Archive for February, 2013

Closing Some Trades And A Few Tech Stock Thoughts ($BBRY, $AOL,$TRLA, $Z, etc)

By: ispeculatornew | Date posted: 02.14.2013 (3:00 am)

40First off, I’m actually going to close several trades this morning! I will be closing:

Long eBay (EBAY)/Short Demand Media (DMD) +30,70%
Long Priceline (PCLN)/Short AOL (AOL) -29.56%
Long Yelp (YELP)/Short Trulia (TRLA) -31,32%

For reference, these are the trades that will remain live for now:

Long Apple (AAPL)/Short Blue Nile (NILE) +16,04%
Long Tripadvisor (TRIP)/Short Travelzoo (TZOO) +12,57%
Long LinkedIn (LNKD)/Short Zillow (Z) +27,54%

Just for those who did not know, you can always see my live trades and returns here!

http://www.intelligentspeculator.net/livetrades

As you can see, my long & short stock picks have been fairly volatile but overall are off to a great start as the average trade this year has returned over 4%. I would personally say that anything above 1% is ok and 2% is great in my opinion. We’ll see how things keep up though.. last year had started off very well also.

A Few Thoughts

Blackberry (BBRY): I remain very negative about the stock long term and it is down quite a bit from its highs. I’d be increasingly scared to short though for one reason. The company still has a ton of users which are all looking forward to upgrading their older phones.. this could end up meaning huge sales numbers upfront and a lot of talk about the company coming back from the dead. It’ll be a tough stock to trade for a long time in my opinion… I still think it’s going (way) down over the long term but it could be a bumpy ride.

AOL (AOL): After a terrible year trading the stock in 2012, I’m off to another poor one with my first trade. I still have not gone through the earnings call to figure out what caused the big increase but I think it’s safe to say that I’ll probably take a break from trading AOL for now.. are any of you long AOL? If so, please explain your rationale, especially if you’ve been long for 12-18 months and made a killing.. could learn a thing or two from you:)

Trulia (TRLA) and Zillow (Z): Both announced decent but far from great results but it seems like expectations were so low that the stocks actually jumped significantly.

Apple (AAPL): The stock is seeing a rebound for a few reasons. Some think the iWatch might turn out to be a big deal, others such as Goldman Sachs say that Apple has tremendous upside which is also something that I really believe in.

Do you have any thoughts on these stocks? Or any questions?

Ultimate Sustainable Dividend Portfolio – February 2013 Update – Income Is Back!

By: ispeculatornew | Date posted: 02.13.2013 (4:41 am)

44In September 2011, I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term but also show how I would manage such a portfolio. I have said it before, I do not believe in stocks that you can hold “forever”. Thus, even in a long term portfolio such as this one, I will end up making some trades from time to time.

The USDP is obviously a critical part of my now very public quest to replace my job income with passive income. you can see my most recent update here.

The USDP continues to do very well!! Very exciting stuff and I’m thrilled with how things have gone so far. I have done a couple of trades and continue to work on optimizing it, if ever you would like to receive those types of updates, please join, it’s free:

Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the 20 best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.

Here are the holdings as of last night to start off:

[table “492” not found /]

Dividends Received

After a poor January, February will see over $109 of dividends received, a 4.8% increase over last year. The income is likely to continue increasing quickly going forward as I will be adding more money into the fund and thanks to my use of the DRIP.  Take a look at the progress:

usdp-income

Ultimate Sustainable Dividend Portfolio News

A few good dividend increases for the USDP, always good news right?

[table “493” not found /]

Returns

I’m fairly happy with the USDP return in the past year. Why? Because both are more or less equal which in a fairly fast rising market is a good performance for a dividend/income focused portfolio.

usdp-value

Trades

I have started reinvesting $1000 into the portfolio every month which I will hopefully be able to keep up! This week, my biggest trades were increasing my positions in Microsoft (MSFT) and Pepsi (PEP)!

Passive Income Targets – February 2013

By: ispeculatornew | Date posted: 02.12.2013 (3:00 am)

43I’ve gotta say, I never could have imagined how well this would be turning out to be. Since starting to do monthly updates about my passive income project, my revenues have been increasing steadily almost every single month. Part of it is expected as investments continue to compound and I reinvest all income. Another important part though is that since I know that every month I’ll be reporting my numbers here, it makes me think about it a lot more. I’m trying to be smarter about my expenses, creative in finding new income sources, etc.

