Links to Carnivals - December 28, 2009

PFStock.com participated in two blog Carnivals this week. Here are links to the Carnivals in which PFStock.com was mentioned for December 28, 2009:

My post about the account aggregation service, Yodlee, was mentioned in The Last Carnival of Personal Finance of the Year.

My post about dividends and ex-dividends was mentioned in the 173rd Edition of the Festival of Stocks. There appear to be two URLs for this carnival:

http://www.fatpitchfinancials.com/1842/173st-edition-of-the-festival-of-stocks
http://www.tradercurrencies.com/currency-trading/48287/173rd-edition-of-the-festival-of-stocks

Thanks to the bloggers who hosted these carnivals! Please check out the other interesting articles at these Carnivals.

PFS

About Dividends and ex-Dividends

One of my investment strategies is to buy companies that pay dividends (i.e. dividend paying stocks). In conjunction with my recent post about dividend yields, I want to also discuss the mechanics of dividends. Basically, stocks could be classified into two categories: those that pay dividends, and those that don't. A lot of smaller, growth companies do not pay a dividend. Companies are not required to pay dividends, and each dividend must be declared by the company (usually at a board of directors meeting) before it is paid. An example of a big company that does not pay a dividend is Berkshire Hathaway (NYSE: BRK-A and BRK-B).

In the United States, most companies that pay a regular dividend do so every quarter. There are exceptions, for example some companies pay their dividends only once or twice a year. When looking at a finance site such as Yahoo Finance, the dividend is listed with the company stock quote. I estimate that 95% of the time this data is correct. However, sometimes it is inaccurate or outdated, so it is a good idea to confirm this information with another source.

Typically, when dividends are announced, the company will usually issue a press release that says something like this:

The board of directors of Pfizer Inc (NYSE: PFE) today declared a 16-cent fourth-quarter 2009 dividend on the company’s common stock, payable December 1, 2009, to shareholders of record at the close of business on November 6, 2009.

Let's dissect this statement. For 2009, Pfizer (NYSE: PFE) paid dividends of 16 cents per quarter (equivalent to 64 cents for the year). The dividend was paid on December 1 to "shareholders of record" on November 6. In order to be a "shareholder of record" one has to own the stock 3 business days before the record date. In this case, that date is November 3. On November 4, the stock goes "ex-dividend". What that means is that if you buy the stock on November 4 or later, you are not entitled to this particular 16-cent dividend. The term "ex-" in this case means "without". So as of November 4, the stock trades without the current dividend.

A common question about dividends is "What happens if you sell the stock on November 4 or later, but before the December 1 date when dividends are paid?" In this case, you would be entitled to the dividend, even though you don't own the stock on the pay date. This has happened to me several times where I've received dividends on stock that I no longer own.

Another more involved question that people sometimes ask is "What if you bought the stock on November 3 and sold the stock on November 4. Does that qualify you as a "shareholder of record" for November 6?"

Looking at a calendar, if you buy the stock on Tuesday, November 3 (trade date), it will show up in your account on the morning of Friday, November 6 (settlement date). On the settlement date, the brokerage deducts cash from your sweep account in exchange for the stock. If you sell the stock on Wednesday, November 4, the sale will settle in your account on the following Monday, Nov 9.

In this example, you are the "shareholder of record" from the morning of Nov 6 until the morning of Nov 9. This sounds strange because you have already traded away the stock. Nevertheless, you "own" the stock at the close of business of Nov 6, so you are entitled to the dividend. Some investors actually use this method, which is known as a "dividend capture" strategy, to invest in stocks.

PFS

Dividend Yields

One of my investment strategies is to buy dividend-paying stocks. When making investment decisions on dividend-paying stocks, it is important to know what the dividend yield of the stock is. Basically, a dividend yield is the sum of the regular dividends that a company pays over the course of a year, divided by the current stock price. In the United States, most dividend-paying stocks pay out every three months (quarterly). In a previous post, I stated that Pfizer (NYSE: PFE) had a dividend yield of 3.64%. Currently, Pfizer pays 16 cents per share in quarterly dividends, for a total of 64 cents in dividends per year. At the time of my post, Pfizer was trading at 17.56. If you take the annual dividend divided by the price, you get 0.64/17.56 = 0.0364 or 3.64%.

When researching a stock at a financial website such as Yahoo Finance, the dividend and yield is listed with the company quote. I estimate that 95% of the time this number is correct. However, sometimes this number is inaccurate or outdated.

Another case where the dividend yield may be incorrect is when the company pays a one-time special dividend. This will make you believe that the dividend (and thus the yield) is greater than it really is. Unfortunately, it is not always obvious whether a dividend payment is a regular dividend or a special dividend. So be careful when looking only at the dividend yield statistic on financial sites.

