February, 2011

"Risk comes from not knowing what you're doing"

~ Warren Buffet

The Professional Opinion

DJIA: 11891.93

Buy on the dips.

Buy Recommendations

Suncor (SU)
when you can get it under $33.00 a share.

Comment:  I have found that with this stock and a beta of somewhere around 1.7,  Suncor makes for a better trading stock than a buy and hold stock.  You just need a little patience.

.Downy Wood Pecker
A Downy Woodpecker  - taken with a Canon Powershot SX 30

Personal Portfolio
Home builders, materials and engergy led the way.  I still don't quite know what to think of that....
Not a bad month.

Weyerhauser led the way with a nice return. BBV did nicely too although I only have a token amount in that.

The winter storms and Egypt did not do too much to dampen the markets.

Speaking of Egypt and the teleprompter shooting off it's mouth about the rights of the people and all that..... where was the teleprompter when the people of Iran rose up during their elections?  Did it support them?

Nope, it was nowhere to be found.  It did however manage to take some nice vacations, eat ice cream and look rather silly on a bicycle.

Oh well, mayber there's hope yet.  At least it's not demonizing big business every chance it gets.

Personal Portfolio


Weyerhauser ended up being a decent pick and I made 20% on that on short notice.  I ended up taking the profit and keeping the original dollar value of shares because I think there's a good chance an old holding of mine could do well again.

Blackstone Group

By now we all are aware of the fact that many companies are sitting on piles of cash.  Merger and acquisition activity is picking up and one company that I think is still reasonably priced that does this, is the Blackstone Group (BX).

The share price has been stabilizing and their earnings come out in early February.  Financials seem to rapidly trend higher or tank after positive earnings results.  Witness RF - still haven't figured that one out.

I'm thinking that enough of them have tanked lately that a couple deserve to run on good news.  This is more of a short term speculation but who knows, might be worth holding for the long term.


Feb Update:  It did!

Fixed Index Annuities

Boy the weekly financial talk shows sure have degenerated - degenerated into a pile of infomercials about annuities.  There are even annuity wars going on between show hosts. 

It's enough to make a person gag.

They all start out with the presumption that you have worked all your life, scrimping and saving to live out yours in retirement bliss.

But, you can't possibly do pre-retirement planning and preparation yourself because you don't have the wealth of background and experience as these purveyors of financial porn. 

Unfortunately there is a large amount of truth to this assumption.  If I was to guess,  I would say 70% or greater of the working public is under educated when it comes to personal finance and it is a national shame. 

I highly the doubt this will even cause a blip on the teleprompter's radar screen when considering its push for higher education. 

How about an emphasis on practical education, teleprompter? 

This of course is where the so-called financial planner comes in, hawking annuities of all stripes.  The primary focus these days seems to be the fixed index flavor.

Ever wondered what some of these so-called financial planners have in terms of an education themselves, other than selling product?

If you are ever curious as to what those acronyms following their names means, should become your best friend.

A number of these individuals proudly sport the designation CWPP after names.  I just happen to know a little something about this. 

It means 'Certified Wealth Preservation Planner'.

Let's go over to and see what exactly a CWPP is:


At least a CWPP is listed.....


A 24 hour course on-line and you can be one too!  Is this a credential that you would entrust your savings to?  I would hope not.
It's amazing how many people will.

Fixed Index Annuities - Beyond the Hype

I can make this short and sweet.

1. Fixed Index Annuities are Insurance Contracts, not investments.

2. Fixed Index Annuities are tied, or Fixed to an Index - the S&P 500 for example.

3. Your return on an indexed annuity is typically about 85% of the return of the index it is tied to.

If the S&P 500 Returns 5%, you get 4.25%.  What a wonderful deal.

This reduced return offers so-called 'protection' from market losses.  

4. The return does not factor in any dividends the Market index produces. The insurance company keeps any dividend returns.

Let me repeat that:


This may not seem like a big deal, particularly if you are in the company of a glib annuity salesman. 

However, the dividend return for a typical S&P 500 Index fund over 20 years can account for 25-30% of the total return.

Let me repeat that:


This is a BIG DEAL

In Summary:

A. You get sub-par performance compared to the index your annuity tracks

B. The insurance company keeps any dividends.

C. If the index has an outstanding return for the year, say 15%....your annuity is capped at somewhere around 8% for some indexes.
This means you make 8%, excluding any dividends.  The insurance company makes 7% off the investment, plus dividends.

Does this sound like a good investment in return for 'safety'?  Sounds like a wonderful deal for the insurance company.

If you are investing for the long term, you can do far better than the reduced returns offered by the hawkers of fixed index annuities and boy are they out there running their mouths in overdrive on talk radio these days.  

Makes me tempted to listen to the mass marketers of vitamins instead.

Standard poodle
- taken with a Canon Powershot SX 30 for testing under less than desirable lighting conditions.