I, like many investors, were drawn toward REIT's due to the high dividends and rather constant charts until recently but the question is did the REIT bubble pop or will we see recovery in the coming year. REIT's, for those of you who aren't familiar, are real estate investment trusts. They invest in real estate and/or mortgages, have special tax breaks, and usually pay out a considerable portion of their profit as dividends to the stock holders. I have a few in my portfolio, MFA, NLY, ARR, and at one time WAC which I sold after they were no longer classified as an REIT.
So far the dividends that I have received have covered the recent loss in value. So what does the future hold for these high dividend stocks? I believe that given the recent drop in price now would be a great time to buy. I think the economy is headed upward in 2014 which will bring even more stability to a still recovering housing market.
With the dividend percentage being as high as it is on these particular stocks it gives you a little more cushion when the value takes a dip. As of today, ARR is paying over 15%, NLY is just over 12%, and MFA is over 11%. At these rates, even if the REIT market holds steady (which it should), you are still making well over 10% a year. Add into that the probability of an increase in value it's a no brainer for me. Even in the off chance it does drop in value, it would have to completely plummet to reach the pitiful rates that CD's and money markets are paying out. If you are going to invest in CD's you might as well hide your money under your mattress, but that's another topic.
In closing, I believe if you do your research and chose a reliable REIT you won't go wrong this year. So buy, buy ,buy on REIT's in early 2014.
7Q8DYRYJZE28
Tuesday, December 31, 2013
Monday, December 30, 2013
Warren Buffett on Simple Retirement Advice
I found this article on The Motley Fool and thought it was excellent advice on picking investments that have overall reduced costs associated with them.
Warren Buffett's Super-Simple Retirement Advice
Warren Buffett might as well be king of the investment industry. He produced the best returns the world has ever seen working from his house in Omaha, not a desk on Wall Street. And for that reason, so many people want his advice on how to invest for retirement. They want to hear from someone like them -- someone who doesn't spend every waking moment in Manhattan. What would Buffett do? At the 2004 Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) shareholders meeting, Buffett was asked by one investor if he should buy Berkshire, invest in an index fund, or hire a broker. Buffett delivered with his typical, common-sense rationale: "We never recommend buying or selling Berkshire. Among the various propositions offered to you, if you invested in a very low cost index fund -- where you don't put the money in at one time, but average in over 10 years -- you'll do better than 90% of people who start investing at the same time." An index fund? That's what the best stock picker in the world recommends? Yes, and it wasn't the first time he answered with such simplicity. In another question-and-answer session, Buffett made his stance plain and clear: "If you like spending 6-8 hours per week working on investments, do it. If you don't, then dollar-cost average into index funds. This accomplishes diversification across assets and time, two very important things." So, let's get to the specifics. What's Buffett's favorite index fund? "Just pick a broad index like the S&P 500. Don't put your money in all at once; do it over a period of time. I recommend John Bogle's books -- any investor in funds should read them. They have all you need to know. Vanguard. Reliable, low cost. If you're not professional, you are thus an amateur. [F]orget it and go back to work." Why is Buffett so keen on index funds? They're cheap. In fact, Vanguard's S&P 500 ETF (NYSEMKT: VOO ) provides a way for investors to own a slice of 500 of the largest businesses traded on the public stock markets, including Berkshire Hathaway, at a cost of just 0.05% per year. On a $100,000 investment, fees would tally to only $50 per year, compared to $1,310 for the average large-cap mutual fund. Over time, lower fees and expenses help your money compound faster. Just look how Vanguard's low-cost ETFs stack up to the alternatives: Add in Vanguard's other popular ETFs, like its Vanguard FTSE All-World ex-US ETF (NYSEMKT: VEU ) fund, which tracks international stocks, and its Vanguard Total Bond Market ETF (NYSEMKT: BND ) for bond exposure, and you'll have a more balanced investment portfolio than many who hire the help of a broker. Avoid this big mistake Buffett's pretty keen on helping people avoid big mistakes, just as he's all for helping investors make better decisions. Saying it as simply as he could, he opined on how having cash is one of the worst investments you could ever make: The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time. Of course, that's not to say that having a cash buffer for emergencies is a bad thing. However, having piles of cash -- tens upon tens of thousands of dollars in cash -- is a great way to guarantee a terrible return on a very large pile of money. More thoughtful insights from the Oracle of Omaha Warren Buffett has shared wisdom worth billions in his annual letters to Berkshire shareholders. Luckily, his smarts are free for the taking. You can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report. Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Source: The Motley Fool
Warren Buffett's Super-Simple Retirement Advice
