Wealth Fluctuations

Investing in the Stock Market

2011-02-04T11:34:00.001-08:00

Investing in the Stock Market

It can be rather daunting if you do not know what exactly your investment goals are. You have several options. That can actually be a bad thing.

You can self invest, which I prefer, but the comfort level of doing such a thing will vary based on the individual.

You can invest with a mutual fund. You would simply contact one. There are smaller mutual funds and larger ones. Most of them would require you to set up an online account. Some will even help you with doing so, especially if you have a lot of money to invest. People will bend over backwards for you if you have a lot of money that you are interested in investing.

You can simply put your money in a CD. You can often times do this through your local bank. The interest rates on these are not that great, but they are much safer in comparison to the market.

You can look for enticing savings bonds. The rates will vary with interest rates and with the bond rating. If you choose a bond that has a worse financial rating you will get a higher interest rate, but your money is at a higher risk than if you got your savings bonds with the government.

As you can see there are numerous ways to invest your money. Each of them carries some sort of risk. Some more than others. It is up to you to decide your risk level and learn a little about your options.

It can be a lot of work, but it is nice to know where your money is.

Akeena Solar, Inc.- Penny Stock

2011-02-01T11:57:00.001-08:00

For those of you that are looking for a good penny stock play, Akeena Solar, Inc. The ticker symbol is WEST.

They will see a good surge in sales when summer comes along. This should coincide with a strong movement on their stock price.

I also feel they are a good long term company. Solar energy is something that we need to harness to help combat the energy crisis that will be forthcoming.

This company is on the smaller side. This fact would allow them to see dramatic growth when the demand for solar energy increases.

They are trading at .54 per share as I write this. Hopefully you will get into this company and they will be trading at $1 by the end of the year, after they receive their summer surge.

Direction Blog Is Heading

2011-01-20T12:08:00.001-08:00

It has been about a month of me having this blog and I still have not exactly settled into exactly what I want it to be.

Some things that I will start writing about:

1). Book Reviews

2). Stock Picks & Detailed Analysis

3). Financial Industry News

4). Reasons/How To save

5). Job Market

Anything that any of you can think of please email me with your ideas.

It is my goal to become very knowledgeable about finance and investing. I will do that through reading and studying of different subject matter.

I know for certain that I am a value investor, however I remain cognizant of overreaction to news items and finding good prices as a result of this.

A new post will be forthcoming each day that the market is open about stocks. I will sprinkle in additional posts throughout the week.

Company on the rise

2011-01-18T07:42:00.001-08:00

CWTR- Cold Water Creek Inc.

I feel strongly that by the end of this year that CWTR will prove to be a fantastic investment. They are working on paying down their debt as profits return in the retail industry.

They are at a great price of about $2.95, at the moment. Their market cap is under 300 million, which is great if a big investor takes notice.

Any sort of good news can have a dramatic effect on a smaller cap stock such as CWTR.

In checking the open interest for options on this stock, I found that there is strong interest for the $5 dollar calls. This bodes well for the long and short-term of the price. With the price being so low for a fairly strong company it deters short sellers, that otherwise would have driven the price down even lower.

I think 2011 will be the year that we see a good recovery from the financial mess that we all have endured as American citizens. A recovery will lead to more spending, and investor sentiment will go in the direction of BUY! BUY!

CWTR is one of the stocks that have not made a dramatic recovery yet. Reason being is because consumers have not fully returned to their pre-meltdown spending habits.

Time heals all wounds and the time for dramatic healing is near. In addition, to their retail stores, CWTR also owns spas, which will see a rise in sales.

All in all, I think this is a great company, with very limited downside, to own.

AT&T

2011-01-13T07:00:00.000-08:00

AT&T announced today that they are changing the way that they recognize profits in accounting. Rather than amortize them over a period of many years they will recognize them on the year that they are incurred. What exactly does this do for the company’s long-term outlook?

I contend that it does nothing. Their obviously is a short-term market reaction based on the stock currently being up over 29%. I feel this news, conveniently, is a response to them losing the market of being the only exclusive carrier of the Apple Iphone. Verizon already has a stronger and larger customer base for the simple fact of fewer dropped calls.

I feel AT&T needs to do more than change their accounting procedures to mask the fact that they have just taken a shot in the gut.

Long-term, I would say, short AT&T and invest in the growth, and stability of Verizon.

Penny Stocks

2010-11-16T19:36:00.000-08:00

A friend of mine has asked me to help him invest. He wants me to look at penny stocks. The outlook when investing in penny stocks is usually not very long-term. You typically enter a position looking to make a quick buck and then get out. There are several things to consider when choosing to put your money in a penny stock.

You have to make sure that your entrance/exit does not influence the stock price to drastically. To combat this you must make sure that the stock that you deem a good buy has high enough volume that you can act upon it fairly easy. If the stock is really low volume it makes it much harder to accumulate enough shares to get a good return if the stock actually goes up. You also have to be aware of the stock being delisted from the exchange. This can happen when a stock has an average below $1 for too long. If this happens your investment is not looking great because the amount of people that would potentially buy the stock from you is now greatly dropped and the volume will subsequently follow.

