BBVA buys Simple, Makes a Play into New Banking

Simple is a modern bank and tailors directly to people trying to make banking simple. It has a convenient tool to track purchases and other tools to see those purchases impact on your bank account. It focuses on online banking only rather than having branches it put the branch in your pocket and wherever you go. It makes budgeting and saving easy and gives great graphics to achieve those goals.

BBVA is a large traditional bank. It has many branches in the Southeast United States and is based in Spain. They are making a play into this new sector by buying Simple and the technology. They paid $117 million for the bank. If BBVA takes simple to more people and continue to operate it as a new company this will end up being a great investment. Customers will enjoy the simplicity and the great new tools to help them achieve goals. Although, BBVA could also make a mistake and change too much or roll out Simple to more consumers in a haphazard way. This could then backfire on BBVA. I do not think that the managers at BBVA will make these mistakes and it will truly revolutionize banking in a good way for the consumer.

Diversification into Foreign Markets

For the modern investor it is necessary to diversify risk with bonds, cash, stocks, and other forms of investments. This does not mean putting all your eggs in one area of the world. There are opportunities for expansion and great reward in other markets besides your national one. It decreases risk because one area might be struggling with higher inflation and the other country is booming. Now when investing it is still prudent and wise to go ahead and research everything you can about the foreign firm and how the market operates. Due diligence is a must. It is still your money and information is out there about these firms. Just because it is in a different local does not suddenly make it a fountain if wealth or even the exact opposite of what is happening at home.

Foreign companies can be valued differently. A company in the US has average price to earnings of maybe 18-20 while in Eastern Europe it might be closer to 4 or 5 because of the known corruption that will take place. So because it might look like a bargain with American eyes an investor has to put on the correct lenses to value and understand the company.

The investor should also not put more than 25% in foreign stocks and bonds. You want to be well diversified but the home turf is still the better place to invest. It saves transactions costs and the possibility of losing the money with a sudden change. The Ukraine recently had a revolution and those old bond investors might not have a claim to money anymore. Things can happen rapidly and too much abroad might hinder your overall return.

That being said lower risk with probability of higher profits is always a good thing. Investing in foreign markets is an easy way to diversify risk and boost return. Happy investing and start researching those new firms.

United Parcel Service: The Fourth Pick in the WML

UPS is one of the two leading private parcel companies. The other is Fedex, the other major competition comes from the United States Post Office. As the consumer purchases more and more online, these companies will provide most of the shipping of goods. Trucks are still important for the majority of businesses but a truck isn't going to stop in the front driveway but a smaller UPS truck could certainly stop and unload the daily goods you bought. The online retailers enjoy sending you the goods from a central warehouse instead of hiring employees in the store. The cost of shipping is also not that expensive to the consumer or the corporation as seen that many companies provide free shipping over a certain order price. UPS is very efficient at getting shipments from one place to another quickly getting most shipments delivered in just a few days. Their logistics formula has to be good to have such a well run machine. The company has invested heavily in getting goods from one location to another. This is justified because people will need to move items around and UPS offers good service for a reasonable price. They also provide easy shipments from business to business and that is their true bread and butter.

The stock has returned nicely to shareholders with dividends and with a nice growth in price over the past five years. They have increased revenue and able to maintain being top dog in the industry. UPS's CEO D. Scott Davis has spent a long time with UPS and has run the company through the worst of the most recent recession and made the company stronger. I think with careful research that UPS has positioned itself strongly in their sector. The company will be able to maintain the strong position making this company a good investment choice for the investor. It will be a very important business for everyone and will have more growth in revenues to come.

