Tracking Expenses

I'm entering my third month of tracking my expenses (as long as the rest of the financial stuff) and I'm going to change my tracking method a bit. When I first started I decided to just keep a list of expenses, but without any descriptions. Then, after the month had passed, I found myself wondering "I don't remembering spending all that money, where did it go?" so starting with this month I'm going to track expenses and keep a description. I think it will work out better this way when I see that I spent $25 last week on lunches at work (I took my own today).

The markets have been rebounding a bit lately, and I'm hearing more talk about an upbeat fourth quarter. I'll definitely be happy with that and I can't wait for December to come around. I think I will be able to use that month to actually look into more stocks. Things still seem shaky; people want to believe a late year rebound is on the way, but then they are hesistant as well. I've been reading more technical analysis reports that we subscribe to, and they are back-and-forth as well. One week some of the indicators turn positive, but some remain negative. The next week things look good followed by a bad week.

Technical Analysis update: I think I'm doing pretty well with picking short-term longs (earlier I did mention that I would post the picks with prices but then I don't want to get into any trouble with compliance reasons if the firm actually buys/shorts any of the picks).
I can say that my long position has gained about 5.2% in five days. I'm happy with that number, but I'm more aware of the percentage of winners (84%).
On the short side I'm having a little trouble. My short list is positive, but not by much. I think my problem is, is that I focus on stocks that I think are way overbought (based on RSI and MACD), but they have yet to break down. I keep thinking "this is bound to drop back a bit", but they continue to show strength. I think I need to focus on stocks that have already started to break down.
More on this later...

GSH and some comments

First the comments, I miss sleeping in!
I bought a few hundred shares of JSDA yesterday and the spread was incredibly high (around 14 cents or so). Of course there was barely any volume. I put in my order and it took about 30 seconds to fill, and then I looked at the Time and Sales (this shows all the orders throughout the day) and saw my order there. After about one hour there was only one more trade placed. So this is a long term investment, which means I shouldn't have to check the price constantly (but of course I am).

CFA: The studying is going well, but I still think I need more time. I have less than a month to go and while this seems like a lot if you break it down by available hours it's really not too much time.
I feel that I'm strong on the equity and economics parts. My weakest parts have to do with financial accounting (I thought I was finished with debits and credits after college...) and the fixed income section. I also need to review parts of the math sections because I haven't used the Bayes formula in about five years. Overall I think I have a so-so chance of passing. It all depends on how I use the next few weeks (especially weekends, when I can get a lot done).
If I don't pass, I'm fairly sure I will pass in June. I would be more confident if the test was in January rather than the beginning of December, but oh well.

Guangshen Railroad (GSH): I can't remember how I came across this one, but it was awhile ago. If the dividend information is accurate, it has a 4.7% yield.
It's really hard to find info on this company, but I did manage to find one report.
Here are the highlights:
-60% of all freight and 35% of all passenger traffic in China goes by rail
-railroads haul over 700 million tons of coal per year
-they are expanding their railroad network fairly fast and total investments earmarked is about 38 billion (which seems kind of high, this isn't definite)
-GSH deals mainly with the Guangzhou and Shenzhen regions; they are the sole operator
- the rail line is considered an integral part of the PRC national railroad system
- through the first half of 2004 revenues rose 36%, net income rose 66%, profit margin was 23%, ROE was 6.6%, no long term debt (which may explain a lower ROE), and they had about $300 million in cash (US $)
-then the report ends with a note about how passenger travel is up, freight travel is up, and both are expected to rise

It's a pretty interesting company, although I wish I had more information. I might look into it more, but there are a ton of risks. First is the country risk (who knows what China is going to do), then the fact that it's a Chinese company presents risks about their financial information. Chinese companies (and the country) are still known for kind of shady financials.
The lack of information is a big risk and as well as the coverage. It may be a great stock, but with an average volume of 18,000 shares per day it's going to take a lot to move it up.
The dividend is interesting if it's sustainable. I saw some information off Reuters and their cash flow seemed to fluctuate a lot, but this may not be accurate data. Basically the dividend yield is catching my eye, because if it's sustainable then you have a growing company in a growing country with a ton of cash and no debt.
I'm going to try to find some more info, and I'll post it if I do.

*note if you do look up GSH on Yahoo you will notice a div yield of 9.6%. A quick way to see if this is real or not is to look up Historical Prices on Yahoo and then select Dividends only. Assuming this information is correct, it looks like the company pays out a dividend around once per year and Yahoo calculated the yield by adding the last two payments (which was technically over one year's time, but it's close to two). I guess you can look at it both ways because of the timing.

End of Month Review

I was able to save a good amount in the month of October. On a month by month comparison, my net worth increased by 4.43%; which is a lot better than the previous comparison. I didn't have any major expenses and I tried to watch what I spent throughout the month. My total expenses for October came out to $370

My net worth at the end of October was: $29,051

I need to increase my net worth by 10.2% in two months in order to meet my year end goal of $32,000. I think I can do it if I can watch my daily expenses and prepare for Christmas spending.
I'm not going to hold back on Christmas spending, so I will try to save more in November. I also have two months worth of transportation reimbursement I can get back from work. I need to complete the form tomorrow, but then I should get a check for about $280.

I also have a good amount of things I'm going to try to sell: numerous books, a small mp3 player, and my digital camera (it's too bulky). I plan to do at least two more options trades (most likely spreads) and I think I might be able to bring in another $200.
My job does pay a bonus, but I have no clue about the amount. I doubt it will be big since I'm new, young, and I'm not an analyst or trader.


