Archive for September, 2007

by Melanie
A high dividend yield can indicate there’s value in a stock, but there are plenty of traps for the unwitting investor.

If you’re anything like us, you probably enjoy running your eye down the dividend yield column of your favourite financial pages. As far as yardsticks for value go, a high dividend yield is one of the most straightforward. Unfortunately, simplicity doesn’t equate to reliability and many investors end up buying high-yielding stocks that turn out to be absolute dogs.

It’s a topic we discussed in our More to income than yield article of issue 136/Sep 03, which we recommend reviewing. In this article we’re going to suggest some specific questions you might like to ask next time a stock with a high yield jumps off the page at you.

First and foremost

The first and most important question is: ‘Do I understand exactly what this investment is?’ This gets back to the words Ben Graham wrote in chapter 20 of our namesake, The Intelligent Investor: ‘Investment is most intelligent when it is most businesslike.’

Many people shop around to save a few hundred dollars on their whitegoods, or even a few cents per litre on the price of petrol, but then invest thousands of dollars after minimal research and only a few minutes of thought. We suspect the problem is that a lot of people don’t know where to begin, so they take a deep breath, place the buy order and hope for the best. If you take the following pledge, we guarantee your investing results will improve:

From this day forward I shall never place a single dollar in an investment which I do not understand. I will undertake any required research and not be afraid to ask ’silly’ questions of anyone who has recommended a stock or product to me until such time as I am comfortable with the nature of the investment and the risk it entails.

Visit The Intelligent Investor for the rest of this article on dividend yield and to find out more about value investing.

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by William King
Being an entrepreneur was never easy. Starting a business up from scratch is one of the most difficult and complex things to do. If anyone ever told you that it was easy, then that person is wrong. But now, a lot of would be entrepreneurs are looking at a much safer and hassle free option of buying an established business. The reasons for this are many. It reduces the hassles, the anguish and the pain by leaps and bounds, getting finance is easier etc. But buying a business is also an equally challenging task. If you go wrong, then very soon you will have made a huge financial mess. You need to ask a few questions to yourself to ascertain whether the business that you are about to buy is right for you.

You as the new owner
Besides the finance, there is a lot more at stake when you buy a new business. Your reputation for one, your ability to run the new business and your working capabilities are all at risk in starting a new venture. When you buy the new business, you need to understand that the focus of the business shifts completely upon you. You need to be qualified both technically as well as in terms of experience to run the business effectively. A business can be really stressful as you might have to deal with difficult employees, uncertainty, adversity and lastly, loss. The faster you are able to gauge your expertise, the easier it will become for you to determine whether the new business is right for you.

Background check
This is one of the most important steps in securing a good and strong business. You need to conduct a complete background check of the business that you are about to takeover. Does the business have a positive cash flow? Valuing the business is a part of this background check. A business valuation analyst will be able to help you determine the actual value of the company. The valuation of the analyst is based on experience and professional standards. The analyst does not take the financial details of the company into consideration.

Finding the right business
The Merger and Acquisition firm will help you to find the right business for you. These guys are intermediates or middlemen. They can be categorized into several categories based on the kind of business transactions that they can handle. For example, a broker can handle a business transaction for companies with sales under $5 million. The broker would nevertheless love to handle the transaction for a company with sales exceeding $20 million but neither do they have the competency nor the expertise to do the same. So when you seek the services of a M&A firm, make sure that you choose the right one based on their expertise.

Planning

A proper plan in place will let you complete the entire acquisition deal in no time at all. If you run an aggressive plan, then it should not take more than three months for the complete acquisition to go through. So sketch out the plan and execute it in proper order.

William King is the director of French Wholesalers & France Wholesale Suppliers Directory , Wholesale Trade Offers & Wholesalers Dropshipping Supplies & Products , and Dubai Property & UAE Property & Dubai Real Estate Properties . He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing.

