Wednesday, November 29, 2006

Free USB Flash Drives

Previously, I wrote about collecting freebies at The Money Show and at the Hard Assets Conference (also known as the Gold and Precious Metals Investment Conference) in San Francisco. At the Hard Assets Conference held over this past weekend (Thanksgiving Weekend), I have discovered a new trend in freebies: USB (Universal Serial Bus) flash drives. For those who are not familiar with the technology, a USB flash drive is a portable computer memory that plugs into a computer USB port and can be used like a small hard disk. USB Flash drives are also known as thumb drives.

In the past, exhibitors have used a variety of media to get their messages across. Typically, they have used glossy brochures, and CD-ROMs containing information about their companies. Now, some companies have put their annual reports, company press releases, PowerPoint slides, and other data onto USB flash drives that they give away as freebies. I was able to snag a couple of these 512MB drives from a booth at the conference. My DW also got a free MP3 player for herself. In this case, the 256MB MP3 player also contained soft copies of company literature from the sponsoring firm. Of course, the casing of each USB flash memory is printed with the company logo, so it is unmistakably a freebie. After viewing the information on the USB flash drive, the memory can be re-used for whatever purpose the user wants.

I think this is a shrewd move on the part of the exhibitors. When their company literature was contained on a CD-ROM, I might choose not to view it. However, when the information is on a USB drive, I pretty much have to at least glance at it once (even if it is only to delete the data so that I can re-use the flash memory). With a bunch of new freebies in hand, I've chalked up another successful investment conference!

On a related topic, I also purchased the latest versions of H&R Block's TaxCut and Microsoft Money, this past weekend. I am getting started on taxes early this year. TaxCut also offers a version of their software on a reusable USB flash drive. But I got the regular version of TaxCut on CD-ROM since it is $10 cheaper. Also, I think that the flash drive has a pretty small capacity.


Monday, November 27, 2006

Ameritrade's Unimpressive Site Upgrade

I have written before that I have both an original Ameritrade account and an original Waterhouse account. Ameritrade recently upgraded their web site. This "upgrade" was delayed for about a week with no reason given. Thus far, I'm thoroughly unimpressed with the new site.

So, where's the upgrade? I was expecting things like better online statements, easier to use account history, PDF views for my trade confirmations, and so on. Instead, the changes to the Ameritrade website are mostly cosmetic in nature -- mostly rearranging the menus, and changing the site color to green. I can't see any real improvement in functionality. Some features are either not improved, or even worse than before.

Take for example, the new stock screener. Here is a stock screen that I might put together: find all large cap stocks that are within 10% of their 52-week low. I couldn't figure out how to run this simple screen in the Ameritrade stock screener. Another thing is that the screener is no better than the free stock screens available at Yahoo Finance or MSN Money.

I use Standard and Poors (S&P) stock reports extensively for my personal research. However, the usual S&P reports available at the new Ameritrade site have somehow shrunk from 8 pages to 5 pages. I think that they cut out the three pages that include S&P's Sub-Industry Outlook, Company News, and Analysts' Recommendations from the abbreviated reports. Again, there's no explanation for the change.

As a former Waterhouse customer, I would qualify for Ameritrade APEX twice over based on my Waterhouse account balance. But after talking with Ameritrade customer service representatives about this, they were unwilling to upgrade me to APEX unless I transfer my funds from my original Waterhouse account to a new Ameritrade account. Logically, this is like saying that TD Ameritrade is one company, but you have to transfer your funds from one TD Ameritrade to another TD Ameritrade in order to get APEX access. Huh, what gives?

As a Waterhouse customer, I'm concerned now that Ameritrade will downgrade my account to a lower standard when they finally finish straightening out the mess they made. As I mentioned in my previous post, there are features that I particularly like in my Waterhouse account. Mainly, these features are access to IPOs and the cost basis calculator available through Waterhouse. Ameritrade doesn't keep track of cost basis for you, and instead the refers you to Gainskeeper which costs extra.

