Make your own ETF!

Many investors have become big fans of exchange- traded funds (ETFs).

This type of investment allows Investors to buy a group of stocks in a particular market sector or a wider market segment.   A major problem with ETF’s is that you have to take the good stocks with the bad.   I encourage you to create your own ETF. 

The internet has provided an excellent benefit to investors with online brokers.   Investors now have the ability to make their own ETF.   Here’s how.

• Choose a sector you believe will show growth during the remainder of 2010. 
•  Devise the criteria for inclusion. 
• (Suggestions:  A company’s corporate responsibility and sustainability initiatives may be important to you.  The input from the Management’s Discussion and Analysis.   The last reported quarterly earnings.  The important thing is to be able to quantify them in some way.  For example, a company that has high probability of successful innovation according to analysis might render a 10 on a 1-10 scale.  You develop your own rating system based on your insight. ) 
•  Select the top two or three companies in each industry classification.
• • Research each company diligently by using the latest annual report .  I cannot stress enough the importance of using this important document as a primary research tool. 
  • Check into the latest press releases. 
•  Decide ahead of time what your portfolio stop loss percentage will be and stick to it. 
•  It is significant to treat the group of stocks as one equity position.   This is what makes it an ETF.   Spreadsheets can easily calculate group end of day and intraday returns. 

Good luck.   I welcome feedback from your ETF results!

Research many annual reports and 10-k’s easily with a complete one stop source to obtain online and hard copy annual reports at publicregister.com and publicregisteronline.com.  Corporate sustainability reports are now available.

Operation Hope: The common sense approach to financial education

An interesting global initiative that is comprised of a 3-principaled concept founded by John Hope Bryant, Operation Hope features Banking on Our Future (teaching school children about money), HOPE Coalition America (financial emergency preparedness and disaster recovery), and the HOPE Center Banking Network (loans, bill pay, computer literacy, understanding banking principles).  HOPE is leading the “silver rights” movement towards making free enterprise and capitalism relevant to all underserved communities.

Bryant’s mantra from Civil rights to Silver rights is appropriately explained as follows:  ” SILVER RIGHTS- a concept that documents and validates the next phase of civil rights: the empowerment movement not only of American minorities, but of majorities as well. That is, we transition beyond giving a fish, beyond teaching to fish, to owning the pond itself. In the time of a vanishing middle class, John Bryant and Operation Hope, his brainchild, would develop stakeholders, that group between the working class and the middle class, not making more money, but making better decisions with the money they have.”

Although hindsight is oftentimes 20-20, a fundamental notion of primary monetary education is necessary.  So many of our youth and young adults are not trained in common sense practice of how to appropriately handle money. 

Taking this a step further, it is essential that anyone who is market invested either in brokerage accounts or pension plans (including 401-K plans) should know the basic principles of sound financial management.  Investment ideas need to be born from prudent research.  The National Association of Investment Clubs (NAIC) does  a good job of  providing basic adult education.

It is up to you to acquire modern due diligence.  Careful scrutiny of the financial statements, management’s discussion and analysis and copious notes to the financial statements all of which are found in a company’s annual report.   Also, reading through the corporation’s social responsibility and sustainability is paramount  as a well-informed stakeholder. 

Annual reports can be easily found on over 5,000 publicly held companies at publicregister.com and publicregisteronline.com.   CSR and Sustainability reports are also available for select companies.

Two – way communication: The real transparency!

               After placing an order on Amazon.com over the weekend, marketing insightfulness occurred.   As I was deluged with all the product information including a Product Description, Customer Reviews, Items Frequently Bought Together, What Do Customers Buy That Viewed This Item, Customers Who Bought This Item Also Bought (A List Occurs),  I had an epiphany regarding corporate transparency.

                What if the same set of reviews and listings were available on each publicly held company.  A review by the people that matter, the savvy investors.  Imagine the social interaction that could take place regarding company information.  A potential investor reads an annual report, then reviews it.  Bringing to light an aspect that another potential investor might miss.  There is also a spot for investors that invested in this company also purchased …….  We wouldn’t have to rely on the traditional analyst reports.  We could actually get feedback from the trenches.  People who bought into the company.   For instance, even the thumbs up grading system could be used.   (We like this company CCC.)   People could retweet comments from C-level executives.  The real beauty of this type of social media would be the honest interaction between potential investors and corporate communications  with very few words.   Just the core message transferred to the masses.

