: As the Austin real estate market has strengthened we have been inundated with investors. A good number of them have been buying new homes in master planned communities or other developing neighborhoods. This has had many residents in these areas pretty angry. They don't like to see "for lease" signs all over the place. Most builders, at least the ones I have spoken with, will no longer sell to anyone who will not use the home as the primary residence. Some will sell a very limited number of homes to investors when they open a new part of a development. However, the builder’s reps I have talked with already have a list of hungry agents who represent agents lined up. So any investor without an agent on one of these prized lists is probably out of luck. Why have the investors become such a big part of the Austin market? Take a look at where real estate prices have run up with huge rates of appreciation over the last few years. Then look at what is happening in some of those markets right now. Then look at Austin real estate market stats at the end of this article. From Jay Thompson about the Phoenix real estate market: “A year ago, the Phoenix market was just insane. Last years AVERAGE appreciation was 47 - 56% (depending on whose numbers you use). Some homes more than doubled in value over the last 12 months. Houses were selling in hours, literally, with multiple offers significantly over list price. Builders were holding lotteries for lots. No investors could buy new homes, and many builders cut buyer agent co-brokes to 0%. Builders would pre-announce a new subdivision and hundreds of people would show up once a month to see if their name was one of a dozen drawn from a hat. If it was, they had to put some ungodly amount of non-refundable earnest money down and then wait 12 months for their home to be completed. People were flipping homes before they closed escrow. For profit. Last March, there were just over 4,000 homes in the MLS. Move to today.... There are 41,000 homes in the MLS. Builders are offering $75,000 incentives to buyers and some are paying 10% buyer agent co-brokes (on spec homes). DOM is now measured in weeks instead of hours. Countless homes advertise price reductions. The median home value is flat to slightly depressed. And that's freaking people out. But we had MONTHS with 10% appreciation. No market can possibly sustain that kind of appreciation rate. Many people say we are in a "buyers market". I contend we are in a neutral market. The problem is people compare today's market to the ridiculous seller's market we had. Yes, it's been a huge shift. But it still has a way to go until we're in a strong buyer's market, IMHO.” From Jim Sparrow about Calgary, Canada real estate: “Calgary's market is hot .... we're the new Saudi Arabia of North America, and people are arriving in droves. I'll only quote you SF House figures ... condo numbers are very similar: 2006 (June): Up 51% from same period in 2005 2005 (June): Up 9.6% from same period in 2004 2004 (June): Up 6.2% from same period in 2003” I know that Calgary isn’t a U. S. market, but it is North American and this is interesting news. I had a client from Calgary approach me about Lake Travis waterfront property two summers ago, so the stats from Jim seem applicable to me. From Ruth Arnold in about the Broward County real estate market: “If you do the math of the ratio of listings to solds, we here in the Broward County area of Southeast Florida are also in a Neutral market (media thinks it is a buyer's market). Sellers so far are getting the same price they would have at about April or May of last year (pre hurricane season). But, the sellers are so used to inflation in the 25-30 per cent per year rate, they want to list their homes way too high. Can not put a price on it and wait til inflation gets there, because it will not arrive. If you estimate (in normal places in America), people move every 5-8 years or so, then in any one year about 15-20 per cent of the available homes should be on the market. In a "normal" market, it takes 4-6 months to sell a house, so about 7-10 per cent should be on the market at any one time. We are there now and everyone thinks there are too many houses on the market. No, this in normal. It has been crazy and now it is normal. When we get to the point that the number of homes on the market exceeds the ten per cent (about) rate, then we will start to move into a true buyer's market. The media is doing all it can to make sure we get there.” From Stan Mackey about real estate in areas east of Seattle: “Here’s the data (1st 6 months last year to same period this year) for Eastside (which is NOT Seattle, but a few miles away), everything east of Lake WA, included Bellevue and 5 or 6 others cities: Average sale price for 4/2.5 single family (2005) $572k to (2006) $697k Median 2005 $460k to 2006 $572k DOM 56 to 55 Total units sold for 1st half each year (2005) 4,968 (2006) 3,771 It looks like we still have demand, lower supply with 20% appreciation, give or take. You maths guys can provide the exact % #’s.” Appreciation rates in the Austin MLS area from the Austin Board of REALTORS®: 2006 through the end of May was +12% 2005 was +6% 2004 was -1% 2003 was 0% 2002 was -1% Does this help explain why investors have been coming here? The other thing is our median price, which was at $174,000 at the end of May, 2006. The average price was higher at $236,406. The median price is still well below the national average. The average price is better than areas like Southern California, Seattle and Phoenix. So looking at what were hot markets until recently, it looks like Phoenix and South Golf Coast Florida have cooled. Calgary is on fire and areas east of Seattle are doing well. Southern California, from what I understand, has been cooling. So a big reason investors have been flocking to Austin is because other markets they had been investing have peaked. Another is the steady growth in the Austin area. We’re adding jobs, people are buying second homes and people are retiring here. Real more about Austin real estate stats. Keep watching the Austin real estate market. Investors who can’t get into new homes in subdivisions now are pretty bummed. I think investors who got in a year ago will be very pleased.
