Archive for October 2013

Separation Of Church And State

One of the myths of the Religious Right-Wing is that there is no such thing in the US as the separation of church and state.

Their main argument seems to be that the actual phrase (as well as the phrase “wall of separation”) does not appear in the Constitution. The phrase “wall of separation” comes from a letter Thomas Jefferson wrote while President. Generally conservatives love to go on about what the Founders intended, and Jefferson always seemed to be one of their favorite founding fathers.

This topic comes up a lot on Freethought Radio since church/state issues are the point of the organization. They point out that while the phrase is not in the First Amendment, “separation of church and state” is a pretty good summary of the  Establishment Clause and Free Exercise Clause of the First Amendment.

I had a Christian friend who used this argument since the actual phrase is not in the Constitution. Then he would turn around and tell me about his debates with the Jehovah’s Witnesses. They do not believe in the Trinity, since the word “trinity” is not in the Bible. He would cite Bible verses showing that the concept is. He was pretty proud of himself. And he never saw the contradiction.

The hosts of Freethought Radio point out that the concept of Balance of Powers is in the Constitution, even if the phrase is not. Slavery is also in the Constitution, although the actual S-word is not.  The phrases used are “other persons” and “Person held to Service or Labour”.

There is another concept that is in the Constitution even though the phrase itself is not. And it is a concept that a lot of conservatives love love love: States’ rights.

Either you need the phrase in the Constitution, or you do not.

Image from Wikipedia, assumed allowed under Fair Use

Thoughts On MLPs

A few of the dividend sites that I visit (like Dividend Growth Investor  and Dividend Growth Stocks) will frequently post lists of stocks: stocks they have recently bought, stocks they are looking at, and stocks that have recently increased their dividends.

Sometimes these stocks will include companies that are master limited partnerships. An MLP is a different legal structure for a company. Unlike a corporation, its members share some liability.

My issue is that many of these sites (and lots of articles around the web) will mention MLPs without really explaining some of the differences from regular stocks. One example is here.

One of their main features is they do not pay income taxes at the company level. For this reason, they are sometimes called “pass-through entities“. They must send a certain amount of their profits to their investors. Investors buy and hold “units” instead of shares, and they get “distributions” instead of dividends. (I think some REITs are also pass-through entities.)

They tend to be in the energy industry, and have “LP” at the end of their name. A couple of the bigger, more famous ones are Kinder Morgan Energy Partners, L.P. (KMP) and Enterprise Products Partners L.P. (EPD).

Because they are taxed differently, you get a different tax form called a K-1. I have heard it is a beast to deal with.

My impression is since they are pass-through entities they should only be held in taxable accounts. You could pay tax on the MLP income even if you hold it in a Roth IRA. I think there are a lot of people in the USA for whom the $5500 they put in their Roth IRA is the entirety of their retirement savings. Right now, I am one of those people. If you want to go with an MLP, I think an ETF would be the best bet.

Dividend investors need to be aware of the different tax treatment. And some of us who have been doing this for a while need to let beginners know that there are a few gotchas with MLPs. I think most people should avoid investing in them directly and just go with an MPL ETF.

Another point about MLPs is that they tend to have higher percentage yields than most stocks. Many of them have yields above 6%. Many dividend investors would consider anything above 6% yield for a corporation to be a serious red flag if not a reason for elimination. But for MLPs it is not necessarily a cause for concern. When I was first looking into dividend investing I found this a bit confusing until I learned a bit more about MLPs. One week a writer would say I should avoid a stock with a yield of 7% since yields that high are considered a sign a company is having trouble. But then the next week the same writer would say that some other stock (an MLP in this case) was a good investment because it had a 7% yield. If you do not know the distinction between a corporation and an MLP, those mixed signals can be a bit confusing.

They also may have higher payout ratios than stocks. I have neither a degree nor any experience in accounting, but from what I have gathered MLPs track things differently. So a higher payout ratio is not a cause for concern.

Once again, I think for most people an ETF is the best way to invest in MLPs.

Image from Wikimedia, assumed allowed under Fair Use

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Thoughts On ‘Star Trek’ Videos 2013-10-21

I have been watching some of the Star Trek videos on the Star Trek website. I mentioned before that I thought it was odd that CBS and Time Warner Cable resolved their dispute but never made an announcement. I think I figured out how they resolved it.

My cable bill went from $34/month to $43/month. Enjoy the jet, Les. My mom has Verizon FiOS and she loves it. I live in an apartment complex, so I am stuck with Time Warner.

I have no desire to ever own a house. My father started out owning a house, but eventually he was owned by the house, and he cared more about his house than the people in it. Plus I have no desire to spend any time or money working on a lawn. It seems like if you own a house, you have to have a lawn, preferable St Augustine, the most expensive and thirsty species of grass. And you have to have one because the jackass next to you has one. I don’t know if I could define “freedom”, but that is not it.

An interesting fact about The Next Generation: When that series started Patrick Stewart was 47. He looked like he was in his 60s. Granted, he’s in his 70s and still looks like he’s in his 60s, so I guess he is doing something right.

Image from Memory Alpha, copyright owned by CBS, assumed allowed under Fair Use.


Yet More Austerity

Here are a few more links to articles about austerity.

This is an academic page on VoxEU.

Here is one from the New York Times by some professor at Cornell. At one point, he asks the question: If we are not going to spend money to repair infrastructure now, then when will we?

