Novel Investor

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Happy Hour: Better 2012 and Stock Picking Challenge

by Jon

As goes January, so goes the year!   Or so the January Effect saying goes.  If the first few days of 2012 is a sign of things to come, we’re in for a good year.  At least that’s the hope.

Better 2012

The folks over at Betterment have put on a Blogging For A Better New Year event.  It’s an article a day about the importance of setting goals for your life and investments, written by some of the best finance bloggers out there.  How I was included is beyond me.  Most likely just a filler, but proud of the opportunity nonetheless.  Mostly because I finished writing it three weeks in advance.  The collection has been great reading so far.  Check it out.

Money Pro Challenge

A stock picking challenge is being had over at Money Pros and I tossed my picks into the fray.  The rules are fairly simple: pick 3 stocks that you think will do well in 2012, submit them, and wait.

I thought I’d put my money where my mouth is and submit 3 stocks I own (but reserve the right to sell at any time).  Here’s my picks:

  • New York Community Bancorp. (NYB) – The lone bank stock and dividend play of the bunch.
  • MGM Resorts (MGM) – MGM is a play on an economic recovery in the US, specifically Vegas.
  • Whiting Petroleum (WLL) – Energy is always a good play and oil is king.

Being a competition I’d like to point out I’m up almost 8% for the first week.  Too bad we can’t take profits along the way.
Disclosure: I own shares of NYB, MGM, and WLL.

Last Call

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Predictions For 2012

by Jon

Starting any new year there is an abundance of prediction posts that have been popping up for the past few weeks.  Think of it more as an educated guess on what’s to come in the next year.

Making predictions offers a chance at a better understanding of the financial world around us and how to invest in it accordingly.  Plus it’s just downright fun!  Sometimes we’re right, others we’ll be wrong.  But it’s a good exercise for investors to pick up so you can plan your allocation accordingly.

In an effort to get the mental juices flowing after the New Year’s celebration, here’s my predictions for 2012.

Europe

The Euro doesn’t break, but it does become the most expensive currency ever to maintain.  The final price tag for keeping the Euro alive closes in on $3 trillion when it’s all said and done.  Too bad they didn’t act sooner.

Don’t expect the Euro mess to end quickly either.  I’m looking at a timeline of 6-9 months.  Sometime around July sounds best.  August is a big vacation month over there and no one will want to deal with this after an extended holiday.  Until then, expect volatility similar to what was seen this past year. This whole event is far from over.

US

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Goodbye 2011: Best And Worst Market Awards

by Jon

2011 Best And Worst AwardsPart of having a finance blog offers me the opportunity to add my two cents every now and then.  With that in mind I’ve come up with the Novel Investor Best and Worst Awards for 2011, relating to stocks and ETFs that may or may not have been part of your portfolio this past year.

In order to come up with the stock list, I eliminated all penny stocks and limited the list to the more well known companies.  For the ETF list all leveraged ETFs were eliminated.  Something to keep in mind before getting into the winners or losers, these are not investment recommendations and past performance doesn’t equate to future performance so invest at your own risk.

Best Stock of 2011 – Mastercard (MA)

In a time when debt has been the biggest topic in personal finance, Mastercard stock was one of the best performers of the year.  Finishing the year up 64%.  Thanks in large part to the growing cashless society we’re moving towards.  The Fed allowing banks to charge more for debit card fees didn’t hurt either.

Worst Stock of 2011 – Research In Motion (RIMM)

Proof that not keeping up with tech trends is bad.  The maker of Blackberry phones has been destroyed with the advances in the smart phone thanks to the Apple IPhone and the growth of Android smartphones.  RIMM failed to get on board and has been killed because of it.  Starting off January at $58/share and ending the year around $14/share, for a loss of -76%.

My two cents is this company is done.  The current smartphone wars will come down to Android and Apple.  Very reminiscent of the operating system war of the 90s.  Android is the new Windows for smartphones.  Hopefully better, but there’s only one real winner in Google.

Best and Worst Stock Award – Netflix (NFLX)

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Holiday Roundup: Lessons From A Christmas Vacation

by Jon

In the spirit of higher learning I decided to put myself through the arduous task of studying the educational side of National Lampoon’s Christmas Vacation.  A few things I took away from the hours of research:

Several strings of lights are okay, 250 strands for a grand total of 25,000 imported italian twinkle lights, might be excessive.  If you’re trying to compete with the laser light show at Epcot Center, stop, you lost already.  Your wallet will thank you and so will your neighbors.

Writing a $7,500 check to cover the deposit on a swimming pool when you don’t have money in your account is a bad idea.

Hoping that your Christmas bonus shows up on time and is big enough to cover the check is even worse.

I’m not sure how far ahead one normally pays for a pool instillation, but the middle of winter might just be too early.  Paying too far in advance is borderline sketchy, wait till the ground thaws.

Despite what you might think, kidnapping your boss, will not get you that bonus either.

When the insanity of the holidays begins to set in, remember, there’s always Jack Daniels. Continue Reading…

I’m Addicted To CNBC!

by Jon

If I had known several years ago, that going down the CNBC path would be so addictive, I would have switched to the Cartoon Network.

It all started back in 2006 or maybe 2005, I’m really not sure, probably earlier.  My job allowed me the unfortunate opportunity to watch daytime TV.  I worked nights, or at least evenings to early mornings. While most people came home from their 9 to 5, I was off to work.  Which was fine by me.  Except one thing, there is almost nothing of value on daytime TV!

Once you get through the talk shows, soaps, People’s Court rip offs, and reruns, you’re left with sports news, world news and market news.  I found out real quick that sports news tends to be on a repeat news cycle until the nightly games start.  World news can be way to negative.  Certainly educational, but depressing.

Then there was CNBC!  I was immediately hooked and needed my daily fix. Continue Reading…

New Cost Basis Reporting Changes For 2012

by Jon

Cost Basis ReportingStarting January 1, 2012 new cost basis reporting changes will take effect regarding mutual funds, ETFs, and DRIPs (Dividend ReInvestment Plans).  Under the new changes, the IRS will require all brokerages and fund companies to track the purchase and sale price of these assets.  These are similar to the cost basis changes for stocks that were put into place at the beginning of 2011.

Cost basis, if you’re not familiar, is the original value (purchase price) of an asset.  This value is used by the IRS to determine your capital gains (losses) when you sell shares in a mutual fund, ETF, or stock.  Which is why it’s so important to track your investment purchases and sales closely.  Using a simple spreadsheet covering: purchase date, invested amount, shares purchased, and sales date, will get the job done.

Which Shares Will Be Impacted?

Every time shares of a stock, mutual fund or ETF are purchased, that transaction is given a share lot ID, also referred to as a tax lot ID.  Even if you already own shares, each new purchase is given a separate share lot ID.  If you invest money every month into a specific mutual fund, there will be separate share lot IDs for every purchase.

Starting in 2012, all new share purchases in non-retirement accounts will be affected by these cost basis reporting changes.  Any shares bought prior to January 1, 2012 will not be affected by these changes.  The reason retirement accounts are excluded from the changes is due to the tax advantages of those accounts. Continue Reading…

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