Ubering Away

I recently took a trip to Seattle and started out using public transportation to get around. It was inadequate and took too long for my needs. I have heard much about Uber on the news and some good testimonials from friends in bigger cities. But could Uber be better than taking a taxi and cheaper. The answer from this small town kid is a resounding yes! Uber took two minutes to download and I was able to order my first car right away. I never had a problem finding a car or traveling to a destination. The cars were clean and the cost was cheaper than I expected. Uber has changed the way we get cars and the cost. I know that they have changed because taxis in Seattle were advertising that they also had an app to download. I didn't use the taxi  app so I do not know who it worked but why switch when Uber already made it simple.

Uber has also caused taxi medallion prices to fall as the New York Times reported, the cost of a taxi medallion fell 17% from the peak reached in 2013. If Uber were publicly traded I would probably want to invest as they expand and disrupt the current status quo. Google believes strongly in them and I might want to take a close look at investing in Google if they make more great investments like Uber.

It might be too late to make huge returns off Uber but what I need to do is search for another company that will disrupt an immovable landscape. I have my eye on a few companies but I'm afraid many are staying away from public trading. I hope that I will be have the foresight to see the next big company but it is doubtful.

Living Frugally and You Can Retire A Millionaire

The quickest way to become a millionaire is to get a high paying job and saving a portion of that income for retirement or future use. If you can't get the top jobs or create a start-up that can be sold then you can still become a millionaire it will just take more work. It is still possible as this story or this one and the most recent story of a gas station attendant who accumulated an eight million dollar fortune over his life can attest. We as humans are always so surprised when the person next door who lives prudently has more money than we do especially if their income is lower than ours. We wonder if they inherited it or they must have a second job. It really is most likely just a simple idea of saving money.

I'm fascinated with these stories because it shows that with patience and hard work you can move yourself from a lower class to a higher class. It does not happen for everybody yet it is attainable.
The media also likes these secret millionaires because we as consumers like to hear about them. It plays to our desires and wants.

All of these individuals have made good stock picks or investment choices. It was not by picking investments though that they were able to amass fortunes. The real change here is that with each increase in wealth they did not spend the new wealth but kept the same lifestyle. Not changing the lifestyle even if you could technically afford it means that you can use profits and the same money to grow your money even more. It is difficult to predict the future and to live frugally allows a person to accumulate wealth and be able to maintain the current lifestyle in case of job loss or other event. If each time you had new wealth and changed your lifestyle you would erase all the gains.

Living frugally is not the easiest choice and at times I do not take the frugal path. Yet if I want to amass a fortune too maybe I should start living more frugally and that should be a choice as wise investors also choose. It can be done and let's take the advice of their lives.

Oil still Struggling, NASDAQ to 5000

Oil fell down hard today after news of supply still overstocked. This was after a rise from the slump earlier this month. I still think that oil will go up in the long-run back to previous levels but it will be a volatile and rocky road there. I have enjoyed the cheap gasoline at the pump but know that it is a temporary price. A good move will be to take advantage of the cheaper gas now and invest in companies that have been hurt like Exxon and Chevron.

The NASDAQ is closing in on 5000 points around thirty points shy. It's very close to its all time high and one that has not been seen in fifteen years.  Apple has certainly carried it up to the heights it is at now. Once it passes this milestone again will it go up or will it scare investors that the market is overvalued. Earrings at record levels and good prospects on the economy this year point to a great sign that the markets will continue to go up and up. Companies are getting stronger and will attract people to invest in the market. I've invested in this market.

The Market Is Down Again

The market has had several days of losses. It has started high and then nosedived or just started down and never goes positive. This will scare many people from the market and could get people to stop investing or pul money out. This is the wrong strategy. Money should be going into stocks. They are still a great buy and certainly have room to go up even higher. Not only do third year terms for presidents always outperform the average but companies are still profitable.

Companies have changed their outlooks and some companies earnings have missed. Many companies are still strong though and will do really well once the oil is more stabilized and consumers have money to spend from saving at the fuel pump.

