This site has its heart in the right place -- investing for income -- and so I wanted to like it more than I did:
Dividend Yield Hunter
One problem is that its domain name is misleading . . . it's focused on non-dividend income investments -- REITs, Canadian trusts, preferred stocks, and so on. It even lists some high-yielding money market accounts.
But it totally ignored common stocks that pay dividends, so it misses the biggest way to grow income faster than inflation in the long term.
It lists some basic information on each type of investment, and then lists some of them. It contains interesting information on shipping and transportation stocks. I'd thought they were high-yielding simply because the shipping business is so strong right now. That's the impression I got from reading various sales letters for financial newsletters sent to me. But apparently these companies get a tax break from the government. So that's interesting to know.
On a technical level, this site is poorly laid out. I had to scroll right and left, and move the screen around a lot. It badly needs a web design makeover to make it user-friendly.
It does contain some news and opinion, also. It has a model portfolio, but now real plan (although to its credit it does say that it doesn't support trading.)
Comparing it to my site, I have to rank mine higher in terms of appearance and usability. I think I do a better job of giving in depth information about the investments, but I don't even try to keep up with news, so I don't give yields, which will change constantly. However, this site currently covers more types of investments than I do (yet - many more pages will come in the not too distant future). I also do not give an overall plan on my site -- but I am writing a book that will give a plan.
It's a good place to see a wide range of income investments and to get a list of some of them, so it's not a bad place to begin your research.
Dividend Yield Hunter
Dividend Yield Hunter
Thursday, August 9, 2007
Monday, August 6, 2007
Global warming municipal bonds on the way?
Here's an idea for a new type of bond -- global warming bonds
Only I have to admit, the story is quite vague on details about how such bonds would work. Selling an issue of bonds would raise money -- but what would they spend the money on to reduce carbon emissions?
Also -- and very important to anybody who'd be crazy enough to invest in such bonds -- how would the bond debt be serviced? By the issuing government? Out of what revenue? General tax revenues?
One way or the other, I'm sure the taxpayers of this country are going to pay out the nose to solve this problem, if problem it is indeed.
However, unless they're a clear and rational use of the bond issuance money to generate income from whatever activity is done to reduce carbon emissions, then I'd strongly advise you to NOT add global warming bonds to your fixed income portfolio.
Global warming bonds
Global warming bonds
Only I have to admit, the story is quite vague on details about how such bonds would work. Selling an issue of bonds would raise money -- but what would they spend the money on to reduce carbon emissions?
Also -- and very important to anybody who'd be crazy enough to invest in such bonds -- how would the bond debt be serviced? By the issuing government? Out of what revenue? General tax revenues?
One way or the other, I'm sure the taxpayers of this country are going to pay out the nose to solve this problem, if problem it is indeed.
However, unless they're a clear and rational use of the bond issuance money to generate income from whatever activity is done to reduce carbon emissions, then I'd strongly advise you to NOT add global warming bonds to your fixed income portfolio.
Global warming bonds
Global warming bonds
Sunday, August 5, 2007
Canadian income trusts -- doomed or not?
I've just completed the beginning of a new section of my site on income investing -- on Canadian income trust funds.
So I just checked out the latest news, and it doesn't look good for those who've been hoping to stop the government of Canada from beginning to tax trusts in 2011:
You can read about that here:
Canadian trust fund taxation
The Conservative Party of Canada seems determined to shoot itself in the foot. It barely won the January 2006, where it promised no new taxes. So many Canadian voters feel betrayed by this broken campaign promise.
Plus, as the land of oil and natural gas in a politically stable country, Canada is well poised to benefit from the rising prices of energy, not to mention that most of these energy assets are in unstable and unfriendly places such as the Middle East, Russia and Venezuela. Of course the government knows this -- and wants to grab a big chunk of tax money.
I am sort of sympathetic to the "Why should trusts get away with not paying taxes when corporations have to" argument. My answer is that, simply, neither trusts nor corporations should have to pay taxes. It doesn't really make sense. Business structures are not people. Eliminate all double taxation. Just impose taxes on dividends received by individuals. This would make eliminate a lot of inefficiency.
