Archive for July, 2005

Pfizer – will history repeat?

Friday, July 29th, 2005

Another anonymous reader email, this one about Pfizer (a company I’m currently invested in). Please keep the emails coming to jtrotta@gmail.com

Since the pharmaceutical company Pfizer was founded in Brooklyn, New York in 1849 it has become and has continued to be one of the world’s leading manufacturers of pharmacological products. In addition to the long established list of over-the-counter medicines that Pfizer has developed and continues to improve and manufacture, they can also boast an impressive list of life-saving and breakthrough prescription drugs. I’ve even seen my dog get Pfizer prescriptions.

Here’s a little Pfizer history: With the development of their very first product, an intestinal worm treatment drug called santonin, the then-small company established itself as a pharmaceutical and chemical manufacturer to be reckoned with. Although santonin was already a known treatment for intestinal worms, few people were willing to ingest it due to its extremely bitter taste. Through tireless research, Pfizer’s founders, German-born Charles Pfizer and Charles Erhart, found a way to combine the chemical with flavorings that made it much easier for patients to take, and santonin soon became a much more popular treatment. It is this kind of innovation and dedication that established Pfizer as a leading chemical and pharmaceutical manufacturer – a reputation that remains with the company today.

Research is the mainstay of pharmaceutical companies. A drug company’s stock price will reflect not only its current product sales but also the strength or perceived strength of its product pipeline. Pfizer’s focus on research has continued to produce breakthrough drugs and treatments that have not only saved lives, but have improved the quality of life for many consumers. In the early 1940’s, Pfizer developed a way to mass produce penicillin through a fermentation process, which resulted in the drug being available on a much wider scale than was previously possible. The company’s research also produced the first widely successful drug for erectile dysfunction in the 1990’s – and for many males, quality of life was greatly improved.

I don’t know when the next breakthrough will come but it seems likely to me that eventually Pfizer will come up with another blockbuster and stock prices will rise. I bought Pfizer nerly a year ago and am considering adding to my position at the moment.

Rich Dad, Poor Dad (the sequel)

Saturday, July 23rd, 2005

So I’ve been reading Robert Kiyosaki’s Rich Dad’s Guide to Financial Freedom, which is a bit short on specific financial information. It does, however, present some interesting theories.

Kiyosaki argues that the key to financial freedom is to start a business (a successful one generates passive income) and then invest that money (he seems to prefer real estate although he does mentione that investing in other businesses can be fruitful. Interestingly, he argues that specialization is better than diversification.

Anyway, the types of businesses he suggests are interesting: build your own corporate system (this is what Kiyosaki did), buy a franchise, or do network marketing (the option I’m working on and the one Kiyosaki seems to recommend).

The next step is to become a highly educated investor, and while he suggests a few books, this is where the book lacks specific information.

Investing In Renewable Energy Stocks

Wednesday, July 20th, 2005

Here’s an anonymous reader submission about renewable energy stocks. Keep the submissions coming to jtrotta@gmail.com

You want to find a way to make your money work for you instead of you working for your money. One good way is to invest in stocks. You purchase stocks in what are called shares. When you buy shares from a company you are actually buying a portion of that company. So the more shares you purchase the more you will make when the company makes a profit. There are many different types of stock to choose from and it can be overwhelming to find a company to invest in. A good starting point is to think of something you have an interest in, for example the environment. An increasingly popular stock to
invest in is a renewable energy stock. So lets take a look at it. Renewable energy is energy that is continuously being replenished such as wind and
solar energy.

There are three sources investors could deal with. First is the sun, more utilities are being run by solar power. The solar power uses solar cells to absorb photons and loosen electrons, which in turn produces electricity. Then there is hydrogen the most abundant element. Hydrogen is being used frequently now by car manufacturers. Fortunately for investors most hydrogen-based companies are now public. The last source for renewable energy stock
investors is wind. Wind is a competitive alternative to coal and natural gas to produce electricity. Unfortunately for now there are not many public companies.
People today are using roughly two percent of renewable energy, making this appear to not be the best stock to invest in. Appearances can be deceiving, take a look at government and state incentives for cleaner air. Investing in renewable stocks can be a little risky. Some of the companies are fairly new and depend on government grants. Of course that being said, you always take somewhat of a risk when you invest in anything. You will see that investing in renewable energy stocks could be quite lucrative.

Silver: Outlook and Investing

Wednesday, July 13th, 2005

This article was contributed by an anoymous reader and I decided to post it here to reiterate points I’ve made about investing in metals because they don’t (historically) track stock indexes or currencies. Anyway, here’s the article (you can submit articles to jtrotta@gmail.com):

The fact that silver is not the most popular precious metal used for jewellery should not deter someone from considering it as an investment option. Silver is the most proficient conductor of electricity, and is used in many products including film, solar cells, thermal windows, silverware, and many decorative items. The list of industrial and technological uses for silver goes on and on. There are many applications where only silver can be used.

Although the price of silver has risen fairly slowly, with some variation, over the past few years, many experts agree that it will continue to maintain a rising trend. With the unstoppable progress of technology, the demand for silver should never decrease, and in fact should increase proportionately.

One of the factors an investor should look at is the fact that the price of silver has not usually swung wildly with the rise and fall of the value of the dollar. Silver has been known to increase in value even when the value of the dollar has fallen sharply. When an investor is looking for safety and consistency, having silver as part of your investment portfolio can seem like the right choice.

There are several options for the investor who is looking to include silver in their investment portfolio. Silver bullion bars, coins, or medallions can be bought as a direct product and stored by the investor. This can pose the question of security, however, and the investor should be sure that there is a safe place for storage. One of the advantages of this kind of silver investment is that conversion into cash can be much faster.

Investments in silver that can be done on paper include silver mining stocks, silver certificates, and silver futures, just to name a few. The investor should check with a financial advisor to find out all the options for investment, and which one would be the right choice.

Paying pensions

Sunday, July 10th, 2005

One thing to consider when investing is how well the company has been able to keep up with its pensions and what effect trying to keep up will have on profit. Bernard Condon writes:

Some of the biggest underfunded companies: Exxon Mobil (nyse: XOM – news – people ), which is $12 billion in arrears and 24 years away from payback; General Motors (nyse: GM – news – people ), which is $8 billion in the hole; and IBM (nyse: IBM – news – people ), which is facing $7 billion in underfunded pensions. The latter two giants need another eight and four years, respectively, to meet their obligations, which themselves are moving, and ballooning, targets.

Taking GM for an example, I read somewhere that GM is paying its retirees more than its active workforce. That seems like a competitive disadvantage to me.

Portfolio strategy in today’s market

Wednesday, July 6th, 2005

Michael Sivy notes that analysts are basically split on the future of the US economy but leans toward the bullish view. He also feels that defensive stocks are overvalued.

In the end he advises investors to hold on to their defensive stocks and to add to their positions in growth stocks and inflation hedges (not REITs though) while slowly diminishing holdings in energy stocks (he sees declining oil prices sometime in the future).

In all, the advice is sound if a bit general. Perhaps most interesting is this: “The best inflation hedges appear to be producers of industrial metals and materials, such as aluminum and copper.”