Hedging Your Bets


[Hello? I have an idea. pic of Françoise Hardy]

In my grand quest to master the stock market against all the well-documented odds, this week I hedged a few of my bets.  Here’s a little update for those of you investing along with me:

I had a handful of stocks that were up 30-50% that I think are going to dip down this quarter. So I sold 1/2 – 1/3 of my shares in those stocks: William Sonoma ($WSM) Apple ($AAPL) and Whole Foods Market ($WFM).  Apple and $WFM I still believe in as long-term holds, but I want to re-buy more stocks at a slightly lower price.  William Sonoma is a retail brand – it’s cool and diversified, but retail is a zero-sum game and it’s easy for another brand to take your market share. So I’m ready to sell the rest of my shares if something shinier catches my eye.


I also bought more of one of my down stocks, Google ($GOOGL), because they are at the forefront of innovation, and I trust that being creative and bold will always win over a company that is stodgy and slow.


I also added a new food stock in the fast casual dining industry, called Habit ($HABT), since Chipotle ($CMG) has been killing it. The fast casual food industry is kind of like craft beer in that it’s a fast growing market but there is not that much to invest in.  So I also plan to buy shares of Danny Meyers’ Shake Shack ($SHAK) even though it is trading for much higher ($48) than was anticipated ($12-$20).

Quarterly earnings were released yesterday, and the good and surprising news is that Amazon, which is a stock I was starting to really regret buying, actually made legit money last quarter – everyone was SHOCKED.  As they revealed that news the stock flew up. #besosforbezos


What about you, any stock ideas to share?

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A Buying Fast


Have you ever done a spending freeze?  Want to join me on this one?  Here’s the challenge: for the entire month of February, you don’t buy anything.  Nothing.  So you pay your bills, of course, but you don’t buy gas or groceries or pay a parking meter or do any other transactions.

My intention is to reset and re-examine my spending habits by taking a complete fast from purchases for a full month.

Instead of doing a spending diet where you “try to spend less” (again) this is a cleanse.  You don’t even buy the stuff you need like a ream of paper or a bottle of olive oil.  You just make do with what you have until the fast is over.

One of my goals is to re-focus my gratitude for my freedom I have to buy the things that I want. It is a real luxury to fill up my gas tank whenever it’s low, swing by the grocery store for whatever is on my list, or buy a new pair of jeans when I want to. It’s contrived, sure, but I want to take a break from satisfying that impulse so that I can appreciate it’s satisfaction again. Just like fasting from food can make you really remember how good a doughnut tastes.

Another goal with this spending fast is to reclaim the time and energy that I spend shopping. Between time spent pumping gas, at the grocery store, or obsessively online shopping for the perfect version of whatever we need (then returning said perfect thing when it doesn’t fit the kid it was intended for), I spend a lot of time and decision making energy spending money. I want to take a break from that, and I hope to get some perspective on how much energy I’m actually spending on spending.

My last goal is to take a break from the “need” dialogue of consuming.  There’s always some need justification going on when I buy something.  But there are plenty of people with smaller budgets than mine who would have a different threshold for needing something. So I’m hoping to take a break from the need dialogue that goes in my head in order to use my mental energy for other thoughts.

But, you guys, this is going to take some serious planning! This isn’t really an exercise in saving money, it’s more of a money-mentality-reset.  I am going to spend some time this weekend planning and stocking up on everything I will need. Here is my plan:

Food: I am doing one massive menu plan.  I am going to buy stuff that can cellar (like apples and potatoes) plus frozen veggies for later in the month, and will plan to eat a lot of perishable things like salad and melon on the front end of the month.

Gas: We are filling up the tanks on the first of the month and then plain not driving much so that the tank lasts.

Gifts: I am shopping ahead for the smattering of birthday gifts and valentines that I will need in February.

Want to join me? I thrive on contrived all-or-nothing challenges like this. I am going to keep you updated here about how this goes…maybe it’s unrealistic? I’m excited to try, though…

[image here]

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You Get Used To It


I got a desk at a co-working space a few years ago, and the guy who had the desk next to mine had the BIGGEST most-amazingly-huge computer monitor ever made. Anyway, when I awed at his monitor he gave me this resigned face and just shrugged, “you get used to it.

Isn’t insanity supposed to be doing the same thing over and over but expecting different results? Does that describe our recreational buying habits?

Note to self: the things are not going to make you happy. You ARE going to get used to them, and then like a little consumer-goods lab rat you are going to go sniffing around for your next treat. The only exception, and this is straight from the scientist’s labs, is if you buy memorable experiences. Even if you have a shit time on your ‘experience,’ your tricky mind will turn that memory into part of your story, and having a robust story makes you happier.

In conclusion: stop it with the buying stuff; do something fun / different / challenging / scary.

[I love this painting by Ji Dachun]

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The Apocalypse


So New York was supposed to have a huge snow storm, and people were lining up in droves buying everything on the shelves at the grocery/liquor/hardware stores. It makes me think about the resources we spend stocking up for the future unknown (cash, batteries, canned beans, retirement) vs how much we enjoy the moment and then scramble/deal when an emergency hits? Is there a right middle ground?