Ameritrade SPAM: I know that I am not the first person to write about getting SPAM at my Ameritrade Email address, as it has been reported by other PF bloggers. Like many others, I use a unique Email address for my Ameritrade account. This is accomplished through Yahoo's "AddressGuard" feature. In other words, the only entity that knows my Ameritrade Email address is Ameritrade itself. However, I have been getting spam at this address. Whenever this happens, I change my Email address to a new one, and delete the old Email address. This has happened three times already, as it seems that my Ameritrade Email address has been repeatedly compromised. I think that it is a security issue at the Ameritrade end, and I now have to delete yet another Email address. By contrast, the Email addresses that I use for Waterhouse and E*TRADE have never been compromised.

Ameritrade has been touting such features as Trade Triggers, but I'll tell you that the E*TRADE site has them beat there. However, I think E*TRADE's customer service is worse than Ameritrade's. Nevertheless, I now have a wait-and-see attitude on Ameritrade. But based on what I am seeing, I predict that E*TRADE might end up with a lot more business out of me in the future.


Wednesday, November 22, 2006

Hard Assets 06: San Francisco

I had previously written about the San Francisco Money Show, which is held each fall at the downtown San Francisco Marriott Hotel. There is a second investment conference that is held each year at the same hotel. This year the theme is "Hard Assets". While the carnival atmosphere of the Money Show is retained at this show, the subject matter usually focuses on precious metals, mining, oil, and gas.

Many of the exhibitors in the investment conference are foreign mining companies. These are largely listed on the Canadian stock exchanges, most notably the Toronto Stock Exchange (the TSX). Unfortunately, a large share of these stocks are penny stocks of questionable quality. For a few years, there were a lot of dotcom exhibitors, and even mining companies that actually became dotcoms to feed off of the associated hype. This came at a time when the prices for gold, oil, and other commodities were depressed.

Among the speakers at the conference, one stands out among the crowd: James Dines. This flamboyant individual has been touting something every year since about the late 1960s, whether it is gold, dotcom stocks, or his current favorite, uranium. Mr. Dines is the publisher of The Dines Letter, and the author of the book Mass Psychology. I haven't had the opportunity to read the latter, though. His booth is typically rimmed by half a dozen blond, blue-eyed assistants that could politely be referred to as bimbos. And you wouldn't expect anything less from a man whose motto is "Always travel first class, because if you don't, your heirs will!" At any rate, his seminar is usually well attended and very entertaining, to say the least.

Just like at the Money Show, this investment conference also offers an array of freebies. Over the years I've been able to snag several tote bags, caps, and keychains. I have one titanium keychain that was offered by a titanium mining company, and I have another one that includes a flashlight and looks like a miniature miner's hat. Hard Assets '06 is held November 26-27 this year.


Saturday, November 18, 2006

David Bach: 90% Good, 10% Evil

A lot of good things have been said about David Bach, author of The Automatic Millionaire. I do think that his work is largely good, and a lot of good things have been said about him. His book is especially helpful for those who are just starting to pull themselves out of debt, and starting to build on their savings. I won't repeat the positive things that have already been said. Instead, I'm going to focus on what I don't like about his books.

First of all, Bach has a way of oversimplifying things. Throughout the book, he uses examples of how you will end up with an astronomical amount of money, if you stop buying coffee drinks, and invest the money at a 10% annual return. Of course, he doesn't really tell you where you can get the 10% annual return. He dances around the issue in his book, and mentions a bunch of brokerages and mutual funds, but I don't see any one of them guaranteeing a 10% annual return.

Like many popular financial writers today, Bach's book reads like an advertisement. Indeed The Automatic Millionaire contains 5 full pages of advertisements for his website, his other books, and his 10 CD set for the complete Automatic Millionaire Audio System. And, did you realize that Bach trademarked the term "The Latte Factor (TM)"? Boy, I hope I don't owe Bach royalties for writing this post.

Aside from this, nothing irks me more than Bach's three paragraphs covering the term "leverage". In this one section, Bach describes buying a $250,000 home with $50,000 down. He states that if the home's value goes up to $300,000, then the investor has doubled his money. Fair enough. But, he goes on to finish the section with the following paragraph.

