Update For My Readers

A quick update for my readers: My parents and fiancée are in town for a few more days, so postings will be thin.

Christmas: Santa was good to me this year— plenty of books and gadgets to keep me entertained. Upcoming reading: Where Have All the Leaders Gone? by Lee Iacocca; The Kite Runner by Khaled Hosseini; The Google Story by David Vise and Mark Malseed.

Also, I am planning to purchase a new laptop in the very near future. If you have recommendations please send them my way.

Have a great New Year!

Apple: Still Not Overvalued

I continue to watch Apple (AAPL) blow away earnings expectations and its stock shatter record highs. In fact, Apple’s stock price broke through $200 a share yesterday for the first time. Of course, the bears are busy bashing while the bulls think $200 is still cheap. I’m going to take you through a quick analysis to find out if Apple is overpriced.

Rick Munarriz at The Motley Fool wrote a nice article today highlighting Apple’s explosive growth, along with some reasons why $200 a share is still undervalued. I agree with his analysis—$200 a share is still undervalued—however, they must continue to beat Wall Street expectations.

The stock currently trades around 32 times forward earnings, not bad considering they have beaten Wall Street’s earnings estimates in 19 straight quarters. The PEG ratio sits around 1.78—which is high—but remember Wall Street is betting on blowout earnings. However, will they continue to shatter expectations?

This is a tougher question to answer, but I think they will—at least in the short-run. The company’s long term growth plans are better than ever. iPod sales continue to grow as more people go digital; the iPhone is in its infancy with room for explosive growth; and there is plenty of room to increase market share in their computer business.

I don’t own shares of Apple, but I’m thinking seriously about taking a small position. If they take a little dip I may pick some up. I’ll keep you posted.

Recommendation: begin accumulating shares of Apple

Make and Keep Your New Year's Resolutions

It’s Christmas Eve, and the New Year is rapidly approaching. If you’re like me, it’s time to make some New Year’s resolutions. However, most new goals, plans, resolutions, etc, fail for a number of reasons—so I ask the question: What is the best way to make and keep your New Year’s resolutions?

My friend and fellow Air Force Academy graduate Cameron Schaefer has written a great post about setting SMART goals, along with some other tips for keeping yourself properly aligned. Read the full post here.

I hope everyone is enjoying spending time with family and friends, but don’t forget why we celebrate Christmas…

Personal Finance Year-End Checklist

I had been preparing some year-end financial tips when Sue Stevens for Morningstar put together an exceptional Personal Finance Checklist that is worth checking out.

I agree with the majority of the document except for one thing:

1. She hints at buying/selling mutual funds. Don’t do it! Index, index, index! Remember, end of year is a great time to rebalance your portfolio; however, lots of factors play into your ideal mix—age, tolerance for risk, etc. I’m roughly 70% indexed—USAA S&P 500 Index Fund—with 15% in individual stocks and 15% cash in a money market account patiently awaiting my next move.

Divorced Parents Do A Good Job?

I read an article today highlighting a study conducted by Lisa Strohschein, a sociologist at the University of Alberta in Canada titled: “Divorced Parents Do A Good Job.” Conventional wisdom leads me to question her findings because I think divorce would change parental controls, and lead to children taking advantage of separated parents. I think some parents can do a good job raising their children married or not; however, the article fails to discuss the impact of divorce on the children—socially, etc..

It seems that education and financial status play a role as well:

“Strohschein found that parents who had no more than high-school degrees became less consistent and relied more on punishment to discipline misbehaving children over the course of the study compared with parents who had post-secondary degrees (college and/or graduate school). Households with an annual income ranging from $40,000 to $59,999 in 1994 showed a greater decrease in nurturing behaviors compared with wealthier homes (more than $80,000 annually).”

Your thoughts?

The Dollar Decline: Is It That Bad?

The Economist has a nice blurb on the possible global implications regarding the falling U.S dollar. The article highlights the potential problems if China or other fast growing economies decide to dump their current dollar reserves in exchange for a more stable currency. Undoubtedly, the subprime debacle is partially to blame, along with the current deficit; however, I feel the global ramifications are somewhat overstated. With China’s close ties to the U.S. economy, it is unlikely they’ll risk “dollar dumping” in exchange for a better return. However, the long term effects may linger for a while.

