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Twist your brain around supporting evil for the good of humanity. Or not.

"Smoking is cool, and everybody knows it." --Chandler Bing (Friends)

“Smoking is cool, and everybody knows it.” –Chandler Bing (Friends)

So the idea of this blog is to talk about how to make a sustainable nest egg for safety and retirement, without (too much) guilt.

So, why are we here, we who have a list of rules (one of which is “Don’t buy defense contractor and tobacco stocks”) going to make the argument that we should buy tobacco stocks?

Well, lets think about it … money? Yeah, sure, of course. I mean, why invest in stocks if you aren’t going to make money. But, we here always have a secondary objective: Doing good, or, at least not doing (too) bad.

We have morals! We have ideals! And where we may not always live up to the ideals, we at least feel bad when we don’t abide by them. So, we don’t support companies that make things that purposefully kill, exploit or support killing or supporting … even when we don’t know what that means. [Does buying stock in alternative energy from a company that supplies energy to a factory that makes bombs that are used to shell civilians 6000 miles away constitute supporting building and dropping bombs? And if so, or not, does simply paying taxes support that too, thus making the whole thing moot?]

Certainly there are shades of gray  to buying any stock. In a gray fog, while wearing sunglasses.  At night. Underground.  With the Beatles playing (cause it sounds like a psychedelic party!)

So, let’s just set up a set of rules. Actually, 2 cop outs, and 2 rules. No, well, making money is one of the rules, so 3 rules. But, 2 besides that.

Forget it. Lets just focus on the rules:

1) (cop out) Business sucks. But it’s the best thing we have ever found to channel the selfish human heart into constructive gains. Businesses employ people, who support families. They pay (lots) of taxes (or, their employees pay lots of taxes, either way, the government gets more so they are happy). Generally, they pay for everything and move money around. They are the heart of the world. (Roads are arteries and veins. Money is blood. People are cells. Dogs are leukocytes. Food is, well, food. Movie stars are the moles and freckles. Manteca, Ca., is the anus, Etc.)

2) (cop out) In planes with sudden loss of pressure, parents are told to put on their masks first, get some oxygen, and then take care of their children. Like that, we need to take care of our bottom line, so we can continue to fight the good fight. (BTW, this is good justification for taking an evening off from your kids. And just may be true, also.)

3) Avoid bad (self explanatory, but hard to define)

4) But above all, support good.

So, what does this all mean. It is sound and fury signifying nothing, but we’re calling it our “Guiding principals”. (Hey, we want at least the illusion of doing good. It’s working just so long as we believe it, right? ‘Cause, lets be honest, just being alive and breathing is f***ing things up, and it just gets worse from there.)

So, cigarettes kill people. Don’t support that. But, as an alternative, e-cigarettes have lower the risk of cancer and lung disease. So support that.

But, doesn’t supporting e-cigarettes support the tobacco industry?

Yes, it does. So, how can we invest in this? I mean, we are hooking people on nicotine, either way, right? Er … yes.

But, lets look at our algorithm here (you just learned a fancy word for recipe):

Rules one and two: Check!

Rules four: Check!

Rule three:<buzzer sound> Not so much.

But, FIGHTING the big EVIL corporations can be done by methods other than destroying them, but by redirecting their evil ambition towards less evil, but more profitable business ventures. If we are supporting something bad, but steering it towards something good, then we’re doing good, right? Like Michael Corleone in the Godfather, trying to go legit. Or, like an undercover drug operative. Or like James Bond!

No matter how you spin it to yourself, the truth is, is that if the stock price goes up (more people are buying it) then the more tobacco companies will pay more attention to e-cigs. This will decrease the production of regular cigarettes, which, lets face it, stink.

Or, maybe we are just trying to talk ourselves into something stupid.

Look at the stock: Victory Electronic Cigarette Incorporated (OTCBB [Over the Counter Bulletin Board]: ECIG) (These wacky stock brokers! HA HA HA).

It is all over the place, highly volatile. The FDA is cracking down (not really, but hey, when the Wall Street Journal hypes something …) the prices are just going to plummet.

But, as you know, we advocate buying things when they get bad press. And we believe this industry will grow by leaps and bounds over the next few years. And this company is just starting out …

Could it be the next Starbucks? The next Netflix?

Probably not, but, heck, it’s stocks. 99% of new companies fail.

