Friday, February 26, 2010

Portfolio Update 2/26/10

Before reading, please see the disclaimer in the 'About Me' section.

The Wilshire 5000 closed at 11,439.10, down from
11,499.54 since my last post on 2/19/10. The Wilshire 5000 is now 7.66% above it's 200-day moving average.

The Investor's Intelligence Survey was released on Thursday night. This week's reading was 41.1% BULLS, and 23.3% BEARS, for a spread of 17.8%. This is in comparison to a reading of 35.6% BULLS, and 27.8% BEARS, for a spread of 7.8% on February 17th. This is the highest Bull reading we have seen in over a month, as well as the largest spread.

The Volatility Index closed today at 19.50, down from 20.02 at the date of my last post. The VIX has now broken the 20 mark. It will be worth paying attention to see if the VIX stays below 20 for an extended period, as well as to see what the Investor's Intelligence Survey gives us in weeks ahead. This may be a sign that the market is getting back ahead of itself in the near term. Many have suggested that the recent correction was not quite deep enough, and the market needs to consolidate further.

Now for the portfolio...
1) Verizon at $28.93, down 12.46% for the year.

2) AT&T closed at $26.37, down 1.20% for the year.

3) GE closed at $16.06, up by 6.15% for the year.

4) Citigroup closed at $3.40, up by 2.72% for the year.

5) TBT, the doubleshort U.S. Treasury ETF closed at $47.05, down by 5.67% since my buy.

6) FXP, the doubleshort China ETF, closed at $9.05, up 4.99% since my buy.

7) GOOD closed at $13.98, up by 3.71% since my buy.

8) NLY closed at $18.38, up by 6.06% since my buy.

9) X closed at $52.94, up by 20.02% since my buy.

10) AAPL closed at $204.62, up by 5.61% since my buy.

Overall, the portfolio is up by 2.92% (-2.54% for the DOW Dogs), versus -.38% for the Wilshire 5000. The gap between my performance and the overall market has shrunk to 3.30% outperform, down from 3.42% last week.

Have a great week, and happy trading!

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Sunday, February 21, 2010

Interesting Blog Post...

Interesting post on a blog that I follow. Enjoy.
http://gregmankiw.blogspot.com/2010/02/what-unions-are-getting.html

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Friday, February 19, 2010

Portfolio Update 2/19/10

Before reading, please see the disclaimer in the 'About Me' section.

The Wilshire 5000 closed at 11,499.54, up from
11,149.40 since my last post on 2/13/10. The Wilshire 5000 is now 8.64% above it's 200-day moving average.

The Investor's Intelligence Survey was released on Thursday night of last week, as it is every week. This week's reading was 35.6% BULLS, and 27.8% BEARS, for a spread of 7.8%. This is in comparison to a reading of 34.1% BULLS, and 27.8% BEARS, for a spread of 8.0% on February 10th. This is the tightest spread we have seen since tracking this blog, and is the most bearish we have seen the sentiment on the market. We continue to see the bearish sentiment creep up toward the 30 level. A financial newsletter stated today that a 35.0% reading on the bearish side would usually indicate that the market is wiped out, and ready for an upturn. Food for thought.

The Volatility Index closed today at 20.02, down from 22.51 at the date of my last post. The VIX is getting close to breaking that important 20 mark. This, along with the aforementioned data, seems to suggest that perhaps the market is getting ahead of itself short term. That is a sentiment that a newsletter that I read suggested, and I tend to agree with.

Now for the portfolio...
1) Verizon at $29.02, down 12.18% for the year.

2) AT&T closed at $26.22, down 1.76% for the year.

3) GE closed at $16.17, up by 6.87% for the year.

4) Citigroup closed at $3.42, up by 3.32% for the year.

5) TBT, the doubleshort U.S. Treasury ETF closed at $49.57, down by .62% since our buy.

6) FXP, the doubleshort China ETF, closed at $9.34, up 8.35% since my buy.

7) GOOD closed at $13.97, up by 3.64% since my buy.

8) NLY closed at $17.33, up by 2.48% since my buy.

9) X closed at $53.29, up by 20.81% since my buy.

10) AAPL closed at $201.67, up by 4.09% since my buy.