Disclosure: I do not own UPS or plan on purchasing a position in UPS

The Third WML Stock: The Southern Company

The Southern Company (SO) provides power to over 4.3 million customers. This makes it one of the largest electrical firms in the United States. It covers most of the deep south/gulf states. This hugeness though does not put it into the WML. It is put there because the good leadership qualities of Tom Fanning has pushed the electrical company from just providing power to a vibrant company that is looking into new energy sources. They have started a new nuclear power plant. When completed will provide so much cheap energy to the southern states. And hopefully will show that nuclear power is a viable option. They are the leading example of new energy right now. Southern Company has also strived to cut waste and pollution with technology. In al aspects they are leaders in changing the landscape of the electrical utilities.

The stock return has not been as spectacular as some returns but it makes it up with consistent growth and any declines made up with its dividend. It will also return consistent profits because every modern person uses electricity at some point. The states Southern operates in are growing and will therefore increase profits later. If the technological changes decrease costs for Southern, the returns will be enormous. The changes being implemented will work out because the leadership in the firms structure are pushing hard but not changing too slowly. They are keeping up with the new times, listening to customers to give them what they want. The government has approved the loan just a few days ago to build the new nuclear plant. Hopefully they can get it running quickly.

Southern Company changes with possible threats meeting them and going over the threats. They are not remaining stagnant in providing electricity but adding new technology and leading the way in new technology in utility companies. As Mr. Fanning continues his firm's direction and guidance I cannot see them failing. A good investment

Disclosure: I do not own any shares in SO. Nor do I plan on initiating a position.

The Second Stock in the WML Index: Eagle Bancorp, Inc

The second well run company is Eagle Bancorp (EGBN). It operates 16 branches in Maryland and Around Washington, D. C. The firm has performed well over the past few years going from the 8th largest bank in Maryland to the 2nd largest. It has increased revenue, earnings, and customers in the past few years. Management maintains an aggressive stance to fend off the threats of larger banks. They are beating the average operating margin and profit margin of their competitors and peers of publicly traded companies. The stock has returned 584.65% in the past five years. All point to really good management of the firm and caring about the investors. It has $2.9 billion in assets and $2.67 billion in loans. A good healthy margin for the bank and source of good income down the line. The firm remains competitive to its customers offering the latest services.

Ronald Paul the CEO has many years in regional banking and has steered the company in the right direction. Expanding the bank's reach and maintaining good margins. Their consistent growth and strong investor relations makes me put them second in the index. It is also fitting because America and the investor need banks to do business and this company will grow to support a very strong segment of America. Hopefully we see more exciting news from this company.

Disclosure: I do not own any shares of EGBN nor have I had any interaction with the bank. i do not plan on opening a position on the bank's stock

The First Stock in the WML Index: Macy's, Inc

When the average American thinks of Macy's they think of the Thanksgiving Day Parade and the enormous department store in New York City. What they need to think of is a strong management team fending off fierce online competition and a strong network of stores committed to customer service. Macy's is an aggressive company differentiating itself from other department stores. Recently it revamped its credit card accounts to better take care of the customers. It has priced products aggressively to get customers in and shopping. It has a superb management team that has many years in retail and constantly looking at the competitors. They have sales above $26 billion and are in a strong position against other department stores. The team has managed the recession well and have emerged stronger to face new challenges.

They have centralized control and are adding more fulfillment centers in stores. Cutting out districts and moving only to regions has reduced waste and will make Macy's a more competitive business against online retailers. The fulfillment centers will boost store sales while also getting the product quickly to the customer. It will open up ways to order from other stores quicker and seamlessly. Macy's making online business and retail stores stronger and more interconnected moves the company forward.

The head management are focusing on what the local customers want to buy and are delivering goods that meet local tastes. People on the Southern coastline do not have the same preferences as those in the mid west. Those customers will now get different goods and can order the other goods not found in their particular store. Also, many stores have a local shop that is connected to a local attraction. The Bowling Green, KY store has a Corvette shop with ties to the National Corvette Museum. It adds character. No other store has the same local shop and no other stores in the area have that shop.