While dividend yield is an important criteria used for selecting stocks worth buying, it is not the only criteria. Dividend yield is not the most important criteria either. In future posts, I will cover some of the other criteria that I use for selecting stocks to buy.

PFS

Yodlee: A Love/Hate Relationship

I have over 25 bank and brokerage accounts, and I use an account aggregation service called Yodlee to help keep track of them. Yodlee automatically polls different websites where you have online accounts. These accounts are then aggregated at the Yodlee MoneyCenter so that you can get a "big picture" look at your financial data. As someone with accounts at several different financial institutions and nearly 100 financial transactions a month, I find this type of service to be useful.

But over the years, I have developed a sort of a love/hate relationship with Yodlee because I have had various problems with the service. To be fair, many of the problems that I've had with Yodlee were temporary, and were more likely related to technical problems with the financial institutions' websites that Yodlee is trying to aggregate rather than with Yodlee itself. Several times a month, I receive an Email message with a subject like this: "Your Yodlee MoneyCenter Alert: Account Error".

In this example, Yodlee tells me that one or more accounts can't be updated because I have invalid login credentials (user name and/or password). However, I do not encounter any technical problems if I try to log into the financial institution's website manually, and the problem usually goes away by itself. I've found that oftentimes, Yodlee problems seem to clear up by themselves. Has anybody experienced similar technical problems with Yodlee?

Yodlee's customer service is fairly responsive. At one time, I even received a message from Yodlee's senior VP Peter Hazlehurst, who offered to help with my issues. Despite its problems, I consider Yodlee a necessary evil since I have so many accounts to keep track of. Although Yodlee is probably the best overall service to use for its intended purpose, I also keep a Microsoft Excel spreadsheet that tracks the balances of all my accounts. However, I only update that spreadsheet once or twice a year.

Here are some of the downsides to Yodlee's service that are worth pointing out:
1) Not all banks participate in Yodlee. About three or four of my accounts are not supported, and I would need to add and update them manually if I wanted to track them in Yodlee. According to Peter Hazlehurst, some credit unions use a technology called "CAPTCHA" which shows "squiggly" letters, and Yodlee doesn't support them. The term CAPTCHA is an acronym that means "Completely Automated Public Turing test to tell Computers and Humans Apart". I have no idea what a Turing test is.

2) Security and "Secure Sign On" concerns are valid points to consider. This is a question of risk versus reward, and should be up to the individual user. How comfortable are you with storing your personal information online with Yodlee? While Yodlee's security is probably very good, if their security was ever compromised, fixing the problem would be a massive headache for its numerous users.

3) From time to time, I notice that I am missing transactions, or get an incorrect balance in Yodlee. For example, Countrywide Bank was recently merged into Bank of America. As a result, the previous history with Countrywide was lost, and it looks like I got a big boost in my net worth when money magically appeared in my Bank of America accounts. This situation results in an inaccurate accounting of net worth, and it is frustrating since I have to make a mental note of which balances are incorrect.

4) Another extreme example relates to the conversion of Washington Mutual (WaMu) accounts to Chase. By contrast to the Bank of America case, I now have a history of duplicate transactions going all the way back to the beginning of 2008. If I follow it back, Yodlee thinks that at one point my balance was negative by about $60,000. (I hope not!) These transactions can be manually reconciled, but for me there would be over 500 records to go through.

5) In another case, I have a 401(k) account that is administer by JPMorgan. Earlier this year, this account stopped being supported by Yodlee. I believe this is due to something called Multi-factor Authentication (MFA) that JPMorgan has recently implemented. While MFA is meant to improve security, it also makes it impossible for this account to be aggregated. The balance shown for my account is frozen in time and does not update anymore. Again I could update the balance manually, but that would defeat the purpose of using an account aggregation service.

I will also mention two features that I do find very useful in Yodlee are alerts and auto-login. The alerts feature allow you to set alerts if, for example, your account balance drops below a certain amount, or a very large transaction is processed. This feature can help in the early detection of fraud. The other feature I like is auto-login where Yodlee can automatically log you in to some (but not all) accounts with the click of a button. You don't need to remember or type your password. This, of course, makes it all the more important that you keep your Yodlee password secure.

In spite of its problems, I consider Yodlee to be satisfactory for my purposes. While I still use an Excel spreadsheet to periodically get a complete picture of my finances, Yodlee is a quick way to check on my account balances. Note a shortcut to the Yodlee Money Center appears in my blog sidebar.

See Also: Mint.com Versus Yodlee

PFS

USB Flash Drive Freebies

I recently mentioned attending the San Francisco Hard Assets Conference, which was held last month. One of the highlights of this annual investment conference is that the exhibitors usually offer a variety of freebies to attendees. Over the years I've been able to snag several tote bags, caps, and keychains. I have one titanium keychain that was offered by a titanium mining company, and a few stuffed animals and toys that I've collected for my daughter.

