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Joseph L. Shaefer  

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  • Did the January Effect Start on November 1st This Year? [View article]
    Investing1 just unleashed the following diatribe...
    "mindless blather about nothingness is more appropriate. Why is it that financial advisors are always telling their clients to go head long long when the market has turned to a short side bias?"

    Ummm -- before getting that off your chest, did you bother to do any research and note that we were SHORT until March, LONG in March, SHORT over (too much of!) the summer, and now LONG again?

    No doubt your rant applies to some advisors but, as I'm certain you will learn as you progress toward your degree in finance, RESEARCH will save you embarrassment -- and FLEXIBILITY will save your portfolio!

    I don't know what the market is going to do tomorrow. I can only rely on my experience, having been in similar situations a few dozen times over the past 40 years. Since you "know", perhaps your recommendation of MZZ will work better for you. I prefer research and flexibility...

    Wishing you much success in your investing endeavors,
    Nov 24, 2009. 01:35 PM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Underwater mortgages could drown housing recovery. 23% of all U.S. homeowners with a mortgage, or 10.7M, now owe more to the bank than their house is worth..."

    I don't discount the importance of these numbers one bit. I was among the first to warn of the housing bubble with "clear and present danger" articles during 2005 and 2006. But neither can I accept the shrill conclusion that because 23% are underwater, that some figure close to 23% will walk away from their current home. (Although, in the Unintended Consequences Department, the current $6500 "redistribution" from all taxpayers to any principal residence buyer may tempt many more than otherwise would have walked to do so...)

    Still, a house is not a home and a home is much more than a house. If you like the neighborhood, like the school district, like your neighbors and are comfortable in a place you rent, you don't move just because rent somewhere else is $50 a month cheaper. The same is true of your home, especially if have put sweat equity into the yard or painted it recently or done improvements to the interior, etc.

    23% underwater doesn't mean that 23% are hundreds of thousands underwater; or that we'll stay underwater as housing prices rebound in many parts of the country; or that we'll walk away from the home we love just because it's underwater TODAY.

    I did not share in the irrational euphoria when prices were ridiculously overpriced. But I do not share the shrill hysteria that the sky is now falling, either. We've been here before. "House" prices go up and they go down. But people still want a "home" to call their own...
    Nov 24, 2009. 01:23 PM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Dimon for Treasury Secretary? "

    OK, let's accept that it's "possible" for someone on Wall Street to experience remorse. Next, that it's "possible" they may feel just guilty enough to give up their $48 million a year job to take on a role in government. And that it's "possible" they aren't just pandering to the popular anger and might actually allow the occasional Not Too Big To Wail bank to fail ("possibly" into the waiting arms of JPM.)

    Even if that were all possible -- isn't it just as possible we could hire someone who WASN'T a hungry fox to guard the henhouse? Who would begin the job with credibility rather than distrust?

    Why must our Treasury Secretary come from Wall Street? Are there no Paul Volckers or Milton Friedmans or Alexander Hamiltons out there willing to put the needs of the American people above the markers they owe their cronies on Wall Street?

    It's a rhetorical question. Of course there are...
    Nov 23, 2009. 11:51 AM | 7 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Geithner defended his position, saying, 'The U.S. ... came into this crisis without anything like the basic tools countries need to contain financial panics. Coming into AIG, we had basically duct tape and string.' "

    Duct tape and string? How about common sense, the previous experiences with Long Term Capital, Bear Stearns, Lehman, et al, and half a brain?

    I believe we could take a farmer from Iowa, a 3rd-grade schoolteacher from Oregon, and an accountant from South Carolina and, singly or together, they could have used common sense and an honest concern for the American people to figure out that the problem came from Wall Street and should have stayed on Wall Street.

    Of course, they would not have been beholden to Wall Street for their job, wouldn't have contempt for the hoi polloi everywhere west of Wall and Broad, and wouldn't have needed to cuddle up with other little masters of the universe in order to ensure their own feathered nest awaits them the second they leave what is more and more humorously referred to as "public service."

