Monday, January 5, 2009

Notable News 1 05 09: Franken/VZ and T/& Zero Interest in buying bonds & bond like investments

Education Realty became the latest REIT to slash its common stock dividend.   Reuters  The dividend was reduced by 50%.  I do not have a position. 

It is just as well that a comedian has been declared the winner of the Minnesota senate race.  Reuters   But, does anyone have any confidence in the accuracy of this result?  When the margin is a few votes, the only sensible thing to do would be to have a do over, without the third party candidate.  I am not sure who I would have voted for in that election, possibly Coleman, but the end result of any election has to be confidence in the tally and I do not see that happening in Minnesota. If you are a card carrying member of one of the two Tribes, I know that it is all about winning and losing but fairness, accuracy, and confidence in the election process is more important.    

Bernstein downgraded Verizon (VZ) to underperform and At & T (T) to market perform, apparently under the assumption that the current economic downturn will last long enough that people will give up their cell phones.  Reuters What I have noticed is that most of the young people that I know only have cell phones.  If they quit paying, they would not have any phone.  I suspect that cell phone users would cut back on cable before changing their phone service.   I do however suspect that the companies are nearing the saturation point for new customers but the last earnings reports from VZ and T still show a significant expansion in their new customer base.  I looked at the most recent 10-Q for AT & T which showed a healthy increase in wireless customers to 74.871 million by the end of the September 2008 quarter from 65.66 million on 9/30/07.  att3q08.htm  (at p. 16)  About 1.7 million of that increase was from its acquisition of Dobson.  But growth in wireless customers and revenues was still impressive.  Both VZ and T are probably also feeding off weaker rivals like Sprint.  My main involvement with both VZ and T is as an owner of their senior long term debt.  I sold my position in T in the mid to high 30s which was in my regular IRA and kept a very small position in Verizon common in that account which is only 30 shares.  I no longer intend to make any contribution to the traditional IRA account, but will continue adding to the Roth IRA.

It does seem, at least for now, that the animal spirits are tamed and corralled when the Dow hits 9000. 

I would have to say, looking at my quote pages containing TCs and preferred stocks, that I have now almost zero interest in just about all of them at the current prices.  For most of them, I am also not interested in selling either.   This is just as well.  I may have over done my allocation in those sectors between September and December of last year since I now feel a need to hedge the positions with TBT.   Now, it is time to start looking at stocks again.   I have to move to where I see the best values for my money.  No matter how much money you have, it is still about capital allocation. 

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