iNVESTING for the Long Run..

2011 has passed and 2012 comes full steam ahead.

2012-01-04T22:45:00.000-08:00

With 2011 now behind, I can look back and see it was a great year for investing and look forward to a great 2012.. I moved my portfolio around to better position an upswing in midyear, a decision that proved to be very profitable.. Even though some of my decisions did not gain as much as I wanted them too, and in some case they went down, I have learned to take my winners with my losers. It was a roller coaster of a ride and I sold some long term holds and even readjusted my portfolio to take advantage of the momentum created in the midyear crisis.. Loaded up on Visa, McDonalds, Transatlantic, Aeropostale, Google, dumped 30% of my Deutsche Bank and Skechers. All in all, these adjustments led me to close the year up over 20%. This was helped greatly with my Aeropostale investment I made midyear. ARO appreciated over 70% in a few short months and I sold the position at two different times with an average gain of 60%. This was the company that pushed my portfolio way into the positive, but now here comes the bad news..

So here are my recent moves.. I keep it simple when it comes to trimming my portfolio, I just sold 50% of my entire portfolio down the middle and sold 100% of the losers to offset the capital gains from my sales for tax purposes. My loser stocks were Skechers and Deutsche Bank. I continue to be a sucker for these two companies as I believe they have a good future ahead and may appreciate greatly.. Maybe, just maybe, I'll get suckered into buying them again. (Please note: I'm not a tax expert or a stock expert I just believe investing is simple, You buy a company when it's selling cheap and sell it when it's selling high) Please visit my portfolio page to see my holdings and sales.

I share this blog not to gloat, or to give people advice, but as a learning tool to help me remember my decisions and my mistakes. I share some of my personal information and wealth information with the hopes that you don't know me personally as I prefer to stay anonymous and only hope these writings help anybody who crosses by them. Investing has become my hobby.. I have a real job that pays me very well and don't plan on leaving it any time soon. If you want to ask me a question leave me a comment and I'll happily answer any question you may have. If you believe my blog sucks, that's OK too. If you have an investment idea or a blog you would like to share. Please leave me a comment.. I'm a ravenous reader and love to read everything and anything.. Thank you and good luck in 2012.

REIT what are they and why are they a value?

2011-12-01T21:24:00.000-08:00

I have spent the last 2 hours looking at financials. One REIT I believe in particular is low risk, has growth, and is selling pretty much for tangible book value. I will dig in a little more and post later. My last REIT I invested in although it didn't deliver stellar #'s it did deliver double digit yearly returns. (RWT) Now I have my eye on one but I must do more diligence to decide whether I should buy and post. (I want to go see how they maintain properties here locally they own...

Redwood trust (RWT) by the way has cratered since I posted and sold. RWT looks very cheap now but I worry about the long term for Redwood Trust.

Aeropostale investing, is it catching a falling knife?

2011-11-18T21:23:00.000-08:00

ARO truly provides an interesting history in investing. ARO went public in 2002 and it had its usual IPO ride, going up only to fall down and take every believer down with the stock. Going from $8 to under $2 before the end of 2002 provided a wild ride for any new investor to what would become a billion dollar company just a few years later.

Aro finally found footing in 2002 after dropping over 75% from over $8 to under $2, after the great fall, it proceeded to rise to over $14 a share in under 3 years. This rise was a 700% return for those brave enough to jump into what seemed to be one of the riskiest investments available. Yet if you look at its history based on financial results you would have noticed that the price actually became very cheap and ARO was a great value at $2 and not such a great value at $8. So where are we now compared to the history of this companies stock price relative to its earnings?

In ARO's first year it had over 100 million shares outstanding. From 2007 to 2011 ARO has grown revenue from 1.4 billion to over 2.4 billion, It has reduced outstanding shares from 116 million to a little over 80 million shares, and grown earnings per share by an average of 29% per year from $0.88 to $2.49. Basically this company has performed great even though its stock has gone NOWHERE! ARO has just traded in a range, but in 2011we got an over correction and the stock dropped to under $10. This stock has become cheap again, maybe even back to the same value level it found itself in 2002 before it had a nice run of 700%.

Here is the deal, This stock price can not remain at this level if it continues to grow even remotely close to its historical growth! Saying it will go up 700% would be silly, but I believe that it will rise; Maybe not 700% but even if it is only 70% in the next couple years, that would be good wouldn't it? Trading for a small multiple of EBITDA this companies stock has a lot of potential and now has stores found in most malls all over the US. The margin of safety is high with its price relative to earnings and the potential is even higher with its history of growth.

I have been buying ARO with an average price of 10.18 a share and will own for sometime to come.

A value is a value is a value!

2011-10-12T10:04:00.000-07:00

What a time to be an investor!! Yes the market is jumping up and down and your earnings may be down for the year but this opens up values.

I have made a few adds to my investment portfolio lately. Here they are below.

My newest addition is ARO, GOOG, added position in SKX, TRH, MCD, and purchased a building.. Yes I was sitting in a huge amount of cash and decided my cash would be good to buy a building during this time as a value investor, which brings me to my post..

The 30% I was in cash like investments, I figured would be best invested in future cash flow and as of this writing the building I just purchased already has a full fledged tenant and will produce a ROI of 15% above what my loan payment, insurance, and taxes are. The best part is that not only is it providing positive cash flow, it pays for itself and a little more, with this in mind the ROI will be close to 25% a year if everything goes right and the building is paid for in full in 20 years. Talk about being a lucky and an opportunistic investor.

