(00:00:00) Newspapers radio and television of all been filled with stories this week about the 50th anniversary of the great stock market crash of 1929. We thought this would be an appropriate time to take a look at what is going on now in the stock market and to examine the broader question of what makes good investment sense in this time of extraordinary inflation Our Guest is George Covington investment executive for blyve Eastman and Dylan company in Minneapolis. Mr. Covington has broad experience in the investment field including Commodities trading things like rubber and Plastics and cocoa and coffee and so on he is currently dealing in stocks bonds oil and gas real estate tax shelter and other things at play these men and Dylan in Minneapolis. We're going to be taking your questions for him in just a few moments and George wanted us to be sure to note that he's speaking for himself at the company and when you call he's happy to answer your questions, but not about specific stocks. He Here just by himself. He doesn't have that great big thick book or those computer readout terminals that most of the Brokers have and so he's really not prepared to talk about specific stock issues today. To get things started George. I'd like to ask you how how you explain the recent behavior of the stock market. I'm talking about the past couple of weeks when the market took a big decline at the time Federal interest rates went up. Now. This is of course designed to cut back inflation and inflation is seen as a big problem with our economy controlling inflation would be good for American Business and yet the stock market went down. What's the reason for (00:01:40) that? Well, basically Bob what we're looking at is a situation where the Investor has lost confidence in paper. And this has manifested itself over the past six to eight months in a very rapid increase in the price of many Commodities such as silver and gold and we view this decline in the Dow Jones Industrial Average or the stock market as you call it as merely an effort by the market to drain the inflation out of our economy and interest rates, of course are an integral part of this but interest rates are a mechanism used by the Federal Reserve board to try and control inflation will the markets doing a more effective job of it, perhaps then the Federal Reserve board is (00:02:27) 50 years ago in the stock market crashed. One of the one of the characteristics was that there was a lot of speculation stocks many of them were selling at 20 and more times with their actually earning today. There's a lot of stocks that are selling at 5678 times earnings does the price of the stocks today reflect the General Health of American? This or are the two unrelated. (00:02:51) Basically. It's an inflationary matter the In the past two to three years there have been literally billions of dollars lost in the actual price of Securities billions of dollars. And this does not reflect bad companies by any means it reflects investor confidence. Primarily Monday, which was actually the 50th Anniversary Wall Street has in the old story when variety printed the 29 crash Wall Street laid an egg. Well it kind of did Monday to because it only the only traded about twenty two million shares and the market was very inactive and there was very little enthusiasm about it situation has changed entirely from 29. However, there was no sec in 1929 margins were down around 10 percent by that. I mean that's the amount of money you had to put up to buy a stock 10 percent of its value and the government is much more active in our lives today than it was at that time also. (00:03:54) You know, I remember back in the 1960s people were saying that the stock market was the best hedge against inflation. That one could find the performance of the market in the 70s does not seem to bear this out. Does (00:04:07) it know it doesn't it's it's been very bad for those people that were highly invested in Securities through the years and it just brings up a point that an investor that has a substantial amount of money should certainly be Diversified an investor that does not have a substantial amount of money should seek a very safe stable investment at this time as they showed have all along. (00:04:33) Why do you suppose the market hasn't gone up as people thought it was in the 60s. (00:04:38) I really don't know it all goes back to the fact that It's costing more and more money to be in the market particularly the large investors that use the margin accounts currently on account of less than $10,000 borrowed you're paying over 17 percent in interest on the borrowed money, which means you have to make a substantial return to even begin to break even and so more and more people have gotten out of the market the stock market per se and put their funds into regular money instruments where they can get a locked-in yield and perhaps an inflating yield over a period of time based on interest rates. (00:05:20) You started to go into this a minute ago, and I'd like you to pursue it a bit what kind of investment strategy makes sense with today's rate of inflation (00:05:31) that's very very difficult question before it any responsible broker would answer that. He'd have to analyze the assets and means of the investor. Let's talk about two basic types of Investors here. The people that have less than $2,500 in a savings account should probably leave it there even though it's drawing very small return people with in excess of twenty five hundred dollars can go to any of a number of brokerage firms in Minneapolis. St. Paul area and effectively get in excess of 11 and a half twelve percent yield on their money and some very well, they're not risk-free but they're essentially risk-free type