Molly Masters the Stock Market

By Molly Helgren*

My questions for the week:

How diverse should a portfolio be? Is there a safe standard for what percentage of your money should be in what sector? I know it’s not good to have all your eggs in one basket, but I’m not sure beyond that.

Also, is it riskier to invest in the retail store rather than the brand name of the product you are buying there?

These are the questions I’m asking myself as I put this together.

Meanwhile, here are my buys for the week of September 28th:

Nordstrom (100 shares @ $30.16) – I shop at Nordstrom mainly for their shoe department, and at Nordstrom Rack for their discount designer clothes. I read this week that Nordstrom Rack is opening new stores in Cincinnati and St. Louis. With so many retail stores closing their doors these days, I think it is a good projection for future performance that Nordstrom is expanding their discount locations to adjust to the current economic times.

Bed Bath & Beyond (100 shares @ $37.42) – I like this store cause it’s a one-stop shop. When I moved earlier this year, I bought pretty much everything besides my furniture for my new place at Bed Bath and Beyond. They have great customer service, offer coupons galore, and even accept coupons of their competitors. They beat earnings expectations in the second quarter of this year, and with Linen’s and Things closing its doors last year, they have fewer rivals moving forward.

Yum brands (100 shares @ $32.88) – Besides the fact that Taco Bell is a guilty pleasure of mine, Yum Brands increased their quarterly dividend this week. Shareholders will get 2 cents more per share for the third quarter than they did for the second. More incentive for shareholders could drive the price up before the payout in November.

Colgate Palmolive (100 shares @ $76.74) – They make products that we all buy. Recession or no recession, everyone is still buying toothpaste, deodorant, and soap. Their quarterly earnings over the past few years have been steadily increasing, which is not something many companies can say. This seems like a safe bet for me as a long-term investor.

Nike (100 shares @ $60.09) – I bought Nike a few weeks ago when I first opened my portfolio (mainly because I love my Nike tennis shoes, and I’ve always owned their brand). As I’m learning more, I can see that they have been one of the top performers in my portfolio over the weeks. I looked into why they had been doing so well and I read about the release of a new product this week called Nike Football. Nike always seems to be at the top of their industry for bringing athletics together with technology (like the product that connects your ipod to your shoes to gauge how fast you’re running! Genius!). Clearly their technological advancements are always forward-thinking, and I’m seeing future growth.

Hewlett Packard (100 shares @ $47.11) – HP Products are always good quality, my HP photo scanner & printer is one of my favorite toys. I looked into their financials and saw that they have a 12-month forward P/E ratio of 11. For a technology company this is pretty low, meaning the potential reward is greater than the risk involved over the next year. Am I grasping this? Or am I way off? We’ll see!

Disney (100 shares @ $27.48) – I like Disney cause they have some of everything. They are spread out over so many different industries that they can’t possibly depend solely on one sector. With the holiday season approaching, more people will be traveling to warmer destinations (Disney Land/World), buying gifts and toys, seeing movies, etc. These are all very different activities, but are all a part of what Disney does.

Del Monte Foods (100 shares @ $11.53) – I came across this company when I was thinking of the foods I buy and I discovered that they make a lot of canned foods like fruit and tuna. I looked at their financials and saw that they have a P/E ratio of 9.4 and the past few years the third and fourth quarter earnings have been the highest, so the upcoming release of those numbers over the next few months could make this a good buy right now.

Johnson & Johnson (100 shares  @ $59.96) – This is a pretty stable company as far as earnings because like Colgate, they offer products that we will always be buying. You can probably find their products in just about every home in the U.S. This week was a good time to buy, with the market down overall.

Energizer Holdings (100 shares @ $64.66) – In a time when more and more Americans are trying to go green while also saving some green, a better, more advanced everyday rechargeable battery is a product that can give a company a little edge. Energizer released a more advanced rechargeable AA battery in mid September without increasing its price.

ConAgra Foods (100 shares @ $21.22) – I like this company because they are trying to make more of their products health-conscious, while keeping their prices low. They make things that I use like PAM no-calorie cooking spray and Healthy Choice products. The company also just made a $10 million donation to fight child hunger. Philanthropic companies appeal to consumers — or at least to me.

Clorox (100 shares @ $57.64) – I use Clorox bleach and cleaning solutions all the time. Its reliable products make it a great company, and the valuation is an incentive for investors with a 12-month forward P/E of 14.9 and its earnings trends have been consistent over the past few years. I’d like to see their Green Works product line take off and become more standard for everyone.

