The Crowded 3% Club

The 3% club is getting crowded: Dividend investors beware

Excerpt:

There is now an extraordinary crowding of big U.S. stocks around the 3% dividend yield level, a threshold that seems to exert a gravitational pull as investors bereft of easy sources of income bid up equities until they yield just a bit more than the 10-year Treasury note. (A stock's yield, calculated as the annual dividend payment divided by price, falls as shares climb.)

But too many investors may implicitly be betting that these bond-like stocks will act like stocks in a low-rate bull market, and like bonds in an equity downturn. It won’t likely work out that way. If the stock market remains strong, these are unlikely to be the areas that continue to thrive. If it hits the skids, such stocks will not offer much of a buffer.

Of the 422 stocks in the Standard & Poor’s 500 that pay any dividend at all, 58 of them now have yields within a narrow band between 3.3% and 2.7%. This roster spans virtually all industry sectors, with the expected over-representation of consumer-staples names but plenty of energy, real estate investment trust, industrial and healthcare entries as well.

Widened out a bit, almost a quarter of dividend-paying stocks in the index yield between 3.5% and 2.5%, including more than half of the members of the Dow Jones Industrial Average. Looking at a handful of stocks yielding almost exactly 3% shows how disparate their business trends and other valuation measures look. ....

Tobacco, personal-care products, utilities and REITs are all among the most richly priced. Rising-rate beneficiaries, in contrast, such as communications equipment, consumer- finance and autos appear inexpensive.

The investing site Magic Diligence, which uses the “Magic Formula” value-investing ideas popularized by hedge-fund pioneer Joel Greenblatt, this week offered interesting views showing that steady-seeming names such as Kraft Foods Group (KRFT) and Kellogg Co. (K) do not truly qualify as value stocks at all, in part because of their aggressive treatment of pension obligations.

Comment: My take is that the market is near the top. Must be cautious about investing.

Entrepreneur Barbie: If I really wanted to "piss off" my daughter ...

Why ‘Entrepreneur Barbie’ is another miss for Mattel

Excerpt:

Silicon Valley Barbie is finally here! Mattel is rolling out a new line of ‘Entrepreneur’ Barbie dolls, adding to a resume of various careers fashion model to astronaut, veterinarian, firefighter, and fitness instructor. It’s understandable why Mattel wants to push another line of Barbies from a business perspective, but the question remains if this will be (1) a profitable move, and (2) a good way to encourage young girls to get into the business world. Danielle Hughes, founder and CEO of Divine Capital Markets (which is a WBENC certified Woman-Owned firm), isn’t a fan. "Barbie sales have been decreasing, it's an opportunity for them to try this out, but i just think it's going to fall flat," she says in the attached clip. "It just hits the wrong note." The message being sent is what bothers Hughes the most. “Is it the right message to take a doll who’s always been a fashion icon with unbelievable measurements and then stick a cellphone and tablet in her hand and say ‘oh, she’s CEO Barbie’? I don’t think so.”

Comment: (In 2nd year of MBA at M.I.T. majoring in entrepreneurial finance and now doing internship at major investment bank in San Francisco.) Entrepreneurial Barbie also available in black, asian, and hispanic models!

The Panic of the Lost Wallet

I was at a Wells Fargo sponsored event at the Earl Brown Center all day today. 

Shorty after 11 as I was moving from the main central event to breakout sessions, I noticed my wallet was missing.

There were more than 700 Wells Fargo employees in attendance, plus a myriad of vendors, conference center employees, et cetera. 

Kathee was with me. I told her perhaps it had fallen out of my pocket in the men's room. I went that way and she backtracked through the main hall retracing our steps.

We regrouped and neither of us had found it. As we walked towards the welcome booth, I whispered to Kathee to pray we would find it. 

Sure enough some kind and honest soul had found it and turned it in.

As we left at the end of the day, I stopped by the welcome booth again to thank them. I asked the woman there if she knew who had found it. She said that a taxi driver had dropped someone off at the event, went to the men's room and found it there. 

Nice! Thank you Lord!

Comment: Image source

The best time to begin taking Social Security

At what age should you start claiming Social Security?

Excerpt:

"Most people take it at 62," he says. "They end up losing in the long run. If they delay it till 70, they will get 30% more. Unfortunately," he says, "most Americans can't do that." Improper timing can cost you $100,000 to $150,000 over a lifetime, says John Gajkowski, of Money Managers Financial Group in Chicago. When should you take it? If you delay taking Social Security, it increases your monthly benefit about 8% a year until you're eligible for the maximum at 70. Most financial planners pretty much recommend that you do that if you can, or delay at least until age 66. But most people can't delay.

Comment: Obviously we have not taken it at 62. Kathee is 63 and I am 65. Image of "gramps": "(1939). poster of old man smoking pipe. This poster announces the passage of the 1939 Social Security Amendments." Source. (many cool retro posters here!)

