Today I realized that I’ve been harboring a terrible limiting belief.

“She’s not going to like me”… Today I discovered that I unconsciously and automatically tell myself this and I believe it every time that I’m near sexy girls that I want to approach. And the scariest most sickening part of this whole experience was discovering that I am saying this limiting belief to myself automatically and not consciously. You see, prior to today I would always get terrible, almost crippling, approach anxiety but I didn’t know why. Being in situations where I could approach sexy girls always led to feelings of fear about the approach but I don’t ever recall consciously telling myself point blank, “She’s not going to like you”. The belief was always there but outside of my conscious mind, in the background, working against me.

So why was today different and how did I discover that I was unconsciously carrying inside of me this terrible belief? I was doing an exercise from Hypnotica’s “Collection of Confidence” inner game audio program. Basically, I was to go out to a place where there were lots of women, like a mall, to look for sexy / attractive girls, and then simply to take note of the automatic thoughts that popped into my head when I thought about approaching them. I didn’t actually have to approach them (if I didn’t want to). It was all about discovering your automatic thoughts. This actually turned out to be a lot harder than I thought because most of the time I didn’t get any verbal, conscious thoughts popping into my mind (like, “she’s going to make fun of me”), rather I simply got a feeling of fear / anxiousness that kept me from approaching. But the whole point of this exercise was to discover the ideas or beliefs that are causing these feelings because you can’t fight the fearful emotions with anything (well maybe you can) but it’s much easier to look at an idea and argue against it, invalidate it, and prove it as being patently false. It’s very easy to invalidate a stupid belief system but the real crux of the problem is identifying and knowing you have one in the first place.

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Thoughts on neediness of positive validation and freedom from outcome.

  • When you cold-approach a girl what is it that you actually want from her, besides the sex? You want her validation, but wait a minute, her validation of what exactly? Good question. You want her to validate (confirm as being true) all of the positive beliefs you have about yourself. As a guy, you probably believe these type of things about yourself:
    • I’m a sexy guy
    • I’m good looking
    • I’m cool
    • I’m attractive
    • I’m funny, interesting, and charismatic
    • Girls want to have sex with me
    • etc, etc.

You want her to accept you because by accepting you she will be completely validating all of your positive beliefs about yourself, which feels pretty fucking awesome. Now, of course everybody wants validation, everybody. Everybody loves the huge ego boost that you get from it, it feels fantastic, and it gives you a drug like high. The only problem; however, is if you become needy and desperate for her validation, then you become creepy and creepy guys don’t get laid. What you have to realize is that in actuality, you don’t need a girl’s validation for you to feel good about yourself and to experience positive emotions. You don’t need her external validation because you can be your own source of internal validation. This is what RSD means when they talk about “drawing state from within” or “Pumping your own state”. You, all on your own, can make yourself feel good. You don’t need the girl for that. But when you don’t realize this and you’re coming from the frame that, “you can only feel good if a girl validates you and that you need her to validate you in order for you to feel good”, now you have become needy, weird, creepy, and you have an agenda because you think that you need something which you actually don’t. That is the outcome from which you are supposed to be free from. You have to be indifferent to the outcome of your approach because whether she validates (accepts you / likes you) you or not, you know that you don’t need her validation anyways. A lot of guys, myself included, when we first heard the phrase, “Freedom from outcome” it didn’t seem to make a lot of sense to us. Freedom from what outcome? Freedom from all outcomes? Should I not give a shit about anything anymore and become totally indifferent to my entire life? Should I become apathetic? And how can I have “clarity of intent” while simultaneously being indifferent about the outcome? The answers is that it’s perfectly OK to want something (an outcome/ a goal), it’s perfectly OK for you to want to fuck the girl and to get her validation, and you should be crystal clear in your intent (desire / want) but it is totally disgusting, repulsive, and despicable if you start believing that you actually need her validation (the outcome) when in reality, you don’t.

Her validation is nice, you want it, and you can definitely appreciate it but in no way do you need it.

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Microsoft nearing 52 week lows, 3.48% yield

MSFT pays out 0.23 cents per quarter, meaning that annually they pay out 0.92 cents per share. As of Friday’s closing price of 26.455 it currently yields 3.48%. The stock is also nearing its 52 week low. Image

Hopefully, this upcoming week MSFT and the market will have one really good down day and I can pick up MSFT shares at or above 3.5% & preferably at new 52 week lows. There is nothing more that I like than buying great companies at yearly lows, with fat yields, and then seeing their stock go higher buy buying the stock when most people are bearish on it.

