The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 2

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MARKET STATUS

Before continuing to examine the case for the U.S. Dollar and how high yield stock investors can hedge it while getting high yields, we first must look at the overall market, since almost all stocks follow the major indices.

1. Still Down

In sum, as anticipated in my last article, the S&P 500 continues making lower highs and lower lows, now cracking 10 year support to hit 12 year lows.

The big near term question is, are we at the bottom of the past four months' trading range (if so, a good time to go bargain hunting), or at the brink of another decline? Given that we’re at the bottom of a four month trading range, any substantive positive news, especially about stabilizing the banks and credit availability, could spark a rally. Increased pessimism about the banks will bring the opposite. Mixed signals on the financial system will most likely mean we stay in the recent trading range.

2. A Summary of Recent Events

If you haven’t been following the market, here’s the essence of what’s happened since the ten-year lows of late November. The downtrend continues to break support to 12 year lows.

1. The Good: Bearish Can Be Bullish

As mentioned in Part I, the overwhelmingly bearish sentiment can be bullish, since it lots of pent-up buying cash waiting to buy. It provides the fuel to power the market higher.

Here’s how it’s supposed to work, at least in the short term:

• Buying begins with bargain hunters or positive news
• Prices trend up
• Short sellers begin to buy back stock to protect profits
• Prices rise more
• Afraid to miss the low prices at the start of a possible rally, investors sitting with lots of cash begin buying
• More short sellers cover
• Prices rise more, etc.

2. The Bad

• Stimulus and Banking plans fail to impress
• Credit situation thus worsening, and that’s the core problem driving the market down
• Support at 10 year lows cracks, hello 12 year lows

3. The Ugly

If “The Bad” wasn’t ugly enough, as noted in my prior article, share prices in previous market crashes did not hit bottom until traditional valuation metrics like dividend yields and P/E ratios reached even further oversold extremes. Specifically:

• Dividend Yields: While at a multi-year high of 3.5%, are still only 25% - 50% of the levels hit during the major crashes of the Great Depression, World War II, and the 1970s.

• P/E Ratios: The Price to Earnings Ratio represents the multiple investors are willing to pay for a dollar of earnings. Historically, it sinks to 10 to 12 times earnings or lower before the market begins a sustained uptrend. Per Standard and Poor's estimates, it was over 16 times earnings in Q4 of 2008,will be over 14 times in Q1 of 2009, and could get as high as 18 times earnings by year end. Though the S&P 500 Index is around a ten year low, earnings in 1997 were 25% higher than those forecast for 2009.

Thus, statistics support the prevailing sentiment that the market is still in freefall. It’s quite possible that stocks are yet due for a further drop of 20% or more.

Of course, that drop won’t be permanent, and will be difficult to time, as will the recovery. Meanwhile, U.S. treasury securities and the like pay us virtually nothing and provide no hedge against inflation or a weakening of the dollar.

Thus those of us needing to generate income need to consider taking at least partial positions in high dividend stocks.

3. THE CASE FOR AND AGAINST THE US DOLLAR-CONTINUED

Last time we looked at the basic case against the U.S. Dollar. Here’s a basic look at the other side of the argument.

1. The Case for the U.S. Dollar’s Survival as We Know It

Before you rush out to buy guns, preserved food, and gold to prepare for The End, take a few deep breaths and consider the arguments offered in favor of the dollar surviving in its same basic form and primacy.

1. The Mother of All “Too Big to Fail”: Too Many Powers with Too Much At Stake to Let the USD Collapse

First, there’s the U.S. Government and its Citizens. Obviously, a society can’t function without a currency. Thus the dollar is, ultimately, a national security issue. Folks get mighty serious about that. In the past, the U.S. government has imposed a variety of heavy handed controls to keep its currency stable, including wage and price controls, banning precious metal ownership, closing banks and financial markets, pressuring allies, etc. In many ways, Obama & Co. are only limited by their imagination. The judiciary can be quite flexible in its interpretation of law and the Constitution in times of emergency.

Since everyone in the U.S. will suffer from a dollar collapse, the Obama administration will have the political support to do what it takes to preserve its currency.

