Here is a common sentiment about the stock market: "No fun at all. As I have said before, I believe it has turned into one big casino largely divorced from its original goal of providing capital to companies who produce something of value."

There's a lot of truth to what "granny" recently said to me in an e-mail. Fortunately she also noted "FYI Granny's up 5.86% + dividends." That would give her a gain of about 10% in the past ten months since I posted Where should granny put $50,000, suggesting a very conservative portfolio for an uncertain time.

Not only has she earned a very nice return, surpassing her CD account by 9.5% (20 fold), but she was able to do so with a great deal less volatility than the overall market most of us have lived through.

Continue reading Chasing Value: Granny Said, 'It Has Turned into One Big Casino'

Chasing Value: Granny Said, 'It Has Turned into One Big Casino' originally appeared on BloggingStocks on Mon, 16 Aug 2010 13:30:00 EST. Please see our terms for use of feeds.

Continue reading U.S. Takes First Step in Nuclear Power's New Era

U.S. Takes First Step in Nuclear Power's New Era originally appeared on BloggingStocks on Tue, 16 Feb 2010 19:30:00 EST. Please see our terms for use of feeds.

One of my wonderful friends, Ms. P, asked me for some guidance on how she might allocate $50,000 currently earning peanuts in a money market account. Though she is decades from becoming a grandmother, after a brief discussion about her financial parameters, it became clear to me that she was looking for a "granny fund."

In reality, my recommendations would be suitable, and perhaps desirable, for many passive investors as well.

The $50,000 is a portion of money Ms. P has set aside to purchase a home, which might happen in six months, but could also be pushed out further, depending on the economy and her situation. Basically, she wants to cover all her bases because she might need the money at any time and does not want to be caught short, while at the same time she would like to generate some revenue without taking any big risks.

Continue reading Where should granny put $50,000?

Where should granny put $50,000? originally appeared on BloggingStocks on Fri, 09 Oct 2009 15:40:00 EST. Please see our terms for use of feeds.

Continue reading Southern Co.: A play for low-risk investors

Southern Co.: A play for low-risk investors originally appeared on BloggingStocks on Thu, 08 Oct 2009 17:40:00 EST. Please see our terms for use of feeds.

Today's three stocks are in diversified mining, electric power utilities and high-tech defense. Going back ten years, they have all trounced the index and I'm betting they will continue to do so.

Continue reading Serious Money: Three more stocks that beat the market: BHP, RTN, SO

Serious Money: Three more stocks that beat the market: BHP, RTN, SO originally appeared on BloggingStocks on Tue, 07 Jul 2009 15:40:00 EST. Please see our terms for use of feeds.

The stock market has enjoyed a strong rally the past ten weeks, even with a few very minor setbacks. If you were in the market, you enjoyed it too.

It is more likely that the market will become somewhat volatile for the rest of the year rather than continue to rise substantially, barring some outlier. For this reason I have been emphasizing to our readers that they focus their attention on creating a watchlist of stocks they would like to acquire, potentially at great discount for the long haul.

I started this recent series last week with Serious Money: Keep your eyes on UPS and FDX, focusing on large cap stocks certain to make it through these difficult times.

Continue reading Serious Money: Duke Energy & Southern 'Power-Full'

Serious Money: Duke Energy & Southern 'Power-Full' originally appeared on BloggingStocks on Thu, 21 May 2009 13:00:00 EST. Please see our terms for use of feeds.

One of the best things about blogging is the instant responses we receive. There are many times you have to be thick skinned when receiving criticism or just tolerant of the foolish people who are either rude or unknowing.

This brings me to Mr. noitall (small 'n' his choice) and the following commentary which followed my recent post $700 billion is real money!

"Well, maybe I was labeled a cynic about 2 years ago when I said the Fed is in a "check-mate" situation, where they will have to choose between saving the stock market, real estate market, or the dollar, but it most likely fail at all three. I don't think I am a cynic, just a realist, and it looks like I was right. Another thing I will say is massive greed, ignorance, arrogance and our willingness to believe in fantasies allowed this to happen. Maybe when a "cynic" questions some of the well known "facts", like the "buy & hold" theory, people should listen & give it some thought, before they believe the "historical data" they are given."

Mr. n and I often find common ground and he is telling the truth when he writes that two years ago he predicted the speculation and down market we are faced with today. While I must say that I find his view bleak, it has to be said also that people should be better prepared for poor markets and tough times.

While Mr n. is correct today and maybe tomorrow, his bearish outlook may not hold true next week or month or year. He does not mention the folly of straight-line analysis, but I am sure he would agree that good times do not necessarily follow good times and for the same reason bad times to not proceed in a linear fashion either.

