Wednesday, April 30, 2008

Pluses and minuses

Plus: I got my $50 National City gift card in the mail today - it was a Sharebuilder bonus for signing up through my National City account that I have for CashDuck. So that's pretty cool. Sharebuilder bonuses are awesome. (I invested my $6 in an S&P 500 index fund. It is now worth $6.14. How savvy am I?)

Minus: I got two W-2's that I had forgotten about - one for Pearson, which was a test-grading job that I had for about a month in April-ish ($988) and one for Kaplan, where I worked for exactly three days during the July-ish period when I decided I needed a second job and then decided that I really wanted to go home after work ($81). So that's about $200 more in taxes to pay since neither had much withheld. And it also makes me wonder where the thousand dollars went??

Plus: I finally am able to see information about Electric Orange, the new ING checking account, and I am ALL over that. They have a payment feature where you can send someone an email, they put in their banking info, and voila they get money! This is so cool I can't even begin to describe. Plus about 3% interest on the money you have sitting around in the account. I am so opening one for CashDuck!!

EDIT: I originally wasn't happy about this feature because you had to know their account info - but the description made it sound like you didn't have to anymore. On further investigation, it's the same. So I guess that makes this a neutral?

Minus: I went to Target on Sunday with a pocketful of coupons, spent $91 and walked out without remembering to actually hand over the coupons to the Target lady (about $10 worth.)

Plus: I got a prescription filled and actually had one of the free-gift-card-with-prescription coupons (which I did use) from Target, so I got a $10 gift card from that.

Plus: I get my first paycheck from my new job on Wednesday - and $500 of it is going into my 403(b). So, from my calculations, about $1340 will actually be deposited between my employer's contributions and my voluntary and involuntary contributions. Which is about as much money as I use to live on and pay bills other than debt. So I think that's pretty cool. If all goes as planned I may have to raise my goals of how much retirement money I want to save by 30! =)

Tuesday, April 29, 2008

SandRidge Energy (SD)

I screened a stock on Monday named SandRidge Energy (SD) in a post titled, My Latest Stock Watchlist and noted that it made just about every screen I ran over the weekend. I looked back at scans from earlier in the year and it did make a few of them but didn’t grab my attention until now.

SD – 44.28, made almost every screen I ran this week (buy near $40)


Stock of the Day

Sandridge Energy Inc. (SD)

Monday’s Closing Price: YGE - $44.38

Sector: Oil & Gas

Industry: Oil and Gas Production

52-week Price: $28.50 - $45.40

SandRidge is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The Company also owns and operates drilling rigs and a related oil field services company with focus on exploration and exploitation of its significant holdings in West Texas. SandRidge operates in four segments: exploration and production, drilling and oil field services, midstream gas services and other.

The stock recently logged a new all-time high on increasing volume as it broke-out above the ideal entry area of $41.15. Unfortunately for me, it broke out during the week of my vacation (and return). I can’t say that I would have bought shares but I am interested now. I understand that crude is selling at all-time highs and some people are calling for a top but I am not about to listen to them. Money is still to be made in this industry. By the way, SandRidge is in the #1 rated industry group as produced by Investor’s Business Daily.

Net income was 137% higher than a year ago (3rd quarter) with revenue increasing by 71% during the same time period. Natural gas and crude-oil production jumped nearly five-fold. Shares closed at $31.20 ahead of the 3rd quarter report; it has since given investors a 40%+ gain in a few months.

SD is starting to outperform a few of the top stocks in the top rated industry group, something I do make note of. For example, SD is up 24% YTD as the industry groups as a whole is up 18% YTD. As you will notice, SD shares company with some very respectable names (stocks).

Sister Stocks (Top Rated Industry by IBD):

Range Resources Corp - RRC

Continental Res Inc. - CLR

Quicksilver Resources - KWK

Bois D'Arc Energy LLC - BDE

Petrohawk Energy Corp - HK

Potential Trade Set-up:

Ideal Entry: $41.15

Risk is set at 1.0% of total portfolio or $1,000 of $100k

Stop Loss is 10% or $37.04 (breathing room to $36 is okay)

Number of Shares: 243

Position Size is $10,000

Risk is $4.12

Target is $55+ (based on future growth)

Reward-to-Risk is 3.36-to-1 with ideal entry; less with current price

Continue reading to see the impressive institutional numbers, general fundamental numbers and basic technical analysis that make this stock stand above other recent IPO’s. Net income, revenue, earnings and industry (global) growth make this an ideal stock for my watchlist. I am looking for young companies with increasing earnings and sales.