"Investors love dividends," and that, experts say, is one reason many Americans are showing deep support for a permanent dividend tax cut. According to results of a spot survey sponsored by Eaton Vance Corporation in March, seven in ten (70 percent) Americans polled agree that the current tax cut established by the 2003 Tax Act should remain. These sentiments closely resemble those of the individual investors polled in Eaton Vance's 7th annual investor study. A panel of experts at a recent luncheon hosted by the company concurred. The event-Divining Dividends: The Past, Present, and Future of Corporate Cash Payouts and Implications for Investors-featured a panel of corporate finance, economic, tax, and capital market experts. Discussion focused on dividend trends and potential implications for the stock market and U. S. economy. Panelist Alice Rivlin, former vice chair of the Federal Reserve, said she was not surprised by the favorable response from polled investors who want the lower tax rate on dividends to continue. "We need to broaden the tax base so that all tax rates can be lower and ensure that return on capital is taxed only once and not at rates that discourage investment," stated Ms. Rivlin. With the current tax cut reducing the maximum tax rate on qualified dividends from 35 percent to 15 percent, panelist, and senior research analyst at Lipper, Inc., Tom Roseen described how the tax cut has helped many mutual fund investors in recent years. "In 2004, funds in Lipper's U. S. Diversified Equity (USDE) funds macro-classification distributed $12.9 billion more in dividend income than in 2002, but investors paid almost the same amount in taxes as they did in 2002," declared Mr. Roseen. Howard Silverblatt, senior index strategist at Standard & Poor's, added to the panel discussion, noting, "The bottom line is investors love dividends. Quarterly dividends supply not just income to live on, but can also provide a convenient mechanism for dollar-cost averaging through dividend reinvestment programs." It is still unclear when Congress may make a decision regarding the tax cut extension; however, panelists shared their own predictions with the audience. "We won't see a permanent solution this year, but political trade-offs are likely to lead to at least a one-year extension through 2009," observed Mark Weinberger, former U. S. Assistant Secretary of Treasury for Tax Policy and current vice chair of Ernst & Young. Yet, despite the uncertainty that surrounds the potential tax cut extension, moderator and executive vice president and chief equity investment officer for Eaton Vance, Duncan Richardson, added, "In many cases, the 'right thing' will be to return more cash to shareholders, through dividends, causing payout ratios to rise over the next decade. We see the coming period as a golden era of equity income investing." Eaton Vance Corp. is a Boston-based investment management firm whose stock trades on the New York Stock Exchange under the symbol EV.
Fifty years ago, uranium fever hit Wall Street. It was then just a few years after a Navajo shepherd in New Mexico, by the name of Paddy Martinez, discovered “yellow rocks” on his property, mistaking them at first for gold. An avalanche of 1950s dollars (more valuable than the ones we have today) poured into mutual funds and uranium mining stocks, sending their values to astronomical levels. Get ready for dйjа vu all over again, as Yogi Berra once said. Trend spotter, James Dines, editor of The Dines Letter, believes uranium mining stocks could become just as hot, or hotter, than the Internet stocks of the 1990s. (Editor’s note: StockInterview interviewed James Dines on July 20, 2004, when he forecast a “buying panic in uranium.” Since then, spot uranium (U3 08) prices have nearly doubled. Over the past 35 years, Dines has successfully predicted mega trends in gold, internet, palladium and uranium price movements). And now investors are chasing uranium mining stocks again. A look at industry leader, Cameco (NYSE: CCJ), which money manager Robert Mitchell called the “Saudi Arabia of uranium,” shows a three-year gain of more than 700 percent. Over the past few years, Australian-traded Paladin Resources, skyrocketed from under a dime to over $2/share (A$). A recent Forbes magazine cover story, entitled Going Nuclear, analyzed uranium’s recent price surge, “One reason the price of uranium should keep escalating is that producers are only starting to ramp up to meet the strong demand. Utilities globally need 180 million pounds of uranium annually, but at this point a mere 108 million pounds are coming out of the ground.” Why the sudden jump? A Morgan Stanley institutional report, published in December 2004, explained that through the 1990s, uranium oxide prices stayed low because surplus uranium came into the market from weapons decommissioning. That surplus inventory worked its way through the market. The Morgan Stanley analyst forecast a “deep supply-side shortage” of uranium, citing that new mining production hasn’t yet come online to remedy the deficit. In the year-ago forecast, the uranium deficit was expected to grow to nearly 20 million pounds this year (from a surplus of 6 million pounds in 2003), and then leap to a peak deficit of more than 35 million pounds in 2006. Deficits in excess of 30 million pounds were also anticipated for 2007 and 2008. According to the Morgan Stanley analyst, $50/pound may be possible in the spot price for uranium oxide, known in the trade as “yellowcake.” Mining Newsletters Favor Strathmore Minerals What’s that mean for uranium stocks? Higher prices should be anticipated as more investors, mutual funds and hedge funds search out the best returns. While the lion’s share of investment dollars is likely to chase Cameco’s price higher, the robust percentage gains in that stock may have already peaked. Generally, new money searches for well-capitalized junior mining stocks with solid uranium projects in their portfolio. One of those most frequently recommended among mining newsletter writers is Strathmore Minerals Corp, trading on the Toronto Venture Exchange (ticker symbol STM. V). Prominent among Strathmore’s projects are in-situ leach mining operations proposed for Wyoming and New Mexico, plus an aggressive exploration program in the world’s richest uranium areas, Saskatchewan’s Athabasca Basin (home to uranium mining giant, Cameco). In September, letter