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Uncle Pie

Uncle Pie
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  • Reality Check For Peter Schiff [View article]
    From 1792 until 1933, you could walk into any bank in America and exchange a paper $20 bill for a $20 gold piece, containing almost one troy ounce of gold. Did not America enjoy some GDP growth between 1792 and 1933? Was America's growth hampered by a sound currency? Today it takes at least 66 of those paper twenties to buy one troy ounce of gold. Anyone who buys groceries, pays tuition bills, or goes to the doctor knows that the government's inflation statistics are a fiction.
    The article suggests that the "currency wars" have not materialized. Not so: today we witness the incredible sight of the United States Treasury criticizing Germany for holding what they consider to be too much cash reserves. Here we have a fiscally irresponsible nation, America, with chronic trade and budget deficits, criticizing a nation that is arguably the benchmark for fiscal responsibility. You can read all about it in today's Financial Times. Norway has a sovereign wealth fund, essentially a national piggy bank for the benefit of its citizens, worth nearly $800 billion. Meanwhile the US has a $16 Trillion debt and must print 85 billion paper dollars per month out of thin air to keep the balloon inflated.
    In August 2012 the economist Steve Hanke published a list of all the hyperinflations which have occurred in the last century. There were FIFTY SIX of them. You can see the list and read the study if you google: hanke krus hyperinflation table.
    Read the book, The Currency Wars, by the economist James Rickards. You get a lively history of the many instances of currency debasements by desperate politicians, and some interesting scenarios about how the end game of the current
    dollar debasement experiment might play out.
    Oct 31 11:26 AM | 69 Likes Like |Link to Comment
  • Reality Check For Peter Schiff [View article]
    I can only believe my eyes. Recently, the price of a pint of Ben & Jerry's ice cream went from $3.99 to $4.59, about a 15% increase.
    We just got a notice our condo fee is going up 4.5% for 2014. Everywhere we look, prices are rising 5, 10, 15%. There's no way you can average out all these increases and get a rate of inflation under 2%.
    When we baby boomers were young, there were Five and Ten Cent stores. Today there are Dollar stores. The dollar is the new dime.
    Oct 31 12:08 PM | 52 Likes Like |Link to Comment
  • Cyprus Will Bring The Red With It [View article]
    Cyprus has to confiscate money from its savers because it can't print it. Here in the US, the Fed just prints the money to paper over the politicians' fiscal irresponsibility. The Fed's printing of more money dilutes the value of the existing dollars and thus confiscates purchasing power from savers, just as effectively as the Cypriot confiscation does, only no one notices.
    It's like the boiled frog phenomenon: they say if you try to put a frog into boiling water, it will naturally do everything to avoid immersion. But if you put a frog into room temperature water, and then put the water with the frog in it on the stove to boil, the frog won't notice and will remain in the water even as it is boiled alive. American savers are being boiled alive by the Fed's money printing.
    Mar 17 08:15 AM | 38 Likes Like |Link to Comment
  • Oil, Coal and Natural Gas Master Limited Partnerships: As the Landscape Changes for MLPs, Our 3 Top Prospects [View article]
    Prospective MLP investors should understand that they are limited partners when they invest in a publicly traded partnership: you don't get a proxy to vote on. Moreover, most MLP partnership agreements provide that the general partner gets an "incentive distribution" once the distributions to the limited partners reaches a certain level. For some MLPs, like Kinder Morgan, the "incentive distribution" to the general partner is nearly 50% meaning the limited partners have to put up 100% of the capital to get 50% of the return. This arrangement is called the "high splits". Enterprise Products, to their credit, limited the "incentive distribution" to their general partner to 25%. This makes EPD a better deal. Recently, Enterprise announced plans to buy out their general partner which would eliminate the "incentive distribution" altogether. This will give EPD a lower cost of capital with which to compete for acquisitions. They were perhaps motivated by Magellan Midstream Partners, MMP, which has no "incentive distribution" to the general partners.
    The article correctly suggests that MLPs should not be held in IRA accounts. The reason is that partnership income in an IRA above a certain level will subject you to the dreaded UBTI (Unrelated Business Taxable Income) tax, so it just makes no sense.