Institutional Analysis:

Held By Institutions: 38.07%

Total Held by Institutions: 269

Money Market: 123

Mutual Fund: 143

Other: 3

New Positions: 229

Positions Sold: 8

Shares Held: 64.4M

Shares Held Previous Period: 5.8M

Shares Bought: 59.4M

Shares Sold: 0.77M

Value of Shares Bought: $2.3B

Value of Shares Sold: $29.9M

Top Institutional holders; Shares Held:

Ares Management LLC; 13,333,333

Lone Pine Capital, LLC; 6,557,039

Farallon Capital Management LLC; 5,771,010

Janus Capital Management, LLC; 3,545,082

Janus Contrarian Fund; 2,424,071


Key Fundamental Numbers:

Market Cap.: 6.3B

Outstanding Shares: 142.7M

Float: 102.8M

P/E (TTM): N/A

PEG Ratio: N/A

Total Debt/Total Capital: 32.50%

Quick Ratio: 0.96x

Operating Profit Margin: 27.58%

Gross Profit Margin: 76.01%

Net Profit Margin: 7.37%

1-yr EPS Rate: 118%

1-yr Sales Rate: 72%

5-yr EPS Rate: 91%

5-yr Sales Rate: 63%

EPS Growth (MRQ): 141.96%

Revenue Growth (MRQ): 72.49%

Net Income (millions):

FY 2007: 50

FY 2006: 16

FY 2005: 18

FY 2004: 25

FY 2003: 13

Revenue (millions):

FY 2007: 659

FY 2006: 363

FY 2005: 277

FY 2004: 172

FY 2003: 155


FY 2009: $0.64E

FY 2008: $0.44E

FY 2007: ($0.06) - Estimates were for $0.03

Saturday, April 26, 2008

Portfolio Snapshot: Growth

I am going to disclose the holdings in my growth portfolio because I have been receiving questions as to what I am currently investing in (during the so-called bear environment). Readers ask what I actually own and want to know why I present stocks that I do not own.

So, to answer some of these questions and requests:

  • I will disclose my growth portfolio which consists of stocks that I anticipate will provide a rate of return greater than the general market averages and 90% of all listed stocks. I have owned shares in a couple of these stocks for a lengthy period of time. However, I will note that the size of the positions in MA, JASO and EDU have changed just as the market environment has changed. I have both added-to and sold-out of shares over the past 6-12 months.

  • This blog is treated as an educational and equity research site. I am providing a portion of my own research in public while trying to help others based on the knowledge I have accumulated in the market. I research and study hundreds of stocks every week but I only buy a handful over the course of a year.

Anyway, the six stocks below are all currently positions in an account I consider my growth portfolio (stocks can be held from a few weeks to a year). This account buys young innovative growth stocks that have the potential to provide returns greater than the vast majority of the equity market. It’s a long portfolio. I have other portfolios that buy options, ETF’s, value plays and short from time to time but this portfolio most closely resembles my research and writing style on

If you are wondering about this year’s losing trades (closed trades), most of them were sold prior to leaving for Mexico in late March (and I had several across the portfolios).

I am disclosing the positions because I am reevaluating the holdings while looking for new potential buys. Visa is the latest purchase and is up over 16% since accumulating my first batch of shares. I would like to buy additional shares in Visa once I determine how to reallocate the funds within the portfolio. Some new faces are popping up on my research scans and may be worthy of consideration versus the longer holdings and rebound plays.

Portfolio Snapshot: Growth Stocks

  • CPLA – 63.18, Capella Education; I bough this stock as a rebound play upon returning from my trip in Mexico. I highlighted it as a possible $60-$100 play back in February and have been watching it ever since. It will stay in the portfolio as long as it holds at or above the 200-d m.a.

  • MA – 239.55, Mastercard; One of the older positions in my portfolio, MA is still giving me gains as it continues to trend higher. The ultimate mercy point or sell signal is a violation of the 200-d m.a. I will not liquidate the entire position until it drops below the 200-d m.a. on heavy sell-off volume.

  • JASO – 23.73, JA Solar Holdings; A long time holding in this portfolio but it is a stock that I liquidated before opening a new position in recent weeks. The latest trade was based on a momentum signal rather than last year’s trend buying signal. I like the sector but it may be exhausting so I would like to find a new place to possibly park the money.

  • EDU – 73.55, New Oriental Education & Technology Group; I love the products and services this company offers. It teaches English to Chinese students (children and adults). The demand for this market is huge and EDU is at the forefront. I recently added new shares as this stock may have staying power based on its offerings and market. I am looking for a run towards $100 and a test of new highs.

  • V – 72.30, Visa; I bought shares both before and after my vacation and I am hungry for more. Maybe I am crazy but the 0% credit card balance transfer/ purchase offers are pouring into my mailbox every day. I have always received these offers but it seems it has picked up in recent months. People are going to charge since their piggy-bank houses are no longer an option. Well, I didn’t base my buy on that assumption but it’s not a bad indicator.

  • GU – 14.35, Gushan Environmental Energy; By far the riskiest stock in my portfolio in terms of name and perceived potential. Actual risk is capped to 1% of total equity but I will sell this sucker prior to a full loss if it starts to drop. I have already sold a position from earlier in the year when it turned against me but felt the need to jump back in for a potential longer term move. I don’t know if it will happen and wouldn’t be surprised if I was sold-out again; before the run I am anticipating based on my research.

So there you have it – my actual growth portfolio. I wish POT was in my portfolio in 2007 but I missed that boat. Maybe IPI will become a solid momentum play. Some new stocks I am watching are TITN, IPI, SD, GTLS, PPO…among others that I can’t remember off the top of my head.