writer Lawrence Roulston of Resource Opportunities recommended Canadian-based Strathmore Minerals (TSX-V: STM), writing, “The company is systematically adding value to the projects most likely to be significant in the near term, especially those with near-term production potential.” Also in September, Resource World contributing editor, Alf Stewart, wrote, “The two deposits Strathmore is developing were ‘cherry picked’ from the inventory of Kerr McGee, largest private explorer of uranium prior to that industry grinding to a halt in the early 1980s. As these properties are largely drilled off, Strathmore may be considered more of a uranium development company than an explorer.” This past June, money manager Adrian Day recommended uranium stocks in his research report, writing, “So I am focusing on four main areas in uranium, with one or two buys in each… top exploration companies that have the goods and are likely to bring properties into production. Strathmore Minerals, with technically strong management, lots of properties, and a strong balance sheet, is arguably the best.” New Uranium Discovery in the Athabasca Basin? Here’s one of the stronger reasons why investors might anticipate a strong rally in Strathmore’s share price over the coming twelve months: In a November 16th news release (biz. yahoo/bw/051116/20051116005591.html?.v=1), Strathmore Minerals announced a discrete conductor, more than 30 miles long, after completing an airborne geophysical survey on the company’s Davy Lake property, in the north central portion of the Athabasca Basin. According to the company’s news release, “The conductor's profile response indicates a deep and in places, broad source.” Virtually all the significant unconformity uranium deposits known in the Athabasca Basin are directly associated with fault structures associated with graphitic conductors. Deposits such as Key Lake, Cigar Lake and McArthur River were found by drilling electromagnetic conductors located within magnetic lows. In an interview with Jody Dahrouge, of Edmonton-based Dahrouge Geological Consulting Ltd, he told StockInterview, “Early indications are that this conductor is similar with other known uranium deposits, graphitic conductors with magnetic lows.” On a scale of one to ten, Dahrouge rated the Davy Lake conductor a ten. “It is a long conductor, cut by structures, with deep depth and associated by a late fault,” explained Dahrouge. “It is a high quality conductor that continues to depth, and it is typical of those occurring that are associated with known uranium deposits.” Dahrouge described how the MegaTem II airborne geophysical survey was able to pinpoint the conductor as shallow as 600 meters and running deep to 1200 meters. Dahrouge made comparisons to other uranium deposits in the Athabasca Basin. “The Sue Deposit near McLean Lake is associated with an electromagnetic conductor that is approximately 2.6 kilometers long,” he said. “Based on our work at Waterbury Lake, we identified an 8 kilometers long conductor associated with the Midwest Deposit(s). The 'P2' conductor at McArthur River is approximately 13 kilometers long. This feature was first identified in 1984, by a ground Deep EM Survey. The Shea Creek deposits, located south of Cluff Lake, are associated with an approximately 25 kilometers long conductor, known as the Saskatoon Lake Conductor.” Dahrouge added, “These deposits are located at depths similar to what we expect at Davy Lake.” What is probably most significant is Strathmore’s gamble, by exploring away from the eastern parts of the Athabasca Basin, some 300 kilometers from the eastern Athabasca Basin, where the major discoveries have been made. “It was virtually unexplored,” Dahrouge said with excitement in his voice. “It’s really virgin ground.” While there is ample evidence suggesting multiple uranium deposits in the Athabasca Basin, other junior exploration companies are looking at the shallow parts of the eastern basin, which may not likely yield economic uranium ore. One pundit acidly questioned some of the current exploration activity in the Athabasca region, “Are they really re-flying old ground that’s already been flown a hundred times, or are they just releasing old data to save money?” Dahrouge pointed out that the uranium appears to be running deeper for many of the newer discoveries, as he believes the Davy Lake property might hold true for Strathmore Minerals in the north central part of the Athabasca Basin. Important features in many Athabascan uranium deposits are the cross-cutting fault zones. Dahrouge confirmed the Davy Lake conductor has cross-cutting fault zones with a sinistral (left-sided) fault about halfway along its length. According to Dahrouge, there is also a “conductor extension which crosses the fault from west to east and ‘flows’ out into a small, sub-circular magnetic low.” As with many of the Athabascan uranium deposits, which tend to be found between overlying sedimentary units and underlying basement rocks, the Davy Lake conductor fits the bill. Strathmore Mineral’s president, David Miller, told StockInterview, “the 50-plus kilometer geophysical anomaly appears to indicate a basement conductor.” However, Mr. Miller tempered the exhilaration in the air, “A geophysical anomaly does not make an ore body. These exciting initial results will be followed up with infill geophysical lines, followed by ground geophysics, followed by shallow drilling, looking for alteration. When we have narrowed the target to drill, we will pull in the big rigs and test the conductor at the unconformity.” Dahrouge remains excited about the Davy Lake conductor, and said, “Clearly this represents an excellent exploration target for unconformity type uranium deposits. What does all that mean? It could explain why Strathmore Minerals might well be on the road to a world-class uranium discovery as further exploration more clearly defines how valuable those newly discovered conductors might become. Meanwhile, Strathmore’s New Mexico and Wyoming properties (amounting to potentially several million pounds of uranium resource) are in the preparatory phase of the permitting process. As the spot uranium price inches forward to the widely accepted short-term target above $40/pound, several of Strathmore Mineral’s properties may become instantly more valuable to a utility company who will someday need the company’s uranium oxide to fuel their nuclear reactor.
