InvestorGeeks

Pro forma Earnings

by Chris

Pro forma earnings (sometimes spelled “proforma” or “pro-forma”) are included by some companies in their quarterly or annual reports as a way to discount “unusual and non-recurring transactions” to more accurately reflect their true financial health. But while actual earnings are calculated using Generally Accepted Accounting Principles (“GAAP”), the US standard for corporate accounting, pro forma earnings are used as guidance for investors to demonstrate how much money a company would have earned had unusual and one-time charges not occurred. As one would expect, pro forma reporting has had a history of abuse and therefore should be approached with great care.

Monday Reading and Stock Update

by Jason

Ramit Sethi from www.iwillteachyoutoberich.com proposes a financial makeover for 2006. And I give updates on SIRI, AMD, and YHOO.

Investing vs. Starting a Business

by Chris

There’s a very important topic that I’d like to discuss briefly here, and it’s in regards to starting your own business. Fundamentally, a business is an investment. Any company’s goal is to generate profits for its owners, and in the case of a small business, a salary as well. The problem with businesses is that they’re a job. And not only are they a job, they also cause a lot of stress and a generally poor social life during the initial years.

Real estate has always been a passion of mine. Many people have made fortunes off real estate and growing up with a father in the business, I understand how the model works. However, getting started is a big effort, which involves management, construction, marketing, and all the other jobs associated with starting a business. This is not coincidence — buying investment property is a business.

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Intro to 401k Part 2

by Jason

Last week, we introduced 401(k) retirement plans and focused on their main two benefits:

1. Tax Benefits.
2. Employer Match

This week we’ll close out the discussion with a little talk on Roth 401(k)s and some tips for choosing Funds inside your 401(k).

Monday Reading and Stock Update

by Jason

Monday Reading

Mark Cuban has written some interesting articles on investing. I think they’re a good read; it’s not the typical stuff you would hear from other investing pundits.

- My Investment Advice for 2006

- The Stock Market is for Suckers

- Long Tail of Investing

Main takeaways:
- When you buy stock, someone is selling it to you. Why is that someone selling it? Are they really dumber than you are?

- Instead of trying to make better investments, you might do better by spending your time trying to reduce your expenses. Saving $100 per month you would have spent going out = $1200 per year. That’s equal to a 10% return on a $12,000 investment.

- For some people, more spare time and a little piece of mind might be worth the 5% you would give up by putting your money into bonds.

Stock Update

So January starts off with a tech stock rally which prompted me to write an article about why it would be good to invest in tech stocks. A couple days later Intel, Yahoo, and Apple (among others) report “disappointing earnings“¹.

A lesser geek might be concerned about this pull back, but I see it as a great time to get in. All tech stocks took a hit last week, while only some of them deserved it. One of my favorites, AMD, has already bounced back a bit. Yahoo! on the other hand is still trading below $35 right now, making a great opportunity for you to check out the stock.

References

[1] Stocks Slump as Tech Earnings Disappoint by Jennifer Coogan.

Full Disclosure: At the time of writing this article, Jason owns a small number of shares in AMD stock.

Introduction to 401k Part 1

by Jason

For most people, the 401(k) savings plan offered by their employer is the first investment worth making. This article is meant to introduce you to the 401(k), why it’s often a good deal, and how to get started.

Book Review: “The Only Investment Guide You’ll Ever Need”

by Chris

Frank bought me The Only Investment Guide You’ll Ever Need by Andrew Tobias for Christmas, which finally arrived at my doorstep on Saturday. With the assistance of Tobias’ great sense of humor, it’s a quick and enjoyable read. The book provides sound advice on when it’s appropriate for people to begin considering their investment options, and what those options are.

Good Time to be a Geek

by Jason

First, my apologies to those of you who are not geeks (and just wish you were).

Because… it’s a good time to be a geek. Tech stocks are performing well, and there is no one better to take advantage of this rally than fellow geek investors like you. Even the NASDAQ is back with a vengeance.

There is a lot of talk these days about a new tech stock rally. Below are just a few of the reasons tech stocks are getting so much attention these days.

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Using the Morningstar Prem. Fund Screener, Part I

by Chris

I’ve spent a lot of time in the past week working with the Morningstar Premium Fund Screener, a tool used to search for mutual funds based on filtering criteria. Think of a screener as both a search engine and a pair of blinders. Not only will it help you discover new funds but it will also keep you away from funds that may post high short-term results but have a lot of inherent risks.

This screener is the best I’ve seen for mutual funds and in addition to access to Morningstar analyst reports, makes the Morningstar Premium subscription worth every penny of the $135/yr fee. If you can get a friend or two to split it with you, all the better! Think of it this way, if you have $15,000 invested in mutual funds and this subscription lets you pick up an extra 1% annually, it has more than paid for itself.

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