Tuesday, May 31, 2005

Price Targets

This is my last of four articles I've posted for the time I'm on vacation. The other three should be below this one. I will be posting on a regular basis when I come back home (June 7th). Feel free to leave comments or email me and I will get back to you on the 7th.

The market has been moving up recently so I decided to review some of my stocks and price targets. These targets are not set in stone.

UNTD (I added this one last week at $12.25): I'm up about 5.5% so far (I'm not sure if I made a post about my purchase, I'll get around to my reasons later). It's trading for about 1.6x sales while it's five year average is about 3.2x sales. My price target will be on the low end of this range (2.5x sales) so around $19.50.

LB: this one is growing revenues and earnings at a fairly fast pace, I'm going to re-evaluate this position if it his $18

EBF: I think this one has finally stabilized; slow growth; nice yield. I'm looking for $19-20, but will re-evaluate if it his $18. If it does, then I'm going to see how dependable the cash flow (free cash flow) is and then take it from there. I might hold on for longer.

NTE: I'm fairly sure I've already posted the target and it's still $30

SFL: my position is small (it was from a spin-off dividend), but I might add more shares in the future

FRX: it's selling for 4.4x sales when from 1996 to 2004 the lowest it ever traded was 4.9x sales. I've already made about 10%, but I think it still has room to move up. Even if it gets back to the low side of its P/S historical record, it has potential to hit $50.

NCC: I'm up about 3.3%; growth might slow a bit but I think it can move higher. It's trading for 1.75x book when the historic low end has been around 2.2x book (high end went into the 3's).
I don't think it's the best bank, but I think it can add returns to my portfolio (and having a 4%+ yield doesn't hurt). I'll re-evaluate my position if it his $43

Again, none of the targets are set in stone.

I'll be back June 7th, take care!

Sunday, May 29, 2005


Investor's Business Daily (IBD) was started awhile ago by William O'Neil. Fool.com had an interview with O'neil back in 2002. Although the interview is a few years old, it's still worth a read. I used to read IBD when I was at my last job and I was always impressed by the vast amount of information/data. The newspaper and website has tons of useful information on stocks and commodities. Although I didn't pay too much attention to the editorial content (it's very conservative, very pro-Bush), I always took a look at the stock section.
O'neil has written some investment books and is the pioneer behind the CAN SLIM methodology.
CAN SLIM stands for:
  • C = Current earnings; strong growth EPS and/or sales growth at the 25% range
  • A = strong Annual earnings growth; earnings growth > 25% for the past 3 years; ROE > 17%; rising margins
  • N = New products, services, leadership
  • S = Supply and demand; volume indicators
  • L = Leading stocks in Leading industry groups
  • I = Institutional holdings
  • M = Market direction should be positive
The one thing I usually keep in mind is that IBD and the CAN SLIM method has a strong following. They have a list of Top 100 stocks in the newspaper and if a stock makes this list it can have strong movements. If IBD focuses on a company, the stock price will move.
It's a powerful tool to use not only for the vast amount of info/data O'neil has collected over the years, but to see how so many people put faith into the system and move the selected stocks.


I'm always on the look-out for good online and text resources/magazines. Free would also be a good thing (although I did decide to renew my Business Week subscription).
Before I start raving about Amount.com, I wanted to say that your local library has many useful resources. Nowadays you are most likely able to use the resources from your home. We have a huge library near my school and I sign on the website by using my card.
One of the periodicals I read from time to time is the Wall Street Transcript. One of the portfolio managers at my old job would talk about it and we finally subscribed. It's basically tons of interviews with managers and analysts about various sectors. For instance in one issue they might focus on banks and telecom companies. Reading it through the library means I don't have to subscribe. This saves money over the years especially considering that a subscription runs, I think, $2,500/year!

About.com is a site with a collection of articles covering a multitude of subjects. I use this site on a very frequent basis and not just for stocks and investing (I do have interests in other subjects; poker, astronomy, philosophy, etc). Here's one page that has a few good stock articles. The one thing I like about the site is that it lists related links (on About.com and outside sources) covering the subject.

I can spend a lot of time searching through these pages because what ends up happening is that I read on article that has links to a few more articles. I read those articles and they lead to even more articles.
The site does have some good info and it's worth the time to check it out.

Saturday, May 28, 2005

Bored with a Calculator

I had a few minutes and I tried to plan out how much I can save per year for the next few years.
I assumed that when I get a full-time job the pay will be at least $40,000 before taxes.
I then assumed that the taxes taken out of my paychecks will total 20% (this is just an assumption).
So using those facts that leaves me with $32,000.

Next, I thought about my living situation. I definitely want to live with roommates. I'm just used to this I think, and it might get too quiet if it's just me in a one bedroom apartment. Also, it will be cheaper! I'm going to assume living expenses and bills to total $900/month. This figure will depend on tons of factors, but it should be around $900. This will equal $10,800/year leaving me with $21,200.

