All Entries in the "Personal Finance" Category

Diversify Savings into Other Currencies & Overseas Assets

With an unprecedented increase in federal spending, a record number of newly printed dollars entering the system, and the shrinking tax base, time is running out for savers, earners and investors who still have all their savings, salaries, homes and their investments denominated in U.S. dollars.  The U.S. economy looks grim…multi-billion dollar bailouts at taxpayer expense…billions of dollars in stock value evaporating overnight…dried up credit…collapsing mutual funds…disappearing retirement accounts.

Couple this inflation threat with the 100% certainty of higher taxes in the future. If you earn $62,068 or more, you already pay 80% of everything collected by the IRS.  But at the other end of the scale, about 50% of adult Americans don’t pay any taxes whatsoever.  This shrinking tax base will force Washington to collect more of the tax take from those who already shoulder most of the tax burden.  Anything else would be political suicide.

• Smart investors have already positioned themselves for the inevitable when the dollar fails.  They’ve diversified into non-dollar denominated investments, and there are a lot of them to choose from.  Stocksonwallstreet.net regularly discusses equity investments overseas and in emerging markets, so I won’t dwell on that here.

• Invest in foreign currencies directly.  Currency investing can be tricky and volatile, but in countries like Japan and Hong Kong, financially savvy housewives are heavy day traders of currencies.  There’s no reason Americans cannot do the same.  Just beware and educate yourself well before diving in.

• Another strategy is to invest in real estate that’s bought and sold in a currency other than the dollar.  For example, Brazilian real estate is traded in the Brazilian Real, a currency that’s very strong and will probably get stronger as the dollar declines.  However, overseas property investments can be fraught with scams and fraud, so buyers beware!  A lot of foreign investors have been burned in places like the overheated Shanghai property market.  Given the pitfalls, this is not an investment option I’m not particularly keen on.

• The erosion of the dollar can also make the value of the currency part of the equation in determining where to retire.  In many places around the world, you can enjoy an upscale but low-cost retirement…a wonderful high-quality lifestyle for a fraction of what it costs at home.  There’s never been a smarter time to explore.  There are already 7 million Americans abroad for whom the American Dream has simply been priced out of reach.

There are places you can still own your own home or beach house and enjoy appreciation of 20-60% per year…where world-class health care won’t send you to the poorhouse…where the government doesn’t involve itself in every aspect of your personal life…and won’t even charge you taxes.  A house on the beach, a mountain villa, or a super-modern city condo can cost 50-75% less than it might at home.  Same goes for the overall cost of living.  A week’s worth of groceries, dinner at a fine restaurant, a night at the symphony, even full-time household help – like a maid or a gardener – can cost pennies on the dollar.

Why You Should Invest?

Want a resolution to add to this list? Well if you don’t already here is one for you, investing. Trust me, it will pay off in the long-run.

Why You Should Invest?

Why you should Invest? Plain and simple, investing is the easiest way to create wealth. Investing is relatively simple and the rewards are great. By Investing

in the Markets it will open up the world to you offering you more money to do what you want. Money gives you opportunities so investing will allow you to explore your opportunities whether they are retiring in a beach house in Mexico, paying for child’s education, or just for traveling the globe. Realistically, unless youhave a top-notch salary, investing in the Stock Market is the only true way to reach financial independence.

Benefits of Investing and Power of Compounding

Lets put it real simple to show you the benefits of investing. Say you put $2,000 of your savings into the stock market and invest within the S&P 500. Well the S&P’s historical average is 10% and would make your 2,000 worth $34,898.80 after 30 years. Now do you see the gain from investing? On the contrary if you put that same amount of money into a savings account your $2,000 would only be worth $3,622.72 30 years later. Quite a difference huh? This number will shock you even more. If you invest $1,000 a year in the S&P 500 after 45 years it will have grown to over one million dollars. Overall you only added $46,000 over the time but compound interest and solid investments did the job for you. Below is a graph that shows the power of investing and why you should put your money in the Stock Market rather than a CD or Bond. Historically overtime CD’s and Government Bonds have averaged around 5%. The Stock Market has averaged 10% over the same period and if you learned how to trade yourself or followed Stocks on Wall Street you could easily achieve 15%-20%.

Growing At

Shocking what a few percentage points can do and why it pays off to take some risk. Remember you are a long-term investor so you’ll go through the bull markets and bear ones but overall your money stays put and grows exponentially.

Time Value of Money

Lets say your parents start you investing when your 15 years old with a simple $100 dollar bill. Look how that simple bill will grow:

Growing At

The Story of Jack and Jill

Delaying making investments in order to launch your career can cost you dearly later on. Smaller investments made between the ages of 18-25 will yield much greater returns than larger investments made later on over a longer period from ages 26-65. Consider the classic parable taught in many basic economic courses:

Jack decided not to go to college. He got a job at 18 and invested $4,000 each year into an IRA. He stopped after eight years after investing a total of $32,000. His sister, Jill, went to medical school, started her medical practice at age 26, at which point she began contributing $4,000 to her IRA. Jill did this for 40 years from 26 to 65. She invested a total of $160,000 and put her money into the same investment as her brother. Jill started investing the same year Jack stopped, and she saved for 40 years compared to just eight years for her brother.

By age 65, whose IRA account do you thing was worth more money?

Assuming both Jack and Jill earned a 10% annual return, Jill accumulated $1,327,778. But Jack had $1,552,739 – $224,961 more than his sister!

Jack’s account grows to a higher value because he started sooner!

+$224,961

Jack stopped investing at age 26 having invested only $32,000 to Jill’s $160,000. But Jack’s money earned interest for eight years longer than his sister. It wasn’t the money that made him successful – it was the time value of money. Jack didn’t put off investing when he first launched his career. By investing sooner than Jill, his account grew larger.

The moral of this story is not to forego a college education and its promise of higher earning potential. No doubt, Jill earned more disposable income during her career. But Jack’s investment head start was far superior, resulting in substantially greater savings.

What you Should not Do?

Do nothing – Obviously nothing in life is a guarantee. There is no guarantee that you will make money investing in the market in your first month or year. However overtime you will as you can see through the charts above. One thing you can guarantee though is if you do nothing you will not be able to retire comfortably.

Start Late – Besides not investing at all this would be your second worse decision. The numbers don’t lie and the graphs above prove my points.

Invest for the short term – The market is not a guarantee so don’t use it as a short fix to pay off bills or debts. The key to investing is by having a long-term perspective. Traders are different as they manipulate the markets to turn a profit. Beware though it takes only the very skilled as 90% of traders lose money.

Take it Easy - If you’re young, most of your investing dollars should be in the stock market. Over time you will be able to weather the dips in the markets and benefit from the rewards of long-term gains.

Risk it All – Never pour all your money into something that could lose it all. Diversify, Diversify, Diversify!!!

Now What?

Hopefully after reading this you realize the true gains from investing and why it is the best decision you could ever make in your life. Next step is to open up a Brokerage Account so follow my next steps to get started. Get going cause remember the clock is always ticking.

Finishing off the Stock Picks: What to Expect from the Rest

Building off of yesterdays article, here is an update on the rest of my stock picks. Here it goes:

Foster Wheeler (FWLT) Bought on 7/16/2009 at $19.75 now at $32.00, Total Return: ↑62%

Hold. Foster Wheeler has surged a lot recently setting it up for some form of a pull-back in the stock price. Long-term I am still a fan due to the strong growth potential. What do I mean? FWLT tapping into the international market with large projects in the Middle East/India. These large revenue streams will allow for FWLT to continue to expand and become a dominant player. Also they have a large order of backlogged work orders meaning that revenue will continue to come through into the new year even if the industry doesn’t pick up as expected. Long-term its a solid holding but expect a minor setback. Here is the link to read the Original Foster Wheeler Research Report.

U.S. Corporation (USG) Bought on 7/23/2009 at $12.03 now at $15.66, Total Return: ↑30%

Buy/Hold. This stock has fluctuated as of recently though long-term the potential is still there. As the housing market continues to recover within the next few years more and more new projects will start up offering new business which USG will feed off of. $19 is still a great target come 2010. Here is the link to read the Original U.S. Corporation Research Report.

Gamestop (GME) Bought on 8/4/2009 at $22.86 now at $25.24, Total Return: ↑11%

Buy. Long-term though it is a great pick. It is overlooked. The reason the video game industry has been struggling is not because of the recession but because no good video game titles have been released.  Now that new titles have started to come out we have seen a significant increase in video game sales. In September numbers jumped significantly showing a resurgence in the industry. Not one top title has come out within a year. Backing this up Gamestop has strong financials, management, and a healthy balance sheet which all bodes well. Stay in or buy in which ever fits you. Here is the link to read the Original Gamestop Research Report.

