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By Johnny, July 11, 2006 4:02 pm

All my funds came over from Vanguard last week into my Scottrade account. I finally positioned myself in the following ETFs: SHY, XLE, and GLD. Because Scottrade’s cash position did not have any money market that came close to the yield of 4+% from my old money market fund, SHY was a recommended position. Its basically some a bond fund consisting of US Treasury Notes yielding between 2.6-4.7%. Its a relatively safe ETF which pays out monthly dividends yielding about 4.2+%. I’m 75% in SHY while the remaining 25% was split between XLE and GLD. XLE is my energy play whereas GLD is my position in gold. Both XLE and GLD performed well today. They’re both poised for a potentially higher trend with both being above their 200 day MA and right at their 50 day MA as well as making newer highs. Sitting in cash in my 401K is rather dull, but I’m waiting for more positive signs to move into the right position.

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By Johnny, June 22, 2006 11:08 pm

It’s some pretty scary times if you’re in the market right now. I had to assess my own portfolio and found that I’m only down 0.31% since the start of the year. Not bad considering that I had some pretty big losses in my 401K account. Thankfully I moved to cash at a timely manner. Next step is moving my Rollover IRA into Scottrade so I can begin trading some Bear Funds. Oh yeah, there are finally Bear market ETFs. I’ll be monitoring those closely. Moving to Scottrade should also get me situated for the next Bull market. Hopefully I can reach my 20% annual growth this year. I’m 8% behind where I should be.

On a side note, I told you Miami was going to be the NBA Champions. Now if I was only this good in predicting the market…

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By Johnny, June 16, 2006 2:27 pm

As of Wednesday this week, I am 100% in cash. I missed on the 2nd day bounce but after seeing my international fund drop 16% since I first got into the position and my small cap fund hit my stop-loss mark of 10% the previous day, I had enough. That’s a hefty loss on 30% of my portfolio. I’m up a couple of percent on the remaining 70% of my portfolio. I really should just figure out how much I’ve loss since the beginning of 2006. June has been a pretty bad month to be in the market. I’m looking for some Bear market funds to get into. Here are the funds I’m monitoring:

RYSHX
RYCWX
RYMHX
URPIX – I’m specifically watching this closely since this is a complete inverse of the S&P 500. From what I understand, for every 1% S&P 500 drops, this fund hedges twice as much. Unfortunately, if the S&P 500 rises like yesterday, you will lose twice as much. I haven’t got into position yet only because the 70% of my portfolio is parked in a rollover IRA where they don’t give you the choice of other fund families. I will be moving to Scottrade soon.

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By Johnny, May 26, 2006 9:12 pm

Yes I finally did it! Finally reached one of my financial milestones. I’ve finally become debt free. This afternoon, I just dropped off the last check to pay-off my student loan. No more student loan payments, no more car payments, no more credit card interest payments. Well, maybe for a mortgage, but that’s it!

Here is a picture of me and my final check and letter to my loan company.

Here is me depositing my letter in the post office.

Here is the last look of the letter going down the post office box.

And finally, my Dave Ramsey declaration in MP3 format.

No I did not call into his show. I just made my own audio file. Yes I’m lame, but I’m also debt free!

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By Johnny, May 19, 2006 12:06 am

My second playoff game came sooner that I had expected. Because of some unfortunate reason, I was offered the opportunity to see the Clippers again last night against the Suns in Game 6 of their series. Again the Clippers was victorious and forced a deciding Game 7 at Phoenix. It was very entertaining and our seats this time was at center court but still at the nose-bleeds. Thank goodness it was the Staples Center since it didn’t matter where we sat we were still in the middle of the action. I brought my Adalyn to her first NBA game ever. She was excited. Everything was fine until near the end when some dude 2 rows back fell over and push the guy behind us on her. She’s a little banged up on the shins, but I think she’ll be fine. What a way to enjoy the action after a nail-biting conclusion to my Spurs‘ game the night before where they inched by the Mavs by 1 point to foce a Game 6.

On another unrelated note, I finally put 59% of my position into cash. My trailing stop-loss mark was actually met today so I had to make that switch to cash to reduce further damage by this recent bearish market. Hopefully I’ll have to see if my move was right. Moving your money out of position seems a bit overwhelming. I am worried about the fees and tax implications. But since its in a roll-over IRA, I don’t think I have any issues with tax since an IRA’s capital gain does not impact my taxes since this is tax deferred. Also the money market mutual fund’s overall fee is only 0.13% per year. That’s about just a meal a year so no biggie. Now I have to do the same with the remaining 41% of my portfolio. Unfortunately, this one is in my 401K so I have to wait for a recent transaction I initiated. On May 12th, I moved the majority of that portfolio into a Small Cap and International Fund. Both sectors suffered a 6% decline so far since then. I would have only lost about 4% if I left it the way it was in multiple funds. Oh well, live and learn. I’m willing to move that into cash as soon as we hit about 10-12% stop-loss. Hopefully this will happen later since I can initiate another transaction. Only crappy part in dealing with my 401K is that you’re only allowed 2 transactions a month.

On a positive note, I’m looking to be completely debt free next Friday. I think I’m going to have it on video of me screaming, “I’m debt free!!!”, much like how those Dave Ramsey callers do it on his radio show. Hopefully I can post that on here when it happens.

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By Johnny, February 22, 2006 10:42 pm

In a recent post, I had dabbled in the idea of compounding interest. That was just the tip of the iceberg. Today, I learned something even more incredible and worth sharing. Ever since that last post, I wanted to figure out why more people are so excited about compounding interest. I mean I can figure out how long it will take for me to double the amount of money just by using a simple calculation, but why was this important?

