American Futures

As the stock market melts, here are some quotes...

2008-09-17T17:45:00.001-04:00

J.P. Morgan

Capital must protect itself in every way... Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd.

Sir Josiah Stamp - Director of the Bank of England 1928

Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits.

Napoleon Bonaparte

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.

How to Borrow $42,000 for $99 - legally

2008-07-31T01:57:00.001-04:00

SPECIAL EDUCATION SECTION
Corrupt Banking System - Part 1: Cartels Robbing the Public

Corrupt Banking System - Part 2: How Money is Created

Corrupt Banking System - Part 3: Money is Debt

Corrupt Banking System - Part 4: Monetary Reform

Corrupt Banking System - Part 5: Warning About the NWO

This is so obvious. The thing was staring me in the face for weeks, but I kept throwing the materials away. What am I talking about? Cash checks from my credit card. Now, I know what everyone is thinking, "Nate cash advanced his credit card to the max? That's probably at 29% interest! What a moron!?" Well, to be honest, that is what I thought when I received the materials from Bank of America. After receiving an envelope every two weeks for the past several months, I finally read the details.

Credit line: $37,400

0% APR on balance transfers and cash advances through statement closing June 2009

3% service fee. Min $10, Max $99

Too good to be true, right? So here is the chain of events.

7/8/2008
Call Bank of America. Thanked for being a customer since 1999. Instant credit limit increase from $37,400 to $42,400. Verify terms of offer. Confirmed max $99 service fee. Confirmed that the money can be transferred anywhere - including direct deposit to a checking account. Confirmed minimum monthly payment: 1% + finance rate (0%) so 1% of $42,000 = $420 / month.

7/9/2008
Call Bank of America again. Re-verify everything discussed on 7/8. Shock customer service rep who has never seen BoA give unlimited sums of money away for a max fee of $99. Arrange to have $42,000 of $42,400 transferred to my checking account.

At this point, some of you would ask, "Why the hell do you need $42,000?" Well, quite honestly, I don't need it. However, as any smart person will tell you, that is the perfect time to borrow. The more important question: What can I do with $42,000 interest free for the next 10 to 11 months? Quite simply: REINVEST IT AND EARN INTEREST. Since I'm not a big risk taker with this sum of money, a CD will do fine. In hindsight, I called the short term rebound of financial stocks perfectly. I could have earned 30%-60% on this money in the past couple weeks. Oh well. Back to the story.

7/12/2008
Unable to log into Bank of America credit card website. Call BoA. Customer service rep indicates that the website is experiencing issues. I should try later.

7/14/2008
Still unable to log into Bank of America website. Starting to get paranoid. Thoughts of Homeland Security (large money transfer) going through head. Greeted at work by two voicemails from BoA anti-fraud division. Makes sense, but let's crank up the paranoia: How does BoA know my office phone number (which I received in 2000) for a credit card I opened in 1999? I NEVER put my work phone numbers on ANY credit card accounts. Why? I want to receive calls at home... not work. But SOMEHOW, the banking system knows this info. Echelon, anyone?

Anyway, I return the call to the BoA anti-fraud division. We confirm the details of the money transfer, my personal info, and recent transactions. Transfer approved.

7/16/2008
Still unable to log into BoA website. Call customer service again. This time, I am told that my account is locked out and common (aka lowly) customer service reps can't even look at it. I have to call a special division inside BoA.

7/17/2008
Call the double-secret-probation division inside BoA. After second ring, a human answers. When the hell does that ever happen? Needless to say, I saved that phone number. I explain the situation to her, she seems highly compitent, and contacts the parties 'who can help fix this.' Conferenced in with BoA anti-fraud division again. They confirm that they screwed up on 7/14/2008 and did not properly unlock my account. They unlock my account and tell me to wait 1 hour. One hour later, my account is working.

7/21/2008
$42,000 shows up in my ING account. $42,099 is my new balance on BoA credit card. First payment due after August statement closing on 8/11.

And that, my friends, is how you borrow $42,000 for $99. After finding a couple sweet short term CD deals (over 4%, in stable/name brand banks... aka NOT IndyMac), I should be able to earn $1000-$1400 in interest on this 'free' money. Lesson to the world: let your (or in this case someone else's) money work for you. That's a stimulus check I can use.

As it relates, for those of you who have difficulties understanding why Bank of America would allow me to do this, maybe you should learn how banking truly works. I suggest a brief education via the YouTube videos to the right.

Death of the Postal System

2007-03-20T01:08:00.000-04:00

I say death, but it may just represent another period of transformation. CNN is running an article which mentions the upcoming stamp increase from $0.39 to $0.41 along with the new 'forever stamp' which allows users to lock-in prices.

A forever stamp, eh? Why? This stinks of 'last ditch effort to generate large sums of money upfront.' This is the classic 'create panic and let the public buy up all the supply' tactic. Well, I hope it doesn't work. The postal system is great, but damn... it totally sucks. With the increase of email and online bill pay, I write one check a month. That amounts to under $10 a year in postage. Personally, I think all mail should be electronic - or you should at least have the option to request mail as all electronic.

Imagine the efficiencies throughout the entire supply chain. Content providers could release their product via electronic means. This means $0 for printing costs, $0 for postage, etc which not only equates to cost efficiencies, but also resource efficiency - no paper! In addition, the postal service would see reduced volume which means fewer trucks, airplanes, etc needed to move mail which equates to fuel savings.

Basically, you could shutdown the post office within 10 years. However, as with all government agencies, we are overlooking the true reason the post office exists: welfare. Just like the military, police, and other bloated government agencies, the postal system provides jobs to thousands of otherwise unemployable individuals. Yes, I know there are some good postal people, but they are outnumbered 5 to 1 by my count. After all, what other job allows you to ditch your route and layout during the summer? (Personally witnessed by several of my coworkers.) What job allows you to park your delivery van in a company parking lot and smoke weed? (Again, personally witnessed along with several coworkers.)

