Billytickets

Please join us

2010-08-08T06:50:00.000-07:00

Go check us at www.billspetrino.com

A 25 year old who's portfolio is only $30,000 can buy a stock like with a dividend of about 8%. The $2,700 of annual dividends should double about every 9 years at least. With no further investment this particular Dividend Machine should return over $86,000 annually at age seventy. Sound impressive? By reinvesting dividends the first 15 years this amount should be well over $200,000 annually at age seventy. How many of your friends do you think will have done that? Not bad for a one time investment. See the importance of a dividend machine now?

What happens if you don't have the $30,000 to get started? Borrowing the money from a loved one or relative is a great alternative. Many parents grandparents and loved ones loan money to a child for an automobile or school which may or may not have a future tangible value. Giving your loved one their "inheritance" early may create a permanent dividend machine that can be transferred for many generations to come.

Wharton School of Business professor Jeremy Siegel said that about 97% of the gain of the Dow since 1900 has been from reinvested dividends. Many "gamblers, disguised as value investors, have lost hundreds of thousands of dollars investing in financials like AIG, Bear Stearns and others. Their mistake is concentrating ONLY on capital gains and not dividends. In the next installment, a step-by-step blueprint will help you to explain how to build your own personal dividend machine.

Come see my webinar with Bill O reilly

Billytickets intervie part 2 with a billionaires student

2009-01-12T11:14:00.001-08:00

Billytickets: How do you invest now?

Student: What do I do now? First of all, I deal with seasoned companies. By that I mean companies that have been around for long enough to have a record that shows how the business behaves in various economic environments—a business that has been through good times and bad, through recessions, inflations--and see how the business performs. I look for companies that have a long enough track record so what you are looking at present can’t possibly be an aberration. Pretty much unavoidably these are pretty big companies. These are big companies and they have been around long enough to be seasoned by my definition, they are successful and they are not tiny, little companies. The insight that I bring to these companies is that their stock prices—this is historically demonstrable--are much more volatile than their underlying values.

Billytickets: many say that there is not big profits in large caps like there is in small caps?

Student: Laughs. Well that is if you are skilled enough to pick the small caps. Even Warren was mistaken on Berkshire Hathaway the textile company . And while I can’t prove it, it would appear that stock prices are much more variable than the changes in their underlying intrinsic values. I refine or restrict my list to companies with superior financial characteristics. We will talk about what that means. But in general these are companies that are cash generating, with free cash flow, businesses that are more than self-financing. They generate cash in excess of their cap/ex and reinvestment needs. Because they are cash generating, they tend to have lower debt

Billytickets: So how important is trying to find the next Apple or Crocs or RIMM?

Student: All those stocks have been profitable but the investor can not say with certaintity that these investments would be 99.9% profitable. I am also no longer interested in companies where there is a story or a narrative. I am not interested in a company that is going to do something new and different. I am interested in its long record. I presume that a company of a certain size has a long record. We will talk about specific examples in a few minutes when we look at some Value Lines. I am not talking about long-term growth, I am talking about long-term high profitability, consistent profitability and consistent cash generation.

Billytickets:But isn't it true that everyone knows the best large caps and they never become cheap?

Student:Now, if I said to you, almost no company doesn’t have some degree of cyclicality in its operations. Wall Street because of its short-run obsession is very twitchy. You see these stories every so often like IBM, an enormous company, reports earnings that are a penny or two higher or lower than expectations, will move the stock price of these enormous companies 3% to 5% in a day. For sure, the value didn’t move 5% but the price did. Not in a single day, but over a series of days, you can have the divergence between price and value. The opportunities for value investors can and do present themselves

Billytickets interview with a billionaire's student Part 1

2009-01-07T10:26:00.000-08:00

I have talked extensively and read the class notes of a student of one of investing legends.I have NOT named anyone because the words stand 'alone" .Please enjoy part 1 of this MANY part interview: and feel free to ask questions and comment

Billytickets: Hi I am a bit of a contrarian and I would like to about how beinga contrarian and being a value investor goes hand in hand?

Student: I am…nearly all value investors have a little element of contrarianism in them. We lean against the tide. We like to buy when things are out of favor and sell when they are in favor. Benjamin Graham used to write in a Latin phrase for it, “Nothing is ever as bad as it seems, nor as good as it seems.” (From the 2nd Edition of Security Analysis—“Many shall be restored that now are fallen and many shall fall that now are in honor.” Horace--Ars Poetica). It means in modern terms that there is a tendency toward mean reversion.

When businesses are doing well, they have a tendency to go back to their long term performance measures and vice versa. (Competition enters, there is over-expansion, etc. Prices revert). Businesses go back to their long-term norm. All businesses are cyclical to some extent. That is a deception that people perpetuate on themselves—that is to say I am going to buy businesses that are not cyclical. One way or the other all businesses are cyclical. Companies that report very smooth earnings are fudging the numbers through accounting that would make the earnings smoother than the underlying business’s true earnings really should be.

Billytickets:Many believe that Buffett would be buying many smaller caps if he had only a million dollars to invest ,very similar to what he did in the 50s and 60s?Agree or disagree?

