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.

Da Dip

When I dip, you dip, we dip

The market took a big dive yesterday, likely as a result of the Fed raising interest rates. People get skittish and they freak out. Luckily our portfolio isn't just a mirror of the S&P 500, since we've tried to really stay diverse. We may have gone a little too heavy on international markets because that was a safer bet at the time for us. An interesting thing to look for is if the domestic market does experience a downturn, will that mean we'll see an uptick in international stuff or just see our diverse portfolio save us a bit.

Another relevant concern is we should try to think about whether or not we are diversified in a way that makes sense. A good chunk of our profit has come from dividends, but is that a problem? Many investors probably earned most of their profit from growth. Our theory at the outset was to be super safe and try and be able to make some gains despite what is going on in the market. So in a way, our plan worked. We could have made more money if we tried a different approach, but that's some crystal ball stuff. 

As part of our diversification strategy, we tried to not have too great a percentage of our portfolio in any one investment. Since we have purchased lost of ETFs, did we end up with higher exposure in any one thing?

As an aside, there's an interesting investment theory that you put 90% of your portfolio in super safe stuff and then 10% in some crazy-bananas stuff. It sounds like a safe way to be reckless. The caveat here is that you are likely going to lose out, and you really need to closely monitor that part. But it might be worth pursuing. So who wants to short some Bitcoin?


Next time we should talk about house stuff and leverage.

Profit

Care Bear Stare

Might be getting a bit bearish on SPY

We started off talking about saving. One of our members suggests a $100 a month maintenance saving scheme to take care of anything that comes along. While, you won't spend nearly that a month, or even most years, that will cover that new roof you'll need, plumbing nightmares, conditioning of the air, etc. Even if you don't set aside this money, its a pretty good way of conceptualizing the unseen costs of homeownership and ultimately accounting for them.

We just bought some INFY and since there has been some drama with the board, but that didn't seem to shake the market on it at all. In fact, the stock is up a bit.

With everything going on in our country, it might be time to prepare to be bearish on SPY. Now does that mean not getting more of it, or does it mean getting something to counterbalance it? For now, we'll just sit on it and see how things go.

We have basically put our lot into a diversified portfolio, but it's probably best not to have a portfolio that is ALL diversifiers, even if we have hedged our losses pretty well. Although, we've certainly sacrificed some gains too. We knew this going in, but what happens when there's a super-down global market? One consideration is that we don't know what would happen when global economic turmoil occurs--we're looking at your Greece! It might just come down to our appetite for risk.

Profit!

Hot Speadsheet Action!

It appears that your columns are getting a little too familiar with your rows.  

We've been taking a look at the spreadsheet of our portfolio, especially sector weighting.. The moral of the story is that we should be close to 10% for each of the ten sectors in order to have a truly balanced portfolio. But if you take sectors like real estate and financials, we are okay being light here and there, since these aren't investments that work with our current philosophy. We are reluctant to go into real estate, because it just doesn't seem like the safest bet for profits, and financials have burned the economy as a whole in the past. Both of these sectors just don't appeal to us, at least not yet. 

We're overweight in telecom, staples, utilities. These are all the least volatile of the sectors.

We looked for nice, calm investments with dividends, so it makes sense that our portfolio is a little overweight in these sorts of investments. 

Energy and financials are probably about where we want them to be, so we need to focus elsewhere.

We have been focusing on sector-specific buys (ATT was telecom, etc.), and this approach will 

If we went sector-by-sector for the lowest five sectors, our next five buys would end up skewing things in the middle, and we would be back where we started. Perhaps the wise approach is to balance some of our buys, getting two or more sectors at once. We have been on the track of balancing out portfolio one sector at a time, which just may not work. This would be much easier if we were dealing in bigger numbers, i.e. not in $500 increments. 

We're not just trying to balance by sector, but also by geography, for added safety. 

We have this idea to follow a safe, conservative strategy and it might be good to consider whether or not we are actually accomplishing something with this approach. If not, we need to figure out what to change, and possibly re-evaluate our attack. 

Profit!

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!

Starbox!

Members present: Brian, Yousef

We talked a little about diversifying out of the US a bit. Our last two buys were done to diversify internationally. But where to from there? Europe doesn't seem stable, South America screwed us already, Africa is super-scary, and China isn't going to grow like it has. That doesn't leave a whole lot of places left. Penguin ETF?

