4/15/08

Economics

In praise of the optional flat tax:

http://article.nationalreview.com/?q=MjU5NjgzZjMyNGQ1OWQ1Mjc4OTk1MGM3NWYxZDE2MGM=

The current price of insuring against default risk:

http://bespokeinvest.typepad.com/bespoke/2008/04/leh-mer-and-ms.html

protectionism (Free trade is a major positive for world and US economic growth.). On Pelosi’s maneuvering:

http://www.ibdeditorials.com/IBDArticles.aspx?id=293065978453189#top

Breaking down the employment data:

http://mjperry.blogspot.com/2008/04/ny-times-flawed-labor-market-analysis.html

Politics

Domestic

The latest economic proposals from McCain:

http://www.myfoxboston.com/myfox/pages/News/Detail?contentId=6308313&version=1&locale=EN-US&layoutCode=TSTY&pageId=3.3.1

International War Against Radical Islam

The Market-Disciplined Investing

Technical

Fundamental-A Dividend Growth Investment Strategy

If you had told me that the Market was going to be down another 200 points yesterday, I would have believed you. That it held as well as it did was clearly a positive. Part of it was attributable to better than expected March retail sales report (even though real final sales were still down)--another data point it what seems to hopefully be an improvement in economic conditions March (recall I pointed out two weeks ago following some of the initial March statistical reports that the March numbers were looking better than those of February). Lots more data is needed before we start tip toeing through the tulips, but I’ll take a little good news anywhere I can get it. For the moment, no additional stock purchases will be made, though my intent is to continue averaging into stocks.

The Dividend Growth Buy List

Company Close 4/14 Buy Value Range

Avery Dennison $49.37 $45-52

Brown Forman 70.98 65-75

Canadian Nat’l RR 48.35 45-52

Chevron 89.30 79-91

Emerson Electric 50.36 46-53

ExxonMobil 89.70 86-99

Federated Investors 33.09 32-37

Ingersoll Rand 43.16 42-48

Johnson Controls 32.01 31-36

Johnson & Johnson 65.74 60-69

Manulife Financial 37.15 34-39

Northern Trust 65.00 64-73

Proctor & Gamble 70.12 66-75

Sherwin Williams 53.53 53-61

T Rowe Price 50.42 45-52

UGI 25.72 24-28

UPS 70.25 67-77

VF Corp 76.04 72-83

Wells Fargo 27.20 27-33

Subscriber Alert

The stock price of Linear Technology (LLTC-$30) has returned to its Buy Value Range. LLTC is being Added to the Dividend Growth Buy List; however, the Dividend Growth Portfolio will not Buy shares at this time.

Company Highlight

Ingersoll Rand is a diversified manufacturer of industrial equipment and components focusing on (1) the transport, preservation, storage and display of temperature sensitive products, (2) enhancing industrial efficiency and (3) the manufacture of architectural hardware, mechanical locks and access control products and services for residential, commercial and institutional buildings. IR has grown profits and dividends 10-15% annually over the last 10 years while earning a 15%+ return on equity and should be able to continue this record as a result of:

(1) its strategic focus on high margin businesses in particular the spare parts and aftermarket services for its original equipment sales [approximately 21% of revenues],

(2) increased investment spending in emerging markets especially add-on acquisitions [averaging seven per year],

(3) new product development,

(4) reducing its cost structure through consolidation and eliminating cyclical businesses,

(5) stock repurchases.

IR is rated A++ by Value Line, has only 15% of its capitalization in debt and its stock yields 1.9%.

http://finance.yahoo.com/q?s=IR

News on Stocks in Our Portfolios

A reasonably positive look at US Bancorp (High Yield Portfolio):

http://www.thestreet.com/p/_htmlrmm/rmoney/banking/10411876.html

Johnson & Johnson (Dividend Growth Portfolio) reported first quarter earnings per share of $1.26 versus expectations of $1.20 and $1.16 recorded in the comparable 2007 quarter,

More Cash in Investors’ Hands