Buy America. Buy dividend increases. Buy Caterpillar.

Isn't this the prettiest thing you've ever seen?  This tractor is known all over the world for quality, dependability, and endurance.  It's a brand that has withstood the test of time and tons of competition.  And as less developed economies continue to improve their infrastructure, roads and bridges and all that kind of stuff, demand for the best construction equipment money can buy is as close to guaranteed as an investor can get.  Periodically trucks and tractors in our own country also need to be upgraded as technology advances.

Here's the stock chart for Caterpillar over the last year:

Not so pretty, is it? Bank of America/Merrill Lynch has it rated neutral.  Morningstar has it at a hold and S&P downgraded the stock last January.  Nobody is all that excited about this dowdy staple of American manufacturing.  

And yet - I am in love.  I already own some shares (at a profit - I'm a long-term hold kind of gal).  And just now I added to my position.  The company thinks their stock is trading at ridiculously low prices, that it's the best thing they can do with their cash, and continues to buy-in their own shares to the tune of over $10 billion worth in the last five years. (Fewer shares outstanding mean more earnings per share for the ones that remain.)

Here's what's happened to their dividend recently:

2012:  $2.02

2013:  $2.32

2014:  $2.70

2015:  $3.45 

2016:  $3.97 (projected)

The current dividend yield is just under 4%.  (What are you earning on your money market fund lately?)

The reason the stock is down?  The global economy is in the midst of a depression.  Not just China, but Latin America as well (Caterpillar's business has declined in Latin America by 50%.) But economic downturns do not last forever and the global picture will eventually recover.

In the meantime, buy this American beauty, reinvest the dividends to purchase more shares and put the position on automatic pilot.   The way to make big money in the stock market is not to buy the stocks where everybody already has a "buy" rating.  Upside surprises happen when investment professionals have forgotten good companies and then suddenly, out of nowhere, every Tom, Dick, and Merrill Lynch upgrades their opinions at the same time shouting all together, "Buy," "Buy," "Buy." 

Update: Hasbro

For those of you who complain that I should write more about stock investing, you're right.  I couldn't help but notice today that the last time I wrote on DIY Stocks, I recommended Hasbro.  It was trading at $53.30.

The company announced their most recent quarterly earnings this morning and I am happy to report that they were ahead of market expectations.  The stock that nobody liked (but me!) is  at $73.45, up 11.47% on the day, up 37.8% from where I recommended it last September - which doesn't include the healthy dividend payments that take it to almost 40%.  S&P 500 is up around 6% during the same time period.

I should pay more attention to the stock market.  There's always a bargain lurking somewhere for picky, patient investors who don't pay attention to what everybody else thinks.

Hasbro: a stock nobody likes (but me!)

I first bought Hasbro in October of 2012 because it showed up on a list of companies that had a big dividend and they had consistently raised it.  I understood the product because I'd played with their toys as a child, bought them for my own children and now I'm buying them for my grandson. Monopoly, Play-doh, Playskool, GI Joe - plus a bunch of licensed products based on Star Wars, Spiderman and Sesame Street. 

This is a perfect example of what I've come to think of as a "low IQ investment."  A dividend that is significantly higher than what I can earn on the money market, a consistent track record of taking care of their shareholders by raising it - and it doesn't require an advanced degree in economics or technology to understand the stock.  If kids are going to continue to play with toys they can hold in their hands, they are probably going to play with Hasbro products.

But the best thing about Hasbro?  Nobody likes it.  Morningstar has a "hold" rating on it, as does Standard & Poor's.  Bank of America (Merrill Lynch) doesn't even bother to assign an analyst to follow it.  Everybody's decided this company - in an internet-based world - is yesterday's news and they've stopped caring - the exact same opinion they all held when I bought my first 200 shares 2 years ago.  And my position is up over 40% after expenses. 

