First, why you being a 70-year old want to become richer? By statistics which never lies, you have about 10 years to live plus or minus 5 days. Investing is very emotional and damaging to your health. I ask myself the same question. I do not think inheritance is good for the next generation and it would take out their objective in life and fun in creating wealth. They should inherit enough to start something and nothing more.
I agree that we should keep our minds active. However, you're competing with professionals and swimming with sharks. You do not want to turn it into a very expensive hobby. One way to beat them is to invest when every one is selling and vice versa.
When you live that old, you've beaten the social security system which was designed for average folks not living that old. Just have a big smile and a big day, do not let the market control your mood. Like my late mother said: Every day you wake up alive and feel no pain, you've earned another day that is more important than all the gold in the world. :)
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(c) TonyP4 2012. Written in 3/31/12. Last updated in 5/16/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Saturday, March 31, 2012
Wednesday, March 28, 2012
Distorting indexes
The S&P 500 and Dow may not be a good benchmark esp. for long term (say 15 years) for the following reasons. It would give you distorted results if it is not used correctly. The better ones are the equivalent ETFs but they have a shorter history like SPY.
1. Survivorship bias. If you do not include Lehman, AIG..., you will have better return for dividend stocks. How many dividends you have to gain when you lose the entire investment on these stocks?
2. Most companies in the 1920s have not survived. They may spin off, being acquired, change name... Examples abound. Comparing the index for a specific year is fine but not from 1920 to today.
To illustrate, a spun off company originally worth $100 is spun off to two companies with $50 each. It does not mean it loses half of the value and the data base should adjust the price accordingly.
3. When I use a database with no survivorship adjustments, I usually have screens making incredible returns especially those screens with no selection on stock price.
To illustrate, I have two stocks costing one cent each. One goes to 2 cents and hence makes 100% return and the other one goes to 0. In reality, my return is 0. However, the database does not include the bankrupt stock and hence it shows me I have a 100% gain.
When you see the ads claiming of unbelievable returns, it could be the survival bias or they use the best price of the day to their advantage.
4. Stocks are added and removed from the indexes every year. The ones that are removed could be bankrupt or doing badly like Kodak, Polaroid, AIG, Bear Stern... It would make the indexes look better than they really are.
5. Inflation. When I was in college, I paid $1 for a Value Meal and now I need to pay $7. My stock has to make seven times to break even, not to mention the taxes Uncle Sam and the state get from me.
6. Dividends are not added to the index. When your investment says they have 10% return and compared it to the index with 8%, the comparison could be misleading. The investment by law can include dividend while the index is usually not.
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Investment decisions are educated guesses based on current market conditions, tax laws... A lot of time indexes cheat and you need to adjust your result accordingly.
I prefer to use S&P 500 (^SP500 in Yahoo!Finance which has historical data) for its diversity: 1. 500 is more diversified than Dow's 30, and 2. value-weighted (vs price-weighted).
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(c) TonyP4 2012. Written in 3/29/12. Last updated in 5/2/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
1. Survivorship bias. If you do not include Lehman, AIG..., you will have better return for dividend stocks. How many dividends you have to gain when you lose the entire investment on these stocks?
2. Most companies in the 1920s have not survived. They may spin off, being acquired, change name... Examples abound. Comparing the index for a specific year is fine but not from 1920 to today.
To illustrate, a spun off company originally worth $100 is spun off to two companies with $50 each. It does not mean it loses half of the value and the data base should adjust the price accordingly.
3. When I use a database with no survivorship adjustments, I usually have screens making incredible returns especially those screens with no selection on stock price.
To illustrate, I have two stocks costing one cent each. One goes to 2 cents and hence makes 100% return and the other one goes to 0. In reality, my return is 0. However, the database does not include the bankrupt stock and hence it shows me I have a 100% gain.
When you see the ads claiming of unbelievable returns, it could be the survival bias or they use the best price of the day to their advantage.
4. Stocks are added and removed from the indexes every year. The ones that are removed could be bankrupt or doing badly like Kodak, Polaroid, AIG, Bear Stern... It would make the indexes look better than they really are.
5. Inflation. When I was in college, I paid $1 for a Value Meal and now I need to pay $7. My stock has to make seven times to break even, not to mention the taxes Uncle Sam and the state get from me.
