Thursday, December 23, 2010

MERRY CHRISTMAS!

HERE'S WISHING EVERYONE A VERY MERRY CHRISTMAS AND A HAPPY AND PROSPEROUS NEW YEAR!!!

Wednesday, December 15, 2010

IN THE NEWS

In the news this week, Ron Paul wants to create competition for the Federal Reserve by allowing U.S. citizens to use gold in place of the dollar.  I've a feeling that won't really catch on anytime soon, but I do agree with his thinking on the Fed's "monopoly" like control of U.S. currency and would like to see a little more restraint on the free wheeling printing of dollars.

Obama invited Bill and Melinda Gates and Warren Buffett to the Oval Office for a meeting to discuss their charitable giving.  Could it be that he's thinking we might all be in need of some charitable support by the time the Democrats are through spending?

Speaking of Warren Buffett, his company Berkshire Hathaway has done a great deal of selling in the past quarter.  There is speculation it is to raise cash for the incoming investment manager at Geico after the retirement of Lou Simpson at the end of this year.  I think it might just be a move to collect capital gains in an up market.

As for my own trading, I pulled out my original investment in Centerpoint energy (CNP:NYSE) and reinvested it in Invesco Mortgage Capital (IVR:NYSE).  My stake in CNP was up over 28%, so I kept the remaining shares and will continue to draw the dividends on those.  At the same time I'll triple the dividend income I was earning on my investment in CNP by putting the money in IVR shares which currently yield 17.77%.  Like Annaly Capital (NLY:NYSE) I do not consider this a long term holding, it's purely a dividend play as long as interest rates are low.  Since a rising interest rate could drastically affect earnings for REITs, I'll be watching this one closely and move to trade out if interest rates should begin to rise.  Not expecting that to happen anytime soon, so I'll collect the dividends in the mean time.

Wednesday, December 8, 2010

FOLLOW UP ON ANNALY MORTGAGE MANAGEMENT

My sale of Windstream shares and purchase of Annaly Mortgage Management are complete.  Looks like I may be positioned to collect my first dividend payment from Annaly (NLY) either by the end of this month or sometime around the first part of 2011, depending on the ex-dividend date.  Either way I stand to collect over three times as much in dividend payments as I was making with Windstream.  As long as interest rates remain favorable I should be able to hold shares of the REIT for quite a while and continue collecting the increased dividend income.  At the same time I'll still be collecting a nice dividend payment from Windstream (WIN) shares that were paid for out of capital gains.  Was also able to keep back some of my original cash investment to hold as a reserve in my money market account, should I need the extra cash or find another investment I'd like to take advantage of. 

Tuesday, December 7, 2010

NEED EXTRA CASH? NEVER PAY FULL PRICE FOR ANYTHING!

Imagine if you lived in a magical world where you never had to pay full price for anything!  Well guess what, you're already there.  With so many promotional gimmicks, it's quite possible to avoid ever paying full price for anything you buy for the rest of your life.  You just have to figure out how to do it.

I've been a bargain hunter for years, but since my recent trip to the hospital, I've been looking for even more ways to save.  Here are a few of the things I've come up with.

CASH BACK ON PURCHASES:  You've most likely heard of people who use cash back credit cards to pay for their purchases, then pay the balance in full at the end of each month and collect the cash back on their purchases.  This is a great way to save on your purchases, in fact my sister does it all the time.  However, I've found what I think is an even better way to take advantage of this strategy.  One of my money market accounts provides a cash back debit Mastercard.  As long as I use it like a credit card at the point of purchase (I don't give them my pin number), I get cash back for everything I buy.  I have to admit I was not really taking advantage of this until just recently.  It occurred to me that I could transfer all the money I usually spend on cash purchases into this account, use the card and get part of my money back.  I now pay for gas and maintenance on my car, restaurant meals, grocery and department store purchases and anything else I used to pay with cash, I put on the card.  At the end of each month I get cash back added directly to my money market account.  What makes it really great is that I also earn interest on my average daily balance, so adding my spending money to the account has boosted my interest income as well.

USE COUPONS:  I've talked about this before, but again I have to admit that I truly hadn't taken full advantage of this easy money saving tip until just recently.  Now I scan the coupon section of the newspaper religiously, in search of manufacturer or store coupons for items that I use on a regular basis.  Recently I've saved several dollars on some of my favorites like Folgers coffee, Tide laundry detergent, Bounce fabric softener, Campbell's soup and Lever 2000 bar soap to name just a few.  These are all items I purchase on a regular basis, but with the coupons and the cash back debit card, I've saved a great deal of money and earned cash back.  

SALES AND REBATES:  Of course I've always watched the sales and taken advantage of manufacturers rebates on any of the items I buy, but I've become more committed to putting these money saving tips to better use as well.  I'm thinking the best case scenario would be to find items I use on a regular basis on sale with a manufacturers rebate, then use a coupon and my cash back card to purchase them, resulting in a quadruple discount!!!  Of course you may not always be able to use coupons on sale items, but when you can, what a deal!

By following these few money saving ideas, I've been able to make my hard earned dollars go a lot farther, helping to create extra cash to pay medical expenses and keep my savings and investment plans on track. 

Friday, December 3, 2010

WINDSTREAM: ANOTHER FREE STOCK

My stake in Windstream Corp. (WIN:NASDAQ) is up by 28.84% since my initial purchase.  I've put in an order to sell most of my shares so I will regain all of my initial cash investment.  The remaining shares were paid for with profits (capital gains) from my investment in Windstream, making them essentially free stock.  I will have none of my own money tied up in these shares, so all past and future dividends plus any gains in share price from now on, are just icing on the cake.  Counting Windstream, I'm up to 5 different companies I've repeated this strategy with.  I'm looking to do more as opportunities present themselves, with a goal of building an entire portfolio of free dividend paying stocks.

As for the money I've pulled out of the stock, I've placed an order to purchase shares of Annaly Mortgage Management (NLY:NYSE).  NLY currently pays a dividend of $2.72 per share which represents a yield of 14.95% on their recent share price of $18.20.  While an increase in interest rates could hurt NLY's profits, I'm hoping to collect a nice return on dividends while rates are low, then trade out of the stock should rates begin to rise.  The goal here is to boost monthly cash flow from dividends with this one. 

Wednesday, December 1, 2010

UPDATE ON MEDICAL BILLS

It looks as though I won't be wiped out financially by my recent heart attack and heart surgery.  Just got a letter from the hospital today saying they're charitable program was picking up 100% of the bill.  I'll still have radiology, emergency room physicians and cardiology to pay, but that's a lot more doable without the extra $50,000 from the hospital.  Takes a lot of pressure off me right now, although I'd already figured out a plan B in case it hadn't worked out.

On top of this good news, had a little up tick in the stock market today and completed a couple of successful auctions on ebay, so things are looking up a bit.  Plan on paying off most or all of my credit card debt after the first of the year.  Don't want to be making payments on credit card debt along with payments on medical bills, so I've decided to pay them off and save on the interest.

Wednesday, November 24, 2010

MONEY SAVING TIP OF THE MONTH

If you like the Ipad, but can't see yourself spending the money to buy one, and you're not expecting one for Christmas, you might want to consider a less expensive alternative.  I recently purchased a 7 inch tablet internet appliance running the Android operating system (see pic).  While it's not up to the operational level of an Ipad, if you're only interested in checking emails, surfing the internet via wifi and playing music and video then you might be satisfied with the much less expensive epad.  I found mine on Amazon for $129 with free shipping and I've been extremely satisfied with its performance.  I downloaded the Kindle for Android software and have been using it as an ereader as well.  It works fine on my home wifi connection and came with several applications pre-installed.  Like I said, it may not be up to the quality or functionality of an Ipad, but I figure with the difference in price I could go through 4 or 5 of these gadgets before I'd be out the money I'd spend on one Ipad. 

Battery life seems to be around 2 hours, which is roughly the same amount of time I get out of my laptop.  I find it a lot more portable and convenient to use than a laptop and when I'm stuck waiting at the Dr.'s office or the VA I can enjoy reading a good book.  I've also figured out, the amount of money I save by purchasing ebooks, instead of printed versions, will quickly cover the cost of purchasing the epad. 

Several of the stores are currently selling these tablet pc's, but prices vary widely, so you definitely want to shop around.  If you'd like to look for it on Amazon, simply type epad into their search under the electronics section. 

