Buy Like Buffett

The First Million Is The Hardest To Make

Mark — Fri, 12 Mar 2010 07:16:18 +0000

Why does the 1st million seem so difficult to make? It’s the principle of compound interest that makes the 1st million the hardest million that you will ever earn. Here’s are a few examples.

If you started with $100,000 and would like it to grow to $1,000,000 than you would need a 900% return on your money. ($100,000 + $900,00) = $1,000,000

If you started with $10,000 and would like it to grow to $1,000,000 than you would need a 9,900% return on your money. ($10,000 + $990,000) = $1,000,000

If you started with $1,000 and would like it to grow to $1,000,000 than you would need a 99,900% return on your money. ($1,000 + $999,000) = $1,000,000

If you started with $100 and would like it to grow to $1,000,000 than you would need a 999,900% return on your money. ($100 + $999,900) = $1,000,000

As you can see it takes astronomical returns on your money to make $100, $1,000, $10,000 and $100,000 grow to a million dollars. Suppose that you already had $1,000,000 dollars and would like to turn it into $2,000,000 dollars. What type of return would you need to achieve that?

($1,000,000 x 100% = $1,000,000) You would need a 100 percent return in order to turn $1,000,000 into $2,000,000 dollars. A 100% return seems paltry compared to the returns listed above. So, what does all of this illustrate? This explains why it is easier for a millionaire to become a multimillionaire than for an individual with a few thousand dollars to become a millionaire. Remember it’s not impossible to become a millionaire just remember 2 simple rules.

1. You need to continually increase the amount that you are investing. The greater the amount that you are willing to invest can help lower the return needed to achieve your goals. Saving more money today means that you don’t have to chase high returns tomorrow. It’s better to be in a position where you can accept a 10% return on your money rather than chasing a 1,000% return.

2. You need to give yourself ample time to reach your financial goal. The principle of compound interest works best for you over longer time periods. All things being equal an individual that invests for 20 years has the potential for a greater return than someone who invests for 5 years.

Photo by: Simon Davison

My Investopedia Post Made Yahoo’s Homepage

Mark — Fri, 12 Mar 2010 05:36:14 +0000

My Investopedia post made Yahoo’s Homepage! Seven Costly Pro Athlete Screw Ups

A New Number 1

Mark — Thu, 11 Mar 2010 23:55:36 +0000

1. There is a new richest man in the world. Ladies and Gentleman meet Carlos Slim Helu. The Mexican telecom mogul knocked Bill Gates off as the world’s wealthiest man with a net worth of $53.5 billion dollars. 80% of his net worth lies in 5 Mexican telecom stocks. His net worth jumped $18.5 billion last year vaulting him from third to first place.

2. Bill Gates finished at number 2 with a net worth of $53 billion dollars. Gates would no doubt still be the richest man in the world if he had not retired from his daily duties at Microsoft in 2008. Only $500,000 separates Gates and Slim. His net worth increased $13 billion dollars over the past year.

3. Warren Buffett, for whom Buy Like Buffett is named, came in at number 3 with a net worth of $47 billion dollars. Buffett’s net worth grew $12 billion dollars in 2009. I wouldn’t feel too bad for Buffett. I am sure he isn’t losing too much sleep over just being the 3rd richest man in the world.

Financial Advisory

Mark — Wed, 10 Mar 2010 18:37:17 +0000

Check out my first market update post for Financial Advisory. The link can be found below.

AIG Continues To Rally

Chicago Bridge & Iron Is Building A Promising Future

Mark — Tue, 09 Mar 2010 05:00:53 +0000

Chicago Bridge & Iron (CBI) has had a 22% rise since I first recommended buying the stock in December of 2009. The company recently reported results for the full year 2009. For 2009 total revenue was $4.6 billion dollars. Net income came in at $174.3 million dollars and earnings per share was $1.79. Chicago Bridge & Iron picked up over $3.4 billion in contracts in the fourth quarter and $6.1 billion dollars in new contracts for the full year. According to CEO Phillip Asherman, CB&I has over $300 million in cash and a backlog of $7.2 billion in orders.

The stock still looks like it has upside. The balance sheet is solid and shares still look cheap selling at just 13 times this years earnings. CB&I is selling at a .41 price to sales ratio. To be fair Chicago Bridge & Iron’s price to book ratio is definitely not cheap with a value of 2.7. Management appears to be doing a solid job managing a 24.4% return on equity for 2009. The company tempered investor expectations for 2010 by guiding earnings downward. Any upside surprise in earnings for the current year and shares should rise. The real earnings story for CB&I is in 2011 when the average EPS is $2.15 meaning that the stock is trading at just over 10 times next years earnings. I have been long Chicago Bridge & Iron since last year and will continue to buy shares as long as the stock stays south of $24.

