A 50th Anniversary Celebration..The Country Squire, Vintage Inn, and Winery.

Earlier this year I took an opportunity to assist a restaurant celebrating their 50th Anniversary.  Since retiring form advertising 3 years ago  I generally avoid doing marketing work, but I have had a personal relationship with this business going on 33 years.  (note I am not taking monetary compensation for this effort as it is truly a joy for me to be a part of the event )  Having personally known the person who started this dining establishment as well as current owner the place feels like home to me. Home in the sense one can visit a place enough you know the people like family. I got married there over a couple decades ago and have experienced many memorable moments in the building, including being at the 20th Anniversary celebration thirty years ago, their last big celebration.  The Country Squire, Vintage Inn, and Winery is one of the most fascinating places I have ever dined or stayed.  You can see it online at their website and facebook page, but frankly only actually visiting the place does it justice. The moment you walk in the door. you know that the place is not like other places you go to dine.  You feel like you have stepped back in time to where knights reigned and being the "country squire" meant you got top of the line service and food.   The owner, Iris Lennon, enhances your travel back in time as she is Scottish and her accent is as much.

 

"The Squire" as many locals and long time customers call it is an assembly of several older buildings from the area brought together to this place over the years to form dining areas. a tavern, a large entertainment and meeting hall, and of course a kitchen. The motel added on a few years after the restaurant was started is comfortable and quiet. The winery started in the last decade is the love of the owner's daughter and they produce some pretty good wines for a winery so young.  The Squire is just a honest for real off the beaten path, out of the way place, where you can get away from it all and just enjoy yourself.  The food is good and the service superb. The motel is quiet and romantic.

 

Some of the more interesting places in the complex are the sunked garden and the little house at back of the place that looks like a gingerbread house, which you can stay in overnight. Trees grow through the ceiling in the main dining areas and there are apples in what seems like every nook and cranny which are free on the taking. The apples also enhance the smell of the place. Smell, which I believe, are the best sense to bring back memories is what catches me every time I enter the place.

 

I opined to Ms.Lennon several years ago that so many people had dined, got married, celebrated birthdays or anniversaries, and experience other memorable moments at The Squire, that she and the Squire were "the keeper of memories".  Maybe that is why they have so apply named their 50th Anniversary "Celebrates 50 Years of Memories".  I expect others do as I do and remember the table or spot in the complex where something happened that is a wonderful memory.

 

The most fascinating fact about this 50th Anniversary, other than the fact restaurants rarely make it to 50 years,  is that The Squire has someone still working there who was there the day the place opened back those so many years ago. Now folks that just might be a first of it's kind anywhere. I have met the person and enjoyed our visit, I will allow you to visit The Squire and do the same on your own. Many other employees have been there over 20 years. That kind of loyalty tells you something about the place.

 

Back to the 50th Anniversary. Joe West, who started this place back in August 1961, would be most pleased with  what Iris Lennon, her family, and staff have put together for a fun weekend August 12-14. From singing groups, music, exhibits,  to special dining opportunities check out their Facebook page for more details. But even if you do not take in this special weekend, take my advice and go dine and spend the night at The Country Squire and Vintage Inn. The relaxation is worth the trip.  Ask about their weekend getaway special that included a night's stay and their wonderful tenderloin of beef for two dinner. Plenty to do in the area too as Duplin County, where The Squire is located,  is filled with early American history.

 

Info on Facebook at Country Squire Winery. The facebook page has photos that give you a sense of the place. Online at http://www.countrysquireinn.com/

STI Hedge Fund July Performance.

Like the Federal Reserve I am all out of bullets after July trading.  The limited number of trades available within the asset base of the hedge fund going into July led me to believe the performance for July would be sub par. However the month was improved because of some unusual volatility pricing and us taking advantage of a couple of reserve positions that offered premium value due to the volatility. So we get to report a stellar month of 21.63% annualized profits for the month.  This improves our year to date performance to 16.8%, which still good is below our 18% goal.

 

Trading profits this month were drove primarily by oil stock options and tobacco stock options. Real estate option trading contributed nicely as well.  We also got a boost from an improved trading expense agreement with our broker. Add in that we got a nice swap on the cost of interest expense and dividend income. In all a superior month.

 

Looking forward to August as we noted all bullets have been used and we have the smallest number of positions to trade this year, so a repeat performance is not to be expected. The good news is that almost all of our positions coming up for trading are our best performers. I do not expect to get any assigned post ions back this month since the world's markets, including the US market, remain in turmoil due to the budgetary impasse here and the Greek situation in Europe. We did get a couple of unexpected positions back during July. As expected our carry forward losses improved during July, significantly for SCCO, which never was a concern. FTR and WIN continue to be losses we will realize at year end. The new one, and totally a surprise, is CTL. CTL got hit with arbitrage selling due to an earlier merger with a small firm so even there we expect the price to stabilize nearer year end. A note on carry forward losses. Due to the nature of put option trading the fund regularly has paper losses, but the vast majority of these losses are soon gone due to call option put backs.  However in the current market due to the uncertainty in Washington DC and the GDP number this morning a traders screen can look scary red and takes serious nerves to keep held positions.

 

We will continue to hold almost all positions in the fund in high quality dividend paying securities due to the weakening economy and political concerns currently. We have reduced our number of holdings to 21 stocks, of which 2 are speculative, 3 are being sold out of the fund, so we are left with only 16 going forward for all our basic trades.               

The Adults in Chapel Hill finally take back over.

I am pleased this morning that finally some adults stepped forward in Chapel Hill yesterday, albeit the timing could have been better, but at least the adults stood up and did the right thing.  Yes, the best time would have right after the season was over last year since the players in the football team will be needlessly punished due to waiting until now to fire Coach Davis.  The problems with the management of the football program goes right to the head of the program and that means Butch Davis. Does not matter if he participated in or even knew of any of the problems, but at $2 million dollars annually you should know. As they say when the train jumps the track, people only are interested in who was running the train at the time, Butch was running the train.

 

However this goes deeper than Butch Davis and the football program. This is a problem we have nationwide now, where end results are more important than doing things the correct way and not the politically correct way. We are teaching a generation of young people that it is ok to cheat, lie, steal, etc if the results in the end produce what we wanted all along. I expect some of this change at Carolina started in the grass roots so to speak when the professional school graduates and other graduates told the people in charge that the institutional ACCEPTANCE of wrongdoing at Carolina was tarnishing their hard earned degrees and reputations that they went to school at the University of North Carolina for in the first place. Like it or not, having a degree from UNC is much better in the marketplace than having a degree from NC State, East Carolina, and most other schools in this state. I expect some of the comments to the leaders of the university went something like this, "if you guys do not do something about the football program problems the advantage I got from going to UNC means I just have soon had gone to State or ECU" or you name the school. Trust me there is a reason that UNC and Duke or intense rivals unlike any other athletic programs in the state, they are considered the top ACADEMIC schools in the state. Besides the 100 or so people who participate in the football program there are hundreds of thousands of people who graduated from UNC and those graduates and their contributions to society are more important than any win on the football field.