Student:Warren Buffett: “The chains of habit are too light to be felt until they are too heavy to be broken.”

This is Warren quoting the English philosopher Bertrand Russell, because his words so aptly describe the insidious nature of bad business habits that don’t become apparent until it is too late. This is what happened to Warren with the Benjamin Graham-inspired investment strategy of buying bargain (“cigar-butts”) stocks that were selling below book value regardless of the nature of the company’s long term economics. This was something Warren was able to do with great success during the 1950s and early 1960s. But he stayed with this approach long after it wasn’t viable anymore—the chains of habit were too light to be felt. When he finally woke up in the late 1970s to the fact that the Graham bargain ride was over, he shifted to a strategy of buying exceptional businesses at reasonable prices and then holding them for long periods—thereby letting the business grow in value

Bilytickets: So you don't believe warren would be buying smaller caps today if he was smaller in size?

Student: What's stopping him ? He could buy a basket of 250 stocks and put 4 million dollars in each and that would be equal to his position in Wal Mart . However many would turn out like Berkshire Hathaway the textile company did :without Warren deploying the cash into insurance and the good businesses. And the questions of when to sell out or buy more are NOT CLEAR. When he purchases Wal Mart he has the security of knowing that company's underlying business is fine and his ROE and moat is intact.

Billytickets: So even if Warren only had a million or 2 you dont think he would invest any different?

Student:Buffettt: “Turnarounds seldom turn.” The world is full of businesses with poor economics selling at what seem to be bargain prices. Warren looks for a good business that is selling at a fair price, or even better, a great business at a bargain price. Poor businesses tend to stay poor businesses.

In Warren’s early days he was only concerned with the historical financials of a company, he didn’t really care about the products it produced. His mentor Graham believed the numbers reflected everything there was to know; he didn’t separate a commodity-type business such as textiles, which has poor long-term economics, from a consumer-monopoly business such as Coke, which has great long-term economics. But as Warren became active in running a struggling commodity type business, he soon realized that it was the consumer-monopoly-type companies that had the competitive advantage and were producing the superior results. Graham would buy anything as long as it was cheap. Warren will only buy a consumer-monopoly-type company that has a competitive advantage, and he doesn’t have to wait for it to be selling cheap. A fair price is all he needs, if he holds on to it long enough.

An excellent example of this was his investment in Coca-Cola, for which he paid approximately 20 times earnings. The old Warren would never have made this investment because the Grahamian valuation techniques would have deemed it way too pricey. But for the new Warren it was a more-than-fair price that paid off for him in the billions. (The Tao of Warren Buffett pages 46-47)

11 months ago this is what i said

2008-12-31T10:51:00.000-08:00

Yesterday while discussing the market, someone said Billy its a stockpickers market now.

Guess what? Its always a stockpickers market. Are we at the bottom? Who knows. Here's what is obvious to me

Valuations on the stocks that are on my radar screen have not been this low in awhile

Anheuser Busch is BELOW where WEB bought in almost 3 years ago. With price increases and managements stockbuybacks and the possible Imbev merger there certainly is MORE upside than downside . the 40+% high ROE and almost 50% market share in the US are powerful.The 45 march put pays you 95 cents and is a great way to "get long" bud . Please respond in this thread if you need further explanation

Kraft is 10% below where billionaire takeover specialist Peltz bought in last year and his handpicked board members,the "breakaway" from Altria and the fact they are buying back stock heavily should combat the increase in commodity prices which have made these stocks a GREAT VALUE. Neither KFT or BUD are losing market share although the commodity prices have been a drag on earnings

Johnson and Johnson is another WEB pick and he owns over 3 billion dollars worth of the stock which he bought near this level LAST SUMMER

This company is a 3 headed monster with pharma,medical device sales and consumer goods and its over 20% ROE is very appealing at these levels

Altria alias "BIG MO" has a high div yield a ROE of over 40% and should be unlocking more value with its spinoff of the international cigarette market

Will all 4 of these stocks double in the next 2 years? Don't think so. How long is the recession going to last? I don't know and neither does anyone else

Many have said Billy these stocks look "dead. THATS RIGHT. BE GREEDY WHEN OTHERS ARE FEARFUL.

1)These 4 stocks are all recession proof .All 4 of these companies products are affordable and consumable.It is doubtful that ANY household in the US is NOT doing business and PROFITING off these 4 companies

2)Cash is yielding about 3.5% and is taxed as ordinary income.The Dividend yield on this portfolio is almost 4% and is taxed at LOWER rates than interest income

3) Even though these companies"seem" to be "no growth" industries they all have HUGE FREE CASH FLOW which can be used to

4) Buyback their stock at these LOW PRICES which benefit the long term shareholder

5)FORWARD PE is about 14 for ALL these companies which historically is LOW especially in todays low interest rate enviornment

Thse stocks make up about 75% of my portfolio. BNI makes up another 20% and has aforward PE of 12 and a 5 billion dollar investment by Warren Buffett ,but "new money should enter it about 5% lower than prseent levels . aperson who sold the March 80 puts and collected a 1.75 would at "worst" be entering at 78.25

Certainly there are stocks with higher long term "upside" and there are always those who want to"wait" until the markets get to "unrealistic" lows before they get in. ( someone told me that when JNJ gets to 50 they are buying) That is each individuals choice but at these current price levels DOUBLE DIGIT annual compounded returns should be realized.