Overall, the portfolio is up by 3.44% (-2.39% for the DOW Dogs), versus .02% for the Wilshire 5000. The gap between my performance and the overall market has shrunk to 3.42% outperform, down from 3.58% last week.

Have a great week, and happy trading! I will update the portfolio at the end of next week, as always, with possibly a post or two on other topics thrown in the mix.

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Saturday, February 13, 2010

Portfolio Update 2/13/10

Before reading, please see the disclaimer in the 'About Me' section.

Here goes...

The Wilshire 5000 closed at 11,149.40, up from
10,913.90 since my last post on 2/8/10. The Wilshire 5000 is now 5.79% above it's 200-day moving average.

The Investor's Intelligence Survey was released on Thursday night of last week, as it is every week. This survey is a measurement of the sentiment in the market. This week's reading was 34.1% BULLS, and 26.1% BEARS, for a spread of 8.0%. This is in comparison to a reading of 38.9% BULLS, and 22.2% BEARS, for a spread of 16.7% on February 2nd. This is the tightest spread we have seen since tracking this blog, and is the most bearish we have seen the sentiment on the market. I am reiterating the fact that now is a good time to buy, as I have the last 3 weeks.

The Volatility Index closed today at 22.51, down from 26.51 at the date of my last post.

Now for the portfolio...
1) Verizon at $28.93, down 12.46% for the year (ouch...still).

2) AT&T closed at $26.04, down 2.44% for the year.

3) GE closed at $15.55, up by 2.78% for the year.

4) Citigroup closed at $3.18, down by 3.93% for the year.

5) TBT, the doubleshort U.S. Treasury ETF closed at $48.81, down by 2.15% since our buy.

6) FXP, the doubleshort China ETF, closed at $9.40, up 9.05% since my buy.

7) GOOD closed at $14.00, up by 3.86% since my buy.

8) NLY closed at $17.15, down by 1.04% since my buy.

9) X closed at $44.09, down by 0.05% since my buy.

10) AAPL closed at $200.38, up by 3.42% since my buy.

Overall, the portfolio is up by .55% (-4.07% for the DOW Dogs), versus -3.03% for the Wilshire 5000. The gap between my performance and the overall market has shrunk to 3.58% outperform, down from 5.35% last week.

Have a great week, and happy trading! I will update the portfolio at the end of next week, as always, with possibly a post or two on other topics thrown in the mix.

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Wednesday, February 10, 2010

Why a Roth IRA is Better Than a 401k, And Why You Need One Yesterday!

Please see the disclaimer in the 'About Me' section before proceeding...

While it is not my area of professional practice, or perhaps my place to do so, I have undertaken the goal of trying to enlighten my friends as to the benefits of the Roth IRA this year. The Roth IRA was first explained to me in my undergraduate tax class 5 years ago, and ever since, I have been on the bandwagon saying how great these accounts are. A friend of mine asked me for some financial advice last week, and I put together a spreadsheet detailing why a Roth IRA at this stage in our lives (we are both 25, going on 26) is far more beneficial than contributing to a 401k. While I have believed this for many years, I had never put the numbers to the test, so here is quick and dirty version of what I came up with (sorry for the formatting, I am new at this):

Roth IRA
IRA Contribution Limit $5,000
Bi Monthly Gross Pay 2,083 (Assume $50,000 salary)
Tax Paid 521 (Assume no pre-tax deductions, 25% tax bracket)
Paycheck 1,562
Bi-Monthly IRA Contribution 208
Take Home Pay 1,354
Historical Market Return 8% (Historical market return, +/-, with dividends re-invested)
Number of Periods 420 (12 months * 35 years)
Amount at Retirement 930,511
Gross Yearly Distribution 37,220 (Assume: retire at 60, and take 25 equal payments)
Net Distribution 37,220 (No tax paid on Roth IRA distributions)

401k (No Employer Match)
401k Contribution Limit $5,000 (To match Roth IRA example)
Bi Monthly Gross Pay 2,083
Bi-Monthly 401k Contribution 208 (Pre-tax)
Tax Paid 469
Net Pay 1,406
Historical Market Return 8%
Average Fund Mgmt Fees 1.2%
Rate of Return 6.8% (Assuming the average mutual fund fee is 1.2% +/-)
Number of Periods 420
Amount at Retirement 706,754
Gross Yearly Distribution 28,270 (Retire at 60, 25 payments)
Tax paid 4,241 (15% income tax at this level on 401k distributions)
Net Distribution 24,030 (After tax)

