Economy:
Existing-home sales roar higher, but the West takes it on the chin - MarketWatch Roar is not an accurate description IMO. Existing home sales increased 1.9% from October's seasonally adjusted rate, but were down 7% from November 2017.
Philly Fed manufacturing index in December weakens to more than two-year low - MarketWatch
Philly Fed manufacturing index in December weakens to more than two-year low - MarketWatch
The market rallied last Friday morning after the New York Fed President stated that the FED was listening to the stock market. NY Fed President John Williams says the Fed could re-evaluate view in 2019; Williams says Fed is 'listening' to a plunging stock market as part of data-dependent rate policy - MarketWatch I did not regard his comments as earth shaking or as representing a change in the FED policy announced earlier in the week. Williams still maintained that the FED expects real GDP growth next year of between 2% to 2.5% which would support higher interest rates. Williams noted that the FED's future policy was data dependent which is nothing new. After digesting his remarks, the Stock Jocks reached the same conclusion and sold the rally.
Donald is of course a loose cannon who confuses his overflowing ignorance for good "gut" instincts. Trump Said to Discuss Firing Fed's Powell After Latest Rate Hike - Bloomberg
November durable goods orders point to underlying weakness - MarketWatch;
Personal Income and Outlays for November 2018.pdf
Consumer spending outpaces income growth in November - MarketWatch
Trump warns of a ‘very long’ government shutdown if Democrats oppose bill that includes border wall money
Donald is of course a loose cannon who confuses his overflowing ignorance for good "gut" instincts. Trump Said to Discuss Firing Fed's Powell After Latest Rate Hike - Bloomberg
November durable goods orders point to underlying weakness - MarketWatch;
Consumer spending outpaces income growth in November - MarketWatch
Trump warns of a ‘very long’ government shutdown if Democrats oppose bill that includes border wall money
+++++
Markets and Market Commentary:
Has anyone seen Donald's tweet taking credit for the stock market's decline? I am waiting to read it with bated breath. If anyone sees that tweet, please send me a link.
I do believe that more investors are becoming concerned about Donald's capacity and eagerness to wreck havoc.
On a short term basis, I view the stock market as oversold and am expecting a sharp bounce up, though the path of least resistance at the moment is down as rallies are still being sold with gusto.
The U.S. stock market lost about $2.05 trillion last week. The Nasdaq Composite declined 8.36% and is off almost 22% from its recent high.
The S & P 500 closed last Friday 17.83% lower than its 52 week intra-day high which was hit on 9/21/2018. (see charts: Market Briefing: S&P 500 Bull & Bear Markets & Corrections)
The October 1987 crash IMO was such a reset accompanied by a panic attack and ill-conceived and designed portfolio insurance programs. That crash occurred within the context of a long term secular bull market that started in August 1982 and ended in March 2000. During that period, the S & P 500 had an average annual total return of 15.546% adjusted for inflation:
S&P 500 Return Calculator, with Dividend Reinvestment – DQYDJ
The annual average total return starting in March 2009 through September 2018 adjusted for inflation was +15.475%.
There is a remarkable symmetry in what one can expect in SPX inflation adjusted total returns in both long term bull and bear markets.
The number for the worst long term secular bear market in my lifetime was an annual average total return of -1.813% (dividends reinvested), adjusted for inflation, between January 1966 and July 1982.
I am currently classifying the stock market's abrupt and fast decline as a valuation reset based on a more realistic assessment of future earnings. Those resets occur periodically in long term secular bull markets.
I have been doing some light buying into the volatility spikes, which at least gives me the option of selling higher cost shares when and if that bounce up occurs. For several weeks now, that has led me to catch falling knives.
All of the major stock index volatility indexes are at elevated and worrisome levels:
VIX - CBOE Volatility Index - MarketWatch (for the S&P 500)
VXO - CBOE S&P 100 Volatility Index - MarketWatch
VXN - CBOE NASDAQ 100 Volatility Index - MarketWatch
VXD - DJIA Volatility Index - MarketWatch
RVX - CBOE Russell 2000 Volatility Index - MarketWatch
Robert Shiller worries about market turmoil and possible recession
Has anyone seen Donald's tweet taking credit for the stock market's decline? I am waiting to read it with bated breath. If anyone sees that tweet, please send me a link.
I do believe that more investors are becoming concerned about Donald's capacity and eagerness to wreck havoc.
On a short term basis, I view the stock market as oversold and am expecting a sharp bounce up, though the path of least resistance at the moment is down as rallies are still being sold with gusto.
The U.S. stock market lost about $2.05 trillion last week. The Nasdaq Composite declined 8.36% and is off almost 22% from its recent high.
