Observations and Sample of Recent Trades (CCNE, GLW, EGO, CGL:CA, XGD:CA): 2/7/17

While the two major parties in the U.K. certainly have many differences, they are united in calling the Orange King a racist and a sexist who is not welcomed to spew his "poisonous" words before the British Parliament. Almost two million Brits have signed an online petition requesting that the P.M. refuse an official visit from our President. President Trump Unlikely to Address Britain's Parliament - NBC News That is a unique accomplishment for a U.S. President to achieve. 

Prevent Donald Trump from making a State Visit to the United Kingdom. - Petitions

Donald is making and will continue to make all kinds of firsts for a U.S. President. 

The P.M. will give Donald what he wants in pomp and ceremony because she has no choice. The U.K. has to have a bilateral trade deal with the U.S. without undue delay. Trump would throw a temper tantrum otherwise. 

++++++

There used to be way back in time a significant number of republicans who supported measures to protect the environment. In fact, the EPA was created in 1970 under the Nixon administration. Why Nixon Created the EPA - The Atlantic The republicans who currently support the EPA and environmental protection are barely a faint remnant of the distant past.

The EPA is going to be emasculated under Trump, who in yet another delusional rant called climate change a hoax created by China to gain a manufacturing advantage over the U.S.

Is this Trump tweet delusional?

"The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive."  PolitiFact

That statement is no less delusional than Trump's statements that he has won a number of environmental awards and is an environmentalist. Trump’s unsupported claim he has ‘received awards on the environment’ - The Washington Post

The new EPA administrator, Scott Pruitt, is an advocate for those who cause environmental damage, though there is some debate about whether he will cause the EPA to slowly die from a thousand cuts or will just bludgeon it to death over the next four years. Trump has said many times in the past that he wants to abolish the 'Department of Environment Protection', and that appointment is an excellent first step in achieving that objective.

Trump names Scott Pruitt, Oklahoma attorney general suing EPA on climate change, to head the EPA - The Washington Post

Putting Scott Pruitt in charge of the EPA risks irreversible damage to the planet - LA Times

President Trump's EPA Administrator Nominee Scott Pruitt Has a Rep for Politicizing Science | WIRED

Trump's EPA pick took hands-off approach to environmental crisis that shook Oklahoma - CNNPolitics.com

Will Pruitt Bring On Earthquakes as He Did in Oklahoma? Newsweek

What Scott Pruitt Did About Oklahoma's Earthquake Epidemic - The Atlantic

Scott Pruitt, Trump's EPA Pick, Has Challenged Mercury and Ozone Pollution Rules - The Atlantic

It will take some time for Trump and Pruitt to undo EPA regulations to permit significantly more pollution. Trump has most likely been told that he can not change EPA rules with an Executive Order. There has to be a rule-making process that overturns existing rules. Give it a year to two years before rules favored by polluters are in place. Before that is done, the EPA's budget will be slashed to starve it too death.  

There can be no good faith debate now on the GOP's direction on environmental protection.

Anyone who is not in favor of turning back the clock to the 19th century is a LIB ER RAL, and that word needs to be said as if you are spitting out spoiled milk with a scowl of horror on your face.

++++++++

Another first is that the Vice President had to break a 50-50 tie vote to secure the confirmation of a Cabinet nominee. Well, at least schools can have guns now to protect against grizzly bear invasions. Betsy DeVos confirmed as Trump's education secretary; vice president casts historic tie-breaking vote - CNNPolitics.com; Betsy DeVos Cites Grizzly Bears During Guns-in-Schools Debate - NBC News

Ms. Devos seems like a pleasant and mostly clueless lady to me. She has certainly paid enough over the years to purchase a cabinet seat. $200 Million or thereabouts to the GOP At least she admitted in the past that political contributions were made to acquire something in return. Time.com

I am not sure why the GOP wanted someone as Education Secretary who is not in favor of public schools. I thought they were for public education, but I guess that has changed now.