So let us theorize a second: If all of these people were unemployed, society would crash, millions would go into poverty and starve. Hmm.... sounds like Egypt all over again. However, instead of pyramids, now we are receiving shitty customer service and junk mail.

I advocate the complete rebuilding of the entire economic system from the ground up. Nothing but efficiency. With all of the cost savings, we could decrease our tax burden. The effect should be equivalent to the various 'trickle down' policies of the past - except people would actually get to keep their money! Now, I realize that millions would be unemployed. However, I advocate that we move back to a one-income household model. Since our tax burden would be significantly reduced, we should see a similar increase in the value of our dollar which would in turn cause deflation. A one-income family would allow time for family - something that is almost forgotten in our go-go-money society.

Then maybe, just maybe, the children of this new generation would receive proper parenting, proper education, and critical thinking skills. Renaissance! And all of this could start with the death of the Postal System. :-)

We're simply hell-bent on War with Iran

2007-02-20T22:48:00.000-05:00

Honestly, what the hell is wrong with us? Iraq is going SO well. Sure, let's open up yet another front in our amorphous 'War on Terror.' For weeks, I have been hearing that we will find (or create) a reason for war with Iran. In many ways, this parallels the reality that surrounded the start of the Vietnam war.

Let's look at some of the CNN headlines over the past couple weeks:

02/20/2007 - U.S. admiral questions Iran's motives
02/20/2007 - Force won't work on nuclear issue, Iran says
02/19/2007 - Officials: Iranian patrol boats probe Iraqi waters
02/19/2007 - Edwards: No direct talks with Iran a mistake
02/18/2007 - Where is al-Sadr? Not in Iran, official says
02/16/2007 - 2nd blast in 3 days hits Iranian city
02/15/2007 - Extent of Iraq-Iran link 'unknown'
02/14/2007 - Bush blames Iraq weapons on 'part of' Iranian government
02/14/2007 - Bomb kills 11 on military bus in Iran
02/14/2007 - U.S. insists radical cleric in Iran despite denials
02/13/2007 - U.S.: Radical cleric al-Sadr in Iran
02/12/2007 - Iran calls Iraq arms charges 'all lies'
02/11/2007 - Iran negotiator: Nuclear program 'no threat to Israel'
02/11/2007 - U.S. ties Iranian leader to bombs killing U.S. troops

It's That Time of Year: Tax Time!

2007-01-26T09:35:00.000-05:00

As it nears the end of January, I begin my yearly routine of tax preparation. I would be able to prepare my taxes at this point, but I have yet to receive my W2 statement from my employer. Figures. I have received my 1098's from my student loan and mortgage companies, my 1098's from my investment accounts, and my 1099's from other ventures - but still nothing from my employer!

Regardless, I have come to rely on H&R Block's Taxcut package for my tax preparation. Not only do I find it very cost effective, but also useful, quick, and accurate. I am sure that someone somewhere will disagree with me - suggesting that another package or a CPA could find more deductions. While this may be slightly true in some cases, I do not want to invest extra time and / or money in what could be considered questionable accounting practices. I prefer to understand my taxes. I do not feel like being audited because I 'donated' $500 worth of clothing. I like being honest, even though paying taxes sucks.

Google Buys YouTube

2006-10-09T22:07:00.001-04:00

That's the headline - "Google Buys YouTube!"

I admit that I can see the synergies; however, I must add that I felt YouTube was more valuable to a media company than an advertising company. After all, YouTube would have allowed the media companies another 'free' venue to push their old and popular content while building an independent advertising model. That plan describes why Newscorp (NWS.A) bought MySpace - leverage their existing media portfolio to sell ad space... something that TV and radio have done for years.

Google (GOOG), with its purchase, now enters the room from the other side. Already having a booming advertising business, but lacking the content. Ironically, YouTube lacks content too since it only recently started to forge agreements with the media companies - aka copyright holders.

Honestly, how does Google intend to make money off of this deal? After all, it will have to pay some sort of licensing fee to the media companies. Does Google honestly believe that they can charge future users to view YouTube content? Do they believe that ads alone will generate enough revenue to pay the YouTube media licenses and other operating costs?

I think the true answer lies in the field of Cisco (CSCO) and BP (BP). Both companies buy companies who are viewed as competition instead of buying companies whose assets could provide an immediate and long term boost to the bottom line. Then they hold the companies, strangle out the value, and eventually release it back to the world. In other words, basically, I believe that Google bought YouTube to shut it down. Maybe not completely... but I look for YouTube to stagnate until Google believes it can re-brand it and own the market.

I still have visions of the nightmare known as AOL-TimeWarner (TWX)... at least TimeWarner OWNED the media portfolio!

Microsoft's Zune will Kill Apple's iPod

2006-10-02T09:18:00.000-04:00

Yes, let the flame war begin! I am sure the zealots will respond critically. After all, no one can ever improve on the APPLE design.

Whatever...

First, watch this:
Click to see a video demonstrating the soon to be recently Zune.

Second, understand what this means:
Microsoft is attempting to capitalize on the social networks aspect of their future users. Will it work? Depends on how intrusive the Digital Rights Management is. However, only DRM-protected files have DRM! Essentially, you should be able to share any type of media betweeen Zunes. I can see two immediate implications.

1) Going to a concert or even a restaurant with a band will become a vastly more interesting time. Why? Well, I am sure that someone will come up with a centralized share-to-the-room feature. How would it work? You find out that a band is playing at your local bar/restaurant. Nothing new. But you and your friends are carrying your Zunes. Periodically, let's say every 30 minutes, the band's 'share feature' broadcasts to the entire room of Zunes - "Do you want to download Sloppy Joe's song/cd?" Basically, it's push advertising for small bands. No more need to push self-made CD releases at the bar. JUST BRING YOUR ZUNE!

