Saturday, June 17, 2017

Observations and Sample of Recent Trades (AZN, BSCL, CCP, CGL:CA, LXP, VOD)

Trump: Digging His Own Obstruction of Justice Hole and Then Jumping in Head First

Trump is now trying to demonize the Special Prosecutor as being a full fledged member of a Deep State conspiracy that is using false information to harm Donald. 

I would note that the Russian collusion investigation is still an ongoing matter. 

Trump falsely  implies in the first tweet that he and his associates have been exonerated by the investigation. 

The second tweet conjures up another Trump conspiracy theory that everyone is out to get him including the Special Counsel Mueller, and all of them are "very bad and conflicted people".

The third tweet takes aim at the Deputy Attorney General Rosenstein who recommended firing Comey due to his handling of the Clinton email matter last year.

Trump neglects to mention his prior statement that Rosenstein's recommendation was not the basis for his decision. The White House story on Comey’s firing is falling apart.

Why Did Trump Fire Comey? - 

If Rosenstein knew that Trump had already made a decision to fire Comey before he wrote the letter recommending dismissal, and consequently knew that he was providing a fake reason to justify Comey's dismissal, then he will need to recuse himself IMO. Deputy Attorney General Rod Rosenstein acknowledges he may need to recuse himself from Russia probe - ABC News 

If Rosenstein recuses himself from matters relating to the Russian investigation, then the third ranking Justice Department official, the recently confirmed Associate Attorney General Rachel Brand, will be in charge. 

Ms. Brand has no experience in criminal matters and is potentially more of a partisan republican. Time will tell whether or not she will dance to Donald's tune. Who Is Rachel Brand?: New York Magazine She is active in the right wing Federalist Society whose members would like to turn back the judicial clock by at least a century.Ideas with Consequences: The Federalist Society and the Conservative Counterrevolution (Studies in Postwar American Political Development) (9780199385522): Amanda Hollis-Brusky The Federalist Society is picking Trump's judicial nominees. 
The Conservative Pipeline to the Supreme Court | The New Yorker

The obstruction of justice claim at the moment primarily deals with Trump's effort to impede the criminal investigation of Flynn on matters that are either tangentially related to Russia's meddling in the U.S. elections or totally unrelated. 

Those matters include Flynn's failure to register as a lobbyist and lying to an FBI agent who asked him about his conversations with the Russian Ambassador. A grand jury has been convened in the Eastern District of Virginia. CNN exclusive: Grand jury subpoenas issued in FBI's Russia investigation - CNN The D.A. for that federal district, Dana Boente, also heads up the Justice Department's National Security Division. The lead prosecutor is Brandon L. Van Grack, viewed as a leading Justice Department prosecutor for national security and financial crimes. 

Trump could eventually be exonerated on the Russian collusion matter,  but still be guilty of an attempt to obstruct justice in the ongoing Flynn criminal investigation. Why is he so interested in taking the heat off Flynn? It is not a requirement for that felony that Trump's attempt succeed or for the investigation to result in a charge against Flynn. 

The reality is that Trump has only himself to blame for the obstruction of justice investigation. Since he lacks introspection, and would never blame himself for the natural repercussions flowing from his own conduct, he hatches bizarre conspiracy theories and demonizes others for what he has done to himself. 

What are the facts? 

Trump fired Comey who is leading the investigation into Flynn, Russia's interference in the election to support Trump, and possible collusion between members of the Trump campaign and Russia.  

Trump tells Lester Hold that he had the Russian investigation on his mind when he fired Comey. 

Importantly, the former Director of the FBI testified that the President asked him to let Flynn go, a conversation that occurred only after other people left the Oval Office, leaving only the President and Comey. 

The FBI Director did not testify that Trump asked him to stop the Russia investigation. 

