What magazines to read?

I often get emails asking what financial websites people should check out to learn more about investing. Lately I've received a few emails about magazines, so I thought to sum things up in a post.
I generally prefer to read things on paper rather than online content and I know others feel the same way. For the list below, I would recommend buying one or two issues and see how you like them. If you like the magazine, then you might as well subscribe to them because it will be cheaper in the long run.

The first two magazines I would start off with are: Smart Money and Bloomberg's Personal Finance magazine. Both have articles about investing and personal finance and I probably like Smart Money a little more.

Once you get a little more familiar with things, I would suggest a subscription to Barron's. Barron's is a newspaper that comes out once per week and has a ton of information. They have great weekly recaps and specific stories highlighting stocks.

After Barron's I think Business Week is the best choice. This weekly magazine does not give as much financial data as Barron's, but it gives you more business stories. I think it's a great magazine and it sums up the major stories of the week, while writing about stocks and industries.

If you're up for even more reading then it's time to move on to the Wall Street Journal. Of course this is a daily newspaper and you will have all the info on the important business and political stories.
Another magazine I like that leans a little more toward politics/policy is The Economist. I don't think this is a magazine for people just starting off about investing, but it's worth it for other investors.
It seems like a lot of reading and it is! Most of the people I know read all of the above plus specific trade journals and other financial newspapers (like the Financial Times).
One more: for those interested more on the academic side of investing/business I would suggest The Journal of Finance. I've been subscribing for awhile and this Journal has been around for decades.

Time for junk?

I came across a few articles lately that basically said a small allocation in junk bonds might not be such a bad thing. I definitely think the safer way might be through a fund, unless you do a lot of research into a particular fund. I checked out a few junk bonds and some of their charts are actually pretty attractive, plus they are on the plus side for the year. Some of them yield in the 8-10% range, but some of these are also trading at big premiums to their net asset values (NAV).

With the markets being down it's time to do a few things. If you're a long term investor then this is becoming a good time for you. It takes patience, but I suggest to spend some time researching companies. Some companies are just being brought down because of the market, fear, and macroeconomic variables. These companies are starting to become cheap (I think MSN money highlighted Coke -KO- today). If you're a shorter term trader, it might be time to branch out into some different asset classes. All the top performing etf's for the year have to do with foreign stocks. Lower market cap stocks (small caps, micro caps) tend to have less systematic/market risk on average, but more volatility. It would be interesting to see if some of the better performers of the last few weeks are in this category.

One last data: earlier today the markets were selling off and I noticed the Naz was trading at a 7.2% discount to its 50 day moving average. I don't remember seeing it that low in years!

Where's my $9,842?

I just came across a site, leapfish.com, where it attempts to value your site/blog based on certain factors like the number of search results from Yahoo and Google and how long the domain name is (I got points taken off for having a longer name).
It creates two values: an estimated base value and an estimated actual value. The base value is the minimum the site is worth and the actual value is based on the factors combined with recent web site sales. My actual value turned out to be $9,842 so if you want to write that check, click the email button and I'll let you know who to make it out to!

This reminds me of another finance site from about one year ago. I forgot the name of the site, but it was a rather popular finance site. Apparently someone offered the two writers $2000 for their blog and they sold it. The buyer promised to continue the blog and offer many new things (new writers, etc.). A few weeks go by and nothing updates. Then a little over a month goes by and people start to realize that the site is dead. Some guy paid $2000 for the site and did nothing with it! Talk about a waste of money.

Month end review

I haven't posted in awhile due to lack of time. Things have been incredibly busy lately at work and I haven't had too much free time because of other activities. Since I've been too busy to look for new stocks, I've been sitting on a good amount of cash and that proved to be a good move for this month. Most of the indexes lost their gains or only up marginally. For the year I'm still up, but I need to calculate my performance. Once I get some free time I'm going to use a time-weighted return and I'll hopefully post about this soon.
I did manage to get a copy of the S&P 600 small cap directory, so I will look through that within the next week or so. I've already skimmed through some companies and I know I'm definitely not going to look further into some of the service companies. Some of these companies don't produce anything, they just find the best service for you (tech companies). I don't see the big deal about this, and it just seems like an industry that can change way too dramatically.
Anyway, back to the May month end review.

I ended this month with a bigger than normal gain because of a few things. I have been keeping my expenses in line and I think everyone can do this if they just stick to a plan. Check out NCN's blog as he went from a good amount of debt to savings with thousands of dollars. It didn't even take him that long to reverse things because he had a plan and stuck to it.
Since I didn't work the last few months while I graduated/looked for a job I ended up getting a big tax refund. This is definitely a one-time thing and I think next year my taxes are going to get a little more hectic.

My end net worth is: $48,637

This turns out to be 6.76% more than last month. The year started with a slower growth rate and now things have started to pick up a bit. This also means that next month I should hit a nice figure: $50,000
It's probably not a lot of money for some people, but to me that is a very nice number!

What is that?

I saw this incredibly odd color on my screen today....it was green.

The major indices had a relatively strong day (Naz and S&P) were up over 1%.
I remembered one thing I learned a few weeks ago and I wanted to share it.
Have you ever had some stocks that just open sharply down and wonder why? I see many people post messages saying it's the specialists ("they are crooks", etc.), but I wanted to explain one particular reason. The stock could go down in after-hours due to some bad news, but there's anothe reason that would be hard for the individual investor to spot.
Let's say there is no news, barely any after hours trading, and yet the stock still opens down 2.5%
What happened?
Here is one reason: suppose a major investor (or even the CEO) wants to sell a big chunk of their holdings. If they try to sell 1 million shares on a stock with an average volume of 300,000- well this is going to take days/weeks for them to get out of the position. Plus, all their selling can drive the price down which is something they do not want. One way to go around this is to call up some institutions. The CEO goes to Goldman Sachs (or whoever) and says "the price right now is $20, I need to sell my 1 million shares and I could go as low as $19.50"
Goldman then starts calling up other big places to drum up some buying interest. Their goal is to find people who are willing to buy the 1 million shares (either one party, or a group of parties) and for doing this they get the discount on the price. So these other big places will buy the shares for 19.50. Now here's the part the individual investor doesn't see: the movement of shares.
This transaction won't show up on the time and sales because of the way it went through. Then most of the time the price will open lower (around 19.50, not necessarily 19.50) for what seems like no apparent reason.

Another down day

Well the markets were choppy and ended the day in the red. I wanted to say a few comments about the market and the blow-ups happening in some of the emerging markets, but a piece in Barron's caught my eye.

I was scanning through the new issue and there's a table with the first quarter winners in terms of institutional and retail money managers. Some of these returns were fantastic. They had columns for quarterly returns, 1 year annualized, and 3 year annualized returns. I was more impressed with the 3 year column. Here are some of the big ones (3 year): Insight Small Cap Growth (45%), NorthPointe Small Cap Growth (41.47%), Globalvest Latin America (45.4%), Strategic Corp Long Only (60%), and Ironwood Small Value (50.6%).
Now, when I have time, I want to check into these funds to find any available information. Sometimes funds put the core part of their strategy on their website, and it will be interesting to see what these funds say.
Small cap is the major theme.

Expenses and a few blow-ups

I somehow have managed to spend over $600 this month on concert tickets. Now I did buy tickets for friends, so I haven't received that money yet, but my expenses for this month are going to be a little messed up. I might sell a few on eBay depending on my schedule, but as of right now I'm going to use them all. I have to watch my spending for the rest of the month in order to meet my savings goal. I did receive my federal tax refund, so this will help for this month.

The indices have gone through a rough couple of days. The S&P lost the majority of its gains (it's up about 1.08% YTD) while the Naz is down 1.13% for the year.
I've gone through a few blow-ups in my portfolio that has sent my portfolio down. What was on track to being a great year (in terms of my returns vs the S&P) is now just an okay year. I'm still beating the index, but I've lost a good amount of gains. I had two stocks decline over 10% in a day, and one down 4% or so. It hasn't been too fun and I might sell one due to a change in fundamentals. This means I'll take a loss and I haven't done that in a long time. This definitely doesn't change my outlook though. If I think the stock is bad, then I'll sell it and take the loss!

I'm going to take it easy the next week and then after that I will start looking for more investments. Some stocks should appear to look cheap because they have been dragged down by the markets. I'm going to actively look for more foreign stocks, no tech stocks, stocks with stable dividends, and small/mid-cap stocks. I will also look into the consumer sector.
Overall, I think a blend of these combinations will be best for me. I'll have some stability, generate some income, be hedged against the U.S., and hopefully find some alpha producing opportunities in lesser known names.

I also added the Investing Idea blog.

The Tech Sector

I read a few articles over the weekend and that got me thinking about the tech sector. What's going to fuel the growth in this sector (consumer tech)? This growth is fueled on innovation, but it seems that we're being saturdated by this innovation. The other factor is that one of the characteristics of this sector is that prices almost always go down. Other sectors can kind of go along with the economy, but with this sector the price today compared to the price 6 months from now will be different.

