We The Economy

The lines are blurring when it comes to distribution platforms for film and television, and competition is fierce. There’s Netflix versus HBO versus Amazon versus Hulu, to name a very few. But somehow, despite all of this competition, Morgan Spurlock has managed to get more than fifty digital, cable, television, and mobile platforms (and Landmark theatres) to play nice and work together to launch his latest project, We The Economy: 20 Short Films You Can’t Afford to Miss.

They assembled a group of economic advisors and “brilliant economic minds” to help shape the topics for each segment, which led to films about supply and demand, natural resources, government regulation, and the healthcare system. Then they went out to directors on a “first come, first served” basis, says Spurlock. Catherine Hardwicke, Barbara Kopple, Adrian Grenier, Albert Hughes, and Adam McKay (who helmed an animated film about pastel colored alpacas that explores economic inequality) came on board.

The goal is to begin a larger conversation and education of the general American public, but the project could also serve as an example of yet another way to evolve old-school distribution models.

“The window is gone,” says Spurlock. “The window is out the window.”

Francis Chou

Francis Chou immigrated to Canada in 1976 with $200 to his name. Without a college degree, Chou worked as a telephone repairman for Bell Canada, then formed an investment club with co-workers after reading about Benjamin Graham's teachings. Today, Chou is the fund manager of Chou Mutual Funds. Below are his answers to questions from GuruFocus readers.

Who is your all-time favorite investor – and why?

Benjamin Graham is my favorite investor. His 'margin of safety' principle is so profound that it is applicable everywhere. I have bought equity securities of good and mediocre companies in the United States, Canada, Europe, China, Japan, as well as distressed securities such as junk bonds, and they have worked out really well as long as 1) my valuations are accurate and 2) I bought them at a severely discounted price.

You run a very concentrated portfolio. How do you (from an emotional standpoint) deal with large swings in positions that have such heavy weightings? Do you have any tricks to help deal with becoming emotionally attached to a security?

We only look at intrinsic value and what the ratio of the stock price to intrinsic value is. That's all that matters. Everything else is noise.

How do you know if you have enough information to make a purchase decision?

I will make a purchase when I think the odds are 80% in my favor, given all the information provided. You also ask yourself whether you are willing to put 10% of the assets of your fund in that one stock, and if the answer is 'no,' your subconscious mind is telling you that you have strong doubts about your valuation or the company and therefore you need to take a few days off and then come back and reassess the company and your valuation.

How much research do you do before you have conviction to take a position?

For most stocks, I’ve been following them for 30 years, and when it falls within the range of undervaluation, I may then begin to start thinking about buying it. You should always feel like the odds are at least 80% in your favor before taking a position. Don't commit unless you have high certainty.

Vectorvest forecast for 2015

Apparently from Dr. Bart DiLiddo

[too bad I couldn't copy and paste the text from this video.  So type away..]

The Strategist's average prediction for 2015 was that the S&P 500 Index would close at 2,212, up 5% from today's close of 2.089 [this report apparently was written on 12/26/14].  Thomas Lee, the Strategist who made the highest and closest prediction of 2075 for 2014, also was tied for the highest prediction for 2325 for 2015.  Great, but what does VectorVest say?

Our Watchlist of the S&P 500 shows that GRT, Forecasted Earnings Growth, is currently at 9.0%/yr, the same as last year.  However, the Investment Climate Graph shows that the Earnings Trend Indicator has fallen from 1.13 to 1.11 over the last two months.  This is not a serious change.  Therefore, the VectorVest view is that a Bull Market Scenario will prevail in 2015.  However, we must watch the Earnings Trend Indicator very carefully.  Profits in the oil patch are expected to drop by 16.5% over the coming year.  However, I expect profits in the consumer sectors to increase from oil's decrease.  Once again, the stock market should do well in The Year Ahead.

Forbes vs. Oxfam

It’s hardly news at this point, but a new report from British anti-poverty charity Oxfam predicts that the world’s richest 1 percent will soon enough amass wealth that will be greater than half of the world’s total.  If so, those not among the 1 percent (including this writer) should all be giddy with excitement.

Simply put, when the wealth gap widens, the lifestyle gap shrinks.

