with my unleaded gasoline position.
Around the same time that I opened that account, I opened an account with a different broker specializing in currencies. Now, for all the sexiness of currency trading, I've heard horror stories about them that rival anything you've heard in hardcore rap lyrics.
Anyway, my currency experiment has gone even worse than the commodities. I'll be closing that out completely soon. But this is a lesson's learned piece. The biggest lesson I learned from the currency trading is - OMFG! You need to do this shite every day. If you plan to do any currencies, just drop everything else in your life. You don't need them. Sex is overrated. S.O.s are time sink. To hell with a job. Friends are pretty useless too. Just sit at home in your underwear and trade your pairs. Probably best to find 2 or 3 single pairs and focus on them.
And dammit, when you're up, take the money off the table. Period. A win is a win.
*sigh*
Somehow, I think I wanted to say something different here, but I got distracted. There may be a part 3. Maybe...
Around the same time that I opened that account, I opened an account with a different broker specializing in currencies. Now, for all the sexiness of currency trading, I've heard horror stories about them that rival anything you've heard in hardcore rap lyrics.
Anyway, my currency experiment has gone even worse than the commodities. I'll be closing that out completely soon. But this is a lesson's learned piece. The biggest lesson I learned from the currency trading is - OMFG! You need to do this shite every day. If you plan to do any currencies, just drop everything else in your life. You don't need them. Sex is overrated. S.O.s are time sink. To hell with a job. Friends are pretty useless too. Just sit at home in your underwear and trade your pairs. Probably best to find 2 or 3 single pairs and focus on them.
And dammit, when you're up, take the money off the table. Period. A win is a win.
*sigh*
Somehow, I think I wanted to say something different here, but I got distracted. There may be a part 3. Maybe...
Friday, September 08, 2006
Lessons Learned, Part I
First, some background.
My first experiment with options also turned out to be an experiment with futures. 2 for the price of 1. I received a cold call from a broker in late May. Although I didn't have the funds immediately available, I was able to assemble them by early - mid June. The plan was a bull call spread on options for October expiration on unleaded gasoline futures. The reasoning was solid, I think. Entering both summer and hurricane season. Expectations of a bad hurricane season. Instability in the mid east. Nationalization of the oil industry in Bolivia. So I went with it. In 3 weeks, I made 12.5%. (That's not annualized. That was the 3 week return.) After closing out those contracts, I was feeling emboldened. So when my broker came to me in July to do the same thing, I went with an even larger stake.
Mistake #1: Bad money management.
So things progressed fairly well. Until they didn't. The Israel/Hezbollah "war" ended w/o causing any problems between Iran and oil markets. The deadline for Iran to stop enriching uranium came and went. (Loved the "woosh" sound that one made as it went by.) Hurricane activity was so low that the estimates were lowered, and we still haven't seen a level of activity consistent with the lowered estimates. (Kinda like homebuilder stocks. *shrug*)
Mistake #2: Cut your losses.
I held on. Looking for an out. "Hope is a lousy defense." At the first sign of breaking 5% down, I should have been out. Instead, I made a worse mistake.
Mistake #3: Never average down.
I turned the puts in the bull call spread into calls, by buying them back, closing the contracts and sinking the money into more October calls. Now I'm long unleaded gasoline calls in a dropping market. I doubled down on a losing position, like a bad poker player. WTF was I thinking?!?!?!
So now I'm sitting on top of even more calls spiraling toward zero, and I refused to close out the position. Until this past Friday. When I tried calling my broker and couldn't reach him. And I continued watching my calls falling into the apartments beneath me. Glad I didn't need that money for my (future) kid's college tuition, because that 5K is sooooo gone.
And the moral of the story is - apply the same rules that you do for stocks, but even more strictly. Thankfully, knowing how volatile options can be, and futures as well, I went in with the expectation that it could all disappear. And thankfully, not all of it disappeared. I still have some money in some other positions, and a bit in cash. It was expensive tuition, but sometimes you learn the hard way (unfortunately).
Until next time, anyone got a recommendation on an online broker with good response times & order routing and that allows you to trade options and currencies? Stockdiva? I'm not ready for bonds yet, but I can do the options, currencies and futures still. I haven't completely lost my taste for them. Just gotta remember the rules.
My first experiment with options also turned out to be an experiment with futures. 2 for the price of 1. I received a cold call from a broker in late May. Although I didn't have the funds immediately available, I was able to assemble them by early - mid June. The plan was a bull call spread on options for October expiration on unleaded gasoline futures. The reasoning was solid, I think. Entering both summer and hurricane season. Expectations of a bad hurricane season. Instability in the mid east. Nationalization of the oil industry in Bolivia. So I went with it. In 3 weeks, I made 12.5%. (That's not annualized. That was the 3 week return.) After closing out those contracts, I was feeling emboldened. So when my broker came to me in July to do the same thing, I went with an even larger stake.
Mistake #1: Bad money management.
So things progressed fairly well. Until they didn't. The Israel/Hezbollah "war" ended w/o causing any problems between Iran and oil markets. The deadline for Iran to stop enriching uranium came and went. (Loved the "woosh" sound that one made as it went by.) Hurricane activity was so low that the estimates were lowered, and we still haven't seen a level of activity consistent with the lowered estimates. (Kinda like homebuilder stocks. *shrug*)
Mistake #2: Cut your losses.
I held on. Looking for an out. "Hope is a lousy defense." At the first sign of breaking 5% down, I should have been out. Instead, I made a worse mistake.
Mistake #3: Never average down.
I turned the puts in the bull call spread into calls, by buying them back, closing the contracts and sinking the money into more October calls. Now I'm long unleaded gasoline calls in a dropping market. I doubled down on a losing position, like a bad poker player. WTF was I thinking?!?!?!
