Taking Profits Incrementally

During the recent market rally, my company stock has risen significantly, over 25% since mid 2012.  I'm taking advantage of the gains by executing  my company stock options.  However, I've decided not to execute all the stock options at once.   Rather, I've been executing 3-8% of the position at $1-2 increasing increments of limit prices.   That way I reduce some of the risk associated with a pullback and also participate in further gains.

Of course, this approach won't get maximum profits from selling at the top.  However, I long ago resigned myself to never selling at the peak :-)  For me, the next best approach is to be able to sell some near the peak.  So now I will sell part of a position when I think the price is near a peak.  If the stock keeps going up, I will sell an additional part of the position.  This continues until I run out of stock or the price starts declining.

Psychologically, this is a win/win selling approach for me.  If the stock continues to rise, part of the position continues to gain.   If the stock declines, then I have locked in higher profit for part of the position.  Either way, I've made a good profit that validates the purchase of the stock.

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

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

Copyright © 2013 Achievement Catalyst, LLC

My Recycled Wardrobe

Since late 2012, I've voluntarily started a very restrictive diet: vegetarian(except for egg whites and non-fat milk products), no nuts and seeds, and no added oils.   While the change was made primarily for health reasons, a side benefit has been a significant loss of weight. I have lost a little over 10% additional pounds. As a result, I am now able to fit comfortably into clothes from a decade ago when I was just slight heavier than I am now.

Since I still have many of those clothes, which are classic styles, I will be able to recycle much of my wardrobe from that time.  For me this is good news in three ways.  I don't particularly like shopping for clothes and my expense for clothes should be significantly reduced.  In addition, I will eliminate some clutter by determining which of the recycled clothing should be kept, donated or discarded.

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

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

Copyright © 2013 Achievement Catalyst, LLC

Irrational Exuberance May Come Again

"It's déjà vu all over again." ~ Yogi Berra

Low interest rates may once again be creating asset inflation for stocks and real estate, just like in the early 2000s.   This should be no surprise as asset inflation is one of the goals of the Fed via its policy of low interest and quantitative easing.   Unfortunately, the question is probably when, not if, asset inflation becomes a bubble and accompanied by an ensuing crash. 

To me, it feels like the markets are in the early stages of bubble formation.   The market has had a choppy recovery since March 2009, which has kept many investors cautious.   Lately, however, it seems people are become more positive, optimistic and bullish about the economy, stock market and housing. 

Recently,  almost every investor is seeing a nice return in their portfolios and that has me worried. In our case, we've seen most of our investments go up the last three months.  I know our results are mainly due to a rise in the overall market, since I'm not that good of a stock picker. However, when the majority of people start thinking that stock market gains are easy, it's probably time to take profits and prepare for a significant correction.  That time seems to be getting closer every day.

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


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

Copyright © 2013 Achievement Catalyst, LLC

Using Heirlooms

When I was growing up, my parents always took special care of our expensive or valuable possessions.  We only used living room furniture and china with guests, we had covers on our new car seats, and heirlooms were stored versus used.   I can understand the reason.  My parents were born during the depression, grew up during WWII, and had limited financial resources until their late thirties.  So they wanted to be careful with the items of value they had or acquired.

While my parent's approach has preserved the heirlooms for the next generation, we didn't use (or see) many of the items while they were alive.   I only remember using the fine china twice.  My mom rarely wore the silver charm bracelet we gave her.   My dad never used a valuable birthday gift from his relatives.

My sister and I now own all these and other heirlooms.  I've decided that we'll be using the items that I received.   That way we will get to enjoy using the items instead of just saving them for our daughter.
For more on Crossing Generations, check back every Thursday for a new segment.

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

Copyright © 2013 Achievement Catalyst, LLC

It's Only $X Per Day, Week or Month

I try not to be fooled by arguments that present prices in terms of a time frame that make the cost seem low.    One example is life insurance for only 99 cents a day.   Very affordable, who couldn't afford 99 cents?     But that misrepresents the real cost of $362 per year, which may be a different decision about the purchase.

So rather that think of expenses in daily, weekly or monthly costs, I think of total or annual costs.  All those cents or dollars add up to the larger annual costs.  That way I can realistically compare it accurately to our other expenses and make a better financial decision.