What’s unfortunate about the report is that rather than celebrating the rewarding of enterprise on the way to global plenty, Oxfam Executive Director Winnie Byanyima seeks “urgent action” to reduce the inequality.  Adding her voice to a chorus of economists offering evidence-free assertions about inequality being the cause of poverty, Byanyima has said that “Failure to tackle inequality will set the fight against poverty back decades.” She adds that “The poor are hurt twice by rising inequality – they get a smaller share of the economic pie, and because extreme inequality hurts growth, there is less pie to be shared around.”

Readers can relax.  What Oxfam presumes about inequality is belied by simple history.  What we’ve actually seen is that inequality and the economic growth that lifts all boats go hand in hand.  Of course they do.

Readers can relax.  What Oxfam presumes about inequality is belied by simple history.  What we’ve actually seen is that inequality and the economic growth that lifts all boats go hand in hand.  Of course they do.

The above is true simply because wealth achieved in the capitalist system is more often than not a function of turning obscure luxuries into ubiquitous goods enjoyed by all.  The great Thomas Sowell has written that before John D. Rockefeller came along, evenings were rather bleak.  Sowell has noted that during the 19th century the phrase “the night cometh, when no man can work” was the sad truth.

Rockefeller not only made the kerosene that lit up formerly dark evenings a common, low-priced reality, but he eventually did the same with the fuel that powered automobiles.  Henry Ford got exceedingly rich by virtue to turning the once unimaginable-to-own luxury that was the car into something everyone could buy.

More modernly, Michael Dell earned his billions turning once expensive, slow and bulky computers into pedestrian gadgets that a growing number of people own several of, including ones that fit in our pockets thanks to people like the late Steve Jobs.  Bill Gates became the world’s richest man by virtue of designing software that rendered the computer easy to use, while Amazon’s Jeff Bezos made it possible to order the world’s plenty all with a tap on one’s computer, tablet, phone, and according to rumors, soon enough from the timepiece on one’s wrist.

The above examples are so unrelentingly true that it’s almost shooting fish in a barrel to mention them.  But they cannot be denied no matter one’s ideology, or dislike of achievement.  If Gates, Dell, Jobs and Bezos had been layabouts inequality would no doubt be less, but life would be much less enjoyable, and much more uncomfortable.  Thinking of music alone, Paul McCartney is said to be worth billions, but would the class warriors in our midst return the joy he and the Beatles brought the world just to reduce the wealth gap?

To state what is obvious, to look at the Forbes 400 is to see people who’ve made our lives better, healthier, more interesting, and more abundant. Patrick Soon-Shiong is worth billions for having advanced the search for a cure to cancer, Steven Spielberg is a member for having entertained millions, and possibly billions, while Mark Zuckerberg is on the list for connecting us to friends, ideas and conversations around the globe.

Oxfam presumes the need for “urgent action” to fix what isn’t a problem, but implicit in urgent action is that politicians will act as wealth allocators over the color, class and gender blind markets.  In short, what wealth gap worriers unwittingly seek is wealth destruction by politicians over the provision of always limited resources to the most talented.  Thinking about this yet again, readers need only ask themselves who has done more to better the world: Mitch McConnell, Harry Reid and Silvio Berlusconi, or Jerry Jones, Oprah Winfrey and Sergey Brin?

The answer to the above non-riddle stares us in the face every single day.  Politicians invariably get rich when they redistribute the wealth we create, but in ways that do the opposite of improving our lives.  Conversely, when market forces allocate the economy’s resources the wealth gap surely soars, but we’re all made better off.  Again, can any reader say with a straight face that life would be better if Jones, Winfrey and Brin were on the dole?

What can’t be forgotten is that great, inequality inducing fortunes are made and lives beautifully enhanced (in my upcoming book, Popular Economics, I argue that inequality is beautiful) when meritocratic markets are allocating capital instead of politicians.  In that case, we should cheer loudly assuming Oxfam is right.

Indeed, Oxfam says inequality is set to soar.  If so, this can only mean that the economy’s resources are set to be allocated a great deal more by market forces, and a great deal less by politicians.  Inequality is once again beautiful, and a signal of rising lifestyles for those not rich.

All that’s left is to wonder what the rich of the future will make commonplace for all? It says here private jets, self-driving cars and near-instantaneous recovery from knee injuries will be among the advances.  If so, inequality will soar.  Let’s hope.  It’s when the wealth gap is not increasing that we have reason to worry.