    Where you sit may depend on where you stand -- but it shouldn't determine whether you have the courage to even take a stand.
    Nov 20, 2009. 10:06 AM | 9 Likes Like |Link to Comment
  • 11 Stocks Increasing Dividends, Long-Term Return [View article]
    Thank you for your always-interesting articles, D4L. My watch list is filled with companies like these so I always appreciate seeing new ones to add to the mix.

    Though I am solidly in the camp of those who believe in dividend investing, I part company with those who buy companies like WMT, ABT and MCD exclusively, believing an incremental increase from 2% to 2.2% will serve their portfolios well. That level of yield and "safety" that comes only from size may be illusory -- many former "dividend aristocrats" lost their lands and castles and are now begging in the streets for food. (GE, BAC and C were once considered aristocrats and are now paupers...) That's why I think it's essential to look at the up-and-comers, the niche players, and those increasing market share like the ones you have identified here.

    While well-managed, growing companies that yield 2-3% and are growing their dividends 10% a year, year after year are good -- those of us older than 20 or 30 need to see some income TODAY as well.

    That's why I research, own, and write about food and energy companies whose product will be consumed as long as their are people on earth and who <> have an equally fine record of increasing dividends -- but do so from a much higher base.

    (For example, many natural gas pipeline MLPs yield more than 8%, are conservatively managed, and have raised their dividends every year since they are paid on the amount of gas going through their pipeline -- the owner of the gas takes all the risk in the price of the product.)

    For me, dividends are an important part of our total return and dividend growth is an essential element in increasing portfolio value. But dividend growth from a higher sustainable baseline is even better!
    Nov 20, 2009. 09:57 AM | 8 Likes Like |Link to Comment
  • Bill Gross: Anything But 0.01% [View article]
    ... and just as likely, I suspect inflation will make a comeback once real estate picks up!

    Since I can't hold my breath that long, I'm going for the dividends paid by commodities that have autonomous pricing power at any level of inflation -- like natural gas pipelines, coal royalty trusts and apartment REITS...
    Nov 19, 2009. 06:44 PM | 8 Likes Like |Link to Comment
  • Ethanol vs. Natural Gas or Coal: Comparison Not Even Close [View article]
    Dear Mr. Kreg,

    Thank you for your e-mail to President Obama asking him to replace the current Sec of Energy with me. If called, however, I would have to respectfully decline for two reasons:

    (1) << Divorce is expensive. >> After speaking before various groups, some members of the audience will always come up and tell me I should run for governor or senator or city dog-catcher or whatever and they would vote / campaign for me. In each instance, my wife has informed me that if ever I entered the fantasy world of politics, I would do so alone. She then reminds me that Nevada is a community property state.

    (2) Speaking from experience, having a hard-wired propensity to tell it like it is does not engender civility or cooperation from Washington's cozy insiders. I fear my time in that saddle would be too short-lived to do more than gore a few oxen. Hmmm... maybe there's value there after all!
    Nov 19, 2009. 02:54 PM | 4 Likes Like |Link to Comment
  • Reaching for Yields with MLPs [View article]
    Fine analysis, Elliott. I couldn't agree more. We originally recommended both WPZ and WMB to SA readers on Sept 15 when they were, respectively, 21.61 and 18.30. One of those readers e-mailed to ask if they should sell now. I responded that I don't know their personal situation so it would be inappropriate for me to recommend one way or another. But for myself and our clients, I'd say, "No way!"

    I am in the camp of those who believe in dividend investing -- but I part company with those who buy companies like WMT, ABT and MCD exclusively. Fine growing companies that yield 2-3% and are growing their dividends 10% a year, year after year are good -- but for those of us older than 20 or 30 need to see some income TODAY! At our purchase price, WPZ yields 11.75% -- and it has shown that same steady progression from 15 cents a quarter in 2005 to 64 cents every quarter now.

    Dividend growth is good. Dividend growth from a high baseline is even better...
    Nov 17, 2009. 07:03 PM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "...a lobbying group for 18 of the world's largest financial firms...urged House Financial Services Committee Chairman Barney Frank not to pursue big bank break-up legislation."

