Monday, November 28, 2005

Done Deal...

After all this flip-flopping I finally made a final decision on the condo. I decided to go for it! I gave them a check for a 5% non-refundable deposit. I'm glad they were willing to decrease the deposit down to 5%. So if for some reason I decide to walk away from the deal, it won't be so painful. I really do feel that I made the correct decision. The recent price appreciation on the condo is just a little extra frosting on the cake.

This is what it currently looks like... just a pile of dirt.

Wednesday, November 23, 2005

Condo Saga

There's been a lot of drama since I last reported on my condo update. My last post on the condo pretty much stated that it was a done deal. Well I'm actually still debating believe it or not. I've flip flopped a couple of times already. Here goes, on Monday I told them that I was going to proceed with the deal. I signed the paper work and submitted a check for a 10% of the purchase price. I slept over it and the next morning, I decided that I didn't want to go for it. I guess I got cold feet at the last minute. So I got my lawyer to tell them the news. It was not going to be a problem. They would void the contract and return the check. After all this, I thought that was the end of it. I was actually a bit relieved. Well today, I got a call from my lawyer to see if I would reconsider. The sales rep was willing to lower my down payment to 5% from 10%. This was not going to influence my decision since I was planning on putting 20-30% as a total down payment. But it would be nice to have less money tied up for a period of almost two years. The big kicker was that the price for the same exact units have now appreciated by ~ 30% over a period of four months. This should really be a no brainer! The decision I make on Monday will be my final decision! I promise!

This condo thing has really distracted me from the market. Wow, I'm really impressed by this rally and the market has pretty much priced in an end to the Fed rate hikes. When the Fed minutes came out on Tuesday that was the green light to put money aggressively back to work. Since I may end up only using half of the cash raised for the condo down payment; I'm going to plow the rest back into the market. I'm going to do some research over the weekend...

Sunday, November 20, 2005

Lack of Retirement Savings

I just received the quarterly magazine from Fidelity Investments. They had a nice article on retirement savings. Here's some interesting facts from the article:

(1) "The Fidelity Retirement Index indicates that younger adults (ages 25 to 40) are on track to replace an estimated 55% of projected retirement income when they retire - well below the suggested estimate of 85%."

(2) "The same group, on average, has saved just $9,000 toward retirement and contributes $92 a month toward their nest egg."

(3) "More than one in five (21%) have not yet started saving for retirement."

Scary facts, huh? I continue to see this first hand at work. The company has a decent 401K plan in which they will match up to 5% of your salary. Still, people are contributing much less to be eligible for the 100% match and some are simply not even participating. Talk about throwing away free money! These people aren't young either, they're in their late 40's to early 50's. If you haven't started saving by then; it's going to be a very tough uphill battle. Time is the most important factor in investing. Start early and let compounding do it's magic.

Saturday, November 19, 2005

Getting More Conservative

I've started to rebalance my portfolio. At one point I've had approximately 40% of my portfolio in company stock. I've brought it down to 35%, but there's still more work to do. This was accumulated over the years through the company employee stock purchase plan. Fortunately this was one of my best investment decisions ever (to hold onto the espp shares), but now it's time to diversify some of the risk and not get too greedy. Now where do I put this cash? I've thought about investing in other individual stocks, but I'm starting to shy away from that a bit. Over the years, I've been pretty fortunate at picking winners, but it takes time, a lot of work and a bit of luck. I'm leaning towards placing most of the cash into index funds such as the S&P 500 and just a small portion into individual stocks.

Oh... I was not able to get any ipo shares of Under Armour Holdings (UARM). That one shot up 94% on the first day of trading. The ipo market is really starting to heat up. Once you see some junk companies trying to go public, that's time to really lighten up. So far the companies coming public are actually making money. That's a good sign...

Thursday, November 17, 2005

Risking It...

Risk it? Yeah, why not! I was not able to get my hands on any shares of Intercontinental Exchange, Inc (ICE). That was definitely a hot issue with a 50% pop on the first day of trading. Hopefully I’ll get some shares of Under Armour, Inc (UARM). I believe it’s supposed to price tonight and start trading tomorrow. I really like the feel of the market. Lots of stocks starting to break out into new highs. I'm going to start dumping some of the losers for tax planning purposes. As they say it's always good to trim the weeds and water the flowers.

I have my lawyer reviewing the condo docs and I’ll meet with her tomorrow. She’s good… She’s bringing up a lot of good questions. I really don't anticipate anything negative that will stop me from going forward with this. But we'll see...

Tuesday, November 15, 2005

Risk It?

Hmm... Should I risk it? I have the opportunity to get my hands on two upcoming IPOs (Intercontinental Exchange, Inc and Under Armour, Inc). So far after checking out the prospectus and the IPO Home web site click here, Under Armour has the best prospects for a small pop. But I shouldn't push my luck anymore. I need the cash for my condo deposit this Friday. I have today and tomorrow to decide.

