Saturday, May 31, 2008

Shuttle launch

Pics live from the shuttle launch. Now let's hope the market does the same this week.

Thursday, May 29, 2008

Lookin' good

With oil inventories down and initial claims slightly higher than expected, oil and gold futures continue to fall. This is a positive sign.

The inflationary fears have been kept in check. Falling oil prices continue to stimulate equities.

We may not be out of the woods yet, but more and more analysts are saying what I've been saying: stocks are cheap, tech is good, financials will be back.

Wednesday, May 28, 2008

First Mobile Post

I've realized that more often than not, I have plenty of free time around my cellphone, but not as much around my computer. If this works well, I will be posting more often, utilizing my cellphone multimedia features.


Bubble's first pinprick?

Is it really happening? Is there a sign that the commodity bubble for gold and oil starting to show the first signs of correction?

I can only hope. The correction however is certainly welcome.

Come on oil...fall!

Monday, May 26, 2008

Interesting Career Advice Website

Today I was surfing the 'net and unconsciously I was searching for salary negotiation information.

At work, I am in a three-year rotation program, changing between financial jobs every year. At the completion of each rotation, we have interviews for our next rotation and salary discussions. As with most people, I feel I could be paid more.

In my search, I stumbled upon E-Zine articles and specifically this article.

However, linked to that article are a wide array of career articles I found interesting.

Check it out.

Friday, May 23, 2008

Market Update

Oil is leveling off from its $135 a barrel highs. I expect it to range between $125-$135 for a while, which should easy the negative sentiments of the market. I still believe in what I posted on Tuesday, and I have been buying June options on the cheap.

Tuesday, May 20, 2008

Market Conditions Seem Bleak...

...with the rise of oil to almost $130 a barrel and core inflation rising.

However, I sincerely believe that there are two phenomenon occurring in the market:

(1) The market is trading in ranges. The expectations is for the market to go +/- 3%. Today' the Dow was down about 1.5%, so I expect at least another big down day, and the market will rebound. In general, investors have been flaky, alternating between lots of optimism and instant reaction to any kind of economic news

(2) Rising oil prices is one of those pieces of economic news that investors have been overreacting to. However, it appears that speculators are also happy to trade within ranges, with big oil price spikes resulting typically with big oil price drops. Additionally, I firmly believe rising oil prices should already be built into the market, and so in about a 6 months, this should all even out.

With those two in mind, I am planning to buy both DIA and QQQQ (Dow and Nasdaq ETFs) Call options tomorrow afternoon, when I believe both will be near their low points.

Sunday, May 18, 2008

Long-term investors beware...

In a recent MarketWatch article, Chuck Jaffe who writes a column titled "Stupidest Investment of the Week" (link), talks about a specific Vanguard mutual fund that essentially invests all the other managed Vanguard mutual funds. Jaffe suggests, and I agree, that this type of diversification is over-diversification, or a type of risk aversion akin to keeping your money under 8 mattresses instead of one.

While most readers know I enjoy risk, my retirement funds are long-term focused. I've often debated the risks of holding one good stock (leading to high risk) or just holding something safe (Treasury bills). Classic finance would tell you that the ideal location is somewhere in between; a good mix of high risk and low risk investments.

Jaffe writes, "Studies have shown that holding more than four funds that cover the same ground results in a 'closet index fund,' where an investor pays the price for active management but winds up with the performance of an index fund."

People sometimes take mutual funds and diversification too far, believing that spreading their money around to various mutual funds meets the criteria of diversification. Instead, look at each mutual fund's holdings and find out if you are duplicating sectors. If you are, rather than holding two mutual funds and paying double the management fees, just put twice as much into one mutual fund and get out of the other.

Wednesday, May 14, 2008

Stock Market

Today's stable inflationary figures coupled with Congress' suspension on buying oil for the Strategic Oil Reserve caused a large bump in the stock market. During this time, I sold off half of my Dow call options, making about $300. Unfortunately, I'm still in the hole for other options that I have bought.

During the afternoon, the market began to dip, as finicky traders began to take advantage of the large uptick to make some quick profits. By day's end, the upward movement had been halved. Believing that this downward pressure was purely speculatively based, I bought in near the end of the day on both the Dow and Nasdaq ETFs, hoping for another quick pop tomorrow.

[Update] Attached is my current spreadsheet. For trades where I have yet to sell, I have added the current market value of the options in orange with an estimated trading cost. As you can tell, one trade in particular has had a huge negative effect on my overall profit:

Monday, May 12, 2008

Stock Market Updates

A recent reader asked for my an update to my investment experiment with credit card debt. Unfortunately, there isn't much to tell yet. Last Thursday and Friday, I bought in Dow Jones Industrial Average ETF Call Options, thinking the market was severely battered by what I believed to be high speculative oil prices.

This bet has been proving well for me today, with oil prices coming down. The DJIA has also been helped by positive expectations for tomorrow's earnings report from Wal-Mart.

Along with Wal-Mart's first quarter earnings report, retail sales figure will also be released. This is a key indicator of consumer spending patterns. The market expects a downward pressure, in line with general thoughts of recession. If this measure is neutral, or if better positive, the market will react very positively, perhaps seeing another flirtation with the mythical 13,000 mark.

