Thursday, March 19, 2009

Buy of COP/Advantage Energy, AXP, Life Insurance Company Downgrades/Politicians Have Had it With Wall Street/

1.  Tax on Bonuses: The House passed a 90% tax on bonuses paid to employees whose family incomes exceed $250,000 and whose firms received at least 5 billion in bailout money. NYT 

The Masters undoubtedly rue the day they had to go begging politicians for money. Even if the bill does not become law, the financial wizards will remember what happens when they go hat in hand to Washington for years to come, and perhaps will become more circumspect in the future about irresponsible risk taking at 40 to 1 leverage. But, they really thought they could privatize the rewards, using government money to continue paying themselves as if nothing had happened, while socializing the risk by having the government pick up the tab for their improvidence. 

I suspect that the public outrage will make it far more difficult for Geithner to jump start a private/public deal to buy bad assets. Given the kind of uproar that we have seen, and the punitive measures just taken by the House, who is going to want to step forward and work a deal with the government? 

2:  Canadian Energy Company-Advantage Energy: Advantage Energy (AAV) became  the first Canadian energy trust to abandon its monthly dividend in anticipation of the 2011 change in Canadian tax law for these enterprises. Advantage will dispose of some assets and change its model from providing income to growth. This may be the start of a trend. Many of them have already cut their dividends in response to falling energy prices and it is now just a short leap to wean shareholders off the dividend entirely. This will cause me to stick with firms like Chevron (CHV), Exxon (XOM), and ConocoPhilliops (COP) because dividends are still important to an old geezer.

3.  American Express Debt: S & P placed American Express debt on credit watch for a possible downgrade. MarketWatch  I do not own AXP but I have been surprised by the extent of its credit losses from its customers.  Forbes.comI have an alert set at $10 to remind me that I will want to look at it again for a possible nibble. The stock has already fallen from a 52 week high of over 50 to the current price of 13 and change. 

Tyler will be leaving to Jordan in a few days for the Peace Camp 2009 sponsored by People to People. Event Summary

4.  Bought Conoco Phillips at $38.6: I did start a position in ConocoPhillips (COP) at $38.6 today. This is a new position and I am slicing and dicing my normal order into several different purchases as a risk mitigation strategy in this still extremely dicey market.  This kind of strategy would not be possible in the old days when brokerage commissions were a significant part of the cost. I can split and order into three parts and still pay less than $25.  

5. Prudential Debt: Moody's downgraded the senior debt of Prudential two notches to Baa2 from A3.   Moody's kept the outlook as negative which simply means another downgrade is possible within 2 years. Reuters 

Prudential fell almost 25% today. 

6. Lincoln National Debt: Moody's downgraded the senior debt of Lincoln National by one notch to Baa1.

7. Tennessee Legislature: The Tennessee Legislature continues to focus its attention on the issues viewed as critical, banning all abortions and permitting Tennesseans to carry all manner of firearms wherever they want.  The most recent bill would allow a loaded shotgun and rifle to be carried in a vehicle since you never know when you will get into a firefight.

  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. 

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