So now I'm sitting on top of even more calls spiraling toward zero, and I refused to close out the position. Until this past Friday. When I tried calling my broker and couldn't reach him. And I continued watching my calls falling into the apartments beneath me. Glad I didn't need that money for my (future) kid's college tuition, because that 5K is sooooo gone.
And the moral of the story is - apply the same rules that you do for stocks, but even more strictly. Thankfully, knowing how volatile options can be, and futures as well, I went in with the expectation that it could all disappear. And thankfully, not all of it disappeared. I still have some money in some other positions, and a bit in cash. It was expensive tuition, but sometimes you learn the hard way (unfortunately).
Until next time, anyone got a recommendation on an online broker with good response times & order routing and that allows you to trade options and currencies? Stockdiva? I'm not ready for bonds yet, but I can do the options, currencies and futures still. I haven't completely lost my taste for them. Just gotta remember the rules.
Wednesday, September 06, 2006
Rough Week
Wow, this blogging stuff is rough. Or maybe its just the constant state of sleep deprivation I find myself in. Or maybe its the paper losses I just realized.
Eh.
So lets recap. My REI partners and I are finally close to making some real progress on our first property. It took far too long, IMO, but in one week, we should have banked some refi cash. The lessons learned on that deal will have to fill another post. Suffice it to say that it serves as a solid lesson in how not to purchase property.
My unleaded gasoline October calls got massacred. OMG! Its surreal having your own head handed to you, but now I can honestly say that I know what it feels like. Events like this make me glad I don't have to support any dependents. While the $5K I'm down hurts, it by no means throws off the rest of my portfolio in any significant way. Same for the losses on the currencies. The post-mortem on those deals makes for another post or two, if anyone is interested enough.
As for my big long post, man... The thing I can least stand is that now I have to explain what is going on my head. Just follow along, dammit! (Oh, wait, sorry, I guess you AREN'T mind readers.)
*sigh*
Time to go look at the next charts. My pain medication should start kicking in shortly too, hopefully, because I really need to go to sleep.
Until next time, remember what Bill Joy said: "Hope is a lousy defense."
Damn skippy!
Eh.
So lets recap. My REI partners and I are finally close to making some real progress on our first property. It took far too long, IMO, but in one week, we should have banked some refi cash. The lessons learned on that deal will have to fill another post. Suffice it to say that it serves as a solid lesson in how not to purchase property.
My unleaded gasoline October calls got massacred. OMG! Its surreal having your own head handed to you, but now I can honestly say that I know what it feels like. Events like this make me glad I don't have to support any dependents. While the $5K I'm down hurts, it by no means throws off the rest of my portfolio in any significant way. Same for the losses on the currencies. The post-mortem on those deals makes for another post or two, if anyone is interested enough.
As for my big long post, man... The thing I can least stand is that now I have to explain what is going on my head. Just follow along, dammit! (Oh, wait, sorry, I guess you AREN'T mind readers.)
*sigh*
Time to go look at the next charts. My pain medication should start kicking in shortly too, hopefully, because I really need to go to sleep.
Until next time, remember what Bill Joy said: "Hope is a lousy defense."
Damn skippy!
Friday, September 01, 2006
Recommended Blog #3
I'm sure I don't have to elucidate on the sheer pleasure that is DealBook to you, my loyal readers. This is one of the blogs that really helps me construct the big picture in my mind and connect the dots. That creativity is what leads to exciting business ideas and investment theses, IMO. So add DealBook to your feeds, if it isn't already among them.
That's all for today. I'm still fleshing out my BIG post. Its a complex analogy to work out, and this is the first time I've put it in writing. I will keep you posted. So until next time...
Go corn!
That's all for today. I'm still fleshing out my BIG post. Its a complex analogy to work out, and this is the first time I've put it in writing. I will keep you posted. So until next time...
Go corn!
Saturday, August 26, 2006
Portfolio Diving
Now that I have explained my asset allocation, I'll describe my investment holdings in more detail.
Where specifically is the money? My small cap equity portfolio (fully inside my 401(k)) is represented by The Ariel Fund and Columbia Acorn Fund. US fixed income is represented by Pimco's mammoth Total Return fund, also inside the 401(k). My inflation protected FI fund is Pimco's Real Return fund, again, inside the 401(k).
Moving on to the international small caps, Templeton Foreign Small Cap fund holds 10% of my portfolio. Yes, this too is in my old 401(k). I should be clear that I have two 401(k)s, the one abandoned after my company was bought by a much larger entity, and the new one with Fidelity whose fund choices leave a lot to be desired. Most of the diversification comes from the old 401(k), which is why that one will be rolled into a self-directed Roth IRA in the near future.
The international mid cap representation is courtesy of American Europacific Growth Fund and the SPARX Japan Fund. Europacific has the larger weighting. While the former is owned inside my 401(k), the latter is in a taxable account. I have owned it for almost 1 year and plan to continue holding it for a while.
The large cap international segment is owned by Fidelity's Diversified International Fund, which I think is the only fund in my new 401(k) that I am investing in currently. The emerging market equities fund I am looking at, but not yet invested in, is T. Rowe Price's Emerging Europe & Mediterranean Fund. That will be owned outside of either 401(k) as well. My RE exposure is in the Phoenix Dodge & Phelps RE Securities Fund.
As for the US large cap exposure, I own XLP, with 5% of my portfolio, alonside the American Growth Fund of America (redundant, dontcha think?), at 7.5%.
I do my commodities and forex trading through accounts with 2 brokers, 1 in Chicago and one in NJ. And the cash portion is money sitting on the sidelines in money market funds within the taxable account.
So that's the breakdown. I've totally forgotten the other topics I have previously said I would discuss in earlier posts, so if someone who has been keeping score wants to ping me with that info, that would be very helpful. Otherwise I'll be reading through my older posts to figure out the material for the next post. So until next time...