***

Surprisingly, I see only one comment (by Sean Durkin). “Are YOU kidding? Is this really theonion.com? Anyone who swallows this propaganda is an idiot.”

More Forbes articles mentioning Oxfam

an average decade?

The past 10 years brought a credit boom and bust, the most damaging financial crisis in decades and $12 trillion in money creation by desperate central banks – all of which made for a pretty average decade.

Rather average, that is, in terms of the returns produced by big U.S. stocks.

Through Dec. 31, the average annual total return for the Standard & Poor’s 500 stock index was 7.6%, according to FactSet. That’s up sharply from negative 1% five years earlier, when the market was winding up a “lost decade.” This measure of the past decade’s gains is now approaching long-term average yearly return.

Since 1926, big American stocks have delivered just over 10% a year, and Jeremy Siegel’s study on stock performance dating back to 1871 pegged the average at 6.8% after inflation, which is slightly above the pace of the past 10 years.

So the market took a messy, dramatic, sometimes scary and then euphoric path to a respectable, if pedestrian, performance since the end of 2004. It barely nosed above its 2000 peak in late 2007, then was cut in half within 18 months, and since the March 2009 low has surged more than 200%.

The question now -- especially for those who haven’t participated in the past few years’ ascent -- is how much life this bull market might have left in it, both in terms of duration and upside.

A glance at this long-term chart of rolling 10-year stock returns would lead many to the conclusion that this uptrend is really just getting in gear. Throughout history, this gauge has spent far more time at levels well above the current one.

Yet it’s worth noting how rapid the upside progress has been in just the past few years -- and how this 10-year measure will keep rising in coming years even if stocks stall out or merely trudge higher. The S&P 500 has appreciated at an average of more than 17% annually the past six years.

Financial advisor and Yahoo Finance contributor Ben Carlson calculates that if stocks stay right where they are for the next four years, the trailing 10-year return will rise to 9.9%; if stocks shuffle ahead by a modest 5% a year over that time, the 10-year average will jump to more than 12% by the end of 2018.

In those terms, it might appear that the market doesn’t exactly owe investors much in coming years.

Jim Paulsen, strategist at Wells Capital Management, this week noted that beneath the indexes, the typical stock is now about as expensive as it has ever been.

Sure, the S&P 500 as a whole trades at 18-times the past year’s operating profits, and a bit more than 16-times forecast earnings for 2015 – modestly but not alarmingly above the long-term average. But this aggregate multiple is dragged lower by a relative handful of mega-cap stocks that appear quite cheap statistically, such as Apple Inc. (AAPL), Exxon Mobil Corp. (XOM) and Bank of America Corp. (BAC).

Using an academic screen performed each summer of all New York Stock Exchange issues, Paulsen says the median stock P/E ratio is around 20 -- roughly as high as it’s been since 1950 -- which should make big continued gains for the typical stock challenging.

This, in a way, is the reverse of the market at the height of the tech bubble, when the S&P 500 was fabulously overpriced thanks to richly valued blue chips and nearly all big technology stocks, while the median company sported a multiple no higher than the historical norm.

One of the few ways to escape much concern about how these forces sort themselves out is to have at least a couple of decades to work with. The market has never been down over any 20-year period. Indeed Carlson offers the reminder that the worst trailing annual 20-year return after the crisis was 7.7%.

Patience, then, is a comfort as well as a virtue – for those who enjoy the luxury of lots of time before they’ll need to convert a portfolio into living expenses.

Seven Consecutive Years?

If the stock market closes higher this year, it'll do something it's never done before.

The US stock market has been up for six consecutive calendar years — from 2009 to 2014. If it closes up in 2015 for the seventh year in a row, it'll be the first time this happens ever.

On Tuesday, DoubleLine Funds' Jeffrey Gundlach unveiled his 2015 outlook for the economy and financial markets, during which he included a chart showing that US stocks have never been up for more than 6 consecutive years in a row.

He cited the six-year stock market rally as one of the reasons for his bear-case scenario.

You can see below that the last time stocks closed up six years in a row was over 100 years ago — back in 1893 to 1903. And then the next year saw an 18% downwards price correction.

Gundlach isn't the first to suggest that the rally may not last longer. And last month, Societe Generale's Roland Kaloyan attributed his belief that stocks are going to slide in 2015 to a similar reason.

