• Ok, GE missed their earnings estimate last quarter due to a down quarter for financials. So did everyone else. GE still is one of 5(?) companies with the AAA credit rating. They aren’t going anywhere.
• They have  150 Billion dollars in gross revenue a year. To increase that by 10% they need to grow the company by roughly the same size as Iceland’s whole economy. And yet, GE still comes pretty close to doing it every year.
• They make 22 Billion in cash every year.
• They are yielding 4%!
• They are at the lowest the stock has been since 2004. When GE is at its lowest in a half a decade, it seems like a buy to me.

So, boring, foolhardy, or a good idea?

Ok a quick primer for those of you that don’t listen to Bloomberg as obsessively as I do (that’s a good thing):

Specific Stock Risk is risk that a stock will have a change in share price due to specific events that affect the company over any given period of time. When Pfizer invents a new drug it is specific stock risk that is affected (probably positively) but when the FDA changes how it approves drugs it is a risk that affects the entire market.

Market Timing Risk is based on the volitility in a stock’s price at any given moment in time due to market forces. It is generally considered that this type of risk is very difficult to isolate because then you could predict a stock’s price over any given time period.

So what has happened to the investment world since Market Timing Risk is ‘hard’ to define? Everyone attempts to reduce their overall risk profiles by lowering their  Specific Stock Risk.

From what I understand, this is the basis of a lot of portfolio theory (I could be way off here). Invest in lots of stocks (a ‘la mutual fund or ETF) and virtually eliminate the risk of any one stock tanking your portfolio.

Of course, you also eliminate any stock hitting a home run for you…

Why not go the other way around? Why not buy stocks that you know kick the willies out of their competitors over a long time period (There are too many examples of this to count, but JP Morgan is doing a pretty good job of kicking the willies out of other banks right now as an example..) and then just never plan on selling?

Sure, if you own 10-20 single stocks and you do a bad job picking, one or two might go out of business in your lifetime.

Holding them forever make you nervous? Fine. Set one day every 5 years when you allow yourself to sell holdings.

The rest of the time build positions in single stocks that have shown that they can kick the willies out of their peers over extended time periods.

Eventually, you have a group of dividend paying stocks (for the most part if companies destroy their competition they return some capital to their investors over time - Berkshire and Google being notable exceptions) that you don’t owe any fees on every year.

With mutual fund fees, you are basically paying for a little bit of the devil you know (fees) to avoid (theoretically) the devil you don’t (Specific stock risk).

I’m not saying that mutual funds are bad, I’m just not convinced they are the best way to go about it either..

From the e-mail:

Mint’s approach to Investments is all about helping you make better decisions more easily. So, you’ll find quick and timely answers to key questions like:

• What’s the big picture? Mint pulls together all your 401(k), IRA, brokerage, and mutual fund accounts in one secure place.
• Am I beating the market? Compare your stocks, accounts, or total portfolio to relevant market indices like the S&P 500.
• Is my money working hard for me, or for my broker? You’ll understand what fees you’re being charged, by whom, and when.

It’s a Private Beta but they gave me a few invites since I was a beta tester the first time around. If you want one, leave a comment and I’ll e-mail you a sign-up link :).

This of course, has left little time to think up snide remarks for people who don’t like capitalism, money, or free trade.

I was going to input a quick link here to a cool page on capitalism but apparently stumble upon only has 4 pages tagged with capitalism as a tag word. That makes me sad..

I wonder how many pages are tagged with ‘lol cat’ or some nonsense….

Ouch.

I think I figured out what happened. Last year, I ended up getting a much bigger refund than I would have liked (over $2,000). Obviously, the ideal tax return is $0. If I break even with the government on April 15th, I’m a happy camper. So, I reduced my witholding last year in anticipation of the problem.

The problem was that at the end of the year, we are awarded a bonus (well, this isn’t really a problem at all, but it caused the tax problem ) . Now, I think that the computer that did the witholding checked to see what rate to tax the withdrawal at by looking at how much you had made so far in the year.

