Whole Foods Recommendation Withdrawn

In the past, I made a stock recommendation to buy Whole Foods Market Inc (Nasdaq: WFMI). However, due to recent events involving the CEO of Whole Foods, PFStock is withdrawing its recommendation of Whole Foods (WFMI). To make a long story short, Whole Foods CEO John Mackey has admitted to making anonymous comments about Whole Foods and its competitors on Yahoo Finance. Using the Yahoo user ID "rahodeb," Mackey had posted negative comments about a competitor, Wild Oats Markets Inc (Nasdaq: OATS). These comments were made prior to Whole Foods' offer to acquire Wild Oats.

This type of behavior is simply not appropriate for a CEO-level employee. As a direct result of Mackey's reckless judgment, Whole Foods is now the subject of a Securities and Exchange Commission (SEC) inquiry. Needless to say, this is not good news. Due to these recent developments, I cannot recommend WFMI to anybody.

DC

TD Ameritrade's Cost Basis Tool

I had previously mentioned that TD Ameritrade has added a gain/loss tracking tool called GainsKeeper to their website. I have used GainsKeeper before, and I believe that it can be very helpful to keep track of investment cost basis. However, there are a few obstacles to their new tool.

For me, GainsKeeper didn't have any cost basis information for investments that I bought before 2003. I had to go through a process known as "baselining" to tell the online tool what I originally paid for my stocks and mutual funds. For the most part, this process is straightforward if you have your cost basis handy. However, if a stock or fund has undergone a stock split, spinoff, or merger, it can get very confusing. For example, I had a mutual fund that was merged into another one, and I had to manually figure out the cost basis, and update it in GainsKeeper.

TD Ameritrade uses this GainsKeeper cost basis information to figure the Unrealized Gain (Loss) on your monthly statement. If it doesn't know what you paid, it shows "NP" for the Average Cost, and leaves the gain amount blank. On the other hand, I noticed that the GainsKeeper cost basis doesn't seem to be reflected on the "Balances & Positions" page. New trades are almost immediately reflected here. This leads me to conclude that TD Ameritrade uses two different sources for the cost basis data. The fact that they do this can lead to confusion.

Going forward, I think that GainsKeeper has the potential to provide accurate cost basis information at a glance. But, I do have a wishlist of improvements to GainsKeeper that I think would be easy to make. First of all, I would like to see a bigger font size; my eyes are not what they used to be. I'd like to see green and red colors used to indicate a gain or a loss. Another improvement would be for GainsKeeper to flag securities that could potentially trigger a wash sale if you buy or sell. Currently, GainsKeeper divides all gains into long and short term, giving you a subtotal for each. How about adding a line that gives you the total gain too? Lastly, I found that if you make a trade during the day, GainsKeeper doesn't reflect that trade until the next day. This could be updated in real-time.

DC

Interest Compounded Continuously

Have you heard of the concept of continuous compounding? This is a question that I posed a while back while commenting on a post at My Money Blog. In that post, the author, Jonathan asked the question if it matters whether interest is compounded monthly or daily. The answer was that it doesn't make much difference.

In Jonathan's post, he included the following example of a $10,000, 1-Year CD paying 5% APR (Annual Percentage Rate). He then went on to calculate the amount of money you would end up with after one year of compounding.

At this point, some readers might like to review my post about how to calculate APY on a bank account, as the following math is similar. For an account that is compounded monthly, you will have the following after one year:

$10,000 x (1 + .05/12)¹² = $10511.62

And if this amount is compounded daily, you would end of with this amount:

$10,000 x (1 + .05/365)³⁶⁵ = $10,512.67

In other words, you'd end up with $1.05 more by compounding daily versus compounding monthly.

I have always held that it is best to compare the Annual Percentage Yield (APY) for deposit accounts, rather than Annual Percentage Rate (APR). And, the author agrees with this sentiment.

But getting back to the original question, what about continuous interest compounding? This is not compounded daily, hourly, every minute, or every second, but continuously. Many people (erroneously) believe that if they could have their savings compound continuously, then they would have an infinite amount of money. However, taking the formula above, in the limit that the 365 goes to infinity (continuous compounding), the formula results in this one:

$10,000 x exp(.05) = $10,512.71

…or about 4 cents more than compounded daily. Note: This formula uses the e^x key on a scientific or financial calculator.