 

As I opined in an earlier posting there are those who live and breathe this sports fan stuff and that is also the problem. Winning is nice, but it does not feed or cloth you, it does not change or effect the most important things in life. If you think colleges and universities are for football teams my friend it is time for you to realign your priorities. It is a Saturday event and that is it.

 

Fortunately as I mentioned above the adults have again taken charge in Chapel Hill and are looking after the students there above all again.  I am also happy that John Swofford stood up this week as well and made similar comments towards leading the ACC that way again. Duke University made the decision years ago to place academics before football and their graduates are accorded high respect due to that decision. North Carolina officials made the same decision yesterday to keep the respect they have earned over the years. Maybe, just maybe we are finally moving in the right direction. Now are the adults in Raleigh, Greenville, and other schools in this state listening and will begin to put the athletic programs there in the proper perspective as well?  If they are then the hopes that William Friday of academic excellence at all our state schools, both public and private, will become a reality.  Who knows maybe we can find some adults in Washington DC as well:)

 

 

Rate Sensitive Stocks

The Federal Reserve, via Chairman Bernanke's testimony to Congress,  signaled this past week that interest rates would not be going up for a long time.  That in my opinion opens up opportunities with a stock sector I have been avoiding, mortgage backed securities stocks. MBS stocks are REITS that hold residential pass thorough securities that are guaranteed by an agency of the federal government.  These generally are issued by Fannie Mae and Freddie Mac, but can be any agency of the federal government that guarantees home mortgages.  These REITS make their money on the spread between the cost of short term borrowing and the income from higher rate longer term mortgage securities. Your principal is guaranteed, but the value of a mortgage security depends on interest rates. If rates are rising your value goes down because the spread between already held securities and rising short term interest rates narrows. REITS are required to pay our essentially all their profits each quarter and are taxed at normal rates not advantaged dividend rates. The advantage for shareholders is that these stocks produce superior dividend income, sometimes nearing 20%.  That is not a typo,these are real pay outs. Stock prices for these securities tend to be quite static as there is little growth of capital, only payout of high dividend income.

 

The threat to these stocks is a rising short term interest rate. When that happens it is not unusual to see share prices move down quickly. Many investors avoid these stocks just for that reason. So with the Federal Reserve signaling that short term rates will be not rising anytime soon now might be the time to take the dive into these stocks. Less risk of capital loss and nice dividends make these stocks attractive. Normally the way to value a stock is thus GDP plus dividend plus inflation. Below I will outline three of them I like at this time.

 

Annaly Mortgage..., symbol NLY, The biggest of these MBS stocks by a large margin. In fact NLY is so big it is bigger than all the rest put together. If you are looking for the best of breed NLY is it.  Payout currently is about 14%.  The point with NLY is they have many adjustable rate mortgages that have to be recycled over and over. Of course in a static rate environment the only problem there is the cost of the transaction. So for the time being the payout is likely solid.  Long experienced management team makes for a good company as well.

 

Hatteras Financial....symbol HTS,  A new company that has only been in business of a few years. It is headquartered in North Carolina, so if you like local stocks this is one. HTS gas the most floating rates in the MBS universe, so if rates rise this stock will be the least adversely affected. For the few years they have been in business they have shown excellent smarts in navigating the MBS environment. Current payout is about 15%.

 

Cypress Sharpridge..symbol CYS, I have mentioned this one in an earlier posting. I had wanted to sell a option on this stock, but circumstances and prices did not work out so I passed on the position.  With a 18.5% current payout this one certainly has appeal. Most of their mortgages are 15 year based so if you believe interest rates are not going up for a good bit this stock is your choice.

 

There are several other stocks in this category, MFA, CMO, AGNC, CIM, and some others. Most have solid double digit dividends and most are pretty solid in this rate environment. I would suggest you do your own due diligence before buying.

 

I currently hold either a long position or option in HTS.

Greek finally default on bonds and how that effects US bonds

Note to readers in 33 years of investing I have never bought, never owned. and never plan to own US Government debt. So I can opine here with abandon knowing I do not have a dog in this fight.

 

The new Greek and European Bank plan to deal with the debt of the Greece is nothing more than default on their bonds. The deal simply explained means that the European Bank will redeem Greek bonds and issue new bonds for 79 cents on the dollar, but in truth the deal will mean bondholders are really only getting a new bond for 67 cents on the dollar since the interest rates will be lower than are currently being paid to the bondholders.  Add in that the Germans mostly and other European taxpayers are on the hook as collateral for the new bonds since everyone knows that the Greeks can not pay for these bonds either. The only thing holding up this deal is that there is the guarantee of payment by the European Bank. So the people of Greece and the government of Greece just keep on keeping on with their overspending and non payment of debt.  Wonder who will step up and buy these worthless securities? Could be time for the European Bank to begin printing money for the first time like the US federal reserve has done for years to buy the bonds themselves. Now that would be serious ground breaking in a Europe that has been historically horrified of any inflation.  Read here, old people get really screwed and Europe is full of old people.

 

Now you can be sure the people and governments of Ireland, Portugal, and Spain are taking a look at this and saying if the Greeks can default then why can't we too. Add in that Italy's latest efforts at reining in their problems has only delayed the day of reckoning there. The Italians might be smarter than others as they have put much of their bond maturities further out in years than others, but of course at higher interest costs. France will be the next country up in this ring of debt as they also have entitlements that are not sustainable in their budget either.

 

Now if you think your political leaders in Washington DC, especially those who believe money just happens and is not earned, are not looking at this paying only partial value for redeemed bonds as well then you my friend are a fool.  If these other countries can reduce their debt load by simply issuing new bonds with reduced face value then why not do it here in the US.  Besides the game can be pushed on a believing public that the evil, rich, and greedy millionaires and billionaires are the ones taking the haircuts. Of course no one will mention that US states, pension funds, many individuals, and retirement funds all posses US government bonds. But again that is their problem and the purpose would be to rid the US FEDERAL government of difficult bond payments and allow further increased government spending on those who would be said to need it worse. Add in the politicians who do this will win the adoration from voters who have no holdings in US bonds and likely get reelected.  Laugh if you will, but if we get in a real bind and the proper adults are not in a position to say no remember you heard it here first. Quick name one adult in Washington currently.