What You Don't Know About Social Security—but Should - A Look at Claiming Strategies, Tax Angles and More to Help You Make Sense of a Complicated Program

Excerpt:

You may have heard the advice countless times: Minimize (or avoid) withdrawals from your nest egg (401(k), individual retirement accounts, etc.) for as long as possible to take advantage of tax-deferred growth. Many investors who follow that advice grab Social Security benefits, typically at age 62, to help pay the bills. But that advice ignores the possible tax benefits associated with following the opposite course: accelerating withdrawals from savings early in retirement so that you can hold off on claiming Social Security. The thinking here is tied to the fact that Social Security benefits are taxable. As much as 85% of a married couple's benefits are subject to tax when their income exceeds $44,000 ($34,000 for individuals); as much as 50% of benefits are taxable at lower income levels. If you delay claiming Social Security and, as a result, end up with larger benefits, future withdrawals from savings will likely be smaller—a recipe for lower levels of taxable income. (For a detailed discussion of these tax issues, see "Innovative Strategies to Help Maximize Social Security Benefits," from James Mahaney, vice president at Prudential Financial Inc. "Many retirees don't consider the impact of their withdrawal strategy on how their Social Security is taxed," says Mr. Meyer, the SocialSecuritySolutions.com founder. "Missteps in tapping the wrong account and investments to generate income can significantly increase your taxes."

Helpful 16 page guide from Prudential: INNOVATIVE STRATEGIES TO HELP MAXIMIZE SOCIAL SECURITY BENEFITS



93

Edward Fashingbauer's final request

Edward Joseph FASHINGBAUER

Excerpt:

Ed joined the Marines during World War II, taking part in the Battle of Okinawa, the largest amphibious assault of the Pacific War. Ed later said that war movies showing beautiful palm trees waving over a tropical beach were all Hollywood, for during the war, he never saw a palm that wasn't shattered. Ed was a businessman by day, but came home to his White Bear Lake farm by night, hung up his suit jacket and threw hay to his horses. He never met a piece of wood he couldn't craft into something beautiful, had a soft spot for any and all animals, and stayed loyal to Minnesota sports teams in bad times and in worse. He would've liked the Minnesota Vikings to be his pallbearers, so they could let him down one last time. Semper fi. -Published in Pioneer Press on June 22, 2014

Comment: Kathee saw in today's Star Tribune

Islamic Proselytism

How to Convert to Islam and Become a Muslim

Excerpt:

Converting to Islam is easy. This article explains how to convert and become a Muslim in a simple way. In addition to that, it gives a brief overview of Islam, the faith of 1.7 billion people, and sheds light on the benefits of converting.

"We did not send before you (O Muhammad) any messenger but We revealed to him: ‘none has the right to be worshipped except I, therefore worship Me.’" (Quran 21:25)

"We have not sent you (O Muhammad) but to all mankind as a giver of good news and as a warner, but most people do not know." (Quran 34:28) "Whoever seeks a religion other than Islam, it will never be accepted of him, and in the Hereafter he will be one of the losers." (Quran 3:85)

Becoming a Muslim is a simple and easy process. All that a person has to do is to say a sentence called the Testimony of Faith (Shahada), which is pronounced as: I testify "La ilaha illa Allah, Muhammad rasoolu Allah."

These Arabic words mean, "There is no true god (deity) but God (Allah), and Muhammad is the Messenger (Prophet) of God." Once a person says the Testimony of Faith (Shahada) with conviction and understanding its meaning, then he/she has become a Muslim. The first part, "There is no true deity but God," means that none has the right to be worshipped but God alone, and that God has neither partner nor son. The second part means that Muhammad was a true Prophet sent by God to humankind

Comments: As one of the "losers" it strikes me that Islam proselytizes at the end of a gun or the blade of a sword. Examples seem to abound (warning ... stacks of bloody bodies). To be fair at times Christianity has done the same (see Crusades and Spanish Inquisition).To be (or become) a Muslim one must reject the Deity of Christ and the Trinity and:

O People of the Scripture! Do not exaggerate in your religion nor utter aught concerning Allah save the truth. The Messiah, Jesus son of Mary, was only a messenger of Allah, and His word which He conveyed unto Mary, and a spirit from Him. So believe in Allah and His messengers, and say not “Three”—Cease! (it is) better for you!—Allah is only One God. Far is it removed from His transcendant majesty that he should have a son. His is all that is in the heavens and all that is in the earth. And Allah is sufficient as Defender. The Messiah will never scorn to be a slave unto Allah, nor will the favoured angels. Whoso scorneth His service and is proud, all such will He assemble unto Him (Surah 4:171-172, emp. added).

They surely disbelieve who say: Lo! Allah is the Messiah, son of Mary. The Messiah (himself) said: O Children of Israel, worship Allah, my Lord and your Lord. Lo! whoso ascribeth partners unto Allah, for him Allah hath forbidden Paradise. His abode is the Fire. For evil‑doers there will be no helpers. They surely disbelieve who say: Lo! Allah is the third of three; when there is no God save the One God. If they desist not from so saying a painful doom will fall on those of them who disbelieve. Will they not rather turn unto Allah and seek forgiveness of Him? For Allah is Forgiving, Merciful (Surah 5:72-74, emp. added)

This leads to the essense of Christianity:

• God is Triune (not time to defend it now but for a full treatment consider: Delighting in the Trinity: An Introduction to the Christian Faith and The Forgotten Trinity
• Jesus IS God. Much evidence but briefly: "In the beginning was the Word, and the Word was with God, and the Word was God." (John 1:1). He is the only begotten Son.
• He died to save sinners: "This is a faithful saying and worthy of all acceptance, that Christ Jesus came into the world to save sinners, of whom I am chief" (1 Timothy 1:15)
• He rose victorious over the grave: "For I delivered to you first of all that which I also received: that Christ died for our sins according to the Scriptures, and that He was buried, and that He rose again the third day according to the Scriptures, 5 and that He was seen by Cephas, then by the twelve. After that He was seen by over five hundred brethren at once, of whom the greater part remain to the present, but some have fallen asleep. After that He was seen by James, then by all the apostles. Then last of all He was seen by me also, as by one born out of due time." (1 Corinthians 15:3-8)
• Christians do not worship Allah .. we worship Christ. 
• Both Christianity and Islam may be error (obviously as a Christian I believe New Testament Christianity to be true!). But both Christianity AND Islam cannot both be true