Should you buy only stocks at a value? I believe as an investor you would be limiting your opportunities if you only looked at stocks and stocks alone. Values are found outside of the stock market, whether it is in real estate, bonds, businesses, or yourself through higher education.

I am undecided on whether I should add my new building as part of my portfolio of investments as you see on the top of my site. I believe it is important to measure all investments performance and compare them relative to each other. Thus the dilemma is created based on knowing that each one will have good times and bad times.. History has shown us that just when you think one investment may never drop the complete opposite happens and lower performing investment become the best performing. High flyers fall hard and zeros become heroes, isn't this value investing at its simplest description.

I recently closed ALL of my NFLX position. Netflix is a great company, but as I wrote a few months ago about the future turbulence, never did I think the CEO would create such a mess for himself and his company. Had I known what was ahead I would have sold 100% of my position at 280 and not just 30%. With three major mistakes, raising prices, coming out with a half ass apology, and then another. The harm done to the goodwill of Netflix may take years to rebuild. My decision to sell had more to do with the lack of direction the company is taking and its self destruct nature at the moment. This also brought to mind a Warren Buffett philosophy. A good business to invest in is a business that can raise prices and people will pay it. Well Netflix didn't fit the bill. (although I believe if Netflix had just raised everything $2 across the board we would be talking about how great this company is) I sold all of my position for a 320% return on investment. Netflix was originally purchased in 1/07/2009, so you can see the annual rate of return was awesome. The returns were awesome, I have no regrets, and I hope the CEO gets his house in order. If NFLX returns to a value I feel is cheap I may revisit but till then let's look elsewhere for great values.

Thank you for reading and I hope you find yourself surrounded by opportunities and luck.

Adjusting my portfolio.

2011-08-28T21:01:00.000-07:00

I write these post for those people who come by this blog and to help me remember and adjust my way of investing.. During the writing of this blog I learned a few lessons and have kept track of my decisions. With the way the market has been changing, I have recently adjusted my portfolio much more. I have gone from buy and hold to more of a buy, hold, and adjust.

My new method is not about buying and holding the same investment forever but about investing for the long run and adjusting my portfolio in a way that best meets my opinion of the future. Most of my investment are still held for years at a time.

here are my recent changes.. You can see all of my changes here.. http://www.insomniacinvestors.com/p/portfolio.html

I recently sold 30% of my Netflix investment.. Selling at 271 a share. The gain was 900% from my original investment. The reason for selling was more a tax move. I believe netflix will be very volatile in the near future.. I actually sold in order to pay capital gains tax on long term gains and am looking for a short term adjustment. I repurchased shares at 221 and have actually reduced my initial cost by selling high and buying low with Netflix's own gains..

I recently sold my Visa options for the actual Visa stock.. The options gains were 58% in only 9 months. I purchased the options during the months Visa was very volatile due to the debit card ruling.. I now believe the stock is safe to own and we want to take advantage of the dividend payment and not lose the time factor options have. Visa continues to be my biggest investment and it has appreciated 11.13% while the market has declined 1.39% during the same period..

On 7/29/11 I sold 30% of DB to hold in cash..(Maybe I should have sold 100% but hindsight is 20/20) Now I have reinvested those funds by adding to my MCD position. MCD delivers solid earnings, great dividends, and a high margin of safety.. Riding out a European bank right now is a hairy roller-coaster ride.

I did a cardinal sin with my L Investment (Loews). I let a big gain become a small gain.. I was guilty with NE (Noble) of the same crime as the market went up and came crashing back down, but both paid dividends and the gains were measly, but that is much better than a loss. I am 15% cash at the moment though I'm actively looking for another buying opportunity..

Currently my interest is in GS, MS,BAC, BRK-A, KSS, ROST, and ANAT once again.. All of these seem discounted and at great value..

found this interesting video on diversification..
http://www.marketwatch.com/video/asset/cuban-on-investing-diversification-is-for-idiots/233AE43E-9DA3-40A3-8F6B-9DC23DD82BEF#!233AE43E-9DA3-40A3-8F6B-9DC23DD82BEF

Is RWT Redwood Trust a good value investment?

2011-07-21T21:20:00.000-07:00

First let me say I just sold all my Redwood Trust Inc $RWT positions. Redwood trust was part of my value portfolio for 7 days short of a year.. Although I could have held the stock for a few more days I had not reinvested the dividends so the gains were minimal and with the uncertainty going forward with the fed it could have proven a disaster; and still may prove to be a disaster when the Fed starts QE3 or what they are calling stealth QE3.

Redwood trust is a good REIT, it just faces a lot of challenges, some of these challenges I waited patiently for close to a year to see if they were handled in the federal government level but it seems the government is doing just about everything and anything to keep the private sector from becoming the dominant force in housing. They are artificially keeping the rates down, introducing more regulation.. In fact as I write this only 12% of the 400 expected Dodd-Frank rules have been introduced. The results and affect these rules will have in banking and financial companies like Redwood Trust are really an unknown at this moment. With all the new rules these private MBS holders my be left holding an unwanted bag of securities. Here is a link to a good article on Dodd-Frank

http://www.marketwatch.com/story/one-year-on-most-dodd-frank-changes-still-to-come-2011-07-21

At this moment with the market continuing to climb higher and higher the risk also climbs higher and higher, With that in mind although I feel RWT is a good investment I just don't feel it is a great investment and right now we only want to hold on to investments that have a low risk-high reward characteristics. RWT is the kind of company whose stock will depreciate with the market but not appreciate when the market moves up and cash may be better used for investments that can return higher reward when a correction happens. To put it simply no one wants a stock that will drop when the market drops but may meander around the same price range while the market rises. It's time to remove some risk from the table, For those who aren't value investors; yes the higher the market goes the higher the risk goes, the lower the market goes the lower the risk.

