Archive for October, 2013

Dear Republicans, Stop Fooling Around

By: ispeculatornew | Date posted: 10.09.2013 (3:00 am)

john_boehnerI’m generally able to remain out of politics on this blog and while I’m clearly for lower taxes, less government intervention, etc. I do still think many democrat ideas or concepts make sense. So yes, you could say that I’m fairly independent. I will likely be voting Republican more often over my life than not but these days, I find it difficult to justify backing them. I understand Republicans frustrations with Obamacare. It’s a very expensive program and it goes against many core Republican principals. That being said, there have been several battles against Obamacare already. The last one of course being the last Presidential vote. Republicans made the vote largely about Obamacare and lost.

So the Democrats won that battle. Yet somehow, some of the richer men in the country have not given up. They created this great long term that would put insane amounts of pressure on Obama, thinking he would cave. There are many things he has done that I don’t agree with but this is not part of it. Just let the country move forward, work on bigger, more pressing issues. Believe me, those are easy to identify. I understand that repealing the program once it’s in place will be quite a task. That is what the public and government voted for though.

How long are we supposed to be debating Obamacare? Are the Republicans not making the case that the population should give Democrats power in both houses? Some years ago, both parties would fight hard on their arguments but then one side would win and they would then join together for the good of the country. A certain part of the Republican party no longer believes in that. An increasing number of democrats are now doing the same. So what’s the solution? Doing nothing until one party is so dominant that it can get its reforms through? That sure doesn’t sound like the type of thing that a world leading economy would do.

If that is how the government is going to operate going forward, I don’t see how things get resolved. It’s beyond discouraging but I do hope Democrats hold their ground on this so that everyone involved can learn their lessons… Maybe even that is an overly optimistic position.

What are your thoughts on this whole thing?

South Korea In The Middle Of A War?

By: ispeculatornew | Date posted: 10.08.2013 (3:00 am)

ks-lgflagOne of the best aspects of trading ETF’s is how simple things become. Want to buy a bond index? You don’t need to find a dozen bonds that have a strong correlation with the index. Instead, you can simply look for an ETF that tracks the index.

Sometimes though, knowing what index an ETF tracks is not enough. One of the bigger and more known ETF’s is the iShares Emerging Markets ETF (EEM) which tracks the MSCI Emerging Markets Index. Its biggest competitor had been Vanguard’s own Emerging markets ETF, VWO. Then, a few months ago, Vanguard announced it would be switching the index that its ETF was tracking. Instead of tracking the MSCI Emerging Markets index, it would switch to the comparable index offered by FTSE (a MSCI competitor). On the surface, this did not mean much. VWO’s name would change from:

Vanguard MSCI Emerging Markets

To:

Vanguard FTSE Emerging Markets

The main assumption was that it would be cheaper for Vanguard which could then reduce its annual fees. One big difference that attracted some attention at the time was South Korea. Specifically, MSCI considers it an emerging economy while FTSE does not. That is a huge difference. South Korea is over 15% of the MSCI index and is missing from the FTSE one which has been a big problem for Vanguard in the past few months as South Korea continues to do well. That has translated into underperformance by the Vanguard ETF and it very well could continue to be the case.

vwoeem

EEM, which had lost ground in terms of assets under management because of its higher fees has now regained its momentum as more and more investors try to move to what they perceive as the “stronger ETF”. This is a great example where it’s not only about fees but also about understanding the differences between 2 similar indexes.

Is South Korea An Emerging Or Developed Economy?

It’s a very debatable point and you can read more about it here:

http://qz.com/124190/investors-fleeing-emerging-markets-are-still-showing-the-love-to-south-korea/

If you’d like to invest directly into South Korea, you can trade the iShares South Korea Capped ETF directly here:

EWY

Benefits and Risks of DBAs

By: ispeculatornew | Date posted: 10.07.2013 (4:15 pm)

dba businessIf you’re a sole proprietor who wants to legally do business without the massive cost of registering a corporate entity, you should consider using a fictitious business name or DBA (doing business as). You can do many of the same things as a regular business, such as advertise and accept payments but you need to understand what you can do.

Why and How of DBA

If you’re planning to operate a chain of businesses, or create a series of web sites they will use, a DBA will save you a lot of money. It allows a legal entity, individual, or company, to operate multiple businesses without having to go through the arduous process of creating a full-fledged legal entity. In some cases you’ll need a part of your name, and a description of the product or service you’re going to provide, such as J. Doe Marketing Research. If there is more than one person involved, you need to file an assumed name that’s different from your legal name, such as J. Doe Group.

