Observations and Sample of Recent Trades: CHIQ, COTY, DUK, HT, MNLO, NEWM, TRPPRH

Economy: 

U.S. budget deficit jumps 34% billion in October, gap set to top $1 trillion in 2020 - MarketWatch The 34% increase is over the October 2018 level. The potential short term problem arising from the budget deficits relates to the federal government's ability to replace private demand with additional spending during a recession. 

Larry Kudlow assured investors on 11/14 that the Phase  1 trade deal is near but Trump has not yet signed off. Kudlow represented that "there has been very good progress and it’s also been very constructive.”  Trade deal close, Kudlow says, but Trump isn’t sold on it yet - MarketWatch I have been listening to those assurances for over a year now. 

US-China trade talks hit snag over agriculture purchases, other issues, according to report    

German growth rises 0.1%, skirting recession - MarketWatch This is just the first estimate for the third quarter. The GDP growth estimate for the second quarter was revised to a -.2% from -.1%. No one should be surprised that the German economy is already in a recession. Germany can borrow money at less than zero through its 10 year government bond. Oddly, this does not produce a reconsideration of the consensus view that negative rates produce growth. Trump gripes that foreigners have negative rates: 'Give me some of that money'

Weekly jobless claims November 14 (225K vs. estimate of 215K)

Powell: No 'day of reckoning' coming for the US anytime soon

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Markets and Market Commentary: 

Jeremy Siegel: S&P 500 will see '10% pop' on US-China trade settlement The Stock Jocks IMO are already anticipating a Phase 1 trade deal and that has contributed to the recent price spurt. It is possible that either the deal is already priced into stocks or the deal will disappoint investors for lack of breath and/or a continuation of most tariffs.  

Cisco stock falls as slowdown spreads, CEO says ‘the entire quarter was worse than we had expected’ - MarketWatch (Cisco beat the non-GAAP estimate by 3 cents, but issued weaker guidance for the current quarter) 

Walmart (WMT) reports Q3 2020 earnings that beat estimates

The big worries facing stock investors in 2020, according to Citi’s top equity strategist - MarketWatch

China Commerce Ministry: Trade war should be ended by removing tariffs

After nailing a call for a pullback in June, Canaccord’s Dwyer predicts another S&P 500 slide - MarketWatch

The market's 10-year run became the best bull market ever this month From my perspective, this means that it is time to avoid being a hog. 

Only one telecom company remains a buy, analyst says - MarketWatch (Comcast is the only buy left according to the HSBC analyst); HSBC cuts U.S. telecoms in shifting environment - AT&T Inc. (NYSE:T) | Seeking Alpha

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Trump: 

Secretary of State Pompeo, a former tea party republican congressman from Kansas, is part of Trump's obstruction of justice campaign: Pompeo's Impeachment Role Draws Outcry From Diplomats, Staffers

Pompeo hired a Mina Chang to be deputy secretary in the State Department's Bureau of Conflicts and Stability Operations. Senior Trump official embellished résumé, had face on fake Time cover (e.g. she claimed to be a Harvard graduate while only attending a seven week course in 2016) Apparently, the Trump Administration does not check the claimed credentials before hiring people. The main qualification is to be a committed Trumpster and loyalty to Donald rather than to such old fashioned principles laid out in the Constitution, silly things like laws and the taxpayers/voters.

Anyhow, how could anyone complain about Ms. Chang (1) having her photograph on a fake Time Magazine cover when her ultimate boss, the Duck himself, has done the same or (2) embellishing her success in an outrageous manner when the Duck holds the all time trophy for the same (e.g. claiming to be a successful businessman in Art of the Deal when in fact he had lost almost $1 billion when the book was published)

Trump criticizes Roger Stone guilty verdict, attacks Clinton, Mueller The court system works in Trump's America only when juries and judges give Donald what he wants. 

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Trump, Ukraine and Impeachment:

For those who have the read the transcripts, the live testimony that started on Wednesday offered only a few details.

Viewers can judge the credibility of witnesses by watching the hearing, hopefully as they would as jurors in a trial involving strangers rather than through a partisan lens.

William Taylor, Marie Yovanovitch and George Kent were highly credible witnesses.  Their testimony is particularly useful in how Ukraine fits into U.S. national security interests and U.S. opposition to Russian aggression.