The S & P 500 closed last Friday 17.83% lower than its 52 week intra-day high which was hit on 9/21/2018. (see charts: Market Briefing: S&P 500 Bull & Bear Markets & Corrections)
The October 1987 crash IMO was such a reset accompanied by a panic attack and ill-conceived and designed portfolio insurance programs. That crash occurred within the context of a long term secular bull market that started in August 1982 and ended in March 2000. During that period, the S & P 500 had an average annual total return of 15.546% adjusted for inflation:
The annual average total return starting in March 2009 through September 2018 adjusted for inflation was +15.475%.
There is a remarkable symmetry in what one can expect in SPX inflation adjusted total returns in both long term bull and bear markets.
The number for the worst long term secular bear market in my lifetime was an annual average total return of -1.813% (dividends reinvested), adjusted for inflation, between January 1966 and July 1982.
I am currently classifying the stock market's abrupt and fast decline as a valuation reset based on a more realistic assessment of future earnings. Those resets occur periodically in long term secular bull markets.
I have been doing some light buying into the volatility spikes, which at least gives me the option of selling higher cost shares when and if that bounce up occurs. For several weeks now, that has led me to catch falling knives.
All of the major stock index volatility indexes are at elevated and worrisome levels:
VIX - CBOE Volatility Index - MarketWatch (for the S&P 500)
VXO - CBOE S&P 100 Volatility Index - MarketWatch
VXN - CBOE NASDAQ 100 Volatility Index - MarketWatch
VXD - DJIA Volatility Index - MarketWatch
RVX - CBOE Russell 2000 Volatility Index - MarketWatch
Robert Shiller worries about market turmoil and possible recession
Even Stan Druckenmiller Doesn't Know Where Markets Go Next - Bloomberg; Druckenmiller warns that the stock market is one big ‘mirage’ right now - MarketWatch
The ‘smart money’ is the most bearish on stocks since 2008, with ‘recession coming,’ BofA survey finds - MarketWatch
EIA reports a fall in U.S. crude supply for a third week in a row - MarketWatch
David Tepper says the 'Fed put is dead' and so cash is 'not so bad' as an investment now
EIA reports a fall in U.S. crude supply for a third week in a row - MarketWatch
David Tepper says the 'Fed put is dead' and so cash is 'not so bad' as an investment now
+++++++
Trump:
Donald can not help himself.
Knowing that the Trumpsters are unlikely to ever make any effort to learn accurate information, much preferring the reality creations and cliches fed to or created by them, Donald feels unrestrained in making up the most outrageous lies and then pedals them to his gullible followers as facts.
This is a continuing process which occurs almost daily and sometimes multiple times during a signal day.
A recent example is this missive from Demagogue Don, the unchallengeable leader of the modern day GOP:
The Trump's Administration's OIG just reported that the emails were not deleted, as claimed by Donald and his sycophants, but were simply not retrieved due to a technical glitch, since corrected, in an automated collection application.
The emails were recovered after the misconfiguration was corrected. DOJ investigation turns up thousands of missing texts from Peter Strzok and Lisa Page - POLITICO
Report of Investigation: Recovery of Text Messages From Certain FBI Mobile Devices
On the same day, Don the Con repeated his lie that the FBI broke into Cohen's office:
The FBI had a search warrant issued by a court after a probable cause finding which proved to be justified by subsequent events. It was not Mueller's team who sought the search warrant but the federal prosecutor's office in the Southern District of New York headed by a Trump appointee. FBI Raids Show Michael Cohen Investigation Is No Witch Hunt; Michael Cohen: DOJ went great lengths to conduct raid on Trump lawyer
Trump previously referred to this lawful search and seizure a "disgraceful situation” and an “attack on our country in a true sense.” In TrumpWorld, lawful is unlawful and unlawful is lawful.
And on the same day, Lying Don, channeling his deeply authoritarian demagoguery, slammed the free press:
Since Demagogue Don repeats demonstrably false statements over and over again, the WP has created a new classification for his category which is standard fare for Donald.
The new category is called the Bottomless Pinocchio. "The bar for the Bottomless Pinocchio is high: The claims must have received three or four Pinocchios from The Fact Checker, and they must have been repeated at least 20 times. Twenty is a sufficiently robust number that there can be no question the politician is aware that his or her facts are wrong." Meet the Bottomless Pinocchio, a new rating for a false claim repeated over and over again - The Washington Post
About 6 out of 10 Americans believe the fact checkers when they factually document a false claim made by the Duck, Trump Fact Checker poll-Washington Post, while the remaining individuals are Trumpsters and are not reachable with accurate information. Donald Trump didn't tell the truth 83 times in 1 day
Trump published the following missive about the Trump Foundation that was forced to close due to fraud:
Note that the Duck does not actually contest specific facts about his use of the trust for personal enrichment and advancement of his political career when spewing his usual feral venom at the former and current New York Attorney General.
And it is reasonable for those who still have functioning brain cells to ask how can a family that so mismanages an extremely small charity run the U.S. government?