Lastly, there are reports that Trump had asked the Director of National Intelligence, the former Republican U.S. Senator Dan Coats, and the NSA Director, Admiral Rogers, to intervene in the FBI's investigation of Flynn: Trump reportedly asked national intelligence chief to get Comey to ease Flynn probe: CNBC 

Some press reports suggest that the Trump requests to Coats and Rogers went beyond the Flynn investigation. Top intelligence official told associates Trump asked him if he could intervene with Comey on FBI Russia probe - The Washington Post ("The events involving Coats show the president went further than just asking intelligence officials to deny publicly the existence of any evidence showing collusion during the 2016 election, as The Washington Post reported in May. The interaction with Coats indicates that Trump aimed to enlist top officials to have Comey curtail the bureau’s probe.") This report, if true, would have serious consequences for Trump.  

Mueller now wants to interview Coats and Rogers  to determine what, if anything, that Trump asked them to do. Those two gentleman apparently discussed Trump's requests with others who will also be interviewed by Mueller. 

If Coats confirms what has been reported in the press, then that would be sufficient IMO, along with Comey's testimony,  the firing of Comey, other corroborative evidence such as contemporaneous conversations and documents,  and Trump's own admissions, for a jury to convict Trump of obstruction of justice. 


Trump the TruthTeller

I hope Trump testifies under oath as he promised to do. 

Trump's History of Lies, According to Biographer Timothy O'Brien - Bloomberg

According to Donald, his administration has been able to pass more legislation than any of his predecessors except for FDR who after all had to deal with the Great Depression, a somewhat greater mess than Donald inherited from Obama. Trump makes bizarre claims at press event as Cabinet members take turns praising him: CNBC
Did Donald Trump inherit 'a mess' from Barack Obama? | PolitiFact

Trump is actually correct to say that he had  signed by June 12th more new laws passed by Congress than most of his predecessors over the past century, excluding FDR, Harry Truman, Bill Clinton and Jimmy Carter. Trump says he has done more by this point than anybody since FDR. Sort of. - The Washington Post 

Yes, among Trump's major legislative achievements are appointing new board members to the Smithsonian, establishing a memorial, and naming Federal office buildings. Other legislation includes 14 measures of disapproval under the Congressional Review Act that allows a brief window for a new President to shoot down pending regulations, provided the action is taken within a narrow time frame after inauguration. (none of the pieces of legislation are significant)  

The cabinet members sang his praises at the first cabinet meeting as well. Cabinet members give Trump unusual tribute - CNN There was a Godfather movie feel to it, though the fawning did stop short of kissing Trump's hand or kneeling before the Sun King with heads bowed.   

Putin probably could not even muster the same adulation from his ministers.  

Perhaps Kim Jong-un, that other Great Leader, receives similar groveling comments from his ministers without specifically asking for them. Kim recently received an award for being the healthiest leader in the Universe and was all smiles: 

Maybe Kim is striving for the Elvis look now.

{ I would hope that no American will visit North Korea again. The odds of being arrested for no reason, tortured into making a confession, imprisoned after a brief show trial, and being murdered by the authorities or sentenced to hard labor that may end in death or permanent damage, are very high.}     

Back to Trump. 

All Trump needed to do was ask his cabinet members for a comment and they started to sing his praises. 

I thought it would be better for them to write a song praising Trump's many accomplishments and to sing it together on national TV once every morning with all of the nation's children singing along rather than giving that old fashioned pledge of allegiance to the U.S.A. 

After listening to Donald lavish praise on himself, it appeared to me that Donald probably thought that he had passed the largest tax cut in history already, rather than merely proposing a one page outline several weeks ago. The 1-page White House handout on Trump's tax proposal - CNN 

Trump's approval ratings are starting to show that a few Trump voters are less than enthusiastic about his accomplishments to date, but his core support is likely to remain in the 38% to 42% range. Trump's core supporters may start to leave him only when they see their own personal situations change for the worse (e.g. losing health insurance, losing the benefits of a federal program eliminated or substantially cut by the GOP; continued wage stagnation, a major recession resulting in job losses with no new major federal  support, jobs not returning to the coal industry, etc.)    

