Fed Action

Fed reduced the fed fund rate by a quarter point and stock market soared. I anticipated the quarter rate cut. To hopefully enjoy some of the market rally, I bought some $30,000 worth of investments the last two days. Not much, just trying to dip a toe in to catch some profit, so most of them is not full position. I still have 25% of cash, and expect to deploy them in the coming two weeks before Thanksgiving. The problem is I think a lot of the things I have my eyes on are all quite expensive in my opinion, so I am not sure I can find anything to buy. I bought a half positon in CGMFX (CGM Focus, this fund is a high flier this year, up 70% YTD thanks to legendary money manager Ken Heebner), PRHSX (T Rowe Price Health Science), MERKX (Hard Currency), FNORX (Fidelity Nordic) and one single stock (HERO). I will add more to CGMFX, FNORX and PRHSX later, giving it some time for me to observe their performance first. I want to get 100% in to capture the usual Christmas rally, on the other hand, the expensive values I have seen in so many stocks has me concerned as well. I will just take my time and be patient.

Rain Barrel, Sort Of

That is our latest adventure. We want to save water and the environment, and reduce our water bill. So instead of buying expensive rain barrels, we just use our spare 13 gallon trash can, open the lid and let the rain collect inside. It has been raining for three straight days now, so the trash can is a little more than 1/4 full. Tomorrow, when the rain stops, we will put the lid back on to prevent bugs getting in and use the water later on to water plants. Admittedly it probably won't save us much money, but I feel that it is small baby step towards a cleaner environment and we will do as much as we can to conserve precious water.

AC/furnace company came yesterday to service our furnace as part of our annual checkup to make sure that the furnace is running at tip top shape and get ready for the cold winter. We use gas for heat, and since the government predicted another record year for winter heating bill, we want to be prepared. Gas is relatively cheaper than using oil, so we are a little luckier that way.

Warren Buffet Warned Investors about China

He said it! Warren Buffet, the greatest investor, cautioned investors to be wary of China stocks' vertical climb in recent years. I know he is the GREAT ONE for a reason! I have the same feelings about China stocks as well, that is why I sold my MCHFX (Matthew China) fund last month. It almost doubled since I bought it and I sold it to diversify out to other Asian funds, not willing to concentrate on China alone. I still have 12% in Asia ex-Japan, but that includes HongKong, Taiwan, Korea, Singapore and Thailand. So I am a little more diversified.

I have learned a great deal from Warren Buffet. His theory that we should buy superior companies with solid management for undervalued price is the key to my investment philosophy. My purchase of Walgreen today is a direct application of his teaching.

Bought Walgreen and Sold GLD

That is my only two trades today. GLD is getting soft and toppy, so I sold it. It is a small position, and I just bought it not long ago, so my profit is minor, couple hundred. But I expect to buy it back soon, after a steep market sell off. I used the sales proceed to buy 150 shares of Walgreen. Its RSI7 daily finally went up above 30 and after I bought it, it went up more, even in today's market when S&P 500 goes down by more than 1%. So I guess we will see how this plays out.

It seems to me that the sale of Walmart and Johnson and Johnson I did two weeks' ago was very timely. Since then, Walmart has dropped down to my purchase price of 43.75, due to a conference call yesterday that the company claimed they would slow down US domestic expansion plan and predicted further decrease in sales growth. But I am not eager to buy it yet, considering the volatility of the market, I am very cautious and try to preserve cash to buy on dips later on. Besides, I want a even lower entry price this time, so it is on my watch list.

I still have my eyes on couple other stocks, mainly Toyota, JC Penney, Sandisk, and Wells Fargo. I was warned by some experts that now is not the time to buy financials, so even thought Citigroup and Bank of America look very promising now, especially Bank of America (Warren Buffet bought it at a higher price from here!), I will probably just put them on the watch list.

Will

We are in the process of updating our will, including will, power of attorney, medical power of attorney, living will. We first did that several years ago, but the person I picked to be the estate executor moved out of state and we want someone close by to take care of us when something urgent happens. So we choose one of our close friends who live couple miles away to be the new executor. To be cautious, we invited her to dinner one day and asked her if she would be willing to be one. She readily agreed. So we will give her our parents' contact info, our password to everything and a copy of our wills after they are ready and signed by a notary.

It is a serious matter for us and I think everyone should take steps to take care of this matter, especially if you have kid(s).

