Saturday, September 28, 2013


Hey Everyone! Hope you all had an amazing week. I have a busy weekend ahead of me but couldn't leave you without the top financial stories for this past week. And here we go!  

R.I.P Blackberry

 So ladies and gents it appears that Blackberries will now go down the path of those companies that were simply not able to keep up with the popularity of newly-developed devises and strenuous competition. On September 23rd, the announcement was made that an insurance company in Canada by the name of Fairfax Financial (one of blackberry’s larger shareholders) has decided to acquire the company for $4.7 billions, an average of $9 per share which is a premium to the current stock price. Just a week before this announcement was made blackberry had informed shareholders it would lay off about 40% of its workforce and would likely be reporting a loss of nearly 1 billion dollars on their next earnings call. If that was not a hint that things were not going well (like, at all) I don’t know what is.

So what does Fairfax financial intend to do with blackberry? Well, although there is probably a lot of speculation truth is that only they know for sure or maybe they don’t even know. There are a lot of patents and technology involved within the blackberry emporium which they will likely be able to profit from one way or another.

You may recall that just until a few years ago BlackBerrys were still a popular devise. I remember my first “transition” in to a “smart phone” (meaning a phone that had access to the internet) was a blackberry back in 2010. I have to admit, I was late to the “blackberry party” but how can we forget how extremely popular these phones were? Everyone and their mother had one and if you were caught without a blackberry in your hand you were simply not cool enough.

Well if you had any doubts whatsoever  about how incredibly fast the world of new technology moves and how it can completely destroy a #1 company at the speed of light; let this be your prime example. As a business student, something that gets drilled in to our heads from our very first class is the importance of sustainable competitive advantage and staying ahead of the curve. Is not enough to simply have a product that’s “original” and that everyone wants to get their hands on but is also important that this edge is sustainable for the long term and strong enough to fight competition.

Established corporation that fail to remain aware of new technology and evolution within their industry end up in very risky grounds. I am not saying that Blackberry was not aware of what was going on; specially with competitors such as Apple and Android  (who didn't ) but perhaps the technology moved so incredibly quickly that they could not keep up  with the competition fast enough and much less surpass it.

We've all witnessed the way companies that were once #1 and even had some sort of virtual “monopoly” going on against consumers are now bankrupt or worth millions (if not billions) of dollars less than what they once were thanks in [major] part to technology and major strides within the industries which left many “major” corporations behind.

Who can forget about the infamous movie-rental company Blockbuster, which was completely wiped out by Netflix and other rental/online streaming companies?!  Or, how can we forget companies like AOL which was a pioneer  in the industry and today barely exist, if at all?! I applaud companies like Yahoo! Which somehow has remained alive and well after so many “innovation tsunamis” have wiped out so many companies. 
Rest In peace blackberry, you wont be forgotten!

Thought Apple was left for dead? Think again!

The same week in which blackberry makes the announcement that they are being bought, apple announced that it sold over 9 million new IPhones in their first weekend ALONE since the new phones came out. As per AAPL CEO Tim Cook, this represents record-breaking sales for a weekend in the iphones history. They actually sold out of their first supply of phones and as per Cook are still “working hard to build enough new iPhones for everyone.” If that’s not a perfect scenario of supply and demand for a company I don’t know what is!

Whomever thought apple was left for dead (I have to admit, even I had my doubts!) was in for a huge awakening when apple made this announcement. What does this mean for the stock price? Well, it shoot up like light fire! Is the price sustainable? Not quite sure. AAPL stock seems to be on this pattern of shooting up when a new product comes to market (and proofs to be successful) and then somewhat stabilizing as the months go by until the “next new gadget” comes along.
As previously mentioned, I no longer own shares of AAPL but this past week was a good one for current shareholders. Not to mention dividend payments and share-buy back programs that AAPL executives have put in to place.

Great Job apple! Still a solid company with billions of dollars in reserves—there is really no comparison no matter how you slice it! If you are a shareholder, you just had a pretty good week.

