One of the highlights of my weekends has been when I pull into the parking space in front of 7-11. I hop out of my SUV and wonder what Barron's will serve up. I promised myself this time that I would look more carefully at the contents before just automatically buying it ($5.00 plus sales tax). But, the Cover Story got me again! ("Fishing For Steady Income" on the Cover, "Reeling in the Yields" is the actual story title.).
Author Karen Hube's "Reeling In the Yields" is an important article about a subject I have not gotten around to writing about: how can we investors make ANY money (income money) when we can get only 2% on a 10-Year Treasury and similar amounts for bank CDs? This ZIRP environment is KILLING savers as their older bonds mature and they have to put money to work! And with inflation at 4% - 11% (depends on whose figures you believe), we who are savers are getting slammed. And the "little meme" just out recently ("buy stocks with a high dividend") is becoming a crowded trade, lots of those stocks have been bid up recently making the percent of dividend to stock price less favorable.
[personal note: our family's income is down fairly sharply over the past two years or so, due in large part to not being able to get any decent income from stocks and bonds]
It's a great article and very timely. I will now show you their table of 11 Ways to Earn Juicy Yields (the table itself shows a plus of each one and a minus):
Dividend Paying Stocks
Closed-End Corporate Bond Funds
Emerging Market Government Bonds
Equipment Leasing (how can I buy and then lease out a railroad car?)
Master Limited Partnerships
Real Estate Investment Trusts
Global Infrastructure Stocks
Immediate Fixed Annuities
The article goes on to say that buying some of many of these can get you a yield of up to 7%! There are risks in all of the above. Moi? I can tell you RIGHT NOW I would not touch the second and third from the bottom because of insurance company risk (counter-party risk).
The inside front cover and facing page is a two page ad for the Select Sector SPDRs (eg, XLF is the Financial Sector SPDR). There are 9 of them. The other page lists the the Top 10 companies in each of the ETFs. For those interested!
Barron's bear Alan Abelson is back this weekend. He marvels how our Congressmen are able to get much work done, what with all the insider trading going on. Indeed.
He then discusses how the world must create 80 million jobs in 2012 and 2013 just to get employment back to where it was in 2007. He quotes Joseph Quinlan, chief market strategist at U.S. Trust. Quinlan says that the International Labor Organization says that the developed countries (USA, Europe, Japan) need to create 27.5 million of those jobs. And how many will likely be created here in the developed countries? 2.5 million. A miss of 25 million jobs. And "jobs" is what the political hacks are talking most about. Not just here, but all around the world. What does this mean? Lots of social turmoil. Abelson: "Think Greece multiplied geometrically and you'll have a reasonable notion of the potential problem". Ruh Roh.
He finishes with a short piece on how he thinks "...the outlook for 2012 is pretty darn bleak".
"Review and Preview" notes than Warren Buffett finally got around to buying a big chunk of IBM shares, he said he should have spotted this one years earlier...
"To Russia, With Funds" is a short column there about how one money manager makes a good case for investing in Russia. That the corruption and sleaze there is already priced in. Another analyst (same column) says that Russian banks are now borrowing more cheaply than European ones. [no thanks re investing Russia]
Jack Willoughby suggests that Murphy Oil (MUR) is a good cheap stock. It is shedding refining and marketing to focus more on exploration, where it has not had luck recently. If they DO get catch a break, this stock could go up. [OK, maybe so, could be a winner]
Dimitra DeFotis writes this week's "Technology Week". She again mentions Buffett and IBM. She then goes on to discuss Seth Klarman's (a "deep value" hedge fund manager) views on Microsoft and Hewlett-Packard (HPQ). Klarman likes them both because they are cheap.
Tiernan Ray gives the Thumbs Down on "Our Gadget of the Week", Amazon's brand new Kindle Fire, which does not perform like the Kindle for reading nor anywhere close to the iPad for access to the Internet.
Jim McTague writes a full page article on the the Supercommittee, and it isn't pretty. He expects them to not agree, and that stocks and bonds will suffer additional volatility. [I agree with Jim]
"CEO Spotlight" is about John Mackey, founder and CEO of Whole Foods Market (WFM). An interesting story! "Mackey gave up his socialist beliefs as soon as he had to meet a payroll". Hey, it happens...
Editorial page editor Thomas Donlan has come back to his senses! He writes that Team Obama has made a Bad Call re putting off the decision re the Keystone XL oil pipeline from Canada. Donlan is 100% right. We need more access to Canada's oil! Canada could decide to build the pipeline to the Pacific coast, and ship the oil to China instead. Here's the punch-line to this column:
"On Nov. 12, the White House and the State Department decided to give the pipeline route more study, at least until after the election in November, 2012. "This was not a political decision," said an assistant secretary of state who must have practiced in front of a mirror to keep a straight face."
Yeah, sure. Of course it was not a political decision...
In the Market Section Jonathan Buck writes "European Trader" and notes that fears are targeting The core of the Euro Zone. No surprise to Zero Hedge readers.
Randall W. Forsyth writes in "Current Yield" that US Treasuries and corporate bonds again benefited from anxiety in Europe. [people there want their money OUT of there]
"Commodities Corner" (Leslie Josephs) is about how cocoa may soon be on the rise, as the current glut is being eliminated.
Lots of interesting stuff in the Classifieds there this weekend. Assay On Wheels (the PM refinery in a truck) advertised again (assayonwheels.com), I am waiting on the information they said they would send me. Other interesting ads include Iowa farmland for sale (warning: BUBBLE in Midwest farmland!) and a pair of ads taking both sides (buying and selling) of distressed debt: smithandgrahaminvestments.com.
I noted in the Market Laboratory Jeffries Group (JEF) issued a whole bunch of corporate debt last week. At over 10% and 11% (various terms). That is in Junkland. I believe this company is similar to what MF Global was... Danger, Will Robinson.
Fed Total Holdings: + 0.3 %
Monetary Base: + 1.0%
M1 Money Supply: + 0.0% (up a tiny amount)
M2 Money Supply: +0.4%
Peruvian Sol vs. US$: unchanged.
Verdict this weekend: Yes! A good issue of Barron's IMO.