John Wasik

CHICAGO, Nov 30 (Reuters) – With a tax increase on dividends
and capital gains looming, high-dividend paying stocks may hold
up well – even if investment income rates climb on Jan. 1.

Unless Congress acts by the end of the year, taxes on
dividends will automatically rise from the current 15 percent to
as high as 39.6 percent. While that sounds like a draconian
increase, it should not discourage investors from owning
high-dividend paying stocks nor should it trigger a lasting
market decline.

You can blame inertia, but individual investors are likely
to stick with their dividend stocks anyway. And those who do may
even be rewarded for the fear factor of higher rates. Companies
like Wal-Mart have moved up dividend payments to
December. Others like Costco, Wynn Resorts and
Tyson Foods are declaring special dividends, some of
them quite substantial.

If history provides any clue, the market should get over its
anxiety quickly and move on. According to a study by Ned Davis
Research, dividend stocks performed well during past periods of
higher dividend taxes. The firm studied years when rates ranged
from 28 percent (1988-1990) to 70 percent (1972-1978).

In every period studied, except for 1987, high-dividend
stocks outperformed non-dividend payers. The margin of
outperformance was as high as nearly 15 percentage points.

CHICAGO, Nov 26 (Reuters) – Nervous Nellies can’t stand
losing money, so they typically hedge their portfolios with
investments seeking to preserve capital. With the fiscal cliff
looming, there are a lot more of these worriers out there who
are (temporarily) looking to put together worst-case scenario
portfolios.

Whether you think that the fiscal cliff crisis won’t be
resolved by the end of the year or fear inflation, a
calamity-proof portfolio can hedge against any number of perils.
This would be a prudent approach for anyone primarily focused on
capital preservation or a subset — possibly 40 percent — of a
larger portfolio in which you need to temper stock-market risk.
You can create it yourself or buy it off the shelf in the form
of a mutual fund.

When looking to safeguard your money, keep in mind that this
is not an aggressive or moderate growth portfolio. If you’re
young, can afford to take some risk or have a solid guaranteed
pension waiting for you, this is not an ideal strategy for you.

CHICAGO, November 23 (Reuters) – When you are deciding how
to allocate your charity dollars before the end of this year,
you might want to consider investing in a community development
financial institution (CDFI).

There are nearly 1,000 private-sector community development
financial institutions that operate in all 50 states, according
to the CDFI Coalition. They range from local credit unions to
community loan funds and they perform a variety of roles from
providing venture capital to funding affordable housing.

What’s compelling about CDFIs is that they can combine
innovative social missions with service to low-income
communities. They are community partners that provide financing
for projects that have social value or may be neglected by
larger institutions. They can target underserved neighborhoods
and even develop sub-specialties such as sustainable development
and green businesses that have environmental missions.

CHICAGO (Reuters) – This holiday season may prove to be a bell-ringer for stores and producers of consumer goods and services, despite disappointing recent retail sales reports.

The 0.3 percent drop in October sales the Commerce Department reported after a three-month increase was likely due to the impact of Superstorm Sandy. Sales should pick up in coming months. In fact, there are enough positive converging trends that stocks in this sector — especially for retailers and manufacturers of consumer durable and discretionary goods — will rise well into next year.

A continued economic recovery will amplify retail spending in 2013 — what economists call a multiplier effect. Increased discretionary spending flows throughout the economy, creating even more jobs and buying more goods and services.

CHICAGO, Nov 16 (Reuters) – The “core and satellite”
strategy for portfolio management is an elegant and simple
approach that will not only help you diversify but allow you to
reduce your country and political risk.

Your core consists of broad indexes of stocks and bonds with
exchange-traded funds like the Vanguard Total World Stock Index
ETF and the Schwab U.S. Aggregate Bond ETF.

Then you can have some fun by working on satellite holdings
that include emerging markets, specialized themes and dividend
payers. These are more specialized investments that focus on
long-term global growth and help distance you from increasing
volatility and the slow-growth economies of the U.S. and Europe.

CHICAGO (Reuters) – If the fiscal cliff triggers an economic slowdown, you need to prepare your portfolio by lowering its risk profile. Even if you think you’re prepared, it’s good to take a detailed look at what you own.

Classic modern portfolio theory holds that diversification among stocks, bonds, real estate and other asset classes will balance the tenuous relationship between risk and return.

When the stock market tumbles 2 percent in a single day – as it did on November 7 – many pundits say that’s a sign of things to come if Congress doesn’t resolve the mother of all tax hikes by the end of the year.

CHICAGO, Nov 9 (Reuters) – U.S. financial services stocks
may be the most unloved sector in recent memory, but they may
end up prospering in the coming year.

Individual investors have had solid reasons to be sour on
financials since 2008. Earlier this year, JPMorgan Chase & Co
disclosed a $6.2 billion loss in trading as part of its
“London Whale” scandal. Bank of America Corp and
Citigroup Inc continue to struggle, and all of the
megabanks were involved in a legal settlement over the troubling
“robo-signing” of mortgage documents.

The balance sheets of the megabanks are still bruised and
hiding untold woes of bad debts; their share prices have largely
reflected uncertainty since 2008.

CHICAGO, Nov 5 (Reuters) – Despite the sourness of the
recent job market, a college degree is still a good investment.
But picking your major is akin to assembling the right portfolio
– you have to be selective to maximize your returns.

Recent studies back this up: the Hamilton Project of the
Brookings Institution shows that a college degree can yield a
more than 15-percent return. That’s better than double the
average annual return of stocks over the last 60 years (6.8
percent), and five times the return of corporate bonds through
2010 (2.9 percent).

Even a hot investment like gold has only managed a 2 percent
average return over that period.

CHICAGO (Reuters) – Whether you believe in man-made global warming or not, it’s undeniable that trillions of dollars will be spent on technologies to address the collateral damage of climate change.

Superstorm Sandy has just provided a tragic and devastating exclamation mark to the ongoing discussion of climate change and its link to extreme weather.

There are a number of ways to invest in industries that are seeking solutions to climate-caused problems. Several global companies, insurers and institutional investors accepted the idea some time ago and are investing for the future. Even investors who haven’t signed on to the idea of man-made global warning may find some sectors or companies to like.