The company has 66.07B in cash and 12.37B in debt, that is it has 5.3x as much cash as debt or a net cash balance of 53.7B. In the last 12 months the company generated 15.71B in profits, so that means that MSFT has 3.4x years worth of earnings in cash. This is what I call a fortress balance sheet, they are loaded with cash. Furthermore, they only pay out 49.7% of their earnings as dividends (0.92 Dividend Per Share / 1.85 Earnings Per Share).

With 53 billion dollars of cash in the bank and yearly profits of 15 billion Microsoft has the resources to invest in its own organic growth and create its own new and innovative products and also the capability to make strategic acquisitions and essentially buy growth. The reason why its stock price is low is because in their most recent quarter sales were down 7.9% yoy and earnings were down 22.2% YOY. I believe that this is just a temporary slow down and that overtime Microsoft will continue to grow profits and their dividend faster than inflation. Here is a chart of their dividend history. Image

As you can see in 2008, just 4 years ago, its dividend was only 0.11 cents but today, in 2012, they are paying out 0.23 cents. That is a more than a 100% increase in their payout in just the last 4 years! So come this week, I can only hope that the market gods bless me with a down day so that I have the opportunity to buy the World’s largest software maker at a big fat yield of 3.5%.

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My selection process for dividend stocks

Today I’m going to show you how I go about selecting a company whose stock I want to buy mainly to collect their growing dividends. As a general rule of thumb, unless I am very familiar with the business & have personally bought something from said business, I won’t even touch a company that is worth less than 1 billion dollars in market cap value. Stocks worth less than that aren’t even on my radar. Why? Because most companies trade at some multiple to sales and I want to filter out any company that doesn’t at least have a billion dollars in annual sales (unless there is rapid sales growth as is the case in lululemon et. al.). Now I’m going to show you step by step exactly what I do when researching a company. I’ve been investing now for over 4 years, so a lot of this stuff I’ve picked up along the way. I’m about to drop some serious investing knowledge on your asses.

1) I go to FinViz and search for US companies that pay at least a 3% dividend and arrange the list in descending order from largest market cap to smaller. I choose US only companies because companies that are incorporated and / or domiciled outside of the US sometimes have countries have what is called a Dividend Withholding tax that gets taken from your dividend payment by the foreign country before you get paid. In some instances you can get refunded this tax from the IRS but it can be a bit complicated & I would just rather avoid the hassle. There are plenty of great companies right here in the US. Now from this list you will get universally known brands such as GE, Microsoft, Chevron, Johnson & Johnson, Procter & Gamble, etc. These are gigantic multi-billion dollar companies that have the lowest probability of going bankrupt and the highest probability of growing their dividends overtime. I don’t exclusive invest in mega caps but these are among the least riskiest investments you could make in the stock market. Image

2) For this example, I’m going to analyse $INTC. First I will go to the Yahoo Finance Intel page.                                                                           Image

Here I am only really looking for 2 things, what is its market cap and what is its dividend (according to Yahoo at least, which isn’t always accurate so double check it with other sources, like SEC filings or company press releases). 

3) Then I look at the “Key Statistics” part of the site.                                   Image