Seeing this figure I think I should positively be able to saving $10,000. The rest will be used for other expenses, buying things, entertainment, etc.
I think for the first few years at a full-time job, $10,000 will be my savings goal. All the calculations I've done in the past where I figured out my potential net worth at the age of 50 or so, always used savings per year of around $8000 to $9000. I think $10,000 is a realistic goal, and if it is then hitting my long-term goals might be a little easier.

Friday, May 27, 2005

The Interview

The phone interview went very well today. We got along rather well and it was a friendly conversation. I talked about my past positions at the brokerage and portfolio management firm and a little about myself. She decided to set up an interview with the head trader for June 7th (if it fits his schedule). So I come back from vacation and immediately go on an interview!
The position seems okay. It does have many responsibilities, but it is not a typical trading job. Most of the portfolio management area is outsourced to a big mutual fund family. Then those portfolio managers send back the trade requests and the traders put them through. The traders will also make sure the individual portfolios are aligned with certain specific models. I think I'll know a lot more about the position after the second interview. I know that the hours should be around stock market hours; and I'm hoping it will be 6am to 2pm. Those hours would be great, since I'll have the rest of the day off. The pay is a little below what I'm seeing for finance/research/trading positions, but I'm not really concentrating on that (for the curious, it's 38-40k). If I do get the job and I do find positions that I think I have a shot of getting, then maybe pay will become a factor. The job is located in Oakland and I'm fine with that.

That's about it for right now; things are still very hectic. I'm leaving for Tokyo on Monday and I will definitely put up a few more posts to make up for my absent week.
Also another recruiting firm contacted me to meet, but they are in Los Angeles. I'll see how that goes.

Market news: Honestly, I haven't been paying too much attention to the general market besides keeping track on my stocks. Everything in my portfolio finished up today and YTD the portfolio is up 4.7% while the S&P is down YTD about 1.08%
Hopefully I hit double digits by the end of the year.

Thursday, May 26, 2005

Short and to the point

Okay I need to make this short because there's tons of things I need to do: pack up things, dinners, graduation stuff, etc.

The interview, or as I like to call it, the non-interview.

The phone interview was set for 12/noon and I waited patiently with my cell and laptop ready to go. Noon comes by and no one is calling. I figured I should wait a little bit and after playing some minesweeper I realize that it's now 12:30. Huh? Maybe they meant the interview was for 12:30 so I check my email and it does in fact still say noon. I decide to wait five more minutes.

Five minutes later I call the person who set up the interview (but would not give it, that was another lady). The phone rang and it went straight to voicemail. She was out but she said a number to call for recruiting. I called that number and explained the situation and they informed me that the first lady I called no longer works at the company!
But they did transfer me to the lady who was going to give me the interview. She immediately picked up and apologized many times. She said she had my info, but was not told what time to call. She apologized again and then we needed to set up a new time for the interview. So the interview is not set for 10:30 am tomorrow morning, before I head out to a graduation bbq.
Frustrating, but the lady was incredibly nice.

I'll report on the interview sometime tomorrow.

Wednesday, May 25, 2005

Finals are over!

I finished my last final and and walked out of the business building for probably the last time. It felt a bit odd walking down the steps; a bit unreal maybe.

I sold back one book and actually received a good amount ($43). The school's bookstore must make a ton of money/profit even though they say they try to keep their prices low. A student might buy a book for a class for $90 and then when the semester is over with the student will be able to sell it back for $43 (in my case). Since the book will be used next semester the bookstore will then resell the same book for another $90. They also don't buy back books that will not be used next semester, as in the case for my business IT/Access class. A few semesters ago I started buying my books online because it is cheaper than buying it from the bookstore. Even with shipping costs I usually saved a good amount of money.
I'm probably not going to save the $43, but spend it on a few things: movies and there's talk of a big final dinner between friends.

I'm going to keep this post short because I need to study up a bit for the phone interview. I need to check out the company's website, and a few other things. But I wanted to share three sites that may offer some deals and possible free stuff.

1. Craigslist: There is a section for most major cities and I use this site constantly. I like to read the posts and also post about various things. For instance I asked about any advice for the Level 1 test and had a few good responses. Anyways, they do have a part where people post about selling items and even free items. Some people are moving out and they need to get rid of their couch, that sort of thing. I browse that section from time to time, and it might be worth the effort.

2. Blingo: This is a search engine that is based off the Google engine, so you get the same results. The difference is that every time you search for something there's a possibility of winning a prize. The prizes range from Ipod's, Amazon certificates, Blockbuster for one year, to movie tickets. This site actually works since I won a movie ticket awhile ago (it came in the mail today). My friend also won a ticket (these are the most common prizes). Also, you can sign up with a friend and if you or the friend wins then both wins. So if your friend was searching and won an Ipod, then you would also win one. Free stuff is always a good thing.

3. Ben's Bargains: This site posts deals daily and they usually have to do with tech things (monitors, hard drives, memory, etc), but it does have some great deals. It looks for deals across various websites and even posts codes you can use to get discounts. For instance, I think today they have codes to get 25% off a Dell mp3 player. I check this site from time to time.

