Investing In Industrial REITs, Part 1: Is Stag Industrial's Valuation Justifiable? [View article]
Good article. I appreciate getting both the pros and cons of all investment ideas. One thing missing from all REIT articles on SA seems to be a discussion of where the dividend comes from--specifically how much represents net income and must be distributed to meet IRS limitations and how much is return of capital and therefore totally optional on the part of the REIT. Any information on that for Stag and the others you will be discussing?
Readers: Whenever an author tells you an idea is too silly to even discuss, hold on to your wallet. Hundreds (thousands?) of countries with their own printing presses have had their currency become worthless. That, to me, is a good definition of bankruptcy. How many times has it occurred to Argentina in the last 150 years? Have you been reading the recent U.S. court case about Argentina debt? Germany declared their currency worthless in 1923 and started over--all the old version of the Mark were worthless. France invaded and demanded coal and other hard assets to settle the debt. Just because a country can print money doesn't mean anyone has to accept it. Or lend to it. Any country that relies on large amounts of imports (as the US does) needs to pay for those imports with an acceptable currency. Any country that relies on external debt (like the U.S.) has to be able to attract investors. This stuff is pretty basic. This column was just plain silly.
You weren't happy that Stockman had to undergo the "vitriolic and ad hominem" attacks, then you tell us that David Frum is "a neo conservative apologist and Iraq war cheerleader". Cheerleader? Sounds like you want it both ways.
Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
Of course, the charts are of no value if they don't include dividends. They need to reflect total return of the investment in both cases or what purpose do they serve? Since the author didn't respond to your guess on that issue I am assuming you are right. But if buybacks result in a better total return then the fact that a company CAN do both (buy back stock and make dividends) still raises the question of "should they do both"? If it's my money on the line I would say no-put all the excess cash into share buybacks unless the stock is overpriced. If the stock is overpriced the company then has the problem of deciding to hold the cash waiting for a correction; paying down debt; making acquisitions (which will probably also be overpriced) or paying dividends. I think Jimmy Buffett found himself in that position back in about 1971 and distributed his one dividend.
Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
I think the flaw in your charts, comparing performance of dividend payouts stocks versus stock buyback stocks is that the dividend stock chart hasn't been adjusted for the tax payout. They only represent raw numbers, I assume, of stock appreciation plus dividends--but not tax implications. So the actual difference between the two options is even greater than it appears. Of course that implication varies by type of account (taxable versus Roth versus conventional IRA/401k) and would be difficult to quantify. An initial pass might be to focus on taxable accounts and reduce the dividend payout by 15% (dividend tax for most) and then run the chart. The way I look at it is that non dividend stocks have the same benefits as a conventional IRA--deferral of taxes--without the downside of IRAs--forced distribution starting at age 70.
The Facts Are In - MLPs Work Great In IRAs [View article]
Picture yourself driving down the interstate at 72mph, with a speed limit of 65, and you pass a cop. Is the cop going to pull you over and give you a ticket? Probably not--cops don't make the traffic laws and the IRS doesn't make tax law. They are both in the position of trying to enforce laws passed by legislatures. Cops and the IRS have to consider limited manpower (peoplepower?) and focus their efforts where they think it makes the most sense. It must seem obvious to the IRS that the issue of MLPs and IRAs is confusing and they could easily make it clear with a very specific publication but they can't tell the public to ignore the legislature any more than the cops can tell you it's OK to speed. I have no doubt (or little doubt anyhow) that "Reel Ken" is correct in his analysis of this issue but for now the IRS is ignoring it so I think we investors can also ignore it as long as we understand that the IRS can change their tune any time they want.
Why I Bought Linn Energy In My Roth IRA [View article]
Movie man:
I tried to look at the 990-t and don't see anything unequivocal. Seems fuzzy to me. LINE might confirm that recapture is taxed as UBTI but will they confirm that IRAs recapture? I still haven't heard anything from the investing public that the IRS has taxed them for the item. That will be unequivocal. Where are they?
Why I Bought Linn Energy In My Roth IRA [View article]
I have read many MLP articles and comments on SA over the last year. Some readers have very strong opinions on the proper placement of these investments--maybe it goes beyond opinions, where they might be confusing their opinion with fact. Seems like there are two very different kinds of UBTI--as the author says the first kind appears on your annual K-1 and is (in my experience) generally insignificant or non existent so not an issue for most; and the second kind apparently happens at the time the MLP is sold--the so called "recapture". I would guess the question is whether there can be a "recapture" if there isn't a "capture". In a taxable account you capture the tax benefit of MLPs annually. Do you capture the tax benefit in an IRA? I would GUESS no. But instead of guessing why don't we have one person who gives us something beyond their personal opinion. Is there any reader who has had the IRS tell them they owe additional taxes because they didn't report an MLP recapture in an IRA?