Here I’m primarily looking at 5 things, prices/sales, revenue, income, net debt to income (if there is any debt, which there might not be), and payout ratios. So as we can see here INTC trades at a 100.29 billion dollar market cap and it earned 57.75B in the trailing twelve months (ttm) and thus has a price to sales ratio of 1.87x (according to Yahoo). This is simply a valuation metric that you can use to get a sense of how cheap or expensive this company is relative to other companies in the same industry. For example, if ARMH was trading at 18x sales and QCOM at 6x sales, then all else being equal INTC would be the cheapest of the bunch. Of course not all things are equal and ARMH and QCOM are growing much more rapidly than INTC and thus are going to trade at a higher multiple than it. Many things play a factor in why some companies get valued more richly than other, but in general the a better, faster growing, company with low to no debt will have a higher multiple than a bad company, losing market share, with a sizable amount of debt. You can also see that its revenue per shares is 10.70 and its current stock price is 20.15 which is roughly 2x sales. We can also see that year-over-year (yoy, that is from last December to this December) sales decreased by 5.5% and earnings fell by 14%.  That is obviously not good but if you believe this is only a temporary slow down it is what is creating a great buying opportunity in the stock. Also, I generally like looking at 2 year growth trends which I will highlight further down. Now here is a really important balance sheet analysis, debt to cash and net debt to income. Intel has 7.25B in debt as of their most recent quarter (mrq) and 10.50B in cash (or cash equivalents which are usually treasuries or other cash like paper). Fortunately, Intel is in a strong liquidity position as it has more cash than it does debt. Clearly, it is almost always better to have more cash than debt but this is not always a deal breaker. It’s net debt is -3.25 (7.25 in debt – 10.5 in cash) which simply means it has no net debt, which further means that the company has no leverage. Now if the opposite was true and it had 10.5B in debt vs 7.25B in cash then it would have 3.25B in net debt and here is why having some debt is not necessarily a huge issue. As you can see Intel had 11.9B in profits in the ttm, which means that its net debt to income ratio is only 0.27 (3.25 in debt dividend by the 11.9B in cash). This means that it would only take intel 3.2 months to generate enough profits to pay off its entire debt if it so chose too. If on the other hand it had ten times as much net debt, 32.5B, then it would take it 2.7 years to generate enough profits to completely pay off its debt. Another way to think of this is using a personal example. If you make say, 50K dollars (after-tax) per year but you have student loan, car, and credit card debt of 250K, you are leveraged 5-to-1 and it will take you at least 5 years (if you spent all of your money on it) paying off all of your debt. This is clearly not a good situation for an individual or a corporation. I typically try to avoid companies that have 3x as much debt than they generate in profits but again, it depends on the terms, maturity, and cost of the debt. For example, if the debt matures over 30 years and it only costs 2% per year, it’s probably not a big issue. Lastly, I look at the dividend payout ratio. This is the ratio of annual dividends per share to earnings per share (EPS). Intel is currently paying out 0.90 cents per share every year and in the ttm it made 2.29 cents per share in profits. Meaning that it is only paying out 39% of its earnings as dividends. This is a good thing because for example, you would never want to own a company that was paying out more in dividends than it was actually generating in profits. In other words, if a company is only making 2 in EPS but is paying out a 2.5 annual dividend that means its payout ratio is 125%. So the question is, where is that extra 25% coming from if they are not earning it? Most likely they are borrowing the money, increasing their debt to payout the dividend. This is not sustainable and eventually the dividend will have to be cut (which will cause the stock to take a major hit). So look for companies that have a payout ratio somewhere in the range of 25 to 50% as the company does need to reinvest some of their profits back into the business to continue growing and expanding (capital expenditures).

4) Then I go to yCharts and check out a visual graph of the company’s sales, gross profit, and net income.                                         ImageAs we can see here over the last 2 years, inte’s sales were up 23%, their gross profit was up 20% and their net income was up 3.8%. The most important growth metric in any business is the top line (sales/revenues) as long as the company is selling more and more products everything else can be fixed buy cutting costs and finding inefficiencies to get profits and margins growing again. And remember, if sales increase but the market cap of the company stays the same of declines, it makes the company cheaper on the price to sales valuation metric. Or in other words, if the multiple stays the same while the sales are increasing, the stock will go higher. Also, growing sales should eventually result in growing earnings, which means higher and higher dividend payments and it is this “variable” or growing dividend income that is what makes dividends so much more attractive than the fixed-income you can get in bonds. Make no question about it, corporate bonds are much safer and less risky than stocks; however, if you bought the bonds at a 4% yield, that amount will never change, you will only ever get paid that 4% per year (fixed-income). With stocks however, if the annual dividend payment increases from $4 per share to $8 per share over a 5 year period, assuming you bought the stock at $100, then your dividend yield will increase from 4% to 8%. In other words, your dividend income will have double. So you definitely want to see growth.

5) then I got to DiviData and check out a chart of Intel’s dividend and how much it has grown over the last few years. Image

As we can see here, Intel has had a steadily growing dividend since at least 2003 when they paid out only 2 cents per share, today the pay out 22.5 cents per share. So in the last 9 years their dividend has increased by over 10 times. Meaning that if you had bought the stock back then (in 2003) at say a 1.5% yield, your yield today would be 15% on that Intel stock, and that right there is the holy grail of dividend investing. You could compute it’s 3 year compound annual growth rate to see how quickly the dividend is growing right now on excel but fortunately Zecco has a stock screener  that not only computes that growth rate for you but also lets your arrange all of the stocks in order from the fastest dividend growers to the slowest. As a note, INTC’s 3 year CAGR of its dividend is currently 31.8%, which is much faster than inflation.                  Image

6) There are a few other things that I like to do before buying the stock. I like going to the company’s investor relations website and corporate website and seeing if they have a YouTube channel or any videos that can help people understand what the company is all about. OXY, WM, and LULU, just to name a few, are great companies that have pretty long, professionally produced corporate / investor videos that show what the company does, and shows the CEO and other execs talking to investors about their vision and goals. I also like listening to the most recent quarterly earnings call to hear what management has to say and also what issues the analysts are bringing up during the Q&A session. Additionally, I will Google the company and see what has recently been in the news about them about things that they have said or done, what competitors have said, if they are in legal battles, if congress is thinking about passing some new law, etc. Just to know what is out there about them to avoid risk.

