5/11/09 Stock Position Update - 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. Last week, I was able to sell Southwestern Energy (SWN), which was one of the stocks on the first buy list. While the rally has continued, these stocks are only keeping pace, which I don't think is a good sign for the rally extending much further. If any position get close to breaking even, I will consider selling the stock.

I updated the stock picks for the modified Unemotional Investor Growth system with a 5/4/09 buy list that only had one stock, Cognizant Technology (CTSH). For now, I plan to buy Cognizant Technology only if the stock market corrects and the stock falls to $20.

The portfolio rose 4.1 % this week versus 1.2 to 6% increases for the market indices. The overall portfolio is down 15.9% 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]	Shares	Purchase Price	Price on 5/8/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$45.89
Potash (POT) [7/18/08]*	10	$215.09	$96.15
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	sold on 5/8/09 at $40.90
Potash (POT) [7/24/08]*	10	$192.02	$96.15
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]	Shares	Short 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 $10.50 on 5/8/09, significantly rising again last week. The massive rebound of Las Vegas Sands and other poor quality stocks continues to support the current advance is likely a bear market rally.

The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 5/8/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8574.65, 1739, 929.23. All three indices have risen significantly from lows in March 9, 2009. The Dow declines -1.05% year to date. The Nasdaq and S&P 500are now up 10.27% and 3.87% for the year.

Economists 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 gains in 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, and Potash 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

See No Evil...

The rally in financial stocks doesn't make sense to me. From October 3, 2008 to March 6, 2009, financial companies could do nothing right and the stocks were pummeled, with some declining over 90% in that time. Since March 9, 2009, financial companies can do no wrong. All news is considered good news. For example, Bank of America (BAC) needing $34 billion of capital is good news. Many of the banks required to raise more capital saw their stocks rise significantly this week.

I've learned my lesson and I'm not going against the investor sentiment in this rally. On October 3, 2008, I purchased financial stocks and lost a significant amount of money before selling on March 27, 2009. On April 28, 2009, I purchased the Ultrashort Proshares Financial ETF (SKF), only to see it lose 36% in only nine days. For the rest of 2009, I'm going to avoid contrarian investing and follow the trend.

However, in my opinion, this rally has some of the elements of a bubble, specifically optimists are starting to dominate and pessimists are leaving the market. Even Jim Cramer is now saying banks are a buy. Therefore, my plan is to continue selling into this rally. And should the advance become euphoric, I hope I have the presence of mind to cash out of a large portion of our investments :- )

Disclosure: At time of publication, I own shares of the Ultrashort Proshares Financial ETF.

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

On Surviving Early Retirement during the Financial Crisis

Since retiring in my forties in 2007, it seems we've been living through one financial crisis after another. The bear market started in the month I retired. The recession started two months after I retired. On a personal level, our retirement savings have fallen about 40%.

For now, we are still able to maintain our early retirement despite the plunge in the economy and stock market. While challenging, it has still been doable. Here are the elements that I believe have enabled us to survive thus far:

1. Spending discipline. Prior to retiring, we were living on 76% of our take home pay. With the economic decline we are consciously cutting back even further through approaches such as eliminating waste , buying below the regular price, taking advantage of free offerings, choosing only the options we need when making a purchase, and to enjoy what we already have. In addition, we only use credit cards for convenience and pay off the balance each month.
   
   If we weren't used to living below our means, the stock market decline would have been quite a shock to our lifestyle.
   
   
2. Financial cushion. Before retiring, we evaluate a range of savings targets and withdrawal options. We created a margin of safety by retiring after attaining the higher savings target and demonstrating we could live at the lower withdrawal amounts. This approach helped significantly since the stock market decline reduced our savings to the lower target amount, requiring the reduction of expenses to the lower withdrawal rate. In hindsight, we were also lucky to have 3-4 years of expenses in cash, CDs, and bonds.
   
   If we had retired at the lower savings target, with a higher withdrawal rate and 100% equity investments, the stock market decline would have caused a failure of our retirement plans.



3. Good health and very good insurance coverage. My spouse, our daughter, and I have been fortunate to have continued good health during our early retirement. I realize that health expenses can be a wild card, significantly depleting savings if there is a major medical event. Thus, we make additional efforts to eat healthy and exercise regularly. Fortunately, my company has excellent retiree health insurance, which also covers dependents. In addition, my spouse and I have taken out a long term care policy, to cover nursing home stays.
   
