Thursday, April 30, 2009

Outsmarted by a Four-Year Old

My daughter has become quite a negotiator. Even though she is only 4-1/2, she has figured out that many things in life are negotiable. For example, when she was younger, I would often encourage her to take "three more bites of vegetables." After a while, she started counter offering with different numbers, sometimes higher and sometimes lower. It wasn't long before she learned that countering with lower numbers were to her advantage.

Last week, our old daughter got the best of me as we were practicing her soccer drills. To make the routines interesting, I offer an incentive for her to work hard. For example, if she kicks more goals than me or scores more points in a drill, a reward is given. Typically that means allowing her to decide what we do in the future, e.g. choosing a restaurant, since she likes dining out.

However, our daughter doesn't like the idea of winning sometimes and losing other times. So she came up with a ingenious idea, giving me a reward of her choice if I win. My first reward? Getting to choose the restaurant when we eat out. As it turns out, this is also a reward for her, since we need to eat out for me to get my reward. So she wins, no matter what.

I thought her suggestion was pretty clever, and agreed to it for this time. However, to get more practice in soccer and other areas, I will likely need to change the reward system. I also realize that I definitely need to further improve my negotiating skills before she reaches adolescence :-)

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Tuesday, April 28, 2009

Restaurants Offering More Meal Deals

Casual dining restaurants are cutting back prices. The newest participant will be T.G.I Friday's as reported in the USA Today article, T.G.I Friday's joins bargain dining $5-meal club. The article also mentioned that Chili's has introduced a $7 dollar menu, which I've seen heavily advertised on TV.

The article reports that the casual dining industry saw same store sales drop 4.9% in March, 2009. Offering meals at lower price points is one way entice customers back into the restaurants.

The $5 price point for menu items started with Subway, with their $5 foot long promotion. I must admit that we increased our frequency of eating at Subway during the promotion. For us, two Subway foot longs were an economical alternative to pizza or other convenience dining options.

We're probably not as likely to take advantage of the Chili's $7 or the Friday's $5 meal deals, since we haven't eaten there much in the past. Also, we consider them more sit down dinner options, and we prefer to go to our usual choices, especially when they have specials such as coupon discounts. However, for many other casual diners, the $5-$7 meal deals will be a great help for the entertainment budget.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or dining out advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From April 21 to 27, 2009

Here is the link to the Carnival in which My Wealth Builder participated from April 21 to April 27, 2009:

Carnival of Financial Planning

For some interesting articles from the blogosphere, check out this Carnival and give the host some recognition for his hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Monday, April 27, 2009

4/27/09 Stock Position Update - A Breather in the Rally

Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list, the 10/20/08 Buy List, or the buy list of 1/12/09. On 3/18/09, I sold the 50 shares of Southwestern Energy (SWN) that I bought on 3/5/09. While the rally has continued, these stocks are no longer keeping pace, which I don't think is a good sign for the rally extending much further. If any position get closes to breaking even, I will likely sell the stock.

Last week, I was supposed to update my buy list based on the modified Unemotional Investor Growth System. Unfortunately other priorities caused me to miss doing and I will do the update this week. I expect there will be pull back soon, which will provide a good buying oportunity.

The portfolio fell 1.0 % this week versus -.36 to 1.27% changes for the market indices. The energy stocks were down a little this week. The overall portfolio is down 21.5% and the remaining holdings are down 38.6%. The portfolio is now way above the previous bottoms that occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

From My Wealth Builder 7/7/08 and 1/12/09 Buy List
Stock [purchase date]SharesPurchase Price

Price on 4/24/09

Range Resources(RRC) [7/10/08]*50

$58.17

$41.87

Potash (POT) [7/18/08]*10

$215.09

$84.01

Southwestern Energy (SWN) [7/18/08]*50

$39.46

$34.43

Potash (POT) [7/24/08]*10

$192.02

$84.01

Southwestern Energy (SWN) [3/5/09]*50

$29.44

sold on 3/18/09 @ $30.52


*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. After received a buy signal on 1/12/09, Southwestern Energy received a second sell signal on 3/6/09. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock.

From My Wealth Builder 7/7/08 Short List
Stock [short date]SharesShort Price

Price

Las Vegas Sands (LVS) [7/7/08]100

$38.10

closed 7/11/08 @ $33.69


I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling a weekending low of $1.77 on 3/6/09. It closed at $7.42 on 4/24/09, significantly rising last week. However, it is still too bad I didn't hold the short position until now :-)

The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 4/24/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8076.29, 1694.29, 866.23. All three indices have risen significantly from lows in March 9, 2009. The Dow and S&P 500 declines are -6.92% and -3.25% respectively year to date. The Nasdaq is now up 7.44% for the year.

Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. I cashed in another 5% of one of our managed funds, because I believe there will be a pull back soon. However, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern Energy in my trading account. The managed accounts are long Hess, Potash, Range Resources, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Friday, April 24, 2009

A Career Fair Disappointment

Since taking early retirement in 2007, I've attended three career fairs to looking for potential retirement job opportunities. . While the first two did not provide any leads in which I was interested, I thought they were substantial and useful career fairs. The number of companies were in the 50 to 100 range and had a balance of employee and self-employed options. In addition, there were typically several major companies from the area represented.

The first two were very different from the career fair that I attended today. There were only 15 companies participating, and about a third were providing educational opportunities for a new career. Another third were primarily self employment opportunities, referred to as "independent sales." The final third were companies actually offering employment opportunities, mainly in retail sales. None of the major companies in the area were represented.

In a addition, I was not very impressed with the career fair sponsor. After requiring registration to view the list of participating companies, the sponsor would not send out the list until three days prior to the career fair date, leaving little time for someone to research any companies of interest. I was reluctant to adding my resume "to their database and get in front of employers attending the event" prior to knowing the companies. After receiving the underwhelming list of employers at the local career fair, I am glad that I didn't provide them my resume to distribute companies unknown to me.

Since the career fair was less than 10 miles from my house, I didn't lose much time attending. In fact, after I saw the employers , I changed my schedule and only allotted an hour to travel to and attend the fair. However, I did learn a couple valuable lessons:
  1. Career fairs that don't openly provide the list of participating companies probably are not doing so for a good reason. In hindsight, I should have realized that a good career fair would gladly provide the list of employers from the very beginning. Great participating companies would be excellent advertising, that a career fair sponsor would want to share employer list as early as possible.


  2. I will continue to not provide e-versions of my resume to career fair sponsors. I like to be choiceful about which companies receive my resume and personal information. At this career fair, I did not give my resume to any employer. Providing the information to a career fair sponsor would eliminate my control over who gets the information.