Next, there’s the rest of the world.

• They Own lots of U.S. Dollars. Since WWII left the U.S. as the undisputed leading economic power, most of the world’s liquid wealth is tied to U.S. dollars in some way. Except for a few die hard opponents of the U.S. no one wants the dollar to die, because every government and economic entity of size holds a great deal of dollar denominated assets. What happens if those assets seriously devalue?

• They Export to the U.S. Next, consider the other major economic powers and how they’d fair with drastically reduced exports to the U.S. Can the rest of the world fill the void in demand if the U.S. market seriously shrinks from a crippled dollar? Do they want to?

• Your Currency or Mine? They Need an International Currency: It makes life easier, and replacing the dollar will create its own set of, ahem, issues and disagreements.

2. Will the USD Remain Currency of Last Resort? Does Anyone Have a Viable Alternative Existing Currency?

A story: Their aircraft suffering from engine failure, Smith and Jones are forced to parachute into the African Savannah. They notice a lone lion approaching them with a hungry look. Smith begins to run. Jones yells out to Smith “You can’t outrun a lion.” Smith yells back “I don’t have to outrun the lion, just you.”

The point is, every economic block on the planet is also hoping to inflate their way out of trouble. Exchange rates are relative. Thus the dollar can remain predominant simply by being seen as the best existing currency, even if all are in trouble. Remember the mid 1970s and early 80s, when inflation was so high you could get bank CDs around 15%? The dollar retained its status.

True, conditions aren’t the same, but the point is that inflation alone does not mean the end of the dollar. Relative status of currencies depends on a variety of factors, particularly the health of the underlying economy relative to that of others. The Chinese economy may be growing better, but they link their currency to the USD to keep their exports relatively cheap. Unclear if they’ll change that policy any time soon. What is clear is that they also hold a massive hoard of dollar investments and would suffer along with the dollar.

3. Other Ideas?

Unless I’ve badly missed something, I don’t know of any obvious substitute for the U.S. dollar, for a variety of reasons. You’ll find some very creative ideas in Paco Ahlgren’s excellent What's Going to Replace the Dollar?, but I doubt you’ll see any convincing substitute. In the end, he humbly admits we need some kind of liquid currency and leaves with a few creative but unconvincing alternatives. So, he advises us to be in anything but dollars. But with what will you buy those assets? What will your seller accept? One alternative he suggests is privately issued currencies backed by gold, silver or something else. I believe such things have existed in before the advent of strong central banks.

While the idea is conceivable, questions and problems abound. Whoever tries to set up “Joe’s Currency Inc,” “McDollars,” and the like will need access to an awful lot of precious metals or other universally recognized hard asset if the Chinese, Saudis, or any central bank shows up at their exchange window. What then, does “Private Money Inc.” do with the dollars or other gutted currency they’re likely to get in exchange?

Is another one of the major currencies a viable substitute? Mr. Ahlgren doesn’t see one, and admits their supplies are also rapidly expanding. The Chinese economy is far healthier, and the major OPEC powers have lots of valuable oil and gas. However, do the Communist Chinese, the Saudi King, or the Ayatollahs have the credibility to gain the world’s trust?

I welcome anyone’s suggestions about alternatives to the dollar.

Nonetheless, prudence dictates that since high yield stocks tend to be dollar denominated, we income stock investors seek some alternatives that protect our income and principle against the risk of a declining dollar.

There are other dollar hedging alternatives to high dividend stocks that have dollar hedging characteristics I describe below. For example:

Foreign Exchange or Forex Trading: This is a form of trading, not investing. However for those with the expertise, it’s an idea. It’s can be a currency hedge, but there’s not steady income from dividends and like any form of trading, you can lose heavily if you’re not a skilled trader.

Buying Foreign Currency Denominated CDs or Bonds: Also an idea, though the risk-reward ratio is better with the stocks mentioned below, which I’ll discuss in greater detail in the coming weeks.

4. WHAT MAKES A HIGH YIELD STOCK “USD-COLLAPSE-RESISTANT”?

Because most investors still need to hold liquid assets that produce high passive liquid income, here are three key criteria for selecting stocks that provide both high yields and a hedge against a weakening U.S. Dollar.

