Tuesday, November 07, 2017

Delaying Income and Advancing Deductions to Take Advantage of Expected Tax Reform

I think it's a good idea to look at the possible impacts of tax reform on our finances.

In my quick review,  I've concluded that I will lose out on deductions but gain on the increased child tax credit and lower tax rate.   Net, I will be slightly ahead and can manage our income stream better to minimize taxes.  In addition, our tax return will be significantly simpler, requiring far less time to do each year.

So for 2017, we will move forward all deduction, e.g. medical expenses, charitable contributions and property tax.   We will delay income such as IRA withdrawals until next year.    In addition, we will increase the amount of income from dividends, since I expect the 0% capital gains tax rate for those in the lowest tax bracket to be maintained.

Of course, YMMV since each individual's situation will be impacted differently by tax reform.

For more on Ideas You Can Use, check back every Tuesday  for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, November 04, 2017

Still All Clear for a Market Top

Previously, I posted about my three signals for a market top: 1) Bears capitulating; 2) Beaten down stocks reach 52 week highs; 3) Oil reaches $100/barrel.      First oil is still at about $55/barrel, second stocks such are Under Armour, GE,  and JC Penney are hitting new 52 week lows; and third bears are discouraged, but still bearish.

However, I am still a bit cautious and selling some of my winners to take profits.  In addition, I am shifting my equity weights towards REITs (for guaranteed income), and  international (for higher relative returns).  At this point, I don't think there will be a severe correction or crash will occur in U.S. markets.  Rather international markets will outperform the U.S. and so I am shifting my weightings toward those markets.

Disclosure:  At the time of this post, we owned shares of Under Armour, JC Penney, and GE... unfortunately.

For more on  Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, October 30, 2017

Taking Some Profits and Sticking with Winners

For now, I am continuing to take some profits but selling parts or all of my winning positions. In many cases, the stocks have advanced further, which indicates the bull market is still intact.  We are still maintaining our core positions, and thus are still participating in the gains.

Although I'm tempted to buy some underperforming stocks, I am going to resist.  It seems that underperformers continue to underperform, e.g. GE, Under Armour,  and Oil related stocks.  On the other hand, outperformers tend to continue to outperform, e.g. Amazon, Alphabet, Nvidia and Netflix.

If I take any new positions, I will focus on buying stocks that have been outperforming.   My only variance from this strategy is to increase our positions in certain REITs, which mostly have dropped from their recent 52 week highs.   The REITs offer nice dividend payments, which are great for tax deferred retirement accounts, since REIT dividends are taxed as ordinary income.

Disclosure:  At the time of posting, we owned shares of GE, Under Armour, Amazon, Alphabet and Netflix.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, October 28, 2017

More Exuberance but Not Yet Irrational

Amazon, Alphabet (parent of Google), Microsoft, and Intel had outstanding earnings and their stock prices advanced significantly on Friday.   Apple and Facebook, which report this week also advanced nicely.   These tech stocks (excluding Intel) gained $181 Billion in market cap on Friday.

Definitely, more exuberance. (Even I am starting to want to put more funds in these names.) However, it doesn't seem irrational yet.

First, the bears haven't capitulated.

Second, my beaten down stocks are still at or near their 52 week lows.

Third, oil is higher but no where near $100/barrel.

So while I remain cautious, I expect the market indices to continue grinding up and lengthen the most unloved bull market ever.

Disclosure:   At the time of posting, we owned shares of Amazon, Alphabet, Apple, Facebook, Intel and Microsoft.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, October 24, 2017

Seth Klarman: The Question Investors Should Be Asking

According to Baupost's Seth Klarman, the question investors should be asking is, "How can I afford not to sell with the risks I'm taking on?"  I think he makes a good point since the downside risks of this market are much greater than the upside potential.  Raising cash for future opportunities and being invested at a (much) lower allocation makes sense to me at this time.

For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, October 22, 2017

What If Low Interest Rates Continue?

Most people are expecting interest rates to rise and inflation to increase.  But what if it doesn't?   Could this bull market continue for several more years, despite all the skepticism?

My thinking is yes, if interest rates continue to be low.

So I am going to start hedging against interest rates being lower for longer by investing more in REITs, dividend paying stocks and long term CDs.


For more on New Beginnings, check back Sundays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, October 21, 2017

I'm Not This Good

"Don't confuse brains with a bull market." ~ Wall Street adage

 Everyday, it seems, our accounts are going up and frequently hitting new highs.  It would be wonderful if it was do to my exceptional stock picking.   However, I know that it is more likely due to an exceptional bull market.

So while I'm enjoying the market advance, I'm not bragging about it.   I know if will only take a bear market, or even a lengthy correction to make me look a stupid.

But until that bear market or correction comes, I will continue to take advantage of this market rally by staying invested and taking some selective profits.  That way I will feel a little less stupid when the inevitable correction or bear market appears.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, October 13, 2017

Protecting Profits and Raising Cash

At 10 years into retirement, I cannot afford a 50-70% decline in our overall savings.  First, we are entirely dependent on our savings to cover living expenses.  Second, we don't have the luxury of waiting 3-5 years to recover our losses.

We have been enjoying this bull market and the recent advance.   However,  I also feel the downside risk is greater than the upside potential, and the risk continues to grow.    So I've been taking the opportunity to sell some profitable positions and raise some cash.  

For now, I am maintaining our core investment positions, acknowledging that the amount may lose over 50% in the next bear market.   However, since our core position represent about 33% of our investable assets, I believe we can safely handle a major decline in the stock market.   Thus, I can sleep well at night, despite the possibility of a significant bear market.

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial, investing, or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, October 11, 2017

My New Pain Trade Signal

"Markets tend to deliver the maximum amount of punishment to the most investors from time to time." ~ Wall Street Adage

The current greatest pain trade is shorting the market.   The next biggest pain trade is not being invested and being entirely in cash.   Interestingly, investors in these situations don't feel they are in a pain trade.   Most of them still feel they are right, but perhaps a bit early.

These investors are convinced that a market correction is imminent and refuse to consider that the possibility of the bull market continuing.  As long these investors continue to justify their investing strategy, the market will continue to grind up and perhaps even melt up.   It's when these investors finally throw in the towel and admit their pain trade that I will worry about a market top.

For now, I am still bullish, but also cautious.  So I am taking some profits in our trading positions, while maintaining our core holdings, which will continue to benefit from the rising market.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing  advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, October 03, 2017

Bears Getting Closer to Being Right

Every passing day is a day closer to a bear market.    So every day, the bears are closer to being right. So I'm preparing for the inevitable.   I'm trimming some of our positions, raising cash and creating an investment plan for when the market drops 10%.

The market will fall 10% someday.  And we'll be ready for it.

For more on Ideas You Can , check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, October 01, 2017

Easy Way to Become Rich

According the progressive pundits, Trump's tax reform only benefits the rich.   Since 45.3% of households (77.3 million) pay ZERO federal income tax, only the 54.7% that pay federal income tax will benefit.

So those that pay federal income tax are now part of the rich. Who would have ever thought it was that easy to become rich.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, September 30, 2017

The Best Reason for Being Bearish

Is it because the market overpriced?  No.  Is it because of geopolitical turmoil, aka North Korea?   No.  Is it because the Fed raising interest rates?  No.  Is it because of issues from natural disasters?  No.   Is it because of  the lack of congressional action?  No. Is it because Donald Trump?  No.

According to Merrill Lynch "the best reason to be bearish is. . .there is no reason to be bearish."  Their point being that the current market advance continues to look great so beware.

However, it seems to me that most people are already bearish: here and here.  I guess all the other reasons, which most investors seem to be worried about,  aren't leading to a bear market, so Merrill had to make the contrarian case.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, September 29, 2017

Getting Paid to Buy

Lately, I've notice that more merchants have been sending free money to spend in their stores.   A couple of years ago, it was only new restaurants that did it to get trial.  Then Chick-Fil-A started send out coupons for free products periodically.  A while ago, Kroger started offering a coupon for a specific free product each week.   Since I go to Kroger or pass by Chick-Fil-A several times a month, it was easy to use the coupons.