Tuesday, November 23, 2010

HOSPITAL BILL FROM MY RECENT HEART ATTACK

Was off work for a week recovering from my recent heart attack.  Just started my second week back at work, so far so good.  Got my hospital bill in the mail today.  The grand total so far is near $46,000.  Still waiting on the bill from the cardiologist.  Also waiting to hear back from the hospital's assistance program for the uninsured.  Since going back to work I haven't been covered by health insurance, so I'm going to have to figure out how to pay my own medical costs without leaving myself in the poor house.  I told Pickles, my chihuahua, he may have to get a job :0).  He was not amused. 

MY TOP TEN HOLDINGS GOING IN TO 2011

With this year winding down, the dollar is up on bad news in credit markets overseas, the stock market is down and I'm not expecting to do any major buying or selling until after the first of the year.  My top ten holdings for the new year are:

 1.  AT&T (T:NYSE)
 2.  Philip Morris Intl. (PM:NYSE)
 3.  Windstream Corp. (WIN:NASDAQ)
 4.  Universal Insurance Holdings (UVE:AMEX)
 5.  Centerpoint Energy Inc. (CNP:NYSE)
 6.  Merck and Company Inc. (MRK:NYSE)
 7.  General Mills Inc. (GIS:NYSE)
 8.  British American Tobacco (BTI:AMEX)
 9.  Unilever NV (UN:NYSE)
10.  ISHARES TR US PFD STK IDX (PFF:NYSE)

Overall I think it's a pretty diversified list of holdings with good prospects for growth and decent income from dividends.  I am currently earning a little over a 6% return in dividend income overall from holdings in my taxable portfolio.  Would like to see the Bush tax cuts extended, but not quite sure that will happen.  Just have to wait and see.

This list is for informational purposes only.  I do not suggest anyone follow my investment strategy without first doing their own research.

Sunday, November 14, 2010

PREPARING FINANCES FOR THE NEW YEAR

I know it might seem kind of earlier to be planning ahead for 2011, especially in view of my recent health concerns, but it's never too early to plan as far as I'm concerned.  Given the major changes to my financial situation due to recent medical bills, I think it's even more important to come up with a plan of attack.

One thing I've been wanting to get done was to revamp the spreadsheet I use each month to keep track of personal finances.  While I've made adjustments and improvements along the way, the current spreadsheet I use is one I created 10 years ago and was due for a major update.  The simple spreadsheet has worked well for me over the years, but I thought it was time to prepare a more professional monthly financial statement.  With that in mind, I've created an entirely new system incorporating a personal cash flow statement and balance sheet.  While not any more complicated or informative than my current spreadsheet, it presents the data in a more professional and organized manner.  Which means, I should be able to use this spreadsheet for the next 10 years. 

As an update on the medical front, I've finished my application from the hospital for consideration for their financial aid program for the uninsured.  Seems my reduced pay since the economy crashed may actually qualify me for assistance in paying my hospital bills or at least help in arranging an affordable payment plan.  I'm turning my application in tomorrow and I'll keep my readers posted on how well it works out. 

Friday, November 12, 2010

RECOVERING FROM A HEART ATTACK

Went in to the emergency room Monday night with chest pains.  Turned out to be a mild heart attack caused by blocked coronary arteries.  Had stint installed to open blockage on Tuesday morning and I'm home from the hospital recovering from my first, and hopefully last, heart attack.

Now for the worst of it.  With my current job, I have no health insurance, so I'll have to figure out how to pay for all this on my own.  Not looking forward to all that, but I'm determined not to let it wreck my finances.  I'll keep readers posted on how it all goes. 

Already saved a great deal by shopping around for medications.  The original quote from a local drugstore chain was $812 for a one month supply of prescription medications.  After checking around, I got 3 months of four of my medications, plus one month of the most expensive one for $209 at the local Walmart pharmacy.  Saved well over $600 per month on prescriptions with a few quick phone calls. 

Now I'll have to work on the medical bills as they come in.   

Friday, November 5, 2010

ALTRIA GROUP "WORLD'S GREATEST INVESTMENT"

I know it hasn't been popular to invest in the tobacco industry for quite some time now, which might explain (in part at least) the mediocre/poor performance of Altria Group's (MO) stock price.  However, I recently read an article on the Motley Fool website which presented a good argument for Altria being possibly the "world's greatest investment."  They made some good points about how stocks with slow growth and high yields can make stellar gains through reinvested dividends over a period of time. 

I've owned shares of Altria for quite some time now and, after reading the article, have decided the best use of their dividends would be to reinvest and increase my stake in the company.  Some may think this an insane move with tobacco use on the decline in the U.S. for several years now, but I seriously doubt that the industry will fold anytime soon.  Basically what you have is a simple business model consistently churning out cash for shareholders.  As a smoker, I have no qualms about investing in the tobacco industry.  I'm sure there are plenty of people who would disagree.

Closed on my purchase of AGNC shares earlier in the week and collected some great dividends from Campbell's Soup, AT&T and Universal Insurance Group.  The month is off to a great start, hope to see it continue through the rest of 2010!

Thursday, November 4, 2010

FALLING IN TO CASH!

I wrote about my trip to the casino last month and how I lost $50 dollars on penny slots, but this month things are really looking up.  It's only the 4th and I have all my bills paid except my phone bill, which runs around $50 per month.  I'm sitting on about a months worth of cash in my bank account and I get paid from work tomorrow.  Also picked up a contract for a carpet cleaning job that will take me about 2 hours and pays $100.  On top of that, I sold a couple of silver coins on ebay for $70 and the listing only lasted about an hour before someone took the buy it now option, so it was a quick sale with immediate payment. 


As if that weren't enough, I recently took some cash out of my money market account from stocks I'd just sold.  Just wanted to have extra on hand for maintenance work on my car.  As it turned out, I didn't need the money after all so I transferred it from checking to savings to boost my cash reserves.  In the mean time, the stocks in my regular investment account went up and are now worth more than before I took out cash.  Have you ever heard that expression, "They just fall into money?"  I'm beginning to feel like it's happening to me.  It's a nice feeling.  But the truth is, what seems like a run of extremely good fortune is really more the result of taking control of my finances, creating a plan and sticking to it. 

Sure is nice to see some progress for a change.  Especially after the last couple of years.  It's also nice to know that even though I don't feel very secure in my new job and my earned income is well below what I'm used to making, I'm still making progress towards financial freedom by actively managing my finances.  I feel much more confident that no matter what obstacles the future may hold, things will turn out all right in the end.  It really boils down to managing what you do have and not worrying about what you don't have. 

Friday, October 29, 2010

AGNC NEWEST ADDITION TO STOCK PORTFOLIO

Looking to boost overall cash flow from dividends I've decided to add American Capital Agency Corp (AGNC: NASDAQ) to my taxable investment account.  AGNC is a real estate investment trust which earns income primarily from investing in residential mortgage pass-through securities and collateralized mortgage obligations. These investments consist of securities, for which the principal and interest payments are guaranteed by United States Government-sponsored entities, such as Fannie Mae and Freddie Mac or by a United States Government agency, such as Ginnie Mae. The Company is externally managed by American Capital Agency Management, LLC, a subsidiary of a wholly owned portfolio company of American Capital, Ltd.

AGNC has a price to earnings of 4.01 with a ROE of 34.17.  They have earnings per share of $6.84 with a dividend of $5.60, which represents a return of 19.55% on their recent share price of $28.64.

I have to admit a bit of trepidation about investing in AGNC after previous experiences with REITs.  However their reported earnings seem to indicate support for their current dividend and their share price has remained fairly stable during the past year, with their 52 week high being $30.09 and their 52 week low of $23.61.  Since the total initial investment I'll be making is a small fraction of my portfolio, I believe the risk is acceptable for current returns.  The fact that they've managed to thrive during one of the worst economic downturns in this writers memory is yet another positive as far as I'm concerned. 

Sunday, October 24, 2010

TIME OFF WORK

Took a couple extra days off work this week.  Just needed some down time, so I went to the Isle of Capri casino in Booneville.  Played the slot machines for a couple of hours, lost $50, but I had a good time.  Decided to go to Sedalia for some shopping at Big Lots.  Didn't find anything there, but I did pick up a nice addition to my Egyptian collection, later in the day, at Hobby Lobby.  So it's been a relaxing weekend overall.

Going forward this week we'll be looking at the GDP report and the report on consumer confidence.  Experts aren't expecting much of either report, so any surprise gains could bode well for stocks.  Also, a great deal of money has been moving out of government bonds lately and the money has to go somewhere.  If a decent percentage is reinvested in the market we could see some additional gains.  I'm looking for the big push, one way or the other, to come after the November elections.  However, we could see movement before the elections as investors factor in expected election results.  Just have to wait and see.

