June was the best month of the year performance wise as we finished with an annualized return of 17.88%. This is net of expenses and all interest charges. Good income from communications, cigarette, and oil option trading. Highlight of the month was a large gain from a Lorrilard trade. We also continued from May much lower interest expenses. We were helped by having a larger number of positions to trade in June. Our annual goal is 18%, so despite the good month were remain focused on improving our return going forward.
The mid-year report was also good, but below goal at 16.09% net for the six months of trading. Our dividend gains, expenses, and interest costs were in line with expectations for the trading activity.
Looking forward to July we expect less profits since we will have 25% less trading positions available due to the stock assignments during June. These assignments required longer expiration options to stay within hedge fund required trading goals. However the positions we do have offer some solid profit opportunities. There is also the chance we could gain back some assigned positions during July market activity. Interest costs could likely be larger than normal with the balance sheet leveraged more than usual.
July also remains a mystery market wise as we await what transpires when the Federal Reserve ceases QE2. Carry forward losses are significant in long positions, but none concern us except for the legacy communication stocks FTR and WIN. Both positions we are looking to end this year. Due to the uncertainly of the markets we continue to keep trading positions highly concentrated in large caps and less volatile positions. Looking out six months to the end of 2012 I would expect that the 17% plus gains of the last two months will not be duplicated going forward, but we do expect 15% plus gains and that performance still is ahead of most hedge funds this year as well as many mutual funds.
Thursday, June 30, 2011
Monday, June 27, 2011
Bernanke, Washington, Greece, and You
Unless you live under a rock you know there are many things going on right now in the economy and markets and frankly many of them are not positive for investments or investing.
The Federal Reserve is basically done with Quantitative Easing or the relentless printing of money that propped up the economy over the last year or so. What remains is how quickly Bernanke not only decides to recycle the vast amounts of dollars out there and when will he feel the need to begin pulling some of that cash back into his pot. Inflation has been rearing it's ugly head in increased prices of energy and food. It is just a matter of time before we see it in other consumer prices. The only thing that is saving us from big time inflation is that the economy is actually slowing, not expanding. If we actually start growing the economy and adding real jobs we will see significant increases in demand and inflation. Little known fact is since January 2008 not a single FULL TIME net job has been added, only temporary positions. Timing is critical for Bernanke, but he also has no control over the political decisions in Washington that will effect which way the economy moves. I frankly also remain quite concerned about who is going to buy the federal government debt being pushed out in $100 billion dollars plus each month, now that the Federal Reserve will no longer by buying $75 billion or so each month. How interest rates can not move upward soon is just a foregone conclusion in my opinion.
Into this end of money printing comes continued debt by Obama and the federal government. We also will see very soon if Congress, specifically the House of Representative will bend under the media and administration pressure of wanting to just keep on keeping on with building up mountains of debt. Obama is frankly worried that the economy is slowing and that re-election odds are getting long with Americans growing increasingly tired of rhetoric and no action on the economy and jobs. Obama's approach is to keep adding debt, regulation, and taxes and hope he can run out the clock to re-election. It is a serious and frightful game he is playing. Something must give soon and whoever wins in November 2012 has a heck of a mess on their hands. Personally I believe the game over increasing the debt limit is likely the last finger in the dike before it breaks. Be careful, be VERY careful if you own US government bonds if debt keeps on growing and the dollar finally gets killed in world markets. The dollar as world currency is the last inheritance we have from the WorlWar Two generation and we are blowing it rather quickly now.
If you want to see what happens when debt becomes unsustainable take a look at the situation in Greece. They owe about $56 billion in INTEREST each year and have tax revenue of around $40 billion each year, even the dumbest person can see that default is not if, but when. Germany has been loaning good money after bad to Greece to avoid the pain of Greek bonds held by German's going into default. French bankers are on the hook here too. Everyone knows if Greece defaults, Portugal follows, Ireland follows, and likely Spain as well. Again, if you own bonds be very careful, even US government bonds. Now Obama has stepped into this mess offering to loan money to Greece to help them out. Money the US does not have, and will borrow from China. The reason is simple if this house of cards collapses the world economy tumbles with it and Obama begins planning his new library in Chicago. Angela Merkel, German Prime Minister, is likely gone in the next election, as Germans are mad as hell that their hard work and savings are going to save Greeks who have been less than diligent with finances. I think it is interesting that China has also made inquiries into this monetary mess offering to buy Greek bonds, but of course with shall we say much more strings attached that Merkel or Obama is offering.
How does all this relate to you. Putting it simply if you have savings and investments, or if you have nothing, you are likely going to get screwed. Inflation will eat at savings and bond values, inflation will eat at your monthly expenses, Obama and Greece is looking after themselves and not you, and both will trade away anything to keep afloat. I do mean afloat as neither Obama or Greece is going to make anything better in this monetary environment.
I suppose the question here is are there any grownups left, who know how to take control of things and make things work again. The Greatest Generation is over the hill and heading away, so no help there. In times past someone stepped forward and did the adult things and made everyone take their medicine and pain and turned things around. Currently that person is not anywhere to be seen. Of course you could do the real smart thing and go find your bed and hide underneath it. That seems to be what many of the American public has done since no one seems to care about this mess. Soon they will have no choice. For me I enjoy moments like this, trouble breeds opportunities and if things really go to hell I can just wait for the young folks to be taxed to death to pay my medicare and social security.
The Federal Reserve is basically done with Quantitative Easing or the relentless printing of money that propped up the economy over the last year or so. What remains is how quickly Bernanke not only decides to recycle the vast amounts of dollars out there and when will he feel the need to begin pulling some of that cash back into his pot. Inflation has been rearing it's ugly head in increased prices of energy and food. It is just a matter of time before we see it in other consumer prices. The only thing that is saving us from big time inflation is that the economy is actually slowing, not expanding. If we actually start growing the economy and adding real jobs we will see significant increases in demand and inflation. Little known fact is since January 2008 not a single FULL TIME net job has been added, only temporary positions. Timing is critical for Bernanke, but he also has no control over the political decisions in Washington that will effect which way the economy moves. I frankly also remain quite concerned about who is going to buy the federal government debt being pushed out in $100 billion dollars plus each month, now that the Federal Reserve will no longer by buying $75 billion or so each month. How interest rates can not move upward soon is just a foregone conclusion in my opinion.
Into this end of money printing comes continued debt by Obama and the federal government. We also will see very soon if Congress, specifically the House of Representative will bend under the media and administration pressure of wanting to just keep on keeping on with building up mountains of debt. Obama is frankly worried that the economy is slowing and that re-election odds are getting long with Americans growing increasingly tired of rhetoric and no action on the economy and jobs. Obama's approach is to keep adding debt, regulation, and taxes and hope he can run out the clock to re-election. It is a serious and frightful game he is playing. Something must give soon and whoever wins in November 2012 has a heck of a mess on their hands. Personally I believe the game over increasing the debt limit is likely the last finger in the dike before it breaks. Be careful, be VERY careful if you own US government bonds if debt keeps on growing and the dollar finally gets killed in world markets. The dollar as world currency is the last inheritance we have from the WorlWar Two generation and we are blowing it rather quickly now.
If you want to see what happens when debt becomes unsustainable take a look at the situation in Greece. They owe about $56 billion in INTEREST each year and have tax revenue of around $40 billion each year, even the dumbest person can see that default is not if, but when. Germany has been loaning good money after bad to Greece to avoid the pain of Greek bonds held by German's going into default. French bankers are on the hook here too. Everyone knows if Greece defaults, Portugal follows, Ireland follows, and likely Spain as well. Again, if you own bonds be very careful, even US government bonds. Now Obama has stepped into this mess offering to loan money to Greece to help them out. Money the US does not have, and will borrow from China. The reason is simple if this house of cards collapses the world economy tumbles with it and Obama begins planning his new library in Chicago. Angela Merkel, German Prime Minister, is likely gone in the next election, as Germans are mad as hell that their hard work and savings are going to save Greeks who have been less than diligent with finances. I think it is interesting that China has also made inquiries into this monetary mess offering to buy Greek bonds, but of course with shall we say much more strings attached that Merkel or Obama is offering.
How does all this relate to you. Putting it simply if you have savings and investments, or if you have nothing, you are likely going to get screwed. Inflation will eat at savings and bond values, inflation will eat at your monthly expenses, Obama and Greece is looking after themselves and not you, and both will trade away anything to keep afloat. I do mean afloat as neither Obama or Greece is going to make anything better in this monetary environment.
I suppose the question here is are there any grownups left, who know how to take control of things and make things work again. The Greatest Generation is over the hill and heading away, so no help there. In times past someone stepped forward and did the adult things and made everyone take their medicine and pain and turned things around. Currently that person is not anywhere to be seen. Of course you could do the real smart thing and go find your bed and hide underneath it. That seems to be what many of the American public has done since no one seems to care about this mess. Soon they will have no choice. For me I enjoy moments like this, trouble breeds opportunities and if things really go to hell I can just wait for the young folks to be taxed to death to pay my medicare and social security.
Million Dollar Moments
Many currently wealthy families made their wealth in what I shall name "million dollar moments" . The last one of these occurred in the 1930"s. It was then in the depths of the Great Depression that someone in a family made a bet on the future. I have lived in three counties in North Carolina where I can see the wealth those families created at the precise moment everyone else was headed for the hills. Being able to be foresight when others are fearful is the steel that can make your family filthy rich. In a county south of us a family made a huge bet on farming back in the 1930's and bought up land and started a supply business that allowed them to not only survive, but thrive in the Great Depression. In doing so, taking whatever they had and betting the ranch, they made their generation and future generations very well off. In a county to our east a family bought into farm equipment and trucking during the Great Depression and made a fortune. In the county I currently live a family made a huge fortune being conservative bankers during the Great Depression, when many other banks were going under. In all these cases great risks were taken and rewards just as great. I expect there is a family in your area that did the same thing back in that million dollar moment.
I have already mentioned to you in another posting one serious opportunity that can bring you future wealth that is available right not. Many people, many young people, bought homes the last ten years and now are under water in their mortgage. Frankly they should have waited on the purchase of real estate if for investment purposes. Today residential real estate is a steal. Yes, if might go lower, but many opportunities are lost while waiting for the absolute bottom. If you financially sound and have good income, good out buy as much home as you can afford. You will get a low interest rate and a way below market price. Be selective and be patient, but buy. Buy a home to live in, not a house. Twenty years from now you will be richly rewarded with a almost paid off home and serious capital appreciation. You will also be the envy of your friends when they discuss mortgage loan rates.
Are there other opportunities for great wealth such as the Depression investments available now or soon? Frankly I do not know as most of these investments took long sighted individuals who could see past the prevailing problems and I do not possess such insight. The key here is to find investments where fear is rampant and the future bright. Sometime in the next couple of years the US Government will either make a decision to get a handle on their growing debt or they will not. If the government does not I expect we will again see a moment where asset values are ravaged and opportunities for future wealth will emerge. I leave it to you to find your Million Dollar Moment.
I have already mentioned to you in another posting one serious opportunity that can bring you future wealth that is available right not. Many people, many young people, bought homes the last ten years and now are under water in their mortgage. Frankly they should have waited on the purchase of real estate if for investment purposes. Today residential real estate is a steal. Yes, if might go lower, but many opportunities are lost while waiting for the absolute bottom. If you financially sound and have good income, good out buy as much home as you can afford. You will get a low interest rate and a way below market price. Be selective and be patient, but buy. Buy a home to live in, not a house. Twenty years from now you will be richly rewarded with a almost paid off home and serious capital appreciation. You will also be the envy of your friends when they discuss mortgage loan rates.
Are there other opportunities for great wealth such as the Depression investments available now or soon? Frankly I do not know as most of these investments took long sighted individuals who could see past the prevailing problems and I do not possess such insight. The key here is to find investments where fear is rampant and the future bright. Sometime in the next couple of years the US Government will either make a decision to get a handle on their growing debt or they will not. If the government does not I expect we will again see a moment where asset values are ravaged and opportunities for future wealth will emerge. I leave it to you to find your Million Dollar Moment.
Thursday, June 23, 2011
The Bullets are all gone.
