Archive for April, 2012

Smartphones seem to be vital part of our everyday life, but the costs of having these smartphones is getting out of hand. With most major carriers (Verizon, AT&T, Sprint) , a smartphone, such as an iPhone 4s, can run about $80 or $90 with data per month. Of course there are many discounts offered by these carriers (Such as 15% or 20% off for working for any large company). But even with these discounts, these phone plans can be financially crippling.

I myself was paying $76 a month for my Galaxy S2 (Now Evo 3d) on Sprint with Unlimited Data, Unlimited Mobile to Mobile, and Free Nights and Weekends (after 7pm). For those who do not know, Sprint tends to be viewed as the cheaper carrier versus Verizon and AT&T. Recently I added my girlfriend to my plan with her iPhone 4s and was shocked to hear the cost per phone was still going to be roughly the same, and in fact a little more. I can’t believe they don’t offer any discount for that second phone on a plan. But what about a third phone? Sprint Cost Per iPhone

This is where things get interesting. Adding a 3rd, 4th, and 5th phone is roughly $30 a month more per smartphone. That means you can get five iPhone 4 ‘s (or any other smartphone) for about $240 a month (after 15% discount off the base plan, excluding surcharges and taxes), that’s $48 per phone. This of course would also make you liable for a five smartphone contract, but at $48 per phone, this is a sweet deal. This is most likely the cheapest iPhone family plan out there.

But you don’t have to be a family to do it. In fact you don’t even have to share a relationship. Girlfriends, boyfriends, friends, or just acquaintances are all eligible to join your plan. But once again, remember the contract holder is liable for payment.

The best course of action would be to find people that will either:

  • Prepaid the entire 2-years ($1,152 + $36 activation = $1,188 + any phone insurance premiums), or 
  • Prepay $350 for the early termination fee (ETF), so if they don’t pay they are dropped off the contract on their dime, or
  • Go with someone you trust whole-heartedly (such as family)

Whatever you decide, be careful and get it in writing. Make sure everyone understands what the plan entails. If you do opt into this cheap family sprint plan, you can plan on saving about $22 – $40 a month against other major carriers, which is $528 – $960 per phone over the 2 year contract ($2640 –   $4800 for all 5 phones). On the high end of that savings scale, that’s a cool five grand in 2 years. It can be a lot of hassle, but with numbers like this, it might be worth the hassle. For a complete breakdown of how the Sprint family plans are priced, take a look at the image below (click to enlarge).

Sprint Cheapest Family Plan

Get Rid of Cable and Pick Up Roku

roku or cableTired of paying for cable? Well consider ditching cable for Roku. Roku is a tiny little box that connects to your internet via wifi (or ethernet cable) and connects to you TV via HDMI  and allows you to stream things such as Hulu plus, Netflix, and Pandora. Additionally, if you buy the high end model ($99.99), there is even a USB slot so you can plug your media in directly to it.  Now of course you do have to pay for Hulu Plus ($7.99 a month) and Netflix ($7.99), but you are talking roughly $16 a month.

Roku also has the ability to link up with HBOgo, Facebook, and a host of other channels, but sadly does not appear to have an actual internet browser (my one complaint). I personally only plan on subscribing to Hulu Plus to have access to about 80% of any show I would ever want to watch anyhow. I am currently paying roughly $50 a month, so in a given year I should save $504 minus the cost of the unit plus the salvage value of the unit.

what is on roku

One of the things that stands out about Roku versus the iTv is Huluplus. Sadly even the newest iTV does not have the ability to access Huluplus.  I will keep you updated on my overall experience with Roku.

How to Get Lower E-Trade Commissions

If you are with E-trade and you are looking to get lower commissions, take these simple steps to save $2.00 a trade. If you haven’t been living under a rock, you most likely know that E-trade is not the most competitive commission rate broker out there at $9.99 a trade (until 150+ trades a quarter.) With multiple companies offering under $5 commissions (Tradeking and Optionshouse for example), it can be hard to justify dropping $9.99 a trade. But here is how you can lower those commission fees.

Lower Etrade CommissionsStep #1: Call E-trade and tell them you are considering transferring and was told by the brokerage firm you are transferring to that you would have to contact E-trade to find out the actual fee amount for the transfer. The representative will most likely tell you that it is $60 flat fee to transfer out.

