Archive for April, 2005

Friday, April 29th, 2005

The company keeps saying things are going well, but the stock doesn’t perform that way.

Lifeline Biotechnologies (or has the dubious distinction of being a Pink Sheet stock. What does that mean exactly? It means that for whatever reason it doesn


Sunday, April 24th, 2005

If you


Thursday, April 21st, 2005

The outlook for the aerospace sector

Plan for medical disaster when you invest

Tuesday, April 19th, 2005

I usually stick to the investing side of personal finance on this blog, but the new bankruptcy laws (and some old information I found while researching them) can seriously affect your investment philosophy as you’ll want to keep more liquid assets, like cash, in your banking accounts to cover health related expenses, even if you have health insurance. Here’s why, in the words of Elizabeth Warren, a professor at Harvard University:

The link between jobs and health insurance is strained beyond the breaking point. A harsh fact of life in America is that illness leads to job loss, and that can mean a double kick when people lose their insurance. Promising them high-priced coverage through COBRA is meaningless if they can’t afford to pay. Comprehensive health insurance is the only real solution, not just for the poor but for middle-class Americans as well.

Without better coverage, millions more Americans will be hit by medical bankruptcy over the next decade. It will not be limited to the poorly educated, the barely employed or the uninsured. The people financially devastated by a serious illness are at the heart of the middle class.

Every 30 seconds in the United States, someone files for bankruptcy in the aftermath of a serious health problem. Time is running out. A broken health care system is bankrupting families across this country.

I included more than necessary so that everyone could clearly see that this is a highly opinionated article, but regardless of what you think about the conclusion the facts supported by the Harvard University study suggest that even people with good jobs can face bankruptcy in the face of serious illness. Lose the job, lose your insurance. Lose the insurance, go bankrupt trying to pay your medical bills.

Now that was a bad system. The new bankruptcy laws make it even worse. That’s why it is critcal when planning your investment strategy to have some liquidity. Be certain that you can pay for health insurance if you lose your job due to serious illness. And of course make sure it is the right kind of health insurance. High co-payments, deductibles, exclusions from coverage and other loopholes are things you have to look out for. To repeat part of the artcile:

A harsh fact of life in America is that illness leads to job loss, and that can mean a double kick when people lose their insurance. Promising them high-priced coverage through COBRA is meaningless if they can’t afford to pay. Comprehensive health insurance is the only real solution, not just for the poor but for middle-class Americans as well.

The US government will not make sure you get comprehensive health insurance. You have to find it yourself. With the new bankruptcy laws, the US government will make it more difficult for you to declare bankruptcy when medical problems make you poor.

I’ve recently increased the amount I spend on vitamins and antioxidant supplements. I’m also getting more serious about working out. Getting seriously ill is just not an option for Americans so do everything you can to prevent illness (eat well, get antioxidants, exercise) and make sure your investment strategy is flexible ebough to handle a simultaneous illness/job loss.

Investing in China

Monday, April 18th, 2005

In this article, we’ll look at US stocks with exposure to China as a possible alternative to directly investing in the Chinese market where information can be difficult to find.

Do you know enough to invest intelligently in China or any other foreign market for that matter? It depends. Are you doing your research? And if so, who are your sources and who are their sources? Media is difficult enough to trust on government actions in our own country, much less a burgeoning economy still building regulations.

Having said that, however, China

No hope for US stocks?

Saturday, April 16th, 2005

“What we’re looking at is a giving up of hope on the part of investors,” said Joseph Keating, chief investment officer of the asset management group at AmSouth Bank.

So the question is do the poor IBM numbers and the recent economic data really indicate an economic slowdown? I don’t think inflation will be out of control, but I don’t think it matters. Even a little inflation will increase already poor investor sentiment.

“Earnings are really the only hope for this market,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “If, on the whole, earnings can go up, then we might be able to overcome oil and inflation and all the other things.”

I don’t plan to put more money in stocks just yet. Investors will be looking for bad news in terms of inflation (consumer prices and producer prices) and I think that they’ll find something that spooks them. The figures may not be real bad, but investors are spooked so it won’t take much to send the markets even lower.

How to recognize a great business

Sunday, April 10th, 2005

This information will be most useful to inexperienced investors who aren’t sure what to look for when searching for investment opportunities. For the most part, I suggest passive investing to these types of people, but for those who want to learn more I have found a well written article that covers some important basics.

Advice in this article includes examining the industry anddetermining whether there is demand for the company’s products and/or services and if that demand is sustainble long-term.

There’s also inofmration on how to look at a company’s financials with explanations of price earnings ratio, price earnings to growth ratio, gross margin, return on equity, and debt to equity ratio.

Stocks breaking the rules

Sunday, April 3rd, 2005

Here’s a very interesting article from Motley Fool about identifying rule breakers. The focus is on defining “rule-brekaer” and giving examples.

Starbucks is one of the stocks mentioned. Sure it’s not a new company, but who is #2? When there’s no clear competition you might be looking at a rule breaker. Taser is another stock mentioned in the article. It’s not a safe investment but it’s another example where there is no clear #2.

While the potential returns are enormous, this is not a safe place for a big chunk of your portfolio. However rule breakers should be considered:

Researching this column, I ran some numbers. Turns out, when David officially shuttered his real-money Rule Breaker portfolio, he’d managed a 20.1% annualized return. That was in mid-2002, after the bear market. Compare that with 9.1% for the S&P and 7.3% for the Nasdaq over the same period.

Put another way, the $87,500 invested in the real-money portfolio between August 1994 and April 2002 was worth more than $300,000 when the portfolio officially closed in February 2003 — after the bear market had run its course. Those are the kinds of results that made legends of Peter Lynch and Bill Miller, and rightfully so.