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cd_vision's LiveJournal:
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| Monday, February 8th, 2010 | | 7:25 am |
Got some new hardware
I caved in and bought a new graphics card. Pickep up a Geforce 250GTS for $130 at Frys. This is a very capable card for what you pay for it. I get what I would consider to be very high framerates playing Bioshock and Assassin's Creed on it. I saved a lot of money by being behind the technology curve too. Allegedly if you SLI a pair of these together you get performance in line with the 285 GTX, currently one of their fastest cards. I'm not really feeling the need to do that currently, the performance is very impressive. There wasn't a lot of difference with World of Warcraft. I think the draw distance was improved a bit. Maybe it has more to do with the network speed than your hardware. I read that there is some kind of card you can buy that takes the load off of your onboard network adapter and is supposed to improve things. It costs $100 though and I think we can live just fine on what we have now. | | Wednesday, February 3rd, 2010 | | 12:56 pm |
There are no risks in stock ownership
I wanted to take a moment here to address something I get asked about a lot. I want to define the word risk. People who have never invested seem to be under the impression that there is a high degree of risk in stock ownership. They associate that word with the same meaning risk carries when you talk about crossing the freeway it seems like. As if you have some kind of chance of being hit by a truck or have all of your money wiped out. I have a different meaning. The risk in stock ownership shouldn't be confused with the idea that you could somehow lose everything you put into it. If you are buying shares of a single company, well I suppose that's possible, but when you're buying something like an index fund that contains the stock of every company in the S&P 500, well I'd tell you there's virtually no risk at all. When you say risk in that sense, what you mean is that it's possible the price of the fund could drop over a short time frame. That's called volatility risk, and sure, it's real. But you can mitigate that kind of risk by simply making regular purchases over a long time frame. You don't have to be concerned with "Buying low, selling high". For more than 100 years the long term trend of the markets has been upward. Trying to guess when it's low or high is a fool's game. If you make regular investments, once a month say, you're sure to hit some of the "low" times. If you do that over your entire lifetime you're going to have way more money than just putting it into a savings account. Many times more. So no, investing is not risky. And you should do it because not investing makes you poorer every day. That's the risk of holding onto cash, is that it depreciates over time. There is risk in everything. It doesn't have to mean that there is danger. | | Sunday, January 31st, 2010 | | 9:42 pm |
And for those sharebuilder trades...
I don't really do much with my personal Sharebuilder account anymore these days, but I don't want to waste free trades, so I started buying $25 worth of the Pimco High Income fund every other week. I'll use the money to buy a new graphics card or something. It's a good choice for this kind of investment since they will automatically reinvest my dividends, and everyone seems to expect that bond fund prices will start falling as interest rates rise. If start to see a loss in principal, I'll actually consider adding more to the account, since the income amount rises as a percentage. I keep some PHK in my normal account but I limit that investment to 5% of the total. I'm tracking the amounts added and the current value on a spreadsheet. This should be an interesting experiment in cost averaging. | | Wednesday, January 27th, 2010 | | 8:32 am |
Using up those free trades
Zecco decided to get in on the action too and shot me 40 free trades. So I did a little rebalancing. Sold some Nintendo and Cheniere Energy and added to Coca-Cola, Line Energy and a new BDC called Prospect Capital. | | Tuesday, January 26th, 2010 | | 9:48 pm |
Trust me, I'm a genius.
Started Biology this week too. We were doing a lab on the scientific method. The assignment was about World War I, and how the soldiers used to wear these helmets made out of cloth. Well they were finding that lots of soldiers were being killed by trauma wounds to the head. So we come up with suggestions for why they might be dying, and new materials to make the helmets out of, using control methods like steel vs. iron, and then in the end steel helmets are what the soldiers are given. So the soldiers go out to battle with their new steel helmets, and the outcome is that even more soldiers die. Then we are asked to determine what the cause of that could be. Some ideas given were that the new helmets increased visibility, or there were concussion problems from impact, scrambling the brains from vibration when shot. My question was simply "Are there more soldiers fighting in total than there were at the start of the war? More should die as a rule." The teacher said that is the right answer, and in ten years of teaching that class, I am only the second student who ever asked that. | | Monday, January 25th, 2010 | | 7:10 pm |
HAH
I started the next level of accounting classes. My big class assignment which I have just two months to prepare for, is to read an annual report and decide if I would invest in the company. Wow, I hope I can handle that :> I'm hoping to find a good growth company and then give a great analysis of it's profitability, good asset levels and such, and at the very end shoot it down with a statement about how the stock is priced too high relative to earnings. :> This semester is going to be such fun. In other news, I racked up a buttload of free trades on Sharebuilder. They're shooting out a promotional code that gives you 10 free trades. Between my individual and joint accounts, and all the kids' funds I manage, I've got close to 110 free trades. Awesome. The code for the trades is 10aip2, and if anyone also wants an invite which gets you a $25 signup bonus, send me your email address. | | Saturday, January 23rd, 2010 | | 10:19 am |
Investing is not a one time activity.
