Monday, October 18, 2010

Dumpster Diving

There is a dumpster across from my apartment. Luckily it's nicely enclosed by a fairly well designed brick structure so I don't have to look at the garbage that's often spilling over into the parking lot. There are some kids that like to play around this dumpster; it's weird. They hide behind it and wait for people to throw stuff away then make a game of finding out what they threw away. Contrary to popular belief, these kids are not homeless. But, the other day I saw them play a little role reversal. In fact, I had to double take. One of the kids was throwing stuff away! Four perfectly good tennis racquets. Part of me wanted to go grab them, but the more sane part of me said I make over 1000 dollars a year, I'm not going to rummage through a dumpster (eventhough the things were already on top). Now, this may be gross, but let's say you could sell those for 5 bucks each. That's 20 dollars with very minimal effort, just because someone was dumb enough to throw stuff away that still had value. Not to mention the two couches I have seen out there in the last couple days, one of which I took for my apartment.

This all made me think, how much money could you make from reselling stuff other people throw out just because they are too lazy to go through the effort of finding someone to buy it from them? Just sell the stupid junk on ebay. Technically, you are getting an undefined return on your investment if it costs you nothing. Talk about a good reward/risk ratio...infinty.

I have decided from now on if I see someone throw out junk, I'm going to put my ego aside and take it. Let's say I find 10 bucks worth of stuff a week for a year and invest the $520. Then, I continually add $520 bucks every year assuming I continue to find people's worthless crap (worthless is relative here, it's actually worth something if I can sell it) I'll have over 14 grand by the time I'm 34. And that's just from selling other people's stuff. I'm going to go ahead and thank my neighbors in advance. They may provide me with a downpayment on a house. If possible though, I'd really appreciate it if they just set their stuff next to the dumpster, rather than dropping it to the bottom. It will make my life much easier, and much less smelly.

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

Wednesday, September 29, 2010

You're just a Doorman, Doorman....Doorman.

There are no real standards as to which direction doors should be placed in a frame. This is fairly strange to me. I mean looking at the door in my bedroom, the handle is on the right and it opens into the room. Looking at my bathroom, to which the door also opens inward, the handle is on the left. However, it really gets strange when I think about how neither one feels awkward, eventhough I am opening the doors the same direction with handles on opposite sides (both open inward, one handle is on the right, one is on the left).

Now, the Blockbuster near me, like so many typical buildings, has two sets of doors you have to walk through to get in. So why is it that every time I manage to push on the hinges side of at least one of these doors? I thought by now I would figure it out but alas, I am stuck trying to push the door down instead of push it open. Oh wait, I know, because they have no HANDLE! There is no way to tell (not by trivial means at least) which side is hinged and which is not. It's just basically a flat pane of glass with a metal frame that stands in ones way and is called a door because it happens to open the first time if you guess correctly which side to push. As if it's not bad enough that RedBox has pretty much played the trump card on all video rental businesses, now Blockbuster is successfully locking me out without actually having to lock their doors.

This door opening extravaganza may seem trivial, but is in fact quite annoying. Just find a door that doesn't open intuitively (which, believe me, is probably easier to do than you think) and you will probably find it pushes your buttons too. Maybe this is my calling; a standard in the door assembling industry. My money making idea. In fact, I encourage OSHA to adopt some standards before I run head first into a door, thinking it's going to open when I push on it.

My apologies if you now overanalyze every door that you do open, and they all begin to feel weird.

Sunday, September 19, 2010

Why Are People So Narrow Minded?

The fact that we are often narrow minded is probably a bigger cause for problems than we realize. People do a great job of finding ways to support their argument, but are incredibly bad at considering other people's arguments. Proving you are right is relatively easy; just find facts to support your arguments. Unfortunately, though, finding facts to support your argument is not enough to consider your opinions to be facts themselves in most aspects of life. There is not only 1 correct answer. If you are going to be safe, isn't it only rational to look at the other side of your argument to try and prove yourself wrong? Only after you have done that and have been unable to prove yourself wrong can you ever say with almost 100% certainty that you were right in the first place. I say almost 100% because there is always the possibility of the unpredictable (which is actually more common than you may think). However, proving to yourself you are wrong is not only difficult, but why would anyone ever want to do that? I'd say most people are perfectionists in one way or another. Being wrong to most people means they initially lacked some sort of knowledge, and worst of all means you have just proved to yourself, in one way or another, that you have failed. No wonder people want to avoid looking at the other side of an argument; because looking into the other side is admitting to yourself what you don't know is more important, or at least of equal importance to that which you do know. And who wants to admit they don't know something about something that they think they know everything about?! Ignorance is bliss.

However, if you want to better yourself I feel it is invaluable to try and prove youself wrong because in doing so, you may just prove to yourself you're right.

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

Saturday, September 11, 2010

Why do successful people fail in the market

I view myself as a fairly successful human being as far as society defines "successful". Graduated college, have a job, no debt, have my 5 basic needs (there are 5 right?) etc. So why is it successful people have such trouble investing? I'm not implying I'm successful in the market, but in my attempt to become successful I'm looking at what other people do wrong and I try to do the opposite. If that is combined with trying to replicate what others do right, the odds of success should be pretty good...theoretically. Afterall, if 5 years of failure while learning allows me 30 years of success, I think I can live with that.

