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Saint Louis Stocks

Sillicon valley stocks and St. Louis stocks

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Tech for Silicon valley and agriculture for St. Louis.

Silicon Valley Stocks
We went to Sillicon valley for the holidays and obviously, stock is one common topic in family reunion and friends gathering. Note stock options makes up a significant portion of employee’s compensations for some of the technology companies there.

I happened to read the San Jose Mercury News Jan 1, in which it has a nice summary of how Silicon valley stocks did in last year. In summary, the big tech (GOOG, AAPL) and IPOs (VMW, NetSuite) lead the Silicon valley stocks to a fairly good performance. Here are two articles I read: tech titan’s year; Valley’s big year for Wall St. debuts.

St. Louis stocks
I tried to look up St. Louis stocks 2007 performance at stltoday, the web site of St. Louis Post Dispatch, but could not find any. So I just list St. Louis companies I know.

I believe Monsanto (MON), one of the largest agriculture company in the world, is the No. 1 performer last year. MON is enjoying the global farm booming, and in a way the oil boom too. By the way, I live right across the street from the company. ADM and Bunge, another two agri play, also did well.

St. Charles based solar play MEMS (WFR) also faired well very amid the all the solar boom. Note WFR is a leader in this area.

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Fun Master Series

Why not Berkshire for stock investments

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I know no broker offer this as an option in IRA. But how about buying Berkshire (BRK.A, BRK.B) over mutual funds in a taxable brokerage account? Not only does Berkshire has a track record which beats almost all mutual fund (21.4% annual compound return in last 42 years) and the 10.4% annual return of S&P 500. See this Buffett’s 2006 letter for details. But also an investor get the service of the best investor with virtually no fees: Buffett is paid a salary of 100,000. So why don’t we all give the money to Buffett, rather than mess up with our own investments, which in most cases can not beat Buffett’s performance in long term.

I can think of the following reasons:

1) We think it’s harder and harder for Buffett to repeat the performance he had in last 42 years. It’s practical because as much as Buffett is getting better (he is a life long learner), his portfolio is growing so big that expecting an annual return of 20% is impossible.

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CFA

Go for CFA level I test

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I decided to go for the June 2008 CFA level one test, due to several reasons:

1) Learning: I am interested in learning more about finance, since it is not practical for me to enroll a formal academic program, nor do I have the discipline stick to my own study plan. Enrolling in CFA exam and learn from the program itself is better suited for me.

2) Basics: I do have some previous training on economics and accounting, no formal courses on finance (financial management) though. I did took other fundamentals such as statistics in college.

3) Recognition (and potential benifits): I believe CFA will bring some credential for a guy like me if he/she wants to be a fund manager, or managing an investments partnership.

In today’s world, people simply won’t hand money to a person without formal finance education and/or investing experience. Although personally I still believe successful track record in investing matters more (vs. education), when I look at fund managers for my 401k 🙂

schweser CFA study guide

(picture above: Schweser CFA study guide, from schweser.com)

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Fun Stocks

Top 25 stocks in past 25 years

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I came across this list of top 25 stocks in last 25 years from AOL money and finance. The original article was appeared on USAToday Sept 15, 2007.

Note statistically, a sample of 25 is too small to draw any scientific conclusion. But I found a few things to be interesting nonetheless.

1) Two money managment firms in top 5: they are Franklin Resource (up 65 times, ticker BEN), which manages the well known Franklin Templeton funds; Eaton Vance (up 38 folds, ticker EV), which manages the less known Eaton Vance funds.

Let me quote the article “As the old saying goes, the way to make money during a gold rush is to be the one selling shovels“.

2) Hardware and software: Cisco (up33 folds), Microsoft (up 29 times), Oracle (up 28 folds), and Adobe (up 20 folds). May I add Google here? It’s up around 800% from offering price of $85 to around $700 during from Aug 2004 to Sept 2007 (roughly 3 years).

3) Which stock surprise you most?

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Fun

Looking back at year 2007

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rear view mirror

The following was my the new year resolution for year 2007. I am putting my comments in italic.

