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Best Personal Financial Planning and Personal Investment Articles this Week from Personal Finance Blogs 

Welcome to the August 20, 2010 Edition #154 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security. 

This edition is arranged by subject heading, so that you can browse efficiently.

Enjoy!

The Skilled Investor, Editor

Budgeting and Economics

Jeff Rose, CFP presents 3 Unusual Ways to Save Money posted at Jeff Rose, saying, “Here goes, three unusual strategies that not only save you money but also improve the quality of your life.”

Roshawn Watson presents Economists Blame ME for the Slow Recovery posted at Watson Inc, saying, “We are responsible with our money, yet instead of admiration (or even understanding), these efforts garner contempt as the frugal once again get the blame for dismal economic activity.”

Craig Ford presents 20 Reasons to Start a Budget posted at Money Help For Christians, saying, “This post gives reasons why non-budgeters should consider budgeting.”

Roshawn Watson presents Why Is Debt Really Decreasing? posted at Watson Inc, saying, “In the first quarter of 2008, our debt to disposable income peaked at a staggering 131%. This means for every dollar we earned, we spent $1.31. As of March, our debt as a share of our annual income is presently 122%. If you think this change indicates that we have collectively been so scarred by the “Great Recession” that we are now behaving fiscally responsible, think again. There is a surprising and sad reason why our debt has gone down. Hint, it has nothing to do with frugality.”

Mike @ Green Panda presents The $7.27 Mistake Plus Ways To Avoid It posted at Green Panda Treehouse, saying, “How to make the most out of your money when going out.”

Joe Plemon presents The Real Estate Bubble: What Happened and What Can We Learn From It? posted at Personal Finance By The Book, saying, “Understanding how the real estate bubble inflated and popped may help us spot other financial bubbles before they pop.”

The Skilled Investor presents Save More Money posted at Personal Finance Strategy, saying, “Budgeting and self-control in consumption is far more important than clever investing. Expenditure control and budgeting works, while “clever” investing usually is counter-productive.”

Estate Planning

Peter presents No Estate Tax In 2010 Means George Steinbrenner’s Family And Others Will Save Millions In Taxes posted at Bible Money Matters, saying, “2010 is apparently a good year to die.”

Financial Planning

Paul Williams presents How to Create a Balance Sheet, or How to Calculate Your Net Worth posted at Provident Planning, saying, “A basic step in financial planning is to create your balance sheet. It gives you a snapshot of what you own and what you owe. You’ll need one if you’re working on your estate plan or if you just want to keep track of things.”

Sustainable Life Blog presents Prioritizing Goals? posted at Sustainable Life Blog, saying, “Wondering where to turn when starting to attack debt? Here’s a quick guide on how to help you prioritize your goals.”

Tom @ Canadian Finance Blog presents Will The Fee Only Financial Planner Model Ever Catch On? posted at The Canadian Finance Blog, saying, “Hiring a Fee Only Financial Planner is in the best interest of the consumer. To get unbiased advice you need someone who has no interest in selling you something.”

Ryan @ MFN presents What to Do With an Enlistment Bonus posted at The Military Wallet, saying, “What should you use a large cash bonus for? Pay down debt, invest, spend?”

Ashley Jacobs presents Clogged Cash Flow? 4 Tricks to Restart the Flow posted at Cash Flow Sherpas, saying, “There are so many things that stop us in our tracks financially. Why does getting stuck seem easier than making progress? Here are four popular places we get jammed and four tips on how to remove obstacles from your fiscal flow.”

Frank Knight presents Roth IRAFinancial Software posted at Financial Freedom Plan, saying, “Whether to invest in a Roth IRA or Roth 401k versus their traditional retirement account alternatives is one of the most complex personal financial decisions. Roth accounts do not make sense financially for most people. They are a good deal, for a minority, but you need to do the analysis.”

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, “whether it is running a business or individuals investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.

jim presents Review Your Credit Reports Every Year posted at Identity Theft Wall.

Larry Russell presents No Load Mutual Funds posted at Top Index Mutual Funds, saying, “Superior past performance has simply not been shown to be a reliable predictor of superior future performance. However, low costs can lead you to the best mutual funds.

Financing a Home

Jeff Rose, CFP presents Rent Vs. Owning: When Does it Make Sense to Rent posted at Jeff Rose, saying, “I’ve seen too many cases where young people were so eager to “live the American Dream” and get their first home that they didn’t realize all the little things that come along with being a homeowner. Slow down and do your homework before you take the plunge.”