Over the past few decades we have come up with some nice products.
Computers: the market is getting saturated (look at Dell), you can buy a laptop for under $400, and while some people say that the growth will be through replacements I'm not too sure. I'm using a one year old laptop right now. The laptops out today will blow mine away, but do I need this? Only a small percentage of us use the maximum power of our laptops. We don't run heavily intensive programs! Yes, the new laptops can hold more (but I still have 13 gigs on my hard drive) and programs will load faster (a few seconds...).

LCDs: these are catching on huge and the prices are dropping. Many suppliers are going the route of selling as much as they can at lower profit margins. As the prices continue to drop, some of these producers will get squeezed.

Music playing devices: the iPod has to be one of the fastests products to penetrate mainstream America. It seems like every other person has an iPod (also, some articles note that they have an 80%+ market share). What will they come up with next?
Here's what I want to see: Sirius + iPod. Sirius is coming out (or already have) a portable radio. Wouldn't it be cool if they could shrink it down to almost the size of an iPod and have a built in flash drive to carry music? Then you could have commercial free radio + music.

One off the subject note, but still semi-related. I just read that the 2007 Infinity G35 will come with a 9.5 gig hard drive to rip music. I really like the G35 and catch myself looking up how much the potential monthly payment will be (around $500/month).

A Sea of Red

All the major indices were down over 1% or more for the day. It was just a wave of selling after selling. Some of the decline has to do with surging commodities as gold continued to soar (it's now $725 an ounce!) as well as copper. I read a joke somewhere (hey who knows, it might be true) that the pennies made before 1980 are now worth 2 cents!

Oil also reached $73 a barrel, but I've noticed a drop in gas prices around here. It will be interesting to see the sales figures for hybrid cars. I read that Lexus came out with a hybrid suv (I think) and it's only about $2000 more than the normal version. This seems like a good deal because you will save at least a few hundred dollars per year on gas and you might get some other breaks depending on where you live. Some of the perks I've seen before is that you can drive in car pool lanes even if it's one person (saves time, time = money) and some cities were offering free parking in certain lots. I'm still waiting for that Honda fuel-cel car. I think a few years ago they built the first one and gave it to a family to test, but that's the last I've heard of it.

My portfolio actually finished up today (and beat the S&P by 1.5%) all because of Jones Soda. It finished the day up 10.68% on really heavy volume- around four times the 3 month average. Generally when a stock shows that much gains on that heavy a volume, this is a great sign. If the volume doesn't pick up tomorrow, I would expect a drop though like CUP did today (down 6%).

Another Increase

Today the Fed raised interest rates for the 16th straight time to 5%. The markets acted with some volatility, but did not drop too much. The Nasdaq did drop 0.75%, which is a big amount, but the S&P and Dow held steady.
I think I might have found a few stocks worth looking into, which is a good thing so I can put some cash to work. Lately I've been seeing some of my other picks go up and I'm kicking myself for not investing. I highlighted a risky company awhile back, CUP, when it was around $3. It went down and I almost talked myself into 1000 shares at around $2.20. I didn't end up buying, and in a relatively short amount of time it has gone up over 100%. Today it finished up 17% and it's up another 3% in after-hours. It's getting somewhat close to their project's NPV (which doesn't kick in till 2009-2010), so there's definitely some downside risk.

In other news, I made a relatively small eBay sale but profit is profit. I have roughly three more items (possibly a fourth) so this will bring in some extra cash.
As of right now things are going along fairly slowly. I'm saving a good amount, my portfolio is up a decent amount, and I've had some other smaller sources of income. It's been a long stretch to reach $50,000 (a nice milestone), but I think I will get there within a few months (although I might have been there if I bought some CUP!)

Jones Soda transcript

I got a chance to read over the transcript for JSDA's last conference call and it was good. Of course it highlighted the areas in the press release (27% increase in Q1 revenue, 310 basis points improvement in gross margin), and included a q&a section.
The overall theme though was to only put out limited information. They kept their answers short and would not expand in certain topics. For instance they used to break down their sales figures into a little more detail, but not going any further. I'm assuming the reason for this might be because of their Target relationship. They are in discussions regarding the extension of their agreement and it appears that the lack of sales data might have something to do with the discussions.

The highlight was Jones Organics (still makes up a small percentage) and well as the Valentines Day success. They also really improved their balance sheet. The cash position is healthy now (last quarter was a little low). I think they also mentioned a southwest production plant. This will increase costs in the short run, but decrease costs (like transportation) in the long run.

There wasn't really anything exciting about the q&a session. Capex was $21,000 while cash flow from operations was $1,069,000. This will get you a free cash flow of $1,048,000.
The one semi-surprising note was that Jeff Canter (who follows the company) actually had only positive things to say. He seems to rely heavily on cash flow (free cash flow, cash flow from ops), so he really liked this quarter. Here's a quote from him: "I think your free cash flow generated in the quarter was greater than your cumulative free cash flow from 2001 through 2005, and hopefully that's a trend that will continue." He seemed impressed with the results.
Overall it was a good conference call.

Jones Soda earnings

I'm actually drinking a Jones while typing this (watermelon flavor). Today was incredibly busy at work so I was unable to listen to the conference call. If I get a chance tomorrow I'll print out the transcript and read through it (so more comments may come in next weeks post).

It's funny how three different headlines can be talking about the same thing. If you look up on JSDA on Yahoo Finance the first three reports are titled: Jones Soda Announces Record 2006 1Q Financial Results, Jones Soda Profit Falls, and Jones Soda Breaks Even in Q1.

I didn't get a chance to read through anything, so these are just some preliminary thoughts. While I was hoping they would be a bit more profitable, I was happy with their 28% increase in revenue. The other positive figure was their increase in gross margins, which improved year over year from 32.5% to 35.6%.
Some of the headlines mentioned that the Valentines Day package was a success. I actually hope they put out that soda more often because it was really good.
On a side note: I wish I was able to find more flavors in my area. The Targets around me generally only carry around 3 different flavors.
I definitely want to read the conference call, so that will have to wait until tomorrow.

April month end review

April was a pretty decent month for me. I didn't have any unexpected large expenses and I had gains in my brokerage account. I managed to save a good amount of my paycheck and I see the same thing happening for May.
My expenses were in line with my expectations. I didn't want to get into a pattern of wildly fluctuating expenses and I've managed to keep expenses within a decent range. My savings rate hit my goal and I expect the same thing for May. I also expect somewhere between $200-400 dollars in extra income from a few sales I've made.

April Net Worth: $45,554

This amounts to a 4.7% growth rate from the previous month.

Microsoft misses?

First of all the market action was pretty volatile today. I looked at my screens in the morning and the Dow is down 60 points, what seemed like half an hour later the Dow was up 20%, then it even sold off later on in the day. What caused these wild fluctuations? Well it was two main stories.
One is that China raised their interest rates.
The other was Bernanke's comments about inflation.


In other news Microsoft's income rose 16%, but they missed estimates. Their revenue also came in below estimates. The title of this post has a question mark because Microsoft used to be notorious for "beating" estimates by a penny. Firms can do many things to increase their earnings per share and there was a long stretch where Microsoft would barely beat estimates. They would also use another tactic by talking about their guidance before they report. For instance, some analysts might throw out some numbers and Microsoft would say something like "well those are very optimistic numbers" blah blah blah. So analysts might take down their numbers a bit, but what do you know when MSFT reported their numbers were a bit higher than the analysts!
Well not today, and MSFT is down about 6% in after-hours.

Also, a decent article on Jones Soda.

To somehow tie this post into my organization post from a few days ago, I saw a fairly cool gadget on Amazon that is basically a pen-scanner. So you scan the words and the pen saves it and uploads it to a computer. I read about these awhile ago, but forgot about them until today. I looked at a few and they might be a little buggy, but I might keep looking. This would definitely be a good way to keep track of information.

Quick Post

I have a ton of things I need to catch up on, so I need to make this quick.

So far this month is going fairly well in terms of my savings and investing. My stocks have been acting pretty well and I haven't had any major expenditures. I might need to get something done on my car, but it shouldn't be too expensive.

I also *might* be going to Europe later this year. The key word here is "might" because there's a chance my friends might flake out. As of right now we're looking into things and where to go. The goal is to go for about 12 days for under $2000. I think this is definitely do-able because we will be going during the off-season so a roundtrip ticket is around $600 (pretty cheap).
I'm glad I started that vacation fund because by the time we're ready to go, the fund should be able to pay for the majority of the trip.

Organization

I finished reading a biography on Fischer Black (co-creator of the Black-Scholes option pricing formula, among other things) awhile ago and one of the things that struck me was his detailed organizational skills. I lack in this department and I'm thinking of ways on how to get things organized. While parts of my room seem like a mess, it's actually in an organized-chaos environment. Like my two foot tall stack of reading materials. Nothing there is organized, but I know everything that makes up the pile (some old WSJournals, some Barrons, a few trading magazines, and a few back issues of Journal of Finance).

