Don’t believe the REIT dividend stablity hype.

Don’t believe the hype that REIT’s dividends are any more stable than government bonds.  REITs like American Capital Agency Inc. (AGNC) are benefiting temporarily from abnormally low interest rates caused by massive Federal Reserve money printing.  Interest rates have nowhere to go but upward.  It is just a matter of time until bond investors wake up, smell the smoke, and start running for the exits.  Don’t get trampled.

The market participants can see all the money printing.  They will demand an inflation premium for the bonds they are prepared to purchase.  This means that they demand higher interest rates.  Higher interest rates will squeeze AGNC’s profits.  They will be forced to cut their dividend drastically.  Just understand the risks of owning AGNC shares.  Their dividends are enormous right now.  That is mighty tempting.  Don’t let your AGNC shares exceed 5% of your high dividend stock portfolio.

Subscribe today at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.  AGNC’s earning power is very precarious.

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SOURCE: The Bedford Report

 

Jan 31, 2011 11:25 ET

REITs Remain the Top Destination for Dividend Investors

The Bedford Report Provides Analyst Research on Annaly Capital & American Capital Agency

NEW YORK, NY–(Marketwire – January 31, 2011) – In the past year Real Estate Investment Trusts (REITs) have been one of the most popular investments in the financial sector. Since the start of 2010, the Vanguard REIT ETF has surged more than 30 percent while the overall financial sector has been relatively neutral. REITs’ ability to generate this significant capital appreciation is one of the industry’s main allures, as most investors flock to REITs for their hefty dividends and stability. In fact, most of the success of the industry in the last year can be attributed to low interest rates. When interest rates get this low the return on dividends can far exceed that of bonds. The Bedford Report examines the outlook for diversified REITs and provides research reports on Annaly Capital Management, Inc. (NYSE: NLY) and American Capital Agency Corporation (NASDAQ: AGNC). Access to the full company reports can be found at:

www.bedfordreport.com/2011-01-NLY

www.bedfordreport.com/2011-01-AGNC

The Vanguard REIT index had been stagnant for most of January, however it surged last week as investors bought up a number of the fund’s top components on speculation of a wave of M&A activity in the industry.

M&A speculation in the REIT sector increased after ProLogis confirmed it is in talks with rival AMB Property about a possible merger. The two industrial REIT giants have a combined market cap of $13.9B, and are considering an "all-stock, at-market transaction, based upon the unaffected trading prices of the two companies’ stock prior to media reports of a possible merger."

The Bedford Report releases regular market updates on REITs so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

Companies such as American Capital Agency and Annaly earn their money on the spread between low-interest short-term borrowing and purchasing high-interest long-term securities, which leads to solid profits given the current conditions. Federal Reserve Chairman Ben Bernanke says that he is prepared to keep rates in the range of 0 – 0.25 percent for an extended period if the unemployment numbers don’t drop significantly.

Solid profits for a REIT keep those dividend payments stable. Presently, American Capital pays an annual dividend of 5.60 for yield of about 19.60%. Annaly, meanwhile, pays an annual dividend of 2.56 for a yield of 14.40%. While high yielding dividend paying stocks are appealing, be forewarned that companies can cut, slash, or suspend dividends at any time, often without notice.

Link to original article: http://www.marketwire.com/press-release/REITs-Remain-the-Top-Destination-for-Dividend-Investors-1387799.htm

Published in: on January 31, 2011 at 3:17 pm  Leave a Comment  

TIP OF THE WEEK – How to easily spot a high dividend impostor

How to spot a high dividend impostor

Jason Brizic

Jan. 21, 2011

Last week's tip of the week covered the use of Google Finance's stock screener to find high dividend stocks.  Sometimes the companies that the stock screener outputs to you haven't paid a quarterly dividend in several quarters.   I have found that one of the easiest ways to determine if a company has paid a dividend every quarter in the last five years is to enter its ticker into Google Finance and adjust the price chart to 5 years time.

Google Finance's default chart views include dividends and their amounts.  You are only a click away from seeing a quick dividend history.  Google Finance has an easy to use charts that I use to find high dividend stocks.  Go to: 

I have two examples for you so you can see what I am writing about:

Tele Norte Leste Participacoes SA (ADR) 

(Public, NYSE:TNE)

Upon first glance this stock appears to have a dividend yield above 20 percent.  But when you examine its dividend record on the 5 year chart you see no consistent pattern.
TNE has a very spotty dividend record.  Enter TNE into Google Fiance and adjust the chart to 5 years.

Altria Group, Inc. 

(Public, NYSE:MO)

This tobacco stocks 5 year chart demonstrates what a consistent dividend payer looks like.  You can be certain that its 6.3 percent dividend is coming quarter after quarter.

Published in: on January 28, 2011 at 4:03 pm  Leave a Comment  

Don’t Put Off Your First Gold Purchase. A Buying Opportunity Awaits.

There is a place in your investment portfolio for non-correlators to the stock market.  I believe you should own 5% – 30% of your net worth in non-correlators.  For most people this means gold, silver, agricultural commodities, and energy (e.g. oil, coal, and natural gas).  This article is specifically about purchasing gold or silver coins.  I recommend that you buy gold before silver.  Central banks to not purchase and store silver.  If you feel you must own silver, then limit it to 20% of your precious metals dollar total.  For example, if you have $7,000 to purchase PMs, then buy 4 ounces of gold (80% @ $1,400/oz) and 46 ounces of silver (20% @ $30/oz.).  Follow Burt Blumert’s rules: "Buy the best. Pay cash. Take delivery."

MarketWatch sent an interviewer to interview Parker Vogt of Camino Coin Company in Burlingame, California. This was Burt Blumert’s company. He gave it to Vogt, an employee. How’s that for a legacy!

The reporter has such a thick accent that I had difficulty following her narration. She is obviously reading a script. It’s not a good script. But Vogt is very good.

The margins at Camino are low.

http://www.marketwatch.com/video/asset/bullion-coin-investing-may-cost-you/97CFE159-0178-43F2-962B-A1F1E5CC5256

Do not buy the gold ETFs.  Buy physical gold coins and take delivery of them.

The price of gold has declined for nearly four weeks.  If you don’t own any physical gold coins, then you should prepare to buy some while the price is declining.  I think that the price might continue to decline almost to the 200 moving average at around $1,260 per ounce.  We won’t get a slide in gold of -25% like in 2008 unless the entire stock market flounders.  A stock market crash is unlikely in the absence another financial panic.  There is a financial panic coming, but there is no buildup to it right now in the worldwide media.  The problems in the financial systems have not been solved.  Central banks are printing trillions of dollars, euros, and other fiat currencies.  Gold will rebound.  Take the opportunity to buy some while it is relatively cheap.

Subscribe today to www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.  Along the way you will also learn to diversity your investment portfolio with non-correlators to the stock market such as gold.

