A Napoleon Hill Thought

 

 

"If you want a job done promptly and well, get a busy person to do it. The idle one knows too many substitutes and shortcuts."

Most of us will never know our true capacity for achievement because we never challenge ourselves to perform at our best every day. This truism becomes apparent when you are presented with an opportunity that really interests you. No matter how busy you may be, somehow you will find the time to pursue it. Conversely, duties that have little appeal for you are easily postponed and eventually forgotten. Busy people are not procrastinators. They know that life, as John David Wright once observed about business, "is like riding a bicycle. Either you keep moving, or you fall down." The most effective people have a sense of urgency. They set deadlines and force themselves to establish priorities. Even if your activities don't usually require strict deadlines, set them for yourself. You will be amazed at how much you can accomplish in a short time - if that's all the time you have.

I shared with you in an earlier writing that I bought Twitter when it opened on the market.  A neighborhood friend and I were sharing on Facebook about the purchase, I had purchased it at $47 a share and it went down and he purchased it at around $43 a share.  At the time of the market close on 12/17/13 Twitter was setting at $59 a share, not bad for a play.  This week I’m starting to do some Dividend Capture’s for a few of my subscribers, here is a little information on how that works.  A stock may pay a quarterly dividend and have 4 ex-dividend dates in a calendar year.  The ex-dividend date is mentioned when a dividend payout announcement occurs. Even if a company is known to pay regular dividends, they must make payout announcement each time they issue a dividend. The ex-dividend date is the date that’s exactly two business days prior to the date of record. What this means is that the firm that is giving out the dividend establishes and figures out exactly which individuals are entitled to receive a dividend from the company.  If you’re one of the investors that purchases the stock before this specific date then you are entitled to the dividend when it comes out.  If you purchase the stock on this specific date or the time after it, then the previous owners are entitled to the dividend payout when it arrives. He will receive the dividend payout in cash even if he doesn’t hold the position at the time of the dividend issue. What is important is to know if you are holding the shares prior to the ex-dividend date, not when the dividend is paid.

Investors often ask “why own the stock for the entire 365 days in the year when technically you can own it for 4 days in the year to capture the dividends?” So one of them has $10,000 to invest and the other one has $1,200.  Because on the ex-dividend date the stock will periodically lose the amount of the dividend per share the one investing the $10,000 for a particular stock will make after all is said and done around $700 and the one investing in the same stock with $1,200 will make around $90.  Not bad for a quick safe 4 day investment.  There are a few people that do this monthly with around $4,000 and average making around $10,000 or better a year with their consistent $4,000 investment two to three times a month.

Safe Investing

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.

Suburban Trader

 

If you want to make quick money in the market other than investing in guaranteed money from dividends you could also look at trending.  One of the sleeping trends now is Pharmaceuticals.  Pharmaceuticals are slotted to make big swings after the ACA, (Affordable Care Act), gets into full effect.  The reason is due to more people having access to insurance there will be a doubling affect on the purchase of prescription Meds, just our thoughts at Suburban Trader and we are in this week with a pick for our subscribers.  The stock is at $68 a share, but, I slept a year ago with several opportunities to by Toyota at $6, $20, $30, $60 and finally $80 a share.  I reluctantly bought some shares at $82 a share and it is trading now at $128 as of last week.  High or low it is not the price that I'm concerned about, with this strategy I'm only concerned about the trend.

Timeless Advice from Jesse Livermore, from the blog A Wealth of Common Sense.

“Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went for a tuition fee. A man has to have experience and he has to pay for it.” - Jesse Livermore

Reminiscences of a Stock Operator by Edwin Lefevre is an investment classic that often finds its way onto the short list of best investment books ever written.

It’s not a get rich quick or how to kind of book. It simply chronicles the investing exploits of one of the most famous Wall Street traders of all-time, Jesse Livermore. It’s amazing how well this book holds up today considering it takes place during the late 1800s and early 1900s.

The book was actually first published in 1923.

Livermore made his first trade at the ripe age of 15. He started small but ended up making and losing millions throughout career as a professional trader.

My biggest takeaway from this book isn’t just that Livermore was an insanely smart trader (he was); it’s that his biggest advantage over the other side of his trades was that he understood human nature.

