I saw this and almost started crying. Just to be able to spend a day racing at this club would be a phenomenal experience. Of course, I imagine its Bring Your Own Supercar (BYOS) even at a daily pass rate of $2500. Since I happen to be short of the supercar, I guess I'll just have to read the news coverage, if any.
Tuesday, July 29, 2008
Friday, July 25, 2008
Analyst Arbitrage
Well, not exactly, but it sounded good. :)
Seriously though, I was reading this piece in the SJ Mercury News about Frank Quattrone's return to technology finance, and something that Frank was reported to have said caught my attention. Here's the paragraph from the article:
At first blush, you may agree with Frank. However, that analysis is counter intuitive to me. While what Frank said here may be true (I don't know), it appears to me to offer an opportunity for someone to profit. See, if there is less analyst coverage of smaller tech firms (especially those with real businesses, revenues and profits), then a studious operator can use the lack of coverage to their advantage.
Every trader, portfolio manager, or even small investor, is looking for an edge. The analyst rules implemented in the wake of the Blodget and Grubman scandals create a vacuum of public information around small companies, according to Frank. So the operator who is peering into the cracks, doing the due diligence, and sniffing out the promising companies that have minimal or no analyst coverage, has a better chance of finding a "hit" before the market does. Its a perfect arbitrage play. Of course it takes courage to do, but isn't that the point? The successful operators feel fear like everyone else, but they don't let that fear stop them from making good, well reasoned investments (or trades). So the operator that steps into this information void, spends the time learning about the company, and generates an investment thesis for it is taking a huge risk. However, that risk is mitigated somewhat by the fact that s/he's got a larger margin of safety to work with while the stock is undiscovered.
None of this means that our hypothetical operator can't be wrong. The investment thesis could be bogus. The timing could be sub-optimal. Any number of things can go wrong; that is the risk of the market. However, finding an unloved gem is the kind of investment everyone wants to make. So analysts' failures to cover these small companies creates an opening for the intelligent and courageous operator to profit handsomely. Shouldn't we be glad that these information arbitrage opportunities are being created? If we are the competent and capable operator, we should be giving thanks and showing gratitude for such situations, so I would think.
I don't feel bad for the sell-side analysts. If their work is any good, they'll get known for it. Meredith Whitney and Dick Bove come to mind. The good analysts will have options. Hell, even the less-than-best analysts will probably land on their feet too, usually within a hedge fund or private equity firm, as Quattrone acknowledges, or some other buy-side entity. The analysts creating forgettable research will fade into obscurity within their firms, and the typical retail investor will probably place (misguided) value in/on their work. I don't see how life is so bad for our sell-side analyst. Will it be as easy as it was during the go-go 90s? No. Will it orders of magnitude harder for them to make a living? I doubt.
Its too easy to tag along on the words of the great Frank Quattrone, given his reputation and past success. I think Frank misses the mark on this one, though. However, Frank wasn't a trader. He was a banker. As such, he probably never had to consider this issue too closely. In Frank's world, the sell-side coverage was probably proof that he was doing his job (and well). It probably justified the expense that the IPOing startup went through to work with Quattrone and his gang at CSFB. All of this would serve to burnish Frank's reputation as the go-to banker, which made him more prized and valued by whichever firm employed him.
I don't know if he's just looking at this void through the eyes of a banker, or if he has really evaluated the pros and cons of the reduction in sell-side coverage for smaller stocks (across industries, but especially in technology). I hope he has, and that he saw something I missed. In that case, I would LOVE to know what I overlooked. However, I don't get the feeling, from reading this (very) short article, that he did that evaluation.
Until next time, good people...
Seriously though, I was reading this piece in the SJ Mercury News about Frank Quattrone's return to technology finance, and something that Frank was reported to have said caught my attention. Here's the paragraph from the article:
But the result has been that a large number of analysts have left investment banks to join hedge funds and private equity firms, Quattrone said. The remaining analysts have focused on covering bigger corporations, rather than small start-ups, because there's no money and little recognition in covering the smaller companies, he said.
At first blush, you may agree with Frank. However, that analysis is counter intuitive to me. While what Frank said here may be true (I don't know), it appears to me to offer an opportunity for someone to profit. See, if there is less analyst coverage of smaller tech firms (especially those with real businesses, revenues and profits), then a studious operator can use the lack of coverage to their advantage.
Every trader, portfolio manager, or even small investor, is looking for an edge. The analyst rules implemented in the wake of the Blodget and Grubman scandals create a vacuum of public information around small companies, according to Frank. So the operator who is peering into the cracks, doing the due diligence, and sniffing out the promising companies that have minimal or no analyst coverage, has a better chance of finding a "hit" before the market does. Its a perfect arbitrage play. Of course it takes courage to do, but isn't that the point? The successful operators feel fear like everyone else, but they don't let that fear stop them from making good, well reasoned investments (or trades). So the operator that steps into this information void, spends the time learning about the company, and generates an investment thesis for it is taking a huge risk. However, that risk is mitigated somewhat by the fact that s/he's got a larger margin of safety to work with while the stock is undiscovered.
