Philosophy, Investing, Video games, and other Tomfoolery|
[Most Recent Entries]
Below are the 20 most recent journal entries recorded in
[ << Previous 20 ]
[ << Previous 20 ]
|Tuesday, November 17th, 2015|
|Saturday, October 24th, 2015|
|Sunday, October 18th, 2015|
|Saturday, October 17th, 2015|
|Friday, October 16th, 2015|
|Thursday, January 1st, 2015|
|Tuesday, September 2nd, 2014|
|Mattel is on sale
As a followup to my last entry, let me tell you why I'm interested in buying Mattel right now. Mattel was one of the "Durable competitive advantage" companies that I talked about. They recently missed the analyst estimates on their last quarterly earnings report. Although there was a year over decline in total toys sold, the miss was largely a part of cash that Mattel spent to acquire a new brand.
I'm making an apples to apples comparison based on the current P/E multiple of Hasbro, a competing company which has not been growing earnings as fast in their good years. Although 2010 was rough for Mattel, since that time they have been producing good growth in earnings. I believe that this drop will only be temporary. When Mattel gets back to normal operations, based on their more recent results, I expect Mattel to report earnings around $3 per share next year. If they achieve this, then at a P/E ratio of 20, the stock would sell for $60 per share. It's not unreasonable. Hasbro is selling over 21 times earnings right now.
There is some fear out there that electronics like tablets and video games are eating into their territory. I don't believe that. Babies don't use Playstations, and tablets will never replace the experience that girls have playing Barbies with each other. You need only to know that as the population gets larger, so will Mattel.
|Thursday, July 24th, 2014|
|How long till I get rich?
Something I get asked a lot is "How much time does it take to become rich in the market?" I'll give you a realistic assessment. If you are starting from nothing, but willing to contribute 5% of your income to a solid growth stock that pays dividends, or even just an index fund, something like the S&P 500. If you're going to do individual stocks, stick with something that's been around a lot of years, not some new company that hasn't had time to figure out who it's competition is. A decade's worth of performance is great, but a century is where I'd start.
First things first, you need to be willing to take this seriously. As you go along, the time commitment from you that's required can grow a bit. You'll want to at least read a couple of books explaining about how the markets work, and what risk really means. This is not a casino, but that doesn't mean it doesn't have the chance to lose you some money. But here's the thing. If you stick to only profitable businesses, I can guarantee you that you will not be retiring poor. Unless you're a spendthrift, but that's a different issue altogether and we'll talk about it another time.
This is going to surprise you. You'll probably get your first taste of economic freedom after about three months. It's not going to be like what you're expecting. What you'll have here is wiggle room. If you're putting at least some small percentage of everything you earn, you should have a few bucks in your account by three months. Most people stop here, they take whatever they saved up, they go shopping and get themselves some new clothes, or a video game or something. The people who stay poor in life, this is their exit off the money bus. Maybe they do this again in the future, but odds are good that they'll never learn the discipline needed to see real wealth building.
Keep reading. The next step in wealth building is coming, and if you stop here, you'll never be able to see what your true potential is. You will start to have options for how to use your money in a better way. You might be able to see that you can get a better return by paying down some of that debt of yours. But don't give it all away. This is where compounding starts to begin. Remember what I said about contributing regularly. In 3 months, the market can do all kinds of crazy things, but odds are good that no matter what it did, your base investment hasn't changed much because you have been cost averaging. If the market came down some, you bought shares at a lower price, and if it went up, you paid a little more. Don't worry about what the market did. Don't worry about what the market does. Just stick to the plan.
Start examining your budget, see if you can find more of your income to put in here. Aim to get to 10% of your income. But once you've made those changes in your lifestyle, don't back down because you are probably going to have a fully functioning cash machine after about two years. Even faster if the market has had a significant decline in the time you've been in it. Because remember, as the price goes down, you are earning more future money on what you invest today. Those dividends and the power of compounding are real, and it tips the risk of investment into your favor when you refuse to get out of the game.
Now, after two years, this is the time that you have learned at least the basics, and more likely some of the really good things about yourself. You'll have started diversifying your investments. You'll own both stocks and bonds now. You will have a new dividend income that's noteworthy by this point, and it will be consistent and reliable. Enough to get a nice dinner at least once a month and still have your portfolio grow. Try to resist that. You might have enough for a down payment on a house here. Unless interest rates are exceptionally low, and prices are great, try not to go there either. Remember, if you spend the shares, this money flow stops forever and you'll have to completely start from scratch.
There was actually an opportunity very recently where your entire net worth could have doubled in just one additional year of prudent investing. Those opportunities will come again, I promise they will. You just worry about staying put. The average annual return on stocks has been somewhere around 10% a year, but it's not like that every year. Some years you'll make a lot less, some you will even see your worth decline, but you won't lose that dividend income, that's the beauty of a long-term outlook. Stock prices will fluctuate, but you will always see your dividend income increase more every month longer that you stay in. Keep investing, don't try to guess what the market will do. You can't control the market, you can only control how you react to it.
