Wednesday, November 28, 2018

Observations and Sample of Recent Trades: GMRE, PBCT, PGX, TDIV

Economy:


Harvesting in a trade war: U.S. crops rot as storage costs soar | Reuters

GM to slash over 14,000 jobs from North American workforce


In a 2016 rally before auto workers in Warren County, Michigan, Trump made the following commitment which elicited cheers from the Trumpsters: “If I’m elected, you won’t lose one plant, you’ll have plants coming into this country, you’re going to have jobs again, you won’t lose one plant, I promise you that.” The rally was held about one mile from GM's plant in that county which is going to be closed. Donald Trump Campaigns Warren Michigan, Oct 31 2016 | Video | C-SPAN.orgGM’s Plant Closures Confirm the President is a Liar and a Fool | The NationGM to halt production at several plants, cut more than 14,000 jobsTrump promised to return lost jobs to industrial America. Why is General Motors laying off 15,000? GM has already got what they wanted from the Duck, a relaxation of emission rules and a big tax cut. 


Trump threatened to take away GM's subsidies, apparently referring to the tax credit that is available to consumers-NOT GM-who buy electric cars: GM stock tumbles after Trump threatens to cut all subsidies - CNN


Trump says ‘highly unlikely’ that China will avoid facing tariff hikes - MarketWatch


Larry Kudlow previews Trump-Xi talks on tariffs and trade at G-20 summitAhead of G20 summit, Trump will meet with Xi to discuss 'fair' trade deal (Trump believes there is a "good possibility" of a trade deal with China) Donald stated last April there was a "very good chance" of a trade deal with China. Very good chance of a U.S.-China trade deal: Trump | Reuters (4/24/18 article)


Trump says US could slap 10% tariffs on iPhones, laptops from China


The Stock Jocks are becoming more optimistic that a trade deal is in the works. I hope so, but view that renewed optimism to be more delusional than factual.  


Trump attacks Fed Chair Powell: 'I'm not even a little bit happy with my selection of Jay'


+++++++

Markets and Market Commentary:

Yesterday, there were 20 new highs on the NYSE and 233 new lows:  NYSE New Highs & Lows - Markets Data Center As of yesterday, only 38% of the S & P 500 components were above their 200 day SMA lines. S&P 500 Index Chart, Components, Prices - Barchart.com


Trading guru Bollinger: U.S. stock market just flashed not one, but two, buy signals - MarketWatch


Grim Stock Signals Piling Up as Wall Street Mulls Recession Odds - Bloomberg


+++++

Trump:

Scientists have not yet accepted the Professor Don's erudite conclusion that climate change is a Chinese hoax. Major Trump administration climate report says damages are ‘intensifying across the country'The Three Most Chilling Conclusions From the Climate Report




Donald claimed to have read some of the climate report before reaching a decision that he did not believe it. I doubt the Duck read more than the headline and two sentences. Trump: 'I don't believe' climate change report - CNN Video


Donald is a "Stable Genius" who knows everything or so we are told by none other than the Duck himself. 

Trump on climate change: ‘People like myself, we have very high levels of intelligence but we’re not necessarily such believers.’-The Washington Post (11/27/18 statement by the Duck); Trump to reporter: I'm a very stable genius - CNN Video

The Stable Genius does not need to read books, gather facts from reliable sources, or talk with experts before arriving at an opinion. God is apparently giving him his wisdom through the "gut". Trump: My gut tells me more than anybody's brain - CNN Video


Some skeptics may argue that it was Donald's gut decisions that led to his six business bankruptcies. 


Professor Don knows more about military technology than anyone in the military. Just ask him and he will pontificate: Trump questions technology central to Pentagon’s plans for launching aircraft at sea - The Washington Post  

Those who believe that Trump knows nothing other than his own reality creations and bull shit have not yet seen the light by basking in the Duck's brilliance and profound erudition.  


Stable Genius with a High Level of Intelligence or Just a Lying and Ignorant Carnival Barker and Demagogue suffering from several mental illnesses?  

Trump brushes aside CIA assertion that crown prince ordered killing, defends him and Saudi Arabia - The Washington Post According to the Duck, the CIA had "feelings" that possibly the Crown Prince ordered the Khashoggi assassination, adding that the "crown prince hates it more than I do.”  