Go unleaded gasoline!
Where specifically is the money? My small cap equity portfolio (fully inside my 401(k)) is represented by The Ariel Fund and Columbia Acorn Fund. US fixed income is represented by Pimco's mammoth Total Return fund, also inside the 401(k). My inflation protected FI fund is Pimco's Real Return fund, again, inside the 401(k).
Moving on to the international small caps, Templeton Foreign Small Cap fund holds 10% of my portfolio. Yes, this too is in my old 401(k). I should be clear that I have two 401(k)s, the one abandoned after my company was bought by a much larger entity, and the new one with Fidelity whose fund choices leave a lot to be desired. Most of the diversification comes from the old 401(k), which is why that one will be rolled into a self-directed Roth IRA in the near future.
The international mid cap representation is courtesy of American Europacific Growth Fund and the SPARX Japan Fund. Europacific has the larger weighting. While the former is owned inside my 401(k), the latter is in a taxable account. I have owned it for almost 1 year and plan to continue holding it for a while.
The large cap international segment is owned by Fidelity's Diversified International Fund, which I think is the only fund in my new 401(k) that I am investing in currently. The emerging market equities fund I am looking at, but not yet invested in, is T. Rowe Price's Emerging Europe & Mediterranean Fund. That will be owned outside of either 401(k) as well. My RE exposure is in the Phoenix Dodge & Phelps RE Securities Fund.
As for the US large cap exposure, I own XLP, with 5% of my portfolio, alonside the American Growth Fund of America (redundant, dontcha think?), at 7.5%.
I do my commodities and forex trading through accounts with 2 brokers, 1 in Chicago and one in NJ. And the cash portion is money sitting on the sidelines in money market funds within the taxable account.
So that's the breakdown. I've totally forgotten the other topics I have previously said I would discuss in earlier posts, so if someone who has been keeping score wants to ping me with that info, that would be very helpful. Otherwise I'll be reading through my older posts to figure out the material for the next post. So until next time...
Go unleaded gasoline!
Wednesday, August 23, 2006
My Portfolio
I will quickly try to explain how I am positioned in the market. I need to get some sleep, because I work at night, and it is far too daytime for me to be awake. These will be broad brush strokes, but feel free to ask questions and I will answer as best I can.
As I said, I'm an asset allocator. I max out my 401(k) with a 50% match up to 6% of my salary from my employer in stock, IIRC. (Ugh!) Oh well, not gonna argue. Sure makes it harder to allocate assets though when I get a huge chunk of retirement funds defaulted into a Fortune 500 stock.
My target portfolio allocations are 20% small cap US equities, 8% US fixed income, 5% US inflation protected fixed income, 10% international small caps, 16% international mid caps, 5% international large caps, 6.25% emerging market equities, 6.25% international/emerging market fixed income, 5% commodities, 1% forex, 4% real estate, 12.5% US large caps, and 1% cash. MS Excel tells me that is 100%. Currently, I have nothing in the emerging market equities or fixed income, but I plan to handle the equity side in the next 1-2 months. Except for the commodities and forex, everything is in mutual funds and 1 ETF - XLP.
Right now, I am over-allocated in my commodity, US large caps, forex, mid cap international and fixed income accounts. I tend to rebalance the 401(k) monies regularly, about monthly. For the monies in my taxable account, I usually stop adding once I get over my target allocation. Then I focus on upping the amounts in the accounts that are short. I don't have a self-directed Roth IRA yet because my employer has changed recently and I was getting a feel for the new 401(k). Needless to say, I am disappointed. I have so little control over their "contributions" that I don't even count them in net worth or asset allocation. Its purely bonus money. By year end I will roll my old 401(k) into a self-directed Roth through which I definitely plan to do some more real estate investing.
So thats me in a nutshell. If you have any questions, you know what to do.
Peace!
As I said, I'm an asset allocator. I max out my 401(k) with a 50% match up to 6% of my salary from my employer in stock, IIRC. (Ugh!) Oh well, not gonna argue. Sure makes it harder to allocate assets though when I get a huge chunk of retirement funds defaulted into a Fortune 500 stock.
My target portfolio allocations are 20% small cap US equities, 8% US fixed income, 5% US inflation protected fixed income, 10% international small caps, 16% international mid caps, 5% international large caps, 6.25% emerging market equities, 6.25% international/emerging market fixed income, 5% commodities, 1% forex, 4% real estate, 12.5% US large caps, and 1% cash. MS Excel tells me that is 100%. Currently, I have nothing in the emerging market equities or fixed income, but I plan to handle the equity side in the next 1-2 months. Except for the commodities and forex, everything is in mutual funds and 1 ETF - XLP.
Right now, I am over-allocated in my commodity, US large caps, forex, mid cap international and fixed income accounts. I tend to rebalance the 401(k) monies regularly, about monthly. For the monies in my taxable account, I usually stop adding once I get over my target allocation. Then I focus on upping the amounts in the accounts that are short. I don't have a self-directed Roth IRA yet because my employer has changed recently and I was getting a feel for the new 401(k). Needless to say, I am disappointed. I have so little control over their "contributions" that I don't even count them in net worth or asset allocation. Its purely bonus money. By year end I will roll my old 401(k) into a self-directed Roth through which I definitely plan to do some more real estate investing.
So thats me in a nutshell. If you have any questions, you know what to do.
Peace!
Monday, August 21, 2006
Apologies & Blog Recommendation
I apologize for being out of the loop for the last few days. I've had some thoughts about investing that I want to write up but they will have to wait. I've been working on moving out of my old apartment but I'm still in a transitional housing state. I may have some interesting news to report on my unleaded gasoline trade in the near future. We'll see how things develop on Monday. It looks promising right now.
