Economy:
Retail sales sink 1.2% in December in the worst plunge in nine years - MarketWatch
Economists slash growth for fourth quarter after big retail sales drop (The consensus estimate is now at 2.4% which is fine as long as the growth does not continue to decline into a recession. The first quarter has been the weakest for several years.)
Consumer debt continues to hit new record highs:
The Center for Microeconomic Data - FEDERAL RESERVE BANK of NEW YORK
Household debt inches higher as auto loans rev up while mortgage originations fall - MarketWatch
Red flags emerge as Americans' debt load hits another record | Reuters
A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy - The Washington Post
Another wave of retail store closures coming. 'No light at the end of the tunnel'
Mortgage rates hit a 12-month low as economic expansion looks increasingly vulnerable - MarketWatch
++++++++
Markets and Market Commentary:
Stock market just cleared key hurdle: 'It should open the door to 2,800'
Here’s why hedge-fund manager Kyle Bass thinks U.S. stocks will be lower by end 2019 - MarketWatch Bass believes that a recession in 2020 is inevitable without a major boost in federal government spending on infrastructure.
Stock market may be in for a rude awakening as profits dry up, warns strategist - MarketWatch This opinion is from Morgan Stanley's equity strategist. I would agree with him that the Stock Jocks are not factoring in a significant profit slowdown with many companies posting negative Y-O-Y numbers.
I view that as standard for the Stock Jocks, who are not now taking into account other possible negative events which have not yet occurred such as a breakdown in the China trade negotiations with more tariffs added by the U.S., recessionary conditions developing in several important European countries (e.g. Germany), more political and economic instability in the EU, a messy BREXIT, and/or higher than anticipated inflation and slower growth than currently anticipated in the U.S.
When and if several of those events happen, and an ocean of cold water is thrown on future assumptions, then the Stock Jocks will react in a non-temporary fashion.
They are not going to react to mere possibilities other than on a temporary basis.
The growth assumption and P/E multiple contraction adjustments will then occur with a bang. From their perspective, and who could blame them, it has not paid to overreact to react to negative news items over the past decade, and there have been plenty of them, until it becomes clear that future growth assumptions are kaput on a non-temporary basis.
That approach, which has worked so far, has created a buy-on-the-dip mentality, so declines caused by panic and negative news events have been arrested at or near 20% with a quick bounce back.
There will come a time when buying the dip will only result in greater non-temporary losses. When? It could be the next decline or the one after but I would not go too far into the future now for the inevitable to occur.
The recent decline in interest rates, both in North America and Europe, has caused more investors to buy since the real rate of return on interest bonds have turned deeper into negative territory (e.g. Germany government bonds) or just barely above a reasonably anticipated real yield over the bond's life (e.g. U.S. treasuries). Both would be before an adjustment for taxes that would simply make matters worse.
++++++++
Trump:
Trump’s failed shutdown strategy produced an even worse deal than he started with
Congress, which has the Constitutional power of the purse, refused to give Trump what he wanted for his wall.
In true authoritarian fashion, Trump then declared a national emergency and will appropriate funds from other programs to build the wall. Trump signs bill to avoid shutdown, declares national emergency
So why did Donald shutdown the government when, according to him, he has the power to spend money to build a wall that Congress has refused to grant and to use money authorized by Congress for other programs and purposes to build that wall?
What is the emergency when Donald said that "he did have to this"? Border emergency: Donald Trump quote undercuts move, critics says
How President Trump came to declare a national emergency to fund his border wall - The Washington Post
A part of Donald's unauthorized expenditures will be used to acquire private property on the border. Landowners have already filed a lawsuit.
So, is it the conservative position that private landowners can have their property taken away by the government for a program that has not even been authorized by Congress but only by the President?
The conservative position on the legitimacy of Donald's national emergency declaration is not the republican one which is not surprising.
So far, I have heard only 4 republican politicians express a constitutional concern. Trump’s border wall emergency: For Rubio, it’s violation of Constitution. For Scott, it’s well-measured security solution. - Sun Sentinel The other three are Senators Susan Collins, Thom Tillis (R-NC), and Tennessee's senior Senator Lamar Alexander, who will not be running for reelection in 2020. I voted for Lamar.