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P.M. Kitco Metals Roundup: Gold Ends Solidly Lower, hits 4-Month Low, on Technical Selling

27 January 2010, 02:06 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) – Comex gold futures prices closed solidly lower, near the daily low and hit a fresh nearly four-month low Thursday. Fresh technical selling amid waning safe-haven demand pressured gold prices. Comex gold last traded down $14.80 at $1,318.20 an ounce. Spot gold last traded down $26.70 at $1,320.00.

The gold market is seeing reduced safe-haven investment demand, what with the U.S. stock indexes trading near multi-year highs, no fresh headline news regarding European Union financial problems, and no major geopolitical flare-ups occurring. Indeed, investors worldwide have gained a better appetite for taking risk, which is hampering the safe-haven gold market. However, the gold market is still just one step away from a solid price rebound or an extended rally should a significant geopolitical or financial market event suddenly and unexpectedly appear in the news headlines.

Lower crude oil futures prices Thursday, which hit a fresh seven-week low, also worked to pressure the precious metals markets. Crude oil has seen bearish near-term technicals develop that do suggest more downside price pressure in the near term, and that’s also an underlying bearish factor for gold.

The U.S. dollar index traded weaker again Thursday and hit another fresh 2.5-month low. The dollar index bears have downside near-term technical momentum and if the index remains on a downward path in the near term, look for gold prices to at least see limited selling interest. Gold bulls have been disappointed recently that the yellow metal has not seen more upside support from the weaker dollar index.

The London P.M. gold fix was $1,334.50 versus the previous P.M. fixing of $1,328.00.

Technically, February Comex gold futures prices closed nearer the session low Thursday and scored a bearish "outside day" down on the daily bar chart. Serious near-term technical damage has been inflicted in gold recently. Prices are in a four-week-old downtrend on the daily bar chart. A bearish head-and-shoulders top reversal pattern is also playing out on the daily bar chart.

Gold market bulls’ next near-term upside technical objective is to produce a close above solid technical resistance at this week’s high of $1,352.40 in February futures. Bears’ next near-term downside price objective is closing prices below psychological support at $1,300.00. First resistance is seen at $1,325.00 and then at $1,332.00. Support is seen at Thursday’s low of $1,315.70 and then at $1,310.00. Wyckoff’s Market Rating: 5.0.

March silver futures closed down 18.8 cents at $26.94 an ounce Thursday. Prices closed nearer the session low today and were pressured by lower gold and crude oil prices. Prices Tuesday hit a fresh seven-week low. Silver prices are in a four-week-old downtrend on the daily bar chart. Some near-term chart damage has been inflicted in silver recently.

The next downside price objective for the silver bears is closing prices below solid technical support at $26.00. Bulls’ next upside price objective is producing a close above solid technical resistance at this week’s high of $27.95 an ounce. First resistance is seen at $27.25 and then at $27.50. Next support is seen at Thursday’s low of $26.775 and then at this week’s low of $26.54. Wyckoff’s Market Rating: 5.5.

March N.Y. copper closed up 670 points at 433.40 cents Thursday. Prices closed nearer the session high. The bulls had faded a bit earlier this week and needed to show fresh power, which they have done. The copper bulls have the overall near-term technical advantage. Bulls’ next upside objective is pushing and closing prices above solid technical resistance at the January all-time high of 449.80 cents. The next downside price objective for the bears is closing prices below solid technical support at 410.00 cents. First resistance is seen at Thursday’s high of 435.55 and then at this week’s high of 437.25 cents. First support is seen at 430.00 cents and then at Thursday’s low of 427.55 cents. Wyckoff’s Market Rating: 7.0.

  

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

Don’t Miss a Word! Read Kitco News on the Go with Kcast Gold Live for iPad! Get it now!

 

 

Published in: on January 27, 2011 at 3:46 pm  Leave a Comment  

Don’t Trust the Inflation Numbers

Don’t trust the government reported price inflation numbers otherwise known as the consumer price index (CPI).  The government’s Bureau of Labor Statistics under-reports the true price increases that we all experience as we buy food, shelter, energy, healthcare, entertainment, and transportation.  I wrote about this in greater detail in August of 2010:

http://bit.ly/riggedCPI

You might be asking yourself why would the BLS change their methodology for computing the CPI?  The reason is simple.  The two largest federal welfare programs: Social Insecurity and Medicare would go broke dozen of years earlier without the rigging of the CPI.  It is in every president’s and congress’ best personal best interest to delay the day of reckoning.  Rigging the CPI helps to kick the can.

The Federal Reserve and the monetary base

There will be massive price inflation caused by all the money that the Federal Reserve has created out-of-thin-air since late 2008.  The Wall Street Journal author does not understand the mechanics of money creation.  The Federal Reserve creates the money and buys assets (usually US government debt like they are doing now with QE2).  This expands the FED’s balance sheet and adds money to the monetary base.  Prices don’t go up until the monetary base gets transformed into money that actually goes into people’s bank accounts. 

The fractional-reserve banking process in a nutshell

The banks receive the freshly printed dollars or digital dollars in their accounts for the US government debts that they sold to the Federal Reserve.  The banks can then lend almost all of the money they received from the FED – OR – they can choose to not lend it.  They have chosen to lend very little of it.  They call the money above the legal reserve requirement the  “excess reserves”.  The banks are holding over a trillion dollars as excess reserves.  When banks lend they create new money.  For example, if the legal reserve requirement was set at 10% (it is much lower than this), then Bank A that received a $1,000 deposit from a customer would be allowed to lend $900 and would have to keep $100 as reserve.  The person who received the $900 loan from Bank A would deposit $900 into his checking account at Bank B until he was ready to spend the loan money.  Bank B could loan $810 to someone else while keeping $90 (10%) as legal reserves.  This is how money is created.  A $1,000 increase in the monetary base multiplies many times through this process.  The M1 money supply increases.  Prices increase.

If the banks lent that money in a manner like they did in 2006, then prices would roughly double in a relatively short time.  Keep this in mind as you read the WSJ article below.

Economy by Brett Arends (Author Archive)

Don’t Trust the Inflation Numbers

A surprising number of people on Wall Street will tell you not to worry too much about inflation.

After all, they’ll say, just look at the numbers. The inflation picture is incredibly benign. In the past 12 months the Consumer Price Index has risen just 1.5%—a remarkably low rate. And when you strip out volatile food and energy costs, they’ll say, it’s even lower—a meager 0.8%.

It doesn’t stop there. Many economists will point out that wages are also rising by less than 2% a year. With so many people still out of work, goes the line, labor costs are going to stay low for a long time too. So what’s the worry?

Clearly, a lot of investors agree. Inflation-protected government bonds, which people would buy to protect themselves if they were worried, have fallen in price in the past couple of months. Gold, another inflation hedge, is down. Ten-year Treasury bonds yield less—3.3%—than they did when President Eisenhower left office.

It’s crazy. There is plenty to worry about. As you battle to manage your family’s finances, be aware that there are three reasons why inflation needs to be on your radar screen.

• First, the official inflation numbers should be taken with a fistful of salt.

Over the past 30 years, the federal government has made a lot of changes to the way it calculates inflation. It’s taken place under presidents of both parties. Each change in methodology has come with plausible-sounding justifications. But, as if by magic, each change has had the effect of flattering the numbers. Funny, that.

