Category: Investing

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401k and Personal Finance Investing

Zoombies or zoombie companies

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I came across this term yesterday.

You may search the Twitter (aka X) for more tweets on the topic.

And this made me to think two small stock positions I have and I may have talked about them in my blog posts too: LEG (Legget and Platt) and SCS (Steelcase). I just did a bit more search and reading.

Zombies: Financial Term for Distressed Companies

Credit ratings

SCS – Ba2 Moody’s: this is speculative

LEG – Fitch BBB– : this is the lowest among investor grade

Interestingly enough, my gut feeling matches the two companies ratings (at least in relative terms)

Explanation and comparison of ratings

Corporate credit ratings: a quick guide 

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Investing

Some reflections in my last 2 years of investing

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I didn’t do well in my last 2 years of investing or trading. I think the overall performance in my main IRA (trading) account, for last 2 years (2022 and 2023) is slightly down.

This year, I lagged behind the S&P 500 index in terms of performance (mine 11% vs S&P 500’s 25%). And I think one reason is probably I had too many stocks. 

https://twitter.com/rationalwalk/status/1739984491148619933

Traded too frequently?

A related issue is the overall short holding period, and traded too frequently. The last point was a bit subjective, I think one example is I bought $ANSS and hold it for a few days, before it jumped due to the buy out (on the market) rumor. 

https://twitter.com/teto8k/status/1740082887507218533

This is subjective because in my Robinhood account, in which I do trade most frequently, I got 49% YTD return which matchs $APPL performance YTD, and is about twice as good as S&P 500 index fund. I wish I have put in more money into my Robinhood account – which I will do it in the new year.

Going forward 

I am going to put >= $10k on a stock: put eggs in a few baskets and watch them carefully. For existing stocks, I’ll ask: if the position is over 10k, should I keep it? If the position is less than 10k, should I add more? If yes at what price. Keep this new mind when initiating a new position too. #majorsThoughtsOnStock #newYear #newMindset

I put it in a tweet too: 

https://twitter.com/stlplace/status/1739697731071828323

Also, I am going to be more patient. Easily said than done on this, but I am going to try. I think the mindset of long term investing goes like this: we don’t know or it’s very hard for us to know in advance whether an investment (a stock) will work out or not. But given time, and if we do our homework, we got a better batting average. And if we can live longer enough, this snowball effect (compounded interest) will help the asset grow. 

https://twitter.com/kejca/status/1739650407968723414

Also a direct reason, is I that I missed some former high flyers this year. 

https://twitter.com/stlplace/status/1728617009074549156

My 2024 picks

I am looking at $JAMF and $PYPL now. I have a little bit of both at this time. And I may add them as time goes.

https://twitter.com/chasingthevig/status/1630714064023465985

My comment: the +30% growth in 4Q20 till 3Q21 seems mostly pandemic driven – think school adding devices for virtual learning. Btw, my daughters’ school district use Mosyle – it seems Jamf is a more expensive and comprehensive product (Jamf vs Mosyle). I used Jamf while at Mercy for my MacBook (remember I had a special command to get around the fact that I was not admin). I am not sure what MDM software I used while at MasterCard and Ascension.

https://twitter.com/convequity/status/1724800420927959247
https://twitter.com/convequity/status/1647514068511784960

My comment: Mac is usually a more secure OS compared to Windows. I don’t remember we had antivirus (or end point protection) software back in year 2014 using Jamf. And at Asc I recall they installed Blackberry Cylance. A comparison between Cylance and Jamf.

More on MDM software

Years ago (in year 2012) I heard about Mobile Iron, which was bought by Air Watch, which was in turn bought by VMWare (and VMWare was recently bought by Broadcom).

Also: jamf vs intune

Microsoft Intune, now Company Portal app, it seems right now I used it more like #BYOD (bring your own device) instead of #MDM (company owned device, MDM stands for mobile device management).

company portal vs intune (reddit; Microsoft learn)

Paypal is in the payments industry. This article explains some of the competitors. I recall PayPal did paid a hefty sum for the Honey coupon site acquisition. Not sure if this works out or not. Other competitors in this arena include ebates (Rakuten.com) and Dosh, plus credit card offers such as Amex and Chase. This is a very competitive market.

Some more thoughts – no silver bullet

I don’t think there is a silver bullet or a multi-bagger, at least not for me. Most likely I will continue to plug along, trading the stocks that I have some success in my past trading. Again I will learn from other people including Warren Buffett, but I won’t mimic other people.

