Wednesday, 31 December 2008
Yes We Can! New Year's Lesson From Recent Presidential Election
Posted on 10:15 by Unknown
Tuesday, 30 December 2008
Real Life Superheroes
Posted on 14:48 by Unknown
| According to Rolling Stone, its a growing phenomenon... Real people putting on costumes and helping people and fighting crime... |
Press Release for My Book, "Stock Trading Riches"
Posted on 14:28 by Unknown
I recently came across the press release I issued last December about my book "Stock Trading Riches".
In one year, it has been read 2,170 times.
In one year, it has been read 2,170 times.
Saturday, 27 December 2008
Old Woman Doesn't Trust Banks Anymore, So She Stored $10,000 in a Cracker Box - And Returned It to The Store!
Posted on 22:26 by Unknown
| This family found an envelope with $10,000 in crisp, $100 bills in a box of Annie's Sour Cream and Onion Cheddar Bunny crackers. They reported it to the police, who at first thought it was probably a drug drop. Then, they found out that it belonged to an old lady who didn't trust banks anymore. She hid the money in the cracker box - and then returned the box to the store by mistake! She also did not give the family a reward. I picture her as some miserly she-Scrooge who likes to say Bah! Humbug! |
Friday, 26 December 2008
The Fuggerei: A Good Example of Long Term Investing, Perpetuating A Charity Trust - and the Ultimate in Rent Control
Posted on 14:57 by Unknown
| The Wall Street Journal had an interesting article about people living in the Fuggerei - a Roman Catholic housing settlement for the poor in Augsberg, Germany. People who live here still pay the same rent that was set when the Fuggerei was first opened - in 1520! Then, the rent was 1 Rhein Guilder a year and 3 daily prayers for the well being of the Fugger banking family (make up your own jokes about "Fugg"ing bankers ;-) ). Today, the equivalent to 1 Rhein Guilder/year is 0.88 euros ($1.23) per year. The founder of the Fuggerei was Jakob Fugger "The Rich": Jakob the Rich was Wall Street long before it existed. He minted coins for the Vatican, bankrolled the Holy Roman Empire and helped steer Europe's spice trade in the early 16th century to become one of the wealthiest and most powerful financiers in history. He left more than seven tons of gold to his successors -- and a good deed. Much of the Fugger business empire crumbled over the next 150 years, battered by wars and soured credits. But the walled Fuggerei, with its picturesque lanes and seven gates in the heart of this onetime European banking capital, still stands. The Fuggerei is a good testament to the power of long term investing - even at conservative rates of return. In the late 17th century, after losing money in riskier investments, the bulk of the trust was invested conservatively - in old forest holdings. Since then, over the last 200 years, the trust has never lost money. The returns have ranged from 0.5% - 2%. |
The CIA, Afghanistan, and Viagra
Posted on 14:27 by Unknown
| The CIA is winning cooperation from older warlords with multiple wives by handing out free Viagra... In the case of the 60-year-old warlord - the head of a clan in southern Afghanistan who had not co-operated - operatives saw he had four younger wives. The pills were explained and offered. Four days later the agents returned. "He came up to us beaming," the Post quoted an agent as saying. "He said, 'You are a great man.' "And after that we could do whatever we wanted in his area." |
Tuesday, 23 December 2008
Still Following My Investment System With No Tensions
Posted on 11:26 by Unknown
After making a 13% return in 2005, 14% in 2006, and 22% in 2007, my account is down about 40% in 2008 - just like most stock indexes and funds.
However, unlike the days when I aggressively day traded, I am still calm and tranquil. I believe in my trading system, and know that bear markets such as these are what feed the rebalancing mechanism of my system that allows me to "win through defense" - like Bears football.
Now, it is the end of another year and I plan to rebalance my positions next week. The only thing I might have done differently was to have saved more in the cash part of my account.
Normally, when you buy a new position under my system, you have to add a certain percentage of the amount to the cash portion. But, I also have the rule that you can waive this when you are making regular contributions because you can use future contributions to rebalance.
This year, all my positions are down enough that, when I applied the system's formula to my stocks, I found that I had to add a lot. I had to transfer more cash from my bank, but I did not have enough to rebalance every position.
So, according to another rule, I picked the 2-3 worst performing stocks in my portfolio and sold those off. That freed up a little more cash but, more importantly, meant that I have three less stocks to rebalance.