Altria Group, Inc (MO) Bought on 9/3/2009 at $18.28 now at $18.18, Total Return: 0%

Buy. For the safe investor long-term Altria is a safe bet. It doesn’t fluctuate to much yet is backed up by strong financials and a nice dividend. Altria has managed to cut costs with smart acquisitions and moves plus with the new initiatives pushed forward by congress any form of competition should be pushed out of the way. $23.50 is a strong target come 12-months from now. Here is the link to read the Original Altria Group Research Report.

EOG Resources (EOG) Bought on 9/29/2009 at $80 now at $91.45, Total Return: ↑15%

Hold. EOG has posted nice results in the past two weeks making it now a hold. Long-term it is still a strong play due to the projected increases in production and demand for Natural Gas. They have strong balance sheet, good ROE and ROA, plus are a dominant player in the U.S. market. Once Natural Gas becomes a force in the U.S. so will EOG. Here is the link to read the Original EOG Resources Research Report.

GigaMedia Limited (GIGM) Bought on 10/8/2009 at $4.78 now at $4.78, Total Return: 0%

Buy. I like GIGM due to its strong growth potential in the Chinese Gaming Market. GIGM is undervalued as they have a strong balance sheet, cash on hand, no debt, and strong gaming products already. They have received big contracts in the past year solidifying them as one of the major players in the sector. With the U.S. loosening restrictions on online gaming this opens a new door for GIGM to excel in. Here is the link to read the Original GigaMedia Limited Research Report.

Recap of Stock Picks: What to do with your Positions

So most people are concerned that the stock market is oversold right now and trading up to high. I disagree, though I want to go through my Stock Picks section over the course of the next two days and help give you advice on how to play these picks. Here it goes:

AT&T (T) Bought on 6/21/2009 at $24.04 now at $26.00, Total Return: ↑8.5%

Hold/Sell. I liked this stock at one point due to its strong P/E and EPS valuations to go along with their strong brand loyalty and improved balance sheet. It is a very safe bet though I am suggesting you sell it as it has done very little in the time frame. If you are the long-term investor looking for safe bets then this might be a fit as AT&T is not a volatile stock that will get you big returns but it won’t lose you huge returns but it won’t lose anything. The dividend could be a bonus but I want something that can get me more bang for my buck so I’m selling. Here is the link to read the Original AT&T Research Report.

Noble (NE) Bought on 6/16/2009 at $34.40 now at $42.53, Total Return: ↑27%

Buy, Buy, Buy. This is a great oil stock. I believe that this stock could easily reach $50 come years end and hitting $65 in 2010. It holds a strong array of oil holdings worldwide and is positioned well for the future. With the price of crude oil slowly creeping up all bodes well for this stock. Here is the link to read the Original Noble Research Report.

Under Armour (UA) Bought on 5/25/2009 at $20.70 now at $31.58, Total Return: ↑54%

Now how you play Under Armour depends on what type of investor you are. If you are a short-term investor, then sell UA at around $32-$33. Why? Read this article as I highlight all the reasons on why to sell Under Armour. If your a long-term investor, hold onto the stock as they should continue to post strong numbers and expand throughout 2010. If Under Armor can do it big in the international scene then there is nothing stopping this stock from surging. Here is the link to read the Original Under Armour Research Report.

Petroleo Brasileiro SA (PBR) Bought on 4/23/2009 at $35.90 now at $49.64, Total Return: ↑40%

Hold onto PBR as long-term it had great growth potential. I am a firm believer that oil will continue to rise throughout the year and leading into 2010. $100 a barrel oil is on its way. PBR also has invested billions on billions in the discovery of massive oil fields. Only a six months back they found one of the largest oil discoverieis off the coast of Brazil. With money backed by the government and a strong expansion plan this stock has room to grow making it a great long-term investment. Buy on a dip, if you own it hold on for awhile Here is the link to read the Original Petroleo Brasileiro Research Report.

Oracle (ORCL) Bought on 4/2/2009 at $18.82 now at $22.19, Total Return: ↑18%

Hold onto it if you own it. Its a nice play as Tech should rally in the fall. They offer a nice dividend and are a best of breed company in a growing industry so looks good for the time being. Here is the link to read the Original Oracle Research Report.

Ivanhoe Mines (IVN) Bought on 2/20/2009 at $4.42 now at $11.89, Total Return: ↑170%

Not sure how to play this one. IVN is up 170% since this pick was made and has high volatility ahead. I am not sure what the time frame is for it to reach $15 per share. It has fallen down some since peaking at $13 last week yet long-term I am still a huge fan of Copper due to the increase in price and demand. The big news for IVN was getting the go-ahead from the Mongolian government to build the huge copper mine. This surged the stock price. Question is, what will send it higher now? Since this is one of my largest holdings in my account I take it very seriously. I will make sure to read up this week and update you guys later. Sorry for no help. Here is the link to read the Original Ivanhoe Mines Research Report.

How to Chose a Brokerage Account

Last week I wrote an expose on the Top 10 Brokerage Accounts, now this week I will talk about how to chose the perfect brokerage account to fit your style of investing and trading. When it comes to choosing a brokerage service, I believe customer satisfaction and top ratings have to be near the top priority. With the internet vastly expanding, many people no longer need the ability to call a broker to invest and trade in stocks. Frankly anyone who still calls a broker and pays those excessive fees has to be crazy with the simple setup these sites have today. Two clicks now and I can make a trade, on my iPhone!!! Anyways, getting back to the point, customer satisfaction does play an imminent role in cashing out, making transfers, and the little day-by-day operations of running your investment portfolio. So now lets narrow down the options by first asking yourself a few basic questions:

How much do I have to Invest? The more you have, the more options you’ll have. Though I would advise for those of you with smaller portfolio values to take cheaper fee based brokerage services such as Zecco, Wells Fargo, TradeKing, and Scottrade.

What kind of investments do I want? Every brokerage will give you access to the most commonly traded stocks, but you won’t necessarily have access to thinly traded issues or every mutual fund on the planet. If you want access to IPOs, options trading, forex trading, etc… you need to choose either Interactive Brokers or OptionsXpress.

How often will I trade? Big question as if you are more of an investor rather than a trader then you might choose higher fees for more amenities. For those of you only doing several trades a year, I would advise using any of the following: E*Trade, Charles Schwab, Fidelity or TD Ameritrade.

How much help do I need? Many discount brokers offer advice these days, yet some clearly stand out more than others. For advice on stocks, IRAs, ETFs, Mutual Funds, etc look at: Charles Schwab, Fidelity or TD Ameritrade.

How about top market research sites? If you are looking to do market research on your own or through other publications to not linked to your investment portfolio then thats no problem. These days the web is filled with quality investment sites which will help find you those hot stocks and narrow down your list of which stocks to buy. Unfortunately like any good quality product, the best sites will cost extra $$$. Here are my personal recommendations: Morningstar, Zachs, The Street, MarketWatch, Barron’s, and The Wall Street Journal. Many of these offer free 14-day trials, at least I know Mornigstar, Zachs, The Street, and Marketwatch do with no credit card down, all you need is valid email so take advantage of the trials to see if they can add value to your investment portfolio.

What type of Investor are you? 1) The small investor starting out with an investment portfolio of less than $5,000 looking to make money investing in stocks. 2) The buy and hold investor where you are too busy to follow the markets daily so you have a portfolio of stocks that doesn’t change much on a daily basis. 3) The avid trader who trades often trying to support himself with a full-time income by trading and investing in stocks within his investment portfolio.

So now that you have all your questions you are going to rush off and sign-up for your brokerage account, right? Well just read these 10 cautions first before you rush into anything. One word of wisdom I can say though is the younger you invest the better off you will be.

Here are 10 considerations as you begin your search:

1) Read the fine print on everything. Look for any hidden costs, such as account minimum balances, fees for late payments or bounced checks, transaction fees, and postage and handling fees.

2) Commission schedules vary depending on the trade. If you most typically buy 1,000 shares of stock for less than $10 a share, use this trade as a test of your prospective brokers. See how much of a commission you’d pay for your typical trade with each prospective brokerage and narrow down your selections.

3) Want to play with the big guys and trade options or penny stocks. Well make sure the brokerage is set up to trade them as most aren’t. Check on the ability to buy and sell stocks traded on international exchanges, too, if you’re planning to add foreign companies to your portfolio or dip into some forex trading.

4) The availability of checking accounts or bill-paying services may be very attractive to some. Discount brokers are expanding their banking services in an attempt to make the most from each customer. Do you really still need a checking account from a separate bank? Newest addition is Wells Fargo investments however which can links all accounts if you are a Wells Fargo customer. Worth looking at.

