Kellogg Co.(K) sets increased dividend

Kellogg Co. today announced it will pay a 37.5-cent dividend per share on common stock, up from 34 cents per share last quarter. The payments will be made Sept. 15 to shareholders of record as of Sept. 1. The company announced plans to increase the dividend in April.

Kellogg has paid dividends to common stock shareholders every quarter since 1925.

Disclosure I am long K shares in my Consumer Goods/Services Folio.

More Firms Ban Sales of Leveraged ETFs

Earlier this summer, Edward Jones announced that it was banning leveraged exchange traded funds (ETFs). Now two more names have jumped into the fray.

LPL Financial said yesterday that they were banning the sale of ETFs that use more than 200% leverage, while Ameriprise said they were banning sales of all leveraged ETFs. Luisa Beltran for Ignites says that the regulatory scrutiny of the products is making the brokers nervous.

These announcements are coming after a warning from FINRA, which reminded firms of their obligation to investors when it comes to leveraged and inverse funds. These ETFs are typically viewed as unsuitable for long-term, buy-and-hold investors. Their providers have been very vocal about who these funds are intended for – tactical traders who are prepared to monitor their portfolios closely.

As we said in the case of Edward Jones, these announcements seem a little self-serving. The institutions that use these funds are known for employing basic strategies, not for their use of sophisticated financial instruments. There are many advisors out there who wouldn’t touch these ETFs, but they’re not making proclamations.

Disclosure None I do not use levered etfs.

Emerging Global Advisors Launches Emerging-Market ETF

Investment firm Emerging Global Advisors launched an emerging-market exchange-traded fund this week, joining a growing number of firms keen on combining the appeal of developing-world equities and ETFs.

The firm launched the Emerging Global Shares Dow Jones Emerging Markets Titans Composite Index Fund (EEG) on Wednesday. Fifteen emerging markets countries are represented in the index, ranging from China Offshore and Brazil to Egypt and Slovenia.

Interest in emerging-market ETFs has increased in recent months as investors looked for cheaper and quick access to developing-world stocks.

Emerging Global Advisors has already registered nine funds with the Securities and Exchange Commission in such emerging-market sectors as financials, telecoms and consumer goods, but have yet to decide which of those will be officially launched, company officials said.

So far in 2009, various companies have launched a total of 11 emerging-market ETFs, according to research analyst Mark Komissarouk at Morningstar. That count doesn't include the three started by Emerging Global Advisors, as two existing funds are listed under the natural resource category and the newest addition hasn't been recorded yet.

ETFs in general provide a platform for playing "with niche exposures for sophisticated investors," said Richard Kang, chief information officer of Emerging Global Advisors. ETFs are like mutual funds but their shares are traded like stocks.

"Turnover in ETFs is a matter of minutes, not hours or days" like traditional funds, Kang said.

The company launched its two other sector-specific ETFs in May. The EGS Emerging Markets Energy Fund (EEO) includes companies in the oil and gas industry across 13 countries. Their EGS Emerging Markets Metals & Mining Fund (EMT) includes companies in the metals and mining sector across nine countries.

Disclosure none

New silver ETF starts trading on NYME

A new exchange-traded fund backed by physical silver started trading on the New York Stock Exchange Friday. The ETFS Silver Trust (SIVR- Quote) , an open-ended fund sponsored by ETF Securities USA, will track price of silver bullion. In recent trading, the ETF rose 0.3% to $13.89. The iShares Silver Trust (SLV- Quote) , the biggest silver ETF, gained 1% to $13.64. On the Comex division of the New York Mercantile Exchange, September silver features rose 0.5% to $13.84 an ounce.

Disclosure I am long SLV in my Basic Materials Folio.

Why Everyone Should Be Investing In Commodities

If you are not investing in commodities, you may be missing a giant opportunity. Environmental and economic forces could have a very strong impact on the value of commodities in the future, especially as the world's resources become increasingly scarce. The following article from Money Morning explains why it would be a mistake to not have some of your investments in commodities.

Commodities investing was once limited to the super-wealthy. But not anymore. In the face of almost-certain inflation – and with soaring growth in such fast-growing markets as China already driving up global prices for food, oil and gold – virtually every investor needs to have some money invested in commodities, says Peter Krauth, a longtime commodities-investing expert who is also the editor of the Global Resource Alert service.

“Every investor needs to have a financial exposure to commodities,” Krauth says. “For one thing, although commodities have been in a bull market since 2000, bull markets in commodities tend to last a long time. This one, in fact, is likely to last as long as 17-20 years. That means we’re only nine years in – with a decade or more left. Then there’s the tremendous growth we’re seeing abroad. There’s still a major opportunity for investors to profit from these trends.”

