Saturday, August 13, 2011
Building a business
As announced previously, I am going through a number of steps to hang out a shingle on my own. I'll be doing financial planning and investment management; combining what I love to do, I love to talk about, and what I can see myself doing for a long time without burning out.
In the next few weeks, I'll post somewhat frequently about the steps in setting up such a business. While a sole proprietorship in some industries can be started by simply taking on work, this type of business is quite convoluted in some ways.
For liability reasons, I have decided that I need to either incorporate or form an LLC. And as a financial planner, I will need to pass the NASD Series 65 test to become a Registered Investment Adviser (RIA).
Those two steps, and the associated compliance, will take a couple months as well as about $7K to get the ball rolling. Then there are the practicalities to think about:
An office, a home-office, or a "virtual" office?
Equipment? Laptops, smart phones...
Business name, fictitious business name, trade/service marks, logo design...
Domain names, building a website...
Accounting! Taxes!
CRM (client relationship mgmt) software, electronic signature vendor...
Marketing! Advertising! Networking (I don't know any millionaires, personally), what is my niche? What are my bragging points?
What services exactly will I offer? Pricing?
Fortunately I do not see myself hiring employees for a long time yet... reading up on all the hoops that an employer must go through gave me a headache.
One thing I know for certain, is that I will be using the Spoke Fund concept (see www.SpokeFund.com) for how I handle investing money. Starting a mutual fund would cost about $400K, and while a hedge fund is much cheaper, you can only advertise to "high net worth individuals"... or basically millionaires. With a Spoke Fund, the investor's money remains in his or her own name, with a discount brokerage custodian I select, but invested according to a model of stocks I control. Importantly, my own account is the "hub" - where I am invested in the model myself with all the risks and rewards - and the "spokes" connecting my account and my clients' accounts are simply the model's percentages of the various investments.
As to financial planning, I intend on being a fee-only planner, taking no commissions, kickbacks, or other incentives for the products I may recommend.
So please, gentle reader, lay it on me! Ideas this post may have raised? Questions on the whys or hows? Advice from experience? I thank you and look forward to any comments!
Regards,
Trond
Wednesday, August 10, 2011
401(k) asset allocation
Just a very quick note.
With the market plunge this week, it may be a good time to review your 401(k) existing balances. The percentage you want in stocks may have dipped, and it would be a good time to transfer some dollars from cash or bond into the stock funds.
Rebalancing is touted as a good way to enforce moving money from hotter sectors into weaker sectors - before the hot grows cold and prior to the cold warming up! But those who rebalance only on an annual basis will miss out of this kind of volatility that allows mid-year corrections.
Regards,
Trond
With the market plunge this week, it may be a good time to review your 401(k) existing balances. The percentage you want in stocks may have dipped, and it would be a good time to transfer some dollars from cash or bond into the stock funds.
Rebalancing is touted as a good way to enforce moving money from hotter sectors into weaker sectors - before the hot grows cold and prior to the cold warming up! But those who rebalance only on an annual basis will miss out of this kind of volatility that allows mid-year corrections.
Regards,
Trond
Tuesday, August 9, 2011
Celsion Q2 conference call
I'm most disappointed that they again missed their guidance on the interim calc - most recently in July, they said they'd have results from the interim by the end of Sept. According to the 10Q (pg 20), they now expect the 190th event "in Q3" and the interim results "in Q4". With 6-8 weeks necessary for that calc, that means the results could be anywhere from 10/1 to 11/25. I thus sold my Oct calls today, perhaps a bit hasty but Jan is now the safest. Still expect a runup, just pushed back again by a month or so.
Everything else looked okay, CRLM trial being initiated, EMA guidance for trial approval by eoy, Japan will start a separate trial from HEAT so as to take different standard of care issues into account - Yakult still responsible for 100% of that new trial costs. RCW Phase 2 trial (Dignity study) will be extended to other indications than just RCW cancer in order to speed enrollment, but that kills the registrational ability.
Please note that pushing out the 190 event was blamed on the slower than expected enrollment, but there is some reason for optimism about how well Thermodox is doing. The trial was based on assuming the placebo (RFA only) would lead to a median PFS of about 12 months and Tdox extending that by 33%. It appears to me that both arms are doing better than assumed, but Tdox by at least the same proportion. I still intend on selling 1/2 to 2/3 on the runup, but I'm getting a bit more excited about interim success.
