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  • 13 Dividend Stocks Passing Rigorous Quality, Growth And Valuation Filter Criteria [View article]
    As always, thanks Richard. I'm starting DD on CMI now.
    Oct 8, 2015. 10:54 AM | Likes Like |Link to Comment
  • Top 10 Healthcare Stocks For Dividend Growth And Income [View article]
    Paul -- Those (off)topics resonate with most of the population. I'm also certain you know my comments did not address "industrial scientists"--I addressed all to common practices approved by CEOs.

    So if you want to let it be, OK.
    Oct 7, 2015. 10:18 PM | Likes Like |Link to Comment
  • Top 10 Healthcare Stocks For Dividend Growth And Income [View article]
    Paul -- I regret having hit a sore spot; especially as there is much we have agreed upon. But OTOH, your comment is anecdotal, and IMO contains nothing of substance to counter the facts mentioned in my comment and links I attached.

    I don't know which pharma company you worked for, or what their pricing policies are today. However, it's no secret some in the industry have a 'whatever the market will bear' pricing policy, a.k.a., unfettered capitalism, which Pope Francis recently described as "the dung of the devil". A couple years earlier, he said unfettered capitalism was "a new tyranny"...

    Here's a quite recent example of unfettered capitalism in the drug industry: The price of Daraprim, a 62-YEAR-OLD off-patent drug used to treat the parasite infection toxoplasmosis, skyrocketed overnight, rising from $13.50 to $750 per pill—an increase of 5,455%! Was that increase the result very costly investment in new research? No, and here's the rest of the story few are aware of:

    Daraprim was discovered in 1953, and its patent expired in in the 1970s; the drug changed hands a couple times, and was recently bought by Martin Shkreli, a hedge fund manager, and founder of Turing Pharmaceuticals.

    He chose well, as this drug is prescribed to only a few thousand patients per year, so no other manufacturer has had the incentive to develop a competitive pill. If they had wanted to manufacture their own version, they first would have to conduct comparative clinical trials to convince the FDA that their compounds are identical to Daraprim.

    Shkreli devised a plan to exploit the situation. First, he apparently talked Impax into starving the wholesale market of the drug, so that when Turing completed its purchase of the rights there were no extra pills floating around. Next, he set up an exclusive distribution network as a way of preventing potential competitors from obtaining enough Daraprim to conduct those trials for the FDA. With potential competitors blocked, his monopoly did what monopolies do--he increased the per pill price from $13.50 to $750--a price set to maximize profits in a market he controlled.

    What more do we know of Shkreli's use of unfettered capitalism? In 2011, Shkreli filed requests with the U.S. Food and Drug Administration (FDA) to reject a new type of cancer diagnostic from the manufacturers Navidea Biopharmaceuticals and an inhalable insulin therapy for diabetes from MannKind Corporation, WHILE ALSO SHORT-SELLING the companies' stocks. Both companies' stock values immediately dropped following Shkreli's interventions. He profited, and the companies had difficulty launching the products as a result. BTW, the FDA subsequently approved both therapies.

    But wait, there are additional cases of such pricing practices in that same article: Similarly steep recent price increases in other medications have also been decried and investigated recently by congressional committees. For example, URL Pharma turned the ancient anti-gout drug colchicine into Colcrys, boosting the price from pennies per pill to $5 each; the price of Mallinckrodt's Ofirmev pain injections are up 250 percent; and Horizon Pharma's Vimovo pain tablets now cost 600 percent more. I'm sure a simple search will discover added examples.

    So if the biotech/pharma industry were above reproach, why would all hell break lose when Shkreli announced a 5,455% price increase? Hillary Clinton tweeted "price gouging". If the price increase were defensible, why did 'the smart money' immediately take a few hundred billion $$$ in market cap out of the healthcare sector? Even if elected President and taking office in Jan 2017, she would not have the power to change drug pricing, even by executive order. IMO, SDIs don't own enough of those companies t make a difference; but institutional $$$ know this industry's pricing policies are vulnerable, and reacted accordingly.

    The good news is that competition continues to lower prices for most generic drugs and benefit patients; OTOH, generics can't address the prices of drugs protected from competition.

    Moving on, of course large companies conduct research, and benefit greatly from their successes. BTW, as for "not getting credit" for failed research, I assume you are not suggesting the companies don't write off (i.e., expense before taxes) that cost, just as does PG, DD, MON, GE, and many others investing in research.

    Moving on again, perhaps you will address why these companies charge only $X for their products to middle class families in developed countries around the world, and charge $X times hundreds more to middle class families in the USA. You might also address why over the last 20 years, they've begin spending more and more $$$ on consumer advertising for drugs (only available by prescription) to the point they now spend more $$$ on advertising than on research!

