Dividend Update for 4-30-08

It has been a while since I posted an update of my dividend/distribution payments; so without further ado, here is a list of my dividend payments through today, 4-30-08, since my becoming an investor in January of 2007:

Roth IRA Dividends:

iShares MSCI EAFE Index ETF (EFA):

01/04/08: ($18.02)

iShares Russell 2000 Index ETF (IWM):

03/29/07: ($0.64)
07/05/07: ($0.86)
10/01/07: ($1.58)
01/03/08: ($2.18)
03/28/08: ($1.07)

S&P 500 Index "Spiders" ETF (SPY):

04/30/07: ($1.27)
07/31/07: ($1.62)
10/31/07: ($3.22)
01/31/08: ($3.49)
04/31/08: ($3.48)

PowerShares High Yield Dividend Achievers ETF (PEY):

04/30/07: ($1.11)
05/31/07: ($1.38)
06/29/07: ($1.39)
07/31/07: ($1.82)
08/31/07: ($1.82)
09/31/07: ($2.29)
10/31/07: ($2.25)
11/30/07: ($2.27)
12/31/07: ($5.25)

Money Market Fund:

02/21/07: ($0.47)
03/21/07: ($0.53)
04/23/07: ($0.64)
05/21/07: ($0.26)
07/23/07: ($0.36)
08/21/07: ($0.37)
09/21/07: ($0.26)
10/22/07: ($0.12)
11/21/07: ($0.34)
12/21/07: ($0.24)
01/31/08: ($0.06)
02/29/08: ($0.16)
03/31/08: ($0.29)


Taxable Account Dividends:

Advantage Energy Income Fund (AAV):

03/19/07: ($0.87)
04/18/07: ($0.91)
05/17/07: ($0.94)
06/19/07: ($0.99)
07/19/07: ($1.01)
08/17/07: ($0.99)
09/19/07: ($1.05)
11/19/07: ($1.12)
12/19/07: ($1.10)
01/17/08: ($0.88)
02/20/08: ($0.92)
03/19/08: ($0.93)
04/17/08: ($0.91)

Money Market Fund:

02/21/07: ($0.35)
03/21/07: ($1.55)
04/23/07: ($3.25)
05/21/07: ($4.62)
06/21/07: ($2.68)
03/31/08: ($0.06)

I Saved $160 in Bank of America Overdraft Fees

This morning I managed to negotiate my way out of paying $160 in overdraft bank fees. I had been running a little lower on cash in my checking account this week than I thought, and I managed to overdraw my account with several small charges. So today I called up Bank of America (NYSE: BAC) and requested that my excessive overdraft fees be removed. I had nearly $200 in overdraft fees due to multiple small debit charges, and it seemed to me that $200 in fees was excessive for such small debits. While Bank of America would not remove all the charges, the customer service representative on the phone generously offered to remove $160 worth of fees without any significant prodding on my part.

I have a somewhat mediocre opinion of Bank America as a whole, but I was especially pleased with the way I was treated on the phone today. And the lesson to you readers should be clear. Bank fees and charges that seem to be set in stone are actually quite negotiable, since financial institutions absolutely do not want to lose you as a customer. Do not lie down and let yourself be charged up the wazoo by your bank. In all likelihood a simple telephone call is all it will take to get those overdraft charges (or even credit card late fees) eliminated.

Job Experience and Training

A quick survey of any corporate job board will establish that the vast majority of available positions require several years of experience for the candidate to be considered for the job. While there is the age old conundrum of how exactly one is supposed to get experience if all the available jobs already require experience, my own view is that this trend is a sign of the negative state of the American economy.

In simpler and more prosperous times, companies could afford to pay for their employees' training. However, it is cheaper for a company to hold out for someone who already has the requisite skills for the job in question than to spend money to train someone on the job due to training's status as non-productive (i.e. non-revenue-producing) payroll hours.

But in today's questionable economy, such on the job training is as passé as employee pension plans. The net result is that today's job-seeker has an increased personal responsibility to provide his or her own training and to acquire the skills needed to fill whatever narrow niche the desired job satisfies in the overall corporate jigsaw puzzle.

Do you have any experience with this experience trend in the corporate world? Please share your experiences (no pun intended) and thoughts in the comments section.