Keep your spending modest, and stick to your budget. If you keep going another 3 years, you will probably never have another serious money problem your entire life.
So there you go, the time frames are:
3 months = A few bucks
2 years = Ghetto fabulous
5 years = financially independent. Enjoy those vacations, you earned them.
20 years = You'll be at least a millionaire at this point.
40 years = Congrats, now your kids can be millionaires too. Teach them well so they don't waste the opportunity.
Now stop wasting your money on lottery tickets. Go get rich.
|Saturday, March 8th, 2014|
|How to identify fake Nike Air Max 2013
I ordered up some fake Nike Air Max 2013 so that I could personally compare them to my real 2013s. There are differences, but they are so subtle that you'd never know if you weren't the person wearing them. The bright yellow ones are the fakes, the reds are genuine. My camera has added a green tint to everything but these are actually a much brighter canary yellow. Here are the cosmetic differences:
1.The most major give away is the stitching of the sockliner, it is much further apart than the real things, and various other stitching that you can see inside is also not as straight.
2. On the bottom of the shoe where the Nike + is located, where the outsole meets that clear plastic, the rubber seams are not straight lines. They look melted/fused instead of a nice clean attachment that the real ones have. There are these six little marks that look like screwdriver slots, they are at different angles from the real things.
3. The air bubble is a different kind of plastic, and when you look from an angle they are not smooth, you can detect a variance in the thickness throughout it, and it is not as soft. Real Air max feel more like a medical tubing, and have a consistent thickness.
4. Larger shoe sizes are easier to spot fakes in, because the laces used are the same size across all. For example, I wear size 13 and the laces aren't long enough to go through all of the eyelets.They leave the top two eyelets unlaced. You can also see that the flywire is not threaded the same way, and has no elasticity, where real flywires have tension to hug your foot.
5. When actually wearing them, they feel different. In my size 13 I can feel pressure against my the sides of my toes, so they are not true to fit. The dynamic flywire therefore has no function at all. The cushion is not as soft, and I'll tell you right now that I would never use the fakes for running in, I think they'd damage my feet.
Now, all of these things are extremely hard to spot unless they're in your hands, so if you are wearing these just for cosmetic reasons (I got these in a yellow color that Nike never made so that I could specifically match them to this Bruce Lee themed running pants I wanted lol), you'd otherwise never know they were fakes. All of the fabric used in the product is an extremely close match. So if you buy the fakes, they're good for show but don't use them to run in. I would actually go as far to say that some of the assembly is better than my real ones. In my legit Nikes there is a good sized bit of glue that fell on the toes, it looks like a stain or something and the fakes are absolutely flawless in that sense.
|Thursday, July 12th, 2012|
|Random act of updating
Not too much going on that's exciting with my portfolio. Markets have just been going back and forth around the same range for some time now. I just add more each payday, and stick to asset allocations. I haven't been adding many new things. I did sell my bond position with FCO, and switched over to GIM, because of the end of year dividend, it makes the yield twice as high on cost.
The largest down position is BMA, which I have been cost averaging for several months now. I read that Argentina was last year's worst market performance, even worse than Greece. They're just struggling to find direction. BMA continues to make lots of profits, so I'm going to keep buying and buying until this all gets worked out.
|Monday, February 13th, 2012|
|Money for nothing, chicks- they usually charge.
I've been meaning to write about this for a long time now, but I have just been especially lazy this year, sorry. One of the techniques I'm employing is called an "Interest-rate spread". It's essentially making money out of nothing, but it's not to say that it's free, and there are certain risks I'm bringing on by doing it.
This will probably work for a while to come, but I'm going to need to get an exit strategy in mind soon to wind the whole process down. I'll come back to that. So starting from the beginning- Sharebuilder, really any broker for that matter, lets you borrow cash against the value of your stocks. They'll loan you just shy of half of the account value, though it's a bit of a mystery what the exact limit is.
You can withdraw that cash right out of the account, or you can use it to buy other investments on "margin". The biggest risk of this strategy is if the investments you are buying fall enough in value, the broker will force you to sell the position immediately, or you get what's known as a "Margin call".
I have been borrowing cash. In our bi-weekly budget I get a certain amount as an allowance for investing, to pay for karate, fast food or whatever. Most people pay their bills first then invest. I invest, then borrow the available margin to pay my bills. It's working out that I deposit just a little more than double what I need to borrow out, which is perfect.