This entry is probably going to be one of the most important issues I've ever talked about as part of my investing strategy. Buy and hold investing is not about making a single decision and sitting on it, just riding it out and accepting your fate. You need to be prepared, you need a safety net in case something doesn't work out. You need to protect yourself from the markets as well as your own impulsive mind. Case in point, the purchase of AK Steel. My mother in law and I both started buying last year when I first started talking about their electrical steel business. She has cost averaged it up along the way. I took around a 70% profit out of it when I started to think they had lost their margin of safety. I didn't like the numbers showing up in their annual reports and I felt there were safer ways to see growth. I missed out on some profit with AK Steel, but I did very well with where I moved the money to so I have no regrets about that at all. But my mother in law kept it, and she got as high as $26.75 per share. Well now they've dropped to $20.19 as of market close on Friday. She's still up overall on the purchase, but just lost an opportunity cost of more than 20% on what she had invested. To make it back to $26.75, she has to gain better than 32% over the current price. The average gain for the overall markets is only about 11% per year, so that's a lot to ask from any stock, especially one that's got as much competition as AK Steel. She's got no hedge, no cash reserves to use if the stock drops from here. She is at the mercy of the markets. Having a hedge in safe bonds or cash makes things different. Making a habit of adding money every time I get paid also increases my opportunity. I'm always maintaining my bonds as a percentage of my portfolio. Currently 25%, but I'm thinking of taking it just a bit higher. I won't buy stocks if my bonds percentage is off. Ever. I do that so I can get cash ready to strike when opportunity is there. I'm down on the trade too, but only 2%. I'm more than ready to buy even more if we go down from here. Sure AKS is not great, but they do have value, and they are more likely to swing up in price after such a vicious swing down. If they swing up, I will almost certainly take profits and then wait for the next opportunity. I can't lose this way. Either I profit from the value of the stock rising, or my monthly income increases from dividend payments. That's how to play this game intelligently. | | 9:53 am |
| | 9:03 am |
Quite a Friday!
There was a heck of a lot of selling going on today. I see a really great purchase available in Coca-Cola so I'll probably add to what I have in that soon. American Express dropped shy of 9%, that's probably another opportunity to get back into them. Linn energy fell a good 6%. Microsoft has been surprisingly resistant to price drops (or rises for that matter), but they moved down 3%. Even the new lower priced Baby Berkshires pulled back a hair. Obviously I like Buffett's company a lot but he's so heavily diversified now that it's not much different from buying a market index. Of course, that'd be a really good index since pretty much every company in there draws profits. I kind of feel like I owe him a little so I should probably hold some just out of respect for what he's taught me. I am getting really excited. I hope that Monday is equally bad but that would probably be asking for too much. | | Friday, January 22nd, 2010 | | 8:13 am |
Bottom-Fishing Steel
Commodities had a really sharp pullback this week, something about China tightening monetary policy. I picked up AK Steel for almost 25% less than what it was selling for on Monday. I'm not sure what this year will bring but their income has been stable enough, their debt isn't growing compared to revenue, and even though they are currently in negative earnings, it appears to be from a one-time charge. It doesn't look like they're serial offenders with charges that appear every year so I'm going back in. | | Thursday, January 21st, 2010 | | 7:00 am |
| | Saturday, January 16th, 2010 | | 8:23 am |
Accidentally useful tool
Some time ago I posted in the finance journal asking about portfolio tracking software. I had been using MSN, but they lost a feature I really liked with regards to dividend tracking. Somebody pointed me towards Mint.com, and although I don't track my gains there, I did find it useful for another reason. Every week I get an email telling me what the largest moves in price have been in my portfolios. That's helped me make smart purchases in several of my income stocks, and also alerted me that Nintendo had a big pop. My current boss doesn't let me watch my tick list at work so I hadn't noticed it. The real bonus is that it's not just tracking my Zecco portfolio, but all of the Sharebuilder portfolios I manage for my relatives. I hold certain things in those baskets that aren't in my group, so it helps me spot when opportunities are present everywhere. On top of all that, the features are free. They occasionally send me ads for credit cards and CDs but for what I'm profiting I can live with that. | | Friday, January 15th, 2010 | | 7:30 am |
Don't just do something, stand there!
