Kirk Lindstrom's Two Investment Letters

I write two different, but related, newsletters.

#1 "Kirk Lindstrom's Investment Letter" is $155 a year and uses the "core and explore" method to invest. It has two core portfolios plus an explore portfolio of individual stocks. My aggressive core portfolio has 80% equities while my "conservative" core portfolio has 50% in equities. My core portfolios are made of index funds and ETFs for the very lowest expenses.

Since 12/31/98 "Kirk's Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

Update:  For 2010 through December 21, my “explore portfolio” is up 20.0% YTD vs. S&P500 up 14.6% & DJIA up 10.6% YTD. The explore portfolio was roughly 70% equities for the year so the stocks in the portfolio had a banner year!  Click for a full performance table here.  

I recommend people start by getting their proper core portfolio created THEN add individual securities (Stocks, ETFs, Specific TIPS and even specific fixed income investments) I cover in my explore portfolio to build your own explore portfolio for 5 to 20% of your investment portfolio total.

"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 33.5% in 2009 with 75% in equities and 25% fixed income with an overall portfolio beta of 1.0. For 2009, the DJIA gained 19.2% and Warren Buffett's BRKA only gained 2.4% (FREE Sample Issue - More Info - Return Data )

I have target prices to buy and sell my explore stocks so I find I almost look forward to market declines to get really great prices for stocks I can sell later at higher prices. Of course, following this explore portfolio is more work than buying index funds and rebalancing once a year that I recommend for my core portfolios. Compared to "other newsletters" costing more, my core portfolios and general stock market coverage in the first 11 pages of the 35 page monthly letter offer significant value even for those who don't dabble in individual stocks. I do (so far successfully) a small amount of "market timing" with a small portion of my explore portfolio but it mostly follows my "asset allocation strategy" as explained in "Using Asset Allocation to make money in a Flat Market."

#2 I write "The Retirement Advisor" with David Korn. We sell this for a very modest $99. We offer three model portfolios. We do not recommend individual stocks but we have articles that discuss current financial events such as economic data and Social Security COLAs. We also have articles to help you save money plus we find CDs with FDIC paying the highest rates. Our most aggressive portfolio has 50% in equities. Our most conservative portfolio contains no equity exposure.

Difference: The conservative (50:50) core portfolio in "Kirk Lindstrom's Investment Letter" is slightly more aggressive than the aggressive model portfolio #1 in "The Retirement Advisor." Over the very long term, you should expect the most aggressive portfolio to have the highest returns but at a price of higher volatility. When we started the "The Retirement Advisor" in 2007 we thought people like Bob Brinker were far too aggressive with equity exposure recommendations for retired people at such a risky time for the markets. If you recall, Brinker's Model Portfolio #3 was nearly 2/3rds in equities when the markets peaked. As our great returns show, we were right.

Summary:

"Kirk Lindstrom's Investment Letter" is for those who want to use individual stocks in an attempt to enhance their core portfolio returns. Some like to buy or trade individual stocks for extra return as they try to beat the markets over the long term as they build their investment portfolios to retire someday in the future. For those people, I recommend they place 120% less their age of their investment portfolio in my "core aggressive" portfolio and use remainder to follow some or all of my explore portfolio. For example, someone 40 years old would have 80% in my core aggressive portfolio and 20% in my explore portfolio.

For those at critical mass in retirement, there is no need to take a lot of risk so I recommend 95% of investment assets in my "core conservative" portfolio and the remaining 5% in some or all of my explore portfolio for "entertainment."

In sharp contrast, "The Retirement Advisor" has no individual stock advice. The portfolios are designed not to try and beat the markets but to help you sleep better at night in retirement with lower portfolio volatility. "The Retirement Advisor" also helps you manage your "living expense" or "emergency" account that is outside your investment portfolio. In addition to portfolio and living expense management help, "The Retirement Advisor" has articles to help you save money, understand Social Security, follow the basics of the economy and how it relates to our advice.

Many of my readers subscribe to and enjoy both newsletters.

