December 31, 2009

2010 = Best time to be an Entrepreneur

In my last blog of 2009 - my focus for my blog in 2010 will have more entrepreneurial articles for you to read in addition to my usual investing and finance articles.  Because the markets were failing in early 2009 and most people (including some economists) were afraid that the sky was falling, I wanted to focus most of my blog articles on investing to motivate you all to take advantage of the cheap stocks and begin investing.

But now that we have avoided the so called impending "doom" of America and the rest of the world, the economy is on a better foundation and companies are starting to increase their earnings.  Which also means they will soon increase employment (just a little bit) and banks will increase their lending and credit will eventually be a little more relaxed in 2010 or early 2011.  Companies have become leaner with less staff (meaning they force their employees to work longer hrs without a salary increase) and more concerned about their bottom line because now they are or should be concerned about the threat of entrepreneurs.

In the past, it was an American cultural belief that "bigger is better".  Nowadays, this belief has changed to "less is more" mainly because of the wave of new technologies that are leveling the playing field for entrepreneurs and/or small businesses.  Look around - the business jargon of today is to persuade businesses and individuals to consume less energy, to drive fuel efficient cars, use green energy, conserve, etc.  Most big mega-companies cannot respond quickly enough to these rapid developments and advancement in technology the way a small business or entrepreneur can (except for the companies that the government deems "to big to fail"...but dont get me started on that.)

So if you've ever thought about becoming an entrepreneur or establishing your own business - then 2010 is the best of times to do so.  There are several websites and technology applications that are "entrepreneur friendly" to help you should you decide to become more entrepreneurial...and if you're creative and know how to work smarter - then you really don't have to work like a dog as most entrepreneurs have done in the past.  Google Apps and Google Adwords allows entrepreneurs and small businesses to operate more efficiently and professional no matter what your budget may be.  Some other good mentionables are,, and Yahoo Local Business.

Let's be realistic, the odds can be against you if or when you try your hand at entrepreneurship.  If you're not bringing to the marketplace an original idea or a different approach to an already existing idea then failure is likely during the first 2 years.  For example, there are several shoe stores in every mall or place where we shop, so it will be difficult to establish another shoe store where people shop just because you would like to open a franchise or think you would be good at managing a store.  So the idea of another shoe store is not original, however, there was room for a different approach and brought a different approach to shoe buying.  It brought the shoe directly to the customer - and made available several more varieties instead of the customer going out to buy and search for a particular shoe at a mall or whatever.  I know this is just one industry where an entrepreneur challenged the approach to traditional shoe buying, but there are several opportunities just like waiting for you in every industry if you look for them.

I'm not just talking the talk, but as with all my articles, I'm also walking the walk.  I have several projects I'm working on to even better establish myself as an entrepreneur in 2010.  I've finished my 3rd book, "Black Insolvency" which is ready for its debut January 2010 on MLK's bday.  I'm also a director/co-founder of BEL Advisory Group, LLC, a full service financial firm offering innovative and intelligent financial and tax advisory services for primarily small businesses and individuals.

So get to work people - don't just think about being successful - try, try, and try again until you are successful.  If you fail, then try another idea, or try another approach.  But at least try!  And 2010 is the best year to do it.


December 28, 2009


Well the year is finally coming to a close!  2009 was a roller coaster ride and the financial effects of this year will be carried over to the next.  The 1st qtr of 2009 we saw turmoil and the stock markets at their lowest - which also meant this was a good time to buy (I hope some of you who follow my blog actually took my advice and got into the stock market).  Ford Motor company was down to $1.01/share, but today it is over $10/share.  Bank of America was down to $3.26/share, but today it is over $15/share.  United States Steel was down to $19/share, but today it is over $57/share.  Almost every stock on the exchange was for sale at very low and discounted prices!

The worst of 2009 was actually the best of times for buyers...the lowest point in the markets became the opportunity of a lifetime to realize returns of 60%, 100%, 300%, or even higher investment returns going into 2010.  For Generation X and Y-ers, there has been no other better time to invest than 2009.  However, it is still not too late!  As we go into 2010 - there are several opportunities still waiting to be realized.  The real estate market has not fully recovered, and probably won't for some time.  The cost of a new home or foreclosed home has been dramatically reduced for those who have access to cash and good credit.

So what is my move for 2010?  As far as investing...I'm going to invest in commodities such as energy and metals.  This strategy should be a good shelter for any upcoming inflation due to government spending.  But nevertheless, I am also looking for expansion.  I'm looking to increase my audience of people who follow me by working smarter and reaching out across all networks.

What are your goals?  To increase cash flow?  Invest more?  Whatever your goals may be - let's aim to BE FREE in 2010 and retire early.

"The rich rule over the poor, and the borrower is slave to the lender" - King Solomon


December 25, 2009

Health care reform bill that passed Senate is a monstrosity - and a giant step for America

Health care reform bill that passed Senate is a monstrosity - and a giant step for America

via Health care reform bill that passed Senate is a monstrosity - and a giant step for America.

Interesting article on the reform of healthcare.  There should be some type of reform - but the current format of the bill is not the best answer overall and I think we could offer a better bipartisan alternative.  Let's take the politics out of it and just do what's right for America.  But nonetheless, it's going to happen....I just hope the government will better manage this program and not leave it in such shambles as the current Medicare and Social Security system.

December 21, 2009

Your 401K can be stolen. Legally.

  • NOT FDIC Insured

  • NOT Bank Guaranteed

  • MAY Lose Value

  • Have you seen this wording before?  Does this look familiar?  It should because it is stated on your retirement plan.  This phrase is disclosed in each and everyone's 401(K) retirement plan no matter which employee benefit company you're invested in (Fidelity, Principal, Schwab, Hewitt, etc).  Most people are truly depending on their 401(K) as their SOLE form of retirement like I was since most Americans won't have much of a Social Security to rely on for their retirement.

    But what we should ask ourselves is - Why are we blindly and solely investing our hard earned money into a retirement plan that clearly states it is:

  • NOT FDIC Insured

  • NOT Bank Guaranteed

  • MAY Lose Value

  • Are we investing in these plans just because they tell us our entire nest egg might be there when we are ready to retire?  I wonder how the next generation will feel when they are forced to keep working since their retirement lost 20% - 30% of its value the next time the economy hits a recession or depression. 

    But a factor we haven't considered is - legal theft.  Unfortunately, Most Americans won't be able to retire and will have to work until death...but how would you feel if your 401K plan was legally stolen from you?  Legally?  It can happen.  It HAS happened.  Remember the story about the Bear Stearns fund managers Ralph Cioffi and Matthew Tannin who were acquitted by a NY District Court even though they lost $1.6 Billion dollars of investors' money?  Remember Bernard Madoff who made off with billions of dollars?  Some of these victims' retirements are forever lost.  Yes, Bernard Madoff and a few others were sent to prison - but that fact doesn't replace the capital value stolen from investors' retirement plans.  And these investors are forced to go back to work during their "golden years"...competing for jobs typically given to teenagers...until they die.  The money is forever gone - and there is no law that will replace it.

    What would you do if your company's 401(K) plan went bankrupt due to bad investments made by the company that manages your employee benefit plan?  We invest in our 401(K) plans religiously but how do we know our money is safe and not being wasted on high risk gambles such as mortgage backed securities that caused our economy to recess in the first place?

    We receive account statements, but how accurate are they?  I'm sure Bernard Madoff was sending out nicely crafted account statements as well until the walls came crumbling down.  Because our 401K is not insured by any government, bank, or any other entity we could lose it ALL due to some mistakes and bad management of so called portfolio managers or investment advisors.  And it's not a damn thing you can do about it - when it comes to 401(K) plans that is.

    America, do NOT put your faith solely into 401(K)ill plans.  Have a backup - own some property.  Invest in REAL assets such as oil, metals, land.  Get out of debt while you're young and before you retire!  There is nothing worse than having to retire while still paying off a mortgage.  Do not let the banks legally steal your 401(K) or your retirement by solely relying or trusting on them to have your best interests in mind when investing your money.  Have a backup plan so that it won't hurt as much if you become a victim to someone else's greed.

    December 18, 2009

    Director’s Blog » Blog Archive » Analysis of the President’s Budget

    Analysis of the President’s Budget

    via Director’s Blog » Blog Archive » Analysis of the President’s Budget.

    Interesting analysis of the President's budget by the CBO (Congressional Budget Office).  An informative an interesting least I think so.  Click on the hyperlink above.