                The basic fundamental of investment research — the annual report — needs to  be catapulted to into up to date  communication norms.    It is paramount to compare strategic information obtained from these reports  to make wise investment decisions.   Pertinent transparent information can oftentimes only be found in an annual report.   

                Order your favored company’s annual report today at PublicRegister.com and PublicRegisterOnline.com – then do your fellow investors a valuable service  –  talk or tweet about it!

Executive Hedges Should Come into the Light.

I read an interesting article in BusinessWeek issue dated March 8, 2010 entitled Hiding Behind Their Hedges:  How Some Executives Are Selling Their Companies Short; by Jane Sasseen.

The main points of the Sasseen article can be summarized as follows:

a)      Executive management especially those paid with stock options can hedge the price of the stock by a zero-cost collar or a prepaid variable forward contract.   (Defined at http://www.optionsforoptions.com/withstock/collar.html and http://en.wikipedia.org/wiki/Variable_prepaid_forward_contract)

b)      Company executives that use these hedging vehicles seem to have a direct correlation to stock price down turn in the months that follow the hedge. 

c)      Disclosure of this activity is hard to monitor

From the standpoint of any of the C-suite (CFO, CEO, CTO, CIT) executives, I don’t blame them for actually wanting to turn a stock option into cold hard cash.  Isn’t the intent of stock compensation to add an incentive to the executive to bring the company’s stock price higher?  I suppose if a person is aware that it will be difficult to accomplish (for reasons beyond your control), it makes sense that you would want to hedge your losses and maximize your gains. 

If the correlation stated in item b above is correct, then it would be nice if  the average investor could obtain this type of information.   It might then be easier to determine if a company’s stock should be shorted or not.    I poured through Form 3, 4 and 5 filings about beneficial ownership at sec.gov for executives I knew had created hedge instruments.  I couldn’t fully grasp if the executives had created a hedge vehicle or not from the filings.  Technically what they are doing is not illegal.  Furthermore, unless a transaction actually occurs it is not reportable.  Why would the SEC want to know about a complex option theory if it hadn’t come to fruition?

Since this information is not readily available as an investment research tool, it is extremely important to diligently obtain as much knowledge as you can on the company.  Vast amounts of pertinent information can be found in the company’s annual report!  Annual reports are required by the SEC for a very good reason.  It is called “disclosure”. 

As the December fiscal year end reports become available, it is extremely important that every investor make it a point to read through a company’s annual report.  Read and understand the Management’s Discussion and Analysis and the key executive officer letter.   Then act on what you glean!

Check out http://publicregister.com and http://publicregisteronline.com for a complete list of annual reports for publicly held companies.

Vulnerability buzz – the new honesty!

     One of the things the economic crisis of 2008 and 2009 taught me is that there is a new vulnerability buzz. Susceptibility and openness brings a new level of transparency that is gaining traction in the arena of relationship marketing.

     According to a blog by John Baldoni, Vulnerability Paves the Way for Healing posted by Patricia O’Connell on February 19; Tiger Wood’s attempt at an apology seemed rehearsed and didn’t go far enough to his core to be believable. The following is an excerpt, “Sincere apologies are reflections of an authentic self. As such they must signify more than a realization of wrongdoing–they must demonstrate a commitment to making things right again. Very importantly a person who apologizes must show a degree of vulnerability; he has to show that his wrongdoing has been hurtful to others and therefore hurtful to him.” He further states, “There is another aspect to vulnerability; it has mass appeal.” It is this mass appeal that makes the vulnerability concept popular. Small business and the economy have been hurting and now it is okay to say just how beat up we have been as a society.

     Management guru, Patrick Lencioni’s, new release Getting Naked promotes vulnerability for service companies. He encourages companies to follow a model that requires the service provider to be vulnerable—to embrace uncommon levels of humility, selflessness and transparency for the good of the client. After reading the book, I am anxious to give it a try.

     Sarbanes Oxley attempts corporate transparency through promotional pieces such as annual reports that expose facts. It now appears trendy to be honest with clients as well as potential investors. For so long, vulnerability may have been linked to weakness. It now is an admission of strength to be able to have the courage to point out our inadequacies and ask for understanding to help grow and fix our businesses and/or our moral shortcomings.

