First individual stock: LUV–>Failed

Standard

My first pick for individual stock in my virtual account is Southwest Airlines (LUV). I bought it at $10.40 last week. Now it is down to $9.79, the lowest in 52 weeks. I have lost -1.51%.

Why is it going down? The oil price is going up which will lead to an increase in commodity price. Southwest is a strong company, but this inflation will shrink its profits. It is not a good idea to buy more of its stock now.

My next move will be News Corp (NWSA) and Eli Lilly (LLY). My decision is based on news, 52-week, charts, P/E ratio, and dividend yields.

Will keep you posted.

Earning more vs. Spending less

Standard

Money Marketplace this week gives a new approach on how to grow money. The rationale is that over the past 50 years, the advice of spending less does not work for Americans. A lot of people still do not know how to manage debts or do not have a knowledge of finance. So a question is raised, why not earning more?

It is not easy to earn more. The commentator points out two reasons why people do not focus on earning more: they do not have an idea and they think they do not have enough time. He said that people should use their hobbies/ existing skills to earn more money.

To me, I think earning more and spending less should go hand in hand. Also, even if a person has a skill, it is still hard to find a job in this slow economy. I do not even know what skills I have, but I believe skills can be built. It is always a good idea to learn something new everyday, to re-educate oneself in a different field, to start a second career. I like to learn foreign languages and learn about finance. Learning about finance actually has helped me earn more money.

Are you thinking about a second career? What is it?


“Bamboo Ceiling”

Standard

“Bamboo ceiling” comes from a book by Jane Hyun, “”Breaking the Bamboo Ceiling”. It means the limitation in an Asian-American’s career due to difference in culture and work ethics in the United States. Here is one example told by the author in an interview with NPR: All things considered:

“Ms. HYUN: I have a little story there. When I was early on in my career, I was in a job where I did a lot of spreadsheets and analysis, and I worked with a team of people. And I noticed that a co-worker and colleague of mine would go into my manager’s office once in a while to connect, informally, engage in banter and discuss a variety of different things, work and personal-related, with him.

And so at the time, I didn’t understand why she did that because for me, the message that I got about how to be successful, right, was to put your head down, work hard, and then you’ll get rewarded. Somebody will see that you’ll do the hard work, right. That was – I didn’t know any differently, right. This was the second year inside of a Fortune 500 company.

And so I actually asked my friend, who was my peer, who tended to do this, and said: You know, why do you go in there? You can get a lot more done if you actually spend 20 minutes more at the computer or finishing up a response to an email. What she said was really interesting to me. She said: Well, you know, I just go in there to shoot the breeze, to build a relationship with the boss.

And that was the first time I had that aha moment of really getting the fact that, you know, you can actually, without being asked to come to the meeting or without scheduling a meeting, you can actually go in unannounced and unscheduled to have this very informal relationship with a manager. I didn’t see that as a possibility because I thought hard work was working alone at your desk.

And so that moment was kind of turning point for me to realize wow, you know, there’s some cultural – deeply embedded cultural messages, scripts, that I operate under that maybe I need to understand better so that I know how to work effectively across a variety of different spectrums.

And so that really was a turning point for me that helped me in the rest of my career.”

The key is “to promote yourself”. I see myself in her story, and I know I still have to practice this habit (talking to my manager and other co-workers). To me, it is not about to advance in my career, but just to build a relationship with my friends from white ethnicity group. I have a bad experience in class with my classmates who criticized my accents and my personality. People should not judge and they should try to understand others who speak English as a second language. One thing I love about America is that it is the most diversified country in the world. People should be more open to others’ culture.

The show also mentions Wesley Yang, the author of “Paper Tigers: What Happens to All Of The Asian-American Overachievers When the Test-taking Ends?”.  He talked about Asian-American students’ over-representation in almost every index of achievement in education and their under-representation in corporate leadership. Asian-Americans have been raised in a different way which hinders their success at the workplace in the United States. It is a challenge to not only the first generation Asian-Americans but also to the second and the third.

You can listen more on NPR.

Do you have this experience? Can we break that “ceiling” to be successful in this country and turn it to be Asian pride?

A break

Standard

I have a special guest here in town for a month, so I may not post regularly. In the mean time, please check out Updown.com. It provides virtual trading but you may get extra money if you perform better than market average.

Good luck and stay cool!!!

My 401k plan part 2

Standard

I am eligible to enroll to my company’s 401k today and I decide to contribute 6% of my paycheck to maximize my company’s matching contribution. IRS allows personal contribution to 401k of maximum of $16,500 per calender year but I still have to save for mortgage down payment, so I do not max out my limit. There are two big questions about my plan that I have to find out the answers:

1. Administrative expenses. Even if I choose to direct my investment, all the transactions are still managed under Merrill Lynch, a contractor with my company. Also, each individual fund has its own expense. I need to read about this Plan Fees Document. It mentions Gross and Net Expense Ratio. I have an overall idea from Stocks for the long run but I need to dip in further.

2. There are 9 funds under the plan for me to choose. I already mentioned their categories in the previous post. However, when it comes into detail, I have no idea about these funds.

The booklet the company sent to me has a brief description about the above funds in 2 1/3 pages. Only 2 1/3 pages 😦 I do not think it is sufficient. It states in the booklet that you should feel comfortable about what you are going to invest. In reality, it is just a game of luck. Warren Buffet reads annual reports every day as a pleasure reading. Technical analysts use maths to predict the market trends. Using information from 2 1/3 pages to decide how to invest, it does not make sense at all. Therefore, most of the time people ask professionals to manage their investments. I can request copies of their prospectuses, financial statements and reports, but to understand and make a decision, I still have a long way to go.
The funds are different from individual stocks. Some are indexed, some have a pool of individual stocks (mutual funds). I wonder what the difference between Trust and Fund is. A pool of stocks are considered safer than picking individual stocks. But I have to see the holdings of each fund.
I feel a little bit tired because of the overwhelming information. Making money is not easy and I do not know whether my time and efforts are worth it. A lot of people, including my father, do not like investing in stocks. They prefer business or real estate. I believe everything is interconnected but stocks are more challenging because they involves the whole world’s market and human behaviors.

“I can calculate the motions of the heavenly bodies, but not the madness of people.” – Isaac Newton, South Sea Bubble

By the way, I start to use technical terms. In case you do not understand, let me know and I will try to explain to you :). Investopedia does a better job in explaining, so this blog is just a way to show my progress in the long journey to make the 1st million dollar. The first is always the hardest. When you have 1 million, it is easier to make 2 millions and so on.

Have a safe Independence Day weekend.


(Remember this, anyone?)

Do you own stocks? Do you read their annual reports?