"Since 1875, we have never seen the S&P rise for seven calendar years in a row, so an eighth year would seem highly unlikely," wrote Kaloyan in a note to investors. "We assume that the S&P 500 will finish the year slightly down as the strengthening of the US dollar and the new tightening cycle offset the strong US GDP growth already priced-in at the start of the year."

Kevin Cook says, "so what?"

Dividend Investing

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm here with Josh Peters. He is the editor of Morningstar DividendInvestor newsletter and also our director of equity-income strategy. His portfolios recently crossed the 10-year mark. We're here to take a look back and see how performance has been and what lessons he's learned. Josh, thanks for joining me.

Josh Peters: Good to be here, Jeremy.

Glaser: Let's start with that performance number. Now that you have 10 years under your belt in running these portfolios, what did those numbers look like versus a broad-based index like the S&P 500?

Peters: I don't normally target trying to beat the market over any short-term interval, like a quarter or a year. I figure you're going to own a very different group of stocks than the market average if you're going to target those high yields, so you shouldn't expect to behave like the market. But having reached the 10-year mark, it's very gratifying to see that without even trying, so to speak, we have beaten the S&P 500. Since inception, our annualized total return is 9.4%, and that compares to 7.7% for the S&P 500.

Glaser: Even though this was a successful strategy, probably looking back there are things that you maybe wouldn't do again or mistakes that you've made. What's the biggest one that you saw over the last decade and that you've tried avoid since?

Peters: When I started, I had very much that traditional bottom-up type of focus that you'd expect from a value investor. And it happened that, by 2007, I had found merit from the bottom up in lots and lots of bank stocks and other financial-services companies--many of whom had dividend yields of 3%, 4%, or even 5% and records of raising the dividend every year, dating back 20 or 30 years. These looked like perfect candidates for the types of total returns I was looking for.

However, to have owned them heading into the housing and mortgage crisis--that terrible time from 2008-09--was bad enough. Frankly, I just loaded up too much; I wasn't thinking top down enough in order to control my risk. I still believe that it's very, very difficult, if not impossible, to start your investment process from the top down--[to ask yourself] how fast is the economy going to grow, how fast is inflation going to run, where are interest rate is going to go, and then devolve that down to selections of individual stocks.

I think it's best to start with those fundamentals, looking for those wide- and narrow-moat companies with good dividend policies that can provide you with good total returns. But you look to the macro factors to control your risk. And frankly, housing prices and the state of the mortgage market, those were risk factors that should have helped me at least limit my exposure to banks back in that period.

Glaser: On the flip side, what positive lessons have you learned over the last decade and how have you benefited from that?

Peters: It's really been about the dividends teaching me, which may sound interesting because I started 10 years ago with the same operating system, the same premise that we have today, which is that I want a large and secure, reliable and growing stream of income from my portfolio holdings. That's what the strategy is all about. But I started out with more of the mindset of a value investor. And it's hard; a value investor is looking for mispriced assets. They are looking to buy the proverbial dollar for 50 cents. And within that, what you hope is that that discounted asset gets marked back up to a more reasonable price. You capture the gain, and then you look to repeat with another situation. It puts a lot of the work back on the investor as opposed to the company to generate the total return. You would expect more turnover in that type of strategy.

After a number of years managing our strategy for Morningstar DividendInvestor, I realize this isn't really a value strategy. Our best results have been from high-quality companies--sometimes where we paid nearly fair prices, not bargain prices--that have created a tremendous amount of value for shareholders just because they have good management and good assets. Let those companies do the work. Let your winners run. It doesn't mean you take your eye off the ball in terms of valuation; but the best dividend investing, the best management of a stream of income for total return turns out to be very much that buy-and-hold strategy that a lot of people look down on and have some concerns or qualms about these days. Let the companies do the work.

So, I start off every year thinking, "OK, I can see some buys, some sells potentially emerging over the course of the year, but I want the dividends and the companies that pay them to do 99% of the work, generating the returns in our portfolios." They're going to a tremendous amount of effort. Why should I add that much more effort on my part when trading back and forth, especially the shorter your time interval is likely to be, can easily become counterproductive?

rising interest rates and the stock market

[1/19/15] When you examine previous periods in which interest rates have risen and you look at, say, the S&P 500's return during those time periods, what you tend to see is that stocks tend to behave reasonably well during those periods. The key reason is that the stock market is responding mainly to the economic growth that is often precipitating those interest-rate increases. So, that's the main thing that the stock market will respond to--secondarily will be what's going on with rising rates. Of course, how this particular rising-rate environment will unfold is anyone's guess; but when you look over past historical periods, it hasn't been a terrible period for stocks when interest rates have been on the move upward.