Here's the free money part. I borrow at 7.75%. That's not the best rate around, but I can't do much better until I have $250,000 in assets, and it's a ways off. I can buy many kinds of high-yield investments that pay more than 7.75% though, and I do. The interest gets charged monthly, and I currently earn about 20% more in dividends than I pay out. That's the spread I talked about earlier. If I took no action at all and rates stayed constant, the balance would pay itself off over time, like a Credit card in reverse.
Ben Bernanke made me very happy when he got on TV and said rates will stay low for 2 years. That means I have almost all of that time to get the balance reduced. When rates start to rise, and possibly a little before that, the stocks with the highest yields will start to drop sharply, and I will get margin calls if they're still leveraged like this. So it's not entirely free money. If the market took a dive right now it would probably cost me, but I am betting on that being unlikely because there's just nowhere else that makes sense to put money.
Where I've gotten into the most trouble is that there are 170+ positions in my portfolio. The fastest way to pay off margin would be to sell the largest holdings and knock it down. But that means a $9.95 fee for every sale I make. What I'm probably going to do is hit my 401k for a loan and pay off the margin entirely with that even cheaper money, the rate there is something like 5%.
Don't worry about me, I'll be fine. This isn't the worst problem a person could have.
|Sunday, November 13th, 2011|
|A day late, but never short anything
I would have commented on this a little sooner, but I thought that I already had for some reason. I guess I spent so much time talking to co-workers and commenting on Facebook I'd pretty much gotten it out of my system. It looks like the occupy Wall Street and other places movements are starting to wind down. I just wanted to add in this quick thought.
Many of the complaints being given are valid. The wealthy do influence (not control) a great many of the decisions being made today. The working poor have accepted that they essentially have to take what they are given. I disagree with this. Being a pawn of the system isn't something you have to accept. What makes the 1% different is equity. Ownership. They own the businesses that the 99% get paid by.
But the 99% can take ownership too. The stock and bond markets of the world have made this very easy, and very available to the masses. You can get on Sharebuilder today, for example, and start accumulating shares for as little as $5. Get yourself some companies that pay larger than average and growing dividend income, and then just continue to add to that collection over your lifetime.
Maybe it will take you 10 years to get somewhere. Maybe it will take 30. However, if you continue to do as you always have, expect that you will struggle your entire life, because the system is not designed for you to have an edge otherwise. If you do what I'm saying here, you will become the 1%. At the very least, even if you don't become rich, you'll still have more leverage than you do today. You don't have to be ultra-wealthy to have control over your own life. You just need to be disciplined.
|Monday, September 19th, 2011|
|Buy List updated
This is an update to a previous entry, and this list is probably final.
I was originally planning to wait until I've used up all of my free trades in February before I went back to buying large caps, but with the remarkable market conditions that we're currently seeing, I realized that it's better to go ahead and just get started now. So here's a list of the large cap and dividend growth companies that I'll be purchasing moving forward. The first 10 companies to be purchased on 9/20/2011, and I'll be buying clusters of 10 companies every two weeks after that until the trades are all used up.
I selected them myself, but I did use the 2011 edition of "The 100 Best Stocks You Can Buy" as a tool to look at earnings histories. It's similar to the stock guide that S&P publishes but with all the less good companies removed. I narrowed the choices down to companies showing good earnings growth, above average yields, yield growth, and in the case of Apple, a company that is changing the face of the electronics world. Dividends were a major factor. I took out almost everything that wasn't carrying over a 2% yield unless there was very good growth in the payments.
The companies listed below are not sorted in the order that I think they're the best values, but rather by dividend ex-dates, and in order of yield from highest to lowest so that I can get as many payments as possible between now and February. I might make a few tweaks to the list, but I don't really need to add more to it, this is plenty more diversified than I need to be, and there are already 103 companies in my income portfolio right now.
Most companies here will have ex-dividend (The day that you need to buy them before to collect the dividend) dates about one month before they pay out. You can check the latest information at dividendinvestor.com.
Odd pay dates:
The Coca-Cola Company April/July/October/December
Nintendo July and December. **Ex-dates are usually 3 months prior.**
McCormick & Schmitt
Procter & Gamble
Air Products & Chemicals
Johnson & Johnson
Norfolk Southern Corp
Church & Dwight
No dividends, but I think they are outstanding companies and I will continue to accumulate them regardless of price or market conditions:
|Sunday, September 4th, 2011|
|The winds of change, and hot air
A very good reason why you should ignore the news on a stock: AT&T, when they first announced that they wanted to buy T-Mobile, they dropped in price. When the news was put out that the deal might not happen, they also dropped in price. Completely illogical. Buy on earnings power, not news.
Also, I was originally planning to wait until I've used up all of my free trades in February before I went back to buying large caps, but with the remarkable market conditions that we're currently seeing, I realized that it's better to go ahead and just get started now. So here's a list of the large cap and dividend growth companies that I'll be purchasing moving forward. The first 10 companies to be purchased on 9/13/2011, and I'll be buying clusters of 10 companies every two weeks after that until the trades are all used up.
