Making Money

JoelMaxwell: The Fall and Rise of Success?

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I recently found this incredible story of how a regular guy got $556,000 (archived only) in debt. I was intrigued that this was so easy for him to do. The original blog is now missing, and the story is now unavailable at JoelMaxwell.com

It intrigues me that our societies now treat debt so lightly and make it so easy to get for personal use, for business use, for investment use, and FOR SPECULATION. I do sympathize with a number of the problems he had as they are very easy for eager business owners to fall prey to: overexuberance in the first months, unexpected expense, unforeseen cash flow issues, high leverage of debt, but mostly lack of a Plan B, if things didn’t work out. In fact, having a Plan C and a Plan D to fall back on is always a good idea so that if you can’t get your Plan B, then there are still other options that don’t include borrowing even more money.

Our business nearly got put out by the unexpected advent of SARS, and we didn’t have much time to prepare for it, as we were forced to close for 2 weeks. We were fortunate: no debt, malleable costs, and a willingness to sacrifice. But it could have been much worse than it was. Guess what, we haven’t learned yet either.We’re only now planning to set up emergency funds, and create a wall of financial security for the business… It’s going to take a lot of time and a lot of learning for me, I’m not particularly savvy at this kind of things, so the learning comes at some cost to myself. But it must be done.

I do admire Joel’s resilience to bounce back in a desperate situation. And so I am supporting him with positive thought waves and wishing him well.

Kenneth

DELL: A Chance for Capital Appreciation?

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I’d be very disinclined to buy Dell now. I’ve seen it ride up and down between 30 and 45 two or three times. I don’t see much opportunity for growth there, unfortunately in the short term. Though recently it’s been looking frothy again. Here’s another view:

Today’s Issue of Steve Sjuggerud’s DailyWealth

Why I’m Not Buying Dell by Porter StansberryThe stock is being accumulated right now by a “who’s who” list of the world’s best investors, including: Southeast Asset Management (advisors to the Longleaf Partners Fund), Dodge and Cox, and the Legg Mason Value Trust.

From a numbers perspective, Dell looks very attractive. It’s down $20 (roughly 50%) from its post-bubble high just above $40. It’s trading for less than 10 times operating earnings to enterprise value – suggesting that the stock is cheap enough for the company to buy all the shares back.

What are your top tips for 2007? I’m thinking about communications stocks, esp. the new AT&T and VZ. They have somewhat attractive EPS, and overall income and profit growth. They’ve been beaten up for a while. Can they stay down forever? I don’t think so. I like these stocks because
a. they’re in DJIA
b. they pay 4-4.5% dividends. Quite generous.
c. they’re out of favor right now.

I’ve also looked at DISney and Time Warner. Both of these are looking interesting. Time warner seems to be digesting and expurgating the stupid AOL acquisition, while DISney has changed leaders, mended fences and is now moving.

Anyone? Any comments?

These are pretty big fish, but for smaller mid-caps, any suggestions?

Just my 2c, etc. etc.

Kenneth