Black had an elaborate system to organize all the information he came across. I want to start making up a similar type system. He first had a huge cabinet with information he read and I'm fairly certain he even cross-categorized the data. So whenever he came across a particular subject, he would be able to look in his system and find a card that had some available info, what papers he read that dealt with the subject, as well as the people who knew more about the subject.
He later moved his system on to a computer in order to speed things up and he was able to save a lot more information. I remember a somewhat funny thing about him that goes along with his organization skills. He would always carry a small notepad with him (good idea) and let's say he was talking to someone about options. If that person said something very interesting, Black would stop him in mid sentence and write down what the person just said! Sometimes he would even ask for the person to repeat themselves.

I definitely do not want to go to that extreme, but I am starting up a digital catalog for finance. At work I can "print" out articles in pdf format so I have the ability to save just about anything as a pdf. Last week I realized that I come across a vast amount of information. For instance in one day I check about four different finance sites that all have a few new articles. So far that's easy to come up with. Then there's the Wall Street Journal, which has a ton of info. Right now I read the stories that interest me and skim the rest of the headlines, but I want to start reading the whole thing. On Monday's I have Barron's to go through. Then there are the stocks I track. These include the ones in my portfolio as well as others. Some of the software I use at work combines all the major news sources so if I'm watching a big company this can amount to many stories to get through or skim the headlines. I'm spending all this time reading, but I have to work on saving the information I want to keep.
Information is key. The more information you know, the better story you can tell. Why is this stock acting one way? Well maybe it's because of this article I read in Business Week that mentioned how demand was picking up, an maybe demand was picking up because of this article I read on Reuters that highlighted strength in a particular sector. This is just an example, but stories are related. It's best to put the key points of these stories together, and then you will have the bigger picture.

Portal Player

It was a rough day for whoever held a position in Portal Player today (PLAY). Their product is used in the Ipods and Apple is their main customer.
First Apple came out with an okay report and strong demand in Ipods and the Nano Ipods. So things were looking fairly good for PLAY. Then a press released went out last night stating that Apple was no longer going to use PLAY's products! Today was a terrible day as it ended down over 41%.

In other news, Google's profit went up by 60% and the last time I checked it was up almost 8% in after-hours.

My portfolio had a decent day, finishing up over 1% while the S&P was basically flat. I was helped out by my small insurance company. It's had a nice few days and I'm up almost 4% in about one week.

I still need to invest more and I feel that my cash levels are too high. Although I think it's hard to find good stocks, I can always find something. In the U.S. area I might stick to more stable dividend paying stocks, unless I can find some small-caps I like. I'm searching through some ADR's for some foreign exposure as well (although many of them have gone up quite a bit so far)

Slow and Steady

The last time I checked the S&P was up just under 3% for the year. Considering that almost a third of the year is gone (that was fast!), the market has been looking fairly average at best. But doesn't it seem like it's going to correct a bit? Where is the good news?

It seems like the majority of the stories out there are more for the negative side. Let's see what we have:
Housing prices are starting to drop around the nation, which may help along a recession.
Interest rates are rising and this will hurt interest rate sensitive stocks (like banks) and other types of loans (how about all those people paying interest only loans?)
Oil just hit over $70 a barrel. I'm paying $3/gallon right now.
Consumer spending hasn't been strong at all.
The tech sector has been lackluster with below average earnings reports, slowing growth, too much inventory, and falling prices (see semiconductors, flash memory, etc.)
Many natural resources are making multi-year highs and that's adding to the costs of many products
What's going to drive the market up? Is it the finance stocks? Tech (Google is slowing, Microsoft still hasn't done anything, Intel keeps dropping)? Retailers? What industry?

It might come down to a best of breed market, where the best companies will outperform and there won't necessarily be any hot industries.

In other news, I'm keeping my eye on JNJ.

Portfolio Changes

A few days ago I made some portfolio changes by selling my NCC. For a bank, I had a nice one year gain, but I thought the risk:reward ration wasn't on my side. Interest rates are rising, which the big banks can offset/hedge, but the one thing that bothered me about NCC was their mortgage side. The housing sector is getting a little shaky where prices are dropping in most major markets, inventory is picking up, and there aren't enough buyers out there.

I took some profits in a few other stocks because of nice rallies and I added (slightly) to the insurance sector. The company is a small cap and doesn't really have a strong correlation with the market.

I ran a few more screens today and I need to go through that list, but I might have found a couple interesting stocks to look into.

The tanker sector is not turning up. A few companies were downgraded this weak because of lower rates and higher capacity. Everyone is trying to build more tankers (especially China) and this will just increase the supply of ships. This increase in supply will put downward pressure on the charter rates and they are starting to decline even more. I was tempted to buy a little bit of a few tankers, but I rather watch the rates drop even further especially when you have companies getting rid of their dividend (TOPT- although they will pay out a special dividend). I rather wait till things bottom out and rates start picking back up. It might take a few years, but when the industry hits the bottom I'll be ready to buy. The only company I might look into and add to my position is SFL because it's a leasing company rather than a tanker company. The majority of their contracts are locked in for awhile and I need to see how safe the dividend is (yield is north of 9%).

After writing my post about coins, I'm thinking about putting 1-2% of my net worth into coins.
I definitely have to read up more on this area, but it might be worth a 1% position.

I'm closely keeping my eye on the Peruvian elections. No candidate won the majority of the vote, so there will be a run-off between the top two candidates. As of two days ago this was bad news for foreign mining companies because Humala is in the lead. He's preaching a leftist campaign and doesn't like foreign companies making huge profits (he's like Chavez in Venezuela). If Flores isn't in the top two, then mining companies might take a hit. I'm still watching CUP and it's rallied a bit lately but if Humala wins it might take a hit.

Filing Extensions

The following helpful article comes from H&R Block.

What to Know About Extension Filing

Taxpayers are increasingly buying time by filing for an extension. As the April 17 tax deadline looms, the IRS expects at least 10 million taxpayers to file extensions this year.

Reasons for seeking an extension vary. Many taxpayers are intimidated by the ever-growing complexity of the tax code. Others are held up by late or missing documents. Still others face major life changes, such as a divorce, a move or a new job, that make timely filing more difficult.

Know the Rules

To avoid penalties, interest and other headaches, taxpayers who need to file an extension should pay close attention to IRS rules. Extensions take time and preparation to calculate. However, with assistance from a tax professional, online programs or software products, extensions can be completed easily and filed correctly, buying the time needed to complete the tax return.

According to H&R Block, the important facts to remember when considering an extension include:

• Notify the IRS – If a taxpayer files an extension with the IRS (Form 4868) he or she will have until Oct. 16 to complete their tax return. (Taxpayers living and working outside the US have an automatic two-month extension to June 15. They can request an additional 4-month extension by filing Form 4868.)

Preparing Form 4868 isn’t always easy, so the taxpayer should plan ahead. Using a tax professional or a digital solution (online or software) may simplify the task. They may also visit www.hrblock.com to file an extension electronically or to find the nearest year-round H&R Block office.

• File later, pay now – The extension to file will not give taxpayers more time to pay their tax bill. Taxpayers should estimate their tax liability and pay as much as they can by April 17. Underpayments are subject to penalties and interest.

• Use your credit card – The IRS accepts most major credit cards, so taxpayers can charge their taxes owed as part of the extension. There is no IRS fee for credit card payments, although card processors may charge a convenience fee. When H&R Block clients visit an office to file their tax return and find they have a balance due, the standard card-company convenience fee of 2.49% is eliminated if they choose to pay by a Visa^® check card. If clients choose to pay with a Visa credit card, the standard 2.49% fee is reduced to 1.99%. To receive this special Visa Credit Card offer, payment must be made in the tax office through www.pay1040.com/block. There are also other credit card offers available via hrblock.com Shouldn’t we mention the other offers?

• Year-round Tax Professionals– Using a tax professional to complete a late return can save the taxpayer time and may save them money by identifying deductions or credits. More than 4,000 H&R Block offices nationwide are open year-round.

• File if you can, even if you can’t pay – If taxpayers complete their returns but are unable to pay the tax due in full, they should file their returns by April 17, and submit with as much of the tax due as possible. The IRS will send the taxpayer a bill or notice for the balance due. Installment agreements are another option. The IRS charges a $43 fee to set up an installment agreement. It will also charge interest and, sometimes, penalties on the unpaid balance.

• Extend the extension? – Beyond the first extension of October 16, the IRS says it is unlikely a taxpayer may receive another extension. There are exceptions for U.S. taxpayers living out of the country. Taxpayers should consult the IRS or a tax professional if they have questions.