Other news
Jones Soda: The reason why I haven't purchased any JSDA yet is because it will be a transaction that goes against the type of investor I am right now. I rarely hold things for more than one year. As of right now my investing behavior is to hold things for a short term, wait for it to move up, sell and move on. I definitely can't consider myself a buy and hold investor.
I know I will need time with JSDA, but I do think it's a good company. The next quarter will be important, but I think the long-term reward/risk ratio is rather good. I plan to buy a small amount tomorrow (200-300 shares) and this is going to be a long-term investment (unless it goes crazy and I quadruple my money....then I might take my profits and run).
I might make a second long-term investment tomorrow in GSH. This will also be small because I want enough available capital to continue with my short term investments and I also need available capital for my option trades.
I'll try to post about GSH tomorrow; it's risky but I figured in the long run it might work out.
I'm still thinking about it, so I might either buy none or just 150 shares or so.

Jones Soda

First of all, I followed Neville's advice and changed the comment section so it has the word verification thing; hopefully this stops all the spamming.

Jones Soda
Before this quarter was released I was hesistant with this company because I was unsure of their Halloween promotion idea (as well as a few other things). Well it looks like the Halloween cans were a big success, but now I'm still hesistant with the company!
I read over the transcript for the conference call, and there wasn't really anything too spectacular.
Earnings per share came in at a nice rate and they managed to increase their sales with only a small increase in promotional costs (nice sign). Now I'm hesistant about Q4 and their levels of inventory. They said they can sell the inventory, but it's a good amount of inventory!

Stolk and Cue (CEO and CFO) did seem very confident about the next few months so it will be interesting to see how much sales increase and if they can have some positive cash flow.
I still think they need to diversify away from Target. They hinted that due to their Halloween success (which was quite profitable for TGT), they might have more bargaining power with Target. I rather see them spend more effort into expanding their products through more stores. They are partnered with more chains, but they could expand into the grocery business.
They just seem too Target focused.

I think they are in a great position right now, but the next quarter is going to be important. They basically came under with light revenues and now are really confident that q4 is going to be great. If it doesn't meet these high expectations it might lose some investor confidence for awhile (and analyst confidence- Kanter from Prudential seems to be waiting for expectations to come down a bit).
Long-term, I still think it's a good company. Plus, if they get listed on the Naz that would be great. Also, you have to think some of the big beverage companies are looking at Jones (Pepsi and Coke). Wouldn't this be an attractive target for a takeover? Niche brand/branding, growing sales, big fan following...

One stock on my watch list went down 5.2% today and it got my interest. It's GSH and it's a Chinese railroad company. It is kind of hard to find information on this company, but I found one decent report. I'll try to write a post about GSH in the near future.

Also, I've been giving my opinion to the head trader regarding industries/stocks based on technicals and I hit a few good ones today! Just to be on the safe side, I won't mention any names (because I don't know if they will take a position in it or not), but I picked one industry to go down and all my picks went down, so that was good. One pick actually went down over 12% today, so that was nice to see (I was picking to short).
I say: beginner's luck, but I'm trying hard to improve the streak

Things I still need to do

This is basically more of a reminder for myself, but I figured if I made a post it will prevent me from slacking off.

I still need to find out about taking a math class at a junior college. A good friend of mine said it was possible to teach myself some of the basic things (like refreshing pre-calc and calculus), and I have thought about it. If I can fit something into my schedule, I'll probably sign up.

I'm tracking my expenses, but I need to plan out a monthly budget. I know a few other blogs break it down by categories, and I might try this and see how it works.

Regarding my last post about information is key, I need to get myself some more info. I get the Wall Street Journal, but I'm also going to look into re-subscribing to Business Week and then subscribing to Barron's and the Journal of Finance. I don't think it will cost too much money and I think it will be worth it.

Although it's still a few months away, I need to think about the new year. Right now my cash levels are too high and I need to invest. Besides that, I should look into setting a 2006 goal, but I will need more info about some cash inflows.

Nev over at his blog, always manages to try new experiments and network. I'm going to attempt to do more of these two things. Right now I'm talking and meeting with more traders from different firms (went to lunch with one today), and I'm looking into joining some investment related groups in the city. In November I'm going to an options training class and I'm going to try to meet some new people there.

Looks like I need to do a lot of things!


Jones Soda comments: I haven't had time to listen to the conference call and I just glanced at the numbers at work. The two big things I noticed was the increase in Accts Receivables and the huge increase in Inventory. I'm assuming they are stocking up for the last part of the year (Halloween, Thanksgiving, and Christmas), but I wonder how this increase (something like +38% from last Q if I remember?) is within range in terms of their past history. Also, for some reason I thought the revenues were a little light. Tomorrow I should be able to print out a transcript of the cc. Any comments?

As for the comment spamming, I switched it so only registered users can leave comments and hopefully it will cut down the spam a little. A guy mentions a little gambling here and there and all the spammers come out....

Information is Key

So far, I've been learning a good amount of things at my job. I think the most important thing is that information is key. The analysts and traders stay on top of everything and this means keeping track of tons of stocks, reading many 10-k's, calling up people from around the country, and basically trying to find out as much information is possible.

