Is Now the Time for US REITS

Every industry faces periods of rise and periods of decay. The last few years have, not surprisingly, been a period of decay in the REIT Area. But like nuclear stocks after 3 mile island, or banks after the savings and loan scandal, or bonds after the junk bond era, after a sector has been decimated what is often left are the high quality well managed companies that will rise to dominate the sector in the future. Is now the time for REITs?
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Interesting Links

For your reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles- enjoy!

• Great Chart Showing how the recession has impacted workers with differing education levels
• A dangerous omen looms for bonds
• Sony Sets Aggressive 3D goals- good investment of bust?
• Cisco oversells the hype and it costs them
• 10 Key Charts to See before you buy a home

Anticipating Dividend Increases

I am a big fan of companies that make it a regular habit of dialing up a dividend. This is why I have been such a proponent of the dividend aristocrat group. Nothing perturbs me more though than to buy into a 2% dividend stock that I believe will crank up its rate only to be forced to wait multiple years before seeing that increase. To counteract this here is a simple parachute that can increase your confidence that a rate will increase.
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Interesting Reading Links

For your weekend reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles.

• Tim Hortons Brews an Expensive Drip and SPP
• A change in the Yuan
• Top 100 Commodity, Materials and Energy ETF’s
• Dividend Aristocrat or Champion?
• Emerging Markets?
• Blockbuster: Back to the Drawing Board

Buffett Gets a Bullseye

I have written about the benefits of boring businesses in previous posts. I thought Buffett summarized some of the arguments quite well in his latest letter to shareholders:

“Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries.Even the survivors tended to come away bleeding.
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Three Key Ratios For Investors

if you could only have four ratios to evaluate a company what would they be? This is a fun question that is popular in investing circles. For a laugh I’ll take my shot at it, what would you pick?

1) Current Ratio

Current Assets / Current Liabilities

Why?

This ratio keeps track of the company’s ability to pay its short term debt. If a company doesn’t have safety money to deal with debt then they might not be in business tomorrow and I don’t need any of that.

2) Dividend Yield

Annual Dividend Per Share / Price Per Share
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Microsoft Pirates Arrr

I had a fellow investor tell me one day that they would never buy shares in Microsoft (MSFT) as their software is so widely pirated. I’m not a big fan of Microsoft stock but I’ve heard that reason given before and it is just silly- let me tell you how it works.

Microsoft widely subsidizes licensing for high schools, universities and colleges. They also provide university bookstores with deeply discounted licenses for their products to sell to students. This puts the product front and center and forces students to learn it or face failing their courses. After four or more years working with the product students in all ranges of study become proficient users. This indoctrinates users into Windows’ users. The cost of retraining these people would be tremendous, so the net effect is that it forces future employers to buy Microsoft products.
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Reading Links

For your reading pleasure a few interesting articles from around the globe about dividends, stocks, the economy, the market and other just plain interesting finance or economic oriented articles.

• P&G entering the retail business… kind off?
• An interesting take on the US budget
• DGI gives an argument on Why to choose Div Growth over Div Yield
• What will the US use after the humvee- possible investing opportunities?
• Office Depot in big trouble?
• Has Whole Foods Turned the corner?

Dell- a Dud

Before any investment in a company I try to do business as a consumer with that company. Balance sheets can only tell you so much about the “true” story of a business. When the option came up to buy a new laptop for my wife I thought, Dell (NASDAQ:DELL) stock has been interesting to me for some time, let’s give them a go.

Let me tell you, it wasn’t pretty. After going through far too many pages and a number of strange web errors on the dell site my order was lodged. Content to write off these bizarre website errors I went over to the track order page. To my surprise I discovered my estimated delivery date for an off the shelf, uncustomized, mass manufactured, laptop was over a month away.
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Weekend Reading Links

For your weekend reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles.