Outstanding Business: Before anything, the underlying business should be robust. So as always, the first criterion is great fundamentals and reliable revenue streams that can support and grow distributions, even in recessions.

Based in Hard Assets or a Monopoly-Like Position in Vital Services:

There are a variety of such niches, but there are two basic types.

• The business owns, sells, or otherwise profits from assets with strong intrinsic demand that allows enough pricing power for revenues to keep pace with or exceed inflation. This includes firms tied to energy, vital agricultural or industrial commodities, precious metals, water, etc. While many commodities and currencies related to them are down, it’s a temporary condition to be exploited, not feared. The underlying long term demand for the above commodities is growing along with the populations and economies of China, India, and others.

• Alternatively, a provider of critical services that for some reason dominates its market, like a major well run utility or dominant communications company.

Non-USD Denominated: Shares and/or distributions are priced in another currency, ideally a commodity based currency like Canadian or Australian dollars, but any other major currency would provide some hedge. We can include here U.S. dollar denominated and U.S. firms that get the majority of their earnings in other currencies. Beware, however, that the foreign exchange markets are notoriously hard to predict and at given time the dollar could strengthen against your alternative currency. Thus the foreign currency can become a liability. But if you’re already overloaded in USD, then some hedge in another currency makes sense, especially hard asset based currencies.

In short, we’re seeking stocks of strong companies that mostly earn and distribute a high dividend in a non-USD currency and have a dominant position in a market for an essential product or service.

5. Conclusion, Disclosure & More Info

In Part II we’ve reviewed the current market, the case for the USD, and the key criteria that make a high dividend stock a USD hedge.

In Part III, we’ll begin looking at specific sectors and recommendations that fit these criteria. The coming articles will examine individual categories and stocks in greater detail.

Disclosure: I have positions in most of the above mentioned investments.

Continue to Part III >>

Comments

[jairo:]

Your comments about hedges and investments makes sense. As regards politics you seem to have drunk the same cool aid as most others. First an undue concern for Israel -- a nation that has nukes, and according to organizations including the Red Cross, commits war crimes. Secondly, an uneducated position about Iran. Ask yourself and then check the history: the number of countries that Iran attached (first strike) versus the number attacked by the US, Israel, the UK, and all the other countries in the world. Maybe the results will open your eyes. I do not support nuclear weapons for anyone or any country. Nor do I support repressive regim,es whether Iran or Israel, However, when countries with nuclear arms threaten to attach others without such weapons and refuse to eliminate their WMD's, what can one conclude about a desire for peace?

Mar 03 08:55 AM

[GD:]

Nothing especially new here. Just a treatise on Investing 101, and some international political dribble!

Mar 03 09:13 AM

[Delojozafado:]

I am on the same page with you! Thank you for your analysis of ATPWF in your 2/15 blog. Wow!... I own so many of these issues that you have outlined in this blog. I would also thank those that contributed insightful remarks there on ATP as well

Mostly I am bearish the US dollar vs Loonie against remarks from Jim Rodgers, Mark Zandi and Dennis Gartman. Now I add your voice to the list. As far as the Loonie goes though it seems a hard road to travel as of late. If you blog into a (FXC) you might find some blogs authored by a Kathy Lien. She is a currency strategist and over the last 6 weeks has made some very prescient and correct observations on the Loonie. She seems to feel this Loonie weakness may persist a bit longer. This morning we have the BOC cutting rates in line with the US Fed. Ms Lien does propose that stronger oil prices are the underlying foundation for a higher Loonie.