What are the facts that the Duck refuses to address in the preceding rant?
The largest expenditure by this "charity" was to rehabilitate a fountain outside of Trump's NYC tower that improved the value and aesthetics of his property. The smallest gift was for $7 Boy Scout registration fee that was probably for Trump's oldest son who was 11 at the time.
Then Donald used the Foundation's money to make a $25,000 political contribution to the campaign of Florida Attorney General Pamela Bondi (R).
The Foundation bought a large painting of the Duck for $20K in 2007.
Donald's businesses used the Foundations money to settle lawsuits. Those included "a $100,000 payment to settle legal claims against Mr. Trump’s Mar-A-Lago resort; a $158,000 payment to settle legal claims against his Trump National Golf Club in 2008 from a hole-in-one tournament; and a $10,000 payment at a charity auction to purchase a painting of Mr. Trump that was displayed at the Trump National Doral in Miami". Attorney General Underwood Announces Lawsuit Against Donald J. Trump Foundation And Its Board Of Directors For Extensive And Persistent Violations Of State And Federal Law | New York State Attorney General
Trump used $258,000 from his charity to settle legal problems - The Washington Post
Donations were doled out in coordination with Donald's presidential campaign.
Trump boasts about his philanthropy. But his giving falls short of his words. - The Washington Post
Trump Foundation To Dissolve Amid New York Attorney General's Investigation : NPR
Trump agrees to shut down his charity amid allegations that he used it for personal and political benefit - The Washington Post
Trump Foundation admits to violating ban on ‘self-dealing,’ new filing to IRS shows - The Washington Post
PolitiFact Sheet: Comparing the Clinton and Trump foundations | PolitiFact
That negative image of the Clinton Foundation is owed to a plan run by none other than Steve Bannon
One fantasy cooked up by the republicans, and peddled by their apparatchiks at Fox, is that Hillary gave favors when she was the Secretary of State in exchange for contributions to the Clinton Foundation. None of those fantasies have withstood a factual investigation. FACT CHECK: Hillary Clinton Gave 20 Percent of United States' Uranium to Russia in Exchange for Clinton Foundation Donations? Answer: False Claim; Russian Uranium One Deal And Hillary Clinton In The News Again
And, there is no contention that the Clintons used their foundation as a personal piggy bank like the Duck did with his foundation. Once again, the Duck appeals to the brain dead and distracts attention from himself by falsely accusing others of misdeeds when he has done far worse himself.
+++
Defense Secretary Mattis Has Had Enough of Donald:
One day after the Duck woke up and decided to pull U.S. troops out of Syria with the order sent via twitter, Mattis resigned and rebuked Donald in his resignation letter. Defense Secretary James Mattis is quitting because he doesn't agree with Trump; James Mattis resigns today: Mattis steps down as defense secretary, soon after Trump ordered U.S. troop withdrawal from Syria - CBS NewsPutin agrees with the Duck and praised him for his decision. Syria withdrawal plan is pure Trump
After Mattis’s Resignation, a President Unbound
Jim Mattis’s unmistakable repudiation of Trumpism, annotated - The Washington Post
Syria Pullout by U.S. Tilts Mideast Toward Iran and Russia, Isolating Israel - The New York Times
In Afghanistan, Alarm and a Sense of Betrayal Over U.S. Drawdown - The New York Times; U.S. to Withdraw About 7,000 Troops From Afghanistan, Officials Say - The New York Times
Trump's America First policy means isolationism in foreign policy matters.
Trump's approval rating among republicans hovers in the 85% to 90% range. Trump’s approval ratings so far are unusually stable, deeply partisan | Pew Research Center
++++
In Tweetstorm, Trump Bends Truth on Foreign Policy and the Border Wall Donald claimed that Ronald Reagan tried for 8 years to build a border wall yet there is no historical record indicating that he made any effort at all.
Acting Attorney General Matthew Whitaker has ignored the recommendation of the DOJ's top ethics official to remove himself from supervision over the Mueller investigation. Whitaker rejected advice to recuse himself from Mueller’s Russia investigation - MarketWatch
+++++++
1. Eliminations:
A. Sold 70 UL at $52.625-Used Fidelity Commission Free Trade:
Quote: Unilever PLC ADR (UL)
Profit Snapshot: +$2,412.2
Added to UL at $18.05 (3/23/2009 Post)
Closing Price Last Friday: UL $52.26 -$0.54 -1.02%
I am running near empty in my Fidelity money market account. The overall weighting in this account is near 90% in investment grade bonds and FDIC insured CDs, with the bonds weighted in treasuries, high quality Tennessee municipal bond (none rated below A- and mostly AA to AAA), and "BBB+" or better rated corporate bonds
I am going to use the proceeds from this elimination to buy higher yield common stocks. I would emphasize that UL has held up in the recent market turmoil better than the stocks that I will likely buy with the proceeds.