401k (50% Employer Match)
401k Contribution (indiv) $5,000 (To match Roth IRA example)
401k Contribution (empl) 2,500
Bi Monthly Gross Pay 2,083
Bi-Monthly 401k Contribution 208 (Pre-tax)
Tax Paid 469
Net Pay 1,406
Historical Market Return 8%
Average Fund Mgmt Fees 1.2%
Rate of Return 6.8% (Assuming the average mutual fund fee is 1.2% +/-)
Number of Periods 420
Amount at Retirement 1,060,131
Gross Yearly Distribution 42,405 (Retire at 60, 25 payments)
Tax paid 10,601 (25% income tax at this level on 401k distributions)
Net Distribution 31,804 (After tax)

Now, before people get all up in arms, please realize that this example is for illustration purposes only, and is a very quick and dirty calculation. To check my math on the returns, you can go to any Future Value (FV) of an annuity calculator, and punch the numbers in yourself.

A few key points:
1) Under this example, there is no calculation for the return on the extra $52 per paycheck that you would take home contributing to the 401k. That will certainly close the gap between the rates of returns.
2) This calculation does not take into account commission fees realized in an IRA account. Assuming $10 per trade (seems to be the average these days), if you make 10 trades in the first few years, that's a sizeable portion of your account balance ($100 ($10x10) divided by $5,000 = 2%, which is more than the management fees on the 401k. However, with time, that amount drops to an insignificant level as you make contributions to your IRA. The management fee on a mutual fund, however, stays constant as a percentage of your balance. Therefore, that 2% shrinks in an IRA, while the 1.2% stays the same in a 401k.
3) This assumes that you invest in the QQQ (the ETF that tracks the DOW, and that the performance of the QQQ exactly mirrored the market, and that the market returned 8%) in your IRA, and that the funds in your 401k match the market. Obviously, your accounts will not achieve exactly those results. In my opinion, the IRA allows you to be more nimble, and offers a wider range of investment choices. As such, it becomes much easier in an IRA account, if you're a wise investor, to beat the market consistently. Not to mention, did you know you can buy investment real estate in your IRA? Can't do that in a 401k.
4) These assumptions basically only work until you take your first distribution at age 60. You'll notice, the rate of return and account balances are not adjusted for the years which follow the initial distribution. However, if I was a better man, and I am, I would bet that the calculation would favor the IRA if it was carried out until the account balance reached $0.

In asking around, fewer and fewer employers are offering company matches these days, and if they are, they seem to be shrinking. I remember about 15 years ago my dad told me he got a dollar for dollar match. Good luck finding that benefit these days. The company that I currently work for doesn't even offer a match (full disclosure, they make up for it elsewhere). I am guessing that as time goes by, fewer and fewer employers are going to offer that match, as the cost of employee benefits seems like it will be on the rise.

I encourage people to interact with this blog. Please leave comments or send personal e-mail, it is greatly appreciated when I hear other's views. If you would like to refute my calculations, I certainly would like to hear those arguments as well, and if you'd like, I will post them in this space.

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Monday, February 8, 2010

Portfolio Update 2/8/10

Before reading, please see the disclaimer in the 'About Me' section.

Here goes...

Today the Wilshire 5000 closed at 10,913.90, down from
11,330.55 since my last post on 2/3/10. The Wilshire 5000 is now 4.00% above it's 200-day moving average. The last few weeks have been a pretty solid consolidation in the market. In my opinion, this is a reason to be bullish, and why I have recently filled the portfolio.

The Investor's Intelligence Survey was released on Thursday night of last week, as it is every week. This survey is a measurement of the sentiment in the market. This week's reading was 38.9% BULLS, and 22.2% BEARS, for a spread of 16.7%. This is in comparison to a reading of 40.0% BULLS, and 23.3% BEARS, for a spread of 16.7% on January 26th. The spread between bulls and bears has remained constant, however, there are fewer of each out there in the market right now. Again, I see this as bullish.

The Volatility Index closed today at 26.51, up from 21.60 at the date of my last post.

Now for the portfolio...
1) Verizon at $28.37, down 14.15% for the year (ouch...still).

2) AT&T closed at $26.25, down 1.65% for the year.