Yet this is politically impossible. Liberals in Canada as well as the U.S. act like corporations themselves are evil rich people and it'd be a crime against the poor not to tax them.
Canadian income trusts
Canadian income trusts
So I just checked out the latest news, and it doesn't look good for those who've been hoping to stop the government of Canada from beginning to tax trusts in 2011:
You can read about that here:
Canadian trust fund taxation
The Conservative Party of Canada seems determined to shoot itself in the foot. It barely won the January 2006, where it promised no new taxes. So many Canadian voters feel betrayed by this broken campaign promise.
Plus, as the land of oil and natural gas in a politically stable country, Canada is well poised to benefit from the rising prices of energy, not to mention that most of these energy assets are in unstable and unfriendly places such as the Middle East, Russia and Venezuela. Of course the government knows this -- and wants to grab a big chunk of tax money.
I am sort of sympathetic to the "Why should trusts get away with not paying taxes when corporations have to" argument. My answer is that, simply, neither trusts nor corporations should have to pay taxes. It doesn't really make sense. Business structures are not people. Eliminate all double taxation. Just impose taxes on dividends received by individuals. This would make eliminate a lot of inefficiency.
Yet this is politically impossible. Liberals in Canada as well as the U.S. act like corporations themselves are evil rich people and it'd be a crime against the poor not to tax them.
Canadian income trusts
Canadian income trusts
Saturday, August 4, 2007
Here's a site I found recently that could help you -- their focus is in the right places for income investors -- REITs, energy master limited partnerships, unit trusts, preferred bonds and convertible preferred bonds, fixed income bonds, royalty trusts . . . this site keeps up with yield, prices, news and so on.
ePreferreds Online
Only trouble, it's not free.
They also publish the Yield and Income Newsletter, which covers these same topics on a monthly basis.
I have two reservations.
1. Their newsletter recommendations are from major banks and brokerages. Yes, I know they're the professionals, but they must take a short term approach. They're also the institutions that encourage people to overtrade their stocks.
2. If you follow the news about which REITs are up, which master limited partnerships are down, which preferred bond issues look good, which royalty trusts don't etc -- you'll be tempted to start buying and selling your portfolio. If you get all this information and advice, you might make the mistake of actually trying to use it.
I much prefer a long term approach of diversifying your portfolio with high quality yet high yielding securities of all these types -- and holding them forever.
So I suggest you subscribe while you're still building a portfolio, to take advantage of current trends -- then forget about whether or not bond yields are too high or too low. Cash or reinvest your checks, but spend the rest of your time enjoying life or working a job or business that makes you even more money to invest.
Income Investing Site
Income Investing Site
ePreferreds Online
Only trouble, it's not free.
They also publish the Yield and Income Newsletter, which covers these same topics on a monthly basis.
I have two reservations.
1. Their newsletter recommendations are from major banks and brokerages. Yes, I know they're the professionals, but they must take a short term approach. They're also the institutions that encourage people to overtrade their stocks.
2. If you follow the news about which REITs are up, which master limited partnerships are down, which preferred bond issues look good, which royalty trusts don't etc -- you'll be tempted to start buying and selling your portfolio. If you get all this information and advice, you might make the mistake of actually trying to use it.
I much prefer a long term approach of diversifying your portfolio with high quality yet high yielding securities of all these types -- and holding them forever.
So I suggest you subscribe while you're still building a portfolio, to take advantage of current trends -- then forget about whether or not bond yields are too high or too low. Cash or reinvest your checks, but spend the rest of your time enjoying life or working a job or business that makes you even more money to invest.
Income Investing Site
Income Investing Site
Sunday, July 29, 2007
Next -- Dow 15,000 or 10,000?
Stocks go up, stocks go down.
Do you feel poorer today than you did a week ago, thanks to the 700 pount loss in the Dow Jones Industrial Average?
If so, may I suggest that you need to rethink your investment strategy?
Another long time aphorism came to my mind in thinking about the latest decline in the Dow -- easy come, easy go.
