I Bought Colgate-Palmolive and Cirrus Logic

On Thursday, I bought Colgate-Palmolive (CL) at $80.70 and Cirrus Logic (CRUS) at $16.49.

Colgate-Palmolive was recently mentioned in an article on how, paradoxically, the lowest volatility stocks actually have the highest total returns over time. Over the last 20 years, CL had a beta of 0.6 (the general market is 1, so anything below 1 is less volatile) and a total annualized return of 13.5% (vs. 8.8% for the S&P 500).

Around the time of this article, CL was also a recent pick of columnist Ken Fisher. He admits that many see it as a boring stock, but he sees it "as a low-risk, big-cap growth stock". At $78, he said it was trading at 16 times his estimate of 2011 earnings, and thinks it will trade at a 25% premium over the market as the economic cycle picks up.

Cirrus Logic is a way to bet on Apple without paying the premium. CRUS makes the chips for iPads and iPhones. Asset Manager Jim Oberweis anticipates revenue growth of 70% over the next 12 months.

Remember that I don't do short term trading. I try to buy good long term stocks at good prices, and then let the stock trading riches system manage the picks.

Don't Underestimate the Importance of Logo Design for Your Business

If you are starting a new business, your company's logo may be an afterthought. After all, right now you are preoccupied with generating business, and managing your cash flow.

Many companies in this situation don't hire professional Logo Designers. Instead, they tend to take the cheap and easy way:

1. They ask an artistic friend or family member to draw something up.

2. They surf the internet looking for free or inexpensive clip art.

3. They hire someone inexpensive from a free lancer web site.

The problem with these approaches is that you are not planning for the future. Once your business is stable, it will be hard to grow if potential clients view you as amateurish. There is only so much business for a one-man shop. Major clients are looking for a professional and competent looking organization.

But, with a poorly designed logo - or one that looks like every one else using clip art - you won't give off the image of a successful, professional organization that will be around for a long time. You will always look like a start-up, hungry and dependent on the next job for survival.

Some things - like branding and logos are worth spending time and money on because they will pay off down the road.

$1500 Gold and $45 Silver! The Difference Between Just Making A Prediction and Profiting From It

"$1500 Gold and $45 Silver!" was the title of an email that a friend of mine sent me a couple of days ago. His email reminded me that he had predicted these prices last year.

So, I wrote him back and said:

Hopefully you were able to profit from your prediction - and have a plan for when to take profits.

Those two things separate an economist from a trader :-)

Well, it turned out that he had taken profits along the way, and saved them to reinvest in pullbacks. I told him that he could also have used my stock trading riches system. It would actually work for more than just stocks, ETFs, or mutual funds. You could use it to trade actual metals, commodities, or currencies. In fact, just about any good.

As an example, you could take $10,000 and buy $7,000 worth of gold (or silver, or oil, or tea) and keep $3,000 in a cash reserve. Once a year, if the value of the commodity has fluctuated by at least 10%, you could rebalance. Of course, the total amount, constant value, and reserve amount can be anything you want.

With a commodity, instead of strictly rebalancing, you may want to use the optional growth rule from my book. This way, the constant value would grow over time as your position went up.

Harassed By Debt Collectors? Know Your Rights

During this financial downturn, a lot of people have lost their jobs and are having trouble paying their bills. Many of the businesses they they owe money to will turn their claims over to a debt collection service.

Debt collection agencies specialize in recovering debts. Since they depend on getting people to pay, it is an industry that is ripe for abuse. Many of these agencies apply aggressive individuals with telemarketing skills.

It's important for people to know their rights and how to stop collection calls. Most states have laws limiting how aggressive collection callers can get.

It's bad enough to receive a call from someone trying to sell you a product, but it's much worse when you are already worried about your finances and expenses. Some of these debt collectors abuse callers by preying on the worry - hounding and abusing people with threats to embarrass them by calling their friends, family, and neighbors.

If you get hounded by an aggressive debt collector, you may want to report it and/or contact an attorney.

In Defense of House Flippers / Investors Buying Foreclosures

This past Sunday's Chicago Tribune "Money and Real Estate" section had an article on how house flippers have changed tactics.

During the bubble, they loaded up on easy credit, bought at high prices, did complete renovations, and carried the properties for a few months before trying to sell at higher prices.

Now, house flippers try to acquire homes cheaply - frequently from foreclosure auctions, use cash, make minor changes (such as painting or landscaping), and try to sell the properties quickly. The idea is they make less per property, but flip more per year.

Some of the flippers interviewed must have felt that people will think they are profiting by taking advantage of people losing their homes, so they offered a good defense of what they are doing.

