Economy:
The government's first estimate of real GDP growth in the 2019 first quarter was reported at a much better than expected 3.2%: Economy grows 3.2% in first quarter, GDP shows, much stronger than anticipated - MarketWatch
Gross Domestic Product, First Quarter 2019 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)
However, when drilling down into the report, the rise in GDP was partly attributable to a 3.7% decrease in imports which is a potential sign of "a deceleration in American spending" and a $218.4B annualized buildup in unsold inventory. In the government's math, imports count as a negative in GDP accounting, so a decline in imports actually makes growth appear stronger. Inventories contributed .65% to GDP, and the smaller trade deficit due partly to a decline in imports added 1.03%. Without those items, which are expected to reverse, GDP increased by 1.52%. US Treasury yields fall despite stronger GDP print; Trade, inventories power U.S. economy to 3.2 percent growth in first quarter - Reuters
Domestic demand only increased at a 1.3% rate, the slowest increase since the 2013 second quarter. Growth in consumer spending declined to 1.2% from 2.5% in the prior quarter. Residential construction fell 2.8%, which is the 4th straight decline. The economy was helped by a 2.4% increase in government spending.
The personal consumption inflation number used in the GDP also decelerated from the prior quarter, falling to .6% annualized rate compared to 1.5% in the 2018 4th quarter. Excluding food and energy, the PCE price index declined to 1.3% from 1.8% annualized rate.
The first estimate of first quarter real GDP growth will be revised in subsequent reports.
So the report was better than expected for the wrong reasons IMO. Sort of like unemployment falling because unemployed individuals were so discouraged about finding a job that they left the labor force.
Nonetheless, the important points are that real GDP is still growing at a rate that is neither too fast nor too slow and inflation remains subdued.
As I mentioned earlier, those models are guesses. Even the final GDP estimate provided by the government is a guess, though it does constitute the best guess. Measuring economic activity in the huge and complex U.S. economy will never be precise, but a reasonable range estimate can be made after all the data becomes available.
The government's first estimate of real GDP growth in the 2019 first quarter was reported at a much better than expected 3.2%: Economy grows 3.2% in first quarter, GDP shows, much stronger than anticipated - MarketWatch
Gross Domestic Product, First Quarter 2019 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)
However, when drilling down into the report, the rise in GDP was partly attributable to a 3.7% decrease in imports which is a potential sign of "a deceleration in American spending" and a $218.4B annualized buildup in unsold inventory. In the government's math, imports count as a negative in GDP accounting, so a decline in imports actually makes growth appear stronger. Inventories contributed .65% to GDP, and the smaller trade deficit due partly to a decline in imports added 1.03%. Without those items, which are expected to reverse, GDP increased by 1.52%. US Treasury yields fall despite stronger GDP print; Trade, inventories power U.S. economy to 3.2 percent growth in first quarter - Reuters
Domestic demand only increased at a 1.3% rate, the slowest increase since the 2013 second quarter. Growth in consumer spending declined to 1.2% from 2.5% in the prior quarter. Residential construction fell 2.8%, which is the 4th straight decline. The economy was helped by a 2.4% increase in government spending.
The personal consumption inflation number used in the GDP also decelerated from the prior quarter, falling to .6% annualized rate compared to 1.5% in the 2018 4th quarter. Excluding food and energy, the PCE price index declined to 1.3% from 1.8% annualized rate.
The first estimate of first quarter real GDP growth will be revised in subsequent reports.
So the report was better than expected for the wrong reasons IMO. Sort of like unemployment falling because unemployed individuals were so discouraged about finding a job that they left the labor force.
Nonetheless, the important points are that real GDP is still growing at a rate that is neither too fast nor too slow and inflation remains subdued.
As I mentioned earlier, those models are guesses. Even the final GDP estimate provided by the government is a guess, though it does constitute the best guess. Measuring economic activity in the huge and complex U.S. economy will never be precise, but a reasonable range estimate can be made after all the data becomes available.
Durable-goods orders grow at fastest rate in 7 months as business investment rebounds - MarketWatch
 |
| Census Bureau: Durable Goods |
Uneven housing recovery with some markets behind pre-recession peak
New single family home sales increased 4.5 percent in March
The Bond Ghouls see no chance of a rate hike on or before the January 2020 FED meeting and a 68.6% probability that the FF rate will be cut at least .25%.
