Saturday, May 28, 2011

Master Limited Partnership (CLICK for list of MLP's)


Three Good Buys
Possibly Play
Attractive Yield
Big Payout Good Prospects
List of MLP 


Master limited partnerships are restricted by the U.S. government to natural resource companies and some real estate enterprises. However, there are certain indirect methods of investing in MLPs and avoiding the tax complications. The MLP Kinder Morgan Energy Partners (KMP) also has a counterpart called Kinder Morgan Management (KMR) that holds units of KMP and whose quarterly payout is treated like a regular dividend instead of a partnership distribution. Another alternative is closed-end funds like Kayne Anderson MLP (KYN) and BlackRock Global Energy and Resources Trust (BGR). KYN is currently trading at a 15.22% premium to net asset value (NAV) and a yield of 9.17%. In contrast BGR is trading at a 13.16% discount to NAV and a yield of 8.61%.
Most MLPs tend to be concentrated in the energy sector but there are always exceptions such as the private equity firms The Blackstone Group (BX) and Fortress Investment Group (FIG), which also happen to be set up as MLPs.

As an MLP, KMP must distrubute at least 90% of its income from qualifying sources such as natural resource activities, interest, dividends, real estate rents, income from sale of real property, gain on sale of assets, and income and gain from commodities or commodity futures. Much of the distrubution is typically treated as 'return of capital', which causes a downward adjustment to U.S. taxable investor's cost basis. It is not taxable in the year it is recieved, but increases capital gains taxes in the year the MLP units are sold.
Where a company does business (e.g. owns/manages pipelines) in many states; owners may be required to file income tax returns in each state in which the MLP conducts business, even when no taxes are owed.
MLPs aren't suitable for U.S. investor's IRA accounts because earnings above $1,000 will be considered unrelated business taxable income by the IRS. Tax consequences for foreign owners are generally onerous.
Life, Liberty, & the Pursuit of Happiness

Friday, May 27, 2011

Memorial Day cookout will cost you 29% more this year thanks to inflation | Mail Online

Memorial Day cookout will cost you 29% more this year thanks to inflation | Mail Online

Who besides Democrats, Obama, and Pelosi do we have to thank for the high prices this Memorial Day?



Life, Liberty, & the Pursuit of Happiness

Fidelity Investment Information for Investors


Why wait for interest rates to rise before putting your cash to work?

The cost of waiting in cash
Not long ago, the conventional wisdom was that interest rates had nowhere to go but up. Then, a series of crises—from euro zone debt woes to conflict in the Middle East and North Africa to the Japanese earthquake—unleashed a flight to quality that actually helped keep rates low, illustrating the difficulty of predicting interest rates, even for veteran investors. That's why, says Ford O'Neil, co-portfolio manager of three Fidelity bond funds, "we haven't made big short-term interest rate bets."
Nor should other investors, in our opinion. But that is exactly what people may inadvertently be doing by leaving too much cash for too long in savings accounts or money market funds, where interest rates are historically low and unlikely to go much lower. Of course, most people need an emergency fund to deal with life's unexpected demands. Others have obligations coming due shortly. Still others need to offset very volatile investments with very stable ones. And for those needs, low-yielding but highly liquid accounts can work well. But if you are an income-focused investor, there are many potentially higher yielding options to consider for money you won't need for three to five years.

What are you waiting for?

So why are investors holding near-record levels of cash in low-yielding accounts? Some may still feel paralyzed from the 2008 market meltdown. Others may have ridden the rebound that took the S&P up 80% from its March 9, 2009, bottom to its April 23, 2010, high, but sought safety in cash during any pullbacks.
If you're one of them, consider this: Since 1926, cash underperformed investment-grade bonds in 66% of all 84 one-year periods, and stocks nearly 68% of the time, according to Fidelity's Market Analysis, Research and Education Group (see chart below). Meanwhile, cash outpaced both stocks and bonds in just 12% of all those one-year periods.
Stocks and bonds outperform cash
So, ask yourself: Are you holding too much cash? Take the time to revisit your investment mix by using Fidelity's Portfolio Review1 to help make sure your allocation to stocks, bonds, and cash is consistent with your risk tolerance, investment time frame, and overall financial situation.
Other fixed-income investors may be waiting for interest rates to rise to capture higher yields. Many look at today's low yields, currently about 2.05% for a five-year Treasury bond, and conclude it's hardly worth the effort to move their money out of a very liquid account to lock in such a low rate for such a relatively long time. But at least for the cash you won't need in the next three to five years, the cost of waiting too long in low-yielding accounts may be steeper than many realize—unless rates rise sharply and quickly.

