BHP bought 1.5 million shares today. They report this on their website. Pretty amazing how much stock they've bought back. The stock buy backs along with their regular dividends and diversified commodity base makes them one of my favorite stocks. Plus the fact that everyone I know isn't harping on about them (like Qualcomm in 1999) makes it even more attractive.
Along with Anglo American (AAUK), these two are great commodity plays. Plus they're both down over 5% this week makes it a good time to jump in. I plan on holding both for a long long time.
As usual, do your own Due Diligence. If you don't know what that means or how to do it, put your money in ING Direct instead!
Today's market rebound was disheartening. Even though my portfolio is down on the whole, my invesrse S&P500 fund was up 7% yesterday. Now I don't know whether I should hold it or bail. On the other hand, if we saw another day like yesterday, I could exit and take my profits! But then gain, everyone else seems to be really happy with the rebound. I guess thats the closest we'll ever get to world peace. I'll take it ;-)
Biggest Market Drop Since 9/11
The stock market suffered the biggest loss today since the terrorist attacks on September 11th 2001.
They were allegedly caused by profit taking in China caused by the governments comments on cracking down on the rampant stock speculation taking place and by Greenspan's comments on the US facing a mild recession later this year. Even Oil and Gold were down today. So was every other sector!
The only green mark in portfolio was URPIX which was up 7% today, but I didn't own enough to offset my losses. Still, the losses are to be expected and a 30% cushion still isn't bad. Hopefully WCI will drop even further and I can actually profit from my remaining puts (which are currently underwater)
I did use the drop in GDX (gold mining ETF) to sell some March puts. If they expire worthless, then I'll have made some money and if they don't I'll own some GDX shares for less than what I sold them during the last options expiration period.
Wonder how long and severe this correction will last?
They were allegedly caused by profit taking in China caused by the governments comments on cracking down on the rampant stock speculation taking place and by Greenspan's comments on the US facing a mild recession later this year. Even Oil and Gold were down today. So was every other sector!
The only green mark in portfolio was URPIX which was up 7% today, but I didn't own enough to offset my losses. Still, the losses are to be expected and a 30% cushion still isn't bad. Hopefully WCI will drop even further and I can actually profit from my remaining puts (which are currently underwater)
I did use the drop in GDX (gold mining ETF) to sell some March puts. If they expire worthless, then I'll have made some money and if they don't I'll own some GDX shares for less than what I sold them during the last options expiration period.
Wonder how long and severe this correction will last?
Strip-Club Stocks Go To Wall Street
There's a very interesting article today about how strip clubs are over-looked and under-valued. I'm not sure I necessarily agree with that point of view but there are some interesting points to consider.
* They're recession proof. (along with barber shops and fast food joints)
* They have very low overheads.
The strippers pay for the luxury of working at strip-joints so there are no employee salaries or payroll taxes to worry about. Just rent and electricity!
* The have multiple profit points
First there's the entrance charge that runs $20 or more. Then comes the food and drinks. Even if they aren't allowed to provide alcohol, they charge steep fees for providing glasses and ice if the customers bring their own booze. Also they rent out room for private dances. According to the article that can run around $400-$500.
But the one thing that can't be denied is the terrific performance of 2 stocks mentioned in the
article. Ricks Cabaret Intl Inc (RICK) went from $7 to $11(baring todays market performance) in 6 months and VCG Holding Corp(PTT) went from under $3 to over $12 in the same time!!!!
You can read the whole article at MarketWatch.com.
* They're recession proof. (along with barber shops and fast food joints)
* They have very low overheads.
The strippers pay for the luxury of working at strip-joints so there are no employee salaries or payroll taxes to worry about. Just rent and electricity!
* The have multiple profit points
First there's the entrance charge that runs $20 or more. Then comes the food and drinks. Even if they aren't allowed to provide alcohol, they charge steep fees for providing glasses and ice if the customers bring their own booze. Also they rent out room for private dances. According to the article that can run around $400-$500.
But the one thing that can't be denied is the terrific performance of 2 stocks mentioned in the
article. Ricks Cabaret Intl Inc (RICK) went from $7 to $11(baring todays market performance) in 6 months and VCG Holding Corp(PTT) went from under $3 to over $12 in the same time!!!!
You can read the whole article at MarketWatch.com.
COSTCO CHANGES RETURN POLICY ON CONSUMER ELECTRONICS
Costco will no longer enforce its "satisfaction guarantee" on consumer electronics. You now have only 90 days to return a product.
According to BusinessWeek,
Good! Whenever you abuse something, it goes away. It was just a matter of time before they scrapped their policy. Good thing they didn't wait until they went out of business! I like Costco and shop there a lot. I just picked up a 24 pack of awesome "Fat Tire Beer" from there!
According to BusinessWeek,
In general, Costco allows its customers an unlimited grace period to return purchases for a full refund. The only exception was a six-month deadline after the date of purchase for returning desktop computers. That unlimited timeframe still applies to Costco merchandise other than consumer electronics. Electronics goods purchased before the new 90-day policy goes into effect can be returned at any time.
Good! Whenever you abuse something, it goes away. It was just a matter of time before they scrapped their policy. Good thing they didn't wait until they went out of business! I like Costco and shop there a lot. I just picked up a 24 pack of awesome "Fat Tire Beer" from there!
SAVING MONEY FOR KIDS EDUCATION
For many parents, savings for their kids education is a big concern. Many opt to put them in a tax-deferred savings vehicle like the 529 plan.
Not only is this a good way to save for children's education related expenses like tuition, lodging, groceries, books, etc but there are some other loophole available too.
* You can change the beneficiary at any point to favor someone who goes to a more expensive school.
* You can use the money for your own education.