The article states:

“A dollar slump would hit financial markets hard, and could force the Fed to raise US interest rates just as the economy was slowing, pushing the US into a protracted recession. At the same time, the Euro would bear the brunt of the dollar's weakening: further Euro appreciation would substantially reduce growth in Europe (we estimate that a 10% rise of the Euro in nominal effective terms would cut growth in the Euro zone by a third of a percentage point). The downturn for the global economy already expected as a result of recent financial market turmoil would therefore be much deeper and more protracted.”

Jim Cramer: Not So Mad After All?

I’ll admit it’s hard to see through the “boo-yah’s” and background noises that accompany every episode of Jim Cramer’s Mad Money. However, it seems he's changing: Forget the hoopla because he’s advocating buy and hold forever. His new book Stay Mad for Life is all about investing--not trading.

From BusinessWeek writer Ben Steverman:

"The new book Jim Cramer's Stay Mad for Life is a primer for saving and investing. It advises readers to pay off credit cards, make the most of 401(k) plans and individual retirement accounts (IRAs), and get the right kinds of insurance. The subtitle of the book, written with Cliff Mason: Get Rich, Stay Rich (Make Your Kids Even Richer)."

"Most people actually won't get rich by buying individual stocks," Cramer says. "Unless you do your homework, namely spending an hour a week researching for each stock you own, you won't beat the market, and you'll probably lose money," he writes.

In my experience, it takes a lot more than one hour a week to successfully trade individual stocks. Obviously, the more you research a company the more you'll understand and feel confident making a move; however, sometimes you have to get a little lucky too.

Interesting Article on Barack Obama

Barack Obama impressed me today after reading an article on Yahoo where he mentions his “personal walk with Jesus Christ.” Rumors have been circulating the Internet questioning his religion, although he adamantly states he is a Christian.

He has an amazing life story no-doubt; however, I question his political experience. One thing I find interesting is his name: Barack Hussein Obama—quite different from the traditional names of former presidents. However, does his name really matter? Can you really judge someone on this basis alone? I would hope not…

From Nebraska Senator Bob Kerrey:

“It's probably not something that appeals to him, but I like the fact that his name is Barack Hussein Obama, and that his father was a Muslim and that his paternal grandmother is a Muslim. There's a billion people on the planet that are Muslims and I think that experience is a big deal." Kerrey added, "He's got a whale of a lot more intellectual talent than I've got as well.”

Creative Destruction: Amazon's Kindle

Alan Greenspan’s book The Age of Turbulence revisits the idea of creative destruction, and its importance in a free market economy. Harvard economist Joseph Schumpeter coined the phrase “creative destruction” in 1942, which is an idea that articulates the foundation of capitalism. Greenspan describes it like this: A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones.

Numerous examples in history point to this idea: the telegraph gave way to the telephone; the tin can was victim to the aluminum can—both examples of creative destruction at work.

The reason I bring up this idea is because I continue reading more information about the Amazon Kindle, and wonder if it will generate enough interest to eventually render the standard paperback/hardcover book obsolete. After reading a few reviews and watching Amazon’s online video of the product, it seems amazing, and it’s generating lots of attention.

However, the discussion of Amazon’s Kindle came up in a class I attended this past week with mixed reviews. Many students expressed the desire to hold something tangible in their hands—like a paperback book, and questioned the Kindle’s ability to provide that “effect.” I can partially relate to this fact because I prefer hardcopy versions of online materials. When studying for tests, I’ll print out the study guide rather than simply reading it online.

It’s hard to say how the Kindle will catch on, although it’s causing a craze much like Apple’s iPhone. I doubt Schumpeter’s idea of creative destruction will eliminate books as we know them, but it’s fun to speculate, and certainly makes Amazon a thought for investment. Has anyone used the Kindle yet?

Quick Apologies

I apologize to those that have taken the time to comment. Unfortunately, I have had some trouble with the Intense Debate comment platform and have decided to uninstall it for now. I have your previous comments saved; however, they won’t show up in my blog. Please continue to comment as you normally would; your feedback is greatly appreciated, and it helps everyone learn. Thanks!

