Long Time No blog

It’s never too early to think about retirement. I am a responsiblish citizen and so I had been diligently contributing to my 401k until last year. Granted 2008 was a terrible year, but my portfolio in various investment bank managed mutual funds had lost about -17% since I joined the workforce in 2006 which really felt like a waste.

I felt like I could do much better. Anticipating my own unemployment, I finally consolidated all my mutual funds from my various 401Ks and rolled it into an IRA under my control. I only kept two small mutual fund holdings and put the rest in stocks I picked myself with the help of google’s stock screener because I favor stocks with high dividends, low price/earnings ratios, and general uptrend. Since October, this portfolio has returned over 22%. I’ve got another $6,000 towards my retirement even though I have not contributed a dime in a year. In the past, my out of paycheck contributions were about $4000 a year (before the -17% return) so I have no plans to contribute more anytime soon now that I’m doing so much better on my own accord.

Of the 9 stocks I selected, only one is a loser which was an impulse buy. It is obvious the average joe is a better investor than Lehman brothers or BlackRock…all you have to do is buy companies that actually make money instead of risking your shirt speculating on the next big thing! This is easy, just start by thinking of products you enjoy and take a minute to think about their business models noting those that stand out as “best in breed”. I start by following them for a little while to see where the price is going, and then I decide what I’m willing to pay and put in a limit order. The goal is to buy on the lower end of the stock’s usually range when the stock market is just having a bad day.

Two of my pastimes are hobby farming and collecting gems, so I bought stock in Tractor Supply and Tiffany & Co business I think they have the best business models in their sectors. In a few months these have returned 92% and 41% respectively in money I didn’t have to work for. These are my high performers and I believe they will split and I’ll have twice as many shares. Of the stocks I’ve made more modest returns on, I usually sell to collect my gains once they’ve hit about 14% return. I often will buy and sell a stock several times taking advantages of price fluctuations once I’ve made it my business to understand a company’s business.

Today I decided I need some new blood in my portfolio so I put in limits to sell my CMRG and PALL if they get a bit higher. These are the stocks I’m watching as new contenders: AXP, HWD, BAX, SCL, UL, SHW, JWN, HNZ, CAT. Some were selected based on my recent experiences in Tanzania that made me appreciate the global superiority of overlooked but iconic American brands such as Heinz ketchup and Catepillar generators.

To sum up:
· You do know better than investment bankers
· Stick to stocks where you truly understand how they make their money
· Always buy and sell using limit orders

Buy low, sell high

There is a hot new investment on the Somali stock exchange. Be careful about investing though. You might need to walk the plank.

Opposite of a locavore

One of my goals in starting this blog was to talk about finance. Archers Daniels Midland (ADM), the stock I bought last week gained 10% today. ADM is one of the largest producers of grain and processed foods and is the largest producer of ethanol which is now added as a stabilizer to all gasoline as a replacement for the recently banned MTBE. I have owned ADM before. In 2006 I bought about at about $31 and sold at about $42 to help with my house down payment. So around $23, this stock is a company with strong financials and market presence selling at a huge discount. It's a conservative and somewhat contrarian stock with a P/E around 8. Obviously it's up and down a lot right now but I think it will trade in the $40s again in less than two years. As soon as I get some more dough I'm going to set a limit to buy more next time it dips to $19-$20.