Time to prepare!

Tuesday, May 24, 2005

Phone Interview on Thursday

From the best stocks under $10 (the article in my last post) one had a great day today: DXPE finished up 14.64%

The market had a mixed day today (Dow down, Naz and S&P up), but nothing earth shattering. Well Buffett made a big move. He's planning to pay $5.1 billion in cash to acquire PacifiCorp.

My portfolio overall finished up 0.61% (the S&P was up 0.02%) on gains from LB. Overall I'm up about 5% for the year, but I'm still waiting for NTE to rebound. I'm down about 8% on this stock, but I think it can go back to the 28-30 level.
I've been compiling a list of possible momentum plays and I have to decide if I want to go through with some of these. If I do decide to buy some, then I also have to decide if I should transfer money over from my ING account or go on margin (a bit risky, but sometimes I need to take risks). Well, I can also do both- that would be another option.
It will have to wait till I get back from my vacation.

Job Stuff
To reiterate: I'm looking for either a trading assistant position (stock and/or options) or a research assistant/associate position. My plan is to look for all possible opportunities in the San Francisco Bay Area and if I don't get anything by the end of summer, then I'll make a tough decision. My next choice will be to move to another city (the way it's looking, most likely NYC) in order to search for a job. Most of the jobs I want are heavily concentrated in the NYC area and many listings say they will only interview local candidates.

As my title shows, I have a phone interview for this Thursday. Honestly I thought I seriously screwed up my chances two minutes after I emailed my resume/cover letter. I have about four different cover letters for various types of positions, but I have two I use frequently. One I use for non-local jobs, while the other one I use for local jobs. So this place is local, and yes I did the incredibly stupid thing of sending the non-local one! That one mentioned NYC multiple times and well it made no sense since this company is near San Francisco. I immediately sent a follow-up email saying I was sorry for the confusion. I guess it didn't hurt me too much since I'll have the phone interview. I rather have a face-to-face, but I'll take what I can get!
The Position: Associate Trader position

I'll write about the interview on Thursday. Also, I will be on vacation from Monday to the following Tuesday. I'm going to try to write a few more posts for the week I'm gone and post them up on Sunday. I will be unable to answer any comments/emails, but I will as soon as I get back.

Monday, May 23, 2005

Looking Back

By Wednesday night I will be completely done with my college career. I have two more finals to go (one easy, one hard) and then five years of college will be completed. Looking back, I've had a pretty good time, had a few great teachers, and met some good people along the way. In high school I definitely lost some of my competitive spirit. I'm happy to say that while in college I've gained this spirit back. I think this will definitely be important for the next stage of my life.

Market News
Jones Soda had a great day (up 7.74%) and hopefully it has a pullback in the near future. While noticing this price movement, I also noticed that I need to transfer over more funds if I want to take a decent sized position. I figure somewhere around 200-300 shares. JSDA sometimes reminds me of this bank I looked into a few months ago. It was a bank located in Las Vegas (VLLY) and I was semi-interested in buying it. Then it went up, so I was hoping for a pullback the next day- but it still went up. It seemed like for two straight weeks the price kept moving up and I kept saying to myself "tomorrow it will pullback a bit". I never bought any and took other positions when the stock eventually settled down a bit.

Aeropostale finished the day up 3.39%, but I'm still unsure if I want to take a position. This would probably be more of a momentum position rather than something long term.

Google had a nice day! Cramer said (yeah I watched the show again) it will hit $350!

My portfolio: I finished up a bit (about $60) and my brokerage is using a new trading platform so I need to get used to it. All my positions were so-so; nothing really special.

I did come across an article about the best ten stocks under $10. Here are the tickers that were highlighted: DXPE, RADS, GEOI, CTGI, STV, PRZ (which was also highlighted in a quarterly magazine I receive- Equities), VLFG, ERS, ENG, and ORCC.
The link gives a bio on each company as well.

Job stuff: I received some good advice from the school's career center leader and I've begun to use a target resume rather than a general one. I'm also not looking too hard or applying for too many jobs this week. I'll be on vacation next week and will begin my full-time search when I get back.

Sunday, May 22, 2005

Quick Note on the Cramer Picks

In my last post I made a comment about 3 airliner picks made by Cramer on his show Mad Money. He said to get in and get out and this was for Friday only.
Well if you followed his advice you most likely lost money (unless you had great timing). His show was late Thursday night, so I'll assume someone would buy at the open and sell sometime during Friday.
AMR: opened at $12.85, hit a high of $12.90 and finished the day at $12.42
LUV: opened at $15.04, hit a high of $15.10 and finished the day at $14.94
JBLU: opened at $23.38, hit a high of $23.45 and finished the day at $22.59

Friday, May 20, 2005


The markets finished a tad bit higher today. My portfolio finished down a little for today, mainly because of a sell-off in LB (it's been acting funny lately). FRX had a nice day finishing +1.75% and it's up 11% since I've bought it (4/27/05).

