San Diego just blocked Walmart's plans for a new Super Store arguing that that Wal-Mart puts smaller competitors out of business, pays workers poorly, and contributes to traffic congestion and pollution.
Of course the council failed to state that social engineering isn't their job and that the people who currently work at Walmart seem very happy with their jobs and have never protested their pay or anything else. Nor the fact that Walmart's lower prices put competitors out of business but help low-income families buy more stuff and actually increase their standard of living. Of course no one wants low income families shopping in their neighborhoods so the easiest solution is to ban the superstore itself.
Another bad idea is the forced raise of the minimum wage. Mom and pop stores who are trying to stay afloat in California due the increase in real estate prices [& therefore taxes on triple-net leases when the properties are sold], increase in electricity & heating costs and the slow down in the housing market are hurt the most. [50% of new jobs created in the state since 2000 were real estate related. As the house market slides, the jobs will disappear as will the income of the people still in the business]. As a result they will be less likely to hire new employees or maybe even cut down on the hours of existing employees. At the same time, prices will have to be increased to make up for the increase in the wages. So the poor employees will see no real benefit in the wage hike while feeling the brunt of the increase in prices.
But atleast we're still better than France, where the employer can't fire anyone even if the business files for bankrupcy!!!!
Rocks For Breakfast?
I spend a several hours every week reading different newsletters on a variety of investment, business and marketing topics. Here's an interesting piece on the value of branding.
How many of you subconciously buy stuff solely based on the branding? Clothes, food products, electronics and maybe even investments are made on our perceived value of the item and not on its actual merits or even our needs.
Why is my wife willing to spend more for jackets just because they have a tag on the inside which says its from some high-end clothing store? Or for sweatpants which have sparkly BCGC studs across the rear?
If what people feel and remember about your business is positive and translates into more loyalty and sales, you've just made your business more valuable. Here is an example which opened my eyes even wider to the importance of branding.
On a news television show I watched recently, a test was performed on children and their breakfast choices. The first test involved placing a banana and a cupcake in front of the child and asking which they preferred to eat. In the test, they placed stickers of popular cartoon characters such as "Shrek" and "Spongebob" on the banana and left the cupcake plain. Almost all the kids chose the banana for what they would prefer to eat for breakfast.
In a second test, they placed a rock (yes, I said rock) with stickers on it and a plain banana in front of the child. Almost all of the children said they would prefer to eat the rock for breakfast!
How many of you subconciously buy stuff solely based on the branding? Clothes, food products, electronics and maybe even investments are made on our perceived value of the item and not on its actual merits or even our needs.
Why is my wife willing to spend more for jackets just because they have a tag on the inside which says its from some high-end clothing store? Or for sweatpants which have sparkly BCGC studs across the rear?
Utah Home Prices Doing Well
I started buying real estate in Salt Lake City in the fall of 2004. So far I've done pretty well on those investments. Here's a link for the appreciation in the last quarter.
http://extras.sltrib.com/homeprices/Index.asp?County=Salt%20Lake
Historically, SLC has done well when CA did poorly and poorly when CA did well. Looks like a similar situation is playing out this time, although this time the housing slump might be different from previous slumps.
http://extras.sltrib.com/homeprices/Index.asp?County=Salt%20Lake
Historically, SLC has done well when CA did poorly and poorly when CA did well. Looks like a similar situation is playing out this time, although this time the housing slump might be different from previous slumps.
Investment Pimps
Had a meeting today with a group who finds investments. Pretty interesting. Not in a way where you feel you found a good deal, but interesting in the way that you learn something about someone that amazes you.
They basically had some very sketchy deals in several parts of the country and in various different price ranges.[ranging from $75,000 to $28 million]. The deals were
either pre-construction or commercial/land deals. They didn't really have any numbers on any of the deals[except pricing]. They just wanted $25,000 to $3 million assignment fees on most of them.
What amazed me was that though they didn't really understand market cycles or how investing worked, they definitely thought that they were doing the investors a great favor and were demanding pretty steep assignment fees upfront. Most of the deals were marginal at best and some were just terrible. And they were offering me an equivalent amount in "commissions at closing" to pimp them to my investor group.
While there are many agents, who specialize in investments and dealing with investors and provide excellent services, you also need to be wary of investment pimps who will say anything to push a product so long as they get paid they're upfront finders fee, or assignment fee. Dont' get taken in by their "research".
Always do your own Due Diligence!
They basically had some very sketchy deals in several parts of the country and in various different price ranges.[ranging from $75,000 to $28 million]. The deals were
either pre-construction or commercial/land deals. They didn't really have any numbers on any of the deals[except pricing]. They just wanted $25,000 to $3 million assignment fees on most of them.
What amazed me was that though they didn't really understand market cycles or how investing worked, they definitely thought that they were doing the investors a great favor and were demanding pretty steep assignment fees upfront. Most of the deals were marginal at best and some were just terrible. And they were offering me an equivalent amount in "commissions at closing" to pimp them to my investor group.
While there are many agents, who specialize in investments and dealing with investors and provide excellent services, you also need to be wary of investment pimps who will say anything to push a product so long as they get paid they're upfront finders fee, or assignment fee. Dont' get taken in by their "research".
Always do your own Due Diligence!
Changed 401k Investment Elections
Today I changed the funds selection in my previous employer's 401k. I was investing about 30% in Global funds, 15% in financial funds, 30% in world wide health, 10% tech, and the remaining 15% in small, mid and large cap funds. I moved the 15% in financial over to global funds.
In my current job, where I've boosted the 401k through a high contribution[currently 30% of income which I'll change from the 1st of Jan] I changed it to 60% global and international funds, 10% value income funds and the rest a mix of small, mid & large-cap funds.
Its not that I don't have much faith in the US economy[which I don't], but rather that I feel even if foreign stocks will do slightly better. I do feel that the US dollar will drop another 20-30% over the next few years which will boost the returns on global funds.
If I had to choose US companies, I'd stick to multi-nationals like Unilever, P&G and Walmart which have a large amount of foreign income and pay out dividends. Can't see myself investing in stocks that don't pay out dividends. I tried that once in 2000 and lost my shirt!
In my current job, where I've boosted the 401k through a high contribution[currently 30% of income which I'll change from the 1st of Jan] I changed it to 60% global and international funds, 10% value income funds and the rest a mix of small, mid & large-cap funds.
Its not that I don't have much faith in the US economy[which I don't], but rather that I feel even if foreign stocks will do slightly better. I do feel that the US dollar will drop another 20-30% over the next few years which will boost the returns on global funds.
If I had to choose US companies, I'd stick to multi-nationals like Unilever, P&G and Walmart which have a large amount of foreign income and pay out dividends. Can't see myself investing in stocks that don't pay out dividends. I tried that once in 2000 and lost my shirt!
Oh, To Be Young & Debt-Free [Well One Out Of Two Isn't Bad]
USA Today has a good story about a young 29 year old with $165,000 of student loans.
She got a degree in Chiropractic health and makes $44,000 a year. Not surprizingly she can't afford to eat out or feel she's making any headway reducing her debt. She also isn't saving for retirement nor does she have health insurance. She does however feel saving for her future kids education is important.
Hmmm....don't you think you'd try and see if getting $165,000 in debt was worth it if you could only get a $44,000 job? Assuming a she pays 5% interest on her student loans and ignoring her other credit card debt and car loans, she'd pay about $687/mo interest on her student loan. Her monthly pre-tax income is $3700 so she pays a whopping 18.5% of her income towards the interest on her student loan!
Why would someone pay more than 1 times the potential annual salary is amazing. I have a friend who's going to Harvard Business School. Luckily she has a business and the contacts she's made in her first semester should more than pay for the education. But even if that hadn't been the case, spending $150,000 atleast makes financial sense since many HBS grads make that in the first year.
Kind of like the kids who go to Ivy league schools to get philosophy and liberal arts degrees and then wind up with $120,000 student loans and $26,000 jobs!!! Its ok if your daddy is rich and can afford to send you there. But if you're going to be paying off the loan yourself, you better make sure it doesn't take you 30 years.
She got a degree in Chiropractic health and makes $44,000 a year. Not surprizingly she can't afford to eat out or feel she's making any headway reducing her debt. She also isn't saving for retirement nor does she have health insurance. She does however feel saving for her future kids education is important.
Hmmm....don't you think you'd try and see if getting $165,000 in debt was worth it if you could only get a $44,000 job? Assuming a she pays 5% interest on her student loans and ignoring her other credit card debt and car loans, she'd pay about $687/mo interest on her student loan. Her monthly pre-tax income is $3700 so she pays a whopping 18.5% of her income towards the interest on her student loan!
