New Personal Finance Blog

Here is a link to a new blog about personal finance and stock investing. Check it out: PFStock.

Switch Back to OLD Yahoo Page

There have been some questions about how to switch back to the OLD Yahoo home page. I know that this is really a moving target since every time a new solution is posted, Yahoo changes it again. In any case, I have found a way to switch back that works as of today, 8/28/06. As for tomorrow, I can't be sure. Anyway here is the link:

Click here to switch to old yahoo web page.

If this doesn't work anymore, leave me a comment, and I'll research other alternatives.

Update on IGV, recommending QQQQ

This past Monday (8/14/2006), I recommended buying iShares Goldman Sachs Software Index (AMEX: IGV). At that time, it closed at 38.19. On Friday, IGV closed at 40.55, a gain of 6% from the time of my recommendation. At a time when people are falling all over themselves to lock in a 5% interest rate on a 12-month CD, I consider a 6% gain in less than a week pretty impressive. On Thursday, this article was posted on Marketwatch.com where Citigroup analyst Brent Thill sees "a sector rotation into software" stocks. I wonder if he was reading my blog. Unfortunately, I know that my blog doesn't yet have a broad readership, and most people missed out on this gain.

Coming off of this early success, my next stock recommendation is for Nasdaq-100 Tracking Stock (Nasdaq: QQQQ). Like IGV, this is also an ETF. While IGV is concentrated in the software sector, QQQQ is more broadly positioned with 100 of the largest Nasdaq companies. It is now trading at 38.79. I again see some potential upside in these Nasdaq stocks as they have been beaten down lately.

Update on Washington Mutual

About 1 week after my first post on the topic, the Washington Mutual (WaMu) website returned to a functional state. I now seem to be able to login and pay my bills. There are some confusing messages on the site though. For example, "The service for your external transfers account has been closed." What the heck does that mean?

But, we might not be out of the woods yet. I just checked the WaMu site, and they are promising an upcoming site update. They will be down 9:00 pm 8/19 to 6:00 am 8/20 (PT). Hopefully, they won't screw something up in the process.

Lastly, an ironic thing since my previous post is that many of the Adsense ads are for Washington Mutual. This is the company I was complaining about in the first place!

Stock Pick: IGV

At this time, I am recommending the purchase of iShares Goldman Sachs Software Index (AMEX: IGV). Actually, IGV is not a stock at all. It is an Exchange Traded Fund (ETF). An ETF is like an Index Mutual Fund; however, it is traded like a stock.

IGV is based on the Goldman Sachs Software Index (^NVV), and includes shares in such software companies as Adobe Systems (Nasdaq: ADBE), Oracle (Nasdaq: ORCL), and Microsoft (Nasdaq: MSFT). On Monday, IGV closed at 38.19. The software sector has been beaten down lately. The GS Software index has started to show signs of life, and I feel that it still has significant upside.

Why I Don't Trust Analysts

Rambus (Nasdaq: RMBS) is a stock that I have followed for years -- essentially since its IPO in 1997. I consider myself a periodic trader in this stock -- buying when I feel that it has reached a low point, and selling when it reaches a high.

This past Monday, Hamed Khorsand, an analyst with BWS Financial raised his rating on the stock from hold to buy. (BWS stands for "Beating Wall Street," by the way. This is something I found out on the company website, which looks somewhat amateurish if I say so myself.) According to an Associated Press article, Rambus rose $1.98, or 13 percent, to close at $17.63 after the analyst upgrade. The analyst cites Rambus' improving legal environment as the reason for his upgrade. By its nature, this particular stock is that it reacts quickly to speculation and rumor. I am surprised (but not shocked) that one individual analyst could cause the stock to move so much in a day. The traders in this stock want to believe that somebody knows something, even if it is some amateur stock analyst.

However, I can tell you that this analyst now has egg all over his face; RMBS closed out the week at $11.38, a 35% decline from its price just after the analyst's buy recommendation. If "beating Wall Street" means losing 35% of a client's money in a week, then I'm thinking that I maybe even I could qualify to be a stock analyst.

Let's do a little reality check. Rambus has been embroiled in the stock option backdating scandal. On July 19th, Rambus released a statement that it would need to restate earnings as far back as 2003. This came as a result of their own investigation of improperly dated option grants. Furthermore, they said that they would not be able to complete their quarterly report (Form 10-Q) before August 14th, and that the Nasdaq exchange may delist their stock as a result. This was before the analyst upgrade.

On Wednesday of this week, the Federal Trade Commission ruled that Rambus had a monopoly on chip technology. (I am simplifying things here, to keep a long story short.) This FTC ruling caused Rambus' price to drop 25% on Wednesday alone.

My point is that I don't know what on Earth the analyst was thinking when he touted "Rambus' improving legal environment." Is he deliberately trying to manipulate the stock price, or is he just plain incompetent? Do you see why I don't trust stock analysts?

Ok, so do you want to know my recommendation? Currently, I am neither long nor short on RMBS. The stock is down 75% from it's 52-week high of $46.99. I bought the stock sometime last year, and most recently sold it at $31 in January. (For a while, RMBS kept on rising, and I wondered if I had made the right move.) Now that it is down significantly from its high, it is approaching a point where I might consider buying it again, but there may still be some downside. I would advise a wait and see attitude, and perhaps let the August 14th date come and go before rushing into action. In any case, I do not believe that RMBS is the type of stock that one should buy-and-hold.

I will issue one warning. Rambus stock is very volatile. It is definitely not recommended for anyone that cannot stomach the severe ups and downs of the stock market. If you do buy this stock, it is best to heed my caution and sell too soon rather than sell too late.