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Dec 302016

Thousandaire Investment Performance in Review

By |December 30th, 2016|Blog|Comments Off on Thousandaire Investment Performance in Review

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While less than a year is far too little time to judge the success of an investing strategy, I like to look in on my investments at least on an annual basis.  This also presents a good time to check in on the stocks that we’ve profiled on Thousandaire.  All of these are compared to the Russel 2000, an index of the largest 2000 publicly traded companies, the more common comparison is the S&P 500 which only includes the 500 largest companies.  Small stocks have done better than large ones over the last 6 months so this represents a higher bar than the S&P 500, but it is hopefully a more accurate comparison because many of the profiled stocks are very small indeed.  The stocks I’ve looked at are usually microcap or nanocap stocks and are much riskier than other giant stocks like GE.

SYTE – Sitestar Corporation (+47%; Relative to Russel 2000: +27%)

When I first profiled Sitestar, a dying dial-up internet company which became a real-estate play, on this site it was trading for 5.86 cents per share, the definition of a penny stock.  I had open limit orders at levels between 4.5 cents and 5 cents per share, alas my limit orders never got hit, as the stock quickly went to roughly 9 cents per share and stayed around there for the last 6 months.  My hubris here was hoping that I’d be able to obtain shares at a price obviously below the true value of the business (the cost of its real-estate).  Hopefully some of you were able to get an order filled nearer the fair value of the business rather than aiming for the minimum value.  Sitestar currently trades at 8.4 cents per share, and is extremely illiquid.  Considering that insiders just sold themselves 80 million shares (doubling the number of shares outstanding).  This concerns me, insiders just bought half the company at half price.  This money was used to invest in an asset management fund.  Interestingly this fund will be run by the fellow who writes over at otcadventures.com.  It isn’t clear what the fee structure with this new hedge fund will be.  At this point, it’s quite difficult to justify 8.6 cents per share for roughly a 5 cent per share investment in a fancy new hedge fund. If you currently own Sitestar, I’d probably hold on for now.  I’ve found that avoiding activity mostly means avoiding selling, so unless I had good reason to believe that Sitestar was going to be worth zero I’d sit on it.  That being said, I currently have no plan on buying until or unless I can get in below book value.

ADVC – Advant-e Corporation (+23%; Relative to Russel 2000: +8%)

When I wrote up Advant-e Corporation, a provider of electronic data interchange systems to grocery stores and healthcare related companies, it was trading for $4 per share.  The company has not yet released any new financial statements, however the share price has climbed to $4.90.  While this looks like a significant increase, the stock is quite illiquid, and can often change by as much as 25% in a day.  In my estimate the company is probably worth $5.40 per share, but there are very significant risks because the company is tiny, illiquid, and does not report to the SEC. They will probably announce a 0.20 cent per share dividend for 2017 somewhere between January and March of next year.

FDVF – Fortune Industries (+102%; Relative to Russel 2000: +102%)

Fortune Industries provides subcontracted HR services to small and medium businesses.  There was pretty good news here for holders.  The company was bought out for $0.586 per share in August.  If you were able to pick up shares at 29 cents per share the article ran you came out significantly ahead.  If you bought shares before management snatched most of the company you didn’t do quite as well.  Unfortunately it’s no longer possible to invest in this one.  This is another one that my limit orders turned out to be too low to pick up, oh well. (The relative number matches the absolute number because the russel was basically flat over the holding period, most of the run in the Russel 2000 has been relatively recent).

RELL – Richardson Electronics (+6%; Relative to Russel 2000: -6%)

This was one of the largest companies that I’ve profiled on Thousandaire.  The results have not been quite as good as some of the smaller companies, but the thesis was quite straightforward.  The company is worth $8.50 per share just on the basis of its cash, inventory and receivables. When I first profiled it the company was trading for $5.97, and today it trades for $6.21 (and you got to earn $0.12 worth of dividends along the way).  In my view Richardson Electronics is still undervalued, and it is still slowly liquidating with a $0.06 per share quarterly dividend.