* You can give upto $60,000 to a single beneficiary in one go, although you can't give that same beneficiary any more contributions for 5 years.(since the maximum gift amount is $12,000 per year)
* You can use it as an estate planning tool by moving money out of your estate (but not necessarily out of your control). If grandpa & grandma each gift $50,000 to each of their 5 grandkids, thats $500,000 out of the estate in one fell swoop! Of course, they better not die too quickly, else some of it may be taxable!
* Being able to change the beneficiary may also allows you to skip paying estate tax for several generations!
It might be complicated to understand and setup, but I think its definitely worth checking into.
Not only is this a good way to save for children's education related expenses like tuition, lodging, groceries, books, etc but there are some other loophole available too.
* You can change the beneficiary at any point to favor someone who goes to a more expensive school.
* You can use the money for your own education.
* You can give upto $60,000 to a single beneficiary in one go, although you can't give that same beneficiary any more contributions for 5 years.(since the maximum gift amount is $12,000 per year)
* You can use it as an estate planning tool by moving money out of your estate (but not necessarily out of your control). If grandpa & grandma each gift $50,000 to each of their 5 grandkids, thats $500,000 out of the estate in one fell swoop! Of course, they better not die too quickly, else some of it may be taxable!
* Being able to change the beneficiary may also allows you to skip paying estate tax for several generations!
It might be complicated to understand and setup, but I think its definitely worth checking into.
NO OUT-OF-POCKET LIFE INSURANCE PROGRAMS
I've been looking for cheap insurance for the past few months. But FREE insurance is even better! Unfortunately, I don't qualify, but for those that do, there are some great programs out there. Here's some info. If anyone is interested in more info, send me an email and I'll hook you up with the insurance agent.
Who is Eligible?
Seniors aged 70 to 80 (in some cases 68 up to 85) who meet ALL the following:
* Minimum net worth of at least $1,500,000 – (includes residence and all assets)
* In good or reasonably good health (no terminal illnesses)
* Currently uninsured or vastly underinsured in relation to net worth
How Does it Work?
If the insured qualifies, then usually this program funds the premiums for the first two years of a life insurance policy based on insured’s net worth. Should the insured pass away during the first two years the insured’s beneficiaries are entitled to the full face amount of the policy less premiums paid out and interest. There are never any fees or costs to the insured in any way at any time.
Example (insured passes away 18 months into the policy on a 2M policy. Heirs receive 2M less premiums and interest estimated at ~$200,000 leaving heirs with $1,800,000.)
After two years the insured has the option to continue paying the premiums and repay the loan (usually only done if the insured becomes terminally ill and it makes economic sense to the heirs). Or, the policy is sold on the secondary market by the lender(s). In most cases it is sold for above and beyond the premiums and interest already paid. In this case, the profits are split 50/50 with the insured and lender(s). Insured’s profit is expected at anywhere of 1-5% of the face policy.
The collateral for the loan is solely the insurance policy and is completely NON-recourse to the insured. Should the policy later be unable to be sold the insured is under NO obligation to repay any premiums or fees and the lender(s) take the loss.
Why does this work?
This program works as a win-win for the insured and the insured’s heirs as a result of several factors. After two years these policies are able to be sold on the secondary life settlement market for at least what the premiums paid out are for the following reason(s):
Premiums on life policies are currently very low due to high competition among insurance companies and the fact that many policies lapse or insured(s) fail to pay the premiums and the insurance company keeps all the previously paid premiums. Because of this high lapse rate and competition, the premiums are kept low. This may end soon and premiums will rise and this program will end, giving reason to lock in this program now!
Insurance companies are risk adverse and need to balance out their portfolios (meaning a Company may need 75 year olds and be willing to offer preferred rates to 75year-old’s to balance out their portfolios of non-75 year-old’s) companies are willing to offer preferred or standard rates to someone that really should not receive this preferential rate. The investors on the secondary market will pay top dollar for a policy written on someone in this scenario.
Many seniors over 70 develop illnesses after two years and/or their health deteriorates over time. These policies become more valuable to the life settlement market which means it can be sold at a profit!
How To Buy New Houses At A Discount
The past week has been terrible for stockholders of sub-prime lenders. Today a major home builder, Toll Brothers reported that its net profit fell nearly 70% in the 1st quarter.
There's a major slow-down in many markets across the country. Inventory is piling up and home prices are dropping. However, for renters who are looking to become home owners, this is positive news.
Today I spoke to a friend of mine who's a CPA. He has a builder client who's looking to offload some of his brand new homes at a 20% discount to current market value. (Thats not the same as a year old appraisal for 20% more! Its discounted off the current market value.)
If you're looking for a new home, thats the way to go. Find a builder who needs out and buy directly from him. You'll get a great deal. Thats not to say you won't get better deals in the future, but if you want a home NOW, this is the best deal in town.
So if you're looking for new discounted homes in various parts of San Diego or downtown condos, shoot me an email.
There's a major slow-down in many markets across the country. Inventory is piling up and home prices are dropping. However, for renters who are looking to become home owners, this is positive news.
Today I spoke to a friend of mine who's a CPA. He has a builder client who's looking to offload some of his brand new homes at a 20% discount to current market value. (Thats not the same as a year old appraisal for 20% more! Its discounted off the current market value.)
If you're looking for a new home, thats the way to go. Find a builder who needs out and buy directly from him. You'll get a great deal. Thats not to say you won't get better deals in the future, but if you want a home NOW, this is the best deal in town.
So if you're looking for new discounted homes in various parts of San Diego or downtown condos, shoot me an email.
What A Day!
Today was a great day in the markets. Well actually the Dow, Transports, Industrials and Russell sank on inflation worries. Gold spiked up $23 and Oil closed above $60.
Novastar Financials(ticker: NFI), another mortgage lender, tanked 42%.