Why would someone pay more than 1 times the potential annual salary is amazing. I have a friend who's going to Harvard Business School. Luckily she has a business and the contacts she's made in her first semester should more than pay for the education. But even if that hadn't been the case, spending $150,000 atleast makes financial sense since many HBS grads make that in the first year.
Kind of like the kids who go to Ivy league schools to get philosophy and liberal arts degrees and then wind up with $120,000 student loans and $26,000 jobs!!! Its ok if your daddy is rich and can afford to send you there. But if you're going to be paying off the loan yourself, you better make sure it doesn't take you 30 years.
Gartman's Rules of Trading
Every year Dennis Gartman publishes his "Rules of Trading." Here they are.
DENNIS GARTMAN'S NOT-SO-SIMPLE RULES OF TRADING
1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!
2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.
3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.
4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.
6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.
7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.
8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.
9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!
11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"
12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.
13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.
14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.
15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.
16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
DENNIS GARTMAN'S NOT-SO-SIMPLE RULES OF TRADING
1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!
2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.
3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.
4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.
6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.
7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.
8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.
9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!
11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"
12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.
13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.
14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.
15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.
16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
$5 Dollars Off Magazine Subscriptions
Amazon.com is currently offering $5 off future purchases on most Magazine Subscriptions
.
Save money on your subscriptions and they make great christmas gifts too!
. Save money on your subscriptions and they make great christmas gifts too!
Bad Day For The Dollar - Great For Retailers!
Today was black friday and atleast in San Diego it seemed like everyone was out shopping like its going out of style. The local best buy had great deals on TVs. I buddy picked up 2! One 32" LCD HDTV for $475[$400 discount] & another Plasma 47" HDTV for $1000[$700 discount]. Of course they only had about a dozen of these that sold out immediately but luckily we had friends camping out at various stores so with a few well placed phone calls we were able to get in on the action! He tried to pursuade me to get one too, but I'm really happy with my 19" regular TV! However I did buy a very nice laptop from Costco for under a $1000. The good thing about Costco is that if you aren't satisfied you can return your purchase at any time. Apparently people have been abusing the system so for laptops the cutoff is 6 months.
Anyway, today was a particularly bad day for the dollar. It was down against most major currencies including the Euro, Yen, Swiss Franc, Aussie & NZ Dollar and Indian Rupee. Just in time to make my vacation to south east asia just a tad more expensive!
Like I've been harping on before, I think the easiest way to get out of the multi-trillion dollar debt is for the Feds to inflate the value out of the dollar. This will provide the necessary "soft" landing for real estate. And by soft I mean a 20-40% price drop on the coasts, as opposed to a 50-60% drop. I belive its a trend that will continue for the next year or so. This will likely result in commodity inflation while the economy experiences deflation in terms of manufactured products, squeezing margins, profitability and wages. Not a good sign. [of course, this is just my opinion and could be wrong]
Gold was also uptoday to $637 and Silver is up to nearly $13.50. Finally my gold & silver coins are coming back up in value. I bought a lot of old goin coins & a few new ones for almost the bullion price. I think my average price is around $668/oz. Not bad considering a few of them are roughly 100 years ago and 2 of them are in the 200 year range! My belief is that once gold starts its upward trend again, coins will again become collectibles and will outpace the intrinsic value of the metal content.
Anyway, today was a particularly bad day for the dollar. It was down against most major currencies including the Euro, Yen, Swiss Franc, Aussie & NZ Dollar and Indian Rupee. Just in time to make my vacation to south east asia just a tad more expensive!
Like I've been harping on before, I think the easiest way to get out of the multi-trillion dollar debt is for the Feds to inflate the value out of the dollar. This will provide the necessary "soft" landing for real estate. And by soft I mean a 20-40% price drop on the coasts, as opposed to a 50-60% drop. I belive its a trend that will continue for the next year or so. This will likely result in commodity inflation while the economy experiences deflation in terms of manufactured products, squeezing margins, profitability and wages. Not a good sign. [of course, this is just my opinion and could be wrong]
Gold was also uptoday to $637 and Silver is up to nearly $13.50. Finally my gold & silver coins are coming back up in value. I bought a lot of old goin coins & a few new ones for almost the bullion price. I think my average price is around $668/oz. Not bad considering a few of them are roughly 100 years ago and 2 of them are in the 200 year range! My belief is that once gold starts its upward trend again, coins will again become collectibles and will outpace the intrinsic value of the metal content.
Canadian Royalties Revisited
A few weeks ago, I cursed the Canadian Finance Minister for causing my CanRoys to drop significantly overnight. I may have been premature in cursing him.
I originally bought them for the dividends that they were paying out, mostly in the 8-12% range, with the occasional one paying out 13-14%. However, the severe drop in prices caused their yields to jump proportionately to 12-17%. One of the companies I bought became a 19% yield! Even if Flaherty's taxation of dividends became true, it would still be 4 years away and by then you would've gotten nearly 80% of your money back. Last week money started flowing back in Canroys. I picked up a little more on margin. The one I picked up, AAV currently gives a 17% yield. So even if I have to pay 9-10% margin interest I'm still ahead by 7%. Plus if Oil & Gas prices continue to rise which I think they will I'll see some capital appreciation.
There are a few Master Lease Partnerships in the US that are like Mutual Funds of Energy Stocks. They only pay 6% dividends however the divis are considered return of principle and thus are not taxed!!! Pretty sweet deal if you ask me.
I originally bought them for the dividends that they were paying out, mostly in the 8-12% range, with the occasional one paying out 13-14%. However, the severe drop in prices caused their yields to jump proportionately to 12-17%. One of the companies I bought became a 19% yield! Even if Flaherty's taxation of dividends became true, it would still be 4 years away and by then you would've gotten nearly 80% of your money back. Last week money started flowing back in Canroys. I picked up a little more on margin. The one I picked up, AAV currently gives a 17% yield. So even if I have to pay 9-10% margin interest I'm still ahead by 7%. Plus if Oil & Gas prices continue to rise which I think they will I'll see some capital appreciation.
There are a few Master Lease Partnerships in the US that are like Mutual Funds of Energy Stocks. They only pay 6% dividends however the divis are considered return of principle and thus are not taxed!!! Pretty sweet deal if you ask me.
Commodity Play: Billion Dollar Companies Swallowing Each Other
I own a few shares in a company called Freeport-McMoRan Copper & Gold Inc. (FCX). Monday they announced a bid to buy copper producer Phelps Dodge Corp. (PD) for $25.9 Billion. [yeah thats Billion]. Interestingly enough, as part of the bid FCX will pay $500 million if it backs out while PD will pay $750 million if it bails.
As if that wasn't exciting enough, yesterday an analyst floated a rumor that BHP Billiton Ltd. (BHP) would shortly announce a bid for FCX!!! Apparently the market liked that idea because prices for FCX and BHP did well. I also own shares of BHP. BHP is involved with oil, gas, copper, silver, zinc, lead, uranium, and copper by-products, including gold, aluminum, coking coal, iron ore, manganese, diamonds and fertilizers.
If you're wondering why I own stock in BHP & FCX its because I think we're going to see high inflation in commodity prices and a devaluation of the dollar. [search this blog for "inflation"]. Also read this post on "Hot Commodities".
Here's a good post on what the PD acquisition means at The Strategic Investor.
On another note, my dozen shares of PetroChina (PTR) have been doing pretty well. They're up 10% in the month that I've owned them.
As if that wasn't exciting enough, yesterday an analyst floated a rumor that BHP Billiton Ltd. (BHP) would shortly announce a bid for FCX!!! Apparently the market liked that idea because prices for FCX and BHP did well. I also own shares of BHP. BHP is involved with oil, gas, copper, silver, zinc, lead, uranium, and copper by-products, including gold, aluminum, coking coal, iron ore, manganese, diamonds and fertilizers.
If you're wondering why I own stock in BHP & FCX its because I think we're going to see high inflation in commodity prices and a devaluation of the dollar. [search this blog for "inflation"]. Also read this post on "Hot Commodities".
Here's a good post on what the PD acquisition means at The Strategic Investor.
On another note, my dozen shares of PetroChina (PTR) have been doing pretty well. They're up 10% in the month that I've owned them.
Beware When Shopping For Camera's Online
I recently lost my beloved Canon Powershot SD300 camera. I decided it was time for an upgrade so I started researching the different options available. As obsessive as I am about doing the research I went far beyond what I originally intended to do and ended up trying to figure out the top of the line camera in the non-professional consumer space.