In reality, no bank offers continuous compounding. But if it did, you would probably realize that it was certainly an advertising gimmick because even continuous compounding doesn't make much of a difference.

DC

New E*TRADE Offerings

A few months ago, E*TRADE announced that they will soon be offering global trading. According to their website, you will be able to trade stocks in six global markets: Canada, France, Germany, Hong Kong, Japan, and the United Kingdom. And, you'll be able to hedge U.S. dollar exposure with five global currencies. While I think that this is interesting, I personally believe that investing in individual foreign stocks is too risky for most U.S. based investors. I will and have invested in foreign mutual funds and ETFs, though. Actually, this notice has been on the E*TRADE website for a while, and I'm still waiting for them to implement the feature.

I had mentioned before that E*TRADE is one brokerage that I use which offers IPOs. The other broker that offers IPOs is TD Ameritrade (i.e. the broker formerly known as Waterhouse, not to be confused with the broker formerly known as Ameritrade which does not offer IPOs). Of course, to add to this confusion, all former Waterhouse accounts have now been merged into TD Ameritrade, which doesn't offer online access to IPOs. One of the E*TRADE IPOs that I was recently allocated shares in is Interactive Brokers (Nasdaq: IBKR).

One new thing that I recently noticed on E*TRADE's IPO Center page is "structured products." The one I was looking into was BNP Paribas 3.75 Year 100% Principal Protected Notes. These are bonds that mature on December 30, 2010. Unlike a regular bond the return on these bonds are linked to the quarterly averaged performance of the S&P 500 Index and have a minimum return of 5%.

That caught my eye! You get the performance of the stock market with no downside risk. I did a little more investigating, and it seems that the word average above is key. Assuming that the S&P goes up like a straight line (don't we wish), you won't be receiving the return of the stock market, but the Average Index Performance of the S&P 500 value during the term. The bond prospectus goes on to define the Average Index Performance by a somewhat intricate formula where they value the S&P every three months, and take the average value of the index during the term of the bond. Suffice it to say that the return in this case might be significantly less than the actual S&P performance. On the other hand, if the stock market goes down, you are assured that you will at least receive the 5%. And that is the other catch... The 5% is over the term of the bond, and not an annualized return. For the mathematically challenged here, this works out to the equivalent of about a 1.3% nominal annual rate.

It is clever wording on the part of the offering party here. In essence you can't really lose money on the investment, but you might not make as much as you would in either an index fund (if the stock market goes up) or a regular bond fund (if the market goes down). I can see that the worst case is that you get stuck with the 5% return (1.3% annually). The best case would be if the stock market goes up over the next 4 years, but tanks during the last year.

DC

Account Aggregation

I had written that I was having some trouble with two sites (MSN Money, and Smith Barney) that aggregate my account balances. For my TD Ameritrade accounts, MSN Money double counts my cash holdings, and Smith Barney doesn't count them at all. The account aggregation service is powered by a company called Yodlee. Unfortunately, there are other problems with Yodlee.

Some banks are now using a system called "Secure Sign On" to log you in. The secure sign on feature uses a multi-screen login that will typically show you a picture and personal phrase that you previously chose. In addition to typing your password, the bank will then ask you to answer one or more confirmation questions for added security. These are personal questions that you previously provided answers for. This is what one bank says about using this sign on procedure in conjunction with account aggregation services like Yodlee.

Account aggregation lets you see the information from all your online accounts on one website. The firm operating the account aggregation service logs in as you and uses your security information to get your information for you. [With] Secure Sign On, these services may not work with the user ID and password you provided them because Secure Sign On uses a multi-page signon process. Confirmation questions and cookies are also used as additional security information.

For a long time, I was largely satisfied with the account aggregation service that sites powered by Yodlee provided. However, my satisfaction has now been replaced with skepticism about Yodlee.