At this point I am holding my ATPWF shares but have not added. The acquisition in Fla one poster called "ballsey", is exactly what has held me back along with how far down these stapled units have dropped. I am not 100% comfortable with the debt situation. I don't even know if the debt situation is that well known/understood? They are not reporting 4th quarter and year end total results until the end of March. This seems a little late. Again I would have been more comfortable with some guidance press release in the interim. I recently added 100 (BP)at $39.40 and have not prospered, yet. I have some(AVV) in an IRA. I bought (ENY) to get the Canroy O&G trusts. With a $10.50 cost basis I am getting killed in that . I recently added 300 REP-PRA , I believe this is as solid as TOT. They are going to be on second base when the offshore oilCuba ball game starts. I have a limit order in for 200 VZ below $26. I am getting a little concerned about their claims to continue taking share. The pie is still shrinking even while most dump their land line belfore giving up the profitable mobile. Right now FCX-PRM sells at a $5 premium to the mandatory conversion of 5/01/10. Not that far away. I may bite on it but it looks dicey with the arm twisting so near a date. Yesterday's meltdown allowed me to add to KYE more Canadian Canroy trusts and MLPs. I also added to the "note" BSR the MLP index instrument. I also added the iron ore producer rich BCF. I am holding coal MLP rich BGR which also holds a lot of MLPs as well. My best holding has been the MLP CEF MTP. This one still trades at a discount to NAV as does BSR at its current price. All of these remove the UTBI and K-1 issues. Yesterday I took an initial position in CHK-PRD at $53.62/ ended @$55. I have also recently added a position in ChemTrade CGIFF/CHE.UN. Huge dividend and hugely beaten down like ATPWF. So as far as risky I am the pot calling the kettle... by going there instead of adding more ATP. I think I am just going to wait for these end of year numbers and 4th qtr results to be published at ATP to see if there are any overhangs in this equity.

That leads me to Great Lakes Hydro. With 2800 units It is my largest single holding. I have written on many of these Canadian investment blogs in length on GLHIF, in terms of the (BAM) Flatt issue/ the record profits and production in the 2008 annual results, the leverage to the Loonie / the 1st qtr vs 2nd qtr Hydrology issues and the +$20 52 week high valuation. Even as the US dollar continued to knock down the Loonie and GLH-UN.to was off on the TSX , GLHIF posted a 4 cent move higher in yesterday's melt down. I would encourage anyone to click on my Blogs list, to get my full perspective on GLHIF, which I regard as the value of a life time with it's very secure 6.5-7% effective dividend against it's 8.2% distribution. I have gotten into this position since the closing of the BDF of Dec '08, basically as a whale follower at a valuations below the BDF 16 CD$.

I would hope the author might be able to make some remarks on the Canadian issuances not mentioned CGIFF/Chem-Trade, BIRDF/ Bird Construction, and ATBUF/Acadian Timber (45% owned by BAM). AES another energy international that could benefit from a weaker dollar has been hammered down after reporting EARNINGS! in the last qtr results. They missed by about 15cents to a $1.10 against projected $1.25? I have the AES-PRC @$34 and am under water in it. I am holding and will most likely add on a drop to just below $30 if it gets there. The ADM-PRA is another I just added another 200 to yesterday as well. Rogers loves the soft commodities and Gartman while not keen on commodities yet says the soft commodities should out perform in the sector.

Mar 03 10:08 AM

[ironist15:]

Great article! You noted that the Atlantic Power CFO had a good explanation for the high payout ratio. Could you share what it was? I've been an ATP owner for about two years, and it seems like a good port in this economic storm.

Mar 03 02:15 PM

[Cliff Wachtel:]

Thanks, I'll be discussing this conversation at length in the coming parts of this series - stay tuned!


On Mar 03 02:15 PM ironist15 wrote:

> Great article! You noted that the Atlantic Power CFO had a good explanation
> for the high payout ratio. Could you share what it was? I've been
> an ATP owner for about two years, and it seems like a good port in
> this economic storm.