According to one rogue economist, John Williams at Shadow Government Statistics , if we still calculated inflation the way we did when Jimmy Carter was president, the official inflation figures would look about as bad as they did when … Jimmy Carter was president. According to Mr. Williams’s calculations, if we counted inflation under the old system the official rate wouldn’t be 1.5%. It would be closer to 10%.

Mr. Williams is just one voice. But it makes sense to treat the government numbers with skepticism.

Under the official calculations, if steak prices boom, the government just assumes you buy cheaper hamburger instead. Presto—no inflation!

Or consider the case of Apple ( AAPL: 344.46*, +3.06, +0.89% ) computers. We all know Macs are expensive. And we know Apple doesn’t discount. The cheapest Mac laptop today costs $999. A few years ago, it also cost $999. So the price is the same, right?

Ha. Not according Uncle Sam. Using a piece of chicanery called "hedonics," Uncle Sam calls this a price cut. His reasoning? You’re getting more for the money. Today’s $999 Mac is lighter, fancier and faster than last year’s $999 Mac. So the government calculates that the "real" price has actually fallen.

How’s that work in the real world? Try it. Go into your local Apple store and ask for 50% off thanks to hedonics. (If you do, please, please video the exchange and put in YouTube. We could all use a good laugh.)

Instead, the government is worrying about deflation, partly because of all the "cheap" MacBooks out there.

• The second reason to treat the official inflation figures with some mistrust is that they look backward. They register what just happened, not what’s about to happen next.

OK, so the prices of many things haven’t risen. Yet. But if the laws of economics mean anything, they will have to. Why? Because costs are rising.

Economists need to stop focusing just on labor costs. The world has plenty of surplus labor. But look at raw materials. Around the world prices are skyrocketing, from copper to cocoa. The United Nations Food Price Index has just hit a new record high. Oil’s back near $90 a gallon. Wheat prices have nearly doubled since last summer.

Soaring food prices helped spark the revolution in Tunisia. According to Alex Bos, commodities analyst at Macquarie Securities in London, other governments—especially in North Africa—have responded with panic buying of foodstuffs.

Algeria alone, he says, has bought about 1.5 million tons of wheat this month—maybe triple its usual amount. Saudi Arabia is rushing to build up grain supplies. Corn supplies are as tight as they were back in the inflationary 1970s.

Sooner or later this is going to show up in your supermarket, or at the mall, in higher prices.

Just ask McDonald’s ( MCD: 75.40*, -0.08, -0.10% ) . Or paints and plastics giant DuPont ( DD: 50.36*, +1.32, +2.69% ) . Or Kleenex and Huggies maker Kimberly-Clark ( KMB: 65.21*, -0.40, -0.60% ) . Or 3M ( MMM: 89.18*, +0.68, +0.76% ) . Or Coach ( COH: 54.61*, +1.52, +2.86% ) . These companies, and many others, have warned in recent days that they’re getting squeezed by rising costs. They’ll either eat the costs, which will hit the stock, or pass them on. How is this not inflation?

• The third reason to be mistrustful of the inflation picture? Simple. Economics.

We are flooding the world with extra dollars. The Fed simply invents as many as it likes. In the past couple of years, to try to keep the economy out of a tailspin, it has more than doubled the size of the so-called monetary base.

A dollar bill has no intrinsic value. Dollars are only "worth" something because you can exchange them for a haircut, or a pair of shoes, or a book from Amazon.com ( AMZN: 175.63*, -1.07, -0.60% ) . So if you drastically increase the number of dollars without a commensurate increase in the number of goods and services, each dollar must, by definition, be worth less. That’s another way of describing inflation.

So far, this inflation seems to have shown up in the unlikeliest of places. It’s like Whac-A-Mole. The price of vintage wines has skyrocketed 57% in the past year, according to the Liv-ex Fine Wine 50 Index . Real estate prices across China are in a bubble. So long as the Chinese tie themselves to the U.S. dollar, they are importing our inflation. But, once again, one wonders how this can be called benign.

Is inflation certain? I’m wary of any predictions. Casey Stengel once said, "Never make predictions, especially about the future." Mr. Stengel would have lasted three days as a Wall Street analyst. But he won five World Series in a row, and he knew a thing or two.

Maybe inflation really will stay tame. But I’m not counting on it. I’m not buying the conventional wisdom, and neither should you.

Published January 26, 2011

Read more: ROI: Don’t Trust the Inflation Numbers – SmartMoney.com http://www.smartmoney.com/investing/economy/roi-dont-trust-the-inflation-numbers-1296052731208/#ixzz1CAwwqdMx

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Published in: on January 26, 2011 at 2:37 pm  Leave a Comment  

AGNC Will Report 4Q2010 Earnings on February 8th

American Capital Agency Corp. (AGNC) will report 4th quarter 2010 earnings after the US markets close on February 8th, 2011. The company said earlier this month that earnings would exceed $1.20 per share. Unnamed analysts expect earnings of $1.29 per share. AGNC also reported that they would pay another dividend of $1.40 per share. Expect a dividend cut in an upcoming quarter because their dividend payout ratio exceeds 100% and has exceeded it for more than one quarter.

I think this confirms the fact that AGNC does not have the earning power to sustain a $1.40 per share dividend. Be sure to subscribe to www.myhighdividendstocks.com/feed to receive more AGNC analysis delivered to your reader once their quarterly report is available.

Disclosure: I don’t own AGNC.

Here is the link to the press release: http://finance.yahoo.com/news/AGNC-Will-Report-Q4-2010-prnews-3553937482.html…

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Published in: on January 25, 2011 at 9:23 pm  Leave a Comment  

Short biography on Hazlitt and Keynes. Amazing!

Lew Rockwell delivers an amazing speech on the lives of Henry Hazlitt and John Maynard Keynes.  Keynesian economic voodoo is destroying the world’s economies and later it will destroy your standard of living if you don’t take action to protect yourself.

Subscribe today at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets that will weather the Keynesian economic storms on the horizon.

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Hazlitt and Keynes: Opposite Callings

by Llewellyn H. Rockwell, Jr.

Recently by Llewellyn H. Rockwell, Jr.: The Unthinking Right

 

 

 

This talk was delivered at the Mises Circle in Houston, Texas, on January 22, 2011.

John Maynard Keynes was born in 1883 and died in 1946. Henry Hazlitt was born in 1894, eleven years after Keynes, and lived much longer, until 1993. Their lives and loyalties are a study in contrast, and mostly of choices born of internal conviction, in Hazlitt’s case, or lack thereof, Keynes’s case.

Keynes became the most famous economist of the 20th century and the guru-crank whose work has inspired thousands of failed economic experiments and continues to inspire them today. He is the Svengali-like figure who implausibly convinced the world that saving is bad, inflation cures unemployment, investment can and should be socialized, consumers are fools whose interests should be dismissed, and capital can be made non-scarce by driving interest rates to zero – thereby turning the hard work of many hundreds of years by economists on its head.

Keynes had every privilege in life, and all the power and influence that an intellectual could have, and he used it all irresponsibly in service to the State.

