A New Years Mishmash:


It may well be a good buy here – it still yields 9.5% – but I am selling the Great Atlantic & Pacific Company preferred J shares (symbol GAJ) suggested in this space 364 days ago at $11.75. It has a little more than doubled since then – it closed at $24.35 Friday – and has paid $2.34 in dividends along the way. That works out to a total return of 127%. Needless to say, that was pretty good for a year like 2001. (Even more needless to say, my life is not usually like this.) The reasoning behind my selling is barely reasoning at all. It includes the following: (1) I haven’t done the homework to make an educated guess as to whether that preferred dividend is safe. It probably is, but I really don’t know. If it is safe, then even at $24.35, this is a great buy – where else can you get 9.5% these days? But (2) I know myself. I would feel less bad not receiving that fat dividend than I would if GAJ got into trouble again and the stock went back down. It’s a relief sometimes to quit while you’re ahead. (3) My local Food Emporium is closing this month. (Food Emporium is one of A&P’s several chains.) Of course, this could actually be good news. It could be a sign of prudent management ready to cut losses rather than let them bleed. It could be the result of some irresistible offer they got to give up their lease. And it could certainly make the next closest Food Emporium even more profitable, as many of the closing-store’s customers happily walk the extra few blocks. But I’m just not willing to do the homework to try to find out what it means; and even if I were, that’s no guarantee I’d draw the right conclusion. Finally, (4) although the dividend yield is great, any further price appreciation is likely to be very modest. I’m too lazy even to find out whether these preferred shares can be called in at their par value of $25. But if they can be, and the company were to secure cheaper financing, the upside from $24.35 would be very slight. Anyway, I’m outta here, and didn’t want to leave without letting you know.


Joel Williams: You write: ‘My own view is that religion works best when it stops short of complete, unquestioning faith. You find it comforting, and you sort of believe – especially when there’s engine trouble at 37,000 feet or you’ve run off a deserted road into a snowdrift and are pinned inside the car. But you don’t fully, really, absolutely, literally believe.’ My wife worked with a fundamentalist Christian. He was fairly high up in the company, and drove a Cadillac. He took another employee on a business trip in the summer from Houston to New Orleans. They went in the Cadillac. Well, about half way there, the air conditioning died and the power windows would not work either. Some kind of electrical problem. The solution? He stopped on the road (I-10), went down on his knees and prayed that God would heal the car. Made his companion do the same. Did not work, of course. The moral is apparent.’

☞ Yes: pray harder.


Thanks to Ralph Sierra for this interesting op-ed from Friday’s Washington Post. It is by a Muslim with harsh things to say about Muslims – and harsh words for us as well. I don’t think the author is fair to Israel, or our support of Israel, but he is clearly worth a listen.


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