His theme was something I feel like I already knew deep down, but could not quite put into words.  Our economy right now is focused too heavily on FIRE (finance, insurance, and real estate), and we need to shift some of that investment to other areas; mainly ones that focus on making our workers more efficient.

Janszen mentioned that clean energy, telecommunications, and physical infrastructure are areas our government should focus on to help get the economy going again.  Imagine if George W had taken $150 billion and built wind turbines throughout the country instead of sending everyone a check for $600 that they spent at Best Buy?  Imagine if the government would spend a big chunk of the current bailout package on providing a nationwide wireless internet (maybe Wimax?) instead of giving the unallocated funds to banks and car manufacturers?

As the wife said, I hope someone is whispering these things in Obama’s ear right now.

Check out the replay on NPR here.

Woman on eliptical: Tell me about it.  So much money goes into all that stuff.

Man (a moment later nodding to a clip about the World Series):  I wish I played baseball, even the league minimum would let me retire after a couple years.

Woman:  Yeah that’s definitely outrageous.  I think there should be a way to limit the amount of money those people make.  It’s not like they’re adding that much value to society.  Even CEOs make way much more than they’re really worth.  I think they should make a law that would make things more fair and equal.

Man: Me too.

Woman (point back to Obama on TV):  I think he’s crazy too, wanting to do all that wealth spreading.

Man: Me too.

I meant to sell some call options for GM to get a little cash, but instead I clicked “Buy”.  The order summary page looked a little strange, and I used my software engineering background to assume they had a bug.  I thought “they need to fix that!” and I clicked “Submit”.

So very stupid.

When I realized what I had done I had to sell the options back to the market to close out my position.  I paid $24 in commissions and $21 to Mr. Market because of the spread in bid/ask prices.

The only good thing to come out of this is that I can guarantee I won’t ever do that again.  Imagine if I was dealing with thousands of dollars instead of hundreds???

First off, let’s do some basic evaluation of the companies and their stock price. FSLR is currently trading at $135 with a market capitalization of $10.3 billion. STP is trading at $21.75 with a market cap of $3.3 billion. In the last 12 months FSLR has made a profit of $2.68 and STP $1.32. This gives them Profit to Earnings ratios (for trailing 12 months earnings) of 50 and 16 respectively (average US PE is around 16).

Here’s a breakdown of these numbers:

What does this tell us? Well FSLR is still very expensive relative to what they earn. STP is still kind of pricey too. What’s the reason for this? Growth!

If you look at expected future earnings, FSLR’s earnings are supposed to grow to $3.67 from $1.40 (FYI 2007 to 2008) and STP to $1.67 from $1.02 (also 2007 to 2008). This gives them growth rates of 162% and 63%. So now we can see why FSLR is about 3 times as expensive as STP even though it only has 2 times the profit.

To take this a step further you can look at a ratio that allows you to compare these two company’s earnings with their growth rate called PEG. This is Price to Earnings to Expected Growth rate. So lets look at these:

So what do these numbers tell us? Well according to Peter Lynch, who says “The P/E ratio of any company that’s fairly priced will equal its growth rate” the companies aren’t actually overpriced since the PEG ratio is less than one.  In other words, Peter Lynch would say that the current growth rate more than makes up for the fact that these companies are priced pretty high when just comparing the PE ratio.

So what to do? Well, you can look at it two ways.  One, the stocks are both pretty expensive for their current performance.  On the other hand if they continue to grow at this rate, then they could turn out to be a pretty good deal, if you bought right now, if your in it for the long run.  The big factor though is predicted future earnings.  If you think demand for solar might drop because of a slowing US economy then the growth rate might not end up being as high.  If you think too many solar companies are jumping into the market leading to oversupply, again the companies might not make as much money.  Or everyone could be way underestimating how much demand there is for solar, and every house in America could end up with solar panels on the roof, making the companies trillions more than ever expected.