You may notice one thing: I buy the stocks I study the most and present on the blog.

Quick Political Fixes That Don't Work

Going to post another article that is pretty good but pretty boring but has a lot of meaning so read it. I'm too busy right now to do it all myself since I just added a possible lawsuit in Florida over my late uncle's estate. Just gets better and better.

But I realized when I saw this article at (full disclosure--I do business with these guys) that none of you have ever seen or been under price controls. Hope you never do because they don't work, ever. Read on.

The high cost of cheap food

Published: October 24 2007 20:37 | Last updated: October 24 2007 20:37

In 1973 Richard Nixon, US president, under political pressure be­cause of rising domestic food prices, banned the export of soyabeans. The policy had predictably dire results, but today, with the world in the grip of another bout of food price inf­lation, governments worldwide are rushing to distort the market with subsidies and quotas, price controls and export taxes. They should stop.

In the run-up to its presidential election, Russia has imposed price controls on basic foodstuffs, and plans an export tariff on wheat. China already controls prices; other importers, including Egypt, Jordan, Bangladesh and Morocco, are increasing subsidies or fiddling with their tariff regimes.

The simple problem with all these actions is that they distort the market. Price controls and export tariffs make production less profitable, which discourages increased supply and can make shortages worse. Subsidies stimulate demand so it does not fall into line with higher prices. All distort the terms of trade within a country. Farmers suffer at the expense of city dwellers – especially perverse in countries with high rural poverty, such as China.

None of this is too bad in the short term. If food prices fall back, price controls become meaningless, subsidies can be withdrawn and export tariffs no longer make sense. The more pernicious problems will appear if food prices stay high. With more demand for protein from fast-growing Asian middle classes, lunatic policies to subsidise corn-based ethanol and the legacy of under­investment during long years of low prices, that prospect seems likely.

For exporters, distorting the market in favour of domestic consumers harms the balance of payments, lowers investment and helps rivals. Nixon’s ban is often credited with creating Brazil’s soyabean industry.

For net food importers, who can keep prices down without shortages only by offering subsides, the risks are much more serious. Cheap food is an open-ended fiscal commitment – once in place it is politically impossible to withdraw – that can play havoc with a budget. Developing countries have improved their fiscal position in recent years. They should not throw that away.

Rich countries, where food is a small part of total consumption, have less to worry about, although they should beware the ratchet effect as food importers increase subsidies and food producers tax exports, driving up world market prices still further. But leaders in the developing world, no matter the political pressure to bring down the cost of grain, should resist. Cheap food comes at a high price.

Friday, April 25, 2008

LifeCell Surges on Buyout - Another One that Got Away

The inevitable happened today, and Lifecell (LIFC) was bought out today by Kinetic. The stock had already been on a run of late and capped off its path with a 17% gain on today's news to $50 per share. LifeCell is a top supplier of tissue based products for reconstructive and other medical uses and its financials combined with lack of viable competition have provided shareholders with a masterful return over the years. Unfortunately, although I posted and recommend on multiple occasions as far back as June of 2007, LIFC didn't make it in to the Everyday Finance portfolio. This was an old investment club favorite back at $7 per share. I hope some readers were turned on to the stock and got to participate.

How Much Is Enough To Retire? Finally Some Reasonable Answers

When I see something I like, I steal it. Or at least borrow it. The financial world is full of worthless calculators. Here is something by Jon Clements of the Wall Street Journal that makes sense.

It's halftime. What's the score?

Today, I turn 45. (Don't feel bad; only my mother ever remembers.) By my reckoning, that puts me halfway through my working career and hence halfway to retirement.

How big a nest egg should a 45-year-old have? Here's a look at who faces a midlife financial crisis -- and who might be able to retire early.

Taking stock. Start with the accompanying table, which shows what percentage of pre-tax income you need to sock away over the next two decades, depending on how much you currently have saved.

Suppose you have a $240,000 portfolio, equal to three times your $80,000 annual income. To retire in comfort, you ought to save a manageable 12% of income every year for the next 20 years, calculates Charles Farrell, a financial adviser with Denver's Northstar Investment Advisors.

That savings rate -- which would include any employer contribution to your 401(k) -- will give you a retirement stash equal to 12 times income at age 65, or $960,000 in today's dollars. If you then use a 5% initial annual withdrawal rate, your savings will kick off $48,000, or 60% of your old salary. Add in Social Security and you might be hauling in a respectable 80% of pre-retirement income.

All this assumes you can clock an after-inflation investment return of five percentage points a year during the next two decades. To hit that target, keep a healthy sum in stocks and a tight lid on investment costs. (If you don't have precisely 20 years to retirement and want a sense of whether you're on track, try the retirement planner at

Quitting early. What if you have savings of four or even five times income? As you can see from the table, amassing enough for retirement should be a breeze. In fact, if you have savings of five times income today and you never saved another dime, you would hit 12 times income at age 63.

But if you have already amassed a hefty nest egg at 45, you're probably a diligent saver, and you might look to retire early. Let's say you salt away 20% a year.