PLC International Marketing Networks has revealed that some institutional investors are trying to diversify their property portfolios through areas like Southeast Asia, China and beyond - with the Philippines heading the list, then Thailand, Japan, China, and Singapore property investments featuring in some portfolios. In the UK, "Investors are moving to new areas to find value" said Beth Collingz, Global Marketing Director of PLC International Marketing Networks based in Metro Manila and Cebu in the Philippines. "More and more of clients for Condotel Investments are coming from the UK. There has been a distinct market shift from US based clients over the past few months and we see that trend continuing over the winter months of 2006 and on into 2007 has Sterling continues its increase in value over the US Dollar. “A lot of this interest is being driven by the relatively cheap market prices in the Philippines compared to Europe, specially UK Housing prices, and the easy payment options available for our Condotel Developments, but there are other factors, too. Offshore Property Investors, Foreign baby boomers as well as overseas Filipinos, are looking for ways to maximize their return on investments as they approach retirement, and so are purchasing second homes, particularly Condotel Investments where they can use the Condo for vacations and rent it out through our In-House Condotel Management when they are not using the unit thereby gaining rental incomes that on today’s purchase prices, give a projected ROI on their investments of some 12-16% depending upon the mode of payment for the unit” Metro Manila remains a popular choice with international buyers and institutional investors. Collingz says clients tell her that it makes more sense to buy in a year-round vacation destinations and business centers. Lancaster - The Atrium Condotel developments by Pacific Concord Properties located in Shaw Boulevard, Metro Manila - fits the bill with all it offers to International buyers. Accessibility is also a factor. “Flights from London to Manila, for example, average just 16 hours, add to that the many airline specials and it’s easy to see why this area is becoming an international community.” Unlike other offshore rental properties, where the rental market is largely seasonal, in the Philippines there is a strong market for rental properties year round. This gives buyers greater flexibility in choosing when to use and when to rent their property. The strong rental/second home market also has resulted in a proliferation of professional property managers and rental agents, making property ownership and rental easy. Pacific Concord Properties Inc with it’s flagship Lancaster Condotel Developments fit’s the bill. Lancaster Manila Atrium Tower A, Shaw Boulevard, Metro Manila, Philippines is a "Full Service" Condominium Hotel ["Condotel"] offering Studio, One, Two and Three Bedroom Suites for sale. To be completed and ready for turnover from December 2010, the Lancaster Suites Manila Atrium Tower II will provide unit owners with premier residential condo units with the option of enrolling their units in the Lancaster Condotel Rental Pool and earn Rental Incomes as Owner Non-Residents when not using their units through Condotel Management and reciprocal arrangement with Lancaster Cebu Resort Residences. This makes Lancaster Suites Manila, one of the Hottest Investment Opportunities in the Philippines said Collingz. For further information about Philippine condo hotels please do not hesitate to contact us: Beth Collingz PLC International Marketing Networks
When more than 1 million college graduates entered the work force last fall, they began the first of what could be seven job moves during a 40-year working career, according to the Bureau of Labor Statistics1. In fact, according to a recent study by Fidelity Investments, one-third of today's new work force could be compiling a series of stand-alone retirement savings accounts, which may not be as diversified as they think2. With each job change, millions are faced with the increasingly challenging task of managing their workplace retirement savings accounts. "As American workers continue to change jobs, our survey tells us that approximately 32 million have left behind retirement accounts with past employers," said Jeffrey R. Carney, president of Fidelity Personal Investments. "Our research also shows that 41 percent of investors with multiple retirement accounts believe that maintaining separate accounts makes for a more diversified portfolio. While Americans are more savvy about investing, many have lost sight of what 'diversification' really means -; spreading out money over different types of investments such as stocks, bonds and cash to manage risk -; which can't be assured simply by having multiple accounts." In reviewing the portfolios of nearly half a million investors over the past year, Fidelity found that many need to be reminded of three basic tenets for managing a diversified portfolio: Know what you own; know how much you're paying; and know when it's time to seek guidance. Many investors who maintain multiple accounts don't realize the makeup of their overall investments and may be heavily overweighted or underweighted in a specific type of investment sector or security. Keeping accounts scattered not only creates additional paperwork, it can cost more when maintenance fees are assessed by multiple providers. "Many investors are surprised to find that they are holding a variety of mutual funds with above-average expenses or paying more in fees by maintaining several smaller balance accounts," Carney said. Managing and monitoring multiple accounts through numerous statements and Web sites can add increased layers of complexity for investors. In fact, nearly a quarter of those with multiple accounts reported trouble keeping track of them.