Now I'm off to continue catching up on my Barron's, WSJ Online, Bloomberg.com and blog reading. If you don't already read The Big Picture, you should start. But then, I'm sure most of this audience probably reads the TBP daily. ;)
Cheers!
Now I'm off to continue catching up on my Barron's, WSJ Online, Bloomberg.com and blog reading. If you don't already read The Big Picture, you should start. But then, I'm sure most of this audience probably reads the TBP daily. ;)
Cheers!
Thursday, August 17, 2006
The Future of the US Dollar
Personally, I think the Fed should have raised the Fed Funds rate last week. But what is done is done. I know there are a bunch of people who would disagree with that, but hey, we live where we do and you can believe what you want. Inflation, not the artificial and mass-produced hedonically generated numbers but real inflation, what we see and feel every day, has been around us for a while. How the Fed missed it is beyond me. I don't know about anyone else, but my inflation expectations are already shot to hell. Forget "its coming" - its already moved in and taken your side of the bed.
I foresee lowering of the FF rate in 6 - 9 months. That's just my own personal expectations. This is why I have rebalanced my portfolio to shift some money around into the generally weaker allocations. The 10 - 15% of my portfolio that is in bonds should experience a nice little boost once the cuts start.
But thinking a little further out, I can't help but see doom coming for the dollar. (Hell, its probably already here.) I won't belabor a point already made by many commentators but if you don't have a fair amount of money in non-dollar denominated assets, you're taking a huge risk with your portfolio. I think the dollar is on borrowed time overall. In the shorter term, grab your yield where you can. The big themes appear to be natural resources and foreign stocks, especially natural resource based economies.
Next time, I'll throw out my asset allocations and the logic behind them. Mind you, its not investment advice, just letting folks know what personally works for me. I have no problems sleeping with 30% of my funds in small caps. YMMV.
I foresee lowering of the FF rate in 6 - 9 months. That's just my own personal expectations. This is why I have rebalanced my portfolio to shift some money around into the generally weaker allocations. The 10 - 15% of my portfolio that is in bonds should experience a nice little boost once the cuts start.
But thinking a little further out, I can't help but see doom coming for the dollar. (Hell, its probably already here.) I won't belabor a point already made by many commentators but if you don't have a fair amount of money in non-dollar denominated assets, you're taking a huge risk with your portfolio. I think the dollar is on borrowed time overall. In the shorter term, grab your yield where you can. The big themes appear to be natural resources and foreign stocks, especially natural resource based economies.
Next time, I'll throw out my asset allocations and the logic behind them. Mind you, its not investment advice, just letting folks know what personally works for me. I have no problems sleeping with 30% of my funds in small caps. YMMV.
Sunday, August 13, 2006
Emerging Market Fund Recommendations?
This is a quick post to see if anyone has any recommendations for emerging market funds, both equities and fixed-income. A nice diversified international fund (either flavor) is welcome as well as long is there is non-trivial (10-30%) emerging market exposure. BRIC countries, other Latin American and Asian markets are tops. Eastern European markets are welcome too. As I mentioned in my first post, I am an asset allocator by nature. (All my esoteric alpha-seeking investments are a small but significant part of my portfolio.) This is the last big gap I have to fill in.
Miscellaneous Market Ramblings
So a well connected, slightly younger friend of mine, from now on to be referred to as "G", wants me to go down to TX with him to explore investing in the oil industry. I don't know where "G" gets these ideas, but I have to admit to being intrigued.
Man, the events of this past week were murder. Makes you wanna crawl up in a corner in the fetal position and suck your thumb all day. And damn if watching the front month long bond futures creep down steadily hasn't been annoying. Just get through to 108 already dammit! Just 9 more ticks to go.
Sheesh!
And did you see unleaded gasoline? (As if there is a market for leaded gasoline still. WTF?) But you have to wonder - if there are so many daggone speculators in the market as OPEC would like us to believe, how come we didn't see a larger drop across the petroleum-based energy futures. Just a question I've been pondering for the last few days in the wake of the "foiled" terrorist plot.
Anyway, until next time, peace!
Man, the events of this past week were murder. Makes you wanna crawl up in a corner in the fetal position and suck your thumb all day. And damn if watching the front month long bond futures creep down steadily hasn't been annoying. Just get through to 108 already dammit! Just 9 more ticks to go.
Sheesh!
And did you see unleaded gasoline? (As if there is a market for leaded gasoline still. WTF?) But you have to wonder - if there are so many daggone speculators in the market as OPEC would like us to believe, how come we didn't see a larger drop across the petroleum-based energy futures. Just a question I've been pondering for the last few days in the wake of the "foiled" terrorist plot.
Anyway, until next time, peace!
Wednesday, August 09, 2006
Reader Feedback
Being new to being on this side of the blogosphere, I'd like to find out what you, the readers of this site, would like to see. What topics are of interest to you? If you're reading a site called "Alpha Guy", I presume your interest is making better than market returns on securities. But what flavor of securities pique your interest? What types of things did you want to see before the change in management? What do you like about this blog? What don't you like? I just want to get a feel for the things that people want to see so I can shamelessly pander to my fans. :)
Tuesday, August 08, 2006
Apartment REITs
So I believe I mentioned that the declining housing market was creating some investment ideas. That sounds familiar. Of course, the most obvious opportunity would be apartment REITs the likes of Camden Property Trust (CPT), Archstone-Smith Trust (ASN), AvalonBay Communities (AVB) and Essex Property Trust (ESS).
I currently live in a Camden property in Rockville, MD. I've been here about 1 year. Real nice. And fairly reasonably priced for me. My rent was $1440 per month until I received notice of a change earlier this year. (I don't mind paying for things important to me, and this place has most if not all of them.) On top of all of that, the leasing agent was painfully attractive, I mean "staring directly into the sun without shades" beautiful...but I digress.
