Tuesday, September 29, 2009

IMF Revises 2010 Global Growth Upwards

SAO PAULO, - The International Monetary Fund will increase its forecast for global growth next year, in the next few days, to account for a faster recovery in major economies its deputy director said on Monday.

The IMF will raise its forecast for 2010 global growthfrom 2.5% to about 3 percent, said Murilo Portugal, the fund's deputy managing director. The revised forecast could come as soon as Tuesday.

"The recovery is stronger than initially forecast," Portugal, a former deputy finance minister in Brazil, told journalists on the sidelines of a business seminar.

Portugal, without giving detailed forcasts, said Brazil's economy, the largest in Latin America, should grow more than the global average.

In a weekly central bank survey released on Monday economists increased their forecast for gross domestic product growth in Brazil from 4.2% a week earlier to 4.5 % for 2010.

Has The Economic Stimulus Failed?

I read an article in yesterday's USA Today about a survey of corporate CEO's, who were asked if they thought the economic stimulus had succeeded. Sixty percent said they thought it had failed to have the desired affect on the economy and only 23 % said it had been a success.

I've written before that in my opinion it has been a failure. While some banks were saved, at least in the short term and the automakers and AIG got some relief, where is the overall stimulus to the economy. Infrastructure benefited, but while infrastructure is in much need of repair and updating, I doubt we'll see much job creation there. So you have banks, automakers, an insurance company and infrastructure, none of which have created jobs in any great degree. Without job creation and the resultant increased consumer spending, the stimulus package has to be considered a failure. Would we have lost more jobs and been worse off without it, maybe and maybe not.

I believe that the money would have been better spent by sending out rebates to taxpayers. If the money had been put in the hands of taxpayers, it majority would have been spent, boosting the economy by keeping the money in circulation. The banks did not keep the money in circulation, they hoarded the money, paid out bonuses and tightened consumer and business credit, worsening the economic situation. When consumers spend, retailers benefit, they keep their employees working. Manufacturers benefit by increased orders and they keep their employees working. Government benefits by increased revenue through payroll and sales taxes, so they keep their employees working. The restaurant and other hospitality industries benefit because more people are working and have more to spend on their services. When the money is given to a limited group, ie. banks, insurance, infrastructure and automakers, only the people in those industries benefit. When it is given to taxpayers who spread the money around, everyone benefits. If the government gets any of the taxpayers money back from TARP, I believe they should seriously consider sending it out in the form of tax rebates to taxpayers and maybe we'll actually see some improvement in the economy. If not, with the job market still hemorrhaging jobs and consumer spending down, I believe we're looking at a slow and drawn out recovery at best.

Monday, September 28, 2009

Great Start For the Week!

Wall Street wasted little time in recovering from its worst week in two months as the Dow climbed more than 130 points Monday afternoon amid a flurry of M&A action. The markets were taking their cues from the merger news as Xerox (XRX: 7.2799, -1.7501, -19.38%) inked a $6.4 billion deal to buy Affiliated Computer Services (ACS: 52.41, 5.17, 10.94%), Abbott Labs (ABT: 48.681, 1.341, 2.83%) bought a drug business for $6.6 billion and Johnson & Johnson (JNJ: 61.305, 0.645, 1.06%) acquired a $444 million stake in biotech company Crucell (CRXL: 22.35, -1.35, -5.7%).

The Dow was led higher by DuPont (DD: 32.6383, 0.8683, 2.73%), General Electric (GE: 16.7949, 0.3949, 2.41%) and Cisco (CSCO: 23.7104, 1.0904, 4.82%). All 30 blue-chip stocks were in the green but financial-related stocks like American Express (AXP: 34.04, 0.96, 2.9%) and Bank of America (BAC: 16.9194, 0.2694, 1.62%) saw more modest gains.

