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  • Nokia's Desperation [View article]
    I'm also interested. Could you give us any information about employee morale at Nokia, internal conflicts over where the company is going, etc.? Did you leave the company on good terms?
    Apr 16, 2012. 09:27 PM | Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    The name is a long story, but basically I adopted it some time ago because I planned to write articles that would appeal to both Rookies and those who like to correct errors made by Rookies.

    I will write an article in the near future on the pros and cons of taking a lump sum distribution, but needless to say, everyone's individual financial circumstances are different and must be taken into account.

    Disclaimer: I am not an investment professional. Always consult a professional before making any investment decision. Professional financial advisors are renowned for their valuable and impartial advice and invariably put your interests before their own.
    Apr 16, 2012. 10:14 AM | 1 Like Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    Voodoo, thanks for your comment. Yes, it IS true that diversified mutual funds and ETFs have less volatility than individual stocks, though part of the reason for this is that they are less affected by the increased volatility around earnings dates of individual stocks.

    However in the example given in the late summer of 2011, an investment in an index fund such as (SPY) which tracks the S&P 500 would have had a similar result.

    Even in the case of an diversified mutual fund or ETF, it would be beneficial to scale into a large position gradually.

    You state that Rookies know less about investing than people here on Seeking Alpha, but my assumption is that Rookies are likely to come to Seeking Alpha because it is a place where people can share experiences and knowledge and improve their investing skills.
    Apr 16, 2012. 07:17 AM | 2 Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    Tom in TX, thanks for your interesting comments on your experience. Your example with (T) is an excellent example of a Mistake Rookies IRA Investors Make, but I'm glad it turned out well for you in the end.

    I think your mix is sensible too. Well done!
    Apr 16, 2012. 07:07 AM | 1 Like Like |Link to Comment
  • A Provocative Play On The Smart Phone Market: Nokia [View article]
    He is saying that you can buy the January 2014 $5 calls for 80 cents per share. This means that if the stock price exceeds $5.80 on the third Friday in January 2014, you will be showing a profit and that the maximum per share you could lose would be 80 cents per share or 20% of the current share price.
    Apr 15, 2012. 05:23 PM | Likes Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    No, check the monthly payment for a contract on an iPhone versus a few other cell phone services. Many are half the cost.
    Apr 15, 2012. 02:00 PM | Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    What you need to do is to find out how much your lump sum would be, and how much your monthly payment plus COLA would be in the future.

    With the monthly payment, basically you are getting an annuity plus the COLA. You could calculate what percentage that return is, for example, hypothetically, your lump sum is $200,000 and you would get $20,000 per year so that is a return of 10% right? No, not right, because capital is also being returned to you as well as investment gains, and the amount of capital returned to you will depend on how long you live. But you know the real rate of return on your $200,000 is a great deal less than 10%, though the actual percentage will depend on how long you live, so if you think you could make more than 10% managing your own funds, then you might want to do so.

    The company that administers this plan will win on pensioners who die quickly and lose on those who live very long lives, but you can be assured that the scales will be tilted in their favor overall, and of course they will also be extracting juicy administrative expenses and salaries.

    If you die after one year, your entire pension will be only $20,000, assuming that you do not choose a lower monthly payment with survivor benefits for your wife. On the other hand, if you take the lump sum and roll it over into an IRA, and then die, the remainder of your balance will be inherited by your surviving wife, if you have one, or your children.

    So these are just a few of the calculations that might go into your decision. Of particular importance are questions like how long you expect to live, whether you want to try to leave money to dependents, and how confident you feel in managing your own funds. Note that I am not even addressing the COLA issue here and how much that might be worth, or on your opinions about future inflation.

    This is a very complex topic, and I may discuss it more in the future, but I hope these thoughts give you something to start on.
    Apr 15, 2012. 12:38 PM | Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    No, I am trying to resist writing them all in one go, but I don't want to be rude and ignore comments when they do actually address relevant topics, and I hope to engage the reader sufficiently that he will subscribe to future articles.

    No, 30:1 is lousy odds on a 35:1 chance.
    Apr 15, 2012. 12:21 PM | 1 Like Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    One can make money out of NOK regardless of whether the price goes up, down, or stays the same, but it is an interesting stock because at the current level of $4 it has the potential to deliver spectacular returns on option plays, and because it is at the center of one of the few industries selling to the consumer that has tremendous potential for worldwide growth over the next decade--it its strategy pays off.

    NOK is by no means the only stock that I am interested in. I have current options plays in PCLN, for example, as well as MSFT and WMT which are well on target to make substantial returns by next weekend. Most SA articles focus on which stocks are good long prospects, but there is more than one way to skin a cat
    Apr 15, 2012. 11:24 AM | Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    Thanks for your comment, Don P. Yes, our Rookie certainly compounded the error by dumping the stock when it went down, but as I said above "a little hyperbole never hurts when you are trying to make a point."

