InvestorGeeks

My Asset Allocation Problem

by Chris

If you have less than $50,000 to invest in securities you kinda get screwed. All of us here at InvestorGeeks are just starting out, in our Mid-20s and have less than $50k in investments. Now I love to learn about investing, but I’m nobody’s fool, and so I want to build a foundation of safe diversified funds until I master selecting value stocks. However, because of my low account balances, I get whacked with maintenance fees that can be pretty stiff. This is a problem because I’d like to diversify my portfolio, but lose more and more of my returns because of these fees. So I’ve come up with an action plan, and I’m hoping you’ll provide feedback before I go ahead an implement it in the next couple weeks.

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2-year Bond Yield Higher than 10-year

by Jason

I woke up this morning wanting to answer one question more than any other. Why is the yield on a 2-year bond (4.37%) higher than the 10-year yield of 4.35%? [1]

After some research, I have to admit I’m still a little lost. Understanding how our economy runs is not my strong suit (you’d be better off reading Chris’s posts). But I’ll take a stab at this.

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Phil Town & INVESTools

by Chris

I’ve become very interested recently in fellow investment blogger Phil Town’s site, and so I’ve been reading it from start to finish. After reading much of his site, I’ve come to enjoy his style of writing and investing. Ever the skeptic though, I wanted to make sure he’s not just some shill on the web hawking his wares to an unsuspecting public. Everything I found has been good, and I was even able to find a new resource that he recommends frequently called the INVESTools Investor Toolbox.

About Phil Town

It’s important when investing to pick your advisors carefully. I have kind of a rating system for investment advice.

Poor - Any guy on the web. Pay little attention.
Fair - What he says passes the reason test. I’ll listen skeptically.
Good - Good track record, good advice. I’m listening, but still fact checking.

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Money Markets

by Frank

So. I’ve been out of it for awhile, but I’m back now, and I’ll be making appearances here as I can. At the moment I have little or no free time, between work and planning my upcoming wedding. Which reminds me I still need a guest list. So without any further non-sense let’s get into this, and I’ll try and make something that’s rather drab and boring as informative and interesting as I can.

Last week Chris talked about the bond market. This week I’ll be talking briefly about the money market. (more…)

Google and AOL

by Jason

Last week we heard the news that Google would pay $1 Billion for 5% ownership in AOL. Here are some bullet points from Google’s press release:

• Creating an AOL Marketplace through white labeling of Google’s advertising technology - enabling AOL to sell search advertising directly to advertisers on AOL-owned properties;
• Expanding display advertising throughout the Google network;
• Making AOL content more accessible to Google Web crawlers;
• Collaborating in video search and showcasing AOL’s premium video service within Google Video;
• Enabling Google Talk and AIM instant messaging users to communicate with each other, provided certain conditions are met; and
• Providing AOL marketing credits for its Internet properties.

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What are Bonds?

by Chris

In The Intelligent Investor, Benjamin Graham encourages investors to divide their holdings among two broad types of investment: bonds and stocks. He recommends dividing an investors’ portfolio between them from 25% to 75%, depending on the investors’ financial goals. Because stocks provide all the glitz and glamour of Hollywood the most investors understand how they work (or at least they think so). However, bonds are the ugly understudy and as a result can be misunderstood.

Because bonds are supposed to play such an important role in our portfolios, this series of articles on bonds will take us through the basics of bonds, describe the type of bonds available, provide links to resources and lay the groundwork for us to begin investing in them. To begin the series we’ll start at the beginning: what are bonds? We’ll go over what they are, how they make money, and basic pricing considerations.

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Small-caps to the Rescue

by Jason

Last Thursday, Chris wrote about Big Mother Mutual Funds and pointed out some reasons why you might not want to buy the “biggest and best” when it comes to mutual funds. Another problem with large mutual funds is that they lose their flexibility to invest in small-cap stocks. These funds are making investments in the tens of millions, which could add up to a sizable percentage of a small-cap’s total shares. It’s hard for a larger investor to make (or pull out of) an investment worth 5% or more of a company.

If large mutual funds won’t invest in small-caps, who will? We will.

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ETF Index Funds

by Chris

Relatively new investors may have heard about ETFs but are still unsure what they are. Well, ETFs, or Exchange Traded Funds, are a type of investment fund that is traded like a stock on the open markets, but typically track an index such as the Nasdaq-100 or S&P 500. First introduced in 1989, ETFs have grown in popularity over the last decade because of their ease to buy and sell, and low expense ratios. However, like any investment, there are pros and cons that the prospective owner should be aware of.

Over the long-term, the S&P 500 beats 80% of actively managed mutual funds (before tax benefits). Because of this fact, prominent investors such as Warren Buffett and Benjamin Graham recommend index funds for defensive investors and those looking to diversify their portfolio. Not only do they provide instant diversification, they also offer the benefit of being simple to own, as it represents owning an already established group of securities selected by finance companies such as Standard & Poor’s, Dow Jones and Nasdaq.

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Follow Ups

by Jason

Pulling out of Index Funds?
In last Tuesday’s article, I talked about John Mauldin’s book Bull’s Eye Investing which speculates that we are in the beginning of a secular bear market. I’m just now getting to the part of the book where he talks about what to do about that situation. Among other things, Mauldin suggests buying small-cap stocks for value. Ben Stein suggests this kind of investing in any market: Want Big Returns? Think Small by Ben Stein.

SIRI is Downgraded After a Recent High
I was getting snug in my SIRI investment. Then some bozo at Bank of America downgraded the stock from “neutral” to “sell”.

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