Friday, August 28, 2009
Don't have big plans for the weekend, the weather is kind of rainy here. Thought I would sit down and go over my retirement plans. When I retire, instead of buying a condo or renting, I thought I'd buy a 4 plex apartment building, live in one apartment and rent out the other 3 for extra retirement income. I don't really plan on managing the building, although I probably will do the yard work as long as I'm physically able to, since I like that kind of work. I like the idea of having more than 1 or 2 sources of income when I retire. If you have money coming in from multiple sources, it only makes sense that you're more likely to have a comfortable retirement.
At any rate, have a great weekend everyone!
Tuesday, August 25, 2009
Oil is expected to average above $73 in 2010, and with a recovery in the global economy, could go even higher. Which means the Canadian trusts would be in a good position to make money. I've decided to ease my way back in by buying shares of Pengrowth Energy Trust.
Pengrowth (PGH) currently has a dividend yield above 12% on their recent share price of $8.87. Their earnings are currently sufficient to maintain their dividend payout and I expect those earnings to go up. Of course Canada will take their share in taxes, but I do like the idea of another high dividend payer in my portfolio.
Monday, August 24, 2009
I am against the proposed health care reform, because of the abuses of medicare and medicaid. If they are unable to monitor these programs effectively, then how do they expect to administer a new program? I believe Senator McCaskill, and most elected officials, are relatively intelligent people, so I can't imagine they truly believe a new bureaucracy is the answer to our nations' health care problems. So we have to ask ourselves, what is the motivation for passing such a program, that Warren Buffett, one of the worlds greatest investors says could lead to "banana republic type inflation?" Is it possibly a political move? Perhaps they think it will make the Democratic party appear to be champions of the poor? Well the poor have been speaking at the town hall meetings and no one seems to be listening. We didn't want government health care when Hilary Clinton was promoting it and we don't want it now. Not at the cost of higher taxes and inflation.
So, Senator McCaskill, as a citizen of the great State of Missouri and of the United States of America, let me spell it out for you and the rest of the people who are promoting the Obama administrations health care reform. Stop the madness of unbridled spending! NO NEW TAXES! NO MORE GOVERNMENT PROGRAMS THAT INVOLVE INCREASED SPENDING! ENOUGH IS ENOUGH AND WE'RE WAY PAST THAT POINT! Let's concentrate on fixing the health care programs we have and paying down government debt!
Senator McCaskill, on the subject of credit card reform, you yourself said that you thought consumers should be responsible when it came to managing their spending and debt, shouldn't your constituents expect the same from their elected officials?
Thursday, August 20, 2009
Legacy currently has a yield of 13.08% on their recent price of $16.01 per share. Ev Energy has a yield of 14.60% on their recent share price of $20.70. Both currently have sufficient earnings to continue or even increase payouts. This should help boost my dividend income on my overall portfolio, while reducing risk. With the tax advantages on payouts, it should be a good move toward building my investment portfolio.
I will be looking to take further gains on some of my other stock holdings and diverting that money to MLPs in the months ahead. My plan is to have 25% of my taxable portfolio invested in MLPs by next year.
Tuesday, August 18, 2009
Monday, August 17, 2009
Review: Americans' appetite for debt did them in.
They quote Charles R. Geisst, a Manhattan College finance professor and former investment banker, when talking about "craven financial firms making euphamistic lures to consumers."
"A credit card offers $10,000 of credit, not debt. It has a friendlier ring," he writes.
If we all switched to thinking "debt cards" or "debt limits", instead of credit cards and credit limits, I believe we'd be a lot less likely to use them. It's easy to say, "I'll put it on my credit card." But wouldn't you think twice if you said to yourself, "I could add it to my debt?"
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Sunday, August 16, 2009
In the first half of the year, around 77 % of S&P 500 companies beat consensus earnings forecasts for the second quarter by an average margin of 11 percent. This suggests that the earnings revisions cycle has finally bottomed for most sectors. The revision cycle is straightforward: In the early stages of an economic (and profit) recession, analysts tend to hold their estimates too high; companies routinely disappoint as they simply can’t meet still-lofty expectations in the face of economic headwinds. By the time analysts get around to revising estimates to more accurately estimate earnings, most companies have already cut their costs to the bone and we tend to see a majority coming in above earnings estimates.