A person claiming to be Peter Hazlehurst (senior vice president of product development at Yodlee) posted a comment in response to one of my posts. In this post, I mentioned the account aggregation problems that I was having with TD Ameritrade. I sent a message to what I believe was his Email address. Although he offered to help debug the problems, I never received any response to my message. While I cannot verify that this person actually wrote the response, I can confirm that Yodlee employees do visit and read my blog.

Of all my accounts, the majority of them have some sort of issue with the Yodlee's account aggregation scheme. Another issue that I've seen is that with some 401(k) plans, the individual funds are listed as "unknown" securities because Yodlee doesn't know the symbols to these funds. And I also remember one instance, where the money fund symbol was replaced with an "X". Money funds are supposed to have retain a value of $1 per share. But, Yodlee was substituting the value for stock symbol "X" (United States Steel Corp.). Suddenly, I appeared to have millions of dollars in my 401(k) plan.

What is the value of a service that claims to give you a complete picture of your finances when much of your account information is missing or inaccurate? At best, this is a big hassle. Lastly, others have expressed security concerns that Yodlee needs to have your user IDs and passwords on record as part of their service. I hadn't really considered this a problem before, but it is certainly something for me to think about.

PF Stock

Glendale Federal's Squirrels Club

I remember opening my first bank account when I was about 7 years old. It was at a bank called Glendale Federal Savings, at the corner of 25th Avenue and Geary Boulevard in San Francisco. They offered a special account for children called the Squirrels Club account. The club would send a newsletter every few months and gave me a bank for saving coins in. The newsletters featured squirrels as cartoon characters with the head squirrel named Filbert. The materials included games, puzzles, and tips on such things as saving money. The educational part of the newsletter would explain things like interest compounding. I believe that the Squirrels Club was run by an association of different savings and loans.

I was a Squirrels Club member until I was 12 years old. After that, my account was changed to a regular savings account. Looking back, I think that it is a pity that more banks don't offer this type of club for young savers. The educational material that they offered really formed the foundation of how I think about money today as an adult. Actually, the Squirrels Club still exists in a different incarnation. This was the only information that I could find on the Internet.

As far as Glendale Federal is concerned, it went through different incarnations in its history. I think that they changed the name once to West Coast Federal Savings, and then back to Glendale Federal. In the late 1990s, they advertised that as a small bank, they were able to give superior customer service. This was largely a true statement. That was before things started to change.

Glendale Federal was acquired by California Federal Savings which was for the most part acceptable. Then CalFed was finally bought by Citibank. So, what was to me a small bank with good customer service was replaced with one of the biggest, most impersonal banks in the country.

Does anybody know of any youth savings accounts that are similar to Glendale Federal Savings's Squirrels Club? This post was originally published on September 16, 2006. It is being republished today because I am still in search of a youth saving account.

PF Stock

I'm Famous

Yesterday, I found that my blog has been mentioned on a website called Credit Card Lowdown. They posted a list of "The 100 Most Inspirational Personal Finance Turnaround Stories Online". I am number 89 on the list. Please have a look.

PF Stock

Template Fixed -- Kinda

A comment left for my last post suggested that I add space to the top margin of the blog template. This is to fix the issue of the title being cutoff and unreadable under Internet Explorer 7 (IE7). The blog now looks fine under IE7, and the title is not cutoff. My blog also looks fine in Firefox. But, when viewed in IE6, there is an additional blank space at the top. Nevertheless, I consider this to be a good workaround since there isn't any unreadable text, but I am still considering switching to a new template altogether.

PF Stock

It's Not That Easy Being Green

Is it written somewhere that a financial blog has to be green in color? I read a post by Smarty of Growing Money where he notes that Citibank uses green in its website. Referring to his own blog, he said that bright green is his color of choice and is used widely in his website theme. The color green could be used to represent the color of money (in the United States), which is appropriate for a personal finance blog. When looking at stock screen, green is often used to represent a gain or profit. However, the color green also represents one of the deadly sins; hence the phrase "green with envy."

I have mentioned that I am considering changing my blog's template from this current green one "Son of Moto". See Blogger Beta Strikes PFStock. The main reason for my change is because the title is cut off in Internet Explorer 7. A few other PF blogs that I've noticed with the same title issue under IE7 are Moomin Valley, Penny Foolish, and My Wealth Builder.