Jeff Rose, CFP presents Dave Ramsey FPU 12 Real Estate and Mortgages posted at Jeff Rose, saying, “the absolute best mortgage is the 100 percent down plan, but if borrowing is necessary, he teaches to get a 15-year fixed-rate loan with payments that do not exceed more than 25 percent of your take-home pay. He also reminded students to make sure they have a fully funded emergency fund”

Ben presents 5 Good Reasons Buying a House Requires Planning posted at Money Smart Life.

Financing Education

Ryan @ CML presents Where to Open a Coverdell ESA Plan posted at Cash Money Life, saying, “Coverdell ESAs are a college savings account that have great tax advantages. This info can help you find a great place to open your Coverdell ESA.”

Craig Ford presents How to Graduate from College without Student Loan Debt posted at Money Help For Christians, saying, “A step by step guide for those who want to graduate debt-free.”

Health Care

GrrlScientist presents Free Money? posted at This Scientific Life, saying, “I just mailed a letter back to the comptroller for Columbia-Presbyterian Hospital [now: New York-Presbyterian Hospital], which promises a refund for one of several duplicate charges that the hospital levied against me for medical bills that were “unpaid.” I know I should be happy about this, but instead, I am very very angry. Why?”

Money Beagle presents Flexible Spending Account Review posted at Money Beagle, saying, “It’s always good to do a check on where you’re at every now and then if you participate in an FSA or HSA plan.”

Income

MoneyNing presents Three Reasons Stay at Home Parents Should Consider Working Part Time posted at Money Ning, saying, “Working part time is not as bad as it seems, even for stay at home parents!”

MoneyNing presents 15 Ways to Earn Extra Money posted at Money Ning, saying, “There are lots of ways to make more money. Here are 15 to start you off.”

Paul Williams presents The Three Methods of Making Money posted at Provident Planning, saying, “Trying to think of ways to make more money? This article helps you consider the methods people use to earn money. It might just help spark that idea you’ve been waiting for!”

Alexander presents General Mills Pays Dividends posted at Dividend Stocks, saying, “General Mills General Mills is a good stock for fixed income investors looking to add some income to their portfolio.”

Investing

Mr. Money Smarts presents Personal Finance Basics: The Power Of Compound Interest posted at Smart On Money, saying, “The power of compound interest – just make sure you’re earning it!”

freefrombroke presents Investment Strategy For Beginner Investors posted at Free From Broke, saying, “Some ideas for the beginning investor in, what is for many, the confusing world of investing.”

Super Saver presents Faith in our Long Term Future posted at My Wealth Builder, saying, “I still believe it is right to have faith in the historical long term returns of the stock market.”

Praveen presents Caveat Emptor: If An Investment or Opportunity Appears Too Good To Be True, Beware! posted at My Simple Trading System, saying, “Beware of investment opportunities that seem to be too good to be true.”

Sun presents Watch Those Fees to Improve The Performance of Your Portfolio posted at The Sun’s Financial Diary.

Dividends4Life presents 3 Signs of an Impending Dividend Cut posted at Dividends Value, saying, “Most investors are not surprised when a company cuts its dividend. They saw the early warning signs well in advance of the actual cut. Here are three signs that a company is heading toward a dividend cut:”

Tushar Mathur presents Can’t Control the Markets? Try controlling the Costs posted at Everything Finance, saying, “The financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results may have left you feeling concerned over your financial future. You’re not alone.”

FMF presents Invest in All Six Asset Classes posted at Free Money Finance, saying, “Here are the six areas where you should be investing your money.”

The Skilled Investor presents Market Timing posted at Investment Portfolio Management, saying, “Always stay invested to earn risk premiums. You must have your money invested and at risk to get risk premium returns. Jumping out and in or “timing the markets” doesn’t work.”

Super Saver presents Profiting from the Bond Bubble posted at My Wealth Builder, saying, “Over the past two years, our bond investments have done very well. Lately, I’ve been thinking that results are not sustainable, and that this may be a bond bubble.”

marc ryan presents The Vanguard Group, Inc. and Canadian investors – IndependentInvestor.info posted at IndependentInvestor.info, saying, “One of our readers, Eileen B., recently wrote to us: ‘’There are Vanguard ETFs now available from Canadian online banking/investing sites. These do not get the same positive recommendations in the Canadian media as do the iShares or Claymore offerings. Can you think of a reason for that? Why do Canadian investors not hear more about Vanguard? ‘’This commentary seeks to explain and help fill that information gap. Even though it is a US entity, there are many reasons why Canadian investors should take the time to learn about Vanguard and its products.”