Senators Collins and Thom Tillis are up for re-election in 2020 and both could lose to a Democrat. (over $3.7+M has already been raised online for any Democrat who runs against Collins, and that was just in response to her Kavanaugh vote. Fund Susan Collins' Future Opponent | Crowdpac)
The purported authority for that declaration is the National Emergencies Act, passed in 1976, where Congress attempted to limit and define the President's emergency powers. Emergency Powers | Brennan Center for Justice
In the past, this emergency power has never been invoked to circumvent Congresses constitutionally based power over spending. Article I, Section 8. Article I, Section 8 - Annenberg Classroom
Nancy Pelosi can force a vote in the Senate regarding the constitutional legitimacy of Trump's declaration.
At least that will require the republican "conservatives" to go on record and prove once again that they are not conservatives, unwilling to even stand up to an authoritarian demagogue who usurps their constitutional powers. Though, without question, those "conservatives" would be outraged if a Democrat president did the same. Hypocrisy knows no boundaries in the modern day GOP.
The conservative position is to respect the values expressed in the Constitution which includes the checks and balances placed in that document by the founding fathers. The new generation of "conservatives" view that as the "liberal" position.
Trump has unquestionably just usurped the constitutional powers granted to Congress.
There are practically countless issues where the evidence would provide greater support for a national emergency declaration.
Some that have mentioned so far include gun violence and global warming.
You could also add a countless number of others, such as the 100,000 or so who die each year from hospital infections or the deaths caused by drinking, smoking and driving while talking on the phone or texting.
As a practical matter, I could come up with close to 100 national emergencies using the standard now adopted by republicans that would have at least equal evidentiary support or better.
To allow a President the power to declare one that usurps the constitutionally based powers of Congress or the Courts, except in very limited circumstances such as when nuclear bombs are on their way, is to move further on the path toward authoritarianism. The GOP's long standing derision of, and efforts to undermine the free press and voting rights are consistent with that movement.
I mentioned in a recent comment Arthur Schlesinger's 1973 book the The Imperial Presidency. Since that book has been written the movement toward the President as King has only intensified and has now reached its historical apex with Trump's declaration.
Perhaps the republicans want to escape from freedom and the values expressed in the Constitution, which explains their effusive and warm embrace of someone who is so clearly authoritarian in nature.
‘A recipe for disaster’? Trump’s border emergency drags the GOP into a risky fight ahead of 2020
++
El Paso Fire Department denies Trump's crowd claim at rally - POLITICO (Lying Don claimed that a competing rally held by Beto O'Rourke had only 200 people, when some reports had the number at between 10,000 to 15,000. Beto vs. Trump: Who Had the Bigger Crowd in El Paso? Of course, and this is not debatable, Donald will lie even when the evidence is overwhelming that he is lying.
Beyond dumb: Paul Manafort lied to special counsel, Judge Amy Berman Jackson finds - CBS News
My idea, which I am hereby copywriting, is that Donald and Manafort team up for a new Dumb and Dumber movie. Dumb and Dumber To (2014) - IMDb
One skit in the movie would have Donald proclaiming one of his best new ideas, to wit, a parade and fireworks for July 4th. Trump floats new 'tradition:' 4th of July parade that already exists - CNN Only a Stable Genius could come up with that idea.
++++
Research on Family History:
I came across some history that could be made into a mini-series.
My 5 x. great grandfather was James Mayo who fathered 8 sons who fought in the Revolutionary War, either as members of colonial militias or in the Continental Army.
My 4 x. great grandfather Stephen Mayo was one of the eight. He was a private. Those eight sons were not fighting to support the King of England but for an American democracy where there were checks and balances on a President's power.
Many years after that war, Congress passed a law granting pensions to those who were still living or their widows. To qualify for the pension, the applicant had to go to a court and testify under oath about their service.
Recently, transcriptions of that testimony have been made public and can be found on the internet.
Link to Stephen Mayo's testimony: W25680 Stephen Mayo
At least Stephen could write his name, as his signature appears after his testimony.
Stephen had 13 children by three wives.
When he was 78, he married his third wife Rebecca who was then 17 years old. I would like to think that Rebecca married him for his stamina, good personality and looks, but I suspect that the romance was tied inextricably to her right to receive the pension until her death.
As noted in the transcribers notes to Stephen's testimony, Rebecca received Stephen's pension until she died in 1904. Rebecca was either the last or next to last person receiving a revolutionary war pension. The pension amount started at $80 per year and had risen to $25 per week by 1904 or close to $700 per month in today's dollars.
