Since several banks have been taken over by the Federal Deposit Insurance Corporation (FDIC), many depositors who had limited their accounts to the $100,000 guarantee have been taken by surprise to find the funds are not immediately available for withdrawal, sometimes only learning that fact after waiting hours in line.
It is a peculiarity of government to sometimes punish the innocent with a very logical bureaucratic nuance. In this case, depositors should be aware the FDIC will indeed make good on its promise. The problem is that all accounts with more than $100,000 are frozen until they can sort out who is due what.
Since a $100,000 account can become larger due to collected interest, access to money is held up even if the overage is by a small amount. However, if the account is smaller, then there is no question and the money can be released.
So although funds are not at risk in the long run, in the short run, access may be restricted. Therefore, you may find it safer to keep $99,000 in your account than $100,000, or you should have all the interest automatically deposited in another account so you do not go over the limit.
All of this is not material except in the most extreme of circumstances. On the other hand, that is when a delay in access to your funds is also the most critical.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
Nucor Corporation (NYSE: NUE) - This is one of the world leaders in the idea of mini-mills. This smallish steel producer prides itself on running a tight ship, pays a dividend and has a P/E under 9. The steel industry has been volatile in recent years with many mergers and acquisitions. NUE could be a takeover target as the industry continues to consolidate. In the mean time, at Friday's closing price of $51.6, it was paying a 4.05%yield and is near its 52 week low, having dropped from a high of $83.56.
Precision Drilling TR (NYSE: PDS) - This Canadian supplier of gas drilling equipment and manpower is probably the least well known of the companies in this group. It has dropped off its highs with the recent sag in gas prices and may well be a bargain again although not the bargain it was when I posted Chasing Value: Precision Drilling for 10% yield. At Friday's closing price of $21.35 it was paying a 7.1%yield and that is still a wonderful bounty even it the stock only appreciates a little.
The following two-part article puts forth ten stock ideas that I believe would be better off in your investment portfolio than one comprised primarily of Certificates of Deposits (CDs) or bonds, or even government treasuries. This is not to say that CD's do not have value or offer some level of security, but they are long term losers.
A basket of high yielding-high quality stocks can offer a higher return, better tax advantages, and the potential of significant appreciation for those with a long time horizon. Five year CD earning 4%, or a utility stock? I pick the utility every time.
My wife sent me the following quote from Ambrose Redman that I thought would be worth sharing with readers: "Courage is not the absence of fear but rather the judgment that something else is more important than one's fear."
It seems that might be extended to one's view on investing as well. What is really important, the short term or the long term, growth or value, the promise of riches or the hope for stability? In each case I would favor the latter over the former and this brings to mind one of my pal Warren's lessons: Do not buy a stock unless you would be happy to own it even if the market was closed for ten years.
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven
Washington Mutual(NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.
Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.
Well, the market was in the dumps yesterday and is even worse today. So this may be a good time to check on my list of stocks for those looking for equities that are stable enough to ride out this bearish storm.
The standard for comparison will be the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The following are the five stocks with closing prices from July 1.
1) Johnson and Johnson (NYSE: JNJ) -- when recommended the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $71.70 -- up 11.44%
2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended the stock closed at $45.80 and paid a 1% dividend yield. It finished at $46.41-- up 1.3%.
3) Chubb Corp. (NYSE: CB) -- when recommended the stock closed at $49.01 and paid a 2.64% dividend yield. It finished at $48.39 -- down 1.26%.
After the market closed last night, with the Dow Jones Industrial Average rebounding from Monday's notable drop and ending the trading day at 11,397.56, up 266.48 (+2.39%), I posted Serious Money: 10 finance stocks as the market bounces. This is the follow-up post listing the full pool of speculative stocks that as a group I believe will beat the overall market in the next 12 months.
The prediction business is thankless and the speculative business is even worse; it is often painful. I usually refrain from this activity but today I play the contrarian in a Sir John Templeton (RIP) sort of way, jumping into the stock market's worst performing sector with both feet. I believe the market is at or near a bottom and this summer is the time to buy.
Looking for a break in the clouds, yesterday I started choosing ten stocks knowing that three or four may go to zero, a few more will survive with modest gains, and three or four will rise, not returning to their old glory soon but more than covering the ones that fail. The first four picks have been bleeding all over Wall Street for a year now and the blood-letting is not done yet.
