Archive for the ‘Wealth building’ Category

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IPO:Of A Company I Love!

Friday, February 4th, 2011

IPO Announcement

I try not to be hypocritical here at the Millionaire Nurse Blog.  Sometimes I fail….  All of us have a little of the  “do what I say, not what I do” gene!

Investing In Single Company Stocks

Mutual Fund investing is more conservative  than single company stocks when it comes to investing in our retirement accounts.  But I confess, I do own a few single company stocks, and will continue to do so.

They represent less than 5% of my net worth, and I enjoy the process of selection and following them.  But studies show that it is difficult for the average investor to beat the market. And many experts recommend using index funds for the stock portion of your portfolio-and I have no problem with that!

A stock that has caught my eye this week is that of  the company epocrates-( EPOC on Nasdaq)  had an IPO.  {If you aren’t familiar with IPO’s, please read this popular post, The Purple Haze Condom Company Goes Public!}

epocrates

I have been a customer of epocrates software  since they first came out.  I had a Palm Pilot PDA-(already an antique) with one of their initial versions of the now famous prescription drug database.

Before epocrates, if I wanted to check on a drug dose, side affect, drug interaction I had to look it up in the PDR, a huge book with thousands of pages. And the drug interaction information was almost impossible to find.

PDR-Old School Drug Database

Now, with epocrates on my smart phone, it takes seconds to get a huge amount of data, well organized, about the medicine.  It even has information about disease diagnosis, and drug dosing calculators…

A Few epocrates Coporate Financial Highlights:

  • The company has over 300,000 physician clients-some of which are like me and actually pay them for their software.  They do have a free app that suffices for many of their customers.
  • The company has a marketing tunnel directly to many more of us health-care types.
  • It is profitible
  • The money raised in the IPO will be used to pay a dividend the company is obligated to pay on preferred stock holders, and for R&D.

I think the challenge for epocrates is finding a way to monetize the relationship they have with the medical community.  They are already doing so with ads directed at individual docs.

Getting the right ad in front of the right person is the whole secret to successful marketing.  If epocrates does this well, they should be successful.  They are also trying to grow their current business in a broader fashion by developing an Electronic Medical Record for small medical practices.

Here is link to their SEC filing prospectus, that will give you all the data you can obtain at this point to decide if this extremely speculative stock is for you.  I am still in my study and think mode myself…And remember, I am not a stock adviser, just a dumb guy with an opinion!

Investor Related Blogs and Websites

I want to highlight  a few fellow Yakezie personal finance writers who write frequently on investing and their latest investor related post .

Buy Like Buffett has a new series on beginning investing. I have been an admirer of Buffett, and a stockholder of Berkshire-Hathaway for many years.

Jacob at ERE has this poem that summarizes his investment strategy.  Wish I had written it!

Barbara Friedberg’s Personal Finance has ten steps before  investing.

Suba @WeatlhInfomatics compares Fidelity to Vanguard.  Both great companies in my mind!

Young and Thrifty give advice on finding a financial advisor, or is it adwisor….

Squirrlers has an interesting post on Stock Market returns by month.

Darwin’s Money gives up on Muni-Funds-I think with careful research there are still great buys in Muni-funds.

For another Buffett oriented investment post, check out Investor Junkies review.

General investing websites

Yahoo Finance

Morningstar-which you must join, but has a free service

CNN Money

Motley Fool is still around, but not quite as irreverent as in the old days!

Reader Questions:

Please let me know your favorite investing websites.  Where do you go for investing information before you pull the trigger on an investment?

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Posted in Investing, personal finance, Wealth building | 6 Comments »

Beginning Investors: Don’t Read This!

Tuesday, December 7th, 2010

The Stock Market

Most of my posts are beginning level info on retirement and the stock market, but today I wanted to discuss a few advanced theories.  If you are a beginner, don’t go out and throw money away, cause Dr Dean said…. I didn’t!

One of the most predictable things about the stock market is its unpredictability.

