Investing Curiouscatblog

Category: quote

  • 30 Year Fixed Rate Mortgage Rates

    Fairly frequently I am asked, by friends, for investing advice. One topic I am asked about frequently is mortgages (locking in rates, etc.). Often they are concerned about what a Federal Reserve decision to raise or lower rates will effect the 30 year fixed mortgage rate. Essentially the decision by the Fed won’t have any predictable impact (this is not the complete truth but close enough for the question being asked – this article has more, though it still just provides a cursory view of the situation).
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  • China and the Sugar Industry Tax Consumers

    China to Raise Tariffs On Clothing Exports, from the Washington Post:

    The Chinese action would raise export duties on 74 categories of Chinese clothing from token amounts announced late last year to a range of 12 to 48 cents per garment, starting June 1.

    If the Chinese government must reduce the amount of the world textile trade that their country is taking, or face retaliation from other countries, this is a very smart move. Essentially China gets to tax the United States, Europe, etc. and be thanked for doing so by the governments of those countries. Such is the odd nature of international trade these days.

    The Chinese government is going to tax textiles being exported by China. Therefore when an American picks up a shirt at the mall it will include a new tax to the Chinese government and this is seen as a good thing by the American government. An alternative would be for the American government to tax imports. Then the tax paid by the American consumer would go to the United States government instead. It seems odd that the American government thinks it is better to pay a tax to the Chinese government than to the American government but that seems to be what their policy and statements support.
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  • 10 Stocks for 10 Years

    I decided to look at selecting a portfolio of stocks I would be comfortable putting into an IRA for 10 years. My main criteria was companies with a history of large positive cash flow (that seemed likely to continue that trend).

    The 10 stocks I came up with are (closing price on 22 April 2005 – % of portfolio invested):

    • Templeton Dragon Fund (TDF – 16.40 – 16%) – a closed end mutual fund investing in China, Hong Kong, Taiwan, Singapore… This one doesn’t fit the criteria but does a great job of filling out the portfolio in my opinion.
    • Dell (DELL – 36.43 – 12%)
    • Toyota (TM – 72.42 – 12%)
    • Google (GOOG – 215.81 – 12%)
    • Pfizer (PFE – 27.22 – 8%)
    • Amazon (AMZN – 33.04 – 8%) They are only just starting to generate cash but I like their prospects.
    • Intel (INTC – 23.24 – 8%)
    • Petro China (PTR – 61.68 – 8%) Investing in PTR is based on the potential for China, the prospects for oil over the next 10-20 years and Warren Buffet’s ownership of the stock.
    • Cisco (CSCO – 17.43 – 8%)
    • First Data (FDC – 37.48 – 8%)

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  • Beginning of the End of Housing Bubble?

    re: Beginning of the End of Housing Bubble? – Dan Gilmor blog post

    I doubt we are at the end of the bubble. However, financial bubbles are very difficult to time. My guess is the bubble will continue for over a year for most, if not all locations in the USA. And unless the bubble continues and prices reach levels much higher than they are now, the end of the bubble will not be dramatic decline of prices (say an drop in prices of over 25%) in most locations.

    Manhattan (with historically very volatile prices) and certain other locations will likely have dramatic declines. But overall the real estate market will slow down (fewer sales) greatly and may experience say a 5 year period where prices decline slightly (or increase slightly). Real Estate normally does not behave the same way the stock market does when a bubble breaks, but we will see what actually happens.
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