Tesla Motors, Inc (TSLA) IPO : Good Buy?

I've been asked by several people about what I think about the Tesla Motors IPO (TSLA) yesterday. It was offered at $17 and closed on $24 yesterday. It was at $28 this morning.

What I find interesting about the company is that the CEO founded PayPal, and it is the first U.S. auto manufacturer to go public since Ford in the 1950's.

I read about the IPO the day before it happened. I thought about whether it is worth buying and decided against it.

1. The company has lost money for years.

2. They currently make only 1 car which costs over $100k.

3. They have only sold about 1,000 of them.

4. The IPO and price are assuming that they sell a lot of the new car they are developing, which might cost between $35-45k.

5. The new car will have competition from the Nisson Leaf and Chevy Volt.

So I concluded it's too much risk relative to the possible reward.

Read More

Tax Credits For House Sales Made The Markets More Volatile

Today, there was a report that home sales dropped 33% after the tax credits ran out.

This article on the tax credit's effects on home sales argues that the credits did not create more sales - it just simply affected their timing, thus causing more volatility in the market place.

Read More

How Trying to Save $15 Cost A Fishing Crew $1 Million

It looked like a fishing boat called The Citation had won the "Big Rock Blue Marlin Tournament", off the coast of North Carolina, with their record 883 pound catch.  However, it turned out that one of the crew members didn't have a $15 fishing license, which is a violation of contest rules. The boat was disqualified, and the second place boat The Carnivore, with its 528.3 pound catch, ended up getting first prize and netting a cool $999,453.

Read More

Canada's Economy is the Envy of the World

According to this article on Yahoo, Canada's economy is strong and leaders of other countries want to learn from it. Here are some highlights from the article: * Canada's economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered. * Finance Minister Jim Flaherty recalled visiting China in 2007 and hearing suggestions "that the Canadian banks were perhaps boring and too risk-adverse. And when I was there two weeks ago some of my same counterparts were saying to me, 'You have a very solid, stable banking system in Canada,' and emphasizing that. There wasn't anything about being sufficiently risk-oriented." * As the U.S. and Europe loosened regulations on their financial industries over the last 15 years, Canada refused to do so. The banks also aren't as leveraged as their U.S. or European peers.  * In Canada's concentrated banking system, five major banks dominate the market and regulators know each of the top bank executives personally. * There was no mortgage meltdown or subprime crisis in Canada. Banks don't package mortgages and sell them to the private market, so they need to be sure their borrowers can pay back the loans. * Canada  had 12 straight years of budget surpluses.  When recession struck, they pumped stimulus money into the economy, with the result that Canada again has a large deficit. But it is recovering from the recession faster than others, and although its deficit is currently at a record high, the International Monetary Fund expects Canada to be the only one of the seven major industrialized democracies to return to surplus by 2015.

Read More

Watson Trivia Game

I just played the "Dear Watson" trivia game, and I crushed it 41-12.

http://www.nytimes.com/interactive/2010/06/16/magazine/watson-trivia-game.html

I don't know if it will ever be able to completely rival human intelligence - but it will be better than us when it comes to retrieving knowledge.

Read More

Fw: 'Jaws' Launched Summer Blockbuster 35 Years Ago - ABC News

The 35th anniversary of the first summer blockbuster.  My mom took my brother and I (we were 8 and 5), but my dad hadn't wanted her to take us - he thought it might be too scary. It scared us, but was good!  My brother even jumped out of his seat during one of the scenes. http://abcnews.go.com/Entertainment/jaws-launched-summer-blockbuster-35-years-ago/story?id=10855868

Read More

CBOE Just Had Its IPO: Why I Bought The Stock

Yesterday, the Chicago Board Options Exchange (CBOE) went public at $29, reached $33.75, and closed at $32.49.  I ended up buying it at $32.50.

I bought CBOE because it fits a strategy I've used successfully in the past to trade IPOs.  The strategy to buy new issues of companies that have similar market share to stocks that have already performed well since their IPOs.

This strategy is included in my book Stock Trading Riches.

In this case, I believe that CBOE is similar to CBOT (Chicago Board of Trade) and CME (Chicago Mercantile Exchange) - both of whom had successful IPOs.

So far, I am 3-0 for this strategy:

1. When CBOT (Chicago Board of Trade) went public, I saw that the CME (Chicago Mercantile Exchange) had previously gone public around $35-40, and had climbed into the $300's.

So, I bought CBOT.  It went public in the 40's and I got filled at $85.  Since I follow my book's re-balancing system, I didn't get discouraged by the volatility.  I ended up selling some in the 120's, buying more at $96, and then taking profits in the $200's.  Finally, CME bought CBOT and I ended up with CME stock around $490.


