Monday, December 28, 2009

MBCI Store Updated For New Year!

Just finished updating the MBCI store (bottom of page) for the new year. Added new categories for cell phones and service and DVD's. The store has started to generate sales and I'm excited about the prospects for increasing sales in the coming year.

Feedback from customers has been very positive to date, and I'm very happy with the associates program I chose to create the store for my readers. Have to spend more time promoting the store. Once the traffic is there, the products and convenience pretty much sell themselves. Building traffic will be my top priority for 2010.

Any ideas?

Friday, December 25, 2009

Happy Holidays!

Just wanted to wish everyone a very Merry Christmas and a Happy and Prosperous New Year!

The past year has been a rough one for us all, but the new year brings with it new hope and new opportunities. Now is the time to plan for gains for the coming year.

So here's wishing you all the best this Holiday Season and in the years to come!

Friday, December 18, 2009

Financial Plan For 2010

As the new year approaches, I'm finalizing my financial plan for 2010. I wrote back in November that I was considering selling some stock to pay off credit card debt. I've changed my mind after reading in one of the "Rich Dad" series of books, by Robert Kyosaki, that the rich do not dip into savings to pay off debt or meet cash shortfalls. That defeats the whole purpose of "paying yourself first". So instead I've decided to use a percentage of the dividend income from the stocks to pay off the debt and reinvest the rest to continue building my portfolio, while reducing debt. I should be completely debt free by the end of next year, which will allow me to increase my monthly investments by 300%.

The real point here is that I'm trying to get away from the poor persons mentality of always paying everyone else before paying myself. By continuing to pay myself, even when my cash flow is tight, it makes me look for ways to increase my means. In other words, I'm a lot more motivated to look for ways to increase my income, to cover my expenses.

I used to invest any money I managed to save after paying everything else. Now I consider my monthly investments a part of my expenses. The way I see it, if I'm willing to work so hard to come up with the money to make car payments for 3 or 4 years to buy a depreciating asset, shouldn't I be even more enthusiastic about working for a better future for myself and my loved ones? I've really shifted my thinking regarding saving and investing. It's no longer money I manage not to spend, it's money I've budgeted, the same way I budget to pay for a car or anything else. Only I'm paying for a better life!

So I'm finalizing my wealth building plan for 2010 and looking forward to another great year of adding income producing assets to my investment portfolio. I'm setting some ambitious goals and working on a plan to get there.

Sunday, December 13, 2009

The Newest Addition to My Portfolio

"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." -- Warren Buffett, Oct. 16, 2008

When Warren Buffett made the above statement, I was still buying stock. I bought stock all through 2008 and 2009 and expect to do so in 2010. Buffett also once famously boasted that he would be able to earn 50% annual returns ... but only if he had a whole lot less money. Why? Because he'd be able to freely buy and sell small stocks that the hotshots on Wall Street don't adequately cover.

With that in mind, I decided to buy back in to Advance America Cash Advance (AEA: NYSE). The Group's principal activity is to provide cash advance services in the United States. It offers prepaid debit cards, money transfer services and tax preparation services as an agent for third-party vendors and check cashing services at state authorized rates. The Group focuses primarily on providing cash advance services to middle-income working individuals. As of 31-Dec-2008, it operated 2,767 centers in 33 states in the United States, 20 centers in the United Kingdom and 10 centers in Canada, and had 79 limited licensees in the United Kingdom.

I held shares of AEA twice before and made a nice profit both times on the capital gains. My reason for buying back in this time is for the dividend yield of 4.04%. Their current price of $6.19 and earnings per share of $0.66 allow for continued payment of their current dividend while also fueling future growth. With a return on equity of 23.40% and very little debt, I'm thinking they are in a good position for some excellent growth. And it doesn't hurt that I will be earning over 4% in dividends along the way.

Wednesday, December 9, 2009

GE Showing Signs of Improvement

GE is one of the core holdings in my personal stock portfolio. Even though this past year has not been kind to their stock price or their investors, I still believe the company has a bright future (no pun intended). Recently they announced improvement in their Capital division, which was largely responsible for their poor performance of late. While loan losses are expected to continue into 2010, they're predicting the division will show a profit by 2011. In the mean time, I'm looking to add additional shares to my stake while the price is low ($15.66 currently). Their dividend yield of 2.55% is well below the average yield of my current investments, however I'm expecting to make up for that through growth in stock value. If Warren Buffett feels confident enough to loan GE $3 billion, then I feel pretty safe investing my money with them. Bottom line, it's a magnificent company with a fantastic pedigree, strong management, great product line and a franchise name. You can't really ask for much more than that.

On an entirely unrelated subject, Obama recently announced tax incentives for small businesses who hire new workers. I have to say I think this is the smartest move the man has made since being elected. Getting people back to work is the key to getting the economy moving again. When the government gives business incentives to put people back to work, it's a win win situation for everyone concerned. The businesses save money due to tax incentives, the workers gain jobs and paychecks which they spend, in turn benefiting other businesses. With sales of goods and services going up and more people working, tax revenues increase for local, state and federal governments. So jobs should be JOB 1 for our political leaders right now.

Monday, December 7, 2009

Is Dell Turning the Tide With Customer Service?

I just saw one of Dell's latest commercials. They flew a customer from the U.K. to Texas to personally approve his new computer. Yeah I know it's a gimmick for the commercial, but I couldn't help but wonder if it meant that Dell, who's sales had suffered recently, was finally turning it's attention to improving customer service. I've always liked Dell computers, but because of my personal experience with their customer service, I have never done any business with them since I bought 2 desktops and a pocket pc a few years back.