Zach Scheidt presents Solar Selloff Close To Exhaustion? posted at ZachStocks, saying, “Solar stocks are off sharply due to Euro-Zone concerns. Trina Solar could end up being an exceptional value if earnings remain somewhat stable and management is able to calm investor fears.”

Dividends4Life presents 16 Confident and Secure Companies Boosting Dividends posted at Dividends Value, saying, “Are you confident and secure in your investing process? It appears many people are not. We must follow a process we are 100% confident in. Doubt is the gateway to destructive behavior. For me, dividend growth investing is what I am confident and secure in.”

The Financial Blogger presents Best 50 Canadian Dividend Stocks posted at The Financial Blogger, saying, “With the plethora of dividend stocks out there, here are the best 50 canadian dividend stock picks.”

Intelligent Speculator presents Of course Amazon (AMZN) results are terrible!! Blame Apple (AAPL) posted at Intelligent Speculator, saying, “Amazon isn’t doing so well with the iPad now out in the market.”

Frank Vertin presents Top Index Funds posted at Noload Mutual Fund, saying, “Top ten no load index funds that track the Standard and Poors 500 composite index in terms of lowest costs.

Dividend Tree presents Dividend Investing and Businesses with Moat posted at Dividend Tree, saying, “In general, companies with moats in their business are very good dividend growth providers. However, the opposite may not be true.”

Frank Knight presents Municipal Bond Financial Software, posted at Personal Finance Software, saying, “Municipal bond investments and your state and federal marginal income tax rates: Some investors hold municipal bonds in an attempt to reduce their tax burden. This article discusses the relationships between tax-exempt municipal bonds, bond market returns, marginal tax rates, and investment asset tax location.”

Silicon Valley Blogger presents Where To Invest Extra Cash and Savings Today posted at The Digerati Life

Tomas Escent presents Stock Trading Automation posted at Nerds on Wall Street

Managing Debt

Tim Chen presents Costco TrueEarnings: the Best Credit Card for Well-Rounded Spenders? posted at NerdWallet Blog – Credit Card Watch, saying, “When you, as a credit card user, are hunting for ways to maximize rewards, attention-grabbing 5% cash back offers can be tempting. But we’ve made no secret of our view that these cards rarely offer the best deals. If you just want to find the one card that fits your spending habits the best and move on with your life, the Amex TrueEarnings Card from Costco might be exactly what you’re looking for.”

The Smarter Wallet presents Are Debt Counseling Services The Way To Debt Relief? posted at The Smarter Wallet, saying, “On debt counseling services.”

Jeff Rose, CFP presents How Important Is Your Credit Score posted at Consumer Boomer, saying, “If you have bad credit or no credit at all, you have undoubtedly run into trouble getting approval for credit or good terms on the credit for which you are approved. Here we look at the importance of your credit score and how you improve your score to better your life.”

freefrombroke presents Sure-Fire Tips To Renegotiating Your Credit Card Debt posted at Free From Broke, saying, “Ways a person can re-negotiate their credit card debt.”

Big Cajun Man presents Found Money Trap posted at Canadian Personal Finance Blog, saying, “Found money should go on debt no matter what!”

Tim Chen presents Amex is Hiking Fees on the Starwood Preferred Guest Nearly 50%, and it?s Still a Good Deal. posted at NerdWallet Blog – Credit Card Watch, saying, “American Express has started sending out letters to its cardholders, informing them that it plans to raise the annual fee from $45 to $65 starting October 14th, and it’s modifying the rewards program a bit. If you’re a cardholder, you may be considering canceling the card in anger at the prospect of a higher fee, but we don’t think you should.”

Learn Save Invest presents 5 Steps To Debt Reduction posted at Learn Save Invest, saying, “Here are 5 tips you need to master in order to reduce your debts.”

Miscellaneous

Joe Plemon presents Should You File That Insurance Claim? posted at Personal Finance By The Book, saying, “There are times when filing a legitimate claim can earn you a penalty from your insurance company.”

PT presents Investment Properties: Should You Buy One? posted at Prime Time Money, saying, “Should a rental property be a part of your portfolio?”