I think this description also describes the value that stock market speculators create:

"Some people's bad fortune is other people's opportunity. I know it sounds callous...but I also feel like we provide a backstop to the market."

"Anyone who depletes the foreclosure inventory is helping the marketplace because we will not see appreciation or increases in value until foreclosures go away."

Credit Card Information Site

When it comes to credit cards, there are plenty of options - a whole matrix of annual fees vs. higher percentages, cash back, airline miles, branded, etc.

It can be hard to research which one is right for you.

The nice thing is that there are sites like FinanceGlobe.com, which has specialized sections devoted to credit card information, credit card reviews, and ratings.

Then, if you decide on a credit card you want, you can even apply for a credit card right from the site - saving you time and effort.

Unix / Linux Scripts For Computing Compund Interest

On my unix blog, I posted three scripts for calculating compound interest.

They are written in awk, which is included free on all unix and linux systems. Since Macs are unix-based, it should be included on them , as well. Versions of awk are also available for free download on PCs.

The three scripts are called "compound", "compound_add", and "compound_add2".

Here are some examples of how to use these scripts:

1. You open a money market account with $5,000 and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound 5000 .45 12"

2. You open a money market account with $200, contribute $200 each month, and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add 200 .45 12"

3. You have an existing money market account with $5,000. You now contribute $200 each month and earn 0.45% / month. How much is the account worth after 1 year? You would use "compound_add2 5000 200 .45 12"

Alternative to Credit Cards and Bank Loans

The internet is home to a lot of different companies looking to disrupt normal business processes.

One of them, eLoanPersonal, is looking to change how individuals borrow money. They want to position themselves as an alternative to people tapping their credit cards or going through the hassle of applying for a bank loan.

They offer Personal loans with no credit check, payday loans, and Personal loan for poor credit through a quick application and approval process.

Even their website design reflects an easy, hassle - free experience. It is a very minimalist, clutter-free website, with large type - written in a short, simple and easy to understand style.

Grant Achatz's Next and Doughnut Vault: How To Succeed In Business By Playing Hard To Get?

I was reading in the Chicago Tribune about two new restaurants that are thriving despite (or maybe because) they make it hard to buy their food:

1. In order to make a reservation at "Next", you have to buy a non-refundable ticket from their website. There are 14,000 names on the email waiting list, so tickets are going for up to $600 on Craigslist. Remember, this is just to get in - the actual dinner cost is separate.

2. Even more intriguing, a small doughnut shop called "Doughnut Vault" (just a order/pickup window in an alley) opened in Chicago's River North area without much publicity, and they sell only coffee, and 5 kinds of expensive ($2 - $3 each) doughnuts.

But the lines are jammed every morning. People start lining up by 7:30 am, but the shop has no set hours. They could open at 8 am or 9 am. They send out a Twitter just before opening time. Once open, they sell out fast, because they only make so many.

The Tribune interviewed one woman who lined up for hours twice, and didn't get any doughnuts.

With "Next", it is a bit understandable, because the chef / owner is Grant Achatz - who is a celebrity chef. His "Alinea" restaurant has three Michelin stars and is considered the best restaurant in the United States. He even gets his $100,000 Viking ovens almost for free, in exchange for them to mention his name in their marketing materials.

"Doughnut Vault" is owned by Brendan Sodikoff, a veteran of famous restaurants like Alan Ducasse, who also owns Gilt Bar and Maude's Liquor Bar. But, this fact isn't advertised. In fact, there wasn't much publicity or advertising.

What are the business lessons in this?

1. People are attracted and interested in the mysterious and exclusive.

2. Being hard to attain is not the same as anti-customer service or substandard products. People rave about the food quality at both places. Sodikoff told the Tribune that he doesn't like making people wait, and he makes up to 600 doughnuts a day.

3. Restaurants and food tend to be fads. Especially with "Doughnut Vault", it is possible that there will be no wait in 6 months, or it might even have closed down.

PayDay Loans Serve The Community

Many community activists and politicians vilify payday loan firms because they think that these companies are exploiting working class people who need fast cash.

However, several studies from economists have shown that small personal loans actually help the people in their communities. Because of bad credit, the only way they can borrow money is through small term loans.

If these loans were not available, the alternative in many cases would be bankruptcy.

In fact, in the current economic environment, payday loan providers - along with pawn brokers - are doing business even in middle class and affluent cities and neighborhoods. While these communities may use zoning laws to keep physical payday centers out, a fast growing segment of the industry are online payday firms, such as Little Payday.

Little Payday specializes in online loans up to $1000.

