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Invest in fun s***, and tap dance on hard-work’s face.

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Here is a secret: If you are having fun, you never have to work hard. Or, to put it another way, if you are having fun, working hard is not an ordeal — it can even be a rewarding, enjoyable way to spend your time.

This goes for:

  • Work, work: Work for yourself; work at Pixar; work doing what you love …
  • Exercise: Tramplines, sports (basket ball, soccer), paint ball, rock climbing .. .
  • Other boring, annoying, scary, tiresome, awful, painful and/or smelly stuff: E.g., Raising children.

Examples of hard work being fun:

  • Sex (although, I bet you had already figured this one out)
  • Showering (stop and think about how much work you do in there! I bet you never noticed, as it feels so nice).
  • Games/puzzles …
  • Misc. (i.e., punching a pillow, chewing gum or running from small woodland animals while drinking Boons Strawberry Hill with your friends in the woods).

One of the secrets in this life is to learn basic life-hacks, such as the example above, and creatively, (and actively) apply them to other areas of your life. So how do we apply this “fun can distract from annoying/tiring/painful work” theory to investments?

Here is a list of five things you can do to make investing fun:

1)  Invest with friends: Get a group of people together, pool your money, and buy lots of stocks. Advantages of this route include: diverse knowledge and fresh leads; lowered fees, due to buying in bulk, and splitting the costs; more brains working on the problem; rapid diversification; it can be an excuse to get together and have fun!

2) Invest with your kids: Have your kids help you invest, and teach them a valuable skill at the same time.

3) Play “fantasy investing” (i.e., paper trading or paper investing). Get a bunch of fantasy football addicts, ante up, and win a pot of money at the end of a set period — then use your research to invest for real …(also, all of your competitors are giving you their research for free! Suckers!). My infomercial: Stop wasting your time on Baseball, Basket Ball, Football, Soccer, or Hockey, which only take your money! Play a game that can make you REAL money! Just send me three easy payments of $19.95! Act now! Supplies are limited to the first 6 billion! 

4) Buy companies you love: Guitars, watches, motorcycles, helicopters,  Hollywood, cosmetics, fashion, theater, whatever turns you on! My wife watches Charlie Hunnam on Sons of Anarchy, and begged me to buy Harley (HOG). I love music, so I bought a stock of a company I had heard of, Avid (NYSE: AVID), which makes Protools, a software used by every professional musician in the world. There is also Porsche (OTN: POAHF), Virgin Media (NASDAQ: VMED) and TakeTwo Interactive Inc. (TTWO) which owns RockStar & 2K Games, two well known video game companies. Your imagination is your limit, from Barbie (MAT) to Dungeons & Dragons (HAS) to Phineas & Ferb (DIS) to parachutes to Mythbusters (Discovery Communications, NASDAQ: DISCA) to L’Oreal (NASDAQ: LRLCY).

5) Buy companies you hate (and get your money back!): Microsoft is a dirty thief. I am determined to get my money back (see article related to this: here).

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ROTH-IRA vs. Godzilla! (Quick Tip)

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If you are going to get into investing, the very first thing you should do is look into an IRA (look at the pros/cons of ROTH vs. traditional here).

Any online investment house can host your IRA, for free (well,  the account is free).

Why an IRA? Because it forces you to not spend what you save (or, at least gives you serious pause), while also giving you a tremendous tax advantage (while the money is within the IRA):

i.e., If you cue up all your big-gun dividend yielding stocks, and put them into your IRA, you don’t pay taxes on the dividends (whether or not you re-invest them: why this is important) … then you can buy non-dividend stocks* for your non-IRA investments and not pay taxes until you sell them [at which point you should have very little “income”, a.k.a., you’re retired, and won’t get taxed like a brain surgeon].

As one professional said, “Put your tax-adverse investments within your IRA, and put your tax-advantaged investments (e.g., US government bonds) outside of your IRA.”

Hustle! The faster you get your IRA up, the more you can contribute! Time is the main variable at work here!

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*Keep this in mind and be careful — in general companies that pay dividends do so because they are not reinvesting their money, whereas a company that is growing fast is probably not paying dividends (or, very little).

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

10 ways to over-complicate investing and lose money while doing it! Or, Why my five year old can pick stocks better than you.

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The number one rule in stocks is: Buy low, sell high.

Listen, stocks are scary, because you are investing money and you may lose some of it. But, you go to Vol*dMart to buy groceries every other week, and your probably spending a lot more on those goods than you are on stocks. Why is it so hard to buy stocks?

There are a lot of psychological reasons why buying stocks is hard:

1) You want the perfect stock! The more choices there are out there, the worse you’ll believe your final choice is (seriously, watch this. It will blow your mind); so you hesitate and lose all initiative.

2) You want to buy it at the perfect time! There is no way to know when the perfect time to buy was, until it is in the historical record. Just buy when a stock is really low, and hold the sucker till your 59. I.e., It’s like, you go into Target and see a winter jacket on sale for 33% of it’s previous price, but its June. Since you needed a jacket the previous winter, and had been planning on buying one anyway. You buy it, and next winter you have a good coat. 

