Tuesday, January 27, 2009

Wally World

I just bought 72 shares of Wal Mart (WMT) at $48.6301 a share.

- $7.00 (transaction fee)
- $3501.37 (72 x 48.6301)

= $491.63

I'll have to figure out a better format for these posts so it's easier to follow. Also, I only spent $3500 because of transaction costs, etc.

Sunday, January 25, 2009

Money Where Your Mouth Is

I've been known to talk about the fact that fund managers are a rip off and we're basically getting screwed when we deposit money in things like 401k's and IRA's. It's the best available option for working class folks like ourselves, but an option making rich people richer and not very good in terms of value for the consumer.

I usually follow up this boastful talk with the fact that when I play the market with hard rules, but fictional money, I tend to outperform my most aggressive 401k by 10-20%. In my convoluted mind, this proves that we're over paying for a service that does not provide much value and isn't that hard.

The very good counter argument is that I'm using fictional monies and if it was real money I would make different decisions and would probably not out perform guys who were trained to do these types of things.

Marsalis has taken the argument one step further and said it must be an amount of money I'm not comfortable taking risks with.

So now we'll settle the score. It's a new year and an excellent time to try this out, especially given the fact that my 401k looks like shit anyways.

Given the fact that I was immediately losing 10%-25% of money every time I made a 401k deposit, I have reduced my contributions and set some money aside for savings. I've been doing this for a while and I know it goes against typical financial advice and the "dollar cost averaging" theory, but it's Friday and I don't give a @#!%$

I'm going to take $4,000 (I assure you Marsalis, that I'm not cavalier about that much money and Corinne is especially concerned about it's well being) and begin placing trades through an online broker.

The sort of fun part for y'all is that I will list out every time I make a trade, how much was made/loss and where I stand. Because I am not a day trader, each of my trades will likely span weeks, not hours, etc.

My prediction is that I should be up %25 by the end of the year, not including taxes, but including trade fees. Really, my goal will be to outperform my ING account which is currently making about 2.5% annually. I'm %100 sure I can beat that.

I, of course, highly recommend that you don't take any of my trades as financial advice or insight. I also won't be trading any financial stocks since I sort of work in the industry and don't want anything to look inappropriate.

I will try and remember to label each post as "stock" so you can view the history over time and provide summaries occasionally. At the end of the year, I'll also show what would have happened if I had just stayed with the stocks I bought as opposed to trading them.

Let the grand experiment begin.

Part 2 Will Have to Wait

Thanks everyone for the birthday wishes and the great party. It means a lot to me and I really enjoy every minute of it. Sorry I don't have any pictures, which is probably good. I do have a ton of vodka to drink, which means we'll be having a vodka tasting party soon. Cab rides home will be the party favor.

Monday, January 19, 2009

Blah, Blah, Blah humbug...

You may have noticed that I seemed to lose some steam on that last blog post about the economy. I could honestly go on forever about the economy, money, etc. I abbreviated that last section to end the suffering. It was a mercy post or maybe a courtesy post. You decide.

Well, enough about markets, let's talk about family for a little bit. Christmas was good. The kids woke up to Razor scooters under the tree. We had tons of family in town to enjoy the Christmas morning. Participants, besides the Jackson Four, were:
Christina (Kent's Sister)
Pop (Corinne's Dad)
Mimi (Corinne's Mom)
Mawmaw (Corinne's Grandmother)
Lindsey (Corinne's Sister)
Austin (Lindsey's Husband)

Needless to say our little house was packed, but cheery. Corinne and I have made Coors Light a Christmas Eve tradition and mimosas and bloody maries a Christmas Morning tradition, which tends to add to the Christmas Spirit for everyone.

I got Corinne an iPhone for Christmas and she has yet to set it down. If they had those things 10 years ago, I would have given her one with a picture of a diamond ring on it and I'm sure she would have still said yes. It's pretty incredible and I'm looking forward to getting one some day when Apple learns to share with other carriers.

Corinne gave me a very special gift by framing 20 Morgan Silver Dollars of mine. These dollars were my Grandpa's and have made their way through the family and into my hands. They have quite a few stories attached to them and mean a lot to me. They mean even more now that they were framed by my thoughtful wife.

After Christmas, the Oxford Jacksons packed up and headed to the Coast to visit the Jacksons of D'Iberville (My parents and my brother).

