Friday, October 17, 2008

Now Is The Time to BUY!

As a follow up on my post for October 15th, Crisis or Opportunity of a Lifetime, I thought readers might like to check out the post on CNBC titled:

Warren Buffett: Why I'm Buying U. S. Stocks Now.

In the article, Mr. Buffett makes many of the same arguments I made in my article. I like the way he puts it when he says, "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors."

Read the entire article at:

It's always nice to know that someone who has done so well in the stock market shares my opinion.

Thursday, October 16, 2008

Buying Stock For the Dividends

As anyone who has read my previous posts can attest, I've always promoted buying stocks based on dividend payouts and the companies' ability to continue paying the dividends. It is interesting to note that the "experts" are starting to give this same advice. Check out this article on CNBC:

Cramer: Buy Dividends on This Dow Drop

While Cramer makes some good points about dividends being a cushion in the market downturn and yields rising as prices fall, I have always advocated buying investments that provide current income, i.e. dividends, as well as having strong possibility of future capital gains. All of the stocks recommended in Cramer's article are good stocks, but with a little effort it's possible to find much better yields than mentioned here.

Crisis Or Opportunity of A Lifetime?

With all the negative news on the economy, the stock market crash and the chaotic actions of our national leaders, one has to wonder when or if this "crisis" will ever end. I may be viewed as the perennial bull for saying this, but what I see right now is the opportunity of a lifetime! Stock prices have plunged, everybody is bailing out and parking their money in low interest cash accounts. I think now is the time to make the real money in the stock market. We may or may not be at the bottom of the market cycle, but I haven't seen such bargains in the stock market in years!

My personal stock account has suffered along with everyone else's, however, instead of panic selling, I've been on a personal buying spree. My biggest fear at this point is that the "crisis" will end before I'm able to accumulate all of the shares I'd like to own. You might think I'm crazy for taking this point of view, but just look at what is really going on. Warren Buffett, undeniably one of the most brilliant investors of all time, is investing billions of dollars. Is he trying to prop up the U.S. stock market single handed? I doubt it. I think he recognises the situation as an opportunity for building his tremendous wealth even further. Gas and oil prices are plummeting, leaving more discretionary income in the hands of consumers. What do consumers usually do when they have more discretionary income? They spend it on goods and services. When they spend, business begin to grow earnings, which in turn leads to more jobs and a healthier economy. This may sound a little simplistic, but that is the way a market economy operates. How soon will all these things come about? Your guess is as good as mine, but I don't think it will take as long as all the experts seem to think.

I'm not a believer in bailouts, I think they are mostly a political ploy and will only lead to job destroying higher taxes. But I am a firm believer in the power of the free market economy to overcome tremendous adversity. I can't help but think that a few years down the road a lot of people are going to be saying, "We had nothing to fear but fear itself."

Saturday, October 4, 2008

Quarterly Update

Sorry for not keeping up with the posting, it has been an extremely busy month for me. The general manager at my new job quit and I have taken over as the new GM and am working hard to turn things around on the job. Things are going well there, but it has taken a lot of time away from my personal pursuits.

Everyone is well aware of the turmoil in the stock and financial markets, but we must all remember that with every problem comes opportunity. While problems abound, opportunities are all around us. If you've read some of my previous articles, you will see that the things I predicted are starting to unfold. Oil is down, gas prices are down, people are switching to more energy efficient means of transportation. There has been a big drop in the stock market with a lot of people running for the exits, doing exactly what they should not do, selling low! We all know you are supposed to buy low and sell high, the problem is none of us tend to do this.

So how is my plan progressing? Like everyone else, my stock portfolio has dropped in value. However, as I mentioned in earlier posts, my plan for the year included building cash positions through better cash flow management. This has gone quite well for me. I have reduced my debt considerably, built up my cash accounts and am in position to take advantage of some of the best bargain pricing on stocks that I have ever seen in my lifetime. I have also reduced investment costs, buying larger blocks of shares at a time and reducing commission costs. I have been actively searching out new dividend stocks and adding to my portfolio, thus increasing my monthly dividend income. With larger cash holdings, my interest income has increased as well. I still have some small debts to pay off and will then be able to concentrate all of my cash flow towards wealth building.

My small businesses have done well. Income from my rental property maintenance company has increased and I have added new clients to keep the money coming in. My online business has started generating commissions and should be profitable within the next year. I am excited about this business, because it takes so little time and effort on my part, yet the returns can be staggering. You can check it out at:

My advice at this point is to stay calm. Yes there are a lot of problems with the economy and the stock market, but remember, with every problem there is an opportunity.

Sunday, August 10, 2008

Should You Be Buying Gold?

I just finished reading an article on one of the major news media sites talking about the recent decline in oil prices and the rise in the value of the dollar. Both of which I predicted back in October of last year. Overall, it was a very good and positive article, but of course they couldn't stop at that. They had guest commentary from an "economic expert" who said that high oil prices should not be the only consideration when addressing inflation. O.K., I agree with that, it should not be the only consideration. However, he then talked about the high food prices around the world and rising unemployment, both valid subjects for consideration in addressing inflation, but he somehow managed to segue that in to a justification for buying gold as an investment and hedge against inflation. What?

I'm no expert, but common sense would tell you that high oil prices and the low value of the dollar drive prices higher in food and gold. If oil and gas prices are dropping so are the costs of producing and transporting food. If the value of the dollar is rising, it makes our agricultural products more expensive to foreign buyers, leading to demand destruction in exports of our food products. Add to that the increasing unemployment in the U.S., which further reduces demand for high priced food items and the simple rule of supply and demand kicks in. Which all adds up to falling or stagnant food prices. All these things should lead to a halt to the inflationary spiral we've been in for the first 7 months of this year.

So, should it make any sense to anyone to be buying gold right now? Not as far as I'm concerned. When inflation begins to ebb, gold prices drop, as they have been doing recently. If you are considering any investment in precious metals, silver is a more likely candidate. Most of the gold that has been mined throughout human history is still in existence to this day. However, silver is being consumed at an ever increasing rate and as a non-renewable resource, this would present a much better investment opportunity than gold. Gold would have been a good investment when it was selling between $300 and $400 per ounce, that is, as long as you were selling when the price was over $900 an ounce. But now, I don't think so.

Update on My Latest Business Venture

I recently wrote about a new business I have gotten involved in. It basically involves network marketing and yeah I know all the negative attitudes people have towards these type of businesses. However, I had recently read some positive comments about network marketing in Robert Kyosaki's book, "Retire Young, Retire Rich." He pointed out how building a network type business in your spare time not only taught you the invaluable lessons of how to build and run a business, but they can go a long way towards building a steady stream of income and making you far wealthier than a regular 9 to 5 job. In another of his books he says, "Rich people look for and build networks, poor people look for a job." So I came across this opportunity and dived right in.

I've been in Amway, I've done the Ebay auctions and Ebay store and Google Adsense, but I have never had such a tremendous and immediate response as I've had with this new business! I'm getting a great deal of traffic on my new website, which has never happened with any of my other sites and several hits on my referral codes. All this with very little effort to date! I'm excited! If I've gotten all this response, imagine how much it's going to take off once I start putting some real effort in to it!

At any rate, I'll keep the readers updated on how things are going and if you'd like to check it out for yourself, you can go to:

Friday, August 8, 2008

Enough With The Wining!

I just sat through another mind numbing "news" program about the problems with the U.S. economy and the inability of our political system to address the issues. Yeah, O.K. we all know what the problems are. Is it really helpful to anyone to carry on these endless debates in the news media about how it is just impossible to solve all our country's problems? Does this really accomplish anything? They always say they are, "addressing the issues." I think they are confusing "addressing the issues" with giving an address about the issues. If all the people who proclaim to be so concerned about the problems facing our nation, are truly concerned, wouldn't it be more productive to concentrate on proposing real workable answers to the problems, instead of endlessly wining about how we're faced with insurmountable dilemmas?