Penny stocks are usually more of a gamble than investing in stocks with a higher market cap. They also have the potential to give you the highest returns, this is what is so attractive about them from an investors standpoint. They also have the greatest potential to lose money. That is precisely what scares me.

Great Dividend Stock!

2010-10-25T13:57:00.000-07:00

Kinder Morgan Energy Partners LP (KMP)

Here is the description of the company given on Google Finance:

Kinder Morgan Energy Partners, L.P. (KMP) is a pipeline transportation and energy storage company in North America. KMP owns an interest in approximately 28,000 miles of pipelines and 180 terminals. It has five business segments: products pipelines, natural gas pipelines, CO2, terminals and Kinder Morgan Canada. On October 1, 2009, KMP acquired the natural gas treating business from Crosstex Energy, L.P. and Crosstex Energy, Inc. On November 1, 2009, KMP acquired 40% ownership interest in Endeavor Gathering LLC, the natural gas gathering and compression business of GMX Resources Inc. In May 2010, the Company completed a 50/50 joint venture with Kinder Morgan Energy Partners, L.P. (Kinder Morgan) involving the Company's midstream business in the Haynesville Shale, and the sale of Terryville Field.

Kinder Morgan is one of the largest pipeline master limited partnerships in the United States. The definition of a MLP is here: http://en.wikipedia.org/wiki/Master_limited_partnership

On October 20, 2010, KMP raised their quarterly dividend to $1.11 per share. The dividend is payable to shareholders on record as of October 29, 2010. The distribution is scheduled for November 12, 2010. As of today KMP is trading at 70.51, which would put the dividend at 6.296%.

If you are looking for a great dividend paying stock with an even better past of dividend payouts, then KMP is a good choice. They have a 30 year history of raising their dividend yearly. Aside from consistently raising their dividend they often raise it more than the rate of inflation. Inflation has averaged 3.36% a year since 1913. If you are looking for a dividend stock to add to your portfolio, one that outpaces inflation is very important. Otherwise, the value of your money will be decreasing yearly. This will defeat the whole purpose of investing. Adding KMP to your portfolio will help you battle inflation by making use of their fantastic dividend.

They are a consistently growing company. Their gross profit has risen the past four years. The stock price of the company has gone up over 75%, since early 2006. The company also appears to have great management with shareholders best interests aligned with their own. This is a quote I found on their website www.kne.com: At Kinder Morgan, we pride ourselves on being a different kind of energy company. What makes us different?

It starts at the top with Chairman and CEO Richard D. Kinder, who earns a salary of $1 per year and does not receive a bonus, stock options or restricted stock grants. As a shareholder/unitholder, Kinder’s financial rewards are directly aligned with the company’s investors – if the company does well, he does well.

I will end my post with that. If true, it says more than I even could about the strong foundation and bright outlook for this company.

Chico's FAS, Inc. (CHS)

2010-10-20T21:27:00.000-07:00

Chico’s FAS, Inc. (CHS)

CHS is a fashion company with Chico’s, White House Black Market, and Soma Intimates brand names. They are currently trading at $10.25. They currently average 4.82 million shares traded per day. They do offer a dividend of .04 per share. Chico’s does not have a long history of giving out a dividend. The dividend was put in place within the last year. Chico’s is a company that carries very little debt, other than their short-term debt, which belongs to merchandise.

I feel this is a strong company with great upside. They have a good following and are striving to grow the White House Black Market stores to rival the Chico’s stores. By them carrying so little long-term debt it gives them flexibility to be aggressive in other areas of the business without the fear of incurring expenses and falling further in debt. The importance of being in this position cannot be stressed enough. When businesses are in serious debt their judgment can become clouded. That will certainly not be a problem with Chico’s. Look for them to continue to grow and gain an even stronger following as they develop their branding and prove to be a leader in women’s clothing and clothing accessories. Do not miss out on CHS. It will be trading significantly higher in early 2011, than it is now.

Technical Analysis

2010-10-18T10:16:00.001-07:00

Technical Analysis

Technical Analysis is essentially the reading and interpreting of past charts for a stock’s price movement. This thought process of picking stocks can be attributed to the gambler’s fallacy. Someone sits down to play roulette and watches as the ball lands on red 7 times. A person that falls prey to the gambler’s fallacy “knows” that the next spin will land on black. However, the odds will stay the same. The next spin will have a 47.36% chance of hitting no matter the previous spin. Past results are not indicative of future results.

People that institute TA into their trading philosophy are essentially gambling with their money and worse the money that they are managing for others. It is absolutely impossible to look at a chart of XYZ Company from the previous week and know which way their price is heading for this week. There is useful information that can be gained by looking at charts, but it will not give you any indication of the future price movement of that stock.