The Three Stages of Investing

There are three basic steps or stages to investing. Any sound investment decision will go through all three stages, and skipping any of these steps will jeopardize the effectiveness of your investment decision. Being aware of these stages can help you analyze your own investment process and what, if anything, may be holding you back from having the financial security you desire.

Stage 1: Curiosity

The Curiosity Stage is when you first encounter an investment that you might be interested in; when it first shows up on your radar, so to speak. Many investments don't make it past this stage due to the inherent filtering process we go through when we encounter something new. "Do I take this seriously, or do I move on?"

The fact that we go through this screening process seems obvious at first. But if you are not aware of the implicit assumptions and prejudices you have that can influence your own personal screening process, then you may be blind to certain benefits or drawbacks to the investments that make it past your radar.

Stage 2: Research

The Research Stage is when you take the investments that make it through your initial curiosity screening and subject them to further investigation. What criteria you use at the Research Stage will depend upon what your overall investment plan is, but the important thing at this stage is to make sure that you have a sound financial plan and are applying your criteria as objectively as possible.

Stage 3: Action

All the planning in the world is moot if the planning does not result in action. It is not enough to have a financial plan that you never put into practice. Sadly, however, many people become gun-shy and never take any action on the plan they put together at stage 2.

People often forget that good long-term investing involves taking on a degree of risk, since that risk is usually minimized over the long-term and since the increased risk will yield greater long-term returns on good investments. Do not let any subjective phobia or fear of loss interfere with your ability to implement a plan that you know to be in your best interest.

If you know that you have a good financial plan, take whatever steps are necessary to put that plan into action and make it a reality. No one can take this action for you; you must be proactive about your own financial decisions.

Starbucks Versus McDonald's: The Postmodern McMocha?

I just read an article on Time about a coffee war that is brewing between Starbucks (NASDAQ: SBUX) and McDonald's (NYSE: MCD). Apparently McDonald's is hoping to cash in on the $4/cup coffee craze and is going to be putting espresso machines inside nearly 15,000 of its locations.

Now as someone with a Germanic temperament, I tend to like neat categories and rigid structures. I am inclined to think that most businesses should stick to what they are best at and stick to their reason for being. When I think of McDonald's I don't think of premium coffee. McDonald's is a Big Mac, McDonald's is a Quarter Pounder, McDonald's is french fries, but McDonald's is not espresso. The clientele is the wrong crowd, or maybe the right crowd in the wrong mindset, but I'm sure that the great espresso experiment will go over like a lead balloon.

There is something in today's postmodern culture that encourages this mixing and blending of things that are best kept separate. Whether it is the blending of different business spheres in a postmodern "fusion" (think Asian-Fusion cuisine), or whether it is the trend toward interdisciplinary research in higher education, traditional boundary lines are being abandoned in favor of this postmodern mix.

Jean-Francois Lyotard considered this to be an indication of the erosion of the legitimacy principles behind traditional concepts of knowledge, ethics, and even business practices. It used to be that we had grand narratives of progress and liberation to guide us as a society, all of which were reciprocally reinforced by the traditional boundaries in our concepts and categories.

With the decline in our faith, as a society, in these traditional concepts, novelty for its own sake has become the modus operandi for business and research. As Lyotard says in his Postmodern Condition, "They have at their disposal no metalanguage or metanarrative in which to formulate the final goal and correct use of [their] machinery. But they do have brainstorming to improve its performance."

What better summary could there be of the current economic, governmental, and academic state of affairs? Espresso at Starbucks was undoubtedly dreamed up inside of a corporate board room or a customer focus group, with novelty as its primary motivator. Yes it is true that novelty motivates investors and hence affects a company's stock value, but I yearn for the days when a company could be a sound investment just by doing what it does, and that alone, and doing it very well.

Inevitably what will occur is that McDonald's will introduce its new espresso service, it will become a fad, and then there will be a call for a return to McDonald's core elements. This has occurred every time McDonald's has attempted to stray from its original formula (McDonald's salads anyone?). The return to McDonald's basics will itself be presented as a type of novelty, which can be touted to shareholders as a form of corporate carrot-waving.

I think it is fair to say that we can already kiss the McDonald's McMocha goodbye, although not before millions of dollars are spent in advertising and planning this espresso adventure. It's a good indication of these postmodern times and just how fragile, shadowy, and contingent our economy has become.

