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  • Investors Should Not Be Complacent About Dividend Champions [View article]
    This is an excellent article. I am a bit ambiguous about the whole concept. For me personally a dividend growth approach cannot meet my investment goals due to not enough money and not enough time, however I can see that for many people it is probably the best available approach to saving for retirement.

    Imagine you are 30 years old and your main interest is in pursuing your career in medicine, architecture, or repairing cars. You are able to save for retirement in an IRA or tax sheltered account, but you don't want to spend your days monitoring the stock market. Altogether too much stress. It makes a lot of sense to pick a few good well-established, mature, dividend paying consumer goods or industrial companies like Coke or Chevron and to DRIP the returns or reinvest them. Check that your companies are all still in business each New Year's Eve, and come back in 30 years.

    Of course, this model makes certain assumptions about the stability of Western capitalism, but then if the barbarians at the gates take over, then we are all screwed anyway.

    What is the alternative? Put your money in some mutual funds that will provide a guaranteed steady return on your money--only not to you, but to the people who run the business? Just put all your money in SPY or DIA and pray for America every Sunday? Hand over the portfolio to your wife's Uncle Stanley who used to work for the IRS, or the investment manager who gives free seminars at your church?

    So a dividend champions strategy is probably as good as anything for long term savings, and if you drop a company if it does not increase its dividend, then you will probably be pretty certain to avoid companies headed for bankruptcy.
    Sep 24, 2011. 11:53 AM | 9 Likes Like |Link to Comment
  • Debt Ceiling Deal a Prelude to Ultimate Default [View article]
    Looking at the distinguished resume of the author, I find it extraordinary that he would espouse views that are so out of touch with reality. I can only assume that he got out of bed on the wrong side today.

    The higher taxes for families earning more than $250K per year woudl only be on the portion of the income above that figure after deductions and businesses expenses, not on their whole income.

    Businesses hire extra employees because they believe they will make extra money that way, not for charity. If the personal income taxes paid by the owner of a small business are increased a bit, how would laying off employees improve his personal wealth? If each new employee hired contributed x dollars to his bottom line, then he would need to hire even more employees to compensate for income lost to taxes,not less.

    The author also completely misses the point that the US is addicted to fighting foreign wars of aggression and could easily reduce the ´´defense¨ budget by 75% and still have the largest military in the world.

    On health care, a fortune would be saved in the US if Medicare, Medicaid, Veterans Administration, Indian Health, the military health services, prisons, Workman´s Comp only authorized payment for prescription of generic medications, except in certain cases where there is no comparable generic equivalent and a proprietary drug offers substantial benefits. If proprietary drugs are otherwise desired, the patient should have to pay for them.
    Jul 14, 2011. 09:45 AM | 9 Likes Like |Link to Comment
  • Stock Picking: Why It Is So Difficult to Be Successful [View article]
    Picking stocks is easy, but the hard part is buying them at the right time and at the right price. Too many retail investors don't realize that buying, say, Intel at $24 is not the same thing as buying Intel at $20.

    People who have heard that I know a thing or two about the stock market often ask me questions like "Do you think Ford is a good buy?" to which I invariably reply that it just depends on what you pay for it.

    In reality, buying stocks is a much more complex business than just slapping in a buy order, and to assume a full position of maybe 1000 or 2000 shares one may have to go through a months long process of placing limit orders, selling puts, and buying stock at market price so as to be sure not to buy a stock at its 10-year high and be left as a bag holder.

    The professionals and hedge fund traders who are on the other end of your trades don't just go to work one day and place an order to buy 5 million shares of Intel at market before coffee time and let the chips fall where they may, and neither should the wary retail investor.
    Jun 24, 2011. 11:16 AM | 9 Likes Like |Link to Comment
  • Jobs Friday---When Bubblevision Misses The Epic Failure Of The US Labor Market [View article]
    Obviously sending out resumes is not an effective way of getting a job, or these resumes did not contain the kind of skills and experience the employer was looking for. I would first find out what vacancies employers have, and then apply for them if I was qualified, not just waft thousands of resumes into the blogosphere and hope for the best. I would also try to use personal contacts, if any. I think this is called networking. If all else fails, nepotism may be worth a try. If I had particular skills I would also look overseas.

