This post is mostly to myself to remind me (waves!) to not be such a dumbass and do a little more research before buying any individual stock.
I purchased 40 shares of Xyratex (Ticker XRTX) in my Roth IRA on September 3, 2008. It is a company that manufactures external disk drives, parts and components and the machines used in making those drives. Given the explosion of data available online ready for downloading and media being created and uploaded daily from people's digital cameras, iPods and other devices this certainly sounds like a growth industry.
The first thing I did wrong was I bought too many shares. My standard practice is to buy 25 shares of any company the first time out. Then if it drops in price, a minimum of 10%, preferably 20%, I do more research to determine if I should scoop up more shares at a lower cost basis. But I bought 40 shares instead of the normal 25 because I was being greedy.
The second thing I did wrong was to base my purchase decision purely on earnings estimates of the stock. Earnings estimates are helpful when researching a stock, but they are not concrete - they are ESTIMATES and they can change very rapidly. At the time XRTX was expected to earn $1.09 per share this year and $1.77 per share next year - solid earnings growth.
What I also should have done in September was go onto their company website and review their Annual Report for 2008. This would have given me more insight into their business. Where their revenue comes from, how much debt they have, future expansion plans, an overview of their industry and tons and tons of financial data for the past 3-5 years.
Alas, I didn't do that and bought the stock purely based on the earnings estimates for the two upcoming years. As we all know, the economy has tanked and now XRTX is estimated to LOSE $.25 this year and post a profit of.....wait for it.....$.01 next year. As a result the stock, which I bought at $13.85 per share, now trades at just North of $2.00 per share.
The 2009 Annual Report for Xyratex came today in the mail so I gave it a look while eating lunch. If I had bothered to look at the 2008 Report, which I could have accessed for free on the company's website, I never would have purchased the stock. It turns out XRTX got 70% of all its revenue for 2008 from only 3 customers. So if one of those cancels some orders, goes bankrupt or even merges with another company XRTX will probably be screwed. (Ironically, one of XRTX's major customers is another stock that I have owned in the past Western Digital [WDC].) Having a few customers account for the overwhelming majority of a company's revenue is a Major Red Flag with "Don't Buy Me!!!" printed in huge, bold letters on it.
Greed 1, Jon 0.
Mood: Inquisitive.
Movie Quote of the Day:
"Don't take life too seriously, you'll never get out alive." - Van Wilder
Saturday, February 28, 2009
Wednesday, February 18, 2009
Working For A Living
Today is kind of a special day. It marks my 10 year anniversary as an Ameriprise financial advisor. With the ongoing market turmoil my job has become more stressful than ever the past few months at the same time my income has been plummeting. In honor of my 10 years on the job here are a few careers that I could never stomach. Just something about them that rubs me the wrong way.
1) Water Boy - at pretty much every major sporting event there are people on the sidelines with water bottles at the ready to service the players as they come off the field, court, ice or what have you. A water boy (or girl I suppose) is responsible for squirting water or Gatorade or something (could be steroids for all we know) into the players' mouths when they come to the sidelines. They may also have the extra special task of wiping the sweat off the athletes. Nope, can't do it.
2) Realtor - this one may surprise you since a Realtor is a fairly nice, cushy professional job with solid earnings potential. Sell one $500,000 house in greater DC and your commission is $15,000. Certainly the housing slump has made this career a challenge but that is not the reason for my disdain of it. Realtors have to work Sundays and show houses. There is no way I could ever bring myself to have an open house on Super Bowl Sunday as I saw many Realtors doing just a few weeks ago.
3) Special Interest Lobbyist - Certainly DC is packed with associations for everything under the sun and they all have lobbyists. That is all well and good to a degree but it is not a career my conscious would allow me to pursue. Trying to persuade Congress that cigarette taxes should be lowered or that we should repeal the Clean Air Act is just not in my soul.