I haven't decided if I will keep the green color in my updated template. But, I am considering other color schemes. Does anybody have any input on this topic?

PF Stock

Microsoft Money Issues

I have recently been having problems downloading transactions from TD Ameritrade to Microsoft Money 2004. One of my computers has this older version of MS Money installed on it. I use the Deluxe version of MS Money. After attempting to update my brokerage account, I get an error message saying that "There is a problem with the data received from this online provider."

For years, I have been using Microsoft Money with TD Ameritrade and its predecessor, Waterhouse Securities. This new error only occurs in the "Waterhouse" accounts that were recently transfered to TD Ameritrade. This problem doesn't seem to happen with my original Ameritrade accounts, or with E*TRADE.

On the other hand, I have purchased a new copy of MS Money Deluxe almost every year since 2002, and I haven't seen the same downloading problem with the current 2007 version of MS Money. I will also note that I received a notification from Microsoft saying that they will soon discontinue supporting updates to Money 2004. Their policy is to discontinue updates three years after the introduction of a product. This is obviously a way for Microsoft to force its customers to upgrade, and pay for new software.

There are a few things that I think are better in Money 2004 than in the new Money 2007. For example, you can more easily switch from viewing one investment to another in the 2004 version. There is a drop-down box with the names of all of the securities that you entered into money. This feature doesn't exist in the 2007 version. Also, the latest version of Money only runs under Windows XP Service Pack 2 (SP2) or Windows Vista.

PFStock

Annoying Magazine Ads

You know the ads that I'm talking about. When you read a magazine, it will open up to the page with the advertisement. The ads make it hard for you to stay on the page that you're actually reading. And they're so big that they get in the way of everything else. They're the ones that are printed on heavy paper or cardboard, and sometimes have elements that stick out from the page. They are held in place with a rubbery glue. And when you finally remove the ad, it leaves a sticky residue that resembles a booger.

Whenever I encounter one of these ads, I tear it out and throw it away, almost as soon as I see it. I suppose this is not the advertisers original intent. But, I guess that it serves them right for being so obnoxious with their advertising. Recently, Philips ran an ad like this, and I found myself repeated tearing out the same ad from my Money, SmartMoney, and Business 2.0 Magazines.

PF Stock

More on the TD Ameritrade Switchover

I had a couple of other notes about the switchover of TD Waterhouse clients to the new TD Ameritrade website. I needed to change login information for Microsoft Money, Quicken, and my online account aggregation sites (which are powered by Yodlee).

MS Money and Quicken never did display the correct account balance information for TD Waterhouse, so this is nothing new. On the other hand, I also use MSN Money and a Smith Barney account (powered by Yodlee). In the case of MSN Money, its seems to double count my cash balance, listing cash as both an "unknown" security and then again in the cash section. Smith Barney drops the cash amount altogether, thus under reporting my account balances. Does anybody else experience these issues with account aggregation?

As far as MS Money and Quicken (I use both) are concerned, there were a bunch of extraneous transactions caused by the changeover. On the TD Ameritrade website, these are listed as "TRANSFER OF SECURITY OR OPTION IN" and are dated 05/14/2007. In MS Money, these are listed as a series of "Remove Shares" and "Add Shares" transactions. Because the number of shares added and removed are equal, these transactions cancel out. But I had to mark both transactions as void to retain my original purchase dates and cost basis information.

Another big change at TD Ameritrade is the addition of a gain/loss tracking tool provided by GainsKeeper. I have used GainsKeeper before, and I believe that it can be very helpful to keep track of the cost basis of investments. However, the first obstacle for me is that GainsKeeper doesn't have any cost basis information for investments I bought before 2003 or so. I had to go through a process known as "baselining" to tell the online tool what I originally paid for my stocks and mutual funds. For the most part, this process is straightforward if you have your cost basis handy. However, if a stock or fund has undergone a stock split, spinoff, or merger, it can get very confusing. For example, I have 0.001 shares of T ROWE PRICE EQUITY INDEX (symbol: PREIX) that I don't know the cost basis for! This was originally the TD Waterhouse 500 Index that got merged into T. Rowe Price. When I was finally done updating and correcting the cost basis, I noticed that these updates don't seem to be reflected on the "Balances & Positions" page. There must be two different sources for cost basis data, which can be confusing.