In all my testing, it is better to sell off a couple of stocks at a loss, and rebalance stronger stocks, rather than leave all the positions unbalanced.
The complete rules behind my successful stock trading system (along with chapters on topics such as variations, minimizing commissions and taxes, etc.) are described in my book, Stock Trading Riches, which is available on Amazon.com.
However, unlike the days when I aggressively day traded, I am still calm and tranquil. I believe in my trading system, and know that bear markets such as these are what feed the rebalancing mechanism of my system that allows me to "win through defense" - like Bears football.
Now, it is the end of another year and I plan to rebalance my positions next week. The only thing I might have done differently was to have saved more in the cash part of my account.
Normally, when you buy a new position under my system, you have to add a certain percentage of the amount to the cash portion. But, I also have the rule that you can waive this when you are making regular contributions because you can use future contributions to rebalance.
This year, all my positions are down enough that, when I applied the system's formula to my stocks, I found that I had to add a lot. I had to transfer more cash from my bank, but I did not have enough to rebalance every position.
So, according to another rule, I picked the 2-3 worst performing stocks in my portfolio and sold those off. That freed up a little more cash but, more importantly, meant that I have three less stocks to rebalance.
In all my testing, it is better to sell off a couple of stocks at a loss, and rebalance stronger stocks, rather than leave all the positions unbalanced.
The complete rules behind my successful stock trading system (along with chapters on topics such as variations, minimizing commissions and taxes, etc.) are described in my book, Stock Trading Riches, which is available on Amazon.com.
The Financial Crisis, Madoff Scandal, Bailout, and Black Boxes
Posted on 11:14 by Unknown
The New York Times had an interesting op-ed piece that starts off mentioning the movie "Slumdog Millionaire", but then goes on to trace the roots of the sub-prime mortgage crisis and the alleged Madoff hedge fund Ponzi scheme to the Wall Street concept of the "black box".
While the author doesn't mean to let crooks and failed regulation (especially, in his opinion, an ineffective SEC) off the hook, he thinks that a lot of this ultimately happened because of the acceptance of "black box" systems - where the automated algorithms are kept hidden (either for proprietary reasons or due to complexity) and the investors just accept it.
Even more interesting, the author of this article feels that the bailouts themselves form a black box system, because the Treasury department is not doing enough to keep the process transparent and track where the money goes.
While the author doesn't mean to let crooks and failed regulation (especially, in his opinion, an ineffective SEC) off the hook, he thinks that a lot of this ultimately happened because of the acceptance of "black box" systems - where the automated algorithms are kept hidden (either for proprietary reasons or due to complexity) and the investors just accept it.
Even more interesting, the author of this article feels that the bailouts themselves form a black box system, because the Treasury department is not doing enough to keep the process transparent and track where the money goes.
Sunday, 21 December 2008
Ken Fisher's Latest Stock Picks
Posted on 21:23 by Unknown
In the latest issue of Forbes Magazine, money manager and billionaire Ken Fisher gave a list of stocks that he currently likes.
Being a contrarian, he thinks that the economy is not as bad as the media make it out to be. In fact, he thinks that there might currently be a reverse bubble, where only bad news is being noticed.
For example, he notes that the media does not mention that the S&P 500's dividend yield (3.74% on October 13) has exceeded the yield on a 10-year treasury for the first time since 1958.
Also, he says that business inventories were at record lows during the start of the recession. This should help make the recession milder.
Finally, because stocks are so cheap, a large bull market should develop.
He doesn't know when it will happen so, depending on your risk tolerance, you can own big, safer stocks or smaller, risky ones.
His 5 stocks picks:
1. Logitech (LOGI) - this Swiss firm (with American ADRs) is small, but is the leader for PC peripherals (mice, keyboards, trackballs, etc). The stock is down 65% this year, but profits are up 5%. So, Fisher thinks it is cheap at eight times 2008 earnings and one times revenue.
2. Cisco Systems(CSCO) - A bigger and safer choice than Logitech. Here, you are getting the world's leading supplier of data-networking hardware / software for noly ten times 2009 earnings. He thinks it will fully participate in the next rally.
3. GlaxoSmithKline (GSK) - this is the world's second largest drug and vaccine maker. Fisher thinks that it is way too cheap at its current price (less than two times revenue, a dividend yield of 6%, less than 10 times 2008 earnings).
4. France Telecom (FTE) - France is doing better than the rest of Europe, and this stock is trading very cheaply - "at a price only a pessimist can justify".