Trump has given his marching orders: increase spending, cut taxes and lower the ballooning federal budget deficits. Trump demands action to reduce deficit, pushes new deficit spending I call this miracle economics.  


Mia Love slams Trump in concession speech- CNN 

Trump uses immigration crisis to call for border wall funding (and once it is built, migrants will go over or under the wall, though some would be deterred)


The chaos behind Trump's family separation policy at the Mexican border - 60 Minutes investigation finds separations were greater in number than the Trump administration admits - CBS News


Trump's Response to 60 Minute Programs: 






Donald is simply repeating lies that he has told many times previously in those tweets. Trump attacks ‘Fake 60 Minutes’ for ‘phony story’ on family separations at the border - The Washington Post 


60 minutes did not use the photo referenced by Trump, but did use images "released by Customs and Border Protection in June of a facility in McAllen, Tex.,  that showed children being held in similar cagelike areas."  


Obama did not have a zero tolerance policy, which was Trump's unique policy notwithstanding his repeated lies and false denials on the subject. 


Trump's policy required that all parents be arrested and that policy then resulted in their children being routinely separated from them and sent to a different facility. The Trump Administration's Family Separation Lies, Laid Bare | Cato InstituteTrump migrant separation policy: Children 'in cages' in Texas - BBC;No, Donald Trump’s separation of immigrant families was not Barack Obama’s policy | PunditFact 


Trump claims that only "safe" tear gas was used on the migrants that included women and small children in diapers. Trump defends using very "safe" tear gas as DHS claims 600 migrants are convicted criminals - CBS News President Donald Trump: Migrants Sprayed With "Very Safe" Tear Gas At Border-YouTube Homeland Security Secretary Kirstjen Nielsen claimed that more than 600 of the migrants were convicted criminals. The border patrol claimed that over a 1000 migrants tried to storm the border last Sunday. Mexico said it was about 500. I view Ms. Nielson to be about as credible as the Duck. 


Tear gas is banned by the Geneva Convention as a chemical weapon when used in a war. What Tear Gas Does to Its VictimsChemical Weapons Convention | OPCW There is no such thing as "safe" tear gas, notwithstanding's the Duck's usual ignorant claim to the contrary, let alone "very safe" tear gas.  


Trump claims that 97% of asylum seekers failed to attend their court hearings. In the 2017 fiscal year, the number was 11%. Trump’s Falsehood-Laden Speech on Immigration - The New York Times "Of the asylum seekers who participated in a pilot program tested as an alternative to detention,... 100 percent turned up for court hearings." Trump terminated that program. Trump ends program for mothers, children seeking asylum - CNN 


I would agree that there are those who seek asylum who are gaming the system, including those who simply want to escape poverty in Central America and have no legitimate asylum claims. One way to deal with the no-shows is to place angle bracelets on the adults and to require periodic check-ins, until their asylum application reaches a final decision.      


Trump says 'thank you President T,' 


++++++

1. Small Ball-Commission Free ETFs

A. Bought 5 TDIV at $35 (commission free for Vanguard customers):



Quote: First Trust ETF VI NASDAQ Technology Dividend Index Fund (TDIV)

Closing Price Yesterday: TDIV $35.25 +$0.17 +0.48% 

Expense Ratio: .5%


Holdings


Distribution History: Quarterly at a variable rate 


Current Position: 5 shares


Maximum Position: 100 Shares


Purchase Restriction: Small Ball Rule 


Last Sell DiscussionsItems # 3.A. and 3.B. Eliminated TDIV Sold 50 at $36.56 and Sold 50+ at 36 (2/26/18 Post)(profit snapshots =$462.81); Item 2 Sold 50 TDIV at $37.07 (1/25/18 Post)(profit snapshot = $270.61); Item # 5 (4/29/17 Post)(snapshots of prior trades +$683.57)

Trading Profits to Date: $1,416.99 

B. Bought 30 PGX at $14, 10 at $13.9 and 10 at $13.71 (commission free for Schwab Customers):

Quote: PGX Fund - Invesco Preferred ETF Overview

Closing Price Yesterday: PGX $13.70 -$0.02 -0.15% 

This ETF would also be commission free to Vanguard brokerage customers.

