Don’t Time Market, Invest Steadily

November 30, 2008

With the New York Stock Exchange bouncing around 8000-9000, investors are getting weary and people are checking their 401k totals with  eyes barely open.  It really is a rough time for the economy and for anybody who has been semi invested in the stock market, a gain for the year usually isn’t the case.  For those that have the luxury of having extra cash available for trading, do not be scared to invest because you need to see these depressed prices as an opportunity to cash in on some oversold stocks.  Alcoa (AA) is at prices not seen since 1994.  Expedia (EXPE) is generally at an all time low since they IPO’ed in mid 2005.  And that trend is similar for many other companies regardless of industry or market capitalization.

Since no one has a crystal ball, make sure you invest in increments and do not sink all your money into the market at once.  The novice investor will get anxious and be worried about missing a big upturn by chasing after stocks.   For some people, it is psychologically easier to buy stocks when they’re going up instead of going down.  When the market does head lower (as we’ve seen in recent times) and you have no funds to trade with, then you really have handcuffed yourself.

My general rule:
Invest 25% (divided into as many companies as you like) of your money every time the NYSE drops 5%.  Therefore you know you’ll only spend all your money if the market drops a total of 20% at your first observation of the current market conditions.   This is a good way to hedge your investments so that you don’t try and “time the market.”  Timing the market is near impossible unless you can tell the future.  I can guarantee you’ll never invest all your money at the bottom of the market and sell all your investments at the market peak.  Therefore be conservative in your investments, do not let emotion sway your choices, and understand that when the market is dropping, it should be seen as an opportunity to buy stocks at prices that you were unable to purchase before.


Saving Money: Big Screen TV

November 29, 2008

The big ticket item this holiday season is a big screen TV. It is the perfect time to buy a new TV with a digital over-the-air TV tuner in anticipation of the February switch over from analog TV to digital TV. There should be many bargains to be found right before Christmas as retailers are struggling in this economy. Definitely shop around and do your homework when making your big decision, but there are some additional things you should think about.

Paying for your television does not stop after you leave the checkout line. You still need to pay for electricity, which will only get more expensive as time goes on. There are several ways to figure out the energy consumption of your television. There is the listed power consumption for the manufacturer, but how can you be sure that the actual power consumption will be the same. Most manufacturers overestimate the power consumption to err on the safe side. The actual power consumption may be quite a bit less. You can test the power consumption yourself with a handy power meter, such as P3’s Kill-A-Watt. Someone did this with their monitors and found some interesting results. For more televisions, CNet has a handy HDTV power consumption comparison chart. But for more recent televisions, Crutchfield tests the power consumption of televisions makes this available information on their website.


  • Replace CRT computer monitors with LCDs, since they use about half the power.
  • CRT computer monitors use about twice the power of CRT televisions.
  • CRT and LCDs use amount of power for the same sized for televisions.
  • Plasmas use about 3 times as much power as a LCD
  • Projection TVs, such as the Laser TV, use the least amount of power

Time to party like it’s 1997

November 20, 2008

The S&P index has gone back to 1997 values. Since Thanksgiving is next week, we should start thinking about what we are thankful for. What really matters in your life. Let’s try to find some happiness in investing. I know its there, we just have to look hard enough.

Federal Deposit Insurance Corporation (FDIC)

November 18, 2008

Recently the limits on insured amounts has changed from $100,000 to $250,000, but what is the FDIC and what does it mean to me?

After the stock market crash of 1929, people pulled their money out of the banks, because they had fears that their deposits would disappear along with the banks. The very act of pulling out the deposits puts the banks in jeopardy. In order to avoid this chicken and the egg dilemma, the government decided to insure bank deposits, so people would have faith that their money would not disappear if the banks disappeared.

FDIC Insurance

  • $250,000 in single accounts
  • $250,000 in joint accounts
  • $250,000 in retirement accounts

The insurance covers savings, checking, CDs and money market deposit accounts. It does not cover any risky investments like stocks, mutual funds and bonds.