6. Dividends are not added to the index. When your investment says they have 10% return and compared it to the index with 8%, the comparison could be misleading. The investment by law can include dividend while the index is usually not.
-----------------------
Investment decisions are educated guesses based on current market conditions, tax laws... A lot of time indexes cheat and you need to adjust your result accordingly.
I prefer to use S&P 500 (^SP500 in Yahoo!Finance which has historical data) for its diversity: 1. 500 is more diversified than Dow's 30, and 2. value-weighted (vs price-weighted).
-------
(c) TonyP4 2012. Written in 3/29/12. Last updated in 5/2/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Friday, March 16, 2012
Market condtions now
The long-term outlook is good.
1. The two wars will finally be finished within 3 years. No presidents (with Bush as the recent exception) will want to start another one with the bad memory unless Israel has its way. I read from magazine we exported $1.4 M honey in a year - guess how much we spend in these two wars in a week.
2. Most economic data look better than before. However, I'm just a little suspicious in the employment data, esp. in a election year.
3. We're still rich in resources particularly per capita wise. New discoveries could be more than twice the Arabian reserve but we need new technologies to extract them.
4. We still have the best high tech in researches and environment to flourish them.
The problems are:
1. Energy cost. If we open to more drilling, the pipeline... then problem may not be a long-term problem.
2. EU crisis could spread to our shore. The bright sides are 1. EU in most cases are our competitors and not our best traders (which go to China - a surprise to some), 2. Moving some assets to our way.
3. The uncertainty of corporate profits. Apple and its suppliers are only a small percentage of all corporations. They have been cutting to the bare bones and too much cuts could have long-term adverse effect.
4. Depending on how you calculate/estimate, Federal liabilities/interests/entitlements total is close to GDP. Printing money at the max. is good for no one except the politicians.
5. Newton's Law. I expect the market will take a breather of 5-10% correction. Your guess is as good as mine.
6. Next year the tax will be higher. I expect a sell off during Dec. to take advantage of the low long-term capital gain tax.
7. China's soft landings on several fronts like housing... and conflicts with US.
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(c) TonyP4 2012. Written in 3/16/12. Last updated in 4/29/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
1. The two wars will finally be finished within 3 years. No presidents (with Bush as the recent exception) will want to start another one with the bad memory unless Israel has its way. I read from magazine we exported $1.4 M honey in a year - guess how much we spend in these two wars in a week.
2. Most economic data look better than before. However, I'm just a little suspicious in the employment data, esp. in a election year.
3. We're still rich in resources particularly per capita wise. New discoveries could be more than twice the Arabian reserve but we need new technologies to extract them.
4. We still have the best high tech in researches and environment to flourish them.
The problems are:
1. Energy cost. If we open to more drilling, the pipeline... then problem may not be a long-term problem.
2. EU crisis could spread to our shore. The bright sides are 1. EU in most cases are our competitors and not our best traders (which go to China - a surprise to some), 2. Moving some assets to our way.
3. The uncertainty of corporate profits. Apple and its suppliers are only a small percentage of all corporations. They have been cutting to the bare bones and too much cuts could have long-term adverse effect.
4. Depending on how you calculate/estimate, Federal liabilities/interests/entitlements total is close to GDP. Printing money at the max. is good for no one except the politicians.
5. Newton's Law. I expect the market will take a breather of 5-10% correction. Your guess is as good as mine.
6. Next year the tax will be higher. I expect a sell off during Dec. to take advantage of the low long-term capital gain tax.
7. China's soft landings on several fronts like housing... and conflicts with US.
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(c) TonyP4 2012. Written in 3/16/12. Last updated in 4/29/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Monday, March 12, 2012
iPad4
The following opens a door for Microsoft with its upcoming tablets for business users.
1. USB support.
2. Office support. Actually it is available now. Click here and it is free for 2G storage.
3. Internet Explorer support. Some of my investing software only run on IE. It could be a small group who needs this feature.
Most likely I'll get my new iPad to read Chinese books from the library and get my grandchild busy. It is definitely not a disappointment and Apple beats its competitors.
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Most will give credit solely to Steve Jobs and the management for producing such good products enjoyed by the world.
Reality check:
1. Check the % of Indian and Chinese tech folks working for Apple and it will surprise you. Most are top tech folks and work long hours.