The show I was watching was about the millions of poor people in the U.S. and how companies are targeting these people for their collective wealth, estimated to be around $650 billion. Speaking as someone who comes from this group, I don't want any one's pity, I don't want any one's handouts, all I've ever wanted was the knowledge to rise above my humble beginnings. Has anyone ever seriously considered educating the poor to deal with their own problems? I do know of a few people who advocate financial education, but it has never, to my knowledge, been proposed as a solution to the generations of poverty stricken families here in our country. It is no big secret. Anyone in this country can rise above poverty if they have the desire to do so. They may not know how, but there is a simple solution to this problem as well. I personally believe that the book, "The Richest Man in Babylon" should be required reading in all our public schools. ANYONE who follows the advice set out in this simple, easy to understand book, will do well in life. And if we truly want to address economic issues in this country, then we need to start a grass roots campaign to end financial ignorance and illiteracy. In one of the parables in the above mentioned book, the King of Babylon desires that his city should become the wealthiest city in the world. So he sends for the "richest man in Babylon" and asks that he teach others his secrets to acquiring wealth and building an estate. As this wise old man in the book states, "Anything that one man knows, can be taught to another." So, if we truly desire to end poverty in this country, if we truly desire to lift the financial burdens from the poor, then welfare and social programs should only be temporary and for the poorest of the poor. Financial education should be the cornerstone of any true campaign to eliminate poverty in this country.

Saturday, August 2, 2008

Recommended Reading

I just read an interesting article on one of my favorite blogs, "In The Know" by Michael E. Brisky about the 15 things investors should look for in selecting a common stock and the 5 thing you shouldn't do. I recommend everyone interested or involved in stock investments read this article:

I've always tried to follow these rules when making a new stock selection, but sometimes it's nice to be reminded.

Monday, July 28, 2008

Your Future Starts Today!

People often talk about what type of future they would like to have. But if you keep doing the things you've always done, (get up, work hard, pay bills and try to save or invest a little money) then chances are good your future will be exactly as it is today. In one of the books I've been reading, the author said, "If you want healthy teeth in the future, brush your teeth today." Meaning, you don't wait until you have more time or more money, or until you've gotten more education or a higher paying job. If you want a future that is dramatically different, much richer and more enjoyable than the life you are living right now, then your future starts right now. You need to be taking steps today to build the bridges to your future life.

In my case, I want to stop working for other people. I've often written in my blog about wanting to stop working. I have worked hard all my life, making other people rich. I've decided it's time to do the same for myself. For a very long time now, I've always had a source of income outside my job and my stock investment portfolio. I've been involved in one small business venture after another. Mostly self employed, service type businesses. I have made money and learned a great deal from these small ventures, while I continued to work my day job. Now I consider everything I've done so far as an educational experience. I've been learning how to and how not to run a business. Recently I launched a new business that I'm very excited about. I haven't made a dime yet, but I can see the future and I can see how to get to where I want to be from where I am now!

I feel like everything I've done so far was leading up to this point and now is the time to make the move and jump on the fast track. Does this mean I'm giving up on saving and investing in stocks to provide for my future? Absolutely not. It simply means that my plans are beginning to accelerate and the future is no longer "some day" or "when I retire," the future I see for myself is starting right now!

Friday, July 25, 2008

Be Financially Free!

You Can Do This!

Want to get out of debt and live the life you've always dreamed of? Would you like to work from home? Don't want to sell vitamins or lotions or carry big inventories of product?

Then I urge you to check this out:

This is one business ANYONE can do!

Wednesday, July 23, 2008

Don't Take My Word For It

O.K., so I've been writing since January about how this is the perfect time to get in to the stock market, albeit on a very selective basis. I always search for investments that provide current cash flow and the possibility of future capital gains. For anyone who thought that I couldn't possibly know what I was talking about, check out this article from the Rich Dad Blog by Robert Kyosaki:

When Pessimism Prevails, It's Time to Get Rich

If you go back and read some of my articles for this past year, you'll see that I've been saying basically the same thing Mr. Kyosaki is talking about in this article. I've read most of his books and he is by far my favorite author when it comes to investing, so I was pleased to see that his most recent post is validating a lot of the things I've been writing about. So, don't take my word for it, read what someone who's already made millions has to say.

Quick Follow Up on My Last Entry

In my last article, I wrote about a new work from home business that I had started. I'm stunned by the amount of interest in the business! I've gotten more response in just 2 days than from any other business venture I've been involved in. I'm pretty excited about this one. I'll keep the readers updated on how it all goes.

Monday, July 21, 2008

Easy, Inexpensive, Internet, Work From Home Business!

Like so many other people I know, I have been searching for an Internet business opportunity that is simple to operate, inexpensive and easy to set up. I don't want to sell lotions and potions and the like, and I've already done the ebay thing (ran a store for over 3 years). But I've never really come across anything that seemed promising, until now.

If you'd like to set up your own website and start your own business online, but you don't want anything too complicated or anything that's going to cost you a ton of money and involve maintaining large inventories of products, I urge you to check out this website:

The above link will take you to a video presentation explaining the business and showing just how simple and inexpensive it really is. What's even better, you can sign up for a 7 day free trial! If you decide to stick with the program it's only $10 per month ($11 if you add Internet security). The profit potential is astounding! You can cancel at any time. Do yourself a favor and check it out!

Check Out My New Blog On Yahoo!

I want to thank all of my visitors and readers who have supported my blog on Google. I will continue updating The Blue Collar Investor from time to time, but the bulk of my writing will be found on my new blog at

Be sure and visit me:

Saturday, July 19, 2008

Buy Property With Little Down And Small Payments!

For those of you who, like myself, are interested in buying property but would like to find deals that require very little money up front and small payments, you might want to check out this website:

It looks like a promising resource for finding affordable properties. I wasn't able to locate any property in Missouri that I was interested in, but you can sign up for property alerts. So I'm looking forward to seeing the deals they have available in the future.

I'm not interested in buying property just for the sake of owning it, like everything else I put my hard earned money into, I want property investments to provide income. I'm always looking at rental properties, with an eye toward investing. So far I've yet to take advantage of any of these, although I have come across some great deals. I am currently in the process of positioning my other investments to throw off more cash so when the right deal comes along, I'll be in a position to take advantage of it. I don't want to do more and more work, I want my money to work for me so I don't have to work so hard. Like I tell my friends and co-workers, I don't live to work, I work so I can have a nice life.

Friday, July 18, 2008

Oil Prices and A Few More Stocks I Like

I've written about oil prices before, saying it was all about price and demand. Well now everyone seems to be in agreement. When the price reached the point where most Americans had to start cutting back, the price is beginning to falter. Seems everybody is backing away from their predictions of $200 dollars a barrel for oil and $5 dollar a gallon gasoline. I truthfully never expected it to get to that price. Most of the people I know and work with simply could not afford it. They are struggling now at $4 per gallon, so add another $1 and they simply would be out of commission. When the public can no longer afford something, no matter what it is, the drive behind increasing prices is gone. The new catch phrase, "demand destruction" is occurring on a huge scale, just as I predicted it would. Will China and India continue to drive demand? Only if they can sell their products and how is that going to happen if everybody is spending their money on gasoline? Demand destruction is occurring, not only from consumers switching to smaller cars and driving less, but also from the shift to alternate energy sources, such as bio-diesel, solar and wind energy, all lessening demand for petroleum products. I wouldn't predict oil at $40 per barrel like the guy they interviewed on CNBC earlier this week, but I do see the prices dropping dramatically.

