Thursday, May 31, 2012

SocGen's Grice: Quality Income Index

More support for buying quality dividend paying stocks...

From BusinessInsider:

The gist of it is just like it sounds: investing in quality companies that pay out sustainable dividends tend to generate the highest returns over the long run.

Wednesday, May 30, 2012

Really??? Or: the internet is made of cats

From the WSJ Blog:
Facebook is more than a company bet. It is “an option on the World.”
The best question for FB is how to value it,” Needham writes. “Our point of view is that FB should be valued based on revenue potential from total minutes spent on FB times its powerful margin expansion engine.”
My humble take: the internet is made of cats, not friends. Also, dogs.

Tuesday, May 29, 2012

Buying VIG: Vanguard Dividend Appreciation ETF

In keeping with some past thoughts on dividend stocks I have been buying VIG.  If rates are destined to stay low for some time then I think there's going to be greater interest in searching for yield in quality dividend payers.  This is not an original idea, and expert interviews at some media outlets would give you the impression that everyone and their dog is in this trade, but retail investors still seem to be shunning stocks and buying bonds.  It is difficult to see how investors can meet their future liabilities (children's college, mortgage, retirement income, etc) in bond funds with negative real yields going out 10 years and cash paying near zero percent.

Monday, May 28, 2012

The U.S. Consumer

Is it safe to invest in the U.S. consumer?  Some investors must think so.  From Feb 23, 2012 to May 25, 2012, XLY has outperformed SPY by 4.23% (price returns)--that's for less than three months.  Over the same period, OIL was down 16.8%.  Lower gasoline costs and the housing situation no longer accelerating to the downside could explain why retail sales have been reasonably resilient considering everything that's going on with de-leveraging, high unemployment, and daily doom and gloom coming from global factors.

So what do you think, is it safe?

Sunday, May 27, 2012

Kotok on the Beveridge Curve

David Kotok at Cumberland Advisors writes about the Beveridge Curve on May 4, 2012 and graphs job vacancy vs the U6 from Dec'00-Feb'12.  He notes that the curve moves from the top left to the bottom right.  Conclusions: higher levels of unemployment is structural (and remember, gains have been due to lower participation), inflation and interest rates will stay low, and profits will stay high.