Although I will continue attending career fairs, I will now only attend the major ones, where I know there will be good employer representation from our area.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, job hunting or career advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Wednesday, April 22, 2009

Cavalcade of Risk #76

Welcome to the Cavalcade of Risk #76. As the name indicates, this Carnival is about risk - e.g. insurance, health, financial, and other types. Thank you to all bloggers who submitted an article to this Cavalcade. I enjoyed reading each one of them. While every post submitted was a great article, I only included those I judged primarily related to risk management.

For your convenience, I have grouped the articles into five categories of risk: Insurance, Health, Business, Investment and Personal.

And now on to the Cavalcade ...

Insurance

  • Nancy Germond, ARM, AIC, ITP presents Managing Contractual Insurance Requirements a Necessity posted at AllBusiness.com - Risk Management for the 21st Century, commenting that managing contractual insurance requirements for vendors and sub-contractors can be a complex task.


  • Wenchypoo presents *WARNING! WARNING! BOOK DANGER!!* posted at Wisdom From Wenchypoo's Mental Wastebasket, saying, "This book unwisely advocates the use of whole life policies as the next ATM--insurance is a RISK TOOL, not a savings account!"


  • Speaking of life insurance, here are some thoughts for those considering a policy. Patrick presents How Much Life Insurance Do You Need? to replace your income should you pass away and FMF presents Seven Life Insurance Mistakes You're Probably Making that one should avoid.

  • Health
  • Cesarean Risks at Colorado Health Insurance Insider highlights the importance of truly informed consent, and points out the ways that women are swayed (manipulated?) towards opting for repeat c-sections in the name of safety, without being truly informed about the risks on both sides of the issue.


  • Jason Shafrin presents Adaptive Partial Drug Approval posted at Healthcare Economist, saying, "Should the FDA move towards a model where drugs are approved quicker, but undergo more intensive post-approval monitoring? The Healthcare Economist weighs in."


  • The Bad and the Ugly of Disease Management ROI and How Al Lewis of the Disease Management Purchasing Consortium Wants to Fix It at Disease Management Care Blog offers a better method to analyze if programs are really reducing the incidence of disease and providing claimed savings.


  • David Williams presents Hygienic door handles: the final frontier of bathroom automation? posted at Health Business Blog, saying, "Risk mitigation reaches the bathroom door handle!"


  • Henry Stern, LUTCF, CBC presents DNA vs PAP posted at InsureBlog, saying, "Will replacing traditional PAP smears with a simpler DNA test reduce the risk of cervical cancer? InsureBlog's Henry Stern has the surprising answer."


  • C. Ladsila, writing at the Health Related Fitness blog, discusses a new study casting doubt on the efficacy of BMI (Body Mass Index) as a primary gauge of one's risk of developing heart disease.

  • Business

  • An Immodest Proposal posted at Aaron Rogier makes "a bold suggestion for supplanting that paradigm used to warrant financial markets." Specifically, Aaron believes the current financial crisis may have been prevented if people had rigorously inspected the knowledge used to construct risk models.


  • Andrew Reynolds presents Economic Capital - a common currency of risk posted at Banking and Risk Management in Australia, which discusses how economic capital is used by financial institutions to determine risk.

  • Personal

  • Ask yourself: Do you feel lucky today? at Worker's Comp Insider shares how fears and risks are not necessarily related. Julie Ferguson takes a look at your odds and relative risk of danger - from shark attacks to cardiac events. You might be surprised to learn who the most dangerous person in the world is.


  • While identity theft isn't fatal, it is a fear of many people. Silicon Valley Blogger presents Prevent Identity Theft: Some Credit Report Monitoring Services and Options and Nickel presents How to Protect Yourself from Identity Theft and E-mail Scams.
  • This concludes the 76th Edition of the Cavalcade of Risk.

    This is not financial or risk management advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, April 21, 2009

    Links to Carnivals from April 14 - 20, 2009

    Here are links to Carnivals in which My Wealth Builder participated from April 14 to April 20, 2009:

    Festival of Frugality

    Carnival of Financial Planning

    Festival of Stocks #137

    Carnival of Family Life

    For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial, investment or family advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Monday, April 20, 2009

    4/20/09 Stock Position Update - Up as the rally continues

    Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list, the 10/20/08 Buy List, or the buy list of 1/12/09. On 3/18/09, I sold the 50 shares of Southwestern Energy (SWN) that I bought on 3/5/09. While the rally has continued, these stocks are no longer keeping pace, which I don't think is a good sign for the rally extending much further. If any position get closes to breaking even, I will likely sell the stock.

    During this week, I plan to update my buy list based on the modified Unemotional Investor Growth System.

    The portfolio rose 2.6% this week versus .6 to 1.5% increase for the market. The energy stocks were down a little this week. The overall portfolio is down 21.1% and the remaining holdings are down 38.0%. The portfolio is now way above the previous bottoms that occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

    For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

    From My Wealth Builder 7/7/08 and 1/12/09 Buy List
    Stock [purchase date]SharesPurchase Price

    Price on 4/17/09

    Range Resources(RRC) [7/10/08]*50

    $58.17

    $42.58

    Potash (POT) [7/18/08]*10

    $215.09

    $86.77

    Southwestern Energy (SWN) [7/18/08]*50

    $39.46

    $33.71

    Potash (POT) [7/24/08]*10

    $192.02

    $86.77

    Southwestern Energy (SWN) [3/5/09]*50

    $29.44

    sold on 3/18/09 @ $30.52


    *Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. After received a buy signal on 1/12/09, Southwestern Energy received a second sell signal on 3/6/09. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

    At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock.

    From My Wealth Builder 7/7/08 Short List
    Stock [short date]SharesShort Price

    Price

    Las Vegas Sands (LVS) [7/7/08]100

    $38.10

    closed 7/11/08 @ $33.69


    I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

    At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

    On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling a weekending low of $1.77 on 3/6/09. It closed at $5.03 on 4/17/09. It's too bad I didn't hold the short position until now :-)

    The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 4/17/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8131.33, 1673.07, 869.6. All three indices have risen significantly from lows in March 9, 2009. The Dow and S&P 500 declines are -6.33% and -2.9% respectively year to date. The Nasdaq is now up 6.09% for the year.

    Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. I cashed in another 5% of one of our managed funds, because I believe there will be a pull back soon. However, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

    Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern Energy in my trading account. The managed accounts are long Hess, Potash, Range Resources, and Sears Holdings.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Sunday, April 19, 2009

    Reducing My Work Schedule

    After publishing an article every day but one since November 25, 2006, I plan to cut back to three or four posting per week for My Wealth Builder during the next few months. Here are my reasons for doing so:
  • Enjoy this summer. This summer may be the last one before our daughter enters kindergarten. We're still wrestling with the decision on whether to hold her back since her birthday is in the borderline month. If she should enter kindergarten, I'd like to have extra time to spend with her doing fun activities and prepping her for school.


  • Worry free vacations. A daily posting schedule puts an unneeded burden on my vacations, as I try to publish every day even when I'm away. While I have been able meet my obligations to date, I'd like to have vacations where I don't need to think about My Wealth Builder.


  • Put some of my ideas into action. This blog has been helpful for me to think through my personal finances before and after early retirement. Some of the ideas will require significant effort to effectively put them in place. Writing fewer articles will allow me to spend more time bringing the ideas to life.


  • Avoid repeating previous topics. Finally, after publishing 1151 articles to date, it has become more challenging to find new topics on which I have not written. While I think good personal finance principles are timeless, I also don't want to be endlessly covering the same topic. By reducing my work and engaging in other interests, I hopefully will discover new topics and ideas in the area of personal finance.
  • So if you are a regular reader, don't be surprised when you no longer see an article from My Wealth Builder every day. Also, don't be surprised if I miss a whole week once in a while. I won't be missing in action, just slowing down a bit so I can work on other priorities and discover new topics for future postings.

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial or blogging advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Saturday, April 18, 2009

    My New Approach to Applying for Part Time Jobs - Qualification Deflation

    Given my lack of success in getting part time jobs, I've decided that part of the problem may be that I'm overqualified, causing hiring managers to dismiss my application. As an experiment, I'm going to revise my application for part time jobs to downplay my qualifications, without lying. Here are the two areas in which I will make revisions:

  • Career history. My last full time position, prior to early retirement in 2007, was manager of a Research and Development (R&D) organization at a Fortune 100 company. I suspect that some hiring managers prefer to not have an experienced manager working for them in an entry level part time job. In my next application, I plan to revise my last full time position to "researcher" or "scientist" in an R&D organization.

    In addition, I will also emphasize my most recent job, which is a part time seasonal role I have been doing for the past couple years.


  • Education. Having a degree from Princeton University probably isn't helping much either. I had briefly considered removing the information from my part time job applications, but decided that would be lying. I decided on an alternative approach of using a former name of the university, The College of New Jersey, which was the official name of Princeton until 1896. For most managers hiring part time employees, a degree from The College of New Jersey is probably less intimidating than a degree from Princeton.

    I thought this option was very clever, until I found out that Trenton State College changed their name to The College of New Jersey in 1996. I guess I can remain truthful by specifying I attended The College of New Jersey located in Princeton, NJ :-)
  • Of course, I really don't know for sure if my (over)qualifications on my application are keeping me from being offered a job. However, being a former researcher in R&D, I thought it would be interesting running the experiment and observing the outcome. Best case, I get an offer or two for a part time job. Worst case is that someday I will be promoted to a significant level, found out and then dismissed for downplaying my experience and qualifications on my application :-)

    For more on Reflections and Musings, check back every Saturday for a new segment.

    This is not financial, career, or job application advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Friday, April 17, 2009

    Playing the Hand that's Dealt

    While I would have preferred a continuing bull market, it would have been too easy to have a successful early retirement. I would have become too complacent and probably would have eventually taken too much risk or possibly invested in an investment scheme:-) The economic and stock market downturn have reinforced that there are no guarantees in life, or retirement. Financial success is not as simple as "investing in a diversified stock portfolio"

    The past year has given me ample opportunities to sharpen my financial skills during a recession and bear market. Hopefully, we'll be better positioned to take advantage of an economic and stock market recovery when it happens. Here are some of the actions that we have taken:

  • Convert traditional IRA fund to Roth IRA funds. While the earnings of both IRAs are tax free, only distributions from Roth IRAs are tax exempt. Distributions from traditional IRAs generally are taxable, to the extent that non-deductible contributions are exceeded.

    Since most stocks are down from 2007, we can pay less takes for the same amount of shares converted. While we are paying taxes on the amount converted to a Roth, future earnings will be 100% tax free, both when earned and at withdrawal. Thus,when the market recovers, we won't be paying taxes on the gains for stocks transferred to a Roth IRA.

    In addition, we were able to transfer funds at a effective tax rate of 5%, which is much lower than the 25% marginal tax rate I expect will have in the future.


  • Buy stocks on sale. While my initial attempt to time the bottom did poorly, I think the market has turned, giving investors the opportunity to buy a number for great companies at sale prices. I still believe that financial stocks are toxic and am not buying them. However, there are a number of great companies that are down 20 to 70% from their all time highs.

    Of course, not all stocks that have declined significantly are good buys. My focus is to buy stocks that I think will emerge stronger from this recession, such as Amazon (AMZN) and Monsanto (MON).


  • Reduce taxes. Since our main source of income is from investments, we can manage the level of taxable income received to take advantage of various credits, income adjustments and special tax rates. As a result, we now eligible to qualify for several tax credits, 0% tax rate on long term capital gains, and over half of the adjustments to income.

    Someday, I hope to pay zero federal taxes, as over 40% of tax filers already do legally. It was possible to do it for 2008, except we determined it was a better financial decision to do Roth IRA conversions and pay taxes.

    In addition, with home prices falling, we have filed a request to reduce the appraised value of our home, which will reduce our annual property taxes.

  • At this time, I still believe that the economy and stock market will recover in the next year, if not sooner. The above actions should help us get more benefits from the recovery than if we had not done them.

    Disclosure: At time of publication, we own shares of Amazon and Monsanto.

    For more on Reaping the Rewards, check back every Friday for a new segment.

    This is not financial, investment, tax or retirement advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Thursday, April 16, 2009

    On When to Peak

    People develop and progress at different speeds. Nowadays, the norm is to want to progress as fast a possible. Kids are spending a lot of time, effort and money to accelerate their development in sports, the arts and academics. As a result, some are peaking early in life. However, I believe that demonstrating one's best performance later in life may be desirable. Here is my personal experience with peaking in different areas:

  • Sports. In my experience, kids that mature earlier are often better athletes in their youth. They are faster, stronger or more coordinated. However, an early advantage may not be maintained, resulting in some kids having their best years before becoming a teenager.

    I remember many of the star players from my youth football and baseball leagues having their best years before junior high. Only a few went on to even play in high school, much less be a star player.

    To me, peaking in high school or college is the best, for those that don't expect to make a career in sports.

