Follow along as I attempt to stack up enough money and become good enough to trade full time. Here's to chasing the job I've always wanted.
Wednesday, March 14, 2007
Kraft, Oreos, and Me
There is some kind of a societal comment to be made when I have to hunt just to find some original Oreos among a sea of Mint, Double Stuff, Chocolate cream, Chocolate covered, Mini-bite size and on and on, I’m just not sure what that comment would be. I found some originals; I’ll work on the commentary while I’m snacking.
As far as making any money, I still think that there is money to be made. It just might not be made right this second. Reading the message boards it seems that most have written off KFT and most are certain that MO share price will raise quickly. Watching Kraft the past few days I can see why most might feel that way. Today we were down 2.36% on super big volume. That troubles me some, but not enough to be selling shares at $30 plus change. I have too much Kraft food in my refrigerator for the stock to go much under $30 for very long.
When I get my Kraft shares I’ll sit tight and wait. Not sure what price would get me thinking sell. I just need a little time after the spin to see what’s what. The nice dividend they pay will help me wait. Here’s a guy that says we should be buying at these levels not sitting and waiting. He may be right, but I am still good with waiting.
That’s it for today. Here’s to not forgetting that the Original Oreos still have it and to keeping an eye on your EveryDay Money.
Monday, March 12, 2007
Enron, New Century, and ADD moments
I would love to claim that I had the foresight and investment acumen to duck investing in either but the truth is much simpler. Avoiding sinking money into them boiled down to old fashion luck and a few well timed ADD moments. Days before I was to jump on the bandwagon and throw money at Enron I got distracted with Exxon. Then in an ADD blink my money was headed to XOM and their DRIP, with Enron forgotten about till they made the nightly news with their meltdown. A few years back New Century seemed to be making money hand over fist. They had popped up on a stock screen and with a money sense of déjà vu` another bandwagon was going by. Once again my ADD sidetracked me with General Growth Properties (GGP). General Growth had likewise popped up on a screen, they just didn’t seem… I don’t know… as sexy as NEW. Well some how GGP got the check and I got another DRIP.
Sometimes, I wonder if I would have had the presence of mind to jump off the Enron free falling elevator or if I would have had frozen up and crashed to zero with it. Looking back at NEW’s chart I wonder how many felt the end near when it dropped from $30 to $20 in a day and sold? How many bought at $16 thinking there would be a bounce? How many still sit with shares bought at $60 back in ‘05 wondering what just happened?
I don’t wish anyone bad luck in the market, we all have to eat. But… with that being said I am more than willing to learn from other’s mistakes. After all it is alot cheaper and one day the ADD may not be there to save me.
Have any good “near miss” stories? I would love to hear them. E-mail me or add a comment.
That’s it for today. Here’s to near misses, ADD moments, imploding companies, and to keeping an eye on your EveryDay Money.
Sunday, March 11, 2007
CROX is trying to drown me
With the way the whole market has been acting the past few weeks we all might have to work a little harder this year to make the returns that some of us have become accustomed to. For the past 2 or 3 years, I think, the market has made it too easy to make oversized returns. I have scaled back my use of margin, trying to get the account in a little more conservative posture going forward, just in case.
In light of the market’s behavior the past few weeks have you changed anything in regards to your trading?
That’s it for today. Here’s to understanding the market may actually go down. And to keeping an eye on your EveryDay Money.
Friday, March 02, 2007
A little extra Part 4
Again this month we sent a good size check to the ROTH account. The plan is to have it maxed with the check next month. It feels nice to be so close to fully funding the ROTH this early in the year. After we have funded this year’s ROTH we are planning on continuing to set money aside in order to have a good start on fully funding next year’s ROTH, you never know when your budget will change and ROTH dollars become harder to come by.
Again this month the mortgage check was bigger than it had to be. We were able to send extra enough that the principal reduction should be a little bit bigger than the interest accrued. Focused banging until it is knocked down, is what keeps clanging around my head. Not sure if we can, but if we keep up this level of payment then the house will be OURS in about thirteen more years. (that sounds so far away)
If you are sending extra on the house or working to fund your IRA then I would love to hear about your successes and challenges.
That’s it for today. Here’s to working the plan and to keeping an eye on your EveryDay Money.
Tuesday, February 27, 2007
What an ugly day, but it was a buying one
Philip Morris, my old friend, closed at $82.67. I believed in them at $85.50 just a few days ago, so today seemed like a sale price. I picked up some shares at $82.47 in after hours. Either you believe in your picks and you push money into the pot or you don’t believe. But you can’t make any money unless you are in the pot. Well for me in Philip Morris I trust.
That’s it for today. Here’s to keeping you margin amounts small and your decisions solid. And to keeping an eye on your EveryDay Money.