ARO posted earnings in-line (0.15/share) and revenues rose 26%, but did not meet expectations. They also issued downside guidance. I'm going to see how the stock reacts tomorrow. Revenues are increasing fairly fast, but management are not hitting the numbers recently. The things I keep in mind: they have good products and I don't buy the saying that AEOS (American Eagle) and ANF (Abercrombie & Fitch) are taking sales. Plus they are still a growth company considering the fact that they don't have nearly as many stores as AEOS and ANF.
The negative: teen retail is a hard business where fashion changes incredibly fast. There's a few more things I don't like about them as well.

I wanted to write a post on the psychology of investing and discipline. These topics could fill volumes (and probably do) so I didn't know where to start. Instead I found two links. The first one has a few links about the psychology of investing. It's from the site About.com, which I think is an excellent site. The second article is actually a speech given at Wharton by Robert Rodriguez. I thought it was a good speech with discipline as the central theme.

Random Things
Net Worth: I haven't posted an update lately, but it should be around the same levels ($23k).

Mad Money: I ended up watching this Cramer show again! Someone needs to tell me/give me the over/under on Cramer having a heart attack on air. He was jumping around, sweating, almost passing out (I think he said he was sick), and yelling. Anyways, he did list three trading stocks for the next 48 hours. Basically he said buy these 3 stocks and sell them within 48 hours: AMR, LUV, JBLU. All are airliners and Cramer thinks they will move up tomorrow and/or the next day because of today's news- U.S. Airways and America West are merging.

I finished the 419 pages of the Quantitative book for the CFA. Fun read (just kidding). Now I just need to go back, take notes, and answer the problems. It wasn't too bad; I covered all the info in my statistics classes.

Job Hunt: I haven't applied to anything lately, but I'm going to spend tomorrow looking for a bit.

New site added: Free Money Finance. A great amount of finance advice. I also added Trader Dan's site since it seems we're almost in the same boat.

Quote: It's not the strongest of the species that survive; nor the most intelligent, but the one most responsive to change.

Wednesday, May 18, 2005

A few good articles

I came across a few good articles (mainly from Business Week) that might be worth the read.
The first one is about picking stocks when the markets are rough and it has some sound advice. It was written by one of The Street columnists and they usually have some good info. Speaking of TheStreet.com I just saw Jim Cramer's show "Mad Money" for the first time last night. Who else has seen this? I thought certain parts were good, but he spent the entire show jumping around! I was laughing a little too much and some parts were just cheesy (Sell! Sell! Sell!). I might just keep watching it for the comedic value (but I'll admit he had some good info); although the camera moving around every few seconds was annoying.

The next article details about possible takeover candidates. I always find these types of articles interesting.
Marie Driscoll of the S&P talks about some apparel stocks. Also this article shows the top ten stocks from the S&P.

The market had a strong day as the Dow (+132.57) and the S&P(+11.76) trended upwards throughout the day. My portfolio had a strong day as well, beating the markets (Dow up 1.28%, S&P up 1.00%) by a slight margin (portfolio up 1.75%). Most of the gains were due to EBF (up 4.49%) and LB(up 6.47%).
I haven't bought anything in awhile and I do want to invest some more of my cash. ARO reports tomorrow and judging from today's action (and after hours) expectations are on the low side. Although this means if they keep their guidance (or up it), the stock should have a nice day. I'll most likely wait on the sidelines with this one.
FITB and BSX are starting to trend upwards. I haven't had time to run any screens lately; hopefully tomorrow.

One last note
My eBay sale finally completed with a +11% return. Although it's my lowest return, I'll take it considering I thought it would be a break-even return.

Tuesday, May 17, 2005

How soon can I have your office?

I'll explain the title in a bit, but first on to some investing mistakes.
First, I'll post some of mine and then include others that were left as comments or emailed to me. Below that I'll post some I found online that haven't been included.