And the Bank of Japan raised interest rates a quarter of a percent. I didn't think they had the back bone to do it! The BoJ's prime lending rate is now a whopping 0.5%! But they said they'll take their own sweet time in considering future rate increases so the Yen didn't spike on that news.
Well a good day for gold and oil is a good day for my portfolio!
Novastar Financials(ticker: NFI), another mortgage lender, tanked 42%.
And the Bank of Japan raised interest rates a quarter of a percent. I didn't think they had the back bone to do it! The BoJ's prime lending rate is now a whopping 0.5%! But they said they'll take their own sweet time in considering future rate increases so the Yen didn't spike on that news.
Well a good day for gold and oil is a good day for my portfolio!
Old 401k Does Well
I left my previous company last March and therefore stopped contributing to the 401k. I was planning to roll it over into a rollover-IRA but didn't get around to it. Luckily I did check in a few times to make sure the asset allocation was ok and I'm glad I did.
From April 1st 2006 until Feb 20th 2007 it returned 16.66%. And for the year 2006 it returned a stellar 21.4%. Now if I could keep this up, I'd be in the running with Warren Buffett ;-)
Of course my regular brokerage account hasn't done nearly as well, basically because I buy individual stocks and not mutual funds, because I think I'm so damn smart!! (Actually it was those stupid WCI puts that ruined the performance) Anyway, as soon as August rolls around (thats the 1 year anniversary of the new account) I'll post how that account did. Right now its not worth even mentioning!
My Roth IRA which I opened in September is up 11.66%. My previous Roth which I opened in 2002 and funded with $4,000 has a balance of $1.99. Its been like that for about 4 years and I don't have the heart to transfer it to TDAmeritrade or close it. Don't even know if I can close it.
Anyway, I'll be funding the wife's 2006 Roth at Bank of America. I just got an email that if you maintain a $25,000 balance they'll give you 30 free trades per month which is pretty sweet. Don't know if they have the same breadth of products as TDAmeritrade but they can't be too bad.
Incidentally I found out that TDAmeritrade had taken out some of my dividends from last month and reapplied them the next day. When I inquired why, I found it was because the fools didn't know what the Canadian Loonie to US Dollar conversion rate was and mistakenly gave me $0.002 cents per US Dollar. That didn't even make a 1 cent difference which leads me to wonder where all those rounding errors go??? Is there some programmer (like in 'Office Space' or 'Superman III') who's getting fat off these?
From April 1st 2006 until Feb 20th 2007 it returned 16.66%. And for the year 2006 it returned a stellar 21.4%. Now if I could keep this up, I'd be in the running with Warren Buffett ;-)
Of course my regular brokerage account hasn't done nearly as well, basically because I buy individual stocks and not mutual funds, because I think I'm so damn smart!! (Actually it was those stupid WCI puts that ruined the performance) Anyway, as soon as August rolls around (thats the 1 year anniversary of the new account) I'll post how that account did. Right now its not worth even mentioning!
My Roth IRA which I opened in September is up 11.66%. My previous Roth which I opened in 2002 and funded with $4,000 has a balance of $1.99. Its been like that for about 4 years and I don't have the heart to transfer it to TDAmeritrade or close it. Don't even know if I can close it.
Anyway, I'll be funding the wife's 2006 Roth at Bank of America. I just got an email that if you maintain a $25,000 balance they'll give you 30 free trades per month which is pretty sweet. Don't know if they have the same breadth of products as TDAmeritrade but they can't be too bad.
Incidentally I found out that TDAmeritrade had taken out some of my dividends from last month and reapplied them the next day. When I inquired why, I found it was because the fools didn't know what the Canadian Loonie to US Dollar conversion rate was and mistakenly gave me $0.002 cents per US Dollar. That didn't even make a 1 cent difference which leads me to wonder where all those rounding errors go??? Is there some programmer (like in 'Office Space' or 'Superman III') who's getting fat off these?
Why You Need A Good Attorney
Even though Anna Nicole Smith's husband (did they marry? I don't really follow this sort of thing) Howard Stern was an attorney, her will was supposedly taken straight out of a textbook and wasn't even proof-read. She apparently left everything to her son (who's deceased) and specifically excluded all unborn future kids.
Don't know why she'd write in something as wierd as that but apparently thats what you get when you pay $19.99 for your will. So not only will Dannielle Smith-Stern be dragged through a six ring circus of paternety suits, but her mom's money will probably be dragged through the probate courts, the IRS and then finally through her legal guardian's hands. (& maybe her attorneys too!) Good luck getting that dough!
When you die, the last thing you want is for your loved ones to
(a) fight over your money/possessions
(b) pay an obsene amount of tax - both inheritance and income tax
(c) be dragged through the probate courts to get it
Better you spend a little time learning about it and a little bit of money to make sure everything is sorted out before you die.
Don't know why she'd write in something as wierd as that but apparently thats what you get when you pay $19.99 for your will. So not only will Dannielle Smith-Stern be dragged through a six ring circus of paternety suits, but her mom's money will probably be dragged through the probate courts, the IRS and then finally through her legal guardian's hands. (& maybe her attorneys too!) Good luck getting that dough!
When you die, the last thing you want is for your loved ones to
(a) fight over your money/possessions
(b) pay an obsene amount of tax - both inheritance and income tax
(c) be dragged through the probate courts to get it
Better you spend a little time learning about it and a little bit of money to make sure everything is sorted out before you die.
Getting Insurance
After playing phone tag for nearly 4 months I finally met with an insurance agent today. I've been meaning to get disability and life insurance for myself and the wife and today I got some good quotes.
For me a $1000/mo disability policy thats indexed to inflation costs only $29/mo. Term life insurance that starts out at $300k and eventually reaches $600k in the 10th year only costs about $248/year. It increase every year but its not a lot. In the 10th year it'll be around $745/year. The advantage with this plan over a fixed premium product is that this plan is good until I'm 80. The fixed premium product is only good for 20 years.