Monday, February 26, 2007
Crocs stalls, Philip Morris treads water
Big MO, I think, is stuck until the spin-off happens at the end of next month. Oh, it ticks up and down but hasn’t really went anywhere for days. If there is some kind of run going into the record date (March 16th) for the spin I might be inclined to sell, but it would have to be a run. I am thinking that it would have to be in that $95 - $100 range and I am just not seeing that happen, but who knows.
I am setting with plenty of margin ability and no place to put it. Would love to put it to work, just nothing I have come across looks too interesting. With the Dow having a rough time the past few days I am in no big hurry but don’t want to let a good trade go unnoticed either. Recently there seems to be more articles and talking experts opining that a correct is due. Is it that a correction is due or a case of group think or people just getting out in front with a little CYA in case something does happen or something else entirely? Perhaps a continuation of the “Big Guys” conspiracy to rip the shares from the “little individual investor” at rock bottom, panic induced prices right before “they” let the Dow return to its record setting ways? It couldn’t really be that…right?
That’s it for today. Here’s to not losing sight of the big picture and to keeping an eye on your EveryDay Money.
Friday, February 23, 2007
Linus has a blanket I have Philip Morris
So two days ago, after having cut half of my CROX loose, I went running back to Big MO. $85.50 seemed like an ok price to pay with the spin-off coming the end of next month. In the coming months I look for MO shares to gain relatively quick after the spin. Announcements of a big dividend raise, increase in share buyback or the international part being spun-off too could all help propel MO shares higher post split. At least I hope some of this stuff happens and the shares go up.
The shares of Kraft I get next month are the great unknown. They are in the middle of trying to right the ship and most anything is likely to happen post-spin. They could make headway in improving the businesses, sell some stuff, buy some stuff, who knows. So the plan as of right now is to wait and see. Unless something really bad happens or gets announced I look to hold the KFT shares for at least 3 months. Now if the shares run up 20% or more a month after the spin then all bets are off.
Another factor in how long I may hold either MO or KFT post-spin is how well my CROX are doing. CROX have had it a little rough since earnings release. I have them off margin so will sit with them a bit and see. I’ll let you know how it all works out.
Do you have a comfort stock that you keep running back to?
That’s it for today. Here’s to security blankets, consistent dividends and to keeping an eye on your EveryDay Money.
Wednesday, February 21, 2007
Sold half of CROX position
If I would have known that CROX would drop to $53.98 today I would have dumped it all last night. The good news is that the selling not only eliminated my margin loan but left me with some cash. (Average cost of shares was $47.15. Selling at $58.19 and $56.58 gave me a nice return. ) Not having a margin loan hanging around costing me money also gives me some options. The plan, right now, is to keep what shares I have for awhile. I still would like to see CROX at $70 plus. Without the margin loan I can afford to wait this one out, after all summer is right around the corner and that is when Crocs should haul in the money. I hope.
That’s it for today. Here’s to cashing profits when you can and to keeping an eye on your EveryDay Money.
Sunday, February 18, 2007
Big MO finally saying bye to Kraft
So on March 30th I will be handed a few shares of KFT and will have to decide what to do with them. Right now I am leaning toward just starting Kraft’s DRIP and letting it run for awhile. Recently, Kraft has faced some challenges and are in the middle of trying to get things squared away. Investors seem to be underwhelmed with Kraft's efforts. Since the IPO back in 2001 (Philip Morris kept over 80%) the stock has been erratic to say the least.
The good news is those ups and downs can and do work in a DRIP’s favor. Over the years MO’s DRIP has shined the brightest when they were facing bankrupting lawsuits and the stock price tanked. (Case in point: Back in the beginning of 2003 you could have picked up shares for under $40 (if you had the stones). Today MO is trading in the 80’s.) For the past 15+ years I have owned MO it seems we have continually either been on the brink of losing a catastrophic court case or recovering from one.
Is MO a buy or a sell right now? Will Kraft be a buy or a sell after the spin-off? I don’t know. For me MO is an investment not a trade. What either will do in the short term is best left to a coin flip. Now long term, with the DRIP running, I think both will be good investments. Remember I am investing MY money and making MY decisions based off of MY research with a little gut feeling thrown in. When investing YOUR money make YOUR decisions based off of YOUR research and whatever else you want to thrown in.
That’s it for today. Here’s to finding companies that are worth living with long term. And to keeping an eye on your EveryDay Money.
Saturday, February 17, 2007
February Poll
The Breakdown:
3% of voters clicked on “Am I supposed to have one?” Let me address that, “Umm…YES.” Only 18% reported that they have less than one month set aside. Another 12% of voters were in that one to two month category. 21% of people have at least three to four months on hand. 15% said they were in the five to six month group. A big fat 27% of people taking the time to vote said they were sitting with over six months of living expenses stacked up in piles. 3% reported that they consider their home equity line of credit a good substitute for a “traditional” emergency fund.