Collected some good dividend payments in the past few weeks, including my last payment for this month from Windstream (WIN: NASDAQ).  They have a current dividend yield of 8.03% on their recent share price of $12.45.  However, I would caution that their current earnings may not support continued payment of such a high dividend.  Right now I'm holding on to the stock since I bought in at a lower price and my yield is closer to 10%, but I am watching it very closely.  If earnings do not pick up I may be selling my position and moving the money elsewhere. 

Thursday, October 7, 2010

TRADERS VERSUS INVESTORS, WHICH SHOULD YOU BE?

Just read an interesting article about traders beating out investors under current economic and market conditions.  While I agreed with some of their points, I think they ignored the fact that you don't necessarily have to be one or the other.  I firmly believe that there are merits to both and there are times when it's appropriate to trade stocks, as opposed to a simple buy and hold strategy.  So in my opinion, we should all be investors who also take advantage of a great trade when it comes along.  Although I consider myself a dividend investor, which entails buy and hold, I'm also quick to take advantage of decent capital gains.  Usually when I'm sitting on a large paper profit, I'll figure out how long it would take to earn the same amount through dividend payouts and then decide which I would rather do.  Sell the stock for immediate gains or hold and collect the dividends.  I've also cashed in on capital gains and turned around and repurchased shares of the same stock for the dividend payout when the share price has dropped back down. 

Not much news with my investment accounts this week.  Collected nice dividend payments from Merck (MRK:NYSE) and Ishares Preferred Index Fund (PFF:NASDAQ).  Took cash from Merck and reinvested dividend in PFF.  I'm working on building my position in PFF since they pay monthly dividends.  Want to keep my cash flow from dividends ever increasing and it doesn't hurt to have a few holdings who pay on a monthly basis. 

Monday, October 4, 2010

REYNOLDS AMERICAN INC

It's been kind of a slow week for my investment accounts.  Got a nice dividend from Reynolds American Inc. (RAI:NYSE).  I'll be upping my stake in RAI with my next stock purchase.  They currently pay a dividend of $3.60 per share, which represents a 6.12% return on their recent share price of $58.85.  They have earnings per share of $4.16 and their P/E is 14.1.  RAI is a long term holding in my regular stock portfolio. 

Stock futures are pointing towards a lower open in the market this week, due mostly to concerns over U.S. jobs.  So I'm not looking for any big moves this week.  I just keep reminding myself that the longer the market languishes, the more time I have to accumulate bigger stakes in some great dividend stocks. 

Wednesday, September 29, 2010

NEW ZEALAND TELECOM

It's been kind of a slow week for me investment wise.  End of the month I guess.  Anyway, collected a nice dividend from New Zealand Telecom (NZT).  The stock itself didn't hold up well in the downturn, but I believe in the company and they carry a dividend of 11.31% on their recent price of $7.70.  So I'm keeping the stock for the yield and looking for some recovery.  I'm thinking it will happen, just may take some time.

Put in an order with my IRA account to purchase more shares of S&P 500 Index SPDR (SPY).  While the dividend is not so impressive (2.10%), I'm expecting to collect some decent capital gains with this fund.  SPY is definitely one of my long term holdings for my retirement account.  I also like the fact that SPY invests in some sectors currently not represented in my overall investment portfolio. 

On a personal note, looking forward to the latest round of "Dancing With the Stars" and the new season of "Glee" on television!  Also looking forward to the November elections, it will be interesting to see how that plays out.

Thursday, September 23, 2010

BUYING MORE SHARES OF PFF TO BOOST DIVIDEND INCOME

In a move to boost monthly dividends, I've decided to increase my stake in iShares S&P U.S. Preferred Stock Index Fund (PFF:NYSE).  They have a current yield of 9.23% on a recent share price of $39.85.  Exchange traded funds that focus on dividend paying stocks trailed the market by a wide margin in 2009, but may attract yield starved bond investors who are also worried about the prospect of rising interest rates.  Several factors are causing some fixed income investors to take a second look at stocks to generate income.  Yields on CDs, money markets and high quality bond funds are at paltry levels thanks to the Federal Reserve's commitment to keep rates low to fight recession.  There's also the fear among bond fund investors of the potential losses from rising interest rates.

After taking all this into consideration, I decided it would be a good place to put available funds to work.  Where else can you get a reasonably safe 9.23% yield?  As with all stock investments there are risks, so if you're thinking about investing in PFF, do your homework people.

Sunday, September 19, 2010

MY MOST EXCITING DISCOVERY IN INVESTING!!!

While doing some research to boost my monthly cash flow from dividends, I discovered something truly amazing.  I'm ashamed to admit that I never considered it before, since I have been investing for many years now.  However, here it is.  I found out that I can replace the money I earn in a years time at my current job for a total investment of just under $140,000.  To do this I would only need purchase 2,000 shares each of 3 dividend stocks that pay in different quarters.  The average dividend income per month would be roughly equal to what I currently earn at work.  

Why is this so exciting to me?  Because even though I'm working for a lot less than I'm used to making in this down economy, I've been managing quite well.  Not only am I paying all my bills ahead of time, I add to my investment portfolio every month as well.  On top of that, I've always estimated that I would need anywhere from a quarter to half a million dollars to retire comfortably.  Now I've come to the realization that I can retire on a whole lot less than I thought and possibly years earlier than I expected.  

I've revised my automatic investment plan to include my new discovery.  The greatest thing of all is that I already own shares in all three companies, so I need only increase my stake to 1,000 shares each.  While I don't have enough cash to buy the entire 6,000 shares, I'll be diverting dividends and capital gains from my other holdings to speed up the process until I reach my goal.  In the mean time, I should benefit from ever increasing monthly dividend income as my stake in the 3 companies rise.   

Monday, September 13, 2010

LATEST ADDITIONS TO MY PORTFOLIO

Added shares of telecom Windstream Corporation (WIN:NASDAQ) to my taxable stock account.  It's been a great performer for my portfolio and I like the dividend (currently 8.06% on their recent share price of $12.39).  Windstream is one of my long term holdings. 

For my IRA account I purchased shares of Credit Suisse Group (CS:NYSE).  They currently pay a dividend of $1.78 which represents a yield of 3.84% on their recent share price of $46.66.  While it's not the highest yield, I think they have good prospects for increasing dividends in years to come.  CS is one of my long term holdings for my IRA account. 

I'm happy with the way the markets have been moving of late, although I'm not too optimistic that the upward trend will continue.  I'm thinking a lot hinges on the direction of the November elections.  Should the Democrats retain control of both houses, which seems unlikely, I'd expect a prolonged drop in equities.  If the GOP manages to rest control of both the House and the Senate, I expect the stock market to react quite favorably, at least through the first part of 2011.  Aside from the above scenarios, the only real market mover that I foresee would be a dramatic increase in new jobs, which I believe is highly unlikely.  Should the jobs situation get worse, it would present another tremendous buying opportunity when equities bottom out.  At least for those who still have money and the courage to invest in stocks.

Tuesday, September 7, 2010

DON'T COUNT ON OBAMA'S 50 BILLION DOLLAR INFRASTRUCTURE SPENDING TO CREATE JOBS

I've said it before and I'll say it again, there will be no meaningful recovery of the economy without new jobs.  But I wouldn't count on Obama's plan to create new jobs by spending 50 billion dollars on infrastructure.   Creating infrastructure jobs will not directly impact the areas of unemployment among the poorly skilled workers,  those hardest hit by high unemployment.  When current and newly employed skilled workers spend their earnings there may be some residual job creation, but in my opinion it's highly unlikely to have any significant impact on unemployment overall. 

When the State of Missouri received federal funding for road improvements in the last round of stimulus spending, the only thing I saw locally was some street resurfacing and a lot of new roundabouts that were not really needed.  Did it create more jobs locally?  Not that I'm aware of.  It appears that all the work was done by persons already employed by city street and state highway departments.  So I guess it did keep those people working and good for them.  But there was no significant increase in employment and I'm sure it will play out much the same on the national level.

So how will this affect the stock market?  We might see some temporary gains because of additional funds being pumped in to the economy, but it's unlikely to last.  Big infrastructure firms and their shareholders are likely to benefit most of all.  We're also likely to see a severe market correction, as taxpayers who are spooked by runaway government spending and the ever increasing threat of massive new tax increases, tighten down even more on discretionary spending. 