Warren Buffett might as well be king of the investment industry. He produced the best returns the world has ever seen working from his house in Omaha, not a desk on Wall Street. And for that reason, so many people want his advice on how to invest for retirement. They want to hear from someone like them -- someone who doesn't spend every waking moment in Manhattan. What would Buffett do? At the 2004 Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) shareholders meeting, Buffett was asked by one investor if he should buy Berkshire, invest in an index fund, or hire a broker. Buffett delivered with his typical, common-sense rationale: "We never recommend buying or selling Berkshire. Among the various propositions offered to you, if you invested in a very low cost index fund -- where you don't put the money in at one time, but average in over 10 years -- you'll do better than 90% of people who start investing at the same time." An index fund? That's what the best stock picker in the world recommends? Yes, and it wasn't the first time he answered with such simplicity. In another question-and-answer session, Buffett made his stance plain and clear: "If you like spending 6-8 hours per week working on investments, do it. If you don't, then dollar-cost average into index funds. This accomplishes diversification across assets and time, two very important things." So, let's get to the specifics. What's Buffett's favorite index fund? "Just pick a broad index like the S&P 500. Don't put your money in all at once; do it over a period of time. I recommend John Bogle's books -- any investor in funds should read them. They have all you need to know. Vanguard. Reliable, low cost. If you're not professional, you are thus an amateur. [F]orget it and go back to work." Why is Buffett so keen on index funds? They're cheap. In fact, Vanguard's S&P 500 ETF (NYSEMKT: VOO ) provides a way for investors to own a slice of 500 of the largest businesses traded on the public stock markets, including Berkshire Hathaway, at a cost of just 0.05% per year. On a $100,000 investment, fees would tally to only $50 per year, compared to $1,310 for the average large-cap mutual fund. Over time, lower fees and expenses help your money compound faster. Just look how Vanguard's low-cost ETFs stack up to the alternatives: Add in Vanguard's other popular ETFs, like its Vanguard FTSE All-World ex-US ETF (NYSEMKT: VEU ) fund, which tracks international stocks, and its Vanguard Total Bond Market ETF (NYSEMKT: BND ) for bond exposure, and you'll have a more balanced investment portfolio than many who hire the help of a broker. Avoid this big mistake Buffett's pretty keen on helping people avoid big mistakes, just as he's all for helping investors make better decisions. Saying it as simply as he could, he opined on how having cash is one of the worst investments you could ever make: The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time. Of course, that's not to say that having a cash buffer for emergencies is a bad thing. However, having piles of cash -- tens upon tens of thousands of dollars in cash -- is a great way to guarantee a terrible return on a very large pile of money. More thoughtful insights from the Oracle of Omaha Warren Buffett has shared wisdom worth billions in his annual letters to Berkshire shareholders. Luckily, his smarts are free for the taking. You can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report. Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Source: The Motley Fool
Saturday, December 28, 2013
Stocks of interest in 2014
Looking ahead to the new year brings speculation as to which market segment will prevail as the best investment choice. I have a couple I would like to share today. First I will start with NBG - National Bank of Greece. I think this one we see marginal increases throughout 2014 but will be a good one to hang onto for the years to come. Not a get rich quick stock, but one to keep for the long term. The Greek economy shows signs of improvement and NBG has stated some interesting tactics to reduce expenses and increase revenue. Keep an eye on this one this year. Second is XIN - Xinyuan Real Estate. They build apartment complexes in middle sized asian cities and as of right now have a good P/E ratio and a positive looking future. XIN is currently 5.49 and I wouldn't be surprized to see over 7.00 in 2014. So on a recap NBG I would buy under $6.00, and same for XIN buy under $6.00. I have a sell order at $7.50 for XIN (picked it up a little over $5.00) and am holding onto NBG for a while.
Tuesday, September 22, 2009
Getting back into financial stocks
With the markets on the mend, fund manager David Ellison says there are great bargains to be had.
NEW YORK (Fortune) -- Now that the housing crisis looks like it's really hit bottom, it's a good time to be a financial services investor, says David Ellison, president of FBR funds.
"When things are good or great, you don't really make any money. What's the upside?" he says. "You don't get these opportunities very often to get through these cathartic events."
Back in the first quarter of last year, Ellison says there were too many uncertainties in the fundamentals of the economy. But now that the economy has come through that period and enough healing has taken place, investors can get back in the market without having to worry about quite so many unknowns.
He points to residential real estate, where prices have fallen an average of 30% from their 2006 peak. "We haven't had a nationwide decline in residential real estate in this country in almost anyone's lifetime." Prices don't need to rise back to boom-time levels -- in fact, he would rather they stay in line with inflation or GDP growth. They just have to level out, and inventories need to come down.