Bottom line: It may not hurt you to invest a small portion of your portfolio on this, like say, $1000. Or, it may cost you $1000 and your soul. We aren’t quite sure.

 

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

 

 

 

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).

Lies we have told you so far … (Quick tip)

As a follower, you have many benifits, such as not having to think. But, there are problems too.

As a follower, you have many benefits  such as not having to think. But, there are problems too.

For the past two months and eight articles, we have been preaching the same fundamental actions: Buy solid stocks, keep costs low, avoid brokers & administrators, hold your stocks long term and ignore stock news.

But as one of our genius friends always says, “There is an exception that makes the rule.” He must be a genius, because that axiom doesn’t make any sense to us.

Here is the exception: Read stock news, on losers — because the bigger the loss, the greater the potential recovery. So, every once and a while, Google something like, “Prices fall”, “Stock slips” or “investors are selling”, and note the names of companies on that list. Here are three current examples: Caterpillar; JCPenney; Apple;

However, don’t actually read the article! You are trying to get ideas on companies with a sale price, not over think it. Why this is true: here.

***

Bonus quick tip!

So, now your thinking, “These people are asking me to put my money into the least safe place I could put it! I’m going to lose all of my money!”

Well, maybe yes and maybe no. You want to be sure about your money? Put it in a savings account. That is as close to a sure thing as is possible in this life — too bad the sure thing is that it will lose ground on inflation.

We live in a world of volatility. The question is not if a company experiences volatility in it’s price/business, but, is this volatility based on real or perceived problems.  

There are a lot of reasons there can be a loss  in the price of a company: Pending legal action/outcomes, income loss, change in management, market loss, change in strategy/product/the color of the VPs tie, opinions, economic astrology, etc.

Where there are many reasons for a price loss, there are only two categories: Real and perceived.

Remember, the market is run by people that a) panic b) follow the panic-ers and c) people that take advantage of all the panic. The thought process of each of these people can be very, very complex, but the results in aggregate are fairly easy to understand: if there is bad news, the price goes down; if there is good news, the price goes up.

This is where you’re BS detector comes in, and a little common sense. Also, the slightest hint of research … but just a pinch! Just enough to answer this: Is the price low because the product sucks or because the press sucks?

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 easy steps to purchasing your stock. Now with TIPS and real cane sugar!

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Here are ten random steps and 12 random tips on investing. We have put them in chronological order, sort of.

10) Keep an eye out for companies to invest in. Create a list (can be done online on your personal investment account). TIP #1: Keep an eye out for companies every where … in the subway, on a plane, on a lunch break, at your doctors office. You should always be thinking, “Hey, I bet that company is doing well! I wonder  …” TIP #2: What is your specialty? Are you a plumber? Then you have specialized knowledge! Look for companies that you have “inside” information on. This works for all professions/educations/hobbies/obsessions. Take a look around, at the products you see everyday. I am positive there are some great bargains there for the buying!

9) Scrimp and save: I always tell myself, “1 dollar today, is $100 when I retire! Am I willing to spend $100 on a pen?” This is my mantra — especially when something catches my eye, and I get that jones for a little retail inebriation. TIP #3: Open up a new bank account (make sure they don’t charge a monthly fee!) or investment account and have a percentage of your wages transferred into it — this is your “business account”; use it for your investments. TIP#4: Either a) spend only cash [i.e., $100/week petty cash fund] or b) put a stop to all transfers/lending/overdrafts etc. on your checking account, and then put only a set amount of money in that account. A worse idea is to buy a pre-paid card to accomplish the same thing, but they charge you to buy it, and maintain it (example prepaid card; example gift card). TIP#5: Don’t spend change, ever! Take your change, put it in a piggy bank, and once every few months, deposit it into your “business account”.  We bet you’ll be surprised! 

8) Buy good value stocks (explanation) in bulk! So, we have found three companies we want to buy. We have $3000 dollars to invest. The math seems simple: $1000 for each, right? No.

The reason why not, is that you have to pay the fee’s three times! If you think of each fee as another partial share you can’t buy, then you can see that the lower the purchase amount, the greater the fee is, by percent: i.e., $8 is 8% of $100, but $8 is only 0.2% of $3000! TIP#6: While you wait for your money to accumulate to ~$3000 (or whatever), you can use the money to buy tax-free bonds (and if your really smart, you can ladder them [example]) (this also can be used as part of your cash reserve).