If they want to create jobs, why not invest the 50 billion in partnerships with business owners who have proven track records of starting and building businesses and creating new jobs?  It shouldn't be that difficult to identify 50,000 U.S. businessmen with successful track records, loan each of them $1,000,000 to start new businesses on the condition that they hire at least 20 employees.  This would instantly create a million new jobs.  The business man would benefit as the owner of a new business, the government would benefit by having a chance to reclaim the money loaned out from successful business ventures.  While they may lose some from businesses that fail, it's better than infrastructure spending where there is no repayment at all.  Taxpayers would benefit by having jobs and residual jobs created by increased spending from a million newly employed.  Oh and don't forget, the 50 billion dollar spending package on infrastructure was just the amount proposed to get the program started,  so even more taxpayer dollars would be spent on future projects. 

However, with the type of government and business partnerships I'm proposing, if the first 50 billion in partnerships was successful, then the loan repayments could go toward creating new partnerships between government and business leaders, whereby even more jobs could be created, without additional costs to taxpayers.  Of course it will probably never happen, but wouldn't it make more sense?  As for those who would argue the dire need for infrastructure spending, I couldn't agree with you more.  We definitely need infrastructure spending, but the money for infrastructure could and should come from increased tax revenues due to job creation, not the other way around. 

Sunday, September 5, 2010

BIG LOTS BARGAINS

I recently paid a visit to my local Big Lots Store.  Got a great deal on a wireless keyboard and mouse combo for my desktop computer.  They had the least expensive prices I'd seen anywhere for the set.  They also had great deals on some nice laptop cases and even though I don't really need one right now, it's nice to know for future reference.

Another thing I love about their store is the primo line of furniture they carry.  While it's not like visiting your local furniture store, they do have quite a selection and the prices were unbelievable for the quality of merchandise.  When I'm in the market for new furniture, this will be the first place I visit.  I could have easily refurnished my 2 bedroom apartment with fantastic furniture for less than $3,000.  Which is most likely what I'll do as soon as I finish paying off my credit cards. 

I would consider investing in their stock (Ticker Symbol--BIG:NYSE) but I limit my investments to mostly dividend stocks and don't currently pay dividends.  Although, in their defense as an investment the companies stock price is up 33.94% for the past year.  Pretty impressive.

QUOTE FOR SUNDAY

"I don't know the key to success, but the key to failure is trying to please everybody."-- Bill Cosby

Thursday, September 2, 2010

A REMINDER OF WHY WE INVEST IN STOCKS

The markets rally over the past few days serves as a reminder of why we invest in stocks.  It is extremely gratifying to see the rapid increases in wealth that even a small rally in the market can bring.  While I doubt anyone, including myself, has gained enough over the past few days to quit their day jobs, it's still good to see some gains.  While I suspect that a true recovery of the economy and the stock market will only come with recovery  in the job market, small rallies along the way remind us of better days to come.

On Wednesday of last week, I wrote about getting another check from SendEarnings.com.  Today I discovered that I have started earning money from referrals.  So far I only have 2 referrals, so the amount is quite small, but I'm excited none the less because I see the potential for greater earnings in the future.  I'm still planning on investing my checks in dividend stock so I can keep the money growing.  This reminds me of what Robert Kyosaki talked about in one of his "Rich Dad" series of books about creating wealth building assets with no money.  He basically said if you want to be rich, you need to learn to create income producing assets from nothing.  With SendEarnings you invest no money, it's totally free to sign up.  You don't have to buy anything, you can earn money from reading paid emails, doing surveys and so on.  I started earning money faster when I decided to do a portion of my regular shopping through their associated retailers.  I only purchase items that I would normally buy anyway, but with SendEarnings I get some of my money back with every purchase.  What could be better?  The money I save and the money I earn all goes in to my investment portfolio.  So basically it's like creating wealth without investing any of my own money.  My idea right now is to invest in a couple of stocks with my earnings and see how much I can make it grow. 

Tuesday, August 31, 2010

QUOTE FOR TUESDAY

"Always bear in mind that your own resolution to succeed is more important than any other one thing." -- Abraham Lincoln

Monday, August 30, 2010

NOVEMBER ELECTIONS AND THE STOCK MARKET

With upcoming November elections in the U.S., the democrats may very well lose their stranglehold on the House and the Senate.  By some estimates, the likely hood of Republicans gaining control of the House of Representatives has grown to 77% from below 30% at the beginning of 2009.  So how might this affect the stock market?

The last time the Democrats controlled both Houses of Congress and the White House was during the first two years of the Clinton administration.  They lost control of both houses to the Republicans during mid term elections in 1994.  So how did the market react?  Subsequent to the 1994 mid term losses and during the second half of the Clinton presidential term,  the stock markets gained over 34% in 1995. 

If history should repeat itself, which it often does, then we should all be hoping for resounding victories for the Republicans in November.  Also playing in favor of the markets, the third year of a presidential term is historically the best, as far as the stock market goes. 

Wednesday, August 25, 2010

ANOTHER CHECK FROM SENDEARNINGS!!!

Just earned another check from SendEarnings (see banner ad this page).  What a great deal!  This check is for $42 and some change.  Not a lot, but I'll be transferring it from the bank to my money market account and will use it to purchase a few shares of dividend paying stock.  Keep the money moving and growing :0)

Also been doing some carpet cleaning jobs on the side with my new carpet machine.  I've earned enough to reimburse me for 1/6th of the purchase price of the machine.  In addition I have three other carpet jobs lined up, whenever I get time to do them.  At this rate it won't take long to earn back the entire purchase price and I can start using the money to retire what little debt I have left and build my investment account even more.

Speaking of investments, I'm looking at the current downturn in the market as a buying opportunity.  Looking to add additional shares to some of my quality stock holdings.  Have reduced investment costs to my IRA by changing my investment schedule from monthly to quarterly.  Instead of paying a commission each month, I'm only paying 4 times per year, reducing my commission expenses from $48 to $16.  Would rather have the money go towards purchasing more shares than fattening the brokers.

Monday, August 23, 2010

QUOTE FOR MONDAY

"There are no limitations to the mind except those we acknowledge--both poverty and riches are offspring of thought." - Napoleon Hill

If you think you will be wealthy, you will.  If you think you'll always be poor, you're absolutely right. 

Sunday, August 22, 2010

VICTIM OR BENEFICIARY OF FEAR, IT'S YOUR CHOICE

While the U.S. and the rest of the world may be short on jobs, short on available credit and short on signs of economic recovery, one thing they are not short on is fear.  Fear has become a pervasive part of our national consciousness in relation to the stock market and the economic recovery.  Every day brings some bad news or other that activates yet another panic attack among investors. 

The choice we face as investors is whether to become a victim of fear or learn to benefit from it.  Fear almost inevitably causes an overreaction and it has never been more evident than in the wild swings we've seen recently in the stock market.  One thing you have to do, to avoid becoming a victim of fear, is to decide whether your financial plan and your financial goals are still worth pursuing.  If the answer is yes, and your time horizon is 10 or more years, then why would you be panicked by temporary swings in the market?  Yes we are in a historically disastrous economic state at present, but this too shall pass.  Those who had the intestinal fortitude to invest during the height of the great depression and hold on, found themselves the beneficiaries of some of the greatest wealth building portfolios the world has ever seen. 

I believe we are facing just such a situation today.  While the average Americans day to day life is not as bad as the people who suffered throughout the Great Depression, there are still a great deal of similarities.  So, if you find yourself one of the lucky ones who still has a job and still has a little extra money to invest, now may be a golden opportunity to build the portfolio of a lifetime.  When panic takes hold and most investors flee the market, look at that as an opportunity to pick up great company stocks at bargain basement prices.  The resulting investments could generate untold wealth for you and your loved ones for generations to come.  Instead of being victimized by fear, choose to become a beneficiary instead. 

Wednesday, August 18, 2010

QUOTE OF THE DAY

"In the confrontation between the stream and the rock, the stream always wins--not through strength, but through persistence." -- Buddha

Being persistence will win out when working towards your financial goals.   

Monday, August 16, 2010

UPDATE ON FREE STOCKS

Not making a lot of changes in my portfolio right now.  But I wanted to update readers on the progress of my "free stock" strategy.  In earlier posts I talked about selling enough shares in Legacy Reserves LP (LGCY) and E. V. Energy Partners (EVEP) to pull all my initial investment money out of the stocks.  I intend to let the remaining shares ride to collect future dividends, figuring any dividends collected are pure profit, since I have no dollars invested in these stocks.