Macy's balance sheet and numbers have looked spectacular over the past few years. The stock has returned  579.29% over the past five years. A wonderful return for any investor. The fundamentals look good with earnings growing over the past few years and revenue increasing. All signs to a well managed company.

Macy's deservedly gets the first pick as a well managed company. It is a bastion of retail and Americans love retail. With the management in place, Macy's will remain a strong pick from a managerial viewpoint. Things could change with the leadership or bad decisions could remove them from the index. Congratulations Macy's on gaining the coveted first spot.

Disclosure: I work at Macy's part-time but own no shares in the company and no one in my immediate family owns shares.

A New Stock Market Index: Wood Management Leadership Index

I want to start my own stock index to follow the 25-50 best leadership/management headed firms. It will be a huge project and probably take many weeks of intense study to finalize the companies. I will operate it with a set of rules and opinions. The rules being has to be publicly traded and a set of guidelines and factors that will separate one from another. It will be important to maintain objective standards to show that well run firms are better investment choices than poorly managed firms. This is just the beginning of the index so will take some time to formulate rules. My opinion on the company factors into the overall rankings and weight in the index. I don't think I want a price weighted average because price has nothing to do with the value of management but instead a function of earnings and shares available.

After picking a stock, I will then put some of the analysis on the blog for you to critique and you can see where I am coming form. Let's say I choose a stock a day to add to the index and analysis. Management is important to a business and can make or break the company as a whole. Let us go and find the best managed companies.

10.10 is a Terrible Idea for Business and Workers

The president and many of his supporters have raised the call to bump up the minimum wage 39% over the next few years. It has been touted as a way to release many people from the chains of poverty and boost income. Today though the CBO (congressional budget office) said that the increase could cost the economy around 500,000 jobs. Not a trivial amount and one that is definitely affecting those making minimum wage or just above it. Combined with the ObamaCare job loss and it looks pretty dire  for finding work. They also claim that it would raise 900,000 families out of poverty, good for them to get so many people out of poverty while destroying 500,000 jobs. Also, that only holds true if the poverty rate is not changed which it is changed with inflation or at anytime congress decides it is different. With more people making more money chasing the same amount of goods you can be certain that it will not lift anyone out of poverty but it sure will put 500,000 people out of work. Think about how many people were pulled out of poverty from the last wage hike. My guess is about zero, it could have been a few of course.

The administration claimed today that the CBO cannot always be trusted and they make mistakes. Sure the organization makes mistakes sometimes because after it makes recommendations the government sometimes changes policies. And not only that but the current administration held pretty tightly to those CBO numbers about the effects of ObamaCare and the deficit when they needed. This is a case of them playing politics and spinning a bad story for their plan.

Now, most economists agree that minimum wage hikes effect workers and cause some unemployment. It just has to based off of economic rules. The effect's magnitude is the thing in question among all but the most staunch liberal economists. It makes businesses hire few workers and instead buy machines that are now cheaper than labor. It makes firms decide to work and demand more from each individual worker. That's nice to now have to worker harder on those already struggling.

The last thing it will do is cause everyone else to demand a higher wage. Those making 10.10 now will not stand for soon making minimum wage. Instead they will also ask for a new higher wage line with the work they perform. Now we have just inflicted ourselves with higher inflation. The President's goal could be higher inflation to take away the debt burden but what he did was taking those who invested wisely and saved and destroyed that saved wealth so some people can win. I think strongly that the government should not interfere with who wins in the economy and who loses. Especially when it trashes the savings of one group to pay off another. It is shady and should not be done.

If the government passes the hike which it looks like it might. Companies that sell machines to perform tasks might be a good buy. Also, get ready for increased inflation and news of businesses laying off workers and small businesses perhaps closing because of the inability to pay the new higher wage. Mandates are rarely good because they do not take into account the changes in the organic economy and are blind to what might actually be happening.