  • Career. I've seen stars rise quickly in their first 10 years and never get another promotion. While this is not bad financially (being paid 20 years at a high level), it can be frustrating for an individual who expected to advance at the same rate throughout his career.

    On example is the child star in television or movies. Catching Up With the Cosby Kids shares how the actors have had varying success after the The Cosby Show, with none reaching the level they experienced as children.

    So far, my career peaked in my early forties. I'm hoping for a second peak as I explore next phase opportunities in my early retirement :-)

  • Life. The popular and cool kids from high school seem to have it made early in life. My mom would always remind me that there was life after high school and that it was important to strive for success in the future.

    Since I consider myself a late bloomer, I have a soft spot for people who experience success later in life. The story of 47 year old Susan Boyle auditioning on Britain's Got Talent (their version of Idol) is a great late bloomer story. The video of Susan Boyle's audition brought tears to my eyes.




  • With the exception of sports, I like to think that my peak still hasn't been reached, especially since I consider myself a late bloomer. Psychologically, I feel better thinking my best days are ahead of versus behind me :-)

    For more on Crossing Generations, check back every Thursday for a new segment.

    This is not financial, parenting or life advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, April 15, 2009

    Owe Taxes? - Options for making payment

    When taxes are owed with a tax return, there are several options for making payment according to the IRS.

  • Send full payment by April 15. If the money is available, send the payment to the IRS by the deadline of April 15. A check or electronic direct debit can be used. This option avoids penalties, interest, and getting future notices from the IRS.


  • Make partial payment by April 15. If the full payment cannot be made, the IRS site recommends to file the return by the deadline and "pay as much as you can to avoid penalties and interest."


  • Request a short term extension. The IRS can give extensions up to 120 days to make full payment of taxes owed. Using this option will reduce interest and penalties versus paying through an installment agreement or taking longer to pay. Here's some more information at IRS.gov and the online application for an extension. For those who prefer to talk to someone, call 1-800-829-1040.


  • Make installment payments. The IRS can set up a payment schedule. Use of this option costs either $52 or $105 depending on the payment method chosen. Form 9465 is used to apply for installment payments. Also, the online application can also be used for installment payments.


  • Pay by credit card. The IRS accepts payment by credit card. No fee is charged by the IRS, but the credit card company will charge a "convenience fee" based on the amount charged.

  • Overall, other than paying in full, I think the best option is to request an extension. There is no fee, and the option let's the IRS know the taxpayer is aware of and trying to pay taxes owed. Making a partial payment would be my second choice. However, I would expect an IRS notice for the balance, plus interest and penalties at a future date. Personally, I would avoid using a credit card since it doesn't really eliminate the tax debt. To me , the option just transfers the owed taxes from the government to a credit card company.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial or tax advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, April 14, 2009

    Links to Carnivals from April 7 - 13, 2009

    Here are links to Carnivals in which My Wealth Builder participated from April 7 to April 13, 2009:

    Carnival of Boomer and Seniors News You Can Use

    Money Hacks Carnival #59

    Carnival of Personal Finance #200

    Carnival of Taxes #52

    Carnival of Family Life

    For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial or family advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Monday, April 13, 2009

    4/13/09 Stock Position Update - Down during an Up Market

    Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list, the 10/20/08 Buy List, or the buy list of 1/12/09. On 3/18/09, I sold the 50 shares of Southwestern Energy (SWN) that I bought on 3/5/09. While the rally has continued, these stocks are no longer keeping pace, which I don't think is a good sign for the rally extending much further. If the position get closes to breaking even, I will likely sell the stock.

    During mid April, I plan to update my buy list based on the modified Unemotional Investor Growth System.

    The portfolio fell 3.2% this week versus 1.5-3% for the market. The energy stocks were down a little this week. The overall portfolio is down 22.1% and the remaining holdings are down 39.6%. The portfolio is now way above the previous bottoms that occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

    For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

    From My Wealth Builder 7/7/08 and 1/12/09 Buy List
    Stock [purchase date]SharesPurchase Price

    Price on 4/9/09

    Range Resources(RRC) [7/10/08]*50

    $58.17

    $42.72

    Potash (POT) [7/18/08]*10

    $215.09

    $85.50

    Southwestern Energy (SWN) [7/18/08]*50

    $39.46

    $31.21

    Potash (POT) [7/24/08]*10

    $192.02

    $85.50

    Southwestern Energy (SWN) [3/5/09]*50

    $29.44

    sold on 3/18/09 @ $30.52


    *Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. After received a buy signal on 1/12/09, Southwestern Energy received a second sell signal on 3/6/09. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

    At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock.

    From My Wealth Builder 7/7/08 Short List
    Stock [short date]SharesShort Price

    Price

    Las Vegas Sands (LVS) [7/7/08]100

    $38.10

    closed 7/11/08 @ $33.69


    I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

    At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

    On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling a weekending low of $1.77 on 3/6/09. It closed at $4.47 on 4/9/09. It's too bad I didn't hold the short position until now :-)

    The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 4/9/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8083.38, 1652.54, 856.56. All three indices have risen significantly from lows in March 9, 2009. The Dow and S&P 500 declines are -6.92% and -4.37% respectively year to date. The Nasdaq is now up 4.79% for the year.

    Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. I cashed in 9% of one of our managed funds, but plan to trickle in around 25% of the funds after this bear market rally ends. However, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

    Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Hess, Potash, Range Resources, Sears Holdings and Williams Companies.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Sunday, April 12, 2009

    I'm Applying for a Real Job

    OK, the impact of the economy on my retirement portfolio is causing me to take some drastic action. Up until now, we've been taking small interventions, such as applying for part time jobs and cutting back on expenses, to enable me to continue with early retirement. The first quarter 2009 update showed almost a 44% decline in our savings since my early retirement in October, 2007. While we did have a margin of safety in our savings, we weren't prepared to cover a permanent 44% drop.

    Fortunately, to prepare for such a possibility, I had updated my resume right after taking early retirement. In addition, I took a few classes on returning to the job market, in case I should ever need them. Then last month, I identified a job advertisement that matched my experience and skills, although in a different product category.

    This week, I will submit my first application for a full time job since graduating from college. Of course, with this economy, I don't have high expectations for getting offer. However, this will be a first step to getting back in the job market game. And at this point, I am keeping all options open, including reversing my early retirement :-)

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial, retirement or job advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Saturday, April 11, 2009

    A Reminder on Why I Shouldn't Buy Ultrashort ETFs

    Ultrashort ETF Losses Go to "Money Heaven" is a reminder of why I should not buy 2X inverse ETFs to hedge against a market decline. As the article's analysis shows once again, the returns of 2X inverse ETFs do not directly correlate with a long term 2X inverse return of the corresponding index. The reason is that 2X inverse ETFs are reconciled on a daily basis, and thus correlate to index changes on a daily basis. As a result, one can be right about the downward long term direction of an index and still lose money on a 2X inverse index.