In addition to the Streamer Suite of online tools, the new TD Ameritrade website also includes a couple of tools that you can download (and install on your computer). These are StrategyDesk and Advanced Analyzer. I have experimented a little with StrategyDesk which is designed to help you find a successful trading strategy. I have not installed Advanced Analyzer yet.

Lastly, for my money market fund which is officially called the "TDAM Money Market Portfolio – Investor Class," the symbol that TD Ameritrade uses changed from CMFMZ to 9ZZZTD109. I'm not sure about the reason for this change.

PF Stock

NetBank's Demise

PFStock has helped to chronicle the ongoing demise of the online bank NetBank. In my first posting (Sayonara NetBank) dated September 20, 2006, I stated that I was beginning the process of "evacuating my money" from NetBank. In subsequent posts on PFStock, I cited deteriorating financial conditions at NetBank as my prime reasons for closing out my account. Although I conceded that NetBank was not likely to be forced into bankruptcy, I felt that it would be a hassle for depositors to get their funds back from the FDIC.

In my more recent post, on April 15th (NetBank Revisited), I advised any of my readers that still owned shares of NetBank (Nasdaq: NTBK) to get out, even though the NTBK shares then trading at $1.74 per share seemed cheap at the time. Quoting myself:

For NTBK shareholders, I think that there are better investments out there. Taking a loss may be a difficult thing, but so is watching your remaining investment dwindle to practically nothing.

Yesterday (May 21st), the other shoe dropped. NetBank announced that it is selling a substantial portion of what remaining assets it has to privately held EverBank. Here are a couple of statements from the NTBK press release:

The company has been under extreme financial pressure for more than a year due to a difficult mortgage origination market, a flat yield curve environment and other factors. These pressures have resulted in large operating losses that have significantly reduced the company's capital position and prompted heightened regulatory oversight.

And:

Regulators have been increasingly concerned about the bank's capital and earnings trends and advised management to find an alternative immediately that covered all of the bank's deposit obligations.

Doesn't this seem to imply that the aforementioned "regulators" forced NetBank to essentially liquidate its remaining assets in order to protect depositors' money? And the NTBK stock price has reacted very negatively to these developments. On Friday, May 18th, NTBK closed at 1.75, and it closed Monday at 0.59 (a stunning 66% one-day decline).

So, what is left of NetBank? According to NetBank CEO, Steven F. Herbert, "Our remaining businesses will include our mortgage servicing operation, along with our retail prime mortgage franchise, Market Street Mortgage." My interpretation is that there won't be anything left of the online banking operation, after EverBank takes its share. So substantially I can say that as you and I know it, the online bank, NetBank is no more!

NOTE: On May 12th PFStock received an anonymous comment that said, "Stay tuned for more on NetBank. There might even be some big news this coming week." (See Obsession Tagged.) I know for a fact that NetBank employees regularly read this blog, but I was not able to ascertain the identity of the commenter. Nevertheless, it is clear now that this event is what the anonymous reader was referring to.

I don't know if there is really much more to say about the NetBank situation, other than, "I told you so".

For further reading:
NetBank Revisited
The Decline and Fall of Internet-only Banks
Unprofitable and Unstable, NetBank Ousts its CEO
More on NetBank
Sayonara NetBank

PF Stock

TD Ameritrade Update and a Warning

PFStock has helped to chronicle the travails of Ameritrade as it swallows up the brokerage formerly known as Waterhouse Securities. This past week, the assimilation was completed. For former Waterhouse customers, we have been switched to Ameritrade's new web site. I had previously described this upgraded web site in the post: Ameritrade's Unimpressive Site Upgrade.

For long-time Waterhouse customers, like myself, this is a significant changeover. Notices have been posted on the TD Ameritrade on the website indicating that the brokerage firm is experienced a very high volume of calls to customer service. Presumably, this is due to a great many former Waterhouse customers who are, at best, confused by the new web site.

