Points!

We talked a little about points,  or discount points, the extra you pay at closing to get a lower interest rate on a loan.

There are two terms we need to define:

• Point--1% of the loan. It is not atypical to find fractions of a point added on. 
• APR just the interest on the loan itself 
• APY takes into account compounding interest. This is the rate considering the total costs--additional fees, points, etc. The "real" rate, since it takes into account all the other factors. 

So, if there are points, your APY goes up, because your total cost is higher.

The moral of the story here is that you should consider these factors when deciding which mortgage is best for you. There are various calculators and tools online to help you decide.

Profit!

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.

Trying to save a few dollars isn't worth it.

We've been trying to buy an ETF, but it hasn't gone through because it went up slightly over our buy threshold. We're pretty hands-off, so after two weeks of it not going through, we decided to put in a market order for the fund. This way the buy will go through no matter what. That's what we get for trying to be cheap bastards.

Now let's talk about the DEATH CROSS, which, despite sounding like a rad metal band is actually a real thing:

The blue line in the chart above is the current price for SPY. The orange line is the 50 dma (daily moving average). You can think of this as how things have gone in a fairly recent time frame. The purple line is 200 dma, which is how things have been doing in the longer term.

Watching how these lines are doing in relation to each other is a standard tool for assessing price changes over time. These trend lines could be used to let you know when increases and declines are happening in a sustained way. In the chart above, the three lines appear to be converging. When the blue line is crossing one of these dma lines, it means that the price is under what is has been for the last 50 or 200 days. So when the 50 dma crosses the 200 dma that means that prices are steadily going down. That's our friend, the "death cross". Crossing the 200 dma with the daily price for a few days is a first sign to take defensive action. The "death cross" is when you should really think about or should have already done something. Defensive action doesn't mean we have to dump everything into cash, but potentially the portfolio balance should be change slightly.

Next time, let's talk about what this defensive action may look like. We have a fairly diverse portfolio, so we may already be partially prepared for this.

Profit!

Old MacDonald has a server farm

We've been doing this for nearly ten years, very lazily on and off. Huh.

ICLN is the etf that we decided that we were going to buy. So do we? It is up 13% since a year ago and meets our criteria. Honestly, it takes us so long to buy that it's weirdly anticlimactic realizing that we've made a decision. Of all the ETFs and stocks in the world why this one? We're in this for the long term and we feel a sustainable energy ETF is a good choice. This one meets our criteria within that.

Buy buy buy!

INFY, our last buy, is up. Good job. Almost 20%! Our original intent was to buy this on a perceived drop and then dump it for cash. That means that is probably time to sell. That also means that there's some potential tax implications We may have to pay capital gains tax on this. Since we've had it less than a year, it just adds to the adjusted gross income of the account holder. We're a small time operation, so that will just impact one of our members (not all that much). The tax laws for long term capital gains tax are changing so that folks at the lower income tax brackets won't have to pay any long term capital gains.

Here's some more info about the changes to the tax code. Bascially, if adding it into your income keeps in the lowest two brackets, you do not pay any taxes on those capital gains. However, if it pushes you up into a 25% or 35% tax bracket you pay capital gains tax and it goes up from there.

For us, selling doesn't impact us that much. We're going to end up paying around 15%. We could reinvest to avoid that, but we move so slowly that it's not gonna happen.

Profit!

It Takes Energy to Make Energy!

Revisiting why we're interested in these ETFs, we looked at Energy as the worst performing sector within SPY.  From a long-term perspective, we believe that alternative energy has a great deal of upward potential and so could be a sound buy-and-hold investment.  We're interested in sustainability at a personal level, so why not spend a little time investing in something you believe in.

To narrow down our 3 potential picks for "alternative energy" ETFs, we put together this table below.

ETF Name	Expense ratio	Top Sector	International Holdings	Yield	Sustainability	Notes
TAN	0.7	Technology (72%) Utilities (24%) Real Estate (3%)	61%	1.82	Low	Middle of the road for Growth vs Value. Massive bid/ask spread (42%).
PBW	0.7	Technology (51%) Industrials (20%) Utilities (13%)	19%	1.33	Low	Mostly domestic.
ICLN	0.48	Utilities (52%) Technology (26%) Industrials (21%)	73%	2.48	Medium	Lowest expense ratio. Highest yield. Highest sustainability. Most diverse sectors.

This approach makes the choice surprisingly easy.  While we believe that the low sustainability scores for TAN and PBW come from the manufacture of solar panels, and the terrible things that go into that process, the long term for solar energy production is a sustainable path.  ICLN's utilities mean that it is investing in companies that use the solar panels and wind turbines and do not necessarily manage the production of this hardware.

The other factors listed in the notes really make ICLN stand out when it comes to our style of investing.  We'll spend a little more time next week making sure that this is the direction that we actually want to go and maybe get around to actually making a buy.

Profit!

Alternative Energy ETFs

This is a sound investment, right?

Investopedia gave us a good list of some Alternative Energy ETFs.

These are the five we're looking at:

• TAN
• PBW
• QCLN
• GEX
• ICLN

In choosing, here's our current checklist of things to consider:

• What is the expense ratio?
• What are the top holdings? 
• What are the sector weightings? 
• What is the yield? 

Also how directly are we looking at renewable energy vs. things that are associated with renewable energy?

We have five funds, so how do we knock two to three out?

GEX is out--the volume is too low, which could make selling it difficult down the road.
QCLN is out because it's a pain to deal with in Morningstar. Petty perhaps, but we will need to be able to look it up and deal with it. Also, we're really indecisive, so getting something else checked off is a good one.

That leaves three remaining (TAN, PBW, and ICLN).

ICLN is pretty international, which might be cool for global diversity.

But that's neither here Nora there. The main thing is that we need to narrow it down to one, and maybe even buy that.

Profit!

Tech Sector Chat

"So, you think ENCOM is overvalued?"

Today we're looking at the technology sector. Nvidia is the at the top of that. Probably the biggest thing about Nvidia is that their sales are crazy right now, because their video cards are used in bit coin mining. Also, new phones are making the ram prices jump up as well. This has driven the prices up way above the normal market price. They can't keep them on the shelves. Nvidia is doing great, but this might mean that its overvalued, or at least we missed the boat. At least for us, not a good investment.

The worst of the best is Verizon followed by AT&T. We already have a big chunk in telecom with AT&T, so Verizon probably isn't for us either.

Also in the sector there's Facebook (hard pass) and a few others that just don't make us sing.

We went back and forth a bit and realized that most of us have much more interest in the technology sector, just as far as personal tastes goes. This may be making us more likely to want to invest in that as opposed to energy or something else. That might not be a bad thing, but it sounds like with technology, a lot of stuff has been going up, but we're not sure how hight that'll climb. However, with renewable energy that thing seems inevitable. Even though there have been setbacks with readily available fossil fuels. It is unlikely that we'll be clairvoyant enough to pick the one company that explodes. So is there instead a renewable energy ETF out there for us?

For next week, we should look at some renewable energy ETFs and see if any jump out at us.

Profit!