At that rate, if your portfolio today is equal to four times income, you will hit 12 times income at age 59, Mr. Farrell calculates. Similarly, if you currently have five times income saved, you should be set by age 56.

True, that means retiring before you're eligible for Social Security. But if you are a diligent saver used to living on a small portion of your income, that shouldn't be a big sacrifice.


Catching up. On the other hand, maybe you haven't been so thrifty. As the table indicates, the annual savings rate required to amass 12 times income by age 65 is 20% if you currently have two times income saved -- and a whopping 27% if your nest egg today is merely equal to your annual income.

Can't do it? Instead, you could scale back your retirement goals, delay retirement or both. Suppose you have savings equal to twice your income. If you sock away 12% of income per year, you could retire at age 69 with 12 times income.

Alternatively, you could call it quits with 10 times income at age 66. Again, imagine you earn $80,000 a year. If you retire with 10 times income, or $800,000, and use a 5% withdrawal rate, you will have $40,000 a year from your portfolio, equal to 50% of your old salary.

Meanwhile, if you have a nest egg of just one times income and you can't see cranking up your savings rate to 20% or more, you will likely have to curtail your spending fairly sharply in retirement, unless you work well past 65. For instance, to retire with 10 times income, you would need to salt away 12% of your pretax income every year until age 71.

One warning: All of the above presumes your income rises at the inflation rate between now and retirement. What if your income rises much faster? Ironically, that could make it tougher to retire.

"Let's say you get a big raise at age 50," Mr. Farrell says. "It's probably not feasible to replicate that lifestyle in retirement. The majority of that money should probably be committed to additional savings." If you do that, your nest egg will grow faster, and you won't have to throttle back your spending quite so much when you retire.

Copyrighted, Dow Jones & Company

Thursday, April 24, 2008

StubHub Selling Experience

All season long, I’ve had hockey tickets I couldn’t use. Generally I liked to sell the tickets off in pairs at cost. I calculated that for my section, tickets were about $30 a pair, which is an excellent discount off face value. I’m not interested in gouging my friends, so I didn’t. However, this lucky wombat has NHL playoff tickets in her hot little hands. I’m completely gobsmacked about it, but I couldn’t shake the thought that my tickets are a saleable asset. Due to the time-value of tickets, I had to decide quickly if I wanted to sell a pair off.

Because Washington is ranked 3rd in the standings, we’re playing the #6 team and we get home ice for the first two games. Since we’re playing the Flyers and the teams are evenly matched, there is a high likelihood that the series will return to DC for a 3rd home game. I couldn’t shake the fact that I could sell a pair of my tickets and possibly pay for all my conference quarterfinal tickets AND still have enough to buy one of those spiffy new red Reebok hockey jerseys the Capitals got this season. (The old black jersery was ugly as sin.)

I agonized over this decision. I feel like financially, it would be stupid not to recoup some of ticket cost. But lifetime experience-wise, it could be another 10 years before the Capitals make it to the playoffs again. What is a girl to do?

I started cruising StubHub, an eBay owned website for ticket auctions, and looked at playoff ticket prices. I figured that I would price the starting price very high with a high reserve price. Then if they didn’t sell, I wouldn’t feel stupid and I could still go to the game myself. In doing so, I priced my tickets STUPIDLY HIGH. I would never have paid 4-5 times the face value. But in reading all the listings for tickets, I realized that the insanely high price I was setting could be justified.

1. My seats are in the 400-level, close to the aisle, concessions and bathrooms.

2. Most seats on sale are in the rear of the section, but mine are pretty close to the front of the section.

3. As a season ticket holder, my playoff tickets are spiffy red with a silver Stanley Cup to commemorate the occaision.

Most sellers put a stupid comment on their listing. It’s pathetic what they’re writing. “RD1 GM2″ Of course it’s Round 1, Game 2, that’s what the ticket link said in the first place. Why place redundant information? Instead, I put exactly why my tickets were freakin’ awesome. “Commemorative tickets close to aisle (2 seats away) Close to concessions and bathrooms” BADA-BING! I got $170 for a $37 ticket!

StubHub takes a 15% commission. I asked for a check to be mailed to me, instead of PayPal because I wasn’t sure if there was going to be an extra fee by PayPal, which also happens to be an eBay company. I wasn’t interested in a potential double dip, so I’ll wait a little for the money to reach me. It took some doing to find a FedEx envelope and drop off point since I don’t work at a place with a regular FedEx pickup, but boyfriend was able to take care of that for me and it was pretty simple.

Bottom line:

1. Market your tickets well.
Give the buyer a reason to buy your tickets over someone else’s tickets. Of course, be truthful too because they will know if you lied once they get the tickets.

2. Price the tickets to sell, but don’t be dumb about it. StubHub made a suggested selling price based on other/historical selling prices in the system, sort of the way Priceline suggests a bid price based on other bid information. However, I ignored the suggestion because the current prices for playoff tickets were way higher. I used a selling option that lets you set a high price and have it knocked down a little bit each day till a reserve price is reached.

3. Get it done quickly. StubHub relies on FedEx for overnight delivery of tickets. Tickets themselves only have time-value. Sure prices fluctuate, but if there is a frenzy for tickets, you want to leverage that mania for your benefit.

