The Perfect Investment Bites the Dust

The Perfect Investment ?

Even perfect investments aren't perfect. Back in February of 2012, I wrote about a perfect investment with the following attributes:

1. Almost 3% average annualized return on your investment
2. Inflation-proof
3. Short term or long term investment: your choice
4. Guaranteed by the United States Government
5. No minimum investment
6. An easily transferable bearer investment with no registration required
7. The investment will never go down in value

Then in November of that same year, I described how the perfect investment would return 2.2% in just two months! In addition, I mentioned one other benefit: the entire investment may be deductible.

Unfortunately, the seventh benefit listed above didn't hold true.

Do you know what this 'perfect' investment is, or should I say, was? The Forever Stamp issued by the United States Postal Service. No matter what you pay for the stamps and how much the cost of first class postage increases in value, the Forever Stamp could still be used to mail a one ounce letter.

Yet on Monday of this week, the Post Office did something almost unheard of. It REDUCED the cost of first class postage from 49 cents to 47 cents for the first ounce. This is a drop in value of 4.1%.

So the bad news is that if you had stocked up on Forever Stamps at 49 cents, you would have lost money. But if you had bought the stamps back in 2012 at 45 cents, you would still be ahead. Plus, if you never stocked up on these stamps, you would benefit now because postage would now cost you less.

Wouldn't it be nice if the government reduced our taxes the same way?

Perfect Stocks: Low PE, PEG, PS, & PB, and High Yield

If you had to define the perfect stocks, what would the characteristics be? The classic ratios are the following:

PE ~ price to earnings ratio ~ the lower the better
PEG ~ price to earnings growth ratio ~ the lower the better
PS ~ price to sales ratio ~ the lower the better
PB ~ price to book value ratio ~ the lower the better
Yield ~ the dividend payout rate ~ the higher the better

In the case of the PEG, the PS, and the PB, a ratio of less than one is considered excellent. In the case of the PE ratio, less than 15 is good. As for the yield, 2% or higher is considered decent, far better than any bank account, certificate of deposit, or money market fund.

The following is a selection of stocks that meet all the above criteria. For the PE ratio, the forward price to earnings ratio was used.

AU Optronics (AUO)
Avianca Holdings (AVH)
China Yuchai International (CYD)
Gafisa (GFA)
Global Power Equipment (GLPW)
LG Display (LPL)
POSCO (PKX)
Rocky Brands (RCKY)
Seadrill Partners (SDLP)
Stage Stores (SSI)
Sunoco (SUN)

Only four of the companies are baed in the United States, GLPW, RCKY, SSI, and SUN. Check them out. Maybe you can find the perfect stock in this list. If you like interesting stock lists like this, check out many of the free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

By Stockerblog.com

Perfect Investment: 2.2% for Two Months US Government Guaranteed

If you were offered an investment that pays 2.2% in two months, and the investment is guaranteed by the Federal Government. Plus the return is tax-free. As a matter of fact, you investment may be entirely deductible. Do you think this would be the perfect investment? Here are some other characteristics.

1. Almost 3% average annualized return over the long term on your investment
2. Protection against inflation
3. Can be considered a short term or long term investment
4. Guaranteed by the United States Government
5. Very low minimum investment
6. An easily transferable bearer investment with no registration required
7. The investment will never go down in value

If you haven't figured out what this investment is yet, it is the Forever Stamp, the stamp issued by the United States Post Office that is used to purchase one ounce of postage. It doesn't matter how high the price of postage rises, even if the postage rate goes up to $50 an ounce, you can still use this stamp for one ounce of postage. The price of first class postage is scheduled to rise on January 27, 2013 from 45 cents to 46 cents. The increase is only a penny but it still works out to a 2.2% increase a couple months from now.

Postage used to be 39 cents an ounce in January of 2007. If you look at the increase in the cost for one ounce of first class postage over the last several years, it works out to an average annual increase of about 2.9%. And since 1970, the average annual increase in the price of postage is 4.9%. (See chart.)

You can still buy these Forever stamps and take advantage of this 'investment'. Over the long term, postage rates will continue to increase, especially with inflation. If you still pay many of your bills by mail, or you have a small company that does mass mailings, or you are with an organization that sends out printed monthly newsletters, then maybe it would be make sense to purchase these stamps before the rates go up.

If you do any international mailing you should also be aware that the Postal Service will introduce a First-Class Mail Global Forever Stamp, which will allow customers to mail letters anywhere in the world for a fixed price of $1.10.