Over the last five years, many homes have doubled in price. Think of
what this means in terms of leverage. If you invested $50,000 in a
$250,000 home five years ago and it's now worth $500,000, you've made $250,000 on a $50,000 investment. In investment circles, that's called a five-bagger -- an amazing 500 percent return on your money.

Talk about glittering generalities! In any responsible coverage of the topic of leverage, the author would explain that leverage is a double-edged sword. While one can make outsized profits in an up market, one's loss could also be multiplied in a down market. In the stock market, the parallel example is buying stocks on margin. In this case, you are using leverage in the hopes of making multiplied gains when the stock market goes up. On the other hand, if the stock goes down, you could lose your entire investment and more.

Bach doesn't even mention the potential downside of leverage anywhere in his 240 page book; he only discusses the upside. I think that David Bach's omission here is at best irresponsible, and at worst criminal. While the term criminal may be a harsh assessment of The Automatic Millionaire, it is nonetheless accurate. You may have noticed that mutual fund prospectuses have a statement that goes something like this:

Past performance is not an indication of future performance.

Do you know why mutual funds are required by government regulators to print this in their prospectuses? That's because it's true! You can't make the assumption that if an investment is increasing in value at a certain rate, that it will continue to do that in the future. Similarly, you can't just assume that if the stock market has returned an average of 10% for several years, that it will only continue to do that in the future. Clearly, Bach is strongly implying that buying a home in this already overheated market is a great investment. And at that, he is peddling his advice to those who are least likely to know any better.

Anyway, so much for David Bach. As I have said, his material is pretty good for people who are just starting to pull themselves out of debt. I will say that his books do contain about 90% good advice. It is the other 10% that I have issues with.

Clearly, though, there are better personal finance books available. I would recommend a couple time-tested classics. My first recommendation is The Richest Man in Babylon, by George Clason. The second book is The Wealthy Barber by David Chilton. These books have a far better track record that Bach, and I think that they will better withstand the test of time.


Tuesday, November 14, 2006

Ameritrade's "Hidden" Cash Sweep Account

Ameritrade has a cash sweep option called the Total Asset Plan (TAP) which offers a significantly higher interest rate on cash than the default Ameritrade cash sweep option. When you first setup an Ameritrade account, you are put into a cash sweep option that pays less than 1% interest. By contrast, as a participant in the TAP, the cash sweep is offered through money market funds at "The Reserve" (website: There are a variety of taxable and tax-free money funds available. For example, the taxable Primary Money Market fund pays about 4.4%. Personally, I chose the California Tax-Exempt fund which pays about 2.4%.

But, don't go looking for the Total Asset Plan on the Ameritrade website; it's not there. In order to setup this account, I needed to talk to a customer service representative. In fact, I would not have even known that the TAP option existed without speaking to a real person at Ameritrade. I don't know why they keep the TAP a secret from most investors.

Lastly, having gone through the application process once, I now know where to find the TAP application on the Internet. However, since this is a "hidden" option (that Ameritrade doesn't want the average person to know about), I would suggest calling Ameritrade to inquire about it.


Friday, November 10, 2006

Buying an IPO: Free Money

I had previously mentioned the Bare Escentuals IPO (Nasdaq: BARE) that I received from my stock broker, Waterhouse. Since most people are probably not familiar with the process of getting Initial Public Offering (IPO) shares, I thought that I would write an overview of the process. My caution here is that I am not an expert. IPOs represent an added layer of risk that many investors are not willing to take. Nevertheless, if one is willing to "invest" the time to understand the IPO process, and more importantly the companies in which you are investing, buying IPOs can be a relatively low-risk venture that is like getting free money.

First of all, there are two online brokers that I use which offer IPO shares. These are Waterhouse, and E*TRADE. Of course, there are other brokers that offer IPOs, but I'm not yet involved with them. I recently found that Fidelity offers IPOs. However, their minimum requirement of $500,000 in a Fidelity account makes that venture prohibitive for most people.

The first step in getting an IPO is passing an eligibility questionnaire. You will be asked questions about your income, your liquid net worth (excluding the value of your primary residence), your investment experience, and your investment objective. My only advice here is to be honest when answering the questions.