Investments. These are money funds which the brokerage houses manage and take a very small percentage of the profits out out, but then you get up to the very large investor. Their possibilities today are at the 14 14 and a half percent level six months CD certificates of deposit right now are paying 14.5 9% 14.4 5% The these are prudent. We also thank and this is a thought that we are very close to the bottoming of the stock market as many technical analyst field that it could test the 780 area. It's running now between 78 20 and 8:30 the Dow Jones Industrial index and we believe there could be a test of is perhaps as low as a 780 area, but we feel that if that should occur and we do build a base. In other words the market sort of go sideways for a while. Then we have an excellent chance to see a year-end rally and people should be aware of these low price earnings ratios and select good quality companies and put a portion of their money. Back into the stock market at that time. (00:07:30) Let's see what is on the minds of our listeners this afternoon our guest in the studio is George Covington with the firm blithe Eastman Dylan Minneapolis. He's an investment executive with a very broad range of experience in Investments. You have a question for George in the Twin Cities area. Here's a number to call to to 11550 221 1550 in the Minneapolis. St. Paul area outside of the Twin Cities call us toll-free on the wats line eight hundred six, five two nine seven zero zero eight hundred 6529700 while we wait for the calls to begin coming in George, you know, I've seen articles and books about planning ones financial future and all of them seem to not take account of the very high rate of inflation that we have currently most of the talk about inflation rate of 6. I haven't even 8% as being as being a lot now, we're up at 13 and a half and I think last week Charles Schulz indicated that nine percent would be the best we could hope for and that's after you take out housing and energy costs does buying a house for example seem to be a very wise thing for people to do these days to you know, put a third of your income into housing and by a hundred and fifty thousand dollar house or whatever. (00:08:54) Well, it's it's of course an excellent investment if you're able to make a substantial down payment but people that go into the housing market today with a very very small initial Equity are going to be saddled for many many years with some very very high interest rates and it's a consideration and should be thought out very carefully before you do it because a difference in three percentage points an interest rate can add 10 20 $30,000 to your overall mortgage payments. The life of the mortgage (00:09:29) a lot of money our first caller is standing by. Hello. You're on the air. Yes, you mentioned small investors putting their money into a brokerage firm and they invest in the money market for them. So they didn't have to have such large amounts. Is that better? We've had some information from is okay to mention the insurance company Lutheran Brotherhood that they do this and they charge a fee and then you can have smaller amounts of money that they'll invest in the money market. Is it cheaper to go through a brokerage firm do they not charge the commission that the insurance company would do, you know that? (00:10:06) Well it all comes down now miss to the bottom line figure in other words. What what are you going to get in return from the insurance company versus the brokerage firm today? Just before I left the office I checked and I saw that our money fun, which we have Nicole National liquid reserves is paying 11.5 3% All right. That is after a very small charge has been taken out brokerage firms essentially charge. Nothing for the service to the client. It's taken out of the income. There's no commission involved. It's very liquid and Blythe is no exception all of the major firms have this feature. So I would say look at the bottom line if you're going to get less than 11 .53 by dealing with your insurance company, then go to your brokerage firm and talk to them see what you can do with them. And incidentally I said $2,500. There are some firms. I believe that will accept as little as $1,000. This is be just a matter of shopping on your part brokerage firms are generally listed under stocks and bonds in the Yellow Pages. (00:11:17) All right, we have another caller on the line. Good afternoon. You're on the air. Good afternoon. I had two questions. Actually. The first question dealt with whether was really prudent to buy Silver and Coin Rather than bullion and the second question is what in the world happened to Copper. The price has been fluctuating went over a dollar now, it's down to I think 92 again and can you do you have any advice on copper as a possible commodity (00:11:43) investment? Let's address that first question first the silver market as I see it. If you ever watch Monday Night Football the end of the game lot of times Don Meredith will sing a little song the party's over. I think the party's over on gold and silver. We may see another rally in it. But if you have the funds and the means and the know-how of shorting that market I would suggest you do it other words. I think there's going to be a substantial drop in the price of precious metals over the next. Oh, let's say 6 to 18 months. If you like silver coins for their numismatic value fine, go ahead and buy them, but don't buy them for any other reason at this time and this is Personal opinion on my part copper copper is a funny Market. It's quoted at many different prices. You can never really tell what is happening in the copper Market by seeing what the listed cash price is in the Wall Street Journal for instance. And there are