Hazlitt was very nearly his foil. He did not come from privilege, did not enjoy a prestigious educational pedigree, and did not know any of the right people. He came from nowhere and worked his way up through sheer force of intellectual labor and moral determination.

Hazlitt eventually became one of the great public voices for free markets in the 20th century, writing in every popular venue he could and applying his enormous talents as a thinker and writer to defending and explaining free markets, showing how the classical economic wisdom was true and vastly improved by the Austrians, how sound money is essential for freedom, how market signaling works to achieve economic coordination, and how government policy is always and everywhere the enemy of freedom and prosperity.

Hazlitt’s great book Economics in One Lesson, written the year that Keynes died, boils down all of economics to a single principle and applies it across the board to all the policies of government. It is crystal clear in its language, designed to be read by anyone in an effort to achieve Mises’s dream of bringing economic wisdom to every citizen.

Keynes’s major work is The General Theory and it has been read by relatively few, mainly because it is so incomprehensible as to be nearly written in code. But then it wasn’t designed for everyone. It was written for the elites by a member of the most elite class of intellectuals on the planet. Even more effectively, it was written with an eye to impressing the elites in the one way they can be impressed: a book so convoluted and contradictory that it calls forth not comprehension but ascent through intimidation. Its success is a remarkable story of the bamboozlement of an entire profession, followed by the misleading of the entire world. If there are still believers in what Murray Rothbard called the Whig Theory of History – the idea that history is one long story of progress toward the truth – the success of The General Theory is the best case against it.

If I had to bet on which book will have greater longevity, however, I would go with Hazlitt. The same is true of Hazlitt’s great legacy. He died without much fame. In fact, his days of fame were far behind him, arguably reaching their height when he was an editorial writer for the New York Times. When he was told that he needed to write in defense of Keynes’s screwy plan for Bretton Woods, he balked and walked away. Thirteen years later, writing as a columnist for Newsweek, Hazlitt came out with a line-by-line refutation of Keynes’s General Theory. It is arguably his great work, the one begging to be written. He alone had seen the need. It continues to teach us today, and serves as something of a manual for the errors of government.

Both Hazlitt and Keynes began their educations with an intense interest in literature and philosophy, but eventually settled on economics. Both were in a position to make a choice of theoretical paradigms given the intellectual and political content of their times. Both were major public intellectuals. Both considered themselves to be liberals in the way that term was used before the New Deal, meaning a general disposition toward favoring human rights, free trade, and open societies.

In this spirit, Keynes wrote in opposition to the Treaty of Versailles that imposed savage terms on Germany after the war. He favored free trade and generally allied himself with that cause. Sadly, that tendency, which derived from the old world’s love of liberty, was incompatible with his life’s agenda, which he believed to be his birthright. That agenda was to rule the world through intellectual means by virtue of connections to the powerful. That essential humility that was at the core of the economics profession of the 19th century – the humility to embrace laissez-faire as a principle – was completely missing from his mind.

Keynes was born as a member of the ruling elite in Britain. His father, John Neville Keynes, and his father’s good friend Alfred Marshall were very powerful figures at Cambridge University. They shepherded him and introduced him to the right people, and the time came when he was inducted into the secret, super-elite society of top intellectuals in the English-speaking world. The group was called The Apostles, and this was the group that would come to shape his ideas and his approach to life. The group had been formed in 1820 and included top members of the British ruling class. They met every Saturday evening without fail, and spent most of the rest of their time during the week with each other. Membership was for life.

It is impossible to overestimate the extraordinary intellectual arrogance of this group. They would refer themselves as the only thing that is truly real in a Kantian sense, whereas the rest of the world was an illusion. Keynes as an undergraduate wrote to a fellow member as follows: "Is it monomania – this colossal moral superiority that we feel? I get the feeling that most of the rest [of the world outside the Apostles] never see anything at all – too stupid or too wicked."

In the time of Keynes, according to those who have studied this carefully, the Apostles was dominated by an ethos that included two general traits: first, the bond that held the world together and would push it forward was the friendship and love that the Apostles had for each other, and that there were no other principles that really mattered, and, second, an intense disdain for religion and bourgeois values, institutions, ideas, and tastes.

It was in this period that Keynes met G.E. Moore, a philosopher at Trinity and Apostles member. His magnum opus was called Principia Ethica, published in 1903. It was a philosopher’s attack on all fixed principles and a defense of immoralism. This was the book that changed Keynes’s life completely. He called it "exciting, exhilarating, the beginning of a new renaissance, the opening of a new heaven on earth." It was this book that led him to believe that it was possible to completely reject morality, conventions, and all traditions. It might even be considered a kind of prototype of his later work.

These same values migrated to the famed Bloomsbury Group that Keynes joined after graduation. As many historians of the period have said, it was the most influential cultural and intellectual force in England in the 1910s and 1920s. The emphasis here was not on science but on art and the overthrow of Victorian standards in order to embrace the Avant-Garde. Keynes’s contribution to their efforts was mainly financial, for he had made a fortune in speculation and spent lavishly on Bloomsbury causes. He also provided members with contacts in the world of finance and economics.

In discussing how immoralism and the rejection of principles applied to economics, Rothbard draws attention to Keynes’s position on free trade. As a good Marshallian, he was a proponent during most of his early public life. Then suddenly in 1931, all that changed with a paper that loudly and aggressively called for protectionism and economic nationalism, a total reversal of what he had previously said. The press ridiculed him for his shift, but this never troubled Keynes, for as an Apostle and a champion of immoralism, he contended that there was no contradiction worthy of notice. He believed that he could take any position he wanted on an issue, and could live his life unhinged from any standards or rules. He was always ready to change his opinion given the new make-up of the political constellation and felt no burden to explain himself.

It was precisely because of this tendency to change his point of view on a dime that critics became tired of dealing with him. Hayek spent a great deal of time refuting him on various subjects, particularly Keynes’s book on money, only to have Keynes dismiss the criticisms on grounds that he Keynes no longer held these views. He praised FDR and urged all governments to follow the New Deal. But when pressed on the details of programs such as the National Industrial Recovery Act, he would back away and grant that it was ill-conceived. His opportunism was palpable and infuriating.

As the Depression deepened, he began to see himself as the philosopher king of the world economics establishment, advising governments all over on their politics. His main target was the gold standard, which he regarded as a relic of a bygone era, the ultimate symbol of Victorianism, the monetary embodiment of morality and standards, a restraint on the ability of government to tinker with the economy, and therefore, from his point of view, the ultimate enemy of everything he hoped to accomplish. He had long ago written that "A preference for a tangible reserve currency a relic of a time when governments were less trustworthy in these matters than they are now." What he meant, of course, that with himself at the helm, gold would not only be unnecessary but an impediment to the ambitions of economists.