    Last week I was interviewing candidates for a middle manager job that pays $55,000 per year with 13 days paid vacation, 13 days paid sick leave, 11 public holidays per year, a choice of employer subsidized health insurance plans, free life insurance for 6 months pay. The job is 40 hours per week, indoors in a clean, air-conditioned building and within commuting distance by Interstate highway of one of the largest cities in the US. The applicant would have an office with an ensuite bathroom, fridge, microwave, and of course the usual computers, desks, filing cabinets,and telephones. There is free parking. The job is not in a prison.

    The position was advertised statewide and there were three applicants. One was superb at interview, and you wanted to just say "can you start today?". The next candidate was a total loser who had never held a job for more than 2 years, was currently out of work, looked disheveled, and looked completely puzzled by the interview questions that related directly to the job, like "What is the most number of employees you have ever supervised?". The third candidate was a current employee who is very charming, but has a limited understanding of spoken English and insufficient experience to be qualified.

    None of the candidates spoke Spanish, which was not a qualification required for the job, but always a useful add-on in our state given that there is a large Hispanic population.

    No one else applied. If the best candidate decides to withdraw, then we are left with Hobson's choice. That's how it is in the real world, folks. A lot of poorly educated underemployed people, many of them obese, whom employers only hire if they can't get the better candidates.
    Sep 11, 2014. 12:53 PM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    @Rich in Quebec

    They might be right up to a point, but only up to a point.

    I live in the Dominican Republic, my in-laws are Haitian. The DR has no food stamps, so people have to find jobs, or create their own, which might include anything like selling a few stolen avocados or bananas in the street, prostitution, pimping, stealing, dealing drugs, people smuggling, selling a variety of items in the street like clothes, music, videos, ad hoc fast food operations on vacant lots and street corners, washing windscreens at junctions (recently banned after a motorist shot a window cleaner in Santo Domingo), motorbike taxis at $1 a ride, "massages", robbery, and numerous types of fraud of which the most widespread would be diversion of electricity and cable TV services, not to mention employee swindles on a massive scale in which cash is diverted from cash registers into the pockets of employees.

    Of course all of these things occur in the US too, but on a much smaller scale and surely the social safety net is part of the reason for that.

    If the Republicans really want to see what no government looks like, they can vacation in Haiti where their hotel will have its own generator and water and sewerage systems and supply since the communal ones are completely non existent or if they exist at all are unreliable. Their resort will have high walls topped with razor wire and armed guards within, since there is no reliable police force, so you need to form your own, and even if you did call the police, they will need you to pay for a taxi to bring them to your location.

    Is this really the vision of the future for the US? Of course not, the argument is only about the finer details of how much government should have a say in setting out a few rules for health insurance, an industry that is already government regulated.

    Having said that, I would like to see a much freer market in health insurance. Many people in the US would benefit immeasurably from getting their medical, dental, and drug needs met off-shore, for example in the Dominican Republic. This would work out great for all as patients would have less co-pays, insurance companies would have to fork out much less to providers, and the DR and other medical destinations would benefit from dollar earnings, hotel bed occupancy and so on. And once medical charter flights were organized from major gateway cities, travel costs would come way down too!
    Oct 3, 2013. 08:45 AM | 8 Likes Like |Link to Comment
  • Apple: Is Tim Cook The Next Steve Ballmer? [View article]
    Bit of a difference. Ballmer was a college pal of Gates at Harvard and was employee #30 when he joined MSFT in 1980 as business manager. He dropped out of an MBA program to join MSFT at the age of 24.

    When Microsoft was incorporated in 1981, Ballmer owned 8 percent of the company.

    So he was more or less one of the founders of the company. No he wasn't a programing wiz like Gates, but for all we know a lot of the business strategy of the company may have come from Ballmer as much as from Gates and he may have played a large part in getting the company from a small start up to a huge multinational.

    Cook got his MBA at Duke and spent 12 years at IBM, presumably at the part located down the road from Duke, near Durham, N.C.

    One gets the impression that Ballmer is more of an all around intellect than Cook who comes across as very "focused" on business.

    Cook was first hired at Apple as with a mandate to clean up the atrocious state of Apple's manufacturing, distribution, and supply apparatus.

    Cook is credited with pulling Apple out of manufacturing by closing factories and warehouses around the world. This helped the company reduce inventory levels and streamline its supply chain to match the efficiency of Dell Inc., dramatically increasing margins. Cook has been quoted as saying "You kind of want to manage it like you're in the dairy business. If it gets past its freshness date, you have a problem". [Wikipedia].