Related: Persecution of Muslims who convert to Christianity

30 Stocks analyzed

Comment:  A companion (click image to enlarge) to my previous post. Lessons:

• Note MRK where the payout ratio is 115%. This cannot be sustained. 
• COP, IBM, INTC, T, and WMT have an Enterprise Multiple less than 10. All pay dividends with a nice return. Worthy of purchase and holding

How I evaluate a stock - Example Intel

Someone recently asked me how I evalutate at stock. Here's my basic process. First of all I want to make money on a stock. I don't buy stock just for the fun of it. I buy with an expectation of a return. And my return horizon is less than 5 years.

1. Am I familiar wiht the company? Have I read articles about the company over time (Example)? Is the company a major player in its industry sector?
   
2. How do I expect to make money? Generally I expect to make money on both dividend returns and stock growth. I almost exclusively invest in dividend stocks.With Intel I expect to hold this for a long term and enjoy the dividend returns. 
3. Do I expect growth? If not, I pass.
4. What is the P/E ratio? Defined . Caveat: The P/E ratio looks at the last 4 quarters of profit. It is not forward looking. Generally I look for a P/E ration of less than 20. 
   
5. What is the Dividend yield? In the case of INTC, it pays an annual dividend of $ .90 and the price of the stock is about $ 30. So the yield is .9 / 30 or 3%. 
6. What is the Payout Ratio? INTC earned $ 1.87 per share over the last 4 quarters. That's a gross yield of 6%. The Payout Ratio is EPS / Dividend = 48%. If all of the earnings are paid out in dividends, it means that nothing is kept back for R&D. Not a good thing. A company with an unprofitable quarter may have a Payout Ratio of greater than 100%. They may be able to sustain that for a few quarters but not over the long term. 
7. What is the Enterprise Multiple? This topic is a bit complex so click through to my longer blog post. I look for an Enterprise Multiple of less than 11.
   
8. How does the stock compare to the company's competitors? finance.yahoo.com is my go-to website for all of this information. 

Conclusion: Intel is a buy for me. We currently have holdings in INTC. We are not adding to that at this time.

Ready to Retire?

5 Ways to Tell if You Are Ready to Retire Early
Excerpt:

One way to estimate if you're ready for early retirement is to divide your investable assets by your annual expense. I call this the financial freedom ratio. If your financial freedom ratio is above 25, then you're in pretty good shape. You can use the 4 percent rule to withdraw from your portfolio, and chances are good that your money will last for 30 years or more. Of course, if you retire very early, then you probably need to be a bit more conservative and withdraw less until you're near 65, the normal retirement age.

Comment: As for us

• We meet all of the above criteria except my wife is 2 years younger than I
• She does not want to retire yet AND
• I don't want to retire without her
• So basically we are waiting 22 months (her 65th birthday)
• And using these months to double down on investments.

Are you Ri¢h?

Definition of ‘Rich’ Changes With Income

Excerpt:

I asked survey respondents to tell me how much money the people in their household would have to earn in a year for them to consider themselves rich. I evaluated answers that began at $10,000 and went through $4 million. In households in the lowest quartile of income, those earning less than $25,000 a year, people thought they needed about $293,000, on average, to consider themselves rich. And in households earning between $30,000 and $60,000 of annual income, the magic number was closer to $394,000. As people earn more, the multiplier on current income goes down, but the absolute number goes up in a somewhat linear fashion. In households with annual income between $60,001 and $120,000, the dream of becoming rich comes true at $426,000, on average; and, for the top 15 percent of incomes ($120,000 and up), the average number was $501,000.

Comment:  See earlier Richie Rich blog post. So much could be said about this from a Christian perspective. Off the top of my head:

• "When you have your health, you have everything. When you do not have your health, nothing else matters at all" (This is not a Christian perspective ... but a frequently quoted axiom. Actually one could be sick unto death and suffering and have true riches!)
• The Bible speaks of "true riches" (Luke 16)
• "Now he who received seed among the thorns is he who hears the word, and the cares of this world and the deceitfulness of riches choke the word, and he becomes unfruitful." (Matthew 13:22)
• Romans 2:4, "Or do you despise the riches of His goodness, forbearance, and longsuffering, not knowing that the goodness of God leads you to repentance?"
• Romans 11:33, "Oh, the depth of the riches both of the wisdom and knowledge of God! How unsearchable are His judgments and His ways past finding out!"
• Ephesians 3:8, "o me, who am less than the least of all the saints, this grace was given, that I should preach among the Gentiles the unsearchable riches of Christ,"

Medtronic: Sweet Home Ireland

Medtronic, Covidien in Advanced Talks to Combine - Deal, Valued at More Than $40 Billion, Would Be Structured as So-Called Tax Inversion
Excerpt:

Medical-device maker Medtronic Inc. is in advanced talks to combine with rival Covidien PLC in a deal valued at more than $40 billion, according to people familiar with the matter. The deal, which could be announced Monday, would be structured as a so-called tax inversion, according to one of the people. In such deals, acquirers buy companies domiciled in countries with lower corporate tax rates than their own as a means of lowering their overall rate. Covidien is based in Ireland, which is known for having a relatively low tax rate.