But actually, the conference itself is not the topic of this post. A couple years back, I discovered a new trend in freebies. Some companies now offer free promotional USB flash drives. For those who are not familiar with the technology, a USB (Universal Serial Bus) flash drive is a portable computer memory that plugs into your computer's USB port and can be used like a miniature hard disk. While they were once a novelty among computer enthusiasts, nowadays USB Flash drives (also known as thumb drives) can often be purchased in the many commonplace stores, including drug and discount stores.

Anyway, conference exhibitors usually load up these USB flash drives with information about their companies: annual reports, company press releases, PowerPoint slides, etc. The casing of each USB flash memory is printed with the company logo and is given away to people willing to stop and talk at their booth. In general, a flash drive can be reused for storing pictures, MP3s, documents, etc. You only need to delete the existing data, or just re-format the drive to make room for your own files.

This year I obtained a couple of new USB flash drives: a 512MB drive from US Gold and a 256MB one from Minera Andes. Nowadays, even 512MB is considered to be a small flash drive, but what can you expect for free? Anyway, thanks to these companies for the freebies.

Does anybody else know of other companies offering free USB flash drives? I would appreciate it if you could share the information. And, if your company offers promotional flash drives, you may Email me (my Email address is in the sidebar) and I will mention it on my blog.

PFS

Links to Carnivals

PFStock.com participated in two blog Carnivals this week. Here are links to the Carnivals in which PFStock.com was mentioned for December 7, 2009:

Carnival of Money Stories #31

Festival of Stocks #170

Thanks go to the bloggers who host these carnivals.  Please check out the other interesting articles at these Carnivals.

PFS

Use It or Lose It

I have just completed my company's annual open enrollment. This is where employees have the opportunity to change medical or dental plans, and to opt into making contributions to a flexible spending account (FSA). In general, a flexible spending account allows one to contribute deposit pre-tax dollars into the account to pay for medical expenses, or to pay for dependent care. Note that these are two different types of accounts. The ability to use pre-tax money to pay for expenses is a good benefit that can save a lot of money.

However, one thing to keep in mind is that most flex spending accounts operate on a "use it or lose it" basis. This means that any balance you have in the account at the end of calendar year is forfeited to your employer. Since this is something that I would rather not do, I never leave any money on the table at the end of the year.

But in the current economy, I also want to warn my readers of one more potential hazard with FSAs. Having been downsized twice in the last decade, I can tell you that the "use it or lose it" provision also applies if you are terminated without cause (i.e., laid off). This may seem totally unfair, but that has been my real life experience.

PFS

How Banks Calculate APY

Have you ever wondered how banks calculate the annual percentage yield (APY) of a bank account? Suppose that an account pays 4.88% (nominal rate) compounded daily and yields 5.00% APY. (I know that this interest rate is not a realistic one these days, but it is used only for the purpose of illustrating my point.) The APY is the annual percentage yield, and is the best number to use when comparing rates from different banks. To calculate the APY from the nominal rate, you will need a scientific or financial calculator. A computer spreadsheet could be used instead of a calculator.

Warning: math is involved in the next section. In this example,

1) Enter the interest rate in decimal form: 0.0488
2) Divide the rate by 365 (number of days in a year)
3) Add 1 to the result
4) Then use the y^x key, and type 365 for the number of days.

You should end up with something that says 1.0500069.... The digits after the decimal point represent the APY. In this case, it is 5.00% APY.

Shortcut: In most cases, you can take the nominal interest rate: 0.0488, and hit the e^x key on your calculator to get 1.0500103.... This quickly approximates the APY, assuming that interest is compounded daily.

If you have an account that is compounded monthly, then replace the 365's above with 12 (number of months in a year). In this case, if interest were compounded monthly, then the APY would round off to 4.99% APY.

PFS

San Francisco Hard Assets 2009 Conference

This past weekend, I attended the Hard Assets 2009 Investment Conference in San Francisco. Once or twice a year, I make the trek from Silicon Valley to downtown San Francisco to attend either this conference or the San Francisco Money Show. These investment conferences are held each year at the downtown San Francisco Marriott Hotel.

Usually, the Hard Assets conference has a carnival-like atmosphere with subject matter that generally focuses on precious metals, mining, oil, and gas. Many of the exhibitors in the investment conference are foreign mining companies. These are largely listed on the Canadian stock exchanges, most notably the Toronto Stock Exchange (the TSX). For several years, many of the exhibitors touted penny stocks of questionable quality. There were a lot of dotcom exhibitors, and even mining companies that actually became dotcoms to feed off of the associated hype. This came at a time when the prices for gold, oil, and other commodities were depressed.

One would think that with gold prices near record highs, that the conference would be far more upbeat.  But,  the conference is definitely toned down compared to past years. The world economy in general decline has overshadowed the focus of the conference, and there was little to celebrate among the exhibitors.