Everyone reads the Wall Street Journal, that is a must. Besides that, everyone has other sources of information. They all use Bloomberg and read many of the news stories off of there. The traders talk to other traders to see what's being whispered and any preliminary information on earnings. The analysts talk to other analysts that they know, read 10-k's all the time, and listen to conference calls when companies release their earnings. It's pretty amazing how much information they have to keep on top of. During one day an analyst might listen in (and ask a question or two) on two to three conference calls, depending if it's earnings season or not, and then take more conference calls with management of specific companies. We're a big enough firm where we can also bring management in to see us and then the analysts can have a more personal meeting with them. Besides all of this, they keep track of breaking news and how stocks are reacting throughout the day. My reuters station has about 50 tickers of stocks I'm watching. The analysts all have at least a few hundred!
The traders also track these stocks and they also have to keep on top of technical analysis reports and charts.

Right now I barely have enough time to scan a few news articles! At first I was hesistant because I thought they wanted me to only focus on the trades/operations part, but the main trader is showing me more things. Now I feel more comfortable reading news stories and looking at charts. When I first started, I would only quickly glance at a news story and then quickly go back to the operations work.

Information is key!

Sitting on Cash

In terms of percentages, I have the lowest percentage ever in stocks. I'm sitting on cash and getting ready to put more cash into my brokerage. I'm also getting ready to buy, but I don't know what as of yet. I need to spend time looking for things, and while I have been looking at certain industries (some packaging companies, technically, look decent- but natural costs are hurting their margins). Right now I think it's best for me to remain in cash and just take my time looking for decent investments. The way the market is acting, I'm not even sure if I will do anything for awhile.

I did finally sell something at a decent time. UNTD has dropped over 5% since I sold it a few days ago. I made the decision technically and stuck with it, and it's good that I'm sticking with the plan. I need to remember to not hesitate.

Also, I completed my first option trade! I won't go into the details, but my after commission return was +0.25%. Now, I know it's nothing to brag about, but here are a few details: it was made over a 2 day span and I just wanted to end up with a positive gain. My max profit was roughly 1.15% and I think I could have achieved that, but I wanted to minimize some risk. I'm still learning, but I do want my option trades (lots of spreads) to hopefully average a 1-2% per month. I'm dealing with short term options and using theta (the time decaying factor of options) to my advantage. I'll be limited my profits through the use of certain spreads, but I will also be minimizing my risks. I'm not looking into hitting home runs, but rather just a few nice singles per month. If I can hit my average, I'll definitely take that 12-24% gain over a year's time.

Another day of red

I ended up selling UNTD and EBF at the open today because I thought it was time to get rid of EBF and UNTD looks like it's breaking down technically. I closed that position with an almost 12% gain, and I didn't want to see my gains slip away. I think it might go down a bit, but I don't think I will re-invest in it.
Now I'm sitting on a bunch of cash and nothing to invest in. The way the market has been acting, I think I might do okay by sitting on the sidelines. I was thinking about looking for some low growth high dividend stocks, but I don't think that's the best plan for me. I normally don't hold stocks for a long period of time and by parking my cash there, it will/might force me to wait awhile for some decent returns. As of right now, my investing mentality is on a year to year basis. I know some people look at the long term, but I'll stick to a short term mentality. Before October, my average yearly return was 23%. I'm assuming it's lower now since October has been a bad month, but I think I can maintain around that average. It might be because I am young (and possibly impatient), but also because I'm surrounded by other investors who have the same sort of mentality. At our place, and others, we want to generate returns (generate alpha). Beating the S&P is not the goal, it's making money. If the S&P lost 3% and we lost 2%, that's useless to us.

I also need to move some money over to my brokerage account. I want to hold about $3000 in my ING account (for emergencies, etc.) and around $2000 in my bank account for bills and spending money. This means I need to transfer over about another $5000 or so into my brokerage account. I still haven't decided if I want to transfer over my Roth, and I still need to fund that. By the way, the Think or Swim software platform is incredible. It's really advanced and it will definitely help me with my options trading in the future.
One more thing: by transferring over more cash I will also have more option buying power. I'm looking into a few ideas where I would write calls and puts, but I'm not ready to go into the details just yet. I think I might be able to generate between 0.8% and 1.3% returns per month. Annualized this is about 9.6% to 15.6%, this is assuming nothing goes terrible wrong (which may be wrong to assume). It's a learning process though, and the only way to learn is by trying new things.

Quick Disgusting Update

I need to catch up on a few things so I won't be able to write a long post.
Earlier today I was reading up on some news and came by this report on Lifecell. The article mentions how Lifecell is going to take a third quarter charge. Lifecell is a provider of human tissue for skin grafts and operations. The reason for the charge: they need to recall some products "that may have come from body parts illegally bought from funeral homes".
Disgusting!

A few updates

Just to note: I fixed some links on the right hand side and added a few more blogs. Hopefully one day I will actually put them in some type of order, but for now I just want to make sure the links work.
If any of the links are broken, just email me and I'll fix it.

New post coming shortly.

There goes the retailers

The clothing retailers basically got destroyed today. I was looking at a list of them earlier and it was full of red and decent declines. Here's how some of them did:
American Eagle down 5.58%
Tommy Hilfiger down 6.04%
Coach down 5.24%
Aeropostale down 2.57%
Abercrombie down 4.15%
Limited down 2.23%

Definitely not a good day for retailers or for the market in general as the S&P dropped another 0.6% today.
I have been doing some preliminary research at work involving the S&P and moving averages and based on some historical information, I wouldn't be surprised if the S&P continues downward for awhile. I could take a guess at a short-term bottom, but I don't have any figures with me (maybe around 1160-1165 area).

I did read an interesting headline: Comcast and Google in talks over AOL.

Is anyone doing the Mad Money Challenge? I'm basically even and I see the leaders have made about $40,000 in profit. It seems like the way to do these challenges is to go for one or two stocks that are speculative/momentum plays. Ngas seems to be the choice for a lot of these people.