I found out that the Nikon D80 10.2MP Digital SLR Camera Kit with 18-135mm AF-S DX Zoom-Nikkor Lens which retails for about $1300 and its close competitor the Canon XTi 10.1 Megapixel Slr Camera with 2.5" LCD With Ef-s 17-85MM Zoom Lens which retails for around $1220 were the best picks for under $1500.
I would have to chose the Nikon D80 over the Canon XTi because of 3 reasons:
1. The Canon doesn't fit well in my hands. If my hands were slightly smaller like my wife's it would've fit well, but it just feels like its going to slip out.
2. The battery life on the Canon is about half as long as the Nikon. Plus the battery life indicator shows full, half and quarter as opposed to the somewhat more accurate meter on the Nikon.
3. No spot metering. [I'd probably never use it anyway]
Anyway, after doing all this research I got excited and decided I'd buy one. I found a few sites that offered phenomenal deals on both cameras. It seemed like I could get either kit for roughly $800 at sites like ExpressCameras.com. It sounded too good to be true. I did some research and I found its a scam. According to several review sites, customers were charged extra for batteries, straps, lens covers,etc which normally come standard. Not only that but there was heavy pressure to upsell onto much more expensive equipment. Also, quite a few people got wrong kits and had to dispute it through their credit card companies. That didn't really sound like something I'd enjoy going through to save a few bucks.
Anyway it put me off buying the damn camera so instead I just bought the Canon Powershot SD450 Camera. I figured that it made more sense since I had an extra battery and charger already! Plus I saved on a $1,000!
camera. I decided it was time for an upgrade so I started researching the different options available. As obsessive as I am about doing the research I went far beyond what I originally intended to do and ended up trying to figure out the top of the line camera in the non-professional consumer space.I found out that the Nikon D80 10.2MP Digital SLR Camera Kit with 18-135mm AF-S DX Zoom-Nikkor Lens
which retails for about $1300 and its close competitor the Canon XTi 10.1 Megapixel Slr Camera with 2.5" LCD With Ef-s 17-85MM Zoom Lens which retails for around $1220 were the best picks for under $1500.I would have to chose the Nikon D80 over the Canon XTi because of 3 reasons:
1. The Canon doesn't fit well in my hands. If my hands were slightly smaller like my wife's it would've fit well, but it just feels like its going to slip out.
2. The battery life on the Canon is about half as long as the Nikon. Plus the battery life indicator shows full, half and quarter as opposed to the somewhat more accurate meter on the Nikon.
3. No spot metering. [I'd probably never use it anyway]
Anyway, after doing all this research I got excited and decided I'd buy one. I found a few sites that offered phenomenal deals on both cameras. It seemed like I could get either kit for roughly $800 at sites like ExpressCameras.com. It sounded too good to be true. I did some research and I found its a scam. According to several review sites, customers were charged extra for batteries, straps, lens covers,etc which normally come standard. Not only that but there was heavy pressure to upsell onto much more expensive equipment. Also, quite a few people got wrong kits and had to dispute it through their credit card companies. That didn't really sound like something I'd enjoy going through to save a few bucks.
Anyway it put me off buying the damn camera so instead I just bought the Canon Powershot SD450 Camera
. I figured that it made more sense since I had an extra battery and charger already! Plus I saved on a $1,000!
Book Review: Hot Commodities by Jim Rogers
I just finished reading Hot Commodities by Jim Rogers. Its a very easy to read book and the author does a great job explaining why everyone should invest in commodities. A lot people mistakenly believe that commodities are very risky and that investors usually lose their shirts.
Jim Rogers shows this isn't the case and that commodities and stocks just follow different cycles. Infact in many cases, commodities have similar returns to the S&P500 but with lower risk. He explains what causes commodity prices to rise & fall, how a few different commodities have behaved in the past and how they are likely to behave in the future. If you don't have any commodities or commodity related stock in your portfolio I strongly recommend you pick up the book.
This book is not a primer on how to go about investing in commodities. Thats the topic of another book. I also recommend The Oil Factor as a related book which also has good investment ideas. [Incidentally, Jack Schwager's Complete Guide to Mastering the Markets also comes highly recommended but at $799.00 its a bit pricey!]
If you get both books, don't forget to take advantage of the Get $20 off $50 when you use Google Checkout! promotion.
Jim Rogers shows this isn't the case and that commodities and stocks just follow different cycles. Infact in many cases, commodities have similar returns to the S&P500 but with lower risk. He explains what causes commodity prices to rise & fall, how a few different commodities have behaved in the past and how they are likely to behave in the future. If you don't have any commodities or commodity related stock in your portfolio I strongly recommend you pick up the book.
This book is not a primer on how to go about investing in commodities. Thats the topic of another book. I also recommend The Oil Factor as a related book which also has good investment ideas. [Incidentally, Jack Schwager's Complete Guide to Mastering the Markets
also comes highly recommended but at $799.00 its a bit pricey!]If you get both books, don't forget to take advantage of the Get $20 off $50 when you use Google Checkout! promotion.
Coupons For Buy.com
Google has a promotion right now. They're offering $10 off a $30 purchase or $20 off a $50 purchase at Buy.com if you use Google Checkout.
The Google Checkout is a very simple process. Its similar to Paypal in that it stores your credit card info, however its a much simpler process and takes only 2-3 minutes.
I used it today to pick up two books:
Mastering The Trade by John Carter &
Winning the Day Trading Game by Thomas Busby
The total price for both was about $72 and I got $20 off which represents a 27% discount!
The Google Checkout is a very simple process. Its similar to Paypal in that it stores your credit card info, however its a much simpler process and takes only 2-3 minutes.
I used it today to pick up two books:
Mastering The Trade by John Carter &
Winning the Day Trading Game by Thomas Busby
The total price for both was about $72 and I got $20 off which represents a 27% discount!
Where To Invest Your Can't Lose Money?
Here's an interesting excerpt from an MSN money article this month.
Here's the entire article.
One fund that didn't notice was Permanent Portfolio (PRPFX).
Welcome to a home for your serious money -- the money you can't afford to lose. Launched in 1982 as an antidote to that most dreaded of economic conditions, stagflation, Permanent Portfolio has lost money in only three years, mostly recently 1994.
It sailed through the post-2000 tech-crash turmoil like it didn't happen, racking up double-digit gains in three of the past five years. This year, as of Nov. 1, it's ahead 11.4%.
If you could afford a numbered account in a Swiss bank -- and because of six- or seven-digit minimums, you probably couldn't -- this is how your money would be managed. The approach is absolutely immune to fashion.
"We're 20% gold, 5% in silver, 10% in Swiss-denominated assets, like government bonds, 15% in U.S. and foreign real estate and natural resources, 15% in U.S. growth stocks and 35% in U.S. Treasurys and high-growth corporate bonds," says manager Michael Cuggino.
His turnover ratio last year was 1%, implying an average holding period for his securities of 100 years. The name "permanent" was not lightly chosen.
Here's the entire article.
Private Equity Funds on the Rise
Doesn't it seem that there's been a resurgence of Private Equity buyouts of familiar public companies???
Readers Digest just agreed to be acquired for $1.6 Billion. 2005 was infact a banner year for corporate buyouts with targets like Hertz, Toys R Us, Neiman Marcus, La Quinta and Dunkin' Brands, the owner of Dunkin' Donuts. The targets keep getting bigger as more pension funds, institutions and wealthy individuals hand money to private-equity firms. I think even grocery chain Albertson's was bought by a team of investors for about $9.5 billion.
Some of the bigger Private Equity Funds are well known names like KKR, Apax, Blackstone and Carlyle Group. Here's what Wikipedia has to say about KKR
While it sounds surprizingly neutral, KKR's LBO's were usually bad for individual shareholders. Read Barbarians At The Gate for an interesting account of how KKR successfully staged a hostile takeover of RJR Nabisco.
There are usually two exit strategies for a corporate buyout. Sell it to a big corporate buyer or floating it on a public stockmarket through an initial public offering (IPO). Earlier this year Burger King went public after having its costs reduced and being laden with debt! After dropping nearly 30% the stock is now nearly at IPO price!
Seems to be a pretty profitable business. However before you rush out and stick your money in them, while top few private-equity funds have actually beaten the stock market in the past few years, most of them did far worse after you factor in their fees. The total global market size of these funds was about $180 billion in 2004 so there are quite a lot to choose from.
And the Financial Services Authority[which is kind of like the SEC for the UK] even declared that the collapse of such leveraged-buyout firms was inevitable. Although to be fair, they don't just do leveraged-buyouts. They also provide venture capital, mezannine financing and growth capital.