None of this means that our hypothetical operator can't be wrong. The investment thesis could be bogus. The timing could be sub-optimal. Any number of things can go wrong; that is the risk of the market. However, finding an unloved gem is the kind of investment everyone wants to make. So analysts' failures to cover these small companies creates an opening for the intelligent and courageous operator to profit handsomely. Shouldn't we be glad that these information arbitrage opportunities are being created? If we are the competent and capable operator, we should be giving thanks and showing gratitude for such situations, so I would think.
I don't feel bad for the sell-side analysts. If their work is any good, they'll get known for it. Meredith Whitney and Dick Bove come to mind. The good analysts will have options. Hell, even the less-than-best analysts will probably land on their feet too, usually within a hedge fund or private equity firm, as Quattrone acknowledges, or some other buy-side entity. The analysts creating forgettable research will fade into obscurity within their firms, and the typical retail investor will probably place (misguided) value in/on their work. I don't see how life is so bad for our sell-side analyst. Will it be as easy as it was during the go-go 90s? No. Will it orders of magnitude harder for them to make a living? I doubt.
Its too easy to tag along on the words of the great Frank Quattrone, given his reputation and past success. I think Frank misses the mark on this one, though. However, Frank wasn't a trader. He was a banker. As such, he probably never had to consider this issue too closely. In Frank's world, the sell-side coverage was probably proof that he was doing his job (and well). It probably justified the expense that the IPOing startup went through to work with Quattrone and his gang at CSFB. All of this would serve to burnish Frank's reputation as the go-to banker, which made him more prized and valued by whichever firm employed him.
I don't know if he's just looking at this void through the eyes of a banker, or if he has really evaluated the pros and cons of the reduction in sell-side coverage for smaller stocks (across industries, but especially in technology). I hope he has, and that he saw something I missed. In that case, I would LOVE to know what I overlooked. However, I don't get the feeling, from reading this (very) short article, that he did that evaluation.
Until next time, good people...
Tuesday, July 22, 2008
Covered Bonds and Bank Failure
So does anyone REALLY know what happens to covered bonds if their issuing bank defaults? I ask because based on the brief description from Bloomberg.com, Wikipedia, and the European Covered Bond Council, it sounds like a securitization that has to stay on the books of the issuer. Now, if the issuer fails, what happens to the bonds? I mean, it sounds like they are already overcollateralized, which is how they get the superior ratings, but I haven't seen any mention of the outcome of issuer failure. Maybe I just need to read a bit more.
However, these things sound pretty attractive so far, if you can look past the fact that a NRSRO had to issue the rating on the bond. As we know, until recently, the 2 NRSROs that the market listened to most closely were Moody's and Standard & Poor's. Their collective track record on ratings isn't exactly spotless. Still, these covered bonds that are already trading (not necessarily those of FNM and FRE, should they actually come into being) sound promising based on their yields. I sense a lot of fear around these things, just based on the the names of the issuers, and that indicates a potential opportunity to me.
At times like this, I wish I had access to a Bloomberg!
However, these things sound pretty attractive so far, if you can look past the fact that a NRSRO had to issue the rating on the bond. As we know, until recently, the 2 NRSROs that the market listened to most closely were Moody's and Standard & Poor's. Their collective track record on ratings isn't exactly spotless. Still, these covered bonds that are already trading (not necessarily those of FNM and FRE, should they actually come into being) sound promising based on their yields. I sense a lot of fear around these things, just based on the the names of the issuers, and that indicates a potential opportunity to me.
At times like this, I wish I had access to a Bloomberg!
Thursday, July 17, 2008
Financial IQ Test Score
64.
That's including the bonus point. Not nearly as good as I thought, but it shows me what I need to work on. Credit/debt, shopping, and financial planning would appear to be my weak points. Time to get to work, it is.
I encourage everyone to roll on over to Moolanomy and take the test. I printed it out to make it easier to record my results next to each question. Do whatever works for you, but then turn that knowledge into action!
Until next time...
That's including the bonus point. Not nearly as good as I thought, but it shows me what I need to work on. Credit/debt, shopping, and financial planning would appear to be my weak points. Time to get to work, it is.
I encourage everyone to roll on over to Moolanomy and take the test. I printed it out to make it easier to record my results next to each question. Do whatever works for you, but then turn that knowledge into action!
Until next time...
Wednesday, July 16, 2008
Trading Up
Well, it took me forever and a bloody day, but I finally got my options application in to the mail today. Yay me! We'll see whether I get approved. Cross your fingers. Since I don't plan to write any options, and especially not puts, I think it should be ok.
I'm also looking to lighten up some of my funds today or tomorrow. We'll see how things look near the close. I plan to close out my TREMX, PRMSX and RPIBX, as I prepare to trade into Teresa Lo's satellite portfolio (with a few minor differences).
Anyway, more on this to come. I need to go sleep!
I'm also looking to lighten up some of my funds today or tomorrow. We'll see how things look near the close. I plan to close out my TREMX, PRMSX and RPIBX, as I prepare to trade into Teresa Lo's satellite portfolio (with a few minor differences).
Anyway, more on this to come. I need to go sleep!
