Author Archive

Dividends for Breakfast


I bought a coffee at Dunkin’ Donuts this morning, which has pretty much become my daily routine recently. I always used to feel bad about spending money on coffee and other foods like this, and I always used to be a penny pincher like my parents. Then I did a calculation.

In March, I made an average of $4.50 per day in dividends.

In February, I made an average of $8.56 per day.

In January, I made $11.00 a day in dividends.

And that had nothing to do with my stocks going up or down. It all depends on the month, but I think you get the point.  This free money is free money.  That is, of course, before the 15% capital gain tax, but even with the taxes, it makes me feel a lot better knowing that I’m making enough money to pay for my coffees every day!

The great part is that it doesn’t require a whole lot of principal to enjoy the benefits of these dividends. The more money invested, the higher the dividend payback is, but even if there isn’t much principal, I believe everyone can still enjoy dividend gains over time.

Finding the right portfolio isn’t very difficult, but it does require a little bit of time. Here’s a great site for some good dividend stocks: 

Best wishes to everyone!

Picking a Killer Stock Portfolio – The Best Stocks for 2013 and Beyond


Just like everyone else, I love reading stories about the “best stocks” or the “hottest stocks” out there, and I don’t think you can beat the excitement of the ‘Top 10 Stocks for 2013’ articles.  I also love when the experts put price targets on certain stocks – as if it’s somehow destined to go to that value.  At the same time, it seems like we’re constantly inundated with news on the trendiest, most volatile stocks, which only adds to the excitement.

But are these stories really true?  And how well do the stocks in these articles compare to the average?

Unless the person writing the article (or your financial advisor) is a genius & you truly believe it, I think it’s really important to take everything with a grain of salt.  *Take special note that EVEN if someone is a genius, it’s still impossible for them to predict what will happen in the future.  I, on the other hand, know exactly what is going to happen in the future since I am a genius.  And I also created a special time machine to guarantee I won’t make any mistakes.  It really works:

Seriously though, it can be really hard to hold off on buying risky stocks, especially when the stock market is in the middle of a rally.  It’s like standing in a casino next to a group of slot machines that start paying out large wins to everyone who’s playing.  The area gets noisy with excitement.  A crowd appears, and people start making even more money, and this continues to happen for a while.  You’re suddenly thinking to yourself, “This is crazy!”.  An old woman smoking a cigarette cashes out and suddenly walks away.  –Since when does that ever happen?!–  You’re standing right next to her seat.  So, the question is – Do you sit down and play, or do you walk away to play another slot machine in the corner?  I think it would be stupid to ignore the excitement (how can this be happening?!), but I also think it would be important to remember that slot machines are designed to make the casino money, and not you.  Impulsively, however, I would definitely sit down!  With a bigger picture in mind, I would limit the amount of money I put into the slot machine and I’d force myself to make a strong decision on when to stop.  This would take a lot of self-discipline though.  But, I’m extremely self-conscious of the fact that you can WIN big just as easily as you can LOSE big, and losing big far outweighs the psychological effect of winning big, at least for me.  ESPECIALLY in a casino.

Maybe this was a horrible example since the stock market is far from being a casino.  But I think you get the point: It’s better to be a part of a rally, at least in a small way, than to just sit on the sidelines blinking mindlessly.

When I first started to research stocks 5 years ago, I came across an article on MSN Money for the Top 10 Valentines Day stocks that year, and they went on to say how their yearly picks continually beat the average.  They provided some facts on the fundamentals of the companies, etc.  I ended up falling for the advice in the article hook, line, and sinker.  On a side note – I always love the disclaimers at the end of those articles stating how the author doesn’t hold any positions in any of the stocks that were mentioned.  Ha ha.