There are lots of theories about why investing is difficult. Why can the average, or even above average, professional be a below average investor? My opinion is this: in a "typical" career, work is given and one uses current information and current and past knowledge to complete the present task. The keyword here is present. Results are (relatively) immediately seen. When investing, current information and current and past knowledge is used to predict the future direction of a company. Immediate results are not seen which is completely contrary to what everyone is so used to when putting work into anything. Not to mention no matter what the available current information, the future will always hold things one cannot possibly know ahead of time. Let's face it, human's just aren't that great at predicting the future. Combine that with the fact that there are a lot more shitty companies than good ones, it makes it pretty evident why people have so many problems. The conclusion I have drawn from the above is this -- everyone is so used to seeing immediate results, that when they have to wait to see them, they are immediately convinced something is wrong. It's what their job tells them, it's what society tells them (if you aren't doing x or y or z at time a b or c in life, somethings wrong) and that is the battle each person fights when the longer term market crosses paths with the immediateness of every day life.

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

Thursday, September 9, 2010

Goal Setting Actually Is Important!

Recently I have finished the book Predicatably Irrational by Dan Ariely. I read it to see if any of the irrational things human's do could benefit me financially. Well what do you know, I learned something. Actually, I learned many things, but one of which is that human's procrastinate. Yes, everyone knows this already, but what not eveyone knows is the following: By giving yourself the option to set intermediate "due dates" that are part of a greater goal, you will procrastinate less than if you are told a specific date for all goals to be complete. The experiment within the book doesn't use the example of goals, per say, but instead uses due dates on multiple papers throughout the semester. I incourage you to read the book if you want to know the details of the experiment.

I began to see the parallels between the due dates for papers and setting short/long-term goals for myself. At this point what people preached to me about setting goals when I was in elementary school suddenly had some sort of validity to it. Maybe I should read more often. I have discovered the key is finding something you like to read. I have been told this before (after all, I'm in my mid-20's) but it never really clicked until I realized what I like to read could help me with something I like even more--money.

So, here are my current goals. I will try to update these as much as possible as I come up with new goals or modify existing ones.

Short term (1 month)
  -come up with a checksheet to follow when researching to take the emotion out of purchasing stocks
  -Read all of Buffett's Letters to the Shareholders and take notes divided into topics he covers
  -Find 1 stock that I believe may be better than my worst holding now

 Short term goals (1 year)
  -Have 10,000 dollars in savings by the end of 2011
  -Have 12,000 dollars in 401k by end of 2011.
  -Not have to sell any equities because of something I missed that was available at the time of my research
  -Beat the market at end of 2011

Long Term goals (10 years)
  -Have $100,000 in liquid money (stocks, cd's, savings acct etc)
  -Have $150,000 in 401k (Final goal is 3+ million by age 60, that would be $5600 added a year with a  12% interest rate compounded annually)

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

Sunday, August 29, 2010

Management and Fundamentals colliding

Another company I like is Universal Travel Agency (UTA). As of late though, there have been some....interesting...things materializing which makes it very hard to make a decision with regards to buying in or not, especially on this huge dip it's taken. Taking a look at management first, there are a lot of negatives lately in terms of decisions.

First, they issued more shares at $7ish in order to help pay for aquisitions. There reason I see this as a bad decision is two fold. First, because they were in the middle of a quarter in which they made $0.33/share. That puts them easily over a dollar EPS this year which means the stock should fall somewhere between 10 and 15 dollars per share depending on the P/E ratio. Possibly more if this growth rate gives a higher P/E which it may. Well, if that is the case they are effectively aquiring a company but paying double what they should by using cash raised from shares that are worth half of the company's intrinsic value.  The second reason is why dilute shares when you have $43.5 million in cash? Just use the cash you have on hand for the aquisitions and do a buyback, thus increasing the price of your stock closer to fair value. And why is there no insider buying if this is potentially a triple based on forward EPS? The way they are handling these aquisitions worries me because they are doing pretty much everything Buffett says management should not do if managment cares about the stock price.

There is also some discrepancy about reported earnings, along with the fact that they had to ammend their 10Q because of an expense being put under the wrong business segment. This mistake didn't effect overall earnings, but I don't blame people for wondering if there are other mistakes.

Now on to the positives. Fundamentals are great, huge EPS, and clearly a growing company. Also, despite the offering of more shares, float is still very low around 20 million. Management are obviously looking to expand and the kiosks for booking trips are a great option in China, where personal computers aren't as prevelant. They also have a recent partnership with Agoda, a subsidiary of Priceline, which allows UTA to access their hotel network. This in turn, will allow Agoda to increase exposure in China.

UTA still has 16% margins for the MRQ, despite the fact that they included the numbers of two aquired companies in their 10Q that have the lowest margins of the 4 aquisitions they are planning on closing. A P/B < 1 doesn't look too shabby either. Finally, subtracting out their 43.5 million in cash from their current market cap gives them an enterprise value of around 56 million or an effective P/E of 2.8.

UTA definitely has potential to show big jumps in PPS, but not without management showing more concern for the share price. They may be forced to do this, however, if they plan on paying for aquisitions with stock. That said, I am not buying more until I see how management handles the remaining 2 aquisitions, but I am not selling because I see upside potential. That is my stance, as of now.

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

Wednesday, August 25, 2010

Stock Market different than the mall...Why?

Ever been to TJ Maxx? I have bought countless polos from there for less than 50% of their original price. So why is it when a stock is priced at 50% of what it should be (or less) people freak out? I see posts online titled "WHAT'S WRONG?!?" "WHAT AM I MISSING?" etc. First off, don't "type scream". It's unhealthy. Besides, decible level is not controlled by font size. Second, I can't wait for the day someone storms out of TGX yelling WHY IS THIS SHIRT HERE FOR THIS CHEAP PRICE!? kicking the door open, and leaving their mom standing there sweating, holding 10 back-to-school bags, and crying because she couldn't buy her son the $50 abercrombie shirt he really wanted.

If you liked the stock at $10 and nothing changes except the price, you should like it more at $5, and even more at $3. Don't be afraid of deals. Buy them like you would any other deal.

That is all.