At first, most free products were less that $5.  Then last year, I started getting $10 off coupons (for any total purchase on $10 or more) from Staples on a weekly basis, which has since stopped.  Recently, I received in the mail a $10 gift card and $5 gift card from Lowe's and Target respectively, that have no restriction.  Essentially, it was cash that could only be spent in their stores.

Since I live within  2-3 miles of all these stores, it easy for me to go there and make a purchase even if is an additional stop.  Usually, there is something I can use even though I may not need it immediately.

A question is why I am getting these new gift card like coupons.   I don't really know.  In one case, I am a member of the rewards card; in another, I have the store credit card; and on the last one, I have no relationship other than being within 2 miles.

Maybe it's just because I'm retired an have the time to take advantage of these offers

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial or shopping advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, September 25, 2017

Correction...or Rotation?

Right now, my opinion is this is a rotation.   Technology didn't do well today.  Oil and most of our  biotech stocks did do well.

Fortunately, we own a bunch of beaten down oil and biotech stocks, which offset the declines in our technology stocks.  So our self managed accounts were mostly up despite the decline of the indices.

For now, I plan to continue selling into the rally.   If technology stocks get beat up sufficiently, then I may buy back a small amount in some previous holdings.

For more on Strategies and Plans, check back Mondays   for a new segment.

This is not financial  or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, September 24, 2017

My New 10% Rule

I read an article that stated since 1950, the market has had 35 declines of 10% or more.  In all 35 instances, the market passed the previous highs.  Sometimes within a few weeks, other times a few months, and in a couple cases a few years.  But the recovery happened 100% of the time.  I would include a link to the article, but I can no longer find it.

Of course, the issue is timing.  If it takes 5 or 10 years to recover, it may be challenging for those who have no other source of income.  But if one has time, and other sources of income, it seems to be a no brainer decision to invest something

So from now on, when the market drops 10%, I will put some funds in an index ETF, such as the Vanguard Total Market ETF or the Schwab Broad Market ETF.   Of course, I will use funds that we won't need for at least 3-5 years, such as our children's savings/college accounts..

With all the geopolitical issues, I may get the opportunity to use this new rule sooner versus later.

Disclosure:  No compensation was received for this post.   At the time of the this post, we own shares of the Vanguard Total Market ETF and the Schwab Broad Market ETF.

For more on  New Beginnings, check back Sundays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, September 23, 2017

Grinding Up

"The reports of my death are greatly exaggerated." ~ Mark Twain

So is the imminent death of this bull market.

This bull market is like the energizer bunny.   It just keeps going up, despite, or perhaps because of, all the negativity by, well, everybody.   It's a Goldilocks market: not too hot, not too cold, but just right.

It is also a retirees dream market.   Every year, our net worth grows, despite having spent money for our living expenses.

Of course, this can't go on forever.   If this bull market lasts another year, it will be the longest bull market on record.   I would surely enjoy a few more months, or (wishful thinking) a few more years :-)

For more on Reflections and Musings check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, September 13, 2017

Growing Signs of a Market Top

"No one rings a bell at the market top." ~ old adage

My accounts are showing two of the three signs of a market top.  Many of my beaten down stocks are starting to rise, but nowhere near o 52 week highs.  Oil prices are rising but nowhere near a $100/barrel.

The only sign I don't see are bears capitulating.

So I continue to be cautious but staying invested.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, September 10, 2017

My Third Signal of a Market Top

My first signal is when bears capitulate.  My second signal is when my beaten down stock reach new 52 week highs.

My third signal is when oil reaches a $100/barrel price again.   Ha, ha.   If that happens, I'll be laughing my way to the bank as I sell all my oil related stocks.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, September 04, 2017

Negotiating on Unsolicited Real Estate Offers

I have some investment residential real estate in which developers are becoming more interested.  I have not put the property on the market, but I get occasional unsolicited offers to purchase.

Here is what I've learned from the negotiating process:
  • Listen a lot, talk very little.    Let the developer's agent do all the talking.   Remember all relevant information:  developer's company, previous developments, intent for the property.  The more information I have, the better my negotiating position since I can research the information.
  • Share only public info; don't share non-public info.   I am happy to discuss property size, zoning, topography, property cost, etc.  Remember, the agent represents the developer and will share everything with the developer.  
  • Know my property potential.  With the Internet, I have been able to research nearby properties for sale and nearby developments.   With that information, and a previous appraisal, I determined a fuzzy asking price for discussion.  
  • Be ready for a low ball offer.   I have had some very low bona fide offers, which were later increased 33% to 200%, despite the agent implying I was getting a good offer.
  • Counter all offers, even if the counter is the asking price.   In an article I read, low ball offers sometimes end with up final contracts within 5% of the asking price.
  • Specify that all discussions are negotiations and that nothing is binding until written into contract, reviewed by my attorney and signed by both buyer and seller.   That way no verbal or email discussions are binding.
  • Be ready to walk away from the negotiation.    Since I wasn't planning to sell for a couple years anyway, this is easy to do.
Finally, I always remember that I am the only person looking out for my interests, especially when the  buyer's agent or buyer offers to provide me "professional perspective" to convince me to sell. 

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial,  real estate or legal advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, September 03, 2017

80 is the new 55

Today, we are celebrating my mother-in-law's 80th birthday.

HAPPY BIRTHDAY.

She is doing very well, since 80 seems to be the new 55.  That makes our kids happy, since they love seeing their grandmother.

For more on New Beginnings, check back Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, September 02, 2017

My Second Signal of Market Top

Recently, I posted that one of my signal of a market top is Waiting for Bears to Capitulate.  My second signal is seeing my beaten down stock holding achieve 52 week highs.  Examples include Under Armour,  Chesapeake Energy, Contango Oil and Gas,  Infinity Pharmaceuticals, and Geron.  When that happens, I will know exuberance is happening and it will be time to exit the market.

In the meantime, I expect the market to keep grinding up, making it painful for the bears.

Disclosure: At the time of posting, we own share in Under Armour,  Chesapeake Energy, Contango Oil and Gas,  Infinity Pharmaceuticals, and Geron.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, September 01, 2017

When to Take Social Security

We have a more complicated that usual decision on when to apply for Social Security.  Because we will have minor children when I turn 62, the children and my spouse will qualify for auxiliary benefits when I file.  So the children will collect auxiliary benefits until they are 19 and my spouse will collect auxiliary benefit until the youngest turns 16.   Due to the auxiliary benefits, a simple calculation the break even age is around 88 years, i.e. after 88, I would be better off to have waited.

I have even read one article,  Why Social Security Dependent Benefits For A Child Can Make It A Good Deal To Start Early And NOT Delay, that shows one never breaks even, assume 3% inflation, 6% growth and the lost opportunity cost of spending down other assets.

The downside of take Social Security early is the reduction of the survivor benefit, if my spouse out lives me.    At my death, my spouse would receive my benefit, which is higher than the spousal benefit.  However, if I wait until I am 70, she would get a significantly higher survivor benefit that has a cost of living adjustment, which makes it attractive to wait.

Of course, that assumes that Social Security will be around or won't reduce benefits in the future.  So maybe taking it early will ensure we receive some benefits before any future changes are made.  

In any case, I sill have a couple years to decide and should wait since the rules may change between now and then.

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial  or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Thursday, August 31, 2017

A Market Crash is a Golden Opportunity for our Children


Markets have always recovered to new highs after every crash.  Sometimes it just takes a while.

A crash is very risky for me since I am retired.   However, for our children, a crash would be a great investment opportunity.  After all, they have a 50+ years to wait for the recovery.