Countdown to FOMC: CME FedWatch Tool
That probability assessment is reflected in the yield curve. Note how the yield slides from the 6 month bill to the 2 year treasury note.
++++++
Portfolio Management:
The recent better than expected economic numbers has caused me to sell some intermediate corporate bonds and to reallocate the proceeds into shorter maturities. The intermediate term definition that I use is 3 to 10 years from the current date.
While I have significantly pared the intermediate term corporate bond allocation down to about $200K as of today, that number is still a meaningful allocation for me. I simply started with a large inventory.
When I reach an inflection point where I do not want to buy, the natural next question is what can I sell. I reached that point with intermediate term corporate bonds over a month ago.
I have referenced this relatively minor allocation change in previous posts.
As usual, I am not making any sudden major allocation changes.
Instead, I have been spacing the intermediate term corporate bond sells over time. Discussions about those transactions will continue for at least another month. I am currently way behind in discussing trades that have already occurred. I will now adopt and wait and see mode.
The bond rally that took the 10 year treasury yield from 3.24% (11/8/18) to 2.39% (3/28/19) appeared to predicated IMO on a recession prediction that is unlikely to occur within the time frame contemplated by the Bond Ghouls.
I would emphasize that predicting directional changes in interest rates is at best dicey. In this recent change, where I first quit buying intermediate term bonds given their yields and shifted to selling them, I am motivated in part by the narrow yield spreads between short and intermediate bonds, which is a current fact that does not require a future forecast. The yield curve is flat.
So I am not giving up much by buying a 1 year treasury bill at auction and selling an intermediate corporate bond maturing in the 2023-2026 range.
I still have a significant allocation to longer term Tennessee Municipal bonds that will continue rising in price if rates decline further. I do not presently anticipate a decline to new lows, but recognize that my future forecast of higher rates may be wrong.
The Bond Ghouls thought that the GDP report was a buy signal for longer dated treasuries:
Friday's Close (4/26): TLT $123.81 +$0.42 0.34%: iShares 20+ Year Treasury Bond
That is not an irrational response given the low PCE inflation numbers and the problems lurking beneath the surface of that report. This GDP report has caused me to pause paring my intermediate term corporate bond allocation.
The process of coping with the inevitable uncertainty about the future will often lead to allocations which are contradictory, with each component in the allocation addressing different possible future scenarios weighted based on my current "best guesses".
All of my portfolio allocations have as their starting point capital preservation followed by income generation. Capital appreciations is the third and least important objective given my financial circumstances.
The income generation component does require some measured risk taking where risk is controlled and mitigated through a variety of trading rules formulated by Left Brain.
++++
Markets and Market Commentary:
JP Morgan lays out a blueprint for how this record run in the stock market will keep going
Chart shows glaring economic risk that could wipe out record highs
3m earnings Q1 2019 (Closing Price Day of Report: MMM $190.72 -$28.36 -12.95%)
Intel stock plummets on disappointing earnings outlook as new CEO describes ‘more cautious’ trend - MarketWatch
Popular Heart Drugs Tainted With Carcinogens Face a Wave of Lawsuits This article discusses generic high blood pressure drugs manufactured by a Chinese company.
While the Stock Jocks expressed some concern about the weaker than expected earnings reports from Intel and MMM, their concerns quickly evaporated into ignoring those reports and focusing instead on the more positive reports from MSFT and AMZN.
Intel stock plummets on disappointing earnings outlook as new CEO describes ‘more cautious’ trend - MarketWatch
Popular Heart Drugs Tainted With Carcinogens Face a Wave of Lawsuits This article discusses generic high blood pressure drugs manufactured by a Chinese company.
While the Stock Jocks expressed some concern about the weaker than expected earnings reports from Intel and MMM, their concerns quickly evaporated into ignoring those reports and focusing instead on the more positive reports from MSFT and AMZN.
+++++++
Trump:
Trump’s Fed pick Moore irks senator for calling Cleveland and Cincinnati ‘armpits of America’ - MarketWatch
Apparently, Donald sees no contradiction in calling the Mueller report a "total vindication", which is obviously false, or a "total hit job".