Update 01-07-2024: I got another idea, that’s Zoom $ZM. I heard from my younger daughter’s violin teacher that he taught lesson to kid (family) travelled to Indonesia during the holiday break. We did one lesson with him during last year too when my 9 year old was sick. From 1st look, Zoom stock is very cheap now. I understand the growth may not be there because we passed the pandemic growth.

https://twitter.com/ZaStocks/status/1741965058911899849
https://twitter.com/carbonfinancex/status/1743660531515363762
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401k and Personal Finance advice and tips Investing

Year end tax moves and my thoughts on personal finance and investing

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Some friends asked me about the year end tax moves, such as the tax loss selling etc. Here is a good article on the topic – Tax-Loss Harvesting: What It Is, How It Works. My take on tax: this is at least secondary maybe even more down the priority list. The No. 1 priority in the personal finance/investing is don’t lose your money. Ideally we don’t want any type of loss. Tax loss is applicable only after we lose the money during investing. If we don’t have loss in the 1st place, would it be better?

But I do appreciate the mindset of 亡羊补牢。Or salvage whatever we can (not exact translation).

Another question is what to contribute if we need to contribute to the regular IRA account. The latter is an easier question. The deadline to fund IRA is actually usually the tax day (the middle of April), so we still have time. As to investments, I only recommend the S&P 500 index funds and I explained it more here.

The 529 plans I setup for my girls

I have a fairly small 529 plan for my girls, which I started shortly after they were born (see my blog post one, blog post two, and blog post three).

With the enhancement of the 529 plans by the law passed by congress in the recent years, it becomes a tool for retirement as well. Read this for more details.

The thing I taught my 13 year old the other day, is the 12/6 compounded interest rule (snowball effect), an investment that grows 12% annually, in 6 years it will double. From 2010 to 2023, since I invested in S&P 500 index fund, and the S&P 500 index did well since 2010, the money I put in quadrupled. It was a small amount of money. But the compounded interest concept is important and we saw it in action.

Another thing many working people can consider is the HSA account. I heard it has even more benefits for retirement compared to the 529. So something to read about, think about and do something about 🙂

My free tips on PF and investing

Like many good things in life, don’t rush it. Take the time, savor the moment, think it through, before jump into the market and make big moves: Rome is NOT built in a day. So was the business empire such as Berkshire Hathaway, or the GPU, AI chip designer nVidia. They are built in decades.

Hindsight is 20/20

Look at the about 1,137% or 11 times gain of $CVNA. Below is the YTD chart of Carvana vs CarMax ($KMX), Tesla ($TSLA) and S&P 500 index. But the million dollar question is: who bought and hold the $CVNA this year (until today)?

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401k and Personal Finance Business Fun Fun Video Investing Life Life Tips Master Series

The 4 right hand men of Warren Buffett 巴菲特的四大金刚

Reading Time: 3 minutes

油管：my Youtube 2022 video for BRK HQ video below (narration mostly in Chinese)

Charlie Munger

We know Charlie Munger (Wiki) passed away recently, and he was the vice chairman of Berkshire Hathaway: he had some influence on Warren Buffet’s investments over the years, including See’s Candy, Coca Cola and so on. Here is the free online book Poor Charlie’s Almanack (you can purchase the paper versions through the links here). Also, the last interview before he passed away with CNBC’s Becky Quick (1 hour 42 mins, YouTube link here). I still think Warren makes most investments decisions independently. though.

If you like to have a quick look, I listed some shorter videos of Charlie Munger’s classical moments here.

四大金刚 (google; baidu baike, Wiki) is a common idiom in Chinese, and I think it may be suitable to describe the current top 4 men who works for Warren Buffett. And I assume they take over most of what Warren does today, should Warren decides to retire.

Top Two (Duo)

Greg Abel (Wiki): current Vice Chairman of BRK, responsible for all non-insurance operations, which also means he is in charge of the BRK Energy (formerly Mid-America Energy), BNSF Railway, many manufacturing and retail operations ranges from BH Home Service (real estate agents), Brooks Running, Clayton Home, Diary Queen, to ISCAR, Nebraska Furniture Market (NFM), Net Jets, See’s Candies, to Oriental Trading, Squish Marrow and so on. Note there are many business people may have not heard of. As of now, Greg will be the CEO of Berkshire Hathaway when Warren Buffett retires, in addition to his curent Vice Chair title.

Ajit Jain: current Vice Chairman of BRK, responsible for all insurance operations, companies such as Geico (car insurance) to reinsurance business.