This morning's release of oil from the US Petroleum Reserve makes it clear the Obama administration has run out of bullets. At Bernanke's press confernce yesterday the Fed Chairman admitted that he had run out of bullets as well. Oh, he tried to say he had some ammo left, but anyone who knows the situation knows the fed has used up every weapon he has to kick-start the economy. The only choice he has left is to continue and accelerate his printing of money. But that piece of ammo is the very very last resort because with inflation already accelerating via oil and food prices, printing more money would only push inflation up faster and do nothing to help the economy. Oil's increase in price is why Obama has choose to release the oil reserve this morning. His hope is it will hurt oil traders enough to get them to back off of aggressive positions and make OPEC back off as well. As with the fed, Obama's effort will not work either as it will only temporarily slow down the oil advance. Deficit spending has already put a fire under prices and oil gimmicks will only be a short term fix.
This we arrive at a point where the massive stimulus spending and printing of money did little to produce economic growth. Many believe we should spend even more stimulus money, but these people are either fools and just plain stupid. More debt will only hurry the day of reckoning for the country.
As I have opined before the only hope now is to cut federal and state government spending and lower regulation and tax rates on SMALL BUSINESS origination. Cutting government spending will release money to individuals to spend and capital to lend for small business to grow and originate. Lowering taxes on small business will allow them to keep more money to invest and hire and to encourage those who might start a business to do so.
These ideas are not new and have been tried before with great success. Those of us who remember the early 1980's watched it work and with it the greatest expansion of wealth and business the world has ever seen occur during the 1980's. Why not do this again? Because the current people in charge, Obama and Bernanke, do not see it that way.
So we likely will continue on this bouncing on the bottom, no new jobs, no new small business, and no growth. Despite the silly talk of lower unemployment we have less people employed now than in the year 2000, or 2008. Add in the current continued bashing of business and corporations and this is what you get.
What to do as an investor? Find good DIVIDEND paying large cap stocks and hide until someone somewhere decides to make a change in policy, or the voters make a change in leadership. Large cap companies know how to survive and are doing so in this enviroment. Why do you think they are not hiring, to save expenses and to be wise with capital when there is no growth in sales to be had.
I continue to eat my own cooking and the stocks I am in are S&P 500 for the most part and will continue to be so for the foreseeable future.
This we arrive at a point where the massive stimulus spending and printing of money did little to produce economic growth. Many believe we should spend even more stimulus money, but these people are either fools and just plain stupid. More debt will only hurry the day of reckoning for the country.
As I have opined before the only hope now is to cut federal and state government spending and lower regulation and tax rates on SMALL BUSINESS origination. Cutting government spending will release money to individuals to spend and capital to lend for small business to grow and originate. Lowering taxes on small business will allow them to keep more money to invest and hire and to encourage those who might start a business to do so.
These ideas are not new and have been tried before with great success. Those of us who remember the early 1980's watched it work and with it the greatest expansion of wealth and business the world has ever seen occur during the 1980's. Why not do this again? Because the current people in charge, Obama and Bernanke, do not see it that way.
So we likely will continue on this bouncing on the bottom, no new jobs, no new small business, and no growth. Despite the silly talk of lower unemployment we have less people employed now than in the year 2000, or 2008. Add in the current continued bashing of business and corporations and this is what you get.
What to do as an investor? Find good DIVIDEND paying large cap stocks and hide until someone somewhere decides to make a change in policy, or the voters make a change in leadership. Large cap companies know how to survive and are doing so in this enviroment. Why do you think they are not hiring, to save expenses and to be wise with capital when there is no growth in sales to be had.
I continue to eat my own cooking and the stocks I am in are S&P 500 for the most part and will continue to be so for the foreseeable future.
Tuesday, June 21, 2011
My Largest Position Ever
My trading style is to spread out my risk by taking numerous positions in diverse industries. Rarely do I take $100k plus positions. I currently hold one position of that size ERF at $111600. I have suggested that security to others and I eat my own cooking. With this post I will take a position larger than that for the first time ever. At $126000 my just executed trade in a put option in Lorrilard, LO, will move my risk quotient up a good bit. I have never lost money in this security and expect the continued high level of option prices and volatile stock price will continue until President Obama and his FDA finally make a definitive statement on the banning of menthol in cigarettes. As I have noted before I can not see this happening as the banning of this ingredient in cigarettes will immediately create a black market in the smokes. The worry is the zealots on the FDA board will go ahead and do it anyway. I also can not see Obama allowing this ban due the fat the predominance of menthol smokers are black, not a wise election season decision there.
So with all this uncertainty an opportunity lies and I am stepping in and taking advantage by upping my bet considerably higher.
So with all this uncertainty an opportunity lies and I am stepping in and taking advantage by upping my bet considerably higher.
Monday, June 20, 2011
Your Chickens have come Home to Roost.
The news of PNC Bank buying the banking assets of RBC Bank in the United States should come as no surprise to anyone who has been keeping up with the banking business lately. You can expect additional sales of smaller banks to larger banks and the resulting layoffs to continue for some time in the future. The reason is simple, the recently passed financial regulation bill is forcing banks to find additional ways to make money since many avenues were taken away by the new law. The Dodd-Frank financial regulation bill supported and signed by President Obama is also designed to push financial institutions to get larger, which will make it easier for the federal government to oversee them.
Many of you supported this law which restricted banks from charging fees for overdrafts among other things that cut down on places banks could make profits. But in that case, like most cases, the banks were asking people who cost the bank more to pay more. Many people love to hate banks, but without banks the financial system in this country could not function. In many ways banks are a regulated monopoly of the federal government. I actually approve of many regulations since we the taxpayers back the deposits with FDIC insurance. However beyond the requirement that banks keep an appropriate amount of capital to insure protection of depositers and taxpayers there should be less regulation. That is why we have bank holding companies which basically make the interest of shareholders seperate from depositers and taxpayers.
Unfortunately the federal government, via congresspeople and presidential administrations, tend to want to use banks for their personal agendas. The results are usually bad. In the case of the recent subprime debacle the results were catastropic. Banks had a hand in that mess, but the impetus for the problems began with President Clinton, then added in President Bush, Congressperson Barney Frank, and Congressperson Chris Dodd as the leading problem makers. All of these people wanted everyone who could even come close to buying to home to have one and pushed banks to issue mortgages to almost every possible homeowner. To make the deal work the feds used Fannie Mae and Freddic Mac, the two quasi-government agencies, to insure the mortgages so the banks could legally issue them. Of course we now know too many people got mortgages and the result was a breakdown of the financial system via the vastly overbuild home market.
The recent law also limits debit card fees for banks to 12 cents per transaction. Congress just last week seeing trouble ahead tried to end that restriction only to see the change go down in defeat. Note that Senator Chuck Schumer, not exactly a raging conservative, backed the change. Being a New York Senator he had been told by the bankers in NY of the problems down the road from this one regulation in the Dodd-Frank bill. Mainly that small banks can not survive from the smaller fee and banks will have to merge to make money. Trust me there is more problems to come from this bill.
Besides the fact restricting bank fees by regulation is just not good capitalism, frankly what it does it make the fee NO LOWER than 12 cents for those banks who actually might have wanted to lower the fee to attract customers. Minimum anything is like giving licence to those who want to make money and kill off competitors.
All this is to say you the voter wanted this bill and voted in 2012 for this much heavier hand of regulation. Congress and President Obama obiliged you with the new bill and regulations. Of course as usual the federal government took the regulations too far. We never learn, since we have been down this path just a few years ago and did not then. In this case to quote a recent Chicago preacher "your chickens have come home to roost". They are roosting with additional job cuts and soon to be slower economy for all you already looking jobs. Now many of you will blame the banks and corportations, but in this case the finger should be pointed towards you the voter. These companies, unlike the government, must make money to survive. They must make enough profit to attract shareholders to give them the capital to grow and prosper. Welcome to your new financial world since you helped create it.
Many of you supported this law which restricted banks from charging fees for overdrafts among other things that cut down on places banks could make profits. But in that case, like most cases, the banks were asking people who cost the bank more to pay more. Many people love to hate banks, but without banks the financial system in this country could not function. In many ways banks are a regulated monopoly of the federal government. I actually approve of many regulations since we the taxpayers back the deposits with FDIC insurance. However beyond the requirement that banks keep an appropriate amount of capital to insure protection of depositers and taxpayers there should be less regulation. That is why we have bank holding companies which basically make the interest of shareholders seperate from depositers and taxpayers.
Unfortunately the federal government, via congresspeople and presidential administrations, tend to want to use banks for their personal agendas. The results are usually bad. In the case of the recent subprime debacle the results were catastropic. Banks had a hand in that mess, but the impetus for the problems began with President Clinton, then added in President Bush, Congressperson Barney Frank, and Congressperson Chris Dodd as the leading problem makers. All of these people wanted everyone who could even come close to buying to home to have one and pushed banks to issue mortgages to almost every possible homeowner. To make the deal work the feds used Fannie Mae and Freddic Mac, the two quasi-government agencies, to insure the mortgages so the banks could legally issue them. Of course we now know too many people got mortgages and the result was a breakdown of the financial system via the vastly overbuild home market.
The recent law also limits debit card fees for banks to 12 cents per transaction. Congress just last week seeing trouble ahead tried to end that restriction only to see the change go down in defeat. Note that Senator Chuck Schumer, not exactly a raging conservative, backed the change. Being a New York Senator he had been told by the bankers in NY of the problems down the road from this one regulation in the Dodd-Frank bill. Mainly that small banks can not survive from the smaller fee and banks will have to merge to make money. Trust me there is more problems to come from this bill.
Besides the fact restricting bank fees by regulation is just not good capitalism, frankly what it does it make the fee NO LOWER than 12 cents for those banks who actually might have wanted to lower the fee to attract customers. Minimum anything is like giving licence to those who want to make money and kill off competitors.
All this is to say you the voter wanted this bill and voted in 2012 for this much heavier hand of regulation. Congress and President Obama obiliged you with the new bill and regulations. Of course as usual the federal government took the regulations too far. We never learn, since we have been down this path just a few years ago and did not then. In this case to quote a recent Chicago preacher "your chickens have come home to roost". They are roosting with additional job cuts and soon to be slower economy for all you already looking jobs. Now many of you will blame the banks and corportations, but in this case the finger should be pointed towards you the voter. These companies, unlike the government, must make money to survive. They must make enough profit to attract shareholders to give them the capital to grow and prosper. Welcome to your new financial world since you helped create it.
Friday, June 17, 2011
Management Rules for Success
A few weeks ago I posted some rules for salespeople, today I will post some rules for management.
1. Management is a practice just like medicine and law. It is not a science, it is a art. As with any art each person you manage is different and has different ways to be motivated. A good manager finds those "pressure points" and uses them to enhance the person's performance. Always, always remember employees are people and each is just as important as any person in the organization no matter what level of position.
2. Good leaders give credit to others, never allow themselves to be set apart from the people they manage. The person who did this best was Coach Dean Smith. No one ever was able to deflect praise and acclaim like Dean. That is what made him so special to his players, his staff, and the fans. Everyone knew he deserved the praise and Dean sincerely believed others deserved it. Take a look at today's leaders who can get things done and you will see the ability to allow others to accept credit for achievements. Ever wonder why almost all politicians are so disliked, this is the reason why. If you sincerely want others to get credit for the job done well you will be a good manager.
3. Top 10% of managers are not always the smartest people, nor did they have the always best grades in school. Management, unlike sales, is a leaned skill. Most importantly it is a skill that lends itself to the talent to get others to achieve goals. A unique talent for building a team concept and team atmosphere. Inspiration and hard work is more, much more important than how smart you are.
4. Great managers have attainable character traits. Qualities and habits that can be learned. The willingness to do whatever is necessary to achieve the shared goals and qualities such as realizing there are always alternatives to the way things are presently done. They also know that the people that came before them were not dumb as others and you might think at the time. They had purpose in how they did tasks and good managers do not waste time blaming those who came before them.
5. Good managers know their edge, their circle of competency. You can never be excellent and I do mean EXCELLENT at lots of skill sets. Therefore get really good at least one or two things and then use them to win competitive battles, Make sure those battles are fought on your turf. Being a professional means I know I can get it done, so get out of the way and let me do it.
6. Good managers do not cut corners. Integrity will get you through most any hard patch and win you converts be they your employees, your customers, or your boss.
1. Management is a practice just like medicine and law. It is not a science, it is a art. As with any art each person you manage is different and has different ways to be motivated. A good manager finds those "pressure points" and uses them to enhance the person's performance. Always, always remember employees are people and each is just as important as any person in the organization no matter what level of position.