DBA gives business owners a more professional appearance, and if you have a home-based business, it’s a great convenience. The process to register DBA businesses is different in each state but the price is less than $100, and in most states less than $50. In some cases, you’ll just need to register with the county clerk’s office or register with your state. As a DBA, you can open a business checking account, have a business listing, or even have employees. In that case, your DBA will need a federal employer identification number. Depending on how it’s done and its location, DBAs may need to file state as well as federal taxes every year.

Be Careful

The benefits of having a DBA far outweigh the costs, and that’s why a lot of larger companies use these fictitious names when expanding their businesses to another state or even another country. Even though you can do a lot with your DBA, there is very little legal protection to the business owner. It’s a name-only entity that is nothing more than a brand name. It’s transparent so ownership can be traced. Branding can also be an issue, especially if your name is not descriptive enough, and you may wind up having to constantly explain who you are and what you do.

Filing incorporation papers is an involved and expensive process. If your business is one of low liability and legal risk, it makes more sense to delay corporate filing until a later stage. As your business matures, the legal and tax realities of your situation may force you to make that move. If you’re in the business of finance, or law, or any other profession where you are responsible for providing a product or service that could lead to legal liability, a DBA without a legal entity to back it up doesn’t make sense. The best thing to do is to check with your attorney, as well as local and state governments, to see what your options are.

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Closing Trade ($PCLN, $OWW)

By: ispeculatornew | Date posted: 10.07.2013 (3:00 am)

One of the changes I did in my tech stock long & short picks is to give myself more liberty in deciding when I close winning trades. Even though my trade on Long Apple (AAPL) and Short Travelzoo (TZOO) stands at over 30% of return, I’m leaving it open as I continue to believe in the incredible value of Apple and the possibility that product announcements in the next few weeks give more upside potential.

One trade that I will be closing out this morning though is my long Priceline (PCLN) and short Orbitz (OWW). Why? I don’t love being short Orbitz so if I can take some gains off of the table, I’ll do it.  The trade currently stands at +23%. As always, you can see my 2013 tech picks here:

http://www.intelligentspeculator.net/livetrades

PCLN

OWW

The average trade has returned over 3% so far this year which translates into a portfolio return of over 12%, which is above my objective for this strategy. Of course, the year isn’t over and I’ll still have 5 live trades after closing this one so I’m hoping the returns can keep up.

How is your trading going these days?

How to Save Thousands on Your Home

By: ispeculatornew | Date posted: 10.06.2013 (9:14 am)

mortgage

Shopping for a new home can be a lot of fun. Thinking about moving into a new home and a new neighborhood can be one of the most pleasurable experiences many will go through. The only thing that many people do not like is when it comes to thinking about actually spending money to get a new home. Homes are expensive, so finding any way to save money will help to make it easier for you to get the home you actually want to have. Among the ways you can save when buying a new home are to have an edge for bargaining the price of the home, get the best rates on your mortgage, and try to pay off your home early. This will help you to save thousands of dollars.

Bargain with the Sellers

The best bet for saving a lot of money whenever you are buying a home is to buy directly from the sellers. Also, if you know something about the home or the area, it can give you an edge when negotiating the deal on the home. If you know the home has been on the market for a long time, you can negotiate a better price because the sellers are ready to unload. If the sellers are not even living in the home, it is just a drag on their budget. Any price you offer them, even a loss, will help them to save by no longer spending money on the mortgage.

Get the Best Rates

The interest rates you pay on the mortgage will also play a big role in how much you pay for a home in the long run. If you are able to negotiate the best mortgage interest rates on your loan, you will save a lot of money. Getting your loan at a good time is important, but so is making sure you are getting the loan from the right people. Some lenders have more leeway in brokering the interest rate you will be responsible for. Look for those who start with a low rate and see if you can get them to go even lower. This will make a difference of literally thousands of dollars over the life of your loan.

Pay off Your Home Early

One of the biggest expenses when you are purchasing a home is the interest. This is why the sooner you can pay off the home, the more money you will be able to save. This does not mean to save up a lot of money and pay a big payment near the end of the loan. Instead, pay a little extra on each of your payments. This will allow you to slowly chip away at the massive amount left to pay on the loan. It will also allow you to save up for other things you want to purchase. Many will make the goal of making an extra payment a year to minimize the amount of money being spent over the life of the loan.

