Neville's Financial Blog

A lesson for the future: Whenever you need something done requiring specialized knowledge or skill, go to a college campus. There are literally thousands of students, TA’s and professors who have the knowledge you seek (such as programming, web design or anything else) who will do the work for cheap.

I have told people before, “I will pay you $50.00 on the spot if you do (insert specialized task here) for me” and you will always find a taker.

The thought of completely riding myself of having to pay rent often intrigues me. Most people in America put the largest proportion of their income towards housing costs, if we could get rid of this massive expense, imagine how much more $$$ we could dedicate to investing.

Viable ways to avoid rent:

1.) Buy and pay off your own house/apartment. You can thank yourself for this in a few decades when you pay off your loan (if you choose to finance) because you will have no rent/mortgage to pay. The drawbacks are houses age and require maintenance, all maintenance must be done by yourself, taxes and utility bills.

2.) Live in a van. Believe it or not, I am not completely adverse to this idea. I think living in such a cramped space will make me better appreciate what I have now. It would also save me a ton of money and allow me to be completely mobile. People would think you are poor, but you could be using the money saved for stock investing or a business venture till you start making loads of money. A young person who needs to save mass amounts of money may look into this, when you are young you can endure those types of hardships.

3.) Bum off of relatives or friends. This is an alternative to rent many people utilize. People with hospitable households will get free rent, free food and a clean house to live in. The drawbacks are: You may be inconveniencing someone, the stigma of living at home, the feeling you cannot support yourself.

Out of these three, I personally think #1 and #2 are not so bad.

To find out the percentage of your assets which should be exposed to risk, simply use the Rule of 100:

100 – (Your age) = Percentage of your assets which should be invested.

I am 22, so 78% of my savings should be exposed to some risk, and therefore a larger chance of gain. The other 22% should be tucked away in a fail-safe account such as a CD or other savings device. This is by no means the correct method for everyone, but for my needs it seems right. As a semi-active investor I’d like to see more of my net worth exposed to some potential gains. I think it is better to learn financial mistakes while you are young and can easily recover rather than when you are older and have bills to pay and a family to support.

To restructure my finances to meet this 78% mark, I am stopping my $5,000 CD which has earned only $36 after a year and a half. The current rate I am getting is 0.75% which is much lower than inflation. I will put half the money back into permanent savings and invest the other half. While I enjoy having money to invest, I also enjoy the security a pile of cold, hard cash can provide.

I bought my smallest share ever of a company ($387 worth) of Superconductor Technologies (SCON) a short while back as an experiment. The exeriment was to catch a short term gain after a large breakout in price. I caught a short gain, then it fell. I was going to sell but I liked the company, although the charts didn’t look good.

I roughed out a -40% loss for 2 months, and finally today the stock rose +33.72%. The headlines aren’t saying what caused this massive 3 hour increase in price, but it looks like I may actually get my money back and then some. The only reason I accepted such a high loss was because of my limited amount of exposure, unfortunately when the stock goes up, this small exposure doesn’t make me much $$$…but hey, at least I won’t be losing any!

After coming back from a final exam, I checked my Dynegy (DYN) stock as I knew they were making a big announcement soon. I saw the big red numbers that read - %10 and immediately went rummaging through the news.

Deciding to keep my investment or run for the hills with what I still have (I actually bought the stock lower than what it fell to, so I am not in a loss as yet) I noticed why it had dropped. Turns out they are paying off debt (good), and the bottom line for yearly earnnings will now take a big hit (bad) because of it.

I evaluated my stance on this position: Longterm investment with a minimum holding period of two years. I have confidence Dyngy will get back on its feet when the initial hit clears. It may take a few years, but this one is for the longterm portfolio.

The lesson learned here is how fast your luck can change. Just 12 days ago I wrote an entry bragging about how well DYN was performing!

Syntel (SYNT) and Dynegy (DYN) are both down substantially (several hundred dollar losses in each). The surprising thing is that Superconductor Tech (SCON) is still going up, the one stock I didn’t have high expectations for.

Feel free to drop me comments on trading strategies etc, but keep in mind I generally hold shares for 3 months to 2 years. I have had stocks in the past that dropped dramatically, but holding on to them for 6 months reversed those losses into big gains. If you are not careful though, those losses can turn into even bigger losses.

The reason behind this post is to show myself that no matter how confident you are about a stock, it can still play games with you. Fortunately I have longterm faith in Dynegy and Syntel. Dynegy will be a several year hold, and Syntel will be held for approximately 6 more months (based on current situations).

To make extra money I’ve always designed websites. Now that I’m done with final exams for the week, I can concentrate on Resumite Personal Websites (I have set a goal to launch in on December 15th).

I try to start small businesses all the time. Since I’m a full time student, I look for businesses with low/no overhead, low entry costs, flexible hours and good returns for my time. My first real business from high school still brings in more money than my job, and I spend less than 20 minutes a day on it. For Resumite, I decided to do a different take on standard website design because it is a very saturated field. Resumite will be a simple business to start, and 100% profit (especially since I already own a dedicated server for hosting). All I need to do is market around campus and online.

-About Resumite-

-Personal Resume Websites (Resume + Website = Resumite)

-Users can have their own yourname.com website to put on their resumes and business cards.

-Price: $50 for basic package. Includes 1 year hosting, domain registration and a choice of sample sites.

-Check it out – It is still in the construction phase.

Tommorrow (Sunday) I am going for an 18 hole round of golf, then Monday I finish my 2nd to last semester of college. After Monday I need to focus on:

• Creating new investments.
• Opening my 2nd brokerage account.
• Getting Resumite Personal Sites ready to do business.
• Adding new content to business.

Here is my Financial Update for 12-11-2004:

General Account – $963

Business Balance – $1,683

Spending Account – $431

Investment Account – $873

Permanent Savings – $3,040

CD Savings – $5,039

Stock Portfolio Value -$5,104

Credit Card Balance – $0

Today when golfing with friends I realized how much I like golf just for the business aspect of it. The comfortable, open and semi-formal aura of the golf course makes it an ideal spot for personal and business talk.

On another note,

Everytime I view NevBlog, I feel it emulates The Kirk Report more and more. This is not a bad thing since I greatly respect his dedication to the market and desire to help the little guy.

I found this article about Mario Gabelli interesting. One quote I particularly liked was:

Gabelli made it clear that his firm only hired PhDs – and by that he means

“poor, hungry and driven.”

I love it!