Why is Netflix expanding so quickly?

2011-07-13T22:04:00.000-07:00

Do you think Netflix (NFLX) stock has risen quickly? Well it has been by far the best investment I have ever made. The stock has appreciated 916% in under 5 years.. This kind of appreciation would be great for 50 years, let alone for under 5 years. In this day in age of rapid movement, where a company can go from hero to zero in just a few years time(RIMM, NOK, HPQ) growth and earnings go hand in hand, and when it's your time, you have to go. You have to go quickly because the other guys are planning right behind you. I think this is the reason for Netflix's grand plan of rapid growth..

"You snooze you lose.." This phrase can be so true in business and more in the technology world, even in investing, waiting for a perfect entry. Without a doubt the board of Netflix feels that if they don't move now they will lose their chance to maximize their control of the online movie community.(Globally) The one chance to be the dominant player in a new field, a field that could be around for a very long time.

For some reason some major players believe the CEO of Netflix is a real smart guy.. This new guy in the digital field is now on the board of Microsoft and Facebook, two of the biggest names in business and consumers.. (If you think Facebook is not in business, you are way wrong!!) With the CEO being on these boards will it open up a gateway to a direct link for Netflix to go on let's say the next windows operating system as an integrated feature bringing the desktop ever so closer to the living room and not just the office?? Or how about Netflix movies playing on your facebook page as you see your updates? It is no secret, people now watch tv while checking their facebook.. So the questions becomes why not integrate facebook and tv? Why not bring in a netflix player on your tv screen within facebook.. Both riding the success of each other to a higher level.. Facebook hitting the big screen and Netflix hitting the social network with the biggest player in town.

Netflix will grow, might even grow hated by those few consumers who jumped in early and took advantage of some very low pricing. In the end, Netflix has really big potential! Even more now that it has the scale of size, two great partners, and the advantage of being a trend setter. With the new pricing of 7.99 and 15.98 just released you will see some consumers change in how they view Netflix so expect big swings in the near future..

Update on what happens when a stock gets added to the S&P 500

2011-06-28T01:09:00.000-07:00

Back in December of 2010 it was announced, Netflix (NFLX) would get added to the S&P 500 list and New York Times would get be removed from the coveted listing. It has now been over six months and any real big effect would now be represented in the stock price.. Since the announcement Netflix Inc has appreciated over 50% while the New York Times Company has depreciated 7%..If you were to base expectations in just these two stock the results look very skewed and it seems being listed in the S&P 500 adds a huge positive, although I believe it has to do more with the fundamentals and growth of the business. Here is the original article I wrote back in December..

http://www.insomniacinvestors.com/2010/12/what-happens-to-stock-when-it-gets.html

One stock does not tell a story, so when it was announced in January that Noble Corp (NE) would be added I made a note to reference back. Since the announcement Noble Corp. has appreciated 4.9% in total.. This total is less than the jump it originally had of 6.2% the day it was announced they would get the privilege of being on the S&P 500 index listing. The S&P 500 has appreciated about 0.5% since that date, again the new listed stock outperforming the general market. Here is the original article I wrote back in January on Noble corp.

http://www.insomniacinvestors.com/2011/01/what-happens-when-stock-gets-added-to-s.html

In the end I have to quote what I believed when I started following these three stocks and effects of being added and subtracted from the S&P 500, even though both Netflix and Noble Corp have outperformed the S&P 500 since announcement by a substantial amount. "Overall it is my opinion a stock will benefit from being added to the index and will suffer by being removed in the long run because of the way investors invest money into index funds. It is no secret people invest directly into an S&P 500 index fund expecting it to be a direct representative of the overall economy. "

Noble Corporation provides offshore contract drilling services for the oil and gas industry worldwide. As of December 31, 2009, it operated a fleet of 62 mobile offshore drilling units, including 13 semisubmersibles, 4 dynamically positioned drillships, 43 jackups, and 2 submersibles. The company also offers labor contract drilling services, and engineering and consulting services. Noble Corporation was founded in 1921 and is based in Baar, Switzerland.

The New York Times Company operates as a diversified media company in the United States. It operates in two segments, News Media Group and About Group. The News Media segment comprises the New York Times Media Group, the New England Media Group, and the Regional Media Group. The New York Times Media Group comprises the New York Times, a daily and Sunday newspaper; the International Herald Tribune, a daily newspaper; NYTimes.com; Baseline, Inc., an online subscription database and research service; the New York Times Index, which produces and licenses the New York Times Index, a print publication; Digital Archive Distribution business that licenses electronic archive databases; and the New York Times News Services Division, which transmits articles, graphics, and photographs from The Times, the Globe, and other publications to newspapers, magazines, and Web sites, as well as owns interest in Epsilen, LLC, a hosted online education solution. It also distributes content on other digital platforms, including mobile applications, social networking sites, and reader application products. The New England Media Group includes the Boston Globe, a daily and Sunday newspaper; Boston.com; the Worcester Telegram & Gazette, a daily newspaper; and Telegram.com. The Regional Media Group consists of 14 daily newspapers in Alabama, California, Florida, Louisiana, North Carolina, and South Carolina, as well as related print publication businesses. The About Group segment consists of the Web sites of About.com, ConsumerSearch.com, UCompareHealthCare.com, and Caloriecount.about.com. Additionally, the company holds interest in a Canadian newsprint company; Metro Boston LLC, which publishes a free daily newspaper in the greater Boston area; quadrantONE LLC, which is an online advertising network; New England Sports Network, a regional cable sports network; and 50% of Roush Fenway Racing. The company was founded in 1896 and is headquartered in New York City, New York.