Krauth – a contributing editor to Money Morning – sat down recently with Money Morning Executive Editor William Patalon III to talk in detail about commodities investing. Here are the highlights of that interview:

Money Morning (Q): For years, such “alternative investments” as gold and natural resources were viewed as the exclusive domain of the wealthy. But you believe that almost every investor needs to have investments in such natural-resource investments as gold, silver and energy. What do investments in these “hard assets” give you that a similar-sized investment in stocks may not?

Peter Krauth: Protection from inflation is a huge benefit. Inflation is a subtle-yet-menacing tax that government imposes on us by debasing the value of our cash and fixed-income investments. They do this by printing money – lots of it. Just look at what [U.S. Federal Reserve Chairman Ben S.] Bernanke is saying about the central bank’s so-called “exit strategy” right now.

(Q): Can you name some of the specific investments in this category, and list some of their specific benefits?

Krauth: Specific investments would include gold, silver, oil, and copper, to name a few. All of these are valuable – and possess an actual value – which means that they will not go to zero. They’re also assets that are never someone else’s liability. Since they are priced in U.S. dollars, as the dollar loses value through inflation, you need more dollars to buy the same quantity (not to mention increasing demand). That sounds like good protection to me.

(Q): What are some of the strong global trends – worldwide infrastructure development being one, we know – that figure to drive up demand for these natural resources?

Krauth: Voracious demand from large emerging economies that are growing and modernizing. Just the two countries of China and India are home to about one of every three humans on earth. Their disposable incomes are improving, so they want to eat more meat, have the latest electronic gadgets and condos, and drive new cars.

(Q): What geographic parts of the world are the strongest providers of these resources?

Krauth: Some of the biggest providers of natural resources are Canada, Australia, Latin America, Africa and Russia.

(Q): What countries or regions are the biggest users of these resources?

Krauth: Traditionally, the biggest users were in North America and Western Europe, but China, India, and much of the rest of Asia are catching up on a total usage basis. Plus, there’s a lot more demand to come, since most of these countries are still way below the West on a per-capita consumption basis.

(Q): We’ve heard that China is working very hard and using the global financial crisis to lock up captive supplies of many key resources. Does this figure to drive up the prices of some of these already-scarce resources?

Krauth: No question in my mind. And China is using every means at its disposal. What would you do with a $2 trillion foreign reserve? Remember, at least $763 billion of this is directly placed in U.S. debt. It makes perfect sense to be trading an asset I’ve got too much of, and whose value is depleting [U.S. dollars], for assets I need more of [commodities], especially when they’re on sale. China’s imports of refined copper in April of this year at $2 a pound were 148% above April 2008 levels, when copper was trading at $4 per pound.

(Q): Is this rising demand by global players a trend the typical individual investor can profit from? Can they profit directly, by investing in the assets themselves? Or can they profit indirectly, by investing in the markets where the demand is strongest, figuring that these markets will have stronger growth than, say, the United States?

Krauth: I believe that investors can profit both ways – directly and indirectly. The more direct approach is to buy the stocks of companies that produce these commodities – as the price goes up, so do the companies’ profits. Investors can also consider investing in the end-users of these products, but then they must make a geographical bet. Meanwhile, commodities get sold to the highest bidder, no matter where those bidders happen to be.

(Q): What’s the basic premise behind your new Global Resource Alert trading service? What’s the strategy that you employ?

Krauth: What we’re doing is seeking out the best opportunities for subscribers across all commodity sectors. That includes precious metals, base metals, energy, alternative energy, and even agriculture. I look for prospects in a sector that has fallen out of favor, yet has great fundamentals. I also ride sectors that my research demonstrates are in a sustainable, upward trend.

(Q): What types of investments do you highlight? Stocks? Exchange-traded funds (ETFs)? Any others?

Krauth: We trade mostly small- and mid-cap stocks, as well as ETFs and ETNs [exchange-traded notes]. There’s enough opportunity there to benefit from all the underlying trends.

(Q): What are the hottest sectors you see at play right now?

Krauth: Right now, I see precious metals and agriculture as the most attractive. Both will be benefiting from growing demand and inflation concerns. Remember, financial markets look forward.

(Q): You’ve talked about the “commodities supercycle,” as well as the “Secular Cycle.” What, exactly, are these and how can investors benefit?

Krauth: My recent Money Morning article on the Secular Cycle should be read by all serious long-term investors. Essentially, if you look at market behavior over, say, 100 years, there are distinct, alternating cycles that typically last 17-20 years. When general stocks are in a bear market, commodities are in a bull market, and vice versa. But you can’t see this without stepping way back and visualizing the long-term view. Right now, we’re clearly in a long-term cycle, where commodities should continue to do well.