And even 100 years or so later, human nature still rules the markets and can lead to manias and panics. The structure and technology of the markets is different, but really it remains the same because emotions still rule the decisions of investors.

Here is some of the timeless advice from the book along with my thoughts:

Speculation is a hard and trying business, and a speculator must be on the job all the time or soon he’ll have no job. Being a full time trader is extremely difficult to pull off. Being a part time trader is impossible to pull off.

Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. The players may change but not their motives.

Of course there is always a reason for fluctuations, but the tape does not concern itself with the why and wherefore. The financial media loves to look for reasons that the market moves up or down on certain days. Most of the time there’s no explanation.

There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play.  Doing nothing is a perfectly legitimate strategy the majority of the time with your investments. Livermore was a trader and even he knew that inaction worked most of the time.

It takes a man a long time to learn all the lessons of all his mistakes. I make mistakes all the time, but I’m trying to learn from them. Complex financial markets lead to mistakes no matter how smart or experienced you are. You can be wrong just don’t stay wrong for too long.

There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn! Learning what not to do can be more important than learning what you do need to do to have success.

But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. All a man needs to know to make money is to appraise conditions.Markets trade in cycles and sometimes they don’t care about external events.  Valuation, trends, cycles and sentiment determine the direction of the market.

After spending many years on Wall Street and after making and losing millions of dollars I want to tell you this: It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!Patience is a key virtue for investment success.

One of the most helpful things that anybody can learn is to give up trying to catch the last eighth - or the first. These two are the most expensive eighths in the world. Investors get themselves in trouble by becoming greedy after large gains and fearful after large losses. Don’t fall into this trap by making big moves at the extremes.

But the average man doesn’t wish to be told that it is a bull or bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. Investors love looking for hot stock tips and market timing signals. They don’t exist on a consistent basis. Tactics are context dependent and they don’t last for long.

As a rule a man adapts himself to conditions so quickly that he loses the perspective. He does not feel the difference much - that is, he does not vividly remember how it felt not to be a millionaire. This line of thinking keeps people from saving more as they make more money. Keeping a consistent lifestyle is the key to saving.

Man will risk half his fortune in the stock market with less reflection than he deviates to the selection of a medium-priced automobile. It’s funny, because it’s true.

A man may beat a stock or a group at a certain time, but no man living can beat the stock market! Price is the ultimate judge and jury of the market. Don’t try to be outsmart than the market, especially over the short term.

The professional concerns himself with doing the right thing rather than with making money, knowing that the profit takes care of itself if the other things are attended to. Another example of the power of process over outcomes. This is one of the hardest things to do as an investor because you can clearly see your wins and losses, but doing it the right way is the best way to increase your probability for success.

Source:  Reminiscences of a Stock Operator

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.

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It is little wonder, therefore, that many people meet with failure throughout their lives, if we stop to consider that nature forces human beings to absorb and become a part of their daily environments. The most important part of any man's environment is his association with other people. If this association is not one of harmony, the inevitable result is failure.

Successful men choose their daily associates as carefully as they choose their food, and they make sure that their environment is harmonious and thus constructive and beneficial to themselves and to others as well. And they spend no time in the company of people who do not contribute something to their welfare!

"Selfish!" some will exclaim. No, not necessarily selfish. Particular would be the better word.  Successful men know that their lives are influenced by those with whom they associate most intimately, and they so arrange their human relationships that they are influenced in a beneficial way.

It is every man's duty to achieve personal success, and every normal person desires to be successful in his chosen occupation. Inasmuch as success is inseparably associated with human relationships, it is an important part of a man's duty to choose his associates with great care.

The successful man may have sympathy for the man who is a failure, but he will not permit it to contaminate his own mind with the defeatist's mental attitude. He will recognize that it would be better for him to suffer loneliness than to associate intimately with those whose minds are contaminated with thoughts of failure and distress

Every great accomplishment began with the germ of an idea in the mind of a great person, then was shaped for practical usefulness and finally transformed into reality. Make your mind a fertile ground for ideas through constant study and learning, and condition through constant practice to discipline yourself to follow through on your good ideas. The most brilliant concept in the world is only a dream unless you take action. Even a mediocre idea that is put into practice is far more valuable than a flash of genius that languishes in a fallow, undisciplined mind.

  

To your Blessings and Success

Annuities cap your Income potential!!