Betsy DeVos loves charter schools and vouchers -Business Insider

Maybe the republicans need to look at the tuition costs for private schools. I graduated from a private school many full moons ago when the tuition was $650 for a year. That sounds like a reasonable sum for taxpayers to pay for a voucher to attend private school now, but it may only cover the first two weeks or so. I looked it up ($23,929 for the 2016-2017 year). I did not calculate the number of days that $650 would cover now, just eyeballed it. And, that is for Nashville, TN.

Maybe I am just getting old and do not understand much anymore.

The GOP has something up their craw about grizzly bears.

When the republicans took control over the Tennessee legislature, which has been financially beneficial to me along with other well-off residents, the grizzly bear argument was an important reason why a law was passed permitting guns in state parks.

Once as I recall the story, there was a grizzly bear who scared a little girl before departing to parts unknown.

If the citizens had been packing that day, they could have fired their pistols at the bear, mostly errant shots to be sure. Possibly one or two would hit the bear, causing it to become really, really angry and then killing the little girl. It all makes sense to me now after listening to Ms. Devos' testimony.

I have no problems allowing permit holders to carry guns in state parks (though I did raise a question about the GOP allowing guns in bars). I feel sacrilegious for voicing that reservation about guns in bars.

Personally, if a grizzly charged me as I was fetching the morning paper, I would use pepper spray as the better alternative, particularly since I do not own a gun and have never allowed one in my house. Come to think of it, I do not have pepper spray either. I will put that on my shopping list. Pepper spray might work better on those Muslims too. I see everything clearly now. It all comes down to Muslims and bears.

For indoor personal protection, I have instead a nice Louisville Slugger bat autographed by Frank Robinson which I would hate to use against an uninvited person (probably one of those Muslims terrorists flooding the country now due to that so-called Judge's order.) I will use the Louisville Slugger bat on the bear and the pepper spray on the Muslim. Maybe I got that backwards. I could get really confused when attacked by the bear and the Muslim at the same time.  

The government does not want the 9th Circuit to look at evidence showing Trump's true motive which goes without saying. Trump’s loose talk about Muslims gets weaponized in court against travel ban - The Washington Post Yes, he should have been given a Miranda type warning before shooting his big mouth off about banning Muslims and allowing Christians to immigrate.

Now, if Trump had said the same thing about Jews as he did about Muslims, would the government argue before the Ninth Circuit that his intent in issuing an order impacting Jewish migration in favor of Muslims was irrelevant. Would the U.S. government make that argument?

As previously noted, immigration issues are one area where a President has wide latitude to abuse the powers granted to him. I expect widespread abuses of Presidential power over the next four years, far greater than anything committed by Nixon.  Even John Yoo, who authored the infamous  'Torture Memos', has argued that Trump has already gone too far. The President can have people tortured but can not issue an Executive Order to build the Mexican wall. Executive Power Run Amok - NYTimes.com

Note that Yoo also disagrees with the consensus view that Trump can terminate NAFTA without congressional authorization. I have argued the same here. The issue is not decided by a failure to reference that Congressional power in Article 2005 of the NAFTA Treaty. Only Congress can alter a tariff, tax or custom duties in Article 1, Section 8 of the Constitution: Article I: The Legislative Branch — The Enumerated Powers (Section 8)

+++++++++++++

Bond Baskets: 

In both my short and intermediate term bond baskets, I am buying small 1 and 2 bond lots. In the event these bonds significantly decline due to an interest rate rise, I will be purchasing additional lots in selected issues. This is one of many ways that I am attempting to mitigate interest rate risk.


One Fed governor said today that a hike was on the table for the March meeting. Philadelphia Fed’s Harker Says March Is on the Table for a Hike - Bloomberg

I seriously doubt that will happen.

I do anticipate a .25% on or before the FED's July meeting.

Consequently, I have been increasing the short term basket maturities in the April-July time period.

