MJ's Blog

If your company has a 401k plan with a matching incentive, yes. You should continue to contribute to the plan. Company retirement matching incentives are “free money.” I would not contribute more than the matching dollar or percentage. For example, if you are contributing 7% of your wages and your employer matches up to 7%, you should not contribute more than 7%.

Although, making contributions in excess of employer matching is not a total waste, the money could be used in other investments. Your employers’ 401k plan may be diverse and broad enough to cover your investment needs. However, the excess cash you contribute could be used in a supplemental annuity, certificate of deposit, money market account, etc. I believe these are all good options.

In addition, individual investment accounts are great. These accounts allow you to diverse beyond your employers’ 401k plan of predetermined mutual funds, bonds, index funds etc. Furthermore, individual investment accounts place you in the driver’s seat as an investor. Meaning you buy and sell what you want, when you want.

Remember we are waiting on news of a debt restructuring for AMR. Two things: 1. CEO/Senior Management starts to sell off parts of AMR that are profitable to help capitalize operations. This action will give AMR enough leverage to solicit lenders for funds that will cover the labor contracts that have caused the Chapter 11 bankruptcy. 2. AMR begins merger and acquisition talks with a smaller airline that adds a significant growth and or change factor to profitability. A merger with a larger airline could dilute share value.

While a reduction in operating costs has helped AMR avoid Chapter 11 the last two years, it’s not as significant as the labor contracts. The airline has had a reputation for premium fares as well as wages.  AMR labor contracts will need to be renegotiated to sustain long-term business operations in and pull itself out of bankruptcy.

The company has been unsuccessful in crafting a viable agreement with unions/labor that could prevent the filing. Other large airlines (Delta & United Airlines) have entered merger agreements to avoid bankruptcy. I believe $4 billion is enough cash on hand to continue to operate 6-9 months. Unfortunately, high fuel, oil, and labor cost demands AMR restructures and streamlines some of its processes and services.

I think the stock is a “BUY” at its current price. Holding shares short-term to intermediate could be profitable.  Long-term positions may be too risky without knowing more details about AMR management’s plans about how to exit Chapter 11.

There's no need to guess when picking profitable stocks. Take the mystery away by using a sound, successful method and repeat, repeat, repeat! Here's what I look at when choosing equities for my portfolio:


1. Take a look at the technical data.
You want a stock that is showing a steady increase in price and volume. Price movement's that are steady tend to be less volitale  and allow you to capture earnings. Don't fall for the abrupt increase in share price--it's not permanent. What rises fast, falls even faster in the trading game. I've seen some stocks give returns with minimal volume but you should look for a good consistent amount of trade volume. Keep your eye on stocks that do at least 100k or more in average daily volume.

2. Financial Statements that “Show Me the Money”
Generally, great stocks’ financial statements will show long term growth in sales and investments; while simultaneously decreasing debt. If sales, investments, and debt move in the same direction—it could mean trouble for the stock price. Cash flow at minimum should remain even year to year. Net income will climb year after year over multiple years. I set no percentages nor dollar amounts for growth because if all of these are happening, it’s a good pick!