Lackluster Friday, But Not a Bad Week

Not much news as far as the stock market goes today. None that really caught my interest anyway. The new jobless claims were lower than expected, but I'd really like to see overall unemployment numbers improving. Would like to see the economy improving to the point that employers were hiring again. Overall though, it hasn't been a bad week for me as far as my investments go. I made some trades that were quite profitable (the last half of my UVE stock I'm selling with a 101% gain) and I've identified some shares I'm buying in to that I believe will do well. See: http://thebluecollarinvestor.blogspot.com/2009/06/trading-for-some-quick-cash.html So it really hasn't been a bad week for me.

Last spring I did an experiment in trading equities. Although I prefer long term investment, along the lines of Warren Buffet's long term, I did quite well with trading small cap stocks. As an investor, the more you learn, the more you earn. I feel comfortable with my knowledge of the stock market and my stock picks at this point and feel that I'm ready to make short term trades for quick cash. I am limiting the amount I allocate for short term trading and will report on how it goes in future posts. I think the market is in for a rough ride throughout the rest of this year, but I believe there are always opportunities to make money. You just have to look for them.

Buy Property With Little Down And Small Payments!

For those of you who, like myself, are interested in buying property but would like to find deals that require very little money up front and small payments, you might want to check out this website:

http://www.landsalesco.com/

It looks like a promising resource for finding affordable properties. I wasn't able to locate any property in Missouri that I was interested in, but you can sign up for property alerts. So I'm looking forward to seeing the deals they have available in the future.

I'm not interested in buying property just for the sake of owning it, like everything else I put my hard earned money into, I want property investments to provide income. I'm always looking at rental properties, with an eye toward investing. So far I've yet to take advantage of any of these, although I have come across some great deals. I am currently in the process of positioning my other investments to throw off more cash so when the right deal comes along, I'll be in a position to take advantage of it. I don't want to do more and more work, I want my money to work for me so I don't have to work so hard. Like I tell my friends and co-workers, I don't live to work, I work so I can have a nice life.

Oil Prices and A Few More Stocks I Like

I've written about oil prices before, saying it was all about price and demand. Well now everyone seems to be in agreement. When the price reached the point where most Americans had to start cutting back, the price is beginning to falter. Seems everybody is backing away from their predictions of $200 dollars a barrel for oil and $5 dollar a gallon gasoline. I truthfully never expected it to get to that price. Most of the people I know and work with simply could not afford it. They are struggling now at $4 per gallon, so add another $1 and they simply would be out of commission. When the public can no longer afford something, no matter what it is, the drive behind increasing prices is gone. The new catch phrase, "demand destruction" is occurring on a huge scale, just as I predicted it would. Will China and India continue to drive demand? Only if they can sell their products and how is that going to happen if everybody is spending their money on gasoline? Demand destruction is occurring, not only from consumers switching to smaller cars and driving less, but also from the shift to alternate energy sources, such as bio-diesel, solar and wind energy, all lessening demand for petroleum products. I wouldn't predict oil at $40 per barrel like the guy they interviewed on CNBC earlier this week, but I do see the prices dropping dramatically.

So how is this affecting my investments? Fortunately, since I'm mostly buying, the price drop in equities has been good for me. I'm searching for stocks that I feel have room for growth, solid earnings and pay current high dividends. While the share prices of my portfolio holdings have dropped, along with everyone else, my earnings from dividends have been increasing month after month. I am currently re-investing all dividend income in bargain priced dividend stocks. When the market starts to recover, I will re-evaluate my investment plan and possibly shift dividend income to fixed income opportunities or real estate investments. But while the prices are down, I'm being greedy and adding to my holdings as much as possible. Whether we're at the bottom or not, STOCKS ARE CHEAP! Buy when they're on sale.

My latest additions to my portfolio include Biovail Corporation (BVF), a pharmaceutical company with a whopping 15.10% dividend yield and Windstream Corporation (WIN), a small rural telecom with solid earnings and an 8.4% dividend yield. Both should fit nicely with my overall plan of building a portfolio of high dividend stocks and increasing monthly income from dividends. Any price appreciation on top of that is just icing on the cake. Since I have no intention of selling any stocks within the next several years, I can wait on price appreciation.

