Observations and Sample of Recent Trades: EBGUF, FFHPRD

Portfolio Management:

I am moving deeper into my bunker waiting for incoming.

The general goals of portfolio management are set out here: Stocks, Bonds & Politics: Portfolio Management Goals-Snapshots of Performance Numbers YTD, 3 and 5 Years Cumulative (4/18/14 Post)

Notwithstanding an increasingly defensive and conservative posture on stocks, I will continue to engage in a variety of short term trades.

My general goal now is to generate anywhere between $15K to $25K in annual short term trading profits to supplement dividend and interest income. I have already hit the top end of that range in 2017, so I can slow down and wait for better opportunities.

I try to grow my dividend (ex capital gains distributions) and interest income by at least 5% per year. The goal above 5% growth is dependent on the level of interest rates. If the ten year yields 2% for example, then 5% growth is acceptable but I would want 8%+ with the ten year at 4%.

That has been doable, even in a low interest rate environment, and would be made far easier with a continued increase in short term rates.

I will comfortably exceed that 5%+ increase bogey this year, even with a lower dividend stock allocation, through security selection, dividend clipping trades, higher MM rates for idle cash compared to last year, the annual growth in portfolio size which has a compounding effect, and redeploying cash held in MM accounts into higher yielding bonds and CDs.

Capital gain distributions from stock funds are unpredictable as to amounts, but have generally been significant in the past several years.

In those short term trades, meaning a holding period of less than 1 year, I am selecting securities that pay decent income or attempting to score nice percentage gains on what I call lottery ticket purchases.

For my T. Rowe Price mutual funds, the management approach is simple. Once I buy shares, my only option remaining is to turn off or on dividend reinvestment. I did turn off the dividend reinvestment option for the first time earlier this year. The size of those positions is currently greater than my entire stock allocation in the early 1980s.

My largest Vanguard mutual fund position is the VEIRX Vanguard Equity-Income Admiral Fund (VEIRX). I turned off the reinvestment option for that fund as well. When the value goes over $51K, I will sell $1k which I have done three times this year:

I have pared other Vanguard mutual fund positions as well.

When and if there is a catastrophic market event, I will turn on the reinvestment option.

I am not buying CDs in my Vanguard accounts. The primary reason is that the Vanguard Prime Money Market fund provides me with a competitive rate and liquidity compared to short term CDs. The current SEC yield is 1.11%. The expense ratio is .16%. Vanguard - Vanguard Prime Money Market Fund I also have some funds in the  Vanguard Tax-Exempt Money Market Fund that has a .7% SEC yield which is higher than the .63% taxable yield for the Fidelity ® Government Money Market Fund which I am now forced to use as a settlement account. 

The higher MM yields at Vanguard is have some minor impact on my asset allocations in those accounts. I have started to sell some low yielding corporate bonds maturing in 2020 to 2026 owned in those accounts as the spread between the MM yields and their YTMs narrow and will probably narrow further.   

The ten year treasury bond is currently stuck in a range between 2.15% to 2.62% since mid-November 2016. The current directional move is toward the lower end of that range, which means that I am net seller of intermediate term corporate bonds now. 2017 Daily Treasury Yield Curve Rates I will probably use the proceeds to buy back those bonds when the directional move turns up in yield and the ten year yield hits 2.6%. 

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Trump's Rantings and Ravings: 

Trump's rambling rants continued in a campaign rally held in Arizona. Even some of the True Believers had enough of Trump's bloviations and left early. As Trump ranted and rambled in Phoenix, his crowd slowly thinned - The Washington Post

Among his many ravings, Trump threatened to shut down the government unless the Democrats agreed to fund the GOP's Mexican wall to probably terminate the NAFTA Trade Agreement. He attacked both GOP senators from Arizona and hinted that a pardon was waiting for Joe Arpaio, the former sheriff of Maricopa County, who was held in criminal after deliberately refusing to obey a court order to stop detaining people that Joe suspected of being undocumented immigrants. Trump’s 2017 Phoenix, Arizona Rally Full Speech Transcript | Time.com

The free press was attacked by Trump, something that Demagogues do until there is no longer a free press to castigate. 

Trump said the 'media is totally dishonest" and "for the most part, honestly, these are really, really dishonest people, and they're bad people." The True Believers chanted "CNN Sucks, CNN Sucks" in response. 