-Brian

Response to America's Atheists: Believe it or Not

The Economist had an article yesterday titled: “America’s Atheists: Believe it or Not.” While I found the overall message partially true—that atheists “are hardly a cohesive group” and have failed to catch the attention of political candidates, I disagree that America will rally support for an atheist president anytime soon. Freedom itself stems from the universal truth that acknowledges unalienable rights endowed by our Creator. I highly doubt a candidate will challenge the foundation of our very existence, and if they do—good luck getting elected.

This article reminds me of an earlier post regarding people I know that describe themselves as “spiritual, not religious.” The Economist seems to point out that atheists don’t believe in any God. In my experience, some people choose not to follow an organized religion, but maintain their belief in a higher power. Are there different levels of atheism? Does “spiritual, not religious” mean you are atheist?

Don’t get me wrong here: I have numerous friends that are not religious, and it certainly makes for good conversation. However, I’m increasingly curious to learn more about the derivation of their personal beliefs. What makes someone not want to believe in a higher power? Isn't there some sort of desire that makes you want to believe?

A Quick Tip When Trading Individual Stocks

I sold 75 shares of Best Buy (BBY) today at $53.51 right before the Fed announcement. Lucky, in hindsight, although I wasn’t trying to time the market and I had no idea what the Fed planned to do.

With the DOW closing down 290+ points, it’s easy to see the market had priced in a half-point cut, but only got a quarter-point cut. If you’re a contrarian, now is not a bad time to start indexing…..

Selling Best Buy had been in the works for months—the Fed announcement had nothing to do with it. However, the subprime mortgage mess did influence my decision because when consumer spending drops from the fallout, companies like Best Buy suffer. During rough times cash is king, so today offered a nice exit along with $4,000 cash.

The lesson from today:

1. Don’t try and time the market—meaning don’t buy and sell because you expect the Fed to cut rates, or because you think you know what a company’s earnings will be. From personal experience, the small investor cannot time the market relative to big players (hedge funds and other institutional investors), so getting emotional and acting because you think you know makes you the star of a loser’s game—and you will lose more often than you’ll win—trust me…

If you plan to buy and sell stocks, do your homework, have a plan, and understand the reasons behind your decisions.

More to come on this topic……

Some Great Ways to Save

If you haven’t already read the Kiplinger’s article “26 Fabulous Freebies,” I highly recommend doing so. The article is loaded with information about how to save and spend wisely, while offering various links that directly affect your wallet.

I have never heard of Wesabe before reading the article, but I’ll check it out as it deals with budgeting and personal finance.

I’d be a little weary of the “Free Financial Advice” offered in number 13 because I doubt it’s actually free, or if it is, there’s probably a catch.

If you want to take a vacation, you can save a bunch of money with Moments-Notice. They offer various cruise packages for the last minute traveler.

Sunday's Ramblings: Rupert Murdoch Plus A Great Gift Idea

I’ve been wondering when Rupert Murdoch’s News Corps. officially planned to take over the Dow Jones & Co.—looks like it’s happening this week…

Other than subtle hints, he hasn’t given much direction regarding his plans for the company, although I hope he makes the online version of the Wall-Street Journal free.

Finally, a quick gift idea if you don’t know what to buy someone: magazine subscriptions. This is a great way to give a gift that lasts a year or longer, while educating someone at the same time.

My magazine wish list consists of: The Economist and The Atlantic. The Wall-Street Journal is great, but I’d only want the online version.

On a related note, I am seeking recommendations for magazines, books, or any other publications. What do you read that I may find interesting?

My Current Frontrunner: Mike Huckabee

I’m going to be honest about politics—is that an oxymoron? Meaning: where I currently stand in the presidential race—subject to change. Mike Huckabee has impressed me over the past month and is the current frontrunner for my vote.

The Baptist minister has won me over with his “realness,” and political prowess. He is well spoken and willing to stand up for his beliefs relative to the other candidates. Rudy Giuliani seems to take shots at other candidates more often then he’ll legitimately answer a question. Mitt Romney, my early favorite, lost me during the Republican CNN/YouTube debate when he danced around various questions sounding unpolished.