So if there is a stock market crash, our plan is to make significant investments in our children's accounts.   That way they can reap the benefits of the inevitable recovery.

For more on  Crossing Generations, check back Thursdays for a new segment.

This is not financial, parenting or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, August 30, 2017

Waiting for Bears to Capitulate

It's hard to predict market tops. However, I look for simple indicators that a market top is near. One of them is lack of bears, because they've all thrown towel.  

Right now there are still lots of bears.   In fact, the number of bears is still growing.    So no worries.

For right now.

For more on The Practice of Personal Finance, check back Wednesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, August 29, 2017

Look at the Economy, not Politics

From 2009 to 2016, I was under invested because I believed the administrations policies would be a significant drag on the economy.   (Actually, the policies were a drag but in a good way to keep the economy from overheating.)   So I partially missed out on a great bull market advance.

Now the people with the opposite political beliefs are making the same mistake.   I know people who believe that Trump will soon bring down the market.   So they have deinvested from the market.  They are making the same mistake I did in 2009, investing based on political beliefs.

Instead, the economy is doing well, and Trump keeps it from overheating.  So I'll plan on the market continuing its slow advance, since no bubbles, with the exception of bitcoin, are happening.  And there isn't enough market cap in bitcoin to bring down the economy if there is a bitcoin crash.

For more on  Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, August 23, 2017

Tax Loss Selling

Although it's still a ways from the end of 2017, I am already considering how we will create tax losses against our gains, while maintaining positions that I want to keep.

As background, the IRS has a 30 day wash sale rule that prevents investors from selling losses and immediately repurchasing the same stock.    An investor needs to wait over 30 days when buying back the same stock.  

One way to circumvent this rule is to buy a different stock, but similar in business.  An example would be to sell GE at a loss, and buy United Technologies as a replacement.    This would avoid the 30 day wash rule.

My approach is acquire or sell the subject stock, and then sell or buy the same stock 31 days (or more) later.  Of course the risk is that the stock will rise during that time.  So I tend to acquire first and then sell late.

Stocks I am considering for tax loss selling:  Tidewater, Seadrill, Contango Oil and Gas, and Under Armour.

Disclosure: At time of posting, we own shares of GE, United Technologies, Tidewater, Seadrill, Contango Oil and Gas, and Under Armour.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial, investing, or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, August 22, 2017

Anticipating a Flash Crash

With all the anxiety and concern about current  market valuations, I think there is a small possibility for a flash crash to occur, due to algorithm trades being activated by some event.   So I am putting in some good til canceled orders at 40-70% below the current price, just in case a flash crash happens.

I wouldn't mind owning more Amazon, Priceline or Netflix at 50% or lower than current prices.

Disclosure:   At the time of this post, we own shares of Amazon, Priceline and Netflix.

For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, August 21, 2017

Waiting and Planning on the Sidelines

The stock market is looking very weak to me, i.e. ready for a pullback.

I've sold most of my non core positions that are profitable.  However, I am still waiting before buying back my sold trading positions.

So I am making short list of the actions I plan to take for a small pull back or a big correction.  ( I don't expect a bear market at this time.)

At this time, I plan to be patient.   Although, the market may rebound quickly, I am waiting for a further drop before making any significant purchases.

For more on Strategies and Plans, check back Mondays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, August 19, 2017

Why Isn't the Stock Market Crashing?

"It's the economy, stupid." ~ James Carville

With all the negative events of the past week, why hasn't the stock market fallen further?   Charlottesville, Barcelona, Finland and the Trump administration turmoil were all negative events.  These types of events would have caused significant market declines in the past.  Why not now?

Here's my reasons for the resilience of the stock market:

  • The economy is continues to improve.  Corporate earnings are good.   Unemployment is low.   Inflation is low.  
  • The economy is not overheating.  Companies are still cutting costs and not over investing in growth.  There doesn't appear to be any business frothiness.   In fact, the economic recovery continues to one of the slowest ever.
  • No significant bubbles.  The only bubble I see is bitcoin.  Other than the bitcoin markets, there isn't any exuberance.   In fact, there is significant caution in most markets.
  • No recession in sight.  Typically, bear markets coincide with recessions.   At this point, there aren't even small concerns about a recession.

Of course, economic conditions can change quickly, but right now the economy looks very positive to me.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial, economic or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, August 16, 2017

De-Risking But Staying Invested

I am clueless as to why the stock market keep advancing.  There is domestic turmoil, there are geo-political issues, stock market breadth is getting very narrow, and there is political gridlock even  though one party is controlling.  The only positive is that the economy, both global and US, continues to improve.

We are only one or two major negative events away from a significant market decline.

Until then, the market will continue to grind up higher.

I'm not a fan of completely exiting the market and going to cash.  However, I am willing to reduce risk by selling some stocks and taking some profits.  I may even sell some stocks at a loss, if I expect them to all further.

So I plan to sell my peripheral holdings, taking profits in my trading positions, and take profits to maintain accounts at minimum levels.  If the market declines, the pain won't be as great.   If the market advances, I will partially participate.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, August 15, 2017

What's Hot and What's Not

The stock market has become very discriminating.   Even though indices are near all time highs, many stocks are not.  In fact, there are many near 52 week lows.    So here is my perspective on what's hot and what's not.

Hot
  • FAANNG -  Facebook, Apple, Amazon, Netflix, Nvdia and Google (now Alphabet).   Nvidia, Facebook and Apple are really hot.  Amazon, Neflix and Google have cooled a little but can easily recover.
  • Priceline and Tesla - Both have pulled back from their highs, but I would still consider hot.
  • Alibaba - At all time highs with earnings coming up this week.
Not
  • Retail, especially apparel-  This sector is getting crushed, with many stocks at or near 52 week lows.   More downside risk that upside potential at this time.
  • Oil - Many stock are hitting new 52 week lows.
  • Materials - Weak and getting weaker.
Being a contrarian isn't working now.  Stocks in the Not category can't find a bottom and  keep going down.   Buying momentum is working.  Even if stocks in the Hot category correct, they quickly  rebound to new highs. 

So for me right now it's either go hot or stay in cash.

Disclosure:  We own the following stocks:  Facebook, Apple, Amazon, Netflix, Google (Alphabet), Priceline and Tesla.  Unfortunately, we own a bunch of oil, retail and materials stocks too.

For more on  Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, August 11, 2017

To Buy or Not to Buy

After yesterday's drop in the market, it's tempting to consider purchasing some beaten down stocks.   Several stocks have fallen to 52 week lows and some have even fallen to all time lows.  On the other hand, several stocks have hit new 52 week highs and then fallen 10-20%.   Earnings season hasn't been kind to these stocks.

In my younger days, I've typically purchased the stocks near their 52 week low.  However, that strategy doesn't seem very promising at this time, since stocks near their lows seem to keep going lower.  Lately, I've focused on buying stocks that have been advancing and near their highs.   This worked well when I started in early May.  But recently, these stocks have fallen from their highs and some are below my purchase price: oil stocks, retail stocks, and biotech stocks.

Now that I'm retired, I don't have as much time to recover losses.  So I am a bit more cautious.   Articles like Cracks in the bull market: Amazon and 199 other S&P companies now in correction make me think it may be too soon to start buying.

So here's what I will be doing.   First, I am not buying the beaten down stocks near their 52 week lows, yet.  I am going to wait until the pain is so great that there is no hope, and then I may buy some.   Second, I will buy small positions in a few previously "winning" stocks, for example, Nvidia.  Third, I will continue to look for opportunities to take profits or otherwise de-risk our investments.

I still don't think the bull market is over, but I am hedging against the possibility that I am wrong.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, retirement or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Thursday, August 10, 2017

Only Six More Years

Until our daughter goes to college.

It felt like forever until she got into kindergarten.   Now it seems it will be the blink of an eye before she goes to college.  Where did all the time go?

We'll definitely miss our oldest when she goes to college.  