    However, my essential point is this. If you have made a decision to buy 1000 shares of a certain dividend stock and the price today is $45, it is highly unlikely that the stock will never be available again for less than $45. Using the techniques outlined in my next article, it is very likely that you would be able to average the purchase price down to $40 or less, which is 11% less basis in the stock. If you pay 11% more than necessary for a dividend stock that you plan to hold for ever, than that will affect your returns on your money until the day you die.

    In the next article in the series I address some other approaches that the Rookie might have used, which will make the picture clearer.
    Apr 15, 2012. 11:07 AM | 1 Like Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    Thanks, richjoy403, for your excellent comments. Really this is a huge topic that I have launched on and all of the points you have raised are 100% valid.

    Rather than try to write a textbook or encyclopedia of investing, my plan is to focus on "mistakes" as this is a format that can be addressed snappily within the Seeking Alpha 1000 words limit, with a focus on "actionable ideas", because once you appeal to the reader's sense of schadenfreude, you can address what the wiser Rookie might have done instead, and the lesson is more likely to be remembered (I think).

    Although I have dozens of article titles already mentally prepared, it is extraordinarily difficult to decide where to start. For that reason I tried to put myself in the position of imagining what the first thing a person might do on receiving their rollover into their IRA account might be, and how it might go wrong.

    Yes, I think growth and income is the name of the game, because I am assuming the person with the IRA will have to both live off the proceeds and maintain his or her capital, taking into account the tax system in the US and how that may affect his/her decisions.

    I am probably getting ahead of myself here, but this is a big topic, and I plan to address many aspects of it. One imagines that Seeking Alpha readers are already interested in some aspects of the stock market, but part of my aim is to generate interest in the idea of managing rollover IRAs, which is likely to be the situation of many members of the baby boom generation reaching retirement in professions that have pensions.
    Apr 15, 2012. 10:59 AM | 3 Likes Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    "The youth of America only wants what their friends have and that is the I-Phone."

    Yes, but at least 80% of youth in the US cannot afford an i-Phone, a Burberry coat, Nike Jordans, a Rolex, or any other luxury brand. Now take this to the rest of the world, and the percentage of youth that can afford an iPhone is even less.

    I think you make a valid point that Steve Jobs and Apple are perceived as an American success story, and that patriotism and loyalty to the brand probably do play a significant part in influencing choices in the US market.
    Apr 15, 2012. 10:42 AM | 2 Likes Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    I don't think the question is whether Nokia will replace Apple as the #1 phone provider, especially in the US, but whether Windows can establish itself as a popular platform for mobile computing and telephony that will have a reasonable share of the world market 3, 5, or 10 years out from now with NOK a leading player in Windows phones.

    If Nokia could double its stock price and its (recently halved) dividend over the next 5 years, it would then be returning about 12% on each dollar invested right now in dividends alone. It would not need to displace Apple from the #1 spot to do this.

    Also take into account that NOK receives royalties from AAPL for each iPhone sold, related to technologies developed by NOK. I am not sure whether this will extend indefinitely into the future or not, but without that knowledge any prediction about the future of NOK is rather uncertain. Certainly any company that gets even $2 per iPhone sold indefinitely, or just for the next few years, has a very valuable revenue stream, especially if iPhone sales continue to grow exponentially. Unfortunately this agreement is covered by a secrecy agreement.
    Apr 15, 2012. 10:37 AM | 1 Like Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    Which apps would add to Nokia sales in, say, Germany or India? Surely if you can figure out that apps are a driver for phone sales, then MSFT and NOK can also do this and incentivize production of apps for the most popular usage. After the first 100 or so apps, there must be a law of diminishing returns for each new app added. An app that enables a vetinarian to take the temperature of a cow by pointing his cell phone at the cow's rear end might sell some phones to some vets, but how much difference would it really make to overall sales?

    The theory of apps driving cell phones sales appears to assume that smart phone owners belong to thousands of subsets, each of which is driven by a particular interest. This might have some truth in it, but the majority of people who buy a smart phone for general use (not business) just want the most common apps like Facebook, Skype, Kindle reader, an instant messenger, e-mail, Twitter, a browser, (Seeking Alpha of course) a flashlight, a shopping list, a music player, Youtube, an alarm clock and a timer for cooking, a game or two, and maybe some Internet apps so they can view their favorite Websites or newspapers and magazines, in a more readable format than using the full scale browser with a tiny screen.
    Apr 15, 2012. 09:49 AM | 3 Likes Like |Link to Comment
  • 100 Mistakes Rookie IRA Investors Make: #1 - Buying Huge Blocks Of Stock To Get Started [View article]
    As this is the first article I have published, there are probably a few technical aspects of the publication process that I have not mastered, however I will post the link to the next article in the series here in the comments when it becomes available as an interim measure. Happy IRA investing.

    If you click on the left of the page and add my name as a person followed, then the remaining posts in this series and the other 99 Mistakes IRA Rookies make will automatically appear in your Seeking Alpha feed. This might be the easiest way to make sure you don't miss any.
    Apr 15, 2012. 09:05 AM | 1 Like Like |Link to Comment