Now we come to The General Theory that made its appearance in 1936. Let me introduce this book with a question. What would we call a person who believed that government policy can completely eliminate the scarcity of capital? Most all economists in history and even today would call this person a nut. The whole economic problem that economic theory grapples with concerns the invincible reality of the scarcity of capital. The idea that we can somehow concoct a system in which there would be no scarcity amounts to the belief that government can create a permanent utopia by pushing a few buttons. It is no different in kind from a belief in some kind of magical land of fantasy. It represents a fundamental failure to grapple with reality.

And yet this is precisely what Keynes hoped to achieve through his policy prescriptions in The General Theory. His idea was to create this land of universal happiness by: 1) driving the interest rate to zero, and thereby 2) achieving his sought-after "euthanasia of the rentier class" – that is, the killing off of people who live on interest, and thereby, 3) eliminating what he considered to be the exploitative aspect of capitalism, that which rewards investors for their sacrifices.

As Keynes wrote, driving interest to zero would mean

the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land…, [T]here are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run…. I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work.

As you can see, Keynes was far more extreme in his views than the media generally presents him. And the ghastly situation in which we find ourselves today, where saving earns virtually nothing and the Fed holds rates down to zero in perpetuity, seems to be the fulfillment of the worst of the Keynesian dream.

As for the contribution of the book to theory, Rothbard writes that "The General Theory was not truly revolutionary at all, but merely old and oft-refuted mercantilist and inflationist fallacies dressed up in shiny new garb, replete with newly constructed and largely incomprehensible jargon."

Mises further pointed out that even Keynes’s old and refuted ideas had already had a good run of it. "Keynes’ General Theory of 1936 did not inaugurate a new age of economic policies," he writes, "rather it marked the end of a period. The policies which Keynes recommended were already then very close to the time when their inevitable consequences would be apparent and their continuation would be impossible."

What bad economic policies lacked was a prestigious economist to come to their defense, and this is precisely the role that The General Theory played. Governments all over the world welcomed and celebrated the book. As for the success of the book within economics itself, there are important sociological reasons to consider. Keynes’s language was nearly impenetrable. He coined new terms on nearly every page. Rather than being a disadvantage, this is often an advantage in a profession that has lost its way.

Keynes set out to divide the world into two broad class of people: stupid consumers whose behavior is determined by external force, and savers who are a drag on economic growth. The job of government policy is to goad the first group into a different set of behaviors and pretty much destroy the second group. Everything else in the Keynesian system follows from those two general propositions. This accounts for his hatred of the gold standard, of traditional capitalism, and of the price system that functions as a signaling mechanism for the production and allocation of resources.

It also accounts for why Keynes was one of the world’s most passionate advocates of the rise of the fascist impulse in the 1930s. He celebrated the "enterprising spirit" of Sir Oswald Mosley, the founder of British fascism. He joined the New York Times in praising the central planning of Mussolini. Thus it was not a surprise when Keynes wrote a foreword to the German edition of his book in 1936, after the Nazis had come to power. He said that his book is more easily "adapted to the conditions of a totalitarian state" than to free competition and laissez-faire. Nor should it be surprising that Keynes also dabbled in anti-Semitism, praising even openly anti-Jewish tirades of prime minister Lloyd George and his brutal and public attack on the Jewish French finance minister Louis-Lucien Kotz.

A puzzling aspect of academia is how a sector that lives on its reputation for objectivity and love of science can be so easily bamboozled by charlatans, and the success of this book is a great case in point. Most economists over the age of 50 dismissed the book, but the younger ones regarded it as a kind of revelation that gave them a career advantage over their elders. Keynes’s personal prestige had a lot to do with this. As Rothbard wrote, "It is safe to say that if Keynes had been an obscure economics teacher at a small, Midwestern American college, his work, in the unlikely event that it even found a publisher, would have been totally ignored." But coming from a Cambridge professor and student of Marshall, Keynes had huge advantages.

The Keynesian magnetism was so powerful that it even drew most of the former followers of F.A. Hayek, who was then teaching in London too. Most tragic of all was the conversion of Lord Robbins to the Keynesian cause. Robbins had written a great book on the Great Depression, one that the Mises Institute publishes to this day. It is written entirely in the Misesian spirit. But after having worked with Keynes on economic planning during the war, Robbins fell victim to his personal charisma, later writing of Keynes "unearthly" brilliance and "godlike" personal stature. He wrote that Keynes "must be one of the most remarkable men that has ever lived." Robbins ended up repudiating his best work, and only coming back to his senses late in life.

Hayek wrote many times that Keynes himself before his death was on the verge of repudiating what had become of the Keynesian system. This is based on Keynes’s positive review of Hayek’s Road to Serfdom as well as Keynes’s own private words to Hayek himself.

In analyzing the evidence, Rothbard concludes that no such conversion was oncoming but rather that this was Keynes doing the Keynesian thing: shifting, moving, dodging, and changing, with no attachment to standards or principles or morality. He would believe anything and say anything and do anything to advance himself and put his class of technicians in charge of the world economy. It is remarkable that after a lifetime of writing, his views would still be so difficult to pin down that even Hayek could believe, however briefly, that there was a modicum of sincerity in this man’s words or actions.

Comparing his life and works to Henry Hazlitt is like night and day. Hazlitt never held an academic position, had no family connections, and was never formally schooled in economics, but he was an extremely hard worker who read passionately and extensively, making an extraordinary career for himself, given that he was forced to drop out of school to support his widowed mother. He read in all his spare time: Mill, Aristotle, Nietzsche, Gibbon, and anyone else he could get his hands on, and kept extensive diaries of all his thoughts on their work. In all his studies, he presumed an old-fashioned view of his goal: to discover what is true, as a means to guiding his life and judgments.

All the while, he was also working. His first series of jobs followed in quick succession lasting only a few days. At each job, he would acquire a bit more knowledge than he had previously before getting fired for not having enough skills. Keep in mind that this was long before the minimum wage and other interventions. So his average salary grew a bit at each position: $5 per week, $8 per week, $10 and $12 per week. He finally worked his way up to become a reporter at the Wall Street Journal. He was paid 75 cents for every story, and he soon became invaluable to the staff.

It was in 1910 that he received his first real exposure to economics in Philip Wicksteed’s great book The Common Sense of Political Economy. This is the book that would firmly embed him in a classical and marginalist perspective on economic issues and prevent him from ever falling away. He was also trying his skills as a writer. Sure enough, he managed to get his first book published at the age of 22: Thinking as a Science. The Mises Institute keeps this book in print and it remains one of the most inspirational and instructive books ever written on self-education and the obligation to learn.

He opens the book as follows:

Every man knows there are evils in the world which need setting right. Every man has pretty definite ideas as to what these evils are. But to most men one in particular stands out vividly. To some, in fact, this stands out with such startling vividness that they lose sight of other evils, or look upon them as the natural consequences of their own particular evil-in-chief. …I, too, have a pet little evil, to which in more passionate moments I am apt to attribute all the others. This evil is the neglect of thinking. And when I say thinking I mean real thinking, independent thinking, hard thinking.

Here we have the tone and approach of a man with integrity, intellectual integrity, a man who is determined to find his way to what is true. The entire book reads this way. I’m particularly struck by his analysis of why some people attach themselves to error and will not let go. He might as well have been describing the seduction of the economics profession by Keynes:

In this passage, from this book he wrote at the age of 22, he is speaking of the prejudice that in particular affects intellectuals: their propensity to imitate the ideas that seem fashionable at the moment.