Develop A System Before Trading

When I was first starting out as a trader, I sometimes traded impulsively - where I tried to use my "gut feel" to execute buys and sells. What happened every time was that I lost money and got stressed.

This also includes jumping in and buying a stock because of a hot tip or because you like the product. Now, don't get me wrong - I do buy stocks based on analyst recommendations or because I like to shop there. But, I follow my Stock Trading Riches system so that I know at which prices I will buy and sell, and at what quantities. So, I am never trading impulsively.

No matter what happens to the stock, I can fight the emotions of fear and greed because I have an objective way to calculate my buy and sell points.

I'm not saying that everyone should use the Stock Trading Riches system - because different systems appeal to different personalities. Even if system A is better than system B, you would be better off using system B if it appeals better to your investing philosophy.

But, the key is that you do need a system.

For the Best Interest Rates, Try Online Banking

These days, it can seem hard to find any banks that have products (such as savings accounts or CDs) that pay a decent amount of interest.

However, the "best kept secret" is to check out online banks. These banks have reduced costs because they avoid bricks and mortar branches, employees, and ATM networks.

With less overhead and legacy costs, they are able to offer high interest savings accounts that pay more than the average bank.

You may be wondering - are online banks safe? The answer is yes because they are regulated just like any other bank and any federal deposit insurance applies to them as well as bricks and mortar banks.

Also, many online banks are actually owned by traditional brick and mortar banks. For example, the online bank RaboDirect is owned by Rabobank Australia, which was started in 1898.

Interesting Article on Walter Breuning, The World's Oldest Man

Walter Breuning, the world's oldest man, died Thursday at age 114. The Associated Press article on his death included his story - based on an interview they did with him last October.  It's very interesting reading, because they framed his story in parallel with the history of the U.S. Some highlights: 0. His mother died at 46, and his father at 50, so he didn't have longevity in the family.  His advice for living a long life:       a) Embrace change.       b) Eat only 2 meals a day.       c) Work as long as you can.      d) Help others.     e) Accept death. 1. His earliest memory is at 3 - with his grandfather horrifying him by telling stories of killing Southerners during the Civil War. 2. In 1912, his parents split up and he had to work on the railroad at 16.  He ended up working there for the next 50 years.  3. His mother died at 46 and his father at 50. 4. In 1919, he bought his first car, and said it spooked the horses that he had to share the street with. 5. He got married in 1922, and bought vacant land for $15.  The Depression hit and he was never able to build a house.  Eventually he sold the land for $25, making a $10 profit. He never bought property again and was a lifetime renter. 6. His wife died in 1957 - they had no children, and he never remarried.

Secure Virtual Data Rooms

I'm always interested in specialized niche businesses that are successful by doing one thing really well - something that the general public probably doesn't even realize is a genuine need.

Recently, I came across a specialized business which is related to trading and Wall Street.

The business is called Merril DataSite, and they provide virtual data rooms for capital market / financing functions such as mergers and acquisitions (M&A) activities, business ownership transfers, bankruptcies, restructurings, licensing activities, etc.

Basically, their data sites are useful for any firms that are involved in complex business, financial, and/or legal processes that involve sharing highly confidential documents (such as due diligence checklists) between groups of financial analysts, lawyers, and / or accountants.

A secure data site process can insure that the documents stay protected from outsiders by limiting access to only authorized individuals, and keeping track of checkouts and revisions.

In an interesting, and natural, extension of their business, a division of Merril provides document Translation Services for international clients.

Gadhafi's Surprising.ly Internet Asset

In an ironic twist, it turns out that, whenever NATO, the U.S. Air Force, celebrities like Charlie Sheen, or just regular people, have been sending out links to their Twitter followers, they have been using a Libyan asset.

Many of the most popular free services for condensing links, such as bit.ly or owl.ly, are using domains owned by Libya.

Here is a link to the Wall Street Journal article about it:

http://finance.yahoo.com/banking-budgeting/article/112508/gadhafi-ly-web-suffix-libya-wsj

Should You Buy Gold?

Should you buy gold bullion? These days, many people are buying gold in the form of coins, ingots, and bullion because gold prices are at record highs.

The government is printing a lot of money and keeping interest rates low to help the economy recover from the recession. This has a lot of people spooked that inflation will come back. The dollar is low, and grains, commodities, oil, and metals are soaring to new price highs.

So, it might not be a bad idea for individuals to diversify and invest some of their money in gold. But, many people are not sure how to buy bullion.

Fortunately, contrary to many people's ideas, it can be as easy to buy gold bullion as buying stocks and bonds. One way to buy, is through a dealer such as GoldCoinsGain.com. They can even tell you about having agold IRA.