The big firms in NYC spend millions  on salaries of hotshot Ivy League graduates, and invest billions in super-computers to help  make wise investment decisions and big money.

But study after study shows that most investment firms recommend buying when they should be selling and vice-versa.

Why is that?  Just human nature.

When the going is good, it’s human nature for everyone to want to jump into the party.  Everyone wants to dance with the dream.

Then when a crack in the dam is visible, everyone checks out at the same time, similar to hospital administrators on Friday afternoon.

Don’t get in the way of the herd….When everyone sells, there are no buyers-so the market drops like a kid in an ice bath’s fever.

You may say, “well Dr Dean, if the market drops because everyone is selling, wouldn’t buying at that point be like putting your finger on the IV site of  someone with DIC,  who is bleeding out from every orifice.”

And I would say “Great thinking grasshopper.”

Contrarian Thinking

Contrarian thinking is not to be confused with being a dufus.

Contrarian thinking would be, after the selling has ended, when everyone thinks the sector in question is dead forever,  is the time to start building a position.

This article by Greg Zuckerman in the Wall Street Journal points out several end of year suggestions of money experts trying to avoid the usual trend of  “buying when you should be selling.”

Let’s look at their suggestions one by one:

1.     Buy small cap stocks: now stocks of smaller companies have done well this year, (small cap 600 index is up 20%) and playing the don’t do what the crowd does may say: “Don’t buy smaller company stocks.”  Buuuut, keep in mind the crowds aren’t piling into small cap stocks, and the amount of investable cash on the sidelines right now is at a record.  So if you have no small cap exposure I would say it is time to add.

2.     Buy technology: Technology shares are up 7%. That certainly is less than the market as a whole.  And if we are going to get out of the current doldrums, I think technology will have to lead the way.  I don’t think it will be housing or health care.

3.     Sell gold: I wrote that gold probably had peaked a couple of months ago, when I was tempted to begin buying it again myself as it seemed to want to go up forever.  I am concerned that the Feds’ actions will result in hyper-inflation in the next couple of years-but don’t think that is a worry in the immediate future.  I think gold is a going down or sideways for some time…

4.     Sell emerging markets: I have been adding to our emerging market position in my retirement portfolio the last couple of years, which has been a good strategy.  If you have no exposure to this area, I think it may be something to add gradually.  But would be waiting on a drop in this sector to add a significant portion to your portfolio.

What are a few other areas a contrarian might be interested:

1.     Banking sector:  This group has been given up for dead by many experts.  But with cheap money, and continued high unemployment, I think low fed-funds rates and higher lending rates and standards is as close to a money printing machine for banks as is legal.

2.     Energy stocks: I think energy prices are going to outpace the inflation rate for the foreseeable future-and the BP fiasco has prevented our country from moving forward with home-grown oil.  The alternative fuels push seems to be dying a slow death as prices remain too high to be competitive.  And even Al Gore’s folks are scaling back!!

Stock sectors to watch:

I don’t think the fall in health-care and housing is quite done, but they would be on my radar in 2011.

Begin to study the sector and pick out the stronger companies or the mutual funds/ETF’s that will lead the pack.

Remember, when you see the “You Have to Buy Health-care Stocks” on the cover of the investment magazines-you have already missed the boat.   At that point it is like going to your nurse practitioner for birth control after you have missed three periods….

Disclaimer:

These are the opinions of an Gyn Doc stupid enough to be writing a personal finance blog for nurses, so keep that in mind.  Please do not begin investing until you have paid off the sports car you bought when you graduated from nursing school, and have those student loans down to below 100 grand….

Seriously, this article is just for those who are ready to begin investing in your future, and have professional assistance.  You should have a plan when you invest, and have a trusted mentor to assist you.  That and losing your ass a few times even when you do things right is the best teacher.

And finally, these decisions should be part of re-balancing your portfolio-and if you don’t know what that means-you need to keep studying….

Reader Questions:

What are your thoughts about investing these sectors?

Do you have a favorite, or a story of your disasters while following the herd?  Share it with us here.