Well, at the end of the day, I think it’s important to (1) Not believe in a single source, even if you really think it is trustworthy – IT’S GENIUS!, (2) Not get completely caught up in all of the excitement around you – JACKPOT!!!, and to (3) Realize all of the facts around you – THESE ARE STOCKS, NOT CASINOS.  The stock market will definitely pay off if you invest in the right stocks carefully, but…. what the heck are those stocks anyway?  Some might argue that it’s better to invest in a low-cost index fund that tracks the Dow, or the S&P 500, since it’s impossible to predict what will go up/down/etc., but I think this type of investment is far better suited for a 401k account, or within an IRA account.

The goal here is to provide a killer stock portfolio while remaining neutral to what the market is currently doing.  The stocks below are intended for the longer term, and there is no way they’ll be anywhere as exciting as the trendy technology stocks right now, such as Netflix (NFLX), LinkedIn (LNKD), Apple (AAPL), Facebook (FB), Google (GOOG), Nokia (NOK), or Zynga (ZNGA).  The stocks I’ve chosen provide reliable (20+ years) increasing dividends, and none of them have gone significantly up or down throughout their lifetime, either, which is a good thing.  I also made some effort to select companies with household names, which means it’s easier to keep track of what they’re doing, and I’ve also made sure to provide enough diversity across multiple industries.  Bear in mind that these are slower moving stocks, however, so you won’t get any huge wins in the short-term.  These are a lot safer so that you won’t need to worry about huge losses (or gains).  10-15 years from now though, you can look back and smile, just not tomorrow.

**Note: All of the information below has been taken from Google Finance and Yahoo Finance**

(LLY) Eli Lilly & Co., 3.65% Dividend

Eli Lilly and Company discovers, develops, manufactures, and sells products, in one business segment, pharmaceutical products. The Company also has an animal health business segment. It manufactures and distributes its products through facilities in the United States, Puerto Rico, and 15 other countries. Its products are sold in approximately 130 countries. The Company’s products include neuroscience products, endocrinology products, oncology products, cardiovascular products, animal health products and other pharmaceuticals. The Company’s new molecular entities (NMEs), which are in Phase III clinical trial testing include Dulaglutide, Edivoxetine, Ixekizumab, Necitumumab, New insulin glargine product, Novel basal insulin analog, Pomaglumetad Methionil, Ramucirumab, Solanezumab and Tabalumab. In February 2012, the Company acquired ChemGen Corp. On July 7, 2011, it acquired the animal health business of Janssen, a Johnson & Johnson company.

(JNJ) Johnson & Johnson, 3.23% Dividend

Johnson & Johnson is a holding company. The Company, along with its subsidiaries, is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The Company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. During the fiscal year ended January 1, 2012 (fiscal 2012), the Company’s subsidiaries operated 139 manufacturing facilities occupying approximately 21.8 million square feet of floor space. Within the United States, eight facilities are used by the Consumer segment, 10 by the Pharmaceutical segment and 34 by the Medical Devices and Diagnostics segment. In June 2012, the Company acquired Synthes, Inc.

(CVX) Chevron Corporation, 3.11% Dividend

Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in petroleum operations, chemicals operations, mining operations, power generation and energy services. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas; and a gas-to-liquids project. Downstream operations consist primarily of refining crude oil into petroleum products; marketing of crude oil and refined products; transporting crude oil by pipeline, motor equipment and rail car, and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives.

(GE) General Electric Company, 3.38% Dividend

General Electric Company (GE) is a diversified technology and financial services company. The products and services of the Company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products. It serves customers in more than 100 countries. Its segments include Energy Infrastructure, Aviation, Healthcare, Transportation, Home & Business Solutions and GE Capital. Effective January 1, 2011, it reorganized the Technology Infrastructure segment into three segments: Aviation, Healthcare and Transportation. In April 2012, GE Healthcare acquired SeqWright, Inc. In May 2012, GE Healthcare, the healthcare business of GE, acquired Xcellerex, Inc., a supplier of manufacturing technologies for the biopharmaceutical industry. In June 2012, GE Healthcare acquired XPRO. In August 2012, it acquired PRESENS. In December 2012, the Company acquired 19% interest in Morpho Detection Inc.