XIV –  VelocityShares daily inverse VIX (+31%)

This security isn’t a stock, and it is probably best explained by reading my original article here: XIV. Basically, when the market isn’t volatile XIV gains value.  When the market goes up XIV gains value.  When the market goes down or becomes more volatile the XIV goes down a lot.  In principle the XIV should increase in value over time.  I suspect it will increase in value faster than the broader market on average, unfortunately it will probably lose 95% of its value at some point in the future.  I have 1% of my portfolio in XIV and I wouldn’t buy more than that.  If it gets above 5% of my portfolio I break my rule to never sell and sell some.  If you picked it up the day the article ran at $36.64 you are up somewhat.  (There is no relative comparison because it would disingenuous, implying that the risk in XIV is similar to the Russel 2000, that isn’t true in any of these cases, but it is very not true with XIV, XIV is much more volatile.)

OUTR – Outerwall (+1.5%; Relative to Russel 2000: +1%)

If you include the dividend between when the article on Outerwall ran and when the buyout was successfully completed you got a 1.5% gain.  This doesn’t sound like much but it helps that it was over such a short time period, as that makes your annualized return (the return you would earn if you reinvested your proceeds in an identical deal all year) much higher. I call this one a win.

GTIM – Good Times Restaurants (-1.5%; Relative to Russel 2000: +0.9%)

I profiled Good Times Restaurants earlier this month.  My somewhat tepid conclusion is that it might be a little undervalued.  I’m long Good Times (that means I profit if the stock goes up).  I tried Bad Daddy’s Burger Bar the other day and found everything to be more or less pleasant.  The folks I’ve talked to either like it or don’t really care one way or another.  Not exactly a full throated endorsement, but at this point I’m really only trying to make sure that it isn’t terrible given the operating results of the company.  If you purchased when the article on Good Times was originally released you’re down a nickle (the current price of $3.05 versus the previous price of $3.10).  In my view it still probably represents a good deal.  (The movement of this one has largely matched the decline in the Russel 2000).

Overall Investment Performance

I missed a few good deals this year by being conservative with my limit orders, but what can you do.  If you had invested in each of these companies upon the publication of the article you would have made an average of 30%.  If someone tells you something like that your bullshit shields should go up immediately.  This is atypical of my investment performance and is probably due to luck.  If you invested only in companies that I invested in (as stated in my disclosures at the bottom of each article) you would have averaged only a 12% gain.  What is more important as a judge is the relative performance of these ideas.  I compare with the Russel 2000 because it includes small stocks as well as large and is, hopefully, more representative of the risk of these ideas than the S&P 500.  If you invested in each of the ideas your average return was 22 percentage points higher than the Russel 2000.  If you invested only in the ideas that I was invested in your average return was 1 percentage point higher than the Russel 2000.  This is easily within statistical variance, and is clearly does not imply any statistically significant stockpicking skill.   More time is needed to identify any outperformance of the market.

Disclosure

I am not an investment advisor.  I do not give investment advice, everyones investment situation is different. I am long (meaning that I profit when the stock goes up) ADVC, RELL, XIV, and GTIM. I wrote this article myself, and it expresses my own opinions. This is not a investment recommendation. I am not receiving compensation for it (other than from the owner of the blog District Media Corp). I have no business relationship with any company whose stock is mentioned in this article.  Always do your own research before making any trade, buying or selling any stock mentioned. (By this I mean do a ton of your own research, never buy anything you don’t understand.)

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Dec 302016

Four Steps to Ensuring That Your New Affiliate Blog is Financially Viable

By |December 30th, 2016|Blog|Comments Off on Four Steps to Ensuring That Your New Affiliate Blog is Financially Viable

blog affiliate tips, blogging affiliates, tips for blogging affiliatesMaking money through blogging doesn’t have to be a pipe dream.