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by Melanie
If you’ve ever sampled the subtle delights of skiing—and the all too frequent and rather less subtle delights of landing on your backside—you will know that the techniques involved are somewhat counter-intuitive. A mastery of skiing requires you to conquer your fear of falling. To move forward in a controlled fashion, you must actually lean down the mountain, and to turn, you must lean into it. Until you’ve conquered the fear, you will try to do the opposite, which would prevent you from falling in most other situations, but which will quickly send you posterior over pectorals on a set of skis.

So it is with investing. The behaviours that usually work well in the ‘real world’ can be the seeds of our undoing in the sharemarket. In this article, we’re going to examine some of those counter-productive behaviours, using a few examples, and look at what we should try to do instead. We won’t pretend that any of it is easy, but it’s always a good idea to ‘know thine enemy’, and most of the time in investing, ‘thine enemy’ is you.

To start things off, assume you have researched a company and feel very sure it is underpriced. You buy the stock, but next day the company releases news that knocks the price down 25% on high volume. What’s your reaction?

Visit The Intelligent Investor for the rest of this article on the value investing and to find out more about being a value investor.

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by Melanie
In the world of investment, some arguments are as old as the hills; and none more so than the amount of cash to hold in your portfolio. Some stick to a rigid percentage of their assets held in cash, others always aim to be fully invested. So who’s right? Well, as ever, it all depends on where you’re coming from.

We’ll dispense with part of the problem right away. It stands to reason that everyone needs to hold some cash. After all, you’d find it hard to walk into Woolies tomorrow and exchange a few shares in Telstra for a bag of groceries. You need cash to cover your living expenses and an emergency reserve for, well, emergencies. How much depends on your personal circumstances. It’s all basic budgeting and we’ll say no more about it; but, when people say they always hold 20% of their assets in cash, it’s often this that they’re talking about. What’s left of your stash, over and above these requirements, are your investment assets and this is where the plot thickens.

Margin of safety

One of the foundations of value investing is that you should make sure of a margin of safety in any investment—and the benchmark for safety is cash. If you can’t find anything that looks like it offers this margin of safety, then you simply stick with the cash. Two recently-floated listed investment companies, MMC Contrarian (MMA—$0.97) and Wilson Investment Fund (WIL—$0.98), both mentioned on page 8, are currently following this approach with 58% and 78% of their respective assets held in bonds and cash. A more established example is Warren Buffett, whose Berkshire Hathaway vehicle held a whopping US$36bn in cash at the end of 2003. All of these companies complain of a lack of suitable opportunities and they’re prepared to be patient in waiting for them.

Visit The Intelligent Investor for the rest of this article on the investing in money and to find out more about stock investing.

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by Henry Davis, International Property.ie
1. Don’t let your emotions cloud your business judgement
If you are buying for investment purposes particularly, try not to become emotionally involved, remember this is a business transaction and unless you plan to stay and use your overseas property choose an area with strong capital appreciation and just because you wouldn’t live there yourself doesn’t mean it’s not a good investment. According to the Royal Institute of Chartered Surveyors review in 2006 the top rising markets with the highest capital appreciation in 2005/6 were Estonia, Denmark and Spain. However, this data is now well out of date as the Spanish market in particular is no longer a speculators market.

2. Research and understand your rental market
Be careful if purchasing in large blocks of apartments exclusively sold to investors, which can often complete together bringing large supply into the market at one time. Twenty or thirty apartments can easily find tenants, but prepare to wait longer if you’re the owner of an apartment in a block where hundreds of apartments become available to rent at the same time. Also ask local letting agents the type of units that rent easiest, if the area is over developed there can sometimes be an oversupply of two bed apartments.

3. Remember transaction costs seriously reduce your returns
Remember transaction costs reduce your overall yield. For example in Germany apart from transfer taxes (stamp duty) the buyer pays the estate agency fees, not the vendor. Transaction costs also increase in countries where the loan to value rates are low, the more cash you have to put into a deal the less the return on investment. Check all your transaction costs before buying, ask your solicitor for a full quote in writing outlining all taxes and fees, but remember to ask for it in writing before you commit.

