Economics
a rising tax and regulatory burden (Government has never proven that it could solve economic problems efficiently or satisfactorily.)
http://article.nationalreview.com/?q=MzVkOTgxZDcyNGMwZThmYWFiOTFjYTdlYzIyZjE5Njk=
fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.). The continuing battle on earmarks:
http://robertbluey.com/blog/2007/07/25/democrats-abandon-transparency-for-earmarks/
Politics
Domestic
International War Against Radical Islam
A non MSM look at the ‘surge’:
http://www.strategypage.com/qnd/iraq/articles/20070724.aspx
The Market
Technical
Fundamental
As of the close of business yesterday, 40% of the S&P 500 have reported second quarter profits with the average earnings increase around 12%.
*****
We read an article by Ralph Wanger this last weekend, the basic thesis of which was that dividend paying stocks were better performers over the long term than non dividend paying stocks. We searched the Web and couldn’t find a link, so here is a summary:
Dividend paying stocks experienced superior performance because:
1. Financial theory states that the value of a stock is the discounted value of future dividends suggesting that it is more difficult to value a non dividend paying stocks and, therefore, more likely that investors will misjudge both buy and sell decisions.
2. Paying dividends discourages the awarding to corporate managements of huge stock option packages which require the use free cash flow to buy back stock simply to reverse the dilution resulting from those stock option grants.
3. Unfettered by the discipline of dividends, corporate managements, ex their option grants, tend to fritter away cash flow, investing in marginal projects that may improve revenues but penalize return on equity and hence the rate of earnings growth.
4. Stock buy backs are not a substitute for dividends because they are unpredictable and if made when the stock trades above its intrinsic value, actually destroy value.
News on Stocks in Our Portfolios
A positive write up on Bank of Nova Scotia:
http://www.zacks.com/rank/zcommentary/?id=5520
FFO: 2006 $3.12, 2007 $3.20, 2008 $3.40; DVD: $2.50, YLD 5.7%
http://finance.yahoo.com/q?s=LRY
Alcon (Aggressive Growth Portfolio) reported second quarter earnings per share of $1.48 versus expectations of $1.44 and $1.18 reported in 2006’s second quarter.
EPS: 2006 $4.35, 2007 $5.15, 2008 $5.90; DVD: $1.50, YLD 1.5%
http://finance.yahoo.com/q?s=ACL
Graco (Dividend Growth Portfolio) reported second quarter earnings per share of $.66 versus $.66 reported in the comparable 2006 second quarter.
EPS: 2006 $2.17, 2007 $2.55, 2008 $2.90; DVD: $.66, YLD 1.6%
http://finance.yahoo.com/q?s=GGG
ExxonMobil (Dividend Growth Portfolio) reported second quarter earnings per share of $1.83 versus expectations of $1.94 and $1.72 posted in last year’s second quarter.
EPS: 2006 $6.55, 2007 $6.75, 2008 $6.30; DVD: $1.37, YLD 1.7%
http://finance.yahoo.com/q?s=XOM
3M (Dividend Growth Portfolio) reported second quarter earnings per share of $1.25 versus expectations of $1.18 and $1.15 reported in the second quarter of 2006.
EPS: 2006 $5.06, 2007 $4.85, 2008 $5.05; DVD: $2.00, YLD 2.4%
http://finance.yahoo.com/q?s=MMM
Rockwell Collins (Aggressive Growth Portfolio) reported its third fiscal quarter earnings per share of $.86 versus expectations of $.83 and $.70 posted in the second quarter of 2006.
EPS: 2006 $2.73, 2007 $3.50, 2008 $3.85; DVD: $.70, YLD .9%
http://finance.yahoo.com/q?s=COL
Southern Co (High Yield Portfolio) reported second quarter operating earnings per share of $.55 versus $.52 reported in 2006’s second quarter.
EPS: 2006 $2.10, 2007 $2.25, 2008 $2.30; DVD: $1.60, YLD 4.4%
http://finance.yahoo.com/q?s=SO
Market Analysis
More Cash in Investors’ Hands
GlaxoSmithKline announced a $25 billion stock buy back.
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