Now, the notice I received informed me that the rent would be increasing by $342 per month. WTF?!?!?! Some basic math shows that to be a 23.75% increase. Who ever heard of this kind of shite? I had to leave on general principal. It wasn't that I couldn't afford the new rent, I just didn't feel like paying it. At least have the decency to put a gun to my face and tell me "your money or your life".
A few weeks later I'm reading my favorite publication, The Wall Street Journal Online, and they have an article about resurgent apartment REITs as the housing market starts slowing. It features the CEO of CPT talking about how they have been able to raise rents as much as 25% in certain markets due to new rent optimization software they implemented within the last year. Conceptually, this software is similar to the yield management software most airlines use. So based on all the data, the software told these people to increase my rent 20%+ Y/Y. Riiiiight. Had I known about this, I would have picked up some CPT sooner. (I wasn't following the shares because I was beginning to have "issues" with the new management here, and the painfully cute assistant manager moved on to God knows where.)
Aside: The WSJ is, in my estimation, the best daily publication on the planet. If you don't subscribe, you should if you're at all serious about your money. Only in the WSJ will the CEO expose his strategy for increasing rents. I love it.
Now, as I prepared to write this post, I decided to do a bit of followup on the apartment REITs, to see if the thesis I originally formulated over 6 months ago still held up. Unsurprisingly, it does not. Why would I want to buy into a REIT on the tail end of their earnings yield curve? 4%? I get 5% at HSBC's online bank. I mean, the numbers work for Ken Heebner, but I just can't see it right now.
Anyway, I will continue to rent for the time being. I was hoping that this would be my last apartment but it was not meant to be. I have no problem with being able to save over 25% of my take home pay however. If I have to do that for another year, I guess I'll just suffer through.
So now I pose the question to you, gentle reader - what's your investment thesis for a slowing housing market?
I currently live in a Camden property in Rockville, MD. I've been here about 1 year. Real nice. And fairly reasonably priced for me. My rent was $1440 per month until I received notice of a change earlier this year. (I don't mind paying for things important to me, and this place has most if not all of them.) On top of all of that, the leasing agent was painfully attractive, I mean "staring directly into the sun without shades" beautiful...but I digress.
Now, the notice I received informed me that the rent would be increasing by $342 per month. WTF?!?!?! Some basic math shows that to be a 23.75% increase. Who ever heard of this kind of shite? I had to leave on general principal. It wasn't that I couldn't afford the new rent, I just didn't feel like paying it. At least have the decency to put a gun to my face and tell me "your money or your life".
A few weeks later I'm reading my favorite publication, The Wall Street Journal Online, and they have an article about resurgent apartment REITs as the housing market starts slowing. It features the CEO of CPT talking about how they have been able to raise rents as much as 25% in certain markets due to new rent optimization software they implemented within the last year. Conceptually, this software is similar to the yield management software most airlines use. So based on all the data, the software told these people to increase my rent 20%+ Y/Y. Riiiiight. Had I known about this, I would have picked up some CPT sooner. (I wasn't following the shares because I was beginning to have "issues" with the new management here, and the painfully cute assistant manager moved on to God knows where.)
Aside: The WSJ is, in my estimation, the best daily publication on the planet. If you don't subscribe, you should if you're at all serious about your money. Only in the WSJ will the CEO expose his strategy for increasing rents. I love it.
Now, as I prepared to write this post, I decided to do a bit of followup on the apartment REITs, to see if the thesis I originally formulated over 6 months ago still held up. Unsurprisingly, it does not. Why would I want to buy into a REIT on the tail end of their earnings yield curve? 4%? I get 5% at HSBC's online bank. I mean, the numbers work for Ken Heebner, but I just can't see it right now.
Anyway, I will continue to rent for the time being. I was hoping that this would be my last apartment but it was not meant to be. I have no problem with being able to save over 25% of my take home pay however. If I have to do that for another year, I guess I'll just suffer through.
So now I pose the question to you, gentle reader - what's your investment thesis for a slowing housing market?
Recommended Blog #1
Just because I'm bored at work (at 0241 EDT), I figure I'll post my first recommended reading blog. If you haven't been to Uncle Jack's, I suggest you do so now. No commenting allowed, but nice insightful, incisive commentary from a CFP in Florida. And he has a new book available that he self-published.
Sunday, August 06, 2006
Foreclosure Redux
Hopefully now I've got this font situation resolved. Please bear with me. The notion of using an online WYSIWYG editor to create HTML has thrown me for a loop. Time for the K to evolve. I'll get it right eventually.
Now then, continuing with that housing theme from last time...man, I hate this market. Speaking as a buyer, anyway. Some people say you shouldn't try to time the market if you plan to live in that area for 5 or more years. Whatever. I say do you. And that's not me, not right now. Nevermind that I have my doubts about how long I'll be in the DC area. But the problem here folks is affordability, or more accurately, the lack of it.
Now, why did I back out of my foreclosure? I backed out b/c I thought the bank was getting greedy. (It was either Countrywide, led by Angelo Mozilo, whom I quoted in an earlier post, or Wells Fargo, who ironically was going to be MY lender on the purchase. Kooky.) I pulled the tax records for the property and they were looking for a 50K premium to the last sale in June of this year! (Still need to learn how to read those better in the case of a foreclosure.) I didn't feel like subsidizing that when I believe we are near the beginning of the "next time down" in real estate. No sense in being early to the feast. Not to mention the mortgage costs were going to be murder. (To be precise, I am primarily speaking of PITI in those "mortgage costs" as well as maintenance costs.) So this bank wanted me to pay 319K for a foreclosure that would need 10-15K of work before it was livable at the top of a declining market in an OK but far from ideal area (IMO). Uhhh, no. It helped that the guy at the bank took his sweet time reviewing the offer, allowing doubt to creep in. He could have locked in the sale and had the property off the books, but he slept.