Netflix, Inc. provides online movie rental subscription services in the United States. The company offers its subscribers access to a library of movie, television, and other filmed entertainment titles on digital versatile disc (DVD). Its members can get DVDs delivered to their homes and can instantly watch movies and TV episodes streamed to their TVs and PCs. As of December 31, 2009, Netflix served approximately 12 million subscribers. It also partners with consumer electronics companies to offer a range of devices that can instantly stream movies and TV episodes to members' TVs from Netflix. The company was founded in 1997 and is headquartered in Los Gatos, California.

LInkedin IPO presents an interesting scenario.

2011-05-25T20:11:00.000-07:00

I have to admit; I didn't invest during the dot-com bubble, although I would have bought some of my favorite stocks during this time, had I had the money.. The reason for not investing during this boom and bust time is a simple one; I was young, broke, and fresh out of school. Now as I see the new bubbles forming, the hope of getting in early on a huge climb can lead many to invest in high risk companies like Linkedin.. Now notice I didn't say bad company or anything negative about the company itself. The risk is in it's valuation not in the company..

One of my favorite Benjamin Graham quotes is "People forget to ask how much" Lets just say you didn't know what either one of these companies did..

Think about these hypothetical questions..
"You have a company that has a product that has been around for generations, just about every restaurant in the country, if not "every" restaurant has, and makes billions.. This company is known to just about everyone in the planet.. How much would you pay for said company? Would you pay up to 12 x earnings or would you pay 20 x earnings."

Now imagine you have a company that produces a technology that gets people together.. It only make 8 million dollars a year.. Technology changes all the time and people go with the flow.. It may be the thing in a few years or it may not, all depends on what happens with competition.. Would you pay 12 x earnings or 1000 x earnings for such a company??

Maybe you guessed it, the top company is Coca Cola now trading at 12 x earnings.. The company is massive in reach and impossible no to see all around.. The second company is Linkedin a new and up in coming company selling for over 1000 x earnings.. Would you pay for something that sells for 1000 times more than what it is worth or would you pay for company that is renowned around the world for 12 times its earnings.. Truly amazing when you ask how much..

Interestingly enough I have a Linkedin account. I don't really use my account, although I accept certain invitations here and there. I wouldn't buy the stock (unless it was cheap)but I don't mind using the free service.. Don't forget to ask how much folks! You wouldn't buy a car for 1000 times its worth and it doesn't make sense to buy a company (stock) in the same manner.

Looking for an investment idea?
Buy KO, MCD, BRK.B, V, GS, YUM, L, XOM.. These companies make money and at the end of the day when the dust settles, that's what matters!!

Sell in may and Go Away will it continue its trend??

2011-05-03T21:32:00.000-07:00

Well what are your chances of losing in may if the trend continues or if you are a trend follower? 80% chance the market will fall if you use the last 10 years as the market has been up 2 years and down 8. This to me is pretty significant and shouldn't be ignored specially if you have a weak stomach for losses.. Here is a chart on the returns..http://www.chartingstocks.net/2010/05/sell-in-may-and-go-away-2010/ The only thing I really notice is that the two times the market appreciated were after having horrendous months prior to May and thus it was in the mends... This year has been good so it may be one of th 8 years where it goes down.. Good luck and good investing..

Here is my last year's article..http://www.insomniacinvestors.com/2010/05/has-sell-and-may-and-go-away-begun.html May ended significantly down in 2010 and continued the trend for May.

and here is an article on the total returns for the market during all months.. The trend doesn't lie but doesn't predict the future also..
http://www.investmentpostcards.com/2009/04/29/sell-in-may-and-go-away-fact-or-fallacy/

What is stock twits?

2011-04-28T20:01:00.000-07:00

Funny on a day when I got nailed by owning (SKX) Skechers Usa Inc.down 9% I was rewarded greatly by a recent increase in my (DB) Deutsche Bank Holdings now my biggest holdings overtaking Netflix (NFLX). With this recent change in my portfolio I started looking around and ran into Stocktwits.com.

Stocktwits has proven to be an interesting site. People, investors, traders or what ever you want to call them have so many different opinions.. It is amazing how few will actually admit what I just posted in the start of my article; (The fact that investing involves losing money sometimes or being wrong).. No one likes to lose, and yet I wonder how you learn if you don't first admit, I effed up.. Getting the perspective of people and how they function may help one day, right now I just joined for fun.. Who and what is stocktwits.com? Here is their about us..

The Financial Idea Network
StockTwits is the 24/7 financial idea network. It is a community of traders and investors sharing market insight, ideas, charts and news streaming in real time.

Have you visited this site yet better yet why don't you have a look? www.stocktwits.com It's pretty fun.. I don't think any one should get caught up in it, but it is interesting to see how other people make investing decisions..

Here is a picture of Skechers current problem even though it was originally supposed to be the savior for the company.

Wesbanco delivers good results and beats estimates for the fifth time in a row

2011-04-26T19:42:00.000-07:00

OK, so the earnings came in for WSBC Wesbanco Inc. and they were 39 cents a share again and beat analyst estimate of 34 cents a share.. This is real good in a day when my top holding NFLX lost close to 9%. Nothing to fret about as Netflix is still up 30% this year even after that drop. Well instead of writing a defense or downer article I decided to discover more about the CEO for Wesbanco Inc.

