Dr. Chandler of Richlands.

Growing up in Richlands in the 1960's we had two doctors in town, but frankly they were as different as night and day. 

Let me describe each one briefly. 

 One had a nice new medical office with the latest medical equipment on the main road in town.  He was by all accounts an excellent doctor who kept up on the newest medical training and had a pharmacy in his office with trained and experienced pharmacists. (note in those days we had no pharmacy in town so having one in the office made sure patients got the right prescriptions in a timely manner). Dr. Mease lived in a upscale house just right out of town and was highly respected. 

The other doctor had his office in an abandoned service station which when you entered reminded one of something out of the dark ages.  There was one light in each of the two rooms hanging from a long cord from the high ceilings with just a single light bulb in the receptacle. Frankly the place was dark since the bulbs did not provide adequate lighting. The floor was concrete and stained from being an old auto service station and the long window length curtains looked quite old. The examining table was a old aluminum table, not an actual medical table.  He kept tongue depressors and stuff in left over nab containers from the former service station and his small desk looked to be maybe brought over on the Mayflower.  Oh, it was clean, but never would anyone today consider even going into a medical office that looked like this one. Add in the doctor lived just down the road in a very old Victorian style home that looked run down and had maybe 3 dozen cats on the porch and in the yard.  Yes, that is not a typo, at LEAST three dozen cats. Dr. Chandler had many words to describe him, aloof, weird, strange, old coot, and most of all quack.  His wife who worked with him was herself a pharmacists, at least I think so, she did fill prescriptions in their office as well, but you wondered where they got the  pills .  Legend had it that Dr. Chandler came from some secret government project in Florida before he moved to Richlands, but I doubt it.  He drove an old black Edsel which he would part under the old service station canopy when he was at the office.  Most people in town would not go near Dr. Chandler, but he was our family physician for many years and here's why. 

First off I am alive today due to Dr. Chandler and have a scar on my right knee to help me remember the ordeal.  In 1959 my birth mother was in her last year of a hard life due to medical problems. That summer before my first grade in school I got on a bicycle  I was not supposed to be riding without supervision and skinned my knee.  The sore quickly got infected and I was taken to the doctor in my hometown, not Richlands at the time, and got a shot of penicillin.  Penicillin was the new miracle cure all drug at the time and certainly seemed the right approach.  Another shot the next week should have killed the infection, but did not.   My soon to be parents, my aunt and uncle, came over to visit my mother and found me on the sofa with a huge and growing blood poison infection in my knee.  The blood poisoning was running up my leg headed to my heart and likely certain death.  My father not knowing what to do allowed my aunt and uncle to take me to Richlands to Dr. Chandler.  The supposed quack doctor realized right off my situation was dire and  applied a old fashioned poultice to the wound. Trust me when I tell you it smelled so bad you could barely stand to be around it, but for two weeks every day Dr. Chandler applied the medicine and sent me home. I missed my only 6 days of school  ever in my life that year, but in about 10 days the doctor got his results and that was the blood poisoning going away.  From then on out I was a regular patient, whenever I needed medical attention until I moved away. 

Of course the real story here is just how my soon to be adoptive mother ended up having Dr. Chandler as her doctor.  My mother having moved to Richlands young had used Dr. Mease and found him a competent and helpful medical doctor, but sometime in the late 1950's got a bad case of strep throat that would not go away. Dr. Mease used the latest in medicine to go after the infection but after about two months told my mother he was at his wits end and maybe it was time to see a specialist in Greenville. So off she went to the Greenville specialist who gave her some powerful antibiotics that seemed to do the trick in a few short days. However not long afterward the strep throat came back and that specialist sent her to Chapel Hill to another specialist who told her the problem was she had been taking too many drugs and her throat culture was barren of good germs and she was told to go home and find some old fashioned non pasteurized buttermilk.  This she did quickly as it was going on about four months now with no relief from the strep throat pain.  Well the buttermilk was non effective. At this point she heard about a specialists at Duke hospital in Durham and she went and paid him a visit.  Frankly that doctor was most puzzled nothing had worked to that time and gave her some more medicine to try and they too did not work. 