In fact, there’s arguably no better time to hop on the affiliate marketing bandwagon given the wealth of free resources out there for site-builders to get started. From creating killer sales funnels to squeeze pages that make your offers irresistible, the sky’s the limit for skilled affiliates who understand what makes their traffic tick.

However, there are many moving pieces that will determine whether or not your blog will actually generate big bucks. For example, consider the following questions for starters.

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Dec 232016

7 Steps to Minimize Your Taxes Before 2017

By |December 23rd, 2016|Blog|1 Comment

minimizing taxes, tax tips, tax adviceEvery December before the end of the year I run down this checklist to make sure that my taxes will be roughly what I had withheld from my paycheck.  I try to keep my tax withholding as low as possible; I have no interest in giving Uncle Sam what amounts to an interest free loan, just so I can get a big refund check in April.  I also don’t want to end up owing money in April, the Feds don’t really like it if it turns out that they gave you an interest free loan over the course of the year.  Landing on a nearly zero return every year takes a little doing, but here are the steps I take to manage my tax burden as the year comes to a close.

1. Calculate Anticipated Taxes

This is fairly straightforward.  Grab your most recent paystub (probably November), often it’ll have your total gross income for the year so far, then add one additional month of gross salary. Then subtract any deductions that you have taken, things like:

  • 401(k) contributions
  • Health Insurance Premiums

This is gonna be your guess at your adjusted gross income for the year, then subtract the standard deduction:

  • Single or Married Filing Separately: $6,300
  • Married Filing Jointly: $12,600
  • Head of Household: $9,300

After that, go ahead and subtract the number of personal exemptions you can take (this is generally one for each person involved in the tax return, ie, one for you and each of your dependents).  This determines what tax bracket you’ll end up in, this matters when making marginal decisions, but your actual tax rate (your total federal tax divided by your total income) is much, much lower than your tax bracket.

2016 Tax Brackets

Tax Rate Single Married Filing Separately Married Filing Jointly Head of Household
10% Up to $9,250 Up to $18,475 Up to $9,250 Up to $13,175
15% $9,251 – $37,500 $9,251 – $37,500 $18,476 – $74,975 $13,176 – $50,250
25% $37,501 – $90,850 $37,501 – $75,700 $74,976 – $151,375 $50,251 – $129,750
28% $90,851 – $189,500 $75,701 – $115,350 $151,376 – $230,700 $129,751 – $210,100
33% $189,501 – $412,000 $115,351 – $206,000 $230,701 – $412,000 $210,101 – $412,000
35% $412,001 – $413,650 $206,001 – $232,675 $412,001 – $465,350 $412,001 – $439,500
39.6% Over $413,650 Over $232,675 Over $465,350 Over $439,500

2. Compare your income with MAGI breakpoints

What are MAGI breakpoints you ask? Well, a bunch of stuff in the tax code really cares about what your modified adjusted gross income (MAGI) is.   Rarely, if you increase your income just above a MAGI breakpoint an additional dollar of income can cost you more than a dollar in tax.  For example, if you earn a dollar less than $30,750 you can claim the saver’s tax credit (worth $200).  If you earn a dollar more than $30,750 you lose the saver’s tax credit.  These few dollars cost you $200 in taxes.  Below is a table of credits for various MAGI’s:

Tax Credit Single Married Filing Separately Married Filing Jointly Head of Household Value (Maximum)
Saver’s Credit (50%) AGI less than $18,500 AGI less than $18,500 AGI less than $37,001 AGI less than $27,750 $1000
Saver’s Credit (20%) $18,501 – $20,000 $18,501 – $20,000 $37,001 – $40,000 $27,751 – $30,000 $400
Saver’s Credit (10%) $20,001 – $30,750 $20,001 – $30,750 $40,001 – $61,500 $30,001 – $46,125 $200
Roth IRA Phaseout $117,000 – $132,000 $0 – $10,000* $184,000 – $194,000 $117,000 – $132,000 Lose the Roth IRA 🙁
Traditional IRA Loses Tax Deductibility $61,000 – $71,000 $0 – $10,000* $98,000 – $118,000 $61,000 – $71,000 Lose IRA deductibility 🙁
EITC No Children (Phaseout – Cap) $8,270 – $14,880 N/A $13,820 – $20,600 $8,270 – $14,880 $506
EITC 1 Child (Phaseout – Cap) $18,340 – $39,617 N/A $23,930 – $45,207 $18,340 – $39,617 $3,400
EITC 2 Children (Phaseout – Cap) $18,340 – $45,007 N/A $23,930 – $50,597 $18,340 – $45,007 $5,616
EITC 3+ Children (Phaseout – Cap) $18,340 – $48,340 N/A $23,930 – $53,930 $18,340 – $48,340 $6,318
Child Tax Credit $75,000 $55,000 $110,000 $75,000 $1,000 per child

*This isn’t a typo, the Roth ira phase out starts at $0 for married couples filing separately. I gather that this is necessary to avoid people using it as a way to get around the IRA, though I don’t really understand why the ability of a wealthy couple to do this would be such a problem.

3. Tax Loss Harvesting

You can reduce your total MAGI by selling investments that have lost money since you purchased them.  You can take up to $3000 of losses above and beyond your capital gains against your income.  The only unfortunate part is that, due to the wash-sale rule, you can’t immediately repurchase the investment.  You have to wait 30 days before or after the sale to repurchase the investment, if that’s what you plan on doing.  This is dangerous because the investment you sell could recover during the period you sold it.  In principle, according to the efficient market hypothesis, one investment is basically as good as any other, so selling out of one to buy another (and booking a tax deduction along the way) shouldn’t hurt you any.  Unfortunately, markets aren’t precisely efficient, and people often want to sell at precisely the wrong time. Therefore, it bears some thinking to make sure that you’re selling purely for tax reasons, not emotional ones. While this is a violation of our admonishment to be as passive as possible with your investments, the reduction in your taxes could potentially make the activity worth it.

4. Tax Gain Harvesting

If it looks like you’re going to have an unusually low MAGI this year you can take advantage of it by tax gain harvesting.  In this case the wash-sale rule doesn’t apply, so we don’t worry nearly so much about the admonishment to be passive, as you should be able to get nearly the same price for your repurchase.  Basically the strategy is to take your gains in years where your capital gains taxes will be low.  For more details on the strategy check out: Tax Gain Harvesting.  This works pretty well if you’re a ways under one of the breakpoints or if you’re in the bracket in which capital gains aren’t taxed.  This has to be done in the calendar year though!

5. IRA conversions

If you’re planning on converting your traditional IRA to a Roth IRA you want to do it in a year when it won’t shove you over one of the MAGI breakpoints.  Of course, if you expect that all of your future tax years are only going to make this worse, you might as well bite the bullet and do it now.  I check if I want to convert any traditional IRA’s near the end of the year, unfortunately I haven’t really had a good opportunity to do that quite yet.

6. Buy Business Equipment and other Business Expenses

I’m not a real accountant, I’m just a dude online, so you’ll want to carefully analyze this strategy with your CPA, but it seems to me if you’re going to buy an ad campaign or something you might be able to load some of your costs into the current tax year by making purchases before the tax year ends.  I believe this will reduce your MAGI, and it could take you under an important breakpoint, say….the savers tax credit, or one of the havin’ a kid tax credits.  It’s worth a check.

7. Bundle your below-the-line deductions

These are sometimes called itemized deductions, and these won’t change your MAGI. If you’re like me you might very often take the standard deduction.  It probably makes sense to go ahead and save the items which you might be able to take a deduction on to do them all in the same year, for example, if you normally give $4,000 per year to charity, and take the standard deduction, it probably makes sense to instead give $8000 every other year.  The charity still gets the same amount of money over time, but you get to take an $8,000 deduction on even years, and still take the standard deduction on odd years.  The extra $2,000 deduction if your single can add up to real money over the years.  Examples of below the line deductions which make for good bundling are: mortgage interest, charitable contributions, educational tuition, costs related to investment activities, taxes, as well as unreimbursed medical and dental expenses (above 10% of your income).