5. John Wiley and Sons (JW.A) - This is a small, but well managed and low risk, book publisher. Fisher says its revenues are growing - and are derived from an established portfolio of expert books in the fields of science, technical, medical and Financial. The stock is currently selling cheaply for 10 times its estimated 2009 earnings.
Being a contrarian, he thinks that the economy is not as bad as the media make it out to be. In fact, he thinks that there might currently be a reverse bubble, where only bad news is being noticed.
For example, he notes that the media does not mention that the S&P 500's dividend yield (3.74% on October 13) has exceeded the yield on a 10-year treasury for the first time since 1958.
Also, he says that business inventories were at record lows during the start of the recession. This should help make the recession milder.
Finally, because stocks are so cheap, a large bull market should develop.
He doesn't know when it will happen so, depending on your risk tolerance, you can own big, safer stocks or smaller, risky ones.
His 5 stocks picks:
1. Logitech (LOGI) - this Swiss firm (with American ADRs) is small, but is the leader for PC peripherals (mice, keyboards, trackballs, etc). The stock is down 65% this year, but profits are up 5%. So, Fisher thinks it is cheap at eight times 2008 earnings and one times revenue.
2. Cisco Systems(CSCO) - A bigger and safer choice than Logitech. Here, you are getting the world's leading supplier of data-networking hardware / software for noly ten times 2009 earnings. He thinks it will fully participate in the next rally.
3. GlaxoSmithKline (GSK) - this is the world's second largest drug and vaccine maker. Fisher thinks that it is way too cheap at its current price (less than two times revenue, a dividend yield of 6%, less than 10 times 2008 earnings).
4. France Telecom (FTE) - France is doing better than the rest of Europe, and this stock is trading very cheaply - "at a price only a pessimist can justify".
5. John Wiley and Sons (JW.A) - This is a small, but well managed and low risk, book publisher. Fisher says its revenues are growing - and are derived from an established portfolio of expert books in the fields of science, technical, medical and Financial. The stock is currently selling cheaply for 10 times its estimated 2009 earnings.
Tuesday, 16 December 2008
New FDIC Exhibit to Commemorate Its 75th Anniversary
Posted on 11:24 by Unknown
The Chicago Tribune recently had an article describing that the FDIC has a new exhibit tracing its history. It is in honor of its 75th anniversary, but the exhibit seems appropriate, given today's credit crisis.
The exhibit is free, and located at the FDIC (550 17th St. NW) in Washington D.C.
The exhibit begins with a look at the financial panics of the late 19th and early 20th centuries. Then, it tells how the FDIC was created after 9,000 banks failed in the Great Depression.
Interestingly, there are a couple of Illinois connections:
1. The first FDIC payment was in 1934 to Lydia Lobsiger, a customer of Fon du Lac State Bank of East Peoria, IL.
2. During World War II, the FDIC re-located to Chicago to free up office space for the war effort until the Pentagon was built.
Also, the FDIC has temporarily owned some interesting properties - due to acquiring bad loans from failed banks:
During the 1988 and 1989 football seasons, the FDIC owned 12% of the Dallas Cowboys, due to the failure of FirstRepublic Corp.
They once owned the 1983 horror movie "Grizzly 2: The Predator", starring Charlie Sheen and George Clooney.
The exhibit is free, and located at the FDIC (550 17th St. NW) in Washington D.C.
The exhibit begins with a look at the financial panics of the late 19th and early 20th centuries. Then, it tells how the FDIC was created after 9,000 banks failed in the Great Depression.
Interestingly, there are a couple of Illinois connections:
1. The first FDIC payment was in 1934 to Lydia Lobsiger, a customer of Fon du Lac State Bank of East Peoria, IL.
2. During World War II, the FDIC re-located to Chicago to free up office space for the war effort until the Pentagon was built.
Also, the FDIC has temporarily owned some interesting properties - due to acquiring bad loans from failed banks:
During the 1988 and 1989 football seasons, the FDIC owned 12% of the Dallas Cowboys, due to the failure of FirstRepublic Corp.
They once owned the 1983 horror movie "Grizzly 2: The Predator", starring Charlie Sheen and George Clooney.
