I made a trip to Philadelphia last Saturday (7/28/07) and went to look at my house. My tenants have completely vacated the area, so I inspected the house for any damages. I checked the rooms, the doors, lights, closets, cabinets, etc to make sure they were in good working order. I did not see anything in particular that needs to be repaired.

I also had two appointments for prospects that wanted to see the house. One was for 3:00pm and one was for 6:30pm. I waited until 6:00pm for the first prospect and called her several times. She finally answered the phone at 5:30pm and with an attitude, told me that her car broke down. The second prospect did not return my calls during the whole day. It was very frustrating to deal with people who do not have any responsibility. I definitely did not want them as tenants.

I left my house at 6:00pm and went to downtown Philly. I spent some time walking around and thinking about the Philly rental investment. Is it worth it to own a house in Philadelphia? The local economy in Philly is weak and there has not been much appreciation, if any, in my house.

Do you own a house in Philly? What do you think of the property appreciation potential in the short term?

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Top Tips: The biggest mistake in a falling stock market
Friday July 27, 5:37 pm ET
By Gerri Willis, CNN

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Meet Chris Gardner, whose real-life rags-to-riches story was turned into a Hollywood movie, The Pursuit of Happyness. Find out how Gardner rose from the streets to great wealth.

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From Mad Money:
Jim, is there an ETF that tracks alternative energy stocks? — Gus from Long Island, N.Y.

James J. Cramer: One popular ETF that tracks alternative energy plays is the Powershares Wilderhill Clean Energy Portfolio (PBW:Amex) . It holds 36 stocks in the alternative energy business, including Capstone Turbine (CPST:Nasdaq) , Plug Power (PLUG:Nasdaq) and UltraLife Batteries (ULBI:Nasdaq) , and the diversity may help protect investors from some of the wild swings you see in these types of stocks.

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Are the Shorts Right? Is a Correction Coming?

http://www.fool.com/investing/small-cap/2007/07/19/are-the-shorts-right-is-a-correction-coming.aspx

Brian Richards and Tim Hanson
July 19, 2007

According to The Wall Street Journal, the iShares Russell 2000 Index (AMEX: IWM) is the most heavily shorted ticker in the U.S. markets — by a huge margin. This at a time when, again according to the Journal, “short positions are at record levels.”

There are more than 290 million shares shorted of the small-cap ETF. In a distant second is Ford (NYSE: F), with 214 million shares shorted, followed by the S&P-tracking SPDRs (AMEX: SPY), Motorola (NYSE: MOT), and Time Warner (NYSE: TWX).

Forecast: Cloudy, chance of thunderstorms
Now, in previous columns, we’ve pounded the table for small caps — something about them being hands-down the market’s best performers. And they’ve certainly had a nice run. So nice, in fact, that a lot of smart money — much of it from hedge funds, no doubt — is shorting the major small-cap index, betting that the small-company bull run is not only in its final days, but also that a “correction” is nigh.

We’re not 12-month market prognosticators. We don’t know whether the Russell 2000 will continue its torrid run, if it’s dead money, or if it’s going to drop substantially in the near term.

We also don’t really care.

The past does not repeat itself, but it rhymes
Around this time last year, fellow Fools Tom Gardner and Bill Barker examined the various price-to-earnings ratios of the major Russell indexes as part of their work with our Motley Fool Hidden Gems small-cap investing service. If the smaller-cap P/Es were out of whack with the larger-cap P/Es, the reasoning went, there might be something to this “correction is nigh” theory.

But that wasn’t the case last year, and it doesn’t seem to be the case this year. Here’s the data as of June 30:

Data from Russell.
*P/Es exclude companies with negative earnings.

While small caps are trading for a slight premium to large caps, the gap is neither shocking nor well outside of the historical norm.

Another handy (and oh so quick-and-dirty) test
Tom and Bill also revisited a Peter Lynch theory from Lynch’s book Beating the Street. Lynch wrote that investors could, as a handy reference, compare the P/E ratio of T. Rowe Price New Horizons Fund (PRNHX), a small-cap growth fund (whose top holding is Coventry Health Care (NYSE: CVH)), against the P/E ratio of the S&P 500 (whose top holding is ExxonMobil (NYSE: XOM)). If the ratio falls between 1.0 and 1.2, it’s time to load up. If the ratio is above 2.0, be very afraid.

