Death Cross, not just a Christian Metal Band

The Death Cross weighs on us.

The Death Cross may be the place to take defensive action. For us that means selling something and letting it sit in cash until we feel like we can buy it by. Alternately, we can selling something that is falling and buying something we think will do okay in this financial climate.

We are pretty terrible at timing things, because honestly we don't put a lot of effort into monitoring our portfolio between meetings. That makes our timing more macro. Doesn't that make it sound fancy?

Knowing who we are, we're probably going to let it ride. This seems like a good long-term play anyhow. Of course, this approach works better if your portfolio is super-diversified.

We continue to do the Death Cross watch on SPY. 

But look who just Death Crossed. Thanks EWZ.

We have a portfolio that has a lot of stuff in it. By our understanding, it is pretty diverse. We buy. We hold. So SPY is tanking, so we probably don't want to buy it while its tanking. But we really should consider buying some when we think it's hit the bottom.

Or, do we diversify outside the US? A lot of purchases have been domestic. We should look at that.

The next time we meet, we need to do an update to the KOL account summary.

Math is hard

Were we mathing wrong?

Are we looking at our portfolio performance all wrong? We tend to compare our performance against the S&P 500, or more accurately the SPY ETF that tracks the S&P. Really all of our comparisons so far have been going into Google finance and look at the chart of how our portfolio is doing versus how the S&P has done over that period. Basically, are we doing the math correctly?

Here's what has been sticking for us: If every time we made a purchase it was SPY instead of whatever we bought, how would we have done? Better? Since everything is a moving target with investing, different investment products are valued differently depending on the time. Our idea is to try and look at past purchase dates and compare those with how SPY was doing.

But what does this information get us? What conclusions do we draw? If SPY turns out to consistently best our choices, do we just keep buying that and talk about video games every Saturday morning instead? Probably not. It's good to have some baseline to compare it to, to check in and see how we're doing. What we decided is that it is word trying to figure out how to track this. We won't bore you with the details, but we'll keep you posted on how it is going.

Profit

Treat Yo Self

The word on the street is that the Fed is thinking about raising interest rates, since the jobs numbers have been better. That could mean things will be cooling down a bit. Eventually they will, of course, so then we can invest in candy and cosmetics to rot our teeth and look good for the party at Ground Zero. These investments tend to do well during a down economy. The idea is that you can treat yourself to these comforts, even when the world is falling apart around you.

Also, we're headed for another buy, so we need to consider our next move. It was noted that we have never bought any bonds, and there may be something to be learned from a non-equity buy. Also, we haven't done any commodities. If only we could figure out the McRib cycle. One problem with buying a commodity is that it would mess up our diversity, since our portfolio is so small.

We've always been concerned with diversifying our portfolio, and one of the original purposes of this group was education. Maybe we need to focus on the parts of this that we don't yet understand, rather than continue our march towards the perfectly diversified portfolio. Before our break we did spend some time looking at a single company. We ended up going with Proctor & Gamble (and we purchased AT&T in the past). WIth both PG and T, we purchased them as proxies for other things (sector, dividend). We didn't pick these up as growth engines, but rather for their stability. The next step may be developing skills for selecting something that we do expect to grow. Another idea is to focus on building a good retirement fund, with bonds and treasuries and the like. Either way, we should take some time looking into non-equity (stocks) investments.

ENZL and EWZ basically still cancel each other out.

SPY is still up significantly from where we picked it up, even though in the last few days it has dropped a bit. Every drop makes people think its the end.

VPU, NORW, and PG are basically being stable. Mission accomplished on those.

T is still up more than we expected.

Hey, we noticed this article linked on our sigfig account. It's pretty interesting:

P & G to shed more than half its brands

This adds to our knowledge from reading the annual report. From that, it looked like PG was trying to get more diverse internationally, and now they seem to be trying to get rid of stuff that isn't overwhelmingly profitable.

Profit!

I have my mad money.

We started talking about how investing is a way to fight against inflation. The idea is that if you have returns that outpace inflation, it is "safer" than just keeping cash in an account. But there's also TIPS, treasury bonds that track inflation, which seems like the ultimate defensive investment. Something that meets inflation has a consistent adjusted value, whereas cash loses value over time if there is inflation. 

