Bank of America’s profit falls 77% in the first quarter. More bad news for the banks and for the current shareholders of this company. What should an investor in BAC DO? Buy, Sell or Hold? Or as they say in Poker, Bet, Call, Fold or All-In? The company is currently paying a fat 6.80% yield. Talk about compounding.... Will the BAC continue to pay the fat yield? That is what people are waiting on.
If you think that the housing mess is nearing bottom, this is a good stock to pick up. If you think the housing mess has a long way to go and that more write downs are coming, then this is definately a company you want to add to your watch list and wait to pull the trigger.
Very rarely are you given an opportunity to purchase a company with a 6.80%
Today:Bank of America's shares dropped 95 cents, or about 2.5 percent, to $37.61.
Monday, April 21, 2008
Thursday, February 21, 2008
Compounding to Riches
Today I was going to write my blog on Compounding. However, instead of hearing about this wonderful financial strategy from me. I thought you could read it from one of my investing mentors, Richard Russell, who writes http://www.dowtheoryletters.com/.
The following is taken from his website:
Rule 1: Compounding: One of the most important lessons for living in the modern world is that to survive you've got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation -- and money. When I taught my kids about money, the first thing I taught them was the use of the "money bible." What's the money bible? Simple, it's a volume of the compounding interest tables.
Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following: perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time.
But there are two catches in the compounding process. The first is obvious -- compounding may involve sacrifice (you can't spend it and still save it). Second, compounding is boring -- b-o-r-i-n-g. Or I should say it's boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!
In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions -- he's finished.
A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).
Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A's 33 additional contributions.
This is a study that I suggest you show to your kids. It's a study I've lived by, and I can tell you, "It works." You can work your compounding with muni-bonds, with a good money market fund, with T-bills or say with five-year T-notes.
The following is taken from his website:
Rule 1: Compounding: One of the most important lessons for living in the modern world is that to survive you've got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation -- and money. When I taught my kids about money, the first thing I taught them was the use of the "money bible." What's the money bible? Simple, it's a volume of the compounding interest tables.
Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following: perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time.
But there are two catches in the compounding process. The first is obvious -- compounding may involve sacrifice (you can't spend it and still save it). Second, compounding is boring -- b-o-r-i-n-g. Or I should say it's boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!
In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions -- he's finished.
A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).
Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A's 33 additional contributions.
This is a study that I suggest you show to your kids. It's a study I've lived by, and I can tell you, "It works." You can work your compounding with muni-bonds, with a good money market fund, with T-bills or say with five-year T-notes.
Wednesday, February 20, 2008
To Quicken or not to Quicken?
My vote is to Quicken. What is Quicken? It is a personal financial tool. It might be one of your most important tools that you use in your life. Is it inportant to understand where and what your hard earned cash is being spent on?
Before I was married, my boss told me to purchase Quicken. He suggested that before getting married, you should begin to track your spending. Quicken has continued to allow me to learn about where our money is being spent. It helps me budget how much is spent on the following each month: Dining Out, Groceries, Gas, Rent, Entertainment, Books, Clothing, Hair Cuts, and Gifts Given.
Quicken takes time to initially setup. You setup each investment account, bank account, credit card account and enter your loans (if you have any). Once all the accounts are created, you just need to press “update” and it downloads all of the recent transactions to your account. Within minutes each day, you can see your net worth and plot a month by month charge to see if it has been increasing.
If you currently are not using Quicken then I ask you, how much did you spend last month eating out? Do you know how much you spent at Starbucks? I bet it is more than you think!
Before I was married, my boss told me to purchase Quicken. He suggested that before getting married, you should begin to track your spending. Quicken has continued to allow me to learn about where our money is being spent. It helps me budget how much is spent on the following each month: Dining Out, Groceries, Gas, Rent, Entertainment, Books, Clothing, Hair Cuts, and Gifts Given.
