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Archive for July, 2007

Market going down, Buy more!

Friday, July 27th, 2007

It’s inevitable. The market will correct. A lot of people will panic and sell. I’ve been waiting for the market to go down. I have not seen many good bargains out there for the past 6 months because of the elevated prices. It’s always tough to watch the market go down because almost all of your investments will go down with it. I’ve lost a lot of money over the past 3 days, but I’m glad the market is going down. I think of a market correction as providing me with future buying opportunities. It also raises my future expected rate of return. No one likes losing money, but expect to lose money from time to time because that is part of investing.
I usually do not wait for the market to go back up before buying because I know I cannot predict the future. I bought some shares of Goldman Sachs (GS) for 200.55 only to watch it drop almost 4% today. It’s okay though, because I adding more cash into my brokerage account and I’m ready to buy some more stocks.

No one can really escape a market correction. The best way to deal with corrections is inactivity or greed. I was reading an article from wallstrait.com about Buffet. I remember reading that Warren Buffet lost 15 million in 1 year, which was almost half of his net worth. He took advantage of the correction to buy great companies at unbelievable prices.

Catching a falling knife can be fun.

Posted in Mutual Fund, Stocks | 2 Comments »

Cardselection.com

Saturday, July 21st, 2007

I just received my check for 185$ for opening 6 credit cards through cardselection.com. I got 25-40$ for the cards that I applied for. Not many people had experience with cardselection.com because they are fairly new. Cardoffer.com discontinued their program when I was doing my applications, so that is why I used cardselection.com. I am still waiting on the bonus for 3 more cards that I opened. Not bad for a little bit of extra work. Just create an account and sign up for credit cards through their links. I received the check 5 weeks after I applied for the cards.

Posted in Credit Cards | No Comments »

Borrowed $100,000

Wednesday, July 18th, 2007

I’ve now received all my cards and got most of my balance transfers. I borrowed $101,000 with another $16,200 on the way. I still have 2 of my Citibank card(1 business and 1 personal) balance transfer saved up so that I can use them in a year.

I can reallocate the credit and do another large transfer with in a year with the saved up Citibank cards. Most of the borrowed money is in my Wamu statement savings account because I believe that now is not a good time to buy equities. I do not see that many good options. Investing with borrowed money just makes it even more risky. I would be more comfortable investing a large sum after the market drops by a huge amount.

It is more difficult now to reallocate credit limit with Citibank. I had to talk to retention in order to combine my limits. The regular credit representative said that they would combine the limits, but the limits never got reallocated.

I got my $100 credit from Sony card. Still waiting on my 15k points from Citibank and a few hundred dollars from cardselection.com.

Overall, the balance transfers went smoothly. It did take a many hours of researching, but the effort was worth it.

Posted in Credit Cards | 3 Comments »

Change In Investment Philosphy

Sunday, July 15th, 2007

Analyzing a stock normally requires a person to look at a company’s qualitative and quantitative qualities. I have been mainly looking at the quantitative attributes of a company in the past. Now I am trying to focus on qualitative aspects of a company too. Numbers cannot lie, but they do not give a complete picture of a company. If management is not honest, they can distort numbers to make them look more favorable in the short term. They will sacrifice long term performance for short term results.

I am trying to copy certain aspects of Warren Buffet’s investment technique. His first criteria is to buy companies with high return on equity. Companies that continually have high ROE above 15% a year show that they can earn a high rate of return on share holder equity. I will look at 10 years ROE and get it’s average.

Consistent increase in earnings per share.
I have never really look at a company’s competitive position closely. I am now going to do a lot more reading on the company to try to understand what they do. I need to figure out if the company has a strong moat or competitive advantage. Looking at their competitors and their position in their industry can tell if a company can earn a higher rate of return on it’s capital in the future.

I am going to look for a predictable business that will not change much in 10 years or longer so that there will be a high probability that the company will still maintain its competitive advantage. Easy to understand companies. I’ll admit that my previous stock purchases were speculative because I did not know much about the company. I did some relative analysis and that was all. The main reason for not doing in depth research is the amount of work it takes and the large amount of reading in order for a person to have a deep understanding of a company.

Posted in Investing | No Comments »