Last-Minute Help is Available from H&R Block. For more information, please visit:

http://www.nationaltaxadviceday.com

Coins

I was cleaning up a bit and found some silver coins I have and a rather small vial of gold.
Gold, and metals in general, have been surging lately and today I spent a little time reading up on gold and silver coins as an asset class. I've been thinking about different asset classes lately because right now I'm in cash and stocks. I've been interested in coins because my dad has a small collection, but I never thought of it as another form of diversification.

The best article I came across of today is this one. It's rather in-depth and it had some surprising statistics. I never new that the annual average return was around 10.5% (based on their studies), but what was also surprising is that the overall returns had a standard deviation of 12.3%
Stocks generally have standard deviations that are a little higher, so coins seem to be more stable.
Another interesting point is that from the start of the study till the end, there were only a few negative years with the worst being down 7.4%. The best year had a return of +48%
I'm not exactly sure how the study was set-up so it can be skewed. For instance, it might only be looking at the rare coins that are put up for auction. It might also be focusing on a limited amount of coins or certain issues. I'm going to try to look for other studies that will back up these figures, and if I do I'll post them.


Added one new link

Taxes

I procrastinated long enough and finally finished my taxes. I'm actually going to get a decent amount back because there was a four month period from just before graduation to finding my current job where I wasn't working. That led to my taxable income being fairly low. I should get a decent amount back from federal and state. I plan to do three things with the money: put some into my vacation account, put some into savings, and spend a bit. I might get a new digital camera (lots of great deals going on right now at bensbargain.net) or I might use some of the money on something else.

I think, for some, this is one of the tough things to balance. How much to save versus how much to spend. I know a few people who spend whatever they have. Sure, they have all the cool gadgets (which will drop 50% in price in months...), but they have no plan for the future. I also knew one guy who was quite old (past retirement) who was still working even though he was worth millions.
Personally, if I was in his situation I would travel and spend time with family. The one thing I keep in mind is that I want to be worth millions some day (need to set those goals high), but I can't bring the money with me after I die! I don't want to just store all my cash, if I could afford to buy a few things I want. I think it will definitely be something that I will keep in mind as I grow older.

It also helps depending on the type of person. For instance, I like gadgets but I'm not the one who goes out and buys them when they first come out. I have a mp3 player, a digital camera, and a laptop. My mp3 player (not an Ipod) was cheaper than the Ipod and had four times the battery life. My digital camera is old, but still works well. My laptop is over a year old, but still working great. I could take my next paycheck and buy a new laptop, camera, and Ipod; but I really don't want to.

Other news
I still need to invest more and I'm thinking about a few other options besides stocks.
My math class is going well and I think I'm balancing work and my other activities fairly well. Although this week has been rough, leading to a lack of sleep.
I mentioned a potential online business and we're hopefully going live within a month. My involvement so far is more for financial guidance and planning. I probably won't discuss this site unless it becomes profitable. Right now it's a learning process for us.

March month end review

Another month has passed and it's time for another review. I'm slightly disappointed by the results, but there's nothing I can do about that now.
I did have a few fairly large expenses this month, which brought down my total. For instance I bought a usb flashdrive for $60, I bought six concert tickets for over $200, I took a trip to Reno and that was a bit expensive, had to pay one fairly large bill, and the last expense was $180 for a new window. My car was unfortunately broken into a week ago and they broke through the little triangle glass in the back. A jacket was stolen and that's about it, and I was surprised by how expensive it was to replace that little piece of glass!

My month end total is $43,493.

This represents a monthly gain of only $528. Based on my take home pay, I managed to save a little over 15% of my paychecks. While I'm glad I had a positive gain, this if pretty low from my 40% savings goal.
Well, this month was full of one-time charges. If I add those back and pretend they didn't happen, my savings rate would have been 45%
I think next month I'll get back on track because I should receive a reimbursement check, money for concert tickets, a few things on eBay, and possibly a few other items.

Chicken?

In a recent issue of Grant's (a very well known newsletter), they highlighted the chicken industry and it had some good points. They mainly talked about two companies: Gold Kist and Sadia. They feel that the chicken industry is near a bottom and it's worth taking a look into these two companies. Gold Kist is a pure chicken play and it has an advantage over some of its competitors because of their balance sheet. Many chicken producers have a lot of long term debt when compared to cash levels, but Gold Kist has an even amount. They currently have $143 million in long term debt and about $145 million in cash.

Sadia is a little bit different because it's a Brazilian company (and has also had a nice run-up while the other companies have been declining). They have lower costs, which is another advantage, and have captured a good amount of the Asian market. Grant's hypothesizes that they may capture even more market share in Europe and parts of the Middle East.

On a normalized earnings range between 8 and 12 for the chicken industry, Grant's thinks Gold Kist and Sandia are cheap. Sandia is around 6 to 7 realizable earnings, whil Gold Kist is a bit higher. According to Yahoo Finance Sandia has a 6.2% yield, but their dividend seems to fluctuate quite a bit so I doubt this is a reliable number.

Netflix is awesome

I don't own a tv and I really don't plan to in the near future. Although I miss having a tv for certain events (sports), I normally just watch the big games at a friends house. Also, most of the good shows are on around 9pm or 10pm and that's too late for me during the week. Since I have to get up at 4am, I try to be asleep by 10 at the latest.

So a few weeks ago I decided to do a trial offer of Netflix and I think it's fantastic. I'm getting the 2 dvds at a time deal and it's fairly cheap. For me, I think it's worth it because I can watch dvds on my laptop whenever I have some free time. I was also surprised by their inventory! I searched for some hard to find dvds and they had them in stock. This is starting to sound like an ad, but I'm definitely not getting anything from them. I just like their service and wanted to write about it.

I also added a new blog: Russell Bailyn's Financial Planning Blog. He's around my age and I'm currently reading his older posts.

What's up with ING?

Normally ING has one of the highest rates around (but not the highest). I decided to check the current rates at Bank Rate. I was surprised that ING was pretty far down on the list. Many on the list are regional banks and some require minimums, but the difference between ING's rate and some of the other ones is pretty big.

ING is currently at 3.8% while the number one on the list is 4.8% (although this might be a promotional rate). Still, many of the other ones are 4.5% or greater. I might spend some time searching to see if some of the other ones are just as easy to use as ING. It would be worth the switch over the long run if I can park my cash in a place that's getting almost one full percent more per year!

Please post a comment or send me an email if you use a different savings site and how do you like it.
Also, I received a few emails lately and I promise I'll get back to you shortly (and add links to your sites).

Portfolio moves

Jones Soda had a great day today finishing up 9.78% on pretty big volume. The stock has had a fantastic run lately and I'm hoping it continues. It's up over 50% from when I bought it a few months ago and things are looking good.

I sold FRX two days ago and it was decent timing. I had a good gain and I ended up selling it in the morning around $44. The stock then started to drop and ended the day down over $2 I think (I sold it when it was down under 30 cents). My main reason why I sold it is that there is too much news in the near future. This sentence doesn't really make any sense, so this is what I mean. They have a patent trial coming up that could potentially take another two months to wrap up. If they lose the trial, they will basically lose 50% of their sales -this is a huge case! Some analyst reports put the probability of them winning the trial at 75%. This is a good number, but then you have to think that they still have a 25% chance of losing 50% of their sales (scary!). Here's my thinking: this won't be settled for another few months so what's going to make someone buy the stock now? It just seems that there's too much potential for selling rather than buying. If I was looking at a stock and I knew they had a 25% chance of losing half their sales in two months- I would wait it out. This is assuming I have no great insight into the trial. Even if someone wanted to get in because they think FRX will win, why buy now and not a month from now? Logically, I would think there will be more selling pressure in the near future (but I'm probably going to be wrong). I just didn't want to take that chance with a position that turned out to be my biggest position. There's a very small chance they might settled, which could be a good thing (look at BMY today, which I almost bought at 22...).

Other news: added Intel a few days ago. 2006 might be a little tough, but it looks cheap, and I think they will get back on track.

Bargain site

I mentioned this site a long time ago, but I thought it was time to talk about it again because I just bought something off of it. The site is called Ben's Bargains and throughout the day the site updates with various bargains. Most of the products are electronics, but they have all sorts of goods. For instance they might find a bargain off of Dell's site for 15% off select items. This coupon could be added to another coupon bought off of eBay for Dell for greater savings (they are stackable). I've needed a USB flash drive for quite awhile, but I waited until today to finally buy one. I searched Ben's Bargains and I was able to find one for roughly $53 (includes shipping, after rebate) for a 2 gigabyte usb drive. I thought this was an excellent price because the other ones I've seen were over $70.
I just like browsing the site because I find a lot of good deals. Another section they have is the Freebies section. This part is not updated as frequently, but you can sometimes find some good stuff. For instance a week ago they had a link to a Microsoft survey for a free usb flash drive. I'll let you know if I actually receive the drive (it's probably going to be small like 64MB), but it's free!
Other past deals where free keyboards from Lenovo and a good amount of free magazine subscriptions. I've received a few free ones from here and the only thing is that it takes awhile for the first issue to arrive. I think last week they had a link to a free subscription to Smart Money. Considering that my subscription is almost over with, I'll go for the free one.