I currently don't need any of the income from my stock portfolio, but the ever increasing flow of dividends into my money market account make it a lot easier to afford new investment opportunities as they present themselves. Robert Kyosaki, one of my favorite writers, says to "look at a deal a day." I've made that my goal. I can't always afford the deals, but it keeps my mind active and on the lookout for my next investment.

Summer Cost Cutters For My Investments

For traders in the stock market, summer is usually a time for laying low. "In May, go away" as the saying goes. For my personal investments it is usually a time to re-evaluate my plan and assess changes that will improve my portfolio performance. I also think of it as a good time to pick up stock in some of the big blue chip companies while prices are down. As an example, I sold my AT&T stock in early spring of last year, while I had a nice price gain and bought the company's stock back in late summer when the prices were down. From the profit I made in the spring, I was able to purchase more shares of this great company when I bought back in at the lower prices. It has performed quite well since.

As for improving performance of my portfolio, this year I have decided to increase the dollar amount of each of my investments and purchase larger blocks of stock each time. While I'm building up cash for stock purchases, the money is parked in my money market account where it earns a nice interest rate. By increasing the size of my investments each time, I will save on brokerage fees. I don't think anyone would consider the amount I pay in brokerage fees to be extreme, but every dollar you save is like earning two, since the saved dollar has already had the taxes taken out. So I'm looking to save every way I can on investment related costs.

The biggest threat to my portfolio this year is high gasoline prices. Not only does this have a negative affect on the economy overall and on the cost of doing business for a lot of the companies I invest in, it drastically reduces the amount of discretionary income I am able to devote to my investment plan. I believe we will see a break in gasoline prices soon. I just don't think it's possible for the average working person in the U.S. to continue paying ever increasing gasoline prices. People have already started to make drastic changes, replacing larger vehicles with smaller ones, riding bikes to work or taking public transportation, in many cases they never would have considered these things before. As for me, I simply don't drive any more than I absolutely have to. All these things add up and when the demand falls, so will gasoline prices. My plan B, you should always have a plan B, is to change jobs and reduce my commute or to relocate closer to my work place. For now I'm cutting back and waiting for a price break. I would much rather be putting this money towards building investment income rather than burning it up in my car.

Personal Wealth Is Not All About Money

I recently read this quote on wealth and thought it an appropriate reminder that true wealth is not all about money. I thought I should share it with my readers.

Wealth Comes In Many Forms

My mentor, Bob Proctor, once said, "Don't cry over anything that won't cry over you." People will often create tremendous suffering for themselves just because they're in debt or have lost money. They'll generate intense feelings of anger, sadness, and fear, all of which are destructive and actually make it more difficult for them to regain the wealth they lost. Because they're upset, they may fight with their spouse over money or become severely depressed, not realizing that the power to create abundance for themselves once again is always available to them.When you understand that money is simply one form of the tremendous force known as abundance or wealth, and that you can always receive riches from our ever-giving Universe, it becomes easier to let go of negative feelings about money and the destructive belief that material wealth is more important than other manifestations of abundance.

Ask yourself how much money you would take in exchange for your eyesight and your abundant health. How much would I have to pay you for you to give up your relationship with the person you love the most? My guess is that your health, your eyesight, and the people you love are far too precious to trade for any amount of money.If what you receive isn't money, open yourself up to it with gratitude and joy. Allow your creativity to flourish and you can discover ways to convert the abundance into the form you could most use right now.Wisdom and knowledge are types of abundance that we often overlook.

An antiques dealer I know often purchased items from homeless people who brought him furniture and other objects they'd found in the garbage.He was always gracious and kind to them, and one day one of his regular sellers, who was a homeless man, noticed that the dealer had recently acquired a gold record by a celebrity."You have that underpriced," he said. "I used to work in the music business. I know."The antiques dealer listened to what the man had to say and decided to take his advice and quadruple the price. A few days later, the dealer's dentist came in, got very excited about the gold record, and said, "Listen, I'd love to own that, but I don't have that much in cash to spend. How about if I do that dental work I recommended to you, in exchange for the gold record?"The antiques dealer was able to pay for expensive dental procedures he needed and couldn't afford, because he valued the abundance that came to him from an unexpected source and converted it into something he could use.