Twitter continues its IPO process; decides to pair up with the NYSE

In case you didn’t know-- twitter is not a publicly traded company (yet) but they are in the process of becoming one. As an IPO (initial public offering—which is usually what stocks of a company are called when they first become public) a company can choose where they want to be listed. For example, the NASDAQ and the NYSE are two examples. Twitter decided to go with the NYSE and some say is because they don’t want to be associated with Facebook in any way, shape or form. Whether that’s the reason or no, who knows! Read the full story here. Would you invest in twitter when it comes out?

Have an amazing weekend everyone! Cheers to a bull atmosphere next week. I am excited because earnings season is just around the corner! 

Saturday, September 21, 2013

TOP 3 FOR THE WEEK: This Week in Finance

Hello Investors!

Hope everyone had a great week. I am here to share the top 3 finance news of the week (a.k.a the headlines that caught my attention the most) and my thoughts about them. As an investor, it is important to remain aware of market news. Information is golden and here is the good news--- we live in a world where information is everywhere, 24/7, at our fingerprints so there is really no excuse. And here we go:

1. Bernanke wont be tapering (at least not for now!): For my investors whom are fairly new to the market-- Ben Bernanke is the chair of the Federal Reserve (The FED). The FED is in charge of monetary policies (ie: adjustments of interest rates to leverage economy, etc.). One of the "actions" the FED took after the chaotic times of 2008 when the market tumbled was implement a program to "lift the economy back up again". The name of the initiative is: Quantitative Easing. The objective of Q.E is in part to buy "junk debt" from the corporations whom had significant debt (mostly from mortgage backed securities) in their portfolios after the crisis. The debt gets 'credited' in to the account the FED has for these corporation and in return; this corporations have more money to lend out. 

How much is this costing you ask? well, great question! Right now the plan is for the FED to continue buying $85B (yes, billions) in bonds each month, indefinitely. Yes, that means money is being printed for this on an ongoing basis. Many in the media have compared this to feeding a drug addiction. Do you see the comparison? 

The idea behind the program is that having more money available to lend can help the economy by increasing liquidity and more movement of funds rather than having the economy stay "stuck" and damaged. There are a gazillion opinions about this Q.E program one of them being that pumping so much money in to the economy will bring future consequences in regards to a ridiculous amount of inflation, etc. Part of the criticism has a lot of valid points but there are always two sides to every story. The idea behind "tapering" is that the FED is supposed to slow down their purchases of these bonds (and lessen the amount of money being 'pumped' in to the economy) as the economy continues to show improvement  Well, as per Bernanke, there is not enough improvement yet, hence, he wont be changing anything for the time being.

All I can say is that as an investor that believes is important to be informed; I will continue monitoring the actions of the FED and then act accordingly. My advise? Keep your eyes and ears aware as this story develops! 

2. S&P 500 and DOW report all time highs: So this is whats so ironic about the stock market-- Logic would tell you that if the Q.E program is to continue this means that the economy has not improved enough. A "less than stellar" economy [theoretically] should "scare off" investors and Wall Street because things are still not where they are suppose to be. Well, GUESS WHAT--That's not the case. The announcement that the Q.E program would continue actually made wall street cheer with excitement and a shopping spree of stocks begun! The fact that the FED will continue "pumping" money in to the economy was seen as "amazing news" (regardless of the fundamentals for this decision). The results? The top industry benchmarks jumped to all time highs. Hence, this is a clear example that investing has a MAJOR psychological component. Fundamentals are important but often times simple "good" or "bad news" can surpass the effect of fundamentals by a long shot! If you want to read more about the excitement in the market this past week click here.

3. JP Morgan Chase to pay $920B (yes, billions) in penalties: In case you didn't know, there are very solid laws in place when it comes to securities trading. If an individual or a corporation (which is the case with JP Morgan here) violates said rules and is found guilty the results are hefty fines which come in part with the hope to discourage any similar actions from other corporations. 