2. Good leaders give credit to others, never allow themselves to be set apart from the people they manage. The person who did this best was Coach Dean Smith. No one ever was able to deflect praise and acclaim like Dean. That is what made him so special to his players, his staff, and the fans. Everyone knew he deserved the praise and Dean sincerely believed others deserved it. Take a look at today's leaders who can get things done and you will see the ability to allow others to accept credit for achievements. Ever wonder why almost all politicians are so disliked, this is the reason why. If you sincerely want others to get credit for the job done well you will be a good manager.
3. Top 10% of managers are not always the smartest people, nor did they have the always best grades in school. Management, unlike sales, is a leaned skill. Most importantly it is a skill that lends itself to the talent to get others to achieve goals. A unique talent for building a team concept and team atmosphere. Inspiration and hard work is more, much more important than how smart you are.
4. Great managers have attainable character traits. Qualities and habits that can be learned. The willingness to do whatever is necessary to achieve the shared goals and qualities such as realizing there are always alternatives to the way things are presently done. They also know that the people that came before them were not dumb as others and you might think at the time. They had purpose in how they did tasks and good managers do not waste time blaming those who came before them.
5. Good managers know their edge, their circle of competency. You can never be excellent and I do mean EXCELLENT at lots of skill sets. Therefore get really good at least one or two things and then use them to win competitive battles, Make sure those battles are fought on your turf. Being a professional means I know I can get it done, so get out of the way and let me do it.
6. Good managers do not cut corners. Integrity will get you through most any hard patch and win you converts be they your employees, your customers, or your boss.
Thursday, June 16, 2011
Stocks to Sell
Most investment houses will not give you a list of stocks they are NOT recommending. This fact is true because most of these firms want to do business with public companies. They do business when the shareholder owned companies want to float more shares, sell some bonds, or issue preferred stock. So they most likely will issue a statement on a stock saying it is a "hold". "Hold" could mean anything from an actual hold to a outright sell. Investment houses have gotten better since the economic downturn, but you still have to be careful and read their fine print at the bottom of the page. Anyway I am under no obligation and can have an opinion, so here goes on an area I keep close research on. The stocks below are in my opinion "sells".
First Energy..FE...This stock has just run up too far too fast since it's merger with Alleghany earlier this year. Buy at your own risk Take a look at the chart and the 20 PE and it is obvious to anyone but the biggest fool. However that is not the real problem here. The real problem is FE now supplies electricity via Alleghany to the state of Maryland. There are not many states worse for regulated utilities than Maryland.
USA Mobility....This company provides messaging and other communications services to medical, government, and emergency personal in the country. Now again the 6.5% dividend looks sweet, but this is not your cell phone operation, this is a basically a pager service. Now I do not know about you, but with the ever evolving technology regarding smart phones I have no desire to own an outdated technology that is getting replaced daily.
PCH..Potlatch Corp...This is a timber company and they own lots of good timber in good places to grow timber. Only one problem they are not earning their dividend. Not earning your dividend is ok only in situations where your cash flow is high and is being covered by large depreciation such as legacy phone companies. In PCH's case it is selling assets such as land to cover the dividend.so sooner or later if this does not stop the company basically sells itself away.
LLY..Eli Lilly... I have liked pharmaceutical companies for many years as they are a valuable tool in combating disease and actually save health care expense. Obamacare is not a plus for these companies and I expect long term most of them will not be good stocks since the incentive to invest in new drug compounds is no longer there. However LLY has other problems, there two largest patents representing about 40% of sales, loses patent protection this year. So with no new drugs in the pipeline currently and Obamacare taking away incentive to produce more this drug company is the first to feel the effects of the new healthcare plan. Nice dividend, declining value.
BAC and C..Bank of America and Citigroup...These banks who used to be powerhouse financial operations are a shell of what they used to be. Back just three years ago both were paying nice dividends and had stock prices that were solid. Today they barely pay dividends, and buying stock in them at any price is a losers bet. This my friends is what mismanagement on a huge scale gets you. Frankly I would extend the sell rating on just about any large bank stock. For awhile this year I liked some of the smaller banks, but have decided that many small banks are going the way of the dinosaur. They have serious difficulty trying to operate profitably under the new Dodd Frank finance rules. Ten years from now there will be a handful of small banks left that will operate as boutique banks.
PDLI..PDl Biopharma...Earlier this year I thought I had found a sweet drug stock. Paid good dividends and worked the bio-med sector. One problem this company owns expiring patents. Seems drug companies sell their expiring patents to PDLI and in about three years they will have nothing to sell. Sorta a annuity that is liquidating.
MSFT... Microsoft...If there ever has been a more successful upstart in the country I do not know of it. MSFT literally owns computer operation software that runs on most of the world's computers. That is all nice, except they will not share any of their cash hoard with shareholders. Oh, they pay a dividend, but nothing like they could pay if they would. MSFT fancies itself as a technology growth company, they are not. I wish they would just accept they are to the computer industry what electric utilties are to their operating monopoly areas. A monopoly operation that should just continue to improve the software they produce and pay out a real nice dividend and be done with it. Consider the fact the US Justice Dept. just let expire any restrictions on Microsoft business agreed to back in the 1990's. Even the Justice Dept. considers this company no monopoly threat anymore.
GE...General Electric...Never in the stock market has a CEO just thrown away what was handed to him by the former CEO. Jack Welch handed to Jeffrey Immelt the best run company on the planet and in just a few years Mr. Immelt has pissed it all away. Mr. Immelt has tried to play political footsie with Barack Obama, he has tried to make GE the "ecomagination" company, and he has failed miserably as both. Get this he even needed a bailout from the government to keep in business during the downturn. What a joke, what a bad stock.
MNI...Mcclatchy Company...The CEO of this company has the worst timing of any CEO in the country. He went out and paid several billion dollars for a rival newspaper company right before newspaper stocks took a fall. MNI has suffered mightily with it's stock dropping from mid $70's to less than $5. Now yes other newspaper companies have suffered too, just not as bad as MNI. The CEO also has a tin ear, he keeps paying his mates in the corporate office big bucks, while he slashes employees in newspapers they own. Mr. Pruitt should, and would, have been fired long ago except for the fact that the founding family still controls the B shares. Let them have this dog. Full disclosure I used to work for McClatchy.
GM...General Motors...or maybe Government Motors?.. Anyway sell this baby if you own it. Ask yourself this do you want to own a stock where the employee union owns a bunch of the share float? A employee union who could care less if the company makes any profit. Where the union can vote in or vote out management that does not adhere to the union's wishes. If you do be my guest and buy it. Do not expect me to follow you. GM is where good investment money goes to die.
Airline Stocks....This little fact about airline stocks tells everything. Since the Wright Brothers first flew an airplane no airline company has ever made a single dime. Imagine if you had been there at the birth of flight, anyone would have wanted to get in on the ground floor of this business. However you would have lost big. Airlines might be the most mismanaged businesses on the planet. Bad management and unions who have squeezed the life out of any profits. I have never bought an airline stock and never will. If the market is open it is a good day to sell an airline stock.
First Energy..FE...This stock has just run up too far too fast since it's merger with Alleghany earlier this year. Buy at your own risk Take a look at the chart and the 20 PE and it is obvious to anyone but the biggest fool. However that is not the real problem here. The real problem is FE now supplies electricity via Alleghany to the state of Maryland. There are not many states worse for regulated utilities than Maryland.
USA Mobility....This company provides messaging and other communications services to medical, government, and emergency personal in the country. Now again the 6.5% dividend looks sweet, but this is not your cell phone operation, this is a basically a pager service. Now I do not know about you, but with the ever evolving technology regarding smart phones I have no desire to own an outdated technology that is getting replaced daily.
PCH..Potlatch Corp...This is a timber company and they own lots of good timber in good places to grow timber. Only one problem they are not earning their dividend. Not earning your dividend is ok only in situations where your cash flow is high and is being covered by large depreciation such as legacy phone companies. In PCH's case it is selling assets such as land to cover the dividend.so sooner or later if this does not stop the company basically sells itself away.
LLY..Eli Lilly... I have liked pharmaceutical companies for many years as they are a valuable tool in combating disease and actually save health care expense. Obamacare is not a plus for these companies and I expect long term most of them will not be good stocks since the incentive to invest in new drug compounds is no longer there. However LLY has other problems, there two largest patents representing about 40% of sales, loses patent protection this year. So with no new drugs in the pipeline currently and Obamacare taking away incentive to produce more this drug company is the first to feel the effects of the new healthcare plan. Nice dividend, declining value.
BAC and C..Bank of America and Citigroup...These banks who used to be powerhouse financial operations are a shell of what they used to be. Back just three years ago both were paying nice dividends and had stock prices that were solid. Today they barely pay dividends, and buying stock in them at any price is a losers bet. This my friends is what mismanagement on a huge scale gets you. Frankly I would extend the sell rating on just about any large bank stock. For awhile this year I liked some of the smaller banks, but have decided that many small banks are going the way of the dinosaur. They have serious difficulty trying to operate profitably under the new Dodd Frank finance rules. Ten years from now there will be a handful of small banks left that will operate as boutique banks.
PDLI..PDl Biopharma...Earlier this year I thought I had found a sweet drug stock. Paid good dividends and worked the bio-med sector. One problem this company owns expiring patents. Seems drug companies sell their expiring patents to PDLI and in about three years they will have nothing to sell. Sorta a annuity that is liquidating.
MSFT... Microsoft...If there ever has been a more successful upstart in the country I do not know of it. MSFT literally owns computer operation software that runs on most of the world's computers. That is all nice, except they will not share any of their cash hoard with shareholders. Oh, they pay a dividend, but nothing like they could pay if they would. MSFT fancies itself as a technology growth company, they are not. I wish they would just accept they are to the computer industry what electric utilties are to their operating monopoly areas. A monopoly operation that should just continue to improve the software they produce and pay out a real nice dividend and be done with it. Consider the fact the US Justice Dept. just let expire any restrictions on Microsoft business agreed to back in the 1990's. Even the Justice Dept. considers this company no monopoly threat anymore.
GE...General Electric...Never in the stock market has a CEO just thrown away what was handed to him by the former CEO. Jack Welch handed to Jeffrey Immelt the best run company on the planet and in just a few years Mr. Immelt has pissed it all away. Mr. Immelt has tried to play political footsie with Barack Obama, he has tried to make GE the "ecomagination" company, and he has failed miserably as both. Get this he even needed a bailout from the government to keep in business during the downturn. What a joke, what a bad stock.
MNI...Mcclatchy Company...The CEO of this company has the worst timing of any CEO in the country. He went out and paid several billion dollars for a rival newspaper company right before newspaper stocks took a fall. MNI has suffered mightily with it's stock dropping from mid $70's to less than $5. Now yes other newspaper companies have suffered too, just not as bad as MNI. The CEO also has a tin ear, he keeps paying his mates in the corporate office big bucks, while he slashes employees in newspapers they own. Mr. Pruitt should, and would, have been fired long ago except for the fact that the founding family still controls the B shares. Let them have this dog. Full disclosure I used to work for McClatchy.
GM...General Motors...or maybe Government Motors?.. Anyway sell this baby if you own it. Ask yourself this do you want to own a stock where the employee union owns a bunch of the share float? A employee union who could care less if the company makes any profit. Where the union can vote in or vote out management that does not adhere to the union's wishes. If you do be my guest and buy it. Do not expect me to follow you. GM is where good investment money goes to die.
Airline Stocks....This little fact about airline stocks tells everything. Since the Wright Brothers first flew an airplane no airline company has ever made a single dime. Imagine if you had been there at the birth of flight, anyone would have wanted to get in on the ground floor of this business. However you would have lost big. Airlines might be the most mismanaged businesses on the planet. Bad management and unions who have squeezed the life out of any profits. I have never bought an airline stock and never will. If the market is open it is a good day to sell an airline stock.
Tuesday, June 14, 2011
Cenovus Energy...a Goldman Sachs Recommendation
Goldman Sachs, the top investment bank on Wall Street, this morning sent out a recommendation to it's clients to re-consider buying oil related stocks. Among the four or five they suggested was Cenovus Energy, symbol CVE. If you have been a reader of this blog, you would have noted that twice I have recommended this stock for long term gains and decent dividend income. CVE is sitting on a big pool of oil and it is just ramping up production. Ten years from now you will be thrilled you bought this stock and just put in away in your portfolio. My first post on CVE was Feb. 3 when you could have bought it around $34 per share, it has traded over $40 since then and now settled back to around $35 as the economy has slowed. If you are a long term investor consider taking a position here again.