+++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Northern States Power 2.6% First Mortgage Bond Maturing on 5/15/23:
I now own 2 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: A wholly owned subsidiary of Xcel Energy Inc. who does not guarantee the notes
XCEL SEC Filings
XCEL 10-Q for the Q/E 9/30/18
XCEL 2018 4th Quarter Report
While I would prefer a guarantee, it really does not matter as a practical matter given the higher credit rating for this first mortgage bond compared to Xcel's senior unsecured bond. Even if there was a guarantee from the parent company, the question would then be whether the guarantee of a subsidiary's debt is junior to the parent's senior unsecured debt and becomes just another unliquidated claim in bankruptcy.
Security and Make Whole:
Credit Ratings:
Bought at a Total Cost of 98.222
YTM at TC Then at 3.046%
Current Yield at TC = 2.6471%
At the time of purchase, the five year treasury note was trading with a 2.51% yield. The 3 year note was at 2.505%. U.S. 3 Year Treasury Note- MarketWatch
2. Short Term Bond-CD Basket Ladder Strategy:
The following buys are secondary market purchases that can be bought commission free at Schwab and many other brokers including Vanguard and Fidelity. I view these purchases as fillers in my bond ladder and an alternative to Schwab's sweep account that pays almost nothing.
All of the maturities are within one year.
Purchases: $5K
A. Bought 1 Treasury 1.75% Coupon Maturing on 9/30/19:
YTM = 2.51%
I now own 3 bonds.
B. Bought 1 Treasury 1.25% Coupon Maturing on 10/31/19:
YTM = 2.543%
C. Bought 1 Treasury 1.875% Coupon Maturing on 12/31/19:
YTM = 2.553%
D. Bought 1 Treasury 1.375% Coupon Maturing on 1/15/20:
YTM = 2.521%
This purchase and the next one were made after the first three. The yields had declined some.
I now own 3 bonds.
E. Bought 1 Treasury 1.375% Coupon Maturing on 12/15/19:
YTM = 2.52%
3. Eliminations:
A. Sold 50 METPRA at $23.86 (IB $ 1 commission):
Quote: MetLife Inc. Floating Rate Non-Cumulative Preferred Series A.
Closing Price Last Friday: MET-PA $23.14 -$0.21 -0.90%
Category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities
Profit: +63.25
Item # 3 Bought 50 METPRA at $22.58 (12/19/18 Post)
I received one quarterly dividend payment.
Security Description:
Prospectus
Coupon: Greater of 4% or 1% above the 3 month Libor Rate
Par Value: $25
Dividend: Quarterly, non-Cumulative and qualified
Issuer: MetLife Inc. (MET)
Optional Call: At par value plus accrued and unpaid dividends-anytime now at issuer's option
Stopper Clause: Yes
Last Ex Dividend Date: 11/29/18
This type of security provides some problematic inflation protection through the Libor float while at the same time addressing the abnormally low interest rate scenario through the minimum coupon of 4%.
The problem is that both inflation and short term interest rates look stuck.
Since I first bought METPRA in 2008, the security has paid its minimum coupon.
METPRA Realized Gains to Date: $1,972.39 ($1,909.14 in prior trades)
Largest Single Gain: Item # 1 Sold 100 METPRA at $24.95 (7/9/12 Post)(profit snapshot = $1,283.99)
4. Pares:
I sold my highest cost ORIT lots in two accounts.
A. Sold Highest Cost ORIT Lot at $17.08-Schwab Account:
Quote: Oritani Financial Corp. (ORIT)
Category: REGIONAL BANK BASKET STRATEGY (net profit = $50,228.41)
Closing Price Last Friday: ORIT $17.31 +$0.16 +0.93%
"The Bank currently operates its main office and 25 full service branches in the New Jersey Counties of Bergen, Hudson, Essex and Passaic."
As previously discussed in several prior posts, I view ORIT to be a conservatively managed bank.
This bank is based in New Jersey which has just adopted "a temporary surtax of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021." This state tax will offset some of the benefits from a lower federal income tax rate. This legislation required a revaluation of the bank's deferred tax balances that caused a $477K non-cash charge in this last quarter.
Profit Snapshot: +$12.33
Current Position Schwab Account: 87+ shares
This pare reduced my average cost per share from $16.06 to $15.67 in this account. That is one objective of small ball trading where the goal is to end up with less money producing more income. Selling the highest cost lost also reduces my income tax liability, increases my dividend yield for the remaining position, and makes it more likely that I will buy when the price falls below the lowest price in the chain.