    I learned about this phenomenon the first (and last) time I purchased 2X inverse ETFs. Fortunately, the abrupt market decline in February, 2009 allowed me to exit these positions profitably. While owning them, I decided to not invest any further in 2X inverse EFTs, with the exception of the Ultrashort Proshares Financial ETF (SKF), if there were a V-shaped rebound in financials.

    Since March 10, 2009, financial stocks have had V-shaped recovery and the Ultrashort Proshares Financial ETF has fallen from a closing high on of $250.07 on March 6, 2009 to a closing low of $64.88 on April 9, 2009. (Luckily, I didn't buy at $100 as I had originally planned :-) Despite the good news of the past two weeks, I still think that there are issues in financial stocks that will come to the surface in the next couple months.

    If the Ultrashort Proshares Financial ETF falls below $50, I will be tempted, perhaps against better judgement, to make a 20 share purchase as a short term hedge against the financial stock decline. Then again, I may read the above article again, and decide against a purchase, since it is way too much like gambling instead of investing :-)

    For more on Reflections and Musings, check back every Saturday Sunday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Are we there yet?

    "No one rings a bell at the bottom of the market." ~ stock market adage

    The distribution of market sentiment is shifting and becoming more evenly spread among the three perspectives shown below:
  • After five weeks of an advancing market, some people are becoming optimistic that the economy is improving and the bear market is over. After several months of doom and gloom,the Obama administration now says the economy is showing "glimmers of hope." Bank announcements of a profitable first quarter are causing investors to be more positive about financial stocks and the market. Also, a number of analysts are becoming more positive.


  • Ben Stein offers a more middle of the road view in Stocks and Housing: Are They Putting in a Bottom? The article offers two opposing views, i.e. the economy and stock market has rebounded and is recovering or both are still due to fall further after the rally. Mr. Stein's solution is to play both sides by investing 50% in equities and 50% in U.S. Treasury bonds. This allocation would have good upside potential in bull market while reducing the downside risk if the bear market resumes.


  • Jim Jubak offers the pessimistic view in Is market turning? Stay skeptical. The bottom line is that Mr. Jubak believes the current rally is of the bear market kind, and that there will be opportunities to purchase equities at lower prices in the future. For reference, his portfolio is 49% in cash.
  • While I am more optimistic psychologically, my analytical (skeptical) side agrees with Mr. Jubak. The stock market has advanced too high, too fast and looks more like a bear market rally than a bear market bottom to me. In the past two weeks, I've taken the opportunity to sell some purchases from February and March, 2009 for gains, and unload the financial stocks purchased in October, 2008 for losses. In addition, I've sold some of the gains in our managed accounts, while maintaining our core minimum investment amounts.

    If I'm wrong, and the market continues to advance, we will still have enough invested to participate in the rebound. However, if I'm right and the market declines again in the near future, we will have cash reserves to reinvest in the market for the next rally.

    For more on Reflections and Musings, check back every Saturday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Friday, April 10, 2009

    Five Signs of Getting Old

    I knew I was getting old when the following events and thoughts were happening to me:

    1. Job applicants were born after I graduated from college. Yes, I felt old when the candidate I was interviewing had a birth date after my graduation year. It made me realize I was potentially as old as the applicant's parent.


    2. I could have never been that the green. Sometimes I can't believe how inexperienced new hires are about the working world. I don't remember ever being that green, but I probably was.


    3. Early thirties seems young. On of my first supervisors was 33 when I started working in his group. He had already been married 10 years and had three kids. He seemed really old to me. Now I think of 33 as being pretty young.


    4. Teenage kids exceed my sports skills. Up until my late thirties, I could still hold my own against college and high school kids in games like rugby, touch football and tennis. Although I haven't tested myself in rugby or football recently, I now regularly lose to high school kids who play on a tennis team.


    5. I'm sore after light physical activity. It used take a game of football or rugby to cause my body to be sore. Nowadays, it seems I'll be noticeably sore after playing a set of tennis, mowing the grass or even trimming tree branches.
    Of course, there isn't any way to reverse the natural aging process. However, I have found that by being around young children, I tend to feel much younger than I am :-)

    For more on Reaping the Rewards, check back every Friday for a new segment.

    This is not financial or aging advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Thursday, April 09, 2009

    Privilege and Responsibility

    Our 4-1/2 year daughter has never been much of an eater. She often leaves over half of her meals on the plate, claiming she is no longer hungry. While this is a minor irritation at home, I consider it a bigger issue when eating out. Specifically, I don't like paying for an overpriced child's menu item, only to have her take one or two bites. Our solution usually is to have her share a meal with a parent.

    For our last few outings, our daughter has accepted that she would share a meal. However, today at lunch, she was adamant about ordering the macaroni and cheese kid's meal. Just having some french fries from my meal wasn't no longer going to suffice. Of course, we could have held our position and not let her order. Instead, we accepted the opportunity to make this a teachable moment on privilege and responsibility.

    We let her know that she could have the privilege of ordering her own lunch. However, it was her responsibility to finish the meal. We told her if she didn't finish her meal, that she would lose the privilege of ordering in the future when eating at a restaurant.

    We were pleasantly surprised by her response. Not being a fan of losing privileges, our daughter did a great job of eating her meal. In fact, my spouse was satisfied when the meal was three quarters finished. However, being the tough negotiator that I am, I encouraged her to eat 100%, which she did, apparently understand the responsibility she had.

    At the end of the meal, I think everyone was happy. We all had a great lunch. Our daughter was able to order her own lunch. She finished the entire main dish. I didn't feel like we wasted money on a kid's meal. Most important, I think our daughter received a good life lesson on privilege and responsibility.

    For more on Crossing Generations, check back every Thursday for a new segment.

    This is not financial or parenting advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, April 08, 2009

    A Bailout for Good Behavior - Great Bargains

    I've noticed that a benefit of the current recession is there are lots of great bargains available for those that have the funds. Here are some of the bargains that I've read about or experienced myself:
  • $500k homes now selling for $200,000 at CNN.com describes how one couple was able to buy a home in California for $250,000, which sold for $550,000 two years ago. The real estate collapse has allowed them to own a home they previously couldn't afford, at a reasonable price.

    Although we are not looking for a house, I have taken the opportunity to contest this year's assessment of our property by the county auditor, which hopefully will help lower our annual property tax.