2) The pervert market. That's right! Just like the Internet which has seen most of its development funded by the military and porn, Zune will likely benefit the same way. No, it's not about trading legal XXX content. It's about the freaky-freaks out there. Imagine: Again, you're at a bar, you have your Zune 'socially-enabled' so that other Zune's can see you. Pop... "Want to see a picture?" Oh, how interesting. You look around to see who may be sending it. You download the pic and you like what you see - except it's kiddie porn... or gay porn ... or biker porn because you're in a gay-biker-kiddie porn bar. "Oh, they don't exist!" HA, sure. Just click to see the Google results for "gay bear." I guarantee you that the Zune will spread through these fringe groups quickly.

Synthesis:
So, you have the young-MySpacers, the mainstreamers, and the fringe all carrying around the same device for the same reasons: quickly and almost invisibly capitalize on the social networking function to share vast amounts of media. Can you imagine a school cafeteria full of these? "Want to see my ex-girlfriend?" takes on entirely new and instantly destructive realities.
And guess what? Any and all negative hype will propel the Zune just like it has done for MySpace - the fastest growing, most commericialized social networking experiment in hystery. If the Zune can do for MS what the iPod did for Apple, I would suggest buying Microsoft stock (MSFT) now.

Bill Clinton is THE MAN!

2006-09-28T00:56:00.001-04:00

$20 says I am late to this party. Seems Chris Wallace of FOX News interviewed ex-President Bill Clinton. At one point, the interview devolved into a finger pointing session about bin Laden and 9/11.

Regardless, I have always enjoyed watching and listening to Bill Clinton. He is a very charismatic individual, and I honestly believe what he is saying. Based on body language, Bill Clinton comes across as defensive and angered while Chris Wallace comes across as a pompous jackass.

I consider myself conservative, yet I hate the para-Nazi propaganda spewed by FOX News on a daily basis. Since the Bush administration has already set fire to the Constitution and Bill of Rights, I see no reason why we cannot elect Bill Clinton to a 3rd term of President of the United States.

Thanks to YouTube, here is the interview broken into three clips. Enjoy!

Clip #1	Clip #2	Clip #3

The American Dream

2006-09-27T23:54:00.001-04:00

During my daily news-read, I stumbled across this short video entitled Small Business Heroes. The meaning of this short 5-minute documentary struck me on two levels.

First, I am an aspiring small business owner. I can see parts of my current efforts in their words and actions. I have worked the long hours. I have built the personal relationships. And at the end of the day, the goal of a successful small business owner is to make his or her clients happy by delivering a quality product, service, or whatever at an appropriate price in a very close, very human way. Everyone has a name. Your clients are not nameless, faceless wallets to pick-pocket.

Second, immigrants came to this country to seek a better life. Why? Not only did they want better conditions for themselves, but they also wanted better conditions for their families. How have times changed! Sure, the vast number of immigrants still have this in mind, but the terrorists (really, they are not immigrants) have the singular goal of infecting nations and destroying them. This is somewhat new. After all, how many terrorists did you hear of 100 years ago? How about 50 years ago?

I take that back - there are several examples. A few hundred years ago, Native Americans conducted terrorist attacks against the European settlers. Of course, this was in response to the European settlers who could ne called terrorists themselves. A cursory examination of Cortez and his plundering of Mexico reveals such terrorist acts. I suppose colonization would be a better term for that period of time.

My point: I see the American Dream becoming more and more of just that - a dream. Granted, there are still opportunities at every turn; however, my children will not have the privelege of growing up ignorant and innocent as I did. Instead, my children will inherit the sins of this nation - ecological, political, and spiritual. If we continue down this path, I see no alternative other than rising up and reclaiming the American Dream.

Full Circle
I know that the United States is not popular in the court of world opinion. Honestly, I would venture that the United States is not popular even at home! Just think about how bloated our goverment is. But the result is the same: "Do to others as you would have them do to you." In the case of small business owner, you treat your clients with respect, and they will reward you with their trust and their business. In the case of our government and the world, it will require each of us to do our best each day in order to fulfill our American Dream.

More BPT Trouble?

2006-08-29T01:34:00.000-04:00

As I mentioned a few weeks ago during my assessment of the BP Prudhoe Bay pipeline corrosion issue, it seems that the skeletons are starting to come out of the BPT closet. This site does a good job of aggregating recent articles and press releases.

To summarize, BP is replacing the corroded pipeline segments with pipe that is half the diameter of the old pipe. A quick review of high school math means that this reduces the volume of oil that the pipe can carry by 75%! Why would anyone want to do that unless the Prudhoe Bay field is not producing as much oil as it once did?

In fact, that exact reason was alluded to by a BP representative when the corrosion story first broke. It was stated that slow moving oil causes sediments and sludge to settle out of the oil slurry. This sediment provides a feast for bacteria that in turn generate chemicals which degrade the pipe.

Makes sense. If the field is running dry, then the oil that is being extracted would not be moving as fast. Therefore, if you do have to spend to replace/repair the pipeline, there is no reason to spend more cash on pipe than what is needed.

Seems recent events continue to plague the Prudhoe Bay field.

I expect BPT to decline at least 25-35% as these scenarios continue to unfold. The class action / investor fraud lawsuits cannot be far behind. BPT moves from my probation list to my watch list. I no longer intend to establish a position.

Disclosure: I do not own shares of BPT.

CANROY Merger Fever!

2006-08-29T01:15:00.000-04:00

It seems that every CANROY I choose is either in the process of completing a merger or recently completed a merger. This trend continues with Pengrowth Energy Trust (PGH). Back in July, Pengrowth announced that it intended to purchase Calgary-based natural gas trust Espirit Energy Trust. This pair should produce a balance between Pengrowth's focus on oil and Espirit's focus on natural gas.