Do you think that readers of financial blogs are more likely to have an emergency fund or at least be actively working on it?
That’s it for today. Here’s to solid rainy day funds and to keeping an eye on your EveryDay Money.
Wednesday, February 14, 2007
Garmin trade ends on a positive note
Garmin reported that quarterly earnings doubled and the stock still dropped from today’s high. It seems counterintuitive for it to do so. We still have some time; it wouldn’t surprise me if GRMN got back to that $59 range by the end of the day. If it runs to over $60 tomorrow then I will feel a touch foolish…for a minute. I plan on keeping an eye on the stock. If down the road it drops low enough I will be happy to get back in.
The Numbers:
Garmin shares purchased on January 22nd for $49 per. All shares sold February 14th for $58.68. The difference gives a $9.68 profit per share (excluding commissions and margin interest.) $9.68 divided by $49 gives a 19.75% return for a 23 day holding period.
That’s it for today. Here’s to finding another quality trade and to keeping an eye on your EveryDay Money.
Tuesday, February 13, 2007
Batman, Superman, & Crocs
A new Wall Street Journal article openly questions if Crocs can continue to expand at the current rate and if the stock can double again this year like it did last year. While the over all article didn’t slam Crocs it (for me) didn’t come across as hugely positive either. At any rate it didn’t have people rushing out buying the stock today.
On the bright side today brought us yet another licensing agreement. A deal announced with Warner Brothers will put the likes of Batman, Superman, and Wonder Woman on Crocs soon. Perhaps there has been so many licensing deal of late (NCAA, NHL, NFL, Nickelodeon) that the market no longer gets jazzed. (Looked that way today.)
Toward the end of the day a nice piece came out about the growth opportunities in Europe. It seems that Crocs is expanding nicely just across the pond. The Thomas Weisel firm sees the growth pattern in Europe mirroring that of the U.S. only running about 12-18 months behind as Crocs continues to ramp up their distribution channels. Their opinion is that Crocs may see 50% of revenues coming from international sales this year. (I would call that a good thing.)
Last but certainly not least Crocs picked February 20th as the official date to report numbers. They are scheduled to start at 4:30 Eastern. You can listen to the whole thing through a link on their web site (here).
Although it has hurt my eyes watching the stock fall the past few days I still think the company will have good things to say on the 20th. As the stock continues to have days where the chart is going almost straight up… or down it is not lost on me that Warner Brothers already has the Batman name on a rollercoaster along with a Superman coaster.
That’s it for today. Here’s to stocks that don't make us queasy and to keeping an eye on your EveryDay Money.
Sunday, February 11, 2007
Eating lunch out would kill my budget
The question: If that was a “normal” lunch cost for eating out ($6 a piece) how are people affording to eat lunch out everyday or even 3 times a week? Maybe I should stopping being such a cheap skate and allocate more of our budget to us eating out?
My lunch: I usually take a cold cut sandwich on white bread, some fruit (apples, oranges, grapes), chips, and some cookies that we bake at home. (Ok… my wife bakes at home every few days from store bought dough.) It is pretty much a variation of that everyday. A normal week with no coupons the week’s total cost less than $10.
The Math: If eating out is an average of $6 a day times five work days that equals out to $30 a week. Taking my lunch averages out to less than $10. That is a hypothetical savings of $20 a week. $20 a week amounts to $80 a month or about $1,000 a year in savings.
The point: If you are trying to stack money for an emergency fund or find additional dollars to put toward the credit cards or you are short on fully funding your ROTH then cutting back on eating out maybe a place to start. Take a look at how many of YOUR dollars are being spent on lunches during your week.
How much of your monthly budget do you allocate for eating out?
That’s it for today. Here’s a tip of the hat to all those “brown baggers” out there. Remember to keep an eye on your EveryDay Money.
Thursday, February 08, 2007
Crocs, Garmin, and freaking Waiting
Garmin found its way up almost 3% today. Good. About time. I thought we would get something going into earnings that is why I stabbed at it when it was $49. Today is closed at $53.15. The plan is (if) when it hits $54 I’ll throw in a stop and let it play out till earnings. I’m still leaning toward exiting before earnings with a gain. Knock on wood. Waiting.
Crocs took a pause today, slipping almost 2% to end at $56.49. Blame it on Cramer if you need to, it doesn’t matter. I am not too troubled by today’s action. Have you seen CROX’s chart for the past couple of weeks? Earnings will be out soon and I’m thinking that the growth continues at a torrid pace. If the numbers are bad and the stock tanks expect a post shortly after that is titled, “The stupidity of not using stops.” Waiting.
What I need is another company or three to start researching. Something to help pass the time while I’m waiting. The truth is I don’t have anything lined up to go after Garmin. Guess I should be working on that this weekend. Did I mention that I am not particularly fond of waiting?