Last year, Random Roger wrote about the Floor Leverage Rule, and it sounds interesting. Basically the idea is that you devote a small portion of your portfolio (say 15%) to something that has an exceptionally high risk and potential high return. Yes, you may lose your hat, but it's only a small hat, like a beret or a beanie. And think of the potential gains. Even though the rest of our portfolio isn't just a bunch of Treasury notes, we do have a pretty conservative group of investments. It might be a way to ease us into taking a little more risk. With the next buy let's find something volatile, something extreme. 

We found a nice list of some discretionary stocks at TheGlobeAndMail.com that might be worth looking into next week. The Motley Fool seems to have good things to say about Lithia Motors, so that's probably where we start. 

Profit. 

Dividend Bonus! Maybe we can put in that pool we always wanted.

The group discussed how we had a little love for Microsoft  which has become a bit of an underdog, compared to Google.  They may not quite be out of the tablet business and Bing is kind enough to point towards our member's science blog (Citizenship In Science).  Take a look.

(T) - ATT is down almost to the price where we bought it.  SigFig linked to a few interesting articles, one of which stated that T-Mobile is seeing a large increase in subscribers.  Another article talked about a price war in the US mobile market which may impact profits for all carriers.  Again, we realize that we purchased this for the dividends.

Where are our dividends anyways?  After a little bit of research, apparently they came back as cash.  We had wondered this for a while, but finally took the time to research.  Our portfolio is up a bit more than we previously thought.  We're up 14% rather than the 8% we thought we were based on equity purchases.  That's wonderful!

Extra Profit!

We're thinking about hiring the Paul the Octopus to manage our portfolio.

We talked about this Wired article that took a look at how random methods of stock picking can do about as well as actively managing a portfolio without all that nasty volatility. While the article isn't heavy on details and is more amusing than anything, it is interesting to talk about volatility, especially in light of the recent Nasdaq market glitch.

Also, there was this article from the folks at Planet Money that made an analogy between choosing what you think is best and what you think others will think is best in terms of baby animals. They likened this to how people behave with regard investing, where sometimes investments are chosen not on their merits as you see them, but upon what how you think your peers will value them. Perhaps we needs to see some sort of New Sincerity movement sweep the investment world.

In other news, our portfolio has changed around a bit. We started out buying chunks of five stocks, with each one worth 20% of our portfolio. However, with how things have changed in valued over time, our domestic stocks are now worth 60% of our portfolio. Interestingly, given how Brazil went to the toilet, EWZ is only about 6% of our portfolio value. By shares 60% of our portfolio is foreign, however by value only about 40% of our portfolio's worth lies outside the US.

The US economy has done well, which has served to skew the percentage of our portfolio value toward America. This is where having a diversified portfolio has, with the way things shook out, ended up limiting profits. Even our Beta is shifting downward. However, if we had chosen a more foreign portfolio, we would be in some dire straits indeed. While it is a little disappointing that we didn't predict the future, this is something we anticipated in our strategy. We were hoping when we started this experiment we would at least break even, and so far that appears to be the case. We are doing better than a savings account, and hopefully as we increase the size of our portfolio, the small rate of return will be more financially significant. Of course, we aren't even talking about how dividends may have contributed to this.

As far as a next investment, what about Egypt?

A random investment algorithm wouldn't see anything here, but humans say, "Hey, look what those colored lines are doing...I bet I can make some money..."

And then, we were talking about Africa as a place to put some money. After doing some discussion, we narrowed it down to:

EZA
GAF
AFK

And then there were some Asian investments. If only there was an Antarctica ETF.

For next week, we need to seriously consider what the long-awaited next buy. We should take a look at our friend's portfolio and analyze it the way we did with the Africa investments. Hopefully, a good pick will shake out.

Profit!

Talk to Hal.

Members present: Brian, Bickford, Danak

SPY is currently doing pretty well, and we were wondering if we wanted to see if it is going to go higher or do we want to lock in our profits. If there is some downturn on the horizon, when do we want to get out? Granted, SPY is an index of the S&P 500, which means that as long as the parts of the fund are doing well as a whole, we are good.

SPY is hovering at $151, and historically it hasn't gone much past $160. We purchased it at $119, so it has been mildly profitable. It might be a good idea to set an automatic sell, say at $140, just to limit the amount that we can lose in the case of a crash. Using automatic orders is good for a small, informal group such as ours. We meet once a week, and none of us is at the computer all day looking at the numbers. Using these tools allow us to keep a watchful, robotic eye on our money.