Fortunately, we started saving for college the year we adopted her.    The savings should be able to cover costs for most colleges.   Should she be accepted to a more expensive school, we'll work to cover the additional costs so she can graduate without any student loan debt.

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial or education  advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, August 08, 2017

Good News is Bad News

This earnings season has been interesting.  It seems that several companies with excellent earnings reports have had their stock price beaten down significantly.   I don't get it.   Revenue and earnings beats are resulting in the stock going down.   The reason given is that the forward guidance disappointed.

Tomorrow that is going to happen one of our holdings, The Priceline Group.   It is already down $137 in after hours trading.   This phenomenon has also happened to a few other companies I am trading.   My expectation is that the drop is short term and the stock prices will recover since these are outstanding companies.

We'll see...

Disclosure:  We own shares of Priceline.


For more on Ideas You Can Use, check back Tuesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, August 05, 2017

When It Rains...

It pours.

I typically do most minor home repairs, but lately, stuff is breaking faster than my pace of fixing things.

I still have a few not urgent plumbing repairs on my list.   Then this week, I determined my refrigerator gasket is deteriorating and found an underground rainwater drainage pipe has a break  Then today,  my son breaks the door handle on my spouses car.

My first two discoveries were already taking up significant time as I was figuring out how do to the repairs.   My biggest concern was the refrigerator, since a poor repair would have us lose a lot of food.   So I was carefully working out the details.

Now my son has added more complexity to my tasks.   It seems that replacing a door handle requires major, in my opinion, disassembly of the car door.    Again, a little risky if I don't do it correctly, since my truck is able to transport our entire family.

So I'll be very busy in the next week, figuring out if I can manage the work to minimize risk or if I should just have the professionals do it.

For more on  Reflections and Musings, check back Saturdays for a new segment.

This is not financial or home/car maintenance advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, August 04, 2017

No Regrets for Retiring Early

"Lot less money, but a lot more time." ~ me on early retirement.

It's been almost 10 years since I took early retirement at 49.   Looking back, it was extremely challenging due to the Great Recession, and I gave up a significant amount of earnings.  So the question is, "Would I do it all over again?"    The answer is, "YES!"

Here are the reasons:
  • I might not be alive today.  Five years after retiring, doctors found significant blockages in my arteries.  I suspect I may have had a heart attack due to stress if I had continued working.
  • I received retiree health insurance from my company.  So I didn't need to find private insurance or use Obamacare.
  • I could focus on what was best for me and my family, instead of what was best for the company and its employees.  This is much more rewarding for me.
  • I had time to see my children grow up.  My daughter was three when I retired.  My son was adopted 6 years after retiring.   I didn't miss a moment, which all seemed to go by too fast.
Of course, we would be better off financially, if I hadn't retired.  But overall, I think it was a good trade off.

For more on Reaping the Rewards, check back every  Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, August 02, 2017

Bull vs. Bear Tug of War

With the stock market at all time highs, it is now a classic battle between the Bulls and Bears.  Some days the Bulls win, other days the Bears win.  It's back and forth, back and forth since neither wins with sustaining conviction.

Inevitably, the Bears will win and bring an end to the Bull market. However, for now, I think the Bulls have the (slight) advantage.   So I'm still staying in my core investments, although I will use rallies to sell some peripheral holdings and take profits.

For more on  The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial nor investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, July 31, 2017

Switching Cash from Saving Accounts to Short Term CDs

Today I checked CD rates and found one month CDs paying 1% that compares to my brokerage and bank savings accounts paying 0.1%.    So I am switching our cash funds to the short term (one to three month) CDs.  

Yes, I know I can get 1.2 to 1.3% from online savings accounts.  For simplicity, I don't want to open another savings account at a different institution.  So my second best option is just to invest in CDs, which mature in a short time so that the cash always available.

I never thought I would be excited about getting 1% interest on my short term savings.

For more on Strategies and Plans, check back Mondays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, July 30, 2017

My Signs of Stock Market Euphoria

"Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria." ~ John Templeton 

Although U.S. Market are at all time highs, I still don't think there is euphoria, despite such claims by numerous pundits.

Here are my personal signs for euphoria that I will be looking for:

  • All stocks rise significantly for an extended period (at least 1-2 months).  Currently, there are still many laggards and falling stocks in the market.   During euphoria, people will buy any and all equities, driving up all stocks.
  • Family, friends and acquaintances initiate conversations about stocks and investing with me.   Almost no one I know wants to talk about investing and stocks.  Usually, I initiate a conversation since I am interested in what people think.
  • The bears capitulate.   I know several people in bear funds, or in all cash since they think the market is due for a big fall.  When they throw in the towel...
Although not a necessary sign, if my company stock starts gaining 40% a year, as it did in the 90s, I will assume euphoria has arrived.

For now, I think there is still quite a bit a skepticism, so the bull market may have a way to go.


For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, July 29, 2017

Still Irrational But Not Exuberant

A little over a year ago, I posted Irrational But Not Exuberant.   Today, that point of view is still true.   To many people, the market is ready for a correction or even a major decline.   Given all the uncertainty, there are no fundamental reasons for the market to be this high or even go higher.

However, I still see virtually no signs of exuberance.   In fact, I see many signs of anti-exuberance: people in all cash, people in bear market funds, people scare of investing in stocks.   This is still the most unloved bull market ever.

And the market continues to defy logic and grind up slowly to new highs.

Is this time different?   Probably not.  The bull market will end and become a bear market again in the future.   I just don't think it will be before the end of this year.

If this bull market lasts a little over 12 more months, it will be the longest bull market in US history, exceeding the October 1990 to March 2000 bull market of 113 months.   Given the lack of exuberance, there is still a good chance of this bull market lasting that much longer.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, July 25, 2017

A Terrible, Horrible, No Good, Very Bad Day is Coming

Someday the market will experience a terrific decline.  Mark Farber, aka Dr. Doom, has told me.  Ron Paul has told me.  Doug Kass has told me.   My brother-in-law has told me.  My mother-in-law has told me.

I agree a bear market is definitely coming.  The questions is when.

I believe the earliest will be 2018.  So far, it's looking like that.   I betting on 2600 before a significant decline. We'll see....

For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, July 19, 2017

Invest in Winners

"The trend is your friend." ~ Wall Street adage

It seems almost everyone is sure the market is about to decline, correct or crash.   Even perma bull Tom Lee is predicting a lower finish for the S&P in 2017.   People I know have bought 2X inverse bear mutual funds

For me, the best strategy is to stay invested in the winning stocks.    It seems they are hitting new highs on a frequent basis: Amazon, Priceline, Netflix and Facebook are prime examples.   Google, Apple and Tesla are close but not as strong.  

Who knows when the market will turn.   But until it does, I'm not betting against the market and staying invested in the winners.

Disclosure:  We own shares of Amazon, Priceline, Netflix, Facebook, Google, Apple and Tesla.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, July 15, 2017

Lack of Economic Boom Keeps Bull Market Going

"Stock markets climb a wall of worry." ~ old adage

I am convinced now that Obama was great for the economy.   Because  businesses did not have confidence in the administration's policy, they under invested and the economy grew at the slowest pace ever after a recession.  Growth was slow and measured. So we never experienced the boom/bust cycle that typically occurs and leads to another recession.

Similarly, the uncertainty with Trump may also be very good for the economy.  The dysfunction exhibited by the Republican party, despite controlling the Executive and Congressional branches is keeping the economy from being overheated.  The economy continues to grind up slowly.  And so does the stock market.

In another eight years, staying invested in the stock market may be the smartest thing anyone ever did.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, July 14, 2017

Looking for Euphoria

The final stage of a bull market is euphoria - when everyone's accounts are going and people are investing as much as they can (and more) into the stock market.   I am very sensitive to the stage of euphoria since I retired in 07 and planned on the market going up for another 10 years. Instead the market crashed the next year.  Having survive a big downturn in our first year of retirement and clawing back the over 10 years has made me exceptionally cautious.