Personal
Spend more quality time with family and friends; cut Internet and TV time.
Did the first part, I did spend more time with my parents, brother’s family, and my wife (girl-friend). Whether quality or not is up to them to judge 🙂

Second part, I really need to cut more aggressively on TV and Internet. I need to do more reading this year.

Drive safely. Walk safely. Drive and walk safely.
I did ok. I drove more local vs. highway, because I felt it’s more relaxing to drive local. I need to exercise more.

Financial
Pay off the Home Equity Line of Credit (currently 8.5% interest rate).
Not done. As the rate dropping, I found it’s a good idea to borrow and invest if I can get better return than the borrowing rate. I think my debt is at very much controlled level.

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Master Series

Walter Schloss also beats S&P

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and he had done it for 47 years (maybe not every year, but compound annual return), that’s pretty good.

The following is quoted from Buffett 2006 shareholder letter, you can get the full letter at Berkshire web site:
……
Let me end this section by telling you about one of the good guys of Wall Street, my long-time friend Walter Schloss, who last year turned 90. From 1956 to 2002, Walter managed a remarkably successful investment partnership, from which he took not a dime unless his investors made money. My admiration for Walter, it should be noted, is not based on hindsight. A full fifty years ago, Walter was my sole recommendation to a St. Louis family who wanted an honest and able investment manager.

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IPO Stocks

Year end investments summary

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My performance
The Scottrade account did beat the S&P 500 and Nasdaq (detail to be calculated…). This is pretty easy because the market did not go up much in the past year (3.5% for S&P and 9.8% for Nasdaq).

More importantly, learned the risk, portfolio management (weighting), IRA/401K/mutual funds, all from hands on experience and can not be measured by the numbers.

What went right
1) Sell the losers: XFML, SBUX
2) Ring the register on winners: HMIN
3) More focus, 3 or 4 stocks maximum in the portfolio; work on same stocks (MR) if it’s working
4) Basic research: reading F1/S1 prospectus, 10K, 10Q; using google spread sheet
5) Read the five stocks/investing books (listed in my aStore), learned a lot from the masters. I still need to complete Buffett’s book (a little harder) and Ken Fisher’s book (a little long).

What went wrong/lesson learned
1) Did not sell CROX before Oct 31 ER: if a stock went up a lot and its weight on overall portfolio increased dramatically, make sure ka ching some…
2) Speculate on small companies (GSIT) without much research

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Stocks

Fourth quarter 2007 update

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The miserable performance of CROX erased much of my 2007 gains. But thanks to the rebound of Mindray (MR), I am still be able to be above water 🙂

Some random thoughts of Q4 and year 2007 stock performance:

1) Crocs (CROX): I agree with my friend StrengthTrader, Crocs is a fashion product. It’s almost unbelievable for Crocs to become popular in much of the world in such a short time. At least it grew much faster than Nike did 20 years ago. But will Crocs be as big as Nike some day? I don’t know. The market thinks it will NOT (traded at PE of about 20, the company projected 35 to 40% revenue growth in 2008).

2) Mindray (MR): benifit from the global spending of healthcare. Although the US market did not turn out to be as successful as we like, other interntional markets especially South America made up the slack.

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Fun

Merry Christmas

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snow man pic

Also, I will be visiting families and probablly not updating this blog for a week or so.

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IPO Stocks

I sold MXB six hours too early

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Stocks in review week of Dec 16 to Dec 22

1) I bought some MXB shares on Dec 19. After I read its prospectus more carefully, I found two things I don’t like: it will use the proceeds of the IPO ($225 m) and borrow some $425 m to pay the dividend to its parent, Morgan Stanley; Morgan Stanley still controls more than 90% of its share. So I put up a limited sell order at 29.30 for Dec 21.

On Dec 21 the stock opened at $29.50 and had a huge run from 3:00 PM EST till close. It closed at $33.72. This reminded me 3 years ago I sold my 51job (JOBS) two days too early.

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