New Years Resolutions - 2008

I'm actually not one for New Year's resolution. I'm much more the type to just start something whenever the mood hits me rather than wait for a specific point in the year to take on a new challenge. However, since I have this blog up, I've decided that it would be good to lay out some financial resolutions for myself and see how it stacks up at the end of the year. So my financial goals for 2008:

1. Double my $20,000 - Obvious but worth mentioning.


2. Develop another source of Income - Right now I have two. I have my job and I have my investments. I really would like to have at least three if not four. It would be great if I could get this blog to make money. But if not that, I really want to at least come up with an idea on how to get my income to go up. I could probably save myself to being rich, but it will be a much easier journey to get there with another income.


3. Watch my basket more carefully - Warren Buffet advises that you put your eggs in one basket and then watch the basket very carefully. That is something I got away from in my investments this year with all the other things going on in my life. I need to be more choosy in picking stocks for my long-term portfolio, and watching that basket like crazy. I made a big mistake with ETrade, and should have gotten out much earlier. I paid the price for it.


4. Spend more money - OK. I know, this is usually the exact opposite of what most people try to do. Problem is, I'm not most people. I suffer from the exact opposite problem that most people do. I save way too much. I probably save about 60% of my net take home pay in one form or another.

That's it for now. They are actually pretty big goals. #4 may seem easy to some, but it has proven very difficult for me in the past. I even started a "spending" plan about two years ago, and it didn't work. I couldn't make it stick. Odd huh?

What are you New years resolutions?

Idiots Turn Trades into Investments

A while ago I took a position in some Natural Gas drillers.  Specifically Grey Wolf and Nabors.  I never really planned on owning them long term.  I just took positions because I thought I wanted a few different energy plays and so I branched out into an area I wasn't totally comfortable with (mistake #1).

I actually did OK on these at first, and saw some good gains.  As I was in this for a trade, I should have gotten out, but I didn't.  Soon after, the price of Natural gas spiked down and never recovered.  Since I didn't have a lot of money invested in either position, I didn't really worry about it.   I figured that it was OK and that it would eventually come back.  So I held.  Held like a chump.

I should have just gotten out of the position when it reversed.  I made a classic mistake that so many of us make; I let a trade become an investment.  I held on to the position WAY too long in the hopes that it would eventually come back.  Hope, it's the one case where it really isn't a very good thing to had.  I kept telling myself that energy was a great story and it would continue to be so (it is, but this wasn't the way I should have or wanted to play it).  I kept coming up with excuses to keep the stock.  But that was unnecessary.  It was a trade.  Trades don't have reasons, only investments do.

I finally got out of the positions this week.  I did it to take the capital loss and offset some capital gains I have but it should have never come to this.

Markets are Janet Reno Ugly

The market was down significantly today. The Dow was down almost 200 points and the Nasdaq was even worse than the Dow. There was a host of bad news that came down today from the assassination in Pakistan to Goldman coming out and downgrading a bunch of the financial stocks.

I'm not going to buy any stocks for the rest of the year. There is just no compelling reason to do it. Here is the problem. Everyone thinks that 2008 won't be a good year for stocks. And if you know anything about the market you know that expectations play a very big role in the short term. While sentiment is this way, people have not thrown their hands up and given up. The S&P is still up about 4% of the year. So you know that there is still a lot of people out there who are still bullish on the market.

But we are definitely trending down. To make matters worse, Christmas and New Years fall on Tuesdays meaning most are taking long weekends. This means few people making trades. Volume is very light right now. What that means is that there is not much liquidity in the market. Less liquidity means more volatility and more volatility means more risk. Best to not go long any new positions unless you are really sure about it for the rest of the year. I have to clear some losses out, so I hope the market doesn't tank before I can get out, but we will see.

Note:  Smart people can make lots of money when the market looks like this.  You can always make money whether the market is going up or down.  I'm just not that smart :)

Those Lattes Cost You $20,000

Here is a trick to prevent yourself from buying something you don't really need. Whenever I really

want something, I always think about just how much money it is actually going to cost me down the line.

The alternative to buying something is to not buy something and save the money. You then put the money

to work for you and suddenly that small purchase really starts to make a difference.

Take lattes for example. Say you buy a latte at $5 a pop everyday you go to work. Figure that there

are about 230 work days in the year and you see that lattes will cost you about $1150 a year. Now say

instead of buying those lattes, you save the money and at the end of the year put the money in an index

fund. After 30 years, assuming a 10% rate of return, that money turns into $20,000.

The Real Cost
Cost Today
Rate
Years
Amount

This is even more true for big ticket items or things that are reoccurring. That $3000 LCD flat

panel? That cost you $52,000. Want to buy a new car instead of just keeping your current one? That could

cost you almost $500,000. This is not to say that you should live like a miser and not buy anything. You

should of course enjoy your life; you just need to be aware how current consumption will affect your

future net worth. The latte example only considers one year. Imagine if you don't do it over 30 years. The numbers get staggering.

Want to try it out yourself? Just enter the cost of some item above, and it will

calculate what the real cost of that item is 30 years down the road. If you want to adjust the numbers

from the default, you can do that too.

Ivy League Schools are Affordable

Harvard announced today that it would ease the burden that Middle-class families would have to bear to send their kids to the second-best university on the planet.  I have always stated that Ivy League schools are actually more affordable than many other universities.  They just have a ton of money to help those who genuinely need it.

By the time I got to college, my family was relatively poor.  I came from a single family parent where my mom was making under 30K a year.  When choosing colleges, I did not let cost factor into the equation because I believed that a good education from the right school was worth it at almost any price.  What I discovered was that these schools had fantastic need-based financial aid.

I left Princeton (the best university in the world) with about $17,000 in debt (all of which is already paid off). If I had actually been about two years younger, I would have left with $0 in debt as Princeton has switched all it's need based financial aids to grants rather than loans.   The last two years I attended the university, my family paid $0 to the university.  I only paid  my fees to my eating club.

I actually talked to several people in my high school who did not apply to some of the better schools because they were not sure how they would afford a private school tuition.  I wish they had known how affordable it really can be.  So for all those of you who find this page and are wondering if you should apply my advice to you is this.  APPLY!  Worry about how you will get the money later.  The worse thing that could happen is that somehow you might not be able to afford and you won't go, but you will never know unless you try.