Two DRIPs Gone

I sold out two DRIP (dividend reinvest program) stocks the last few days. One is Aqua America which is a water company, the other is Omnicom which is an advertising company. I have had these two companies for about 2 years now and their performance has been sub par, less than 10% overall return on all my investments. So my patience is running low. I made a little profit on both. I will move all the proceeds to our Wells Fargo brokerage account. I have my eyes on several stocks right now who are all at 52 week lows. They are Toyota, Walgreen, Wells Fargo (!), and JC Penney. I am waiting for the trend to improve for all of them before I open my wallet. With the market running at such a high level, I am very wary of expensive valuations I have seen in so many stocks.

Verizon Phone and DSL

That is what we got for our home. We have a lower speed DSL for $17.99 a month, and we have the cheapest phone plan offered by Verizon which means we only have a basic plan and have to pay 8 cents per outgoing call (incoming calls are free). Since we both have cellphones, we hardly ever use the land line for outgoing calls. The land line is used strictly for the DSL. I know Verizon offer a "naked DSL" which has no land line at all. But we want to keep a basic land line just in case of emergency. Any way, the basic plan is about $5 a month, which is probably about what extra cost will be for the "naked DSL". So our total phone/Internet cost every month is $34.5.

We also have basic cable from Comcast, costing us $16 a month after fees. Cellphone is a family plan, two lines and minimum whenever minutes, total charge a month is $60.

Gas and electricity total about $65 or less last month. Of course it is higher for electricity in summer month and for gas in winter month. We haven't gone through one winter yet in the new house, so I don't know how much gas bill will be in winter. But I guess at least $70 or more.

Water would be about $20-25 a month. So last month, our total utilities (cable, phone, Internet, gas, water, electric)were $200.

To me that is a lot! I can't cut back on cable short of canceling it which P will raise h***, have to keep DSL, have to use gas/water/electric, so the only way I can serious cut back is finding more ways to use less electricity by turning off lights, computers, TV while not in use and line drying clothes, our latest adventure. Another area I may need to look into is our cellphone although I doubt we will be able to cut much out of it. Our cellphone contract will be up for renewal in Dec, I have been thinking about changing to prepaid for me and find a cheaper plan for P. But so far, I haven't found anything that can really save us money. I will need to analyze our calling patters and total minutes used every month to do a comparison between different plans.

Line Dry Clothes

We did it this weekend. We used the basement to line dry our clothes and it was very successful! The trick is we put the clothes in the dryer for 5 minutes then we hanged them up to dry. That way the clothes won't be stiff and scratchy and it will dry faster. We left them there for the night and next morning, they are ready for the closet.

We prefer it this way instead of hanging them in the back yard. One reason is of course we don't feel comfortable hanging our laundry for the world to see. They won't see much since our back yard is pretty secluded, still we don't like the idea. Second reason is we won't have to worry about dirt, dust and pollen getting inside the clothes since both of us have allergy.

It takes P a while to warm up to this idea and we did a trial run last time just for couple items so that he could see whether it is doable.

We still use dryer for a full cycle to dry undergarments which we don't want to line dry. So it means every week, we only run dryer for 20 minutes for two-three loads of clothes. I can't wait to see how much this new strategy will save us in electric usage.

Electric Bill for New House

I just got an email from our electric company telling me our Sep bill is available for viewing. It was $43.58! The lowest I have seen so far since our move in late June. I think turning off the AC helps tremendously. The most expensive one was in Aug about $64. Of course Aug was the month with the hottest temperature too.

I know that moving into a bigger house will mean higher utility bills. So we try a lot of ways to save money. We bought high efficiency washer. New dryer is not HE but it takes only average 15 minutes to dry a load of clothes because the clothes are not wet but only damp coming out of the new HE washer. And we start to line dry cloth in the basement so that we can save even more by not using dryer much at all.

We use programmable thermostat to adjust temperature so that it will be higher while we are at work and cooler before we get home. And we just turn off the AC in early Sep when the temperature turns comfortable. We also use ceiling fan quite a bit too to keep cool.

The biggest electric bill saving tip is we sleep on a futon in hot summer days of June/July/Aug in the basement so that we don't need to keep the AC running. The basement is cool in summer and warm in winter. I think that is our plan too to sleep down there in winter. We even discuss putting an actual bed there instead of futon. But we want to take it slow and see actually how we spend the first winter in the house first before we commit the money to buy a new bed or do something drastic again.

We use gas for cooking/heat/water heater in the new house. The bill for Sep is also the lowest, $18. So total we spend a little more than $60 last month. It is about $10 higher than the old house although the old house is much smaller. So I am pretty happy about our electric/gas usage and spending so far.

