Personal Finance Tools

From USA Today...

Create a budget

The first step to taking control is to understand how you spend your money. Start by determining your basic living expenses such as housing, food and transportation.

Then, list other monthly expenses. This may take some work. So pull out your bills and credit card statements. Fortunately, free software can make light work of organizing it all.

SimpleD Budget (Windows) is a small program that helps you track expenses. You enter your monthly expenses and income. After allocating your money to certain categories, you enter payments as you make them.

You'll see when you're approaching the limit for a particular category. You'll also get an idea of how fast you're spending money.

Buddi (Mac/Windows) works much the same as SimpleD Budget. However, it can also help you generate various reports. For example, you can see how your net worth has changed over the months.

Another free finance manager is AceMoney Lite (Windows). It has more features than the other two. For example, it can download stock quotes from the Internet.

Review your credit report

Once you know where cutbacks can be made, you're ready to make changes. Maybe you want to downgrade your car to a cheaper model. Or perhaps you're looking for a car that uses less gas. And, of course, you may want to refinance your home.

Before you do this, you should review your credit report. A poor credit report can stifle your chances of locking in a lower rate on loans.

You'll want to check your report for accuracy and fraud. Then, you can contact the credit bureaus to correct errors.

You can get your credit report at AnnualCreditReport.com. You can request one copy from each of the three major nationwide consumer credit reporting institutions — Equifax, Experian and TransUnion — once a year. Those reports are free.

You must enter your Social Security number to get your report. If you're uncomfortable doing this online, you can mail your request.

AnnualCreditReport.com provides information on disputing items on your reports. However, it does not provide your credit score. For that, you'll need to pay the credit bureaus about $10 for each score. If you decide to buy just one score instead of all three, go with the FICO score, which Equifax offers. The FICO score is the most widely used by lenders.

Find your credit score for free

Your credit score can play a large role when you apply for credit. Quicken Loans has an interesting site —Quizzle.com. It will give you a free credit report and throws in a score. A Quizzle score, that is, which isn't used by lenders, but can tell you how well you're doing as a homeowner. Quizzle also will help you gauge your home's value. You'll also find out how to save on your mortgage. Additionally, there's a budget management tool.

Quizzle is interesting, even if you don't need a mortgage or can't qualify. You should come away with a better understanding of your finances.

For now, Quizzle is aimed at homeowners. It should provide service to renters soon.

CreditKarma.com also provides you with a free credit score. The score comes from one of the three major credit bureaus. The site will also help you monitor your score over time.

CreditKarma provides you with special offers based on your credit score. For example, you can get a lower interest rate on credit cards. You may also apply for offers from cable companies and other businesses.

Sandy Weill

Charlie Rose had an interesting conversation with Sandy Weill, Chairman Emeritus, Citigroup.

The most interesting tidbit to emerge from that conversation was this...

We keep buying oil and gas from all those other oil-producing countries. They take our money and put it into what they call "sovereign funds", which are owned by the various oil rich countries.

The problem is that these country-owned investment funds have to re-cycle these dollars and use them for something... which could either be good... such as creating educational opportunities, reducing poverty or improving health care... or they potentially could be used for not-so-good purposes, such as financing terrorism and helping to undermine the entire US economy.

The problem is not just the purposes these funds can be put to, but the very size of these funds, which are, even today, a very large part of overall global wealth.

According to Sandy Weill, "sovereign funds" today are about $2.3 TRILLION dollars in size. If you assume that oil will stay around $80 to $100 a barrel (not such a good assumption... have you visited a gas station lately?), then these "sovereign funds" will automatically grow to about $13 TRILLION dollars in size in just seven years (2015).

If you then assume that the oil price will much higher than it is today, the total value of all "sovereign funds" will be correspondingly much higher, and represent an even greater percentage of total global wealth, with enhanced capabilities to do either good or evil.

This is an important consideration for global finance going forward, and should be studied VERY seriously.

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And here is an article, Mortgaging America: Investment funds run by foreign governments are keeping the U.S. afloat, by Eric J. Weiner, from the Los Angeles Times on June 4 2008, that discusses this very topic!

Important points...

Sovereign wealth funds, or SWFs, basically are mutual funds that invest the excess capital generated by a region or country. The first one was established by Kuwait when it still was a British territory. After World War II, as Kuwait was negotiating independence, its leader, Sheik Abdullah al Salem al Sabah, asked the British to help him create a fund that would invest the nation's oil profits. The Kuwait Investment Board, which eventually became the Kuwait Investment Authority, today has about $250 billion in assets and is one of the largest sovereign wealth funds in the world.

