“Your life is made of two dates and a dash. Make the most of the dash.” Twice a year a client of mine leaves the comforts of home to patrol 26,000 sq. miles in Southeastern Utah for the Department of Interior. He spends two weeks in the Spring and two months in the Fall, September and October. I spoke with him the other day, the first day back from his Spring trip. I asked him what he does out there. He said he is either out on his own for 3-5 days patrolling, or working from the base station going out on day jobs to fix things, do field study, or work on his research at the base … [Read more...]
What Goes Around…
How about these numbers reported last week in The WSJ: Young technology-company stocks fell out of favor in the blink of an eye. But their valuations remain sky-high and many investors say they have a lot more room to decline before bouncing back. Cybersecurity firm FireEye Inc. has tumbled 72% from its peak March 5, the day the tech-heavy Nasdaq Composite Index hit a 14-year high. Meanwhile, advertising-technology firm Rocket Fuel Inc. is down 61%, software firm Splunk Inc.is off 50%, microblogging service Twitter Inc. is down 41% and electric-car maker Tesla Motors Inc.is off 28%. The … [Read more...]
Save Money. Live Better
Wal-Mart’s slogan is “Save Money. Live Better.” Just don’t do your banking there. Check-out this WSJ analysis: On a rainy morning in April, Anna Proctor entered a Wal-Mart Supercenter near some of this city's poorest areas to get $300 for urgent car repairs—money she didn't have. Inside, she joined a line at a Woodforest National Bank branch and intentionally overdrew her account. When her paycheck was deposited 12 days later, she said, the bank would take the borrowed sum plus a $30 fee. "It's cheaper than a payday loan," said Ms. Proctor, a 35-year-old customer-service worker. If her … [Read more...]
Turn $100 into $1 Million
More reasons to like dividends. In his January issue of Intelligence Report, Dick Young writes: I recommend dividend payers to you not because of some idealized view of history, but because the data proves that dividends win over time. Below is a chart of the data from the French data library, possibly the most comprehensive data library of American stock market returns in existence. You’ll see in the chart that the stock market is broken down into four groups based on their yields…As you can see in the chart, the Hi 30 performs the best by far, breaking $1 million on an investment of $100 … [Read more...]
All Hail the Dividend
Historically dividends make-up about 2/3rds of stock returns. The S&P 500 has a miniscule dividend yield of 1.95%. That’s not saying much for future stock returns. That’s why we continue to pound the pavement for yields twice that. More on dividends in The WSJ: Ultimately, dividends drive long-term shareholder performance. From 1970 to 2012, the dividend yield accounted for about two-thirds of real stock-market returns in major markets, Credit Suisse notes. Sometimes the market appears to forget that in its enthusiasm for the latest fad offering the prospect of large price … [Read more...]
His $3.5 Billion Haul
Hedge fund managers aren't getting the job done–losing money for investors in back-to-back months for the first time in two years. Last year when the S&P 500 was up over 30%, the average hedge fund made only 9.5%. But don't worry, the hedge fund managers are just fine. The billions of dollars they've pocketed in fees won't have them dining on canned tuna. Let’s not forget that investors pay hedge fund managers a derivative of "2 and 20"–2% on your assets under management and 20% on your profits. That’s 20% on profits that were off by more than 20% relative to the S&P 500. To add insult … [Read more...]
Sell in May
It’s been a great year for dividend paying stocks. Not so much for emerging markets. It would be a shame to sell dividend payers in May to miss a Summer of payments. Here’s a snapshot of utilities and emerging markets YTD. What’s not to like? … [Read more...]
(E)State Planning
Rhode Island is a great place to visit but a rotten place to die. The top inheritance tax rate is 16% on estates more than $921,655. Compare that to “The Live Free or Die State” of New Hampshire which has no estate tax. It’s an island among the tax happy states of the northeast. “Have your cake and eat it too” in NH or “Live Free then Die Free”, could work for you if you live in NH. I like this illustration in Forbes: … [Read more...]
Good ‘Ole Warren Buffett
Warren Buffett has pulled the wool over the eyes of so many with his “aw shucks” mid-western persona. But in reality he’s a self-preserving stock salesman just as comfortable playing inside Wall Street boardrooms as he is inside the D.C. beltway. On the tax front he’s been of no help to successful Americans trying to keep more of their hard-earned money. He’s all for higher taxes. That is unless it’s his taxes. Then it’s all about his bottom line. The WSJ’s Review & Outlook has more on good ‘Ole Warren here: So it was fascinating to hear Mr. Buffett explain that his real tax rule is to … [Read more...]
We’ve Seen this Movie
Retirement investors are piling back into stocks, a bit late I’d point out. Stocks accounted for 67% of employees’ new contributions into retirement portfolios in March according to Aon Hewitt. Let’s not forget that we’ve seen this movie before, as the WSJ points out here: Individual investors, notorious for mistiming the market, didn't fare well in the financial downturn. At the stock market's peak in October 2007, investors put 69% of new 401(k) contributions into stocks, according to Aon Hewitt. The S&P 500 went on to lose 57% of its value by March 2009. Some financial advisers now … [Read more...]
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