Since this is what happened at the end of the second quarter, what can we expect to see for the remainder of 2009? The simple answer is that rising earnings estimates tend to drive stock prices higher. The bottoming of the revision cycle will be a key upside catalyst for the broader averages through the end of the year. While it’s clear that if the recovery is to be sustainable, we need to see actual revenue growth, aggressive cost cutting during the past year by US corporations leaves them with a great deal of earnings leverage. Which means with any recovery in final demand, they should be able to post some truly impressive year-over-year growth numbers as we head into the latter months of 2009.
Friday, August 14, 2009
Calumet Specialty Products CLMT--12.80%
Encore Energy Partners ENP--12.62%
EV Energy Partners EVEP--15.04%
Legacy Reserves LGCY--13.15%
What fantastic returns! When you consider the payouts and the tax advantages of investing in master limited partnerships, I think it will boost my returns significantly over the next few years. Recently,I also bought and sold Regency Energy Partners (RGNC) for a quick 24% gain. So I'm feeling pretty good about investing in limited partnerships.
In an MLP, instead of paying a corporate income tax, the tax liability of the entity is passed on to its unitholders. Once a year, each investor receives a K-1 statement (similar to a 1099-DIV form) detailing his or her share of the partnership's net income, which is then taxed at the investor's individual tax rate.
One important distinction must be made here: While the MLP's income is passed through to its investors for tax purposes, the actual cash distributions made to unitholders have little to do with the firm's income. Instead, cash distributions are based on the MLP's distributable cash flow (DCF), similar to free cash flow (FCF). Unlike dividends, these distributions are not taxed when they are received; instead, they are considered reductions in the investment's cost basis and create a tax liability that is deferred until the MLP is sold.
Fortunately for investors, MLPs generally have much higher distributable cash flow than they have taxable income. This is a result of significant depreciation and other tax deductions, and is especially true of natural gas and oil pipeline and storage companies, which are the most common businesses to choose an MLP structure. Investors then receive higher cash payments than the amount upon which they are taxed, creating an efficient means of tax deferral. According to a report by Wachovia Securities, titled "Master Limited Partnerships: A Primer" (2003), the taxable income passed on to investors often is only 10-20% of the cash distribution, while the other 80-90% is deemed a return of capital and subtracted from the original cost basis of the initial investment.
Read More About MLP's at:
Thursday, August 13, 2009
People who do not subscribe to the frugal school of thought, often work long hours and acquire truckloads of debt to support their spending habits. They may have designer clothing, shiny new cars and all the latest electronics, but are they truly happy? Frequently, they're not. If they're working lots of overtime, they don't have the time to truly enjoy those things (much less priceless time with the ones they love). If they're running up lots of debt, they probably spend a lot of time dodging bill collectors and worrying about how they will ever pay it back.
Living frugally affords a more laid back approach to life. When you're not concerned about having the newest thing from the hottest designer straight off the shelves, you can dress fashionably at a minimal investment. Instead of paying a premium for that designer label, you can find a nearly identical item at a discount store or thrift shop for next to nothing. You don't buy the latest gadgets just so you can be the first one on your block to have them, but you purchase electronics that you know you will use while they're on sale.
Frugal shoppers also strive to save money on essentials so there's more left over for savings and wants. They scour the sale papers to find good deals at the grocery stores, and clip coupons to save even more. They turn off the lights when leaving a room and hang clothes out to dry to lower their electric bills. And they run all of their errands in one day to conserve gas. These measures alone can add up to significant savings each month.
Frugality doesn't mean keeping your expenses to a bare minimum. It means stretching your dollar as far as it will go. While frugal shoppers may not have the newest and most expensive things, they can buy much more with a given amount of money than the average consumer. For the price one might pay for the latest cell phone, they can buy groceries, buy the kids school clothes, pay a couple of bills and have enough left over to treat the family to a movie.
Mary Jo Kopechne was an only child. I can't help but wonder, how would her parents feel about all the recent praise for Ted Kennedy?