Last Ex Dividend Date: 11/1/18
I did not reinvest any dividends.
UL Profits 2015 to Date: +$2,781.68
Most Recent Sell Discussion: Item # 4.B. Sold 30 UL at $47.66 (3/10/17 Post Post)(a flip; profit snapshot = $264.7)(snapshots of other recent trades)
Most Recent Buy Discussions: Dividend Growth Strategy: Added 30 UL At $39.25 Roth IRA - South Gent | Seeking Alpha; Item # 2 Bought 100 Unilever at $38.10 (9/21/13 Post)
I have never sold either UN or UL shares for a loss.
Price increases underpin sales growth at Nestle, Unilever | Reuters
German retailer Kaufland drops Unilever products over price rises | Reuters
2. Small Ball-Income Generation BDCs:
A. Bought 15 FSIC at $6 and 20 at $5.65-Used Commission Free Trades (symbol changed to FSK):
This completes my small ball buying program for FSIC.
Closing Price Lat Friday: FSIC $5.36 -$0.08 -1.47%
FSIC completed its merger with CCT with FSIC as the surviving corporation. FS/KKR Announces Closing of Merger of FS Investment Corporation and Corporate Capital Trust The corporation renamed itself to FS KKR Capital Corp with the the new ticker symbol of FSK.
Quote: FS Investment Corp. (FSIC)
Website: Home | FS Investment Corporation
As stated in prior posts, FSIC is a deservedly hated BDC.
It looks like that I will become an involuntary long term holder of the stock.
The question, which remains unresolved, is whether the external managers have learned anything from their mistakes.
I doubt it but hope springs eternal until drowned by reality.
It looks like that I will become an involuntary long term holder of the stock.
The question, which remains unresolved, is whether the external managers have learned anything from their mistakes.
I doubt it but hope springs eternal until drowned by reality.
Management: External (IMO, unworthy of any compensation)
Annual Average Total Return with a Start Date of 4/16/14 Through 11/23/18: -1.43% (Everyone involved in producing that result needs to be fired IMO. The world, however, rewards Masters of Disaster handsomely regardless of their actual worth and contributions, and they are much affronted by the factual observation that they are often worse than worthless. Describing that return as pathetic is a gross understatement. It is impossible to defend it as even remotely competent)
The start date was the earliest date of a trade provided by this website: DRIP Returns Calculator | Dividend Channel
Two Year Chart: Strong Bear Trend
The chart also reinforces and supports my opinion about the external managers expressed above.
Maximum and Current Position in this Account: 100 Shares + Shares purchased with Dividends
Average Cost Per Share: $6.55
Dividends: Regular dividend currently at $.19 per share ($.72 per share annually)
Last Ex Dividend Date: Regular on 12/11/18 (payment date 1/2/19)
Special Dividend: $.09 with an ex dividend date on 11/16/18 (paid 12/3/18) The special dividend was not reinvested to buy more shares.
Dividend Yield at TC Per Share (using regular dividend only) = 10.99%
Dividend Reinvestment: Yes at greater than a 10% discount to last reported net asset value per share
Last Reported NAV per share (9/30/18) = $8.64
Discount to NAV Per Share at TC Using $8.64 NAV per share = -24.19%
Last Discussed: Item # 1.C. Added 10 FSIC at $6.4 (11/14/18 Post) I discussed the third quarter earnings report in that post.
3. Short Term Bond/CD Ladder Basket Strategy:
Purchases: $5K
A. Bought 1 Treasury 2.625% Coupon Maturing on 11/15/20:
YTM = 2.795%
B. Bought 1 Wells Fargo 3.1% CD (monthly interest payments) Maturing on 12/14/20 (2 Year CD):
C. Bought 2 Mondelez 3% SU Maturing on 5/7/20-In A Roth IRA Account:
I now own 4 bonds with the other 2 held in a taxable account.
Finra Page: Bond Detail (prospectus linked)
Issuer: Mondelez International Inc. Cl A (MDLZ)
MDLZ Analyst Estimates
Mondelēz International Reports Q3 Results
MDLZ SEC Filings
10-K (2017 Annual Report with debt discussed starting at page 86)
Mondelēz International Outlines Long-Term Strategy and Provides 2019 Guidance
Credit Ratings:
Fitch Rates Mondelez's Senior Unsecured Notes 'BBB'
Bought at a Total Cost of 99.586
YTM at TC Then at 3.302%
Current Yield at TC = 3.0125%
D. Bought 1 Treasury 1.625% Coupon Maturing on 7/31/20:
YTM at 2.72%
I now own 2 bonds.