Coverage is limited to $250,000 per depositor per bank. If you have less than $250,000 in combined your insured accounts at a bank, then you’re covered. If you have more than $250,000 in one bank, you might want to consider opening an account at another bank. If you have $500,000, you can put $250,000 in one bank and $250,000 in another and be fully insured. Married people have a bonus, because joint accounts are separately insured. A couple could have $1,000,000 insured at a single bank. $250,000 for each of their individual accounts and $250,000 each for a joint account. Certain retirement accounts are FDIC insured and they are also considered separate from individual and joint accounts, adding even more that could be possibly insured at a single bank.

I’ve heard if your bank disappears, you can recover the principal from the FDIC pretty quickly, but the interest takes longer to get. The best case scenario is to avoid a bank that is in danger of going under. Just like stocks, you need to diversify your banks.

Piracy and the Economy

November 16, 2008

Pirating may cause the Nintendo (NTDOY.PK) Wii to be in short supply for Europeans this year. This is not bootleg kind of piracy, but the kind where sailors board ships with guns in hand to hijack your ship. I’ve heard of piracy and kidnapping reports off the coast of Africa for a long time, but they haven’t taken center stage till the MV Faina was hijacked. The mass media and governments don’t mind when rich luxury yachts and ordinary cargo ships get hijacked, but the MV Faina was not any old cargo ship. It was loaded with tanks and ammunition for more killing in Sudan. NATO and Russia responded by spending more military ships to patrol the area, but as I’m writing this article, there was news of another hijacking. Even with all of our modern technology, the seas are still vast expanses of water. When I think of pirates, Spanish galleons filled with gold doubloons and talking parrots fill my head. Why are we hearing about pirates now?

According to the pirates, they were forced into piracy by illegal fishing. Some may think pirating is confined to Somali, because they lack a stable government, but there are also pirates in South East Asia. Their reason is also economic. Pirating is an easier way to make a living. As long as the is an incentive to pirate, there will be pirates.

Economic Impact

Shippers wishing to reach Europe from Asia are considering going pass the southern tip of Africa through the Cape of Good Hope instead of the Suez Canal to avoid pirates. This longer journey will add 3 weeks to the trip and increase the fuel surcharge. The increased patrolling will incur addition costs to NATO and Russia. Shippers are also equipping their vessels with additional anti-pirate equipment, such as security personnel and water hoses keep pirates from climbing on board.

I predict that in the near future, pirating will cease to be an important issue. As the economy is going south, it makes no sense to export goods halfway across the world. Then the pirates will have nothing to loot. Thus, the global financial crisis affects everyone.

BART Tickets Can Be Cheap

November 5, 2008

For the 365,000 people that use BART every weekday to work (and to travel through the Bay Area), BART tickets need to be bought.  For a trip from Hayward to San Francisco, you’re looking at a fare of $4.30 each way and it costs even more if a longer distance is traveled.  Buying a BART ticket is a necessity for BART travelers just like gas is a necessity for people who want to drive their car or motorcycle.  The trick I’ve found lately is that even though it’s something that everyone needs, everyone doesn’t need to pay full price.  Matter of fact, if you search on Craigslist, you will find many instances of BART tickets at 75-81% of the original value for sale.

I’ve recently bought many $48 BART tickets for $38 cash (79% of original value) and have easily found $64 BART tickets for $54 (84% of original value).  Of course, it also makes even more sense if you work/live in an area that is close proximity to where these tickets are being sold.  I work in the SF financial district where a lot of these tickets are usually offered.  It’s an even better deal when you can buy an allotment of 3-6 BART tickets at the same time and possibly offer to buy all of them at a further discounted price.

The question is “how can people sell BART tickets for less than the printed value of the ticket?”  The answer I’ve formulated is that a lot of companies in the bay area encourage their employees to use public transporation and offer them BART tickets or vouchers for BART tickets (probably with pre-tax money), and for whatever reason, these people end up driving anyway or do not use the entire allotment in a given time frame.  Therefore, they are left with an excess amount of BART tickets and would prefer to turn into the tickets into hard cash.  These people are looking to obtain cash to spend on other things instead of hoarding a surplus of BART tickets since they should still be receiving tickets or vouchers in the future through their work place.  Other people’s “loss” is your gain so take advantage of the people who want to exchange their BART tickets into cash and do you both a favor.  A golden opportunity for Bay Area Rapid Transit riders to get “free” money!!!!