5) Do you want Mutual Funds? I am a huge opponent to Mutual Funds as they are underperforming and the fees they charge are absurd. Find an ETF with the exact same holdings and avoid the fees. However, for those of you who are fans of Mutual funds look at which funds are offered through your brokerage service.

6) Look at the margin interest rate. Margin trading can become very profitable and if you plan on ever borrowing money from your broker for purchases make sure you know what you will be paying. Margin rates vary substantially from broker to broker. Unless your experienced though, I would advise staying away from margin trading.

7) Check for money market sweeps which is where they sweep unused funds into money market accounts.

Look at where the nearest local branch is and what type of touch-tone trading/phone support is offered. If you are old school and want to place a trade the old-fashioned way by phoning a human broker see if that’s offered. Plus find where the nearest branch is incase you want face to face communication and support.

9) Find out what Research and investing tools are offered. One of the perks of a brokerage account is getting access to additional screening tools, analyst research reports, stock charts, and more. The higher the commissions most likely the more that will be offered, remember though plenty of other private options like I mentioned above, best bets: Morningstar, Zachs, The Street, MarketWatch, Barron’s, and The Wall Street Journal.

10) Find the free perks that are offered. Lots can be worth having, I mean some brokerage services offer frequent-flyer miles, free trades on your birthday, or cash placed right into your account. If it doesn’t offer anything, call the branch and ask what they are willing to give you. With the downfall of the recession brokerage services are dyeing for new customers and might offer more than you think.

Overall, after reading this brief guide I believe you will be more than prepared to make the wise choice that fits to your needs and specialties. Good Luck and feel free to comment or send me an email (jameshartje@gmail.com) on what brokerage service you have chosen.

Top Performing Stocks of the Decade

Interesting list to see the Top Performing Stocks of the Decade. Hope you were able to reap some of the gains. Will be done with finals on Monday so tune in next week for some hot stock picks!!!

Top Stocks of the Decade
GMCR…………..Green Mountain Coffee Roasters………….7,895.4%

HANS……………Hansen Natural………………………………….6,504.1%

BYI……………….Bally Technologies……………………………..6,394.2%

SWN…………….Southwestern Energy………………………….5,108.4%

CLH………………Clean Harbors……………………………………4,456.0%

DECK……………Deckers Outdoor………………………………..3,669.5%

AMED……………Amedisys………………………………………….3,669.2%

TNH……………..Terra Nitrogen…………………………………….3,611.5%

BOOM…………..Dynamic Materials………………………………3,519.4%

QSII…………….Quality Systems………………………………….3,497.2%

JOSB…………….Jos. A. Bank Clothiers………………………….3,419.5%

CETV…………….Central European Media Enterprises……..3,263.4%

XTO………………XTO Energy………………………………………..3,191.2%

SIRO…………….Sirona Dental Systems…………………………3,142.0%

AFAM…………….Almost Family…………………………………….3,071.6%

MCF………………Contango Oil & Gas……………………………..3,034.0%

JST………………..Jinpan International……………………………..2,974.2%

TRA………………..Terra Industries………………………………….2,339.7%

MDVN……………..Medivation………………………………………..2,321.6%

RRC………………..Range Resources………………………………2,231.9%

ISRL………………..Isramco…………………………………………….2,093.5%

CGA………………..China Green Agriculture………………………2,064.3%

CEDC………………Central European Distribution……………….2,049.2%

FCN…………………FTI Consulting…………………………………….2,044.3%

GROW……………..U.S. Global Investors……………………………1,887.3%

Why you should Invest? Delaying the Process is Costing you Money $$$

hy you should Invest? Plain and simple, investing is the easiest way to create wealth. Investing is relatively simple and the rewards are great. By Investing in the Markets it will open up the world to you offering you more money to do what you want. Money gives you opportunities so investing will allow you to explore your opportunities whether they are retiring in a beach house in Mexico, paying for child’s education, or just for traveling the globe. Realistically, unless you have a top-notch salary, investing in the Stock Market is the only true way to reach financial independence.

Benefits of Investing and Power of Compounding

Lets put it real simple to show you the benefits of investing. Say you put $2,000 of your savings into the stock market and invest within the S&P 500. Well the S&P’s historical average is 10% and would make your 2,000 worth $34,898.80 after 30 years. Now do you see the gain from investing? On the contrary if you put that same amount of money into a savings account your $2,000 would only be worth $3,622.72 30 years later. Quite a difference huh? This number will shock you even more. If you invest $1,000 a year in the S&P 500 after 45 years it will have grown to over one million dollars. Overall you only added $46,000 over the time but compound interest and solid investments did the job for you. Below is a graph that shows the power of investing and why you should put your money in the Stock Market rather than a CD or Bond. Historically overtime CD’s and Government Bonds have averaged around 5%. The Stock Market has averaged 10% over the same period and if you learned how to trade yourself or followed Stocks on Wall Street you could easily achieve 15%-20%.

Growing At

Shocking what a few percentage points can do and why it pays off to take some risk. Remember you are a long-term investor so you’ll go through the bull markets and bear ones but overall your money stays put and grows exponentially.

Time Value of Money

Lets say your parents start you investing when your 15 years old with a simple $100 dollar bill. Look how that simple bill will grow:

Growing At

The Story of Jack and Jill

Delaying making investments in order to launch your career can cost you dearly later on. Smaller investments made between the ages of 18-25 will yield much greater returns than larger investments made later on over a longer period from ages 26-65. Consider the classic parable taught in many basic economic courses:

Jack decided not to go to college. He got a job at 18 and invested $4,000 each year into an IRA. He stopped after eight years after investing a total of $32,000. His sister, Jill, went to medical school, started her medical practice at age 26, at which point she began contributing $4,000 to her IRA. Jill did this for 40 years from 26 to 65. She invested a total of $160,000 and put her money into the same investment as her brother. Jill started investing the same year Jack stopped, and she saved for 40 years compared to just eight years for her brother.

By age 65, whose IRA account do you thing was worth more money?

Assuming both Jack and Jill earned a 10% annual return, Jill accumulated $1,327,778. But Jack had $1,552,739 – $224,961 more than his sister!

Jack’s account grows to a higher value because he started sooner!

+$224,961

Jack stopped investing at age 26 having invested only $32,000 to Jill’s $160,000. But Jack’s money earned interest for eight years longer than his sister. It wasn’t the money that made him successful – it was the time value of money. Jack didn’t put off investing when he first launched his career. By investing sooner than Jill, his account grew larger.

The moral of this story is not to forego a college education and its promise of higher earning potential. No doubt, Jill earned more disposable income during her career. But Jack’s investment head start was far superior, resulting in substantially greater savings.

What you Should not Do?

Do nothing – Obviously nothing in life is a guarantee. There is no guarantee that you will make money investing in the market in your first month or year. However overtime you will as you can see through the charts above. One thing you can guarantee though is if you do nothing you will not be able to retire comfortably.

Start Late – Besides not investing at all this would be your second worse decision. The numbers don’t lie and the graphs above prove my points.

Invest for the short term – The market is not a guarantee so don’t use it as a short fix to pay off bills or debts. The key to investing is by having a long-term perspective. Traders are different as they manipulate the markets to turn a profit. Beware though it takes only the very skilled as 90% of traders lose money.

Take it Easy - If you’re young, most of your investing dollars should be in the stock market. Over time you will be able to weather the dips in the markets and benefit from the rewards of long-term gains.

Risk it All – Never pour all your money into something that could lose it all. Diversify, Diversify, Diversify!!!

Now What?

Hopefully after reading this you realize the true gains from investing and why it is the best decision you could ever make in your life. Next step is to open up a Brokerage Account so follow my next steps to get started. Get going cause remember the clock is always ticking.

How to Value Technical Analysis: The Basics

Technical analysis is a method of analyzing a stock or company solely on statistics generated by market activity. This can include volume, historical prices, etc. Using these charts and patterns many can suggest and predict future activity. However, plain and simple, technical analysis is only based on three assumptions.

1. The market discounts everything.

2. Prices move in trends

3. History always tends to repeat itself.

The Market Discounts Everything

One major critic about technical analysis is the fact it only takes into consideration price movement. Analysts looking for technical indicators ignore fundamental factors. The way they get around is by the theory that at any given time, a stocks share price will reflect everything that could possibly affect a company. This includes the effects brought on by fundamental factors. Since these factors are already priced into the stock, they believe all that matters is the analysis of price movement, which basically is the supply and demand of a stock.

Prices Move in Trends

This basically means that the price movements will follow similar patterns. It all comes down to assumption and the analyst assumes that the trends will follow on a similar pattern.