3) You don’t know what your doing: I get this, but really, it’s no more complicated than buying a cart full of groceries. It’s way simpler than buying a car, because, heck, if you don’t like it, you just sell it right back and the price is pretty much the same!

4) You worry about the company going out of business. OK, read up on the company, a little.  But don’t over think this. If 5 professionals say, “Hey this company rocks!” It’s probably not going anywhere.

5) You see a company on MSNBC/FOX Business/CNN Business etc., in trouble, and you shy away from it — but those are the only bargains you see. Well, you don’t get $0.15 off a dented can of soup cause it’s pretty! And it’s still the same soup! 

6) You want to buy the next Google, Amazon or Microsoft, with penny stocks, but don’t know which one to buy. Here is the truth, all of them are extremely risky, and 99% of them are garbage. Do you have time to look into these companies? I don’t, and this is one of the two mutual funds I own (small cap and medical insurance). Let the pros figure this out.

7) Your friends/coworkers/relatives/bus boy know more about stocks than you, and you know you can’t compete, and so you don’t. Well, that solves your problem of having to compete with them! But there is a simpler method: Don’t judge your portfolio/decisions/life by other people. Judge it by itself: is it getting better? Just ignore other people. There will always be people smarter, richer, and better at anything/everything than you. But, there will always be someone better than them too.

8) Too many numbers, graphs and ways of looking at this crap! Seriously, there is. Ignore most of that it (look at market cap, dividend, P/E ratio, price and some ratings — done!). Again, if the professionals are saying buy, it is probably OK to just go and buy it. I know there are a lot of serious investors out there who will need some knappy wipes after reading that last sentence, but just because She/He doesn’t know if a company is good or not, doesn’t have any bearing on whether the company’s good! Other people can be right! And another thing these “super knowledgeable” investors seem to forget: It’s pretty easy to buy and sell stuff. If you buy it low, and it goes even lower, you can just wait (or even buy more!). If it goes up, great! Whats the big risk? I don’t understand it …

9) Stocks aren’t safe! Look, if I had bought 10 share of the S&P 500 when I graduated high school in 1993, it would have cost me $4630 at its highest point – at it’s lowest point in the past 10 years, it would have been worth $6830. That is still a profit of $2200. If I had kept it until this very moment, it would be worth: >$15,000, and that is after TWO horrible stock market crashes and the biggest depression since 1930! Lets see your savings account do that!

10) Investing needs to be super-sophisticated. Well, hate to tell you buddy, but you’ve been lied to your entire life. The best diet? Eat less.  The best pickup line? “Hello, I find you attractive. Would you like to have coffee sometime?” Best solution to a mathematical/scientific conundrum? The simplest explanation  The best way to make money in stocks? Buy something.

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Take home message: Buy stocks of companies you know. Don’t think a lot about it. Really, that’s it.

Don’t watch the market news, don’t dither, don’t read the WSJ. Don’t log-in and look at your account all the time. Just buy a solid company, and play with your kids. Simple.

And tell your self this: If you were explaining to your child about a company and you said, “You know, ___, where we have shopped your entire life, and where mommy and daddy shopped with their grandma and grandpa? The one that’s on every corner in America? Yes, that one. Do you think it will be there tomorrow?” My 5 year old could pull the trigger on that one!

Cited for walking without insurance.

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Since the advent of the car, there have been accidents — and ways to make money out of them. One of the legal ways, though some would argue more immoral ones, is insurance. And it’s easy: you promise to pay someone if their car gets damaged in a crash, and all you have to do to make money is take in more than you give out.

But, from the insurance company’s point of view, people that have accidents are losses. In order to make money, the insurance company needs people who are not getting into accidents. 

So, in the early days, insurance companies looked around and noticed that most of the people they were insuring were either a) rich or b) those at the greatest risk for accidents. In order to compensate for the at risk, the insurance companies had to raise the premiums … and they could only do that so long until people just went somewhere else, or dropped their coverage’s altogether. What they needed was a bunch of people that were not risky to purchase insurance — in other words, get people that didn’t need insurance.

Then, as if by a miracle from Heaven, laws began being passed in certain states requiring minimum insurance for any driver and/or automobile.  All of a sudden, insurance companies had plenty of low risk customers (who were forced to purchase the insurance!), and the people that owned stocks in those companies received dividends because the company had “extra” money and didn’t have any thing left to pay for. Hooray!

Now, is it ethical to force people that don’t need insurance to purchase it? Americans don’t like to be forced to do anything … so, on a personal level, I find this repellent. Is it necessary? Probably, because, we can’t know before an accident, who will actually be in an accident. Sure, statistics can tell us percentages or likelihood  but this can not be applied to an individual. So, while it sucks being forced to pay for something you haven’t ever needed, you can never tell if you ever will  need it. And, heck, if you do need it, it’s sure nice to have.

