Oh Sony! That's gotta hurt...

(I'm gonna keep this short today) I read this from BusinessWeek Online:

S&P Keeps Strong Sell on Sony

Sony (SNE ): Reiterates 1 STAR (strong sell)Analyst: John Yang
After Sony's move to partly refinance $1.1 billion of bonds under a $2.7 billion shelf registration, we see liquidity challenges as it aims to transform itself with capital-intensive chip investments. With fiscal 2005 (ended March) cash of about $7.3 billion, and free cash flow of $2.7 billion, we don't think Sony can sustain cash outflows needed to expand its chip business, as competitors like Intel and Samsung spend about $4 billion on capital expenditures per year. As we see a likely cash crunch and profit deterioration on higher depreciation, our target price stays $27 on relative price-to-book value and enterprise value-to-EBITDA analyses.

Sony's ended trading today at $33. Time to short?

Is your company eco-friendly?

General Electric is one of many companies turning eco-friendly. GE's had a handful of environmental scandals in the past (tiffs with the Environmental Protection Agency at the very top of the list), but it's turning a new leaf. With it's new Ecomagination campaign, they're heavily advertising to investors. I've seen their commercials in front of almost all of MarketWatch's video analyses. It's boldly trying to make investors aware that companies are making an effort to be friendlier to mother nature. And everyone should follow. I am proud to say that I've been a GE investor and loyal appliance patron for a few years now. Now that GE's making the effort to be more conscious of the notion that nature could be fleeting, I like them that much more.

Should other companies follow? I mean GE does bounce back and forth as being the market capitalization giant of the Street. If they're the biggest and richest guy out there, should we all follow suit? In this case, I think so. As a shareholder, there's a sense of pride knowing that your company is using your money well and in a way that can't hurt future generations. Starbucks also fills me with such pride.

Did you know that if you bring your own mug into Starbucks and order a drink in it, you get 10 cents off? For someone who spends roughly $20 a month there, 10 cents a cup isn't bad! Those savings could practically pay for the mug itself in time. Anyway, the point was to give people incentives to not use and throw away paper cups. Starbucks' cup sleeves are recycled. They're even toying around with the idea of making 100% recycled paper cups (they're at 10% right now I think and that's already real good). That close contact with such high content of recycled materials has never happened before. I'd be a hair skeptical, but I'd still drink their coffee out of it.

Starbucks also has "Grounds for your Greens," which is ground coffee leftovers rich in nitrogen to fertilize your garden. I love the idea of giving people their aromatic leftovers and have them beautifying their gardens. I've used it before - too bad I didn't know enough about nitrogen rich fertilizer.. Don't put too much in one plant! :)

Anyway, I kind of like stressing investing in a company you really believe in, in one way or another. This way, you can rest assured that as long as these companies are around, the world will be a little bit ... healthier.

Bear Markets Make me Sad...

I'm a very bullish investor. To me, bearish days should be few and far between. That's probably because I'm not a short term investor. And in the long term, little day to day things shouldn't swing your portfoilo hideously.

In the past month, we've seen it all. Record oil prices, soaring home sales, inflation fears. You name it, I've heard it. The Nasdaq and DJIA have both lost around 2.0% in value. So what's the remedy to make money during the bearish times?

DIVIDENDS

Look for companies that raise their payouts consecutively. Look for companies that have solid cash flows. Here's the list of companies I invest in that has pretty nice dividend yields.

NZT New Zealand Telecom 6.59%
WM Washington Mutual 4.58%
MO Altria Group 4.17%
PTR PetroChina 3.88%
ACH Aluminum Corp of China 3.75%
SPG Simon Property Group 3.62%
KO Coca Cola 2.56%
CHL China Mobile 2.51%
GE General Electric 2.50%
XOM ExxonMobil 1.98%
CAT Catepillar 1.82%
CQB Chiquita Brands 1.57%
MSFT Microsoft 1.18%
MOT Motorola 0.76%
WFMI Whole Foods Market 0.76%
WAG Walgreens 0.48%
LUV Southwest Airlines 0.13%

I use Scottrade for most of my trading. Their $7 commissions are nice, but their downfall is not being able to reinvest your dividends. Schwab does though. I love the idea of reinvesting dividends. Your stake in the company just keeps growing. But taking the cash and saving it is also a good idea too. I hope you can see that with this arsenol of dividend paying stocks, I can worry a little less about market downturns.

Sorry I haven't written in awhile. I just moved. :)

Sony...Cutting edge technology and innovation?

Not anymore. I remember Sony as a brand growing up. There were days when everyone carried around a Sony Walkman, that eventually turned into a DiscMan, and then it turned into the Mini-Disc player. The list goes on. Sony definitely innovated the way gaming consoles look nowadays (Microsoft's own Bill Gates was even thrilled when he took his new Xbox 360 to Japan and they thought it was the new PS3. Talk about flattery). I have to give them credit with the design of the PS2 and then subsequently the slimline PS2. Nice work. (I'm being sincere here).