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"Kirk Lindstrom's Investment Letter Returns"

From 1/1/1999 Through 12/31/09:

My "50:50 Conservative Core Portfolio" was up 70.1%
or 4.9% compound annual return.
==> $100,000 invested 1/1/99 became $170,054

My "80:20 Aggressive Core Portfolio" was up 54.6%
or 4.0% compound annual return.
==> $100,000 invested 1/1/99 became $154,596

My "70:30 Explore Portfolio" was up 159.2%
or 9.0% compound annual return.
==> $100,000 invested 1/1/99 became $259,177

80% in “Core Aggressive” plus 20% in “Explore” was up 79.5%
or 5.5% compound annual return.
==> $100,000 invested 1/1/99 became $179,503

95% “Core Conservative” plus 5% “Explore” was up 77.3%
or 5.3% compound annual return.
==> $100,000 invested 1/1/99 became $177,279

100% in VTSMX was up 21.6%
or 1.8% compound annual return.
==> $100,000 invested 1/1/99 became $121,587

VFINX (S&P500) was up 10.2%
or 0.9% compound annual return.
==> $100,000 invested 1/1/99 ONLY became $110,195

Vanguard's Money Market Fund was up 41.3%
or 3.2% compound annual return.
==> $100,000 invested 1/1/99 became $141,337

"Kirk Lindstrom's Investment Letter"

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The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

The Retirement Advisor Portfolios	Dollar Value on 12/31/09	Change
Model Portfolio 1	$214,500	7.2%
Model Portfolio 2	$224,106	12.1%
Model Portfolio 3	$237,109	18.6%
DJIA 12,501.52 on 1/1/2007	$10,428	(16.6%)
S&P500 1,418.30 on 1/1/2007	$1,115.10	(21.4%)

• Website for more information and our annual Performance Data

• Click here to start your subscription to The Retirement Advisor now!

FREE SAMPLE issue of The Retirement Advisor newsletter in pdf

Ultratech to Share DOE Grant for Solid State Lighting

Ultratech Inc, (UTEK charts) will share a $23.5M Department of Energy (DOE) grant with Applied Materials (AMAT Charts), GE Global Research (GE Charts), GE Lumination, KLA-Tencor Corporation (KLAC), Philips Lumileds Lighting Company, Universal Display Corporation (UDC) and Veeco Instruments as part of the American Recovery and Reinvestment Act to support manufacturing high-efficiency solid-state lighting projects.

"Low-Cost Lithography Tool for High-Brightness LED Manufacturing"

Ultratech, with team member SemiLEDs, will attempt to develop a lithographic manufacturing tool with the benefits of higher throughput, greater yields, lower initial capital cost, and lower cost of ownership. Ultratech will modify a projection stepper process used for larger wafers and optimize it for LED manufacturing. The proposed new manufacturing tool will be able to accommodate a variety of wafer sizes and thicknesses and handle the wafer warpage typically associated with larger-diameter wafers.

From DOE Announces Selections for SSL Core Technology (Round 6), Product Development (Round 6), and U.S. Manufacturing (Round 1) Funding Opportunities

These eight selections

"are focused on achieving significant cost reductions and enhancing quality through improvements in manufacturing equipment, processes, or monitoring techniques. Projects address the technical challenges that must be overcome before prices fall to a level where solid-state lighting will be competitive with existing lighting on a first-cost basis. The total value of manufacturing selections is $23.5 million; the performers will provide an average of 51 percent as cost-share.

A major DOE objective in funding these projects is to develop, establish, and/or maintain the solid-state lighting technology and manufacturing base within the U.S., which will create jobs and promote our nation's role as a leader in the field. "

Ultratech has said during conference calls it now sells a new, low cost (under $1M) solder bump stepper for small wafers (probably between 1 and 3 inches) used for white LEDs that will replace incandescent and fluorescent lights. Ultratech said it expects this market for efficient visible LEDs to grow 35% per year starting in 2010.

To get costs down, manufactures will want to use larger wafers similar to how microprocessors and other silicon based semiconductors grew from 3-inches in diameter 30 years ago to 12 inches today.

Disclaimer: I own and trade UTEK around a core position in both my personal account and in my newsletter with a very low cost basis. My newsletter "Explore Portfolio" currently has a break-even cost of $2.91 per share for UTEK where I have set prices already announced for selling shares. I may buy or sell shares at any time so beware. I also own AMAT and GE in both my personal account and my newsletter explore portfolio.

Subscribe to Kirk's Investment Newsletter today to get my current outlook for UTEK , AMAT and GE including buy and sell levels to trade around a core positions in many of the stocks I follow.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09) (More info - FREE Sample Issue)

Subscribe NOW and get the January 2010 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

How to Help Earthquake Recovery Efforts in Haiti

Please Support the Earthquake Recovery in Haiti through the Clinton Bush Haiti Fund.

www.clintonbushhaitifund.org

I verified this web site is recommended by official website such as whitehouse.gov so I used it to give.

On January 12, a magnitude 7.0 earthquake struck Haiti just outside the capital city of Port-au-Prince. The devastation – in lives lost, property destroyed, and families displaced – is immense.

