Buying Spree!

Since my last post, I have basically become obsessed with the market. I feel like I am a financial advisor all over again. It's a good feeling, but I'm undoubtedly spending too much time looking at this stuff.

I transferred the proceeds of the sale of my Dallas home into my Scottrade account, which explains the difference in the balance. Anticipating this, I had already been researching several funds. My strategy is to safegaurd myself from too much risk (investments in single stocks and options) by putting most of my money into mutual funds, which I will hold for hopefully a considerable period of time.

Before I get into the funds, I should explain what happened to my shares of CBOT. CBOT was acquired by CME (Chicago Mercantile Exchange) as of Friday of last week. Under the agreement, each share of CBOT turned into 0.375 shares of CME. Since I had only 5 shares, I received 1 share of CME and will recieve cash for the remainder. In retrospect if I had just bought 6 shares instead of 5, I could have 2 shares of CME now instead of having the lump of cash out. Just before that transition, I also received a $9 dividend from CBOT; $45.

As a rule of thumb, all of these funds are no-load funds. Some carry a 1% or so redemption fee. Most 1% or less in annual fees. This way I'm not commited for several years to get a low annual cost average such as the case with A, B, or sometimes C shares.

The first fund I decided to go with is the Dodge and Cox International Stock (DODFX) fund. It is rated as a 5-star fund by Morningstar. I just like Dodge and Cox funds, in general. It is ranked as a top returning fund with medium risk. This is hard to find in international funds, which are usually high risk. It steadily outperforms the sector year after year, ranking in the top quartile for 1, 3, and 5 year annual returns. Minimum investment is $2500, which is how much I put in.

Second is the Alpine International Real Estate fund (EGLRX). Once again, this is rated 5 stars by Morningstar. While real estate in the US is tanking, international real estate is booming. All you have to do is go to Hong Kong or Dubai and look at the countless building going up to know it's a place to make some dough. It is ranked high return with medium-high risk. More than that, it has been in the top 2% for 1, 3, 5, and 10 year annual returns! That's just crazy to me. Congrats to manager Sam Lieber. I hope he keeps it up now that I have money with him. :) Minimum investment is $1000. I put in $2000.

Third is the Janus Contrarian fund (JSVAX). Yet again, Morningstar ranks this one a 5-star (notice a trend?). After the first two international funds and already having other funds and stocks in international, I figured I'd better do a domestic one for a change to diversify a bit. More of these to come. Janus seems to be out of the stigma they carried with the scandals a few years back. This fund has great returns - top 1% for 1, 3 and 5 year annually. That's remarkable. Medium-High risk with high returns. Low fees. I like it. Minimum investment of $2500 is exactly what they got from me.

At this point I was feeling very responsible for all the mutual funds I bought. So, it seemed time to make a stock speculation purchase.

I chose Goldman Sachs (GS). It has totally sucked since I bought it three days ago, going from $221 to $211 while the rest of the market is doing great. That being said, I really like this one. Even at $211/share, it is discreetly undervalued. Current P/E is just 9.9 and forward P/E is 9.6. That's pretty good to me. Add to that a PEG ratio of 0.7 and a Strong Buy rating by S&P, and it just looks great as a buy. Not to mention the fact that I just like Goldman Sachs and am always envious of the ridiculous bonuses they give to employees. I'm in for just 9 shares.

Now let's just hope that the market continues to rise. The continuing boom kind of scares me, which is why the stocks I buy are all based on value, not just growth. You won't see me buying any stocks with P/Es of 40+ anytime soon (unless their forward P/E is half that... see BlackRock (BLK)).