Mike @ Green Panda presents Stop Waiting For The Big Idea posted at Green Panda Treehouse, saying, “Just thinking about the next big thing might just be a complete waste of time. Take that step towards your goals.”

The Wise Squirrel presents How Much Money Would it Take for You to Relocate? | Squirrelers posted at Squirrelers, saying, “When planning out your financial future, where you choose to live can be very important. How big of a role does money play?”

Pasadena Financial Planner presents Vanguard Investment Performance posted at Top Mutual Fund, saying, “Compares Vanguard’s actively managed mutual funds and Vanguard’s passively managed index mutual funds. Vanguard investors should read and understand this study.”

nissim ziv presents What are your career goals? How do you plan to achieve these goals? posted at Job Interview Guide, saying, “When you are asked about what are your long term career goals, consider it as a chance to speak about how you are stable in your professional and personal life, and how you would like to grow with the company that you are working for.”

Joe Plemon presents This Family Paid Cash For Their Car; You Can Too! posted at Personal Finance By The Book, saying, “A story about some friends who are excited about paying cash for their car. Turns out they are doing lots of things right.”

Ryan @ CML presents Best Business Credit Cards posted at Cash Money Life, saying, “Best business credit cards for small business owners who need credit cards to help manage and run their business.”

Mike Piper presents Replacing the 2% Schwab Credit Card posted at The Oblivious Investor, saying, “2% cashback on all purchases is hard to beat. Unfortunately, the card is no longer available to new users. What’s the next best thing?”

Retirement Planning

FMF presents How to Catch Up on Retirement Savings posted at Free Money Finance, saying, “If you’re behind in saving for retirement, this post will give some suggestions on how to catch up.”

Jules Wells presents Retirement Calculator-Retirement Savings Software, posted at Retirement Financial Planning, saying, “This article helps you understand the trade-offs between traditional and Roth tax-advantaged retirement plan contributions, including Roth 401k and IRA retirement plans. It helps with the 2010 Roth conversion decision.”

FMF presents Three Good Reasons for Retiring and Three Good Reasons for Not Retiring posted at Free Money Finance, saying, “Three times you should and three times you shouldn’t retire.”

Jeff Rose, CFP presents Basic Rules of the Traditional IRA posted at Consumer Boomer, saying, “It is important to understand how each type of IRA account that will best meet your current and future needs. Here we look at the traditional IRA which is a popular personal savings plan and the basic rules of this type of account.”

studenomist presents Is Retirement Becoming Obsolete? posted at studenomics.com.

Jacob A. Irwin presents What Percentage of My Salary Should I Save for Retirement? posted at My Money Blog – Personal Finance and Investing, saying, “A look at a spreadsheet tool I created to assist readers in figuring out how much they should be saving for retirement.”

Larry Russell presents Roth IRA Conversions posted at Best Financial Planning Software, saying, “Trying to decide about a traditional IRA to Roth IRA conversion without first having a comprehensive lifetime financial plan in place makes absolutely no sense. Without such a plan, you cannot figure out whether or not you are likely to achieve the tax savings in retirement that would warrant paying higher taxes now.”

Michael Pruser presents How Much Dough Does A Roller Need to Retire? posted at The Dough Roller, saying, “Wonder what the magic number is to retire comfortably? We can help you out.”

Risk Management and Insurance

Jeff Rose, CFP presents Term VS. Whole Life Insurance- Which Is Best For You? posted at Consumer Boomer, saying, “Knowing which option is better for your unique situation depends on your understanding of what term life and whole life insurance policies are and how they differ.”

Big Cajun Man presents Self Insured Company Disability Plans posted at Canadian Personal Finance Blog, saying, “Sometimes insurance is not as safe as you might think (in Canada at least)”

FMF presents How to Know Whether or Not You Need Long-Term Care Insurance posted at Free Money Finance, saying, “Some tips on how you can determine if long-term care insurance is for you or not.”

Savings

Madison DuPaix presents 9 More Ways to Maximize Back to School Savings posted at My Dollar Plan, saying, “Great tips on saving during the back-to-school season!”

Joe Plemon presents You CAN Afford That Baby – Ten Money Saving Tips posted at Personal Finance By The Book, saying, “I want to assure you that you can afford to bring that baby into this world even if you aren’t sitting on a huge nest egg. These ten tips will help.”

