DIVIDENDS: THE DOWNSIDE.

Daughter, Me, Grandson and the New Generation.

One Generation Leaves and Another Shows up. They took this picture the day after I got home from Arizona after saying goodbye to my Dad. In the picture above are Cindy and Zachary, Me, and Lucas Orion Crutchfield. I have this thing about babies and the miracle of life. They are so tiny and innocent, yet they have been programed for survival. Truly a blessing from God.

Are You Tired of Listening to Me Preach About Dividends? I still believe in their usefulness; however, I do believe I should let you know some of the pitfalls of this approach and give you some ideas about how to manage them.

1. The Dividend May Not Continue. I have not hidden this fact; however, the fact that some companies have a long history of quarterly dividends, does not prevent them from reducing them or even eliminating them all together. The past two years have seen strong companies like Pfizer, General Electric, and Dow Chemical cut dividends. General Electric and Dow Chemical CEOs virtually promised continued dividends at current levels only to drastically reduce them a short time later. The lesson here is that, rather than depend on what the executives say, do your own evaluation of the company's ability to continue dividends. Looking at things about the percentage of cash flow the company is paying out in dividends or the amount of cash and debt on the company balance sheet will give you an independent measure of the probability that the dividend will continue.

2. Sell Right After Dividend Cut. This is not a good strategy because not only will your income be reduced because of the dividend cut, the value of your stock will almost certainly drop. If you are unable to predict the dividend cut you stand to lose both income and principal after the cut. In fact, you may be better off buying more at the lower price right after the cut. Statistically, those who buy right after a cut usually do far better than those who sell.

3. Diversification Can Suffer. Although I am not adamant about staying totally diversified, I do believe that concentrating all your investment portfolio in dividend paying companies makes it more difficult to diversify which can increase your overall risk. Unfortunately, many higher dividend stocks tend to be among Real Estate Investment Trusts, Utilities, Master Limited Partnerships, and Business Development Companies. It is difficult to get a diversified portfolio by concentrating on these companies. Even though they pay lower dividends, you are usually well advised to diversify into other industries like telecommunications, energy, and technology Yields in these companies are usually half that of the high dividend industries; however, they still beat the 1-2% paid in banks.

4. Lower Growth Potential. A company that sends out a higher percentage of its cash flow in dividends should be able to earn a higher percentage return on that capital than you can; therefore, in the long term, you might accumulate more wealth by letting the company reinvest your capital than paying you a dividend so that you can reinvest it. This might not always be he case but you should always consider the possibility.

5. Tax Issues. The company has to pay tax on the earnings it distributes to shareholders. You also have to pay tax on the money after you receive it. While dividends received are taxed at a lower rate than ordinary income, this may not always be the case. There is considerable pressure to increase taxes on investment income and the preferred rate may become a thing of the past in an environment where many voters are of the opinion where we need to increase taxes the so-called rich.

I Still Favor Investing For Dividends. But I am aware that there is a downside that has to be managed. Perhaps we can discuss this more in the coming year. Merry Christmas and Happy New Year to all my readers.

TRIBUTE TO MY DAD.

An Early Family Picture of Me at Six With Mom and Dad and Brother.

Most of You Know This. I lost my dad just before Thanksgiving. He was 92 years old. We were close for all 73 years I spent on this planet. He had just turned 19 when I was born so we grew up together. As I was going through his posessions, I came across a copy of this blog post I made almost five years ago. Although he never mentioned it, it must have been important to him for him to print it and save it all these years. It is as true now as it was then. Although he only had a 7th grade education, he taught me as much as I learned in seven years of university education. I decided there could be no tribute to him that is more fitting than my thoughts of almost five years ago.

Sunday, June 17, 2007

THINGS I'VE LEARNED.

From My Dad. It's Father's Day. All the kids and grandkids have either been over here or called me. I received numerous cards, most quite humorous. I am lucky to have such a devoted family, more important to me now than ever as I approach my 70th birthday in a few months. But the main thing that comes into my mind on this day is my own father and the things he taught me. There is no legacy of material goods that can compare with the value of the things he taught me.

1. When You Make a Mistake, Admit It And Do What You Can to Correct It ASAP.
Before I was born, my mom and dad moved to Kentucky so my mom could be with her mother when I was born. My Dad found himself working in the dark misery of a coal mine. Kentucky was rainy and damp and there was little work to be had besides in the coal mines. When I was six weeks old, they made their way back to Colorado where our entire family was better off.

2. There Is Always A Way. Until I was seven years old, we lived in a series of run-down rental properties. Every thing from converted barns to tool sheds. Mom and Dad had no money to buy a home and not enough income to make mortgage payments. When the Mile High Poultry Farm closed down, the company practically gave away their old chicken coops to anyone who would tear them down. Dad acquired several of them and tore them apart piece by piece. We then removed the nails and used the lumber to build the house I grew up in. I followed him around from start to finish. I had a little crow bar (which I still have) and I did what little I could to help. My mother and I removed nails and stacked lumber while Dad worked on the house. That was almost 60 years ago and the house is still being lived in today.

3. How Much You Earn Is Not Important. My Dad became financially independent on very little income. I still can't figure out how he did it. He was frugal but not stingy. He knew the world didn't owe him anything and he went out and worked for everything he got.

4. Being Poor Is a State Of Mind. When I was 12 years old, I used to cross the road in front of our house and lay in the cool green grass under the apple trees. In the fall there were apples every where and I ate all I could but most of them rotted on the ground. One day I got this great idea and I ran home to tell my Mom we should pick up all those apples and give them to poor people. Mom's reply was "Son, we are poor people." Nobody ever told me. There was always an attitude of "we'll get what ever we need." And we did.

5. Teach Your Children to Take Care of Themselves. I have many clients who sacrifice much of their wealth to care for children who are old enough to take care of themselves. I don't know how he taught me this, but from the age of 13, my pride wouldn't let me to ask my Dad for money. I saw how hard he worked for what we had. I knew I was expected to do the same thing. I did my best to earn my keep. I wasn't always able to do this but I never stopped trying.

I guess this is about the best I can do to pay tribute to my Father on this day. In case you think I am referring to a memory, let me tell you the best part. As I approach my 70th birthay, my father is still here. Not just in spirit but in the flesh. He doesn't walk quite as fast and he gets out of his chair slowly but he is still teaching me. He is showing me how to grow old with dignity and pride. As my brother says, "He'll live to throw dirt on both of us." I hope he does.

UNFORGETTABLE CHARACTERS I'VE MET. THE WARRIOR.

Her Father Was The Town Doctor. She was a pretty lady just over 30 but her family was disappointed in Helen. The prevailing opinion in 1922 was that any female over 30 that had not yet attracted a mate was missing some important qualities. While that was embarrassing, she had an even more humiliating problem. She was going to have to tell her family that she was with child.