At this time I am still strongly a bull and believe the market will shake off these early year jitters. In full disclosure, the Christmas season was not as strong as I expected. It did not have the increase in December spending but a decrease. I cannot always be right but it does seem that consumers had money. The consumers did not spend their extra cash. I think they will spend it and some were probably waiting for the deals after Christmas.

Happy Investing in 2015 may it be profitable.

Is Telsa Now a Buy

Telsa looks like a good company. It has good, healthy growing sales. It makes batteries that last and make people want to drive a Tesla. It probably has plans to make more cars that are more accessible and different ideas to expand the idea. Elon Musk is a extraordinary CEO. He pushes new ideas and wants to change the world. He will change the world if the company continues letting him push ideas.

With the recent collapse in oil prices the stock has taken a hit in price but recovered slightly. I think it will continue to fluctuate with the price of oil for awhile but even with cheap oil as long as they design awesome cars people will buy them. this will create huge profits for the company and for the investors.

It is always a risk to invest in a company but Tesla is a good risk. It has a way to change the market and offers a super product that will bring value to everyone in the world. Investors might want to look at it to also receive some of the wealth that will be created.

Lending Club: Changing the Loan Game

I have been interested in Lending Club since 2010. I heard about it and at first dismissed it as just a blimp because the banks will come back and start lending again. It has stayed and has grown more than 100% in outstanding loans in the past year. That is huge for any lender to double the amount of loans on the books. It has done this with the appeal to investors looking for healthy returns and a good supply of worthy debtors. It requires both to succeed and it has them in droves. It makes it easy to get a loan and pay a reasonable rate. They will change the way people look to take out loans. I also see this as a way for millennial to invest more and expect healthier returns. Younger investors are hesitant to invest in the stock market but helping out a neighbor while earning a good return appeals immensely to my generation.

This is why I am going to say that The Lending Club is something that is worthy of investment. It has lots of room to grow and it will change the market for loans. As more hear about it more people will want to take advantage of these loans and the terms. They can feel better about the loans because most of the interest paid goes to an individual investor instead of a bank. People will be less likely to default knowing the disappointment that will come from default. There will always be defaulters but I  think fewer will default using this model and others might start using it too.

I am going to invest in Lending Club too. If the price is good tomorrow I will be there.

New Book I Started

I just started "Millennial Money" by O'Shaughnessy and am really liking the first two chapters. It's a good description so far of why young people need to invest early and often. It almost feels like an update and reimagining of "The Richest Man in Babylon." He has several of the same themes like pay yourself first but less stories and more hard facts on why it is critical for the future. 

Can't wait to read the next chapters and learn even more. I think this would be a great book for recent high school and college graduates. Our generation needs to get over the holding cash in savings accounts and buy actual investments that will grow and return over time. 

IBM and Apple Reported Today

And the two reports were vastly different in reactions and profitability. IBM lost about seven percent today and never recovered from their tumble this morning. Apple had a strong day and after their earnings report had a strong after hours movement up in price.

Investors did not like the report that IBM had an earnings miss and selling its chip business. It was probably good that IBM sold the chip business and can use those resources more efficiently. Any investor of IBM is hurting today. Although, I still think IBM is an okay investment, it will be steady and maybe they can reinvent themselves to be leaner. They are more attractive now at the lower price.

Apple had a very good earnings report with high margins as expected, huge numbers of iPhone sales, and less than stellar iPad sales. Apple has mountains of cash and will use the cash horde to buy other companies to increase revenue streams and continue to make great new products. Not everyone will work but some will become household staples.

Apple is more revolutionary than IBM and that is partly from the fact that Apple is a newer company and has created a culture of trying new things and pushing the boundaries. Now they make different products and only operate as competitors in a few places. It really depends if you as the investor think that Apple can continue to reinvent the wheel or if IBM can turnaround to become more nimble.

I would look at other tech firms than these two. Both are consistent and large. I'm searching for the next Apple.

The Market Will Fluctuate

That is the most important thing we should remember in this volatile time. Markets will always go up and down and sometimes it is nothing to panic about. Other times it is truly a bubble. This time is probably not a bubble or the start of another recession. Stocks are not crazy with valuation except a few which is always unavoidable. Earnings are expected to be less per share than forecast in the beginning of the year but that might be because of not buying back stock, commodity price differences, or the consumer is not spending as much but saving. The jobs numbers look okay, the Federal Reserve is still buying fewer bonds.

