Archive for February, 2012

Sprint Nextel Corporation Jumps 13% in a Day

Sprint Nextel Corporation stock jumps 13% in a single day. Some of you might remember from my last brokerage account update that I own a leveraged position that is long on Sprint Nextel Corporation (Symbol: S). This position represents about 21% of my brokerage account’s total value.

I  own 10 options to call @ $1.00 by Jan 19th, 2013. This is an “in the money” option, so everything that this stock goes up is a leveraged gain. The result is I am now up 8.3% on this transaction, but I remain long and have decided not to sell. I believe this stock has much more room to grow.

Sprint Stock

I’ve said it before and I’ll say it again, all Sprint Nextel has to do is slightly turn things around and generate a tiny EPS to make this stock an absolute deal. The current market valuation is $7.55B, which I would argue is insane.

I understand the market doubts Sprint Nextel Corporation’s ability to generate net income, but their ratios are very favorable when comparing to other carriers. AT&T’s market cap is rough 22.5x’s sprints, but their revenue is only 3.22 times as big.

sprint nextel corporation

The end all message here is that the market does not believe Sprint Nextel Corporation can generate net income, and in fact the only way the market cap for this stock would make any sense is if there was a high probability that Sprint Nextel Corporation will go away entirely, which I find possible but not likely. If Sprint Next Corporation turns a profit in the foreseeable future, this stock is going to go gangbusters.

CPA Exam Results: Section BEC

CPA Exam ResultsI am happy to say I have my CPA Exam Results from the BEC section that I took in early Feb. I passed with an 80 (75 required to pass). I have to say that I am very happy with these cpa exam results, because I wasn’t 100% sure I was going to make the cut on this section.  This is my first section taken and it can tend to be a very trivia section.

I am not allowed to discuss specific questions (as exam rules dictate), but I can tell you that a few questions resulted in my brain doing a “404 Error – Not Found.”

1 out of 4 down – My next is Audit in April.

Housing Market 2012The Housing Market in 2012 is recovering, or so the National Association of Realtors said today in a report that stated home resale numbers are through the roof and available inventory is at a seven year low.  But how heavily should you weigh this report in your decision making? I would argue that is is about 99% complete propaganda.

Now of course when the National Association of Realtors is advising that housing is strong, you probably realize there is a strong conflict of interest. Are there signs that the housing market are getting better, I would argue nothing is concrete.

Taking a look at the numbers in the report released, the claim is that existing home sales increased 4.3% to an annual rate of 4.57 million for last month (which would be the highest since May 2010). But if you keep reading, you will find out that there is a major revision. In December this same association reported an annual rate of 4.61 million (which would have been higher than last month’s numbers), but they are revising this number down. If that 4.61 million would have been correct for December, it would have been an increase of 5%. The revision this month put December down all the way to 4.38 million units, which is a loss of .5%.

That’s right, from +5.0% to –.5%, which is a 5.5% swing! Don’t forget this month they are saying it is up 4.3%.
Look I understand people make mistakes, but if you are going to make headlines with a 4.3% increase and then say you made a 5.5% mistake you are a joke.Housing Market 2012

The only thing this report really has done is make a headline and discounted what little believability the National Association of Realtors had left.  The headline should have gone to the revision and not to the propaganda for this month.

So what should we use as an indicator of a housing market in 2012 and onwards? That’s a tricky question, but it most likely is going to be a combination of both sales volume, sales price, and interest rate macro trends. If you think about it, interest rates might be the only un-biased indicator we truly have.

If money is cheaper to borrow and people are not taking advantage of it, most likely it’s a fairly weak market. If people start borrowing and purchasing homes, the interest rates are likely to increase.

Anyone else feeling confident in a true housing recovery in 2012? Because I certainly am not.

Reference: Housing Market 2012

Gold and Diamond Jewelry is a Bad Investment

Gold and Diamond Jewelry is a bad investment. It’s such a simple statement, but many do not understand just how bad of a hit you are going to take when purchasing jewelry.

The jewelry market is ten times worse than a used car dealer. Jewelry dealer’s job is to sell you something for literally at least double the price of the actual value. They will assure you of it’s value through certificates of appraisal which might as well say it’s worth “clown bananas and Nyan cat moon rainbows.”

Jewelry is StupidMoon Rainbows

I came across something that really makes the point. A local craigslist’er sells gold and diamond heart pendants. These retail from anywhere from $99 to $299 in store , and the seller asks for about $100 to $125 for these pre-owned pendants. This sounds pretty fair? Oh heavens no.

Jewelry is a Scam

How much are these pendants actually worth? About $25 dollars. That’s right, $25 dollars.

Don’t believe me? Here is a the ultimate fair market test – a completed eBay auction. $28.99 with 4% cash back.

jewelry is a waste of money

This eBay auction is not an outlier at all. I am constantly reminded of how worthless jewelry really is thanks to eBay. Sad part is, this is virtually scrap value! 2.2 ounces of 10k would be worth $51.11 at current market prices, and assuming it is half gold and half diamonds it would be worth about $25.55 in scrap gold alone!

Remember these pendants sell for about 600%-900% more in retail stores. The best part is if you had it appraised, I’m sure a jewelry store would assure you it is worth hundreds even if you show them the eBay auction (try it yourself).

The scam continues and America has yet to wise up to it. If you don’t buy your girlfriend jewelry, you’re a terrible man according to what I’ve been told via media. My girlfriend deserves the best and I don’t mind if it costs a little bit of money to achieve that, but the jewelry industry is disgusting.

On a side note to all of this, I find it interesting that so many people are engaged in gold scrapping and salvaging. People will salvage anything from jewelry to CPU and motherboards from old PC’s (which contain gold). Sure they have to use $10 of chemicals that most likely cause rectal cancer to get that $100 of gold from the 400lbs of motherboards they paid $40 for, but I think it’s awesome. The best part is the equipment  — I have a crockpot and a coffeemaker in my home and this device below is up for $299 dollars! I think I’m going into the jewelry and/or gold salvage equipment business. What a world we live in!

gold salvage kit

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