I searched for picture of the CEO around the net and I can tell you Paul M. Limbert could not be found for close to an hour of search!! None on the Homepage, Forbes, Google, Local news, although I'm sure it's out there.. If you have one share it with me as I just want to put a face to the name.. I was able to find the next guy next in line, which is Robert Young, in about 5 seconds.. Here he is below.

Moving on.. What could I find about the man leading Wesbanco?? Well actually not very much, although I will say it doesn't look that bad.. Here is what I found on the Wesbanco Homepage..

Mr. Limbert is the President and Chief Executive Officer, Wesbanco, Inc. Mr. Limbert also served as Vice Chairman and Chief Financial Officer for Wesbanco Bank Wheeling, and previously served as President and Chief Executive Officer of Wesbanco Bank Wheeling. In addition, Mr. Limbert served Wesbanco Bank Wheeling in a variety of capacities, including Assistant Controller and Controller, Vice President and Controller, Senior Vice President and Controller, Executive Vice President and Controller, and Executive Vice President and Treasurer. Mr. Limbert joined the Corporation in April 1977. Prior to that, he was a Senior Accountant at Price Waterhouse and served a tour of duty in the United States Army.

Good old military guy.

Here is more info from Forbes in the likes..

View All Key Executives

PAUL M. LIMBERT has served as a member on the Board of Directors of the Corporation since December 18, 2003. Mr. Limbert is a member of the Executive Committee of the Board. Mr. Limbert is President and Chief Executive Officer of WesBanco, Inc. and President and Chief Executive Officer of Wesbanco Bank, Inc. He is the former Executive Vice President and CFO of WesBanco, Inc. Mr. Limbert has been associated with the Corporation for a period in excess of 34 years, having joined the Corporation in 1977. Mr. Limbert is a Certified Public Accountant and has an extensive financial and accounting background. He has an extensive history with the Corporation and has assisted in all of its acquisition transactions. Mr. Limbert also serves as a member of the Board of Directors of the West Virginia Bankers Association and the Ohio Bankers League. Mr. Limbert also has served on accounting advisory boards and committees through the American Bankers Association, including the American Bankers Association Accounting Administrative Committee. Mr. Limbert recently served as a member of a �Blue Ribbon Panel� to address standards for private companies jointly formed by The American Institute of Certified Public Accountants, the Financial Accounting Foundation and the National Association of State Boards of Accountancy.

Unfortunately that's about all I could find. Here is a a shortcut to Wesbanco Inc.'s latest earnings release..

Did you find a picture?

Tap - Molson Coors Brewing Company like cash but not really.

2011-04-21T20:42:00.000-07:00

Today after owning Molson-Coors Brewing Company stock for a little over 9 months I sold the stock (TAP). This is way less than I normally want to keep a stock but situations change and I am not liking the decreasing sales revenue. TAP's earnings came in good but they proved that raising prices would increase income at the expense of lower revenue.. The question is at what time do the customers give up their beer for something better? What happens in the long run with decreasing sales #'s.

Seeing that local brewery's are increasing in numbers, local observation, and increase of wine consumption I believe light beers has reached a tipping point..The consumer is demanding different choices.. I don't know how many people I have heard state they lost weight as soon as they dropped beer, but if TAP doesn't come out with a diet beer (good idea) the revenue will continue to suffer as the "it" thing becomes craft beer for people looking for more taste, wines for the ever increasing middle class, and spirits for those looking for a better way to feel a buzz.

The stock has only appreciated 7% or so and it paid a nice 3% dividend.. So why would I get rid of this company after only a short 9 months or so and 10% appreciation?? When I invested in Molson Coors it was like cash to me.. It was never supposed to be a big gainer, but more of slow grower with a huge margin of safety.. As the economy continues to get better and the market continues to climb I believe it is time to be in hard cold cash or cash like investments to prepare for a corrections.. Now don't get me wrong!! I'm 80% invested stocks but I feel 20% in Cash or cash like money market, is a good idea as a way to lock in gains and also to look for something that may have taken a beating lately..

"I have kept TAP on my IRA portfolio as it continues to be a safe investment and pays a good dividend so I am not completely out"

I cashed out on TAP this week and increased positions in Visa and Deutsche Bank. I have lowered my cost average on both stocks to 75 and 57 respectably and believe these stocks could prove to be very profitable if the market continues to appreciate.. Both of these stocks would do good with inflation as revenues would increase and thus earnings would increase.

Have you noticed MCD lately? It dropped on awesome #'s as it continues to increase revenue, deliver solid growth, and pay a great dividend. We may be increasing more happy meals in the near future as the analyst don't get it! If food prices continue to rise then people will switch to cheaper alternatives like McDonalds; if inflation remains in the lower end then McDonalds will have a better margin; infact the only real negative will be if we have another bad economy similar to 2009 when few companies where spared and only a few like McDonalds held their own.

Inflation, McDonalds, and Stock Splits.

2011-04-19T20:52:00.000-07:00

Oh the days you could eat on pennies.

I have heard some very bad theories on McDonalds (Think Super Size Me) , some very good one ones, (No Country that has a McDonalds has gone to war with each other) and now an interesting one. (Burgernomics?)

Yes the Big Mac index exists and it is used in some interesting ways.. One of the ways is to judge which country may be understating or overstating inflation.. As it happens, if a restaurant has to raise its food prices to offset inflationary conditions in a region, it creates a very measurable change. This change is fun to observe and creates an easy index to evaluate inflation. If the burger goes up 20% and the country stated it only had 10% inflation, you can see this country may be understating inflation. If food prices go up, the rent goes up, then the almighty burger goes up.. You can see based on the picture above the burger is no longer 15 cents and the theory lives on. If you don't travel much you may not know that a Burger in Texas has a different price compared to one in New York.

here is a direct link to economist.com article on the Mcflation index.