History Always Tend to Repeat Itself

The market repeats itself in its patterns of price movements. Analyzing charts for the past 100 years you can see everything follows a similar pattern so a could technical analyst will be able to read when the next trend is coming.

Trends

There are three types of trends: Long-term trends, Medium-term trends, and Short-term trends. The Long-term trend is over a year, the Medium-term trend is one to three months, and short-term is less than a month. If you are a long-term investor all you should worry about is the Long-term trend. If you look its a recipocal cycle for the stock to fluctuate with ups and downs, however long-term companies usually all go up as seen by the chart to the right. In this case the Super Trend is the Long Trend, the Dot com Bust is the medium trend and the small falls and gains in between are the small trend. Thats why long-term investors don’t look at their investments on a daily basis as due to fluctuations it doesn’t make sense. On the contrary if you trade regularly the Medium-term trend might be more critical. Remember the two most important sayings on trends: “the trend is your friend” and “don’t buck the trend.”

Support and Resistance

Support and Resistance can often be characterized as the on-going fight between the bulls and the bears or the struggle between supply and demand. This graph will help illustrate the difference: Support is the price level for which a stock or the market in general falls. Resistance is the price level it surpasses.

Are you following along? Well read carefully as support and resistance levels are crucial factors involved within the markets. Simply they are the price levels, traders/investors will buy or sell a stock at. When analyzing support and resistance price levels, round numbers come into play throughout a large amount of charts. Round numbers represent physiological turning points for a stock and become the price levels in which a stock plays off. Often traders/investors will purchase a stock at a price level that they don’t believe it will fall under. For example, Google support level could be $400 where whenever it reaches near that price level, investors buy large quantities. On the other hand, Google could have a resistance level of $500 where investors don’t believe it will continue to go up much further therefore selling off. So now that you know about the basics of support and resistance levels, lets analyze why it’s an important factor. Support and resistance analysis is crucial for traders as if you can identify a important level of resistance that over time has never been broken you will most likely consider profit taking when it reaches near that level the next time as you believe it is unlikely the shares will exceed that level. They go side by side with trends, as normally a trend will conform to its support and resistance levels. One key tip to know when trading near support and resistance levels is never to place your order on the exact price. Due to increased volatility, when a stock price reaches this level there tend to be a high level of trading volume therefore you will most likely miss out. Therefore place your order a couple points above or under and all will be good.

Moving Averages

When analyzing the moving averages there are two main ones that should be looked at, the 50-Day moving average and the 200-Day moving average. For the 50-Day moving average it is usually considered that if it is below the 200-Day moving average it is on a downtrend and if it above it is on an uptrend. This can also be considered the Golden Cross where if viewing a chart you analyze the 50-day and 200-day averages you should see them cross and depending on which way the 50-day average is moving it will tell you whether or not the stock is heading up or down.

(The green arrow here shows the Golden Cross where the 50-Day Moving Average in Blue crosses over the 200-Day Moving Average. On the contrary this also shows the Death Cross which is the complete opposite. This can be seen by the Red arrow at the top and as a result markets collapsed)

Now that you have learned the basics move onto the next section which will go even further into Technical Indicators

How to Value Fundamental Analysis: Financial Statements

Financial statements can sometimes scare off investors with the unbelievable amount of information given. Though if you can get over your intimidations and learn how to analyze financial statements it can be a gold mine of info. Financial Statements are the way a company discloses all its numbers. Investors use the quantitative information given from financial statements to make investment decisions. Before we learn all the ins and outs it is crucial we learn the three most important statements: Income Statement, Balance Sheet, Cash Flow Statement.

Balance Sheet

Represents company’s assets, liabilities, and equity at a certain time. If you ever studied accounting you should know the following formula:

Assets = Liabilities + Shareholder’s Equity

Assets are crucial factors as they show the resources and capital your business owns and controls. Assets are comprised of everything from cash, inventory, machinery, etc. Financing comes as a result of both liabilities and equity. Liabilities are how much debt you have and equity represents the total value of money that owners have contributed.

Income Statement

Income statement represents how much money a company has been making in a specific period of time. It’s a good indicator to analyze a company’s performance.

Statement of Cash Flows

Shows how much cash is being generated and coming through the business. Cash inflows and outflows are crucial in balancing the company’s budget. The Statement of Cash Flows is a conservative way to measure a company’s performance, as unlike earnings there is no way to manipulate cash in hand.

P/E Ratio

Price of Stock

Earnings per Share

The P/E Ratio tells us how much an investor is willing to pay for $1 of company earnings. Usually the long-term average P/E is around 15 so basically investors are willing to pay $15 per dollar of earnings. When comparing P/E its important to consider the difference between industries. Industries with higher risks will usually attract lower P/E Ratios. Another way to use the P/E Ratio is by turning it around to look at the E/P Ratio. Look at it this way, for $1 earnings per $15 it expresses an E/P of 1/15, which gives an earnings yield of 6.67%. At the end, the P/E Ratio should roughly mimic the EPS for value based-growth stocks. Now a days most stocks with low P/E Ratios have bad times ahead. This speaks for the majority, not to say there are not still value stocks out there with low P/E’s but usually they are backed by other strong fundamental indicators.

P/S Ratio

Market Cap (Shares Outstanding x Market Price Per Share)

Total Sales

The P/S comes in as a good indicator when valuing both young up and coming companies and unprofitable companies which do not have a P/E Ratio. For value investors a P/S under 1 shows an opportunity. It is also worth considering that a relatively low P/S ratio with a rising stock price to be a good basis to invest in growth stocks that have suffered a setback. Look at the P/S for the past 10 years; if it is below the average it could be a good indicator of value. A P/S above 10 is momentum priced. Only buy momentum priced stocks in a strong market.

PEG Ratio

Price/Earnings Ratio

Forecast Earnings Growth

The PEG Ratio takes the annualized rate of growth out of any further estimates. Further grow adds to the vale of a company thereby it makes sense that higher growth rates will increase a companies value. That where relying on just the P/E ratio is misleading. Take this for example: If a company is expected to grow 15% a year over the next two years and has a P/E of 15 then it will have a PEG ratio of 1. Whereas a company with a P/E of 10 and expected growth of 20% would have a PEG of 0.5. Last if a company had a P/E of 20 and a growth of 10% it would have a PEG of 2. All in all, the lower the companies PEG Ratio, the more cheaply valued it is. Use this following chart when analyzing companies PEG Ratios:

Under 1 = Undervalued Companies

Equal 1 = Value Companies

Over 1 = Overvalued Companies

Overall the PEG Ratio is a good indicator in analyzing growth companies.

How to Value Funadamental Analysis: Qualitative Factors

Qualitative factors represent every aspect of a company and are almost impossible to quantify. It often goes unnoticed but when investing you have to go back to the basics and look at the less tangible characteristics of a company. Before you look at any financial statements ask yourself these questions:

Fundamentals – What is the Companies Business? Is it Sound? Is it Growing?

Market Share – By understanding what your companies market share is can tell you a lot about a company. This can help you factor in if it’s the largest player. It can also be a catalyst in protecting current/future earnings. When the firm is bigger than the rest of its rivals, it is in a better position to absorb the high fixed costs of a capital-intensive industry.

Industry Growth – You have to fully analyze the industry your company is in. Examine whether or not the overall market will grow and what its potential is? Consider how supply and demand will change and how prices will fluctuate.

Regulation – How will your companies industry be regulated? What affects could this have long-term and short-term?

Competition – Always got to know the competition? Who is ahead or behind you? How they can affect your future earnings/market share. Whether or not they will affect your pricing power?

Price History – How much have other investors been willing to pay for the stock?

Price Target – How much are investors likely to pay for the stock in the future?

Catalysts – What catalysts will change investor perceptions of the stock in the future?

Comparison – How does the stock compare to others in its industry?

Why you should Invest? Delaying the Process is Costing you Money $$$

Why you should Invest? Plain and simple, investing is the easiest way to create wealth. Investing is relatively simple and the rewards are great. By Investing in the Markets it will open up the world to you offering you more money to do what you want. Money gives you opportunities so investing will allow you to explore your opportunities whether they are retiring in a beach house in Mexico, paying for child’s education, or just for traveling the globe. Realistically, unless you have a top-notch salary, investing in the Stock Market is the only true way to reach financial independence.