Anyway, back to my original point. Doesn't it seem like we've been hearing a lot about private equity funds buying various companies and taking them private? Do you think the Sarbanes-Oxley act had something to do with it or is it just one of those cyclical things?
Readers Digest just agreed to be acquired for $1.6 Billion. 2005 was infact a banner year for corporate buyouts with targets like Hertz, Toys R Us, Neiman Marcus, La Quinta and Dunkin' Brands, the owner of Dunkin' Donuts. The targets keep getting bigger as more pension funds, institutions and wealthy individuals hand money to private-equity firms. I think even grocery chain Albertson's was bought by a team of investors for about $9.5 billion.
Some of the bigger Private Equity Funds are well known names like KKR, Apax, Blackstone and Carlyle Group. Here's what Wikipedia has to say about KKR
KKR helped develop and popularize the acquisition concept known as the leveraged buyout (LBO) by creating a series of limited partnerships to acquire various corporations, which they deemed to be underperforming. In most cases, KKR (often with management) financed up to twenty five percent of the acquisition price with its own capital and borrowed the remainder through bank loans and by issuing high-yield bonds, while having a more favorable approach towards the latter. KKR would often ensure that the target company's management retained an equity interest to create a personal financial incentive for them to approve of the takeover and work diligently towards the success of the investment.
The bank loans and bonds used to finance the acquisition were collateralized by the tangible and intangible assets of the target company. Because the bondholders only received their interest and principal payments after the banks were repaid, these bonds were deemed riskier than investment grade bonds in the event of default or bankruptcy, and popularly became known as "junk bonds."
Investment banks such as Drexel Burnham Lambert, led by Michael Milken, helped raise money for leveraged buyouts. Once the targeted company was acquired, KKR would help restructure the company, usually selling off certain underperforming assets and implementing a series of cost-cutting measures. The new, "leaner and more efficient" company could then be resold, often at significant return on investment.
While it sounds surprizingly neutral, KKR's LBO's were usually bad for individual shareholders. Read Barbarians At The Gate
for an interesting account of how KKR successfully staged a hostile takeover of RJR Nabisco.There are usually two exit strategies for a corporate buyout. Sell it to a big corporate buyer or floating it on a public stockmarket through an initial public offering (IPO). Earlier this year Burger King went public after having its costs reduced and being laden with debt! After dropping nearly 30% the stock is now nearly at IPO price!
Seems to be a pretty profitable business. However before you rush out and stick your money in them, while top few private-equity funds have actually beaten the stock market in the past few years, most of them did far worse after you factor in their fees. The total global market size of these funds was about $180 billion in 2004 so there are quite a lot to choose from.
And the Financial Services Authority[which is kind of like the SEC for the UK] even declared that the collapse of such leveraged-buyout firms was inevitable. Although to be fair, they don't just do leveraged-buyouts. They also provide venture capital, mezannine financing and growth capital.
Anyway, back to my original point. Doesn't it seem like we've been hearing a lot about private equity funds buying various companies and taking them private? Do you think the Sarbanes-Oxley act had something to do with it or is it just one of those cyclical things?
Closed Part Of My WCI Postion
Since WCI was up sharply, I closed out the January $20 Puts. There's only 2 months left and like someone famously said, "Markets can remain irrational longer than you can remain solvent". Better to take a small loss now than a bigger loss later on.
I still think the underlying fundamentals are bad so I'll keep my other Puts and bear Calls in place. I think I should've entered into Spreads instead of just selling out of the money naked Calls. That would've reduced the premium I collected but it would've limited my losses. Of course, I could still implement that strategy, but its going to be a bit more expensive since my out of the money Calls are now in the money.
I expect the stock to wind down a bit going into the long weekend. I might close out some of the March positions at that time.
On the bright side, the in the money naked Puts I sold for a Junior Mining stock will be expiring worthless today!
I still think the underlying fundamentals are bad so I'll keep my other Puts and bear Calls in place. I think I should've entered into Spreads instead of just selling out of the money naked Calls. That would've reduced the premium I collected but it would've limited my losses. Of course, I could still implement that strategy, but its going to be a bit more expensive since my out of the money Calls are now in the money.
I expect the stock to wind down a bit going into the long weekend. I might close out some of the March positions at that time.
On the bright side, the in the money naked Puts I sold for a Junior Mining stock will be expiring worthless today!
WCI Up Sharply!
OUCH! Yesterday WCI was up over 10% on twice the normal volume. About 5 million shares traded hands at about $17.5 which makes it nearly $100 million dollars worth. I was wondering who was buying up so much of this crap, and then I find out today thats its Bill Gates. His charity indiscriminately bought several builders stocks. This is a great time for the insiders to bail on the stock!
I was wondering whether to bail on the stock[close my short option positions] and eat my some small losses or to ride it out and incur either smaller losses or maybe much larger ones. However looking at the MACD it seems that just over $18 was the short term peak and its due for a pullback, which might offer a better place to exit. I could get more puts at this juncture but I'd rather just bail.
No point letting my ego get in the way.
If anyone can provide a better technical analysis on WCI, I'd love to hear it!
I was wondering whether to bail on the stock[close my short option positions] and eat my some small losses or to ride it out and incur either smaller losses or maybe much larger ones. However looking at the MACD it seems that just over $18 was the short term peak and its due for a pullback, which might offer a better place to exit. I could get more puts at this juncture but I'd rather just bail.
No point letting my ego get in the way.
If anyone can provide a better technical analysis on WCI, I'd love to hear it!
Got My First Oil Check
I got my first oil revenue check today! It was for a whopping $35.12!!!! At this rate it'll take 30 years to get my money back! Its for a project where they're drilling 10 wells in the Gulf of Mexico.
To be fair the operators had told me not to expect anything until December 2007, so atleast they're doing something.
I also got an email from them saying that as a christmas present they'll be sending me a copy of The Millionaire Maker. Its a good book but I don't recommend the mentoring course.
We finally resolved the insurance issue on our Natural Gas pipeline deal in Texas. Now thats resolved we can finally turn it on and start making some money! Of course it'll probably be about 4 months before we see any money, but the insurance issue cost us atleast 3 months worth of delays.
To be fair the operators had told me not to expect anything until December 2007, so atleast they're doing something.
I also got an email from them saying that as a christmas present they'll be sending me a copy of The Millionaire Maker. Its a good book but I don't recommend the mentoring course.
We finally resolved the insurance issue on our Natural Gas pipeline deal in Texas. Now thats resolved we can finally turn it on and start making some money! Of course it'll probably be about 4 months before we see any money, but the insurance issue cost us atleast 3 months worth of delays.
Selling Covered Call Options
Previously, I had talked about selling naked puts on a small mining stock. With one week to go the options are now worth only 5cents a share or about $25. I had sold them and pocketed $175. So it looks like they'll expire worthless and I'll get to keep my $175.
Its not a lot of money, but I'm still learning so it never hurts to make money while you learn!
I purchased a stock today. Its a low priced stock but I think it has the potential to do well in the long run. However I'm not sure it'll do well in the short term. I bought it at $2.70 and sold a December $2.5 call for 40 cents. If the stock is over $2.50 in about 5 weeks, the stock will get "called" and I'll have to part with it. In return I'll get $2.50 per share plus I get to keep the 40 cents I got upfront. That equates to a 5.8% (after commissions) return in about 5 weeks. Annualized thats a 60% return!
But probably what will happen is the stock will trend down to about $2.50 where there is a lot of support(meaning its bounced off this price before) and the option will probably expire worthless. Meaning, if I'm lucky I'll get to keep the stock and also the 40 cent premium.
Of course, if I'm unlucky the stock will tank and I'll lose money. However, I don't lose money unless the stock trades below $2.30 cents, which is a 14.8% below what I bought it at and below its support line. But there's no risk-free reward in real life.
Its not a lot of money, but I'm still learning so it never hurts to make money while you learn!
I purchased a stock today. Its a low priced stock but I think it has the potential to do well in the long run. However I'm not sure it'll do well in the short term. I bought it at $2.70 and sold a December $2.5 call for 40 cents. If the stock is over $2.50 in about 5 weeks, the stock will get "called" and I'll have to part with it. In return I'll get $2.50 per share plus I get to keep the 40 cents I got upfront. That equates to a 5.8% (after commissions) return in about 5 weeks. Annualized thats a 60% return!
But probably what will happen is the stock will trend down to about $2.50 where there is a lot of support(meaning its bounced off this price before) and the option will probably expire worthless. Meaning, if I'm lucky I'll get to keep the stock and also the 40 cent premium.
Of course, if I'm unlucky the stock will tank and I'll lose money. However, I don't lose money unless the stock trades below $2.30 cents, which is a 14.8% below what I bought it at and below its support line. But there's no risk-free reward in real life.