Given Pengrowth's current share price of approximately $23 per share, the monthly distributions represent an 11% return. Assuming the merger is approved, the addition of Espirit and its natural gas reserves, combined with the approaching winter heating season should protect or increase the monthly distribution (meets my goal of decreased volatility). Also worth noting, Pengrowth has approximately 10 years worth of proven reserves which means we could actually hold this stock for several years (meets my requirement of decreased portfolio churn). As I recently mentioned with Penn West, I will be looking for any price dips as an opportune time to start my position.

Update on Pengrowth / Espirit merger

Disclosure: I do not currently own PGH.

Dave Chappelle is on the Money

2006-08-26T00:27:00.000-04:00

You may wonder how Dave Chappelle possibly relates to politics and American Society. However, read on and you will see.

We were fortunate enough to have a friend who was able to get us two tickets to this show. It was worth the $90 per ticket. As always, the Borgata (in Atlantic City) provided a great venue for this act.

Dave walked on stage and stated that he was late because his bus broke down. He mentioned that it was 123 degrees in the bus, and that it had affected him. I would agree because Dave seemed slightly out of it as he began his routine.

He started off by stating that if anyone ever offers you $50 million dollars, just take it! This was a clear lead into the Comedy Central / escape to Africa situation. That led into Dave becoming more serious, mentioning that there are wars in Iraq and Afghanistan, strife in Sudan, and... Lance Bass is gay. Dave used that as his first shot in a salvo against mainstream media. As we have mentioned before, American news media never focuses on the real stories. Instead, the propaganda machine is used to distract us and fill us with fear as to manipulate us for 'their' purposes.

Dave mentioned the Natalie Holloway situation stating that it was unfortunate that one white girl had gone missing, but thousands of black people had gone missing and no one ever looked for them. That led to his first completely hysterical statement of the night, "Realize that in two hundred years, I am the first black person anyone has ever looked for!" - again, an obvious reference to the media frenzy that surrounded his escape to Africa.

After discussing his heritage - that his mother is half-white - Dave talked specifically to the whites in the audience by telling all of them that they were only posing as white, that the true whites were the super-rich who controlled everything. "You know who I'm talking about. You drive around and see their large, gated estates. And even their landscapers are WHITE! When I am in a house like that, I can't help but ask, 'How did you get your money?' 'Well Dave, you see, my family owns the patent for fire.'" Another example of what makes Dave's routine so funny - it's absolutely true!

Dave once again came back to politics with a reference to George Bush. The audience reacted. It was at this time that Dave made one of the most profound statements of the night, "I watch politics like some of you watch wrestling. It's all an act. If you believe what you see on TV, then you are crazy."

Dave stated that he had definitive proof that Iraq did not have weapons of mass destruction. The proof: we invaded Iraq. He pointed out that the United States did not dare mess with someone capable of fighting back. It is interesting to point out that North Korea flaunted its nuclear arsenal at the same time, yet North Korea still exists as a sovereign, albeit it twisted, 'terrorist state.'

"Truth is, the American Lifestyle is unsustainable. We are a broke nation. Wouldn't it be nice if the President would just on TV and tell the truth? 'America, I am before you tonight to inform you that we are broke. In order to keep living our lifestyle, we need to rob someone. We are going to rob Iraq.' And the sad thing is, most Americans would still respond with, 'Let's roll!'"

"It's all just a dirty game. Worst part is, I can't even tell you about the game. Like Fight Club, the first rule of the game is that you do not talk about the game."

Other Chappelle Links
Dave's Wikipedia entry
Dave's Official Site

Another Hit!

2006-08-18T17:42:00.000-04:00

Second stock from my old trust-based portfolio: Petrofund Energy Trust (PTF). No worries, though since it was bought by Penn West Energy Trust (PWE) on June 30, 2006. That being said, we will discuss Penn West instead of Petrofund.

Penn West, with its acquisition of Petrofund, has doubled its debt load. However, it has also doubled the assets of the company. In addition, the properties and development efforts underway should continue to be quite profitable through 2010 (meets my goal of decreased portfolio churn).

Around the recent closing price of $40 per share, Penn West is returning slightly more than 9% via its monthly distribution. I intend use upcoming price dips as a time to establish my position. It is important to note that elections are nearing and energy prices typically drop before elections. And who says politics and big business aren't related?

Here is a great blog that provides some more background on Penn West and CANROY's as a whole.

Disclosure: I do not currently own PWE.

Can I Pick the Winners or What!?

2006-08-10T08:48:00.000-04:00

Update:
Adding fuel to what I said below, CNN is running with this story.

Original post:
And you have to know that I am talking about BP Prudhoe Bay Royalty trust (BPT). After years of price appreciation and a great dividend, we get hit with pipeline corrosion and a shutdown while more than two thirds (16 miles) of the 22 mile pipeline is replaced. BP officials state that repairs are almost underway, pipe and welders are being delivered to the site, and the outtage could only last a few months.

That is what we have all heard and read about at this point.

Personally, I would love to suggest NOW as a buying opportunity for BPT, but I think that may be too hasty. For those of you who love volatility, then by all means, jump in now and play the short term rebound. However, I am looking for this stock to fall again in the next few weeks or few months. Why? All of the subtext indicates that there will be a second announcement - containing more bad news. Any combination of the following:

The repairs are going to take longer than expected (which means zero production, $0 dividend for a longer time period).
There will be lawsuits or simply mention of lawsuits (the rumor mill has already started here) against BP for neglience in the area of proper diagnostics and preventative measures in the area of pipeline maintenance. Could that spread to others in the industry?
And rounding out this trifecta of pain - oil spills / environmental issues. This region is always a hotbed for environmental protection, especially if big oil has to replace large sections of pipe quickly.

There you have it. A collection of delays and/or possible lawsuits which could continue to impact the near term volatilty of this stock. Long term, we know this stock is still good - there is still oil in Alaska, and we need it now more than ever. Also, chances are high that oil will be more expensive (due to increased demand) once the pipeline comes back online... which could translate into a higher dividend assuming the pipeline repairs do not cost too much.