At this point my mother being most frustrated at almost 6 months of the infection was telling her customers in her beauty shop about the ordeal and one of them said to her, "well you have tried everyone else, why not go down and give old quack Chandler a go at it."  My mother being desperate figured why not and made an appointment. Dr. Chandler took her into the dark back examining room took his flashlight and looked at her throat.  (Point here he used a standard off the shelf flashlight for medical work, not a precise medical light.)  He asked her where she had been and what they had prescribed and set down in his seat and crossed his legs. He told her "now lets see now you have seen one regular doctor and three specialists and no results?  Heck those people are more educated and smarter than me and I am wondering why would you come to see me, must have been pretty desperate I suppose.  Ms. Jones it could be anything causing your throat problems, might even be the brand of toothpaste you are using."   My mother left his office went home and changed her toothpaste from Colgate to Crest and the throat cleared up in about three days and it never bothered her again. NOW you know why Dr. Chandler was our family physician in Richlands and why I was taken there in my hour of need.

             

Two new stocks to our trading list.

We have backed off some of the larger holdings in some trading stocks AGNC and CTL not because we do not like them, but in a politically charged environment we currently find ourselves in we prefer to keep  our holdings more diversified just in case some candidate attacks a certain group and they take a hit in stock price. We might even go back to both of these stocks after the election because we consider both of them solid going forward for many years. 

Using the opened assets we have added NCT and CLF as new trading securities. 

NCT, Newcastle Investments>  has been one of our favorites all along and this gives us a chance to take part in the mortgage processing business this company is pursuing in greater and greater volume.  There are so many mortgages that are in either foreclosure or close to foreclosure and NCT is buying a good bit of these underwater mortgages at rock bottom prices. Note they are getting sometimes 50% off CURRENT values to take over handling not only private label business, but also government issued paper as well.  NCT keeps them a few years, cleans up the mess, and re-sells them at a handsome profit all the while taking in the mortgage interest. Not a bad business to be in right now and NCT just added a 10% jump in their dividend to show they are making lots of money. We will be adding a short term option and a long term option to our portfolio with this posting. 

CLF, Cliffs Natural Resources,  makes iron ore nuggets and does and smaller amount of coal mining, but iron ore is the key here.  We have had an eye on CLF ever since they raised their dividend earlier this year to over 5%.  That is a nice payout for a metal processing firm and they had serious cash flow to back it up. Of course the economy has tanked and CLF is making much less money now from the huge sales going to China at one time.  The stock has tanked by over 50% and now looks like a bargain.  Personally we believe they can maintain the dividend and when investors notice the price there might be some capital gains here too as well.  We just like bargains and CLF is a outright steal (steel) here. We will be adding it to our trading list now. 

Crystal Coast Restaurants.

Coming up on our 6 month anniversary of being a resident of the Crystal Coast we have had a chance to sample a good number of dining establishments there.  No we are not restaurant critics, but having dined out now for over a half a century we believe we know what good food tastes like and the enjoyment of the dining experience. This is not an all inclusive list, just a limited list of places we believe we have enough  experience in dining we can opine.  One final point since we get no compensation from anyone we can let loose in our opinion and not worry about offending anyone, except maybe a owner or two. 

Rucker Johns..Emerald Plantation...Emerald Isle....We find the food here unusually good with most dishes. Their salads are excellent and the honey mustard hot bacon dressing to die for.  The crossiant that comes with the salad is out of this world with a buttery taste. The Tuscan Turkey sandwich is excellent as well.  Customer service is almost always first rate too.  Unfortunately the ribs are below par and we have yet to eat a steak cooked right in two efforts.  The beef has yet to live up to the quality we know it to be as our insider tells us they buy top of the line product.  We will keep going as we find the atmosphere most pleasant and to our liking and might even try another steak, but right now we will stay with what we know to be good. 

Lazzards Pizza...Bell Cove...Emerald Isle...We can not comment on their subs, but the pizza is excellent. We prefer a thinner crispier crust, but in every pizza we have ordered they do not cheat you on ingredients simply covering the entire pie border to border with lots of fresh goodies. Price is right and be careful about ordering the Godfather size as it is truly a monster.  Staff is quite nice as well. 

Emerald Grill....Emerald Isle....We gave this place a try for breakfast due to a recommendation.  Simply put the food was awful and is hard to mess up breakfast food. Canned biscuits too. We will never go back period. 

Flippers...Emerald Isle...We have tried this place three times and all three were frankly average in food quality.  We did not say bad, just average.  We consider Flippers a tourist trap and prefer not to go back.  One good point is the atmosphere is very family oriented and comfortable. 