House oversight chairman cites 'massive' obstruction by Trump, Barr - Reuters (“Both President Trump and Attorney General Barr are now openly ordering federal employees to ignore congressional subpoenas and simply not show up - without any assertion of a valid legal privilege,” according to U.S. Representative Elijah Cummings) While that is a true statement, Barr and Trump will nonetheless be successful in obstructing House investigations. Barr will be Trump's active co-conspirator in efforts to prevent testimony from federal employees and to ignore valid subpoenas.
Donald does not even want to hear any discussion about how to secure the 2020 election from Russian interference. It is a taboo topic for him. In Push for 2020 Election Security, Top Official Was Warned: Don’t Tell Trump
If Trump loses in 2020, he will not go quietly. He will instead use his twitter megaphone to claim that the election was rigged and millions were allowed to vote illegally. The only way to prevent Donald from making those claims is to beat him decisively with nothing even approaching a close call in battleground states.
Trump’s Fed pick Moore irks senator for calling Cleveland and Cincinnati ‘armpits of America’ - MarketWatch
Apparently, Donald sees no contradiction in calling the Mueller report a "total vindication", which is obviously false, or a "total hit job".
House oversight chairman cites 'massive' obstruction by Trump, Barr - Reuters (“Both President Trump and Attorney General Barr are now openly ordering federal employees to ignore congressional subpoenas and simply not show up - without any assertion of a valid legal privilege,” according to U.S. Representative Elijah Cummings) While that is a true statement, Barr and Trump will nonetheless be successful in obstructing House investigations. Barr will be Trump's active co-conspirator in efforts to prevent testimony from federal employees and to ignore valid subpoenas.
Donald does not even want to hear any discussion about how to secure the 2020 election from Russian interference. It is a taboo topic for him. In Push for 2020 Election Security, Top Official Was Warned: Don’t Tell Trump
If Trump loses in 2020, he will not go quietly. He will instead use his twitter megaphone to claim that the election was rigged and millions were allowed to vote illegally. The only way to prevent Donald from making those claims is to beat him decisively with nothing even approaching a close call in battleground states.
Trumps obstruction efforts have now shifted into high gear: Trump: 'We're fighting all the subpoenas' from House Democrats
Listening to republicans, and I not making this stuff up, the Russia investigation was a partisan witch hunt concocted by the loser democrats in concert with the liberal Fake news media to overturn the results of the 2016 election.
Their view is also that the money spent on the the investigation was wasted, while insisting that the 2½ year investigation into the Benghazi embassy attack, which was an effort to tag Hillary with a security lapse at one embassy, was worth every penny.
The republicans spent more time investigating the embassy attack on Benghazi than Congress spent on investigating the 9/11 attacks. Congress spent more time investigating Benghazi than it did 9/11
And, it goes without saying that it is impossible to have a fact based conversation with the Trumpsters on the contents contained in the Mueller report or anything else. It is not worth the effort to even try. Facts do not matter and facts that are inconsistent with their opinions are per se false anyway.
Trump thinks that the 5 republican Supreme Court Justices will stop any effort by Congress to impeach him. Contradicting Constitution, Trump vows Supreme Court fight over impeachment - Reuters; Trump Says He'd Seek Supreme Court Help to Deter Impeachment
While those Justices will do whatever they can to implement reactionary republican ideology, taking the U.S. gradually back to 19th century jurisprudence while bending over backwards to support the Imperial Presidency doctrine which is tailor made for Donald doing whatever he wants, it may be a bridge too far for them to delete the impeachment clause in the U.S. Constitution.
Trump could care less about the conservative values expressed in the U.S. Constitution except of course for a liberal interpretation of the Second Amendment. After all, he has his guys on the Supreme Court and is well underway in refashioning the federal appellate and district courts in his image, having already succeeded in that task with the party formerly known as republicans.
Listening to republicans, and I not making this stuff up, the Russia investigation was a partisan witch hunt concocted by the loser democrats in concert with the liberal Fake news media to overturn the results of the 2016 election.
Their view is also that the money spent on the the investigation was wasted, while insisting that the 2½ year investigation into the Benghazi embassy attack, which was an effort to tag Hillary with a security lapse at one embassy, was worth every penny.
The republicans spent more time investigating the embassy attack on Benghazi than Congress spent on investigating the 9/11 attacks. Congress spent more time investigating Benghazi than it did 9/11
And, it goes without saying that it is impossible to have a fact based conversation with the Trumpsters on the contents contained in the Mueller report or anything else. It is not worth the effort to even try. Facts do not matter and facts that are inconsistent with their opinions are per se false anyway.
