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My First Trade For 2012

September 8th, 2012 7 comments

I don’t trade that often in my portfolio. I look to invest in companies that offer a quantifiable expectation of an attractive return, on a risk adjusted basis. This sounds like something a professional broker would try to say to you to convince you of his expertise, but it is the right words. All this means is that you need to get a better return from an investment in return for taking equity risk.

Bonds are designed to lower capital risk. This means that you get all the money back you invested, plus interest along the way. When you make the jump to equities, you are taking on capital risk which means that you not only might not make any money but you can also lose it.

So, make sure you have the possibility of getting a good enough return if everything works out close to your valuation model. There’s no point in investing in a company that performs exactly as you expected but offers a poor return for your trouble.

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2012 YTD Portfolio Performance

September 1st, 2012 2 comments

We’re just past the middle of the third quarter. This wouldn’t normally be a good time to talk about performance since we are not at a typical time break. After taking some of the summer off from this site, I think its a good time to put this out there. It is a great time to reflect on your portfolio because the markets right now are at an inflection point. We’ve come up from a bottom in June to re-capture the highs achieved in the April. This is what the YTD S&P500 chart looks like now:

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Book Review: The Dividend Toolkit

August 28th, 2012 No comments

The Dividend Toolkit is a new investment book offered by Dividend Monk (DM). I rely on Dividend Monk as a quality source of evaluating dividend stocks and was very interested in reading his new book. This book consolidates his investing analysis and tools into one place. The new book was provided to this author for evaluation.

Book  Summary

The Dividend Toolkit is a guide on dividend investing. The book makes is easy for you to understand and approach dividend investing. It is setup in chapters that are readable on their own just in case you want to skip around.

The book itself has two sections and a supplemental spreadsheet that puts a discount valuation model into practice. The spreadsheet can be used to value stocks in a couple of different ways using stock financials plus your own inputs.

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Your Broker Wants To Be Your Bank

August 22nd, 2012 No comments

There is a push by investment brokers to become your full service bank. Brokers want
to become your bank for the same reason banks do: to get a lock on your direct deposit
income and investment money. In this article I will talk about banking, plus a few brokers
that are going to great lengths to become your bank.

When I first started to utilize direct deposit at a credit union, it was natural to use that
account for investments such as CDs or money market accounts. Once you are a member
of your bank or credit union, it takes very little effort to open other accounts.

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How To Invest In Addiction

August 17th, 2012 No comments

One of the easiest ways to pick individual investments (as opposed to diversified mutual funds, ETFs, or index funds) is to invest in addiction. Addiction is a strong word that correctly applies to certain situations but I would expand this investing style to include other kinds of products and services that are bought and used consistently. These investments can be categorized using the following descriptions:

1. Addictive – products or services that really create a chemical dependency, such as tobacco or alcohol.

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