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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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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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Where To Put Your Cash Now

January 18th, 2012 3 comments

Even if you are fully invested, inevitably you will need to manage some cash. It’s a good idea to have some of your portfolio in cash in addition to a stash (“emergency fund”) that is very liquid to handle unusual bills or issues (things like car repairs up to more serious issues such as unemployment). My investment portfolio is about 30% invested in cash. I expect to reduce this over time but not to zero so that I have some powder to take advantage of opportunities that come up.

It was just a few years ago that you could earn enough interest on cash that you could call it an ‘investment’. Today, that’s no longer true, cash investments are providing very low returns.

Managing cash means putting the money in instruments that are designed to protect principal. There are many options here plus a bunch that you may think protect principal but don’t. Here are your options plus a few that are not cash.

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New ‘Budding’ Aristocrats Added For 2012

January 12th, 2012 2 comments

Another year has passed. It’s a good time to take a checkpoint to see how companies are fairing with their dividend plans. The last few years have been hard on companies, many of them have cut or eliminated dividends. Also, we have gotten a real demonstration about companies that can not only persevere through difficult times but thrive.

Now is a great time to poke the waters for what I call ‘Budding Aristocrats’. These are companies that could be future Dividend Aristocrats, only that they are younger. Real Artistocrats after all started as younger ones. The thinking is that if a company has been a solid dividend payer over the past 10 years (and could survive the last 3 years) as a Budding Artistocrat, it has a good chance of maturing into a Dividend Aristocrat.

A Dividend Aristocrat is a company that is a part of the S&P500 Index that has increased its dividend for 25 years in a row. For this article, I am going to consider the newest inaugurated class of 2012 that has joined the 10 year club. This means that the company has increased its dividend for 10 straight years as of 2012. Also, I’m not going to limit the list to those companies that are a part of the S&P500 Index.

Here’s the list below. There are some recognizable companies and a whole bunch I never heard of. This is not necessarily a buy list, but a starting point for further analysis.

Alterra Capital Holdings Limited ALTE 2002 17% (August 2011)
Auburn National Bancorporation, Inc. AUBN 2002 3% (February 2011)
Cass Information Systems CASS 2002 17% (October 2011)
Canadian Natural Resource Ltd CNQ 2002 20% (March 2011)
Delphi Financial Group, Inc. DFS 2002 9% (May 2011)
Harris Corporation HRS 2002 12% (August 2011)
Landmark Bancorp, Inc. LARK 2002 5% (November 2011)
Landauer, Inc. LDR 2002 2% (November 2010)
Magellan Midstream Partners, L.P. MMP 2002 2% (October 2011)
Monsanto Company MON 2002 7% (August 2011)
NIKE, Inc. NKE 2002 16% (November 2011)
Inergy, L.P. NRGY 2002 6% (July 2010)
NuStar Energy L.P. NS 2002 2% (July 2011)
Norfolk Southern Corp. NSC 2002 8% (July 2011)
Nu Skin Enterprises, Inc. NUS 2002 19% (July 2011)
Royal Gold, Inc. RGLD 2002 36% (November 2011)
Senior Housing Properties Trust SNH 2002 3% (October 2011)
The Southern Company SO 2002 4% (April 2011)
Valmont Industries, Inc. VMI 2002 9% (April 2011)
W.R. Berkley Corporation WRB 2002 14% (May 2011)
Watsco, Incorporated WSO 2002 9% (October 2011)

For this list, I have utilized the lists available on Dynamic Dividend.

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