My Office View

2007-05-10T14:45:00.000-06:00

101 Investing Tips

44) Don’t put more than 10% of your money into one company.
See number 43 and remember it.
45) Stock splits don’t make you richer.
If you have a pie and cut it in half, the two halves still only make one pie. Any stock split or dividend still gives you the same percentage ownership. What it does do is make the shares more affordable. Many times a novice investor thinks he should buy shares in an even hundred lot, called a round lot. With $2500 he can not buy a round lot of a $50 stock but can a $25 stock.

2007-04-24T17:58:00.000-06:00

101 Investing Tips

42) You can begin to build a diversified portfolio of long-term growth stocks with as few as nine companies.
Diversification is mandatory to preclude disastrous mistakes. By having a minimum of nine stocks that keeps your exposure to just over 10% in any one stock. Make sure they represent different industries.

43) Don’t put more than 10% of your money in your company’s stock.
Remember what happened with Enron. We all tend to fall in love with our company stock based on loyalty. Even if you own the company events and bad judgments can make things go wrong. More so if you are an employee.

2007-04-24T17:45:00.000-06:00

101 Investing Tips

38) The best way to find a cheap growth stock.
Divide the forward PE ratio by the expected growth rate. Less than 1.2 may be an undervalued growth stock. The caveat is the assumption of earnings and growth.

39) Stocks come in all sizes- Large-cap stocks
Large cap have market value of $5 billion or more.

40) Midcaps
Market value of $1-5 billion

41) Small-caps
Less than $1 billion

2007-04-24T17:43:00.000-06:00

101 Investing Tips

36) The difference between forward P/E and trailing P/E.
Remember there is a huge difference between what has happened (trailing) to what investors expect to happen (forward).

37) The difference between a growth stock and a value stock.
With growth stocks you are betting more on the come. They are exciting, mesmerizing and risky if you are on the wrong side of the curve. Value stocks are more staid. These are a Ben Graham or Warren Buffett type investment. Buy out of favor solid value and wait for it to perform.

2007-04-24T05:29:00.000-06:00

101 Investing tips

34) Price/cash-flow ratio.
This is very complicated but the cash flow is the real test. Look at cash flow from operations first.
35) Price/book-value ratio.
This reflects how much assets are valued at book value. If assets are undervalued or written down considerably this can help find undervalued companies.

2007-04-24T05:28:00.000-06:00

101 Investing Tips
32) Price/earnings ratio.
This is the ratio of how much you pay divided by the earning. Look at it this way how much would you pay to buy a business that did not have a published value everyday.
33) Price/sales ratio.
Another common sense ratio. How much do you pay for a dollar of sales? This is a good indicator of profit margins.

2007-04-24T05:27:00.001-06:00

101 Investing Tips
31) A $2 stock can be expensive. A $100 stock can be cheap.
The stock price makes no difference. It is what you pay for each dollar of earnings, assets, sales or cash flow.

2007-04-24T05:25:00.000-06:00

101 Investing Tips
29) The bear case.
Combine this with number 28. Take the contrarian view and think of all the reasons it will not go up.
30) Great companies don’t necessarily make great stocks.
It is very easy to pay too much for a great company. If everyone else already thinks the same way it will be overpriced and could stub its toe.

2007-04-24T05:23:00.000-06:00

101 Investing Tips
27) Don’t discount dividends.
Dividends can account for 40% of the total return on stocks. This is “ muy importante” to your portfolio returns.
28) The two-minute drill.
Before you buy a stock give a sales pitch to your spouse. You may come to entirely different conclusions.

2007-03-27T18:09:00.000-06:00

101 Investing Tips

25) There’s a difference between investing and speculating.
When you invest it is the same as buying into a business. When you speculate you are betting on the greater fool theory.

26) Earnings drive stock prices.
Remember the ups and downs but to not forget that stock prices follow the path of corporate earnings.

2007-03-27T18:06:00.000-06:00

101 Investing Tips

23) Nothing tops the 401(k).
The great triple threat: no taxes on the contribution, matching dollars from employer, and tax deferral on gains. But look for the 401K Roth this could be the best especially for younger workers.