Speaking of Goldman Sachs, symbol GS. This stock has again moved up from around $132 per share to today about $138 per share. This due to some improving news on the legal front with the company. Again, you will note I did recommend purchase of this stock, or the purchase of puts on the stock, for short term and long term gains. I expect the stock will again be back lower when more negative news hits. The legal probes are just beginning. But the recent movement illustrates the upward bias in GS and once the legal cloud is lifted the stock will move up significantly. Do not expect any positive news anytime soon, but purchase of this security is for a year or so down the road gains.
Speaking of Goldman Sachs, symbol GS. This stock has again moved up from around $132 per share to today about $138 per share. This due to some improving news on the legal front with the company. Again, you will note I did recommend purchase of this stock, or the purchase of puts on the stock, for short term and long term gains. I expect the stock will again be back lower when more negative news hits. The legal probes are just beginning. But the recent movement illustrates the upward bias in GS and once the legal cloud is lifted the stock will move up significantly. Do not expect any positive news anytime soon, but purchase of this security is for a year or so down the road gains.
Keystone XL Pipeline..one of the reasons gasoline is higher than it should be.
If you want to look where a significant portion of the blame is for the rising price of gasoline look no further than the Keystone XL Pipeline. For those who do not know about the Keystone XL Pipeline let me explain. This PROPOSED pipeline is a link from the rich oil sands of western Canada to the United States. The oil sands of Canada have more oil deposited than Saudia Arabia. Yes, right here in North America we have enough oil to handle the oil needs for this country for years to come. Better yet, Canada wants to sell it to us and not to China or anyone else. Better for them, cheaper for us.
The current Keystone pipeline is owned by Transcanada corporation, symbol TRP, and currently extends from Canada to Oklahoma and Illinois. Oil for refining has been piped to these junctures for some time. But now Canada is producing more oil than the refineries and storage facilities in these areas can handle. Thus the Keystone XL extension has been proposed with this section to extend to the Texas Gulf Coast where lots of hungry refineries await the crude oil.
Now every state and province involved with this pipeline extension is on board the extension of this $7 billion pipeline. Ditto for the unions who will build the pipeline who see tens of thousands of high paying new jobs for their members. Add in that the 1.1 million barrels of oil DAILY will be piped down to refineries will essentially eliminate any need to imported oil from the middle east for the US. So what gives here, oil from our neighbor who wants to sell it to us, thousands of badly needed jobs for people unemployed, refineries who need additional supply, and lastly no chance at any ocean spillage since all of the pipeline is over land?
There is only one person who can stop this pipeline and he is currently doing it. President Barack Obama refuses to sign the permit to start the construction. The unions frankly are not happy, but in this case their interests are outweighed by environmental interests. Environmentalists believe the additional supply would stymie current efforts at fuel efficiency. The environmentalists are also upset that the oil comes from oil sands, which can be messy getting in out of the ground. All this is silliness because if the US does not build this pipeline and buys this oil, Canada has already said they will build a pipeline to the Canadian west coast and sell the oil to China. In that case the Chinese and Canadians get the high paying jobs. Jobs again needed right here in the US.
So the decision is obvious either we build the pipeline and get the oil and jobs or China does it. Frankly Obama is captive to green crazies in my opinion and has made it clear he has no intention to sign the permits. Oh, one other note here, oil from Canada is up to $15 per barrel currently cheaper than oil imported across the ocean from other countries. So when you go to gas pump, remember the sole person who is keeping prices up on your gasoline is Obama.
TRP, Transcanada corporation, is one of the best long term dividend investments you can own. It has consistently paid and raised the dividend and is a safe investment for your money in these troubled times. I have in the past owned this security and would again if it fit my trading approach. It has my highest recommendation.
The current Keystone pipeline is owned by Transcanada corporation, symbol TRP, and currently extends from Canada to Oklahoma and Illinois. Oil for refining has been piped to these junctures for some time. But now Canada is producing more oil than the refineries and storage facilities in these areas can handle. Thus the Keystone XL extension has been proposed with this section to extend to the Texas Gulf Coast where lots of hungry refineries await the crude oil.
Now every state and province involved with this pipeline extension is on board the extension of this $7 billion pipeline. Ditto for the unions who will build the pipeline who see tens of thousands of high paying new jobs for their members. Add in that the 1.1 million barrels of oil DAILY will be piped down to refineries will essentially eliminate any need to imported oil from the middle east for the US. So what gives here, oil from our neighbor who wants to sell it to us, thousands of badly needed jobs for people unemployed, refineries who need additional supply, and lastly no chance at any ocean spillage since all of the pipeline is over land?
There is only one person who can stop this pipeline and he is currently doing it. President Barack Obama refuses to sign the permit to start the construction. The unions frankly are not happy, but in this case their interests are outweighed by environmental interests. Environmentalists believe the additional supply would stymie current efforts at fuel efficiency. The environmentalists are also upset that the oil comes from oil sands, which can be messy getting in out of the ground. All this is silliness because if the US does not build this pipeline and buys this oil, Canada has already said they will build a pipeline to the Canadian west coast and sell the oil to China. In that case the Chinese and Canadians get the high paying jobs. Jobs again needed right here in the US.
So the decision is obvious either we build the pipeline and get the oil and jobs or China does it. Frankly Obama is captive to green crazies in my opinion and has made it clear he has no intention to sign the permits. Oh, one other note here, oil from Canada is up to $15 per barrel currently cheaper than oil imported across the ocean from other countries. So when you go to gas pump, remember the sole person who is keeping prices up on your gasoline is Obama.
TRP, Transcanada corporation, is one of the best long term dividend investments you can own. It has consistently paid and raised the dividend and is a safe investment for your money in these troubled times. I have in the past owned this security and would again if it fit my trading approach. It has my highest recommendation.
Friday, June 10, 2011
Adding a Speculative Position CYS
With this posting I will be adding a speculative position with Cypress Sharpridge Investments, symbol CYS. This new position is for speculative purposes only and is not an added regular holding. This company is a mortgage reit that does business in government guaranteed mortgages. These are securities that are extremely interest rate sensitive as CYS buys the mortgages securities after first borrowing short term cheaper money then making their profit on the spread between the two. If short term interest rates go up then their profit is squeezed or in the worst case eliminated. So therefore the risk and speculative nature of the investment. The stocks prices of these type mortgage reits move very little unless interest rates go up and the price goes down significantly.
My purpose in this position is to take advantage of what I believe is a housing market that for the next few quarters is going nowhere. I still believe prices need to go down 10% to 20% more before housing can rebound. There is also significant overhang on supply from foreclosures and unsold new and existing homes. This will be a short term trade and will be reconsidered when the option I am selling expires.
The position I am taking will be selling a put on CYS for Sept. 2011 expiration at $12.50. The premium is 55 cents per share. If we have to take possession of the stock on that date we will also gain a 60 cent dividend making the cost basis $11.35 per share or about 9% less than the stock is currently selling. We prefer to take the premium and not the stock, but the purpose here is to build in protection going forward. The position will only be taken when we assess the price of CYS is below $13 adequately enough to make the trade sufficiently profitable.
As I have mentioned in earlier posts there has not been in decades and will not happen again in your lifetime to opportunity to buy a house at today's prices and interest rates. So the best approach is to buy a house. The second best is to take a position such as this one.
My purpose in this position is to take advantage of what I believe is a housing market that for the next few quarters is going nowhere. I still believe prices need to go down 10% to 20% more before housing can rebound. There is also significant overhang on supply from foreclosures and unsold new and existing homes. This will be a short term trade and will be reconsidered when the option I am selling expires.
The position I am taking will be selling a put on CYS for Sept. 2011 expiration at $12.50. The premium is 55 cents per share. If we have to take possession of the stock on that date we will also gain a 60 cent dividend making the cost basis $11.35 per share or about 9% less than the stock is currently selling. We prefer to take the premium and not the stock, but the purpose here is to build in protection going forward. The position will only be taken when we assess the price of CYS is below $13 adequately enough to make the trade sufficiently profitable.
As I have mentioned in earlier posts there has not been in decades and will not happen again in your lifetime to opportunity to buy a house at today's prices and interest rates. So the best approach is to buy a house. The second best is to take a position such as this one.
Thursday, June 9, 2011
"Miss Wilma's Tomato Sandwiches"
This has absolutely nothing to do with investing, but I do not care since this is more important in my opinion:)
I do not remember the exact moment of my first tomato sandwich, but I expect it came sometime around the age of 7 or 8 when I was old enough to go into the garden in back of our house on Hargett Street in Richlands NC and pick a tomato for myself. What I do know is that once I got one in my mouth it was love at first bite and I have never missed a summer without as many as I could devour. Before weight became an issue it was not uncommon for me to eat 3 sandwiches at one meal with the accompanying summer vegetables of butter beans, okra, and corn etc. You can have your sophisticated dining and high end places, but if I had a choice of any meal on earth this would be it. Two slices of good bread, some Duke's mayonnaise, several pieces of freshly cooked bacon, salt and pepper, and some HOMEGROWN tomatoes. Folks this is just good eating.
Back to Hargett Street and "Miss Wilma's tomato sandwiches". I call them that because the lady who came over to help my mother "keep house", (that is what is was called in those days), called them that. My mother opened a beauty shop starting sometime late in the 1930"s ( first feminist my friends ) and about the time I was old enough to eat tomato sandwiches had enough business she needed help around the house. I forgot the lady's name now, but I know she said more than once that Miss Wilma could have all the Toot n Tell It ( local drive in ) hot dogs she wanted, but the days she was there to clean there had better be some of "Miss Wilma's tomato sandwiches" for lunch. You see even then back in the early 1960's we in Richlands already had crossed the racial divide because the cleaning lady was black and she ate what we ate, sat at the table where we sat. If there is one thing blacks and whites agreed on then and now in the South that nothing beats a tomato sandwich for a good summer meal. Cheap, easy to make, and the ingredients could be gotten locally. The important thing here is the HOMEGROWN tomatoes. None of that store bought stuff comes close to the flavor of growing your own tomatoes. I say that because some of you Yankees who have migrated down to the South need to know there is a difference. You can not find these babies in a store, so if you want to partake of this delicacy, either grow your own or find a friend who grows them.
I believe tomato sandwiches are God's gift to Southern culture, much like North Carolina BBQ is the holy grail of food here. I remain convinced that the Civil War ended in April 1965 when the Confederate soldiers opined that why should they stay and fight the damn Yankees, when it was planting season down home and soon there were tomato sandwiches to be had. Makes sense to me anyway. Nothing hold Southerners together like good food and tomatoes sandwiches are something all "real Southerners: can agree on.
Anyway here I sit June 9, 2011 and I have just picked my first two HOMEGROW tomatoes and a tomato sandwich is a day or so away as the tomatoes finish ripening on my counter. So as I take that first bite the next day or two I believe it remain blessed, as other "real Southerners" do that I was first introduced to tomato sandwiches and I get to relive that moment again. Thank you "Miss Wilma" for what I about to enjoy and I remember you and the wonderful gift you gave me in "Miss Wilma's tomato sandwiches".
I do not remember the exact moment of my first tomato sandwich, but I expect it came sometime around the age of 7 or 8 when I was old enough to go into the garden in back of our house on Hargett Street in Richlands NC and pick a tomato for myself. What I do know is that once I got one in my mouth it was love at first bite and I have never missed a summer without as many as I could devour. Before weight became an issue it was not uncommon for me to eat 3 sandwiches at one meal with the accompanying summer vegetables of butter beans, okra, and corn etc. You can have your sophisticated dining and high end places, but if I had a choice of any meal on earth this would be it. Two slices of good bread, some Duke's mayonnaise, several pieces of freshly cooked bacon, salt and pepper, and some HOMEGROWN tomatoes. Folks this is just good eating.
Back to Hargett Street and "Miss Wilma's tomato sandwiches". I call them that because the lady who came over to help my mother "keep house", (that is what is was called in those days), called them that. My mother opened a beauty shop starting sometime late in the 1930"s ( first feminist my friends ) and about the time I was old enough to eat tomato sandwiches had enough business she needed help around the house. I forgot the lady's name now, but I know she said more than once that Miss Wilma could have all the Toot n Tell It ( local drive in ) hot dogs she wanted, but the days she was there to clean there had better be some of "Miss Wilma's tomato sandwiches" for lunch. You see even then back in the early 1960's we in Richlands already had crossed the racial divide because the cleaning lady was black and she ate what we ate, sat at the table where we sat. If there is one thing blacks and whites agreed on then and now in the South that nothing beats a tomato sandwich for a good summer meal. Cheap, easy to make, and the ingredients could be gotten locally. The important thing here is the HOMEGROWN tomatoes. None of that store bought stuff comes close to the flavor of growing your own tomatoes. I say that because some of you Yankees who have migrated down to the South need to know there is a difference. You can not find these babies in a store, so if you want to partake of this delicacy, either grow your own or find a friend who grows them.