2.Visa went public at $47.  I bought it at $65 and thought it was still a good price because Mastercard had previously gone public around $40, and was then trading at $223.  I recommended that purchase in this post and this one.

Visa ended up reaching $83 a month later. Here was my follow up post at that time.


3. In November 2009, I wrote about buying the Hyatt IPO at $27.92 because Hilton had done well since its IPO.  Currently, Hyatt is trading at $40.64

I think this IPO technique works because mutual funds that own the first stock will want to own both. When you can identify stocks that funds want to buy, you can "ride" their coattails.  Since they buy in large quantities, it typically takes them months to build up a position, and all their buying drives up the price.

Read More

Run your business like a Kids’ Lemonade stand

This interesting post talks about running your business like a child's lemonade stand.  This way, your business will be simple, fun, flexible, and adaptable.  Your customers will feel welcome and comfortable that they undersdtant your business and there are no gimmicks or hidden agendas.

Read More

Best of Money Carnival

The blog My Dollar Plan recently hosted the Best of Money Carnival, which features a lot of good financial articles.

Read More

Thinking of Being A Landlord? Read This Tenant Horror Story

A lot of people want to become landlords - especially in this market. You must realize that being a landlord is not a source of passive income, where you only deal with paperwork. You have to deal with real humans...

Read More

Thinking of Being A Landlord? Read This Tenant Horror Story

A lot of people want to become landlords - especially in this market:

1. They want to buy investment property at today's low prices and rent it out.

2. They want to buy a new home because prices are down, but they want to rent their old house and sell it when the market comes back.

Either way, you must realize that being a landlord is not a source of passive income, where you only deal with paperwork. You have to deal with real humans.

Here is a cautionary tale called "The Tenant From Hell: The Stripper With The Dirty Feet".

Read More

David Einhorn Thinks The U.S. Debt Will Be Our Problem - Not Grand Kids

It's become a cliche that our government debt will be a legacy that future generations have to repay.

However, David Einhorn, of Greenlight Capital, made a speech saying that our future generations can rest easy.  The explosion in government spending during the last few years means that WE will end up paying for it.

In his insightful speech, Einhorn lays out how last year's "stimulus" wasn't really a stimulus because, rather than being a one-shot boost to the economy, it permanently increased government base-line spending and created / preserved government jobs.

The speech details how official government statistics are manipulated and understate inflation. 

The Fed has us on a cycle -  going from one bubble to bailout to next bubble.

Read More

Inflation Sucking The Life Out of The Economy?

Read More

Goldman Sachs' Board Discussing Bonuses?

Read More

Is It A Bull Market? Or A Bear In Disguise?

Read More

The Powerful Google Search Box

The Google search box is really powerful, and does a lot of functions besides search. This is an example of over-loading, where one interface can do multiple tasks, depending on the context.

The minimal Google home page with its humble search box lets you track packages, convert currencies and measurements, find the local time in world cities, find movie show times, see sport results, and do math calculations.

Here is an article with more details on the Google search box.

Read More

Strategic Purchase By Abbott Laboratories Will Make It Largest Prescription Drug Seller In India

Abbott Laboratories (ABT) recently spent $3.7 billion to buy Healthcare Solutions, a unit of India's Piramal Healthcare - a maker of popular generic medicines in emerging markets.

The deal calls for $2.1 billion upfront, followed by annual $400 million payments for the next four years.

This is a strategic move that should make Abbott stock even more attractive.

The combination of Healthcare Solutions and Abbott's existing India businesses has now positioned it as the leader (with 7% market share) in India's pharmaceutical business - which is the second largest market in the world, and one of the fastest growing.

India's pharmaceutical market has a size of 1.1 billion people, and has $8 billion in annual sales - which analysts expect to double by 2015.

Read More

Amazon Jumps Into Cell Phones and Wireless Plans

The fact that Apple passed Microsoft in total market value shows that investors think a new era is emerging - one where high tech is moving from computers towards smaller, personal devices - such as smart phones.

Amazon is making a bet on this by opening a new website dedicated to cell phones and wireless plans.

Amazon is one of the unique companies that can go both deep and broad, i.e. quality and quantity. They perfected their business model with books, and then scaled up into other areas of merchandising.

Read More

Flooding opens up sinkholes in Guatemala City - Yahoo! News Photos

Here's an even more dramatic picture of the sinkhole: http://www.businessinsider.com/giant-sinkhole-guatemala-city-large-2010-5 Hurricane season just started and this was caused by tropical storm Agatha. Flooding opens up sinkholes in Guatemala City - Yahoo! News Photos http://news.yahoo.com/nphotos/Flooding-opens-up-sinkholes-Guatemala-City-Tropical-Storm/ss/events/wl/053110guatemalahole/im:/100601/ids_photos_india_wl/ra572889842.jpg/ ============================================================ Yahoo! News http://news.yahoo.com/

Read More