so many deals that are made between the manufacturers and the ultimate consumers that is very difficult market right now to read and I would say that if you were interested in Copper as a speculation that you should bide your time for a little while and let it stabilize. It's very risky very very risky to get into a market. That's wildly fluctuating. (00:13:12) George Covington is taking your questions on investments the telephone number for people outside the Twin Cities area 865 to 9700. We have another caller on the line. Good afternoon. You're on the air. Many utilities are paying dividends of 10% or more at the present time. What is your Europe idea on whether one should invest in utilities at this time? (00:13:40) Okay. My personal opinion on utilities is this go to your broker and find some utilities that have been issued in the past paying probably in the area of nine and a half to ten percent. You'll find that the basic price of those utility stocks are down substantially from the point at which they were originally offered to the underwriters and were subsequently sold to the public. Now if our prognostications are correct and interest rates truly do began to fall then not only will you have locked in a nice yield, but you can also look forward to a substantial capital gain on the price of the stock over the coming months my Suggestion on utilities is look for old utilities that have been in the market for six to eight to 12 months by them at a discount and hope like the rest of us that interest rates do began to fall. (00:14:41) All right. We have another caller standing by. Where are you calling from this morning? I'm calling from Tyler Minnesota. Tyler, Minnesota. Well, good morning or good afternoon. I guess it is 12:30. What's your question? Well, I'm a farmer and I've been farming for about five years now and there is a bunch of a group of Old Farmers older Farmers. I should say that remember the 30s and they remember the crash and they tell me that this Farm economy is very similar to what took place before the crash of NE 50 years ago. For example, 50 years ago the hog market the cattle market. I mean the cost of production on all farm products was well below which you know what we can get out of it hugs went down to nothing at you send in a load of hogs and they would send you a bill for the freight because the you know, it didn't cover the cost and this happened this started. Walter before the market crashed interest rates rates went up and farm debt in general when up to the point where you know, no farmer could afford to buy our it and you're seeing the same thing right? Now today farmers are very skeptical about borrowing money to buy livestock to keep the general flow of production going through the channel and they're very skeptical. I wouldn't say it as skeptical but they seem to be rather skeptical about borrowing money to buy Machinery George. What do you think about the farm? So - land prices are seemingly going down (00:16:23) young man. Let me address your question this way. There's no way in the world that you or any farmer in this part of the country can afford to buy land pay the prices that you're going to have to pay for it on a per acre basis and expect to raise anything on that land that's going to pay for Only thing you can do is expand very slowly. If you have any acres by acquiring a smaller pieces that you can amortize into your original acreage plot. All right, let's get back to one of your major questions here. And that is the similarities between today's Farm economy and those in 1929. You had no price supports at that time. You had no government controls. You had no government assistance. Everything is changed in that area. I've been in commodities for a lot of years and I've had a lot of hedging accounts for farmers and getting to know farmers and I grew up on a farm in East Texas myself. So getting to know Farmers, I find that one of the basic problems in talking to Farmers is they are truly the almost the last of the independent businessman. And as this they tend not to group together if they group together on some of their business decisions as opposed to acting independently all the time. They'd have a lot better chance to I don't want to talk, you know too much into a technical area here but there needs to be more cooperation between individual farmers and less dependence on the government as I see it. (00:18:05) Okay, let's take another caller. Hello. You're on the air. Where are you calling from? I'm calling from Anoka. What's your question? My wife and I are expecting a child in May. We're going to be going from to Ian comes to one income. We're right now. We're just trying desperately to clear up as many debts as we possibly can and enable us to live on one income. My wife has acquired number of shares of Gamble stock through profit-sharing. She works at Gamble's should we would you advise us to hold on to this stock? Should we liquidate it put it into? What's your advice for somebody in our position? Let's see George. If you could take that kind of that question and not respond to the specific company, but to that General kind of thing profit-sharing (00:18:51) plans. Well, it's just like I asked Bob to mention earlier. I don't want to respond to a specific stock. But let me just talk about your position in General Sir. The the way I see it is it all depends on what the base price in the stock is other words. How much did your wife pay for it over a period of time? Does it have a gain in it worth taking are you just going to be swapping dollars? Remember what I said earlier in response to another question. I don't know where it came from but we still think we've yet to see the bottom of the market and if you could hold off as