I think this has to do with some uneasiness about ISIS and ebola. It is also expected to happen when the Fed slows down bond buying and might get near to raising interest rates. All of these combined to create a high volume selloff but will probably just end up as smoke.

As long-term investors we cannot be skittish when the market goes down 10% just like we cannot be over jubilant when it goes up 10%. We know it goes up and down and we are riding the wave. We make big moves when the research says that is a good idea. Don't go out and sell everything today because it might go down some but I can almost guarantee that it will go back up. Not sure when but it will in the end. Stay the course and Happy Investing!

Take Advantage of Declines

Many investors have sold shares these past two weeks, either taking profits from highs or believing there is a bull market coming soon. The taking profits is understandable risking money you want some return and taking a little from the high point is very good. You can set it aside to have Christmas or renovate the house. Or take some profits and reinvest when the market has a pullback. It's almost what the people who sold because of a negative view of the market are doing. They are selling now and hopefully will buy shares back later for a lower price to make even more money. Those investors could also just have a short position out on stocks and will make money on the short. 

We as savvy investors know to take a little money when stocks reach the high point to either incest in something that can go up or sit on the sidelines to reinvest when stocks go back down. I don't believe in timing the market and this is not the same. This is being wise and making a real profit on a gain and then reinvesting it at a later date. As an investor I do not feel bad if I sell some of a stock to take some profits and it goes up because I should still have some money in said stock unless the company has changed policies or management that will negatively affect returns. 

So with this recent pullback, I am reinvesting money into the stock market I took out and putting more money in companies that have long term futures. Not every single one will last forever and some might even still have further room to go down but since research was a major factor in deciding which stocks to invest in, I am confidant that the choices will give healthy returns in the years to come. Do not be scared of a little pullback, take advantage of it. 

Long-Term Investing Choice: Real Estate

For real estate to pay off your time horizon needs to be in the decades. You could get really lucky and invest in a plot of land that quickly increases in value. Most though are long term plays and will return well if you are willing to wait. A plot of land to develop would be good especially if you can collect some rent on the land while waiting to develop to something bigger.

With increases in population and less land available per person, buying land in the right place will be great for your portfolio. If you have the cash to invest in property and land you should do it. If you do not have the cash to buy your own land it would not be a bad idea to invest in a REIT or form a group of investors among people you know to buy land and property.

With the choice of getting into real estate you also have to think about the side of real estate you want. Do you want apartment complexes or do you want to rent to business owners. Each can be profitable but come with their own challenges. Apartment renting has high turnover and will require costs to upkeep the places and work on each apartment. The positives are the chances that every building is empty is very low and you can change the price of rents quickly because of the high turnover.

Commercial real estate positives are high rents and low turnover. The business will be a constant source of income. Until it leaves then it would be harder to attract a new business and could sit empty for years until a new business is persuaded to move to your property.

Each type must be weighed with what you want property you want to handle. It is a smart idea for young investors with a long time horizon. Not just for older investors looking to diversify.

Up, Up, and Away

The S&P 500 is up again to record intraday highs today and even crossed 2000. It has since come down but looks to go over it again if information doesn't change the direction. This helps to confirm my thinking that the market was going to end higher this year and continue to go up maybe not much but still go up. I encourage all young people wanting to get in the market that they should get in now before it becomes even more expensive to join in.

Get in their find value and invest. These highs should not be too worrisome for everyone. Next year it might be different but some traders are even calling for 15-20 year long bull market and we are just in the first five years. Although world news and government policies change all the time which will distort  the market and change outcomes and directions. We as smart investors have to keep on top of all news so that we do not lose money. Passive management of money is not good.

Happy investing and happy making record highs today

Cutting Expenses at the Grocery Store

Being the smart saver and investor I am, I decided to do a little experiment to save money at the grocery store. I will hopefully be changing and continuing the experiment to get the best bang for the buck. And since I've saved so much at the grocery store I will then invest those savings.