Peggy McColl

IRA's, 401k's and Mutual Funds Revisited

On February 25th of this year, I wrote an entry in my blog explaining why I don't invest in mutual funds.

http://thebluecollarinvestor.blogspot.com/2008/02/why-i-dont-invest-in-mutual-funds.html

On November 14th, 2007 I also wrote an entry concerning my views on IRA and 401k retirement accounts.

http://thebluecollarinvestor.blogspot.com/2007/11/iras-and-401ks-and-lions-and-tigers-and.html

Needless to say, my views are not extremely popular. I'm sure that, due to these two articles, a lot of readers and so called "investment professionals" would question my credibility as an investor. However, I'm not exactly writing to give investment advice to anyone. I'm writing about what I personally am doing to build my investment portfolio, it's up to the reader to make up their own mind about what's right for them.

Having said all that, I thoroughly enjoyed reading Robert Kiyosaki's latest post on the Rich Dad blog, "Playing the Mutual Fund Lottery." I came to many of the same conclusions expressed in this article after my experience with mutual fund investments and after reviewing both IRA's and 401k's and deciding against investing in them for retirement. Robert Kiyosaki's credibility, as a successful investor and best-selling author, is unimpeachable. Read what he has to say on the subject of mutual funds and retirement accounts at:

http://richdadblog.blogspot.com/2008/05/playing-mutual-fund-lottery.html

Don't Be Afraid of Listening to People Who Are Smarter Than You.

"Dependent people need others to get what they want. Independent people can get what they want through their own efforts. Interdependent people combine their own efforts with the efforts of others to achieve their greatest success." - Stephen Covey

Even though I haven't had the benefit of an extensive secular education, I still consider myself as pretty intelligent. However, one thing I have learned is, there is always someone smarter. When it comes to investing, no matter how much I learn, I know there are people who are more in the know than I am. A very important part of intelligent investing is to take advantage of advice from people who are smarter than you.

I recently came across this blog by Michael E. Brisky:


http://briskycapital.blogspot.com/


I didn't have to read too many postings before realizing this guy knows way more about investing than I do. So you better believe I'm going to be keeping up with his postings. While I might not take advantage of every piece of advice he gives, I think this guy definitely knows what he's talking about. Thanks Michael, keep up the good work!

Getting Started Investing in Stocks

My first investments in the stock market were in the form of mutual funds. Back in 1993, when I first returned to Missouri, I made very little money, so I only had $35 a month to get started. That didn't stop me though. I opened a savings account and let the money build up until I had enough to buy in to my first mutual fund. Within a few years I was able to build my account and eventually owned 7 different funds. I didn't do to bad, but it seemed to me that with the fees charged to my account and the fact that the mutual funds didn't really increase much in price, I could probably do better with individual stocks. To test my theory, I purchased a few shares of Mobil Oil. A few months later they announced their merger with Exxon and my shares of stock zoomed from $65 to around $120. I had almost doubled my money in less than a year! That convinced me. I sold all my mutual funds and started investing in stocks.

I have always followed the pay yourself first rule, at least to a point. I have never quite been able to put aside 20% of my gross income, like so many money experts seem to recommend. However, I've always decided on an amount my budget would allow and pay myself before I pay any of my bills. I can't say I've never touched the capital. It is very seldom that do, but "time and unforeseen occurance befall" us all. For the most part though, I've left the money alone to accumulate.

Along the way I've had some really good years and some pretty lean ones. This year has been a pretty rocky road for stocks, but I've still done pretty well. I think the biggest change I've made to my portfolio this year was to convert all my stock investments to dividend paying stocks. I had carried a lot of growth stocks, but the thing I noticed with growth stocks is that the "growth" can dissappear very rapidly in a down market. The same was true with dividends re-invested in the stocks that paid them. So I now have my dividends paid into a money market account where they earn interest every month until I decide to where to re-deploy the capital. I'm not suggesting that this is the best way to invest, but it has worked well for me.

I currently own stock in about 20 different companies. My investments are pretty diverse. I own shares in a couple of banks, a few consumer goods companies, some Canadian energy trusts, a couple of utility companies and some Greek shipping companies. Right now I'm concentrating on building my positions and increasing the amount I recieve on dividends each month. This strategy has worked out pretty well, since my budget doesn't allow for much of an increase in my monthly deposits to my account. That will all change before long, since I'll have one of my major bills paid off and I'll be rid of a monthly payment of over $300. I'm planning to keep making this payment, but I will pay this amount to my investment account instead of to the creditor. In the mean time I've been picking up extra work so I can keep increasing my current investment amounts. Everything is working out pretty well so far.