Have an idea or three on a company I should take a look over let me know. What do you do while you’re waiting to see how your trades turn out?
That’s it for tonight. Here’s to twiddling thumbs and to keeping an eye on your EveryDay Money.
Monday, February 05, 2007
The Carnival of Personal Finance is up and running
Sunday, February 04, 2007
Crocs, Dora, and Ocean Minded
After half of my position got called away last month I kept feeling that it was a mistake to have let those shares go. So a little hastily I jumped back in on January 30th. I admit I was more interested in getting in than getting a good entry price. My order was filled at $52.50, which for that day looked like a mistake. As the price continued to drop the next day my next order was filled at $50.00 and the previous day’s $52.50 looked like a bigger oops. Those two orders replaced what I had called away only at a much higher price. (Could someone please tell me why Mr. Experience gives the lessons after the test instead of the other way around?)
Besides a new 52 week high last week also brought us interesting press releases. Crocs signed an agreement with Nickelodeon. The deal puts Dora the Explorer and SpongeBob SquarePants on Crocs shoes. From what I have read those will be available this summer in some markets. I think these will sell well to the kids and translate into bottom line dollars for Crocs.
The other big announcement was that Crocs is buying all of Ocean Minded LLC. Looking at Ocean Minded’s website I see they make flip flops. I am along way from an ocean and to tell the truth never heard of the company. I will use the distance excuse rather than admitting that perhaps they design for and target a less experienced (younger) market than myself. Anyway I am guessing that their flops are now going to be made with Croslite, maybe, I haven’t heard. Dora is going to make us some dollars, Ocean Minded I’m not sure about yet.
What is your take on the Nickelodeon and Ocean Minded deals? Can we see $100 by summer?
That’s it for today. Here’s to new 52 week highs and to keeping an eye on your EveryDay Money.
Friday, February 02, 2007
Garmin starting a move before earnings?
Ever since I bought GRMN back on January 22nd I have been trying to formulate a plan. Well now I have one, at least for today. 10% that’s my whole plan so far. If Garmin can see its way to $53.90 or more before earnings release on the 14th then I will let them go. I am not opposed to holding through earnings like I was with Sandisk. My thinking is simply I’m on margin and 10% in less than a month ain’t too bad. (Bird in the hand and all that…) Stay tuned I’ll let you know how it pans out.
That's it for today. Here's to figuring out why stocks go up. And to keep an eye on your EveryDay Money.
Wednesday, January 31, 2007
Be comfortable with your activities and investments
Uncomfortable is pretty much my emotion when I read about people using money from zero interest credit card balance transfers to invest with. In short you pull money out with the balance transfers and usually push that money into an online savings account yielding 5% plus. Somewhere down that road you pay the money back and keep the interest. Is the plane on fire? Now don’t get me wrong. There are people that do this and make money consistently. Just ask 2Million. Over on his blog he has a great how-to about making money with balance transfers. More power to you if balance transfers work for you. For me it is too much like jumping out of the plane… blindfolded.
On the flip side of that I have no problem buying stocks on margin. With the margin buying I am still borrowing good size sums only now the interest is far from zero and the stocks a long way from FDIC insured. Can you make the plane go upside down again, please. Some would go as far as to say that buying on margin comes with greater risk than the balance transfers path. I would not disagree with that being said. For me margin buying is like snap rolling an Edge 540… exciting and fun. (Could one of these ideas be better than the other for you? Sure. Could they both be bad ideas for you? Yes! Could you be comfortable using both? Some people are.)
Many “professionals” say we should invest in things and companies that we know something about. Well hell I know a little bit about a lot of things, not all of them I would be comfortable sinking my money into. (I’ll take margin buying over balance transfers, stocks over rental property, aerobatics over skydiving, a mountain view over a city skyline…)
My point is this: Seek investments and activities that you are comfortable with. Don’t get me wrong I am not advocating NEVER doing things that take you out of your comfort zone, after all that is how we continue to grow. Just keep in mind as you read, listen, or watch different investment ideas being showcased that not everyone of those “great ideas” is great for you. There are no hard and fast rules as to how or what you ultimately should invest in. Don’t give it a second thought if your comfort level doesn’t match up with Dave Ramsey, David Bach, Robert Kiyosaki, Jean Chatzky, or even me. As long as you are making an effort in managing your money, preparing for your future, seeking enjoyable company and activities then that’s enough.
We all make far better decisions when we are comfortable with our current situation and investments as opposed to being mind numbingly stressed out. Repeatedly making better decisions not only increases the return on our investments but also the return on our life.
That’s it for today. Here’s to people, activities, and investments that make us smile. And to keeping an eye on our EveryDay Money.