Their Reaction Was Predictable. They were horrified. Within 30 days she was on a train to Kansas where she had some wealthy relatives. She was going to have the baby and come home after a respectable period. The family would have several months to concoct a story as to the origin of the child. This didn't work so well. Poor Helen died from some sort of flu germ shortly after giving birth. They named the baby John and the Kansas family was more than willing to keep the child and raise him as their own; however, the Pennsylvania country doc would have none of that. Within two months, he was on a train to claim his grandson so he could bring him home to raise as his own.

A Pretty Auspicious Beginning For The Warrior. The doc was unable to continue bringing up the baby, hereinafter called "The Warrior". He must have contacted the same nasty flu germ that killed Helen because he died within a month of coming home with the warrior. Ultimately the warrior wound up with the oldest brother in the family who went through adoption proceedings. His uncle didn't raise him like the rest of his "siblings". He was assigned most of the hard work tasks around the farm, one of which was to bring home wild game to subsidize the family meals.

He Was Well Liked In School. Like most of his family, he finished high school which was not entirely common during those times. He still felt like an outsider at home so he joined the army shortly after high school. Because of his excellent marksmanship, he was selected to become a gunner the air corps. After undergoing several months of training in the maintenance and firing of machine guns, he was assigned as a bottom turret gunner on a B-24 in the 492nd bomb group.

The 492nd Was Not Blessed With Fantastic Luck. They had a tremendous casualty rate. The warrior and his crew were one of a very few to complete their quota of 30 missions, two of which were during the invasion period in the vicinity of Normandy. Because of his contribution to his crew's success, he was awarded the Air Medal and The Distinguished Flying Cross. The rest of the 492nd was disbanded after three months due to their huge casualty rate.

I Was Seven Years Old When I Met Him. My father was still in combat in the army when my aunt brought him to our house and announced her intention to marry him. I liked him right away. I thought the jacket he wore with one bomb attached to the back for each mission he flew was more than neat and he spent considerable time teaching me some of the skills he had acquired. He was part of our family for 60 years but almost never mentioned any of his combat experiences until I coaxed some out of him after he turned 80. The big surprise was that this mild mannered gentleman had undergone so many tasks that required courage more than I could imagine. It wasn't until after his death that I found out he had won the two medals given out for distinguished performance.

Alzheimer's Claimed Him Before He Died. Old age related illnesses have no respect for lifetime courage and accomplishment. Dementia began to overtake the warrior in his late 70's and gradually worsened until he could barely talk and he had no idea who I was when he died at the age of 85. I watched out for him during these years and I must confess it was a relief to see this proud man relieved of the burdens of that horrific disease. The plaque you see above was made by my wife and we hung it in his room at the Alzheimer unit. The purpose was two fold: 1. To remind his failing memory of the good he had done during his life. 2. To let those caring for him in his unit know he wasn't just another old man who had to have his diapers changed. Perhaps they might have given him just a bit of the respect he had earned.

We Are Losing His Generation At a Very Rapid Rate. They will all be gone within a few years. War is changing and, although this was a difficult, high casualty war, those of that generation had the comfort of knowing we were all behind them. Perhaps we can do more for the current generation of warriors.

UNDERSTANDING TOTAL RETURN ON INVESTMENT.

Water Level At the Dock After A Single Night's Rain.

I've Written About This Before. It's a relatively simple concept, yet I am surprised at how few people have a firm grasp on how we are rewarded for risking our capital in an investment. I even find financial professionals who do not have a firm understanding. There are two major sources for our return. 1. Benefits (usually in the form of cash) during the holding period. 2. Benefits from selling at a profit at the end of the holding period. If I told this to an audience at a seminar, I would expect to hear a chorus of "Duh" after those statements. While you may hear a few other suggested benefits such as tax advantages, etc. the first two overshadow the remainder. Here is another Duh statement.

More Is Better Than Less and Sooner is Better Than Later. Again relatively simple; however, there are some strong implications here. It's a relatively simple matter to understand that the sooner you begin to receive cash flow, the lower your risk. Less obvious is the fact that this interim cash flow may be a return on investment or it may be a return of your initial investment. Also, you won't really know which it is until the end of the holding period. To use a real life example from my own portfolio, consider an investment I made in a company called Prospect Energy Capital. My original investment was in May of 2007 when I bought 2000 shares at an average price of 13.50 per share. During this holding period, I have received distributions of $9685. Not a bad return on an investment of $27,000. That is until you look at the current value in todays market. At a current price of $9.45 the value is $18.900 or $8,100 less than I paid. From that point of view, if I sold today, my $9685 in distributions would be considered as a return on investment of $1585 and a return of capital of $8,100. If you have trouble following this example, let me assure you it's relatively simple. Your failure to grasp this concept was more likely do to boredom or not giving a damn. For some reason I enjoy this sort of thing.

Let's Go A Step Further. Suppose I sold today what would be my return on investment. Let's simplify this and say I received my distributions monthly (which I do at present.) My return would be an average of 193 per month for 50 months. This equates to an annual return of 1.61%. Obviously, there is little argument that if I sold today this would be a poor investment. Let's say we didn't receive those distributions and we sold today at $28,585 (current value of $18,900 plus $9685). Our return on investment would be 1.37%. While this is not a huge difference, it does illustrate my point. More is better than less and sooner is better than later.

An Even More Important Point. It isn't just the magnitude of your return that matters it's which is the most important to you. In a high risk environment such as this one. Current income is important as a risk reduction tool. I have clients tell me that they have an adequate income from salary to fulfill their income needs. This can be true for many of the younger folks with relatively stable employment but one point to remember is that current income is important for things other than income to fund your lifestyle. It can be valuable for reinvestment. During the "Tech Wreck" when dividends were considered less useful, many ended up with a drastically reduced portfolio value with no capital to re-invest in stocks at bargain prices.

So Who Would Benefit From Later Rather Than Sooner Income? As I mentioned before, one group that would often choose growth would be higher tax bracket investors with no need for income to fund their current lifestyle. Since there is no current tax on accumulated growth, these are much more tax efficient than stocks with current income. Also, stocks that reinvest their earnings rather than pay distributions should be able to earn more on this capital than the investor who must reinvest these funds. Unfortunately this isn't always the case as some companies can't be depended on to invest this capital in the best interest of shareholders as opposed to management.

The Implications of All This. Some of us have no interest in finance for different reasons such as the lack of capital to invest or the ability to make more money doing something else while they pay to have their investments managed. My position is, whether you manage your own money or have someone else do it, the more knowledgeable you are the better qualified you are to communicate your needs to your investment manager or spot a manager who is acting more in his best interest than yours. I would appreciate your feedback on this post.

UNFORGETTABLE CHARACTERS I'VE MET.

The Land of My Ancestors in 2010.