Ok, so I sold CQP last week and the price just isn't really doing anything. I'm still sitting on the cash I earned, so it'd be really great if it would drop a bit so I could buy back in. I don't like holding onto cash, I want my money earning something for me at all times, either in a safe investment or in stable bonds. If nothing happens soon I'll probably move the money back to Linn Energy. There's still a nice margin of safety in their price to earnings ratio. | | Friday, January 8th, 2010 | | 4:42 am |
Powerup collected
Nintendo's had a big move up this week too. If you remember, I was down about 10% and I doubled the number of shares I was holding at that point. I'm now up about 10% on the average cost of the entire purchase. I had thought about taking out the extra amount I used to average it but I think I might just let this ride. There is a lot of room for growth from here. | | Thursday, January 7th, 2010 | | 6:54 pm |
SOLD
I sold half of my CQP for a 17% gain on it. That's just too much movement too fast. After I make this week's deposit I'll figure out what I want to use the cash to do. Hoping for a price drop by then. | | Wednesday, January 6th, 2010 | | 6:09 pm |
Wow
When I checked in earlier, CQP was up another 5% on the day. That's a 15% rise in just over a week. I was really starting to think about selling there but I'm not really sure what I would prefer to move the money into right now. I'm still catching a great yield so I'm just not motivated to sell. The stock hit a new high for the year, and that kind of thing will attract people to it. Since only one analysts follows the stock it's reasonable to think there is room to run. Their price history has been pretty volatile though, so maybe it'll swing in the opposite direction soon and I can pick up some more. Money. Like it. | | Tuesday, January 5th, 2010 | | 9:01 pm |
All green
I like how the year is starting! I'm already up 10% on the new MLP I bought. Also, after cost averaging out Nintendo, they're profitable as well. Now it's just a matter of keeping these gains. My bonds are right where I want them, but I will add to it if I keep seeing increases in stocks. | | Wednesday, December 30th, 2009 | | 7:42 am |
Return of Capital = DO NOT WANT
I got a letter last night from the MFS Income trust, those were the guys I changed my mind on a couple weeks back and sold. If I hadn't sold then I definitely would have sold today. The letter says that their last dividend payment was paid half with net income, and the other half by return of capital. "Return of capital" is when assets are sold to raise cash instead of the business making profits on those assets. Sure, I get a cash payment, and the 8% yield seems nice on the surface, but the future profitability of the operation can be compromised, and I would rather not have that. It would be as if Coke paid me because they sold one of their bottling plants. How can I expect them to sell more Coke in the future if they just turned that cash over to me? This is not what I want as a co-owner of the business. | | 7:37 am |
It's like increasing my monthly income by 50%
Did another income trade, swapped half of what I had in Linn Energy, which yields 9%, for Chenier Energy Partners, yielding 14%. Chenier has a couple of operations, I bought the one trading under CQP, which is specific to a port in Louisiana. This could be viewed as somewhat speculative because the operation only took it's offering public in 2007. They quickly got up and running, and net income has been ticking up each quarter. I've found with income investments, and maybe any other kind of investment too that nothing tells me more about future moves than the information found in the income statement. Obviously if a company if going to pay cash dividends it needs to have cash to pay it from, so rising income is critical. | | Tuesday, December 29th, 2009 | | 8:40 am |
Today's special
More profit taking, diversifying my REITs. Sold half of my Realty Income @$26.69, used that money to buy Gladstone Commercial @$13.12. Comparing apples to apples, Gladstone's yield is about double what I get on Realty Income. |
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