Wednesday, October 3, 2007

How to Locate and Assess Homes for Sale

When youre looking for a new home, its almost like youve picked up a second job. And thats the way it should be. The time it takes to really evaluate the homes for sale in your desired area is a good precursor for the financial investment you are about to make. There are two main steps in your process of finding appropriate homes for sale. The obvious first one is to locate them- not as simple as it sounds. The second step is to evaluate those homes for sale with a good set of criteria.

Locating Ideal Homes for Sale

The biggest problem isnt locating homes for sale, its locating the right homes for sale. You know the methods- drive through neighborhoods, online MLS listings, work with a realtor, scan the classifieds, and stock up on real estate homes for sale magazines. The issue can be one of there being too many homes for sale to even know where to start. Hiring a realtor can give you another set of legs to eliminate stale and out of date listings and other inappropriate properties. But dont think that hiring a realtor lets you off the hook completely. Even if you do choose to work with an agent, it will be in your best interest to always be on the look out for homes for sale on your own. Heres why.

Its in your realtor's best interest to sell you the pricier home. Now honestly, a difference of a few thousands dollars may not make that big a difference in commission. But even the most honest realtor may not consider looking for deals below your stated price range of homes for sale. The other factor is that only you really know what you want in the homes for sale you see. You may have told your realtor that you really need 4 bedrooms. But once you see that sprawling lawn of an otherwise perfect 3/2, your priorities could change. So take advantage of a realtor to help you sort through the numerous homes for sale, but keep looking anyway.

Assessing the Homes for Sale

Maybe you know exactly what you want in the homes for sale that you tour. Or maybe youre still trying to decide what your highest priorities are. Older house, lower cost- newer house, less maintenance? Since everyones priorities are different, one of the best tools for assessing homes for sale is to create your own evaluation form. Make it out by hand, or design a simple spreadsheet. But make a few copies of the form and take it with to assess the homes for sale you are interested in.

Items to include on your Homes for Sale Assessment Form:

Structural and Maintenance concerns- Has the home been well maintained? Any signs of wood or water damage? Mold?
Amenities- Number of bedrooms and bathrooms, kitchen and storage requirements, yard care and size, extras like sunrooms, garages, sheds or pool
Locale- Proximity to schools, stores, busy streets, your job, your family, type of neighborhood
Red flags- How does the property handle drainage? Are there dumps or industrial areas nearby? Dangerous traffic areas, crash zones, on-going construction?

Primarily knowing what you want and having a way to compare the homes for sale you visit will put you in a better position to make your final buying decision. In the process of buying a home, it is the most informed buyers who end up happy homeowners.

John Harris is a researcher and writer on applicable real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit homes for sale in Oceanside

Coca-Cola - A Value Stock?

There has been much talk lately about Coca-Cola and its potential as a value stock as it now spots a dividend yield of 2.6% (which is the highest dividend yield since the late 1980s) and a P/E or less than 21 right at the bottom of its five-year low. Moreover, the current price of approximately $43 a share is also near the bottom of its nine-year range (nine years ago, the last former great CEO of Coke, Roberto Goizueta, was still at the helm of the company). Sure, Coke has had its own set of problems, but it is a great company, they would argue and heck, Warren Buffett is also an owner of Coke shares.

Dont get me wrong. I really like Coke as a company. Its brand is as American as can be, and yet over 70% of all its sales are derived from outside of North America. The country with the highest consumption per capita of Coca-Cola is Mexico. According to Interbrand.com, the brand name of Coca-Cola is worth approximately $67 billion and is the worlds number one brand name. Who could forget the famous declaration of Cokes patriarch, Robert Woodruff? When the United States made the decision to enter World War II, he placed his hand on his heart and famously declared that he would see that every man in uniform gets a bottle of Coca-Cola for five cents wherever he is and whatever it costs. Of course, it didnt hurt that Woodruffs friend, General Dwight Eisenhower, was a great promoter of Coke as well. By the time the war ended, hundreds of thousands of fighting men and women became a fan of Coca-Cola for the rest of their lives.

Under the leadership of Goizueta, Don Keough, and Doug Ivester, Coca-Cola emerged as a growth and must-own stock during the late 1980s and up to the mid to late 1990s. Keough was the great motivational speaker, while Goizueta was unmatched in his ability to manage the stock price and the Wall Street analysts who covered the non-alcoholic beverage industry and Coca-Cola. Goizueta had a habit of watching the stock price of Coca-Cola on an intraday basis on a computer in Cokes headquarters. When Warren Buffett was buying shares of Coca-Cola back in 1988, he and Keough figured it out by watching the action of the trading and tracing those purchases to a broker based in Omaha. Ivester, a former accountant, could have been regarded as a great financial alchemist. Under the financial leadership of Ivester, Coca-Cola bought out many of its bottlers and named the entity as Coca-Cola Enterprises. The bottler went public in November 1986.