    Gee, there's a surprise. Big banks, having mismanaged, bungled, ruined, botched or made a mess of everything they've touched, invested in or been entrusted with, now want us to believe we shouldn't act to protect ourselves in the future.

    Sort of like the usual criminal response when standing over a dead body with gunshot residue on their hands and a smoking gun: "I didn't do nuthin' wrong! It isn't my fault! The law was unclear! I had a terrible childhood!"



    Nov 17, 2009. 02:41 PM | 3 Likes Like |Link to Comment
  • The State of Banking: Banking on the State? [View article]
    One of the essential underpinnings of any social contract – or legal or financial contract, for that matter – is that “actions have consequences.”

    Once a state or national government picks and chooses favored industries (often because the appointees have come from and will return to those industries) and says to them, explicitly or implicitly, “actions have consequences, but, don't worry, not for you,” there is no social, legal or financial constraint on their actions.

    “Actions have consequences, but not for you” is just another way of saying “All animals are equal but some animals are more equal than others.”

    That is why so many Americans are so incensed by this favoritism. It isn’t only about the money. It’s about whether this nation stands for equal opportunity, whether individuals and institutions can succeed or fail on their own, and whether the playing field is level or it isn’t. For Wall Street, it may always be about the money. For the rest of us, it’s about something bigger – what this nation stands for and where we go from here.
    Nov 17, 2009. 12:19 PM | 7 Likes Like |Link to Comment
  • Weekly Recap: Is the U.S. Going Bankrupt? [View article]
    "Despite several attempts, the S&P 500 failed to close above the all-important 1,100 level."

    There is no question that the market has roared ahead every bit as quickly as it plummeted from September 2008 to March 2009. As a result, many a prudent investor is lightening up on their portfolio or placing trailing stops.

    But those strident voices (not you, Graham, but I've seen many on SA) who said, "The S&P will not penetrate the all-important 865 level" or "it cannot penetrate the all-important 920 level" or "there's no way it will penetrate the all-important 1045 level" were wrong.

    It's OK to be wrong. No one bats 1.000, not even Ted Williams, who was the last man to bat over 0.400 -- and that was 3 generations ago.

    It's what we do when we're wrong that counts. Do we become ever more strident and bray from our shrinking ice floe that the sea cannot rise? Or do we say, "OK, nobody bats 1.000. I was wrong. Let's reverse course and make some money." Personally, I prefer the latter. I picked the March low 2 days early. Good. Then I got out and went short in May. Not good (though it looked smart for a couple weeks in June and July!) I realized I was wrong and went long in August.

    I share your concern that this market is long in the tooth. IF you and I are right, I am close to the exits and have already placed stop orders on my most liquid positions. If wrong, I still need to ensure that my clients and I participate and wring out profits where we can. If this job were as easy as it sounds in well-written articles, anybody could do it, right??!!
    Nov 13, 2009. 11:28 AM | 18 Likes Like |Link to Comment
  • U.S. Jobless Rate Hits 10.2% - Government Supporters Blame Rising Productivity [View article]
    Rising productivity never lost ANY one their job! Yes, technology has replaced some drudge work -- machines now scoop dirt out of ditches faster than men, sewing machines made better lives for seamstresses, though there are today fewer seamstresses, and automobiles meant that horse curriers, groomsmen and blacksmiths were replaced by car dealers, auto mechanics and factory workers.

    So what? Every time we became more productive, not only did those "displaced" go from digging ditches to something hopefully better, but a whole NEW group of employees were created to make and service machines, to sell consumer items to those with new and different jobs, and to entrepreneurs that founded new companies and all their employees.

    When someone says, "Well, people are just working smarter and better, that's why unemployment is up," it's a lie, plain and simple. BECAUSE government favors the big, the ungainly, the goliaths that contribute the most to their campaigns, they have taken from the small and given to the big. Instead of creating jobs, this money has disappeared down the rathole of bonuses and perks.

    Unemployment is up because our government is sticking its tentacles into the fabric of business and entrepreneurship and ripping it to shreds.
    Nov 9, 2009. 09:31 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Interesting juxtaposition of articles, Eli --

    "Consumer bankruptcy strikes new high" preceded directly by "Big bonuses are back. Wall Street incentive pay is set to rise by about 40%..."