    Prospective MLP investors should be aware that they will not be able to file their income tax returns until they receive their K-1 tax form, which usually arrives in early March. This mysterious form, accompanied with incomprehensible instructions, is a sheet of paper with about 20 boxes on it, about half of which will have numbers in them. If you have a professional tax preparer, he or she will have a bit more work to do and will have to charge you accordingly. If you use Turbotax you'll need to buy the "Premier" disc (the high end version); with that the entering of the K-1 information is easy. If you get impatient waiting for your K-1 to arrive in the US mail, you can get a head start by visiting the website, where your K-1 info. can be retrieved a couple of weeks before the paper copy comes in the mail. The trade off for all these inconveniences is that the majority of your MLP cash distributions are sheltered from current income tax. This investor has owned several MLPs, including EPD, for some 15 years, which have been excellent investments.
    Oct 22 03:00 PM | 36 Likes Like |Link to Comment
  • Earn A 9%-Plus Yield With This Undervalued New High-Dividend Stock [View article]
    CAUTION: OCIR IS NOT A STOCK AND IT DOES NOT PAY A DIVIDEND. OCI RESOURCES, LP. is a publicly traded partnership, or MLP, and it pays distributions to unitholders, not dividends to shareholders. That's what the "LP" means in the name: LIMITED PARTNERSHIP.
    The distinction is important because partnerships are a COMPLETELY DIFFERENT form of business organization from a corporation, and the taxation of partnership distributions is COMPLETELY DIFFERENT from the tax treatment of corporate dividends. Corporate dividends are reported on your broker's form 1099. Distributions from MLPs are reported on the K-1 form, sent directly from the issuer, not from your broker. Owning MLP securities can create considerable tax complications which you can read about on SA and elsewhere. Do your homework and understand if you are buying a stock or an MLP. (even though MLPs trade on the "stock" exchange, they are not stocks!)
    PLEASE, PLEASE, Seeking Alpha writers, do your homework and distinguish carefully between corporate stocks and MLP securities!! Please do not use "dividend" and "distribution" interchangeably as they are NOT the same. If you are long this MLP you'll find out next spring when you get your first K-1. Don't file your tax return until it shows up (usually not until late March or even early April!)

    Long various MLP securities, and various C Corp common stocks. No position OCIR.
    May 17 08:48 PM | 30 Likes Like |Link to Comment
  • This High Dividend Stock Just Declared 5th Straight Hike, Yields Almost 8%; Goes Ex-Dividend This Week [View article]
    USA Compression Partners, LP is an MLP, NOT a stock. It does NOT pay dividends, it pays DISTRIBUTIONS. Distributions and dividends are NOT the same as they are treated completely differently on your taxes. A partnership is a completely different form of business organization from a corporation. PLEASE do not use the words "dividend" and "distribution" interchangeably. Many people have bought MLPs thinking they were stocks, as they do trade on the "stock exchange", and then only after they've filed their tax return the following spring, the K-1 tax form arrives in the mail, meaning they have to file an amended return using IRS forms they've probably never seen before. MLPs are not for everyone. Please, SA writers, and editors, DISTINGUISH CLEARLY between MLPs and dividend paying C corporations.

    Long various MLPs and various C corporations.
    Jul 26 04:55 PM | 29 Likes Like |Link to Comment
  • Dividends Don't Matter In Retirement Either [View article]
    I think you have it the wrong way around: dividends (and MLP distributions) are the ONLY thing that matters.
    I'm a retired baby boomer living on my dividends and MLP distributions. I started investing nearly 50 years ago, almost always in dividend payers. When my dividend income got to the point where I could retire with a good margin of safety, I did so. Since then, my dividend income has continued to grow and exceeds my cost of living. As the unspent dividends accumulate, I buy more dividend paying stocks, or distribution-paying MLPs. It's unlikely I'll ever have to sell any holdings as my income grows faster than my cost of living (I live modestly). ONLY THE DIVIDENDS MATTER: what doesn't really matter (except psychologically) is the market value of my securities. During the Panic of '08, the nominal value of my account dropped by about 50%; it has since recovered and gone to new highs. My dividend income barely fluctuated, so the market collapse, while scary, had no real effect on my financial situation, which is a function of my dividend income, NOT a function of my so-called "net worth". Now that the market is at extremely frothy levels, another drop like 2008 is increasingly likely. I will continue to collect my dividends and MLP distributions and not worry about the market price of my holdings. THE DIVIDENDS MATTER; THE MARKET PRICE OF THE STOCKS DOES NOT MATTER IN THE LONG RUN.