Warren asked Greg and Ajit to be on the stage in last few years’ annual shareholder meeting, and they answered relevant questions in their portfolio. This is a good move. I think also, once Charlie slipped his tongue during an Q&A, and he said Greg will keep the culture (or something similar). So the world knows Greg is the CEO heir apparent.

Investment managers (also a duo)

Ted and Todd are two former hedge fund managers that Warren Buffet hired about 15 years ago (exact date please refer to their Wikipedia links below, or you can google it). Quite a few people including $BRK.A and $BRK.B shareholders would question Warren Buffett’s age and they are worried what if Warren suddenly became incapacitated or die. Who is the heir apparent. This is a tricky question or problem, because very few hedge fund managers would give up their career, at the same time would basically be prepared when this inevitable happens. It seems in Ted W. and Todd C. Warren found the perfect duo for this job. This is somewhat like the duo of Warren himself and Charlie.

Berkshire began buying Apple stock in 2016 under the influence of Buffett’s investing deputies, Todd Combs and Ted Weschler.

Ted Weschler: Ted got a bit unwanted attention from his personal IRA investment. But his performance speaks louder than his words. Quote Wikipedia: in 2012, Weschler joined Buffett at Berkshire Hathaway, a year after Todd Combs joined as Berkshire’s first investment manager. As of 2019, he managed $13 billion of the equity portfolio and $8 billion in pension funds.

Todd Combs: in addition to his investment duty (along with Ted), note Todd is also the CEO of Geico (and technically for that role he reports to Ajit). Here is a picture of Todd during “invest in yourself 5k” during the annual Berkshire Hathaway shareholder meeting. Here is a picture of Ted, Todd and Tracy Britt Cool during that run. Note Tracy used to work for Warren as well, and she started to work on her own investment partnership in recent years. Maybe someday she will come back to BRK: if the right opportunity arises.

Board

Howard Buffett, Warren’s older son, plans to take over the Chairman role when Warren retires. Susan Buffett, Warren’s daughter, and a few others will be on the board. They may need to add one or 2 board seats because Charile used to be a board member.

One thing it’s interesting is Warren likes #pairProgramming, or #pairWorking, because he has two pairs of magnificent managers for CEO and investment managers job.

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401k and Personal Finance Investing

My recommendations for investments in 401k

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That is the S&P 500 index funds. This is similar to Warren Buffett’s recommendation. He actually has more recommendations beyond stocks or bonds.

Anyway, I think for most people who are still in the wealth accumulation stage (I think most people before retirement is in this category), low cost stock index funds, plus some low cost specialized stock funds (value, growth, small, mid, large caps) that has a track record, are the ways to invest. I have both in my 401k accounts. And I usually look at them once a year, and do some rebalance (mostly very small adjustments) as I see fit. I do this for my HSA and 529 plan too. The latter 2 are much smaller than my 401ks. But I feel HSA is overlooked by many people and I am also aware of some new changes to the 529 plan (and they are good changes).

有朋友问我401k的投资选择：我一般推荐S&P 500 index funds. 过去十年/二十年 S&P 500 index return 有可能比历史上的9.81% 还稍高一些，应该是可以beat inflation 的。工资不一定，我2000年第一份码工工作工资是$56,000, 现在圣村entry level 的software engineer 大概给个六万或稍多一些。那时候一个新的Camry LE 大概不到两万，现在要三万。当然硅谷大厂的码工收入要高几倍：entry level 也是如此。做OpenAI 等相关热门行业的更高。

但是反过来说如果2012 年买了一万块钱的$NVDA 或者$TSLA, 我觉得我拿不到现在。买准股票和长时间一直拿在手上都不容易。

还有就是不一定非要买magnificent 7 stocks, 其它一些市值小一点股票也有长时间不错的：比如$CMG, $MA, $MCD, $MNST, $SBUX 应该还有不少beat S&P 的。当然loser 更多. On this note, we need to be careful on IPOs and SPACs. Think $BHIL.

My own stupid mistakes on my 401k and IRAs, and turnaround

At one time, probably year 2010 till 2013, I converted my 3 small 401k accounts to an IRA account at Vanguard, then I traded stupid stocks (yes they are stupid stocks looking back), such as Arch Coal (I worked for the company in 2011 and 2012), Alpha Natural Resources (also a coal company) and also “the one time smartphone wonder” Palm. Long word short, I probably lost half of the money when I did all this. Luckily I found out my stupidity and decided to change my strategy. I was able to turn around from year 2017, the pivotal point was actually in year 2015, when I started trading on the Robinhood platform. I know my favorite person or investment great Charlie Munger dislikes the Robinhood (for encouraging frequent trading, basically make it more like a lottery or gamble). But for me personally no trading fees plus some trading that has a purpose or a theme works better for me (I hold a stock from a few days to a few months on Robinhood).