    December 17, 2009

    401(K)ill Plan

    Research proves that our beloved 401(K) cannot save us in retirement.  In fact, it was never meant to be the primary retirement vehicle - but instead a way for top level CEOs to shield some of their income from taxes, and to be a supplement retirement plan for the rich.  Forget Healthcare Reform...we need Retirement Reform.  But a reform in the form of financial education that won't raise taxes in the long run.  (Side Note:  Healthcare reform is bound to raise taxes - the same way Medicare, Medicaid, and Social Security does - it is a government plan, after all.) Yet nowadays, the average employee retires with under $200,000 in their 401(K)ill plan.

    Corporations preach to us that this 401(K)ill plan is the way to go (because it cuts their benefit costs in half by passing our retirement responsibility on to us and they no longer have to fund the old pension plans - so of course they want us to invest in it.)  And it is evident how wrong these corporations are about 401(K)ill plans when you see people in their "golden years" forced to work at Wal-mart as a greeter, sweeping floors at Mcdonalds, or bagging groceries at Publix because they lost their retirement once the market crashed or some company filed for bankruptcy.

    As I write this - I wonder if people actually understand the severity of this issue enough to actually do something proactive to change their reality of possibly never retiring.   The solution is to find ways to increase our income and decrease our debts during our working years -- and save more in our retirement plans than the 6% with company matching.  If you're going to participate in the 401(K)ill plan then make sure you're saving at 12% - 15% with whatever the company matches.   I call this plan a 401(K)ill plan because it kills your dreams, and it can kill your retirement.

    Every company provided 401(K)ill plan charges monthly "maintenance" fees that kills our overall investment gains... this kill plan is maintained by some benefit sponsor company like Fidelity, Vanguard, or Charles Schwab, etc.  And these benefit sponsor companies take their fees and expenses out of our 401(K)ill plan for their operations.  At my company, we employees are charged $1,000 monthly for maintenance of our 401(K)ill plan - may not seem like a lot of money to most people - but it is a ton of money considering we had to pay maintenance fees even though our overall account balance dropped 25% during this economic crises.

    I'm getting out - forget corporate lies and dress codes.  I hate having to schedule my vacation time around holidays and accumulating a billion sick hours I never use.  Why should I leave my fate up to corporate insecurity?  Entrepreneurship is going to be my solution...My goal is to be self sufficient.  Now I just have to figure out a way to get government spending under control so they won't tax my aspirations to death bailing out every defunct company or cause they deem "too big to fail".


    December 16, 2009

    Schooling the Competition - student entrepreneurs -

    Schooling the Competition

    via Schooling the Competition - student entrepreneurs -

    I'm fed up with corporate and their schedules, dress codes, set vacation and sick times, etc.  It's time to get out....And anything is possible once you put your mind to it....

    December 12, 2009

    Live as a CEO, or die as an Employee....

    The CIA World Factbook has some words about the US economy that many people may find very interesting.  These are profound facts published by the CIA about our economy concerning long term problems and risks such as the increasing wealth gap and deficits that can cause detrimental effects between the top and bottom percentage of families in America.

    As briefly stated on their website at

    "The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households.  Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups."

    It seems as if becoming a successful CEO is the best means of achieving a high salary versus being just an employee and working your way up.  "Working your way up" seems like it is just as difficult to do nowadays than it is to simply be your own boss.  The concept of job security is fleeting - and the idea of retiring with a 401K seems like a joke (especially since the 401K was never intended to be a retirement plan in the first place.)

    December 11, 2009

    Congress to Raise Debt Ceiling -

    Congress to Raise Debt Ceiling

    via Congress to Raise Debt Ceiling -


    Say it ain't so Demo's!  Why do these politicians believe that we can keep spending without eventually having some  consequences??!  Should we just say the US has an unlimited debt capacity?  I'm tired of seeing increased deficits of the US....  one day the bill will become due.  And guess who gets to repay it... taxpayers!

    What is sad is that Republicans are no different with all of the deficits we incurred under their watch.  We need politicians in Congress who know a thing or two about economics! 

    Enough is enough.  No wonder other countries are looking for ways to hedge against the dollar's woes.  India has dumped their dollars for gold.  China is dumping their dollars for gold, oil, coal, etc.  The Obama administration is reflective of none other than the Carter administration.

    December 3, 2009

    What happened to Pensions? Is Social Security next?

    Once upon a time, in a land called the United States, an employee would work for one company for 50+ years and could eventually retire from their job and live out the rest of his/her life knowing their expenses would be covered by their employer sponsored pension plan.  Not too long ago, pension plans were the norm and if you worked hard and long with one employer you could expect to get a pension in addition to whatever Social Security paid you.  

    Due to the large expenses associated with pension plans, and that every employee was entitled to one, companies at one time operated with smaller profit margins.   But as time went on, employers could not afford to guarantee everyone a check for life and eventually had to become more competitive on a global basis.  Because of the growing need to have access to more cash, cut operating costs, and expand revenues,  one solution was to expire the pension plan (which guaranteed employees income for life) and replace it with the now popular 401K plan.

    401K plans force employees to save for their retirement, as opposed to guaranteeing them an income for life.  This way companies can cut costs associated with pension plans - and pass this cost onto its employees.  As companies are pressed to cut even more costs they'll eventually pass off healthcare to us as well.

    What will come to be when the government cannot afford to pay out Social Security anymore?  This entitlement program has been operating at a deficit for decades now - and no bailout in sight.  Just as companies could not afford to pay out pension plans - the government cannot continue to pay out Social Security.  With an increasingly aging population soon to retire in the next 5 years (if they can retire), the United States is facing an enormous bill we can't afford.  Senators who foresee this as a "too big to fail" challenge, decided to postpone a solution by recently increasing the retirement age from 65 to 67.  This will help...for now.

    Nevertheless, there will need to be some serious restructuring for Social Security (i.e. significantly increasing taxes, and/or a bailout, or increasing the retirement age AGAIN)....or the US needs to get rid of it and maybe replace it with a Universal retirement plan?  Which would perhaps lead us to financial ruin.

    House Votes to Restore Estate Tax, Exempt $7 Million Update1 -

    House Votes to Restore Estate Tax, Exempt $7 Million

    via House Votes to Restore Estate Tax, Exempt $7 Million Update1 -

    No surprise here - unfortunately the government needs money and will get it from us in life and death.  We work all of our lives paying income tax, sales tax, property tax, capital gains tax, retirement tax (401k), you would think we could at least die without a tax!  Good grief....

    December 2, 2009

    Meet America's White Elephants (Healthcare, War, and Deficit)

    How will the Obama administration pay the tab? 

    • $30 billion for additional troops in Afghanistan

    • $1 trillion Universal healthcare plan

    • $700 billion TARP

    • $800 billion Stimulus plan

    • Expanding US deficits

    With an economy barely in the recovery stage - President Obama and his administration is utilizing "deficit spending" to get the economy back on track, the consumer spending again, and to pay for the war in Afghanistan.  One potential fall back is that as the Fed prints more money, the more worthless our dollar becomes....which means all of the dollars in our paychecks and savings accounts become a little less powerful - and the cost of food, gas, and /utilities become more expensive.

    I'm not sure how the Obama administration will pay for everything without raising taxes (which politicians tend to avoid so they may be re-elected) or allowing inflation.  The Fed is already considering ways to take money (bailout money) out of the system to prevent the potential of hyperinflation, yet they must be careful not to send the economy into stagflation

    Will Universal healthcare be the answer?  Tax the rich - they say - and quality healthcare will be provided for all.  But at what cost?  And how long will the rich pay for it before the government needs to expand the base of taxpayers? (i.e. Tax the rich AND the middle class)  In a WallStJournal article, "France fights Universal Care's High Cost" France's Universal healthcare system is in a crisis...and France is looking to become more American where they allow copays to combat the high costs associated with their system coined "Assurance Maladie".  Universal healthcare in the United States could potentially become a disaster in the long run.  Why doesn't the government leave health insurance to the private industry - but enforce caps on health insurance's rate of increase and eliminate pre-existing conditions?  Might be a little cheaper and more acceptable to critics then Universal care.

    • Fix the economy first - then everything will fall into place.  If people have jobs, then they can afford their own health insurance or some supplemental plan and people will be less dependent on rich people footing the bill.

    • Provide tax credits for businesses that have new hires - this will be an incentive to get employers back to hiring (which reduces the 10% unemployment rate) instead of cutting costs and keeping their cash/record earnings in the bank

    • If people have jobs - then people will spend more money instead of saving it.  Consumer spending is 2/3 of the economy.  Then we can allow the government to stop spending/printing so much money.

