Investing

Investing: Are You Looking at the Big Picture?

Mar 7th, 2011
by Sean.
2 comments

One of the biggest issues that many people have when it comes to long-term investing is looking at the big picture, and how it fits into their long-term financial goals. It’s hard to focus on the long-term when, in the short-term, stock market volatility is scaring you. In order to stay focused on the big picture – which is what you want your finances to look like 20 or 30 years down the road – you need to tune out some of the yelling you hear in the financial media.

Develop a Longer Attention Span

As a society, we are so debt-ridden because we have short attention spans. Credit card debt is so high because we don’t have the attention span to save the money over the course of months for something we think we want now. The same lack of attention can also be difficult when it comes to maintaining your investment portfolio. We want to see riches immediately, and we get impatient if our portfolio grows at a moderate pace.

On top of that, the financial media, which like to focus on the next “crisis” has us drawing attention away from our long-term investing goals and looking at what is sure to be a stock market crash. Decisions made in panic just after the financial crisis led to people selling low, when if they had kept with a long-term investing plan, they could have been buying low and seeing substantial gains today.

Volatility Evens Out a Bit Over the Long Haul

Remember that, over the long haul, things that seem like huge market problems tend to even out a bit. A trend line observed over the course of 30 years looks a lot different than one observed during a particularly volatile five-year period. By keeping long-term trends in mind, it is possible for you to gauge how you are really doing with regard to the big picture and your investment portfolio goals. It is important to keep this in mind as you make investment decisions.

This doesn’t mean that you never get rid of anything. Long-term investing is about seeing how your decisions affect the big picture. If something changes fundamentally about an investment, it might be time to sell. Think about why the investment no longer fits into the big picture. Just because something dropped along with the rest of the market is not a valid decision to remove it if the fundamentals of the investment haven’t changed. If, however, something has changed about the investment that could affect its place in your financial plan, it might be time to shift things around.

Measured, carefully thought out asset allocation and portfolio re-balancing are part of a good long-term investing strategy. Just don’t let short term volatility lead you into abandoning your investment plan because of the panicked frenzy whipped up by the financial media. Long-term investing is an important part of your long-term financial stability. Don’t lose site of the big picture in the heat of the moment.

Miranda is a freelance writer and professional blogger, specializing in personal finance. She is associated with a number of web sites, including the AllBusiness Personal Finance Corner, her personal finance blog, and Credit Card Canada, which offers reviews of the best Canadian credit cards.

Jim Cramer’s Top 3 Stock Picks for 2011

Jan 28th, 2011
by Sean.
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Jim Cramer shares his top 3 stock picks from Dow Jones for the new year on his Mad Money segment, which aired on Jan 3, 2011.

#1 Stock Pick: AA

Cramer’s top pick is Alcoa (AA). He believes that this company is a takeover candidate. He forecasts a 42% rise for the stock this year.

Price: 15.80 (as of Jan 3, 2011)
P/E: 65.8
Div: 0.12
Div Yield: 0.8%

#2 Stock Pick: INTC

Cramer’s second pick is Intel (INTC). He thinks that Intel’s acquisition of McAfee allows the chipmaker to embed internet security in the computer computer chips and that will give Intel an advantage over the competition. He predicts that the price of INTC could jump 44% to $30 by the end of this year.

Price: 20.85 (as of Jan 3, 2011)
P/E: 10.2
Div: 0.63
Div Yield: 3.0%

#3 Stock Pick: AXP

Cramer’s third pick is American Express (AXP). He tells us that AXP is a growth stock and the stock is greatly undervalued. He thinks that AXP could increase 40% to $60.

Price: 43.40 (as of Jan 3, 2011)
P/E: 14.2
Div: 0.72
Div Yield: 1.7%

Disclaimer: The author owns shares of AXP as of writing the article.

11 Healthcare Facilities Stocks with High Dividend Yields

Oct 18th, 2010
by Sean.
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In this article, I will list 11 Healthcare Facilities stocks with the highest dividend yields. Healthcare Facilities is a good sector to look for income stocks, especially for the long term. They have a long history of paying out dividends.  In addition to the dividend yield, I will also looked at Dividend Consistency, which is a metric I use to check how reliable the dividend income are historically.