Posted in Investing, Wealth building | No Comments »

Cars and Success: Do They Have a Correlation?

Thursday, October 28th, 2010

Cars and Car Buying-For Successful People

Julie RN, Staff Writer

You’ve made that exciting leap towards being debt-free in order to boost your retirement savings   on your way to become a “millionaire nurse” or just a millionaire if you are not a nurse….  Congratulations!  “Credit cards are paid off…I’m debt-free! Now it’s just my mortgage and car loan!”  Whoa! Not so fast…car loan = debt!

Besides credit card debt, car loans are the the next largest item of expense we tackle…but it doesn’t have to be.  “how is that possible?”  OK, let’s look at the situation a little closer…

Let’s put our Car buying thoughts on the Psych Docs couch, and probe a little:

1.  STATUS - the evil one, our biggest downfall!  We all fall victim to this at one time or another.  We pull into the parking lot at work and see that gorgeous Acura SUV nurse Susie drives.  “Wow! What I would give to have that car (or similar luxury car or maybe a sports car)!  This old Chevy is embarrassing!”   Peer pressure – it’s not just for teenagers!

New Car (photo by Uggboy

Nurses make pretty good money. There’s no reason why we can’t afford a $400-500 car payment.  Besides, we deserve to look as good as money-bags Susie-what’s she got that I ain’t got..

Remember…our goal is money in the bank, not image! Your self-worth should NEVER be tied up in your CAR

2. MONTHLY PAYMENTS - “It’s a good financial decision to trade cars every 2 years if I can keep my same monthly payment. I always have a new vehicle and warranty.”

Now tell me how that’s financially sound when you always have payments? You’re never out of debt! Why do you want never-ending monthly payments?  How can you fund your retirement account and become a “millionaire nurse” when you’re paying $400-500/month forever for that new car?

3. VALUE - A new car loses  20% of its value the moment you leave the dealership, another 20% each year until after the 4th year when depreciation slows. When you trade for a new vehicle every couple of years you are trading during the highest depreciation period.

4. NEW vs. USED - I love the smell of a new car!  But is smell worth that 20% loss in value the moment I drive away with it? No! Let someone else take that 20% loss.

Dealerships are loaded with great used, low mileage vehicles and the immediate depreciation has already been taken. Find that 1-2 year-old low-mileage car that someone else took the 20-40% loss on. I’ll never buy another brand new vehicle. Status isn’t worth taking that financial loss!

5. LEASING – Don’t even think about it!

“I can’t swing $600/month for that new Lexus but a $300/month lease is too good to pass up…brand new luxury car, no down payment or sales tax..yeah, man!! Money-bags Susie won’t have anything on me!”

Leasing is one of the worst financial decisions for most individuals. You will always have monthly payments and if you drive more than the mileage allowed (usually 12,000-15,000 per year) you will pay dearly at the end of your lease. You will pay the difference between allowed mileage and actual mileage plus there are always hidden fees. Insurance costs are higher as well.

When you buy a car, it is yours free and clear.    With leasing, you make those monthly payments and have nothing to show for it at the end of the contract term.  If you opt to purchase your leased car when the contract ends, you will pay the difference in mileage (if any) plus  the remaining value of the vehicle.  Total costs will be much higher than buying a car from the beginning.

What is YOUR OBJECTIVE?  Look wealthy, or be wealthy?

Our object is to BECOME millionaire nurses, not LOOK like one!

I live in an area where driving luxury vehicles are the norm…high-end BMW, Porsche, Mercedes, even an occasional  Lamborghini or Ferrari.  I envy these people for a moment until I consider what their true financial status may be.

Statistics show that most millionaires drive conservative cars, usually American made, average age around 4 years, and never buy new.  This is because they are into making money, not boosting their image.  They don’t worry about keeping up with nurse Susie, or anyone else!

It doesn’t have to be a luxury car to be a bad financial decision.  Buying ANY new vehicle is a poor choice.

You may be in a situation where you can afford to buy that luxury car and pay cash.  Boy, do I envy you! But I don’t know a single nurse personally who makes enough money to buy new vehicles and be able to adequately fund their retirement fund.