T&W Oyster Bar.... Highway 58...Cape Carteret....This is a very nice place to dine and bring a family. Lots of room and good service too. Makes you think you are in a seafood house as it should be.  The oysters as opined by my wife are excellent.  We find the fish better than average, but not great. Deviled Crab is a one time order for us as it was below par.  One point that really bothers me is the regular fish plate offers one average piece of fish for a tourist site price, should be two pieces.  T&W is a fun place to go and comfortable place to dine and we will go back. 

Nickys...Highway 24...Swansboro...This hole in the wall between the bridges has been updated and looks quite nice inside. Nice comfortable bar area too.  We get the fish basket and like the lightly fried flounder of which we get a nice portion of several pieces. The tarter sauce which is homemade is also quite good. Slaw is excellent. The wait staff friendly and helpful.  Now we like Nickys, but our son does not as he sells restaurant food and says they buy average quality product. So you decide, but we will return regularly. Final note the owner here has bought Captain Charlies in  Downtown Swansboro and plans a more upscale menu. 

Ice House...Downtown Swansboro... We liked the location of dining on the sound right over the water and that was as far as it went. Not one single thing we ordered was good and frankly way over priced. We will not be back. 

Cox Family Restaurant...Highway 24...Morehead City...We found this place while trying the Golden Corrall in Morehead City, which was frankly awful and we now know it has closed. Good riddance.  Cox is a family oriented locally owned eatery that we will return to if for no other reason is the price is right. Two can eat for about $10 or so and get a homestyle meal.  We use homestyle and not home cooked as some of the items on the menu are out of canned and jazzed up to be home cooked. However the country steak we had was good and the service very good.  If you are looking a amble amount of food at a family friendly budget this is your place. 

Carteret Cafe... We have dined here one time and really liked the place.  We should have been back earlier for a second run. We had breakfast and it was the real thing, home cooked, and a good portion as well. The service was excellent.  We understand from others there other menu items are very good as well. Priced right is a bonus. 

Clawsons....Downtown Beaufort....It had been a few years since we had dined at Clawsons and frankly it had changed little. The food was average and the prices touristy.  Atmosphere is excellent however and the service first rate as we were a large table that night. Likely will try somewhere else next time in Beaufort. 

Clamdiggers Inn...Pine Knoll Shores...There have been times we loved the food here and there have been times it was nothing more than average.  The last time during this 6 month period it was nothing more than average. The fish was ok, the deviled crabs ok, and the breakfast food was out of a box.  It is not on our list to dine regularly. 

Sweet Spot....Emerald Isle....Ok this is a ice cream joint, but we believe it is worth the review. The owner does all she can to make the place people friendly and she has to since there is a Ben and Jerry's across the street and a Dairy Queen a few doors down.  Karen gets it done by making sure the portions are more than average and the service frankly as good as it can get anywhere. The rocking chairs out front make it a pleasurable experience to get your ice cream and sit awhile watching the world go by. Hersheys ice cream too. We highly suggest you give this place a try.  Maybe we should not and keep the lines down, oh too late now I suppose. 

Emerald Isle Market...Emerald Isle....First try was a wow!  The potato salad and tuna salad were quite good and homemade. You can get Boars Head meat as well and we did and enjoyed a turkey sandwich back home. They are expanding and adding some seats and we will make this a regular stop for good and healthy food. 

Carolina Ale House...Jacksonville....Ok this is not technically Crystal Coast, but we gave it a try while in Jacksonville shopping.  Did it on the suggestion of a friend and I wondered what he was thinking while we dined.  The place was loud, as in very loud and as one of the older set that was an issue. The flat iron steak was plainly just not good and the mixed vegetables nothing more than lots and lots and lots of green beans. Too much green beans in fact. The Fish and Chips we tried was pretty good, but maybe not good enough to bring us back.

We will continue to try new restaurants in the area over the next few months and will blog on them as we get another batch. 

Realty Income

We backed off trading and owning Realty Income shares earlier this year due to the high valuation and began the look for stocks in the triple net leasing business to replace symbol O.  In the meantime we decided that the monthly dividend and the push into dividend stocks by investors looking for yield lessened the risk of a sell off in O.  So about two months ago we went back in with option positions and figured the monthly dividend made the shares acceptable. 

Since then O has done about what we expected and traded pretty much just above the $40 price level with a 4.5% or so dividend. Since O continually raises it's payout on a quarterly basis as long as the shares stayed around that price the valuation premium continued to lessen. We continue to hold options in the stock and get nice cash flow. 

