Sunday, March 31, 2019

Observations and Sample of Recent Trades: PWF:CA, RVT, SGZA, TDIV


Markets and Market Commentary

Whatever is causing panic bond buying has not registered yet with the Stock Jocks.  Stocks rise; S&P 500 set for biggest quarterly advance since 2009 - MarketWatch 

From their perspective, nothing but blue skies. Diana Krall - Blue Skies (Audio) - YouTube

One reason for that first quarter performance was the poor 4th quarter one. SPX is still more than 100 points below its 52 week of 2,834.4. My feel is that this is a trader's market now, with a lot of up and down chop. 

Just before the stock market crashed in 1929, the economist Irving Fisher made this declaration: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."  Irving Fisher, Ph.D. in economics, Oct. 17, 1929 

Starting with Black Monday, 10/28/29, the DJIA would lose over 80% of its value before hitting bottom in 1932. Stock Market Crash of 1929 | Federal Reserve HistoryThe Four Totally Bad Bear Recoveries: Where Is Today's Market? - dshort - Advisor Perspectives

I was reminded of Irving's major egg on his face moment when I read what Trump's chief economic advisor Larry Kudlow opined in December 2007 just in time for a 56.8% SPX decline. Bush Boom Continues | National Review (published 12/10/2007) 

In that very short article, the nation's chief economic advisor made the following claims: 

“There’s no recession coming. The pessimistas were wrong. It’s not going to happen.”

“The pessimistas are a persistent bunch. In 2006, they were certain a recession was just around the corner. They were wrong.”

"I believe the economic pendulum will soon swing in favor of the GOP.” 

"The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told.”

Larry graduated with a B.A. decree from the University of Buffalo and majored in history but his prediction was no worse than the still esteemed economist Irving Fisher who actually made substantial contributions. (e.g. Fisher equation - Wikipedia

Rest assured, Larry has been predicting as of late that there will be no recession in the U.S. due to Trump's tax cuts until last Friday, when he expressed considerable doubt about the real economy's response to the GOP's tax reform. 

There is no other interpretation for demanding an immediate .5% cut in the federal funds rate to a 1.75% to 2% range. White House advisor Kudlow says Fed should cut rates Just Fuck the Savings Class some more and tell them that it for their own good. 

Why is that even necessary when the tax cuts are doing such a good job  in lifting the economy or so Larry and Donald have been saying until the economy started to slow? The cuts went in effect on 1/1/18 and now the republicans are telling us that even more stimulus is needed. 

The idea that a 2.25% to 2.5% federal funds rate is causing a slowdown is nonsense and falls well within the patently absurd classification. 

But the republicans have to blame something or someone other than themselves and their policies if the nation slides into a recession this year, notwithstanding abnormally low interest rates by any historical standard going back to the 18th century and the huge tax cuts for corporations and the wealthy. 

It is all just part of the GOP's Big CON that has succeeded no matter how much evidence undermines the underlying thesis.  

What is amazing is that the GOP's con job convinces middle tax voters that the tax cuts are all about them. The middle class needs a tax cut: Trump didn’t give it to themA Year After the Middle Class Tax Cut, the Rich Are Winning  

Part of the Big Con is to use average tax cut numbers rather than mean ones. The average number is skewed skyward by the large cuts given to the rich. 

Then, in furtherance of the Big Con, the measures that actually increase middle class taxes are not talked about at all. 

Those include the inflation adjustment change, the repeal of the personal exemptions, the paring back of many itemized deductions, "the deduction for state and local taxes (SALT) is capped at $10,000; the mortgage interest deduction is capped; and deductions for casualty and theft losses, employee business expenses, and union dues are eliminated outright. Deductions for moving expenses, tuition and fees, and alimony payments are also repealed." The Two Biggest Lies in Donald Trump's Tax Plan The change in how the inflation adjustment to tax brackets and other items will increase middle class taxes more slowly. 

The change in the inflation adjustment alone will increase taxes by approximately $134 billion over a ten year period. The Tax Law's New Way Of Measuring Inflation Could Take A Toll On Taxpayers : NPR In effect, this is a hidden GOP tax increase on the middle class.  

How do you convince someone who is in the middle class to support a tax cut for the uber wealthy? Many have come to realize that their taxes went up under the GOP's law. 

First, and foremost, lie a lot and have shills come up with studies making the most outlandish claims. 