Let's do the numbers

Imagine you have $100,000 to invest, and won't need it for five years. Let's say you kept that money in an extremely liquid investment like a money market fund earning 0.07%. After five years, assuming those rates rose 0.2 percentage points every six months, the $100,000 would be worth $105,580. If you factor in inflation, which is now about 2%, you'd actually be losing money.
Let's suppose, hypothetically, that the money is invested in a five-year Treasury bill, currently yielding 2.05%. If you sell it after holding it five years, it would be worth $110,736 (assuming interest is reinvested annually at 2.05%), enough to keep pace with inflation. But locking up your money for five years at such a low rate bugs you, since you think rates are more likely to rise than fall. (Of course, rates could also go down, but at such low levels currently, they don't have much farther to drop.) So, you leave the money in the savings account with the expectation that you'll shift into higher yielding securities when rates rise and potentially do better over the five-year period.
The problem is there can be a high cost to waiting.
If you invest $100,000
As the table to the right shows, the only way to make money by waiting is if rates go up fast—and even then, you don't come out that much better (see shaded green boxes). For example, if interest rates jump two percentage points in a year, the $100,000 invested would be worth $117,733 after five years, $6,997 more than if you had invested immediately at 2.05%.
But how confident are you that rates will jump that far that fast? After all, the Federal Reserve has been holding interest rates low. Wait two years for rates to rise one percentage point, and the investment would be worth $110,577, $159 less than what you'd have earned if you had bought the hypothetical investment immediately. Wait three years for a one-point rate hike and the hypothetical investment is worth only $108,451, $2,285 less than with an immediate purchase of the five-year Treasury.
If rates don't go up, or they don't go up quickly, you may need to find increasingly higher yields just to generate the same 2.05% return as the five-year Treasury bill. As the graph below right illustrates, if you wait a year, you'd need a rate of 2.48% for the following four years to break even. That's not so implausible. But if you wait two years earning money market rates (which we assume increase 0.2% every six months), the break-even rate for the next three years on the Treasury yielding 2.05% goes up to 3.40%. At three years, it's up to 4.08%, and at four years, 6.67%.
As the graph shows, if you wait a year before investing in a five-year corporate bond, you'd need to earn 3.78% just to break even. Wait two years, and that rate goes to 4.81%. At three years, it's 6.68% and four years 11.89%. Of course, you are taking on more risk with a corporate bond than a Treasury bond.

Consider the alternatives

High Yield
So what are your options for that longer-term cash that you won't need for three to five years? Like most things, there are trade-offs; in this case, a higher yield may mean lower credit quality as well as less stability and liquidity.

Want high liquidity and safety?

For high liquidity and safety, there are bank checking, savings, and money market deposit accounts. You can withdraw funds quickly. They can be insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank. And the value is stable. As of April 26, Bankrate.com reported that rates on money market deposit and savings accounts were averaging 0.672%. But that number includes teaser rates, so money held longer term in these accounts is likely to earn even less. Many checking accounts do not pay interest at all, though there are exceptions.
Or consider money market mutual funds, which are not insured or guaranteed by the FDIC or any other government agency. Money market funds are highly liquid, but generally stable. Though it is possible to lose money in a money market fund, it's rare. Over the 35 years they have been in existence, there have been only two instances of a money market fund "breaking the buck"—that is, paying less than $1.00 per share. But yields tend to track the Fed's target interest rate, which remains in a historically low range. The average retail taxable money market fund yield was 0.3% as of April 26, according to iMoneyNet.

Willing to trade less liquidity for potentially higher yield?

Consider short-term Treasury bonds, which are backed by the full faith and credit of the U.S. government. Yields are higher than for shorter-maturity instruments like savings accounts or money market funds, with the five-year Treasury at 2.05%. And you can sell these prior to maturity, though you may end up with less than the face value if interest rates on newly issued bonds have risen.
Another popular option: certificates of deposit (CDs). Bank-issued CDs are FDIC insured, and rates are relatively high: 1.71% for an average five-year CD as of April 26, according to Bankrate, though you can currently find them as high as 2.65%. But they cannot be redeemed prior to maturity without an interest penalty—generally six months' worth. Brokerage firms typically offer brokered CDs, which are deposits at a bank and FDIC insured. While there is no early redemption penalty, brokered CDs will incur a trading charge if sold prior to maturity.