Part of the reason for the fines was due to evidence which concluded that during April 2012; trades at the JP Morgan Chief Investment Offices in London were pricing derivatives portfolio in a way that reduced the reported losses; essentially lying to the public and the owners of these portfolios. It should go without saying that reporting FALSE information in financial statements is strictly prohibited by the securities and exchange commission (an organization that, in part, monitors  trading activities by corporations and protects investors). The interesting thing is, however, that JP Morgan stock price didn't drop by much when this news was announced (only about 1.2%) many investors believe that although the dollar value of the fine is quite significant is only a "drop in the bucket" for a company like JP Morgan. You can read the full story here. 

And that's all Folks. Thank you for reading and have a great weekend! Stay aware of market news. "Stay Hungry, Stay foolish". -Jobs. I think that quote can apply to pretty much anything in life!

Happy Investing. 

Saturday, September 14, 2013


Welcome to the 'premiere' of this end-of-the-week series where I’ll do my best to narrow down the top 3 stories in finance for the past week--- or the ones that caught my attention the most. And here you have it:
  1. AAPL revealed new IPhones named ‘5S’ and ’5C’: The new phones brings zero surprises, the “C” category (which is suppose to be much more affordable--- and C doesn’t stand for cheap, by the way) is not “cheap enough” (pardon the redundancy) to entice a new niche of price-conscious consumers and increase market share.  Another reason for a cheaper model was to have better penetration in international markets such as china, but apparently that wont be as easy as expected with the current price points. 

    The result? Wall Street is not happy and the stock price tumbles a bit. APPL’s stock price failed to reach the heights it has reached during past announcements. I still remember the day AAPL reached 700 p/s sometimes towards the end of 2012 (which lasted about a second). I was a very proud owner of several shares. As the greedy investor that I used to be I did not sell but I eventually had to face the facts and gave it up collecting my profits and running for the door. I still feel AAPL is a great company but in the world of investing it is extremely important that we remain aware and informed so that we know when it may be time to give up our positions, even if temporarily.

    My two cents? Folks at apple should really consider this: innovation is paramount & privacy regarding new products should be non-negotiable—maybe they should invest a little more on privacy. Lately there has been a trend of AAPL products and ideas leaking out to the public before they are announced—not bueno. For example, everyone and their grandmother knew about the “fingerprint” technology long before any official announcements were made. With AAPL products people thrive on innovation and the anticipation of “what’s next?”—that’s where its competitive advantage comes from (at least a major part of it). If they start lacking on these factors I smell trouble. By the way—it was recently announced that Walmart (WMT) was given the OK to sell discounted versions of the new models for a percentage lower than other retailers. This is unheard of in the history of AAPL but the good thing is that AAPL is getting their asked priced regardless from WMT so that doesn’t really affect their bottom line. However, the consumer can get a little break on the price, if they wish, thanks to WMT. You can read more about it here. 

    Phones look very nice though, cannot lie. The C comes in different colors:

  1. The DOW dumps Bank of America (BOA), Alcoa (AA), and Hewitt Packard (HP)--Picks up Goldman Sachs (GS), Visa (V), and Nike (NKE): For my beginner investors—the “DOW” refers to the Dow Jones Industrial average which is a price-weighted index (mostly followed and referred to by the media) as a benchmark on “how the market is doing” (one of several). As a quick reminder: Another benchmark is the S&P500 which is more popular, more commonly used, and sometimes more accurate as is representative of the top 500 companies in the US and weighted by the market cap of each company rather than price. There are multiple speculations as of why the DOW made the change. Some say is to reduce the volatility of the index and other speculate is because they want “higher priced” stocks, or whatever the case.

    My two cents? I was pleasantly surprised to see Visa (V) as one of the chosen ones. I currently hold shares of V and whatever the reason why it was chosen, I can only conclude one of them is because it is viewed as a quality company with quality stock. I’ve also had NKE on my radar for several months but have yet to buy the shares. I held GS for nearly a year when I first started investing back in 2008. All are great stocks backed up by amazing companies and I have no doubt they’ll be valuable contributors to the DOW. By the way, the DOW composite involves a total of 30 companies. You can check out the entire list here (with the new replacements).

