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Archive for January, 2009

January???

January 30th, 2009 2 comments

Holy Cow!  January is gone and I’ve been slacking as far as posting any blogs.

I do however have an update on my 2009 goals.  In fact, I think I’m doing pretty darn good by still thinking about them after a month into the year.  I’m guessing I made it further than a lot of people who vowed “to get in shape in 2009″, and hopefully I’ll stick with it.

Well, the good news and the bad are the same thing: the numbers are down.  

The good news is that I’ve successfully lost about 7 pounds this month.  I’ve made it to the gym 3 times a week and did some form of excercise a couple of other days.  I’m starting to see a very small difference, but I’m continually having to remind myself to not go nuts and stuff my face.

The bad news is that I’ve also lost a lot of money in my investing account.  I got killed by owning a pretty good chunk of Bank of America.  It’s pretty much down around 50%, and is hovering at about $6.  I paid around $15. 

Other than that, the only other news is that I might need to put a little more “frugal” in FrugalJim.  My company just announced that there will be no merit increases this year.  If prices keep going up with inflation next year, it’s going to seem like I have less money in my pocket.  My only chance is to get a promotion (which usually comes with a bump in pay).  It’s a stretch for me to get one this year, but I think I might have a chance… only if I kick some butt here at work.  Speaking of work, I better get back.

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What is a Stock Option?

January 29th, 2009 2 comments

A stock option is kind of a vague idea for most people to understand right off the bat.  You’re not actually dealing with owning a piece of a company like with a stock, but you’re actually dealing with the “option” to own a stock which is a piece of a company.

A stock option is actually defined as “the right to buy or sell a company’s stock at a certain price”. 

I think that the best way to help understand stock options is to use an analogy:

I live in Central Florida, where we get battered with hurricanes every couple of years.  Let’s say I own a hardware company, and I know that if we get hit with a hurricane this year, I could sell 500 gas generators to people who want to keep their refridgerator and appliances running while the power is out.  The problem is that as soon as a hurricane comes, my suppliers will be bombarded with demands from other companies, and I probably will only get 10 or 20 generators to sell.  Plus I don’t want to buy 500 generators now, because if we don’t get hit with a hurricane I’ll be stuck with 100s of generators in my warehouse taking up space and a lot of my money.

So what do I do?  I go to the manufacturer and I tell him that I’ll pay him $1,000 in return for a guarantee of the right to buy 500 generators the next hurricane season at MSRP.  Even if, all the other hardware stores in Florida are asking him to send generators, he will send the first 500 from his warehouse to me, whenever I ask.

Now, if we don’t get hit with a hurricane this year, I’m out $1,000, but at least I’m not stuck with 500 generators I can’t sell.  The big benefit comes though if we do have a hurricane.  I’ll probably be the only one in town with generators to sell to everyone, and I can probably raise the price a little too.  I’ll make a killing.

Stock options work this way too.  It essentially lets you benefit as if you “own” the stock, without actually having to buy it.  For example, if I buy call options on Bank of America for next month at a $10 strike price, I’ll have to pay around $.50.  If the stock goes up to $20, I can excersize my option to buy the stock at $10, and turn around and sell it for $20, when I only spent $.50.  If the stock tanks, I’ll only be out of $.50.

I hope this helps clear some confusion in the complicated topic of stock options.

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New Commerce Secretary

January 29th, 2009 1 comment

There are rumors that John Thompson, the current CEO of Symantec Software will be nominated to become the United States Secretary of Commerce.  Thompson already has plans to step down from his post at Symantec in the middle of this year.

What can we expect from this guy?  I’m betting on a bit of a protectionist agenda.  Be on the lookout for new rules against the government buying software from other countries.

For example, there is a Russian software security company out there that offers a competing antivirus solution with Symantec.  Do you think that it will make it’s way onto government computers in the future?

It will be interesting to see who gets nominated for that post.

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Going Forward

January 20th, 2009 No comments

Right now, I’m watching the inauguration of Obama on my computer here at work.  The sounds is crackling, the video keeps freezing and rebuffering, and the video window size is so small, I have to squint.  Still though…  I’m enjoying it.

I figure it might be funny to look at this image sometime in the future and remember the thoughts swirling through my head right now.  We have no idea what will happen in the next four years.

 

Obama inauguration screen cap

Obama inauguration screen cap

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FrugalJim’s 2009 Resolutions

January 2nd, 2009 3 comments

I can hardly believe another year has passed. 2008 definitely had its ups and downs, but overall, I think when I look back, I’ll remember some fun things I did…

The wife and I celebrated our first anniversary in 2008, and we made it through a big challenge to not kill each other while painting, installing hardwood floors, and tiling our house.  We traveled three times into the mountains of North Georgia, Cherokee North Carolina, and Laurel Springs North Carolina.  Scooter made it to the last two :)   And to top it off, we made significant contributions towards savings for the future (even if a lot of it has been lost from the short term down market).

Looking ahead though, I was trying to decide what goals for 2009 I should set.  Of course I automatically came up with a perennial favorite of most people: Make More Money and Lose Weight.

Making more money seems pretty vauge.  What I’ve decided to do is track my investments down to every deposit and withdraw, so that I can calculate my Internal Rate of Return at the end of the year.  I will also track a sample investment of an S&P 500 index fund.  At the end of 2009, if my investment returned less than it would have if I had just put it into an index fund, then I will take half of my money and put it into the fund.  If on the other hand I beat the S&P 500 I will continue to personally manage the majority of my investments.  In essence I’ll really be able to decide if I’m making the most of my money.

Losing more weight has been my goal countless times.  On January 1st, 2009, I weighed myself and discovered I’m tip toeing on the line of “All time highest weight” at around 220 pounds.  My perfect healthy weight according to my height would be 175 (if I used the BMI calculations, they say I should be 140 lbs, but I’m big boneded :) ).  So again, I am planning on tracking my weight.  I am setting a goal of losing 1 pound a week for 50 weeks.  By cutting 500 calories a day of my current face stuffing, I should be able to do this.

So here they are…  my 2009 Goals:

  • Beat the S&P 500
  • Lose 50 pounds

Wish me luck!  I’m sure going to need it for the weight loss part.  I have way more confidence in goal number 1 :)

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