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Bitcoin: A Trillion Dollar Opportunity?

December 3rd, 2013 No comments

Bitcoin, the virtual currency little more than four years old, just crossed the $1,000 mark this past week.

You may have heard of Bitcoin, the virtual currency that has potential to become an accepted store of value not controlled by any central authority. The distinction with Bitcoin versus other types of value stores is that Bitcoin is store of value that is virtual instead of physical.

For investors, if you want a store of value outside of currencies or other kinds of paper assets (like bonds or stocks), the typical place to go is for an actual physical asset of some kind. Gold, silver, or even real estate or cigarettes. The reasoning is that a physical asset has better value retention because physical things are necessarily limited in supply.

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Old Technology To Rediscover

November 26th, 2013 No comments

This is the week of Thanksgiving where I hope you are able to spend quality time with your family. This is a good time to decompress and reflect on your life. Recently, I was thinking about my life as a child and how much simpler it was back then. I’m all for improvements and technology (I work in technology); but in many cases, progress isn’t always better.

I grew up in a family that was on a tight budget, we got by through a combination of changes. First, my mother went to work after that 1970s inflation kicked in. Also, my siblings worked doing jobs like paper routes to add to the family income.

When I think back to that time, I realize that since then how we live has changed dramatically in many big and small ways. Today, I want to talk about a few small ways the world has changed and how I have rediscovered the charm of going back to a time when these conveniences didn’t exist.

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Empire State, Great Building but Expensive Investment ($ESRT)

November 6th, 2013 No comments

The Empire State Building (ESB), along with some other less noteworthy real estate all in the North East were packaged up and put out in an IPO a few weeks ago. The iconic building was owned by a small group of investors in a partnership. They were bought out by the majority owners who organized the IPO, but not without incident. After all said and done, there was a settlement that enabled the building to be sold as part of the IPO. There is a good story here about the history of the ESB as an investment. Let’s also take a look at  this REIT that was just IPOed to determine if it’s a worthy investment.

There is a lot of history with the Empire State Building, both for investors, tourists and corporate tenants. The ESB was owned by a limited set of investors, about 2,800 in total.

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IBM: Value Play or Value Trap?

October 25th, 2013 No comments

IBM is testing the mettle of its investors right now. This inevitably happens to everyone, something happens to your investment in the market that removes the comforting confirmation of your investing hypothesis. After all, if you buy low, then the market rewards you with a higher share price, this means you are a great investor, right? Not necessarily. Today stocks are going up because, well.., stocks are going up. There doesn’t have to be a reason.

As of now, I don’t have any investment in IBM.

Great investments don’t necessarily get rewarded by the market. This can be a good thing because you get more time to increase your position and get a larger percentage of earnings.  Tobacco stocks have been written off by investors due to ethical concerns and also the misguided notion that these companies products are declining and going away. There is a distinction here: a sales decline for a product is a separate issue compared to whether it’s a good investment. That domestic tobacco producer, Lorillard (LO) just announced a 15% earnings increase for last quarter. Not bad for a dead industry.

 

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Buying More Altria

September 16th, 2013 No comments

Let’s take a look at the performance of Philip Morris (PM) compared to its former parent Altria (MO) over the past 5 years. Which one do you think has performed better? Which one should have performed better?

The answer gets to the heart of how dividend growth investing works and why you should really consider investment performance on what actually happens versus what you think should happen. After being spun out from its parent, Philip Morris has the possibility of better prospects as an investment because it competes in more diversified markets that are still developing and growing.

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