     Ponder the following quote by Madeline L’Engle, “When we were children, we used to think that when we were grown-up we would no longer be vulnerable. But to grow up is to accept vulnerability… To be alive is to be vulnerable.”

     The tools have always been there to draw upon transparent information. It is up to us to seek the truth and have the courage to accurately access the information we receive. Visit publicregister.com and publicregisteronline.com to obtain free annual reports on over 5,500 publicly held companies.

As the Olympiad begins, a few thoughts.

I watched some televised sporting events during the past few days.   Thoughts of global warming brought to mind global sustainability efforts as I watched the volunteers haul in manmade snow and dry ice because it was quite warm and raining.  More on that topic in another blog.

The human drama of athletic competition during the 2010 Vancouver  Winter Olympics entertains me.  I listened intently during the Olympics coverage of the financial struggles many of the American athletes’ face.  I specifically recall Mark Ladwig, the U.S. pairs figures skater.  Here is a young man with a wife and a young  5 month old baby.  The announcer blurted out during the telecast the mountains of debt this man has incurred while he has tried to hold odd jobs to allow for a rigorous training schedule.  The amount of dedication this young skater certainly struck me.   It also struck me to hear the story of the female hockey player, who attended a private high school in Connecticut and then went on to graduate from Harvard.  There was limited financial concern during her interview.  She actually admitted that she enjoyed playing hockey  more than sitting behind a desk thereby utilizing her Harvard degree.  She stated she would then have to grow up.   Such was the case with many of the international athletes  mentioned during the opening ceremonies.  Many of them attended U.S. boarding schools and took up their sport while a student on our soil.  My inner nerd relishes the facts that abound during the telecasts – the information about the athletes, the countries and the city that hosts the Olympiad.    

As the December fiscal year end  annual report reporting season draws closer, I hope that all investors will get in touch with their inner nerd and seek out and relish the facts about companies they are going to invest in.  An annual report will provide you with the information not easily found elsewhere.  Transparency is often found in the notes to financial statements or in excerpts from the management’s discussion and analysis.  

The more education one can obtain in any given discipline whether sports or investing  is paramount to success. 

Easily obtain the information you need.  Visit publicregster.com and publicregisteronline.com to obtain current annual reports on over 5,000 publicly held companies.  Information available to you at the click of a mouse.

How’s the triple bottom line?

More publicly held companies are forced to compete in the global environment to increase profit.  The importance and incidence of corporate responsibility reports  (CSR) are increasing.  European reporting standards are finally pushing global conglomerates to enter this reporting arena. 

CSR is important for the following reasons:

• All stakeholders including customers, vendors and financial lending institutions are influenced by a company’s reputation in social and environmental areas. Stakeholder relationships are crucial during economic recessions and downturns
• Companies that care attract better recruits in the competitive employment market.
• CSR enables the strategic management benchmarks for SWAT analysis of  internal and external risks in social as well as environmental areas.
• Existing socially responsible actions are media magnets; therefore, becoming more visible and easily communicated. 
• Social and sustainable responsibility consistently proves reduction in operating costs overall.  Although implementation might have high cost ratios, the return on investment outpaces over the long term. 
•  Social performance increasingly influences investors’ decisions, as the ethical investment segment grows stronger.  

A recent Businessweek article by David Boboslaw, dated February 3, 2010 Social Investing Gathers Momentum cites this type of investing is no longer considered a niche.  Additionally, “Socially responsible funds are putting up impressive numbers and their reach is spreading.”

Due diligence on a company’s triple bottom line (people, profit, plant) becomes imperative to implement and maintain stakeholder relationships.  Finding all information necessary to assess  a company’s triple bottom line proves problematic.  It is time consuming and leads to research on several different web sites. 

The PublicRegisterOnline.com announces one source – one site to obtain comprehensive responsibility, sustainability and financial reports; namely, Triple Bottom Line Profiles. 

Visit http://www.publicregisteronline.com/3BL/3BLindex.html to check out a sample of listed companies.  Let these companies know that you are interested in their CSR efforts and applaud their transparency and commitment to people, planet and profit.

Greetings from Walt Disney World !

Even a nerd enjoys a family vacation.   Please allow me a few observations while on this trip.

I see that the global economy has impacted Mickey Mouse.  Three of the four BRIC (Brazil, Russia, India and China) nations are present at Florida theme parks.  More than a third of the attendees to the theme parks are from South America.  High school students on independent tours and young families are abundant.  Albeit our South American friends are on their summer holiday which began in mid December and ends in last week of January.   However, I note there is an abundance of cash among this group.  Most probably from their strong growing economy.  I note large groups of Brazilians everywhere I look at the popular attractions. 