At the request of President Obama, we are partnering to help the Haitian people reclaim their country and rebuild their lives.

Our immediate priority is to save lives. The critical needs in Haiti are great, but they are also simple: food, water, shelter, and first-aid supplies. The best way concerned citizens can help is to donate funds that will go directly to supplying these material needs.

Through the Clinton Bush Haiti Fund, we will work to provide immediate relief and long-term support to earthquake survivors. We will channel the collective goodwill around the globe to help the people of Haiti rebuild their cities, their neighborhoods, and their families.

We ask each of you to give what you can to help ensure the people of Haiti can build back stronger and better than ever.

Both of us have personally witnessed the tremendous generosity and goodwill of the American people and of our friends around the world to help in times of great need. There is no greater rallying cry for our common humanity than witnessing our neighbors in distress. And, like any good neighbor, we have an obligation and desire to come to their aid.

Thank you for taking the time to visit, and we hope you will donate to this worthwhile cause. The people of Haiti now need our assistance more than ever.

President William J. Clinton
President George W. Bush

To contribute, visit the secure online donation page or mail a check to:

The Clinton Bush Haiti Fund
c/o William J. Clinton Foundation
Donations Department
610 President Clinton Avenue
Little Rock, AR 72201

OR

The Clinton Bush Haiti Fund
c/o Communities Foundation of Texas
5500 Caruth Haven Lane
Dallas, TX 75225

For additional information please see The Clinton Bush Haiti Fund FAQs.

Many of us in the Bay Area remember well our own 7.1 magnitude Loma Prieta earthquake from 1989. I was lucky to be in on the second floor of my well constructed Sunnyvale town house during that quake waiting to watch the Bay Bridge World Series. (I moved to a single floor house after that... all things being equal, why press my luck?) By winning the genetic lottery, I was lucky to be in a well constructed building where all I had to do was hold up my bookshelves that wanted to fall over onto my bed. These people in Haiti are so poor their government buildings and homes have collapsed. They need our help. I've heard over 100,000 may have died. President Bush said they need money and he and President Clinton will make sure it is well spent.

More information on

• 1989 Loma Prieta earthquake
  
  
• Google Maps of Port-au-Prince Haiti
  

View Larger Map

US Treasury Auction Calendar - Upcoming Auctions & My Expected Rates

From the US Treasury Auction Calendar - Upcoming Auctions

Next Week Tentative Schedule:

Mon., January 18, 2010

• Holiday: Martin Luther King Day

Tue., January 19, 2010

• 13- & 26-week bills
• Expected Coupon = 0.000%
• Expected Yield = 0.120%

Wed., January 20, 2010

• 4-week bill
• Expected Coupon = 0.000%
• Expected Yield = 0.040%

More information:

• US Treasury: Rates at a Glance
• US Treasury: Auction Calendar

Gasoline Price Breakdown

The price of gasoline is up considerably in California in the past decade. The state and federal excise taxes have remained the same at 18¢ per gallon. The sales tax in California is higher on a percentage basis since sales taxes went up from about 8.5% in my county to 9.25%. Even if the rate stayed flat, the total collected per gallon is higher since the price taxed is higher.

The biggest change is the cost of crude oil went up 242% from $0.59 to $2.02 per gallon.

January 2010 Gasoline Price Breakdown

Branded
	Jan 4, 2010
Distribution Costs, Marketing Costs and Profits	$0.14
Crude Oil Cost	$2.02
Refinery Cost and Profits	$0.20
State Underground Storage Tank Fee	$0.01
State and Local Sales Tax	$0.25
State Excise Tax	$0.18
Federal Excise Tax	$0.18
Retail prices	$2.99
Unbranded
	Jan 4, 2010
Distribution Costs, Marketing Costs and Profits	$0.07
Crude Oil Cost	$2.02
Refinery Cost and Profits	$0.27
State Underground Storage Tank Fee	$0.01
State and Local Sales Tax	$0.25
State Excise Tax	$0.18
Federal Excise Tax	$0.18
Retail prices	$2.99

BRANDED 12/27/99

• Dealers Cost and Profit Margin (1) $0.10
• Crude Oil Cost $0.59
• Refinery Cost and Profit Margin (2) $0.21
• State and Local Sales Tax $0.10
• State Excise Tax $0.18
• Federal Excise Tax $0.18
• Retail Price $1.36

UNBRANDED 12/27/99

• Dealers Cost and Profit Margin (1) $0.11
• Crude Oil Cost $0.59
• Refinery Cost and Profit Margin (2) $0.20
• State and Local Sales Tax $0.10
• State Excise Tax $0.18
• Federal Excise Tax $0.18
• Retail Price $1.36

Data from Estimated 2010 Gasoline Price Breakdown & Margins Details

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 161% (a double plus another 61%!!) vs. the S&P500 UP at tiny 9.8% vs. NASDAQ UP at tiny 4.8% (All through 12/28/09) (More info - FREE Sample Issue)

Subscribe NOW and get the January 2010 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

Year in Review - Exceptional Results!

