Archive for April, 2013

Passive Income Targets – April 2013

By: ispeculatornew | Date posted: 04.16.2013 (3:00 am)

retirementI’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

April Updates

-I did take a look into the idea of owning Bitcoins, which would not provide income but would help diversify my assets.

-It was a rather slow month but I did post an update of the Ultimate Sustainable dividend portfolio

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?:)

passiveincome

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:

5.38% – Dividend/Investing Portfolio: I am currently generating a dividend yield of about 3.43%. 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.

7.48% – Private Investment In My Online Company: I have discussed how my web company has been the best investment of my life so far. I’m happy to say that I was able to slightly increase my monthly income from the company even though it wasn’t expected. I certainly hope that will keep happening.

Total: 12.85%

It’s not spectacular by any means yet. That being said, I am 31 years old (soon to be 32!) 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%:)

passiveincome2

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 as well as the question of becoming (or not) a landlord.

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 love seeing that little blue line above the red one, it’s a very nice thing to see:) So far so good in terms of reaching my next objective of $12,000 per year by January next month. In fact, I’ve already surpassed that amount and will work hard to get closer to my $25,000 goal.

passiveincome3

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 eBay ($EBAY) & Short Yahoo ($YHOO)

By: ispeculatornew | Date posted: 04.15.2013 (3:00 am)

I’ll start off by saying that this morning I will be closing out 2 existing trades. I actually have 2 trades that have returns over 20% and 1 that is below -20%. I’ll be leaving Long TripAdvisor (TRIP)/Short Travelzoo (TZOO) open as I do still believe there is a lot of upside. The two trades I’m closing are:

Long Dice Holdings (DHX) & Short Monster Worldwide (MWW) +21,02%: This is a trade I’ve done over and over but in recent months, Monster’s prices have gotten much closer to what I believe to be its value.. still happy to get this one done.

MWW

Long eBay (EBAY) & Short XOXO Group (XOXO) -24,42%: XOXO group is such a tough one to trade, I’ve been burned a few times and might remove it from my radar at this point. The stock is tricky to trade because of the fairly low volume and little news that comes out.

EBAY

XOXO

It feels great to be back in on the action today, opening a 7th long & short tech stock trade. As always, you can see my live tech long & short trades and performance here:

2013 Long & Short Tech Stock Picks

This week’s trade is an interesting one. I’m shorting a stock that I do believe in…s. You can see the numbers here:

[table “507” not found /]

Long eBay (EBAY)

eBay continues to be one of the top ecommerce plays because of its dominant Paypal unit but also because it continues to make smart plays in terms of its mobile and auction sites. I did write a few weeks ago a bit more about my thoughts on eBay which you might want to take a look at.

EBAY

Next earnings release: April 17th 2013

Short Yahoo (YHOO)

I’m certainly much more optimistic about Yahoo’s future now that Marissa Mayer is in charge. I do think they have a decent shot at turning things around but it will take time. She’s taking a lot of big (and needed) decisions which will be good over the long term but will cost money in the near to medium term.

YHOO

Next earnings release: April 16th 2013

If ever any of you are interested in my technology stock thoughts and picks, I invite you to my tech stocks newsletter, it’s free and you’ll get an email bi-weekly with additional thoughts on many of these names:

Disclaimer: I will enter into the trade this morning but have no positions as of this time…

Weekend Readings

By: ispeculatornew | Date posted: 04.12.2013 (3:00 am)

BHioM77CEAIKSK5The Bitcoin story has been fascinating… I honestly could easily defend its value if it crashed closer to $0 or to $1000… it’s just impossible to say! I’d love to hear your thoughts:)

General Readings

Bitcoin markets under attack @ TechCrunch
BitCoin visualized @ Visual Capitalist
How high should income tax rates be? @ Fiscal Times
Dan Loeb’s investment process @ ReformedBroker
The Obama budget @ TheAtlantic

Passive Income and Dividend Readings

What Cyprus banks have in common with US and Canadian banks @ TheDividendGuyBlog
Cincinnati Financial Corporation (CINF) analysis @ DividendMonk

Tech Stock Readings

Evernote expansion @ AllThingsD

More Thoughts On Google (GOOG)

By: ispeculatornew | Date posted: 04.11.2013 (3:00 am)

Sometimes I feel like I could write a daily blog about Google. Things move that quickly and while a lot of this stuff has limited impact on the short term revenues and earnings, I do still think they do matter when trying to determine Google’s (GOOG) longer term value. Why? Because even if one of these long shots (self-driving cars, Google glasses, Google fiber, same-day shopping, etc) turns out to be a game changer (as in multiple billion dollar business), Google’s value would be significantly impacted.

