The Sun's Financial Diary

Then come to New Jersey!

And fill up at gas stations along the Garden State’s pay road!

With national average of regular gas at $3.574/gallon (Gasbuddy.com), NJ’s $3.374/gallon average is the second lowest (only Wyoming has cheaper gas). However, $3.374 per gallon is NOT the cheapest you can find in the state.

Along NJ’s toll road, Garden State Parkway and NJ Turnpike, regular gas is still sold at $3.179 a gallon, but only for a few more hours. Because of the contract between the state and gas stations, stations can only adjust their price once a week, at the mid-night every Friday. By tomorrow morning, the price will go up 23 cents. No wonder people are lining up to fill up their tanks today! Even out-of-state drivers are attracted to these stations to get a full load before heading back home to facing near-4-dollar gas.

And today CIBC World Markets analyst came out with a prediction that gas price could hit $7 in four years. Talking about being squeezed, the ever increasing gas price has a much bigger impact on our wallet than food, at least for now.

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Chase Freedom Credit Card Chase Freedom Card is the gas reward card I am using, though not exclusively for gas purchase. The card gives 3% cashback on all purchases at any gas station. But it comes with a catch: Gas purchase must be one of top 3 categories in monthly spending to e receive the 3% reward. Otherwise, the rebate will be just 1%. In addition, the card also has a maximum of $18 you can earn on 3% bonus every month.

More card offers can be found here.

*Photos from NJ.com

Yesterday on my way to home, I heard on radio that some Costco stores in the California’s Bay area are setting limits on how much rice and flour a customer can purchase. According to Costco’s CEO, the limits were put in place after what he saw as “unusual demands” for basic items. And Costco is not alone. Today, a story in USA Today says that Costco’s rival, Sam’s Club, is also limiting the amount of rice its customers can buy.

So what’s the reason behind the action from warehouse clubs like Costco and Sam’s Club, which serve both individual shoppers and small business owners? Apparently, it has something to do with the recent surge of rice price, as well as the prices of corn and wheat. Increased media coverage on food shortage in some countries (UN’s World Food Program yesterday called the food crisis a “silent tsunami of hunger“) also fueled concerns among consumers in this country about supplies of food staples, though there’s no shortage here in the U.S.

Tonight, when I told my wife the stories I heard about Costco and Sam’s Club, she said maybe we should get a couple of bags of rice this weekend, just in case. Since a 20-lb bag of rice, which typically costs between $8 and $15, can last nearly two months in our house, I am far from in the panic mode. However, with food prices on the rise, groceries are taking a bigger and bigger share in our monthly expenses, just like gasoline.

Are you concerned?

photo credit: stevegarfield

Today, April 22nd, is Earth Day and one of the topic being discussed is how to live a green life and save our environment. On this year’s Earth Day, the government also announced a plan to boost fuel efficiency by 25%, increasing per gallon mileage from 27.5 to 35.7, on the same day when the price of crude oil reached another record high, only a few cents away from breaking the $120/barrel milestone.

I don’t know how much impact this new proposal will have on the nation’s oil consumption, especially when the net standard won’t take effect until 2015. As an investor, one way we can save our planet is investing in companies that are in the business of exploring renewable energy such as solar power. For that, the newly incepted Claymore/MAC Global Solar Energy Index ETF (TAN) comes handy.

TAN, which was launched on April 15th, is a passive exchange-traded fund (as oppose to active ETF) that uses MAC Global Solar Energy Index (ticker SUNIDX) as benchmark. The index mainly tracks companies that either manufacture solar power related equipment or supply materials used in solar power system, or provide consulting, integration, or financing for solar power industry. Currently, the fund currently invested in 25 stocks, including many popular Chinese solar power players such as JA Solar and LKD Solar, etc. Companies covered by SUNIDX have market caps from $300 million to nearly $18 billion. Specifically, 42.65% of the components are small-cap stocks, 29.67% mid-cap, and 27.68% large-cap. According to the fund’s prospectus, the index is rebalanced on a quarterly basis.

Continue reading …

In his book, A Random Walk Down Wall Street, author Burton Malkiel declared that

A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.

Do you believe random walk? Or do you follow your own research? Or maybe experts recommendations?

Early this month I mentioned in my net worth update that I have been using Zecco account to do some trades recently and made a small money from the activities. Here’s what I am doing with my so-called “play account.”

