Here’s an interesting Money magazine article about finding value in today’s market …
You’ll notice that it reinforces much of what we’ve ALREADY been doing in Dividend Superstars, including focusing on market lagards (something that I’ve been writing about extensively) as well as focusing on dividends.
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Foreign demand for U.S. Treasuries dropped at the greatest rate in history during December, according to Washington.
Could this be the long-awaited beginning of a spike in interest rates?
The full story is here.
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According to this New York Times article, China’s sovereign wealth fund has been buying stakes in some of our country’s biggest (and best) companies – including Coca-Cola, Apple, and Johnson & Johnson.
All told, China put $9 billion to work in U.S. stocks last year.
So, once again, I’d like to reiterate my stance that high-quality U.S. companies still have real value. In fact, I consider them the best wealth-building vehicles on the planet. And apparently the Chinese can see that, too.
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This great article by Fortune’s Allan Sloan points out that Social Security is technically bringing in less than it’s paying out right now.
According to Sloan,
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No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn’t provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.”
This is the first time since the 1980s that Social Security has run into such a problem, but as I’ve been pointing out over and over, just 7 years from now (and possibly sooner) this will become a permanent situation according to estimates.
As I’ll be telling my Money Show workshop this afternoon, you absolutely must start preparing for changes related to this worsening situation now.
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Just a quick note that I’ll be flying down to Orlando tomorrow for the Money Show. If you’ll be there, I hope to meet you in person on Thursday or Friday!
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Are investors setting themselves up for disappointment? Sure seems that way … http://finance.yahoo.com/retirement/article/108608/why-many-investors-keep-fooling-themselves?mod=retire-planning
Something I continually stress in Dividend Superstars and elsewhere is the idea that we should be glad with consistent returns via dividends, reinvestment, long-term capital gains, etc. … and that we should minimize the impact of taxes, commissions, and other frictional costs.
But obviously even many professional investors fail to understand that slow and steady really does win the race!
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It’s something we’ve been saying at Weiss consistently over the last year — stay away from longer-term Treasuries.
And now, as the year comes to a close, you’re seeing why … the “safe” investments are having their worst year in decades.
Interestingly enough, the story linked above says:
“Individuals are among the biggest recent buyers of Treasurys, alongside the usual suspects such as foreign investors and money market funds.”
This is just yet another example of how investors need to think for themselves, and anticipate rather than react.
I’ve said it before, but the time to buy inflation protection is when people are worried about deflation …
The time to scoop up junk bonds is when the world is supposedly collapsing …
The time to buy long-term Treasuries will be when yields are above long-term historical averages.
And that time could be coming sooner than you think. =^)
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I just dug up the link to the WSJ story I was talking about. Here it is …
Separately, here’s another interesting article on the legions of underemployed currently in the U.S. …
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Look, I don’t want to come across as callous, but I’m tired of hearing stories about people who clearly got themselves into messes … are now suffering … and yet seem unwilling to change or recalibrate the lifestyles they’ve come to expect.
This recent Wall Street Journal piece is a good example. I mean, a $650,000 house for a police offer and a real estate agent? That’s bad enough. But then a refinance to pay for college costs and a wedding?
And then there’s that quick little line about the HORSES!
Really, folks. This is entitlement at its finest.
But at least I can applaud the Gindlesperger for trying to stick it out and for taking their lumps in what was clearly their bad decision.
It’s the other stories that get me even madder - including the tales about highly-paid workers who have gotten laid off and have been turning down jobs either because the title wasn’t good enough or the pay was — while still WAY abovve me most salaries — not high enough for them. All the while, they collect unemployment, complain, and continue sending their kids to expensive private schools.
I read one story about a bank executive who has been burning through his $200,00 severance package and turning down jobs because they paid only $150,000 not the $200,000 he was accustomed to!
Like I said, I feel bad for the real victims of this crisis. The people who worked hard at their regular jobs and got laid off because middle managers were saving their own hides. The responsible savers and investors who are getting paid bupkiss in interest. The taxpayers who are footing the bill for all the extensions and credits being doled out now.
But I certainly do not feel any pity for people who cannot step back and to their current situations.
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Wynn Resorts (WYNN) just said it will pay a special cash dividend of $4 a share AND begin a $0.20 quarterly dividend in 2010.
Now don’t get me wrong — I’m happy to see another company begin issuing shareholder payments. But I’m just a little surprised to see this announcement coming from a highly cyclical hotel company …
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