The early bullishness on Wall Street comes after the markets closed lower on Friday, marking the first three-day slide for stocks since early September. After a relatively resilient month, the markets have run into resistance in recent days amid disappointing economic reports that have led some to question the bulls' economic optimism. In fact, last week marked Wall Street's steepest pullback since early July as the Dow lost 155 points and the S&P 500 slid 2.24%. Still, the Dow is up 1.78% in September and more than 10% year-to-date. But the markets are well on their way to making up most of those losses as traders cheer the M&A activity, which until recently had all but dried up. The increased M&A activity has some traders thinking, “Well maybe there is indeed some value here and the growth prospects are a little bit better,” said Nick Kalivas, vice president of financial research at MF Global. “I think people have taken the secondary issuance as a sign that stocks have poor valuation. I think these M&A deals neutralizes that argument."

We'll see how things hold up for the rest of the week.

Sunday, September 27, 2009

Time To Get Back Into Shipping Stocks?

I've been a big fan of shipping stocks in the past because of their high dividend payouts. However, I sold off some shares during the downturn in the economy and have not added to any of my current positions in quite some time. My current holdings include Euroseas LTD (ESEA) and General Maritime Corp. (GMR), with dividend yields of 9.30% and 25.10% respectively. While current earnings do not support such high payouts, world trade appears to be picking up, so shipping should gain ground along with improvements in trade.

According to the statistics issued by the Bureau for Economic Policy, research showed the volume of world trade rising 3.5% in July after a revised increase of 1.6% in June. Decrease in the world trade was caused by the decrease in demand; but, the increasing trade ties among countries can play an important role in stabilizing the world economy. The rise in volumes was the steepest since December 2003.

With share prices of shipping companies being so cheap and trade volumes on the rise, is now the time to buy into shipping? I tend to think so. While some companies may be forced to lower dividend payments, their future prospects look quite good. Given the fact that their stock prices are at extreme lows, now might be the perfect time to make a long term investment.

With this in mind, I intend to either add to my current positions in ESEA and GMR or purchase shares in another company whose financials are a little better positioned. I'll have to do more research before I make a final decision.

Friday, September 25, 2009

Week In Review

At this point, it looks like both my stock portfolios will end down for the week. Although I'm still up quite a bit for the year on my IRA, I haven't quite regained all I lost on my taxable stock portfolio. Even though the total dollar value is 40% higher than last year, the increased value represents profits from stock trades since the first of this year, and extra cash added to my stock account.

The biggest change I've made in the past 30 days would be to add a shares of a Canadian Energy trust and a Real Estate investment trust, both of which pay dividends on a monthly instead of quarterly basis. Both appear to be solid companies and I think they'll work well towards reaching my goal of boosting monthly cash flows from dividends. I've noticed a lot of getting ahead in investing is all about cash flow. How quickly you turn over your money. When you pay out your cash to purchase shares of an investment, the quicker you get your money back, the better. That's why I love dividend stocks, because as long as the company is solid, you can look forward to a steady stream of dividend income for years and years to come. I could be perfectly satisfied with holding my stocks till the day I die, as long as the dividends keep rolling in.

Looking ahead, for the next couple of months, I'll be adding to my AT&T and BP stakes in my IRA account and will probably purchase more shares of PGH for my taxable portfolio. Nothing new on the job front, but I have been getting more responses to applications, so that's encouraging. Still working on eliminating my remaining credit card debt. Because of increased interest rates, I have canceled all but 2 of my credit cards and don't intend to take out any new ones. I think the credit card companies have all lost their minds recently and until I see some better offers, I'm avoiding using them all together.

I'm beginning to believe things are picking up with the economy, more in spite of, rather than because of recent government efforts. In the end, I believe legislation passed since the first of this year will ultimately lead to higher taxes than we've ever seen and create a tremendous drag on the economy. Just have to wait and see how it all plays out.

