AIG Reverse Split

I get Morningstar e-mail summaries every day for my stocks. It just notes different things such as high trading volume or a significant price increase/decrease. Many of my stocks were sold when Zecco got rid of the 10 free trades a month, but I never updated the list from Morningstar.

Today I was shocked to see for AIG: "The price of this stock moved up 1,458.621% from $1.1600 to $18.0800. " I had purchased 20 shares several months ago for around $1.50 as a small gamble, but sold them when Zecco changed their trading policy. I was kicking myself for a minute until I realized that it really was a reverse stock split (and the shares are now worth 90¢ at the pre-split ratio).

Lessons Learned from First Offer

The first house I looked at was huge - 1800 square feet. The living room/dining room and stairs were nice hardwood floors. It had an addition over the garage that had 3 rooms and would be perfect for a library (I absolutely LOVE to read and have a ton of books). The yard was private. I really did not want to live in town, but it was private and the house was awesome. The house was mostly empty, but the owner's son was living in one of the rooms. He was very disgusting and dirty. He was using the back room for trash bags (it was literally full of them) as well as one room in the basement was so full of trash that you couldn't go in it.

I was foolish and put a bid in a few days later. Then I had my brother come look at it (he knows a lot about fixing up houses) and he found some foundation problems. He said they looked kinda big to him, but he's no expect in that area so maybe they were alright. I had the inspection and yeah, some of them were major. But the kicker came when we went into the basement. One of the stipulations for the inspection was that the owner had to have that room in the basement cleaned out of trash (though he didn't get rid of it - he just put it in a trailer on the driveway!). We took a look in that room and it was horrible. Not only was the room never finished (it was only 1/2 dug out of the dirt) but the wall had fallen back and didn't look safe at all! There was even a little stream that flowed down the dirt. The inspector said to me "Let's talk off the record for a minute - you don't want this house!" His estimate was that the cost for fixing the foundation was probably more than the cost of the house.

I was pretty dissapointed in myself. Why didn't I insist on seeing that room before I put in a bid? I think I was too set on getting a house that I didn't worry about the "little" details. Thank goodness I did not get the house! Thankfully it didn't cost me too much - the inspector gave me a reduction on the inspection so I was only out $300 plus my time.

My realtor was working on getting all the paperwork done to get my released from the contract and she told me that the other realtor called and said that the seller had his own contractor come through and said it would only cost $6,000 to fix that and so he'd just deduct that from the asking price. My realtor said she called our inspector back and told him about that, and told him the name, and he said that was just a fly-by-night guy who was probably paid $100 just to say that. That shows the character of the people I almost bought the house from.

In retrospect, when I saw all the trash (not trash from like cleaning out a basement, but kitchen trash that rots) and all the minor problems I did see, I should have said no thank you and left. Personally, I don't think the house will ever sell. It had a lot of potential, but the owner (and specifically his disgusting son) have never taken care of it, and so small, easy to fix minor problems became big problems and some of them turned into major expensive problems. Most likely the house would have to have the entire foundation redone, which would probably cost more than the house is worth.

Ironically, the part of the house I would have made my library was probably the 2nd major unsafe place of the house. The inspector said that he wouldn't have been surprised if it collapsed with the weight of all my books - there were next to nothing for support beams in that spot.

Preparing to Buy a House

I am preparing to buy my first home, and I am very excited. I have sold most of my stocks. I was sorry to have sold BGF and BGS, which were one of my best investments. But I did make plenty on them - my average cost was $9.42 (BGF) and $3.70 (BGS) and I sold them at $14.43 and $7.96. Not a bad return at all. My average price for AOD was $6.83 and I sold it for $7.88. The return for these stocks is even greater when you consider the dividends I recieved.

The only stocks I kept were HTE (I do think gas is going to go higher in the future) and ACAS (I think this will certainly go much higher, plus I have 2 options out on this for August).

The first place I tried for a mortgage was ING Direct. I was able to get qualified for a ING Saver Mortgage at a 4.25% APR, which was awesome. But there were two problems - you had to do atleast 25% down and it's ony for 5 years - after 5 years you'd have lock it in at the current rate. I think I could come up with 25% down, but that would involve completely cashing out my 401k and spending every cent I had saved, which doesn't leave me with anything left over for an emergency - I'd basically be living paycheck to paycheck, which doesn't appeal to me at all. The 5-year thing is also a little unnerving. I do plan on paying extra on this, but I don't think I could do it in 5 years. At the end of the 5 year period, you may not qualify for it again if your credit changes (or if you lost your job), so you'd have to come up with the remainding balance! Also, I think that interest rates now are probably about as low as you're going to see them for a long time - so 5 years from now who knows what we'd be looking at.

I filled out an application online at Bank of America and was pre-qualified. I got a call from them, but they wanted $400 upfront to actually apply. I told them I'd call them back.

I tried going through my local credit union, but I was pretty dissapointed. Last year I went in to see what I would qualify for and they were very nice and helpful, and we determined I had better wait a little bit. This year I tried to do that again but all I got was "we just do all that online now" and they referred me to their website. I filled out the form and they said someone would be contact with me. About two weeks later I finally got a call from someone asking if I was still interested, told them that I had already found someone else.

I am going to go through another local bank for the mortgage. I just called and asked to come in, and was told I could come in right away - they'd even come to my local branch for me, or I could meet them at the main office 10 min away - that's service right there! I am so glad that I did, too. I was told about a program NY state does - SONYMA. They will pay my closing costs up to $3,000, my interest rate will be 5.75% (or 5.25% if I did not want the closing cost assistance) and I only need a 3% downpayment (though I would probably do more).

One effect of the falling US Dollar

About two months ago I began stocking up on canned food. Not a lot - just extra couple of cans each time I go to Wal-Mart. This serves several purposes. If I were to loose my job that would be one less thing I would have to worry about for a while. But the main reason is to be prepared in case of an emergency. What if the US was attacked? Or what if there was a huge natural disaster in my area? Etc. Most people live paycheck to paycheck, and most people eat the same way - they pretty much only have enough food in the house for a couple days.

My goal is to have about three month's worth of food stored up. I do this by purchasing more of each canned food that I normally would buy. I also write the date I purchased each can on the top of the can. Then I use the oldest stuff first, and put the new cans in the back - this allows me to keep the food as fresh as possible.

I've been doing this for about 2 months now, and I've noticed increases in the prices. Carrots went from 50¢ a can to 68¢. Campbell's soup went from $1.53 to $1.72. Mandarin oranges went from 64¢ to 98¢. This would seem to me to be the effect of the falling US dollar, as most of those foods are grown outside the US. Addionally, I think that the present administration is only going to make the dollar weaker and weaker, which is going to continue to cause prices to go up.

Another Reason I am Glad I Switched From Zecco....

See Article Here.

On April 1, many of Zecco's customers (Zecco says only 1%) logged into their accounts to find that they had millions of dollars available to trade - and the system allowed them to trade it!

Now, I must say, if I logged into my account and it showed millions of dollars, I'm going to realize that there was a mistake and most likely I am not going to be able to keep it. Many of those people actually traded with it (I guess one guy even bought one million shares of AIG). That really was just foolish! That would be the same as if you found a million dollars in your checking account and you took it out and spent it all, and then the next day the bank realized the error and wants the money back.

To complicate the matter even more, I guess when Zecco realized the mistake, they went through and sold all the shares that were purchased with the money, and many people are claiming they were charged a $19.99 broker-assisted trading fee for it (Zecco wasn't very clear on this in their response). I don't know if that would be right of Zecco to charge them the fee, but if you went out and traded with that money without making sure that it really was yours, you almost are asking for it.

Zecco claims that this has nothing to do with an April Fool's Joke (I gotta admit, that's kinda hard to believe) but that it was a problem with data coming from a vendor (I really don't understand that - why would a vendor be responsible for my information being correct?). Whether it was an April Fool's Joke gone bad that they tried to cover, or it truly was a problem with a vendor, or whether someone hacked into their system, the whole thing really draws me away from Zecco.

I was almost (let me emphasize the almost) thinking about continuing to use Zecco, after all $4.50 trades are pretty good, and Tradeking (I haven't used it yet) seems to be a pain with putting money in your account (a 5-day hold), but after this, I don't think I will ever consider using them again!

Trying to Figure out My Brother's 401k

My brother asked me to help him set up his 401k plan for him. He doesn't understand how they work and really doesn't care to know to much. Looking over his plan, I am just horrified looking at the selections. My employer uses Fidelity, and we have some not so good funds in there, but we also have a couple index funds (like FUSEX with a .10% fee) and some other nice ones like BGRFX and FCNTX. His plan is run by Paychex, and the offerings are horrible.

There is only one "index" fund (FMXKX) and it has an expense ratio of 1.13%! It's a fund that follows the S&P 500 and it's 10x the cost of the equivalent in my plan (FUXEX). My plan offers some of those Target 20XX funds, and so does his. But the ones in his plan invest only in ETF's, and they are listed with expense ratio of 10% and 16%!!!! (FTWKX and FTHKX). Each is listed with a 1.22% Net Expense Ratio, and the larger ratio is when you include the total costs of all the ETF's which make it up. That's just unbelievable.

The fund family for all of the choices except 3 is Federated. The other two are with American Funds and they seem to be the best ones in there. All of the choices have a .50% 12-b fee. Not a single fund has an expense ratio under 1%. Morningstar rates many of them as 2-star funds, and a couple are not even rated!

If anyone has any suggestions, let me know!

Here are all the options:
RERCX
RGACX
CPAKX
KAUFX
FTRKX
FIGKX
MCVRX
FMXKX
FTOKX
FTWKX
FTHKX
FALKX
QKACX
FIGKX

Update

The past couple days have been very good for my portfolio :-).

I have begun investing in 2 ETFs - CHN (The China Fund) and EWZ (iShares Brazil Index). I invested $250 in each one. I have owned CHN since March 17, and I have seen a 10.1% return. EWZ I purchased Tuesday, and I have gotten a 9.6% return in only 3 days!

My best stock pick ever has been ACAS. I originally purchased 10 shares for $135 in October (just before they announced that they were suspending the divided and the shares plummeted!). A few weeks ago for speculation, I invested $75 and got 103 shares at about 72¢ each. I have seen a 263% return! ACAS closed today at $2.63. I am tempted to sell it and take my profit, but I think I will hold on to it. I'm almost thinking about getting some more shares - when they start paying a dividend again, this is going to take off.

I first purchased DOW at $15.40, which I thought was a steal. I thought it was an even greater steal at $7.59 and $6.27. I am average down to $9.05 a share, and currently have a 10% return on my investment.

I'm Glad I Waited...

Back in October/November 2008 when I began looking to expand my portfolio (it consisted then of about 5 stocks), there were a lot of stocks I was looking at. Today, I went back and looked at 2 of them, and I am very glad I waited.

When I looked at Atlas Pipeline Holdings (AHD) and Atlas Pipeline Partners (APL) they were trading at around $13 (AHD) and $22 (APL). Now AHD trades for $1.36 and APL for $3.40! That's about an 85% loss for each one! One of the primary reasons I was considering them was because of the relatively high dividend (I believe it was around 20%?). Well, the dividend for AHD dropped from 51¢ to 6¢ (though the stock has fallen in price that the yield is about the same), and APL went from 96¢ to 38¢ (with another dividend drop expected).

Just goes to show you that you shouldn't chase high dividends. Though I must admit that at these prices it is tempting to put maybe $100 in one of them.

Peer-to-Peer Lending

I came across this blog here about a site called Lending Club. Basically, you loan money to individual people and get a high interest rate on it. The minimum to invest is $25.

The link I used from that blog allowed me to get $25 for opening an account. Not bad. I'll get $25 to play around with. Just a word of warning though, when you enter your checking account information, they don't tell you until afterwords that they are going to be initiating a small withdrawal (under $1) to make sure you own the account. Every other place I've seen always makes a deposit, not a withdrawal. You can also add money to your account via a credit card (through paypal) or just use your paypal account (it appears this is only for the first time). I added an additional $25.

There are a variety of loans to choose from, and you can view the individual details of each one, including information such as the intended use of the loan, their credit score, income, etc. The interest rates range from 8% to 17%.

You can even sell your notes on their trading platform (though I don't think there is tremendous liquidity here).

I don't think I would invest a ton of money here, but I'll see what happens with the money I put in. If I were to decide to put more money in, I would split them up over several loans as do spread out the risk of default.

Dissapointment with Sharebuilder

Thursday morning I, along with many others, were unable access our Sharebuilder accounts. Sometimes you could log in and view your account, but even if you got that far you would not be able to do anything more. Most of the time I would get an error message saying that due to the high trading volume today they were having problems (kind of funny that the problems started before trading opened!). I was finally able to get in around 1pm.

That was very frustrating not being able to access my account. I complained to them and I received this response from Justin Savino:

I am sorry for the experience you had with our site. Your frustration is understandable.

Recent market conditions led to unprecedented website traffic, and we apologize for the delays you encountered. All our technology teams are working to improve the responsiveness of our site to serve you better. We have already made several upgrades and are working on several more.

We truly value your business and appreciate your patience as we work to restore the level of service you expect from us.

They didn't even offer me a couple of free trades. This pretty much does it for me with Sharebuilder. I still have several referral trades left, so I will use them up before I switch. Right now I am considering TradeKing. I have opened an account there, though I have not added any funds to it at this time. Trades ar $4.95, which is 1/2 the price of Sharebuilder. They will also reimburse me for my transfer fees if/when I transfer my stocks from Sharebuilder. I considered just using Zecco, as I already have an account there, and the trades are only $4.50, but I'm still pretty steamed about the bait-and-switch thing and I really don't think I will be back there. Besides, based on their history of changing their plans, who knows if they'll even keep $4.50 trades?

If anyone is interested in opening an account with Tradeking, I can send you a referral e-mail. I'll get $50 if you open your account with $1,000 and make 1 trade, which I am willing to split with you via PayPal or an Amazon.com GC.


Update: Today (3/23) I tried to log in and was able to view my account, but when I went to the trading window all I would get was Error Encountered. Now even the main page (www.sharebuilder.com) gives me an error as well. Once, I could understand - everyone has a problem now and again. But this has happened several times over the last week. This is simply not acceptable. I will certainly be transfering my stocks out once my free trades have been used up.