Personal Finances: I've been controlling my expenses and I need to deposit a reimbursement check soon. Besides that, October is going okay so far.

Is anything going up?

The S&P made a new three month low today and well nothing is looking too good. A few months ago everyone was raving about energy and now those are getting hit hard, followed by the home builders, and now companies are getting hit with rising costs. I have been reading and hearing more people talk about a recession looming (and of course I forgot to save links, sorry about that).
It's definitely an odd time right now and maybe I am safer with more cash on the sidelines. I've also started to think more about the type of investor I want to be in the future. Some are buy and hold, and I know that's not for me. I've been thinking about it more, and I will probably post something longer before the year is over (maybe like a year-end investment review).

I'm still up in all my holdings except for one (EBF- basically even with dividends). UNTD has been climbing upwards and hopefully it continues for awhile. I still need to add some more stocks to my portfolio and I do like the idea of looking into small-caps or even micro-caps, although that can be risky.

I missed out on a good eBay sale. There's a concert that I knew would sell out fast and I tried incredibly hard to buy some tickets. I logged on to the site and right when the tickets went on sale I tried buying them. I was unable to get the tickets I wanted. If I had, the total cost would have been around $110 for two tickets. The last time I looked on eBay, the same type of tickets were going for $500...maybe next time.

A tough week

The S&P has had a rough week, as you can see here. There is definitely a lot of pessimism out there: inflation talks, rising rates, uncertainty about oil, and profit warnings. I have an old copy of Barron's on the floor (from about one month ago) and it talks about how the market might go up 10% by the end of the year. Looks like that's not going to happen...

In other news, rebalancing portfolios is a pain in the ass. We've been doing this over the past few days and it causes a ton of problems and work. Basically we have out portfolios in line, but sometimes they need to be rebalanced by selling some shares in one fund and buying it in the other. You would think it would be easy, but it's not. It creates a ton of trade transactions because they can't just switch the shares from one portfolio to the other.

On a normal day the trade report I work off of is usually around seven pages long. That's not too bad and in the morning it might take me under two hours to get through everything. When we rebalanced yesterday my trade report was 35 pages long! Also, when the trades are done at the end of the day I basically have less than two hours to process them and send it to the company that handles are trading platform (which then send it to our prime broker). I always have enough time, but yesterday I only finished with two minutes to spare. In the mornings I deal with the previous day's trades and any trade breaks (mistakes made by the various brokers, etc.). I sometimes get one or two trade breaks, which isn't too bad. For instance the shares might have been booked with a different commission than what we reported or the shares when to the wrong account. This morning I open up my inbox and see my trade breaks report, it was three pages long! One guy at one of the brokers we used screwed up, and then on top of that there were many other mistakes. It literally took me all the way up till the market close to figure everything out. Then I took a breath, and had to process today's trades. We did a small rebalance so it wasn't too bad, but it was still pretty hectic.

A little extra income

I received a reimbursement check as well as some money from an eBay sale. This should add about $250 to my net worth, so I'll take that. I've also finally gathered a stack of books I might try to sell on eBay or Amazon.

The market has not been too fun these past three months. It's been filled with a ton of anxiety, and with that strong emotion comes volatility. I've seen stocks start off the morning going up over $1 and then ending the day down $1. I haven't been able to spend too much time looking at stocks, but I have been spending more time looking at graphs.

One of my new technical analysis projects is trying to find patterns of price run-ups or downward momentum and how far it moves from particular moving averages. It's going to require a ton of numerical data and I'm finding a hard time gathering the info from the software we use. So far it is pretty interesting though. I'm also trying to teach myself technical analysis by looking at graphs and using moving averages, MACD, and rsi to see if they will go up or down. After writing down my reasons I'm sending my recommendation to the head trader and then he will see if I made a good choice or not. We've been spending more time looking at particular stocks (I can't mention any particular ones) and trying to see his reasons behind certain transactions. It's been a learning experience.

End of Month Net Worth

September was full of fairly big one time expenses: two birthday gifts, the gym membership, the CFA program, and doctor bills. Awhile ago I mentioned I had to get my leg checked out (everything is fine), but the bills kept on coming! I had limited health insurance because this was during the time I was unemployed. Bills: $30 to see the doctor for 10 minutes, $37 to get blood taken out of me (5 minutes), $437 to practically enter the hospital, and $37 to get a 5 minute examination.

Anyways, back to my net worth. I managed to increase it by a little over 1%...
Before I calculated everything I thought I was actually going to go down a bit, so I'll take the 1% gain. As of the end of September the figure is $27,818

I'm a decent amount away from my end of year goal, but I think I can still make it.

Stockdiva left a comment about a stock picking contest going on with Mad Money (Cramer's show). The link is here for anyone interested. I'm going to look into and hopefully sign up.
You know what's odd? I work at a hedge fund that deals with stocks all day long, and I really haven't been able to catch up on any particular stocks or sectors. That needs to change.

Cost of Living

I just saw a news report saying the following: the cost of living for a family with two children living in San Francisco is $80,000. This is to just basically stay even. This is just an insane amount of money and I can't believe the figure is this high. I'm not sure what the average salary is in San Francisco, but I know it's higher than the average. How are people expected to maintain some level of savings while living in the city?

In other news, I was browsing on Yahoo Finance and noticed that they added eight columnists (the most famous probably being Jeremy Siegel, or Ben Stein). I read the intro columns and most of them seemed pretty good. I think it will be worth the time to check out the site every now and then to read the new articles.

