Author: stlplace

Categories
Master Series

Why Buffett bought BNSF and did stock split?

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buffett burger
(Source: lsnhs.leesummit.k12.mo.us)

I can think of a few reasons:

1) He sees value in BNSF;

2) He want to use some cash so that his successor won’t have too much cash to squander (this is legit considering his age, and a lot of times people make mistake when they are rich);

3) Last but most important, financial crisis taught Buffett a lesson: liquidity is very important. GE and GS got his endorsement and got cash by issuing stocks in one day. Buffett could not do that before buying BNSF and the stock split. Now he can. BRK is S&P component, much more widely held. “Get access to capital market” is one reason Goldman went public in 1990s.

I think Buffett only said 1. But I think 2 and 3 are also the factor here. Remember Buffett was against stock split up to this BNSF deal. Although he said publicly splitting Berkshire stock is for small BNSF shareholders, a valid point. Nonetheless I would be astonished that was the only reason to overthrow 40 years belief/rule in one deal.

Categories
401k and Personal Finance

Buying mutual fund for Scottrade IRA account

Reading Time: 3 minutes

So I opened an IRA account in mid March, deposit some money there, but I have not bought any mutual fund until today (theoretically tomorrow).

Why? Two reasons:
1) The market has been hot lately, and I was waiting for a dip, that dip did not come until recently the Goldman scandal surfaced, and Greece (Europe) debt crisis deepened.

2) Picking a good mutual fund is hard. I did not realized it because in the past, I only bought mutual funds in 401k plan, which usually has 10 mutual funds. Now, it’s a big pond (or ocean).

I remember David Swansen (the Yale endowment investment chief) once said, individual investor usually “buy high, sell low” on mutual funds, what he meant was individual investors usually did not get the good results from “good performance” funds. I also remember Warren Buffett suggested individual investors stick to index fund. Because most mutual funds lagged behind index benchmarks. With that in mind, I am still pulling my head and try to find a fund that will outperform. The first source I can think of is the WealthTrack TV program (which I listen to via Podcast) in which the hostess interview many mutual fund or hedge fund managers. I googled “WealthTrack mutual fund” and foundthis program guide (PDF). I found “ron muhlenkamp” on the guest list, and looking at his fund web site, it looks ok. So I placed an after-hour order at my Scottrade IRA account.

WealthTrack Consuelo Mack

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Categories
gadgets Life

The missing iPhone

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By now all the people who are into gadgets should have heard about this iPhone Gizmodo gate: this is apple’s next iPhone .

I don’t know about the fate of this Apple engineer, as Gizmodo did not say a word about him/her (Why Apple Couldn’t Get the Lost iPhone Back). I hope he/she won’t get fired for this (assume this whole thing is not an Apple stunt). Because a while ago, if we recall, a young Chinese engineer died from iPhone leak(HuffingtonPost: Sun Danyong, Chinese Engineer, Kills Himself After Losing ‘4G’ iPhone Prototype).

After all, life is much more important than stupid iPhone, if we can put things in perspective.

Categories
401k and Personal Finance

Enroll in Ohio College Advantage 529 Plan and receive $50 bonus

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(Update 08-01-2010) It seems the referral still works. Feel free to use my referral code 2568778, and email me after you enroll. I will send you the $25 Amazon gift card as soon as I receive the referral bonus from Ohio 529 plan.

(Update 06-29-2010) My mistake, there is not limit in terms of the number of referral. But the deadline (to get referral bonus) is still valid, June 30, 2010.

(Update 06-22-2010) 10 Referral used. 2 more remaining. Note the offer expires on June 30, 2010. Send me a note after you enroll, if you like the Amazon gift card 😀

(Update 04-27-2010) First referral bonus received and the $25 Amazon gift card sent. Please note this offer is limit to first 12 accounts opened using my referral code.

CollegeAdvantageReferralBonus2010-04-27 AmazonThankYou2010-04-27

Why should I worry about my kid’s college now? She/he is just 3 years old, it’s 15 years away.
I know I know I know. I am a procrastinator too. A little more than a month ago, my daughter was born. I joked I would worry about her college tuition because I will be near retirement age when she goes to college.

But seriously, from my own 10 years 401K savings experience, “start early, and invest in high quality investments regularly” is the right thing to do. The other day, I found Nightly Business Report (NBR) folks at PBS did a nice job on this topic. They have a series of planning 101: paying for college covers the rising college costs, and how the parents can prepare well before kids going to college, very impressive reports. The only thing left for us, the parents (new or old), is action.

What is 529 Plan?
Obviously you can google and find the answer. Here is some explanation from SavingForCollege.com: A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996. According to the 529 plan interview at NBR (PBS), the tuition does not have to be college, it can be graduate school or re-training. I think the tax treatment of expenses other than higher education might be different (read more from Wiki and other material if you are interested).

What are the factors when we consider the plans (in-state vs. out of state; can we transfer the money later)?

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Categories
401k and Personal Finance

More tips for 2009 income tax filing

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I received both the federal and state tax refund last week.

Besides using the Turbo Tax from Bank of America site (get 35% off). For State (show me state) filing, I used paper filing, because state filing is usually simply enough, and also the Turbo Tax already gave me the estimate refund amount (so that I can compare my own calculation with it).

