Sunday Morning Coffee

A few odds and ends this morning.

First up Barron's has a lengthy post about how Japan could end up defaulting on its debt at some point in the future. The big idea is that the population will be getting smaller and older and their version of social security faces some problems. Chances are you know that Japan's debt load is about twice it's GDP and while that is mitigated somewhat but the cash hoard the savings rate has been on the decline.

I've never been a fan of Japan as an investment destination. Most of the issues here were not new but the conclusion of a debt default was. This is a fair ways away from playing out one way or the other but certain funds like the SPDR International Treasury ETF (BWX) are heavy in Japanese debt and are likely to always be heavy because of their methodology. At some point they could become a sell. A few clients own BWX.

Now for something very amusing. A few weeks ago I wrote a tongue in cheek blog post about the best five places to retire based on living a state with no income tax that was next to a state with no sales tax. The idea being you live where there is no income tax and buy your stuff where there is no sales tax.

Well Barron's had a similar article yesterday. It was just about moving to a state with no income tax, it did not go as far as to explore the tax arbitrage as reader Stephen Drone put it. I get a kick out the whole idea but on a serious note this line of thinking is innovative and being innovative in general will be crucial. One last point on this for now; the Barron's article referenced a couple moving to Sheridan, Wyoming to longer pay state income tax. Probably a good idea to go spend a few weeks there in the dead of winter to know what you might be in for.

The two state ETF were supposed to start trading a week ago and it appears they have not yet listed. Thinking that maybe I missed them, there is supposed to be one for Texas and one for Oklahoma, I went to Yahoo Finance and starting typing in O K L A... and I found a stock I'd never heard of called Public Service of Oklahoma (POH). It is publicly traded but also a subsidiary of some sort of American Electric Power; the exact verbiage says it "is part of the American Electric Power system."

It is NYSE listed but there is almost no volume. The market cap is $226 million, it has $868 million in debt a P/S of 0.15, a yield of almost 6% and trades at three times earnings. A PE of three? Woo-hoo! It is pretty clear that there was some sort of one time event to effect the earnings but I could not find any news telling what that event might have been but to be candid I didn't exactly make a day of it either. Anyone interested in finding out could probably call investor relations and get right through.

Looking for information about one stock is a great way to find another interesting one by accident. I've found a few that way over the years including a couple I hold now.

Finally a quick little story about life here in Walker. I've mentioned my (now) 78 year old neighbor with the backhoe. He is also a firefighter, really a remarkable role model for successful aging on several fronts. I went over to his house yesterday to borrow his chimney sweep (on the honey-do list for yesterday) and we were chatting for a few minutes and he made a comment about his getting older so I said "well, what are you 60 now?" And he shot right back "I could do anything when I was 60." I thought that was a brilliant one-liner.