Penny Stocks..

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A co-worker came to me yesterday with a stock tip and what he’s been doing lately. Essentially buying low value stocks (penny stocks) and selling them in 1-2 days for a profit. He’s been doing well with this, but I question if I get into if I will get stuck in an endless wheel of losing days and earning days.

My gut tells me to just stick it out with my current retirement contributions and let my diversification play itself out.  In the finance class I took in college, there was one example of how diversification lowers the overall risk of the investment, while maintaing similar returns. A good analogy would be the proverb “Don’t put all your eggs in one basket.” If you drop it, you won’t lose your meal :)

Either way, I am not a financial planner so feel free to ignore my ranting on this topic, I thought I’d get my thoughts down to convince myself not to invest in these penny stocks :)

Loans, Loans, Loans… Federal Loans

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Having recently completed my MBA, I am now amidst the beggining in repayment of a large sum of money.  With 6.8% interest on the Stafford loans that I received from the loan agencies, I need to make this a priority.

I’ve already started repaying a some of these loans, including the TA’ing i did during school. Regardless, it’s still a large amount and I want to get rid of it as quickly as possible. I know some view it as good debt that can be repaid of a longer period of time, but regardless it is still a debt that hangs over my head so I have to eliminate it.

This is the plan I’m following:

  1. Make sure that the emergency fund has approximately 8 months of expenses for anything that may arise.
  2. Continue funding for a home downpayment, but a smaller rate (250/paycheck).
  3. Contribute $1,000/mo toward the 6.8% loans (approx 6 years of payments to follow).
  4. Contribute the minimum to all other lower % loans.
  5. Any additional money – dump into the loan.

This means that I will have to cut back on some things during this period, but it is doable.

One step at a time :)

Networth Update – 7/22/11

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-Updated Networth-

Total Assets: $85,378
Total Liabilities: $108,898
Networth: -$23,520

Anothe month has gone by and improvement, mainly due to the fact that I forgot to add the home downpayment fund that I already started funding a while back. In reality, the progress should’ve been minimal as I spent some time abroad after my work trip. One of the unfortunate things is that I get easily relaxed when I am travelling and money in different currencies somehow normalizes in my head that it is cheaper than it actually is. This pitfal caused me to spend in excess of $1,300 on extra dining and trips to london and paris, although I have to say that I quite enjoyed the experience and it is something that I will never forget :) I could’ve easily spent the same amount of money on a couple of nights out in new york and not had the same experience.

More recruiting contacts, but they seem to be slowing down as our nation is reaching its debt ceiling. Isn’t it funny that as a nation we are failing and not putting any right foot forward to rectifying the situation, while as individuals we may be failing, but often trying to at least try and improve our own situations. Certainly the budget is something that is far more complicated than my situation, but I just don’t see how one of the richest countries in the world can’t start looking at this from a different perspective and realize that hey.. maybe we can solve this in another manner that’s not debilitating to business and individuals alike.

‘Till next time:)

What the GMAT taught me.. Do it right

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I’ve never really enjoyed standardized tests, and when I finished undergrad with a masters degree to boot, I thought I would never have to take a test again. Little did I know how my desire to have an MBA would lead me into the GMATs..

The test itself is not hard, but it is something that you have to know cold in order to finish with enough time to spare. In addition, the very nature of answering more questions right from the start that have a greater impact on your score than the latter questions, made it imperative that you do it right from the beginning.

This brings me to my lesson. Doing things right from the start reduces rework and is more rewarding in the long run. I’m not talking about perfectionism, but just putting the effort in what you do so that it shows.

I often look at reports at work that others put together with gramattical and mathematical mistakes, and it makes me wonder just how much they care. These are reports being sent to superiors and even publications, not a simple blog post such as this :) By doing things right from the beginning, you can develop a reputation of being reliable and knowledgeable. These qualities come in hand when looking for recommendations, promotions, and even during layoffs! I know first hand. Plus, you become almost indispensable to the organization if you can show these skills. Whether or not you want to be indispensable is another question :)

Develop New Skills and Earn Money

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One of the biggest realizations that came to me early on after graduating from undergrad was that you are not constricted by the job you work in terms of earning money. Now this might seem like a no-brainer to many, but this was a foreign concept to me having come from a family that relied heavily on one source of income. Unfortunately, much like the saying “don’t put all your eggs in one basket”, this is not the best methodolgy to follow.
The restriction that comes from only doing one job is two-fold.
1 – Your current career might not go as planned and you could end up unemployed due to downsizing, finding someone that can do your job at a cheaper rate, a loss of work volume, etc..
2 – You lose an edge in being able to acquire new skills

I propose that to improve ones career, one should develop new skills – whether that is in management or in a technical manner that is different from what one is doing.
Take me for example. I took on extra projects and earned side income by utilizing those skills, albeit at a much lower work rate than I would’ve liked. That has actually led me to other projects (higher paying) and more opportunities to expand my career. It amazes me how much new skills offer outside of the actual knowledge you gain. It brings about a change in mindset and approach to problems that you would’ve never had, if you didn’t explore it.