Gallup Daily: Trump Job Approval | Gallup

Compilation of Approval/Disapproval Polls: RealClearPolitics-President Trump Job Approval


Fed's Dot Plot

The Fed - June 14, 2017: FOMC Projections materials


Fed's General Plan for Reducing Balance Sheet

The Fed - FOMC issues addendum to the Policy Normalization Principles and Plans

System Open Market Account Holdings - FEDERAL RESERVE BANK of NEW YORK


CPI in a Downtrend

Consumer Price Index Summary


Amazon to Acquire Whole Foods Market | Business Wire

Mortgages are unaffordable in half of America’s largest housing markets - MarketWatch

GOP Health Care Law Could Cost Nearly 1 Million Jobs, Report Finds - NBC News;  AHCA Economic and Employment Consequences for States - The Commonwealth Fund

AAR Reports Weekly Rail Traffic for the Week Ending June 10, 2017 ("For the first 23 weeks of 2017, U.S. railroads reported cumulative volume of 5,899,194 carloads, up 6.8 percent from the same point last year; and 6,058,698 intermodal units, up 2.4 percent from last year. Total combined U.S. traffic for the first 23 weeks of 2017 was 11,957,892 carloads and intermodal units, an increase of 4.6 percent compared to last year.")

For the current quarter, the Atlanta Fed's GDP model currently predicts real growth at 2.9%. The forecast for this quarter has been trending down: 

GDPNow - Federal Reserve Bank of Atlanta


Housing Starts: Worrisome

Housing starts decreased to a seasonally adjusted  1.092M annualized rate in May, down 5.5% from the revised April number and down 2.4% Y-O-Y. The consensus was for 1.23M. Housing permits fell 4.9% from April and declined .8% Y-O-Y: Census Bureau: Monthly New Residential Construction.pdf

Housing Starts: Total: New Privately Owned Housing Units Started-St. Louis Fed

United States Housing Starts | 1959-2017 | Data | Chart | Calendar


Productivity Growth: Worrisome:

Productivity growth flatlined in the first quarter: U.S. productivity in first quarter: zero - MarketWatch

Productivity Growth by Major Sector, 1947-2016. Bar Chart

Below trend: the U.S. productivity slowdown since the Great Recession : Beyond the Numbers: U.S. Bureau of Labor Statistics

Revisiting U. S. Productivity Growth over the Past Century with a View of the Future: Robert J. Gordon; Robert Gordon: The death of innovation, the end of growth | TED Talk | TED.comThe Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (The Princeton Economic History of the Western World): Robert J. Gordon: 9780691147727: Books


1. Some Nibbling in U.K. ADRs

Both the Vodafone (VOD) and AstraZeneca (AZN) ADRs pay good dividends. 

The British Pound appears to have stabilized in value. GBP (U.K.'s Pound Symbol) / USD Currency Chart (use 5 year chart).

The most recent decline in the GBP/USD, which started in July 2014 near 1.71, may have bottomed at 1.2.  

A rise in the GBP/USD conversion rate after purchasing these two ADRs will result in the USD priced ADR outperforming the ordinary shares traded in London and priced in pence.   (100 Pence = 1 U.K. Pound)

The decline in the Pound's value since July 2014 has caused the U.S.D. priced VOD shares to significantly underperform the ordinary shares priced in pence. And, the ordinary shares priced in pence have underperformed the S & P 500 ETF SPY over the past three years. The following three year chart is not a total return chart and is not adjusted for dividends.

Green Line: SPY (S & P 500 ETF)
Blue Line: VOD Priced in Pence
Black Line: VOD Price in USDs

VOD's total return (dividends reinvested) since 6/17/14 through last Friday was +1.81%, so the dividends did at least create a positive total return rather than a loss which is reflected in the chart above. DRIP Returns Calculator | Dividend Channel

AZN's total return over the same period was 6.51%.

SPY's total return was 33.04%.

A. Bought 50 VOD at $29.13:

USD: VOD Stock Price - Vodafone Group PLC ADR

Bought on 5/19/17
GBP/USD at 1.3036
GBP to USD Exchange Rate Chart - Bloomberg Markets

U.K. Pence: VOD Stock Price - Vodafone Group PLC Stock Quote (U.K.: London)

1 ADR = 1 Ordinary Share

The stock went ex dividend shortly after my purchase. I have requested dividend reinvestment. 

Semi Annual VOD ADR Dividend and Ex Dividend Date: $1.12336 per share on 6/7/17

I bought the stock to replace this senior unsecured bond that matures in September:

Website: Investors (serves 516M mobile customers; 75M 4G customers) 

Vodafone's stock has been stuck within a narrow trading range for years. 