The market is currently anticipating at least one .25% hike on or before the 7/26/17 meeting. Countdown to FOMC - CME Group

Closing Prices 2/7/17: (short to longest durations)

SHY $84.53 -0.02 -0.02% : iShares 1-3 Year Treasury Bond ETF

IEF $105.50 +0.19 +0.18% : iShares 7-10 Year Treasury Bond ETF

TLT +120.60 +0.88 0.74% : iShares 20+ Year Treasury Bond ETF

ZROZ $110.36 +$1.17 +1.07% : PIMCO 25 Year Zero Coupon U.S. Treasury ETF 

1. Short Term Bond/CD Ladder  Basket Strategy 

A. Bought 1 WFC 2.15% Senior Unsecured Maturing 1/30/20

Debt Rating Summary — Investor Relations — Wells Fargo

The 1/30/20 maturity date would now be near my transition date from short term to intermediate term which is three years from the current date.

FINRA Bond Detail: Bond Detail

YTM at Total Cost (99.854) = 2.2%

There is a necessary and inherent trade off when buying a 2.15% bond maturing in 2020.

I am trading more current income compared to the Fidelity Government MM fund in exchange for the probable future loss of income that will arise by waiting and buying the same or similar bond at a lower price and a higher yield.

I call that type of interest rate risk as the risk of lost opportunity. I am not currently concerned about being paid the $1K principal amount at maturity, nor do I have any rational reason to predict that this lack of concern will change prior to maturity.

I will lose the opportunity to use the money tied up in this bond to buy the same or similar bond at a higher yield.

However, I am not 100% certain that I will lose that opportunity in that rates may remain near current levels or may even decline based on unanticipated future events.

I am 100% certain that I would lose about 2% now-per annum-based on the current yield of Fidelity's Government MM fund that was the source of funds use to buy this bond and most of the other bonds/CDs discussed in this blog. And that will continue for awhile at or near the same level. Further, I am not likely to get up to a 2.2% yield from that MM fund prior to 2019.

Further, any discount to par value caused by a rise in short term interest rates will start to narrow as this bond moves closer to maturity. I may have an opportunity within a year of maturity of selling at a slight profit and then reinvesting the proceeds into a higher yielding WFC bond maturing in 2024-2025.

B. Bought 1 UST .75% Maturing 7/31/18: 

C. Added 1 UST .5% Maturing 7/31/17 

D. Bought 1 UST .75% Maturing 3/31/18

I own another UST maturing on the same day with a .875% coupon. 

2. Stocks, Bonds & Politics: Intermediate Term Bond Ladder Basket Strategy 

Due to a number of recent intermediate bond buys, which have not yet been mentioned, I have moved from a significant underweight to just an underweight position. 

Return of my money is more important than the return on my money. 

A. Bought 1 Anheuser Busch 2.625% Senior Unsecured Maturing on 1/17/23: 

Finra Page: Bond Detail (prospectus linked at Finra page)

Moody's Rating	A3 (05/25/2016)
Standard & Poor's Rating	A- (11/13/2015)
Fitch Rating	BBB (11/09/2016)

Fitch Downgrades BUD Senior Unsecured to BBB from BBB+ (11/16) 

Moody's assigns A3 to bonds; outlook stable (May 2016) 

YTM at Total Cost (98.5) = 2.9%

B. Bought 1 Anheuser Busch 2.5% Senior Unsecured Maturing on 7/15/22

FINRA Bond Page:  Bond Detail (prospectus linked at Finra page)

YTM at Total Cost (98.618) = 2.775%

C. Bought 2 Comcast 2.85% Senior Unsecured Bonds Maturing on 1/15/23

Comcast: Bond Detail (prospectus linked at Finra page)

Moody's Rating	A3 (07/14/2015)
Standard & Poor's Rating	A- (02/14/2013)
Fitch Rating	A- (04/21/2016)

YTM at Total Cost (99.766) = 2.893% 

Fitch Report July 2016 

3. Continued Paring Stock Allocation:  

A. Eliminated Remaining CCNE:  SOLD 50 CCNE at $23.76

Quote: CNB Financial (CCNE)

Stocks, Bonds & Politics: REGIONAL BANK BASKET STRATEGY GATEWAY POST (round-trip trade snapshots at the end)

This lot was bought at $11.06: Item # 2 Bought 50 CCNE at $11.06 (6/30/2010 Post)

I read some interesting commentary in that June 30, 2010 post about Jim Cramer. The S & P closed that day at 1030.71.