We agree with others, we adopt the same opinions of the people around us, because we fear to disagree. We fear to differ with them in thought in the same way that we fear to differ with them in dress. In fact this parallel between style in thought and style in clothing seems to hold throughout. Just as we fear to look different from the people around us because we will be considered freakish, so we fear to think differently because we know we will be looked upon as weird.

He recalls a conversation he had with an intellectual in which he raised a point made by Herbert Spencer. The person recoiled and said that surely Spencer’s ideas had been superseded. Hazlitt discovered that this person had never read Spencer and had absolutely no idea what Spencer actually believed about anything. Clearly Hazlitt, like most nonacademics, had a tendency to have higher expectations of the integrity of the intellectual classes than they merited then or now.

Nonetheless, he condemns the tendency to absorb prevailing ideas uncritically as completely foolhardy, as a pathway toward making life meaningless.

I am willing to wager that most of these same people now so dithyrambic in their praise of James, Bergson, Eucken and Russell will twenty-five years hence be ashamed to mention those names, and will be devoting themselves solely to Post-neofuturism, or whatever else happens to be the passing fadosophy of the moment.

He goes on to speak what might have been the credo of his life.

If this is the most prevalent form of prejudice it is also the most difficult to get rid of. This requires moral courage. It requires the rarest kind of moral courage. It requires just as much courage for a man to state and defend an idea opposed to the one in fashion as it would for a city man to dress coolly on a sweltering day, or for a young society woman to attend a smart affair in one of last year’s gowns. The man who possesses this moral courage is blessed beyond kings, but he must pay the fearful price of ridicule or contempt.

After downtime during the war, he went back to work at the Journal and resumed his reading, tracing footnotes to ever greater books. He followed the notes in a Benjamin Anderson book all the way to discover Mises’s Theory of Money and Credit. He had fallen in love with economics in the same way that most of us did. He loved its elegance, explanatory power, its implicit love of liberty, and its central role in the rise of civilization. But it was not his only love. He read widely in literature and art as well, and found a market for his talents in this area. He moved from paper to paper until he eventually took a position as the literary editor at The Nation, which was then known as a liberal but not statist publication.

It was a high-prestige job for him, accepted at a period that would turn out to be a major turning point in our nation’s history and also in his own life. In 1932, after FDR’s election, the weekly would start to weigh in on various aspects of New Deal policy. It was Hazlitt’s internal constitution, that belief in truth, that led him to write in these pages what he believed about FDR’s policy. He wrote about the real cause of the Great Depression, which he saw not as a failure of capitalism but as correction from a credit-fueled bubble. The Nation itself was not yet firmly entrenched as a propaganda paper for economic central planners, and so the editors let Hazlitt have his say.

He warned of the results of protectionism, price controls, subsidies, and economic planning in general. Not only would these methods not work to dig us out of Depression, he wrote, but they were contrary to the spirit of human liberty that liberals embrace as a matter of their creed. In saying these things, he was saying pretty much what any economist would have said a few decades earlier, but he also knew full well that he was going against the existing Zietgeist that Keynes himself was helping to craft.

Sure enough, Hazlitt won the debate but lost his job at The Nation. This was the first of many such events in his life, and it was something to which he would become accustomed. He had worked too hard for too long, and believed too much in the power of truth, to turn away from it. He had established a dictum early in life that he would not go along with an opinion simply because powerful and influential people around him held to it. He would have courage now and always.

It was not only his writing ability that attracted H.L. Mencken but also this quality of moral determination. Mencken named Hazlitt as his successor in what was the greatest American publication in those years, The American Mercury. He was there for three years until he moved to the position he held for the next ten years. He became the lead editorialist for the New York Times. There he wrote several editorials per day, plus book reviews for the Sunday paper. It was a stunning display of productivity. It was also probably the last time that the New York Times was correct on the issues of the day.

In 1946, this job came to an end in a dispute over the Bretton Woods monetary agreement. Hazlitt was relentless in attacking its fallacies and in predicting its defeat. The publisher came to him and explained that the paper could not continue to oppose what everyone else seemed to support. Hazlitt knew this routine rather well, and so he left without bitterness or acrimony. He simply packed up and walked away, and proceeded to write what would become the best-selling economics book of all time.

In these years, too, he had met Ludwig von Mises who had come to our shores in 1940. Hazlitt recognized in Mises one of those men with moral courage, a man who, as Hazlitt put it in his early book, is "blessed beyond kings" for his willingness to stick up for truth even at great personal cost. He used his position at the Times to alert readers to Mises’s books and ideas. He helped Mises find a publisher for English translations of his books, and became a promoter and champion of the Misesian worldview. As we look back on it, it seems clear that Mises’s life would have been very different without the help of Hazlitt. In some ways, Henry Hazlitt became a one-man Mises Institute.

But let’s return to Hazlitt’s succession of jobs. He went from The Times to Newsweek, where his BusinessTides column educated a full generation or two in economic theory and policy, me along with them. These were remarkable columns, beautifully written and spot on topic every week. I’m pleased to announce that the Mises Institute is publishing all of these columns in a single volume this year. I’m expecting this book to help reestablish Hazlitt’s rightful place in the intellectual history of the 20th century.

Now it was time for Hazlitt to take after the man whose ideas had dogged him for decades: John Maynard Keynes himself. Hazlitt was the first and still the only economist who has ever taken on the General Theory in a line-by-line analysis. He did this in a book published in 1959 which he called The Failure of the “New Economics.” He writes in the introduction that he was warned not to do this since Keynes’s ideas were already unfashionable but he decided to go ahead, based on an insight of Santayana that ideas aren’t usually abandoned because they have been refuted; they are abandoned when they become unfashionable. And so far as Hazlitt could tell, there was no stepping away from the Keynesian fashionableness. And note too that this was written fully 52 years ago, and Keynes is fashionable all over again.

What Hazlitt discovered was that the book was much worse than he imagined. He found no ideas in the book that were both true and original. He patiently goes through the book to explain what he means, taking Keynes apart piece by piece through 450 pages of thrilling analysis and prose, finishing up with a great concluding chapter that summarizes all the errors in the book.

I’ve not mentioned many of Hazlitt’s other fantastic books, including his two books on monetary economics. On this matter, he was the perfect foil for Keynes. Whereas Keynes believed that the most important single step to destroying the laissez-faire of the old world was to demolish the gold standard, Hazlitt believed that there would never be a lasting regime of freedom restored without addressing the money problem. What Keynes wanted to destroy, Hazlitt wanted to restore and firmly entrench as part of the market order. They both agreed on the centrality of the issue in achieving their dreams and in this they were both right.

But note where each ended up at the end of their lives. Keynes died famous and rich and beloved, heralded by one and all for his brilliance. He was never asked to do anything courageous. He was never asked to make a sacrifice for what he believed. It would never have occurred to him to do so, for the very idea of a moral commitment or an intellectual responsibility was either unknown to him or totally rejected by him.