    So Cook is the business efficiency guy, yes, but not much to suggest that he is a creative genius or leader of men. (Maybe he is, but there isn't much in the public forum to suggest this is so.)

    Ballmer was there from the start, but his strategic decision making as CEO has been suspect.

    I do agree that Cook's leadership ability may be suspect. He may have great critical ability to see what is wrong with a process and how to improve it, but this doesn't necessarily parlay into any visionary qualities regarding products.

    Jobs' greatest ability was probably that he could visualize products that he would like for himself and inspire other people to get them made so they might be enjoyed by others. His ability to run a large corporation on a day to day basis may have been overestimated, and had he not been a founder of the company, I doubt whether he would have risen in the corporate structure.
    Feb 20, 2013. 10:29 AM | 8 Likes Like |Link to Comment
  • Ignore The Hate: Buy Microsoft! [View article]
    "I don't know about you, but I've always wanted to watch a feature-length film on a 7" screen that I have to hold."

    So much easier for the whole family to gather round a telephone this Christmas to watch A Wonderful Life.
    Dec 3, 2012. 07:59 AM | 8 Likes Like |Link to Comment
  • Nokia And The Unbearable Lightness Of Reflected Glory [View article]
    "But damn the torpedoes, full steam ahead. Nokia was up over 3%."

    Partly because of the low stock price Nokia is quite volatile and it is pretty much normal for the stock price to fluctuate 3% or more daily, so I would not read too much into this. 3% of $2.60 is about 8 cents per share.

    The figure of a cash burn of $300 million per month may be misleading as it appears to include one time restructuring costs.

    I would certainly agree that if the Lumia range of phones with Windows Phone 8 don't start to build market share, then we can look for an early sunset in Finland this winter.
    Sep 28, 2012. 10:29 AM | 8 Likes Like |Link to Comment
  • Bears Say Nokia's Products Are Obsolete; Consumers Disagree [View article]
    "A quality product is important. But not if it's delivered woefully late."

    In that case motor-cycle manufacturer Honda has no chance with its new line of cars.
    Jul 15, 2012. 09:55 AM | 8 Likes Like |Link to Comment
  • Nokia: Is This $3 Stock Running On Fumes? [View article]
    I have taken a peek at about 20 articles by the author that encourage investors to buy large cap stocks, but have yet to find a single article in which the author admits to owning a long or short position in the stock that is being discussed.

    A month ago the author was suggesting that Nokia might be a buy, and wrote quite favorably about Lumia phones. Now he is retracting that opinion and taking the opposite tack.
    May 4, 2012. 09:59 PM | 8 Likes Like |Link to Comment
  • Lumia 900 Appears A Winner, For Now [View article]
    Don't underestimate the power of Amazon reviews, because many people use them to find out about a product even if they don't plan to buy from Amazon, and reviews from regular users are often more credible than those of professional reviewers. Of course there is bound to be owner bias when people have already committed to a contract without trying the phone, and the reviews that are the most interesting are always the negative ones.
    Apr 10, 2012. 03:40 PM | 8 Likes Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    "Most hedge funds are run by gun slingers who are looking to one up their hedge fund buddies so they can get the most coke and hookers at the boys night out Friday nights."

    Excellent post, love it.
    Sep 1, 2011. 08:38 AM | 8 Likes Like |Link to Comment
  • Is Wall Street Trying to Force Us Out of the Markets? Here's How to Protect Yourself [View article]
    1. They don´t know how.

    2. There is a constant stream of advice from the telespeakers of the Ministries of Truth and Plenty that all you retail guys need to do is hang tight and trust the Party and it will all come out right in the end.

    I was talking to a guy yesterday who is a university professor who has $500,000 in his state´s retirement fund in the aggressive portfolio, which is 90% stocks and 10% bonds. He plans to retire in about 5 years.

    I pointed out to him that after a while of the Dow slipping 400 points here and 500 points there, it could all add up to some shrinkage of his portfolio and that a 5% loss would be 25K dollars, 10% would be 50K dollars, and that if you lost 50%, you would have to gain 100% to break even.

    He thought about this for a while, and then said that the market would go up in the long run.