24) Watch what you watch.
Stay away from the TV investing shows and infomercials. They typically promote systems and overtrading. Nothing beats good old fashion value investing

2007-03-20T12:13:00.000-06:00

101 Investing Tips

20) Don’t rely on the regulators.
Do not count on the big brothers to oversee your investments. Just look at the debacles we have had in then last five years. Remember the regulators are the same bunch that run the government. Remember how bad they handle it.
21) Never let tax considerations be the main driver of an investing decision
Enough said

2007-03-20T10:45:00.001-06:00

+It is not often you see real insight from a military techno thriller, brain candy, escapism novel. The following is a quote from Harold Coyle's "Pandora's Legion" I felt it summed up my attitude about the two parties.
"Well, it's like this, Doctor. The Democrats want illegals in our country. They talk about Mexicans doing work that Americans won't, but that's just a smoke screen. A guest worker program could handle that problem. No, those illegals who get the right papers are eligible to vote---some of them vote anyway---and they nearly always go Democratic. That's because they know the liberals provide funding and dispensation. On top of that, our constitution says that any child born in the U.S. is automatically a citizen. Even if the mother is there illegally. That's insane. But it'll never change."
"Then what about the Republicans? Don't they ever...."
"No, ma'am. Hardly ever. See, they mess their diapers at the thought of being accused of racism by the Democrats. And the Demos know that, so they use it like a club to beat the Goopers down."
"Goopers?"
Keegan laughed. "Oh, that's my expression. I sort of made it up. GOP: Grand Old Party. The Republicans." He shrugged. "Goopers."
The Brit shook her head slightly. "I still do not understand, Terry. If the Republicans--your Goopers--have the majority, why do they cater to the illegals and the political opposition? I mean, those people won't support the party anyway."
"I guess you'd have to ask them, ma'am. I'm a former Gooper myself, for a lot of reasons. Probably the biggest, though, is that the Republicans don't really stand for anything, except election. They want to get along with the Democrats, and the Demos are bent on destroying the country."

2007-03-15T17:23:00.000-06:00

101 Investing Tips

19) Some things are best left to the pros.
Do not be lulled into a sense that you can or will achieve the returns that professionals make. They have a much lower transaction cost and can react quicker and make more informed decisions that then average investor.

20) When you buy a stock, you think it’ll be a winner. But you’re buying it from someone who’s happy to let it go.
There is always a buyer and a seller. Each made their own decision , probably for much different reasons.

More to Come.

2007-03-11T17:02:00.000-06:00

101 Investing Tips

17) Save more
This dovetails with “Start Early” An extra $50 per month is worth $132,000 at retirement. Who can not give up a cup of coffee per day.

18) When planning for long-term goals, assume that your overall portfolio will earn 5% to 6% a year.
Every once in a while we all have to take a reality check. You hear about making 10 to 20% a year. What people want to do is overlook is the drawdowns (losses). The other factor is taxes. For every gain there is an offsetting tax. History has the stock market averaging 9% over long periods of time. Subtract a 20% tax and you are left with 7.2%. There is also the uninvested cash or interest bearing accounts. These all make up your “Portfolio”. Try for more but have realistic expectations

2007-03-09T10:54:00.000-06:00

I am not a big fan of having lots of employees because they are so hard to keep up with. We do have a lady that did something yesterday that we could all learn a lesson from. She had made an error of omission about a month ago. It materialized again yesterday.

The omission was not a big deal but there were a couple of frustrated customers. When asked about the problem she said, "I forgot, it was my mistake, it will not happen again and here is how I will make sure it doesn't happen again". Who could ask for anything more. She did not try to shift the blame. She did not try to cover it up. She did not make excuses.

We all make mistakes but it shows a lot of character to own up and take responsibility.
We need more individuals with that kind of character.