Gambling, Stocks, and Beating the Odds

I listen to a lot of sports talk radio. On the radio today was a sports bookie and he was talking about where the good places to bet would be in the coming months. Right now, there are a lot of things you can bet on like the NFL regular season, the College Bowl Season, and Basketball.

Something he said really interest me because it applies so well to picking stocks. He was telling people where they should put their money this bowl season and was telling people to look at some of the smaller college basketball games. His reasoning was that there were so many people focused on the NFL and College Bowl Games that there was just not enough coverage of some of these smaller college basketball games and that meant there was great value there.

When picking stocks, this is the sweet spot. I will admit, I've not been great in this space, but one thing you as a small investor can do to gain an advantage is to look at the smaller, less well known names. The big names like Google and Goldman Sachs are very well researched. The odds of you getting an edge over someone else is very small. However, if you concentrate on the stocks not covered as well, you can find some great value.

All I Want For Christmas ...

are a few great stocks. I've started my wish list where I will put all the stocks that I'm actually interested in buying. I might buy one out of ten stocks, but it will give you an idea of what I'm thinking. I'll update it regularly so check on it often. One of my goals this holiday was to figure out what stocks I was going to buy for this journey. Thus far, I haven't identified any, and have only listed some good long term plays. I'll continue to plow through some ideas that I have and hopefully come up with a good play for tomorrow or later this week.

Hope everyone is having a good holiday. If you want to get me a gift I really need some short term trade ideas.

Salute to the American Consumer

Tomorrow is Christmas. Not to sound so cynical, but it really is one of those things that has turned into a consumer driven holiday. Given that, it gives great insight to where we are as a nation economically and where we might be headed for the next year.

This year looked to be a bad year for retailers. Many people were blaming the subprime mess and credit crisis for the problems. Others believed that the consumer was worried about a recession. But it looks like there may have been a slight last-minute rush to the stores.  However, I wouldn't rush to crown this a great success.  Other reports I read are that Credit Card debt is rising, so much of this consumption may indeed be borrowed from the future.

This holiday season will be crucial to myself because it will dictate a lot about where I think the economy is actually going this year, and thus my investment strategy.  You see, people vote with their wallets.  It is an important psychological thing for people to buy things during this time of year as to not disappoint their loved ones.  If people aren't spending, they are worried about the future.  If they are worried about the future, they must see things on the horizon that really worry them.

I've been a natural bear for a while, so I need to temper whatever news comes out about the consumer with my own internal bias.   I would be shocked if this holiday season turns out to be a success as I think the wealth effect will be working in reverse.  People are starting to realize that their home is not an ATM.  I think it is happening slower than it should, but it is happening.  If people feel poorer, they will spend less, and the economy numbers will be affected.

How I Will Spend My Holiday Weekend

Lucky for me, I also get Monday off, so I will have a four day weekend coming up. So what am I going to do?

I'm basically alone this weekend as I have left my girlfriend up in Seattle for now, and won't be seeing her until the next weekend. Despite the fact that I could use a nice respite from a rather hectic work week (and nightmarish commute) I will be quite busy. On my to do list

• Catch up on this blog. I really want to pick at least two or three stocks this weekend and at least set up my portfolio


• Attend a Heroes marathon at my friend's place


• Find an apartment. I'm pretty tired of the commute, and need to get a permanent place closer to work


• Catch up with some California friends. Actually haven't seen anyone since I got here a week ago.


• Balance out my regular portfolio. Probably need to make some sales of stocks for tax reasons.


• Sleep. I've been working 11 hour days this week on top of a 4 hour commute.

What are your plans for the weekend?

Free Trades - The Temptation

Yesterday was free trading day at E*Trade. Being that I want to do some short term trades, it would have been a great day to just get in and out of stocks today and hopefully catch a few bucks this way. However, I'm not going to trade while I'm at work, so this really wouldn't have been possible for me. That being said, I was tempted. But as MoneyNing correctly points out, you shouldn't let a promotion make you make an impulsive investment. So I've stood to the side as I haven't had the time to properly investigate any stocks.

One thing I do like to do is to look at the days top gainers and losers to see if there is a trade built around them. Sometimes, a stock pops for very bad reasons, or drops for the same reason. One stock that caught my eye was CAKE, The Cheesecake Factory. I've not been a fan of this stock for a long time. Yesterday, it went up because hedgefund manager Nelson Peltz has decided to take a position.

I've always been boggled by Cheesecake Factory. The place is ALWAYS crowded despite the fact that the food is somewhat mediocre and pretty overpriced. It has a lot of choices, but one thing I have learned is that more choices is not always better. I would love to short this stock. I think it may go up slightly from here, but I don't think that Nelson Peltz buying into this stock is going to keep this stock up. He also bought into Wendy about a year ago, and well, that stock hasn't done so hot.

The Illusion of Work

Do you know a guy at work who seems to always have a lot of work, but in reality you know he doesn't?  They appear in most companies.  There the guy running around all the time complaining about how much work they have and how they can't get any of it done.

I'm not saying that everyone who does this doesn't actually have a lot of work.  Many people are genuinely overworked.  However, I've come to the conclusion that most people do this to themselves.  I will admit, that sometimes I probably made it seem like I had more than I had simply so it would look like I was working hard.

But I've decided to go the other way on this one.  I want it to appear that I'm always in control.  Think about this carefully.  I'm at a point in my career where I want to make the move from middle management to upper management.  This is a big jump, and the rules at the top aren't the same at the bottom.  While working your ass off is what it takes to get where I am, I don't think it will get me much further.

Executives need to always be in control of the situation.  Things can not be hectic around an executive.  Having "too much work" is a sure way to cause chaos.  Things get missed when you are overworked, and when things get missed at the top, they have a BIG impact on everyone else.  Further, it is crucial that management always be able to do more with less.  If you can't manage your own workload, how are you going to be able to manage the workload of others.  How are you going to manage it when you inevitably have to cut staff and produce even more?

This isn't to say I'm not going to work hard.  Of course I am, it's just who I am.  But I'm going to be sure not to make it seem like I have "too much work".  What are your thoughts?  Is it more important to look busy or look like you can manage your time effectively?