Tuesday, January 30, 2007
Festival of Frugality #59 is up and running
Monday, January 29, 2007
Sandisk sold in After Hours
What did I learn? I need to do a better job at not rushing in. I started with the idea of writing some nice covered calls. I did a quick once over and the numbers didn’t look too bad. Sandisk had already taken a hit after the last quarter’s numbers came out and I figured that they were about done falling. Oops. After I was knee deep in stock I got a crash course on flash technology. Depending on who you listen to there seems to be two basic arguments. This is a company facing declining margins and tougher competition than ever before. The 40s are just a pause in a share price on its way to the low 30s. Others argue that its cutting edge leadership, size, and efficiencies will allow it to overcome any NAND gluts, margin contractions, and on and on back to a stock price more in the neighborhood of 70s or 80s. Now here’s the problem. I am just not smart enough about this business or the flash industry to even be able to argue either side. And that my friends is a problem when you don’t even know where to stand. So I had to hang it up. There is just too much uncertainty going into tomorrow’s earnings call.
The numbers: Bought the shares on October 30th 2006 for $48.20 per share. Sold covered calls the same day (Nov. 50s) for $1.20. Since the stock wasn’t called away I sold Dec. 50s for $1.35 on November 20th 2006. Today sold all SNDK shares for $42.24. Final tally not counting commissions and margin interest about a 7.5% loss.
That’s it for today. Here’s to just moving on and to trying to keep an eye on your EveryDay Money.
Saturday, January 27, 2007
A little extra Part 3
There are some legitimate reasons (at least I think of them as legitimate) behind my sticking with the extra payments. Let’s see, the last ten years of a thirty year mortgage the payments are mostly made up of principal. Since the payment is mostly principal then there will be less interest to deduct on the taxes. As the “experts” have said the tax deduction is a major reason that a mortgage is “good” debt. With so much less interest the last 10 years I guess it makes the last ten “less good” debt? Another reason I keep telling myself is that my wife and I already put about 15% or so of our pay away for retirement. If somewhere down the road we couldn’t put that percentage away then I would have to rethink the house extra. (No, really I would.) Also, if we didn’t have to pay a mortgage then we would need a fair amount less in income every month to maintain our lifestyle. Needing less income would give us both options in regards to job type and hours at work. With a baby coming in March those options might be worth lots down the road. In short I still equate a paid off house with freedom. Well maybe not freedom but at least choices.
I ran the numbers as best I could on a 30 year mortgage. If the amount that goes to principal is equal to the amount of interest each month then you can kill off a mortgage in about 15 years. So today I went back to my old, evil, money mismanagement ways and sent a check that matched principal reduction to interest accrued and took another full step closer to having more choices.
Are you sending extra to your mortgage even though you know investing that money “may” make better sense? Or do you still think that I have it wrong? Post a comment or drop me an e-mail. All feedback is appreciated.
That’s it for today. Here’s to finding a path that makes sense to you. And to keeping an eye on your EveryDay Money.
part 1
part 2
Thursday, January 25, 2007
Garmin, Crocs, and Sandisk take a beating
After the beating today it will be interesting to see how they fair tomorrow. SNDK has earnings next week and CROX should be announcing shortly. What happens in the next few weeks will dictate what I end up doing with those two. Garmin doesn’t show its hand till February 14th. I still don’t know about them, a few of those GRMN shares may end up being carried as a long(er) term holding. It seems that GPS navigation is almost to the point of “have to have”. You know kind of like cable TV. (wink, wink)
Remember having to get UP and change the TV channel, getting letters in the mail from far away friends, and having to finally stop to ask directions when we were “almost” lost. My how cool companies have changed our world.
That’s it for today. Here’s to the market not punching too hard tomorrow and to keeping an eye on your EveryDay Money.
Monday, January 22, 2007
Will Garmin’s GPSs locate a pile of cash?
Some of my thinking: Earnings are due out February 14th. S&P has a 5 star Strong Buy on the shares and a 12 mo. price target of $61. Back in December GRMN was at $55. The shares are now in the $50 range, that’s about a 10% correction. The February 50 calls are being priced at a nice premium. Garmin has cool toys! All of these ideas and a few others were racing around my head this morning at the same time my available margin was blowing trumpets like Churchill Downs calling me back to the action. I pulled the trigger at $49 and promptly watched it fall below $49. Ain’t that what happens to everyone?
The decision I need to make…soon is whether to sell February covered calls? I could probably get around $2.00 for the February 50s. Take the $2.00 add the $1.00 for the strike price difference, divide that by $49.00 and I end up with around 6% for a month holding time. Not bad and kind of conservative. Or I can wait it out till earnings are reported. If the numbers are good then we race back to $50 (maybe) or above $50 (double maybe with a cherry on top) and I make 10% plus in a month.