Here are the signs of euphoria that I am watching for:

  • Everyone is talking about the stock market.   Not.   All my spouses relatives, who were all made money as speculators in the dotcom boom, have no interest in stocks anymore.   At a neighborhood cookout, I couldn't even get people who are in the business to have any interest in talking about stocks.  The only hint I have is a neighbor telling me she has been "watching" NVDA.
  • All stocks are rising.  Not.  There are still a large number of stocks declining and many stocks that have fallen previously are still near their 52 week low.
  • There are no more bears.  Not.  I still see a number of bears and significant bearish sentiment.   I know one person that has sold all his equities and has invested in a 2X bear fund.  When there are no more bears, it's a sure sign that euphoria is near or happening.
  • FOMO - Fear Of Missing Out. Maybe. People start chasing high flying stocks assuming the stock price will go higher.  Stocks advance in the double digits on a frequent basis due to buyers chasing the stock.   A few stocks have advanced significantly this year and those are being chased, but not the majority of stocks.
As I see it, euphoria may be coming, but it's not here yet.  So I will continue to maintain our investments and taking some profits by trimming positions as the market keeps advancing.


For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial  or investment advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Procrastination Pays Off

For years, I've been considering adding a few more large stepping rocks to widen a path through our back yard wooded area.   But I never got around to it.

This spring, we decided to get rid of all the ivy in our wooded area, which I did over 6 weeks, a 5X5  square foot patch at a time.  To my surprise, I found 40-50 rocks that were 50-150 pounds in a few ivy patches.   Some were covered by years of dirt under the ivy. About half of them were the right dimension for stepping stones.  So I recycled them to the path.    Also created a couple of new paths.

So these rocks would have cost me $15 to $40 each, but I got them for a few hours of digging (and free exercise hauling stones).   Fortunately, I'm a retired guy and my time is cheap.   So procrastination paid off.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or landscaping advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, July 12, 2017

Staying Invested

Despite all the negativity, I'm staying invested in the stock market.  Here are my reasons:

  • All my spouse's relatives think the stock market will crash soon.   For example, my brother-in-law has purchased a 2X bear fund.  Their position is based on politics.  They all voted against Trump and are ignoring that the economy is improving.
  • Trump has more teflon than Reagan and Obama.   Despite all the Russia issues for Trump, the stock market keeps going up.
  • It's what George Costanza would do.
Sure the market will eventually fall.  But I think it will happen later (after the end of the year) versus sooner.  We'll see ...

For more on  The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, June 19, 2017

Resisting My Normal Investment Strategy

I normally prefer to buy stocks of good companies that have been beaten down from their high and hold them until the stock price recovers.  However, this strategy has done very poorly for the past two years.  During this time, stocks I have purchased continued to go lower, and then didn't rebound.

So I have broadened my strategies for now.  While I continue to hold my beaten down stocks, I am now buying the stocks that have been going up, i.e. the momentum stocks.  This goes against my nature since I am buying these stocks near their highs, and expecting (hoping) them to go higher.  

For now, this additional strategy is working well.  In a little over a month, some of my buys are up
as much as 20%.   I plan to use this strategy short term and ride the rally in the momentum stocks.  I will consciously take profits on the way up, since I expect the market may correct sooner than later.

Hopefully, this strategy will yield a net gain when (not if) the market experiences a correction.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, June 05, 2017

A Stock Market Nightmare

"Markets can stay irrational longer than you can be solvent." ~ Wall Street adage attributed to John Maynard Keynes

This market should be lower, much lower.   Why?   Trump won.   Trump has not and cannot delivered on his campaign promises. Trump will soon make several big mistakes that will crash the market.

This should have been easiest short in stock market history.   Except it wasn't.

Those that have sold out and shorted the market have not only missed out on a great rally, but have lost money in addition.

Of course, they will be right eventually.  There will be a bear market in the future.  However, if the bull market last a few more years, it will be a hollow victory since they may not be solvent by then.

For now, I remain cautious, with an optimistic bias.  I continue to look for purchasing opportunities for stocks in my buy list and sell tradable position when profitable.  I will also continue to keep a significant level of cash in case there is a major decline.

For more on Strategy and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, June 04, 2017

The New "Retirement"

For me, retirement was working enough years to get certain benefits from my company, e.g. company  retiree health insurance, and  company provided retirement funds.

However, when I hear about current bloggers retiring early, it is one of the following situations:
  • One spouse quits working, while the other spouse keeps working.  The spouse that quit has "retired" in their 30s and 40s,  Often the spouse who quit working earns supplemental income from blogging.
  • An individual or both spouses quit working in the corporate world because the income from gig jobs and blogging is sufficient to cover expenses.  In some cases, the income exceeds their previous corporate job.
To me, these options did not seem to be "retirement."    I grew up in a single income family, because my mom stayed home to care for the kids.   We didn't call that retirement since she didn't receive any retiree benefits from her last place of employment.   Similarly, finding a better way to earn income, e.g. blogging, was "getting a better job by being self employed."

Here's What Millennials Are Prioritizing Instead of Retirement provide me some insight as to what is the new retirement.    It seems young adults goals are to have the financial freedom and flexibility to have their desired lifestyle.   As a colleague once said, "work to live instead of live to work."

So maybe the "new retirement" is achieving work life balance and continuing to work well into their 70s and longer.   We'll see how that works 30 to 40 years from now.

For me, I still prefer the "old retirement" model, but maybe that's no longer achievable and therefore not relevant to the current generation.


For more on New Beginnings, check back every Sunday for a new segment. 

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, May 20, 2017

Road Trip for President Trump

"This is ridiculous.  What are we going to do?  Road trip."  ~  Animal House discussion

It's been a tough week politically for President Trump.   And now he's off on a 9 day trip to the Middle East and the Vatican.  

It doesn't seem to me that the political situation will go away while he is travelling.  It will be interesting to see how everything evolves.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial, policy or political advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, May 15, 2017

Pacing House Updates

It seems that houses need to be updated about every 10 - 15 years.    Otherwise, the home will seem dated, especially to potential buyers.    We've been living in our home almost 14 years.

We've already updated some mechanicals (roof, furnace, A/C, and water heater) in the past ten years.  Over the last couple years we've updated most of our kitchen appliances, due to failure.  Also, I changed the kitchen cabinet handles from brass to brushed nickel.    Recently, we painted the living, family, and dining rooms, and the exterior.  In addition, we changed the remaining aluminum venetian blinds to celluar shades.

This month, we will be changing our kitchen sink to stainless steel, and updating some bathroom faucets to brushed nickel.  I will also be replacing most of our brass switch/outlet plates with brushed nickel.

Our next round, which we have started, will be working on eliminating  ground cover (i.e. ivy and vinca) from our landscape areas.   Also, we will be replacing some plants and adding new ones.

Hopefully, we will complete our major updates in the next couple years, allowing us 10-15 years of minimum effort before the next update.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial or home improvement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, May 02, 2017

My Buy List

Here are the stocks on my buy list:

Add to existing positions:
WDC, PCLN, GOOG, GOOGL, FB, AMZN,

Buy new positions:
TSLA, TRMB, ALGN, SHOP, HRC

Just purchased yesterday:
SIMO, IDXX, MMSI

I identified these stocks based on a screen of recent price performance.  My hypothesis is that winning stocks will continuing advancing in this bull market.   These will be primarily trading positions, which I will exit partially or completely after meeting target profit gains.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, April 30, 2017

Turning Bullish

"Don't fight the tape." ~ Wall Street Adage

To be this has become a market of winning stocks and losing stocks.   The winners keep winning and the losers keep losing.   It's time to put more money into winners.

Examples of winners:  Facebook, Amazon, Netflix, Alphabet, Priceline, Tesla.

Examples of losers:   Under Armour, Gilead, Seadrill, Tidewater, J.C. Penney.