 

Also note that none other than Warren Buffett has suggested this might happen during the 2009 meltdown of bond values.  Bill Gross, no bond dummy himself, has been selling the US government securities out of his PIMCO holdings for some time now.  Now this is not to say US government bonds are not safe, this just states that people of influence and serious amounts of assets are lessening their holdings of these bonds currently. You be the judge here.

 

The current debate on the debt ceiling could get interesting as well. Let's assume that the sides do not agree and borrowing capacity is stopped. First off the only reason there might be a default is because Obama decides to stiff bond holders and pay other government bills. Yes, I know the law says bond holders are the first to be paid from any government revenues, but in this politicized environment who knows who will be first in line. Add in that the president has shown he is not to be constrained by law, note the bankruptcy deals for Chrysler and GM where bondholders were stiffed against current standing law. Now Obama could pay Social Security and welfare recipients first, or could pay government contractors first, or could pay bond holders first, etc. With around $200 billion of revenues coming in monthly and needing another $100 plus billion monthly to pay all debts the options, or actually targets, are numerous. The most obvious will be Social Security or bondholders to get the most political punch. Social Security payees are a big block of voters and with Senator Schumer from NY, who scuttled the deal last weekend, spoiling for a fight this pick packs punch for Democrats holding onto the US Senate next year. Stiffing bondholders gets punch from those who hold serious influence in Washington DC since they have the ear of people in positions of power. Ain't this fun? Well maybe not if you hold bonds. If I was a betting person, and noting of who got stiffed last time bondholders were involved like GM, I vote for bondholders getting stiffed. And you thought your US Government bonds were safe?  Also if you do not think the no deal scenario could happen, remember this crowd believes that no crisis should go to waste.

 

 

All this debt default is nothing more than the unraveling of the debt cycle that started buildup around 1965 and is unsustainable even with the biggest of suggested tax hikes.  Frankly I do not know where this will end and neither does anyone else. But I do know the day of reckoning for Europe and the US is upon us right now and between now and about 2018 or 2019  these things will be either solved or let to unravel in a viscous cascading of defaults.  Now maybe you fell comfy and safe holding your US government bonds or any other country's government bonds, maybe you feel safe with your cash or CD as the fed prints more dollars making them worth less with each passing day, but I do not.  You can go about your life and weekends with no worries, but there is not a living person in the US who will not have a very serious lifestyle change if something is not done.

               

Long Time Gone...Scotch Bonnett Pier

Growing up we lived near the beach, about 20 miles or so. So close that it was not unusual that when my father came home from work in the fall when the fish were running we would drive down to the beach and fish for a few hours and come home by bedtime.  My father having grown up in Onslow County NC it was just part of his nature to enjoy the beach since even before fast cars he could get to the beach and back in a day.  My mother who grew up further inland in Duplin County, where trips to the beach were not normal because of the further distance,  quickly took to beach trips and fishing.  She enjoyed fishing and I enjoyed watching her fishing. Picture this, cold fall night on a pier, wind blowing, my mother wrapped from head to toe to protect from the cold, and a fishing rod in her hand. No she did not have on the latest  fashion, "fishing chicks", but the pleasure to her was the same. When she would catch a fish, or if the spots were "really running" two at a time, she would pull the rod over the side of the pier for my father to take off the fish and bait the hooks again. She might have been a early female entrepreneur, but she understood where to draw the line on the messy stuff.

 

Anyway all this going to the beach got in my blood and the sea air got in my lungs.   Sea air is like perfume to me as the beach is "home" and I am uplifted with a few days of salty air and ocean water. When we first headed to the beach the pier we went to was Barnacle Bills on Topsail Island.  Understand you went to certain piers over and over since your friends went there and pier fishing was a social activity. Sorta Facebook before Facebook.  Shortly after I began going we switched piers to the newest one on the beach, The Scotch Bonnet.  The Scotch as it became to be known was opened sometime in the mid 1960's and was across the county border on Topsail Island in Onslow County. This area was the fast developing area of the island since the area NC legislative representative had promised a new high rise bridge on that northern end of the island and people were buying up land there. Topsail had only one way on the island at the time the old military built swing bridge about mid way down the island.  Even with the development you could drive to the northern end of Topsail Island then and see nothing, no lights, no people, no power poles, no nothing.  On fall nights after fishing we would drive there just to experience the total solitude and see the stars.

 

The Scotch Bonnet quickly drew many people from the older Barnacle Bills pier and these people became their own community as well. Some built homes near the pier, some like us took advantage of what would become the deal of a lifetime. That deal was a mobile home park right on the beach within 50 yards of the pier. Pull your "trailer" into our lot and get rent, water, and power for $250 per year for life. The purpose in this deal was to get people who would buy fishing privileges on the pier, buy from their store, and eat in their restaurants. It worked, lots of people including us took the deal.  We led to us spending nights at the beach and sometime days at a stretch. When the new bridge was completed the trip to work for my father to Camp Lejeune was actually shorter than from home. So life at the pier began. Like many before me I fell in love with what many would call "the pier life".  When I got my first job out of college I spent the first year living at the mobile home and frankly that might have been one of the best years of my life. The beach then had few people year round then and the people who worked at the pier and the people who lived near the pier got to know each other. We were thrilled to see Sunday nights, when the "weekenders" would leave and leave us with the solitude of the beach.

 

I spent lots of time at the beach even after I left my job in nearby Jacksonville for better opportunities inland in eastern NC. After my mother passed on in 1984 we sold our mobile home since my father did not go down there much anymore and I was busy building a career.  I suppose somewhere along the way I forgot about "the pier life", but like something breed into you I began to long for those days again after turning 40 or so. Unfortunately in 1996 it all came to an end in the name of Fran.  Hurricane Fran not only wiped out The Scotch Bonnet, it also took out most of the piers along the southeastern NC coast. Most pier owners, due to high insurance costs and building costs, did not rebuild. They sold their land to developers who wanted the ocean front land to build condos to sell.

 

For all intents and purposes "the pier life" was gone and is gone. There are still a few piers left along the coast, but none have the intimate social societies of the old piers.  The Scotch Bonnet only exists now in some photos and the minds of those of us who loved her.  On occasion I drive down to where the old Scotch was and walk out on the beach and reminisce. You can almost close your eyes and be there again, all the smells, all the noise, all the people. What is left now is a couple of posts from the pier out in the ocean about 25 yards. So close, but yet so far.  I miss The old Scotch and the people there, but would not give anything for having enjoyed those days with my "pier family". It might be long time gone, but it is not long time forgotten.