We Hunted and Fished This Area. I suppose everyone has an old friend they would like to see again. Mine was from 1950. His family moved across the street from me when we were in the 7th grade. His name was Richard but we all called him Rich. Many labeled him a misfit. He often didn't tie his shoes, buttoned his shirt crooked, and could never seem to get the last bit of shaving cream from behind his ear. Some folks even thought he was a bit slow mentally. I knew better. Especially now that I am 73 years old and have a number of those problems myself.

He Was Always Using Big Words. I didn't dare ask what they meant because I thought he would laugh at me. Because of him, I just about wore out a dictionary. He also had a quick wit that could coax a laugh out of the most rigid sourpuss. No.....Richard wasn't dumb. He just occasionally did dumb things. One incident I will never forget is when he asked his mom if he could drive the family car around the block. He drove clear to downtown Denver, a round trip of more than 15 miles. The next door neighbor, Gayle and I sat frozen in the passenger seats, sometimes frozen with laughter. When we came to a red light, he would start shifting into low gear 50 feet from the intersection. Still, we made it home. Quite a feat for a 13 year old who had never driven before. Of course, he had no license, let alone a a learners permit.

Me and Rich Had All The Answers. We both knew that Franklin Roosevelt was the first president of the country and the man who wrote the constitution. He could have been the heavyweight champ but he had to spend his time being president so he could save the country from depression. We thought it was possible for him to rise from the dead and throw the Republicans out of office so as to avoid another depression which we all knew was just around the corner.

The Most Noble Activity Was Fishin'. We went fishin' as often as we could talk my parents or his into giving us a ride to one of the local lakes. In order to fish, you needed a hook a a line, and bait, but most important, a bobber. Without a bobber, white with a red tip, you couldn't see the fish bite. Rich also followed other principles Fish close to the bank, put your bait anywhere you see bubbles, and if it's big enough to bite, it's big enough to eat.

Our Favorite Fishin' Spot was Near Clear Creek. It was a gravel pit near the creek pictured above. We almost drowned wading the creek to get to that spot. We were carrying our fishing gear in the fast moving water which was shoulder deep. It was much deeper then than it is now and, despite its name, was no where near clear. We only had a few minnows left but it was enough to catch a couple of large bass and three or four reasonable sized crappie. We swore each other to secrecy not to disclose to others the location and the fact that minnows were the preferred bait.

The Things We Didn't Understand Back Then, I Still Don't Understand. One of the biggest mysteries was women. They are still a mystery even though I've married three of them and helped raise three daughters. I can't understand why people harm other people, especially children. I don't know why they had to cut down all the apple orchards and raspberry fields in the valley where we grew up. I don't know why they ran a major interstate highway along the west side of our fishin' hole. And I don't know why the teachers in our school and the adults in our neighborhood wouldn't let Rich be the way he was. Finally, I don't understand death. Why do we go through all these stages from grandchild to child to adult to father to grandfather, only to disappear into eternity. Maybe Rich knew the answer but every time we started to talk about it, we got scared and quit.

Where Ever You Are, Rich, I hope you are still leaving your shoes untied and buttoning your shirt different. I hope you are still spontaneous and creative and possessed of great wit. The trials and tribulations of life have a way of breaking us all into formation. I pray that it didn't happen to you, Rich.

I Found This In an Old Notebook I Wrote In 20 Years Ago. With the help of the internet, I have found Rich. One of his two beautiful sisters is still alive and in her mid 80's and they live in California. It's unlikely that we will meet again. He doesn't see well and I don't hear well so we have a problem communicating. I'm glad he's still alive and I hope he gets a lot of enjoyment from the years he has remaining.

REQUIEM FOR A WATER OAK

" ....Only God Can Make A Tree." Joyce Kilmer.

I've Always Loved Trees. That's why I live here. Hurricanes Ike and Rita along with a severe draught took 75 of these majestic creatures from us. Since you survived the hurricanes and lived adjacent to the water I was not worried about you. I forgot about the beaver who chewed all around you and removed your bark resulting in what appears to be a lingering death.

You Were My Favorite. You stood guard over my dock and provided shade to those who wanted to spend time by the water. You watched my grandson catch his first fish and my father-in-law catch his last. You watched me tip over in my canoe and get an unexpected cool water bath. Do you remember how I looked all around to see if any of the human species witnessed that. I was relieved that it was only you who saw that display of clumsiness and I was secure in the knowledge that you would keep it a secret.

I Was Patient With You. I lost numerous fishing lures that became totally meshed in your leaves and branches. When friends and family chastised me for these errant casts, I told them I was fishing for the elusive Tree Bass. I never became angry because I knew your benefits far outweighed the cost of a few fishing lures.

Looking At You Today. It fills my heart with sadness. My entrepreneurial neighbor, a Rice University Graduate who prefers to do landscaping work in the woods to corporate life , came by to tell me you were gone . I agreed since I have never seen your leaves turn brown in the 15 years I have lived here. Still, I couldn't bear to have you removed. I am hoping for a miracle. I want to see the brown leaves fall and new green ones emerge. I know I have probably lost a dear friend. If the Boss can find some compassion for you and me, I pray that your greenery can be restored. If not, I will someday have to admit defeat and provide you with a dignified exit from the planet.

WHAT A DIFFERENCE 50 YEARS MAKES.

The "man" on the left is a proud college boy who was the first in his family to attend college. The man above is the same man after getting his ass kicked by the world many times over. The man on the left thought he was pretty smart to have received
that college degree with a major in chemistry. The man above knows very well how lucky he was to be able to finish college and to graduate with mediocre grades. The man on the left earned his way through school with little help from family or student loans. He was lucky enough to have a job that allowed him to set his own hours and earn enough to pay his own expenses. He also got a grant from the National Science Foundation that paid for his last year.

Timing Means A Lot. College, even at a state supported university, costs many times what it cost in 1960. Retirement plans are often decimated by education costs for kids. In addition, many students graduate with mountains of debt. All this and the majority of students move back home after graduation. When I graduated, I had 20 or so on-campus interviews and 5 or 6 interviews where I was flown all over the country for on-site interviews. The company that hired me spent thousands to move my wife and I from Colorado to Delaware. No such luck today. Which leads me to the major point of this post.

Is College Worth It? I have to question the value of a college education today. Statistics show that the average college graduates earn considerably more over a lifetime than those without an education. I don't question those statistics but you also have to take into consideration that those who attend college have, on average, more ambition than those who don't. There have always been more opportunities for those with higher than normal ambition. Bill Gates and Steve Jobs and countless others have been quite successful without finishing college.

Keep My Opinions To Myself. My daughters have chastised me not to talk this way around my grandchildren. I guess I don't mean to say that I don't recommend college. If you can afford it your children will probably be better off with an education than without. If you have a child with a strong ambition to work in a field that requires an education, it is probably worth it. But if you are having trouble sending your child to college without jeopardizing your financial security, don't feel guilty. There are ways to accomplish educational goals without taking a vow of poverty.

Reflections on a Monday Morning.

"...When my son is born, and he looks up at me, he will see the man he has helped me become." My grandson expecting his first child in two months.

A Different Approach. My last post about dividends could have been quite useful to those looking for a more stable return on investment than the overall stock market; however, I didn't find it much fun to write. There are a lot of things more important to me at this stage in my life than money; therefore, I have decided to write more often about these things. Let me know what you think.

Working Together Works. Although I was very young during WWII, there is one thing I remember that was different than subsequent conflicts. We were all involved in that war. Most of us had family members in one combat zone or another and the casualty rate was so high that just about everyone had suffered a loss or knew someone who did. There were rationing coupons for gasoline, meat, and other commodities needed to support the troops. Formerly stay-at-home wives worked in defense plants. Old men did the same. Even kids were involved as we collected milkweed pods that were supposed to be used in parachutes. We made tinfoil balls to be processed into a reflective material to drop from airplanes. Even fats were supposed to be saved to be processed into glycerine for explosives.

Even The Press Was Different. Most journalists voluntarily refrained from publishing negative information about the war effort but that wasn't enough. Less than two weeks after Pearl Harbor the office of censorship was established. The government actively monitored news organizations both for propaganda purposes and to prevent leaking of secret weapon information. Freedom of the press was no longer an issue. They also suspended habeus corpus which would have required judicial treatment of anyone suspected of being an enemy of the war effort. In that environment torture of the enemy, no matter how severe, would never have come to light like it has during the war on terror.

You May Agree or Disagree. Contrast that environment with the present. A much smaller segment of our population is directly involved in combat. The average American is sacrificing little for the war effort. We are bitterly divided over the war and a number of issues and, although most claim to be in support of the troops, very little effort is is expended in showing this support. Then, as now, we are in the midst of a serious threat to our way of life. The difference is that now those defending that way of life are largely limited to a small fraction of our population, who's lives are in danger each day. Until we become more united in support of efforts to defend our freedom, it will be in jeopardy.

DIVIDENDS. THE ONLY GAME IN TOWN

A Decent Return On Your Investment Portfolio Involves Some Risk. I have met with several retirees who have lost 70% or more of their capital. What used to be the lynchpin of American industry, General Motors endured a bankruptcy and the stock holders saw virtually all their capital wiped out. If you had any of that in your portfolio at all, you suffered a major loss. Dividend paying stocks weren't exactly safe since several companies with 50+ years of ever-increasing dividends found it necessary to drastically reduce, or totally eliminate all payouts. Despite these dire circumstances, you either have to forgo any return on your investment (the after tax return on one year CDs is virtually zero or negative) or take some risk. Since I do not have enough capital to sustain my lifestyle without some return on my capital, I chose to take some risk in the market.



Cash Flow Is My Choice. If a stock does not provide some interim cash flow while I am holding and hoping the value goes up, I am not interested. Last December, I put together a sample portfolio of dividend paying stocks to provide some income with what i consider to be acceptable risk. The cost of the portfolio was $199,755 and the anticipated income was $11,950 or 5.98%. The main purpose of this post is to let you know how that portfolio has done since the mid December purchase date. An update of the individual components is as follows.



1. Ameron Corporation, AEE. This is a utility company with an original purchase of 600 shares at $17,130 and a dividend of 1.54 per year. The current value is $17,406 and the annual dividend has increased to 1.56 per share. So far we have colleccted $684 in dividends since the original purchase date.

2. Bristol Myers/Squibb, BMY. This a pharmaceutical company with an original purchase of 700 shares at $18,380 and a dividend of $1.28 per share. Current value is $21,784 and the dividend has increased to $1.32 per share. So far we have collected $693 in dividends.


3. Duke Energy, DUK. This is a utility company that we purchased 1100 shares at $19,300 with a dividend of .98 per share. Current value is $22,143 and the dividend has increased to 1.00 per share. So far we have collected $825 in dividends.


4. Lockheed/Martin Company, LMT. This is an aircraft company that we purchased 300 shares at $20,460 with a dividend of .98 per share. Current value is $21,747 and the dividend has increased to $1.00 per share. So far we have collected $900 in dividends.


5. Medical Properties Trust, MPW. This is a real estate company that owns medical properties. We purchased 2000 shares at $20,240 with a dividend of .80 per share. The dividend is still .80 per share and the current value is $18,520. Dividends have been $1,200.


6. AT&T, T. Most of us know and do business with this company. We purchased 600 shares at $17,526 with a dividend of $1.68. Current value is $21,264 and the dividend has increased to $1.92 per share. Dividends YTD have been $774


7. Health Care Properties, HCP. This is a company that invests in a wide variety of health care related properties. We bought 600 shares for $19512 with a dividend of 1.86, Current value is $21,264 and the dividend is $1.92. So far we have collected $864 in dividends.


8. Kinder Morgan Energy Partners, KMP. This is a company that owns pipelines for petroleum products. We bought 300 shares at $20.775 with a dividend of 4.44. Current value is $22,137 and the dividend has increased to 4.60. This year we have collected $1035 in dividends.


9. Fidelity National Financial, FNF. This is an insurance company that specializes in title insurance. Tha annual dividend was .72 per share. Current value is $21,658 and the dividend has decreased to .48 per share. YTD dividends have been $504.

10. Windstream Corporation, WIN. This is a wireless communication company for which we paid $26,800 and bought 1900 shares. Annual dividend was, and still is $1,900. We have collected 1, 425 so far.

Summary. The total value of this portfolio is now $206,478 or $6,000+ more than our purchase price. Total dividends at the current payout are $11,896 compared to our rate at purchase of $11,950. Seven of ten companies are worth more than the purchase price while
three are down. Seven of 10 companies have raised their dividends while one is lower and two are unchanged. I have not monitored these carefully during the interim which I would recommend any investor do. Chances are I might change one or two of these however, the main reason I have included these is that I believe it should be relatively stable in a highly volatile market. Total dividends paid out by this approximately $200,000 investment year to date have been $8,904. Considerably more than the average 1 year CD. I tend to ignore the approximately $6,000 gain since it could be up or down depending on a number of factors. That small gain could disappear or increase depending on investor sentiment.

TEN THINGS I'VE LEARNED ON FACEBOOK.

Many Think It Is a Waste of Time. I must admit, I was one who thought it fell into The Get A Life category. Maybe it is a bit of a time waster but I've learned a number of things that, taken together, have made a significant change in my life. Here, in no particular order, are ten of them.

1, Facebook is Not Just For The Younger Generation. Our kids and grandchildren may use them for flirting and gossiping with their friends which doesn't mean as much to most of the older among us but the older generation may have an even greater need to stay in touch with the outside world. Neuroscientists have learned that the aging brain is capable of learning new things that can keep it biologically and psychologically healthy instead of unavoidably deteriorating as we grow older. One of the most important factors in the health of the aging brain is social contact with others. As elders find it more and more inconvenient to leave the home environment, Facebo0k can be a valuable resource in avoiding elderly decline.

2. People You Found Interesting Fifty Years Ago Are Still Interesting Now. I ran across a friend from 50 years ago, John, whom I haven't seen since high school. We had a few common interests together back then and enjoyed spending time together. Even though we went somewhat different directions after high school, we met on Facebook and now have totally different interests but we still connect on many different levels. My relationship with John has added numerous benefits to my life.

3. Blood Bonds Are Extremely Important. I ran across a cousin, Marlene and her husband, Clarence on Facebook last spring. She came from a very religions family and I did not and we had virtually no reason to meet again since we last visited over 60 years ago. It also turned out that her husband Clarence and I had never met but he and I were also cousins through a different branch. Our visits together have been high points and have added immensly to my life in the past year.

4. You Have An Opportunity To Meet People You Might Not Have Met Otherwise. The other day, I met with Josh, a 23-year old veteran of combat in Iraq and Afghaniston. We met on Facebook and decided to have lunch together so I could have a chance to become more knowledgable on what our young men go through over there. He was very willing to share, even some things he found uncomfortable to recall. I came away more knowledgable and even more appreciative of those young men who put their lives on in our behalf.

5. People Are Often Willing To Share Some Intimate Details With Others. Kim started to work in our company when she was 19. She was a brash young lady and knew virtually nothing about our business. She became a huge asset to us in a hurry but I have rarely seen her since she left us over twenty years ago. When we became friends on facebook, I had a chance to follow her through a period of unemployment, a serious injury to her daughter, motorcycle trips across country, and some of her political views. Her frankness and "what you see is what you get" attitude leaves it even more like she's my daughter than she was 20 years ago.

6. You Even Get To Know Family Members Better. My brother married his wife 35 years ago. Even though I saw her on holidays, weddings, and other family events, most of our time at those events I spent with my brother and his two sons. Since we met on facebook, I have learned of her immense admiration for plants and animals around her mountain home and of her relationship with with God which forms a central part of her life.

7. Genuine Love can Exist Between People Who Have Never Met. I have observed this between long-time online friends. I had considerable doubt that this could happen but my observations of some of the interactions have convinced me that this is true. I guess I am now convinced that love can take many different forms and everything we thought to be true may not be.

8. What Can Appear to Be Genuine Love Can Be A Fantasy. I read about a chat room relationship between a male named "Marine Sniper" and a female labeled "Tall Hot Blonde." They both sent very appealing snapshots of themselves and they talked extensively on the telephone, even engaging in phone sex, whatever the hell that is. A third young man also became involved causing lots of jealously. In the final analysis this third man was the only real one of the bunch. Unfortunately, he was killed by "Marine Sniper" who turned out to be 46 years old. His picture was genuine but taken 23 years ago. When police talked to "Tall Hot Blonde" they found out she was 45 years old, married and mother to the young lady in the bikini photo that she claimed was herself. Which brings me to item 9.

9. In Addition To Love, Genuine Hostility Can Form. The previous example illustrates this. In less serious case, I posted a joke (not a dirty one nor hostile one) on an online friend's page. One of her older friends, who obviously did not understand the joke, replied saying that I wouldn't have made that reply if I "knew the lord." Later she replied and she said she didn't understand what I meant but she didn't appreciate it and dropped me as a facebook friend. If she didn't understand the joke, why did she not appreciate it. Again I should emphasize that the joke wasn't dirty, hostile and didn't contain any hostile innuindos. I still don't understand what anyone found offensive but I decided it wasn't worth pursuing.

10. Facebook Can Be A Place to Showcase Your Talent. One of my friends, Sue paints beautiful pictures of horses that show an amazing facility for the use of color. She takes pictures of the paintings and puts these on Facebook. I don't know if her pictures are an economic success but there is no doubt that she is a talented artist.

This Post Represents a Departure from my Original Subjects. Your feedback is appreciated.

AMERICA WAS WRAPPED UP IN A BLANKET OF RAGE.

Been Distracted Lately I won't bore you with the details of why I have been distracted from my practice of a weekly post. Let's just say I have been driven to start again by some of the things I have experienced lately.

A Blanket of Rage? Read the title page about America being wrapped in a blanket of rage. Who said that? Michael Moore? Rush Limbaugh? Actually it was neither (I'll tell you who said it in a later paragraph) but it describes the environment today. Despite my strong efforts to stay away from hate speech, I do find myself getting angry at some of the things I hear, like "Let's take these sons of a bitches out and give America Back to America Where it Belongs. (James Hoffa) There have been comments from the left that Fox News cut out some parts of the speech to make it look like a call to violence. as opposed to what he really meant, that we should vote the Republicans out of office. (I might remind him that they already did.) Violence or voting booth, I know hate speech when I hear it. I probably should look for something equally offensive from the other side but I'm sure there are plenty who will do that for me.

Mr Hoffa Wants More Union Jobs. Actually, I agree with him. I want more jobs for everyone. What Mr. Hoffa and his constituents haven't done is tell me how to make American Labor competitive with the BRIC nations. (Brazil, Russia, India, and China). We are in a global economy and both labor and management have to get more bang for our labor buck if we are going to re-create the job market in America.

Who Said The Title Quote. It was Bob Dylan and he has yet to state his political preference. The time he was referring to was 1968. Racial strife, assassinations, anti-war demonstrations, and sit-ins capped off by the Kent State killings. We are not yet in a situation that serious and I sure hope it doesn't come to that. A common thread to both times is a long-running war which becomes more unpopular by the day.

You and I Both Know What Changed Everything. The September 11 attacks. You know my favorite memory of that day? I remember looking out my 9th floor office window and seeing a man on the freeway overpass waving a huge flag on a six foot pole. Cars driving by were honking and blinking their lights. Many would think that the flag waving was a meaningless gesture. I understood. The poor flag waver just felt he had to do something to express his love for the country. I wanted to do something myself to show my support. Three years later, the flag waver was replaced by folks standing on that, and similar, overpasses with large signs that said, "Bush Lied, Thousands Died." Or at election time, signs said, "Fire The Liar." How did we move from all pulling together on 9-11 to half of us hating the other half a short time later. Frankly, I really don't know but I know its bad for our country. Hate hurts the hater as much or more than it hurts the hatee. We all suffer from what is going on today.

The Terrorists Accomplished More on 9-11 Than Most Of Us Realize. Not only did they kill almost 3000 of us and destroy some major landmarks and symbols of freedom, they started driving a wedge between us. We all differ about how to manage the war on terror or even whether we can call it that but there is one thing I bet most of us can agree on:

DON'T LET THE BASTARDS WIN.

REAL ESTATE AS AN INVESTMENT

Does This Look Like a Drought? Lush and green as my back yard looks, we are in the middle of the worst drought I have seen in this part of the country. The humidity is often so high here that we seldom have to water. Not this way now. I have to water somewhere virtually every day. It's around 100 degrees and the humidity is 50% as opposed to high 90's and 70+% in normal times. We are about 20 inches below normal rainfall for the first six months of the year and we won't be able to have our normal fireworks display because of fire danger. Fires have already destroyed several thousand acres of timber in this area.


What About Our Investments? I haven't talked much about investments in recent months, in fact, I have been so busy with life that I haven't posted much about anything. Hopefully, I can get at least three or four posts per month for the rest of the year. I am still favoring cash flow over depending on capital gains from our investments but the main question is where are we going to get that cash flow in the future. Many of my clients are wary of the stock market and are depending on withdrawal of capital to fund their life style. This increases the odds that you will run out of money before you run out of life. I am in a similar situation myself but I'm determined to improve it in the future. The biggest risk I see in the stock market is that much of the recent gains have been fueled by the federal reserves' loose money policy which is scheduled to tighten in the near future. This means that we are looking at the potential for inflation which is always a problem for the stock market. If you don't have the stomach for another correction, better lighten up in this area. That doesn't mean get out altogether because I don't claim 100% accuracy when it comes to something as in-exact as an economic projection.

Fixed Income Investments? Bonds are unlikely to provide a reasonable return on investment in the current low interest rate environment. If you buy longer-maturity bonds you will get a higher interest rate but you run the risk of losing market value when rates increase.

Which Brings Us To Real Estate. I bet there are many out there, who have seen the value of their homes and investment properties drop 20-40%, and think I am crazy. I won't go into tremendous detail but here are some reasons why I think investment in single-family homes is a wise move at present.

1. Prices Are Down. When the market was hot and heavy I received many calls from investors who wanted to get into the market. Prices were so high that I was unable to find properties that I would project to bring a decent return. If you were using me as a real estate advisor at that time, the best deals were the ones we didn't make.

2. The Rental Market is Strong. During the recent bubble, anyone who could fog a mirror could buy a home; therefore, we had a challenging rental market. You have heard me say many times that it is tenants who drive the investment property market. Vacancy rates in Denver, Colorado are approaching 5%. This means that the supply of qualified tenants exceeds the supply of well cared-for properties and excellent potential for higher rental rates in the future.

3. There Are Still Tax Advantages to Real Estate Investments. Not only can you get decent cash flow in this market, you won't have to pay tax on all of it. You can delay taxation until you sell the property. Even then, you will be taxed at a lower capital gains rate. If you decide to sell and buy another property, there are a number of techniques to allow you to defer, or even avoid, taxation. I few years ago, one of my clients sold a property and carried back a note for part of the proceeds. Not only did this allow him to earn interest on money that would have gone for taxes, he now owns a mortgage that pays him 8%. This is an excellent return in this market. It is my opinion that the note is worth more than the principal due because of this high yield.

4. There is A Strong Potential For a Rebound In Values. The population is increasing and there are few new properties being built. This makes it highly likely that properties will increase in value when the current inventory of unsold homes is absorbed. While there is no way to accurately predict when this will happen, property owners will be paid to wait. Current cash flow is higher now than at any time in the past few years and there is a potential for even higher rents in the future. Qualified borrowers can borrow at favorable rates and tenants will make the payments on your behalf.

A Few Cautionary Notes. Real estate investment is not for the faint of heart. Before buying a property, make sure you have a liquidity reserve to carry you through unanticipated vacancy or maintenance expense. Make sure you have a qualified management company to lower your risk of tenant problems. Don't look for very low down financing. This is a two edged sword and can increase your risk of disaster. Mortgage payments must be made whether or not your tenant pays the rent or you have unanticipated expense.

I'm In Town For Much Of July. If you want to discuss ways to add real estate to your portfolio, give me a call. My cell phone is 303-902-3940 or you can call Susan at Westmont Companies 303-996-2010. She always knows how to find me.

LIKE IT OR NOT, CHANGES ARE COMING

The Picture Above Is What I See The Right After I Get Up. Perhaps it is why I am so nostalgic lately. I am grateful that there are some things in my life that change very little. Although I have to expend some effort to keep it this way, most of it occurs automatically with little help from me.

Other things Are Changing Very Rapidly. A number of these changes are inevitable and can be very frightening because some long time fixtures of our society are virtually disappearing.

1. The Post Office. Regular mail (snail mail) is disappearing. As the older generation disappears, virtually all written communication will be via computers. So much nicer to write something that you can send around the globe in seconds rather than days. Of course, we will still need to move objects and packages but Fed Ex and UPS can handle that much more efficiently than the government.

2. Checks. More and more of us pay our bills by internet. It's way too inefficient to use paper that must be carried around from place to place to conduct commerce.

3. Newspapers. As a means of disseminating news, newspapers are way too slow. Between television and the internet, there is little need for print media to be carried around and thrown in people's yard. Dad with his morning paper and coffee is a thing of the past.

4. Books. In a very short time, electronic books have exceeded printed material. My daughter was here recently with her Kindle bragging to me that she was carrying an entire library of 150 volumes in her purse. Although it pains m to say this, it appears that thi is much more efficient
than my present method of keeping reading material which requires book cases in every room and a dust collecting system that causes my wife to sneeze every time she gets one down.

5. Conventional Telephones. My first cellular telephone was confined to my automobile and cost over $1000 (on sale). It only involved voice communication and you paid by the fraction of a minute each time it was in use whether you contacted the party you wanted to reach or not. The hardware is now cheaper and more versatile. The younger generation takes their cell phones with them when they move away from home and few bother to hook up conventional telephones in their new environment. Telephone companies are doing very little to maintain and improve the infrastructure of their conventional telephone business. Talk to even low level phone employees and they will tell you that land lines are the least profitable segment of any communication company's business

6 Television as it currently exists. TV networks are not serving the public well and it appears obvious to me that commercials are becoming more and more prevelant. Cable subscrptions are becoming more and more expensive, yet their revenues are down. At the same time, video games and and internet entertainment are competing more and more for entertainment time. In the future, virtually all television sets will have a computer terminal and internet connection with programming through the internet.

Most of These Predictions are Common Sense. But common sense predictions have helped my investing success immensely over the years. Think about it. What kinds of companies may be successful over the years in view of these trends? Certain tech companies? Transportation companies? Electronic companies? The current investment environment is pretty risky. Companies that have had dominant positions in some industries might be at risk (Remember General Motors?). It's going to take some thought and attention to avoid losing money on some of the companies that will be impacted by these trends.

THE IMPORTANT THINGS IN LIFE.

Can You Take A Picture of Love? Photography is based on simple scientific principles. It has nothing to do with anything but physical phenomenon. Love is not a physical phenomenon and, although I have tried to formulate a physical definition based on things I learned from my chemistry and biology courses, any definition I could come up with is woefully inadequate. There is no adequate definition to describe love as a physical phenomenon but I know what it is when I see it. Look at the picture above. You might describe the photograph as one of a beautiful young mother and her new born daughter. A very poor description. It is a picture of love. One that tells us what really matters in this life.

I Was Brought Up To Believe You Have To Fight For What You Get. I was born into poverty but I was blessed with parents who encouraged me to roll up my sleeves and work to achieve my goals. I was born into a country that provided me with ample opportunity to do so. Social Security records show I started working at age 13 and have worked every year since although some of you might not define what I do now as work. I am now 73 and I realize that much of what I have worked for is valueless. I can't take it with me when I leave this world and wouldn't want to if I could.

So What Do I Own Worth Taking With Me. With the exception of a few guitars, nothing I can pack up and take from place to place. The answer lies in the picture above. It's relationships and the love that goes with them. I still spend time with people I knew in childhood. During the past two years, I have met people online and formed relationships that I value highly. I have seen posts on facebook that shows the high value certain others place on love. I suppose it is idealistic to wish we could form an entire world society based on love, but you can form a series of core relationships based on love and mutual respect. These will serve you well throughout your life.

I Am A Bit Embarrassed. Some of you may find this to be a bit hokey. I admit I find it a bit that way myself. Still, I find it boring to always be talking about money when there are so many more important things. I will probably be in Colorado soon. Send me an e-mail or call my cell phone (303-902-3940) if you want to get together.

WHO DO WE BLAME FOR OUR PROBLEMS?

It's All George Bush's Fault. No. The Fault Lies With Obama. There was a recent series of posts on Facebook where several posters argued as to whether George Bush or Barack Obama was at fault for the current economic malaise. This reminds me of my own upbringing. We were Democrats from head to toe. There was no room for argument. Herbert Hoover caused the depression we barely survived and FD Roosevelt got us out of it. In every subsequent election we voted against Hoover and in favor of Roosevelt, even though both had been dead for several years. It was that simple. I would be a Democrat when I became old enough to vote. Through out high school and into college, I saw no reason to change my plan as my high school teachers and college professors somehow began to let their preferences creep into their lectures. Not only did I know I was right, I could advance a series of arguments, relatively well constructed, to defend my position. Where Are We Now? As I looked at the series of Facebook arguments, it became obvious to me that things have not changed. Each poster had a very simple answer as to who was responsible for our current situation. One side claimed that Obama has failed to take the necessary steps to remedy our situation because of his lack of leadership skills while the other side claimed he was doing as well as he could be expected because of the mess that Bush left us in due to his lack of intellect and willingness to lie to get what he wants. Which one is to blame. Bush? Obama? Both? We all have our opinions. The real facts are that none of us have access to enough information to know. Both Bush and Obama had access to a host of skilled advisors and more facts than any of us could access in a lifetime. The success or failure of each president will depend on a number of factors beyond their control. For example, Clinton was a highly popular president who produced a budget surplus for which he gets the total credit. This is despite the contribution of Reagan who gets credit for the fall of the Soviet Union which allowed Clinton to cut the military budget as a result of the decline of the cold war. Bush gets total blame for getting us into war in the middle east. This is despite the fact that an overwhelming plurality of congress approved that war. The surplus turned into a deficit for a number of reasons, not the least of which was 9/11 and massive additional expenditures to keep us safe. The Bottom Line I still have my opinion and I'm sure most of you do too. But neither of us can assume that we know enough about all the factors involved to put forth a simple answer or offer a simple solution to a problem that is far too complex to be solved by a simple solution. We also have to look at the voting public who continues to expect the government to provide things for us that we can't provide for ourselves. Want a nice house, a new car, all the gasoline you need, and a low stress job with an income that provides more than 90% of the wage-earners in the world can't afford? Want all of this guaranteed by the government? Ain't gonna happen folks. Beware of any politician who claims to be able to provide it for you. What Does This Mean To Your Finances? No doubt, the government has an influence on your financial future and this is the main thing I'm interested in. There is little or no reward in safe investments. The FED is keeping interest rates low and providing liquidity to the market by increasing the money supply. This is likely a temporary situation that will eventually cease as those funding our deficit will decide they don't want to keep providing us with goods and services that we can purchase with dollars of ever decreasing value. The correction may be prove to be painful to investors. For this reason, I am staying with my same old arguments. Stay with investments that provide income. The most critical factor in evaluating your investments should be how likely is that income to continue. On my next post, I will discuss the real estate market and how you can profit in the current situation. The Picture At The Top. This is a flower bed that we planted when Hurricaine Ike blew down a cluster of Magnolia trees. Rather than try to replace those trees we decided to take advantage of the increased light to add a little color. The bright red flowers are called "Knockout Roses" which I had never heard of but which provide more color than I expected. One of life's pleasant little surprises.

TEARING DOWN FRUITDALE SCHOOL

Recent Picture Of Clear Creek A Major Fruitdale Landmark

All I Needed To Learn I Learned At Fruitdale School In my last post, I talked about a phenomenon known as "Creative Destruction." It's a process by which our society can change for the better. Dr. Jack Makens, a friend of mine from high school sent me two examples from the Denver Post. One of these articles was about the Fruitdale School, the place where I obtained my first 8 years of education. I loved that old school where I learned a lot from several dedicated teachers. There is now a controversy as to whether or not the old building will be torn down. It was offered to the Wheat Ridge Historical Society for the modest sum of ten bucks. The society turned it down because it could not afford the estimated $225 per square foot it would take to remodel it. Several local citizens oppose the destruction of this school because it has been a landmark in Fruitdale Valley for almost 100 years. The building was designed and built by Temple Buell, a prominent Denver area architect. He hired several local farmers to work on the construction. I considered joining in the effort to protect the building but then decided that the significance of that school was the people I encountered there, from classmates to teachers. My memories of those days will always center around those people rather than the old red brick structure.

Another process most likely scheduled for destruction is the teaching of cursive writing (longhand or script to most of us). This is being replaced by "keyboarding skills." I never used cursive after obtaining my college degree since I learned how to print very rapidly as an air force radio operator. My guess is that cursive will gradually disappear from our culture. I, for one, will not miss it.

I'm not sure all this destruction and replacement represents an improvement. At the end of the street where I lived, there was a trolley track where you could ride down town for a dime. We used it a lot during the war when gasoline was in short supply. It was a handy way to get where you wanted to go if you wanted to go to an area near the track. Every few blocks was a green colored station with a roof where you could wait. I won't mention other uses for those buildings but I'm sure your imagination will serve you well if you think about it. The station, tracks, and trolley cars have all disappeared and those who use public transportation can stand out in the cold and catch a bus. If they hadn't constructed I-70 where those tracks ran, they might still be viable for light rail.

