Tuesday, December 30, 2008


I had a comment just come into the email system here at HQ about my recent sale of 100 shares of the Phoenix bond (PFX) for about a $100 profit with the quarterly interest payment on a $600 investment in 3 weeks or so. DWS GLOBAL COMMODITIES (GCS)/ U.S. PHYSICAL THERAPY (USPH) BUY/TCs Ex Interest/PFX SOLD People who know me will often ask a question, which is often a thinly disguised criticism, and they know that I will just shrug my shoulders.  The question had to do with why I am bothering with these small profits and how do I plan to get ahead clipping $100 profits here and there.   I know that virtually all investment decisions can be dissected, criticized particularly with hindsight, and questioned.  What I do is just right for me and it may never make any sense to anyone else.  

This is my defense on the senior bond sale. The transaction was in an IRA so it has no tax significance.  I am in a bunt for a single mode. The sale occurred on the ex interest day when the price rose more than the amount of interest adjustment, so that I was able to capture both the interest and the profit at the same time. Part of the reason for exiting the position is its speculative nature and the account where I was engaged in the speculation.    When Phoenix (PNX) reports its results for the 4th quarter, I will read it.  I still have a position in the senior bond in a taxable account where  a loss in a security can at least reduce the amount of taxes paid which is not an option in an IRA account of course.  In other words, a loss in a taxable account still has value.   If the bond continues to fall, I reserve the right to buy it again using part of the proceeds from my last sale. The price would have to fall below 5 to tempt me before the earnings report is released.  If the earnings are okay, I might be tempted to re-enter the position at a price lower than my last purchase at $6.06 adjusted for the low online commissions.  I am flexible on a possible buy of this security at a lower price. This kind of maneuvering would not have been possible in the old days, even with a discount broker, when the trades still had to be conducted over the phone, using the keypad of a touch tone phone, with the commissions running $50 a trade.  Those $50 commission trades were still an improvement from my first stock buy back in the 1960s that was done through J.C. Bradford. 

That reminds me.  Nashville has always been a dynamic entrepreneurial city, sort of a city state, that can prosper notwithstanding what is happening elsewhere.  The economy will be impacted by a severe recession but generally jobs are plentiful, the economy is diverse, both labor, housing and land are still relatively cheap, interstates run into the city from every direction making Nashville a sort of transportation hub where a trucker can reach a good chunk of the U.S. population within a day's drive, and it is the home of the soon to be Super Bowl champions.  I was thinking about this point this afternoon when I bought Corrections, a private owner and manager of prisons founded and based in Nashville.  My first stock buy was Hospital Corporation of America back in the 1960s with money saved from mowing lawns and working at $2 bucks an hour during the summer, soon after HCA's original IPO when it owned a small hospital near Centennial Park called Parkview.  It was the original private owner of hospitals, which ultimately grew into the largest private owner of hospitals in a few years, and was taken private a couple of times in leveraged buy outs.  

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