4) Commercial Actor - while I wouldn't be opposed to fame and money the path to reaching that nirvana does this career in for me. You have to start out at the bottom, in commercials. You have to feign excitement for a sale at Kia Motors or dance around like a spaz because you ate some Jello Pudding. No thanks. There are some really lousy commercials on the airwaves and I am very glad you will never see me in one.
5) Sweat Boy - This is perhaps the next step up from water boy in the NBA. At each end of the court there is a guy (never seen a girl) with a big mop and his job is to mop up the sweat the basketball players leave on the court. Once upon a time this was a very respected profession. Sweat boy would mop up the sweat after a collision or foul when players would end up on the floor. It was a valuable service and only performed when needed. That is not the case anymore. Sweat boys are whoring themselves out between every possession mopping up even the tiniest beads of perspiration on the court or perhaps mopping up nothing at all. Sweat boy, you have lost your soul for all eternity, pfffftttttt.
Someone told me they thought it would be fun to be a water boy because you could pretend that the players are your pets. You pat them on the head, squirt some water in their mouth and send them on their way. Unfortunately, that would only work until payday when you realize you get $8.50 per hour and they get $8.5 million per season.
Mood: Jovial
Song of the Day:
"I'm taking what their giving, cause I'm working for a living."
- Working For A Living
Huey Lewis and The News
1) Water Boy - at pretty much every major sporting event there are people on the sidelines with water bottles at the ready to service the players as they come off the field, court, ice or what have you. A water boy (or girl I suppose) is responsible for squirting water or Gatorade or something (could be steroids for all we know) into the players' mouths when they come to the sidelines. They may also have the extra special task of wiping the sweat off the athletes. Nope, can't do it.
2) Realtor - this one may surprise you since a Realtor is a fairly nice, cushy professional job with solid earnings potential. Sell one $500,000 house in greater DC and your commission is $15,000. Certainly the housing slump has made this career a challenge but that is not the reason for my disdain of it. Realtors have to work Sundays and show houses. There is no way I could ever bring myself to have an open house on Super Bowl Sunday as I saw many Realtors doing just a few weeks ago.
3) Special Interest Lobbyist - Certainly DC is packed with associations for everything under the sun and they all have lobbyists. That is all well and good to a degree but it is not a career my conscious would allow me to pursue. Trying to persuade Congress that cigarette taxes should be lowered or that we should repeal the Clean Air Act is just not in my soul.
4) Commercial Actor - while I wouldn't be opposed to fame and money the path to reaching that nirvana does this career in for me. You have to start out at the bottom, in commercials. You have to feign excitement for a sale at Kia Motors or dance around like a spaz because you ate some Jello Pudding. No thanks. There are some really lousy commercials on the airwaves and I am very glad you will never see me in one.
5) Sweat Boy - This is perhaps the next step up from water boy in the NBA. At each end of the court there is a guy (never seen a girl) with a big mop and his job is to mop up the sweat the basketball players leave on the court. Once upon a time this was a very respected profession. Sweat boy would mop up the sweat after a collision or foul when players would end up on the floor. It was a valuable service and only performed when needed. That is not the case anymore. Sweat boys are whoring themselves out between every possession mopping up even the tiniest beads of perspiration on the court or perhaps mopping up nothing at all. Sweat boy, you have lost your soul for all eternity, pfffftttttt.
Someone told me they thought it would be fun to be a water boy because you could pretend that the players are your pets. You pat them on the head, squirt some water in their mouth and send them on their way. Unfortunately, that would only work until payday when you realize you get $8.50 per hour and they get $8.5 million per season.
Mood: Jovial
Song of the Day:
"I'm taking what their giving, cause I'm working for a living."
- Working For A Living
Huey Lewis and The News
Monday, February 9, 2009
A-Fraud
I love baseball. Anyone who knows me well knows that. Any other sporting event I watch is just a way to kill time because there is no baseball on. MLB Network has certainly helped out in that department.
The big scandal these days in the world of professional baseball is that Alex Rodriquez now admits that he took steroids. What a shocker this is, um, no not really. I am not here to droll on and on about that. There is more than enough of that going on elsewhere.
