The Motley Fool's Weekly Editors' Picks
Jun 16th 2012 7:37AM
Updated Jun 16th 2012 7:38AM
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
Dividends are great, but not if companies don't or can't keep paying them. Fool analyst Brian Stoffel helps investors figure out what shape dividends are in, using three companies with "monster" dividends as examples. Oil and natural gas trust Enerplus (NYS: ERF) , for example, yields 15.9%. The low price of natural gas has hurt the share price, Brian notes, and that's one weakness to watch out for.
Investors also need to look at whether a company is going to keep paying its dividend. Brian suggests using metrics including how much of the company's earnings are used to pay the dividend, how much of the company's free cash flow is used to pay the dividend, and how the company has been growing its dividend. Enerplus stumbles in this part of the examination. "Enerplus not only has negative free cash flow, but it worsened from a loss of $43 million in the first quarter of last year to a loss of $250 million in this year's first quarter," Brian wrote. "With numbers like these and a historically shrinking dividend, you'd be better off staying away" from this stock.
Read the article to check out all of Brian's analysis.
Charlie Munger's 30 Best Zingers of All Time
Berkshire Hathaway's (NYS: BRK.B) Warren Buffett is a quotable guy who imparts much investing wisdom, and Charlie Munger is no slouch, either. Fool analyst Morgan Housel rounded up 30 Munger quotes from the man who Morgan says "is probably the most quotable investor of all time." Morgan adds: "Sometimes what he says is hilarious. Sometimes it's serious. But it always gets you thinking."
Here are just four of the quotes Morgan has put together: one on business, one on life, and two on banks, with a little bit of Hitler thrown in.
On patience: "Almost all good businesses engage in 'pain today, gain tomorrow' activities."
Life advice: "Don't do cocaine. Don't race trains. And avoid all AIDS situations."
On investing in banks: "A friend of mine won't touch banks. His attitude is that sooner or later the bastards will go crazy. I think that's irrational. You have to be able to recognize the ones that stick out. Wells Fargo and US Bancorp (NYS: USB) avoid stupidity better than most. And Wells admits that it had its head up its [behind] when it made some of its mortgage loans. They know it wasn't their finest moment. I'm comfortable with people like that."
On regulation: "When Hitler was in his bunker before he shot himself, he said, 'This isn't my fault. The German people just don't appreciate me enough.' That's the attitude of a lot of bankers. They think their silliness is necessary. Banks will not rein themselves in voluntarily. You need adult supervision."
Read the article for a bigger dose of Munger and to find out his rule of investing.
Facebook's Next Moneymaker
Facebook (NAS: FB) . What's it all mean? Let's start with what its 900 million users mean. Fool analysts Joe Magyer and Tim Hanson tackled this question in last week's MarketFoolery podcast. Investors need to know that number, but also realize that there's a difference between "users" and "members," Joe said, adding that "no matter how you slice it, a whole lot of people are using this site."
Tim noted that a website's users are only as valuable as the people who are willing to pay for the opportunity to sell to them. The guys talked about LinkedIn (NYS: LNKD) , which charges companies that want to use the site to "hyper-target" help-wanted ads to LinkedIn users by characteristics such as experience or location.
Sentiment on Facebook has quickly gone from raves to mockery, Tim said, and this makes the stock "interesting."
Watch the video for more insight into the question of how Facebook is going to make money from the millions of people who use the site. And get The Motley Fool's free report on "Forget Facebook -- Here's the Tech IPO You Should Be Buying."
At the time this article was published Fool online editor Kris Eddy owns no shares of any stocks mentioned in this article. The Motley Fool owns shares of Facebook, LinkedIn, Wells Fargo, and Berkshire Hathaway, and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo, LinkedIn, and Berkshire Hathaway. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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