Log cabins are generally low-maintenance houses since they are located in far out places and it is obviously not easy to get maintenance staff or equipment there. Log cabin plans tell the whole story. Most of the building material including the floor textures used in a log cabin requires very basic maintenance and it looks as good as new. The exterior of a log cabin has to face the nature’s wrath and thus is very simple to maintain. However, some people might like to keep the interiors of the log cabin in a very good condition and might use professional maintenance and restoration services. These services provide detailed maintenance services for the log cabin and do not come cheap. Some of the steps of maintenance for a log cabin include staining of the interior and exterior wood, chinking repair and replacement, borate treatment to safeguard against pests, stay dry, chemical strip and cob blasting. Deck cleaning and sealing are also important since that is where most of the time of the log cabin residents is spent. Log cabin plans should include inspection of the entire log cabin along with finishing of rough edges is part of the maintenance procedure. If you are a log cabin owner and rent it out on frequent occasions to holiday-makers then good maintenance will go a long way to fetch you an attractive rental income. Apart from that, the overall value of log cabins tends to be higher if they are well maintained and clean. A quick search online will provide you with details of a number of agencies who deal in maintenance services for log cabins. It is advisable that you narrow down your selection to a few companies in the region where your log cabin is situated and take comparative quotes for them for the maintenance requirement and then make a decision.
Before one decides to sell his structured settlement for another investment opportunity; it is worthwhile to consider the pros and cons of such an action. The most important advantages of structured settlements include regular payments that are free from income tax and are secured by state and federal laws. This cannot be said of many other investment options. Structured settlements can also be invested in government schemes that may offer low returns but are guaranteed. The main reason for an individual opting for another investment vehicle is the apparent high returns from that investment option. These options include stocks and real estate. One should compare the pre-tax income from an alternative investment source to that from a structured settlement. Also, the process of selling a structured settlement involves a cost. This is because the amount of settlement payment sold is more than the lump sum obtained. This cost should be factored and compared to the returns from another investment. An important advantage of a structured settlement is that the individual is not required to manage the settlement payments. No taxes mean freedom from keeping abreast of tax laws. With any other form of investment, a person has to first be confident enough of managing his own investment portfolio and control his finances. If one has the necessary experience and skills to run a business, lump sum obtained from the sale of a structured settlement can be used as capital. However, since the amount obtained is less than the value of the settlements sold, one should ideally try and sell as little of the structured settlement as possible. The assurance of regular income as guaranteed by a structured settlement should be traded for another investment option only after due consultation with an attorney. In fact, legal advice on the sale of structured settlement is a pre-requisite in several states in America. One advantage that other investment options offer is the freedom of managing one’s own money; this can be of use to those who are into financial trading and have their fingers on the market pulse. With ready cash in their hand, they can invest immediately when opportunity presents itself.
One question almost every investor asks at some point is whether it is possible to achieve above market returns by selecting a diversified group of stocks according to some formula, rather than having to evaluate each stock from every angle. There are obvious advantages to such a formulaic approach. For the individual, the amount of time and effort spent caring for his investments would be reduced, leaving more time for him to spend on more enjoyable and fulfilling tasks. For the institution, large sums of money could be deployed without having to rely upon the investing acumen of a single talented stock picker. Many of the proposed systems also offer the advantage of matching the inflow of investable funds with investment opportunities. An investor who follows no formula, and evaluates each stock from every angle, may often find himself holding cash. Historically, this has been a problem for some excellent stock pickers. So, there are real advantages to favoring a formulaic approach to investing if such an approach would yield returns similar to the returns a complete stock by stock analysis would yield. Many investment writers have proposed at least one such formulaic approach during their lifetime. The most promising formulaic approaches have been articulated by three men: Benjamin Graham, David Dreman, and Joel Greenblatt. As each of these approaches appeals to logic and common sense, they are not unique to these three men. But, these are the three names with which these approaches are usually most closely associated; so, there is little need to draw upon sources beyond theirs. Benjamin Graham wrote three books of consequence: “Security Analysis”, “The Intelligent Investor”, and “The Interpretation of Financial Statements”. Within each book, he hints at various workable approaches both in stocks and bonds; however, he is most explicit in his best known work, “The Intelligent Investor”. There, Graham discusses the purchase of shares for less than two – thirds of their net current asset value. The belief that this method would yield above market returns is supported on both empirical and logical grounds. In fact, it currently enjoys far too much support to be practicable. Public companies rarely trade below their net current asset values. This is unlikely to change in the future. Buyout firms, unconventional money managers, and vulture investors now check such excessive bouts of public pessimism by taking large or controlling stakes in troubled companies. As a result, the investing public is less likely to indulge its pessimism as feverishly as it once did; for, many cheap stocks now have the silver lining of being takeover targets. As Graham’s net current asset value method is neither workable at present, nor is likely to prove workable in the future, we must set it aside. David Dreman is known as a contrarian investor. In his case, it is an appropriate label, because of his keen interest in behavioral finance. However, in most cases the line separating the value investor from the contrarian investor is fuzzy at best. Dreman’s contrarian investing strategies are derived from three measures: price to earnings, price to cash flow, and price to book value. Of these measures, the price to earnings ratio is by far the most conspicuous. It is quoted nearly everywhere the share price is quoted. When inverted, the price to earnings ratio becomes the earnings yield. To put this another way, a stock’s earnings yield is “e” over “p”. Dreman describes the strategy of buying stocks