Monday, July 14, 2008
Thoughts of IndyMac
This is exactly why I scoffed and avoided any bank offering a rate greater than the rate HSBC has been offering for their online savings accounts. It was pure asset gathering, as these institutions, in their race to the bottom, were trying to generate enough lendable capital to generate enough revenue to offset the risk of failure. As if there was enough time for such machinations to work! E*Trade Bank and Capital One come to mind as well, along with IndyMac.
Wednesday, July 09, 2008
Eurozone Birthrates
I'm not an economist, and I'm thankful for that, but this just makes me think that the eurozone has MUCH bigger problems than the ECB's monetary policy. I mean, they're pretty fscked anyway with the collapse of credit and housing markets in their most dynamic economies (never mind what's happened to everyone else -- German banks?). I wonder if they can pull off the trick of getting their economies to slow down faster than their birthrates?
I guess I should just be glad I'm where I am. Barely.
I guess I should just be glad I'm where I am. Barely.
Tuesday, July 08, 2008
Preliminary June Analysis
Since I had some time before going to sleep, I figured I'd try to throw together some quick and dirty reports about June's financial performance. So far, things look good. I spent $405.84 on food, when my budget allows for $600. I spent $201.04 on gas, which is WAY beneath my ceiling of $794.62. If not for the Misc category, which blew a complete hole in my numbers, things would look great. Add to that the fact that I will be moving next month, so by September my rent will drop from $1650 per month to $1234 for my own 2 bed/1 bath apartment, and I'd say things are in excellent shape.
Anyway, I plan to work with the numbers a bit more and get a better idea on what worked and what didn't. My new diet seems to have had a very positive impact on my finances, if I had to take a guess from these numbers. I front load carbohydrates and finish the day with a salad. Even with a pre-packaged salad, I'm not loading up on sugar-laden food which becomes fat while I sleep. Those pre-packaged salads cost only a few dollars as well, so I can buy a bunch of them for work and still leave room in my budget for eating out the rest of the week (if I choose). Sweet!
Anymore, more to come. Until next time...
Anyway, I plan to work with the numbers a bit more and get a better idea on what worked and what didn't. My new diet seems to have had a very positive impact on my finances, if I had to take a guess from these numbers. I front load carbohydrates and finish the day with a salad. Even with a pre-packaged salad, I'm not loading up on sugar-laden food which becomes fat while I sleep. Those pre-packaged salads cost only a few dollars as well, so I can buy a bunch of them for work and still leave room in my budget for eating out the rest of the week (if I choose). Sweet!
Anymore, more to come. Until next time...
Sunday, July 06, 2008
Heads Up
I know I've been off my game recently. However, I do have a new update coming soon. Now that the first half is done, its time for a quarterly wrap up and some other activities. Also, there is a big position sale in my future. Gotta love tax loss selling! I don't see Japan going anywhere significant anytime soon, so...
Stay tuned!
Stay tuned!
Friday, June 27, 2008
Separation of Powers
I have started a new blog called "What De Rass?" This is where you'll be able to find my personal ramblings. All finance oriented chatter will stay here, but I'll move the bulk of my non-finance related postings over there. Things seem cleaner that way.
Those of you who come here probably don't give a damn about my life or what goes on inside my head beyond the conversations about finance, money and alpha (when they break out). Thats all good and fine, and this is the place that you'll stay. For those of you who harbor any interest in me beyond finance and my take on it, feel free to check out "What De Rass?" and even let me know what you think.
Have a good day, all!
Those of you who come here probably don't give a damn about my life or what goes on inside my head beyond the conversations about finance, money and alpha (when they break out). Thats all good and fine, and this is the place that you'll stay. For those of you who harbor any interest in me beyond finance and my take on it, feel free to check out "What De Rass?" and even let me know what you think.
Have a good day, all!
Wednesday, June 25, 2008
Silver Lining
It looks like Mexico might have some medication for the real estate woes in Texas.
You have to admit, that's pretty funny. Mexico, of all basket case economies, has enough liquidity flowing through its veins to stanch the bleeding here. There are so many things racing through my head -- humor among them -- as I think about this.
You have to admit, that's pretty funny. Mexico, of all basket case economies, has enough liquidity flowing through its veins to stanch the bleeding here. There are so many things racing through my head -- humor among them -- as I think about this.
Sunday, June 22, 2008
What I Want...
...is a short play on social networking. How many fuggin' social networking sites do we need? I know I sure don't need that many, and I probably need more than the average human. (Not as many as Kedrosky, but more than average. THAT dude needs his own personal social network.)
I wish there were a nice index I could short, but none of these fuggin' sites is public (and most probably have no chance of ever being public). In fact, fugg a short. Just buy puts on the index. I need a derivative contract.
Hi5? Facebook? LinkedIn? Friendster? Ok, ok, ok. I'm good. I don't need Multiply or MyYearBook or whatever the hell other social networks are lurking out there. Fuggggg man, just leave it alone already!
One of my students asked me about his idea for a social network the other day. I went on a rant about the business, basically telling him that he'd be better off doing it as a hobby unless he had a clear business case and heartless, soulless dedication to that objective. (As Gekko said, if you need a friend, get a dog.) I sure hope he doesn't go through with it. Talk about a waste of talent and time.
Stop with the social networks, please, for the love of God and all that holy!