    The old saying: companies lie, bankers lie, brokers lie, lawyers lie, auditors lie, money managers lie, but DIVIDENDS DON'T LIE!
    Jul 17 01:49 PM | 29 Likes Like |Link to Comment
  • This High Dividend Stock Just Blew Out Earnings And Has Major Dividend Growth Ahead [View article]
    Neither Hi Crush nor Emerge Energy are stocks and they do NOT pay dividends. They are master limited partnerships, or MLPs, which you can tell by the LP after their names. LP stands for Limited Partnership. This is important because MLPs are completely different from C corporations which pay dividends; MLPs pay distributions which are not reported on your broker's 1099; you will receive a K 1 tax form sometime in late March or early April and if you've already filed your return by then you'll have to file an amended return. MLPs are complex securities and are not for everyone. It would be beneficial if SA writers distinguish carefully between dividend paying C corporations and distribution paying MLP securities as they are COMPLETELY different. In the above article "dividends" and "distributions" are used interchangeably as if they were the same thing but they are not. They are COMPLETELY different animals.
    Nov 16 06:26 PM | 28 Likes Like |Link to Comment
  • 5 Important Reasons To Avoid Canadian Oil Sands Now, Perhaps Forever [View article]
    I've owned COSWF since 2002-2003 and my cost basis is under USD$5/share on those positions. (keep in mind there was a 5 for 1 stock split in May, 2006). At current, 2014 prices, the annual dividend yield on my original investment is about 25%. To put it another way, my dividend income from COSWF repays my original investment in total every four years, and I continue to hold this asset which is worth almost 4X what I paid for it.
    I do appreciate that oil from the oil sands is expensive and messy. Oil from five miles under the ocean is also expensive and messy, as is shale oil from fracking. At least with the oil sands you have 40 or more years of production with NO production decline and NO exploration risk. The shale oil wells have a very steep decline curve, producing something like one half all the oil they will ever produce after one or two years. So the shale companies have to keep drilling new wells constantly. As the best properties are drilled first, over time the quality of the drilling prospects will deteriorate and production costs will rise. In the decade plus that I've owned COSWF, the oil price has gone from about $35 to about $135, back to $35, and then to $90 where it is now. Moreover, COSWF has had to deal with Canada's abrupt termination of the income trust, gyrations in Alberta's royalty regime, labor shortages, equipment breakdowns, and a whole host of issues. Throughout this volatility, management has done a good job, in my view, of balancing the needs of the enterprise for sustaining capex, with the needs of the shareholders for dividends, while maintaining a reasonable balance sheet. With the world's central bankers printing paper money with abandon, I'm content to have a chunk of my capital held in the form of a 40 year supply of oil in a politically stable jurisdiction, close to the largest oil consumer on the planet. The politicians can print money but they can't print oil. I take some comfort from the fact that COSWF has come through a turbulent decade with flying colors. I take some comfort from the fact that the Syncrude asset is managed by Exxon Mobil's 70% owned subsidiary, Imperial Oil. It is a comfort to have a triple-A rated company for a partner and project operator. I take some comfort from the fact that the private market value of COSWF is likely much higher than the current quotation: remember that the price that Sinopec paid for Conoco's 9% of Syncrude a few years ago, if applied to COSWF's 36.7% stake, would translate into a price per share for COSWF almost double the current market. There was an interview on Bloomberg TV the other evening with a gentleman from that part of the Chinese government involved with overseas energy investments. I regret that I did not make a note of his name. He basically stated that China would like to own the Canadian oil sands, if only the Canadian government would allow it. Now that China's CNOOC has purchased Nexen, there are two Chinese companies with stakes in Syncrude. Over the years, there have been many reasons for me to sell my COSWF shares: equipment breakdowns, earnings shortfalls, dividend reductions, environmental mishaps, the demise of the income trust structure, sharp falls in the oil price, you name it. I'm certainly glad I held on. If I were to sell my position today, where would I redeploy the capital?