A consistent dividend payout indicates that the company has a strong balance and can pay out the dividends regardless of the market conditions. Dividend Consistency means that the company has pay a dividend every quarter since the first dividend issued and that the dividends in subsequent quarters are equal to or greater than the previous quarters.

The dividends payout are graphed to illustrate the payouts from the time of dividend inception to present. For the companies with dividend consistency, the average dividend percentage growth is calculated over the past ten years, using this formula: (more…)

BP Suspends Dividends for 3 Quarters 2010

Jun 17th, 2010
by Sean.
1 comment

BP establishes a $20 billion fund for the Deepwater Horizon Rig spill and suspends dividends for at least 3 quarters this year. The stock has taken a large drop from it’s pre-spill days, losing nearly half it’s value from $60 a share.

There will be big impact for the shareholders who rely on the dividends for retirement or income. The dividends was previously paid at $3.36 per share every year. Today’s the dividends will be paid at $0 per share, until the suspension is lift.

I have bought BP shares recently in hopes of collecting dividends, which yielded around 6% for me, but now, I would have to rethink whether or not it is worth holding on to BP shares any more. The stock tanked, the dividends suspended, and their reputation heavily damaged. It would take a long time for BP to recover.

Trillion Dollar Rescue Plan for Greece And Others

May 10th, 2010
by Sean.
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After many roller coaster dives, the stock market finally took a turn and headed up today. The European Union came out with a trillion dollar plan for financial crisis clouding its countries, such as Greece, Portugal, Spain and Italy. The stock market responded positively and Dow Jones soared 405 points today.

Question of the day: Will the trillion dollar plan from the European Union be enough to rescue Europe from the financial crisis?

Dow Drops 999 Points During Mid-day

May 6th, 2010
by Sean.
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The stock market took the biggest drop ever on Thursday, most likely caused by an error in a computerized selling program. Add in Greece and a weak economy, most stocks took a beating today. Below is an excerpt of the article from the Yahoo Finance page.

Wall St. rollercoaster: Stocks fall nearly 10 pct

Stocks take record tumble, nearly 10 pct, before regaining some; typo may have caused selloff

NEW YORK (AP) — A computerized selloff possibly caused by a simple typographical error triggered one of the most turbulent days in Wall Street history Thursday and sent the Dow Jones industrials to a loss of almost 1,000 points, nearly a tenth of their value, in less than half an hour. It was the biggest drop ever during a trading day.

The Dow recovered two-thirds of the loss before the closing bell, but that was still the biggest point loss since February of last year. The lightning-fast plummet temporarily knocked normally stable stocks such as Procter & Gamble to a tiny fraction of their former value and sent chills down investors’ spines.

“Today … caused me to fall out of my chair at one point. It felt like we lost control,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

No one was sure what happened, other than automated orders were activated by erroneous trades. One possibilility being investigated was that a trader accidentally placed an order to sell $16 billion, instead of $16 million, worth of futures, and that was enough to trigger sell orders across the market.

Read more

Brian Williams Talks About Wall Street’s Free Fall on David Letterman

Advantages of Index Funds

Mar 12th, 2010
by Guest.
3 comments

I’ve often said that I’m a boring investor. I pretty much stick with index funds. They populate my retirement account and my son’s 529. When my husband gets a retirement plan through his work, it will probably involve index funds. While it is certainly possible that I could make more by going with different types of investments, and trying my hand at stock picking or investing in commodity futures or currencies, the fact of the matter is that it is too much work and stress for me. So I go the boring route.

Index funds are groups of investments that follow an index. This doesn’t have to be a stock index; index funds also include groupings of bonds, commodities, currencies and other investments. There are indexes based on foreign investments, on growth investments and on value investments. In fact, it is possible to create a diversified portfolio, with your preferred asset allocation, using only index funds. Once you understand the advantages of index funds, you might not want to invest any other way.