Wednesday, September 23, 2009

Market News

Since the first of the year, stock trading was in and the buy and hold strategy was out the window. It seems this trend may be reversing itself, with more investment managers giving their clients the old "dollar cost averaging" spiel and telling them to "invest for the long-term." Nothing wrong with any of this advice, but I think there will always be occasions when stock trading is more appropriate than a strict buy and hold strategy.

Speaking of buy and hold, the greatest buy and hold investor of all time, Warren Buffett, stands to gain a bundle off his investment in Goldman Sachs last September. Not only is Berkshire Hathaway benefiting from the special 10% dividend on their preferred shares, but they are also holding stock warrants from Goldman, currently worth a cool $3 billion. Not bad for a guy, who some were saying, had lost his touch.

There's been a lot of talk lately about weakness in the U. S. dollar. In the short term, this is not always a bad thing. Certain market sectors, such as technology, energy and materials, who get more than 50% of their revenues overseas, stand to benefit by the weakness in the dollar making their prices more attractive to foreign buyers. However, long term weakness in the dollar could lead to inflation woes here at home.

The market is static today, waiting for news from the Fed meeting and due to the drop in oil prices caused by a build up in inventories. I do think we'll see a move upward by the end of the week and September could prove to be better than expected for the year.

Monday, September 21, 2009

Brazilian Business News and Investments

In earlier posts I wrote about my belief that Brazil is definitely a good investment play when looking to expand outside U.S. stocks. Currently I own shares in one of Brazil's largest utility companies, CPFL Energia (NYSE:CPL). I've been very pleased with this investment and am looking to expand my investments in this country.

In recent research I learned, Brazil posted a foreign-trade surplus of $556 million in the third week of September, the Trade and Development Ministry said Monday. In the Sept. 14-20 period, exports totaled $3.496 billion, while imports were $2.940 billion. Year-earlier figures weren't provided. With the new September figures, Brazil's year-to-date trade surplus totaled $21.33 billion, up from $19.3 billion in the same period of 2008. Analysts are expecting a slight increase in Brazil's trade surplus in 2009. Brazil posted a trade surplus of $24.74 billion in 2008. A weekly survey of experts conducted by the Brazilian Central Bank and released earlier Monday produced an average forecast for the 2009 surplus of $25 billion.

Brazilian economists and financial market analysts have revised upward their forecasts for 2009 and 2010 gross domestic product, according to the central bank's weekly market survey published Monday. Analysts expect Brazil's 2009 GDP growth of 0%, compared with a forecast contraction of 0.15% in the previous week's survey. In addition, their forecast for 2010 GDP growth was increased to 4.20% from 4%. Brazil's GDP expanded 1.9% in the second quarter compared with the first quarter of this year and it decreased 1.2% in the second quarter versus the second quarter of 2008, according to the Brazilian Census Bureau, or IBGE. The central bank's weekly survey tracks the opinions of 100 analysts and economists from banks and brokerages, reporting the average of their expectations.

Brazilian shares rose Friday, continuing their best week since July, as energy and telecommunication companies boosted the index. The Bovespa gained 467 points, or 0.8%, to end at 60,703. The index added about 4% since last Friday. From July 10 through July 17, the index surged about 6%. On Wednesday, the index closed above the 60,000 level for the first time since July 21, 2008. Earlier in the week, Brazil's Central Bank President Henrique Meirelles had encouraged businesses to invest, saying that the economy must expand to protect against inflationary pressures.

Shares of oil producer Petrobras SA (PBR .A 38.02, -0.07, -0.18%) added 0.2%, steel maker Gerdau SA (GGB 13.48, +0.13, +0.97%) advanced 0.2% and mining giant Vale (VALE 22.10, +0.04, +0.17%) added 1.1%. Also, shares of the world's largest beef producer, JBS SA (BR:JBS 8.75, -0.08, -0.90%) , gained 1.5% after Moody's Investors Service said Friday it has changed its outlook on JBS to positive from stable, following the company's agreement to purchase 64% of bankrupt poultry producer Pilgrim's Pride Corp. (PGPDQ 6.71, -0.15, -2.19%) for $800 million in cash. Rob Lutts, chief investment officer at Cabot Money Management, said he thinks the Bovespa is going to continue to grow, especially the housing and real estate markets. He pointed to Gafisa SA (GFA 31.21, -0.77, -2.41%) , a home builder that he thinks will gain in the long term but may pull back in the next few months. Gafisa's shares rose 0.09%.