much as a month or two months, you might begin and I emphasize might you might begin to see a rebound in this market and you could be At least surprised with what your stock are stocks might do over this period of time. (00:19:45) All right. Let's move on to another caller. Where are you from? I'm calling from st. Paul. I was interested in an investment problem that involves an annual budget and other words. This is for a nonprofit organization and we would get an allotment in September and we would want to invest that but still be able to utilize the money in you know, that allotment over the course of nine months. What type of investment would you suggest we maximize our (00:20:10) return short-term money markets is no question about that. I think that for you to go in and try to tie it down a CD for six months would probably defeat the liquidity that you're going to need in your program mom servicing. So I would say contact your brokerage firm and ask them about their current money market or money fund because there you're going to get currently 11 to 12 and in coming months if it's a sizable fund you're going to be getting up to 13% and incidentally you can roll money in and out of These things just exactly like you do a bank account there certain minimum restrictions on them, but please don't don't hesitate to ask questions and your broker will provide you with a very simple prospectus on it. (00:20:57) Okay, we have another caller standing by good afternoon. Where are you calling from? I'm calling from Robbinsdale. And what is your question for George Covington? Well something ever be done in the future to reduce the difference in interest amounts between borrowing money. Say for example for a home mortgage and depositing money in a savings account currently. It's what is it about five and a half (00:21:20) percent more than that sir. (00:21:22) I'm African on savings alone and probably 11% to borrow for a home. This is control isn't it by the federal rate governed by Federal Regulation? Yes, sir. It is. Okay, but it seems to me like in the past the the different the differential was which was (00:21:37) less. Yes, sir. That's correct. That's (00:21:39) true. I hope that they could be some kind of action in the government could could make that more fair or for the for the person wants to put his money in a savings account. Seems like we're not getting enough but we're paying an awful lot to borrow money, (00:21:54) sir. I I don't know. I can't answer your question. There is a tremendous inequity there and it seems that through the years and it's not just the current Administration. It's been a lot of administrations have overlooked this inequity between the small investor and the and the large investor $2,500 $1,000 Etc. Today is not a lot of money, but at the same time it's a lot of money to some people and to answer your question as to whether they'll ever be any changes in these laws are not I don't know. There are many people that are advocating changes in it. They want to let Savings and Loans pay more Etc. But whether there be any changes or not, I can't answer that. (00:22:42) Okay, we see that there might be a liner to open if some of you have been calling and just getting a busy signal the In the Twin Cities 221 1550 and outside the metro area 865 to 9700. There is another caller standing by. Hello. You're on the air. Hello. I'm interested in these contracts or certificates that can be purchases purchased with the brokerage houses. I'm wondering number one. What are the risks involved are they is it really a pretty safe place to put, you know, five to $10,000 sounds like a good return and my other question is whether there are other forms of investment a person with that amount of money five to ten thousand might consider outside of real estate. (00:23:28) Okay, $10,000 is a lot different and opens up a lot more Vistas to you as an investor than does 5,000. So in your own mind, you're going to have to be specific about what you're talking about $10,000 investment. If you're willing to tie it up for six months at today's rate of 14.5 at set You can get that at most of your commercial banks on certificates of deposit. Now, let's go back to the person that has five thousand dollars to invest and they want a high degree of safety. You're not going to get a federal guarantee. When you go to your brokerage house that your investment is guaranteed. But let me tell you the types of Investments that this money is put into and perhaps it will ease your mind part of it goes into treasury obligations, which are guaranteed of course part of it will go into bank certificates of deposit just exactly like you would go out and buy except the people that we're dealing with by much larger quantities dollars amounts Etc. Also commercial paper a very very high quality, which is short-term debt created by your major corporations. And then there are many many banknotes several of the banks here in the Minneapolis area for instance. (00:24:48) Or (00:24:48) in our portfolios for these money markets. I do not consider it a high-risk investment by any stretch of the imagination. It's not guaranteed but it is not a high-risk investment. (00:24:59) How long do you need you to leave your money in these (00:25:01) funds if you put your money in today before 10 o'clock, it starts drawing interest to Mara on a daily basis and it's compounded monthly and let's say that the from for some unforeseen reason Bob you had to pull it out next week are the day after you'd begun to get interest on it. You can pull it out. I told you earlier you can use this exactly like a checking account if you want to there's no penalty for really no penalty for early withdrawal. I don't like (00:25:32) that phrase. All