Friday, July 27, 2007

Links for Friday

This Week's Links:

A Post from the Past:

Monday, July 23, 2007

Links for Friday

Little late with these...

This Week's Links:

A Post from the Past:

Thursday, July 19, 2007

Arbitrage Trade

Oh, the privileges of being a small investor. It is really nice that big hedge funds are too occupied with million dollar arbitrage and currency trades to capture all available arbitrage. A couple thousand is insignificant in their books, but for many small investors, a trade of that proportion could add 10% to their net worth! As my risk tolerance diminishes, I continue to look for opportunities that provide substantial returns with limited risk. One such opportunity is Monarch Community Bancorp (MCBF).

Monarch Community Bancorp specializes in... oh wait a minute... it doesn't matter what they specialize in, what matters is what they are doing with their stock. In February MCBF agreed to execute a merger transaction in an attempt to reduce their number of shareholders in order to become a private company. MCBF calculated that in order to reduce the number of individual shareholders to 300, the maximum number of shareholders of a private firm, the company would need buy out shares from investors with less than 1,000 shares, at a price of 13.50 per share. The deal is scheduled to close sometime in the fourth quarter of this year.

Required Transactions:
The trade is pretty simple for this arbitrage opportunity: go long, right now, at any quantity under 1,000 shares.

Expected Results & Risks:
The only risk involved with this trade is merger abandonment. I have no reason to believe that the deal will fall through based on my initial research on the transaction. It appears that the company is progressing nicely toward privatization. So if the deal does finalize, investors could easily snatch up almost 10% in four months!

The writer of this article currently owns shares in Monarch Community Bancorp. Investors should always do their own individual research before executing a trade.

Monday, July 16, 2007

Some Thoughts On Earnings Season

This week marks the first round of earnings reports. Companies expecting to report include Eaton (ETN), Merrill Lynch (MER), Coca-Cola (KO), Johnson & Johnson (JNJ), Intel (INTC), Yahoo (YHOO), Altria (MO), JP Morgan (JPM), eBay (EBAY), Google (GOOG), and Caterpillar (CAT). These reports will try to justify the great month that all of the major indices are having.

The only real earnings precursor came last week with reports from Alcoa (AA) and General Electric (GE). Both stocks boosted strong earnings results and investors responded nicely, but I am not entirely confident that the post-earnings rallies were due to the financial status of the firms. AA was down pre-market, but when an analyst suggested the buyout attractiveness of Alcoa, the ticker arrows quickly shifted direction.
GE had a really great report as well, but the total market was in the mist of a strong rally and GE may have simply rode the market wave last Friday.

Some final thoughts and a Bearish Warning:
Last season I suggested that investors would continue reacting well to earnings beats, even with the lowered yearly expectations. I am confident that if the beats continue, investors will once again ignore the lowered expectations and reward successful firms. I also predict that in-line reports will not be good enough to sustain the summer rally. A large part of this bullish run is unwarranted and not justified by earnings reports, leaving much of this month's run-ups susceptible for a pullback. I would encourage investors to wait a day or two and investigate the initial reports to better gauge the potential success for the rest of the earnings season.

Good luck all!

Friday, July 13, 2007

Links for Friday

This Weeks Links:

A Post from the Past:

Sunday, July 08, 2007

Book Review: The 4-Hour Workweek

I took a break from the heavy finance books to read Timothy Ferriss's The 4-Hour Workweek. The book has had excellent reviews from many respectable critics, so I thought I would give it a go.

The book basically lays out a strategy to create automated income and free yourself from the dull life created from our 9 to 5 society. The basis of Ferriss's writing focuses on using DEAL (definition, elimination, automation, and liberation) to formally join the NR (new rich). Each chapter offers ways the reader can shift from a steady work-life, toward a life full of travel, leisure, and mini-retirements.

Personal Takeaways:
Honestly, the book is full of information. I am entirely convinced that all readers will find something of value embedded within Ferris's chapters. For me, the income via automation and comparison of travel costs vs. traditional costs were pretty compelling.

Automated income is very powerful and does not necessarily involve linking millions of databases together. Ferris details how to find your niche, use it to create a source of income, then automate it. The automation chapters explain that you can hire virtual assistants to do anything from responding to customer inquiries to sending your significant other flowers. Auto-response emails and a couple of outsourced resources can create a business with no maintenance. Amazing!

Ferris also busted the expensive overseas travel myth. In relation to the expense you are already paying now in the states, you could very well vacation as royalty practically anywhere else in the world.

I recommend this book to everyone. It is informative and proactive (offering an array of activities to help achieve inner happiness) and will help readers uncover what is truly important in life. It is a quick read and will having you laughing more often than not.
And make this post finance related, consider borrowing this book from a friend or checking it out from your local library.

Friday, July 06, 2007

Links for Friday

This Weeks Links:

A Post from the Past:

  • Considering using a financial professional? Forget about it. Just consult May's Financial Calculators Galore for all of your financial calculation needs.