(T) AT&T Inc., 5.10% Dividend

AT&T Inc. (AT&T) is a holding company. AT&T is a provider of telecommunications services in the United States and worldwide. Services offered include wireless communications, local exchange services and long-distance services. AT&T operates in four segments: Wireless, Wireline, Advertising Solutions and Other. Its Wireless subsidiaries provide both wireless voice and data communications services across the United States, and through roaming agreements, in a substantial number of foreign countries. Wireline subsidiaries provide primarily landline voice and data communication services, AT&T U-verse TV, high-speed broadband and voice services (U-verse) and managed networking to business customers. Advertising solutions subsidiaries publish Yellow and White Pages directories and sell directory advertising and Internet-based advertising and local search. AT&T’s Other segment includes customer information services (operator services) and corporate and other operations.

(LMT) Lockheed Martin Corporation, 5.23% Dividend

Lockheed Martin Corporation is a global security and aerospace company principally engaged in the research, design, development, manufacture, integration, and sustainment of technology systems and products. The Company also provides a range of management, engineering, technical, scientific, logistic, and information services. It serves both domestic and international customers with products and services that have defense, civil, and commercial applications, with its principal customers being agencies of the United States Government. It operates in four segments: Aeronautics, Electronic Systems, Information Systems & Global Solutions (IS&GS), and Space Systems. During the year ended December 31, 2011, the Company acquired QTC Holdings Inc. (QTC) and Sim-Industries B.V. In November 2012, the Company acquired Chandler/May, Inc. In December 2012, the Company acquired CDL Systems Ltd.

(KO) The Coca-Cola Company, 2.63% Dividend

The Coca-Cola Company is a beverage company. The Company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. It owns and markets a range of nonalcoholic sparkling beverage brands, which includes Coca-Cola, Diet Coke, Fanta and Sprite. The Company’s segments include Eurasia and Africa, Europe, Latin America, North America, Pacific, Bottling Investments and Corporate. On December 30, 2011, it acquired Great Plains Coca-Cola Bottling Company in the United States. In December 2011, it acquired an additional minority interest in Coca-Cola Central Japan Company (Central Japan). In September 2012, it acquired approximately 50% equity in Aujan Industries’ beverage business. In January 2013, Sacramento Coca-Cola Bottling Company announced that it had been acquired by the Company.

(VZ) Verizon Communications Inc., 4.64% Dividend

Verizon Communications Inc. (Verizon) is a holding company. The Company is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. It operates in two primary segments: Verizon Wireless and Wireline. Verizon Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States. Wireline’s communications products and services include voice, Internet access, broadband video and data, Internet protocol network services, network access, long distance and other services. In April 2011, Verizon acquired Terremark Worldwide, Inc. (Terremark). In August 2011, it acquired CloudSwitch. In March 2012, Verizon Wireless purchased the operating assets of Cellular One of Northeast Pennsylvania from United States Cellular Corporation. In July 2012, it acquired HUGHES Telematics, Inc.

2012 Into 2013 Bull Market


Wow, it’s amazing how much stocks have gone up over the past few months!!

I seriously thought we’d have a pullback in August 2012, especially when my portfolio reached an all-time high at the start of the month, and I had no idea the market would climb an additional 25%. Well, now that the Dow has passed 14000, a lot of the experts at Market Watch, The Street, etc. seem to be getting nervous. As crazy as it sounds, I also think milestone numbers have the ability to psychologically trigger inflection points.

Overall, I still think it’s unbelievable difficult (well, mostly impossible) to predict what will happen in the market in the short-term, and while it’s easy to run around raving about how everything is so GREAT right now, tomorrow could be a completely different story. The thing that upsets me a little bit is how the media hides the bad economic news, especially the international news, when everything is going well domestically. For example, who would have known that Spain’s economy plunged in its fourth quarter, or that the government in The Netherlands is providing bailout money to some of their banks to prevent their economy from crashing right now. Well, if the market falls in the US and there isn’t enough domestic news to blame it on, I can guarantee you’ll see a bunch of these headlines emerging.