I had a little discussion with friends about why ticket auctions like this are acceptable. Turns out, it’s a lot less illegal than it used to be to sell tickets higher than for face value. So I guess I have to claim this as income on my taxes next year, but I’m ok with that. Main thing is that I’m hoping the Capitals make it to the next round!

Wednesday, April 23, 2008

Hope you weren't counting on that extra half-percent raise

... cuz you aren't going to get it, at least not for awhile.
Remember the National Defense Authorization Act, which President Bush vetoed a couple of months ago, with the 3.5% military pay raise? Well, our pandering and inept congresspeople were unable to revise the bill such that it would be passed before the start of the new year, so military personnel will have to settle for a 3.0% raise across the board. However, plans are "in the works" to assure that "the half-percent raise will be applied to military pay retroactive to January first, 2008," but I wouldn't count on seeing it for a couple of months, at least. Luckily, for most families, this amounts to a difference of $20 or less per month; however, it's hard to plan a budget when something as basic as base pay hasn't even been established. Keep this in mind next time you go to the polls.

Tuesday, April 22, 2008

Debt Consolidation: Easing the Burden

There's no doubt that while having a certain amount of debt is normal and a way of life for most of us who live in North America, some of us have gone over the line where we can pay back what we owe in monthly payments. Before any further discussion of this unfortunate situation can take place, it’s necessary to note the facing a debt burden is something that can happen to anyone. It’s not just the people who don’t know how to manage their money that can get into trouble, but those unfortunate ones among us that are faced with the loss of a job, a family illness, or a host of other unexpected circumstances that find themselves falling behind.

Types of Debt

It matters what kind of debt you have, and as you might have guessed, there are several different kinds although most of the debt that the average person finds themselves facing is what’s called unsecured debt. This includes the one that most of us struggle with in one way or the other—credit card debt. As well there are those unpaid student loans that have a way of gathering interest like a stone rolling down a hill gathers moss, and tax debts as well as medical or legal bills that have gone unpaid.

It happens more and more that people find themselves unable to see over the mountain of debt that they’ve created for themselves. Most of them are good people who would love nothing better than to find a way out and there’s help out there. Debt relief agencies like?Delray Credit Counseling?are experts at studying people’s individual debt circumstances and then helping them find a way out.??

What to Do About It

?The best option is to speak to a professional that can help. A certified debt counselor is the right choice. Professionals like those at are the people that can listen to your situation and help you find a plan to get you back on track. To start, all you need to do is apply to a local debt consolidation program—they are either usually private or non profit agencies that will supply a free quote on the time and interest that will be required. It’s really quite simple and once a plan is in place, you stand to save a substantial amount of interest on the payments and shorten the time it will take to pay the money back. The debt consolidation company that you select works with your creditors to design a repayment method that will both satisfy them and start you back on the road to financial freedom.

There’s a good reason that this is the best option and it’s simple. By consolidating you debt, you avoid having to claim bankruptcy. While bankruptcy does erase many of your debts, it does not take away some of the ones that can swell to large proportions like child support payments and student loans. As well, once you’ve filed either the Chapter 7 or Chapter 13 versions of bankruptcy, you credit rating is affected for up to ten years and you will find it considerably more difficult to get a personal loan, a mortgage or even a job.???

Saturday, April 19, 2008

We're Back--It's Time To Think

Ok, back at it. House is going ok, son getting married, daughter loves her job, son going off to be an air liaison officer with the army (not real thrilled with that but he does what he wants) so grabbed a few minutes and back on the air.

First thought--to succeed you got to think in this world. Most people don't. A French, yes French, philosopher said "Those who feel, think life is a tragedy. Those who think, feel that life is a comedy." Or something like that. To be successful you have to think and think hard. One guy that does is Forbes columnist Ken Fisher. If you can't afford Forbes you can find him and his staff at

Here is one column that requires you to think, not feel. I'm probably breaking some copyright law but, hey--

Veto Power


Story Notes:

  • The third year of a US president’s term is usually very positive for stocks

  • So far, 2007 has been a classic presidential third year with no major legislation passing into law

  • With the 2008 election race revving up, congress is likely to accomplish even less in the next sixteen months

The third year of a US president’s term is simply stellar for stocks historically. Doesn’t matter who the president is, or what his agenda was—it’s great for just about all of ‘em. A president’s third year has historically been good for stocks because his party has typically lost seats in the midterm elections, leaving the country closer to legislative lock-up. A Congress split down the middle (or close to it) specializes in posturing and pontificating. But that’s about it. Stocks love when there’s little to note legislatively, preferring the status quo to government intervention in free enterprise.

MarketMinder has highlighted this theme over the last twelve months. See these past commentaries for more:

  • A Presidential Popularity Contest, 7/25/2007

  • A Political Punch, 5/31/2007

  • Hot Fuzz, 5/17/2007

MarketMinder is agnostic to political affiliation. Donkeys or elephants, it makes little difference to us. Why? In the Beltway everyone’s a politician first and foremost. This means politicians on both sides of the aisle are out to preserve and consolidate power and get reelected. That’s always job one. Seeing politics in this way allows investors to view the landscape in a clear, unbiased way and make accurate decisions about the potential market and economic consequences of new legislation.