The companies listed below are not sorted in the order that I think they're the best values, but rather by dividend ex-dates so that I can get as many payments as possible between now and February. I might make a few tweaks to the list, but I don't really need to add more to it, this is plenty more diversified than I need to be, and there are already 103 companies in my income portfolio right now.
Wal-Mart, General Electric, H.J. Heinz, Kraft Foods, Clorox, Procter & Gamble, Abbot Labs, Colgate-Palmolive, Air Products & Chemicals, Starbucks, The Coca-Cola Company, Eli Lilly, Microsoft, Wells Fargo, Johnson & Johnson, 3M, Bemis, Kimberly-Clark, Sherwin-Williams, McDonalds, Intel, IBM, Exxon Mobil, Hershey, Chevron-Texaco, Church & Dwight, Nintendo, Apple, and Berkshire Hathaway.
|Tuesday, August 30th, 2011|
High Yield International added Philip Morris into the portfolio. I already have Altria in there now. Guess I'll take both.
|Saturday, August 20th, 2011|
|QEIII is not coming. Stop waiting for it.
If the Fed does anything, it will be bond buying, which is more or less a type of quantitative easing, but they've been doing that for ages. Watch instead for the treasury to get together with the president to make changes to the tax code. It's not so much that they'll want to just collect taxes, but it will motivate the businesses that are out there sitting on billions in cash to do something with it.
Whether that is hiring people, paying more dividends, or even if it really is just handing the money over to the government, ultimately that's going to get money into more people's hands, and it will spur a stronger economy.
This is a trick that the government uses to collect more revenues even at the current percentages. As the cash gets into people's hands, they will spend it, it will be re-taxed and then returned to the government anyway, so they get what they want regardless, even if it means some inflation is necessary to get things moving.
At any rate, don't expect Ben to just add cash onto piles of cash. There's no more benefit at this point.
|Thursday, August 11th, 2011|
|So I have been active
I got an email this week, somebody reminded me (thank you) that I haven't been giving updates on what I've been doing. The last post I made talked about how I was switching to part cost averaging, part increasing smaller positions. There are 103 stocks in my income portfolio now.
About 3 weeks ago, before the debt ceiling issue had been settled, I started noticing a downward trend in all of my leveraged investments, especially the BDCs and M-REITs. Just two days before the start of this nearly 2000 point pullback I sold enough things to completely pay off my margin balance. I didn't know the crash was coming, I just didn't want to have the extra risk. So, as a result I suddenly had access to a pretty large amount of cash. I set up orders across my income portfolio to post on 8/2, but I actually screwed up the funding source and the order never went through.
What an incredibly lucky break on both accounts. So I added cash from my paycheck to that order, and put it through on 8/9. A total of 19 orders that day; 9 on my largest losses, and 10 on my smallest holdings, bringing them all up to approximately the same size in my portfolio. That all processed within 2 hours of the market open. Here is the exact set:
NMM TNK AINV SFL FAV AGD RIO GGT NRP VIV E SNY CPL FLY CH JRS MPW IGR HRB
Every position closed up that day, and in a single set of transactions I raised my monthly income by 30%. Now things have been just a hair volatile since then, but basically, there was stuff I was way down on, NMM for example down 33%, that is now either at the break even point or even showing a profit thanks to that cost averaging. Only one of the other 18 is not in the green on my cost, that's AINV.
I have no idea what is going to happen moving forward, but I am always buying something each payday. Right now, companies are in very good shape. There's more cash out there than ever, and debt is going to be nearly free until 2013 for anyone who needs to use it. I have absolutely no fear of buying right now, and am going to try to do as much as I can while we are down. I would expect banks to stay low for a while to come, but I'm going to start assembling a buy list of the companies I want to own for the next 30 years at today's prices.
It's funny, I was just saying to someone not too long ago that I was having trouble figuring out where to hedge at. I thought bonds just weren't paying enough, and gold is ludicrously high. Guess that problem is not a problem now.
Markets like these make millionaires. You'll be hearing from me soon.
|Thursday, July 21st, 2011|
|A slight change in strategy
I'm still making purchases in clusters of 5 each payday, but now I'm letting one of those purchases be of whatever I am down the most on percentage-wise. I'm thinking this will be more effective. We'll see what happens.
|Saturday, July 16th, 2011|
|The pain is temporary
Seeing a downward trend in all of my leveraged investments. The market is predicting higher interest rates in the near term. I don't believe that is the case, and I don't think the Fed will tighten for some time to come. Buying into as many of the drops as I can.
Humans are meme machines, but we have the choice not to be. Avoid just repeating things that people say. Question the words meaning, consider if they are reasonable. Do not make decisions on an emotional basis because you will always suffer for that. And remember that only God is infinite. Everything else returns to sameness.