Buy only what you can afford, get it paid off and DRIVE IT UNTIL THE WHEELS FALL OFF!  (seriously, until your repairs are more costly than the value of your car)

FORGET ABOUT IMAGE! Put the money you’ve saved in your retirement account, watch your investments grow. Then YOU’LL be the envy when nurse Susie asks how you retired a millionaire on a nurse’s salary : )

Reader Questions:

What’s your new car jones? Do you have a problem, not driving a new car and making payments?  Is it your birthright to die with a car payment?

Article by Julie RN Staff writer for The Millionaire Nurse Blog

For information about Julie, check this link.

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Posted in personal finance, Wealth building | 7 Comments »

Stock Buying 101:For Nurses and Non-Nurses Too!

Wednesday, October 20th, 2010

Buying Stock….Protocol for Success

Julie RN- Staff Writer!

Nurses and Doctors love protocols! Nurses get more autonomy. Doctors get fewer phone calls! (I see that smile, Dr. Dean!) – It’s a win-win situation!

When it comes to buying stock, how do you find the right stock at the right price? Decrease your risk of loss? Know when to buy and when to sell?

Wall Street lingo is a course within itself – P/E ratios, ROE, EPS, IPOs!   And charts…wow! For most of us, it’s like being an OB nurse trying to interpret EKGs!

Not The Right Direction For YOUR Stocks (by yotut)

Buying stock is not for the faint at heart! If you can’t handle the looping corkscrew roller coaster then single stocks aren’t for you!  By all means, stay with mutual funds, bonds, and safer investments.  But for those who enjoy the challenge, there are basic guidelines to follow when doing research to improve potential profits.

Selecting stocks:

  • Keep your eyes open for that new fad.  If you had jumped on the Crocs craze or Apple when the I Phone emerged and cashed in on your profits, you would be well on your way to wealth!
  • Buy what you know. Cosmetics, cleaners, toilet tissue (there’s something we all know about!), lingerie, medications, coffee, and ice cream – the list is endless! If you know the product, chances are you have a feel for its potential success. For example, don’t buy agricultural stocks if you know nothing about the industry.
  • Look for companies paying dividends. It’s an added bonus! yeah!!

Basics of Stock Buying

We’ll start with a condensed protocol with more detailed focus on each category in the coming weeks

STOCK-BUYING PROTOCOL:

Always start small and stay diversified!!  Never put all your eggs in one basket!

Do your homework! MSN Money and Investors.com (IBD) are excellent sites for research:

□ Beware of cheap stocks < $5 – there’s a reason why they’re cheap

□ Earnings per Share – up 25% from last 2-3 quarters and increasing over last 2-3 years

□ Sales – increasing at least 25% from last quarter

□ Return on Equity - 17% or higher

□ Company is in top 5 of industry group – buy leaders, not laggards!

□ Low margin of debt – only invest in financially strong companies

□ Near its 52-week high in price per share – good indicator of an upward move

□ Mutual Funds are grabbing up shares – institutional buying = increased demand

Learn to read charts – determining proper buying points are critical in optimizing profit potential and decreasing losses.  Charts take time to learn but IBD has an excellent tutorial for beginners. We’ll discuss basic chart patterns in future blogs.

DON’T BE GREEDY -  let me stress that again…DON’T BE GREEDY!

Don’t try to pick the top – you will never out-smart the market! SOME profit is better than zero.  I’m still crying over Cisco Systems – I was getting rich quickly and wanted just one more split. “Cisco is too hot! There’s no way it’ll drop below $70/share! It will come back, split again, I’ll take my profits, and be one rich happy girl!”  I rode that baby all the way down to $25! GREED = STUPID MISTAKE!

Keep your emotions out of the market! don’t be married to your stock just because it’s something you like.  Remember…it’s about making money…not falling in love!

I have a friend who told me this story.

A patient who had gone through 3 in-vitro 1st trimester miscarriages, finally went to term.  She came into OB with early labor.