Comment: Corporate Inversion defined:

Re-incorporating a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.

Comments: Others domiciled in Ireland: Accenture, Seagate. The problem: High US Corporate tax rates.

"To Serve Man" means to help people

For even the Son of Man did not come to be served, but to serve, and to give His life a ransom for many.” (Mark 10:45)

"For you, brethren, have been called to liberty; only do not use liberty as an opportunity for the flesh, but through love serve one another." (Galatians 5:13)

---

Reflecting today on a conversation I had about sales and salesmanship. The best salesman matches his company's offerings to the genuine needs of the customer. If there is not a match, he will walk away from the sale. Having been a salesman, I did not always do this.

The two black and white images above are of the famous "To Serve Man (The Twilight Zone)". It's old (1962). And it's a classic. Click the link for the explanation. The classic closing line was "It's a cookbook!". The colored patch above (source) is the unofficial badge of the 509th Bomb Wing based in Whiteman Air Force Base in Missouri, shows a space alien with huge eyes holding a stealth bomber near its mouth. The text reads, "To Serve Man," and the caption below reads, "Gustatus Similis Pullus"—dog Latin for "Tastes Like Chicken".

Now my lesson for ministers of the Gospel. Look out for what is best for your flock! Don't treat them like chicken!

EV/EBITDA (Enterprise Multiple) better than P/E ratio for value investors

A Superior Metric for Value Investors

Excerpt:

Enterprise value (EV) is calculated in the following way:

EV = Market Cap + Total Debt + Preferred Stock + Minority Interest – Cash

This gives us a theoretical takeover value, which is similar to how an investment banker might value the company.

The denominator of the ratio is EBITDA, which stands for earnings before interest, taxes, depreciation and amortization.

Basically, it’s the earnings that are available to all stakeholders. Similar to the P/E ratio, a lower EV/EBITDA represents a cheaper valuation, all else equal.

Luckily, the EV/trailing EBITDA ratio can be found on the Yahoo! Finance Key Statistics page, so we don’t have to dig through financial statements.

.... The median EV/EBITDA ratio for the S&P 500 is currently 11.4x. If we own a stock with a much higher multiple, there better be a really good reason.

Comment: So ... low EV/EBITDA is preferred. See samples above. Also known as the Enterprise Multiple

---

Some other links:

• EV/EBITDA Screener
• PDF Article
• The Single-Best Metric: EV/EBITDA

Retailers you won't miss

The future of 'Zombie' RadioShack

Excerpt:

Unfortunately for everyone involved, RadioShack has entered a sort of undead ‘zombie’ retailer state. The company is being run for cash flow and liquidity. That means there are unlikely to be many grand remodels completed or revamps in the works. The stores will still be there, at least for now. Some chains such as CompUSA seem to disappear overnight, but at least for now the people calling the shots at RadioShack seem to think it’s more expensive to close the stores and get out of the leases than to let them run as is.

At Sears, 'closing stores is going to be part of our future'

Excerpt:

Speaking at this year's annual shareholders meeting in Hoffman Estates, Sears Holdings Corp. Chairman and CEO Edward Lampert today said the retailer would close stores and look for ways to leverage its real estate while sticking to its focus on integrated retail and its Shop Your Way program. "Closing stores is going to be part of our future," he said. "I'd rather do (fewer closures) rather than more, but the world has shifted." He outlined a vision of Sears' stores five years from now that will be physically smaller and sell both Sears merchandise and goods from third-party retailers, much the way the company's online Marketplace currently sells 120 million products, the vast majority of which are not Sears' own merchandise. "We want to be a partnership company," he said. "Sometimes we're going to be the big dog and sometimes we're going to be a (smaller) piece of a solution." Sears has closed about 500 stores since 2005 — 305 of them since 2010 — but Mr. Lampert said he could not estimate how many more will shutter. He did say that whereas he previously would have kept a marginally performing store open in the hopes of improving it, industry changes and the shift to online means that today "the decision more often than not is to not renew the lease." "We think you don't need 2,000 stores to be relevant in the United States," he said. Currently there are 1,152 Kmart stores and 778 full-line Sears stores.

Is it time to close Kmart?

Excerpt:

Kmart used to fill an important role for budget-conscious shoppers. But those customers have many more places now that can meet their needs. Dollar stores sell groceries and household necessities. Wal-Mart has a bigger selection than Kmart, often at lower prices. In fact, the Journal cited data showing Kmart's prices were higher than Wal-Mart's and Target's in five out of six items it checked at all stores. Granted, that's a pretty small sample. But if that holds true and Kmart isn't necessarily cheaper than competitors, then what is Kmart's reason for existing?

Sears vs. J.C. Penney: which is worse?

Excerpt:

... if you gave me $1,000 in free money with the express condition it be invested in either Sears or J.C. Penney stock, I’d have to come down on the side of J.C. Penney. That’s for one simple reason: Penney is reducing costs and trying to reinvent itself out of necessity, while Sears started the process of bone-deep cuts long ago... with seemingly no intention of ever stopping. Given the choice between a struggling company that is trying to improve and a company that doesn’t care about long-term strategy as long as it makes this quarter’s numbers, I’ll take the former.