Once you pass the IPO eligibility questionnaire, the next stage is to wait until the broker announces that they are taking conditional offers on a new IPO. At that time, you should go to the broker website, read (or at least skim) through the prospectus, and place a conditional offer. In general, a conditional offer is placed in multiples of 100 shares, and you will indicate the maximum number of shares you are willing to buy at the offer price. Up to this point, you are not under any obligation to buy the IPO shares, and may cancel your offer up until the allocation phase. However, it is your responsibility to read and understand the "risk factors" that are listed in the prospectus.

Next comes the pricing (if the IPO is not withdrawn). Note that pricing occurs after hours on the day before the IPO begins trading. You will be asked to confirm your conditional offer (usually by midnight of the same day). This step is very important! You have to make the decision at this point if the IPO is one that you really want to participate in. If you decide that you don't want the IPO, you can still cancel at this time. Warning: not all IPOs go up, so choose carefully! I cannot overemphasize this point: buying an IPO can involve significant risk.

The last stage is the allocation phase, which occurs in the early morning hours on the day that the IPO begins trading. Here you will be randomly allocated shares based on the level of interest in the IPO. However, I estimate that 80-90% of the time, I was not allocated any shares after completing this whole procedure. In practice, I have usually placed conditional orders for 200-300 shares of a new IPO, and have been allocated either 100 shares or nothing.

In the case of Bare Escentuals, the IPO priced on Thursday, September 28 at $22 per share. I placed an order for 300 shares, and was allocated 100 shares. It began trading on Friday, September 29 when it closed at 27.15. I later sold the stock at $30, and made a profit of $800.

As with any investment, I advise you to do some outside research of the companies that you are potentially investing it. Two resources I use to gather information about new IPOs are IPOhome and MarketWatch. Please use these resources before you invest. One last note, sometimes you will see what is called a secondary offering for stocks that are already being traded on a stock exchange. I generally avoid these because the potential for quick gains is not as good.

In summary, buying an IPO can be a big hassle, and you most likely won't even get any IPO shares in the end. But if you play the IPO game right (and avoid poor quality IPOs), you can end up with an almost certain profit. It is like getting free money.


Thursday, November 9, 2006

NetBank Increases MMA Rates

After nearly a year, NetBank (Nasdaq: NTBK) has finally raised its interest rates on money market accounts for existing customers from 2.90% to 2.99% APY. Although this rate is much below what its competitors are offering, it shows NetBank's willingness to move in the right direction. Honestly, I thought that this day would never come! This is an impressive 0.09% increase! Imagine that if you have $10,000 deposited with NetBank, that would work out to an incredible $0.75 per month or $9 more per year. I'm absolutely flabbergasted by the immense generosity of the folks at NetBank. For once, I'm speechless...


Prior posts about NetBank (Nasdaq: NTBK):
Sayonara NetBank
More on NetBank
Unprofitable and Unstable NetBank

Tuesday, November 7, 2006

Internet Explorer 7

This past weekend I upgraded my browser to Internet Explorer 7 (IE7) by Microsoft. This upgrade is only available for legitimate owners of Microsoft Windows XP and Windows Server 2003. Some of the new features that I like in the new IE7 are tabbed browsing, a customizable search box on the right side of the address bar, and a shrink-to-fit feature for printing wide webpages. In Internet Explorer 6 (IE6), many webpages had to be rotated (or the right side was cut off), and thus wasted lots of paper.

But, what I like the best about the new IE7 browser is the ability to read RSS feeds (i.e. XML) directly. For example. The URL of the RSS feed for this blog is This usually appears as gibberish in older browsers, but is formatted quite nicely in IE7. It includes all of the links, and if the blog is broken out into categories, you can filter posts by category. I think that this will be most useful when reading blogs that choose to load down their site with advertising. I am not opposed to ads, since I have a few on my own site. However, when a site has ads on the top, left column, right column, in-between posts, and so on, it gets a little out of hand...