CIA tactics for investment managers?
A few people at work attended a workshop hosted by two former CIA agent. The workshop was how to read people and see when they are lying. The retired agents both had many years of experience in this area and are now trying to start a new business. The idea behind it is that big funds bring in key managers from public companies into their offices to talk about the particular company. At our place, it seems like one company comes every week. Now with these tactics, investment analysts might be able to tell when the managers are lying or hiding something.
I'm not sure how successful this will be, but it sounded interesting (I didn't go).

A pretty good site

Things have been hectic lately and prices have been jumping all over the place. In times like these it's always interesting to see how people react so quickly to news updates. It's even more interesting to see it happening in front of you on your computer. For instance, the other day when Hurricane Rita was downgraded (I think, from a 5 to 4), showed a bunch of anxiety and panic among investors. The day started off with things looking bad as everyone thought the Hurricane was going to be bad. The majority of the quotes on my Reuters screen turned red and it looked like it was going to be a bad day. I have about 100 quotes or so ranging in industry, and another screen shows the S&P components so it's a good mix.
Most of the analysts at my firm were reading about the hurricane and I received about three phone calls from other brokers with hurricane related news. Then in the middle of the day, the hurricane didn't look so bad and it was downgraded. Immediately the buying starts and a bunch of quotes on my screen turn from red to green in no time.

Anyways, today at work I started reading this investing site at about.com
In terms of simplicity and clarity, I think this is one of the best investment guides I've seen online. The writer breaks it down into lessons (which all have multiple parts) and covers the financial statements. He then ends it with a real-case example and a quiz. I like about.com in general, and this site is definitely worth a look to catch up on some of the basics.

A net worth update should be coming up in a few days and I've been watching my expenses. I'm due another paycheck, money from eBay, and a reimbursement for travel expenses.
I calculated a year end goal awhile back, but I think I should come up with a concrete month to month goal as well. I've basically been using a 40% savings rate (or so), but I think with two full months of information I might be able to make a better goal. Of course, as more information comes in I will adjust the goals.

Money Masters

I'm about half way done with Money Masters of Our Time by John Train. I definitely recommend this book because you get a little background info on various big name investors, plus a general outline of their investment approach. You see how the value investors choose their stocks, growth investors, and those who invest all over the world. I just finished the section on Soros and was amazed that at times he was leveraged 5 to 1! He took a lot of big bets and his record proves that it mostly paid off. The book is also well written and you can find a used copy on Amazon for fairly cheap. There is also the possibility that I'll offer it on this site sometime in the near future.

My account is in limbo so even if I wanted to sell FRX, I don't think I can. It seems that my Scottrade account is closed (since I can't log in and get any of my old financial records), and that my Think or Swim account is not yet funded. From my brokerage experience, I know transfers can take 7-10 days, so I think by the end of this week or early next week I will be able to use my new account.
In the meantime, NTE has been making some nice moves as it finished the day up 3%.

Random Notes
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No Credit Needed is hosting the Carnival of Debt Reduction, and I suggest you check it out.

Free Money Finance has a Carnival of Personal Finance, and that's worth checking out as well.

After one bad and two mediocre weeks of NFL bets, I'm shutting it down for the season. I ended down for the season, but I'll try it again next season with a twist: only bet on weeks 4 through 15. The beginning weeks are tough to figure out, and the chance of upsets are greater in the last few weeks if a weaker team is playing a team who is already guaranteed a playoff spot.

I should close another eBay sale within the next few days and I should book about a 70% profit (only $45 in dollar profit, but a nice percentage profit).

CFA studying is going well (I think) and I know what areas I need to work on: leases, taxes, and basically all the accounting details.

Think or Swim

Today I finally completed my account transfer to the Think or Swim brokerage. It was an easy process, but I always got side-tracked. Normally I use my laptop, but I needed to print out forms and things like that (this hassle looks more like laziness, and that might be the case...).

Anyways, the good news is that I'm done. Now I just have to wait a little while before my account transfers over. This brokerage is tailored more towards options, but it does have stock trading capabilities (with low commission rates). So far, I really like the demo software. My biggest complaint about Scottrade was that the site and software always looked like it came from the 1980's. They have since redesigned the site and that looks fairly nice. I really like the look of the Think or Swim software.

The one thing I really like: customer service. I emailed them a question and received an answer very fast. Since I work at a hedge fund, my company needs to get copies of my monthly/quarterly statements for compliance reasons. I emailed them about this and the Managing Director for Compliance emailed me back promptly. Plus I like how they follow-up. I faxed over my paperwork and received an email letting me know that they received the fax and will start the account transfer. Then, I also received a phone call confirming the same thing.
It's the little things that count, and they are doing a great job so far.

I received an email from them that I wanted to post about. They are teaming up with Option Planet and offering free option courses. The link is here, but I think it's mainly for major U.S. cities. If you are interested in options, it might be worth the look (I don't think they will try to sell you anything). I'm planning to go to two so far, another one conflicts with my work schedule. They have an 8 hour class that deals with advanced options and it's free, that's definitely worth my time! They also have a Think or Swim software demonstration that I might attend, but I'm not so sure yet.

At work today, I learned I might be getting a Bloomberg station. I'm signed up to attend two workshops next week (one dealing with fundamental analysis and the other with technical analysis), so hopefully they do decide to get me a Bloomberg.

A Way of Thinking

Are some people better savers because of the way they think? How come one person is able to charge $1000 on their credit card without a moment's thought, when another knows that it would be better to stay out of debt?
Maybe it comes down to the logic and reasoning behind the two people. The first is driven by consumption in the present. He "needs" the new Ipod/stereo/tv/etc. He doesn't really need these things, but he wants these items. He can justify his wants by re-naming them as needs. The second person is thinking more about the future. Can he give up this present consumption in order to consume more in the future? (this is also where the time value of money comes into play).