Before I continue with what is becoming a long post, I will now issue the warning that is mentioned in the title of this post. Here is my warning about he the new website:

If you formerly received paper statements from Waterhouse, the new TD Ameritrade will now charge you $2 per month for paper statements, unless you are an Apex client.

This notice was incorporated in the many reams of paper that TD Ameritrade sent out to its clients. In case you missed the change, I am letting you know now.

From my perspective, I am finally an Apex client at TD Ameritrade. However, by the arcane system that TD Ameritrade uses, my DW is not considered an Apex client. Although we (as a household) have more than double the required assets for Apex access, there is less than $100,000 in my wife's combined accounts, so they don't count her as Apex.

TD Ameritrade has been touting such features as Trade Triggers, which the new site has. They also now offer conditional orders. I use Standard and Poors (S&P) stock reports extensively for my personal research. And TD Ameritrade allows customers to access S&P reports for most companies. Typically, these S&P stock reports are 8 pages long. There are some other improvements to the site including the very good Streamer Suite of online investment tools. There is also the new Command Center 2.0, and StrategyDesk.

However on the downside, the new TD Ameritrade website does not give access to IPOs. And currently, customers cannot access the cost basis information for their investments. My general opinion is that customer service at TD Ameritrade is lacking unless you are able to make friends with a representative at a local branch office. In that case, you can call your representative with your issues, and have them do battle with their own customer service department.

As I described in my previous post, the new stock screener is still hard to use. I had trouble figuring out how to use the Ameritrade stock screener, so I've abandoned it and will instead use the free stock screener from Yahoo Finance. And I am still receiving spam at my Ameritrade Email address. In a previous post on the topic, I mentioned how I use a unique Email address for my Ameritrade account. This is accomplished through Yahoo's "AddressGuard" feature.

Lastly, I want to remind readers that better choices exist for the TD Ameritrade's money market (cash sweep) account. Typically, these fund options pay 4-5% APY while if you let let TD Ameritrade assign you to the default FDIC-insured sweep account, you will earn as little as 0.1% interest on your money.

For information on money market (cash sweep) funds, see this post: Ameritrade's "Hidden" Cash Sweep Account.

For information about enhanced cash funds which pay about 5.4% APY, see this post: Money Market Fund Options for TD Ameritrade. By the way, the symbol for this fund is RYPQX and it is offered through The Reserve.

PF Stock

Blogger Beta Strikes PFStock

I've been resisting the move to the new Blogger Beta for as long as I could. However last month, Google automatically changed my blog over to Blogger Beta. Now, some blog elements no longer display correctly, especially when using Microsoft Internet Explorer 7 (IE7). Most notably, I noticed that the title "DC's Personal Finance and Stock Investing Blog" has been cut off by the blogger bar.










I am not alone. There are several other PF blogs that have some sort of display issue after having changed to the new Blogger version. A few blogs that I've noticed with significant problems in IE7 are Retiring Early, Growing Money, Money Monk, and Moomin Valley. To these blog owners: if you aren't aware of the problems with your blog, I can Email you a screen capture of what it looks like under IE7.

All new PC computers come with Internet Explorer 7 installed, and about one quarter of my blog readers currently use IE7. This number is should rise in time, as people upgrade their computers and software. So, what should I do? I am considering either modifying the existing template for PFStock, or going to a new one all together. Since I have used the same template since I first started PFStock, it might well be time for an update. I'm looking for a template that looks more modern than this one called "Son of Moto". Does anybody have a suggestion?

One other thing that Blogger Beta changed is the URL for PFStock's RSS feed. The URL is now http://pfstock.blogspot.com/feeds/posts/default. I have had to update a couple of my external RSS readers to point to this new site feed. I hope that my readers were able to update their feeds. Either that, or they might think that I've been on an extended vacation.

PF Stock

Obsession Tagged

My blog has been tagged by Moneymonk in this game of obsession tag that is going around the blogosphere. I suppose that it is an invitation for me to list out my obsessions for the world to see...