So I decided to hold out and continue renting. Personally, it works for me right now. I still need to do the numbers to find my break-even point on renting vs. buying, but renting will wins right now. Had I purchased any of the properties I have made offers on in the last few months, I'd have doubled my already significant housing costs. Once I move in the next few weeks, my rent will drop by anywhere from 115-300 dollars per month.
That said, I'm enjoying watching the futures market for the time being. Go corn! More on that to come. Laterz.
Now then, continuing with that housing theme from last time...man, I hate this market. Speaking as a buyer, anyway. Some people say you shouldn't try to time the market if you plan to live in that area for 5 or more years. Whatever. I say do you. And that's not me, not right now. Nevermind that I have my doubts about how long I'll be in the DC area. But the problem here folks is affordability, or more accurately, the lack of it.
Now, why did I back out of my foreclosure? I backed out b/c I thought the bank was getting greedy. (It was either Countrywide, led by Angelo Mozilo, whom I quoted in an earlier post, or Wells Fargo, who ironically was going to be MY lender on the purchase. Kooky.) I pulled the tax records for the property and they were looking for a 50K premium to the last sale in June of this year! (Still need to learn how to read those better in the case of a foreclosure.) I didn't feel like subsidizing that when I believe we are near the beginning of the "next time down" in real estate. No sense in being early to the feast. Not to mention the mortgage costs were going to be murder. (To be precise, I am primarily speaking of PITI in those "mortgage costs" as well as maintenance costs.) So this bank wanted me to pay 319K for a foreclosure that would need 10-15K of work before it was livable at the top of a declining market in an OK but far from ideal area (IMO). Uhhh, no. It helped that the guy at the bank took his sweet time reviewing the offer, allowing doubt to creep in. He could have locked in the sale and had the property off the books, but he slept.
So I decided to hold out and continue renting. Personally, it works for me right now. I still need to do the numbers to find my break-even point on renting vs. buying, but renting will wins right now. Had I purchased any of the properties I have made offers on in the last few months, I'd have doubled my already significant housing costs. Once I move in the next few weeks, my rent will drop by anywhere from 115-300 dollars per month.
That said, I'm enjoying watching the futures market for the time being. Go corn! More on that to come. Laterz.
Saturday, August 05, 2006
Real Estate Quickie
So I'll jump in real quick with interesting tidbit about everyone's favorite subject - real estate. I just cancelled an offer on a foreclosure that I was looking at renovating and buying with about 30K of equity built it, if all went as planned. Why I didn't go through with the deal is material for another post, but suffice to say the numbers didn't work as well as I would have liked.
Here's something picked up from the LA Times. (I still read them since I lived in Orange County, CA for 2 years until December 2002):
I don't know about you, but Mozilo has 22 years more in the business than I have in life. That is a very telling remark. The whys, hows, and possible investment ideas based on that are material for another day.
Here's something picked up from the LA Times. (I still read them since I lived in Orange County, CA for 2 years until December 2002):
"But Angelo Mozilo, chief executive of Countrywide Financial Corp., the top U.S. mortgage lender, told analysts last week that 'I've never seen a soft landing in 53 years.' "
I don't know about you, but Mozilo has 22 years more in the business than I have in life. That is a very telling remark. The whys, hows, and possible investment ideas based on that are material for another day.
Friday, August 04, 2006
New on the Scene
Please allow me to introduce myself. I am Khyron. While not a blogger until now, I have been reading and contributing to selected blogs for a little over 1 year. If you look around, you'll find some things I've contributed to some personal finance blogs. I tend to deal with the writers more directly than publicly. As for my background, I studied electrical engineering in college but ended up crafting my own computer engineering curriculum until I took time off to explore the world of work. I did manage to slip in some business classes while in college, as well. I've been following investing and finance since I was 13, and investing on various levels since my last year interning for NASA in the early 90s. I tend to be an asset allocator, but I do believe in risk capital, because sometimes you just need some alpha.
Having followed this blog on and off for about the last 8 months or so, I am honored that I have the opportunity to be on the other side of the table. Hopefully, we'll learn some new stuff, look at things in some new ways, and if there's a money making idea in there somewhere, all the better. Feel free to let me know what works and what doesn't. That doesn't mean I'll act on your suggestions, but I will listen within reason. But please don't "play de ass", as my Trinidadian friends would say. I may just call you on it.
Having followed this blog on and off for about the last 8 months or so, I am honored that I have the opportunity to be on the other side of the table. Hopefully, we'll learn some new stuff, look at things in some new ways, and if there's a money making idea in there somewhere, all the better. Feel free to let me know what works and what doesn't. That doesn't mean I'll act on your suggestions, but I will listen within reason. But please don't "play de ass", as my Trinidadian friends would say. I may just call you on it.
Friday, July 28, 2006
Alpha Guy Resurrection
Jason has done a wonderful job with this blog and as the previous post indicates, he has stopped to pursue other interests. Rather than letting the blog languish, he agreed to sell it so that someone else can continue where he has decided to leave off.
While obviously the writing will change to some degree with someone else writing, the themes will stay basically the same. The main focus will be investing with a bit of personal finance and other ramblings thrown in from time to time.
I'd like to thank Jason for doing a wonderful job and wish him the best in his other side projects. I hope to continue writing to his level and expand it into something he'd be proud to read. I look forward to meeting all the people who frequent the posts here and look forward to continuing this project.
While obviously the writing will change to some degree with someone else writing, the themes will stay basically the same. The main focus will be investing with a bit of personal finance and other ramblings thrown in from time to time.
I'd like to thank Jason for doing a wonderful job and wish him the best in his other side projects. I hope to continue writing to his level and expand it into something he'd be proud to read. I look forward to meeting all the people who frequent the posts here and look forward to continuing this project.