If you are currently contemplating “so what do I need to learn?”. I don’t have an exact answer, but a guideline that you should follow an interest or passion and develop it to the fullest extent. From my experience, most people are not doing what they thought they’d be doing in their lives and have put things like their passions on hold. This mindset can lead to job unsatisfaction and a void in one’s life. So go ahead and set some specific actionable goals and small steps to get to those goals. I’m in the process of doing the same now (details removed for anonimity):

  • Start a website that connects _________ with __________ and earn a passive income of $10,000 per month.
    • Identify appropriate infrastructure requirements
    • Learn Ruby on Rails
    • Create data structure and sketch out user interaction with site
    • Identify revenue streams and income model

These are my beginning steps, and I’ll post more as I accomplish them. This being a side-project, it might proceed at a slower rate.  What are you passionate about? Are you willing to try something new and exciting in your life?

Networth Update – 6/28/11

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-Updated Networth-

Total Assets: $83,054
Total Liabilities: $110,588
Networth: -$27,533

Missed a month due to work travel and different projects. Made decent progress in paying back some of the student loans. I’m trying to get back on track with work and creating the appropriate payback plan. One of the downsides of getting an MBA is that it does not come cheaply. I definitely should’ve done more in terms of looking for grants from the school and scholarships as it would’ve saved me much repayment in the future.

Still, this is an improving trajectory and after another work trip, I intend to focus more heavily on what I need to do to accomplish a faster payback and perhaps re-align my career. Thus far, I’ve been quite a loyal worker and I’ve appreciated everything that was given to me by others; however, the amount of money that I am getting is only incremental and I need to make some big jumps. More updates to follow, hopefully at a better rate :)

Networth Update – 4/25/11

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-Updated Networth-

Total Assets: $75,583
Total Liabilities: $109,657

Networth: -$31,074

Slowly but surely I am working my way into paying the student loans, my only outstanding “good debt” as they say, although I don’t know how much good it is with some of the loans at 6.8%. I also received a decent bonus from work, which was taxed 50% of course, but I entered it all toward paying the student loan. I am looking to make some additional payments for the student loan, but I need to come up with a game plan for 2011 in terms of how I’m allocating the money. It’s pretty cool, and I’ll share my insight to the way I’m approaching this. Essentially, I am taking the total amount I am expected to make over the rest of the year net, then I am subtracting all of my trips, gifts and large expenses. Then I am calculating my monthly needs (some of which I know such as rent and cell bill), and determining what my budget should be for everything else. This is a new way that I am allocating my money and I’m hoping it will help me in becoming more conscious of my spending as I will be automating all the goals on a bi-weekly basis.

How to succeed – often

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I’ve always been a fan of the ready, fire, aim approach. This gets me out of the planning stage and into the actual implementation of what I want to do. Often times it turns out that what I had originally thought about the situation was not the case and I had to change my tactic. For example, instead of sitting around and thinking of what to write about – day dreaming –  i often just start writing. The words flow, and they might not be the best written words, but who cares, it’s just a draft. The aim portion is where all the refining can take place.
I’m not saying that planning does not have its place, in fact, I think that planning is part of the fire step. Just don’t plan too in-depth or you might be turned off and not even complete the task at hand. This brings to mind an article I’ve read in The Economist called “Fail often, fail well”; very interesting to see some of the top firms out there like Bain & Company using the same approach to advise clients.
Learning from one’s mistakes is key, afraid of investing in stocks – why not buy just a few and give it a shot? If you fail, the downside is limited. By putting less at risk in the action portion, you can actually improve your situation the next time around. The big black box high frequency trading machines that many Wall Street firms use just the same sort of approach, at least the way I would do it, is to use a continuous algorithm that buys small share blocks, to figure out the direction of the stock and then buy/sell stock accordingly to where the algorithm is telling it to go; learning along the way.
I sometimes use this technique when playing poker (good thing this is an anonymous blog :) ; in order find out the strengths of my competition, I will play small amounts just to see how they play hands and to see how they disguise their bluffs. It’s much cheaper to learn in that manner, and win big when it really counts with all my chips in the pot.
So my advice is this, go for it - not all the chips in – but just enough to move forward in your approach, you can adjust along the way.

Don’t do what you want..

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Retro TV

I often run into the issue where what I want to do is not what I should be doing. This happens in the form of watching countless hours of TV,  I especially spend a lot of time on Hulu. At least I’m saving some money by not getting a DVR to record the shows, but I am wasting time that I could be spending on other projects or improving my overall situation.

It all comes down to motivation and making a conscious decision to turn the TV off. Why is it so hard then? I think, at least for me, I just need an escape from day to day “stuff” and TV is one way I can go into another world. This isn’t all bad, we all need some time for relaxation; it’s when this becomes an obsession and you spend way too much time when there are other more important things you should be spending your time on. So how to control it?

I wish I could say I can control this habit I’ve formed.. but it’s hard. I could go on and say that I set time limits for myself and then I can just stop and then do other things. Unfortunately this is not the case.  So I’m making my intention known on the web that this is something that I want to control and I’m setting a time limit of 1 hr/day of TV.  There’s no way that I know of to automate this goal or it would be easy, but hopefully putting this goal out there again will help. Last time I tried to go cold-turkey with no TV, but I think I started to go nuts and get depressed. I need some TV to relax :)