So how is this affecting my investments? Fortunately, since I'm mostly buying, the price drop in equities has been good for me. I'm searching for stocks that I feel have room for growth, solid earnings and pay current high dividends. While the share prices of my portfolio holdings have dropped, along with everyone else, my earnings from dividends have been increasing month after month. I am currently re-investing all dividend income in bargain priced dividend stocks. When the market starts to recover, I will re-evaluate my investment plan and possibly shift dividend income to fixed income opportunities or real estate investments. But while the prices are down, I'm being greedy and adding to my holdings as much as possible. Whether we're at the bottom or not, STOCKS ARE CHEAP! Buy when they're on sale.

My latest additions to my portfolio include Biovail Corporation (BVF), a pharmaceutical company with a whopping 15.10% dividend yield and Windstream Corporation (WIN), a small rural telecom with solid earnings and an 8.4% dividend yield. Both should fit nicely with my overall plan of building a portfolio of high dividend stocks and increasing monthly income from dividends. Any price appreciation on top of that is just icing on the cake. Since I have no intention of selling any stocks within the next several years, I can wait on price appreciation.

I currently don't need any of the income from my stock portfolio, but the ever increasing flow of dividends into my money market account make it a lot easier to afford new investment opportunities as they present themselves. Robert Kyosaki, one of my favorite writers, says to "look at a deal a day." I've made that my goal. I can't always afford the deals, but it keeps my mind active and on the lookout for my next investment.

Friday, June 27, 2008

Quarterly Update

Here we are at the end of June, boy the year is sure going by fast. The stock market took a tumble yesterday and once again the mainstream media are abuzz with their perpetual doom and gloom style of reporting. It's times like these that test investors souls. You just have to keep a clear head. Remember, even during the great depression there were companies who made money and who's stock prices rose. It's time to get busy and identify the great stocks that are selling at bargain basement prices.

Speaking of which, I've been adding to my portfolio on a regular basis. My real regret right now is that I just can't come up with enough cash to buy everything I'd like to own. While everyone else is saying sell, sell, sell, I'm looking to buy everything I can get my hands on. But I am being very selective, doing a lot of research on prospective stock investments.

As for the rest of my wealth building plan, it has been a great year. My small rental property maintenance business has been sailing right along. Without much effort, I've been able to more than double my business there, even though my new job is taking a lot of my time. Another of my small business ventures bit the dust, but like everything in life, it was a learning experience for me, so it was not an entire loss. Considering I had only time invested in the venture, and considering it did make some money which I rolled in to dividend paying stocks, I can't really call it an entire waste of time. After all, the stocks purchased with the money earned will continue to pay dividends, so even though the business itself failed, I will continue to earn income. Think how great it would be if we could turn all our failures into money makers!

As I stated in an earlier post, I have already met or exceeded most of the goals I set for myself at the beginning of the year, so I've adjusted my plan and made new goals for the second half of the year. I've gotten more aggressive and set my sights higher, which has kept my mind busy thinking of new ways to reach my goals. My life has been changing rapidly for the better and I keep learning of more and more ways to work towards my ultimate goal of no longer needing a job. Remember, job stands for "just over broke," so everyone should be looking for ways to build income outside of work. There is no real job security anymore.

Monday, May 26, 2008

Summer Cost Cutters For My Investments

For traders in the stock market, summer is usually a time for laying low. "In May, go away" as the saying goes. For my personal investments it is usually a time to re-evaluate my plan and assess changes that will improve my portfolio performance. I also think of it as a good time to pick up stock in some of the big blue chip companies while prices are down. As an example, I sold my AT&T stock in early spring of last year, while I had a nice price gain and bought the company's stock back in late summer when the prices were down. From the profit I made in the spring, I was able to purchase more shares of this great company when I bought back in at the lower prices. It has performed quite well since.

As for improving performance of my portfolio, this year I have decided to increase the dollar amount of each of my investments and purchase larger blocks of stock each time. While I'm building up cash for stock purchases, the money is parked in my money market account where it earns a nice interest rate. By increasing the size of my investments each time, I will save on brokerage fees. I don't think anyone would consider the amount I pay in brokerage fees to be extreme, but every dollar you save is like earning two, since the saved dollar has already had the taxes taken out. So I'm looking to save every way I can on investment related costs.

The biggest threat to my portfolio this year is high gasoline prices. Not only does this have a negative affect on the economy overall and on the cost of doing business for a lot of the companies I invest in, it drastically reduces the amount of discretionary income I am able to devote to my investment plan. I believe we will see a break in gasoline prices soon. I just don't think it's possible for the average working person in the U.S. to continue paying ever increasing gasoline prices. People have already started to make drastic changes, replacing larger vehicles with smaller ones, riding bikes to work or taking public transportation, in many cases they never would have considered these things before. As for me, I simply don't drive any more than I absolutely have to. All these things add up and when the demand falls, so will gasoline prices. My plan B, you should always have a plan B, is to change jobs and reduce my commute or to relocate closer to my work place. For now I'm cutting back and waiting for a price break. I would much rather be putting this money towards building investment income rather than burning it up in my car.

Wednesday, May 21, 2008

The Power of Thoughts

"The Law of Attraction attracts to you everything you need, according to the nature of your thought. Your environment and financial condition are the perfect reflection of your habitual thinking. Thought rules the world." - Dr. Joseph Edward Murphy

In other words, you are what you think. If you think you will fail or that you will be a resounding success in life, then you're absolutely right.


Sunday, May 18, 2008

Create A Cycle: How I Stopped Living Paycheck To Paycheck in 30 days

What a fantastic article! Everyone should read this, especially those who think that it's just not possible to break the cycle of living paycheck to paycheck. Thank you Perry for a terrific post!

Create A Cycle: How I Stopped Living Paycheck To Paycheck in 30 days

Saturday, May 17, 2008

Personal Wealth Is Not All About Money

I recently read this quote on wealth and thought it an appropriate reminder that true wealth is not all about money. I thought I should share it with my readers.

Wealth Comes In Many Forms

My mentor, Bob Proctor, once said, "Don't cry over anything that won't cry over you." People will often create tremendous suffering for themselves just because they're in debt or have lost money. They'll generate intense feelings of anger, sadness, and fear, all of which are destructive and actually make it more difficult for them to regain the wealth they lost. Because they're upset, they may fight with their spouse over money or become severely depressed, not realizing that the power to create abundance for themselves once again is always available to them.When you understand that money is simply one form of the tremendous force known as abundance or wealth, and that you can always receive riches from our ever-giving Universe, it becomes easier to let go of negative feelings about money and the destructive belief that material wealth is more important than other manifestations of abundance.

Ask yourself how much money you would take in exchange for your eyesight and your abundant health. How much would I have to pay you for you to give up your relationship with the person you love the most? My guess is that your health, your eyesight, and the people you love are far too precious to trade for any amount of money.If what you receive isn't money, open yourself up to it with gratitude and joy. Allow your creativity to flourish and you can discover ways to convert the abundance into the form you could most use right now.Wisdom and knowledge are types of abundance that we often overlook.

An antiques dealer I know often purchased items from homeless people who brought him furniture and other objects they'd found in the garbage.He was always gracious and kind to them, and one day one of his regular sellers, who was a homeless man, noticed that the dealer had recently acquired a gold record by a celebrity."You have that underpriced," he said. "I used to work in the music business. I know."The antiques dealer listened to what the man had to say and decided to take his advice and quadruple the price. A few days later, the dealer's dentist came in, got very excited about the gold record, and said, "Listen, I'd love to own that, but I don't have that much in cash to spend. How about if I do that dental work I recommended to you, in exchange for the gold record?"The antiques dealer was able to pay for expensive dental procedures he needed and couldn't afford, because he valued the abundance that came to him from an unexpected source and converted it into something he could use.