Another thought involves opportunity costs. These costs can be explicit and implicit and involve money, time, or generally something that is given up for something else.
I just wanted to share a quick example. Let's say you get a speeding ticket and you need to go to court. The judge gives you an option: either pay a $500 fine or pay nothing and do ten hours of community service during the week. Which would you do? Many people would opt for the community service because it doesn't involve a cash outflow. But this does involve time, and your time is worth money. If your current salary is $70/hour, wouldn't it make sense to pay the fine? By doing the community service you are giving up $70/hour for ten hours = $700. (You could argue that the externalities, like helping the community, will offset the -$200 loss for doing the community service). This example just offers another way of looking at things.

Selling some stocks?

I've been watching FRX and NCC lately, and I'm not liking what I see. I still have some nice gains (up 6% in NCC and 20% in FRX), but I don't want to see my gains evaporate like what happened in LB. NCC is hitting below some of its moving averages and this might be the first one I sell. But the action in FRX is just ugly. Today it dropped about 3% and it's starting a downtrend. I want to see how the next few days (hopefully the markets in general can pull together a few nice days), and see how they react. I'll be looking not only at the price action, but as well as volume. If I do get rid of these two, then my stocks as a percentage of my total net worth will drop to 25%. I don't mind that figure too much as long as I can find a few more stocks. This will also mean that my portfolio will be small and made up of just a few stocks. The volatility of these stocks are fairly low, so I might be able to close out 2005 with double digit gains. This would just mean I'm satisfied with those gains, but I might want to take a risk to try to improve my gains in the last few months. Honestly though, the markets have been a bit shaky. I have a few option ideas in mind though...
When it comes down to it, I would be happy to end the year +double digits. It's been a fairly tough year and I'm not sure the last few months are going to be any better.

I'm going to try to look up some time management articles online (during my lunch break), but if anyone has any ideas please leave a comment!
Here is my current week schedule:
Wake up at 4am
Leave work at around 3pm
Get home at around 345pm unless I go to the gym then it's around 530pm
Eat dinner at 6pm
Get my bag and clothes ready for the next day at 830pm
Depending on how tired I am, go to bed at either 9, 930, or 10pm (then there are those really fun days when I'm so tired I go to sleep at 8pm, tonight might be one of those days).

Somehow in that time I need to: write this blog, study for the CFA, catch up on emails, and check out a few other blogs/websites.
Any suggestions?


Just a note: the CFA studying is going okay, I got down the two big economic sections and I'm moving on to another section. As of right now, I'm definitely not sure I can pass this December. I know I have time, but I still think I need a little more. I'll keep on updating

87% Towards my Year end Goal

Alright, I just wrote three big paragraphs and then my browser shut down for some reason. I really don't feel like re-typing everything, so this one will be shorter. Due to some big expenses, my net worth so far has only increased by about $230. I actually thought it was going to go down a bit (this is just an update, not an end of the month update) due to the expenses. Every little bit counts and I think I should get a check for about $140 fairly soon to compensate me for my commuter expenses.

My goal is within reach, but it might take a little more effort than I previously thought. I don't see any major expenses in the next few months except for a few birthdays and Christmas shopping.
I gathered up some books that I will try to sell (I'll list them here first for any takers) and I might sell some dvds and cds.

I think as long as I keep my expenses in line, the goal should be in reach. The one thing that would help is the fact that I still haven't found an apartment (okay, I haven't looked in awhile).
The lack of a rent check should help me reach my goal.

My offer to send my CFA notes to anyone who wants them is still up. If you're interested, email me about the notes (my email address is in my profile). I've received about six emails already, and I'll send the notes off tonight.
For those interested, just be aware that it is a big Word file (about 850kb).

One more thing: I just saw a list of the best business schools
Here are the top 10
1. Dartmouth
2. Wharton (Penn)
3. Chicago
4. Columbia
5. Yale
6. Stanford
7. Harvard
8. Virginia
9. Cornell
10. Northwestern

CFA notes

I need to make this post short because I only have a little time to study tonight. I'm not sure if anyone wants my CFA notes, but I sent a copy to my friend and I thought I would offer to send it to anyone interested. It's a rather big Word file, but if you're interested in the test or just want to see the information I will be tested on just send me an email (it's in my profile).
There are a few abbreviations, but everything should make sense. If you do email me for the notes, I'll reply back within a day or two.

I read this fairly interesting article on drug makers.

Time to study.

NCC

I'm starting to look at NCC. I haven't liked the way it has been acting lately and today was a decent sell off and high volume. Check out the end of this graph to know what I mean. They came out with a mid-quarter report and it showed they are still buying back shares. They plan to continue their buyback and hopefully this could stop this mini-downtrend.
UNTD is still looking pretty good and no weakness is showing yet. I still need to find some more stocks to invest in. Right now stocks are making up about 54% of my total net worth and I think this is way too low for me for a few reasons. I can have a higher rate in the stock market because I'm young, my paychecks coming in represent a size-able percentage of my total net worth (which means my % of stocks as part of my net worth will drop fairly fast), and I have no major bills or expenses.

So far, I've been doing pretty well with my savings plan. I'm maintaining a high savings rate and I'm watching my expenses. It hasn't been too tough and I think I continue in the future. I do have those days where I go "I bet I can afford a new car", but those quickly go away. Maybe in a few years I'll decide to trade-up from my Civic.
The one thing that has helped me is making lunch at home. I think I've done this for almost a full week and the savings add up. I'll sometimes buy my lunch out of pure laziness, but I think I've already saved about $30 or so.