The cost for my wife's policy is cheaper by about $50-60/year. We're not getting disability for her since her company has awesome coverage already.
Since I'm getting insurance as a safety net for my family and future kids, I want to keep up my policy until they're atleast out of college. Since I don't currently have any kids, we're talking atleast 20-25 years. Getting a policy that lasts for nearly 50 years is a good way to ensure this, since I won't have to go through medical check-ups again and there's no chance of my failing to qualify for insurance because of bad health later on.
Insurance is cheapest when you don't need it! If you're planning on having kids you need to get life insurance. If you have a decent job you need disability. Get it now!
For me a $1000/mo disability policy thats indexed to inflation costs only $29/mo. Term life insurance that starts out at $300k and eventually reaches $600k in the 10th year only costs about $248/year. It increase every year but its not a lot. In the 10th year it'll be around $745/year. The advantage with this plan over a fixed premium product is that this plan is good until I'm 80. The fixed premium product is only good for 20 years.
The cost for my wife's policy is cheaper by about $50-60/year. We're not getting disability for her since her company has awesome coverage already.
Since I'm getting insurance as a safety net for my family and future kids, I want to keep up my policy until they're atleast out of college. Since I don't currently have any kids, we're talking atleast 20-25 years. Getting a policy that lasts for nearly 50 years is a good way to ensure this, since I won't have to go through medical check-ups again and there's no chance of my failing to qualify for insurance because of bad health later on.
Insurance is cheapest when you don't need it! If you're planning on having kids you need to get life insurance. If you have a decent job you need disability. Get it now!
GDX Called Away
I've been selling covered calls on GDX - yes I know selling puts is the same risk-reward ratio but I usually do pretty well in selling far out options. I lost a whopping $40 than if I had outright sold them on friday. I'm hopping we'll see a small dip in the market next week so I can buy back in at roughly the same price.
I'm thinking I might actually buy CEF or SLW (Silver ETF) instead since I think there's a chance than silver might run up more than gold on a percentage basis this year. The markets closed today, but earlier kitco.com reported that Gold was around $672.00/oz. quite a jump in the past few months. Hopefully it consolidate before resuming its next leg up.
My GG naked puts expired worthless so I made $138.50. If they had expired in the money I wouldn't have felt bad about actually buying the stock.
I'm thinking I might actually buy CEF or SLW (Silver ETF) instead since I think there's a chance than silver might run up more than gold on a percentage basis this year. The markets closed today, but earlier kitco.com reported that Gold was around $672.00/oz. quite a jump in the past few months. Hopefully it consolidate before resuming its next leg up.
My GG naked puts expired worthless so I made $138.50. If they had expired in the money I wouldn't have felt bad about actually buying the stock.
Shorting the S&P 500 index
Looking at the unbelievable Valentine's Day rally in the stock market, I decided the market might be heading for a correction. I read somewhere that smart money had the highest amount of short futures contracts since May of last year, when the market corrected quite a bit.
The easiest and cheapest way to short the S&P 500 is to buy a Profunds Inverse Market Fund like URPIX. It has amongst the lowest expenses for funds in that category and if you buy through TDAmeritrade, there are no fees to buy or sell. Not only that but $10k minimum is also waived.
The only problem is that it takes about 3 days to get in or get out of this trade, a move that may have been implemented to prevent people from daytrading mutual funds.
Anyway, I finally got filled friday at a price of $13.29. Lets see if this trade works out. I'm not really good at timing the market and as seen by my WCI puts, I'm actually quite terrible at this sort of thing! But since I don't want to sell any of my stock, this way, I'm hedging my bets. But hopefully, I can get better at this sort of thing.
Speaking of WCI, Bill Gates's foundation announced they were bailing on it but that didn't help. The stock still went up! Its up 30% since October!
The easiest and cheapest way to short the S&P 500 is to buy a Profunds Inverse Market Fund like URPIX. It has amongst the lowest expenses for funds in that category and if you buy through TDAmeritrade, there are no fees to buy or sell. Not only that but $10k minimum is also waived.
The only problem is that it takes about 3 days to get in or get out of this trade, a move that may have been implemented to prevent people from daytrading mutual funds.
Anyway, I finally got filled friday at a price of $13.29. Lets see if this trade works out. I'm not really good at timing the market and as seen by my WCI puts, I'm actually quite terrible at this sort of thing! But since I don't want to sell any of my stock, this way, I'm hedging my bets. But hopefully, I can get better at this sort of thing.
Speaking of WCI, Bill Gates's foundation announced they were bailing on it but that didn't help. The stock still went up! Its up 30% since October!
The Poor Middle-Class
Rich at Queercents has a good post on what it takes to be middle class and makes a great case on why being middle class (at a $75k annual income) means barely getting by.
Sadly, I agree with the post. Ever since the 1960s, where a single earner in the family could provide for a family and send the kids to college, the average american's standard of living has been eroding at a steady pace. Of course the average house is 30% bigger than a 60s house but apart from the bump in creature comforts, there has been a drastic decrease in the amount of savings.
It now takes 2 incomes to maintain a decent lifestyle, and again, most people barely get by. There's the choice people have to make - do I want to save for my retirement this year, or go on vacation? And with the government lying about the rate of inflation, Social Security payments (or bank savings rates) haven't been keeping up. As a result, many seniors who thought the government would take care of them have an even more difficult choice - should we buy food or medicine?
In California, where the median house price is $550k (and dropping), being middle-class is even more difficult. I have friends, where both spouses work. One of their incomes goes totally towards house payments! So far I've turned down my wife's complaints about moving into a bigger house on the grounds that we can't afford it. I'd rather make the extra payments into areas where the house prices are appreciating and the rent covers most of the mortgage. Its better to have 5 appreciating assets you can afford than 1 depreciating "asset" that you can't. (isn't that really a liability?) Of course, the popular press will make stupid comments like "your house is your biggest asset" instead of saying, "if your house is your biggest asset, it just means you don't really have any assets and are probably broke". (that deserves a seperate rant of it own!)