I have noted a couple of issues with IE7 that will affect PF bloggers. In Blogger, there is a preview function on the "edit posts" page that lets you view a post without going into the editor. This doesn't work in IE7. And at, clicking on "all" underneath "Today's active weblogs" will open a search panel on the left side that contains a list of all available blogs. This doesn't work in IE7, as it will open the list in a new window. There are various other websites that I've seen where parts of the text or images are cropped off, or don't display the same as they did in IE6. In the some cases, there are parts of the webpage that you can't read.

In a twist of irony, there isn't a way to run IE7 and IE6 on same computer. This will force me to install a competing browser, Firefox, on my machine in order to view the websites that are "broken" in IE7. This is probably not Microsoft's original intent.

On a related topic, I recently installed a Site Meter on this blog. This is basically a web counter that keeps track of a few different statistics including browser share. For this blog, a slim majority of the readers use Internet Explorer, with IE7 representing about 5%. (I expect that percentage to grow in the future.) About a third of the readers use the Firefox browser. (But I think that most of this fraction is actually one reader who visits frequently.) The rest use miscellaneous other browsers like Safari, Opera, Netscape, and Mozilla.

If you are curious, I have kept the statistics on my Site Meter public. Just scroll down to the very bottom of this page and click on the Site Meter icon.


Saturday, November 4, 2006

Nasdaq-100 May Be Reaching a Top

I wanted to take the opportunity to mention the Nasdaq-100 and Exchange Traded Funds (ETFs). ETFs are like Index Mutual Funds; however, they are traded like stocks. Until this past week, I had been holding shares of an ETF called Nasdaq-100 Tracking Stock (Nasdaq: QQQQ) which I purchased back in July (before I started PFStock). As an ETF, QQQQ is broadly positioned with 100 of the largest Nasdaq companies as its components.

Some of my investment decisions are based on technical analysis (i.e. looking at the chart) of an investment. The recent run-up of QQQQ is a nearly picture perfect example of how to buy into an uptrend. Here is a 6-month price chart of QQQQ (click to enlarge):

As I had mentioned, I first purchased QQQQ in July. From the chart, you can see that QQQQ hit a low in July. Low price alone is generally not enough of a reason to justify buying a stock. I waited until almost the end of July, when QQQQ was starting into an uptrend before buying. From there, I've held on until this past week. You can see that stock price has seen some dips along the way, which might stop out some traders.

Currently, the Nasdaq-100 Index is starting to encounter some resistance after this prolonged uptrend. If you look at the very end of the QQQQ chart for the past several days, you can see some recent weakness.

Although QQQQ may continue to climb, and I have closed out my position in QQQQ. This doesn't necessarily mean that I think that QQQQ is going to drop. However, I'm pretty confident that we won't be seeing the same kind of increase in QQQQ that we have in the past three months. QQQQ is near a 52-week high again, and has entered a volatile phase where it might be risky to take either a long or short position.

My opinion is that the safe thing to do now is to take profits. These are a certainty, and it is perhaps time to look for other investment opportunities. I will caution you, though, that I have a tendency to sell a little bit early.


Thursday, November 2, 2006


I had written before that I found a web site that used snippets of text that were literally stolen from this blog for what is called a "Made for Adsense" advertising site. I've now identified other similar sites and one particular site that has copied my entire entry on Resources for Early Retirement, verbatim. Again, there was no attribution to my blog or any link back to this blog from that site. Others whose stolen material appears on this site include 2million, John Greaney, Suze Orman, and other bloggers. It appears that the sole purpose of that web site is to earn revenue from junk ads that appear there.

Annoyed is perhaps an understatement of my feelings. Someone else is making money off of the material that I wrote here, and I feel that this is a violation of trust to say the least. I created PFStock with the genuine intention of giving others my insights in the areas of personal finance and stock investing. I had never expected my writing to be plagiarized in this way. I sought assistance from Google, the owner of Adsense, but they have been useless in helping combat this problem. And why should they be? After all, Google makes money from these sites that steal copyrighted material from others. Considering these events, I am now seriously considering ending the publication of this blog.

Update: On the advice of JLP from AllFinancialMatters, I Emailed a cease-and-desist letter to the owner of the offending website. In the end, the offending website was removed. But, I am still annoyed by the whole situation.