Last April, Tom and Bill found the ratio to be around 1.6. Today, it’s closer to 1.2.

In other words, using master investor Peter Lynch’s test, rather than shorting small caps, now might actually be the time to start buying some. Why is that so? Because small-cap earnings have been growing rapidly in this healthy economy without the small-company stocks outperforming their larger (and slower-growing) counterparts over the trailing-12-month period.

Earnings don’t tell the whole story
Of course, the market’s performance going forward isn’t at all governed by what’s happened in the trailing 12-month period. Our guess is that these heavy short bets are less bets against the valuations of small-cap stocks, but rather based on the theory that the confluence of rising interest rates and rising energy prices will thwack consumer confidence, sending the whole economy into a downturn.

And when that happens, earnings that have been growing rapidly will cease doing so — and stocks will fall. Previously fast-growing small caps will likely get hit hardest. But while that may be true for the index, it’s absolutely not true across individual stocks.

Don’t stop … thinking about tomorrow
We continue to believe that investors who are looking will find compelling small-cap opportunities in the current market environment. After all, while an index can track general market sentiment, truly great small companies will continue to be the best stocks that investors can buy to hold for the next decade or more.

Source: http://www.fool.com/server/printarticle.aspx?file=/investing/small-cap/2007/07/19/are-the-shorts-right-is-a-correction-coming.aspx

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Bank of New York
Summer of 1998
Total: $2240 (@8.00/hour)

I was cleaning up and I found an old W-2 form from my Bank of New York internship in 1998. The total amount on the form was $2240, which was the total amount I made during that summer. I worked in desktop support and was paid $8 an hour. In comparison, the minimum wage in New York was at $4.25. I was earning nearly double the minimum wage. At that time, I thought $2240 for the summer was a lot of money.

I think back and I still remember my first job. I applied in the New York’s Summer Youth Employment Program and was accepted to a Food Service Center. I was 14 years old and was paid $4.25 an hour. For the whole summer, I made $600. I was so happy because I actually made money for the first time.

The times have changed. I looked back at these financial statements and think about how much I have come along. At first, the financial statements brought back memories, and I relived my past in my head for several seconds. Then I snapped back to reality and smirked at the amounts I used to make. Now, I can make $2240 in one stock trade in a day. My earnings power has grown since, hundreds of percents from 1998. Certainly, inflation has helped grown my earnings, but my drive to succeed was the biggest factor for the increase.

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Stocks Everyone Says Buy Now

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CKSW has been doing very well for the past month, going from the mid 3’s to the high 6’s. Today CKSW Dropped by more than 19%. It may be due to profit taking or low confidence in the stock going into earnings report. Something doesn’t look right here. It’s a huge sell off, with ten times the average volume.

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The stock market has been performing phenomenally well. The Dow recently cracked 14,000. The job market is also very good. Most of the people I know have good jobs and are very well compensated. My income is at the highest it’s every been. My stocks portfolio has been doing great this year.

Is the overall economy good for everyone? Should we worry about a downfall?

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The Next Small-Cap Buyout

Private equity buyouts and mergers are an integral part of small-cap investing, and let’s face it, the next small-cap buyout is coming soon — big money is finding a ton of value in small companies. But that doesn’t mean you should go out and try to pick the next buyout.

As a small-cap investor, all you can do is continue to look for financially stable, well-run companies. If you can find value in promising small caps, a buyout would just prove your thesis right. As for where to look, follow Chuck Royce’s three precepts:

1. Focus on small companies.
2. Employ a fundamentally driven, business-buyer’s approach to small-cap investing.
3. Plan on holding for five to 10 years, if not longer.

And mix those with three learnings from Motley Fool Hidden Gems, where Tom Gardner and Bill Mann have had seven companies from their scorecard acquired (and two more in the process of being acquired):

1. Hunt for cash-rich balance sheets.
2. Look for top-flight managers (who preferably have an ownership stake in the company).
3. Buy businesses with a wide market opportunity or a valuable product roster.

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