I know it's counter-intuitive to get excited about a company that puts the professionals to sleep, that nobody rates "buy."  But think about it.  If everybody is already excited about a company, it's really hard to get a surprise to the upside.  Who is left to buy it?  We've seen this happen time and time again with top-notch companies.  Apple comes to mind as a great example.  It hit $800 a share (pre 6:1 split), all the news that came out about earnings, the dividend, their products was fantastic - and the stock still went down to $400 because everybody had already bought into the "Apple is the best company in the universe" scenario.  The time to buy a stock if you want to make the big money is BEFORE the analysts get excited, not after. 

Now we're heading into Christmas season and yesterday Hasbro announced they are partnering with Disney and Walmart (not bad partners) to introduce a new product that takes advantage of 3-D printing. 

"The SUPER AWESOME ME experience begins when the fan visits an in-store scanning station where a 3D face scanner captures their likeness to create a 3D model. At launch, fans can visit one of ten Walmart or two Sam’s Club stores and choose from Captain America or Iron Man to create a personalized 12” action figure. The SUPER AWESOME ME figure features a traditional 12” articulated plastic action figure body and a full color 3D printed head. Recommended for fans ages 4 years and older and available for an approximate retail price of $45, the SUPER AWESOME ME figure will be available for pick up at Walmart locations or ship to Sam’s Club customers in four weeks."

Come on - I'm not even a comic book fan and I'm cheap - but I'm dying to plunk down $45 to see what my grandson looks like as a 3-D ,12" version of Captain America. 

Even if it turns out Christmas shoppers don't love this idea, I'm stuck with a great dividend record and a package of iconic toy names that can continue to be re-imagined in ways that take advantage of changes in technology. Who cares what the analysts say?  Today I'm looking for cash to add to one of those rare, common sense companies that I can hold for years, confident that their seasoned management team will take care of the children who play with their toys as well as their shareholders - the way they have for generations.  

What are you waiting for?

I know you.  You're always going to start investing in individual common stocks someday.

When you learn enough.
When you get your next bonus.
When your savings account or IRA or mutual fund hits a magic number.
When the market pulls back.
When you get your tax refund.
When the bald, loud guy on TV confirms that the time is right.
When you pay off your credit card debt.  (Well, this one might have some validity to it.)
When you get a raise or win the lottery or your great Aunt Gertrude dies and unexpectedly leaves you her baby grand piano - which you don't play.

Enough.

Stop waiting.  Just do it.  Scrape together a few bucks from somewhere, be it your next paycheck or part of the mutual fund you own in your retirement account.  Stop waiting for a sign from the heavens and get thee to a discount broker.  Merrill Edge.  Ameritrade.  Fidelity.  It doesn't matter.  Stumble your way through the on-line account application (and transfer process if you are moving your retirement account).  Call the 800 number. Ask questions.  Do what you've got to do because there is no perfect time, there never has been and never will be.  Do it now.

Buy one share in one company that you believe in with all your heart, a product that you use and understand, a company you like so much you want to own it forever.  If that's all you can afford, then buy that one share.  Or two or five.  It doesn't matter. Stop being afraid and pull the plug because that's the day you become a real investor, when you've got real money on the line, money that you earned and saved, when you stop buying these stupid generic funds and decide for yourself what makes sense.  Stop dabbling.  Stop researching.  Just do it.

Give up eating out for a month - not forever - just a month.  Take that same money that you would have diddled away on waffles (oh, I know they're yummy) and carry out (yes, you're tired after a long day at work and I know you don't feel like cooking), and pale ales (oh, I know it's not easy) and make your first stock investment. Who knows, if you can cold turkey on the $10 lunches, the $20 Happy Hours for one month -  maybe you could stretch it to two.  And then you'd have enough to buy another share of something that would really get you somewhere.

Stop waiting.  Be an owner.  Reinvest the dividends.  Care about the future - yours and our common good.  Because that's what it means to own individual common stocks.  Ticker symbols mean something beyond the random letters and numbers.  They are our collective future, visions to believe in that will make your life rich in a way you can never suspect until you're on your way.   You've got to start somewhere, so start wherever you are.  Start now.

Mindful Spending

About three times a day I tell my husband how annoying he is.