Willing to take on even more risk?

Then you could consider investment-grade corporate bonds. Five-year AA bonds were yielding an average 2.968% as of April 26, according to Bloomberg. Of course, like Treasuries, these carry interest rate risk: if rates rise, prices of existing bonds fall. Corporate bonds also carry credit risk, the risk that the issuer will default and fail to pay coupons and principal as expected. If credit risk rises, the price of the bond in the secondary market would fall. So it's important to keep to very high quality bonds for this strategy.
With individual bonds, you can build a ladder of varying maturities, say, one to five years. That way, if rates rise, you can roll the maturing bonds into higher yielding ones, potentially increasing your total return potential. Of course, if rates fall, you would get lower rates on the new bonds, but you would have locked in the higher rates on the longer-term bonds. Use our online bond ladder tool to help create your own bond ladder by answering a few straightforward questions.
Or, consider a short- or intermediate-term bond fund where professional managers use laddering strategies to help smooth out income and total return potential. An added advantage of a bond fund: you get automatic reinvestment of interest, which is easy to forget when you are managing individual bonds but can add up over time. You also get professional management, diversification, and in the vast majority of cases, lower implementation costs. However, with a bond fund you don't own the bonds outright. If rates rise, the net asset value of the fund is likely to fall.
Likewise, high-bracket taxpayers might consider short-term municipal bonds or bond funds, where interest is free of federal taxes and, in many cases, state taxes too.
Life, Liberty, & the Pursuit of Happiness

How to Find the Safest Dividend in S&P 500 | Investing Answers

How to Find the Safest Dividend in S&P 500 | Investing Answers

Life, Liberty, & the Pursuit of Happiness

Wednesday, May 25, 2011

YouTube - Ryan Condemns Divisive Class Warfare

YouTube - Ryan Condemns Divisive Class Warfare

Life, Liberty, & the Pursuit of Happiness

YouTube - Federally Funded NASA 'Educates' Children About Global Warming on 'Climate Kids' Web Site

YouTube - Federally Funded NASA 'Educates' Children About Global Warming on 'Climate Kids' Web Site


Propaganda of our children with our tax dollars!

Life, Liberty, & the Pursuit of Happiness

YouTube - 'KISS-off' of Pre-1967 Israeli Borders

YouTube - 'KISS-off' of Pre-1967 Israeli Borders

Life, Liberty, & the Pursuit of Happiness

YouTube - Ryan Condemns Divisive Class Warfare

YouTube - Ryan Condemns Divisive Class Warfare

Life, Liberty, & the Pursuit of Happiness

YouTube - Ryan Calls for Spending Cuts Greater than President's Debt Limit Hike

Monday, May 16, 2011

Boehner and Obama Tangle

Big Oil's $4B tax break in doubt as Obama, Boehner tangle

President Obama once again calls for the subsidies to end as high gas prices erode Republican opposition.

By Steve Hargreaves, senior writerPresident Obama repeated his call Tuesday for an end to $4 billion in oil industry tax breaks as gas prices approach $4 a gallon and after a top lawmaker indicated a possible shift in Republican policy.
In a letter to congressional leaders, the president said the oil industry is profitable enough without the tax incentives and that the money should be spent on alternative energy sources and conservation.
"CEOs of the major oil companies have made it clear that high oil prices provide more than enough profit motive to invest in domestic production without special tax breaks," said Obama. "As we work together to reduce our deficits, we simply can't afford these wasteful subsidies."
This week those profits are going to be front and center. BP is expected to report earnings on Wednesday. Exxon is slated to announce its results on Thursday. Some analysts expect the company's profits to jump 50% from last year. Chevron (CVX) is scheduled to make its earnings announcement on Friday.
The oil industry and many of its supporters in Congress have long argued that the tax breaks encourage domestic oil production and provide jobs for millions of Americans. Republicans in particular have resisted efforts to eliminate these tax breaks, something many Democrats have been trying to do since at least 2008.
But on Monday night, Speaker of the House John Boehner indicated he might be open to taking some of those breaks off the table.
"I don't think the big oil companies need to have the oil depletion allowances, but for small, independent oil and gas producers, if they didn't have this, there'd be even less exploration in America than there is today," Boehner said on ABC's (DIS
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World News Tonight. "It's certainly something we need to be looking at."
Depletion allowances let oil companies treat the oil in the ground as capital equipment, and they can write off a certain percentage for each barrel that comes out.
On Tuesday the speaker appeared to backtrack from those comments, with an aid telling CNN (TWX
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that "what the President has suggested so far would simply raise taxes and increase the price at the pump."
Nonetheless, Obama took the chance to pounce, saying in his letter that he was "heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies."
This all comes as the price of gasoline surges above $4 a gallon in many states, making it increasingly difficult politically to defend Big Oil.
As gas prices approach their record highs set in 2008 they are threatening to derail the nation's nascent economic recovery.

