That Was The Week That Was-1st Week February

 The Dogs of The Dow is an Investment Plan that takes very little work and oversight.  Here is how it works- There are 30 stocks in the Dow Jones Industrial Average. Buy the 10 Dow stocks with the highest dividend yields with the poorest previous year performance. The theory is that in the following year investors will rediscover these fallen gems and bid them up. Along the way investors get some tasty yields. That’s the theory but sometimes the dogs remain dogs and even dogs reduce dividend payouts. But over time the dogs have provided reasonable returns for the patient investor and for those who don’t want to daily tinker with their investments. So how well have the Dogs done?

• 2007 Flat
• 2008 lost 31%
• 2009 Plus 17%
• 2010 Plus 15%
• 2011 Plus 12%
• 2012 Plus 10%

And who are the Dogs for 2013?

1. AT&T
2. Verizon
3. Intel
4. Merck
5. Pfizer
6. DuPont
7. HP
8. GE
9. McDonalds
10. Johnson & Johnson

But for me- the best way to play this is simply buy a mutual fund that does this for you. Interested in knowing more? Call me for Fact Sheet and current prospectus. 586 783 7080. Or- email…

2013 January Best Start for S&P 500 Since 1997! Barron’s called it back in October 2012. But Business Insider says Barron’s May Have Jinxed the Rally Recovery.

 

Apple Redux… So why did Apple share price tank? The fact that the company comes out with modest guidance and then crushes the numbers is well known. Experts have cited the company is dead, has lost its economic base and will soon be a footnote in the history of corporate economic failures. And what was it that Apple did? In the 4th Quarter sold a record 47.5 million iPhones (analysts wanted 50 million), the quarter previous they sold 37 million and would have sold more if supply constraints didn’t hamper their sales. They had record revenue in the 4th quarter of $54 billion and $23 billion of cash flow in the quarter! Here’s a peek at their unaudited summary data:

The company lost the equivalent of a General Electric in stock value in the sell-off.

Monday Cramer on Squawk Called Bullish 2013 Better than 2012! 

Markets broke their string Monday as soon as The Mouth opened his.

Casinos doing swell…Las Vegas Sands got a boost as Macau okayed adding another 200 tables. The Chinese island is a boon to MGM, Wynn and LVS.

Investors Who Crave Yield May Not Know What’s Inside Those Fixed Income Offerings. Be careful out there because the Wall Street factories are busy creating and shoveling out the door something called corporate hybrid bonds. According to Tuesday’s WSJ in order for these bonds to work they need to create an investor’s optical illusion. The bonds look like equity, are deeply subordinated (Remember when rules tossed out when Obama saved GM but croaked bond holders? This is something like that only everyone gets shafted if things don’t work right.) Also these hybrids have long or perpetual maturities and interest payments that can be deferred. Caution as 2015 spells when some of these bonds become eligible to call by their issuers. 

I constantly monitor funds and holdings and there appears to be weakness in certain fixed areas.

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Here’s some other stuff…

Tuesday Ford Announced Earnings and Blew The Doors Off…Share promptly sank and F closed off to $13.14. Analysts and Money Managers turned on the automaker because it didn’t address its plan for Europe which sucked over $700,000,000 of losses. The fact that Ford increased sales, dealers and exposure in Russia and China seemed to be lost on the ‘smarter than us’ folks. Still there were some that said Ford could trade $16 to $18 per share in 2013. Morningstar gives a fair value of $20 and a buy at $12. Shares fell under $13.00 and some called Ford the Apple of manufacturing.

Markets Tuesday Were Up ‘Cept Naz Which Was Even…Oil over $97 and Gold up, too. With indices approaching what Dow Theory would indicate a strong buy others worry that a major correction is in store for investors.  Doug Kass blogging at Minyanville suggests that the Market is overpriced. In the WSJ suggestions that the United States could get stuck with a lot of lousy bonds (namely their own) and take the Treasury years to get out from under it. I wonder what ever happened to that asset allocation adage that Central Banks bought and sold all debt from around the world and some they made money on and others they didn’t but in the long run they did okay? It’s not like the U.S. needs the money for college or retirement anytime soon.