Annuities are mostly sold to people on the notion of safety, and they guarantee your income. If the market goes down, you can't lose money. Now that sounds nice, however, does anyone realize first of all how expensive they are.  Currently, the average annual fee is around 2.28%. Not only is that high, but it's cause has to do with the fact that annuity salespeople receive high commissions.

On top of that, your money is locked up and your gains are capped. (This is a feature that many people don't understand.)  For an example, even though the stock market is up 18% this year, with an annuity, your gains could be capped at 5%.

If you had taken out a variable annuity with 5% caps in 2009, you'd have missed out on over 129% gains during the past four years. Not to mention, if you haven't noticed, Wall Street's good years have always made up for its down years, and then some, to date.

I have a friend whose Husband passed and a friend of hers talked her into an annuity and I was floored at what she said he had told her, but I couldn't get her to listen to me.  There is one form of an Annuity called an ALDA let me share with you the basics of an ALDA. Like a regular annuity, it will pay a defined amount of money over a specified period of time. However, the ALDA will pay out later in life. So for example, you can be 65 years old, pay a lump sum today and start collecting the income stream starting at 80.  The ALDA will be cheaper than a regular annuity because the income collected will likely be less than if you started immediately at 65. But if you die before 80, the insurance company keeps the lump sum payment. You don’t collect anything!

In other words, you’re placing a bet with the insurance company that you’re going to live long enough to recapture all of your lump sum payments in the form of monthly income. As you can see there’s a reason these executives make millions and fly private jets – because they bet the right way more often than not.  Now that doesn’t mean you can’t live to a ripe old age. It just means that financially, an annuity of any kind isn’t designed to work out for your benefit. It was created to generate profits for the insurance company.

I've never been a fan of annuities or any investment where I'm not somewhat in control, or at least have knowledge of what is going on.  That is one of the reason's I share information that I've gained on the Suburban Trader web site and blog.  From the information and knowledge that I've gained over the years that is why the portfolio at Suburban Trader is around 90% invested in stocks that pay handsome dividends.

One interesting book to read is Get Rich With Dividends by Marc Lichtenfeld; it's just one of many but may be a good start for some of our readers.  But let’s get on with the information. If you don’t need the income stream for 10 years or more, buy quality Perpetual Dividend Raisers – companies that raise their dividend every year – and reinvest the dividends.

Here’s the way it would work:

Let’s say you buy a portfolio of quality Perpetual Dividend Raisers with an average yield of 4% and average annual dividend growth of 10%.

If the companies continue to raise the dividend by an average of 10% every year, as we've stated that they have over the past 10 years, and the market generates its historical average return, a $200,000 initial investment will be worth $635,549 in 10 years.

If at that point you need the income stream, you simply stop reinvesting and instead collect the $28,808 per year in dividend income. That is likely 50% more than you’d receive if you invested the same $200,000 in a deferred annuity.

In 15 years, the $200,000 portfolio is worth $1,179,868 and spins off $59,968 per year in income. That’s way better than giving an insurance company $200,000 at 65, hope you make it to 80, and then collect less per month than you would investing in quality dividend stocks.

Even better is that as long as the companies continue to raise the dividend, you’ll get an increase every year, something that won’t happen with an annuity.

So if you’re collecting $59,968 at age 80 and the companies you’ve invested in are raising the dividend by 10% per year, at age 81, you’ll collect $65,964. The next year you’ll receive $72,560, etc. And when you pass away, that million-dollar nest egg will go to your heirs instead of an insurance company’s bottom line.

As you can see, that investing in Perpetual Dividend Raisers is the least expensive method of investing. You get to hang on to and compound your savings rather than pay for an insurance executive’s salary. Furthermore, you’ll make more money than you would with an annuity, and, importantly, your assets will stay with your family.  Marc also writes an article for Seeking Alpha.

 There are hundreds of companies that have been raising their dividend for years. Some, like Procter & Gamble (NYSE: PG), have done so since Eisenhower was president. Others, like Texas Instruments (Nasdaq: TXN), have a 10-year track record.