    Let's get rid of these white elephants....ASAP~!


    November 30, 2009

    Why Its Time to Retire the 401k - TIME

    Why Its Time to Retire the 401k

    via Why Its Time to Retire the 401k - TIME.

    Very interesting article depicting the truths about Americans' savings & 401k retirement accounts.

    November 24, 2009

    Lawmakers Propose War Surtax to Pay for Troop Increase in Afghanistan -

    Lawmakers Propose War Surtax to Pay for Troop Increase in Afghanistan -

    Democrats propose more taxes!  Tax the rich they say - but how long can they expect to tax the rich for every cost burden/expenditure of America without crushing the spirit of independence/ingenuity that motivates people to be rich in the first place??  If we punish American citizens for having too much money - or redistribute too much wealth - what would motivate people to become wealthy?  To work longer hours?  To do more research and spark creativity?

    How much is too much?  The rich/business owners cannot and will not bear the total brunt of America's deficits - or they simply will not keep people employed, or maybe they'll leave the country (although I know the extent of their actions will not get this far)...however, the unemployment rate may keep rising!

    November 22, 2009

    Oil, China, United States

    The United States needs a recovery...and fast.  By keeping a devalued dollar, the US can increase its manufacturing sector and export more goods than we import -  and possibly create more jobs (eventually) to restore our country back to its feet.  Ben Bernanke and Timothy Geithner have pledged their support for a strong dollar, but it will be a while before this will come to fruition since the US is in a slow, jobless recovery.  The Fed, taking an active role unlike the contraction years of 1929-1933, has been pumping trillions of dollars into our economy hoping to spur growth and keep the economy from slipping into a depression.  However, the downside of this is that with interest rates held low - inflation is almost certainly due.

    China, the largest holder of US debt, is worried that its investments are at risk with every dollar the US prints and has voiced its concern about the stability of the US debt level and our on-going ability to repay back loans.  However, China keeps its currency low (perhaps unfairly) and therefore when the US dollar drops, the renmimbi also falls to keep China's goods and services cheaper than the US.  Although China keeps its currency low - it's economy is growing and may be forced to raise its interest rates to keep its economy's growth from stalling or from experiencing hyperinflation.

    To hedge against inflation, China has been dumping its dollars for commodities - mainly oil commodities.  Oil, which is based off the US dollar, has historically been a great hedge against inflation whenever the value of the dollar falls.  So because China is the largest holder of dollars, naturally they would be concern with their US investments and seek to find profits elsewhere or at least shield some of their exposure to US debt/devalued currency.  China's purchases of oil has been helping to keep the price per barrel steady between $77 - $80 even though there is already a surplus of oil inventories in the market today. 

    Q: Is oil a good play for an investment if inflation is inevitable?  What about stocks?  A: Yes, both of these are good investments and definitely a lot better than holding cash in the long run!

    November 18, 2009

    As the economy turns...What's your 20? 2 quick thoughts of mine

    ---------------1st Thought-----------------------

    If you take a step back in history, you will find that the US Economy has been through bad times and good times.  Our economy has gone through various depressions and recessions, as well as prosperity  and increase within a century.  It reminds me of the popular game show "Wheel of Fortune", where contestants spin a wheel hoping to win money while simultaneously avoiding bankruptcy and from losing a turn in the game.  What baffles me is how similar this game is to reality for most of us in how we govern our  money and finances.  People consider that because they have a job in good times - they expect to have that same job in bad times.  But as the current economic crisis has taught us, (with a 10% unemployment rate that continues to climb) that many of us may not have a job.  So now some unemployed people are rushing to pay off debts by taking out more loans, or they decide to live off of savings and file for unemployment benefits to continue living their lifestyle as if nothing has happened. 

    But what if you didnt have any debts?  And what if your income did not depend solely on your job?  But rather your income was diversified with dividends and rental income from your investments?  So that even if you lost your job - you would have money still coming in?  It's not impossible at all....some people live this type of lifestyle and not all of them are retirees.  These individuals I speak of live a good life whether the economy is bad or good.  Aim towards this lifestyle and you won't have to worry about saving a 401k for retirement.

    --------------2nd Thought--------------------------

    Speaking of 401k's - how many of us really expect to retire off of a 401k and savings?  I think it is so funny that the media acts as if this is all we need to do to reach a happy retirement, or the "golden years".  Has anyone taken notice about how the government has raised the retirement age to 67?  Now why would they do this?  Answer:  There isn't enough money in social security to pay everyone when they retire at 65.  So the government needs you to wait a while...even if you dnt have a job.  If the government keeps printing money and expanding its deficits then what do you think will happen when the bill becomes due?  Answer: Higher taxes and inflation.  So if you're one of the people who loves to save cash - see how good you will feel when your $100,000+ in savings is really worth only $70,000 in savings due to inflation. 

    Is Obama a supporter of Keynesian economics?  Is Obama similar to President Nixon when Nixon wanted to continue paying for the Vietnam war, expand social programs, and create cheap money to promote growth in the economy during the 70's?  This era was coined as the "Great Inflation", where the US saw inflation as high as 14% !  An advisor to the Obama administration, Paul Volcker, a retired Federal Reserve Chairman with a monetarist approach to fiscal and monetary policy, will hopefully prevent "Nixonomics" from happening again.

    I'm not sure if the Obama administration is leading us down the same or similar path as Nixon - but it makes you wonder when the US taxpayer is paying for wars in middle east, expanding social programs and extending unemployment benefits, and keeping interest rates low.  This strategy might give us the jobs and recovery we Americans want, and make some Americans comfortable....but at what cost?

    November 8, 2009

    Fool's gold

    Gold is at an all time high - which means that several people are trading their dollars for gold because of their fear of the dollar potentially becoming less valuable due to inflation.  The more people that invest (demand) in gold drives its price higher... and when demand increases for gold, then the supply increases, which drives the price of gold downward.  I think people are fooled into believing that gold is an actual good investment, when it is clearly not.  If you do your research, one can see that gold and inflation moves hand in hand - which means that those who invests in gold would not make any profit from it if held long-term.  Investing in gold will give you an average return of about 4% YTD - but inflation is also about 4% YTD!  So your net profit is zero.

    Obviously, people invest in gold not because of profit - but for stability.  The benefit of investing in gold is because your loss of value is zero!  If the value of the dollar declines due to inflation and you're investing in gold, then your portfolio value does not decline at all since the price of gold will most likely go up as the dollar declines.  If you're going to invest for gold, then it should be for the short term only - since it does not make sense to hold on to gold for the long term.  If I owned gold today, I would be selling today at its highest point...because sooner or later the price will come back down.  But that's just me - short term investing is just like gambling, and I don't like to gamble with my money...I like sure things.

    The Bottom Line: 

    If you hold on to gold for the long term - you will actually lose money.  Because long term investing in gold yields no profit (+4% return - 4% inflation = 0% ) and once you pay Uncle Sam's capital gains tax (currently at 15%) you have just paid taxes for an investment that gives you a 0% return.



    October 31, 2009

    People who make moves...My learning experience at the H&M Auction.

    Today I went to an H&M Auction here in Atlanta, GA and had the opportunity to see investors making big moves on a rainy Saturday while most people were gearing up for the infamous Florida - Georgia game.  I was able to experience how investors were able to acquire property in the form of condos, multi-family complexes, and single-family homes that were once valued at over $100,000 - being auctioned off for $35,000 to $80,000.

    There was one condo located in Buckhead, an affluent area in Atlanta, that sold for $82,000.... this is an awesome deal considering that this condo would have easily sold for $300,000 in the midst of the 2007 credit era.  I imagine that the smart investor that purchased this property will only have to wait about 3 - 4 years in which he can sell this condo for double of what he purchased it at.  But I assume he won't sell at all - because it will be smarter to rent it out indefinitely and get paid approximately $1300 - $1400 a month since it is in such a central and convenient location within Atlanta...and rents in the Buckhead area typically go for this amount.

    Although it wasn't me this time making moves, it was interesting to learn how others make moves.  Sometimes we have to watch and learn how to play the game before we rush out on the field with the actual players.  Some people spend $82,000 on cars that depreciate in value and don't put a cent back into our pocket... but when we acquire assets that DO put money into our pocket - now we're making moves.