Photo by laffy4k

Highest Rates on A Savings Account

Mark — Tue, 09 Mar 2010 01:34:48 +0000

Here is a list of the highest interest rates on a savings account for the month of March.

1. SmartyPig 2.01%

2. Bank of Internet 1.50%

3. Capital One 1.45%

4. Discover Bank 1.35%

5. Colorado F.S.B. 1.35%

6. Ally Bank 1.30%

7. American Express Bank 1.30%

8. Dollar Savings Direct 1.30%

9. WTDirect 1.26%

10. Everbank 1.26%

List Of Bank Failures

Mark — Sat, 06 Mar 2010 18:57:44 +0000

Complete List of All 219 Bank Failures Since 2000

Bank Name	City	State	Closed
Centennial Bank	Ogden	UT	5-Mar-10
Waterford Bank	Germantown	MD	5-Mar-10
Bank of Illinois	Normal	IL	5-Mar-10
Sun American Bank	Boca Raton	FL	5-Mar-10
Rainer Pacific Bank	Tacoma	WA	26-Feb-10
Carson River Community Bank	Carson City	NV	26-Feb-10
La Jolla Bank	La Jolla	CA	19-Feb-10
George Washington Savings Bank	Orland Park	IL	19-Feb-10
The La Coste National Bank	La Coste	TX	19-Feb-10
Marco Community Bank	Marco Island	FL	19-Feb-10
1st American State Bank of Minnesota	Hancock	MN	5-Feb-10
American Marine Bank	Bainbridge	WA	29-Jan-10
First Regional Bank	Los Angeles	CA	29-Jan-10
Community Bank and Trust	Cornelia	GA	29-Jan-10
Marshall Bank, N.A.	Hallock	MN	29-Jan-10
Florida Community Bank	Immokalee	FL	29-Jan-10
First National Bank of Georgia	Carrollton	GA	29-Jan-10
Columbia River Bank	The Dallas	OR	22-Jan-10
Evergreen Bank	Seattle	WA	22-Jan-10
Charter Bank	Sante Fe	NM	22-Jan-10
Bank of Leeton	Leeton	MO	22-Jan-10
Premier American Bank	Miami	FL	22-Jan-10
Barnes Banking Company	Kaysville	UT	15-Jan-10
St. Stephen State Bank	St. Stephen	MN	15-Jan-10
Town Community Bank & Trust	Antioch	IL	15-Jan-10
Horizon Bank	Bellingham	WA	8-Jan-10
First Federal Bank of California, F.S.B.	Santa Monica	CA	18-Dec-09
Imperial Capital Bank	La Jolla	CA	18-Dec-09
Independent Bankers’ Bank	Springfield	IL	18-Dec-09
New South Federal Savings Bank	Irondale	AL	18-Dec-09
Citizens State Bank	New Baltimore	MI	18-Dec-09
Peoples First Community Bank	Panama City	FL	18-Dec-09
RockBridge Commercial Bank	Atlanta	GA	18-Dec-09
SolutionsBank	Overland Park	KS	11-Dec-09
Valley Capital Bank, N.A.	Mesa	AZ	11-Dec-09
Republic Federal Bank, N.A.	Miami	FL	11-Dec-09
Greater Atlantic Bank	Reston	VA	4-Dec-09
Benchmark Bank	Aurora	IL	4-Dec-09
AmTrust Bank	Cleveland	OH	4-Dec-09
The Tattnall Bank	Reidsville	GA	4-Dec-09
First Security National Bank	Norcross	GA	4-Dec-09
The Buckhead Community Bank	Atlanta	GA	4-Dec-09
Commerce Bank of Southwest Florida	Fort Myers	FL	20-Nov-09
Pacific Coast National Bank	San Clemente	CA	13-Nov-09
Orion Bank	Naples	FL	13-Nov-09
Century Bank, F.S.B.	Sarasota	FL	13-Nov-09
United Commercial Bank	San Francisco	CA	6-Nov-09
Gateway Bank of St. Louis	St. Louis	MO	6-Nov-09
Prosperan Bank	Oakdale	MN	6-Nov-09
Home Federal Savings Bank	Detroit	MI	6-Nov-09
United Security Bank	Sparta	GA	6-Nov-09
North Houston Bank	Houston	TX	30-Oct-09
Madisonville State Bank	Madisonville	TX	30-Oct-09
Citizens National Bank	Teague	TX	30-Oct-09
Park National Bank	Chicago	IL	30-Oct-09
Pacific National Bank	San Francisco	CA	30-Oct-09
California National Bank	Los Angeles	CA	30-Oct-09
San Diego National Bank	San Diego	CA	30-Oct-09
Community Bank of Lemont	Lemont	IL	30-Oct-09
Bank USA, N.A.	Phoenix	AZ	30-Oct-09
First DuPage Bank	Westmont	IL	23-Oct-09
Riverview Community Bank	Otsego	MN	23-Oct-09
Bank of Elmwood	Racine	WI	23-Oct-09