Preview of New "X men Origins: Wolverine" Movie
Posted on 10:56 by Unknown
Some Companies that have Done Well in the Recession
Posted on 09:55 by Unknown
Forbes Magazine recently had an article on some "main street" companies that are holding up well in the recession:
1. Campbell Soup Company - In trying times, people turn to comfort foods like soup. Campbell's was the only S&P stock to escape the Sept. 29 market selloff of 778 points.
Its stock is up 26% since January. A few days before the selloff, the company announced a 14% dividend increase - its fifth increase in 5 years.
In the fiscal year that ended on August 3, Campbell had an 8% increase in sales. They forecast 4% sales and earning growth for fiscal 2009.
2. Walgreens - This drug store chain's gross margins have been stable at 28%, even during the last recession.
3. Pediatrix Medical Group - Even in recessions, 1 in 8 babies end up in the neo-natal intensive care unit. This company employees 12,000 physicians who help small hospitals setup and staff these units. They benefit from the trend of older parenting, because women who have kids at an older age have more chances of complicated pregnancies and premature babies.
4. AAR Corp - They are an aerospace outsourcing firm that services jets for airlines and defense. Government contracts accout for 40% of their business, and sales should be up 30%. They are helped by airlines putting off purchases of new planes.
5. Microsoft - They have so much cash ($23.7 billion) that they can buy their way into other markets.
6. Brown-Foreman - Their liquor sales hold up in recessions. They are currently shifting their marketing for Jack Daniels from restaurants/bars to retail ads and in-store promotions, because people are eating at home instead of restaurants. They have lots of cash and untapped credit lines.
1. Campbell Soup Company - In trying times, people turn to comfort foods like soup. Campbell's was the only S&P stock to escape the Sept. 29 market selloff of 778 points.
Its stock is up 26% since January. A few days before the selloff, the company announced a 14% dividend increase - its fifth increase in 5 years.
In the fiscal year that ended on August 3, Campbell had an 8% increase in sales. They forecast 4% sales and earning growth for fiscal 2009.
2. Walgreens - This drug store chain's gross margins have been stable at 28%, even during the last recession.
3. Pediatrix Medical Group - Even in recessions, 1 in 8 babies end up in the neo-natal intensive care unit. This company employees 12,000 physicians who help small hospitals setup and staff these units. They benefit from the trend of older parenting, because women who have kids at an older age have more chances of complicated pregnancies and premature babies.
4. AAR Corp - They are an aerospace outsourcing firm that services jets for airlines and defense. Government contracts accout for 40% of their business, and sales should be up 30%. They are helped by airlines putting off purchases of new planes.
5. Microsoft - They have so much cash ($23.7 billion) that they can buy their way into other markets.
6. Brown-Foreman - Their liquor sales hold up in recessions. They are currently shifting their marketing for Jack Daniels from restaurants/bars to retail ads and in-store promotions, because people are eating at home instead of restaurants. They have lots of cash and untapped credit lines.
Friday, 12 December 2008
Now Indian-Americans and Schaumburg's India House are a Key to IL Governor Allegedly Trying to Sell Senate Seat
Posted on 21:50 by Unknown
| What a small world - now the restaurant / banquet hall where Rasika and I got married (India House in suburban Schaumburg) is mentioned as a key to the Blagojevich scandal over selling Obama's senate seat. It looks like a prominent group of Indian-Americans, who support both Blagojevich and Jesse Jackson Jr., tried to arrange fund-raising for Blagojevich in return for Jackson being appointed to the Senate seat. There was a closed-room power lunch at India House on October 31, with Blagojevich present. |
Wednesday, 10 December 2008
Chuck E Cheese Tougher Than Biker Bars...
Posted on 10:45 by Unknown
| Police around the country say the restaurant that gives them the most trouble is Chuck E. Cheese! "The biggest problem is you have a bunch of adults acting like juveniles," says Town of Brookfield Police Capt. Timothy Imler. "There's a biker bar down the street, and we rarely get calls there." |
Tuesday, 9 December 2008
Tribune Files for Chapter 11 Bankruptcy Protection
Posted on 10:51 by Unknown
Yesterday, the Chicago Tribune filed for Chapter 11 bankruptcy protection.
All newspapers are under pressure these days, because of the rise of the internet and the decline of advertising in today's economy. In fact, I think the stock price of the Chicago Sun Times is less than the cost of its daily newspaper.
The Tribune, however, is also burdened by $13 billion in debt - mostly because of its leveraged buyout from last year - which was done by billionaire Sam Zell.