Benefits of Investing and Power of Compounding

Lets put it real simple to show you the benefits of investing. Say you put $2,000 of your savings into the stock market and invest within the S&P 500. Well the S&P’s historical average is 10% and would make your 2,000 worth $34,898.80 after 30 years. Now do you see the gain from investing? On the contrary if you put that same amount of money into a savings account your $2,000 would only be worth $3,622.72 30 years later. Quite a difference huh? This number will shock you even more. If you invest $1,000 a year in the S&P 500 after 45 years it will have grown to over one million dollars. Overall you only added $46,000 over the time but compound interest and solid investments did the job for you. Below is a graph that shows the power of investing and why you should put your money in the Stock Market rather than a CD or Bond. Historically overtime CD’s and Government Bonds have averaged around 5%. The Stock Market has averaged 10% over the same period and if you learned how to trade yourself or followed Stocks on Wall Street you could easily achieve 15%-20%.

Growing At

Shocking what a few percentage points can do and why it pays off to take some risk. Remember you are a long-term investor so you’ll go through the bull markets and bear ones but overall your money stays put and grows exponentially.

Time Value of Money

Lets say your parents start you investing when your 15 years old with a simple $100 dollar bill. Look how that simple bill will grow:

Growing At

The Story of Jack and Jill

Delaying making investments in order to launch your career can cost you dearly later on. Smaller investments made between the ages of 18-25 will yield much greater returns than larger investments made later on over a longer period from ages 26-65. Consider the classic parable taught in many basic economic courses:

Jack decided not to go to college. He got a job at 18 and invested $4,000 each year into an IRA. He stopped after eight years after investing a total of $32,000. His sister, Jill, went to medical school, started her medical practice at age 26, at which point she began contributing $4,000 to her IRA. Jill did this for 40 years from 26 to 65. She invested a total of $160,000 and put her money into the same investment as her brother. Jill started investing the same year Jack stopped, and she saved for 40 years compared to just eight years for her brother.

By age 65, whose IRA account do you thing was worth more money?

Assuming both Jack and Jill earned a 10% annual return, Jill accumulated $1,327,778. But Jack had $1,552,739 – $224,961 more than his sister!

Jack’s account grows to a higher value because he started sooner!

+$224,961

Jack stopped investing at age 26 having invested only $32,000 to Jill’s $160,000. But Jack’s money earned interest for eight years longer than his sister. It wasn’t the money that made him successful – it was the time value of money. Jack didn’t put off investing when he first launched his career. By investing sooner than Jill, his account grew larger.

The moral of this story is not to forego a college education and its promise of higher earning potential. No doubt, Jill earned more disposable income during her career. But Jack’s investment head start was far superior, resulting in substantially greater savings.

What you Should not Do?

Do nothing – Obviously nothing in life is a guarantee. There is no guarantee that you will make money investing in the market in your first month or year. However overtime you will as you can see through the charts above. One thing you can guarantee though is if you do nothing you will not be able to retire comfortably.

Start Late – Besides not investing at all this would be your second worse decision. The numbers don’t lie and the graphs above prove my points.

Invest for the short term – The market is not a guarantee so don’t use it as a short fix to pay off bills or debts. The key to investing is by having a long-term perspective. Traders are different as they manipulate the markets to turn a profit. Beware though it takes only the very skilled as 90% of traders lose money.

Take it Easy - If you’re young, most of your investing dollars should be in the stock market. Over time you will be able to weather the dips in the markets and benefit from the rewards of long-term gains.

Risk it All – Never pour all your money into something that could lose it all. Diversify, Diversify, Diversify!!!

Now What?

Hopefully after reading this you realize the true gains from investing and why it is the best decision you could ever make in your life. Next step is to open up a Brokerage Account so follow my next steps to get started. Get going cause remember the clock is always ticking.

Success is a result of Failure: The Difference between a Successful Person and an Unsuccessful One

What makes the difference between one who achieves and one who fails?

“Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.”A famous man named Thomas Jefferson once said this and it is 100% true. Success is not easily accomplished; it takes hard work, time, and commitment. Something many of us fail to accomplish and as a result many don’t perceive. You want to know distinguish the difference between a successful person and an unsuccessful one. A successful person has goals and knows where he wants to be five to ten years down the line. An unsuccessful person has dreams and thinks maybe it will happen someday. One person will tell you what he plans on doing and when it will be done. The other will what he hopes might happen someday. Those are the two worst words you could use, Someday and Hope. For one, the word hope, it’s a sellout, you either want something or you don’t. Plain and simple don’t hope for things, make them happen. 99% of the time your extra effort can get that job, land that deal, accomplish your goals. If you believe it you can achieve it. The other word Someday is equally as bad. Without goals, and plans to reach them, you are like a ship that has set sail with no destination.

What it takes to be a Winner

A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses these skills to accomplish his goals. A winner has no fear of failing because they know success is only achieved from a string of failures. You have to take risks in life, that’s the only way to achieve what you want. That’s something many people fail to accept, they are to scare to accept risk. You want to know why unsuccessful people have dreams not goals? Because dreams don’t have a timetable. People are so scared of failure and don’t want to be accountable so they think that if they set a goal with a time table and the clock runs zero and they haven’t achieved everything possible, well to them that’s failure. The only difference between a dream and a goal is a goal is a dream in action. A winner makes commitments, while a loser makes promises. To achieve your goals you need to take on responsibility. To many people in life are followers willing to go in line with the same day-by-day process even though they disagree. You know what challenge that person or system and make it your goal to fix it. Hey, we all have dreams, however have you ever made a goal to achieve your dreams? Did you ever put a time limit on it or is it something in the back of your mind you continue to put off. The trouble with not having a goal is that you can spend your life running up and down the field and never score.

A Goal is a Plan of Action

The key to a goal is setting a time limit and a group of stepping-stones to help you reach that point. If you don’t know where you are going, you might wind up someplace else. For instance would you ever loan someone money not knowing when you will get paid back? What if the only answer the person gave you was someday I will pay it back. Well someday could be a long way away so would you invest? No never, if you ever want to achieve something in life you need to place a time limit on it. A set date of completion helps force you to take action and getting around to completing your goal.

Failure is the Key to Success

I can’t stress this more importantly the key to success is to not be scared to fail. Failure is required in order to succeed. You must have long term goals to keep you from being frustrated by short term failures. Talk to any successful person and I am sure they will have quite a few stories to tell you about their failures. In my short life, I have had many failures trading within the stock market. I can remember specifically buying Monsanto (MOS) at $95 in May of 2007. Well come July the stock was riding high at $165 and I felt good about the profits. However, foolishly I felt it would keep going up. What happens next? Well I go on a family vacation to Okoboji, don’t pay much attention to the markets and then come August I had to settle with selling the stock at $100. 2008 all together was a failure for my brokerage account but you know what? It has only made me better. Talk to any trader on Wall Street and he will tell you that he learns more on the losing trades than he does on the winning ones. I learned this recently on a cold call to Kenneth C. Griffin, the Founder of Citadel Investments, one of the largest Hedge Funds in the world. Unfortunately I was unable to talk to Ken personally yet was passed on to his right hand man and this is a key aspect he stressed. As a result I want to pass it on to all of you. This relates to all sectors of business, just remember failure is the key to succeed.

A Day Spent with “Think or Swim”

Many of you who use “ThinkorSwim” (TOS) as an online broker are familiar with the free Options seminars hosted by TOS affiliate “OptionPlanet”. Yet how many of you have attended one of these seminars rather than just think about it?

On Saturday August 15th, 2009 I made sure to make my way to Foster City by 9:00 AM to see first hand what these were all about. I attend the Options for Traders presentation. The seminar itself is a seven hour ordeal, from 9:00 AM to 4:00 PM. When I first arrived to the hotel hosted event I was shocked to see a pretty big turnout of folks that had made their way over just as I did. Being twenty-one I can surely say that I was the youngest attendee. After grabbing some complimentary coffee the seminar was ready to begin.

Joe Mazzola, a man in his early thirties, presented the seminar. Mr. Mazzola who has been trading for twelve years, ever since he was twenty-one, also runs “SwimCoach”. Another TOS tool focused on teaching investors complex option strategies and answering live position related questions, for a small monthly fee of $50. With a bachelor degree in Economics and an MBA in finance Mr.Mazzola takes a more fundamental approach when entering option positions, rather than a technical one.

The class began with an overview of the current market situation, specifically the S&P 500. In Mr. Mazzolaʼs opinion the S&P 500 is a little overbought for the time being considering the comparatively weak economic data and easy to beat earning targets. He proceeded to explain to the folks who are inclined to believe in a coming inflation to follow the CPI (Consumer Price Index) and PPI (Producer Price Index) as they are direct reflections of inflation. We then began to get into the meat of options trading. We skipped the explanation of calls and puts and dove right into the world of vertical spreads. Stressing the benefits of limited losses and limited gains, Mr. Mazzola went on to explain that buying options was inferior to selling them, “This is because you want to benefit from
time decay” he explained. He recommended trading highly liquid securities, minimum volume of 400-500 and 1 million a day for options and stock respectively. This is because the bid/ask spreads are often tighter and you are more likely to be able to get a fill in-between the two. Another word of advice was to sell the spreads 30-45 days prior to expiration, due to an accelerating time decay, and to buy them back 4-10 days prior to expiration, in order to avoid an expirations weak disaster.