I believe tomato sandwiches are God's gift to Southern culture, much like North Carolina BBQ is the holy grail of food here. I remain convinced that the Civil War ended in April 1965 when the Confederate soldiers opined that why should they stay and fight the damn Yankees, when it was planting season down home and soon there were tomato sandwiches to be had. Makes sense to me anyway. Nothing hold Southerners together like good food and tomatoes sandwiches are something all "real Southerners: can agree on.
Anyway here I sit June 9, 2011 and I have just picked my first two HOMEGROW tomatoes and a tomato sandwich is a day or so away as the tomatoes finish ripening on my counter. So as I take that first bite the next day or two I believe it remain blessed, as other "real Southerners" do that I was first introduced to tomato sandwiches and I get to relive that moment again. Thank you "Miss Wilma" for what I about to enjoy and I remember you and the wonderful gift you gave me in "Miss Wilma's tomato sandwiches".
McJobs
I think nothing bothers me more than listening to and reading media reports and their reporting of such events like the National Hiring Day McDonalds held April 19. Most media followed the New York Times approach, like they always do, and called the event "McJobs". Let me translate that name, it means lousy jobs or jobs no one wants or better yet "burger flippers". Most of these media types never held a real job in their life. Most have sat in an air conditioned or heated office, typed on a computer, and basically never sweated except for their daily visit to a health club. They "do" lunch with friends of the same background and have dinner parties with people who think the same way they do. Never in their life have they ever spend serious time with people who work hard for a living. Oh, they might volunteer some time or money to help the needy, but God forbid they never would actually get to know these real people. Worse yet live and work around them, no way. I know I have worked with these elites and they disgust me.
My first "McJob" was mowing lawns. As soon as I was physically able I was told to go find some lawns to mow and used the family mower to make my spending money. As I got older I got another "McJob" working in a tobacco field doing whatever the owner of the farm asked me do. It was hard, hot and sweaty work for low pay. When I was not working in the tobacco fields I would mow lawns too. When I moved up from that job I worked in a textile factory. Again hard work in a hot building loading and unloading trucks. Finally after several years I got a office job selling advertising. I went on to be a manager and good career. Was my "McJob" worth it, you bet. I learned how to organize my time, how to work with other people, and how to really appreciate what hard work really was and how blessed I was to have a job not so hard physically. I expect many people who have succeeded in life today began their work life at McDonalds or another job that certainly was not glamorous. They also learned good work habits and over time became more valuable to their future employers.
No one is expected to live a middle class lifestyle holding an entry level position. These jobs are on the job training for people who want to make themselves better employees. Smart people consider these jobs OPPORTUNITIES, not lousy jobs. You are getting paid what you are worth to the employer.
Most importantly these lower level jobs taught people the value of money. They taught you how to budget and how to save for the future. In my lifetime I have never known as truly successful person who did not start out with a "McJob" of their own. Oh, there are people who are higher up in organizations who never held such a job. But trust me everyone in the organization know they are above their head and not qualified for the position. So next time you hear someone talk about a "McJob" step in and explain how ignorant they are of the real reason for entry level work.
My first "McJob" was mowing lawns. As soon as I was physically able I was told to go find some lawns to mow and used the family mower to make my spending money. As I got older I got another "McJob" working in a tobacco field doing whatever the owner of the farm asked me do. It was hard, hot and sweaty work for low pay. When I was not working in the tobacco fields I would mow lawns too. When I moved up from that job I worked in a textile factory. Again hard work in a hot building loading and unloading trucks. Finally after several years I got a office job selling advertising. I went on to be a manager and good career. Was my "McJob" worth it, you bet. I learned how to organize my time, how to work with other people, and how to really appreciate what hard work really was and how blessed I was to have a job not so hard physically. I expect many people who have succeeded in life today began their work life at McDonalds or another job that certainly was not glamorous. They also learned good work habits and over time became more valuable to their future employers.
No one is expected to live a middle class lifestyle holding an entry level position. These jobs are on the job training for people who want to make themselves better employees. Smart people consider these jobs OPPORTUNITIES, not lousy jobs. You are getting paid what you are worth to the employer.
Most importantly these lower level jobs taught people the value of money. They taught you how to budget and how to save for the future. In my lifetime I have never known as truly successful person who did not start out with a "McJob" of their own. Oh, there are people who are higher up in organizations who never held such a job. But trust me everyone in the organization know they are above their head and not qualified for the position. So next time you hear someone talk about a "McJob" step in and explain how ignorant they are of the real reason for entry level work.
Wednesday, June 8, 2011
Put Options plus two put trading opportunities
Put stock options are a trading approach that only a few people need to consider, Unless you have enough time to do daily stock research, keep abreast of your trades and positions, and have somewhere in the neighborhood of a minimum of $200000 in marginable assets. If you meet this terms this posting could help you make income with put options.
The technical name for selling a put option is actually called "naked puts". The term does have purpose however since what you are doing is placing a bet that a stock will not go down and since you do not own the stock you are writing on option that is considered naked. The income approach with naked puts is to find stocks that you believe are good companies and you either believe are good buys now or would be a better buy at a cheaper price. Be realistic with yourself do not sell put options just for the producing income, do your homework and be confident you are willing to own the stock and more importantly be very happy to own the stock at a lower price.
Once you have decided on your stock go to the options table on Yahoo and check the option premiums on your security. You decide the strike price, the month for your option, the number of shares you would be willing to own, and then you sell your put option. You will then receive the premium for the option in your account as income less the brokerage commission. The income is yours to keep.
If the stock sells for more than your strike price anytime between now and the expiration date the option expires worthless. if the stock sells below the strike price anytime between now and the expiration date the option holder has the right to put the stock to you at the option strike price. One point of clarification here, when the stock is put to you the stock must be selling below the strike price. If the option holder sees the price dip below the strike price and then the stock moves back up above the strike price they can not force the you to buy the stock. Their risk, your gain.
Also note when you sell the put option you must have the money in your account to buy the stock if put to you. No brokerage will allow you to sell put options without adequate resources to buy stock when put to you. The other fact here is you are liable for buying the stock no matter how far down the stock goes in price. In effect you are selling insurance on the stock.
Put options are an excellent way to produce income, but it is absolutely necessary to be willing to do research and keep up with options you have sold. Discipline is a neccesity. Below is an example.
Let's use BP oil company for an example. BP is selling as of writing this posting at $44 per share. A put option for $40 per share on BP that expires in October is selling for $1.46 per share. Using 500 shares for an example, you sell 5 put option contracts ( a contract is 100 shares ) on BP at $146.00 per contract makes you $730 in premium less commission. Using Scottrade prices the commission cost would be $13.25 leaving you $716.75. You now wait to see if the stock sells below $40 per share to see if it will be put to you. You also will need $20000 to buy the 500 shares if put to you. Annualized return on option 9.6% plus interest on $20000 over 4 months and two weeks.
The simplicity of selling put options is obvious. It also is a good way to buy stocks at a discount. The Small Town Investor Hedge Fund operates just this way. STI Hedge Fund does have some other techniques that make the buying of put options more profitable, but that is not needed for the average investor, nor am I willing to write about skills that have taken years to learn.
If you are considering using put options to buy stocks and make income, let me suggest just the example I did above as a excellent trade to do right now. BP oil company has been beaten down due to the problems in the Gulf of Mexico last year and I believe is now on the way up in price. Oil prices are headed up long term, and I expect BP is due to raise their dividend some more soon. One other note about BP, the news that the company has about paid out almost all claims in the Gulf and the total looks to be around $4 billion total cost. I would assume the rest of the $20 billion set aside will be coming back to the company in some form down the road. All these should put a floor in this stock. Even if you have it put to you at $40 you likely got a good price on a company with good future prospects.
One other trading opportunity I consider a good opportunity right now is Goldman Sachs, symbol GS. I have wrote about this stock in an earlier posting. A GS put option for October with a strike price of 120 is selling for around $4.10 per share. Selling two contracts would get $820 premium with you being liable for $26000 if the stock sells below $120 per share. With GS selling now for $134 per share I believe there is more than significant room for the price to go down when and if indictments are issued following the current criminal investigation. Again, GS is the top investment bank and I can not see if selling below book value, Goldman Sachs is not going away as a company and will recover from any bad news long term. GS would be a excellent buy at $120 per share. Annualized return 8.4% plus interest on $26000.
The technical name for selling a put option is actually called "naked puts". The term does have purpose however since what you are doing is placing a bet that a stock will not go down and since you do not own the stock you are writing on option that is considered naked. The income approach with naked puts is to find stocks that you believe are good companies and you either believe are good buys now or would be a better buy at a cheaper price. Be realistic with yourself do not sell put options just for the producing income, do your homework and be confident you are willing to own the stock and more importantly be very happy to own the stock at a lower price.
Once you have decided on your stock go to the options table on Yahoo and check the option premiums on your security. You decide the strike price, the month for your option, the number of shares you would be willing to own, and then you sell your put option. You will then receive the premium for the option in your account as income less the brokerage commission. The income is yours to keep.
If the stock sells for more than your strike price anytime between now and the expiration date the option expires worthless. if the stock sells below the strike price anytime between now and the expiration date the option holder has the right to put the stock to you at the option strike price. One point of clarification here, when the stock is put to you the stock must be selling below the strike price. If the option holder sees the price dip below the strike price and then the stock moves back up above the strike price they can not force the you to buy the stock. Their risk, your gain.
Also note when you sell the put option you must have the money in your account to buy the stock if put to you. No brokerage will allow you to sell put options without adequate resources to buy stock when put to you. The other fact here is you are liable for buying the stock no matter how far down the stock goes in price. In effect you are selling insurance on the stock.
Put options are an excellent way to produce income, but it is absolutely necessary to be willing to do research and keep up with options you have sold. Discipline is a neccesity. Below is an example.
Let's use BP oil company for an example. BP is selling as of writing this posting at $44 per share. A put option for $40 per share on BP that expires in October is selling for $1.46 per share. Using 500 shares for an example, you sell 5 put option contracts ( a contract is 100 shares ) on BP at $146.00 per contract makes you $730 in premium less commission. Using Scottrade prices the commission cost would be $13.25 leaving you $716.75. You now wait to see if the stock sells below $40 per share to see if it will be put to you. You also will need $20000 to buy the 500 shares if put to you. Annualized return on option 9.6% plus interest on $20000 over 4 months and two weeks.
The simplicity of selling put options is obvious. It also is a good way to buy stocks at a discount. The Small Town Investor Hedge Fund operates just this way. STI Hedge Fund does have some other techniques that make the buying of put options more profitable, but that is not needed for the average investor, nor am I willing to write about skills that have taken years to learn.
If you are considering using put options to buy stocks and make income, let me suggest just the example I did above as a excellent trade to do right now. BP oil company has been beaten down due to the problems in the Gulf of Mexico last year and I believe is now on the way up in price. Oil prices are headed up long term, and I expect BP is due to raise their dividend some more soon. One other note about BP, the news that the company has about paid out almost all claims in the Gulf and the total looks to be around $4 billion total cost. I would assume the rest of the $20 billion set aside will be coming back to the company in some form down the road. All these should put a floor in this stock. Even if you have it put to you at $40 you likely got a good price on a company with good future prospects.
One other trading opportunity I consider a good opportunity right now is Goldman Sachs, symbol GS. I have wrote about this stock in an earlier posting. A GS put option for October with a strike price of 120 is selling for around $4.10 per share. Selling two contracts would get $820 premium with you being liable for $26000 if the stock sells below $120 per share. With GS selling now for $134 per share I believe there is more than significant room for the price to go down when and if indictments are issued following the current criminal investigation. Again, GS is the top investment bank and I can not see if selling below book value, Goldman Sachs is not going away as a company and will recover from any bad news long term. GS would be a excellent buy at $120 per share. Annualized return 8.4% plus interest on $26000.
Tuesday, June 7, 2011
Websites for Research
E-mails with a friend brought up the thought of where does one get good research for investing, so below I give you some good sites.
