Alcoa has been around for 120 years.  Its main business is in the production and sale of aluminum.  They have over 100,000 employees in 44 countries.  They are the world leader in production and management of aluminum.  They are very diversified.  This is important so that if one area of the world or one industry has problems then AA would be in trouble.  But if they sell products to many industries in many countries, then the risk is mitigated - if one country or industry has problems, it is only a mall portion of AA’s business.  Here are some of the locations they sell to and some of the people who buy their products:

–They sell to: N America (55%), Europe (25%), Pacific (14%), S Amercia (6%)

–They sell to many established companies: Airbus, Toyota, ExxonMobil, Lockheed Martin, Nissan

–They sell to many industries: Aerospace, Automotive, Building and Construction, Commercial Transportation, Industrial Markets.

They were also named one of Most Sustainable Corporations in the World at the World Economics Forum in Davos, Switzerland (2007).  Why is that important?  Because, many companies come up with something that gets them a lot of sales and a lot of profit for a few years.  One example is Crocs - you know those weird sandals that come in many different colors and cost $30.  I would say that their sustainability is very low.  A stock only goes up if they can raise their profits.  And I don’t think Crocs can raise their profits for too many years after their initial product push.  You already see spin off versions of their shoes for half the Crocs’ price.  And they are not going to be able to branch out their business very easily.  They can’t very well go into the food industry or the clothing industry.  There is just nowhere for them (and many other companies) to grow their profits.  Most companies are not very sustainable.  But AA is.  Click to continue →

Payscale.com just finished a study that ranked the top colleges graduates earnings following graduation.  They did this for private and public universities and for three different groups: 0 to 5 yrs after graduation, 10 to 20 yrs after graduation and top 10% of grads 10 to 20 yrs after graduation. 

The top school following graduation was Dartmouth with salaries for the 3 groups listed above at $58,000, $134,000 and $321,000.  The top public school was Univ of CA-Berkeley with salaries of $60,000, $112,000 and $201,000.  Click to continue →

The Fund took its largest one-week loss since inception, losing 11.44% last week. The reversal comes as the result of a “massive repositioning in the foreign-exchnage market,” in which the euro dropped 3.4% against the US dollar. To put this into perspective, 95% of weekly euro returns over the last 2.5 yrs have fallen within the 0.04% to 0.41% range. Consequently, commodities prices are dropping, particularly for oil, agricultural businesses, and for commodity-dependent economies, such as Brazil.

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There’s no need to give you a list of articles describing the conditions found across the African continent.  We all know, excepting a few countries there, the continent is seemingly in a perpetual state of despair.  Over and over again, “developed” countries attempt to rid Africa of poverty by dumping a bunch of food on them.  We even praise such “leaders” who help in this effort.  Showering the poor with food may seem like the most heartening and generous thing to do, but this will never solve the problem in Africa, it will only prolong it.  The African people need to learn to take care of themselves, and today I found a Kenyan economics expert, James Shikwati, who agrees.

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Handing someone a fist full of cash in exchange for a vote is illegal. Telling people you will give them money if they vote for you is immoral. Barack Obama’s latest gimmick is to tell voters he will “immediately give every working family in America a $1,000 energy rebate and pay for it from oil company profits.” This is a nice way of simultaneously buying votes and inciting class warfare, i.e. “rich” companies/people will pay for the bribe.

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Long energy and short financials has been a winning hedge fund trade this last quarter, but has since unwound. Oil has fallen nearly $30/barrel off it’s highs approaching $150/barrel, and financial stocks have been all the rage of late. Concensus is that, although we’re not in a recession, GDP growth is stagnant and markets are all over the place. How should a prudent investor approach today’s environment, particularly in dealing with energy? Click to continue →

Read an article this week that spoke about the habits of people who are not worried about their finances.  It is very likely that if you follow these habits, you will also not be worried because of financial issues.

1) They know where their money goes.

People who have a budget and know where their money is going are informed people.  They don’t have to ask their spouse “why do you need more money, you just withdrew $100 from the ATM 2 days ago?”  Every dollar spent is accounted for.

It is very hard to blow a couple hundred dollars impulsively if that money is already accounted for and needed somewhere else (on the budget).  It is hard to justify buying new clothes with money that is earmarked for college debt repayment. Click to continue →

The Fund closed out the week with a 2.57% gain,  bringing July performance up to 11.98%. Overall, the Fund is up 27% since inception in March. Higher than normal volatility across all asset classes made for a tough month, but the Fund pulled out well ahead of our benchmark. Our portfolio is currently 85% invested with a 15% cash reserve. All positions remain well within acceptable risk parameters, leaving the porftfolio in a strong position going into August options expiration on the 15th.    

Do they? It sounds like a rhetorical question, but many advocate deficit spending to pay for such things as infrastructure, social programs, and economic growth. Except for four crazy years (1998-2001) the federal government has spent more than it has earned every year since 1968. Is deficit spending justified, or are our politicans merely irresponsible? The White House just announed a projected half a trillion dollar budget deficit for 2009, so this question is more important than ever. Click to continue →

Most debt is bad debt, but not all debt.  How do you delineate the bad from the good? 

Good debt appreciates over time or creates value over time.  Bad debt depreciates over time. 

Good debt comes in only few forms.  First, your home’s value will appreciate over the long term.  (Maybe it hasn’t appreciated in the last 18 months, but if you buy and hold for 30 yrs, it’ll go up in value.)   So a home mortgage is the most common form of good debt.  The second form of appreciating debt is your college education.  And that is not 100% of the time, but most of the time.  You need to study something that the world values and you need to obtain that education at a reasonable cost.  You can’t pay $100,000 for an education in women’s studies and then hope to recoup those education costs (because the difference in salary between someone with a degree in women’s studies and no degree at all is very small).  Third, would be trading debt at a higher interest rate for debt at a lower interest rate.  If you take out a Home Equity Loan at 7% interest to pay off your 20% interest rate credit cards, that would be good debt.  But only if you don’t run the balance on those credit cards back up.  If you run the balance on those cards back up, you have made your current situation much worse.  Click to continue →