Hazlitt, in contrast, died at what was arguably a low point in his career. He had climbed to the top, but then was pushed back down again, eventually writing for and working with a small and largely embattled group of defenders of free enterprise.

We have in these two approaches contrasting images of the role of the public intellectual. Is this role to defend the freedom of the individual and to promote the development of civilization? Or is the goal to enrich oneself, get as close to power as possible, to become as famous and influential as one can be? It all comes down to one’s moral commitments and personal integrity. In the end, this is the core issue, one that is arguably more important than economic theory.

Hazlitt made his choice and left us with great words of wisdom on the duty to support freedom.

We have a duty to speak even more clearly and courageously, to work hard, and to keep fighting this battle while the strength is still in us…. Even those of us who have reached and passed our 70th birthdays cannot afford to rest on our oars and spend the rest of our lives dozing in the Florida sun. The times call for courage. The times call for hard work. But if the demands are high, it is because the stakes are even higher. They are nothing less than the future of liberty, which means the future of civilization.

January 25, 2011

Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books.

Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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Published in: on January 25, 2011 at 2:28 pm  Leave a Comment  

Past Prosperity is no Gurantee of Future Earnings Success.

You should always question the indefinite continuance of past prosperity in your high dividend stock earnings.  Below are some examples for you to consider.  Do any of the stocks in your portfolio have any of these traits?
 
Companies with a single successful product that can lose market share rapidly as competition encroaches with new generic products.  Small biopharma stocks come to mind here.  Their successes will typically be short lived.  The stability of their earning power is constantly threatened.  US patent protection can't protect them in a worldwide economy.  Chinese drug factory owners don't care about American patent laws.  The generic drug manufacturers can sell their products to Canadian and Mexican distributors.  Those distributors can resell them to Americans trying to escape the ever rising drug prices caused by the evil Federal Reserve and health care fascism.
 
Any company that relies on a fad should not be counted on to maintain its earnings growth beyond the duration of the fad.  Crocs (CROX) and other fashion fads come are good examples of this.  Trendy products grow quickly to peak popularity and then quickly fade.
 
There will be an earnings explosion for companies that produce a good that the people calling themselves the government re-legalize.  The initial goods producers enjoy high prices until the supply catches up to demand.  Here are some examples of such transitory profits: rare earth metals mining, nuclear power plants, offshore oil drilling, and marijuana production (in several States).  This exact situation occurred in 1933 when a bunch of brewery stocks came back into the market after the US government's tyrannical prohibition of alcohol.
 
You should be wary of large profits in the stocks you own that are likely to be transitory in nature.  These transitory profits can cause you to overestimate the earning power of a company.
 
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Published in: on January 24, 2011 at 6:16 pm  Leave a Comment  

Dry-Bulk Shipping Extends 2011 Drop to 20% on Australia Floods

The news for existing capesize ship owners is not good.  Rents for the largest vessels (capesize) are down to $9,143 per day.  That is the lowest level since January 2nd, 2009.  To understand the magnitude of the loss of revenues to the ship owners consider the fact that rents averaged $110,000 per day back in 2007 and 2008.  Those high rents caused ship owners to order more capesized vessels because they looked profitable.  Then the global recession caused by Keynesian central bank actions from 2003-2007.  The recession revealed the malinvestments of the ship owners.  Rents fell in free fall until January 2nd, 2009.
 
Capesized rents increased over the course of the next two years as the Keynesian central bankers pumped trillions of counterfeited dollars into the world's economies.  The false recovery coupled with a glut of capesized vessels are now putting pricing pressure on capesized rents.
 
However, this is somewhat good news for Safe Bulkers Inc. (SB).  They entered into a shipbuilding contract for the construction of a Chinese-built, drybulk Capesize-class vessel of approximately 180,000 deadweight tons at a contracted price of $53 million, with an expected deliver of the third quarter of 2012.
 
One of the reasons that I like Safe Bulkers is that this vessel will be employed for ten years at a gross daily charter rate of $24,810, less 1.25% total commissions.  Most of their existing fleet along with the new vessels are locked in for several years.  Their earning power is foreseeable.  There ships will be bargains when worldwide inflation takes off from the trillions of dollars printed in late 2008 to the present.
 
 
Dry-Bulk Shipping Extends 2011 Drop to 20% on Australia Floods
January 19, 2011, 11:20 AM EST

By Alistair Holloway

Jan. 19 (Bloomberg) — The Baltic Dry Index, a measure of commodity-shipping costs, extended this year’s decline to 20 percent as Australian flooding curbed cargo volumes and new capesize ships joined the fleet.

The index fell 21 points, or 1.5 percent, to 1,411, according to data from the Baltic Exchange in London. Daily rents for capesizes that haul coal and iron ore led declines, dropping 4.1 percent to $9,143, the lowest level since Jan. 2, 2009. That means the biggest ships in the gauge are the cheapest to hire.

Australia’s Queensland state, producer of about half the world’s seaborne supply of coking coal to make steel, suffered its worst flooding in 50 years this month, shutting mines and railroads. The state today cut its coking-coal output forecast for the year ending June 30 by 10.5 percent. The capesize fleet’s carrying capacity will swell by 18 percent this year, according to fund managers and analysts surveyed this month by Bloomberg.

“It’s a combination of Australia, plus continued deliveries of capesizes,” Philippe van den Abeele, managing director of Castalia Fund Management (U.K.) Ltd. in London, said by phone. “We are down to levels that are really hurting owners.”

Capesize rates declined today for a 17th session, the longest streak since November 2008. The capesize fleet’s carrying capacity expanded by 23 percent last year, according to an estimate by Clarkson Plc, the world’s biggest shipbroker.

Negative Rate

The lack of cargoes in the Pacific Ocean has led some shipowners to cover part of clients’ costs in an effort to hire out vessels. Costs on the C11 journey for shipments to Europe from Asia were at minus $825 a day today, compared with minus $879 yesterday. The rate went negative on Jan. 13, a first for any dry-bulk voyage reported by the exchange, which publishes daily assessments for more than 50 routes.

The vessel surplus stems from orders placed in 2007 and 2008, when daily capesize income averaged about $111,000. Rates reached a record $233,988 in June 2008 before plunging 99 percent over the next six months to $2,316 as economies entered the first global recession since World War II.

Rates to hire panamax vessels that compete with the larger capesizes for coal and iron-ore cargoes and also ship grains fell 3.5 percent to a daily $14,166 today. Supramaxes gained 0.5 percent to $15,023 and handysizes rose 0.7 percent to $11,402.

–Editors: Dan Weeks, John Deane.

Link to the original article: http://www.businessweek.com/news/2011-01-19/dry-bulk-shipping-extends-2011-drop-to-20-on-australia-floods.html

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Published in: on January 23, 2011 at 4:16 pm  Leave a Comment  

The Surprising Price of Wheat

The Surprising Price of Wheat

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01/20/11 Tampa, Florida – I was intrigued by the title of the essay “The Cheapest Thing on Earth” by Nathan Lewis here at The Daily Reckoning.