As time goes by, my objective is to be able to live entirely off of these new income streams but also be able be diversified enough to be ok no matter what happens. In many ways, that is what’s behind my interest in dividend income. For now, I prefer to avoid using actual numbers (might change later on) so what I will do is express all of this data in %. The objective of course is for all of these flows to end up generating 100% of my current income. I also want to gradually make sure that my income producing assets are not all locked away in accounts that will only be available upon retirement. In terms of income, I will be using my gross household income. Counting the bonus would only make things more difficult to track and would not represent how I currently live on my finances.

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources

February Updates

-I was able to increase the monthly revenues from my online company by $120/month or so as our balance sheet gets stronger

-Last month, I made my passive income objectives very year up until 2028.. I can of course change and adjust but it does give me a moving target, I will now be updating a chart on a monthly basis which will give myself and all of you an idea of how well I’m doing!

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

passiveincomefeb

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

Current Passive Income Flows:

5.47% – Dividend/Investing Portfolio: I am currently generating a dividend yield of about 3.41%. This portfolio will be increasing over time. I use a bucket system which I will be writing more about but the main retirement components are a long term dividend portfolio (see the Ultimate Sustainable Dividend Portfolio) and an ETF portfolio (see BuildYourETFPortfolio for more details on how I build mine). I saw a slight increase here thanks to markets rising and a similar yield.

6.48% – Private Investment In My Online Company: I have discussed how my web company has been the best investment of my life so far. The company continues to be focused on debt repayment so I don’t expect to see huge increases from these flows in 2013 but we did just increase my monthly payments by $120 which certainly helps

Total: 11.92%

It’s not spectacular by any means yet. That being said, I am 31 years and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

passiveincomefeb2

Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here🙂

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

I feel like my January 2014 objective was perhaps a bit too easy to reach but it at least gives me some momentum and I know that I could suffer some setbacks so I’ll work hard on getting to that 25K per year as soon as I can!

You can see that little blue dot… slightly above the red line:)

passiveincomefeb3

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

 

New Trade: Long Yelp ($YELP) & Short Trulia (TRLA)

By: ispeculatornew | Date posted: 02.11.2013 (3:00 am)

After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with a few solid trades. As of writing this, all 5 of my live trades are profitable with the best one being what I opened last week when I went long LinkedIn (LNKD) which ended up announcing killer earnings. That trade is now up 31%!! I will keep it open a bit more because I continue to believe the potential is strong. You can see live performance of my 2013 picks here:

2013 Long & Short Tech Stock Picks

This is a very interesting trade, no doubt about it. It’s a great example of why I like long and short trading. I’m not a huge fan of either stock. But there’s one that I clearly believe to be undervalued relative to the other so today As I currently have 5 live long & short trades, there are not as many possibilities among the stocks that I follow but this one seemed like a low-risk/high reward type of trade. Both stocks trade at similar prices, are losing money, but they have vastly different profiles otherwise. Before getting started, let’s take a look at the numbers for this trade:

[table “490” not found /]

yelpLong Yelp (YELP)

Obviously, I’m not a huge fan of Yelp simply because I think there is more potential with some of the other social web stocks. That being said, Yelp offers a fairly unique product which is doing very well in this more mobile world.  The company’s reviews have been getting more deeply integrated into other products as well as the Apple O/S which certainly speaks to the possibilities. I do think there will be growth so seeing Yelp trade at a comparable P/E ratio and price to TRLA, a stock that doesn’t have as much going for it screams opportunity.

YELP

YELP Revenue Quarterly YoY Growth Chart

YELP Revenue Quarterly YoY Growth data by YCharts

Next earnings: May 2nd 2013

Short Trulia (TRLA)

I did bash both Zillow and Trulia back in October so it’s probably not a big surprise to see that I’m now short both names. Trulia is basically trading at a similar forward P/E, and even price but I do expect Yelp to continue having stronger revenues and earnings per share as well as have better opportunities for strong growth. Trulia has a product that faces strong competition in a struggling industry (housing), I’m not sure what to get excited about really so going short is a no-brainer.

TRLA

Next earnings:  February 12th 2013

Disclaimer: No positions on YELP or TRLA (position will be opened this morning)

Weekend Readings

By: ispeculatornew | Date posted: 02.08.2013 (3:00 am)

56Ahh no more football. I’m not thrilled but others in my house (not giving out names) are:) Somehow though, the coming weekend looks like it’ll be incredibly busy! Anyhow, if you have a bit of time, here are some good readings for you!:)

General Readings

Comprehensive guide to index funds @ DividendMonk
Federal reserve hit by hackers @ PCMag
Do I know enough to manage my investments? @ BudgetsAreSexy

Dividend Stock Readings

Are you an investor or a failure @ TheDividendguyblog
Dividend stocks are my conviction @ Dividend-Growth-Stocks

Tech Stock Readings

LinkedIn rampage to be tested today @ Wired
Decent earnings from Zynga @ TechCrunch
Goldman has more upside than any other stock @ BusinessInsider

Does This Move Mean Anything For Microsoft ($MSFT)?