I guess the moral of the story is to “proceed with caution”. I, too, have a tendency to get caught up in the excitement, raving about the gains and all of the exciting winners. But who wouldn’t when the market hasn’t rallied like this since 1994? I also found out that 10 out of the 11 times the market has rallied so much like this, the stock market has continued to climb for the rest of the year. Based on this, one might assume the odds are in their favor… but… are they really?

I think we can all agree that the best place to invest hard earned money in 2013 is in stocks and/or real estate. For investing in stocks, I’m always a huge fan of long-term, low volatility stocks with safe, reliable dividends. Of course they’re boring and won’t be able to provide the same excitement you’d get out of the hot technology stocks like Facebook (FB), Apple (AAPL) or Netflix (NFLX) that everyone’s talking about, but in 20 years, you’ll definitely be ahead of your peers. The best part is that if you’re investing in the “boring” funds, you don’t need to worry so much when the market drops since you’ll know your stock picks are legitimate and safe. It’s still important to reconfirm your positions from time to time, but unlike Jim Cramer and other personal finance educators who claim there’s a need to consistently do homework and to research the crap out of your investments, I think it’s definitely possible to sit back for literally years if you can select the right blue-chip companies. And if it weren’t for my thoughts on the literal application of this “buy and hold” strategy, I wouldn’t be so interested in advocating the stock market to all of my friends and family.  Over the years, I’ve heard a lot of my colleagues and friends complain that investing in the stock market takes too much time.  Well, I’m here to say that it does NOT!  🙂  Just take a deep breath over a weekend sometime and DO something about it.  Force yourself.

Another excuse I hear from people is that they don’t have enough money, and this seems to be a big one.  Again, I flat out DO NOT agree.  I have to be nice whenever I hear this one though, because it’s always a sensitive topic for people.  But seriously, stop being so lazy!  I think you could have as little as $500 that you absolutely do not need to use in the foreseeable future, put it into the market, more than double it in 5 years, and then buy yourself a $1000 plane ticket for a mini vacation to a remote island somewhere.  But, the whole premise of investing in the stock market while you’re young in the first place is not to buy vacations, or to go on a spending spree somewhere else, but to save your money for your family and for your retirement.

I’d like to talk a little about some of my recommendations for the “boring”, more safe investments, but I’ll save it for another post.  In the meantime, don’t wait for me, go ahead and get started!  🙂

The Magic of Compound Interest with a Growing Principal


I’m a strong believer in the power of compound interest.  Do you remember back in your 7th grade math class when you learned the equation P = e^RT?  I don’t know why, but that lesson stands out very clearly for me, and I even remember where I was sitting in my classroom at the time.  I was also considering a lucrative summer job involving corn detasseling that year.  It would have been hard work, and looking back, I’m not sure why I didn’t do it.  I think that was the first time I seriously started thinking about (making) money.  I just wish I had known more about the power of investing, instead of saving.

So, let me put this out there, and you can check this math later when I post the formula…  If you search on Google for ‘compound interest’, you’ll get hundreds of results describing scenarios where the principal investment value is fixed.  I don’t agree with this.  You should always continue putting money into your investment account, and the formula to describe this is actually tough to find on the web for some reason.

Here we go…..

Let’s assume you start an investment account (stocks!) with $0 for the principal.  (Horrible situation for growth, I know, but it’s a realistic scenario.)
Let’s also assume you decided you can afford (or… even better.. you have forced yourself to afford) to invest $100/month into this account.  Think of this as paying an extra $100 bill every month (ouch), but that bill is being payed directly to YOU, and not to an evil cellular, TV, or Internet service provider company.
Now let’s assume you continue paying this “bill” for 30 years, and that you’re getting 3% APY (annual percent yield) through dividends.  –This is way better than a savings account, by the way.
After 30 years, your $100/month investments add up to $36,000, but because of the compound interest, you get an EXTRA $22,000 on top of this.  If you add in the gains from these stocks, you’ve suddenly (pretty easily) doubled your money.