    He asked me how much I had lost in the current downtrend, and I told him about $2000, but that if the market rebounded even halfway, my profits would be substantial. He asked how this could be done, but when I started to explain that I was 80% cash, he said it was too damn complicated to bother with.

    3. They simply don´t know how. Investing is stocks is considered patriotic, just like eating Domino´s pizza or McDonald´s hamburgers. You don´t like it, but it is the done thing. It shows you have faith in America. Hedging is unpatriotic. It is like making your own hamburgers.

    4. No one ever said human beings are rational, but Americans are the most superstitious, irrational tribe in the whole damn jungle.

    5. They just don´t know how and Wall Street doesn´t want them to know how.

    Consider the luckily aborted movement to hand Social Security over to Wall Street. This would be a wonderful opportunity for the gangsters of Wall Street to strip a whole nation of its retirement pensions by constantly churning funds into different asset classes, driving those classes into the ground, and then buying low for themselves to sell high to the next generation of mugs.

    But if more than a handful of individual investors knew how to hedge their bets, the whole numbers game business would be spoiled for the operators.
    Aug 11, 2011. 10:42 AM | 8 Likes Like |Link to Comment
  • S&P Downgrades U.S. to AA+ - We're Tied With Belgium! [View article]
    ¨Finally, do you really believe there are 47 million people who should be receiving free food from the government? ´´

    It seems hard to believe that one out of 6 people in the US needs food stamps, however, it is quite difficult to qualify for food stamps if you have any kind of money, so I guess these people really are indigent.

    If you have financial assets exceeding $2000, or $3000 if there is a member of the household over 60 years of age, then you are not eligible, which would probably exclude most SA readers.

    If they really are indigent, then the next part of the question is whether there ought to be food stamps at all.

    I am currently in the Dominican Republic where there are no food stamps and a great deal of poverty. I am not seeing people who appear to be clinically undernourished such as you might seen in Haiti, but on the other hand there is a great deal of prostitution, robbery, and alll kinds of scams and petty crime in general. Every one who has a job steals from their employer.

    Turning 40 milliion hungry people onto the streets to hustle for a living might be more than the US can handle.

    On the other hand, I do believe that the food stamps allowance could be cut without causing nutritional insufficiency if people made the effort to pool their resources and labor so as to eat well cheaply. Remember that prisons still feed inmates on about $1 a day and that while the food is not very tasty, it meeets legal nutritional standards.

    If the money spent on food stamps went into communal kitchens, I believe people on food stamps could eat better for less money.
    Aug 6, 2011. 10:38 AM | 8 Likes Like |Link to Comment
  • Wal-Mart's Real Problem: Competitors Can Match Its Buying Power [View article]
    Yes, I agree and the fundamental analysis is wrong from the get go. Either compare Maxwell House with Maxwell House or compare the Kroger house brand coffee with a can of Walmart House brand coffee, which is called Great Value, and sells for $3.50 a can, and is excellent coffee (coming from a very picky coffee purchaser.)

    If I can buy frozen strawberries at Dollar Tree for ten cents an ounce and they cost twelve cents an ounce at Walmart, which is 20% more, how is this related to purchasing power or the gross turnover of the business? Is this because Dollar Tree has twenty percent more negotiating power with strawberry growers?

    Why are frozen blueberries ten cents an ounce at Dollar Tree, but fifteen cents an ounce at Walmart, a massive 50% more. Why doesn't Walmart hire Dollar Tree's blueberry buyers? What happened to the pricing power of Walmart. Perhaps when you need vast quantities of commodities, you have to get tied down in long-term contracts with growers rather than buying on the spot market when there is a glut and take your chances on currency fluctuations.

    Some things are pretty cheap in Walmart due to an efficient supply chain and bulk sales, and others are damn expensive. If you try to buy something like a USB cable or a protector for an iPhone at Walmart instead of Amazon, you will get badly stung, but you are paying for the convenience of picking it up along with your groceries while your car gets a new tire installed. This has nothing to do with negotiating power.

    Incidentally, I have compared the prices per ounce of basic products like frozen strawberries, yoghurt, and oatmeal at Walmart and Costco and there is no real advantage to Costco once you get it down to a per ounce basis. Costco is growing faster because there are large tracts of the country that are not served by Costco stores, whereas there are large tracts of the country in which everyone has a Walmart within a few miles.
    Dec 29, 2014. 07:59 PM | 7 Likes Like |Link to Comment