Probability of success was another key theme. Although TOS provides a tool for calculating the percentage of an option expiring at least .01 in the money successfully, Mr. Mazzola explained another simple equation which would merit results for selling positions successfully. Max loss divided by the difference between the two strikes. “When selling options you want a percentage between 55%-75% of success, no more no less. This is because the greater the percentage the smaller the payout or vice versa” he said.
Example:
-1 @ 12 Strike = +$.60
+1@ 13 Strike =  -$.25
Credit = .35
Max loss = .65
Probability of Success is =     (.65)/(1.00) or 65%

After all this it was finally time for a break. We were given fifteen minutes to grab a drink and go to the bathroom before beginning the seminar again. When the seminar began again Mr. Mazzola stepped down and gave the stage to a sales person of“Investools”. A platform which is used to help investors pick fundamentally sounds stocks with technical timing. This took two and a half hours to present. It was definitely the most wrenched thing to sit through that day. While the old folks awed at the platform and smiled at the ground breaking idea of selling covered calls on their stock, I sat there with my face in my hands grumbling to myself. I was disappointed to see that the concepts of fundamental analysis which were presented, only pertained to the platform. The importance of P/E ratios and balance sheets were never articulated but merely expressed as functions the platform offered and how to find them. Unless you are willing to pay the $299 upfront cost and the $29 monthly subscription fee to use the platform, the information was completely useless. When it was finally time for lunch, the presentation finished. We were given an hour to eat.

After eating my ten dollar chicken wrap that the hotel had sold me I returned to my seat and waited for the seminar to begin. I watched Mr. Mazzola answer pupils questions. When the seminar began again we moved on to another options strategy. The Iron Condor. This is a strategy that benefits from range based trading and sideways movement. Mr. Mazzola explained that an Iron Condor was nothing more than selling a put spread as well as a call spread to create a range in-between to profit from. He stressed the fact that this strategy should not be used on volatile stocks such as AAPL, but on sideways ones such as WMT. We went through different scenarios for using this method and how to adjust it, if it begins to go wrong. “Layering your trades is the secret. If your stock becomes too bullish you sell a second put spread closer to the money and another call spread farther out” he said. He continued by showing us how this looked on a chart. Many people were not familiar with this aspect of the platform, so he finished by answering pupils platform based questions.  Going over the platform was the final aspect of the seminar.

Overall I found the seminar to be decent. I would recommend it to new options traders who are not yet familiar with the TOS desktop platform, nor complex options strategies. The are some good beginning concepts that are taught, as well as some good information about the platform. The “Investools” presentation was the disappointing aspect. I felt as if I was taking part in a live infomercial. Besides that I felt Mr. Mazzola was very professional and experienced, and I thank TOS and OptionPlanet for providing the seminar free of charge.
Written by Greg Magadini

Stock Picks: What to Expect

Here is the rest of the recap on my stock picks.

AT&T (T) Bought on 6/21/2009 at $24.04 now at $26.50, Total Return: 9%

Buy/Hold. With strong P/E and EPS valuations to go along with their strong brand loyalty and improved balance sheet I still think AT&T is a safe bet. Its not a volatile stock that will get you big returns but it won’t lose you huge returns but it won’t lose anything. It also offers a nice dividend which is another bonus. Here is the link to read the original research report.

C.R. Bard (BCR) Bought on 7/10/2009 at $74.33 now at $78.37, Total Return: 6%

Sell. Hasn’t really done anything as of recently. Plus with the concerns in Universal Health care and the whole health care industry all together I think there are better plays that will turn more prosperous. Here is the link to read the original research report.

Foster Wheeler (FWLT) Bought on 7/16/2009 at $19.75 now at $29.23, Total Return: 48%

BUY. Foster Wheeler has surged a lot recently but long-term they have large growth potential. Engineering and Construction is an undervalued industry due to the downfall in the economy and Foster Wheeler is even more undervalued within the sector making it still a strong play. Here is the link to read the original research report.

U.S. Corporation (USG) Bought on 7/23/2009 at $12.03 now at $15.28, Total Return: 27%

Buy. This stock has fluctuated as of recently though long-term the potential is still there. As the housing market continues to recover within the next few years more and more new projects will start up offering new business which USG will feed off of. $19 is still a great target come 2010. Here is the link to read the original research report.

Baidu (BIDU) Short on 7/30/2009 at $351.18 now at $343.03, Total Return: 1%

Hold. Continue to short this stock. It had been overvalued for quite sometime as the stock soared in recent times due to the soaring Chinese stock market. Plus with further competition from Google and others it will struggle to hold the majority of the Chinese market. I still thoroughly believe that come the end of the year this stock will be hovering around $300. Here is the link to read the original research report.

Gamestop (GME) Bought on 8/4/2009 at $22.86 now at $22.80, Total Return: 0%

Buy. This stock shot up +15% in less than a week then it was sent down by the shorts. Long-term though it is a great pick. It is overlooked. The reason the video game industry has been struggling is not because of the recession but because no good video game titles have been released.  Not one top title has come out within a year. Madden kicked it off and now the titles will be pouring out and gamers will be rushing to the stores. Backing this up the company has strong financials, management, and a healthy balance sheet which all bodes well. Stay in or buy in which ever fits you. Here is the link to read the original research report.

Stock Picks Recap: The Ups and the Downs

Looking back on all the Stock Picks I have made throughout the year I have realized it is time to sell some of my positions. Will do this in two articles this week but basically just go through every pick and say what I think so here it is:

Ivanhoe Mines (IVN) Bought on 2/20/2009 at $4.42 now at $8.69, Total Return: 97%

Sell half your position, that’s what I did to protect myself. The stock is up 89% since this pick was made and has high volatility ahead. I still like it, actually love it but its better to play with the houses money than your own. The things that bode well for IVN are Copper is increasing in price and demand plus they are on verge of building one of the largest copper mines in the world. The plans to build a massive mine in Mongolia would surge stock price. They are just going through agreements. IVN with an IA agreement would appreciate a lot. I firmly believe this as does Goldman Sachs and many analysts. It will easily reach 13-15, in a short run.  The run is partially due to the anticipation of the signing which is now in negotiations and it will most likely be signed very soon. Clearly the movement of IVN in the short term is based on the IA and has nothing to do its recent run-up. It has dropped on anticipation but I am long. Yes this all sounds like great news but the problem is the deal has been a stalemate for such a long time, who knows if it will ever get done. Plus if they get screwed over by the government with the excess of 68% windfall tax, etc it could take a hard hit on the stock. That’s why I advise selling half the position. Here is the link to read the original research report.

Oracle (ORCL) Bought on 4/2/2009 at $18.82 now at $21.96, Total Return: 17%

Hold onto it if you own it. If not buy on a dip. They offer a nice dividend and are a best of breed company in a growing industry so looks good. Here is the link to read the original research report.

China Life Insurance (LFC) Bought on 4/4/2009 at $53.05 now at $64.03, Total Return: 21%

Sell and take the profits. LFC is up close to 20%+ since the recommendation and it is already trading over my 12-month target. Still has potential as it is a sound company yet I think there are other places to but your money that you will get better return. Here is the link to read the original research report.

Petroleo Brasileiro SA (PBR) Bought on 4/23/2009 at $35.90 now at $42.21, Total Return: 18%

Hold onto PBR as long-term it had great growth potential. I am a firm believer that oil will continue to rise throughout the year and leading into 2010. $100 a barrel oil is on its way. PBR also has invested billions on billions in the discovery of massive oil fields. Only a few months back they found one of the largest oil discoverieis off the coast of Brazil. With money backed by the government and a strong expansion plan this stock has room to grow making it a great long-term investment. Here is the link to read the original research report.

Under Armour (UA) Bought on 5/25/2009 at $20.70 now at $24.00, Total Return: 16%

Hold it for the long-term. If Under Armor can do it big in the international scene then there is nothing stopping this stock from surging. Here is the link to read the original research report.

Noble Bought on 6/16/2009 at $34.40 now at $34.46, Total Return: 0%

Buy, Buy, Buy. This is a great oil stock. I believe that this stock could easily reach $40 come years end and hitting $50 in 2010. It holds a strong array of oil holdings worldwide and is positioned well for the future. With the price of crude oil slowly creeping up all bodes well for this stock. Here is the link to read the original research report.