Flagship National Bank	Bradenton	FL	23-Oct-09
Hillcrest Bank Florida	Naples	FL	23-Oct-09
American United Bank	Lawrenceville	GA	23-Oct-09
Partners Bank	Naples	FL	23-Oct-09
San Joaquin Bank	Bakersfield	CA	16-Oct-09
Southern Colorado National Bank	Pueblo	CO	2-Oct-09
Jennings State Bank	Spring Grove	MN	2-Oct-09
Warren Bank	Warren	MI	2-Oct-09
Georgian Bank	Atlanta	GA	25-Sep-09
Irwin Union Bank, F.S.B.	Louisville	KY	18-Sep-09
Irwin Union Bank and Trust Company	Columbus	IN	18-Sep-09
Venture Bank	Lacey	WA	11-Sep-09
Brickwell Community Bank	Woodbury	MN	11-Sep-09
Corus Bank, N.A.	Chicago	IL	11-Sep-09
First State Bank	Flagstaff	AZ	4-Sep-09
Platinum Community Bank	Rolling Meadows	IL	4-Sep-09
Vantus Bank	Sioux City	IA	4-Sep-09
InBank	Oak Forest	IL	4-Sep-09
First Bank of Kansas City	Kansas City	MO	4-Sep-09
Affinity Bank	Ventura	CA	28-Aug-09
Mainstreet Bank	Forest Lake	MN	28-Aug-09
Bradford Bank	Baltimore	MD	28-Aug-09
Guaranty Bank	Austin	TX	21-Aug-09
CapitalSouth Bank	Birmingham	AL	21-Aug-09
First Coweta Bank	Newnan	GA	21-Aug-09
ebank	Atlanta	GA	21-Aug-09
Community Bank of Nevada	Las Vegas	NV	14-Aug-09
Community Bank of Arizona	Phoenix	AZ	14-Aug-09
Union Bank, National Association	Gilbert	AZ	14-Aug-09
Colonial Bank	Montgomery	AL	14-Aug-09
Dwelling House Savings and Loan	Pittsburgh	PA	14-Aug-09
Community First Bank	Prineville	OR	7-Aug-09
Community National Bank of Sarasota County	Venice	FL	7-Aug-09
First State Bank	Sarasota	FL	7-Aug-09
Mutual Bank	Harvey	IL	31-Jul-09
First BankAmericano	Elizabeth	NJ	31-Jul-09
Peoples Community Bank	West Chester	OH	31-Jul-09
Integrity Bank	Jupiter	FL	31-Jul-09
First State Bank of Altus	Altus	OK	31-Jul-09
Security Bank of Jones County	Gray	GA	24-Jul-09
Security Bank of Houston County	Perry	GA	24-Jul-09
Security Bank of Bibb County	Macon	GA	24-Jul-09
Security Bank of North Metro	Woodstock	GA	24-Jul-09
Security Bank of North Fulton	Alpharetta	GA	24-Jul-09
Security Bank of Gwinnett County	Suwanee	GA	24-Jul-09
Waterford Village Bank	Williamsville	NY	24-Jul-09
Temecula Valley Bank	Temecula	CA	17-Jul-09
Vineyard Bank	Rancho Cucamonga	CA	17-Jul-09
BankFirst	Sioux Falls	SD	17-Jul-09
First Piedmont Bank	Winder	GA	17-Jul-09
Bank of Wyoming	Thermopolis	WY	10-Jul-09
Founders Bank	Worth	IL	2-Jul-09
Millennium State Bank of Texas	Dallas	TX	2-Jul-09
First National Bank of Danville	Danville	IL	2-Jul-09
Elizabeth State Bank	Elizabeth	IL	2-Jul-09
Rock River Bank	Oregon	IL	2-Jul-09
First State Bank of Winchester	Winchester	IL	2-Jul-09
John Warner Bank	Clinton	IL	2-Jul-09
Mirae Bank	Los Angeles	CA	26-Jun-09
MetroPacific Bank	Irvine	CA	26-Jun-09
Horizon Bank	Pine City	MN	26-Jun-09
Neighborhood Community Bank	Newnan	GA	26-Jun-09
Community Bank of West Georgia	Villa Rica	GA	26-Jun-09
First National Bank of Anthony	Anthony	KS	19-Jun-09
Cooperative Bank	Wilmington	NC	19-Jun-09
Southern Community Bank	Fayetteville	GA	19-Jun-09
Bank of Lincolnwood	Lincolnwood	IL	5-Jun-09
Citizens National Bank	Macomb	IL	22-May-09
Strategic Capital Bank	Champaign	IL	22-May-09
BankUnited, FSB	Coral Gables	FL	21-May-09
Westsound Bank	Bremerton	WA	8-May-09
America West Bank	Layton	UT	1-May-09
Citizens Community Bank	Ridgewood	NJ	1-May-09
Silverton Bank, NA	Atlanta	GA	1-May-09
First Bank of Idaho	Ketchum	ID	24-Apr-09
First Bank of Beverly Hills	Calabasas	CA	24-Apr-09
Michigan Heritage Bank	Farmington Hills	MI	24-Apr-09