    October 25, 2009

    Capital Gains/Dividends/The New Normal

    While I'm mostly a fan of dividends  - this week I've turned over to capital gains!  Of course, there is some risks involved because when one is investing for capital gains, there is always the chance that you could get a capital loss!  I usually love investing for dividends because there is not much chance for loss, and there is a monthly or quarterly check in the mail from a company that I've invested with.  So one may ask - why turn to capital gains this week?  Well, my reason is simple - MONEY!  Or maybe a little greed....  I'll let you decide. 

    Stocks are still very low considering the downturn of the economy - so there are still undervalued companies out there that are ripe for the picking...and profiting.  This week I've placed a small wager on Sprint/Nextel as they gear up to release their earnings this Thursday.  I think this company has the potential to beat analyst's estimates....but we will find out if I'm wrong or not.  If I am right, then there will be a nice reward....if not, then a penalty to pay.  Which is why I normally do not invest for capital gains - but I consider myself a well rounded investor and if I'm wrong then it will be a lesson learned.

    Everyone is waiting for the economy to return to "normal" because we are still not where we were when the economy was at its highest in 2007.  Nevertheless, there are talks about the economy being in a "new normal" where it will be more difficult to predict where the market is heading and it will be more volatile.  I think the economy is already where it needs to be given that the highs of the 2007 credit era was inflated due to excessive lending of loans with a lack of financial responsibility to verify the backgrounds of people applying for credit. 

    The Dow is above 10,000.  The S&P is above 1,000.  The recession is over and the American economy is doing OK, since 80% of companies have posted 3rd quarter profits already.  When companies continue to post profits, it is an indication that consumers are beginning to spend - and this indicates that companies will eventually begin to hire some new talent to keep up with demand.

    Our next horizon is the potential inflation ahead - the government has been the biggest spender during the recession, and has printed hundreds of billions of dollars to keep the economy "afloat"...  So a potential area for investing will be commodities, because commodities increase as inflation increases...  So investing in oil, coal, corn, wheat, etc.  are good alternatives to make money during inflationary periods.  


    October 15, 2009

    Salary Fixing = Employee fixing

    Remember the term price fixing? Where a group of direct competitors within a certain radius would conspire together and decide on a price of a product/service, and offer that product/service at the same price to all their customers? For example, a group of gas companies such as Chevron, BP, and Exxon - all of them in Lakeland, Florida - would get together and "fix" their price for a gallon of unleaded gas at a determined price.  So no matter which location a customer went - the price would be the same.  Therefore the customer has to pay a premium at any gas station, and the gas station were the only ones benefitting from the price fix. 

    Nowadays, price fixing is illegal in almost every state and companies can't do this anymore - when it comes to their products that is.  But what about when it comes to the jobs/careers that they offer to their employees?  Well, salary fixing is not illegal at all!   And most employers that are in direct competition come together and determine on what they will pay employees depending on the position.  Ever wondered why there is a certain "range" of pay for a position?  I remember going on several interviews and discussing pay - and in every interview the recruiter would say "the salary range for this position is blah blah".  I sometimes ask myself, "Where did they get the range for this position?"  "Why won't you just tell me what you're willing to pay me? And I'll say yea or nay."

    The range comes from an agreed pay amount that is determined by every other company within that industry, for a specific position.  Thus, salary fixing!  This is why no matter what industry one may be in - he/she can't get a better pay from a competitor.  For instance, if you're a supervisor at Geico and you want to become a supervisor at State Farm...well expect about the same level of pay.  If you are a teller working at Bank of America, and you want to become a teller at Suntrust...expect about the same level of pay.  The reason companies do this is to prevent 1 company from having all the human capital or the best talent just because that company is paying a higher salary for the same position.  So to spread the talent around for all - most companies offer the same "range" of pay!

    So is your salary fixed?  Or did your employer "fix" you??  Salary fixing appears to be a very liberal thing to do - but does fixing promote competition amongst competitors?  Or should we consider a conservative approach and allow salaries to run amuck?  Would this then create monopolies?  I suppose the answer may lie somewhere in history........

    October 8, 2009

    Time value of $1million dollars - 40 years from today

    Ok folks – I know I was going focus most of my time on other projects for a little while, but how can I not post to my blog when I come across some financial articles that make me upset? Such as the one from that “teaches” how one can retire a milionaire. You might be thinking – “What’s wrong with that?” “Shouldn’t we all want $1 million dollars by retirement? Why is Barrington upset about this article?” Well I’m upset because this article (and several other “how to retire a millionaire” articles) is misleading.

    It is misleading because it gives the illusion that we only need $1 million in retirement – when the average person will need much, much, more! It’s upsetting to listen to so-called “financial gurus”, who are broke themselves, teach others to become wealthy. However, we Americans should first lose our archaic admiration for the word “millionaire” because having just 1 million dollars has already begun to lose its luster and appeal when it comes to retirement. Let me set an example – if you’re 25 today and your goal is to have $1 million dollars in retirement 40 years from now – you will be the most unprepared person to retire by the time you’re 65, and thus you will likely have to keep working.

    What underscores my argument is a simple term, it’s called the Time Value of Money, and the value of $1 million dollars 40 years from today has a value of $46,030.93 assuming you save $286/month in a account at an 10% interest rate. So thinking that you’re going to be safe with $1 million in the bank is misleading. And why I’m so upset. Who can live off of just $25,000 dollars in retirement? That’s not going to work even if you don’t have any debt! Money loses value over time and we need to have enough of it to last our “golden years” and to pass on to the next generation after we’re gone. Money losing value is also why the price of oil will probably hit $300/barrel 10 years from now… unless huge improvements in our energy structure and renewable energy eventually becomes widely available.  But you have to count on politicians ignoring their egos for that to happen.  Not to mention passing on the bribes they could receive from lobbyists of corporations that wants laws and bills to be voted in their favor - it is mentioned that even President Obama received $20 million from healthcare lobbyists...I wonder how much has he received from energy lobbyists?  Auto lobbyists?  Well, these are just my questions......

    The smart financial gurus and investors are those that look to the future and can interpret it. Isn’t it obvious that all governments are becoming more interlinked and interdependent? One can see how as populations and economies grow together – so does the need for capital, energy, food, and water. Alternative sources of energy and water are becoming the next hot commodities…just think – only 3% of the world’s water supply is drinkable and the other 97% is salt water. Already there are water shortages in many countries and people need clean drinking water that isn’t infected with harmful bacteria.

    These are good investments but I’m getting off the subject… There is only one proven and succesful way to retire and it is to obviously make more money than you can ever spend while in retirement. Out of the world’s wealthiest people, over 50% of them were entrepreneurs that worked hard to secure their wealth. This isn’t discouragement, but encouragement! Learn how to sell your ideas and talents, become a successful entrepreneur, and you’ll eventually make millions (plural)!


    October 4, 2009

    Pay you? No. Pay me!

    Some people are stuck in neutral - they just don't get it and probably will never get it when it comes to their own personal finance or creating wealth for the next generation.  The average American has student loans, maxed credit cards, car notes, and other miscellaneous debts that we tend to carry for decades hoping to rid ourselves free of it by the time we retire.  But why do we have these debts so long?  I suppose we can blame the individuals with MBA's and JD's (I'm talking about politicians here) that have shaped our economy into a consumer driven one, where we are punished to save (taxed) and rewarded for debt (tax deduction).

    We Americans typically work 40 to 80 hr hard work weeks and take limited vacation and use barely any sick time so that we can be at the top of the list to receive any promotion, bonus, or salary increase so that we may use the extra money to pay off some debt.  Once we get ourselves a little out of debt by paying off the credit cards or the car note, then what do we do?  Instead of investing or saving our money - we simply look for another car to buy because our current one is too old or "doesn't look good anymore", or some form of jewelry, rims, etc.  But if we can't buy it totally outright, we simply finance the rest.  And again we're back in the same situation and working extra hard to get back out of debt again....  This is what we call the rat race.  Because we never move ahead, we just move in circles going nowhere.

    Broke people don't have any money because they give it away to rich people.  Most of us work for rich people already, but unforutnately we take our hard earned money and give it right back to them when we buy our clothes, shoes, cars, jewelry, tv's, etc.  So as of 2008, I began changing the way I make and spend my money. 

    Most broke Americans might agree that we only have one stream of income - our job and a meager 401k.  But to really get ahead in life, we need multiple streams similar to our corporate colleagues.  Corporations have multiple streams of income through the sale of bonds, issuance of stocks, and sales of products and services. 

