Sunday, October 16, 2011


Been quite busy and hope to get back to updating this on a regular basis :)

Sunday, October 24, 2010

yet another Chipotle update..

Had you made a play on Chipotle stock as I have been talking about you would have done quite well on friday.  Chipotle announced earnings Thursday after the markets closed and was soon up $8 dollars in after-hours trading.

On Friday the stock was up close to $26...or 15% for the day.  Had you bought shares or a call option you would have done quite well for the day.

I think that I will probably try using the same strategy again in January (buying a call a few weeks in advance of Chipotle's earnings report).  I'm hoping I can find another stock like this and am always up to suggestions.

Thursday, October 21, 2010

Told you to buy Chipotle..

DENVER--(BUSINESS WIRE)-- Chipotle Mexican Grill, Inc. (NYSE:CMG - News) today reported financial results for its third quarter ended September 30, 2010.
Highlights for the third quarter of 2010 as compared to the third quarter of 2009 include:
  • Revenue increased 23.0% to $476.9 million
  • Comparable restaurant sales increased 11.4%
  • Restaurant level operating margin was 27.7%, an increase of 220 basis points
  • Net income was $48.2 million, an increase of 39.9%
  • Diluted earnings per share was $1.52, an increase of 40.7%
Highlights for the nine months ended September 30, 2010 as compared to the prior year include:
  • Revenue increased 19.7% to $1.35 billion
  • Comparable restaurant sales increased 8.3%
  • Restaurant level operating margin was 26.9%, an increase of 180 basis points
  • Net income was $ 132.5 million, an increase of 39.1%
  • Diluted earnings per share was $4.18, an increase of 41.2%

Chipotle is up $8.58 in after hours trading...take that, non-chipotle stock buyer people

Tuesday, October 19, 2010

So how good is Jim Cramer?

 I was reading an article today about some of Jim Cramer's stock picks.  At the bottom I saw "Jim Cramer was up 31% in 2009."  Article can be found here:

I thought to myself wow he did pretty good in 2009.  Then I decided to calculate my own portfolio return for the year.  Turns out not only did I do better than him but i pretty much kicked Jim Cramer's ass.

My stock portfolio for the year of 2009 got a return of 57.5%.  How did it do so much better than him?  Well first off I think I know that I threw larger percentages of money into "riskier" investment choices that had been beaten down at the time, including steel (X), oil tanker frontline (FRO), and a real estate investment trust (FRESX).  Secondly, I didn't do a crapload of trading.  When you make trades on a daily or even weekly basis you eat up your gains with all the commissions and fees.  Now I'm sure Jim is doing much larger trades so the commissions are probably pretty negligible but for me $8 to buy and another $8 to sell each position really does add up over time.

In this case I'd have to say the Warren Buffett inside of me kicked in.  I bought when others were fearful.  The idea is to buy low and sell high.  When others were selling low (to cut their losses) they were missing out on huge potential future gains.  An adjustment here and there is always going to be necessary when the market makes big moves (either up or down) but if you don't have the right balance to begin with you're going to screw yourself over should the market crash.

I don't see myself making 57.5% this year but I'm definitely hoping to be in the 20%+ range.

Sunday, October 10, 2010

What is a day off worth to you?

I always find it interesting that when people are offered some money to work out of their normal work schedule, such as the weekend, they look at the situation in many different ways.

Some people would be more than happy to pocket the extra cash, even if it's less than or equal to what they would make at their "normal" job.  They just see it as bonus money and it goes above and beyond what they're already making so as long as they're busy they don't really care if they're making a bit less $ since in the end it's extra.

On the other hand, there are people that see a lot more value in their weekend, and free time in general.  These people tend to be the ones that get upset when they have to work overtime at their regular job, even if that results in a bigger paycheck.  It would take a lot more money than their regular pay rate for them to be motivated enough to do some side work on the weekend.  If they regularly make $20 an hour they might not even do some work on the side for $30 or $40 an hour, whether it's because they can live without the extra bit of money or they just want to be able to enjoy their day off.

So the question is what kind of person are you and why?  Does extra cash motivate you to accept offers for side jobs or are you one of those people that likes their weekend routine and it would take a hell of a lot of money to change that.

Thursday, October 7, 2010

Easy way to become a millionaire

How hard is it to become a millionaire?  Well it all depends on the path you take and how much time you are willing to wait.  One of the easiest ways is to start saving at an early age.  If you're 18 years old and want $1,000,000 by the time you are 65, you have 47 years to both contribute and allow past contributions to grow.  In this scenario you could have $1 million if you saved $161 away each month (assuming an 8% average rate of return).  That's it.  $161 might seem like a lot to a teenager, but once you are in your twenties, thirties and beyond it won't be such a big chunk of your take-home pay.  

Now let's imagine you couldn't get started at 18 & instead you started 10 years later at age 28.  Now you'd have to put away $368 each month...that is over 2x what you were required to save at age 18.  Why so much more, you ask?  Basically you're missing out on 10 years of contributions and 10 years of your contributions to get that 8% assumed rate of return, but the main reason of the difference is called time value of money.  

Imagine investing $100 for 10 years at the same 8% rate of return.  After 10 years you'd have $222.  Now, imagine instead that you invested the initial $100 for 40 years.  You'd end up with $2,427.  As you can see, it isn't just 4x what the 10 years option earned because the earnings are also being compounded.

So long story short, the earlier you start saving the better.  By starting at age 18 you end up saving $90,804 of your own money (the rest of that 1 million is all growth).  If you started 10 years at age 28 you'd end up saving $163,392.  That is $72,588 more dollars you'd have to come up with just to be able to meet the $1,000,000 goal in time.  So take a look at your finances and see what you're willing to put away each month and you should be able to make that $1,000,000 mark without much problem, especially if time is on your side.

Wednesday, October 6, 2010

Sometimes even when we dont want to we have to let go

The great thing about selling covered calls is that you know ahead of time, in the event that the stock price goes beyond the strike price you sold it at, how much you will make.  Unfortunately your earnings potential is capped at the strike price, but at least you get to decide what that strike will be.  If you set your strike price above the money not only do you get to pocket the premium but you also get the difference between your cost basis on the stock and the stock price.

I purchased AMSC (an alt energy company that deals w/ wind technology) for about $28 a share in july.  I sold a covered call with an expiration of October 15 at a strike price of 36.  I made $70 off of selling the covered call, which computes to an annual return of 7.5% on the premium alone.  Should the stock make it above $36 and be called away from me, I'd make $36 - 28 + .70 = $8.7 per share, or a 31% return on the 4-month trade, which is a 93% annualized return.  I don't know about you but as far as I'm concerned the stock could go up to $50 in the next week (i'd still only profit up to $36) and either way I'll be happy with my 93% annualized return on my trade.

I guess the moral of the story is that you need to make sure that when you initially are deciding on selling a covered call, you will be happy whether or not your shares get called away.  You can't get too greedy with trying to get the highest premium WHILE hoping your shares don't get called away from you.  Decide on a strike price you are comfortable with in the event you do get called away.

I'll keep you updated on whether or not my shares actually get called away.  They are currently at $35...only $1 away and have over a week to get to the $36 strike price.