Trump thinks that the 5 republican Supreme Court Justices will stop any effort by Congress to impeach him. Contradicting Constitution, Trump vows Supreme Court fight over impeachment - Reuters; Trump Says He'd Seek Supreme Court Help to Deter Impeachment
While those Justices will do whatever they can to implement reactionary republican ideology, taking the U.S. gradually back to 19th century jurisprudence while bending over backwards to support the Imperial Presidency doctrine which is tailor made for Donald doing whatever he wants, it may be a bridge too far for them to delete the impeachment clause in the U.S. Constitution.
Trump could care less about the conservative values expressed in the U.S. Constitution except of course for a liberal interpretation of the Second Amendment. After all, he has his guys on the Supreme Court and is well underway in refashioning the federal appellate and district courts in his image, having already succeeded in that task with the party formerly known as republicans.
Six Trump Interior appointees are being investigated for possible ethical misconduct
Rich guys are most likely to have no idea what they’re talking about, study suggests - The Washington Post
Rich guys are most likely to have no idea what they’re talking about, study suggests - The Washington Post
++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Sold 1 AT & T 3% SU Maturing on 2/15/22:
Profit Snapshot: +$9.98
Item # 3 (1/18/17 Post)
Finra Page: Bond Detail
Sold at 100.4
YTM at 100.4 Then at 2.852%
Current Yield at 100.4 = 2.988%
Proceeds at 100.3 (after $2 Commission/YTM at 2.889%)
This bond needed to be sold during the 2017 bond rally and then bought back when interest rates spiked higher last year.
As noted previously, I did sell a majority of immediate term corporate bonds into the 2017 rally. Snapshot of 2017 Short Term Bond Trading Profits Fidelity Account only
B. Sold 1 Vodafone 2.95% SU Maturing on 2/19/23:
Profit Snapshot: +$9.98
Item # 3 (1/18/17 Post)
Finra Page: Bond Detail
Sold at 100.4
YTM at 100.4 Then at 2.852%
Current Yield at 100.4 = 2.988%
Proceeds at 100.3 (after $2 Commission/YTM at 2.889%)
This bond needed to be sold during the 2017 bond rally and then bought back when interest rates spiked higher last year.
As noted previously, I did sell a majority of immediate term corporate bonds into the 2017 rally. Snapshot of 2017 Short Term Bond Trading Profits Fidelity Account only
B. Sold 1 Vodafone 2.95% SU Maturing on 2/19/23:
Profit Snapshot: +$28.42
Item # 4.B. Bought 1 VOD 2.95% SU Maturing on 2/19/23 at a TC of 97.605 (4/19/18 Post)
FINRA Page: Bond Detail (prospectus linked)
Sold at 99.3
YTM at 99.3 = 3.144%
Current Yield at 99.3 = 2.97%
Proceeds at 99.2
I am keeping one bond.
I know that a 2.97% current yield for a Baa2 rated bond maturing in almost 4 years is unattractive to me.
But, I have to deal with the way things are and play the hand that I am dealt even if the cards are bad.
So far I have been successful in trading intermediate term bonds by buying when interest rates pop and then selling during a significant decline in rates. That trading strategy has provided me with actual yields in excess of their respective YTMs when the bonds were originally purchased.
Profits are of course small given the 1 and 2 bond lots but the percentage returns on invested capital have been acceptable for a bond.