Just goes to show that no one will take care of you. Its up to you to make your own financial future, to learn about finances and investing, to make the right and smart decisions, to live below your means, and to develop alternate means of income. And thats Kiyosaki's philosophy in a nutshell! Now you don't have to read the book ;-)
Sadly, I agree with the post. Ever since the 1960s, where a single earner in the family could provide for a family and send the kids to college, the average american's standard of living has been eroding at a steady pace. Of course the average house is 30% bigger than a 60s house but apart from the bump in creature comforts, there has been a drastic decrease in the amount of savings.
It now takes 2 incomes to maintain a decent lifestyle, and again, most people barely get by. There's the choice people have to make - do I want to save for my retirement this year, or go on vacation? And with the government lying about the rate of inflation, Social Security payments (or bank savings rates) haven't been keeping up. As a result, many seniors who thought the government would take care of them have an even more difficult choice - should we buy food or medicine?
In California, where the median house price is $550k (and dropping), being middle-class is even more difficult. I have friends, where both spouses work. One of their incomes goes totally towards house payments! So far I've turned down my wife's complaints about moving into a bigger house on the grounds that we can't afford it. I'd rather make the extra payments into areas where the house prices are appreciating and the rent covers most of the mortgage. Its better to have 5 appreciating assets you can afford than 1 depreciating "asset" that you can't. (isn't that really a liability?) Of course, the popular press will make stupid comments like "your house is your biggest asset" instead of saying, "if your house is your biggest asset, it just means you don't really have any assets and are probably broke". (that deserves a seperate rant of it own!)
Just goes to show that no one will take care of you. Its up to you to make your own financial future, to learn about finances and investing, to make the right and smart decisions, to live below your means, and to develop alternate means of income. And thats Kiyosaki's philosophy in a nutshell! Now you don't have to read the book ;-)
Book Review - Guns, Germs & Steel
I'm currently half way through a great book by Jared Diamond called Guns, Germs, and Steel: The Fates of Human Societies
.
It delves into 30,000 years of human history and tries to answer the question how some cultures were able to dominate over others and become successful. Its an incredibly interesting book and the author has done a ton of research. If you're too lazy to read it, its also available on DVD
from National Geographic
.
It doesn't have anything to do with investing but I had to recommend it nonetheless. On the other hand, anything you learn can spark a million dollar idea! Check out some really dumb ideas that made millions.
. It delves into 30,000 years of human history and tries to answer the question how some cultures were able to dominate over others and become successful. Its an incredibly interesting book and the author has done a ton of research. If you're too lazy to read it, its also available on DVD
from National Geographic.It doesn't have anything to do with investing but I had to recommend it nonetheless. On the other hand, anything you learn can spark a million dollar idea! Check out some really dumb ideas that made millions.
BoA To Give Credit Cards to Illegal Immigrants
Bank Of America is going to start giving out credit cards to illegal immigrants who don't have social security numbers.
Apparently there will be some checks in place to make sure they're not financing terrorists. The applicants must maintain a bank account for 6 months and pay an upfront fee.
What I'd like to know is how on earth can they open bank accounts without a social security number?
Apparently there will be some checks in place to make sure they're not financing terrorists. The applicants must maintain a bank account for 6 months and pay an upfront fee.
What I'd like to know is how on earth can they open bank accounts without a social security number?
Sub-prime Lenders In Trouble
According to the Mortgage Lender Implode-o-Meter Website, 21 of the top 25 sub-prime lenders have closed their doors or gone out of business since december 2006.
According to various sources, 25% of all borrowers last year were sub-prime and another 25% were speculators(or atleast people who can afford a 2nd home, investors and some speculators). Assuming minimum overlap between the 2 groups, that means only 50% of the loans last year went to homeowners who could actually afford them! Okay, thats a bit of a stretch but no wonder the sub-prime lenders are doing poorly.
WAMU was smart to sell its sub-prime portfolio to a french pension fund and HSBC who paid $8 billion for a sub-prime lending company and is now putting aside another $9 billion for bad loans wasn't.
According to various sources, 25% of all borrowers last year were sub-prime and another 25% were speculators(or atleast people who can afford a 2nd home, investors and some speculators). Assuming minimum overlap between the 2 groups, that means only 50% of the loans last year went to homeowners who could actually afford them! Okay, thats a bit of a stretch but no wonder the sub-prime lenders are doing poorly.
WAMU was smart to sell its sub-prime portfolio to a french pension fund and HSBC who paid $8 billion for a sub-prime lending company and is now putting aside another $9 billion for bad loans wasn't.
Land Trusts Offer Great Tax Breaks
According to the WSJ, Landowners Rush to Take Advantage of New Law That Boosts Deductions for Blocking Development.
So if you're one of the lucky rich people who can afford to buy land out in the wilderness for horse riding or camping or whatever, you can now write it off. All you need to do to promise not to build on it. Now thats a neat tax deduction.
Here's how it works: A landowner typically donates a conservation easement to a land trust, a type of non-profit organization that helps put together the easement and monitors its restrictions over time. The value of the donation for income-tax purposes generally is the difference between the land's unrestricted value and its new value with limited development or usage rights.
Landowners can now deduct the value of a donation up to 50% of their adjusted gross income per year, up from the previous ceiling of 30%. That means if your adjusted gross income is $100,000, you are now eligible for as much as a $50,000 tax deduction a year, instead of $30,000. And if your income is too low to deduct the full amount of your gift in one year, you can now carry forward the deduction for 15 additional years, up from five years previously.
