HEAD INJURIES....THEN AND NOW.

Surrounded by Strange Sounds.  As I lay in a tube with various gadgets restraining my head and with plugs in my ears, I listened to unusual sounds from the MRI that surrounded my upper body.  Strange thoughts entered my head, from where i have no idea.  One thought came from 40+ years ago about a conversation with a kindly old German physician named Otto.  I had visited his office to inquire about dizzy spells I was having after a slight head injury.  "Phil, we know very little about these minor head injuries because it has not been worth it to open the skull and examine the brain to try and determine the cause.  All we know is that they usually go away after while."  Otto was right, the symptoms slowly subsided. 

 Not So Today.  We have tools like Magnetic Resonance Imaging (MRI) and Positron Emission Tomography (PET) scans to allow us to obtain images of brain activity.  Although these are sophisticated instruments made possible by advanced technology, they are still relatively primative when it comes to understanding the complex network of neurons, dendrites, and axions that make up our brain.  It is advanced measuring tools like these that have changed our entire health care system.

Today vs Fifty Years Ago.  We seldom went to the doctor but when we did he took a look at us, made a good guess as to what was wrong, and recommended a course of action to take care of the problem.  More often than not, he was correct and we got better.  Now it seems like the primary care physician is simply a gate keeper to send you for a multitude of tests before deciding on a treatment.  As I lay in the MRI, I thought about the fact that my dizziness symptoms had disappeared on their own a few days before, just like Otto had said.  Years ago, there was no receptionist, no physicians assistant, and no insurance person.  A single nurse generally ran the whole operation.  Instead of worrying about the co-pay, it was simply the you-pay system.  They told you how much it was and you paid it.  There were also no complex diagnostic centers where a huge staff ran various tests to determine what was causing your difficulty.

Some, If Not Most, of What I Criticize is Progress.  I am not suggesting we go back to the old system, at least not totally.  It seems perverse that I spend 99% of my health care expenses on insurance premiums and practically nothing to the provider.  Could we do away with programs that pay everything and that tell the physician how to run the practice?  Perhaps we should pay more of our dollars to the practitioners and less, far less, to the insurance companies.  Should we limit mal-practice claims to gross negligence and do less to penalize honest mistakes.  My guess is that it might result in lower insurance premiums.  There needs to be some way other than more government regulation to promote competition in the insurance industry.   

My MRI is Complete.  Right now I still know nothing except that the symptoms are gone.  I am regretting that I bothered to go through with the test.  After almost 75 years on the planet, there is little doubt that my brain might have a mal-function or two.  I have endured two or three mildly traumatic brain injuries over the years but those could be the subject of another post.  Here's wishing for a happy Independence Day to All.

UPDATE ON DIVIDEND PORTFOLIO

                                    Summertime Birds on Feeder

Improving Your Cash Flow.  In December of 2010, I posted a sample portfolio of stocks that paid decent dividends.  As usual, I informed you that in order to collect these dividends you have to take some risk. Of course, you have to take some risk to get a bad return too.  If you tried to supplement your income with interest from certificates of deposit, you would have to have a huge portfolio to get any return at all or extend the maturity of these deposits.   Either way, in order to live on that most will have to cut their expenses drastically or invade principal.  I didn't intend to update this portfolio because I thought most folks, including myself might find themselves bored hearing about this again.  I couple of weeks ago, I actually became curious about how the portfolio had performed over some market ups and downs. 

The Original Portfolio Was $199,795.  The dividend rate was 5.98% or $11,950 per year.  Nothing earth shattering but considerably more than 0.5% per year on a one year CD.  The question is will the extra yield be worth it or is the risk of loss of principal too great to be justified by the extra cash flow.  The results are as follows: 

1.  Ameron Corporation.  AEE.  The original investment was $17130 with annual dividends of $924.  Current value is $19,380 and the dividend has increased to $960 per year.

2.  Bristol Myers Squibb.  BMY.  The original investment was $18,380 with a dividend of $896 per year.  Current value is $23,370 and the dividend has increased to $952 per year.

3.  Duke Energy.  DUK.  The original investment was $19,300 with a dividend of $1098 per year.  Current value is $24,866 with a dividend of $1100 per year.

4.  Lockheed Martin Company.  LMT.  We invested $20,460 and our dividend was $900 per year.  Current value is $24,246 with a yield of $1,200 per year.

5.  Medical Properties Trust. MPW.  We invested $20,240 and our dividend was $1,600 per year.  Current value is $18,160 and the dividend is still 1,600 per year. 

6.  AT&T.  ATT.  We invested $17,526 and received a dividend of $1032 per year.  Current value is $20,436 and the dividend is $1056 per year. 

7.  Health Care Properties.  HCP.  We invested $19,512 with a payout of $1116 per year.  Current value is $24,048 and the dividend is $1200 per year. 