Saturday, November 12, 2005

Condo Purchase

I went to chat with the sales rep and I was quite surprised by the strong demand for the condos. This is in the face of a real estate slow down. It's been three months since I placed the initial deposit for the condo. Since that time, the prices for the same exact units have increased by 27%. There definitely is some price pressure with some of the older condos, but the new construction seems to be holding up well. People are still willing to pay a premium to be in the city. I'm not looking to flip the condo, but it's nice to know that I've already built some equity in the place. I got my sister to help me select the color layout of the cabinets, counter tops and rugs. She's an art student so she has a good eye for this kind of stuff. I'll submit the 10% deposit next week and then it's a pretty much a done deal. I've already been pre-approved, but unfortunately it's still too early for me to lock in a rate. I have to wait another 3 months before I can lock. Depending how high or low rates go will determine the amount of the down payment. I'm willing to increase the down payment if rates really shoot up. Now I just hope the construction of the condo is on schedule and the stock market behaves. Remember, I still have the remaining down payment invested in stocks. I'll start liquidating those positions shortly.

Thursday, November 10, 2005

Cashed In For Condo Deposit

I finally sold some stock today to raise some cash for the condo deposit. The condo deposit is 10% of the condo price. This is / was a very risky strategy; I essentially kept all of my real estate cash invested in the stock market. This strategy has worked out well, but I would not advise anyone to use this strategy. Cash you need in the short term should be invested in very liquid assets (money markets, T-Bills, etc...). I still have the rest of the down payment invested in the stock market. I plan on putting 20-30% for a down payment. There's plenty of time before I need to come up with the rest of the cash. The condo won’t be ready until 2007, which is actually ideal for my situation. Things can still change...

Tuesday, November 08, 2005

Bad Analyst Call / Condo?

Yesterday an analyst from Bear Stearns downgraded Genzyme (GENZ) because of reimbursement concerns for Synvisc, which is used to treat osteoarthritis for the knee. The stock fell ~ 4.5% on this downgrade. This was definitely an over reaction by investors and simply an excuse to take profits. Synvisc makes up only ~8 % of total revenues so any reimbursement reduction would have a minimal impact on earnings. This morning Genzyme announced that the Medicare reimbursement rate for Synvisc would remain unchanged from the prior year. The stock recovered 1.8% on this news. This analyst basically blew the call and was simply wrong. Analysts are often lagging indicators; they usually upgrade a stock after it has made a huge increase or downgrade a stock after a steep decline. They follow the crowd and there's very little value added in their analysis. I enjoy reading analyst reports, but I do not make trading decisions based on their opinions. I just wish analyst would just own up to their mistakes...
Note: I have a position in Genzyme.

Ohh... I finally received the condo docs today! It must close to 100 pages a legal mumbo jumbo and I'm supposed to decipher it. Fortunately I know a lawyer, who deals with real estate law so I'll probably give her a call and hopefully help me decipher some of this stuff. So I have 10 days to decide. It's really a tough decision, real estate prices are falling and there are some good values starting to pop up. hmm... ???

Election Day Today

Thursday, November 03, 2005

The Beat Goes On

Ever see cardiac muscle cells in action? Check this out... click here.
What does this have to do with investing? There are many companies working on cell based therapeutics. It's a small market right now, but the future for cell based therapeutics will be enormous. It's something to keep an eye on.

Good Bye Johnson & Johnson, Hello Amgen

I sold Johnson & Johnson (JNJ) today; it was pretty much dead money. I purchased JNJ in April & May 2003 and since that time I was only able to generate a total return of 13.13% (including dividends reinvested). Not a good return over a three year period. The pending merger with Guidant (GDT) is a big question mark for JNJ. JNJ needs a merger to grow its top line; it simply can’t generate strong organic growth by itself. I used the cash from JNJ and purchased some more Amgen (AMGN).

Wednesday, November 02, 2005

Bad Apple...

My worst trade of the year has got to be Apple (AAPL). I purchased Apple when it started to break out into new highs in mid August and sold for a 10% gain in September. I simply sold way too early. Apple is now trading in the 60s with the success of the video iPods. I shouldn't really be complaining because I did make some money in it. Always hang onto your strong stocks and sell the weak ones! I sold Apple, one of the stronger stocks in my portfolio, and kept the losers. Oh well, that's how you learn...

E*Trade Resolution

I was planning on writing a not so pleasant letter to E*Trade describing their horrible service. I decided to write a more diplomatic letter and suggested ways they can improve their service. I also suggested that they should refund the commission for yesterday’s transaction. They apologized for the web site outage and agreed to refund the commission.

Tuesday, November 01, 2005

E*Trade = Bad Service

I use several discount brokers: TD Waterhouse, Fidelity Investments and E*Trade Securities. TD Waterhouse and Fidelity have great service and I've never had a problem with them. On the other hand E*Trade is simply horrible. For example, today around noon I tried to access my E*Trade account to perform a transaction. I logged onto my account and it stated that my account was unavailable! So I tried to call customer service to clear this little mess up. And guess what? The hold time was a minimum of 20 minutes! I'm a really patient person, but this really got to me. Unfortunately, I can't dump E*Trade since our company uses them for the stock purchase and options plan. They eventually resolved the problem, but this is really unacceptable. I just had to get that out...

I sold some Genzyme (GENZ) today. The total % gain from this transaction was ~ 80%. There's nothing wrong with the company / stock. I simply needed some cash for my parent's home renovation. Now I'm going to do some tax loss selling to offset some capital gains.