The law is even more generous for career farmers and ranchers who earn at least half their income from their land. These property owners, who are often land-rich, but cash-poor, can now deduct up to 100% of their income. "If you're a farmer you could pay no federal income taxes for 16 years," says Rand Wentworth, president of the Land Trust Alliance, a coalition of 1,600 land trusts across the country.
So if you're one of the lucky rich people who can afford to buy land out in the wilderness for horse riding or camping or whatever, you can now write it off. All you need to do to promise not to build on it. Now thats a neat tax deduction.
Friday Rant
I came across this article last night, 32 Reasons Why The Stock Market Will Jump This Year.
While its written as a serious prediction, I personally feel its more like a christmas wish list or a list of finalist answers at the Miss World Beauty Pagent!. Here are some of the gems
#1. Housing and Auto-manufacturing weakness will subside
Based on what? Major layoffs in both industries?
#5. Unemployment with stay at record lows.
Hmm...with the massive layoffs in Housing and Auto-manufacturing, you really think so?
#7. Inflation will continue to decelerate, with CPI averaging around 2.0%.
Hmm...ever since the minimum wage was jacked up, small business around where I live jacked up the price of everything along with it. That doesn't sound like low inflation to me. Anyone who thinks that CPI is an accurate measure of inflation makes way too much money to begin with. Once you take out all the factors that cause inflation, of course you'll be left with 2%. What a doofus.
#11. The US Dollar will firmer up and even maybe become stronger
With almost all the worlds major currencies strengthening against the USD how is this going to happen? Oh yeah, Bank of Japan is enforcing a weak Yen policy. And of course the USD will strengthen against the Iraqi Dinar! And with China owning a Trillion USD do you think a strong Dollar is actually in our interest????
#12. The U.S. budget deficit, which is currently 1.5% of GDP, well below the 40-year average of 2.3% of GDP, will continue to trend lower as healthy economic activity continues to boost tax receipts substantially more than estimates.
Uh...isn't the US GDP is currently mainly comprised of government spending? Thats not really a show of healthy economic activity. Although it is true that the tax receipts are up more than estimated.
#15. The mania for commodities will completely end.
Yeah Right!!! All those millions of people in India and China who can now afford to buy a car and a decent place to live will choose to buy plastic go-karts and tents instead of regular cars and houses that use steel & copper. Is he completely blind to the global industrialization thats taking place? Every year China adds to its electricity generating capacity by the same amount as the entire UK. This electricity comes from coal and is used to make more cars and power more houses. The dude's smoking crack now.
#16. Oil falls to $35 to $40 per barrel and eventually $20-$25.
#19. Gas prices will drop below $4/mcf.
#20. Gold will drop below $550 per ounce
This was written on the 1st of Feb when Oil was around $50/barrel. Its since gone up to nearly $60 and is probably on its way up. Corn has quadrupled to over $4/bushel making ethanol almost as expensive as gasoline now. Similarly Gold is also up to $665. I actually bought some GLD (the gold ETF) 2 days ago and I'm already up 7%. I predict its going to $800 in 2 years.
#17. Peace in the Middle East.
HAHAHA.
Some of the points are actually valid, but the ones I've mentioned are pretty stupid. Like I've said before, I've taken exactly opposite bets in my stock investing, so of course my views are out of line with the authors.
What do you think?
While its written as a serious prediction, I personally feel its more like a christmas wish list or a list of finalist answers at the Miss World Beauty Pagent!. Here are some of the gems
#1. Housing and Auto-manufacturing weakness will subside
Based on what? Major layoffs in both industries?
#5. Unemployment with stay at record lows.
Hmm...with the massive layoffs in Housing and Auto-manufacturing, you really think so?
#7. Inflation will continue to decelerate, with CPI averaging around 2.0%.
Hmm...ever since the minimum wage was jacked up, small business around where I live jacked up the price of everything along with it. That doesn't sound like low inflation to me. Anyone who thinks that CPI is an accurate measure of inflation makes way too much money to begin with. Once you take out all the factors that cause inflation, of course you'll be left with 2%. What a doofus.
#11. The US Dollar will firmer up and even maybe become stronger
With almost all the worlds major currencies strengthening against the USD how is this going to happen? Oh yeah, Bank of Japan is enforcing a weak Yen policy. And of course the USD will strengthen against the Iraqi Dinar! And with China owning a Trillion USD do you think a strong Dollar is actually in our interest????
#12. The U.S. budget deficit, which is currently 1.5% of GDP, well below the 40-year average of 2.3% of GDP, will continue to trend lower as healthy economic activity continues to boost tax receipts substantially more than estimates.
Uh...isn't the US GDP is currently mainly comprised of government spending? Thats not really a show of healthy economic activity. Although it is true that the tax receipts are up more than estimated.
#15. The mania for commodities will completely end.
Yeah Right!!! All those millions of people in India and China who can now afford to buy a car and a decent place to live will choose to buy plastic go-karts and tents instead of regular cars and houses that use steel & copper. Is he completely blind to the global industrialization thats taking place? Every year China adds to its electricity generating capacity by the same amount as the entire UK. This electricity comes from coal and is used to make more cars and power more houses. The dude's smoking crack now.
#16. Oil falls to $35 to $40 per barrel and eventually $20-$25.
#19. Gas prices will drop below $4/mcf.
#20. Gold will drop below $550 per ounce
This was written on the 1st of Feb when Oil was around $50/barrel. Its since gone up to nearly $60 and is probably on its way up. Corn has quadrupled to over $4/bushel making ethanol almost as expensive as gasoline now. Similarly Gold is also up to $665. I actually bought some GLD (the gold ETF) 2 days ago and I'm already up 7%. I predict its going to $800 in 2 years.
#17. Peace in the Middle East.
HAHAHA.