Thus far, this presidential third year has been archetypal. Politicians were front and center across media outlets—ubiquitously promising to take action on issues like trade with China, new taxes on private equity firms, healthcare reforms, and so on. But for all the talk, they’ve got nothing to show for it! A promise broken is the modus operandi of politicos, and we think that’s a great thing.

The Democrats are too busy drafting resolutions denouncing a radio entertainer for practicing his right to free speech to pay much attention to other issues. And let’s not forget the GOP, recently spending valuable time in Congressional session spearheading a resolution condemning a newspaper ad. Strong work guys!

The only material legislation that’s passed through both Congressional chambers recently is a $35 billion increase in healthcare coverage (for folks mostly already covered by more efficient and better private insurance). 35 billion bucks is small change for a $13 trillion US economy, so it was nothing to get excited about in the first place. But the bill was DOA—Bush vetoed it as soon as it hit his desk.

With 2007 heading toward closure and the 2008 election machine revving up, the likelihood of any big new legislation in the next 16 months is extremely unlikely. The president’s third year is the sweetest, but the fourth is historically almost as good. That’s just another positive feature to today’s stupendously benign equity environment.

Let the politicians keep expending their hot air on advertising censures and inane grandstanding—stocks will appreciate it.

Think about it. Bill

Friday, April 18, 2008

Part I: Disaster in the Bathroom

The ceiling caved in on my bathroom about a week ago. My friend had been staying there and she didn’t notice anything funny. I never got a call that there was something going on. Instead, on April 1st, I went to my apartment to do my taxes from home on my Quicken installed desktop. All was well when I left the house to go stay at my boyfriend’s house that evening.

Later that week, I come home and there is a note on the door dated April 2nd from the unit below mine. There’s water damage coming from my apartment and he wants to talk to my insurance company. Well I check the kitchen first since that was the source of some prior water problems when I first moved into my house 3+ years ago. Nope. Nothing. It’s dry as a bone.

Then I walk into the bathroom, and my jaw drops. I see the ceiling has caved in completely onto my toilet. Not good. I have a 2 foot square hole in the ceiling. There are about 3 layers of drywall and plaster fallen everywhere. I can tell that the floor has been soaked and dried up already because the bathmat has some staining on it and feels slightly damp, but isn’t wet.

Over the last week, I’ve been struggling to deal with it. I am now imposing myself on my boyfriend’s hospitality and it’s bugging the crap out of me. I really just want to be at my own house. I love my place, but this is a little too much for me. The landlady upstairs is taking care of the ceiling repair, but get this, there is another leak in the building that is still causing a problem!

Because of my asthma, I don’t clean up dusty stuff. I just avoid it and pay someone to do it. That’s always cheaper than an ER visit. My boyfriend did the clean up for me and while he was taking stuff to the dumpster, he left the toilet lid down and then I heard drips coming from the hole in the ceiling! YIKES! The leak was supposed to be fixed!

So now it’s being all referred back to the HOA to find the damage. It’s in multiple units and the origin is still not found.

At this point, I think the landlady upstairs will reimburse me for the ceiling repair for my unit, but I’m going to tear up the whole bathroom and remodel it just in case I want to rent it out. And if I’m going to do that, then I have some other things I’d like to do as well to the unit.

I’m going to have to stare at my cash flow for a while and figure some stuff out. UGH. Who needs this?

PS - I ran into Debt Hater this morning on the way to work!

"But You're Not On The List"

Chairman Clifford T. Phillips III: Ok I'd like to call this hearing to order. The witnesses have been sworn and I'd like to get started right away since we have limited time. Our pension system in this state is in crisis.

As members of this committee may know we have made great strides in providing our state workers with some of the most competitive and progressive defined benefit programs in the country. We have been able to attract and support the best talent in the state and through aggressive hiring, grow total man hours worked by state employees, despite the fact that we have had to struggle with the highest absenteeism rate in the nation. I am proud to say that despite this, real wages for our employees have outpaced the rest of the country by 15% per year for the last 10 years. No, no, please, ladies and gentlemen, hold your applause. Let me continue.

We have reduced the vesting of 120% last year's salary and health benefits in our state pensions to age 48 and, for the first time, added a cost of living multiple that raises cash portions of the pension benefits by 1.2x the CPI so that our retired state workers never have to worry about the Bush Administration's ridiculously low inflation estimates again. This finally puts us in front of San Diego.

We have done our part to support the workers of this great state, now it is time for our financial advisors to meet their commitments to our loyal and sacrificing workers. And this is why we are here. We have expected of the gentlemen before us, our pension fund's financial advisors, and we have made it very clear that we require of them nothing less than 16-18% annual returns. This is not optional, gentlemen. This is what we have mandated. This is what we require. This is what we expect. At this point our state pension fund is beset by a 46% funding ratio. So let me begin by asking you, where are our returns?