This is one of the hardest parts about buying a growth stock.  It seems like it all comes down to how well you can predict the future.  I don’t think I’m currently going to be buying either of these stocks, because it seems like there is too much unknown about the future, but it might end up being the perfect time to buy.  People like me are probably the reason why the stocks are lower…

One other thing that might be good for someone in Mike B’s position would be to look at an alternative energy ETF. This basket of stocks would diversify some of the risk these somewhat expensive stocks yet allow you to capture some of the upside if the solar industry takes off. PBW is one that comes to mind.

And that’s all I have to say about Solar.

Today it’s official that his campaign is up and running around here.  Just today:

• A Obama campaign worker came to my door to help me register to vote if I wasn’t already.
• I received a campaign mailer touting how Obama wants to get US off Middle Eastern oil in 10 years (though it didn’t say how he would do it, just that he had a “plan”).
• I received a poster size mailer that showed how McCain was taking money from lobbyists and listed the people in McCain’s campaign that were lobbyists at one time.

Today I sold my first covered call.  So what the hell does that mean?

I currently own 100 shares of General Motors.  Today it is priced at around $12.50, so my total investment is $1,250 (ps, I originally bought it for $10 per share).  And today I sold a call option for October 18th with a strike price of $15.00, and after commissions I made about $50.

A call option gives the owner the “right” to buy a certain stock for the strike price on the expiration date.  So in my case, I gave someone else the right to buy my shares of GM on October 18th for $15 each.  By doing so, I sold my right to any profits if the stock goes above $15 to whoever bought this option from me.

If, at the end of the month, the stock is below $15, the option expires and I get to keep the $50 (a 4% return on my investment in 1 month).

In essence, I’m making a bet that the stock won’t appreciate by 20%.  The only way I can lose money in this is if GM goes below $12.50 per share (which is very likely).  But considering I plan on holding this stock for at least the next year or so, I at least get a little cash from the options sale in the meantime.

It costs $130,000 and requires only 20 hours of training.  On top of that, the wings fold in, so you can tow it with your truck, it can use automotive gas (cheaper than air fuel), and it can land on water (it floats), and it gets 25 MPG with a top speed of 140 MPH.  Sweet!

I will be buying a lotto ticket this weekend…

On Saturday, we actually had a hard time finding gas (3 stations in our area) due to people freaking out about gas shortages.  The freaking out about possible gas shortages were what actually caused the gas shortage…  Anyways, it just seems awesome to potentially not have to go to the gas station.

While it was scary to read, at the same time it was very cleverly written.  It could almost pass for a Bible verse, which makes it seem even more scary.

I seem to agree with almost everything in the article, but I’m unsure what role I personally played in bringing on the doom and gloom.   I do drive a gas guzzler, and I did buy a house recently that probably bumped up the demand and prices around our area.  Does this mean that I’m to blame as much as the government?  And what else could I do to make things better?

We’ll just have to wait and see how the story ends.

I was just pondering a thought:

Who would you rather work for?

Man A)  This man grew up in a well connected and wealthy family.  When it came time to go to college, his family pulled strings and got him into the college of his choice.  Throughout college he was “that guy” who would party like it was his job.  Graduation came and he proudly took the stage with a class rank of 894 out of 897.  He went on from here and through some weird strokes of luck that made him known throughout your industry and more help from the ole’ family, he’s now in the contest to be your boss.  He’s been in this industry for a very long time and is will likely not change things at the office too much.

Man B)  This man grew up in a very middle class family headed by a single parent.  Instead of relying on family ties, he used hard work and his smarts to work his way though college.  He did so well, in fact, that he went on to earn an advanced degree from Harvard.  Afterward, he worked his way up the corporate ladder relatively fast, and is now in competition to be your boss.  While this guy is definitely more of an unknown than “Man A”, he does have potential to become one of those bosses that could transform the company into something greater.

Of course I would pick Man B…