First Day on the Job

So yesterday was my first day on the job.  It was a long day.  I got up 2 hours before I started because my commute was 1.5 hours.  Got to love L.A.    Despite the fact I can live rent free with my Mom for the time being, I think it will be worth it to just go find a place.  Will probably go look this weekend since next weekend I'm back to Seattle to go finish my move.

Not a lot out of the ordinary for the first day of work.  Just your usual orientation stuff and introductions.  Went to lots of meetings where I didn't know what anyone was talking about.  Some people feel very uncomfortable in these types of situations.  I don't.  I find you can learn much faster if you just get in the middle of it and figure out how the team operates.  I have been told I actually have to make some key decisions this week.  It's a little early even for someone who can learn quickly like me, but hey, I'm up to the challenge.

Sorry this is not more of a substantive blog post.  It's going to be a little light this week as I get my feet wet.  I will still have a blog post every day and actually have some pretty good stuff planned going forward.  I'm working some long hours this week, which goes against some of the things I believe in when it comes to work.  More on that later.

The Corporate Review System

The comic for Dilbert yesterday was fantastic and it actually covers a topic I've been wanting to talk about. I've done a lot of thinking about how reviews work in corporate America and how they fail miserably at achieving what they are set out to achieve. Reviews should be set up to give honest feedback to someone about their job performance, set clear goals going forward, and to motivate an employee to reach their full potential.

Everywhere I've worked, there has always been a mantra that "Our people are our most important asset". This is particularly true in the tech world because your business is based on information and knowledge which must be created by smart and creative people. So, on the surface, there is at least some recognition that for a business to succeed in this space, they must have great people.

But almost every employer bases their review system on a bell curve. Now think about that. A bell curve represents a normal distribution. It is supposed to represent a nice AVERAGE population. For every "great" person you have, you must have someone who is not so great. The majority of the people will be "average".

Now, I'm all for differentiation. I believe people need to be ranked within an organization and under-performers need to be pruned. But to go into a review with the expectation that your employee pool must come out "average" is laughable. If you are a knowledge based business, and you have average people, you are going to get average results. It's a simple equation.

But differentiation does not mean that there needs to be winners and losers. I think the only incidence that I have heard of someone getting this right is Netflix. Netflix has a policy of keeping only the best. There are no "average" reviews. Getting an "average" review means you will be shown out the door. They openly advertise that they pay more than market rates. And I agree. If you want great people, you need to pay for it. Great people know they are very hard to replace. You may pay these people 15% more, but you will get 100% more work.

It reminds me of a controversy at Princeton when I was there. Grade inflation was a big topic there and at other Ivy League schools. It seemed that too many students were getting A's and B's. At the time, I agreed. I thought more people needed to get lower grades. But now being removed from the situation, I kind of see how ridiculous that is. Almost every single person at an Ivy League school was a top performer in their high school. Giving someone an 'F' because someone got an 'A' would be ludicrous. Someone else's success should not diminish yours. Certainly, their success needs to be recognized and appreciated. They should get better rewards. But the notion that the only way to succeed is to make sure your peers fail is a very dangerous path to go down. But it is something that corporate America hasn't seemed to figure out yet.

Moving To California - Is It Worth It?

Is it worth it to move to California? I'm in California now, ready to start my new job on Monday. Pretty excited about it. One of the things I struggled with was whether or not to leave Seattle and come back to California. I obviously made the decision to do it but how did I come to that conclusion? Is it really worth it?

Taxes

I'm going to start with this one because taxes is one of my favorite topics. According to one survey, California and Washington state have a tax burden of 11.5% and 11.1% respectively. This is a virtual wash. However, they go about how they collect their taxes very differently. California income tax is pretty high reaching 9.3% at the top,They also have a pretty high sales tax which can reach upwards of 8.75%. California also has fuel tax ,property tax, and a cigarette tax.

Washington also has a pretty high tax burden, but structures it very differently. Washington has NO income tax. Seattle has a sales tax of 8.8% and a Restaurant tax of 9.3%. This is of course higher than in most places in CA. They too have a property tax, and derive 30% of all revenue this way. They have a fuel tax, but it is lower than California's. They too have a Cigarette tax which is MUCH higher than in California. I don't smoke, so this doesn't affect me.

In the end, most of the taxes are a wash. BUT the fact that I don't smoke, don't own property, I earn a high income, and I don't spend very much, Washington is the clear winner.I estimate that I probably pay about 5% more in total taxes in California than I do in Washington. Winner: Washington

 

Housing

I rent. So I'll start there.

This really depends on where you live in each area. So for sake of comparison I will use the two places I have lived, Pasadena and Redmond. Pasadena is much more "urban" which means that rents are going to be slightly more. When I left Redmond, they were about to raise the rent on my apartment to $1300 for a one bedroom apartment that was a little over 700 sq. feet. That was probably a little higher than the average, but it was close. So I would say market rate for this place was right around $1200. A similar place in Pasadena right now would probably be about $1400 right now. However, if you were to live in say Santa Clarita, a city closer to the type of town Redmond is, rents would probably be about the same.

Buying is a different matter. Despite the fact that housing prices are coming down in LA and are staying relatively flat in Seattle, buying a house is still more expensive in LA than it is in Seattle. I would estimate that buying in LA is still probably about 15-20% more expensive right now. But I expect this to correct itself in the coming year. Winner: Washington

 

Weather

As I type this, it is about 68 degrees in L.A right now and is very sunny. It is 43 degrees in Redmond and cloudy. I'm actually not a person who is affected that greatly by weather, but having left it and come back, I can say that it does make a difference in more ways than is obvious. First off, I don't have to plan around weather. In Seattle, I often have to change my plans or not make them at all because of the rain or cold. I have found myself reluctant to leave the house because it was so cold.

If you are a guy, a side benefit of the nice weather are the short skirts. I also contend, that the women are just better looking in CA than in other parts of the country. Sure, it may be fake, but what does it matter if you are only looking anyway :)

The one advantage Seattle has here is that it is not quite as hot in the Summer. There is a week where the heat might be really uncomfortable, where LA probably has about a month of that. But hey, isn't that why they invented Air Conditioning?