Fidelity offers a functionally similar ETF commission free: iShares U.S. Preferred Stock ETF (PFF)

PGX Two Year History This Account:



Sponsor's Website: Invesco






Dividends: Monthly at Variable Rate



Prior Sell DiscussionsItem # 2  Sold 100 PGX at $13.65 (9/14/13 Post)Sold: 200 PGX at $14.38

PGX Net Trading Profit (-$116.54 and +$155.66) = +$39.12

Maximum Position: 100 shares I prefer to own individual equity preferred stocks and exchange traded bonds.

Purchase Restriction: Small Ball Rule

Dividend Reinvestment: Not until I hit 100 shares

As previously discussed, the "preferred" stock ETFs own more than traditional preferred stocks. Owned positions include bonds that pay interest including a variety of exchange traded bonds.

You can not spot those securities looking at the descriptions provided by the sponsor: Holdings More descriptive detail is given in the annual report. For example, all of the holdings described in the following snapshot are senior unsecured baby bonds:




E.G.

TBC-AT&T Inc. 5.625% Global Notes due 2067
TBB-AT&T Inc. 5.35% Global Notes due 2066
CTY-Qwest Corp. 6.125% Notes due 2053
TDA - Telephone & Data Systems Inc. 5.875% Sr. Notes due 2061
VZA Verizon Communications Inc. 5.9% Notes due 2054

Other owned baby bonds include:

Subordinated = junior unsecured bond (generally rated one or two notches below senior unsecured debt)

Debenture = bond, not equity capital

AFGE-American Financial Group Inc. 6.25% Subordinated Debentures due 2054

ALL.PB- Allstate Corp. 5.1% Fixed-To-Floating Rate Subordinated Debentures due 2053

ARGD- Argo Group International Holdings Ltd. 6.5% Senior Notes Due 2042

CMSA-CMS Energy Corp. 5.625% Junior Subordinated Debentures Due 2078

CMSC Stock Price-CMS Energy Corp. 5.875% Junior. Subordinated Notes due 2078

EBAYL-eBay Inc. 6% Notes due 2056

GMTA- GATX Corp. 5.625% Senior. Notes due 2066




SWJ-Stanley Black & Decker Inc. 5.75% Junior Subordinated Debt Due 2052

THGA - Hanover Insurance Group Inc. 6.35% Subordinated Debentures due 2053

TMK.PC - Torchmark Corp. 6.125% Junior Subordinated Debentures due 2056

WRB.PE -  W.R. Berkley Corp. 5.7% Subordinated Debentures due 2058

There are several more.

Of the preceding linked bonds, I currently own only ARGD and SGZA but have bought and sold EBAYL, GMTA, SOJB, SWJ and THGA. I will trade them given their potentially long durations.

2. Short Term Bond/CD Ladder Basket Strategy:

December Maturities: 

SU = Senior Unsecured Bond ($1K par value per bond)

CD = Certificate of Deposit ($1K par value per CD)-FDIC Insured
MI = Monthly Interest Payments
Treasury: U.S. Treasury Debt ($1K par value per bill, note or bond)
IR: Investment rate for T Bills Bought at Auction 
Secondary Market Treasury Purchases: All Commission Free