  1. Verizon (VZ) announces the largest bond offering & sale in history (49 billion!) and they immediately became quite popular in the bond market with yields higher than the industry average. I currently hold shares of VZ and been keeping an eye on ALL, ANY, AND EVERY type of news regarding VZ since their announcement that they were splitting from Vodafone (VOD) to take FULL control of VZ as a whole. Considering the massiveness of this deal-- VZ agreed to buy off Vodafone for 130 Billion (Yes that’s a B in front of the word –illion); they had to pursue all sorts of financing options one of which includes selling bonds. You can read the full story here. 

    My two cents? Not sure how I feel about VZ getting in to so much debt for this deal. But one thought that keeps running through my mind is that if they are willing to shell out so much money to gain full control; it can only mean that they can only see an upside to this (and are overly optimistic about VZ’s future). Gaining full control of their operations and separating from Vodafone is a deal VZ has been pursuing for a very long time, as portrayed in the media. Hence, this can only mean good things in store. Only time can tell as "vision is 20/20 on hindsight". I will continue watching as this deal develops!

And that’s all folks. Thanks for reading!
Tell me, any “major” news I may have missed? Did any of these announcements influence you in any way? 

*I am currently long on Visa (V) and Verizon (VZ).

Tuesday, September 10, 2013

Dollar Cost Averaging

Although part of the “excitement” or “thrill” of investing is the idea of finding new stocks where to put our money; sometimes is perfectly okay to take the “safer” route and stick to what we know by slowly building a significant position in a company we feel strongly about. One way we can do this is via “Dollar Cost Averaging”.

In theory, dollar cost averaging refers to the technique of buying a fixed amount of shares of a particular company stock on a regular schedule regardless of the price. Source.

For example, lets say you found a stock you feel strongly about and you have $500 to invest in that particular stock. Instead of throwing in the entire $500  at once and hoping for the best; you commit to buying 5 shares of said stock every month for the next 6 months or so (depending on the current price of the stock).

Let’s illustrate with a company such as Disney (DIS).
Let’s suppose current price of Disney is $62
You have $500 to invest, which would buy you a little bit over 8 shares, at today’s price. (500/62=8.06)

Instead of throwing in ALL the money you have and acquiring all shares at once, you decide to buy two shares per month for the next 4 months (for example, 2 shares with your first paycheck of the month for the next 4 months).

The result? You will get DIS at different prices, averaging out your cost per share! What do I mean by this? Lets illustrate-- Say you buy at the following prices (hypothetically speaking):
September: 2 shares at $62

October: 2 shares at $58

November: 2 shares at $57

December: 2 shares at $65

 Your average price per share will be: 62+58+57+65/4= $60.25

So, basically, you’ll have 8 shares $1.75 cheaper than buying all at once! (Note: this may not seem like a lot but trust me, it is as it adds up overtime! And can be even more exponential with the more shares that you own, as you continue accumulate.)
Using this technique lowers your risk of buying too high and gives you the opportunity to get shares at a lower price in the event the stock does go down for whatever reason. It helps us get away from buying shares with “emotion” and we all know that when it comes to stocks is not a good idea to get emotionally involved. So, you’ll be buying while following your schedule and not because you had a “feeling” that it was a good day to buy.

As we all know, the stock market is NOT linear and share prices go up and down constantly.  Hence, you can take advantage of these “swings” by slowly building your position in the company of your choice. Not only are you averaging out your price per share but in addition, if the company pays dividends (as it is the case with DIS), more shares means you get more in dividends each quarter! Lets not forget about that amazing perk!!

Remember that this technique doesn’t come without risk. It works in our favor if the company is one to go up in price over time (most quality companies do). So, remember to continue doing your homework every week (check out Cramer’s post on the Golden Rules of investing if you missed it) and keep a close eye on the fundamentals. Remember that is never a good idea to just “blindly” throw in your money and hope for the best. This is not a black jack table.