I wish there were a nice index I could short, but none of these fuggin' sites is public (and most probably have no chance of ever being public). In fact, fugg a short. Just buy puts on the index. I need a derivative contract.
Hi5? Facebook? LinkedIn? Friendster? Ok, ok, ok. I'm good. I don't need Multiply or MyYearBook or whatever the hell other social networks are lurking out there. Fuggggg man, just leave it alone already!
One of my students asked me about his idea for a social network the other day. I went on a rant about the business, basically telling him that he'd be better off doing it as a hobby unless he had a clear business case and heartless, soulless dedication to that objective. (As Gekko said, if you need a friend, get a dog.) I sure hope he doesn't go through with it. Talk about a waste of talent and time.
Stop with the social networks, please, for the love of God and all that holy!
Monday, June 16, 2008
Does Not Compute
Something about Felix's argument doesn't compute, but my brain is a bit too cloudy to take this on right now. I need some sleep.
Yes, credit enhancement has generally been the name of the game with muni issuers and monolines. The issuers were trying to get their issuance costs down (e.g. their yields), knowing full well that the primary buyers of their product were likely not going to spend a lot of time doing credit analysis. Even doing 1 issue would be problematic for a small investor, never mind the universe of muni credits in the marketplace. Guys like Tom make a lot of money (and spend a lot of time) doing that research. People like me, however? Not so much.
So what am I missing here? Yes, credit enhancement in an era of diminished trust in the ratings agencies is probably absurd. However, you have to play to your audience. The rating agency problem will, hopefully, start getting sorted out with new entrants to the market. I don't see this world changing drastically.
Of course its nuts that munis, with their historical default rates, were not being compared evenly with corporate credits. However, I think your state treasurer probably was working with a small budget, and any way to shave a few hundred thousand in coupon payments annually was (and is) significant. All of those costs (and savings) flow directly to the bottom line.
In the longer run, the market will likely morph. Higher quality credits will probably go without insurance. Lower quality issues will probably still seek it out. I doubt the market will disappear, but shrinkage seems highly likely to me. For these issuers, making those costs evaporate is probably the key reason for the demand for insurance. Now, I may be missing something from my limited vantage point. Please, someone, clue me in if I have missed something. Basically, I think Felix is being a bit too cynical on this one. Ratings arbitrage occurs, sure, but I think the primary motivator for many of these treasurers is keeping their costs low. For a relatively small outlay (especially for larger issuers), they could get that, with the higher rating being gravy (an effect rather than a cause).
Does that make sense to anyone other than me? I hope it does. Maybe I'll expound on this after I get some rest.
Until then, dear readers...insurance - don't leave home without it!
Yes, credit enhancement has generally been the name of the game with muni issuers and monolines. The issuers were trying to get their issuance costs down (e.g. their yields), knowing full well that the primary buyers of their product were likely not going to spend a lot of time doing credit analysis. Even doing 1 issue would be problematic for a small investor, never mind the universe of muni credits in the marketplace. Guys like Tom make a lot of money (and spend a lot of time) doing that research. People like me, however? Not so much.
So what am I missing here? Yes, credit enhancement in an era of diminished trust in the ratings agencies is probably absurd. However, you have to play to your audience. The rating agency problem will, hopefully, start getting sorted out with new entrants to the market. I don't see this world changing drastically.
Of course its nuts that munis, with their historical default rates, were not being compared evenly with corporate credits. However, I think your state treasurer probably was working with a small budget, and any way to shave a few hundred thousand in coupon payments annually was (and is) significant. All of those costs (and savings) flow directly to the bottom line.
In the longer run, the market will likely morph. Higher quality credits will probably go without insurance. Lower quality issues will probably still seek it out. I doubt the market will disappear, but shrinkage seems highly likely to me. For these issuers, making those costs evaporate is probably the key reason for the demand for insurance. Now, I may be missing something from my limited vantage point. Please, someone, clue me in if I have missed something. Basically, I think Felix is being a bit too cynical on this one. Ratings arbitrage occurs, sure, but I think the primary motivator for many of these treasurers is keeping their costs low. For a relatively small outlay (especially for larger issuers), they could get that, with the higher rating being gravy (an effect rather than a cause).
Does that make sense to anyone other than me? I hope it does. Maybe I'll expound on this after I get some rest.
Until then, dear readers...insurance - don't leave home without it!
Sunday, June 15, 2008
It's Official!
My $20,000 savings goal has officially been accomplished! The latest account balance is $20,275.82 after my latest direct deposit (at a rate of $250 every pay period) and $51.65 in interest.
Gawd, saving money is addictive!
I'm preparing my next credit card payment for this week, and it will be substantially bigger than usual. I love progress! I'm happy. (I'd be happy without this, but there are just 2 more things to be be happy about.)
Until next time, cheers!
Gawd, saving money is addictive!
I'm preparing my next credit card payment for this week, and it will be substantially bigger than usual. I love progress! I'm happy. (I'd be happy without this, but there are just 2 more things to be be happy about.)
Until next time, cheers!
Thursday, June 12, 2008
Goal Shifting
While reading over my 2008 goals last night, I came to the realization that 2 of my goals (1 each of the regular and stretch) are no longer goals of mine. I just no longer desire to work on them. So, in order to have my environment reflect my reality, I am updating my 2008 goals appropriately.