For me, it's tough to put money into these winning stocks.  Often, they have already advanced significantly, have high P/Es and seem very expensive.  I prefer to buy stocks on sale, but this seems to be a buy high and sell higher market.    So I'm going to go along for the ride.

I've made a list of stocks to buy as new positions or to increase holdings and will begin acquiring shares this week.

Disclosure:   At the time of posting, we own shares of Facebook, Amazon, Netflix, Alphabet, Priceline, Under Armour, Gilead, Seadrill, Tidewater, and J.C. Penney.

For more on  New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, April 19, 2017

Paying Zero Federal Income Taxes in Retirement

"People would rather stick a pin in their eye than think about taxes after April 15th."  ~ me

My goal over the next few years is to pay as zero federal income tax.   And it will be 100% legal.

How am I doing it?

Income Source
First, since we are retired, we can manage where income is derived and choose a source that is most tax efficient, dividends and long term capital gains, which has a special federal tax rate of 0% for taxpayers in the 15% tax bracket.

Itemized Deductions
Second, we have itemized deductions that can reduce ordinary income (wages, rents, IRA distributions) by 1/2. I am still not old enough to collect Social Security, but deductions can also reduce the amount included in adjusted gross income (AGI).

Tax Credits
Third, we have two children that each qualify for a $1000 child tax credit.  This enables us to eliminate any remaining income tax after itemized deductions.

These are legitimate strategies for reducing one's taxes.  I also know that tax laws may change and eliminate any or all of the three strategies that we plan to use.

For more on The Practice of Personal Finance, check back every Sunday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, April 08, 2017

A Hard to Make Money Stock Market

This is a frustrating stock market.   The market is pricing in high expectations for Trump's administration and the Republican congress, despite no concrete results being delivered.  The advancing stocks are narrow.  Investors do not seem to have any conviction.

As a result, the market indices are trading sideways in a narrow band.   It's kind of like watching paint dry.  Not very exciting.

In addition, only a few stocks (e.g. Amazon, Facebook, and Apple) are are making significant advances.  The rest are flat or even falling.

The good news is that most of our accounts are near their highs.   The bad news is that these accounts are not achieving new highs.   So our accounts are not growing.

For now, I have no confidence in the market direction, nor any confidence that Trump and congress will meet expectations.   I will wait for a more clear market direction before putting any significant amount of funds back into stocks.

For more on  Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, March 18, 2017

Career Path and Expectations Explained in a Graph

I found this on the Internet under Life Explained in Graphs:



This one gave me a good chuckle.

For more on Reflections and Musings, check back  Saturdays for a new segment.

This is not financial or career advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Thursday, March 09, 2017

Happy 8th Anniversary

Today marks the eighth anniversary of the bull market that started on March 9, 2009.

It wouldn't surprise me to see the bull market end in the next year, but then again, I've been expecting a an ending to occur since 2011.  I haven't been right yet, which isn't a bad thing.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, March 08, 2017

Waiting for Extreme Carnage Before Buying

"To the pain..." ~ Westley from The Princess Bride

I'm itching to buy, but I'm going to wait.

In 2013 (the tape tantrum) and 2016 (worst start to S&P in history), I started buying right away and endured a month of further decline.  Then for Brexit and the Trump election, I waited and missed the immediate rebound of 2 days and 6 hours.

I expect this time the decline will be longer and more drawn out for the following reasons:

  • The Fed is raising interest rates.   
  • Trump's honeymoon fading fast.  And Trump is running out of items that can be dealt with by executive order.
  • Too many stocks are near 52 week lows despite the indices being near all time highs.
  • The low bar of expectations for Trump is rising.
  • Obamacare repeal and replace proposal disappointingly is really Obamacare tweak and refine.  
  • And the Fed is raising interest rates.
So I will wait for the market to become painful before buying.  Currently, I'm thinking of a 20% decline before doing most of my buying.  However, if a reversal occurs before 20% is reached, I may start buying.

Hopefully, I will be able to buy low.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, March 06, 2017

Preparing for a Really Ugly Market Downturn

While I don't know when the markets will turn down significantly, I want to be prepared for the inevitable.   Here are my two ugly market scenarios:

The first scenario, which some may expect, is the market will fall quickly, 10, 20, or maybe 30+% , over a couple months and then recover.  This scenario is usually painful, but short lived.

The second scenario, which others may expect,  is the market falls slowly over 6 months to two years. This scenario is usually painful for those expecting the first scenario and stay in the market or put more fund in while waiting for the rebound. Since this scenario extends the pain for a longer period, this scenario is particularly ugly.

Over the past few years, we've reduced our equity exposure from about 50% to about 25%.  This has been done primarily by reducing our exposure to my company stock by 66%.   So this has reduced our risk in two ways.

So if the stock market falls significantly, our downside will be about 25% of the market indices, which gives me comfort.   Of course, if the market rises significantly, we will only experience 25% of the gain in market indices.  However, given the current uncertainty of the markets, it is a trade off that I am happy to make, so that I can sleep better at night.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, March 01, 2017

Time for Investing Discipline

Despite numerous predictions of a market rout if Donald Trump was elected, the market has done exactly the opposite, rally about 15% since the election.    This totally unexpected market rally is giving me the opportunity to do some portfolio adjustments.  

Dispense with Losers.
First, I'm am selling some of the investments that have gone down or stayed flat.    If they aren't rising in this market, these stocks are probably dead money.  I sold most of our retail stocks.   I've sold some oil stocks.   However, I'm still keeping many of my energy stocks despite their stalled recovery.  

Trim the Winners.
I am taking profits in some of our winning stocks.  For most, I am selling a partial position, for a few, I am selling the total position.   Mostly, I have been selling off part of some of my biotech positions.  In addition, I am also taking profits by trimming our managed accounts to the minimum investment amount.

Identify Trading Opportunities.
There appear to be certain sectors and stocks which are taking off in short bursts.  I will experiment with buying small positions in these advancing stocks and then selling them after 10-50% gains.   This is purely a technical trading approach.  

Increase Cash for Future Buying Opportunities.
Some time in the future, the market will correct.   I will be ready to make some additional purchases in our core position, or adding more dividend paying stocks.

I don't sense a correction yet since there is little exuberance.  At the same time, I don't see a lot of conviction for this rally.     So we will continue to keep a base amount invested to participate in the rally, while waiting for correction to occur.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, February 19, 2017

Changing My Retirement Sleeping Schedule

"Early to bed and early to rise." ~ Benjamin Franklin

When I was working, I would go to bed at midnight and get up at 5AM.   After retiring, I slowly evolved to going to sleep at midnight and getting up at 8PM.   I'm consciously thinking about gettng up earlier (about 5-6AM) and going to bed earlier (9-10 PM).    Even on weekends and holidays.

This may be challenging since I am more of a night person.  However, getting up early may allow me quiet time to put significant effort against some projects, before the family is awake.  Also, I've learned that even though I'm retired, there are still some things I need to do only during normal business hours.

So tonight, I'll be to bed by 10PM.  Tomorrow, I'll be up by 6AM.

For more on  New Beginnings, check back Sundays for a new segment.

This is not financial or sleeping advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Returning to Periodic Posting

With this post,  the number of 2017 posts (77) is equal to all the posts from 2014 through 2016.  I guess I had a lot of pent up posts ready to go.  It's been fun.  However, I think I used up all my material ready to post in the near term.

So I am moving back to periodic posting of at least once a month, which is what I did for most of  2015 and 2016, after taking a sabbatical in 2014 .  

For more on New Beginnings, check back Sundays for a new segment.

This is not financial or blogging advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, February 18, 2017

Places I Like to Shop

First, I admit I am an technology Neanderthal.  I don't have a cell phone, I don't have a Facebook account, and I don't shop online.