Would I select BPT for my model portfolio? You bet... but not at the moment. It will go into my probation list while we wait for news. Assuming we will get hit with another gut punch if any of the above comes true, I would consider another large price drop as a potential buying opportunity.

Disclosure: I do not currently own BPT.

Model Portfolio - The Beginning

2006-07-28T09:28:00.000-04:00

As you may or may not have noticed over the past several weeks, I have not made too many posts. Why? Nothing has changed! Sure, there are new events happening in the world, but nothing has dramatically impacted anything - other than events in Lebanon and Israel.

With that being said, I have decided to take a slight detour. From 2000 through 2004, I made a nice bit of cash in my 401k by owning the stocks listed below. Then my company changed 401k plans, removed the brokerage option, and forced me into funds that have gone no where!

Times have changed, I have some cash, and I am looking to invest again (outside of a retirement plan). Most of these are still OK and are producing nice amounts of cash. For the near future, I am going to focus on these core holdings - assessing value, growth opportunities, and cash flow with the goal of constructing a nice portfolio worth holding for a year or two with minimal turnover.

Goal: Find value and growth while acheiving an average 7% or greater return via dividends.

I would like to acheive an even higher return through dividends, but I fear that model portfolio might contain riskier stocks which would increase my volatility and turnover. Take a look around - if you have an opinion on any of them, let me know.

Oil / Natural Gas Trusts

BP Prudhoe Bay Royalty Trust (BPT)

Oil / Natural Gas Trusts - Canadian (CanRoy's)

Petrofund Energy Trust (PTF)
Pengrowth Energy Trust (PGH)
Provident Energy Trust (PVX)
PrimeWest Energy Trust (PWI)

Oil / Natural Gas Shipping

Frontline Ltd. (FRO)
Knightsbridge Tankers Limited (VLCCF)
Nordic American Tanker Shipping Limited (NAT)

Real Estate Investment Trusts (REIT's)

American Capital Strategies, Ltd (ACAS)
American Home Mortgage Investment Corp (AHM)
American Mortgage Acceptance Company (AMC)
Annaly Mortgage Management, Inc (NLY)
Anthracite Capital Inc (AHR)
Hanover Capital Mortgage Holdings, Inc (HCM)
IMPAC Mortgage Holdings, Inc (IMH)
New Century Financial Corporation (NEW)
Newcastle Investment Corp (NCT)
NovaStar Financial Inc (NFI)
PMC Commercial Trust (PCC)
Saxon Capital, Inc (SAX)
Thornburg Mortgage, Inc (TMA)

Disclosure: I do not currently own any of these stocks.

Inflation Grows

2006-07-22T11:35:00.000-04:00

This is a mini post as I have been moving into my new home and getting set up.

Pennsylvania Raises Minimum Wage
Pennsylvania joins an ever growing number of states raising their minimum wage above the federal minimum wage of $5.15 per hour. By July 1, 2007, minimum wage will climb $2 an hour (a 38.8% increase) to $7.15 per hour.

Small business owners are complaining about the cost. However, we should look at this from the end of that chain. When owner's costs increase, what happens? Prices increase too. The squeeze is on at the low end. Also, I am sure the government is happy since it will also see an increase in its tax revenues.

Has Everyone Gone Mad!?

2006-06-30T09:11:00.000-04:00

Bill Gates 'retires' from Microsoft
Seems Bill wants out of Microsoft and is putting a transition plan in place that will end with his departure in July 2008. Supposedly Bill will concentrate his time, efforts, and fortune supporting the Bill and Melinda Gates Foundation. Interesting, but some question what will happen to Microsoft. In the past few years and especially in recent months, Microsoft has been the focus of deep questions about its lagging stock price, competition from Google and the Open Source community, and its bloated, ineffective organizational strategy. Some were and still are suggesting a massive layoff at Microsoft. An action that would make Microsoft lean and mean again.

Microsoft start layoffs
Seems Mini-Microsoft has been heard! It appears there are changes coming to the organization and some say it is nothing unusual. However, it is hard to ignore the exodus in recent months of Microsoft executives to Google and other fast-moving companies. Check out the stock (MSFT)

Has Warren Buffett Lost his Mind?
Yes, it seems that he may have. Well, maybe not. Almost a week after Bill Gate's announcement that Gates would retire from Microsoft to focus on philanthropy, Warren Buffett declares that the majority of his approximately $40 billion fortune will be donated to the Bill and Melinda Gates Foundation. Check out Berkshire Hathaway (BRK.B)

Commentary: Granted, I think charity is great - and charity on this level is amazine. But does anyone else get the feeling that something else is happening? The two richest men in the world have just collapsed their wealth into a separate organization. I can't help but wonder if this has something to do with instabilities in the world markets or some questions about the stability of the dollar.

More Discussion of Buffett's Donation

Ah Yes, the Nazi Paranoia!
Seems some are comparing Gates' and Buffett's recent actions to that of the Nazis! I love how any and all actions somehow lead to a comparison to Nazis. What's up with that? Seems being in favor of population control means you are a Nazi. To me, it is simply common sense. If you have people who you cannot feed, quit having children! Sorry to be cold, but the problems of Subsaharan Africa seem quite simple to me. Stabilize the population, feed them, rebuild and grow a society which can support itself. Yes, I know about the rapes and forced sex in Africa, but this is exactly what is needed - money and attention. Worst case, the rich do nothing and everyone dies. That would be a Nazi solution...

Seems no good deed goes unpunished.

The Record Goes 'Round and 'Round

2006-06-20T08:09:00.000-04:00

George Soros and his views
Coming from the standpoint of not supporting the war in Iraq, Soros discusses the decline in global liquidity, a correction in commodities and hedge funds, and a decline in the value of the dollar.