Investing Mistakes

Some of mine...
  • Forgetting to look at the macro picture. The macro picture will include how the overall U.S. economy is doing, but also how the specific industry of the particular stock is doing. I would sometimes concentrate only on that one particular stock and not keep track how its competitors and overall industry is performing.
  • Not keeping great notes. I think many investors are guilty of this one. I would come across stocks I'm interested in, but never write down the reason why I was interested! Then months later I find a post-it with some ticket symbols, and I have no clue about them. In the Random Thoughts today of The Kirk Report, he mentions a software that's like putting electronic post-it notes. I've used a similar program and it's an easy way to keep notes.
  • I'm learning to keep my emotions in check, but I have made brash decisions for no particular reason. For instance the stock might be having a bad day and I want to keep my gains so I sell, but for no good concrete reason.
A few others noted
  • Not having an entry/exit plan for each trade. I think this is a very important one to note. When looking at a particular stock you should always have an entry and exit plan. This may be particular prices (buy if it drops to $17, sell when it hits $30) or even a range (buy anywhere between $16.50 and 17, sell anywhere between $35 and $37) but make sure the range isn't too wide.
  • Cutting your losses. I would think this is probably the biggest psychological mistake investors make. Too many times people hold on to a stock, when they should just get out. It's hard because you're admitting you screwed up (in most cases) and bought the stock at the wrong price. By selling you're admitting this, by holding on investors downplay their mistake and wait for a rebound. This rebound could take years, or never happen at all. I think it's best to just cut your losses, tell yourself you messed up, and then figure out what went wrong.
  • Not paying attention to fees. This is a potentially big one for some because they are basically giving away money. If you have two funds that invest in large cap stocks that correlate strongly with the S&P, why would you own the one with higher fees?
  • This one goes with the one above. Leaving money on the table. Maybe some are paying higher fees, or paying too much in commissions, or not reinvesting dividends. What ever it may be, all this amounts to money left on the table. Some might say "what's the big deal, it's only a 1% difference?". Well those 1% differences add up over time! Yeah, I'm talking about compounding. Here's one example: two guys start with $10,000 and invest another $1,000/year for 40 years. The first earns 10% and has continually left 1% on the table from various things (nothing too big right?), he ends up with: $895,185. The other guy tries not to leave anything on the table and earns 11%/year. His total: $1,231,834! This is about 37% more than the first guy!
Here are some I found off various websites
  • Not doing your homework
  • Letting short-term noise affect your long-term investing decisions/horizon
  • Falling in love with a stock
  • Not diversifying
  • Being overconfident
  • Selling the winners and holding the losers
  • Misunderstanding risk
Everyone makes mistakes. What matters is what you do after making the mistake. Learning from your mistakes is one of the most valuable things you can do.

Time to explain the title. Today, someone posted a comment under "The Interview" post about an interview with Morgan Stanley. The poster might not be feeling too well about the interview and I saw this article about weird things that have happened during interviews: it's a funny read and a few laughs are a good way of getting out of a funk. The title of this post refers to a question a candidate asked during the interview.

Monday, May 16, 2005

Where can I find a few extra hours?

I always need more time during the day to get things done. When I was working my day usually started around 5:45am and ended around midnight. The only difference now is that I'm sleeping in a bit, but I still try to remain busy throughout the day. Every few days I do some job searches off a few major sites (Craigslist, Monster, CareerBuilder, and a few smaller ones). I do want to spend more time researching stocks. I'm still looking into Jones Soda (thanks for answering my question stockdiva) and I'm liking what I see so far. I also want to look into Aeropostale (ARO), Infospace (INSP), and Etrade (ET). ARO has been selling off and I think there might be a possibility of a nice rebound. Last week it was in the high 25's, and today it went past 26. INSP announced a big buyback today, so I want to look into this one. I've wanted to look at ET for awhile because I think it's the best brokerage out there. Not just for the brokerage services, but the way they have built a fairly strong banking presence as well. The combination of a bank plus a discount brokerage interests me.

I've also started studying for the CFA. My first book is Quantitative Methods for Investment Analysis. Sounds rough, but it's not too bad. It's basically a good amount of statistics, but I've covered all the topics so far in previous classes.

In order to get better at investing, you need to examine your mistakes. I plan on covering this on my next post. If you want to share any of your mistakes either post it as a comment or email me.

Thursday, May 12, 2005

Ebay Sales and Random Thoughts

I have another eBay sale ending tomorrow and I'm currently breaking even. This will potentially by my worse eBay transaction (but I should at least break even).
My grand totals for 2005 are as follows (not including the pending transaction):
Total cost: $490
Total revenue: $989
Profit = $499
Return percentage = 101.84%

So far, my worst sale has a return of 33.9% and my best sale had a return of 212.50%
It's all about supply and demand!

Two quick points: I'm going to look further into Aeropostale when I get a chance, since it has been sliding from 34 to 25.75 these pass couple of weeks. I've owned ARO in the past and made a decent return, maybe I'll get another chance to make some more gains.
Today, I came across a good article off the Motley Fool site (you might need registration) about Warren Buffett and the discounted cash flow valuation model (DCF). It involves some math, but it's an important read.

Before I sign off, I had a quick question about Jones Soda (maybe stockdiva can help?). I've been looking at their financials from 1999-2004 and I was stumped at one part. Sales in 2001 was about $23.6 million, while in 2002 sales came in at $18.56 million. I also research the locations where they sell their products and there's a strong correlation between sales and the number of states (and provinces) where they sell.
In 2001 the products were sold in 41 states, while in 2002 they were only selling in 30 states.
Why the big drop-off in the locations where they sold?

Also if anyone would like to comment (or email) on how I can make this blog better. Do you want to see more links, more personal finance stuff, more stock talk? I'm open to all suggestions, thanks!