I still prefer to shop at brick and mortar stores, where I can still touch and feel the item(s) I am buying.   Still I have a preference of stores where I make purchases.  Here is my top stores list:

  • Costco -  First, I know Costco is charging a minimum markup price.  So I know I am getting a good deal.  Second, I like the items the Costco buyers choose.  There selection is not wide, but it is good.   Third, Costco has a lifetime satisfaction and return policy, except for computers, cameras, and TVs.  So I can try something out for a while and decide.   The downside is the emphasis on bulk purchases, leading me to buy a several months worth of some items.

    I like buying specialty clothing, seasonal gear, and staples (like batteries) at Costco.   Occasionally, I find something that I really wasn't considering, but thought it would be fun to try (e.g. a gazebo kit, which took me a couple weeks to assemble).

  • Lowe's -  This is my go to store for household maintenance items.  I can usually find what I need or they will direct me to a place that my carry the item.  Also, several of the associates are long time employees and are very knowledgeable.  The prices are also very good.  I applied for the Lowe's credit card, since it gives an automatic 5% discount.  Lately, Lowe's has been giving out an 11% coupon randomly when I make a purchase.

    We purchased our last two kitchen appliances there.  We found new handles to upgrade our cabinet look.   We just purchased electrical plate covers to replace the brass ones.  Our next purchase will be to replace the faucets and sinks as needed.

  • Whole Foods - Yeah, they're expensive.  However, often they are the only grocery store that carry some of the prepared vegan, no oil added foods that are part of my diet.  Fortunately, these products go on sales sometimes and I stock up.

  • Trader Joe's -  Good healthy food and great prices.  An excellent opportunity to try new foods.   Also, it has a great selection of staples that help me maintain my vegan, no added oil diet.

  • Kroger's -  This is our local grocery store.  They have been expanding into the organic foods market with their own private label brand, which is very cost competitive.  Also, we buy a lot of our produce here.
These stores are where I probably spend 80% of my funds.   So I really don't need the online purchasing capability.

Disclosure:  We own Kroger in our personal accounts.  One of our managed accounts owns Costco.  Also, I received no compensation for writing this post.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or shopping advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

A Lesson from Crashes I've Lived Through

I've lived through four major stock market crashes, and I was invested in three of them.

1973 - 74  -   I wasn't old enough to invest, but I do remember this crash.  This was the same time as oil embargo/gasoline crisis.   The stock market lost 45% of its value.

1987 -  On October 19, 1987, the stock market lost 22.6% of its value in a single day.  This was the first crash during which I was invested.

2000 - 02 -  From the September 11, 2001, the date of the WTC terrorist attacks, the markets declined then recovered in early 2002 and then fell sharply again.  The Dow declined 35% from its peak and the Nasdaq declined 44%.  This happened after the Internet bubble in stocks that occurred up to 2000.

2008 - 09 -  This was the latest stock market crash due to the financial crisis of 2008.   The stock market fell 54% from October 2007 to March 2009.

Subsequently after each crash the stock market rose to new highs.  It's hard to remember that fact while in the depths of a downturn.  But it's one worth remembering since I expect to live through at least three more market crashes.

For more on Reflections and Musings, check back  Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Friday, February 17, 2017

Not Feeling the Love of New Highs

Yesterday, the Dow had sixth day of setting a record high.  Wednesday marked the fifth day in a row tht all the major indices closed at a record high at the same time.    This has not happened since 1992.

I should be ecstatic, but I'm not.    Although our accounts are at or near all time highs, individual stock performance is very mixed.   Some stocks are near 52 week highs, while other are near 52 week lows. It's very discomforting to have this bimodal performance.  I don't feel this market advance is sustainable.

So I am selling some investments and raising cash.    We will put the funds back into the economy by spending them on home improvements and a vacation.  For now, I feel these options feel will get a better return on our retirement savings than being invested in the stock market :-)

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Thursday, February 16, 2017

Eating Out is Now an Expensive Norm

CNBC highlighted the high expense of extreme eating out an article on how one couple spent $30,000 last year on away from home meals.  That's $82 a day for their three person family.

When I was growing up, eating out, even at McDonald's was a rare event.   My mom cooked most of our meals from scratch.  TV dinners, as frozen prepared meals were called back then, were also a special occasional treat.  

From college forward, I became used to eating out.  There was the company cafeteria, quick meals in the evening, and entertainment with friends.  I don't know how much I spent since I didn't keep track of the amount.

We don't eat out as much anymore since I am on a strict vegan no added oil diet.   Still, we do go out occasionally as a family for special celebrations, such as birthdays, at an average cost of $120. Also, we'll go to a fast food restaurant if we are out a while with the kids, which costs $10-$20.  So, we might spend $80 average a month eating out.   Even then, that adds up to about a $1000 per year.  But we would probably easily spend at least $600 a month  (or $20 a day) eating out if we both working and I didn't have a dietary restriction.

For more on Crossing Generations, check back  Thursdays for a new segment.

This is not financial or food advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Appliances Don't Last as Long Anymore

When I was growing up, household appliances seemed to last forever, or at least I don't ever remember replacing them.  While growing up, we had the same refrigerator, dishwasher, oven, range the entire time.   Also, my mom had the same vacuum cleaner until it became too heavy to use after 40 years.

Nowadays, household appliances seem to have a much shorter life.  Recently, we replaced a 25 year old dishwasher and double oven.  The sales representative told us the life of the new dishwasher was about 8-10 years.  The working life of the double oven was also 8-10 years.  The quoted lives are based on standard usage.  Since we use our dishwasher three times more than the standard, we may get a shorter useful life.  We use our oven less than the standard, so it will probably last longer.

So even though we just replaced our kitchen appliances, we'll probably need to replace them 1-3 more times during our retirement years.   There is silver lining benefit to the short replacement cycle.   Although I'd prefer to keep the same appliance, I must admit the newer appliance are function much better, and in the case of our dishwasher, much quieter.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or appliance advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Wednesday, February 15, 2017

Don't Forget Maintenance Costs

I used to just look at the purchase price before deciding to buy something.  Over time, I learned that maintenance cost is also an important component in the decision making process.   Sometimes, since maintenance is an ongoing cost, it can be a major factor in determining the financial feasibility of a purchase,

Here are some rules of thumb that I have learned about maintenance costs:
  • Everything has a maintenance cost.   From clothing to a house, everything requires periodic cleaning and repair.  We may choose to defer maintenance to reduce costs, but the lack of maintenance with eventually cause an issue.
  • Higher complexity = higher maintenance cost.    A motorcycle costs more to maintain than a bike.  A car costs more to maintain than a motorcycle.   A luxury car costs more to maintain than a standard car.
  • More stuff = more maintenance cost and effort.  I used to think that owning things was cost efficient.  Having our own pool would save membership fees.  Having a vacation home would save rental costs.  That is true, but then the hidden cost and time of maintenance needs to be considered.   Nowadays, I think it's sometimes more cost efficient to rent when needed and let someone us handle the maintenance.  
Not only does maintenance incur costs, it also takes time to get it done, even if someone else is paid to do the maintenance.  Nowadays, I think less (complexity, cost, stuff) is better.  So that we can spend our time and money on more important things.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or maintenance advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Looking for Signs of a Correction

Someday this bull market will take a substantial pause.  Unfortunately, I don't know when that will be.   In the meantime, it is prudent to anticipate this inevitable correction of unknown timing and duration.  Here are some signs I'll be looking for:
  • Exuberance - This is when everybody is excited and talking about how well they are doing in the stock market.  I don't see much of this happening yet.
  • FOMO investing -  This is when people start investing more in stocks because they're afraid of missing out on what everybody is exuberant about.   It seems to me there is still a lot of cash on the sidelines.
  • All stocks advance -  This is when good, as well as bad stocks keep going up.   There is no differentiation as investors put money into index funds/ETFs, driving up the valuation of all stocks.  Not happening yet, since there are a number of stocks still near or at the 52 week lows.
Net,  the current administration has not yet taken any concrete actions that would justify the optimism of the stock market.  If we seen part of all of the three above points in the next few months, I will start expecting a correction to be coming soon.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Tuesday, February 14, 2017

Renting Skis Makes Economic Sense for Us

My daughter and I have a season pass at the local ski resort.   We also rent ski equipment instead of purchasing our own.  I didn't do the economic calculation when we first decided, because I didn't know if we would ski more than a couple years.  But now that we've been skiing 3 years, it may be worth considering purchasing skis.