So, congratulations! If you’ve made it this far down without falling to sleep yet, it means you are a serious investor. If you are new to this and have any questions, feel free to ask me on twitter @elwalvador . I’ve been doing this for years and am a wealth of knowledge when it comes to trading and investing. I know almost everything that one could possibly know about financial markets and I hope to keep sharing my knowledge with you guys, here on my blog. Until next time, have a good day y’all.

 

 

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Weighted Quick-Union, “Algorithms” by Sedgewick & Wayne, page 228

Here is the Java source code for a version of the Weighted Quick-Union algorithm that will automatically read-in the tinyUF.txt “connections” text file, from your local drive, provided by the authors (which you can find here). Unlike the source code in the book, which requires that you manually type in all the integer values yourself (contained in the txt file), this one does that work for you.

Here is the code, enjoy::::::::::::::

import java.io.File;
import java.util.Scanner;

public class WeightedQuickUnion {
private int[] id; // parent link (site indexed)
private int[] sz; // sz of group for roots (site indexed)
private int count; // number of components
private int N;

public WeightedQuickUnion(int N){
this.N = N;
count = N;

id = new int[N];
for (int i = 0; i < N; i++){
id[i] = i;
}

sz = new int[N];
for (int i = 0; i < N; i++){
sz[i] = 1; // for each site set the number of nodes on the tree
}

System.out.print(“Current array status: “);
for (int a = 0; a < N; a++){
System.out.print(id[a]);
}
System.out.println(“”);
}//end WeghtedQuickUnion constructor

public int count(){
return count;
}//end count()

public boolean connected(int p, int q){
return find(p) == find(q); //are the roots of p and q equal?
}//end connected()

public int find(int p){
while (p != id[p]){//find the root of p
p = id[p];
}
return p;
}//end find()

public void union(int p, int q){//
int i = find(p);
int j = find(q);

if (i == j) {
return;
}
//make smaller root point to larger root
System.out.print(“The size of ” + p + “‘s group is : ” + sz[i]);
System.out.println(“. The size ” + q + “‘s group is : ” + sz[j]);
if (sz[i] < sz[j]){//if the size of p’s group is less than q’s group
id[i] = j;//set the root of p to the root of q
sz[j] += sz[i];//add p’s group members to q’s group
} else {
id[j] = i;//set the root of q to the root of p
sz[i] += sz[j];
}
count–;//decrement, 2 minus signs

System.out.println(p + ” and ” + q + ” are now connected”);
System.out.print(“The root of ” + p + ” is: ” + id[p]);
System.out.println(“. The root of ” + q + ” is: ” + id[q]);
System.out.print(“Current array status: “);
for (int a = 0; a < N; a++){
System.out.print(id[a]);
}
System.out.println(“”);
}//end union()

public static void main(String[] args) {
Scanner scan = null;
try{
scan = new Scanner(new File(//use foreword slashes next
“C:/whereever you saved the txt file/tinyUF.txt”));
} catch (Exception ex){
System.out.println(“Could not find file”);
}
int N = scan.nextInt();// read number of id.
System.out.println(“Array length is: ” + N);

WeightedQuickUnion wqu = new WeightedQuickUnion(N);
while (scan.hasNext()){
int p = scan.nextInt();
int q = scan.nextInt(); //read pair to connect
if (wqu.connected(p, q)){
System.out.println(p + ” and ” + q + ” are already connected”);
continue; //ignore if connected
}
wqu.union(p, q); //combine components

}
StdOut.println(wqu.count() + ” components”);
scan.close();
}//end main()
}

||||||||||||||END OF SOURCE CODE|||||||||||

This is what the tinyUF trees look like after the 11 connections:

And this is the printout you should get in the command line or Console of your IDE:

Array length is: 10
Current array status: 0123456789
The size of 4′s group is : 1. The size 3′s group is : 1
4 and 3 are now connected
The root of 4 is: 4. The root of 3 is: 4
Current array status: 0124456789
The size of 3′s group is : 2. The size 8′s group is : 1
3 and 8 are now connected
The root of 3 is: 4. The root of 8 is: 4
Current array status: 0124456749
The size of 6′s group is : 1. The size 5′s group is : 1
6 and 5 are now connected
The root of 6 is: 6. The root of 5 is: 6
Current array status: 0124466749
The size of 9′s group is : 1. The size 4′s group is : 3
9 and 4 are now connected
The root of 9 is: 4. The root of 4 is: 4
Current array status: 0124466744
The size of 2′s group is : 1. The size 1′s group is : 1
2 and 1 are now connected
The root of 2 is: 2. The root of 1 is: 2
Current array status: 0224466744
8 and 9 are already connected
The size of 5′s group is : 2. The size 0′s group is : 1
5 and 0 are now connected
The root of 5 is: 6. The root of 0 is: 6
Current array status: 6224466744
The size of 7′s group is : 1. The size 2′s group is : 2
7 and 2 are now connected
The root of 7 is: 2. The root of 2 is: 2
Current array status: 6224466244
The size of 6′s group is : 3. The size 1′s group is : 3
6 and 1 are now connected
The root of 6 is: 6. The root of 1 is: 2
Current array status: 6264466244
1 and 0 are already connected
6 and 7 are already connected
2 components

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A working QuickFind Java source file for the Sedgewick Algorithms book.

I’m posting this code because of my frustration in dealing with the code for the QuickFind algorithm in the book “Algorithms” on page 221. Sedgewick or Wayne, whomever wrote this code, hides a Scanner System.in read in their so called “StdIn.readInt()” library. In other words, when you run their version of QuickFind by typing in: “java QuickFind tinyUF.txt”, as it tells you to in the book, in the command line to run the program, absolutely NOTHING happens because the program is waiting for YOU to type in each and every single int value in the tinyUF.txt file and then hit enter for each value!

Now this might not be such a huge problem when your only dealing with 11 connections, since you “only” have to type in 23 values, by hand, and also hit enter 23 times for each value but it would be an absolutely ridiculous task to try and type in all of the connections for the mediumUF or largeUF files as the former has 900 connections and the latter has 2,000,000 connections. You would spend the rest of your natural life typing in the values on these files just to run a simple QuickFind algorithm.

The code I’ve posted below makes the program read in the values from the file automatically, so that you don’t have to type them in manually.

import java.io.File;
import java.util.Scanner;

public class QuickFind {
private int[] id; //access to component id (site indexed)
private int count; //number of components
private int N;

public QuickFind(int N){ //initialize component id array
this.N = N;
count = N;
id = new int[N];

System.out.print(“Current array status: “);
for (int i = 0; i < N; i++){
id[i] = i;
System.out.print(id[i]);
}
System.out.println(“”);
}//end QuickFind() constructor

public int count(){
return count;
}//end count()

public boolean connected(int p, int q){
return ( find(p) == find(q) );//are p & q in the same group
}//end connected()

public int find(int p){
return id[p];
}//end find()

public void union(int p, int q){//put p and q into the same component
int pID = find(p);
int qID = find(q);
//do nothing is p and q are already in the same group
if (pID == qID) return;

//rename p’s component (group) to q’s name.
for (int i = 0; i < id.length; i++){
if (id[i] == pID) id[i] = qID;
}
System.out.println(p + ” and ” + q + ” are now connected”);
System.out.print(“Current array status: “);
for (int i = 0; i < N; i++){
System.out.print(id[i]);
}
System.out.println(“”);
count–;
}//end union()

public static void main(String[] args) {
Scanner scan = null;
try{
scan = new Scanner(new File( //use forward slashes next
“C:/…wherever you saved the tinyUF file…/tinyUF.txt”));
} catch (Exception ex){
System.out.println(“Could not find file”);
}
//solve dynamic connectivity problem
int N = scan.nextInt();// read number of sites.
System.out.println(“Array length is: ” + N);

QuickFind uf = new QuickFind(N);
while (scan.hasNext()){
int p = scan.nextInt();
int q = scan.nextInt(); //read pair to connect
if (uf.connected(p, q)){
System.out.println(p + ” and ” + q + ” are already connected”);
continue; //ignore if connected
}
uf.union(p, q); //combine components

}
StdOut.println(uf.count() + ” components”);
scan.close();

}//end main()
}

______|||||END PROGRAM||||||_______

This is the output you should get:

Array length is: 10
Current array status: 0123456789
4 and 3 are now connected
Current array status: 0123356789
3 and 8 are now connected
Current array status: 0128856789
6 and 5 are now connected
Current array status: 0128855789
9 and 4 are now connected
Current array status: 0128855788
2 and 1 are now connected
Current array status: 0118855788
8 and 9 are already connected
5 and 0 are now connected
Current array status: 0118800788
7 and 2 are now connected
Current array status: 0118800188
6 and 1 are now connected
Current array status: 1118811188
1 and 0 are already connected
6 and 7 are already connected
2 components

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