One thing to keep in mind, is to use the “fill/calculate” versions of the tax forms, when filling the forms using Adobe Acrobat Reader. That way, when you print, you will have a bar code, which will expedite things according to MO Department of Revenue. One can certainly use Turbo Tax state version too, but I felt it’s just unnecessary. I did used the state version once or twice, and at one time I screwed up (put negative number in income), and the online software did not warn me. Later I had to make amended return. So my lesson there is never trust the computer blindly.

Categories
401k and Personal Finance Stocks

Joined Bank of America Keep the Change Program

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(Update 05-07-2010) I just found out some more details on how it works. Per BoA’s FAQ of the Keep the Change Program, “The matching funds will be credited annually to your savings account. This will take place within 8 weeks after the month of your enrollment anniversary for the Keep the Change® savings service.”

(Update 04-04-2010) I found US Bank “Start” saving program also to be interesting. I may join them after I “kept” enough changes from BoA in the initial 90 days.

(Original) I heard about it for a long time, today I took the plumage: I went to the local BoA branch and opened a Savings account, and because I already have checking account and check card with them, I enrolled into the Keep the Change program. Quote BoA:

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We’ll match your Keep the Change savings for the first 3 months, to the penny. After that, we’ll continue matching 5% a year. The maximum total match is $250 per year.
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So it looks like the offer is less generous than the old one, where they match penny by penny until hit annual limit ($300?). In other words, there is no 3 month sweeten deal, then 5% match thing. It’s more like I missed the hot deal 🙁

But look at another way, I need the Savings account regardless, the Keep the Change is just ice on cake.

Categories
Software development

Some corrections to Hibernate tutorial

Reading Time: 2 minutes

Hibernate logo
I was referring to the First application at Hibernate (Jboss) offical documentation. I found some problems when doing the exercise: just want to share some of my findings so others may benefit.

1) dependency version missing: there are already some some discussions on the Hibernate discussion forum, such as this one and that one. I followed the first one: added the version numbers as suggested and the problem went away.

2) jdbc driver can not be found, the fix is to

mvn install:install-file -DgroupId=hsqldb -DartifactId=hsqldb -Dversion=1.8.1.2 -Dpackaging=jar -Dfile=/path/to/your/hsqldb.jar

in my case (mac) this is /Users/major_xu/Downloads/hsqldb/lib/hsqldb.jar

I saw discussion on this one, too, the suggestion is to “add classpath for hsqldb.jar”. But I don’t know how to do it in maven command line.

3) misc: there are a lot other corrections:

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Categories
401k and Personal Finance

Tax tips 2010: double check ESPP income

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ESPP stands for Employee Stock Purchase Plan. My former employer is a public company, and it offers a good ESPP plan: 15% discount of stock market price at the beginning or the end of plan period (pick the lower of the two prices, then apply 15% discount), the plan period is usually 6 months. I took advantage of that. I was nervous about the market crash in Jan 2010, so I locked in my gains in late 2009. But I found a catch until today when I finalize the federal income tax using Turbo Tax (got 35% off referral from Bank of America here).

Basically I found my W2 form already included the ESPP gain (as my ordinary income). And I already put those in the investment section before today. That’s double counting my income! I am glad I caught this when I double checked my W2 form 😀

Opened traditional IRA
To correct the mistake I made about selling ESPP stocks too earlier, also combined with my new employment situation, I opened an IRA account to reduce the taxable income for year 2009.

Categories
gadgets Stocks

Is PALM here to stay: II

Reading Time: 3 minutes

I sold my few shares of Palm Friday morning shortly after opening. Palm (Nasdaq:PALM) share dropped 29% on Friday after horrific earning outlook (marketWatch). Palm is increasingly likely to say “bye bye” to its loyal customers in a year or two. Quote sobelmedia:

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I’m never going to forget my very first Palm Pilot in 1998…how cool…it was everything I needed and wanted in a handheld device…addresses, notes, contacts everything…and it had the ability to sync with my computer to keep it up to date. Over the years the company changed owners, management, operating systems and the competition heated up all at the same time. Now it appears as though Palm is at the end of the rope and Wall Street is ready to say goodbye.
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I think PALM has to blame itself for the recent problem (since webOS based Palm Pre launch at Sprint network last July). I saw the following problems:

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Categories
Investing

Stock lessons 2009/10: sold stocks for tax reasons

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Sold stock ((NYSE:BEE) at a loss for tax deduction (in year end of 2009), but forgot to buy it back in Jan 2010. Now the stock doubled the price from where I sold it. I am not trying to predict the stock price in near term, or think “what if” from hindsight here. I think one key reason I did not hold the stock is still due to my ignorance: I don’t know how to value it (as REIT). I saw someone put an quite optimistic est. at around $2.50 in last Dec.

Back the topic, another reason I think I did not hold the stock is because it dropped precipitously in last Dec., and I started to sell some after initially bought quite a few shares. As I sold when the stock started bouncing, I sold too early. After a while I only have a few thousand shares, I sold them at around $2: thinking to take advantage of the loss for tax deduction, and hope to get back when the price drop again the the Jan.

But obviously I did not jump back to this bandwagon in Jan.

Think long term and trade less

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