8.  Kinder Morgan Energy Partners.  KMP.  We invested $20,775 to get a dividend of $1332 per year.  The current value is $22.137 and the dividend is $1380. 

9.  Fidelity National Financial.  FNF.  We invested $19,570 for a dividend of $1008 per year.  Current value is $26,082 and the dividend has been reduced to $784 per year. 

10.  Winstream Partners.   WIN.  We invested $26,860 for dividends of $1900 per year.  Current value is $17,100 and the dividend is still $1900 per year. 

Summary.  I have not monitored this portfolio during the year.  My intention was to construct a dividend portfolio with a relatively stable income stream and stability of principal without requiring constant monitoring by the investor.  In reality, I would recommend checking at least once a week and replacing those investments that do not appear to continue to fit your objective.  The cash flow currently obtained from this investment portfolio is $12132 per year vs the original cash flow of $11950.  This fits our criteria of income stability.  Two companies have decreased their dividend while seven have increased.  Those companies decreasing dividends have made substantial reductions which is common; however, these reductions were more than compensated by increases in the other seven.  The current value of the postfolio is $220,184 or a capital gain of $20,431.  If you liquidated the portfolio at the time this update was performed, you would have a gain of 10.23% plus cash flow of approximately 6% during the holding period.   As I mentioned before, I tend to ignore capital gains unless I intend to sell.  These gains could be here today and gone tomorrow.  Selling just to harvest the gain is not recommended unless you can find a better investment.  Still, a paper gain is more reassuring than a paper loss at this point.  

This Portfolio Is An Example, Not a Recommendation.  For one thing, there is no "one size fits all" portfolio.  We might make changes in portfolio composition to assure that it fits the unique needs of each client.  If you are considering buying any of these stocks for your own portfolio do your own due diligence to determine if the characteristics of the investment meets your needs.

BEING POOR WASN'T THAT BAD.

                                                     1950s Education Planning Tool

In Case You Don't Recognize The Object In The Picture.  It's an education planning tool and it's called a wheelbarrow.  My Dad started using this in 1946 when he got home from WWII.  At the age of 15, when I progressed from farm labor and dishwashing, it was the main planning implement until I graduated from college in 1960.  The wheelbarrow in the picture was given to my dad when the greenhouse where he worked for 34 years closed.  Believe it or not, it is more than 50 years old.  As Grandpa used to say, "They just don't make 'em like that any more".  For 7 years, between the age of 15 until I graduated from college at age 22, I funded my education behind one of these.

It's Different Nowdays.  Certainly most people aren't as poor as I was when I came into the world.  Yet, we didn't expend our energies with futile efforts like gathering in massive protests because we were underprivileged.  They would have laughed at us as they threw us in jail.  I guess you might use a term I learned in graduate school.  It's called relative deprivation.  We didn't know we were poor because in the 40's and 50's there were few, if any rich.  If you will indulge me to relate another story from the 40's, I recall an apple orchard across the street from our place.  It was one of my favorite places.  I would lay in the grass in the fall and eat apples that fell from the trees while I marveled at the magic of trees which provided shade from  the sun and dropped apples far faster than I could eat them.  One day I got a terrific idea.  I ran across the street, into the house, and yelled to my Mom.  "Mom, let's gather up all those apples and take them to poor people."

She got a big  smile on her face as she said, "Son, we are poor people."  I was totally shocked.  I had never found about other folks who weren't as poor as we were.  We didn't worry about a remote control for our TV.  No one had a TV.  We didn't have a snow blower to clean our sidewalk because no one had sidewalks.  We bought used cars but so did just about everyone else.  My Dad's first new car came when I was 16.  It was a 1954 Chevrolet purchased from Jim Flake Motors for $1695.  It had no radio or CD player.  It had a heater for the cold Colorado winters but no air conditioner.  (What's an air conditioner?)  Now days virtually everyone has those and we find out about it because everyone has a TV and sees pictures of the kind of luxury that they can't afford.  Many believe ownership of these things to be a right and should be provided by the government.  The government tries hard to provide those things by taxing the more affluent members of our society (and taking a relatively large portion of those of those taxes to fund operating expenses). 

Most Of Today's Poor Can Afford The Necessities of Life.  But they want more and I don't blame them.  They think the government can, and should, provide them with more.  They think the government can get the money by taxing the rich.  The problem is that no one can give us everything we think we deserve by taxing the rich.  The rich didn't get that way by being stupid.  They will always find ways to avoid taxes, if nothing else, by not working or investing.  Many of the truly rich can live off their assets for the remainder of their lives.  They will not use these assets productively, if the benefits produced are confiscated by the government and given to others who did not earn them.  We cannot build a strong society by trying to make poor people well off with government handouts.  Of all the things I am thankful for in 70+ years on this planet, the opportunity to earn my way out of poverty is the most important.   Let's build a strong economy so that more poor people can do the same thing.