Peggy McColl

Monday, May 12, 2008

My Latest Dividend Investment

Altria Group, Inc. (MO, NYSE) engaged in the manufacture and sale of cigarettes and other tobacco products through their wholly owned subsidiaries, Phillip Morris U.S.A. and Phillip Morris International. Altria Group is also the majority shareholder in Kraft Foods, Inc.. With a current dividend of $3.00 per share, which represents a 14.30% yield on investment, I think this will make a great addition to my portfolio. The rest of the numbers look good, with a 34% return on equity, very low price to earnings of 4.70 and price to book of 2.38 and reasonably low debt. While I realize cigarette and tobacco products are a shrinking market in the U.S. and some of the more developed countries, their sales are increasing in other parts of the world, so I think they will be making money for several years to come. With a dividend payout ratio of 68%, the company is retaining enough earnings to service debt and provide for future growth and possibly even allow for increases in future dividend payments to shareholders. With a recent price of $20.94, the company is looking like another bargain stock to me, so I'm buying in.

Now I know all the people who are going to argue about the morality of investing in a company producing tobacco products and I don't intend to defend tobacco over the health problems it causes. I am making this decision strictly from an investors point of view, not a moral point of view. As for the people who are on their soap boxes about the evils of smoking, I would point out that every time I see something on the news about another group rallying against smoking, I can't help but think about how they got to their meeting. Can you really in good conscience berate a bad habit like smoking if you're driving an SUV or any other gas burning vehicle? Cigarettes pollute the air and cause major health problems, but so do the vehicles we drive and the foods we eat and a lot of other things. So, the way I see it, it's "six of one and half a dozen of the other" as my mother always used to say.

Thursday, May 8, 2008

IRA's, 401k's and Mutual Funds Revisited

On February 25th of this year, I wrote an entry in my blog explaining why I don't invest in mutual funds.

On November 14th, 2007 I also wrote an entry concerning my views on IRA and 401k retirement accounts.

Needless to say, my views are not extremely popular. I'm sure that, due to these two articles, a lot of readers and so called "investment professionals" would question my credibility as an investor. However, I'm not exactly writing to give investment advice to anyone. I'm writing about what I personally am doing to build my investment portfolio, it's up to the reader to make up their own mind about what's right for them.

Having said all that, I thoroughly enjoyed reading Robert Kiyosaki's latest post on the Rich Dad blog, "Playing the Mutual Fund Lottery." I came to many of the same conclusions expressed in this article after my experience with mutual fund investments and after reviewing both IRA's and 401k's and deciding against investing in them for retirement. Robert Kiyosaki's credibility, as a successful investor and best-selling author, is unimpeachable. Read what he has to say on the subject of mutual funds and retirement accounts at:

Tuesday, May 6, 2008

Why I'm Not Investing In Gold

It's the gold rush all over again! No, they haven't discovered gold in Missouri, not to my knowledge anyway. I'm talking about the hype in the gold market since prices have soared. Everybody seems to be rushing in to gold, with some reasoning it is a hedge against losses in the value of the dollar or the stock market. Sounds reasonable, the price certainly has skyrocketed as the dollar dropped and markets went into turmoil. However, I think that now is not the time to be investing in gold. If you wanted to invest in gold, the time to invest would have been when gold was $300 an ounce instead of near a thousand dollars an ounce. If I had bought gold then, I would be selling now. Perhaps the price will continue to climb, maybe even going over $1,500 or as some are predicting, $2,000 an ounce although I tend to doubt that.

I think gold is at or near the top. When everyone wants in, that's usually a good time to exit. With recent buzz that the Federal Reserve may be through cutting interest rates and may begin to actively fight inflation and work on strengthening the dollar, gold prices are likely facing a correction. I doubt we'll see $300 an ounce again any time soon, but I do see prices dropping dramatically when the Fed's shift their focus to fighting inflation. Like I've mentioned in previous articles, this has all happened before. I was there for the last big run up in gold and silver prices and got caught up in the whole ordeal at exactly the wrong time. This time around, my investment strategy kept me away from precious metals, since I tend to invest for current income as well as future growth and income. While it is possible to make some fantastic gains in gold trading, it's not something that particularly interests me, so I didn't want to spend the time learning the business. But one thing I'm pretty sure of is, now is definitely not the time to be getting in.

I suppose, in the interests of full disclosure, I should mention that I do hold silver as part of my investment portfolio, in the form of silver coins. I never really set out to be a coin collector, but I have built up quite a collection over the years. I'm not seriously expecting a great deal of return on those either, but I like the coins and occasionally add to my collection.

Monday, May 5, 2008

Revising My Financial Plan for 2008

After reading Robert Kiyosaki's latest article in the Rich Dad blog about thinking big:

I decided I needed to make some revisions to my financial plan for the year. I have already accomplished many of the goals I set back in December of 2007 and I'm thinking that maybe I need to expand my plan. While I think it's good to set realistic goals, so you don't always set yourself up for failure, I realize now that my goals may have been too short-sighted. In other words, I've been thinking too small and need to expand my perception of what I am able to accomplish for the remainder of the year.

Of course it would be easier to leave things as they are and coast through the rest of 2008, knowing that I will have attained all of my personal and financial goals for the year. However, nothing worthwhile in life is ever really easy and if my true goal is to be on the fast track to financial freedom, then I'm going to have to come up with new goals and expand my plan to accomplish them. Once again I've gotten a wake up call from one of the best financial writers in the business. Thanks again Robert....

"You can achieve anything you want in life if you have the courage to dream it, the intelligence to make a realistic plan, and the will to see that plan through to the end." - Sidney A. Friedman

Saturday, May 3, 2008

National Healthcare

CNBC had a panelist discussion on National Health Care this morning, spawned by Hillary Clinton's appearance on the O'Reilly Factor, where they talked about her proposed health care program and how it would bankrupt the nation. I too believe that it is impractical to think that the nation can afford nationalized health care, since we really can't even afford the health care programs we have in place now. If everyone played by the rules, perhaps medicare and medicaid would be in better condition. However, after working several years in the health care profession, I know that it is rife with fraud. I have seen health care providers billing the government programs for services they did not provide. So any government run program is bound to be way to costly for the taxpayers to afford, simply because there is no effective way to control such a program. Add to that the fact that in countries with nationalized health care, the quality of health care leaves a lot to be desired and I believe a National Health Care Program is really only political rhetoric. Might be good for picking up votes but for all practical purposes it most likely will never happen.

So what should be done to solve the health care crisis? Perhaps the government should consider a national group insurance program instead. It could be a group insurance plan that is open to all legalized citizens and residents of the United States. The insurance premiums that individuals pay could be based on income to make it affordable for low income households. I know that people would argue that this would hurt the insurance companies, leading to loss of income and loss of jobs, but that doesn't have to be the case. The government could pass legislation whereby private insurance companies have to provide the coverage, perhaps offering tax incentives to the companies who comply. As for people who absolutely cannot afford to pay anything for insurance coverage, a tax code provision which allows for deductions of insurance premiums in addition to the standard deductions, should cover the cost for the poorest Americans. There would be a lot of details to work out, but it would keep the government out of the health care business while providing health care for everyone.

Of course I realize, this too will probably never happen. However, I just wanted to make the point that there are workable alternatives to a Nationalized Health care program. The bottom line is that the United States as I see it is nearing or has already gone beyond the tax threshold. When you see wealthier citizens leaving the country to escape high taxes and corporations parking earnings in overseas subsidiaries to delay tax payments or worse yet, leaving the country entirely, then it's a pretty safe bet that more taxes are only going to make our problems worse. Make no mistake, no matter what the politicians would have you believe, a nationalized health care program would mean more taxes and probably much more than any of us could afford to pay.