Stock I'm watching: TOPT (tanker)
It's about to give off a big dividend and I want to see how the price reacts afterwards

Work update

I've barely posted this week, but that's because I've been busy with numerous things.
I had a fairly big update at work and I'm pretty excited about it. I'm not sure if I actually explained what I do: I assist the two traders and I also help out with the operations side of the business. This means I talk to other traders/brokers and sometimes give them trade orders. Once those are complete, they need to be entered into the system. The operations side takes care of all the details after the trades are done. For instance we use two different prime brokers and one needs to shadow the other. So if one shows 100,00 shares traded of XYZ the other one needs to show this. Sounds simple? I wish! Mistakes are made all the time and these need to be tracked down and fixed. I aslo take care of tax lots because sometimes we might spend a month buying something and then when we're ready to sell, I'll specify what tax lots to sell for tax reasons.

Anyways, back to the update. A few weeks ago I asked if I could use a certain piece of software that the analysts use. The portfolio managers decided to think about it because to add another user it's rather expensive, but I found out this week that I'll be added! I'm also going to be working with one of the analysts developing models and short ideas (short = stocks to short).
I'm excited about this opportunity and I should be learning a good amount.

Nothing new with stocks!

Jones Soda conference call

I was able to print out the JSDA conference call on Friday and read it over. First of all, JSDA went up over 6% today so that greatly helped my portfolio while the markets remained flat.
I thought the conference call was good and the results were great.
4th quarter revenue was up 37% and they had a positive EPS of 3 cents (which would have been higher but they dealt with some one-time costs).

Some more positive news: they extended the Barnes and Noble agreement for another year and Starbucks will add a third flavor. Panera is rolling out a customization program and Starbucks is going to start one soon.
I was hoping lincensing revenue was going to come up bigger. It increased 12% and this is revenue from Target (cans), Kroger (frozen pops), and Big Sky (candy). This number seemed a bit weak considering the base amount was fairly small. The 12% increase equals about $123,000

Gross margins improved as did their cash position. A few financial ratios declined though, so it's worth keeping an eye on them. Accounts receivable days outstanding increased to 38 days, while accounts payable increased to 42 days. Average days of inventory increased to 77 days. It's nothing too drastic, but it could cause trouble if the trends continue (I don't think they will).

I'm curious as to how long they will keep going with their energy drinks. The margins are good, but it doesn't seem to be catching on.
Most of the analysts thought it was a good earnings report, except for Jeff Kanter who seemed disappointed (but I think this is a common thing with him).

One last thing to mention is their cash flow position. They had cash flow from operations of about $875,000 and capital expenditures of roughly $240,000 (60k from branding and 180k on regular capex). This equates to a rough free cash flow calculation of $635,000
FCF = CFO - Capex
On a FCF/share basis, the results are not very meaningful, but the important thing is that they are cash flow positive.

I've successfully caught a cold, so time for some rest.

Jones Soda

Jones reported today and here are the highlights:

4Q revenue increased 37%; full year revenue increased 22%; and their gross margins in the fourth quarter increased 90 basis points. So far, so good!
I only had a few minutes to read over the press release and I didn't get a chance to listen to the conference call. Tomorrow at work I'm going to print out a transcript of the call and I'll probably post my remarks early next week.

Other random notes
* I still need to do my taxes (I don't know why I'm slacking)
* I still need to fill out my reimbursement form (a few hundred bucks!)
* I might be selling FRX soon. I wanted to wait till I get to long-term status (over a month away), but there might be some risks coming up soon with their litigation. Although it seems favorable to FRX, I have read reports where they put it 50/50 of helping FRX.
* I might add to TCHC and SFL
* I have way too much cash and not enough investments and I need to fix this

Where's the Walmart talk?

At the beginning of the year, every other article I read about the market in general had some quote from some professional that basically said "this is the year for large cap stocks".
This is the big theme for 2006 and that's why I'm a little surprised I haven't seen too many articles on Walmart. I've read some, but I expected at least a few more.

It's had a few problems, but things seem to be working out. They recently raised their dividend, appear cheap on a historical price/sales ratio, and they might have worked out their problems with some of their European stores (sluggish sales). They have a p/s ratio of 0.60, which is the lowest it has been in about eight years.


Other news:
Jones Soda reports tomorrow and CUP came out with a good preliminary mining report (I think the stock is selling off because many people are exercising their warrants and taking some profit).

I also added an Investing Quotes site and my net worth is now part of the Financial Blogger's Net Worth Index.

Commenting on another blog

I usually scroll through some daily finance related blogs (mainly the ones listed on the right side of this page) and I read one recent post over at No Credit Needed that I wanted to comment on.
He mentioned how when he was growing up his parents really didn't discuss money issues with him. He ran into some debt but has done a great job working his way out of debt and is now on to his savings goals.

His post reminded me about how important it is to teach children about money. Why is it such a guarded topic? My parents were pretty open with me about money issues and this is how I learned about credit cards, how to buy a house, loans, etc. It seems too many parents are potentially setting up their kids for a fall when they grow up by not teaching them any money basics, the pitfalls of debt, and the importance of savings. Our savings rate is near 0% (or possibly negative) and I think it's up to today's parents to help reverse these figures by teaching their kids.

A 10 year can grasp some of the simple concepts of savings and credit cards. It's important to teach them that credit cards are not "free money" (I've heard many kids use this phrase) and how important it is to save for the future.

I'm still a very young guy, but if/when (!) I have kids here are some of the things I would do:

* Start them off early because money concepts can be said in a simple way.
* Have them set their own savings goals. I do it for myself, so why can't kids? I would probably come up with some sort of game and have a savings goal that is somewhat easy to attain to not discourage them if they don't make their goal.
* Give them an allowance, but require them to save a bit and talk to them about how to spend their money
* Once they reach high school, I would encourage a part-time job (10 hours) just so they could experience working for their own paycheck

I'm sure to come up with more, but these are just the ones I thought of right now.
I just think that if parents spent some time teaching their kids at a young age, then they will have fewer financial problems when they grow up. They won't have to go through some of the mistakes their parents made.


Stockdiva posted a few links to some stock picking constests (here and here)

Who I want to go public...

A few things have caught my eye recently and it's time for a few links.
I saw this article on Wendy's and their future plans. It first caught my attention because it mentioned Baja Fresh, which is a fairly popular food chain over here (I'm not exactly sure how spread out they are; it's like Taco Bell but a lot better). Apparently their sales are rather weak, but it got me thinking of brands that I would find interesting if they went public. Here's my rather short list:
Whenever I go to the mall, I notice one store is normally packed and that's Forever 21
I think it's mainly for high school/college girls and it seems to be really busy. They are in the top 10 most popular stores for high school girls (last ranking I saw as #7) and I'm pretty sure I read somewhere that they generate a good amount of sales.

Another clothing company I would watch out for, and this is very premature, is Company 81. I saw an ad for their clothes and they are along the lines of American Eagle and Abercrombie. It seems for the slightly older crowd so it might be comparable with Urban Outfitters. They are incredibly new and I don't even think their online store is up as of yet, but just by looking at their clothes I want to at least keep an eye on them. I definitely think the AE/Abercrombie look is going to be popular for awhile.

The next companies are food companies. The first one is found in all the malls around here and it's Panda Express. It's basically a take-out chinese food place that is incredibly popular. I've been to the mall countless times when the other food places are barely packed, but there's a long line for Panda. The food is definitely good, especially the orange chicken!

Another place, but I doubt it will go public, is In-and-Out. I think there's only two in San Francisco and a few in San Jose. This place is packed all the time! I'm amazed by how crowded these places are. There's one south of San Francisco that always has a packed drive-thru line.
I always wonder how profitable they are because they generate a ton of sales, but I would figure their labor costs are rather high. I know they employ a good amount of workers (there seem to be at least 12 people working at one time) and each one starts off at $10/hour, which is higher than the other fast food places. Plus their food costs less than the other places.

I'm fairly confident that the stores I listed are not public (or part of a bigger company), but I might be wrong. If you have any favorites that you wish would go public, write a comment about them.

February Month end review

Another month has passed and so it's time for another month end review.
The month went fairly well and I had some nice gains in my portfolio. I cut back a little on my spending but I need to update my Quicken (and learn how to use the damn thing) to really track my expenses. March should have a good amount of expenses due to some CFA expenses and I'll be taking a small trip for my birthday.

My net worth increased by 4.3% from January's number. I think this was a decent sized jump.
My February month end net worth is $42,965

In dollar terms my net worth increased by $1,777 and I'm pretty happy by this figure because it represents over 50% of my take-home pay. Once I start tracking my expenses closer, I think I'll be able to cut back on a few things and increase this percentage. My goal was to save 40%, so I'm on track.