Tonight I just don’t know which way I want to hop. If you have a take on Garmin or an opinion on which way I should go then drop me an e-mail or post a comment. Thanks.
That’s it for today. Here’s to being ready to pull the trigger and to keeping an eye on your EveryDay Money.
84th Carnival of Personal Finance is up
Friday, January 19, 2007
Crocs Covered Calls Called Certainly
In the end: CROX shares were bought on November 20th and 21st, for an average price of $44.26. December $45 covered calls were sold on November 21st for $1.60. Since they were not called January $45 covered calls were sold on December 21st for $1.40 and were called January 19th.
The math: $45.00 - $44.26 = .74 per share
.74 + $1.60 (Dec) + $1.40 (Jan) = $3.74
$3.74 / $44.26 = 8.45% for right at two months of holding time. (Does not take into account commissions and margin interest paid.)
You can see how it all started (here).
That’s it for today. Here’s to trades with positive outcomes and to keeping an eye on your EveryDay Money.
Wednesday, January 17, 2007
An Emergency Fund is like the Ark
Before the rain, before the rain. I gave them the Noah analogy and some more “what ifs”. After some thought they settled on trying to establish a two month emergency fund. I encouraged them to pile up some dough as quickly as possible, push it into an online savings account and let the current 5% interest rate help them along. Then they could add a little every month to keep it growing towards the six months of expenses target. They agreed. If you are going to go then go full speed.
Noah didn’t just start the Ark he actually got it FINSHED before the rain. Their plan of attack is simple in its approach. Cut the cable movie channels, cut back on eating out, and start taking lunch to work more. They are also putting some shopping on hold (new houses need new things, but not all at the same time.) and he is picking up extra duties at work. (I think picking up extra hours or duties at work is a great idea. If that is not possible a second job for a few months is another possibility to help build quicker. A good garage sale, in warm weather, can pull in some cash also. ) The whole point I tried to make to them was get some cash on hand before something happens and you have to reach for the plastic.
If you stand outside in the country you can actually smell the rain coming. Now some of you may be thinking the same thing as my friends started out thinking, “I have plenty of room on my credit cards for almost any emergency.” “You don’t understand the bank has already set us up with a home equity line of credit in case something happens.” My response was and is this. Let’s say an emergency comes up so you throw it on the credit card and move on. You now have a NEW payment next month. Doubtful you can pay it in full next month because there’s not enough slack in the budget. If there were you would have used that slack instead of the credit cards. Now you are paying interest on an emergency. (The phrase kick him while he’s down ring any bells?) In a couple of months something else happens, car tires, refrigerator goes out, deductible for x-rays from rolling an ankle during a pickup game of basketball (no wait that last one was me). The point is now you have ANOTHER NEW PAYMENT. As you can imagine it doesn’t take but a few small emergencies before the budget is worthless and you are waist deep in water. Nervous1 summed it best on a thread over on the MSN Money boards, “Your $0 dollar emergency fund will be more than sufficient to cover any $0 dollar emergency you have.” Putting emergencies on credit (cards or home loan) would be like Noah building and someone coming right behind him pulling out every other nail. Get the rainy day fund finished and the emergencies will be more like rough seas then someone trying to drown you. Good luck with your building.
I see my friend all the time so I know how they are doing, drop me an
e-mail or post a comment and let me know how YOUR rainy day fund is coming along.
That’s it for today. Here’s to being prepared and to keeping an eye on your EveryDay Money.
Tuesday, January 16, 2007
Is BEST BUY a Buy?
Best Buy reports earnings April 4th, they had a little trouble last time around. They have fallen from around $58 in October to below $49 today. S&P has a four star buy on them and a $63 one year target price. Since this buy would be on margin I am looking for a quick turn of 5% or so. Ideally I could turn it in less than a month, kind of like last time. The question I am still mulling over is whether to do covered calls again. Right now I am leaning toward playing this one straight up with no calls. There is probably more to be made here if I decided to hold longer but when it is on margin my thinking is, “just give me the money and I’ll get out of your way.” I’ll let you know next week. (This is me merely thinking out loud. Please do your own homework. Buy and sell what you think is best for your portfolio.)
Have an opinion on Best Buy or another stock I should be tracking? Drop me an e-mail or post a comment.
That’s it for today. Here’s to making a few dollars and to keeping an eye on your EveryDay Money.
Monday, January 15, 2007
The Carnival of Investing is up
83rd Carnival of Personal Finance is up
Saturday, January 13, 2007
Is your car costing you a future?