4 Wisconsin Public Service 1.65% SU 12/4 (various purchase dates)
2 Northwest Natural Gas 1.545% SU 12/5 (bought in February 2018)
2 Beal Bank 1.5% CDs 12/5 (16 month CDs, semi-annual interest)
2 Starbucks 2% SU 12/5 (bought in March 2018)
2 Treasury 1 Year T Bill 1.694% IR 12/6  (bought at auction)
1 Citigroup 2.05% SU 12/7   (bought in March 2018)
2 Morgan Stanley 2.2% SU 12/7 (bought in March 2018)
2 Pacific Premier 1.45% CDs MI 12/10 (15 month CDs)
2 Treasury IR 2.207% 12/11 (1M 25 day T Bills Bought at Auction)
5 Treasury IR 2.234% 12/11 (1 month T Bills bought at auction)
2 Black Hills 2.5% SU 12/11 (early redemption)
2 Deere 1.95% SU 12/13 (bought in February 2018)
2 Treasury 2.151% Investment Rate 12/13 (bought at auction)
2 Sonabank 1.65% CDs MI 12/14 (1 Year CD)
6 Treasury 1.25% 12/15 (multiple secondary market purchases)
2 Tyco Electronics 2.375% SU 12/17 (bought in March 2018)
2 Treasury Bills (1MO & 25 days) IR 2.218% 12/18 (bought at auction)
2 Citizens Bank 2.1% CDs 12/20 (6 month CDs)
2 Treasury 13 Week Investment Rate 2.166% 12/20 (bought at auction) 
1 Parkway Bank 1.75% CD MI 12/22 (1 Year CD)
2 Wells Fargo 1.5% CDs MI 12/24 (13 month CDs)
3 Treasury  2.243% IR  55 day T Bills (bought at auction) 
1 Stifel BK 2.1% CD MI 12/27 (6 month CD)
2 Treasury 13 Week Investment Rate 2.223%  12/27 (bought at auction)
1 Merrick Bank 1.75% CD MI 12/28 (1 Year CD)
1 GATX 2.5% SU Early Redemption 12/28 (maturing on 3/15/19)
1 Bank of China 2.2% CD 12/28 (6 month CD)
4 Treasury 1.5% 12/31 (multiple secondary market purchases)
2 Treasury 1.25% 12/31 (")

$64K (added early redemption of 1 GATX bond on 12/28/18 and early redemption of 2 Black Hills SU bonds maturing on 1/11/19 )

A. Bought 1 Wells Fargo 3% SU Bond Maturing on 1/22/2021:


I now own 2 bonds.

FINRA Page: Bond Detail (prospectus linked)

Issuer: Wells Fargo & Co. (WFC)
WFC Analyst Estimates
Wells Fargo Reports $6.0 Billion in Quarterly Net Income; Diluted EPS of $1.13 

Credit Ratings:



Bought at a Total Cost of 99.171
YTM at Total Cost Then at 3.398%
Current Yield at TC = 3.0251%

B. Bought 2 J.P. Morgan 2.75% SU Bonds Maturing on 6/23/20-In a Roth IRA Account:



FINRA Page: Bonds Detail (prospectus not linked)

Issuer: JPMorgan Chase & Co.  (JPM) 

JPM Analyst Estimates 

Credit Ratings:



Bought at a Total Cost of 99.469    (includes $4 Vanguard commission)
YTM at TC Then at 3.094%
Current Yield at TC = 2.7647%

I am replacing in advance two JPM SU bonds that mature in this ROTH IRA account next March.

C. Bought Two  53 Day Treasury Bills at Auction Maturing on 1/15/19:
IR = 2.34%



Auction Results:

3. REGIONAL BANK BASKET STRATEGY:

A. Bought 100 PBCT at $15.65:



Quote: People's United Financial Inc (PBCT)

Closing Price Yesterday: PBCT $16.00 -$0.21 -1.30% 

PBCT Consensus Analyst E.P.S. Estimates (as of date of purchase)


2018: $1.29

2019: $1.43

Y-O-Y Projected E.P.S. Growth = 10.85%

P/E Using $15.65 price and $1.43 E.P.S. = 10.94

Dividend: Quarterly at $.175 ($.7 annually)

Dividend Yield at $15.65 =   4.47%
Dividend Yield at $15.7 TC per share = 4.46%

Last Ex Dividend Date: 10/31/18

Last Round-TripItem # 4 Sold 100 PBCT at $14.61 (9/21/13 Post)(profit snapshot =$298.47)- Item # 1 Bought 100 PBCT at $11.47 (6/14/12 Post)

The reason for selling back in 2013 was overvaluation. The consensus E.P.S. for 2014 was then $.9. With the recent price contraction from over $20, and earnings growth since 2013, the valuation has become cheap IMO.