Mar 04 03:59 AM

[Cliff Wachtel:]

Thanks for the detailed comments. Great minds work alike. Where is your blog? Definetely worth checking further. thanks again, will try to pursue your suggestions, which at first glance seem very solid. thanks again, Cliff


On Mar 03 10:08 AM Delojozafado wrote:

> I am on the same page with you! Thank you for your analysis of ATPWF
> in your 2/15 blog. Wow!... I own so many of these issues that you
> have outlined in this blog. I would also thank those that contributed
> insightful remarks there on ATP as well
>
> Mostly I am bearish the US dollar vs Loonie against remarks from
> Jim Rodgers, Mark Zandi and Dennis Gartman. Now I add your voice
> to the list. As far as the Loonie goes though it seems a hard road
> to travel as of late. If you blog into a (seekingalpha.com/symbo...)
> you might find some blogs authored by a Kathy Lien. She is a currency
> strategist and over the last 6 weeks has made some very prescient
> and correct observations on the Loonie. She seems to feel this Loonie
> weakness may persist a bit longer. This morning we have the BOC cutting
> rates in line with the US Fed. Ms Lien does propose that stronger
> oil prices are the underlying foundation for a higher Loonie. <br/>
>
> At this point I am holding my ATPWF shares but have not added. The
> acquisition in Fla one poster called "ballsey", is exactly what has
> held me back along with how far down these stapled units have dropped.
> I am not 100% comfortable with the debt situation. I don't even know
> if the debt situation is that well known/understood? They are not
> reporting 4th quarter and year end total results until the end of
> March. This seems a little late. Again I would have been more comfortable
> with some guidance press release in the interim. I recently added
> 100 (seekingalpha.com/symbo... $39.40 and have not prospered,
> yet. I have some(seekingalpha.com/symbo...) in an IRA. I
> bought (seekingalpha.com/symbo...) to get the Canroy O&amp;G
> trusts. With a $10.50 cost basis I am getting killed in that . I
> recently added 300 REP-PRA , I believe this is as solid as TOT. They
> are going to be on second base when the offshore oilCuba ball game
> starts. I have a limit order in for 200 VZ below $26. I am getting
> a little concerned about their claims to continue taking share. The
> pie is still shrinking even while most dump their land line belfore
> giving up the profitable mobile. Right now FCX-PRM sells at a $5
> premium to the mandatory conversion of 5/01/10. Not that far away.
> I may bite on it but it looks dicey with the arm twisting so near
> a date. Yesterday's meltdown allowed me to add to KYE more Canadian
> Canroy trusts and MLPs. I also added to the "note" BSR the MLP index
> instrument. I also added the iron ore producer rich BCF. I am holding
> coal MLP rich BGR which also holds a lot of MLPs as well. My best
> holding has been the MLP CEF MTP. This one still trades at a discount
> to NAV as does BSR at its current price. All of these remove the
> UTBI and K-1 issues. Yesterday I took an initial position in CHK-PRD
> at $53.62/ ended @$55. I have also recently added a position in ChemTrade
> CGIFF/CHE.UN. Huge dividend and hugely beaten down like ATPWF. So
> as far as risky I am the pot calling the kettle... by going there
> instead of adding more ATP. I think I am just going to wait for these
> end of year numbers and 4th qtr results to be published at ATP to
> see if there are any overhangs in this equity.
>
> That leads me to Great Lakes Hydro. With 2800 units It is my largest
> single holding. I have written on many of these Canadian investment
> blogs in length on GLHIF, in terms of the (seekingalpha.com/symbo...)
> Flatt issue/ the record profits and production in the 2008 annual
> results, the leverage to the Loonie / the 1st qtr vs 2nd qtr Hydrology
> issues and the +$20 52 week high valuation. Even as the US dollar
> continued to knock down the Loonie and GLH-UN.to was off on the TSX
> , GLHIF posted a 4 cent move higher in yesterday's melt down. I would
> encourage anyone to click on my Blogs list, to get my full perspective
> on GLHIF, which I regard as the value of a life time with it's very
> secure 6.5-7% effective dividend against it's 8.2% distribution.
> I have gotten into this position since the closing of the BDF of
> Dec '08, basically as a whale follower at a valuations below the
> BDF 16 CD$.
>
> I would hope the author might be able to make some remarks on the
> Canadian issuances not mentioned CGIFF/Chem-Trade, BIRDF/ Bird Construction,
> and ATBUF/Acadian Timber (45% owned by BAM). AES another energy international
> that could benefit from a weaker dollar has been hammered down after
> reporting EARNINGS! in the last qtr results. They missed by about
> 15cents to a $1.10 against projected $1.25? I have the AES-PRC @$34
> and am under water in it. I am holding and will most likely add on
> a drop to just below $30 if it gets there. The ADM-PRA is another
> I just added another 200 to yesterday as well. Rogers loves the soft
> commodities and Gartman while not keen on commodities yet says the
> soft commodities should out perform in the sector.