    Jan 14 09:23 AM | 26 Likes Like |Link to Comment
  • Dollar's Purchasing Power Annihilated - The Chart They Don't Want You to See [View article]
    The 94% decline on the chart is about exactly in line with the decline of paper money vs. gold. Prior to 1933, a twenty dollar bill could be exchanged for a twenty dollar gold piece, which contains almost one ounce of gold. Today it takes about fifty of those twenty dollar bills to buy one ounce of gold, so the paper dollar has lost 49/50ths of its value or 98%. The very high correlation shows how gold has maintained its purchasing power!
    May 9 09:28 AM | 26 Likes Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    I'm a retiree who has been investing for 35 years. I'm 100% invested in dividend paying stocks. I'm also heavily invested outside the US because: 1) most US investors ignore non-US stocks 2) I believe the US dollar will lose value faster than many other currencies 3) many non-US stocks have higher dividend yields than US shares and 4) there are many non-US companies which do business all over the world and their "footprint" has little to do with the nation where they are domiciled 5) most nations have lower corporate taxes than the US. I do not "rebalance" my portfolio: I look for securities which I can own forever. If they don't work out, I sell the losers and hold onto the winners. As a result, I have shares that I've owned for 10-20 years. My broker's statement tells me that about 50% of my account value is "unrealized capital gain". So money that I would have paid in taxes had I "taken profits" continues to work for me. The overall yield on my overall portfolio is about 3%. I do have a 10% position in MLPs, which generate about 20% of my retirement income, thanks to their yield. I have benefitted from owning non US securities in that "foreign" currencies have not lost as much value as the US dollar. For example, when the Euro came out in 1999, you could buy a little more than one euro for one US dollar. Today, it takes about $1.39 US to buy one Euro. So the dividends I receive in euros, Australian and Canadian dollars, Norwegian Krone, Swiss francs, etc. over the years, buy more US dollars each year as the US dollar continues its long swan dive. I have a small position in gold, and I have zero in bonds since they don't pay anything. Ironic, because I was once a bond salesman. The US is less than 5% of the world's population and generates about 18% of the world's GDP. So the Rest of the World is 95% of the population and about 82% of the world's GDP. It makes no sense to be 100% invested in the United States.
    Norway has a sovereign wealth fund for the benefit of its citizens, worth about $900 billion USD. So every Norwegian is a millionaire (at least in Norwegian Krone, of which you can buy about 6 for a US dollar). They own thousands of stocks all over the world; as of year end 2013 their top ten holdings were:
    Nestle, Royal Dutch Shell, Novartis, HSBC, Vodaphone, Roche Holdings, Blackrock, BG, Apple, and BP. Not a bad list. Only 2 American stocks in 10.
    I hope these ideas are helpful.
    Mar 12 01:28 PM | 25 Likes Like |Link to Comment
  • You're Retiring: Where Is Your Income Going to Come From? [View article]
    This writer has been retired for 7 1/2 years and is 100% invested in dividend growth stocks for all the reasons given above. One additional point to consider: diversify your income source by currency. The politicians in this country are following a fiscal policy that will only work if the US dollar is continually debased. The US dollar has lost over 95% of its value since 1964, the last year our coins contained silver. It takes about 36 of today's zinc quarters to buy the amount of silver in one 1964 quarter, so our paper money has lost 35/36ths, or 97.2% of its purchasing power since 1964. You wouldn't invest all of your capital in just one company or in just one industry, so why have your retirement income in just one currency? By owning dividend paying securities from a variety of countries, one's income stream is diversified by currency. This writer receives most of his retirement income in currencies other than the US dollar, by owning dividend paying shares from Canada, Australia, Norway, South Africa, China, Germany, France, Brazil, Switzerland, etc.
