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Posts from the ‘Finance’ Category

Investing Pet Peave

I wish mutual fund companies had more accurate titles (or more vague, at least) for some of their funds. You would think that a fund called Fidelity China Region Fund (FHKCX) would have more than 7% of its investments in Chinese companies. Or at least, I would think that. Granted, it has substantial investments in Hong Kong (44.2%) and Taiwan (26.3%) which in total gives it a 77% stake in companies based or listed in the Chinese market region.
Figuring out my play in this region has proved difficult. I’m hoping that my upcoming journey will help me identify industries and companies to look for as anchors. No, I don’t think I’ll be buying raw shares in CNOOC or anything like that – I’m looking for mutual funds that would share my overall investment strategy and then I’ll let the fund manager do the work. We don’t have enough self-managed retirement money to properly diversify in that market alone, anyway.

Bearish on the Nasdaq

The Wall Street Journal reports that short interest on the Nasdaq market has continued to climb this year – it’s been falling on the New York Stock Exchange. What does this mean? Simply that investors feel a downturn is coming, at least for many stocks traded on Nasdaq. I’m guessing that $60 a barrel oil probably has something to do with it, although I don’t quite see the connection on the surface.
Oh well – it’s not going to change my game plan at all. I’m a buy and hold type of investor. I ask myself “If I were to look at Company X today, would I feel like it’s a good investment at its current price?” If I answer No – I sell. Sometimes I buy more.
Case in point – I bought Brown Shoe Company (NYSE:BWS) in the upper 30s last year. Some bad news dropped it into the upper 20s. I felt like it was such a good investment at that price, I bought a bunch more. Now we’re back in the upper 30s (time to ask myself that question again, huh?).
Don’t ignore general sentiments – just don’t let them rule your life, either.
One other important thing to note is that we’re closing in on the end of fiscal year ’05 for a lot of mutual funds. This means there may be a lot of volatility in the marketplace this week as mutual fund managers reshift their holdings so that their end of year reports reflect portfolios that match the investment objectives set forth in their prospectuses. It’s all about the window dressing. So batten down the hatches and resist temptation to move unless you see a great bargain out there.

Taxes & Surcharges on Rental Cars

Travelocity released its second annual report on taxes,etc in the rental car industry. Not only did they compare city to city the uplift charged over the published rental rate, but they also did neighborhood comparisons around the airports to show how much higher the taxes were on the airport property. The top 3, Houston, Dallas/Ft Worth, and Phoenix all resulted in actual charges that were over 50% higher than the published rate.
Do some research. It may be cheaper to take an alternate form of transportation to and from the airport, and rent your cars away from the airport property!

Drummers on Your Front Lawn Until You Pay Your Taxes?

I wonder how much the drummers are making. I could’ve used the money myself 12 years ago. If only I could’ve gotten the state or local government to buy into it. I remember going into a highschool football halftime show with the Georgia Tech drumline -> no band, just drums. Heck, we may have been greater in size than the band. Anyway – the look on the people’s faces. Imagine that look on some guy’s face when he is awaken at 6 a.m. by a bunch of drummers on his front lawn. Imagine the peer pressure he’d face from his neighbors.
Pay Your Taxes, Pa-Rum-Pum-Pum-Pum…. (Reuters)

Reuters – Tax defaulters in southern
India are being forced to face the music after city authorities
hired drummers to play non-stop outside their homes until they
pay up.

A Company Called TravelZoo

I don’t exactly remember whether it was 1997 or 1998. What I do recall is seeing a unique proposition from a startup company called TravelZoo. In exchange for signing up for their service, they would alot 3 shares of the company to you. For each additional person you signed up, you could get an additional share. I was traveling for leisure off and on, and so out of curiosity as to how good their travel deals were, I bought in.
Time passed. I contracted for a company that had an American Express travel agency on site. Not only did they help with my corporate needs, but would also assist in finding and booking air, hotel and car deals for my personal travles. I did not need the assistance of TravelZoo, and thus, unsubscribed from their mailing list.
November of 2003. I get some information about TravelZoo going public and needing to verify my information. They had done a 2 for 1 split, and I had a whopping 6 shares. I still had the same email address as I did in 1997, but my address had changed several times. I updated them and forgot about it.
In April of 2004, I got an annual report from this company. I was sure they were only worth $3 or $4 per share, and was pleasantly surprised to find them around 5 or 6 (as I recall). Then in June of 2004, I started to see some odd stories pop up about this company and the trading volumes associated. It seems that all of the investors who were like me were interested in snapping up more shares. But it seemed only around 4,000,000 shares were floating out there to be traded. Enter a classic supply & demand problem. The stock price had been drived up north of $20 a share. I immediately executed the paperwork needed to issue a stock certificate.
When the certificate arrived, I rushed to my broker’s office and deposited it. The next day, I sold for around $17 a share. Not a lot of money – but it was the best kind: Found Money.
Today, TravelZoo (Nasdaq:TZOO) is trading around $92 a share. It has been as high as $110. Am I sorry I got out? Nope. Fundamentally, this stock might be worth around $20 a share (I rationalized $9 a share based on the information I had last June). I tried to short sell the stock over the summer when it was trading in the $50-60 range. There were not enough shares outstanding to accomplish that feat.
This is a classic case of supply and demand outweighing the fundamentals. It reminds me a lot of the late 90’s when suddenly everyone had internet access and a brokerage account. People are investing in a company that, as far as I can tell, generates revenues from selling advertising on its website and in a weekly email newsletter that lists travel deals. It’s trading at 356 times earnings. Google (Nasdaq: GOOG) has some of the best and brightest programmers in its stable and is implementing innovative technology on the desktop and network. It is trading at $194.50, 233 times earnings.
What is wrong with this picture? And not to sound greedy, but when there are no option chains or shares to be sold short, how can I make money off of it?