I admit it I am cheap. The idea of paying for research is just not in my DNA. But as someone who consumes and needs lots of information about the market if is absolutely essential that I get good information. Right up front if one depends on the mass media you will not only not get good research, but agenda driven research and opinion. The large newspapers and major television networks are lousy when it comes to information and their web sites are just as bad. Add in the web sites that are biased to one way or another towards some political angle. If someone listens or reads the agenda driven information sources your opinions and more importantly your emotions can be swayed to a point you lose a true sense of what is really happening.
Each morning I get at 6 AM and do about two hours of immediate research online to keep abreast of what is going on in the economy and markets. During my research time I am listening to CNBC and picking up points as well. On CNBC I do avoid John Harwood, who might be the worst reporter on the planet agenda wise. Through the years I have added and culled web sites as I have found them and as some web sites have lost appeal. Below are the current web sites I look at each morning for information. There are also several web sites I check weekly or monthly too. This is not an all inclusive list for me, as I know some of you are not professional investors and do not have the time for such. However the sites listed can give most investors info they need for investing.
24/7 Wall Street...an excellent web site updated regularly throughout the day with nice opinion pieces. I particularly like John Tammy and his insights on the economy and stocks. http://247wallst.com/
CNBC..good breaking news source. updates regularly. http://www.cnbc.com/
Marketwatch...another good breaking news source. Be careful with the opinion pieces here as they can be agenda driven to the left. http://www.marketwatch.com/
Seeking Alpha...if there is a better opinion and information site on the web I have not found it. updates regularly and is a place you can research just about anything. If you had no other place to do research this would be the one. http://seekingalpha.com/articles this is a direct link to the article database.
Investing Daily... this source of information updates about once daily, but the pieces are very good. this is a paid site, but there is good free research too. Roger Conrad is real good on the income side. http://www.investingdaily.com/
Morningstar..again a paid site, but good information is free and worth the daily look. http://www.morningstar.com/?topnav=home
MSN Money...frankly not as good as it used to be, but worth at least one look daily for possible new articles of interest. http://money.msn.com/investing
Yahoo. Finance...a very good source of info and quotes. Good articles each morning too. The message boards here are the best on the web in my opinion. Excellent source of info on stocks. http://finance.yahoo.com/
Money Show...an increasingly good source of info and a huge library of articles available for research. Once a day is enough. http://www.moneyshow.com/main.asp?scode=
Breakout...Yahoo...I check this daily for one reason, Jeff Macke. He is a no nonsense person who knows his stuff. http://finance.yahoo.com/blogs/breakout/
Real Clear Markets...check once in the morning for good articles. http://www.realclearmarkets.com/
Carpe Diem...written by Michigan professor Mark Perry. excellent source of upbeat economic points. once daily http://mjperry.blogspot.com/
Business NC...for local morning source of NC business news web links this is the place. http://www.businessnc.com/index.php?cid=342316&src=news&srctype=lister&category=Business&curlid=1
Triangle Business Journal...another local source of business news. again the articles here can be biased so be careful. paid site so you only get the headlines. http://www.bizjournals.com/triangle/
Wealthtrack...interviews by Consuelo Mack who is very good. has a show on PBS which you can view here too. once a week. http://wealthtrack.com/
PIMCO...once a month Bill Gross posts a column. absolutely necessary reading for any investor. http://www.pimco.com/EN/Insights/Pages/ViewpointsOverview.aspx
Mcdep...oil analysis. paid site that drops paid info for free a couple of weeks late. this guy has forgotten more about oil investing that most people know. site updates Sunday evenings http://www.mcdep.com/
Doug Kass. called the market right the last couple of turns so has cred. this is a paid site that occasionally drops free stuff, worth checking to get the free stuff. Kass is a bear. http://www.thestreet.com/author/1358076/DougKass/all.html
The Draconian...superbly written article once a week. great insight on market direction. http://thedraconian.com/
The Small Town Investor... excellent source of investing help that is written by one smart guy. Ok, just could not help myself. http://smalltowninvestor.blogspot.com/
I admit it I am cheap. The idea of paying for research is just not in my DNA. But as someone who consumes and needs lots of information about the market if is absolutely essential that I get good information. Right up front if one depends on the mass media you will not only not get good research, but agenda driven research and opinion. The large newspapers and major television networks are lousy when it comes to information and their web sites are just as bad. Add in the web sites that are biased to one way or another towards some political angle. If someone listens or reads the agenda driven information sources your opinions and more importantly your emotions can be swayed to a point you lose a true sense of what is really happening.
Each morning I get at 6 AM and do about two hours of immediate research online to keep abreast of what is going on in the economy and markets. During my research time I am listening to CNBC and picking up points as well. On CNBC I do avoid John Harwood, who might be the worst reporter on the planet agenda wise. Through the years I have added and culled web sites as I have found them and as some web sites have lost appeal. Below are the current web sites I look at each morning for information. There are also several web sites I check weekly or monthly too. This is not an all inclusive list for me, as I know some of you are not professional investors and do not have the time for such. However the sites listed can give most investors info they need for investing.
24/7 Wall Street...an excellent web site updated regularly throughout the day with nice opinion pieces. I particularly like John Tammy and his insights on the economy and stocks. http://247wallst.com/
CNBC..good breaking news source. updates regularly. http://www.cnbc.com/
Marketwatch...another good breaking news source. Be careful with the opinion pieces here as they can be agenda driven to the left. http://www.marketwatch.com/
Seeking Alpha...if there is a better opinion and information site on the web I have not found it. updates regularly and is a place you can research just about anything. If you had no other place to do research this would be the one. http://seekingalpha.com/articles this is a direct link to the article database.
Investing Daily... this source of information updates about once daily, but the pieces are very good. this is a paid site, but there is good free research too. Roger Conrad is real good on the income side. http://www.investingdaily.com/
Morningstar..again a paid site, but good information is free and worth the daily look. http://www.morningstar.com/?topnav=home
MSN Money...frankly not as good as it used to be, but worth at least one look daily for possible new articles of interest. http://money.msn.com/investing
Yahoo. Finance...a very good source of info and quotes. Good articles each morning too. The message boards here are the best on the web in my opinion. Excellent source of info on stocks. http://finance.yahoo.com/
Money Show...an increasingly good source of info and a huge library of articles available for research. Once a day is enough. http://www.moneyshow.com/main.asp?scode=
Breakout...Yahoo...I check this daily for one reason, Jeff Macke. He is a no nonsense person who knows his stuff. http://finance.yahoo.com/blogs/breakout/
Real Clear Markets...check once in the morning for good articles. http://www.realclearmarkets.com/
Carpe Diem...written by Michigan professor Mark Perry. excellent source of upbeat economic points. once daily http://mjperry.blogspot.com/
Business NC...for local morning source of NC business news web links this is the place. http://www.businessnc.com/index.php?cid=342316&src=news&srctype=lister&category=Business&curlid=1
Triangle Business Journal...another local source of business news. again the articles here can be biased so be careful. paid site so you only get the headlines. http://www.bizjournals.com/triangle/
Wealthtrack...interviews by Consuelo Mack who is very good. has a show on PBS which you can view here too. once a week. http://wealthtrack.com/
PIMCO...once a month Bill Gross posts a column. absolutely necessary reading for any investor. http://www.pimco.com/EN/Insights/Pages/ViewpointsOverview.aspx
Mcdep...oil analysis. paid site that drops paid info for free a couple of weeks late. this guy has forgotten more about oil investing that most people know. site updates Sunday evenings http://www.mcdep.com/
Doug Kass. called the market right the last couple of turns so has cred. this is a paid site that occasionally drops free stuff, worth checking to get the free stuff. Kass is a bear. http://www.thestreet.com/author/1358076/DougKass/all.html
The Draconian...superbly written article once a week. great insight on market direction. http://thedraconian.com/
The Small Town Investor... excellent source of investing help that is written by one smart guy. Ok, just could not help myself. http://smalltowninvestor.blogspot.com/
Saturday, June 4, 2011
Some more of my Favorite Places In North Carolina.
My postings on Favorite Restaurants and Jimmy V's got such high readership I am doing another posting similar to those. I hope you enjoy it.
Smith Farm-Fresh Local Goodness....This is my newest find. Just this Saturday was my first visit and will not be my last. I must admit I got onto this place from my Campbell University student Facebook friends. When I kept seeing the words "awesome" and "you got to try this place" I figured I should give it a try as well. So on the way back from a trip to near Charlotte we stopped by and tried what everyone was raving about, their homemade ice cream. Well I can say this without a doubt their ice cream is the best I have ever tasted. Trust me on this one, you are not prepared for homemade ice cream, make that any ice cream, quite like this ice cream. Smooth, creamy but not too much, sweet but not too much also, and you can tell it is homemade as it is chunky. They make it right there in the store and you can see the machine they use. Lots of flavors too, cherry, vanilla, chocolate, strawberry, banana, peach, a couple others I forgot. My first run was chocolate and vanilla on a waffle cone. They got regular cones and cups too. Other items there are blueberries, fresh roasted peanuts, and fresh squeezed lemonade. But the ice cream is what I tried and will keep me coming back as I am hooked. It is not cheap as a double waffle cone is something like $3.95, but the double is a lot of ice cream. Regular cones and cups are cheaper. On highway 55 east of the highway 27 and highway 55 intersection in Coats NC. Just on the edge of town.
Beefmastor Inn...Wilson NC..**** I have been told this place closed last weekend, but have not got confirmation**** This little steakhouse most people would just drive right on by and never see. I got wind of it from my banker back a decade or so ago and do not visit it as much as I desire. Beefmastor Inn has changed hands since I was there, but I understand the steaks are still top notch and the service as good as ever. The small building on highway 301 will seat maybe 50 when full, so people just stay outside in the parking lot and visit. You can buy drinks from the restaurant while you wait. One of the real treats here is the fresh goodies on the salad bar, one of the best I have ever tried. This area of Wilson was one the bastion of the huge tobacco market in Wilson, which is now gone. So the places left along highway 301 are remnants of a time gone by when the wealth of the town was here. Good advice is to come early to beat the wait.
White Lake NC.. This crystal clear lake is a great place to take the family for a day or a weekend. There is a boat house, a pier to lay on, rides for the kids, some restaurants, and lots of small motels. White Lake has a long history and many people return with their children in tow every year. There are several beaches, but the main one now is Goldston's, which has the pier and such. The water is extremely clear being spring fed and the slope is very gradual which makes it "the safest beach in the USA". Goldston's has a game house and a grocery store too. Just off highway 701 south of Garland NC.
Clamdigger Inn..Pine Knoll Shores NC...First off this is not a resort and it certainly is not the place to go if your idea of beach fun is to party, drink, and make merry. Oh, they have a nightclub and serve alcohol, but that is not the emphasis of this smallish hotel. This place is perfect for families and safety. I began coming here when the Eastern Press Association began having meetings there. Immediately I took a liking to it as it is not crowded, the beach is nice, it is close to the aquarium, the onsite restaurant is pretty good too. Add in that it is still owned by a family and the rates are reasonable, even for a beach. Parking lot is right in front of the hotel, but note there are no bellmen here. As I said this is not your upscale resort, it is a place to go spend the night, enjoy the beach, and relax. On the main road on Emerald Isle.
Joe Sugars... St. Pauls NC...Back in 1982 when I was working in Fayetteville NC one of the accounts I was assigned was Joe Sugars in St. Pauls. It was my lucky day. Not only did I find a good place to buy men's clothes, but I got to meet the owner who at the time was Stanley Sugar. Stanley inherited the store from his father who started it back in the early 1900's. Stanley knew more about marketing small business than anyone I ever met, I learned a lot at his knee for many years. The current owner Joe Sugar Jr. who is family too and has maybe has the largest selection of men's clothes in North Carolina, maybe in several states. Their motto is " If you got a figure we can fit it" , is no joke they can do just that. Frankly there is no piece of men's clothing that can not be bought there. Almost any size you can imagine. It is worth the trip just to see some of the big pants they have in stock. Great selection, good prices, lot of sizes, and family ownership, check it out. Right off I-95 in St. Pauls NC easy to find.
Elizabeth's Pecans...Turkey NC..If you like pecan brittle, then this is your place. I challenge you to find better brittle anywhere. They got lots of other goodies too, but people come back for the delicious pecan selections. The chocolate pecans are down right addicitive. Hard to find place right off I-40 near Turkey NC. I suggest you google it. Mail order available
The Peanut Roaster...Henderson NC..For my money the Golden Gourmet peanuts from this place are the best you can eat. The peanuts are golden fried and crunchy when eaten. The Peanut Roaster has all kinds of nuts, but I keep coming back for the peanuts. A visit to the place in Henderson offers you the chance to sample everything they got in stock too. Off I-85 north Henderson. Mail order available.