CNN's response: Donald Trump's 57 most outrageous quotes from his Arizona speech - CNN 

Trump further blamed the media, rather than himself of course, for the nation's deepening divisions. When he pointed out the press to his supporters, the True Believers booed in unison as they have been trained to do. 

Trump wrapped himself in White Nationalists buzzwords when he claimed that the media was "trying to take away our history and our heritage". Maybe he needs to kiss and hug the confederate flag to make his point clearer to those of more than normal muddled minds.  

Unlike the media, Trump stated that he is a good and honest person: "I'm a person that wants to tell the truth. I'm an honest person, and what I'm saying, you know is exactly right."

He claimed at least twice, untruthfully, that he media had turned off the cameras after Trump called them bad and dishonest people. Democrats are worse. 

Trump found a black man to stand behind him at this Phoenix campaign rally. The WP and other news organization found that this gentleman had multiple identities; had been acquitted in the 1990s of conspiracy to commit two murders; had called Obama "The Beast" and Oprah the devil, claimed that Hillary was a member of the KKK, and was allegedly a member of a cult.  The strange story of that ‘Blacks for Trump’ guy standing behind POTUS at his Phoenix rally (WP article republished at MSN)'

See Also: The ‘Blacks for Trump’ Guy Is a Former Cult Member: New Yorker; "Blacks for Trump" Supporter Is Former Yahweh Ben Yahweh Cult Member | Miami New Times (both articles published in October 2016 so Trump's campaign had to know about his background thereafter) 

Trump's kind of guy. 

Trump likes his dog whistles.   

Trump used the word "thugs" to describe protesters who had assembled outside the building. 

While the Phoenix Police claimed some protesters had assaulted the police, which then required a massive police response, the protesters, supported by video, claimed that the police fired  tear gas, pepper balls, and rubber bullets into the crowd after two water bottles were thrown at them, falling short of their targets. 

Police Use Tear Gas on Crowds After Trump Rally - The New York Times (embedded video shows a protester kicking a tear gas cannister and then retreating about twenty feet or so before being shot with rubber bullets. The video is also available at Tim Ring on Twitter: "Protester kicks tear gas back at police. Police shoot him with a rubber bullet on live TV. VIDEO); 

Police spray tear gas at protesters following Trump's Phoenix rally - CNN (video shows that a couple of water bottles thrown and police immediately responded with the full panoply of their arsenal) Each person can vote on which side was acting thuggish.     

Fact-checking President Donald Trump’s campaign rally in Phoenix | PolitiFact

Trump's Phoenix Fiction - FactCheck.org

Through 8/21/17, and starting with Donald's inauguration, the Washington Post has now identified 1057 false claims made by Donald: The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post 

While the True Believers are convinced that Donald is a Truth Teller, a large segment of the population believes with justification that he is a pathological liar. If they are called upon to give Donald the benefit of the doubt on some future important matter, they will refuse to do so.    

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What is a "True Believer": 

I use the phrase to describe anyone, regardless of ideology, who forms opinions with  little or no accurate information and whose opinions will not change irrespective of exposure to accurate information that contradicts well nourished reality creations. 

Other characteristic personality traits include some heightened levels of both stupidity and ignorance; a lack of logical and rational thought processes; a frequent inability to exercise even a modest amount of common sense; an enhanced close-mindedness; a higher than normal need for confirmation bias; and consequently a person who is easily manipulated with cliches and false information that pushes their buttons in the right way.  

When those issues become severe, the appropriate termS in my lexicon are Troglodyte and Know Nothing. How the 19th-Century Know Nothing Party Reshaped American Politics | History | Smithsonian

Reasonable and fact based discussion is impossible with TBs and Troglodytes. 


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Trump's New Test for Immigrants: 

The test that Trump wants to give potential new immigrants was given to U.S. citizens. Only 2% passed and most scored below the minimum threshold requirement for consideration. 

My thought is to give that new test to American citizens whose ancestors have been here for at least 50 years. Anyone scoring below 30 will be sent back to their native land. 

How Many Americans Would Pass an Immigration Test Endorsed by Trump? - The New York Times

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Market Commentary:

The Stock Jocks are only going to wring their hands of excessive moisture whenever Trump throws red meat to the troglodytes. The reaction will become more severe and non-temporary when and if he actually does something that will have serious and adverse economic consequences (e.g., starting a trade war with China, bombing NK, terminating NAFTA without anything to replace it; etc and so on).