Just got my latest dividend payments from both stocks!  I'm thinking this is the greatest thing since sliced bread!  With no dollars invested, I've created a stream of future income, not to mention the current value of both stocks is on the rise.  What could be better?  I'm looking at some of my other stocks to see which ones I can employ the same strategy with.  I'll be selling just enough shares to take my investment capital out and keep the remaining shares of "free stock".  Then I'll redeploy the original investment capital elsewhere, in hopes of repeating the process over and over.

I'll keep the readers posted on how it's going.

Friday, August 13, 2010

BONDS VS DIVIDEND STOCKS

Just finished reading an interesting article about investing in bonds versus dividend stock investing.  It made some great points about the current state of the bond market.  Not the least of which is the fact that with current bond rates at all time lows, the bond market yields have nowhere to go but up.  As yields rise, bond prices move lower, eating away any gain from the coupon.


On the other hand, dividend stocks make quarterly or annual cash payments similar to bond payouts, but also have unlimited potential for capital appreciation.  They satisfy the two main concerns of most investors by giving them cash to help with rent, groceries and other expenses, while increasing in value over time, helping to raise the value of your portfolio in the process.

What I found most interesting about the article was, of the five dividend stocks recommended for stability and long term gains, I already hold positions in four of the corporations.  The remaining was an energy limited partnership which I do not own shares in, but I do still have shares in 3 other energy partnerships, so it all works out in the end.

Investors this year have pulled billions of dollars out of the stock market and poured their hard earned cash in to bonds.  With the uncertainty in the market, this is certainly an understandable response.  But I firmly believe that the only way for most of us to achieve a secure and comfortable retirement, is to invest in individual stocks. 

While you won't get rich over night, diverting a good portion of your investment portfolio toward dividend paying stocks, will go a long way towards building wealth and helping you sleep better at night.  

Saturday, August 7, 2010

TIM GEITHNER SAYS RICH SHOULD PAY MORE TAXES????

Am I the only one who thinks it's the height of hypocrisy for Tim Geithner to be on his high horse about the Bush tax cuts?  Correct me if I'm wrong, but isn't this the same guy who almost blew his appointment as Treasury secretary for failure to pay all his taxes?  So now he would have us believe that the United States economy is doomed if the Bush tax cuts remain in place, tax cuts which he most likely benefited from. 

I would like to remind Mr. Geithner that not all people who benefit from dividends and capital gains are "rich".  I certainly would not be considered "rich" by any standards, but I do benefit directly from dividends, capital gains and interest on my investments.  Is there any good reason hard working Americans, who manage to save and invest for their future, should be forced to pay higher taxes to support those who fail to do so?  I don't believe there is.  

You can't fix unemployment and insufficient government revenues by taking money from one group of citizens and giving it to those who are less productive.  It's this type of thinking that is giving fuel to the rumors of the current administrations move towards a more socialistic form of government.  It did not work in the Soviet Union.  It did not work China.  It did not work in Cuba and it will not work in the United States of America.  

Promoting savings by low taxes encourage investments, which in turn generate capital for businesses.  When businesses have adequately capitalized and are free from excessive government taxes and restrictions, they hire more workers.  When more people are working, more people are spending and state and federal governments benefit from greater tax revenues.  It's just that simple.  If Mr. Geithner and anyone else in Washington doesn't understand this, they should not be there.  We should all keep that in mind during upcoming elections.

Tuesday, July 27, 2010

UNIVERSAL INSURANCE HOLDINGS INC

Had some extra cash from dividends in my money market account and decided to put it to more profitable use. So I put in an order and picked up more shares of Universal Insurance (UVE: AMEX). I'm currently long on UVE although I have traded in and out in the past. I especially like their dividend yield right now of 9.60%, which beats the you know what out of the return I was drawing from the money market account. They're currently trading near their 52 week low, most likely due to hurricane season, so I'm taking advantage of the low price to increase my stake and boost my return from dividends. I've noticed it's not unusual for the price to drop during spring and summer months and rebound when hurricane season ends in September.

I'm currently sitting on some nice paper profits, but haven't decided to pull any cash out at the present time. I'd like to make a couple more trades where I pull out my initial investment and keep the remaining shares, in effect gaining "free" shares. While I am in a position to do this with a few of my current holdings, I haven't found any new investments that I prefer over the ones I already own. So I'll sit tight for now and keep my eyes open for a good opportunity.

Bought a commercial carpet cleaning machine for $700. I've made a deal with my apartment complex to clean all their carpets as tenants move out. I figure that I can easily earn a 40-50% return on dollars invested in the machine by doing 8-10 apartments per year. But if I only do enough to earn 20% on dollars invested, I'd still get my money back in 3.6 years and everything after that is pure profit. Not to mention that I can clean my own carpets without paying for a rental machine. So I think this may actually be one of my best investments of the year.

Wednesday, July 21, 2010

THE SMALL INVESTOR BY JIM GARD

I've been reading a great book for people who are new to investing. It's not a new book, but it does a great job of covering all the basics of investing in stocks, bonds and mutual funds. It is very well written and easy for anyone to understand. The book is titled, "The Small Investor" and is written by author Jim Gard. I'm reading the second edition which I picked up at a used book store, but I'm sure it's still available through Amazon or Barnes and Noble.

Along with covering all the basics of investing, the book also explains why the small investor actually has an advantage in some ways in the marketplace. It tells you how to work with professionals such as investment counselors, brokers, money managers, and others whose services you may or may not need. It's not a get rich quick scheme, but it can help you make a personal plan that gives you your best shot at a reliable return on your investments, with manageable risks.

I highly recommend the book for beginning investors.

Sunday, July 18, 2010

A NEW CAR OR A NEW FUTURE?

My car has been paid off for a little over 2 years now. It's still in pretty good shape, even though I bought it used (2 yrs old at time of purchase). But I've been thinking a lot lately about buying a newer model. I wanted to wait until I could pay cash or work out a great deal with a trade in and large down payment, so I could pay off the remaining balance in 3 years with small payments. Then I started to think a little more about the return on investment here.

We all know that cars are not really investments. You pay a large price, you pay even more if it's financed and the value steadily drops the longer you own the vehicle. Not to mention all the money you put out along the way for maintenance and repairs. All that aside, let's pretend for just a moment that you consider your car an investment of sorts. Say you were to buy a nice used car for $12,000 for 60 months, with payments of $200 per month. At the end of the 5 years we'll generously assume that you're able to sell the car for $4,000. Instead of spending the money, or using it to pay on a newer model, you decide to pay yourself equal monthly payments for the next 5 years (60 months) from the $4,000. You would be able to draw roughly $66.66 per month for 60 months ending with a $0 balance. O.K., that doesn't sound too bad. But let's consider another scenario. Instead of buying a nice used car, you decide to make do with the vehicle you have and invest $200 per month in dividend paying stocks. At the end of 60 months instead of having a $4,000 car to sell, you have accumulated roughly $12,000 worth of dividend paying stocks. From personal experience I'd say you could expect to draw $75 per month for the next 5 years in dividend payments, at which time you still own your $12,000 investment portfolio, instead of being back to $0. But it doesn't end there, because as long as you continue to hold your stock, you continue to draw dividends of $75 or more per month.

I realize the preceding scenarios do not take into account everything you would want to consider in making an informed decision. However, the basic lesson holds true: It's always better to buy things that put money in your pocket than something that takes money out of your pocket. So the real choice you'd be making here was whether to buy a new car or purchase a new future for yourself by investing in something that pays you back and keeps on paying.

Wednesday, July 14, 2010

AMAZON KINDLE

Just bought an Amazon Kindle as a birthday present for one of my family members. I have to admit that I didn't really know much about the Kindle until I bought this one. Now I've decided I've got to buy one for myself :0) Being a tech and gadget junky and a voracious reader as well, this is something that's right up my alley. Can't wait to get one for myself!

CREDIT SUISSE LATEST ADDITION TO MY PORTFOLIO

I've decided to add shares of Credit Suisse (CS:NYSE) to my regular stock account. The principle activity of Credit Suisse Group is the provision of global financial services including a range of banking and insurance products. The company has earnings per share of $5.05 and pays a dividend of $1.78 which represents a 4.15% yield on their recent price of $43.01 per share. They carry a price to earnings of 8.5 and their current stock price is well below the 52 week high of $60.08. Operating out of Switzerland they are a global presence in banking with a terrific franchise name. I'm thinking it will make a great dividend play with possible capital gains as well.

While I may not have the kind of money to open a Swiss bank account, I do like the idea of owning shares in one of the largest and best known Swiss banks in the world. I also like the idea of increasing my diversification outside the United States.

