Advantage :partner with others to build wealth

After a day of hardworking 9 to 5, I know you must be getting tired to do anything else other than go home, relax and sleep. But as you probably should know by now, that 's not the way to build wealth. Sometimes, we're just tired, lazy, and lack of self-motivation. In fact, it's quite hard to do it alone. That's reason I suggest partnering with others. Find people who has similar desire as you to get ahead financially. Form a meeting with them on a regular basis, it can be every week or every other week. During the meeting, discuss what some thought you have about business, investing for long time but haven't done much activity. Your partner should share his or her thoughts with you. After every meeting, list out Action Items that need to be done by the next meeting. Then, consider the possibility partnering with them to do things you have thought about doing. There are many advantages of forming partner than working it out alone:
1) Action items are like your homework. You should get it done or your partner will be disappointed you don't do your assignment. In other words, you're accountable. You will be more motivated than if no one hold you accountable.
2) Two people will have more thought, ideas, creativity than one
3) If one of you is busy in some time because of job, the other partner should help so things are moving forward
4) Your idea, thinking, are checked and validated by your partners so your chance of getting it right should be higher than if you do it alone.
I 'm starting to partnering with few of my acquaintance this year to work on some investment together. It's exciting to meet and work with people who has similar desire like I do to build wealth. If you haven't done so, I suggest you look for people in your network and start meeting with them regularly to get things going and rolling. Good luck in year 2008.

Mr warren buffett's wisdom on investing

I've been reading a lot of book about how the greatest investor all time think and his philosophy on investing. It's really a great learning experience and I enjoy it so much. He has great vision and patient in stock game. One of the greatest lesson I learn from him and I think this will change my way of investing forever is followed " When everyone fears, you should be greedy. When everyone greedy, you should fear" This is powerful and straight to the point. Basically, Mr buffet always buy stock and invest when no one else does. People will laugh at him of buying stock which is out of favorite by most people. In other words, he wait for a crash of a paticular stock and he buys with both hands when price is selling at discount. He believes the stock's price is priced below its intrstic value and it's just a matter of time when others realize the value of the stock and start buying, and hence, price rise again. He is very patient, sometimes, he will hold on a stock for as long as five years to wait for the price become over value. Then he sells his holding to everyone who buy near or at the peak. He is a truly buy-and-hold master. I will combine his thinking into my stock selection system. The couple stock I've been watching are stock related to financial, real estate and home builder.

New year: time to think and plan BIG

2008 is few days from us. At the beginning of the year, I like to think and plan on the goals I want to accomplish in the new year. Chances are that you're just like me, surrounded by people who has small dream, small goal, and little to no desire to get ahead their financial life. People who are "used to" living day by day , year by year, with no exciting dream to talk about. It's good idea to be alone and think clearly what are some BIG things you want to accomplish in the new year. Or else, next year will be same as this year. Think and plan on it. Write it down and be specific on your goals. The more specific it is, the bigger chance it will get done. These are some of the major goal I set to reach in year 2008:
*Buy Apartment building with over 40 units with over 5 thousands dollar cash flow.
*Develop a winning stock trading system allow me over 50% of profit with loss no more than 10%
*Find equity partner to invest with me for my properties.
What about yours?

Foreclosure.com

As you should probably know, the number of foreclosure in many area of the country has experienced a significant increase in the past 6 months. There are more people behind or can't afford the payment and walk away from the mortgage obligation. House prices continue to fall as a result. This is quite an exciting time for buyer. I've been looking for foreclosure listing last several months. I rely the resources from Internet. While there are many website program out there charge you a monthly fees for seeing the listing, I found a site that is pretty informative in providing the foreclosure listing info without a charge. Foreclosure.com. It covers all the 50 states in U.S. While the address is not complete , (it only show the street name, city, and state), it is useful enough as a first step. After I review the listing, I 'll call my agent in the area I'm interested invested in. I give them the street name and ask him/her to do more research for me. Check it out and let me know how you like the site?