Driving to a meeting last Wednesday and half an ear tuned to WJR and bad news coming from an author selling his book bashing the Obama administration, saying that we’re already in a double dip recession because GDP fell 1% in the fourth quarter! The only jobs created were the part-time and lowest paying. The author wailed, ‘We are doomed!’ And then we find GDP fell because of defense spending cuts and businesses putting fewer goods on warehouse shelves. There was also a decline in exports. Still Capital Economies called the GDP report the ‘best-looking contraction in U.S. GDP you’ll ever see.’ The truth is somewhere in-between with the economy in low gear but slowly trundling forward. Surprisingly consumers are seeing some income gains- a positive, stuff the wallet, after tax rate of 6.8%- something we haven’t seen in a long time. U.S. companies also contributed to investment in equipment and software at an increase of 8.4%. Still the lack of spending on defense will continue and be a forward drag on the economy. 

If you just listened to WJR talk  and  nothing else you would’ve … yeah, doing that!

Facebook Announced Numbers After Hours Wednesday. And shares promptly tanked and then moved up and down again…T’was a wild ride for FB shares as the company reported some great numbers but not great enough for the very finicky investors who punished and then re-thought so re-bought what they sold. 23% of FB advertising revenue last quarter came from mobile, where the future is. The thing that investors didn’t like was hearing that FB would increase by 50% expenses in 2013. However revenue did increase by 40% and revenue jumped to $1.59 billion for the 4th quarter alone. The company is still fine tuning its advertising program connecting advertiser to customer. Zuckerberg finished by saying that investors should be cautious as the company is not trying to maximize profits but build the best service and business over the long term. Shares finally closed off after hours at $30.17.  Getting a match between customer and advertiser will come. If Kroger can send me coupons on the products I buy the most of  at their grocery stores I am sure Facebook can create an algorithm that is dead solid perfect. 

Markets Taking a Break? Thursday things seemed to be doing well with indices up until the afternoon and ended with all off except for Gold up a few dollars.

Looking For Stock Names?

Morningstar offered up news that investors shouldn’t be giving up on Tech, just yet. It would seem to be one horror story after another in the tech sector. Bad news on Apple shares, Microsoft stuck in a rut and Cisco seems to not want to move at all. Intel is another giant that is ignored and the share price is where it was in 1998, except for a brief spike to $70 around 1999. Shares today are right about where they were when I had a 36 inch waist. Morningstar reports that the 10 largest tech firms have huge cash hoards and some pay very tasty dividends, so investors get paid while they wait. And, wait! But, Morningstar says they do like the following tech stocks and investors may want to research them a bit- Apple, Microsoft, Intel and Check Point.

Are You a Video Binger? I am. Netflix is betting there are more Bingers out there that care to admit. My binge is getting the CDs for the entire season on Game of Thrones and Boardwalk Empire and locking myself away for a weekend. Netflix is allowing viewers to binge on all 13 episodes of House of Cards, staring Kevin Spacey rather than parcel them out. This is the first step into original on-line TV programming for the streaming video company. They hope it’ll change forever the way people will view and for companies like themselves and Amazon. The company will also provide new offerings entitled, ‘Orange is the New Black and Hemlock Grove.’ Shares closed at $164.80 Friday.

Wonderful Way to Start The February! The jobs report was the catalyst Friday and investors chose to ignore that the percentage unemployed increased a smidge with about 157,000 new jobs. Revisionists insists the employed number will be higher when they recalculate. In the meantime the Dow was up 149 points, Naz ran up 37 points and even Gold and Oil joined the party moving up smartly.

Finally- Market Superstition When One of the Original NFC Teams Wins Super Bowl Good For The Market. Ravens were not one of the original- Colts were. Wiggle room is where we find it.

Questions? Call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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