San Bernardino's council has passed a budget that will allow the bankrupt Californian city to restart $1.2M in biweekly employer contributions to Calpers while continuing to renege on its commitments to its other creditors, including bondholders. Along with Stockton, San Bernardino represents a test case over who should get paid first when a municipality goes bankrupt - the public employees or the bondholders. (previous) [View news story]
Many city council members in these medium size cities in California eat like pigs at the trough. But its the trough of poltical contributions from the police and fire unions, the city workers unions, etc. Even in a bankruptcy, it behooves the councilmembers to not bite the hand that feeds the re-election. Jesse Unrah, former speaker of the state assembly said it best, "Money is the mothers milk of politics!" Only a federal judge will be able to defend the rights of bondholders in states like California. Muni holders look out!
In a blow to municipal bondholders, a judge rules Stockton, CA eligible for bankruptcy protection. The ruling let's stay the city's decision to keep pensions intact while imposing losses on those holding the town's paper. Jefferson County, AL and San Bernardino, CA - along with other municipalities - are watching closely. Bond insurer Assured Guaranty (AGO) slides 3.3%. [View news story]
This was a local judge. The case will wind itself into federal court and I will be amazed if the pension obligations will remain untouched while bondholders are busted!
A federal judge is due to hear closing arguments today about whether Stockton in California should be allowed to file for bankruptcy protection. The main is issue is whether the city can continue paying into the Calpers pension fund while forcing losses on bondholders. The case is being widely watched, with Alabama's Jefferson County and California's San Bernardino also considering breaking with the long-standing practice of meeting obligations to bondholders. [View news story]
Your comments on overinflated obligations to a pension fund only touches on 1/2 the equation! The other half is the Stockton medical and hospital benefits. Stockton saw fit to give any and all employees (and the city council) lifetime medical benefits considered the most generous in California - the only requirement was to be on the Stockton payroll for ONE DAY! As soon as you were on the payroll, you had lifetime medical benefits for you and your spouse. Great system! If that doesn't bankrupt a city, what will? Of course, the public employee unions (who donate political contributions to the city council) were happy to receive such generosity!
Illinois has become only the second state to be accused of securities fraud, with the SEC saying that it misled bond investors from 2005-2009 about the ever-worsening condition of its public workers' retirement plans by claiming that it was properly funding the scheme when it wasn't. However, while Illinois has agreed to a cease-and-desist order, it has escaped any fines and it hasn't had to admit any wrongdoing. (PR) [View news story]
California state muni bonds are ok. The sales tax and income tax increase recently passed by the voters has taken care of the deficit. Comparing California to Illinois and Michigan is a disservice.
With 2-3 weeks to receive $30M of state aid from Michigan in order not to run out of cash, Detroit is again teetering on the brink of bankruptcy. The aid is contingent of the city implementing the provisions of an agreement in April, when Michigan agreed to provide $137M, but those measures haven't been enacted. Financial mismanagement, political corruption, a hard-hit housing market and a massive loss of population are the causes of Detroit's woe. [View news story]
Detroit is a basket case! The declining population is the number one problem. To reverse it requires a herculean task. Throwing money at these situations without a top to bottom restructuring and renegotiation of contracts is just that, throwing money! Everyone says California is broke, but guess what, they are not! Look for the fight between public employee unions and the municipal bankruptcy judges to go all the way to the Supreme Court. This is a long term restructuring problem caused by money. "Money is the mothers milk of politics" -Jesse Unrah, former speaker of State Assembly and widely considered the most powerful person in California politics.
Great first article. I was in Japan in the late spring for Cherry Blossom time and talked at length about Aflac with a retired Nomura Securities guru. Aflac writes mostly cancer policies but is expanding its breadth in Japan. It is an extremely well run company, doing better than most other insurance companies. The costs of rebuilding in Japan will be high but the biggest cost is replacing nuclear plants with fossil fuel plants that run on expensive fuel. Aflac was a great pick for a first try! Two bullseyes!
High-Yield Preferred To Be Thankful For: Undervalued, High Yield, Inflation Linked [View article]
I own MHR preferred C and D. They pay monthly dividends and are eligible for the maximum 15% tax on dividends. Sooooo, If you like 9%+ or 10% + on (D & C), you will definitely like MHR. The pricing of the preferred is totally independent of the common prices. They follow their own tune, the only problem is very thin trading which has been decreasing the past several months as more and more folks come across these gems! Lets see, I buy $100,000 of them on margin at 2.2% and they pay 10 1/4% = $10,250 yearly dividends paid monthly less the $1100 margin interest = $9150 dividends divided by $50,000 = 18.3% ROI for sitting on my butt! Taxes = $1537 less savings for margin interest deduction ($1,100 x 30% = $330) = $1207 taxes. $10250 - 1207 = $9,043 after tax or 18% after taxes on my $50,000 investment. That beats most muni bonds!
Buy Philip Morris For Its 3.8% Yield And 13% Dividend Growth Rate [View article]
A lot less smoking on my trip to Japan this year than around 5 years ago. Not that PM was big in Japan, but it shows that some countries are trying to ban the bligget!!