I went back and looked, and I was less than $100 from one of the tax rate breaks ( to go from 15% - 25%) at the time of the bonus. This means that the bonus check contained almost entirely money that would be taxed at 25% but was only witheld at 15%.

Stupid Computer.

So, at the end of the day, my net tax owed / due would have been less than $200 either way if the computer glitch ( I call it a glitch) hadn’t underwitheld.

Don’t worry, I thought the computer was dumb so I put a little aside to pay for taxes. Doesn’t quite cover it, but I can cash flow the rest.

Do you have a witholding nightmare?

I am thinking about refininancing my house (long story, different post) and was trying to get a quote. I filled out the credit check app and he thanked me a bunch and said live poker 3dasian poker tourgioco da pokerbwin pokergioco poker on lineomaha poker onlinebonus code party pokergioco video poker gratis7 card stud gratisstrip poker flashpoker giochi scaricareitalian poker tourpoker sportivo onlinetornei di poker gratisgiochi poker texasgiocare poker online,giocare poker on line,giocare pokergioco poker scaricare gratistexas poker on linesoftware poker gratisistruzioni gioco pokerstreep poker gratisstreap poker on linevc pokersrtip poker gratispoker su internettornei poker onlinegiochi poker da scaricarepoker online osxsoftware Pokerstrip poker game onlinetornei pokerpoker multiplayer onlinegambling pokerpoker texana on linestud pokerpoker tour pccasino pokergiochi poker gratisscaricare gioco pokerpai gow pokerdownload gioco pokerpoker game gratispoker tutto gratisseven card studscarica gratis pokerdownload giochi di pokergiochi on line pokertexas holdem italiapoker texas holdgioco texas holdem that ‘Justin’ would call me by the end of the day or tomorrow at the latest.

It is now Thursday, 3 days later and a lot has happened. Since I highly doubt that this ‘Justin’ fellow is buried in refinance requests, I can only assume the good ole JP has been afraid to quote rates.
I was talking to someone else last night who was trying to buy some CDs this week. The bank refused to sell them because they couldn’t quote a rate. woah.

In the mean time, everyone I see still goes to work and cooks bbq and hunts and fishes and wonders why I listen to Bloomberg etc.

I’m still trying to figure out how we are in a recession when the economy grew 1.9% last year and 3% if you pull housing out (which, by definition, ‘pulling X out’ means you are dealing with even worse data so we’ll leave it in) including growth in Q4. The last time I checked, Q1 wasn’t even over yet and we are now in a ‘prolonged’ recession according to some talking heads. What baloney.

What’s your crazy banking/economic doom story this week?

Not only are they basically giving away $600 to everyone with a pulse who makes less than $75,000 a year, the package includes some wonderful other instructions:

1. Social Security Benefits count towards the $3,000 AGI limit to receive the check. Sooooo, the government sends you money based on how much money they’ve given you. The more the better.
2. They’ve actually created a stimulus package calculator to help you determine whether you get $300 or $600.  There’s only 3 possibilities!!
   • You Make over 75k AGI (150k Joint) - $300
   • You paid a single dollar in taxes but were under the $75k cap - $600
   • You paid NO taxes AND had less than $3,000 in income.
3. Have More Babies. Each little kiddo you have will net you a sweet $300 check.  Oh joy, universal welfare  here we come.

Doesn’t anyone else think its a problem that we are effectively taxing all the people who make more than $75k a year in a ‘wealth distribution’ scheme like this?

I do.

1) He knows more than me about Economics, one of my favorite subjects.

2) He’s funny and often self-deprecating (which is funny)

3) Every once in a while he will post something exceptionally funny yet educational like this presentation on the subprime mess. (Note: Some of the cartoons say curse words)

In 45 cartoon slides with only a couple hundred words total he manages to succintly explain how the Subprime mortgage problem got started. Do you know anyone else that can do that?

Nice work Greg.

Congratulations on another Monday everyone!

-JD