Try to Stay Far Away from Malinvestment

As wise, smart investors we want to get great returns but sometimes investments promise great returns or show great returns than spectacularly collapse. Leaving you without that wealth and feeling burned from the market. So how as forward thinking investors do we avoid thew possibility of malinvestments. It is not simple because it is easy to fall in the trap and sometimes malinvestments are displaying results and activity of perfectly good investments. I will try to tell you a few ways to avoid malinvestments.

1. If someone is offering you a guaranteed rate of return is lying to you. There is no way that anyone can know the future and get the rate of return you can expect. That person selling you the investment is hiding something and probably something is very wrong. It should be a warning flag and alarm for any and all investors. Okay, that one is pretty common sense and should already be followed.
2. A broker offering you on the ground floor of an investment is probably a bad investment. The only way it got to you if you are a retail investor is if it stinks and no ones else was willing t touch it. Let some other sucker bite and lose money. There are better more stable investments around. Just remember for you to get in on the ground floor of an IPO it has to travel through all the banks, hedge funds, big time investors, and probably even more people. You are the last and the broker really needs to unload this investment onto you. If you are a wealthy trader already you might be able to ignore this message. 
3. Watch out for possible bubble assets. This are ones that very one has to buy, it's the next great thing, and you couldn't possibly lose money. You can and there is a big possibility you will lose money. This firms are ones that do not have much income, little business experience, and people are just focusing on the possibilities not on the actual results. The stock is already probably overvalued when you get in because it has no income and little prospects to make money. At least the money that would justify the value. Remember the dot com boom and subsequent bust. It happens all the time and you don't want to be on the wrong side of the trade. You as a retail investor must keep in mind that it will be arduous to beat the bubble before it pops. The information you have will less and later than the high power traders. 

I know this sounds unnerving and might think that stuffing the mattress is a better alternative to investing money. We must recall that investing is about risk and reward. Malinvestments have high risk and little reward which is why they are to be avoided. There are many good investments out there we maintain our diligence in looking for long term projects for money.  The best way to stay ahead and avoiding the terrible possibility of losing money is having a diversified portfolio that has some riskier assets and some stable assets. This way you hedge and always remain on top. Keep up the good investing and the good strategy and you will retire a wealthier person than a less attentive investor.

Non-Traditional Investments

Many people want to buy items that can be perceived as being investments for the future but not as traditional as stocks and bonds. These include artwork, cars, books, and rare coins. They certainly can be real investments that make money above the average. With artwork it could be you discovering the next Andy Warhol before he gets too famous. Anything is possible for these investments. The returns on some of them are spectacular.

One should tread lightly when deciding to have these as investments. Some never pick up the required steam, others might fall out of favor amount the cultural elite, and sometimes the economy dips and the buyers of these goods dry up before you can sell. This would be terrible if you have these as a significant part of your retirement plan. It could cut your retirement lifestyle which would be terrible for anyone. That is why with any investment, the person putting money in should always try to know everything there is and continue to expand their knowledge of that investment.

I have something else in mind though. Instead of thinking of these as investments and one to make money on later, I try to think of them as expressions of my likes or as trying to be more cultural. I do not see them as commodities that are bought and sold regularly. I view them as cultural icons that I either want to have or as something that matches the decor. Also, if I really liked the item I would not want to sell it later just because I am running low on cash. Keep them and enjoy them but view them not as investments. Just take the view that they are beautiful works of art that you want to enjoy in the private of your home.

The Day was Good

Janet Yellen had her first testimony today and to everyone's happiness said exactly what the markets wanted to hear. She is going to be another Bernanke and continue his policies. The markets love this because it means that she will support the markets and not change anything. It is better for the economy that she will be a continuer rather than a radical changer. Markets need stability and to have trust in the system for it to thrive. As long as she continues the same policy and the markets can trust her, it will be better overall. Of course she could have in mind keeping it the same for now and changing later. We should always be diligent in finding information and processing it. For now though the markets will celebrate the new Fed Chairman and the it will be a good time to invest.