5 Year Chart With Price Channel (dark blue line): 

Results Q/E 3/31/17: 

B Bought 30 AZN at $33.98 (Used commission free trade): 

Quote: AstraZeneca PLC ADR (AZN)

I mentioned this purchase in a recent comment. I am just linking some press releases that were reviewed prior to purchase and some positive news developments thereafter. AZN appears to be on a roll which is reflected in the stock price action since early May.

AstraZeneca PLC ADR Interactive Charts - MarketWatch

The news about the cancer drug Imfinzi caused me to buy 30 shares on 5/15/17:

Imfinzi Brand Name for Durvalumab (a lot will depend on Imfinzi being approved for multiple indications) 

Imfinzi significantly reduces the risk of disease worsening or death in the Phase III PACIFIC trial for Stage III unresectable lung cancer (5/12/17 Press Release)

AstraZeneca’s IMFINZI™ (durvalumab) Receives US FDA Accelerated Approval for Previously Treated Patients with Advanced Bladder Cancer (5/1/17 Press Release)

Pipeline - AstraZeneca (several of the cancer drugs are being tried in multiple indications)

I also noted that both the EU and the FDA approved AZN's cancer drug Tagrisso:

Tagrisso receives full approval in the EU (4/25/17 Press Release)

Tagrisso (osimertinib) receives US FDA full approval (3/31/17)

This positive news flow trend has continued subsequent to my purchase on 5/15/17.

In early June, AZN released positive results for Lynparza: AstraZeneca's Lynparza Slows Spread of Inherited Breast Cancer - BloombergLYNPARZA™ (olaparib) Significantly Reduces the Risk of Disease Worsening or Death in Patients with BRCA-Mutated Metastatic Breast Cancer (6/4/17 Press Release)

AstraZeneca Delivers New Data on Expanding Portfolio of Cancer Medicines at 2017 American Society of Clinical Oncology (ASCO) Annual Meeting (5/26/17 Press Release)

Bydureon EXSCEL trial meets primary safety objective in type-2 diabetes patients at wide range of cardiovascular risk (5/23/17 Press Release)

Phase III ZONDA trial for benralizumab shows ability to reduce oral steroid use in severe asthma patients (5/22/17 Press Release)

Brodalumab receives positive CHMP opinion for the treatment of adult patients with moderate-to-severe plaque psoriasis (5/19/17 Press Release)

Most Recent Earnings Report Q/E 3/31/17:


Management expects revenue to decline this year in the mid-to-low single digits and earnings to decline at a low to mid-teens rate.

AZN has been in the past a perennial laggard in the large cap pharmaceutical sector. The preceding table, which shows a significant Y-O-Y decline in revenues, explains the running in place share price action.

3 Year Chart:

Some patent expirations (e.g. Crestor, Nexium) have contributed to revenue declines. It is all about the future.  

Pfizer attempted to acquire AZN in 2014 but was rebuffed and dropped its bid. Pfizer walks away from $118 billion AstraZeneca takeover fight | Reuters

In 2016, AZN sold its small molecule antibiotics business to Pfizer. AstraZeneca to sell small molecule antibiotics business to Pfizer

In May, AZN sold the European commercial right for Seloken and associated Logimax for $300M plus a tiered royalty. AZN retained commercial rights in other markets. AstraZeneca enters agreement with Recordati for Seloken in Europe

In early June 2017, AZN entered into an agreement to sell the global rights to Zomig outside of Japan for $200M plus up to $102M in additional milestone payments. AstraZeneca enters agreement with Gr√ľnenthal to divest rights to migraine treatment Zomig

Dividends are paid semi-annually. The first payment for 2017 has been made and was $.95 per ADR share. The next dividend will be paid in September.

AZN is not highly regarded by investors and that is reflected in the stock price action over the past several years. AZN experienced major patent protection expirations over the past several years and is still suffering the lingering effects. This year may be the bottom. 

Recent news has resulted in some positive share movement, but the stock has yet to breakout of its long term doldrums. 

Morningstar has a 3 star rating and a $32 fair value estimate. 