During her assessment, the new nurse on the floor couldn’t find heart-tones on the baby.  The nurse just fell apart, couldn’t do her job.

It is easy to get emotionally attached to patients-but you can’t help them if you are in as bad a shape as they are.

You have to have a professional sense of detachment-not that you don’t care, on the contrary.  You care enough to put your feelings aside, knowing someone has to provide emotional support, and not need it themselves.

Emotions and YOUR Stocks

When you are investing in stocks you have to have the same professionalism.

Look at each stock  with clinical detachment-and make difficult decisions.

If you can’t do that, then you have no business investing in single stocks.

If your stock fails to rise, cut your losses at 7-10% below purchase price – NO EXCEPTIONS! Minimal loss is better than total loss!

Investing in stocks is much different from mutual funds, where you leave the research to the pros. It’s comparable to differences between med-surg and critical care!  Stocks require critical thinking and research (and nerves of steel!)   If you enjoy the challenge, minimize your exposure to risks, and remain frugal, then stocks can play a part in your investment strategy on your way to becoming a Millionaire Nurse!

Questions? Do You Have Questions? What stocks have you been buying lately-how have you done in the market?

Post by Julie RN Staff writer for The Millionaire Nurse Blog!

Message from Dr Dean

To learn more about Julie, just click on her name for a link to her bio. We are excited to add her to our team!

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Posted in Investing, Personal Finance 101, Wealth building | 5 Comments »

Gold-Is it Time To Buy? Or Time To Sell?

Monday, August 23rd, 2010

Gold Investing

Gold, is it the best investment since Wal-Mart or McDonalds debuted- many years ago, and since made many investors wealthy?

Columbian Gold Figurine-photo by Casver CC

Or is gold, truly fool’s gold, only worthy of a Gold Bug’s time and study?

In this WSJ Blog article, James Altucher, writes about gold’s two century-long lack of investment growth- a miserly 1%-even counting it’s go-go growth the last few years.

What do I say to those who brag about Gold tripling in value over the past 5 years or so.  I say,”So what!”

Internet stocks hit the stratosphere in the late 1990′s.  Housing was growing 15-25 % in some parts of the country a few short years ago. And my personal favorite- beach property in Florida-where your’s truly has lost a bundle.At their heyday all three seemed to be no-brainer investments.

That is the nature of bubbles.  And my personal best barometer, is “When Dr Dean start’s to think about an investment, it is probably at it’s bubble-licious peak!

Internet Stock Bubble

Think about it.  When the internet  investment bubble was near it’s high, I saw a nurse anesthetist- who didn’t know  a P/E ratio from a vial of Narcan-poring over the Wall Street Journal.    With her  broker holding breathlessly on the other end of the phone, waiting,  for her latest pick.  She no longer reads the WSJ….

Housing Bubble

Another acquaintance in another part of the country, has had several foreclosures, on his flipping flops in the housing market.

Beach Property Bubble

And finally, there is yours truly, who is still holding beach property, at 25% of its former bargain price,(so I thought!)  Just when I thought the market might be turning, BP had to turn loose a couple billion gallons of oil on my beloved Gulf Coast!  Saying it’s like throwing gas on the fire (sale) would just be too easy!!!

Calling Market Tops

Years ago, there was a saying on Wall Street-called the Business Week Sign-if an area of investing was featured in Business Week-it was probably at it’s top!

That is just one more sign of the herd mentality.  It is emotionally more satisfying to follow others, than to make a decision all our own, based on facts as we can determine them.

So based on the “Dr Dean’s Investing Forecast” I have been more and more tempted to buy gold recently-probably a sure sign it is close to its top-buyer beware…..

Or. is this recognition of my failings,  a sign that I am becoming more mature-Nahhhhhh!

What say you, Gold Bug, or Gold Bear?  Or do you care??????

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Posted in Wealth building | 10 Comments »

Making Money From Nothing: Can YOU Do it?

