tag:blogger.com,1999:blog-2986124651030959736.post7781438139730622447..comments2024-03-28T09:42:38.695-05:00Comments on Stocks, Bonds & Politics: GDP-Profit Margins/GMAC Bond Redemptions/SUNCOR/CISCO & Jobs/Added 50 BDGE at $20.76/Bought 50 EAA at $23.6-Roth IRA/Added 100 NPBC at $10.68/Added 100 CSQ at $10.18/Bought Back 100 EWM at $15.28TENNINDEPENDENThttp://www.blogger.com/profile/17444227958539559639noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-2986124651030959736.post-28223586258190939082013-08-20T18:53:57.774-05:002013-08-20T18:53:57.774-05:00I still own a lot of stocks and stock funds. I am...I still own a lot of stocks and stock funds. I am mainly liquidating some stock funds, mostly CEFs, that have been disappointments as a means to temporarily lower my stock allocation. I am hoping for better prices after a 10%+ correction. <br /><br />Since 1982, I have gone into a liquidation mode only once, and that was in 1999. <br /><br />Since I own a large number of positions, I always have some positions that need to be jettisoned for one reason or another anyway. <br /><br />I am not selling core individual stock or stock fund positions. I am selling some positions at profits as a means to reduce my stock allocation and to build up my cash allocation for later stock purchases. <br /><br />I will use some of the proceeds to buy an individual stock where I have a comfort level about the current valuation and decent dividend support. It is hard to find that comfort level at current prices which is a signal to me to lighten up some. <br /><br />Today, I bought 100 shares of Pfizer which I will discuss in the next post. I have stayed away for years due to patent expiration issues, particularly on Lipitor. I became somewhat comfortable after reviewing PFE's new FDA approved drugs and the drug pipeline, which allayed my concerns only sufficiently to justify a small purchase of 100 shares. The dividend is over 3% and the forward P/E on estimated 2014 earnings is 12.4. There is also a lack of enthusiasm for the shares which is fine with me, since I do not have to pay a high multiple for my entry purchase. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-39488686977462423792013-08-19T23:19:28.859-05:002013-08-19T23:19:28.859-05:00Thanks South!
Wow, a logical way to decide if it&...Thanks South!<br /><br />Wow, a logical way to decide if it's time to sell:<br />"<br /> value investor who is currently having difficulty finding stocks to buy. When I reach that point, I will generally become a net seller of stocks, "<br /><br />That makes so much sense.<br /><br />Great the details. You've answered my question very well. <br /><br />I've seen P/E evaluated as too high, and just low enough... in the end, the idea that stocks seem expensive to buy, seems a solid way to get a gut read.<br /><br />Happy investing!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-16952483284028575232013-08-18T17:53:30.861-05:002013-08-18T17:53:30.861-05:00Curls: I am a value investor who is currently havi...Curls: I am a value investor who is currently having difficulty finding stocks to buy. When I reach that point, I will generally become a net seller of stocks, which is the case now. <br /><br /> The trailing twelve months P/E for the S & P 500 is high at around 18.13, and the Shiller P/E is over 20. The recent earnings reports have been disappointing particularly the one from WMT discussed in this post. <br /><br />The S & P 500 was up over 55% earlier this month, since closing near 1100 on 10/3/11. I mentioned in the prior post that this move was too far, too fast given the economic fundamentals. <br /><br />A continued rise without more confirming economic data could precipitate an even larger decline than 10% to 20%. <br /><br />The S & P 500 went down almost 20% between May-August 2011. I would view a similar downdraft positively now, followed by several weeks of consolidation. It is better to let the air out of the ballon slowly rather than to continue blowing it up until it explodes and crashes into itself. <br /><br />Possibly and hopefully, the market has started a correction. The S & P 500 is down about 3.21% from its August closing high of 1709.67 printed on 8/2/13. <br /><br />The market has started to anticipate the end of QE. Last week, interest rates rose for intermediate and longer term bonds even though inflation expectations came down. <br /><br />The 10 year treasury has now risen about 69% in yield since 5/2/13, when the yield was 1.66%. I expect it to continue rising during the rate normalization process which could place short term downward pressure on stocks, similar to what happened last week. <br /><br />Nothing is for certain however. I view my bond market views to have a much higher probability factor than my prediction about a stock market correction. <br /><br />All that I can say for sure is that I will continue to be a net seller of stocks in the event the market continues its upward trajectory during August-September.<br /><br /> I am just not comfortable increasing my stock exposure at current prices, though I will buy some securities in small amounts that are not overpriced in my opinion. <br /><br /> I may also, for example, buy back some security, such as 100 shares of EWM discussed in the current post, where I sold the position at a higher price earlier in the year. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-41721391158394901272013-08-18T14:18:47.230-05:002013-08-18T14:18:47.230-05:00Hi South!