By: ispeculatornew | Date posted: 02.07.2013 (3:00 am)

dell_logoYou might have heard that Michael Dell was taking his company private. How? He partnered with Silver Lake who is putting several billion dollars, both borrowed a ton of money, mostly at high interest rates but also $2B from Microsoft.. I have several thoughts on this deal and would love t hear yours.

Why go private? I’m certainly in favor of private equity (even considered working in it for a while) but this one intrigues me. Michael Dell seemed like he was in charge so what more can he do now that wasn’t possible when the company was public? If he had some brilliant ideas, was he waiting to take the company private (at a lower value) to start implementing them?

What is Microsoft’s play here?

Clearly, Microsoft is going through a lot of transformations these days. It is moving from its traditional software company to cloud based software, gaming and even building its first hardware device, the Surface. Is it based off of the Apple strategy? The fact that its recent tv ads are so similar to what Apple has produced certainly makes me wonder about it. One major hurdle that Microsoft faces about building hardware is that it has no experience/infrastructure. But Dell does? Could this be the start of an alliance between the two?

Sure, it could simply be Microsoft putting some of its cash reserves to use but that seems unlikely doesn’t it? Microsoft, Apple and other companies with huge cash reserves rarely start behaving as hedge funds, trying to rack up big returns, etc.

Thinking about getting in on the action? Just look at MSF shares in the past 10 years.. it’s been a bumpy ride!

MSFT

DELL

Disclaimer: No position on Microsoft (MSFT)

 

Cable Companies Are In Big Trouble (CMCSA, TWC, VIA-B, SJR, etc)

By: ispeculatornew | Date posted: 02.06.2013 (3:00 am)

comcast-logo-1Cable and telecom companies are a major part of many portfolios, especially income/dividend focused ones. Why? It’s certainly not because of their huge revenues or earnings growth. Rather, it’s because like many other types of businesses (utilities, REIT’s, MLP’s, etc), these companies provide consistent income every quarter with little to no volatility. It’s easy to depend on them and they generally do well no matter how the overall economy performs. As much as we pretend that having a television is a “luxury”, the fact is that even in tougher economic times, few customers end up getting rid of their cable/phone/internet connections.

Things Are Changing Though

Let me start off with a quick comparison. I know it’s not perfect.. but hear me out. A decade ago or so, there were 2 basic ways to get music. You could either listen to radio and hope to hear your favorite songs or you could go to a record store and buy that artist’s cd. How times have changed..! Music is now sold through satellite radio, all kinds of online services such as iTunes, Amazon, etc. There is also a growing feeling that artists no longer need labels. They can produce their own music, distribute it, organize shows, stay in contact with fans, etc. The labels still matter of course but they have nowhere close to the power they once had.

Cable Companies Are Scared To Death

Just a few years ago, almost every single one of us had a hefty cable bill to pay that included our phone lines, cable and internet connection. For many, that bill was nearly $200/month. Then, many such as myself started moving to mobile phones, and slowly cutting off our land line phones. The much bigger change though has started only recently. Cable had this amazing model where if you wanted to see a couple of shows per week, you needed to pay for the entire cable package and those 200 channels. Sure, some could be added at an extra fee but there was little choice available.

Fast Forward To 2012

These days, you can get most of the tv shows through online means such as the Apple store, Hulu, Amazon’s Prime streaming service or Netflix. There were 3 missing parts:

-Many shows were still missing
-The better produced shows from HBO and others remain off-limits
-Live events such as sports are not consistently available without cable

Now just look at the what happened in the past few months:

-Practically every show is now available with Disney even getting on-board through an exclusive deal with Netflix
-Netflix and Amazon have now started to produce high quality exclusive tv series
-Several professional leagues such as the NFL and MLB have started streaming and selling their own content

We’re not there yet.. but we’re close to the day where users could cut out cable and get as much content at a fraction of the cost. It has already started, especially among the younger viewers.

Could Even The Internet Service Be Under Attack

We don’t know much about how successful Google Fiber is but the fact that the company is offering a much superior service at a fraction of the cost is one more reason for cable companies to start worrying. What if Google or others started offering such a service?

Are The Cable Companies Toast?