The idea is simple in its premise if not a little challenging in its implementation. You save a few thousand dollars and pay cash for a car that simply gets you from here to there. Now this car may not turn the head of anyone in your neighborhood but does reliably get you from point A to point B. At the same time you start setting aside what would have been a car payment of $250 (or there abouts) each month in a online line savings account which earns you around 5% interest. At the end of three years you will have almost ten thousand dollars in that account. Take the ten grand and the car you’re driving roll them together. With the $10,000 and the trade in you should be able to trade up for “a little nicer” car. (Caution: Don’t let your ego overreach and roll the $10,000 + the trade in + a LOAN for this “little nicer” car.) Repeat the $250 a month set aside process. In another 3 years roll the new 10 grand with the “little nicer” car and upgrade again if you must. In short if you can save $250 a month then six years and two rolls later you can be driving a paid for automobile that turns the neighbor’s heads. OR
Roll your future not the car:
After you have rolled into a “little nicer” car then perhaps you realize that this type of ride isn’t so bad after all. The next three years you continue to save as planned but at the end you don’t roll into a different car. You decide, “screw the neighbors I’m going to be cash rich not car poor.” The $10,000 gets left in the online savings account earning interest and waiting until you NEED a different car. The $250 a month now gets pushed into a less than fully funded ROTH or a less than maxed out 401(k) or a nice dividend reinvestment program.
A look at what could be:
$250 a month invested that returns 9% gets you about $10,700 in three years. For five years of focus it grows to around $19,500. For those that are disciplined, in ten years you have just shy of $50,000. For those of you starting young, twenty years rolls to just under $170,000.
Bottom-line:
As I said the idea is simple: drive a paid for car and invest what would have been a car payment. It is the implementation of that idea that is the challenge. But, for the ones who rise to that challenge, master their car emotions there is indeed a rich reward for the disciplined and focused.
That’s it for today. Here’s to paid off cars, fully funded ROTHs, and to keeping an eye on your EveryDay Money.
Thursday, January 11, 2007
January Poll Results
Q: Your expected return for 2007?
As the New Year is getting into full swing I thought it would be good to find out what everyone thought the market would bring them this year. Now that the poll is closed I’ll share my thoughts. I have heard the market’s historical return of 10% idea so many times growing up that I think I am brainwashed. So my realistic answer, (the one I use with friends, coworkers, and such,) would be 10-20%. Now privately at home when it is just the wife and I, when I am running scenarios and the calculator on MoneyChimp ask for an interest rate… well then I invariably use something between 30-40%. Might as well shoot big, especially if no one is looking. Well enough about me, here is how you voted.
Above zero, I’ll be happy: four percent
Less than 10%: six percent
10-20%: forty three percent
20-30%: twenty three percent
30-40%: thirteen percent
40-50%: four percent
Above 50%, I’m that good: four percent
Thanks to everyone that voted. The February poll will be up in a couple of weeks.
That’s it for today. Here’s hoping the votes go your way. And don’t forget to keep an eye on your EveryDay Money.
Wednesday, January 10, 2007
Finding the next covered calls
With CROX up on good volume there is a really good chance that my January 45s covered calls will be called away at next week’s end. If that does happen then two things will come about: 1) Half of my CROX position goes away. 2) Pretty much all of my margin loan goes away. Not sure how excited I am about #1 but #2 let’s me go hunting for another stock. Since I will be on margin I don’t want anything too crazy. Ideally I will be able to find a stock that I can write some February calls against (take in a little money to off set the interest). 2.5% - 3.5% call premium is what I normally shoot for (again nothing too crazy) on a stock that I won’t mind sitting on if it doesn’t get called away come February. If things go well the stock moves up some, it gets called away in February and I make about 7-9% for the effort. All the while my CROX and SNDK continue to climb. (Well that’s the plan anyway.)
For the last few days Garmin (GRMN) has caught my eye. It has taken a few downgrades (Merrill Lynch and DA Davidson). The stock once over $56 a few days ago has backtracked to $52.30 today. The February 55s don’t look to bad. And if they get called away it is right in that 7-9% range for the month. I don’t know yet. First I have to get to next Friday’s option expiration and see what happens to my CROX.
If you have an idea on a good covered call play for next month drop me a comment or an e-mail. Thanks.
That’s it for today. Here’s to always finding somewhere to go next and to keeping an eye on your EveryDay Money.
Tuesday, January 09, 2007
Festival of Frugality #56
That’s it for today. Enjoy the Festival and keep an eye on your EveryDay Money.
Monday, January 08, 2007
Blog Carnival of Personal Finance 82nd edition
That's it for today. May you always find interesting things to read and are able to keep an eye on your EveryDay Money.
Sandisk and Crocs come out swinging
Crocs had a good showing today also. They finished up 2.56% at $44.80. Someone must think they are going to say some really good thinks at the big investor conference that is starting on Wednesday. You have so many people talking fad and one trick pony with this stock. If their new line up of shoes starts doing well then I feel this stock could make me some real money. I am looking forward to what is said on Wednesday, although with earnings right around the corner I don’t feel they will be giving away any secrets.