2009 in Review. Is your New Year's resolution to take better care of your finances? If so, then you came to the right place!

"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 33.5% in 2009. This portfolio has 75% in equities and 25% fixed income with a beta of 1.0.

My 80:20 Aggressive Core portfolio gained 26.2%

• 80% in my core aggressive portfolio and 20% in my explore portfolio returned 26.7%

My 50:50 Conservative Core Portfolio gained 18.4%

• 50% in VTSMX and 50% in VBMFX only gained 17.3% while 95% in my core conservative portfolio and 5% in the explore portfolio returned 19.1%!

Here is a table showing how the various indexes did last year. Beta is measure of a portfolio's volatility in relation to the Standard & Poor's 500, which by definition has a beta of 1.0. A beta higher than 1.0 implies greater volatility than the S&P500. For example, with all else being equal, an index with a beta of 1.5 will move up 15% when the market rises 10%.

Index	12/31/09 Value	2009 Return	Index Beta
DJIA	10,428.05	18.8 %	0.91
NASDAQ	2,269.15	43.9 %	1.53
S&P 500	1,115.1	23.5 %	1.00
Russell 2000	625.39	25.2 %	1.21

Table Data from Briefing.com
With dividends, the S&P500 gained 26.5%
Beta for DJIA, NASDAQ and Russell2000 from DIA, QQQQ & IWM

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09) ( FREE Sample Issue - More Info - Return Data )

Subscribe NOW and get the January 2010 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

More Data:

1/1/1999 through 12/31/09
Total & Compound annual return

My "50:50 Conservative Core Portfolio" was up 70.1% or 4.9% compound annual return.
==> $100,000 invested 1/1/99 became $170,054

My "80:20 Aggressive Core Portfolio" was up 54.6% or 4.0% compound annual return.
==> $100,000 invested 1/1/99 became $154,596

My "70:30 Explore Portfolio" was up 159.2% or 9.0% compound annual return.
==> $100,000 invested 1/1/99 became $259,177

80% in “Core Aggressive” plus 20% in “Explore” was up 79.5% or 5.5% compound annual return.
==> $100,000 invested 1/1/99 became $179,503

95% “Core Conservative” plus 5% “Explore” was up 77.3% or 5.3% compound annual return.
==> $100,000 invested 1/1/99 became $177,279

100% in VTSMX was up 21.6% or 1.8% compound annual return.
==> $100,000 invested 1/1/99 became $121,587

VFINX (S&P500) was up 10.2% or 0.9% compound annual return.
==> $100,000 invested 1/1/99 became $110,195

Vanguard's Money Market Fund was up 41.3% or 3.2% compound annual return.
==> $100,000 invested 1/1/99 became $141,337

Vanguard's VFIIX GNMA Fund was up 83.7% or 5.7% compound annual return.
==> $100,000 invested 1/1/99 became $183,679

Subscribe NOW and get the January 2010 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

Happy Palindrome Day!

In month-day-year format (MM-DD-YYYY), today can be written as 01-02-2010 the numerical version of a palindrome.

A palindrome is a name (Mike Kim), word (rotator), phrase (Poor Dan is in a droop) or number (01022010) that reads the same backward and forward.

The last palindrome day was Oct. 2, 2001 — or 10-02-2001. Prior to that one, you have to go back over 600 years to Aug. 31, 1380 or 08-31-1380!

The next palindrome day is Nov. 2, 2011 or 11-02-2011. That will be the third of only 12 palindrome dates in the 21st century.

List of 21st-century palindrome dates

• 10-02-2001
• 01-02-2010 - today!
  
• 11-02-2011 - You have 10 months to prepare!
  
• 02-02-2020
• 12-02-2021
• 03-02-2030
• 04-02-2040
• 05-02-2050
• 06-02-2060
• 07-02-2070
• 08-02-2080
• 09-02-2090

Thinking of palindrome days gives me good memories of my high school math teacher, Mr. Rodney Crittenden, who love palindromes.

Image showing today's mirror image date is courtesy of Aziz Inan, a professor of electrical engineering at the University of Portland

What are your favorite palindromes? Post them in the comments section and I will publish the good, clean ones (and chuckle at the dirty ones!!!)