Timeshare Buyer or Victim?
I spoke to one of my friends after a while. I found out that he had just purchased one of those Hilton timeshares I had mentioned in an earlier post.
He was taken in by the high pressure tactics and the temptation of exotic vacations! He's now suffering from buyers remorse.
Like they say, "Invest in haste, repent at leisure!".
Well if any of you are interested in spending $20,000 on a hotel room, let me know. I'm thinking of putting together my own timeshare.
We buy a small house in Nicaragua for around $120,000. Its atop a mountain next to a nature preserve with lovely ocean views. It has running water and solar power. Its no Hilton with conceirge, but instead of 52 partners, you might only have 12. Plus you get to deduct the cost of your surfing vacations, because you've bought an investment property! It should rent out sporadically to cover the cost of maintenance. If Nicaragua does a quarter as well as Costa Rica, it should atleast double in value!
He was taken in by the high pressure tactics and the temptation of exotic vacations! He's now suffering from buyers remorse.
Like they say, "Invest in haste, repent at leisure!".
Well if any of you are interested in spending $20,000 on a hotel room, let me know. I'm thinking of putting together my own timeshare.
We buy a small house in Nicaragua for around $120,000. Its atop a mountain next to a nature preserve with lovely ocean views. It has running water and solar power. Its no Hilton with conceirge, but instead of 52 partners, you might only have 12. Plus you get to deduct the cost of your surfing vacations, because you've bought an investment property! It should rent out sporadically to cover the cost of maintenance. If Nicaragua does a quarter as well as Costa Rica, it should atleast double in value!
The Easy Hassle Free Way To Invest In Real Estate
If you're like most people, you want to invest in real estate only there are some obstacles you need to overcome, like
1. You've never done it before & you don't know how
2. You know how to do it but your credit sucks or you're tapped out from too many loans & can't buy any more.
3. You have done it before & you did well but didn't like the paperwork or dealing with deadbeat tenants that didn't pay on time
4. You tried it but you couldn't make it work
5. Your area is way too expensive to make it work and is heading for a correction
And my personal favorite
6. You tried it but now you're accused of mortgage fraud and are on America's Most Wanted List.
Well a CPA buddy of mine has hit upon a novel way of investing. He's been investing for 4 years and has a good handle on it. He originally started out doing this for his family. He identifies the property and gets the loan on it. The investors put up 25% of the money required for the down payment and he manages it from there on. In return for putting up the cash, they get a 70% stake in it. Yes, you heard it right, 70% of the profits!!!!
I told him he's crazy to give away more than 50% but that's the way he's been doing it and he likes it that way.
He typically identifies somewhat undervalued areas with potential for increase. He requires a down payment of 25% so there's no chance of the rent not covering the mortgage even after vacancy, repairs, etc. He deals with property management, deadbeat tenants and makes sure the mortgage gets paid. After all, its his credit on the line.
The properties are put in an LLC so there's asset protection and he does the paperwork and sends you a k-1 at the end of the end which you give your accountant and you're done with all the paperwork!
He currently has a deal in Dallas and needs to raise about $156,000 to buy 5 houses. He has an in with the builder so he's getting a great deal on them. They are 1800 sq ft 4/2.5/2 brand new homes for $125,000 each. [Actually they are newer than new since they're pre-construction].
I really like the fact that the project is in Dallas. During the last oil boom, Dallas house prices saw tremendous growth even as the economy faltered on the whole. I forsee the same thing happening this time around. Some parts of Dallas have already gone up over 10% in the past year. Quite a jump from being the worst state in terms of appreciation in just 2 short years!
Another good aspect of this deal is that the tenants will be Section 8 so the rent will come directly from the Government. [Atleast the rent won't be late!] The vacancy should be LESS THAN 4 weeks since they're being built to Section 8 specifications and he'll be setting it up during the building of the homes. The downside is section 8 tenants normally trash the place, but each home comes with a $5,000 in reserves included in the $125k price. Damn, he thought of everything!
If any of you are interested in partnering let me know. I'm trying to help him raise the money.
This really a phenomenal deal. The only issue is that the window for opportunity is only 30 days [Must have the money in by 1st week of December]. Email me quickly before he comes to his senses and reduces the investors' stake from 70% to the 50% that it should be. Do it NOW, this will not last long! Where else can you get a CPA with Big 4 Accounting experience to do your investing, put up his credit, offer you asset protection AND give you 70% of the profits??
Contact me at EmptySpacesInc@gmail.com
1. You've never done it before & you don't know how
2. You know how to do it but your credit sucks or you're tapped out from too many loans & can't buy any more.
3. You have done it before & you did well but didn't like the paperwork or dealing with deadbeat tenants that didn't pay on time
4. You tried it but you couldn't make it work
5. Your area is way too expensive to make it work and is heading for a correction
And my personal favorite
6. You tried it but now you're accused of mortgage fraud and are on America's Most Wanted List.
Well a CPA buddy of mine has hit upon a novel way of investing. He's been investing for 4 years and has a good handle on it. He originally started out doing this for his family. He identifies the property and gets the loan on it. The investors put up 25% of the money required for the down payment and he manages it from there on. In return for putting up the cash, they get a 70% stake in it. Yes, you heard it right, 70% of the profits!!!!
I told him he's crazy to give away more than 50% but that's the way he's been doing it and he likes it that way.
He typically identifies somewhat undervalued areas with potential for increase. He requires a down payment of 25% so there's no chance of the rent not covering the mortgage even after vacancy, repairs, etc. He deals with property management, deadbeat tenants and makes sure the mortgage gets paid. After all, its his credit on the line.
The properties are put in an LLC so there's asset protection and he does the paperwork and sends you a k-1 at the end of the end which you give your accountant and you're done with all the paperwork!
He currently has a deal in Dallas and needs to raise about $156,000 to buy 5 houses. He has an in with the builder so he's getting a great deal on them. They are 1800 sq ft 4/2.5/2 brand new homes for $125,000 each. [Actually they are newer than new since they're pre-construction].
I really like the fact that the project is in Dallas. During the last oil boom, Dallas house prices saw tremendous growth even as the economy faltered on the whole. I forsee the same thing happening this time around. Some parts of Dallas have already gone up over 10% in the past year. Quite a jump from being the worst state in terms of appreciation in just 2 short years!
Another good aspect of this deal is that the tenants will be Section 8 so the rent will come directly from the Government. [Atleast the rent won't be late!] The vacancy should be LESS THAN 4 weeks since they're being built to Section 8 specifications and he'll be setting it up during the building of the homes. The downside is section 8 tenants normally trash the place, but each home comes with a $5,000 in reserves included in the $125k price. Damn, he thought of everything!
If any of you are interested in partnering let me know. I'm trying to help him raise the money.
This really a phenomenal deal. The only issue is that the window for opportunity is only 30 days [Must have the money in by 1st week of December]. Email me quickly before he comes to his senses and reduces the investors' stake from 70% to the 50% that it should be. Do it NOW, this will not last long! Where else can you get a CPA with Big 4 Accounting experience to do your investing, put up his credit, offer you asset protection AND give you 70% of the profits??
Contact me at EmptySpacesInc@gmail.com
Your Identity Stolen Through a Sealed Envelope!
Thanks to MARK NESTMANN, Privacy Expert & President of The Nestmann Group
www.nestmann.com for this.
www.nestmann.com for this.
Credit card fraud is a huge problem worldwide. Online merchants alone suffer losses of more than US$60 billion each year, according to research firm Financial Insights.
Unfortunately, credit card companies have no incentive to reduce credit card fraud. If someone uses a credit card fraudulently, the merchant that accepts the card-not the credit card company-pays for the loss. Consumers are mostly off the hook, too, with their losses (at least in the U.S.) limited to US$50 per card in the event of theft or fraudulent charges.
Now, credit card companies have introduced a new type of "contactless" credit card that eliminates the need to swipe the card to make a purchase. The cards contain a radio frequency identification (RFID) chip that transmits authorization data by radio waves.
Incredibly, the credit card companies that have sent out tens of millions of these
contactless cards in the last few months didn't bother to include any security features in the new system, such as encryption. Anyone equipped with a RFID card reader, costing less than US$150, can pull up your name, card number, and expiration date if they get close enough to your card.
Simply aiming the card reader at your wallet or purse, where you keep your credit cards, is enough. It's a little like wearing a T-shirt with your name, credit card number, and expiration date displayed on it. Moreover, it's even possible to retrieve the personal information from a new credit card while it's still sealed in its original envelope.