When Coca-Cola Enterprises (CCE) went public, Coca-Cola (the company) owned 49% of its outstanding shares. Because of this, Coca-Cola had the ability to raise syrup prices at will (the former agreement mandated that Coca-Cola only adjusted its price to match inflation for its syrup in the North American market) thus squeezing the profit margins of the bottler but increasing its own revenues and profits. The stroke of genius was this: Because of the fact that Coca-Cola only owned 49% of CCE, it did not have to consolidate any of its financial statements with CCE. At the time, not one single analyst totally understood this relationship. Year-after-year, the company delivered. Goizueta carefully (personally) managed all the information that came out of Coca-Cola. He would personally call Wall Street analysts. Any analyst that dared to question him openly or disagree with Coca-Colas earnings projections would be rebuffed. One such analyst was Allan Kaplan from Merrill Lynch, who at one point wrote a note to his clients observing that Coca-Cola may be depending on Japan for too much of its profits. When Goizueta found out about the note, he responded angrily with letters to both Kaplan and his bosses at Merrill Lynch. Kaplan was banned from attending analyst meetings at Coca-Cola for more than a year. From that point on, analysts knew not to mess with Goizueta and Coca-Cola.

Keough officially retired in 1993 while Goizueta passed away in October 1997 succumbing to lung cancer. Ivester succeeded as CEO but behind the scenes, the company was in disarrays. People loyal to Keough and to Ivester clashed with the former group bearing the brunt of the hardship. The current CEO, Neville Isdell (who was loyal to Keough and the only true competitor for the top job back then) was sent into exile to Great Britain to head up a bottler. According to a recent Fortune article, The biggest problem [with Ivester], though, was his tin ear. Ivester was high in IQ but terribly short on EQ. A self-made, stubborn, very shy son of North Georgia millworkers, he had gotten where he was through brains and hard work. He resented Keough's grandstanding, say people who knew him well, and never fully appreciated the importance of Goizueta's almost daily chats with directors. (Ivester declined to comment.) Before long, head-down and full tilt in a turbulent market, Ivester had alienated European regulators, executives at big customers like Wal-Mart and Disney, and some big bottlers, including Coca-Cola Enterprises (on whose board sat Warren Buffett's son Howard). As he raced to put out fires, he became increasingly isolated from his own board of directors. One person was keeping in touch with them, though, even in his retirementDon Keough.

By December 1999, Ivester was out as CEO, after board members Warren Buffett and Herbert Allen told him that they have lost confidence in his leadership. If anything, the next CEO Doug Daft fared even worse than Ivester. Daft, an Australian and who ran Cokes Japanese operations, did not have a clue about the culture in Atlanta. In a sort of retaliation for Ivesters handling of Keoughs loyalists, he also made many of Ivesters favorite executives leave the company. He also looked for quick fixes for example, by trying to boost Coca-Colas profitability by simply reducing headcount. By May of last year, Daft was out as CEO, and Neville Isdell a former darling of Keough came out of retirement to run Coca-Cola.

Described as charismatic, Isdell may be the best man for the job, but it is still too early to see what he can do at this stage to revitalize the brand. Under the leadership of the trio of Goizueta, Keough, and Ivester in the 1980s and much of the 1990s, the shares of Coca-Cola were a must-have and Coca-Cola was regarded as a growth stock. Please also keep in mind, however, that the run of KO during that time also occurred in the midst of the greatest bull market in U.S. stock market history.

Again, readers should recall that I have always contended that we are still in a secular bear market a bear market not unsimilar to the 1966 to 1974 secular bear market. While indices such as the Dow Industrials, Transports, the S&P 400 and S&P 600 have recovered nicely since the cyclical bear market bottom in October 2002, large caps such as Coca-Cola, Microsoft, or even GE have never really covered, and it is my belief that large caps will continue to underperform once the bear reasserts itself sometime this year. The dividend yield of 2.6% may or may not help, but who would want to hold a value stock once the Fed Funds rate is greater than its dividend yield (as of right now, the Fed Funds rate is 2.5%)? I really do not see deep value here. While a P/E of 20 is at the low end of its five-year range, it is interesting to note that Warren Buffett started buying his shares of Coca-Cola in 1988 when the P/E was only 13 (with a market cap of less than $15 billion) and analysts at the time were proclaiming the stock to be expensive! S&P currently projects a fair value of Coca-Cola at $46, so there is really not a great margin of safety here.