Initially I was looking for stocks that had fallen at least 70%. After reviewing my figures, I have compromised and changed that to 63% so that I could include some of the major companies like Citigroup Inc. (NYSE: C) that are broadly held and have strong reader interest. Prices are as of July 29, 2008.
Today the Dow Jones Industrial Average bounced back from yesterday's poor showing. It ended the trading day at 11,397.56, that's plus 266.48(+2.39%) returning more than it had lost only 24 hours ago.
There are plenty of prognosticators explaining why this happened and so I am not going to join the crowd this afternoon with my own version. Leave it to say we are in a period of uncertainty where investors and traders alike are a bit jumpy. We did have a 5.4 magnitude earthquake today in Southern California, only fitting for this type of market.
In the meantime I have been wondering how to take advantage of the lousy situation in the financial sector of the market. How can I maximize my gains and control risk at the same time? I guess we are all trying to do this, but few will appreciate my contrarian, 'no guts no glory' approach.
I think you have to be buying banks and investment companies and I have decided that ten is the right number. Sir John Templeton (RIP) is the catalyst for this notion. I am already on record (Serious Money: More signs the market has bottomed) that this is the time to be selectively buying and 'my pal Warren' said as much at the Berkshire Hathaway (NYSE: BRK.A) annual meeting when he suggested the financials have seen the worst of the storm.
Some may view the sun as rising while others see it setting. Before you send me your rant that the pain has just begun and I am foolish to believe the recent market upswing is anything but a short term reprieve, let me share a few thoughts.
Today Wachovia Corp (NYSE: WB) reported a loss of $1.30 a share compared to the average analysts' guess of $1.27 a share. WB lost almost $9 billion, is cutting the dividend and will layoff 6,400 employees. All bad news -- and still the the stock and the DJIA are up!
At the same time, oil is trading down about $4 a barrel during the busiest driving time of the year because people are actually conserving gas. The market is working. It should also be noted that after the Bush administration spent over seven and a half years stating various preconditions to establishing relations with Iran, last week they decided to send an envoy and start a dialog. It may be good or bad politics depending on your view -- but it is only good for the stabilization of oil prices.
Updating the story with the final numbers heading into the week end. The market looked sad again today, so I thought I would spot-check Serious Money: Five stable stocks for troubled times, to see if my picks, (suggested watchlist considerations) were holding up...so far so good, sort of...
The standard for comparison will be the Standard & Poors 500 Index, which closed on June 30, 2008 at 1,280.00. The following are the five stocks with closing prices from July 1.
1) Johnson and Johnson (NYSE: JNJ) closed at $64.34 and pays a 2.89% dividend yield. (NOW $66.53 -- up 3.4%) finished at $66.26 -- up 2.98%.
2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) closed at $45.80 and pays a 1% dividend yield.( NOW 42.58 -- down 7%) finished at $41.78 -- down 8.78%.
3) Chubb Corp (NYSE: CB) closed at $49.01 and pays a 2.64% dividend yield. (NOW $47.51 -- down 3%) finished at $47.56 -- down 2.96%.
After seeing the interest in yesterday's Serious Money: Five stable stocks for troubled times, I decided to track the stocks on a quarterly basis to see how they hold up over time (otherwise, what would be the purpose of discussing them in the first place?).
I said that all five have shrewd, conservative management teams and have been in the right place, at the right time -- and prepared. The standard for comparison will be the Standard & Poors 500 Index which closed on June 30, 2008 at 1,280.00. Although my original story was published yesterday, I will be using the second quarter end point for my five stocks as well.
GM stock closed yesterday at $12.81 but today traded down to a new 52-week low of $11.21; as of 1:15, it is at $11.51, down nearly 10%.
GM is trading at a 30 year low. "Today's drop came after a Goldman Sachs analyst cut his rating for GM to "Sell" from "Neutral" and his price target to $11 from $16, saying things could still get worse for the North American automotive industry as a whole."
I wonder if he read my post yesterday . . . probably not. I am not a big fan of analysts as a group but this did not take a crystal ball. Barron's should do a follow-up story explaining how their crystal ball got so fogged up.
A recent Barron's had a cover story featuring General Motors (NYSE: GM) which I have been pondering for a while. Somehow the story did not get me all that excited despite the boldness of the headline reading "BUY GM."