On July 18, 1969, Kopechne attended a party on Chappaquiddick Island, off the coast of Martha's Vineyard, Massachusetts, held in honor of the Boiler Room Girls. It was the fourth such reunion of the Robert Kennedy campaign workers.
Kopechne left the party at 11:15 p.m. with Robert's brother Ted Kennedy, after he — according to his own account — offered to drive her to catch the last ferry back to Edgartown, where she was staying. Kennedy stated he made a wrong turn on the way and came upon a narrow, unlit bridge without guardrails. Kennedy drove the 1967 Oldsmobile Delmont 88 off the bridge and it overturned in the water. Kennedy extricated himself from the submerged car but Kopechne died, after what Kennedy said were several diving attempts to free her.
Kennedy contacted several aides that night, but failed to report the incident to the authorities until the car and Kopechne's body were discovered the next morning. Kopechne's parents said that they learned of their daughter's death from Ted Kennedy himself before he reported his involvement to the authorities, but that they learned Kennedy had been the driver only from wire press releases some time later.
So why are Americans “mad as Hell”?
For the past year, we watched as the housing and financial sectors imploded, taking with them manufacturing and automotive companies. Job losses, foreclosures, and personal bankruptcies mounted into the millions, and the response of government has been to pass pork-laden legislation that spent huge amounts of future taxpayer dollars for questionable results. And when it is revealed that many of the same government policies, regulations, and politicians created the problems in the first place, it becomes obvious that politicians via the government are out of control and have no qualms about feeding at the public trough to achieve their own ends.
The current crop of politicians in office have run on the platform of hope, change, and transparency. That hope has changed into a morbid hopelessness, the change for the better is changing for the worse, and the only transparency there is the obvious attempt of the politicians to cram as much legislation loaded with their pet projects through before the public catches on. Are there any doubts that the government that we now have is not what the majority voted for?
And when the voters are protesting, they are called un-American, un-patriotic, and a whole host of other nasty names by the supporters of the current Administration. All for voicing their opinions. What is so hypocritical is that they did the same thing when the former Administration was in power, and they called it their God-given right under the power of Free Speech granted by the Constitution.
We heard a lot of politicians proclaiming their indignity at the banks who handed out bonuses while avoiding bankruptcy on the taxpayers dime. Yet the bank executives, who seem to have forgotten that they are only still in business because of the massive bailouts from taxpayers, doled out bonus money like their was no tomorrow. Over 4,800 people received more than a million dollars each, for what? Because they helped orchestrate one of the worst economies since the great depression? Maybe that was their intent all along and they are getting the bonuses for accomplishing their goals. Otherwise, I see no reason anyone working at any of the bailed out institutions should be collecting anything other than an hourly wage. And they should thank their lucky stars that they still have a job, since that puts them way ahead of the millions of Americans they helped put out of work.
Back on the health care front, I can't believe how dense some of our politicians are. It is as plain as the nose on their faces that the average citizen does not want government run health care. Some of the politicians have actually talked down to their constituents, saying we already have government run health care, in the form of medicare, medicaid and V.A. health care. If I were them, I would not be holding up these programs as an argument for more government involvement in medical treatment. While they all do some good, they are notoriously inefficient and let's not forget about the recent bout of infections caused by unsanitary equipment at some of the V.A. hospitals. If the current administration is so hell bent on ignoring what the people want, then they should be voted out. Let's get rid of them, lock, stock and barrel.