Some of the points are actually valid, but the ones I've mentioned are pretty stupid. Like I've said before, I've taken exactly opposite bets in my stock investing, so of course my views are out of line with the authors.
What do you think?
Deals On Electronics?
Circuit City, the No. 2 electronics retailer behind Best Buy, is closing 69 stores in the U.S. and Canada. The company quoted gross margin pressure from lower prices on flat-panel TVs as a large reason for its troubles. The closings represent nearly 5% of Circuit City's stores. The company will not announce which stores it is shuttering, but keep your eyes open. The targeted stores will close on Monday and reopen Wednesday for a major clearance sale.
Guess there's no return policy on these items!
$10 Billion Dollar Stock Buyback
BHP Biliton (BHP) just announced a $10 Billion Dollar stock buyback over the next 18 months!!! Thats on top of the $3 Billion previously announced. About 4 months ago I bought BBL. BHP also trades as BBL and BBL trades at a slight discount to BHP, making it cheaper to own blocks of 100. Since BBL closely follows BHP it doesn't matter which one you buy. I'm up 8.5% since then and I think there's still a long way to go.
Most of my holdings are oil & gas or commodity companies. I've also been selling naked puts sporadically on companies like STP and CRDN which have done pretty well. Well enough to offset my losses on WCI. Since I started shorting WCI in October its up about 30%.
Has anyone had luck consistently buying options instead of selling them???
Most of my holdings are oil & gas or commodity companies. I've also been selling naked puts sporadically on companies like STP and CRDN which have done pretty well. Well enough to offset my losses on WCI. Since I started shorting WCI in October its up about 30%.
Has anyone had luck consistently buying options instead of selling them???
Boost Your Passive Income
There's nothing like passive investments which provide monthly income. There are 2 deals right now.
The first is a 2nd trust deed on a property in Eden, Utah. The developer is a friend of mine who's very entrepreneurial. He runs a real estate brokerage company, a lending company and also does land development and construction deals too. He used to rental investing as well but he got out of that and into these more profitable deals. He's currently offering between 12% and 24% (payable on a monthly basis) for various deals. Let me know if you're interested and I'll send you his contact info. I've lent him money in the past and gotten 24% for an 18 month period. In about 10 days, I'll be lending him some more money.
The second deal comes from one of my readers. He has some cashflow property in Indiana.
Let me know if you're interested in either deal and I'll email you the info.
The first is a 2nd trust deed on a property in Eden, Utah. The developer is a friend of mine who's very entrepreneurial. He runs a real estate brokerage company, a lending company and also does land development and construction deals too. He used to rental investing as well but he got out of that and into these more profitable deals. He's currently offering between 12% and 24% (payable on a monthly basis) for various deals. Let me know if you're interested and I'll send you his contact info. I've lent him money in the past and gotten 24% for an 18 month period. In about 10 days, I'll be lending him some more money.
The second deal comes from one of my readers. He has some cashflow property in Indiana.
Let me know if you're interested in either deal and I'll email you the info.
Housing Market still doing well in Salt Lake City
Utah's Business Index Skyrockets
2007-02-02
Deseret News (Salt Lake City)
Demand high for downtown housing
Renting no longer a bargain in Utah
I started buying SLC at the end of 2004 and I've seen a pretty good run. I still have half the homes I bought and I'll probably hang on to them. Utah seems to have an opposite cycle from California, so if I pick up a few homes locally in San Diego at the bottom of this cycle, I'll always have something that appreciating.
2007-02-02
Deseret News (Salt Lake City)
The economy soared in three Mountain states last month, with Utah leading Colorado and Wyoming in new hiring and manufacturing production, according to a report Thursday from the Creighton Economic Forecasting Group.
The report tracks business conditions based on an index that ranges from zero to 100. Utah's index reading in January skyrocketed to 86.8 from December's 53.6, the report said.
"January's growth was broad-based for industries in Utah," said Ernie Goss, an economics professor at Creighton University in Omaha, Neb. "Advances were especially significant for trucking firms, and nondurable-goods manufacturers, including food processors. Firms with close ties to the transportation equipment manufacturers detailed pullbacks in January economic activity."
Demand high for downtown housing
Over the next 20 years, Utah will witness a 140 percent increase in the number of people ages 65 and older, according to a November report by the Brookings Institute. This "age-wave," according to the report, will have profound effects on America's cities, shaping how and where baby boomers and seniors live.
Those changes will be felt strongly in Salt Lake City, where a rush of new residential housing is planned.
The city already has roughly 3,400 residential units in the central business district, providing housing to 6,000 people, according to James Wood, director of the University of Utah's Bureau of Economic and Business Research.
Over the next five years, The Church of Jesus Christ of Latter-day Saints' estimated $1.5 billion City Creek Center project in downtown Salt Lake City will add five new residential towers to the skyline, with about 430 new residential housing units.
But if market conditions and demand are strong, the number of residential units in the project could be as high as 700, according to Dale Bills, spokesman for City Creek Center.
Renting no longer a bargain in Utah
Average rents rose to $674 - up by $33 a month from 2005. The 5.1 percent increase is still the largest in more than a decade. The days of low rent increases, reduced deposits and freebies to attract renters along the Wasatch Front are only a happy memory.
At the same time, vacancy rates at Salt Lake County apartments declined to 5.1 percent at year's end, down from 6.5 percent at the end of 2005 and 10.9 percent in 2002.
I started buying SLC at the end of 2004 and I've seen a pretty good run. I still have half the homes I bought and I'll probably hang on to them. Utah seems to have an opposite cycle from California, so if I pick up a few homes locally in San Diego at the bottom of this cycle, I'll always have something that appreciating.
Investing In Hotels
I spoke to my uncle's friend today. Apparently he had a few liquor shops and recently got into the hotel business.I'd been wondering what the numbers are in that business and I actually got some concrete numbers today.