I won’t discount the likes of Barack Obama, and the other Democrats. I need to spend more time examining their various perspectives. The current issue of The Atlantic has a great article by Andrew Sullivan about Barack Obama. It’s long, but worth reading. He has a very interesting life story to say the least.

The main issues affecting my stance (in no particular order) are: education, immigration (illegal), health care, war policy, and the economy as a whole. The candidate willing to captivate my attention in these areas will get my vote. What are your top five?

If anyone has any good books, articles, etc, highlighting where various candidates stand on these issues, send them my way!

Tips For Cheaper Travel

I spend a good amount of my extra income on airline tickets—yes they aren’t cheap, (they are relative to the past) but I wouldn’t have it any other way because buying one typically means I’m either seeing my family, fiancée, or both.

In the continuous process of searching for a better way to save money in this area, a few websites I always check: Kayak, Orbitz, and Southwest.

Kayak searches nearly all travel websites for the best deals available. Orbitz offers a decent search with better operability (meaning I find it easier to follow). Southwest Airlines offers different levels of ticketing, which often leads to a great deal.

I used to think the best way to purchase airline tickets was last minute; however, in most cases it’s better to buy a long way out (30-60+ days if possible).

Interestingly enough, I used to think one-way tickets were a joke. However, I managed to lower a $450+ round trip ticket to $227 using two one-way tickets with different carriers (American Airlines and Southwest Airlines in this case). Once again: it pays to do your homework!

Anya Kamenetz, offers Ten Tips on Traveling Cheaply—well worth a glance.

Some of Life's Toughest Questions

Recent statistics show that 80% of the world believes in God. However, acknowledging God’s existence does not necessarily mean someone is religious. I had an interesting conversation with a few of my friends this weekend and we began discussing God, organized religion, and some of life’s other tough questions.

Over the past couple years I have met more and more people that describe themselves as “spiritual,” but not “religious.” I never really understood what that meant until discussing this aspect with one of my friends that falls into this category.

Developing your “spiritual” side simply means the conscious act of self improvement. Taking a walk, clearing your mind, reading a book, thinking deeply about something, meditation, or any other activity that promotes self reflection qualifies as self improvement. If someone says they are “religious,” this typically means they actively practice their faith—like a Christian that goes to church, reads The Bible, and constantly prays.

A viewer of the CNN/YouTube debates (scroll to question #20) and asked the Republican candidates if they “believed every single word of The Holy Bible.” I’ve never really examined what the question asks, or where I stand. I think The Bible was written by God through man—meaning that it is the word of God. However, I also acknowledge it’s translation from Hebrew to various languages, and believe some of the words have been altered—so there are some interpretive differences between the original Hebrew version of The Bible and many of the versions we read today, however, the concepts remain the same.

My next point: I feel God left The Bible for man to interpret. In addition, there are certain aspects of it that human beings cannot comprehend, which is exactly how God intended it. If science explains everything, why have faith?

The conversation jumped around numerous times, and I found it interesting that five good friends all had different feelings, meanings, and interpretations when it came to organized religion. We eventually agreed that for the most part, religion does more good than harm, and it remains an essential part of many people’s lives.

Finally, a really tough question: Do you believe God knows exactly what’s going to happen in all our lives, and if so, how does “free will” fit into this logic?

I believe God has a set plan for the earth and all of our lives. “Free will” simply means we have the ability to do what we choose, with no outside influence. However, even though we think we are somehow “tricking” God with our decisions—good or bad—he already knew the path we would take.

I’d like to hear what you think are the answers to these questions…..

Some Random Information For My Readers

I had the pleasure of seeing Keith Urban in concert last night and I can’t explain to you how amazing he is live. I honestly don’t think it’s possible to entertain anyone more than he does—pure energy—2+ hours. If you ever have the chance to see him, definitely go, it’s worth every penny.

On an unrelated note, I finally figured out how to change the CNAME with GoDaddy’s web domain services in order to allow readers to simply type brianreeseblogs.com in a web browser like Internet Explorer and have it automatically reference www.brianreeseblogs.com.

If you have questions about how to do it if you decide you want your own domain name, feel free to email me: breese27@yahoo.com