S & P has a 1 star rating, a strong sell, with a $28 price target.  

The Credit Suisse analyst Rebekah Harper upgraded AZN to neutral from underperform after the Imfinzi stage results were released in May. 

Argus has a buy rating and a $35 price target.  

As I noted above, a lot depends on the multiple ongoing trials for the cancer drug Imfinzi. 

AstraZeneca gains major I-O ground with Imfinzi lung cancer maintenance stunner | FiercePharma

Changes to MYSTIC set AstraZeneca up for success | BioPharma Dive

Ongoing Investigations of Durvalumab (PD-L1 Inhibitor) | Celgene Research Oncologyv

IMFINZI™ (durvalumab) | Treatment for Advanced or Metastatic Urothelial Carcinoma


Gold has been diving in price since the Fed announced its interest rate increase and its projections for another .25% increase later this year and 3 more next year. The bond market does not believe that will happen, viewing it as probable that there will be just one .25% on or before June 2018.
Countdown to FOMC: CME FedWatch Tool The Gold Bugs and Currency Dopers are buying into the FED's forecast. 

A. Bought Back 100 CGL:CA (C$1 Commission):

CGL Fund - iShares Gold Bullion ETF Hedged

This ETF owns gold bullion and is priced in Canadian Dollars. The fund hedges the CAD currency risk.

My prior purchase was at C$10.61. Item # 4.A. When I sold out of GLD, I also sold CGL (4/6/17).  

3. Intermediate Term Bond/CD Ladder Basket Strategy:

In the trades discussed below, I am increasing my current yield and YTM while taking on more interest rate and credit risks.

I sold two low coupon bonds maturing in 2021 and the 150 share position in the ETF BSCL, a 2021 term bond fund.

I used the proceeds to buy 4 senior unsecured bonds with higher current yields and higher YTMs.

A. Sold 1 Shell International 1.875% Senior Unsecured Bond Maturing on 5/10/21:

Profit Snapshot: +$7.49

FINRA Page: Bond Detail

I bought this bond at a total cost of 98.174 (3/29/17) and discussed that purchase here: Item # 1.A. The current yield at my total cost number was 1.909%. The YTM was higher at 2.344%. Part of the differential between the current yield and YTM was captured by selling at 99.023, with net proceeds at at 98.923 adjusted for the $1 commission.

B. Sold 1 Centerpoint 1.85% First Mortgage Bond Maturing on 6/1/21:

Profit Snapshot: +$3.5

FINRA Page: Bond Detail

CNP CenterPoint Energy Inc Page at Morningstar

This bond was bought a total cost of 98.236 (2/2/17) and that purchase was discussed 
Stocin Item 1.B. (February 16, 2017 Post).

The bond was sold at 98.686 or 98.586 adjusted for a $1 brokerage commission.

The current yield at my total cost was 1.883%. The YTM was at 2.281% at the time of purchase, with part of the differential yield captured by selling at a net of 98.586. The YTM at 98.586 is 2.22%.

C. Sold 150 of the ETF BSCL at $21.33:

Profit Snapshot: +$38

Quote: Guggenheim BulletShares 2021 Corporate Bond ETF 

I discussed buying 50 shares in this post: Item # 1.A I discussed the 100 share purchase in Item 1.C. Bought 100 BSCL at $21.14 

I am recycling the proceeds into higher yielding individual bonds. 

D. Bought 2 Healthcare Trust of America 3.5% Senior Unsecured Bonds Maturing on 8/1/26:

Issuer: Healthcare Trust of America Inc. (HTA)-A REIT

HTA Healthcare Trust of America Inc Page at Morningstar
Finra Page: Bond  Detail
Credi Ratings:
Moody's at Baa2
Moody's affirms Healthcare Trust of America's Baa2 rating, outlook revised to negative (based on acquisition of medical office buildings from Duke Realty-Healthcare Trust of America to Acquire Duke Realty's Medical Office Portfolio for $2.75 Billion)
S & P at BBB

YTM at Total Cost (98.346) = 3.714%

Current Yield: 3.56%

HTA Analyst Estimates

Healthcare Trust of America, Inc. Reports First Quarter 2017 Earnings

Healthcare Trust Of America, Inc. Reports Fourth Quarter And Full Year 2016 Earnings