I don’t think 3% is too difficult to achieve though, and $36,000 + $22,000 is not that much money in the grand scheme of things.  I mean, that might help you pay for 1 semester of your child’s future college education the way things are going!!

Now, here’s the exciting part.

If you do the EXACT same thing as above ($100 every month for 30 years), but you can increase the APY to 8%,  your EXTRA $22,000 suddenly becomes $212,000!

Say whaaat?!

I tried to tell you, this blog is ‘Not Fo’ Yo’ Mamma!’ investing.

If you can start out with a $5,000 or $10,000 principal (instead of $0), and your stocks also go up in value, which is likely after 30 years, you’re suddenly an instant millionaire!  Ta daaa.

Maximizing Cash Back Credit Cards


While I always love long-term investing with high-yield dividend stocks, I’m also a huge fan of maximizing the rewards you can get from the cash back credit & debit cards.  This only works if you’re responsible and confident with paying off credit card balances every month.  With a little planning, you can easily get 5% cash back on purchases you’d normally be making anyway.  Cards that are very attractive right now (in order of my own interest) include the following:

  • US Bank Cash+ Visa Signature (5% cash back on rotating categories you can pick yourself, 1% cash back on everything else, additional bonuses included)
  • Discover More Credit Card (5% cash back on fixed rotating categories (gas, food, etc.), 1% cash back on everything else, plus a nice redeeming system for additional savings)
  • Chase Freedom Visa (5% cash back on rotating categories, 1% on everything else, great signup $100 signup bonus, excellent redeeming system)
  • PerkStreet Debit Card (1% cash back on everything, 2% cash back for online purchases, 5% cash back on PowerPerks rotating categories)
  • Capital One Cash Rewards (1% cash back on everything, plus 50% back on the cash earned… averages out to 1.5% back overall.. good for “hands off” users)

I’ve owned the Discover More Card for about 3 years now, and without much effort I’ve been getting anywhere from $300 to $500 in rewards every year.  I use these rewards to get even further discounts on renewing my Sams Club membership cards ($40 for a $50 membership), paying for items on, buying gift cards for my favorite restaurants, etc.  And I think that when you can get 5% cash back on gas for 3 months straight (there is a limit on how much money can be applied), along with 5% cash back on other major categories such as supermarket spending, restaurants and travel, I think the Discover More card is a great one to have in your wallet.

I also own the PerkStreet Debit Card.  PerkStreet provides you with free checks when you get started, and the account provides a lot of flexibility to withdraw money from various ATMs, while still allowing you to get 1% cash back on all purchases.  2% cash back applies for certain online purchases, and there are some 5% rotating PowerPerks categories every month.  The debit card comes with a PIN number, but when you apply it as a credit card transaction (it’s a Mastercard), the cash back system goes into effect.  PerkStreet recently upgraded their PowerPerks system this month, and I’m hoping the options will get a lot better.  Personally, however, I have a love/hate relationship with PerkStreet, because they started out with a 2% cash back program on all purchases and then downgraded to a 1% system in the middle of 2012.  Because of this, I’m looking to replace the card with a new one that gets 5%.

And that new 5% card is the US Bank Cash+ Visa Signature card.  It looks like a great card! Once I can become more familiar with the program, I can provide further information, but the part that sounds the most exciting is the fact that IF you can stand to let your cash-back balance grow without redeeming it right away, US Bank will bump your rewards percentage up to 6.25%.  I also really like how you can select your own 5% categories, and I imagine this could really help to remember what the categories are.  This always seems to be an issue for me with the Discover More card since I always forget how many months certain categories last, etc.