0:00 /2:55Bank stocks too hot?
During the last boom, banks were over-lending and making risky bets to produce higher returns. Ellison believes the slump has forced them to return to traditional lending standards and practices, which bodes well for their profitability in years to come.
He says banks are going to spend the next five years taking down risk and complexity. And people are buying homes to live in, not to flip. "The guys that can make loans today are going to be the guys that have the profit tomorrow to pay off the bad loans they made two years ago," he says.
Ellison managed to avoid devastating losses during the meltdown. He began shifting out of stocks six or seven quarters ago, when he saw banks reporting big increases in non-performing loans. At one point he had 60% of his portfolios in cash. Currently, both funds are less than 5% in cash, he says.
As a result of his timely moves, his FBR Small Cap Financial fund (FBRSX), which has $220.7 million in assets, is up about 1% from a year ago and about 25% from the start of the year, according to Morningstar. His FBR Large Cap Financial fund (FBRFX), with $44.7 million in assets, is down less than 1% from a year ago but up almost 40% so far this year.
But since the second quarter of 2009 he's moved his money into financial stocks. "The overriding assumption is five years from now most of the banks will be better than they are today," he says.
In his large cap portfolio, Ellison concentrates on the giants; according to Morningstar, Bank of America (BAC, Fortune 500) and J.P.Morgan Chase (JPM, Fortune 500) are his two largest holdings. "This is the American banking system," he says. "It's very simple."
In his small-cap fund, Ellison divides his portfolio into thirds. One-third is companies he knows are going to make it, and another third is companies that are good but not great, perhaps trading at a 30% discount and might double or triple your money. The final third is the best of the worst. The stocks are very cheap, and if they make it, investors will do well off them.
His top holdings in his small cap fund include Webster Financial Corp (WBS), Fifth Third Bancorp (FITB, Fortune 500), Astoria Financial Corporation (AF), and TCF Financial Corporation (TCB), according to Morningstar.
Source: money.cnn.com
NEW YORK (Fortune) -- Now that the housing crisis looks like it's really hit bottom, it's a good time to be a financial services investor, says David Ellison, president of FBR funds.
"When things are good or great, you don't really make any money. What's the upside?" he says. "You don't get these opportunities very often to get through these cathartic events."
Back in the first quarter of last year, Ellison says there were too many uncertainties in the fundamentals of the economy. But now that the economy has come through that period and enough healing has taken place, investors can get back in the market without having to worry about quite so many unknowns.
He points to residential real estate, where prices have fallen an average of 30% from their 2006 peak. "We haven't had a nationwide decline in residential real estate in this country in almost anyone's lifetime." Prices don't need to rise back to boom-time levels -- in fact, he would rather they stay in line with inflation or GDP growth. They just have to level out, and inventories need to come down.
0:00 /2:55Bank stocks too hot?
During the last boom, banks were over-lending and making risky bets to produce higher returns. Ellison believes the slump has forced them to return to traditional lending standards and practices, which bodes well for their profitability in years to come.
He says banks are going to spend the next five years taking down risk and complexity. And people are buying homes to live in, not to flip. "The guys that can make loans today are going to be the guys that have the profit tomorrow to pay off the bad loans they made two years ago," he says.
Ellison managed to avoid devastating losses during the meltdown. He began shifting out of stocks six or seven quarters ago, when he saw banks reporting big increases in non-performing loans. At one point he had 60% of his portfolios in cash. Currently, both funds are less than 5% in cash, he says.
As a result of his timely moves, his FBR Small Cap Financial fund (FBRSX), which has $220.7 million in assets, is up about 1% from a year ago and about 25% from the start of the year, according to Morningstar. His FBR Large Cap Financial fund (FBRFX), with $44.7 million in assets, is down less than 1% from a year ago but up almost 40% so far this year.
But since the second quarter of 2009 he's moved his money into financial stocks. "The overriding assumption is five years from now most of the banks will be better than they are today," he says.
In his large cap portfolio, Ellison concentrates on the giants; according to Morningstar, Bank of America (BAC, Fortune 500) and J.P.Morgan Chase (JPM, Fortune 500) are his two largest holdings. "This is the American banking system," he says. "It's very simple."
In his small-cap fund, Ellison divides his portfolio into thirds. One-third is companies he knows are going to make it, and another third is companies that are good but not great, perhaps trading at a 30% discount and might double or triple your money. The final third is the best of the worst. The stocks are very cheap, and if they make it, investors will do well off them.