Google’s Retail Aspirations

Last week, I wrote a post on SeekingAlpha where I heavily criticized Google’s idea to compete with Amazon, eBay and others in the same day shipping segment. I said Google should instead focus on physical retail stores (i.e. similar to Apple stores) and Google Fiber. One week later, very interesting news as Google confirmed it was expanding its Fiber service and will be servicing Austin, Texas by mid-2014. This is fascinating. How Google is able to offer a service that is so superior to what traditional cable makers can do at a lesser price is truly amazing. I can’t tell you how excited I’d be to be in Kansas City or Austin. In many ways, Google is truly changing the way we get access to television and the internet. It’s putting a lot of pressure on AT&T and others but I have yet to see them come up with a viable answer. That being said, Google is moving slowly on this front and it will be interesting to see how this evolves over time.

As a consumer, I’d obviously love to see Google start to expand rapidly on Google Fiber but the tricky part is that it’s difficult to know how profitable Google Fiber is and how much it helps further its other goals (faster internet, more use of its products, Youtube progress, etc)

Android Concerns

The major news these days concerns Android though with a few stories breaking:

Microsoft (MSFT) and other allies have started complaining that Google is abusing its dominance of Android (they’ve already complained about abuse of search) to promote its other products. How roles have reversed as Google was making such complaints 15-20 years ago against Microsoft’s dominant Windows position. It’s unclear where such complaints could lead in addition to legal bills and decade long battles

Facebook: I saw the following Tweet which I loved:

tweet

Think about it.. Facebook and Google have been fighting for years now over the future of the internet, how social will be used, etc. Now, Facebook is taking over a Google Android instance and building its own phone with HTC. Talk is that over time, Facebook would start replacing Android features by some of its own (including search). Can you imagine how ironic this is? I can only imagine how worrying this might be to Google execs. It’s far from certain that this phone will be a big hit.. but what if it did?

Samsung Dissociating Itself From Google/Android: Just a few weeks ago, Samsung announced its latest S4 phone to great anticipation. One of the more surprising aspects was the fact that Samsung barely mentioned anything about Android. In fact, it seems to be launching some services, apps and other services that will compete with Google’s. In a world where Apple and Samsung are the two dominant players and the S4 is the only phone to compete with the iPhone, I have to think this is very worrying for Google.

All of that being said, let’s not kid ourselves, Android remains an incredibly valuable platform even though it does not directly generate revenues. But the past few days have certainly raised a lot of questions and I think it’s important for any who either holds Google or is considering doing so to follow all of these stories

What are your thoughts on Android’s value and do these stories worry you at all?

Ultimate Sustainable Dividend Portfolio – April 2013 Update

By: ispeculatornew | Date posted: 04.10.2013 (3:00 am)

retirementIn 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 “506” not found /]

Dividends Received

April is certainly not a very interesting month. Yes, there is a 15% increase over April 2012 but it still only amounts to $11.60. Oh well:) I will be adding more money into the fund and thanks to my use of the DRIP.  Take a look at the progress:

usdp-inome

Ultimate Sustainable Dividend Portfolio News

It was a very calm month this time around with none of the stocks announcing increases.

Returns

I’m thrilled to see that the USDP continues to do well, it has slipped very slightly under the S&P500 but not enough to concern me. I’m still very happy with the return!

usdp-progress

Trades

Yesterday, I reinvested about $1200 (including the $1000 which I’m reinvesting every month) into 3 stocks that were under-invested but also had very strong profiles in terms of my 7-7-7 rule, here they are:

SJM JM Smucker Co/The (SJM)
TROW T Rowe Price Group Inc (TROW)
ADI Analog Devices Inc (ADI)

Like It Or Not.. The Government Is Coming After Your Money

By: ispeculatornew | Date posted: 04.09.2013 (3:00 am)

government_stealing_moneyMost of you know that I’m generally willing to accept somewhat higher taxes. I have however said over and over that there are many MUCH MORE important issues. Spending is one, especially in entitlement programs. Other priorities include finding a better way to reduce health care spending, simplifying the tax code, etc. Despite having some views in common with democrats, I hate the idea that the government should get more involved. It’s less efficient and over time that is what matters most.