Monday, August 10, 2009
It conducts its operations in three geographical operating segments: the Southwest, the Northeast, and the Gulf Coast. Its East Texas system consists of natural gas gathering pipelines, centralized compressor stations, a natural gas processing facility and an NGL pipeline. The East Texas system is located in Panola, Harrison and Rusk Counties and services the Carthage Field. Producing formations in Panola County consist of the Cotton Valley, Pettit and Travis Peak formations, which collectively form one of the largest natural gas producing regions in the United States. The Company owns the Foss Lake natural gas gathering system and the Arapaho I and II natural gas processing plants, all located in Roger Mills, Custer and Ellis Counties of Western Oklahoma. The gathering portion consists of a pipeline system that is connected to natural gas wells and associated compression facilities. It also owns the Grimes gathering system, which is located in Roger Mills and Beckham Counties in Western Oklahoma. In addition, it owns a natural gas gathering system in the Woodford Shale play in the Arkoma Basin of Southeast Oklahoma. The Company owns a number of natural gas-gathering systems located in Texas, Louisiana, Mississippi and New Mexico, including the Appleby gathering system in the City and County of Nacogdoches, Texas. It gathers a portion of the gas produced from fields adjacent to its gathering systems. The Company is a processor of natural gas in the Appalachian Basin, with fully integrated processing, fractionation, storage and marketing operations. Its Appalachian assets include the Kenova, Boldman, Cobb and Kermit natural gas processing plants, an NGL pipeline, the Siloam NGL fractionation plant and two caverns for storing propane. The Company owns and operates a crude oil pipeline in Michigan. The Michigan Crude Pipeline is subject to regulation by the Federal Energy Regulatory Commission. It also owns a natural gas gathering system in Michigan. The Company owns and operates the Javelina Processing Facility, a natural gas processing facility in Corpus Christi, Texas, which treats and processes off-gas from six local refineries. The facility processes approximately 120 to 130 MMcf/d of inlet gas out of its 142 MMcf/d capacity.
In each of its operating segments, the Company faces competition for natural gas and crude oil transportation and in obtaining natural gas supplies for its processing and related services operations in obtaining unprocessed NGLs for fractionation and in marketing its products and services. Competition for natural gas supplies is based on the location of gas-gathering facilities and gas-processing plants, operating efficiency and reliability, and the ability to obtain a satisfactory price for products recovered. The Company's business is subject to federal, state and local laws and regulations with respect to environmental, safety and other regulatory matters.
MWE currently pays a dividend of $2.56 per share which represents a yield of 11.97% on their recent share price of $21.38. Recently I discovered the tax advantages in owning MLP units, which makes them even more appealing. The way I understand it, the IRS considers 80 to 90% of payouts from master limited partnerships as return of equity, and unit holders are taxed at their regular tax rate on 10 to 20% of payments received. Because of their special tax treatment, they are more appropriate for taxable investment accounts.
Sunday, August 9, 2009
The Labor Department said U.S. employers cut 247,000 non-farm jobs in July, far less than the 320,000 expected and the smallest decline in a year, suggesting the recession was abating. Also, the July unemployment rate eased to 9.4 percent in the prior month, the first time the rate has fallen since April 2008.
Treasurys came under selling pressure, driving yields higher, and the dollar finished the week firmer. In the week ahead, investor focus will be on the Treasury market and dollar as much as the Fed's 2 day meeting midweek and a heavy calendar of economic reports. Retail sales are released Thursday, and there are just a few major earnings reports, including Wal-Mart and several other chain stores.
Although there has been a lot of talk about all the money waiting on the sidelines, possibly coming in to stocks and driving the markets higher, I would expect some kind of pull back before that would happen. There is current speculation that the market could return to 12,000 but I wouldn't expect that to happen until sometime next year at the earliest.
For the coming week, I'll be buying shares of MLP, Markwest Energy Partners LP (MWE) for their 11%+ yield and adding to my stake in AT&T (T) in my IRA account.
Saturday, August 8, 2009
I think it is ridiculous to think that the government should solve all our problems. Yes we have a definite problem with health care in the U.S., but it is wishful thinking to believe that increased government involvement is the answer. As someone who has worked in health care, I can attest to the fact that current government programs are ineffective. I have personally seen cases of government programs being billed for services that were not performed. So why would anyone think that more government involvement would lead to better care? I believe it would only lead to more corruption and fraud and bigger burdens on the American taxpayer.
This is the point so many politicians and mainstream media seem to be missing about the "tea party" protests. This grassroots movement is an expressions of the average taxpayers disgust over ever increasing taxes. At some point we have to draw the line and say no more taxes! Obama is now backpedaling on his campaign promise of not increasing taxes for the poor and middle class. If they continue to pass spending bills, including health care reform, tax increases are inevitable. Some experts are projecting top tax rates as high as 55 to 60%. I don't know about anybody else, but I don't think I'd be too motivated to go out and work hard only to hand over 50 to 60% of my paycheck to the government.