A. Bought 1 Treasury 2.625% Coupon Maturing on 11/15/20:
YTM = 2.795%
B. Bought 1 Wells Fargo 3.1% CD (monthly interest payments) Maturing on 12/14/20 (2 Year CD):
C. Bought 2 Mondelez 3% SU Maturing on 5/7/20-In A Roth IRA Account:
I now own 4 bonds with the other 2 held in a taxable account.
Finra Page: Bond Detail (prospectus linked)
Issuer: Mondelez International Inc. Cl A (MDLZ)
MDLZ Analyst Estimates
Mondelēz International Reports Q3 Results
MDLZ SEC Filings
10-K (2017 Annual Report with debt discussed starting at page 86)
Mondelēz International Outlines Long-Term Strategy and Provides 2019 Guidance
Credit Ratings:
Fitch Rates Mondelez's Senior Unsecured Notes 'BBB'
Bought at a Total Cost of 99.586
YTM at TC Then at 3.302%
Current Yield at TC = 3.0125%
D. Bought 1 Treasury 1.625% Coupon Maturing on 7/31/20:
YTM at 2.72%
I now own 2 bonds.
4. INCOME GENERATION-CAD Stash:
A. Bought 50 PWF:CA at C$27.73 (C$1 commission):
A. Bought 50 PWF:CA at C$27.73 (C$1 commission):
Quote: Power Financial Corp. (Canada: Toronto)
Closing Price Last Friday: PWF.TO C$25.21 -C$0.51 -1.98%
This stock also trades in the U.S. Pink Sheet Exchange under the symbol POFNF. The last letter in that symbol denotes ordinary shares that are priced in USDs. When I bought this lot in Toronto, the USD priced shares were trading at $20.88.
This is my first purchase of PWF:CA. I have bought and profitably sold Power Corporation of Canada several times (POW:CA) which has a 65.5% ownership stake in PWF:CA. Power Corporation of Canada | Organization Chart I currently own 100 of the USD priced Power Corporation shares (PWCDF) with an unrealized loss. Item # 2 Added 50 PWCDF at $22.58 (7/5/18 Post)(trading profits to date = $1,088.04)
I decided to go directly to PWF:CA for an additional purchase, rather than averaging down on PWCDF, due mostly to its higher dividend yield.
Organizational Chart:
Pargesa - Companies
The ownership interest in Pargesa does not contribute much to earnings compared to the subsidiaries Great-West Lifeco Inc. (Canada: Toronto) and IGM Financial Inc. (Canada: Toronto). The main interest is the value of stock holdings indirectly owned through Pargesa's stake in Groupe Bruxelles Lambert S.A. (Euronext Brussels)
Dividends: Quarterly at C$.433 per share (C$1.732 annually)
Dividend Yield at C$27.73 (assuming no change in the penny rate) = 6.25%
Next Ex Dividend Date: 12/28/18
Morningstar: 4 star rating with a C$35 fair value (report dated 10/11 and available to Schwab customers or through expensive subscription with Morningstar)
Last Earnings Report: Q/E 9/30/18
Highlights Summary: Good Y-O-Y Comparisons
Adjusted Earnings of C$.81 vs. C$.65 in the 2007 third quarter
Other Items (adjustments to Net Earnings to arrive at Adjusted Earnings:
B. Bought 100 FIE:CA at C$6.9 (C$1 IB commission):
Quote: iShares Canadian Financial Monthly Income ETF
Sponsor's Website: iShares Canadian Financial Monthly Income ETF
Holdings as of 11/29/18:
Last Discussed: Item # 1 Bought 100 FIE:CA at C$7.12 (11/7/18 Post)
Current Position: 300 Shares
Maximum Position: 500 Shares
Dividend: Monthly at C$.04
Dividend Yield at C$6.9 = 6.96%
Last Ex Dividend Date: 11/27/18 (before last purchase)
Last Sell Discussions: Item # 5. Sold 300 FIE:CA at C$7.64 (11/26/17 Post); Item # 4.A. Sold 100 FIE:CA at C$7.57 (10/30/17 Post)
FIE:CA is primarily used to generate income on my Canadian Dollar position. The general idea is to collect a number of dividends and to exit the position at a profit, as I have successfully done in the past. This time may be different.
5. Income Generation-Commission Free ETFs:
A. Bought 50 NORW at $13.15; 10 at $12.62 and 10 at $12.27 (commission free to Vanguard Brokerage Customers):
Quote: Global X MSCI Norway ETF Overview
Closing Price Last Friday: NORW $11.85 -$0.15 -1.25%
Current Position: 70 Shares
Maximum Position: 100 Shares
Purchase Restriction: Small Ball Rule using only commission free trades at Vanguard
Previous Buy Discussion: Bought The Global X MSCI Norway ETF (NORW) - South Gent | Seeking Alpha (4/14/15 Post) I bought that lot at $12.74 and then averaged down with another 50 lot purchase at $11.23. I took one annual dividend of $18.54 in cash, paid on the first 50 share lot, and then reinvested the next annual dividend. I exited the position at close to break-even on a total return basis which included a $-27.48 loss on the shares.