Thursday, May 8, 2008

Stock Market

With oil prices rising, and Dow Jones component AIG reporting 100% greater losses than analyst estimates, the market is looking difficult to stay in the black tomorrow. However, I am still optimistic.

Today's jobless claims data was very positive and the overall daily rises in oil prices has actually been decreasing. On top of this, both the Fed and the Bank of England have decided to hold interest rates steady, suggesting the world economy is turning around.

Right now appears to be a great time to jump into the market. I've just sat on the sidelines and bought in during big down days and selling on the inevitable pop a few days later.

Try it out.

Tuesday, May 6, 2008

Cheap way of getting rid of tree sap on your car

(if you're in a hurry, scroll to the bottom to find out how)

That's right. Summer season is upon us, which means tree sap is dangerous for any shiny car haphazardly parked under a tree.

Today, visiting a field office, I made that mistake by parking in the visitor's parking lot, right under a tree.

It the afternoon, as I walked around my car to get in, I noticed that the entire top of my car seem to have been splattered by something wet. Upon closer inspection, the spots were a bit gummy and impossible to remove.

I got in my car, tried the windshield fluid on the spots on the windshield to no avail. I finally decided to ignore it for the major washing and detailing I had planned for this weekend.

But, while sitting on my couch watching TV, I began to worry about the spots being permanent. I had remembered at some point a car enthusiast on TV yelling about the dangers of tree sap to car paint, so I tried that on Google.

Viola! The first link for tree sap removal brought me confirmation that tree sap was the problem and the solutions. They ranged from almond mayonnaise to WD40. Apparentally, people had tried everything.

But finally, I found one solution that everyone agree would work and had no negative remarks about: basic rubbing alcohol (70%). I did as suggested and poured some on a clean cloth and wiped it on a small spot. It disappeared immediately. I then spent the next 15 minutes pouring rubbing alcohol on my car and wiping. Now its all gone with no damage to the paint!

As it turns out, rather than buying some expensive specialty remover or going to a professional carwash, the solution, rubbing alcohol, was in my apartment already.

Fuel Tax Break

Every time I post an entry like this, I always preface that I rarely stray into politics on this blog. However, in the case of the fuel tax break, I have to because it relates directly to personal finance.

Let me state it plainly: suspending the fuel tax is stupid.

The fuel (gasoline) tax is a pure consumption tax whose proceeds are designated for infrastructure maintenance and expansion. Rather than taxing the population at large, the greater users of gas, and therefore of public infrastructure, bear the greater weight of the upkeep.

By suspending the fuel tax, where does the money necessary for infrastructure upkeep come from? Well, real taxes, since roads HAVE to be maintained. Essentially you would divert already earmarked funds into the roads, if not take out loans to pay for it.

Many argue that this is an elitist or rich man's argument. It is not. There are 3 primary reasons this is better for the average Joe:

(1) Rich people have more money. They can already buy more gas and keep prices high. If the price dropped, they would want even more gas. Gas will go back to that price, and you would still be in the same place.

(2) Before, rich people already drove more and therefore paid more to maintain the transportation infrastructure. Without those funds, the money would come from general tax revenues. In general, most people would think rich people are paying much less tax relative to average. By taking money from general taxes, we would only widen this gap.

(3) Gas prices are not high because of taxes; it is because we are in high demand of it. Keeping prices high forces efficient car technologies, such as hybrids, to be developed, both saving the environment and costing the average consumer less.

Remember that we elect politicians to make TOUGH decisions that affect the LONG term. If they made decisions based on what everyone wants in the short term, the country would be (already is?) in great trouble.

(And yes, I am an economist, so Hillary doesn't agree with me and believes I'm elitist for having studied economics and wishing to inform the world of my opinion. This, coming from a Yale graduate...)

Saturday, May 3, 2008

April Networth Update

This was an interesting month, where I found myself on the short end of a bank account when I accidentally paid my credit card bill the day a bill was generated, rather than the due date. This along with a week-long visit by a friend, where we indulged on steak and seafood much of the week, caused this month's networth growth to be a meager $600.

My current networth is -$11,162.59 or -1.12% from my goal.

However, as many of you know, I have embarked upon an interesting venture, which by October, could net me a one month big jump or decline, depending on my investment picks.

If you look at my networth statement, you can see that Card #1 has a huge outstanding debt, which is offset by a $6,500 investment account asset. I have borrowed $8,500 at 0% from that card for 6 months, and I'm investing $6,500 of it in the stock market, while holding $2,000 in my bank account collecting interest. I hope that this two-prong method will allow diversification in this "investment" and provide me a net profit after I pay back the loan.

I've included my networth chart below, and you can see that the past few months have not been good for my networth goals. I will have to work hard in May to get back on top.

Friday, May 2, 2008

Investment Update

On Thursday, after the Fed announced a rate cut and indicated future rate cuts were on a hiatus, the market reacted unexpected, crashing after about 30 minutes of upward momentum. I thought this was the wrong way to react to such a positive economic indicator, and I bought more Dow Jones Industrial Average ETF Call Options.

Today, the market thought about the news, and reacted very positively, ending over 13,000! This helped me make a quick one-day profit. The following is my current position:

In the month of April, I've netted $555.24 in trading profits, or about 6.5% of my original loan, surpassing my monthly 6% return goal.

I will be taking my profits out around middle of May to pay back principal, and fees on the loan.