4. When is a discount not a discount?
It is easy to get discounts on higher value properties, over priced properties and over supplied destinations. Remember list prices are developer driven and they always tend to price at the top of the range. Just because you receive a 10% of buyers are say German buyers and if the German economy should experience problems, then this will seriously effect your ability to re-sell your overseas investment.

Henry Davis develops commercial & residential property in Britain www.internationalproperty.ie or +353 87 2344000

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by Lazy Guy Trader
Honestly, I’m not a big fan of the half point cut today by the Feds, but you really shouldn’t care what I think because I’m not an economist. That’s the job of the Feds. The reason I’m not so hot about the reduction is because I am a strong believer in market’s own correction, and not government intervention.

Anyway, that’s beyond the point. The point is, what option trades should I enter after today? Last week, I chose to enter into some put options on the S&P Index because the market has been moving in a zig-zag fashion in the last two months. Having seen some up days last week because of Wall Street’s euphoria with the Feds cutting interest rates, I wasn’t so optimistic and actually bet on the Fed not doing anything or only a quarter point cut.

Now that was a $2000 lesson learnt (as you can see, I avoid putting in more than 5% of my risk money). I admit that I should have stick to this one lesson from one of my options trading instructor 2 years ago - Never enter into one position on a trade. Meaning, I should not have bet on only one direction. However, I should still feel vindicated because back in the low of August, I had purchased some stocks and options that I have been watching for a while now to buy at a discount. Those have gain nicely for me. Anyway, that again is beside the point of this blog.

Looking forward, what is the best option trade to get into from the Fed’s action today. The best strategy is to take on a straddle position. What is a straddle position? As defined by Investopedia, “An options strategy with which the investor holds a position in both a call and put with the same strike price and expiration date.” So this strategy allows me to play both direction with the expectation that in the next couple of weeks, the market will either move dramatically higher or lower.

Straddle is a good option trade if you believe the market or the particular stock will make a big move either up or down. You only lose money if it doesn’t move much at all. With the current volatility in the market, stagnation doesn’t appear very likely.

Next question, which options should I adopt a straddle position? I could either trade the S&P500, Dow, or Nasdaq. This time, I chose to trade the Nasdaq (ticker: QQQQ) because the Nasdaq 100 chart is in a vertical trend up and trending towards its 52 weeks high. It appears bullish but at the same time, is hitting resistance so may suddenly become bearish if it doesn’t break resistance. So to take my own lesson of never enter into a trade in one direction, I will adopt a straddle position on the QQQQ.

With the QQQQ at a market price of $50.04 as of closing today, I plan to enter the Nov 07 $50 Call at no more than $2.00 and the Nov 07 $50 Put at no more than $1.60. I expect to exit this trade within 2 weeks to both avoid time erosion but also taking advantage of the current momentum and euphoria because of the rate cut.

Patrick Lim aka Lazy Guy Trader

Up, up, and away!

Patrick Lim operates www.LazyGuyOptionTrader.com, a blog about his personal journey to take $50,000 to turn it into $1,000,000 in 5 years. He likes to share the strategies he uses to try to accomplish his goal and is now giving away a FREE article he wrote about how to make a quick profit during times of market volatility.Join him on his journey and get FREE tips and strategies at:http://www.LazyGuyOptionTrader.com

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by Mostafa ElAwady
Today in the aftermath of the housing bubble, people who had bought property in the height of a strong economy are now finding it hard to keep their homes and are nearing foreclosure. This can cause what is called a “short sale”, for investors this is a good time with an educated agent to buy properties, Sellers can be found in a bailout situation, in other words a homeowner can no longer keep their mortgage payments up because of financial reasons and need to sell their properties quickly before they are foreclosed on by their lender and willing to sell at a fair price. This not only is to the advantage of the investor, but interest rates might be lower, to a qualified buyer, than they were when the property was purchased in a bubble market. This means in today’s market the price they had bought at is now debt higher than the value of the house. A wise investor knows that to buy in the down slide of a bubble market they need Antonio that is aware of how to negotiate the depreciation of a property value and work to the investors gain.