Stipp: Lastly, when we do see rates go up, historically something else is usually going up and that's inflation. So, you might be getting a higher rate on some of your fixed-income investments, but you might also be paying more at the grocery store or at the gas pump.

Benz: That's right. So, when interest rates are on the move, it's often when the economy is performing well and inflation is often on the move at that time. So, what the market gives with one hand in the form of higher yields, it may be taking away with the other in the form of inflation. Think back to the period in the mid-80s, for example, when inflation was at a very high level. Yields were very, very high at that point, too; but inflation really was tamping down investors take-home yield because of those higher prices.

[9/24/14] The debate now is over when the rate hike will happen in 2015 -- spring or summer. It's a foolish discussion and impossible to predict, even for people whose livelihood depends on calling Fed turns and market tops.

What’s more important is what the markets will do when the Fed finally gets around to boosting short-term rates and returning them to "normal," whatever that means.

Well, actually, it's more about what will happen before and after rates start rising, because the stock market, as we know, anticipates big economic changes like rate hikes and recessions months ahead.

And there, market history suggests long-term optimism but short-term caution.

Sam Stovall, S&P Capital IQ's U.S. equity strategist, recently tracked Fed interest rate hikes going back to the end of World War II.

"In 13 of the 16 times the Fed raised rates, the market went into a pullback, correction or bear market" in the six months before the rate hikes began, he told me in a phone interview last week.

In the years since 1946, Stovall found six pullbacks (a 5 percent to 10 percent decline), four corrections (when stocks fell from 10 percent to 20 percent) and three bear markets (a drop of 20 percent or more) began in the six months before the Fed started tightening. He used the S&P 500 Index for his research.

The S&P 500 lost 16 percent of its value, on average, during those declines, but it fell slightly less in the six months after rate hikes began.

"We had pullbacks, corrections and bear markets start more often in the six months before [a rate increase] than the six months after," he told me.

Altogether, Stovall wrote last week, "88 percent of the time, the markets were thrown into a pullback or worse when an initial rate hike was a possibility or reality." That means "a very high likelihood that the S&P 500 will begin a decline of 5 percent or more within six months" of the Fed's first hike.

Sounds depressing. Yet if you look at the numbers somewhat differently, the S&P 500 "was back in the black and up an average 1.3 percent" within six months after the first rate increase, Stovall wrote.

The point is that although the prospect of a new Fed rate-tightening cycle brings out the fear in investors' reptilian brains -- and even the great Marty "don't fight the Fed" Zweig believed in selling on the Fed's second rate increase -- it need not lead to long-term losses.

In fact, that fear may cause investors to sell way too early when waiting it out would be a better strategy. It usually is.

The best year to own stocks?

In a couple of months, the raging bull of the stock market will turn six years old. The average bull market only lasts five years, and Jim Cramer is wondering if investors need to start worrying about the health of the bull.

To find the answer, Cramer once again turned to the charts to see what they predict. He has taken a step back with Ed Ponsi to take a good look at the big picture for the averages. Ponsi is a technician and managing director of Barchetta Capital Management, as well as Cramer's colleague at RealMoney.com.

According to Ponsi, this could be one of the best years to own stocks. Why? Because of the U.S. presidential election.

Ponsi stated that according to Jeffrey Hirsch, author of The Stock Trader's Almanac, the year before an election has a cyclical tendency to be the best year to own stocks.

From 1833 to 2012, the stock market has on average rallied 1.9 percent in the first year of a president's term, 4.2 percent in year two and 5.8 percent in the fourth year. Year three is the biggest, and has a return of 10.4 percent market gain in the Dow Jones Industrial average. The only year this didn't occur was in 1931, the height of the Great Depression.

"It's not just that the market tends to rise during the year before a presidential election. It's the consistency of this pattern that is so impressive," said the "Mad Money" host.

And there is more, the stars have aligned politically as well, assuming all political beliefs are put aside.

According to the average performance of the Dow industrials from 1949 to 2011, a Democrat president with a Republican Congress is good news. Since 1949, the average Dow return with this political combination was 19.5 percent. Wowzer!