A World of Bubbles
With Bubbles in every market, where do we go and what do we do? This is a continuation of the themes Soros discusses in the article above.

How Capitalism Can Crush a Country
It used to be that citizens of a country invested inside the borders. Since World War II, that has changed dramatically. However, all is not rosy. With trade imbalances and the herd nature of investors, it has become easier than ever to 'pump and dump' an entire country's economy. Is this why emerging markets have been very hot and now appear icy?

Everything will be fine?
According to Louis Navellier, the answer is yes... and here's why.

The Parabolic Rise in Commodities Will See a Parabolic Decline
According to the herd mentality of investors, their goal is not to spot the top, but to get out as soon as things turn sour. Interestingly enough, this becomes a chicken-and-egg scenario since early panic selling can actually create a decline that spreads throughout the market. Damn herds...

Dollars and the World

2006-05-06T17:52:00.000-04:00

The decline of the Greenback
An unpleasant view of the long term decline of the buying power of the dollar.

More dollar news
Is the dollar going up or down? It appears that even if the dollar continues to lose value, it is going to stabilize soon and possibly rebound.

Jeremy Siegel on the Fed, Commodities and Global Markets
The name says it all. A very good summation of all of the interests in the market right now - oil, interest rates, Bush, Iraq, commodities, etc.

Iraq on the brink
An in depth review of the current instability in Iraq, what worked, what did not, and where we are all going from here. A very middle-of-the-road read for those who are tired of the Fox News-only realm of news.

Republicans prefer Fox while Democrats don't care?
Study analyzes the possible influence of Fox News during the 1996, 2000, and 2004 elections which suggests that Fox News may have been influential in swinging some voters to Bush's side during Election 2000. The aptly named "Fox News Effect." Continued analysis shows that Republicans prefer Fox for their news while Democrats really do not seem to care where their news comes from - taking input from all networks.

Coal is top choice for electricity generation
Yes, coal is hot, and it appears to be getting hotter. Amazingly enough, this is an energy source widely available within the confines of our own country and friendly neighbors.

Five alternative energy picks
In reality, these are old-school alternative - like nuclear and ethanol. And then we have the conglomerates (GE), and finally... the coal / oil sands stocks.

America and its rendezvous with Feudalism

2006-05-05T08:18:00.000-04:00

Note: Originally written 9/11/2005. Since then, we have seen interest rates continue to rise, although thankfully no widespread panic has occurred.

I have posited this for years. We have been told by Marx that socialism would follow capitalism, the belief that a classless society would follow the highly stratified capitalist society. However, I do not believe that is the case. When you look at events and consider them for at least a moment, you begin to see that the United States, and most of the world, is headed back to a feudal system. Let us compare and contrast (this is going to be a long post). Since these topics are complex, please be sure to click and read the wiki entries.

Socialism
Socialism is commonly defined as the formation of a classless society – by the working class. Recently, we have seen socialists focus more specifically on issues instead of an entire governmental change. Their hope: to create an ideal democracy. However, much of this desire is founded upon the creation of a welfare state. Essentially, socialists want the government, which is the more informed and able party, to watch out for the common man, to provide general protection, and to provide aid as needed. That is great. We need a smarter, stronger, better, richer entity to watch out for us, to do what is in our best interests even if we, as citizens, are too dumb to know it.

Does anyone see a problem with this?
Personally, I do. Socialism and welfare states successfully remove the greed from capitalist societies – along with drive. Complacency Kills! We have seen similar results in the fall of the Soviet Union. Once people realize that they do not have to work in order to receive care, people stop working. Efficiency and effectiveness drop. The machine breaks.

We are beginning to see this to some extent in the United States.
We currently have two large social welfare programs: Social Security and Welfare. I am not going to enter that debate; however, we know that both of these programs (along with general incompetence) are bankrupting the United States government and require constantly increasing taxes to support an ever larger population. Our machine is breaking down. Do the socialists see that their efforts are going to lead to a day when the welfare state will be unable to help? To some general extent, that has been witnessed during Hurricane Katrina. The government lacked the ability to provide assistance - hampered by its own incompetence and lack of preparedness. No plan. No resources available at the right time.

What does this mean?
Personally, I believe socialism is being used as a tool to lead the United States and other governments to feudalism. But first, let us investigate feudalism.

Feudalism
Feudalism is essentially defined as citizens (known as vassals) using the owner’s (known as lords) land in exchange for homage or services – including military service. At this time, we must also define serf and serfdom. Serfs are not slaves, yet are bound to the land in forced labor. In exchange, serfs are protected by the lord’s military.

Serfs were caught in the middle. They did not own land, but they worked it. They were then taxed on the profits produced by the land – even though they did not own the land, vassals did.

This concept should not be too alien to us.
After all, we are almost there. The following is how I see feudalism evolving in the United States. The lords are now known as the government, the only true body owning land – we are just renting; hence the reason all citizens pay taxes. The vassals are comprised of the wealthy – be it wealthy individuals or the new elite, corporations. Corporations now own large tracts of land and property. You may have more commonly heard those called banks and property management companies. Then enter the serfs. Yeah, that is us. When we take out a mortgage from the bank, we are working the lord’s land – and get to keep the profits. However, we are taxed on these profits – federal and state income tax, property taxes, etc.

“But that is capitalism!” you say.
Originally, that was true. However, capitalism combined with the ever increasing welfare state of socialism is leading us down the road to feudalism. In the United States, the average citizen’s debt load has increased so dramatically in recent years that we really never own anything. Instead, we are constantly paying rent or interest and taxes for every item we ‘own.’ In many ways, the items own and control us. How many people do you know who make just barely enough to feed their families – yet they have a large house, nice new cars, and buy everything their children ask for? Yes, that is the disease of the middle class. The middle class wants to believe it is rich and deeply wants to act the part. The results are twofold: The middle class becomes indebted to corporations - where the lower classes have been for years. Additionally, the children of the middle class learn by example. Do the children of today inspire you? Can you envision them leading the United States of tomorrow? Well, we can envision them carrying on their parent’s credit-loving ways.