In Item # 3 titled "The Malaise of the Hamptons", I discuss a Cramer rant that the market was not cheap because the Democrats were trying to destroy the very fabric of U.S. Earnings were then "under attack" or may even be "wiped out by meddling, meddling from an activist anti-business federal government".  This is typical hyperbole and group think, formulated and reinforced by a person's social group, that distorts reality beyond recognition.

Profit Snapshot: +$618.1

2017 CCNE 50 Shares +$618.1

I am selecting individual stock positions to sell based on valuation issues, recent price spike up, and/or disappointing earnings reports. CCNE fit all criteria. 

Total CCNE Trading Gains Since 2009: $926.94

Since I started this basket in the 2009 Spring, I have a net realized gain of $33,165.42. The trades are small lots. My dividend total was $12,659.11 through 12/31/16 and starting on 1/1/2010.  Stocks, Bonds & Politics: REGIONAL BANK BASKET STRATEGY GATEWAY POST

B. Eliminated Corning: Sold 103 at $26.45 (commission free trade)

Profit Snapshot: +$568.02

In a taxable account, an eighteen month or so holding period for this stock is normal for me. 

One prior lot was bought 8/31/12 and sold 1/30/14:  

2014 GLW 50 Shares +$252.23

That odd lot was bought at $11.98:  Item # 1 Bought 50 GLW at $11.98 (9/5/12 Post)

A lot sold last year in the Schwab taxable account had a similar holding period: 

2016 GLW 102+ Shares +$215.3

The IRA holding period may be a month to about a year: 

2016 GLW 51+ Shares +$84.39

Corning's stock has been erratic over the years and was one of the tech stocks that went into La La Land in the late 1990s. On a split adjusted basis, the share price went over $109 in 2000, up from around $8 in mid-1998.  GLW

Morningstar rates the stock with 3 stars and has a fair value estimate of $26 and a consider to buy at $15.6. The average target price among analysts is currently at $26.47.

"Core" E.P.S. was $1.55 in 2018. At $26.43, the P/E based on TTM non-GAAP earnings is 17.05.

The 2016 GAAP E.P.S. was reported at $1.47 and included positive and negative items (constant currency adjustments for the yen and won, Taiwan power outage, acquisition related charges, pension mark-to-market, asset disposals, etc.)

Corning Incorporated Completes Strategic Realignment of Interest in Dow Corning Corporation

This disposition was in part due to my long history with Corning.

The current 1 year chart shows upward momentum

4. Continued Increasing GOLD Position as a Hedge Against the Modern Day Republican Party 

Destruction of the existing world order and trade relationships, created by sane, competent and responsible officials from both parties, will likely lead to chaos, less economic growth and greater protectionism.  

The Economist magazine captured this risk on a recent cover. An uncomplimentary drawing of an overweight Trump, wearing his Make America Great hat made in Vietnam, is shown with a scowl on his face as he throws a molotov cocktail. 

The Stock Jocks have bought into Trump's world vision, but I have my doubts.  

When we look back to 2017 from 2020, we will at least have the benefit of hindsight and a lot of data to measure the forecasts being made now and reality, a much different animal than present predictions about the future.  

Canadian Dollar Purchases  

A. Bought 100 CGL:CA at C$10.61 (C$1 commission)

Quote: iShares Gold Bullion ETF Hedged Fund Price Today (CGL:TOR) 

CGL is a gold bullion ETF that trades on the Toronto exchange and is hedged to the Canadian Dollar. 

There is also a Canadian ETF bullion ETF that is not hedged against the Canadian dollar.  iShares Gold Bullion ETF Non-Hedged (CGL.C:TOR)

I did not try to think which one would be better when both the Canadian Dollar is rising against the USD and the price of gold is moving up as well. I let the market tell me on a day when both the CAD/USD and gold rose. The gold bullion ETF hedged to the Canadian dollar performed better. Since the Canadian dollar has been falling against the dollar for most of the past two years, the unhedged bullion ETF has done much better than the hedged version. 