Link to Last VOD Bond Sell: Item # 3.A. (3/3/19 Post)
2. Short Term Bond/CD Ladder Basket Strategy:
May 2019 Maturities:
May 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 Rate for Treasury Bills Bought at Auction
Treasury: U.S. Treasury Debt ($1K par value per bill, note or bond)
IR: Investment Rate for Treasury Bills Bought at Auction
7 Treasury 3 Month Bills 2.423% IR 5/2/19 (bought at auction)
2 BP Capital 1.676% SU Bonds 5/3/19 (bought 11/17 and 12/17)
5 Treasury 2.434% IR 28 Day Bill 5/7 (bought at auction)
2 Mainsource BK 1.6% CDs MI 5/9 (18 month CD)
1 Shell 1.375% SU 5/10 (bought 12/17)
1 BP Capital 2.237% SU 5/10 (bought 7/18)
2 Amgen 1.9% SU 5/10 (bought 12/17)
2 Westpac BK 1.65% SU 5/13 (bought 12/17)
2 Boston Private BK 1.6% CDs MI 5/14 (18 month CDs)
5 Treasury 2.434% IR 28 Day Bill 5/7 (bought at auction)
2 Mainsource BK 1.6% CDs MI 5/9 (18 month CD)
1 Shell 1.375% SU 5/10 (bought 12/17)
1 BP Capital 2.237% SU 5/10 (bought 7/18)
2 Amgen 1.9% SU 5/10 (bought 12/17)
2 Westpac BK 1.65% SU 5/13 (bought 12/17)
2 Boston Private BK 1.6% CDs MI 5/14 (18 month CDs)
2 Celgene 2.25% SU 5/15 (bought 1/18)
1 Treasury .875% 5/15 (secondary market)
1 Bank NY 2.2% SU 5/15 (bought 7/18)
2 Amgen 2.2% SU 5/22 (bought 4/18)
4 Comerica 2.125% SU 5/23 (bought 1/17 and 12/17)
3 Treasury 2.455% IR 6 Month T Bills 5/23 (bought at auction)
5 Treasury Day Bills 2.434% IR 5/28 (bought at auction)
1 Treasury .875% 5/15 (secondary market)
1 Bank NY 2.2% SU 5/15 (bought 7/18)
2 Amgen 2.2% SU 5/22 (bought 4/18)
4 Comerica 2.125% SU 5/23 (bought 1/17 and 12/17)
3 Treasury 2.455% IR 6 Month T Bills 5/23 (bought at auction)
5 Treasury Day Bills 2.434% IR 5/28 (bought at auction)
5 McDonalds 1.875% SU 5/29 (various)
2 Disney 1.85% SU 5/30 (bought 12/17)
3 Treasury 1.5% 5/31/ (various)
$52K
A. Bought at Auction 5 One Year Treasury Bills Maturing on 4/23/20:
IR = 2.443%
Auction Results:
I am probably going to keep buying 5 one year T Bills at auction until I have 5 maturing each month.
B. Bought 1 Treasury 1.5% Coupon Maturing on 5/15/20:
YTM = 2.39763%
I now own 3 bonds.
C. Bought 1 Treasury Maturing on 10/3/19:
YTM = 2.45%
This is a zero coupon treasury bought in the secondary market rather than at auction.
D. Bought 5 Treasury 28 Day Bills at Auction Maturing on 5/28/19:
IR= 2.434%
Auction Results: 28 Days
Schwab does not charge a commission for treasury auction purchases.
2 Disney 1.85% SU 5/30 (bought 12/17)
3 Treasury 1.5% 5/31/ (various)
$52K
A. Bought at Auction 5 One Year Treasury Bills Maturing on 4/23/20:
IR = 2.443%
Auction Results:
I am probably going to keep buying 5 one year T Bills at auction until I have 5 maturing each month.
B. Bought 1 Treasury 1.5% Coupon Maturing on 5/15/20:
YTM = 2.39763%
I now own 3 bonds.
C. Bought 1 Treasury Maturing on 10/3/19:
YTM = 2.45%
D. Bought 5 Treasury 28 Day Bills at Auction Maturing on 5/28/19:
IR= 2.434%
Auction Results: 28 Days
Schwab does not charge a commission for treasury auction purchases.
3. Eliminations and Pares:
A. Sold 100 DIR.UN:CA at C$11.92 (C$1 commission):
Profit Snapshot: +C$215
Item # 4.A. Bought 100 DIR.UN:CA at C$7.95 (12/12/18 Post)
Quotes:
CAD Priced Units: DIR.UN
USD Priced Units: DREUF (Grey Market-Dark with no bid/ask quotes and some brokers charge special fees to execute orders)
Closing Price Last Friday: DIR-UN.TO C$11.51 +C$0.02 +0.17%
The Canadian REITs sell "units" rather than "shares".