Lying works in American politics, and lying a lot, over and over again, works even better as Trump has proven beyond any reasonable doubt and may prove again in 2020. 

'Take profits very quickly' on US-China trade deal upside: Stephen Roach

So what are the problem that require a continuous massive infusion of monetary and fiscal stimulus to keep the U.S. economy puttering along? 

I discussed briefly some of the underlying and structural problems that neither political tribe have addressed in any meaningful way in a comment published yesterday.  

Another reason is that the GOP's tax cuts are poorly designed to help 80% of U.S. household that form the core of a consumer led economy and actually represent a tax increase for about 10% of the households now and more as time goes by. 

By massive fiscal stimulation, I am referring to spending almost 1 trillion per year more than government collects in revenue and to the tax cuts. 

Monetary stimulus refers to the FED's QE and other forms of interest rate suppression which distorts asset prices, encourages unproductive debt accumulation and spending, and causes the misdirection of financial resources from research, development and other job promotion activities to financial manipulation and engineering through stock repurchases and dividend increases that disproportionately enrich the top 10% with some trickle down below that number. 


Portfolio Management-Cash Flow Objective

A primary objective for portfolio management is to generate an almost daily cash flow stream. That stream consists of three parts: (1) dividends (less important); (2) interest (more important in the portfolio given the emphasis on bonds); and (3) proceeds from maturing bonds and CDs. 

When and as received, the cash flow can be redirected to whatever appears to be the best relative value taking into account the strong capital preservation and income generation objectives. This aspect of the strategy is going to be problematic now. 

The following are snapshots of cash flow in my Fidelity account for 4/1/19: 

The long term part of my bond portfolio is addressed primarily with high quality and longer term Tennessee municipal bonds. 

The preceding snapshot includes interest paid by two Aaa rated Williamson County, TN. GO bonds; two Montgomery County, TN. GO bonds rated AA+; and several Maury County, TN GO bonds rated Aa2. Those counties border Nashville, Davidson County TN. I live in Williamson County. Nashville occupies all of Davidson County



For the third time since Trump's election, republicans made an attempt to eliminate all government funding for the Special Olympics. Trump administration scrambles to defend budget cut for Special Olympics - The Washington Post  

After major blowback from the public, Donald did a 180 and claimed he would no longer seek to eliminate federal funding. Trump Says Special Olympics Will Be Funded After Proposed Cuts - Bloomberg The budget only called for an annual $17.6M contribution from the federal government. 

Barbara Bush didn't consider herself a Republican after Trump, book says: USA TodayBarbara Bush blames Trump for heart attack, GOP exit in The Matriarch

I have previously discussed Trump's multi-prong efforts to terminate Obamacare health insurance coverage for those with pre-existing conditions and republican efforts to terminate Obamacare's Medicare extension, premium support and other provisions relied upon by families across America.  

A few republicans in close senate races last November 2018 claimed to be concerned about affordable pre-existing coverage, but had previously undertaken concrete measures to eliminate or undermine that coverage.  Say one thing and do another is the MO for modern day republicans. The underlying premise is apparently based on H. L. Mencken's advice: 

"The majority of men prefer delusion to truth. It soothes. It is easy to grasp. Above all, it fits more snugly than the truth into a universe of false appearances—of complex and irrational phenomena, defectively grasped." (emphasis added)

“No one in this world, so far as I know — and I have searched the records for years, and employed agents to help me — has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.” This Day in Quotes: “No one ever went broke underestimating the intelligence of the American public.”

Josh Hawley, the new senator from Missouri, is in that election fraud category. The head-spinning health care dispute in the Missouri Senate race, explained - Vox 

As Missouri's attorney general, Hawley joined a lawsuit to invalidate Obamacare in its entirely including its provisions that made coverage for pre-existing conditions affordable. Yet he was all for coverage nonetheless and said so in many campaign commercials.   

The current republican effort to repeal Obamacare involves a case styled Texas v. United States. Texas v. United States: The Latest Court Case to Threaten Health Coverage for Millions | Families USA

The republicans filed the case in what is the most friendly to them district court. 