Madison DuPaix presents How to Pay Your Mortgage with a Credit Card posted at My Dollar Plan, saying, “Here’s a great idea for saving on your recurring bills!”

Ryan @ MFN presents Military Savings Deposit Program (SDP) posted at The Military Wallet, saying, “The Savings Deposit Program is a government sponsored savings account that guarantees 10% return on interest for deployed military members.”

KCLau presents Are You Rich in Internal Assets? posted at KCLau’s Money Tips, saying, “pay attention to the internal assets”

Jim & Martha presents Royal Caribbean Cruise Lines Shareholder Benefits posted at Wanderlust Journey.

Taxes

Intelligent Speculator presents Please do not let the Bush tax cuts expire posted at Intelligent Speculator, saying, “It may be easier to take the popular position and have the Bush tax cuts expire, but I personally think otherwise.”

Brenta Bevis presents The Pros and Cons of Hiring a Professional Tax Preparer posted at Jeff Rose, saying, “As with most things in life, taxes are not always so black and white but can be extremely complicated and dependent on each person’s unique financial situation. While tax season is still far from the near future, I have learned that it is never too late to start preparing for your next tax return and doing so in advance will save you not only money, but perhaps more importantly, time. Unfortunately this is something that took me years to learn.”

Jeff Rose, CFP presents Things to Know About Paying Taxes on Earned Income posted at Jeff Rose, saying, “While there are many different forms of taxation, we are going to focus on income tax. This is the tax you pay on earned income. Here are a few things you should know about paying income tax.”

Jeff Rose, CFP presents Simple IRA Rules For the Small Business Owner posted at Consumer Boomer, saying, “The SIMPLE IRA is designed with small business owners and employees in mind. Where many smaller companies lack the resources to offer retirement plans to their employees, the SIMPLE IRA makes it possible for contributions to be made through salary reductions (for employees), while the employer can provide a matching contribution.”

Darren presents How To Determine If Your Social Security Benefits Are Taxable posted at MORE than Finances, saying, “You may think it’s unfortunate enough that social security taxes are already taken out of your paycheck each pay period. But did you know that when you receive your social security benefits in retirement, they may be taxed again?”

Financial Freedom Plan presents Roth IRA ConversionFinancial Software, posted at My Financial Freedom, saying, “The Roth tax optimization puzzle for asset conversions, as well as for annual Roth contributions during working years, is one of the most complex decisions that the ridiculously complex US taxation and retirement planning system forces upon individuals.”

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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The book did not disappoint.  I didn’t really know what to expect going in.  I had already started reading Erin Arvedlund’s book on the same topic from a different viewpoint and got bored with it and feared Markopolos’ book would be similar.  (I’ll write a review on the other book whenever I get back to it, if I do.)  Instead Markopolos was able to hold my attention throughout the book.  It feels like an autobiography of himself as much as a historical report on the ineptitude of the SEC.  Markopolos is an admitted nerd and it shows through in his stories and attempts at humor.  He comes across as an extremely intelligent, very likeable guy which is probably why this book works so well while covering what some would consider a dry topic.

As much as he gets into the details of each of his multiple submissions to the SEC pointing out the red flags and impossibilities of the Madoff being legit, Markopolos manages to hold the reader’s attention.  You can feel his anxiety as he continues to push the SEC and they fail to react.  (I felt the additional anxiety from the publisher who nagged me weekly for the past month to get this review posted.)  Since Markopolos and his team first identified the fraud so long ago he’s able to give a highly detailed account of their first-hand research and struggles to topple Madoff, even though there was no financial reward in it for them other than bringing down the competition.

Markopolos explains how Madoff sold his the numbers and strategy behind spectacular performance to potential investors.  It’s basic math for readers of this blog who understand options even slightly, but yet the SEC still didn’t get it while it’s their job to stop schemes like this.  Amazon is selling No One Would Listen for $15 which is well worth the fascinating read of the investigation of a once in a lifetime fraud and how Madoff got away with it for so long.

Female Anchor (FA): We are going to need a really big package to make this worth the effort.

Male Anchor (MA): How big does the package need to be to make you happy?

FA: I really think we need something that can go deep enough to put a smile on everyone’s face. The stimulus package will have to penetrate deeply to reach all consumers on a personal level.

MA: What do you have in mind that can really stimulate us the way you think we need it.

FA: The economy needs longer, harder stimulation. It has to be something that doesn’t let the economy turn limp prematurely.