Quicken takes time to initially setup. You setup each investment account, bank account, credit card account and enter your loans (if you have any). Once all the accounts are created, you just need to press “update” and it downloads all of the recent transactions to your account. Within minutes each day, you can see your net worth and plot a month by month charge to see if it has been increasing.
If you currently are not using Quicken then I ask you, how much did you spend last month eating out? Do you know how much you spent at Starbucks? I bet it is more than you think!
Tuesday, February 19, 2008
Market Recap: Negative flow from the wall.
The dow was down (10.99) to close at 12,337.22 and the Nasaq was down (15.60) to close at 2,306.20. There were no real movers or shakers that caught my eye today except for (SNE) Sony Corp that finally won the blu-ray versus HD DVD format war. The news this weekend was that Wal-Mart has decided to exclusively sell blu-ray products. Sorry Toshiba, it was a valiant effort.
The big winner today was was our favorite little yellow medal. Gold that is! April gold was up $27.70 to close at $929.80. Gold has continued to climb. I will discuss later in the week some good ways to invest in gold via ETF's or mutual funds. However today, I will discuss GLD. What is GLD, besides the ETF that keeps going up? GLD strives to reflect the performance of the price of gold bullion. StreetTracks GLD as of 2/19/08 has 631.15 tonnes, 20,292,100 ounces and is valued at $ 18,745,863,353.29
I generally recommend that any diversified investor should hold some form of gold. Below is a weekly chart of GLD the gold ETF courtesy of stockcharts.com.
I will discuss a little more about gold in a later post. Until then, please feel free to read about gold investing and educate yourself in different areas of investing. If you have any questions about my posts today, please feel free to leave me a question.
The big winner today was was our favorite little yellow medal. Gold that is! April gold was up $27.70 to close at $929.80. Gold has continued to climb. I will discuss later in the week some good ways to invest in gold via ETF's or mutual funds. However today, I will discuss GLD. What is GLD, besides the ETF that keeps going up? GLD strives to reflect the performance of the price of gold bullion. StreetTracks GLD as of 2/19/08 has 631.15 tonnes, 20,292,100 ounces and is valued at $ 18,745,863,353.29
I generally recommend that any diversified investor should hold some form of gold. Below is a weekly chart of GLD the gold ETF courtesy of stockcharts.com.
I will discuss a little more about gold in a later post. Until then, please feel free to read about gold investing and educate yourself in different areas of investing. If you have any questions about my posts today, please feel free to leave me a question.
Monday, February 18, 2008
The Government is Giving Away Cash!
Yeah! The government is giving us $1200 (or $600 if you are not married like me). Why is the government giving me money? I do not know. They rarely give anything to us. The correct answer is to stimulate the economy. Will this really stimulate our economy? Maybe we should buy a TV or a blueray player or maybe even a GPS. What do you think?
Details of the tax rebate:
1. If you are single and your AGI (adjust gross income) is $75,000 or less, here comes $600.
2. If you are married (like me) and your AGI is $150,000 or less, here comes $1200
If your AGI is higher than either of those amounts, you phase-out pretty quickly. Once you reach $187,000 as a married couple, you get a big fat $0.
So for those of you that will get some money, please check back in the next couple of days as we discuss what to buy. After all, show your American pride and let's stimulate the economy.
Details of the tax rebate:
1. If you are single and your AGI (adjust gross income) is $75,000 or less, here comes $600.
2. If you are married (like me) and your AGI is $150,000 or less, here comes $1200
If your AGI is higher than either of those amounts, you phase-out pretty quickly. Once you reach $187,000 as a married couple, you get a big fat $0.
So for those of you that will get some money, please check back in the next couple of days as we discuss what to buy. After all, show your American pride and let's stimulate the economy.
Welcome to my blog!
I just wanted to welcome you to my blog. This blog will discuss the intricacies of money, earning it, investing it and spending it. There is a reason why those three are in that order and that is what I want to discuss a couple of times a week. Please feel free to add comments and I am currently looking for guest writers to share their thoughts as we all work hard to make our first million!
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