Last Discussed: Item #1.B. Bought 10 ORIT at $15.1 Used Fidelity Commission Free Trade (10/31/18) I discussed the third quarter report in that post: Oritani Financial Corp. Announces Dividend and Quarterly Results
Annual Report F/Y Ending on 6/30/18
Dividend: $.25 per share
In the past, ORIT has periodically paid special dividends as well. The last one was for $.15 per share and was paid on 12/21/18. Oritani Financial Corp. (ORIT) Dividend Date & History - Nasdaq
Last Ex Dividend Date: 2/7/2019
Last Earnings Report: Q/E 12/31/18
Total Position All Accounts: 238+ shares (after 50 share sell discussed below)
Last Sell Discussion: Item 1.E. Sold 20 ORIT at $16.91 Used Commission Free Trade (6/28/18 Post)
Recent Earnings Report: Q/E 12/31/18
E.P.S. = $.31
Non-Accrual Loans to Total Loans: .3%
Non-Performing Assets to Total Assets: .28%
Net Charge-Offs (annualized) to Total Loans: .01%
"Overall, non-performing asset totals and charge-offs continue to illustrate minimal credit issues at the Company. Subsequent to December 31, 2018, an $8.1 million loan included in the 60-89 days past due total above, was sold at par plus accrued interest."
"During the quarter ended December 31, 2018, the Company repurchased 1,871,979 shares of its common at a total cost of $28.5 million for an average price of $15.20 per share."
Oritani Financial Corp. Announces Dividend and 2nd Quarter Results
B. Sold 50 ORIT at $17.26-A Roth IRA Account:
Transaction History this Account:
Using FIFO accounting, I sold the highest cost lot bought first.
Profit: $14
Average Cost Per Share Reduced to $15.89
6. Commission Free ETFs-Small Ball:
A. Bought 5 IBB at $109-Commission Free for Vanguard Brokerage Customers:
Quote: iShares Nasdaq Biotechnology ETF Overview
Closing Price Last Friday: IBB $112.04 +$1.82 +1.65%
Sponsor's Website: iShares Nasdaq Biotechnology ETF | IBB
Top Ten Holdings as of 2/11/19:
The largest holding, Celgene, is being acquired by BMY: Bristol-Myers Squibb to Acquire Celgene to Create a Premier Innovative Biopharma Company | BMS Newsroom
Holdings: 223 stocks
Expense Ratio: .47%
Total Return: The total return over the past five years has been subpar.
Maybe that will change.
Dividends: Practically Non-Existent
The dividend will not provide any support for the price IMO.
Maximum Position: 20 shares
Purchase Restriction: Small Ball Rule
200 Day SMA Line as of 2/12/18 (1 year chart): $110.4
5 Year Chart: Uninspiring
Prior Round-Trip: I am not going to invest much money in this one
I sold 5 shares at $290.11:
Item # 1 Bought 5 IBB at $280.87 Update For Healthcare Basket Strategy As Of 6/2/16 - South Gent | Seeking Alpha
Subsequent to those trades, there was a 3 for 1 stock split on 12/1/17: IBB Split History
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.
Retail sales sink 1.2% in December in the worst plunge in nine years - MarketWatch
Economists slash growth for fourth quarter after big retail sales drop (The consensus estimate is now at 2.4% which is fine as long as the growth does not continue to decline into a recession. The first quarter has been the weakest for several years.)
Consumer debt continues to hit new record highs:
The Center for Microeconomic Data - FEDERAL RESERVE BANK of NEW YORK
Household debt inches higher as auto loans rev up while mortgage originations fall - MarketWatch
Red flags emerge as Americans' debt load hits another record | Reuters
A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy - The Washington Post
Another wave of retail store closures coming. 'No light at the end of the tunnel'
Mortgage rates hit a 12-month low as economic expansion looks increasingly vulnerable - MarketWatch
++++++++
Markets and Market Commentary:
Stock market just cleared key hurdle: 'It should open the door to 2,800'
Here’s why hedge-fund manager Kyle Bass thinks U.S. stocks will be lower by end 2019 - MarketWatch Bass believes that a recession in 2020 is inevitable without a major boost in federal government spending on infrastructure.
Stock market may be in for a rude awakening as profits dry up, warns strategist - MarketWatch This opinion is from Morgan Stanley's equity strategist. I would agree with him that the Stock Jocks are not factoring in a significant profit slowdown with many companies posting negative Y-O-Y numbers.