    Perhaps you will comment on this exchange between a women in Pennsylvania, and Journalist Philip Moeller, known as the Medicare Maven" who writes widely on health and retirement...
    Woman: I am on only a couple of prescription medications with no significant medical issues. Medicare is charged more than $500 for a 3-month supply of one of my generic drugs (or about $2,000/yr). The problem is over a year, the cost to Medicare of this single drug will consume almost all my donut hole coverage. In Canada, the cost is $800/yr. without insurance!

    Medicare Maven: "Your government is allowing this, because the pharmaceutical industry convinced enough legislators in 2003 to forbid Medicare from negotiating drug prices when Congress enacted the law creating Part D drug plans. It was a bad move then, and it is costing us even more now. As new generations of effective but very expensive drugs hit the market, Medicare has little choice but to pay up. A Congress that truly represented the American public would have addressed this problem. Our Congress has not. And while high drug prices will be an issue in the 2016 presidential campaign, it’s tough to see Congress dealing with it before the election.

    Also, calls for drug price cuts make for good news headlines. But the key here is to rein in U.S. drug prices while not destroying the financial incentives that I believe are appropriate to encourage companies to pursue the very costly research and development costs of new drugs. The Maven may (once again) be a lonely voice here, but the U.S. can’t do this by itself. We need to involve other nations and develop a global cost-sharing system where all countries pay some of the freight for pharmaceutical research and development. Today, U.S. consumers (and taxpayers) are shouldering nearly all of this burden. Compared with global accords on limiting greenhouse gas emissions, a trade pact on drug prices should be a snap."

    Finally, of course there is more, but this is getting quite long.
    Yes, I'm long many of these companies. However, investing for profit doesn't mean I turn off my brain and tow their company line.
    Oct 7, 2015. 06:39 PM | 7 Likes Like |Link to Comment
  • Where Are The Safe Investments? [View article]
    SD -- IMO, You made a mistake in discussing 'real return' in one place, but considering only bond income in another. Thus as Dale has demonstrated, the proper comparison of bond returns to stock returns is their total returns, and the recent record shows bonds have produced excellent total returns in spite of their low rates.

    Nonetheless, risk/reward works over long periods; equities have produced either narrowly or greatly superior total returns.

    Unfortunately, your comforting reference "you must not sell because of a temporary price decline" is simply illogical. That a price decline is temporary can only known in the fullness of time--for example, GM was a blue chip trading in the $30s in 2007--yet stockholders lost 100% of their investment when it was bankrupt in 2009. The 2007 stockholders of blue chips--AIG, C, BAC, GE, and many others, remain below water 8 years later, and their 'lost-opportunity costs' are gigantic.

    To the extent risk is "controllable", the control results from the ability to (unemotionally) cut losses while sale proceeds are sufficient to be reinvested with little net impact to portfolio income and total returns--if you love your KO, PG, or PM, it is unlikely you will control risk when appropriate.

    Nonetheless I agree with your conclusion, when positions are properly monitored and losses minimized so the proceeds can be reinvested with little net loss of portfolio income or total return.

    Overall, the elevated risks of equity investments demonstrate they should not be treated similar to one-decision FDIC savings accounts.

    Oct 7, 2015. 01:14 PM | 2 Likes Like |Link to Comment
  • Top 10 Healthcare Stocks For Dividend Growth And Income [View article]
    It's well established prescription meds are available in other developed countries (e.g., Canada and most of Europe) at significantly lower prices compared to the US. Why is that?

    By legislation, the US government is prohibited from negotiating the prices Medicare (and VA hospitals, etc.) pays for prescription drugs. To date, the industry has had a VERY effective lobby.*

    Recently, PBRs have begun exerting pressure upon the industry's ability to charge whatever the market will bear (i.e., based upon maximizing profits, and not related to costs). The recently negotiated (but yet to be approved) TPP free-trade pact, will likely become a lightening rod for discussion of this issue.

    While I own many companies on the above list, I find such stock screeners of little value for identifying high-probability long-term holdings in THIS INDUSTRY because the PIPELINE is the essential predictor of probable EPS growth (and therefore DGRs). Of course there are also other criteria to be considered--including diversification among company specialities in treatments, animal health, medical devices, insurance, FOREX exposure, etc.

    * For years these big Pharma companies have used the argument that negotiating lower drug prices would actually hurt seniors in the long run because it would take away the necessary funds for innovative research and development to “save lives.” Yet, this just isn’t true. “Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 resulted from research at universities and biotech firms, not big drug companies, research shows,” according to an article in Health Care for America NOW. The article also notes that “despite their rhetoric, drug companies spend 19 times more on marketing than on research and development.” In fact, 5 pharmaceutical companies have reported million-dollar increases in their spending on lobbying the federal government during the 1st quarter of 2014 alone.