Dropping Stock on Watch and adding a Position

Effective this morning I will be dropping BP from further consideration for adding to the trading portfolio. This due some additional information about their liability from the Gulf oil spill coming to light. This info did not specify that there would actually be additional liability, just that the legal issues were unsettled. Therefore there remains the threat of any negative news to erode current price and valuation.

Adding to the portfolio will be HTS. I have posted on this security in the past and with the recent news that the economy is not moving forward anytime soon we feel more comfortable with this security going forward. So sometime in the next few days when the price moves in our direction we will take a position in HTS. The dividend payout is strong and since HTS has a majority of it's assets in long term ARM mortgages this should buoy the price and value of the stock.

This leaves us with 21 securities in the portfolio going forward, with 3 of these being dropped by year end, leaving 18 total. Concentration in the trading portfolio is expected in this uncertain market and slowing economy risking addition recessionary trends. I find myself seconding Steve Wynn's comments a day ago about opportunity now.

News Media in the Toilet.

If you want to understand why the news media in this country rates either at the bottom of near the bottom of trusted organizations take a look at your news leads today. Better yet try to avoid if you are looking for news the wall to wall non stop talking heads spilling out comments or breaking news on the News Corp. situation. Now note I am of like mind that the reporters and editors at the London newspaper went beyond what would be considered by about anyone acceptable ends to get info for their readers. Even with the relaxed standards of the UK press. However as I look now at least four networks are carrying the hearing in London wall to wall. This is AMERICAN networks doing this coverage of a news event, most people in the USA could care less about. Now yes part of this is the news media enjoying the fact that their despised nemesis Rupert Murdoch is getting what they consider his comeuppance. But none of this will change the facts of news coverage going forward in this country, and it sure will not bring back the once high credibility and respect the news media had here.

What this does really show is the incessant piling on to what the news media considers stories that have salaciousness that will garner ratings. In that attempt they use whatever news source, any source,  or considered facts that enable and enhance their agenda style reporting. Remember the Gulf oil spill from last summer and how the the Atlantic Ocean beaches were going to be destroyed by that event. How about the earthquake in Haiti and how bad it was, heard anything about that recently. I suppose we should be happy they have moved on from Caylee Anthony trial, but MOVED ON they have. I could list a dozen such events now, but do not want to waste the time.

If you were an investor in news media stocks the past decade you know what has happened to your holdings. This is the reason why, lazy and lousy reporting and editing. There was a time, and I worked in the media then, when this kind of news coverage would never happen. My career location at one time led me to be involved with the 1988 hostage taking at The Robesonian in Lumberton. The day after the hostage taking the entire staff of the newspaper participated in getting out the newspaper. We all had extra duty, I remember that I was asked to be one of several people to help edit that day's newspaper to make positively absolutely sure we were not making mistakes or making ourselves more of the story than just the facts. That kind of reporting my friends is today gone with the wind.

                

 

Thrid Quarter Trading Portfolio

Below are the stocks currently in the Small Town Investor Hedge Fund trading portfolio and my synopsis on each.

 

ARCC...This will be dropped by the end of 2011, possibly as early as next month due to an in the money call .  Ares Capital is a  business development company that lends capital to small companies and I have concerns about their immediate future due to the slowing economy.

 

BCE...Canadian telephone company. Continues to raise dividend and is in Canada where the political business environment is good. 

 

CTL...Legacy telephone company that operates in rural US markets. Great management and solid fundamentals. Above average dividends. A good buy currently as well.

 

DO. Diamond Offshore..Offshore driller who does no business in the US where the political environment is negative for drillers.

 

DUK..I continue to believe this utility will do well once merged and new and better leadership takes over.

 

ERF..Hands down still my favorite trading stock. Canadian oil company that continue to pay high dividends and find new oil and gas deposits. I have made more money on this stock than any stock ever.

 

FTR..legacy telephone stock.  good company and long term holding, but is no longer a good trading vehicle. Dropping end of 2011.

 

HCN..excellent operator of health care real estate. good dividend

 

JNK...continues to be good value ETF and despite concern over junk corporate bonds keeps it's price well.

 

LO...excellent trading stock and my largest holding. I still believe with the quality of earnings and solid management this stock is undervalued.

 

MO..steady eddie, just keeps selling product and paying dividends.

 

NNN..one of my two favorite real estate stocks. triple net leaser that raises dividend annually and is solid as they come.

 

O..my other real estate stock. monthly dividend payer continues to raise dividend. might be most friendly stockholder company on the planet.

 

PFF...solid preferred stock ETF. good dividend.

 

RAI...like MO keeps selling product and paying a dividend.

 

RRD..the largest printer left in the world. continues to buy out limited competition and pays out profits to shareholders.

 

SCCO...copper miner that is my play for gold. nothing in this tech connected world can be made without copper. nice dividend.

 

SO...best run utility on the planet. good regulatory atmosphere and conservative management make for a stock you can own and sleep like a baby.

 

WIN..legacy telephone company. good stock but no longer a good trading vehicle. dropping by end of 2011.

 

GS..largest most profitable investment banker on the planet. Knows their stuff and plays the political game better than about anyone.

 

Stocks on watchlist...

 

BP... should be poised for a comeback.

 

HTS..rate sensitive stock that now has appeal.

      

Casino Royale GS

One of my favorite movies is Casino Royale, the new one with Daniel Craig and Eva Green. Besides the great verbal interchanges between the two stars the most interesting moments for me are the two where James Bond must make decisions about how his nemesis is going to play his cards and should he go all in on the hand and pot. For those of you who watched the movie you know Bond loses the first hand and wins big on the second hand.  There are moments like that for me when selling put options and then waiting to see if the position is a winner.  Since as I have mentioned in earlier posts how I diversify and spread risk over several positions and stocks I rarely have a moment where I go out of my standing portfolio for positions. However the option I will be selling immediately after this post is for my purposes a "all in" position.

 

I have opined regularly on Goldman Sachs, symbol GS,  and the concern over the pending Congressional investigation and US Attorney General's inquiry into the firm's investment practices. Despite all that I have noted that since the firm donates hundreds of thousands of dollars to Obama's reelection coffers that there is the likelihood that he will pull the plug on investigations and protect his money flow. But of course in Washington there are no givens, so one best be careful of deployment of assets here.

 

 However yesterday I see where none other than Warren Buffett is taking a position in GS, he bought in at the tune of $5 billion of preferred stock and took warrants for another $5 billion later. So it seems Warren believes GS has long term value.  Who am I to argue with Warren?  Goldman Sachs is laying off 1100 people in the USA and hiring 330 in Singapore. This likely is a sign that GS like other multinational banks is headed overseas with their business since the Dodd-Frank financial regulation bill has limited the opportunities for trading profits in the USA, which is another positive sign. So effective with this posting I will be taking a put position in GS that is considerably larger than I had planned and at a higher strike price as well.   Yeah, not quite the size of Warren, but who is counting.