Regards,
Trond
Sunday, August 7, 2011
S&P downgrades US debt
The "unthinkable" happened Friday night when US debt was downgraded from AAA to AA+.
While horrifying to me, simply because it was avoidable, I have some hopes this will be considered a tempest in a teapot within a few weeks. I certainly expect tomorrow's stock market open to be down, but there are some mitigating factors at work.
First, the S&P ratings agency is one of the crooks who gave low risk / reasonable quality credit ratings to all those CDOs that were the culprit of the financial crisis. That fact is pretty widely known - and it is like home inspector who gives you a great report, leaves you with a house that has holes in the roof, and has his brother (coincidentally a roof-repair contractor) come for a visit next time it rains.
Second, Europe (the G-7) was hard at work over the weekend soothing fears over the pond about their own credit woes.
Third, this market has been dominated by momentum traders for the last year - meeting all dips with buying fervor. A lot of cash left the market over the last two days, and will be looking for a home.
Fourth, such a downgrade is bad, but Moody's (the other major credit rating agency) did NOT lower their rating.
Finally, when risk goes up, prices tend to fall. In the bond market, you can look at this thusly: if you think a bond is riskier, that means you think that you have a lower chance of being repaid. For existing bonds being traded tomorrow, that lowers the price you can sell them for. People selling those bonds will be looking for better returns and some may end up looking at the stock market (I would propose dividend-paying large cap stocks or ETFs).
A final note is that it will be very interesting seeing the results of the next treasury auction. For bonds to-be-issued, you would demand a higher interest rate to compensate you for the higher default risk mentioned above. Having higher interest rates will cause more issues down the road - paying just the interest on our national debt is doable at the moment because of the historically low interest rates. If you think the bickering over the debt ceiling was acrimonious and protracted - wait until higher interest rates cause us to make really hard choices between cutting expenses and raising taxes.
I am absolutely incensed that ALL of our Congresspeople have forsaken their duties to We-The-People and brought this on. Both Democrats and Republican share the blame here, and the black eye the S&P ratings agency gave us is most definitely their fault alone. We need them to rise above partisan lines and fix these issues: it will take raising some taxes, lowering or erasing some deductible categories, massive cuts in some agencies and freezing the budgets of others, and meaningful discussions about SSI and Medicare.
I am not selling anything Monday morning, and will be looking to buy certain companies at fire-sale prices. As Warren Buffet famously said, "be fearful when others are greedy and greedy when others are fearful."
Regards,
Trond
While horrifying to me, simply because it was avoidable, I have some hopes this will be considered a tempest in a teapot within a few weeks. I certainly expect tomorrow's stock market open to be down, but there are some mitigating factors at work.
First, the S&P ratings agency is one of the crooks who gave low risk / reasonable quality credit ratings to all those CDOs that were the culprit of the financial crisis. That fact is pretty widely known - and it is like home inspector who gives you a great report, leaves you with a house that has holes in the roof, and has his brother (coincidentally a roof-repair contractor) come for a visit next time it rains.
Second, Europe (the G-7) was hard at work over the weekend soothing fears over the pond about their own credit woes.
Third, this market has been dominated by momentum traders for the last year - meeting all dips with buying fervor. A lot of cash left the market over the last two days, and will be looking for a home.
Fourth, such a downgrade is bad, but Moody's (the other major credit rating agency) did NOT lower their rating.
Finally, when risk goes up, prices tend to fall. In the bond market, you can look at this thusly: if you think a bond is riskier, that means you think that you have a lower chance of being repaid. For existing bonds being traded tomorrow, that lowers the price you can sell them for. People selling those bonds will be looking for better returns and some may end up looking at the stock market (I would propose dividend-paying large cap stocks or ETFs).
A final note is that it will be very interesting seeing the results of the next treasury auction. For bonds to-be-issued, you would demand a higher interest rate to compensate you for the higher default risk mentioned above. Having higher interest rates will cause more issues down the road - paying just the interest on our national debt is doable at the moment because of the historically low interest rates. If you think the bickering over the debt ceiling was acrimonious and protracted - wait until higher interest rates cause us to make really hard choices between cutting expenses and raising taxes.
I am absolutely incensed that ALL of our Congresspeople have forsaken their duties to We-The-People and brought this on. Both Democrats and Republican share the blame here, and the black eye the S&P ratings agency gave us is most definitely their fault alone. We need them to rise above partisan lines and fix these issues: it will take raising some taxes, lowering or erasing some deductible categories, massive cuts in some agencies and freezing the budgets of others, and meaningful discussions about SSI and Medicare.
