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The Stingy News Weekly (06/27/2010)


"I've seen more people fail because of liquor and leverage - leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing."
- Warren Buffett


New @ StingyInvestor

Dividend investing
"By sticking to companies that have the means to pay high dividend yields, you not only get the added bonus of a regular paycheque from your portfolio (now electronically deposited in your investing account), but studies show that you'll likely enjoy a higher rate of return over the long run than the market typically provides."


Dividend growers
"Only a handful of stocks in the S&P/TSX 60 sport good five-year dividend growth records. Even fewer pay dividends that are well supported by earnings. I'll highlight four that pass both tests, and also happen to trade at modest price-to-earnings ratios."


Stingy Links

The cost of retiring at 66
"The state pension age looks set to rise to 66 in just six years' time, and may be extended far further -possibly to 70. Unions have condemned these "work till you drop" plans - but they shouldn't come as any surprise."


States of crisis
"Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP."


Niederhoffer on being wrong
"I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in life that are irreversible, that lead you into a path you can't get out of, and unless you have more than one escape clause, the adversary can gang up on you and destroy you. What else? I didn't have a proper foundation. I was not sufficiently private in my activities. I was playing poker with men named Doc. I must've made a hundred errors on that one, but those are five or six that come to mind."


What we should be afraid of
Just when I was about to go back into the water again ...


Chinese firms using back door
"When I asked Heckmann whether he would be leery of Chinese reverse mergers, he said that he wouldn.t avoid just reverse mergers, but all Chinese companies, because it.s simply too hard to determine the real numbers. One reason: He says he believes, from his experience, a primary goal of Chinese companies is tax avoidance."


Suing yourself
"Lawsuit arbitrage! Fantastic! So, see, the problem is that the shareholders ALREADY own the company. So when they sue the company, they are suing themselves. And the lawyers get rich in the process. Sweet."


Is Illinois the new California?
"Like California, Illinois hasn't balanced a budget in nearly a decade, and instead uses gimmicks and borrowing to close gaps. Like California, Illinois regularly issues bonds to pay for current government operations. But unlike California, Illinois has some of the country's least-funded public employee pension plans."


Something's wrong but you'll never know
"Knowing what you don't know? Is this supposedly the hallmark of an intelligent person? ... That's absolutely right. It's knowing that there are things you don't know that you don't know. Donald Rumsfeld gave this speech about 'unknown unknowns.' It goes something like this: 'There are things we know we know about terrorism. There are things we know we don't know. And there are things that are unknown unknowns. We don't know that we don't know.' He got a lot of grief for that. And I thought, 'That's the smartest and most modest thing I've heard in a year.'"


The fog of war
"Robert S. Mcnamera's own words about everything from world war 2, JFK, Vietnam and the Tonkin bay incident, the cold war and the Cuba crises. A must see."


The velluvial matrix
"The truth is that the volume and complexity of the knowledge that we need to master has grown exponentially beyond our capacity as individuals."


Why Amish businesses don't fail
"Want to find America's most successful entrepreneurs? Skip Silicon Valley and Manhattan; head to the rural Amish enclaves. Amish businesses have an eye-popping 95% success rate at staying open at least five years, according to author Erik Wesner's new book, Success Made Simple: An Inside Look at Why Amish Businesses Thrive."


Do politicians cause downsizing?
"This paper provides a new empirical approach for identifying the impact of government spending on the private sector. Using changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures, we find that fiscal spending shocks appear to significantly dampen corporate sector investment activity. Specifically, we find statistically and economically significant evidence that firms respond to government spending shocks by: i.) reducing investments in new capital, ii.) reducing investments in R&D, and iii.) paying out more to shareholders in the face of this reduced investment opportunity set. Further, we find that when the spending shocks reverse (through a relinquishing of chairmanship), most all of these behaviors reverse. Finally, we also find some evidence that firms scale back their employment, and experience a decline in sales growth."


Paid not to marry
"Sophia Constantinidou works as a teacher in a private school in Athens. She also has a more lucrative job: remaining unmarried. The 52-year-old gets 400 euros ($496) a month from the Greek government, part of her late mother's state pension. Under the current system, Constantinidou qualifies to receive the payment for life as the only surviving child of a deceased civil servant, provided she doesn't tie the knot."