Will McDonalds Split already? Based on historical numbers I believe a split is coming but it has to go above $80 a share and stay there.. Last time it only brushed 80.00 and proceeded to fall from there. Here is a link to the history of McDonald's Stock split.

If you had to choose between an Apple and a Google which would you choose?

2011-04-18T20:40:00.000-07:00

It's amazing to be writing about Google and Apple as value plays but the reality is that both are selling pretty inexpensive relative to earnings power.. Google currently sits at 19.30 P/E, one of the lowest P/E even during the 2009 market collapse it was in the 20's. Here is a chart showing Googles growth in the last few years from Nasdaq.com

Year	Sales	Net Income	EPS
12/2006	10,604.92	3,077.45	9.94
12/2007	16,593.99	4,203.72	13.29
12/2008	21,795.55	4,226.86	13.31
12/2009	23,651.00	6,520.00	20.41
12/2010	29,321.00	8,505.00	26.31
Growth Rates	28.95	28.94	27.55

If Google continues this growth let's say for just 5 more years the stock would sell at an equivalent of a stock under 10 P/E. This is what makes it a value play.. Currently Google is valued at 3.46 x Book Value and 4.38 x Tangible book value.. Definitely not a Benjamin Graham book value play but more of a legendary Peter Lynch growth company play.

Here is a little info on Apple inc. Apple currently trades at 18.52 P/E, not one of the lowest P/E in Apple history but Apple has been trading in this range for a few years now. Here is a chart showing Apple's growth in the last few years from Nasdaq.com

Year	Sales	Net Income	EPS
09/2006	19,315.00	1,989.00	2.27
09/2007	24,006.00	3,496.00	3.93
09/2008	32,479.00	4,834.00	5.36
09/2009	42,905.00	8,235.00	6.29
09/2010	65,225.00	14,013.00	15.15
Growth Rates	35.56	62.92	60.73

Wow pretty impressive growth right?? Apple without a doubt has been delivering great growth and if it continued at this growth for 5 more years it would trade for an equivalent of 6 P/E. This is what makes it a value play and the fact that I think Apple has reached a tipping point. More and more people are now going to macs and are abandoning windows, not a good thing for Microsoft, but a great thing for Apple. Currently Apple is valued at 5.52 x book value and 5.65 x tangible book value.. Again definitely not a Benjamin Graham book value and even Peter Lynch would say this company is growing too fast and its growth is unattainable growth for the future..

In the end if I had to choose one of these I believe I would choose Google. More companies are working with Google to produce products and it seems like google survives whether the next hit phone is an Iphone or a windows 9 phone; not the same story for Apple. Right now everyone is gunning for Apple, like a champion fighter the more people know about you the better the chance of exploiting your weaknesses and what happens if the Apple fad dies when Steve goes?

Just a quick thought from the mind of an insomniac.

It may be time to buy more SKX as a value investing idea.

2011-04-14T20:41:00.000-07:00

The message is clear today.. Even though I am not making any different purchases this month, it may be a great time to invest more in SKX Skechers Usa Inc. The stock is trading at a low purchase price.. If this was a sale at a regular store, work shoes would be selling at 50 cents on the dollar.

I don't see my self wearing these shoes any time soon.. Or at all! But guess what? I see people wearing them.

Value investing portfolio performance so far.

2011-04-06T21:14:00.000-07:00

Here is a picture of a nice coors light.. Why don't you go buy one?

2011 has come in with a roar.. Many events have occurred which have created market movements and wild swings.. Yet to a patient value investor it is but a blip in the course of time.. I remember reading The intelligent investor and Benjamin Graham stating the worst enemy of a value investor, or intelligent investor, is boredom.. What to do when you are invested and your portfolio or as he calls it "your book" continues to grow? I look for more values and even though I find some very attractive stocks they are not nowhere as attractive as they seemed to be just months ago..6 months I could find 10-15 stock ideas and value plays.. Now I can only find 2-4 additional ones that I would feel "OK" putting money in, but definitely not super excited about..

I figured since I am not making any moves to my portfolio at the moment I would do a summary of the year so far.. So here goes.

My portfolio of stocks has gained 10.6% so far in 2011.. I would be happy with returns like that for 1 year although obviously I prefer more.. How long would it take to get a Cd to deliver 10.6% returns??? NOT 3 Months!!!

My best performing stock for the year is Netflix (NFLX) up 36.5% so far this year. But wait, what in gods name is netflix doing in a value portfolio? Well it was a value when I purchased it over 700% point gains ago..

My worst performing stock of the year is Molson-Coors (Tap) down a mere 5% for the year.. Molson Coors Brewing Company is a slow grower and pays a nice dividend.. This stock is more of a defensive play to begin with.. No worries here..

I currently only have 1 stock trading down from my original purchase although I feel in the long run and with the government stopping the silly idea of controlling price on Visa debit fees, this stock should perform good for many years.. This stock is down 4.58% since my purchase.. Not a bad batting average when your portfolio is swinging 90% winners, 1 loser and the loser is only down 4.58%, wouldn't you agree?

So there you go on the highlights.. Good luck investing.

You can see my complete portfolio performance here:

http://www.insomniacinvestors.com/p/portfolio.html

Transatlantic Holdings, Inc. and how to protect against an earthquake.

2011-03-23T16:31:00.000-07:00

"Baby Japan had an earthquake" my wife said as she was preparing for her day.. She had a nice dress suit that really makes her look fabulous to the eyes before the day begins.. I smiled and looked at my Iphone to check the time and the news on the earthquake.