With Its 5.7% Yield, Altria Is On Sale [View article]
Yes the question is how will MO do vs. PM over the next 20 years or do I have to acquire both? The beauty here is you set a limit price where you will be happy and in market selloffs wait for the trigger to hit! Great companies.
Dividend Growth Investing: DCA Vs. Timing Technique [View article]
Value Averaging is based on a book written originally by a professor at the US Military Academy at West Point. He later became a professor at Harvard. Its a complicated process and I tried it for about three years. It works, but it takes work!
5 Dividend Champs With 7% Yields On Average To Buy For The Next 4 Years [View article]
I see a lot of Obama based negativity on here that I did not see before. Thus, it is a good time to dip your feet in the equities market. The author's recommendation of 1/4 final total seems reasonable and if congress does not make the fiscal cliff in time, another 1/4, etc. Buy when everyone wants to sell. Especially MO which grinds out money the hard way, "they earn it!". All in all a thought provoking article but I would be slow to buy and use your graphing web site to check out the 200 day MA. I would hesitate to buy anything below that level.
I sorely would like to agree with Bill and leave tobacco stocks off my list, BUT, there is one redemptive value of cigarettes! They are taxed to death by the States! Here in California, 50 cents per pack in addition to other state cig tax goes to funding free medical services to the poor. Meathead of "All In The Family Fame" was able to ram through that proposition bypassing the state legislature. Other states tax cigarettes even more and use it for state funds for education, etc. So even though folks do choose to smoke, the one redeeming quality is they help support the state tax bandwagon!
The Halloween Indicator: A Stock Market Anomaly That Is Stronger Than Ever [View article]
I have used this for years with success and trade mid caps with the system. However, there can be some doozy drawdowns, so you need to be prepared! I would suggest that margin not be used due to the additional volatility. If you have real guts, use small cap value stocks!
The Leveraged Income And Alpha Strategy: Part 2 [View article]
A Stable Stock With 12.2% Dividend; Too Good To Be True? [View article]
San Bernardino's council has passed a budget that will allow the bankrupt Californian city to restart $1.2M in biweekly employer contributions to Calpers while continuing to renege on its commitments to its other creditors, including bondholders. Along with Stockton, San Bernardino represents a test case over who should get paid first when a municipality goes bankrupt - the public employees or the bondholders. (previous) [View news story]
In a blow to municipal bondholders, a judge rules Stockton, CA eligible for bankruptcy protection. The ruling let's stay the city's decision to keep pensions intact while imposing losses on those holding the town's paper. Jefferson County, AL and San Bernardino, CA - along with other municipalities - are watching closely. Bond insurer Assured Guaranty (AGO) slides 3.3%. [View news story]
A federal judge is due to hear closing arguments today about whether Stockton in California should be allowed to file for bankruptcy protection. The main is issue is whether the city can continue paying into the Calpers pension fund while forcing losses on bondholders. The case is being widely watched, with Alabama's Jefferson County and California's San Bernardino also considering breaking with the long-standing practice of meeting obligations to bondholders. [View news story]
Illinois has become only the second state to be accused of securities fraud, with the SEC saying that it misled bond investors from 2005-2009 about the ever-worsening condition of its public workers' retirement plans by claiming that it was properly funding the scheme when it wasn't. However, while Illinois has agreed to a cease-and-desist order, it has escaped any fines and it hasn't had to admit any wrongdoing. (PR) [View news story]
With 2-3 weeks to receive $30M of state aid from Michigan in order not to run out of cash, Detroit is again teetering on the brink of bankruptcy. The aid is contingent of the city implementing the provisions of an agreement in April, when Michigan agreed to provide $137M, but those measures haven't been enacted. Financial mismanagement, political corruption, a hard-hit housing market and a massive loss of population are the causes of Detroit's woe.
[View news story]
Everyone says California is broke, but guess what, they are not! Look for the fight between public employee unions and the municipal bankruptcy judges to go all the way to the Supreme Court. This is a long term restructuring problem caused by money. "Money is the mothers milk of politics" -Jesse Unrah, former speaker of State Assembly and widely considered the most powerful person in California politics.
Aflac's Hidden Source Of Value [View article]
Aflac was a great pick for a first try! Two bullseyes!
High-Yield Preferred To Be Thankful For: Undervalued, High Yield, Inflation Linked [View article]
Lets see, I buy $100,000 of them on margin at 2.2% and they pay 10 1/4% = $10,250 yearly dividends paid monthly less the $1100 margin interest = $9150 dividends divided by $50,000 = 18.3% ROI for sitting on my butt! Taxes = $1537 less savings for margin interest deduction ($1,100 x 30% = $330) = $1207 taxes. $10250 - 1207 = $9,043 after tax or 18% after taxes on my $50,000 investment. That beats most muni bonds!
Buy Philip Morris For Its 3.8% Yield And 13% Dividend Growth Rate [View article]
With Its 5.7% Yield, Altria Is On Sale [View article]
Dividend Growth Investing: DCA Vs. Timing Technique [View article]
5 Dividend Champs With 7% Yields On Average To Buy For The Next 4 Years [View article]
Smoking Dividends In Cigarettes [View article]
The Halloween Indicator: A Stock Market Anomaly That Is Stronger Than Ever [View article]