I believe the government needs to manage the current health care programs more effectively and leave the rest to the private sector and charitable organizations. Over taxation is NOT the answer. The Soviets had to give up on a socialistic society because it did not work. Why our political leaders think it would work here is beyond me. Even Jesus said "The poor will always be with you."
Friday, August 7, 2009
Some things to look for on your statements:
Watch for charges that you didn't authorize. If your card is not with you at all times, someone could have used it without your permission. And even if you haven't lost your card, someone could have fraudulently obtained and used your card number. Compare your charges with your receipts. Mistakes happen, and you could have been charged an incorrect amount. Look for double charges. Equipment malfunctions or cashier errors can cause a charge to go through twice. Unscrupulous employees or companies may also make duplicate charges on purpose. Review charges imposed by the creditor, such as interest, fees and credit insurance. If you see anything suspicious, check the cardholder agreement to make sure the charge is legitimate.
If you find a mistake:
When you find an error on your credit card statement, it's important to report it quickly. If it's the result of fraud, notifying the creditor can prevent further misuse. And in any case, cardholders must act within a reasonable amount of time in order to be protected by law. The Fair Credit Billing Act (FCBA) states that cardholders must report billing errors in writing within 60 days from the date the first statement containing said error was mailed. If they do so, the creditor must either correct the mistake or prove that the charge is legitimate within two billing cycles. If the charges were not authorized by the cardholder, he may be held liable for no more than the first $50.
A phone call to your creditor can be helpful if you have questions about a particular charge. And in the case of unauthorized charges, a customer service representative can tell you if other charges have been made since the statement was prepared. But if there is an error, notifying the card issuer in writing is a must. Otherwise, you may have no legal recourse if they refuse to make a correction. Checking your credit card bill doesn't take long. If you keep your receipts organized, you can verify the charges in just a few minutes. And those few minutes could potentially save you a great deal of money.
Thursday, August 6, 2009
My IRA is set up for automatic investments each month. On the second Tuesday of every month I purchase more shares of stock for my retirement portfolio. This month I will be adding to my AT&T holdings. I own shares of AT&T in both of my accounts. I think their dividend is stable and I'm with them for the long haul.
Other investments in my IRA include British Petroleum (BP), Universal Insurance (UVE), AFLAC (AFL), Great Plains Energy (GXP), S&P 500 Index SPDR (SPY). Since opening the account in December of 2008, my holdings are up by 23.39%. Not a bad return! Just wish I could say the same for my taxable investment account. Still down some on that account, although the total dollar amount has increased. I've actually surpassed my investment goal for the year, so I've had to set the bar a little higher.
I've also been holding extra cash while continuing my job search, just in case I would need it for some reason. I've been able to accumulate the cash by cutting spending to the bare necessities. It's worked so well, I'm thinking that I may just keep it up when I return to work, just to build my investments more rapidly.
My total credit balances continue to decrease. I cancelled 2 of my credit cards to avoid extreme increases in the interest rates. Will probably cancel at least one more as soon as it's paid off. I've decided I really don't need more than 2 credit cards and plan on using them sparingly when the balances are paid. I really haven't been using my cards at all since being off work, just keep paying down the balances and paying cash for everything.
Given the crazy market and economic situation for the first half of 2009, I very happy with my finances right now. If the market continues to improve during the second half of the year, I should be in pretty good standing by the start of 2010.
Wednesday, August 5, 2009
As for Lowes, with housing showing some signs of recovery and people who are off work doing improvement projects to their homes, I think they have room for growth as well. I personally sold all my Wal Mart stock a few years back. Even though I think holding their shares is not really a bad thing, I just don't expect to see it moving much anytime soon. I think there are a lot better places to invest your money right now.
On an unrelated subject, I was glad to see Pepsico up their offer to buy out Pepsi Bottling. I've been a long time shareholder of Pepsi Bottling and will see a decent profit from the buyout. I like the fact that shareholders have the option of all cash or all stock as long as Pepsico pays half cash and half stock total. Personally I would rather have a cash and stock combination as I think Pepsico will do well in the coming years.