My comments (I don't shop so consider that)

• My wife shops at none of the above but did buy some drapes from J C Penney about 4 years ago.
• My young adult children (29, 32, and 34) would not visit any of the above. I sense that the above have lost young people.
• My wife never goes to "the Mall".
• Image Source

The Disability Gravy-Train

Sen. Coburn: ‘We Keep Putting People on Disability Who Are Not Truly Disabled’

Excerpt:

“We keep putting people on disability who are not truly disabled,” said Sen. Tom Coburn (R-Okla.) on Tuesday at a House Oversight and Government Reform Committee hearing entitled, Social Security Administration Oversight: Examining the Integrity of the Disability Determination Appeals Process. Coburn, who also is a medical doctor, was called to testify about disability-payment reform for the House-held hearing.

 “Currently, 8.4 million people are enrolled in SSI [Supplemental Security Income for the disabled], at a cost to the federal government of nearly $56.5 billion in 2013,” according to a June 10 Oversight Committee report. “The number of participants in SSI has nearly doubled over the last 25 years.

Growth in SSI enrollment also increases Medicaid spending since individuals enrolled in SSI are automatically eligible for Medicaid.” “Most of us know that the Social Security disability trust fund is in precarious shape,” Senator Coburn told the committee. “11 million Americans who presently are in need of those payments will receive a cut.”

Coburn, along with Sen. Carl Levin (D-Mich.), reviewed random disability cases from Social Security from three different offices. “What we found is alarming,” Coburn said. “What we found is 25% of the cases should never have been approved by benefits based on Social Security’s own rules and procedures. So, we had 25% where their own administrating law agents didn’t follow their own rules.”

A disability fraud case in Huntington, West Virginia, evoked concern for Coburn. “This got our attention because this office processed more disability cases than any other office in the nation,” he said. “And so when we looked at it, much of that could be accounted to one attorney, Eric C. Conn.” “In spite of practicing in a town of 500 people, he had become the third highest payment Social Security receiving over $4 million dollars in agency fees in 2010,” said Coburn. “When we looked more closely at Mr. Conn’s operation, we found reasons for serious concern. Some of what Mr. Conn did was outright fraud. At times he was simply able to exploit loopholes in the program. Both of those should be a concern for us in Congress, given the current nature of the trust fund.”

Comment: I think I know something about this as I have a genuine handicap AND I WORK for a living.

Bull Market - 62 months and counting

We are about to enter the greatest bull market in 85 years

Excerpt:

At 62  months and counting, the S&P 500 index is this close to its longest bull run since 1994 to 2000. Should it continue rallying for just two months more, it will be the longest bull market run in over 85 years

The Condo hunt

We've been looking at condos for almost three years. I think we are 2 years away from buying (based upon a planned retirement date of April 1st, 2016.

These are the condos we like the best:

The Cobalt: Location. I like it more than Kathee. Uber-convenient with a Lunds on the main floor.

Rock Island Lofts: Location. 

Cream of Wheat: Location. 

River Park Lofts: Location

Comments:

• All have underground parking
• The River Park is in Saint Paul and has Skyway linkup to Saint Paul Skyway system. 
• All are either next door or very close to a park
• Prices range up to a million or more but often have units available for $ 350,000 to $ 500,000
• Wanted: 
• Two parking spaces
• In unit laundry
• Balcony
• Windows on 2 sides (corner unit)
• At least one and preferably two bedrooms
• At least two bathrooms
• At least 1,500 square feet

Winners and Losers in the Tyson - Hillshire Brands deal

Who Are the Winners and Losers in the Tyson-Hillshire Deal?
Excerpt:

The deal is a big win for Hillshire, the maker of Jimmy Dean sausages. Tyson is paying $63 per share for Hillshire, a 70% premium over Hillshire’s $37 share price before the bidding began.

Comments:

• Of interest to us because we have 100 of Hillshire
• I bought Hillshare last July and August for an average price of $ 35.11. At the time I viewed it as fair priced but did not expect it to soar. So $ 63 minus $ 35.11 is a gain of almost $ 2800.
• I don't intend to sell but will wait for it to close and take the Tyson shares.
• With Tyson trading at $ 37.62 (today) our 100 HSH shares would be about 167 TSN shares.

Tears

The Topography of Tears

Image source

Comments:

• The first link above is to a study of 100 different tears under a microscope
• It's interesting because the images tears of different types of stimuli vary
• Tuesday we drove out to Litchfield MN to great Roger's 849th unit back from Afghanistan. 
• The unit organized in a rectangle in the center of the Litchfield civic center (a hockey rink really). 
• Families were in the perimeter 
• Upon dismissal family members scrambled towards the dispersing rectangle of men. 
• I witnessed many family reunions. The first struck me ... a soldier red faced and in tears embracing his spouse (this was not my son and his wife ... it took some time to find them)
• I've seen many tears ... funeral tears at the funeral of a child (At an actual funeral that I conducted, I myself cried from the lecturn during the funeral of a teenager). 
• I remember my own tears at my Dad's funeral. I stayed back and watched as the mortuary personnel closed the casket. They took off Dad's glasses and folded them. Tears came to my eyes.
• This post isn't very  elegant - I doubt many of mine are! But check out the microscopic in the above link.

GM: a pattern of "incompetence and neglect"

GM fires 15 people following ignition switch investigation

Excerpt:

General Motors said a pattern of "incompetence and neglect" led to a decade-long defect in an ignition switch that has killed at least 13 people, and probably more. On Thursday morning, CEO Mary Barra said she had reviewed an internal report on the safety crisis compiled by an outside investigator, former US Attorney Anton Valukas, and that the company had taken aggressive action to fix problems and ensure such a pattern never occurs again. General Motors said it has fired 15 employees related to those series of failures unearthed by Valukas during his investigation and disciplined five more. At least half the employees dismissed were executives, Barra said.