This is one thing money just can't buy. No matter how much money you throw at it, you aren't going to be able to make it sunny or warm outside. Winner: California, by a lot

 

Cost of Living

I've already gone over housing, so I won't factor that in here. A common thing you hear about living in California is that your salary will be adjusted because of the higher cost of living. I can tell you right now it's a big lie. I am going to be making more money here than I was in Washington but that is because I'm taking a better job. I had similar offers and positions in Washington that I was considering, and I can tell you that the salaries can't adjust for the fact that it is just plain more expensive to live in CA than in WA.

At my last job in CA, my company was acquired by a company based in Ohio. I was talking to the head of the CA operations who had moved from OH and we were talking about salaries. I asked him if he was interested in moving more of the engineering jobs from CA to OH to save on the salaries. He let me know that he wasn't because, much to his surprise, the salaries weren't all that different. In the end, CA loses because it is more expensive to live here but you won't get compensated for it.

Other than that, goods cost the same. Food and other items are a push. Gas is slightly more expensive in CA by a couple of cents. Winner: Washington

 

Jobs

If you are looking for a tech job, California wins here hands down. Seattle tech jobs are dominated by Microsoft and Amazon. Google is also starting to make strides in the area. But if you decide, like I did, that you don't want to work for one of these firms, you are going to be out of luck. You could take a tech job in a company like Boeing, Washington Mutual or Starbucks but if you are like me you want to work for a tech company, not do tech work at a company.

The Southern California job market is just much more diverse. No one employer dominates the area. This hold true outside the tech industry as well. If you are looking for jobs in Entertainment, defense, finance, bio-tech, or any number of other industries you will have better luck here. If you are like me, and your partner is not in the tech industry, this becomes a crucial fact because your partner has to be able to find a job too. Winner: California

 

Things to Do

This is barely even worth talking about. Southern California just has more to do. Almost anything you can find in Seattle, you can find in Southern California, but the reverse is just not true. Seattle has some great outdoor activities, but so does California, and in California they are accessible year round. California has better arts and entertainment, museums, beaches, shopping, restaurants and attractions. Winner: California

Traffic

However much Seattlites like to complain about the traffic, California is worse. If you don't like traffic, if it grates on your nerves, then LA might not be the place for you. I try to live close to work to minimize this effect, but the fact remains. Traffic is a bitch in L.A. Winner: Washington

Bottom Line

There can be many factors which way in on your decision to move. The above are mine. I also have family in the L.A. area which is a factor. I also grew up with the smog, so it doesn't bother me at all. I figure it is probably about 8%-10% more expensive to live in California than Seattle. If you make six-figures like I do, that can be more than $10,000. For that money, you get the nicer weather, more things to do, more job choices, and of course, the short skirts.

What's that worth to you?

Blogging Frequently Makes Big Impact on Traffic

I have another website that actually gets more traffic than this one. I've had the site for several years, and it receives quite a few hits a day from search engines for various topics. Just recently, I started updating that blog much more regularly, daily instead of once or twice a month, and for some reason the traffic to my site is up a lot more.

Now I could understand this if people were searching and finding my site through new topics I'm talking about, but that's not the case. My site gets 90% of its traffic from about 3 or 4 search terms and its still getting that from the same search terms. Either there has been a significant increase in interest for these 3 or 4 topics, or Google must be weighting these terms higher because I'm providing more recent content on totally unrelated topics. That's the only thing I can think of, but if someone smarter than me knows what else might be going on, I would love to hear about it.

*Note - I'm somewhere on I-5 on my way from Seattle to L.A.  This post is being blogged via Wordpress' delay post feature.  Be back next week with my thoughts on starting a new job!

Save the Kitty! - Part 2

In a relatively short amount of time, I've become very high on the search "Save the Kitty" in Google. This of course refers to my earlier post about how donating to my site could actually save my kitty's life. Well just to show you how bad things have gotten I present you with these two pictures.



This looks like a seemingly normal pile of large wrapping paper. But take a look inside



My poor cat has resorted to living in this paper bag because you refused to donate money to help him! It is the only shelter he can find from this brutal Seattle rain. Why won't you help this kitty? Why do you want to hurt this kitty? Donate now and you can help help put a real roof over his head.

*Note - I'm somewhere on I-5 on my way from Seattle to L.A. This post and tomorrow's are being blogged via Wordpress' delay post feature. Be back next week with my thoughts on starting a new job!

Sold Jamba

Wow, what a ride. I honestly didn't think I would be in and out of this stock so quickly, but that's what happens when you play in the small cap space. So overall, this was a pretty bad trade for me. Jamba opened higher but then traded down all day on pretty much no news, but the bears were firmly in control.

I actually didn't check on the stock until it was down around $4.90 today. I should have sold there, but I was waiting for a better price. It didn't happen. Like I predicted, as soon as it broke through its support it was straight downhill from there. Good to know I was right, but bad because I didn't get out of the stock in time. Truth be told, I did not think that the stock would hit my stop loss point in one day, but it did. At $4.54, my stop loss executed, netting me a 10% loss in just under two days. Yikes! Lesson learned.

So that means I took a loss, including commissions of $243.42. Kind of painful.  Probably won't trade rest of week and remain in cash.  I'm on my way down to California to start a new job.  Wish me luck.

Update on Jamba

Jamba was doing OK until the Fed decided to piss off the market. It opened up sharply and touched $5.60 but it pulled back. Jamba was hovering slightly negative for the day, around $5.20, until the Fed announcement. It then bounced up and down for the rest of the day between that and it's support at $5.00. It broke through the support slightly, and settled at $5.05.

Now I still think that Jamba could easily go up from here since I really don't think the Fed has anything to do with this stock, and as people realize it, it could continue on its way up. However, it is flirting with going under its level of support, and if it does, watch out below. Tim Sykes, another blogger I read, has even decided to short the stock. I don't necessarily disagree with him, and actually think his logic is pretty sound. He is saying the same thing I am. If Jamba falls below its support, it is going to go down to it's next level of support, right around $4.50.

I bought at $5.03, he shorted at $5.04. One of us will be right, it will be interesting to see which one :)

Building Wealth - Secret #1

Every once in a while, I'll talk about something I learned along the way that has helped me build a pretty sizable nest egg at a relatively young age. So to start things off, I will give you my best tip. The secret to building wealth is to start building wealth.