While I believe Coca-Cola is a very strong brand and should be a part of every investors long-term core holdings, I do not believe it is a good time to buy at this point. The growth in the stock price of KO was neither due to luck nor coincidence it was due to Goizuetas shrewd management of the stock price, Keoughs salesmanship of the company, and Ivesters financial genius along with a roaring bull market more than anything else. Despite the lack of leadership in Coca-Cola during the last seven years, part of the old dream of KO being a growth stock has still hung on for far too long. For KO to be an attractive stock once again, this author will need to see a more compelling valuation, such as a stock price of $25 to $30 a share. At some point, however, I believe KO may be a glamour stock once again (as it still has a lot of potential in China and India where only a total of about 850 million cases of Coke finished products were shipped in 2004, compared to 20 billion cases for the entire world), but not until some of the weak hands have been shaken out from the stock.

Please let us know your thoughts and opinions. Is KO a buy, hold or sell?

Henry To, CFA, is co-founder and partner of the economic advisory firm, MarketThoughts LLC, an advisor to the hedge fund Independence Partners, LP. Marketthoughts.com is a service provided by MarkertThoughts LLC, and provides a twice-a-week commentary designed to educate subscribers about the stock market and the economy beyond the headlines. This commentary usually involves focusing on the fundamentals and technicals of the current stock market, but may also include individual sector and stock analyses - as well as more general investing topics such as the Dow Theory, investing psychology, and financial history.

High Yield Investments 7 Things To Consider Before You Invest

There has probably never been a better time to enter the world of investment with countless opportunities today for those seeking those lucrative high yield investments.

However, the world of investment is complex and, while many millions of people benefit from playing the investment game every day, it is certainly not suitable for everybody. So, if you are tempted to get in on the act, here are a few things to think about before you take the plunge.

The availability of capital. Although it is not necessary to have large sums available for investment you are clearly not going to receive any substantial income or grow your capital to any great degree unless you have reasonable funds available for investment. You should also be prepared to tie your capital up for some time. If you are likely to need to get you hands on your money reasonably soon after investing it then you will be better off simply putting it into the bank.

Your level of knowledge. Just how much do you know about the world of investment? If you are going to invest in stocks and shares for example then you need to understand the stock markets in some detail. The fact that you know more than the average man in the street is a starting point but you will need both a breadth and depth of knowledge of your chosen area if you are going to keep your loses to a minimum and maximize your gains.

Risk taking. Although not always the case, in general, the greater the risk the greater the reward. But what is your attitude towards risk? If you are happy to take a risk in order to gain greater reward then you must also be prepared to accept that you could very well loose a substantial part of your investment.

The time you have available. As with many things in life, the secret to success lies in having both knowledge and accurate and up-to-date information. This, in turn, means having time to research your chosen area in depth and to keep abreast of the latest news and developments.

Your current financial position. You should think about investing surplus monies only when those monies are truly surplus to your requirements. Do you, for example, have sufficient money in the bank to cover emergencies? Have you made provision for your family in the event of your death? Are you and your family adequately covered for health care? Have you paid off the mortgage on your house? Before you start to take risks with your money in the world of investment make sure that the financial foundations of your life are in place.

The stage that youve reached in your life. For many people it is only when they reach their more mature years that they have the capital available for investment, but is this a good time to enter the world of investment? If you loose your shirt when you are young then it is not the end of the world as you still have plenty of time to get another one. If you loose your shirt in retirement however it may not be quite so easy to replace it.

The outlook for the future. It is one thing to make decision based upon your situation today but what is going to happen in your life in the months and years ahead? Many people find that their needs are considerably reduced as they grow older and they simply do not need a great deal of money to satisfy their needs. But what happens when your children run into difficulty and you want to help them out? Perhaps more to the point, what will happen if you or your partner fall ill and need extensive medical treatment, or even long-term care? Medical bills can very quickly run into thousands every month when you start looking at full-time care.

Investing your money wisely allows you the opportunity to both grow your capital over time as well as providing you an additional source of regular income and there are many excellent high yield investments available today. However, before you enter this particular world, think carefully about whether or not you really want to, and can afford to, play the investment game.

For more information on high yield investments please visit Priceless Investments today.