As the British Empire crumbled, the government created similar funds for many of its territories and colonies (including the islands of Kiribati, which profitably exported guano for fertilizer). Meanwhile, other countries with growing wealth started setting up similar funds, such as the oil-rich nations of Saudi Arabia, the United Arab Emirates, Norway and Russia, as well as China, Singapore and South Korea, which had highly productive economies that also generated lots of excess capital.

In 1990, the funds held just $500 billion in assets combined. Today, that figure is about $3.5 trillion. For comparison purposes, that's more than all of the assets controlled by all of the hedge funds in the world. And by 2012, the figure will be at least $10 trillion, according to estimates by the International Monetary Fund.

The primary reason for this explosion is, in a word, oil. As its price has soared from less than $25 a barrel in 2002 to more than $125 a barrel today, the value of sovereign wealth funds held by oil-rich nations has skyrocketed. And this trend isn't expected to change any time soon.

The new power of SWFs has been on graphic display during our recent mortgage crisis. They've essentially rescued the international financial system by injecting tens of billions of dollars into troubled banks. Citigroup, for instance, raised about $20 billion from a consortium of SWFs from Abu Dhabi, Kuwait and Singapore. UBS secured nearly $10 billion from a Singapore fund that now controls 9% of the bank. Merrill Lynch took in about $11 billion from SWFs from Kuwait, Singapore and South Korea. And even august Morgan Stanley got $5 billion from China's SWF.

These investments are steadying global financial markets by ensuring that none of these key banks goes under. But there are important questions to ask about the increasing influence that sovereign wealth funds have over our economy. As SWFs grow in size, they will be in a position to control large swaths of the global business world. That means foreign governments, which control the funds, will increasingly own sizable stakes in companies in such important industries as computer technology, aerospace and biotechnology.

These kinds of investments raise "profound questions" of geopolitical power, as former Treasury Secretary Lawrence Summers pointed out a few months ago at the World Economic Forum in Davos, Switzerland. Summers' essential complaint is that there is no way of knowing if there is a political agenda behind a country's investment in these essential industries.

MSN MoneyCentral Stock Research Wizard

Many thanks to my daughter Dana for providing the following summary of the types of information to be found on the MSN MoneyCentral Stock Research Wizard about Apple Computer, as of February 9, 2008.

This summary is provided "for academic informational and illustrative purposes only" and should NOT be used under any circumstances for making actual investment decisions. Please use the free MSN MoneyCentral Stock Research Wizard yourself when making actual investment decisions.

This information is provided only to illustrate the types of information to be found on the MSN MoneyCentral Stock Research Wizard, and any actual information contained in this report may be inaccurate, incomplete and/or may have changed significantly since it was prepared.

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Apple Computer, stock symbol: AAPL

5 key research questions:

Apple Fundamentals

Apple Inc. designs, manufactures, and markets personal computers, portable digital music players, and mobile communication devices and sells a variety of related software, services, peripherals, and networking solutions under such well known brand names as Mac, iPod and iPhone. The company is experiencing a resurgence under Founder Steve Jobs, after having slipped in recent years. The main company strength is high quality product design in both hardware and software, and the company is even clawing back market share in personal computer operating systems, after having been almost shut out of this market by the popular Microsoft Windows operating system.

Company sales of $26.5 billion are a bit under the industry average, but of course, this is a comparison with Microsoft, which skews the average significantly. However, one year income of $4.07 billion is actually a bit better than the industry average, which is a good sign. One year income and sales growth are both ahead of the industry average, indicating increasing success in competition with Microsoft. One year net profit margin of 15.4% is significantly ahead of its 5 year average profit margin, and the industry average, indicating a strengthening position. The company is operating with no debt.

Apple Stock Price History

Apple stock price change for both the past 3 and 6 months has been negative (-30.9% and -4.1% respectively), although the 12 month stock price change is positive (+40.7%). In each case, these averages compare favorably with industry averages, which are slightly worse. The stock is currently trading (as of the time of this writing) at $122.50 per share. The first resistance level on the upside, in comparison with the 200 day moving average stock price, is $146.61, and the second resistance level, in comparison with the 50 day moving average, is $170.75. On the down side, the support level for Apple stock is $83.00, which is the 52 week stock low.