JUst think about this if these 4 stocks are bought at the current levels and they end the year EXACTLY where they ended the year at 2007 . Lets analyze how your 11 month returns would be

BUD 47.03 today price 52.34 dec 31st price RESULT: 11.29 appreciation + almost 3% dividend=OVER14%in 11 months

KFT: 28.95 today price dec 31 32.63 RESULT:12.71 appreciation +almost 4% dividend =over 16.5% in 11 months

JNJ 62.87 today price dec 31st 66.70 RESULT: 6.09 appreciation +2.9dividend almost 9 % in 11 months

MO 73.13 today price dec 31 75.58 RESULT: 3.35 appreciation + 4.1% dividend almost 7.5% in 11 months.

So you see the odds are in your favor.Since 1957 18 of the top 20 performing S&P stocks were either pharmaceutical or consumer staples companies if reinvested dividends were factored in. This information and the low PE, High ROE and High Dividend yield (read past articles to “recap” how important these traits are)

Just for the record 10,000 invested in each would have given you about 6% return with dividends included

Check this out http://www.squidoo.com/Creating-Dividend-machine

Buying the right stocks at the right price WORKS.Be patient.peace

Warren Buffett disciple speaks

2008-12-27T11:52:00.000-08:00

Heads I win tails I break even
by William Spetrino Jr All of us here enjoy allocating capital. We choose to "speculate" different though. We are different in the fact that I move "away" from things instead as "moving towards" them as most people do. Part of my distrust is based on the fact that my wife is a CPA and I am an accountant and I have "witnessed" many LEGAL but doctored "Enron like" financial statements. This may SHOCK people but I do NOT READ Financial statements in great detail like 99% of you (especially in companies with market caps under 1 billion)

FACT is that one "incompetent", dishonest or rogue employee can wipe out a company’s assets and make a good business bad. Large Caps have simply become LARGE caps because in MANY cases DEVELOPED VALUABLE BRAND names. The" Salad Oil" incident in 1960s (look it up if you don’t know about it) which WEB put 40% into American Express (AXP) influenced WEB's thinking that even if American Express (AXP) lost all its assets, the BRAND NAME had a "HUGE INTRINSIC VALUE" which can not be "quantified on a balance sheet". WEB "repeated" this type of investment with GEICO whose real assets were reduced to almost zero but the "GEICO FRANCHISE" had a large INTRINSIC VALUE. WEB has been "hammering" BNI and I can assure you that he sees some kind of "INTANGIBLE (land drilling rights, mineral rights easements) that us DONT SEE. Think you are going to be able see things undiscovered assets like WEB does? Lots of luck.

The difference we have in my opinion is that in the past 17 years I have ALWAYS adopted a "heads I win Tails I Break EVEN" when I have allocated capital. While you have taken a more "enlightened" aggressive way of allocating capital with a higher upside but also a higher downside as well. Both of our methods are satisfactory but mine is "less risk" oriented being that my "earnings" were my major source of "survival" and one magic formula "EGY” type of stock can cause my family to "eat less".

One guru favorite is Home Depot (HD) which is in my opinion "UNDERVALUED". I feel HD is a typical "value investing play” and I personally think that over a 10 year span it will turn out great. I do not own any HD, NOT because I don’t think it’s cheap but because 98% of my portfolio is in CONSUMER Goods, Pharmaceuticals or Berkshire Hathaway (BRK-A) (whose portfolio is loaded with consumer companies and High ROE large moat companies like Nebraska Furniture Mart, Dairy Queen). Home Depot's earnings are "influenced" by hurricane season and the overall strength in the housing market. The FACT is that NO RETAILER (including Wal-Mart) has the same DOMINANCE than a "brand name" like Marlboro, OREO JELLO, Kool Aid, BUD LIGHT, LISTERINE, DAIRY QUEEN, Gillette, CREST etc which is evidenced by the fact that 18 of 20 of the top S&P companies from 1957-2004 were either Pharma or Consumer Goods companies and the bet on BRK is a bet on the "jockey" as well as the horse (which owns MANY large moat brand names)

I only bought Altria for 9 years and it was 100% of my stock portfolio until 2 years ago. Now it and KFT is 70% of my portfolio and BRK JNJ and BUD are another 28% WMT is 2 %. (although I like WMT and how cheap it is). Readers please do not tell me how "risky" having 50-100% of my portfolio in one stock IS or WAS. (Altria had 60+ brand names with $100 million in sales when I bought them and my basis in KFT on some purchases is now under $5) All my companies are large multinationals which were purchased with a low PE and have high ROE/ROC and bought near their 52 week lows.