Comment: Was this automaker worth saving? U.S. government says it lost $11.2 billion on GM bailout

Burt Shavitz: The Iconic Beekeeper behind Burt's Bees

Co-founder of Burt's Bees says he was ousted

Excerpt:

Conventional wisdom suggests the Burt behind Burt's Bees left the company after he became disillusioned with the corporate world in North Carolina and wanted to return to his solitary life in Maine. The reality, Burt Shavitz says, is that he was forced out by co-founder Roxanne Quimby after he had an affair with an employee. So the man on the Burt's Bees logo that promises "Earth-friendly natural personal care products" ended up with 37 acres in Maine, and an undisclosed sum of money.

Comment: Now owned by Clorox. I love their products!

The 4% Rule

4 Percent Rule Facts You Should Know

Excerpt:

The rule is designed to work over a 30-year period, which will practically never be your timeline. For people who retire in their 60s, the expected lifespan is well within the 30-year window. A 65-year-old retired couple has about an 18 percent chance of either of them reaching 95, which gives them a very small probability of outliving their assets. Some people would say they are almost guaranteed to not run out of money too soon, especially when you factor in the fact that almost everyone will have some form of Social Security and home equity to tap if the worst case scenario actually materializes.

Comment: Not sure if I will live 30 years! (Frankly not sure if I want to). But my Mother is 94 and going strong. She has not run out of $$ and believe it or not still saves! Summary: want to live as long as the Lord enables me. And I want to serve Him faithfully until the end. We are approximately 21 months from retirement (if the Lord wills!). Kathee will be 65 in April of 2016. I will be 66 1/2. Feels right. My initial plan is to withdraw at a 3% rate. Maybe even 2.9%

Retirement: How to invest wisely to live comfortably

Retirement: How to invest wisely to live comfortably
Excerpt:

People think, "I've accumulated this much," and their inclination is to put it in stable investments — cash or bonds, but they run the risk of eroding their purchasing power. Their essential expenses will increase in retirement — taxes will go up on their property, health care will go up, the cost of food will go up — so they need an equity portfolio that is growing so it maintains or increases their purchasing power in the future. ...

Fidelity offers this rule of thumb: Save at least eight times your final salary to help increase the odds that you won't outlive your savings during 30 years in retirement. This amount assumes that you'll get some money from Social Security and that your expenses after you retire will be lower than when you were working. Higher net-worth folks usually need to save more than eight times their final salary.

Comment: Message is start investing early and stay in equities

Hunger Games (Pilgrim's Pride + Hillshire Brands)

Food Fight: Pilgrim's Pride Wants Hillshire To Dump Pinnacle Foods And Join Forces

Excerpt:

Is the merger of breakfast giants soon to be the merger that wasn’t? Barely two weeks after Hillshire Brands HSH +21.66%, the maker of Jimmy Dean and Sara Lee foods, announced that it would pay $4.2 billion to acquire Aunt Jemima maker Pinnacle Foods, a third food producer has thrown its hat into the ring. Pilgrim’s Pride, a Colorado-based chicken company, said Tuesday that it wants to acquire Hillshire for more than $6 billion — but only if Hillshire ditches its deal with Pinnacle. Pilgrim’s Pride announced Tuesday morning that it wants to acquire Hillshire Brands for $45 per share in cash, or a total of $6.4 billion. The offer marks a 25% premium to Hillshire’s weighted average price in the ten days following the announcement of the Pinnacle merger. Pilgrim’s also said that it would cover the $163 million break-up fee that Hillshire would owe Pinnacle, and that a Pilgrim’s-Hillshire partnership would have a combined revenue of $12.4 billion and combined EBITDA of $1.4 billion. “We have long respected the Hillshire business and we are confident that Hillshire’s Board and shareholders will find our all-cash premium proposal to be superior to the pending acquisition of Pinnacle,” Pilgrim’s CEO Bill Lovette said in a statement Tuesday morning, calling the deal considerably valuable for both Pilgrim’s and Hillshire shareholders. ”For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares. For Pilgrim’s, the addition of Hillshire’s portfolio of iconic brands and broad based marketing, innovation and distribution expertise will enhance our position as a market leader.” Among the brands that Hillshire holds: Ball Park, State Fair (both of hot-dog-making fame), Hillshire Farm, Jimmy Dean and Sara Lee. In a conference call with investors, Lovette said that Pilgrim’s merger with these brands would create a “fully integrated protein leader.” He also said that he believes that the deal could be consummated “very quickly,” as early as the third quarter of 2014.

Comment: Image source. Tempted to sell (but resisting) HSH because it is up by $ 8. But would be short term gain. Meanwhile - on the pros and cons of the Hillshire Pinnacle deal

Detroit's Blight

Blight Cleanup Will Cost a Bankrupt Detroit $850 Million, Study Finds
Excerpt:

Saying that Detroit needed to rid itself of its vast collection of dilapidated houses, junk-filled lots and empty shops, a task force examining the city’s blight said Tuesday that the price tag for the cleanup would be at least $850 million, including the likely demolition of 40,000 buildings scattered around the city.  ...