March should include some higher expenses, but they might be offset by a few things. I think I have about 200-$300 in my transportation account. I'm going to fill out a form to get that back this month. I might sell a few items for $200. Also, I still have a few things I can sell on eBay (like an iPod shuffle and my digital camera). If I do this in March, I think I might be able to bring in another $200-300 dollars. Every buck helps!

Random Thoughts

My portfolio is doing pretty well (up over 9% while the S&P is up around 1%), but I missed out on some gains. I know I said earlier that I would try to buy a stock based on the charts and before I research it, but I haven't done that yet. I checked my list and missed out on some gains...

There were a few good posts over at the Jones Soday board. Stockdiva definitely made some good points and hopefully it brings out some more discussion.
Target had the Jones Soda Valentines Day packages on sale for $5 (two bottles, a cd, and lip balm).
The flavor (love potion #6) was incredibly good.
Also I saw some poster said that their can packages was the same as everyone else. I think their packages are sub-par, because even when I get the ones that seem fine- it falls apart fairly easily.

Are you getting enough sleep?
It looks like I'm in the minority of those who get under six hours. I try to get enough sleep, but it's hard. If I fall asleep by 10pm, I'll end up with around 5.5 hours. On some days I'll go to sleep really early, but I might still feel sleepy. For instance, last night I went to sleep around 845 and I got over seven hours of sleep. I was hoping to feel refreshed when I woke up, but I was still sleepy.

I'm probably going to buy the Schweser online test bank questions for the CFA, which is another $250. I used PassPro and looking back, I would not recommend them because you get a lot of the same questions and they are not too difficult.

I also found this site and it seems interesting. It's set up to test your skills and teach you about financial analysis using Excel. If you buy one of the higher end packages, you get enough credits to earn a Certification in Applied Financial Modeling (sounds cool...)

Two more stocks to research

I still have my list of food related companies, but some have increased a bit too much for me and others just don't seem too great. For instance, I was looking at HNZ at $34 and it shot up to close to $37 in a relatively short time span. I'll take my chances and guess that it will come down a bit before any purchases (it's still on my list to research).
Kraft is starting an uptrend but I haven't got around to this one either.
I have looked at CQB because I wanted to see if the stock price found some support. The margins are terrible, but I already knew that. The one thing I'm a bit worried about is if they have enough cash flow to cover their dividends (2.2% yield) and their interest payments. I think in the last quarter they were cutting it close (I don't have the figures/ratios with me). They made a huge acquisition not too long. I think the buy would definitely add sales growth (it was in the packaged salads business- which is one of the fastest growing food segments), but they took on a lot of debt.
They also reported today and came in with a loss greater than expected. The stock is down about 4.5% in after hours and this will give me a little time to continue looking.

Two other stocks I wanted to highlight that seem cheap on a historic price/sales basis are two well known companies and not food related! They are Dell and Intel (INTC). Intel is probably the more interesting story and I'll be watching to see if it can hold $20.

The analysts at my work use a software that takes all the financials from 10k's and 10Q's and puts it into an excel spreadsheet. Then they manipulate the data and calculate any particular ratios they are interested in. I asked one analyst to send me the model for CQB, which he did, but hopefully in the near future they will allow me to sign up for the software (the cost is on a per user basis so they would have to pay). If they did that, it will save me a ton of time looking into companies and I might be able to cover new ones.
I'm hoping something develops by next week!

Some interesting figures

I read a few interesting figures recently and here they are.

There was a survey done and one of the questions was how much have dividends/payouts contributed to overall stock returns. The average answer was 5-20% of total overall stock returns. The return contributed to dividends is actually around 65% and this assumes compounding of the invested dividends. Even if you take out the effects of compounding, payouts still count for 40% of the total return.

Within the last twenty years or so, dividend paying stocks have outperformend non-dividend paying stocks by almost 8%.

This next part is from the Wall St Journal (from a few weeks ago).
One dollar invested in the S&P from 1926 to 2005 would be worth about $2655.
This figure goes down drastically if you remove the effects of inflation, taxes, and trading costs. The same dollar would only be worth $46.59

In other news, my net worth is having a tough month. I've increased it by about $500 so far (with one more paycheck to go), but I had to deal with a few big expenses. Why does it seem that when I was in college I didn't have these big expenses, and now I have to deal with getting new tires and fixing my car? I also planned a small trip for March.

Zillow

I'm sure most of you have heard about Zillow.com
It's a site dedicated to give you housing prices so you could check out how much your house is going for. From what I've read, the prices seem to be almost in line with other home pricing services. I checked out various homes off of the site and it's really cool. They use a satellite image where they will give you the price of your home and the ones around it.
It's odd how I checked my parents house ($695k...I don't think it's worth that much, but we're in the San Fran Bay Area so prices are crazy), but then the houses right on either side are worth 10k more. All three houses are the same size so I'm not sure how they came up with those figures.

I think the site was started by some of the same people who started Expedia, so they definitely have some experience in this area. I live two blocks away from one of the really nice parts of San Francisco and I was curious to see how much those houses were going for. Some of them are huge, but others are a regular size. I would estimate that the average price was around $2-2.5 million!
Housing prices are crazy

Speculative Stock

I'm having one of those days where I need to get a ton of things done, but I don't have enough time and I need some sleep (so this post might lack some details).

Disclaimer: Before I mention this stock I just wanted to say that I'm in no way saying it's a buy.
This is an extremely speculative and volatile stock, but I wanted to mention it because it seems interesting.

The company is Peru Copper (CUP) and they just came out with a feasibility study on a copper mine they have. Most of the details are in another file that is not with me, so I'm just going to give some general facts. The company was set up as an exploration company looking for copper mines in Peru (I think they are #5 in the world for copper mining). The company found a site called Toromocho and from the looks of the study it seems to have been a nice find.

The next paragraph is copied straight from their press release:
"At an estimated average annual production rate of 272,788 tonnes of copper and 5,387 tonnes of molybdenum for 21 years, the Project pre-feasibility study estimates a Net Present Value (NPV) of US$814 million from commencement of construction and an after-tax Internal Rate of Return (IRR) of 16.0%"
I saw this release and a few things caught my attention. One is the annual amount of copper and molybdenum (both, I believe, have been surging in price lately). The next is that the life of the project is 21 years. The last part is that there's a positve NPV of $814 million and an IRR of 16% (that's pretty nice).

The risky parts with these studies are the base assumptions they make. I've seen some reports that basically say "the share price should be $x because sales will grow 50% for the next 10 years". Having a base assumption of 50% sales growth for 10 years is a reach.
Anyways, back to this case. Their assumptions actually seem really conservative.
Copied straight from the release:
"Using base assumptions of a copper price of $1.10/lb.; a molybdenum price of $10.00/lb.; a silver price of $6.50/oz.; and a discount rate of 8%, the Project has an estimated Net Present Value of US$814 million and an estimated after-tax IRR of 16%. Recent metal prices are considerably higher than those used in the pre-feasibility study. On February 3, 2006 copper was $2.31/lb., molybdenum was $36/lb. (based on a molybdic oxide price of $24lb.) and silver was $9.74/oz."

Taking into account the NPV and the number of shares (including potential dilution from warrants) the end result would be over $8NPV/share.


With the stock at $3.32/share, it makes this case a little interesting. There are risks of course (for instance the mining won't really start till I think 2010), so nothing is happening in the near future except for the company burning through cash (which means that they will probably raise more funds and this will cause dilution in the stock). In some releases there are potential hints of selling the site and it might be able to catch a nice sized premium over today's close.

Again: I'm not recommending this, I just saw the release and thought it was interesting.
If you have any comments, please share

Nice Timing

So yesterday I wrote a post about JNJ and that they should be receiving some press since the stock looks like a good value play. Today the stock jumped up over 3% and two more pieces came out on JNJ (besides the one under yesterday's comments- thanks for the link!). S&P upped JNJ to a Strong Buy and set a price target of $67. Then Morningstar came out with an article titled "Five Cheap Companies that Create Value", which can be found here, and I think this was a great article because it also explains the concept of ROIC (return on invested capital). The author also makes a strong case for favoring ROIC over the more traditional ROE (return on equity) and ROA (return on assets) measures.


One last thing on hedge funds (for now) that I didn't include in last weeks posts. I wanted to explain a little on how we pay the traders we use and why we use these particular traders. Some of them are just great to work with and we have a strong relationship with them. Others work with firms that help us out in some way and this is what I want to explain. Let's say a firm has a great sales guy who helps us out a lot. For instance we might be interested in medical companies and he will bring the management of a particular company to our office or set up meetings with the companies. Other sales guys might be in charge of road shows where we'll get to meet more companies. Now in order to pay these guys we can't cut them a check. What we'll do is place trades (use their traders) for some of our orders. So rather than cut a check for $10,000- we'll place enough trades so the commissions total $10,000.


One last note: I'm meeting with a friend tomorrow because he's interested in starting a business or side project. I have the capital and he has the computer expertise, so something may work out...(if something does, details will come in the future).

Where's the talk on JNJ?