“Do-nothing Fed is dangerously disengaged”
Please click that link and read that article. It is a great example from MSN’s Jim Jubak. Mr. Jubak presents the twofold problem. First, the Fed has ensured a massive amount of cheap money has flooded the market. That cheap money has allowed most citizens to buy more and more property. The real estate boom! However, there is always a footnote. In this case, most of the loans have been interest-only or adjustable rate mortgages (ARMs). No longer is it a matter of if, but when interest rates will increase. When this happens, hundreds of thousands, if not millions, will find themselves either hard pressed or completely unable to make their mortgage payment. Unless something magical happens, the number of foreclosures will increase dramatically. That means lots of people losing the only bit of property they had – property that they paid so much to try to own. The foreclosure masses will begin moving to smaller, cheaper houses (where are they?) or back to rental properties.

Banks are guilty too.
The other side of this dangerous coin affects the banks themselves. Banks will have to deal with an increased number of foreclosures. This means tons of hassle and cost for banks and their shareholders. Additionally, it affects the stability of the banks themselves. Banks have to keep a certain amount of cash to cover bad loans and losses. These loan-loss reserves have been decreasing over the years since the number of foreclosures has dramatically dropped – because money is currently very cheap.

Does anyone else see the coming panic?
As interest rates begin to increase, some homeowners will be pinched by the increasing monthly payment. This increase will probably wipe out any ‘cost of living’ increase they have seen in their salaries. Eventually, some will be unable to pay the monthly payment. Banks, since they are corporations seeking profit, will foreclose. The homeowner, now squeezed dry, will either have to settle for a significantly smaller and/or cheaper property, or move back into a rental property to start again.

The banks will spend significant amounts of time and cash covering and processing these foreclosures. Smaller banks will be greatly affected. Their loan portfolios will turn negative. In order to rebound, the banks will either have to increase their own interest rates to make more money or sell some or all of their assets to others who have money. A domino effect / tidal wave will go through the industry. It will become a buyer’s market. Who still has money? Banks and large corporations do.

Look for massive consolidation in the banking industry.
In fact, I would even propose that the days of local banks and ‘mom and pop’ banks will entirely end. This is almost true today, but we have seen a rise in regional banks. Those too will be snapped up by large corporations and banks. Who has cash? Unfortunately, I am not a financial analyst (so feel free to dismiss this if you like), but I would be willing to bet that the following will win: Citibank, JP Morgan Chase, and Bank of America. I would also be expecting Microsoft to make some foray into banking soon. True, the entire banking industry will see great losses during this time, but the United States government will bail out the ‘good old boys’.

After it is done, only a few banks and corporations will own the majority of all property. Feudalism gets another step closer each day. An ever growing number of us will be locked into serfdom forever. The solution, hard as it may be, is for the masses to become smarter about money and debts. Next, I will be writing about the path forward.

What has changed?

2006-04-29T12:01:00.000-04:00

For those of you who check in regularly, I must apologize. I have been attempting to fulfill my American dream - buying our first house ourselves (my wife is a PA-licensed real estate salesperson) So, if any apartment dwellers have any questions, hit me.

What else has changed in the past few months? When I last wrote, we were talking about energy prices, natural resource plays in Canada, and instability in Iran. Ok, it appears NOTHING has changed in these last few months, so here goes the latest:

Ethanol is worse than you thought - it's a net loser!
Although most green advocates and US security analysts have praised ethanol as a solution to our energy dependence issues, it turns out ethanol may be a net loser. In other words, it takes more energy to produce ethanol than the ethanol actually contains! Yikes.

American Energy / Royalty Trusts
In America, there are energy trusts who own the rights to the oil, natural gas, etc obtained from that land. In Canada, they are called Royalty trusts. Now that we've addressed that, let's look at some America energy trusts with nice returns:

BP Prudhoe Bay Royalty Trust (BPT) - Prudhoe? That's right - Alaska's North Slope
Cross Timbers Royalty Trust (CRT) - Oil properties in the Southwest Dominion Resources
Black Warrior Trust (DOM) - natural gas and coal in the South
Marine Petroleum Trust (MARPS) - oil and natural gas in the Gulf of Mexico
Mesa Royalty Trust (MTR) - oil and natural gas in the West
Eastern American Natural Gas Trust (NGT) - natural gas in the Mid Atlantic
Sabine Royalty Trust (SBR) - oil and natural gas in the South and Southwest
San Juan Basin Royalty Trust (SJT) - oil and natural gas in New Mexico
Torch Energy Royalty Trust (TRU) - oil and natural gas in the South
Williams Coal Seam Gas Royalty Trust (WTU) - related to San Juan Basin

Other players (not a trust):
Kinder Morgan Management LLC (KMR) - manages pipelines, terminals, etc
Penn Virginia Resource (PVR) - manages coal and natural gas properties

Book: The Coming Generational Storm

2006-02-11T01:57:00.000-05:00

The Coming Generational Storm:
What You Need to Know about America's Economic Future

This book deals with the very sticky subjects of Social Security, Medicare, and Medicaid as cast against the backdrop of America and the financial burden on future generations. Some will scream in pain with that introduction. However, the book is very much worth the read not only for its detailed description of the problems, but also providing the rare service of suggesting solutions. The writers also go as far as explaining how the solutions can really work if we are willing to make small changes now instead of waiting for the pain of an unchanged future.

As mentioned, the first half of the book details the current Social Security, Medicare, and Medicaid systems. The systems are explained in detail along with the fact that they are all based on paying benefits today from funds collected tomorrow. By definition, these plans are bankrupt and only going deeper in debt each day. This debt is not isolated to the programs as the debt is tied to the financial stability of the United States. Each day, these social welfare programs drive the United States closer and closer to financial collapse.