It was consequently no surprise that the republican judge Reed O'Connor invalidated Obamacare in a decision published late last year. The case is on appeal. Federal judge in Texas rules entire Obama health-care law is unconstitutional - The Washington PostTexas v. United States: Texas Federal Court “Strikes Down” the ACA | Healthcare Law Blog 

{for a discussion of how the republican health insurance plans only pretended to cover pre-existing conditions, but not really as a cost matter, see Pre-existing conditions: Does any GOP proposal match the ACA? | PolitiFact)

The republicans wanted to end both Obamacare's pre-existing coverages, its premium support provisions, and its extension of Medicaid based on their actions rather than their words.   

Trump could care less IMO and is only interested in throwing red meat to roughly 90% of republicans, appropriately called the republican core base.  

That lawsuit filed by Hawley and other republican state attorney generals is now before the U.S. Court of Appeals for the Fifth Circuit on appeal. 

Trump Officials Broaden Attack on Health Law, Arguing Courts Should Reject All of It - The New York Times The reference in this article is to the DOJ's recent filing in that circuit: DOJ Letter Dated 3/25/19

Before the election Donald had the DOJ assert repeatedly in court filings that the U.S. wanted to keep the premium support provisions and the Medicare extension. Best to give the appearance, no matter how false, just prior to an election that you are at least thinking about the bottom 60% or so.

Now, once the  election is behind them, Donald has done a 180 and now supports the repeal of Obamacare's premium support and Medicaid extensions. 

No doubt, Lying Don will be saying, and said last week, that he will replace that lost coverage with something that is both better and cheaper, a bald face lie, meaning in reality something that will actually terminate  health insurance coverage for approximately 20 million individuals due to increases in premium costs.  

And when there are reports by independent researchers like the Kaiser Foundation that millions lost coverage, which are then reported in the media, Trump and the Trumpsters will call that Fake News. 

The DOJ Wants to Strike Down Obamacare. Again

The problem with the republicans' approach is that the intended result is to cause millions to lose existing health insurance (funding in part budget gaps created by their tax cuts for the wealthy) and to then beguile those who have health insurance into believing that they are really just trying to help those who are less fortunate.

I am reminded of a famous line directed by a lawyer Joseph N. Welch to Senator Joseph McCarthy (R-WIS), one of the most famous republicans from the past, during the televised Army-McCarthy hearings: "Have you no sense of decency, sir, at long last? Have you left no sense of decency?" The answer was of course "no". 

Trump says GOP will have 'far better' plan than Obamacare 

The GOP does not have a plan, nor will it ever have one, that provides the same coverage at the same or lower costs. McConnell signals he won’t play a leading role in crafting the health-care bill Trump wants - The Washington Post Let Donald come up with a plan this time.  


Trump's Fed pick Stephen Moore owes $75,000 in taxes, government says

Federal judge blocks Medicaid work rules in blow to Trump

Court blocks another Trump attempt to undermine Obamacare - CNN This involves the GOP plan to allow the insurance companies to bypass Obamacare's coverage requirements by offering crap health insurance. The intended effect was to cause premiums to rise for those buying Obamacare plans. The GOP's plan was to peal off younger and healthier people into buying cheaper insurance with less coverage. One problem with that version of "cheaper and better" was that it was a la carte insurance, allowing insurance companies to avoid providing Obamacare's coverage requirements unless an additional premium was paid. That would cause premiums to rise for those in need of those coverages (e.g. maternity, drug and alcohol abuse treatment, mental health, etc.) 

Essential Protections Under Obamacare:  

Find out what Marketplace health insurance plans cover |

Look at what the republicans actually do rather than what they claim to be doing. 

I have reproduced this table in the past that shows what would happen to those families when the House republicans passed what they viewed as Medicare reform, eliminating traditional Medicare for those then under 55:

The GOP wanted to replace traditional Medicare with a voucher to buy private insurance. They called their plan "The Path to Prosperity". 

Look at the far right bar that shows the doubling of premium costs, compared to traditional Medicare premiums, in the first year of their Path to Prosperity. 

The question which is not asked by the Trumpsters and probably never will be, is whether the prosperity envisioned by the GOP is for them or those who fund the GOP's campaign coffers. 

I called this plan when it was passed in 2011 by the Republican controlled House with no Democrats voting in favor, which also included large tax cuts for the wealthy, a path to bankruptcy for the middle class in their golden years. Isn't that an obvious point. 

My advice then for those who would be forced onto a voucher system was to start preparing the kids now for the day when Mom and Pop will need a room or two in the their children's house and an allowance of say $1K per month at a minimum.  