Is an MBA Worth it?

Is an MBA Worth the time and money? If someone told you that it would take you six and a half years to pay off something would you immediately jump into it? No it would cause worries and make you hesitant. Well that’s how long it takes now to pay of an MBA degree. Up from three years a decade ago. So does this mean that an MBA is not worth it? Absolutely not, still MBA can be a necessity for some jobs but its necessity is fading and the costs associated are just another thing to consider. You have to take in account to that times are changing, no longer do the top banks and management consulting firms required MBA’s. So how will the MBA fit your situation? Are you a current employee searching for more responsibility and higher pay? Are you considering switching careers and obtaining your MBA on the way? Maybe your just looking for another credential to add to your resumes or you are a College Senior looking to get your MBA straight after undergrad? Whatever your situation is an MBA is a big step to make and very costly, so it’s not something you jump right into without analyzing the whole situation. As a result I am going to break down all the important issues you will need to know as you make your decision on whether or not an MBA is necessary anymore.

What is an MBA?

An MBA stands for a Master of Business Administration degree. It is a degree you pursue post-undergrad and usually is a one to three year graduate-level program that provides you training in the theory and practice of business management. Mainly it is a certificate that states you are trained to run a corporation and handle all the management roles involved.

When is the Ideal Time to Get an MBA?

The best time to enroll in an MBA program is when it is most necessary to advance you in your career field. To me it’s not ideal to get your MBA right after undergrad anymore and this is why. Most top-ranked programs will not even admit you if you don’t have at least several years of experience now a days. To add to this, something just receiving their MBA with no job experience is often in a much tougher job hunt than a recent college grad no job experience as one is easier to train and cheaper. If you are currently working and interested in getting your MBA there are still various questions you need to answer. For instance, will you keep working and take night/weekend MBA classes? Do you have the finances to quit your job and go back to school? Does your employer help out with your MBA? For example, many Investment Banks will pay for 100% of your MBA after two years of working there. Do you actually need an MBA to move on with your career?

What type of MBA
 will you get?

One part you need to analyze is whether or not you get a general MBA or a specialized one. The weigh offs are a general MBA is cheaper and shorter however a specialized MBA is more marketable. Also you need to consider the value of the name of the MBA program you attend. If you are looking for a big push to accelerate you through the corporate world then you need to get an MBA for a top-tier school. However if you are just trying to move ahead in your career you might consider unranked programs that offer you the degree and value in which you need.

What will an MBA Cost?

An MBA is usually a $100,000 investment. For any decent program it costs on average $40,000 a year plus additional expenses. Two years of this can add up and become costly. You can find cheaper alternates however they will not add as much value to yourself as a Top-Tier program.

What is an MBA Worth?

According to reports, an MBA is worth about $10,000 to $30,000 a year over a bachelor’s degree. This however can fluctuate as you could see much more money or much less. The main factors that affect your salary are:
1) The Company you Work for
2) The Reputation of the Graduate School you Attend
3) The Industries you are Working in
4) The Location of your Job
5) The Amount of Experience you Have

What an MBA Can Do for Your Career?

Earn your MBA online. No time to return to college? You can obtain your MBA online! Attend classes, search libraries, and take tests from the comfort of your living room! Online universities have become as well respected in the job market as traditional schools. Set your own schedule and find yourself earning promotions and raises soon! An MBA is a career accelerator across a number of industries and MBA graduates can usually command higher salaries. For those looking to make it to the executive suite, an MBA is most likely necessary. Around 80% of executives have graduate degrees, however don’t be fooled it still can be done without. Plus the 21st Century has lowered the value of an MBA and made it not as necessary in the workplace. Just make sure you don’t jump into an MBA program without doing thorough research and analyzing your situation.

Investing When You’re Young – The Time Value of Money

The Story of Jack and Jill

Delaying making investments in order to launch your career can cost you dearly later on. Smaller investments made between the ages of 18-25 will yield much greater returns than larger investments made later on over a longer period from ages 26-65. Consider the classic parable taught in many basic economic courses:

Jack decided not to go to college. He got a job at 18 and invested $4,000 each year into an IRA. He stopped after eight years after investing a total of $32,000. His sister, Jill, went to medical school, started her medical practice at age 26, at which point she began contributing $4,000 to her IRA. Jill did this for 40 years from 26 to 65. She invested a total of $160,000 and put her money into the same investment as her brother. Jill started investing the same year Jack stopped, and she saved for 40 years compared to just eight years for her brother.

By age 65, whose IRA account do you thing was worth more money?

Assuming both Jack and Jill earned a 10% annual return, Jill accumulated $1,327,778. But Jack had $1,552,739 – $224,961 more than his sister!

Jack’s account grows to a higher value because he started sooner!

+$224,961

Jack stopped investing at age 26 having invested only $32,000 to Jill’s $160,000. But Jack’s money earned interest for eight years longer than his sister. It wasn’t the money that made him successful – it was the time value of money. Jack didn’t put off investing when he first launched his career. By investing sooner than Jill, his account grew larger.

The moral of this story is not to forego a college education and its promise of higher earning potential. No doubt, Jill earned more disposable income during her career. But Jack’s investment head start was far superior, resulting in substantially greater savings.

Without question, procrastination is the most common cause of financial failure.

So if you are looking to invest early read my past articles on How to Open a Brokerage Account and Top 10 Brokerage Accounts to help you get started and on you way to gaining true wealth.

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Ever Used Morningstar? Well now you can with the Free 14-Day Trial

Have you ever used Morningstar? Well I hadn’t until recently and I have to admit I am quite impressed. Courtesy of Morningstar, Stocks on Wall Street 
was given a free year subscription to try it out and then report to others what I thought. Guys I am quite impressed with the services they offer. Morningstar provides data on more than 300,000 investment offerings on everything from Stocks to Options to FX. The in-depth analysis they provide is exceptional along with the article they write on the economic policies, foreign relations, personal finance. Everything you could possibly think of is on Morningstar not to mention an array of investment tools that can become quite handy when analyzing stocks. I am not saying its better than Stocks on Wall Street but its up there. Lol. The problem is Morningstar is a paid subscription so most people are hesitant to sign up, not willing to give up cash for a service they have never used. Problem solved? Two days ago, I received an email from Morningstar that they were providing readers with a Free Membership of the Morningstar services. If I were you, I would take advantage of this offer.

Looking for a Forum? Look No Further, RandomChatter.org is here!!!

Hey guys hope all is going well, just out here blogging in London. I just want to remind all of you to go and sign up for my General Forum, RandomChatter. The forum has been incorporated within Stocks on Wall Street and vice a versa as every article I write is created into a discussion within the Stocks on Wall Street Section on the forum. RandomChatter is classified as a General Forum however it has a large Finance Forum, Sports Forum, and Entertainment Forum built within along with anything you could possibly think of. On other news I am also trying to expand my Twitter following as I have now toppled the 9,000 mark and want to continue to grow so follow me @iamwallstreet. In the upcoming months I plan on running a few contests along with a Fantasy Stock League so to receive all updates sign up for both RandomChatter and Stocks on Wall Street. Plus registering with Stocks on Wall Street will guarantee you one of the first copies of my upcoming E-Book on How to be Successful. Hope you can all sign up for RandomChatter right away  and I look forward to see you posting in the future and thanks for the support through Stocks on Wall Street.

Link Exchange

Plus always looking to trade/exchange links with business/finance oriented sites so if you fit that criteria send me an email at jameshartje@gmail.com with your link and we can talk.

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How to Choose a Brokerage Account: Do’s, Don’ts, and Deciding What Type of Investor you Are

Last week I wrote an expose on the Top 10 Brokerage Accounts, now this week I will talk about how to chose the perfect brokerage account to fit your style of investing and trading. When it comes to choosing a brokerage service, I believe customer satisfaction and top ratings have to be near the top priority. With the internet vastly expanding, many people no longer need the ability to call a broker to invest and trade in stocks. Frankly anyone who still calls a broker and pays those excessive fees has to be crazy with the simple setup these sites have today. Two clicks now and I can make a trade, on my iPhone!!! Anyways, getting back to the point, customer satisfaction does play an imminent role in cashing out, making transfers, and the little day-by-day operations of running your investment portfolio. So now lets narrow down the options by first asking yourself a few basic questions:

How much do I have to Invest? The more you have, the more options you’ll have. Though I would advise for those of you with smaller portfolio values to take cheaper fee based brokerage services such as Zecco, Wells Fargo, TradeKing, and Scottrade.