• GlobalEconomicAnalysis: Short Canada
• Gothamist: Stock for Steak
• Barelkarsan: Figure Out who is with you
• The DividendGuyBlog: Dividend Stocks Have Their Limitations
• DailyFinance: Berkshire Joins the S&P 500
• TheBigMoney: The Secrets of the Mexican Wave

The Effects of Layoffs on a Business

A recent mass layoff at my company has given me a fresh perspective on layoffs. Normally, as an investor, we see layoffs as a courageous way to drive profits forward by shaking off some areas of weakness. I have personally invested in companies shortly after a mass layoff if I believe that such changes will benefit the profitability of the business. From a purely financial perspective viewing a company as a machine is an easy thing to catch one’s self doing. However there are some soft costs involved in layoffs to a company culture that I wasn’t really aware of until the week after I witnessed fellow employees walking out the door for the last time:
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Check your Sources

It has become formulaic that when a movie comes out one of the advertisements will feature reviewers comments like “riveting”, or “one of the must see movies of the year” and of course my favorite “an instant classic”. The point, obviously, of these reviews is to convince you, based on some other expert’s testimony, that you need to see this movie.
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Patience

The largest struggle I have as an investor is not researching companies, or finding and analyzing data, or even pricing a stock; it is having the patience to do all of these things properly.

Patience serves as a protection against wrongs as clothes do against cold. For if you put on more clothes as the cold increases, it will have no power to hurt you. So in like manner you must grow in patience when you meet with great wrongs, and they will then be powerless to vex your mind.
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Taking Advantage of a Day Off

A day off from US markets is a great opportunity. With the world being what it is markets are not entirely driven by internal factors. Use your day off today to read international business news.  This news can certainly give you a heads up as to what you should expect from the markets in the next day.  This trick helped me immensely during the early days of the credit crunch.  Bad news would break crashing out European and Asian markets while US markets were closed for holidays- guessing what the US market would do the following day?


Today is a good day to look closely at the Google vs. China story. While China’s business accounts for very little of Google’s bottom line, as the story evolves we have certainly seen market fluctuations. Maybe today is a good day to setup a buy if you have been looking for some weakness, or maybe if you think the market will overreact to Google leaving China (if stories today point that way), and today is a good time to plan your exit from Google. Your call read the news and see what you think.

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CenturyTel Stock Review

CenturyTel, Inc., together with its subsidiaries, is an integrated communications company engaged primarily in providing an array of communications services, including local and long distance voice, Internet access and broadband services. The Company operates in 25 states located within the continental United States.

Why We Are Reviewing

• is currently sporting an 8% dividend.
• CenturyLink is a dividend aristocrat.
• is soon to be a member of the fortune 500.

What I like about their story

CTL is a telco, most investors tune out at that point as the overwhelming consensus is that VOIP has, or will kill, the traditional phone. Centurylink appears aware of this reality and has taken a few steps to remain a healthy business:
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Property Assessment through Google Maps

Having been on a recent trip to the southern US I was awestruck with the prices of property there. Being out of my element in a new city I simply wasn’t comfortable with the idea of investing though. With proper preparation trips of this type can be quite rewarding and one of your best tools is often overlooked- Google Maps.

With a simple browse of an area in Google maps you can learn all of the following:
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• How far away is the local hospital, school, police station, prison, garbage dump, shopping mall. All of these can increase or dramatically decrease your long term value.

RSP and Tax Advantages

I don’t mind paying taxes but if there is ever an opportunity to pay less I am certainly interested. When my wife and I bought our home we had amassed a nest egg in RSPs. We cashed in the RSP funds as part of the first time home buyer’s plan.

This plan allows anyone who has not legally owned a home in the last five years to cash out $20,000 of RSPs for each person on title without enduring the regular taxation hit of withdrawing funds from an RSP- assuming you are willing to refuel your RSP back to its initial value over the course of 15 years. While this is certainly a help if you are coming up short on a down payment, it can also come in handy if you just want a nice tax advantage.
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A House as a Great Investment?

I am always surprised to see the enthusiasm people exhibit when they hear that housing prices are rising, to me this is 100% bad news.
I hear remarks all the time like,

Housing prices are up 12% over last year, I am going to make a killing on this house when I sell in a year or two!

Let’s say you buy a house as a primary residence at $300K and are fortunate enough to see a 12% compound increase in the price of the house for 3 years in a row. So that makes the value of your house now an impressive $421K- wow $121K nice return, well worth celebration.
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