Mattel (100 shares @ $18.06) – It’s holiday shopping season again, and I’m sure the lists of must-have toys for this year will include products by Mattel, likely driving up their earnings for the 4th quarter.

Overall my portfolio is up $10,860.83, but compared to last week I lost about $2,500

I’m starting to get a grasp on what different ratios mean for the value of the company, but what I think is even more important than all the figures, is the companies’ potential for future growth. My process for choosing companies changed a lot this week. First, I think of a product I like and see if the company is public. Next I check the P/E ratio and previous earnings trends to gauge if I think the stock is currently at a fair price.

Finally, I read the headlines to see what the actual company is doing (product releases, expansion, etc.) I think all three steps hold weight on whether or not I think the company has growth potential.

Gain/Loss For Today:

867.35

Current Portfolio Value:

1,010,861.83

WeShares Currently Own:

8250

Overall Gain/Loss:

10,860.83

Overall Trades:

101

WeSeed Cash Available:

656,757.50

*Molly Helgren is an executive assistant at PEAK6, WeSeed’s parent company. Molly is putting together a WeSeed Portfolio based solely on the companies that she knows and likes. So far, she’s doing pretty well.

Cracking open the Newegg IPO filing

The wonderful folks over at Consumerist pointed out yesterday that online retailer Newegg has filed for their IPO — or Initial Public Offering to us non-Wall Street types. For those not in the know, Newegg sells software and electronics like laptops, digital cameras, TVs, and so on, for mega-cheap.

As Consumerist writer Ben Popken went on to say, Newegg is following in the footsteps of both Zappos and Mint.com, which were both bought in the past few months by much larger public companies that occupy similar market niches (Amazon for Zappos and Intuit for Mint.com). But that means Newegg is a little different than the others, just for the sheer fact that a famously customer-oriented retailer isn’t going to be under the leadership of another company.

Instead, Newegg will be directly held responsible by a group of shareholders. I will admit that many people have done a better job of explaining some of the issues surrounding IPOs and investing in startups (see this page in Neal Stephenson’s Cryptonomicon for a great example), but I’m a very visual learner, so I made some charts.

As you can see, Mint.com has to work with many more new elements than Newegg does, which could be a very good thing for Newegg and its founder, Fred Chang. The company will continue do its thing as long as it’s profitable enough to keep the shareholders happy, which shouldn’t be a problem if they keep their customers happy — and thus, coming back.

This is of course an immensely simplified version of reality: both Mint.com and Newegg had “shareholders” before they became publically traded companies. These shareholders, however, were the groups and companies that gave the startup some venture capital to get off the ground, not individuals investing for their portfolios.

Think of it like this: for a couple of years, your parents buy you art supplies and you draw them pictures that they think are amazing (or at least they tell you your pictures are amazing). Your parents frame them and give them to family members and close friends.

Then, after a while, you and your parents go out and decide that you could make even more amazing art if you had more money to buy supplies. So you go to the SEC (Security and Exchange Commission) and ask to file for an IPO. Then you get even more money than you’ve ever had before, and the chance to make even more art.

But you’re not just responsible to your parents any more — now you have complete strangers who can call you up and tell you that they’re not happy with your profits lately, or that you’re using too much blue in your paintings. It’s a scary proposition, isn’t it?

But it can be even scarier for an investor. Would you want a company that you own stock in to risk your funds by buying out a competitor or parallel niche company to expand their horizons? Would you risk your hard-earned cash, or maybe even your retirement, on an IPO that could make you a lot of money?* Or would you rather go with something a little more reliable and known?

For a little more in-depth look at IPOs, check out this great article by Lise Buyer

*for example, if you bought Google at their IPO price of $85 in 2004, you’d have a profit of over $410 per share if you sold today.

The Many Ways to Learn the Market

By Joel Reese

Everyone sees WeSeed differently: Some people see it as a way to get their feet wet and get acquainted with the stock market. Other people look at it as a way to simply have fun on the web. Still others are using it to take the first steps toward becoming serious (or at least semi-serious) investors.

I see WeSeed as a great way to learn about what people are thinking and which companies are catching on. But it goes beyond looking at which shoes people are wearing — it also means doing some homework. And one place you can start this homework is at WeSeed’s Learn section, which gives you a good background in stock basics.

Another solid place to get started is Harry Domash’s site, Winninginvesting. Domash writes in easy-to-understand English about how to analyze stocks, where to find good information, and things that an everyday shmoe like me can use to understand the stock market.