When I opened my Zecco account in the summer of 2006, I was thinking of using it as a play account because of the commission-free trades it offers. For a play account, I plan only to put a small amount of money in it and play with the mo so even if I lose it all, it won’t hurt too much. If I can make any money from it, then good for me, though it won’t prove anything other than some luck.

I didn’t really start to play with the little money I have in my Zecco account until February after I published my first The Dog of the Chinese ADRs. Initially, I thought I would buy the Chinese ADR that performs the worst in the previous month and hold it for one month, then sell the stock at the end of the month and buy the next worst performer. Unfortunately, I didn’t keep up with this method, though I did trade a few Chinese ADRs in the past couple of months without doing any research (random?). I just bought the stocks when I had the money and sold them when the profit was acceptable, no really holding the stocks for a month as I originally planed.

Anyway, I made a total of 7 trades in my Zecco account in March, more than I did in the entire 2007 and made a little over $111 profits, a gain of more than 14%. Stocks I bought and sold since February include:

• Global Sources (GSOL)
• Xinhua Finance Media (XFML)
• Renesola (SOL)
• Baidu (BIDU)

And stocks I am currently holding are:

• China South Air (ZNH)
• WSP Holdings (WH)
• Agria Corp. (GRO)

For me, I think I have no problem deciding when to buy a stock. The problem is when to sell. For various reasons, I am always reluctant to take profits off table when I should. For example, one of my biggest holdings China Life Insurance went to a record high of $106 a share in late October 2007. I didn’t sell any shares when the stock, like many other Chinese stocks traded in U.S., was clearly going down since. Now LFC has lost nearly half of its value, taking away a big chunk of my paper wealth. I guess I am too greedy (always expect it to go higher and higher)! With this play account, I want to sell a stock whenever I think the profit is good enough. So far the average holding time is about a week.

Money in the account were from signup bonuses I got from Zecco for referring new customers to them. I have published the Google spreadsheet that I use to track my trades and performance. The goal of this play account is to make money, small money, and I want to see how much I will have at the end of this year.

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Ten Ways You Can Teach Your Kids About Money Money Smart Life discussed how to prepare your kids the financial life they will live later on with some practical ways that you can use to teach them about money today.

Play the Annual Invest Lazy Man’s Money Game If you have $4,000 now, how would you like the money be invested? Lazy Man and Money is looking for suggestions on how to invest his 2007 IRA contributions.

Thank You, Yahoo!, for Perpetuating the Use of Home Equity as Cash Generation X Finance doesn’t like what he saw on Yahoo because falling home price has already made many home owners struggle to pay their bills after what they did exactly what Yahoo suggested.

Calculating Your Adjusted Cost Base (ACB) Million Dollar Journey showed how calculation should be done if you bought the same security more than once.

What I Learned About Taxes This Year… My Dollar Plan shared her lessons. I wish I had contributed to my 401(k) when I was eligible so we wouldn’t have had to recharacterize our Roth IRA contributions.

Eliminate Credit Card Debt! 4 Methods I’ve Used To Reduce My Debt Check out what The Digerati Life has done to get rid of “bad debt.”

Tracking Tool For Our Investment Performance 2 million’s Personal Finance Blog showed his Excel spreadsheet that he is using to track their investment performance. I should have used a spreadsheet from the beginning. Now I stuck with Quicken.

Investigating Mutual Fund Correlations Five Cent Nickel looked at correlations between different asset classes. A zero correlation, meaning two investment classes move completely randomly, would be ideal for investments. Unfortunately, that doesn’t exist.

The other day, one of my friends who will travel to China next week sent me a link to a chart. The chart is the 5-year relationship between Chinese currenty and US dollar. I know that Chinese Yuan (RMB) has appreciated quite a bit since the pegging ended in July 2005. I also noticed that recently the exchange rate broke the RMB7 per dollar milestone. However, I never looked at the course of the change until I got the link.

Well, if you ask me I have to say it’s quite dramatic. However, I am sure many politicians in this country would like to see a curve like this:

That represents an immediate appreciation of 40% that some say that RMB is undervalued, which is also blamed for the loss of manufacture jobs here. I don’t know much about currencies and jobs, but do you really believe a RMB5/dollar can solve the problem that factories in this country are facing?

I don’t think so. If goods from China becomes more expensive, companies like Wal-Mart will find other suppliers at low prices and the trade imbalance between China and U.S. will simply shift to other countries.