Mar 04 04:03 AM

[Delojozafado:]

I have no blog but "seeking alpha" has all of my posts on record and the ones on Great Lakes Hydro can be read by simply clicking on " 57 Comments". There is also a discussion of ATPWF in that history.


On Mar 04 04:03 AM Cliff Wachtel wrote:

> Thanks for the detailed comments. Great minds work alike. Where is
> your blog? Definetely worth checking further. thanks again, will
> try to pursue your suggestions, which at first glance seem very solid.
> thanks again, Cliff

Mar 04 05:12 AM

[GimliJan:]

I like the article and am currently attempting to build a dividend income portfolio in monthly increments of around $100-200. I was all set to buy BP after tracking them for months and what happens? they announced today that a dividend freeze is most likely to happen later this year. <sigh> Cancelled the order and will probably buy COP instead. Also NAT suspended their dividend some time ago. Did they re-instate it?

Mar 04 12:53 PM

[Universal H...:]

Great article, Cliff- organized, thorough and well written. Exactly what I'd expect from a CPA! Judging by your inclusion in 120 "watchlists" since January, it looks like there is substantial interest in your content and style. I know it takes hours and hours to do the research, collect your thoughts and then translate them into a coherent stream of words that make up an "article", so on behalf of the SA community I'd like to say that we certainly appreciate your efforts!

I'm looking forward to the rest of this series, particularly with regards to MLPs. I noticed that among your list of MLPs you hold only one CEF, Tortoise Energy Infrastructure. I've spent some time examining MLP CEFs including (FEN), (FMO), the Tortoise funds (TYG), (TYY) and (TTO), the Kayne Anderson funds (KYN), (KYE) and (KED), and (MTP) which Delojozafado commented on earlier. I also looked at the ETN (BSR) based on the Alerian MLP Index (AMZS), but I'm very hesitant to invest in a debt instrument. I would like to invest in the MLP sector, but I have a modest portfolio via dollar cost averaging and would prefer to be diversified within the sector. (Also, quite frankly, I'm a little intimidated by the UBTI and K-1 requirements.) Obviously, an analysis of the MLP CEFs might be somewhat outside the scope of your Series, but I'm sure there are many other SA'ers with more limited time and financial resources who would greatly appreciate your input.

Mar 04 01:11 PM

[DuffBeer:]

Cliff,
Nice post !!!!
I too am building out my monthly divie portfolio and you post have been very helpful. This should be a part of Everyone's investment plan. I was so caught up in growth that I forgot income. You young guys out there believe you will find this out too . Put some dough in income stocks you will be glad you did.
Wow it amazes me how quickly the comments on the political front come.
Doesn't anybody like to be shot or rocketed at anymore ??? I think Iran should test out their new nuc in Tehran or Birjand that way they would know it works !!!! I will watch the test on Nasa channel can as I drink a
Shmatz's Jewbelation 12.
Cheers, DuffBeer

Mar 04 09:12 PM

[Cliff Wachtel:]

Thanks for the complement and wry comic irony of employing spelling and grammar errors while making highly dubious claims and accusing others of uneducated positions. I love it! Thanks again for the chuckle.

Lest any innocent soul take some your comments seriously, they should consider the following.

The Red Cross Is Hardly an Unbiased Source: Like many international organizations subject to knee-jerk anti-Israel bias from the Moslem block, the IRC is about as objective a source on Israel as the U.N, Durban Conference, or Teheran “Official” news agencies. The IRC has a long, well established records of blatant anti-Israel bias. Incidents are too numerous to detail, but my favorite is when one of its past presidents equated that Star of David to a Swastika. Repeated use of Red Crescent (IRC member) ambulances for moving arms and troops also well documented.