The DJIA went from 13,000 to 14,000 in just 56 days.
Did that 7.7% rise in under 2 months reflect the American economy rising 7.7% in under 2 months? Of course not.
Yet a week ago, millions of investors were once again congratulating themselves on how smart they were to be buying stocks. I have o quarrel with that in general -- it's when you start thinking of market price rises as cash in your pocket, that I suggest you're out of touch with reality.
The truth is, we don't know the future. I don't know whether the market is going to rise or fall tomorrow, and neither do you. Nor do any of the paid commentators and talking heads.
What's more, we have no idea whether the DJIA has attained any unpenetrable "floor" . . . is there an absolute limit on how fair the DJIA can go down now that's at just over 13,000 and has been over 14,000?
We'd like to think that the DJIA will never see 10,000 or 7,000 or 1,000 again -- but we don't know. You have no guarantees. What if Al Quaida terrorists succeeded in setting off atomic or dirty bombs in multiple major American cities, including Manhattan where the New York Stock Exchange is based? How far down would the DJIA go? Who knows? Will that ever happen? I sure hope not. But we have no guarantees.
Nor do we have guarantees against biochemical terrorism, or a natural problem such as bird flu or natural catastrophes such as the flooding global warming allegedly will bring.
The trouble with called price rises in your stocks "capital gains" is that they all too often don't reflect real gains in REAL capital. The traditional economic definition of "capital" is not simply a profit made selling an investment -- that's the IRS's definition -- no, it's the productive assets of one kind or another.
Land, warehouses, forklift trucks, patents. Cash in the bank is simply the liquidity used to obtain capital assets or to pay the expenses associated with running them.
If the stock market were strictly rational, the price of a company's stock would go up only to the degree that the company achieved success in expanding its net capital assets. The price of the overall stock market would go up only to the extent that overall economic activity expanded the value of the country's net capital assets.
Obviously, the stock market is not strictly rational. Efficient, yes -- but not rational.
Of course, a strictly rational stock market would not go up or down in sharp, fast bursts. It wouldn't be so exciting, but you would still have the advantage of participating in the overall growth of the nation's economy. That's still a big advantage over money market accounts.
And if you buy only stock that pays dividends, then you get quarterly checks in your mailbox whether the market price is up or down. Use this drop in the Dow to buy dividend-paying stocks cheap.
They may never be this low again.
(Or maybe they'll get a lot lower -- but you don't know that, and you don't know when. So buy now to start collecting dividend checks now.)
Dow down 700
Dow down 700
Do you feel poorer today than you did a week ago, thanks to the 700 pount loss in the Dow Jones Industrial Average?
If so, may I suggest that you need to rethink your investment strategy?
Another long time aphorism came to my mind in thinking about the latest decline in the Dow -- easy come, easy go.
The DJIA went from 13,000 to 14,000 in just 56 days.
Did that 7.7% rise in under 2 months reflect the American economy rising 7.7% in under 2 months? Of course not.
Yet a week ago, millions of investors were once again congratulating themselves on how smart they were to be buying stocks. I have o quarrel with that in general -- it's when you start thinking of market price rises as cash in your pocket, that I suggest you're out of touch with reality.
The truth is, we don't know the future. I don't know whether the market is going to rise or fall tomorrow, and neither do you. Nor do any of the paid commentators and talking heads.
What's more, we have no idea whether the DJIA has attained any unpenetrable "floor" . . . is there an absolute limit on how fair the DJIA can go down now that's at just over 13,000 and has been over 14,000?
We'd like to think that the DJIA will never see 10,000 or 7,000 or 1,000 again -- but we don't know. You have no guarantees. What if Al Quaida terrorists succeeded in setting off atomic or dirty bombs in multiple major American cities, including Manhattan where the New York Stock Exchange is based? How far down would the DJIA go? Who knows? Will that ever happen? I sure hope not. But we have no guarantees.
Nor do we have guarantees against biochemical terrorism, or a natural problem such as bird flu or natural catastrophes such as the flooding global warming allegedly will bring.