I know what you are saying. What? Well the secret to building wealth is recursive. For all you non computer geeks, this basically means that the definition of something is contained within its own definition. As soon as your head stops spinning let me explain through my own personal story.

I wasn't always on the path I am today. I started out of college with a good job that paid well. However, living in New York City, I had a lot of expenses. The two bedroom apartment I was renting was $3400 a month. My share of it was basically eating up half my paycheck. Somehow though, I managed to save some money and even put a little away in my 401K, almost $5000. After a year, I left my job and had to pay for my own move back to California, and that ate a big chunk of my savings. However, I still managed to keep enough for an emergency fund.

Over the course of the next few years, I was careful with my money, always remembering that sometimes, unexpected things like leaving your job and moving across the country can pop up and you need to be prepared. I still managed to max out my 401K every year and slowly but surely it was growing to quite a bit of money. As I became more successful in my career, I continued to see promotions and pay raises, but each time I kept my lifestyle pretty much the same. In fact, I began living more frugally. I'll explain why.

The effect of getting more income and spending less money was VERY POSITIVE on my bank account. The higher I saw it go up, the more I wanted to see it go higher. The more money I got, the more interest I could earn from my savings account. As I started investing my money, I realized that the more money I had, the faster the whole pile would grow. This became almost addictive. I would find ways to save more and more money so I could funnel it toward these accounts. The power of compound interest is really displayed when you have a big bank account, and it just starts to snowball on itself. It almost becomes a game as you try to find more ways to save money or earn income to see the wealth grow.

So this is the best tip I can give. Just start trying to build wealth by any means you can. As you do it, you will find you really like it, and you will find other ways to increase your wealth. You will start getting into a feedback loop and you will soon realize that building wealth just becomes a habit. I now earn well over 2.5 times what I used to when I lived in NYC but I probably spend less money. All because I have become addicted to building wealth.

Jamba - A bit deeper

So Jamba closed at $5.30 today. I bought at $5.03 at 11:55 a.m. which just so happens to be where the stock bounced on its way back up. So excellent, albeit lucky, timing on my part. That means if I would have sold on the close, I would have netted a cool 5% in just one hour. Including commissions, I would have made about $114. Of course that is irrelevant since I didn't sell, and I won't unless it breaks back through its resistance line.

I want to go into a little more depth into why I decided to buy where I bought so hopefully we can all learn from this. I think Jamba is on its way up, and up significantly, and wish to give you the technical reasons why. Here is the one month chart on Jamba.



The news on the Nestle deal came out on December 4th, and you can see the rather large spike in Volume there. The stock shot up to $4.50 that day, but then pulled back to close at the $3.70 level. This showed that the bears were still in pretty firm control over the stock, as they were able to beat back the bulls that day. But since then, the stock has soared, going from $3.70 to $5.30 today, a 43% gain. For the last four days, the stock has closed pretty near its highs for the day. This is a very bullish sign. When it broke through its 50 Day moving average of $5.00, and it stayed above this resistance line, it further strengthened my resolve that this stock was set for a good breakout here. The stock has been killed this year, losing over 2/3 of its value, so it seems primed to hit a bottom.

I fully expect this stock to retreat tomorrow. People are going to take profits at this level. Those who have seen this stock fall from $10 all the way down to $3 are going to see this as an opportunity to get out of this stock with a little bit of dignity. If the stock can stay above the $5.00 mark in the face of this selling, then that is a very good sign for the stock, and should signal that the bulls have taken over. This will mean that Jamba has hit a bottom and will most likely be in an accumulation phase. For a small stock like this, this could mean very big gains in the short term.

Tomorrow will be very telling.

Bought Jamba

I did decide to do a trade. I wasn't planning on it because I didn't have a stock I was watching very closely. That was until I looked at my regular portfolio where I own shares of Jamba Juice. I obviously watch the shares in my regular portfolio quite closely, and when I look at the action on Jamba, I like what I see.

I've owned Jamba for a while, and I've taken a bath in it. I've lost probably about 30% of my cost basis in that stock over the last few months. OUCH! But recently Jamba announced a deal with Nestle to sell Jamba Juice in stores. The stock reacted well to that news, but not that well. But since then, the stock is up 50%. Yes that's right 50%.

But the stock is VERY dangerous. It is a very volatile stock, but I liked the fact that it went above it's resistance of $5.00 today. I'm not sure it's a breakout yet, so I only put a small position on and want to watch the movement through the end of the week. I bought 496 shares of the stock at $5.03. I might buy more depending on what the stock does over the next two days. If the stock slips under the $5.00 mark and gets to about $4.50, I will probably close out the position having taken a loss of about 10%

Why I Didn't Buy Apple Today

Despite Rick's urging, I'm probably not going to buy Apple today. Although I really want to get into the market, this isn't the right stock to do it. There are many reasons I like Apple in the short term, but the price action on the stock just isn't shaping up. Here is the one month chart on Apple.



Now look at the last five trading days. See that nice uptrend? That in itself doesn't scare me. Most people don't want to chase a stock that has gone up like Apple, and for the most part I agree. But sometimes it makes sense if a stock is taking off, which I think Apple has the potential to do. But look at the last candlestick. You see how it is red? You see how narrow the candlestick is? you see how it is hovering right near the bottom of the price action today? This is a perfect Gravestone Doji setup.

For those not versed in technical analysis, think of it this way. You had a great run up in the stock. Today, the stock tried to go higher, which is why you have the point sticking up. but toward the end of the day, the bears took over and started selling the stock. It ended up slightly lower (there is still about an hour left in the trading day so this could reverse). This is generally a weak signal, but still significant. What makes this sign stronger is the fact that the market overall is up today, so Apple is looking weak here. Confirmation will come tomorrow if there is another sell off in the stock. I think Apple could break 200, but I think it could also fall down to support at the 170 level.

New Look

No, you aren't going crazy. Despite being only about four weeks in, I decided to go with a different look to the blog. I prefer the two side column look over the one column look I had before. Hopefully, this should be it when it comes to changing the look of the site overall. It actually took me all day to get it to look just the way I wanted even though changing a Word Press theme should be as simple as a mouse click. Maybe that doesn't say very much about my intelligence ...