TDAmeritrade Backtest strategy feature

Few weeks ago, I have a friend told me the online broker TDAmeritrade. It is discount broker like scottrade, etrade, that charge discount transaction fees compare to traditional broker. The interesting feature that attract me is the back test strategy they provide to the user. Basically, one can enter a set of trading rule (entry and exit condition) based on certain technical indicator and test it with the real historic data of the stock you're interested. It let you see how much money you make or lose based on your input trading rule. I open an account with them few days ago and now is busy testing the trade idea I've had in the past. It is quite an impressive tool so far. I'll update with you when I find a formula that I like and have consistent winning result.

Buy low , refinance high!

From the last post "25 cent for a dollar", I blog some of my friends were able to get a super bargain discount price from Bank owned property. It 's very lucrative business and I decide to do a similar deal in the area I'm interested on. I'm going to make numerous offers on the area I'm interested on R.E.O properties. I will start out with 75% discount as my initial offer price. I expect there will be many rejections before I can nail down one deal. But it will all worth my effort. After I acquire the property, I will refinancing it with the market value, so I can pull out equity loan from the house and roll it over to next deal. This is going to be very exciting. I'll update my progress to you from time to time.

Stock is NOT for LONG Term

"This stock is for long run" We usually hear this comment from people when they bought a stock and saw the price drop, drop and drop. Seeing the money draining day, after day, after day. Instead of selling the stock and cut the loss early, people will say "That's ok, this stock is for long run, it will come up" This is a losing mentality. Why would a person want to hold the stock for long time? What's the reason you want to buy stock at first place? The simple answer is: You want the stock price go higher your purchase price so you can profit the difference. If a stock does not do that, why'd you still holding it and HOPE for the long run? Stock is not like real estate, when a particular stock go down in value, it's not necessarily come back up. There are zillions of reasons why stock price go down. And if you don't understand why price go down, you wouldn't understand why stock price will go up neither. So, the smarter things to do is : Cut your loss immediately, preferably less than 10%, so you can limit it from serious downfall of the stock price when you see the trend is turning against your expectation.

Holiday Real Estate on Sale

Tonight, I received a phone call from a home builder representative. His name is Mike, he is sales agent for this new home tract I went to visits six months ago. He called me around 9pm tonight. I was quite surprised he worked so late. Basically, he told me on this weekend, there will be a special deep discount on all the houses for sale. The discount is as big as 20% with special in-house financing, no money down required, no closing cost, interest rate can be offered as low as 5.5%! Wow, I told him, this sounds too good to be sure. And Mike explained, "Yes it is a great deal, the builder is doing the year end sales push and want to get rid of all the inventories. While I think this is a great bargain, my gut feeling tells me to be patient. It's because I'm believing the price could come down even more in the next few months. So, I told Mike, I'm very interested, but I'd pass on the opportunity. I'm waiting for more and more mouth-watering bargain at a even deeper discount price pop out in next few more months or so.

Magic Formula Investing works like Magic for me!

Tonight, I want to share my experiencing using Magic Formula Investing concept to buy and profit from stock market. The Little book that beat the market, arguably the best stock investing book ever written from Wall street Analysts. This is a very easy to read and understand stock investing book I'd recommend to people. Basically, the concept is followed: Mr market is a very emotional guy, his decision in short run may not make sense, but in long run, he is a logical being. This means that sometimes he offer a stock at a very high price, but other time, he will offer you a bargain. It is magic formula's mission to find good company at bargain price. It is that simple!
How do we define good company?
According to magic formula, it looks at how much the return is generated from the invested capital or the return on assets (ROA). The higher the better.
How do we define bargain price?
Magic formula look for company's earning from the price, or earning yield, kind of like the reverse of P/E. Again, the higher, the better
Magic formula look for the universe of stocks and rank each company based on the above two measurement. Every day, it will update the list on the website: http://www.magicformulainvesting.com/
I've been buying stock from the list for the last six months, and the result has been very rewarding. So, tonight, if you've free time sitting at home watching TV, I highly recommend you go get this book to learn magic formula and how it can help you possibly achieve the north 20% annual return to build your wealth tonight.