Unfortunately… it doesn’t look like we’re going to see the government getting less involved in our things. It’s tempting to blame everything on Obama but the fact is that it’s happening all around the world.

Higher Income Taxes: In dozens of countries, taxes are rising, especially on the wealthy. think of France’s 75% rate on millionaires or how the US government let Bush tax cuts expire for more the more wealthy among us.

Bank deposits being taken away: When taxpayers helped fund the bail-out for banks that were too big to fail, many thought it was unfair. The EU proved it felt such action could be justified when it decided to take over part of depositors money in Cyprus.

Cap On Retirement Accounts?: I find this one shocking. Yes, it’s surprising to see that Romney has accumulated millions of dollars in his retirement account. But how in the world does it make sense for the government to start taxing what is supposed to be tax free? My biggest issue of course is where this ends. Currently, Obama is proposing a $3M cap in those accounts. But once such a cap exists, it could end up coming down and completely changing the been fits of using retirement accounts. That doesn’t sound too fair to me.

IRS Trying To Tax All Internet Transactions?: This one sounds creepy on many levels. The IRS apparently wants to know exactly what we’re doing online by creating special tracking software. What is going on? More on Yahoo’s article here.

If governments are desperate enough to:

-increase tax rates on what they tax
-start taxing things that it’s not (retirement accounts, etc)
-take money out of your accounts
-probably cut its promised pension payments
-etc…

Then it’s certainly not looking great for those of us working on increasing our net worth isn’t it? Sigh

New Trade: Long Microsoft ($MSFT) & Short IAC Interactive ($IACI)

By: ispeculatornew | Date posted: 04.08.2013 (3:00 am)

It feels great to be back in on the action today, opening a 7th long & short tech stock trade. As always, you can see my live tech long & short trades and performance here:

2013 Long & Short Tech Stock Picks

Today, I took all stocks that I follow, I then removed stocks that I have live trades on as well as those that I do not have a good enough feeling these days to trade and was left with 12 stocks. These were the smaller P/E ones. You can see the numbers here:

[table “505” not found /]

microsoft_logoLong Microsoft (MSFT)

Is Microsoft under attack? Absolutely. But let’s not over-blow the impact here. It continues to have solid core products such as Windows and Office but also solid products in many different areas such as gaming, web properties, etc. I don’t think Microsoft will get back to its former growth rates but it is still a good holding at its current price.

MSFT

Next earnings release: April 18th 2013

Short IAC Interactive

IAC Interatice has been able to grow its business more than I would have expected in recent months but when I look at the fact that Microsoft made more in earnings per share in 4 of the last 5 quarters but IAC is valued almost 50% higher, it just seems like a great opportunity.

IACI

Next earnings release: May 2nd 2013

If ever any of you are interested in my technology stock thoughts and picks, I invite you to my tech stocks newsletter, it’s free and you’ll get an email bi-weekly with additional thoughts on many of these names:

Disclaimer: I will enter into the trade this morning but have no positions as of this time…

Weekend Readings

By: ispeculatornew | Date posted: 04.05.2013 (3:00 am)

zebraSometimes it feels like the media is making a big story out of nothing. I don’t feel that’s the case regarding Cyprus. The EU taking money from depositors is a game changer, no other way to put it. Will this happen again? Impossible to say for sure but this is a dangerous precedent. I sure would feel nervous if I had money in one of those banks.. and I guess no matter where we live, we do have to at least prepare for such a scenario..right?

General Readings

Extreme early retirement @ DarwinsMoney
Feels like tax reform will never happen:( @ Politico

Dividend Stock & Passive Income Readings

Most popular dividend stocks – April 2013 @ DividendStockAnalysis
The power of the stock market @ TheDividendGuyBlog
5 engineering dividend stock raising dividends @ DividendMonk

Tech Stock Readings

Is Google (GOOG) making a critical mistake? @ SeekingAlpha
A Facebook (FB) phone? @ TechCrunch

Photo credit: National Geography

Thinking About Getting Into Apple (AAPL)? I’d Get In Now

By: ispeculatornew | Date posted: 04.04.2013 (3:00 am)

Apple’s (AAPL) stock has been off to a tough start to the year so far as you can see in the below chart. It continues to generate tons of opinions, from believers, bears, dividend investors and even activists. I’ve personally been a believer and while it’s been a great bet in the past few years, this year is not turning out as well. That being said, I’m likely going to be taking a bigger long term position on Apple in the coming days. Why?