Step #2: Wait for the representative to ask you why you are transferring.

Step #3: Tell them that you found multiple brokerage firms that offer much better rates and although you like E-trade, you simply cannot afford it since you are a frequent trader.

Step #4: Wait for them to offer you $7.99 or ask if there is a way they could meet the other brokerage fees (this will prompt them to offer you $7.99 a trade).

Step #5: Tell them that although it is higher than the other broker, it should be enough to keep you from leaving. Accept it, and wait a few business days for them to apply it to you account.

That’s it. Your account will now permanently give you commission rates equivalent to as if you were trading 150 trades a quarter ($7.99). Feel bad for asking for this discount? Don’t. E-trade even with this discount is not the most competitive pricing. If you were going to place 150 trades per quarter to obtain that $7.99 price, call anyhow to save yourself $300 worth of commissions.

Trade Like a Hedge Fund Manager

There have been some changes to my portfolio as recently, all of which have made me realize one thing.  I do not trade like a hedge fund manager. Hedge funds are designed with one idea in mind, making money regardless of how the market moves, and that is why I am not like a hedge fund. Currently I only have long positions. Positions that will benefit from the overall market going up, but after a couple of down days, it’s easy to realize this is not a fail-safe model.

So how can you trade like a hedge fund manager? With a lot of research. You are searching for industry relationships and resistance levels.  The hard part of course, is building those hypothetical connections. Does Apple move similar to HP? Does Sprint move inversely to Verizon? This is where things get very complex very quickly. This is not to say you simply go long in one stock and find another stock in the same industry and short it.  You are searching for relationships, patterns, and resistance levels of stocks to provide a statistical advantage.

Let me attempt a very basic example of a relationship. Target (Symbol: TGT ) and Walmart (Symbol: WMT ). These two stocks are competitors in the same industry. Although they have entirely different management and business operations, they commonly trend the same way. Below is the 3 month comparison chart, the 6 month comparison chart, and the 1 year comparison chart.

Target Stock Or Walmart Stock
Target Coupon 2012Target Stock 2012

The relationship between the two stocks was extremely strong for the last year, except for at one point, Target’s stock dipped and lagged behind Walmart’s stock (Around Jan ‘12). In Jan of 2012, Target presented a buying opportunity. Compared to its industry counterpart, it was lagging in price. By observing another comparison to the chart, the Dow Jones Index, we can also see that the overall trend is clearly trending up.

Target or Walmart

Now I know what you are thinking, “It doesn’t mean that for sure Target will meet back up with Walmart. Target could have bad news, low earnings, or about a million other things that adversely change the price of the stock.” I couldn’t agree more. In fact, Target’s stock could go down even while the macro trend is upwards. The idea here isn’t to be right all the time, it’s to be right more than half of the time. You are using relationships to try to beat the odds. Maybe with this analysts, you think there is a 55-60% chance that target will trend back towards Walmart’s performance. This is why you develop these relationships.

Furthermore, you can take the hedge fund manager approach and see that Walmart is very high by comparison to Target, and you could short Walmart and long Target. Here is the logic to that action, Target is already fairly low and most likely has some resistance to falling more, while Walmart is flying by comparison and has some resistance to going upwards. Take a look at the chart below.

Walmart Stock 2012

Your short Walmart position would lose money (because you said it was going down and it went up), but the overall effect from the long position of Target would more than offset that loss, to show an overall strong gain. Also think about the fact that if the overall trend of the market was downward, Walmart had arguably more room to fall than Target. If the market tanked, you could potentially see the exact opposite, Walmart falling 10-15% and Target falling 2-5%. This again is all hypothetical since no on really knows, but building these relationships is critical to operating like a hedge fund.
 
Curious for some more relationships? Take a look at some of the easier relationships to identify. One of the charts, I would argue is a potential buying opportunity as well (Shorting KO and Long on PEP).

Visa vs MastercardUnited State Steel Stocks 2012
Coke or Pepsi Stock
There will be a follow up article to this about “Gobbling up Differences.” 

Disclaimer: Do not use this information for any decision making of any kind. Always consult a professional for any financial or investment planning.

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