Monday, May 30, 2011

Week 5 Deposit

Even though its a holiday today and lots of fun and eating will be had, I still am making a transfer from my bank to the accounts...



EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.





Weekly Activity
$100 deposit into Investing


Model Portfolio Totals

Trading Account: $0

Investing Account: $200
Stock: $0
REITs: $0
Bonds: $0
Manuevering: $200

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
CDs: $0
Precious Metals: $0

Wednesday, May 25, 2011

Garden Project: May Update

As I discussed in a previous video, I am attempting to have a garden this summer. I've had hit or miss success in the past with growing plants.  How does that pertain to a blog about self sufficiency with income?

I wanted to see if there was profit, and how much of it, saved by growing vegetables and fruit vs how much it would cost to buy them in the stores.

I live in a townhome so yard space is limited. On top of that I have no windows facing south or to the east. This has made starting seedlings a bit rough. Why am I starting with seedlings? Well they are the cheapest to start with and also I have plenty of time. Where I live, the last night of frost is into June.

To overcome the yard space I built two raised gardens. I took 2"x12"8' boards to make 2, 4'x8' beds of one foot in height. I covered them in wetseal sealant and filled them with a 25% manure / 75% topsoil mixture. These were built last year so I might need to stain them.  Here is the monetary breakdown.

4 boards: $44
16 "L" brackets with 2 holes in each side: $48 (these were pretty solid at $3 each. With little carpentry skill I was concerned with them not being strong enough to hold all the dirt)
Screws: $9
2 truckloads of topsoil mix: $40
Wetseal: $13
Total for 2 beds: $154

I started the seedling back during the first week of April. To be honest? The lack of direct sunlight really slowed their growth down. I'll have to think about getting a grow-light for next year. We were still having snow a couple times in May so I couldn't risk having them out in the open.

We will have to see. If nothing else I will "cheat" and buy some pregrown plants for this year and plan better next year.

Monday, May 23, 2011

Week 4 Deposit

We have the next deposit coming up. As we are done with Phase 1 of the savings account I move on to another account...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.


We begin with building up the investing account. I have to admit that dividend investing is my first true love with the markets. Its the one type of strategy that hasn't treated me bad and its taken care of me.

I mentioned in the Portfolio Management Investing video that dividend investing is quite different from regular stock investing. Its almost an entirely different mindset which means I have a lot of information to cover before I buy too many companies because I want everyone to not only know which companies I am investing in but why I am picking them.


Weekly Activity
$100 deposit into Investing


Model Portfolio Totals

Trading Account: $0

Investing Account: $100
Stock: $0
REITs: $0
Bonds: $0
Manuevering: $100

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
CDs: $0
Precious Metals: $0

Friday, May 20, 2011

Types of Investment: 1 - Stocks

When I first started out I found it easy to buy stock. Log onto the broker. Click buy. Done. It took a lot longer to figure out what exactly I ended up getting when I click the buy button. You get a whole lot more then just having the share price of your stock go up and down...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.


The voting rights that come along with stock ownership aren't talked about much. I didn't even know about it until I received emails to log onto websites to cast my vote.  To be honest, the first couple notices I received I thought they were phishing attempts to steal my identity and I ignored them. 

I think the topic of voting rights gets blown off because a company can have millions to billions of shares. How much voting power does the little guy have? Well if we look at it from a political voting viewpoint 1 vote is 1/300millionth of the say in who becomes president of the United States. For some companies 1 share has as bigger say then political voting and an investor isn't going to be limited to only one share/vote.

Another thing to keep in mind, all the outrage of CEO pay? The shareholders let the CEO's get away with it. If enough shares back up a request to bring a motion forward for all shareholders to vote upon... it can limit pay on board members which includes the CEO. If I recall correctly, this happened to Coca-Cola a few years back when shareholders brought a motion forward to vote on limiting CEO pay.

Wednesday, May 18, 2011

Diversification

Diversification is one of those things that everyone talks about and everyone knows they need to do but it doesn't get talked and thought upon enough. At least to the extent that it deserves.

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

The trap of diversification is you split your money between stocks and bonds. Then with stock you buy an ETF and you think you are diversified for when things go down in value.  An ETF is an electronic traded fund. Basically its a collection of other companies. The idea being is that if one company fails the rest in the ETF keep it up. Instant diversification. It may protect you for if things go down but not the why things go down.

An example. A person buys U.S. stock, U.S. government bonds. West European stock, West European bonds. Awesome! 4 different areas and two continents protection right?