    Our government "leaders" works to ensure that Wall Street -- from whence many of them came and to which they will return after their "public service" -- is taken care of while the rest of us suffer the highest levels of personal bankruptcy.

    Vote them all out. The next crop may be no better but at least it'll take them time to figure out where the goodies are hidden, giving the country time to recover on our own while they are distracted searching for the candy.
    Nov 5, 2009. 09:04 AM | 14 Likes Like |Link to Comment
  • Fiscal Responsibility Has Moved Abroad [View article]
    The worst crime against working people is a company that fails to operate at a profit -- because then the business will ultimately fail and its workers will lose gainful employment and their incomes.

    By the same token, a government that consistently operates at a loss while claiming that "deficits don't matter" is bankrupt both morally and financially. Deficits matter -- to individuals, to businesses and to nations.

    "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."

    It's time we stopped letting anybody fool us any of the time and began once again to work hard, savie for the future, spend responsibly, and elect leaders who share those values.
    Nov 5, 2009. 08:54 AM | 4 Likes Like |Link to Comment
  • Despite Inflation, The Social Fabric Remains Intact [View article]
    The US government is comprised of a self-serving clique and the economy does not currently provide opportunities for all. Yet, like Roger, I must respectfully disagree with some of those whose comments I value most highly on SA. I do not share the belief that America is going to hell in a handbasket.

    Times of retraction lead to introspection, and that’s a good thing. But just as things were never as joyous as we might have believed during “the good times” neither are things as bleak as many say now that we are in a not-so-good place. Neither will last forever. The pendulum swings both directions.

    Our opinions are formed by our experiences and upbringing and I accept that my experiences may not be typical. While I have seen the shortsightedness and frivolity of many, I have also had the honor, my entire working life, of working for, working alongside, and commanding some of the finest Americans of this or any generation. The American Soldiers, Sailors, Marines, Airmen and Coast Guardsmen that I know are as honorable, ethical, serious, hardworking and generous as any who have gone before. They give me hope and confidence in the future of this nation.

    If many of our fellow citizens have became lazy, complacent, and looking for the next government program that will give them something for nothing, others are seeking something greater than themselves and finding it in duty to country.

    The generation of statesmen who returned from WWII who believed in something greater than themselves had seen, firsthand, reason enough to keep America from becoming less than its promise. In the intervening years, we lost many of those statesmen as mere politicians chose to run for office.

    But a whole new generation of young American men and women have been to war and seen the ugly alternatives to a vibrant, tolerant and just nation. I believe their social consciousness has been raised to the same degree as the previous generation of statesmen. These are the men and women who will come to replace the politicians of today.

    If you doubt the resolve of these young people, just stand in any airport that welcomes them home from overseas, as I have.

    Or read this story by Army Reserve Chaplain Jim Higgins, who was pastor of a Methodist church in Georgia, before deploying to Iraq. He writes of a thousand soldiers seeing a movie courtesy of MWR (Morale, Welfare and Recreation) at Camp Anaconda in Iraq in 2007. (The full story and verification of its accuracy may be found at

    For those who have never been to one, every military theater worldwide, whether in an air-conditioned facility in America or a GP Large tent in Afghanistan, precedes the movie with the playing of our National Anthem as those of us in attendance stand at respectful attention. In this instance, a thousand soldiers were standing at attention but the recording stopped. They continued to stand at attention.

    The music started again, but stopped again. Then one of them started singing quietly. A few others joined in. Then the chorus rose as all 1000 troops joined in to complete the Anthem. Chaplain Higgins writes, " I wanted you to know what kind of Soldiers are serving you here."

    I have personally witnessed scores of acts of patriotism, courage, fortitude and humor and toughness in the face of adversity. Those who disparage Americans may have had different experiences. I have seen both sides and I say: God bless any nation that can still produce young people like these.
    Nov 4, 2009. 10:25 AM | 8 Likes Like |Link to Comment