(Q): What are the factors at play?

Krauth: You see, major under-investment between 1980 and 1999 in commodities has set us up for a long-term bull market in hard assets. China and the Asian Tigers have awakened, and now they’re very hungry. I want to own the commodity producers that will feed them.

(Q): What effect will this growing global demand for commodities have on the U.S. economy? The U.S. dollar?

Krauth: The U.S. economy is in for a tough slog. Plus, American consumers will have to compete with others to buy commodities on world markets at ever-increasing prices. Between August 2008 and May of this year, the U.S. Federal Reserve doubled the money supply. That’s about a 110% growth rate in nine months – an astounding run-up. Over the past 95 years – the Fed was established in 1913 – the annual average has been only about 6% annually. We’ve lost 95% of the dollar’s purchasing power since then. This reckless behavior will lead to major inflation once again. This isn’t new. Just look at what happened during the early 1920s in Germany’s Weimar Republic [See accompanying chart].

(Q): Looking down the road, what are one or two of the most interesting new trends that you see emerging in the future?

Krauth: Gold has steadily gained popularity with individual and institutional investors. That’s a trend that can’t be ignored – but is also relatively simple to invest in. Today, the SPDR Gold Trust (NYSE: GLD) – an exchange-traded fund that invests in gold bullion – is the second-largest ETF in the world. With 1,120 metric tons of gold, GLD ranks as the sixth-largest holder of bullion on the planet. There are similar ETFs for silver, and for other commodities, such as oil and agricultural products.

(Q): What will be the catalysts behind those new trends?

Krauth: Putting gold into the hands of the masses is quickly making it the new “equalizer.” I expect to see more and more ETFs, perhaps some new ones for base metals will emerge. But, for serious profits, investors need to look at the producers of these assets, since they benefit from leveraged profits as prices rise.

This article has been republished from Money Morning. You can also view this article at Money Morning, an investment news and analysis site.

Disclosure I am long many commodities etfs.

3M Profit (MMM)Down 17%; Increases 2009 Revenue Forecast

Demand for facemasks for protection against the H1N1 flu virus helped boost 3M’s (MMM - Quote) second-quarter results, but earnings fell by 17% compared to a year ago because of other demand for other products.

The Minnesota-based manufacturer of Post-Its and Scotch Tape and hundreds of other products said Thursday that second-quarter earnings excluding one-time items fell to $1.20 a share from $1.39 a share a year ago. Revenue fell 15% to $5.7 billion.

The results solidly beat the 94-cent profit expected by analysts, according to Thomson Reuters, sending shares up nearly 5% in New York Stock Exchange-based trading.

"We drove strong results in the second quarter, exceeding our own expectations for profits, sales and free cash flow," said 3M Chairman and CEO George W. Buckley in a statement. "Operating discipline was key to the quarter.”

3M raised its full-year earnings forecast to $4.10 to $4.30 a share, compared with its view in April for earnings of $3.90 to $4.30 a share.

Part of 3M’s operating results was driven by broad cost cutting measures across the entire company. In the first six months of the year, the company laid off or provided for early retirement for 2,800 employees.

Buckley said that he remains cautious about the forecast for the economy, and that cost cutting could continue throughout the firm.

“While the exact shape and timing of the economic recovery is unknown, we will move ahead efficiently and energetically so that 3M emerges from the downturn an even stronger company," he said in a statement.

Another one-time component to 3M’s results was the sale of masks related to the outbreak of swine flu earlier this year. Buckley said that orders for 3M’s facemasks were on backorder as a result of the outbreak, which helped offset what were double-digit declines in the company’s operations the company’s other divisions.

Disclosure I am long MMM in my consumer goods/services folio.

Burlington Northern (BNI) Approves $0.40 Qtr. Dividend

Burlington Northern Santa Fe Corporation (BNI - Quote) today declared a quarterly dividend of $0.40 per share on outstanding common stock. The dividend is payable on October 1, 2009, to shareholders of record September 10, 2009.

The ex-dividend date is September 8.

The dividend currently yields 2.03%.

Disclosure I am long BNI shares in my shipping Folio.

Weekly update on 8 folios and recent transactions, Retire on $5.00 per day each day market open

Well not a lot going on with the buy and selling in my 8 folios but here is a breakdown of my recent activity.

Basic materials folio which includes my commodities picks. Currently I am long 17 picks and will be selling one tomorrow. I am long, IPHS,DO,KWR,TYG,EEQ,BP,KMR,NUE,
GNI,DJP,E,BPT,CVX,SLV,GLD, AND GGN. Combined this folio is up 12.24% year to date not including dividends. I will be selling RJI tomorrow, taking a small 5 to 6 % profit.