I use to just go through the grocery and buy anything that caught my eye, spend on the fancy stuff just because I wanted it and it was something I needed, duh. Oh, wait most of the things I bought were not the best for the value and I did not use everything so wasteful as well.

So from now on, I will be buying more generic items unless the generic item is not up to par. You cannot sacrifice everything in life. Real Coke cannot be beat and KIng Arthur Flour blows away everyone else. But I think things like paper products, canned goods, and other choice items might be just as good and maybe the same people make both brands. Then it would be silly to not buy the cheaper brand. So far my experience contains only toilet paper and paper towels. Neither of which have done poorly but I will say the paper towels are little thiner but not terribly. They still get he job done with no change in amount of paper.

I want to hear your experience with generics and trying to save money at the grocery. Maybe your tip can save me money now and earn me money later. Happy investing.

Thoughts on Trading Exxon

Personally I think Exxon is a fantastic stock to invest in, solid earnings, revenue, and dividends. It is very attractive just from these simple measures of a company. It is also way undervalued in my opinion.  It trades at a measly 12.68 P/E ratio very low for its sector and for any stock. I would still buy it at 15 P/E ratio. Lots of room for upside and should go up as people realize that it is undervalued. It has a 19.67% return on equity compared to 13.98% for the S&P 500. It has a market capitalization of 424 billion but its revenue each year are 422 billion.

It provides a good that almost every human on the planet uses every single day in some way. And it is the top provider of that good. It might have some competition from alternative energy sources but I have faith in that management that they will move into other energy sectors and stay on top of their game. If not then the company deserves to be thrown under the bus and go the way of other companies unwilling to change.

I see Exxon trading at 125-130 very soon and it might even be this year. It should at least trade at that level if trends continue. And it would probably still be a great buy at 130. At 150 it is too expensive. So get out there and find an undervalued stock like Exxon and invest. Happy trading.

Disclosure: I have family members who own Exxon, I do not owen Exxon nor do I plan to open a position in Exxon.

Downsides to Day Trading

It is silly and irresponsible to day trade, there I said it. Now let me show you why it might have appeal and then I'll show you why it is stupid.

It has the glamour of being on Wall Street from the comfort of your home. The day trader can watch market news all day, read the latest rumors, and then decide to put money toward what he thinks the market will do on that information. It also has the potential to make a trader very wealthy in a very short time. And with little capital a bet could return 100s of percents in a few months. No other way to invest has that probability in actuality.

The above reasons almost make me want to gamble my own savings and investments to retire even earlier with large piles of cash made quickly and easily. It seems easy, people on tv and the internet talk about how the strategies work and are sure-fire ways to increase returns from small investments. The problems of course are many. One is the problem that lots of the returns are consumed from extra taxes and commission fees. The income is taxed at the ordinary income rate rather than capital gains. Let's say you trade 400 times a year at a cost of $8 a trade that is $3200 a year given to the brokerage house for the privilege to trade. 400 is a small number too because if you are day trading then you need to trade probably more than twice a day. Each trade decreases your actual return while making other people richer from your trades. Unless you have a large amount to big with to trade it is not worth it to day trade and give up such a large percentage in trading fees. Although the brokerage houses will want you to trade more and therefore will try and convince you otherwise. Do not fall into their trap, stay strong and stick with a buy-and-hold strategy. It will pay off in the long term with fewer fees and taxes.

With day trading, the trader has to know direction and timing of the stock. Its already hard to decide if a stock will go up or down based on all the factors that can move a stock and so it is extremely risky to day trade because you are taking on all the unknown factors. It can make you wealthy but I would not do it with any sizable portion of your money and I wouldn't bank on it for retirement. Way too dangerous for the long term and a trader shouldn't want to take on more risk than necessary to get a reasonable return.

Just stay away from day trading. Chose some good companies invest monthly in those and wait for the rewards to come. it might be a few years but they will be there.