The Stock Jocks still believe that the GOP will deliver on tax cuts. The Administration can calm nerves simply by saying, once again, that some kind of plan will be coming. The time frame is now after Thanksgiving. Earlier, it was before Easter. I suspect that some tax cuts will be implemented effective for 2018, but the magnitude will have minimal impact on real GDP growth next year. Depending on the magnitude, there could be a meaningful impact in corporate after tax profitability that will be far more significant than the impact on GDP growth. Public corporations will spend additional after tax money in a variety of non-economically productive areas, including increases in dividends, executive compensation, acquisitions of existing companies that result in job losses,  and share buybacks.

This indicator says the ‘billionaire bears’ are wrong - MarketWatch (referring to the Yardeni gauge)

Wall Street Banks Warn Downturn Is Coming - Bloomberg

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Economic News:

Existing-home sales tumble to 2017 low as supply crunch bites - MarketWatch; Existing-Home Sales Slide 1.3 Percent in July | nar.realtor

New home sales hit 571,000 units in July vs estimate of 610,000: CNBC

EIA data show U.S. crude supplies down for the eighth straight week - MarketWatch

Dollar wanes against euro, yen as U.S. tax-reform doubts resurface - MarketWatch 8/23/17

China state media says US will 'pay' for 'unjust' sanctions: CNBC 

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1. Continued to Pare Canadian Reset Equity Preferred Allocations:

A. Sold 100 FFHPRD at C$22 (C$1 Commission):

Profit Snapshot: +C$400

Fairfax Financial Holdings Ltd. Cum. Floating Rate Pfd. Series D (Canada: Toronto) 

I discussed buying this lot at C$17.98 here. 

This one floats at a 3.15% spread over the 3 month Canadian treasury bill.

The Series C ended its fixed coupon period on 12/31/14 whereupon the coupon was reset at a 3.28% spread to the five year Canadian bond. As with other Canadian resets, the prospectus for the Series C allows its owners to convert into the Series D. Those who do not convert are locked into the new Series C coupon, which was reset at 4.578% for five years.

The keys to the floaters over the T-Bill rate is the discount to par value and how quickly will this short rate return to something approaching a normal level which is in the 4% to 5% range excluding the Great Depression period and the Near Depression period to the present.

Historical 3 Month Canadian Treasury Bill Yields Since 1934: Treasury Bill Auction - Average Yields - 3 Month / Adjudication hebdomadaire de bons du Trésor - Rendement moyen - À 3 mois

Notwithstanding a recent .25% increase in the Bank of Canada's benchmark rate, that CB is still setting short term rates at Great Depression levels. Policy Interest Rate - Bank of Canada The "policy interest rate" is only .75% and was .5% for a long time. 

The last quarterly ex dividend date was 6/14/17.

I include Canadian reset equity preferred stocks in my category called "Equity Preferred Floating Rate Securities". That category also includes U.S. fixed-to-floating rate securities and U.S. equity preferred stocks that pay the greater of a minimum coupon or a spread over the 3 month Libor rate.

Stocks, Bonds & Politics: Advantages and Disadvantages of Equity Preferred Floating Rate Securities: Trading Profit = $22,572.24 (all small lots)

The discussion in that blog post deals only with U.S. equity preferred stocks that pay the greater of the minimum coupon or the spread rate.

I have a discussion of U.S. fixed-to-floating rate equity preferred stocks in this post: Income And Risk Assessment Balancing-Bought 100 Of The ETF VRP - South Gent | Seeking Alpha

Most of the U.S. floaters that are exchange traded securities have the floating rate tied to the 3 month Libor which no longer exist in 2021 as I have previously discussed.  Libor Funeral Set for 2021 as FCA Abandons Scandal-Tarred Rate - Bloomberg That will create ambiguity on what the spread rate will be or whether there will even be one. The prospectus needs to be consulted about whether it was even contemplated that the Libor rate would end. I am avoiding new floaters tied to Libor for those reasons. I will sell any that have no provision of an alternative spread rate.  

Some of the prospectuses will have no alternative solution. Some will have a provision similar to this one found in the MSPRA prospectus:

Prospectus

I no longer own any U.S. equity preferred floaters, having harvested my profits and viewing their current prices as unattractive.

2. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Seacoast National Bank 1.45% CDs (monthly interest) Maturing on 8/23/18 (1 Year CD): 

The holding company for this bank is publicly traded as Seacoast Banking Corp. of Florida (SBCF).

Seacoast Reports Second Quarter 2017 Results

Seacoast National has a 4 star rating from Bankrate.com. 

B. Bought 2 Franklin Synergy 1.65% CDs (monthly interest) Maturing on 3/29/19 (19 month CDs):

Holding Company Franklin Financial Network Inc. (FSB) - MarketWatch (based in Franklin, TN. 722 Columbia Ave - Google Maps)

FSB Analyst Estimates

Franklin Financial Network Announces Record Net Income On Continued Strong Loan Growth For The Second Quarter of 2017

The issuing bank has a 4 star rating from Bankrate: FRANKLIN SYNERGY BANK Review

As mentioned earlier, one of my direct lineal ancestors (mother's maternal side) had the misfortune of being a Confederate soldier at the Battle of Franklin (1864). He had no shoes, which was common for confederate soldiers then, the day was cold with snow on the ground and his feet were frost bitten, when General John Bell Hood, Commander of the Army of Tennessee, ordered a charge toward an entrenched Union position. The result can be seen now in mostly mass graves at the McGavock Confederate Cemetery in Franklin. Perhaps some of those JBH statutes can be moved to that cemetery so JBH can be with his soldiers who followed his orders in what was the southern version of Pickett's Charge at Gettysburg.

The Fort Hood military base in Texas is named after JB. Why? Ten U.S. Army Bases Named for Confederate Officers | Time.com; These are the 10 US military bases still named after Confederates - Business Insider

After 56 years, Six Flags will no longer fly the Confederate flag over its theme parks - The Washington Post; Confederate flag still important symbol to many NASCAR fans: USA Today

C. Bought 1 Berkshire Bank 1.1% CD Maturing on 11/28/17-ROTH IRA:

Holding Company: Berkshire Hills Bancorp Inc.  (BHLB)

BHLB Analyst Estimates

Berkshire Hills Reports Second Quarter Earnings; Dividend Declared

The issuing bank has a four star rating from Bankrate: BERKSHIRE BANK Review

I have owned the common stock in the past as part of my regional bank basket strategy, but no longer have a position.

D. Bought 2 Trustmark National Bank 1.1% CDs Maturing on 11/29/17 (3 month CDs):

Holding Company: Trustmark Corp. (TRMK)
TRMK Analyst Estimates

I have bought and sold several times the common shares and no longer have a position.

The issuing bank has a 4 star rating from Bankrate: TRUSTMARK NATIONAL BANK Review

I have bought and sold the common stock as part of my regional bank basket. I no longer have a position.

Trustmark Corporation Announces Second Quarter 2017 Financial Results

E. Bought 2 ZB National 1.2% CDs Maturing on 12/29/17 (4 month CDs):

Holding Company: Zions Bancorp (ZION)

Zions Bancorporation Reports Second Quarter Financial Results

The issuing bank has a 4 star rating from Bankrate: ZB, NATIONAL ASSOCIATION Review

I have owned in the past a Zions trust preferred security and at least two of its preferred stocks. I no longer have any positions. I have never owned the common shares.

9K Inflow into Short Term Bond/CD Basket

2. Income-Trading Strategy:

As I transition into short term CDs and bonds, I am buying some securities that have risk but provide greater yields. The general idea is to collect a few dividends and then sell the position profitably.

A. Bought Back 100 EBGUF at $24.55:

EBGUF is the USD priced Grey Market listing for the ordinary shares of Enbridge Income Fund Holdings Inc. (Canada: Toronto).

Closing Prices 8/24/18: 

EBGUF USD$24.61 -0.02 -0.09% : ENBRIDGE INCOME FD
ENF.TO CAD$30.78 -0.10 -0.32% : ENBRIDGE INCOME FUND

I only buy Canadian Grey Market listed securities from Schwab who converts the CAD price into USDs. Other brokers would require a manual conversion of the CAD price into USDs, and then the fixing of a day limit order for the USD priced shares: Enbridge Income Fund Holdings Inc. Stock (EBGUF) Schwab also handles those GM orders better.