7) Buy stocks in sectors: In the economy there are different sectors (example). Your goal is to buy quality value stocks in each of these sectors (advisers tend to want to invest in them in percentages, based on the percentage they represent in the economy; i.e., if consumer goods makes up 15% of the economy, your stocks in that sector should represent %15 of your stock portfolio. We really don’t know if this is based on any science, or if it is just “common sense” [or simply a  historical anachronism]. Our thoughts are that buying solid value  and growth [definition] stocks in all sectors will be hard enough, and it will be sufficient). For more info, read this short article: here.

6) Diversify by never buying the same stock twice: Buy one company and hold it until you retire. Diversify by purchasing stocks in all sectors (first one stock in each) then, when you have all the sectors covered,  buy another company in the same sector. This will diversify your portfolio (why is this necessary?).  TIP #7: If you are going to sell a stock because you are not happy with it’s performance/management/policies etc., sell it and then transfer the money into your IRA. Why is this a good idea? Well, you don’t want to make too much money during the year, or your taxes will kill you, and since you can only put in $5500/yr, your limited in how much you can sell. Plus, it forces you to only sell a few stocks a year (or $11,000 for you and your spouse — who needs their own IRA!). It also makes sure you are investing the maximum into this great vehicle while simultaneously preventing you from spending it!

5) Buy using a “Market Order”: Did you know that companies charge more for a limit order or other ‘exotic’ orders? Since we are investing for the long term, a few cents wont make a big difference — so we at StockGuilt just buy and then go to the park with our kids. TIP #8: If a company is doing a terrible job, and you realize you have made a mistake, you can sell it at a loss and come out even if you also sell a stock that has made money in that same year (i.e., a loss of $500 and a gain of $500 makes your capital gains zero!). Always keep track of the bottom line, and be as close to no profit as possible for your taxes.

4) Give money! (A.k.a., Tip # 9)  This has nothing to do with purchasing stocks, but we feel it is important. If you are going to pay taxes, and let the government use your money to do stupid and/or horrid things, you are going to hate yourself. But, you have the option of spending your tax dollars on the right things! If you think the government should be spending more money on education, then that’s where you should put your money. Don’t think of it as charity, think of it as your duty as the head of a very, very small department of the federal government. You alone decide where that money should be allocated! Congrats on the promotion!

3) Go to the library and read a book: This is where you get expanded knowledge of investments. Keep away from books on stock investing, as this will make you over-think things and mess up the long term strategy that will work, if you just leave it alone!  TIP #10: Read non-fiction biographies for insights and inspiration on new companies, strategies, and a warm buzz of enthusiasm! It doesn’t matter who, what, where, when, or how, you will be inspired. TIP #11: Forget about your stocks! Just leave them be. Do not watch the “market news” or any of those investing shows, as this will just make you anxious. If you need inspiration, read it in  mutual fund prospectuses.

2) Read Discover magazine and Popular Science, etc. (A.k.a., TIP #12): This is the cutting edge of science, and we are constantly astonished by what we read in these magazines — and more importantly, about the companies that are making it happen.

1) Get some disparate friends (A.k.a., TIP #13): Not desperate friends, but disparate, diverse, weird. They will have insights into investments you would never think of. Buy them a drink, and let them blow your mind!

Best return for your investment money, bar none. (Quick Tip)

What if I could get you 23% more money, per year, tax free? You’d be interested, wouldn’t you!

But here’s the thing, it’s not glamorous. Its not fun, or cool or even particularly satisfying … but, if you just simply look at it from a accountants point of view, you’ll see, it’s the best investment you can make:

Paying off your credit card bills.

I don’t know about you, but my rates are about 13.3-27%, per year! If I had $1000 to invest, and $5000 dollars in debt, mathematically, it would make more sense to pay off $1000 on my bills: I could only expect $75-150 in earnings on a stock, whereas I would be paying $130-270 per year, per thousand I owed on credit cards.  

And this type of investment has other benifets: It strengthens your credit (which is good for loans on houses, real estate investments and business loans) and it requires you to make a concerted effort to pay-down debt, while making no additional purchases. You will also learn that there is more than one way to make money, and that looking at a balance sheet is just as important, if not more important, than reading investment news.

If you are serious about your financial future, this is a critical first step.

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

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?

street-art-healthcare-by-alec-melrose-ave

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