Easy Change

 So in my previous post, I detailed that I had started to experiment with Options Trading. None of this is advice, but just a description of my experience and thinking. I think that this was an interesting part of my experience in the past year because I didn't previously understand the appeal of some of the more complicated parts of the financial system despite being interested in it for a very long time.  In the past few months, I've begun to take additional opportunities when I can with the shares that I own free and clear via covered calls. I've heard about this option more and I encourage people to read about it more if they are interested. However, this strategy works well for me. In my case, I own a large number of shares in my trading account of certain stocks or ETFs.  It is my intention to buy more if we ever see a market drop. That said, I certainly don't intend to sell. Even in a crazy, 80% style drop like the great depression. I'm holding to zero. It...

This weekend, Donald Luskin had an interesting and compelling piece in the Wall Street Journal that forecasted the impending doom to stock and bond prices were we to see the adjustments that are slated for the end of the year. I encourage you to read Donald Luskin 's piece to see if you agree with him. Then come back here....its ok. I will wait. For me, what is most interesting about this piece is not the doom-and-gloom scenario that Luskin is talking about. Instead, it is about what to do next? I recently found myself wondering what the correct next course of action would be in light of such a decline and how I might reduce risk to be better positioned. I am fortunate enough to be in the high end as far as US Household Income is concerned and measured. And of course, these numbers change all of the time and there is very little certainty about things. So, the question becomes, if you are lucky enough to be well positioned, you have more to lose if you're sandwiched. Of c...

The funny thing about nearly every decline in a market, whether it is stocks, bonds, or housing is that people are incredibly fixated on calling the bottom. In fact, just this past week, the market came back up over 7000 and there was a bit of hoping going on that the bounce was an indication of the bottom. I get it. I really do get it. But even if you think that you have a good chance of being right...and even if you are right this time and you think you can get out and back in at the right time, (There are many studies that say statistically that you can't do this reliably....) the more practical question for many people is: so what? Most people at this point are over leveraged with debt up to their eyeballs. It is a combination of consumer debt, mortgages, credit lines, and loans for education, cars, or even rehab projects on homes. It doesn't matter what kind of debt it is; the average consumer in America cannot afford to be in the business of calling a bottom. The reason t...

This week's Consuelo Mack WealthTrack was particularly interesting with three notable guests: Tom Forrester, forrester value fund - only value mgr to make money last year 1/2800; Thomas Russo, Gardner Russo Gardner; Randall Forsyth, Editor in Chief Barrons.com The main topic for this week's show was the credit markets. As usual for those who are investors, each felt that there was opportunities in this market. Even despite the negative return of the S+P over the past 10 years, there is even some sense among these experts that a reversion to the mean might actually indicative of decent returns in equities in the years to come. Of particularly interest was the way in which Forrester managed to eke out a positive return last year. His secret was basic: avoid housing and financials. As a result he shifted a large portion to cash and overweighted in other sectors like healthcare. Summarizing the reality of this past year, Forrester noted that 2008 was the 'year of the balance sh...

As I talked about early on when I started this blog, I started my financial journey when I read some of the various big name personal finance books. I started with some books by Suze Orman and also with Rich Dad, Poor Dad. I still like these books and feel that they have their own viewpoints and information to offer. As I started branching out into various types of investments and more of this end of personal finance, I wanted to learn more about stocks and other types of investments. I went with a big name and read the current Jim Cramer book that was going on at the time. I like watching CNBC and the like but more than any specific show, I really feel like there's a major point that is critical to keep in mind with regard to personal finance. And this is it: You must continually educate yourself with regard to personal finance, reading, learning, and evaluating new ideas and investments with a critical eye. Its not simple enough to read these books, watch these shows, or consume ...

Since I am relatively new to investing in plain stocks (my investing before this has been exclusively in mutual funds via my 401k retirement account), I have never encountered anything like this before: Today I received an email offering a purchase of my shares in HD. Granted, I don't own many shares of it so I have no intention of taking up this offer, but I still find it quite interesting that I've never really heard of this before.Here is a partial copy of the email I received. <snip> Below is information regarding a tender offer for your holdings in "HD".  This offer expires on 8/16/2007. THE HOME DEPOT, INC., A DELAWARE CORPORATION (THE "COMPANY," OR  "HOME DEPOT"), IS OFFERING TO PURCHASE AT A PRICE NOT GREATER THAN $44.00 PER SHARE NOR LESS THAN $39.00 PER SHARE, NET TO THE SELLER IN CASH, WITHOUT INTEREST (IN INCREMENTS  OF $0.25). </snip> The rest of the email is information explaining how to take...

Well, last year I decided that I'd been investing long enough that I wanted to get some real understanding of how individual stocks worked when it came to investing. I had read Jim Cramer's Real Money which was fairly intriguing, but I didn't have the time in order to really give myself over to investing stocks like a day trader. I never really felt like I would have the kind of time that Jim described in his book to make it really worthwhile. My resulting strategy was basic: buy stocks that seem pretty good over the long, long term. Expect that there could be significant losses along the way and that during those times, it might make sense to buy more. Now here we are, several months later and Home Depot which I bought in the mid thirties has gone up to around 40 and come back down. We're not talking a ton of money here, just a couple hundred bucks. But, does it make sense to buy more? Here's why I'm thinking it might: 1. HD continues to pay chunky dividends. ...

Well, February has ended and the markets were less than kind this week. So I figured now that the carnage is over (hopefully), I figured I'd ask a question to my readers: Take Our Poll from PollDaddy.com Net worth didn't fare so bad over in my neck of the woods since there were tax returns etc to offset the bad week in the market. If you are interested, here's the latest entry: http://www.networthiq.com/people/EasyChange Happy Friday Everyone!

One of the most interesting things that I've seen recently is the idea that people are actually tracking the percentage of their incomes across various income streams. That is, they are tracking how much they make at each job etc. Personally, almost all of my income comes from my primary job (about 95%), which is one of the things that is generally frowned upon. I'd like to really work this upcoming year on developing more passive sources of income. Income that doesn't require my intervention or my physical presence would be ideal. Real estate is the one that often comes to mind, but dividend paying stocks might be more reasonable for me so far. Not long ago, I wanted to get into buying a few shares of individual stocks and I bought a few shares of HD stock and its gone up a fair bit so that I've made about 12% on it so far. But right now I have no intention of selling. I bought it for the long-haul, not for the short-term gain.