Sunday, July 11, 2010

SPAIN WINS WORLD CUP 2010!!!


Hate to say I told you so, but Spain beat out the Netherlands to win the 2010 World Cup Soccer Championship!

CONGRATULATIONS SPAIN, THANK YOU FOR AN EXCITING MATCH!!!

Saturday, July 10, 2010

MY PREDICTIONS FOR WORLD CUP SOCCER AND THE STOCK MARKET

World Cup Soccer: I'm predicting Spain will win. I'm a big fan of the Spanish team and I have a really good feeling about their chances tomorrow.


Stock Market: I'm predicting that the stock market will rally this fall, despite negative rhetoric from the news media. I see an especially strong rally if the Republicans win big in the November elections. It's my opinion that the slow down we've seen in the past month or so is simply a return to normal summer slump in the market and too many nervous/sensationalist reporters are making it out to be more than it actually is.

Thursday, July 8, 2010

33% RETURN ON MY EMERGENCY FUND

When times are tough, like they have been for the past year or so, you have to look for every way you can to increase your personal earnings. My sister emailed me today with a great offer from one of her banks. For each person she refers to the bank who opens a free checking and savings account, she gets $25 added to her account and the person she refers gets $50 added to their checking and $50 to savings. You have to agree to online banking, but otherwise there are few restrictions to the offer. I decided to take $300 from my emergency cash reserve in my passbook savings and open a checking and savings account with her bank. In addition to the $100 they pay within 3 days of opening the accounts, I'll also receive double the going interest rate on savings for the next 6 months. So I'll actually be making more than a 33% return on my original investment. This is money I keep close at hand that has been earning very little interest. Now I'll be able to make a quick $100 and earn twice the interest on any money I deposit into this account for the next 6 months.

O.K., so maybe you're saying it's only $100, but I'll be doing next to nothing to earn it! If you start thinking of ways to increase your income without increasing the amount of physical labor you personally perform, that's when you truly begin to do what rich people do. When you get good enough at doing what rich people do, you eventually become one of the rich people.

Tuesday, July 6, 2010

STOCKS END 7 DAY SLIDE


U.S. markets ended their seven day slide with the Dow gaining 57 points. Investors seem to be trying to make up for some steep losses by searching for value plays after the 4th of July holiday weekend. I picked more shares of General Mills (GIS) and am looking to add to some of my other positions, if the prices are right.

Had a great holiday weekend! Got to watch a couple of World Cup games. Was happy to see Uruguay win in sudden death over Ghana. Uruguay's goal keeper did a great job! Also saw the match between Germany and Argentina. I have to admit that I've never seen the German team play until now and I was expecting Argentina to win. What a shock, when Germany mopped the floor with them!!! It was an exciting match and I can't wait to see more from Germany!

Saturday, July 3, 2010

HAPPY INDEPENDENCE DAY!

Wanted to wish everyone a happy Independence Day! In keeping with the theme, part of my celebration included placing an order to purchase more share of General Mills (GIS). While celebrating America's Independence I'm also working toward my goal of financial independence. Stocks are down, but far from out, so I figure now is a good time to pick up additional shares in some quality corporations.

Friday, July 2, 2010

MINIMUM WAGE FOR CALIFORNIA'S CIVIL SERVICE WORKERS

Just finished reading an article at cnbc.com about the governor of California ordering state workers pay reduced to minimum wage until the state government can come to some agreement on a budget. What I found even more interesting than the article itself, were the comments following the article.

One guy railed against the governor, the Republican party and corporate America, supposedly showing his support for the "little guy." Which of course lead to several arguments about how civil service workers making more than their private sector counterparts and how taxpayers can no longer afford such largess. I can see valid points from both sides. I agree that there is corruption in corporate America and that executives don't always have the best interests of the shareholders, or the corporation they're supposed to be managing, at heart. On the other hand, I firmly believe the average American citizen is overtaxed and both state and federal governments need to make drastic spending cuts. The higher taxes go in this country, the worse the economy seems to get. No matter how high the taxes are, the government always seems to "need" more. I think it's time for average U.S. citizens to voice their disapproval with greedy corporate executives by either voting out the board of directors, or pulling their money out of the companies who allow these practices to continue. As for greedy politicians, the tax and spend and spend and spend types, they need to be voted out of office as soon as the next election rolls around.

One more observation about the guy who was portraying himself a sticking up for the "little guy" while telling everyone else they were idiots: His arguments would have been a little more convincing if he hadn't regarded other's comments with such vehemence and contempt. It is also not very convincing to talk about being one of the "little guys" while at the same time saying you had to get busy planning your trip to Europe. I don't know too many "little guys" who can afford a trip to Europe. Maybe this guy is not quite the genius he thinks he is?

For more on this article, see: http://www.cnbc.com/id/38053858/

Wednesday, June 30, 2010

REPUBLICANS OR OBAMA OUT OF TOUCH?

Obama, in a desperate attempt to help his fellow Democrats keep their seats in the upcoming elections, lashed out at Republicans for being "out of touch" with the daily problems of ordinary Americans. Really? Did the his administration listen to ordinary Americans when they overwhelmingly opposed recent health care reform? Did they listen to ordinary Americans who opposed massive spending of taxpayer money to bail out some of the corporations largely responsible for causing the economic collapse? Have they listened to ordinary Americans who would much rather be going back to work than getting yet another extension of unemployment? I think not. One has to ask, who is really out of touch here. I think ordinary Americans decided who's out of touch when they elected a Republican to fill Ted Kennedy's seat. Hopefully they follow suit later this year.

As for the President's comment, regarding the GOP,

"Their prescription for every challenge is pretty much the same—and I don't think I'm exaggerating here: basically cut taxes for the wealthy, cut rules for corporations and cut working folks loose to fend for themselves."

Who exactly does he think creates the jobs ordinary Americans are looking for? It's America's wealthy, who invest their money in American corporations and businesses who create jobs, not rhetoric spouting, self-righteous politicians. Don't get me wrong, I think President Obama is basically a good man, definitely a smart man, but we should always keep in mind that he is also a politician with a political agenda. Is this agenda in the best interests of ordinary Americans? I personally don't think so. It is not in the interest of ordinary American citizens to have an administration who spend the taxpayers money like a bunch of drunken sailors on shore leave. It is not in the interest of ordinary American citizens to have an administration who thinks it's O.K., on the one hand to destroy one corporation over an accident, while on the other hand, bailing out other corporations with taxpayer dollars, who deliberately engaged in business practices which should have landed them in prison, but instead earned them large bonuses at the taxpayers and shareholders expense.

Once again, we have to ask, who is really out of touch with ordinary Americans here? Right now, I'm thinking one-term presidency.

For more information see: Obama Slams GOP Comments on Wall Street Reform, BP at http://www.cnbc.com/id/38021006

Monday, June 28, 2010

THE MISSOURI BLUE COLLAR INVESTOR'S TOP 10 HOLDINGS

After revamping my portfolio during the month of June, my current top ten stock holdings are as follows:

1. Merck & Co. (MRK)

2. AT&T (T)

3. Philip Morris Intl. (PM)

4. Windstream Corp. (WIN)

5. Astrazeneca PLC (AZN)

6. Universal Insurance Holdings (UVE)

7. Centerpoint Energy Inc. (CNP)

8. General Mills Inc. (GIS)

9. Unilever N.V. (UN)

10. British American Tobacco (BTI)

In interest of full disclosure, I am long on stocks 1 through 10 above. This list is provided for informational purposes only. It is not intended as a recommendation to invest in the above stocks. Every individual investor should do their own research before investing any money in the stock market.

Sunday, June 27, 2010

USA WORLD CUP SOCCER

Was really dissappointed to see the U.S. team lose to Ghana in the World Cup soccer match. Enjoyed the match tremendously! I've always been a fan of soccer, even though it's not as popular in the U.S. as in other countries around the world. Still looking forward to watching more of the matches, since I'm also a big fan of Brazil and Spain. Anxious to see how these teams play going forward. While it's widely speculated that a South American team will win in the end, I think Spain still has a good chance.

As for my stock investments, I've made all the changes I'm going to make for a while in my portfolio. I'll be watching for opportunities to add additional shares to the issues I currently hold and it's possible I may add some new investments, but I think I'll mostly let everything ride for now. I'll be collecting more in dividends this year than I've ever collected before. Most likely I'll reinvest the enire amount, since I don't really need the money for anything. I keep thinking of it as buying a better future for myself and my family.

Wednesday, June 23, 2010

FREE STOCKS!