So this was a failed investment. I could have turned into a more favorable one by waiting to sell the shares a few more months.
Sponsor's Page: MSCI Norway ETF (expense ratio = .5%)
Dividends: Annually at a variable rate
Next Ex Dividend Date: 12/28/18
TOP 10 Holdings as of 11/27/18:
All Holdings:
Of those stocks, I currently own 140 shares of the Orkla ADR which was weighted at # 9 above.
Chart: 5 Years
The problem started in the 2014 summer when oil started to crater in price. One of the major positions is Statoil, now known as Equinor ASA ADR (EQNR).
The stocks owned by this ETF are priced in Norwegian Krone ("NOK"), viewed as a commodity currency, that started to lose value against the USD in 2014 and has not recovered yet. The NOK/USD exchange rate was close to .17 in May 2014 and is now near .114 or slightly more than a 32.9% decline. NOK / USD Currency Chart. Norwegian Krone to US Dollar Rates There was some recent improvement in the NOK's value but the gain was quickly reversed and then some as crude oil weakened.
The devaluation of the NOK negatively impacts the net asset value of the USD priced NORW.
The USD priced ETF will underperform the NOK priced ordinary shares traded in Oslo due to the NOK losing value against the USD.
A stock that has fallen in value when bought in NOKs will go down more when the same stock is owned by a USD priced ETF, and a stock that goes up in NOKs will go up less when owned by NORW.
B. Added 5 TDIV at $34.51, 5 at 33.7 and 5 at $32.3 (commission free for Vanguard Brokerage Customers):
Quote: First Trust ETF VI NASDAQ Technology Dividend Index Fund (TDIV)
Stock ETFs are in falling knife mode so purchases are being chopped up in extremely small lots.
Closing Price Last Friday: TDIV $32.05 -$0.67 -2.05%
The Nasdaq composite entered a bear market last Friday.
Sponsor's Page: First Trust NASDAQ Technology Dividend Index Fund (TDIV)
Holdings
Last Discussed: Item # 1.A. Bought 5 TDIV at $35 (11/28/18 Post)
Current Position: 30 Shares
Maximum Position: 100 Shares
Purchase Restriction: Small Ball Rule (each purchase has to be at the lowest price in the chain; an anticipated bear market trading strategy which also requires selling the highest cost lots profitably when and if that becomes possible)
Last Ex Dividend Date: 12/18/18 at $0.312 per share (will receive on 20 of 30 shares)
Dividends: Quarterly at a variable rate
Distribution History
2018 Dividends Per Share = $.9834
Last Sell Discussions: Items # 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)
Closing Price Last Friday: PWF.TO C$25.21 -C$0.51 -1.98%
This stock also trades in the U.S. Pink Sheet Exchange under the symbol POFNF. The last letter in that symbol denotes ordinary shares that are priced in USDs. When I bought this lot in Toronto, the USD priced shares were trading at $20.88.
This is my first purchase of PWF:CA. I have bought and profitably sold Power Corporation of Canada several times (POW:CA) which has a 65.5% ownership stake in PWF:CA. Power Corporation of Canada | Organization Chart I currently own 100 of the USD priced Power Corporation shares (PWCDF) with an unrealized loss. Item # 2 Added 50 PWCDF at $22.58 (7/5/18 Post)(trading profits to date = $1,088.04)
I decided to go directly to PWF:CA for an additional purchase, rather than averaging down on PWCDF, due mostly to its higher dividend yield.
Organizational Chart:
Pargesa - Companies
The ownership interest in Pargesa does not contribute much to earnings compared to the subsidiaries Great-West Lifeco Inc. (Canada: Toronto) and IGM Financial Inc. (Canada: Toronto). The main interest is the value of stock holdings indirectly owned through Pargesa's stake in Groupe Bruxelles Lambert S.A. (Euronext Brussels)
Dividends: Quarterly at C$.433 per share (C$1.732 annually)
Dividend Yield at C$27.73 (assuming no change in the penny rate) = 6.25%
Next Ex Dividend Date: 12/28/18
Morningstar: 4 star rating with a C$35 fair value (report dated 10/11 and available to Schwab customers or through expensive subscription with Morningstar)
Last Earnings Report: Q/E 9/30/18
Highlights Summary: Good Y-O-Y Comparisons
Adjusted Earnings of C$.81 vs. C$.65 in the 2007 third quarter
Other Items (adjustments to Net Earnings to arrive at Adjusted Earnings:
B. Bought 100 FIE:CA at C$6.9 (C$1 IB commission):
Quote: iShares Canadian Financial Monthly Income ETF
Sponsor's Website: iShares Canadian Financial Monthly Income ETF
Holdings as of 11/29/18:
Last Discussed: Item # 1 Bought 100 FIE:CA at C$7.12 (11/7/18 Post)
Current Position: 300 Shares
Maximum Position: 500 Shares
Dividend: Monthly at C$.04
Dividend Yield at C$6.9 = 6.96%
Last Ex Dividend Date: 11/27/18 (before last purchase)
Last Sell Discussions: Item # 5. Sold 300 FIE:CA at C$7.64 (11/26/17 Post); Item # 4.A. Sold 100 FIE:CA at C$7.57 (10/30/17 Post)
FIE:CA is primarily used to generate income on my Canadian Dollar position. The general idea is to collect a number of dividends and to exit the position at a profit, as I have successfully done in the past. This time may be different.