When you think about it, one huge problem is that these companies have huge fixed costs so even a small user reduction would be very dangerous for them. I personally prefer getting out early than trying to get out late. Yes, they do offer very attractive dividend yields but that’s not enough for me.

Do you hold any cable stocks? What outlook do you see 5-10 years from now?

Top 100 Dividend Stocks – February 2013 Edition

By: ispeculatornew | Date posted: 02.05.2013 (4:00 am)

53Dividend investing is a huge part of my investment strategy. As I’ve mentioned in my now monthly passive income updates, receiving dividend income from my both my Ultimate Sustainable Dividend portfolio and my ETF portfolio is a primary driver of how my retirement will be like a few decades from now:)

Today, I am back with our list of the top 100 dividend stocks from the S&P500 and we have a familiar name still on top.

Pitney Bowes (PBI)

Pitney Bowes is dominating the list but as you can see in the chart below, despite a bit of an increase lately, the stock has not been doing so well in the past year or so, which is certainly not a great sign of things to come. Will the company be able to keep up its high dividend yield in the face of tougher economic times?

PBI

There Is Value In High Yielding Stocks

As member of the mailing list know, I am currently working on a special high yield dividend project which should be published soon, I’ve already exchanged a few emails and gotten over 100 answers back… I’m in the process of putting it all together! If you’re interested in finding out more, I recommend that you join our mailing list, it’s free!

In the meantime, here is the list!

[table “489” not found /]

New Trade: Long LinkedIn ($LNKD) & Short Zillow ($Z)

By: ispeculatornew | Date posted: 02.04.2013 (3:00 am)

After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with a few good trades. 3 out of my first 4 are profitable so far and one is above my 20% threshold which means I might close it at any point but for now, I do think there might be room for a bit more profits. You can see live performance of those picks here:

2013 Long & Short Tech Stock Picks

Today, I wanted to go long LinkedIn, despite the fact that it announces earnings this week, something I tend to stay away from. I looked at different alternatives and was looking for other high P/E trading stocks so Yelp ended up being a good candidate but in the end, given the explosion in “local”, I preferred going for a “safer” short. Here are the numbers for those 2 trades:

[table “488” not found /]

Long LinkedIn (LNKD)

LinkedIn nearly ranked at the top of my 2013 social web stocks rankings but being #2 to Facebook (FB), especially when you know how  bullish I am of the Mark Zuckerberg-led company.  The fact is that LinkedIn is in many ways a unique company that could go in many different directions in the next few years with very little competition.  Yes, LinkedIn trades at an incredibly high P/E which creates challenges but I feel a lot better trading it against other high P/E names as I am doing today.

lnkd

LNKD Revenue Quarterly YoY Growth Chart

LNKD Revenue Quarterly YoY Growth data by YCharts

Next earnings: February 7th

zillow_logo-300x63Short Zillow (Z)

I wrote about both Zillow (Z) and Trulia (TRLA) last October and had not been very impressed by either company. That has not changed and I simply don’t see how in the world this stock can trade at such a P/E. Earnings will not explode and there is no reason in my opinion for the stock to trade at such high prices.  Yes, revenues have increased at a solid pace but that growth is slowing down and earnings have not tracked.

z

Z Revenue Quarterly YoY Growth Chart

Z Revenue Quarterly YoY Growth data by YCharts

Next earnings:  February 13th

Disclaimer: No positions on LNKD or Z

Weekend Readings – Super Bowl Weekend

By: ispeculatornew | Date posted: 02.01.2013 (3:00 am)

SBVery exciting stuff.. I was happy to see the Pats go down (sorry to anyone who wasn’t) so now I’ll be fairly happy no matter who wins it. I’m just hoping for a good game and I’ll either be happy for 49ers, a great defense.. or for Ray Lewis! Are all of you planning to watch the game? Any outcome that you’re hoping for?

Before we get there, here are a few very interesting readings that you might enjoy!

General Readings

NY Times attacked by Chinese hackers @ TechCrunch
The power of habit investments @ ZenHabits
10 ways to simplify your investing @ TheBigPicture

Dividend Readings

Finding double digit growth dividend stocks @ TheDividendGuyBlog
General Mills (GIS) dividend stocks analysis @ DividendMonk
Costco (COST) dividend analysis for 2013 @ DividendGrowthInvestor

Tech Readings

Is it time to sell Apple (AAPL)? @ CuriousCat
Facebook (FB) reports very solid results @ Facebook
Does the new Blackberry phone stand a chance? @ TechCrunch
Amazon (AMZN) soars on slower growth, lower guidance @ ZeroHedge