Regular Goals --
Personal: Learn to snowboard with enough proficiency that I can tackle a green trail by 31 Dec 2008. (Success)
Personal: Accumulate $20,000 in emergency funds by 31 Dec 2008. (Success)
Personal: Achieve $150,000 in net worth by 31 Dec 2008.
Personal: Save $15,000 for a house down payment by 31 Dec 2008.
Personal: To find and accept an offer on a new, rewarding and fulfilling job by 29 Feb 2008.
Business: Unwind my real estate investing partnership by 30 Jun 2008, including all asset sales.
Business: Hand off my consulting customers to responsible, attentive, competent person with high integrity by 30 Apr 2008.
Business: To ship a prototype of our application running on Windows Mobile and the iPhone by 30 Sep 2008.
Stretch Goals --
Personal: Read 50 books by 31 Dec 2008.
Personal: Accumulate $30,000 in emergency funds by 31 Dec 2008.
Business: To have a beta release of our application running on Windows Mobile and the iPhone by 31 Dec 2008.
As you can see, successful goal completions are identified in blue text. My mobile software idea is a much lower priority for me right now, so I have struck through the 2 goals related to it. However, I do have a new fixation, software-wise, and I plan to work on that opportunity more and the mobile device software less.
That's all for now. Peace!
Regular Goals --
Personal: Learn to snowboard with enough proficiency that I can tackle a green trail by 31 Dec 2008. (Success)
Personal: Accumulate $20,000 in emergency funds by 31 Dec 2008. (Success)
Personal: Achieve $150,000 in net worth by 31 Dec 2008.
Personal: Save $15,000 for a house down payment by 31 Dec 2008.
Personal: To find and accept an offer on a new, rewarding and fulfilling job by 29 Feb 2008.
Business: Unwind my real estate investing partnership by 30 Jun 2008, including all asset sales.
Business: Hand off my consulting customers to responsible, attentive, competent person with high integrity by 30 Apr 2008.
Stretch Goals --
Personal: Read 50 books by 31 Dec 2008.
Personal: Accumulate $30,000 in emergency funds by 31 Dec 2008.
As you can see, successful goal completions are identified in blue text. My mobile software idea is a much lower priority for me right now, so I have struck through the 2 goals related to it. However, I do have a new fixation, software-wise, and I plan to work on that opportunity more and the mobile device software less.
That's all for now. Peace!
Monday's 2 Year Treasury Yield Spike
Bespoke Investment Group has a post about Monday's huge jump in 2 year Treasury yields. Using this as an indicator for a trade is a non-starter, at least against the overall market. The returns over the time periods researched are too small to justify the risk. It would be interesting to see the returns for various industry sectors. Also, it would be cool to see how long it takes each sector AND the index to breakdown after the jump.
Hmmm.
Hmmm.
Tuesday, June 10, 2008
See, I Didn't Forget You!
Wow, it really has been a long time since I last posted. It seems like just yesterday that I had posted 5 times in a single afternoon. Ahhh, the power of focus!
I have truly been remiss these last 2 weeks. I apologize again. However, its spring! I've been working to maximize my fun factor this summer. DC Carnival is coming up, and some really good parties with it. I plan to hit a bunch of amusement parks and ride roller coasters until I can't stand. I'm going to hang out with my second cousin and his family who I have ignored for years even though they live a short distance from me. Projekt Revolution is also coming to town a short time after my birthday, and since I missed Linkin Park earlier this year, I will not miss this! Finally, I plan to save enough dough to make it back to Trinidad for Carnival next year!
Anyway, I'll quickly go over the latest. Look for some posts in the near future which examine some of these at length.
On the real estate partnership front, it looks like we have an offer for one of our houses. I couldn't be happier about that, if it keeps me from having to liquidate my investment account to put money into the company. We'll see. The guy should be e-mailing over the contract later today.
By the end of this week, my $20,000 savings goal will be accomplished. I'm now thinking of other ways to increase my savings, and this promotion that JLP mentions over on his blog sounds cool. I might just enter it just because. As for saving, I think I've mentioned that I Direct Deposit funds into my savings account, about $150 per paycheck now. That's only been reduced so I can focus on paying down my credit card (and start getting my points).
Anyway, I do play those savings games with myself. The ones I've played for as long as I can recall involve saving any bills of a certain denomination that land in my wallet. For a long time, that was $1 bills. Maybe 18 months ago or so, I upgraded to $5 bills, and I don't see myself going to $10 bills anytime soon. Those fives are pretty hard to keep, but it does reduce the impetus to spend. I think I had $15 in change left over from this past Saturday when I went to the Capital Jazz Festival, and all of it was in fives. Added to the $100 I did not spend, that will be a nice bump when I deposit it later this week. (I took $200 out of the bank for the festival, and the remainder became my spending money for the week.)
I also save change religiously. I started that as a kid. My father would tell, if not force, me to deposit coins into a jar that he kept in his closet. At some point, we would have a father-son bonding session by counting and wrapping all of the change. Since my father wasn't the most emotionally expressive of chaps, this really was a highlight for me, just being able to spend time with him while I got a lesson in saving (unbeknown to me). Now, I do the same thing using an empty Whitman's sampler box. All savings get transferred to my savings account; none of it is ever used for spending. Besides, I build large cushions into my budget, so that I should never go over my monthly spending limit in any category. Anything extra is for saving.