I don't like Alex Rodriquez as a player or as a person. He openly cheats on the field - see the ball slapping incident of the 2004 playoffs for proof - and off the field too - on his wife. Still, he is arguably the best offensive player in the world. He is a grown man who gets paid millions to play a child's game. He will make more money per at bat than the average American will make all year. And I actually feel bad for him today.
To me, the real controversy here is really the betrayal by the very organization that is supposed to protect players like him - the Major League Baseball Players Association - MLBPA for short. Back in 2003 when baseball finally decided to do something about steroids they tested all players on each team's 40 man roster for steroids and illegal substances. The point of the testing was to serve as a benchmark, to find out how bad it was out there. Were 15% of players doing roids? Or was it 3%? Or 48%? The testing was mandatory but anonymous. Everyone participated because there was no other option.
About 1200 players were tested (30 teams, 40 players per team) and 104 of them tested positive for steroids or illegal substances. Break that number into a percentage and you get 8.7% of players who tested positive. Just like the Mitchell Report, a serious number but not an eye popping outcome in my opinion.
However only 1 name of the 104 guilty parties has been leaked to the press. MLBPA failed Alex Rodriquez and every other player by not ensuring that these anonymous test results stayed anonymous. Their sole purpose as an organization is to protect the rights of MLB players and they have supremely failed.
MLBPA should have made absolutely sure all test results were destroyed years ago the second they were no longer needed by MLB. While I do not care for A-Rod as a person or player I certainly don't want to see his civil rights violated. Even he deserves to be treated better than this.
Mood: Shocked.
Movie Quote of the Day:
"Your middle name is Ralph, as in puke." - The Breakfast Club
It's Ironic:
Kinda funny that both my trail running cousin and I took pictures of our shadows yesterday while we were out on the trail. Mine was taken in VA with a temperature of 67 degrees while his was up in Maine at a slightly lower reading, lol.
The big scandal these days in the world of professional baseball is that Alex Rodriquez now admits that he took steroids. What a shocker this is, um, no not really. I am not here to droll on and on about that. There is more than enough of that going on elsewhere.
I don't like Alex Rodriquez as a player or as a person. He openly cheats on the field - see the ball slapping incident of the 2004 playoffs for proof - and off the field too - on his wife. Still, he is arguably the best offensive player in the world. He is a grown man who gets paid millions to play a child's game. He will make more money per at bat than the average American will make all year. And I actually feel bad for him today.
To me, the real controversy here is really the betrayal by the very organization that is supposed to protect players like him - the Major League Baseball Players Association - MLBPA for short. Back in 2003 when baseball finally decided to do something about steroids they tested all players on each team's 40 man roster for steroids and illegal substances. The point of the testing was to serve as a benchmark, to find out how bad it was out there. Were 15% of players doing roids? Or was it 3%? Or 48%? The testing was mandatory but anonymous. Everyone participated because there was no other option.
About 1200 players were tested (30 teams, 40 players per team) and 104 of them tested positive for steroids or illegal substances. Break that number into a percentage and you get 8.7% of players who tested positive. Just like the Mitchell Report, a serious number but not an eye popping outcome in my opinion.
However only 1 name of the 104 guilty parties has been leaked to the press. MLBPA failed Alex Rodriquez and every other player by not ensuring that these anonymous test results stayed anonymous. Their sole purpose as an organization is to protect the rights of MLB players and they have supremely failed.
MLBPA should have made absolutely sure all test results were destroyed years ago the second they were no longer needed by MLB. While I do not care for A-Rod as a person or player I certainly don't want to see his civil rights violated. Even he deserves to be treated better than this.
Mood: Shocked.
Movie Quote of the Day:
"Your middle name is Ralph, as in puke." - The Breakfast Club
It's Ironic:
Kinda funny that both my trail running cousin and I took pictures of our shadows yesterday while we were out on the trail. Mine was taken in VA with a temperature of 67 degrees while his was up in Maine at a slightly lower reading, lol.
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