First of all, I'm sure someones writing about Johnson and Johnson (and if you have some links, please put them in the comment section).
I'm semi-surprised I haven't been reading too much about the JNJ valuation. Right now everything seems to be about Guidant, Boston Sci, and if JNJ will buy St. Jude Medical (STJ).

JNJ has been sliding from about April, when it was near $70, to now when it is under $57. Much of this slide is due to uncertainties regarding the merger, if they are buying STJ, and how will they promote growth. On a very basic valuation level it seems to be on the cheap side compared to its historic average. It's price to sales ratio is about 3.37. It hasn't been this low since 1996! Over the past decade or so it has ranged from about 3.5 to 5.5. So on a price/sales basis it looks relatively cheap (but this is definitely one small part). Now in 1996 it had profit margins of about 13%, but today they are around 20%.
I wouldn't be surprised (once certain issues die down a bit) if some publications (Barron's, Fool, etc.) comes out with an article about JNJ- because if it keeps on sliding, it will be worth a second look.

BIPS

Hedge fund analysts/traders/managers talk about returns in two ways: bips and alpha.
Bips is just an easier way of saying basis points (bps). One hundred basis points is equal to one percent. So you might hear a phrase "we're down 300 basis points for the month", and this would mean they are down 3%. They also use this phrase when talking about position sizes relative to the fund's total assets. "Disney is up to 30 bps" meaning DIS makes up 0.30% of the fund's assets.

What type of returns are hedge funds shooting for?
This of course depends on the strategy. Some funds are short-only, which means they only short stocks. Other funds specialize in certain areas (distressed, etc.) while other funds remain true to the original title of a hedge fund. Basically a hedge fund was *suppose* to hedge risks, but many hedge funds these days do not follow this definition. They take on more risk for more return.
An average hedge fund might consider being up 25bps in a day a good day. I think this will give an idea about the types of returns hedge funds go for.

Alpha is a measure of return greater than a specific benchmark. If a fund is tracking the S&P and the S&P returns 5% while the fund returns 8%, they will say they generated 3% of alpha.
Alpha is key with hedge funds because this is how they justify their fees. A typical hedge fund will charge 1% of assets (not too bad), but then take 20% of the profits! So a few good years for a portfolio manager can set him/her up for life (kind of). If you have a great reputation you can charge even higher. Steve Cohen (SAC capital) is basically a legend in the business. He takes 50% of the profits! With his record of returns he can justify this and he's made his investors a ton of money.
It's all about generating that alpha!

January Month end

January turned out to be a very good month. My stock holdings did okay, some nice cash inflows, and only a few big cash outflows. I didn't keep track of my expenses as best as I wanted to, and hopefully that will change in the future. I did have some one time expenses: school, school books, CFA notes, registration fees, parking permit, etc.
Overall I'm happy with the month and I started off 2006 on a good note to hit my year end goal of $60,000 (although I have a ton of more work to do).

Here's how I ended January:
My brokerage account had some strong gains (over $800 this month) because my stocks had a good month. Overall my stock holdings increased 6.5% and I received another dividend from NTE.
The other big cash inflows were due to my bonus and raise (although it seems like taxes took a ton away!)

January Net Worth: $41,188
This represents an increase of $8,764 from December's net worth. In percentage terms, I increased my net worth by 27% from December.
*This will not be the norm!*
On average it seems I've been increasing my net worth anywhere between 4 and 7% and this is what I expect in the future.

Today I set up a third ING account. I have my regular savings accoung, a Christmas fund account, and now I have a Vacation account. I set it up so it will take $20 per week from my bank account and I might not include this in my net worth calculations. My goal is to go to a different country per year, but for this year I don't plan on going till late 2006 (if possible).

Kraft reports

Kraft reported today and it seemed okay. It definitely wasn't great, but they may be taking steps in the right direction. They will cut 8,000 jobs in attemps to slim down operations (and continue to close facilities). In the near term, this will lead to more restructuring charges. In the long term they are hoping the restructuring plan will slim down operations and lead to more efficiency. More efficient operations will lead to better margins (which they need).
Earnings were up, but they also had one extra week. Backing out this week caused earnings to be up only marginally. The stock is up in after hours and it will be interesting to see how it reacts tomorrow.

A small post on hedge funds
I might post a few random things about hedge funds in the next few posts. One interesting thing about hedge funds is the commissions they pay. We're used to paying whatever our brokerage charges us ($7/trade, etc.), but at hedge funds it depends on the trading firms. We work with a bunch of different traders/firms and they usually charge different commissions. Some charge 5 cents per share (that's usually the max), while others charge 3 cents. You can also put trades in through an automated system and the commission is usually 1 cent per share.
So we might put in a few orders and one of the traders who works for us will give us a call saying "we bought 50,000 shares of XYZ at 20.5678; 3 cent commission".
Another type of trade is the net trade. This is when we're not really charged a commission, but the commission is built into the price (the stock price). We normally use this for foreign trades rather than U.S. trades.


My next post will most likely be on Wednesday since I'll be busy with school tomorrow and possible the doctors (I may have fractured a part of my foot, I'm okay though). Wednesday's post will be a recap of January.

Time for some Links

The market had a great day today (and the way things are looking I might be losing my FRX shares at $45). In an unrelated note, I logged into my Think or Swim account and I'm still incredibly impressed with this brokerage. The software is incredible, you can do so many things, and their commissions are cheap. Even if you're not into options, you might want to check it out for stocks (I think stock commissions are only $5)

Some stories I read throughout the day

Microsoft reported today and more people are saying that the shares might actually start moving (it's been practically flat for the past few years) due to new products (Xbox, new operating system, and I think a new Office package). I'm pretty sure I've heard similar stories last year, but maybe this is Microsoft's year.

Another interesting article is on J&J (on my watch list) about any upcoming acquisitions.

Business week put out an article on 4 cheap stocks. I don't know if I'll have any time to look into any of them (I'm only really familiar with EMC), but it might be interesting for others.

This stock has been on my watch list for awhile and now there's a little more press about it.

That's all for now. I think next week I might write a few posts (or one) about certain inside workings of a hedge fund. I usually have people ask me questions and I thought it would be good to share a few things.

A few things I'm looking into

I'm not recommending any of the stocks below. This is just a post about a few stocks I'm either looking into or want to look into.
The central theme behind these stocks is that they are all more or less having problems. Pricing issues, rising costs, squeezed margins, etc. So why even spend time on these stocks? Because everyone else is bashing them and I want to see if these problems can be taken care of in the near future.

Another common theme among the stocks is that they all have to do with food. I like this industry because it's somewhat stable in a sense that everyone will continue to keep eating. Are these companies going to grow double digits per year? Maybe, but only through acquisitions and not organic growth.

The first one is ConAgra Foods (CAG).
First of all, I like the chart. This is a packaged food product company that has a ton of products.
The bad thing about this company is that it's balance sheet is not very good looking and its free cash flow can be questioned. The cash flow problem can be detrimental because CAG does have a 5.3% yield.

The next one is Kraft (KFT)
This is a well known brand that has a multitude of products at your local grocery store. Walmart accounts for over 10% of their sales and they are trying to pair back some businesses. They want to sell off some divisions that are not as profitable, while maintaining their market share in the more profitable divisions. This is a fairly major restructuring program, which brings along some risk. Based on the chart, I'm waiting for it to level out a bit. KFT has a 3.2% yield. While they are restructuring they are getting rid of certain businesses and taking on charges. Their margins are getting worse and I would want to see that stabilize and then reverse course. The one thing that I like is that their products have very good brand names.

Who likes chicken? Next up is Sanderson Farms (SAFM).
These companies are getting hammered because of falling chicken prices and worries about the bird flu. I think the bird flu could be a little over-reaction, and this is leading to the falling chicken prices. I seriously doubt chicken companies will go away, and I'm looking forward to a bottoming out in the industry (then I'll start buying).

The last one is Chiquita Brands (CQB)
The name should be familiar to most people. They are going through the same problems as SAFM in terms of product pricing. The prices for bananas and pineapple have been softening and this is causing problems for the company. I think I read that banana prices were starting to rebound. It has a yield of 2.2%

Although I find these companies interesting, I think it will be too risky for me to invest in all of them. They are all generally in the food business and if I bought 100 shares of each, then I would be allocating almost 25% of my net worth into this industry. That might be putting a little too much into food, but some of them might be worth a look if they can over come their problems.


Another blog added: Consumerism Commentary

Time Management

Time management is key in a lot of areas of life. Someone might have a bunch of good ideas, but if they can't manage their time well then they might never get around to developing these ideas.
This site has some time management tips.

I manage my time by keeping a day planner. The night before I take a few minutes to jot down all the things I want to get done the next day. The list doesn't have to contain really important things, but just all the tasks I want complete. This method helps me keep track of the things that need to be done and the act of checking things off a list also motivates me to finish the entire list.