The top trader for 2004

Nothing too exciting today in the markets. I finished up today and for the year I'm up 4.6%. That figure is okay, but I definitely want to hit double digits again! Also, from various readings, it looks like the market behavior is changing a bit- people are expecting a rebound of sorts. The big mover in my portfolio was Forest Labs (FRX), it ended the day up 2.8%. I've owned this stock for exactly two weeks and it has rebounded to a gain of 7%. Hopefully this continues.

Ok, I know my headline is a little dated since it's almost half way through 2005, but I did run across an interesting article. The list of the top 100 traders was published by Trader Monthly and a small recap of it can be found here.
The interesting part of this list is the guy who finished number 1: Steve Cohen
He finished #1 with an estimated annual income north of half a billion dollars! That wasn't a typo: half one billion
That seems like an unreal amount, but I have heard of it happening before. When Michael Milken (hopefully I'll get to him later, and show another side of the issue) was in full force it was estimated that in one year he made a little over $500 million.
Back to Steve Cohen: I looked for a bio and I found a decent one on Business Week that was written in 2003. It's a really interesting read.

Another topic I'm interested in is behavioral finance. I'm trying to find some good articles and I'll hopefully post about it soon.
I've added a new finance blog.

Tuesday, May 10, 2005

A few articles and some more goals

First, I wanted to mention a potential great back-up plan with the job hunt. I do have an interest in trading and I actually found a firm where you train for 18 months and you're job is basically a trading assistant. Then if they think you're good enough, you can trade firm capital. Now some places out there require a deposit and you're basically trading your own capital with their systems, low commissions, and leverage. This one appears to be different because you don't put up any of your own capital (a great thing) and you get a salary! I was surprised by that last part, because normally you wouldn't get a salary. Also, the salary at this firm was fairly nice for a young guy out of college. The bad thing: the job is in NYC, which means I would have to leave my friends, family, and girlfriend...

Anyways, on to other things.
During one of my classes (during break actually) I wrote down a more detailed plan of action for the next seven years or so in terms of goals/accomplishments.
Some of it might seem like a long-shot, but I need to aim high.
(as you'll see I haven't spent time figuring out how to make tables, or make the blog appear cleaner, anyways on to the goals)

Age: Goal
23: Pass the level 1 of the CFA
23-25: Have two years of experience in either trading or research
24: Pass the level 2 of the CFA
24: Begin a math degree (I haven't decided in what exact area) at a junior college (to save money)
25: Pass the level 3 of the CFA
26: Start MBA school and either go part-time or figure out a way to work a bit and take class (if I do trading, I might be able to pick up on currency trading, which trades 24hrs/day)
27: Continue MBA school
28: Continue MBA school and start trying to learn C++
29: Depending on the avenue I take, maybe finish up MBA school if I'm not already done with it, and continue with C++ and the math degree
30: Finish the math degree, but this depends on everything else (for instance, I'll value the MBA over the math degree)

Okay, that looks pretty damn tough but I know I can do it (or at least give it a good shot). As long as I remain focus, I'll have a chance. I did manage to finish two degrees in the time it took everyone else around me to finish one, while working through college (so I have a shot!).

Monetary Goals
These were done quickly just to pass some time and I'm not sure these will be my exact goals or what- I'll wait till things settle down a bit.
Age: Goal
23: $25k
24: $31k
25: $53k
26: $78k
27: $106k
28: $139k
29: $177k
30: $220k

I'll see how these shape out later on. Nothing is definite.

A few articles worth reading.
The first one is the Smart Money interview with Bill Miller, and it's a great read. The next two are both from Business Week and the first one involves stocks that have increased their dividends for 25 years or more. The next one is a Q&A section with Barry Hyman and his thoughts (more volatility).

Besides detailing my personal finances I also want to start posting more links to articles worth reading. I'm not sure how often I'll get to this, but hopefully on a daily basis.

Monday, May 09, 2005

The Interview

I came back from the interview a few hours ago and it was a rather long one.
When I got back to my car I felt my chances of getting the job were under 30%.
Although on the phone it seemed the position was more admin than research, it looks like it was the other way around. It also seems, although they didn't come out and say it, that they are looking for a pre-MBA student (so someone who has graduated with a few years of experience already). I'm basing this on the fact that I met the other Research Assistant and he already worked at a mutual fund for a few years, finished the level 1 of the CFA, and is on level 2. It just seems like they want someone with more experience.

The Interview
I first met with the recruiter for about ten minutes and that went rather well. We got along, and she was friendly. I next interviewed with one of the research associates and he seemed like a really nice guy. He threw out some technical questions and I did okay, but I could have given better answers. I was nervous since this was my first big interview. I also screwed up on one technical question when my mind went blank- definitely got a good time!
We talked about stocks and I think I showed some of my stuff when I talked about Frontline (FRO) and LB.
Next I met with another associate and I stumbled through this interview. I answered his questions, but I wasn't too smooth. He threw me a few curveballs (name 3 weaknesses instead of one!), but I think I handled these fairly well.
Then, yes another interview, I interviewed with the other Research Assistant and this was okay. He was a friendly guy and we talked a little about books (he likes Damodaran, so we had something in common) and other types of books.
He answered some questions and I realized that the schedule of the job will be tough. Some of them get there at 4am, while the rest usually arrive at 5am. They are also sort of on call because, as one pointed out, if something big happens like an acquisition of one firm by another, they will go to the office (one was called in at 3am). It also seems like a job where some of them sleep there- I saw a few pillows! The days are usually 12 hours long. I definitely wouldn't mind this if it started later, but I think I can get used to an early schedule.
If they decide to continue the process, they will give me a call to go on another interview with the two senior research guys.