Naturally, the credit card companies deny there's any problem, so it's up to you to protect yourself. I recommend that you cancel any credit card accounts in which the issuer refuses to provide you with a non-RFID equipped card. That precaution just might save your identity from being stolen.
Its Carnival Time
Thanks to Gill Blog for hosting the Carnival of the Capitalists this week.
It has some pretty good posts.
It has some pretty good posts.
How To Get Canned
Jeanne Sahadi has a good article on CNN Money. Titled "Secrets Your Company Doesn't Want You To Know", its discloses some of the misconceptions surrounding how your actions at work affect you. Here's a snippet.
Ok, so this isn't really an article on how to get fired. Maybe I'll work on that some other day. In the meantime you can read the rest of the article here
The typical rationale for layoffs is the need to reorganize and cut costs.
Pish-posh.
Sometimes those reasons are genuine. But Shapiro has seen companies push select employees out of their jobs or layoff an entire department just to get rid of one or two people without incurring liability.
And those select employees may never know they made a manager's blacklist.
One easy way to get on it is to insult the boss or be overly negative about the company on email, in a meeting, or at the water cooler.
Being a top performer may provide some protection. But if you and your boss don't get along and he has to get rid of two people, he's likely to go for the people who make his day difficult, Shapiro said.
Being among the most highly compensated employees in your office will only give him added incentive.
Treat difficult bosses and colleagues as you would if you were a small business owner dealing with annoying clients: professionally at all times, she said. Otherwise, you'll lose the account.
You're also at greater risk of a layoff if you've:
• First announced that you're pregnant or need medical leave to someone other than your boss. If she hears about it from someone other than you, she could lay you off and claim she had no idea about your personal situation.
• Taken a medical leave or filed for worker's compensation recently.
• Filed a complaint against the company or your boss.
Ok, so this isn't really an article on how to get fired. Maybe I'll work on that some other day. In the meantime you can read the rest of the article here
Save $100 On A DELL Computer Through Bank of America
If you have online banking with Bank of America, they will subsidize your Dell PC purchase to the tune of $100.
Of course, here's the fine print, enlarged so you don't get fooled.
Sucks if you already have an account, but I guess you could open a new one!
Of course, here's the fine print, enlarged so you don't get fooled.
To qualify for the $100 cash rebate, the customer must have one or more products with Bank of America, enroll in Online Banking (new enrollments only) between 10/30/06 – 1/19/07 and purchase a Dell computer through www.dell.com/bankofamerica between 10/30/06 and 1/19/07. The customer must then submit a rebate request through www.bankofamerica.com/onlinerebate and supply the Dell Service Tag number, full name, home mailing address and Online ID. If the customer meets the requirements above, they will receive a direct deposit of $100 into their checking or savings account within 60 days of submitting the rebate. If the customer does not have a checking or savings account with Bank of America, a check will be mailed to the address on record with the bank within 60 days of submitting the rebate.
Bank of America offer available only on Dimension™ E521 desktop and Inspiron™ E1505 notebooks.
Sucks if you already have an account, but I guess you could open a new one!
Canroy Update
The Canadian Royalty Trusts [or Canroy's for short] sold off big today.[For a great post on Canroys, check out this post on Wealth Building Lessons.] People just dumped them. I lightened my load a little bit too. I sold about 15% of my Canroys and bought gold stocks instead.
I think a lot of it is an over-reaction. Even if the government does raise the taxes 40% some of them are yielding over 15% at these low levels. In the energy sector, between 40-60% of the dividend is termed as return of capital so its tax exempt.
So a 15% yield now becomes a 12.4% yield. Thats not so bad is it? What do you guys think?
Besides, on existing canroys theres a 4 year grace period. Maybe the next Canuck Finance Minister might reverse the decision.
But even then, just to make sure I'm not mistaken for a socialist, The POX on you Mr Flaherty!!!
And just a reminder, the competition at The Weekend Investor ends soon. Register and post for a chance to win a $50 Amazon gift certificate.
I think a lot of it is an over-reaction. Even if the government does raise the taxes 40% some of them are yielding over 15% at these low levels. In the energy sector, between 40-60% of the dividend is termed as return of capital so its tax exempt.
So a 15% yield now becomes a 12.4% yield. Thats not so bad is it? What do you guys think?
Besides, on existing canroys theres a 4 year grace period. Maybe the next Canuck Finance Minister might reverse the decision.
But even then, just to make sure I'm not mistaken for a socialist, The POX on you Mr Flaherty!!!
And just a reminder, the competition at The Weekend Investor ends soon. Register and post for a chance to win a $50 Amazon gift certificate.
How To Make $3,000 A Month
One of my investor friends forwarded this link from Google Answers.
The answers range from learning to play poker, selling stuff on ebay, starting online porn site, making money from adsense, day trading, prop trading and scalping nickels and dimes to investing in real estate.
While I don't have a clue how to make $3k a month off $30k, it definitely got me thinking. If I had $30k and needed to make 10% every month, I would have to try something very high risk. Since I've been looking at option trades the past few days I thought I'd give that a try.
Here's a strategy I came up with. You buy a far out call spread. Lets take the stock GDX. Its currently trading at $38 and change. Its never traded below $32 [coz its new] and it follows the price of Gold. Gold was up today and closed at $625. Just 2 weeks ago it was around $575. If you think Gold is headed up in the next few months you can make this risky bet.
You buy the March 2007 $32 Call for $8.60 and sell the March 2007 $37 Call for $4.20.
You're out of pocket costs are $8.60- $4.20 = $4.40.[multiply this 100 coz each contract has a hundred shares and you get $440/contract]
If GDX closes at $35.40 at expiration you break even. Above $37 you make your max profit of $160/contract. But at $31 and below you lose a max of $440. $160 on a $440 investment is a 36% return in about 5 months. Annualized thats almost 90%. On a $30k investment you're making approximately $26k. Not exactly 120% return but still pretty good!
Ok, so why isn't everyone doing it?
Probably coz they don't work in the long run. Here are some reasons I can think of:
1. These things only work until they don't.
They might work a few times, but then something "unforeseen" happens like Gold dropping from $730 to $575 in 2 weeks and you're entire portfolio is destroyed. Victor Niederhoffer lost 20 years worth of profits in one bad "investment".
2. These things are also complex.
A lot of people don't understand how options work. I don't understand them well enough to explain to lay people.
3. Once everyone starts doing it, it no longer works.
This is just a general rule. If there was a great easy solution to making 100% a year everyone'll jump in and bid down the price. [Just like people are doing on Prosper!]
But if anyone knows a sure fire way to make money without not having to work please let me know!
Finacial gurus,
I am looking for the most probable way of earning $3000 monthly with a $30,000 cash investment. This is all I can commit, no additional monies, no borrowing. I want this to supplement my regular 6am-3pm job.
I have thought about using it to trade common stocks, as a down payment to buy a small apartment or rental properties etc.. but thought maybe there were better or more likely ways to make this happen.I am not looking for a sure/guaranteed way, just the most probable way.
I can afford to loose 10-15% max. I am looking for a situation with monthly spendable cash , not theoretical or tax gains.
I am fairly good with computers and have access to high speed internet all day. I'll pay a premium for an answer that is applicable and detailed. Vague generalizations like “start a small business” will be ignored
Thanks
The answers range from learning to play poker, selling stuff on ebay, starting online porn site, making money from adsense, day trading, prop trading and scalping nickels and dimes to investing in real estate.
While I don't have a clue how to make $3k a month off $30k, it definitely got me thinking. If I had $30k and needed to make 10% every month, I would have to try something very high risk. Since I've been looking at option trades the past few days I thought I'd give that a try.
Here's a strategy I came up with. You buy a far out call spread. Lets take the stock GDX. Its currently trading at $38 and change. Its never traded below $32 [coz its new] and it follows the price of Gold. Gold was up today and closed at $625. Just 2 weeks ago it was around $575. If you think Gold is headed up in the next few months you can make this risky bet.
You buy the March 2007 $32 Call for $8.60 and sell the March 2007 $37 Call for $4.20.
You're out of pocket costs are $8.60- $4.20 = $4.40.[multiply this 100 coz each contract has a hundred shares and you get $440/contract]
If GDX closes at $35.40 at expiration you break even. Above $37 you make your max profit of $160/contract. But at $31 and below you lose a max of $440. $160 on a $440 investment is a 36% return in about 5 months. Annualized thats almost 90%. On a $30k investment you're making approximately $26k. Not exactly 120% return but still pretty good!
Ok, so why isn't everyone doing it?