So that's why
"In other words, investors often go along with the crowd because - at the most basic biological level - conformity feels good. Moving in herds doesn't just give investors a sense of "safety in numbers." It also gives them pleasure. That may help explain why market sentiment can change so swiftly, why true contrarians are so hard to find and why investors care so much about the "consensus view" on Wall Street."


Payback time
"Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
AT&T (T)44355
Verizon (VZ)14555
Pfizer (PFE)35255
EI DuPont (DD)32455
Merck (MRK)54155
Chevron (CVX)54544
Kraft (KFT)54344
Johnson & Johnson (JNJ)52244
Coca-Cola (KO)21144
McDonald's (MCD)21144
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
AT&T (T)44351.82
Merck (MRK)54151.85
Chevron (CVX)54542.59
Kraft (KFT)54342.63
Pfizer (PFE)35252.78
Travelers (TRV)55432.80
EI DuPont (DD)32453.11
Johnson & Johnson (JNJ)52243.33
Procter & Gamble (PG)33244.46
Exxon Mobil (XOM)33434.49
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Travelers (TRV)55389.3274.73
JP Morgan Chase (JPM)35148.7323.56
Merck (MRK)54544.1822.97
Kraft (KFT)54435.0419.47
Chevron (CVX)54483.5019.19
Pfizer (PFE)35516.5012.73
AT&T (T)44527.7912.08
Notes | More Info...


Top US StocksYieldV.R.Graham
AT&T (T)YYY
Chevron (CVX)YYY
Kraft (KFT)YYY
Merck (MRK)YYY
Pfizer (PFE)YYY
EI DuPont (DD)YY
Johnson & Johnson (JNJ)YY
Travelers (TRV)YY
Coca-Cola (KO)Y
Exxon Mobil (XOM)Y
JP Morgan Chase (JPM)Y
McDonald's (MCD)Y
Procter & Gamble (PG)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SP/DYield
Transalta (TA)14455
BCE (BCE)34455
CIBC (CM)42355
Sun Life (SLF)45555
Telus (T)43455
Bank of Montreal (BMO)43355
Shaw Comm Cl.B (SJR.B)31255
Husky Energy (HSE)34455
Power Corp (POW)35555
National Bank (NA)54355
Notes | More Info...


Value Ratio StocksP/EP/BP/SP/DVR
National Bank (NA)54352.21
Manulife (MFC)55542.48
CIBC (CM)42352.55
BCE (BCE)34452.67
Sun Life (SLF)45552.98
Telus (T)43452.99
Bank of Montreal (BMO)43353.03
Enbridge (ENB)52443.35
Husky Energy (HSE)34453.46
Bank of Nova Scotia (BNS)42343.54
Notes | More Info...


Graham-Lite StocksP/EP/BP/DG$dG$(%)
Manulife (MFC)55427.3267.08
Inmet Mining (IMN)55169.7151.22
Teck Cominco (TCK.B)55252.1248.83
Encana (ECA)55342.3424.43
First Quantum Minerals (FM)53274.7623.47
Cameco (CCO)53228.4320.99
Sun Life (SLF)45535.4020.07
National Bank (NA)54567.7619.24
Canadian Tire (CTC.A)45264.8516.62
Notes | More Info...


Top Canadian StocksYieldV.R.Graham
National Bank (NA)YYY
Sun Life (SLF)YYY
BCE (BCE)YY
Bank of Montreal (BMO)YY
CIBC (CM)YY
Husky Energy (HSE)YY
Manulife (MFC)YY
Telus (T)YY
Bank of Nova Scotia (BNS)Y
Cameco (CCO)Y
Canadian Tire (CTC.A)Y
Enbridge (ENB)Y
Encana (ECA)Y
First Quantum Minerals (FM)Y
Inmet Mining (IMN)Y
Power Corp (POW)Y
Shaw Comm Cl.B (SJR.B)Y
Teck Cominco (TCK.B)Y
Transalta (TA)Y
Notes...



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