I sat next to a young woman from India that is visiting with a large group from her home country. More than 50% of the families and people I meet are from countries other than the United States.   Approximately, 40% are from Brazil, China and India.   The pundits proclaim that is where the money is.  I saw this with my bespectled eyes! 

Chinese and Brazilian ADR’s, ETF’s and global target funds are still in favor and after this trip I can honestly see why!

Follow me on twitter/financialnerd.  Visit publicregister.com and publicregisteronline.com.

An oxymoron for 2010 : Transparent Geithner

On October 6, 2009, the Wall Street Journal published an article by Meena Thiruvengadam, “Geithner Calls for Greater Transparency at Development Banks” . The following is an excerpt from the article, ” U.S. Treasury Secretary Timothy Geithner on Monday called for more transparency at the World Bank and similar organizations, saying donor countries want to be assured any new funds provided will be well-managed.” This statement seems outrageously hypocritical. American taxpayers want to be assured that funds provided in the TARP bailout will be well-managed especially at AIG.

Geithner’s demand of transparency is now laughable. Here is a man so intent on advancing his career that he recuses himself from the same standards by which he holds others. I often wondered why Lehman Brothers was allowed to fail but AIG was not. Although I hate to admit that the answer probably lies in the hidden relationships that will come out in the weeks ahead. Those strong bonds between powerful men in the federal reserve system and the board room of AIG. Is it only companies without political mentors that need to be transparent because they cannot be offered protection? Mr. Geithner has modeled that transparency isn’t a governance as much as a discretionary convenience to benefit oneself and others.

AIG stock closed up 2.66% on Friday, January 8, 2010 in the wake of the AIG revelations. It advanced more than most other companies in its sector. Why did AIG disclose this information now? I assume their motive for full disclosure will become apparent in the weeks ahead as well.

Timothy Geithner’s definition of “transparency” is certainly not transparent to the American taxpayer or individual stock market investor or is it now…. ?

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Financial nerd promotes annual reports for transparency at www.Publicregisteronline.com and www.PublicRegister.com .

A systematic approach to make 10 realistic resolutions that will succeed in the 2010 New Year!

According to George Santayana, those who forget history are doomed repeat it!  Here is a no-nonsense approach to finding resolutions that help us learn and grow from our mistakes.  

Step 1:  Make a (short) list of the mistakes you made or things that you could have done better in 2009. (BE OBJECTIVE AND HONEST!)  

Step 2:  Group the items into the following categories: 

Investments  (Long term, short term, college tuition plans, retirement)

Finances (Income, expenses, debt, frugality)

Family (parents, siblings, husband, children)

Friends

Health (mental, physical)

Spirituality (religious beliefs, core values)

Work (job tasks, co-workers)    

Note:  Do you have several faults in one category?  You may want to do some research and self-help as to the underlying reason.     

Step 3:  Outline 2 or 3 strategies that act as a change agent for the situation in each category. 

Step 4:  Select the strategy that is the most logical for you and will give you the best odds of success.   

Step 5:  Your best strategy will be your best resolution.   Compile your list of 10 resolutions.  

Step 6:  Order the list.   Implement the resolutions that you will be most successful at first to build confidence and momentum. 

 For example:   Investments  – Mistake=  Follow the crowd to seek investment opportunities.  Cost me money as a late entrant, and the long term hold philosophy was not adhered too.  Also, cost me money by not holding onto some positions when I should have.    

Strategy 1:  Develop a plan to thoroughly research investment opportunities by due diligence.  

Strategy 2:  Decide for the long term.  Short term rides (day trades) influence the lack of due diligence. 

Strategy 3:  Decide the goals for a position at the time of purchase. 

Resolution:   Be informed.   Digest the earnings reports, but more specifically read the annual report.   You can visit (www.publicregister.com or www.publicregisteronline.com) as a complete resource.  It is important to figure out where the company has been, where it is now and where it is going.   Jump from section to section in an annual report.   It may be pertinent to look at the financials, then the President‘s letter, then the notes.   This approach may lead to fresh information and thought provoking analysis to determine purchases and sales. 

Best wishes for a happy, healthy and prosperous new year!

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