Things You Don't Understand

Seth Godin has challenged his readers to make a list of things they don't understand. After all, as Socrates said, being wise means knowing what you don't know (or knowing that you know nothing, but I'm not that pessimistic). Here is my list, although I do have some thoughts on each of these:

• How to start a business with no capital
• How to finish a Ph.D. dissertation
• How to design a ham radio from scratch
• Why God allows suffering in the world
• Why self-serving jerks are the ones that get ahead
• Why people still talk about buying gold at $1000 per ounce
• How anyone affords a house in Santa Cruz
• What happened to quality television like family sitcoms and Star Trek
• Why people like Jim Cramer

There are, of course, many other things I don't understand fully. But that will be enough for now. How about you? What things don't you understand, financially or otherwise? Post your list or link below for all to see.

Perception and Reality in Investing

It goes without saying that our senses and perceptions can sometimes deceive us. We have all seen how a pencil can look bent while propped inside a glass of water or how a cleverly designed optical illusion (such as the rotating circles illusion below, found at http://www.richrock.com/illusion.html) can create the appearance of motion when there is none.

The same dichotomy between perception and reality is present in the world of investing. Sometimes an investment, such as the recent Bear Stearns (NYSE: BSC) fiasco, can seem to be sound while the reality is that there are major problems below the surface. By contrast, sometimes there are no surface indications that an investment will take off in the future, and some lucky soul will make a fortune from it.

With this veil of perception surrounding our investments, how can one be certain that one is making the right choice in one's investments?

One answer to this question would be to have a healthy dose of financial skepticism. Learning not to trust your initial perceptions about what investments would be sound, and hence expecting there to be some hidden factors behind the scenes, will lead to greater prudence in one's investing habits. One should not be too skeptical, however, since excessive skepticism will prevent one from taking any action and turning one's investing plan into a reality. But a healthy dose of skepticism is appropriate, since if something looks too good to be true, it probably is.

Another answer would be to do adequate research before jumping in to an investment. This research can be simple or complex depending on the nature of the investments you are pursuing. If you are investing in an individual stock, such as my recent purchase of 20 shares of Citigroup (NYSE: C), then you ought to familiarize oneself with the ins and outs of that company's financial situation. Investing in index funds is much simpler and requires far less research, but one should still take the time to research a financial plan that one can implement in one's individual situation. Adequate research and planning can make the difference between retiring rich and trading your capital into oblivion.

In conclusion, do not be too quick to trust your financial perceptions. Unless those perceptions are grounded in reality and in adequate research and planning, one's perceptions are just as likely to be incorrect as to be correct. Don't let your investments, and your financial future, be made of smoke and mirrors, but use prudence and wisdom to keep yourself on the straight and narrow.

The Market Goes Down and I Get Rich

The stock market had yet another slight downturn over the past couple of days. But my portfolio went up in value by nearly $200. What is the secret of gaining money when the market goes down? Regular Contributions!

Last week I made an additional $200 contribution to my Roth IRA account. So while the market downturn caused my portfolio to decrease slightly, the net effect of the contribution was that my portfolio was up by just under $200.

One of the simplest strategies for ensuring that your portfolio retains its value in times of economic unrest is to keep on contributing to your accounts even when the market is taking a nosedive. This takes a certain amount of faith on the part of the investor. But if one is confident (as I am) that any market downturn will eventually be corrected in the future, then not only will your account ride the stock market waves a little better, but you will also have significantly more money when the market does go up from buying your security shares at a lower price.

A friend of mine observed a while back that my account seems to weather the storms a little better than others and does not seem to suffer any heavy losses. Making regular contributions to my account is probably the single most important factor in keeping my account at an ever-increasing value. So if you find yourself getting squeamish about investing during hard economic times, check that attitude and make use of the downturn to buy low and sell high (in the long-term).

As my retirement accounts increase in value, my ability to prevent a negative dip in my accounts' net value will be hindered by increasingly wide fluctuations. But the beauty of regular contributions is that the high points in the cycle will be increasingly higher and higher as I continue to make contributions through the ebbs and flows of the stock market.