Ideally you should pay 4 times the gross income or less. The bank requires you to only put down 20% of the purchase price. If you buy a chain (instead of running a mom & pop joint), the bookings are done through a central reservation system so its NOT a cash-based business. This means you can hire a manager or a management company to run it for you and be sure that you're not being robbed. Normally hotels should net you atleast 15% cash on cash or better.
Sounds like pretty good numbers to me. He's promised to include me (with my puny investment capital) in his next investment. Hopefully I will have free capital at that time.
I've heard of hotels in San Diego being sold for 7 times the gross and I guess making money on your investment isn't always the criteria for investing!!! But, there are a few people who pay CASH for their multi-million dollar hotels and so whatever they make is a profit to them.
Anyway, if I can buy a hotel in partnership this year, I'll be very happy. I might even put together a Private Investment Fund for investing in a hotel.
Ideally you should pay 4 times the gross income or less. The bank requires you to only put down 20% of the purchase price. If you buy a chain (instead of running a mom & pop joint), the bookings are done through a central reservation system so its NOT a cash-based business. This means you can hire a manager or a management company to run it for you and be sure that you're not being robbed. Normally hotels should net you atleast 15% cash on cash or better.
Sounds like pretty good numbers to me. He's promised to include me (with my puny investment capital) in his next investment. Hopefully I will have free capital at that time.
I've heard of hotels in San Diego being sold for 7 times the gross and I guess making money on your investment isn't always the criteria for investing!!! But, there are a few people who pay CASH for their multi-million dollar hotels and so whatever they make is a profit to them.
Anyway, if I can buy a hotel in partnership this year, I'll be very happy. I might even put together a Private Investment Fund for investing in a hotel.
Fancy Watch Update
A couple of readers thought that an expensive watch was a waste of money and that a similar looking or similar functioning watch could be had at a fraction of the cost.
I totally agree with them. Someone rightly said "Spend money on experiences, not material things". And I don't own a fancy car, fancy TV, cellphone, Ipod or other "fancy" stuff, so buying expensive toys isn't really my thing.
However, buying an extravagant gift for myself went deeper than just replacing my watch. Sometimes, you need to spend some money on yourself. A reward for all the hard work you put in and a reminder to why we work so hard.
A watch is also a very personal artifact, one that you gift to your kids when you die. I definitely appreciate having my Dad's watch and thankfully he had good taste!
Anyway, regardless of my attempts to justify buying an expensive watch, I went ahead and bought one anyway. I bought the Omega Men's Speedmaster Michael Schumacher "The Legend" Collection Series Watch
I opted not to buy it from an online store, since they are not authorized dealers and therefore do not offer a company warranty. I thought it made more sense to buy it from an authorized dealer, so if something went wrong I could get it repaired anywhere under warranty. After all, these are complex mechanical watches, not a simple quartz mechanism that will fit in 2mm. Most repairs run atleast a couple hundred dollars.
However I did negotiate the best deal ever. I found out that red schumacher legend series was a slow moving model. People who can afford to spend $4,350 on a watch aren't often in the age-group that would appreciate a red faced dial! I told the dealer that I wanted the red faced dial and he said it would take 4-6 weeks to locate and get. I can't wait that long, I have a birthday coming up! So I settled on the black faced dial. I told the dealer I had found a dealer in Florida who was willing to offer a 30% rebate and that with taxes he should offer me atleast 35% off the retail price. He said there was no way he could match that price. I had previously gone to the bank and withdrawn $2,500 cash and I when I spread the stack of hundreds on the counter he realized I was serious. I said I was willing to make a deal right then and pay in cash if he would offer good terms, if not the watch would still probably be there in another month. Finally we settled on a 34% discount. I paid the bulk in cash and put $600 on my visa card.
Atleast I got a good deal on a bad "investment"!!!!
I totally agree with them. Someone rightly said "Spend money on experiences, not material things". And I don't own a fancy car, fancy TV, cellphone, Ipod or other "fancy" stuff, so buying expensive toys isn't really my thing.
However, buying an extravagant gift for myself went deeper than just replacing my watch. Sometimes, you need to spend some money on yourself. A reward for all the hard work you put in and a reminder to why we work so hard.
A watch is also a very personal artifact, one that you gift to your kids when you die. I definitely appreciate having my Dad's watch and thankfully he had good taste!
Anyway, regardless of my attempts to justify buying an expensive watch, I went ahead and bought one anyway. I bought the Omega Men's Speedmaster Michael Schumacher "The Legend" Collection Series Watch
I opted not to buy it from an online store, since they are not authorized dealers and therefore do not offer a company warranty. I thought it made more sense to buy it from an authorized dealer, so if something went wrong I could get it repaired anywhere under warranty. After all, these are complex mechanical watches, not a simple quartz mechanism that will fit in 2mm. Most repairs run atleast a couple hundred dollars.
However I did negotiate the best deal ever. I found out that red schumacher legend series was a slow moving model. People who can afford to spend $4,350 on a watch aren't often in the age-group that would appreciate a red faced dial! I told the dealer that I wanted the red faced dial and he said it would take 4-6 weeks to locate and get. I can't wait that long, I have a birthday coming up! So I settled on the black faced dial. I told the dealer I had found a dealer in Florida who was willing to offer a 30% rebate and that with taxes he should offer me atleast 35% off the retail price. He said there was no way he could match that price. I had previously gone to the bank and withdrawn $2,500 cash and I when I spread the stack of hundreds on the counter he realized I was serious. I said I was willing to make a deal right then and pay in cash if he would offer good terms, if not the watch would still probably be there in another month. Finally we settled on a 34% discount. I paid the bulk in cash and put $600 on my visa card.
Atleast I got a good deal on a bad "investment"!!!!
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