5. Income Generation-Commission Free ETFs:
A. Bought 50 NORW at $13.15; 10 at $12.62 and 10 at $12.27 (commission free to Vanguard Brokerage Customers):
Quote: Global X MSCI Norway ETF Overview
Closing Price Last Friday: NORW $11.85 -$0.15 -1.25%
Current Position: 70 Shares
Maximum Position: 100 Shares
Purchase Restriction: Small Ball Rule using only commission free trades at Vanguard
Previous Buy Discussion: Bought The Global X MSCI Norway ETF (NORW) - South Gent | Seeking Alpha (4/14/15 Post) I bought that lot at $12.74 and then averaged down with another 50 lot purchase at $11.23. I took one annual dividend of $18.54 in cash, paid on the first 50 share lot, and then reinvested the next annual dividend. I exited the position at close to break-even on a total return basis which included a $-27.48 loss on the shares.
 |
| 2017 NORW 102+ Shares -$27.46 |
Sponsor's Page: MSCI Norway ETF (expense ratio = .5%)
Dividends: Annually at a variable rate
TOP 10 Holdings as of 11/27/18:
Of those stocks, I currently own 140 shares of the Orkla ADR which was weighted at # 9 above.
Chart: 5 Years
The problem started in the 2014 summer when oil started to crater in price. One of the major positions is Statoil, now known as Equinor ASA ADR (EQNR).
The stocks owned by this ETF are priced in Norwegian Krone ("NOK"), viewed as a commodity currency, that started to lose value against the USD in 2014 and has not recovered yet. The NOK/USD exchange rate was close to .17 in May 2014 and is now near .114 or slightly more than a 32.9% decline. NOK / USD Currency Chart. Norwegian Krone to US Dollar Rates There was some recent improvement in the NOK's value but the gain was quickly reversed and then some as crude oil weakened.
The devaluation of the NOK negatively impacts the net asset value of the USD priced NORW.
The USD priced ETF will underperform the NOK priced ordinary shares traded in Oslo due to the NOK losing value against the USD.
A stock that has fallen in value when bought in NOKs will go down more when the same stock is owned by a USD priced ETF, and a stock that goes up in NOKs will go up less when owned by NORW.
B. Added 5 TDIV at $34.51, 5 at 33.7 and 5 at $32.3 (commission free for Vanguard Brokerage Customers):
Quote: First Trust ETF VI NASDAQ Technology Dividend Index Fund (TDIV)
Stock ETFs are in falling knife mode so purchases are being chopped up in extremely small lots.
Closing Price Last Friday: TDIV $32.05 -$0.67 -2.05%
The Nasdaq composite entered a bear market last Friday.
Sponsor's Page: First Trust NASDAQ Technology Dividend Index Fund (TDIV)
Holdings
Last Discussed: Item # 1.A. Bought 5 TDIV at $35 (11/28/18 Post)
Current Position: 30 Shares
Maximum Position: 100 Shares
Purchase Restriction: Small Ball Rule (each purchase has to be at the lowest price in the chain; an anticipated bear market trading strategy which also requires selling the highest cost lots profitably when and if that becomes possible)
Last Ex Dividend Date: 12/18/18 at $0.312 per share (will receive on 20 of 30 shares)
Dividends: Quarterly at a variable rate
Distribution History
2018 Dividends Per Share = $.9834
Last Sell Discussions: Items # 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
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.
I continued buying into the volatility spikes, though my overall purchase amounts remain small. About the only positive is that my dividend yield is going up for new purchases.
ReplyDeleteAnd, it is certainly less bad to average down in 5 or 10 share lots than to buy a 100 share lot in one trade and then watch the shares fall 20% or more from that one purchase.
The VIX closed at 36.07, up 19.79%, so that qualifies as Day 3 in my Trigger Event count.
With 2 closes above 30, I now only require a total of 7 or 8 days with closes above 26. I will go with 7 now since the S & P 500 has already gone 5%+ below its 200 day SMA line.
My allocation is still extremely defensive with about 90% of my brokerage assets in cash, CDs and high quality bonds.