I know many other blogs post savings tips, I usually get tips off Frugal for Life, but my tip is to limit eating out (unless your company is paying for it, then get the expensive stuff).

A few articles, and some stocks

I was on BusinessWeek during lunch and the two articles I liked are 'How worldly is your portfolio?' and an article regarding Conagra's dividend (it popped up on a screen a little while ago).

I've been spending more than I originally planned, but they are worth the money. The first big purchase was my gym membership, but I think I got a good deal and this will definitely be worth the money. Today I spent another $150 (September is going to be a big month for expenses!) for a CFA online question program. It has thousands of potential CFA Level 1 questions and I heard that this will be extremely useful.
Looking through my notes I really realized that this test is going to be hard! I'm wondering if I have enough time. None of the material is really hard, it's the fact that there are so many details to know that causes the problems. I'm starting to review my notes, start the problems, and then use the online question bank. I tried the online one today and I can do fairly well with the knowledge I have now, but I'm not comfortable with any of the topics. I need to know all the details.

Stocks
I haven't had time to research any stocks lately or look for stocks based on technicals at work since I've been busy lately. I'm going to have to re-evaluate my schedule and try to move things around. Right now I don't have too much time to study for the CFA (on weekdays), barely any time for this blog, and now I'm starting to go to the gym. I'm going to use my time on BART to study my notes. I'm not sure how I'm going to do next year. Next year is probably going to be busier as I: try to attempt some option strategies, continue studying for the CFA (either Level 1 if I don't pass, or Level 2), take one math class, and possibly work on some business ideas with a friend.

JSDA went up 9.77% today on fairly strong volume. I'm still going to wait for the next quarter to see how they are doing.

NTE went up 5.32% today and UNTD followed up with a 5.06% gain.

Net Worth taking a hit

My friend and I signed up for the gym yesterday (24 hour fitness). We wanted to do a long-term deal since we know it would be useful. They had a deal where you sign up for one year and get two years free and I ended up paying $642 up front for the package. I figured I might as well have the money come out since: on a monthly basis it will be about $12 cheaper than the month-to-month plan and I can afford the chunk of money leaving my account since I don't have any huge bills (no rent yet, I'll get to that). This just means that my net worth will probably only grow by a small amount this month. I'm still tracking my expenses and I'm going to try to limit any other big expenses for the rest of the month. Although I need to buy a few more work shirts.
Oh, and I've only bought my lunch at work one time this week (saving about $17 or so). Sometime in the near future I'm going to clean my room and gather any cds, dvds, and books I don't really need and hopefully sell them to bring in a little extra cash.

The apartment: I've thought about moving in with strangers by finding a room off Craigslist, but I am leaning towards moving in with friends. I have one friend in mind, but we need to wait until he finds a full-time job. I'll post any updates when they happen.

I also finished typing my CFA notes. I somehow managed to write 177 pages of notes! I better pass this damn test....
I have about three more months to study and do the problems- no time to slack off.

My first Technical picks

I don't have anything major to post, so I'm going to post my technical picks from the past few days.
I think the majority of the picks are from 8/31 and then the last few I'll note are from 9/7.
I'll note the ticker, price, and why I think they will go up or down. Again, I'm a beginner so any help is appreciated. All these picks are based mainly on various moving averages, support/resistance levels, and volume. My first picks turned out pretty well, but that doesn't mean anything to me right now.
I'll try to track these on the right hand side.

PFE: $25.35 It's almost reaching the 50 day moving average. It's beginning to rise away from it's downward momentum (short-term starting at around $28.90). The key areas I think are under $27 and then around $27.50 has resistance. Support at $25.
Price today: $26.30

MRK: $28.17 Basically the same setup as PFE, I had the same reasons jotted down.
Price today: $29.25

LLY: $54.80 Broke past the 50MA, the 100 and 200 day MA are flattening. Resistance because of volume at 57, major resistance around $60.50
Price today: $56.36

SGP: $21.31 Beginning of divergence between 50 and 100 MA
Price today: $22.38

CAH $59.70: trending up, 100MA = floor of trned, but it's showing short-term weakness around 60. The key thing to watch for is if it breaks 60.
Price today: $59.70

AET $79.54: short-term uptrend, rising above MA's and broke through the 50MA
Price today: $83.20

CMX $46.71: reversed downtrend in short-term and rising averages
Price today: $48.65

BIIB $42.41: 50 crossed over the 100MA, both starting to trend upwards
Price today: $42.47

9/7 Picks
PHG $27.32: rising MA's
PIO $15.62: MA's are flattening, base is forming. Resistance is 16 due to heavy volume on 6/17 (then it was $19)
RIMG $25.39: Increasing MA's and RSI (now at 60)
SANYY $13.47: Crossed above 50 and now around 100MA, 2 months of heavy volume (could be forming a base)
Short trade FLOW $8.44: losing momentum with a RSI trending downward

We'll see how these turn out.

Time to Focus

I'm interested in a variety of subjects and when it comes to the finance related ones, I think I need to focus on a few spots. The one thing I do not want to do is to stretch myself too thin. I have many goals and plans for myself, and I have to realize that I cannot do them all at once or else none of them will get done.

I wanted to learn more about currencies, but that will take a back seat. I think it's time for me to re-evaluate the areas to concentrate on. Number one is definitely the CFA material. This involves financial analysis and economics. I want to have a strong foundation in this area because this will help in the immediate future.

