Retailers Have More Reasons to Be Merry

After seeing strong sales from Black Friday, retailers have even more to be merry about this holiday season. Cyber Monday showed promising results for the start of the holiday retail season, with online merchants reporting over 4 million shoppers per minute, in North America. While in itself no guarantee of profitable season, it certainly bodes well for better than expected sales.

Shoppers are out in great numbers, but reports show they are more being more selective with their purchasing. More people are paying with cash and debit cards and using their credit cards very sparingly. Not such a surprise, after the credit card companies pulled such a fast one on consumers and jacked up interest rates and fees to beat the new credit card laws to take effect next year. Personally I've sworn off credit card purchases until they come up with better offers. I'm not paying anyone over 20% interest for anything! I'd like to loan them some money at that rate!

I liked Warren Buffet's predictions for the new year. Especially the one about "people mistakenly thinking falling stock prices are bad." Falling stock prices to me mean I can purchase shares of my favorite stocks on sale! So it's not always bad to have falling stock prices, think opportunity knocking instead.

Bob Doll, one of the most respected investors you'll find and Vice Chairman at Blackrock, is predicting a choppier market in 2010, but predicts we'll still see some gains. I'm thinking he's right on the money here.

Dubai Default Sends Markets Lower

The United Arab Emirates country sent markets lower Friday on news of credit default. While many investors took a negative view and headed for the exits, others are taking a wait and see approach. While bad news for Dubai, it does not necessarily mean we need to reassess the credit quality of the rest of the world. A flight to safety would send the U.S. dollar higher and oil prices lower. Personally I think we should take it for what it is, another warning to investors of credit riskiness involving emerging markets. This is certainly nothing new and definitely not the end of the world or of the stock market. Emerging markets have always been high risk for credit defaults and will likely continue to be so. While the U.S. and world economies might be affected to a certain extent, they can and will go on.

So what does this mean for investors? With some questioning the sustainability of the recovery in the U.S. stock market, this could provide the correction they've been looking for. Although I believe any correction from Dubai's credit default will be temporary and mild. It would take further bad news to create a serious risk to the stock market overall. Personally I'm thinking a drop in U.S. markets could provide buying opportunities for those with enough intestinal fortitude to brave the volatility that's sure to result. It seems that any form of bad news from anywhere in the world seems to send investors into a panic. I think we might all be better off without cable news channels spouting their predictions 24/7, although I have to admit that I like watching them as much as the next person. It's just that I take it all with a grain of salt. I make up my own mind when it comes to investing, as should everyone. It helps to keep in mind that no one is able to predict with any great accuracy where the market is headed. While so called professionals may be spouting their prophecies of doom and gloom, chances are very good that they're entirely wrong.

Personally I'm going to be looking for any dips in the market to add to my portfolio and retirement accounts. If others panic over developments in Dubai, all the better for me.

Happy Thanksgiving!

It's hard to believe it's Thanksgiving already and before we know it Christmas and New Years Day will be here. So I'll take this opportunity to wish everyone a Happy Thanksgiving! I guess I'm most thankful for being back at work. While my new job leaves a lot to be desired, I'm thankful for having a job at all, when so many people are unemployed.

Looking ahead to the new year, I'm working on my investment plan. I've decided to take advantage of the capital gains on some of my stocks and retire the remaining debt on my credit cards. At the same time I plan to sell some of the underperforming stocks in my personal portfolio and divert the cash to more shares in master limited partnerships. This should reduce my tax liability in the coming years, while increasing average monthly cash flow from dividends. The increased cash flow and reduction in taxes, should more than make up for the loss of dividends from the stocks I'm selling to pay off old credit card debt. I'm only keeping 2 credit cards and using them very sparingly. Maybe one of these days the credit card companies will come to their senses and if not I'll simply avoid doing business with them.

Back in August I wrote about some of my investments in Master Limited Partnerships (see: http://thebluecollarinvestor.blogspot.com/2009/08/mlps-start-paying-off.html) and how they were beginning to pay off. I've been very pleased with their performance and look forward to earning even more going forward. I really love the idea of tax advantaged income outside of my IRA account.

For the new year, I'm also looking in to starting a new business or possibly purchasing a business in partnership with some of my family members or friends. I am aware of the risks involved in starting a business, but I'm also well aware of the potential rewards if the business is successful. No concrete plans yet, but I'm definitely interested in starting a business of my own.

Opinion Post

I'm glad to see that the leaders of the house are finally turning their attentions toward creating jobs, although I think they need to be very careful about trying to buy the nations way out of recession with taxpayer dollars. Better to give tax breaks and incentives to businesses who add jobs than to spend more money on recovery. At any rate, it's about time!

Just another note to those misguided individuals who think that the Democrats are for the poor. Out of the top 15 wealthiest members of Congress, the majority are Democrats. Does it even make sense to expect them to pass legislation to increase their own taxes? If you think so, you're only kidding yourself.

I've noticed a lot of market "experts" are now saying there may be no correction. I tend to agree with them, though I do think we're still in for a rough ride in to the new year. Most of my current positions are for the long-term, so good or bad I'll be riding it out. I take great comfort in the fact that I'll be drawing a nice stream of dividends in the mean time.

Upping My Investment in UVE

Over the weekend I reviewed my portfolio and decided to up my stake in Universal Insurance Holdings (UVE-AMEX). The Group's principal activity is to provide property and casualty insurance. It performs various aspects of insurance underwriting, distribution and claims. It markets and distributes its products and services, primarily in Florida.