Among the speakers at the conference, the flamboyant James Dines stands out among the crowd. Mr Dines has been touting something every year since about the late 1960s, whether it is gold, dotcom stocks, or uranium stocks. Mr. Dines is the publisher of The Dines Letter, and the author of the book Mass Psychology. While his booth is usually rimmed by half a dozen blond, blue-eyed assistant (i.e., bimbos), I counted at most two this time around, and didn't even see Mr. Dines there. So, if James Dines in cutting back, you know times must be tight.

pfstock

The Squirrels Club

I remember opening my first bank account when I was about 7 years old. It was at a bank called Glendale Federal Savings, at the corner of 25th Avenue and Geary Boulevard in San Francisco. They offered a special account for children called the Squirrels Club account. The club would send a newsletter every few months and gave me a bank for saving coins in. The newsletters featured squirrels as cartoon characters with the head squirrel named Filbert. The materials included games, puzzles, and tips on such things as saving money. The educational part of the newsletter would explain things like interest compounding. I believe that the Squirrels Club was run by an association of different savings and loans.

I was a Squirrels Club member until I was 12 years old. After that, my account was changed to a regular savings account. Looking back, I think that it is a pity that more banks don't offer this type of club for young savers. The educational material that they offered really formed the foundation of how I think about money today as an adult. Actually, the Squirrels Club still exists in a different incarnation. This was the only information that I could find on the Internet.

As far as Glendale Federal is concerned, it went through different incarnations in its history. I think that they changed the name once to West Coast Federal Savings, and then back to Glendale Federal. In the late 1990s, they advertised that as a small bank, they were able to give superior customer service. This was largely a true statement. That was before things started to change.

Glendale Federal was acquired by California Federal Savings which was for the most part acceptable. Then CalFed was finally bought by Citibank. So, what was to me a small bank with good customer service was replaced with one of the biggest, most impersonal banks in the country.

pfstock

Calculating Net Worth

I thought that calculating one's net worth would be pretty simple. Add up the value of your assets and subtract your liabilities (debts) to arrive at your net worth. Having looked through a few blogs, however, I see that the definition is neither simple nor consistent. I've seen one guy who has listed over $50k in automobiles and the value of jewelry as "assets". On the other hand, some people deliberately exclude things such as cars and other depreciable assets from the calculation.

I agree with the latter formula. I don't include what I would call non-financial assets as part of my net worth. I wouldn't consider stamp and coin collections, or jewelry to be financial assets. The reality is that while these items do have value, it is not as if I would be willing to sell any of them, or that I would rely on them for income. Similarly, I don't consider my primary residence an asset for the purpose of calculating net worth. In fact, I've seen a few questionnaires (that brokerage houses use to determine the suitability of certain investments) that specifically ask for net worth excluding one's primary residence.

Getting back to the question of net worth, I suppose that if one would exclude the value of their home from the calculation, then one could also exclude their primary mortgage (but not their second mortgage since that is not usually used to finance the house, but to buy other consumer items instead) from their liabilities. Why do people try to inflate their net worth by including miscellaneous non-financial assets? My guess is that is like the game people play with inflating their resumes when applying for a job. You may be able to fool other people into thinking that your net worth is more than it is, but just be certain you aren't just fooling yourself.

pfstock

Wealth According to The Millionaire Next Door

To answer the question of whether one is wealthy, I will take a quote from The Millionaire Next Door, by Thomas Stanley and William Danko, which I read several years ago. I consider this book to be a classic. Here, the authors discuss what one's expected net worth should be at any given point in life.

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

To give an example, suppose one is 45 years old and makes $100,000 per year. Then, by the above formula, one's expected net worth is $450,000. The authors then go on to describe the wealthy (prodigious accumulators of wealth, PAWs) as those who have at least double this expected net worth based on age and income. Conversely, one who has accumulated less than half of their expected net worth is known as an under accumulator of wealth, or UAW. (I have always found it peculiar that this acronym is the same as the one used by the United Auto Workers union, but that is another story.)

In any case, the suggestion by the two authors is a broad rule of thumb. I would caution one against putting too much weight into the usefulness of a rule of thumb. Nevertheless, armed with this knowledge, you can at least have a rough idea of where you stand with regard to what your savings should be at any point in time.

pfstock

Stock Pick: Pfizer (PFE)

I'm ready to make the first stock pick on my blog. I am now recommending Pfizer Inc. (NYSE: PFE) for purchase. This pharmaceutical giant is a member of both the Standard and Poors 500 index, and the Dow Jones Industrial Average (DJIA). Pfizer is one of the largest makers of prescription drugs.

This stock closed on Tuesday at $17.56. Pfizer's stock price has been trading in a range in between $11-$19. However, PFE has recently begun upward price movement, with Friday's close being a new 52-week high. My opinion is that Pfizer (and several other large pharmaceutical makers) are coming off of a period of depressed stock valuation.