I view that as standard for the Stock Jocks, who are not now taking into account other possible negative events which have not yet occurred such as a breakdown in the China trade negotiations with more tariffs added by the U.S., recessionary conditions developing in several important European countries (e.g. Germany), more political and economic instability in the EU, a messy BREXIT, and/or higher than anticipated inflation and slower growth than currently anticipated in the U.S.
When and if several of those events happen, and an ocean of cold water is thrown on future assumptions, then the Stock Jocks will react in a non-temporary fashion.
They are not going to react to mere possibilities other than on a temporary basis.
The growth assumption and P/E multiple contraction adjustments will then occur with a bang. From their perspective, and who could blame them, it has not paid to overreact to react to negative news items over the past decade, and there have been plenty of them, until it becomes clear that future growth assumptions are kaput on a non-temporary basis.
That approach, which has worked so far, has created a buy-on-the-dip mentality, so declines caused by panic and negative news events have been arrested at or near 20% with a quick bounce back.
There will come a time when buying the dip will only result in greater non-temporary losses. When? It could be the next decline or the one after but I would not go too far into the future now for the inevitable to occur.
The recent decline in interest rates, both in North America and Europe, has caused more investors to buy since the real rate of return on interest bonds have turned deeper into negative territory (e.g. Germany government bonds) or just barely above a reasonably anticipated real yield over the bond's life (e.g. U.S. treasuries). Both would be before an adjustment for taxes that would simply make matters worse.
++++++++
Trump:
Trump’s failed shutdown strategy produced an even worse deal than he started with
Congress, which has the Constitutional power of the purse, refused to give Trump what he wanted for his wall.
In true authoritarian fashion, Trump then declared a national emergency and will appropriate funds from other programs to build the wall. Trump signs bill to avoid shutdown, declares national emergency
So why did Donald shutdown the government when, according to him, he has the power to spend money to build a wall that Congress has refused to grant and to use money authorized by Congress for other programs and purposes to build that wall?
What is the emergency when Donald said that "he did have to this"? Border emergency: Donald Trump quote undercuts move, critics says
How President Trump came to declare a national emergency to fund his border wall - The Washington Post
A part of Donald's unauthorized expenditures will be used to acquire private property on the border. Landowners have already filed a lawsuit.
So, is it the conservative position that private landowners can have their property taken away by the government for a program that has not even been authorized by Congress but only by the President?
The conservative position on the legitimacy of Donald's national emergency declaration is not the republican one which is not surprising.
So far, I have heard only 4 republican politicians express a constitutional concern. Trump’s border wall emergency: For Rubio, it’s violation of Constitution. For Scott, it’s well-measured security solution. - Sun Sentinel The other three are Senators Susan Collins, Thom Tillis (R-NC), and Tennessee's senior Senator Lamar Alexander, who will not be running for reelection in 2020. I voted for Lamar.
Senators Collins and Thom Tillis are up for re-election in 2020 and both could lose to a Democrat. (over $3.7+M has already been raised online for any Democrat who runs against Collins, and that was just in response to her Kavanaugh vote. Fund Susan Collins' Future Opponent | Crowdpac)
The purported authority for that declaration is the National Emergencies Act, passed in 1976, where Congress attempted to limit and define the President's emergency powers. Emergency Powers | Brennan Center for Justice
In the past, this emergency power has never been invoked to circumvent Congresses constitutionally based power over spending. Article I, Section 8. Article I, Section 8 - Annenberg Classroom
Nancy Pelosi can force a vote in the Senate regarding the constitutional legitimacy of Trump's declaration.
At least that will require the republican "conservatives" to go on record and prove once again that they are not conservatives, unwilling to even stand up to an authoritarian demagogue who usurps their constitutional powers. Though, without question, those "conservatives" would be outraged if a Democrat president did the same. Hypocrisy knows no boundaries in the modern day GOP.
The conservative position is to respect the values expressed in the Constitution which includes the checks and balances placed in that document by the founding fathers. The new generation of "conservatives" view that as the "liberal" position.
Trump has unquestionably just usurped the constitutional powers granted to Congress.
There are practically countless issues where the evidence would provide greater support for a national emergency declaration.
Some that have mentioned so far include gun violence and global warming.
You could also add a countless number of others, such as the 100,000 or so who die each year from hospital infections or the deaths caused by drinking, smoking and driving while talking on the phone or texting.