  • Restaurant deals. In our area, restaurants seem to still be doing well, based on my observation of parking lots on weekends. Recently, we were unable to get a reservation on a Saturday night a restaurant by my in-laws. However, many casual to upscale restaurants still seem to be offering great deals, including set price menus, buy one get one free, $10 gift certificates with no minimum purchase. One of my favorite restaurants just sent me a gift certificate for $50, with a two entree minimum.


  • Hotel deals. A nearby casino, in another state, sent me a promotion offering a free weekday overnight stay with complementary dinner include. My spouse and I decided to try their offer, especially since there are a couple attractions in the area we can visit. Also, I get to test my understanding statistics and probabilities theory on the craps table:-)

    There are also probably a lot of other travel discounts offered nowadays. However, I haven't personally looked into this specific area.


  • Mortgage rates. In our area, I've seen 15 year fixed rates as low as 4.60% and 30 year fixed rates as low as 4.90%. I am predicting that 30 year mortgage rates will fall below 4.5%. Since our current mortgage is a 30 year fixed at 5.375%, I'm waiting for 30 year fixed rates to be 4.5% or less before refinancing.


  • Promotional interest rates. The local banks are offering promotional interest rates to attract funds. I was able to get 3.50% interest for six months at my bank. We promptly moved all our cash funds to our savings account. When the promotion expired, I inquired on the availability of alternative interest rate options. The branch decided to give us a special 1.75% interest rate for another three months.
  • Except for buying another home, we are taking advantage of bargains when we can. For now, we using no more money than we spent in the past. However, the bargains either enable us to spend less for the same activity or do more activities with the same money.

    For more on The Practice of Personal Finance, check back every Wednesday Thursday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, April 07, 2009

    Why Do Small Businesses Fail?

    Yesterday, I attended a seminar by a local chamber of commerce on Starting a Small Business. One of the slides presented was titled, " Why Do Businesses Fail?" The reasons resonated with me and I thought it would be worth sharing the list here:
    1. Do not plan properly.

    2. Do not monitor financials.

    3. Do not understand pricing.

    4. Do not monitor cash flow.

    5. Do not borrow properly.

    6. Do not manage growth.

    7. Do not prepare for the unexpected.
    Interestingly, the reasons were mostly about execution, specifically financials and planning. The speaker said that many small business owners really don't have a good idea about the business's financial situation. Noticeably absent from the list were do not have enthusiasm, do not have good ideas and do not work hard enough.

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial or business advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Links to Carnivals from March 31 - April 6, 2009

    Here are links to Carnivals in which My Wealth Builder participated from March 24 to March 30, 2009:

    Carnival of Education

    Carnival of Financial Planning

    Carnival of Personal Finance #199

    Carnival of Family Life

    For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial or family advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Monday, April 06, 2009

    Wealth Builder Ratios - Q1 2009 Update

    Here is our Q1 2009 Wealth Builder Ratio update. 2009 continues to be brutal for our financial plans and goals. Through March 31, 2009, the Dow was off 13.30%, the Nasdaq down 3.07% and the S&P 500 down 11.67%. Due to the leverage of company stock options, our retirement savings have fallen more, with losses of 19.6%.

    For more details on the relevance of these ratios, please see this How Much Is Needed To Be Wealthy - The NUMBER.


    Ratio and Target

    Q4 2008

    Q1 2009

    Comments

    Investment
    Income to Salary

    Target=0.8 2007=3.41 2008=-5.47

    -5.40
    -3.04

    The stock market perfomance for the first quarter of 2009 signficantly reduced our returns. This year's declines have caused our portfolio to lose 3.04 times my pre-retirement salary. Most of the loss occurred in my company stock which fell significantly during the first quarter.

    Fortunately, we do not yet need to sell any investments for our retirement expenses. At this point, we are staying invested in the market, and taking the opportunity to increase our cash position during rallies.

    Savings
    to Salary

    Target>20
    2007=23 2008=16.7

    16.7
    13.6

    The significant loss versus the ratio of 16.7 in 2007 is due to my company stock, which was down 23.3% durng the first quarter. Thus, due to the leverage of stock options, our total investment losses were -18.2%.

    Debt to Salary

    Target=0
    2007=1.51 2008=1.46
    1.46
    1.45

    Currently, our only debt is our home mortgage. Since we retired, we have not made our usual 4% principal payment in January. We were waiting for the market to recover before selling some investments to cover this payment and the recovery didn't happen.


    My financial goals for 2009 are:

    1. Continue to maintain an Investment Income to Salary ratio > 0.8. (off track)

    2. Maintain a Savings to Salary ratio of 20. (off track)

    3. Reduce my Debt to Salary Ratio by 0.1 to 1.36. (off track)

    (For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)

    Both #1 and #2 were directly correlated with how well our stock, bond, and CD investments returns. Due to the bear market in 2008, our stock, bond, and CD investments have lost -6.5%. Including stock options, our investments fell -18.2%. This compares with an S&P return of -11.67% and a Dow return of -13.30% through March 31, 2009. With this year's poor market performance, we did not yet make an additional payment equal to about 4% of our mortgage principal.

    It has been very challenging retiring at the beginning of a bear market. Our short term expense (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to resume an upward trend, hopefully in the next 1 to 2 years. At this point, I am very concerned about reducing our withdrawal rate, and am looking at possibilities of generating regular streams of income through part time employment, and if needed, full time employment.

    Hopefully, this will be the rebound year, as I propose in my 2009 economic predictions, and allow our retirement investments to recover. Otherwise, it's back to work I go :-)

    For more on Strategies and Plans , check back every Monday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    4/6/09 Stock Position Update - Relatively Flat during an Up Week

    Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list, the 10/20/08 Buy List, or the buy list of 1/12/09. On 3/18/09, I sold the 50 shares of Southwestern Energy (SWN) that I bought on 3/5/09. While the rally has continued, these stocks are no longer keeping pace, which I don't think is a good sign for the rally extending much further. If the position get closes to breaking even, I will likely sell the stock.

    During mid April, I plan to update my buy list based on the modified Unemotional Investor Growth System.

    The portfolio rose 1.4% this week versus 3-5% for the market. The energy and commodity stocks showed little change this week. The overall portfolio is down 20.8% and the remaining holdings are down 37.6%. The portfolio is now way above the previous bottoms that occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

    For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

    From My Wealth Builder 7/7/08 and 1/12/09 Buy List
    Stock [purchase date]SharesPurchase Price

    Price on 4/3/09

    Range Resources(RRC) [7/10/08]*50

    $58.17

    $45.11

    Potash (POT) [7/18/08]*10

    $215.09

    $85.71

    Southwestern Energy (SWN) [7/18/08]*50

    $39.46

    $32.32

    Potash (POT) [7/24/08]*10

    $192.02

    $85.71

    Southwestern Energy (SWN) [3/5/09]*50

    $29.44

    sold on 3/18/09 @ $30.52


    *Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. After received a buy signal on 1/12/09, Southwestern Energy received a second sell signal on 3/6/09. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

    At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock.