Tuesday, July 03, 2007

24 Goals to Accomplish in 240 Days - UPDATE

It has been nearly two months since I shared my goals for the rest of the year. I have detailed the status of each of the goals below:
  1. Make the maximum contribution to Roth IRA by July 4th ($4,000/$4,000) - Complete
  2. Successful open up Hedge Fund account by June - Complete
  3. Hedge Fund account value greater than or equal to $10,000 by August ($10,800/$10,000) - Complete
  4. Hedge Fund account value greater than or equal to $20,000 by January ($10,800/$20,000)
  5. Roth IRA account greater than or equal to $9,000 by January ($6,700/$9,000)
  6. Have 150 blog posts by December (74/150)
  7. Create Fund website by July 4th - Complete.
  8. Read five books by August (4/5)
  9. Create two more portfolio’s in my Virtual Stock Exchange league (1/2)
  10. Do 75 push-ups without taking a break (40/75) - No progress
  11. Run 2 miles in 12 minutes - No progress
  12. Increase my net worth by 80% this year (25%/80%) - Increased by almost 12%
  13. Play a set of tennis without double faulting - 9 double faults the last time I played
  14. Achieve Certified Associate in Project Management (CAPM) certification - No progress
  15. Secure a full-time job - No progress
  16. Convince five people to start investing (2/5)
  17. Establish and record 500 phone contracts (140/500)
  18. Establish and record 1000 email contacts (230/1000)
  19. Learn how to drive a manual transmission - No progress
  20. Achieve 1000 lifetime trades (342/1000)
  21. Complete my portfolio management spreadsheet and submit to - No progress
  22. Attend a University of Michigan basketball game for free - No progress
  23. Master double-digit multiplication and division - No progress
  24. Give blood - No progress

Woo-hoo, I have completed four goals already! I still really need to start working toward achieving the fitness goals. Feel free to share how your goals are going!

Monday, July 02, 2007

Festival of Stocks #43

I am proud to be hosting this weeks Festival of Stocks! Enjoy all of this weeks articles!

This Week's Submission

Free Money Finance presents Low Cost Usually Equal a Better Investment (And the Various Costs You Need to Look for).
This article goes in depth about why lowering costs usually creates a better return and what costs are usually associate with particular investment vehicles.

Canadian Economy, Commodities And Mining Stocks Through a Fundamental Lens presents 5 Ways to Gauge Market Sentiment.
This article shares several important factors that help measure market sentiment.

Bankruptcy Lawyer's Blog presents Understanding Chapter 12 Bankruptcy.
This article details Chapter 12 bankruptcy concerning farmers and fishers.

Money Ning presents Taxable Account Portfolio Update - June 2007.
This article shares Money Ning's portfolio holdings at the end of June.

INTJ Personal Development presents Do You Get Money? and Grow Your Pile of Money
The first article details the basics of currency, economies, and meaning on money. While the second article offers ways to use an individual's pile of money.

Investment Jungle presents Stock Analysis - Respironics Inc.
This article evaluates RESP as a potential investment.

Dividends Matter presents Dividend Analysis - Wal-Mart Stores Company.
This article evaluates WMT as a potential investment.

Mad Money & Fast Money Fan Site presents Mad Money - Cramer on Buffett Stocks.
This article shares Jim Cramer's take on Warren Buffett's stocks.

Neutral Market Trends presents Backtesting the S&P Volatility Timing Model.
This article shows the back-tested results of a unique volatility timing model.

Wealth Building Lessons presents Is Sears the Next Berkshire Hathaway?
This article details the investment nature of SHLD, comparing it to Berkshire Hathaway.

The Skilled Investor presents How to Lie with Statistics: Investment Performance Charts.
This article address the dangers of following investment performance statistics.

Adventures in Money Making presents How Capitalism Really Works.
This article shares some comments on the Blackstone IPO.

The Credit & Credit Card Blog presents Boat Show Financing - Never, Ever Use It.
This article reminds use why cash in king when purchasing a boat.

My Estate Planning Career Blog presents Smart Estate Planning Strategies for the Average Joe.
This article reviews some of the most fundamental components in estate planning.

Personal Investing Advice presents Investing - Gold Shares - The Leverage Factor.
This article suggests investors exercise leverage via gold, leaps, & warrants.

My Deft Relief Plan presents Reduce Credit Card Debt Quickly.
This article suggests several chronological steps an individual should negotiate to reduce credit card debt.

Personal Finance Blog Articles presents Saving Money - A Top Strategy for Saving Money.
This article explains how individuals should re-evaluate their spending formulas.

Wealth Building World presents Wealth Creation - Don't Start with the Wrong Concept of Wealth.
This article explains the value and concepts behind establishing a wealth creation program.

Stock Value Finder presents Visa Initial Thoughts.
This article evaluates VISA as a potential investment. presents Do Not Sell Your Stocks Randomly.
This article explains the importance of not letting emotions drive your selling.

Trader's Narrative presents Homebuilding Sector Merits Attention.
This article presents a potential inflection point for homebuilding stocks.

Sox First presents Subprime Fallout: The Bears Are Out.
This article explains the fallout from CDOs and how it could effect the global economy.

The Mad Money Analyst presents Why Invest in Stocks.
This article presents an argument why stocks are always the best long-term investment.

Political Calculations presents Fundamental Indexing in 18 Months.
This article tracks the current progress of a weighted indexing strategy.

The Dividend Guy Blog presents BCE - A Sell Gone Way Bad.
This article recaps a prior sell gone bad.

Investor Trip presents How to Investing in 2008 Beijing Olympics.
This article evaluates HMIN as a potential investment.