EWZ is steady.
ENZL is humming along, as is ATT.

Now, on to the problem of figuring out where to put our money.

We took a look at a few different funds, and did some reading. A while back, we were thinking about investing in HILO, an emerging markets ETF. It is billed as a low-volatility, emerging market, dividend ETF. Also, we looked at EELV and EEMV. HILO is unfortunately a little more "expensive," because it has a high expense ratio. The fund is performing well, but it drags a little because it has to work that much harder to make up for the higher expense ratio.

Next week we should delve further into these funds, and maybe even make a decision on a buy.

Profit!

Yousef forgets to write the minutes [insert joke here]

We started talking about retirement, and some among us are less inclined to crunch the numbers for fear of realizing they will be absolutely destitute, so we crunched some numbers. Here's the take-away:

A pension plan is a stable option, if you can secure one. However, it hinges on the idea of not leaving that job before retirement. If you do go with a pension plan, you need to take the few minutes to look at the calculations of your benefit. It is not as painful as you think...promise. Also to consider, is what happens should you leave and take on another job.

Stocks:

SPY is still doing well, still above the [rising] DMA.
ATT is doing okay, even if a little down--still getting dividends.
ENZL is still going up.
EWZ is still doing it's crap self.

What to buy next?

Profit!

Actual profit?

There are indications that this is a Bear Market, and we are at an impasse. We have two basic options, to dump stock or to hold onto it until the market comes back. 

If we dump, we are at about an 8 or 9% profit. We can decide to get back into it later

We are also at buy time for something else. Next week we need to take a look at stock valuation to try and pick something to get into. 

Profit(?)

Propping Up the Economy... We Would NEVER!!!

Some forcasters believe that the government is propping up the economy for the election year.  The idea is that the growth that we've seen is false and that things will fall apart next year.

The market has had a downswing in the last few days.  Apple is changing management.  The jobs (unrelated) report just came out as well.  Let's explain how it was good and bad.

The good look:  We added more jobs!  Potentially more than expected.  Anyways, it was enough added to imply job growth.

The bad look:  Unemployment is up to 7.9%.  The unemployment rate is based on a survey of 50K people and is seasonally adjusted.


SPY:  Dropping.


EWZ:  Drop-ish.


T:  Dropping, although we just want the dividend.  This is a straight dollar amount, not a percentage of the stock value.  We're not too worried yet.


ENZL:  Go Kiwi's!  Not as bad of a drop as everyone else.

One of our members got their property tax statement.  If this is your only property, or your "homestead", then you get a tax credit.  The tax is assessed against the fair market value of your house minus the credit.  The value of the home cannot be increased by more than 3% a year if it is your homestead.  Another bonus! Florida gets an additional 25,000 for the homestead or 50,000.  This exemption does not apply to taxes for schools.

If one were to get a new residence, after selling the old, the homestead exemption isn't transferable, exactly.  If the previous owners had homestead, then you can keep it.

Rent vs own.

Millage rate:  The rate at which your home is taxed.  This can vary a lot from county to county.

Private stock vs public.

The gang pulls their credit!

Members present: Brian, Bickford, Yousef

AT&T dropped about $2 (approx. 7%) in the past five days. What happened? They paid out a dividend and then it dropped.

EWZ: This ETF is still sucking it up.

SPY had the same big dip in the last few days. What's going on?

After the Presidential debate, there was a comment made on Marketplace that defense stocks bumped up and healthcare stocks swung down as a result of Mitten's strong performance. Interesting.

We pulled our government-mandated free credit report (sans credit score) from annualcreditreport.com
to get an overview of our credit histories. You should do this ever so often. You want to look for anything that shouldn't be there, accounts, debt, etc.

You get to choose from the three major credit-reporting agencies Experian, TransUnion, and Equifax. Apparently it randomizes the list on the screen when it asks you to choose which report you get to view. Each of us got a different order--hooray randomness!

For next week:

Video games!

Dividont's!

Members present: Brian, Bickford, Yousef

The Dow just changed. Kraft is out, and some medical company is in. The managers in charge of the Dow Industrial Average must think that this change will best represent the market as a whole, but we're not really certain.

Europe is still trying to sort things out, but the market seems mollified for the moment.

One of our members has a goofy onestock.com share of Apple in a nifty frame--it was a wedding present, and he has been ignoring the thing's actual value for some time. However, he's not collecting dividends on the thing. He needs to look into that, and figure out what his most highly-valued piece of art can do for him. This also means that he has taxable income from those dividends, which in turn means that he will need to report those dividends.