right, we have another caller with a question for you. Good afternoon. You're on the air I would like to Inquire whether the brokerage house money market funds are better than the large of money market funds the independent money market funds, you know, like Dreyfus or some of those. What's the advantages between the two (00:26:01) I would say probably and this is somewhat of a guess. In that your brokerage house your fees are going to be less. In other words, you're going to get ultimately a higher return and as I mentioned to a caller earlier, look at the bottom line have somebody tell you specifically what you're going to get and then make your decision based on that. (00:26:26) Okay, let's move on to someone else with a question. Hello. You're on the air. Yes. Good. Good afternoon, and I have some assets right now total little bit over $20,000 and they're sitting right now. I've got 10,000 of a tied up in a CD that we bought six months ago. I think I was a little bit over nine and I'm thinking about putting it in. I just heard you mention the rate was a little bit over 14 now, I can tie up closer to 15,000 of that for more than a year. What would be a good investment for that money to make a fast growth? (00:26:59) Okay. I hope they haven't cut you off want to ask you one question 15,000 you can tie up sir. Um, I would say that you would be prudent to probably look at more than one investment with that much money. Go ahead and take your ten thousand and put it in a 14 + % certificate of deposit for six-month period and then go to your broker and talk to him about some things where one thing it's you that you've got to realize in today's investment Market is that you not there are two things that most investors should be concerned with taxes and inflation. All right, we don't see any into either one of them, unfortunately and any to any degree so look for some Investments that have not only an inflation hedge built into them because the asset can appreciate in value, but also look at some Investments. With the kind of money that you have to invest that you're going to have some protection from taxation on the income and it's amazing. When you look around what you can find there to areas that come to my mind immediately. One of the major ones of course is real estate and income programs in real estate and income programs in oil and gas. They're both excellent. They we can any number brokerage firms can provide you with Investments of this type and the safety record the track record as you would say has been excellent in these Investments, so don't don't just rush out and put everything in one investment. (00:28:45) And you say you don't pay tax on these (00:28:47) particular a lot of the income from this is sheltered from tax some of it essentially a hundred percent for several years (00:28:53) and what rate of return could one (00:28:55) expect it varies and initially on your investment. You're going to be looking at perhaps a minimum of six and a half to And a half percent depending on the safety you want but when you pay no tax on that Bob that makes an awful lot of difference in the net re-return or in pocket cash that you're going to be able to keep and over a period of time. These Investments can grow where their yielding as much as fifteen twenty percent tax free. (00:29:26) All right, we have some more callers with questions. Let's take the next one. Hello. You're on the air. Hello. I was wondering whether or not there was a difference in the money market funds. We had wanted to invest in one with a large brokerage firm. And when we saw the list of of places that the firm had invested in on that fund we've spotted all these foreign Banks and that kind of scared us off. (00:29:52) Okay, you don't have to you don't have to invest with foreign Banks go to some more brokerage firms. That's all I can say, you'll find some that where you will not be tied into foreign (00:30:01) Banks. Okay, that was easily answered. Let's move on to the next caller. Hello. You're on the air where you calling from? First of all about Minneapolis. All right. Let's have a question from South Minneapolis. I'm wondering if I could have a brief explanation on the flaws in the stock market leading to the 1929 crash and possibly a background on who invest now as opposed to the average investors previous to the crash. (00:30:24) I think you ought to go to the library and on spend about three years reading but oh the main problem back in 29, I would say it was probably the lack of control at any level in the stock market the highly inflationary period that they had at that time plus the fact that people were allowed to buy stocks with very little money down if you wanted to buy a stock it cost a dollar you put on a diamond you are in business today. Our margin rates are the amount required down is is up to 50% Then and not too many years past. It's been quite a bit higher than that. So any number of things have changed the major change now, I can address the second part of your question more intelligently. I hope the major change that has under has occurred since 29 is there a mutt is there's a much broader base of investors. And even though you may not have one share of stock in your own possession. If you work for a company that has a pension profit sharing plan or if you're involved with an insurance company, then you're in the stock market and because all of these types of entities invest heavily in equities Equity being stock bonds being debt and so everyone is involved in it today in one way or another so I would say the Major difference is a much broader base and people with much fewer many fewer dollars are in the market today than we're in 29. (00:32:10) We'll take another caller in just a second. I wanted to ask you George what about mutual funds those were highly promoted several years ago. And now a lot of people just aren't finding that. They're doing such a job for (00:32:19) them. Well mutual funds did extremely well when the market was going up very rapidly. And so the converse is occurred during the reverse has occurred when the markets been going down very rapidly. I frankly believe that at some time in the future. There will be a time again to look seriously at mutual funds and it might not be too far off. (00:32:42) Okay. Another caller is standing by with the question. You're on the air. Yes. I recently invested about $15,000 into European government bonds, which I get 12 and a quarter percent in the guaranteed for about 20 years. How does that stand vis-à-vis American bonds? (00:33:01) I would say that probably is a good investment and is probably equal to what you could get in this country. If you really want shopping. I personally like to keep our money at home when we're making Investments That would be the only criticism of the choice that you made and I have the the safety of many foreign corporations is as good as ours are here in this country. I'd have to get into more detail with it. I don't know I'd rather not go on about that. (00:33:35) Okay, let's find another caller. Hello. You're on the air. Hello. You said to your precious metal party is over. Is that right? Yes, ma'am. Do you know dr. Franz dick? (00:33:48) I'm familiar with the (00:33:49) name 82 years old and he says that we should buy gold and sit on it just sit on it. (00:33:57) That's about all you can do with Goal ma'am, because you sure can't eat it and it is very difficult to do anything with it. Except hold it. The carrying charges today on Gold are so high that you're really going to have to have a fantastic appreciation and its price over the coming years just to afford to hold it carrying charges consists of interest on the money that you borrowed are used to buy it storage and the insurance on it. So I'm personally not an advocate of owning precious metals other than numismatic value coins at this time, and I have to admit that I am there many. Around the disagree with me. (00:34:45) Okay, I think we have somebody else or the question for you George Covington investment executive from blade Eastman and Dylan. Hello, you're on the air. Thank you. I would like your opinion on a deferred annuity as a long-term tax free investment. (00:34:59) Excellent. Excellent, depending on what you expect in the way of income over the future years, you can place money in these annuities and let your money accrue for a number of years at pretty good interest rates. So 9 plus or minus percent and pay no tax on it. And then when you do need the money you can begin to draw it out and since the money that goes into an annuity has been taxed prior to you placing it in the annuity. You can take all of that out prior to the time that you began to have any tax consequences on the prophets you've actually accrued on it. There are very good for certain. Types of people that are very unspectacular active in nature and this is an excellent area and you should talk to your broker about it, please. (00:35:55) What do you think? Somebody should do George puts a a hundred to a hundred and fifty dollars or some fixed amount each month that a person can save leave that money accumulated in a regular savings account and then do something with it or try to put it into something some sort of a fund that take small amounts of money like that each (00:36:11) month. Well, if you have the initial required investment of a thousand to twenty five hundred dollars or something of that nature find a brokerage firm that will handle it for you open an account is very simple takes five minutes. You do it over the phone. There's no hassle about opening a brokerage account. And if your convenient to a brokerage office just walk in they'll be any number of people are delighted to talk to you. But the person that lets say has $300 savings and they can afford to put in another hundred and fifty dollars a quarter, let it build up at a five and a half. Percent rate until such time as they can make a decision because things are going to change and the one thing an investor should be alert to is that there are changes in what was good two years ago. They might ought to take a look at today. (00:36:59) Okay. We still have time for a few more calls. Let's take the next one. Hello. You're on the air. Thank you. Yes, my wife and I are planning to sing our house and buying a condominium where we should make enough by selling our house put down 50 percent will be wise to do that or will be best to perhaps put less down and invest them without money. (00:37:18) I would say that at today's interest rates if you're going to do it in the very near future, sir. I'd say put down put down the 50% because you and effect are going to be saving enough money on just the interest that you're going to be paying on the balance the 50 percent mortgage that is going to really substantially be a very effective investment for you. (00:37:44) Let me ask you the other side of that question supposing somebody has a six seven eight percent mortgage and they can pay it off like $10,000 remaining in they can pay it off. Does that make sense or should they (00:37:54) continue? Well, I'd say go ahead and pay it out at those rates and just use it as a tax write-off against ordinary income. (00:38:05) All right. Did you have another job another? Alright, we have another caller standing by. Hello. Where are you calling from? I'm calling from Eden Prairie, Minnesota. All right, what's your question? Well, we've just inherited one half of a hundred and 60 Acre Farm in Western Minnesota along with enough cash to either buy it to buy it outright if we wish now, I guess the question that we'd ask is would you buy it or would you sell the other half and invest it and what would be your recommendation? (00:38:32) Okay, excuse me. Go ahead. (00:38:34) Well, I'm going to retire in about five years so that might have some bearing. (00:38:39) Gosh, that's a tough question a hundred and sixty eight Acre Farm. in good part of Minnesota has got to be worth an awful lot of money and I would say as I say, this is a tough question. You should talk to somebody about it and probably not over the radio, but My personal opinion since you are going to be retiring in five years is give some serious thought to selling it and taking that money. Which will probably be taxed to you at long-term capital gains rate, which at the current tax structure is a maximum of twenty a maximum of 28 cents out of every dollar taking the balance that you're going to have leftover and in with a portfolio that you could establish of the many types of Investments that you could make you could essentially set yourself up where you never did have to worry about anything again, sir. (00:39:44) An enviable position to be in I was curious. Let's take our next caller. Hello, you're on the air. My wife and I are both teachers for suburban school system here in Minneapolis. My question is our tax sheltered annuities the best way to build our retirement funds and particular income from taxes, or is there another kind of investment program that we could achieve the same result. (00:40:07) There are many types of investment programs that you can go into where your initial investment after the tax has been paid on it can generate tax free are substantially tax-free income to you. There are many many avenues that you could approach this through annuities are one of the excellent ones. I answered an earlier collar on this annuities are excellent in this area, but there's some other good ones and depending on the size a portfolio that you're going to create perhaps diversification into annuities real estate and oil and gas would be good for you. I would suggest that you Talk to your broker about it, please. (00:40:48) Let's move on to the next caller. Hello, you're on the air. Oh, yes. I didn't hear all that previous comment, but I was wondering if you could tell me where do I get the details for this certificate? I think you mentioned was offered at 14.5 or (00:40:58) something. Just go to any Commercial Bank (00:41:01) the bank's offer that that's correct. I thought for 10,000 more than some like 12 .65 is that just a Tino trait that's different or something (00:41:08) or you're talking about treasury bills versus certificates of deposit. You're talking about two different types of Investments there. The current rate on treasury bills is just slightly in excess of 12 and a half percent. But on the other hand your commercial Banks you can with as little as six months tie up of your money get Fourteen and a half (00:41:30) percent. All right. We have a few more minutes remaining. Let's take another caller. Hello. You're on the air. Good afternoon. I was wondering if it's been noticeable yet that the higher interest rates in the United States are attracting more foreign money. I'm particularly thinking of that funny thing called Euro dollars. Is that having any effect on the (00:41:53) there's a tremendous inflow of money into the United States, but it's not in the area of interest bearing type certificates. What what you're looking at is well, I shouldn't say that. That's what I just said is not completely true. There's tremendous faith in the American dollar for instance. The gentleman that administers 20 plus billion dollars in the country of Q8, which is about the third largest oil producer in the world puts all of his funds into American Securities Equity bonds and treasury obligations. So but in addition to that, we have a fantastic amount of interest in this country from Western Europe the Middle East etcetera in the areas of real estate rahl and develop buildings apartment houses Office Buildings Etc. Yes, there's a lot of foreign money coming into this country and it's about time it started coming back. I'd sure have it rather come back then us to have to pay it all out for oil. (00:42:59) It's about five minutes before one o'clock. Let's take one more caller, then we'll we'll have a brief summary of news before the end of midday. Hello. You're on the air. Yes, I would so I'm basically interested in equities. I've been following electronics and oils and the fellow that I've been dealing with feels that there's an awful lot of risk right now in electronics and I was wondering if you could comment on (00:43:26) it. We think this and I'm speaking for our firm here and not just myself. We think there's several areas that people should be looking at very very closely and be ready to act on in this is one of these areas is high technology. Another one is oil and gas and other one is renewable resources such as Forest Products Etc and I don't think there's a lot of downside risk in the electronics or the high technology Industries at this time. You might try to time it a little better and pick them up a little bit closer to the bottom but there's an old saying that bottom Pickers try to do it and they usually wind up on the bottom. So don't be too terribly cautious in making your (00:44:12) selections. Well George Covington. Thank you so much for coming in and sharing your investment wisdom and knowledge with us today. George Covington is an investment executive for Blythe Eastman Dillon Company in Minneapolis. A lot of questions left unanswered and perhaps we will have an opportunity to invite George back another time.