Stock pick challenge

I needed lots of motivation to continue with this blog, so I suggested a stock pick challenge with some friends. There is no obligation besides tracking the closing price of the stock pick at today's close as well as on 12/31/09. Whoever picks the stock with the highest percent gain between today and year end wins bragging rights. If you want to participate, post a comment here and I will add you to my tracker spreadsheet :-)

Here are the parameters:
- Check tonight's closing price for your stock. This will be the starting price when you calculate your returns at the end of the year.

- List reasons why you think the stock is great. You can also discuss other people's choices and whether you agree/disagree (link to research, news articles, etc extremely helpful).

- You can pick more than one stock or ETF.

- You can't change your mind after midnight tonight.

- Check the closing price of your stock on 12/31/09 and see if you won.

My 1st pick: Apple (ticker AAPL)

My reasons:

- China and S. Korea will finally have the iPhone available at a much more affordable price, which is HUGE for the company considering these are two previously untapped and unofficial markets. There was a story on WSJ.com that discussed these markets opening for Apple. I can't post the link since you need to be a subscriber in order to read the story. So, if you want to read the articles just do a search for Apple.

- There are some accounting rule changes on when Apple can actually book revenues on the iPhone. Since the product's release, Apple had to spread out the revenue from the sale of each iPhone over the life of the AT&T contract (2 years). Now, Apple can report the total amount immediately at sale. That will mean profits will jump over the next two quarters as the company plays catch up with the phones they already sold. I heard about this accounting rule stuff on Jim Cramer's Mad Money show. Normally, I loathe any recs that this man makes but I did some digging and other analysts also point to this new account change. The biggest caveat on the accounting rule, though, is whether Apple will adopt it. I am sure there are some other issues involved with the new rule, but we shall see. I am optimistic Apple will adopt the new rule and that it will be very helpful to the revenue line.

- IMO, Apple will eventually make the iPhone available to other wireless carriers. The moment that happens, there will be another big jump in profits. There are rumors as to which carrier will be next to offer the iPhone. Bets were initially on Verizon, but the recent commercials showing a new phone destroying the iPhone probably means that VZ will not offer it any time soon. That, however, is only in the US. The global market is much bigger and I am sure some carrier overseas will get an iPhone contract similar to AT&T soon enough.

Closing price for 10/19/09: $189.86

Edited to add closing price.

Economic Indicators

Picking up where we left off :-)

One of the more important things to be aware of in the news is the economic indicators calendar. This is a well known calendar among the pros and most of them have memorized when certain data will be released throughout the month. For example, this past Friday, October 15th, initial claims and CPI (Consumer Price Index), among many others, were released. The data released that morning did a number on how the market opened. Combine that with the US earnings calendar and the market ended in the red for the day.

How does this help you as an investor? Well, for one, being aware of the economic data released will help you figure out if the stock or ETF you want to purchase that day will be higher or lower than the price you have in mind (same goes for selling a security). Most times, there will be estimates as to what the economic data numbers will look like. You can try and gauge from these estimates whether you should buy/sell a security before or after the economic data release. This is especially important for active day traders who move in and out of positions frequently.

For the average long term investor, checking the economic indicators calendar is a good habit to practice before making purchases. At least you know what type of news environment you make your purchase in. Many times, investors can purchase a brand name stock during a dip in the general market so you don't have to pay "full retail price" for a security that has had a great run in stock price for the year. Actually, this is similar to purchasing items during a random friends and family sale at the store. It's not on clearance just yet and it's not as good as the holiday sales, but it's better than full price.

Other economic indicators, like the new construction and existing home sales, can be especially important for investors interested in purchasing stocks in home building and construction related industries. What better way to figure out whether a company will have a better than expected earnings release after looking at the history of construction permits?

As I keep mentioning in any post in this blog, please do your research, walk away, then conduct more research when you invest. Information is a wonderful tool to help you make some money in the stock market.

ING Sharebuilder Deal

So I am admittedly one of the worst bloggers out there. However, I saw this email in my inbox and figured it was the world's way of forcing me to start writing on the blog again.

Anyhoo, for those who are still a little hesitant to start trading in the stock market, ING Sharebuilder is offering a pretty sweet deal. ING Sharebuilder is offering a $50.00 bonus plus a week of free trading (up to 50 trades) when you open an account with them. Instructions and offer code are listed below (copied and pasted directly from the email I received from ING).

Please note that this offer only extends to current ING Savings account holders.

How to redeem this special offer:

1. Visit www.sharebuilder.com/em/tradefree and open a ShareBuilder account using promo code TRADEFREE by October 20, 2009.

2. TRADE for FREE (up to 50 trades) during the week of October 26-30
(Free trades apply to Real-time market order AND Automatic Investment commissions).

3. You'll see your $50 bonus in your ShareBuilder account 45 days after your first trade.

This limited-time offer is only available to current ING DIRECT Customers without a ShareBuilder account and is a great value. 50 Real-time trades at the standard commission price of $9.95 would cost almost $500. So there's no better time to start investing in your financial future.