Healthcare Trust of America Announces Pricing of Upsized Public Offering of Common Stock (47.5M shares at $28.5 plus up to 7.125M share underwriters' option)-Prospectus

10-Q for the Q/E 3/31/17

2016 HTA Annual Report

E. Bought 2 Autozone 3.125% Senior Unsecured Bonds Maturing on 4/21/26 ($2 per bond commission/Vanguard Taxable Account):

Issuer: AutoZone Inc. (AZO)

AZO AutoZone Inc Page at Morningstar
FINRA Page:  Bond Detail
Credit Ratings:
Moody's at Baa1
Moody's rates AutoZone's $650 million senior unsecured notes Baa1
S & P at BBB
Fitch at BBB
Fitch Rates AutoZone's $600MM Senior Unsecured Notes 'BBB'; Outlook Stable

YTM at Total Cost (97.428) = 3.461%

Current Yield = 3.21%

AZO Analyst Estimates

Report for the Q/E 2/11/17
AZO SEC Filings

I also own two 1.625% Autozone bonds maturing in 2019 which may be sold when and if I can sell those bonds at par. 

Las April, AZO sold $600M in 3.75% senior unsecured bonds maturing in 2027. Bond Detail

4. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Live Oak Banking 1.1% CDs (monthly interest) Maturing on 11/30/17 (6 month CD)(proceeds received at maturity will be used to buy a short term CD):

Live Oak is a publicly traded bank that concentrates on making SBA loans to businesses. It has no retail branches.

2017 First Quarter Report

LOB Stock Price - Live Oak Bancshares Inc.

Live Oak Bank | Small Business Loans & Small Business Banking

I have a 9 month CD with an .8% coupon, which also pays monthly interest,  maturing on 12/8/17. The Live Oak CD pays .3% more with a 3 month shorter term.

5. Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy

A. LXP Update

In a post published earlier this month, I discussed buying 50 of Lexington Realty shares at $9.45:  Stocks, Bonds & Politics: Observations and Sample of Recent Trades (LXP)-6/11/17

I went ahead and sold my highest cost lot at $10.27, which was held in my IB trading account. 

Profit Snapshot: +$20.08

This lot was bought at $10.05 shortly before the quarterly ex-dividend date.

In that IB account, I thereafter bought  a 50 share lot at $9.6 (5/10/17) and will keep that lot for now. 

If and when the price falls closer to $9, I will consider buying another 50 shares in that account. 

I currently own 100 shares in two taxable accounts: 50 share lot bought at $9.6 ($1 commission and 50 shares bought commission free at $9.45). 

As noted previously, I own 125.45 shares in Fidelity Roth IRA with an average cost per share of $3.15 (snapshot). Fidelity now assigns a zero cost basis for shares purchases with dividends in retirement accounts. Of those 125+ shares, I bought 50 shares at a total cost of $7.89 (1/8/16), with all other lot purchases sold for profits. 

I also own another 50 shares in another Roth IRA account that was bought at $7.73: Update For Equity REIT Basket Strategy As Of 1/11/16 - South Gent | Seeking Alpha  

LXP Trading Profits: $718.02

B. Added 40 CCP-Commission Free Trade

I bought shortly before the 6/7/17 ex dividend date. 

The quarterly dividend is $.57 per share. Dividend History & Information | Care Capital Properties

The price of CCP is now governed by the SBRA stock price and consequently the ex dividend adjustment becomes meaningless in my view. CCP has agreed to be acquired by Sabra Healthcare at 1.123 SBRA shares for each CCP share. 

Sabra Health Care and Care Capital Properties to Combine in $7.4 Billion Transaction to Create a Premier Healthcare REIT

CCP Stock Price - Care Capital Properties Inc.

I previously sold 30 CCP shares in a Roth IRA realizing a $162.08 profit and harvesting one quarterly dividend payment. Those shares were sold at $31.47:

I currently own 102+ CCP shares in a taxable account. The stock is viewed as too risky for my IRA.

My current intention is to keep the CCP shares and exchange them for SBRA shares. 