    Therefore, my quest to build multiple streams of income is beginning, instead of paying Nike for a pair of shoes, I invest in Nike and they pay me a dividend so I can get a pair of shoes every quarter.  Instead of paying a car company like Ford or Toyota for a new car, I invest in them so that they pay me a dividend and I can pay cash for a car (eventually after I save up my dividends).  I actually want gas prices to rise - because that  means my oil & gas companies will do better and pay me more in dividends so that I can fill my tank up whenever I want. 

    Now I am far from where I want to be and definitely don't have buckets of money running over, but I hope I'm on my way as I get older and wiser.  I know the financial education we received in school has been incorrect and not sufficient in today's economy, so I'm working to improve on my situation day by day. 

    Why would I continuously work hard just to pay companies for their products?  When they are so happy to pay me in dividends to use their products?  Pay you?  No. Pay me!

    PS - folks, my blogs will be scarce at best in the upcoming months (unless something too tempting comes up).  I am focusing on finishing my new book BE FREE that will be a simple guide to getting out of debt and making money for everyone.  This book and a few new projects for 2010 will be my main focus for the remainder of the year!
    However, I hope to at least put one post up every month to keep  you informed of my thoughts and actions.


    September 24, 2009

    Free Enterprise or Unions?

    By definition, free enterprise is business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. It is also recognized as the free market. This system of supply and demand places emphasis on competition, where only the strong survive and the weak…well…they die. It reminds me of a forced bell curve that was implemented in my college courses where a certain percentage of students needed to fail in order for other students to succeed. Because no one wanted to be in the category that would fail, this method often resulted in students producing the most creative and unique problem-solving techniques to arrive at the best answers to case studies presented to the class. Free enterprise, or the bell curve in this example, allowed for the most productive classroom and class participation for the professors who taught under this method.

    A second example would be to think of a potential football team – where only the best players are able to compete for 1 position in order to make the cut and get listed on the roster. I think you get the picture and understand the benefits of free enterprise in the example of the classroom and a football team.

    A union, by definition, is an organization of individuals joined to protect their common interests and improve their working conditions. This system of protectionism places emphasis on everybody, where either everybody loses or everybody wins. Now imagine if the classroom was a union…where the entire class would win or fail depending on results. Would some students work harder than others? You bet. Would there be room for errors? You bet. Everyone would be expected to pull their weight for the common goal of the class, but as with any class, you’ll have your class clowns pulling down everyone’s grade.

    Think of the tryouts for the football team operating as a union, where either all the players made the team or none at all. There would be some players who wouldn’t push themselves, train, or practice as hard as the others wanting to make the team.

    So, from my aforementioned examples one can assume I’m a bit lenient towards free enterprise than I am for a union-supported enterprise. But in what scenario would a union be sufficient? How about the US military? Where every soldier trains together, eats together, fights together, and no man is left behind on the battlefield…even if you die your body is shipped back home. Everyone shares one common goal and there is no room for individuality, but if you make a mistake or underperform – you can rely on your comrades for help…and likewise they rely on you.

    Which method is better? A free enterprise or a union…? Both methods are sufficient; however, it depends on the situation in which a method is being used. Which method would be sufficient for healthcare? Should private enterprise lead the way in which some people would have to do without health insurance to keep costs low for others? Or should we back the Obama administration and provide for all even if it meant higher taxes for some of us?

    Governments, or unions, should not force over regulated markets, but at the same time free enterprise should not be able to run amuck and reiterate the overall meltdown of the economy again. There is a place for both at the round table of Capitalism, but we must thoughtfully decide the appropriate time and place for both…because too much of any one thing spells disaster.

    September 23, 2009

    G-20 Summit

    10% unemployment rate is bad, but it also suggests that 90% of Americans are working – Barrington Lewis

    I’m back folks!  Took a little break from the blog to focus on the Level 1 CAIA exam. But now I’m ready to get back to writing!

    Today the G-20 summit met in Pittsburgh, NY to discuss powerful decisions that affects international economic and monetary policy and President Obama delivered a powerful “framework” for global progress and peace…while at the same time Treasury Secretary Timothy Geithner pleaded before Congress for more regulation of the banking industry. Some of us will catch the highlights of the G-20 to see what went on after we get off of work, or maybe we’ll catch the highlights and commentary once we wake up and watch the news.

    But the true fans of this G-20 summit can interpret that a new world of interlinked powers or nations is emerging – indeed the world is becoming smaller. The best opportunities for investments will not be just domestic, such as here in the US, but abroad in developing countries such as India, China, Africa, etc. New financial instruments will come to play and we’ll hear top economists coin phrases such as “green investing” or “socially responsible investing”…hopefully, as time progresses and regulation is at least minutely accepted, hedge funds will self-institutionalize to the point where more middle-class citizens have the opportunity to participate in these “absolute return” funds that are currently limited to high net worth individuals.

    We shall soon see how it all plays out and exactly how much trust is exerted between nations, whether ally or foe, and how democracy spreads its wings throughout the world.

    September 15, 2009

    Just 2 quick thoughts

    • President Obama wants more regulation of the banking industry and aims to prevent companies from ever becoming "too big to fail" and causing another meltdown of the economy.  After supplying the banks with taxpayer funded bailouts - the Obama administration wants to limit the "size" or assets of these banks to keep another meltdown from happening again.  This may backfire given that now, after the bailouts, banks have become even larger.  For instance, Bank of America acquired the assets of Merrill Lynch and Countrywide financial; Wells Fargo acquired Wachovia and Century Bank; JPMorgan acquired Washington Mutual; and the list currently goes on....

    • On another note, I think the United States is reverting back to the times of the past...this may be actually good.  Ever notice that the term "Buy America" is being thrown around lately?  Or that there are more federal grants available for students that decide to pursue math, technology, or engineering majors?  It seems as if the U.S. is becoming again more of an industrial power - where we begin to produce more and consume less.  From a political standpoint - consider the recent tariffs the U.S. has placed on imports (i.e., the tariffs on Chinese manufactured tires).  Consider the "cash for clunkers" campaign and domestic deals on Ford, Chevy, and Chrysler vehicles.  I've also noticed a lot of highways and U.S. infrastructure jobs being created and signs on my way to work stating "This project funded by the American Recovery and Reinvestment Act".  This will put a lot of people back to work and keep America going strong - as China changes its export based economy to more of a consumer based one. 

    September 11, 2009

    Should the super rich be taxed more? Or receive tax breaks?

    It is all over the news about whether the super rich (the top 10%) should be taxed at a higher percentage than the bottom 90% of Americans, or if these high net worth individuals should be given a tax break.  Some middle class and poor Americans (the bottom 90%) believe that the super rich should be taxed at a higher percentage to cover the high costs of the healthcare reform, Medicare, Social Security, and any other expenses or defaults that our country may have. 

    Billionaire Warren Buffet made a case to Congress in 2007 that the current tax code is unfair to lower income Americans, and that he pays 18% of his salary to the IRS while the rest of his staff pays nearly twice that - 33%!  Buffet stated to lawmakers that "frankly, an economy where my receptionist pays a lot higher tax rate [than] I do does not strike me as a just economy."

    But on the contrary, other super rich individuals believe they deserve tax breaks and should not be "punished" for being richer than most by paying extra taxes to cover the cost of those who aren't as fortunate or those that don't work hard enough.  Some say that if the government continues to increase taxes on the super rich Americans who have more income, then most Americans will not be as motivated to achieve higher salaries because the government will take their hard earned money through taxes and give it to the lower income Americans.

    What I consider interesting is how currently most super rich Americans use the tax code to their advantage.  Many super rich Americans either have a low salary or no salary at all - which means the IRS cannot tax all of their wealth with an income tax.  For instance, the boss of Blackstone Group, Steve Schwarzman, has been named the best paid CEO with a compensation of $2.3 million dollars which the IRS will tax at the highest rate of 35%.  However, you may find it interesting that according to WallStJournal, Schwarzman also received an additional "$699.8 million from the vesting of 25% of the equity granted from [Blackstone's] June 2007 IPO.  That is on top of the $684 million he cashed out on in the IPO and doesn't include the balance of his equity grant that will hit in coming years."

    One can see that although Steve Schwarzman has a salary, or taxable income of $2.3 million, he also has additional gains not subject to income tax, but rather capital gains tax, which is currently at 15%.  If you add the sum of $699.8 million and $684 million, the total is $1.38 billion that is only subject to capital gains tax!  In 2008, the 2nd richest man in the world, Warren Buffet, with a estimated net worth of about $60 billion - has a salary of just $100,000 that is subject to income tax - the rest of his fortune is taxed at the current rate of 15% in capital gains tax.

    So should the super rich pay more in income tax?  Or more in capital gains tax?  Or should they receive tax breaks since they pay so much already?