2007-03-08T19:32:00.000-06:00

101 Investing Tips

15) When planning for long-term goals assume that your overall portfolio will earn 5% to 6% a year.
This is pretty arbitrary but it does take in account that there are ups and downs. A 10% return in one followed by a flat year has a simple average of 5%.

16) Start early.
This one of the most important recommendations that I can ever emphasize. If you start at age 25 and put away $50 per month until you are 65 and earn a 7% compound return that portion of your retirement nest egg will be $264,000

2007-03-08T13:39:00.000-06:00

101 Investing Tips

13) There’s more to the stock market than the DOW.
Investing in the DOW is not relevant to investing in an individual stock or the Wilshire 5000.
14) The rule of 72.
This is probably the very best tool for estimating returns and performance of investments. Divide 72 by the annualized percentage return. The answer gives how long ( in years) it takes for the investment to double. You can also work backwards to get an approximate yield.

2007-02-26T19:47:00.000-06:00

101 Investing Tips

11) Earning a high return requires more risk, but does not necessarily lead to a higher return.
Remember to ask, “What happens if I am wrong”. If you lose 100% of your investment in one stock, it greatly affects the performance of the rest of your portfolio.

12) You can’t know how much risk you can tolerate until you’ve tasted real losses.
Until you have gotten sick to your stomach and can’t eat you do not know what it means to lose.
More to come!

2007-02-26T19:45:00.001-06:00

101 Investing Tips

9) Dollar cost average.
Regular commitment is a great way to eliminate emotional decisions from your investing.
10) Rebalance.
This is closely tied to asset allocation and dollar cost averaging.

More to come!

2007-02-26T19:43:00.000-06:00

101 Investing Tips
7) Remember regression to the mean.
Exceptional past performance does not mean the same is true for the future. Anytime the CEO is on the cover of a major magazine, “Watch out”.

8) Don’t pull money out of the market trying to catch highs or lows.
Trading the markets has never proven to be successful for most investors. Focus on your asset allocations. This probably holds true for real estate as well as stocks.

More to come!

2007-02-26T19:41:00.000-06:00

101 Investing Tips

5) Diversification is the wonder drug of the investing world.
Enron will show what happens by putting all your eggs in one basket. Remember to ask, “ What happens if I am wrong”.

6) Over the long term, stocks have returned more than bonds, and bonds more than cash.
There is a certain order in the universe and the short term oscillations will always track the long term trends. Long term equity will return more than debt.

More to come!

2007-02-26T19:39:00.000-06:00

101 Investing Tips
3) You can retire comfortably without ever learning how to pick a stock.
Put your confidence and money in index funds and you will probably outperform most investors. 60% stocks and 40% bonds has passed the test of time.
4) All investing involves taking risks.
Just believe it!

More to come!

2007-02-26T19:37:00.000-06:00

101 Things to Know About Investing
The following series is a compilation of some of the smartest and most common sense rules of investing that I have seen put in one place at one time. The original article was published in Money Magazine March 2004. The headings are verbatim from the article The commentary is mine.

1) You have an advantage over the pros.
Professionals must think short term to compete against the market quarter by quarter. Individuals can focus on the long terms Benjamin said long ago.

2) Asset allocation is more important than trying to find the next Microsoft.
Over the long haul stock and bond returns will track the averages. Your view of the future will dictate how much you commit to each area. The fine-tuning comes later.

2007-02-16T08:37:00.000-06:00

Perfect solution to a lingering problem

Maybe I have been watching too many CSI programs, but when will a DNA test on Anna Nichole's baby and each of the doting fathers solve this question. Of course, the list is so long that process could take months just to collect the samples.

I sure hope the news channels soon realize there are other more important issues to cover than 20 hours a day of a has-been bimbo.

2007-02-14T07:23:00.000-06:00

Video Lottery Terminals

Before I proceed, understand that I do not own a racehorse or racetrack, and the chances of me putting money in a slot machine are next to nil. Outside of Vegas I have never been in a casino except for Lousiana and Europe and that was was because they happened to be where I was at the time.