In my bonds and closed end fund folio, (fixed income) all pay monthly dividends. I am currently long. IID, DPO, IGD, EOS, MAIN, AOD,ESD,JNK,HYG,PCY,PSEC,LQD, and BND. This folio is up 13.54% year to date. No changes this week.

In my financial and reit folio. I am long 15 stocks. This folio is up 10.10% year to date. Top pick AGNC and AFL, my 2 laggers are ESS and CMO. I just repurchased CMO this week after selling it last week for 34% profit. No other changes.

My consumer goods and consumer services folio, all but shipping stocks. Currently is long 11 stocks. MMM and CALM leaders, with SYY a lagger. This folio is up Year to date 10.94% no changes for this folio either.

My index etf and emerging markets etf folio. Currently long 11 etfs, with FXI and VWO leading the way. Even my lagger EFA is up 7.76%. This folio is up 13.36% year to date.
No changes at this time.

My industrial goods and healthcare folio. Contains 17 picks with CAT and GSK at the clear winners, ABT and ECOL the laggers. This folio is up 10.70% year to date. Recently Purchased CAH which is already up 7.83% since my initial purchase. No other changes.

My shipping and railroad folio. By far the healthiest and hottest folios of all lately. Currently long 14 stocks with CSX, SFL, leading the way, and the laggers are GMR and DHT. This folio is up currently 17.17% year to date. No recent changes to this folio.

And my last folio is my utilities and tech folio. Currently long 15 stocks, with INTC, TEG as the winners. The laggers are CTL and ADP. This folio is currently up 11.81% year to date. No recent changes to this folio at this time.

So my total portfolio consisting of 8 folios is up 12.53% year to date, which does not include dividends. I have received 2.24% in dividends this year to date. I still dollar cost average every single day the market is open. I have not missed one trading day this year. I add $5.00 a day spread across each folio plus reinvest the dividends back to who paid them. If a stock cuts its dividend I sell it period.

My core is 112 stock, etfs and closed end funds. The cream of the crop according to my eyes, my value and my long term holding period. I plan to hold this dividend paying stocks until further notice As I try to spank the shorts of my 401k provided through my employer with Principal Financial Group.

Now to my 401k my work currently matches 50% of the first 6 percent so that is all i put there i put the rest in my above mentioned Roth ira account at Folioinvesting.com.

Currently up year to date in my 401k, 18.81% before fees, god only knows how much they will be. Received $7.82 in dividends year to date, versus $40.29 through june in my roth ira.

In closing I am very excited to be playing the market, living, breathing and smelling the stocks. Dow broke 9000 today I used to watch everyday to see what happened, course i still do but nothing seems to matter now that I have plan and stick to it. My core is built and I am in the accumulate phase of my retirement plan. No matters what happens I have am on this train. I go to the coal mines shovel in hand(aka my work place). Do the best I can and try to add to my folio more money everyday.

Sometime I ponder how this all started with just $ 1.00 a day investing in my favorite stocks, at the start of this year I opened this roth ira and now I am off to the races(LOL). So yes you can retire at just 5.00 a day every day the market is open. Yes I do see some ups and downs in the future. But this is so much better than smoking, drinking, gambling and parting away all my money never having a pot to piss in so to say. Now I can see the light I feel better, look better, am happier and have a pot to piss in now.

Please feel free to comment on this or any of my other stories, I have gathered here on my blog. Only through each other can we prosper together. Thanks for taking the time to read my blog, I only hope I can show the light to one more person out there somewhere.


Disclosure I am long all stock mentioned in this blog as well and many that were not motioned. Please if you do invest do your own research what works for me many not work for all I am not a licensed broker at this time but sure hope to be very soon.

Diamond Offshore Drilling, Inc.(DO) Declares Special Cash Dividend of $1.875 Per Share and $0.125/Share Regular Dividend

Diamond Offshore Drilling, Inc. (DO - Quote) announced today that the Company has declared a special cash dividend of $1.875 per share of common stock and a regular quarterly cash dividend of $0.125 per share of common stock. Both dividends are payable on September 1, 2009 to shareholders of record on August 3, 2009.

The Company has adopted a policy of considering paying special cash dividends, in amounts to be determined, on a quarterly basis. Any determination to declare a special dividend, as well as the amount of any special dividend which may be declared, will be based on the Company's financial position, earnings, earnings outlook, capital spending plans and other relevant factors at that time.

Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. Additional information on Diamond Offshore Drilling, Inc. and access to the Company’s SEC filings is available on the Internet at www.diamondoffshore.com.

Disclosure I am long DO in my oil n gas folio, currently up 26.12% year to date(not including prior dividends paid).