    Who's wrong?  Who's right?  What is considered fair...?  You tell me!

    Or if you're one of those considered to be in the bottom 90%, then maybe you should just make more money.....???


    September 2, 2009

    US Stocks Close Lower As Fincls, Consumer Cos Slide - MarketWatch

    US Stocks Close Lower As Fincls, Consumer Cos Slide - MarketWatch: "US Stocks Close Lower As Fincls, Consumer Cos Slide"

    Come on stocks! Get it together... September is historically the worst month of the year for stocks (supposedly), so there is no immediate need to be discouraged. On the contrary, when the market is down it is a good time to buy. So, in taking an optimistic stance, I say September is the best month of the year to buy stocks!

    September 1, 2009

    The strong survive and the weak get taken advantage of...

    Remember not too long ago when the US economy was in a free fall?  And everyone sold off their stocks and took their losses?  In the 2nd half of 2008 and beginning of this year everyone including some "experts" and economists thought the sky was falling.  The media flashed "Bearish" images of the Great Depression and even the WallStreetJournal dropped forecasts of the Dow crashing down to 4,000 before the economy would get better.

    Now take a moment and think back further to mid-2007 when the Dow reached record levels above 14,000, and every expert and economist echoed about how great the economy was...and that the Dow will keep rising as the fundamentals of our economy remained strong.  As the markets showed signs of optimism, the media kept "Bullish" forecasts showing the economy running stronger than ever as the housing bubble became larger and the real estate market was red hot.

    Sometimes the media can show us that things are better than what they really are.  And on the contrary, the media can portray to us that things are worse than what they really are.  Not to mention that listening to some experts and economists predict the direction of the economy is similar to watching a meteorologist try to predict the direction of a hurricane. 

    The real news is that the Dow did not fall to 4000 when times were thought to be the worst; and the economy really wasn't as strong as it appeared when times were thought to be the best!  We live in a capitalist economy where the strong survive and the weak get taken advantage of.  There are big forces at play that influence or trick individuals to buy in at the highest points of the market (even if you can't afford it), and sell off at the lowest points of the market.  All the while these forces (high net worth individuals and corporations) make record profits in both low and high markets.  Don't believe everything you hear in the media, nor everything you see. 

    Do your own extensive due diligence and find out what's really going on.


    August 31, 2009

    China Manufacturing Grows at Fastest Pace Since 2008 (Update1) -

    China Manufacturing Grows at Fastest Pace Since 2008 (Update1) - "China Manufacturing Grows at Fastest Pace Since 2008"

    As economies and nations become interlinked - good news in another country becomes good news for everyone!

    August 27, 2009

    Green energy = More taxes?

    The Obama administration is focused on green energy, or "clean" energy programs that make America more efficient and reduce our dependence on foreign oil. For instance, the current administration has provided billions in subsidies/funding for domestic automakers to provide new technology and more fuel efficient vehicles by requiring that the average mpg on vehicles be increased by 30%. This means that the American people will consume less gas at the pump, and drive further on a tank of gas. And as electric vehicles and bio fuels come to market, some of us won't use gasoline at all.

    This is where the potential dilemma comes into play. As we drive more fuel efficient vehicles and consume less gas at the pump - the government receives less tax revenues for improvements to infrastructure such as roads, bridges, highways, etc. Currently, the federal gas tax is 18.4 cents per gallon (unchanged since 1993) of gasoline that is pumped in the United States. According to the Department of Energy, it is estimated that we consume approximately 378 million gallons of gas per day. Multiply this by $.184 and our government receives approximately $69,552,000 in tax revenues every day!

    But again, as Americans drive more fuel efficient cars and therefore consume less gas, there will be less money coming in from federal gas taxes for improvement in our infrastructure. Eventually politicians will become aware to this decline in tax revenues and will have to find a way to keep the money rolling in, so they can fund the necessary projects to improve our infrastructure...and that they might be re-elected into office.

    Maybe the government will choose to increase taxes on our utility bills as "plug in" vehicles become more popular? Or perhaps the government will employ a "mileage tax" to increase revenues by taxing people who take long road trips for vacations? Or since the average person commutes up to 30 miles Monday-Friday for work - maybe a mileage tax is a viable option? Or perhaps the government will just simply increase the current federal gas tax to, say $.50 cents a gallon?

    In summary, what I'm saying is although vehicles with "better gas mileage" are better for the environment and takes less gas to fill up - they may still cost us more money in the end.


    August 26, 2009

    August 23, 2009

    Real estate, capital gains, & deferred taxes

    Just as there are opportunities in the stock market today, there are also several opportunities in real estate as well - where one can buy properties at a low price and invest for capital gains and/or for cash flow. But just as you eventually need an exit strategy for your investments in the stock market, you also need an exit strategy for real estate.

    Take, for example, Shannon Banks who owns an investment property in the form of 2 duplexes with a value of $219,000 each, or a total of $438,000. After a down payment of $100,000, Shannon owes a total of $338,000 in loans for these properties that she bought in March 2009. Since each duplex can house 2 families each, she decides to rent out all 4 units for $700/month.

    As the economy regains traction and the housing market stabilizes, it is estimated that in year 2011 the value of Shannon's duplexes will appreciate to a total of $620,000. Let's fast-forward and say it is now year 2011. Shannon owes approximately $315,000 on her property which is now valued $620,000 - which means she has approximately $305,000 of equity in her duplexes.

    Let's say instead of selling her duplexes for a profit and paying fees and taxes on the sale of her investment, Shannon refinances to take advantage of the equity in her investment property. The bank gives her a new loan for $550,000. By refinancing, Shannon defers her capital gains taxes and pays off her original loan of $315,000 and pockets the $235,000. Since Shannon did not yet sell the property, she gets to defer her capital gains taxes until a later date.

    So now Shannon can use her $235,000 to purchase another property that she can use to rent out and increase her already $2,800/month income, or she can invest this money into the stock market and not have to worry about taxes until she decides to either take her money out of the market, or decides to sell her duplexes.

    This is smart money. Shannon is using her money to work for her, instead of her working for it! By deferring her capital gains tax to a later date - she ultimately pays less taxes. Why? Because of the time value of money. If Shannon defers her taxes to 30 years from today - the real value of what she pays in the future will be less than if she sold her property and paid taxes today.

    Work smarter. Think harder.


    August 19, 2009

    Warren Buffett's 'Greenback Effect' Warning: A Call to Buy Stocks - Warren Buffett Watch -

    Warren Buffett's 'Greenback Effect' Warning: A Call to Buy Stocks - Warren Buffett Watch - "Warren Buffett's 'Greenback Effect' Warning: A Call to Buy Stocks"

    If you're not buying stocks - what are you waiting for? Do not depend solely on savings as the value of your savings are eroded by inflation and increased taxes. Financial freedom is about taking advantage of opportunities, and the opportunity to buy stocks this cheap won't be around forever. Do more than just invest in a 401k or 529 plan - open your own portfolio in Sharebuilder, TD Ameritrade, Scottrade, etc. and get started investing.

    The US dollar index indicates that the dollar is getting weaker - which ultimately means that oil will eventually become pricier, along with more inflation that is a result of the government providing us with all this "stimulus", TARP, TALF, "bailouts", etc. Someone eventually is going to have to pay the government's tab - guess who? You and your children will have to pay these bills in the form of either increased taxes or increased inflation. Since most politicians need your vote to keep them in office - they won't mention the thought of increasing your taxes to keep inflation low - therefore, inflation will run high while your taxes remain the same.

    Stocks are a better hedge against inflation than cash - period. Don't suffer while the economy is down AND get left behind while the economy is on a rebound. The recession is over...get in the game.

    August 16, 2009

    My stock picks

    Stocks I like - Chevron (CVX); iShares Silver Trust ETF (SLV); Alcoa (AA); and ING Groep NV (ING)

    These stocks are from reputable companies that currently have undervalued stock prices.

    * CVX is a growth stock that will eventually rise as the price of oil rises - potentially next year

    * SLV is a trust that invest in Silver, which has a a 19% YTD Return and can be a good hedge against upcoming inflation

    * AA is a cyclical growth stock that is undergoing some difficulty as the economy struggles - but will increase in value as the auto & home industry stabilizes

    * ING is a growth and dividend stock with a 15% yield payout, or $2/share. I like the bank's business model and know it also will increase as the housing industry stabilizes. I also love the dividend!

    Store credit card a good deal? (Page 1 of 2)

    Store credit card a good deal? (Page 1 of 2): "Store credit cards a good deal?"

