I was expecting something like this to happen. My readers might recall when I was talking about Rob Mcewen dumping his RBY shares. That was a red flag for RBY investors and I think RBY will have a tough time staying above $4.00 a share it wouldn’t surprise me at all if the stock started reaching <$3.50 soon. Time will tell if I’m right or the RBY bulls are right.
Disclosure: I’m neither long or short on RBY, I’m just trying to give my objective opinion.
Finally introducting the stock portfolio of CapitalGeist for my readers. I thought it would be interesting for my readers to track my performance on how I would trade it. First deposit $10 000. I bought 200 Lacrosse footwear shares for $14.76 each.
CapitalGeist Portfolio:
Holdings:
200 BOOT shares.
Cash: $7048
Account Net Worth = $10 000.
I am looking to add Johnson and Johnson my portfolio. Stay tuned for the next update!
The gold bull run is insane. Spain has launched the first Gold ATM in europe. The cheapest gold you can get from the ATM is 40 euro or about $60 usd. I don’t know how close to the market price you actually receive the gold in but it’s a nice idea. You simply put your cash in and you withdraw gold from the machine. The prices for gold get updated every 10 mins. You can check out this youtube video regarding gold atms: http://www.youtube.com/watch?v=CDmUiplpbWE
Mcdonald’s recent quarter showed a profit increase but still surprised analysts. because it was better than expected. We all knew that Mcdonald’s would show rising profit but 5.9% profit increase for Q3 was a bit of a surprise. Not a huge surprise though, many have been making the case that Mcdonald’s will show strong quarters because of their cheap menus. People still can afford to eat there. What makes me not buy additional shares of Mcdonald’s is that I don’t really find it to be the best cheap restaurant food chain out there. They have some serious competition unlike in the soda market where you have two dominant companies, Pepsico and Coca Cola. Mcdonald’s has a long list of serious rivals: Burger King, KFC, MAX ( not big yet though ), Pizza Hut etc.
Mcdonald’s is a company with very strong fundamentals and a strong brand but it’s sligthly more riskier than Coca Cola and Pepsico. With a share price of $78-79 don’t expect more than 7-10% annual return at best. Even though I sound a bit bearish I actually have mcdonald’s shares in my private stock portfolio but I am looking to sell them when they hit $80+.
… but it’s going to take alot of effort for common people to achieve that. Even if we assume an average dividend yield of 5% for a stock portfolio it would still take $1 million to just get $50, 000 a year. You would have an OK life but not a rich life. Living off stock dividends is achievable but you need to get rich somewhere else or be an investor with high returns year after year until your capital has grown to $1 million+. In short I am trying to say living off stock dividends sounds nice but it’s quite hard to actually achieve it.
Let’s say you have $50 000 and put away $500 a month and you average 30% return, how many years would it take to make your capital $1 million? Answer: 9 years and one moth if we don’t count taxes… That actually doesn’t sound so far fetched if you start doing this when you’re 25-30 years old you could “retire” when you’re 34-39. But the big problem with this calculation is averaging 30% annual return for 10 years, very few is capable of doing that.
If we assume a reasonable return which most investors could achieve it would take alot more time. Let’s assume 10% return instead for the example above. It would take 22 years and 9 months pretaxes to get $1 million+.
It doesn’t sound so great anymore… huh? There is hope though, what if you’re an small cap value investor who could achieve 50%+ annual return for the first 10 years. It might sound very high but remember that investing with small amount of capital as a private person gives you huge edges compared to mutual fund or an big market cap investment company. If we use the exact same example as above but with 50% return it would only take 5 years and 9 months to retire ( if $50k/year is enough for you ). You could still be in your late 20s when you retire think about that.
The average salary guy or small business owner who doesn’t have the time or motivation to learn the stock market and is only able to return 10% annually it is still not far fetched. If you’re dedicated enough to achieve you could try live as cheap as possible put all your extra money in dividend stocks etc. Instead of $500 a month maybe $2000 or $3000 if you have a high salary. Some people’s goal might not be to retire early but just to supplement their income with dividends. Whatever your investing goal is it’s important to start early compunded returns add up.