The tax breaks in question

The Obama administration is targeting nine tax breaks, according to a paper from the left-leaning Center for American Progress. Four account for the lion's share of the money:
Domestic manufacturing tax deduction: This is the largest single tax break, and would save over $1.7 billion a year if eliminated.
The tax deduction, passed in 2004, is designed to keep factories in the United States. Companies that manufacture here can deduct 9% of their income from operations that are attributed to domestic production.
But some question if that incentive is really appropriate for oil companies. "What are they going to do, move the oil field to the North Sea," said one staffer at the Center for American Progress said in an interview earlier this year.
No, but higher costs in the United States may make them move the drill rigs to the North Sea or some other place.
Eliminating the tax breaks "would actually discourage new energy projects and new hiring in one of the nation's most dependable job-creating industries," the American Petroleum Institute said in a statement at the time, noting the industry currently supports over 9 million jobs.
The percentage depletion allowance: This lets oil companies deduct about 15% of the money generated from a well from its taxes. Eliminating it would save about $1 billion a year.
The deduction essentially lets oil companies treat oil in the ground as capital equipment. For any industry, the value of that equipment can be written down each year.
But critics say oil in the ground is not capital equipment, but a national resource that the oil companies are simply using for their own profit.
The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries. Altering this tax credit would save about $850 million a year.
Foreign governments can collect money from oil companies through royalties -- fees for depleting their national resources -- and income taxes.
A royalty would be deducted as a cost of doing business, and would likely shave about 30% off a company's tax bill. Categorized as income tax, it is 100% deductible.
Foreign governments long ago grew wise to the U.S. tax code. To reduce costs for everyone involved and attract business, they agreed to call some royalties income taxes, allowing oil companies to take the 100% deduction on a bigger slice of their bill.
Intangible drilling costs: This lets the industry write off about $780 million a year for things like wages, fuel, repairs and hauling costs.
All industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first year.

The 9 places where inflation is crushing us

The 9 places where inflation is crushing us

Meat, gas, even diapers are costing regular folks.

ROCKVILLE, Md. — Inflation is far from under control and it’s time that Americans demand our government officials do something about it.
The Federal Reserve would have you believe that everything is fine, focusing on core inflation rates and ignoring broader measures of inflation as they affect food and energy. These commodity-driven prices, as our central banking overlords would have you believe, are naturally more volatile and shouldn’t be overstated.
You would think after Fed bureaucrat William Dudley was castigated for talking up the affordability of iPads while ignoring real family expenses, our Federal Reserve officials would have woken up to reality. But after the publicity stunt by Chairman Ben Bernanke on Wednesday, it’s clear that the Fed — and perhaps many Americans as a result — is in denial when it comes to the inflationary trends crippling U.S. households.

1. Beef

In a revised forecast Monday, the U.S. Department of Agriculture said consumers will see higher price tags on ground beef and steak, projecting 6% to 7% increases year over year. That’s up from a previous forecast of just 4.5% to 5.5% inflation for beef prices. Beef prices have surged in the last several months as supplies shrink, exports boom and grain costs soar.

2. Pork

Don’t think you can just switch from cow to pig to avoid this trend — pork could see retail price increases of as much as 7.5% over 2010 levels according to the USDA.

3. Grains

Even going vegetarian is more expensive than it was a year ago. Corn prices have doubled, from $3.49 a bushel in July to well over $7.70 currently. Wheat prices have rolled back a bit in recent weeks, but topped 2008 highs in February to set a new record and remain very high currently.