 

I hereby name this my "Casino Royale" moment.  Wonder if Eva is looking?

               

Why do Credit Rating Agencies have any credit themselves?

I remember back in the early years of this past decade when many Republicans, and notably George Bush,  were using credit agencies for securing their argument that Enron was a sound company. Heck, even Paul Krugman the NY Times liberal columnist and Enron board member himself threw it out there one time. During the run up to the sub prime housing collapse both sides used Moodys and S&P to say there was no problem to be found about the obvious wild lending going on at Fannie Mae. Franklin Raines, Jamey Gorelick, and James Johnson, all people who made millions at taxpayer expense while on the payroll at Fannie Mae could be quoted as saying the national credit agencies say everything is just hunky dory.

This past week the Obama administration took their run at saying the world was going to end if we did not do whatever had to be done to solve the debt ceiling impasse. After all as spokesman Jay Carney has said over and over the national credit agencies say our debt rating will be destroyed if we do not do whatever Obama wants to do.

Where were the debt agencies in the runup to the Greek monetary problems? How about the ongoing monetary problems in Portugal, Spain, and Ireland. Take Ireland for instance less than five years ago they were praising the "Irish Miracle" and how everyone should follow their path to prosperity. Just this week there was a scare threw up about Italy and their credit problems and possible downgrade. Italy proved just this week that they could do whatever was needed to handle their situation with several bold moves. Wrong, wrong, and wrong!

Excuse me to all of you, but look at the track record of these agencies. Enron, Fannie Mae, and totally missing the 2008 housing meltdown and we give these people any creditability? How about some stories now on how the credit agencies have taken many regular Joes for a screwing due to some foul-up in credit ratings personally. Someone tell me how in the world these agencies have any credit at all with anyone. Sometimes I wonder if the credit agencies just bend to the prevailing political winds in order to secure more business for themselves.

I have been a municipal bond buyer for over 30 years and I can not remember the last time I took a rating from the national credit ratings as a guide for purchases. Oh, I would take a look at their synopsis to see if I was missing some important info, but using their BBB or AAA as to if I would purchase the bond was worthless. One reason for this is I remember back in the early 1980's purchasing a muni bond rated AA in a large city in NC and about one year later found the bond not paying interest. The problem was the issuer was found to have cash flow problems. Upon my own investigation I discovered that anyone could have seen the cash flow problem just by doing a minimum of research themselves. How did S&P or Moody's miss it?  Darned if I know, but it very well might have been because the credit agencies wanted to do business with the issuer. Who knows? I now depend on my own research and knowledge of bond issuers to make purchases. Take for instance a bond I purchased back over 3 years ago at a huge discount at the time. The bond I bought at the time was a school bond for 67 cents on the dollar and with at the time no current credit rating. The bond issuer was Carteret County NC and as anyone knows if Carteret County can not find real estate to tax to pay for schools then no one can. What use was a rating there? All I know is today I got a steal on a bond buy and some nice long term interest.

All this is to say if anyone uses credit ratings from the national credit agencies for enhancing THEIR credibility for an argument they either believe the other person is just plain stupid or mighty forgetful.       

Bernanke cranks up the printing press and what is means to you.

Either I am really lucky or really good. But my posting on "Safety in Commodities" surely hit the mark after listening to the Federal Reserve Chairman this morning.  Obviously Mr. Bernanke is not going to allow asset prices to go down and will pump them up as much as needed by printing additional money supply, via QE 3,  as per his testimony this morning before Congress. He has acknowledged that the economy is not improving and additionally noted this morning that he will lower rates another 25 basis points as well, which would be virtually zero if he follows through with that action.

All this means if you own stocks or commodities you are looking good going forward. All this free money will be going somewhere and that somewhere will be in additional buying of stocks and pushing up oil, copper, and gold since the dollar will get beat down some more and the response will be prices going up in limited supply commodities to adjust for the weaker exchange rates. Also I believe this opens up the door for buying of rate sensitive stocks such as mortgage backed securities REITS that should perform well since rates will not be going up anytime soon. In a future posting I will suggest some buys in that sector that I have been avoiding due to fears of rates going up. Oil will also get a kick from the fact there is a report out today that even with the additional supply coming from OPEC that there could be as much as a 3 million per day supply deficit in 2012. Understand the rest of the world outside Europe and the USA is expanding economically and buying more oil. Add in the regulatory environment in the USA is restricting supply and you get opportunities in non USA domiciled oil companies for profits.

The comments this morning about lowering the bank rates the last 25 basis points is meant as a shot over the bow of banks and lending institutions to start lending money or Mr. Bernanke will make it virtually impossible to make money on the spread between the borrowing at the Federal Reserve window and Treasury Bonds, which has been what many banks have been doing. The problem there is that the Obama regulatory structure has told banks that if you lend you better have lots of down payment and a golden credit record, which few people have today. Those that do have gold credit prefer not to borrow to expand business in an environment where they have no idea where business is headed. feel that Obama has told anyone who will listen that if you make over $250k you are the hated wealthy, tax rates are said to be going up, and the regulatory environment makes for hoops most just avoid. So what you get is continued static business growth and no additional jobs to be got.

Note this mornings treasury sale went better than I expected as it was the first after the end of QE 2.  The reasons were likely the flight to perceived safety from the pending bankruptcies in Europe via Greece, Portugal, Ireland, Spain, and now the biggie Italy.  With Italy you are talking big bankruptcy and big trouble if it happens. It also helped that Mr. Bernanke said he would be printing more money and buying bonds in the near future if rates went up and that told bond buyers they were safe from bond value losses for the foreseeable future. We will just have to see what happens with treasury auctions going forward, I still remain concerned about funding.

Now as I said if you are wanting to own hard assets your opportunities for profits remain bright. The losers here if Mr. Bernanke carries through with a QE 3 are people who depend on savings interest and anyone who buys food and gas.  Expect inflation in commodities which are in short supply. OIl will be of course and today we learned this year's large corn crop will be 40% dedicated to producing ethanol, so if you buy anything that is made with corn expect prices to move up even more. As most people now know most everything you buy at a grocery store has some part of the corn crop in it. These higher grocery prices do not play well with most people, but the people in Iowa like it a lot being huge corn growers. Imagine that the first state to have political primaries is happy, who knew?  China is importing a lot of corn products too so there is pressure for prices to go prices there. 