Nunnery Freeman BBQ..Henderson NC...I came upon this BBQ restaurant back when first visiting Henderson NC when Roses Stores was a big operation. Their restaurant is in the northern portion of town and has a small sign which is hard to find and a building with windows all around. Nunnery Freeman used to have two locations, but now is down to one. But do not be fooled by that these people know how to do one thing really well. Their Bruinswick Stew is the best you will find anywhere. Lots of fresh ingredients and available in several sizes. My wife craves this stuff and we will drive to Henderson for the expressed purpose of eating this stew and nothing else. Nunnery Freeman also does pork barbecue pretty well too. They use a proprietary cooker that literally pressure cooks the barbecue and makes it tender and pushes the flavors into the meat.
Smith Farm-Fresh Local Goodness....This is my newest find. Just this Saturday was my first visit and will not be my last. I must admit I got onto this place from my Campbell University student Facebook friends. When I kept seeing the words "awesome" and "you got to try this place" I figured I should give it a try as well. So on the way back from a trip to near Charlotte we stopped by and tried what everyone was raving about, their homemade ice cream. Well I can say this without a doubt their ice cream is the best I have ever tasted. Trust me on this one, you are not prepared for homemade ice cream, make that any ice cream, quite like this ice cream. Smooth, creamy but not too much, sweet but not too much also, and you can tell it is homemade as it is chunky. They make it right there in the store and you can see the machine they use. Lots of flavors too, cherry, vanilla, chocolate, strawberry, banana, peach, a couple others I forgot. My first run was chocolate and vanilla on a waffle cone. They got regular cones and cups too. Other items there are blueberries, fresh roasted peanuts, and fresh squeezed lemonade. But the ice cream is what I tried and will keep me coming back as I am hooked. It is not cheap as a double waffle cone is something like $3.95, but the double is a lot of ice cream. Regular cones and cups are cheaper. On highway 55 east of the highway 27 and highway 55 intersection in Coats NC. Just on the edge of town.
Beefmastor Inn...Wilson NC..**** I have been told this place closed last weekend, but have not got confirmation**** This little steakhouse most people would just drive right on by and never see. I got wind of it from my banker back a decade or so ago and do not visit it as much as I desire. Beefmastor Inn has changed hands since I was there, but I understand the steaks are still top notch and the service as good as ever. The small building on highway 301 will seat maybe 50 when full, so people just stay outside in the parking lot and visit. You can buy drinks from the restaurant while you wait. One of the real treats here is the fresh goodies on the salad bar, one of the best I have ever tried. This area of Wilson was one the bastion of the huge tobacco market in Wilson, which is now gone. So the places left along highway 301 are remnants of a time gone by when the wealth of the town was here. Good advice is to come early to beat the wait.
White Lake NC.. This crystal clear lake is a great place to take the family for a day or a weekend. There is a boat house, a pier to lay on, rides for the kids, some restaurants, and lots of small motels. White Lake has a long history and many people return with their children in tow every year. There are several beaches, but the main one now is Goldston's, which has the pier and such. The water is extremely clear being spring fed and the slope is very gradual which makes it "the safest beach in the USA". Goldston's has a game house and a grocery store too. Just off highway 701 south of Garland NC.
Clamdigger Inn..Pine Knoll Shores NC...First off this is not a resort and it certainly is not the place to go if your idea of beach fun is to party, drink, and make merry. Oh, they have a nightclub and serve alcohol, but that is not the emphasis of this smallish hotel. This place is perfect for families and safety. I began coming here when the Eastern Press Association began having meetings there. Immediately I took a liking to it as it is not crowded, the beach is nice, it is close to the aquarium, the onsite restaurant is pretty good too. Add in that it is still owned by a family and the rates are reasonable, even for a beach. Parking lot is right in front of the hotel, but note there are no bellmen here. As I said this is not your upscale resort, it is a place to go spend the night, enjoy the beach, and relax. On the main road on Emerald Isle.
Joe Sugars... St. Pauls NC...Back in 1982 when I was working in Fayetteville NC one of the accounts I was assigned was Joe Sugars in St. Pauls. It was my lucky day. Not only did I find a good place to buy men's clothes, but I got to meet the owner who at the time was Stanley Sugar. Stanley inherited the store from his father who started it back in the early 1900's. Stanley knew more about marketing small business than anyone I ever met, I learned a lot at his knee for many years. The current owner Joe Sugar Jr. who is family too and has maybe has the largest selection of men's clothes in North Carolina, maybe in several states. Their motto is " If you got a figure we can fit it" , is no joke they can do just that. Frankly there is no piece of men's clothing that can not be bought there. Almost any size you can imagine. It is worth the trip just to see some of the big pants they have in stock. Great selection, good prices, lot of sizes, and family ownership, check it out. Right off I-95 in St. Pauls NC easy to find.
Elizabeth's Pecans...Turkey NC..If you like pecan brittle, then this is your place. I challenge you to find better brittle anywhere. They got lots of other goodies too, but people come back for the delicious pecan selections. The chocolate pecans are down right addicitive. Hard to find place right off I-40 near Turkey NC. I suggest you google it. Mail order available
The Peanut Roaster...Henderson NC..For my money the Golden Gourmet peanuts from this place are the best you can eat. The peanuts are golden fried and crunchy when eaten. The Peanut Roaster has all kinds of nuts, but I keep coming back for the peanuts. A visit to the place in Henderson offers you the chance to sample everything they got in stock too. Off I-85 north Henderson. Mail order available.
Nunnery Freeman BBQ..Henderson NC...I came upon this BBQ restaurant back when first visiting Henderson NC when Roses Stores was a big operation. Their restaurant is in the northern portion of town and has a small sign which is hard to find and a building with windows all around. Nunnery Freeman used to have two locations, but now is down to one. But do not be fooled by that these people know how to do one thing really well. Their Bruinswick Stew is the best you will find anywhere. Lots of fresh ingredients and available in several sizes. My wife craves this stuff and we will drive to Henderson for the expressed purpose of eating this stew and nothing else. Nunnery Freeman also does pork barbecue pretty well too. They use a proprietary cooker that literally pressure cooks the barbecue and makes it tender and pushes the flavors into the meat.
Friday, June 3, 2011
Why Job Creation is so Anemic
With the dismal jobs report this morning a post I have been preparing for sometime is now most relevant.
I am one of those people who are willing to take serious risks. In the last ten years I personally have tried and failed at 2 businesses. So what did I do, quit my job and started a personal business. Albeit a one person personal business right now, but I have been very successful this time. All this started when I quit my employment almost three years ago to begin this quest right before and obviously not knowing about the coming 2008 economic debacle, but my confidence in my skills led me to believe I could make it. I am making much more than when I left my job. I expect I could continue operating at this level for as long as I want to work.
At this point I have considered expanding and and increasing my income significantly. That expansion would likely immediately employ one or two new people, require my CPA to add some billable hours, require me to employ some legal help, and consider renting a new office locally. I also would be taking out a loan at the local bank. All of these actions would be a positive to the economy, as well as create additional employment there too.
After some soul searching and fact finding with my CPA, some legal advice, and prospective partners I have decided to hold off for now. Why? Many reasons. One, simply no assurance capital gains or individual tax rates are going to remain the same. The silliness of extending the tax rates only two years means nothing to prospective business owners who need to plan long term when considering investing serious money in a venture. I can only assume rates will go up since the current administration wants them to, but by how much? Two, this government has become so anti-business I fear what is coming next from them that would hurt any further investment Three, I have no idea what will eventually be required of me from the current health care laws and therefore how much it will cost me for employee insurance. I do suspect it will be significantly more than I now expect. Four, getting a bank loan has become very difficult.
Finally considering all above and the fact that I could be pushed to the maximum federal rate in annual taxable earnings I frankly am not sure that additional hours of hard work and the resulting increase in income would not be taxed away at a rate that makes the additional risk and work worthwhile.
The tax rate my additional income could be subject to is as follows. NC state income tax 7.75%, new health care law medicare tax 3.8% when applied, top federal tax rate desired by the current administration 39.6%, and Social Security and Medicare tax on first $106800 of 15.3% once the current reduced tax rates expire in two years. So on my first $106800 of business income my rate would be 39.6%+7.75%+3.8%+15.3 % = 66.45% total on first $106.8k of additional income. Now I know some might think, I wish I could make that kind of money I would be glad to pay the tax. Maybe so, but consider if you were RISKING several hundred thousand dollars of your own capital to start a business that might fail and you will make only 33.55 cents clear on every dollar of profit would you be willing to risk your money? I suspect many would not.
Just about one month ago I considered the possible opportunity to purchase a ongoing business of which I had significant understanding. The price would likely be good and the chance of adding profit high. But again after considering the current anti-business climate and future tax burden outlined above I figured the additional work was not worth the trouble.
I expect there are other entrepreneurs amd small town investors out there who think like I do. With all this in mind it is easy to see why job creation is so anemic.
I am one of those people who are willing to take serious risks. In the last ten years I personally have tried and failed at 2 businesses. So what did I do, quit my job and started a personal business. Albeit a one person personal business right now, but I have been very successful this time. All this started when I quit my employment almost three years ago to begin this quest right before and obviously not knowing about the coming 2008 economic debacle, but my confidence in my skills led me to believe I could make it. I am making much more than when I left my job. I expect I could continue operating at this level for as long as I want to work.
At this point I have considered expanding and and increasing my income significantly. That expansion would likely immediately employ one or two new people, require my CPA to add some billable hours, require me to employ some legal help, and consider renting a new office locally. I also would be taking out a loan at the local bank. All of these actions would be a positive to the economy, as well as create additional employment there too.
After some soul searching and fact finding with my CPA, some legal advice, and prospective partners I have decided to hold off for now. Why? Many reasons. One, simply no assurance capital gains or individual tax rates are going to remain the same. The silliness of extending the tax rates only two years means nothing to prospective business owners who need to plan long term when considering investing serious money in a venture. I can only assume rates will go up since the current administration wants them to, but by how much? Two, this government has become so anti-business I fear what is coming next from them that would hurt any further investment Three, I have no idea what will eventually be required of me from the current health care laws and therefore how much it will cost me for employee insurance. I do suspect it will be significantly more than I now expect. Four, getting a bank loan has become very difficult.
Finally considering all above and the fact that I could be pushed to the maximum federal rate in annual taxable earnings I frankly am not sure that additional hours of hard work and the resulting increase in income would not be taxed away at a rate that makes the additional risk and work worthwhile.
The tax rate my additional income could be subject to is as follows. NC state income tax 7.75%, new health care law medicare tax 3.8% when applied, top federal tax rate desired by the current administration 39.6%, and Social Security and Medicare tax on first $106800 of 15.3% once the current reduced tax rates expire in two years. So on my first $106800 of business income my rate would be 39.6%+7.75%+3.8%+15.3 % = 66.45% total on first $106.8k of additional income. Now I know some might think, I wish I could make that kind of money I would be glad to pay the tax. Maybe so, but consider if you were RISKING several hundred thousand dollars of your own capital to start a business that might fail and you will make only 33.55 cents clear on every dollar of profit would you be willing to risk your money? I suspect many would not.
Just about one month ago I considered the possible opportunity to purchase a ongoing business of which I had significant understanding. The price would likely be good and the chance of adding profit high. But again after considering the current anti-business climate and future tax burden outlined above I figured the additional work was not worth the trouble.
I expect there are other entrepreneurs amd small town investors out there who think like I do. With all this in mind it is easy to see why job creation is so anemic.
Thursday, June 2, 2011
Covered Call Options are for anyone
Got a question this week regarding options, how complicated they are, and if anyone can do them. The simple answer is yes they can be complicated and yes anyone can do them. However with call options there really is no complication and frankly they are very safe income strategy that anyone can do. In this posting I will explain call options, how you can use them, and give an example.
Options are no more than stock insurance. On the options market each trading day anyone can buy and sell options on stocks and other investment instruments. Options are intended to take some of the risk out of owning securities, but they also can make companies honest in their dealings with shareholders due to a strategy called short selling. Investors or traders are allowed to buy and sell certain options depending on the risk involved and are assigned levels of allowed trading based on experience and size of account. You can have millions of dollars and have no experience in certain options and you will not get approval to trade. The levels run from level one to level five. Level five in my opinion involves suicide traders since the options allowed there are asking for suicide if you trade them. I personally am allowed level four trading. Covered calls are assigned level one and frankly with minimal paperwork anyone can be assigned this level of trading.