So in other words, if I’ve put the money from my three small 401k accounts into $NVDA or $TSLA stocks and hold them all this time, I would be an IRA multi-millionaires. But I am just happy with my turnaround and my S&P 500 index like performance. Expectations, expectations and expectations, are the key to happiness 🙂

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401k and Personal Finance Business Investing

All the math we need for trading stocks

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A fun math problem suitable for a confident 4th grader

I went to my 9 year old (4th grader)’s class recently and tried to talk about the “The Stock Market Game” (btw, it looks like my main winner is Nike for now 🙂 Below is something I shared in my daughter’s class.

I also tried to answer some questions on individual stocks too, e.g., Adobe, Chipotle, Peabody Energies (do they still have the same name after emerging from bankruptcy, btw).

All the math you need in the stock market you get in the fourth grade.

— Peter Lynch (famous mutual fund manager in the US)

Warren Buffett said something similar (only need 4th-grade math for stocks) in the 2022 Berkshire Hathaway Shareholder meeting, at about 1 hour 40 minutes mark, morning session (available on Apple Podcast and YouTube)

Warren Buffett bought his 1st stock at the age of 11: 1 minute 28 seconds in the video till 2 min 27 sec . I think he is probably in grade 6 or 7 (he may have skipped grade when he was young).

Mutual Fund (this came up as a question and I prepared a bit)

Illustration of mutual fund

Articles from nerdwallet on Mutual fund


It’s hard to look up Mutual Funds in the Stock Market Game website (app), btw.

VFIAX – VFIAX-Vanguard 500 Index Fund Admiral Shares

I created a notes before I go, and here is the google docs link (you can view it).

PS: 4th grade math on Kahn Academy

(Update 11-10-2023) A coworker recommended the Netflix series below, on personal finance etc. I watched a bit, and I think this is good.

Below is a screenshot, if you are in the free world, you will likely see 2 similar images (to be precise, one is Tweet, the below one is an image)

I think this Netflix documentary series maybe suitable for the kids 4th graders and up 🙂
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Investing

Jack Henry & Associates, Inc. (JKHY)

Reading Time: 2 minutes

(Update 11-22-2023) I think one of the main competitor for Jack Henry is Fidelity Information Services ($FIS), and it seems something happened in mid 2021, and FIS start underperforming against Jack Henry from that time. See the 20 year stock chart above. It looks like the WorldPay acquisition was the main culprit here (Reuters: FIS takes $17.6 billion hit in merchant unit to be spun off).

(Original 10-2023) I noticed from Twitter (X) that Jack Henry is doing its user (customer) conference tomorrow. I also noticed a few companies are doing exhibits there, think they are an eco system and the vendors (big or small) are participating. This reminds me a while ago (in year 2005?) when eBay was hot, and I looked around for the vendors for eBay, small software that integrates with eBay etc. This is similar. I tried to add them to my Twitter list – but I feel this is not as good as the #JHConnect hash tag.

Also, I saw quite a few jobs at Jack Henry at LinkedIn. I saw dev jobs range from COBOL (mainframe) to Node.js

Also, I just noticed I talked about Jack Henry back in 2007. But I picked the wrong horse. That was the time I just got married and my wife and I were going to the states (I blame my wife for this). Joking. Seriously I only blame myself for my stupid mistake. The other horse Longtop Financial turns out to be a fraud, btw. It’s very important that we invested in a sound / fiscally conservative business, note the fraud or impropriety is quite common in the US based companies too, from Enron to WorldCom, as well as Chesapeake Energy. I didn’t touch the first two, but I paid attention to the Chesapeake and I may traded in its late years. I also recall Chesapeake usually has 1 million or so cash (or even lower) at the end of each quarter. Its’ not a lot money for such a large and glamorous company.

Also, I learned something new on the stock market game, as well as trying to teach my kids on investing.

Stay away from Bitcoin and cryptos, friends.

Peace.

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401k and Personal Finance Investing

Microsoft Actvision Blizzard acquisition

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This is probably my only successful merge arbitrage speculation so far. By “success” I meant I am out after the recent US FTC failed attempt to stop the merge. Note the UK authority could still pose challenges or stop this thing completely. Although the market does expect the deal to close eventually.