Monday, July 17, 2006
The end of the Alpha Guy
After 227 posts this post, #228, will be my final post. I haven't been posting as much as I originally wanted to due to a lack of time and being busy with other side projects. I think if I try to keep writing, the lack of posts will continue.
I figured if I'm going to end this blog, it might as well be during a time I hit another goal. This week I passed by the $50,000 mark and it feels pretty good.
I just wanted to say thanks for reading this little blog of mine, thanks for those who emailed me and posted comments, and the other personal finance blogs out there.
I will continue checking the Alpha Guy email from time to time.
I wish everyone the best of luck with their personal finances, but also to remember that we only live once and we can't take the money with us. Spend time with friends, family, and have some fun.
If all goes well you will hear from me on a bigger scale (whether you will realize it or not) because my goals are big and I'm ready to accomplish them...
-Jason the "Alpha Guy"
I figured if I'm going to end this blog, it might as well be during a time I hit another goal. This week I passed by the $50,000 mark and it feels pretty good.
I just wanted to say thanks for reading this little blog of mine, thanks for those who emailed me and posted comments, and the other personal finance blogs out there.
I will continue checking the Alpha Guy email from time to time.
I wish everyone the best of luck with their personal finances, but also to remember that we only live once and we can't take the money with us. Spend time with friends, family, and have some fun.
If all goes well you will hear from me on a bigger scale (whether you will realize it or not) because my goals are big and I'm ready to accomplish them...
-Jason the "Alpha Guy"
Tuesday, July 11, 2006
Rebalancing and Program Trading
This post has to do with rebalancing a portfolio and program trading (for big portfolios). Some investment firms have multiple portfolios/funds that are set up for certain goals. For instance, one fund might be a regular long/short fund where it takes long positions as well as short positions. Another fund might be levered, so it will basically have the same positions as the long/short fund but in greater percentages (through borrowing). If the long/short fund has a 1% position in Microsoft (MSFT), the levered portfolio might have a 2% position in MSFT- so it's a 2x fund. This ration can be any number, I'm just using 2 for simplicity.
But sometimes things get out of whack because of a variety of reasons. Let's say the stock doesn't trade that much so the 2x fund is unable to get enough shares, or more shares are sold out of the 1x fund. If money leaves the 1x fund, stocks will need to be sold and this will throw off the 2x fund as well. This is where rebalancing and program trading come into play. Ideally rebalancing might happen once per quarter, but it can happen more frequently. Rebalancing basically means how it is read- rebalance the portfolio. Using software you can figure out which stocks are out of line and you might need to bring these positions up or down (you can also do this on Excel, it just takes a little longer).
Once this is figured out, most trading software platforms can automatically generate the trades and then you just need to send them to a program for trading. We use program trading because generally when you rebalance a portfolio it's a small amount of shares (percentage wise), but possibly hundreds of trades. With program trading we basically send all the orders to a program and it gets all the trades done. We just have to sit back and wait....I wish! We have to monitor the positions and trades to make sure things go smoothly, but using programs definitely saves some time.
But sometimes things get out of whack because of a variety of reasons. Let's say the stock doesn't trade that much so the 2x fund is unable to get enough shares, or more shares are sold out of the 1x fund. If money leaves the 1x fund, stocks will need to be sold and this will throw off the 2x fund as well. This is where rebalancing and program trading come into play. Ideally rebalancing might happen once per quarter, but it can happen more frequently. Rebalancing basically means how it is read- rebalance the portfolio. Using software you can figure out which stocks are out of line and you might need to bring these positions up or down (you can also do this on Excel, it just takes a little longer).
Once this is figured out, most trading software platforms can automatically generate the trades and then you just need to send them to a program for trading. We use program trading because generally when you rebalance a portfolio it's a small amount of shares (percentage wise), but possibly hundreds of trades. With program trading we basically send all the orders to a program and it gets all the trades done. We just have to sit back and wait....I wish! We have to monitor the positions and trades to make sure things go smoothly, but using programs definitely saves some time.
Thursday, July 06, 2006
It's been awhile
I haven't been on my laptop for awhile, that's my reason for my lack of posts.
I calculated my June end of month net worth and I was pretty disappointed. I thought this was going to be the month to pass the $50,000 mark but I had way too many expenses and I ended the month at $49,150. I fell way short of my monthly goal, but I think I'll be on track for this month. I also have a few more things to sell on eBay and I think this could bring in another $100.
In a few months I'll be able to invest in a 401(k), so I will post more about this once I get more information. The max I can do is $15,000 per year and I think I might be able to pull this off if I use some of my bonus money. Although my company doesn't match, I do get the benefit of reducing my taxable income. Actually this combined with my IRA, my taxable income might be really low (hey! another refund!).
I started trading a few weeks ago at work and it's going very well. I don't think about how much money I'm spending, I just concentrate on completing the trades. I still triple-check my trade order before I push any buttons though! I'll probably write a more detailed post about this later as well.
Also, I casually mentioned that my friends and I are starting a website. Well that's growing into two related websites and nothing is complete yet so I won't go into details. I think they will be fun sites and our goal is to generate enough ad revenue to cover apartment rent. It's going to take awhile because the site will mainly be for the San Francisco Bay Area, but we're going to give it a shot.
I wish I had more web/programming skills because I think it's easier to at least start new ventures. Right now I have ideas and I have to run it by some friends to see if it's do-able.
I calculated my June end of month net worth and I was pretty disappointed. I thought this was going to be the month to pass the $50,000 mark but I had way too many expenses and I ended the month at $49,150. I fell way short of my monthly goal, but I think I'll be on track for this month. I also have a few more things to sell on eBay and I think this could bring in another $100.