Tuesday, August 4, 2009
The head of the vaccines unit announced her retirement as of November 1st, to pursue "personal and professional aspirations." Recently sales have been dropping off for their vaccine Gardasil and they have had manufacturing and supply issues for their vaccine for shingles. Some experts covering Merck believe this is the beginning of a significant change in management company wide, with some changes that will come as a surprise to shareholders. These changes are ultimately expected to enhance the value of the organization going forward.
To read more on this subject:
Sunday, August 2, 2009
"NEW YORK - Even when their profits dried up and they turned to taxpayers to stay afloat, the nation's biggest banks kept paying huge bonuses. But much of the money went not to top executives, but to star traders and salesmen, even as the economy battled through the worst recession in a generation.
The bonuses — including $1 million or more for each of nearly 4,800 bankers at nine of the largest firms — were paid for 2008, along with scores of smaller checks to thousands of rank-and-file employees. But their revelation this week has renewed criticism of companies relying on government aid."
Millions of Americans are out of work, yet the Obama team has sent our tax dollars to the very people who orchestrated the collapse of our economy, so they in turn can pay out billions of dollars in bonuses to their workers. Their excuse is that these people are the "producers", the ones generating the profits for their banks. Even if this is true, why are they being paid bonuses with our tax dollars? Shouldn't any bonuses be paid from the "profits" they produce?
With so many people out of work in the U.S. and the economy still in such bad shape, the administration is considering extending unemployment benefits. Not a bad thing in itself, but how do they plan to pay for it?
Again, from the Associated Press:
"Top U.S. officials said on Sunday more steps may be needed to firm up economic recovery -- including extended jobless benefits -- and declined to rule out future tax increases to tame massive budget deficits.
Treasury Secretary Timothy Geithner
U.S. Treasury Secretary Timothy Geithner said the government needed to show the will to reverse deficits after the recovery, and would have to make some "hard choices" about whether this may include increasing tax revenues."
But wait, that's not all you get, still more of our tax dollars at work:
"The House approved on Friday a $2 billion extension of the "Cash-for-Clunkers" automobile sales incentive program.
The Democratic proposal would run through Sept. 30, 2010, and tap funds from an Energy Department loan guarantee program included in the economic stimulus package enacted in February.
An initial $1 billion in funding approved this summer to boost stagnant industry sales has already been exhausted, officials said."
So under Obamanomics and the Democrats, the taxpayers loaned the auto industry billions of dollars to help pay their debts, then subsidize the sale of their cars with another $3 billion. I'm just guessing, but I'd be willing to bet that some of the bankers, who collected million dollar bonuses, are driving taxpayer subsidized cars about now. It's a sure bet the millions of unemployed could not afford to take advantage of this program. Let's not forget Mr. Geitner's comment about the government making some, "hard choices" in regards to increasing tax revenues. If anyone believes they will really tax "the rich" to make up for budget shortfalls, then they're only fooling themselves. After all, these people are "the rich". Businesses that are overtaxed simply go out of business or move to another country with lower taxes. So who will pay increased taxes? The only ones left to tax. You and me.
I've read articles comparing Obama's handling of the economic crisis with Reagan's handling of the Savings and Loan crisis and the weak economy during his administration. Reagan had the "trickle down" theory and I was definitely better off after his first four years in office. With Obamanomics, even if through some miracle I am better off after his first four years, I'm pretty sure he and his band of merry men in congress will tax it all away. Obama campaigned on a platform of "change", to help the poor and "yes we can!". I can't help but wonder, before his four years are up, if instead of "yes we can", we might be saying, "Oh no you didn't.".
As a final thought, I'll leave you with this piece from the Weekly Standard, titled "Obamanomics Renders Economy Inefficient":
"Two thoughts pierce the gloom. The first is that the American economy might be large enough, and resilient enough, to remain competitive even bearing the weight of the new inefficiencies. The second is that voters will demand a change of course before Obamanomics is permanently embedded in our system. Voters worry that they are leaving their children a mountain of debt. Already Obama's approval rating among independent voters, whom Wall Street Journal analyst Gerald Seib calls "the canaries in the coal mine of American politics", has fallen from 60 percent to 45 percent. Even if the president doesn't get the message, Congress, faced with an election next year, just might."
Let's hope someone in Washington is still paying attention.