Top Five Unreasonable Stock Picks

I spend a fair amount of time in this blog advocating the benefits of long-term investing with index funds (click here to see how I set up my own Roth IRA with Index ETFs). For a change I thought I would offer up a list of my unreasonable and irrational stock picks; companies that I wish I was bold enough to throw some venture capital at to see what would happen:

1) DRDGOLD Limited (NASDAQ: DROOY): I have always had a fascination with precious metals and with gold mining. DRDGOLD is a company that engages in the exploration, extraction, and mining of various gold reserves in South Africa. Despite many setbacks, this company supposedly has access to rather extensive gold reserves that are ripe for the mining. This is obviously a shaky investment at best, but one I would throw some money at if I had venture capital to burn.

2) Crystallex International Corp. (AMEX: KRY): Crystallex is in the same boat as DRDGOLD as far as I am concerned. It is another example of my unhealthy interest in mining and precious metals. Crystallex is sitting on a large gold reserve in Venezuela, but the company is held back from mining operations by political forces in that country. For the last several years, Crystallex's stock price has fluctuated with the impending news of permission to mine the Las Cristinas location in Venezuela, which is constantly being blocked by Venezuelan President Hugo Chavez.

3) Atari, Inc. (NASDAQ: ATAR): As a child of the 80s I grew up playing the Atari 2600. As an adult I would love to own a piece of my childhood by owning some Atari stock. Atari, however, seems to be polishing the brass on the titanic and struggling to stay afloat in the sea of high-tech video game systems such as XBOX 360, Playstation 3, and Nintendo Wii. Until Atari breathes its last, though, I would still like to have this one in my portfolio just for its retro-coolness.

4) Motorola, Inc. (NYSE: MOT): I love communications technology. And while Motorola is not the technology leader that it used to be, it is still a healthy company and one that I consider to be emblematic of the 20th century ideal of technological progress. I have owned countless Motorola products over the years, and it would be just plain fun to own a piece of this communications giant.

5) Berkshire Hathaway Inc. "A Shares" (NYSE: BRK.A): My inclusion of Berkshire Hathaway on this list of irrational stock picks has absolutely nothing to do with the viability of Berkshire Hathaway itself. It rather has everything to do with the share price alone. What is not to love about a company that trades at well over $100,000 per share (for the A shares, at least, and quite a bit less for the B shares)? Were I wealthy beyond wealthy, I would have to own at least one share of Berkshire Hathaway for sheer bragging rights that I own a share of this coveted security.

So there you have it, folks: my top five unreasonable stock picks. If you would like to take a look at some of the stocks I consider to be most promising, then take a look at my other list of Top Five Individual Stocks.

And while I include these lists on SeeMeGetRich.com mainly for fun, I am overall an advocate of long-term index fund investing, and I do not advocate throwing your investment capital around as willy-nilly or as casually as these stock pick lists might indicate. Be smart with your money, invest it in long-term index funds, and then when you have more money than you know what to do with, feel free to engage in this type of reckless speculative investing. Stock picking may be fine for Warren Buffett, but stock picking can be disastrous for the everyman.

Investing As Entrepreneurship

The drudgery and stress of seeking a traditional career path has me increasingly interested in entrepreneurship and business ownership. While I have several business ideas on the table, it has occurred to me that as an investor I am already an entrepreneur.

Investing in the stock market gives the investor part-ownership of his or her investments and entitles the bearer of the investments to a share of the profits of those business investments in the form of dividends or appreciation of the value of the investments themselves.

While I do not yet have the startup capital necessary to buy or to start a business outright, traditional investing can be viewed as a form of entrepreneurship itself. One might never make the transition from investing to business ownership, or one might use investing as a means to generate the capital necessary to own one's own company. In either case, one's investments are analogous to the "money machine" of a traditional business.

Remember that the whole point of business is to generate profit by making more money than one spends to run the business. Stock market investing serves the same purpose and can be pursued on a much smaller scale than business investing.

So if you, too, would like to consider yourself an entrepreneur but lack the financial means to invest in a business, take the plunge instead into stock market investing. You can put your money to work for you generating more capital that you could use for your retirement or to make the transition to small business ownership someday.

Don't get stick in the mindset that you have to be rich already to become an entrepreneur. By putting your money to work for you, you already show yourself to be smarter with your money than 90% of people out there who resign themselves to working for every dollar earned instead of pursuing passive income. If you are an investor you are already an entrepreneur!

Do You Know the Way to San Jose?