Website: Dream Industrial REIT
Portfolio | Dream Industrial REIT (223 properties with 20.2M square feet of gross leasable space)
Distributions: Monthly at C$.05833 (C$.7 per unit annually)
Dream Industrial REIT March 2019 Monthly Distribution
Last Earnings Report: Dream Industrial REIT Reports Solid 2018 Financial Results
Recent Press Releases:
Dream Industrial REIT Provides Acquisitions Update and is Added to the S&P/TSX Composite Index Toronto Stock Exchange
Dream Industrial REIT Completes $144 Million Equity Offering at C$10.45; Dream Industrial REIT Announces Acquisition of CAD$235 Million (US$179 Million) Logistics Portfolio in Five Cities Across the Midwest U.S. and $125 Million Equity Offering
A. Sold 100 DIR.UN:CA at C$11.92 (C$1 commission):
Profit Snapshot: +C$215
Item # 4.A. Bought 100 DIR.UN:CA at C$7.95 (12/12/18 Post)
Quotes:
CAD Priced Units: DIR.UN
USD Priced Units: DREUF (Grey Market-Dark with no bid/ask quotes and some brokers charge special fees to execute orders)
Closing Price Last Friday: DIR-UN.TO C$11.51 +C$0.02 +0.17%
The Canadian REITs sell "units" rather than "shares".
Website: Dream Industrial REIT
Portfolio | Dream Industrial REIT (223 properties with 20.2M square feet of gross leasable space)
Distributions: Monthly at C$.05833 (C$.7 per unit annually)
Dream Industrial REIT March 2019 Monthly Distribution
Last Earnings Report: Dream Industrial REIT Reports Solid 2018 Financial Results
Recent Press Releases:
Dream Industrial REIT Provides Acquisitions Update and is Added to the S&P/TSX Composite Index Toronto Stock Exchange
Dream Industrial REIT Completes $144 Million Equity Offering at C$10.45; Dream Industrial REIT Announces Acquisition of CAD$235 Million (US$179 Million) Logistics Portfolio in Five Cities Across the Midwest U.S. and $125 Million Equity Offering
B. Pared TERP-Sold 51+ at $13.63:
History This Account:
Quote: TerraForm Power Inc. Cl A (TERP)
Website: TerraForm Power
TERP SEC Filings
TerraForm Power Projects
2018 Annual Report
Closing Price Last Friday: TERP $13.55 -$0.03 -0.22%
Profit Snapshot: +$138.51
This was an elimination for this account.
Item # 1.A. Bought 50 TERP at $11.18-Used Schwab Commission Free Trade (9/16/2018 Post) The shares went ex dividend on the day after my purchase.
I still own shares in my Fidelity account where I am reinvesting the dividend. The following link is to the same post: Item 1.A. Bought 100 TERP at $11.19 and Sold 50 at $11.5)-Used Fidelity Commission Free Trades I mentioned in that post that the purchase of 100 shares was a mistake. I thought that I was in a family's member's account who did not own any shares. My maximum limit established by Left Brain's cast in concrete rules was and is 100 shares plus shares purchased with dividends.
Shortly after my purchase, Goldman Sachs upgraded TERP to neutral from sell and downgraded the stock back down to sell in early April. I do not have access to that report but would emphasize that GS went quickly from a sell to just a neutral rating and then back to sell after a brief price spurt.
I view TERP as a bond substitute with a greater risk to the income stream than a senior bond, but also with the potential for increasing the "coupon" and providing a better yield than a senior unsecured bond in today's low yield environment.
Dividends: Increased 6% effective for the 2019 first quarter. The new annual rate is $0.8056
Last Ex Dividend Date: 3/21/19 (before sell)
Last Earnings Report (Q/E 12/31/18):
SEC Filed Press Release or TerraForm Power Reports Fourth Quarter and Full Year 2018 Results | Business Wire
The market reacted favorably to this earnings release.
TERP Trading Profits to Date (100 shares total) = $154.26
My remaining position is 51+ shares at an average total cost per share of $10.86. The average cost number would indicate, without looking it up, a slight ROC adjustment to the tax cost basis for the dividend paid in 2018 4th quarter, the first one received for this lot.
I then looked it up and found that all of the TERP dividends paid, starting in 2014, were classified 100% ROC. TerraForm Power | Investors | Distribution Information
The tax is postponed rather than forgiven and may be recouped in its entirety as taxable income when the shares are eliminated profitably.
4. Small Ball-Commission Free ETFs:
The purpose of ETF "bookmarks" is to identify, prior to a meltdown, ETFs that I will consider buying during a selloff period.