The trouble with called price rises in your stocks "capital gains" is that they all too often don't reflect real gains in REAL capital. The traditional economic definition of "capital" is not simply a profit made selling an investment -- that's the IRS's definition -- no, it's the productive assets of one kind or another.
Land, warehouses, forklift trucks, patents. Cash in the bank is simply the liquidity used to obtain capital assets or to pay the expenses associated with running them.
If the stock market were strictly rational, the price of a company's stock would go up only to the degree that the company achieved success in expanding its net capital assets. The price of the overall stock market would go up only to the extent that overall economic activity expanded the value of the country's net capital assets.
Obviously, the stock market is not strictly rational. Efficient, yes -- but not rational.
Of course, a strictly rational stock market would not go up or down in sharp, fast bursts. It wouldn't be so exciting, but you would still have the advantage of participating in the overall growth of the nation's economy. That's still a big advantage over money market accounts.
And if you buy only stock that pays dividends, then you get quarterly checks in your mailbox whether the market price is up or down. Use this drop in the Dow to buy dividend-paying stocks cheap.
They may never be this low again.
(Or maybe they'll get a lot lower -- but you don't know that, and you don't know when. So buy now to start collecting dividend checks now.)
Dow down 700
Dow down 700
Tuesday, July 24, 2007
What if . . . something unprecedented affects your investments?
Sometimes I wonder whether my way of thinking helps or hurts me when it comes to income investing and investing in general.
I think that if I were to try to get a "real" job in the financial world, I'd be at a disadvantage. That's because the general financial community accepts historical returns and situations, but I'm a long-time science fiction reader (and very minor writer) and therefore am used to asking, "But what if . . . ?"
For example, to the conventional, statistically savvy financial mind, the sun is not going to blow up tonight simply because it's been existence over 4 billion years and hasn't yet blown up. To most people, the sun going nova is simply an incomprehensible event.
But as a science fiction reader I'm used to thinking about suns going nova. If a particular star is about to go nova, it's going to go nova even though it's been in existence for billions of years, and therefore provided billions of mornings to any planets in its solar system.
My only comfort is my understanding -- hopefully not wrong or out of date -- that our particular G class, yellow sun is of a type that doesn't go nova. I put more faith in the findings of astronomers who've studied many stars that have gone nova or not than I do in the narrow, statistical viewpoint of, it hasn't happened in the past 4 billion years so it's not going to happen.
Sorry, but if there's something inside the sun that's about to make it go nova, all the statistics in the world won't stop it.
But, as I mentioned, I'm sure that pension fund managers charged with obtaining optimal performance at a given degree of risk are not interested in statistically highly improbable "long tail" events that may make their forecasts based on historical results irrelevant.
Yet the world is always changing, and sometimes the statistically improbable happens. In 1998 the Long Term Capital Asset "hedge" (I use quotes because they did not hedge their trades, but rather leveraged them 100 to 1 or more) fund placed a lot of money -- huge amounts of it borrowed -- on a derivative contract based on the historical relationship between United States and Danish government bonds.
In the summer of the 1998, a "what if" occurred that they didn't think of, despite their Nobel prizes in Economics and PhDs and Masters . . . The sun didn't go nova, but the Russian stock market did "melt down" -- losing about 90% of its value. This, following the Asian currency crisis of 1997, frightened people in developing countries around the world so much that the shipped all the cash they could to the United States and bought United States Treasury bonds, driving their price far past its historical relationship with Danish government bonds.
Net result -- Long Term Capital Asset not only lost all its investors' money and went bankrupt, the New York Federal Reserve Bank had to intervene to prevent a massive breakdown of the United States (and, probably, world) financial systems.
So . . . what if millions of retiring baby boomers start selling their non-dividend paying, "growth" stocks?
What if . . . ?
What if . . . ?
I think that if I were to try to get a "real" job in the financial world, I'd be at a disadvantage. That's because the general financial community accepts historical returns and situations, but I'm a long-time science fiction reader (and very minor writer) and therefore am used to asking, "But what if . . . ?"