Why I like index funds

Since you can diversify, adding more growth opportunities to your portfolio, as well as creating a safety net with more stolid funds, you can lay in significant returns over time, without the same level of volatility that comes with picking individual investments. In my mind there are three main advantages to index funds:

  1. Long-term solidity: Individual investments fluctuate a great deal. However, since index funds are tied to market performance, their volatility is quite low over time periods of 15-25 years. Investments have yet to lose, overall, during spans of decades, but individual investments can lose. You may not make a big score, but if you are consistent with index fund investing, you are likely to do well enough to meet your lifestyle requirements later in life.
  2. Low costs: Transaction fees, commissions and other costs can easily eat into your returns. Managed funds are especially known for this, since you have to pay transaction fees on top of all the other administrative and load fees. Index funds, though, require little management and see little turnover. As a result, costs are generally much lower than with other types of investing, and you keep more of your money.
  3. Minimal management requirements: You don’t even have to do much to manage your index funds. If you want to create an asset allocation based on the 100 years method, that’s easy. If you are 30, invest 70% of your portfolio in stock index funds and 30% in bond index funds. If you are more daring, looking to mix it up a bit with commodities and cash, you can do that, too. You could create an investment portfolio with 50% stocks, 20% bonds, 20% commodities and 10% cash – all with index funds. All you have to do re-balance your portfolio annually or semi-annually, as you need.

Of course, not everyone likes index funds as much as I do. And you really should do your own research and maybe consult a financial professional before making a decision. I like the fact that there is minimum fuss, low costs and that my stomach doesn’t clench in fear every time the Dow takes a dive. And, since I’m planning for the long term, I have plenty of time to let my boring investment style work in my favor. I may never be a billionaire, but by the time my son is out of the house, I’ll be at a comfortable level of wealth.

This is a guest post from Miranda Marquit. She is a Freelance Writer and a Professional Blogger.

Gold price rises over $1,000

Sep 8th, 2009
by Sean.
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Gold prices at 18-month high over $1,000 on dollar weakness, low interest rate expectations

  • By Carlo Piovano, AP Business Writer
  • On Tuesday September 8, 2009, 3:22 pm EDT

LONDON (AP) — The price of gold rose above $1,000 per ounce on Tuesday to its highest since March 2008 — suggesting investors are wary of the U.S. dollar’s weakness and expect international interest rates to remain low for some time.

The gold contract for December delivery traded up $6.50, or 0.7 percent, at $1,003.20 per troy ounce on the New York Mercantile Exchange. It had gone as high as $1,009.70; that is the highest since it hit a record of $1,033.90 on March 17 last year.

Gold is typically bought as an alternative to the dollar among safe-haven assets favored by investors seeking to preserve capital. So its rise often correlates to a drop in the value of the American currency.

That is what happened in spring of 2008, when worries about the financial crisis brewing in the U.S. helped drive gold to a record. Gold last went over $1,000 in February.

“It is mainly the reflection of the weakness of the dollar,” said Julian Jessop, economist at Capital Economics.

The dollar fell to 92.32 yen on Tuesday from 93.05 yen the night before, while the euro strengthened to $1.4467 from $1.4332 as stock markets rose and investor sentiment improved.

Jessop noted, however, that gold was also being boosted by market expectations that global central banks would keep their interest rates low for some time to come. One disadvantage to holding gold is that no interest is earned — but rates on dollar-denominated assets such as government bonds have fallen sharply, lessening that disadvantage.

“Near-zero interest rates in many of the world’s largest economies reduces the opportunity cost of holding gold,” Jessop said.

The fact that 20 of the world’s rich and developing nations promised over the weekend to keep in place their stimulus measures — which include both spending as well as low interest rates — reinforced the appeal of gold.

Jessop was not convinced gold could sustain such high prices for very long or push much higher, since consumers quickly start selling gold items to take advantage of stronger prices.

“This rally is sowing the seeds of its own destruction,” he said.

What’s Next For The Economy?

May 31st, 2009
by Sean.
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Where is the stock market heading now? Has the stock market bottomed? Is now the time to start/resume investing? There are many questions concerning the economy and the stock market.

Watch the videos below for the analysis and discussions from Bloomberg with Professor Joseph Stiglitz of Columbia University, Meredith Whitney of Meredith Whitney Advisory Group, Oliver Sarkozy of Carlyle Group, Jack Welch (Former General Electric CEO) and Austan Goolsbee of White House Senior Economic.

Part 1

Part 2

5 High Yield Dividend Stocks for 2009

Jan 23rd, 2009
by Sean.
8 comments

In a recession year, there may be little growth in the economy, but that does not mean our portfolios have to suffer. In the time we are waiting for the stock market to pick up again, holding high yield dividend stocks is the best way to increase profits. We look for solid companies that provide consistent dividend. Here are 5 dividend stocks that have good consistent dividend payouts and are expected to grow when the market recovers.