I was interested because I thought that such a tasty trivia tidbit could come in handy, like this morning when I could have used it as a distraction when my kids were calling me “cheap” because I wouldn’t open up my wallet and give them another king’s ransom for some new dumb reason; I forget what, but there was a lot of crying and wailing about it, whatever it was.

This is where I could have said, to throw them off, “Cheap? What do you know about cheap? Do you know what is the cheapest thing on earth? Huh? Do ya? Huh? Do ya? Yes or no?!”

Instead of providing me with the answer, he starts off with a pop quiz! Damn!

And when I say “pop” quiz, I mean exactly that, as he says, “Quick: name an asset, publicly traded, that is the cheapest in a hundred years.” Pop!

I, of course, had no idea, and instead of admitting it, I quickly read ahead, hoping to immediately find the answer, only to be surprised when he taunted me. “Houses?” he asks. “Nope. Stocks? I don’t think so. Commercial real estate? Bonds?”

By this time I was pretty peeved, and getting bored, too, as I was sure that if it was, indeed, none-of-the-above, then this was going to devolve into something about investing in something obscure, the significance of which would elude me even if you explained it to me over and over again, in a company I never heard of, and, probably, in a country I never heard of, either.

Just before I gave up reading in disgust, he dared to taunt me one more time, the bastard! “Not too many, are there?” he asks.

At this final insult, my mind screamed, “Damn you! Damn you to hell! Tell me now, or I will fire off a flaming email that will be both highly insulting and vaguely threatening!”

I could almost hear his cruel, mocking laughter as he rudely called my bluff, and further insulted me and my false bravado with, “Now here’s a tougher one. Name an asset that is near the lowest price in all of human history.”

Arrgghhh! In all of human history? By this time I am angry and distraught, mostly angry, that somebody was exposing my stupidity and ignorance!

Suddenly, I am gasping for air and screaming that if he doesn’t tell me the answer pretty soon, I am going to start hearing those voices in my head again, and (now that you mention it) if I listen really closely, I can almost hear them already, way off in the distance, screaming to be heard and obeyed.

And we all remember how it turned out the LAST time that happened.

Obviously intimidated by the sudden revelation of the strange, powerful forces he is unleashing, he quickly announces, “The answer is: wheat”!!

I admit that I personally put those two final exclamation points at the end of his sentence as an emphasis, both to indicate surprise and to remind you that there are surely significant ramifications of this “price of wheat” thing, the horrors of which I never allow myself to even think, except during sleep, and then hopefully only when I am dreaming of being with some beautiful young thing, and maybe with some of her friends, too, who are all naked and sweaty and grunting and heaving and writhing around in some surreal bacchanalia of some kind, where the only interruption is the masses of people outside wailing and crying that “The price of food is up so much that we are burning things and looting grocery stores in mindless anger and desperation, and we are looking for the Fabulous Mogambo Seer (FMS) to pledge our undying allegiance and love because he predicted that this inflationary hell is Exactly What Would Happen (EWWH) when the stupid Federal Reserve kept creating more and more fiat money, creating astonishing amounts of money, creating outrageous amounts of money, creating So Much Freaking Money (SMFM) for so, so long that We’re Freaking Doomed (WFD)!”

I can reliably report, thanks to these dreams, that the sound of people starving to death is a real “mood killer,” perhaps on a par with the horror that wheat is now at the highest price ever, even going back to Biblical times, which is probably why those old Bible-era people were always “breaking bread,” and eating unleavened wheat crackers, and consuming miscellaneous cheap wheat products instead of having, you know, a few tasty tacos or maybe a pizza once in awhile, which I figure must have been because they were very expensive or something, which is why you never hear of anybody eating them.

Anyway, I immediately used this new information-as-icebreaker at the supermarket, and told the cashier, as she rang up my groceries, “I’ll bet you don’t know that wheat is at its lowest price in recorded history, but climbing fast because the horrid Federal Reserve is still creating So Freaking Much Money (SFMM) that the terrifying, heartbreaking misery and suffering of inflation in the prices of subsistence prices of items, like wheat, is guaranteed! Guaranteed, I tells ya!”

She just dragged my frozen burrito across her laser scanner, the irritating “beep!” noise only underscoring her complete lack of interest.

I went on, helpfully adding that they also said, “Actually, the entire agriculture complex, including corn, beef, pork and beans could fit this description.”

Again the lonely “beep!” as she listlessly ran my bag of Oreo Double Stuf cookies through the beam, her face never changing, not even to make the time pass with idle conversation about, for example, how much she adores cute old guys who buy such delicious cookies, or how my eyes twinkle so charmingly, or even to say how she noticed I kept looking at her boobs. You know; anything.

Giving up, I took my groceries in hand and parted without giving anyone my usual advice, which is to “Buy gold and silver right now, using whatever money you can glean from your stupid little job, because inflation is going to eat us alive, and a weird, distorted economy will make it even more hellish, all thanks to the horrid Federal Reserve continuing to create so much excess money. And buying gold and silver is so easy that a bunch of bored, underpaid worker-bees in a low-margin business like you can do it! In fact, it’s so easy that even morons say, ‘Whee! This investing stuff is easy!’”

The Mogambo Guru
for The Daily Reckoning

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The Mogambo Guru

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications.

Read more: The Surprising Price of Wheat http://dailyreckoning.com/the-surprising-price-of-wheat/#ixzz1BnH5UDUA

 
Wheatprice chart, 2000-2009
 
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Published in: on January 22, 2011 at 1:28 pm  Leave a Comment  

TIP OF THE WEEK – Use the Free Google Finance Stock Screener to Find High Dividend Stocks

Use the Free Google Finance Stock Screener to Find High Dividend Stocks

Jason Brizic

Jan. 21, 2011

Google Finance has an easy to use stock screener that I use to find high dividend stocks.  Go to:

http://www.google.com/finance/stockscreener

You can select amongst three exchanges: AMEX, NASDAQ, or NYSE.  Or you can choose ALL exchanges to screen from the largest pool of stocks.  You can also filter on Sectors.  This is really useful when you are looking for a high dividend stock in a particular sector to diversify your portfolio.

It starts with four default stock screening criteria: Market capitalization, P/E ratio, Dividend yield in percentage, and 52 week price change in percentage.  There are dozens of additional criteria to choose from.  To add criteria simply click the + Add criteria text and an organized list of additional criteria will be displayed.

Each criterion has two text boxes for you to enter minimum and maximum values.  You can also move two sliders on the distribution graphics that sit in between the text boxes, but I prefer the text boxes for their precision.

I use the following criteria to quickly screen for high dividend stocks:

            Market cap –                         Min 150M (I only want stocks with a market cap over 150 million dollars)

            P/E ration –                          Max 20 (That is the absolute max I’m willing to pay – ever)

            Div yield (%) –                     Min 6 (you know I like 6% or higher)

            52 wk price change (%) –  no min or max (the bigger the loss the better for the contrarian in me)

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

Published in: on January 21, 2011 at 12:30 pm  Leave a Comment