    Google the question for more details:
    See this USA editorial:
    These are also helpful:
    Oct 7, 2015. 07:44 AM | 4 Likes Like |Link to Comment
  • My Third Quarter 2015 Portfolio Review - Doing Some Buying [View article]
    Bob -- I always look forward to your portfolio updates, and this one only reinforces my appreciation of your success.

    IMO, that you continue to make portfolio changes indicates you are managing your portfolio--not letting it manage you. I hope you got out of SDRL and LNCO with just enough damage to convince you yield-chasing comes with high-risk that often ends badly. I also note you added AMGN; over the long-term, I expect it's total returns, and DGR, will meet your needs (I increased my AMGN position today).

    Your risk moderation measures are laudable, and especially so for a retiree.

    Regarding beta (and my portfolio is also 0.7 beta); keep in mind, it is a theoretical construct that a stock will move by X% more or less compared to the % change in the S& is not a law of man or nature. Beta is usually based upon the prior 3 years performance (sometimes 1yr).

    One cannot expect a portfolio to track the S&P500 over a brief 3-month period--and especially not when Mr. Market changes his view of some sectors, such as energy and healthcare, which recently moved up or down significantly more than the market average. (This is when monitoring helps the SDI to discern fundamental change from mispricing).

    I am especially pleased you are including a column for EPS growth. You might consider another for total return, as there can be no long-term DGR without price return...

    Using PEP as an example: Had we both I bought in 4th qtr 2010 (as I did), total return to date is about 37% (25% of TR is derived from dividends, and 75% from price improvement).

    Oct 6, 2015. 03:38 PM | 5 Likes Like |Link to Comment
  • Dividends & Income Digest: 'Keep Calm, Don't Panic' - George Schneider On Taking Control Of Your Investment Mindset With Dividends, Not Emotions... And Other Thoughts [View article]
    bionic -- You're too full of yourself.

    The article is about George Schneider, who has 5,000 followers, and it deals with his replies to Robyn's questions about his DGI advice--mostly to retirees and near-retirees. That it was made Editors' Pick properly calls attention to George (not Robyn).

    Thanks Robyn, and congratulations George.
    Oct 5, 2015. 07:27 PM | 8 Likes Like |Link to Comment
  • Weighing The Week Ahead: What Is Behind The Recent Market Volatility? [View article]
    As always, thanks Jeff.

    Last week, I commented: "IMO, and until the data suggest otherwise, the probabilities still favor the US market having entered a (not unusual) mid-cycle slump from which recovery is still probable--a greater than 50% likelihood."

    Nothing in the last week has changed my opinion.

    Oct 5, 2015. 07:28 AM | 5 Likes Like |Link to Comment
  • Starbucks: My Mind Says Sell But My Heart Says Hold [View article]
    ...and in Puerto Rico, we were told it was called Charbucks, because they have a reputation of buying inexpensive beans and over-roasting them to even out the flavor.

    Frankly, I think their coffee is vastly overpriced, and I don't need to be seen carrying a Starbucks logo cup...nonetheless, I like their stock because it is very profitable.
    Oct 4, 2015. 04:51 PM | Likes Like |Link to Comment
  • Consolidated Edison's Place In A Dividend Growth Portfolio [View article]
    Nathan -- Agreed, furthermore, ED must be considered alongside alternative utes, and certainly before comparing it (if at all) to Consumer Staples (PG) or those other non-utes.

    Using FAST Graphs, a quick glance suggests a couple obvious problems with ED, beginning with overvaluation (some might justify over-paying for a growth company like SBUX, but how does one justify overpaying for a ute?). Also, ED's operating earnings are growing at only 1.6%(!)--which make it very difficult for ED to substantially improve its miserly 1.6% 3-yr DGR.

    Consider (for example), both DUK and SO appear to offer superior forward yields, valuations, and operating earnings growth to support attractive DGRs...due diligence required.

    As for total returns, though ED has a 3-yr TR of 7.5%, it sadly trails the average of its competitors by 47%--as competitor utes average 11% TR (according to M*).

    Oct 4, 2015. 09:04 AM | 3 Likes Like |Link to Comment
  • Realty Income: The Monthly Dividend Company Is On Sale Again [View article]
    Thanks Albert -- I appreciate the reminder of what a great performer O has been, and has a high probability to continue performing in the future; and yes, selling shares is what REITs do, largely because they must distribute 90% of otherwise taxable profits.

    IMO, those not having a position in O may find it advantageous to begin scaling in near Friday's close.

    However, as I have a full position, and as O traded as low as $43.15 as recently as Sept 4th (52-wk low=$40.76), I am looking for a retreat to around $43 (5.2% yield) to justify topping-up my position.