I've written about UVE before and have been a long time shareholder for quite some time. Not long ago I had sold some of my shares for the capital gains, but now that I've reviewed the stock, I've decided to buy more. I've always liked their dividend payout and currently it is running at 12.94% on the recent share price of $6.19. Not too many places right now you can get a 12% plus rate of return.

Another factor in my decision was an article I read recently which argued that one of the most important metrics for stock picking, is insider ownership. I thought the author made a very good argument for investing in stocks with high insider ownership. That being said, UVE, which has been a great investment for me so far, has inside ownership of over 50% on top of their high dividend payouts. They have also expanded operations outside the state of Florida, which could indicate prospects for future capital gains.

Bottom line, if the insiders are willing to tie up so much of their money in the company, then I'm thinking it probably wouldn't hurt for me to keep some money working with them.

Canadian Energy Trusts

I recently received a newsletter touting Canadian Energy Trusts. The gist of the letter was that they will make great investments for 2010 because of the new tax law that goes in to effect in 2011. Due to the unfavorable change in Canadian tax law in regards to Canroys, as they are popularly called, several of these trusts are converting to taxable corporations. In so doing they have seen tremendous gains in share prices and some even continue to pay out most of their earnings to shareholders in the form of dividends. So you not only see capital appreciation, but continue to receive excellent dividend income.

My only current position in Canadian Energy Trusts consists of shares in Pengrowth Energy (PGH). Pengrowth Energy Trust. The Group's principal activity is to provide directly and indirectly explore for, develop and hold interests in petroleum and natural gas properties, through investments. The Group directly and indirectly acquires, owns and manages working interests and royalty interests in oil and natural gas properties. Its activities are financed by issuance of royalty units and interest bearing notes to the Trust and third party debt. With a current dividend yield of 8.30%, I added them to my portfolio for their monthly payout.

I've decided, given the new information on the conversions, I'll be adding more shares of PGH to my current investments. I don't know that they will actually convert to a taxable corporation, but I'd say the chances are good. If they choose to do so, it's likely they, like the other trusts who have already converted, will see appreciation in share prices. Either way, the boost to my monthly dividend income makes the purchase worthwhile.

Merck and Schering Plough Merger

Got a nice bonus this week from the merger of Merck and Schering Plough. I held stocks in both companies and consider Merck as one of my core stocks. As part of the merger, I received $10.50 per share in cash, plus additional shares in the new Merck, for each share of Schering Plough. I've always considered both to be good investments and think the combination of the two will be good going forward.

I always enjoy merger deals of this type, where I get most of my invested cash back. It's like playing with the house's money, since I have practically nothing invested in the stock I received as part of the merger.

The icing on the top of the cake is the great dividend I've gotten from Merck all along. Even if they reduced the dividend 50% due to costs related to the merger, I'd still be happy with the return on investment. But I doubt that's likely to happen.

Save Money By Avoiding Illness

With the normal flu season and the added concerns of H1N1 upon us, now is the time to be thinking of preventative measures to avoid illness this winter. Being sick is expensive. Not only do you have trips to the doctor and prescriptions, but usually it involves missed worked resulting in loss of income. So the more you can do to avoid becoming ill in the first place, the more you save.

One of the things I've always done to help avoid colds and the flu is gargling with salt water or peroxide solution (50% water/50% peroxide) or Listerine. I prefer the mint Listerine, not only because it tastes better, but the mint helps soothe my frequent sore throats. I now know that gargling in this manner is recommended for avoiding infections from flu viruses which proliferate in the throat and sinus cavities. However, I stumbled on the benefits of gargling twice a day when I had a bad winter for sore throats. When I gargled with the mint Listerine, it soothed my throat better than anything else I'd tried, so I kept it up all through the winter months. What I noticed was, even though my co-workers and family members all came down with seasonal flu and colds that year, I never got sick. The only thing I did differently from previous years, was gargling twice daily with Listerine. So I concluded that it not only soothed my throat, but also helped me avoid being infected with a cold or the flu.

Some other ways to help avoid infections, keep hands away from your face. The eyes nose and throat are ports of entry for cold and flu. Keeping your hands away from your face helps to avoid infection. Thorough and regular hand washing and regular use of hand sanitizer, are also good preventative measures. Another recommendation I read recently, drinking hot liquids like coffee and tea on a regular basis. The hot liquids wash the flu virus down into the stomach, where they are unable to survive and help prevent proliferation in the throat and sinuses.

Last but not least, consuming foods and juices rich in vitamin C. While some may argue that this is not a proven science, it definitely doesn't hurt and there is a lot of research to suggest that it does help. If you're taking a vitamin C supplement, make sure it also contains zinc to help increase the absorption rate.

November So Far

Well it's the first week of November, the stock market is down and I'm back to work. A little disappointed in the stock market, but it does allow me to pick up stocks at a cheaper price. Been having a little difficulty getting back into the work environment again, but I'm glad to have a job when so many people are out of work still. I ended up taking a much lower position with a lot less pay than at my last job, but work is work. I still recall the 1970's when so many people were unemployed for what seemed like forever. It was hard times then and any job you could get was considered a good job. Don't want to find myself in that position if I can avoid it.

This is a big month for dividends from my taxable portfolio. I'll be receiving payments from over 10 different companies and most of them are high yielding stocks. I'm beginning to like Canadian energy trusts with their monthly payouts and love the master limited partnerships!

My IRA is doing well. Just added more AT&T shares. A friend of mine was telling me a story about a former co-worker who ended up homeless and called him asking for help. He was stunned that the guy had no where to live, no money and no car, but he had a cell phone. That's why I love telecoms. They're not really in favor right now, so I'm picking up shares at bargain prices. When homeless people are carrying phones, you can't hardly go wrong owning telecom stocks.