Apple Stock Price Target

Based upon Apple’s current price/earnings multiple of 26.6, and the average earnings per share, as estimated by 21 professional analysts that follow this stock, Apple’s current fair valuation using the current Price Earning Ratio multiple, ranges from $132.48 to $152.90, with an Average Estimated Price of $140.76 in 2008. Next year’s valuation, using the same methodology, results in a fair valuation from $164.22 to $187.96, with an Average Estimated Price of $175.54 in 2009. Apple’s alternate target price, based upon industry multiples, results in a projected valuation of $140.76 in 2008, and $175.54 in 2009.

Apple Stock Price Catalysts

Representative recent catalysts for changing Apple stock price valuations include:

News – “Apple Ready to Shine Again 2/8/2008, from TheStreet.com

SEC Filings – Apple Quarterly Financials, the 10-Q Report, filed on 1/31/2008

Insider Purchases and Sales – A company director, Millard S. Dexter, sold 20,000 shares on 11/29/07

Advisor FYI Alerts (like changes in analyst projections or changes in the financial condition of the company) – Representative recent samples include:

· Price/Volume alerts - 01/23/08 AAPL opened significantly up

· Analyst alerts - 01/31/08 Current quarter earnings estimate increased.

· Financial alerts - 10/23/07 AAPL's profit margin up again

· News alerts - 02/06/08 AAPL appears to be bouncing off a 52-week low

StockScouter Rating - StockScouter rates U.S. stocks traded publicly for at least six months on a scale from 10 to 1, with 10 being best. Apple is currently rated “10”.

Apple Stock Comparison

Compared to Microsoft, Apple stacks up quite well. Categories in which Microsoft beats Apple include: Total Sales, Total Income, lower Price/Earnings Ratio, Net Profit Margin, Company 3 Month Price Performance, Industry 3 and 6 Month Price Performance, and 3 Month Relative Strength.

Categories in which Apple out performs Microsoft include: Share Price Percent Gain for this and next fiscal years, Sales Growth, Income Growth, 6 and 12 Month Price Change, Industry 12 Month Price Performance, and 6 and 12 Month Relative Strength.

In conclusion, the MSN MoneyCentral Stock Research Wizard provides an excellent and interesting method for quickly and easily summarizing and evaluating publicly traded securities.

Example of a Prospectus for an IPO

Check this out!

Grand Canyon Education, Inc.

Newspaper? What's a "Newspaper"?

It's the end of an era...

I teach finance courses, and my very favorite is MBA 540, a graduate course entitled "Maximizing Shareholder Wealth".

Traditionally, I offer a fun optional assignment in the first session: What's the highest priced, single share of stock available on the New York Stock Exchange?

I'll tell the students to look over the stock tables in the daily newspaper, perhaps over a cup of coffee in the morning, and one obvious candidate will pop out (Hint: it's Warren Buffett's company).

And an occasional student will say, "I could do that on the Internet, couldn't I?" Sure, I say, but the newspaper lists all the companies on the New York Stock Exchange in one compact list.

As a matter of fact, I started a new course just last week, and gave out this very assignment to my current students.

But, unknown to me, that will be the very last time.

You see, our local paper, the St Petersburg Times, just announced today that they are re-organizing the newspaper, and will stop publishing daily stock listings for most companies as of Monday, May 19 (coincidentally, the anniversary of the day that I graduated from college myself).

The paper now directs readers to look up stock prices online.

Which is a shame... and obviously, the end of an era.

Newspapers have always been a daily part of my life. One of my first memories is reading the comics spread out on the floor on Sunday morning after church.

Although neither of my parents graduated from high school (one not even from the eighth grade), there were always newspapers around our home. We had the morning paper (the New York Daily News... New York's Picture Newspaper!), and two afternoon papers, the Staten Island Advance, with neighborhood news and the New York Journal American, primarily to get the closing day's stock prices. Sometimes, my parents subscribed to the Wall Street Journal, and always we had the 'bigger than life' New York Times, with its multitudinous array of separate news sections, including a glossy magazine and book review, on Sundays. In the summer, I used to take the Sunday Times along when I went fishing. Friends and family used to get a kick out of that!

To me, getting a stock price always meant looking it up in the newspaper. I even continued to show students, right up to the present day, a graphic about "How to Read Stock Tables in the Newspaper".

All that will, of course, end on Monday, May 19, 2008.

Of course, I expect that I will make a mental slip now and then in the future directing students to look up a stock price in the newspaper.

"What's a newspaper?" they may ask.

For that matter, as I've cover before in this blog, they also may well ask "What's the New York Stock Exchange?"

Progress? I'm really not sure about that.