    Mar 8 08:42 AM | 25 Likes Like |Link to Comment
  • 12 Reasons to Short Gold [View article]
    Before the last Great Depression you could exchange a US $20 bill for a US $20 gold piece, containing about one ounce of gold, in any bank in the country. In the early 1930s, the government had to rescue the banks by declaring a "bank holiday" and by printing so much paper money for the "New Deal" that they had to recall all the circulating gold coins and make holding gold illegal. Today, it takes fifty- five (55) of those paper $20 bills to buy a $20 gold piece. So our money has lost 54/55ths of its value, that's 98.1%. As Mark Twain said, "history doesn't repeat itself, but it rhymes": today we are entering a new Great Depression, and once again the government is creating money out of thin air to bail out the banks, the auto companies, etc. The government economists tell us there is no inflation, but then the price of a postage stamp is going up almost every other month. (this baby boomer can remember when postage went from 3 cents to 4 cents). Gold is a form of money that is not increasing in supply as fast as paper money. Oil, in my view, is even a better investment because we keep burning it, whereas all the gold that has ever been mined is still around. This writer's investments include a little bit of gold, and a great deal of oil. The supply of money is increasing much faster than the supply of oil.

    Feb 11 03:47 PM | 25 Likes Like |Link to Comment
  • Forget About SWANs, Fish And Chowder: Chase Yield In Retirement [View article]
    If you cast a wider net you will catch more fish! Diversify internationally, many equities outside the US offer higher dividend yields. Moreover, this will diversify your income stream by currency, giving you income which comes in Australian and Canadian dollars, Euros, Swiss francs, Norwegian krone, British pounds, etc. These nations did not have to engage in "quantitative easing" and their currencies are not being debased as fast as the US dollar.
    Here a few quality companies domiciled outside the US with good yields you might want to look at: Australia: ANZ Bank, Woodside Petroleum, National Australia Bank. Britain: BHP Billiton, HSBC, Royal Dutch Shell B. France: Total. Norway: Statoil, Yara. Denmark: Novo Nordisk. Germany: Daimler, Siemens. Italy: Eni. Canada: Suncor, Cenovus, Canadian Oil Sands Ltd., Baytex, Bank of Nova Scotia, Royal Bank of Canada, Power Corp, Pembina, Vermilion Energy, Riocan Reit. Switzerland: Swisscom, Novartis, Roche, Zurich Financial.

    I'm also retired and living on my dividends and MLP distributions. I do not sell call options on my holdings because eventually your winners get called away and you are left with the losers. I do not own any bonds because rates are too low and do not compensate me for the loss of purchasing power in the currency. I do not own preferred shares because if rates go up they go down and if rates go down they get called. I do not sell my winners to "rebalance" my portfolio: if something is doing well, I just hold onto it. I have some holdings that I've had for two decades or more. If something doesn't work, I sell it and try something else, always looking for something that I can hold forever. My broker statement tells me that over 1/2 of my account is "unrealized capital gains". By not "realizing" these gains I do not pay a tax and the money that would have gone in taxes continues to earn dividends for me. Presumably my heirs will get stepped up basis someday and that tax bill will never arrive. I hope these thoughts are helpful.
    Long all securities mentioned
    Jul 6 12:33 PM | 23 Likes Like |Link to Comment
  • The 'Crowd' Is Bullish Gold And Silver: Should You Be? [View article]
    Actually, it is pretty meaningless to be "bullish" or "bearish" on gold. Gold is just gold. I own some because I am bearish on paper currencies. The US dollar has been losing purchasing its purchasing power all my life, (since 1933, actually) and the decline seems to be accelerating. Gold is a store of value which cannot be manipulated by the politicians. (short term price swings, can, and are, manipulated by the hedge funds, of course, but eventually they get margin calls and move on. Probably wise to ignore short term price swings). The miners have to struggle to increase the supply of gold by 1%-1.5% annually. Did you know that the cost of a year at Yale College, tuition, room and board, is the same today as it was in 1913? When priced in gold, that is. This according to the excellent website, It makes no sense to price gold, or anything else, in dollars as if the dollar were a fixed unit of measurement, like a gallon or a yard or a meter or a liter. It would make more sense to price everything in gold, and then the paper currencies can be seen for what they are.....just paper.
    Recently the postal service raised the price of a stamp by three cents. No big deal. I can remember when the price of a stamp WAS three cents, and there was a ruckus when they raised it to four cents! And I've only recently become a "senior citizen".
    Mar 17 09:19 AM | 23 Likes Like |Link to Comment