Pfizer

Pfizer Inc. (PFE)
Sector: Healthcare
Industry: Drug Manufacturers – Major
Company: Pfizer is the largest pharmaceutical manufacturer with $26B in cash reserves and has been paying a consistent dividend over the years. Pfizer has a huge research and development (R&D) unit and it is only a matter of time before they launch a new blockbuster drug.
Price: $18.27 (as of close on 1/2/2009)
Annual Dividend: $1.28
Annual Dividend Yield: 7.01% (as of close on 1/2/2009)
Dividend Payout Frequency: Quarterly
Recent Dividend Payouts:
5-Nov-08 $ 0.32 Dividend
6-Aug-08 $ 0.32 Dividend
7-May-08 $ 0.32 Dividend
6-Feb-08 $ 0.32 Dividend

Verizon

Verizon Communications Inc. (VZ)
Sector: Technology
Industry: Telecom Services – Domestic
Company: Verizon Communications, Inc. provides communication services in the United States and internationally. They are well known for their excellent wireless network. Since the introduction of FIOS, the demand for the fiber optics network in residential units has skyrocketed. Verizon is in a good position for growth and carries little risk.
Price: $34.64 (as of close on 1/2/2009)
Annual Dividend: $1.84
Annual Dividend Yield: 5.31% (as of close on 1/2/2009)
Dividend Payout Frequency: Quarterly
Recent Dividend Payouts:
8-Oct-08 $ 0.46 Dividend
8-Jul-08 $ 0.43 Dividend
8-Apr-08 $ 0.43 Dividend
1-Apr-08 $ 0.17 Dividend
8-Jan-08 $ 0.43 Dividend

GE

General Electric Co. (GE)
Sector: Conglomerates
Industry: Conglomerates
Company: General Electric Company (GE) is a diversified company with four segments: GE Capital, Energy Infrastructure, Technology Infrastructure, and NBC Universal.
They operate in the areas of technology, media, and financial services. With $16B in cash, a high dividend yield, and diversity in multiple verticals, GE is a safe bet.
Price: $17.07 (as of close on 1/2/2009)
Annual Dividend: $1.24
Annual Dividend Yield: 7.26% (as of close on 1/2/2009)
Dividend Payout Frequency: Quarterly
Recent Dividend Payouts:
24-Dec-08 $ 0.31 Dividend
18-Sep-08 $ 0.31 Dividend
19-Jun-08 $ 0.31 Dividend
21-Feb-08 $ 0.31 Dividend

conEdison

Consolidated Edison Inc. (ED)
Sector: Utilities
Industry: Diversified Utilities
Company: Consolidated Edison, Inc. is one of the largest energy providers in New York City, but also provides electric, gas, and steam utility services in many parts of the United States. Even during recession, everyone has to pay their electric and gas bills. ED should be a reassuring bet and has good dividend payouts.
Price: $39.26 (as of close on 1/2/2009)
Annual Dividend: $2.34
Annual Dividend Yield: 5.96% (as of close on 1/2/2009)
Dividend Payout Frequency: Quarterly
Recent Dividend Payouts:
7-Nov-08 $ 0.585 Dividend
11-Aug-08 $ 0.585 Dividend
12-May-08 $ 0.585 Dividend
11-Feb-08 $ 0.585 Dividend

Altria

Altria Group Inc. (MO)
Sector: Consumer Goods
Industry: Cigarettes
Company: Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in the United States and internationally.
Price: $15.20 (as of close on 1/2/2009)
Annual Dividend: $1.28
Annual Dividend Yield: 8.42% (as of close on 1/2/2009)
Recent Dividend Payouts:
22-Dec-08 $ 0.32 Dividend
11-Sep-08 $ 0.32 Dividend
11-Jun-08 $ 0.29 Dividend
31-Mar-08 $ 51.060001 Dividend
17-Mar-08 $ 0.75 Dividend

Ticker Price Dividend Yield
PFE $18.27 $1.28 7.01%
VZ $34.64 $1.84 5.31%
GE $17.07 $1.24 7.26%
ED $39.26 $2.34 5.96%
MO $15.20 $1.28 8.42%

The average dividend yield of the 5 stocks comes out to approximately 6.80%. The best time to buy them is before the market enters an uptrend.

Disclaimer: As of the article published date, the author holds shares of PFE and GE.

Credits: Data provided by Yahoo! Finance

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