Wednesday, April 30, 2008

It's A Buyer's Market

I've been saying, for some time now, that it's a buyer's market as far as stocks are concerned. Courageous investors who are not afraid to ride out the turmoil in the current market can pick up fantastic bargains on U.S. stocks. I've been diverting as much cash as possible into stocks while the prices are down. Recently we've had a few run ups in prices, as investors question where the market is headed. Since it is impossible to know when the market will make a substantial recovery, the most prudent course of action would be to buy at, or near the bottom and wait it out. We may not have seen the bottom to date, however, it's my guess that we're getting pretty close. I can't help but recall the economic downturn of the late 80's, when the housing market was down, people were losing their homes, the savings and loans were collapsing from bad mortgages, the U.S. dollar was beaten down and there were advertisements running everywhere telling people to put their money in to gold, even though it was at an all time high. All these things occurred near the bottom of the stock market. We are seeing the exact same things going on now. When will the market turn? Your guess is as good as mine. All I really know is that we are presented with one of those really great opportunities to pick up stocks on the cheap and position ourselves to make a pile of money when the recovery does come. I personally invest for income and growth. I look for companies that pay good dividends and have the earnings to support those payouts, but also have prospects for growth. They are out there, you just have to look for them.

If you don't want to take my word for it, see what millionaire investor and best selling author Robert Kiyosaki has to say about stocks in his RichDad blog article entitled: Wednesday, April 30, 2008

When the Squeeze Is On, Bargains Abound

If I'd had any questions about my current investment plan, they were all put to rest when I read this article. Like I said in my last post, don't be afraid to admit that some people are just smarter than you are. Listen to what they have to say and figure out how you can use that to your advantage.

Monday, April 28, 2008

Don't Be Afraid of Listening to People Who Are Smarter Than You.

"Dependent people need others to get what they want. Independent people can get what they want through their own efforts. Interdependent people combine their own efforts with the efforts of others to achieve their greatest success." - Stephen Covey

Even though I haven't had the benefit of an extensive secular education, I still consider myself as pretty intelligent. However, one thing I have learned is, there is always someone smarter. When it comes to investing, no matter how much I learn, I know there are people who are more in the know than I am. A very important part of intelligent investing is to take advantage of advice from people who are smarter than you.

I recently came across this blog by Michael E. Brisky:

I didn't have to read too many postings before realizing this guy knows way more about investing than I do. So you better believe I'm going to be keeping up with his postings. While I might not take advantage of every piece of advice he gives, I think this guy definitely knows what he's talking about. Thanks Michael, keep up the good work!

Sunday, April 27, 2008

Motivational Reading

Everyone needs a little extra motivation from time to time. I recently discovered this fantastic blog site containing motivational quotes. I think my favorite one I've read so far is:

"The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term is the indispensable prerequisite for success." - Brian Tracy

I think this accurately describes my life right now. Delaying some of my wants in the short term to enjoy more in the long run. If you'd like to check out this site, the web address is:

Saturday, April 26, 2008

The Commodities Bubble

There seems to be a lot of people in the news media questioning whether or not there is a bubble in the commodities market and whether we're facing a collapse in the record high prices of late. From what I'm seeing I believe that the commodities market is headed for a major collapse. With inflation in gasoline prices and the troubled housing market, consumers are cutting back on spending. Retailers are already complaining that the high food and gasoline prices have cut store sales as shoppers are left with less discretionary income. Since the high demand for oil and metals are basically driven by developing countries, whose economies are driven by consumer spending to purchase their products, when shoppers cut back on buying their products, how long will their demand for commodities continue. Eventually they will have to cut back on their consumption when there is decreasing demand for their products. If you factor in the commodities traders who are artificially inflating the prices of oil and precious metals by bidding up prices in an attempt to hedge against losses in the stock market, when demand drops and the prices start to slip, these people are going to flee the commodities market and prices will collapse.

Once again, it's just basic economics. Supply and demand, when the demand decreases, the prices will fall. I believe we are very near or even at the point when the commodities bubble will burst. I also believe that investors in commodities futures will lose a fortune. As far as I'm concerned, it is much wiser to invest in stock in well run companies, who have steady earnings and pay dividends. CNBC, just this morning, was talking about the casino atmosphere in the trading of commodities futures and they were discussing possible government regulation to help minimize the affect of trading on the price of oil. If the government steps in to regulate futures trading, then it's a sure bet the prices are going to be affected. When will commodities prices start to collapse? Your guess is as good as mine, but I'd be willing to bet it will be very soon.

Friday, April 25, 2008

Recommended Reading

I recently discovered this blog through comments posted to my blog, you might want to check it out:

Thursday, April 24, 2008

A Time For Intelligence and Self Reliance

"Everyone thinks of changing the world, but no one thinks of changing himself." - Leo Tolstoy

Starting next week, taxpayers will begin receiving refunds from the government's economic stimulus program. As I stated in an earlier posting, I'm all for the government returning money to taxpayers, however I think it's important that we keep in mind that these handouts simply cannot continue. The cold hard facts are that the government is running out of money and it's time for every responsible person to start using their heads and become more self sufficient. Our civil and religious leaders can only do so much. We all need to start taking more action on our own behalf. If you haven't educated yourself on money management and investments, now is the time to do so. I recall reading an article over 10 years ago on this very subject. One thing that really stood out to me from this article was when they said, "the rich will continue to get richer and the poor, poorer." At the time I remember thinking to myself, I need to find out how to become rich. While I had already done a lot of studying on finance and investments, I renewed my commitment to educate myself and stop waiting for handouts or "my lucky day." To quote from one of my favorite books, The Richest Man In Babylon, "good luck favors men of action." So if you haven't started working towards financial independence, take action now. Educate yourself in business and investing and you will be in position to benefit from tough times ahead by being able to see the opportunities. The opportunities will be there and there will be people making money through the turbulent times, just make sure you're one of them.

Billions and billions of dollars have been thrown in to solving this nations problems and we haven't made much progress. Money does not solve problems, intelligence solves problems. We, as a nation, have dug ourselves in to a hole and it's time we stop digging. It's time for all of us to step back and take a second look at the way we do things in our own lives. Are we using all of our hard earned money wisely? Have we planned for our own futures, taking in to account that social security, government health care, private sector pensions may not exist? The world is undergoing rapid change. Now is not the time to be asleep at the wheel. John F. Kennedy once said, "Ask not what your country can do for you, but what you can do for your country." Imagine how much better off we would all be if everyone were taught from an early age to work towards financial independence. It is easy to get out of debt and build income producing assets to care for ourselves now and for years to come. We simply have to decide to do it, set some goals, make a plan and follow through.

"A slave is one who waits for someone to come and free him." - Ezra Pound

The Rich Dad Blog

I am excited that one of my favorite authors has started a blog! The author of one of the best books I've ever read on making money, Rich Dad, Poor Dad, now shares his current views on our economic situation and continues to educate people on making money.

If you want to check it out, you can find the RichDad blog at:

Definitely recommended reading!

Wednesday, April 23, 2008

The Blue Collar Investor: The High Price of Oil

I first wrote about the high price oil back on January 4th of this year in

The Blue Collar Investor: The High Price of Oil

When I wrote about what was driving the market, I discussed commodities traders as being behind a lot of the rise in prices. If you found this article interesting, you might like to read the article on

It too, talks about the price of oil being bid up as investors have fled to commodities as a hedge against inflation. Frankly, I believe that they are in for a big let down. Once again, it's supply and demand and the market will find a price where the demand will begin to drop. I think we are near that price. We'll have to wait and see.

The Blue Collar Investor: Don't Be Totally Dependent on Your Job

Just in case my article on my new job leads the readers to think that I've forgotten that I wrote about not being totally dependent on your job,

The Blue Collar Investor: Don't Be Totally Dependent on Your Job

I wanted to add a few things. While I am enjoying my new job, I have also been very busy building my own small business part time. I am doing quite a lot of contract jobs on my own, mostly service type work. Since I started building my own business a few years back, I'm finding it easier to pick up extra work and add additional income to put towards building my asset column. All money I make outside my regular job goes toward building my investments in one way or another. So even though I'm very happy about the new job, I am still working towards my goal of not needing a job at all.