I have picked Pfizer because it satisfies the following criteria:

• Profitable for the last 3 years, and consistently profitable for several years (Source: S&P Stock Reports): In general, I will not recommend an unprofitable company for purchase.
• Current dividend yield of 3.64%: I like to know that if the stock price stagnates, that I will still receive some income for having my money tied up.
• Large capitalization stock: PFE has a market capitalization of over $140 billion. As a general rule, large companies are less volatile than smaller ones.

There you have it, my first stock pick.

pfstock

Citibank Dividend MasterCard

One of the credit cards that I carry is called the Citi Dividend MasterCard. The feature that I like most about it is that I get 2% cash back for purchases at supermarkets, drug stores, gas stations, convenience stores and utilities on this card. They call these "everyday" purchases.

The way that this credit card works, one accumulates Dividend Dollars for the above mentioned "everyday" purchases. For all other purchases, a 1% cash reward is earned. Whenever $50 or more is accumulated, I can request a check from Citibank. They will pay out the entire balance, not just the minimum amount of $50. Believe me, this is a lot less hassle than a lot of the other rewards cards. In many other cases, I've found myself browsing through reward catalogs to find something that I had enough points for, and that I really wanted to get. Also, the Citi Dividend credit card is not a tiered award where you have to spend a certain amount (usually a few thousand dollars) before you qualify to get the maximum rate.

These days, I don't really have any better alternative card to use at the time. The 2% rebate is a lot better than most of my other credit cards which pay nothing. I would be interested, though, to see if another better offer will come along.

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Disclaimer

Before I get too far along here, I thought that I would write a disclaimer.

First of all, this is a personal blog, and I am not a financial advisor. The material provided by PFStock is for general information only. This information is not intended as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Readers should not assume that any recommendations made by PFStock will be profitable.

In other words, if you invest in something that I've mentioned here and lose money, then I'm sorry that this has happened, but I can't accept responsibility for your loss. On the other hand, if you do the opposite of what I've suggested and lose money, then I would say that I told you so.

In addition, I may sometimes mention investments in money market funds or in mutual funds. An investment in these types of funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Regardless of how safe these investments may seem, it is still possible to lose money by investing in them. So, don't bombard me with irate Emails if you do.

Lastly, readers accept responsibility for their own investment research, due diligence and decision making. All investments involve risks and are not guaranteed. You may wish to seek the advice of a professional before investing.

Copyright © 2009 pfstock

About Me

I think that it is fair to give some background about myself. I want to give readers an idea of where I am coming from. I am a 40-something engineer working in Silicon Valley (California). I started saving for my future shortly after finishing graduate school. My main focus then was getting the best savings rates from my bank. Even the concepts of 401(k) plans and mutual funds were something completely new to me. I did become seriously interested in investing a little less than 10 years ago. Like many people, I got caught up in the technology stock craze of the late 1990s. Working in the high-tech industry also fueled my interest in these stocks. I rode a few of these stocks down in the early 2000s. And, I would say that my portfolio hit bottom in 2002. Coincidentally, I was also subjected to downsizing not once, but twice, in the past five years. Any employee stock options that I had were essentially worthless at the time.

But, I have been resilient. Each time that I got knocked over, I have gotten right back up and redoubled my resolve to succeed. Since 2002, I have rebuilt my investment portfolio. Although I actually own fewer stocks nowadays, I am better diversified across industry groups. The economy has its ups and downs, and I've learned not to get too overconfident. I am always planning for the worst while hoping for the best.

On a personal level, I have been happily married for over eight years. My wife and I have one child. Recently, I have noticed a prevalence of "under 30" personal finance blogs on the Internet. I am no longer qualified to be in the under 30 crowd. Nevertheless, I hope that the under 30 bloggers would look to me for advice from someone who is only older. My blog hopes to share my experiences with others. On the other hand, I also hope to learn from those who have more experience than I do.

pfstock

Welcome!

Welcome to PFStock, a personal finance and stock investing blog. It seems that financial blogs are roughly divided into three groups. These groups are personal finance, real estate, and investing blogs. I am interested in personal finance and investing, but not so much in real estate. I've decided to make my blog a combination of a personal finance and stock investing blog. Thus, I've decided to call my blog PFStock.

In the area of personal finance, I am interested in saving money, banking, credit cards, and basically getting the best deals that you can out of banks and credit card companies. In the area of investing, I am mostly concerned with stocks, but I am also interested in discussing retirement plans, mutual funds, ETFs, IPOs, brokerages, and general investment strategies.

I've spent some time now perusing other personal finance blogs. There certainly is a great variety of them. I do not intend my blog to become a diary of my daily financial transactions. I am skeptical that anyone would want to delve into the detailed minutiae of how I spent every last penny over the weekend. Although some personal finance blogs do, I do not intend to disclose my net worth or list out my entire investment portfolio here.