What kind of investments do I want? Every brokerage will give you access to the most commonly traded stocks, but you won’t necessarily have access to thinly traded issues or every mutual fund on the planet. If you want access to IPOs, options trading, forex trading, etc… you need to choose either Interactive Brokers or OptionsXpress.

How often will I trade? Big question as if you are more of an investor rather than a trader then you might choose higher fees for more amenities.  For those of you only doing several trades a year, I would advise using any of the following: E*Trade, Charles Schwab, Fidelity or TD Ameritrade.

How much help do I need? Many discount brokers offer advice these days, yet some clearly stand out more than others. For advice on stocks, IRAs, ETFs, Mutual Funds, etc look at: Charles Schwab, Fidelity or TD Ameritrade.

How about top market research sites? If you are looking to do market research on your own or through other publications to not linked to your investment portfolio then thats no problem. These days the web is filled with quality investment sites which will help find you those hot stocks and narrow down your list of which stocks to buy. Unfortunately like any good quality product, the best sites will cost extra $$$. Here are my personal recommendations: Morningstar, Zachs, The Street, MarketWatch, Barron’s, and The Wall Street Journal. Many of these offer free 14-day trials, at least I know Mornigstar, Zachs, The Street, and Marketwatch do with no credit card down, all you need is valid email so take advantage of the trials to see if they can add value to your investment portfolio.

What type of Investor are you? 1) The small investor starting out with an investment portfolio of less than $5,000 looking to make money investing in stocks. 2) The buy and hold investor where you are too busy to follow the markets daily so you have a portfolio of stocks that doesn’t change much on a daily basis. 3) The avid trader who trades often trying to support himself with a full-time income by trading and investing in stocks within his investment portfolio.

So now that you have all your questions you are going to rush off and sign-up for your brokerage account, right? Well just read these 10 cautions first before you rush into anything. One word of wisdom I can say though is the younger you invest the better off you will be.

Here are 10 considerations as you begin your search:

1) Read the fine print on everything. Look for any hidden costs, such as account minimum balances, fees for late payments or bounced checks, transaction fees, and postage and handling fees.

2) Commission schedules vary depending on the trade. If you most typically buy 1,000 shares of stock for less than $10 a share, use this trade as a test of your prospective brokers. See how much of a commission you’d pay for your typical trade with each prospective brokerage and narrow down your selections.

3) Want to play with the big guys and trade options or penny stocks. Well make sure the brokerage is set up to trade them as most aren’t. Check on the ability to buy and sell stocks traded on international exchanges, too, if you’re planning to add foreign companies to your portfolio or dip into some forex trading.

4) The availability of checking accounts or bill-paying services may be very attractive to some. Discount brokers are expanding their banking services in an attempt to make the most from each customer. Do you really still need a checking account from a separate bank? Newest addition is Wells Fargo investments however which can links all accounts if you are a Wells Fargo customer. Worth looking at.

5) Do you want Mutual Funds? I am a huge opponent to Mutual Funds as they are underperforming and the fees they charge are absurd. Find an ETF with the exact same holdings and avoid the fees. However, for those of you who are fans of Mutual funds look at which funds are offered through your brokerage service.

6) Look at the margin interest rate. Margin trading can become very profitable and if you plan on ever borrowing money from your broker for purchases make sure you know what you will be paying. Margin rates vary substantially from broker to broker. Unless your experienced though, I would advise staying away from margin trading.

7) Check for money market sweeps which is where they sweep unused funds into money market accounts.

Look at where the nearest local branch is and what type of touch-tone trading/phone support is offered. If you are old school and want to place a trade the old-fashioned way  by phoning a human broker see if that’s offered. Plus find where the nearest branch is incase you want face to face communication and support.

9) Find out what Research and investing tools are offered. One of the perks of a brokerage account is getting access to additional screening tools, analyst research reports, stock charts, and more. The higher the commissions most likely the more that will be offered, remember though plenty of other private options like I mentioned above, best bets: Morningstar, Zachs, The Street, MarketWatch, Barron’s, and The Wall Street Journal.

10) Find the free perks that are offered. Lots can be worth having, I mean some brokerage services offer frequent-flyer miles, free trades on your birthday, or cash placed right into your account. If it doesn’t offer anything, call the branch and ask what they are willing to give you. With the downfall of the recession brokerage services are dyeing for new customers and might offer more than you think.

Overall, after reading this brief guide I believe you will be more than prepared to make the wise choice that fits to your needs and specialties. Good Luck and feel free to comment or send me an email (jameshartje@gmail.com) on what brokerage service you have chosen.

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Where to Invest in Stocks? Here’s the Top 10 Brokerage Accounts

Now as I am on to my third different brokerage account I am getting very frustrated in finding the best place to invest in stocks as there are so many new brokerage options now-a-days. When I first entered the investment world, I started out trading stocks with Scottrade. For four years I used Scottrade as my trading platform yet as I became more aware of the other options I decided to change ship. For a short time, I tested the waters with Sharebuilder yet was dissatisfied with their research department and overall trading platform. Then after doing extensive research to find the right match, I was recommended to a brokerage service called Interactive Brokers. It was a perfect match since day one. Interactive Brokers allows me the freedom to trade in every global market, including excellent coverage of Forex and Option Trading. The fees to our the cheapest among all competitors, partly because the minimum opening investment amount is $10,000 so they are looking for serious traders compared to the other online services that allow you to open up with as little as $100. Though now a days with such vast amount of options for brokerage accounts, its hard to break down which one is the best. As a result, below I have my list of Top 10 Brokerage Accounts:

1. Interactive Brokers – Best made for your frequent trader, Interactive Brokers offers many options the discount brokers lack. With advanced Forex and Options Trading it is a sure winner for those heavy investors. The fee structure is very favorable to any investor the only hold back is the $10K minimum. Anyone just beginning to invest in stocks should start off with a simpler platform and build their way up.

2. OptionsXpress – Despite its name, this online stock trading site offers accounts that trade just about any type of security you want including options, stocks, mutual funds, exchange traded funds, futures and more. This site is easy to use and gets to the point. Not the cheapest, but tops in functionality. Plus they offer Free Account Transfers. If you are just beginning to trade stocks then this is a sure winner

3. E*Trade – E*Trade gets high marks for its range of offerings including banking and mutual funds. In recent years they have absorbed several other brokerage firms which has positioned them as the Global online stock trading market leader. Like all the others it offers low rates and much lower starting amounts.  E*Trade is great at offering all the extras from portfolio graphs, iPhone Apps, etc. Plus those E*Trade Baby Commercials got to make you laugh. Great place to start trading stocks in.

4. Charles Schwab – Schwab is the oldest of discount brokerage and is carrying this tradition to its online offering. Slowly its shifting to look more like a traditional broker.  The great part is it offers its own research and clients can work with an investment advisor or Schwab will manage their account for them which is convenient if you know nothing about the markets. Rated as the best choice by The Wall Street Journal. A classic choice for the older investors.

5. Scottrade – Their claim to fame is superior customer satisfaction, which you can tell by the J.D Power and Associates survey of online brokers. S7 commissions are reasonable and they offer solid analysis w/ the S&P reports. Was a long-time user and would recommend it to anyone. Easy to use, reasonable fees, solid starting point as well to invest in stock with.

6. TradeKing – TradeKing is the online stock trading site to checkout for low cost trading. If you want the cheapest trading on the web, TradeKing is the solution. Barron’s agrees by rating it as the best place to start if you are looking for the best price for trades.

7. Wells Fargo – Finally a large retail bank entering the brokerage services. Wells Fargo is solid as you are offered five different levels of accounts depending on whether you want a strictly independent trading account or a version of their managed accounts. The best part personally is if you are a current Wells Fargo customer, then you can find all their financial services in the same location.

8. TD Ameritrade – TD Ameritrade is another brokerage that is the result of mergers and has now become one of the largest players. The company has a large selection of mutual funds and is noted for its responsiveness to customer inquiries. For pure traders not the best option as it is better used by long-term investors.

9. Fidelity – Fidelity shows up at the top or near the top of almost every ranking of online stock trading brokers. They are not the least expensive, but top most lists in customer satisfaction. Fidelity is known for its research and investors can talk to advisors face-to-face at one of the many Fidelity investment centers.

10. Zecco – Known for offering free stock trades, Zecco has become a competitive discount broker. It winning rave reviews as the up and comer among Brokerage Accounts. Be prepared to do your own research however, as Zecco doesn’t offer all the luxuries you might be use to. If you are strapped for cash and don’t want excessively high fees, then Zecco is the place to trade stocks.

What Brokerage Account do you currently use??? Post your answer on my Finance Forum

Best Way to End it with the E*Trade Baby Outtakes!!!