I mentioned this ploy in a recent post about updates to my stock portfolio, but I thought it would be good to go over it again. Two of the stocks I sold recently had went up considerably since my initial investment. Instead of closing out my entire position in both stocks, I only withdrew the amount of my initial investment. In other words, I took out the entire amount of money I had invested in each stock and kept the remaining shares. Which means I am still a shareholder, still drawing dividends on both stocks, but none of my money is invested in either one. Free stocks!!!

No matter how good or how bad these shares perform in the future, it's nice to know that I'm risking none of my hard earned money. If they keep paying dividends and keep increasing in value, fantastic! If they eventually halt dividends and go completely under, I've lost none of my own money. In the mean time I benefit from any future dividend payments, which I'll take in cash and redeploy elsewhere. What's really exciting to me is that this process can be repeated over and over. I could eventually own several stocks, drawing untold amounts in dividend income, that I have none of my own money tied up in!

I've known about this tactic for quite some time, just never put it into practice until now. While I probably won't make a habit of selling stakes in winning positions, it's good to have one more tool for the wealth building process. It's really true, the more you learn about stocks and investing, the easier it is to make money.

Tuesday, June 22, 2010

MARKWEST ENERGY PARTNERS

Recently I posted about my sale of Markwest Energy (MWE) for a profit of over 40%. I found it interesting that Jim Cramer with CNBC is recommending the limited partnership as a dividend play. (See: "Oil’s Out of Favor? Try Natural Gas" Friday June 18th) I sold and took the profit after a disappointing earnings report. It will be interesting to see how things play out. Perhaps Cramer is right, he's a very smart man and I've always been a big fan, just don't always agree with his recommendations. I'm pretty happy with the move I made out of MWE and in to British American Tobacco (BTI) and Unilever (UN). We'll see how it goes.

Monday, June 21, 2010

SELLING ENCORE ENERGY PARTNERS LP

Sold my stake in Encore Energy Partners LP and using the money to increase my stake in Merck. Didn't like the negative earnings report from ENP, although I enjoyed a nice capital gain and some great dividend payouts while held in my portfolio. Merck has been very good to me as one of my long term holdings, so I'm increasing my stake and plan to hold the shares for years to come.

Not very happy with the government playing politics with BP disaster. It was an unfortunate accident that affects a lot of people. What the administration seems to ignore in their zeal to protect the gulf coast residents who've lost their jobs is that many shareholders of BP stand to lose as well. I fully realize it's not quite the same thing and I do believe BP should be responsible for cleaning up the mess, I don't agree with sucking the company dry and hanging shareholders out to dry. Many of these people are retirees and dependent on the dividend income they received from BP. Is it right to take all the money away from these people and give it to oil spill victims? I personally don't think so. Many of these people are unable to return to work and can't afford to lose the money they've invested with BP or the income from dividends. Yes, make BP pay for cleanup and restitution, but don't drive them out of business. It will only make things much worse than they already are.

Wednesday, June 16, 2010

IN WITH FOREIGN INVESTMENTS AND OUT WITH THE LIMITED PARTNERSHIPS

In a further move to reduce my exposure to limited partnerships, I put in sell orders for Calumet Specialty Products (CLMT) with a 23% gain, Markwest Energy (MWE) with a 42% gain and utility company Pinnacle West Capital Corp (PNW) for a gain of 29%. While all three have been great investments up to this point, I didn't like their prospects going forward, so decided to lock in gains and reinvest profits elsewhere.

To add more diversity to my portfolio and seek profits outside the U.S., I've decided to invest the money equally in British American Tobacco (BTI) and Unilever (UN). BTI has a ROE of 28.8% with a dividend yield of 6.70% and $3.32 per share in cash. Unilever, with leading brands like Lipton Tea and Dove soap, has a ROE of 38.70%, a dividend yield of 3.20% and $1.20 per share in cash. Both companies have very little debt.

I see several benefits to making these changes in my portfolio and am looking forward to adding BTI and UN to my long term holdings. While the U.S. seems to be leaning toward a shaky recovery, it doesn't hurt to broaden your investment perspective to include quality companies who make more of their money from global sales. I also see this as part of my move away from speculative issues towards better quality investments.

Tuesday, June 15, 2010

CONFESSIONS OF A BUSINESS NEWS JUNKY

Hi, my name is Bill and I'm a business news junky. I used to zone out for hours in front of a leading cable business news channel. I was addicted and it nearly destroyed my life, or at least my discipline towards investing. I got caught up in "Breaking News" and speculating on how it would affect my investments. It lead to lots of unwarranted anxiety and some bad investment moves.

So what is the lesson here? The lesson is reacting to "news" from financial media outlets is a loser's game. Most likely this information is only "news" to you. If you see something on one of the business news channels or read it on one of the major financial publications, chances are millions of others have read it too, or knew about it even before it hit the news media. It's ridiculous to think that something you read or hear from the financial media gives you a leg up in the information game. More than likely, the stock is already reflecting the information by the time you decide to move on the "news". It's a mistake to get chased out of stocks because of a single news event that the media trumpets as being important. chances are, that news event is some trivial piece of information whose primary value is to fill printed space or air time.

Don't fall in to the trap of becoming a business news junky. Better to avoid overexposure to daily business news and concentrate more on the long term prospects of your investments.

Friday, June 11, 2010

PRICE TO EARNINGS OR RETURN ON EQUITY?

When researching new stocks, a lot of people start with price to earnings valuation to help determine whether or not a stock is a good buy. While this is not necessarily a bad thing and hopefully not the only thing used to determine value, I've found that I come out better by starting with return on equity. While I also review long term debt, earnings per share and yes, price to earnings, I've found that stocks with a good record of ROE usually make good long term investments. I've read that Warren Buffett also considers return on equity as one of the primary considerations with his stock picks, so I think I'm in pretty good company on this one.

Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. It pays to invest in companies that generate profits more efficiently than their rivals. ROE can help investors distinguish between companies that are profit creators and those that are profit burners. Then again, ROE might not tell the whole story about a company, and therefore mus be used carefully. A steadily increasing ROE is a hint that management is giving shareholders more for their money, which is represented by shareholders' equity. Simply put, ROE indicates know how well management is employing the investors' capital invested in the company. Think of ROE as a handy tool for identifying industry leaders. High ROE's can signal unrecognized value potential, so long as you know where the ratio's numbers are coming from.

Thursday, June 10, 2010

UPDATES TO MY PORTFOLIO FOR JUNE

While reviewing my investments recently, I decided to make some changes in my investments. Legacy (LGCY) and EV Energy Partners (EVEP) showed some dissappointing earnings, so I decided to pull my money out of both stocks and reinvest the proceeds elsewhere. While I was way ahead on both, as far as capital gains, I wanted to take my initial investment cash out in case earnings continue to slide. Instead of selling all shares, I pulled out only my original investment in both partnerships and kept the remaining shares. I figure I'm playing with the house's money, so if they tank, I'll still be ahead on both by the amount of dividends I've drawn in the past year.

I also decided to sell CPL, the Brazilian utility company. I was up over 21% and while I think they're a great company, I'd rather invest the money with companies that pay quarterly, instead of yearly dividends. With the sale of these 3 stocks I ended up with quite a bit of cash. So I decided to reinvest the money in equal amounts in PM, General Mills (GIS), Windstream (WIN), Astrazeneca (AZN) and Centerpoint Energy (CNP). It's all part of my move toward more mainstream stock investments. General Mills is a new addition to my portfolio, with the rest I'll just be increasing my current investments. Overall I should improve stability while maintaining cash flow from dividends.

I'll still have money invested in ENP, LGCY, CLMT and EVEP, so I'm not writing off energy limited partnerships. I just wanted to reduce exposure to the sector, since they had become such a large part of my investment portfolio. Hopefully they will do better in the future and I can continue to draw dividends for years to come. We'll see how it goes.

Tuesday, June 1, 2010

MORE WOES FOR BP

It appears as though British Petroleum's (BP) latest attempt to seal the oil leak in the Gulf of Mexico has failed. I hate to see such bad luck befall such a good company. I was quick to sell my shares of BP, as soon as I heard about the disaster, since I thought it quite possible they would have a great deal of difficulty solving the problem. So I got my money out before the big drop in their stock price.

Let's face it though, it could have happened to any of the oil companies involved in offshore drilling. So for the time being, I'm avoiding any investments in oil companies. I certainly hope they get things under control as soon as possible, but I shudder to think of future litigation involving this disaster. It's possible that they will be able to cover the costs, they do rake in money hand over fist. But I think it's going to be a lot more difficult for them than it was for Exxon during the Exxon Valdez oil spill. More difficult and a lot more expensive.