Happy investing…
Gold keeps making the news for reaching new all time highs every now and then. Many average investors are now putting their money into gold. The sales of physical gold is at an all time high, what better time to buy gold then now when it’s expensive. Gold has been very interesting for me to follow, I had a bullish view when it was around $600/oz since because of the market sentiment but now at $1350/oz I am thinking what is really pushing gold higher? Speculators and average joes buying gold? I hate to say it but it seems like the average investor is going to get burned again. History will never stop repeat itself it seems… gold is a growing bubble coming closer and closer to a bubble burst just like past bubbles.
I was thinking about putting my money where my mouth is. What better way than opening a new account and post all the transactions I will make is there? Then you can follow my stock portfolio’s progess. I was thinking about an initial deposit of $2000. The first milestone is $10 000. I will update what my goal is after each milestone is achivied. This is a blog about investing and making money so I think this will be an excellent way to get my readers to understand how I trade. It will take me a few days to sign the papers and set up the account. You can follow the portoflio at: CapitalGeist’s portfolio.
Wish me good luck.
Have you ever thought about the quote, “Time is money”? In investing losing out on time can be a costly lesson. Personal finance is a hot topic these days given that most people don’t believe in the western world’s ability to pay out pensions. Putting away money every month in to stocks can be a good safety net.
Have you ever thought about how much money would you have if you put away $10 a day, $300 a month?
Let’s take a look at chart on what you would have given that you put away $300 a month in to stocks with an average return of 10% annually:
Number of years: Total $$:
5 $23 231
10 $61 453
20 $227 811
40 $1 897 224
You see compound returns makes a huge difference. Starting when you’re 25 years old instead of 35 will make a huge difference when you’re retiring. Let’s assume you started when you’re 25, after 40 years you would be 65 years old. Assume a 4% average dividend yield for your stock portfolio and you would be getting a whopping $75889 in dividends per year. With inflation the dividends you will be receiving is only worth about $19000 in the year when you are started investing. I am assuming the average inflation is roughly the same for the next 40 years.
Even if you decide to start investing when you’re 35 and putting away $600 instead of $300 every month until you’re 65 you would still have less money. You would end up having $ 1 356 293 even though you’re putting away the twice amount every month.
I hope my readers now understand the importance of investing early. Stocks have proven to be the best saving method over a long period of time. It’s also believed that Albert Einstein once said: “The most powerful force in the universe is compound interest”.
Good luck investing!
How can it go unnoticed that gold is hitting all time high when media reports almost on a daily basis. The funny thing is people are actually buying at record levels even though gold is priced at an all time high. Talk about flock behaviour at its finest. When it comes to making money and investing in general, the majority is usually wrong. The majority is very bullish on gold does that mean it’s a good time now to become bearish on gold? Hm… hard to say but I will say that I will not personally invest any large amount in gold and especially not paper gold.
The Warren Buffett quote “Be fearful when others are greedy. Be greedy when others are fearful.” is spot on. And a quote by Warren Buffett that has high relevancy today, “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. “
The world’s greatest investor is not bullish on gold but the average joe is happy investing in gold at record price levels. Buying like everyone else at record high prices is not a good recipe for making money.
Gold is currently trading for $1290 / ounce. I’m not saying the gold price will crash from here. A bubble can continue for a long time even though the fundamentals points at a correlation, gold might go to $1500 / ounce or even higher but it will eventually come down. Gold investors are chasing the last $$ to be made, be careful not being the last one out.
If I were an RBY shareholder I would be a bit scared right now. As you might recall my article earlier about Rubicon Minerals, I made the case that RBY was a buy because of the major shareholder Rob Mcewen. When the facts change it’s important to also reanalyze the company and see if your opinion has changed. When I take a look at Rubicon Minerals it makes me wonder why Rob Mcewen decided to sell of all his shares…
The market seems to be taking this easily, RBY is still going strong at $4.14. About 22% off 52-week high and 35% above 52-week low. I have RBY on my watchlist but I personally hold no RBY shares at all. It will be interesting where the RBY stock goes from here, my guess is as good as anyone’s guess.