An Update On Intel. One common investment mistake I have made is that I am reluctant to sell a stock just because it drops in price. I have invested in companies that I rode all the way from my original price to virtually zero as I held and waited for the price to rebound. Fortunately, I recovered much of my original investment via option premiums and dividends but I would have a much larger portfolio if I had just followed the old adage of "Cut Your Losses and Let Your Profits Run." That is much easier said than done but I surely could have done better than I have. I decided on a somewhat different strategy with Intel. Although I still think it is a good company, the fact that it has dropped almost 10% since I bought it, I decided to take my loss and bail out. Well, almost bail out. I sold my 1000 share of Intel for a $1700 loss. Some of the loss was recovered from profits of $1239 in option premiums and $181 in dividends received for a net loss of $280. Just in case my decision to get out proves erroneous, I purchased an option which gives me the opportunity, but not the obligation, to repurchase my 1000 shares at $22.50 per share any time between now and January of 2013. I paid $1680 for this privilege. This allows me an almost unlimited upside potential should Intel suddenly reverse fortunes and go to unexpected heights with a downside of only $1680.

It is my opinion that option strategies are a valuable tool in the management of any investment portfolio. I would advise virtually any serious investors to learn the basic principles of option investing. Many, if not most, investment managers and stock brokers advise against their use because some don't know enough about them and others are afraid that their clients will become too aggressive and lose money. For this reason, broker dealers require that their investors obtain approval from a designated options principal before they are allowed to trade in this area. While many investors have lost considerable sums speculating in options, others find they can be a valuable tool in managing risk. In the present environment I have limited my own investment choices to those companies that offer attractive option opportunities as well as sound fundamentals.

DIVIDEND PORTFOLIO UPDATE

My Favorite Restaurant I couldn't resist showing you a picture of my favorite restaurant, The Tschoupitoulas Steak House. It's also in one of my favorite towns, Crockett, Texas, The home of the Camp Street Cafe and Store, which is neither on Camp Street nor is it a Cafe and store. It is the home of my favorite music venue and is owned by my favorite cowboy poets/musicians, The Gillete Brothers. One of the pioneers of country blues, Lightnin' Hopkins used to play on the streets there in the early 1900's. The picture next to the cafe is a sample of what's happening to small town America. Alan Greenspan would call it an example of "Creative Destruction" which describes how older/obsolete institutions are destroyed so that newer, more efficient institutions can take their place. I suppose I may also be an example of these old/obsolete intuitions that are being destroyed to make room for the youngsters. In any event, I am grateful for places like this and not sure every example of creative destruction is all that creative.

On The More Practical Side. I told you I would give you periodic updates of the portfolio I put together last December to illustrate alternatives to risk free examples. I am not sure how long I am going to keep publishing these updates. One of the advantages of portfolios like these is that you don't have to watch them every day. I hope you don't find these updates too boring.

1. Ameren Corporation (AEE). Investment amount was $17130 and current value is $16524. Dividends since January 31 are $234.

2. Bristol Meyers Squibb (BMY). Investment amount was $18360 and current value is $19103. No dividends were received this quarter.

3. Duke Energy. (Duk). Investment amount was $19,300 and current value is $19,602. Dividends of $275 were received this quarter.

4. Lockheed Martin (LMT). Investment amount was $20460 and current value is $24,111. Dividends received were $225.

5. Medical Properties Trust (MPW). Investment amount was $20240. Current value is $22140 with dividends of $400.

6. AT&T (T). Original investment was $17,526 and current value is $17310. Dividends received this quarter were $258.

7. Health Care Properties (HCP). Original investment was $19512 with current value of $22038. Dividends this quarter were $282.

8. Kinder Morgan Partners (KMP). Original Investment was $20777 and current value is $22137. Dividends this quarter were $339.

9. Fidelity National Financial (FNF). Original Investment was 19,570 and current value is $19,306. Dividends this quarter were $168.

10. Windstream Corporation (WIN). Original Investment was $26,860 and current value is $24,491. No dividends received this quarter.

The Bottom Line. As of today's date, the total value is $206,762 as opposed a total original investment of $199753, Dividends this quarter were $2181. Since our original investment four months ago, we have earned total dividends of $3,964. This is equivalent to an annualized return of 5.95%. Approximately 3 times as much as you would have earned on a one year CD. In addition, we would have received a preferential tax rate. Of course, you could sell out and get a capital gain of $7,000+ but I would prefer not to count that since it may disappear should the market correct in the future.

Just A Sample. This is the kind of portfolio I would recommend for conservative investors who want current cash flow. If you have a highly paid job, are several years away from retirement, and have a higher risk tolerance, I might recommend something more aggressive; however, I believe now is the time for most investors to be more conservative and, even if you don't need income to live on, you might want to collect cash flow to take advantage of better opportunities that may arise in the future.

IMPORTANT VISITOR ON IMPORTANT MISSION

Azaleas and Dogwoods. The picture at the left shows two of Betty's favorite flowers. The bright azaleas are easily visible in the lower left hand corner while on the right, near the middle is a dogwood tree. You have to strain to see it. Unfortunately, pictures by an amateur photographer seldom do it justice. It is sort of whimsical and graceful and adds a lot to the landscape. Legend has it that dogwood trees used to grow large until they were used to construct the cross on which Christ was crucified and thereafter they were never allowed to to grow large enough to construct an instrument of crucifixion again. It's an interesting story but, as far as I know, it doesn't appear anywhere in the bible.

On A More Serious Note. On March 4, a very important Admiral from Norway visited this country. Rear Admiral Trond Grytting, who had most recently served for several years as the key officer in charge of Norwegian-Russian military contacts, was on an important mission from the king of Norway. While our first guess might have been that this was in Washington DC, we would have been wrong. Instead he showed up at a convalescent center in Silsbee, Texas, a small town a few miles from Wildwood. His mission: To present a royal honor from the King of Norway to Leif Oistad, a longtime neighbor of ours here in Wildwood.

It Was Almost 70 Years Ago. Leif was recruited by the US Army to serve with the 99th Mountain Battalion on a highly secret mission behind enemy lines in German occupied Norway. In his first job, he instructed his fellow soldiers in skiing since he had been a skier practically since his birth in Norway. The second job was much more dangerous in that they parachuted behind enemy lines to conduct sabotage operations. Before traveling overseas, he requested that, since he was likely to give up his life for America, he would prefer to do it as an American citizen. The story has it that his citizenship papers were delivered within an hour.

Their Mission Was Successful. Leif received two bronze stars along with several other medals and awards too numerous to mention. Before retiring to Wildwood, he worked several years as a captain of several seismic research vessels for Shell Oil. While many details of their mission WWII mission are not known, I would venture a guess that the mission involved much more than blowing up a few rail lines since it justified a visit from an important representative on a mission from the King of Norway. I have heard rumors of an atomic energy related operation but can't justify repeating them since they are just that.

I Have Wanted To Pay Leif A Visit For Some Time. We visited a few times when we met outdoors but I never got around to visiting him to discuss some of his adventures. That's very unfortunate since Lief died last Thursday, March 17. This isn't the first time I have neglected to take the time to get to know someone that I could have learned a lot from. Our time here is so important and the most important thing we can do is interact with our fellow human beings. We are losing our heroes at an alarming rate and we must insure that their story lives on.