25 Ways To Save More For Investing

1. Start saving something today. It doesn't have to be a large sum. Even on a tight budget, a small amount adds up over time. Get an envelope, cookie jar, coffee can or whatever you like and set aside the same amount every week.

2. Treat saving as a bill. Consider having the amount transferred automatically from your checking account or paycheck. Pay your account every month or every two weeks.

3. Empty your pockets -- or your purse -- at the end of the night. Put all the change into a jar. Not only will you feel lighter, but your spare change adds up a lot faster than you think.

4. Just paid off a big debt such as a car loan or child's tuition? Keep making the payments -- this time to yourself.

5. Trying to lose weight this season? Each time you go without dessert, that midafternoon candy bar break or that fatty mochaccino at the coffee shop, put the cost of your forgone goody into your savings jar.

6. Involve the whole family in saving. Plan a treat for everyone when you reach the savings goal. Make it something everyone will look forward to, but inexpensive, such as a day at the zoo, museum or beach.

7. Some online banks offer high-interest checking accounts. If these accounts meet your needs when it comes to balance requirements, debit card usage and convenience, why not earn interest on your balance?

8. Stay up-to-date on your checking balance, either by balancing your check book or checking your account online frequently. You'll avoid overdraft fees and better track what goes in and out.

9. If you bounce a check, and it's the first time, ask for forgiveness, including waiver of any fees. A bank will sometimes do that for goodwill. Of course, don't become a repeat offender.

10. Make it a habit to use only your bank, thrift or credit union's ATMs. You'll avoid paying surcharge fees to your bank and the other bank. Or consider opening an account with an online bank or brokerage that covers out-of-network ATM fees.

11. To avoid ATM fees, get extra cash at the grocery store -- most of the grocery store point-of-sale terminals are free.

12. Think before you charge. Unless you're in the habit of paying your credit card bill in full each month, don't use the cards for anything you can eat or wear and avoid using credit cards to buy "wants" such as a new stereo or TV. Wait until you have the money to buy it.

13. If you're knee-deep in credit card debt, get rid of all of the credit cards but one. Take that one and make it hard to impulse shop with -- freeze it in a bowl of water in your freezer.

14. Don't take cash out of your credit card. The rate for cash advances is much higher. And there is no grace period -- you start paying interest right away.

15. Read your monthly credit card statements carefully. Look out for hidden charges, such as credit insurance.

16. Don't pay for theft insurance on your credit card. If your credit card is stolen, you're only liable for $50 at most.

17. Avoid credit card fees. Dodge $39-and-growing fees by not exceeding your credit limit. And send your payments in early -- if you're five minutes late it could cost you $29 or more.

18. Pay more than the minimum. It'll take a very long time and cost you a lot in interest to pay off your balance if you only pay the minimum.

19. Don't be late on any loan or credit account payment. Credit card companies check their customers' credit reports frequently, looking for any late payments to justify raising the interest rate -- a phenomenon called "universal default." In some cases, triggering a universal default can double your credit card's interest rate.

20. Negotiate better terms -- lower interest and higher limits -- with your credit card issuer, especially if you've had a year of on-time payments.

21. Consider transferring your balances from high-interest cards to low-interest credit cards. Then, make the same payment as before, or double the minimum.

22. If the opportunity exists, work overtime or an extra shift at least once or twice a month.

23. Participate in a 401(k) or 403(b) plan. Your contributions are made with pretax dollars. You save for the future while reducing today's taxable income.