As a practical matter, I could come up with close to 100 national emergencies using the standard now adopted by republicans that would have at least equal evidentiary support or better.
To allow a President the power to declare one that usurps the constitutionally based powers of Congress or the Courts, except in very limited circumstances such as when nuclear bombs are on their way, is to move further on the path toward authoritarianism. The GOP's long standing derision of, and efforts to undermine the free press and voting rights are consistent with that movement.
I mentioned in a recent comment Arthur Schlesinger's 1973 book the The Imperial Presidency. Since that book has been written the movement toward the President as King has only intensified and has now reached its historical apex with Trump's declaration.
Perhaps the republicans want to escape from freedom and the values expressed in the Constitution, which explains their effusive and warm embrace of someone who is so clearly authoritarian in nature.
‘A recipe for disaster’? Trump’s border emergency drags the GOP into a risky fight ahead of 2020
++
El Paso Fire Department denies Trump's crowd claim at rally - POLITICO (Lying Don claimed that a competing rally held by Beto O'Rourke had only 200 people, when some reports had the number at between 10,000 to 15,000. Beto vs. Trump: Who Had the Bigger Crowd in El Paso? Of course, and this is not debatable, Donald will lie even when the evidence is overwhelming that he is lying.
Beyond dumb: Paul Manafort lied to special counsel, Judge Amy Berman Jackson finds - CBS News
My idea, which I am hereby copywriting, is that Donald and Manafort team up for a new Dumb and Dumber movie. Dumb and Dumber To (2014) - IMDb
One skit in the movie would have Donald proclaiming one of his best new ideas, to wit, a parade and fireworks for July 4th. Trump floats new 'tradition:' 4th of July parade that already exists - CNN Only a Stable Genius could come up with that idea.
++++
Research on Family History:
I came across some history that could be made into a mini-series.
My 5 x. great grandfather was James Mayo who fathered 8 sons who fought in the Revolutionary War, either as members of colonial militias or in the Continental Army.
 |
| Excerpt from Article in the Virginia Genealogist 1961 |
Many years after that war, Congress passed a law granting pensions to those who were still living or their widows. To qualify for the pension, the applicant had to go to a court and testify under oath about their service.
Recently, transcriptions of that testimony have been made public and can be found on the internet.
Link to Stephen Mayo's testimony: W25680 Stephen Mayo
At least Stephen could write his name, as his signature appears after his testimony.
Stephen had 13 children by three wives.
When he was 78, he married his third wife Rebecca who was then 17 years old. I would like to think that Rebecca married him for his stamina, good personality and looks, but I suspect that the romance was tied inextricably to her right to receive the pension until her death.
As noted in the transcribers notes to Stephen's testimony, Rebecca received Stephen's pension until she died in 1904. Rebecca was either the last or next to last person receiving a revolutionary war pension. The pension amount started at $80 per year and had risen to $25 per week by 1904 or close to $700 per month in today's dollars.
+++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Northern States Power 2.6% First Mortgage Bond Maturing on 5/15/23:
I now own 2 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: A wholly owned subsidiary of Xcel Energy Inc. who does not guarantee the notes
XCEL SEC Filings
XCEL 10-Q for the Q/E 9/30/18
XCEL 2018 4th Quarter Report
While I would prefer a guarantee, it really does not matter as a practical matter given the higher credit rating for this first mortgage bond compared to Xcel's senior unsecured bond. Even if there was a guarantee from the parent company, the question would then be whether the guarantee of a subsidiary's debt is junior to the parent's senior unsecured debt and becomes just another unliquidated claim in bankruptcy.
Security and Make Whole:
Credit Ratings:
Bought at a Total Cost of 98.222
YTM at TC Then at 3.046%
Current Yield at TC = 2.6471%
At the time of purchase, the five year treasury note was trading with a 2.51% yield. The 3 year note was at 2.505%. U.S. 3 Year Treasury Note- MarketWatch
2. Short Term Bond-CD Basket Ladder Strategy:
The following buys are secondary market purchases that can be bought commission free at Schwab and many other brokers including Vanguard and Fidelity. I view these purchases as fillers in my bond ladder and an alternative to Schwab's sweep account that pays almost nothing.
All of the maturities are within one year.
Purchases: $5K
A. Bought 1 Treasury 1.75% Coupon Maturing on 9/30/19:
YTM = 2.51%
I now own 3 bonds.