trading at low prices relative to their earnings as the low P/E approach; but, he could have just as easily called it the high earnings yield approach. Whatever you call it, this approach has proved effective in the past. A diversified group of low P/E stocks has usually outperformed both a diversified group of high P/E stocks and the market as a whole. This fact suggests that investors have a very hard time quantifying the future prospects of most public companies. While they may be able to make correct qualitative comparisons between businesses, they have trouble assigning a price to these qualitative differences. This does not come as a surprise to anyone with much knowledge of human judgment (and misjudgment). I am sure there is some technical term for this deficiency, but I know it only as “checklist syndrome”. Within any mental model, one must both describe the variables and assign weights to these variables. Humans tend to have little difficulty describing the variables – that is, creating the checklist. However, they rarely have any clue as to the weight that ought to be given to each variable. This is why you will sometimes hear analysts say something like: the factor that tipped the balance in favor of online sales this holiday season was high gas prices (yes, this is an actual paraphrase; but, I won’t attribute it, because publicly attaching such an inane argument to anyone’s name is just cruel). It is true that avoiding paying high prices at the pump is a possible motivating factor in a shopper’s decision to make online Christmas purchases. However, it is an immaterial factor. It is a mere pebble on the scales. This is the same kind of thinking that places far too much value on a stock’s future earnings growth and far too little value on a stock’s current earnings. The other two contrarian methods: the low price to cash flow approach and the low price to book value approach work for the same reasons. They exploit the natural human tendency to see a false equality in the factors, and to run down a checklist. For instance, a stock that has a triple digit price to cash flow ratio, but is in all other respects an extraordinary business, will be judged favorably by a checklist approach. However, if great weight is assigned to present cash flows relative to the stock price, the stock will be judged unfavorably. This also illustrates the second strength of the three contrarian methods. They heavily weight the known factors. Of course, they do not heavily weight all known factors. They only consider three easily quantifiable known factors. An excellent brand, a growing industry, a superb management team, etc. may also be known factors. However, they are not precisely quantifiable. I would argue that while these factors may not be quantifiable they are calculable; that is to say, while no exact value may be assigned to them, they are useful data that ought to be considered when evaluating an investment. There is the possibility of a middle ground here. These three contrarian methods may be used as a screen. Then, the investor may apply his own active judgment to winnow the qualifying stocks down to a final portfolio. Personally, I do not believe this is an acceptable compromise. These three methods do not adequately model the diversity of great investments. Therefore, they must either exclude some of the best stocks or include too many of the worst stocks. It is wise to place great weight upon each of these measures; however, it is foolish disqualify any stock because of a single criterion (which is exactly what such a screen does). Finally, there is Joel Greenblatt’s “magic formula”. This is the most interesting formulaic approach to investing, both because it does not subject stocks to any true/false tests and because it is a composite of the two most important readily quantifiable measures a stock has: earnings yield and return on capital. As you will recall, earnings yield is simply the inverse of the P/E ratio; so, a stock with a high earnings yield is simply a low P/E stock. Return on capital may be thought of as the number of pennies earned for each dollar invested in the business. The exact formula that Greenblatt uses is described in “The Little Book That Beats the Market”. However, the formula used is rather unimportant. Over large groups of stocks (which is what Greenblatt suggests the magic formula be used on) any differences between the various return on capital formulae will not have much affect on the performance of the portfolios constructed. Greenblatt claims his magic formula may be used in two different ways: as an automated portfolio generation tool or as a screen. For an investor like you (that is, one with sufficient curiosity and commitment to frequent a site such as this) the latter use is the more appropriate one. The magic formula will serve you well as a screen. I would argue, however, that you needn’t limit yourself to stocks screened by the magic formula, if you have full confidence in your judgment regarding some other stock. These four formulaic approaches (the three from Dreman and the one from Greenblatt) will likely yield returns greater than or equal to the returns you would obtain from an index fund. Therefore, you would do better to invest in your own basket of qualifying stocks than in the prefabricated market basket. If you want to be a passive investor, or believe yourself incapable of being an active investor, these formulaic approaches are your best bet. In fact, if I were approached by an institution making long – term investments and using only a very small percentage of the fund for operating expenses, I would recommend an automated process derived from these four approaches. I would also recommend that 100% of the fund’s investable assets be put into equities, but that is a discussion for another day (in fact, it’s a discussion for Tuesday; my next podcast is devoted to the dangers of diversification). If, however, you believe you have what it takes to be an active investor, and that is truly what you wish to be, then, I would suggest you do not use these approaches for anything more than helping you generate some useful ideas. If you choose this path, you need to be clear about what being an active investor entails. Read this next part very carefully (it is correct even though it may not appear to be): I have never found a screen that generates more than one buy order per hundred stocks returned. Even after I have narrowed the list of possible stocks down by a cursory review of the industry and the business itself, I have never found a method that can consistently generate more than one buy order per twenty – five annual reports read. Here, I am citing my best past experiences. In my experience, most screens result in less than one buy order per three hundred stocks returned, and I usually read more like fifty to a hundred annual reports per buy order at a minimum. You may choose to invest in far more stocks than I do. Perhaps instead of limiting yourself to your five to twelve best ideas as I do, you might want to put money into your best twenty – five to thirty ideas. Do the math, and you’ll see that is still quite a bit of homework. That’s why remaining a passive investor is the best bet for most people. The time and effort demanded of the active investor is simply too taxing. They have more important, more enjoyable things to do. If that’s true for you, the four formulaic approaches outlined above should guide you to above market returns.