JAPAN HIT BY A 8.9 MAGNITUDE EARTHQUAKE the headlines read.. My mind started racing and I thought my god that has got to be the biggest I have heard of in my lifetime... I knew the purchase I had made the night before would take a hit.. I had just found a nice value play in a reinsurance company named Transatlatic Holdings in which it had major operations in Japan.. Dang!!!! I sat and thought about the people and hoped the damage to Japan was minimal and smiled about how diversification truly is an investors friend.. Nothing to fret about and the randomness of current events really is the best part of investing, keeping you on your toes.

As a kid everyone heard the old saying of "Don't keep all your eggs in one basket" now as an adult you really have to ask yourself, where are those eggs, how many baskets do you have, and are those eggs worth your time? The title of this post is how to protect against an earthquake and what better way to protect than by having your assets across different platforms; think stock market, business, cash, and real estate.. I work for Honda full time and once the new started rolling in, the realization of the great damage the earthquake had on Japan materialized, I immediately started thinking about how it would affect our business here in the states.. Luckily Honda learned the art of diversification in the past from a previous earthquake and our business continued like normal as they now produce cars all over the world, not just in Japan.

In a day where even cash isn't safe(due to inflation) diversifying seems more important than ever and not even a huge earthquake with 60 foot high tsunamis can hurt your investments if you do the right thing and diversify.

SKX "No, I have disliked this stock for awhile. This is a bad stock. I told people to get out; I still say get out."

2011-03-18T20:47:00.000-07:00

What a great quote by Jim Cramer.. I put it to the test to see how much he hated this stock.. So here goes.
Cramer March 18th 2011

Sept 17th..2010 Still, Cramer thinks stock is a buy. The long-term story is still intact, he said, and there’s little downside left in SKX. Plus, according to analysis from Wedbush, even a complete collapse in the toning-shoe category leaves Skechers with $8 of cash per share and growth to spare. And even a puny 10 multiple on this stock puts the share price at $25, a buck higher than its present level. So while Cramer admitted he got this one wrong once, he’s willing to stick with it given these other positives. - so much for sticking with it...
http://www.cnbc.com/id/39233831/Cramer_s_Mea_Culpa_Skechers_Cree_Rubicon check out the video

Aug 18 2010 SKX is a buy, Cramer said. He expects the stock to rebound because Skechers has “too much cash and too much momentum.” Really.. Paying over book and its highest PE in in five years is great momentum

March 10th 2010
Here is a video from exactly 1 year ago..
What a joke.. This guy tells you to buy high.. Or better yet at 52 week highs and later tells you what a bad idea it is and questions your intelligence when it is actually selling cheap.. LOL Entertainment indeed...

SKX Skechers, who are they and why are they a value investing idea

2011-03-15T20:33:00.000-07:00

First thing first.. Who are they?

Skechers U.S.A., Inc. engages in the design, development, marketing, and distribution of footwear for men, women, and children in the United States and internationally. The company offers various products comprising casuals, such as boots, shoes, and sandals for men, and slip-ons, lug outsole and fashion boots, and casual sandals for women; dress casuals; relaxed fit for men; lightweight for men; sandals; and casual fusion under the Skechers USA brand name. It also provides a line of sport footwear for men and women, including men’s lifestyle athletic footwear, lightweight women’s sneakers, and sport sandals under the Skechers Sport brand name. In addition, the company offers sneakers, skimmers, wedges, and sandals for young women under the Skechers Cali brand name; men’s and women’s casuals, field boots, hikers, and athletic shoes under the Skechers Work brand name; and a range of infants, toddlers, boys, and girls’ boots, shoes, and sneakers under the Skechers Kids brand name. Skechers USA markets its products through department stores, specialty stores, athletic retailers, boutiques, and catalog and Internet retailers, as well as through own e-commerce Web site and retail stores. As of February 15, 2010, it owned and operated 90 concept stores, 92 factory outlet stores, and 37 warehouse outlet stores in the United States, as well as 22 concept stores and 5 factory outlet stores internationally. The company was founded in 1992 and is headquartered in Manhattan Beach, California.

I started working on this article prior to the devastation hitting Japan.. Now it seems so long ago as I watched the news and my heart sank knowing many paid the ultimate price... So you will have to pardon my shortness and very dull writing as I just don't feel like being enthusiastic at the moment.

SKX has dropped after the earthquake as many stocks have.. In the end this article feels empty and I will only advice you to invest now and as funds are available to maximize dollar cost averaging. This is a great stock with a history of growth and a nice low price valuation to go with it.. I made a purchase at 19.89 and am SKX for the long Run

TRH Robert F. Orlich and a value stock idea.

2011-03-08T21:15:00.000-08:00

First rule of investing.... Never Lose money...
Second rule of investing... Never forget rule #1....

Without a doubt looking through an entire financial statement can be a daunting task, looking through years of statements can seem a little too much and yet it is a necessary task for serious investors. No wonder trading gives a better view for many when all you have to do is look for patterns instead of doing a little homework. Trading gives you the perception of not having to dig deep for the treasures. After a little digging I believe I have found a treasure investment and most important a defensive investment.

Transatlantic Holdings Re is a company lead by Robert F. Orlich, a St. John's Graduate, who has lead Transatlantic through the mass hysteria that was 2009 in the financial world. TRH delivered nice earnings, the stock remained somewhat afloat compared to many other insurance companies, but also emerged (in my opinion) in a better position than before as AIG sold of the majority ownership of its stake in TRH.