MA: So what you are saying is that stamina is important for what ever Congress whips out in front of us?

FA: Exactly, we’re going to have get Congress to give it up like they always do for the automakers instead of pretending they don’t want it when we all know they do.

MA: I think you are on to something. Government has been massaging numbers for too long. It felt good at first, but we need real hard figures to keep the CEOs from pulling out from their plans for growth that rises to meet expectations, but for how long do you think the Fed can keep it up?

FA: It’s just that the Fed was late in trying to lubricate the wheels of business and now it’s hard to be sure any stimulus package will be able to penetrate enough without leaving us sore with inflation for years to come. The more the Wall Street goes down on this, the harder it is going to be to get it up again. These results could stay limp for a long time.

MA: The new administration needs to find the sweet spot and focus on fulfilling the need at this point. They are going to have to try out some new positions to see what feels best for the people on Main Street. It seems everyone wants a piece of the action at this point and they all seem to be stroking the big ones in charge to get what they want.

FA: Anyone who is receiving already must know someone on top.  Some senators have had their hands all over this for months and many wonder if the larger package will ever come. At the same time, business heads are swelling with excitement.

MA: It’s not just the government, banks will have to be flexible on who they give it to also. Investors are still looking for something big to satisfy them and the banks will have to be part of this three way party. Congress can’t just try to slide something in the back door and expect everyone to like it.  They can’t go both ways forever.

FA: We are in agreement then. We all need the package to be big enough to get excited about it and it might take more than a shot to prop it up. Many Americans including myself are interested to see if the President Elect delivers, he talks about and totes his stimulus package around with him, but I want to see it!

MA: I don’t think you’re the only one. Have a Happy Thanksgiving. I’m on my way to Hawaii to get leid while I can afford it.

* What else have you heard that could fit in this attempt at humor?

This week has seen DRYS bounce from just above $12/share to almost $18/share.  I watched it a lot, but made no new trades.  It closed yesterday at $17.17.  That’d be an ideal close for me at November’s option expiration, but I’m not even close to banking on that.  I could see DRYS dropping $5 back down to $12 again before I could see it gaining another $5 to $22, but since the price doesn’t seem to be moving completely rationally right now and I’m already in I’ve decided to weather it for a while still.  It might be years, but DRYS will come back when the economy does.  After November expiration I might take my losses and move into DSX if I see something change that makes me think the run could have legs.

The most important numbers we need to watch this weekend are going to be in the GA/FL football game at the World’s Largest Cocktail party.  Go DAWGS!

I’ve been talking to him for the past few weeks about what kind of new car he should get.  He’s been thinking of getting a new car for months and finally his car’s engine started acting up.  He took it to the shop, got it “fixed” only to have another problem hit.  He took it back and got the run-around about when they’d have it ready for him.  Eventually, after not receiving a returned call from his mechanic, he was in the area and decided to drop by only to find the gates chained and bolted.  That was last week.  I talked to him yesterday and he got his car back, not fixed.  Looking for a silver lining I have to remind him that at least he is buying a car at a time when dealers will be willing to cut a great deal to unload some inventory.

His blog post on AC/360 is worth the short read.  It’s such a great example of the state of our economy.  It’s interesting to see how a car dealership can go under in the same town where technology jobs are still being hired at a premium for good candidates.  We’ve noticed a slow down in our IT recruiting this month, but not too much considering the headlines we’re seeing for other industries.

The AMEX Oil Index (XOI) is up almost 2%, but oil ETF USO is down a half percent.  I recognize they aren’t tracking the exact same underlying issues, but that’s a big difference when both are tracking oil.  INO has an interesting take on it.  Check out the video they posted yesterday:

Crude, wasn’t it supposed to hit 200 dollars a barrell?

I’m sitting tight on my USO position for now.  I want to see how next week rolls out and then I’ll sell covered calls on it.  Based on their commentary, I should probably sell in the money calls on it now.  It’ll be interesting to watch.  At the least, expect gas prices to go up on local shortages from refineries being down and pipelines shut down too.

As would be hard for any book to deliver, stock picks are not what you should expect from any book, including this one.  Blogs, Web sites, daily and weekly newspapers are better for that since their data is more current.  The benefit of reading this book to me (although they do give stock picks) was that it gave me a foundation for understanding the energy industry better than I went in with.  They carefully outline the situation we as a global economy are facing with oil passing its peak production point sometime in the recent past or near future.  The authors paint a grim picture that can almost leave you depressed with their apocalyptic view of the future.