My obsessions:
1) My wife and family are my first and most important obsession. As it should be, this has been more of a constant in my life, rather than just a temporary obsession. My dear wife, by the way, is often referred to as "my DW" on this blog. I recently remarked to a fellow blogger that my DW prohibits me from publicly disclosing detailed financial information or our net worth on the blog. For the sake of our marriage, this rule has stuck.

2) Gadgets, electronic or otherwise would constitute another main obsession. One example of a gadget I have is the Oregon Scientific wireless weather station that I bought a while ago. It has a radio-controlled (atomic) clock with alarm and electroluminescent backlight, indoor and outdoor (wireless) temperature and humidity sensors, a built-in barometer with altitude adjustment, and a weather trend indicator. Is that gadgety enough for you?

3) That investing and finance are among my obsessions shouldn't surprise my readers. I even started this blog to write about it. Recently, I have been more obsessed with IPOs. Other obsessive topics that I've written about include the brokerage Ameritrade and the online bank NetBank.

4) Tracking readers of my blog could be considered an obsession. Through the site meter I have been tracking my visitors' locations, what they are reading, and oftentimes what they were searching for. Sorry that I recently turned off the site meter statistics for public viewing. As I have grown as a blogger, I now consider these stats to be proprietary information.

5) The last and most recent obsession is trying to determining who started this whole game of obsession tag! As far as I can tell, I have tracked it back to a 20-year old in girl in Malaysia named Jessica whose blog, the Undeniable Beauty, was nominated for an award as the "Most Obnoxious Blogger".

So who is left to tag? I pick Smarty of Growing Money, Frugal of My 1st Million at 33, Kira of Penny Foolish, Blunt Money, and 2million.

PF Stock

Sponsored Post: Payday Loans

Payday lenders fill an important niche that is not served by traditional banks. In an ideal society, everybody would be on top of their finances, and there wouldn't be a need for payday lenders. But reality is not consistent with this utopia, as the majority of us have gotten a little bit behind on bills at some point.

National Payday offers cash advance loans that basically use your next paycheck as collateral. A payday loan is an option to consider if you find yourself in a short-term bind and in need of money. If, for example, your car breaks down or you encounter an unexpected expense, a payday loan could definitely assist you. Obtaining a payday loan is relatively easy. The online application takes only a few minutes to complete. According to National Payday, most no credit check loans are approved within 24 hours.

National Payday's FAQ does a lot to explain the process of applying for a loan. A checking account and a steady job are the main prerequisites to apply. To explain how the loan works, suppose you were to borrow $300 from the payday lender. The lender then transfers this money to your checking account, and expects to be repaid this amount plus a 25% fee ($75 on a $300 loan) when you receive your next paycheck. National Payday currently has a special offer for first time borrowers: you will get your first loan for free, if the full balance is paid by the due date.

I would advise borrowers to read National Payday's disclosure statement before applying for a loan. Understand that, in some cases, the effective annual percentage rate (APR) on the loan can be the equivalent of several hundred percent. Payday loans are designed to help you through a short-term credit need and are not meant for long-term borrowing. If used correctly a payday loan can help tide you over to the next payday.

Interactive Brokers and the OpenIPO

I've written about buying IPOs as one of my investment strategies. This past week, I was allocated shares in the Interactive Brokers (Nasdaq: IBKR) IPO. Interactive Brokers is an electronic brokerage that allows direct access for trading stocks, options, futures, bonds, and currency instruments (forex) in worldwide markets. Unlike a traditional IPO where the offer price is determined exclusively by the underwriters, this IPO used a Dutch auction to price its shares. The process is known as an OpenIPO. IBKR is underwritten by WR Hambrecht + Co. which developed the OpenIPO process.

The Dutch auction process is a little bit complex to explain. Instead, I am copying the following text from the Interactive Brokers' prospectus:

• Bidders may submit bids through the placement agents or participating dealers.
• Potential investors may bid any price for the shares, including a price above or below the projected price range on the cover of this prospectus.
• Once the auction closes, the placement agents will determine the highest price that will sell all of the shares offered. This is the clearing price and is the maximum price at which the shares will be sold. The clearing price, and therefore the actual offering price, could be higher or lower than the projected price range on the cover of this prospectus.
• We may choose to sell shares at the auction-set clearing price or we may choose to sell the shares at a lower offering price, taking into account additional factors.
• Bidders that submit valid bids at or above the offering price will receive, at a minimum, a prorated amount of shares for which they bid.

