The Oprah Effect

On January 3rd, I wrote an article titled “Pandora Is A Fundamentally Flawed Stock.” Between that date and yesterday, the stock fell 31.5%. The specifics of the one-month decline were not something I could foresee–I have no idea when the market participants will correctly reflect the true value of a security–but I could predict that Pandora shareholders faced two long-term problems. Pandora shareholders are perpetually suffering from dilution, as the company makes secondary offerings to receive cash to keep operations ongoing. Also, there is significant stock-based compensation for Pandora executives.

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When To Pause A Dollar Cost Averaging Program

Clorox (CLX) has one of the most popular dollar cost averaging plans among blue chips in the country, with a very shareholder friendly plan. After a one-time set-up fee of $15, those investors seeking to regularly accumulate Clorox shares only have to pay $0.03 per share in transaction fees. If you invest $250 per month into Clorox stock, your annual transaction costs are only around $0.72. It’s as close to free something can get without actually being free.

If someone had to commit to only owning 20 stocks for the rest of his life, the diversified and well-branded collection of cleaning/housing goods would be a persuasive candidate for consideration. Everyone has heard of Clorox. The brand dominated the bleach industry over the 20th century and still owns a market-leading position.

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Bank of America Stock: Getting Dirt Cheap

I know most people don’t like it when the price of stocks fall, but I find it provides clarity when searching profitable large-caps that are selling at obviously cheap valuations. Bank of America fell almost 5% in Monday’s trading as there have been increased fears over the commercial lending to upstream oil firms on the bank’s books.

Specifically, Bank of America disclosed that it would lose around $700 million from its upstream oil portfolio this year if oil stays around $30 per barrel through the third quarter of 2016. Bank of America is running a $890 billion loan portfolio, and $21 billion consists of loans to firms in the oil and natural gas exploration fields.

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United Technologies: A Great Long-Term Dividend Investment

What’s the great joy of poring through annual reports of individual investments? Knowing that United Technologies exists, and being able to immediately recognize that the stock is a good deal at $86 per share. It’s never really entered the popular imagination of the investing public as it is a large industrial that doesn’t have many products on the consumer side. If you have encountered United Technologies in day-to-day life, it is probably through the Otis subsidiary that makes the Otis elevators, walkways, and escalators which has a true 100% of business monopoly in some areas.

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Investing The Cash Portion Of An Investment Portfolio

Since about November, I have received a significant amount of e-mail correspondence from readers asking how to approach oil stock investment against the overall desire to maintain adequate cash reserves that act as “dry powder” for attractive opportunities. I haven’t responded to any of those e-mails, but I want to address the question in its broadest form right now: How should the zeal of picking up attractively priced assets be balanced against the desire to maintain proper cash balances for the next opportunity?

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