Continue reading Reader rants, blogger listens - what's this world coming to?

Reader rants, blogger listens - what's this world coming to? originally appeared on BloggingStocks on Wed, 08 Oct 2008 14:10:00 EST. Please see our terms for use of feeds.

This is a continuation of Serious Money: Choose these 5 stocks over CDs -- DEO, GE, HNP, JPM, MRK, which listed the first five stock ideas. Below are the other picks rounding out the ten.

Nucor Corporation (NYSE: NUE) - This is one of the world leaders in the idea of mini-mills. This smallish steel producer prides itself on running a tight ship, pays a dividend and has a P/E under 9. The steel industry has been volatile in recent years with many mergers and acquisitions. NUE could be a takeover target as the industry continues to consolidate. In the mean time, at Friday's closing price of $51.6, it was paying a 4.05% yield and is near its 52 week low, having dropped from a high of $83.56.

Precision Drilling TR (NYSE: PDS) - This Canadian supplier of gas drilling equipment and manpower is probably the least well known of the companies in this group. It has dropped off its highs with the recent sag in gas prices and may well be a bargain again although not the bargain it was when I posted Chasing Value: Precision Drilling for 10% yield. At Friday's closing price of $21.35 it was paying a 7.1% yield and that is still a wonderful bounty even it the stock only appreciates a little.

Continue reading Serious Money: 5 more stocks better than CDs -- NUE, PDS, SO, WFC, XEL

Serious Money: 5 more stocks better than CDs -- NUE, PDS, SO, WFC, XEL originally appeared on BloggingStocks on Mon, 25 Aug 2008 12:48:00 EST. Please see our terms for use of feeds.

The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.

Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven

NOT SAFE:

United Parcel Service (NYSE: UPS) closed Monday at $65.30 down from $78.40; a 16.71% loss

Washington Mutual (NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.

Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.

Continue reading Serious Money: How safe were BRK, BUD, PG, SO, & UPS?

Serious Money: How safe were BRK, BUD, PG, SO, & UPS? originally appeared on BloggingStocks on Tue, 19 Aug 2008 15:07:00 EST. Please see our terms for use of feeds.

I have not decided who I am voting for yet. Or maybe it would be more accurate to say I have decided on multiple occasions only to become undecided again. While some will see me as fickle, or worse, others may be in the same boat.

I am also continuing to think about what difference any of the candidates can make on the economy, and based on these musings, where to invest. My current belief is that none of them will have a profound impact on our economy.

There are no financial wizards among them. Here is the shocker though: I like all three candidates, or at least can find some good in each of them. Each of them is a fighter, and I believe each one of them brings certain skill sets to the job. There are also things about each candidate that are inescapably negative. Clinton has so much baggage, Zsa Zsa Gabor would be jealous. Obama does not have the experience and he has a degree of arrogance (right sweetie); McCain is an old stick-in-the-mud who, as a long-time senator, has spent more hours with lobbyists than almost anybody, though he is pretending otherwise.

Where does this leave me from an investment perspective? My first choice, for stability with moderate growth and dividends, remains the defense sector. I wrote Defense sector rolls over S&P 500 for 8th straight year a while back and I still think that it is the most secure. Here's why:

A) None of the candidates will want to appear soft on defense when we are at war, and all three have made threatening remarks in some country's direction to make sure the electorate knows that.

B) The War in Afghanistan and Iraq rages on, and even the most optimist view is that a draw-down will take years.

C) Even if all war ceased immediately, the upgrading and replenishment of the hardware will cost billions of dollars and most of the defense contractors have that in their backlogs now. Chasing Value: General Dynamics & Raytheon -- The defense does not rest

Continue reading Investing in Everyone: Defense, Food, Power, Clinton, Obama, and McCain

Investing in Everyone: Defense, Food, Power, Clinton, Obama, and McCain originally appeared on BloggingStocks on Tue, 27 May 2008 19:05:00 EST. Please see our terms for use of feeds.

The more questions you have these days about the investment world, and the more concerned you are about economy over the next few years, the more you should have some of your assets in electric utilities. Regardless if our nation makes a push toward nuclear, solar, or wind power or does nothing at all, electric utilities will remain the big players. Year in and year out they have a stable customer base, pay a higher dividend yield and have a much higher level of predictability than almost any other investment class.

Another factor that is likely to contribute to the growth of electric utilities is the push toward electric "plug-in" cars. I have not done any analysis as to how this will affect global warming, the price of gas, the quality of air, or total national energy consumption, but those issues aside, if we change even 25% of the nation's automobiles to all-electric over the next ten years, that is a lot of growth.

