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Investor Repression At Work: My Preferred Stock Was Called!

February 8th, 2012 4 comments

The Fed is bent on forcing investors out of cash and Treasuries. I don’t know if it’s working or not. Stocks are up this year so far, but trading volume is very low. It’s about 30% below average on the NYSE!

The hunt for yield by  investors is enabling companies to get better financing. This effect has caused one of my preferred stocks to get called. Preferred stocks are hybrids between stocks and bonds. They can be traded like stocks but have pricing and coupons similar to bonds.

Realty Income Corp (Public, NYSE:O-D) has been called effective on March 1st. This preferred paid out monthly dividends at a yield of 7 3/8% at par of 25.

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Mind Your CUSIPs!

February 4th, 2012 1 comment

No, a CUSIP is not a Q-Tip, but an important investment identifier. It’s kind of like a bar code for stocks. This identifier is a unique number registered with the Securities and Exchange Commission for stocks, bonds and other investments. You may not have heard of it or used it because Wall Street uses its own version of identification to “market” its products: stock symbols.

Stock symbols have been around almost as long as stocks themselves. Today, stock symbols are used to trade things that aren’t even stocks because the convenience and acceptance of exchange traded stock symbols. So-called Exchange Traded Funds (ETFs) are the most common example of “stocks” with their own symbol that are not stocks but other things such as commodities, options, or groups of stocks.  There are a dizzying and growing number of such investments.

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Governments Offer The Worst Financial Advice

January 31st, 2012 4 comments

When you research personal finance, it becomes evident that this topic is not exactly a black/white science but more of a grey art. For example, typical financial advice would recommend that you don’t, say, use a credit card to start a business. But, I know a few people who did use a credit card as a tool to start a business successfully. It comes down to your personality, it can work for some people. The important point is that the person was trying to ‘learn how to fish’ so it isn’t necessarily a bad idea to take such a risk. Perhaps,though, this is not for the average person.

I can argue that some things are bad advice, say, using a home equity loan to fund consumer purchases that might be open to legitimate question to others. But, I think there are some things that really are bad advice, no matter how you look at it. Here are a few things that I found from governments, no less, that are truly bad advice…
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Why The DOW (DJIA) Is Outperforming

January 24th, 2012 No comments

The Dow Jones Industrial Average (DJIA) or sometimes the DOW, is the most tracked and oldest stock index in the U.S. As an index, it’s a pretty poor one by modern standards. There are downsides to any kind of index, but the DJIA has a few major flaws. First, it only contains 30 stocks whereas modern indexes contain hundreds (from its original 19th century version which contained only 12 stocks, I guess it’s an improvement). Second, it’s market weighted by stock price, not by market cap or some other weight such as sector weight.

For 2011, this imperfection led to outsized performance…

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Investing For 2012: All You Need Is A Few Good Ideas

January 21st, 2012 7 comments

For the new year, we will be bombarded with new investment ideas, portfolio returns from everyone, and the constant drumbeat of analysis/FUD/predictions from the major media financial programs. It’s a good time to take a step back and turn all this stuff off. Keep your focus on what your are trying to accomplish with your portfolio.

The biggest threat to your portfolio is giving in to the temptation that you need to do “X” (whatever it is this week) because its the newest “trend”, will get your awesome returns, and the story is “developing”. There are so many things you could invest in, some of them will be great ideas while many won’t be great ideas. Or if it is a good idea, you need to confirm that you (and not someone else) can actually make money with it.

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