I didn’t speculate on those frequently. I do recall I did a few such as the CNOOC / Chevon bidding war on a company, as well as the InBev buying Budweiser. For this one Activision I started buying after the 2022 Berkshire Hathaway annual shareholder meeting. And I did trade the stock here and there during the process. The main thing I am happy about is not how much money I made (about $1,000 I think, I didn’t bet heavily on it, btw), but I was able to hold my position towards the end (I mean almost the end, close to the $95 closing price).

I hope to get into similar games in the future.

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Investing

The surprising losers in the First Republic Bank rout

Reading Time: 2 minutes

Do you want to guess the mutual fund (company) that lost the most in the First Republic Bank rout? I mean the mutual fund that held the most $FRC before it’s being closed by FDIC and since taken over by the JP Morgan Chase. I was a bit surprised to find that the Vanguard Group, held about 11.45% of $FRC shares (source: Yahoo Finance). And yes $FRC was in the S&P 500 index too (it was replaced by another company on May the 4th). It seems auto pilot, aka indexing is not always safe here.

At the same time, yesterday evening I learned a local hedge fund company Wedgewood Partners, invested in $FRC stock too (not a lot, also note their positions varies over the time). One ironic part is in their recent letter to clients, they put a bank run old movie photo (it’s a wonderful life) there, it’s no longer fun when you think about the stock were worth zero now. The Chief Investment Office CIO of Wedgewood, seems like a Warren Buffett admirer too (just like yours truly). Note Warren basically just said $FRC did some garbage mortgage deals a week ago. So blindly following Warren Buffett or blindly take reverse Berkshire position won’t work. We need to do our own research.

Also, last night (05-15-2023) I read this: ‘Big Short’ investor Burry bet on regional banks in first quarter https://finance.yahoo.com/news/big-short-investor-burry-bet-180322220.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr… Burry’s Scion Asset Management’s positions included 150,000 shares in $FRC, 250,000 shares in $PacW, 850,000 shares in $NYCB, and 125,000 shares of $WAL , filings showed.

(Update 05-16-2023) David Einhorn’s Greenlight Capital snapped up 2 regional banking stocks during last quarter’s turmoil. It seems $NYCB and $FCNCA are the beneficiaries of the crisis so far. At one time I traded $NYCB too but I did not make money (in fact I lost a bit I think).

Last but not least, I found a website that have information on hedge funds and other institutional investors 13F/13D and holdings: e.g., Pzena and Wedgewood parnters.

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Investing Stocks Technology

Twitter

Reading Time: 2 minutes

I joined Twitter back in March 2008, and it’s been 14 years since I joined it. I don’t remember the exact reason I joined it, but I think one reason is probably in the early days of iOS (iPhone) app development, many developers are on Twitter as well. In recent years, the platform has expanded beyond techies, and into politics, entertainment, breaking news etc. The breaking news feature of Twitter has been there for a while, in my opinion. We can find important news on election, on both domestic and international affairs such as war, and so on. Twitter itself grew quite a bit over last 14 years too. I still remember in its early days, it’s quite often to see the whale picture when the system was down. I vaguely recall when they started they used Ruby (Ruby on rails) a web technology was popular or getting traction then, and slowly changed to something more comprehensive or complicated.

For me personally I probably switched my interest there too, in last few years, I am mostly interested in FinTweets (financial or stock related tweets). I tried to stay away from politics, and it was not always successful.

Compared to other platform such as Facebook and LinkedIn, I think I am more open minded, or sometimes blunt, one reason is probably I don’t know a lot of people in person, another reason is probably the culture of Twitter itself is more open. Note Tweets by default is available to everyone in the world (something newbies on twitter sometimes did not realize).

The business of Twitter obviously was not doing well over its 10 years of public market presence, until Elon took it over recently. Elon may even has some of his points: on people’s desire to work or not work, and blue verified could help clean up the public / digital town square. Interesting to learn some of his other thoughts such as easy / smooth jazz mode, vs heavy metal mode (combat mode?), and also his X.com grand plan 22 years ago. This is a recent interview of Elon btw.

Back to Elon’s idea (or ideal) of public / digital town square. This reminded me of something. Note I grew up in China and free speech (like the 1st amendment in the US constitution) was not emphasized. But in 1980s when I was in high school there was still a lot room for feedback or open communication. So once the students in my class put up a feedback notebook, and things quickly went off rails (imagine the early days of the BBS or discussion forum, and then put high school kids to it). Good intention alone sometimes is not enough. I guess similar can be said about Elon’s dream about full automatous driving (self driving), as well as the robots that do all of our work (in addition to chores).