 Sponsor's Website:

iShares Gold Bullion ETF | CGL | COMMON HEDGED TO THE CAD (expense ratio=.5%)
iShares Gold Bullion ETF | CGL.C | COMMON Not Hedged to the CAD (expense ratio=.5%)

CGL Annual Average Total Return for 3 Years Though 1/31/17 -1.75%
CGL.C Annual Average Total Return for 3 Years Through 1/31/17  +3.7%

So this is a bet that both the CAD and gold will rise at the same time.

I also have been buying SPDR Gold Shares (GLD), which has a .4% expense ratio.

I will trade the bullion ETFs and will use them primarily as short term hedges against market turbulence and chaos. A recent example of such use was the purchase of GLD, PPLT and SLV shortly before the Brexit vote. I then sold those positions into the ensuing rally.

I play the long secular bull and bear cycles through bullion ownership. I last sold bullion in September 2011, when gold went over $1900 per ounce, and again in January 2012. I have not bought or sold any bullion since that time.

Item # 1 The Road to Political Power: Lying Works/Recent Gold and Silver Sales (9/15/2011 Post)

Item # 8 Snapshots of Coin Sales In January 2012

B. Bought 100 XGD:CA at C$13.28:

I may sell this one quickly with another pop up. 

Quote iShares S&P/TSX Global Gold Index ETF  (XGD:TOR)

Closing Price 2/7: XGD.TO C$14.27 +$0.01 +0.07%

XGD owns gold stocks and trades on the Toronto exchange;

Top Ten Holdings:

Expense Ratio = .61%

This ETF is similar Gold Miners Equity ETF (GDX) that is traded on the NYSE which has a .52% expense ratio.

GDX Top Ten Holdings:

I bought the Canadian ETF since I currently have an excess of CADs.

The purchase of a gold mining stock or ETF is viewed as a short term trade. The trade starts when I start to worry a lot about chaos.

Trump has the potential for causing more chaos than any prior U.S. President.

The ownership of bullion relates more to their role as alternatives to fiat currencies, particularly in my case the USD. What is Gold's "Fair Value"?

C. Example of USD Gold Mining Stock Purchase (Used Commission free trade):

Quote:  Eldorado Gold Corp. (EGO)

Closing Price 2/7/17: EGO $3.77 -0.02 -0.53%

This stock is a Lottery Ticket selection in the gold mining sector.

A ten year chart looks awful: EGO Stock Chart The shares were trading near $4 late in 2008 and then started to move up, peaking around $22 in 2011. That peak coincided with the peak price in gold. The shares thereafter started to decline in a series of lower lows before bottoming out near $2 early in 2016. The chart highlights that gold mining stocks are not buy and forget investments or long term holds. They are IMO only trading vehicles.  

EGO is currently rated 4 stars by Morningstar with a fair value estimate of $4.5 and a consider to sell price at $7.88. No one knows how much this stock will move when and if gold spikes up in price or starts a long term trend up.  I would not hazard a guess when conditions are ripe for gold mining stocks. 

In 2016, EGO sold its stakes in mines located in China.  Reuters Those dispositions resulted in EGO becoming a much smaller gold producer. A lot depends now on opening Skouries mine in Greece which has faced numerous delays caused by Greece's government after the Syriza party took power in 2015. I would classify political risk as high with this company.

EGO has other mines in Greece: Stratoni (Greece)(silver, lead, zinc) and Olympias (Greece)

Eldorado Gold Corporation - Home

Eldorado Gold: What To Do With The Stock In 2017-Seeking Alpha
Eldorado Gold Plans to Increase Production by 60% - GuruFocus.com

January 2017 Investor Presentation

EGO 2016 3rd Quarter Results 
  

Eldorado Announces Preliminary 2016 Operational Results and 2017 Guidance ("The Company's balance sheet remains one of the strongest in its peer group, with approximately $880 million in cash, cash equivalents and term deposits and $250 million in undrawn credit lines. Sustaining capital for gold mining operations in 2017 is estimated to be approximately $100 million. Planned expenditures for mining development total $315 million.") 

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members