Sunday, July 15, 2007

Buying stock in lojack smart chips

Alice wrote:

So this company called me....with an investment opportunity...and with skepticism I listened. I think it is a pretty good idea to put a lojack chip in kids clothing. They are looking for investors - $5000. minimum $10K is better - more than that is even better.

I think having some money in the bank is good, but I would like to see it grow faster. It's risky but I would like to take a chance. What do you think? ALice
more_about_protecting_children_with_rfid.php - 107k - Jun 19, 2007 - 7k
This is the site they told me to look at:

The Mother Ruminates:

Don't ever invest money you can't afford to lose.

Once I saved up my first $10,000, I invested $5,000. In 1981, I could live 2 years on $5000. I invested in a start up and it soon after went bankrupt. The money was tied up in bankruptcy courts for 11 years, and then I got a check for under $1000 for the final settlement. I'm lucky I got anything at all. There is something called "the opportunity cost." This is the probable income if you had put that money in the bank for the same amount of time, 11 years in this case. It is also calculated on the average growth of investments in those same years. Therefore, I didn't only lose $4000, I also lost the opportunity costs of investing $5000 at the average rate of investment growth for those same 11 years. That could amount to about $14,000 at an average 10% rate, triple!

Those smart chips are definitely the wave of the future. Investment newsletters have been tauting them for nearly 2 years. You are swift, my dear, and this could be a smart opportunity for someone who can afford to lose the money. Its a gamble. That, and nanotechnology.

Although the product may be the wave of the future, a great deal of the company depends upon the management. You'd have to do your homework and find out how the business analysts rate their business plan and management style. You might even go visit the company. Sometimes I wait until the company has been in business for N amount of years, and look at their proven track record. I did that with Renaissance Faire stock; after I felt confident, I bought in, and $1000 turned into $4.89 with a change in management within a year. By waiting, for example, like I did with Google stock, I lost out on a fortune by not putting my money on a fragile, intangible, internet company with massive debt.

Another factor in investing is how much risk can you stomach? The first major loss for a new investor stings the worst. Any successful investor can tell you horrendous stories of investment losses.

Then there's the possibility that their one big product is found to cause some freak unexpected scourge on humanity, and the company is slapped with class action lawsuits. Both Apple and Microsoft have had to weather big lawsuits, as well as competition from startups. Will this lojack chip company be strong enough to weather a lawsuit? On the other hand, do you know for sure that this chip company is not cooperating with the NSA on illegal surveillance to curtail our Constitutional freedoms? You should investigate how many military contracts they have. And how much toxic waste they generate in order to make their product.

People who can't afford to lose their money should invest in mutual funds, or CDs. Even mutual funds can significantly go down, but it will eventually rise again higher than ever before, if you have time to wait.

Real estate is the best investment of all. Real estate is something tangible which will inevitably grow in value in the long run. If you have money laying around aching to be invested, I would invest it into real estate. But like with every other investment, your profits depend a lot on you doing your homework. Right now, your homework is putting in the resources and sweat equity to get your LA house into habitable condition. Every day you don't finish construction and get the units rented out has an opportunity cost. The faster you get that house done, the faster your money will grow. The chance of appreciation of your real estate asset is far more assured at an incredibly lower level of risk for a far greater rate of appreciation than you could likely make betting on stocks of companies run by people you don't even know (except if you had invested in Google).

My advice to you is to let people who can afford to lose their money buy the stock in the lojack chips, and you focus your money-making desires on completing the construction in LA ASAP.

In Peace,
Love you!

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