My next plan will be to transfer the delta between my monthly budget limits and my actual spending into my savings account. I've usually just let those amounts sit in my checking account, or spent them without thinking. However, I want to make my saving more active. Passive saving is easy and find and I highly recommend it to all, but I think of how much I haven't saved that I could have if I had started this plan sooner. Oh well, such is life.
I'm also in the market for a new living space. My lease is up at the end of August, and I have found 2 prospective apartments. The cost difference is only $56 between the two, but once is brand new and the other is quite a bit older. Since I do work out almost daily and I relish the convenience of a fitness center on the property, I'm trying to get a feel for how the older place will renovate theirs. $56 per month is not hugely significant, but I am willing to sacrifice that money for convenience and modern equipment. I really want to get back to my workout routine from when I lived in Orange County, CA. Back then, thanks to my man G, I started working out a few times a week. That grew into an obsession, and I'd workout for 90 minutes before work, then 90 minutes in the afternoon before returning to the office to hack until 11 or 12. After doing 2 hours of cardio plus some running or practicing shots on the basketball court, then some light weights EVERY DAY, I made some serious strides in my fitness. It only took 2 months of that routine to show a difference, but I didn't measure my progress since I found out that I absolutely LOVED it just as a personal challenge. Go figure. The kid who rarely exercised growing up (out of fear on his parents' part that he might induce his own death vis-a-vis a massive Sickle Cell crisis) loves exercising.
Anyway, I digress. Continuing on...
So I expect to save between $300 and $400 a month in rent while at the same time reducing my commute distance. How's that for a plan? I'm soooo looking forward to it. Right now, I think I'll take 1/3 of those funds and increase my monthly savings, divide 1/3 over the various categories of my spending plan, and use the remaining 1/3 to pay down my credit card debt that much faster.
As I said, I look forward to espousing on some of these ideas a bit more extensively in the future. I'm also planning to talk a bit more about financial technology, and hopefully I'll be able to rub brains with some of the better bloggers/thinkers on the subject. I definitely see my career turning in that direction. Of course I'll keep you posted on that. There should also be some progress on the investing front, such as getting that option trading sorted out, and formalizing my analysis. I've been rather haphazard about analyzing my trades, doing research, and generally learning more about investing, trading, and finance. That has to come to an end, and I hope you'll join me for the adventure.
So much for quick, eh? Ah well. You know I love you all!
Until next time, y'all...
I have truly been remiss these last 2 weeks. I apologize again. However, its spring! I've been working to maximize my fun factor this summer. DC Carnival is coming up, and some really good parties with it. I plan to hit a bunch of amusement parks and ride roller coasters until I can't stand. I'm going to hang out with my second cousin and his family who I have ignored for years even though they live a short distance from me. Projekt Revolution is also coming to town a short time after my birthday, and since I missed Linkin Park earlier this year, I will not miss this! Finally, I plan to save enough dough to make it back to Trinidad for Carnival next year!
Anyway, I'll quickly go over the latest. Look for some posts in the near future which examine some of these at length.
On the real estate partnership front, it looks like we have an offer for one of our houses. I couldn't be happier about that, if it keeps me from having to liquidate my investment account to put money into the company. We'll see. The guy should be e-mailing over the contract later today.
By the end of this week, my $20,000 savings goal will be accomplished. I'm now thinking of other ways to increase my savings, and this promotion that JLP mentions over on his blog sounds cool. I might just enter it just because. As for saving, I think I've mentioned that I Direct Deposit funds into my savings account, about $150 per paycheck now. That's only been reduced so I can focus on paying down my credit card (and start getting my points).
Anyway, I do play those savings games with myself. The ones I've played for as long as I can recall involve saving any bills of a certain denomination that land in my wallet. For a long time, that was $1 bills. Maybe 18 months ago or so, I upgraded to $5 bills, and I don't see myself going to $10 bills anytime soon. Those fives are pretty hard to keep, but it does reduce the impetus to spend. I think I had $15 in change left over from this past Saturday when I went to the Capital Jazz Festival, and all of it was in fives. Added to the $100 I did not spend, that will be a nice bump when I deposit it later this week. (I took $200 out of the bank for the festival, and the remainder became my spending money for the week.)
I also save change religiously. I started that as a kid. My father would tell, if not force, me to deposit coins into a jar that he kept in his closet. At some point, we would have a father-son bonding session by counting and wrapping all of the change. Since my father wasn't the most emotionally expressive of chaps, this really was a highlight for me, just being able to spend time with him while I got a lesson in saving (unbeknown to me). Now, I do the same thing using an empty Whitman's sampler box. All savings get transferred to my savings account; none of it is ever used for spending. Besides, I build large cushions into my budget, so that I should never go over my monthly spending limit in any category. Anything extra is for saving.