Why No Trades This Week?

OK, I promised I would do a trade this week, and I didn't. My bad. I'm in the middle of a move, and for those of you who have moved across country before, you know what a huge pain in the butt it can be.

I was planning on trading Activision this week. I had researched it last weekend, and was ready to pounce on it Monday or Tuesday. Then of course they announced the Vivendi deal, and that killed any trade I could do.

So now I'm looking for my next story that will be successful. I was carefully watching Apple today. It looked good while the rest of the market was kind of flat. It found some resistance as it met its 52-week high but I like the price action it can have between now, Christmas, and Mac World. May try and get into it on Monday, we will see how things turn out. The other name I'm closely watching is Potash. They make fertilizer. Not the most exciting thing in the world, but right now there is a global growth story happening in the farming industry and this company looks poised to take full advantage of it. I'll have to examine their charts this weekend, and I'll try and make a call on it before I head down to California at the end of the week.

Everyone have a great weekend. There will probably be some significant changes on this site over the weekend, so watch out for them!

Resell Stuff

So I decided to get rid of some furniture. I have a couch that I've had for a few years that is in good shape but I just don't want it anymore and don't feel like taking it across country again. So I posted an ad for it on Craigslist and figured I would ask $20 for it just to see if I could get it. Truth be told, I would have been happy if someone would have just come and transported it away. I figured if nobody responded, I would just repost the ad and give it away for free. No more than an hour after I posted the ad, I had three people contact me. I ended up selling it for $40, and probably could have gotten more if I tried.




I also ended up selling an entertainment center and my extra TVs. Got $20 for that. Was glad to get rid of the TVs because it can actually be kind of expensive to dispose of if you have to call the disposal company to pick it up.

Now, I was actually going to just get rid of this stuff, to give it away. To me, it was worth it just to not have to take it with me. But, because of this little project, I decided to see how successful I could be actually selling the stuff I didn't want. Because I think it is a little unfair to just add the $60 to my total, since you had to have the stuff in the first place, I'm going to credit myself half the money. $30 will go to my total.

How about you? Have you had good luck selling stuff on Craigslist or other sites? How easy or hard do you find it to be?

The Housing "Plan"

The Just One story is easy for me today. The Bush administration announced a plan which would essentially freeze interest rates in hopes of stemming the tide in an otherwise rising wave of home foreclosures.

It would essentially classify homeowners into a few different buckets. To make a very complicated story short, homeowners who have mortgages that have rates which will reset in the next two years and can not afford the reset, will get a reprieve from the rising interest rate they would have otherwise had to pay. Those who can afford it won't get it (how this is determined is beyond me) and those who could have never afford even the lower rate won't get it.

Another sticking point is to figure out a way to get investors who bought these securities to just bend over and take this. Imagine if someone promised to give you $10 a month for a year and then $30 a month every month after that. Then, when it comes time to start the $30 month payment they say, "Just kidding!". Well that is what this plan is doing.

What about all those homeowners who complain they didn't know what they were getting themselves into? Well I don't feel a lot of pity for them. This was the biggest purchase they will ever have, and they didn't try and understand what they were buying? People like me, who were careful with my money and didn't buy when everyone else was going crazy now have to pay for this (yes we all pay for it). Doesn't seem really fair to me. Further, the economist in me knows this plan will cause Moral Hazard going forward. Basically future homeowners will know that the government will bail them out, causing more people to take on riskier loans. Moreover, investors will suspect the same thing, and demand higher interest rates, thus making mortgages for all more expensive.

So how do you play this in the market? Still wouldn't touch financials or stocks related to housing here. In fact, I would wait for them to bounce, and they will bounce, and then short into strength. Names like Toll Brothers were up 13% today, I think you let them go a little higher, and then short them. This mess isn't anywhere close to over.

What do you think? Do you think this is a good plan that the government should support? If not, what would you let happen?

More Info:

Details of Plan

Pimco Manager criticizes plan.

Six Quick Thoughts

How to find a Job

So now you have that great Ivy League Degree, now what? How do you go about finding a job? Well, it isn't always as easy as it sounds, even for those with great credentials. Here is my advice. Diversify. No, I'm not talking about your portfolio. I'm saying that there is no one single way you should go about looking for a job. You need to look under every rock you can and try multiple methods to try and find that perfect dream job. (I think the same thing applies to finding the right woman, but that's another story)

I've had four different jobs in my life. I found each job differently. Here is how I did it, and what I would recommend.

College recruitment - If you are still in college, this is the way to go. Many larger companies will come to the university and recruit right on campus. This tends to be great for new college grads because you know that they are looking for good entry-level positions. This is especially helpful, because a lot of time, these are treated as informational. If you are like me, you might not know what you even want to do out of college and this can be the way to go.  Word of advice though, just because you don't know what you want to do, don't let on to the recruiters that you don't know what you want to do.  Employers want to know that you will have a passion to do whatever it is they do.  If you go for a banking interview, you must show you love to bank.  If it's a tech job, computers need to be your life.  It's fine to go on lots of different types of interviews, just don't let it on that you aren't sure where you will go.

Post your resume online - Probably the least effective way to go about getting a job, but I'm living proof it works. I posted my resume on one of the job boards, either Dice or Monster, and I was contacted by a person in a company looking to fill a position. Most of the time, this method will get you lots of calls from recruiters looking to present you to a company. I have had very little luck with these types of placements but some luck with companies directly. The big advantage here is that if they contact you, they already like your resume, so chances for success here are very good. However, this has the strong disadvantage that you have little or no control over who is looking at your resume or when they might contact you.  Make sure you resume has lots of keywords in it, but still presents well.  You will be found by people searching for keywords, but you will be called because your resume looks great.

Networking - Everyone says this is the best way to find a job. Ask your friends and see if they know of anyone who is hiring. I found my last job this way, and I will agree it is the easiest way to find a job for most people. Getting through the many layers of HR and decision makers can be very hard. Having a friend on the inside can only help you. My advice to all people is this, be friendly at work. You never know who can help you land the next job. Further, be friendly with the right people. While it may sound underhanded, attach yourself to smart people who are going places. Chances are, they may take you with them if you are ever looking for a change of scenery. Not only will these people always have a good job at a good company, but their recommendation tends to carry a lot of weight wherever they go.