More attuned to the words that followed -- "GM is a risky bet" -- I wondered why they would not feature something with possibly equal potential and far less risk. If you read the journal cover to cover, you might have taken note of the fact that there were two articles highlighting General Electric (NYSE: GE).
In the first, Michael Santoli extols the virtues of owning GE compared to a 10 year Treasury note which offers security but no upside potential. He mentions the high yield, low P/E, strong businesses and the fact that current CEO Jeffrey Immelt bought shares in the open market for $3.5 million.
It's time to make some major changes, something I have said before. I am not the first to suggest this and I am quite sure I will not be the last. General Electric (NYSE: GE) needs to take some serious action to add shareholder value. Apparently, Jeffrey Immelt was very embarrassed after last quarter's earnings announcement, when the company reported disappointing earnings following Immelts' own earlier statement that they would hit their targets.
After GE sells its kitchen and laundry appliances, which is on the block now, it will still own business-producing aircraft engines, locomotives, electric distribution and control equipment, generators and turbines, and medical-imaging equipment. GE is also one of the preeminent financial services companies in the U.S. Commercial finance, consumer finance, and equipment financing and leasing together comprise the company's largest segment. Here is the formal list from the company web site:
I have been following General Electric (NYSE: GE) for years, believing it was a sadly underperforming stock with high quality businesses but a lackluster management team who at least from outward appearances are just caretakers. They have added almost no shareholder value in ten years in the form of stock appreciation and in fact have gone down lately, as the chart indicates.
Although I have been interested in the stock, I was always able to find something more compelling and I always wanted a bargain. When it was $40, I had a buy order in at $36, then lowered it to $34, then $32, and finally $30, where we bought in on Friday. Today it touched a 52-week low of $29.78 but is trading over $30 as of 2:30. (UPDATE: closing price $30.33 up $0.27, +0.90%)
These past weeks, the deteriorating stock market that responds to expectations of slower or no economic growth in 2008, continued high oil prices, sagging housing market, high debt consumers and the financial industry quagmire, got me thinking about "my pal Warren" again.
It's times like these, when we are looking for a solid footing in the investment world, the few people with positive track records -- measured in decades, not years -- are worth examining once more.
Last year I started a series of stories on Warren Buffett's very basic investment cornerstones. Buffett's Berkshire Hathaway (NYSE: BRK.A) has such a track record. Today, given how many companies are up to their penthouse executive suites in debt, I thought I would continue.
The subject of debt is a simple one. Companies that carry excessive debt on their books are not as good as companies that have cash sitting around. Debt can be a drag on earnings, reduce the company's flexibility and opportunity in a slowing economy, and has all the negative impacts to a company that it does to an individual household.
Since several banks have been taken over by the Federal Deposit Insurance Corporation (FDIC), many depositors who had limited their accounts to the $100,000 guarantee have been taken by surprise to find the funds are not immediately available for withdrawal, sometimes only learning that fact after waiting hours in line.
This is a continuation of 
The following two-part article puts forth ten stock ideas that I believe would be better off in your investment portfolio than one comprised primarily of Certificates of Deposits (CDs) or bonds, or even government treasuries. This is not to say that CD's do not have value or offer some level of security, but they are long term losers.
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
Well, the market was in the dumps yesterday and is even worse today. So this may be a good time to check on my list of stocks for those looking for equities that are stable enough to ride out this bearish storm. 
After the market closed last night, with the 
Today the 
Some may view the sun as rising while others see it setting. Before you send me your rant that the pain has just begun and I am foolish to believe the recent market upswing is anything but a short term reprieve, let me share a few thoughts.
Updating the story with the final numbers heading into the week end. The market looked sad again today, so I thought I would spot-check 
It was only yesterday that I posted 
It's time to make some major changes, something I have said before. I am not the first to suggest this and I am quite sure I will not be the last. 
These past weeks, the deteriorating stock market that responds to expectations of slower or no economic growth in 2008, continued high oil prices, sagging housing market, high debt consumers and the financial industry quagmire, got me thinking about "my pal Warren" again.
Apple (AAPL) iTunes loses artists - an antitrust problem?
U.S. Q2 GDP of 3.3% likely to be fleeting
Cramer on BloggingStocks: Don't bother with the private-equity chatter 