Lately, I haven't found too many decent jobs out there. The idea of moving to Chicago or NYC then look for a job has been entering my mind lately. It's risky, but life's about taking some risks.

Market: I'm not really sure what has happened today, I'll check it out in a bit- although I did notice LB was up another 4%, this stock is getting volatile!

Friday, May 06, 2005


I haven't finished re-reading the new market wizards since I've been brushing up on my Excel skills, but I wanted to post about some of the returns of these guys.

Nothing really exciting on the markets. My portfolio finished up and LB had a great day (up a little over 8%).
I also bought a suit today for $340, ouch! Although I'm sure that's probably cheap compared to other suits. Anyways, it's a Ralph Lauren and I think it looks nice. I might put up a pic of it later on. I'll pick up the suit on Sunday, since they have to fix a few things (I'm a bit on the tall side).
The one thing that has been on my mind: the job I'm interviewing for has some crazy hours. I don't mind working many hours, but the schedule for this job (for certain days) will be around 5:30am to 6pm. The starting time will always be 5:30. I'm not exactly the morning person! I can go by on 4-5 hours of sleep, but for working I'm used to getting up around 5:30 not being at work!
As for right now, that's the least of my problems: I need to get the job first!

Some Market Wizard Returns (stocks, options, currency, and futures)
Randy McKay: He started his account at $2k and in seven months was up to $70k. He had his first million dollar year after his second year of trading!

William Eckhardt: Since 1978 to the time of publishing, he averaged better than 60%/year with only one losing year.

Monroe Trout: During a five year period his average return was 67% and he was profitable in 87% of all months

Al Weiss: His average annual return exceeded 29%/year and the most he has lost in a year was 17%

Stanley Druckenmiller: Since taking over the multi-billion dollar Quantum Fund he averaged over 38% in his first three years.

Richard Driehaus: For the 12 year period since 1980, he averaged an annual return in excess of 30%!

Gil Blake: In his first twelve years of trading he averaged a 45% annual return. In this time period he never had a year with a return below 20% (his worst year was a 24% gain!).

Victor Sperandeo: Up till 1990 he had 18 consecutive winning years with an average annual gain of 72%.

Blair Hull: He started with $25k in late 1976 and by the start of 1979 had multiplied his stake twentyfold. He then averaged roughly 100%/year in the years after 1979.

Very impressive results; something to aim for!

More Advice

I decided to continue with some postings from the New Market Wizards. In a future post I might state some of the track records of these guys: incredible!

Some quotes...

Stanley Druckenmillers: The way to build long-term returns is through preservation of capital and home runs. Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you're right on something, you can't own enough.

Richard Driehaus: Charts are a very unemotional way to view a stock's behavior and potential.
Q: What are the major misconceptions people have about the stock market?
They tend to confuse short-term volatility with long-term risk. The longer the time period, the lower the risk of holding equities. People focus too much on the short term- week to week and month to month price changes- and don't pay enough attention to the long-term potential. They look at all movement as negative, whereas I look at movement as a constructive element.
One market paradigm that I take exception to is: Buy low and sell high. I believe that far more money is made buying high and selling at even higher prices.

Victor Sperandeo: To be a successful trader (and investor), you have to be able to admit mistakes. The person who can easily admit to being wrong is the one who walks away a winner.

Tom Basso: I realized that every time I had a loss, I needed to learn something from the experience and view the loss as tuition at the College of Trading. As long as you learn something from a loss, it's not really a loss.

After reviewing more of the book I think I might post some of the track records- some are really amazing.

Also, I've added two related sites. One is called Flipping 70 and the other is the blog to this site.
Check out the sites for some good advice and articles.

Wednesday, May 04, 2005

Advice from the Pros

Another strong day in the market and my positions were up (NTE and EBF had nice days) except for LB. GM and IBM had some news that led to some gains. I also had a few calls regarding jobs, and I returned those. The one thing I'm running into is the fact that most of these jobs want immediate hires. I was previously told that most of the jobs would probably take awhile, and I'm finding it to be the total opposite! I had one good contact with a staffing agency in NYC and she liked my resume and said to contact her when I can work full-time. I also have my first interview set up for Monday for a admin/equity research assistant position near Stanford (CA). More about that later.

I recently decided to re-read The New Market Wizards by Jack Schwager and I wanted to share some comments. I'm not done with the reading so I'll continue to post updates.