Back in April 2007, I wrote about how Zell won a bidding war for the Tribune and bought it using borrowed money, and using an Employee-owned (ESOP) S-Corp structure to avoid taxes.
In that article, I noted that "...as long as the Tribune's cash flow at least stays flat, they should be able to pay off the debt in 10 years...". As we now know, that did not happen. Newspapers declined faster than expected, and the current "perfect storm" economic crisis made things much worse.
In another post, back in August, I mentioned how Zell was anxious to sell the Chicago Cubs to raise money to pay debts. But, in order to use the ESOP tax advantages to avoid capital gains, Zell was requiring the new owner to finance the purchase with debt, and not repay it for 5 years. There were questions about if Major League baseball would allow this.
As it turns out, the credit crunch made a sale difficult. So, the Tribune still has the Cubs. They still want to sell, but it is doubtful if they will get the $1 billion price they were hoping for.
In the first article, I also mentioned how Zell protected his downside by limiting his personal investment to $300 million, while getting 40% of the multi-billion Tribune. It turns out, he protected himself even better than that.
Zell, as Tribune CEO, was able to convert his investment to a subordinated debt note. Now, in bankruptcy, his claims will be at the head of the unsecured creditors. His "co-owners", the employees, still have their interest in an equity form - in the ESOP - which could get wiped out in the bankruptcy.
So, basically, first dibs will go to the secured creditors (i.e. the banks, such as Bank of America, which leant the money for the leveraged buyout). Second dibs will got to Zell's unsecured debt. Finally, the employees will get anything that is left.
Ex-employees (those who retired or were recently laid off) have it worse. Yesterday, the Tribune stopped paying them their severance payments and told them that, if they want their money, they have to get in back of the line in bankruptcy.
Famous film critic Roger Ebert works for the rival Sun Times, but he stated his opinion in his column today. He blames Zell.
All newspapers are under pressure these days, because of the rise of the internet and the decline of advertising in today's economy. In fact, I think the stock price of the Chicago Sun Times is less than the cost of its daily newspaper.
The Tribune, however, is also burdened by $13 billion in debt - mostly because of its leveraged buyout from last year - which was done by billionaire Sam Zell.
Back in April 2007, I wrote about how Zell won a bidding war for the Tribune and bought it using borrowed money, and using an Employee-owned (ESOP) S-Corp structure to avoid taxes.
In that article, I noted that "...as long as the Tribune's cash flow at least stays flat, they should be able to pay off the debt in 10 years...". As we now know, that did not happen. Newspapers declined faster than expected, and the current "perfect storm" economic crisis made things much worse.
In another post, back in August, I mentioned how Zell was anxious to sell the Chicago Cubs to raise money to pay debts. But, in order to use the ESOP tax advantages to avoid capital gains, Zell was requiring the new owner to finance the purchase with debt, and not repay it for 5 years. There were questions about if Major League baseball would allow this.
As it turns out, the credit crunch made a sale difficult. So, the Tribune still has the Cubs. They still want to sell, but it is doubtful if they will get the $1 billion price they were hoping for.
In the first article, I also mentioned how Zell protected his downside by limiting his personal investment to $300 million, while getting 40% of the multi-billion Tribune. It turns out, he protected himself even better than that.
Zell, as Tribune CEO, was able to convert his investment to a subordinated debt note. Now, in bankruptcy, his claims will be at the head of the unsecured creditors. His "co-owners", the employees, still have their interest in an equity form - in the ESOP - which could get wiped out in the bankruptcy.
So, basically, first dibs will go to the secured creditors (i.e. the banks, such as Bank of America, which leant the money for the leveraged buyout). Second dibs will got to Zell's unsecured debt. Finally, the employees will get anything that is left.
Ex-employees (those who retired or were recently laid off) have it worse. Yesterday, the Tribune stopped paying them their severance payments and told them that, if they want their money, they have to get in back of the line in bankruptcy.
Famous film critic Roger Ebert works for the rival Sun Times, but he stated his opinion in his column today. He blames Zell.
Monday, 8 December 2008
Funny Scooby Doo Parody...
Posted on 22:58 by Unknown
Three Year Old in Woods Saved By Puppies
Posted on 09:52 by Unknown
| A three-year old boy wondered away from home and got lost for 21 hours in the woods - in 17 degree weather. The family's two puppies went with him and saved him by keeping him warm. |
Subscribe to:
Posts (Atom)
