Last 10 Posts

• Addressing ADRS: What you need to know about American Depository Receipts
  8/16/2006
• On Surveys and Blogging
  8/14/2006
• On Vacation
  8/8/2006
• Collective Intelligence Experiment - Survey #1
  8/4/2006
• Collective Intelligence Experiment Intro
  8/4/2006
• Why Dividend Payout Ratios Matter
  8/3/2006
• Dividend Resources: Stocks that have increased dividends for 10 or more consecutvie years.
  8/2/2006
• Barriers to Entry and Investing
  8/1/2006
• What does it really mean to be Contrarian?
  7/28/2006
• Bond Valuation Basics: Coupon Rates and Yields
  7/27/2006

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Owning an American Depository Receipt, ADRs as they are called for short, is slightly different than owning a share of a stock in a US company. There are a few things you need to be aware of before deciding to buy one.
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I suppose that the topic of collective intelligence is not a very popular one to the readers of this site. I had over 2000 visitors come to the site since last week when I posted the survey. Of that 2000 only two of them completed the survey. That type of response is no way to conduct experiments so I guess I will discontinue my attempts.
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On Vacation

I will be going on vacation for the next several days and will not be able to post a new article until August 14th. I will publish the results of the Collective Intelligence experiement then (assuming someone actually completes the survey). :-)

This is survey #1 in my Collective Intelligence Experiment series.
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As you may have guessed from some of my previous articles (see "Related Posts" below for a list) discussing the science of collective intelligence and the wisdom of crowds, I am fascinated by the way groups of people can collectively arrive at decisions that are superior to the decisions of any single individual. Specifically, I am interested in how this dynamic interacts with capital markets. I am not going to go over all of that stuff again (please read the articles for a more in depth discussion). After several failed attempts to find some reliable tests on the topic and/or a website or two that addresses it, I have decided to conduct my own simple experiments. If you would like to be a part of them then please read below.
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I have been harping a lot lately on dividend paying stocks and have outlined many reasons why I lean towards them for long term accumulation. The following discussion is yet another "ah ha" thing I discovered while crunching some numbers once. In What to look for in Dividend Paying Stocks the first thing I mentioned was Payout Ratio. I want to delve a little further into why payout ratios are important and the power they have for your dividend income generating stability.
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I am kind of jammed up with stuff to do today so I thought I would leave you with a couple of valuable resources for those of you interested in investing in quality dividend paying stocks. It always helps to have some data handy and here are a couple of good places to start. I have no affiliations with any of these sites. They are simply resources I personally use.
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A couple of recent experiences have made me want to write a bit more about barriers to entry into an industry and the effect that that has on investing. I read an article yesterday, Profitless Prosperity is Tech's Achilles Heel, which reminded me of some of my own reasons for shying away from many technology stocks. I have also spent the better part of the last month trying to get my own financial planning company set up. For those of you who have tried to jump through all the hoops necessary to get that done you know what I mean by "barrier to entry".
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After reading this you may think I had too much vodka last night but here goes. From time to time I overanalyze a common market philosophy to death. Many times I come away from that analysis not really having any answers but really only churning up more questions. The idea of being "contrarian" has been a ride down that path for me. Before I start pondering things and making philosophical inquiries here, let's first look at a few common definitions of what it means to be contrarian.
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Some people get confused between the coupon rate and yield of a bond so I wanted to go over some bond basics to sort of clear things up. The value of a bond is made up of several parts:
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I want to preface this post by saying that I have read just about every book ever published by Robert Kiyosaki and his team of Rich Dad's Advisors. There have been lots of useful nuggets of financial wisdom and some not so useful. I suppose that is to be expected in a field as broad as personal finance. The passage I want to talk about today is something he just published in his Yahoo Finance article Bet on Gold, Not on Funny Money.
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I suppose if you just have to own mutual funds then it is probably best for you to know the difference between an open-end fund (OEF) and a closed-end fund (CEF). I have bumped into a few people with questions about the differences so here goes.
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As you may by now I am hyper analytical about the fees one pays in order to generate investment returns. Fees are, after all, one of the only things truly in your control. The following bit of writing is an excerpt from yesterday's Trend Desk article at Yahoo Finance. You'll have to scroll to page 2 to see this part. The article is written by Daniel Pink and provides some awfully revealing scientific research about how people (even smart people) treat mutual fund fees. Do mutual funds really have a magical quality about them causing us to completely ignore their fees??? Read the excerpt and then I will have some comments below.
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Every trader has his reason why markets are not efficient. Of course, he believes so because he has to believe that he can make a profit from market inefficiencies lest he be wasting his time trying. The efficient market hypothesis states that all publicly available information is factored into the stock price (the "strong" form of the EMH even suggest that inside information is factored in as well) and, therefore, on average you should not be able to make abnormal returns based on publicly available information.
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The one thing I have never quite understood is the need for performance comparison against a benchmark. I don't mean comparing a single mutual fund to a benchmark. What I mean is comparing an individual's portfolio return to a benchmark. If you are investing in a fund that is supposed to mirror the S&P 500 then by all means check to see if it is doing so. However, if you are an individual with many different assets in a portfolio and many different goals then why would you compare those returns to the returns of a simple index?
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Repeat after me. I cannot control stock market returns. I cannot control bond yields. I cannot control daily price fluctuations. I cannot control the whims of man that cause market manias. I cannot control fear or greed or ignorance. After one puts his money to work there is very little one can control in the world of investing. One of the few things you can control that is directly related to your return is the amount of fees you pay in obtaining it.
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One of the most frequently asked retirement planning questions a financial advisor receives is whether one should invest in a Traditional IRA or Roth IRA. I'm here to shed some light on the issue and hopefully provide a simplified explanation to help you with your decision.
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Disclaimer: this post is for informational purposes ONLY. Please read the disclaimer before even thinking about relying on me to make a financial decision!