So, it may be ugly, but it’s not, as suggested earlier, immoral — at least on the surface.

So, what the hell am I babbling about car insurance for, you may be asking yourself. Well, lets look at the “system” of insurance: Receive money, payout money. Keep the profit margin by two mechanisms: Raising prices above losses and spreading the risk. If this is done properly, you will always make more than you lose. Always. There is no gamble.

This may seem attractive to you, as an investment. However, if you purchase stocks in auto insurances now, you will be paying a lot to get a little: i.e., because the insurance companies make money, and people appreciate that, people will pay more for it because of competition. Thus the price raises, but the dividends stay the same. This is called the price/earnings ratio, or P/E ratio. Insurance companies have high P/E ratios. The bottom line is, you will get very little bang for your buck out of an auto insurance company.

So, again, you are asking, what the hell am I talking about, then?

In 2014, the federal government is going to require all people to own body insurance on all human body’s driven by citizens in these United States.

Just like those proto-auto insurance companies, this will be the clarion call for healthcare insurance profits, because when people are forced to  have health insurance, the healthy will have to buy it too. Not only will insurance companies have more customers, those customers will pull down the level of risk!

Sure, insurance rates will fall, because of competition, but this will not be at the expense of profits. The insurance rates will only fall after dividends are distributed (who do you think owns insurance stocks? Why, insurance company employees, of course!)

And here is the crux: Prices on health insurance companies are not up, they are down. This means the P/E ratio is low for this sector. StockGuilt feels confident enough to purchase a mutual fund of health insurances (because we won’t be able to keep up with emerging companies, new competition, policy developments, etc.).

Don’t make me tell you, “I told you so” in ten years, ’cause I will. Look into this, OK?

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NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

How to invest like a big-time, Cristal guzzling, yacht cruising, hairy-chested hedge-fund manager — on a teachers salary. AKA The StockGuilt manifesto.

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“I’ll take that one …”

The name of the game is: Beat the S&P. The S&P 500 is an index, a lump, of the largest 500 companies on the Dow-Jones market. And we have to beat them! Beat them?

How the heck can we beat the biggest companies in the world? Do we really have to beat them? Why?

Well the answers are, in order: You probably can’t, and no. Why? Why, is because that is the baseline everyone else is trying to pass. You may have heard this, or, if you are serious about investing in the stock market, you will hear about it: the S&P grows (or declines) in a given amount of time, and you compare your portfolio to it. If you are better than the S&P, you polish up your trumpets and sell seats to your carnival show. If you don’t, you just don’t mention it.

But, here is the truth: The line in the sand is arbitrary (why not every other company listed on the NYSE, numbers 103 till 2175?). Clearing the  hurdle is based on chance (i.e., luck) and really doesn’t mean anything. It is — (get ready for a swear word) — bullshit. 

Let me tell you right now, you may beat the S&P for one year. You may beat it for two. You may beat it for 10 years. You may throw heads on a quarter 14 times in a row. But it ain’t skill, its dumb luck.

So get the image of the swaggering, uber-intelligent, market savvy stock trader out of your mind. You aren’t her, just like you aren’t Beyonce or Jessica Flecher (Murder She Wrote reference … I lost a bet. ).

What we want to do is about as lucky and glamorous as making a brick out of mud. We take the ingredients,  use a system someone else taught us, slap it together, and build a house. We don’t really think too much, because we know we can’t outsmart the market. We just build bricks and make a strong foundation, and shore up walls, and build a future. It’s slow, boring, messy and unglamorous, but, fortunately, it’s pretty foolproof, and it makes more money, and is nearly as safe as your savings account or a CD (or even Bonds). Besides, we don’t have time for this crap. The reason we are doing this is for our families; it would be pretty dumb to ignore them while you are planning for their futures!

So, here are the basics, no messing around. Each of these will be expanded and explained in detail later, but for now, just make a checklist:

  • Buy individual stocks!
  • Keep fees down! 
  • Do your own financial planning!
  • Don’t move your money around, plan to buy and hold for at least 10 years.
  • Use an online brokerage … and if someone wants to give you $600 for putting your money in there, do it. 
  • Save as much as you can — remember, $1 today is $100 when you retire! Every penny counts. 

Now, the moment you’ve all been waiting for: How to invest like a super-smart, Ivy league educated, platinum TAG-Heuer watch wearing  mutual fund managing superstar! 

  • The secret is you simply buy the companies listed on their prospectus (a document they make for number’s geeks, that tells all the financial voodoo, wizardry and statistics; this document shows what their mutual fund is buying). Why pay them, when they are giving you their expertise for free? 

So, about that S&P. The funny thing is, the S&P does just fine. So fine, in fact, there are funds you can purchase (which we discourage, due to fees) that do nothing but mimic the S&P. You would do well to come close. Everything else is luck and should be cherished like gold found on the sidewalk. 

Now, send me $1000 every year until you retire, like a financial planner. Yeah, I didn’t think so. Still think people that invest have to be super-smart? You are now smarter than 90% of them.