TA can work on a small scale. It works when several investors are looking for an indicator to make a move. They all are using the same software and charts, and they are given a buy signal for a small cap, low volume company. They all simultaneously pounce on their money making opportunity. This will make the demand for this particular company go through the roof. The price will then go up and they will all be patting themselves on the back for their strategy working so well. Then they face the problem of getting rid of this company that they’ve made a return on, but the volume spike it received has returned to normal and there seem to be way more sellers than buyers. UH!! OH!!

That is how TA can work. I, personally, do not consider that a type of trading strategy that I would want to risk my money using. I certainly would not risk the money of investors with this strategy either. I would much prefer to use another method that would be safer and not require me to be a psychic.

Bank of America(BAC)

2010-10-16T10:16:00.000-07:00

Bank of America (BAC)-

Bank of America had a steep drop Friday of almost 5%. They are also down a little over 9% for the week, which gives them their low for the year. This stock will continue to drop as the rumors continue to swirl. Here is a great article about Bank of America and the banking industry: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/15/AR2010101506345.html

In the article, it speaks of Bank of America potentially having to repay Fannie Mae back for their deception of the mortgages. As of now this will not happen with the current evidence against Bank of America. However, they did assume the risk of Countrywide when they took them over. Countrywide, was one of the firms that were criticized greatly for their lending practices, before the housing crash.

After all the rumors settle and you look at this bank they are still a strong company. I don’t believe they will be on the hook to pay back Fannie Mae. The web of deceit runs to deep and to be able to place blame on one or another will be too hard.

I fully believe this stock will get under $10, before it will encounter strong support. Once it reaches this point it will be a great buy and hold for the next couple of years. Their profits will return as they continue to weed out these bad mortgages and management continues the progress they have already achieved.

Xcel Energy Inc.- Add to your portfolio!!

2010-10-14T11:57:00.000-07:00

A must add to your portfolio: Xcel Energy Inc. (XEL)

As I write this it is trading at $23.29. Xcel offers a dividend of .25 per share. Average volume is 2.5 million shares per day. They are trading right at the top of their 52 week range. I feel if once they break through this it will continue up.

Key points about the company:

They are a U.S. electricity and Gas Company which operates in 8 states.

Xcel has a customer base of 3.4 million electricity customers and 1.9 million natural gas customers. Who together, in 2009, generated 9.6 billion in revenue. 681 million in total earnings in 2009.

Xcel Energy is the #1 wind power provider in the nation. Wind currently makes up 5% of their portfolio.

The last one is a strong reason I feel they will be a company that will rise significantly over the next decade. Humans currently use mostly nonrenewable energy. This is not a trend that can continue forever. We must tap into energy sources that are renewable. Wind will most certainly be around much longer than petroleum or natural gas. Xcel Energy is a company that has a vision for the future. In that vision, renewable energy sources will come to the forefront of human consumption. Everyone thinks the key is to work to lower consumption. I feel the idea is to make our consumption more economical. Solar is another renewable energy source that absolutely needs to be taken better advantage of. However, Xcel Energy has a great jump on the competition by being the #1 wind provider in the nation.

I am not affiliated with Xcel Energy Inc.; I simply want to make all of you reading this money. If you’d like to make money you will quickly add Xcel Energy Inc. (XEL) to your portfolio. You can thank me later.

First Blog Post-Introduction

2010-10-12T14:41:00.000-07:00

This is mainly a blog about building wealth. As of 2009, according to the U.S. Dept. of Commerce, the average income per person was $39,138, down from $40,166 in 2008. The state of Mississippi is consistently at or near the bottom with an average per person income of $30,103 in 2009. Connecticut has been at the top since 1990; with an average of $54,397 in 2009. These statistics give you an idea of what the average American makes. In statistics there is a term when gathering data that can skew the numbers a bit. This term is called an outlier. An outlier in regards to the average salary of each American would be James Simons, who according to Forbes, in 2008, brought home 2.8 billion dollars. His total income so far exceeds that of the average American that he skews the data. My goal is to become an outlier in the statistic of the average earnings for each American.

To do this I will be exploring many avenues, but narrowing my focus to a few. I will note the characteristics of the people that are considered outliers. Not only the people that bring the average up, but those that bring the number back down as well. I will try to emulate the traits and characteristics of the former, while trying to avoid the latter. There are so many ways to become wealthy some of which include: entrepreneurship, investing, working up the corporate ladder, and the lottery. No matter what step you take in life risk will certainly be involved. The key is to create a safety net for each risk that you take in an attempt to limit the downside, while attempting to maximize the upside.

The key is to create a portfolio of skill sets and interests that can give you an advantage over the average person. Make a strong attempt to realize your potential in a multitude of areas and settings. Over time this will put you in position to succeed long term. Here is a quote that I am attempting to apply to my life, “The successful always has a number of projects planned, to which he looks forward, anyone of them could change the course of his life overnight.” ~Mark Caine

This is all for my first post and I look forward to everyone reading and all exploring ideas to build wealth together.