Admitting you’re wrong, taking action, and moving on


Admitting You’re Wrong:
About a month ago, my portfolio of stocks reached an all-time high.  As the price of gas continued to climb, all I could think about were the brutal hits the market took in 2011 and early 2012.  Without letting my greed take over, I decided to reduce almost all of my positions in the market, and I also sold a lot of the stocks I didn’t want or need for the long-term.  The funny part is how I had justified everything in my mind by thinking “this is an election year, and the stocks have gone up & up recently, so the only option is to go down”.  Wrong.  Oh man was I wrong.  First of all, it is a complete MYTH that the market is too risky or that it will go down during an election year.  Secondly, I think I’ve learned an important lesson here:  It is never (and I mean NEVER) possible to predict the market unless you extrapolate the market 10-20 years into the future.  I’ve now missed out on a lot of gains.  My negative thoughts took over last month, and I’ve now found myself looking back, wondering what happened to my “long term” investment strategy!

Taking Action:
In order to rethink things, I spent a lot of time at a local book store last weekend in the ‘Self Help’ section reading books on finance and real estate.  One of the workers stopped by the area, curious to see what I was researching.  I mentioned how much I liked the stock market, and he suddenly had all sorts of book recommendations for me, and he was also really eager to share some conversations with me.  I mentioned how I had thought the stock market was fascinating while I was pointing to a chart I found in one of the books (the same 86 year Stocks, Bonds, Bills and Inflation chart I posted previously), and I mentioned how none of my friends found it as interesting as I did.  He was grinning the whole time, and he seemed to be agreeing a lot.  I asked him, “So, why do you think that is?  I mean, why aren’t people interested in stocks, even after looking at this chart?”.  His reply is something I will never forget.  He said, “The thing is, nobody wants to wait 86 years to make money.  Everyone wants it now.”  He’s right!  Nobody has the time or the patience to play the market in a “safe” way for the long-term when they can take risks & win like the TRUE winners win.  Everyone wants a story to tell and of course they want a big story.  And he is right; Nobody has that kind of patience or that kind of time…   Unless you’re smart and can set up your savings and investments to take place like paying your normal bills every month.

So the purpose of hanging out in the Self Help section was to figure out how I could eventually take action to correct the wrong assumptions I had made about the market taking a huge dive last month.  I found an interesting description in one book about the Dogs of the Dow, which mentioned how you can do really well by finding the top 10 highest paying dividend stocks every December, invest in them for the next year, and then repeat the process next December with the next top 10, and so on.  They traced this strategy back 50 years and found that it resulted in an average of 15% gain per year, which is higher than the return you’d get from a general index fund that tracks the Dow Jones Industrial Average.  The Dow is only comprised of 30 stocks though, so someone did an analysis with the top 10 dividend stocks in the S&P 500 and traced it back 50 years and found that it returns 17% on average.  That’s really high!!

Another book I found was one on real-estate called ‘Profit From Real Estate Right Now!’ by Dean Grazioso.  This guy is all over TV, especially in the South, and he comes across as a scam artist, so I was really skeptical when I started going through it.  It was written after the housing market crashed, which was the #1 thing I had checked, and by the time my feet were hurting from standing around for so long, I ended up buying it for $16.  I think it will at least be an interesting read.

So my new strategy will be to use the S&P 500’s “Top Dogs” strategy, along with buying real estate somewhere, and I’ve already gotten started with one of them.  I think it’s really important to stay active with investing unless you’ve (1) already inherited a lot of money and don’t need it, (2) you’ve started your own business – in which you’ve already invested your money anyway, or (3) you really don’t care about money.