B. Bought 1 Treasury 1.25% Coupon Maturing on 10/31/19:
YTM = 2.543%
C. Bought 1 Treasury 1.875% Coupon Maturing on 12/31/19:
YTM = 2.553%
D. Bought 1 Treasury 1.375% Coupon Maturing on 1/15/20:
YTM = 2.521%
This purchase and the next one were made after the first three. The yields had declined some.
I now own 3 bonds.
E. Bought 1 Treasury 1.375% Coupon Maturing on 12/15/19:
YTM = 2.52%
3. Eliminations:
A. Sold 50 METPRA at $23.86 (IB $ 1 commission):
Quote: MetLife Inc. Floating Rate Non-Cumulative Preferred Series A.
Closing Price Last Friday: MET-PA $23.14 -$0.21 -0.90%
Category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities
Profit: +63.25
Item # 3 Bought 50 METPRA at $22.58 (12/19/18 Post)
I received one quarterly dividend payment.
Security Description:
Prospectus
Coupon: Greater of 4% or 1% above the 3 month Libor Rate
Par Value: $25
Dividend: Quarterly, non-Cumulative and qualified
Issuer: MetLife Inc. (MET)
Optional Call: At par value plus accrued and unpaid dividends-anytime now at issuer's option
Stopper Clause: Yes
Last Ex Dividend Date: 11/29/18
This type of security provides some problematic inflation protection through the Libor float while at the same time addressing the abnormally low interest rate scenario through the minimum coupon of 4%.
The problem is that both inflation and short term interest rates look stuck.
Since I first bought METPRA in 2008, the security has paid its minimum coupon.
Largest Single Gain: Item # 1 Sold 100 METPRA at $24.95 (7/9/12 Post)(profit snapshot = $1,283.99)
I sold my highest cost ORIT lots in two accounts.
A. Sold Highest Cost ORIT Lot at $17.08-Schwab Account:
Quote: Oritani Financial Corp. (ORIT)
Category: REGIONAL BANK BASKET STRATEGY (net profit = $50,228.41)
Closing Price Last Friday: ORIT $17.31 +$0.16 +0.93%
As previously discussed in several prior posts, I view ORIT to be a conservatively managed bank.
This bank is based in New Jersey which has just adopted "a temporary surtax of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021." This state tax will offset some of the benefits from a lower federal income tax rate. This legislation required a revaluation of the bank's deferred tax balances that caused a $477K non-cash charge in this last quarter.
Current Position Schwab Account: 87+ shares
This pare reduced my average cost per share from $16.06 to $15.67 in this account. That is one objective of small ball trading where the goal is to end up with less money producing more income. Selling the highest cost lost also reduces my income tax liability, increases my dividend yield for the remaining position, and makes it more likely that I will buy when the price falls below the lowest price in the chain.
Last Discussed: Item #1.B. Bought 10 ORIT at $15.1 Used Fidelity Commission Free Trade (10/31/18) I discussed the third quarter report in that post: Oritani Financial Corp. Announces Dividend and Quarterly Results
Annual Report F/Y Ending on 6/30/18
Dividend: $.25 per share
In the past, ORIT has periodically paid special dividends as well. The last one was for $.15 per share and was paid on 12/21/18. Oritani Financial Corp. (ORIT) Dividend Date & History - Nasdaq
Last Ex Dividend Date: 2/7/2019
Last Earnings Report: Q/E 12/31/18
Total Position All Accounts: 238+ shares (after 50 share sell discussed below)
Last Sell Discussion: Item 1.E. Sold 20 ORIT at $16.91 Used Commission Free Trade (6/28/18 Post)
Recent Earnings Report: Q/E 12/31/18
E.P.S. = $.31
Non-Accrual Loans to Total Loans: .3%
Non-Performing Assets to Total Assets: .28%
Net Charge-Offs (annualized) to Total Loans: .01%
"Overall, non-performing asset totals and charge-offs continue to illustrate minimal credit issues at the Company. Subsequent to December 31, 2018, an $8.1 million loan included in the 60-89 days past due total above, was sold at par plus accrued interest."
"During the quarter ended December 31, 2018, the Company repurchased 1,871,979 shares of its common at a total cost of $28.5 million for an average price of $15.20 per share."
Oritani Financial Corp. Announces Dividend and 2nd Quarter Results
B. Sold 50 ORIT at $17.26-A Roth IRA Account:
Transaction History this Account:
Using FIFO accounting, I sold the highest cost lot bought first.