You had been praying for a correction. ...Hi South!<br /><br />You had been praying for a correction. You've upped it to 10%+ expected. I'm missing in the article -- that's fueling that idea? Especially the + part.<br /><br />Any sense of time frame for it?<br /><br />Thank!<br />CurlsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-55031478347942168732013-08-18T10:06:56.941-05:002013-08-18T10:06:56.941-05:00For the next two years, I would not anticipate any...For the next two years, I would not anticipate any significant value change for corporate bonds maturing within four years due to rising intermediate and long term rates. Any material change would be sourced from credit risk changes. The shorter maturities will be primarily influenced by a continuation of ZIRP which will keep the short term rates anchored near zero. ZIRP is likely to continue for two more years. <br /><br />Since May 2, 2013, the 10 year treasury has risen from 1.66% to 2.84%, while the 1 year treasury is still stuck at .13%. The 2 year treasury closed last Friday at .36%, up from .2% as of 5/2/13. <br /><br />At least with individual bonds, the investor has the option to hold until maturity. The normalization process will hit intermediate and long term bonds. It is those maturities that have been manipulated to abnormally low levels through QE rather than ZIRP.<br /> <br />You can calculate the approximate impact by multiplying the percentage rise in rates by a bond's duration which is not the same as the time to maturity. <br /><br /> You can calculate the duration using a calculator available at SIFMA:<br /><br />http://tipscalc.investinginbonds.com/tipscalcform.aspxTENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-28290061670427256122013-08-18T00:30:45.018-05:002013-08-18T00:30:45.018-05:00Sorry to see GMAC gone, old sentimental position o...Sorry to see GMAC gone, old sentimental position of mine, it was kind of reassuring to be predictably paid fixed amount, month in, month out, especially at the effective clip of 11%+ since I bought it (14 of them however hesitantly) in the memorable 2008 at something like 67c on the dollar. Not bad for the first dip in the bond market for a newbie like me. Still sitting on a six figure bond portfolio that pays me, on par basis alone, close to 10% but wondering what the renormalization will do to it! Oregonnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-39156310295035238732013-08-17T10:47:41.286-05:002013-08-17T10:47:41.286-05:00Cathie: The price last Friday for AED was $23.22, ...Cathie: The price last Friday for AED was $23.22, down 60 cents for the day. I noted in my prior comment the price for AEH which was down .81 to close at $23.1. Both are functionally equivalent to one another. <br /><br /> TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-28964830277206642052013-08-17T10:37:44.447-05:002013-08-17T10:37:44.447-05:00Cathie: I classify both the Aegon and ING hybrids ...Cathie: I classify both the Aegon and ING hybrids as "equity preferred" stocks since they pay qualified dividends for a U.S. taxpayer. Those securities are actually junior bonds. Unlike other bonds, they do not have a maturity date and that makes them very sensitive to rising rates.<br /><br /> If AED was going to mature at par value in three years, it would be selling at over its $25 par value now, rather than skidding down 81 cents last Friday to close at $23.1. <br /><br />AEGON has the option to redeem, but does not have the obligation to ever do so. Aegon has had the right to redeem since 2010 and has not done so. <br /><br />The right to redeem may restrain the downside price action until larger investors determine that AEG is simply not going to finance this security before rates rise to a level that makes it uneconomical. This may already be happening now. A 6.5% rate for a perpetual security is not that bad long term, particularly when it can be included in equity capital while the company deducts the interest payments like a U.S. trust preferred (TP) security in that respect. (note: I have not kept track of whether there has been any changes in European regulations that would alter the use of those hybrids as part of equity capital for regulatory purposes, similar to the Dodd-Frank law in the U.S. for TPs)<br /><br /> I would anticipate further downside pressure on the perpetual European hybrids as rates rise. <br /><br />We had discussions about these securities during the Dark Period when the prices of both the AEGON and ING hybrids hit bottom in the low single digits. For the AEGON hybrids, I picked up AEH at $4.63 back in March 2009 and bought AEB as low as $5.5. I sold AEH at $23.09 back in June 2011. <br /><br />I do not currently own any ING and AEG hybrids. I am monitoring their prices almost daily and may start nibbling again at lower prices. I am more inclined to just wait and see, preferring to nibble when the current yields exceed 8% and we are closer to normalized interest rates than now. <br /><br />Aegon is in much better financial condition now. I am not currently concerned about credit risks. The downdraft in prices during the Near Depression was due to credit risk concerns. <br /><br />I own Aegon common stock as part of my Flyer's Basket strategy and I am reinvesting the dividend. I gave that stock a promotion from my Lottery Ticket Basket to the Flyer's Basket when I added 70 shares at $5.28, discussed in a 10/5/12 post.<br /><br />As for your AED, I would anticipate more volatile price action, with a downside bias, until interest rates normalize at higher levels than now. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-54818827685208318682013-08-17T10:00:37.674-05:002013-08-17T10:00:37.674-05:00Regarding the equity preferreds, I still own an Ae...Regarding the equity preferreds, I still own an Aegon hybrid issue (AED) bought before and during the Dark Period. I'm still far from being in the red on those shares, but took a 2.5% hit yesterday, wondered what happened. Someone dumped a large lot around 1:30 pm....I whimsically picture some "market maker" getting back from lunch and realizing it's time to unload 47,000 shares. The yield at my cost is almost 8% and fortunately I don't anticipate needing to cash out any time in the next few years...knock wood! All this is just to confirm your observation that these are subject to volatility, but I have never regretted holding them. Anything that survived the 2008-2009 meltdown deserves respect in my book. Aegon never missed a payment.Anonymousnoreply@blogger.com