In our quest to find an acceptable alternative to O we came upon a nice small cap stock, symbol ARCT.  We frankly really liked the stock, like the comparable monthly dividend, and very much liked the high grade real estate assets of ARCT.   The problem was that as we are mainly traders, ARCT had few option opportunities and when they were present the bid and ask were unreasonably expensive due to the light trading volume so we moved on just appreciating the value in ARCT. 

Last week Realty Income, symbol O, announced the purchase of the entire ARCT stock and company and frankly we are not surprised.  Not only do we consider this a good value for O, but likely a good merger for ARCT assets.  In fact the merger is immediately accretive to O profits of around 22 cents per share annually and O has said they will add 13 cents to the annual payout.  Yes, there are concerns about the merged assets since this is Realty Income's first real move into real estate such as ARCT owns, but we believe O's management is up to the task and we now like Realty Income even more. 

              

 

Unexplained stock price movement in LO and EXC.

Two days and two stocks were we have positions and movement unexplained.  Well maybe not. 

EXC, which we have posted on twice in the last week and suggested investment has done nothing but go down for two days.  The price has settled just in under $35 now.  That makes it now a 6% yield at this price. Even if it goes down more you get a nice dependable payout and safe company that is not going away or going bankrupt. As long as the lights must be on in the midwest EXC will be the one to sell them the power to make the switch work.  As to the stock price weakness there seems to be concern about just what will be the final annual profit per share of EXC once this merger is integrated fully.  Even if the low estimate of $2.25 actually happens it still covers the $2.10 dividend and this will be the bottom feeder year for this stock and company.  There is also the piling on effect happening as broker after broker downgrades the stock to make sure they cover their behinds when the weaker earnings are reported.  As Cramer says it is time to back up the truck.  The time will come for capital gains. 

LO , Lorillard a tobacco producer, is another stock we actually own as a long that has had serious weakness in the last couple of days. Today's drop off of over $5 per share follows and almost $3 per share yesterday.  This frankly is huge movement for what is considered a consumer stock that rarely moves much on a daily basis.  Look as we may we can find no reason for this move from the company, message boards, or analysts.   LO is down over $25 per share in short order.  Yes, they had a small miss on their latest earnings report, but that should not cause this kind of movement.  There are rumors that insiders have got info from the Obama administration that a ban on menthol is days away from being announced. Frankly we doubt that, but we have been fooled in the past by comments or policy from this crazy administration.  If Obama is so confident he can tell blacks, who are heavy users of menthol cigs, to go to hell to appease his liberal wing then indeed things are getting desperate in the White House. So who knows. 

The next few days will be interesting to see where these stocks move and if the movement is as strong as the past couple of days.  We are certainly feeling the pain from our positions in them and are seeing visions of the first half of 2012 when we got killed from positions in GG and ERF.  2012 has not been a kind year thus far.

                 

 

EXC...likely the last chance to get near 6% safe electric utility dividend for some time.

We posted on this stock just last week when it was above $37.  Last week it finished below $36, at $35.80. That is a 52 week low. Friday it closed at $36.15. 

Let's review EXC, Exelon, which is a electric utility in the midwest.  It has a 13 PE,  $20 billion in revenue, $2.42 EPS,  market cap of $30 billion,  and a $2.10 dividend yielding just at 5.9%. 

What you have is a Fortune 500 mostly regulated utility with a large set of nuclear power generation facilities.  This is a safe dependable dividend paying near 6%, which is the only such large cap electric utility dividend left in the US currently as far as we know. 

Most electric utilities in the US are in overbought territory now in our opinion, with EXC being the exception. The overhang of the late merger offers a buying opportunity. 

The bottom line is this stock is offering a significant buying opportunity in our opinion.  Back up the truck and load up before the market finds this bargain.  We have a sizable option position in this stock currently and will add more at the next options expiration period.

           

WIN..Insiders continue to load up.

We have opined endlessly the past couple of months on WIN.  Despite the less than stellar earnings report last month we continued to say the $9.50 price or so was a good time to take a position.   We pointed out that insiders prior to the earnings report had bought the stock in large volume prior to the quiet period.  Nothing in our mind makes one stop and look at a stock more than when people who are on the board or are officers in the company make purchases on the open market of shares. 

Since the earnings report this pattern has continued as one insider loaded up around $9.50. Note anyone could have bought in the $9.30 range after the earnings disappointment.  Several other insiders have done the same. Again either these people are really dumb and wanting to blow their capital or they know the company is on the right track and eventually it will pay off in higher share price. 

Today the price is just under $10, so the people who bought at $9.50 are already in the black and still none of the early buyers are selling.  The shorts too seem to have been pushed out or scared out of their positions as well. 