    Oct 4, 2015. 08:08 AM | Likes Like |Link to Comment
  • Starbucks: My Mind Says Sell But My Heart Says Hold [View article]
    "I still believe it is prudent for conservative investors to take steps to hedge their portfolios against negative market volatility, giving themselves the ability to take advantage of lower prices, better valuations, and higher yields, if and/or when, the sell-off worsens."

    Nick -- I will not say 'do this'...or 'you should do that'. However, given that your above premise, rings similar to my own portfolio operating tactics, the following reflect my own process:

    1) As I have stated elsewhere, I don't "love" any stock, and following one's heart often doesn't serve one's portfolio's best interest. I have SBUX on my watch list. I see it as a likely addition to the high-growth / low-yield section of my portfolio (I'm considering switching into SBUX from MCD).

    2) For any needing an eye-opener this weekend--go to Morningstar, enter SBUX, click on the Key Ratios tab, and click again on Growth in the lower section--for now set aside the 5- and 10-year growth rates...the 3-yr growth rates are still outstanding (and the 3-yr total returns are 35% vs the market's 13%, and MCD's 6%)!

    3) In 2008, Charles Schultz returned to SBUX after an 8-year absence, and SBUX has been a shooting star since 2009. Starbucks is no longer just an upscale coffee shop. Menu and store expansion is underway.

    4) Nonetheless, considering valuation as computed by M*, Capital IQ, and FAST Graphs, SBUX appears expensive for this market and a potential candidate for mean reversion (forward p/e=31%; operating earnings growing at 24% in a period when Mr. Market seems to be taking down high p/e ratios due to reconsidering prior 2016 earnings growth projections). If I owned it, I'd be far more likely to trim it due to overvaluation, rather than sell it.

    5) IMO, one key factor in favor of SBUX over the long-term is they have positioned themselves to serve customers proven not to be price-sensitive. Thus, I would not sell SBUX; instead I'd consider trimming it to the point I could sleep well at night.

    6) Finally, if sleeping well at night requires you to raise a 10% cash position (and holding no bonds), you would still be 90% exposed to equity upside, and downside.

    ...and please don't make the mistake of managing your portfolio based upon the hold/sell votes. Good luck.

    Oct 3, 2015. 01:26 PM | 5 Likes Like |Link to Comment
  • Designing A Dividend Growth Portfolio For A Specific Retirement Yield Objective: Part 1 [View article]
    "Blue Chip Stocks are safer than US Treasuries !"

    LWCDGI -- You can believe anything you like, but you should realize blue chip stocks and US Treasuries have different risk profiles.

    US Treasuries are "risk-free" because their interest and principle are paid when due (unfortunately, the same cannot be said of blue chip stocks), thus I do not believe Chuck, nor any other RIA, would support your statement).

    Both asset classes are generally recommended for conservative investors, such as retirees. It's also difficult to construct a diversified portfolio without a bond allocation.

    That's not to suggest anyone or everyone should have bonds in their portfolio (which I do not), only that one must be cognizant they are fully-exposed to equity risks in a 100% equity portfolio.
    Oct 3, 2015. 12:01 PM | 5 Likes Like |Link to Comment
  • Designing A Dividend Growth Portfolio For A Specific Retirement Yield Objective: Part 1 [View article]
    Chuck -- It's always appropriate to review the income basics, and your references to risks are especially appropriate for those building a retirement portfolio.

    Though my portfolio is heavily tilted toward the 3%ers providing both growth & income, I also include some 6%ers for income, along with some 2%ers for growth.

    BTW, congratulations on joining the impressive all-star list of contributors to Advisor Perspectives (where you are addressing other professionals). I notice this article appears in an amended form at

    Oct 3, 2015. 11:30 AM | 3 Likes Like |Link to Comment
  • Designing A Dividend Growth Portfolio For A Specific Retirement Yield Objective: Part 1 [View article]
    Neal -- IMO, Chuck lives on the same planet as myself. Furthermore, he addressed retirement nest eggs quite satisfactorily:
    "...this article is oriented to those investors that have had the good fortune to amass assets large enough to comfortably live off of in retirement. However, the specific size that a portfolio needs to be will also differ from one individual to the next."

    I started investing at 31, invested for growth, retired at 53 in 1995, and 20 years later have multiples of the nest egg you believe to be rare.

    In fact, in 2014 there were a record 10.1 million millionaires in the US--in spite of the Great Recession.

    Frankly, your rant suggests either you started saving for retirement way, way, late, or those 5 books you authored on pair and spread trading proved of little value to yourself.

    BTW, planted or not, those I know who have a Fitbit strongly endorse it.
    Oct 3, 2015. 10:29 AM | 9 Likes Like |Link to Comment