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No content published as part of the CAIM LLC blog constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person. To the extent any of the content published as part of the blog may be deemed to be investment advice, such information is impersonal and may not necessarily meet the objectives or needs of any specific individual or account, or be suitable advice for any particular reader. Each reader agrees and acknowledges that any specific advice or investment discussed in the blog must be independently evaluated by the reader and his or her adviser in view of the reader's investment needs and objectives.

Where’s the Faith?

June 30, 2010


It’s not in the equity markets, that’s for sure. Yesterday’s lack of confidence drove the 10 year bond yields to 2.96%. It’s hard to believe that anyone would lend the debt laden government money for that price.

22 names in our portfolio yield 3% or higher. All of these companies are high cash flow generators and have low levels of debt. You have to believe that 10 years from now that we, as a country have the determination to turn around this economic malaise. If that’s the case, these stocks are cheap and will reward investors over the long term. Let’s not forget that with all that cash on the balance sheet, some of it will be going to increase the dividend. Does anyone think the government will raise your interest payment on the 10 year bond?

Gaining More Confidence on the Economy

June 16, 2010


In an April blog, we talked about how we liked the industrial stocks, and in particular, Illinois Tool Works (ITW). Yesterday, management came out with some positive comments for their May results. They are guiding the low end of street estimates upward ($.74 to $.80) for the 2nd quarter. There have been some doubters out there for a less than robust 2nd quarter earnings season but it looks like economic strength will continue. Company reported accelerated revenue growth in all 8 reporting segments. the top 3 were transportation, industrial packaging, polymers and fluids. Stock is off 11% from it’s high of $47 and is a good buying opportunity in here.

Missed Opportunity in the Equity Markets?

June 14, 2010


Not according to Jeremy Siegel. Professor Siegel spoke to financial advisers at Pershing LLC’s national conference in Florida and delivered the following message:

“The S&P 500, now at just under 1,100, would have to rise to 1,500 – a roughly 35% increase – to return to its long-term trend line going back to 1935. From any historical standpoint, you’re not too late. You still have an excellent market to give you extraordinary returns going forward.”

According to Investment News, Jeremy Siegel thinks the current period is similar to the post-World War II era, when people expected a recession and avoided stocks. Investors then flocked to government bonds at low yields and got slaughtered over the next 30 years.

Looks to me like history will once again repeat itself. The individual investor will unfortunately wait until interest rates rise to sell their bonds at lower prices. Not to mention the issue that municipalities will face in the coming years will many individual investors who have not properly diversified their portfolios thinking that they were safe!

Picking the “Best” Dividend Paying Stocks

June 11, 2010


Even in this volatile market, we believe dividend stocks are a far better option than government bonds, which have very little option to keep inflation at bay. Even during the onset of recession, as many as 300 of the 500 companies listed in the S&P 500 raised their dividend payouts.

One important investing criteria when evaluating dividend paying stocks is to invest in those companies that are easy to understand. and have a dividend payout ratio of 50% or less.

Stocks for Today and Tomorrow

June 9, 2010


Jimmy Lee, vice chairman of JP Morgan Chase, made an appearance on CNBC yesterday. He listed the following negative attributes for companies:
According to Lee, there are three basic principles that typically get companies into trouble:
1. Too much debt
2. Too little liquidity
3. Poor risk management

We couldn’t agree more. As we have said many times, the U.S. economy encounters several headwinds next year to cause us to have sluggish growth for an extended period of time. What are the best types of stocks for that scenario?
1. low debt
2. strong cash flow
3. management committed to a solid dividend paying policy

In other words, high quality dividend paying stocks.

Catherine Avery was Featured in the New York Times

June 8, 2010


CAIM LLC is proud to announce Catherine Avery’s contribution to a New York Times article on blended families.

Below is a link to the article:

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