Investing Column

I am not an investing expert but that doesn’t stop me from writing about it! :) In these posts I’ll discuss investing principles, ideas, and comment on current events as they happen. The investments themselves could be in the stock market, real estate, or potential small businesses or franchises… basically anything that could help increase one’s cash flow.


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 Investing 
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Smart Money Best Brokers 2012

Every year, Smart Money puts out their list of the best and worst brokers. We’ve taken a look at that each of the last four years (2008, 2009, 2010, 2011) and this year the list doesn’t look that much different from the ones in year’s past.

(click here to continue reading…)

 Investing 
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5 Tell-Tale Signs of a Good Investment Scam Mark

The scam truckNone of us likes to be scammed. However, there are scammers out there ready to separate you from your hard-earned money. It works because there are always those who fall victim to scams. Scammers seem to know just who to target. In a lot of cases, this is because good investment scam marks often have similar characteristics.

Are you an ideal mark for an investment scam? You might be. Here are some of the tell-tale signs of a good investment scam mark:

(click here to continue reading…)

 Investing 
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Why I Don’t Look at “Performance History” In Mutual Funds

Here’s the funny thing about writing a personal finance blog for 8+ years – you can easily unintentionally start “plagiarizing” yourself (without the deceptive part). I read this article on Reuters (it’s dated February 2012) and was going to title this post “Past returns are not indicative of future results” (an homage to the little disclaimer at the bottom of every investment document) when I realized that I already wrote a post with that title!

As it turns out, any three year return number is going to look insanely good. The Vanguard Total Stock Market Index Fund (which I own some) is going to be up 30% annually from March 6, 2009. Looking at it today, it’s been tempered a bit – only up 13.86%. Back when Reuters did the article, if you were to look at it six months earlier, the 3 year trailing performance is just 0.91%. That’s a huge difference.

It’s why I rarely look at performance history. It’s also important to note that I usually buy index funds (or total market funds) and so really I just want the fund’s performance to match the index. I know that as the index changes the fund will lag (even given announcements) so it won’t match perfectly. I just want it to be pretty close.

Do you look at performance history and does it play a role in your decision making?

 Investing 
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Why I’m Not Wary of Stocks

Kurt’s post yesterday made some good points, and I suspect he was hoping for a worthy counter. So, never one to disappoint his fellow blogger, I offered Jim a counterpoint and he said that sounds like fun, so here goes…

Years ago in grad school I met Branco, a visiting professor from Yugoslavia, and a dyed in the wool communist (yep, that long ago). He hated America with a passion. Many mornings our walk to class became long protracted debates. Branco couldn’t talk and walk at the same time, so many students passed us, staring at the spit flying and arm waving on the sidewalk. I can regale you on the fun stories, but let’s cut to the chase.

“Branco, if you hate this place so much, what the dickens are you doing here? Who at the Politburo did you tick off?”

Branco may have been misguided, but he was not stupid.

“Listen,” he said, “The American education system is the worst in the world; we all know that. But… how come it produces more Nobel prizes than the rest of the world put together?”

What you see depends on what you look at and how you look at it.

(click here to continue reading…)

 Investing 
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TradeKing Referral Bonus Promotion

For my investments in the stock market, I use TradeKing and Vanguard. Vanguard for their ridiculously cheap index funds (it’s not ridiculous in the sense that they are the only game in town, Fidelity also offers cheap if not cheaper funds…) and TradeKing for just about everything else. For the last few years, I’ve written about TradeKing quite a bit because they continue to offer $4.95 trades and speedy transactions. The only hiccup lately was the new inactivity fee but if your account has less than $2,500 or you don’t trade, you probably should put that money in a savings account, not a brokerage account.

That said, when TradeKing doesn’t run a promotion, which it hasn’t in quite some time, the only way to get a sign up bonus is by having an existing customer refer you. In the past, people would email me and then I’d log in to email them a referral. Fortunately, TradeKing has streamlined it and by offering a way to tweet out a referral link, they have now provided a way to automatically “send” out referral links. So, if you’ve wanted to get a referral but you didn’t want to email me because I’m creepy, you can just use this link.

The terms of the referral program are simple – deposit $3,000 into your account and make three trades within 90 days. The account must be a non-retirement account and the address cannot be shared with any existing TradeKing client. After 90 days, they check your account to see if you satisfied the requirements before crediting you with $50. Here are the full details of the Refer a Friend program.

If you still want to email me, that’s fine too. I love getting emails. :)

 Investing 
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Why I’m Wary of Stocks

Game of LifeJim Wang’s recent Bargaineering post “Why Fewer People Trust the Stock Market” inspired from me an “and-I’m-one-of-them” comment. Jim—a savvy guy who probably detected the prospect of one of those cranks who can really drive engagement—invited me to expand here on my reaction. I’m pleased to oblige.

We Do Own Stocks

First, disclosure: Stocks comprise about 15% of our (my wife and I) financial assets—far less than the “experts” would recommend for our situation. And nearly all the stocks we own meet two criteria:

  1. Based on the price we paid, their current dividend yields are 4-7%.
  2. The underlying businesses are mostly resource-based and operate in well-regulated industries. (In my opinion, regulation reduces risk.)

I’m not blindly or ideologically opposed to stock investing, but I stick with relatively safe, income generating stocks, and I actively manage stop loss orders as appropriate.

(click here to continue reading…)

 Investing 
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REITs: Buying Real Estate without Large Amounts of Capital

HouseEven after the recent real estate market crash (and perhaps because of it), there are plenty of people still interested in investing in property. However, many of us don’t have the capital available to buy up real estate. Additionally, considering the financial situation that many find themselves in as a result of the financial crisis, it might not be feasible for many ordinary investors to borrow enough to buy real estate.

For those who are interested in real estate, but don’t have the capital, or those who think that buying actual property isn’t the best investment, there is another option. It’s possible to invest in Real Estate Investment Trusts.

(click here to continue reading…)

 Investing 
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Death Cross Bearish Technical Indicator

As you all probably know, I think technical indicators are often self-fulfilling prophecies. If a lot of traders, especially high frequency traders, think that an indicator works, then they’ll make trades when they see the indicator. If enough of them do it, as is the case when it’s all computers, then the indicators work more often than they don’t. If all signs point to buy and lots of people buy, then the stock goes up and we can look back and say that the indicator worked.

Bearish indicators will lead them to sell. Bullish indicators will lead them to buy. When they look back at how their trades performed against the indicator, they’ll be validated as long enough other traders join them. These traders do a lot of trading, so just a few ticks upward means a profit to them and they just need to be right more often than they’re wrong.

Most technical indicators have boring names, like cup and handle, but I discovered one that actually has an interesting name – it’s called the DEATH CROSS. (it’s made more ominous because I put it in all caps and I bolded it!)

(click here to continue reading…)

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