We all know the importance of savings for the future. A dollar a day would have grown into $ 508,000 after 50 years. This assumes a 10.5 % annual return. There are other ways to boost our retirement account other than cutting your expense by a few dollars a day. But first, you have to understand the importance of boosting just one percentage of your return. 1% does not seem much. After all, if you have saved a dollar a day, after the first year, your savings would have grown larger by $ 3.65. So, why bother, right? Wrong. If you take your time to whip out your calculator and compute, the one percentage difference is a BIG deal. Instead of 10.5 % annual return, you can assume that you now achieve an annual return of 11.5%. While saving a mere $ 1 a day, how much your money would have grown after 50 years? The amount now is $ 730,000. 1% return will have given you $ 230,000 in extra money. Assuming that you will spend $ 100,000 per year on your retirement day, this extra 1 % will give you 2 more years of comfortable life. Knowing that an extra one percent return is significant to your retirement account, here is several ways to achieve that. Using a Limit Order. We are not day traders. But, that does not mean we should buy a company using market order. With lots of program trading out there, using market order might give you the highest price of the day. Looking at any publicly traded companies, it can fluctuate 1 - 2 %. in a given day. Furthermore, using limit order does not cost you extra. At Scottrade, both market and limit order costs you $ 7 per trade. There are several excellent broker comparisons website out there. Learning Technical Analysis. Sure, this is the tool that are mostly used by day traders. But, in the short term, it has its use. There is no guarantee that you can buy at the absolute lowest price. But at the very least, you won't buy at the top. In general, it always pay to buy at major support and sell at major resistance. If you are not sure about this definition, you are welcomed to discuss it at our discussion forum. It pays to be stingy. An extra 1 % would probably buy a new car by the time you reach retirement. Now, this is just a conservative estimate. I believe you can save more than 1% with all the volatile stocks out there.
Doktor Cramer opened his “Mad Money” television show on CNBC last Friday with a very positive review of Laureate Education Inc, LAUR; NYSE. Cramer reminded us that this company was previously known as Sylvan Learning Centers. The company has changed its name and its corporate direction. It’s focused south strategically but not “going south” technically. While offering diplomas to anyone with the necessary financing was initially a good business in the USA, students have displayed a litigious tendency to seek compensation if they fail to land the type of jobs they feel they prepared for. But in the overseas markets where LAUR is now focused, students are putting down their cash and taking their chances that diplomas will allow them to participate in the growing Latin American economies. Cramer pointed out that Morgan Stanley research recently put out a buy recommendation on the shares of Laureate Education because of their sizeable presence in Chile, Mexico and Brazil. The company recently bought the fifth largest private school in Sao Paulo, Brazil and is moving into parts of Europe that offer good growth opportunities, like Crete. LAUR shares closed Friday at $53.25, up 81 cents or 1.5 % on the day. Review provided by John Babington of TipLetter which can be found at CBS2.TV
American Century Investments is collaborating with seven-time Tour de France winner Lance Armstrong to motivate investors to take a more active role in planning a secure financial future. Via a multifaceted campaign featuring Armstrong and the slogan "Put Your Lance Face On," American Century is encouraging investors to take action and approach their financial decisions with the same focus, drive and determination that helped Armstrong triumph over the challenges in his life. "Lance has used his focus, discipline and incredible determination to achieve great success in sports and to overcome personal challenges, and we think these same attributes make successful investors," said William M. Lyons, American Century president and chief executive officer. "We also believe there are great similarities in the compelling personal stories of our founder, Jim Stowers, Jr. and Lance. Both are cancer survivors who are using their success and fame to improve the lives of others." To assist investors in the attainment of their long-term goals, American Century - in cooperation with the Lance Armstrong Foundation - is introducing the LIVESTRONG Portfolios. Carrying the moniker that evokes the Lance Armstrong Foundation's mission of empowering people affected by cancer, this series of mutual funds simplifies investing while supporting the foundation. American Century is making an annual payment to the Lance Armstrong Foundation based on investments in the LIVESTRONG Portfolios. Investors in these portfolios bear no portion of this expense. "I'm very excited about this new relationship with American Century Investments," Armstrong said. "This is a wonderful match given my interest in improving lives through better health and fitness and American Century's commitment to financial well-being. Working with American Century, I hope to motivate and inspire investors to make every financial decision count."