Make a checklist for lower 2016 taxes!

Every year I go over this and check that there isn’t anything which I missed.  The other big one is IRA contributions which can take place at any point up through the tax due-date, but I mainly use traditional IRA and roth IRA contributions to make sure that my total adjusted gross income ends up exactly where I want it to after I receive a W2 from my work and the various 1099’s I seem to collect from the rest of the world.  The important thing is to have a process so that you aren’t shocked every year come tax time, wishing you had done a little more to change your tax liability.  If you have anything to add I could sure use another couple steps!

A note about contributions

I’ve excluded 401k and HSA contributions as its a little late in the game to talk your employer into making big changes to your withholding, but I’d highly recommend making sure that your 401(k) contributions are where you want them to be about halfway through the year.

brokeGIRLrich

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Dec 232016

Gathering Information for Your PPI Claim

By |December 23rd, 2016|General Personal Finance|Comments Off on Gathering Information for Your PPI Claim

Online Trading XTradePPI Claims and the mis-selling of this insurance product has dominated the UK’s news since 2011, when the banks lost in the High Court, which forced them to pay out billions in compensation to the millions of people that they defrauded. However, many people are perplexed by PPI, what it is and what it stands for. In this article we hope to answer everything you’ve ever wanted to know about PPI.

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Dec 212016

Investing Is Easier Than You Think

By |December 21st, 2016|General Personal Finance|Comments Off on Investing Is Easier Than You Think

1520808946_1f2c76d5b1_zToday we have a guest post from fellow blogger, Jon. Enjoy!

If you do a search online about investing, you are going to get a lot of search results. Because of this, many investors, both new and old are overwhelmed. They feel that investing and being successful as an investor is a complicated task. In reality though, investing is relatively simple. This doesn’t mean it is easy to achieve success as many factors come into play, but this post will show you just how simple investing really is.

Two Reasons Why Investing Is Simple

#1: Wall Street Is A Business

Every investor has to remember that at the end of the day, the companies on Wall Street are for-profit firms. This means they are out to make money. How do they do this? They primarily make money on fees and commissions. The more you trade, the more they make.

Therefore, it should come as no surprise that the more volatile the stock market is, the better. When it is volatile, many investors will trade on pure emotion. The more trades people make, the more money the Wall Street firms make.

Another area where Wall Street makes money is through offering new products. When Wall Street touts new products, many times they are just old offerings that have been rebranded after a marketing firm helped make it look more appealing.

#2: The More Confusing, The Better

There are a lot of different investment options out there for a reason. The more complicated a subject can seem, the more potential money there is to be made. Think back to the point above. Wall Street makes money by getting you to trade more often. Well, if they can introduce 10 products that essentially do the same thing but look different, there is a chance that some investors will take the bait and switch from their current investment to the shiny new one.

At the end of the day though, it is essentially the same exact product, just marketed differently. This is the same reason why people are so confused when it comes to eating healthy. There are low fat, low sodium, low sugar, no fat, no MSG, all natural, organic and no GMO products out there. Which one is the best one? Which is better than the others? Ask 5 people and you will get 5 different answers.

Breaking Down Investing To Make It Simple

So how do you as an investor weed through all of this nonsense so that investing can be relatively easy for you? Here are the steps below that you need to follow.

Get Your Emotions Under Control

Your emotions are your biggest crutch when it comes to being successful investing. And this shouldn’t be a surprise since we are talking about money here and money is emotional. When the market drops and we start losing money, we sell and run. When the market rises, we get greedy and want more so we keep buying.

