Perhaps the greatest luxury of all is an investment that throws off cash because it provides a constant stream of earnings that can be used to buy the goods and services you desire without having to punch a time clock.

After all, a portfolio of $10,000,000 in bonds and dividend stocks could generate between $400,000 and $800,000 in annual income without touching your principal. That level of earning power would put you squarely in the capitalist class and can support even the healthiest Amouage Jubilation XXV habit, as you count your money from your new Clive Christian study or home office.

How Can Ordinary, New Investors Invest for Dividends Without a Lot of Money?

Most people, however, don't have that kind of money (or anywhere near it). So how can dividend investors take advantage of cost savings and achieve diversification without breaking the bank in brokerage commissions? Thanks to the iShares family of products, it is now possible. Mr. Monopoly and other dividend lovers can rejoice because iShares has created two major low-cost exchange traded funds (ETFs), or dividend ETFs, designed to let investors buy a block of dividend paying common stocks by purchasing a single security that trades just like a share of regular stock through their stock broker. That means instant diversification with only one brokerage commission, making passive income easier to achieve for those on a smaller budget.  Read more ...

Great story from The Wall Street Journal ... it turns out that the world's richest investors are hoarding cash to the tune of an estimated $10,000,000,000,000.00+ as a reaction to the uncertainty in the markets, economy, and tax situations around the world.  I wrote about the importance of liquidity several years ago and nothing has changed.

The reality is that if individuals are uncertain about what to expect, they will have a higher preference for hoarding cold, hard cash, gold, silver, and other sources of money that can be easily exchanged for value.  This may be bad for a country or the global economy but it makes sense on a microeconomics scale because it is beneficial for families who just want to make sure they can keep eating and supporting the lifestyle to which they have become accustomed.

On a purely anecdotal level, a lot of people in my circle of friends and business associates have been ruthlessly reducing debt levels and piling up cash in bank and brokerage accounts.  (Around here, we are value investors so our activity was not normal because when the market bottomed, I told you at the time that we were going "all in" in poker terms, buying everything we could get our hands on, from General Electric at $6, Wells Fargo at $10, U.S. Bancorp at $10, and Berkshire Hathaway in the $70,000 to $80,000 range for the Class A shares / $46 to $54 range for the Class B shares.  It didn't matter to us if we had to wait five or ten years for the market to recover, we just wanted to own more of the companies we loved.  Now that the market is somewhat recovered and things aren't giving-away-the-store cheap, we have started building cash levels and obliterating the small amount of debt we do have.)

What are you doing?  Investing more to take advantage of lower prices?  Repaying debt as quickly as possible?  Building cash reserves in the bank?  How did you respond to the crisis?

To everyone out there who is cheering, do you all realize that it was reported sometime back that there was speculation among some camps that Tony Hayward was trying to get out of running BP because getting fired or resigning would be better for him than leaving under good terms? That is, he had virtually no incentive to put himself through the ordeal of cleaning up the oil spill, yet if he left he'd get a giant pile of cash, pension, and other benefits.

In other words, he just proved how smart he was.  The details are just coming out but it looks like he will receive what is equivalent to $900,000 per year in pension benefits plus a significant severance package, which might include a lump sum in the seven or eight figures.

To those who think this is excessive, you realize that BP is expected to generate $10+ billion in profits this year even with the spill and, if you include that figure, over the past 4 fiscal years, BP has generated just shy of $100 billion in pre-tax profit.  It isn't even a rounding error on the spreadsheet.  This firm is bigger than most of the sovereign nations on the planet.

(I should probably disclose I indirectly own, through one of my operating businesses, a relatively tiny speculative position involving BP call options.  Right now, they are underwater and don't expire until January of 2012.  They are a total, pure gamble that has nothing to do with our day-to-day investments; equivalent to roulette at a casino.  They are not even remotely appropriate for anyone else to own or trade.)

Bloomberg is reporting that multi-national corporations are lying on their tax returns or using highly abusive practices and shifting income that was really earned in the United States to lower cost countries and dodging more than $60 billion in taxes a year, which is money that has to be covered by individual taxpayers and small businesses.

The problem is that the proposed solution could lead to higher outsourced jobs, especially lucrative high-tech, high-paying jobs:

Doggett has proposed legislation that seeks to curtail that practice. It would require companies to be liable for U.S. taxes resulting from innovations they developed in the U.S., even if the company licensed the property to an overseas subsidiary.

Well, if I'm an executive at a huge multi-national, what am I going to do? Just move the development lab from Silicon Valley to Hong Kong or some offshore haven. It doesn't take more than three seconds to see that this "solution" would cause even more problems! Then, you wouldn't have the income tax the high-paid researchers and developers were paying and you have fewer jobs for Americans. Is it really that difficult?

There must be a better solution, especially when you consider that the 35% tax rate we charge corporations is the second highest in the world! Of course companies are going to try and lower it.  Maybe they would dance less if we were competitive in our rates.  But no, that makes too much sense.  You can read the entire article here.