... The report — perhaps the most elaborate and detailed survey of decay conducted in any large city — found that 84,641 parcels among the city’s more than 377,000 properties are plagued by blight. Of those, some 40,000 buildings or parts of buildings should be torn down, according to the study. “Detroit needs to act aggressively to eradicate the blight in as fast a time as possible,” the report concluded. “Other cities contending with high levels of blight have never addressed more than 7,000 structures a year. At that pace, it would take Detroit more than 11 years to address” its disintegrating buildings and rubble-strewn lots. The report added that “because blight creates more blight,” the city’s deterioration would continue “without swift remedies.” It called for eliminating blight in Detroit within five years.

Comment: Link to report. Opinion: Among other things ... years of Democratic Party leadership

Dividend ETFs

Dividend-yielding stocks are paying off now

Excerpt:

Dividend stocks have been attracting investors for several years because of low yields on fixed-income instruments. Now their appeal is broadening as investors assume defensive postures, accelerating dividend-paying vehicles into outperformance. Dividend payouts provide a downside price cushion, the theory goes, though of course the threat of dividend cuts could exacerbate any decline. But a repeat of that debacle is unlikely, at least this year. Another characteristic of dividend stocks is that they tend to belong to more mature, more established companies that are big enough to weather temporary turbulence. This latest round of investor concern about the pace and strength of global economic recovery has taken growth and small stocks out of favor.

Comment: Of the above, I like PEY. Holdings

"Thrive MSP 2040": Urban Planning Overreach

Turning the Twin Cities Into Sim City - The Metropolitan Council's plans include making sure there is a proper mix of races and incomes in each suburb.

Excerpt:

Here in the Twin Cities, a handful of unelected bureaucrats are gearing up to impose their vision of the ideal society on the nearly three million residents of the Minneapolis-St. Paul metro region. According to the urban planners on the city's Metropolitan Council, far too many people live in single family homes, have neighbors with similar incomes and skin color, and contribute to climate change by driving to work. They intend to change all that with a 30-year master plan called "Thrive MSP 2040." The Met Council, as it's known here, was founded in the 1960s to coordinate regional infrastructure—in essence, to make sure that sewers and roads meet up. Over the years, its power to allocate funds and control planning has expanded. Now, under Democratic Gov. Mark Dayton—who appointed all 17 current members—the council intends to play Sim City with residents' lives.

....

The Thrive plan also will pour public funds into mass transit while virtually ignoring congestion relief on highways. The Twin Cities region is projected to have just $52 million available annually from 2014 to 2022 for highway congestion relief, according to the Minnesota Department of Transportation. Yet the Met Council intends to spend at least $1.7 billion on a single light-rail project, with more rail transit to follow. The Thrive plan's most radical element may be to evaluate all future development policies through the "lens" of climate change. Over time, this could give the council a license to dramatically remake the entire metro area. One former member of the Met Council told me that in the not-so-distant future local governments seeking approval of a new sewer line may first have to meet onerous "carbon footprint" dictates. The council apparently views herding people into dense urban conclaves and restricting their use of cars as the key to reducing greenhouse gases. Yet an exhaustive report by McKinsey & Co. in 2007 found that neither driving less nor densification is necessary and that technological advances, such as fuel-economy improvements, can achieve sufficient reductions.

Comment: THRIVE MSP 2040 Official Site

11315 42nd Place N

11315 42nd Place N

Comment: Up the street and around the corner in my neighborhood. I'm hearing that home prices have recovered to 2008 levels and this is evidence of that.

Clover Leaf University

Some Students Wonder About Marijuana-Themed University On Auraria Campus

Excerpt:

There are three flags over the Auraria Campus for the University of Colorado Denver, Metro State University and the Community College of Denver. But there’s another institution there as well called Clover Leaf University. It’s curriculum is marijuana. “As long as they’re conducting lawful activities we don’t have any desire to ban them from the campus, because that’s part of our content neutrality approach,” Blaine Nickeson with the Auraria Higher Education Center said. Clover Leaf University offers courses in cannabis cultivation, infusion and marijuana business. It rents space in the King Center on campus, but that doesn’t sit well with Metro State student Lawrence Valdez. “It doesn’t seem to be the way that a university really operates,” Valdez said. He says he does not have a problem with the subject of marijuana being taught on the campus, but it’s the status of Clover Leaf. “If they are as legitimate of a university as Metro, CCD and the University Of Colorado at Denver, then we should fly the Clover Leaf University flag just as proudly as we fly the other three,” Valdez said.

Comment: Official site. I have a Bachelor's from Metro State University of Denver

Social Security at 62?

Social Security at 62? Let’s Run the Numbers

Excerpt:

By receiving Social Security at 62, you take a haircut on potential future payments of 30 percent compared with a 6.7 percent reduction at 67. For those waiting until age 70, Social Security offers an 8 percent yearly rate of increase in payments (not including cost-of-living adjustments) over taking benefits at 62. That easily beats what you would earn in government bonds these days.

Comment: Image source. Kathee and I have been having these discussions. Both of us are past 62 and we have not opted to receive social security at this time. I expect we will wait until at least 65 for Kathee and 66 for me. Mentioned in the article: maximizemysocialsecurity.com.

US Special Forces for #BringBackOurGirls? Why not?

McCain: Send U.S. Special Forces to Rescue Nigerian Girls

Excerpt:

“If they knew where they were, I certainly would send in U.S. troops to rescue them, in a New York minute I would, without permission of the host country,” McCain told The Daily Beast Tuesday. “I wouldn’t be waiting for some kind of permission from some guy named Goodluck Jonathan,” he added, referring to the president of Nigeria.