In an article posted on MarketWatch, I was able to determine that the "clearing price" described above was $33. The IPO managers then made the decision to price IBKR at $30.01 per share. And yes, there is a difference between $30.01 and $30 per share! I've heard from some people who put in bids at $30, but won't be allocated any shares because they are a penny short. Not surprisingly, the $33 clearing price is approximately the price where IBKR started trading.

For me, I put in an order for 800 shares (at $31 and above) through E*TRADE, but was allocated only 400 shares. My broker's policy is to do a random allocation when there aren't enough shares to go around. Thus, I received the "prorated amount" described above. Now I wonder if any individual got allocated more than 500 shares of IBKR in total.

Regarding Dutch auctions, if we remember back to the Google (Nasdaq: GOOG) IPO in August 2004, the "clearing price" was widely believed to be around $100/share. But the IPO managers for Google made the decision to issue the IPO at $85 -- below the clearing price. This was to guarantee a $15/share pop for Google at the open. The IPO itself priced "below range," so I considered it an uninteresting IPO, at the time. In retrospect, I was very wrong about it.

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PFStock's First Sponsor

I am happy to announce that PFStock has its first official sponsor. The sponsoring site, Thrifty Scot (website: www.thriftyscot.co.uk) contains general money saving and financial advice. The Thrifty Scot is based in the United Kingdom, so understandably, many of its articles focus on financial institutions in Great Britain.

The Thrifty Scot is a good source of information about loans, and consolidating debt to reduce monthly payments. There is also information about mortgages and credit cards. I have personally used the site, and found it to be useful. The Thrifty Scot focuses more on loans and finance, while PFStock also concerns itself with stock investing and trading.

Nevertheless, the site is constantly updated with informative news articles. The Thrifty Scot may be based in Scotland (UK), but it provides a lot of great information that is of international relevance. At the same time, PFStock's growing readership is becoming more international in nature as the number of visitors from overseas have been steadily increasing. PFStock welcomes The Thrifty Scot as a site sponsor.

Coutrywide Bank SavingsLink Account

On PFStock, I have posted extensively about my experiences with NetBank. I have found a replacement for the funds that I withdrew from NetBank when I closed my account with them. The winner is ... Countrywide Bank.

Recently, I opened a SavingsLink account at Countrywide Bank. The highlights are that they pay 5.25% APY interest if you have more that $10k, and 5.4% APY if you have over $50k. The interest rate drops to 4.0% APY if your balance is below $10k. The account itself works like an ING or iGo savings account. If you are not familiar with these, the SavingLink account is an online only account that must be linked to a regular savings or checking account that you have at another institution. This is pretty much the only practical way to transfer funds in or out.

Countrywide Bank actually has a branch within walking distance of my home. But unlike most regular banks, the branch doesn't have an ATM and a prominently displayed sign says that they don't have any cash in the branch. When I asked the asked the sole employee of this office how to make a deposit, he showed me a deposit envelope, which was actually a Federal Express envelope. Apparently if you give them a check, they will send by overnight mail to Texas where the deposit is processed. Countrywide did send me a few postage paid deposit envelopes, but I assume that the FedEx method would be faster.

The SavingsLink account doesn't come with either checks or an ATM card. So, most transactions have to go through your linked account. SavingsLink only allows one linked account at a time, and the process of linking an account is cumbersome. Countrywide Bank uses what is known as "trial deposits". When you request that they link an external account to your Countrywide Bank account, they will make two random deposits (of less than $1.00 each) to your external account and ask you to verify the amounts that were deposited. This is to assure that you are actually the owner of the external account, and this process usually takes 2-3 days to complete. One other little hassle is that deposits are subject to a 10 business day hold. This basically means that you won't be able to withdrawal any deposit for a period of two weeks.

In spite of a few hassles to setup a Countrywide SavingsLink account, their interest rates are much better than at NetBank. Indeed, the 5.4% APY rate is better than the vast majority of bank savings accounts available.

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