Foreclosure is also seen in the market today and while sad for the homeowner Antonio can find properties at the right price and at a greater value than the asking price to the benefit of the investor. Lenders are interested in being paid back and avoid foreclosing and take less than the amount of the original loan, this makes a foreclosed property one that is a low risk investment find the right agent, the lender may forgive a loan on a home, however this loan might not be the only one encumbering the property, therefore you should rely on a Realtor.

Another type of investing, our website offer is to pool funds with other buyers lowering the risks of investing. By doing this you can find a more attractive properties that will have a higher resell value at the time the partners decide to put it on the market. This type of investments are backed by extensive searches from Antonio itself and always guaranteed by a deed, or other instruments another benefit is that you can distribute your money into several investment. Funds will be legally contracted and deposited in the partnership to be created. Contracts, negotiations require a professional realtor that has experience in this field; an inexperienced agent can leave your investment unprotected. This is the reason why for an investor it is always a wise decision to use an Antonio web site that has tips and calculators to reduce risks and liabilities. Homes, villas and other Real estates properties are widely available in this market, and a wise investor should look into other countries, regions. You don’t shop only at one grocery store ….so make sure to check out Antonio’s International real estate properties.

For a licensed realtor who speaks English, German, French and Italian please click here.
Learn more about multilingual realtors.

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by Andrew A Karasev
Hospitals and healthcare are definitely on the reliable growth pace. Current industry trend is really reverse to what you would expect, being new to this sector — this is shortage of nurses and medical professionals, meaning that it is rather challenge to find certified applicants, and not really to get new contracts from healthcare organizations. This trends requires the investors to look at healthcare staffing agency from the perspective of its popularity among nurses community — getting nurses opinions on which company is “better” — in the senses of being more friendly, offering better conditions, including faster paychecks issuance. As medical staffing companies actually sells services in the form of recruiting fees, plus W2 services to their medical temps — you should feel the nature of the risks and the opportunities: they are at the management experience, passion and competence side, not in real material assets, such as plants, production tools or even buildings. Let’s try to see the pro and contra arguments:

1. Economy Cycles: Booms and Recessions — healthcare is always in demand, so it should be considered stable and not really exposed to economy cycling. This statement might be considered as a trend, however some companies will suffer from bad economy, but in our opinion mostly due to the recession “atmosphere”

2. US population “aging” — this is similar to what was long times seen in Europe and Japan, where immigration offset (or even new young immigrants inflow reversed the aging process) was not as active as in United States. Senior population requires more medicine attention and potentially will increase the workload for healthcare staffing organizations, who supply hospitals, nursing homes and retirement communities with nurses and medical doctors

3. Baby Boomers “contribution”. It is believed to be a factor and it should begin its population aging contribution, in the sense that baby boomers will approach retirement age in five-ten years from now. Maybe it is over estimated, however as new population is growing due to current high rate of immigration into US

4. Healthcare placement competition is rising. Still, we see large number of privately owned recruiting firms, who are strong on the local and sub-regional markets, so the best way to grow is merges and acquisitions, it is not a good time for new operations launching in the regions. Obviously it is too optimistic to predict that all of these healthcare staffing firms will be absorbed by public healthcare placement providers, however the trends are out there

5. Sun belt states syndrome. Retiring population has a trend to sell
their mortgage paid single family houses in New England, New York, Illinois, California and other mid-west or northern states and move down to Florida, Texas, Georgia, Arizona, and others sun belts states, where they surge new medical nurse inflow

Andrew Karasev is technical writer for Crdentia Corp. (CRDT.OB) http://www.crdentia.com 800.803.1777, one of the nation’s leading providers of healthcare staffing services. Crdentia seeks to capitalize on an opportunity that currently exists in the healthcare industry by targeting the critical Nursing, Physician and Allied Health shortage issue. Crdentia has locations in the following states: Alabama: Birmingham, Arizona: Phoenix and Tucson, North Carolina: Charlotte, Texas: Dallas, Houston

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by Melanie
‘Well I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes [without me] getting some surprise that pushes my limit a little farther.’ That was Charlie Munger, Berkshire Hathaway Vice-Chairman, speaking before the Harvard Law School on the psychology of human misjudgement.