    From My Wealth Builder 7/7/08 Short List
    Stock [short date]SharesShort Price

    Price

    Las Vegas Sands (LVS) [7/7/08]100

    $38.10

    closed 7/11/08 @ $33.69


    I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

    At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

    On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling a weekending low of $1.77 on 3/6/09. It closed at $4.48 on 4/6/09. It's too bad I didn't hold the short position until now :-)

    The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 4/3/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8012.19, 1621.87, 842.5. All three indices have risen significantly from lows in March 9, 2009. The Dow and S&P 500 declines are -7.76% and -6.01% respectively year to date. The Nasdaq is now up 2.84% for the year.

    Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. I cashed in 9% of one of our managed funds, but plan to trickle in around 25% of the funds after this bear market rally ends. However, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

    Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Hess, Potash, Range Resources, Sears Holdings and Williams Companies.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Sunday, April 05, 2009

    4/5/09 Bottom Fishing Portfolio - Final Report

    Since October 3, 2008, my attempts to buy stocks near a bottom have failed miserably. My first attempt was to buy financial stocks, which have since fallen 50 to 90%, and an agricultural stock, which has fallen 10%. I have also experimented with buying calls on auto stocks and financial stocks, also without success. I've had the most success selling put contracts to open on Monsanto (MON) and Energy Conversion Devices (ENER), which earned a few hundred dollars to slightly offset the losses. In addition, I have had some success buying and selling stocks in February to March, 2009 that I believe will emerge well from the recession, e.g. Monsanto, Amazon (AMZN), and Energy Conversion Device.

    In mid March, I took the opportunity to sell most of my positions during the bear market rally, even if it meant taking some losses. (If I had waited until last week, I would have reduced my losses in the financial stocks by about 12%.) In late March, I sold the PNC (PNC) leap call for a small profit At this point, I only have three positions in this portfolio, Monsanto, Energy Conversion Devices, and one PNC call. Although the financial stocks did rally again last week, I decided to hold the remaining PNC call to try to sell at a profit this week. I will likely hold onto Monsanto and Energy Conversion Devices for the longer term.

    Overall, this portfolio is down 20.17%. Financial stocks, which had losses of 52 to 84%, were the main reason for the negative returns. In the table, the sales with gains are in blue and the sales with losses are in red.

    Bottom Fishing Portfolio
    Stock or Option [purchase date]SharesPurchase Price

    Price on 4/3/09

    Bank of America(BAC) [10/3/08]100

    $38.00

    sold on 3/20/09 @ $6.03

    J.P. Morgan (JPM) [10/3/08]100

    $49.74

    sold on 3/20/09 @ $23.71

    Wells Fargo (WFC) [10/3/08]100

    $37.07

    sold on 3/20/09 @ $13.95

    Monsanto (MON) [10/3/08]50

    $88.97

    $81.26

    Ford Dec 5 call (FLA) [12/2/08]1000

    $0.078

    expired 12/20/08 at $0

    Ford Jan 7.5 call (FAU) [12/3/08]1000

    $0.088

    expired 1/16/09 at $0

    PNC May 45 call (PNCEI) [1/20/09]100

    $1.51

    $1.15

    PNC Jan 55 call (WYLAK) [1/20/09]100

    $1.71

    $1.99

    Monsanto (MON) [2/23/09]50

    $76.38

    sold on 3/16/09 @ $81.34

    Amazon (AMZN) [2/26/09]50

    $64.45

    sold on 3/18/09 @ $71.13

    Monsanto (MON) [2/26/09]50

    $80.26

    sold on 3/20/06 @ $83.56

    Amazon (AMZN) [3/6/09]100

    $60.25

    sold on 3/11/09 at $68.87

    Energy Conversion Devices (ENER) [3/6/09]100

    $17.49

    sold on 3/13/09 at $18.46

    Energy Conversion Devices (ENER) [3/20/09]100

    $19.25

    $14.54



    Currently, I have profited from all five our of six put contracts which have been closed, allowed to expired or been exercised.


    Put Contracts Sold Short to Open
    Option [short date]SharesShort Price

    Closing Prices

    Monsanto Nov 60 put (MONWL) [10/3/08]100

    $2.39

    closed on 10/29/08 for $0.91

    Energy Conversion Nov 20 put (EQIWD) [11/12/08]100

    $0.69

    expired 11/21/08 at $0

    Monsanto Dec 40 put (MONXI) [11/20/08]100

    $1.19

    expired 12/20/08 at $0

    Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]100

    $1.39

    expired 12/20/08 at $0

    Energy Conversion Feb 15 put (EQINC) [1/14/09]100

    $0.44

    expired 2/19/08 at $0

    Monsanto Mar 65 put (MONOM) [2/23/09]100

    $1.09

    expired 3/20/08 at $0

    Energy Conversion Mar 20 put (EQIOD) [2/26/09]100

    $0.74

    exercised 3/20/09 @ $20



    Since I am only trying to sell the PNC call, and plan to hold Monsanto and Energy Conversion Devices, this is the final report on the Bottom Fishing Portfolio.

    Disclosure: At time of publication, I own shares of Monsanto, and Energy Conversion Devices. I am long a PNC call contract.

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Saturday, April 04, 2009

    Buy a Stock or a Lottery Ticket?

    With the bear market of 2008/2009, a number of stocks have fallen precipitously into single digit values. Some of the stocks have declined below $1, the price of a lottery ticket. However, just because the price is cheap doesn't necessarily make it a good buy. In fact, with some cheap stocks, I think I'm better off buying a lottery ticket. Here are some of the recent single digit stocks and whether I think the equity or a lottery ticket is a better investment.

    Buy the stock or a lottery ticket?
    Company52 week rangePrice on 4/3/09My Decision
    AIG (AIG)0.33 - 49.50$1.14Lottery ticket
    Citigroup (C)$0.97 - 27.35$2.85Lottery ticket
    Fannie Mae (FNM)$0.30 - 31.67$0.70Lottery ticket
    DryShips (DRYS)$2.72 - 116.43$5.25Flip a coin
    Bank of America (BAC)$2.53 - $4.65$7.60Flip a coin
    General Electric (GE)$5.87 - 37.90$10.94Flip a coin
    Ford (F)$1.01 - 8.79$3.25Stock
    Alcoa (AA)$4.97 - 44.77$8.17Stock
    Dow Chemical (DOW)$5.89 - 43.43$11.00Stock

    For reference, in the lottery game Mega Millions, the chances of doubling, tripling or winning 10 times a bet are 1 in 75, 1 in 141, and 1 in 844, respectively. In addition, there is a 1 in 175, 711,536 chance of winning a several million dollar jackpot.