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Weekend Readings

By: ispeculatornew | Date posted: 10.04.2013 (3:00 am)

silkroadHave you ever heard of Silk Road, the invisible website that was facilitating selling drugs and other illegal products? The FBI was finally able to take it down. You can read the fascinating story here! I’m convinced Ben Mezrich could write a great book about the guy who started it. Otherwise, here are some good readings for the weekend:)

General Readings

What we get when we buy a stock @ Ivanhoff
Keep your trades to yourself @ KirkReport
Tip of the hat to Jim Cramer @ iBankCoin
A US-Canada merger? Sounds silly? @ NationalPost

Dividend & Passive Income Readings

TSX60 Dividend Income @ TheDividendGuyBlog

Tech Stock Readings

What is a platform (I often call them ecosystems) @ Sarver
Social networks fighting for the second screen @ NYT

Hoping Carl Icahn Pulls This Off ($AAPL)

By: ispeculatornew | Date posted: 10.03.2013 (3:00 am)

$AAPLI’m a big believer in Apple. In its current products, its management team, the possibility of future products. It makes tons of profits, continues to show strong growth in revenues and profits. Best of all, I continue to think its price is very reasonable and its P/E ratio is among the more attractive ones out there. So of course, I did take a longer term position and have done very well with it (stock is up over 25% from that point). Owning Apple isn’t as “cool” as it was a year or two ago but that is when more contrarian investors, activist investors jump in which is exactly what Carl Icahn ended up doing. He strongly believes in Apple’s value and is very involved in trying to help Apple reach that point. The one thing that would unlock value is for Apple to put its incredible stack of cash to work. How? A big dividend is interesting and would help the case of Apple as a core dividend play but I do agree that a stock buyback is much more interesting. Decrease the number of shares outstanding to increase the value of the existing shares (in terms of the price, revenues/share and EPS). I could hold on to my shares for a couple of decades without paying any taxes.

It’s interesting how Mr. Icahn has been tweating about his progress… He’s certainly getting his point across. How many shares does one need to own to have coffee with Apple’s CEO, Tim Cook? Based on CharityBuzz, that number is staggering… like $610,000 🙂

twitter

Disclaimer: Long Apple (AAPL)

Top 100 Dividend Stocks – October 2013 Edition

By: ispeculatornew | Date posted: 10.02.2013 (3:00 am)

dream-landscape-sun-grand-skyDividend 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 for the first time, I started from the Russell 1000, a large cap index that (as you can imagine) includes twice as many names as the S&P500.

Find Out More

In the next few days, I’ll be doing some research on a few of the top names on this month’s list. You can find out more by joining our mailing list, it’s 100% free:)

 

American-Capital-AgencyTop Name This Month….

Once again, the top name this month in terms of dividend yield is Windstream Corp (WIN) which has been on this list in the past. The dividend yield is high but the actual dividend has not changed in some time as you can see below:

AGNC

A declining dividend is rarely a good sign and I’ll likely stay away from this one. Just look at how the chart has done this year:

AGNC

In the meantime, here is the list!

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Repeating Myself: Don’t Count On The Government…Ever

By: ispeculatornew | Date posted: 10.01.2013 (3:00 am)

shutdownA few weeks ago, I received a letter from the government giving me information about the pension I can expect to receive once I reach the retirement age. Part of that is based off of (mandatory) contributions I’ve been paying through my income taxes. There is an amount that I’d get using my current contributions and a higher amount assuming that I’ll keep making those contributions until age 65 or whatever it ends up being.

Those are certainly nice promises. But in this week where the US government is officially “shutting down”, it seems like a terrible idea to base your retirement plans on those promises. Governments around the world are running massive deficits and it’s not getting better anytime soon. They are all afraid to take long term corrective action because of the political price involved. Whatever is being done is so small compared to what needs to be done (cutting spending, increasing revenues, increasing retirement age, etc),

You Might Think This Won’t Affect You

A few months ago, we heard about the city of Detroit going bankrupt and I heard so many analysts and even friends and family saying that it wasn’t a surprise. Of course, motor city that is a century behind building those cars is going bankrupt. If I were you, I’d check on your own city before judging Detroit. It’s surely not in as bad of a shape. But if I told you that San Jose, which sits on top of the Silicon Valley explosion is also going down that road, what would you think?

Believe me, This Is Happening Everywhere

It’s happening in the US, in Canada, in Europe, in Japan and elsewhere. Excessive debt is creating a major burden and will end up resulting in broken promises all around the world.

The solution of course is to start building your own passive income sources as I continue to work on and do updates on. Don’t wait for the government to force you into saving… it’ll be too late.