Fearless Money » Investing

Don't Quit and Don't Sell

Bruce Kroeze — Tue, 22 Jan 2008 18:05:15 +0000

A little sanity check during an incredibly turbulent time in the economy.

Don’t Quit

If you are already out there building your own business, keep at it. If you were all prepared to jump ship from your lousy office job, do it. The nasty little secret is that harder times clean up the pool for the people who are actually good at what they do.

Yes, a lot of businesses fail, although that stupid “fact” about 9 out of 10 businesses failing in the first couple years is so biased and slanted as to be nothing short of a lie.

For example, you know that selling your business counts as a “failure” in that statistic, right? Sounds like a win to me. The only people who pump that biased “fact” are selling you something or are trying to talk themselves/you out of starting a business. They are losers and you should always ignore losers.

The the truth is that if you are smart, practical and aggressive, you’ll do fine. If you work on the business at least some of the time. If you actually build value for clients and customers. If you actually have a plan, and if you can get over the aversion to actually telling people what you do and why they should buy from you, then you’ll do fine.

In fact, you’ll do better than fine, since all the fair-weather folks will drop out very early on in the so-called harder times. Persevere and you’ll come out on top during the recovery.

Face it, are you really safer at that corporate gig? I’ve been laid off, or quit just prior to mass layoffs several times from supposedly secure jobs. The idea of safety in putting all your income earning potential in the hands of another is simply foolish, and I finally learned the lesson reality was trying to teach me.

Don’t Sell

At these kinds of times, when the market is on a roller-coaster, I usually just turn off all market data feeds for a month or two. I can’t stand thinking “I’ve lost $x,xxx today.”

The truth is, if you look at it historically, the people who simply rode out the huge turbulent periods did fine every time. The people who actually see the big dips as opportunities and buy the right stuff at the bottom of the trough did way better than fine. They joined the ranks of the newly rich come recovery time.

Yes, it is annoying. Yes, you might need to put off that addition to your house because you shouldn’t liquidate the asset you were going to use to pay for it. But selling because everyone else it? You aren’t that dumb.

Technorati Tags: Business, Encouragement, Layoffs, Office Job, Sanity Check

New feature, My Stocks

Bruce Kroeze — Tue, 08 May 2007 16:57:54 +0000

In my third year of successful (25% or greater profit) stock-picking, I thought it was time to add a sidebar widget to show my current investments.

On the right you’ll see where I am currently invested. Most of them are International ETFs and all but one have been making double digit gains for years. Please refer to my disclaimers before making any investment decision. I am not licensed as a financial professional, and your risk is your own, as it should be.

If I have a moment, I’ll write a better plugin to actually show my portfolio holdings and current returns. Oddly enough, such a plugin doesn’t seem to exist in the WordPress World just yet.

Technorati Tags: stock market, etfs, investments

What is an ETF?

Bruce Kroeze — Tue, 26 Dec 2006 05:21:01 +0000

ETF’s can be confusing for many people. I often get a blank stare if I talk about one of my favorites, like FXI. I know that I would have been in exactly that boat just a couple years ago, before I decided that being comfortably disengaged from finance was not working well.

An ETF is like a Mutual Fund Stock

That’s really the simplest way to think about them. Basically, they are like mutual funds in that you are investing in a “basket” of stocks. They are like a stock because you buy and sell them in units instead of whole-dollar amounts.
“Opportunity Investing adds that

Unlike mutual funds, and like stocks, SPDRs (and subsequest ETFs) are traded on various stock exchanges over the counter, the vast majority of trades conducted between investors rather than between investors and the organizations or spponsors that create ETFs.

In other words, ETF are usually traded in the open through a broker instead of by directly setting up an account with the fund itself.

In the next few posts, I’m going to explain some of the pros and cons of ETFs for small-time investors like myself. I am convinced that at least in my case they are an excellent vehicle for diversification, internationalization, and hedging. By the end of this series, I hope you will be able not only to skip the “blank look” I mention above, but more importantly you’ll be able to rationally consider using these powerful tools for your own investments.

Technorati Tags: etf, investing

ETF Performance

Bruce Kroeze — Sun, 24 Dec 2006 08:52:18 +0000

I continue to be astounded at how well the ETFs I bought for my IRA this this summer are performing.

I thought they’d be good

I was sure they’d do well, I just didn’t know I’d see this kind of result so quickly.

FXI: Up 33.58%
EWW: Up 22.54%
IVE: Up 11.35% (it is my “conservative one”)

Technorati Tags: IVE, FXI, EWW, investing

Proud to be interested

Bruce Kroeze — Wed, 22 Nov 2006 06:34:34 +0000

The other day, I was reading Loral Langemeier’s new book “The Millionaire Maker’s Guide to Wealth Cycle Investing” as I was getting off the elevator at work. A coworker asked what I was reading. I told him, and mentioned that I was learning quite a bit from it. He actually snickered.

Now, snickering never feels nice, but in this case it made me really think about what caused that reaction, and to a certain degree how my financial growth is distancing me from many of my coworkers.

In fact, I used to hide my reading of books like that from coworkers and bosses. I felt like I was putting on airs or something. Like I would never be wealthy anyway, and that reading these books was akin to “get rich scheming”, that bugaboo label of poor people everywhere. That was before I really began my mental shift from wage earner to entrepreneur. From paycheck-to-paycheck to actual financial planning.

These days, I read tons about wealth and moneymaking. I listen to business audiobooks almost every day on my 90 minute commute. I don’t hide the books anymore, and I am finding a very interesting reaction.

Reactions

My coworkers are almost universally dismissive. At least my peers are. This is strange to me, since these are professionals making decent corporate money. I don’t know their salaries, but I’d be shocked if some weren’t in the low six figures, and most are probably in the $75-90K range. They are definitely making enough that they could be investing and taking an interest in investment. But they don’t, or most don’t anyway.