Slow and Steady is a Must

Smart investors realize that you first have to pick a good company and I have several choices on how to pick bargains and stocks that will be lasting investments. Secondly and just as important you have to wait and hold on to the stocks you picked. Investing is rarely a win for investors with day trading, those people do that for a living and many lose lots of money but make the brokerage houses very wealthy. As the savvy investor you want to become take note that the huge returns from investing might not appear for 20-30 years. After that period of slow and steady investing all of a sudden you will say I made great investments, they have huge returns and I am making money for my retirement over what i could expect. Third it is also a good strategy for us investors to put in a set amount each month to the investments. This way it increases the pot that will grow and earn money. 

If you start with $10,000 in the nest egg and add $1500 each month for 30 years you will put in a total of $550,000 which is a great start to retirement. It gets better though, with interest earned at a reasonable 6% rate compounded monthly you would have $1 million in interest earned. That doubled the money the saver put in and the saver still has the original investment. That is a great way to have a nest egg. It might have taken a long time to build that up but its well worth it in the end and it's not unreasonable to save $1500 a month for someone making $50000-60000. Each dollar added increases the amount earned and it would be even better to save $2000-3000 a month.

Many of the great investors see the stock market as it is a generator of wealth but it can only do that function if it is allowed the time to work and transform the lowly investment into a fortune. As the young generation right now we can start saving and putting our money in wise places to build the wealth we will need and want for our future. Money just sitting idly because of being afraid for it will not return to what we need, it will lose money and won't be able to cover expenses or the things we would like to purchase. Let's be smart savers and place money in the proper place to work for us and not us working for the money. 

The Current Market Picture

The DOW and S&P 500 are near record highs which to lots of people get them nervous that a correction is coming or worse another recession. It was the same story though a few months ago before it hit these new record highs. I'm unconvinced that the market is about to take a large fall. I think the bears could make the market go down 5-6% until the end of the year but that is a small risk. In large part I think the bull still has room to move upwards. I think earnings might not be great this quarter but with more M&A activity and IPOs that the market will set new highs in the coming months. There is also an election during the mid-terms that will make politicians want the economy to grow. We could also stay at this level trading closely within a few hundred points in the DOW for the most part. For each outcome I would say 50% chance of going up, 35% chance of staying about even, and 15% chance of going down 5-6%. Geopolitical problems could increase or decrease the chances of the outcomes along with certain good/bad numbers coming out from the government at the end of the week. If employment continues going down the market I could only see going up in value.

So with these chances and possible outcomes, you the savvy investor should make plays and investment choices that reflect this outcome. You should have a few defensive stocks that will hold value in a small correction. Also it would be wise to hold a bond fund and some cash on hand to put into the market when some if the stocks become more attractive. Mostly with the chances though if you are in a bull market position I would not change much except too take a little profit now and if on the off chance it does go down you can reinvest and maybe even you got back your initial investment.

Managing a Paycheck

A key to creating wealth and to have a steady income is to manage your paycheck well. A graph, an Excel spreadsheet, or jotting it down on paper all make the same end goals. Putting your money in the correct place and not losing track of where the money goes. I'm afraid that too many people get a paycheck and see that as the amount they have to spend, then spend it all quickly and only have a little to get by until the next paycheck. Some have bills that eat up costs but others are simply buying unnecessary things. Then after the weekend they wonder where all the money has gone. It is as if they are afraid that money will disappear if they do not spend it in the next 24 hours. Well if they do spend it will be gone and they struggle making ends until the next paycheck.

Planning ahead with money, writing down where you spend and the amount, and then seeing how much is wasted can really help with saving money and not wasting money. Instead of spending money in trinkets put it toward a trip. There are tools out there to help manage the daily expenditures, find the one that suits you and use it. This way when you get that next raise you can better handle the extra money to save for retirement or just to spend more wisely.

Update on the WML

Sorry folks for never completing the 30 stocks in the WML index but I have been somewhat busy with a new job and just other things. Here though is an update on how well the index has done over the past 5 months.

If you invested in the five stocks I recommended and added to your portfolio you would be up around an average of 9.48% since the start if you had the same amount in each stock. While it might seem that I only had four stocks I'm going to count GoPro as one because I would have put it in the index earlier but it wasn't yet trading.

Hopefully I can add the other 25 or so stocks soon and of course share my reasoning of removing or adding stocks. I don't think I'll remove one of the five just yet.

Happy trading

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.