The Newest Addition to My Portfolio

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread." -- Warren Buffett, Oct. 16, 2008

When Warren Buffett made the above statement, I was still buying stock. I bought stock all through 2008 and 2009 and expect to do so in 2010. Buffett also once famously boasted that he would be able to earn 50% annual returns ... but only if he had a whole lot less money. Why? Because he'd be able to freely buy and sell small stocks that the hotshots on Wall Street don't adequately cover.

With that in mind, I decided to buy back in to Advance America Cash Advance (AEA: NYSE). The Group's principal activity is to provide cash advance services in the United States. It offers prepaid debit cards, money transfer services and tax preparation services as an agent for third-party vendors and check cashing services at state authorized rates. The Group focuses primarily on providing cash advance services to middle-income working individuals. As of 31-Dec-2008, it operated 2,767 centers in 33 states in the United States, 20 centers in the United Kingdom and 10 centers in Canada, and had 79 limited licensees in the United Kingdom.


I held shares of AEA twice before and made a nice profit both times on the capital gains. My reason for buying back in this time is for the dividend yield of 4.04%. Their current price of $6.19 and earnings per share of $0.66 allow for continued payment of their current dividend while also fueling future growth. With a return on equity of 23.40% and very little debt, I'm thinking they are in a good position for some excellent growth. And it doesn't hurt that I will be earning over 4% in dividends along the way.

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.