"You've got me trained like a dog," I say.  It's the consistency of his simple messages, delivered every time I think about spending money (or leave dirty dishes in the sink) that is so effective - like boot camp, I imagine.

We're on vacation and like a regular person, I want to go into a cute, little gift shop and look around, but as soon as I step inside, he immediately asks, "What do we need?"  I glance at the charming little doodads, the sparkly things, souvenirs that will soon gather dust on shelves, forgotten. Then I take a deep breath and head right back out the door.

The telephone in our bedroom goes on the fritz. I tell Michele I'm going to shop for another one on-line and he doesn't even blink.  "Do we need it?" he asks.  In my mind I'm thinking we've always had a telephone next to our bed.  My parents always had a telephone next to their bed.  Everybody does.  In case of emergencies in the middle of the night.  "There's a phone on the fax machine in the hall," Michele reminds me.  And I have to admit he has a point.  The phone's been broken for three or four weeks and nobody has died.

Welcome to my life.  This happens with every soft drink purchase ("I saw a drinking fountain next to the restrooms."); every time I suggest we stop at a fast food restaurant ("There's roast turkey in the refrigerator at home."); every time I want to buy a new pair of shoes ("How many pairs do you need?  You only have two feet.") .

This is 2014 and I came into this marriage with my own money, so don't think I always do what Michele tells me to.  Just a few days ago I bought the shoes anyway.  But it takes such energy to justify my needs and overcome my husband's inevitable objections, that the object of my momentary affections is hardly ever worth the effort.

Before Michele, like most Americans, I used to enjoy shopping. It was fun.  Something I did with friends or my sisters as a social activity.    But after three or four years of, "What do we need?" I noticed something strange happening to my brain.  I no longer got that pleasant little buzz of dopa-mine when I handed my credit card to the saleslady for my latest purchase.  Shopping became something to be endured and female friends felt self-conscious while I halfheartedly pretended to look at the sales rack after our lunches.

After Michele I noticed that our net worth increased at a significantly faster rate.  We had more choice and our lives were rich and satisfying - not at all deprived.  We got more pleasure from finding cheap wines we liked, daily specials, and free concerts in the park than I ever did from buying without giving it any thought. The packed lunches we ate in airports were not just cheaper, the food was healthier with better quality ingredients. Now I'm proud to tell people, "I'm cheap."  I worry less and in our fifties, work is a choice, not a necessity.

When I came into this marriage thirteen years ago, I understood how to make money.  But there are two sides to every balance sheet and I've seen surgeons earning $400,000 a year have to file for bankruptcy. Thank-goodness my very annoying husband showed me purchase by purchase how little it takes to live a great life.  Together we make an amazing team.

Ode to My Income Taxes

I hate doing taxes.  As soon as I get out my little bag of crumpled receipts and the pink, plastic calculator that doubles as a pencil box I immediately start to complain and don't stop until the forms are in the mail. Every year the sighs get louder, more dramatic, as it gets closer and closer to the 15th.  I hate taxes like I hate washing windows or painting walls, bored to tears before I've finished entering the information from our first 1099.

And yet in my entire adult wage-earning life, I have only paid a professional accountant once and even though he did a decent job at a reasonable price, I will never trust my numbers to a stranger again.  In fact, I am making my husband, Michele, learn how to stumble and bumble through the Turbo Tax prompts the same way I do.

The ritual of income taxes is the only time I force myself to sit down and study the data of my life to reflect on what I value.  When I pay someone else to plug in the numbers, I miss the most important part of the process.  Our check registers and account statements tell Michele and I in black and white what was important to us over the past 12 months and what wasn't.  Tax returns make us face up to those decisions - sometimes painfully - and rethink them.

What are some of the discoveries we've made about ourselves from the numbers of 2013?

1.  Michele figured out we paid less than $400 for gas and electric in Cincinnati for the whole year.  We knew we were paying less in the condo than in our old house - but because the amount is added onto our HOA fees, we didn't realize quite how much we were saving.  (*Please note we are not here in the summers and never use the air conditioner.  We wear sweaters in the winter.  This is not realistic for normal people.)

