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Utility and Income

Utility and Income Archives


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    The Safest Investment

    In good times, it’s natural to seek investments that will grow the fastest. Conversely, tough times like these bring out investors’ impulse to flee to the safest bets. The trouble is, nothing is 100 percent safe under all circumstances. And even pinpointing the highest percentage investments can be a chore when the economy is apparently shrinking and credit markets are still recovering from their deepest freeze in decades.


    Cost and time remain major deterrents to would-be builders of nuclear plants. Two things, however, have changed dramatically to make the economics actually worthwhile, at least for a handful of players.


    Before last year’s financial meltdown, China had already replaced the US as the world’s leading consumer of steel, copper and several other major commodities. At the beginning of the decade, for example, the US economy accounted for 25 percent of global demand for the red metal, while China consumed roughly 12 percent. By mid-2008, however, it was China consuming 27 percent, the US only around 12 percent.


    Change is on the way. Hawaii is launching what it calls an “energy sovereignty plan,” under which it hopes to wean itself off at least most of its foreign oil needs. In a partnership with the US Dept of Energy, the goal is to obtain 70 percent of the state’s electricity from “clean energy” by 2030. That’s 40 percent renewable energy and 30 percent from energy efficiency measures that reduce demand.


    Beyond the Sunset

    There are still plenty of ways to score outsized returns and high yields from income-producing stocks, even at higher tax rates. For one thing, we’re coming off a very low point here in the markets. Despite the sharp rally from the March 9 lows, even financially secure companies that are consistently raising dividends and operating in recession-resistant industries are yielding in the upper single-digits.


    Cap-and-Trade: Closer to Fine

    Being on the right side of government action is, therefore, absolutely essential to successful investing. In fact, with an unabashedly activist government now ruling both ends of Pennsylvania Avenue, it’s more critical than ever.


    Stressed Out

    The market always looks ahead, never behind. The worst sin is always uncertainty, particularly when it affects literally every investment across the board as it has over the last nine months or so. What many forget is that getting out of such a funk doesn’t always take real, honest-to-goodness positive news. In fact, in the worst crises, all it may take is just a little certainty about where the bottom may be. Real good news is a major bonus.


    Utes’ strong balance sheets kept their access to credit open even during the worst of the financial crisis, and at some of the best interest rates seen in a generation. In fact, they’ve been able to issue a record volume of new debt, even as companies in other industries have had difficulty rolling over credit lines.


    Still Solid

    Three bellwethers have reported first quarter 2009 numbers that are just as strong, if not stronger, than those posted in prior quarters. That doesn’t guarantee they’ll continue to put up high-quality numbers as long as this recession lasts, particularly if conditions should worsen. But as long as they do continue to buck this downturn, they’re in the game for an explosive recovery when conditions turn, particularly from today’s low prices.


    Given the carnage of the past 21 months of market history, it’s tempting to buy into the line from the rock industry spoof This Is Spinal Tap. That is, that one can get “too much bloody perspective.” But given the financial media’s almost complete lack of it, a little now can go a very long way.




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