Anyway, the fed came out with some interesting news today, and as much as I hate all of the control they have over being able to ‘tweak’ the market, I also have a lot of respect for their work, because I truly believe they’re smarter than I am.  Hah!  Bernanke announced another “stimulus” plan for the economy, and to be honest, the word “stimulus plan” makes my skin crawl, because I hate the idea of introducing more money into the market.  But, this time the money is being spent on mortgage backed securities, and the Fed will buy $40B of these every month, starting this Friday.  $40B!!!  They have also stated how they will lower the interest rates for loans and keep the bank mortgage rates low.  The whole idea is to encourage everyone to spend more money, which should drive the economy up even higher.  I think it will work, but I really don’t think it will solve anything long-term, because eventually inflation will take over, everything will level off, and there will be more market corrections.  We could potentially be in a position much worse than we are now.  But then again, it’s easy to confuse the economy with the stock market, and I think this is a difficult topic that even a lot of the news articles get wrong.  Everyone always mentions how the stock market is down because of the jobs report, or how the economy is driving stocks higher and higher.  I don’t think you can make these generalizations half of the time, but I do believe they are linked somehow – especially when the fed gets involved.

Moving On:
So regarding long term strategies, I think it’s important to stay on track at the end of the day.  I’m a huge fan of diversifying in multiple stocks along with multiple accounts (Roth IRA, Individual Account, 401K, Savings/CD, + Other(s)) and I also think it’s important to experiment with buying/selling within your different accounts at various times.  Yes, that’s exactly it.  My decision to sell last month was an “experiment”.  Hah.  With all kidding aside, I’m ready to put this behind me and to focus on what’s next, and I’ve already created a strategy to take action with.  I’m ready to move on.

How about you?  What is your action plan, and how will you be moving on?

Commission Fees and Percentage of Buy/Sell


A good rule of thumb when you buy or sell a stock is to make sure the commission fees don’t exceed 1% of the transaction.  For example, if your broker charges $10 per transaction, and you buy $1000 of stock XYZ, you’re right at the 1% mark.  When I first started buying stocks, I had no clue about this and I was buying quantities of $300, etc.  I don’t think it’s necessarily a bad thing to exceed 1%, especially for more long term, safer (or boring) stocks, but it certainly shouldn’t become the norm.

A lot of advisors will suggest putting your first $10,000 into an index fund or an ETF, but I’m against this unless you’re putting your money into an IRA or another conservative retirement account.  Yes, index funds and ETFs are safer investments due to their diversity, but they’re not nearly intriguing enough to keep people interested in the market.  But if you’re very worried about the market and how it will affect you, you might be interested in something called ‘The Permanent Portfolio’.  This is something a friend of mine mentioned to me once, and I will have to leave it up to you to investigate the details.  The fund’s name is PRPFX, and it invests equally among a diverse range of stocks, bonds, and commodities.  Frankly, it’s far too conservative considering how actively I check my own stocks.  I mean, if you put a bunch of your money into some stocks, wouldn’t you be curious to see how it’s doing?  Putting money into a really boring, safe location doesn’t create enough of a challenge for  younger investors, so I always suggest individual stocks.  And I’m not talking about stocks like Zynga, Facebook, or penny stocks.  I’m talking about high quality, safe stocks like GE, JNJ, KO, etc.

So, take some time to research safe dividend stocks, divide your money up to avoid +1% commission fees, and get going!  🙂

Gas prices vs. Stocks


An article just came out today about the price of gas, and it has me worried.  The article states that gas has risen over the past three weeks.

I’ve noticed there seems to be a creepy relationship between the price of gas and the Dow Jones Industrial Average.  When gas prices go down, stocks go up.  But, now, I’m worried.  Not because I’m afraid all of my long positions will go sour, but because I also hold a few speculative stocks, and I enjoy trading these speculative stocks from time to time.  Trading and investing are different, and it’s important to avoid trading (short term buy/sells) unless you have a lot of time and can keep a close watch on the stocks you buy.  Also, an investing approach with dividend stocks is always the way to go if you’re putting some of your savings into the stock market and don’t need the money for awhile.  But, then again, what do I know?

Really though, there’s no way to time the market, and no matter how much the “experts” try to convince you how smart they are, NOBODY can time the market.