Historically, the Dow Jones Utilities Average has beaten the pants off the Dow Jones Industrial Average for total return. There are short periods of time when the Industrials jump past the Utilities, but over the long haul, investors have done much better with what seems like the less attention-grabbing, boring old utilities. Choosing boring stocks remind you of anyone? Yes, "My Pal Warren" has been buying these boring stocks over the last decade (adding to his others in chocolate, underwear, ice cream and insurance) and you can see the results in the five-year chart comparing the two Dow indices.

Continue reading Serious Money: Electric utilities are the place to be

Serious Money: Electric utilities are the place to be originally appeared on BloggingStocks on Tue, 20 Nov 2007 14:55:00 EST. Please see our terms for use of feeds.

Almost 60 days have passed since I posted Scary market -- any safe stocks? and Still scary market -- more SAFE HAVENS.

Interestingly five of these eight companies made the top 20 (actually top 17) on Barron's list of most repected companies based on capitalzation in the current issue of Barron's (subscription required). The other three are not large enough to make the poll. Even more interesting GE, PG & BRK are three of the top five. Is it possible these Wall Street money managers have been reading my stories?... Naw -- and I certainly have not been talking to them.

Making the Barron's Respect List - BIG TIME! originally appeared on BloggingStocks on Tue, 12 Sep 2006 17:24:00 EST. Please see our terms for use of feeds.

Thirty days have passed since I posted Scary market -- any safe stocks? and almost 30 days since Still scary market -- more SAFE HAVENS.

Thirty days is really of no consequence in testing the validity of my comments or these companies. However, I was curious about how they were tracking and I think I should be as accountable as anyone else and more than most since I have been writing for the BloggingStocks site. Since posting the share prices six have moved up and two have gone down. I have not changed my mind about any of these companies or their stocks during this period. I had a good-til-cancelled order for some WM, which filled, taking advantage of the drop. We are also seriously looking at acquiring some more UPS, which is down significantly, to our original purchase price, eliminating all of our profit. They are listed in the order I mentioned them in my earlier posts.

Berkshire Hathaway (BRK-B) closed Friday at $3,102 up from $2,995.

Washington Mutual (WM) closed Friday at $42.75 down from $45.50.

Continue reading Scary market + 30 days -- tracking "safe" havens

Scary market + 30 days -- tracking "safe" havens originally appeared on BloggingStocks on Mon, 14 Aug 2006 14:31:00 EST. Please see our terms for use of feeds.

The subject of "naked puts" has been mentioned in several of my posts (most recently Keep your eye on Black & Decker and Black & Decker follow-up -- a few more thoughts), and I have received some inquiries about this trading option. Again I emphasize that this is a very risky proposition. I have only made these trades five times in my decades of investing all in the last few years after gaining a lot of knowledge and experience, with mixed results. Here's a definition from the Investopedia:

• Meaning: A put option whose writer does not have a short position in the stock on which he or she has written the put. Sometimes referred to as an "uncovered put."
• Caution: Naked puts are very risky since the writer can lose big if the underlying asset moves opposite to the desired direction. But, profits are huge if the underlying asset moves in the right direction.
• Still more discussion: TheStreet.com: Naked Puts Are a Dangerous Game

Why?: I have only one open option 'naked put' at this time and chose a very conservative position. About eight weeks ago I was looking at the Southern Company (SO) which I own in my Roth IRA for inclusion in our investment company portfolio. It was trading around $32. I was interested in getting a bargain and would have liked to buy it at $30. It has not traded at this price for quite some time and may not.

Continue reading What are naked puts and why take the risk?

What are naked puts and why take the risk? originally appeared on BloggingStocks on Thu, 10 Aug 2006 15:15:00 EST. Please see our terms for use of feeds.

Everyone knows that sex sells. That does not take much convincing. Why? Because we have a built-in mechanism that compels us every day, and through every week, month and year to at least take notice. The word in the blog title is a case in point. It probably piqued your interest in reading this, and I took advantage of that. Year in and year out sex sells. Well, the same can be said about stock dividends.

Dividends assure some return on your investment day by day, year after year, in up and down markets. The compounding of these dividends over time adds a burst of upside that is significant in the long run and this has been well documented. The Motley Fool talks about how dividends are powerful and that Wharton finance guru Jeremy Siegel agrees.

So following up on the importance of making a return on capital investments I thought I would add another historic consideration in value investing with a personal example. In my Roth IRA I am conducting a non-scientific experiment.

Continue reading Dividends are VERY SEXY-- no joke

Dividends are VERY SEXY-- no joke originally appeared on BloggingStocks on Sun, 04 Jun 2006 07:57:00 EST. Please see our terms for use of feeds.