Also, it would afford you the opportunity to participate in the considerable upside that stocks offer. Is there some risk? Of course, but over 10-year periods, stocks have gone up 91% of the time.  In fact, the only time stocks did not rise over 10 years was if an investor sold during the heart of the Great Depression or Great Recession. The average increase over those 10 years (including the losing years) was 128%. Does an annuity do that?  In actuality, stocks that raise the dividend every year have never been down over 10-year periods, not even including the Great Depression, for which the data was not available. But that does include the Great Recession. In fact, if you sold at the end of 2008, right near the bottom of the market, you still made 40%.

Stocks, particularly Perpetual Dividend Raisers, are not as risky as people think when you're talking about the long term. If you have a 10-year or longer horizon, it's riskier not to be in stocks as your money won't grow and keep up with rising prices.

 

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.

Suburban Trader

 

One of the major benefits of investing in dividend paying stocks is their constant cash flow. The cash received from the dividend payments returns investors with a certain return despite what happens to the stock market overall.

 Inflation?

Inflation occurs when a currency becomes worth less. This happens naturally in economies around the world. In the United States, the inflation rate is measured by the consumer price index, referred to as the CPI. The CPI measures the cost of a “basket of goods” each month. Over time, the cost of the goods will slowly rise. According to the Bureau of Labor Statistics, the government organization responsible for measuring the CPI, inflation in the United States has ranged from -2% per month to slightly over 4% per month (at an annual rate) over the last ten years. Other than in the year of 2009, however, it has always trended upward.

 Example of Inflation

Assuming a 3% annual inflation rate (this is an arbitrary number chosen for this example, it is not based on the current inflation rate), the cost of everything you buy is going to rise by 3% per year. If a loaf of bread cost $1.00 at the beginning of the year, it will cost $1.03 at the end of the year. While $0.03 doesn’t sound like a huge number, imagine if you have an inflation of 3% over the next 20 years; your loaf of bred will cost $1.81. Inflation has the reverse effect on financial instruments. If you have a dollar at the beginning of the year and leave it in your wallet, it will still be worth a dollar at the end of the year. However, you will only be able to buy what .97 cents would have bought you at the beginning of the year.

Investing in Dividend paying stocks vs Inflation

This rate impacts your investments as well. If you own shares of a non-dividend paying stock that rises 3% over the year, on the surface you have made a 3% return. 3% is better than no return, but did you really earn 3%? In the situation above, based on a 3% interest rate, you actually came out even. Your 3% gain was cannibalized by the inflation rate.

If you own shares of a dividend paying stock, the situation is different. The dividend acts as a hedge, or protection, against inflation. If you own a stock that pays a 2.5% annual dividend and rises 3% over the year, you have earned a 5.5% annual return. After subtracting 3% for inflation, you have earned a 2.5% annual return. The dividend accounted for your entire return over the calendar year.

Natural Gas

According to Commodity HQ, as fracking continues to develop, and with new reserves being discovered on a daily basis, the world has watched natural gas production surge. Though still a non-renewable resource, natural gas burns cleaner and is cheaper than crude oil. As the world looks to replace dated energy sources, natural gas figures to be an increasingly significant commodity. At the forefront of the NG movement has been the U.S., as its presence in the natural gas world has continued to skyrocket in recent years.

The U.S. is now king of the gas world. In 2011, the country produced 62.7 billion cubic feet per day (bcfd), a record figure. That record was shattered in 2012, when the U.S. showed 65.7 bcfd for the 12 month period, an increase of 4.8% from the prior year. That figure also accounted for approximately 20% of natural gas produced worldwide. For 2013, the U.S. is already on pace to show another production record.

HYPERLINK "http://commodityhq.com/wp-content/uploads/PD-Natural-Gas3.jpg"As production has surged, prices for the commodity have been battered, keeping something of a ceiling on NG. While this has hurt some traders and bottom line revenues for major producers, it has translated into lower energy bills and more money in the pocket of the consumer. The excess in supply has also led to speculation that the U.S. will begin exporting NG to foreign countries as some of the price differentials have painted a prime opportunity.  “US natural gas producers have begun eyeing these markets due to the large differential in price between US natural gas and LNG prices in certain countries” writes Robert Rapier. Rapier goes on to explain that transporting NG products overseas costs approximately $6/MMBtu. Last year saw a price difference between the U.S. and Japan of $14/MMBtu and $8/MMBtu for European markets, leaving plenty of room for U.S. producers to turn a handsome profit.