Most importantly NONE of my portfolio EARNINGS are "materially" affected by a 9/11 type event or a slowing worldwide economy. True, beer and tobacco are not necessarily growth stocks in the US but the high steady cash flow will help aid "buybacks" and the INTERNATIONAL GROWTH which is a "hedge" against America losing its economic dominance which will raise EPS without increasing sales.

Conversely "smaller cap" stocks will take "longer" to reach its intrinsic value if times get bad, especially if those companies are dependent on "discretionary" income. The combination of lower earnings and less "liquidity" in the market will cause stocks to take "longer" to reach intrinsic value and prolonged "bad times" will almost certainly reduce intrinsic values.

My portfolio while "defensive" in nature is recession proof and the large institutions which "mirror" the S&P will "invariably" have to purchase my stocks while the small cap stock holder does not have that luxury. I understand that some use options in case of a calamity, I wish I was knowledgeable enough to comment on this but I am not.

What I find amusing is that many investors "believe" they are value investors and model Warren Buffett but forget Rule 1) DONT LOSE MONEY and 2) DONT FORGET RULE 1.

I have 50 capital allocation decisions in stocks. Among the 50 buys over 17 years in stocks EVERY investment over 2 years old is up "double digit annually" and my "worst investment" so far was a purchase of JNJ at $64 in February which is less than 1/100% of my total portfolio. With "averaging down" my basis in JNJ is now $61.03.

Those of you who own companies with less than "35 year moat" or Stocks with a market cap under $1 billion or companies which are dependent on "discretionary" income should consider "options" as a way to "hedge" against a calamity. Over 80% of my portfolio SURVIVED the great depression where unemployment was over 20% and legendary value investor Ben Graham went broke. Business is a game of SURVIVAL of the "fittest". No one can predict the FUTURE, me included. Will JNJ's 120 year moat somehow "disappear"? Perhaps. But I will take my chances

Finally I leave you on a positive note. Buying LOW PE ( 16 or lower), GOOD dividend HIGH ROE HIGH ROC, 35 years or MORE LARGE CONSUMER GOODS MULTINATIONAL companies with LARGE MOATS and HOLDING THEM UNTIL the PE is 25 or MORE or the ROC ROE falls under 20% is your BEST PROTECTION against having 50% or more of your net worth wiped out

2008-12-24T07:19:00.000-08:00

This was written in October of 2007 but its principles especially hold true in 2008

Heads I win tails I break even
by William Spetrino Jr All of us here enjoy allocating capital. We choose to "speculate" different though. We are different in the fact that I move "away" from things instead as "moving towards" them as most people do. Part of my distrust is based on the fact that my wife is a CPA and I am an accountant and I have "witnessed" many LEGAL but doctored "Enron like" financial statements. This may SHOCK people but I do NOT READ Financial statements in great detail like 99% of you (especially in companies with market caps under 1 billion)

FACT is that one "incompetent", dishonest or rogue employee can wipe out a company’s assets and make a good business bad. Large Caps have simply become LARGE caps because in MANY cases DEVELOPED VALUABLE BRAND names. The" Salad Oil" incident in 1960s (look it up if you don’t know about it) which WEB put 40% into American Express (AXP) influenced WEB's thinking that even if American Express (AXP) lost all its assets, the BRAND NAME had a "HUGE INTRINSIC VALUE" which can not be "quantified on a balance sheet". WEB "repeated" this type of investment with GEICO whose real assets were reduced to almost zero but the "GEICO FRANCHISE" had a large INTRINSIC VALUE. WEB has been "hammering" BNI and I can assure you that he sees some kind of "INTANGIBLE (land drilling rights, mineral rights easements) that us DONT SEE. Think you are going to be able see things undiscovered assets like WEB does? Lots of luck.

The difference we have in my opinion is that in the past 17 years I have ALWAYS adopted a "heads I win Tails I Break EVEN" when I have allocated capital. While you have taken a more "enlightened" aggressive way of allocating capital with a higher upside but also a higher downside as well. Both of our methods are satisfactory but mine is "less risk" oriented being that my "earnings" were my major source of "survival" and one magic formula "EGY” type of stock can cause my family to "eat less".

One guru favorite is Home Depot (HD) which is in my opinion "UNDERVALUED". I feel HD is a typical "value investing play” and I personally think that over a 10 year span it will turn out great. I do not own any HD, NOT because I don’t think it’s cheap but because 98% of my portfolio is in CONSUMER Goods, Pharmaceuticals or Berkshire Hathaway (BRK-A) (whose portfolio is loaded with consumer companies and High ROE large moat companies like Nebraska Furniture Mart, Dairy Queen). Home Depot's earnings are "influenced" by hurricane season and the overall strength in the housing market. The FACT is that NO RETAILER (including Wal-Mart) has the same DOMINANCE than a "brand name" like Marlboro, OREO JELLO, Kool Aid, BUD LIGHT, LISTERINE, DAIRY QUEEN, Gillette, CREST etc which is evidenced by the fact that 18 of 20 of the top S&P companies from 1957-2004 were either Pharma or Consumer Goods companies and the bet on BRK is a bet on the "jockey" as well as the horse (which owns MANY large moat brand names)

I only bought Altria for 9 years and it was 100% of my stock portfolio until 2 years ago. Now it and KFT is 70% of my portfolio and BRK JNJ and BUD are another 28% WMT is 2 %. (although I like WMT and how cheap it is). Readers please do not tell me how "risky" having 50-100% of my portfolio in one stock IS or WAS. (Altria had 60+ brand names with $100 million in sales when I bought them and my basis in KFT on some purchases is now under $5) All my companies are large multinationals which were purchased with a low PE and have high ROE/ROC and bought near their 52 week lows.