Tuesday, April 22, 2008

The Blue Collar Investor: My Investment In AT&T

If you read my post on April 3rd of this year about my investment in AT&T

The Blue Collar Investor: My Investment In AT&T

you might find this article on of interest.

It's nice to see that some of the stocks that I've chosen for my core holdings are doing well. Makes me feel like I'm on the right track. It seems, the more I learn about stock analysis, the easier it is to pick stocks with consistent earnings and ones that are able to support increasing dividend payouts.

Sunday, April 20, 2008

My New Job!

One of my goals for 2008 was to get a new job. I'd been at my old job for almost 9 years and it was pretty much a go no where situation. I felt the need for a change and I realized that if I wanted to accomplish my goal of building personal wealth, I would have to move on. I'm happy to report that I have a new job!

I'm still working in the restaurant business, but I started as an assistant manager on the new job. I've been there for 3 weeks now and things are going great! I'm enjoying going to work again. I feel like I've got a lot more opportunity with this company than with my old job. The franchise owners are growth oriented, with plans for expansion to several locations throughout the state. The corporation itself has plans for expansion nationwide, so I feel like I'm on the ground floor with a lot of opportunities ahead of me. I can see this move as the start of something great as far as my professional life, but it will also benefit my plans for building residual income from my investment portfolio. What's really exciting about this situation is that I've done it once before with fantastic results. When I lived in Georgia, I went to work for a struggling restaurant operation as an assistant manager and helped turn the place around. We went from last place in sales in a franchise chain of 12 restaurants, to second place, only behind the training store. I was in a position then to take over as general manager, but decided to move back to Missouri before I was promoted. Now I'm basically in the same position. If things work out the way the owners want them to, our general manager will move on to open the next restaurant, being promoted to district manager and I will take over as general manager with a nice boost in pay! Only 3 weeks on the job, we've already boosted sales and are well on the way to a profitable operation. So I'm thinking that opportunity sometimes does knock twice. This time I intend to see it through.

As my income from the new job increases, the additional money will go straight in to my investment accounts. If everything works out, I would only need to work another 5 to 10 years and I would be free to retire. However, I'm enjoying the new job so much I could see working longer. The bottom line is that I've accomplished one more goal on my action plan for 2008. Just got to keep working the plan and reaching the goals, then I'll set new ones and go from there.

Sunday, April 13, 2008

My Latest Stock Find, New Zealand Telecom!

New Zealand Telecom (NZT on the NYSE) provides a full range of telecommunications products and services in New Zealand including local, national, international and value-added telephone services, cellular and other mobile services, data and internet services, equipment sales and installation. They are also the third largest telecom in Australia. I came across NZT while running a stock screening for high dividend stocks on CNBC's website. Only 4 stocks met my search criteria, with NZT being the best of the four.

Their recent share price of $14.31 is well below the 52 week high of $22.07 and they currently have a price to earnings of 2.2 with a return on equity of 47.80%. Their price to book is only 1.77 and they currently have $3.18 per share in cash. The dividend per share is $1.05, which represents a 7.4% dividend yield. They have very little debt, so when you consider all these things together, their dividend should be quite sustainable with room for increases in the near future. The also retain sufficient earnings to provide for future expansion of business. So while I found this stock while searching for a dividend play, it also fits in well as a growth stock.

To fund my purchase of NZT I sold my shares in Sara Lee (SLE) and Merchants Bank of Vermont (MBVT). While I still consider both of those companies as good long term investments, I think investing in NZT will better fit my current investment goals as far as increasing dividend income and building my cash reserves in my money market account. I also feel that NZT has a much better chance of increasing share price, providing for future capital gains. I've already placed the order to buy NZT when the market opens Monday morning. I think they will make a wonderful addition to my portfolio.

Thursday, April 3, 2008

My Investment In AT&T

I've held shares of AT&T stock in my portfolio off and on for the past 3 years. Early last year I sold all shares, which I had purchased when the price was down, at around a 25% profit. I had already gotten paid several quarters worth of dividends and got an additional cash and stock payout when my shares in the original AT&T were bought out by SBC communications. I thought SBC had the right idea to change their name to AT&T when the buyout was complete. After all, if you wanted a franchise type name and a name with some great history behind it, you couldn't ask for a much better than AT&T.

At any rate, I sold my shares out to take the profit on the increased stock price, figuring that I could buy back in on a price drop and make the company one of my core holdings. Sure enough the price did go down and I was able to buy back more shares than I owned originally. Barring any unforeseen occurrences I think the company will do well for several years to come. They currently pay $1.60 per share in dividends, which represents a 4.1% yield on their recent price of $38.72 per share. Their earnings per share of $1.94 should be more than adequate to maintain the dividend and fund operations. In addition the company has very little debt, a great management team and an exclusive contract with Apple for the iPhone, so I'm thinking things are looking pretty good for future profits. While the share price is down some from the 52 week high of $42.97, I've found that it has added some stability to my portfolio during the current drop in the overall stock market.

What makes this investment even more appealing for me personally is the fact that I have been a customer of AT&T for the past 2 years. All my personal phone service is through them and I've been extremely happy with their service. I got a great deal for my cell phone package over the Internet which included a free Motorola Razor V3. So every month when I go online to pay my bill I really don't mind so much, because I know I'm going to get some of that money back in the form of dividends each quarter. What could be better than that?

Saturday, March 29, 2008

Is The Market Set For a Comeback?

I just finished reading several articles on, one of my favorite financial sites. I found several points of interest regarding the economy and the markets current status and where we may be headed for the rest of the year. It seems several experts are now thinking that the stock market may have reached a bottom and is set to make a slow but steady comeback for the rest of this year. There was also an interesting article regarding commodities prices, where they talked about a possible burst of the bubble in agricultural products and a possible decline in oil and gold prices as well. I tend to agree with their assessments. As early as January 4th of this year I wrote about the run up in oil prices and how I didn't think they were sustainable. I don't think we'll see extreme price drops, but I do think there is room for a significant correction in oil as well as gold prices. If you check my blog entry on January 12th of this year, you'll note that I was talking about the drop in stock prices and how I thought it was a great opportunity to pick up some bargains and add to stock holdings, instead of getting caught up in the panic and selling stocks.

I still think we're in for a wild ride with the stock market, but I do believe that we are at or near the bottom. One thing I know for sure is that there are a lot of bargain priced stocks right now and I have continued to add to my personal portfolio while the prices are down. Personally I'm hoping for the market to stay near where it is, at least until next fall, so I can continue to buy stocks on the cheap. This whole downturn has allowed me to add to some of my current positions and to pick up some stocks that I have wanted to own, but considered too pricey in the past. So even though it's been a tumultuous time for me, just like everyone else, the brighter side has been that I've been able to increase my holdings substantially, which wouldn't have been possible at the higher prices before the market downturn.

Our economy is facing some extremely turbulent times, but if you're like me and you believe that it will all work out in the end, I definitely think it's time to be getting set for a market comeback. Like the saying goes, "You have to be in it, to win it."

Monday, March 24, 2008

Buying More Universal Insurance Holdings, Inc.

I've been a fan of Universal Insurance (UVE) for quite a while now. I've held shares in my portfolio as a long term investment. With the most recent drop in the stock market, their numbers have become even more attractive. While regulatory changes in the Florida insurance market have had an impact on the company's gross premiums written, I believe their expansion plans and recent actions taken to implement those plans will more than balance out any temporary setbacks.

With the current price, as of this posting, of $3.38 the stock is selling near their 52 week low, allowing for a lot of room for price appreciation. The decreased price per share also makes their dividend yield of 8% much more attractive. Since this 8% yield represents only a 15% payout ratio, the company is retaining plenty of earnings for future expansion. Add to this a return on equity of 69.30% and it looks to be a fantastic investment opportunity.