Current and Maximum Position: 100 shares + dividend reinvestment

Last Earnings Report: Q/E 9/30/18

People's United Financial Reports Third Quarter Net Income of $117.0 Million, or $0.33 per Common Share

Comparisons with 2017 Third Quarter:

E.P.S. $.33, up from $.26
NIM: 3.15% up from 3.04% (right direction, slow progress)
Efficiency Ratio: 56.7%, down from 57.3% (right direction)
ROA: 1.06% (average)
ROTE: 14.5%
Charge Off Ratio: .09% (excellent)
Coverage Ratio: 147.8% (good/originated loans only)
NPA Ratio: .57% (okay for this stage in credit cycle)
Total Risk Based Capital Ratio: 13.6% (okay, well in excess of minimum)
Tangible Book Value Per Share: $9.19, up from $8.68
Tangible Equity to Assets Ratio: 7.6%

"The effective income tax rate was 21.6% for both 3Q18 and the first nine months of 2018, compared to 27.8% for the full-year of 2017." The bank owns municipal bonds.  

4. Elimination:  


A. Eliminated GMRE-Sold 98+ shares at $9.41





Equity REIT Common and Preferred Stock Basket Strategy:

Closing Price Yesterday: GMRE $9.45 +$0.01 +0.11%: Global Medical REIT

Profit Snapshot: +$159.01



Last Buy TradesItem # 1.A. Bought 10 GMRE at $7.19 and 10 at $6.77-Used Commission Free Trades (3/8/18 Post) 

I view this stock as a high risk REIT given its debt levels; its use of expensive equity capital to fund purchases; the external management structure and its cost; and GMRE's excessive free cash payout ratio. 


Last Earnings Report: Q/E 9/30/18 SEC Filed Earnings Press Release




10-Q For the Q/E 9/30/18

This relatively new REIT has gradually increased AFFO per share to the $,20 per share quarterly dividend:

GMRE Trading Profits to Date: $363.98 ($204.97 from prior trades)

Links to Prior Sell Discussions:


Item # 3.C. Sold 50 GMRE at $10.01 (5/23/2017 Post)


South Gent's Comment Blog # 7: Eliminated GMRE


I still own a small position in Global Medical REIT Inc. 7.5% Cumulative Preferred Series A Stock. I may add to that position on weakness. 


DisclaimerI 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.

11 comments:

  1. The market's surge this morning occurred just after FED Chairman Powell asserted that the federal funds rate was "just below" normal.

    The Bond Ghouls responded by reducing the probability of 3 more .25% hikes to two more as more probable than not.


    https://www.cnbc.com/2018/11/28/markets-see-fewer-rate-hikes-in-powell-comments.html

    Powell's comment is not having any impact on the ten year treasury bond which is close to an unchanged yield of 3.06%:

    https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

    The impact is being felt in the shorter term maturities that are more sensitive to changes in the FF rate:

    U.S. 2 Year Treasury Note
    2.803 -0.036%
    Last Updated: Nov 28, 2018 at 1:02 p.m. EST
    https://www.marketwatch.com/investing/bond/tmubmusd02y?countrycode=bx

    The 3 year treasury is moving closer to flat with the two year yield:

    https://www.marketwatch.com/investing/bond/tmubmusd03y?countrycode=bx

    S&P 500 Index
    2,719.23 + 37.06
    Last Updated: Nov 28, 2018 at 1:04 p.m. EST
    https://www.marketwatch.com/investing/index/spx

    ReplyDelete
  2. S&P 500 Index 2,743.79 + 61.62 +2.30%

    The Stock Jocks thought something momentous happened today after Powell signaled that the Federal Funds rate was near neutral.

    I would agree with the Bond Ghouls who basically yawned. The difference between today and yesterday is that maybe there will not be three more .25% increases but only two. I have been around too long to believe that a quarter point really means anything at all. And, I did not expect the FED to raise 4 times anyway, and neither did the Bond Ghouls who never bought into the FED's dot plot.

    I expressed an opinion earlier that the FED may raise only one more time if the trade war accelerates on 1/1/19, the date Trump has scheduled a tariff increase to 25% from the current 10% on $200B in China's exports and possibly other measures thereafter.

