The Best Laid Schemes of Mice and Men

Posted on February 22, 2013 by MN Gordon

Japan can’t seem to catch a break.  On Wednesday, for instance, Japan’s Finance Ministry reported that Japanese exports increased 6.4 percent to $51.2 billion in January from a year earlier.  Unfortunately, imports rose even faster…climbing 7.3 percent to $68.6 billion.

In effect, Japan, as a whole, spent $17.4 billion more on goods from abroad than they sold.  The difference was made up with debt: corporate debt, government debt, and private debt.

Naturally, this new debt will exacerbate Japan’s 230 percent government debt to GDP ratio, which is the largest percentage of any industrialized nation on the world.  This will also be compounded by the fact that Japan’s economy shrank 0.4 percent annualized during the fourth quarter of 2012…marking the third straight quarter of contraction.  If this sounds bad it’s because it is.  Yet Japan’s skid into economic oblivion is only beginning to pick up real steam.

Japan’s trade deficit for 2012 widened to $78 billion.  But that’s nothing. Continue reading →

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Warren Buffett’s Unique Problem and Solution

Posted on February 19, 2013 by MN Gordon

“Price is what you pay.  Value is what you get,” once remarked billionaire investor Warren Buffett.  These are sage words, indeed.

Unfortunately, for most investors, they only consider price.  They ignore the value part…the cash flow – or dividend per share – that the business will generate for them as an investor.  Perhaps this is why most investors over pay when purchasing shares of a company.

Generally, most stock market investors are not really investors at all.  They’re speculators.  They only consider price.  If a stock’s price is rising they consider it a good investment.  If it’s falling, it’s a bad investment.

Then, after a stock’s price falls, speculators think it’s a buy…because of how much less it costs than just several months before.  Yet, sometimes, a stock’s price falls…and then it falls more.  Nonetheless, for investors that understand value, and what they’ll be paid to own a stock, price is considered within this context.

Following Buffett’s philosophy, investing is about maximizing the price paid for an ongoing piece of a company’s wealth stream. Continue reading →

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High Yield Dividend Stocks: What Every Investor Should Look For

Posted on February 15, 2013 by MN Gordon

High Yield Dividend Stocks: What Every Investor Should Look For
By Dennis Miller, Editor, Money Forever

It can be mighty hard to earn any interest at all in today’s banking environment.  Many in­vestors are looking to riskier investments to find the kind of returns they once got from an FDIC-insured CD or even a savings account.

But don’t despair.  There are still a few decent ways to make your cash earn some income without putting it at too great a risk.

My wife takes care of our filing, and during one of her filing sprees some time ago she walked into my office with the brokerage statement for her IRA and asked me why the interest was less than $1.  “Interest rates have gone down that much,” I said.

She replied, “That’s terrible,” and turned around, went back into her office, and stuffed the statement into the appropriate file.

Inflation was eating away at our savings, and our broker had nearly stopped paying any interest at all. Continue reading →

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The Great Money Caper

Posted on February 12, 2013 by MN Gordon

Several weeks ago we alerted you to the burgeoning currency wars and the new age of desperation.  If you recall, nations, in unison, are attempting to export their way to prosperity by killing their currencies.  Unfortunately, if everyone’s doing it, the competitive advantage of cheap exports quickly disappears.

Still, it appears the world is heading down this path of insanity.  In fact, last week brought forth new evidence that nations are preparing for the ultimate race to the bottom…

“Shinzo Abe, Japan’s prime minister, has used the phrase “regime change” to describe his hopes for a new mindset at the Bank of Japan (BoJ),” explains The Economist.  “His wish may be granted sooner than expected.  On February 5th Masaaki Shirakawa, the bank’s governor, announced his decision to step down almost three weeks early, on March 19th.”

Abe wants aggressive monetary easing (i.e. money printing) and a weak yen.  He believes his economic policies, which are being called “Abenomics”, will boost exports and pull Japan’s economy out of a two decade slump.  Will it work? Continue reading →

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