We have a large 11600 share position here and are considering adding to that with a option, especially if the shares sell off in the next month or so. Besides who does not like the what looks to be sustainable 10% plus dividend. This would be a out of rules move for us, but WIN still looks to be a win to us.

           

Regular IRA to a Roth IRA?

We expect our opinion of converting your Regular IRA to a Roth IRA is not going to be what some of you want to hear if you have already done the conversion.  Call us skeptical or even dumb, but frankly we do not trust the US Government on this one. Here's why. 

There has been several special tax saving opportunities in the past few years for taxpayers to convert their Regular IRA's to Roth IRA's and we have not bitten on any of them.  The supposed purpose was to offer citizens the chance to convert their retirement assets when they retire by having less to tax and more tax free income.  The real purpose was to give the IRS more tax revenue right now. If you do not believe the last two sentences quit reading now and send me an e-mail so I can send you info about some swamp land down east that might be of interest. 

Anyway the point is that the US Government is in a real bind debt wise and deficit wise and any revenue they can figure out how to come up with is a positive in their view.  Hence our concern about how IRA's of any kind going forward are going to be taxed.  We would not put it past the politicians to decide to tax not only Regular IRA's, but also Roth IRA's sometime down the road and maybe right soon.  Yes, even those that have been converted will get a special tax of some sort so why convert with that threat out there. 

There also is the lingering threat that the US Government might do something even more radical.   That something will be to simply confiscate the entire assets of the nation's IRA's, 401k's, and state pension funds.  Private pension funds because many involve assets in other countries than the US remain untouchable at the moment. President Clinton considered this when he was in office and wiser heads prevailed before it was pushed out as an trial balloon.  Since Obama was elected he actually had Congress do some hearings on this idea after one of his agencies floated the idea of taking all retirement assets from citizens and states and converting them to annuities for all.  If you do not believe this might come up again as the Federals get deeper and deeper into debt you are foolish.  The trillions of dollars in retirement assets look enticing for politicians looking to lessen the cost of debt at the federal level and giving them the opportunity to spend freely again. If Obama gets re-elected and declares a mandate this could become even more conceivable as a way to take from the rich and give to the poor. We have seen other quasi-legal executive orders just in the last three years such as the one where all prevailing law was ignored regarding GM bond holders so do not put it past Obama to do an executive order on this one as well. 

Even if neither of the above scenarios occurs there is the final consideration that make us avoid converting to a Roth IRA. Basically anyone younger than around 35 years old should not have any money in a Roth IRA since the first year anyone could contribute was 1998.  The only people below that age that might have money in a regular IRA are those who make lots of money and some years were unable to make Roth contributions.  Assuming a higher income level Roth's are not an issue for them at the start.  With that said only since 2002 has anyone been able to put more than $2000 in any IRA.  So the only people who have serious accumulations of assets would like be people over 50 years old and likely above 55 years old. (For this discussion I am leaving out anyone who might have changed jobs and moved money from a 401-k to a personal Roth IRA which is not a wise choice most times) Someone over 55 years old would need to have enough money in a Regular IRA from other sources such as 401-k transfers to make doing a conversion worthwhile. However once you reach that age the opportunity for increases in your IRA assets AFTER a conversion are limited either by the need to begin withdrawals or by the age 70 requirements for withdrawal.  My best guess is a minimum of 4 years to break even at 7% assuming a minimum of 22% tax rate on the conversion.  Time and compound interest are the best friends of deferred income retirement plans and less than one decade is not much time for assets to build significantly. 

Simply put even if tax rates increase they will not increase that much for people below $100k annual income for conversions to matter much tax wise. Add in that the annual adjustment in tax brackets will continue to keep any IRA assets from getting hurt by higher tax rates from that approach. There will also be opportunities for gifts made from IRA's that will offer the chance to lower your tax burden enough on withdrawals to offset any taxes as well.  Finally note those that are retired and drawing Social Security, which is in many cases not federally taxed at all, will find their IRA withdrawals possibly LOWER taxed than having that income on top of regular W-2 income. 

In the end we believe the mantra about converting is a scheme by the federal government to create tax income now. The press, being mostly economically ignorant, just spews the same advice out in their stories without checking the considerations behind the suggestion. 

We began making contributions in IRA's from the very first year they were available and expect our IRA assets are as high as most anyone with the retirement plan.  Until there is a better special tax plan we will continue to hold onto our regular IRA assets and not convert.