    I would note that the 200 day SMA line for SPX is at 2,761.54 using a 1 year YF chart. It would probably be disconcerting to the Stock Jocks for that index to move up to that line and then turn back down with some vigor. The 50 day SMA line is somewhat higher at 2,781.86.

    I have been lengthening at a snail's pace my weighted average duration for fixed income investments. This is in response to the plunge in crude oil prices and a modest downward drift in intermediate and longer term interest rates.

    There are several ways that I will lengthen duration. I am starting to nibble on intermediate term bonds. I have increased slightly my purchases of potentially perpetual preferred stocks and longer duration exchange trades senior unsecured and secured bonds. My recent CD purchases, while insignificant, have been in 2 and 3 year maturities. I have been buying more corporate bonds maturing in 2 to 3 years. And, I have started to buy more treasury bills and notes maturing in 1 to 3 years.

    The Bond Ghouls did take down in price long term treasury bonds, possibly due to concerns that the FED is responding to political pressures and will consequently be nowhere near as vigilant in containing the inflation bogeyman. I view that as a legitimate concern.

    iShares 20+ Year Treasury Bond ETF (TLT)
    $114.45 -$0.56 (-0.49%)
    https://finance.yahoo.com/quote/TLT?p=TLT

    What is the normal rate? The current FF rate is nowhere near a normal rate using history to define what is normal. That is not what economist mean by normal:

    https://www.federalreserve.gov/econres/notes/feds-notes/estimate-of-the-long-term-neutral-rate-of-interest-20180905.htm

    While economists and central bankers believe that they can divine the neutral rate, they are guessing and their guesses may be way off, potentially causing long term damage.

    I would consider the neutral FF rate now to be 4%, but I do not have a vote on the FOMC. Powell is implying IMO a neutral rate around 2.75% which I regard as too accommodative and stimulative longer term, and at this stage in the economic cycle. If I am right, it may take a year or two to know with the measuring rod being inflation and inflation expectations.

    ReplyDelete
  3. Look at S&P new highs/lows - use calendar to see last 3-4 days. In no way bullish. Quite the opposite.
    http://www.wsj.com/mdc/public/page/2_3021-newhinyse-newhighs.html

    ReplyDelete
    Replies
    1. I view that data as far less important than the BarChart information which I linked in this post showing the percentage of S & P 500 components trading above their 50 and 200 day moving averages.

      The reason has to do with the large number of securities included on the new high and low tables that are not common stocks.

      Over the past several weeks, a large number of equity preferred stocks and exchange traded bonds have hit new 52 week lows. Perhaps, this is due to tax loss selling. The recent downdraft in intermediate term interest rates are supportive which is how I explain the weakness in bond like securities traded on the NYSE as tax loss selling.

      While there are certainly reasons to be concerned about internal weaknesses in major stock indexes and several stock sectors, and the weakening in some economic data series both in the U.S. and abroad, a more balanced view of the pros and cons to common stocks at this juncture is in order.

      Delete
  4. Intermediate term interest rates are continuing to drift down some.

    U.S. 10 Year Treasury Note 3.025 -0.033%
    Last Updated: Nov 29, 2018 12:11 p.m. EST
    https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

    The Personal Income and Outlays report for October showed a decline in the personal expenditure price index and a surge in consumer spending.

    https://www.bea.gov/news/2018/personal-income-and-outlays-october-2018

    The data on home sales continues to trend on the weak side.

    https://www.nar.realtor/newsroom/pending-home-sales-slip-2-6-percent-in-october

    The Bond Ghouls are apparently reinterpreting Powell's more dovish stand as expressing a more subdued U.S. economy in coming quarters with less inflationary pressures. The decline in energy prices will place downward pressure on headline CPI in the coming months.

    iShares 7-10 Year Treasury Bond ETF (IEF)
    $101.60 +$0.28 (+0.28%)
    As of 12:19PM EST.
    https://finance.yahoo.com/quote/IEF?p=IEF

    ReplyDelete
  5. South Gent,

    T is rebounding a bit after your 10/26 purchase at $29.23. Are you adding on its way up?

    Credit Suisse has an Underperform rating with a price target of $29. There are headwinds in its wireline, media business, and the competition in wireless. I don't have a crystal ball, but I am guessing a short-intermediate term bottom is in.