Also, I can't promise you that I will have something new everyday. In fact, I am skeptical of people who always have something new to say. This is the case with financial writers who are obligated to either report news, or otherwise fill up space when there isn't anything newsworthy to report. The financial markets simply don't work that way. I can go for months without making a single trade or altering my portfolio (buy-and-hold), and then later go through a period where I'll make several stock trades in a week. Besides that, I have a regular job to hold down, and might not be able to write something everyday.

So, as I embark upon creating my new blog, I look forward to sharing my experiences and ideas.

MarketClub Pays for Itself

A couple months ago, I mentioned that I signed up for a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying a stock.

The stock that I was interested in buying was Bare Escentuals (Nasdaq: BARE). Readers of this blog may remember that I first purchased shares of this stock during the Bare Escentuals IPO. I sold that stock a while ago. But with the stock market recovering, I have been looking for individual stocks that I can get back into. I used MarketClub to get an instant analysis, and the results are shown below.


This analysis shows that Bare Escentuals is now in a strong uptrend, and that this is an ideal time to buy the stock. This type of analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, I bought some shares of BARE at $9.25 per share at the beginning of August. It recently closed above $11 a share.

Based on the number of shares that I purchased, I have already made more money that what the MarketClub subscription costs for one year. Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy. I now have a stop order in place to help protect my gains.

Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.

You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?



Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.

The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.

PF Stock

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Update On My Free HDTV

Last month, I wrote a post about a bank offering a free HDTV or a mini Camcorder for opening a new CD account. Specifically, the offer was made by Irwin Union Bank to customers who open an 11-month CD with a minimum deposit of $20,000. After funding their account, a depositor would receive a Sharp or LG 22 inch HD LCD TV or a Flip MinoHD Mini Camcorder within 30 days. I took Irwin Union Bank up on their offer, and opened a new CD account. It has been about a month since I opened my account, and I just received my HDTV.

About a week ago, the bank sent me an Email that saying that the manufacturer had run out of 22" TV sets, and that I would receive a Toshiba model 22AV600U instead. The TV itself is the first HDTV that I've owned, and the picture is quite sharp compared to our old tube TVs. The new TV includes a built-in NTSC/ATSC/clear QAM tuner that can tune into both broadcast TV and cable. (It is an unadvertised fact that cable subscribers who have a clear QAM tuner can often receive unencrypted HD cable TV, without adding "digital" cable to their service.)

A new 22 inch TV set retails for about $250-300, so it is a generous gift considering how stingy banks are with interest rates these days. This offer was scheduled to end on August 31, but it seems that Irwin decided to end the promotion early, as I can no longer find the offer on their website. Readers who are still interested in the TV or Flip Mino might try calling the bank directly. It can't hurt to ask.

The bank informed me that they will report the value of the free gift ($280) to the IRS (on a 1099 form), so the "free" TV will probably end up costing around $100 in taxes. I thought that the days of banks offering a TV set to new customers was a thing of the past. Has anybody else taken Irwin Union Bank up on this offer? If so, could you share your experiences here?

DC

Free Stock Market Analysis

A while back I signed up for a useful stock analysis service called MarketClub. It is part of a website called INO.com, where you can research stocks, futures, or forex products.

I recently asked for an instant analysis of INTC (Intel Corporation), and got this graph from MarketClub:


Their analysis is called a Trade Triangle. It shows that Intel is now in a strong uptrend, and it is an ideal time to buy. This analysis is great for traders who like the "red-light, green-light" simplicity of investing.

For investors who are following a large number of stock symbols, MarketClub sends a daily Email for every symbol in your portfolio. But staying on top of the changes and momentum shifts often becomes overwhelming, especially if you’re watching a large number of symbols and open positions, like me.

Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing.

The link above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. They also cover Forex symbols (e.g., you can enter EURUSD as a symbol). And, here is a great website that allows you to compare Forex brokers. After signing up, you can easily add more symbols to get a daily update, which I find very helpful.

PF Stock

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Rescan Your DTV tuner

Did any of your local TV stations disappear last night? Officially, all regular television stations in the United States stopped broadcasting analog TV signals and switched exclusively to digital broadcasting as of yesterday, June 12th. Because some digital stations have moved to different channel numbers, everybody should re-scan their DTV tuners to ensure that you will receive all of the digital stations broadcasting in your area. This is usually a straightforward procedure.

My DTV converter box is an Insignia NS-DXA1-APT, but it is very similar to the Insignia NS-DXA1 as well as the Zenith DTT901 and DTT900 models. On these models, I push the Menu button on the remote control to get into the setup menu. From there I would select either Auto Tuning, or EZ Add, and follow the on-screen directions to scan for new channels. If you have any difficulty doing this on your DTV converter, then you should consult the manual that came with your DTV box.