Lockheed Martin (LMT) 2Q profit down 17 percent

Lockheed Martin Corp. (LMT - Quote) said its second-quarter earnings fell nearly 17 percent, as large pension expenses created by the financial crisis continued to dig into the defense contractor's bottom line.

The results come as Lockheed, which makes fighter jets and other military hardware, and the rest of the defense industry continue to digest the effects of a broad shift in spending priorities at the Pentagon, their biggest customer.

The Bethesda, Md.-based maker of fighter jets earned $734 million, or $1.88 per share. It made $882 million, or $2.15 per share last year. Revenue rose about 2 percent to $11.24 billion.

For Lockheed, that would mean capping production of its F-22s-- which costs $140 million each--at 187 jets. The company has said it accepts that decision, but the Obama administration and Congress are in a fierce battle over attempts by lawmakers to add hundreds of millions more dollars to the budget for additional planes.

The budget could also help Lockheed, as the Pentagon plans to accelerate production of the company's newer F-35 fighter. The military eventually expects to buy 2,450 of the jets, with foreign governments considering purchases of another several hundred.

Bruce Tanner, Lockheed's chief financial officer, said in an interview that the company has not lobbied for more F-22s since Defense Secretary Robert Gates made his budget announcement in April.

"We would love to build more F-22s, but the customer needs to decide whether that is what they want to do or not," Tanner said.

Lockheed has warned that losing the F-22 would lead to thousands of job losses when the production line ends at its Marietta, Ga. plant in 2012 under current plan. Tanner said funding for additional jets could prompt the company to add jobs.

Some of Obama's budget proposals have already been felt. The cancellation of Lockheed's contract to build new helicopters to carry the president and a communications satellite have taken $2.5 billion out of the company's $79 billion backlog of orders, Tanner said.

The company's aerospace unit, which makes the F-22 along with other fighters and cargo planes, had seen its sales dip in recent quarters as it shifts from making the aging F-16 to the F-35. But the division posted a seven percent sales increase in the second quarter, driven by higher results in both the F-35 and the F-16, which Lockheed still sells to foreign governments.

Sales were lower in its business selling services to government agencies, which Tanner said was the result of problems on some programs and protests by competitors that delayed sales on contracts for special forces and at a government nuclear facility. The division's sales were down 6 percent to $3 billion.

Lockheed's space division, which makes satellites and other equipment, saw sales drop 7 percent to $2 billion while its military electronics unit sales dipped 1 percent to $3 billion.

In the second quarter, the pension expense was $115 million. That lowered earnings by $75 million, or 19 cents per share this period while one-time gains from land sales and tax gains a year ago added 19 cents. The company said in January that pension expenses would be higher each quarter this year because of a drop in the retiree fund's value.

The results still beat analyst expectations of $1.81 per share and revenue of $11.14 billion.

Lockheed held to its 2009 earnings outlook of between $7.15 and $7.35 per share on revenue between $44.7 billion and $45.7 billion. Analysts are looking for stronger results of $7.41 per share on $45.36 billion in revenue.

Its shares tumbled $4.67, or 5.7 percent, to $77.44 in morning trading.

Under President Barack Obama's 2010 budget, the military is spending more on weapons to fight insurgencies in places like Iraq and less on weapons designed for conventional wars.

For Lockheed, that would mean capping production of its F-22s-- which costs $140 million each--at 187 jets. The company has said it accepts that decision, but the Obama administration and Congress are in a fierce battle over attempts by lawmakers to add hundreds of millions more dollars to the budget for additional planes.

The budget could also help Lockheed, as the Pentagon plans to accelerate production of the company's newer F-35 fighter. The military eventually expects to buy 2,450 of the jets, with foreign governments considering purchases of another several hundred.

Bruce Tanner, Lockheed's chief financial officer, said in an interview that the company has not lobbied for more F-22s since Defense Secretary Robert Gates made his budget announcement in April.

"We would love to build more F-22s, but the customer needs to decide whether that is what they want to do or not," Tanner said.

Lockheed has warned that losing the F-22 would lead to thousands of job losses when the production line ends at its Marietta, Ga. plant in 2012 under current plan. Tanner said funding for additional jets could prompt the company to add jobs.

Some of Obama's budget proposals have already been felt. The cancellation of Lockheed's contract to build new helicopters to carry the president and a communications satellite have taken $2.5 billion out of the company's $79 billion backlog of orders, Tanner said.

The company's aerospace unit, which makes the F-22 along with other fighters and cargo planes, had seen its sales dip in recent quarters as it shifts from making the aging F-16 to the F-35. But the division posted a seven percent sales increase in the second quarter, driven by higher results in both the F-35 and the F-16, which Lockheed still sells to foreign governments.