All this means is the economy is not going to grow in the next couple of years and Chairman Bernanke is doing all he can to keep business from actually slipping into depression. Obama for his part continues to be like a deer caught in headlights not knowing what he is doing other than to do things that keep business from growing, such as adding regulations, depressing business expansion, and believing that his makeover of the US is the only thing that matters.

Is this a wonderful country or what? If you want to sell your home chances are you can not. If you want a job chances are likely to get worse. If you need to buy gas or groceries your costs to do so are going up. If you are a corn grower or fertilizer producer you are looking a bumper profits. If you own a oil well  life is good. If you are running for re-election as President next year the Fed Chairman has your back. Otherwise you are screwed.

                

Obama ends the lie about Social Security

Finally someone in the US Government has stepped up and ended the lie that is the "Social Security Trust Fund". President Obama did just that this week. By stating that Social Security checks might not go out in August as planned since as he said" there might be money in the coffers" he admitted that there is no trust fund to pay social security. Anyone with any intelligence knew this all along, but Obama himself just this year as well as former Speaker of the House Nancy Pelosi kept peddling the lie that the fund exists and will be there to pay retirees forever. Well folks if it is there forever then why should there not be money next month to pay out the checks? Because the "trust fund" is nothing but a bunch of IOU's in a filing cabinet in West Virginia since this Congress and President and every Congress and President before has taken in the money and spent it already. By the way federal government retirees your "trust fund" for retirement does not exist either, so accept that is a lie to you as well.

Now I expect Obama did not realize he was putting an end to the lie as his goal this week was for political points to make Congress bend to his demands on current debt discussions. Let's also add in that last week Obama noted that Medicare would run out of money if something was not done and likely done now to improve long term solvency of the program. Again note there is no trust fund there either.

Now if this is a cold dose of water to your retirement plans use this as an opportunity to understand if you depend on anyone else for your retirement funds you are being a fool. Add in the fact that politicians, just like Obama this week, can use the threat or leverage anytime they want to to withhold your check to get you to do what they want you to do.  Frankly I do not like someone telling me what I can and can not do or worse what I must do anytime.  Unlike many Americans I prize my liberty.  So if you are depending on Social Security, particularly if you are less than 50 years old, you are now fully warned by President Obama that there is not trust fund and you are truly on your own.  Maybe it is time for you to be a Small Town Investor too.                

Safety in Commodities

Billionaire Jim Rogers whose investments I keep a close eye on as he started with nothing and well is a billionaire. Mr. Rogers was likely the first person to call the huge move in farm products and specifically fertilizer stocks and has made huge profits there. Wish I had listened to his advice then. So when he said in his latest interview that he was moving significant assets into commodities this time I am listening and will move even more of Small Town Investors Hedge Fund assets into commodities.

 

Mr. Rogers reasoning seems sound as he noted that if he is right and the economy continues to move sideways and more likely downward that central banks in the United States and Europe will crank up their printing presses and print more money. The result will be lots more currency chasing goods and since commodities, unlike manufactured goods, are limited in supply their prices will rise. On the other hand if he is wrong and the economy begins to move upward then commodities will be in demand and prices will rise. Either way you win.

 

Currently the hedge fund trades significant assets in several commodity stocks. ERF, Enerplus Resources Fund, is our second largest holding and provides oil and gas well type returns. Plus ERF is in Canada where Obama can not touch them policy wise. SCCO, Southern Copper, is also in the fund and is a copper miner and copper is my gold play. Copper is in high demand in this tech world and is in very limited supply. DO, Diamond Offshore, is an offshore oil driller that has moved it's business out of the US now due to restrictions, and has high demand due to the high price for oil.  All three stocks are current holdings. RIG, Transocean, is another offshore oil driller, that is domiciled in Switzerland and does most of it's business outside US waters.  As of this posting it has been placed on my watch list for future consideration. Finally BP a oil company domiciled in the United Kingdom has begun to see the final costs on it's Gulf oil disaster and likely will see some payback from the $20 billion dollar fund. BP has also liquidated enough assets to have a large cash position to move on other opportunities in the oil business. Having reinstated a partial dividend I am also placing BP on my watch list.

 

The hedge fund has just over 20% of it's assets in the three stocks listed above and is looking to add to the commodity positions in the two additional stocks. All five securities offer good dividend yield as well.

             

Jobs Report and My Conversation with a Small Businessperson

I had a conversation yesterday with a small business person who I have known for almost twenty years. The family has been doing business for almost 100 years.  We are of like mind and enjoy discussing current events and most importantly current business trends and I stop in the business from time to time. Frankly I still like keeping touch with many small business owners who I used to do business with, not only do I keep long term friendships going, but it helps me know what really is happening on main street.  I consider this information a plus to which many on Wall Street have no access.

When our conversation went into how business is doing the story for me pretty well summed up why the jobs report this morning was awful. Several months ago they hired a new employee to help catch up on some backlogs in work needed at the business. In hiring the company was very up front with the new employee that the job might not last and at the moment it would not be full time. The point was also made if business conditions improved that and the employee showed initiative they might make the position full time. Now they were smart in knowing where the company would get hit with new unemployment tax so they were careful not to work the person enough to penalize the business just in case business did not improve.

Unfortunately business, as most of you know, has not improved and actually declined. So the new employee was let go. Sad for the employee, but the business unlike government must make ends meet. The laid off employee filed for unemployment and was declined as expected. However the laid off employee appealed and won. Frankly since the employer was careful about the hiring it was a surprise that unemployment was awarded after a short work time and fully under the rules should have been denied.

Thus the business is now being penalized for not only laying off the employee, but actually they are being penalized for HIRING the employee in the first place. Simple logic here is clear, do you think the person is going to hire anyone they absolutely do not need going forward? I expect scenarios like this are being repeated over and over across this country. Add in the new health care costs, regulatory costs, and the added worry of much higher taxes on small business from the current administration in Washington DC and you get jobs reports like the one this morning.

               

Markets you leave alone. Plus another stock on the radar.

If you find yourself wondering about where this stock market is going you are not alone. Most of the talking heads on CNBC and other financial media are all over the place about the current market movement. The last few years "sell in May and go away" has worked, but not in 2011.

 

Just in case you are wondering if anyone else is wishing they got in a week or so ago include me in your list. I had opined a couple of times about nice pricing on options with GS, BP, HCN, and a new stock on my watch list RIG.  I was close to pulling the trigger on GS a week ago at a fat profit and just could not find the willingness to do so. I last a thousand dollars or so because I waited. Ditto that for BP.  I even sent a friend a suggestion to buy SCCO at the below $32 price just last night and today it closed above $33. I assumed that person likely started to buy this morning and decided not to chase the run up in price, I know I would not have done so. RIG, a deep water oil driller, that is significantly under priced, has of late entered my radar due to a nice new dividend payout, run up some today and I am not sure if to move or wait on this stock as well currently.