I found it interesting to read their predictions of the spike in oil prices coming true as we saw earlier this summer.  What they didn’t account for was the quicker weakening of demand that we’ve seen as US consumers change their habits to use less energy. (I see this on a daily basis as a recruiter with candidates who used to be willing to drive anywhere in Atlanta for a job, now limit their commute to a much smaller radius from their home.)

This book has a lot of charts to illustrate their points which makes some of the dry text easier to follow.  I actually enjoy this type of reading so “dry” is not an insult, but a compliment.  I don’t need a bunch of flowery words to make the point.  I found the history of oil production interesting as I did learning of the different types of oil out there.  This is some of the information that will be valuable in the coming years in understanding our energy situation.  With the election only two months away, both candidates will be spinning their stories the best they can and this book helps explain a lot of the theories out there.  It also touches on the true cost of oil, pegging the total cost, including the hidden/indirect costs to bring the price per barrel up to $480.  It paints a much clearer picture for the need for greener/renewable fuels.

Profit from the Peak is well documented for those who want to verify facts or are looking for further reading. I already leaned to the side of understanding that oil can’t last forever and took a great deal from this book for learning more about the industry as a whole.  I’ll admit that reading this book influenced some of my recent trades including CHK (Natural Gas) and USO (Oil ETF).

Before anyone asks, all I got was the free book, no payment from Wiley.  So, consider this an unbiased review, although I’d like more free books if they want more reviews.

Tidewater Inc (NYSE: TDW) is listed in the services sector under shipping industry, but is really heavily tied to the energy industry since those are the ships and vessels they service.  With oil at all time highs, TDW seems fairly safe, even if oil is cut by 30-40%, these guys are going to be in high demand.  One thing that strikes me as odd and makes me wonder if I’m missing something is that the PEG ratio is only 0.17.  I can’t figure why the price is so low if the earnings growth predictions are even close to accurate.  I’m typically happy to buy a company with a PEG close to 1.0, so this is good, but possibly too good to be true.  TDW pays a dividend also and just increased the payout recently.  That shows me that the insiders think they have cash they can afford to give back to investors rather than save to cover their potential turn of fortune.

With all that in mind I had to chart TDW to find my entry point.  It closed on Friday after coming less than $1 away from its 10 day moving average.  I figured it’d hit that line and pull back that dollar before moving up too much.  I also saw the 20 day moving average was a little bit above 65 and it has been a better line of support.  Not far below that, the 50 day moving average was around 62 plus change and rising.  It hasn’t broken support since before April.  Add all that together and 65 seemed like the safest/most profit likely trade. 

On Monday, at 2:22 pm, while at TDW was trading at $68.46, I sold one TDW July 65 naked put and received $199.25 after commissions.  When I put the order in the bid/ask was 1.70/1.80.  My order was for 2.10.  I actually thought it’d be the next day before it hit and thought I might even miss the trade because I was pricing it partly for the psychological price point of getting $200 from the trade.  I do that too often – price my trades at a round number, to get what I want after commissions.  Sometimes I think that works in my favor since the other side, the fear side, buys the puts once it crosses the psychological amount.  With that point in mind, I get to point out that I sold my put at the high of the day for that strike and TDW closed at68.58, off the low when it touched the 10 day moving average.

In the end, selling only one put is a smaller trade than I should be making for my account balance, but two 65 strike trades would be at the top end of what I think I should risk and this current market is so crazy that legging in (selling one option at a time) makes more sense right now.  If TDW drops some or even rises in line with the 10 day moving average, I might sell another naked put at a lower premium at the same strike.

As I read various articles from magazines, other blogs, newspapers and traditional Web sites I write the tickers on whatever paper I have near me to make sure I go back to research them later.  I trade on only a few of the stocks I start researching.  This page will let you see some of my notes while it gives me a place to store my ideas using a slightly more organized method.  Right now I use a collection of torn out print articles, Post-It notes and scraps of paper such as the backs of used envelopes that pile up on my desk at work and home.  This will give me one place to stay organized a little better, especially for those days/weeks when I can’t find something I want to trade on, I’ll be able to return to this page and give some old ideas a second chance.

I always welcome emailed stock picks too, so please keep those coming.  I’ll link to your blog from that page if I agree with your idea.  All the stocks listed will be optionable.  Beyond that, any size/price stock or ETF is worth a review.