Where You Live Correlates to a 20% Investment Bias

June 27, 2015

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If you live on the West Coast, near the technology hubs of Silicon Valley, you are very likely to be overweighted in technology by 9.5 percent or so. Live in the Northeast, and you are overexposed to finance by 9 percent. Investors in the industrial Midwest are likely to have 11.8 percent more industrial companies in their portfolio than the rest of the country. The greatest overexposure is in the South, where energy holdings are 13.7 percent above the average.

Some of this overweight might be due to employee stock option plans. After all, Google’s founders, and most of its employees, live in or around Mountain View, California. Their portfolios are likely to be filled with Google shares and/or options. The same is true for JPMorgan and Goldman Sachs in New York and Boston, Exxon Mobil in Texas, and 3M in Minnesota.

Read More: Your Local Investing Bias Could Cost You –bv


Cashing in on the Digital TV switchover

April 6, 2008

For more information visit www.dtv.gov.

If you haven’t been watching TV, you may not know about the digital TV switchover. If you have been watching TV, you may still not know what the digital switch over is or why it is important. On February 19, 2009 TV stations will longer broadcast analog TV, which people have been using these last decades. All the TV stations will switch to digital broadcasting.

The previous standard NTSC is capable of 1525 lines at 29.97 frames per second, while the new standard, ATSC is capable of up to 1080 lines at 60 frames per second. This means the pictures are more detailed with more fluid motion. Also, the information is digitally encoded, so you’re either going to see a clear picture or no picture at all if you can’t get a signal. Fortunately this means that most of us will get a clear picture. I have personally bought a TV converter box and it is definitely an improvement. You may also ask why 29.97 frames per second. The answer is because they didn’t know about color when they made the standard. Television has been long overdue for an update.

Where do I get a digital converter box?

You can get a digital converter box for your old TV at any electronics store, but you should take advantage of a government program that provides $40 vouchers for converter boxes. I was surprised when the BestBuy (BBY) employee there asked me where I got my coupon. She asked for the website, but I did not know it off hand. My receipt however had the website printed on it. You can get up to 2 coupons per household at www.dtv2009.gov. The converter box I purchased was $60, so it was $20 + tax out of pocket expense.

What is spectrum?

Electromagnetic waves come in many frequencies ranging from gamma rays to radio waves with visible light (red, orange, yellow, green, blue, indigo, violet aka ROYGBIV) sitting in the middle. The government regulates and licenses certain ranges of frequencies, so you don’t have different people interfering with each other. Since the analog television frequency band is no longer in use, the government auctioned it off with Verizon Wireless (VZ) and AT&T (T) among the winning bidders. One use of the extra bandwidth is to provide more wireless data services, which has also garnered the interest of Google (GOOG). This will advance the trend of mobile devices using more data services like the iPhone from Apple (AAPL).

How do I invest in the digital TV switchover?

Instead of buying a converter box, a significant amount of people will finally make the switch by buying a new HDTV. Television manufacturers are sure to sell many new televisions in the near future. A quick look at BestBuy and you’ll see television sets from Sony (SNE), Samsung (005930.KS, 005935.KS), Sharp (SHCAY.PK), LG (LPL), Insignia and others. All of these different HDTVs share some common components such as the digital TV tuner and decoder chips from Microtune (TUNE), Texas Instruments (TXN), Maxim Integrated (MXIM.PK) and Analog (ADI). Looking at a technological standpoint, Texas Instruments also provides its DLP technology in affordable rear projection screens and high end digital projectors.

There are many ways to invest in the digital television switchover, but it is hard to see who will come out ahead since there are so many players in the game


Forget Share Price, Percentage Gain is All That Matters

September 3, 2007

Some investors are very hesitant when it comes to buying cheap stocks under $10, and some investors are hesitant when it comes to buying expensive stocks that are over $100. Investors need to get out of the mindset of how much a stock cost, but instead think about the percentage gain they can make from a company or the future outlook of a particular company, regardless of its price. If you buy a $10 stock, selling at $11 is a 10% gain. If you buy a $100 stock, selling at $110 produces a 10% gain. It doesn’t matter how many shares you can buy of a company, but only the percentage gain you can attain from purchasing any given amount of shares of a company. Producing a 25% gain for your entire portfolio during any given year would be wonderful, and it shouldn’t matter how much you paid per share.

Consider the two following stock purchasing scenarios with an original investment of $2000:

1) Buy 4 shares of Google (GOOG) at $500 and attain a 20% gain by selling at $600
2) Buy 100 shares of Aeropostale (ARO) at $20 and attain a 20% gain by selling at $24

Regardless of the two scenarios just mentioned, a 20% gain and a $400 gain has been achieved. Doesn’t matter if you have an odd lot amount of shares or an even 100 shares or how much the original share price is. The 20% gain is all that matters.

Stocks with a market capitalization (outstanding shares times stock share price) under a billion dollars are considered small cap companies that usually have the best possibility to be growth stocks. Companies with over 10 billion dollars in market cap are labeled as large cap companies, and much of their primary growth phase has generally passed. It is more difficult to sustain such a large level of growth when the company is already so big. On the other hand, some examples of large cap companies in recent years that have shown much growth despite their worldwide presence are companies like McDonalds (increased 65% since the middle of 2005) or Chevron (increased 45% since the middle of 2006). McDonalds (MCD) and Chevron (CVX) represent markets caps of 58 and 157 billion respectively with dividends above 2%.

Even though I stated that small cap companies have the opportunities for the largest amount of growth, they are also more susceptible to volatility if they don’t grow as fast as investors anticipate. They will generally fall faster than large cap companies in bear markets because they won’t have as much cash flow as large companies and will probably have a higher debt-to-equity ratio. When earnings come out for these high-growth small cap companies, investors will look for earning to exceed expectations. Even just meeting expectations may not be good enough to propel the stock higher.