William Ackerchapman: First of all, Mr. Chairman, I want to thank the committee for giving me the opportunity to speak this morning. The crisis we face is not a crisis of returns but a crisis of costs. The unfunded obligations of the state pension fund are out of control and need to be-

Thursday, April 17, 2008

Should we move into base housing?

When Mr. Dimes and I moved to California, we put our names on the base housing list at our command. We were told the wait time would likely be from three to five months, depending on who else moved in or opted out. Well, we hadn't given it a lot of thought but after a few weeks here we're trying to decide whether or not we should move when the time comes. It's a complicated decision, with a lot of pros and cons. Here are some of the factors that matter:
  • A dramatically reduced commute. Right now my husband is driving 40 miles per day in a round trip commute, much of it along dubious roads. Moving to base would reduce the round trip to about ten miles. This would reduce his gasoline expenditure considerably and also reduce his risk of being on the road during periods of dense fog, driving rain, or blinding dust storms.
  • Monthly rent and utility expenses would be at the exact level of BAH. Currently we're paying less out of pocket for rent, but water, electric, and gas bring the total above our BAH. Living in base housing would provide a cap, which will be helpful during the high energy use summer months.
  • We would probably use the commissary more. Right now, with the commissary being 20 miles away and open limited hours, my husband tends to run to a local grocery store which is a lot more expensive than the commissary would be. I try and use the commissary, but the savings don't necessarily offset the gas and time expense of going there.
  • We would be living in an actual house instead of an apartment, and I'm pretty sure it's not going to be a duplex. They recently renovated/rebuilt all the housing on the base, so it's in pretty good shape, not your standard prefab double-wide layout. It is also probably bigger than our current accommodations. Also there is more freedom to do your own repairs and not be accountable to a landlord.
  • We just moved! Moving again is going to be a hassle, even if we don't have to pay for it out of pocket. However, it won't be as major of an upheaval as when we moved here from VA. I can probably haul a lot of my own stuff (like my kitchenwares) which would save mover time and effort as well as unpacking hassle. We'll also have to forward mail again, cancel/move utilities, update insurance and drivers licenses as well as addresses on everything else, which we just did six weeks ago.
  • The financial consequences of breaking our lease will be moderate. After reading the lease agreement, the consequence will be one month's rent (the time between notification and move out) plus a $1000 early termination fee. We'd also have to pay for any damages (there are NONE) and a carpet cleaning. Total consequences would probably be as high as $2000-2500, though theoretically we'll recoup that within a year in gasoline and housing cost savings.
  • While my husband's gasoline costs will drop, mine will most likely rise, as I'll be the one with a longer commute. However, if I work as a tax preparer, that will only be on a seasonal, part-time basis. Also, unless we switch churches, it'll still be a 40 mile round trip every Sunday.
  • We'll have to deal with lawn care. Most of the yard is maintained by the base, but a section of it is the service member's responsibility. We've never had to deal with a yard before.
  • Less quiet. The base is noisy. Much noisier than where we currently live. I'm used to it somewhat, but it's been a nice break from the racket. I'll be sad to hear all the noise again.
  • Less diversity. When you live on a base, everyone else who lives on the base is military. Everyone goes through pretty much the same thing, and tales of people being all up in your business are commonplace, though I'm not sure how true they are.
So we're torn. Luckily we haven't gotten a solid offer yet, but we're trying to figure out what to do if we do.

Tuesday, April 15, 2008

Some don't like lack of RAL option

Greetings, faithful readers! I didn't realize I haven't updated in over a month. I've been very busy with a new but seasonal job. And I have discovered something interesting. Military personnel are not fond of the Military Lending Act as it pertains to Refund Anticipation Loans. While not as expensive as recurrent payday loans, Refund Anticipation Loans are short-term, high interest loans given in advance of an income tax refund. The loan is normally paid off with the proceeds of the tax refund and the lender pockets the difference. The loans are considered by many to be predatory and are illegal to give to members of the Armed Forces or their dependents.

However, a lot of military personnel don't know that the law has been changed to prevent them from getting these loans, and I have seen many disgruntled service members who don't want to wait for their refunds. Unfortunately, it doesn't seem like they have much choice in the matter, thanks to the new legislation.

Monday, April 14, 2008

2008 NMFA Fellowship Program available

Hey everyone, I'm writing to let you know that the Military Spouse Fellowship for the Accredited Financial Counselor Program for 2008 is now accepting applications. From now through the end of April, the application will be available online through the National Military Family Association website. It's a great program and at the end of it, the selected applicants will have attained the certification of Accredited Financial Counselor under the guidance of AFCPE and FINRA. Please see the linked website if you're interested in learning more or applying to this program. It is definitely worth the effort.

And on a more personal note, tax season will be over in less than two weeks, and I look forward to blogging again!

Sunday, April 13, 2008

Reversal and a Follow-Through Day

I am not getting overly excited about the 3.55% move in the DOW, the 3.98% move for the NASDAQ and the 3.71% jump for the S&P 500. Today’s action does raise some interest but trend reversals and new bull rallies can’t be confirmed after one day of action. All major bull markets started with a reversal and then a follow-through within the next four to ten trading days.