Most importantly NONE of my portfolio EARNINGS are "materially" affected by a 9/11 type event or a slowing worldwide economy. True, beer and tobacco are not necessarily growth stocks in the US but the high steady cash flow will help aid "buybacks" and the INTERNATIONAL GROWTH which is a "hedge" against America losing its economic dominance which will raise EPS without increasing sales.

Conversely "smaller cap" stocks will take "longer" to reach its intrinsic value if times get bad, especially if those companies are dependent on "discretionary" income. The combination of lower earnings and less "liquidity" in the market will cause stocks to take "longer" to reach intrinsic value and prolonged "bad times" will almost certainly reduce intrinsic values.

My portfolio while "defensive" in nature is recession proof and the large institutions which "mirror" the S&P will "invariably" have to purchase my stocks while the small cap stock holder does not have that luxury. I understand that some use options in case of a calamity, I wish I was knowledgeable enough to comment on this but I am not.

What I find amusing is that many investors "believe" they are value investors and model Warren Buffett but forget Rule 1) DONT LOSE MONEY and 2) DONT FORGET RULE 1.

I have made 50 capital allocation decisions in stocks. Among the 50 buys over 17 years in stocks EVERY investment over 2 years old is up "double digit annually" and my "worst investment" so far was a purchase of JNJ at $64 in February which is less than 1/100% of my total portfolio. With "averaging down" my basis in JNJ is now $61.03.

Those of you who own companies with less than "35 year moat" or Stocks with a market cap under $1 billion or companies which are dependent on "discretionary" income are truly at "risk" NO matter how "diverse" for portfolio is. Over 80% of my portfolio SURVIVED the great depression where unemployment was over 20% and legendary value investor Ben Graham went broke. Business is a game of SURVIVAL of the "fittest". No one can predict the FUTURE, me included. Will JNJ's 120 year moat somehow "disappear"? Perhaps. But I will take my chances

Finally I leave you on a positive note. Buying LOW PE ( 16 or lower), GOOD dividend HIGH ROE HIGH ROC, 35 years or MORE LARGE CONSUMER GOODS MULTINATIONAL companies with LARGE MOATS and HOLDING THEM UNTIL the PE is 25 or MORE or the ROC ROE falls under 20% is your BEST PROTECTION against having 50% or more of your net worth wiped out.

Don't think a bear market will derail your dividend machine

2008-12-22T08:22:00.000-08:00

Despite the fact that my largest holdings have dropped in 2008 ,do not let poor market sentiment make you lose focus. Personally I have a 3 year and 5 year time horizon MINUMUM when I buy a stock. Here are my 3 largest stock purchases and how they turned out.

First example was my purchase of Altria in January 2000 at 23 dollars per share . Within 2 months the stock dropped 20%. 3 years later,at the end of 2002, if you added the almost 7 dollars of dividends per share and the 40.53 closing price you have MORE than doubled your inital investment and exceeded 25% compounded annually.The same amount invested in the S&P would have dropped more than 37% in that 3 year span. Buying the right stock at the RIGHT price is KEY

In my book Consume Consume and Consume More I had forecasted 2 stocks to "buys" .Anheuser Busch which was recommended at 41.60 in Sept of 2005 was 68 dollars per share 3 year later and was taken over by Im Bev. In this years poor maket Anheuser Busch was a ray of sunshine.The 73% gain with dividends included gave me a 20% annual return compounded which was slightly higher than the 16% forecasted in the text. Berkshire Hathaway purchased at 2730 got off to a much faster start than BUD, reaching 5000 last year. Today it is 3200 per share which is only a 6% annual return which is less than the 13% annual return forecasted. The market is much lower in the past 3 years but Both of the stocks proved to be profitable

Becoming a successful investor means to have the"conviction" and patience to wait for a "fat pitch" and hit it out of the park. My proceeds from Anheuser Busch has been rolled almost primarily into Altria and Phillip Morris International. It takes COURAGE to be financially independent. The market guarantees you nothing. Often most people get in too late and exit too early. However many invest in industries like financials which are impossible for the layman to understand. In the examining the top S&P performers including dividends reinvested 18 of the 20 were either consumer goods companies or big pharma and I didnt see any banks or a company like IBM which benefited from the technology boom from 1957-2003. Instead a "boring" no GROWTH product like a Tootsie Roll which became less"popular" in the 70s with the advent of other candy choices gained more than 3 times an Investment in IBM did in the same 46 year period. Remember this adage, let your life be exciting but your investments be BORING ,but Profitable. I didnt have anyone to tell me this 8 years ago when Altria dropped more than 20% in 2 months and many predicted BANKRUPTCY and that the Bull market was over and the Bear Market was upon us. Well the 37% drop in the market did Happen. But Altria showed me and the REST of the world why from 1957-2003 it beat EVERY S&P stock by at least 3 million dollars on a simple 1000 dollar investment WITH dividends reinvested. I am going to "bore you" with my chart that I keep repeating in hope it will finally resonate