Here is one from Politicus that links to a Krugman article in which he points out that the pro-austerity crowd is not being honest. They really do not care whether it will help the economy. They just want to dismantle the welfare state and rip the safety net. If that is what they want, why not just argue for those things on their own merits?

He also makes an interesting point about motives: The pro-austerity crowd never seems to consider that the pro-stimulus crowd is pushing stimulus because the pro-stimulus crowd states and thinks that stimulus might be good for the economy. No, the austerity people insist the stimulus people have an agenda. After all, the austerity crowd has an ulterior motive. So they think that everybody else does as well.

We also see this in the climate change “debate”. I used quotes because from a scientific perspective there is no debate about climate change.

Image from Wikipedia, assumed allowed under Fair Use

2013-10-04 Blog Title

New blog title:

Step Out Of The Machine

There are some experiments are looking at cosmic rays. One of the results will be that physicists will be able to determine if the universe is real, or just a simulation.

Here is an article in Wired magazine. Here is one from Forbes, of all places. Here is one from Discovery. Here is a link to a scientific paper.

What if we are in a simulation? Will whoever is running it end it? Or will they reveal themselves?

(This is not really a Star Trek related post, but an image from a scene on the holodeck seemed appropriate.)

Image from Memory Alpha, copyright owned by CBS, assumed allowed under Fair Use.

More ‘Both Sides Do It’ Nonsense

One of the results of the government shutdown is some people on the web are pointing out that it is not the case that “both sides are to blame”, that it is in fact the case that one side is more to blame than the other.

I retweeted a few articles that I think at least mentioned the “both sides” fallacy:

Here is an article from the Washington Post pointing out that while there are fringe theories on the left, they were never spouted by any Senators or House committee chairs or any high-ranking Democrats, and there were not unending investigations into non-existent “scandals”.

Politicus has an article pointing out that the media is not as liberal as people think. It only got critical of GW Bush towards the end of his presidency. I guess spending billions on a war based on lies is okay with some people at least some of the time.

Dante Atkins at Daily Kos looked at the “both sides” BS when Olympia Snowe decided not to run for re-election in the Senate.

Business Insider had an article in April pointing out that some Repubs not only think the GOP is not waging a war on women, but think that Obama is waging a war on religion. Granted, a lot of conservatives seem to think they are being oppressed when they are not kicking someone around.

Maybe I should get a sticker that says I am a Proud Oppressor Of Conservatives.

Image from Wikipedia, assumed allowed under Fair Use

2013-09 Dividend Income

Here is the dividend income report for September, 2013.

The monthly dividend income came out to $395.65. The yearly income so far is $2374.05. This was the most income I have gotten from stocks in one month without getting any special dividends or dividends from Vodaphone.

The income for September 2012 was $315.21, and the yearly income up through that month was $2425.78.

I think my dividend income for 2012 will turn out to be higher than my income for 2013. Despite the fact that I sold a few stocks late in 2012 and in early 2013, the gap between 2012 and 2013 is shrinking. But my income was still greater in 2012 at this point. Also, some companies in 2012 accelerated their dividend payments due to uncertainty over the tax law. As I wrote before, I think that uncertainty was due to stupidity and fearmongering. All of these companies are still paying dividends. Most of them have increased them.

I did buy more shares of ConocoPhillips. I now have 100 shares of COP, and of all my stocks they pay the most per month. When I started buying stocks I got as many shares as I could get for $1000. I stopped doing that fairly quickly and tried to get at least 50 shares of each. My goal now is to get all my stocks up to 100 shares. For some I have 100 shares due to splits. I plan on getting those up to 200. This may be a multi-year project.

Right now I think a lot of the stocks I own are a bit expensive. I know one of my taglines is “Price Doesn’t Matter.” To be more precise, I think that price doesn’t matter as much to a dividend investor as it does to someone who is investing solely for capital gains. Right now the PE ratios of a lot of stocks are over 20. I would prefer to buy when they are under 18, and under 15 is better. For a long time there was a yearly cycle in which stocks seemed to peak around May, and got lower until November. Then they went up from November to May. The financial crisis in 2008 seemed to disrupt that cycle. It looked to me like that yearly pattern was starting to come back in 2011 and 2012. But now in 2013 the prices of stocks just keep going up and up.

There are exceptions to this. The PE ratios for most oil companies is around 10. I don’t know what the significance of that is. Is it bad for a group of stocks to be under the average PE ration of 16 while everything else is above it? I know a few people who have been involved in investing for a while. I will contact them and get their opinions.

I toy with the idea of making a promise to buy something in January regardless of what the prices are.

Here are the stocks and the income amounts for September, 2013:

  • Black Hills Corp: $12.87
  • Intel: $11.06
  • AFLAC Inc: $18.25
  • American States Water Co: $21.50
  • Bemis Co Inc: $16.43
  • ConocoPhillips: $70.59
  • Vectren Corp: $19.31
  • Questar Corp: $9.53
  • Chevron: $21.91
  • Emerson Electric Co: $21.42
  • Johnson & Johnson: $21.79
  • Sonoco Products Co: $19.98
  • Exxon Mobil Corp: $36.25
  • Archer-Daniels-Midland Co: $11.95
  • 3M Co: $8.17
  • Walgreen Co: $17.49
  • Consolidated Edison Inc: $17.39
  • Dover Corp: $8.33
  • Valspar Corp: $13.16
  • RLI Corp: $18.27


Image from Wikimedia