Sales were lower in its business selling services to government agencies, which Tanner said was the result of problems on some programs and protests by competitors that delayed sales on contracts for special forces and at a government nuclear facility. The division's sales were down 6 percent to $3 billion.

Lockheed's space division, which makes satellites and other equipment, saw sales drop 7 percent to $2 billion while its military electronics unit sales dipped 1 percent to $3 billion.

Disclosure I am long LMT shares in my industrial goods folio.

Caterpillar Delivers Second-Quarter Profit and Increases 2009 Profit Outlook

Caterpillar Inc. (CAT - Quote) today reported a second-quarter profit of $0.60 per share, down $1.14 per share from the second quarter of 2008. Excluding redundancy costs, profit was $0.72 per share. Redundancy costs related to reducing employment were $85 million before tax or $0.12 per share in the quarter. Sales and revenues of $7.975 billion were down 41 percent from $13.624 billion in the second quarter 2008.

"Our profit this quarter, despite the sharp decline in sales, is a tribute to Team Caterpillar's response to this severe global recession and the continued deployment of our economic trough strategy," said Chairman and Chief Executive Officer Jim Owens. "There is still a great deal of economic uncertainty in the world, but we are seeing signs of stabilization that we hope will set the foundation for an eventual recovery. Credit markets have improved significantly. Fiscal policy and monetary stimulus have been introduced around the world, and we are seeing signs, particularly in China, that they are beginning to work. In addition, we've seen many key commodity prices increase from their lows in the first quarter, and they are holding in a range that is usually positive for investment," said Owens.

"With our dedicated employees, strong dealer network and supply base, great lineup of products and the increasing impact of integrated service businesses, I am more confident than ever that we will strengthen our industry leadership as we work through this recession," Owens added.

The second-quarter profit of $371 million was down $735 million from $1.106 billion in the second quarter of 2008. The decline was largely a result of lower sales volume and $85 million of redundancy costs. These negative impacts were partially offset by lower Selling, General and Administrative (SG&A) and Research and Development (R&D) expenses, favorable price realization, LIFO inventory decrement benefits and a lower tax rate.

In addition to profit, Caterpillar is highly focused on delivering positive cash flow in 2009 and is committed to its $3 billion inventory reduction goal for the year. Utilizing the Caterpillar Production System (CPS) with 6 Sigma, the company reduced inventory in the second quarter by more than $800 million, and through the first half of the year inventory has declined by more than $1.6 billion.

"In addition to our ability to generate solid profits in this economic climate, I'm pleased with our work to generate positive cash flow and maintain considerable financial strength during this challenging period," Owens said.

Outlook

The company is updating its outlook for 2009 by tightening the sales and revenues range and improving profit expectations. For sales and revenues, the range has been tightened to $32 billion to $36 billion. The 2009 profit outlook is a range of $0.40 to $1.50 per share including redundancy costs of about $0.75 per share. Excluding redundancy costs, profit is forecast to be between $1.15 and $2.25 per share.

"Team Caterpillar is now halfway through one of the most challenging years in the company's history," Owens said. "Our 2009 sales have been hurt by weak end-user demand and significant reductions in dealer inventory. In fact, dealers have reduced their machine inventories by about $1.5 billion through the first half of the year and could reach close to $3 billion by year-end. As tough as this year has been, the improved profit outlook is a tangible sign of what happens when the entire team is pulling in the same direction and deploying the trough strategy we put in place over the past four years. We are very pleased with the way our people have stepped up and responded to this extraordinary period of economic turmoil," Owens said.

For more than 80 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2008 sales and revenues of $51.324 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. More information is available at: www.cat.com.

Disclosure I am long CAT shares in my industrial goods folio.

The J. M. Smucker Company (SJM) Declares Dividend of $0.35

The board of directors of The J. M. Smucker Company (SJM - Quote) declared a $0.35 per share dividend on the common shares of the Company to be paid on Tuesday, September 1, 2009, to shareholders of record at the close of business on Friday, August 14, 2009.

The Company will conduct its first quarter fiscal 2010 earnings conference call and webcast on Friday, August 21, 2009, at 8:30 a.m. Eastern Time. Earnings will be released on the morning of the call. The live webcast can be accessed from the Company's website at www.smuckers.com. The webcast replay, as well as a replay in downloadable MP3 format, will be available following the call. The audio replay can be accessed by dialing 888-203-1112 or 719-457-0820 and entering pass code 6204951. The replay will be available until Friday, August 28, 2009.

Disclosure I am long SJM in my consumer goods Folio.

Signs That the ETF Industry Continues to Shift

Since the inception of the first U.S.-listed exchange traded fund (ETF) in 1993, the industry has blossomed.