Rep. Ismael Flores of Texas introduced a a bill Tuesday to allow Video Lottery Terminals (VLT) at racetracks. This is an age old controversy which I am not going to argue. I am not particulary concerned about the religous, moral or ethical implications of gambling. It is an entertainment or vice depending on how it affects you.

What we do have is a perfect example of how politics and lobbying play out for individuals and an industry. The horse iondustry in Texas is staggering. It is a several billion dollar industry that employees thousands of Texans. The race industry is just a portion of the horse business. From the centuries old ranching era to backyard horse owners, the Horse is vitally important.

The fact is that all of the surrounding states allow some form of casino type gambling. The hard result is the owners of race bred stallions and mares are exiting Texas at an alarming rate. The answer is a simple matter of economics. You race in other states and win more money because the purses are enhanced by a small percentage of the amounts wagered not only on the horses but also on the VLT's in that state. As I understand it, this percentage is used to supplement race purses and promote the equine industry in Texas, or state where the wager took place, regardless of its relationship to racing or gambling. Just imagine part of the dollars spent by gamblers being used to provide college scholarships and do equine research in other states.

The reason for this exodus is Texans by the thousands travel across the state lines to spend the money they earn in Texas. This is not just gambling but lodging, food, entertainment, etc.

Texas now offers billions of dollars in tax incentives to attract business to Texas, but will not make a simple decision to keep what is already here, established, and a Texas tradition.

Interesting article...
http://www.statesman.com/news/content/news/stories/local/12/23/23horsesgone.html

2007-02-13T18:54:00.000-06:00

Who are they kidding?

I listen to the news and see Diane Sawyer's interviews from Iran. Who in their right mind believes anything that those so called leaders of Iran and North Korea, as starters, is the truth unless it served their purpose. They are liars and will renege on any agreement as soon as the ink dries.
Unfortunately they know the U.S. is waivering under the barrage of press and panty waist complaining of the Democrats and even worse many of the Republicans. We are playing right into the Terrorist's hands. This includes the other nations that are supporting the terrorists.

2007-02-12T20:52:00.001-06:00

Financial Rules of Thumb 4

10) Monthly payments on installment debt shouldn’t exceed 20% of your take home pay
That is pretty confining to look at only installment debt. Look at your total debt and try to stay under 40% of your take home pay.
11) As long as you have a nest egg $1 million, you can retire comfortably
A million dollars is not what it used to be. My personal opinion is that there is not a ROT because your net annual requirement to maintain a standard of living is the goal. Work backwards from this to determine how much income you need then how big a nest egg.
12) Don’t buy a house that costs more than 2.5 times your annual income
Dumb idea. Your home is probably the major investment in your life. It is to big a decision to limit the choice to a ROT. Focus on whether it is good investment. One of the smartest guys I know went years before he bought a home because he did not think it was a good investment. A wife and family made him change his mind.

2007-02-12T20:49:00.001-06:00

Financial Rules Thumb 3
7) A Roth IRA is always better than a traditional IRA
All the people I have talked with or read agree that it is. The problem currently is that if you are above a certain income threshold you cannot make a contribution. One possibility is, if you can manage your income to allow one year to be below the threshold, then convert a portion of you regular IRA to a Roth. This is fairly complicated so check with an expert
8) Save 10% of your income each year
That would be a minimum in my estimation, if you truly want to have a secure financial future. Just run the numbers relative to compound return to see the tremendous impact on your net worth thirty years out.
9) Don’t buy long term care insurance if you have less than $30,000 in annual income or more than $1 million in assets.
We have long term care insurance and I feel that it is a great investment for almost any level of net worth. A notable exception would be Warren Buffett. My caveat is be sure to do your homework concerning the carrier and terms

2007-02-11T16:08:00.000-06:00

Financial Rules of Thumb 2
4) Buying a car is always cheaper than leasing
I have never leased a vehicle because I drive them a long time and can do a lot of my own maintenance. Your time horizon coupled with financial situation can give the insight needed.
5) Always go with a fixed rate mortgage – especially when interest rates are rising
There are way to many factors and options to consider to say this is a good rule. Selecting you loan is based on your cumulative projection of interest rates, ownership horizon and financial ability to pay. Be sure to consider “What Happens if I am Wrong”
6) Your life insurance coverage should equal six times your annual income
I think it should be more, but for some people they do not need any at all.