With all this in mind, I've put in an order to purchase additional shares for my portfolio. This will lower my average price per share for my total investment in UVE and at the same time increase my overall dividend yield. It will also put me in a better position to benefit from future capital gains as the price per share increases. So I'll continue to monitor their progress and provide updates from time to time on how this investment is working out.

Tuesday, March 18, 2008

Quarterly Update on My 2008 Investment Plan

Today was a good day for my stock account, but like everyone else I have lost money over the first quarter, at least on paper. I'm pretty comfortable with the investments in my portfolio right now and have no intentions of selling, so I have no realized losses. I have increased my dividends on a monthly basis for the first three months of the year. My cash balances in my money market account, savings and interest on checking accounts have all increased, so I have met those goals for the first quarter.

Recently I reviewed my investment plan to see if I could fine tune it even further and I switched from a monthly stock purchase plan to a quarterly one. I will still be adding money to my money market account each month, but by investing this money on a quarterly basis, as opposed to a monthly basis, I will reduce my commission cost substantially and increase interest income for the year by carrying a higher average balance in the money market account. This should boost my total return and at the same time increase my cash reserves in case I should have any unexpected expenses.

In April I will be starting a new job, which I'm really excited about! While the hourly pay is the same, I will be getting more hours and have a lot more opportunity for advancement. I'm also very impressed with the owners of this new company, I'm sure I'll be much happier working for them than I have working for my current employer. So I have accomplished a couple more of my goals for the year in finding a new job and increasing my income from my job.

Even with the turmoil in the stock market, I think this is going to be a really good year for me. I'll keep fine tuning my plan for the year and making adjustments as needed and I'm still convinced it is a fantastic time to pick up bargain priced stocks, so I'm excited to see what new opportunities arise. I'll give a brief update each quarter and let the readers know how things are going.

Friday, March 7, 2008

A Simple Fix For the Mortgage Crisis.

I think sometimes government and big business tend to forget the K.I.S.S. principle when faced with a crisis. (The K.I.S.S. principle being, keep it simple stupid.) With banks facing record foreclosures and losses on bad mortgages and home owner's losing their homes because they are unable to pay the mortgages when their monthly payments go up, due to interest rate adjustments, it's clear that something needs to be done. Obviously no one wants to lose their home and the banks and mortgage companies don't want to lose money. Clearly this problem is too big for a government bailout and it's unthinkable to ask taxpayers to pay more in taxes for such a bailout. So what would the simple answer be?

I think it would be a good idea for the banks and mortgage companies to re-write the loans instead of foreclosing and give the struggling homeowners a fixed rate mortgage. From what I've heard in the news, they all seem hesitant to do so because it would cost shareholders some profits. Well as one of those shareholders who have lost a great deal of money already, due to poor business practices and lack of corrective action, I personally would like to see them get off their duffs and start earning their fat incentive packages for a change. Inaction is the real problem here. Nothing has ever been accomplished by a lot of hang wringing and moaning. I'd rather see the return on an investment drop than to see my shares become worthless because nobody was willing to give an inch. If the deal they made on the mortgage is unsustainable, then they need to make a new deal. One that the homeowner can afford to pay. Why would you want to stick to a payment or an interest rate when it becomes obvious that it is beyond the ability of the majority of mortgage holders to pay? There is absolutely nothing to be gained and a whole lot to lose.

So, in my opinion, it would be to every one's benefit, as well as the benefit of the economy overall, to start re-writing these mortgages and extending terms and reducing and giving fixed interest rates and get rid of the adjustable rate mortgages all together.

Tuesday, March 4, 2008

$35 Billion Dollars of Our Tax Money Goes To France?

I know I can't possibly be the only one outraged by our government's decision to give the $35 billion dollar contract to Airbus, a French corporation, over the United States Boeing Corporation! Have these people completely lost their minds? Here we are in one of the worst economic slow downs in years and they are giving jobs and money away to another country?

I have nothing against the French, but I for one would much rather see my tax dollars go to contracts that put United States citizens to work. Haven't government and corporate policies over the last several years sent enough of our jobs out of the country? Will they not be satisfied until they have given away so many jobs and taken so much money out of the hands of hard working Americans, that we end up being the third world country? Yes we've helped a lot of the third world countries to improve their economies, but at what cost to average U.S. citizens? When there are millions of people losing their homes because they can't pay the mortgages and foreign sovereignty funds are snatching up shares in our corporations right and left, how can the government justify giving any major contracts to a foreign corporation.

I know about the bribing incident and the surrounding scandal, but that's not reason enough as far as I'm concerned. It's time for average working class Americans to let our elected officials no that we've had enough. Stop the export of jobs and tax dollars! If they do not take the actions necessary to do this, then they should be voted out of office! Let your congressmen and state senators know that it's time to create real jobs for the people who elect them. After all, they are supposed to represent us, not France or China or India but the citizens of the United States of America! If they don't want to represent our best interests then we need to vote them out of office.

Friday, February 29, 2008

Watch What The Rich People Do!

I'm sure that just about everyone who has read anything about investing has heard the expression, "If you want to be rich, watch what the poor people do and don't do it." While a simple truth in itself, the other side of the coin is just as valid, you need to also watch what the rich people are doing and follow their example. I'm not talking about the people who look rich but are up to their eyeballs in debt, I'm talking about the truly wealthy.

If you've kept up with the financial news lately, you'd think that everything is falling apart and there's no real hope for a stock market recovery. But what are the truly rich people doing? You can rest assured they are not sitting on the sidelines. With some of our nations best corporations selling at share prices well below a year ago, or even 3 months ago, you can bet they are using this opportunity to buy on the cheap. I read recently that Warren Buffet's company just purchased more shares of Kraft and Wells Fargo, both great companies selling at unbelievably low prices right now. I haven't read much about Bill Gate's investing habits, but I think it's probably safe to assume that he's in the buying mode also. After all, you can never be too rich.

Shouldn't it also be a wake up call to all investors in the United States when so many foreign sovereignty funds are beating down our door to buy huge positions in some of our largest companies? I certainly think so. Now is not the time to be faint of heart and follow the heard mentality that is gripping our investment community. Now is the time to buy, buy, buy! Have we reached the bottom? I certainly couldn't say, but one thing I'm sure of. Eventually our economy will recover and the stock market will come roaring back, just as it has in the past. So I'm going to do what the people with the real money are doing and buy everything I can afford while the prices are cheap.

Monday, February 25, 2008

Why I Don't Invest in Mutual Funds

I know I'm going against the trend here, but I no longer invest in mutual funds. When I first started investing, I held shares in 7 or 8 different mutual funds, thinking, like so many others, that this would provide great diversity and lower my risk of losses. Well I did lower my risk of losing money, however, in the years that I held these funds I made practically no money! I would have been better off at the time to simply have kept my money in a regular passbook savings account. It wasn't that the share prices did not go up, it was the expenses associated with the funds. The fees charged by mutual funds eat up a great deal of money that, to my way of thinking, should go to the investors. Yeah, there are a lot of people getting rich off mutual funds, but they are mostly the people who manage the funds and the company's they work for.

The real turning point for me was when I purchased shares in Mobil Oil six months prior to their announcement of a merger with Exxon. In those six months my investment doubled in value and I sold my shares for a nice tidy profit. The only costs associated with this transaction were my broker fees for purchasing and selling the stock. Of course I did have to pay capital gains taxes, but you have to pay those on mutual funds too. What I didn't have to pay were exorbitant management fees for lackluster performance. Like Peter Lynch says in one of his books, you only need a few investments in stocks like this to make a lot of money. So I sold all my mutual fund shares and invested entirely in individual stocks. I've had several more great investments since then and some misses too, but I sure don't miss the fees.

Thursday, February 21, 2008

Tuesday Morning Is Out, National Beverage Is In!