But to be successful, you need to get your emotions in check. You do this first by educating yourself. Read some books on investing by the greats. One book that I highly recommend is A Random Walk Down Wall Street. If you can understand the basics of how the market works, meaning that over the long term you can make money, you will be better equipped to deal with your emotions.

Don’t Fall For Gimmicks

The next step to being a better investor is to not fall for gimmicks. Refer to the previous section on how Wall Street makes money. Then read the book I recommended above. You will understand that no one – not even the professional money managers – know what the market will do on day-to-day basis. Because of this, there is no need to overpay for actively managed investments since they can’t consistently outperform the market.

Your best option is to go with a passive investing strategy instead of an active one. The lower costs and earning what the market earns will pay off greatly over the long-term.

Overcome Short-Term Gratification

Lastly, you have to take a long-term approach when investing in the stock market. If you are looking to get rich overnight, you are going to fail miserably. Wealth is built in the stock market over the long-term. If you look at the successful investors over time, like Warren Buffett, you will see that patience and investing for the long-term is profitable.

I know this can be tough in the instant gratification world we live in, but you have to take this approach if you want any hope when it comes to investing.

Final Thots

Overall, investing in the stock market isn’t terribly complicated. If you can learn to control your emotions, invest in low cost mutual funds and ETFs and do so over the long-term, you will see success.

But while these tips make it sound easy, understand that your emotions are a powerful force and the media and Wall Street are out to provoke you to react. The more disciplined you can be, the better chances of you succeeding.

Jon writes at Penny Thots, a personal finance blog that talks about all things personal finance. The goal of the site is to improve your finances one day and one penny at a time.

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Dec 192016

How to Make Investing in the Stock Market Simple

By |December 19th, 2016|Stocks|Comments Off on How to Make Investing in the Stock Market Simple

stock-1863880_640It’s not uncommon to want to invest but not really know where to start. Sometimes that causes people not to invest at all when they really should be investing for their future. It may seem complicated, but there are ways to make investing in the stock market simple so you can quit putting it off and get started.

What Are Your Goals?

One of the first things you need to know as you get started investing in the stock market is what are you investing for? Are you investing for your future retirement, or are you investing to pay for your children’s future college education? Maybe you are considering investing for a different reason altogether. The point is that the reason you are investing could influence the way you choose to invest.

How Old Are You?

If you are a young investor you are very likely to invest differently than if you are closer to retirement age. For example, young investors who have the advantage of time might make investments that are a bit riskier than those who are middle aged or closer to retirement. Riskier investments traditionally make greater returns and losses that occur can be made up more easily if you are young. However, as you age, you have fewer years ahead of you to make up for losses, so shifting your investment strategy is a good idea. You might choose to increase your contributions to your investments in order to maximize growth in the few years you have left until retirement. Also, putting more of your money into less volatile investments might be a good idea.

If you want more control over how you are investing, take a look at Motif Investing. They offer theme-based investing which allows you to choose your own funds for a flat fee. They do have pre-made funds as well, and they offer low minimum account balance requirements to help you with your investing needs.

How Much Time Do You Have?

Choosing stocks yourself might seem fun, or it could seem scary to you if you feel like you aren’t sure about what you are doing. But no matter which scenario fits you, picking stocks for yourself takes time. In order to be successful, you have to choose the right stocks that are going to make gains rather than losses. How do you know which ones to pick? This is where exchange traded funds, or ETF’s, can help. ETF’s are usually made up of a group of funds but trade as though it were a single stock. This can be a great help to a beginning investor with little time to education themselves on the stock market.

Watch Out for Fees

Another disadvantage of choosing your own individual stocks to trade is the trading fees.  They can vary and quickly eat up your returns, which is another reason ETF’s are a good idea. Make sure you find out what the fees are before making a choice of where to invest your money.

If you have considered investing, it is possible to make investing in the stock market simple so you feel more comfortable doing so without the fear of losing everything you have. It doesn’t have to be complicated.

Do you know of other ways to make investing in the stock market simple?

Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.

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