I think the fact that we have a relatively new AC/furnace system helps in keeping the bills down. We also have an annual maintenance contract with AC/furnace company to do spring/fall tune ups every year to keep them running in optimum shape.

Sold Them All

I sold both Johnson and Johnson and Walmart this morning right after market opened. Walmart raised the quarter earnings guidance and the stock shot up more than $1 at open. So I sold it to pocket a $700 profit in less than 2 month. Johnson and Johnson is getting pricey and the RSI trend is going down, I sold it too to protect my $900 profit.

Now my trading account is all in cash. My long term portfolio is still unchanged. My cash level is now up to 35% which for me is very high. I am waiting for market to cool down and reverse the overbought condition. And I am also very concerned about China/HongKong market. It seems everyday this market is reaching record highs. Movements like this always give me the "too good to be true" feeling. I have about 13% in Asia ex-Japan region. And I will watch it very carefully for any signs of fatigue or topping out. Being an Asian, I know that the faster it goes up, the harder it falls. Moderation is always my theme.

Sealed Our Driveway

We have a pretty decent sized two car driveway. And it is asphalt. It is in good shape but the other day, my boss and I were talking about power washing our front walkway. And he mentioned that if the driveway looks whitish, that means we should seal it with tar to protect if from forming cracks.

We always take care of our stuff, house and everything else. So of course, I go home and look at our driveway. It does look a little parched.

We talked about sealing it with tar. With the cold weather coming, if we want to do it, it has to be soon. So with the three day weekend and hot weather, that was our weekend project number one.

We bought a 5 gallon sealant from Lowes. It is supposed to be good for 5 years. Cost is about $18. We thought that was more than enough! How wrong we were. Not even half way done, the container is empty. So P had to make a quick run to the store and got two more. With a second coat, we finished all three containers and there was not much left. So for about $50, we sealed the driveway and am ready for winter to come. It is a great investment, because to redo the driveway, we probably need to spend $3000. In sealing it and protecting it from water and other harsh element, we are extending its life and our pocket book!

Now we are ready for our next project-dethatch!

Controling My Urge

Any time the market goes up hugely in one day, I have a hard time controlling myself from selling investments and keeping the profit. I know the market is short term overbought. But overbought conditions can keep on going until who knows when to turn around. Just like housing market in 2004, at that time, I started to feel that this market just couldn't continue like this and I read on newspapers that some economists even sold their house to capture the gains and rented because they thought that the market would tank anytime. The housing market kept on going and didn't start to show signs of fatigue until 2006. Those people who sold too early left quite a bit of money on the table.

But of course, no one knows when the market will change, it is better to take profit too early than no profit at all. That is what I am trying to learn to watch for signs that the market trend has turned and sell before the panic sets in. I have left a lot of money on the table throughout my investment life by selling too early. Sometimes, I kick myself for not being patient, sometimes, I congratulate myself for selling the stock right before a horrible quarter earnings report and pocket the gain. You can tell I am probably not a buy and hold person, but more likely a momentum player. I usually treak my portfolio a bit to capture the market theme but still maintain a diversified portfolio by over or under weight certain sectors of the market.

Usually I use fundamental analysis to buy a stock and rely on technical indicators for sell signals. It has served me well over the years. Right now I only have two individual stocks: Johnson and Johnson, and Walmart. Both have some nice gains so far and I think Johnson and Johnson is getting a little pricey. But it hasn't issued a sell signal yet, so I am watching it very closely. The thing is I enjoy seeing the gains brought to me by the strong market performance, such as today, but I am very worried too about how far it can go before it returns most of the gain it reached over the last month.

Not Quite Impressed with TRPrice

We opened our account two weeks ago with T Rowe Price but last week, I found out that the bank account information on the website was not correct. I don't know how that could be since they have a voided check on file. Anyway, we called last weekend and was told it would be corrected as soon as possible. And I checked this morning, it was right. So I think we are all set to invest. Now their customer service was excellent, but I am a little not happy about this incident. How hard is it to get the right account information with a void check?!

I will transfer 27,500 to this account, together with 2,500 already in there, I will have 30,000 total to invest in three funds, 10,000 each. I have already picked out the funds, but I think I will wait for the market to cool down a little from today's overbought condition before I commit cash to work. Until then, the cash will be parked in a MM account earning 4.81%.

Right now I have about 25% in cash, that is a lot to me. And our portfolio has never been higher. So you can tell, I am quite cautious after the big stock run up lately.

Anyway, I will definitely wait until I see more consolidation in the market before jumping in. In the meantime, cash is king!