Archive for September, 2011

On investing

Posted in Uncategorized on 13, September 2011 by nathanbusch

As to investing:  given the high volatility in the market, this is a good time to be in cash.

Here are some suggestions that can be accomplished in the short term in preparation for the bottom:

  1. Stop using credit cards, these things are evil.
  2. If you are employed, or have an alternative source of revenue, pay off your credit cards.
  3. If you are not employed, or do not have an alternative source of revenue, talk with your local grocer, hardware store, or business owner about contracting as a custodian.  Even if you make only a few dollars an hour, at least it is an income and will do wonders for your psychological state.  Use some of the money to pay off your credit cards.
  4. Subscribe to an on-line brokerage house.  Subscription to reputable on-line brokerage houses costs nothing.  The first benefit of this is that you will avoid the outrageous fees and costs charged by your local financial advisor, portfolio manager, etc.  The second benefit is that you are taking the first step towards proper management of your investments.
  5. Create a Roth IRA within your account at the on-line brokerage house.
  6. Add a fixed amount each month to the Roth IRA, even if it is $10.00 per month.  If you are under 55, you can add up to $5,500 per year of after taxes money.
  7. Then be patient and do not get excited when the market rises or depressed when the market falls.  Actually, when the market falls, that is a very good thing.
  8. Be Patient.

Nathan A. Busch

Thoughts towards Purchasing a Company

Posted in Investing on 2, September 2011 by nathanbusch

Tonight, 1st September 2011, I learned that my favorite neighbourhood grocery store is closing in about three weeks time.  This is a small operation not unlike the mom-and-pop stores of a generation ago and the store was affiliated with the Super Value distributor.  The recent arrival of a Rainbow Foods store in the glamorous new mall on the east side of town precipitated the demise of the local store.  The new Rainbow Foods is situated such that it is nightmare to get into and out of the parking lot; the store is not well maintained, and the store clerks are a snooty lot with generally unkempt physical appearance and demeanor.  It is my fond hope that the new Rainbow Foods store will falter and go out of business.  Perhaps this is a bit self serving because I really liked the local store even though sometimes the prices there were a bit higher than could be obtained at the larger stores.

The news of the demise of the local store brought me to the following set of thoughts:  turn back the clock to say five years ago before ground was broken for the fancy new mall on the east side of town; would I have purchased a partial ownership in the local grocery store?  A brief list of some options that others might follow are as follows:  to rely upon every utterance of the poker-playing Amy Calistri with her moronic hat; to chase after promises of  Carla Pasternak, of 69%, 100%, 152%, or more in yield, whom I believe would not recognize a proper investment opportunity if it jumped up and slapped her on the nose; to follow the methods of the technicals that indicate when a one line goes this way and another line goes that way then you either buy then sell or sell then buy, or stand on your head a spit BB’s; slobber all over yourself following the silly brothers at Motley Fool who can only manage no more than about a 7.2% before tax annual yield over a 9 year period; or, perhaps, buy into one of the plethora of penny-stock SCAMS populating finance.yahoo.com hoping to get rich quick.  No, I suspect that, since you are reading this blog, you would want to do something altogether different.

Before my blog was obliterated, I raised the possibility of creating a support group amongst my audience for the purpose of providing mutual aid in determining when and in what companies to invest.  The loss of my local grocery store and the lack of a competent resource on the Internet has caused me to return to thinking about such a group.  To my way of thinking, no membership would be required, no annual subscription fee would be levied, and no hyperventilating hyperbole about selecting the correct three stocks to beat the market for the next fourty-five picoseconds.  No, this group would borrow the model used during the studies I undertook for my doctorate in Biomedical Engineering and my doctorate in Chemical Engineering.  Yes, I actually hold two of those pieces of paper.

In our study groups, each member would be free to ask relevant questions and push as hard as he needed until he fully understood the underlying concept to a problem and was able to derive the correct solution for himself.  That model could work well for a group dedicated to understanding the concepts underlying the purchase of a particular company and to work through the execution of that purchase.  The concept precludes a member from making a vacuous statement to purchase company X at price Y because the moon is full and Jupiter is in conjunction with Mars.  

The group would dig into all of the available and necessary information to place a value on shares, or bonds, of a particular company.  The information and analysis would be freely shared amongst the members of the group.  The members would then stand to potentially profit from the long-term change in the price of that share.

Your thoughts would be appreciated.

Nathan A. Busch