To my surprise, the answer was right in front of me. Well, not really in front of me, but it was in the form of a podcast I was listening to. I subscribe to Doug Fabian’s podcast. The author of “Maverick Investing”. Even though I listen to him on a daily basis, I was never intrigued with what he had to say. But recently he had his dad, Dick Fabian, come on the show and explain the idea of trend following and importantly compounding interest. For some reason Dick Fabian had an incredible appeal where I was paying more attention to what he had to say. You can tell he was very passionate about the subject even to this day after retirement.

After his interviews, I went to visit his web site and found his document explaining the power of compounding. It basically described how you can invest $100,000 and retain an earning of 20% every year for 15 years, you will earn $1.5 million. That isn’t the amazing part. The amazing part is that the earning is equivalent to gaining 96% return on the initial $100,000 every year until 15 years. Meaning even though you’re gaining 20% annual on your lump sum, because of compounding interest where the interest is applied to the lump sum plus all previous gains, you’re actually getting more than 20% every year and eventually returning a much higher interest as you let the amount compound. This to me is truly amazing since you don’t need to find an investment that yields higher than 20% to get a higher gain. All it takes is time and working to find investments that gives you at least 20% gains. He quickly points out that there are hundreds of mutual funds that yield that much or more. All we need to do is go to the library to see the year-end edition of Barron’s, WSJ, or USA Today to look at mutual funds listings. And more importantly, if you use his worksheet, you can monitor your investment every week to make sure they are retaining a 1.67% growth every month. Why 1.67%? That’s 20% gain for a year (1.67% * 12 = 20%). I think I might just subscribe to this trend following methodology in investing. Its basically monitoring the trends using the 200-day moving average, which you can get from Finance Yahoo! page for any symbol you’re looking up. I’m sure there’s more to this so I’m going to find out what else I need to do. But for now, the reality of possibly retiring a millionaire by age of 45 is a reality and not a dream.

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By Johnny, January 31, 2006 11:13 pm

For years I hear people speak of compounding interest like the holy grail to getting rich. Not until I learned the Rule of 72 I appreciated how this worked. Thanks to Dave Ramsey who mentioned it on one of his recent radio shows. He explained that a quick way of calculating how much you will have after 20 years @ a 12% savings rate. It goes something like this:

Monthly savings x 1,000 = Final Earnings in 20 Years

For example, if you save $500 a month for 20 years at 12% interest rate would yield $500,000 (gave or take a thousand or two). $500 x 1,000 = $500,000

The following formula also will give you the amount of money you would earn after just a lump-sum investment at the same 20 year at 12%:

1 Lump-sum x 10 = Final Earnings in 20 Years

For example, if you save $5,000 in an IRA and left it there for 20 years at 12% would yield $50,000. $5,000 x 10 = $50,000.

I looked further into it and figured out how he came up with these numbers and discovered that you just divide your saving’s interest rate to 72 and you’ll figure out how much time it will take for your current amount to double.

For example, if you have $10,000 that was getting a 6% return, it would take 12 years for it to double to $20,000. 72/6 = 12.

This provides a good way to estimate how much money you will have at a particular time. Isn’t this great?

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By Johnny, January 11, 2006 2:11 pm

According to this article: http://biz.yahoo.com/special/live05.html, it costs a family of 4 $370,000 a year to live “well” in Los Angeles. That’s 3rd in the nation behind New York City and Boston. We’re talking about owning 2 houses, one in a nice neighborhood and one in the country side or beach house. 1 kid going to private college and the other one is in 8th grade. 2 luxury cars, a BMW 325i and a Lexus RX 330. Weekend get-aways at resorts, taxes, dining out, and health care costs. The part I didn’t like about this was that the fictional family only saved about 1% of their income to maintain this life style. This is definitely not the lifestyle I want to be pursuing. If this was 2 years ago, I may have been building my goals towards this but after reading The Millionaire Next Door, my views on people spending money extravagantly is rather silly and pointless.

I’ll be happy living in 1 mediocre house with 1 mediocre car, 1 motorcycle, dining at restaurants only on the weekends, and saving about 40-50% of my income towards my future goal of being a “Millionaire Next Door”. 10 more years to go!

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By Johnny, December 5, 2005 6:29 pm

As many of you may know, I am moving back home with my folks. After 2.5 years of living away why in the world would one do that? I have to admit, I am not looking forward to loosing all the freedom and little fringe benefits I get living away from them. The trade-off is a strategic maneuver for me to maximize my earning potential by not having to pay for rent and paying off my entire student loan and being able to save for my 6 months emergency fund by the same time next year.

This will put me in a great situation where I will be able begin investing or saving for investments which may be very good timing with the all the adjustable rate mortgages expiring next year (330 billion) and 2007 (1 trillion). What does this mean to all the people who haven’t kept up with this possible pop of the housing market? With all the mortgages expiring, we may see the terms of the interest rate to be raised and people not being able to pay their mortgages. Refinancing may not even be a viable option by then with banks setting up stricter requirements and interest rates being higher than before. So by 2007 I should have a some money ready to put a substantial down-payment on foreclosed property. Next step, find a source of foreclosures!

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By Johnny, November 13, 2005 2:02 am

I’ve been consistent with my new rule of playing poker every other week for only a $40 buy-in. Yes unlike alot of my friends, I don’t want to be playing poker all the time. Don’t get me wrong, I love this game. But there’s more to life than just poker. Following my predetermined rule, I should be able to pay off ALL of my debts early next year and still be able to enjoy poker.

On a side-note, I have been doing well for the past 3 times we played in the last 6 weeks. Feels good to be winning. Sure makes up for the time when I kept on losing. I think I’m getting the hang of this game. Tonight I walked away with $10 more than what I had brought. Can’t wait for my next game in 2 weeks.