Apply directly to jobs you find either on a company's website or one from a job board - This is how I found my next job but it can be very difficult. Most people will not be able to duplicate my 40% success rate at getting replies back from hiring companies. You would probably be doing well if it was closer to 10% or even 5%. You have to understand, these companies may look at hundreds of resumes. I've been a hiring manager. Believe me, I may look through fifty resumes before I find one I like. You have to be able to stand out from the crowd. That's where a great corporate pedigree comes into play. It can make you stand out. If you don't have it, you need to be sure that you stand out in some other way. I'll get to that later when I talk about resumes.  The one very strong bit of advice I can give here is to put some work into each resume you said.  Read the job description, make sure you are a good fit, and then customize your resume to fit the job description.  You don't have to rewrite the whole thing, just make sure that within 3o seconds, the employer knows you can do the job.

There are still some other ways, but I haven't found too much success in them. How about you? What ways have you looked for jobs and how successful were they?

So What is Good?

So Ningpo makes a good point, I never really discuss what I think "good" is vs. "great" So what is my definition of "good"?

First off, when doing this comparison, I'm going to talk strictly from a financial sense. There is not good or great without great friends, family, and if you are lucky enough, someone to share your life with. So that being said, this is what I consider to be a "good" life. A good life is a life where you are very comfortable, have all the things you need, and with a little bit of work, will continue this way indefinitely. This implies

• Having no debt outside of your primary residence (bonus if you have none of this).


• Having a job you like.


• Having a job or income source that allows you to live an upper-middle class life and afford a few luxuries.


• Having enough savings such that you could choose not to work for one or more years and still be OK.


• Having a savings plan that,if continued, will allow you to comfortably retire at your current consumption level by the age of 60.

So what makes something great?  Having all the above, but not having to work at it anymore but taken to a whole new level.  You can quit your 9-5 job, and just enjoy doing whatever it is that you want to do, even if that is to work.  You can afford pretty much whatever reasonable luxury that you want i.e. you could afford the BMW but maybe not the Ferrari.  You are probably "good" if you are in the top 15% of the population in terms of income and wealth, you are probably great if you fall into the top 1%.

So what is your definition, from a financial perspective, of good vs great?

Budgeting time

One of the thing I find myself struggling with is how to appropriately budget time for this project. With a goal as nebulous as "make money by any and all means necessary" you can sink a lot of time into trying to make something work and at the same time feeling like you didn't accomplish all that much. Despite the fact that I'm not working, and already have my next job lined up, I find that I feel very busy all the time because I'm thinking about this site. How can I get traffic up? Does my design look right? What should I write about next? Etc.

Lucky for me I am a program manager. We are used to dealing with ambiguity and hectic project schedules. But still I find, when you are doing something for yourself, people like myself will tend to overextend themselves. I am not going to try and budget my time better over the next few weeks. This is going to become absolutely critical as I start my new job and I don't have all the time in the world to devote to this journey. So starting today, I'm only going to devote one or two hours during the week to this, two or three hours on the weekend. It will be focused work rather than the kind of helter-skelter approach I have taken so far. My primary focuses will be:

1. Drive traffic up - This includes features added to the website to do this as well as visiting other people's blogs


2. Pick stocks -Since I won't be trading as frequently, I don't need to spend as much time poring over my stocks. Also, I have gotten most of what I need to learn to analyze charts down, just need to apply it now.


3. Writing - I'm going to concentrate most of my writing on the weekends, and then space out my post during the week.


4. Coming up with other money making ideas - Last but certainly not least. Will set aside at least one of my sessions per week to try and come up with something I haven't tried yet.


5. Working on my website - It is for the most part set up now and the way I want it to be. Will work no more than once a week making improvements or tweaking the site from here on.

That's my project plan, hopefully I can stick with it now. Do you have any ideas on how I should budget my time or things I should be focused on? How about you, have you found you are spending too much time on your website?

Fannie Mae Cut's Dividend

As often as I can, I'm going to try and talk about Just One current event and how I would play that event in the market.  I'm  going to try and be as concise and possible each time.  So if you want the one piece of news you need to know that day, this will be it.  More often than not, it will be a financial story, but sometimes I may just talk about something completely random.

Fannie Mae today announced that it will cut it's dividend by 30% and also  sell stock to raise capital.  Fannie helps finance almost 20% of all homes in the United States.  They also announced a significant loss for the quarter and had a relatively bleak outlook for the housing market going forward, signaling we have not quite hit the bottom.

Why is this the story of the day?   I think it has tremendous impact on the rest of the financial sector.  First off, companies hate lowering their dividend.  Doing so means that Fannie Mae is very serious that it needs to raise capital and maintain liquidity.  As bad as the housing sector news has been, I think its going to get worse from here as the rest of the nation catches up with the slumps in Florida, California, Nevada and other hot housing markets.  Fannie is down after hours and I think it has more to go.  I do not think you buy in.  I do not think the financials are done bottoming (but it is coming soon).  I stay out for now, and wait for some further drops.

Going From Good To Great

Jenny gave me a book a few years ago called Good to Great by Jim Collins.  When she gave it to me she said, "I saw this on the shelf, and I just thought of you."  It was one of the nicest compliments I ever got.

While the book is mainly how good companies become great companies, it has made me think about how I can personally make the jump from good to great.   I recognize, and am thankful, that I have a good life.  I've gotten to the point where I am in a great relationship, have awesome friends, a new job that excites me, lots of savings, and no debt.  It's hard not to be happy in this situation, and I am.  :)

However, even though I'm happy, I'm rarely if ever content.   I have started reading a lot of similar blogs about personal finance and jobs.  While I really enjoy them as I think I can add a lot to them because of  my own personal experience, they are all focused on getting to where I am today.  How do I make it to the next step?  How do I go from good to great?  Where is the information on how to do this?