Although I'm still learning technical analysis, I want to limit the amount of time I spend studying it after work. I rather use that time studying for the CFA. Right now, my job is not rushing me, so I have enough time to get my main functions done and then that usually leaves a few hours to study. The head trader has taken a good amount of time showing me things he knows, websites he reads, and his mindset when looking at graphs. Right now I'm going to focus on moving averages, volume, and a few major indicators.

The third major area I want to concentrate on is options. I find options really interesting and I'm looking for a few more books to read. I know a good amount of general information, but I'm still a little murky on more of the advanced info. The more I read about it though, the faster I'll understand.

Any other finance topics for right now will have to wait. I need to spend some free time on CFA/financial analysis stuff, options, and then technical analysis at work.

I'm putting up this post more of a reminder to myself, but it might be helpful to others.
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I deposited $300 into my NFL account, let's see how this experiment goes!
Well for the first week, my plan is taking a little hit. I just logged on and the odds are there but the money line (where you just pick the winner) is off for every game. I'm hoping that when it gets closer to Sunday, there will be some money lines to choose from. If not, I might not bet or just put a little money on a few games. The site I use (sportsbook.com) is also offering a free $10 bet. If I lose, my money is refunded back to me. I figured I'm not going to bet the full $300 anyways, so I'll take a shot (okay, we want the Patriots to cover by 7.5 over the Raiders).

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Site Updates
Alright, I've been slacking in this area. I need to add a few more blogs (and take out one or two that are no longer up). I'm going to try to work on one part of this site at least every other week.

I have two ideas that I want to add to this site.
The first one deals with technical analysis. While I'm at work I'm going to look for stocks that I think will go up or down and give a few sentences about my thinking. I guess I have to put this part just in case: don't buy or short stocks that I mention because when it comes to technical analysis I still no next to nothing
I figured this would be a good way to start, track my results, and hopefully get some helpful comments about how I can get better. I started this at work last Wednesday, so I'm going to put up those results so far. For those who know a lot about technical analysis, please leave some comments.

I've been thinking about the second idea for awhile and I think I might have enough time.
I'm going to pick a really basic company (ie. someone who makes widgets) and then try to evaluate that company on this site. This will most likely be a long, step by step process, and I'll post updates every once in awhile. For instance I might do a business summary sometime during Week 1, then an industry summary, things like that. Then hopefully it will end with a valuation of the company. This is more about finding out how to value a company, rather than finding a company that seems like a worthwhile investment.
More on this later.


Money News: I'm going to join 24 hour fitness. My friends and I are going to try to get a deal by going together and signing up for a full year. We think it might cost around $650 for one year (plus two free years) so three years in total. This will be about 50% cheaper than paying month to month, but I have to pay the money up front (for those into the little details, then it will be lower than 50% because of opportunity costs). We're hoping that they will be able to waive the processing fee.

Another way to look at a Call Option

Buying a call option gives you the right to purchase 100 shares of stock (it's normally 100, but it can be different depending on the contract) at a pre-determined price (the strike price). The option also has a specific time, so it might expire in two months. There are options that go out years (LEAPS). I've been interested in options for awhile, which is partly the reason why I'm switching brokerage accounts. I've read a few fairly detailed books on options, but I still need to study more. I especially need to put in more time if I want to try some advanced option strategies.

As for now, I was reading the options section for the CFA test and it's really basic. It basically covers the general definitions and the payoff diagrams. One part that I found really interesting was the way they described call options. I've always read that call options are generally a bad bet because people tend to buy options that are too far out of the money. They buy these because they are cheaper, but they still need the price to travel up a great distance. This is also one of the big reasons why people say options are risky, but it is because they take their chances and buy these deep out of the money calls (this is just one reason, but an important one).

The book explains the riskiness of calls by showing the percentage the underlying (the shares) need to move before the call goes into the money. In the book example they calculate a break-even price taking into account the premium the buyer needs to pay for the call option. Then you calculate how much the underlying will need to increase in order to cover the cost of the option. In the example the underlying would have to increase by 4.1% in one month in order to break even! Now, depending on the price, this might amount to a few dollars or less, but it's still 4.1%. The book says it perfectly: The underlying must go up by about 4.1 percent in one month to cover the cost of the call. This increase equates to an annual rate of almost 50 percent and is an unreasonable expectation by almost any standard.

I've never thought about calls in this way, and I found it pretty interesting.

Closing the month of August and a few articles

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

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

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

August Net Worth: $27,519

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


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

Random Things

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

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

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

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

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

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

Time to finish up some CFA reading.

August Expenses

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

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

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

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

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

Learning From My Mistakes

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

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

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

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

DSL problems

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

Getting Paid to Read (and ETF's)

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

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

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


I also added a few blogs.

Crazy Price Increases

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

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

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

Quick Post

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

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

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

Net Worth Update

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

Net Worth: August 17th

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

Total = $26,973

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

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

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

"How do I start?"

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

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

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

A smaller list of ETF's

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

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

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

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

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

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

ETF's

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

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

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

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

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

Smart Money (magazine) re-cap

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

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

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

A Rant about 401(k)'s

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

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

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

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

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

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

That's the end of my ranting!

NFL Goals and a Few $ Items

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

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

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


Just a few other things

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

Friday Update

Just two things to say before I start my weekend.

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

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

Have a nice weekend!

Sara Lee

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

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

Seeing What the Pros Buy

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

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

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

Market News and Emergency Fund

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

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

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

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


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

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

First Day on the Job

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

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

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

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

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


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