    Just a quick article for those of you harassed by store retailers to accept their credit cards - is it really necessary? Hopefully those of you who DO accept the cards will actually pay the credit cards off immediately. Because if you receive 20% off your purchase - but then you wait 1 or 2 months to pay the cards off - you end up paying more for your purchase than if you would have just paid cash. Overall, I would stick with cash for purchases...playing with credit cards usually gets you burned.

    August 14, 2009

    Tired of Overdraft fees?

    I AM. Banks love to charge outrageous penalty fees to your checking/savings account even if you go over your account balance by just $0.01! Why? Because it is estimated that some banks receive about 75% of their revenue from assessing penalty fees to its customers accounts.

    You think they would cut us some slack given that we’ve just bailed them out with billions of dollars of taxpayer money (in which we, including our children, will be paying for in the form of increased taxes for years to come – while our banks posts record profits amidst a recession). “U.S. banks will likely collect $38.5 billion from their customers in overdraft fees by the end of the year, according to a report in Monday's Financial Times. Many banks reacted to the financial crisis by increasing the fees for overdrafts and credit cards to keep profits up.”

    This is an outrage – and unfair – and the reason why I choose to bank with ING the self-proclaimed “bad boy” of banks, that does not charge overdraft fees per transaction, but rather a low monthly interest rate on the amount that you go over. But if you pay the over draft balance before the end of the month – then they charge you no fee at all! Here’s an example directly from there website:

    “An Electric Orange Customer has $1,000 in his Electric Orange, and an Overdraft Line of Credit limit of $165. He buys a new laptop computer for $1,100 using his Electric Orange Card. This transaction will be processed using the $1,000 balance in his Electric Orange, and $100 from his Overdraft Line of Credit. His Electric Orange balance will now appear as -$100 on our website, which reflects the $100 credit used from his Overdraft. He will then pay a competitive interest rate on the $100 he borrowed until it’s paid down with his next deposit.”

    Therefore, if today I decide to overdraft my account by $50 and I decide to wait a week until I make a deposit – I do not get charged a penalty or overdraft fee! As long as I make a deposit before 30 days – in which I would be charged an interest rate of 7.25% on that $50 - which is still lower than most banks.

    Why would a bank do this? (Not to mention they pay a higher interest rate on the balances in your checking and savings account than most all other banks!) The answer is that they decided to put consumers first – their business model is different from traditional banks in that they believe they can be just as profitable and succeed within their industry by treating people right.

    Now the only caveat in joining a great bank such as this is that you first must have a good credit score to be accepted – because unlike traditional banks, this bank does not accept anybody. But if I did have bad credit, this would be yet another motivation to repair it – so that I too could be a part of a bank that protects my money, is FDIC insured, and shows that it actually cares for my account and my business.


    August 11, 2009

    Atticus Capital to close two hedge funds - Times Online

    Atticus Capital to close two hedge funds - Times Online: "Atticus Capital to close two hedge funds"


    FYI - On another note - The addition of hedge funds into an investor's portfolio has proven to be a great alternative to protect one's portfolio against traditional asset classes in a downturn economy such as the one we're experiencing.

    August 10, 2009

    Are rappers/hiphop artists making money? How many actually retire?

    Whose your favorite rapper? – Lil Wayne, Plies, Rick Ross, Gucci, TIP, Jeezy, (fill in the next 90,000+)? In the videos they claim to have plenty of what the average American does not – money, cars, clothes, 10,000 sq ft homes, and the bling to go with it. Not to mention the M-16’s and the infamous “A-K” to protect it all. But given the mass fortune of wealth they portray in their lyrics, videos, and concerts –how much money do they actually have outside of the public eye? I didn’t notice many of them on the Forbes’ list.

    But I’m not surprised since many “artists” only get paid 8% - 13% of their album’s retail sales price AFTER everyone else has got their cut (lawyers, label, manager, accountant, IRS, etc.) of that album’s sales. And if it’s more than one person they’ll have to split the remaining meager profits, which is close to nothing if you have like 5-10 people in your group (I wonder how many rappers retired out of WU-Tang? MC Hammer’s club?)

    Only those at the top – which is about 6 rappers are actually making money today. The rest of the 90,000+ are probably making the equivalent annual salary of a data entry temp…like $35k/yr if they are even somewhat successful – which is why many of them eventually go broke, in jail, or decide to get real jobs after several years of trying to “make it”.

    Not going to retire “artists”
    1. Soul For Real
    2. DMX
    3. Rick Ross
    4. Clipse
    5. The Lox
    6. Lil Kim
    7. 95 South
    8. Lost Boyz
    9. Wu Tang
    10. Young Buck
    11. Yung Joc
    12. Fat Joe
    13. Plies
    14. (the other 90,000+)

    Face it – if you’re not JayZ, Lil Wayne, LLCoolJ, OutKast, Eninem, and maybe 1 or 2 more I can’t think of – then you’re wasting your time.

    Hopefully the message gets out to the young and upcoming that there are better options than becoming a rapper/entertainer, and instead they should focus their time and energy in becoming a successful entrepreneur, surgeon, lawyer, or maybe a highly paid CEO who receives a “golden parachute” when they get fired or retire. The road to becoming a successful rapper is a lot harder than it is to go college and become a CEO or successful entrepreneur – but unfortunately parents focus not enough on education and teaching the next generation about financial literacy and working smarter.

    This trend needs to change if we want our kids to become the next generation of leaders and employers, instead of followers and employees. Why are rappers teaching our kids to sell drugs, show your underwear, have lots of sex before you’re 15, commit a crime, and make an album about it? Imagine the pressures being felt by our young daughters who feel as if they are not pretty if they do not have a big ass or dress a certain way? Or that they need to have sex before they’re ready in order to feel loved or build their self esteem?
    Take responsibility for your kid’s individual and financial future – show them the way even if you can’t get there yourself.

    Dhata H. – this was a great convo that we had…


    August 6, 2009

    FTC OKs rule

    FTC OKs rule prohibiting oil market fraud - MarketWatch: "FTC OKs rule prohibiting oil market fraud"

    I'm glad FTC decided to act on this issue - hopefully they will follow through and keep prices normal for a while!

    August 5, 2009

    Work smarter with money; even if you have little money!

    Not making enough money in your job? Don’t plan to be there forever? Or work forever? If you stopped working today – would you still get paid? A lot of us are trained to work harder and put in longer hours at work (sometimes up to 80hrs!) just to get noticed over someone else for that raise, promotion, and/or title. And if we don’t get the raise this year – we will try harder the next year. Working hard is good – but working smarter is GREAT! Why put in longer hours at your J-O-B and not be fully compensated for it? The Bureau of Economic Analysis showed that wages and salaries fell again for a tenth straight month decline of 0.4%, even though personal spending increased 0.4%. So we’re making less and working more.

    But we can BE our own boss and not spend our life working for others – and it really doesn’t require an MBA or Doctorate degree, but rather just thinking differently and wisely about how to apply your money. I’ll show you 3 ways to do so:

    1. Keep your day job (for now) – although we never get paid enough while working for someone else, it is the best alternative for a steady income in your household. While on the job be sure to take advantage of the 401k program and hopefully you invest the full percentage amount up to what your company matches.

    2. Invest yourself – Instead of spending your extra money on movies, expensive shoes, or cars – why not open up your own investment account through Sharebuilder, Scottrade, TD Ameritrade, etc. and manage your own portfolio? And for those of you who don’t have the time to research stocks – you could easily invest in index funds that statistically have outperformed 70% of the investment managers out there.

    3. Find Opportunities – “BE greedy when others are cautious, and cautious when others are greedy” – Warren Buffet. Did you know that if you invested $1,000 in Ford Motor Co. back in January 2009, you would have over $8,000 in your account today? In just 8 months!!?? (Yes I made the call to my friends and family to pick up this stock back in January, but sadly not many did…) This is an example of how to work smarter with money…even if you have little money! For those of us who DO have time to invest and research the stocks for our portfolio, you can find hidden rubies such as Ford was in January (there are still several out there waiting for you). Also take advantage of stocks that pay constant dividends – over time you will come to find that you may have a substantial amount being paid to you quarterly that adds to your bottom line.


    August 1, 2009

    How much would you need in retirement?

    Is an early retirement possible for you and/or your family? How much can one expect to save if he/she regularly invests and saves their money up until their retirement? This is a serious topic because there are several sources of information telling us that if we save regularly for X amount of years then by the time we retire, we will be millionaires. But how much value will a million dollars hold by then?