I can't even imagine how they'll be able to overcome the bad publicity generated from this disaster. One thing I am sure of, if any corporation is capable of making a comeback from this type of event, I believe BP may just be the one. Still, I'm taking a wait and see approach. Like I said before, won't be investing in any oil companies anytime soon.

Monday, May 31, 2010

INVESTING IN PREFERRED STOCK THROUGH ETF'S

Recently I decided to look into investing in preferred stocks, as a means of boosting dividend cash flow. I currently hold around 30 different stocks in my regular investment portfolio, so I'm not really interested in adding a lot of new stocks to keep track of. So instead of researching individual stocks, I decided to simplify the move by purchasing shares of an ETF that invests in preferred stocks.

The one I've chosen to add to my portfolio is ISHARES S&P U.S. PFD STOCK (PFF :NASDAQ). Their current dividend of $2.92 works out to a 7.98% yield on their recent stock price of $36.62. Since their top ten holdings are all financials, I won't be concentrating a great deal of my investment capital in this fund, but I don't think it out of line to invest around 5% of my cash in the fund. At their current yield, I could have all my money back, from dividends alone, in less than 9 years and anything after that would be icing on the cake. I could also benefit from any further recovery in the financial sector, while reducing risk by spreading my investment over a wide range of financials held by the fund. This will be a long term addition to my portfolio.

Normally I strongly advocate investing in individual stocks over funds. In a case like this however, where I don't want to expend a lot of time and energy researching individual investments, I've opted for an ETF to broaden my investments and take advantage of the preferred stock issues.

Tuesday, May 25, 2010

RETURN TO ACORN RIDGE

During the formative years of my early childhood, we lived in a small farming community in southeast Missouri called Acorn Ridge. It was not really a town, more of a collection of houses along the highway, with a church and a small country store. Still, until we moved away the year I turned 12, it was pretty much the world to me. I can't say I have a lot of fond memories of the place, given that we were one of the poorest families to live there, yet there were good times along with the bad.

What I remember of Acorn Ridge was mostly neat little houses with well kept yards. Inhabited by mostly decent, hard working families with a no nonsense attitude towards life. Everyone knew everyone else, most of the residents attended one of the two local churches and life went on pretty much as you'd expect in any small town of the day.

So this weekend I was driving a friend of mine to Cape Girardeau on some business and decided I'd give the little town a visit. Not especially anyone I wanted to see there, after nearly 40 years, but just curious about how the town had turned out after all this time. I don't really know what I expected to see, but I sure wasn't prepared for what was there. Most of the neat little houses I remember were gone, or so overgrown and deteriorated as to be almost unrecognizable. The country store and one of the churches were gone, no sign really that they ever existed. Our old house was gone, a mobile home now sits on the lot where it used to stand.

What shocked me the most I suppose was the family home of one of the wealthiest and most prominent members of the community during the time we lived there. It had always been well kept, modest but nice house, several outbuildings, including a detached garage, expensive late model car and truck and top of the line farming equipment. It was a picture perfect farming operation built up by a very hard working, business savvy farm family. I had pictured it to be much the same as I remembered, with newer vehicles, maybe a nicer house, thinking that family members would have continued to build on what their parents had worked so hard for. I had to drive past the place twice before I was sure it was the same place. The house and garage are still there, although run down and tired looking. Gone are the outbuildings and farm machinery, the well kept yard and basically any hint of prosperity whatsoever. Perhaps they sold out after the parents died, or perhaps they were not as adept at the business of agriculture as their parents were. I think what I found so disturbing is that after 40 years, almost no evidence exists of this families one time prominence and prosperity.

While I'm glad I took the time to visit, I found the whole thing a bit disturbing. Got me to thinking a little more about what kind of legacy I'd like to leave behind and how I want to be remembered.

Thursday, May 20, 2010

MAKING MONEY AS THE MARKET TUMBLES

Contrary to what we saw last year, it looks as though most investors are following the old adage, "In May, go away." With market experts predicting a 15% to 20% correction, many are fleeing stocks in favor of cash. While I'm not selling and have no plans to sell anything anytime soon, I am letting my cash from dividends build up in my money market accounts. It does seem to help you keep your nerves to have some cash on hand when the market goes into free fall.

This is one of those times I like to be in the position to buy. When the market finishes its' tumble and begins to level off, I like to jump in and pick up shares of companies that I believe are normally out of my price range, but would otherwise love to own. You don't have to pick the exact bottom to make money, you just come in as near the bottom as possible. This puts you in a great position for capital gains as the market begins to recover. As a bonus, if you're a dividend investor, you get to earn cash while you wait for stock prices to go back up. This time around, I'll be looking to up my stakes in Johnson & Johnson, Clorox and Campbell's Soup Co.. I may come up with some additional stocks that I'd like to get in on, but for now I'll be concentrating on these three.

Since starting my new job, I've managed to cut my expenses to the bone and am finding it easy to set aside extra money for cash savings as well as continued investments in my regular stock portfolio and my IRA. It strikes me as really odd that I make so much less than I used to, but I'm saving as much or more. I guess when you finally get the hang of managing your cash flow, it's almost irrelevant how much you make. You always manage to pay yourself first and keep right on building wealth. It's taken me a lot of years to get to this point. Sure wish our school systems had provided financial education when I was growing up. Could have saved me a lot of time and a great deal of money.

Friday, May 14, 2010

AS STOCK PRICES FALL, THE YIELD ALSO RISES

As much as I hate to see the balances in my investment accounts drop when stock prices decline, I always try to keep in mind that yields on dividend paying stocks go up as their prices fall. Some say this is only a temporary slow down and the market will take off again soon, while others are predicting another 50% drop in stocks. Either way, it could present level headed dividend investors with great opportunities to pick up bargain priced shares and increase their overall dividend yields.

Say for example you have a $20 stock paying a dividend of $1 per year, that works out to a 5% return on your investment. Not bad really, but if that stock drops in price by 50%, or to $10 per share and still maintains the same $1 dividend, then the dividend yield jumps to 10%! This actually happened to one of my stocks during the last downturn and I was quick to take advantage of the lower stock price to double the number of shares I owned. The greatest thing about that is, now that the share price has returned to near it's former high, I'm still earning a 10% return on the shares I purchased at the lower price, not to mention a sizable unrealized capital gain.

This time around I'm in a lot better position to take advantage of another downturn than I was in 2007 and 2008. While my income is lower, I do have a job with a steady income. My personal debt is nearly all paid off and I've managed to build up a cash surplus. So when opportunities present themselves, I'll be able to move quickly a pick up some terrific deals on solid dividend stocks for both my investment accounts.

For my most recent moves, I'm adding RAI to my regular stock account and JNJ to my IRA account. Reynolds American Inc (RAI) carries a dividend of $3.60 per share which represents a yield of 6.74% on their closing share price of $53.40. Johnson & Johnson (JNJ) currently pays a dividend of $2.16 per share, for a yield of 3.38%. Both companies have more than sufficient earnings to maintain their current dividend payouts and should make great additions to my investment accounts going forward. I'll definitely be looking to add additional shares of both stocks should their share prices drop with the rest of the stock market.

Sunday, May 9, 2010

STOCK MARKET DROP, DISASTER OR OPPORTUNITY?

We had a wild ride in the stock market last week, to say the least. While the U.S. government and others try to figure out exactly what caused the big plunge on Thursday, investors are left to wonder whether they should stick with stocks or sell, sell, sell. My personal investments ended the week down by 10%. While I don't like to see lower balances in my investment accounts, I do like to see lower stock prices on some of my favorite dividend stocks. So I'm looking for buying opportunities.

I've put in orders to buy more shares of AFLAC (AFL) and Astrazeneca (AZN) for my IRA account. Also put in an order to buy more shares of AZN for my regular investment account. I currently hold 27 different dividend paying stocks in my regular investment account and am looking to take that back up to 30. Haven't found any new stocks that I'm interested in yet, but when I do, I'll be sure to keep my readers informed.

Got a great dividend payout from CPL the Brazilian utility company! Will probably add to my stake in this great company. I've done very well with them since my initial investment. Also looking forward to the big payout this coming week from my holdings in energy limited partnerships. Haven't decided what to do with the money yet, so I'll leave it in my money market account for the time being.

Had dinner at my favorite Chinese restaurant the other night and my fortune cookie said, "You can look forward to many rich rewards in the coming year." I took it as a sign, I'm looking forward to a prosperous year ahead.