His top holdings in his small cap fund include Webster Financial Corp (WBS), Fifth Third Bancorp (FITB, Fortune 500), Astoria Financial Corporation (AF), and TCF Financial Corporation (TCB), according to Morningstar.
Source: money.cnn.com
Tuesday, September 15, 2009
Investing in "cheap" stocks
Investing in cheap stocks, or stocks under 1 dollar per share, is indeed risky, but sometimes it is worth the risk. A few years ago I invested in Calpine Energy the symbol at the time was CPNLQ. I bought it at around .23 and sold it around .50, I made a nice little chunk of change, but I continued to keep an eye on Calpine. It went all the way up to over 4 dollars a share, I was really kicking myself for not holding on to that one. Even though the company was going through financial troubles, the stock price continued to rise. It has been a habit of mine for a while now to look for stocks priced under a dollar, and go from there. It has payed off more times than not, you just have to do a little research on the company first. If a company is down on its luck, but has great potential for rapid success in the near future, I buy, buy, buy. I still like energy stocks, most of them are companies that have been around for a while and now how to run their business. Just because a company is down, certainly isn't a reason not to buy. Look at Sirius XM Radio and Ford, they were both way down, facing financial trouble, and now they are both on the way back up. If they reach the prices they were trading at before the downfall, I for one, will have made enough to take a nice family vacation (even after taxes).
Monday, September 14, 2009
Investing in the 'new normal'
There's no question that this isn't a typical recession, and money manager Ron Muhlenkamp says it's time to reset expectations.
By Mina Kimes, writer-reporter
September 2, 2009: 4:33 AM ET
NEW YORK (Fortune) -- Money manager Ron Muhlenkamp gets a lot of credit for his bold, macro-driven investing style, and he deserves it: His namesake fund has returned 9% annually over the last 15 years, 2% better than the S&P 500.
Last year, however, his portfolio took a heavy blow: The Muhlenkamp Fund (MUHLX), which owned holdings in the insurance and mortgage sectors, lost 40% of its value, worse than the blue-chip index.
But when the market was at its nadir, Muhlenkamp hunted for values, picking up shares of beaten-down names like IBM (IBM, Fortune 500) and Legg Mason (LM, Fortune 500). Those picks have since soared, and his fund has recouped much of its losses: It's up 25% so far this year, 18 points higher than other large-value funds, according to Morningstar.
Despite his improved outlook, the manager, who lives on a farm in Western Pennsylvania and loves Harley Davidson motorcycles (he believes Harley's (HOG, Fortune 500) stock is an economic bellwether), says the days of go-go growth are over.
"We fell off a cliff last fall, and things have basically flatlined," he said in a recent conversation with Fortune. "This is not a normal cyclical recession -- this time, people have reset their expectations."
In your latest quarterly letter to shareholders, you wrote that the economy is setting a lower base for expansion. How will that affect the market?
A lot of folks talk about "the new normal." The consumer went from spending 100% to 95%. If you drop by 5%, it takes three years just to get back to where you were. During that time, margins are going to be tight. Every industry we can find has ample capacity, and profitability is going to be less than what it was.
For the market, fair value today is about 15-20% lower than what it was a year ago. We think there will be a 15% drop in return on equity, our favorite metric. Price to earnings ratios should be below what they were.
Does "the new normal" offer any opportunities for growth?
In 2001, we had a normal recession. Coming out, we owned a lot of homebuilders and discretionary stocks, but the things that lead one expansion don't lead the next. If I'm right and the consumer has really cut back this time, then you want to go where the consumer is going with his savings. So there's that extra 5% -- where does it go?
One area where I think there's going to be huge demand is financial advice. What I haven't been able to get a handle on is -- which vendors of financial advice still have a good reputation?
Right now, we own Bank of America (BAC, Fortune 500), which, along with Merrill Lynch, serves some 50% of the households in the U.S. If they can capitalize on that, there's a huge opportunity.
You wrote this spring that you were puzzled by the continued decline in share prices of "great companies." Since then, many blue-chip stocks have bounced back. Is it time to look at lesser known names?
The little stuff has come back more, and all year we've found more value in the big stuff. Size is irrelevant, though. If companies earn good money over time and don't blow it, their stocks will reflect that. Cisco (CSCO, Fortune 500) or IBM or Oracle (ORCL, Fortune 500) at 12 times earnings? That's a good bet.
They're world class companies that sell to a world market. As China and India and Brazil grow faster than the U.S., that's a way I can participate with accounting I trust.