 

Markets like this tend to be nothing more than a bounce off a very oversold position a couple weeks ago. Friday morning we will likely see some moment one way or another in reaction to the monthly jobs report release. If I was a betting person I would bet the market will move up no matter what the report says as the majority of investors will find something good in the report and respond accordingly. However I find myself doing basically nothing at this point either selling or buying as I have learned over the years chasing a market up is fools gold.  Of course most people do that with stocks, wanting to buy in when the market is moving up, when the smart money is buying only when markets are down. Unfortunately most people, including me it seems, can not bring themselves to buy when stocks are on sale.

 

The bottom line here is the economy is showing no growth and I do not expect it to do so in the next couple years so if you are a long term investor buy good dividend stocks and hold. If you are a trader buy when others are selling and sell when others are buying. The good news for me is my significant put option assignments just three weeks ago are looking to get assigned back the end of next week. Either I have been real lucky or real smart.  I expect it was more real lucky with some trading experience on the side.  These are markets best left alone.

               

How much can we tax the "rich"?

I have always been of the opinion that there is a limit to how much you can tax wealthy people. Somewhere on the tax rate scale people who earn significant income simply move income to places where they either are not taxed or taxed at a lower rate. Also wealthy people many times do not pay large monthly bills such as home loans and car payments which they have bought with cash and can find ways to live on less monthly income than non wealthy people. Understand the rich are not always the people who live in big homes and drive fancy cars. They are the neighbor next door that chooses to live modestly as they always did accumulating wealth.

There is a real disconnect in the media concerning the difference between "rich" and "wealth". I wonder every time I hear a news person in the media talk about "taxing the rich", are they referring to the income rich or the asset rich. Income rich people are making lots of money annually, but likely not people with lots of "wealth". A person who earns significant income annually is likely spending much of it, paying for a home, paying for cars, sending children to college, etc. Almost anyone who is working for a living is spending more money living and working than someone not working who has significant assets. Income rich I would opine refers to celebrities, sports stars, CEO's of large companies.

People with "wealth" certainly includes the Kennedys, Rochefellers, and other families who have lots of assets. However these people actually earn little taxable income, due to tax favored trusts and foundations. So even though these people have much more wealth than the income rich, they are not taxed as much as the person working to make a living and accumulate assets.

Now what happens when you raise tax rates? People who can move income to tax free municipal bonds, tax deferred master limited partnerships, move into dividend paying stocks in other countries which are taxed there and not in the USA, place assets in legal trusts, and like many movie stars set up tax favored foundations. People who make lots of working income can max out 401-k's, pay for expenses in pre-tax expenses, and many companies allow income earned now to be deferred until later in life. So when rates get high people with income move assets to places where taxes or low or zero.

These tax avoidance devices are not going away. Take municipal bonds for instance, if by some chance you could find a court to allow these to be taxed, how would cities be able to afford building water systems and roads without these bonds bought by many people other than the wealthy. We all save by cities being able to build infrastructure cheaper using muni bonds for debt. Master limited partnerships help make pipeline infrastructure cheaper , and we all know how important it is to be able to pipe gasoline and natural gas where we need to use it. Foundations and trusts and the donations they make allow for many charities to exist. There will never be a way where you can force another country to tax income made there to be paid to the higher taxed country.

When tax rates are high income rich and asset rich use these tax favored income vehicles much more. The assets they move to lower taxed choices take investments away from stocks and bonds of companies that are growing and adding jobs for everyone. That money is not being used to open new businesses that add jobs. The wealthy can delay taking capital gains so they can avoid paying those taxes until they desire. Delaying capital gains also keeps assets from companies who are growing and improving our economy. So when we raise tax rates to a point where rich and wealthy people move assets we all lose. But just where is that point and what is that rate?

That brings me to the point of this posting. I found a great graph earlier this year online that really shows where that point occurs.
The graph shows that no matter what the federal tax rate is the limit for achieved taxation is about 20% of GDP receipts that can get taxed before people begin using tax avoidance and tax favored option The federal government at one time raised rates to 90% and still got no more than 20% of anyone's income.

Twenty percent federal taxation by my figures equals right at $250k income for a married couple, the amount President Obama has appointed as where you become "rich, taking in considered deductions. So we are right at the ideal tax rate currently to achieve the maximum federal tax haul. Seems any increase in current rates would actually net nothing in added federal revenue. So despite what politicians tell us any increase in tax rates on the wealthy now would not increase tax revenue but only cause the wealthy to use tax avoidance vehicles. All this talk of being "fair" about tax rates would only do harm to our society, but forcing people with higher incomes to put their income and assets in places where it does the least good for society in general.

American Ideals or American Idol?

I expect I will catch grief from friends who misinterpret this posting. Also expect some will be just plain mad at me. But as a verse in a song goes, "I have proved the things I needed proving and lost the friends I needed losing." So if this causes me to lose some friends then I needed losing them. I also expect some people will say what the heck does this have to do with Small Town Investor. Plenty as I will show.

The thought about this posting got started a few weeks ago when I got a return e-mail from someone who got so mad at me for a comment I made in a e-mail they told me to take their e-mail out of my database and do not correspond anymore. The e-mail got started when a group of like minded friends in a town I used to live in, but currently am not living in were exchanging e-mails about current events. The e-mails were basically everyone taking turns making merry of the situation. I opined with my own humor about the subject and hit reply all and got the return e-mail about the person no longer wanting to be a friend. What did I put in the e-mail? These exact comments, "maybe everyone is out watching American Idol". Seems innocent I know, but the person took it as an offense to American Idol show. I sent an apology that the comment had been taken incorrectly and apologized for any confusion. Sorry that was not good enough, the person was upset with me enough they wanted no more correspondence FOREVER. I have deleted the person from my list by request. Seems silly, but in America of today being "offended" is something everyone takes as a right since everyone is a "victim".

Now I am happy Scotty won American Idol, good kid, good morals, love his faith based life, and local boy. But frankly I did not look at a single minute of the shows. This does not mean I do not care about the show, it means I have things in what I believe are proper perspective. My friend Bob Lee, from Bob Lee Says.com, has a similar perspective on what he calls "board monkeys". Bob Lee and I are fans of the North Carolina Tarheels athletic teams. We pull for them, enjoy their victories, might even go to a game or two now and then, but once the game is over we move on. But with many Carolina fans who inhabit the message boards on the Carolina web sites live and breathe this stuff. The idolize the players and think life is made better just being associated with the team and players. If they see a player or better yet get to meet a player their life is made. Literally they worship the Carolina basketball team. Ditto this for any local sports team (yes Wolfpackers you too), as there are people who literally live for being a fan of their team.