Like Enlightenment, Winning Trades Are An Accident

One of my favorite quotes that I share on my Tao of Simplicity blog is:

A zen master was once quoted:

Enlightenment is an accident, but some activities make you accident prone.

Yesterday, I read a blog post by trader Rob Michell, who said something similar about winning trades:

"It is impossible to distinguish between luck and skill in most cases."

"Having said that, here is another tidbit of crazy inside knowledge. Since you cannot distinguish between luck and skill a good portion of the time, the real truth of the matter is you are not responsible for your winning at all. The market is."

"I said before, you have to manage your risk and then, at some point (and here is the blaspemous statement that will make most traders cringe), a good accident happens. Accident you say?? Yes. I use that word, because it is the only one that is strong enough to remind me there is nothing personal about trading. It is all management of risk. It is a disipline."

I really like this fresh way of saying a trading truth, which is that the market goes where it goes, and nobody can predict it 100%. No strategy or model can always pick the best times to buy and sell.

We have to think like a casino. We want to take bets where we have an edge. On any individual trade, it is an accident if we make a profit. But, if we have a trading system with an edge, it won't be an accident if we profit over time.

A New Broker For Online Stock Trading

One of the things you need to be a success at Stock Trading (besides a winning system that suits your personality) is a good Online Broker.

In today's world, there is no reason to use a full service broker that you need to call on the phone. The preferred methods for placing trades are through Online Trading and Mobile Trading. This way, your buy and sell instructions are transmitted instantly and clearly - without the possibility of mis-communication, while you hold down on commission costs.

With so many choices of online brokers, which one is the right one? The answer is the one that feels right for you. You need to feel comfortable with their execution performance, website navigation, order placement, and trading tools.

I recently learned about an online broker called First Trade Securities. Their website looks promising because it has a simple and clutter free design - exactly what you need from your broker. You want to focus on placing the trade, so the site should be in the background and work intuitively.

First Trade lets you inexpensively trade / invest in stocks, options, ETFs, mutual funds, and bonds. You can even open IRA Accounts.

Topics Covered in "Stock Trading Riches" Book

Here are some of the topics covered in "Stock Trading Riches":

My Simple Trading System

Optional Ideas for Customizing The System

Zen and the Art of Speculation

The Hidden Dangers of Investing Too Conservatively

7 Stock Market Secrets for New Investors

Divorce of A Trader - The Perils of Leverage

Why Stocks Are Better Than Mutual Funds

Exchange Traded Fund (ETF) Investment Success - Stick to the Basics!

Combining Fundamental and Technical Analysis for Stock Trading

How to Invest in an Era of High-Inflation and a Weak US Dollar

Deflation and Stock Picking

How Markets React to News and Reports

The Problem With Trading From Charts - The Secret Flaw Technical Analysts Never Talk About

Evaluating Trading Systems Critically - Be Wary of the Well-Placed Example

How to Select IPOs That Are Ready To Explode

Stock Market Cap Analysis - Secrets for Building a Diversified Portfolio

6 Unconventional Metrics for Stock Picking

Bonus 2009 Updates

Bonus Awk, Perl, and Excel Scripts

Your Credit Rating is Important

It's very important to have a good credit rating. A bad credit score can really hurt your financial life.

For example, it may prevent you from buying the house of your dreams. Even if you can get a house or car on credit, you may have to pay a lot more in interest - which is money down the drain. You may also have to pay more for insurance. Insurance companies now routinely check your credit score because they have found a correlation in low scores and more claims.

Therefore, you should monitor your credit score. There are a lot of sites that can give you a free credit score, but some may be more helpful than others - especially if they offer any extra services, such as credit monitoring.

If you need further incentive to take action, you should realize that maintaining a good credit score can improve your chances of getting a job. With the recent recession and global financial crisis, a lot of people are unemployed, and there is a lot of competition for jobs. A lot of companies now check applicants' credit history.

How to Become A Billionaire

Rich Karlgaard, publisher of Forbes Magazine wrote an essay in the latest billionaire's edition about How to Become A Billionaire - Zero by Zero.

He starts with what he thinks people mean by "millionaire" today - an 8 figure net worth ($10 - 99 million). He thinks that there are hundreds of these in every big city in America - either CEO's or people with their own successful businesses. Alternatively, you can become a partner at a top law firm or investment bank - if you have the right credentials.

To get to the next step, 9 figures ($100 - 999 million), he thinks you need to create "a company beloved by the capital markets", and then sell it through an IPO or to another company.

To take the final step, and become a billionaire, requires you to build a company that follows a Moore's Law curve (doubling every year) and scale it up globally.