   If we had health problems with no medical insurance, I expect it would have been more difficult to stay retired.

At this point, these elements have contributed significantly to being able to maintain our status as early retirees over the past 19 months. While all elements were important, I believe having a large financial cushion has been the most helpful.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Staying Invested but Taking some Gains Off the Table

"Don't fight the tape" ~ Wall Street adage

The stock market rally since the March 6, 2009 bottom has been very generous, advancing about 35% through today. In late 2008, any news was bad news leading to precipitous daily declines in the market indices. Nowadays, every piece of news is viewed as "not as bad as it could be," resulting in a sustained market advance. For example, the leaked stress test results of Bank of America needing as much as $34 Billion of capital was considered relatively good news by investors today. The stock rises $1.85 or 17.07% on the news. I would have never guessed such a response by investors.

While I believe the market will correct soon, I don't want to miss out on a sustained advance, if I should be completely wrong. Therefore, I am maintaining the same amount that was invested in stocks at the beginning of this year. However, when the funds gain 5-10%, I am selling an equivalent amount and taking out the cash. That way, I continue to participate in the market advance, while protecting against an expected decline.

Of course, this strategy will reduce our returns if the stock market continues it's strong rally. However, if the market does correct, I will feel better that some of the gains were taken off the table.

Disclosure: At time of publication, I do not have any position in Bank of America.

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

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

Copyright © 2009 Achievement Catalyst, LLC

I Won't Follow This Advice #5

Occasionally, I read commercially published articles which provide advice very different to what I have found successful in my own experience. I will be highlighting these articles periodically in a "I Won't Follow This Advice" segment. These segments represent my opinion and one should consult a professional before making any decisions. Here's segment #5.

The article Live off the the land -- in the city at MSN.com shares some extreme ideas for hunting and gathering food in urban areas. Some of the more radical options include harvesting edible weeds from yards, catching city game such as squirrels, possums or raccoons, and fishing in urban ponds.

None of the radical options are ones that I would consider, even in times of severe recession. I agree with many of the commenters that eating wild urban flora and fauna has many risks, including pesticides, disease and toxins. To me, the risks are not worth taking for many of the free food options.

Personally, I limit urban foraging to eating vegetables from my father-in-law's home garden, food samples at local groceries and free hors d'oeuvres at happy hours.

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

Photo Credit: morgueFile.com, Clara Natoli

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

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From April 28 to May 4, 2009

Here are the links to the Carnivals in which My Wealth Builder participated from April 28 to May 4, 2009:

Carnival of Pecuniary Delights #4

Carnival of Financial Planning

Festival of Stocks #139

Carnival of Twenty-Something Finances

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, tax or family advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Stock Buy List - 5/4/09

As this bear market rally continues into an eighth week, I've decided to update my buy list, in anticipation of a good buying opportunity in the future. For background, see My Stock Picks for Q1 2007 for a description of the Modified Unemotional Investor Growth system. The Top 10 system is a direct application of the Unemotional Investor Growth system described in the book The Unemotional Investor by Robert Sheard.

I was disappointed that the system yielded only one stock for my buy list. In this update, no stocks passed all the Modified criteria and only one of the Top 10 picks appealed to me. Since I expect there will be a market correction, I will start reviewing the list at least every two weeks, in case the system identifies additional buys.

	My Wealth Builder Buy List - 5/4/09
Stock	System Used	Target Price	Target Shares
Cognizant Technology (CTSH)	Top 10	less than $20	50

At this time, I plan to buy the stock outright if there is a market correction and the stock falls below $20.

Disclosure: At time of publication, I do not own any shares of the stocks mentioned.

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

5/4/09 Stock Position Update - Up as the rally resumes

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.

This past weekend, I updated the stock picks for the modified Unemotional Investor Growth system. I will publish the new picks later today.

The portfolio rose 5.7 % this week versus 2.5 to 4% increases for the market indices. The overall portfolio is down 19.2% and the remaining holdings are down 35.1%. 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]	Shares	Purchase Price	Price on 5/1/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$41.48
Potash (POT) [7/18/08]*	10	$215.09	$90.51
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$38.49
Potash (POT) [7/24/08]*	10	$192.02	$90.51
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. It appears I may get an opportunity to sell the remaining shares of Southwestern Energy this week.