Very recently, Sony has been in the news because of the critic they invented to push sales of a few movies back in 2001. I'm sure, by now, readers have heard of this story. (If not, check out Fabricated Film Critic Haunts Sony @ Fool.com). Now, I don't know much about the film critic industry, but a move like that seems tantamount to shady accounting to boost revenues. But that's just me.

I have to give Sony credit, though, for bringing a ton of foreign movies to DVD in the U.S. Being an avid foreign film watcher, I actually own several titles from Sony Picture Classics. I bought another one yesterday - Kung Fu Hustle (great movie by the way). Inside the DVD cover, there was an offer for a free DVD. I'm thinking "Cool. A free movie." I thought the offer would be something like "Thanks for buying Kung Fu Hustle. Include the receipt and proof of purchase and a proof of purchase of another movie listed below (i.e Karate Kid, Medallion, House of Flying Daggers, Crouching Tiger Hidden Dragon etc), and we'll send you a free Asian martial arts movie." But that wasn't how it was at all! The offer had nothing to do with Kung Fu Hustle. Here's the offer (in my own words):

Go out and buy a copy of these movies (Karate Kid, Medallion, etc etc etc) between certain dates, and then we'll give you a free movie.

I already owned some of those movies. I bought House of Flying Daggers and Crouching Tiger the day they came out on DVD. Does that mean I honestly don't qualify for this promotion because I had already previously purchased it? I mean come on! Stop being so cheap!

Sorry Sony. If this is how you show your true colors, I'm not touching your stock with a ten foot pole. Their credibility with movies should be waning. Their LCD TV and HDTV sales are forecasted to produce losses in 2006 and 2007 (see BusinessWeek article). Sony is just not the powerhouse it used to be. SNE is trading very close to 52-week lows right now.

Equity Management 101...

Rule Number 1: Stay current with the times.

My parents have just asked me (as a result of this blog) to manage the money in their retirement accounts. That money is untouchable until they're 59 1/2 anyway. However, they want me to update their portfolio to fit with today's market. I'm young, so I can afford to invest very aggressively and risky. For their portfolio, I have a different approach.

1. In a portfolio mainly bought during the tech boom of the late 90's, there's tons of remnants of that past: SUNW, CSCO, HPQ, UIS, LU, AGR... Sorry all, you're the first to go. (This follows my rule of "if you can't name a product that your company makes, you shouldn't own it." Anyone know what AGR or UIS makes? No clue..)
2. I probably won't buy index funds, but I'm planning on companies that'll continuously pay out dividends - more specifically Dow components, S&P components... Stable companies for the stable soon to be retiree.
3. Though stability is the way to go, I think I'll add a TINY bit of risk into their portfolio. For flavor. One or two (non-major) positions in a company with definitely room to grow: DNA for one.
4. Since my parents retirement accounts are in Roth IRAs, they don't need to worry about getting capital gains taxes. I should set a percentage gain and sell afterwards. You don't want to buy and hold for so long that your portfolio is stale and stuck in the tech boom days of the 90s.
5. 90/10. If you've reached your percentage gain, or a healthy gain regardless, and want to realize some of those gains, there's no need to sell all your shares. I read from Jim Cramer that you should save a small amount of shares (i.e. 10 shares) just in case. If you really believe in your company (like in many cases, I totally do), then you should have very little to worry about

I made a purchase earlier this morning of CQB for them. Even though shareholders dumped it after they reported earnings last week, I still think it's a good long term buy.

Coach's Truly Blue Day...

I've been a Coach (COH) investor and e-mail list subscriber since early 2005. They reported fiscal 4th Qtr earnings this morning. Gross Margin increased a healthy 25.2% over last year's numbers. Their bottom line grew to an enormous 48.6%, earning a diluted $1.00 EPS (versus $0.68 a year ago). Estimates had earnings coming in $0.98 a share. I think Coach did exceptionally this quarter - and it's not the first time they've exceeded expectations. Coach also increased their full year fiscal 2006 guidance on earnings to "at least" $1.24 a share (on sales of around $2.1 billion), up from analyst estimates of $1.21 a share.

Apparently the rest of shareholders aren't as happy as I am, sending shares down (right now) over 5%. This comes as a double shock, considering Coach just reached their 52-week high of $36.42 YESTERDAY (see 5-day chart below) .

Investors are always so fickle. I guess I can't relate to today's mass dumping of shares - I'm a buy and hold type of investor (because I believe in my companies so much).

For the long run, I think Coach is a valuable investment. Their earnings release also signaled a increase in market share. I think that's pretty visible from everyday life. Whenever you're out, try and notice how many people are carrying Coach bags. More people carry Coach bags than you can imagine. (see Trends Based on Daily Life, #4)

On that note, feel free to check out Coach's brand new (appropriately named for today's more solemn stock performance) True Blue collection.

P.S. Coach finished down $0.80 for the day at $34.75.