American Southern Bank	Kennesaw	GA	24-Apr-09
Great Basin Bank of Nevada	Elko	NV	17-Apr-09
American Sterling Bank	Sugar Creek	MO	17-Apr-09
New Frontier Bank	Greeley	CO	10-Apr-09
Cape Fear Bank	Wilmington	NC	10-Apr-09
Omni National Bank	Atlanta	GA	27-Mar-09
TeamBank, NA	Paola	KS	20-Mar-09
Colorado National Bank	Colorado Springs	CO	20-Mar-09
FirstCity Bank	Stockbridge	GA	20-Mar-09
Freedom Bank of Georgia	Commerce	GA	6-Mar-09
Security Savings Bank	Henderson	NV	27-Feb-09
Heritage Community Bank	Glenwood	IL	27-Feb-09
Silver Falls Bank	Silverton	OR	20-Feb-09
Pinnacle Bank of Oregon	Beaverton	OR	13-Feb-09
Corn Belt Bank & Trust Co.	Pittsfield	IL	13-Feb-09
Riverside Bank of the Gulf Coast	Cape Coral	FL	13-Feb-09
Sherman County Bank	Loup City	NE	13-Feb-09
County Bank	Merced	CA	6-Feb-09
Alliance Bank	Culver City	CA	6-Feb-09
FirstBank Financial Services	McDonough	GA	6-Feb-09
Ocala National Bank	Ocala	FL	30-Jan-09
Suburban FSB	Crofton	MD	30-Jan-09
MagnetBank	Salt Lake City	UT	30-Jan-09
1st Centennial Bank	Redlands	CA	23-Jan-09
Bank of Clark County	Vancouver	WA	16-Jan-09
National Bank of Commerce	Berkeley	IL	16-Jan-09
Sanderson State Bank	Sanderson	TX	12-Dec-08
Haven Trust Bank	Duluth	GA	12-Dec-08
First Georgia Community Bank	Jackson	GA	5-Dec-08
PFF Bank & Trust	Pomona	CA	21-Nov-08
Downey Savings & Loan	Newport Beach	CA	21-Nov-08
Community Bank	Loganville	GA	21-Nov-08
Security Pacific Bank	Los Angeles	CA	7-Nov-08
Franklin Bank, SSB	Houston	TX	7-Nov-08
Freedom Bank	Bradenton	FL	31-Oct-08
Alpha Bank & Trust	Alpharetta	GA	24-Oct-08
Meridian Bank	Eldred	IL	10-Oct-08
Main Street Bank	Northville	MI	10-Oct-08
Washington Mutual Bank	Henderson	NV	25-Sep-08
Ameribank	Northfork	WV	19-Sep-08
Silver State Bank	Henderson	NV	5-Sep-08
Integrity Bank	Alpharetta	GA	29-Aug-08
Columbian Bank & Trust	Topeka	KS	22-Aug-08
First Priority Bank	Bradenton	FL	1-Aug-08
First Heritage Bank, NA	Newport Beach	CA	25-Jul-08
First National Bank of Nevada	Reno	NV	25-Jul-08
IndyMac Bank	Pasadena	CA	11-Jul-08
First Integrity Bank, NA	Staples	MN	30-May-08
ANB Financial, NA	Bentonville	AR	9-May-08
Hume Bank	Hume	MO	7-Mar-08
Douglass National Bank	Kansas City	MO	25-Jan-08
Miami Valley Bank	Lakeview	OH	4-Oct-07
NetBank	Alpharetta	GA	28-Sep-07
Metropolitan Savings Bank	Pittsburgh	PA	2-Feb-07
Bank of Ephraim	Ephraim	UT	25-Jun-04
Reliance Bank	White Plains	NY	19-Mar-04
Guaranty National Bank of Tallahassee	Tallahassee	FL	12-Mar-04
Dollar Savings Bank	Newark	NJ	14-Feb-04
Pulaski Savings Bank	Philadelphia	PA	14-Nov-03
First National Bank of Blanchardville	Blanchardville	WI	9-May-03
Southern Pacific Bank	Torrance	CA	7-Feb-03
Farmers Bank of Cheneyville	Cheneyville	LA	17-Dec-02
Bank of Alamo	Alamo	TN	8-Nov-02
AmTrade International Bank	Atlanta	GA	30-Sep-02
Universal Federal Savings Bank	Chicago	IL	27-Jun-02
Connecticut Bank of Commerce	Stamford	CT	26-Jun-02
New Century Bank	Shelby Township	MI	28-Mar-02
Net 1st National Bank	Boca Raton	FL	1-Mar-02
NextBank, NA	Phoenix	AZ	7-Feb-02
Oakwood Deposit Bank Co.	Oakwood	OH	1-Feb-02
Bank of Sierra Blanca	Sierra Blanca	TX	18-Jan-02
Hamilton Bank, NA	Miami	FL	11-Jan-02
Sinclair National Bank	Gravette	AR	7-Sep-01
Superior Bank, FSB	Hinsdale	IL	27-Jul-01
Malta National Bank	Malta	OH	3-May-01
First Alliance Bank & Trust Co.	Manchester	NH	2-Feb-01
National State Bank of Metropolis	Metropolis	IL	14-Dec-00
Bank of Honolulu	Honolulu	HI	13-Oct-00