    I’ll provide a clear example of this:
    Let’s say that William Brown makes $40,000 today and decides that he wants to have $1.5 million by the time he retires in 40 years from today – which would make him 68. He expects to receive an average pay raise of 6%. According to Bloomberg Retirement Calculator – If he made regular contributions and saved at least 20% of his salary annually he would accumulate a sum of $1,732,188 – which actually exceeds his goal (excluding Social Security) by the time he is ready to retire.

    Brown believes that he is on track to a successful retirement if he averages an 8% return on his investments. Unfortunately, he did not consider the actual value his $1.7 million will be 40 years from today. Using TVM (time value of money), we are able to calculate how much $1.7 million is worth today to get an idea of what it would be like for Brown to retire in the future.

    Using the formula of TVM:

    FV/(1+r)^T = 1,732,188/ 1.08^40

    This will give us an understanding of what Brown’s retirement will be worth in the future – or rather what will $1.7 million be worth 40 years from now. After solving for the equation we find that Willam Brown’s retirement will be worth roughly $79,734 for retirement. Assuming we don’t have a mortgage, credit cards, or any other bills that prevent our savings for retiremet – who can survive off of just $79k? Imagine the lifestyle adjustment....

    According to Bloomberg, Brown needs to aim higher – and save more money in order to retire comfortably as the Time Value of Money erodes his retirement value.

    How many of us can successfully retire?

    July 28, 2009

    Mission: Wealth Impossible

    The WallStreet Journal has a front page article today (07/28/09) stating that the high gasoline prices (remember $4/gallon?) during the “laissez faire” Bush Administration’s term was in fact not due to supply/demand issues – but rather the speculation and trading of futures by investment firms and traders (i.e. Goldman Sachs, JPMorgan, etc.). This is a classic example of American Greed. When prices of commodities such as corn, wheat, oil, gas, etc. all substantially increase simultaneously – this puts an extremely heavy burden on the middle-class and poor citizens who may or may not have money to afford the increase in prices. (I know $4/gallon was a pain even to my pocket!) But guess who profits when the prices go up? Traders! Who suffers? You!

    The wealthy get wealthier and the rich get richer….it seems as if their mission is to make wealth impossible for the middle and poor class. But these traders and high net worth individuals operate in a zero-sum game, where someone must lose in order for someone to win – so as the top 10% wins…the bottom 90% loses.

    So we need to change this to scene to “Mission: Wealth Ispossible” and also work towards being wealthy and rich – GO FOR THE GOLD! Become a successful entrepreneur and constantly work towards increasing your monthly cashflow/income – don’t get stuck in a career, unless you’re a highly paid CEO (Ex-GM CEO Rick Wagoner got a $8.6 million dollar payout for his failures). Otherwise you’ll waste your life working for the next 50 years just to watch your retirement savings disappear through increased taxes, inflation, and debt. And if these three horsemen don’t get you – you always have the possibility of a fourth in the form of a “Bernard Madoff” coming to steal from you while the SEC looks away….(how could they have missed $50billion?)


    July 23, 2009

    How to get a little more money - by working smarter!

    Banks make their profits off of the deposits made to them from individuals and other businesses, then they loan those deposits out at a higher rate – and keep the difference in profit for themselves. For instance, an individual deposits $5,000 in an online bank retailer and receives 4% in interest from the bank in a savings account. That $5,000 deposited doesn’t stay in some safe until the individual withdraws, but rather the bank loans the $5,000 out at maybe 10%...and the bank keeps the 6% profit it made off of that money. Well, I decided to play by the same rules of the bank but with my brokerage firm – I can get approved for loans from my brokerage at 6.5% APR (in order to get a good rate like this you need good credit and collateral, i.e. my investment portfolio) and I used this loan to buy stocks that pays me dividends at 12% APR. And I KEEP the difference!
    In other words,
    1. I borrow money from my brokererage at a low rate of 6.5%
    2. I loan this money to a company at a higher rate of 12% in which I receive stocks and dividends
    3. Then I pay my brokerage their 6.5%
    4. I keep the remaining 5.5% profit.

    And if the price of my stock goes up - then I keep all capital gains.

    So without using any money of my own – I create a profit for me playing by the rules of the bank, which is to make a profit for yourself without using any money of your own. Just take a look at the scenario between Goldman Sachs and taxpayer money!

    July 21, 2009

    Sometimes Great things take a while to build...

    Despite the recent downturn in the economy and all of the pessimism that still lingers around today - I am rushing to take advantage and acquire as many stocks, bonds, and commodities that I could given their low cost. My goal is to increase my cash flows as much as possible while the market is down - and then realize the capital gains and the increase in dividends I would receive once the economy is back up on its feet and the price of my investments appreciates.

    However, as I am rushing - eventually I began to run out of my own cash and decided to begin using margin through my broker to continue investing. There are so many undervalued companies in the stock market that I wanted as many as I could possibly get - and my cash flows/dividends were steadily increasing - but too slowly for me. So once I maxed out my margin, I began asking Congress (my wife) to give me approval to look for low interest rates on personal loans from banks to continue investing. This is where the brakes came in....

    My wife - who is a bit more conservative than I am - put on the brakes and basically told me that I would eventually over-stretch myself and our family if I continued. Even though the market is undervalued - there is only so much I'd be able to accomplish without all the cards tumbling back down. Making $400-$1000 a month on dividends would be great and an additional income - but sometimes great things take a while to build!

    So, of course she was right - Egypt, Rome, America, and other great civilizations did not come to be overnight. It took a while for these great powers to be established and build their wealth. Looking back at the subprime mess - where potential homeowners, investors, and flippers, were accepting mortgages that they could not afford just so that they could jump in to the real estate market or "strike while the iron is hot." Unfortunately, as we soon realized - their cards came tumbling down as the entire U.S. economy also did.

    July 16, 2009

    United States of Private Equity

    The rules of attaining wealth and success are constantly changing in our world, and in order acquire wealth we must continuously adapt to the new rules of the game of wealth. I've been listening to the testimony of Former Treasury Secretary Henry Paulson before Congress about whether he pressured Bank of America to accept the deal with Merrill Lynch. What I found interesting is learning that Mr. Paulson, a former employee of Goldman Sachs of 26years, deemed his former employer and his friends "too big to fail" - and now we see that Goldman posts record profits amidst a recession and at the demise of their competitors such as Lehman Bros., Wachovia, etc....

    And another example of why we are the U.S.P.E - Warren Buffet had a $5 billion stake in Goldman, while the US taxpayer bailout fund contributed $10 billion to Goldman Sachs, yet Warren Buffet received $1 billion return on his investment while we the taxpayers received only $500 million???? How do we invest twice as much as Warren Buffet - yet our return is less than his?

    It is a different set of rules at play folks - where the rich control the government...and we average citizens lose!

    July 12, 2009

    Lazy portfolios

    Paul B. Farrell: Lazy Portfolios upend popular active funds - MarketWatch: "ROYO GRANDE, Calif. (MarketWatch) -- Guess what? Actively managed mutual funds are bad news, filching your hard-earned money."

    Mutual funds have been robbing people blindly for years - the managers of these funds have been siphoning off the top at will in down and up markets. Invest in an index fund - it's always a better option. When you account for trading and commision fees, in addition to the rate of inflation, your real value of capital return is minimal. This includes 401k plans, 529 plans, etc. that average people regularly contribute to and simply hand over their money to "financial advisors" who are really just salesmen that convince you their corporation is a legit one and holds true the sound principles of financial responsibility for their customers. Reminds me of a few "sound" financial institutions - Wachovia, Merrill Lynch, Lehman Brothers - were these not "sound" financial institutions? Didn't these companies fail or get bought out by another institution? It's time to wake up.....

    The super rich have been stealing from average Americans for years by using the government, financial institutions, and financial advisors as the vehicles to get access to our money. So why would I waste my time saving and investing my money in these organizations just for them to lose 30% of my 401k plan? Or to lose everything if I was suckered and invested in a former Nasdaq chairman's investment fund (Bernard Madoff was his name). There is a better way to obtain wealth and success without become a stooge of these institutions who have only but themselves in their best interest.

    The best way is to invest and prepare for the future is by investing in cash flow, such as, owning businesses, owning commodities, investing in stocks that constantly pay good dividends, and investing in rental properties that will pay you rental income. This way your money keeps working to produce more money so that you will always receive income via your investments whether you're in a good or bad economy. And then you won't have to worry about stressing over saving enough....

    Just a thought....