My next plan will be to transfer the delta between my monthly budget limits and my actual spending into my savings account. I've usually just let those amounts sit in my checking account, or spent them without thinking. However, I want to make my saving more active. Passive saving is easy and find and I highly recommend it to all, but I think of how much I haven't saved that I could have if I had started this plan sooner. Oh well, such is life.
I'm also in the market for a new living space. My lease is up at the end of August, and I have found 2 prospective apartments. The cost difference is only $56 between the two, but once is brand new and the other is quite a bit older. Since I do work out almost daily and I relish the convenience of a fitness center on the property, I'm trying to get a feel for how the older place will renovate theirs. $56 per month is not hugely significant, but I am willing to sacrifice that money for convenience and modern equipment. I really want to get back to my workout routine from when I lived in Orange County, CA. Back then, thanks to my man G, I started working out a few times a week. That grew into an obsession, and I'd workout for 90 minutes before work, then 90 minutes in the afternoon before returning to the office to hack until 11 or 12. After doing 2 hours of cardio plus some running or practicing shots on the basketball court, then some light weights EVERY DAY, I made some serious strides in my fitness. It only took 2 months of that routine to show a difference, but I didn't measure my progress since I found out that I absolutely LOVED it just as a personal challenge. Go figure. The kid who rarely exercised growing up (out of fear on his parents' part that he might induce his own death vis-a-vis a massive Sickle Cell crisis) loves exercising.
Anyway, I digress. Continuing on...
So I expect to save between $300 and $400 a month in rent while at the same time reducing my commute distance. How's that for a plan? I'm soooo looking forward to it. Right now, I think I'll take 1/3 of those funds and increase my monthly savings, divide 1/3 over the various categories of my spending plan, and use the remaining 1/3 to pay down my credit card debt that much faster.
As I said, I look forward to espousing on some of these ideas a bit more extensively in the future. I'm also planning to talk a bit more about financial technology, and hopefully I'll be able to rub brains with some of the better bloggers/thinkers on the subject. I definitely see my career turning in that direction. Of course I'll keep you posted on that. There should also be some progress on the investing front, such as getting that option trading sorted out, and formalizing my analysis. I've been rather haphazard about analyzing my trades, doing research, and generally learning more about investing, trading, and finance. That has to come to an end, and I hope you'll join me for the adventure.
So much for quick, eh? Ah well. You know I love you all!
Until next time, y'all...
Tuesday, May 27, 2008
Net Worth Update
I haven't done one of these recently, so let's get caught up...
First, I've been re-working my asset allocation to be in line with Teresa Lo's satellite portfolio from her series on building your own investment portfolio. I'll have more to say on that shortly, along with my response to her comment, I promise!
Since I should officially achieve my goal of $20,000 in emergency savings by the middle of June, I will be adjusting my Direct Deposit into that account to a slower rate of accumulation. I have explained why I spent so much effort building up that account in a previous post, so I won't rehash it here. However, with this change, I will refocus my efforts on paying down the credit card debt which has been dogging me since last year. It feels great to finally attack this issue, but I absolutely wanted to make sure I was positioned in case of an emergency. I've dipped into my emergency funds for non-emergency situations a bit too often in the last year.
Since I decreased my withholding a few weeks ago as well, this latest change means that I can ratchet up my 401(k) contributions again. That holds benefits on 2 fronts. First, I'll reduce my adjusted gross income (AGI) which will reduce my overall taxable income while allowing me to take home more money with every paycheck. Second, I'll still be able to maintain some accruals to my emergency account, just at a slower pace, so that I can focus on the debt re-payment. I also get the benefit of freeing up some capital to direct into my self-directed Roth IRA. I'm going to have to give some thought as to what I'll do with that account. I had considered doing tax lien and tax sale investments, but we'll see. I'm not sure at this point.
(As an aside, I just received an e-mail reminder to increase my 401(k) contribution amount to 15% in 2 days. For this, I love technology!)
The one blemish on this record was alluded to in my most recent post, that being the need to buy my way out of the horribly flawed real estate partnership to which I belong. If I do have to put up money to get out of this albatross of an investment, I am prepared to put up as much as $10,000. On further thought, I may be able to put up even more IF it guarantees certain outcomes, such as refinancing the loan which is in my name. That house actually has a tenant in it now (its the only occupied house in the portfolio) so there should be coverage on the note. If I can force a refinance of the mortgage into the LLC's name, thus clearing me, I could put more funds into the LLC. As long as I can get out of this situation once and for all, I'll be happy. You will continue to hear more about this in the coming weeks. I set a deadline to be out of this position by the end of June.
I expect to take a potentially significant hit to my net worth due to the real estate partnership unwind, but my psyche will thank me for it. Doing so will also help me accomplish one more of my 2008 goals. Honestly, the best part is that I probably CAN pull that off and not be too terribly hurt by doing so. I have to be grateful for having the resources to do that, should the situation actually come to that. Thank God for a good job with good income from a solid, large company!
(Wow, did I really say that? I guess I did.)
Anyway, that's the story. Not exactly pretty, but it could be a lot worse. So now for the numbers...