I believe the person who exchanged e-mails with me is just that way about American Idol show, she literally worships the show and winners. God help me if I had said one thing she perceived in her opinion the be offensive to Scotty. Many people today feel similarly about movie stars, sports players, and even politicians. I have said the election of Barack Obama had elements of people going out and winning " American Idol". The idea was let's all get together and go vote and win for Obama, many could have cared less about his policies or positions. This is not to make light of those policies, this is to point out that some people literally worship Obama like they do other celebrities.

My father told me when I was young and foolish about the Carolina basketball team that I needed to get my head straight. He had two axioms I remember to this day. One, "if it does not put food on the table it is not important". Two, " If it will not matter one year from now it is not important". What he was saying was past making a living, loving your family and friends, and putting God first, everything else was to to enjoy and once enjoyed life is to move on to what is important. Unfortunately many people today can not do that. Maybe because many have never really had concern about getting the next day's meal or necessities. My father having been raised in the Great Depression, a real depression unlike today's, and having fought in the Second World War understood where one should place their priorities.

Society today has traded real heroes for just celebrities, real honor for just fame, real success and achievement for just popularity. Simply put we have traded once great American Ideals for American Idols and I am not talking about the television show. I expect a good part of this is people no longer have a faith in a supreme being and are looking for just that in other ways. Oh, they go to church or whatever building you go too, but they do not really participate in a true belief that things will turn out well if they just have faith. Lots of church attendance today is for entertainment of the person, not the worship of God. I opine to my wife that when children sing or do a skit in church today some people applaud. Excuse me but it was not a performance, it was meant to be for the worship of God. Let's not get into the fact the event turns in a camera light picture show as well. Maybe I will be called old fashioned, but church IS for worship of God.

Likely the last real heroes left in our society are the military and I thank God for that as these people are essential to keeping us free. However there are really no heroes left anywhere else in society. I honestly can not name more than a handful of politicians today who are "statesmen", and our current president is not one. Where have all them gone? I expect they have done what many have done, become celebrities to remain popular with the people of the country who seem want that over real achievement and success. Look at sports stars, popular music stars, and movie stars, they have become nothing but fame and fortune producing machines, few consider living a life of integrity anymore as important. Hedonism run amuck. There is little wonder that young people who "idolize" these people are doing the same.

All this is to say something has got to change with character traits and the worship of fame and celebrity. If we do not get back to understanding people possessing such virtues as delayed gratification, the personal satisfaction for working hard to achieve success, and appreciating honor in real heroes all of which are necessary to function of a democratic republic we will lose this great experiment that our forefathers bequeathed us. Trust me, just in case you have not read any history, this IS an experiment in self government. It is truly the last best hope of mankind as one great statesman Lincoln noted. As yet self government has not worked anywhere else on this planet. All of our forefathers knew that fame and celebrity were fleeting and a free society needed people with principled discipline in their character to survive.

Now to how this affects investors and the stock market. Without those positive traits as noted above all we will do as investors is day trade and wish and want for immediate profits to spend and enjoy immediately. The stock market will become completely what it already is trending towards and that is a gambling palace. There are places where trading options is no longer about insurance for commodities or stocks, but making a quick buck and moving on. Computer programming trading is just that. Regular Americans will grow tired of this manipulation and the markets as they are supposed to function will fail.

This brings me back to Scotty and American Idol. Scotty has those traits which are needed today, taught by parents who are passing them on down, who got them from parents who passed them down too I expect. It all started back in a hot sweaty room where some people we today call "forefathers" designed this great experiment in self government in July 1776 and it now comes down to us. To us and weather we will preserve liberty or let some elites decide our future. The key here is not Scotty, but how do you fit in here with Scotty, did you enjoy his real success and accomplishments in life BEFORE American Idol fame or just after he became a celebrity. How about any of you who actually knew Scotty BEFORE he became famous, did you even give him the time of day? Would you have run out to be in person at his homecoming if he had not been a celebrity? According to the Raleigh News and Observer it seems he is NOW getting all kinds of attention from people he knew, but would shun him earlier. Access your own situation, but understand your actions speak louder than your words. Are you really working at real achievement, real success, and real honor represented by once great American Ideals or the immediate gratification of American Idols.

My Two Favorite Natural Wonders In North Carolina

If you live in the state of North Carolina and have not visited the two scenic sites I am about to discuss get off your rear end and get there before you are pushing up daises. Above everyplace else in this state these two places stand alone in my opinion. They rival the Redwood Forest, the Grand Canyon, and any other place in this country scenic wise.

The Cape Hatteras seashore is glorious in it's spaciousness and isolation. You can walk and ride for miles and miles and see nothing but the glorious coast , beach, and sand dunes. If you want to see how small you really are be sure to park your car somewhere along the way and walk the beach. Beautiful from end to end, just no place like this anywhere anymore in the United States. Ships and others have tried to tame this place for years and utterly failed. The sea, hurricanes, and moving dunes can not be tamed and can not be owned. Sunsets and sunrises take your breath away. Be sure to climb the Cape Hatteras lighthouse highest on the Atlantic Coast. This is what beaches looked like before development. I am not against development, but I am happy some of our forefathers noticed what anyone who comes here will immediately notice the incredible glorious spectacular natural environment and saved it. You should take at least one trip in your life over the Bonner bridge or Cedar Island ferry and enjoy.

The trip in North Carolina I enjoy the most is the trip to the LInn Cove Viaduct which wraps around Grandfather Mountain. This little engineering marvel is courteous of the late great Hugh Morton. You might not know who Mr. Morton was, but trust me no greater North Carolinian ever lived and we are the receipt of his love of this state in many ways. But none greater than the Linn Cove Viaduct. Mr. Morton refused to allow the Blue Ridge Parkway to blast their way around his mountain to complete the road until the early 1980's when the French figured out how to build a road on the side of a mountain. Thus the Linn Cove Viaduct around Grandfather mountain. I will leave the particulars here for you to discover, but the result of this viaduct is here for all to view. If there is a more glorious beautiful God given place to be on Fall days in October than the Linn Cove Viaduct you will have to show me. The tapestry of colors laid out before you in the valley below the viaduct make me tear up just thinking about it. How someone can come to the viaduct in late October , view the marvelous display of leaves on mountain trees and not see the handiwork of God is beyond me. Animals are mostly colorblind, so why would nature put on a display such as this if there was not a God who created it for man to see. I can just envision Hugh Morton seeing this the first time and his reaction. Fortunately for us his next reaction was to preserve this place for posterity so we all can make the Fall pilgrimage and behold the wondrous artwork of God himself.