Profit: $14
Average Cost Per Share Reduced to $15.89
6. Commission Free ETFs-Small Ball:
A. Bought 5 IBB at $109-Commission Free for Vanguard Brokerage Customers:
Closing Price Last Friday: IBB $112.04 +$1.82 +1.65%
Sponsor's Website: iShares Nasdaq Biotechnology ETF | IBB
Top Ten Holdings as of 2/11/19:
The largest holding, Celgene, is being acquired by BMY: Bristol-Myers Squibb to Acquire Celgene to Create a Premier Innovative Biopharma Company | BMS Newsroom
Holdings: 223 stocks
Expense Ratio: .47%
Total Return: The total return over the past five years has been subpar.
Maybe that will change.
Dividends: Practically Non-Existent
Maximum Position: 20 shares
Purchase Restriction: Small Ball Rule
200 Day SMA Line as of 2/12/18 (1 year chart): $110.4
5 Year Chart: Uninspiring
Prior Round-Trip: I am not going to invest much money in this one
I sold 5 shares at $290.11:
 |
| 2016 IBB 5 Shares + $44.17 |
Subsequent to those trades, there was a 3 for 1 stock split on 12/1/17: IBB Split History
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.
Hi
ReplyDeleteSG
maybe you could teach me how to evaluate an income CEF; i understand the basic nav etc , but i wonder how you evaluate the risk benefits of this particular portfolio; perhaps there are web sites that explain ginnie mae and fannie mae etc
thanks
https://www.cefconnect.com/fund/PPT
G: I am not familiar with PPT but did glance at its last shareholder report and will note some items.
Deletehttps://www.sec.gov/Archives/edgar/data/827773/000092881618001948/a_premierincome.htm
I noticed a great deal of hedging which is something that I can not easily evaluate and would not even try.
At page 113, I noted that the fund had a loss carryforward of $105+M and that has occurred in a bond bull market. That is a negative.
The fund has not supported its dividend with a return of capital which I view as a positive: Page 106
The fund has a substantial exposure to junk rated securities, see page 6. I am not buying any junk rated securities, since it is my opinion that their yields do not compensate for their risks. Note the 9.5% exposure to CCC rated securities. The fund does pick up some yield with its BB (21.27%), B (19.9%) and CCC rated securities. Junk bonds will react similarly to stocks during a recession.
I would look for the performance in 2008 and over the past 1, 3, 5 and 10 year periods. I would characterize the 10 year annual average total return as good at 9.58% but that number now excludes the 2008 disaster. The five average total return through last Friday is at 4.66%, less than the dividend yield, which shows a bond fund struggling when their is not a strong tailwind lifting all boats.
https://www.dividendchannel.com/drip-returns-calculator/
I would determine whether the fund is leveraged which appears not to be case now. Leverage brings into the equation a lot more risk.
Duration of the bond fund is important and that information can be found in your research.
I would look at a long term chart. The bottom fell out in 2008, but there was a fast recovery that time.
I would look at the historical discount numbers and how they compare to the present number. That information is available under the "pricing information''. I generally prefer to buy at a much wider than normal discount and then to sell at a much lower than normal discount assuming that is accompanied by a rise in net asset value sufficient for me to exit the position at a total return in excess of the dividend yield.
I am been considering, for example, eliminating my position in GDO where I now a net profit of about $100 as the discount has narrowed to lower than normal. I have not made a decision yet, but that could come at anytime now.
https://www.cefconnect.com/fund/GDO
Individual investors are ill equipped to figure out pricing for Fannie, Freddie and Ginnie Mae (part of HUD) debt. You can learn more about those issuers by reading material available on the internet.
You can see what a pure GNMA ETF fund is producing in yield and total return by looking at the ETF GNMA:
https://www.ishares.com/us/products/239461/ishares-gnma-bond-etf
That tells you that the high risk, junk component of PPT is providing most of the yield.
Thanks!!!
DeleteHello sg
ReplyDeleteApparently now it’s ok to have a large National debt. According to the WSJ
I Wonder what the view would be if rates are so low that no one wants to buy. Our debt?
A 10 year treasury at 2.65% looks good compared to alternatives like the 10 German bond at .112% or Japan's 10 year at -.02.
DeleteThere are still an abundance of buyers at negative real rates. The day of reckoning will occur when buyers look at U.S. debt as so much confetti and will want far higher rates to buy.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2019/02/observations-and-sample-of-recent_20.html