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]	Shares	Short 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 $8.00 on 5/1/09, 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 5/1/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8212.41, 1719.20, 877.52. All three indices have risen significantly from lows in March 9, 2009. The Dow and S&P 500 declines are -5.86% and -2.49% respectively year to date. The Nasdaq is now up 8.89% for the year.

Economists 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

Exploring Options in the field of Real Estate

Tomorrow, I begin the pre-licensing course work to potentially become a Real Estate agent. For the next two weeks, I will take about 2/3 of the prerequisite hours needed prior to taking the real estate licensing exam. After that, I will decide whether I like the field enough to complete the rest of the course work.

My previous experience with real estate has been purchasing two homes and being co-owner of three rental properties. In addition, I have taken some vocational courses in electrical wiring, plumbing and masonry that will help me in evaluating properties. Overall, I think I have good skills for determining the value of a property for investment purposes. When the economy recovers, I believe that real estate in our area will also recover in value.

My main reason for considering a real estate license is to be able to better identify potential good investment properties. I'm not as interested in regularly working with buyers to purchase and owners to sell. However, I'm learning that my approach may not be a sustainable option, unless I plan to invest in multiple properties, which is not the current plan.

I'm learning that the cost of maintaining a license, professional dues, and insurance is the responsibility of each agent, since they are independent contractors, i.e. self employed. The real estate broker covers most of the overhead, in return for 30 to 50% commission split. However, there is still probably a $1500 to $2500 annual out of pocket cost for the agent, which I consider too much for doing a part time business where the income is not guaranteed.

Finally, I also realize that while real estate sales has the appearance of being a flexible part time job, the reality is likely different. As with any commissioned sales position, I know I would be serving the client, which means being available according the client's schedule or needs.

In any event, taking the courses is a low risk option at this time. In addition, it will give me an opportunity to network with real estate professionals that aren't recruiting me for their firm, which will hopeful give me some less biased perspectives.

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

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

Copyright © 2009 Achievement Catalyst, LLC

The Stock Market is due for a Correction

"If it's too good to be true, then it probably is." ~ old saying

Like many others, I hope this rally continues and reaches the highs of 2007 by year end. Ah... if investing were only that easy:-) However, I really don't believe that's going to happen. Instead, I think the current market rally is going to stall soon, providing another buying opportunity for the eventual next bull market. Why? Because I don't think there has been enough improvement since October, 2008 to warrant sustained confidence in the economy... yet. Here's why I think the current market rally is of the bear market kind:

Financial companies are still toxic. The last time I looked, most financial institutions are still holding the infamous CDOs, credit default swaps, and other financial instruments that brought them down in 2008. The financial companies are still carry the toxic assets on their books, which will come back to haunt them in the future.

Right now, these assets are being valued higher than a few months ago, which is helping the financial institutions immensely. However, another economic hiccup will likely drive down the valuations again, and take the financial institutions with them. That hiccup may happen next week when the stress test results are revealed.

Although I swore off buying most inverse ETFs, I am still willing to consider the Ultrashort Proshares Financial ETF (SKF). Last week, I bought a very small position (20 shares) as a hedge against a rapid decline in financial stocks.

Increased government ownership of financial institutions and auto companies. While I have no confidence in the legacy leadership of these companies, I have even less confidence in the government. Unfortunately, I don't believe that government ownership of Citigroup, Chrysler, and GM will turn around those companies. On the contrary, government intervention will just delay the inevitable demise of these companies, with the unintended consequence of extending the recession.

Inflation is coming. Although it isn't here now, I expect high inflation in a few years. With all the government spending, I consider high inflation a foregone conclusions. It's now a matter of if, it's a question of when. However, it seems higher inflation is the minority opinion, for now.

At this point, I continue to stay invested, although I am trimming some positions as the market rises. I am selling profitable positions in our trading account, and selling when our managed accounts gain 5%. For now, I don't have enough conviction to get out of the market completely. However, I do plan to reinvest funds when the correction does occur.

Disclosure: At time of publication, I own the Ultrashort Proshares Financial ETF.

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