Wednesday, June 30, 2010


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

Monday, June 28, 2010


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


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


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


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


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 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


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


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


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


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.