Friday, April 29, 2011


I just finished reviewing my investment strategy for my taxable investment portfolio, and came up with an idea to increase my cash holdings, boost the number of shares I own overall and cut costs at the same time.  Sound too good to be true?  On the contrary.  Here's how I did it: 

In my taxable investment portfolio I hold investments in total of 25 dividend paying stocks and funds.  My investment company (ING Sharebuilder) allows free reinvestment of dividends.  So I set 8 of my stocks to reinvest dividends automatically (at no cost) for a total of 56 investments per year, or roughly 4.67 investments per month.  For the remaining 17 stocks in my portfolio, I'm having the dividends paid in cash, for a total of 68 dividend payments per year, or 5.67 dividend payments per month.  Since I'm paying nothing for reinvested dividends, I'll be reducing costs by eliminating commissions on stock purchases altogether.  At the same time, I'm building my cash position by continuing to collect the balance of dividend payments as cash, paid to my money market account.  I'll still have to pay purchase commissions on new investments and commissions on sales, but I should see a significant increase in holdings while also benefiting from greatly reduced costs.  

As a tweak to the system, I'm also reinvesting in stocks which I believe have good long term prospects but are currently selling below my original purchase price.  Reinvesting dividends in these holdings will have the added benefit of reducing cost basis and adding to overall returns in my portfolio.  

Wednesday, April 27, 2011


I used to spend an awful lot of time worrying about my finances or lack thereof.  However, by committing myself to the study of personal finance and investing, I finally came to the realization that it's not so much what you have or don't have as it is what you do with what you've got.  

As an example, during the recession my personal earned income has dropped by close to 50%, an extreme amount by any standards.  While I was thankful to have any job while so many are still out of work, it has been an ongoing challenge to manage with such a dramatic drop in income.  Then I suffered a heart attack and found myself faced with major medical bills for ongoing treatment, with no insurance to help cover costs.  At first things seemed pretty bleak, but then I remembered some great advice from one of the books I'd read.  When you're faced with seemingly insurmountable obstacles, you should never say, "I can't afford it" or "I can't do this or that", rather you should ask yourself, "How can I afford it?" or "How can I accomplish my goals?"  When you make a definitive statement ("I can't afford it.") your brain accepts that as final and gives the matter little further thought.  But when you ask yourself a question ("How can I afford it?") your brain immediately goes to work on the problem and you will ultimately find a solution.  It may not be quite the answer you expect, but you will find a way to deal with whatever situations may occur.  

As for myself, when I stopped worrying about how I was going to afford to pay the bills and how I was going to pay additional medical costs related to the heart attack, and started asking myself how I could deal with the my current situation, I began to look for answers and find a way.  O.K., so things aren't perfect, but I've managed to carry on my normal lifestyle pretty much as before, I'm still saving and investing on a monthly basis (albeit in smaller amounts) and my health continues to improve, by following the advice of my cardiologist and diet and exercise.  

So what I'm trying to say is, when you've educated yourself financially to the point that you can manage on whatever income you have, you can stop worrying about what you don't have and start enjoying life again.

Friday, April 22, 2011


I've been giving some thought to options trading lately.  While I've always avoided the idea as too risky, I read something recently that has changed my mind.  In the article I was reading it was talking about selling options and taking the immediate cash payments to your account.  While it also warned about the risks involved, the article pointed out that as long as you were willing to own 100 shares of a great company at a specific price, it would be more like naming your own price on your stock purchases.  So I can see how there would be a place in my investment strategy for selling stock options.  Although I would definitely limit my exposure, I think I'll give it a try.  At worst I'll pick up some shares of a good dividend stock at a discount to current market prices.

Monday, April 18, 2011


"If ever there was an organization more corrupt, incompetent and less capable of issuing an intelligent analysis on debt than S&P, I am unaware of them."--Barry Ritholtz on his Big Picture Blog. 

One has to ask, if S&P hadn't given triple-A credit ratings on mortgage backed securities, leading investment banks to propel the housing bubble to such lofty heights, and the resulting financial crisis caused from the collapse, would the country be faced with it's current budget shortfalls?

Wednesday, April 13, 2011


Corporations have traditionally sought to return value to investors either through increased dividend payouts or through stock repurchase programs.  A dividend increase obviously meets the stated purpose of "returning value to investors" since the investor receives an increased cash payout.  However, as a long time investor, I have to say I've never really seen any noticeable benefit from stock repurchase programs.

Yeah, I know that a repurchase program reduces the number of outstanding shares, making the remaining shares (at least in theory) more valuable, since profits are split over a smaller number of shares.  This supposedly returns value to shareholders, who should then see an increase in the dollar value of their holdings.  I've never actually noticed any difference (increase in value) when I've had investments in companies who vote to repurchase shares.  In fact, recent research shows that repurchase programs tend to be a wash, since many corporate executives also vote to issue shares as part of executive compensation programs.  Turns out that the majority of shares being repurchased, and supposedly retired, are in reality being re-issued in the form of executive compensation. (Almost sounds like something someone should be going to prison for?)  Which also means that most shareholders would see absolutely zero benefit from a share repurchase program.

This being the case, I say "Show Me The Money!"  I'm making it a policy as a shareholder to vote my shares against ALL stock repurchase programs.  I'd rather invest my dollars with companies who have a history of increasing dividends.  You just can't beat cash in hand. 

For those who would argue the tax advantages of growth stocks, I say hogwash!  Didn't the "Great Recession" teach you anything?  How foolish did all the "growth" investors feel when 10 years of "growth" disappeared from their stock accounts practically overnight.  No thank you!  I'll stick with dividend investing.

Saturday, April 2, 2011


Hate to say I told you so, but since the last major tax increase on cigarettes I've been saying it's only a matter of time before the government went after fat people.  Obesity causes cancer, heart disease and diabetes, so it's no stretch of the imagination that they would start taxing people who are obese for the same reasons they tax smokers.

Arizona is now proposing a $50 tax on people who are obese.  It has not yet passed, but I'm thinking it's only a matter of time.  Seems like the U.S. government is looking for every possible way to increase tax revenues to pay for their overspending.  I heard on the radio they've even proposed a 10 cent per roll tax on toilet paper.  Time to stop the madness and stop the spending!!!


If you diet and exercise and are still having trouble getting rid of some stubborn belly fat, you don't need to spend a lot of money on expensive supplements or fat burners.  In a recent study, researchers discovered 1 to 2 tablespoons of apple cider vinegar, added to your daily diet, helps to significantly reduce belly fat.  It is believed to work in two ways: by reducing the body's ability to convert foods to belly fat and by speeding up the fat burning process.  As an added benefit, researchers also discovered that adding apple cider vinegar to your daily diet lowered systolic blood pressure and triglyceride levels, which may improve your heart health as well.