For some background information, the switch to digital TV is not as simple as just turning off analog TV broadcasts. Until June 12, 2009, TV broadcasts were received on channels 2-69. After the digital transition is complete channels 52-69 will be reallocated for other uses. In Silicon Valley, where I live, the digital TV station KTEH is on channel 54-1. KTEH is really broadcast on digital channel 50, but shows up as 54-1 through a process known as virtual channel numbering. The analog channel 54 will disappear after the DTV transition.

In the San Francisco Bay Area, KGO broadcasts analog TV on channel 7, and digital TV on channel 24. After switching off the analog channel, they will return the digital broadcast to channel 7. More complex is the case of KTVU which broadcasts analog on Channel 2, and digital on channel 56. After the switch off, they will broadcast on channel 44. However until June 12th, Channel 44 was used by KBCW (the old KBHK). For obvious reasons KBCW needs to shutdown their analog transmitter before KTVU can take over this channel. Is this confusing enough for you?

In addition to my DTV converter box, I also bought a DVD/VCR recorder with a built-in digital tuner. If I use an antenna with this device, I will also have to rescan the channels to receive over-the-air (OTA) TV broadcasts.

DC

Diapers.com Coupon Code

Elias over at Finance Puzzle has recently had a baby. In one of his posts, he mentioned saving $10 when buying diapers from Diapers.com. He used a promotional discount coupon code: drybb.

The promo code (drybb) is good for $10 off of your first order from Diapers.com. In addition, they offer free shipping with a purchase of $49 or more. Although they are best known for diapers, Diapers.com also sells other baby products such as wipes, clothes, toys, books, car seats, strollers, etc.

Diapers.com’s claim to fame is fast shipping. Based on what other people have said, delivery usually takes about 1-2 days. In some cases orders are delivered in less than 24 hours.

Anyway, I thought that I would pass along this information to my blog readers in hopes that it can save you some money. If readers know of other helpful discount codes, please let me know.

DC

Determined Californians!

I have mentioned the Retire Early Home Page Discussion Board as being a resource for those interested in early retirement. Topics on this board range from starting to save for retirement to leisure activities after retirement. Some posts seek investment or retirement advice from other readers. One post in particular has stuck in my mind over the years. This post titled "Early Retirement Plan needs investment advice" was written on August 12, 2005:

We have a very serious plan to retire in 3 years (2008) and need advice on investing the lump sum Capital Gains from our properties.

Our plan is to have a total of 10 rentals by the end of this year. So far we have 5 and buying homes very aggressively to achieve this goal by the end of this year. We are breaking even after renting each home. I figure that by the end of 3 years, assuming they all appreciate at the current rate of 30% we will have $2.7M in equity.

After 2008 the Capital Gains tax reverts back to 28%. We want to sell all our properties in 2008 pay the taxes at the 15% capital gains rate and start our retirement. Our thought is that we live off the interest for a long period of time.

I will be 45 and my husband will be 38. This will be a huge accomplishment if this happens and we’re working very hard at it.

I have read many books, articles and logged on to many websites. I still have a long ways to go on educating myself in the investment arena.

What suggestions do you have for rookies like us in putting our money is a safe but of course high interest account to allow us to live off the interest?

We have a combined total of $35,000 in our 401K, both currently work making a combined income of $170,000/yr and have no other investments besides our rental properties. After our planned retirement, our expenses would be $70,000/year to live comfortably, after paying off our main residence.

Determined Californians

This post was written by shelnbud, and is the only post that this author ever posted on the Retire Early forum. Replies to this post from other members of the message board were critical of the lack of diversification in the author's "retirement plan". I don't think I need to add my own commentary since the post itself speaks volumes...

DC

Early Retirement Revisited

I haven't written about early retirement in awhile. So, let me first reiterate what I think are the three common rules among those who have retired early:
1) Living below your means (LBYM).
2) Maintaining a diversified investment portfolio on which to draw from.
3) Using a conservative 4% rule of thumb as a baseline for withdrawing from your retirement savings.

In my previous posts on PFStock, I have mentioned Billy and Akaisha Kaderli. This couple retired in their late 30s, and claim to live off of $24,000 per year. In my communications with the Kaderlis I have determined that they live in what is commonly known as a mobile home. When I asked my readers if they thought that they could live off of $24k a year, or retire to a mobile home, I did not get an overwhelming response. So, one could say that early retirees are often willing to do what most people are not.

I recently came across a blog that purports to be be about early retirement. But, the author is not actually retired, and the blog really focuses on an extreme version of what is known as "voluntary simplicity". Some suggestions mentioned in this blog are turn down the heat to 55F, stop drinking milk, and reuse gift wrap. This got me thinking that practically anyone could claim "retirement" by reducing their consumption to a very small fraction of their net worth. The real question then is "would you be willing to reduce your consumption to this level?"

