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Stock Ideas Investors Daily Edge The job losses are running deep and they are running across all sectors of the economy.
Stock Ideas Investors Daily Edge The job losses are running deep and they are running across all sectors of the economy. 
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| Buying bonds isn’t always the easiest thing to do--outside of my favorite closed-end funds in Bond Desk and Personal Finance. Another exception: the corporate bonds issued by some of my favored heavy-cash-generating companies; | |
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| The job losses are running deep and they are running across all sectors of the economy. |
| Saturday, 07 February 2009 | ||||||||
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The job losses are running deep and they are running across all sectors of the economy. As an investor, there is a bit of a silver lining in this employment downturn. The companies that are cutting jobs right now, but then are able to remain in business will come out of this recession leaner and stronger. I maintain that this is true for corporations, countries and individuals. If you can come through this recession a little bruised, but not broke (financially), you will be positioned to make a lot of money over the next five to ten years. Whether it is investing in stocks, gold or real estate, all assets are set to rise sharply after we get through this recession. Right now, the big question is when will it end. Personally, I think the stock market has already seen the bottom with the November lows. The economy hasn’t bottomed yet, but I think it is close. It will probably bottom in the next six months. Employment will bottom shortly after the economy. Click here to read the full article. Tuesday Shareholders hate to get their dividend checks cut. They rely on that income. It's as if the company is tearing up the understanding they had with shareholders. But keeping dividend payments at the expense of getting rid of valuable assets and/or workers, sooner or later will backfire. By keeping their dividends, GE and Dow Chemical don't become more solid companies. The rating agencies certainly don't think so. If anything, finances get stretched and the companies look riskier than ever. Investors aren't getting fooled either. They're selling. As unsavory a choice as it is, companies should sacrifice their dividend and save as much of their company as they can. If they emerge from the other side of the recession more or less intact, they can start raising dividend payments again. They'd have no problem attracting income investors with their healthy balance sheets and growth prospects.
Despite an economy falling deeper into a recession, 13 S&P 500 companies raised their dividends so far this year. Some of them are doing it without stretching their finances. Click here to read the full article. Wednesday Most think tanks, not political ax grinders who call themselves think tanks, but real think tanks, believe that the best solution, and the only one that has ever had any real affect, is significant tax change. Not a temporary cut in rates, or a suspension of a few of the more bizarre taxes, but reduction in how much everyone pays across the board. Consider this scenario. To inject money into the economy, reduce the payroll taxes for people in the 28% and 31% brackets by 25% for two quarters. Here’s how the numbers shake out. These are ballpark so don’t hold my feet to the fire on this one. Taxable income of $75,000 pays about $21,000 in federal taxes. If the 25% reduction went into affect this quarter and next, this family would have an additional $2625 dollars to spend. That’s a lot of money to a family living on $75,000. Multiply that by the total number of households in the 28% tax bracket and you have one hell of a stimulus. Add the other tax brackets and it’s more than we need. Click here to read the full article. Thursday Many economic experts say we could be heading towards a worsening recession or even a depression. …a government can use inflation, credit policy, monetary policy and fiscal policy to head off a recession or a depression. Keep in mind that none of these intervention tools is perfect without consequences or side effects. It looks like the Obama administration and other world governments are on the verge of expanding government intervention to try to rescue the global economy. Click here to read the full article. Friday Most investors say they want to be rich, but their actions show that they would rather be right. Pride and defense of the ego are very powerful human motivations. But they can be deadly when it comes to investing. There is only one report card when it comes to your investments. It all comes down to profit and loss. In the end, it doesn't matter whether you are right or wrong, but how much money you make. The ultimate test of your success as an investor is where your portfolio is today… not where you hope it will be next year. The resource sector is in shakeout mode and only the strongest will survive. Mergers and acquisitions are now primary on the radar screen. Companies with cash are going to have a field day in this environment. I highlighted a relatively large gold company and a smaller company in a recent editorial, “What's in Your Stocking?”. The financial game isn't over. There are lots of opportunities in the current markets. Quality companies and their shareholders stand to be big winners as events continue to unfold. All of your IDE editors are working overtime to bring winning strategies your way. Click here to read the full article.
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