    In summary, I have very low confidence that AIG, Citigroup and Fannie Mae will recover sufficiently to significantly increase the value of their stock. Thus, buying a lotto ticket offers more return, less stress and more fun :-) For DryShips, Bank of America, and General Electric, I think there is a slightly better chance for recovery than failure. Finally, for Ford, Alcoa and Dow Chemical, I believe there a reasonable chance these stocks will recover when the economy recovers. If the current rally reverts into a market decline again, I will consider buying small positions in these stocks.

    Disclosure: At time of publication, I own shares of General Electric and two lottery tickets.

    For more on Reflections and Musings, check back every Saturday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Friday, April 03, 2009

    Part Time Job Rejection Experiences

    Since taking early retirement in 2007, I've been considering part time jobs, as a strategy to reduce our savings withdrawal rate during the economic downturn. After applying to and being hired for the first part time job, I've been either been rejected or have heard nothing after making an application. Here's a brief summary of my rejection experience:

    Rejection Details

    Job DescriptionExperience NeededApplication ProcessStatus
    Bank tellerHandling moneyBehavior assessment test, interviewRejection letter received after two weeks
    Fast food restaurant crewNoneOn-line application and assessment testNo contact after two months.
    Park staff NoneApplication at job fair and interview with supervisorNo contact after two months.
    Census bureauPassing a qualification testTook test and scored a 98 (1 wrong answer)No contact after two months.
    Kids entertainmentTeaching experienceApplied on-lineInitially contacted for an interview via e-mail and then no further contact.

    Being rejected for a job is a new experience for me. Since being in high school, I had only been rejected for two jobs for which I had applied. As a result, I am changing my approach of selectively applying to jobs in which I had some interest in the role or the company, which worked for the first part time job I got. I expect I will need to apply to more part time job opportunities since my job offer success rate fallen to 15% or less. If I should be lucky enough to get multiple offers, then I will be selective again :-)

    For more on Reaping the Rewards, check back every Friday for a new segment.

    This is not financial or part time job advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Thursday, April 02, 2009

    Claiming a Parent as a Dependent on a Tax Return

    With more children caring for or providing financial support for aging parents, the question of whether a parent can be claimed as a dependent sometimes arises. I've investigated the possibility and here is my understanding.

    A parent can potentially be a dependent provided they first meet the definition of a Qualifying Relative. Of the four criteria, all parents meet two of the criteria, relationship and not a qualifying child. Here are the other two criteria that must be met to be a qualifying relative:

  • Income - Taxable income must be less than the value of an exemption for the current tax year, which is $3,500 in 2008. Tax exempt income, e.g. municipal bond interest, and social security benefits that are not taxed would not be included. Although Roth IRA income was not specifically mentioned, I assume that it counts as tax exempt income.

    However, pension income and IRA distributions, which are taxable income, would be counted.


  • Support - Taxpayer claiming the parent must provide over half the parent's support. For this criteria, tax exempt income is counted towards their support. A tricky part of support is counting the support contribution of a parent's home which has no mortgage.

    It is acceptable if multiple people share in providing over 1/2 of the parent's support. For this case, the people involved would file Multiple Support Declaration, form 2120, to choose which person can claim the dependency for the tax year.
  • Once it is determined a parent is a qualifying relative, three additional criteria must be met. The parent must be a U.S citizen or a resident of the United States, Mexico or Canada, and generally not filing a joint return with their spouse. If they do file a joint return, there are allowable exceptions, e.g. not required to file, and filing only to get a refund. Finally, the taxpayer claiming the parent cannot be a dependent of another taxpayer.

    If all seven criteria are met, then a parent can be claimed as a dependent for tax purposes. However, if one of the criteria is not met, the parent cannot be claimed as a depended.

    Here is some additional information on Qualifying Relatives on About.com and Lawyers.com. As always, consult a tax professional about one's specific situation.

    For more on Crossing Generations, check back every Thursday for a new segment.

    This is not financial or tax advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, April 01, 2009

    A Roth Conversion Strategy For a Declining Market

    With the stock market down, a silver lining recommendation is to consider a Roth IRA conversion of stocks held in a traditional IRA. The common wisdom is that one is only paying taxes on the reduced value of the stock at the time of conversion, and when the market recovers, the gain will be tax free since the stock is held in a Roth IRA. This is a great idea, except when the stock continues to decline after the conversion. In this instance, one is paying taxes on an amount greater than the value of the stock in the Roth IRA.

    Tax Consequences of Roth Conversions
    Converted AmountValue in FutureAmount that is Taxed
    Stock increases in value$5,000$10,000$5,000
    Stock decreases in value$5,000$3,000$5,000

    Of course, if a decline happens, one can avoid paying the tax by reversing the Roth conversion in a process called recharacterization. Unfortunately, one loses the opportunity to convert further funds to the Roth IRA for 30 days or the next tax year which ever is later. This exact issue happened to us in 2008, causing me to recharacterize my Roth conversion.

    In discussions with my financial advisor, he mentioned a Roth conversion strategy that they were using to reduce the risk of paying taxes on losses. They were doing multiple Roth conversions of stock portfolios, and then later choosing to recharacterize the Roth conversion that had declined in value. My build on this idea was to make one of the Roth conversions cash, which would guarantee that at least one portfolio would not decline. Assuming one only wants to keep one Roth conversion for a tax year, the table below show how I would think about keeping or recharacterizing multiple Roth IRA conversions.

    Multiple Roth Conversion Strategy
    Assets ConvertedConversion AmountFuture ValueRecharterization Decision
    Stock Portfolio 1$10,000$5,000Recharacterize
    Stock Portfolio 2$10,000$15,000Maintain Conversion
    Cash$10,000$10,100Maintain conversion when versus Stock Portfolio 1, Recharacterize versus Stock Portfolio 2

    This week I implemented the idea of multiple Roth conversions of equal value with my financial advisor, with one conversion of cash, one conversion of my company stock and one conversion of a managed account. At the end of 2009, I will keep the Roth conversion that is the highest in value and therefore, avoid paying taxes on a conversion amount that is higher than the value in the Roth IRA.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial, tax, or investment advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC