When should you sell Terra Nitrogen (TNH)?

When should you sell Terra Nitrogen (TNH) if you own it or are considering shorting it?  Terra Nitrogen's stock price has increased 43.6% in the past year while the S&P 500 has only risen 0.9%.  I don’t know why the stock’s price has rocketed since April 2011.

http://stockcharts.com/h-sc/ui?s=TNH&p=W&b=5&g=0&id=p33864843115

The stock is currently yielding 8.1% at today's price of $183.38 per share.  It is now paying a $3.75 quarterly dividend on $3.95 in earnings per quarter.  This brings the dividend payout ratio up to a worrying 95%.  I like dedicated dividend payouts of between 50% and 80% (dedicated, but not too high).

TNH has an average adjusted earning power of $9.97 over the past five years.  Consider buying at or below $119.64 (12 times average adjusted earnings).  Consider sell at or above $  $199.40 (20 times average adjusted earnings).  It is almost sell time.

Their balance sheet is strong.  To read the other articles I’ve written on Terra Nitrogen click here: http://www.myhighdividendstocks.com/category/high-dividend-stocks/terra-nitrogen

Disclosure: I don’t own Terra Nitrogen (TNH).

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Ron Paul's best interview to date. Economics in one interview.

I just finished watching CNBC's "Meeting of the Minds" show with some of the most elitist people I've ever seen.  The video link is not the one I just watched, but the posted videos are typical of the republocrat solutions.

http://www.cnbc.com/id/30582844

 

They were all a bunch of republocrat hardcore Keynesian statists.  Even former General Electric CEO sounded like a 80% free market / 20% socialist.  They had no solutions because they don't understand Austrian economics.  They don't understand capitalism.  That means that they don't understand that the customers are in charge in a capitalist society because they hold the most desirable commodity - money.  Government regulation prevents producers from competing against one another to please customers.  Regulaton does this by creating barriers to entry more commonly know as liceansing and bureaucratic redtape.

 

None of the so-called "minds" had anything to say about the crux of the problem.  The problem is a lack of sound money and individual liberty.  Ron Paul explains this better than any economist at the Federal Reserve.  See the video below.

 

The people calling themselves the government and the Federal Reserve are destroying the environment for accumulating capital.  This is not good because our standard of living will worsen due to the policies since 1913 (the creation of the Federal Reserve).

The Best Ron Paul Interview Ever?
Ron Paul schools neocon Chris Wallace, who is suddenly respectful of his surge

Recently by Ron Paul: The Illusion of Safety

Ron Paul joins Chris Wallace on Fox News Sunday to discuss his rise in the mainstream presidental polls (to #3 on the latest Gallup) and the hot issues of the day. It is impossible not to notice how these interviews have changed. The normally belligerent neocon host was respectful as Ron smoothly and convincingly stated his positions.

Since this interview coincided with the media hysteria about Hurricane Irene, Wallace first asked Ron why he was opposed to FEMA. As the representative of a Gulf Coast district, Ron knows full-well the damage the weather can do. Indeed, he says: "It has the worst reputation for a bureaucracy ever. It hinders local people keeps people away from their homes. It's a system of central economic planning that is deeply flawed.....and it's broke."

Ron also rips the US intervention in Libya. He schools Wallace about the consequences of our destructive foreign policy. When asked about Gaddafi, Ron reminds him that "we've been very bad at picking dictators around the world. We may be delivering al-Qaida another prize."

Regarding Austrian economics – which Ron is actually asked about – he describes his solution for a healthy economy as, government “hands off, free markets, property rights, no bailouts, and sound money.” The Fed has caused endless problems with its policy of keeping interest rates artificially too low for too long. It has to stop monetizing debt.

When asked if he's in it to win it, Ron says Yes – but he wants to take a different approach – Not to seek power, but to seek to diminish it, to diminish dependency on government. People are waking up and saying "Ron Paul is right," he notes. Darn right!

See the Ron Paul File

August 30, 2011

Dr. Ron Paul is a Republican member of Congress from Texas.

Art Laffer on the stalled economy and why it will get worse

This video contains a lot of common sense and he mentions excess reserves.  That means he is following the money and understand cause and effect.

 

<script type="text/javascript" src="http://video.foxbusiness.com/v/embed.js?id=1125749259001&w=466&h=263"></script><noscript>Watch the latest video at <a href="http://video.foxbusiness.com">video.foxbusiness.com</a></noscript>

 

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Safe Bulkers on sale, but wait for the bottom.

This article is horribly economically ignorant: http://www.businessinsider.com/baltic-dry-index-suggests-recession-fears-overrated-2011-8

 

It suggest that the recent 16% in the Baltic Dry Index is forecasting improvement to worldwide economic conditions.  This is nothing but Keynesian wishful thinking.  Government debt crises all over the world coupled with very high unemployment and massive quantities of fiat money printing will sink economies from here.  I like Safe Bulkers, but you will be able to buy it much cheaper than today.

 

It isn't done going down.

 

 

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Gary North's Tip of the Week - August 20, 2011 Inflation Calculator

I'm travelling this week so I will borrow a Tip of the Week from a man whom I consider a mentor, Dr. Gary North.

 

* * * * * * * * * *

GARY NORTH'S TIP OF THE WEEK

Gary North's Tip of the Week - August 20, 2011 Inflation
Calculator
=====================================================
  The U.S. government’s Bureau of Labor statistics offers a
useful too free of charge: the inflation calculator. I use it
constantly. I have for at least five years.

    http://www.bls.gov/data/inflation_calculator.htm

 I have created a short link:

            http://bit.ly/BLScalc

  The BLS calculator factors in changes in consumer prices, as
estimated by the BLS's consumer price index (CPI). You can track
this back to 1913. That was the year before the Federal Reserve
System started operations.

  The Federal Reserve was officially created to guarantee price
stability. Test its performance. Type in 1000 in the beginning
year box. Click CALCULATE. See how much money, after taxes, it
would take to match $1,000 in 1913. (Note: there was no income
tax in 1913.)

  Very few financial journalists use this tool on a regular
basis. How do I know? Because they discuss investment returns
from stocks without factoring in price inflation and income tax
payments. Consider this statement:

"And keep in mind, that 'lost decade' wasn’t so for everyone. If
you put $10,000 into the S&P 500 in 2000, you’d have about the
same amount in 2010," Thoma said. But investors who put in $10,000
 over time in regular monthly installments? “Their money would
have grown to over $14,000 during that timeframe, if you were in
a 65/35 portfolio,” Thoma said.

      http://bit.ly/DowJonesLaLaLand

 Use the calculator. Find out what it takes today to match the
purchasing power of $10,000 in 2000. Mr. Thoma didn't. Neither
did the wide-eyed 20-something who wrote the article.

  If you have a 401(k) or IRA retirement account, pick the year
you opened it. See what the dollar bought then compared to now.

  This will help you find out how well your portfolio has done.

  Next, factor in income taxes owed when you cash it out.

  Next, see what the after-tax annual income your portfolio
would generate today if you were 60 years old and you started
living on the dividends generated.

  How is your portfolio working for you?

  You say you don’t want to know? You say this exercise would
depress you?

 That’s why so few people ever use the BLS calculator.

 Reality hurts.

Gary “4 a.m. to 8 p.m.” North
 =============================================
Recent articles posted at www.garynorth.com

================================================================

Japan's Stock Market Set the Pattern for America's Stock Market,
Beginning in 1990.

When you watch Tout TV on the stock market, think "Japan, 1989-201
1." Do not ignore the obvious. The TV talking heads do.

Read the full article at:
< http://www.garynorth.com/members/8393.cfm >

================================================================

Why You Had Better Rent The Company Men in Preparation for 2012's
Job Market

It's not a laugh-a-minute film. It is a good training film.

Read the full article at:
< http://www.garynorth.com/members/8392.cfm >

================================================================

There Are Two Kinds of Resum&eacute;s. Yours Is Probably the
Wrong Kind.

This is not your father's job market any more. Your resum&eacute;
had better reflect this. I will now let you in on a secret. You
will not read this anywhere else.

Read the full article at:
< http://www.garynorth.com/members/8391.cfm >

================================================================

Presidential Politics Today . . . And in 2016

This is a unique election cycle. The system is the same. The
outcome is rigged. The results are predictable, but not the
fallout.

Read the full article at:
< http://www.garynorth.com/members/8390.cfm >

================================================================

The Paradox of Thrift: An Invariable Mark of a Keynesian Who
Knows Zilch About Economics

Keynes said a lot of really silly things, but none so silly as
the paradox of thrift.

Read the full article at:
< http://www.garynorth.com/members/8389.cfm >

That's it for this week!

Visit my site, www.garynorth.com, for the latest charts on the U.S. dollar, gold's price, and Federal Reserve statistics.

I was 79 seconds short of the Nurburgring world record for a VW Golf GTI. Not bad for my first try.

Today was a dream come true.  I raced on the world famous Nurburgring Nordschleife for 5 laps.  Each lap is 21 km long.  I drove a VW Golf 5 GTI DSG.  The word record for the car I drove is 8:36.  My best lap time was 9:55.  Here is the video of the world record so you can see the roller coaster that this track is with traffic:

An opportunity to pick up Safebulkers (SB) below $7.00 per share (9.6% dividend yield) will come again.

You had your chance to buy Safebulkers (SB) below $7.00 like I recommended: http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb 

 

SB has gained 21% ($6.20 to $7.56) since its 52 week bottom on August 8th, 2011.  Safebulkers was yielding 9.6% at the bottom also.  It didn't expect you to buy at the exact bottom.  If you used my combination of technical indicators: CCI, Bollinger Bands, and MACD then you would have bought on August 14th or 15th at around $7.00 per share.

 

Disclosure: I don't own Safebulkers yet because I'm paying down some debts.  That is using all my free cash flow, but it pains me to miss this opportunity.  I believe that the next crash of the stock market will take Safebulkers down with it and present more buying opportunities.

 

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Don't be aggressive buying (AGRO). Patience, please.

I’m looking for bull markets within the secular bear market.  Precious metals and food commodities come to mind.  There are no high dividend food stocks, but there are some food commodity ETFs and some food production companies.  One of those companies is Adecoagro (AGRO).  The bottom line is AGRO should not be purchased until they can prove they can earn profits.  This company has good potential, so don’t stop reading yet.  They produce crops that people will buy in boom times or bust.  I think the bust will continue plus massive doses of price inflation.

Adecoagro S.A. is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. It is engaged in a range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol and energy production and land transformation. As of September 30, 2010, it owned a total of 287,884 hectares, consisted of 21 farms in Argentina, 15 farms in Brazil and two farms in Uruguay. As of September 30, 2010, it owned and operated several agro-industrial production facilities, including three rice processing facilities in Argentina, a dairy operation with approximately 4,500 milking cows in Argentina, two coffee processing plants in Brazil, seven grain and rice conditioning and storage plants in Argentina and two sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 5.2 million tons. It is engaged in three businesses: farming business; sugar, ethanol and energy business, and land transformation business.

The socialist government of Argentina might pass a law restricting foreign ownership of agricultural lands.  This doesn’t help AGRO attract foreign capital to buy new properties and businesses in Argentina.  The CEO explained in the recent conference call that they are going to expand in Brazil and Uruguay where the governments are less hostile.

To hear the recent earnings conference call click on the 1Q11 Webcast button on this site http://ir.adecoagro.com/adecoagro/web/default_en.asp?idioma=1&conta=44

Adecoagro (AGRO)

Market price: $10.12

Shares: 108.87 million

Market capitalization: $1.101 billion

Dividend record: None.  The company has never paid a dividend.

Earning power: Since 2007 AGRO has an average adjusted earning power of ($0.07) per share.  The company has lost money the last three out of four years.  I only like profitable companies.  It will be interesting to see if AGRO can start producing profits in the next two years.

(Earnings adjusted for changes in capitalization.  Adjusted EPS based on 108.87 million shares)

            EPS                   Net inc.             Adj. EPS            Shares

2006

2007     $0.20                $29.170 M         $0.27                144.105 M

2008     ($0.09)             ($19.334 M)       ($0.18)             204.279 M

2009     ($0.01)             ($0.26 M)          ($0.002)            228.05 M

2010     ($0.36)             ($43.904 M)       ($0.40)             121.667 M

Four year average adjusted earnings per share ($0.07)

Consider buying below $6.51 (less than the 2010 shareholder equity without the recent secondary equity offering)

Consider selling above $9.00 (the current book value per share including the money from the recent secondary offering)

Balance sheet: Up from its purchases of farmland

Book value per share: $9.00 (TTM and most of it from the recent secondary equity offering)

Price to book value ratio: 1.12 (good)

Current ratio: 2.89 (over 2.0 is good)

Quick ratio: 2.17 (over 1.0 is good)

Disclosure: I don’t own Adecoagro (AGRO) and I won’t until it is profitable without equity offerings.  This one is going on my watch list at $5.00 per share

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This Alternative to Buying Farmland Could Turn Into a High Dividend Stock.

Jim Rogers and others have been recommending agriculture as an investment.

http://tinyurl.com/3hx5cbt

That got me thinking about high dividend stocks in the agricultural sector.  Guess what?  There are none.  But I did find ConAgra (CAG).  The company has been in business for more than 90 years.  It is a diversified player in the packaged food industry. The majority of its sales are derived from North America. Its portfolio includes such well-known brands as Act II, Banquet, Chef Boyardee, Healthy Choice, Orville Redenbacher's, Parkay, and Reddi-wip. Beyond grocery retailers, ConAgra also sells to restaurants and other food service establishments. With its Lamb Weston brand, the firm is the largest supplier of french fries in the U.S.

ConAgra is cheap at $23.19, but you will be able to buy it at a deep discount when the “double-dip recession” panics stock market investors.  Wait for the bottom in the $12 - $15 per share range.

ConAgra (CAG)

Market price: $23.19

Shares: 410.80 M

Market capitalization: $9,526,452,000

Dividend record: ConAgra started paying a 3 cent quarterly dividend in 1987.  The company grew its dividend from 1987 (34 cents) to 2006 (27.25 cents).  Then they missed a quarter in April 2006 (2Q2006).  They resumed paying a dividend in 3Q2006, but the dividend was cut to 18 cents quarterly.  Since then they have paid a quarterly dividend to today's 23 cents quarterly dividend.

Dividend: $0.23 quarterly

Dividend yield: 3.9% ($0.23 dividend x 4/$23.19)

Recent EPS: $1.90

Dividend payout ratio: 48.4% ($0.92 annual dividend/$1.90 recent EPS)

ConAgra would be a 6% high dividend stock if its price dropped to $15.33 per share.  CAG traded in this range as recent as April 2009.

Earning power: $2.05 EPS @ 410.8 million shares

(earnings adjusted for changes in capitalization.  ConAgra has been buying back shares)

EPS             Net inc.        Adj EPS

2007   $1.51            $765 M         $1.86

2008   $1.90            $931 M         $2.27

2009   $2.15            $978 M         $2.38

2010   $1.62            $726 M         $1.77

2011   $1.88            $817 M         $1.99

Five year average adjust earnings per share: $2.05

Consider buying below $24.65 (12 times avg. adjusted earnings)

Consider selling above $41.00 (20 times avg. adjusted earnings)

ConAgra is trading at 11.3 times average earnings this is value territory.

Balance sheet: Unexciting.  Stagnant since 2007 (assets and liabilities have declined with equity remaining the same)

Book value per share: $10.83

Price to book value: 2.14 this is good ($23.19/$10.83)

Current ratio: 1.83 (over 2.0 is good)

Quick ratio: 0.86 (over 1.0 is good)

Disclosure: I don't own ConAgra (CAG)

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Jim Rogers on QE3

Jim Rogers Says US Needs to Face Reality, Not QE3

Business Intelligence Middle East

Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers, spoke Monday about the Standard & Poor's credit rating downgrade of US sovereign debt, saying the 'no news' event has nothing to do with the markets plunging and will not affect his investment strategy.

He also discussed the Federal Reserve monetary policy, arguing that further money printing, better known as QE3, will bring more inflation, social unrest and will lead to lost decades for the United States. He urged investors to be prepared as 'more problems are coming'.

The only thing that will work, he said, is to face reality by letting people that are bankrupt go bankrupt.

Speaking in an interview from Singapore with Rishaad Salamat on Bloomberg Television's "On the Move Asia" Monday, Rogers said: "Everyone has known that America is the biggest debtor nation in the world".

Standard & Poor's decision to cut the US's long-term debt rating is "not news, it's not even old news, it's just not news," Rogers said.

The US downgrade will not affect financial markets and has not caused the plunge in markets, he argued.

"Markets are coming down because America has problems, Europe has problems, China is trying to slow down...There's plenty of reasons for markets to come down, but it has nothing to do with S&P," Rogers told Rishaad Salamat.

Anyone who is investing on the downgrade, should not be investing at all, he said, adding that the world had known - about the US's problems - for a long-long time.

"The markets look ahead. No none who invests on the news makes any money. The markets are looking 6-12 months ahead and when you look 6-12 months ahead there are some bad things coming."

Where are markets heading now?

"Normally when you see panic like this it may be getting to building up towards a selling climax. If it gets to a selling climax, I will cover my shorts...because this kind of action usually leads to a reversal at some point," Rogers said.

What is he buying?

Talking about his investment strategy, Rogers, who predicted the start of the global commodities rally in 1999, reiterated he owned commodities, real assets, especially agriculture, gold and silver.

"If equities continue to fall, I will cover my shorts, perhaps all my shorts, and I will look for things to buy. And it looks as commodities are continuing to be beaten down, that's where I will put my money," the legendary investor said.

Gold and silver are going up too high too fast, he said, adding he hoped a correction will take place, "so that I can buy some more".

"Gold and silver, over the next few years, are going to go much higher, as will agricultural commodities," Rogers predicted.

"I hope this will protect me if things go bad," he told Bloomberg.

Gold for December delivery in New York advanced as much as 3.6% to a record US$1,774.80 an ounce today on concern the economic slowdown will worsen. The precious metal has surged 23% this year, heading for an 11th year of gains, as the global sovereign-debt crisis and a faltering economy boost demand for wealth protection.

Gold holdings had their biggest daily advance since May 2010 as of August 8.

Gold also advanced today to a premium over platinum for the first time since December 2008, as demand for a haven outweighed the appeal of platinum used mostly in catalytic converters.

Read the rest of the article

August 10, 2011

Jim Rogers has taught finance at Columbia University's business school and is a media commentator worldwide. He is the author ofAdventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.

Copyright © 2011 Business Intelligence Middle East

The Best of Jim Rogers

Jim Rogers is correct in his assessment.

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TIP OF THE WEEK - A New Recommendation For Purchasing Foreign Currencies to Guard Against the Dollar Decline

A New Recommendation For Purchasing Foreign Currencies to Guard Against the Dollar Decline

Jason Brizic

August 12, 2011

Back on May 20^th, 2011 I wrote a Tip of the Week advocating the use of Everbank to buy foreign currencies.  It was titled: How to Buy Foreign Currencies in the US to Guard Against a Dollar Decline.  I subscribe to Gary North’s wonderful website (www.garynorth.com).  I consider him a mentor in the areas of Austrian economics and entrepreneurship.  He has just brought some new information to light regarding Everbank.  You should find another company from which to purchase foreign currencies.  There is a new recommendation at the end of his article.

* * * * * * * * * *

A Warning to All Everbank Clients

Gary North
Aug. 12, 2011

Because I have publicly recommended using Everbank as a way to hold foreign currencies, I am posting this report. I no longer recommend the firm.

I have forums on my site. Members discuss problems. This was posted a week ago.

Well I just got a eye opening about "our" banking system and privacy rules. I made a purchase of coins from the Moneychanger, and set up a wire to transfer the funds (over $50k) to his bank. I set it up online thru my bank (Everbank) that night, for transfer the next day. The next morning, I get a call from Everbank, asking about the transaction. They want to know what this is for. I told them its for a purchase. They ask what was being purchased. I asked, "what does it matter". She wanted to know if it was for my business, and I said no. She kept asking what the purchase was for, and need to know before the wire goes thru. I said I authorized the wire and know who its going to and trust them, and its not their business to know what I am buying. She said they are federally regulated, and need to know. After going round and round with her, she finally said she will write down and note what I have said. After I got off work and came home and checked to see that it still didn't go thru. I called them back and talked to a supervisor. She said the same thing, and I asked for her to email me the documentation that says they have to know what I'm buying. After asking that several times she said there's no documents, but its under the "Know Your Customer". ( I knew I would eventually deal with this somehow). She said they have the right to not send the wire transfer if they don't know about it. So I told her it was for an investment. Then naturally she asked, what kind of investment, which I replied, its private. After going round and round with her, she said she would not send the wire. I asked to talk to her supervisor, and she said she would have her call me. Then after about an hour, the lady I was talking to called me back and said she did some research into the place I was wiring the money to, and found it was a precious metals dealer, so she said she would send the wire thru. I'm still in disbelief this happened. I was going to just send a check , but I'll bet they would of stopped it or frozen my account, after that conversation I had with them. Not sure if anyone else had something like this happened to them, and I'm not sure how to handled it any differently next time. So beware!!!!

http://www.garynorth.com/members/forum/openthread.cfm?forum=1&ThreadID=23672#116597

I followed up with Everbank to assess this. On August 5, I contacted the bank by email here:

https://www.everbank.com/contact.aspx

I told them who I was. I told them what I was about to do. (This article.) I asked them to have Chuck Butler contact me by phone. He and I have known each other for years. He writes the bank's daily column: http://www.dailypfennig.com.

Chuck never called. I have no doubt that he would have called, had anyone told him. I have drawn this conclusion: my request was not forwarded to him.

I received no response from anyone at customer service.

I am hereby withdrawing my recommendation for Everbank.

I will not deal with any financial agency that demands to know what I want to do with my money. I believe that the institution has no business asking.

I recommend that any Everbank customer write to the bank and ask for a response in writing. Ask the bank if it is bank policy to demand full disclosure from its customers about what they intend to do with their money before the bank will release any money in the customer's account. See what response you get. Then decide what you should do.

You have a substantial profit in your Everbank account if you bought the currency I recommended in the spring of 2009. You must decide whether it is worth paying the tax by canceling the account and moving it elsewhere. It may not be. But I recommend that you have another bank or institution in mind where you can transfer your funds whenever you decide to close the account. Do not tell anyone at Everbank what you intend to do with your money. Just get it out.

If you want a hard money account, I recommend that you use Merkfund. It does not have FDIC insurance. But it does not ask snoopy questions about what you intend to do with your money. I have found their customer service team to be responsive.

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

Don't be fooled by Southern Copper's 8% dividend yield. Copper and Southern Copper are going down.

Southern Copper (SCCO) will go ex-dividend on Monday, but that is not the whole story.  The stock price will drop after the dividend and it will likely keep going down.

Southern Copper Stock To Go Ex-dividend Monday (SCCO)

Tweet

By TheStreet Wire 08/12/11 - 09:52 AM EDT

NEW YORK (TheStreet) -- The ex-dividend date for Southern Copper Corporation (NYSE:SCCO) is Monday, August 15, 2011. Owners of shares as of market close today will be eligible for a dividend of 62 cents per share. At a price of $31.41 as of 9:30 a.m. ET, the dividend yield is 8.5%.

The average volume for Southern Copper has been 3.5 million shares per day over the past 30 days. Southern Copper has a market cap of $24.7 billion and is part of the basic materials sector and metals & mining industry. Shares are down 36.8% year to date as of the close of trading on Thursday.

Southern Copper Corporation engages in mining, smelting, and refining mineral properties in Peru, Mexico, and Chile. The company has a P/E ratio of 12.4, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7.

* * * * * * *

Copper is an industrial metal that goes up in price during a global booms.  When the global economy busts the copper price goes down.  There was a bust in 2008 and then a false recovery 2009-2011.  Investors are beginning to realize that the bust must continue in order to liquidate all the malinvestments made during the boom.  Governments and central banks are hell bent on preventing the markets from liquidating those malinvestments quickly.  They will continue to implement policies that forestall and jeopardize a real recovery.  Southern Copper will suffer as a result.

If you buy, then know that you will be buying on the way down.  I expect a dividend cut.  This company will remain a high dividend stock after it cuts its dividend because the stock price will be falling with the copper commodity price.  Copper peaked in January 2011 at $4.64 per pound.  It is down to $4.05 now and grinding lower on the realization of a “global double-dip recession”.  Don’t be fooled by Southern Copper’s 8+% dividend yield.

Consider buying below $23.04 and sell it above $38.40.  The dividend is in jeopardy due to its dividend payout ratio exceeding 100%.  Its balance sheet is stagnant.

Read my analysis of its fundamentals and technicals http://www.myhighdividendstocks.com/high-dividend-stocks/is-southern-copper-heading-north-or-south-from-34-74#more-515

Disclosure: I don’t own Southern Copper (SCCO)

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See the full gallery on Posterous

Total (TOT) is a high dividend stock now, but wait for oil to bottom before purchase.

Total (TOT) is now a high dividend stock thanks to the recent worldwide stock market crash and oil’s price plunge.  Total peaked back in May 2011 at $64.44.  The stock has fallen 27.9% since May to $46.42 today.  I wrote an article on June 23^rd, 2011 on Total that had all my typical measurements of dividend record, earning power, and strength of balance sheet metrics.  Here is a quick recap: today’s dividend yield is 6.9% and is relatively safe, it earned an average of $4.64 per share (adjusted) over the past five years making it a value below $55.68, and it has a good balance sheet.

Click here for the June 23^rd article: http://www.myhighdividendstocks.com/stocks-that-pay-small-dividends/which-integrated-oil-majors-will-become-high-dividend-stocks

This stock is a buy for its combined high dividend, earning power, and strong balance sheet.  But the fundamentals of oil are short term bearish.  The global economy never really recovered since the Panic of 2008.  Keynesian money printing and massive government deficits have only made things worse.  When worldwide investors slowly realize that there is no recovery the price of oil will tank.  Total will be dragged down by the drop in oil.  The dividend yield will become bigger as its stock price declines.  I think that Total could drop all the way back down to $36.82 like it did during the Panic of 2008 especially if oil drops to the $40-$50 range per barrel.

Link to this chart: http://stockcharts.com/h-sc/ui?s=TOT&p=W&b=5&g=0&id=p26097042894

Look at oil’s hammering.  Oil’s fundamentals trump Total’s.  Wait to buy until oil is done going down.  Put Total (TOT) on your watchlist.

Disclosure: I don’t own Total (TOT) yet.

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Day of Reckoning

by Llewellyn H. Rockwell, Jr.

Recently by Llewellyn H. Rockwell, Jr.: Ideas and the Culpability for Violence

The trigger that apparently caused the market meltdown was the ever-so-slight suggestion from Standard & Poor's that the US government’s fiscal health might not be all that it is cracked up to be.

This was not a case of the little boy noting the emperor has no clothes. It is more like the little boy suggested that the emperor's clothes, while beautiful, might have been more carefully tailored to suit the imperial dignity. Hysteria followed, and the entire Obama cult called for the kid to be stoned.

Finally the emperor himself spoke in defense of his rainment. That’s when the market crashed.

But the downgrading of a government’s debt from AAA to AA+ can only have triggered a market avalanche if the truth is in fact much worse, and most everyone knows it.

S&P doesn’t have clean hands, of course. It holds a government monopoly, wants higher taxes, and rated crazed housing bonds AAA. But imagine, for just a moment, that US government debt were rated in the same way that municipal bonds or regular corporate debt are. Imagine that government bonds, like normal bonds, carried a default premium. Imagine, in other words, that the Federal Reserve were not in a position to pay everyone from welfare recipients to banksters with newly created money.

Under such actual market conditions, federal debt would not be rated as AA+. It would be worth even less than junk bonds. In fact, it wouldn’t even qualify for a market rating at all, because it would be utterly worthless and the institution that issued it would be in default and the whole rotten apparatus of the state would be seen to be bankrupt at its very core, in every sense.

We know this for one simple reason: There is no way that the government can fund its debt on taxes alone. There would be a revolution in this country in a heartbeat, and, probably, the entire American empire, domestic and foreign, would come crashing down, along with its banking and monetary systems.

If this actually happened, there would be no more "ongoing negotiations" about the budget and the debt. The cuts would be swift, extreme, gigantic. The federal government would have to behave like state governments, balancing the budget year to year. There would be no more plans for fake cuts in the planned increases, gradually phased in over ten years. The federal government would face actual market discipline. The S&P downgrade is only a slight taste of what would follow.

And let’s not just look at the downside. Hundreds of billions in resources would be freed from government control. The private sector would experience a huge infusion of energy. Interest rates would probably go through the roof, which means that people would actually be rewarded for saving, and saving is exactly what people would do as hundreds of banks went belly-up, large portions of the business sector had their credit lines cut, and merchants of death had to close their bloody doors.

There would be wailing and gnashing of teeth, but there would be no turning back. Within a few months, we would start seeing massive resource shifts and pockets of growth would return. New jobs would be available. New businesses would spring up. New financial firms would displace the old ones. Within a year or 18 months, we would be on a growth path, and this time it would be real and sustainable.

Of course this is not going to happen. Instead, the powers-that-be will continue their long game of "let’s pretend" as the economy sinks deeper and deeper, incomes fall, and the US gradually heads toward 3^rd-world basket case status.

It’s not only the government that is bankrupt, of course. It’s the entire ideological apparatus that backs the state and its eternal expansion. The New York Times struggled for something to say about the obvious failure of the second stimulus. All they could come up with was: "shift every available resource toward jobs," "increased investment in infrastructure," more relief for homeowners, and another extension of unemployment benefits.

The only thing that this asinine editorial left out was the need to lower interest rates. And that’s because interest rates are already 0%, which has killed saving, terminated growth, and denied the public the fundamental freedom to sock away money in time deposits and let it earn something in exchange. The Federal Reserve is completely out of policy options, unless it is ready to embrace the Zimbabwe-Weimar solution.

Of course, the whole theory that the government can stimulate through control and robbery is wrong and counterproductive. It only ends up rewarding government and its friends while the rest of us suffer. If we ever get out of this depression, it will be because government is forced to stop this nonsense, and the economy really stimulated by taking a meat axe to the planning-spending-inflating apparatus.

This is the underlying reality that informed traders understand. The whole system is being propped up by the power to print, and that power alone. No matter how many miracles some people think that paper money can accomplish, there is an underlying realization that the whole system is a hoax.

But don’t take my word for it. Let S&P and many more competitive rating agencies go to town on US bonds and rate them as they would any bond in the private sector or even the public sector not backed by a printing press. Let reality speak, and let us listen.

August 10, 2011

Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books.

Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Link to original article: http://lewrockwell.com/rockwell/day-of-reckoning188.html

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I'm back after technical difficulties

I’m back after a few days of technical difficulties that cause the site to go down.

Since I’ve been gone the world’s stock markets have crashed, S&P downgraded the USA’s debt rating, and several high dividend stocks are approaching value territory.

I’m going to do a compare and contract piece on how high dividend stocks fared during the last couple of weeks in which the US markets have shed at least 20%.  Do high dividend stocks offer better protection from price losses in addition to their dividends?

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The weekly government job report lies. Do you know what they didn't tell you?

Don't believe the government lies regarding unemployment.  Stocks are up slightly as I write this today due to the alleged "good" government jobs report.  Here is a concise article on the bogus jobs numbers and unemployment rate.  It has some great reveals on the information the government and the main stream media do want you to know.  Read'em and weep.

 

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Beneath Jobs Report Surface Lies Some Ugly Truths

Published: Friday, 5 Aug 2011 | 10:20 AM ET

By: Jeff Cox
CNBC.com Staff Writer

AP

Before getting too excited about the modest uptick in net job creation and a slight downward move in the unemployment rate, it’s probably worth a look under the hood.

As is usually the case, there is far more than meets the eye to the Labor Department’s report that the economy added 117,000 jobs last month and the unemployment rate fell to 9.1 percent.

Let’s start with the reality that fewer people actually were working in July than in June.

According to a Bureau of Labor Statistics breakdown, there were 139,296,000 people working in July, compared to 139,334,000 the month before, or a drop of 38,000.

But the job creation number was positive and the unemployment rate went down, right? So how does that work?

It’s a product of something the government calls “discouraged workers,” or those who were unemployed but not out looking for work during the reporting period.

This is where the numbers showed a really big spike—up from 982,000 to 1.119 million, a difference of 137,000 or a 14 percent increase. These folks are generally not included in the government’s various job measures.

So the drop in the unemployment rate is fairly illusory—stick all those people back in the workforce and you wipe out the job creation and the drop in unemployment.

For once, some of the government’s other tools of economic voodoo didn’t help the count.

The vaunted birth-death model, a byzantine approximation of business creation and failure, actually subtracted 18,000 from the total job creation after a five-month run where it added a total of 741,000 positions to the count.

And the so-called “real” unemployment rate, which adds in discouraged workers and others not counted as part of the headline unemployment rate, actually pulled back one notch to 16.1 percent.

But there’s plenty of bad news to go around otherwise.

The average duration of unemployment rose for the third straight month and is now at a record 40.4 weeks—about 10 months and now double where it was when President Obama took office in January 2009. The total number unemployed for more than half a year now stands at 6.18 million, 130 percent higher than when the president’s term began.

Among the nuggets of good news—the jobless rate for blacks slipped to 15.9 percent and for Latinos to 11.3 percent, both at four-month lows.

But how good or bad the unemployment picture really may not come into view until next month, because of distortions from seasonal adjustments.

Including teachers and others who experience seasonal unemployment, total joblessness actually rose 1.23 million.

Link to original article: http://www.cnbc.com/id/44033486

 

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TIP OF THE WEEK - Spot changes in price trends and momentum using the MACD

Spot changes in price trends and momentum using the MACD

Jason Brizic

August 5th, 2011

I love the moving average convergence-divergence indicator (aka the “Mac-Dee”) because it allows me to spot changes in price trends and momentum.

Developed by Gerald Appel in the late seventies, Moving Average Convergence-Divergence (MACD) is one of the simplest and most effective momentum indicators available. MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter moving average. As a result, MACD offers the best of both worlds: trend following and momentum. MACD fluctuates above and below the zero line as the moving averages converge, cross and diverge. Traders can look for signal line crossovers, centerline crossovers and divergences to generate signals. Because MACD is unbounded, it is not particularly useful for identifying overbought and oversold levels.

I use the commodity channel index (CCI) for identifying overbought and oversold levels.  To learn more about the CCI see this tip of the week: http://bit.ly/q2loA8 

Now back to the MACD.  The standard MACD is the 12-day Exponential Moving Average (EMA) less the 26-day EMA. Closing prices are used for these moving averages. A 9-day EMA of MACD is plotted with the indicator to act as a signal line and identify turns. The MACD-Histogram represents the difference between MACD and its 9-day EMA, the signal line. The histogram is positive when MACD is above its 9-day EMA and negative when MACD is below its 9-day EMA.