Brian had a interesting conversation with a friend of his who dabbles in the markets. His friend posed the question: "Why invest in something stable?" His point is that if an investment doesn't really gain in value, we are paying trading costs just to have something that is the equivalent of cash. If it doesn't have any yield or any increase in value, the investor isn't getting anything out of it, except perhaps the goodwill of the people collecting his trading and management fees.

They also talked about how good dividends are. So we have some ATT, which is stable but we are getting something out of it with the dividend.

We were also looking looking at Coinstar (CSTNR), which includes Red Box. Apparently there were talks to work with Starbucks on a sort of StarBox coffee vending machine. That might work, but there are also talks of CSTNR going private as well. We'll look at it, but we definitely need something a little more tempting.

It might be a good exercise to make our next buy something that we purchase for a short-term investment. Perhaps we could set a threshold and maybe an automatic buy and sell point. This would work to our advantage because the three of us don't really move fast as a group.

Profit!

Hard Drives in the Sky!

Members present: Brian, Bickford, Yousef

So we were talking online storage, and Bickford brought up Box.com, a rival to Dropbox. Apparently, you can upgrade from the free 5GB of space to 50GB of cloud storage simply by logging on with an HP touchpad. But you say, I don't have one of those? Just find someone who does (like Bickford). Congratulations, you have some more online storage, but why should anyone in a finance club care about that? It seems like if one is intrepid, one can get in on various free online storage deals. Haven't paid for a dropbox, or a google drive, or now a box account. The internets wants to give you stuff to try it out, in the hopes that you won't be a cheap bastard and just stop at the free level. It beats clipping coupons. Yay free!

EWZ: continues to tank. 

AT&T: Looking good.  

SPY: Up is good. 

So what is the next buy?

New Zealand. There is a NZ ETF:

ENZL Top Ten Holdings

1. Telecom Corporation of New Zealand Ltd (TEL): 15.78%
2. Fletcher Building Ltd. (FBU): 15.34%
3. Auckland International Airport Limited (AIA): 6.43%
4. Sky City Entertainment Group Limited (SKC): 6.27%
5. Chorus Ltd Common Stock Npv: 5.02%
6. Contact Energy Limited (CEN): 4.62%
7. Fisher & Paykel Healthcare Corporation Limited (FPH): 4.50%
8. Sky Network Television Limited (SKT): 4.17%
9. Ryman Healthcare Limited (RYM): 3.90%
10. Goodman Property Trust (GMT): 3.85%

 The small slice in financials is nice. It is a new fund (2010), but it might be a nice place to store some cash. This article in seeking alpha says some nice things.

And here's a chart:

And finally, here is a listing of our proposed portfolio by holdings (by sector).

Profit!

There's one thing I'm certain of/Return.../I will.../to old.../BRAZIL!

Members present: Brian (& Bunny), Bickford, Yousef

So EWZ dropped quite a bit midweek (see Brian's previous post), and it brings up the fact that we should be aware of what we have. We have been going with ETFs, to add to the diversification, but those funds are composed of many bits. It would be helpful to be aware of what those bits are, so that we can do that important research. 

EWZ: Two major components of this fund, Petrobras and Valle, sucked this one down a bit. 

SPY: Over the last five quarters we have earned about $13 dividends. Also, the share price is up  to about $140--purchased at $119.

AT&T: We have gotten a dividend of about $7!

We spent some time poking around the Scottrade account to take a look at how our portfolio is doing. Regrettably, Scottrade only allows one person at a time to be logged in. While this makes sense for security reasons, it also fails to recognize that people may be doing this, as we are, on the Internets. 

The conclusion we came to is that if we were to cash out our entire portfolio, after fees we would make $4.76, collectively. Hey, this is a positive number. Free learning experience, right? Well, not free, we would make a $1.59 on the deal.* 

*Apparently, through some tax voodoo that we don't care to understand or explain, we might be out $0.80. Thanks a lot, Uncle Sam!

Oh fine, we knew you'd be chomping at the bit for this tax magic, so here it is:

The total gains are $46.76, less $42 for trading fees. This gives us $4.76. We divide these winnings by 3 to get $1.59 a piece. However, we have to look at taxes on the gains. Each gained $15.59, which for taxes gets rounded to $16. This is taxed at a rate of 15% (capital gains), giving a tax bill of $2.40. This means that we are in the hole about $0.81 a piece. 

For next week, 

*Maybe Yousef will do his taxes. 

*Figure out some topics for educational meetings.

Profit!