My current net worth works out to $75,271.80. That includes a writedown to $0 of the real estate investment and the $35,000 in student loans I co-signed for. Actually, my investments, both in my taxable account and my 401(k), have done fairly well this year. I have unrealized gains of 29.48% on PRMSX, 10.96% on TREMX, 2.87% on PMF, and 2.7% on RPIBX. All of those are held in my taxable brokerage account. As for the 401(k), it is a bit difficult to calculate the change in individual positions. Its down 4.9% on the year, but I doubt much of that is due to the foreign equities even though they make up 47.1% of my 401(k).
Long ago, I wrote down the value of my car to $5000, and added $50 for the value of my old laptop. I may need to drop that back to $0 again though, in the pursuit of intellectual honesty. I'll check eBay first. My CC debt has been on the rise, although as I said, there will be immediate moves to reverse that. The CC debt is in the neighborhood of $15,000 currently. My brokerage account, as noted, has performed rather well. Once I start re-balancing into the positions in my re-designed portfolio, I plan to sell off large chunks of the existing holdings. I'll end up paying short term capital gains taxes, but I'll gain simplicity. As well, those gains will be heavily offset by previous investment losses and the continuing losses on the real estate partnership.
Anyway, that's everything I can think to mention, at least regarding the net worth situation. If anyone has questions or concerns, or anything was unclear, feel free to post in the comments.
Until next time, all...cheers!
First, I've been re-working my asset allocation to be in line with Teresa Lo's satellite portfolio from her series on building your own investment portfolio. I'll have more to say on that shortly, along with my response to her comment, I promise!
Since I should officially achieve my goal of $20,000 in emergency savings by the middle of June, I will be adjusting my Direct Deposit into that account to a slower rate of accumulation. I have explained why I spent so much effort building up that account in a previous post, so I won't rehash it here. However, with this change, I will refocus my efforts on paying down the credit card debt which has been dogging me since last year. It feels great to finally attack this issue, but I absolutely wanted to make sure I was positioned in case of an emergency. I've dipped into my emergency funds for non-emergency situations a bit too often in the last year.
Since I decreased my withholding a few weeks ago as well, this latest change means that I can ratchet up my 401(k) contributions again. That holds benefits on 2 fronts. First, I'll reduce my adjusted gross income (AGI) which will reduce my overall taxable income while allowing me to take home more money with every paycheck. Second, I'll still be able to maintain some accruals to my emergency account, just at a slower pace, so that I can focus on the debt re-payment. I also get the benefit of freeing up some capital to direct into my self-directed Roth IRA. I'm going to have to give some thought as to what I'll do with that account. I had considered doing tax lien and tax sale investments, but we'll see. I'm not sure at this point.
(As an aside, I just received an e-mail reminder to increase my 401(k) contribution amount to 15% in 2 days. For this, I love technology!)
The one blemish on this record was alluded to in my most recent post, that being the need to buy my way out of the horribly flawed real estate partnership to which I belong. If I do have to put up money to get out of this albatross of an investment, I am prepared to put up as much as $10,000. On further thought, I may be able to put up even more IF it guarantees certain outcomes, such as refinancing the loan which is in my name. That house actually has a tenant in it now (its the only occupied house in the portfolio) so there should be coverage on the note. If I can force a refinance of the mortgage into the LLC's name, thus clearing me, I could put more funds into the LLC. As long as I can get out of this situation once and for all, I'll be happy. You will continue to hear more about this in the coming weeks. I set a deadline to be out of this position by the end of June.
I expect to take a potentially significant hit to my net worth due to the real estate partnership unwind, but my psyche will thank me for it. Doing so will also help me accomplish one more of my 2008 goals. Honestly, the best part is that I probably CAN pull that off and not be too terribly hurt by doing so. I have to be grateful for having the resources to do that, should the situation actually come to that. Thank God for a good job with good income from a solid, large company!
(Wow, did I really say that? I guess I did.)
Anyway, that's the story. Not exactly pretty, but it could be a lot worse. So now for the numbers...
My current net worth works out to $75,271.80. That includes a writedown to $0 of the real estate investment and the $35,000 in student loans I co-signed for. Actually, my investments, both in my taxable account and my 401(k), have done fairly well this year. I have unrealized gains of 29.48% on PRMSX, 10.96% on TREMX, 2.87% on PMF, and 2.7% on RPIBX. All of those are held in my taxable brokerage account. As for the 401(k), it is a bit difficult to calculate the change in individual positions. Its down 4.9% on the year, but I doubt much of that is due to the foreign equities even though they make up 47.1% of my 401(k).
Long ago, I wrote down the value of my car to $5000, and added $50 for the value of my old laptop. I may need to drop that back to $0 again though, in the pursuit of intellectual honesty. I'll check eBay first. My CC debt has been on the rise, although as I said, there will be immediate moves to reverse that. The CC debt is in the neighborhood of $15,000 currently. My brokerage account, as noted, has performed rather well. Once I start re-balancing into the positions in my re-designed portfolio, I plan to sell off large chunks of the existing holdings. I'll end up paying short term capital gains taxes, but I'll gain simplicity. As well, those gains will be heavily offset by previous investment losses and the continuing losses on the real estate partnership.
Anyway, that's everything I can think to mention, at least regarding the net worth situation. If anyone has questions or concerns, or anything was unclear, feel free to post in the comments.
Until next time, all...cheers!
Subscribe to:
Posts (Atom)