According to the National Stock Exchange, at the end of May 2009, there were 829 ETFs and ETNs listed in the United States offered by 18 different providers on three stock exchanges, comprising total assets of $594 billion. Additionally, there were 137 other exchange traded products (ETP) with assets of $60.8 billion from 19 providers on two exchanges.

According to Barclays‘ April 2009 snapshot of the ETF industry, the average total expense ratio for equity ETFs in the U.S. is 0.32% vs. 0.78% for the average equity index tracking fund and 1.41% for the average active equity fund, further enforcing the low-cost characteristic of ETFs. When analyzing sectors, year-to-date, materials have performed the best returning 16.5%, followed by consumer staples which are up 11.9% year-to-date.

Of all the ETF providers, iShares is the largest with offerings of 177 different ETFs, State Street Global Advisors is second with 85 different ETFs. Of all ETFs, the SPDR S&P 500 (SPY) is by far the most actively traded with the largest amount of assets under management at nearly $60.7 billion. The SPY has had the largest change in assets under management as well, losing nearly $33.2 billion year-to-date.

June 2009 numbers should be released soon – stay tuned and we’ll write about it here.

Disclosure I am long many ETFS and they are a important part of my portfolio.

Roth IRAs are tax-free, but you must follow the rules

Here is a question i got e-mailed and will answer a very good solid point and excellent question.

Q: What are the tax implications of transferring the assets held in an taxable investment account with a broker to a Roth IRA?

A: With the stock market's returns being, well, shall we say, subpar, some investors are paying closer attention to taxes.

And paying attention to taxes, especially now that the stock market isn't an ATM, is smart. Given the size of capital gains taxes, especially if you sell a stock you've owned less than a year, Uncle Sam can end up taking a big chunk of your returns.

The Roth IRA is a great idea for people preparing for retirement. The Roth is structured so that you contribute money that's already been taxed. You can invest up to $5000 a year in a Roth, or $6,000 if you're 50 years old or older, if you meet a number of criteria. You can get the full details on annual contribution limits here.

Here's the catch for you, though. You need to contribute cash, not stock. That means if you have a stock in a taxable account that you want to move to a Roth IRA, you'll need to sell the stock in your taxable account, and you may owe capital gains taxes on the sale.

Disclosure I have a roth ira account(through folioinvesting.com) and love it!

Its over the 401k is DEAD, FAILED, Admit It's Over

Why don't we just admit that the 401(k) is a failure and get on to designing something better?

I say this as the writer of an admiring book about the ubiquitous saving plan (Take Charge of Your Future, Warner Books, 2003), and I still think that 401(k)s are fine as a supplement to other plans. But that's not what they are any more. They have become, by default, the only national retirement savings plan. That raises the bar considerably, and 401(k)s just can't clear it.

Here's what I'm not saying. I'm not saying that the main problem is that 401(k)s require ordinary people to manage their investments wisely and only we "sophisticated" investors who read Huffington Post can do that. (i have more faith in the average Joe's ability look out for himself than that--and less faith in allegedly sophisticated investors.) I am saying that even if every 401(k) participant were Warren Buffett, the plan still falls short of what you ought to expect from the nation's main retirement savings vehicle.

I am not saying that we ought to go back to old fashioned pensions, for good reason, or that you should stop funding your 401(k). You still have to save for retirement and the 401(k), flawed as it is, is the best way we've got to do that. (Especially the Roth 401(k) plan.) I am saying that we should do better. We are asking the 401(k) to play a role for which it was never intended, and we should reshape the plan to fit that role, or get a new plan. Here's what's wrong with the 401(k):

It randomly creates winners and losers. Citizens who take part in a national retirement savings plan ought to know what it takes to succeed. It matters less what the rules are than that they're fair and consistent. If you save more in the plan, you retire with more income. That would be a fine rule. If you earned more in your career, you get more retirement income. That works too. (It had better; it's the Social Security promise.)

But neither necessarily holds true in a 401(k). You could earn the same money, save the same amount, invest as wisely as an identical colleague and still wind up eating the Denny's special while your doppelganger vacations in Greece. It all depends on when in your working life the inevitable market downturn falls. If early, you'll build your nest egg by buying cheap assets and retire rich. If late, you'll find your life savings decimated when it's too late to rebuild. That's a problem. The nation's main retirement funding plan should not be a conduit for administering random acts of fortune. It should aim to alleviate randomness.

The plan leaves people poor Left to their own devices, most employees don't put enough into their 401(k)s to make a dent in their retirement needs. And even if they start out putting enough money in, when times get tough, they stop. Worse still, employers have begun to do the same. According to surveys, about a quarter of employers have stopped, or plan to stop, matching their employees' 401(k) contributions. This is happening at the worst possible time, of course: when stock prices are 40% cheaper than they were 18 months ago.