Regarding Iran’s first strike record: As we say in the investment world, past performance in no indication of future returns. Iran openly and repeatedly calls for Israel’s destruction, backs up their words by providing extensive support to both Hizbollah and Hamas. Thus Iran already bears indirect responsibility for “first strikes” of its proxies.

FYI, unlike Iran, Israel does not seek to commit genocide, merely to defend itself from those who do. Israel has repeatedly ceded or tried to cede disputed territory seized in the course of that self defense.

In case your Madrasah’s history program didn’t cover this:

1948: Israel agreed to U.N. partition plan, Arabs reject it, declaring a war of annihilation in contradiction to the U.N.
1956: Israel withdraws from the Sinai after taking it with Britain and France in a war triggered when Egypt violates treaty and closes Suez Canal)
1996: Israel leaves a 15 klm strip of Southern Lebanon, after occupying it in order to stop repeated attacks originating from that territory. Attacks on Israel resume.
2007 Israel evacuates Gaza after occupying it in 1967 when its neighbors again declared a war of annihilation against it.
2009 Israel withdraws again after a brief incursion aimed at ending years of rocket attacks INTENTIONALLY aimed at its civilians.

Don’t wish do be harsh, but I feel a moral responsibility to protest the more blatant cases of what Harry Truman called “The Big Lie” – in this case the demonization of Israel in its efforts at self defense. I don’t claim to be an authority on ME politics.

Again, thanks for the laugh, and I respond only as a precaution that someone might have thought you were being serious.



On Mar 03 08:55 AM jairo wrote:

> Your comments about hedges and investments makes sense. As regards
> politics you seem to have drunk the same cool aid as most others.
> First an undue concern for Israel -- a nation that has nukes, and
> according to organizations including the Red Cross, commits war crimes.
> Secondly, an uneducated position about Iran. Ask yourself and then
> check the history: the number of countries that Iran attached (first
> strike) versus the number attacked by the US, Israel, the UK, and
> all the other countries in the world. Maybe the results will open
> your eyes. I do not support nuclear weapons for anyone or any country.
> Nor do I support repressive regim,es whether Iran or Israel, However,
> when countries with nuclear arms threaten to attach others without
> such weapons and refuse to eliminate their WMD's, what can one conclude
> about a desire for peace?

Mar 08 04:17 PM

[Cliff Wachtel:]

Thanks for the kind comments, glad to be of service. Given the continued downtrend, the only long positions I can see taking are in these kinds of stocks, as long as you can afford to leave the cash alone while getting 4x the return of cash and near cash. Its a balance between trying to hold ammo for the bottom, which we may well miss, and getting decent current income.


On Mar 04 01:11 PM Universal Huckleberry wrote:

> Great article, Cliff- organized, thorough and well written. Exactly
> what I'd expect from a CPA! Judging by your inclusion in 120 "watchlists"
> since January, it looks like there is substantial interest in your
> content and style. I know it takes hours and hours to do the research,
> collect your thoughts and then translate them into a coherent stream
> of words that make up an "article", so on behalf of the SA community
> I'd like to say that we certainly appreciate your efforts!
>
> I'm looking forward to the rest of this series, particularly with
> regards to MLPs. I noticed that among your list of MLPs you hold
> only one CEF, Tortoise Energy Infrastructure. I've spent some time
> examining MLP CEFs including (seekingalpha.com/symbo...),
> (seekingalpha.com/symbo...), the Tortoise funds (seekingalpha.com/symbo...),
> (seekingalpha.com/symbo...) and (seekingalpha.com/symbo...),
> the Kayne Anderson funds (seekingalpha.com/symbo...), (seekingalpha.com/symbo...)
> and (seekingalpha.com/symbo...), and (seekingalpha.com/symbo...)
> which Delojozafado commented on earlier. I also looked at the ETN
> (seekingalpha.com/symbo...) based on the Alerian MLP Index
> (seekingalpha.com/symbo...), but I'm very hesitant to invest
> in a debt instrument. I would like to invest in the MLP sector, but
> I have a modest portfolio via dollar cost averaging and would prefer
> to be diversified within the sector. (Also, quite frankly, I'm a
> little intimidated by the UBTI and K-1 requirements.) Obviously,
> an analysis of the MLP CEFs might be somewhat outside the scope of
> your Series, but I'm sure there are many other SA'ers with more limited
> time and financial resources who would greatly appreciate your input.
>
>