Credit Ratings | Care Capital Properties

CCP does have a senior unsecured bond.  
CCP 5.125% Due 8/15/26

Sabra Health Care REIT, Inc. - Home

Sabra 2017 First Quarter:

Sabra Reports First Quarter 2017 Results; Increases Quarterly Common Dividend by 2.4% to $0.43 Per Share; Provides 2017 Outlook; S&P, Fitch and Moody's Place Sabra on Rating Watch Positive Nasdaq:SBRA

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.  


  1. I will be discussing in my next post two articles that argue that stocks become riskier as time increases, which is contrary to the accepted wisdom.

    I have discussed this issue in the past including these two posts written in March 2009.

    The issue has to be addressed by each individual in the context of their situational risks.

  2. South Gent,

    I could not agree with you more that "...The issue has to be addressed by each individual in the context of their situational risks...". Many of the studies on this subject have a "survival" bias.

    Re. "... stocks become riskier as time increases ..." a basket of small cap biotech stocks will definitely fit the bill. On the other hand, a basket of diversified large cap stocks might fare better as time increases.

    1. Y: Historically, there have been long periods where the total return for the S & P 500, adjusted for inflation and before taxes, was a significant negative number.

      That was the case between 1/1/1966 through July 1982 and between March 2000 through March 2009.

      The S & P is weighted as a large cap index which means that a substantial number of large capitalization stocks are producing significant negative real rates of return before taxes on dividends.

      -1.813% Annualized Total Return Adjusted for Inflation January 1966-July 1982

      -6.957% Annualized Total Return Adjusted for Inflation March 2000 through February 2009

      Click Adjust for Inflation Box

      Total return includes dividend reinvestment but has no adjustment for taxes paid on dividends.

      We were lucky that the financial system was saved from collapse in 2008-2009 or another repeat of the Great Depression period would have occurred.

      September 1929 through December 1941: -3.784% total annualized returns adjusted for inflation and significant periods of deflation

      There was a turn in the market for the better with the onset of WWII. A positive trend was in place after the U.S. won the Battle of Midway in June 1942, when the market decided that the U.S. would end up being victorious.

      A lot depends on the stocks selected in the large cap basket as well. How would a potential retiree have fared by buying GE, PFE, Intel, CISCO, KO and GE in the 1995-2000 period, all of whom may have seemed like good long term investments back then?

      The total return of GE shares bought on 1/3/2000 through last Friday is a -1.01%. Purchasing CSCO on the same day would have netted a -30.42 total return. Intel's total return over that 17 year period would be .96% per year.

      But, if I had bought CISCO on 3/8/2009 after the big shellacking, the total return would be 176.03%.

      At current valuation levels, the reversion to mean valuations would be most painful.

      And, the odds of a mean reversion caused by a major external shock linked to debt would potentially be more catastrophic than the Near Depression due to exponential and parabolic growth in debt since 2007 worldwide.

      I do not believe McKinsey & Company has updated yet its February 2015 report that showed a $57 trillion increase in global starting in 2008 and into 2014:

  3. Drug stocks including the biotechs are moving up nicely today.

    iShares Nasdaq Biotechnology ETF (IBB)
    306.94 +$7.15 (+2.39%)
    As of 11:58AM EDT

    SPDR S&P Pharmaceuticals ETF (XPH)
    $42.59+0.60 (+1.44%)

    My 60 OMER shares now have an unrealized gain of $1K+.

    Omeros Corporation (OMER)
    $25.85+1.34 (+5.47%)
    As of 12:00PM EDT

    Some other small cap biotech movers that I own in my basket include:

    IMDZ 60 shares
    $7.95+0.40 (+5.30%)
    As of 11:59AM EDT.

    ImmunoGen, Inc. (IMGN)
    $5.56+0.65 (+13.24%)

    Nektar Therapeutics (NKTR)
    $18.90+0.51 (+2.77%)

    Cytokinetics, Incorporated (CYTK)
    $14.35+0.30 (+2.14%)
    As of 12:03PM EDT

    While FOLD is down some so far today, it has had a good % run since closing at $7.66 on 5/30/17:

  4. I have published a new post: