Income Investing

One of Warren Buffett's top executives at Berkshire Hathaway has resigned amidst a swirl of insider trading controversy. Former MidAmerican CEO David Sokol bought $10 million worth of Lubrizol (NYSE:LZ) before he suggested a Berkshire-Hathaway buyout of the company to Buffett.

Lubrizol stock jumped nearly 30% on the news that Berkshire would acquire the company. Sokol made nearly $3 million on the deal. And he is insisting that he did nothing wrong.

Individual investors are up in arms about this case, as it appears inappropriate, at best.

Even after Wall Street's greed nearly collapsed the banking system and forced hundred of billions in taxpayer-funded bailouts, bankers are still finding ways to line their own pockets.

The Wall Street Journal is reporting that bonuses at publicly traded banks hit $135 billion in 2010. That's a record high for compensation on Wall Street. It works out to about $141,000 per employee.

This $135 billion represents a 5.7 percent increase in combined compensation for the same group of companies in 2009.

With President Obama extending the Bush-era tax cuts for at least two more years, dividend investors can breathe a sigh of relief.

Taxes on dividends were slated to increase from today's 15% rate up to as high as 40% if the current tax rates were allowed to expire.

While some investors are waiting for the seal of approval from the United States Congress to make the tax relief official, many dividend investors are already taking advantage of the good news and are loading up on their favorite dividend stocks.

Irish debt problems are sending shockwaves through the rest of Europe today.

Yields on Italian bonds jumped nearly 0.25% today alone even as Ireland's bailout barely had time to shore up debt woes there.

According to UK newspaper The Telegraph, "Italy's public debt is over 2 trillion euros, the world's third-largest after the U.S. and Japan."

By all rights this company should have gone bankrupt years ago. The very fact that they're still with us today launching a $20 billion + IPO is ONLY because of massive bailouts from the Federal Government.

And today, people who were able to buy shares at the opening price of about $35 have already lost money on the deal, with the stock closing below $34. That's about a 5% loss.

Gold prices rose $45 an ounce today as investors flocked to the ultimate store of value after Fed Chief Ben Bernanke renewed his attack on the U.S. dollar with another round of quantitative easing.

Called QE2, the Fed will spend as much as $900 billion to buy U.S. Treasury bonds as a way to keep the dollar weak and boost corporate profits.

Today Bill Gross told reporters at CNBC that massive influxes of capital from the Federal Reserve "is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme."

Over the past seven months, Mr. Gross has slowly dumped hundreds of millions of dollars worth of U.S. Treasury bonds in preparation for what he believes is the end of the bull run in bonds.

Frankly, most individual investors -- no matter how smart or dedicated -- never really figure out a winning system.

You see, the secret to true wealth isn't putting in more hours at work. Most of us won't inherit a fortune. And it's certainly not buying a lottery ticket and hoping like millions of others that yours is the one.

The path to true wealth can be very simple: make wise investment decisions, based on a sound investment strategy, with a defined purpose in mind.

You probably already have a purpose in mind -- nice vacation, new car, gift for someone special, putting a child through college, buying a second home, early retirement, any of those and more -- and that's great. It gives you a goal. Now, you just need a strategy.

Investing in gold is often called a “fear trade.” In times of crisis, it’s believed that gold will hold its value, and even rise, while the value of paper currencies and other assets fall.  

 

If you bought SPDR Gold ETF (NYSE:GLD), which seeks to track the price of physical gold, 2 years ago, you’d be up around 36%.   

 

The S&P 500 is down around 15% during that time.   

 

You probably already know that gold hit a new all-time high yesterday at $1,200 an ounce. And even though other traditional measures of fear – like the volatility index (VIX), bonds and even stocks – didn’t move much today, the move in gold can’t be ignored.