Bill Lipshutz: One of his comments that struck me was the amount of prepartion and research he put in to become one of the top traders. He avidly read financial periodicals (Economist, Barron's, and Value Line) and studied the stock tape.

Randy McKay: What advice would you have for traders? "One of the things I did that worked in those early years was analyzing every single trade I made. Every trader is going to have tons of winners and losers. You need to determine why the winners are winners and the losers are losers. The most important advice is to never let a loser get out of hand."

Monroe Trout: What are the trading rules you live by? "Make sure you have the edge....have rigid risk control rules....you need to have an edge and employ good money management."

Al Weiss: This Q&A shows another good example about putting in the required effort.
How did you end up becoming a trader?
"It was not an overnight process. I spent four years of solid research before doing any serious trading. After literally thousands of hours of pouring over charts, going back as far in history as I could, I began to recognize certain patterns that became the basis of my trading approach."
Four years!

I'll post more points from time to time.
Right now I'm learning more about Excel and waiting for my CFA books to arrive (all 46 pounds of them!).

Patience and determination- these are the key words.

Tuesday, May 03, 2005

Moments of Volatility

The fed raised interest rates again and everying is studying every word of every sentence from the meeting. I was watching CNBC when it was announced and then they had a conversation that lasted a few minutes about the one sentence that was in the last meeting, but not in this one. Crazy.
Some say the fed is just as confused as us, and this leads to volatility. If you check out the one day charts for the Dow and the S&P you will see what I mean.

LB finished the day up another 0.88% and I might have to re-evaluate my position soon. Everything else was down, with NTE leading the way. They came out with a nice earnings report, but margins suffered a bit and their next q's estimate weren't as spectacular as people expected.
I'm still going to hold on, even though I think there's a strong chance of it dipping below 20 (although in AH it was up over 2%). It's a fast growing company, heavily dependent on cell phones, nice dividend, and a fairly healthy balance sheet. I'm happy with the rest of my positions although I might sell EBF. This was originally going to be a momentum play, but it has continued to trend downward. I thought the dividend could provide a floor (I still do, just maybe at lower levels), so this one is up in the air for now.

I'll definitely have time for all of this, since I don't have a job right now. For not having a job, I've been fairly busy lately (more in a moment) and I'm going to concentrate my free time in: researching stocks, spending more time with my girl friend, catching up on some reading, resting (I have a knee condition thing- Chondromalacia Patella- so I need to rest/stretch a lot), and look for a job.

Money Stuff: My stocks suffered a bit today, but I did end a profitable eBay sale today. Total cost was $150 and total revenue was $212.50 for a profit of $62.50 (+41.67).
If you're a regular reader (hi!) I know I've mentioned my gambling activities and my current one involves online poker. I use Party Poker and from time to time I'll put in $50 or so, play a little and cash out (usually around the $75 area). I would say that over the past year I've made about $125 profit, so you can see I usually don't play online. Previously I would play in the little mini tournaments they have, but this time I'm sticking to the regular tables. I would say I'm a slightly above average player and I play in the lowest limit tables available because this is where beginners start. Why there? Because beginners are beginners and make nice costly mistakes. This is a double-edged sword because sometimes these players play with any cards and this can disrupt the game (I won't get into too many details). Although at times it has been frustrating, it's proving to be profitable. I started with $75 and I'm currently at $153. I don't spend too much time playing, just maybe an hour per day while I'm watching tv. Hopefully I can turn the $153 into a much higher number!

Job stuff: I met with another recruiter this week who has a portfolio accounting job in mind. The meeting went very well and I seem to be a good fit, but the only thing that can hurt my chances is a timing issue. They might want someone to start right away, and I won't be able to work full-time till June 8th or so.
Someone from another job also left me a message, so I'll give her a call tomorrow morning (it's a admin/equity research assistant job).

Monday, May 02, 2005

Market Thoughts

I was watching CNBC on Friday and they had an analyst on saying IBM is a value buy right now and a possible short-term buy to the $80 range. This does seem interesting, but then I would have to commit over 30% of my net worth for 100 shares- a little too risky for me!

Jones Soda: stockdiva made a comment about this one and I thought to respond in a post. I haven't bought any shares mainly because I haven't done any research yet. I read a quick article on their last earnings and noticed a few things (I think a drop in operating earnings and there was one other thing that stuck out). I think if I had more available money I would be more interested in taking a position (after reading more). It's had a nice run-up and I'll continue to watch it. (JSDA.OB)

LB had another good day (+4.7%) and it's nearing the $15 level. Everything else seems to be okay and my active positions are up a little over 3% for the year (NCC is starting to trend upwards).
I think this might be an important week for the markets. We've had a somewhat breather from the declines, and this week will show if the market has some strength or not. Basically, it seems like people are waiting for some sort of direction.

I was emailed about a site the other day so I checked it out and I think it's a useful site.
The site, Saving Advice, is all about saving and money tips. The site has a nice forum section where people can post/respond about a variety of topics.

Hopefully sometime this week I will write a little more about job hunting and books (CFA books are on the way).