4. Gasoline

The average U.S. price of a gallon of gasoline has jumped about 12 cents over the last two weeks to $3.88, with the highest average price for gas tallying $4.27 in Chicago. This is with oil at $112 a barrel — if crude prices reach 2008 peak levels of $145, four bucks for gas may seem cheap.

5. Copper

The price of copper at the end of 2008 was just $1.30 per pound. Currently, copper is trading around $4.30 after setting a record of $4.60 in February. Unlike gold and silver, which are largely used in luxury goods or as investments, copper is used in a wide range of household items — from electrical wiring to air conditioners to water pipes.

6. Diapers

Consumer-products company Procter & Gamble (PG
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) said this week that list prices for Pampers are up 7% on average over last year, with even Pampers wipes up 3%. To be clear, that’s not a retail price hike, just a cost increase to stores. Retailers will decide how much of those price increases to pass along to shoppers. Kimberly-Clark (KMB
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), maker of Huggies, said Monday it plans to raise prices for similar reasons — rising costs for the petroleum products and paper pulp that go into the diapers. It will be the third such announcement for Kimberly-Clark since the middle of March.

7. Paper towels and toilet paper

If you don’t have infants, you’re not off the hook. P&G also said that Charmin toilet paper and Bounty paper towels are both listing for 5% more now with retailers and distributors than they were a year ago. KMB’s diaper price update will also be accompanied by a boost for its flagship Kleenex tissues.

8. Shipping surcharges

Freight shipper United Parcel Service (UPS
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) will be hiking its fuel surcharges from 7.5% to 8.5% as of May 2 for ground freight and from 13% to 15% for air freight. That really hurts small businesses. If you are a storekeeper simply trying to keep your shelves stocked, you have no choice but to pay more and endure smaller margins — or hike prices yourself and add to this inflationary mess.

9. Wages

Perhaps the most insidious factor of our current inflationary spiral is the fact that while all these other items are costing more, household purchasing power is shrinking because wages and salaries aren’t keeping up. While the consumer price index rose 2.7% in March to clock the fastest 12-month pace since December 2009, a staggering 18% of personal income is now made up government transfer payments while wages account for just 50.5%. That’s the lowest since the government started keeping records in 1929.

Obama appoints Muslim Brotherhood to key posts

Report--Obama quietly appoints Muslim Brotherhood to key posts - National Conservative | Examiner.com

An ex-CIA agent and counter-intelligence expert has revealed in a special report that Barack Obama has quietly appointed members of the Muslim Brotherhood to key posts within the Administration. Dr. Clare Lopez, professor at the Centre for Counterintelligence and Security Studies, wrote a policy paper in December of 2009 which details the systematic appointment of Sharia-friendly advocates within the State Department and other government agencies.

 For example, the Tehran-born Dr. Vali Nasr was appointed to co-direct Obama foreign policy toward Afghanistan and Pakistan. Former Saudi Arabian supplicant Charles Freeman was appointed by Obama to chair the Administration's National Intelligence Council, but withdrew his name when it was revealed he issued a 2-page screed in which he postulated a conspiracy theory claiming he had been 'victimized' by American supporters of Israel. In addition, John Limbert was appointed to direct U.S. policy toward the Islamist regime in Iran. Limbert, who was taken hostage during the Iranian upheaval of the late 70s-early 80s, is an Iranian sympathizer who advocates negotiation with one of the most brutal dictatorships in the world.


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Sunday, May 15, 2011

Is "Leading from Behind" a disassociation from leadership?

President Obama has had the tag of  "Leading from Behind" applied to him on Libya, Immigration, Health Care, Budget Deficit, etc.  Is President Obama a leader or a follower, you make the call.............

Leading from Behind affords an unlimited opportunity for "cheap shots" of critics.
Leading from Behind is positioning oneself as a "Monday morning quarterback."
Leading from Behind effectively allows one to avoid direct accountability for any decision or proposal.
Leading from Behind is jurisprudentially an intellectual dishonesty.

When has President Obama ever put himself accountable on the "front end" of any issue?  Please be specific.

What legislation has Barrack Obama ever personally proffered for debate and discussion? Please be specific.

Stocks To Watch Today - Barrons.com

Stocks To Watch Today - Barrons.com

Friday afternoon seems like an inauspicious time to release earnings results. We'll have to wait until Monday to see how the market reacts to Fannie Mae's (FNMA) first quarter results, but the company's assessment of the housing market was grim. Shares fell 9.1% on Friday to 43 cents per share.


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