When playing small ball, this small repurchase is viewed simply as a battle victory, one battle among thousands.

I sold 100 at $25.51 on 7/17/17 and bought that lot back at $24.55 or $.43 below my last purchase price of $24.98.

I lost by selling at $25.51 one monthly dividend.

After adjusting for that one dividend, I saved about $83 by selling 100 shares at $25.51 and buying back at $24.55. Stocks, Bonds & Politics: Item # 1.C.

History in This Account:

My last substantive discussion was when I bought the ordinary shares priced in CADs back in 2013: Bought: 100 ENF:CA at C$23 (11/6/13 Post)-Item # 1 Sold 100 ENF:CA at C$27.65 (8/2/14 Post) My USD realized gain for that earlier trade was $341.62. The CAD realized gain was C$427.  

I also own the CAD priced ordinary shares in my IB account.  

Dividend History in CADs: Payments are made monthly at the current rate of C$.1711 per share. Enbridge Income Fund Holdings Inc. Announces Monthly Dividend

Dividend History - Enbridge Income Fund

Enbridge Income Fund Holdings Inc. Announces 10% Dividend Increase to Monthly Dividend (1/5/17 Press Release)

For the owner of the USD priced ordinary shares traded in the U.S. Grey Market, the dividend will be paid in Canadian dollars and then converted into USDs for credit to the owner's account. If that account is an individual taxable account owned by a U.S. citizen, Canada will withhold 15% as a tax before the conversion into USDs. If owned in a retirement for the benefit of a U.S. citizen, Canada will not withhold that 15% tax. 

The value of the dividend in USDs will depend on the conversion rate. A decline in the CAD/USD exchange rate after purchase would have the same effect as a dividend cut assuming the rate remained the same and vice versa. The CAD/USD conversion rate impacts both the EBGUF share price and the value of the dividend payments.    

There is what I would call an incestrous relationship between Enbridge Inc. (ENB) and the Enbridge Income Fund. I also own a small lot of ENB which is the USD priced Enbridge shares. ENB owns about 19.9% of ENF's shares and will sometimes sell properties to ENF. Enbridge Income Fund Completes Acquisition of Canadian Liquids Pipelines Business and Renewable Energy Assets; Enbridge Income Fund Holdings Inc. Increases Monthly Dividend (9/1/15 Press Release: Assets bought from Enbridge)

Business:

Overview - Enbridge Income Fund

Enbridge Inc. Closes Secondary Offering of Enbridge Income Fund Holdings Inc. Shares; Over-Allotment Option Fully Exercised for Gross Proceeds of Approximately $0.6 Billion

Enbridge Income Fund Holdings Inc. Reports Second Quarter Results

Enbridge Inc. and Enbridge Income Fund Holdings Inc. Announce Close of $1.075-billion Sale of South Prairie Region Assets (12/1/16 Press Release)

Enbridge Income Fund Holdings Inc. Announces the Closing of Common Share Offering, Full Exercise of the Underwriters' Over-Allotment Option and Concurrent Private Placement for $718 Million (ENB bought the private placement: "Concurrent with closing of the Offering, Enbridge Inc. (TSX:ENB)(NYSE:ENB) subscribed for 5,056,150 Common Shares on a private placement basis at a price of $28.25 for gross proceeds of $142,836,238 to maintain its 19.9 percent ownership interest in the Company.") 

3. Intermediate Term Bond/CD Ladder Basket Strategy: 

A. Added 1 Ventas 3.25% SU Bond Maturing on 10/15/26: 

This would be an average up from my last buy.  Stocks, Bonds & Politics: Item # 1.B. (bought at a total cost of 95.074.

Issuer:  Ventas Inc (VTR)-A REIT
SEC Filed Press Release for 2017 Second Quarter Earnings 
2016 Annual Report 

FINRA Page: Bond  Detail (prospectus not linked)

Credit Ratings: 
Moody's at Baa1
S & P at BBB+
Fitch at BBB+
Credit Ratings 

Bought at a Total Cost of 98.106
YTM Then at 3.482%
Current Yield at 3.31%

This brings me up to 6 Ventas $1K par value bonds 

The last purchase was one 3.5% SU bond maturing on 2/1/25: Stocks, Bonds & Politics: Item #2.A.


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.