For example, to the conventional, statistically savvy financial mind, the sun is not going to blow up tonight simply because it's been existence over 4 billion years and hasn't yet blown up. To most people, the sun going nova is simply an incomprehensible event.
But as a science fiction reader I'm used to thinking about suns going nova. If a particular star is about to go nova, it's going to go nova even though it's been in existence for billions of years, and therefore provided billions of mornings to any planets in its solar system.
My only comfort is my understanding -- hopefully not wrong or out of date -- that our particular G class, yellow sun is of a type that doesn't go nova. I put more faith in the findings of astronomers who've studied many stars that have gone nova or not than I do in the narrow, statistical viewpoint of, it hasn't happened in the past 4 billion years so it's not going to happen.
Sorry, but if there's something inside the sun that's about to make it go nova, all the statistics in the world won't stop it.
But, as I mentioned, I'm sure that pension fund managers charged with obtaining optimal performance at a given degree of risk are not interested in statistically highly improbable "long tail" events that may make their forecasts based on historical results irrelevant.
Yet the world is always changing, and sometimes the statistically improbable happens. In 1998 the Long Term Capital Asset "hedge" (I use quotes because they did not hedge their trades, but rather leveraged them 100 to 1 or more) fund placed a lot of money -- huge amounts of it borrowed -- on a derivative contract based on the historical relationship between United States and Danish government bonds.
In the summer of the 1998, a "what if" occurred that they didn't think of, despite their Nobel prizes in Economics and PhDs and Masters . . . The sun didn't go nova, but the Russian stock market did "melt down" -- losing about 90% of its value. This, following the Asian currency crisis of 1997, frightened people in developing countries around the world so much that the shipped all the cash they could to the United States and bought United States Treasury bonds, driving their price far past its historical relationship with Danish government bonds.
Net result -- Long Term Capital Asset not only lost all its investors' money and went bankrupt, the New York Federal Reserve Bank had to intervene to prevent a massive breakdown of the United States (and, probably, world) financial systems.
So . . . what if millions of retiring baby boomers start selling their non-dividend paying, "growth" stocks?
What if . . . ?
What if . . . ?
Monday, July 23, 2007
Dow 14,000, and on up!
I meant to mention it earlier, but I did notice that the Dow Jones Average closed above 14,000 for the first time in history. Hip, hip hooray!
If you're accumulating stock, you should be sorry that the shares you are going to be buying now will be more expensive -- but only Warren Buffett and I seem to have figured that out. It seems to be immutable human nature in everyone else to place more importance on the total value of the stock shares they've already bought than on the price they're going to pay in the near future.
One reason is that we celebrate capital gains over dividends is the difference in tax treatment. This was alleviated by President Bush's tax cuts of 2003, but unfortunately that law is temporary. If Democrats are in charge in the future, they've made it known that they'll allow the lower tax rates on dividends to expire.
This would be bad, but I still advise investing for income. To get the preferential tax treatment on capital gains, you still have to realize those capital gains by selling them. And with many stocks after the baby boomers start to retire, you may not have any capital gains.
But the run up to Dow 18-20,000 foretold by Harry S. Dent seems to have begun.
DOW 14,000
DOW 14,000
If you're accumulating stock, you should be sorry that the shares you are going to be buying now will be more expensive -- but only Warren Buffett and I seem to have figured that out. It seems to be immutable human nature in everyone else to place more importance on the total value of the stock shares they've already bought than on the price they're going to pay in the near future.
One reason is that we celebrate capital gains over dividends is the difference in tax treatment. This was alleviated by President Bush's tax cuts of 2003, but unfortunately that law is temporary. If Democrats are in charge in the future, they've made it known that they'll allow the lower tax rates on dividends to expire.
This would be bad, but I still advise investing for income. To get the preferential tax treatment on capital gains, you still have to realize those capital gains by selling them. And with many stocks after the baby boomers start to retire, you may not have any capital gains.
But the run up to Dow 18-20,000 foretold by Harry S. Dent seems to have begun.
DOW 14,000
DOW 14,000
Subscribe to:
Posts (Atom)