When Tyler talked about finding your niche on the blogosphere, it got me thinking where would I find my niche.  Certainly not in the "make money online" space or the personal finance space.  Those are pretty crowded areas.  What isn't crowded is the space I'm looking for,  people who have found success but want to take the next step.  I know I'm not alone in this.  Rick is trying to get there with me (and while I have a good head start, I think he will beat me to the finish line) as are most of my friends.  Hopefully, as we go on this journey together, we can figure out just what it takes to go from good to great.

Damn, Missed Activision

My first stock purchase on this journey was going to be Activision, ATVI. I even made sure I was up early today to check out the stock and look for an In today. I liked the stock because I have found it impossible to find Guitar Hero 3 for the Wii. There were also rumors that Vivendi might buy it up. That meant that I wanted to get in and out of the stock in the next 3 weeks, right before Christmas. I thought the two above factors would mean good price action in the short term, with a good long term story of a growing gaming industry and a hot game franchise.  The stock has rebounded since hitting a dip in November, so it wasn't too expensive and look ready to go up for a run.

Well, right before the bell Vivendi announced they were purchasing Activision. Stock Jumped 20% on the news. Since Vivendi has put a price on the stock now, it's pointless to try and get in. Would have been nice to get a quick 20% return on my money. Oh well, on to the next stock.

How to Get Into an Ivy League School

OK, so one of the keys to having a great corporate pedigree is to have attended and Ivy League School (And by Ivy League I do mean any of the top-tier national schools). For most people, it is too late to change this. There is always the option of going to get a graduate degree at a top-tier university, but for most people in the working world, that just isn't going to happen. This is for all the young people who are wondering just how I did it and what advice I may have. Remember my post about compound interest? The point of that post was to emphasize how doing a little bit now, can pay big rewards in the future. This is my view on how important it is to do well at an early age to get into the right school.

I want to be very clear about this point before I move forward. You do not need an Ivy League degree to get a good job or to be successful. Getting an Ivy League degree does not guarantee success. What it does do is present a signal to potential employers is that somehow, someway, you made it through a very selective process. This is an important consideration in many managers hiring process. My alma-mater accepts around 10% of all applicants. And this is 10% of an already very selective group. It reminds me of that Seinfeld episode where George is able to meet beautiful women because he has a picture of a model who is supposedly his dead fiancee. The women accept him because he has already been selected by another beautiful woman.

Every time I go into a job interview, at some point someone says to me, "Obviously you are smart, you went to Princeton..." This is an important point. By default I am assumed smart. I got accepted to Princeton more than a dozen years ago, and yet it still works and is paying dividends for me. It won't get me the job by itself, but it at least allows me to get my foot in the door. It's up to me to shove my way through.

So what do I know about getting into an Ivy League School? Well I got into several, I still do interviews for Princeton, and I actually had a college friend on the admissions board for a while. So what's the secret? Here it is, there isn't any. I can assure you that there is no magic formula for getting into the best schools. Each and every application is read, and read by multiple people. What catches the eye of one, may not catch the eye of another. That being said, here are the basics in order of what I believe is important.

Get good grades in the hardest classes. I want to emphasize hardest, because A's in classes that aren't challenging just don't carry as much weight. You don't have to get straight A's (I didn't. Got a handful of B's) and you don't have to be #1 in your class (I was #8) but it doesn't hurt. Your record has to demonstrate that you consistently challenged yourself and that you excelled in those challenges. Ivy League schools are looking for people who know how to tackle problems, get things solved, and aren't afraid of what might come their way.

Do stuff outside of class. Obvious but important. However, don't join every club for the sake of joining a club. Top schools prefer it much more if you can show you were committed and exceeded in a few areas than you spending an hour a week in twenty different clubs. This of course flies in the face of what I did, as I wasn't particularly talented in any one thing. Everyone at Princeton, besides being smart, tended to have one really good talent whether it be playing an instrument or being good at sports. Be well-rounded. I can't emphasize this enough.

Standardized test are important, but they aren't that important. This is coming from a guy who got 1560 on his SAT's and all 5's on the AP exams that my school saw. If you do well, great. It will just confirm the other facts. If you do poorly, you aren't sunk yet, the rest of your application is much more important. I knew people who got 1600 and didn't get in. I knew some people who were in the 1100's and got in. There were probably people even lower than that. So do your best, and as long as you are OK, then don't worry about it.

Be interesting. Don't do what everyone else does. This will come out in your application. These people read dozens of applications a day. Believe me, they all start to sound the same. If you have some unique talent or some special life experience, make sure it comes out in your application. However don't write about how winning the big game made your realize blah blah blah. They've heard it all before. At the same time, don't be too cute either. Chances are, among the thousands of applications over a dozen years, someone has tried the same tactic. Just be honest, and yourself.

Some things that aren't that important include your recommendations and your interview. Everyone gets a good recommendation. At worse, it can only be a small negative. The same goes for interviews. Don't stress over them. Most high-schoolers have never been in an interview, and they are very nervous going in. Believe me, it isn't weighted all that much. I didn't even interview with Princeton.  If you want advice on how to do well in your Ivy League interview, follow the preceding link.

That's all it takes, and a little bit of luck. Did I miss anything? If you have questions or want to know more about my experiences, feel free to leave a comment, and I'll try to respond.

The General Trading Guidelines

Next week I will begin to put my $20,000 into the stock market. I have let it be known that this type of trading will be a bit unusual for me as I'm not used to getting in and out of positions in a relatively short time frame. While I'm not going to follow any hard and fast rules, these are the general guidelines I plan to follow.

• I'll have no more than four or five positions at a time.


• I will stay in a position on average about a week or two but may hold on to some positions for a few months.


• I will find stocks that I think have a strong fundamental story, but I will only be in stocks that have strong technical indicators to suggest a short term rise


• I will short if I have to, but it will generally not be part of my game plan. Shorting can be very difficult and you can easily lose your shirt if you aren't careful.

Please do not try this at home :) I'm playing with real money, and things may get ugly. I'll give a week by week recap of how I've done and what my plan is going forward. Each stock that I pick, I'll give to the full reason why from both a fundamental reason and a technical reason. Sometimes, I may not have totally sound reasons, and I'll explain that too. Picking stocks can take a lot of time as can starting a new job, so it's going to be hard to try and balance everything out and still come out on top. Expect the first pick sometime in the middle of the week and we will go from there.