This idea was first revealed by William O’Neil, the founder of Investor’s Business Daily, and became a cornerstone in his CANSLIM investing method. I believe this theory to be accurate but it is not an exact science. Before I describe this method, I would like to be clear that my indicators are still pointing down and my screens are still focusing on shorts. It’s a good time to write about reversals and follow-through days even though I don’t think this rally has legs but my opinions must be checked at the door.

The key to understanding this follow-through philosophy is that reversal signals usually occur after a significant market correction, not a minor market correction. The reversal and follow-through in 2003 was classic and one I like to refer back to when looking at the present market. Both the reversal and follow-through days must move at least 2% to the upside on above average volume.


If today acts as day 1 of a possible reversal, then the next two days are not very important except for one fact: the market must not undercut today’s low as that would kill the start of a new rally. As long as prices stay above today’s low, the rally attempt is safe.

The follow-through day should come within four and ten days of today’s reversal although O’Neil’s original rules stated that the follow-through should come between day 4 and day 7. One of the major indexes must move higher by 2% or more on larger volume than the previous day to qualify for a follow-through. Multiple indexes participating with a follow-though shows conviction that the market has sustainability to move in the new direction.


Write-Offs: 04.11.08

$$$ Business Model Drift in the Entourage Sector [LoSC]

$$$ So this Banker Walks Into a Bar [CWS]

$$$ Stepan Company (SCL) [WallStrip]

Saturday, April 12, 2008

2008 CONUS COLA rates

A few months ago, I posted about CONUS COLA, as it was a new entitlement for Mr. Dimes. For the uninitiated, CONUS COLA is a taxable income supplement for living expenses in an area (as opposed to housing expenses, which are covered by BAH). It increases or decreases every year, and can appear or disappear altogether for certain areas. For 2008, a handy calculator is available at this site. An official list of sites receiving COLA as well as the percentage rate can be found on this Pentagon site, where the list is a PDF file. If your location is not listed, you are not eligible to receive CONUS COLA. A handful of locations that were previously receiving it lost it for 2008, though they may get it again in future years. Tax Treatment

Since has been featured a few times here, I wanted to share some insight into the Prosper tax treatment since it isn't prominently featured on the Prosper website and there tends to be some misinformation out there on the topic. One of the first things I question when I signed up was, "Do I have to pay taxes on Prosper? And how are the various Prosper income categories taxes?" Although I am not a CPA and I would recommend that you check with your own tax professional on this, I can share with you what I know and what guidance my tax accountant provided me with.

All the following entries that appear on the Prosper year end statement have tax implications. If you exceed $600, will send you a Form 1099. That does not mean you're off the hook if you've earned less than $600. You are still responsible for reporting and paying taxes on this income.

Interest payments received: This amount will be taxable interest income on 1099-INT.
Late fee payments received: This amount will be taxable income on 1099-MISC.
Service fees paid: This amount will be deducted from your taxable interest income.
Collection fees paid: This amount can be deducted from your Prosper taxable income.
Referral awards received: This amount will be taxable income on 1099-MISC.
If you have any loans repurchased or sold to buyers, you'll use 1099-B.

I was especially surprised to learn that referral fees are taxable. I figured it's like when you have a phone service or internet community account, whereby you refer friends and family and get to keep $25 or something. Anyway, apparently, this is the "bird dog" provision according to my seasoned accountant, in that a bird dog "points", so as the referring member, you point new members to the system and recognize the $25 as income for your referral.

Anyway, I hope this clarifies any misconceptions surrounding the tax treatment in the community.

Friday, April 11, 2008

Free camera when you sign up for Key Checking

I got a Nano with their last promotion - now you can get what is actually a very nice camera. Click to check it out. You have to open a checking account and:

* Set up Direct Deposit and/or Automated Payments and complete two transactions each of $150 or more by June 1, 2007
* Or, use your new checking account to make 20 transactions - from ATM withdrawals to online banking to writing checks - and be approved for a new Key credit card by June 1, 2007

I'd personally go for the first one as it doesn't involve opening a credit card. I've always had great service from Key and they'd be my primary bank if there were a branch close by. Right now I use them as my bill paying account and things have always gone smoothly.

Thursday, April 10, 2008

The California Black Gold Rush

Furious that President Bush has refused so far to press the big green button under his desk labeled "reduce crude oil prices by 20%," congresscritters Edward J. Markey of Massachusetts, Rahm Emanuel of Illinois and Peter Welch of Vermont penned a sternly worded letter to the White House yesterday. This follows weeks of protests by truckers all over the country, but particularly in California, demanding the immediate suspension of the relationship between supply and demand, and calls by other elected officials not just to stop the massive supply crunch caused by the diversion of 0.7% of daily national consumption to the Strategic Petroleum Reserve, but also to open the spigot on the Reserve and let every drop of its 34.2 day supply crush oil prices down to $50 a barrel again, "where they belong."

Asked if a large part of the problem wasn't the dollar's poor exchange rate against, for example, the Euro, Markey, was hear to shout "Damn the Germans and David Hasselhoff!"

A quick review, however, reveals some interesting things about gasoline prices in California (see anything that gives you ideas?)