TOP PERFORMING STOCKS 1957-2003
This assumes All dividends are reinvested
$1,000 grew to
Annual Return

1 Philip Morris $4,626,402 19.75%
2 Abbott Labs $1,281,335 16.51%
3 Bristol-Myers Squibb $1,209,445 16.36%
4 Tootsie Roll Industries $1,090,955 16.11%
5 Pfizer $1,054,823 16.03%
6 Coca-Cola $1,051,646 16.02%
7 Merck $1,003,410 15.90%
8 PepsiCo $866,068 15.54%
9 Colgate-Palmolive $761,163 15.22%
10 Crane $736,796 15.14%
11 H.J. Heinz $635,988 14.78%
12 Wrigley $603,877 14.65%
13 Fortune Brands $580,025 14.55%
14 Kroger $546,793 14.41%
15 Shering-Plough $537,050 14.36%
16 Procter & Gamble $513,752 14.26%
17 Hershey Foods $507,001 14.22%
18 Wyeth $461,186 13.99%
19 Royal Dutch Petroleum $398,837 13.64%
20 General Mills $388,425 13.58%
- S&P 500 $124,486 10.85%
Notice how The difference BETWEEN 16.51 % annually compounded (WHICH IS GREAT) and 19.75% is over 46 years time. A mere $5000 at 19.75 % is more than 23 million and at 10.85% is 622,430. Thats a HUGE DIFFERENCE.

My grammar and sentence structure wouldn't get me into medical school but my constant quest to develop a formula and filters combined with the COURAGE I have to make BIG CONCENTRATED bets has made me financially independent . Many hate my constant self promotion and my unconventional SELF ASSURED BORING STYLE OF INVESTMENT. Well guess what?Im not crazy about their lack of conviction and their constant "critiqiung" of my marketing and investing methods. The fact is MY INVESTING METHOD WORKED and is Duplicable for all hose who"believe in it" Despite the markets wild drop in 2008 ,my annual dividend yield is NOW MORE than 8 times my Margin Interest and more than exceeds my annual living expenses. That's the object of the game isn't it? To achieve the most, with the least amount of "work"? This is only one man's way of doing it.OF COURSE I think my way is BEST.Who doesnt?WITHOUT COURAGE you will never become financially independent UNTIL its too late to matter.peace

Altria : How it responds after a 20% drop when the dividend is above 7%

2008-12-20T17:16:00.000-08:00

Let's track how Altria has responded this decade when the stock drops 20% and the dividend yield is at least 7%.Altria started this decade on January 1,2000 at 23.56 pre all the spinoffs that took plce with Kraft and Phillip Morris International

The first 20% drop was in February of 2000 at 18.84 ( 23.56 X.8).9 months later at the end of November the stock was 38.19 .That was a gain of 19.35 per share plus a 1.10 per share of dividends for a total gain of 108.55% .Very impressive for only 9 months.

In January 2003 Altria reached a high of 42.09 .In March of 2003 ( 42.09X.8) gave us a price of 33.67 .Altria had a 7.8% dividend yield at that price to fit our parameter. At the end of December of 2003 9 months later the price was 54.42 with a dividend earned of 1.96 . The 22.71 total gain individend and appreciation per share would give you a 67.45% gain

The rest of this decade the dividend yield was NOWHERE near 7%.After the high in May of 2008 of 23.02 a 20% drop whichgae you at least a 7% dividend is a stock price of 18.29 whch hit in October of 2008. 9 months laterwould be July of 2009. Will Altria raise this time like it did in 2000 and 2003? After the December 19 ,2008 close of 15.28, The dividend yield is not only over 7% but is 8.37%

Will history"repeat itself" and the stock rises 108.55% in 9 months like it did in 2000 and 67.45% like it did in 2003? No one knows for sure. But between the end of the year tax selling in 2008 which should subside in the past week and the federal and state governments dependency on tobacco taxes it is safe to assume Altria should be one of the first stocks to"recover".Time as it always does will tell.peace

Investment Planning

2008-12-18T12:10:00.000-08:00

One of my first clients in January 2003 between he and his wife had 278,000 in their retirement accounts in "assorted" investments and funds.I am going to explain how we combined diversification ,safety, growth ,income and tax efficiency.They planned on retiring at age 65 by the end of 2006 and would need money for retirement for 2007 and on.