Our portfolio is moving up.

ENZL has moved up about $3.50 since we purchased!
SPY is at an all-time high for up (purchased at $119), currently at $147

There are two ways we can play the exit strategy for SPY:
1. Buy and hold until the KOL finance portfolio is done...when we retire forever from video boxing.
2. Or we could sell constantly (this makes tax stuff a little more complicated, however we need to consider dividends anyway).

EWZ...ugh. Diversity appears to have bitten us there.

However, here's the breakdown of our meager portfolio. You will notice a 7% gain in the value, which should take into account dividends being rolled back into more shares (or portions of shares).

The positions listed below represent your holdings as of the previous market’s close. Market values are delayed by at least 15 minutes.

		Symbol/ CUSIP	Security Description	Quantity	Acquired Date	Holding Period	Average Unit Cost	Cost	Market Price	Market Value	Unrealized Gain/Loss	% Gain/Loss	Covered
		ENZL	ISHARES TR ZEALAND INVST ZE	16.0000	08/09/2012	Short Term (329)	$31.1375	$498.20	$33.4620	$535.39	$37.19	7.47%	Covered
		EWZ	ISHARES INC BRAZIL INDEX FD	6.0000	05/27/2011	Long Term	$75.1467	$450.88	$57.0600	$342.36	-$108.52	-24.07%	Non-Covered
		SPY	SPDR TR UNIT SER 1	4.0000	11/15/2010	Long Term	$122.3200	$489.28	$147.2400	$588.96	$99.68	20.37%	Non-Covered
		T	AT&T INC	16.0000	12/27/2011	Short Term (103)	$30.3175	$485.08	$37.2600	$596.16	$111.08	22.90%	Covered
	** Total All Asset Classes							$1,923.44		$2,062.87	$139.43	7.25%

It's nice to see some positive movement in the portfolio, even if it is just inflationary.

If we would have invested all of our lot in SPY, we would have been up 20%. However, if we would have gone all-in with EWZ, we would have been down 24%. Diversifying may take away those dizzying highs, but it also mitigates the doldrums.

Profit!

The gang buys the Mordor ETF!

Members present: Brian, Bickford, Danak

One of our members recently got hired for a new position, and he was able to have a conversation with his new employer about his internet footprint. Interestingly, his new employer is friends with one of his former colleagues on Facebook, and so she was able to take a look at multiple layers of his presence online. The good news is that he apparently had been a responsible and not-too troubling netizen. However, the real story, if any, in this is that even the precautions of locking things up tight may expose some cracks, say from unintended and unknown relationships. It seems best to use the Babysitter's club axiom of not writing anything down that you wouldn't want copies posted around school of.

Apparently, in late June we earned a 2% dividend on EWZ, so that means we have 2% more of disappointment.

SPY and T are on their way up. EWZ is floating.

It is decision time, and here's our shortlist: ENZL, NORW, and HILO

Comparing ENZL and NORW with respect to percentage changes (see below) shows that ENZL seems a little less volatile. The comparison to HILO (not pictured) shows ENZL to be the least volatile.


So we decided to go with ENZL, partially because it seems like a good buy and partially because we just needed to make some sort of decision. It doesn't feel like a hasty one, but we have had a tendency to sit on money and just let it pile up.

But wait!

As we were about to buy ENZL, we noticed that there was a difference in price between the bid and asking prices. These are the prices that you get and will pay, respectively. The discrepancy between these two is called the spread. A large spread can be the result of a low trading volume for the product or for a product that is not actively being traded.

*More information here.

So the question became, is this worth it? In other words, are we going to be able to make up the spread in the long run? We thought we would, so we went with it. Another fun thing with trading during nights and weekends is that the market is closed, so technically when we click buy, nothing has officially been bought until it goes through when the market is open. There are several buying options, including market and limit.

Market: you agree to purchase the stock/fund at whatever the market price is
Limit: you set the limit for what you will buy or sell at

You can also set the window in which the trade can take place.

This opens up some interesting options for automating your transactions to a certain extent. You can go as deep as you want to with these, however make sure that you don't set up something disastrous or you could end up defaulting or getting your trades restricted. Trade safe, America!

So I guess that means we have a piece of New Zealand, but the real question is, why isn't the symbol LOTR?

Profit!