    ReplyDelete
    Replies
    1. Y: AT & T purchases are subject to the small ball rule. I adhere to my bey of risk mitigation rules religiously. I can only buy now at below $29.25 unless I take the stock out of my small ball restriction rule which I am not inclined to do.

      It appears so far that $29 MAY be a short term bottom. There is what appears to be a double bottom on 11/20 and 10/26 and 11/23. The chart still looks bad however.

      A significant market downturn or possibly an adverse ruling on the Time Warner merger may cause the stock to test that level again.

      Oral arguments in the government's appeal of the District Court's antitrust decision made in favor of AT & T are set for 12/6, and possibly the questioning may indicate how the D.C. Appellate Court leans.

      https://www.broadcastingcable.com/news/court-sets-oral-argument-duration-for-at-t-time-warner-suit

      Given AT & T's huge debt load and constant need for refinancings, stability or a downdraft in intermediate and long term interest rates would be a plus.

      Morningstar gives the stock a 4 star rating and a fair value estimate of $37. That report is available to Schwab customers. S & P currently rates the stock four stars with a 12 month price target of $35, a price that would likely cause me to eliminate my position based on what I know now. Argus has a buy target of $48 and a buy rating.

      The CS report is available to Schwab customers. The price target is $29.

      It comes down to what an analyst wants to emphasize. Their are reasons to be as negative as CS or as optimistic as Morningstar or S &P.

      Delete
    2. AT&T Inc
      AFTER HOURS Trading
      $30.98 +0.41 +1.34% After Hours Volume: 790K
      https://www.marketwatch.com/investing/stock/t

      The pop is apparently linked to this business update released after regular trading hours:

      https://www.businesswire.com/news/home/20181129005758/en/

      Delete
  6. My risk mitigation rules can be changed based on subsequent developments. One of those rules limits my dollar exposure to a particular security based on opinion on the risk-reward balance.

    Previously, I had a 150 share limit on HTPRD, a 6.5% coupon cumulative preferred stock issued by the hotel REIT Hersha Hospitality.

    The risk was viewed as primarily related to interest rate risk.

    The price has continued to decline since my last purchase and the yield has risen to over 8% at the current price.

    I consequently increased my limit to 200 shares and bought another 50 earlier today at $20.11. That purchase was made in my ROTH IRA account where I now own 100 shares. The other 50 share lot in that account was bought at $21.34. The previous sell was at $25.85 (9/27/17), near the bottom of the downtrend in intermediate term rates. Now, I will consider selling the highest cost lot when and if the price exceeds $21.5, probably closer to $22 to $22.25 and then keep the lot bought today at $20.11.

    Another 100 HTPRD is held in a taxable account.

    .065% x. $25 = $1.625 per share annually
    8.08% Yield at a total cost of $20.11 (tax free in the Roth)

    ReplyDelete
  7. The stock market reacted positively today to comments made by the U.S. Trade representative Robert Lighthizer.

    https://www.marketwatch.com/story/as-lighthizer-predicts-trump-xi-dinner-to-be-a-success-heres-what-such-an-outcome-might-look-like-2018-11-30

    The Stock Jocks downplayed recent tough talk talk from Lighthizer:

    https://www.cnbc.com/2018/11/29/trump-administration-to-examine-ways-to-raise-tariffs-on-chinese-autos.html

    Possibly China will give the Duck something that will result in a cease fire. The Stock Jocks seem to think that something will be done to avoid an escalation including the currently anticipated rise in the 10% U.S. tariffs to 25% on 1/1/19.

    The Bond Ghouls took the 10 year yield down below 3%:

    U.S. 10 Year Treasury Note 2.996% -0.034%
    Last Updated: Nov 30, 2018 at 4:47 p.m. EST
    https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

    That downdraft does not express optimism that all will be well come Monday.

    There will be next Tuesday a 1 year treasury bill auction.

    The yield spread between the 1 and 2 year maturities has flattened.

    The 1 year T Bill closed at 2.7% today with the 2 year note at 2.8%.

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  8. I have published a new post:

    https://tennesseeindependent.blogspot.com/2018/12/observations-and-sample-of-recent.html

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