Probably coz they don't work in the long run. Here are some reasons I can think of:
1. These things only work until they don't.
They might work a few times, but then something "unforeseen" happens like Gold dropping from $730 to $575 in 2 weeks and you're entire portfolio is destroyed. Victor Niederhoffer lost 20 years worth of profits in one bad "investment".
2. These things are also complex.
A lot of people don't understand how options work. I don't understand them well enough to explain to lay people.
3. Once everyone starts doing it, it no longer works.
This is just a general rule. If there was a great easy solution to making 100% a year everyone'll jump in and bid down the price. [Just like people are doing on Prosper!]
But if anyone knows a sure fire way to make money without not having to work please let me know!
Teenage Kid Scams $500,000 Through Pump And Dump
Check out the incredible story of Jonathan Lebad, master stock manipulator who was just 14 years old when he made $800,000 through online pump and dump schemes for various stocks he bought. This was during the Dot-com era in 1999 and 2000 and even the SEC tried to shut him down, but couldn't because he hadn't really broken any laws. Read the story here.
The SEC backed down because he hadn't really broken any laws. All he did was post about 200 messages a day pumping each stock he bought and then selling it when it had gone up substantially. There isn't really anything illegal about that. The SEC settled with him to the tune of $285,000 and he walked away with $500,000. Nice chunk of change to have when you're 15!!!!
On another note, CEO of Computer Assassins[ahem, I mean Associates](ticker symbol:CA) Sanjay Kumar was sentenced to 12 years in jail & $8 million fine for accounting fraud and obstruction of justice. He could get out as early at 2016 if he promises to behave and not pull any more scams!
Wasn't there a mother who murdered her new born infant and got 2 years in jail??? Should white collar crimes carry a more severe punishment than murder or violent crimes???
The SEC backed down because he hadn't really broken any laws. All he did was post about 200 messages a day pumping each stock he bought and then selling it when it had gone up substantially. There isn't really anything illegal about that. The SEC settled with him to the tune of $285,000 and he walked away with $500,000. Nice chunk of change to have when you're 15!!!!
On another note, CEO of Computer Assassins[ahem, I mean Associates](ticker symbol:CA) Sanjay Kumar was sentenced to 12 years in jail & $8 million fine for accounting fraud and obstruction of justice. He could get out as early at 2016 if he promises to behave and not pull any more scams!
Wasn't there a mother who murdered her new born infant and got 2 years in jail??? Should white collar crimes carry a more severe punishment than murder or violent crimes???
How To Retire In Luxury
CanadianBusiness.com has some really good articles that are worth reading. Here's another one.
Click here to continue reading
How we retired in luxury — on $2,000 a month
Herman Heynen as told to Camilla Cornell
From the May 2006 issue of MoneySense magazine
Seven years ago, when I was 60 I took early retirement from my job in the customer service department at CP Rail. The company was reorganizing and I didn't want to start another job, but the result was that I took a cut in my retirement pension. My wife, Anne, who is a year younger than me, wasn't ready to retire yet, so she continued to work until 65 as a legal assistant and I just sat at home, on our acreage outside of Calgary, dreading the winters and watching the snow fall.
Every winter we would go down to Mazatlan, Mexico, where we owned a timeshare. We loved the warm weather (usually 25° to 29°C during the day in the winter months) and the long sandy beaches and the very Mexican feel of the place. We started off visiting for two weeks a year, then it became three. At first, we stuck to the tourist areas. But Mazatlan is a good-sized city of about 600,000 people and after a while we discovered what's known as El Centro — the city centre — and we really liked it. The houses are old there — some go back to the late-1800s — and they're very affordable. As well, there is lots of local culture, great shopping, an open-air marketplace and plenty of restaurants and cafes.
Four years ago, we decided to buy our own little place there. It was the year before Anne retired, and we bought a small two-bedroom house that was completely restored. It cost us only $45,000, which we put on our line of credit. Our home is in a traditional Mexican style, painted a salmon color, with pretty ironwork out front, cool ceramic floors and a shady little patio with a nice garden, about a 10-minute walk from the beach. Everything was in there, including furniture, appliances, linens, towels, dishes, cutlery and even a TV, because the owner's original intention had been to rent it out.
When Anne retired, we sold our house outside of Calgary, which had 10.5 acres of land. With the proceeds from the sale, we paid off the house in Mexico and bought a 14 x 44-ft mobile home in a beautiful RV park south of Calgary. Now we spend November to April in Mexico and the summer months in Canada.
Overall, I'd say living expenses in Mexico are between a third and half of what they are in Canada. The two of us can live very well on about $2,000 a month. When we worked out our monthly expenses, we were paying about $135 a month for shelter, including utilities, property taxes, Internet and telephone.
Some costs seem absurdly low to Canadian eyes. Our property tax, for example, is just 381 pesos per year ($40), although we pay an additional bank trust fee of $422 annually because our house is within 50 km of the ocean. Even with air conditioning in the hot months, our electricity costs have averaged $16 a month. Of course, we never have any heating costs. If it gets chilly at night, you just throw on an extra blanket. Fire insurance is not necessary except for contents because all the houses are built of concrete.
Food is cheap. You might pay $2 for a 1.9-litre bottle of milk, 43 cents for a kilo of tomatoes and $2.50 for enough large fresh shrimp for a meal. Services cost even less. You can visit the dentist for $20 to $30, hire a cleaning lady for the day for $10, have your hair cut for $4, and get your laundry done for about $4.50 for three kilos.
We don't need a car — the bus system is great and the local bus costs 4 pesos (41 cents Cdn.), or you can pay 8 pesos for the air-conditioned bus, which is mostly for tourists. That means we can afford to dine out often. On Valentine's Day we went all out and had dinner at a Mexican-Greek restaurant. We had a large margarita, a bottle of wine, a delicious meal, a dessert flambé and cappuccino for about $50 including tip. Normally, we don't spend that much. There are many places where the two of us can get a simple meal for $10.
Another advantage to being in Mexico, as opposed to, say Thailand or Costa Rica, or some of the other places where Canadians can live cheaply during retirement, is that it's fairly close to home. The flight to Calgary costs us about $700 so if we need to go back to see the kids, it's not a problem.
I would advise those considering retiring here to be realistic about what you're used to. We eventually decided that the original layout of our little home was too small, given the amount of time we are spending down here, so we are building another floor onto the house with a large bedroom, an extra bathroom, a large balcony, and a back deck. It'll cost us about $20,000, which is still very cheap.
You have to budget a little extra for health care. We have an FM-3, which is a special visa allowing us to live here for one year. It also allows us to buy into the IMSS, the state-sponsored medical plan, at a cost of about $580 a year for the two of us because we're over 65. We have that plan just in case we get run over or have a heart attack, which would be costly without insurance. For the most part, if we go to our family doctor — who is well-educated and speaks perfect English — we pay directly. It's only about $20 a visit, and if you need an X-ray or ultrasound, you'll pay another $20, but you'll get the results immediately and the care is top-notch.
We've been very happy with our decision to move to Mexico for half the year. Right now the skies are blue and its 29°C, yet at night it cools down and you sleep well. People ask us what we do down here. They'll say, "You can't sit on the beach for six months. Aren't you bored?" The short answer is, no. We can go to the Angela Peralta Theatre, which is beautifully restored, and see a flamenco performance for less than $14. Movies are released at the same time as in Canada, but in English with Spanish subtitles, and cost $3 a ticket. And we have an endless round of barbecues, fundraisers and get-togethers, mostly with other Canadians and Americans, but also with locals.
Escaping The Rat Race
Here's another inspiring story on getting out of the rat race.
Click here to continue the story
How I escaped the rat race
Carole Dobson as told to Duncan Hood
From the May 2006 issue of MoneySense magazine
I used to work full time at a stressful job making a six-figure salary. Then, about 10 years ago, I started planning what I call Carole's Freedom 48 plan. Today, I'm 50, and I only work when I want to, doing things I love to do. I'm living on less, yet I own a 1,700 sq-ft house in a leafy neighborhood in Calgary. I have a three-year-old Chrysler Concorde with leather seats and I managed to travel for three months out of the past year. That included almost a month in Venice — and I flew there business class.
There is no magic involved in how I've chosen to live my life, nor are there any hidden trust funds, wealthy relatives or hardship. To an outsider, it looks like I'm living on air. But once I decided that I'd rather be rich in experiences than in money, I figured, why wait until I'm too old? Instead of one big job where I'm not in control, why not have several smaller sources of income, each one related to something I can enjoy?