Over the weekend I spent a little time reviewing the things that I needed to get done in the long run and decided that I wouldn't have enough time. I thought about cutting things out, but I think if I move things around I'll be able to free up some time. From now until June, my main focus should be on the CFA. It's hard to fit enough time for this when I still need time to: go to the gym, work 40-45 hours per week, and take two college classes.
I need to go to the gym and I can't cut back on my work hours, so I decided to drop one class. I dropped the one I thought would be the most challenging (visual basic programming) because I have no programming experience. This will basically free up my Monday nights, which is a huge time saver. By counting class time, commute time, and homework time I think I'll be saving at least 7 hours per week. I can take the class next semester, when I'll be a little less busy.


I'm doing fairly well in 2006 (so far!). During market hours (so they don't reflect closing prices) I checked out the indices and the three major ones are between 0 and +2%. My holdings are between +0.4% and 13.9%, and three of them have double digit gains. Hopefully this continues!

Important News
I received two great emails earlier today and time to share the news.
NCN over at No Credit Needed has started a podcast! I think this is fantastic news and I hope people listen to it (you can also download the casts in mp3 form; the first one is about 11mb big).
I wish him the best of luck and if you want to check it out please go to his podcast site, which is right here.


Another huge piece of news comes from Free Money Finance. A new personal finance blog network has started by uniting five huge finance blogs. The network is called the Money Blog Network and the five blogs are: Free Money Finance, All Things Financial, Blueprint for Financial Prosperity, Consumerism Commentary, and Five Cent Nickel.
These are five fantastic blogs and I'm sure the new network is going to be a huge success.

Random Things

Tech got crushed today as the Naz dropped 1%.
Apple was down 2.6% during the day and it's down another 3% or so in after hours.
Google dropped 4.75% after a downgrade.
Ebay was down over 2% during the day and another 2% in after hours.
The big news was between Intel and AMD. Intel came out with a poor report that sent its shares down almost 11.50% (although I think they are increasing their capex numbers, which some analysts saw as a good thing). On the other side, AMD came in with a profit and is up over 10% in after hours.


I'm going to buy the Schweser notes/study guide tomorrow and I'll post a review (this goes along with the last post). I'm at least a little happy that I passed the sections that matter the most to me (equities, derivatives, fixed income, etc.), but I'm still pretty mad that I didn't pass overall. I can't wait for the June test.


Internet: my cable modem kit finally arrived, but I need to install it. I'm *hoping* I'll have a reliable connection by tomorrow. Then I'll be able to post on a regular basis and thanks for putting up with these sporadic posts! I know they haven't been too good lately due to the lack of time I have on a computer, so I'll try to make up for that in the near future.

When is it good to sell some premium (options)? When volatility is high, because this leads to more expensive options (higher premiums). FRX came out with a somewhat poor report last week, but the stock reacted positively due to other news. I sold a call on FRX to lower my cost basis in terms of return calculations. It was down pretty far early in the day and I was hoping for a rebound later on. I got the rebound and sold the call for a little more than expected (.90)
I sold the Feb 45 call and got back $90 in return (only one contract). I did this because there is uncertainty around FRX, it is in a volatile state, and I wouldn't mind selling my shares for $45.
There's a chance they could receive some good patent news, but the probability might be on the low side. Plus the option only has about one month left and I'm hoping time value decay will kick in and the premium will start to go down.

Think or Swim now has automatic transfers (cash withdrawals and deposits) so I'm setting that up tomorrow. It should take a few days, but then I'll be able to transfer some money over. I have a good amount of cash in my bank and I want to move it into another account.
If I have time, I'm also going to contribute to my Roth IRA sometime this week.

*sigh*

I'll try to post later tonight, but I got my CFA results back. As you can tell from the title, I'm taking it again in June. I scored high on the parts that matter to me the most (equities, financial analysis, fixed income, derivatives), but not so well on some of the other parts (ethics being the big one). I think if I passed that section I would have passed overall.
The pass rate was 34%

I'm confident I will pass in June because now I know how to prepare. Forget the books! I'll be using Schweser products: notes, practice tests, etc.

I will try to post more later because I have a few more updates.
The next few months should be interesting as I try to balance working 40-45 hours, two night classes, and the CFA test (oh yeah, and maybe a social life too!)

I'll try to post later tonight.

Gone for the weekend

I'm going away for the weekend, so the next post will most likely be on Wednesday.
For those who emailed me, I'll get back to you then.

Have a nice weekend!

Alpha Guy is going back to school

The above title is correct. Didn't I just graduate?? Well I did back in June, but after taking a semester off I'm ready to continue. This time I'm going back to further my education and help my career in the long run. I want to be fully prepared in the next decade and I think a math degree with help me. I'm definitely interested in options/derivatives, but sometimes I feel lost while looking through different models that use advanced calculus. I really don't like that feeling, so I'm going to change it.

I did contemplate trying to teach myself, but I think for this subject a more structured environment will be better. I haven't taken some of these basic courses since high school, so I'll be re-taking a few of those. I figured I could pass the placement tests with a little studying, but I want to have a strong background before I get into the harder courses. I signed up for visual basic programming (it's required) and trig. This will also mean my Mondays and Tuesdays will be incredibly hectic because I'll be busy from 4am to 11pm (I'm saying right now that if I can't make it, I'm not going to force myself- I'll drop the classes).

I made a comment about raising my year end goal and it is due to some changes at work (bonus and raise). My new goal is $60,000!

I still haven't had time to research anything, but here's my list of stocks I'll look into first:
(these are on here for various reasons, so some might seem out of place)
FDP
CAG
GSH (although it's up roughly 15% since I last mentioned it)
TCHC (I shouldv'e bought more, it's up 75% in my IRA)
SFL
SAFM
CQB (I'm glad it went down today, made it cheaper!)
SJM
THS
PPC
HNZ
BMY
VZ
NOK
WDFC
T
DSX
DRYS
PSPT
PMD
ANPI
NGPS
SPC

Some of these companies might not be good at all (SPC may be one of them), but I'm still interested in at least looking into them a bit.

One last thing: there's a new blog for people who are in college or have just graduated (financial advice, etc.) called Ask Uncle Bill

Dow tops 11,000

I still don't have a reliable internet connection, so my posts might be short for a little bit.
Today the markets had some excitement as the Dow topped 11,000. The indices have moved up a good amount compared to their moving averages, so I wouldn't be surprised if they back down a bit. The technical analysis newsletters that I read said that another run might be forming, but also there are some signs of weakness.

I still haven't researched any stocks...

There is a Carnival of Investing over at Free Money Finance, and I suggest you check it out.

One last quick note: I'm going to have to adjust my 2006 year end goals and I'll hopefully post about it on Wednesday. The goal will be going up, but I haven't figured out what the new goal will be.
That's all for now, more on Wednesday!

Quick Update

So the cafe I go to had internet problems on Thursday. I'm sure it will be fixed next week, and then I can continue posting.
In the mean time, just some quick statements.

-thanks to the comment about Paypal, I'll have to check out their money market yield. I wasn't aware that it was that high.
-to the one who commented on European stocks, any suggestions? I'm always looking to add foreign stocks to my portfolio, but sometimes it can be difficult with the lack of info (see: GSH).

That's all for right now!

Paycheck plan for 2006

I won't have an internet connection for at least a few weeks. I just ordered the kit and it takes up to 10 days to arrive....but I did find a nice cafe down the street with free wireless so I'll be able to go online (and post here).

This cuts into the time I wanted to spend looking for new investments since it's hard to concentrate while at a cafe. I have been adding to my list of stocks to look into. Some have been beaten down, but I still want to research them a bit. I've been looking into the food sector (chicken companies are getting hit, PPC, SAFM), and various other food related companies: KFT, CAG, CQB, HSY, and a few others but my list is at work. Some of these have been going through tough times (PPC, CAG), but it might be worth a look especially if they have strong cash flows. Most of these have decent dividend yields as well. I also might look into tanker stocks again, this time dry bulk shipping. I made some very good returns in 2003/2004 off oil tankers and now I'm going to look at a few others (DRYS and DSX). I might also add to my SFL position because it's being treated like a tanker, but it's more of a leasing company (so the yield might be safer).


I'm going to use ING to help with my savings plan. I originally stated my goal is to have a savings rate of 40%. This might be a fairly high number, but I think I can accomplish this.
Rather than just letting my paychecks sit in my bank account until I figure out what to do, I'm going to transfer a portion of each paycheck to ING. The money will sit in ING until it's ready to be put to use and I figured I can always buy on margin for a few days since the margin interest will be low (to give time for the money to transfer over from ING to my brokerage account).
So starting with my next paycheck I'm going to follow this plan. Every two weeks I'm going to have ING automatically take out 40% of my paycheck. This will total about $570 every two weeks and about $13,680 for the year. I'm going to try this out for awhile and see how it goes.

Quick Update

I don't have internet access at my apartment, but there will be a post tonight.
I'll hopefully be back to my regular postings next week!