Friday, July 30th, 2010

Money for Nothing

Myths, Mystics, and Magicians conjure up visions of the supernatural.  The idea that something worth having can be created out of thin air, without blood, sweat, or tears is an idea that has enthralled kids and kids at heart for centuries.

The billion dollar success of the “Harry Potter” series with the emphasis on magic wands, flue dust, invisibility cloaks, and spells is just a recent reminder of our fascination with making something from nothing.

Magic-Wand-by-terwilliger911

But Shakespeare, had his witches, as King Arthur had his Merlin.  The goose that laid the Golden Egg, and spinning hair into gold, also come quickly to mind.

The modern day equivalent can be found in those that want to turn a quick buck, without doing their due diligence.

This might include:

  • Lottery tickets
  • Single stock investing
  • Texas Hold-em
  • Flipping homes
  • Resort real-estate

Brett Arends, in his column in the Wall Street Journal, recently wrote a story on the Ten Stock Market Myths That Just Won’t Die.

I will summarize a few of those  stock market myths here, with my commentary-(apologies to Mr Arends)

  1. This is a good time to invest in the market-I am guilty of this one.  My thinking is, that when everyone is bearish is a good time to be bullish.  I do think this is true, but that doesn’t mean it will be true today!  It also may take a year for everyone to figure out the sky is not falling-so you have to have a strong stomach and deep pockets.
  2. Stocks on average make you 10% a year- this may have been true over the past 100+ years-but we have had zero growth over the last decade.  Does that mean we are going to double in the next couple of years- I wouldn’t hold my breath.  I think those who base their retirement earnings on that number, may be disappointed if they are going to retire in the next 20 years.
  3. Our economists are forecasting…….-Economists opinions, are equal to weather people in my mind.  They may be able to predict the next 24 hours-beyond that is a guess.
  4. This is a stock pickers market- I hear this one every day,  on the business channel, while I eat my homemade p.b.&J gourmet lunch.  Studies show the average mutual fund under performs the market-so where is that damn stock picker when you need him.

For the rest of the list-check out Brett’s article-it’s good for a laugh-before you cry.

So what are we to do, if we want to increase our wealth, and don’t want to play the lottery with our savings.

Dr Dean’s wealth building  secrets:

(I am not going to make you slash your palm, and mix your blood with mine-like Clint on “Outlaw Josey Wales”…..)   But let’s just keep these between me and you.   shhhhh….

  • Start early-compound interest is your friend.
  • Live well below your means and save like hell!
  • Work your ass off! Now this doesn’t mean slaving away for 50 years in a minimum wage job.  It means working strategically, to increase your value in this economy.  That may mean additional schooling, OJT, multiple streams of income.  Most millionaires made their money consistently working, adding value-for their company, their employer’s company, or themselves, not by someone giving it to them.
  • Use your time wisely- I am writing this during a time when a patient canceled her appointment.  Make sure you have things to do during your down-time that are constructive.  Turn off the television, phone, and other distractions.
  • Diversify-and this doesn’t mean invest in 5 different categories of stocks-as Cramer does during a segment on Mad Money!.  It means investing in 5 or more categories-stocks, bonds, commodities ( Precious metals, energy, grains, industrial metals like copper), real-estate, and yourself.  You don’t have to do this all at once-gradually spread out your resources as you build them.

I promise there is not an original thought in the list above. (You are saying no-duhh as my kids were fond of muttering!) The secrets to success are not secrets at all.  They cannot be conjured up with a Magic Wand, even a special one found at Diagon Alley!

Secrets to Success

Like most things in life, the secrets to success should be called the “obvious path to success”.  The difference between those who succeed and those who don’t is frequently the difference between those who make the hard choices and sacrifices.

Now I don’t judge success by bank accounts, and monetary success.   Balancing your life between your family, friends, job, and spirituality-can make you rich in many ways-but if you want money for retirement, or to allow freedom of choice-then develop a plan and go make it work.

Reader Questions:

Do you know any magic ways to make money?  And will you share them?

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Posted in goal setting, Retirement savings, Wealth building | 5 Comments »

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