By using commission free ETFs, I can average down cost effectively and may consider selling the highest cost lot or lots after averaging down when I can do so profitably, a standard risk control trading strategy designed for market volatility and a potential bear market in stocks.
The following purchase is an example of a bookmark.
A. Bought 10 FDVV at $30.2-Commission Free for Fidelity Customers:
Quote: Fidelity High Dividend ETF Overview
Closing Price Last Friday: FDVV $30.41 +$0.11 +0.36%
Sponsor's webpage: FDVV | ETF Snapshot - Fidelity
Expense Ratio: .29%
Objective: To track the Fidelity Core Dividend Index before fees and expenses. That index "is designed to reflect the performance of stocks of large and mid-capitalization dividend-paying companies that are expected to continue to pay and grow their dividends."
Holdings: 122 stocks as of 4/9/19
Some Top Holdings:
Purchase Restriction: Small Ball Rule
Maximum Position: 500 shares
Current Position: 10 shares (cautious on steroids)
History This Account:
Website: TerraForm Power
TERP SEC Filings
TerraForm Power Projects
2018 Annual Report
Closing Price Last Friday: TERP $13.55 -$0.03 -0.22%
Profit Snapshot: +$138.51
This was an elimination for this account.
Item # 1.A. Bought 50 TERP at $11.18-Used Schwab Commission Free Trade (9/16/2018 Post) The shares went ex dividend on the day after my purchase.
I still own shares in my Fidelity account where I am reinvesting the dividend. The following link is to the same post: Item 1.A. Bought 100 TERP at $11.19 and Sold 50 at $11.5)-Used Fidelity Commission Free Trades I mentioned in that post that the purchase of 100 shares was a mistake. I thought that I was in a family's member's account who did not own any shares. My maximum limit established by Left Brain's cast in concrete rules was and is 100 shares plus shares purchased with dividends.
Shortly after my purchase, Goldman Sachs upgraded TERP to neutral from sell and downgraded the stock back down to sell in early April. I do not have access to that report but would emphasize that GS went quickly from a sell to just a neutral rating and then back to sell after a brief price spurt.
I view TERP as a bond substitute with a greater risk to the income stream than a senior bond, but also with the potential for increasing the "coupon" and providing a better yield than a senior unsecured bond in today's low yield environment.
Dividends: Increased 6% effective for the 2019 first quarter. The new annual rate is $0.8056
Last Ex Dividend Date: 3/21/19 (before sell)
Last Earnings Report (Q/E 12/31/18):
SEC Filed Press Release or TerraForm Power Reports Fourth Quarter and Full Year 2018 Results | Business Wire
The market reacted favorably to this earnings release.
TERP Trading Profits to Date (100 shares total) = $154.26
My remaining position is 51+ shares at an average total cost per share of $10.86. The average cost number would indicate, without looking it up, a slight ROC adjustment to the tax cost basis for the dividend paid in 2018 4th quarter, the first one received for this lot.
I then looked it up and found that all of the TERP dividends paid, starting in 2014, were classified 100% ROC. TerraForm Power | Investors | Distribution Information
The tax is postponed rather than forgiven and may be recouped in its entirety as taxable income when the shares are eliminated profitably.
4. Small Ball-Commission Free ETFs:
The purpose of ETF "bookmarks" is to identify, prior to a meltdown, ETFs that I will consider buying during a selloff period.
By using commission free ETFs, I can average down cost effectively and may consider selling the highest cost lot or lots after averaging down when I can do so profitably, a standard risk control trading strategy designed for market volatility and a potential bear market in stocks.
The following purchase is an example of a bookmark.
A. Bought 10 FDVV at $30.2-Commission Free for Fidelity Customers:
Quote: Fidelity High Dividend ETF Overview
Closing Price Last Friday: FDVV $30.41 +$0.11 +0.36%
Sponsor's webpage: FDVV | ETF Snapshot - Fidelity
Expense Ratio: .29%
Objective: To track the Fidelity Core Dividend Index before fees and expenses. That index "is designed to reflect the performance of stocks of large and mid-capitalization dividend-paying companies that are expected to continue to pay and grow their dividends."
Holdings: 122 stocks as of 4/9/19
Some Top Holdings:
Purchase Restriction: Small Ball Rule
Maximum Position: 500 shares
Current Position: 10 shares (cautious on steroids)
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.