Nearly a quarter of the stocks in your portfolio are in the health care sector, including managed care company UnitedHealth. Are you worried about headwinds from potential reform?
How can you have a health care system without UnitedHealth (UNH, Fortune 500)? The best time to buy pharmaceutical or health care stocks has always been in election years, because that's when everyone beats up on the industry. Right now, any positive news about health care would be a surprise.
In my business, you make money on the difference between perception and reality. When everyone expects the bad, that's when you get the chance to buy Pfizer (PFE, Fortune 500), which we own, for cheap.
Is there any sector you're bearish on?
We don't own any utilities -- the time to own them was last year. Of course, we didn't own them then (laughs). If we're any good at picking and choosing stocks, we should do better than utilities. They generate average returns, and I've never aspired to be average.
Source: money.cnn.com
By Mina Kimes, writer-reporter
September 2, 2009: 4:33 AM ET
NEW YORK (Fortune) -- Money manager Ron Muhlenkamp gets a lot of credit for his bold, macro-driven investing style, and he deserves it: His namesake fund has returned 9% annually over the last 15 years, 2% better than the S&P 500.
Last year, however, his portfolio took a heavy blow: The Muhlenkamp Fund (MUHLX), which owned holdings in the insurance and mortgage sectors, lost 40% of its value, worse than the blue-chip index.
But when the market was at its nadir, Muhlenkamp hunted for values, picking up shares of beaten-down names like IBM (IBM, Fortune 500) and Legg Mason (LM, Fortune 500). Those picks have since soared, and his fund has recouped much of its losses: It's up 25% so far this year, 18 points higher than other large-value funds, according to Morningstar.
Despite his improved outlook, the manager, who lives on a farm in Western Pennsylvania and loves Harley Davidson motorcycles (he believes Harley's (HOG, Fortune 500) stock is an economic bellwether), says the days of go-go growth are over.
"We fell off a cliff last fall, and things have basically flatlined," he said in a recent conversation with Fortune. "This is not a normal cyclical recession -- this time, people have reset their expectations."
In your latest quarterly letter to shareholders, you wrote that the economy is setting a lower base for expansion. How will that affect the market?
A lot of folks talk about "the new normal." The consumer went from spending 100% to 95%. If you drop by 5%, it takes three years just to get back to where you were. During that time, margins are going to be tight. Every industry we can find has ample capacity, and profitability is going to be less than what it was.
For the market, fair value today is about 15-20% lower than what it was a year ago. We think there will be a 15% drop in return on equity, our favorite metric. Price to earnings ratios should be below what they were.
Does "the new normal" offer any opportunities for growth?
In 2001, we had a normal recession. Coming out, we owned a lot of homebuilders and discretionary stocks, but the things that lead one expansion don't lead the next. If I'm right and the consumer has really cut back this time, then you want to go where the consumer is going with his savings. So there's that extra 5% -- where does it go?
One area where I think there's going to be huge demand is financial advice. What I haven't been able to get a handle on is -- which vendors of financial advice still have a good reputation?
Right now, we own Bank of America (BAC, Fortune 500), which, along with Merrill Lynch, serves some 50% of the households in the U.S. If they can capitalize on that, there's a huge opportunity.
You wrote this spring that you were puzzled by the continued decline in share prices of "great companies." Since then, many blue-chip stocks have bounced back. Is it time to look at lesser known names?
The little stuff has come back more, and all year we've found more value in the big stuff. Size is irrelevant, though. If companies earn good money over time and don't blow it, their stocks will reflect that. Cisco (CSCO, Fortune 500) or IBM or Oracle (ORCL, Fortune 500) at 12 times earnings? That's a good bet.
They're world class companies that sell to a world market. As China and India and Brazil grow faster than the U.S., that's a way I can participate with accounting I trust.
Nearly a quarter of the stocks in your portfolio are in the health care sector, including managed care company UnitedHealth. Are you worried about headwinds from potential reform?
How can you have a health care system without UnitedHealth (UNH, Fortune 500)? The best time to buy pharmaceutical or health care stocks has always been in election years, because that's when everyone beats up on the industry. Right now, any positive news about health care would be a surprise.
In my business, you make money on the difference between perception and reality. When everyone expects the bad, that's when you get the chance to buy Pfizer (PFE, Fortune 500), which we own, for cheap.
Is there any sector you're bearish on?
We don't own any utilities -- the time to own them was last year. Of course, we didn't own them then (laughs). If we're any good at picking and choosing stocks, we should do better than utilities. They generate average returns, and I've never aspired to be average.
Source: money.cnn.com
Friday, September 11, 2009
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