Start Saving... NOW

People, in general, are consumers, not savers. Now hear me out. In a nation plagued with credit card debt and bankruptcy, did you ever stop to wonder how they get into debt? By not paying off their credit card every month. By spending more than they have. It's nature.

People always say that the smart thing to do is save 10% of every paycheck. I say that's limiting. Make a monthly budget for food, utilities, gasoline, and give yourself a little money for your spending pleasure and measure that against your paycheck. Now that you have a general idea of how much you spend, allocate money each time you get paid to each category, and then throw the rest in a savings account. You can always withdraw money from your savings account later. But think of it as having as little as possible in your checking account and as much as possible in a savings account. (*There may be withdraw limitations).

Shop around for savings rates though. Your checking account bank doesn't need to be your savings account bank. You could try online banks. Currently, I use (and invest in) ING. Right now it sports a 3.15% Annual Percentage Yield - compounded monthly. I just found a new one though, that I'm looking into: HSBC. It boasts a 3.25% APY. I'm not sure how often it compounds though - still lookin into it. Both of these have $1 minimums. Both of these can link to a checking account to fund the savings account. However, HSCB accepts mailed checks for deposit. For those of you who had a thing against ING because money had to be linked to a checking account, HSBC may be the answer.

For better rates and possibly better banks, visit BankRate.com

If I had an investment club, I'd...

1. Register a corporation with my state's Secretary of State.
2. Have a set investment amount for each person at $10,000 or $15,000. (Each person would own one share)
3. Have one particularly interested person give everyone monthly updates of returns, via Excel spreadsheets and pie charts and give him/her a monthly maintenance fee.
4. Try and have people contribute one stock idea a month. Has to at least be justified with additional materials (ie multiple analyst recommendations)
5. Majority agreement on sells.
6. Make sure everyone knows that this is for the long term. Short-term sells are not amusing (to me at least).
7. Add to my portfolio (for now): Intuitive Surgical (ISRG), St. Jude's Medical (STJ), Valero Energy (VLO), Petrobrasileiro (PBR), Whole Foods Market (WFMI), Cogent (COGT) (a lot of these, one should wait a little while before buying. Specifically, I think both WFMI and ISRG are a hair overvalued right now)

I had no faith... and should've doubled down.

Netflix (NFLX) is one of my tales of woe. But it wasn't always that way. I bought Netflix in March 2004, for $29.00 a share. Very soon afterward, it had gone as high as $39. I couldn't have been happier. A proud subscriber and even prouder shareholder.

And then the first drop (around the middle of the chart ) occurred. And then there were the days when you couldn't read financial news without hearing about DVD rental wars. Price cuts, bottom line sacrifices. I was heartbroken. I had so much confidence in my company - that it could pull itself up, that I didn't sell. I just waited. And then the second dip occurred. The stock was now trading in the low low low teens and sometimes high single digits. That was it. I sold it at $10.92. I seriously thought about buying it back when it dropped to around $9, but I felt that my money could be better elsewhere.

If I doubled down... I could be reaping the benefits of a 10% increase in after hours trading right now, to $18.70. Analysts polled by Thomson First Call were expecting profit to come in at 1 cent a share. Netflix delivered 9 cents.

(I also had the same dilemma with eBay, except I didn't sell. See the LARGE dip in the middle waaaaay before the tiny rise at the end? I've almost broken even by now at least.)

In hindsight, it should've dawned on me. If I were so confident about my company, I should've bought more shares while it was down, instead of wallowing in it's sorrow and selling. Lesson learned.

Too bad my money will be tied down to my house very soon. :)

Trends based on Daily Life

I wouldn't say that I'm a trend trader, but I guess I kind of am. I'm a really observant person. Observant is practically my middle name. :) When I'm just out with friends, or going shopping, or out to eat, I'm constantly looking at everything around me. I want to give people examples of how everything around you affects a publicly traded company in one way or another.