So, as mentioned, even thought Dollar Cost Averaging may not be the “most exciting thing in the world” to do with stocks, it can be extremely profitable in the long term. This is a technique that is perfect for those risk adverse investors (those with a lower risk tolerance whom still look to make a nice profit without the fear and/or risk of loosing big).

Thanks for reading and Happy Investing!

If you have any questions you know what to do--- simply email me or comment below. Also, if you feel anyone you know may like this post, feel free to share!
Disclaimer: I currently don’t own any shares of DIS but it is on my watch list. Don’t invest or cease to invest based solely on the information provided in this post.

Saturday, September 7, 2013

Whats "HOT" Around You?!

Hello readers, new and old! I have returned. First off- I want to apologize for the hiatus. Some of you may or may not know I am in Business School while working full time and Fall semester is upon us.  I've had a lot going on to say the least.  But nonetheless, here I am! I am starting to feel like I should be awarded a PHd rather than an MBA degree when I am done with this madness.

But anyways, just wanted to share that I recently enjoyed yet another issue of Kiplinger's personal finance magazine which I read cover to cover because I am a geek obsessed with finance. The October issue had some interesting articles which had my undivided attention because I was able to relate them to some of my personal investing strategies, and learned quite a bit in the process! Check out the October Issue:

Today I want to share the methodology behind one of the articles focusing on one of the ways we can go about finding our new “gem” or “gems” when it comes to profitable stocks: Be aware of what’s “hot” around you.

In the article "Spotting Winning Retail Stocks at the Mall" written by James Glassman, he provides us with a list of some of the "hot" companies he has spotted while doing something as simple as observing his surroundings while at the mall. He provides a list of ticker symbols for the corresponding companies such as LVMUY (Louis Vuitton, owners of Sephora), IDEXY (owners of Zara), and HESAY (Hermes International), just to name a few, as well as an explanation based on research of WHY these companies can be profitable for our portfolios. 

So, what the heck do I mean by “what’s hot?” Well, when we go to the mall or shopping centers in general it is usually very noticeable which stores are more popular than others. Aside from weekend sales or promotion, there are always those “go to” stores that people like to stop by no matter what. Or, those up and coming stores (or products) that people cant stop talking about.

Think about this: which products or stores are hot among your group of friends, co-workers, acquaintances or even your children? (if you have any). Taking notice of popular products can give you an insight in terms of where you should be putting your money or where you should be doing that “extra step” of research before you go ahead and confidently take the plunge.

As I’ve mentioned many times on the blog, investing is not rocket science. Choosing companies is not rocket science either. Is just a matter of taking the time to "study up" those companies that catch your attention and staying ahead of the game.

The weekend is here and many of us may stop by the mall to get a few things. I encourage you to do a something a little "different" this time around and make a conscious effort to really notice what’s popular around you or which stores your wife, husband, kids, friends or random stranger behind you on the escalator says they "need to go to". 

Then, when you get home later on (or right on your cell phone notepad) take a minute of your time and make a list of these companies. If it’s a particular product(s) find out who makes them. Then, let the research begin! Start “doing your homework" on those companies. I am not saying you should spend months or years watching those companies but simply add it to your watch list for a bit while you do your research and then go ahead and make your investment decision!  

Read anything and everything you can get your hands on about these companies on the web from their current share price to company news, etc. A website such as yahoo! Finance, is probably a good place to start. Does the company(ies) pay dividends? How long have they been around? Do they have any products coming out? Do they have any lawsuits against them currently? Any issues? Do your research and then go confidently in the direction of your profits. You may decide for or against them but as long as you do your research you'll be on the right path.

Do not gamble. Do your research, do your homework (cant say that enough).

Thanks for reading and Happy investing!!!

I’ll leave you with a quote which really hits home but Im seriously not sure who said it first (if you know, shoot me an email or comment beloe and let me know):

“Invest in companies, not in stocks”. 

Disclaimer: I received a complementary 1-year digital subscription to Kiplinger personal finance for the year 2013. However, ALL opinions expressed on this post are my own. I do not currently own any of the stocks mentioned in this article.