House Oversight Committee requests 10 years of Trump financial records


1. Bought 100 RVT at $13.63-Used Commission Free Trade

RVT is a closed end stock fund that pays quarterly dividends, mostly sourced from capital gains pursuant to a managed distribution plan. The details of that plan are available at the sponsor's website. 

Quote: Royce Value Trust Inc. (RVT)

Closing Price Last Friday: RVT $13.76 +$0.05 +0.36% 

RVT Royce Value Trust- CEF Connect 

SEC Filed Shareholder Report: Starts at page 41 (period ending 12/3/18)

Last EliminationItem # 1 Sold 505+ RVT at $15.89 (8/3/13 Post)(profit snapshot $454.03 and reasons for disposition set out) 

There are several reason for the lower price. 

One is explained in the prior linked post where assets were transferred out of RVT to a new CEF called Royce Global Value Trust Inc (RGT); see prospectus for further details. 

When effect
ed, that would of course cause a decline in the RVT net asset value per share, but theoretically RVT shareholders would be no worse off since they would received shares in the new CEF RGT. I do not like this kind of stunt. Just form another CEF that focuses on global value and leave the RVT shareholders alone. 

The other two reasons are significant dividend payments and overall subpar performance.

Last Quarterly Dividend: $.29 per share with a 3/8/19 ex dividend date

Historical Dividends

The quarterly dividend has recently been variable. The total can exceed the managed distribution rate with realized capital gains. The excess over the managed distribution rate, if any, is distributed in the 4th quarter as shown in the preceding table. 

Last year, RVT paid out $1.26 per share. At that distribution rate, the dividend yield at a total cost per share of $13.63 would be 9.24%. 

RVT suspended its managed distribution plan, rather than pay out ROC, in response to the Near Depression sending the fund's unrealized gains to money heaven rather than to shareholders. 

The goal is to harvest a total return in excess of the dividend yield. 

2. Pares and Eliminations:

A. Sold 50 of 100 PWF:CA at C$30.99:

Quote: Power Financial Corp. (Canada: Toronto)

U.S. Pink Sheet Exchange Priced in USDs: OTC Markets | POFNF
Power Financial Corporation | Home

Profit Snapshot: +C$161

Item # 4.A. Bought 50 PWF:CA at C$27.73 (12/23/18 Post)

I sold my highest cost lot and kept the 50 shares bought at C$25.5. Item  #5.A. Bought 50 PWF:CA at C$25.5 (1/23/2019 Post) 

Power Financial Corporation | Dividends

On 3/4/19, PWF announced a major share buyback through a modified Dutch auction. Power Financial Announces Intention to Repurchase up to $1.65 billion of its Common Shares through a Substantial Issuer Bid The terms of the  tender offer were announced on 3/8: Power Financial Announces Terms of its Substantial Issuer Bid to Repurchase up to $1.65 billion of its Common Shares ("The PFC Offer is being made by way of a "modified Dutch auction", which will allow shareholders who choose to participate in the PFC Offer to individually select the price, within a price range of not less than $29.00 per Share and not more than $34.00 per Share (in increments of $0.10 per Share), at which they are willing to sell their Shares. Upon expiry of the PFC Offer, the Corporation will determine the lowest purchase price (which will not be more than $34.00 per Share and not less than $29.00 per Share) that will allow it to purchase the maximum number of Shares properly tendered to the PFC Offer, and not properly withdrawn, having an aggregate purchase price not exceeding $1.65 billion.")

The offer is being funded by selling shares in Great-West Lifeco back to that company in response to its modified Dutch auction.  Great-West Lifeco announces substantial issuer bid for up to $2 billion of its common shares Power Financial currently owns 67.8% of Great-West Lifeco. The Great-West offer is being funded in large part by selling substantially all of its U.S. individual life and annuity businesses: Great-West Lifeco to sell U.S. individual life insurance and annuity business

Recent Earnings Report: Q/E 12/31/18

Power Financial Reports Fourth Quarter and 2018 Financial Results and Dividend Increase

Power Financial announced in this release a 5.2% increase in its quarterly dividend to 45.55 cents per common share.

Rationale: I am somewhat concerned that the price may drift down after the auction is completed.

Selling my highest cost lot into a strong rally is consistent with my capital preservation objectives. Another goal fulfilled by harvesting a profit and keeping the lower cost lot is to have less money generate more income.