Nothing much has changed in the allocation percentages since I last discussed them in an August 2018 post, except that the allocation to treasuries, exchange traded bonds and equity preferred stocks has grown some at the expense of bank CDs, and higher yielding common stocks have replaced some lower yielding ones. I will be using the dividends to buy more shares as a means to average down.
Friday, August 24, 2018 (also see my first comment)
Update for Portfolio Positioning and Management as of 8/23/18
https://tennesseeindependent.blogspot.com/2018/08/update-for-portfolio-positioning-and.html
So about 90% of my asset allocation is working now and 10% is being smashed.
Today, just by way a few examples, I bought 5 AT & T at $27.7, 10 GNL at 17.28, 10 APLE at $13.88, 5 FENY at $14.68 and a few other high yielders, with all purchases made with commission free trades. FENY is commission free to all Fidelity customers.
Those kind of buys are what I call small ball, a buying strategy for anticipated bear markets in selected stocks, sectors, and/or indexes. Each purchase was at the lowest price in the current chain of purchases for these stocks which is a small ball absolute rule, as is buying those small lots with commission free trades until I take the security out of the small ball buying restrictions which then permits larger buys.
Hello South Gent,
ReplyDeleteHappy holidays and thank you for all your contribution to teaching us about the market.
I had a major question. This is about earnings revisions. The market has been acting like a rock falling through everything I've seen and scaring people immensely.
I know about the Fed raising rates and quantitative tightening. I saw some discussion about that the amount of quantitative tightening was done in place of having interest rates go below zero. There was an article done by two Atlanta Fed economists that apparently showed negative real rates from quantitative easing equivalent to -3%.
Since the market is based on earnings. With a massive fall from approximately 2900 to 2300 or so, it looks like from gross stock charts that the price earnings ratio of the S&P is approaching what is been traditionally called fair value or will be by next year. If earnings estimates are correct (and this is not hampered by real rate rises from the fed funds rate and hidden raises by QT).
I know in the past you have looked at earnings revisions and I wondered what your thinking was in terms of earnings revisions for the next quarter and perhaps year.
I know a recession call is one of probabilities, but I wondered if you think earnings will hold up and we will not going to recession.
I could say much more about heard behavior, but sometimes the herd is smarter than the cowboy!
Thank you in advance for your discussion of earnings.
Sam
Sam: I took a snapshot of both actual and projected earnings for the S & P 500 in a recent post.
DeleteScroll to
"S & P 500 Actual and Forecasted GAAP and NON-GAAP Earnings as of 12/13/18"
https://tennesseeindependent.blogspot.com/2018/12/observations-and-sample-of-recent_19.html
As I noted there, the future projections are IMO overly optimistic. It is standard for the analysts to back load in the last two quarters most of earnings growth. As the year progresses, throwing cold water on the overly optimistic forecasts, the earnings numbers come down and the process is repeated for the next year.
The market is more concerned about the future than the past. The past is merely one piece of the future prediction puzzle.
Most of the earnings for the Q/E 9/30/18 have been reported. Using the current earnings number for that quarter and the prior three quarters and last Monday's close on the S & P 500, the P/E for that index is about 18 using actual reported GAAP earnings and 15.63 times trailing non-GAAP reported "operating" earnings. So those trailing numbers are within what I would call an historical fair value range.
Wall Street focuses on the non-GAAP earnings number which excludes a number of items, some of which make sense and others that do not.
And that focus is more on the future than the past. For example, many public companies had to take a non-cash one time charge to GAAP earnings in the 2017 4th quarter to revalue tax deferred assets which became less valuable due to the corporate federal income tax reduction. That kind of charge is justifiably ignored as are many other non-cash charges relating to accounting conventions.
Until recently, investors have been bailed out of those continuous overly optimistic future estimates due to a 10 year period of extremely low interest rates and a slow economic expansion undisturbed by an economic recession since June 2009.
Until three months ago, the Stocks Jocks IMO were assigning a zero possibility of a recession within 2 years. The abrupt fall suggests that the recession odds within 12 months is no longer zero but closer to 50/50. The Stock Jocks frequently predict recessions that do not happen in the time frame contemplated by existing stock prices.
The yield curve flattening has provided a historical basis for angst now.
Another increasingly disconcerting trend is the impetuousness and ignorance of Donald Trump which can not be ignored by investors based on recent events. Trump's ability to create chaos and uncertainty undermines investor confidence about the near future.
I do not view the FED's monetary policy as having any meaningful impact on the real economy. The Federal Funds is still abnormally low and is now extraordinarily low for an economy with low unemployment and significant GDP growth. I would add that interest rates for quality debt maturing between 2 and 30 years has come down over the past three months. Contrary to what Donald is saying, that is actually stimulative to the economy particularly housing where mortgage rates have started to come back down.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2018/12/observations-and-sample-of-recent_26.html