24. Set up a tax-advantaged IRA or Roth IRA account to build up your retirement savings.

25. Save your raise. The next time you get a raise at work or a tax refund, consider directing half to savings. If you're not used to the money, you won't miss it.

Friday, September 18, 2009

Realty Income Increases Monthly Dividend

Recently I wrote about getting back to investing in REITs. Today I read about Realty Income increasing their monthly dividend and decided to add shares to my portfolio. Its Board of Directors has declared an increase in the Company's common stock monthly cash dividend to $0.1426875 per share from $0.142375 per share. The dividend is payable on October 15, 2009 to shareholders of record as of October 1, 2009. This is the 48th consecutive quarterly increase and the 55th dividend increase since Realty Income went public in 1994. The new monthly dividend amount represents an annualized dividend amount of $1.71225 per share as compared to the previous annualized dividend amount of $1.7085 per share. The Company continues its long-term policy of declaring and paying dividends on a monthly, rather than on a quarterly, basis.

The Chief Executive Officer of Realty Income commented, "We are pleased that, despite challenging economic conditions, our operations allow us to once again increase the amount of the dividend we pay to our shareholders. With the payment of the October dividend we will have made 471 consecutive monthly dividend payments."

Realty Income (O), The Monthly Dividend Company(R), is a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the Company has declared 471 consecutive common stock monthly dividends throughout its 40-year operating history and increased the dividend 55 times since Realty Income's listing on the New York Stock Exchange in 1994. The monthly dividend is supported by the cash flow from over 2,300 retail properties owned under long-term lease agreements with leading regional and national retail chains. The Company is a buyer of net-leased retail properties nationwide.

Thursday, September 17, 2009

Quote of the Day

"You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them, what they could and should do for themselves."

Abraham Lincoln

Wednesday, September 16, 2009

Philip Morris Boosts Dividend!

Was glad to hear tobacco giant Philip Morris International Inc. (PM) will be boosting their quarterly dividend payout by 7.4%. The new dividend payout is 58 cents per share quarterly, compared to a prior payout of 54 cents. The company said that the dividend is payable Oct. 9th to shareholders of record as of Sept. 28. I added Philip Morris as a long term holding a few months back, and will probably pick up more shares before the 28th to take advantage of the increased dividend. While sales of cigarettes and tobacco products in the U.S. have declined, this is not the case in other countries.

I sold my stake in Altria, earlier in the year, when the new cigarette tax went in to effect. The thinking being, with the current state of the economy and the ridiculous increase in the price of cigarettes, Philip Morris International would be in a better position than Altria to make a profit and pay dividends to shareholders.

About Philip Morris:

"Philip Morris International (PMI) is the leading international tobacco company, with products sold in approximately 160 countries. In 2008, we held an estimated 15.6% share of the international cigarette market outside of the USA. In 2008, we reported net revenues, excluding excise taxes, of $25.7 billion, and operating income of $10.2 billion.

We own seven of the top 15 brands in the world and have a strong mix of international and local products that seek to appeal to a wide array of adult smokers. We are committed to providing our consumers with the highest-quality tobacco products.

We are driven to create the best possible return for shareholders, while proactively engaging regulators and the public health community to address the complex issues surrounding tobacco use."

Visit Philip Morris:

Monday, September 14, 2009

This Week's Trades

Decided to take advantage of Universal Insurance (UVE) 11% dividend yield and pick up some more shares for my taxable portfolio. UVE is a long term holding in my regular portfolio and my IRA. Also decided it might be time to have a look at REITs again. With real estate turning around and several companies gearing up to pick up distressed real estate investments, thought it might be good to shop around. I've decided on Capstead Mortgage (CMO), one of the real estate trusts that has survived the turmoil of the past few years and seems to be on track for recovery. Their dividend yield is currently 16.30%, which is enticing in its' own right, but I chose them mainly for their experience. They've been in business for quite some time and I figure if they could survive the past year and keep their dividend intact, then they're likely a pretty good bet going forward.