Comments: The "why not?":

• Remember Operation Eagle Claw? 8 dead in the desert! (At least that was our fight). Or Black Hawk Down?
• Violates the principle of engaging only when our nation's interests are truely involved.
• Every special forces engagement not only risks US personnel .. .but civilians 

Who should?

• Nigerian forces
• Or Nigerian home grown vigilantes

4283 Evergreen Lane N

Edina Reality: 4283 Evergreen Lane N

Comments: The only house in our neighborhood for sale. Very nice curb appeal and nice interior appointments

Groundbreaking for Downtown East

Wells Fargo and Ryan break ground on Downtown East

Excerpt:

Ryan Cos. US Inc., Wells Fargo & Co., Gov. Mark Dayton and the city of Minneapolis held a groundbreaking ceremony Tuesday in Minneapolis to kick off construction of the $400 million Downtown East development. The bank, which will move about 5,000 employees into 1.1 million square feet of office space in the 5-block urban development, demonstrated its commitment to Minneapolis with this project, said Wells Fargo Chairman, President and CEO John Stumpf. "This is not just any other place. This is not just any other building. This is not just any other community. This is Minneapolis. This is where my heart is. This is where our heart is," Stumpf told the crowd of a few hundred people gathered in a tent on part of the site. Other dignitaries at the event included Dayton, Minneapolis Mayor Betsy Hodges and Ryan Cos. CEO and President Pat Ryan.

Comment: We were downtown today but I was at the Northern Operations Center. I'm not sure where Kathee was today (she rode in with me). I think she was at the Tower. We are not likely to move offices here because we are likely to be retired before its opening. More from the Star Tribune. Wiki on Downtown East neighborhood. Ryan Cos project page.

Michael Sam is no Jackie Robinson

Michael Sam became the first openly gay player to be drafted by the National Football League Saturday.

Excerpt:

Michael Sam, the first openly gay player ever to enter the National Football League draft, was taken by the St. Louis Rams with the 249th pick of the draft Saturday, proving precisely nothing about the state of homophobia in professional football. Only one thing can be said with certainty: By taking Sam with the eighth-to-last pick of the seven-round draft, the St. Louis Rams saved the NFL a small public-relations nightmare.

Comment: To make "crossing the gay barrier" the same as "crossing the color barrier" mocks the civil rights movement! To be assured, there have been gay NFL players. There also have been adulterous NFL players. Just saying!

Douwe Egberts rising

Mondelez and Dutch Firm Aim to Create a Coffee Powerhouse

Excerpt:

Mondelez International, the owner of Cadbury chocolate and Chips Ahoy cookies, is carving out its coffee business to combine it in a joint venture with a Dutch company to form a global coffee seller with more than $7 billion in annual revenue. The joint venture will join Mondelez International’s coffee portfolio with D.E Master Blenders 1753 of Amsterdam, giving the combined company control of coffee brands including Gevalia, Tassimo, Senso and, outside of the United States, Maxwell House. The new company will be called Jacobs Douwe Egberts and will be based in the Netherlands. After the combination, Mondelez International, which was spun out of Kraft Foods in 2012 and is based in Deerfield, Ill., will receive about $5 billion in cash and a 49 percent equity stake in the joint venture. “Jacobs Douwe Egberts will leverage the rich histories of both companies, combining our complementary geographic footprints, portfolios of iconic brands and innovative technologies to offer more people around the world more access to high-quality coffee and allowing the company to capitalize on the significant growth opportunities in a highly attractive market,” Pierre Laubies, the D.E Master Blenders chief executive and prospective C.E.O. of the combined company, said in a statement.

More: Coffee Merger to be financed with $10 billion of debt

Comments: A little history. Sara Lee spun off into two companies: Hillshire Branks (see previous post) and Douwe Egberts back in 2012.

The Hillshire / Pinnacle Foods deal

Hillshire Brands to Buy Pinnacle Foods for $4.3 Billion
Excerpt:

Hillshire Brands Co. agreed to buy Pinnacle Foods Inc. for $4.3 billion in a bet that mixing hot dogs and frozen cakes with pickles, syrup and salad dressing will add up to a more appetizing business. The deal, announced on Monday, would create a company with more than $6 billion in annual revenue and a broad array of brands including Hillshire's namesake lunch meats, Jimmy Dean sausages, Ball Park hot dogs, and Sara Lee frozen desserts and Pinnacle's Vlasic pickles, Wish-Bone salad dressings, Birds Eye frozen vegetables and Log Cabin syrup. Pinnacle, which is majority owned by investment firm Blackstone Group L.P., estimates 85% of U.S. consumers buy at least one of its products.

The Pinnacle deal, expected to close by September, is the biggest for Hillshire since the company, formerly known as Sara Lee Corp., spun off its coffee and tea business in 2012 to focus more on U.S. food sales, renaming itself in the process. Hillshire, valued at about $4.5 billion before the new deal's announcement, plans to buy a company nearly as large as itself, with Pinnacle valued at $3.6 billion at Friday's close. The companies said the deal valued Pinnacle at $36.02 a share based on Hillshire's average closing price before the deal. That would be an 18% premium over Pinnacle's closing price Friday. Pinnacle shareholders will receive $18 in cash and a half share in Hillshire for each Pinnacle share. The companies said the total value of the transaction, including Pinnacle's debt, is about $6.6 billion.

Comment: Synergies

Mother's 94th Birthday

Mom turned 94 on Friday. She looks terrific and is doing well. We were in Texas at my Sister's to celebrate