Covered calls work like this. You own a stock and the stock has options. Almost every stock has options and you can find options where you find stock quotes. Usually somewhere on a sidebar. Yahoo is an excellent place to find option quotes and you can find them on the right hand bar third listing down. When you click on the options link you get call options and put options by expiration month. In this case we are looking at call options. So once you select call options you decide which month you want to take a option position. Usually they have a couple of up front months and then some out months sometimes going out a a year or more. The further you go out the more premium you get for the option. Premium is the amount you get if you sell a call option.
For this example let's use a very familiar and stock that is held by lots of people, Johnson and Johnson, symbol JNJ. As of the moment I am writing this JNJ is trading at $66.49. Let's also say you hold 500 shares. It does not matter what you paid for the stock as you can write a call option if you have a gain or loss in the stock. So a JNJ call option for $67.50 can be sold for 80 cents per share at this point which expires on the third Friday in July. So 80 cents per share for 500 shares equals $400 less commission. Using Scottrade, and I am not endorsing Scottrade just using their price, the price is $7 plus $1.25 per contract. Each 100 shares is a considered a contract and you must trade in lots of 100 shares for options. So the commission cost is $13.25 and you net $386.75 for the trade. Now if the stock does not go above $67.50 before the thrid Friday in July you keep your stock and keep the premium. If the stock trades over $67.50 anytime before the expiration date the holder of the option can "call" the stock from you. The person does pay you $67.50 for the stock, but anything over that price is the option holder's profit. The cost of selling your stock at Scottrade would be $7.00 so you would clear the $33750 for the 500 shares less $7. Note that you get to keep the profit between the $66.49 price of the stock when you sold the option and the $67.50 the option holder paid you.
Selling covered calls is called "writing" an option and as you can see call options are simply a way to increase your income on any stock you own. Once expiration date has arrived and the stock is not called away you can write another call option on the same shares. Doing this over and over again can make some nice premiums on your holdings. It has been years since I actually sold a stock, usually it gets called away from me after I have wrote an option. I call it letting someone pay my commission out of a stock. One other note, a smart play is anytime you buy a stock is to immediately write a call option out a few dollars and a month or two on the stock. That immediately lowers our cost basis and begins the process of making money on your investment.
This strategy works well in a market that is flat and trending up and of course it helps if you have a profit position in the stock so as not to lose any money. But even if none of these condition exist you can write options on stock far enough out time wise to most times not lose money and make some option premium. So go sign up for call options trading and make some extra money on your holdings. If you have questions e-mail and ask.
Options are no more than stock insurance. On the options market each trading day anyone can buy and sell options on stocks and other investment instruments. Options are intended to take some of the risk out of owning securities, but they also can make companies honest in their dealings with shareholders due to a strategy called short selling. Investors or traders are allowed to buy and sell certain options depending on the risk involved and are assigned levels of allowed trading based on experience and size of account. You can have millions of dollars and have no experience in certain options and you will not get approval to trade. The levels run from level one to level five. Level five in my opinion involves suicide traders since the options allowed there are asking for suicide if you trade them. I personally am allowed level four trading. Covered calls are assigned level one and frankly with minimal paperwork anyone can be assigned this level of trading.
Covered calls work like this. You own a stock and the stock has options. Almost every stock has options and you can find options where you find stock quotes. Usually somewhere on a sidebar. Yahoo is an excellent place to find option quotes and you can find them on the right hand bar third listing down. When you click on the options link you get call options and put options by expiration month. In this case we are looking at call options. So once you select call options you decide which month you want to take a option position. Usually they have a couple of up front months and then some out months sometimes going out a a year or more. The further you go out the more premium you get for the option. Premium is the amount you get if you sell a call option.
For this example let's use a very familiar and stock that is held by lots of people, Johnson and Johnson, symbol JNJ. As of the moment I am writing this JNJ is trading at $66.49. Let's also say you hold 500 shares. It does not matter what you paid for the stock as you can write a call option if you have a gain or loss in the stock. So a JNJ call option for $67.50 can be sold for 80 cents per share at this point which expires on the third Friday in July. So 80 cents per share for 500 shares equals $400 less commission. Using Scottrade, and I am not endorsing Scottrade just using their price, the price is $7 plus $1.25 per contract. Each 100 shares is a considered a contract and you must trade in lots of 100 shares for options. So the commission cost is $13.25 and you net $386.75 for the trade. Now if the stock does not go above $67.50 before the thrid Friday in July you keep your stock and keep the premium. If the stock trades over $67.50 anytime before the expiration date the holder of the option can "call" the stock from you. The person does pay you $67.50 for the stock, but anything over that price is the option holder's profit. The cost of selling your stock at Scottrade would be $7.00 so you would clear the $33750 for the 500 shares less $7. Note that you get to keep the profit between the $66.49 price of the stock when you sold the option and the $67.50 the option holder paid you.
Selling covered calls is called "writing" an option and as you can see call options are simply a way to increase your income on any stock you own. Once expiration date has arrived and the stock is not called away you can write another call option on the same shares. Doing this over and over again can make some nice premiums on your holdings. It has been years since I actually sold a stock, usually it gets called away from me after I have wrote an option. I call it letting someone pay my commission out of a stock. One other note, a smart play is anytime you buy a stock is to immediately write a call option out a few dollars and a month or two on the stock. That immediately lowers our cost basis and begins the process of making money on your investment.
This strategy works well in a market that is flat and trending up and of course it helps if you have a profit position in the stock so as not to lose any money. But even if none of these condition exist you can write options on stock far enough out time wise to most times not lose money and make some option premium. So go sign up for call options trading and make some extra money on your holdings. If you have questions e-mail and ask.
Wednesday, June 1, 2011
Todays Market Drop
I am not surprised at today's market drop and would not be surprised to see it continue on down for awhile. But nothing is certain in this market that sometimes seems to have Teflon when it comes to bad news. Most traders noticed that sometime in March of this year many defensive stocks began to move upward with mutual funds buying more of them for protection going forward. The STI Hedge Fund trading portfolio, as you would have noticed if you read my posts, has been dropping stocks and positions that were more concerning. ARCC, NYB, PGH, CWH, HPT, and RGC are all stocks that we have dropped from trading this year. All of these are good companies, but if the economy is slowing these smaller capital companies will fare worse price wise. Frankly the economy slowing is not news if you again have been reading the blog. We have lamented constantly about never knowing any economic expansion lasting long without housing participation. Housing in the last week has shown it is not only not participating, but it is going downward at an ever increasing pace. At this point I again tell you if you want to make the best investment currently available going forward buy a house. You can negotiate a good buy and get some generational low financing rates. The federal reserve and Obama administration has made it clear that if you are a saver you are to continue to be screwed with low rates. If you are a borrower you are getting the deal of a lifetime.
There is also the fact unemployment is not in a positive trend. No matter how much the media trys to spin it anyone who has day to day contact with business knows few places that are hiring long term positions. Actual unemployment is in the range of 16% or so if you use true figures. That is not about to change if we continue to pay long term unemployment benefits no matter how cruel that sounds. Many people drawing unemployment are not accepting the new normal of a lower pay future or going to school to learn new skills. Only the rough edge of no money tends to focus the mind to that reality. States are also not wanting to accept the new normal of much less revenue long term coming in the coffers. The only way to do that is to cut expenses, cut staffing, and get right with future revenue. Again a cruel fact, but fact nonetheless. Here is the truth, we are not going back to a strongly growing economy within at least one generation due to past and recent federal fiscal mismanagement. We must begin to install growth policies sooner rather than later.
If anyone knows what happens next please e-mail me because I would like to know. With QE2 ending, the federal government mired in indecision, federal spending totally out of control, states cutting back due to lack of revenue, and companies such as Walmart saying publicly that business is taking a downturn something has to give. Either the federal reserve decides to keep adding sugar to the pot and trying to make the economy turn back up or we get a downturn that might not end pretty. A sugar high sooner or later has a hangover and we might be there this time. Politically President Obama, looking at reelection has put himself in a hell of a mess. The stimulus has bombed and no one, his party or the other party, wants any part of the political suicide that would result from further stimulus.
Most more seasoned economists know that likely the best medicine back two years ago would have been to let the markets take the bad medicine needed to clean out the debris and with appropriate federal action of cutting tax rates we might have been pulling out of the economic problems about now. All that is to say we still got trouble and the best thing to do when you got trouble is to buy long bonds and get in defensive stocks. The problem with bonds is which ones to trust and with interest rates down so low there is no down anymore in rates and therefore no up in bonds prices left to gain. Most stocks in our trading portfolio now are of the defensive variety. The only exceptions are SCCO, SDRL.and DO. All three of these are doing business outside the US and will likely not get by the political and fiscal mismanagement here. If I was to pick out the most defensive stocks in the group now they would be, MO., DUK, HCN, PFF, SO, and BCE. But any of the stocks there are pretty safe and if the market does take a tumble of significant size and prices take a plunge, these shares would hold up better than most. We also know they would likely keep paying their dividends and once the economic downturn is over prices would move up nicely.
So the best path is to be patient, keep good quality stocks, and wait and see.
There is also the fact unemployment is not in a positive trend. No matter how much the media trys to spin it anyone who has day to day contact with business knows few places that are hiring long term positions. Actual unemployment is in the range of 16% or so if you use true figures. That is not about to change if we continue to pay long term unemployment benefits no matter how cruel that sounds. Many people drawing unemployment are not accepting the new normal of a lower pay future or going to school to learn new skills. Only the rough edge of no money tends to focus the mind to that reality. States are also not wanting to accept the new normal of much less revenue long term coming in the coffers. The only way to do that is to cut expenses, cut staffing, and get right with future revenue. Again a cruel fact, but fact nonetheless. Here is the truth, we are not going back to a strongly growing economy within at least one generation due to past and recent federal fiscal mismanagement. We must begin to install growth policies sooner rather than later.
If anyone knows what happens next please e-mail me because I would like to know. With QE2 ending, the federal government mired in indecision, federal spending totally out of control, states cutting back due to lack of revenue, and companies such as Walmart saying publicly that business is taking a downturn something has to give. Either the federal reserve decides to keep adding sugar to the pot and trying to make the economy turn back up or we get a downturn that might not end pretty. A sugar high sooner or later has a hangover and we might be there this time. Politically President Obama, looking at reelection has put himself in a hell of a mess. The stimulus has bombed and no one, his party or the other party, wants any part of the political suicide that would result from further stimulus.
Most more seasoned economists know that likely the best medicine back two years ago would have been to let the markets take the bad medicine needed to clean out the debris and with appropriate federal action of cutting tax rates we might have been pulling out of the economic problems about now. All that is to say we still got trouble and the best thing to do when you got trouble is to buy long bonds and get in defensive stocks. The problem with bonds is which ones to trust and with interest rates down so low there is no down anymore in rates and therefore no up in bonds prices left to gain. Most stocks in our trading portfolio now are of the defensive variety. The only exceptions are SCCO, SDRL.and DO. All three of these are doing business outside the US and will likely not get by the political and fiscal mismanagement here. If I was to pick out the most defensive stocks in the group now they would be, MO., DUK, HCN, PFF, SO, and BCE. But any of the stocks there are pretty safe and if the market does take a tumble of significant size and prices take a plunge, these shares would hold up better than most. We also know they would likely keep paying their dividends and once the economic downturn is over prices would move up nicely.
So the best path is to be patient, keep good quality stocks, and wait and see.
Adding back a Position
When I am wrong I am wrong. So I am admitting this error right up front. I deleted Seadrill, symbol SDRL, from my trading portfolio just a week ago from the concern that rising interest rates were going to do a number on this firm's profits going forward. Makes sense QE2 ending and SDRL has lots of debt. SDRL basically buys rigs with debt and uses them to do offshore oil drilling work for other companies. So what does SDRL do? They go and report a stellar earnings quarter and raises their already nice dividend. Not only raises the dividend, but adds on a special dividend. Within the earnings report they note the sale of two rigs that are older, and in SDRL's case older means a couple of years. This firm uses the latest in technology so oil companies line up to use them and they have a $11 billion dollar backlog in orders. SDRL also bought a couple of new rigs to use for contracts just awarded from major oil companies, such as Conoco Phillips. So to heck with rising interest rates I am signing back onboard this driller and participating in their profits. Lastly let's add in that Seadrill has NO rigs in United States waters so the current unfriendly political environment here can not harm their business. What's not to like here.
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