For our members this week we have looked at several of these companies for exportation of the fuel and have chosen one to place in our portfolio that is poised to do well in this market in the coming years.

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.

Investment Strategies

Is there Money Overseas?

While pondering on what to share this week I remembered this  stock that I placed in our portfolio last week to give us some overseas exposure.  It is a stock in a country where most of their companies pay out dividends and at present it has a 10.64% dividend yield.  Dividends from overseas is a great way to diversify some of your holdings by purchasing out of the United States while yet still being able to purchase them on our Exchange. 

Follwing is an article that I would like to share from the Wall Street Journal by Ms Reshma Kapadia and her findings on Overseas investing.  She agrees with me that the stocks that pay the biggest dividends on the market today probably aren't where you think. They're mostly outside the U.S.

Nice steady dividends have taken on a newfound shine in recent years. A company's ability to pay a dividend is "an indicator of management's confidence in the future of the business, which is really important in this climate," says Causeway International Value co-manager Harry Hartford.  Fund managers who focus on dividends and other investment pros say many foreign companies pay bigger dividends than U.S. businesses today.

Companies in Europe have a culture of favoring dividends over buybacks, and an investor base that demands a payout. Companies in Asia and emerging markets in general, meanwhile, increasingly see dividends as an important tool to attract capital and boost confidence in their prospects.

YOU ASK, HOW DO THEY COMPARE

So, the 2% average dividend yield for companies that make up the Standard & Poor's 500-stock index may look attractive compared with the recent yield of 2.6% on the 10-year Treasury bond.

But the average payout for the MSCI World index excluding the U.S. is almost 3%; dividends for companies in the euro zone average 3.5%; and in so-called frontier markets—places like Nigeria and Indonesia, with less liquidity and greater risk than more established emerging markets—the average is 4.1%.

Investment professionals say foreign stocks also have a better outlook for dividend increases, helped by earnings growth prospects—especially in emerging markets—and the recent adoption of dividend policies in parts of Asia.

Over the past fiscal year, dividend growth for the world outside the U.S. has averaged almost 11%, with Europe coming in at nearly 16%. That compares with about 5% growth in the U.S., according to MSCI.

One way to profit from the higher rates available abroad is through international dividend funds. In addition to bigger dividends, they offer an income stream from a geographically diverse base of companies, some of which operate in markets not affected greatly by the recent global downturn. Some funds also include emerging-markets and frontier-market plays.

CAVEATS

While there seem to be plenty of downsides to overseas dividends, including currency fluctuations, which can dent the value of a payout if the dividend's base currency falls in relation to the dollar. Some funds hedge against this risk, though. Foreign companies also have a tendency to issue special dividends when profits are exceptional or the company has amassed a heap of cash, which can muddle investors' efforts to determine normal yields.

Another danger: Many foreign companies link their dividends to a percentage of earnings, meaning dividends can fall abruptly when earnings do. Fund managers look for companies that set a floor for their dividends. Still, overseas dividend income streams can vary more than their U.S. counterparts.

With all of that being said there is still money to be made in the Overseas Market with dividends.  Another good place to look at Overseas involvement in dividend paying companies is in the Emerging Markets area.  Dividends are probably not the reason many investors look for opportunities in emerging markets, but there are plenty of good payouts to be found.

"In some of these markets, information in companies is difficult to obtain, so when a company pays a dividend it speaks volumes about management's views and credibility," says David Ruff, manager of Forward International Dividend. His fund has shares of Turkish dairy Pinar Sut Mamulleri Sanayii AS, yielding nearly 10%, and Nigerian Breweries PLC, paying about 5%.

Shares of companies in emerging markets can be volatile when liquidity is poor. But investors have been moving into countries like Indonesia and Thailand where consumer spending is on the rise.

Some of Thailand's biggest companies pay yields of 5% to 6% and appear likely to increase those, says Mr. Harriss. Thai companies make up 15%, the third-largest weighting, in the Guinness Atkinson Asia Pacific Dividend fund.

The company that we added to our portfolio is a Chilean based company that is traded on the NYSE and it has been paying dividends since 1990.

Of course if you don't have the time, we've done all of the leg work for you with a money back guarantee at Suburbantrader.info

May your investing be profitable.

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.

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