Along these same lines is the book Your Money or your Life (YMOYL) written by Joe Dominguez and Vicki Robin. I read YMOYL a while back. While there certainly is a lot of good information in this book, some of the suggestions may be equally unappealing to many people.

The authors of YMOYL encourage the reader to thoroughly evaluate the value of each item they have, and track every last penny that comes into or out of your life. This is an activity that I personally frown upon, as I don't think that people should obsess about the minute details of every financial transactions.

YMOYL also advises investing virtually all of your money in US government bonds. I think that a more diversified investment portfolio of both stocks and bonds is a far more prudent choice. A portfolio made up of purely bonds violates rule #2, above. Also, as a historical note, Joe Dominguez died of cancer at age 58. And, this always left me with an uneasy feeling that the lifestyle he advocated in YMOYL may have contributed to his early demise.

In any case, I don't think that early retirement should be solely about depriving oneself to reach these goals. I will not tell you to give up eating meat, drinking milk, or buying your favorite latte drinks at Starbucks. Regardless, I think that everybody can make small steps that will bring an early retirement closer to reality.

Today, I will leave you with a quote from Robert Frost:

Never ask of money spent
Where the spender thinks it went.
Nobody was ever meant
To remember or invent
What he did with every cent.

DC

Digital TV Delay

It looks like Congress has agreed to postpone the switch off date for analog TV from February 17th until June 12th, 2009. Unless you've been living in a cave, you would know that is the date when all regular television stations in the United States will stop broadcasting analog TV signals and switch exclusively to digital broadcasting. Presumably this nearly four month delay is meant to reduce confusion whenever the digital switchover occurs. But the truth is that there will be confusion regardless of when the switch is made.

Just look at the current wording on the FCC website about when exactly the transition to digital-only TV will be:

On Feb. 17, some full-power broadcast television stations in the United States may stop broadcasting on analog airwaves and begin broadcasting only in digital. The remaining stations may stop broadcasting analog sometime between March 14 and June 12.

That sounds pretty wishy-washy to me... If I interpret this correctly, even the folks over at the FCC don't have a clue when the transistion date is going to be.

The switch to digital TV is not as simple as just turning off analog TV broadcasts. Currently, TV broadcasts are received on channels 2-69. After the digital transition is complete channels 52-69 will be reallocated for other uses. In Silicon Valley, where I live, the digital TV station KTEH is on channel 54-1. KTEH is really broadcast on digital channel 50, but shows up as 54-1 through a process known as virtual channel numbering. The analog channel 54 will disappear after the DTV transition.

In the San Francisco Bay Area, KGO broadcasts analog on channel 7, and digital on channel 24. After switching off the analog channel, they will return the digital broadcast to channel 7. More complex is the case of KTVU which broadcasts analog on Channel 2, and digital on channel 56. After the switch off, they will broadcast on channel 44. Channel 44 is currently used by KBCW (the old KBHK). For obvious reasons KBCW needs to shutdown their analog transmitter before KTVU can take over this channel. So, is this confusing enough for you?

If you own a DTV tuner, what this means is that you may need to re-scan for channels after the switchover. I used to tell people that you could do that on February 18th, but now you'll have to wait until June 13th to be safe. I do own a DTV converter box, but I also bought a DVD/VCR recorder with a built-in digital tuner. I guess that I will have to rescan the channels sometime (as according to the FCC) possibly between March 14th and June 12th. But, it seems that the FCC who has the last word on these matters, aren't themselves sure of the exact date.

DC

Microsoft Money 2009

Around this time of year, I start looking for the new version of Microsoft Money. Last year, I bought Microsoft Money Plus (2008) at the same time that bought my tax preparation software. But to tell the truth, I still have not installed MS Money Plus yet because some reviews I've read indicated that there were only minor changes from Money 2007. Anyway after searching a few stores, I came to the following conclusion: There is no Microsoft Money 2009.

How can that be? Doesn't Microsoft release a new version of their Money software each year? After some digging around, I found my answer in one of the Microsoft community discussion groups:

Microsoft Money Plus continues to be a valuable tool for our customers; however the feedback we are hearing is that the incremental updates to the software don't merit a new product every year. Given this, we have decided against releasing a 2009 version of Money Plus.

We are moving off of an annual release cycle for Microsoft Money Plus (no Money 2009 version in the fall), with future release dates TBD. Money Plus continues to be a valuable tool for our customers, however the feedback we are hearing loud and clear is that, after 17 years in the market, the incremental updates to the software don't merit a new product release every year. Given this, we have decided against releasing a 2009 version of Money Plus.

I guess that what I said was true: there are only minor changes in the yearly updates to MS Money. So Microsoft made the decision to not update MS Money for 2009. There is a new version of Quicken 2009, though. I might consider getting that.

See also: Microsoft Money to be Discontinued

DC