I just finished reading a news article where the board of directors announced they were canceling the dividend for Tuesday Morning (TUES), while they pondered what to do with any future earnings? Since I think there should be no question in this regard, PAY YOUR SHAREHOLDERS!, I placed an order to sell my shares. When I bought in the price was good, the dividend was great and I really like their stores. I'll probably still shop there occaisionally, but it was time for their stock to go.

I will be replacing Tuesday Morning with National Beverage (FIZZ), whose products (Shasta and Faygo) I am very familiar with. I like the way this company strives to run a low cost operation and the fact that they've been in business for a very long time. Add to this a low volatility rating for the stock, a 5 year average return on equity of 14% and a dividend yield of 10.7% and this company is looking like a bargain to me. I have considered adding shares of this company to my investments in the past, but I have to say I'm pretty happy to buy in now with the price being roughly half of their 52 week high. All in all, I think this will make a wonderful addition to my stock portfolio.

Sunday, February 17, 2008

Recent Changes To My Portfolio

I'm always on the lookout for new stocks to add to my portfolio to boost my returns. I found two stocks that I think would be great additions to my investments and have decided to purchase shares in both. The first stock I am adding when the market re-opens Tuesday morning is CapitalSource, Inc. (ticker symbol CSE, NYSE). CSE is a beaten down financial stock that has suffered, in my opinion unjustly so, along with other financials during the sub prime mortgage crisis. There are a few reasons why I like this stock. With the recent price per share of $16.44 and an annual dividend of $2.40, the stock has a dividend yield of over 13%. During my research, I have read only good things about the management team and I really like the fact that insiders hold over a 30% stake in the company so they have a vested interest in the future of the company. While they do hold some residential mortgages, these are of the highest quality (no sub prime) and should perform well for the business. As if the dividend yield and good management were not enough to justify investing some money here, the current price is well below the 52 week high of $27.40, so there is room for price appreciation as well. I've already placed an order with my brokerage and expect to have some good results with this one.

The second stock I'm considering is CEMEX a Mexico based cement company. While the dividend yield on this one is not as attractive, I really like the fact that the company is retained a good portion of earnings for future expansion. They are truly an international corporation, with operations in over 50 countries worldwide. Add to this their near monopoly status in the cement business in Mexico and I think the future prospects for this company are very good. They have shown a knack for expansion through aquisitions and have very effective systems in place for keeping costs down. For my personal portfolio, this stock will be more of a growth play, but I will still benefit from current dividend payouts.

I didn't have quite enough cash to purchase shares in both of these companies, so I reviewed my current stock holdings and decided to sell my stakes in a utility company, which is currently having some accounting issues, and a couple of Canadian energy trusts. Although the CanRoys have been great performers (one of them doubling in price in less than a year, along with great dividend yields), I decided to limit my exposure to one energy trust and sell the others. I purchased shares in 4 different energy trusts last year when the prices were beaten down after the Canadian government passed unfavorable new tax legislation. Since the new taxes weren't set to take effect until 2010 (and may actually be overturned before then) I figured I could make some money off of the yields in the mean time. I have done quite well with these and will continue to hold my remaining stake in Pengrowth Energy Trust (PGH) which I consider to be the best of the 4 that I owned.

I believe these changes will further diversify my portfolio by investing in a multinational and help boost my dividend income as well. As always, before you invest in any of the stocks I write about here, I would recommend that you do your own research and decide whether these stocks are right for you.

Friday, February 15, 2008

The Number One Goal For Investors!

I've written previously about the importance of setting goals, both short and long term, when it comes to investing. I've recently given a lot of thought to what my number one goal should be. Of course I'm sure most people would say that their number one goal is to make themselves rich as soon as possible and I'm all for that. However, what one person's idea of rich is may be entirely different from the next person's. So I think it's more productive to come up with a more definitive goal, one that could apply to everyone.

After careful consideration, I finally decided that my number one goal is to build my investment portfolio to the point that it pays enough cash to meet my monthly expenses. Once I have attained this goal, then everything else is icing on the cake, so to speak. Let's consider what this really means for just a moment. If a person concentrates on building their investments to the point that monthly income from dividends, interest, rental income and so on is equal to the amount of money that they pay out every month to live, then they have reached the point where they are no longer dependant on a paycheck. At this point you could decide to stop working and you would have the money to cover all of your necessities. This is the point of true financial freedom! No longer are you tied to a job you don't like simply because you need the paycheck. You can choose to work as much or as little as you prefer. Of course this does not mean that you are truly rich, but you could consider yourself well off. I plan to continue working even after I have reached this point, so that I may build additional investments and income to keep my wealth growing each year. Once I am sure that my investments and residual income will continue to grow on their own, then I will retire, from the job market anyway.

So the number one goal as I see it:

Build residual income until it meets all monthly expenses.

Saturday, February 9, 2008

What To Do With A Tax Refund?

It's never really much of a question of where my tax refund (usually around $600) is going each year. I regard tax refunds as a small windfall of cash and like every small windfall of cash I receive, it goes directly in to my investment account. This year it went partially to my money market account and the rest went to purchasing more shares in Universal Insurance (UVE), a small but growing insurance company in Florida. (They recently announced plans for expanding to 5 additional states.) I was pretty happy knowing that this small refund of my tax dollars went towards increasing my future income. What better use could be made of the money?

I have to say that I was shocked by what I've heard from friends and aquaintances about the way they've used their refunds. I realize it's their money and they have every right to spend it as they see fit. However, these are the same people who moan and groan about not having the money to pay their rent, or their electric or telephone bills each month. Yet they're going out and buying a lot of high ticket items that they don't really need and for the most part, wil just end up costing them even more money. I recently read an article about what you should do with your tax refund. One thing that I really appreciated was the account of one woman who said that she uses the money to make her life easier. Instead of spending it, she pays her rent, utilities, phone bill and internet for the entire year. That way she knows that if she loses her job she doesn't have to worry about her kids having a roof over their heads or heat in their home while she's on the internet looking for a new job. If your not going to put the money to work building your passive income, then this woman has the right idea.
Under the economic stimulus program, many of us will be receiving an extra tax rebate later this year. So it's not too late to come up with a plan to use this tax rebate wisely.

Thursday, February 7, 2008

High Dividend Yields, Not Always A Good Thing.

I recently saw an advertisement for an investment website touting a stock with a dividend yield of over 17%. Sound too good to be true? Well there are definitely stocks with extremely high dividend yields, but you have to ask yourself if that's always a good thing. Why is the yield so high? In some cases a stock carries a high yield because the company has fallen on hard times and the stock price has dropped dramatically. If that is the case, how long do you think it will be before the board of directors decide that wisdom dictates a corresponding cut in the dividend payout. At other times a company may have a very high dividend, but they may not have the sales to maintain the payout rate and when a company reduces their dividend you can bet that their share price is going to drop, at least in the short term, because all of the shareholders who invested their money to collect the dividends are going to bale. Certain sectors may also fall on hard times. I personally got clobbered on my investments in real estate investment trusts in the past year. I suppose in retrospect, I should have seen it coming, but regretably I held on to some of these shares way too long. That's why I say it's not always a good thing to buy a stock for the high dividend. It may be better to settle for a lower yield, with potential for future increases, than a high yield that tanks.

You have to do your research and make sure the underlying business can support the payout. You also want to make sure there is room for increasing dividends in years to come. If a company is retaining a portion of earnings, has little debt and is carrying a substantial amount of cash on the books, then it's a pretty safe bet that you don't have to worry about collecting your dividends. Once you've identified a company with good potential and you've made an investment, it's also important to keep up on what's going on with the business. Read the annual reports, keep up with news stories about the stocks you're invested in and the economy in general. If you identify a potential problem affecting the investments earnings and thus their ability to pay the shareholders, it's time to consider selling the stock and investing your money elsewhere.