But with the price of gas going up now, I’ll be watching stocks very closely.  I’d love to buy a second property…  Or to put more money into REITs.  The catalyst for making any new moves will be freeing up some of the money I have in stocks.  And for anyone who’s considering buying into the market right now, even though it’s impossible to time the market, I think it’s safe to say that some general predictions can be made, and my conservative prediction is that the stock market will go DOWN from now, so I would seriously AVOID buying into the market for a little while.  The reason is because everything is at an all-time high right now….  at least it is for me… and I don’t think it will go much higher from here.  This is also an election year, and there’s also a lot of pressure from Europe.  If I was a betting man, I would say…


Stocks, bonds, bills and inflation


Mr. Market has a reputation of taking investors on a bumpy ride that instills fear, driving them away from stocks and investing. With all the negative news generated regarding the instability in Europe, the poor job reports, and the chances of looming recessions, it’s no surprise that people avoid the stock market to keep their money in savings accounts and CDs. It makes sense to protect your money this way, but giving in to market-phobia can mean missing out on some big wins while losing out to future inflation.

Investing in stocks can be risky, but it doesn’t need to be if you can take the time to invest in safer stocks. A general rule of thumb is that if you can withstand a potential downturn that lasts 5-10 years, then investing in the stock market should be a no-brainer. In most cases, it is even less risky than that! Here, let’s take a look at a common chart on stocks, bonds, bills and inflation.



The chart shows 86 years of history where you can very easily observe an upward trend. There’s no guarantee that past performance will guarantee future returns.  But as long as the population continues to grow and we have the natural resources to support the growth, the economy should follow. This will result in future inflation and positive growth in the stock market.

But don’t take the advice from me, take it from the nation’s 400 richest people who have been using Mr. Market to make money from stocks all along.

How the Richest 400 People in America Got So Rich

After deciding how much money to invest, the next step is to open an account with an online broker. You’ll most likely have a pretty good idea of what you’ll want to invest in by this point; Just make sure you’re not investing everything in 1 or 2 stocks, because I know some really smart friends and family members who sadly fell into this trap.  It really changed their opinions of the stock market, too.

There are literally thousands of articles on the internet related to picking safe stock investments, and it’s up to you on how much research you want to do. It really doesn’t take too much work. Just make sure to buy at least 5 stocks in different areas, and to check for consistent dividend payouts. And if you can get vested in a DRIP through a Roth IRA, you’ll be all set.

Sound simple?  I thought so.  Now get started!


Quarterly earnings results help gauge performance


The NYSE had a major rally in the first quarter of 2012, and as history shows, stocks usually rally in April before selling off in May.  Next week will be one of the busiest weeks of the quarterly earnings reporting period where 86 companies out of the S&P 500 will report.  We’ll have companies like Microsoft ($MSFT), Verizon ($VZ), McDonald’s ($MCD), Johnson & Johnson ($JNJ), Coca-Cola ($KO), and General Electric ($GE) reporting, all of which I have in my portfolio.  And then there will be some of the big banks like Goldman Sachs ($GS), Citigroup ($C), and Morgan Stanley ($MS) reporting.  So far, reports from companies earlier have exceeded analysts’ expectations, so the week ahead should be something to look forward to.

If you’re new to investing, reading weekly or even monthly articles on the stock market can help provide clues to understanding its volatility, however, it’s critical to avoid getting too emotional during a large selloff, such as the one that happened last week, unless you’re thinking you might need your money out of the market really quickly.  And if that’s the case, it is much safer to keep your money out of the market until you can safely afford a long–term position. There are a lot of investors who will wait on the sidelines during a rally (such as the one we’ve had so far in 2012) to buy when the market drops.  When the market continues to rally, however, frustration starts to set in, and the passion to invest starts to diminish.  As always, my thoughts on this are to find a few companies that you believe in, do a little bit of research, and then buy into the market somewhat blindly (yes – you can do this when you’re first getting started) without thinking of where your stocks have been or will be in the surrounding months.  If you think long term, and you can set some goals for yourself to avoid panicking during large selloffs, it will usually be a safe bet.   Afterall, the stock market is far less risky than gambling your money away in Vegas.  😉