As I mention in the video there are lots of different things to consider. Western Europe and the U.S. have a lot of things in common. Similar service based economies. Similar aging populations. Similar maxed out government debt.
If the citizens are heavy in debt and don't have jobs can they buy a lot of products from companies? Will that lower taxes towards governments needing to pay off their bonds? In all honesty I don't see Western Europe being much different from the U.S. That means that things that will weaken and lower U.S. companies will have a higher likelihood of lowering Western European companies. In the end you may not really be diversified.

Monday, May 16, 2011

Week 3 Deposit

Another week has passed. It seems like just the other day I was sitting back debating if I wanted to have a public presence out there. Next thing you know here we are with another deposit...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.




Weekly Activity
$100 deposit into Savings


Model Portfolio Totals

Trading Account: $0

Investing Account: $0

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
CDs: $0
Precious Metals: $0


This week the deposit goes to the savings account. As I mention in the video, $250 is a good starting point for the more common emergencies that come up. Some may already have savings ahead of time which is great. However I wanted to set this portfolio up for someone starting out in the markets who maybe living paycheck to paycheck and have absolutely nothing.

By saving money for a rainy day we prevent the use of a credit card for that flat tire. Its beyond ridiculous how expensive things get when you are struggling with credit card payments, pay them down a bit, then have to turn around and run them back up. The interest will set everything we are trying to do back.

The site I mention in the video is http://www.zignals.com/main/

This marks the end of Phase 1 of the savings account. Next week we move on to the other two.

Friday, May 13, 2011

Picking an Online Broker

When you are starting out there is very strong pull to signup with a broker and open an account. Its important topic to cover when starting out...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

I can recall first starting out. The main thing I worried about was commissions. There are so many more things to consider when determining which broker you want to go with.

For my model portfolio I am going with ThinkorSwim. I'm really impressed with their software. It's a steep learning curve at first but its capabilities are powerful. And with the model portfolio it is going to be several months at the bare minimum before we do any live trades with real money. That is plenty of time for us to develop a trading system or two and test them.

Wednesday, May 11, 2011

Portfolio Management: 4 - Investing Account

In the next video of my portfolio management series I discuss the second of my three accounts, the investing account.

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.



Dividend investing. I rarely see a more misunderstood strategy when it comes to investing. Take Johnson and Johnson (JNJ) as an example. At first look it appears to not give much profit. 2% - 3% a year yield won't keep up with inflation so why bother. Looking back at 2000 the share price has only risen about 25% over 11 years. We are practically at the same price level so its made their shareholders no profit right?

Look at the actual dollar amount of the dividend paid each year...

2000:  $0.60
2001:  $0.71 (+18%)
2002:  $0.795 (+12%)
2003:  $0.925 (+16%)
2004:  $1.095 (+18%)
2005:  $1.275 (+16%)
2006:  $1.455 (+14%)
2007:  $1.62 (+11%)
2008:  $1.795 (+10%)
2009:  $1.93 (+7%)
2010:  $2.11 (+9%)
2011:  $2.25 (+7% estimated)

Since 2000 JNJ has nearly quadrupled how much they are paying out in dividends.
Thats through the Dotcom bubble, 9/11, and the housing and banking crisis / Great Recession. Even this year with all the mass recalls where some are predicting the end of JNJ and some say their business is in shambles, they are growing the company and continuing to pass on that growth to the shareholders.
When the country lost millions of jobs and the stock market fell by nearly 50% of its value JNJ still gave their shareholders a 7% raise in their pay.

That's the sort of dependability we want with our portfolio. That clearly out paces inflation so we do not have to worry about that much either. JNJ isnt alone. There are 100 companies that have raised their dividend for 25 years or more in a row. 144 companies that have raised it by more then 10 - 24 years in a row.

When was the last time your day job gave you a 10% raise every year?

Monday, May 9, 2011

Week 2 Deposit

In this week's deposit video I talk about a couple side projects I have in addition to the weekly deposit.


EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.




So my garden. I'll be leaving most of that information out of the youtube side apart from some overall total savings updates. I want the blog to be the more conversational side of things.

As I mentioned in the video this is my third year gardening. The first year I did well enough. Some green onions, basil, jalapeƱos. The second year I waited way too long to start my seedlings and I didnt put any mulch on top.  Mulch is a ground up layer of wood chips or a variety of other things that keeps the sun from drying out the soil. My poor seedlings would get shriviled up during the day. I would water them at night and they would recover but never grow roots down below the level where the sun would bake them. This year I started them a month earlier and I'll be mulching. I'll have more details of my garden in their own entries.