Interpretation

As its name implies, MACD is all about the convergence and divergence of the two moving averages. Convergence occurs when the moving averages move towards each other. Divergence occurs when the moving averages move away from each other. The shorter moving average (12-day) is faster and responsible for most MACD movement. The longer moving average (26-day) is slower and less reactive to price changes in the underlying security.

MACD oscillates above and below the zero line, which is also known as the centerline. These crossovers signal that the 12-day EMA has crossed the 26-day EMA. The direction, of course, depends on direction of the moving average cross. Positive MACD indicates that the 12-day EMA is above the 26-day EMA. Positive values increase as the shorter EMA diverges further from the longer EMA. This means upside momentum is increasing. Negative MACD indicates that the 12-day EMA is below the 26-day EMA. Negative values increase as the shorter EMA diverges further below the longer EMA. This means downside momentum is increasing.

In the example above, the yellow area shows MACD in negative territory as the 12-day EMA trades below the 26-day EMA. The initial cross occurred at the end of September (black arrow) and MACD moved further into negative territory as the 12-day EMA diverged further from the 26-day EMA. The orange area highlights a period of positive MACD, which is when the 12-day EMA was above the 26-day EMA. Notice that MACD remained below 1 during this period (red dotted line). This means the distance between the 12-day EMA and 26-day EMA was less than 1 point, which is not a big difference.

Signal Line Crossovers

Signal line crossovers are the most common MACD signals. The signal line is a 9-day EMA of MACD. As a moving average of the indicator, it trails MACD and makes it easier to spot turns in MACD. A bullish crossover occurs when MACD turns up and crosses above the signal line. A bearish crossover occurs when MACD turns down and crosses below the signal line. Crossovers can last a few days or a few weeks, it all depends on the strength of the move.

Due diligence is required before relying on these common signals. Signal line crossovers at positive or negative extremes should be viewed with caution. Even though MACD does not have upper and lower limits, chartists can estimate historical extremes with a simple visual assessment. It takes a strong move in the underlying security to push momentum to an extreme. Even though the move may continue, momentum is likely to slow and this will usually produce a signal line crossover at the extremities. Volatility in the underlying security can also increase the number of crossovers.

Chart 2 shows IBM with its 12-day EMA (green), 26-day EMA (red) and MACD (12,26,9) in the indicator window. There were eight signal line crossovers in six months: four up and four down. There were some good signals and some bad signals. The yellow area highlights a period when MACD surged above 2 to reach a positive extreme. There were two bearish signal line crossovers in April and May, but IBM continued trending higher. Even though upward momentum slowed after the surge, upward momentum was still stronger than downside momentum in April-May. The third bearish signal line crossover in May resulted in a good signal.

Centerline Crossovers

Centerline crossovers are the next most common MACD signals. A bullish centerline crossover occurs when MACD moves above the zero line to turn positive. This happens when the 12-day EMA of the underlying security moves above the 26-day EMA. A bearish centerline crossover occurs when MACD moves below the zero line to turn negative. This happens when the 12-day EMA moves below the 26-day EMA.

Centerline crossovers can last a few days or a few months. It all depends on the strength of the trend. MACD will remain positive as long as there is a sustained uptrend. MACD will remain negative when there is a sustained downtrend. Chart 3 shows Pulte Homes (PHM) with at least four centerline crosses in nine months. The resulting signals worked well because strong trends emerged with these centerline crossovers.

There are more examples available at StockChart.com’s chart school: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve

I believe that the best opportunities to buy high dividend stocks at low prices can be identified when the MACD is below the centerline and after bullish signal line crossover.  I perform fundamental analysis first to decide what stocks to buy.  Next I use the MACD, CCI, and Bollinger Bands to time my purchase or sale of stocks.

I used this technique to buy gold at $840 per ounce in December 2009.  Gold has amazing fundamentals given the historic fiat money printing be perpetrated by the Federal Reserve.  Then I examined the technical indicators.  The MACD (the black line) was below the centerline and it had just crossed above the signal line (the red line).

What works for commodities works for stocks as well.  I’ve been following SeaDrill (SDRL) for about six months.  Their chart shows how the MACD can help time a purchase.  I think SeaDrill should be bought at around $15.00 per share.  The MACD showed a steady decline in momentum during the first six months of 2010.  In June 2010 the MACD crossed the centerline into negative territory, then in July it turned upward and did a bullish signal line crossover.  The stock price bottomed at $16.64 just before these technicals came together

AT&T’s MACD signaled a reversal in November 2008 and March 2009 along with the CCI and it Bollinger Bands.

Pick one of your favorite stocks and type its ticker into the Ticker Symbol field.  Here is the link to the chart with the MACD and CCI set up for you:

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&b=5&g=0&id=p16270535585

Was the best time to buy your favorite stock when the MACD met my criteria above and in the linked CCI Tip of the Week?

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week