Mar 08 04:21 PM

[Cliff Wachtel:]

Thanks for the comments.Shipping, like energy, is no doubt distressed now, so but at the right price the rewards justify the risks for those who can wait. See my comments on Atlantic Power in Part III and in the article prior to this series. Worth consideration


On Mar 04 12:53 PM gimli wrote:

> I like the article and am currently attempting to build a dividend
> income portfolio in monthly increments of around $100-200. I was
> all set to buy BP after tracking them for months and what happens?
> they announced today that a dividend freeze is most likely to happen
> later this year. <sigh> Cancelled the order and will probably buy
> COP instead. Also NAT suspended their dividend some time ago. Did
> they re-instate it?

Mar 08 04:26 PM

[docmike:]

"Remember the mid 1970s and early 80s, when inflation was so high you could get bank CDs around 15%? The dollar retained its status."

Well, the reason you could get bank CDs at 15% was high interest rates at the time, not inflation per se. High interest rates saved the dollar then. What will save it now, with interest rates so low?

Mar 21 04:44 PM

[Delojozafado:]

So now I have taken 3/4 s of my BCF off the table for a nice gain and stop lossed the rest @ $6.84. I have since added another partial in GLHIF to a round 3K position and with today's strong Loonie move I am up over $500 in my position. The effective dividend also rose to 6.95% against my total cost basis on the bird going to .816. ENY which I continued to average down in to below $8 has exploded higher. I have a target for lightening in the mid $11 range. BSR has also rallied and I would love to get some off the table above $25. The ADM-PRA has really kicked butt as well and I am less than a buck away from taking off 20% of the position. At least I am above water now in my AES-PRC. I may have to find a less ambitious target below $38 to unload 50% of that. I am just even in my REP-PRA but I see it swooned in the after hours trading. Ken Fischer the perennial BULL has endorsed the shares of REP as part of his"Madonna" theme. He is also enthusiastic over DOW & AA. Madonna is easily the best show for the money on earth. 2 hrs and 20 minutes with a 10 minute break and a couple five minute costume changes. Just Awesome!! The female version of Dorian Grey. Sort of like an affordable Beamer. My Chem Trade shares had a very strong move higher today as well . At this price it is ripe for a take out. Teck Cominico now has a bad case of indigestion from the Fording Coal take out. With the Suncor deal and the Dow/Rohm Hass deal a small cao like ChemTrade would just round out a major. GACHF and HLSRF both had strong moves up today as well on a percentage basis. Wow my CHK-PRD is smokin' , now with Nat gas finding a resistance at $4 and trading up and down on the $4.50 handle. If only I had pulled the trigger at $53.xx on another 100 shares of CHK-PRD. Peaking A/C is nearly upon us. And so in that vein the EDE was smokin' again today, The 9% dividend may now be safe if the shares can top up over $18. Half of the discount due to the share dilution of their recent subsequent share public offering is now nearly erased. The A/C season is going to be a good one for them this year with all of their peaking Nat Gas turbine units going on for long runs. I truly believe that the best watermelons come from Arkansas. That means a lot of A/C while those melons are growin'. My shares in BP are really smokin' too. Too bad I did not jump the bones at the same time of some RDS/B. With the move higher today it's +7% yield is slipping away. Hey even Bruce not the Almighty had a big day with BAM adding on +1%. Did you see that intra-day swing in AGQ the day the Fed adjourned and made their announcement of the "Q" plan to destroy the US PE$O? A $33.12 low to a $44.xx handle? Yikes!


On Mar 04 04:03 AM Cliff Wachtel wrote:

> Thanks for the detailed comments. Great minds work alike. Where is
> your blog? Definetely worth checking further. thanks again, will
> try to pursue your suggestions, which at first glance seem very solid.
> thanks again, Cliff

Mar 23 09:35 PM