Blogroll Update

Since my first post about The Blogroll, I have added links to six very good personal finance blogs. Through these link exchanges, traffic to PFStock has increased somewhat. However, I have found that most of my blog traffic comes from repeat visitors, or from people who are searching for specific personal finance and investing topics.

In any case, I am still looking to exchange links with other PF bloggers that write useful, original content. If you have a legitimate personal finance or investing blog, please send me an Email, and I will consider including a link to it here on PFStock. (Note that my Email address is listed on the right side column of my blog.)

Please note that I reserve the right to remove links to any PF blog for any reason. Also, from time to time, I will receive comments to posts on PFStock that are off-topic or contain only advertising links. As a matter of policy, I regularly remove inappropriate comments.

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Crude Oil vs. Cruise Line Stock Prices

In September 2006, I wrote a post about investing in the cruise line industry. In that post, I asserted that the price of fuel, which is one of the biggest expenses of cruise lines, is a key factor in the price movements of cruise line stocks. I said that there is an inverse relationship between the cost of fuel and the price of cruise line stocks. To review, I have reproduced the graph that I posted of Carnival Corporation (NYSE: CCL), which is represented by the blue line below. The red line is the U.S. Oil Fund ETF (AMEX: USO). USO is an exchange-traded fund that tracks the price of crude oil. Back in September, the price of oil was dropping in price. If you pay attention to what you're paying at the gas pump, then you are attuned to these movements in crude oil prices. As you can see in the graph, the price of oil was dropping, while the price of CCL was soaring.



Fast forward six months to today, and you will notice things have changed. I was recently at the gas pump, and noticed that regular gas costs over $3 per gallon for the first time in a while. (Note that I live in Silicon Valley, California.) Below is what that same graph of CCL vs. USO looks like today.



Do you see the inverse relationship? It might be a little hard to see in the chart, but USO reached a low of 42.56 on 1/18/07. Only one day later, on 1/19/07, the price of Carnival Corporation (CCL ) reached a peak of 52.73. Since January, these two charts have reversed course. Oil and gas are increasing in price, while the cruise lines have dropped in price. The North American cruise line industry includes Carnival Corporation, Royal Caribbean (NYSE:RCL), and Norwegian Cruise Lines.

To a lesser extent, the increase in oil prices affects the stock market as a whole as well. So, knowing this relationship is something that you can use to help guide your investments. At this time, I would predict that the cruise lines will drop in value until oil reverses course, or at least until oil prices start to stabilize.

Note: My posts about the cruise line industry are among the most popular posts here at PFStock. Many visitors were searching for information about how to get the shareholder onboard credit benefit offered to cruise line (Carnival Corporation and Royal Caribbean) stock holders. If this is what you are searching for, please read the details in my post about cruise line shareholder benefits for RCCL and Carnival stock holders.

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Daylight Saving Time Reminder

As a reminder, Daylight Saving Time starts this coming Sunday, March 11. I would be interested to know if anyone's VCR automatically adjusts since DST starts early this year.

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Still Waiting for Windows Vista

A while ago, I had mentioned that I bought a new computer in order to secure a copy of Microsoft Windows Vista. The computer, which I bought back in November 2006, is a Compaq Presario SR2050NX and included the Windows XP MCE 2005 operating system. As part of the deal, I am supposed to receive Microsoft Windows Vista Home Premium from Hewlett-Packard (the parent company of Compaq) after Vista's release. Well, Windows Vista was released back in January. So, where is my free upgrade?

The last time that I checked the status of my Windows Vista order, it said that Vista would be shipped in March 2007. It seems like a while to wait, since I can already go out and buy a new computer with Vista running on it now. On the other hand, compared to the old Dell computer running Windows 98, this new desktop computer is a big improvement. My old computer used to crash on a daily basis.

Is anybody else (who bought a new computer in the last 3-4 months) still waiting for their free Vista upgrade?

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Telephone Tax Refund

Something new that I noticed on 2006 tax forms is a credit for the federal telephone excise tax. You can get back $30 to $60 as a credit depending on your number of exemptions. This is only available in 2006 to taxpayers who paid for long-distance telephone service between March 2003 and July 2006.

Although it seems like you are getting free money, the refund is due to a court decision which found that the excise tax (which has been on the books since 1898 to fund the Spanish-American War) no longer applies to telephone service today.

If you choose to you can actually add up all the federal excise taxes that you paid based on your old phone records. But, most people will take a standard refund amount, based on the number of personal exemptions that you claim. On Form 1040, this credit is claimed on line 71.

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Volatility

Volatility is a integral part of the stock market. It is on days like these that we are all reminded of this fact. In actuality, the stock market has done well in the past year. The Dow Jones Industrial Average reached an all-time high of 12,845 only last week. The other major indices (S&P 500 and Nasdaq) have also posted respectable gains over the past year. For the Dow, this new high was followed by a drop of 416 points in one day.

What is a warning sign that the stock market is overvalued? In a word: exuberance. In the past few months, we have seen a constant growth of optimism among financial professionals and analysts. This optimism extends into the realm of personal finance blogs as well. Recently, there seems to be a constant new crop of enthusiastic new PF bloggers out there. Over the past few months, some bloggers have been writing that their portfolios have increased by 4-7% per month. These are quite impressive numbers indeed!

I can't help but get the feeling of deja vu when I compare what is happening now to the hi-tech (dot com) boom of the late 1990s. One blogger, who admits to not having a stock picking philosophy, tell us that he will turn $100k into a cool million over the next ten years. Another blogger scaled back the initial estimate of his net worth growth rate to only 30% per year. Even so, he'll be a millionaire in a little over 4 short years.

Early on in this blog, I wrote a post about me. In that post, I said that I feel the economy is much better now than it was in 2002. But I've learned not to get too overconfident, and to plan for the worst while hoping for the best.

In fact, during the last few months of 2006, I had sold off much of my stock holdings. And I found it very difficult to find new investments to buy. These are the ones that I think have a much greater chance of going up rather than of going down. While there are some exceptions, I think that most stocks are overvalued at this time.

Note that these are my views on the stock market. But regardless if the market goes up or down, it does not make me feel nervous or worried. Indeed, it used to. I imagine that most people who are invested in the stock market would feel a little queasy these days. But I now feel that either direction presents a new, different set of opportunities.

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