If you have stockpiled your apartment with emergency provisions, you are sacrificing the potential to enjoy your apartment in an ultra-conservative attempt to be prepared for the unknown. But at the same time, if you don’t prepare at all you’re SOL or hoping for handouts if disaster hits.

Similarly, if you hoard your cash you are sacrificing your potential to enjoy a vacation or grow your money by investing, in an ultra-conservative attempt to be prepared for the unknown. But at the same time, if you don’t save for your future, you’re working well into retirement and scrambling whenever unexpected expenses arise.

If there’s a balance in there, here’s my version of it:

Common wisdom for cash: keep 4-6 months of expenses in a liquid savings account, spend money on fun/fulfilling experiences, and invest the rest.

Common wisdom for survival: $5k in literal under-the-mattress-style cash*, enough canned food and water to feed your family for 10 days, and an always-charged phone.

*I just made that up but it sounds like a nice amount – enough to buy some legit favors or black market goods if you need to.

*image here

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529 Plans


529 plans have been in the news a lot recently after Obama’s State of the Union.  Here’s my executive summary for the passively curious.

What is a 529: A 529 plan is an investment account that you set up to save money for your kids’ higher education.

Where to set it up: 529 plans are state sponsored, so you should set it up in your home state in order to receive any additional benefits that your state offers.  Extra tax incentives vary from state to state, but often your contributions are tax deductible, and some states offer matching grants.

Who owns the account: You own the 529 account, but your child (or grandchild or niece or whoever) is the beneficiary. If you decide to withdraw the money for something other than that child’s higher education, you have to pay a 10% penalty.

Contributions: Your contributions to the 529 are post-tax.  The accounts are set up to make it simple for grandparents or other family members who aren’t the account owners to contribute to your child’s account.

What happens to the funds: The account is state sponsored but managed by an investment firm (like Vanguard).  You can set the investment strategy for your child’s fund, and these choices are guided by the program with suggestions for risk based on your child’s age. The account will typically be automatically rebalanced towards more conservative investments as your kid gets closer to college age.

Tax breaks: Your contributions to your 529 account are post tax.  But when you withdraw the money any earning on the account is not taxed. (although…see below)

Obama proposed: that any earning on your account would be taxed as income when it is withdrawn, AND that the account earnings would be considered the child’s income when applying for financial aid.  These changes would only affect new contributions, so if by some miracle you already have a fully funded 529 account, this would not impact your account.

Should you set one up? Yes.

Five bonus thoughts:

1) Because of the power of compounding, the earlier you start the more time your investment has to grow. Anything is better than nothing – conquer inertia and just get the account set up, put in $20, and let time be your ally.

2) Set up automatic deposits into your account, even if that means $5 per month. This is a free service provided by the state to help you save; take advantage of it! Also, once you have done this legwork it’s easy to go in and up your contribution when you can. Also having a deduction every month serves as a little reminder as you are looking through your finances that you need to be saving for college – it keeps it on the front burner, as they say.

3) Share the contribute link with family who might want to contribute around birthdays or holidays – especially before your kid is old enough to know the difference.

4) Always prioritize saving for your own retirement before your child’s college saving.

5) Even if Obama’s plan goes through and 529 earnings are taxed, still set up and contribute to a 529 account. This is a vehicle for savings, and any tax bonus is just extra incentive – not your main motivation for saving.

[pens here]

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Investing In Oil

oil-paints[oil paints: prettier than oil fields]

Wow, there are so many bad puns being used in investment articles related to the oil industry, I almost had to abort my research because reading them was becoming too painful. But if you want to “gas up” your portfolio, I’ve got some really “slick” ideas for you…sorry.

I feel bad for all the richies that are heavily invested in oil…George W. comes to mind (speaking of which, Jeb for prez?  Really??  You’d think America has a deeper roster than that.).  Anyway, the price of oil has plummeted for seven straight weeks and is now down 50% and at it’s lowest price in six years.  Of course everyone and their mother has an opinion about what’s happening next, but general consensus seems to be that the price will continue to fall for the first half of this year, and then rebound to about $75 by the end of 2015.

Oil is currently trading at $47/barrel, my target price is to buy at $30. Some say it will get down to $20, some say it’s already at the bottom. There is an oversupply of oil, and since big producers like Saudi Arabia are not restricting production, the price is swinging back to a competitive (vs. monopolistic) pricing.  If oil is priced competitively for awhile, this theory goes, than it will trade somewhere between the break-even cost for oil production in conventional oilfields ($20) and the break-even cost for shale-oil production ($50).

If you want to get into oil now, an ETF* is a good way to do it, this way you can let the experts trade and hedge on the various oil companies for you.  If crude oil gets down to my target price, I am going to buy: USO (which tracks the price of crude oil), UGA (which tracks the price of gas specifically) and XLE (which tracks oil related energy companies).

*ETF = exchange traded fund.  This is often an index of companies in a certain sector, or in the case of oil, the fund is tracking a commodity. You buy an ETF just like you would a stock, but that stock invests you in a bunch of other companies or assets.

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