Why Long-term Government Bonds Are The 'Dumbest Investment' [View article]
Robert: That doesn't quite sound right to me. It seems that if inflation goes from 2 to 3% and stays that way for the remaining 15 years of my bond's life I will get an extra 15% inflation adjustment, not just 1% (plus some compounding of that inflation which would bring it up higher). In effect it seems like inflation has a duration impact also (although I have never heard it referred to that way.) So far I can't find a search site that will calculate the inflation impact on TIPs to offset the principal loss from the interest rate increase.
Why Long-term Government Bonds Are The 'Dumbest Investment' [View article]
Robert: Since you seem to have an excellent understanding of bonds let me suggest that in a future article you expand the discussion of TIPs. I wonder how much the inflation adjustment of TIPs offsets the typical bond value loss when rates rise (assuming the cause of the rate rise is inflation). I have some 30 years due in 2028--have been an excellent investment for the first 15 years but I know I have a large unrealized capital gain that will evaporate when rates go up--of course with bonds the capital gain always evaporates (unless purchased under par) as you approach maturity. Coupon rate of 3.625% (but of course that is only applied to the coupon plus 15 years worth of inflation adjustments) not to the current value. I am thinking I should sell and lock in that capital gain but it is hard to pull the trigger on this one.
Hear The Ka-Ching As The Air Leaks Out Of The Bond Bubble [View article]
George: I will have to admit up front that your response doesn't make a bit of sense to me. What does buying "30-40 dividend paying stocks" have to do with shorting TLT? Apples and Bananas. Fidelity Floating has an expense ratio of .71 and has no relationship with the 30 year Treasury. It makes loans to BB rated corporations and the interest rate floats with various interest rates--depending on the quality of the loan. If interest rates (whatever one you want to look at) go up the interest on these loans goes up. The interest rate is substantially higher than the 30 year Treasury and will likely stay that way forever. Your response might have made sense if your recommendation was to avoid bonds totally and invest in high dividend paying stocks.
Hear The Ka-Ching As The Air Leaks Out Of The Bond Bubble [View article]
George: If you're right and the economy is slowly healing and interest rates will slowly (or quickly) rise it would seem like a floating rate fund ( I own Fidelity's) would accomplish much the same without so much risk. My understanding of the floating rate funds is that the only real risk is that a deep recession will cause major loan losses as sub prime type corporations go belly up. Other than that they seem like a very good way to get bond exposure without fearing rising interest rates. What think you?
Forget 'Don't Fight The Fed' - It's Time To Fed-Proof Your Portfolio [View article]
It must be in your article but I can't find it. How are we supposed to "fed proof our portfolios"? I guess you told us why we should do it but not a word about how.
In today's financial world defining cash is tricky. I have most of my cash in Vanguards Short Term Investment Grade bond fund (vfstx) and have had it there for the last few years. Lot of people would say that isn't cash and would place it in the bond category. But to me it is the closest to cash I am willing to suffer. So if AAII asked me for my cash allocation I would include it. Using bond and cash raw numbers without understanding how the FED has changed the world seems to me a waste of time.
The Hershey Company: A Sweet Investment [View article]
Moatfrog: I often ask myself that same question when reading SA articles. I think this author gave us a much better answer than most. In the article he suggested we buy on pullbacks so logically that would apply to his own potential purchase; and he also says he can't own everything he writes about and lists his 10 or 15 holdings (seems to love credit card companies). What is missing for me is the obvious question--why is he writing the article in the first place? Is he just a nice guy trying to educate his fellow investors? Many SA writers are trying to sell us something--they want to manage our money, sell us newsletters, graphs or books. This author has a new book listed in his profile but if he is trying to sell it I would say it is a very soft sell. I think what SA needs, in addition to a disclosure section is a conflict of interest section where the author tells us what he is trying to sell--if anything, and if he is just a nice guy he can tell us that.
Investing In Industrial REITs, Part 1: Is Stag Industrial's Valuation Justifiable? [View article]
Japan Isn't Bankrupt [View article]
The Stockman Backlash [View article]
Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
The Facts Are In - MLPs Work Great In IRAs [View article]
Why I Bought Linn Energy In My Roth IRA [View article]
I tried to look at the 990-t and don't see anything unequivocal. Seems fuzzy to me. LINE might confirm that recapture is taxed as UBTI but will they confirm that IRAs recapture? I still haven't heard anything from the investing public that the IRS has taxed them for the item. That will be unequivocal. Where are they?
Why I Bought Linn Energy In My Roth IRA [View article]
Why Long-term Government Bonds Are The 'Dumbest Investment' [View article]
Why Long-term Government Bonds Are The 'Dumbest Investment' [View article]
Hear The Ka-Ching As The Air Leaks Out Of The Bond Bubble [View article]
Hear The Ka-Ching As The Air Leaks Out Of The Bond Bubble [View article]
Forget 'Don't Fight The Fed' - It's Time To Fed-Proof Your Portfolio [View article]
Cash Is Not King [View article]
The Hershey Company: A Sweet Investment [View article]