3) GE closed at $15.60, up by 3.11% for the year.

4) Citigroup closed at $3.15, down by 4.83% for the year.

5) TBT, the doubleshort U.S. Treasury ETF closed at $46.77, down by 6.23% since our buy.

6) FXP, the doubleshort China ETF, closed at $10.41, up 20.77% since my buy.

7) GOOD closed at $13.82, up by 2.52% since my buy.

8) NLY closed at $17.88, up by 3.17% since my buy.

9) X closed at $44.09, down by 0.05% since my buy.

10) AAPL closed at $194.12, up by 0.19% since my buy.

Overall, the portfolio is up by .27% (-4.27% for the DOW Dogs), versus -5.08% for the Wilshire 5000. I have widened a nice 5.35% gap against the market for the year, up from 2.80% last week.

Some of you have commented on my recent transactions, and as always, such commentary is greatly appreciated. Please pass this blog along to family and friends, and get them participating as well.

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Thursday, February 4, 2010

Update 2/4/10

Please see the disclaimer in the 'About Me' section...

Given the fact that the market is getting killed today, I think it's time to go shopping. I am going to add X (United States Steel) to the portfolio at $44.11. I will also pick up Apple at $193.75. These two picks will round out my 10-slot portfolio, and we will see how it goes from here.

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Wednesday, February 3, 2010

Market/Portfolio Update 02/03/10

Before reading, please see the disclaimer in the 'About Me' section.

Here goes...

Today the Wilshire 5000 closed at 11,330.55, down from
11,342.70 since my last post on 1/27/10. The Wilshire 5000 is now hovering around 8.33% above it's 200-day moving average. In my eyes, this is a sign that the market is still consolidating, and that's a good thing

The Investor's Intelligence Survey was released on Thursday night of last week, as it is every week. This survey is a measurement of the sentiment in the market. This week's reading was 40.0% BULLS, and 23.3% BEARS, for a spread of 16.7%. This is in comparison to a reading of 52.2% BULLS, and 18.9% BEARS, for a spread of 33.3% on January 19th. Since the last reading, the spread between bulls and bears was cut in half, not necessarily a good thing, and helping to support my conclusion from the prior paragraph.

The Volatility Index closed out the week at 21.60, down from 23.14 at the date of my last post.

Now for the portfolio...
1) Verizon at $29.19, down 11.67% for the year (ouch...still). However, we were able to get the dividend of $.475 on February 1st. For the purpose of this exercise, we will assume all dividends are reinvested. As such, we were able to pick up another fraction of a share, and to lower our cost basis a bit. It is also worth noting that Verizon has crossed below it's 200-day, 50-day, and 20-day moving averages. A sign that I see as very bullish.

2) AT&T closed at $26.37, down 1.20% for the year.

3) GE closed at $16.68, up by 10.24% for the year. It's also worth noting that one of the analysts on Fast Money mentioned it as a buy today, as well as X.

4) Citigroup closed at $3.37, up by 1.81% for the year.

5) TBT, the doubleshort U.S. Treasury ETF closed at $48.68, down by 2.41% since our buy.

6) FXP, the doubleshort China ETF, closed at $9.14, up 6.03% since my buy.

7) GOOD closed at $13.97, up by 3.64% since my buy last week.

8) NLY closed at $18.05, up by 4.05% since my buy last week.

Overall, the portfolio is up by 1.35% (-.91% for the DOW Dogs), versus -1.45% for the Wilshire 5000. I have opened up a nice 2.80% gap against the market for the year, not too shabby. I still have two slots open, but as of now I am unsure of what I want to do with them. Stay posted.

As always, question and comments are most welcome.

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About Me

DISCLAIMER: I started this blog as a way for people to exchange ideas relating to investing and finance, primarily. I am in no way a professional in these areas, merely a student of the financial world. The thoughts expressed on these pages have no connection to my employer in any way. Anybody reading this blog should do so with caution, exercise their own judgment, and do their own due diligence on any financial undertaking. About Me: I reside in New Jersey with my wife and my two dogs. I have a B.S. degree in Accounting with a minor in Finance, as well as an MBA in Accounting. Currently, I am employed as a forensic accountant, and am pursuing my CPA designation. I love the stock market, and picking stocks. I spend a great deal of time analyzing market data, as well as individual names.

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