July 29, 2002; Upgrade Investments in an Uncertain Time

To complete the circle, we have a strong conviction that income investors who sell their high greed partnerships and put the proceeds into CVX or RD will have much more value down the road.  Those quality stocks yield 4% and the income could be enhanced in a tax-advantaged way by occasional stock sales.  Such sales might not even dilute ownership much as CVX and RD also return cash through stock repurchase.  Not only is the value better in the latter, but also the risk is much lower in our opinion.

In the message to income investors there is also a message for institutional investors.  Income stocks have sponsors who may be on weak ground.  The broader message of upgrading to low McDep Ratio and lower debt makes sense in our opinion for most investors.