Here is the skinny on this company. Currently this company is selling for 3.2Billion Market Share, Earnings Per Share are below 10 P/E, and it has OVER 12 Billion in fixed Maturities, with only 9 Billion in Liabilities + assets. This makes the stock sell for less than the fixed assets available, and thus a value play.

TRH's book value has increased over 40% since 2008 and yet the stock is selling for less. (I love investing when you see these kinds of vagaries) This stock has underperformed the market even as it grows and now doesn't have AIG holding them back and trades for under 10 times Net Income. This is the best part of this company and sometimes you have to step back to realize how cheap that is. Imagine a company selling for 100,000 and this company making over 10,000 after paying every bill within the company. How much will your return on investment be in 10,20,30 years if your original investment is multiplying times 12%?

So in the end you have a company that makes money, sells cheap, is not in big debt, can hold its own during a depression(recession), and has grown from 1.7 Billion in revenue in 1999 to over 4.3 Billion in 2010. What else would you want in an investment?

Hastings Entertainment Inc. time to say goodbye.

2011-02-24T20:04:00.000-08:00

I have always thought of investing in a company as a long term adventure. Usually more then a year and with the idea of forever, but every once in a while you have to go ahead and cut your losses and move on to something a little better.. Have you ever had the feeling of "I should have known better?" I did once I bought HAST, although I kept having this nagging feeling, I continued to look further and further into the company to ease my discomfort.

Now after owning this stock for 7 months I decided it was time to cut the cord.

Hastings Entertainment Inc. is local company with great possibility and has been able to hold its own during one of the hardest times in the recent US history, but now I feel it can not survive the winds of change. I was hopeful with its great valuation; but I see that real books, real cd's, and video games, rentals are not going to be a great part of our every day lives as they once were. It doesn't matter how cheap this stock gets, in time it will suffer a sad fate.

Go Hastings Online.. Hastings really invested in its online presence, unfortunately for the company it focused more on third party vendors instead of its own website.. Here is what I mean. Digging a little further I discovered Hastings really had a strong presence in Amazon. They sold a lot of items at very low margins, these items sold for less on Amazon than most of the competition and thus delivered a nice advantage; the advantage of a cheaper price and a lower margin.. The new survival focus was now to price low enough to win. Sounds good but over time it will lead to being broke.

The straw that broke the camels back was the gohastings.com website, although it was a good idea it was just lacking.. Some of the items they show after you go through the whole process will say out of stock.. What a waste of time. Who shops, finds what they want, buys it, only to get an out of stock email or notice! Not a good way to keep customers happy or coming back. In the end I sold (HAST) for $6.35 at a 10% loss and wish the owners and shareholders the best of luck.

A friendly reminder.

2011-02-14T20:29:00.001-08:00

Happy valentines day people. This is just a friendly reminder that you can love your wife, mother, dog, life, school, phone, house, kids, fish, food, lobster, sky diving, camping, video games, beer, but you can not fall in love with a stock!!!! You are free to give love freely during this marketing day called valentines, yet when it is time to sell a stock based on fundamental analysis, you must do the right thing and keep emotions in check..

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Last years winners, this years losers? Sometimes

2011-02-09T20:07:00.000-08:00

You've heard it before.. Last years winning stocks become this years losing stock. Boom to boost cycles are a norm.. Well not always.

This year has started fantastically for my little portfolio although for the average American it may be considered a big portfolio, to me it is small. The last 30 days have been great with the insomniac portfolio growing 10.85%. Although I don't really ever try to keep a monthly tab, this is a pretty substantial gain for only 30 days. Normally a gain like this is common for 1 stock but to have your entire, diversified for safety portfolio climb over 10%, this is a feel good moment for an intelligent investor.

The portfolio has been mainly moved by two stocks. NFLX and DB which have both appreciated over 20% since the beginning of the year. NFLX was last years winner, which started off rocky, but now again is leading my portfolio with a 26.39% gain year to date. DB was last years lager and was one of my value plays which didn't quite play out as the Euro zone suffered, but again this year it has appreciated 23.47% year to date. The old philosophy of (Last years winners, this years losers) so far this year has been right and wrong at the same time.

DB affirmed my belief of not selling a stock because it has gone down if the fundamentals and earnings are solid. This Stock dropped to under $47 just under 3 months ago. It is hard to keep a stock as it is dropping like a rock, yet if you believe in the company and the numbers look good, it becomes cheaper and better, not worst.

Currently as the market has appreciated I am holding my stocks, not buying, have recently sold SNY and have the funds available looking for the next value play.. Visa has regained its ground and I believe is the only real cheap stock in the market at the moment. Thank you.

What did the letter by Netflix's ceo bring to question.

2011-01-31T09:02:00.000-08:00

Reed Hastings recently wrote a nice letter to a trader who was shorting netflix . In this letter, the ceo, spoke out on how it was not a great idea to short the stock and adviced him to close his position, as he is a fan of his charitable contribution. The letter was more involved but the just was a simple message. "Here is a tip!! Get out of your short position." This event lead me to believe that the ceo might have had good intentions but I have to question on whether this was a legal move and even if this move is giving some one inside information about the company based on the persons status..

More questions came to mind like:
Wouldn't this be considered a privelage act by the ceo thus giving the other person an edge in investing or trading?

Is it right for a ceo to give a specific person a tip on how he should play his hand on an investment?

I have no doubt that the Reed meant only good by it, but at the same time I feel that no person should be given an edge , especially if the words are coming directly from the man of the highest position in Netflix.

Shouldn't his position be for the best of his shareholders and not for the best of a man betting against your own company?