The ideal "portfolio" COMBINES Growth ,Dividend Income, Diversification,Safety and Tax efficiency

In the next article I will address all those individually

We took that ALL that money in 2003 and Bought Altria which consisted of Kraft foods Miller Beer and more than 76 different brands that did over 100 million in sales and more than a dozen that have a billion a year in worldwide sales.When looking over the top performing stocks from 1957-2003 with dividends reinvested we notice something interesting

10,000$ with reinvested dividends returned the following

TOP PERFORMING STOCKS 1957-2003

This assumes All dividends are reinvested

Rank
2003 Name
$10,000 grew to
Annual Return

1 Philip Morris $46,264,020 19.75%
2 Abbott Labs $12,813,350 16.51%
3 Bristol-Myers Squibb $12,094,450 16.36%
4 Tootsie Roll Industries $10,909,550 16.11%
5 Pfizer $10,548,230 16.03%
6 Coca-Cola $10,516,460 16.02%
7 Merck $10,034,100 15.90%
8 PepsiCo $8,660,680 15.54%
9 Colgate-Palmolive $7,611,630 15.22%
10 Crane $7,367,960 15.14%
11 H.J. Heinz $6,359,880 14.78%
12 Wrigley $6,038,770 14.65%
13 Fortune Brands $5,800,250 14.55%
14 Kroger $5,467,930 14.41%
15 Schering-Plough $5,370,500 14.36%
16 Procter & Gamble $5,137,520 14.26%
17 Hershey Foods $5,070,010 14.22%
18 Wyeth $4,611,860 13.99%
19 Royal Dutch Petroleum $3,988,370 13.64%
20 General Mills $3,884,250 13.58%
- S&P 500 $1,244,860 10.85%

Altria outperformed EVERY stock by at least 34 MILLION Dollars which I took to be significantly significant . Since 1925 Altria was also the best performer in the S&P in the 78 years prior. Ten thousand dollars with dividends reinvested turned into over 2.50 BILLION dollars which is around 17% compounded annually.In the same timeframe ,smoking in the US declined or stayed equal in all those 78 years.( sound familiar.lol)

The 278,000 dollars bought at a price of about 28.96 per share gave us 9596 shares of Altria.the 1.92 per share in dividends we collected in 3 quarters gave us (1.92X 9596) 18,424.32 which we had at the year end of 2003.In 2004 we collected 2 more divdends totaling 12,963.52 In September of 2004 invested the total dividends plus interest which was about $31900 into more shares of Altria around the price of 45.25 which gave us 705 more shares or 10301 total. The last 2 months of 2004 we had dividends of 1.41 per share which netted us 14524.41.

In 2005 we collected the dividendsof (3.06 X10301)of 31521 which added to the 14524.41 gave us about47,000 with interest. We bought 1086 shares of Anheuser Busch ,which controlled 50% of the beer market in the U.S along with the 2nd ranked Us beer Miller that we owned with our Altria purchase.

In 2005 our total dividends were (10301X 3.06) + (1086X1.03) and added in with our interest was about 33,400 at the end of 2005

In 2006 we didnt buy any stocks either and our total dividends and interest totaled about 72,000

In 2007 our formula found NO other stocks and our dividends and interest at the end of 2007 was 113,576- 33000 WIthdrawn by the clients who retired=80,576

In June of 2008 when the Bud deal was being discussed .They "cashed out too early" by my advice when the ImBev deal was announced and collected only 62 dollars per share.That 67332 dollars combined with the dividends and interst from the end of 2007 and 2008 Minus what was withdrawn as living expenses which totaled about 129,000, was invested into 7127 shares of Altria in October at 18.10 per share which is almost 25% More. than its current price 2 months later

Lets see what that 278,000 dollars turned into after about 58,000 has been withdrawn over the past 2 years:

Annual Dividend Income in 2009 Assuming all dividends stay the same even though the 2 largest companies increased their dividends more than 10%in 2008.

Phillip Morris 9596 shares X 2.16 per share= 20,727.36

Altria 16,723 shares X 1.28 per share= 21,405.44

Kraft 6670 sharesX 1.16 per share= 7737.2

Total Diviedend Income in 2009 if all stay the same 49,870 dollars per year

Total Portfolio Worth based on yesterday's close 828,869.69

Whats ironic is this has been done in a depressed market where over $100,000 was invested in something down almost 25% since it was bought. The overall market since the beginning of 2003 was at a higher level then it is now 5 years later.The total dividends should increase yearly and this portfolio is not only "safe" but tax efficient".The client decides how much they take out the retirement account NOT the government.Please feel freeto ask any question or make comments.peace

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Dividend Investor and Buy and hold :your Goal

2008-12-17T06:23:00.000-08:00

The Buy and hold who is building a dividend machine is actually PLEASED when prices go down

The reinvested dividends and the ability to borrow money cheaper because of the FED lowering interest rates has made stocks like MO and PM "unusually inexpensive" relative to future earnings and dividends

If you read my book Consume Consume and Consume More the 2 stocks my formula selected 40 months ago Anheueser and Berkshire have risen over 70% and 22% respectively in that time time span despite todays"depressed market"

Remeber this great quote " BUy and Hold is great now if you have the stomach for it

9 years Altria helped me become financially independent .Trust me its worth it.I know because it happened to me