My wife is in San Francisco this morning interviewing for a job as an admissions recruiter for the Academy of Art. She has been yearning to do something other than retail management for some time, and I have a hunch that she would like to do something more related to her field of study, Art History. She had her first-round interview with Human Resources and with the Admissions department yesterday, after which the Academy of Art immediately invited her back for a second-round interview today.

Should my wife take the job with the Academy of Art, we will be forced to move out of Santa Cruz, since the commute from Santa Cruz to San Francisco is unreasonable at best. We are giving serious thought to moving over the hill to San Jose if she gets the Academy of Art job. San Jose is still a bit of a commute to San Francisco, but the public transportation options make the commute more palatable.

I may have something in the works with RadioShack Corporation in San Jose as well, but the details are sketchy at this point so I will have to fill in the detail when I know a bit more. All I can say is that I am disappointed with the funding situation from my grad school department and with the general lack of available teaching positions at the local colleges. This is forcing me to seriously reconsider my career path and entertain the notion of taking a more stable corporate job instead of continuing to beat my brains out looking for enough teaching work to scrape by.

San Jose is not as appealing a place to live aesthetically, given that it is the heart of Silicon Valley and the technology industry. But the rent is cheaper, the commute would be better, and it is closer to my hometown, which means that I might actually get to see family once in a while. So all in all, I am excited about the idea of moving to San Jose. And thus may soon begin the "Great Apartment Hunt," round II.

Know-It-All: How Many Digits of Pi Do You Know?

This morning I stumbled upon this funny, if crude, comic panel:

I think investing is like Pi in this strip. There is such a thing as knowing too much about investing, when knowing the basics will serve you just as well for most purposes. Some people really get a kick out of tweaking every last percentage point of gains from their retirement/investment portfolios. The extra percentage points can make a big difference in one's net worth at retirement, but the problem is that one is just as likely to foul things up by over-tinkering and come out with less than by leaving their portfolio alone.

Tried and true techniques like dollar-cost averaging (DCA) and index fund investing are good enough for the vast majority of "normal" investors for whom the habit of investing regularly is more important to cultivate than the ideal portfolio. Know-it-all investors (and financial advisers) can be downright rude and condescending to those who may know less about investing but who are cultivating proper and sound investing virtues.

Like any good philosophical debate, the debate about complicated investment portfolios will be an endless one. But also like most endless debates, the debate is entirely academic if there is no practical upshot to the debate. And the fact is that basic index fund investing and dollar-cost averaging are sufficient for most people to have the type of retirement they desire.

So how can one "Keep it simple, stupid" with investing? By saving and investing a percentage of your income on a regular basis. 10% is good, but 15% is better and 20% is better still. Put the money into broad market indexes like the S&P 500 Index (using passively managed ETFs or mutual funds) and keep it up over the course of your working lifetime. You will train yourself not to miss the money in the interim, and your money will grow substantially in the long-term.

If you fall in the "normal" investor category, then do not let the complexity of the know-it-all financial debates deter you from investing regularly. Yes, it can be very complex, but there is an elegant simplicity to the type of investing mentioned here. The single most important variable is your ability to develop, incorporate, and maintain the habit of taking a percentage of your money right off the top and putting it in your investment account. If you are successful in developing this habit, the rest of the details are like the digits of Pi after 3.14159.

Countdown to 401(k) Enrollment

As I have noted in previous posts, one of the biggest financial mistakes I made when I was a young, working college student was to fail to enroll in the RadioShack [NYSE: RSH] 401(k) and the company stock purchase plan. Had someone just sat me down and made me sign the enrollment paperwork, I would have had a significant jump-start on my retirement savings by now.

Hindsight, of course, is 20-20, and there is no use crying over spilled milk. But in exactly two months I will have an opportunity to rectify this mistake of youth by once again being eligible for the RadioShack 401(k) plan.

While I am currently just a part-time employee at RadioShack to supplement my university income, the lack of adequate funding for advanced grad students at UCSC has me seriously considering making a major job switch to RadioShack store management, should I fail to receive funding for the next academic year.

While I am contemplating this (temporary?) potential fork in my career path, I fully intend to enroll in the RadioShack 401(k) plan as soon as I am eligible, come June 2nd. Regardless of whether RadioShack remains supplemental income or becomes my primary source of earnings while I finish my Ph.D., I plan to take advantage of the company matching to provide an additional stream of money into my retirement portfolio while I am there.