2.  At 58, how I appear to the rest of the world is apparently no longer of significant importance to me.  I only saw one professional hair cut come through on the credit card statement and a charge for $342  at T.J. Maxx for clothes.  I think I might have also bought a couple of sun dresses for cash in the market in Savona, but I never pay more than 10 Euros apiece.  To all of my friends and family who are always polite about what I'm wearing, I sincerely promise to try to care more in 2014.

3.  Even though I think we never eat out - Michele says we do and it turns out he's right.  I was surprised by how much money it costs us just to buy groceries in Italy where I add up every single cent we spend. In Savona I do my shopping on a daily basis and the total surprised me. I worry about average families who bring home the equivalent of about $1,500 a month and wonder how they do it because I'm a bargain shopper.

4. Michele also says I spend way too much money on art - which must be where all the money I used to spend on my hair and clothes is going - and this year it might not be such a bad idea to slow it down a little bit.

Of course we're not done yet.  With another four or five days to bicker and fuss this is probably just the tip of the discovery iceberg.  The numbers for School Amici on our schedule Cs (self-employment income) will trigger a lot of thoughts about how we use our resources, what works and what doesn't.  I'll want to give more to charity and Michele will be more conservative.  Then he'll tell me how easy it would be for me to do a little more consulting.   It's awful.   But I swear it's worth it.  We make better financial decisions year-round because of a few days of pain  - and believe me, we'd never do it voluntarily.

Buy Low, Sell High: How it Works in Real Life

They make it sound so easy, don't they?

Buy a stock low.  Wait a little bit.  Sell it after it goes up and then buy something else that is low and repeat the process until you have so much money you don't know what to do with it.

But the most oft repeated rule of good investing is a gross oversimplification that puts way, way too much pressure on the investor.  You are never - not in a million years - going to be able to time markets or purchases, at least not on a consistent basis.  Let's take an investment I own to see how it really works.

I like Google.  When I use a search engine, I prefer to use Google.  I like the Google doodles.  I'm used to the format and over the years I've appreciated the other services the company has developed to earn my loyalty.  Stuff like Google Docs, Google Chat, Images, Maps, Google Earth.  They offer a high quality product and make my life better on a daily basis.

But it's always been an expensive stock.  So the first time I bought it, I purchased 5 shares on November 16, 2007 for $627.75 a share.

Then the world fell apart in September of 2008.  Remember that?  I sat there watching the collapse in absolute and complete terror like every other sane person who owned financial assets.  But good investors learn not to freeze.  You have to take a deep breath, open your statement - the one where the entire portfolio has declined by 20 % or 30% in a matter of weeks - and you have to get very quiet and learn to think for yourself instead of like a sheep.

Is the world really going to come to an end?  No.  Assuming an absolute worst case scenario which companies will survive?  You sell your weakest companies, the ones that had been struggling before the downturn and you take that money and  reinvest it in the strongest parts of the economy.  Or at least that's what I try to do.

On October 7, 2008 I bought 5 more shares of Google at the half-price sale:  $355.05
I got a little braver and bought 25 shares on October 13, 2008 at $365.45 and then in a different account on October  17, 2008, 20 shares at $385.11.  After watching, learning, getting to really know Google over the next five years, I liked the direction they were taking and was pleased with their acquisitions.  On February 28, 2013 I added another 70 shares at $805.10.

Today the stock closed at $1,192.10 and I'm pretty pleased with my investment.

Does that mean it's time for me to sell?  Nope.  Someday it's very possible that their self-driving cars will fundamentally change our ideas about transportation.  Google is working on contact lenses that monitor blood sugar for diabetics and automatically transmit regular data to their health care professionals.  In December alone, they bought seven robotics companies.  Recently Google announced a 2:1 stock split to be distributed on March 27.

This is a company I plan to own forever. But forever is a very long time.  And there are always bumps along the way. That's the way it really works when I buy low.   I know I may get the chance to buy even lower before I ever think about selling high.  My objective is to build wealth, not to be perfect.