I am not selling anything Monday morning, and will be looking to buy certain companies at fire-sale prices. As Warren Buffet famously said, "be fearful when others are greedy and greedy when others are fearful."
Regards,
Trond
Wednesday, August 3, 2011
The RollerCoaster named Dendreon
Long time readers and friends know, I love me some Dendreon.
I started reading up on Provenge back in 2006, was just about "all-in" in 2007 during the FDA's Advisory Committee meeting that okayed it, and watched in horror as the FDA then gave the company a Complete Response Letter (CRL) a month later.
I sold some over the next couple years, but was again an active investor in 2010 when they finally got approval. I sold some in the $50s, more in the $40s, and finally sold the very last amount (save one single Jan 2012 call option) around $35, last November. I stay on top of the company news, however, and consider myself a Dendreonaire.
It is with awe and a sickening feeling, then, to see the after hours cratering of the stock price, following the Q2 earnings call. A transcript of that call can be found here: http://seekingalpha.com/article/284445-dendreon-corp-s-ceo-discusses-q2-2011-results-earnings-call-transcript
Let me sum up the entire issue in one paragraph, if I may. Provenge costs $93,000 for a one month round of therapy (3 infusions). Prescribing doctors make about $6K for themselves, but have to "eat" the entire $93K on a credit line or their own resources until they get reimbursed by insurance/Medicare. Up until extremely late June, there was a question of whether Medicare would cover Provenge (and while it did get a determination for coverage, that fact isn't even posted on the proper website yet!). Thus, for cash flow purposes, few urology or oncology practices could prescribe more than 1 patient at a time. Moreover, due to manufacturing limitations and the scale/cost of the one approved plant through most of this period, the company was unwilling to push large scale scripts yet.
All of the preceding hopefully explains the carnage in the stock price. At the end of after hours trading, it was around $13.70 - down from a regular session closing price of $35!
So the proper question now is, what to do: buy, sell, or hold?
The price tomorrow? It could well be $10, or it could be $17.
I would suggest that if one has no position, and a holding period of a half year or more, this is an excellent time to buy, if within the range above.
If you own shares currently, I'd hold on, all else being equal.
I feel, given the facts known now, that the company will recover from this, and end the year 2011 over $20. It may be 2013 before we see the $40s again, but for an extremely long term p-o-v, I believe this is a solid company that should be a core position.
Regards,
Trond
I started reading up on Provenge back in 2006, was just about "all-in" in 2007 during the FDA's Advisory Committee meeting that okayed it, and watched in horror as the FDA then gave the company a Complete Response Letter (CRL) a month later.
I sold some over the next couple years, but was again an active investor in 2010 when they finally got approval. I sold some in the $50s, more in the $40s, and finally sold the very last amount (save one single Jan 2012 call option) around $35, last November. I stay on top of the company news, however, and consider myself a Dendreonaire.
It is with awe and a sickening feeling, then, to see the after hours cratering of the stock price, following the Q2 earnings call. A transcript of that call can be found here: http://seekingalpha.com/article/284445-dendreon-corp-s-ceo-discusses-q2-2011-results-earnings-call-transcript
Let me sum up the entire issue in one paragraph, if I may. Provenge costs $93,000 for a one month round of therapy (3 infusions). Prescribing doctors make about $6K for themselves, but have to "eat" the entire $93K on a credit line or their own resources until they get reimbursed by insurance/Medicare. Up until extremely late June, there was a question of whether Medicare would cover Provenge (and while it did get a determination for coverage, that fact isn't even posted on the proper website yet!). Thus, for cash flow purposes, few urology or oncology practices could prescribe more than 1 patient at a time. Moreover, due to manufacturing limitations and the scale/cost of the one approved plant through most of this period, the company was unwilling to push large scale scripts yet.
All of the preceding hopefully explains the carnage in the stock price. At the end of after hours trading, it was around $13.70 - down from a regular session closing price of $35!
So the proper question now is, what to do: buy, sell, or hold?
The price tomorrow? It could well be $10, or it could be $17.
I would suggest that if one has no position, and a holding period of a half year or more, this is an excellent time to buy, if within the range above.
If you own shares currently, I'd hold on, all else being equal.
I feel, given the facts known now, that the company will recover from this, and end the year 2011 over $20. It may be 2013 before we see the $40s again, but for an extremely long term p-o-v, I believe this is a solid company that should be a core position.
Regards,
Trond
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