The plan exposes everyone to the risk that they'll live too long Because you don't know when you'll die, you have to save as if you were Methuselah, just to be safe. The usual financial planner's target is age 95. If you saved the fortune you need to cover yourself to that age and don't make it that far-and most people won't-tough luck. If you do live that long and you didn't save enough-and again, most don't-even tougher luck. The shame of this is, longevity risk can be insured away by averaging out the risk over an entire population. Every annuity does this. Why not the national retirement savings plan?

Congress has been talking extensively about 401(k) reform. At the moment, a bill called the 401(k) Fair Disclosure and Pension Security Act is moving through Congress. But it does nothing more than tinker at the edges of a looming disaster, acting as if lowering fees on 401(k)s by a few fractions of a percentage point will solve the massive underfunding of a whole generation's old age. Forget it. It won't. It's time to stop pretending that the 401(k) can get us where we need to go.

Disclosure I am long one 401k through my work using Principal Financial group.

Time to COnsider SHipping ETF's, Sea is my choice

When countries around the globe start resuming business as usual, shipping will be a given necessity and exchange traded funds (ETFs) are one way to gain access to this sector and satiate your investment needs.

The Claymore/Delta Global Shipping (SEA) reflects the Delta Global Shipping Index, which measures the performance of maritime shipping industry firms in global developed markets, writes Don Dion for TheStreet. The ETF’s portfolio has dry bulk goods and the leasing and/or operating of tanker ships, container ships, specialty chemical ships and liquefied gas or dry bulk goods transport ships.

SEA has 30 holdings with an expense ratio of 0.65%. The fund has a 58.7% allocation in industrials and 41.3% allocation in energy. The components within the fund are based on market capitalization and liquidity.

Investors are coming back into shipping, realizing that countries such as China are demanding materials en masse. More recently, the shipping industry is being driven by steel demand and higher demand from China and emerging markets will likely raise rates on dry bulk shipping.

When talking about the shipping industry, the most important ratio is “bottoms,” or number of ships, to demand for transported goods. If there are more products than bottoms then the rates are high; if there are more bottoms than cargo, then rates are low.

* Claymore/Delta Global Shipping (SEA): up 17% year-to-date

Disclosure I am long SEA in my shipping folio.

Tips for trading ETFs

The more an ETF is traded, the more liquid it becomes, making it even more attractive relative to its less-liquid competitors. Based on conversations with people at various ETF providers, the firm learned that it takes roughly $100 million in assets for a company to justify the expense of offering an ETF. Investors should avoid the risk of investing capital in a product that might be liquidated in the future by evaluating the level of assets in a strategy before committing money to an ETF.

Another indicator of an ETF's liquidity is the bid-ask spread. The bid-ask spread is the difference between the highest price a buyer is willing to pay for an asset and the lowest price at which a seller is willing to sell that same asset. As liquidity increases for a particular product, the spread will narrow, thereby limiting trading costs. Low spreads are good because they reflect a more efficient market for an asset.

However, spreads vary by asset class, among others things. For example, ETFs that track the S&P 500 should have very low spreads because the underlying securities in the S&P 500 are very liquid and easy to access. Some foreign securities, particularly those in emerging markets, may be less liquid and require a wider spread. ETFs that track bonds, particularly less-liquid, high-yield bonds, may trade at wider spreads simply because bonds do not trade on an exchange and therefore are not priced as efficiently as stocks.

Investors should aim to limit trading costs by avoiding illiquid ETFs with wide bid-ask spreads. There is no absolute level of spread we can point to as a threshold for investing in a product or not. However, investors should compare the bid-ask spread of the product they are interested in to other similar products.

Investors also should evaluate whether or not an ETF has been trading at a significant premium or discount to NAV. More ETFs than ever have traded periodically at substantial premiums and discounts in the past few quarters as the capital markets have been stressed. Fixed-income ETFs especially have seen some large premiums and discounts.

There are a few guidelines investors should be aware of regarding the timing of trades. The first general rule is to not trade ETFs at the very beginning or end of the trading day. Spreads tend to be wider at these times than at other times during the trading day, because there isn't as much information priced in during these times and because some of the underlying securities in the portfolio might not be trading.

The second general rule is to try to trade an ETF when the markets for the underlying stocks are open. This pertains mainly to international ETFs. For example, if an ETF has European stock exposure, the spreads on the ETF may be wider after European markets have closed, but while the U.S. market is still trading.

Disclosure I am long many ETFS and they are a important part of my portfolio.