1. Starbucks (SBUX) - One time when I was walking around an outdoor mall, drinking a coffee, someone purposely flipped a U'ey to turn around and ask me where I got my Starbucks from. I realize not everyone enjoys Starbucks coffees, but one cannot deny their aggressive growth that seems pretty impressive. Total return: 71.55%
2. Walgreens (WAG) - I heard one time that every 8 seconds, a new Walgreens is built. (Something like that). If you really take a look around, you'll notice that that's probably true. The cow town that I live in, I can already think of 7 Walgreens around, and I'm not really trying. One also has to take into consideration that America's biggest generation is moving toward the age where they'll need more medication for health problems. Total return: 45.97%
3. Aeropostale (ARO) - Everytime I went to the mall, I'd see more teenagers carrying around Aeropostale bags than anything else. I think teenagers these days are moving very agressively into consumerism. So betting on what teenagers think is hot is probably a good idea. Total return: 44.83%
4. Coach (COH) - More and more high school and college kids are about consumerism. Period. I can't even tell you how many high school kids I've seen around that have more expensive Coach bags than I do. (I bought myself a little wristlet as an "I survived another tax season" gift to myself). I've read before that Coach is the reasonable way to enjoy high quality goods. I totally agree. Just look at today's youth generation. You'll understand. Total return: 34.78%.
5. General Electric (GE) - You'd actually be surprised how large the GE conglomerate is. You could even have a loan financed by GE and you may not know it. Really, just looking around at everyone's appliances, a large portion of them are GE appliances. You support GE everytime you watch NBC or a Universal Studios movie. It's really everywhere. In China, you'll see that GE is a major sponsor for the 2008 Beijing Olympics. I also like companies that are not afraid to spend major advertising dollars to place themselves globally. Total return: 11.54%.

I guess I could give more examples, but it's probably unnecessary. I'll leave on one last note: commitment to the people. When I was in China earlier this summer, I picked up a new stock: PetroChina (PTR). One of it's slogans on a billboard caught me by surprise (you'll only be able to read this with a Chinese reader on your computer):

為你加油

P.S. Don't forget to look at Financial Statements after you've spotted a trend and also take into consideration whether or not the trend will last for at least a little while longer.

What comes first? The downgrade? Or the stock plummet?

On Wednesday, J.P. Morgan cut MVL from overweight to neutral. Oh and I love this part -

"In addition, the broker told clients it sees a pattern of stock weakness following major summer movies, which poses a modest risk after Fantastic Four's opening on July 8."

Hey J.P. Morgan - you're definitely not the only one to find stock weakness before any of Marvel's major summer movies. Yes, I noticed it before too. Who can forget the mass drop before the release of Spider-Man 2? That plummet still keeps me scratching my head.. Honestly, with the release of Fantastic Four, I was hoping to see whether or not this alleged "weakness" before openings was a myth or in fact a trend. Well - looks like I can't perform my experiment with this summer release. How are Marvel shareholders going to effectively find trends, if an analyst can just go in and downgrade the stock before the movie comes out - only to send the shares down because of the downgrade?

So really. What does come first? The downgrade or the stock plummet?

All I think this downgrade does is continue to pump in value to the stock. Using SmartMoney's price-check calculator, one can see that Marvel's stock is currently undervalued. It ended trading on Friday at $19.23, whereas the calculator sees the value at a more respectable $23.71. Since the drop to the teens around the time of the Spider-Man 2 release, I've always innately thought that the stock price was definitely too low. I hope it'll come up to the mid-twenties where it belongs. ..stupid downgrade..

Chiquita Brands

Newest addition to my portfolio: CQB (Chiquita Brands). Doesnt the lady to the left look at least vaguely familiar? :) I've always felt that brand name recognition (and product recognition) is an important thing. If you can't name major products that your company makes, do you really need to be owning it? (That's one to ponder for the road, isn't it?)



On 6/8/05, CQB just completed its acquisition of Fresh Express. Now, if you dont know what that is, it's this grand idea of selling pre-washed, pre-cut vegetables in a little baggie. They sell half pre-made salads, complete with croutons and a bag of dressing. I discovered this idea in college, and I've discovered that tons of people like me, would rather pay a slight premium on their vegetables in order to save time on preparation. I think this acquisition was a great buy for CQB. Yay for CQB.

I just recently found a little gem: http://www.smartmoney.com/pricecheck/index.cfm It's a price-check calculator. With CQB, shares ended on Friday at $30.15, but the calculator estimates that the value per share is actually at $60.55! It's so undervalued!

Check out the calculator. Oh but it only works for companies that have positive EPS.