2007-02-11T16:04:00.000-06:00

Financial Rules of Thumb

These “Rules” are just some that I have either heard or seen used. A Rule Of Thumb is great as long as you realize every situation is different and there is no law of nature that provides for Rules of Thumb to be correct or even close.
1) Close credit accounts you no longer use
This is absolutely wrong if you need your credit score to be as high as possible. The rating services such as FICO look at past activity, amount of credit available, and your utilization. A good account can help even if you do not use it.
2) Set up an emergency fund to cover three to six months’ worth of expenses
This is probably a good number. I would lean to the six-month figure if possible. You never know when something major can go wron and you always underestimate.
3) The percentage of stock in your portfolio should equal 100 minus your age
Your financial position dictates what this should be. If you are 65 and only 35% of your investable assets are in stocks or some vehicle that at least has a chance of beating inflation you are cutting your throat if you live to 100.

2007-02-11T13:58:00.000-06:00

THE POST OFFICE SUCKS
This is time for my semi annual complaint about the U.S. Postal Service. Realizing that most people probably know that the post office is not open on Saturday, I did not. However, seeing a parking lot full of cars I decided to go in and buy some stamps. Surprise -- after waiting in line and finally getting to the front desk, the clerk leaves. The remaining clerk looks up and says "I asked her to stay for one last customer." But I was still standing there to be helped.

Being very short tempered when it comes to the post office, I asked to see the supervisor. He adivises me the post office is not open on Saturday. They can't open to sell stamps. It makes no difference there are fifty people in line and no signs saying anything about not being open for business.

Come to find out the whole world came in to get passports. I can't even get a stamp.

2006-07-28T07:42:00.000-06:00

Blood Stripes

For those of you that are interested in the war in Iraq, there is a new book published that is a great read. David Danelo, a Marine Corp captain who served in Iraq, has written a book about the real life perspective of the NCO 's serving inIraq. Five Marine NCO's were chronicled to show their history and veiwpoints during their tour(s).

"Blood Stripes" does not try to promote a political judgment of the war. It is just about how these guys dealt with it.

2006-07-27T09:35:00.000-06:00

Right and Wrong

An article by Steve Blow in the Dallas Morning News about the 80-year old lady in Garland got me worked up again about right and wrong. Evidently, the city of Garland sewer main stopped up and flooded this lady's home with sewage. Garland admits it is their fault.
The rest of the story is that the city will not pay for her damage because of some loophole concerning the municipalities liability. State Farm will not pay on her insurance for some other fine print detail. In the strictest sense of the law she probably is not entitled to compansation. However, somebody needs to step up and do what's right. This is regardless of the fine print.

Her house is ruined, and it is the fault of of the City of Garland. I for one would be happy to pay twice my pro rata share of the cost if enough other taxpayers would do their share.

2006-07-26T11:57:00.000-06:00

Integrity and resolve

A quote by Mark Davis in the the Dallas Morning News today really hits the target about politicians. In his weekly article he discusses logic and principles specifically concerning stem cell research. His quote "....firm resolve often withers in public office...".

That epitomizes the status of our political system.

2006-07-20T09:10:00.000-06:00

Somebody Else Does Not Always Take Care Of It

The Dallas Morning News "discovers" that the DISD has 1200 credit cards issued that charged $20 million last year, and a huge portion is for obviously personal or non-school use. One person charged almost $400,000 without keeping receipts or remembering the "purposes". The evening news reports FEMA spent untold millions on 2000 laptops that could not be found, a distillery to brew beer for the Coast Guard, search dog booties that were unuseable, and the list goes on. All this is in addition to the $2000 toilet seats and many other examples of gross misuse of our tax dollars.

All this happens on a daily basis, and politicians still ask us to trust them to run our country.
Unfortunately, I do not know how to fix it.