Still building cash, but things are looking up on the job front, so I may soon be deploying excess cash in my stock portfolios. Even though I'm not happy with things on the political front, I believe that the stock market and the American economy can overcome a lot of idiotic moves by our nations politicians. And there's always the hope that they'll be voted out and replaced with people who have show a little more fiscal responsibility.

Thursday, September 10, 2009

Public Option Insurance Plan, or Slush Fund for Politicians?

I watched Obama's speech about health care reform and I'm still amazed that the politicians don't get that the majority of taxpayers are against new programs that would increase the tax burden. So I'm watching the speech, wondering what their motivation is for passing a bill that is so obviously unpopular to so many people.

Then it occurred to me to think along business lines, instead of from a political point of view. A public health care bill, that included a public option insurance program, would essentially create a government run insurance company. I've written about insurance companies before and about how they practically print money, since they have tremendous inflows of cash. Normal insurance companies invest this money to produce even more profits, before having to cover any payouts to policy holders or investors. What do you suppose a government bureaucracy would do with such a tremendous amount of cash?

In the case of Social Security, they raided the Social Security fund to pay for pork barrel projects and garner support from special interest groups. They replaced the money in the Social Security Trust Fund with government IOU's, in the form of Treasury notes, which are paid off by taxpayers. So, they subtract money from our paychecks to fund Social Security, borrow that money to fund other projects, then increase taxes to pay off the IOU's, for the money they borrowed from taxpayers in the first place. I'm sure this helps them raise a lot of contributions for their re-election campaigns, but are they looking out for the interests of the average taxpayer? I don't think so.

So now they're trying to pass a public option insurance plan and create a huge bureaucracy with tremendous cash inflows. Does anybody really believe that this money will be used only for health care for the poor? I don't. I think it's more likely to be seen by politicians as one great big slush fund, which will undoubtedly lead to even more runaway spending at the taxpayers expense.

If this bill is passed, which it looks as though it will be, then at the very least, safeguards should be put in to place to prevent politicians from raiding the money taken in for health care. I doubt that this will happen. I think the best that we can hope for is, taxpayers will see through the slick talking politicians and vote them out of office.

Thursday, September 3, 2009


"You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation. You cannot multiply wealth by dividing it."

Adrian Rogers, 1931

We need to stop Cap and Trade, or Cap and Spend as I like to call it, forget about health care and any other programs we can't afford to pay for. Eliminate wasteful government spending and overburdening U.S. citizens with ever increasing taxes. Let people keep more of what they earn, not less. Then you have the incentive for prosperity.

Tuesday, September 1, 2009

Watch Those Credit Cards!

My sister called yesterday to tell me about her latest experience with the credit card companies. She got a letter from one card company Saturday, saying that her introductory rate ended on July 31st and her new rate zoomed to over 21%. Here's the kicker though, she got the letter August 29th and it stated in the letter that her new interest rate was effective July 31st. She is reporting them to the Better Business Bureau. I told her she should collect her cash back, transfer the balance to a lower interest card and cancel the card!

I cancelled all my accounts with the card companies who've decided that they don't care about my business any more. If they are raising rates to usurious levels, then it's time to let them go. It is possible some of these banks could make good investments, since their profits will most likely shoot up from this type of unscrupulous banking, but in the end it will most likely lead to a consumer backlash, so I won't be putting any money in bank stocks. I do still own stock in two banks, New York Bank Corp and Merchants Bank of Vermont. They are both long time holdings in my regular stock portfolio.

In the news, stock futures are down, Madoff's beach house is up for sale and the Chinese are on a spending spree for luxury items in London. I liked the comment from one Chinese tourist when she said they were, "looking for branded high quality merchandise." Apparently they don't want the cheap stuff made in China.