FDIC Shuts Down Four More Banks

Mark — Sat, 06 Mar 2010 17:44:48 +0000

Sun America Bank in Florida, Bank of Illinois, Waterfield Bank in Maryland, and Centennial Bank in Utah were all shut down by the FDIC yesterday. The assets of Bank of Illinois and Sun America Bank were purchased by Heartland Bank and First Citizens Bank respectively. Waterfield Bank and Centennial Bank were unable to find buyers which means that all funds will be refunded to account holders. The 191 bank failures over the past 2 years seems like a pretty high number until you take into account that some economists have estimated that as many as 1,000 banks will fail over the next few years. There are still over 700 banks on the FDIC’s troubled list making it highly likely surpass the 140 bank failures that took place last year. All of these bank collapses are rapidly depleting the FDIC’s insurance fund.

Favorite Financial Sites Of The Week

Mark — Sat, 06 Mar 2010 07:16:42 +0000

Financial Planning Series: How To Make A Budget. Great Series on Making a Budget.

How To Bulletproof Your Portfolio.

Simple Investing Advice From Warren Buffett.

An Investing Guide For People Who Are Afraid To Invest.

The Hidden Advantages of Dividend Investing.

Secret Millionaire Donates Her Fortune

Mark — Sat, 06 Mar 2010 00:12:17 +0000

I read an interesting article today about a 100 year old woman that donated her estate to her alma mater. Grace Groner left over $7 million dollars to Lake Forest College after she died. She lived modestly in a 1 bedroom apartment with very little furniture and bought her clothes at rummage sales. She did not earn a lot of money but she did live frugally. Groner’s story reminded me of the book The Millionaire Next Door. Most millionaires live a simple lifestyle. You could be living next door to a millionaire and never even recognize it because they don’t drive a fancy car or live a giant mansion.

3 Characteristics of Millionaires

Millionaires:

1. Spend Less Than They Earn.

2. Avoid Buying Status Objects.

3. Maximize All Of Their Resources To Build Wealth.

How did Groner build her wealth? According to the Los Angeles Times, “In 1935 she bought three $60 shares of specially issued Abbott stock and never sold them. The shares split many times over the years, Marlatt said, and Groner reinvested the dividends. Long before she died, her initial outlay had become a fortune.” A $180 dollar investment ballooned to $7 million dollars after 75 years. This is truly an example of having patience and investing for the long run.