Additionally, Ponsi sees that there is a pattern in decades that will help the averages as well. As strange as it sounds, the stock market tends to have top performance in years that end in the number five. Like, let's say… 2015. The Dow Jones has seen an average gain of 28.9 percent for years ending in 5, going back to 1895.

[via roy]

Dogs of the Dow

[1/2/15]  Zacks presents Dogs of the Dow for 2015.

 Below we present five stocks from the Dow with the highest dividend yields, each of which also has a favourable Zacks Rank.

AT&T, Inc. (T) is likely to witness strong momentum in both its Wireline and Wireless businesses. Continued strength in the smartphone business owing to the mobile share plan is driving the wireless business. Further, AT&T is the leading provider of WiFi (wireless broadband) connectivity, which is also a key growth driver. The company also expects to complete its LTE deployment by 2014, which could add to its network strength.

AT&T has a Zacks Rank #3 (Hold) and a dividend yield of 5.4%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 13.47.

Verizon Communications Inc.’s (VZ) consistent market share gains, strong LTE (Long Term Evolution) sales and the rollout of FiOS Internet are key contributors to the company’s growth trajectory. Further, robust additions of tablets and Wi-Fi devices are increasing the number of gadgets per customer, driving revenues higher. The acquisition of the remaining stakes in Verizon Wireless should continue to boost cash flow for the company.

Verizon has a Zacks Rank #3 (Hold) and a dividend yield of 4.6%. It has a P/E (F1) of 13.93.

Chevron Corporation (CVX) is one of the largest integrated energy companies in the world with an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.

Chevron has a Zacks Rank #3 (Hold) and a dividend yield of 3.8%. It has a P/E (F1) of 11.27.

General Electric Company (GE) reported strong third quarter 2014 results. The company is realigning the corporate strategy to a manufacturing-based entity and intends to shrink its finance business by 2015 to reduce credit risks.

General Electric has a Zacks Rank #3 (Hold) and a dividend yield of 3.6%. It has a P/E (F1) of 15.56.

Pfizer Inc.’s (PFE) focuses on the development and commercialization of a wide range of products including human and animal biologic and small molecule medicines and vaccines, as well as consumer health care products. Pfizer has committed more resources towards the development of treatments in the fields of oncology, cardiology, metabolic disorders, neuroscience, immunology, inflammation and vaccines.

Pfizer has a Zacks Rank #3 (Hold) and a dividend yield of 3.3%. It has a P/E (F1) of 13.93.

[1/6/07] The idea didn't work in 2005, yet did very well in 2006. Over a longer time frame though, the numbers statistically support the theory. From the early 70's, the average annual return on this theory would have been 17.1%. That's significantly better than the Dow's average annual gain of 10.9%.

[9/6/06] Proponents of the “Dogs of the Dow” investment strategy
have a lot to cheer about right now.

The strategy, which is hinged partly on the hope that blue
chips that did poorly in the preceding year will make a recovery,
is proving to be a profitable one for 2006.

The Dogs of the Dow method involves investing in the 10
components of the Dow Jones Industrial Average with the highest
dividend yield and holding those stocks for about a year.

The dividend yield is calculated by dividing a company’s dividend
by its stock price. So, many of the Dow components with
the highest dividend yields have seen their share price decline
during the preceding year, making them the supposed underdogs
of the stock market.

By the end of August the so-called Dogs had total returns
of about 21% for 2006, according to data from Dow Jones
Indexes. That was well above returns of about 7.9% from the
industrial average as a whole.

The largest companies have received less attention over the
last few years as investors tried to profit from a lengthy rally in
the small-cap sector. But over the last few months uncertainty
about economic growth has been leading investors to seek safety
in larger, better-known names. So, large stocks with relatively
cheap share prices appear more attractive.

At the end of 2005, General Motors Corp. (GM), Verizon
Communications Inc. (VZ) and Merck & Co. (MRK) were
among the Dow industrials with the highest dividend yields,
making them all Dogs of the Dow. All three stocks were beaten
down sharply in 2005 for reasons related to their individual
businesses or industries. Verizon lost roughly 26%, General
Motors fell about 52%, while Merck declined a far more modest
1%. All three are bouncing back with vengeance this year.
Verizon has gained about 18% so far in 2006, and Merck has
added about 29%. [Tomorrow's News Today]