However, those above me in the corporate food-chain are interested. Actually, I think it makes them more interested in me. For example, I like the Financial Times newspaper, and it is often sitting on my desk. I think it is interesting that the most successful salesperson in the company made a point of talking with me about how much he likes that paper too. My boss has made a point of talking with me about some of the tactics I’ve learned from such books as “The Single Best Investment: Consistently Creating Wealth with Dividend Growth” (Lowell Miller) and “Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, … and Every Time in Between” (Gerald Appel).

An Observation

I’ve read many times that you can predict how much money a person makes by observing his friends. Generally, people make within 10% of their friends. I think this is part of how that happens. Subtle social disapproval and enforcement of the norms.

Technorati Tags: wealth, langemeier, embarrassment

Loving those Foreign ETFs

Bruce Kroeze — Tue, 14 Nov 2006 03:49:50 +0000

Wow, the ETFs I purchased in my rollover IRA this summer are spanking the market.

FXI: Up 18.2%
EWW: Up 20.52%
IVE: Up 9.62%

Total percent increase, corrected for my share allocation: $15.93%, approximately 60% annualized. Sweet.

Technorati Tags: eww, fxi, ira, investments

New IRA Investments, IVE, FXI, EWW

Bruce Kroeze — Wed, 09 Aug 2006 03:56:37 +0000

A couple weeks ago, my rollover transfer from my last employer’s 401K to a dedicated IRA finally completed. For some reason, we had to do it via check, so it was much more time consuming and laborious than it needed to be.

I’ve decided to allocate this money in a very aggressive way. One-third to an in-country (U.S.) value stock ETF and two-thirds to out-of-country index ETFs. I am not optimistic about the growth of the U.S. economy, but I don’t necessarily think it is going to go into the tank. I simply think that out-country investments are likely to out perform the U.S. for at least the next 4-6 years.

My choices:

IVE – iShares S&P 500 Value Index. It focuses on S&P stocks that have the lowest price-to-book rations.
FXI – iShares FTSE/Xinhua China 25 Index. A simple index fund which tracks the major China index. It’s gotten less popular recently, but I think it is an incredible long-term purchase (and it is still up, despite losing popularity).
EWW – iShares MSCI Mexico Index. This index fund tracks a major index in Mexico, and it has been an incredible performer. With the conservative win in the recent elections, it has rebounded nicely after the dip due to the uncertainty. Luckily I guessed it would and bought in the dip.

Technorati Tags: ira, investments, fxi, ive, eww

Open a college savings account anyway

Bruce Kroeze — Thu, 27 Apr 2006 14:40:48 +0000

I changed my mind and opened college accounts for each of my three kids. Up to now, I’ve been thinking that I shouldn’t do that until I was already maximizing my contributions to every tax advantaged retirement account. The idea there is that people will always loan money for school, but no one will loan money for retirement.

I still think that is a very rational and reasonable stance. However, it misses one key point. Your relatives aren’t going to subsidize your retirement, but they probably will help with college. Naturally, they don’t want to just hand you the money either, they want it to go into a college savings account.

Solution, a "429 plan"

According to CollegeSavings.org:

Most Section 529 state college savings plans allow parents, grandparents, other relatives, and friends to contribute to a childâ€™s higher education fund.

This means that when my parents or other relatives ask what they should get the kids for Christmas or birthdays, I can tell them a trinket the child wants, and suggest the main gift be a contribution to their college fund. Very nice.

Only $25 a month

My state, Oregon, has a plan run by Oppenheimer. I think the fees are a little steep, but not nearly as bad as some states. The nice thing is that I could open the account with no deposit at all, and only a $25 per month per child auto-deposit. I may be saving the bulk of my money for retirement, but I can afford $75 to keep the account open for relatives to be able to contribute.

Technorati Tags: 429 plan, grandparent college contributions, college savings

My Roth IRA gained 26.57% last year

Bruce Kroeze — Wed, 25 Jan 2006 17:20:44 +0000

A few days ago I posted that I made a 21% after-tax profit from my investment/speculation account. I pay a lot of attention to that account, of course, and deliberately do not pay as much attention to my Roth IRA. I prefer a “buy-and-hold” approach in that account. Interestingly, that strategy paid off even better last year. My Roth IRA increased in value by over 26%! Wow.

Now, I just have to repeat that performance for a few years, and I’ll be the talk of Wall Street. Sure.

My Roth investments last year:

April – 48 shares DODFX at $30.24. Now trading at $36.24. A 20% increase.
April – 80 shares VGTSX at $12.60. Now trading at $14.84. A 17.78% increase.
June – 100 shares PTIE at $5.27. Now trading at $8.51. A whopping 61.48% increase!

Please note my site disclaimer. I am not offering investment advice, I am not a licensed financial advisor. Please make your own investment choices based on thorough research, instead of listening to some internet dude like myself.

Technorati Tags: Stocks, Mutual Funds, Roth IRA

I beat the S&P by 333%

Bruce Kroeze — Mon, 23 Jan 2006 17:31:20 +0000

While doing my taxes this weekend, I realized just how well I did on my stock picks last year. Taking into account every trade, I made a profit of 21% after I cashed everything out in December. Even after the capital gain taxes take their bite, I still made a profile of 13%. That is outstanding! It outperfomed the S&P by 333%.

My non-retirement trades

PTIE – 550 shares, purchased in April and May for an average of $5.11, sold in December for $6.73. 31% profit.
MOT – 100 shares, purchased in March for $15.74, sold in July for $19.37. 22% profit.
SPDV.OB – 500 shares, purchased in March for $1.74, sold in June for $1.50. 15% loss.