Yellen will Speak, the World Will Shake

The stock markets today had a quiet day. Not much changed in the day because the market is holding its breath for what the new Fed Chairman will enact. Many traders mood for the trading day will depend on what Yellen has to say in her first speech as Fed Chairman. I can't really speculate ion what she will say, my guess it will be something encouraging about the US economy and that they will continue with the taper.

I want all of the quantitative easing (QE) to go away, it just creates a bubble and fake wealth. It also just gave most of the returns to extremely wealthy people who owned stocks. Everyone who owned stocks won out (which should be everybody) but most of the gains went to a few favored stockholders. Not what our government should be doing. I have no problem with them gaining more than others because the works is not fair but the government whose goal is to treat everyone equally should not say who makes money and who loses wealth. QE is also not necessary anymore the economy has recovered enough it is no longer the depths of the recession. It has been a long time from that it is time to not have the support of the government in the market.

Yellen still has a large amount of power over the markets because she controls the regulating system of the market. We as investors have to make decisions based off of current market conditions. I don't liked the idea of having one person controlling so much of the market's movements and possibly changing the value of a stock based off words. She does though and probably will continue to have that power. So hang on every word and parse through it. Good investment choices I'm sure abound in her words.

GoPRO, Go Invest

GoPro the thrill seekers favorite camera is going public. This is a great product and the company really focuses on the consumers wants and needs. The original reason for the camera was to film high risk activities so everyone can enjoy without having to participate in the risk. And it is awesome to see these videos. I personally don't like heights but with the GoPro's capabilities I can experience second hand and experience the wonders of the earth. Since not everyone can jump off cliffs, skyscrapers, and surf we can all now see what these people see. It satiates the desire to take risks and participate. The camera has also come to regular households and become extremely popular among non thrill seekers because the camera is small, takes great photos and HD video.

I believe that the company is well run its founder and CEO is young and wants to make a difference. He sees competition and meets threats inside and outside the company. GoPro was also profitable form the start. He is always looking for expansion. The company probably has big plans to expand and make new products with wanting to go with an IPO. I would say to keep looking at this company and try to invest at some point. Its got great potential and to keep expanding.

Always look for the next great thing and the thing that will rock the boat or shifting the paradigm. These are the best investments.

Bad Jobs Report and Microsoft's New CEO

The government's jobs report was way below expectations bad news in most situations. Yet the market seems to have not noticed. The DOW and S&P are both higher today. I guess this could be because of weather and the unemployment went down and beat expectations. We also got a revision upward of the jobs report in December. All of these probably are contributing to the higher market but normally two bad reports in a row would signal something worse. It seems that traders and investors have shrugged this information off. I am certainly fine with this information just not mattering. I still hold that many companies are worth more than their stock prices suggest but I might have traded more conservatively and watch my step with two months of poor job growth.

In other news, the new Microsoft CEO, Satya Nadella, wants to play offense and let Amazon be successful according to this Forbes article. I understand that the internet companies like working together, collaborating, and think everyone can win. We all win when we all work together yes but you have to focus on competition. If companies never focus on what others are doing then they lose sight of what is important and how to handle outside threats. What I see is a lazy company that thinks that they are so big they don't care about the little guy. I assure you though that companies that have this mindset are soon non existent companies because they do not keep up with changing ideas and let other firms steal market share. Microsoft's new CEO statement is troubling because his offense doesn't include focusing on adversaries.

He does want to be aggressive and beat Microsoft's opponents but not looking at them it will be hard to beat them. He might have just been saying this to perhaps relax the competing firms. Either way Nadella's viewpoint and direction matter for Microsoft and its investors. Be wary of any big changes in firms but this one might be very interesting with the direction he takes the company.