The Coast is a strange and mystical place and it always tugs at my heart strings a little when ever we go down. It's the true dirty South, but damn if I don't miss it sometimes.
We had a great visit and managed to take some money from the Beau Rivage, catch an Ole Miss vs. Southern basketball game, visit with Grandpa and Mimi Cheryl, built a bear and a dinosaur, saw the Batton's and their newest addition, and visited with the Guices and Casey. So much to do and barely enough time to do it.

After the Coast we headed to Clinton to see the Kellys and spend New Year's Eve before heading to the Cotton Bowl. Stay Tuned... I have to go watch ' Margot at the Wedding'.

Some Technical Difficulties

I had to switch layouts when my last one suddenly went crazy. I'm not sure what caused it, but I checked my blog and there was a big dark page with crazy looking text everywhere. I switched the template and it seemed to correct everything. I'll probably just stick with this template as opposed to switching back.

Wednesday, January 14, 2009

The Economy..

It's shit. It'll get better.

Tuesday, January 13, 2009

Capitalism, Sort Of

Capitalism is the economic philosophy that all money making entities and resources are privately owned. As a result the wealth created from those entities is privately owned as well.

Capitalism in itself is not a big deal. It's just stating that the government shouldn't own all businesses and people have the right to own wealth individually. I think this is probably something most people can get behind.

However, over the last few decades capitalism in America has become synonymous with ideas like free markets, laissez faire and the invisible hand. These concepts being that in addition to the government not owning wealth and the wealth producing companies; the government will not interfere with the privately held, wealth producing companies or the markets that these companies play in.

The idea is that in a free market, multiple competitors will find the most efficient path to producing a good or service which will ultimately benefit the consumer. In addition the consumer will choose the most beneficial competitor, creating a suitable level of quality. Market conditions and competition will create the best option as opposed to having the government interfere and force options.

For example, lets say Toyota started offering unlimited gas for the life of the car to attract buyers. Other car companies would have to offer the same the deal or something similar to remain competitive other wise the consumer would buy mainly Toyota's and they would all go out of business. This is good for the consumer because they get free gas for life.

Now this would be opposite of the idea that the government stepped in and said that car makers should offer free gas for life because the government sees it as beneficial to the consumer. The government is interfering with the market by requiring a condition, which may have the same result, but will be less efficient if the market was left alone.

What's interesting about all of this is that America has been in a sort of testing stage for the last 50 years or so. We've been toying with this idea that markets should be free and without government intervention and slowly moving more towards this direction. As the markets created wealth in our country and we continued to lead economically it was hard to argue with this approach.

Countries with heavy government intervention like Russia and Cuba failed over and over again resulting in economic meltdowns. This only bolstered the idea that unfettered greed and competition was the best way to go. This hubris ultimately was our undoing and has resulted in the last few stock crashes and now our current economic situation.

The housing crash and subsequent global economic meltdown will be a major part of history. 2008 will be considered the year that the curtain was pull back on American Capitalism and shown to be a fraud. Capitalism in pure free markets may work in theory, but the reality is that there is nothing that is pure, including free markets.

Financial giants that have been around for 85 years have been bankrupted because they bought wholly into this idea. This is a big deal. These are companies that once represented America wealth, stability and superior economic theory. They went bankrupt over night whimpering into the dark like some crappy start up as opposed to the financial stalwarts they were supposed to be.

Now did America's theory of capitalism cause all of this? No not entirely, but this notion that markets shouldn't be regulated definitely helped it along its way. Banks have lots of regulation and there are a lot of rules in place for them to follow. As banks started making more money, the regulators who enforced these rules start backing up. As banks started making mountains of money, the regulators all but disappeared. Poor financial decisions were justified with stacks of money and high stock values. Greed was left unchecked and unregulated and ultimately destroyed many banks and investment firms. We're still dealing with the fall out and there is no telling what other consequences there will be.

What is certain though is that we've reversed our theoretical direction as a country, even if it is only temporarily. Unfettered capitalism has proven to be a loser and we're moving back towards more regulation. Hopefully at some point our leaders and government officials will realize that a balance must be achieved. We shall see.

Next post, my thoughts and predictions on the economy. Where we're at, where we'll be and when will we recover, if at all.