All in all it does my mood good when both of these stocks start the week off strong.
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stocks sandisk crocs
Sunday, January 07, 2007
Online savings accounts, welcome to being old(er)
I remember a very nice blonde lady behind the counter that always had a root beer sucker for me when I went inside the bank with my Mom. I remember there being lines to use the new ATMs. (Some of you will remember those really long lines in the bank on pay day.) Now with online banking, debit cards, and payroll direct deposits the number of trips to the bank become less and less.
All these changes got me thinking when we started building our rainy day fund. (Everyone should have an emergency fund. The “pros” suggest 3-6 months of livings expenses.) What I didn’t want was our hard earned money being mothballed in some savings account grinding out 1% a year. Now it can be debated on where is the proper place for an emergency fund to be sitting and that is for each to decide. For me I want that money guaranteed safe and near at hand. So as our rainy dollars started to pile up I went in search for something better than the near zero percent offered by my local brick and mortar bank.
An online savings account was just what I was looking for. The ones listed below are all FDIC insured and pay north of 4%. There are others, but personally I would start researching these first. (Interest rates current as of 1-07-07)
Emigrant Direct (5.05%) HSBC Direct (5.05%) Citi Bank Direct (5.00%) ING Direct (4.50%)
I will admit I was worried about it not working or more to the point me not working it correctly. When I first started using our online savings account I felt much like I did when ATMs were just getting started. If I screwed it up then there isn’t anyone near by to fix it. (Oh how I miss the nice blonde behind the counter.) Well it has been over a year since we first opened ours and I am happy to report my fears were misplaced. The transfers into and out of the account have gone smoothly and the interest rate continues to be about five times as much as a “normal” savings account.
If you haven’t embraced MP3 players and online savings accounts then this may be a good year to start. The only question I have is, “where’s my damn root beer sucker?”
That’s it for today. Enjoy the benefits of getting old(er) and keep an eye on your EveryDay Money.
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savings online banking
Friday, January 05, 2007
Piloting my ROTH (investing)
Toward the beginning of November (2006) I pushed a hand full of nickels into a ROTH opened with my favorite online brokerage. Now with this money I have none of the diversity or “professional management” but all the fun and excitement that comes from flying the plane instead of merely being a passenger. My thinking was this; surely I could beat the averages since I was only running such a small amount of cash. The money so concentrated that any winner picked would have a dramatic impact on my returns. On the other hand if I stepped on an Enron… well let’s not focus too hard on that hand.
So this year, with spousal support, I will take a turn at piloting my own ROTH. I know full well the long term hazards if this should go against me. This idea of picking individual stocks to place in a ROTH is probably not for everyone. (By the end of 2007 it might not be for me) I’ll let you know.
Do you pick individual stocks for your ROTH or fly with the “pros”?
That’s it for today. Here’s to great returns and fully funded ROTHs. And to keeping a sharp eye on your EveryDay Money.
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Wednesday, January 03, 2007
Push (trading)
Well it didn’t take much to snap me back to reality. Sandisk is the antidaydreaming stock if there ever was one. At one point Sandisk was down almost 5%. What’s with the 5% stuff today? So my idea of a rise going into CES burst into flames and came crashing down around my head today. To my knowledge there hasn’t been a big press release about anything, so I have no idea what was the driving force today. My lack of understanding doesn't stop the speculation from flying on the boards. Sometimes a little comic relief in the middle of a melt down is healthy. For the record, I am voting against the drop today being the result of “the pros coming after the little guy conspiracy”. But let it drop like this again tomorrow and I might reconsider. What I do know is that it was Ugly today. And I am back to internally questioning my hold decision.
At the close CROX was sitting pretty with a 1.85% increase and Sandisk sat with a 3.04% loss hanging around its neck. Both stocks made their move with above average volume. After having my emotions run in two different directions, like my stocks, it was anticlimactic to have my account finish almost even for the day. Like a stupid push in blackjack today left me a touch unsatisfied.
How do you feel when you end flat neither showing a gain nor a loss for the day’s effort?
That’s it for today. Here’s to not ending flat too often and to keeping an eye on your EveryDay Money.
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stocks
Monday, January 01, 2007
Happy New Year
I didn’t do any resolutions this year. If I was pressed to come up with one it would be simply; make good decisions based on solid research. That sounds nice and easy enough, at least tonight with the market closed this whole day. When the market opens and the New Year kicks off it will be harder. When I am watching my money bounce up and down it becomes harder not to get emotional. At least I can say I am getting better. I make fewer trades based on emotions than I did when I was younger. The downside is that I had to get old(er) in order to get that experience. I wish you good luck with your money for this whole year and many after.
Did you make any resolutions?
That’s it for today. Here’s to making smart decisions this year and to keeping an eye on your EveryDay Money.