175,000 vs 189,000

The first of two jobs reports came out today and while it was lower than expected I blame poor weather  for the slight decrease in jobs estimate. The snow effects consumers spending habits and also makes it harder for people to get to jobs. Now if the jobs report on Friday is bad then we might have more serious problem. Especially consecutive poor reports.

I see no reason that this is a bad sign for the economy. A miss but not a big miss and certainly one that can be explained by natural factors that do not effect the overall economy in the long-term. This information has not changed my opinion of the market and the possibility of it going up this year. I will keep my bullish stance.

Jobs Report

This upcoming jobs report is very important. If the numbers look bad with unemployment then I might have to reconsider my bullish viewpoint on the market. If okay numbers or better than expected it will just reinforce my opinion on the bullishness of this market.

This is also a good lesson to learn as an investor. One who puts money into something must always be willing to take it out or add to the investment with changing information. Otherwise you are not being diligent with your investments which could turn out badly for your retirement fund. Changing opinions on new information is a key to successful investing, you cannot remain blinded to the fact that it was a great company last year and so will continue to be this year. Things are constantly changing and new information comes out that one has to incorporate into their strategy otherwise you will either miss out on big upswings or lose on downswings.

Let's see what happens with the new information tomorrow and put it into the overall analysis. Once it is in and processed we can go ahead and make decisions regarding investments.

Take Advantage

"And the best plan is, as the popular saying was, to profit by the folly of others." - Pliny the Elder

This statement shows that the best way to make money and profit is from other people's mistakes. Companies that succeed do this task extremely well knowing, finding the flaws in competitors and digging right into that weak spot. As an investor, you need to do this as well. Finding undervalued stocks is a key to long term profits. I try to stay away from companies that are highly favored in the market because they cannot always beat expectations or could quickly lose their spotlight. High focus and favor from investors also probably makes it overvalued because everyone wants shares and creates a bubble. Undervalued stocks are far away from a bubble and have room to move up in price.

Besides looking at undervalued stocks as other investors folly we can look at companies and parse through information to find the best firms that take this advice to heart. CEOs and management should be talking about their competition and how they are performing and fighting the competition at some point. Firms that never mention the competition might not realize the problems that could appear or not care about taking advantage of other competitors which is a warning signal for sure. Firms that take competition seriously are better choices for long-haul investments. They will take concerns seriously and want to be the best in the sector.

Take this proverb as advice in how to invest and also to compare companies. The best are looking for ways to crush rivals. They are also making sure that they have good defenses against advisories. Remember to keep thinking and studying investments.

Bad February…Not yet

Does the Dow dropping 2% and the S&P dropping 2.5% mean that we will have a terrible year? It could definitely mean that the market will not do as well as its fantastic last year. I believe that this market is just showing people being cautious in a new year with Fed tapering and skeptical of the market return from last year. The market's return last year was Dow gained 26.5% and the S&P returned 29.5%. Way above historical averages so it makes many investors hesitant about the next year and many think a bubble has formed. The market has several factors pushing it down, people taking profits, a new Fed Chairman, and a possible idea for a bubble. This year though is not 2008 or 1929.

So many companies had such a great fourth quarter/Christmas season. They beat expectations in earnings and returned high profits. A few big names with high bars on earnings fell flat but this was not due to poor economic conditions. It was mostly changing tastes, weather related, or poor execution. Companies sometimes do not do well in a quarter it does not mean that a bubble has formed in stock assets and everybody needs to convert to cash.

You can try and beat the market but I know I cannot beat the market so I remain in my positions and trust that the economy is strong. The economy collapses in a manner that all companies go under it won't really matter that much that you have cash because it would be worthless. Take head and do not get too caught up in the wildness and scare tactics of the market. Remain strong and stick to your investment plan that you know works.

The market I think will still be up this year or just slightly down. Companies are doing great and the economy is doing better. Although with stocks being down this week it would be a good time to get in to investments that might have been expensive last year or rearrange your portfolio to a new balance. Continue making wise investments, studying and choosing.