In a few months I'll be able to invest in a 401(k), so I will post more about this once I get more information. The max I can do is $15,000 per year and I think I might be able to pull this off if I use some of my bonus money. Although my company doesn't match, I do get the benefit of reducing my taxable income. Actually this combined with my IRA, my taxable income might be really low (hey! another refund!).
I started trading a few weeks ago at work and it's going very well. I don't think about how much money I'm spending, I just concentrate on completing the trades. I still triple-check my trade order before I push any buttons though! I'll probably write a more detailed post about this later as well.
Also, I casually mentioned that my friends and I are starting a website. Well that's growing into two related websites and nothing is complete yet so I won't go into details. I think they will be fun sites and our goal is to generate enough ad revenue to cover apartment rent. It's going to take awhile because the site will mainly be for the San Francisco Bay Area, but we're going to give it a shot.
I wish I had more web/programming skills because I think it's easier to at least start new ventures. Right now I have ideas and I have to run it by some friends to see if it's do-able.
Wednesday, June 28, 2006
An Important Ratio
Many financial/personal finance magazines tend to highlight only a few particular financial ratios. The most talked about one is the P/E ratio. This tends to be something that is easy to understand and has been widely used for years. It also tends to be a financial ratio that can be manipulated by management (i.e.- managing earnings). This is one reason why some people also use other ratios like the P/S (price to sales) ratio because Sales are a little harder to manipulate.
While these ratios are important, another important ratio is EV/EBITDA
Lots of letters there, so let's get through it:
EV stands for Enterprise Value. Think of the enterprise value as the amount someone would need to pay to takeover the company. It's a relatively easy ratio to compute: take the stock's market capitalization (price x shares), add in debt, add in preferred stock, then subtract out cash and cash equivalents.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization
This figure eliminates the effects of financing. For most income statements, you can see the value if you take sales and subtract out cost of goods sold and selling/admin expenses.
Now we just have to put everything together. Take the enterprise value and divide that by EBITDA. A "good" number is something under 10. Basically the lower the number, the more the stock is considered a value play.
While these ratios are important, another important ratio is EV/EBITDA
Lots of letters there, so let's get through it:
EV stands for Enterprise Value. Think of the enterprise value as the amount someone would need to pay to takeover the company. It's a relatively easy ratio to compute: take the stock's market capitalization (price x shares), add in debt, add in preferred stock, then subtract out cash and cash equivalents.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization
This figure eliminates the effects of financing. For most income statements, you can see the value if you take sales and subtract out cost of goods sold and selling/admin expenses.
Now we just have to put everything together. Take the enterprise value and divide that by EBITDA. A "good" number is something under 10. Basically the lower the number, the more the stock is considered a value play.
Tuesday, June 27, 2006
Ouch
Another bad day where the markets fell by roughly 1%. The day started off fairly well and then went downhill from there. My cash percentage is still a big percentage and I will hopefully have time to start investing that a little more. I read two old articles that got my interest today. One was in a Barron's from about a month ago about commodities and how it's a good hedge against stock positions. They also noted a few studies that showed over the long run a diversified commodity portfolio produced results that came close to the S&P return, but with lower risk. It also noted that when stocks go through periods of downtimes commodities outperform and when stocks are up commodities are down.
The other article I read highlighted an option fund. It mainly used covered call strategies and had an average annual return of about 16% over the past four years. I really think options can become a good part of my overall portfolio. Right now I just re-started Options As A Strategic Investment and after I get through this one I'm going to re-read Option Volatility & Pricing. I think, in terms of authors, McMillan and Natenberg are really good. Hull has wrote what many consider the bible of derivatives, but I have not bought that one yet (it's on my list though).
The other article I read highlighted an option fund. It mainly used covered call strategies and had an average annual return of about 16% over the past four years. I really think options can become a good part of my overall portfolio. Right now I just re-started Options As A Strategic Investment and after I get through this one I'm going to re-read Option Volatility & Pricing. I think, in terms of authors, McMillan and Natenberg are really good. Hull has wrote what many consider the bible of derivatives, but I have not bought that one yet (it's on my list though).
Thursday, June 22, 2006
Oracle
Today Oracle made the headlines by reporting stronger than expected revenue. To me, this seems like one of the few tech giants that's actually going forward at a robust pace. They are growing through acquisitions, but the important thing is that they seem to be making these acquisitions work. The merging of two companies can turn out to be a costly mistake, but ORCL seems to be making their purchases work. The other news story is that they are taking market share away from SAP and IBM. Depending on the product line, SAP is a strong competitor with a nice-sized market share. It will be interesting to see their earnings when they report on July 20th.
Oracle is also continuing their stock buyback program, but I haven't read or looked into the net effect of their buybacks. Some companies issue press releases stating they are starting a $X buyback program. Some people view this as good news, while others view it as poor news. It all depends on the company and the sector. If a slowly growing company is buying back stock that can be seen as a good thing, but if a really fast growing company is buying stock that can be seen as a bad move because it should be investing its money internally. Anyway, back to my point. A company might state a big buyback but after you take into account shares given for options andn shares as part of acquisitions (they might buy a company for 80% cash and 20% stock), the net effect of the buyback might not be all that spectacular.
I didn't see anything mentioned with ORCL, but I'll be on the look out.
Oracle is also continuing their stock buyback program, but I haven't read or looked into the net effect of their buybacks. Some companies issue press releases stating they are starting a $X buyback program. Some people view this as good news, while others view it as poor news. It all depends on the company and the sector. If a slowly growing company is buying back stock that can be seen as a good thing, but if a really fast growing company is buying stock that can be seen as a bad move because it should be investing its money internally. Anyway, back to my point. A company might state a big buyback but after you take into account shares given for options andn shares as part of acquisitions (they might buy a company for 80% cash and 20% stock), the net effect of the buyback might not be all that spectacular.
I didn't see anything mentioned with ORCL, but I'll be on the look out.
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