With the recent 5.2% dividend increase, the dividend yield on my lowest cost lot, which was recently bought during a price downdraft and prior to share buyback announcement, is now at 7.15%. 

B. Eliminated TDIV-Sold 15 at $38.58-Commission Free for Vanguard Customers:

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

Closing Price Last Friday: TDIV $38.30 +$0.37 +0.98% 

Sponsor's Page: First Trust NASDAQ Technology Dividend Index Fund (TDIV)


Distribution History

2018 Dividends Per Share = $.9834

Profit Snapshot: +$76.14

Item # 5.B. (12/23/18 Post)

Prior Sell Discussions:

Item # 1.C. Sold 15 TDIV at $36.48 (2/20/19 Post)($13.45); 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);

Realized Gains to Date+$1,506.58 ($1,430.44 in prior Trades)

The lowest prices paid for this ETF occurred in 2012, soon after its IPO. 

Item # 1 Bought 50 TDIV at $19.95 (8/12/12 Post) 

Rationale: Picking up pennies off the ground. Also with data pointing to a worldwide slowdown, the robust price gains in technology stocks seems suspect to me.

3. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Healthcare Trust of America 2.95% SU Maturing on 7/1/22:

FINRA Page: Bond Detail (prospectus not linked)


I now own 4 bonds. The other 2 were bought in my IB account back in February 2018. Item # 4.A. (2/22/18 Post)

Issuer: Operating subsidiary of Healthcare Trust of America Inc. (HTA) who guarantees the notes

Healthcare Trust of America, Inc. Reports 2018 Results And 2019 Earnings Guidance

CEO Scott Peters on Q4 2018 Results - Earnings Call Transcript | Seeking Alpha

SEC Filings

Credit Ratings:

Bought at a Total Cost of 98.91 (includes $2 commission)

YTM at TC Then at 3.303%
Current Yield at TC = 2.9825%

I have bought and sold the common shares, but no longer have a position. My last elimination was discussed in this post: Item # 1.A. (9/12/18 Post)

The current quarterly dividend is $.31 per share: Dividends – HTA The dividend yield is higher than the 2022 bond YTM, but not by an amount that would induce me, with my capital preservation objectives, to buy the common. The bond has a promise to pay a sum certain on a date certain and that is valuable when capital preservation is the primary objective. I also view the dividend growth potential of HTA to be low based on past history. The quarterly rate was at $.2875 in 2012.

Last week, I quit looking for corporate bonds to buy and have instead focused my attention on bonds to sell. I am doing what I did in 2017 which is a hallowing out the weighting in intermediate corporate bonds. I will still be discussing some bond buys since I am running behind. 

For this prior week and going forward, bond purchases will be short term treasury bills bought at auction. Some 1 year CDs are being bought when the yield is superior to the 1 year treasury bill. Until the rate breaks below 2.4%, I will buy at least 5 one year treasury bills each month at auction and will keep doing so until I have 5 maturing each month.   

4. Short Term Bond/CD Ladder Basket Strategy

April 2019 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 for Treasury Bills Bought at Auction 

Secondary market purchases are made at below par value. 

All securities mentioned in this section have $1,000 par values. 

2 Sysco 1.9% SU 4/1/19 (bought in December 2017)
2 Gilead 2.05% SU 4/1 (bought July 2018)
4 Nextera 2.3% SU 4/1 (bought February-May 2018 in 1 bond lots)
2 MB Financial 1.6% CDs MI 4/5(18 month CDs)
3 Treasury 2.427% IR 4/8 (56 day T Bills bought at auction) 
1 Citigroup 2.55% SU 4/8 (bought June 2018)
2 Treasury 6 Month Bills 4/11 IR 2.442% (bought at auction)
3 Treasury 3 Month Bills 4/11 IR 2.458% (bought at auction)
3 Royal Bank of Canada 1.625% SU (bought 2 in December 2017; 1 in 12/16) 
1 Treasury .85% 4/15 (secondary market)
3 Bank of China 2.45% CD 4/15 (3 Month CDs)
1 Deere 2.25% SU 4/17 (Bought September 2018)
2 UBS BK 2.1% CDs MI 4/18 (1 Year CDs)
3 Treasury  2.453% IR 4/18 (3 month T Bills bought at auction)
4 Autozone 1.625% SU 4/21 (bough 12/17 and 12/16)
1 Wells Fargo 2.125% CD MI 4/22 (9 month CD)
2 Goldman Sachs 2% SU 4/25 (bought December 2017)
1 U.S. Bancorp 2.2% SU 4/25 (bought July 2018)
2 Sterling BK 1.65% CDs 4/19 MI (18 month CDs)
2 Treasury 1.625% 4/30/19 (secondary market purchases)
5 Treasury 2.445%% IR 28 days (bought at auction on 3/28) 