2. The 40,000 engineers / technicians in China should receive some of the credit.
1. USB support.
2. Office support. Actually it is available now. Click here and it is free for 2G storage.
3. Internet Explorer support. Some of my investing software only run on IE. It could be a small group who needs this feature.
Most likely I'll get my new iPad to read Chinese books from the library and get my grandchild busy. It is definitely not a disappointment and Apple beats its competitors.
-------
Most will give credit solely to Steve Jobs and the management for producing such good products enjoyed by the world.
Reality check:
1. Check the % of Indian and Chinese tech folks working for Apple and it will surprise you. Most are top tech folks and work long hours.
2. The 40,000 engineers / technicians in China should receive some of the credit.
Taxes on investment incomes
It will be big debate during the election year. Democrats will ask for huge increases and Republicans will do otherwise. Vote which one is better for you. The 40% who pay no Federal income tax will vote for Democrats.
It is more important to cut spending than raise taxes to me.
Investment incomes are double taxed. You can argue everything is double taxed or more. When the rich (the 10% who control the 50% of the country's wealth) see they are taxed more than 40% (their highest income tax bracket plus the % for Medicare), they will switch to other investment.
With lower investment taxes, the market and hence the economy will prosper. Hopefully they're not passed. There is a good chance Obama will be re-elected, but the senate will be controlled by Republicans.
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(c) TonyP4 2012. Written in 3/12/12. Last updated in 3/12/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
It is more important to cut spending than raise taxes to me.
Investment incomes are double taxed. You can argue everything is double taxed or more. When the rich (the 10% who control the 50% of the country's wealth) see they are taxed more than 40% (their highest income tax bracket plus the % for Medicare), they will switch to other investment.
With lower investment taxes, the market and hence the economy will prosper. Hopefully they're not passed. There is a good chance Obama will be re-elected, but the senate will be controlled by Republicans.
-------
(c) TonyP4 2012. Written in 3/12/12. Last updated in 3/12/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Is Apple a slave master?
If this is the best job you get, you should thank the 'slave master'. With the recent raises and regulations, Apple forces Foxconn to be 'nice'. However, the chance of moving shops to lower-wage countries like Vietnam has been increased. The compensation includes housing, some entertainment and very basic health care.
There is about the same suicide rate with the general population of the same age. It is a boring and repetitive job. Forced OT and long shift are tough to the workers but they are the same reasons why these jobs will never return to US.
Jobs was pushy and sometimes very unprofessional to his engineers/programmers in California. He was tough and sometimes unreasonable but always having a dream. If they did not like it, they could quit - so he was not a slave master.
We should not use a developed country's yardstick to judge a developing country. Decades ago, my starving friend wondered why the west wanted to take away his only job because he was under-aged.
Click here for a fair video.
There is about the same suicide rate with the general population of the same age. It is a boring and repetitive job. Forced OT and long shift are tough to the workers but they are the same reasons why these jobs will never return to US.
Jobs was pushy and sometimes very unprofessional to his engineers/programmers in California. He was tough and sometimes unreasonable but always having a dream. If they did not like it, they could quit - so he was not a slave master.
We should not use a developed country's yardstick to judge a developing country. Decades ago, my starving friend wondered why the west wanted to take away his only job because he was under-aged.
Click here for a fair video.
Wednesday, March 7, 2012
Triple bet
Once a while we come across some good prospects, we double bet it and most of the time we make good profits statistically. Here are my guidelines.
1. Make sure they're real gems other than disguised ones. Some Chinese small caps are just frauds even we've the perfect financial statements. Check whether they have lawsuits against the company.
2. Have 3 levels of buys: 1. Buy at .25% less the market (almost a market) to ensure we get some share, 2. Buy at 1% less than the market and 3. Buy at 1.5% less than the market.
Here is the link of recently successful Lampert.
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(c) TonyP4 2012. Written in 3/7/12. Last updated in 3/7/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
1. Make sure they're real gems other than disguised ones. Some Chinese small caps are just frauds even we've the perfect financial statements. Check whether they have lawsuits against the company.
2. Have 3 levels of buys: 1. Buy at .25% less the market (almost a market) to ensure we get some share, 2. Buy at 1% less than the market and 3. Buy at 1.5% less than the market.
Here is the link of recently successful Lampert.
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(c) TonyP4 2012. Written in 3/7/12. Last updated in 3/7/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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