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


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

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #112

Welcome to the one hundred twelfth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Harrison presents Link Building Demystified for Small Business (VIDEO) posted at eSpire Marketing, saying, "Find out what link building is, how it can help your business earn more money, and where to get started in this week's edition of Whiteboard Wednesday."

Theresa Torres presents How to Prepare for Selling Your Small Business posted at Business 2 Community, saying, "Whatever your reasons for selling your small business, you need to prepare. Here are the steps you should take before putting your business on the market."

Insuring and Protecting

Bryan presents Best Car Insurance posted at My Best Car Insurance 101, saying, "Written by a former car insurance agent and broker, literally, a complete guide to buying car insurance, from details on factors that affect premiums, the different types of car insurance and when you should buy them, how to compare multiple policies, and discounts you need to apply for. This is a must-read for anyone reviewing their car insurance policy."

Investing

basit presents Fintotal Viewpoint | Measuring Returns - A Simple Technique posted at Fintotal, saying, "Measuring how well our money is doing seems trivial at first sight, but those of us who have tried will testify to what a nightmare it ends up being. A returns number is, surprisingly, very hard to find even in single products. let us look at a way to get a rough measure of returns."

Dividends4Life presents This Buffett Stock Is Back With A Vengeance, Raising Its Dividend 14% posted at Dividend Growth Stocks, saying, "This company is an American multinational diversified financial services company with operations around the world.In 2011, it was the 23rd largest company in the United States. For many years it has been a popular holding of Warren Buffett. Buffett has taken advantage of the stock's weakness by adding to his position each quarter. Who is this company? It is..."

Vytas presents Stock market crash posted at Trend, saying, "You most probably know that 1998 saw tremendous rise in Internet stocks, which led to an explosion of a bubble in 2000. 2007 saw an explosion of a housing market bubble. What bubble we are in at the moment? I do not see any. It is just ‘fools hope’ bubble. All financial system is on the verge of a global crash and market participants are buying shares like crazy. On the other hand, we should not be surprised by that as there usually are most investors on the boat just before a collapse comes. Study all major market booms and crashes and you will quickly see that tendency."

Living Frugally

Steve Jackson presents 10 iPhone Apps for Tracking Household Expenses posted at Housekeeping, saying, "In the world of mobile devices, few are as popular or as versatile as Apple’s powerful iPhone."

Bryan presents Should I Pay Off My Mortgage Early? posted at Gajizmo, saying, "It's the beginning of the year and you are planning your finances. Will you be deciding to pay off your home in the next few years? Does it make sense to do so? Here are the pros and cons of paying off your mortgage early."

Alaina Moore presents 8 Ways to Reduce the Cost of Medications for Kids posted at aupair, saying, "Health care costs are soaring higher every year, and as they do many American workers are watching their health insurance coverage simultaneously diminish."

Super Saver presents Free Prescriptions posted at My Wealth Builder, saying, "Here's a pharmacy that offers select prescription drugs for free to everyone."

Retiring

My Money Design presents What are the 401k Withdrawal Rules for Getting My Money Back? posted at IRA vs 401k Central, saying, "Before putting too much money into your employers retirement plan, it helps to understand the 401k withdrawal rules and when you'll see your money again."

Saving

John Schmoll presents Taking the Plunge: Budgeting and the Entrepreneur posted at Frugal Rules, saying, "Taking the Plunge into running your own business is not one that should be taken lightly. If you’re considering running your own business, make sure you have your budget in place beforehand."

Taxes

Emily presents The Marriage Penalty and Itemizing Taxes posted at Evolving Personal Finance, saying, "I clear up some misconceptions about tax benefits for married people and itemizing deductions on income tax returns."

kurt@mymoneycounselor.com presents Tax Season Identity Theft posted at Money Counselor, saying, "Nearly 1 million tax returns were fraudulently filed in 2011. How can you protect yourself? Or can you?"

Bill Smith presents Beware Of Identity Theft posted at 2011 Taxes, saying, "Couple accused of stealing identities in order to receive over one million in tax refunds."