In later article you will see actual case studies

A portfolio that consists of Reynolds,Altria ,Phillip Morris. Coca Cola and Proctor Gamble ,Johnson and Johnson and Pfizer at today's prices is crucial

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Dividend Machine

2008-12-15T21:02:00.000-08:00

Why is it so important to develop your own dividend machine? This multiple part article should help you come to the realization that few investors do until it is too late: The importance of building your own dividend machine

A 25 year old whose portfolio is only thirty thousand dollars, can buy a stock like Altria today with a dividend of about 8.5% .You will find out in the next installment why Altria is ideal for starting your own personal dividend machine.The twenty seven hundred dollars of annual dividends should double about every 9 years at least. With no further investment this particular dividend machine should return over eighty six thousand dollars annually at age seventy. Sound impressive? By reinvesting dividends the first fifteen years this amount should be well over two hundred thousand dollars annually at age seventy.How many of your friends do you think will have done that? Not bad for a one time investment.See the importance of a dividend machine now?

What happens if you don't have the thirty thousand dollars to get started ?Borrowing the money from a loved one or relative is a great alternative.Many parents grandparents and loved ones loan money to a child for an automobile or school which may or may not have a future tangible value. Giving your loved one their "inheritence" early may create a permanent dividend machine that can be transferred for many generations to come

Wharton School of Business professor Jeremy Siegel said that about 97% of the gain of the Dow since 1900 has been from reinvested dividends . Only 3% wwas caused by capital gains. Yet Mmany"gamblers" ,disguised as value investors ,have lost hundreds of thousands of dollars, investing in financials like AIG ,Bear Stearns and others. Their mistake is concentrating ONLY on capital gains and not dividends. In the next installment a step by step blueprint will help you to explain how to build your own personal dividend machine

After each article there will be some business links that I would like feedback with

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Has anyone ever subscribed to any stock programs

2008-12-15T13:29:00.000-08:00

As the author of Consume Consume and Consume More, a Book dedicated to helping the reader go from zero to millionaire status by following a simple plan I have met many investors worldwide

Please share your experiences in investing books or programs you have found beneficial

One of the goals of this BLOG is to WRITE reviews of my book and the thousands of programs out there in the massive market of"Investment information"

If you have any information on these programs Click Here!

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In the event you ever intend to purchase or have purchased any of these your feedback is wanted

Personally I do NOT particpate in the"buying information" market but many readers who have more faith and money that I do are more open minded and less cynical than I am.

Of course I think my book is all one needs.lol

WELCOME

2008-12-15T07:20:00.000-08:00

I Billytickets am in the process of "launching" my first new business venture in over 9 years since my"retirement". This will cause a slight"strain" on my time and his blog is part of my "first step" . Many of our worldwide group of readers will"hopefully" profit FINANCIALLY from this new venture

Todays upgrade of Altria after 2 "fast Money" members Jeff Macke and Karen Finerman recommended it as the final trade is helping to establish a pattern

The stock rose on the open as many who bought it last week at 14.80-15 dollars quickly sold into the rally

With quadruple witching options expiration this week my guessis this stock will be "bought" around 15 and will be"run up" to the high 15s where the "traders" will again cash in.

I mean making 5% a few times in a week goes a long way in helping one's rate of return

The question is "if and when" that trading will stop

The minute you think you have the traders pattern "figured out" the stock "runs without you

Me personally Im just buying on the dips under 15.05 And IM going to hold on.

Todays ruling by the US supreme court that Altria can be sued in state courts in my opinion is just "symbolic".

Any judgment won in an individual state will JUST REDUCE the amount of the settlement that state will RECEIVE.

Do you really think a state appelate court will REDUCE their states share of the master settlement when reviewing the cases with EVERY state facing MASSIVE budget cuts?

Today's ruling just gives everyone a better entry price and has caused a short term dip

Long term this has no effect

MO is not a trading vehicle for me BUT is in my opinion the finest company in America

Many intelligent people have told me there is no growth ( while ignoring MASSIVE free cash flow which fuel BUYBACKS)

In the supposed "lost decade" of the 21st century My original purchase of Mo at 23 in January of 2000 which dropped aslow as 18 ( at which point I sold my car and bought more) was 40 6 months later

Today those shares equal 1 Mo 1 Pm and .7 Kraft shares and MAKE sure you add in all the DIVIDENDS that were paid over the past 9 years

Building a DIVIDEND MACHINE for retirement has never been more important since this years bear market

What if you were 64 and retired and needed to sell stocks for "income".You would have sold at the WORST time possible. Solution :Build your dividend mchine to "create an income" at retirement that is INDEPENDENT of a stocks price.This will 1) give you a certain income and 2) NEVER require you to HAVE TO sell your stocks at an inopportune time

Also the Goose that FUELS the DIVIDEND MACHINE will NEVER HAVE to be liquidated

Sound good?peace

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Introduction

2008-12-15T06:56:00.000-08:00

Well Billytickets is finally in the 21 century now.lol .Today at noon eastern time my first blog post will "offically" available thanks for everyone who has been part of Investors Brainstorming

Please give me feedback on these following businesses

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