UK witnessed, London Land Scams, Kent Land Scams and Sussex Land Scams, and since then Land for sale in the UK are proving a popular investment opportunity due to the scarcity of land, as the demand for property in the United Kingdom continues to rise, more and more investors are turning to land investment as an excellent long-term growth source. The land banking companies allows private individual investors to capitalize on this growing market, generating substantial returns with minimal risk exposure. An investor has a whole bouquet of investment opportunities. Right from equity to real estate and from parking his money in Banks to gambling. But none of these gives guaranteed return. All the opportunities are subject to many risks such as exchange rate risk, currency risk, market risk etc. So a prudent investor searches for an investment opportunity which gives maximum returns with minimum risk. Land investment is one such opportunity. Though this also does not guarantee definite returns but the risks involved are less. Moreover land prices never depreciate. Land is tangible which can be used for self if the returns do not appear lucrative enough. Hence it can be safely said that for a speculative investor investing in land would be the safest and most rewarding option. But the initial investment for land in other parts of the world apart from UK is too high. So UK is one nation which provides ample opportunities for the investor to rake in profits, though the time frame is a bit on the higher side, from 3 to 5 years. But then long term investment demands time.
The UK Parliament seems convinced about Greg Mulholland's arguments that the scammers are trying hard to sell the greenfield lands in Sussex Farmland and Groombridge Land. Both these places are a heaven for scammers as they present natural environment and a feeling of being with nature to the visitor. Mulholland, the Liberal Democrat, argued that the land banking companies are trying hard to get a pie out of the sale of investment land and that the Government and the Ministers will agree to work with him on this issue. The MP for Leeds, North West also commented on the full investment process through which the investor goes and the company makes money. The MP told the Parliament as to how the Government reacted to one of the Land Scams being conducted in Victoria, Australia. The government body barred the said company for any promotional and marketing activities until full hearing of the case has been done. But no such decisive action has taken place in the UK. The MP said that a company contacted him for this matter and put its concern over the growing number of fly-by-night land banking companies. Mr. Mulholland concluded that a governing body to rule out the possible scams has to be devised. The measure suggested by Mr. Mulholland can successfully prevent the scamsters to sell the land of Groombridge Land and Sussex Farmland.
Many people are buying property in Lanzarote purely as an investment, intending to rent out the property for as many weeks in the year as possible and also see good capital appreciation, as opposed to putting their money into pension schemes which have been performing very poorly. So how do you decide where and what properties are likely to give you the best return? Lanzaroteґs climate is such that year-round rentals can be achieved as winter temperatures average around 20/22C daytime average maximum, making it the warmest part of Europe in the winter. But this has an affect on property prices, making them quite high in comparison to resort areas in some other countries. However, the large number of new properties being built on the island, especially in Playa Blanca, is helping to stabilise prices. So firstly of course, you have to decide on your budget. As in any resort area, the further away from the coast you buy, the more youґll get for your money. However, the further away from the coast the property is, the harder it is to rent it out. Lanzarote has the advantage of being quite a small island so no matter where you are, you are never more than 20/25 mins drive to the coast. Realistically though, to achieve a high number of weeks rental, you need to buy in one of the 3 main resorts – Puerto del Carmen, Costa Teguise and Playa Blanca. Your budget will determine whether you can afford an apartment or a villa. Which ever one it is, a swimming pool is essential – in the case of a villa, a private one which is heated. So, your main criteria are ideally to be as centrally located as possible close to cafes, restaurants, bars and supermarkets so that holidaymakers donґt have to hire a car if they donґt want to, to be close to the beach, and to have a pool. If your budget is quite high though, there is a big market for those people who hire a car and want to stay in a quiet peaceful area a bit away from the resort centre. When you go to look at a property, take a few photographs of the outside and inside and have a look at them before you decide on a purchase. The photographs are what sell the property. If the property doesnґt take a good photograph, it is unlikely to do well for rental. To determine what rental income you are likely to achieve, have a look at similar properties in the area on rental listing sites and see what they are charging. If these sites have availability charts, this can give you some guide as to their success in attracting rentals. Buy a villa in the right location, present it and market it correctly, and you can realistically achieve 30 to 40 weeks occupancy in your first year. Along with the capital appreciation, not a bad investment!