The second half of the book provides suggested solutions for overhauling each system using a combination of solutions already suggested, so no new 'magic bullet' here. This includes the privatization of Social Security, the implementation of a national sales tax, and so much more. One truly needs to read this book in order to understand the solutions presented.

There are some points which I would like to emphasize:

First, it is frequently suggested that any plans to save or restructure the US economy will involve increasing taxes. This means that the workers of today will retire to a future that holds higher taxes. Considering the current migration to tax deferred plans - such as 401Ks - you see that we have traded today's taxation for tomorrow's taxation. The sales pitch is that most will earn less when they retire and therefore be in a lower tax bracket. That is a lofty assumption. As a counter, it is suggested that a person purchases inflation-protected assets, such as TIPS, in a tax free account such as a Roth IRA. This would allow you to hedge both inflation and increasing taxes.

Second, the book discussed various asset classes. Not stocks, bonds, cash, etc. Instead, they discuss financial assets (401Ks, Roth IRAs, etc), household assets (housing, appliances, etc), and personal assets (health, education, etc). The first class of assets, financial assets, you have already heard much about.

The second class, household assets, you have only heard part of the story. We all know about investing in real estate. The writers state that the true value of a house goes beyond its direct financial value. This value includes its ability to provide shelter and house services related to survival. An easy example of this is that most homeowner possess a washer and dryer because these household investments are cheaper than the alternative - going to a laundromat. The same philosophy holds partially true for vehicles - most people need to make the investment in order to go to work to earn. In the long term, a house will lead to a decrease in living expenses, and therefore, a decrease in the amount of income needed to survive.

The third category is often overlooked until the end - personal assets. We routinely hear about the greater earning potential of those who possess advanced degrees. It is generally accepted that higher education is key to financial success. On the other hand, we frequently overlook the value of our health until we have lost it. Indeed, most of the costs in retirement come from the high medical expenses made in an attempt to keep us alive. Some of the greatest expenses in this area often come in the final days of our lives.

The final section of this book focuses on some investment strategies that should assist one trying to sail safely through the coming financial storm. Here are some categories and examples:

Core fixed income - inflation-protected securities
- I Series savings bonds
Internation bond fund and foreign certificates of deposit
- T. Rowe Price International Bond Fund (RPIBX)
- American Century International Bond (BEGBX)
Precious metals funds
- Fidelty Select Gold (FSAGX)
- American Century Global Gold (BGEIX)
- Vanguard Precious Metals (VGPMX)
Energy funds
- Index-specific energy funds
- Vanguard Energy Index fund
International equity funds - focus on China
- Vanguard Total International Stock Fund (VGTSX)

These examples were meant to be that - examples, a place to start your research. I highly recommend this book. While it can be a difficult read for those who do not love lively financial discussions, I do believe people need to read this book in order to understand the true scale of the problems ahead - AND what we can AND MUST do now.

Book: Only Investment Guide...

2006-02-04T21:30:00.000-05:00

The Only Investment Guide You'll Ever Need - recently finished reading this book. Let me boil it down for you. Common sense. If you're not rich, then simply use common sense. Make it easy, do not spend lots of time over-managing your investments.

What does this mean? Get a savings account. After you have $25,000 in savings and you are contributing to either your corporate 401k or an IRA or both - open an investment account. Make that easy too - invest in a handful of mutual funds or exchange traded funds (ETFs). Focus on US stock index, international stocks, and inflation-protected securities.

And the number one investment strategy? SPEND LESS, SAVE MORE. Common sense, but so hard for our consumer-driven economy to implement on a daily basis.

Iran and the Next Big Thing

2006-01-18T00:35:00.000-05:00

Yes, a post focused almost entirely on politics although all politics do have economic consequences.

What Happens if Iran goes Nuclear?
Name says it all...

Are our Enemies our Best Friends?
In Iraq, it seems that may just be the case. Apparently the US has somewhat realized that the Sunni 'insurgents' also hate Al Qaeda. Maybe the two should join forces!?! Additionally, Iran seems to be entering the picture as a calming influence - contrary to popular discussion. It seems that Iran's size and influence may be able to moderate the Shi'ites in Iraq.

The World War IV Draft
The WWIV Explanation and Rebuttal

Royalty Trusts

2006-01-12T00:03:00.000-05:00

Handy Two Page PDF on Peak Oil and Its Impact

Oil and Alternatives
A discussion of Peak Oil and potential alternatives - both in the form of renewables (solar, etc) and cheaper, dirtier energy sources (coal, etc).

China Turns to Coal and Renewables
China realizes that its current growth rate has and will outstrip its energy supply. In response, China is requiring a reduction in energy consumption along with requiring a growing percentage of its energy from coal and renewable resources.

Rising Natural Gas Prices Increase Agriculture Prices
Natural gas is used to produce fertilizer for fields. As the price of natural gas rises, so does the price of fertilizer. Eventually, this price increase will be passed along the supply chain to wholesalers, retailers, and eventually consumers. Commodity prices will be rising.

Map of European Gas Pipelines

Oil to $100 and Canada
A prediction of oil reaching $100 per barrel by the end of 2007. As the price rises, the cost of developing oil sands and other resources in Canada will become more and more economically viable. There is still time to invest.

General - Income and Royalty Trusts

Motley Fool on Trusts
Be aware of depletion. Trusts make money by selling resources or assets. Once these resources are depleted, trusts either dissolve or need cash to make acquisitions. Depending on your investment strategy, you may want to sell these trusts before depletion occurs.

Hoovers on Royalty Trusts

Top 50 Canadian Income Trusts

Another Canadian Energy Trust List

Another Canadian Royalty Trust List

Canadian Trusts and Favorable Tax Treatment

Yahoo Finance
As always, do your research! Yahoo Finance is a great site along with its message boards.