I had a problem with one of the desktop computers near the end of my warranty. I called and emailed customer service several times, without any satisfactory results until my warranty expired. I finally fixed the computer myself, no thanks to them. While they might be flying customers to Texas to approve their computers now, at that time, I got no response at all to a letter I sent to their Texas headquarters. I'm over it now, but I was extremely angry and disappointed at the time. If you're in the business of selling computers and you have a customer who buys 3 at a time, I would think you'd want to take care of that customer. Perhaps is was just a slip up in their service department and/or mail rooms. Whatever the case, I've bought several desktop computers and laptops since then, but none from Dell.

So perhaps now that they're faced with flagging sales and poor stock performance, maybe they're finally turning their attention to customer service. I don't plan on being a customer again anytime soon, but it could signal a turnaround in their stock performance. I can't see myself ever investing in their stock or buying any more of their products, but if you're interested in Dell stock, it could be a good thing. In fairness to Dell, I want to make it clear that I am still using both desktop computers, so their products are great! My only beef was that, in my opinion, I received poor customer service after the sale.

See also: "Dell Finally Notices Its Poor Service Hurts Sales"

Thursday, December 3, 2009

Boosting Returns Through MLP's

I wrote in an earlier post about my plan to boost dividend income in 2010 by increasing my investments in MLP's. I did some research and discovered 3 great prospects for investing:

1. Suburban Propane Partners (SPH) Principally engaged, through its operating partnership and subsidiaries, in the retail and wholesale marketing of propane and related appliances, parts and services. This company pays a dividend of $3.32, which represents a 7.7% yield on their recent price of $43.99 per share. The P/E is 8.7, return on equity is 57.4%, earnings per share are $5.93 (so their dividend should be sustainable) and they have over $4 per share in cash. This will be my first targeted investment.

2. Alliance Resource Partners (ARLP) Master limited partnership engaged in coal mining, principally in the Illinois Basin, with the balance split between Northern Appalachia and Central Appalachia. The company is managed by its general partner, Alliance Holdings G.P., who holds the incentive distribution rights to the partnership, as well as 42.5% of the partnership's limited partner interests. They have a dividend of $3.04 which represents a 7.8% return on their recent price of $38.80. Their return on equity is 67%, P/E of 12.10 and they have $2.50 per share in cash. Earnings per share is $3.23. This will be my second investment for the upcoming year.

3. Amerigas Partners (APU) A publicly traded limited partnership formed under Delaware law on November 2, 1994. The Company is a retail propane distributor in the United States. As of September 30, 2003, they served approximately 1.3 million residential, commercial, industrial, agricultural and motor fuel customers from approximately 650 district locations in 46 states. The Company also sells, installs and services propane appliances, including heating systems. In certain markets, the Company also installs and services propane fuel systems for motor vehicles. Their District locations consist of an office, appliance showroom, warehouse and service facilities, with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall transportation and distribution infrastructure, the Company operates as an interstate carrier in 48 states throughout the United States. The Company is also licensed as a carrier in Canada. The Company sells propane to five markets: residential, commercial/industrial, motor fuel, agricultural and wholesale. Their Propane Xchange program enables consumers to exchange their empty 20-pound propane grill cylinders for filled cylinders at retail locations such as home centers, mass merchandisers and grocery and convenience stores. During fiscal year 2002, they introduced PPX Plus cylinders that are equipped with a special overfill protection device required by the National Fire Protection Association. They conduct their business through their subsidiary, AmeriGas Propane, L.P. and its subsidiary, AmeriGas Eagle Propane, L.P., both Delaware limited partnerships. The executive offices of the Company are located at Pennsylvania. As of October 1, 2003, AmeriGas OLP acquired all of the retail propane distribution assets and business of Horizon Propane LLC. AmeriGas Propane, Inc. is their general partner. The General Partner provides these services. Dividend of $2.68 which represents a 7.2% yield on their recent price of $3748 per share. Their P/E is 10.40 with a return on equity of 49% and $1.04 per share in cash.

I don't always agree with Jim Cramer over at CNBC, but he happens to like these companies as well. While I plan on investing in all 3 partnerships, I would suggest readers do their own research before making investments for themselves. However, if you're looking to invest in master limited partnerships, this might give you a good start.

Wednesday, December 2, 2009

America the Land of the Free?

America is often referred to as the land of the free. But most people in this country are not really free. They are tied to debt and a treadmill existence in terms of earning a living. At this moment, our federal government has promised future social benefits in excess of $50 trillion. That figure is approximately the same amount of the total personal wealth held by Americans. In the future, it is very likely that the government will not be able to provide the promised social benefits to our seniors. The typical household in the United States has a net worth of just over $90,000. That is about the same annual cost of a decent quality nursing home. Also, if home equity and equity in motor vehicles is netted out of the $90,000, then the typical household's net worth drops down to about $30,000. That is only about 60 percent of the typical household's annual income. Therefore, it should be every one's goal to provide for their economic future by being fiscally responsible. Otherwise they're most likely become completely dependant on their children when they are no longer able to work.
What should you do if you want to be act more like the rich and eventually become rich? The simplest way is to live below one's means. The typical household should be able to put away 5 percent of their annual income while they are in their 30s, 10 percent when they are in their 40s, and 20 percent when they are in their 50s. If you want to find true happiness and wealth, living frugally, below your means will get you there. It will also guarantee freedom from wage slavery so prevalent in the U.S. today. By continually converting earned income to income producing assets, you will find the road to true freedom in America.