AAPL

Upside vs. Downside

I always look at possible investments in terms of the potential upside vs. downside. In Apple’s case, let’s start off with some numbers:

[table “504” not found /]

So basically, Apple is trading less than a 10 P/E ratio. To give you an idea, AOL(AOL) and Microsoft (MSFT) both trade at comparable P/E ratios, but are growing revenues and earnings per share at a fraction of Apple’s growth.

The vast majority of Apple’s revenues come from sales of iPad and iPhone devices. They have both lost market share but remain at or near the top in fast growing markets so to say that Apple’s growth will decline might be true but there’s still a lot of growth left, no doubt about it.

Significant Upside

My argument also relies on the possibility that Apple will come out with a few more big products.

Yesterday, Brian White of Topeka Capital Markets published research saying that Apple will launch a 60 inch Apple TV later this year (that would also come in 50 and 55 inches) that would be synced with smaller screens/tablets for users wandering around the house among other features. If you remember, Steve Jobs had hinted he had figured out how to do TV.

There have been many rumors that Apple is working on an iWatch.

Apple still has a lot of expansion planned for its existing products such as having T-Mobile start selling the phone, expansion in China and other markets, etc.

These and other products might not make it. But think of the past few things that Apple has launched.. iphone, ipad, macbook air. Not that bad right? Don’t you think there’s at least a shot that new products give a boost to short-medium term growth?

Don’t Wait

Yesterday, following that research note, Apple outperformed the Nasdaq by a decent margin. It’s certainly possible that the report ends up being wrong, but if such rumors start coming out, the stock will rise significantly. If you want to wait until official announcements come out, chances are that you’ll miss almost the entire rally. With little to lose and a lot to gain, I’d argue that this is a great time to go long Apple.

Disclaimer: Currently long Apple (long-short trade vs NILE) and will likely go longer in the next few days

Bitcoin Currency, Should You Care? Are You Missing Out?

By: ispeculatornew | Date posted: 04.03.2013 (3:00 am)

bitcoinsBefore getting started today, I’ll assume that some of you have never heard about BitCoin, so I’ll give you a bit of an introduction.

What Is Bitcoin?

Bitcoin is a currency started 2009 and meant to become a completely decentralized currency, working in a more efficient way compared to those run by central banks around the world. It is virtual (there are no physical coins or anything) and the “printing” of money is done on a regular basis but at a very controlled pace. Why? Economic theory says that inflation over the long term will be equal to the increase in money supply so having a more stable money supply would make it much easier.

Find out more at:

Wikipedia
Bitcoin official website

Does It Actually Matter?

Over the past few months, Bitcoin has certainly been getting a lot more coverage and interest.  Just last week, a major venture capitalist, CHris Dixon, declared Bitcoin part of the 3rd wave of currencies:

Three eras of currency
Commodity based, e.g. Gold
Politically based, e.g. Dollar
Math based, e.g. Bitcoin

The number of Google searches is also reaching its all time high:

bitcoin

 

Traffic to its website is also increasing based on Alexa.com data:

bitcoin-traffic

 

 

How Much Is A Bitcoin Worth?

The value has been increasing in recent weeks against the US dollar with one bitcoin being worth $95 or so. In fact, after starting to write this post, the value increased past $100:

screen shot 2013-04-01 at 10.32.43 am

Over time, a lot more is possible with bitcoins as many virtual and physical goods can be purchased with them and the virtual currency can also be exchanged for more “traditional” currencies such as US dollars.

Where Is This Headed?

It’s very difficult to say how quickly this trend will keep up but with diminishing faith in governments and worries that currencies or banks will end up “stealing” or making deposits worthless, Bitcoins are certainly an interesting alternative. Bitcoin ATM’s are even popping out

I’m Thinking About Giving It A Try

At this point, I’m considering trying it out, putting a few hundred dollars into Bitcoins to get a better understanding of how it works, the benefits and flaws (there are some). This could probably not help me generate more passive income but it could make my savings more diversified without a doubt.  There are certainly some worries around Bitcoins (such as security, their long term value, etc) but I do think the project seems more promising than ever and might be worth looking into.

Do any of you own Bitcoins or have you considered buying some? Would you hold some of your cash in Bitcoins?