A. Bought 5 One Year Treasury Bills Maturing on 3/26/20 at Auction:

IR = 2.443

Auction Results:


B. Bought 2 Capital One 2.5% SU Maturing on 5/12/20:

FINRA Page:  Bond Detail (prospectus linked)

Issuer: Capital One Financial Corp.  (COF)

COF Analyst Estimates

Credit Ratings:

Bought at a TC of 99.644

YTM at TC Then at 2.808%
Current Yield at TC = 2.5089%

C. Bought 1 Treasury 1.625% Coupon Maturing on 7/31/20:

YTM = 2.504609%

I now own 3 bonds.

D. Sold 1 McDonalds 2.625% SU Maturing on 1/15/22 (barely within 3 year range for short term basket now, but bought when it was in the intermediate term basket)-A Roth IRA Account:

Profit Snapshot: +$16.14

Item # 4.B. Bought 1 MCD 2.625% SU at a TC of 97.822 (5/31/18 Post)

Finra Page: Bond Detail

Sold at 99.536

YTM at 99.536 = 2.797%
Proceeds at 99.436

While I can justify at least to myself buying a quality corporate bond that has a +.25%-+.3% spread to 6 month to 1 year treasury bills, I would prefer selling one maturing more than 2 years out with that kind of spread. This MCD bond matures in almost 3 years with about a .28% spread to the 6 month treasury bill as of 3/18.

Last month, I sold 1 of my 2022 MCD bonds:

At the moment, I still own 1 bond, but will probably sell when I can do so without much trouble at a price in excess of par value. A lack of trouble in bond trading for me is when I can hit the bid or ask price with a limit order.

There is only so much profit that can be realized from 1 or 2 bond trades. I simply view my bond trading activity as a supplement to the low yields and as part of a strategy to sell the rips and buy the dips, a practice consistent with my overriding preservation of capital goal. 

With another surge in interest rates, I would look for a re-entry point which is the case for most of the bonds that I sell.

E. Bought 5 Treasury Bills Maturing on 4/30/19 at Auction

IR = 2.445

Auction Results:  The auction was for a 28 day T Bill held last Thursday.  

5. Long Term Bond Basket-Potentially Long Term Exchange Traded Bonds

Category: Exchange Traded Bonds

Sub-Category: Exchange Traded Baby Bonds

For clarification, my baby bond category includes only bonds that are owned directly by the investor. I exclude ETBs where ownership is achieved through owning shares issued by a grantor trust that owns the bonds. Those two trust ownership categories are Trust Certificates and Trust Preferred (both moving toward extinction). Those ETBs need to be in their own categories of exchange trade bonds. The same is true for baby bonds that are "principal protected notes" and European hybrids.

A. Issuer Early Redemption of SGZA

I owned 100 shares of this $25 par value SU bond. 

Profit Snapshot: $44.05

Item #3.A. Added 70 SGZA at $24.39 (12/29/18 Post)Item # 5.A. Bought 30 SGZA at $24.8 - Used Commission Free Trade (5/31/18 Post)

Exchange traded bonds have asymmetric interest rate risk. The issuer has the right to redeem at par value, which generally may be exercised at anytime five years after the IPO. The exchange traded bond may have a very long maturity date unless the issuer exercises that option. SGZA would have matured in 2042. So why I classified this bond as a potentially long term one, it turned out to be a short term bond based on my purchase date and a mid-intermediate term one for anyone buying shares at the IPO. 

If interest rates had risen to a point where the issuer could not refinance at a lower cost to it (and generally extend the maturity date through the refinancing), then the owner would be stuck with a bond going down in value and would keep going down as long as interest rates continued to go up. 

On the other hand, I just received the redemption proceeds when it was advantageous for Selective Insurance to refinance but not advantageous to me for reinvestment. Where am I going to pick up a 6% yield from an investment grade bond now? 

Trading Profits = $428.8 (see links a Item #3.A)

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.