That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

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

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Continuing to Take Profit

After brief review of our stock investments over the weekend, I've decided to continue taking profits on stocks that have gains and are near the top of their trading channel for the past six months.  Although the market has rallied nicely for the past 2 months, I believe there too much complaceny and the economy is only one event (e.g. poor jobs number, debt ceiling/sequester stalemate, sovereign debt default) away from a major downward shock.

So I am further reducing our equity exposure.  I may end up losing out on some profits, but I will sleep better at night.

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

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

Copyright © 2013 Achievement Catalyst, LLC

Super Bowl Stock Market Indicator Predicts a Good Year

The Super Bowl Stock Market Indicator has predicted the stock market direction with 80% success rate. When a winner is from the old NFL league wins, the stock market will end higher.  When a winner is from the old AFL league, the  stock market will end lower.

This year's teams are both  old NFL teams.  The San Fransico 49ers are from the old NFL league.    The Baltimore Ravens were originally the Cleveland Browns, which was from the old NFL league.   So despite all the political uncertainty, sovereign debt uncertainty, and the lackluster economic recovery, the Super Bowl indicates the stock market will have higher finish in 2013.

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

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

Copyright © 2013 Achievement Catalyst, LLC

Great Customer Service

Lately, I've been noticing outstanding customer service from some of the providers that I use.  The service in each case was so good that I wanted to document the experience.

Restaurant - One of our favorite places to eat is a local ethnic food restaurant.   I've known the owners for thirty years and the restaurant is among our top choices for special events.  On special event meals, we usually get a free desert as a gift from the restaurant.   For my last birthday, the desert was put on special platter that played "Happy Birthday."

My daughter couldn't wait until her birthday for the special platter.  However, the restaurant made it her birthday even a more special day.  Not only did they give her a desert on the "Happy Birthday" platter.  They put helium balloons on her chair, gave her a nice present, and put a double helping of her favorite appetizer in our take home order.

Needless to say, we gave the wait staff a really big tip (40%) for the great celebration.

Battery store - Early in 2012, my daughter's  car started to run slower, even though the battery was supposed to be fully charged.  I took the battery the the local authorized dealer, which was a battery store.
The owner explained it was likely the battery, but didn't push selling one. He checked out my battery and said it measured OK, but he couldn't be sure.  He said if I bought a battery and I didn't need one he would gladly take a return.  I decided not to buy one at the time.

Later, my rechargeable toothbrush stopped working and the battery was soldered in, making it very difficult to change. The owner said he would change it for only the cost of the battery and if it didn't work (which was a 50/50 chance), he wouldn't charge me.  He changed it, it didn't work and he didn't charge me.

I was impressed with the service.  Later on, I purchased the motorized car battery.  And then I bought a laptop battery, even though it was cheaper on the Internet.

Software company - I use a well known brand name security software.   Three years ago, I used the chat and remote support to correct apparent security problems.   Typically, the customer service representative would determine if it was related to the software or not, but would always solve the issue.  If the issue took longer than usual to solve, the representative would add a month to subscription.  

Based this level of service, I've decided to stay with this security software company, even though there is freeware or cheaper software available.

In the above cases, less expensive providers are always available.  However, due to the level of great service, I will continue to use their services and not shop for other providers.

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

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

Copyright © 2013 Achievement Catalyst, LLC

Hedging for a Market Top or Market Breakout

Although I am happy and benefit from the recent stock market rally, I am also becoming more concerned about a major correction.   The recent gains, particularly in my company stock, have increased our retirement savings to the peak levels achieved in late 2007, when I took early retirement.  However, the question now is whether the 2007 values will represent a market top, from which correction will occur.  Or whether the current market will break through to higher levels. . 

After the significant losses in 2008 to 2009, I am still not yet confident enough to put the majority of our retirement savings back into equity and bond investments.  Given the issues with EU sovereign debt (which the press seems to  ignore nowadays),  the U.S. debt crisis (which Congress and the President seem to ignore), and QE infinity by the Fed,  I still believe that major correction is a high risk. 

So we continue to keep about 3-5 years of living expenses in cash or cash equivalents, execute company stock options as the market rises (or near expiration), and trickling in some money into stocks, while selling some stocks to lock in gains.  If the stock market continues to rise, the retirement accounts will partially benefit.  If the stock market falls, our retirement savings will  be partially protected.

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

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

Copyright © 2013 Achievement Catalyst, LLC