Value Beat Growth!

There is always a debate in stock market to invest either in value or growth type of stock. Value stock emphasize on the fundamental date, ie, earning, return on assest. An example of value stock is UST. Growth stock focus on the stock price's growth above average of the relative industry. An example of growth stock would be goog. Few days ago, my company's 401k provider come to my company and give a presentation of the overall stock market over last 20 years. There are an interesting data which compare the performance of value and growth stock. Check out the above table.

It's clearly shows that value beat growth in every size of market. This is a good indicator that for long term success in stock market, we should focus on value than growth.

Covered call Vs Call option

Tonight, I want to share some of my research on investing stock options. In particular I focus on CALL options, which is generally works the best when market condition is a rising bull market. You don't want to do CALL option when the market is sinking downward.
Price: For writing covered call purpose, first you must own the underlying shares of stock. Because each contract require 100 shares, the amount required to invest is reduced if the stock price is lower (<$20). Plus, the power of leverage will work better. For call option, you want the stock price higher (>$50) because they are less volatile on downside and solid on the up side.
Option Period: You don't want your option to be "call out" when you're writing covered call, so you'd like the period as short as possible. On the other hand, you want to give it more time to comes up in value when you're buying option call
Risk Level: Covered call is less risk since you're owning the actual stock. You can always wait for stock to bounce back. But in call option, when stock price drops, AND you're near expiration day, you could have high probability of losing your entire investment (premium)
Type of stock: You want a slow price appreciation in covered call because you don't want to get call out. But you want the fast price appreciation type of stock in buying call option to get the maximum gain
Potential return: Every time you write a covered call, you have limited the gain you could make. Your gain is equal the sum of premium you receive plus the difference between strike price and your purchase price. In option case, your return is unlimited, depending on how much stock risk before your options expire
Strike price: The closer the current price, the more premium you will received in covered call case. In opposite, the further out of money, the less you 'll pay for the option premium.
That's all the points I 've summarized as a guideline for investing call options. Hope you'll find it useful.

A must read for flipping real estate

Flipping: A buyer purchase the property, fix it up, and put it for sale for profit in a short period of time. I have done a flipping deal two years ago. I bought this run down property and intend to fix it up and put it on market for sale for profit. I did my homework and estimated the potential profit by estimating all the number: the cost to fix up, the buying and selling cost involved, the purchased price, and finally, the projected selling price. It turns out that all the amount I estimated are pretty close to the actual number. I thought I did great and I've made the projected amount of profit. However, I found that I've missed one important number in my original profit calculation: The CARRYING COST! From the time I acquired the porperty, fixed it up, to the time I sold it for a profit, it took total five and half months for the whole process. In the meantime, I'm responbile for all the holding cost that a normal buyer are responsbile: the mortage, the insurance, the tax and the utility. Each month, these cost add up to over $3000 dollar in my case! $3000 X 5.5 month =$16500! This is almost half of my profit! This is a big mistake I 've made but I learn from it and I'd do it differently if I do a flipping real estate again in future ==> Instead of closing the deal 30 days (normal real estate transaction), I'd ask for a longer closing time, say 3months. In the meantime, I ask for seller's permission to get in the property and do fix up and rehab to increase the value. Once the rehab is finished, I'd bring in an appraiser to appraise the property. Certainly, the new appraised value would increase. Then, I'd obtain a mortgage based on the new appraised value. Once 3 months period reached, I then acquired the property. Immediately, I'd put it back on market for sale. In essence, I will be minimizing my holding period, reducing the expense, and potentially get a better mortgage rate to further reduce the expense and increase the bottom line profit.