Before the switch, I worked for agricultural supply companies in Alberta. It was a lot of fun at first, but the fun was wearing thin. I was raising two teenagers, and my job was high-pressure work, because it was very seasonal. I was responsible for sales of crop inputs — seed, short-line equipment and so on — and about 60% to 80% of my sales would occur in a six- to eight-week period. To make matters worse, I seemed to be spending all of my waking hours involved in a systems project that didn't work. It was initially supposed to last six months, but three years later we were still working on it, and it still didn't work. People began losing their jobs. I was let go in 2000, before Christmas — and right before they handed out the year-end bonuses. I just said, "Fine. I'm outta here."
A few months after being laid off, I landed a job as dean of agriculture at Lakeland College, which is about 300 km north of Calgary. Again, it started off fine, but we were soon faced with very severe budget cuts that had to be implemented overnight. Many jobs were lost and it was a wrenching time for the whole college. Eventually, I thought, what am I doing here? And I left in 2003.
It was then that I decided to launch my Freedom 48 plan. It started when I realized that after decades of diligent saving, my RRSP wasn't going to save me much in taxes. By my mid-forties, I had managed to accumulate several hundred thousand dollars — which was great on one level, but meant that by the time I reached 69 and converted my RRSP to an income fund, I would probably have to withdraw such a large amount each year that I'd be paying as much tax as I was when I was working. Not only that, but my income from those government benefit programs would be clawed back. You've heard about people who don't save enough? Well, I had the opposite problem — I had saved too much.
So I went to my financial planner and said, I want to have enough to retire on, but my lifestyle is not about making as much money as I possibly can. I want to slow things down between the ages of 48 and 65, and I still want to work a bit, but not at a frantic pace. I want to volunteer more, and spend more time with my friends and family. Can I slowly collapse my RRSP in a systematic way so that I can enjoy some of the benefits of all that saving while I'm in my prime? So my planner took a look and found that if I began taking out about $15,000 a year, I'd still have enough to last me until my mid-80s. My challenge was to make another $20,000 or $30,000 a year doing part-time work. So far I've succeeded even better than I expected. I haven't even had to touch my RRSP yet.
I've earned much of my income from the homes I've lived in. Every three to five years, I'll buy the dump of the neighborhood and fix it up, and later, I'll sell it. I've learned how to fix a house so that my cost is minimal and I earn the maximum amount of revenue. Typically, after all the expenses of moving and legal costs, I've been able to clear about $50,000 a house — and all of that profit is tax-free because you don't pay taxes on gains on your principal residence. An extra $50,000 every few years is modest enough, but it costs money to live somewhere, and this way I get it back. I consider the gardening, painting and upgrading that I do to be a part-time job. I actually enjoy doing it.
To help even out the income I get from my house, I take out a line of credit, secured by the house. I do that because even if I systematically withdrew $2,000 a month from the line of credit, the cost of that will be a heck of a lot less than taking that $2,000 from my RRSP. When I sell the house or earn extra income, I pay off the line of credit.
In addition to my savings and my real estate income, I earn a third stream of income from part-time work. When I was first laid off, I reported to the EI office and they suggested that I take an entrepreneurship program offered through a local accounting firm, which taught me how to get going. I started out doing contractual work and French translations of technical documents for agricultural companies — my family is from Quebec and French is my first language — but now I'm zoning in on landscape design and teaching art.
My love of gardening was what convinced me to get my landscape design certificate. Now I help people design yards that will enhance the value of their homes and do well in this temperamental Calgary climate. It's seasonal work, but that was exactly what I was looking for. I also sometimes take on a fun, low-paying job, like working as a tree expert at my favorite gardening centre. I'm paid the princely sum of $10 an hour, but I love it, and I see it as sort of a paid fitness program. I also teach mosaic art at the Alberta College of Art & Design, where they put on a 15-hour program every other month.
The income I'm living on isn't as high as what I was making when I was working, but you come to realize that when you're working long hours and you're stretched for time and feeling stressed out, you're paying a lot of money for things you don't have much time to enjoy anyway. Once you strip away your excess costs, you only need about $30,000 to $40,000 a year to live quite comfortably, even with an expensive teenage boy at home. I'm remarried, but my husband spends much of his time on his grain farm, and doesn't contribute to my living expenses. Now I'm living on less, but my standard of living is not low. The truth is that somewhere between the people who read yesterday's newspapers and eat week-old bread, and those who work flat out for a six-figure salary, there's a middle ground.
I've found that the main thing is to eliminate your major sources of overhead, things like car payments and your mortgage. I'm now in a position where I'm fortunate enough to be able to pay cash for my houses and cars. I save money by cashing in Air Miles to go to the movies, and I put all of my purchases on a CIBC gold credit card for Aeroplan points. I volunteer for several non-profit organizations, such as the local arts society, and when they send me to a conference or other event, I'll piggyback my personal vacation onto the trip. I shop the second-hand markets, I use a flat-rate Internet phone plan, I've done an energy audit on the house and I put in more insulation to lower my heating bills.
Washed out by the Canuks!
I'd recently put a bit of money into Canadian Royalty Trusts - the Canadian equivalent of REITs here in the US. Now, thanks to the socialist Finance Minister I'm down 10% today!
I'm surprised they announced this after they threatened last year and then reversed tune when the stock market tanked. I wouldn't be surprised if they reneged on this announcement too.
Toronto stock market tumbles after Ottawa moves to tax income trustsThe Pox on you, Mr Flaherty!!!!
Wed Nov 1, 12:34 PM
TORONTO (CP) - Finance Minister Jim Flaherty created havoc Wednesday on Bay Street and Main Street as income trust investors suffered massive losses following his Halloween surprise announcement that trusts will be taxed.
The Toronto stock market's main composite index tumbled more than 300 points in early trading, and late in the morning was off 223.23 at 12,123.36, a decline of 1.8 per cent.
The loss was much steeper for trusts, with the S&P/TSX income trust index down 10 1/2 per cent.
"I'm put out, not to put too fine a point on it," declared Brendan Caldwell, president of brokerage firm Caldwell Securities Ltd.
"I tell you, I've got seniors that have income trusts that are down $25,000 or $30,000 today. . . . They're getting hit in a big way."
Among major names, the Yellow Pages trust (TSX:YLO) faded 17 per cent, the CI Financial fund (TSX:CIX.UN) plunged 16 per cent and the Aeroplan fund (TSX:AER.UN) descended 12 1/2 per cent.
There also were big losses for Telus (TSX:T) and BCE Inc. (TSX:BCE), whose plans to convert into trusts - and the prospect that other major corporations would do the same - provoked Flaherty's move. Telus was down 14 per cent and BCE lost 12 per cent.
The proposed rules would tax the money distributed to unitholders by newly formed income trusts, while existing trusts get a four-year transition period.
Income trusts pay much less tax than corporations as they distribute most of their cash flow to investors to be taxed in their hands.
Flaherty says changes are needed to prevent a shift in billions of dollars of the tax burden onto individuals and away from companies.
I'm surprised they announced this after they threatened last year and then reversed tune when the stock market tanked. I wouldn't be surprised if they reneged on this announcement too.
Looks like the Indian Rupee is getting stronger
Not only is the Australian dollar strengthening against the US dollar, it looks like everything except the Canadian loonie is too!
Excerpt from today's daily pfenning...
Excerpt from today's daily pfenning...
Ashish Advani, the Head of Corporate FX here at EverBank, pointed out yesterday that India had split their two interest rates yesterday. Here is what Ashish pointed out to us after the rate announcement:
Reserve Bank of India (RBI) managed to completely surprise markets by raising repurchase rate (rate at which market borrows from RBI in a liquidity deficit situation) by 25 basis points to 7.25% while leaving the benchmark reverse repo rate unchanged. We were expecting a hike in both repo as well as reverse repo rate by 25 basis points each.
Why has RBI done this?
To balance out the risks of global deceleration with the risk of demand side inflationary pressures thawing domestic growth. With the global growth environment turning more uncertain and US economy showing signs of deceleration, the risk remains that excessive monetary tightening domestically could impact domestic growth. However, with domestic price pressures rising RBI cannot afford to sit on the sidelines and let inflation go beyond the tolerance band of 5-5.5%. RBI clearly recognizes the risk that India could be entering the overheating zone and asset price inflation too could hurt the real sector. Hence the RBI chooses to signal potential for higher rates by raising the repo rate but should growth outlook reverse dramatically impact on domestic economy is marginal. Also another signal, in our assessment is, should banks face tight liquidity conditions, the overall borrowing costs increases, thus the cost of money goes up in a situation of banks over extending credit.
Thanks to Ashish for bringing us all up to date on this unusual move by the Indian Central bank. This partial increase in the interest rates have caused the Indian Rupee to rally, increasing by almost .4% yesterday.
Subscribe to:
Posts (Atom)