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10 Questions And Answers On ETFs And Other Topics

I was asked to participate with 57 other bloggers in a post that was entitled 101 ETF Investing Tips . It’s a pretty good article, and I felt the tips numbered 2, 15, 18, 23, 29, 35, 44, 48, 53, 68, 85, 96, and 98 were particularly good, while 10, 39, 40, 45, 65, 67, 74, 77, 80, and 88 should have been omitted. The rest were okay. One consensus finding was that Abnormal Returns was a “go to” site on the internet for finance. I think so too. Below were the answers that I gave to the questions. I hope you enjoy them. 1) What is the one piece of advice you’d give to an investor just starting to build a long-term portfolio? You need to have reasonable goals. You also have to have enough investing knowledge to know whether advice that you receive is reasonable. Finally, when you have a reasonable overall plan, you need to stick with it. 2) What is one mistake you see investors make over and over? They think investment markets are magic. They don’t save/invest anywhere near enough, and they think that somehow magically the markets will bail out their woeful lack of planning. They also panic and get greedy at the wrong times. 3) In 20 years, _____. (this can be a prediction about anything – investing-related or otherwise) In 20 years, most long-term public entitlement and private employee benefit schemes that promised fixed payments/reimbursement will be scaled back dramatically, and most retirees will be very disappointed. The investment math doesn’t work here – if anything, the politicians were more prone to magical thinking than naïve investors. 4) Buy-and-hold investing is _____. Buy-and-hold investing is the second-best strategy that average people can apply to markets, if done with sufficient diversification. It is a simple strategy, available to everyone, and it generally beats the performance of average investors who buy and sell out of greed and panic. 5) One book I wish every investor would read is _____. (note that non-investing books are OK!) One book I wish every investor would read is the Bible. The Bible eliminates magical thinking, commends hard work and saving, and tells people that their treasure should be in Heaven, and not on Earth. If you are placing your future hope in a worry-free, well-off retirement, the odds are high that you will be disappointed. But if you trust in Jesus, He will never leave you nor forsake you. 6) The one site / Twitter account / newsletter that I can’t do without is _____. Abnormal Returns provides the best summary of the top writing on finance and investing every day. There is no better place to get your information each day, and it comes from a wide array of sources that you could not find on your own. Credit Tadas Viskanta for his excellent work. 7) The biggest misconception about investing via ETFs is_____. The biggest misconception about investing via ETFs is that they are all created equal. They have different expenses and structures, some of which harm their investors. Simplicity is best – read my article, ” The Good ETF ” for more. 8 ) Over a 20-year time horizon, I’m bullish on _____. (this can be an asset class, fund, technology, person – anything really!) Over 20 years, I am bullish on stocks, America, and emerging markets. Of the developed nations, America has the best combination of attributes to thrive. The emerging markets offer the best possibility of significant growth. Stocks may have a rough time in the next five years, but in an environment where demographic and technological change is favoring corporate profits, stocks will do better than other asset classes over 20 years. 9) The one site / Twitter account / newsletter that I can’t do without is _____. Since you asked twice, the Aleph Blog is one of the best investing blogs on the internet, together with its Twitter feed. It has written about most of the hard questions on investing in a relatively simple way, and is not generally marketing services to readers. For the simple stuff, go to the personal finance category at the blog. 10) Any other ETF-related investing tips or advice? For a fuller view of my ETF-related advice, go to Aleph Blog, and read here . Briefly, be careful with any ETF that is esoteric, or that you can’t draw a simple diagram to explain how it works. Also realize that traders of ETFs tend to do worse than those that buy and hold.

Future Growth Opportunities For Duke Energy After Piedmont Acquisition

Duke Energy expands its reach from the electric utility industry into the natural gas business. Increases Duke Energy’s stake in very profitable Atlantic Coast Pipeline while tripling gas customers. Expect to see increased EPS for Duke Energy. By Matt De Jesus I have a strong buy recommendation for Duke Energy (NYSE: DUK ) after its acquisition of Piedmont Natural Gas. Duke Energy acquired Piedmont for $4.9 billion, and will also assume around $1.8 billion of its debt, representing an enterprise value of close to $6.7 billion for Piedmont. Duke Energy paid a 40% control premium on the acquisition, paying out Piedmont shareholders $60 in cash for each share outstanding. Reasons they paid this high premium are related to the possible synergies related to the deal. This acquisition is a good deal for Duke Energy, as they try to grow in the utilities industry and possibly expand nation wide. Duke Energy is the largest electric power holding company is the country, and is headquartered in Charlotte, N.C. Before acquiring Piedmont, Duke Energy was known for producing electricity, and not a big name in the gas industry. However, with the electricity industry showing signs of stagnant growth, Duke Energy wanted a piece of Piedmont Natural Gas for a couple of reasons. First, the natural gas industry is growing, whereas the electricity industry is not. Utilities are going through a period right now where natural growth is slow, so companies, like Duke Energy, must grow through acquisitions. The natural gas market, according to Wall Street analysts, is bullish right now, so everyone is trying to get into the gas business, adding significance to Piedmont’s acquisition. They will receive all of Piedmont’s existing customers, thus tripling its number of natural gas customers from 500,000 to 1.5 million. Also, with Duke’s established brand and stake across the southeast, I expect these numbers to grow further. The second reason Duke Energy acquired Piedmont was because of the Atlantic Coast Pipeline. Now owning Piedmont, Duke Energy increases its stake in the $5 billion Atlantic Coast Pipeline to 50%. More importantly, because of the state regulations on Piedmont’s fuel delivery incorporated with the pipeline, the acquisition provides Duke Energy with a steady and predictable profit, which is very important in the utility industry. Much of a utility companies growth is based on a rate base, which is the value of property on which a public utility is permitted to earn a specified rate of return. So, utility companies make money off returns on investments in property for the company. This is why the regulated returns on the Atlantic Coast Pipeline are so important, as they are consistent and profitable. Third, the move is in line with the company’s possible plans to grow throughout the U.S. and not just stay in the Carolina, southeast area. By establishing itself in the gas industry, Duke is scaling itself for the long-term next step in its growth, which may be to take the company nationwide. This move would not be any time in the near future, as Duke must first establish itself in the gas industry. Some may question Duke Energy’s paying such a high control premium to buy out Piedmont, but in the long run, this is a great deal for the company. The deal enhances Duke’s forecast EPS rate of 4% to 6%. To give some perspective, Piedmont’s rate base and EBITDA have been rising annually at about 9%. Duke’s stock price is currently at $67.32, and has been down recently because of the debt involved with the deal and slowed growth in the electric utility industry. The 52-week low on the stock is $67.07, with the high being $89.97. This deal, in the end, will be good for Duke, and it’s investors because it will enhance EPS. The stake in the Atlantic Coast Pipeline is very integral to this, and will provide regulated profit for the company even when the market for electricity is down. Also, the market for natural gas is bullish, and with a big company like Duke Energy providing natural gas, investors will reap the benefits of the profits Duke will make from Piedmont. We’ll see Duke Energy grow in these next months/year, but it will take some time before we see the major benefits from this deal.