Friday, May 6, 2011

Silver market fear

I was hesitant to jump into the silver debates. Silver is right up there with religion and politics. It may start out reasonable and polite but it usually degrades into an emotional flame fest.
In the end however... the silver market is a prime example of what sort of things that the newcomer to the markets might encounter...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Emotion. It will make or break an account and do so quickly.
Right now what is happening in the silver market is people that were emotionally motivated to get into silver are being testing in a way they werent ready for.
Maybe they were afraid that dollar will lose its value. Maybe they are tired of losing money in the stock market with their company 401ks. Those are valid concerns that need to be addressed to be sure, but not enough reason by themselves to go buy silver. There is more to investing in silver then avoiding fear of losing things. Because as I say in the video... you get into a position based upon emotion then you are going to be getting out of it based on emotion.

Here is a screenshot of SLV this morning before the markets opened that I talk about in the video.


At the time of this blog entry SLV is up 4%. It may be reversing and going back up. How is the person who panic sold going to feel if it goes all the way back up?
It may be momentarily pausing and next week continue to plummet. How is the person who is too afraid to sell and take their loss going to feel when it goes down?

Now as for silver as an investment... I'm making no predictions on what is going to happen next up or down. If it goes down low enough that I feel it's a good investment with a risk vs reward ratio that works for me the I will buy. If it doesnt I wont.

Wednesday, May 4, 2011

Portfolio Management: 3 - Savings Account

Today I have the next video in my portfolio management series where I go a bit more into what savings is and isnt and what I use it for.



EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.


Last night I was hopping around youtube seeing what other investing and trading ideas are out there. I know my way of doing things isnt the end all be all best way to do it. There are a lot of ways to fit different personalities and needs of each person. I like to hear what others are doing no matter how outlandish. I came across an interesting idea for the savings account...

Investing in pennies. Pennies?!? Yeah I know right. The 1982 and earlier pennies are made up of copper where as the newer ones are a zinc-copper mixture. With today's current price of copper each of these old pennies has a value of $0.025. Instant profit!
Well I can think of a real big problem.... liquidity. Who the heck is going to buy pennies off of you? They would have to take the time to go through each one to check the date to make sure you werent trying to steal from them.
After the haggling, is someone going to take the time to do that for a half a penny gain?

Silver is a bit different. 1964 and older dimes, quarters, and half dollars were 90% silver. You can get a couple bucks for a quarter so our reward vs time spent is a little bit better here.

So as an experiment I am going to go to my bank and get several rolls of coins.  2 quarters, 2 dimes, 8 pennies.  We will see what I can find.
Now I am under no false pretenses here. I am pretty sure the loose coins in circulation have been picked clean but you never know. Not only that but these coins would be 29 years old for pennies 47 years old for dimes and quarters. They are going to be used, lost, destroyed, and taken out of circulation.
However the nice thing here is it costs nothing but time. The coins that dont have the copper and silver in them that I want I'll just give back to the bank. Zero risk!
We'll see how this turns out.

Monday, May 2, 2011

Week 1 Deposit

When I first planned out my blog I decided upon a certain pace and schedule. Real life, as it always does, has other plans.  I had to make a big push up front to cover my ideas for the portfolio and blog enough so that everyone following would know what I am talking about or at least a close enough idea. The portfolio management videos laid the groundwork for today's video... our first deposit...


EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Ah the "Triple Lindy". Deadly yet seductive in its execution. A bonus point for the first to know what that is.
Yes I do see the irony where in a video I talk about the dangers of using terms before they are explained... I whip out "puts" and "calls". I'll try my best not to do that but with how interconnected and woven everything is? I am not sure if its possible to completely avoid it.

Model Portfolio Totals

Savings Account: $100

Investing Account: $0

Trading Account: $0

Kind of lonely numbers at the moment. What we need is more stats. More numbers. More structure!
Each account covers multiple things and thusly will be sub divided into sub accounts. How we are going to do that will be covered in the next video.

Sunday, May 1, 2011

Portfolio Management: 2 - The specific rules for this model portfolio

My next entry spells out what thoughts and plans on my model portfolio and where I see it going...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.


Something I mentioned in the video that bears repeating...
Whatever amount that you are able to put away for your own investments is perfectly fine. It doesn't have to be $100 a week or even $100 a month. The important thing as I mentioned in the video is that you are consistent with your deposits. A steady reliable stream of deposits will grow over time.

I mentioned a few failings of mine in the video. I debated putting that in there or not but decided to leave em in. I feel its important that you guys hear my mistakes as well as my successes. Its more "real" that way. Those accounts that I blew up when I started was quite awhile ago and I have success ones since. But its always good to remember your roots so to speak. It will keep you focused if you remember the mistakes.

On the video editing route I found how to change the thumbnail that appears when the video is displayed. Hopefully this will be the end of the sleepytime videos. They say it takes 6 hours so we will have to see what tomorrow brings.