One article, for instance, details six easy steps anyone can take to determine a stock’s health. And here’s the best part: You don’t need an MBA from Harvard to make it through his writing.

In a way, Domash’s article points to the beauty of WeSeed: You can buy whatever stocks you want, because there’s no risk — it’s free. So you can own shares of a company because you like the burgers they serve, or the clothes they make. Or whatever. Feel free. God bless.

Or you can start to take it to the next step with Domash’s theories, pick a few stocks based on his criteria, and see how they do. Might as well give it a try. (Have we mentioned lately that it’s free?)

So how do you use WeSeed? Do you just pick the companies you like and figure it out later, or will you Domash’s theories to learn more as you go along?

Molly Masters the Stock Market

By Molly Helgren*, WeSeed

I don’t have as much activity this week due to the fact that few things seem to be doing well. The most disappointing company in my portfolio this week was RIMM. I bought RIMM a few weeks ago when my Portfolio was just getting started because I love their products and couldn’t live without my Blackberry.

After their disappointing earnings announcement, though, I’ve lost well over $500 in 24 hours from that position alone. But I’m holding onto it for now with the hopes that it will make a comeback after the initial buzz over their earnings dies out.

Here are my trades for this week:

Sold 100 shares of Amazon @ 90.28 – Amazon had a great week last week, and made about $1,200. The big jump seemed to not be very characteristic, so I took advantage of the large gain and got out. I still love this company, and will probably trade them again in the future as their goal is to become the biggest online marketplace out there.

Sold 200 shares of GM @ .76 – Was up a penny from when I bought it! I gave it a week and it barely moved, so with everything going on with GM right now I figured it wasn’t worth the risk and I’d take my $2 in earnings.

Bought 100 shares of Google @ 500.83 – As soon as it hit the $500 mark, I figured it was time to jump on the bandwagon with the hopes that someday it’ll reach back up to its $700 price per share before the recession was in full swing. I also love the company – I use Gmail for my personal emails, and always use google for searches, maps, weather, etc. on my Blackberry.

Bought 100 shares of Kraft @ 26.51 – There has been little support for Kraft’s attempted acquisition of Cadbury over the past few weeks. My hope is that this has driven the price down so that now is the time to buy before a deal is reached and it’s back on the rise.

Sold 100 shares of Wal-Mart @ 50.96 – I bought WalMart over the summer with the hopes that back to school season would raise the price. But so far it has been one of the poorest performers in my portfolio, so I just wanted to get rid of it. I lost about $900, but at one point I had been down almost $1,500 so I am glad I waited it out a little longer.

Bought 100 shares of Nintendo @ 33.25 – They announced this week that they will be lowering the cost of the Nintendo Wii from $249 to $199. Just in time for the holiday season! I now own 200 shares of Nintendo.

Bought 50 shares of Visa @ 71.00 – I’ve only owned Visa credit and debit cards. They were also in the headlines this week for announcing a financial education plan for consumers.

Bought 100 shares of Microsoft @ 25.71 – I’ve noticed a significant increase in Microsoft advertising recently with the upcoming release of Windows 7. I’m hoping that if the launch goes well, the shares I buy now will be much more valuable come October.

Bought 100 shares of Ralph Lauren @ 72.87 – They make a wide range of quality products from clothing to linens. I’ve had them in my Portfolio for a few months now and they have been one of my top performers, making me over $2,500 so far. Since I’ve been so pleased with their performance, I wanted to risk a little more to see if they would continue to pay off. I now own 200 shares.

Bought 100 shares of TiVo @ 10.20 – How else would I have been able to watch the season premiere of Grey’s Anatomy last night when I got home late? I love their product. Mine is set to record at least two shows every night. I get watch TV now that I never would have prioritized into my routine without TiVo.

My Portfolio is still doing well with an overall gain of $13,466.63. I currently own 6650 WeShares and hold $291,887.63 in stock positions.

This week I lost about $5,000, but I don’t feel discouraged because percentage-wise, the market as a whole was down as well. My goal for the weeks to come is to not only make as much money as I should proportionally to the market as a whole, but to be making decisions that help me beat the odds.

Gain/Loss For Today:

-1,587.72

Current Portfolio Value:

1,013,421.78

WeShares Currently Own:

6650

Overall Gain/Loss:

13,422.03

Overall Trades:

85

WeSeed Cash Available:

721,586.50

*Molly Helgren is an executive assistant at PEAK6, WeSeed’s parent company. Molly is putting together a WeSeed Portfolio based solely on the companies that she knows and likes. So far, she’s doing pretty well.

See you on the radio!

If you live in Chicago, chances are that you know Eric and Kathy.  As the chewy caramel center of WTMX 101.9’s morning show, Eric and Kathy’s faces are plastered all over billboards, the sides of buses, and you can hear their voices almost everywhere around the city.

Well, tomorrow morning at about 9 AM, the two DJs are putting aside the Fall Out Boy and the Kelly Clarkson for a little bit to sit down with Matt Hulsizer, founder of WeSeed, to chat about the stock market, the economy, and…well, pretty much anything they want.  So if you’d like a chance to hear a really smart guy (we’re talking about Matt of course) explain the idea behind WeSeed and how he knows that you’d be better at investing than you think, tune in just before 9 am to 101.9 FM in Chicago.  You can also listen to the station at their website, which streams the Eric and Kathy show live every morning.

So tune in, turn up the volume…and we’ll see you on the radio!

Photo by Ian Hayhurst

Learn, Baby Learn

If a picture is worth a thousand words, then how much is a video worth?

Don’t try to answer that. It’s a rhetorical question.

It’s also a way to introduce WeSeed’s new videos, which are now up in the Learn section.

“What’s that?” you say. “WeSeed has a Learn section?”

Yes, we do. There, you can gain a solid footing in the basics of the market, like how to judge a stock, the importance of a P/E ratio (and what a P/E ratio is), and much, much more.

But back to the videos: They’re a way for us to communicate the WeSeed message in a fun, engaging, informative way (or so we hope).  We hired local improv stalwart Tim Ryder to do the work for us, and we couldn’t be happier with his work.

Here’s the video for “What Is a Company?” We love Tim’s little asides, like the one at about :30. But clearly we’re a little biased.

There are five videos up now: “The Uses of Money,” “Function of a Bank,” “What Is a Company?”, “What Affects Share Price?”, and “Judging a Stock.” But don’t worry, we’ll put up more.

And as for the title of this post, it refers to the chorus of this song. Enjoy.

The Colonel’s Stock Gets Fried

Photo by Getty Images

by Erica Feldkamp, WeSeed Writer

Do you still believe the old chestnut that even bad publicity is good publicity?

Think again.

KFC (YUM) got a wing up on competition thanks to Oprah clucking about the new finger-lickin’-good grilled chicken last week. The daytime TV queen mentioned an online coupon for free chicken, which led to a 5 million person stampede on the chicken chain. You would think that would be good press, right? Wrong.

Many of the chicken-hungry Oprah watchers were left standing in some very long lines. And unfortunately, some of these folks also happened to be bloggers who ranted mercilessly about KFC’s poorly prepared restaurants.

During the week of the free chicken promotion, KFC’s stock dropped 8 percent. Coincidence? Maybe not, since similar stocks like Burger King (BKC) and McDonald’s (MCD) only dropped 3 percent over the same period. So the question begs: Did investors get skittish watching millions of freebies walk out the door, or did bloggers sway Wall Street?

Recap: WeSeed at FinovateStartup 2009

By Shannon Paul

A lot of people don’t know that WeSeed actually made its debut at last year’s Finovate event in New York City with a live demo performance of the site.

Earlier this week, I went with fellow WeSeed team members, Caitlin Rosberg and Brad Goldberg to represent WeSeed at Finovate once again, only this time the event was in San Francisco.

While Finovate may not be about investing in the stock market, the event is all about a different kind of investment. The people behind new startups in the financial sector go to Finovate to showcase their new companies to venture capital and other types of private investors in hopes of getting funding or having their product acquired by a larger company. Not to mention the fact that anyone who’s ever launched a startup invests a whole lot of time and energy in building and launching a brand new business.

For a complete list of companies in attendance at FinovateStartup 2009, check out this list compiled by Jim Bruene over at NetBanker.com. One thing you’ll notice if you look at this list is that the downturn in the economy is inspiring a lot of innovation. Many new companies are looking to create solutions that help individuals with personal finance and debt management.

Silver Tail Systems was voted to present in the afternoon and was selected as the Best in Show by those in attendance. Silver Tail provides a very sophisticated and detailed fraud prevention system that tracks suspicious behavior in a way that doesn’t disrupt activity for the end-user. One of my personal favorites of the show was Expensify, a website that aims to streamline and simplify the expense report process. Anyone who’s ever had to fill out an expense report for their job knows just how much fun that can be.

Although we didn’t do another live demo of WeSeed for the attendees, we had an exhibition space for people to get a one-on-one demonstration of the site and we were able to record a demonstration video for the event website that we’ll be sure to post here as soon as it’s available.

Maybe in a few years, one of the startups on display will be up for its first public offering and available for purchase on the stock market. Or, perhaps a publicly traded company will acquire one of the new technologies presented by one of the startups. These things don’t happen overnight, but we’ve got our eye on a few new things as a result of exploring the intersection of technology and finance at Finovate.

So, what do you think? How will new technology impact the economy and our ability to manage our own personal finances? If you were building the high-tech solution of the future, what financial problem would you aim to solve?

Share your voice here
The WeSeed team would love to know what’s on your mind! Let us know what you’re thinking by leaving a comment, and if you like what you see, subscribe to our RSS feed to get regular updates.

WeSeed SOBCon Blogger Contest

Since part of the mission of WeSeed is to help people get more comfortable and confident with investing in the stock market, we thought it would be a lot of fun to have a contest with our SOBCon friends.

The idea isn’t about getting rich quick, but rather learning and sharing what you learn with others who participate in your blog. The winner of the contest will receive $500 to invest in the real stock market in any way they choose.

WeSeed lets people learn about the stock market by aligning the economics of the stock market with things they already know and love, whether it’s technology, fashion or sports and letting them make virtual trades in a fake stock portfolio that reflects real stock values and data.

To participate in the SOBCon Blogger Contest:

1. Sign up for a WeSeed account and join the SOBCon group

2. Make three trades in your WeSeed portfoliYOU

3. Write a blog post between May 1, 2009 and May 17, 2009 at midnight and link back to the SOBCon group.

 

The winner will be announced on May 21, 2009 on the SOBCon group page as well as here on the WeSeed blog:

 

Best of luck and keep scrolling down if you want to read the fine print… it’s all here:

WeSeed’s Top Performer: BoomMike

You may have seen this mug over on WeSeed’s WeSocial page over the last few weeks and wondered, “Who is this guy?” Well, he’s been temporarily displaced from the Top Performers section of the page, but BoomMike is still standing strong in his number two position. 

His portfolio had returned 614% as of last week. Not bad…

Since he was WeSeed’s top performer for so long, we decided to have a little chat with him to see what his strategy was and what he knows that the rest of us don’t.

Before I contacted him I decided to peruse his portfoliYOU to see if I could glean any of his wisdom. But when I saw his stocks I thought maybe I clicked on the wrong button. All I saw was this:

Huh? This was all there was to the myth, the man, the legend behind BoomMike? One lousy stock?

I caught up to him and tried to get the scoop on why his portfoliYOU was so lean:

Congrats on being numero uno on WeSeed! How does it feel to be the Top Performing Member on WeSeed?

It’s great, I’ll take any level of internet fame I can get!  I’ve been getting a lot of group invites and my followers have skyrocketed.  Pretty soon I’ll be caught up to that Carlos guy…

Good luck catching up to that guy—I hear he’s kind of a big deal. Now, before coming to the site, did you have a strategy in place?

Buy low, sell high.  I’ve been following the stock for quite some time.  It got to a point where I felt like the stock couldn’t go any lower at five cents per share, and I wanted to find out how much money I could have possibly made if I decided to invest.  Now hopefully I don’t get too greedy and know when to get out.

This leads into my next question: what’s the deal with just having the one stock? Do you even listen to Sirius (SIRI) radio?

I first became a subscriber back in 2004 and think it’s a great product.  Maybe the stock will see another bump if that iPhone application ever comes out.

OK, well that’s good that you actually are into the company. But what about diversification? Only having one stock is kind of risky, isn’t it? Or are you following Warren Buffett’s advice to “put all your eggs in one basket and watch that basket”?

Diversifiwhatnow?  Kidding!  I know… isn’t buying 142 Million shares of a single stock a risk?

Ummm, yeah you could say that! Good thing this isn’t real money because that would be really risky.

When I decide to invest for real I’ll probably diversify, but first I’ll see if I can predict correctly about any other stocks like I was able to do with Sirius.

Interesting strategy BoomMike, very interesting. Good luck!

The Breakdown

We’ll see how this experiment works out for BoomMike, but either way there’s a lesson or two we can all learn from here. First of all, starting with what you know is a great way to find potential stocks. 

Second: WeSeed is the perfect place to experiment with potential stock ideas. Want to try something out without risking any money? Go for it! 

And then make sure to let us know how you did so we can all share in the wealth of knowledge.