Munger is resolutely focussed on the power of incentives to influence human behaviour. In his speech he recounts a number of examples where incentives have been used for both good and ill. Federal Express was one such example. It has to transport packages within its network to a central location for sorting before sending them on to their final destination. For the system to work, the sorting must be quick and efficient. The trouble was that, for a time at least, it wasn’t. The company tried all sorts of incentives without much success. Then management came up with the idea of paying their staff by the shift, instead of for the shift. In other words, when the sorting was done the staff could go home. As you can guess, along with the staff at the end of their shift, the problem vanished almost immediately.

Getting rich at others’ expense

It’s a fantastic example of building a better system through incentives. But have a look around and you’ll see all sorts of incentive systems that don’t operate in the interests of those who generally fund the system; Does your fund manager charge a base percentage fee on the amount under management regardless of performance? Does your financial advisor receive trailing fees and commissions from those funds and investment houses whose products he sells, even if they fail to provide an adequate return? What about stock brokers? Don’t they get a clip of the ticket every time a stock is bought or sold regardless of the profit or loss sustained? In the finance industry there are no shortage of incentives, it’s just that most of them are structured to benefit not you but someone else.

Visit The Intelligent Investor for the rest of this article on investing and up-to-date investment information.

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by Andrew A Karasev
Investing is risky activity by its nature, plus add to the consideration the fact that US economy, as we write these lines in September 2007 maybe already in crisis or will face economic issues in 2008. When you think about investing into stocks, you probably want to be reassured that your decision is economically feasible and you will outperform the market. Well, medicine & healthcare is the industry where economical cycles have minimal if any effect — people have to go to their doctor or physician and get prescription drugs when required. Still, we believe that investing in Medicine and Healthcare is less risky than investment into Dow Jones or High Tech shares. When market slows down, the real cycle-independent stocks will play as expected and should outperform. Let’s concentrate on predictions:

1. Nurses shortage. Remember year 2001 when in California hospitals were desperate to get new nurses to be hired or close short term nursing contracts to be signed by nursing professionals. Similar trend should be probably attributable to all Sun Belt states: Texas, Alabama, Florida, Georgia, Louisiana, and others. If you think that nurses could be imported from India, Philippines, Mexico, then please think about US immigration policy and its restrictions — looks like we are resembling European countries who never really welcomed new immigrants

2. Medical Placement Criteria. Let’s abstract ourselves from investing and think about Healthcare Staffing corporation efficiency. It may sounds as a paradox, however the most important is not to get new customers, read hospitals, nursing homes, etc, but rather attract more certified nurses, doctors, and other healthcare professionals. This is why we are thinking that the challenge is at the US medical colleges and universities side — we are not really ready to accept all qualified nursing applicants and lead them to Medical certification and college degree. If colleges are out of space, we will have to relay on foreign nurses, but current administration immigration policies and working visas issuing mechanisms are leaving the place for substantial improvement

3. Placement system. As staffing and recruiting is the service, it should be very efficient and automated. Taking the assumption that the most important is to attract more nurses and medical professionals to register as the applicants: web based registration system is required. Placement system should be efficiently integrated with ERP system: applicants should be visible in ERP payroll module for quick and preferably “on demand” paycheck issuing. It is recommended to review proposed medical staffing company nurse registration and billing system and probably even get nurses opinion on how do they like this company in comparison to others.

Andrew Karasev is technical writer for Crdentia Corp. (CRDT.OB) http://www.crdentia.com 800.803.1777, one of the nation’s leading providers of healthcare staffing services. Crdentia seeks to capitalize on an opportunity that currently exists in the healthcare industry by targeting the critical Nursing, Physician and Allied Health shortage issue. Crdentia has locations in the following states: Alabama: Birmingham, Arizona: Phoenix and Tucson, North Carolina: Charlotte, Texas: Dallas, Houston

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