On the internet, current late season sale price for  a ski package (skis, bindings and boots) is about $800 for adults,  and $350 for kids.   Assuming my daughter will need 5 sets of skis before she is an adult, that would be $1750.  

Renting for the past three years has been $100/year for the entire season.    An additional benefit is that we don't need to store or maintain the skis.   Also, our rental package allows us to use skis or snowboards, and we can change our ski length at any time.

As I see it, it's probably a better financial decision to rent, instead of purchase.  First, I don't know how long I or my daughter will be skiing.   Second, we don't need more stuff to store at our house.  Third, I like the flexibility of being able to ski or snowboard.  Finally, $100 seems awfully cheap for a season of use since a day rental is $25.   In past seasons, we would ski about 12 times, which works out to a cost of $8.50 per rental.

This year, we've already skied 15 times and expect to get out 20 time, for an average of $5.00 per rental, which seems like a great deal.  The downside is if we ever try skiing at a resort out west.  Since ski rental could run up to $100/day, owning skis may make sense for multiple vacations to distant ski resorts

For more on Ideas You Can Use, check back every for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Changing Financial Behavior

“You cannot change what you are, only what you do.” ~ Philip Pullman, The Golden Compass

While I am not a particular fan of the movie, I do like this quote by the author.

To me, it means self improvement is about changing behavior, not changing me, i.e. my internal essence.   For example, if I want to improve my financial situation, I should be working on behavior changes that help, and not on changing my personal characteristics.  My epiphany is improvement is not about me, it's about what I do.

So how should I decide the behavior change that is needed?

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” ~ R. Buckminster Fuller

As a engineer, I like this quote.   Making the right behavior change requires a little bit of experimentation.   Try an idea, if it works use it.  If it doesn't, then try another idea.  I try to use ideas that have some reasonable basis for being successful.

For me, I found two simple behavior changes that helped me grow our wealth.  The first was to pay ourselves first, i.e. deposit funds into our savings accounts before paying any other bills.  The second was live below our means, which naturally occurred since we paid ourselves first.   This two behavior changes were much simpler and therefore worked better for me than other approaches, such as detailed budgeting.

What I realize now is that retirement requires further changes in financial behavior.  Now that I've internalized that it's not about me, it will be easier to move forward.

For more on Ideas You Can Use, check back Tuesdays for a new segment.

This is not financial or personal development advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Monday, February 13, 2017

Using Options to Mitigate Risks

With the market at all time highs, I'm getting a bit more cautious.  As I have posted before, I am selling some of my positions with gains.  Another way I am reducing risks is through the using options, such as puts and calls.
  • Puts - I like to sell puts on stocks that I'm willing to own, but wouldn't mind owning at a lower price.  If the stock goes up, I get the premium for selling the put.   If the stock falls below the put strike price, I end up buying the stock, but at a lower price.  Occasionally, I will buy a put on a stock that I think will decline significantly.

    I'm selling puts on a couple energy stocks that I feel have been beaten down, but have a chance to rebound.
  • Calls - I like to sell calls on stocks that I own when I feel the market is near a top.  That way if the stock declines, I keep the call premium.  If the stock rises above the call strike price, I end up selling the stock but at a slightly higher price.   Occasionally, I will buy a call to speculate on a stock price spiking upward.

    I'm selling calls on my company stock, which I hope will go up and let me sell at a higher price.  But if it doesn't, I will make a small profit on the call.  I purchased calls on couple energy stocks, in case they rise significantly but it appears unlikely now.
Usually, I don't trade puts and calls since the cost of commissions generally offset the profits of small positions.  However, for a short time I qualified for commission free trades, so I can trade a single contract of a low value option and still make a profit even on a small change in price.  This gives me a low cost opportunity to test my option trading ability.

For more on Strategies and Plans, check back Mondays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

RMD Management

RMD stands for "Required Minimum Distribution" from traditional IRAs,  401Ks and other retirement plans (except Roth IRAs) after one turns 70-1/2.

The typical advice is to spend taxable account funds and let retirement accounts continue to grow tax free.  I've been told by several post 70 -1/2 retirees that they should have withdrawn retirement funds earlier to reduce their RMD, contrary to their financial advisors' recommendation.   In their case, they do not need the funds from their retirement accounts, but are forced to make withdrawals, which results in a greater tax burden.

One option we are considering to reduce our RMD is to do Roth conversions in the years prior to receiving Social Security.   During this time, we can keep the marginal tax rate at 15% or less.   Since we still have itemized deductions and non-refundable tax credits, we can further minimize the tax consequences of a conversion.

A second option is to do a Net Unrealized Appreciation (NUA) withdrawal from my company retirement plan after I turn 59 -1/2,  This will also help significantly reduce my RMD requirements.

I plan to use both options over the next few years.

For more on Strategies and Plans Ideas, check back Sundays for a new segment.

This is not financial, retirement or tax advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Sunday, February 12, 2017

Fighting Complacency

"Change is the only constant." ~ adage

Success is the enemy of change.  Success and happiness makes it easy to be satisfied, which leads to complacency.  But the reality is complacency may keep me from making changes that may be needed.

One choice is to disrupt complacency, accept changes may be needed despite current satisfaction, and allow a chance for greater success and happiness.

It's a choice worth considering.

For more on New Beginnings, check back Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Posting A Lot Recently

In the first two months of 2017, I've already exceeded the number of posts for 2016.   With another 15 posts, I will exceed the total for 2014 - 2016.  Why the big surge?

No real reason. My short explanation is it's the Forrest Gump running phenomenon, where he started running and just kept doing it.   I just started writing last month, and just kept writing almost everyday.  

I don't know how long I will keep doing this.   Like Forrest, I will probably just stop one day and go back to posting once a  month.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Crunch Time

I have a few employee stock options expiring in a couple weeks.    I've only executed 5% of the options, so I will be actively working to exercise the rest.  Usually, I start exercising the options a year before expiration and complete doing so a month before expiration.   But this year has been different for several reasons:
  1. 2015 and 2016 had an unusually large amount of options expiring.  So I generally only exercised options that expired in those years, to reduce the amount of taxes paid.
  2. Since my company is a defensive stock, its price has not risen much during the past few years.  So I am waiting as long as I can for the stock price to increase.  This has worked out somewhat, since the stock price has risen slightly in the past month.  But still it is not higher than in early 2015.
  3. This year is my last year of having employee stock options.   So I don't have many shares left, meaning that a change in the stock price has less incremental impact on our investment value.
 Although I have several limit orders at higher prices, it is likely I will need to convert to market orders and take whatever price is available at the moment.

Hopefully, there isn't a big drop in the stock price in the next couple weeks.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Stock Market is Too Good to Be True

"It's hard to walk away from a winning streak..." ~  Cara Bertoia
"It's hard to defend a danger which you never thought existed." ~ John Christopher

I'm not complaining about recent market rally.  I've been pleasantly surprised by rise in our accounts. However, I'm starting to worry about it's sustainability.  It seems that everyone is expecting the administration to do great things for the economy, despite having done nothing concrete yet.

As I have often found in the past, when things are too good to be true, it probably is.   Our personal accounts are at or nearly at all time highs; 2 out of 3 of our manage accounts are at all time highs; and recent stock purchases are already higher.  I know I'm not this smart.

So instead riding this market to more new highs, it's time for me to do a bit of the opposite and take the opportunity to sell a little.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC