## Tuesday, March 31, 2015

### Financial Thought of the Day March 31, 2015: Investing for the Short Term Is Bad

It is impossible to predict the stock price of any given company over the short term. Trying to day trade based on guesses on where stock prices are heading is a sure way to the poor house.

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## Monday, March 30, 2015

### Financial Thought of the Day March 30, 2015: Future Value of a Single Amount—30 Years

The compounding of money is such a powerful thing. Over time it can build up. Three elements go into the compounding of money—Amount, compound rate and time. It can be denoted by the following formula:

Future Value of an amount = (1 +r)^n where
r = rate of return
n = number of periods

With that said:

A single \$1,000 amount compounded @ 1% over a period of 30 years which is roughly the equivalent of an online bank account —(1.01)^30 gives you a multiplier of 1.3478 x \$1,000 = \$1,347.85

A single \$1,000 amount compounded @ 10% over a period of 30 years which is the historical return of the stock market as a whole --- (1.10^30) gives you a multiplier of 17.4494 x \$1,000 = \$17,449.40

A single \$1,000 amount compounded @ 22% over a period of 30 years which is Warren Buffett level returns --- (1.22^30) gives you a multiplier of 389.7579 x \$1,000  = \$389,757.89

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## Friday, March 27, 2015

### Financial Thought of the Day March 27, 2015: Future Value of a Single Amount—20 Years

The compounding of money is such a powerful thing. Over time it can build up. Three elements go into the compounding of money—Amount, compound rate and time. It can be denoted by the following formula:

Future Value of an amount = (1 +r)^n where
r = rate of return
n = number of periods

With that said:

A single \$1,000 amount compounded @ 1% over a period of 20 years which is roughly the equivalent of an online bank account —(1.01)^20 gives you a multiplier of 1.2202 x \$1,000 = \$1,220.19

A single \$1,000 amount compounded @ 10% over a period of 20 years which is the historical return of the stock market as a whole --- (1.10^20) gives you a multiplier of 6.7275 x \$1,000 = \$6,727.50

A single \$1,000 amount compounded @ 22% over a period of 20 years which is Warren Buffett level returns --- (1.22^20) gives you a multiplier of 53.3576 x \$1,000  = \$53.357.64

### Financial Thought of the Day March 26, 2015: Future Value of a Single Amount—10 Years

Sorry I skipped yesterday folks. Here’s a makeup post:

The compounding of money is such a powerful thing. Over time it can build up. Three elements go into the compounding of money—Amount, compound rate and time. It can be denoted by the following formula:

Future Value of an amount = (1 +r)^n where
r = rate of return
n = number of periods

With that said:

A single \$1,000 amount compounded @ 1% over a period of 10 years which is roughly the equivalent of an online bank account —(1.01)^10 gives you a multiplier of 1.1046 x \$1,000 = \$1,104.62

A single \$1,000 amount compounded @ 10% over a period of 10 years which is the historical return of the stock market as a whole --- (1.10^10) gives you a multiplier of 2.5937 x \$1,000 = \$2,593.70

A single \$1,000 amount compounded @ 22% over a period of 10 years which is Warren Buffett level returns --- (1.22^10) gives you a multiplier of 7.3046 x \$1,000 = \$7,304.60

## Wednesday, March 25, 2015

### Stockdissector (Theoretical) Portfolio Update--March 25, 2015--Beating The S&P 500

It appears that my theoretical portfolio is off to a good start. My one and only stock--Wabtec-- has outperformed the stock market since being added on January 30, 2015.

Wabtec-(NYSE: WAB)--Added on January 30, 2015
Price when added \$83.45
S&P 500 when added 1,994.99
Wabtec's Price on 03/25/15----\$95.27
S&P 500 Price on 03/25/15-----2061.05
Wabtec's Price Return 14.2% vs. 3.3% for the S&P 500 since being added to the portfolio (not including dividends).

The stock is outperforming the S&P 500 since added to portfolio (as of 03/25/15)
Stockdissector owns shares in this company.

Original blogspot post with timestamp for verification.

Go to the Stockdissector (Theoretical Portfolio)

Stockdissector is NOT an investment advisor. This is for informational purposes only. This should not be construed as an investment advice and you should always consult your financial advisor for a second opinion.

### Financial Thought of the Day March 25, 2015: Value Trap

Sometimes a stock price goes down for a reason. Be sure to research the fundamentals of any business before investing.

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## Tuesday, March 24, 2015

### Financial Thought of the Day March 24, 2015: Active Management Risk

The TIAA-CREF S&P 500 Index Fund Prospectus defines Active Management Risk as “The risk that Advisors’ strategy, investment selection or trading execution may cause the Fund to underperform relative to the benchmark index or mutual funds with similar investment objectives.”

Trading execution can run up brokerage fees and taxes which can eat into your returns. Owning shares in a mutual fund means you have a partial interest in a professionally designed portfolio. Within a mutual fund if an advisor trades a stock on your behalf it can incur fees and taxes in the portfolio serving as a drag on return. Picking stocks that you can hold for a long time can enhance your chances of better long-term gains. The same can be said about an advisor managing your mutual funds.

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## Thursday, March 19, 2015

### Financial Thought of the Day March 19, 2015: Never Pay Full Price

When spending money your philosophy should be to never pay full price.

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## Wednesday, March 18, 2015

### Financial Thought of the Day March 18, 2015: Quantitative Analysis Risk Defined

The TIAA-CREF S&P 500 Index Fund summary prospectus defines Quantitative Analysis Risk as “The risk that stocks selected using quantitative modeling and analysis could perform differently from the market as a whole.” First of all that risk could pay off if the company performs better than the stock market as a whole. Second, a business oriented stock market investor will look at factors beyond the numbers such as high barriers to entry, selling a wanted/needed product and market leadership.

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## Tuesday, March 17, 2015

### Financial Thought of the Day March 17, 2015: Cash to Stockholder’s Equity

I always like publicly traded companies with lots of cash on its balance sheet. I prefer companies with cash to stockholder’s equity of 20% or more to get it through tough times, make prudent acquisitions and self-finance operations. However, most of the financial community doesn’t want to see a great deal of cash on a company’s balance sheet because they feel it’s not being put to good use.

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## Monday, March 16, 2015

### Financial Thought of the Day March 16, 2015: Diligence Pays

Never give up on the notion of saving. Always minimize expenses and maximize revenue.

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## Friday, March 13, 2015

### Financial Thought of the Day March 13, 2015: Who Cares About the Jones?

Keeping up with the Joneses? Keep in mind they may be operating under a load of interest choking debt. Better to be debt free and not paying the bank interest then keeping up with your neighbor with the fancy car.

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## Thursday, March 12, 2015

### Financial Thought of the Day March 12, 2015: Have a Spending Blackout Period

Challenge yourself to have a “spending blackout period”. It could be a few hours, a day or whatever. Continue to have these intermittent blackout periods. Check and see if this has any impact on your finances over a period of time. Not spending money over a period of time can strengthen financial discipline.

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## Wednesday, March 11, 2015

### Financial Thought of the Day March 11, 2015: Financial Freedom Defined

To me financial freedom means having enough of an asset base that generates enough income to live on. That means not reporting to a boss to earn a paycheck and doing what you want to in life.

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### Financial Thought of the Day March 10, 2015: The Saving/Investing Formula

Take home pay – bills = Amount leftover to save and invest

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## Monday, March 9, 2015

### Financial Thought of the Day March 9, 2015: Gambling Is Not a Way to Make a Living

Playing slots and video poker is NOT a way to make a living and leaves you feeling empty in the end when you are broke.