The fact that Donald continues his ad hominem attacks against those public servants just proves once again, when no further proof is needed, that he is a breathtakingly malicious asshole, a liar, and a demagogue, and those are among his best qualities.  

Chris Wallace on Yovanovitch testimony: 'If you're not moved, you don't have a pulse' | TheHill

4 takeaways from Marie Yovanovitch’s testimony

One new tidbit was Taylor recounting what one of his staff members, David Holmes, recently told him. 

The staff member had overheard Trump talking to Sondland the day after the call between Donald and Zelensky on 7/25. 

Demagogue Don inquired about Ukraine conducting the "investigations". 

Sondland told Donald that Ukraine was willing to move forward. 

Holmes asked Sondland what Donald thought about Ukraine. Sondland replied that Donald cares “more about the investigations of Biden, which Giuliani was pressing for." 

While that is just Sondland's opinion, it is coming from someone dealing directly with Donald on these issues and is consistent with and supported by other evidence. 

Another U.S. embassy staffer, Suriya Jayanti, also reportedly overhead Sondland's telephone conversation over an unsecured telephone in a Kiev restaurant. Report: A Second Staffer Heard Trump Loudly Discussing Extorting Ukraine | Vanity Fair The Russians were probably listening. 

David Holmes: Sondland told Trump that Ukrainian President would do 'anything you ask him to'  Sondland said that Donald didn't give a shit about Ukraine. Sondland told Holmes that he cares only about the "big stuff". When pressed on how that relates to the Ukraine, Sondland defined big stuff as something that benefits the President, like the Biden investigation that Mr. Giuliani was pushing. " READ: State Department aide's closed-door testimony (see pages 6-7)

Impeachment witness provides firsthand account of hearing Trump demand ‘investigation’ of Bidens by Ukraine

Sondland claimed in his deposition testimony that he “never made the connection between Burisma and the Bidens until the very end.” Gordon Sondland’s Deposition Testimony - Lawfare  

Earlier, when discussing that testimony, I found that claim to be unbelievable. Stocks, Bonds & Politics Under Trump (10/23/19 Post) 

We may see either a second revision by Sondland to this earlier sworn deposition testimony or the invocation of the Fifth Amendment which may be the better legal option for him. The moral of this story and many others is do not go near Donald. It will only land you in trouble with a pile of legal bills with Teflon Don going unscathed by his bad conduct. 

Marie Yovanovitch, Ex-Ukraine Envoy Ousted by Trump, Says She Feels Intimidated by Him

Ambassador’s cellphone call to Trump from Kyiv restaurant was a stunning breach of security, former officials say

New testimony ties Trump more directly to Ukraine pressure campaign

Impeachment Hearings Open With Revelation on Trump’s Ukraine Pressure

Nunes, Stefanik pretend to be "gagged."  The Trumpster Elise Stefanik represents New York's 21st congressional district. 

Although she has handily won her elections so far, I view her as vulnerable in 2020 since her district was carried by Clinton and Obama twice as well as Kerry and Gore. 

Ms Stefanik wants to do a body and mind meld with Trump now, who did carry that district in 2016, but that may prove to be disadvantageous in her district particularly given her very public embrace of Demagogue Don during the impeachment hearings. She is making quite a spectacle of herself.   

I do not view the conduct of any of the republicans at the hearing to be principled or in furtherance of their duties under the Constitution, which is not surprising. 

Instead, their conduct is based solely on their awareness that 90% of republicans support Donald. There were principled republican House and Senate members during the Nixon impeachment period, but they are long gone.      

Mulvaney Not Worried About Getting Fired: 'Knows Too Much' Mulvaney may go down in history as the worst Chief of Staff in modern Presidential history. 

Donald Trump's 10 interactions with indicted Giuliani associates Donald claims that he does not know Lev Parnas and Igor Fruman.

Giuliani Crony Lev Parnas Is Going Full Kamikaze on Ukraine | Vanity Fair

Parnas' lawyer says Giuliani told associate to offer Ukraine aid in exchange for Biden investigation, New York Times reports; Giuliani Associate Says He Gave Demand for Biden Inquiry to Ukrainians - The New York Times

This is not surprising: Stephen Miller pushed racist immigration news coverage in emails, group says - MarketWatch; Stephen Miller’s Affinity for White Nationalism Revealed in Leaked Emails | Southern Poverty Law Center Does Miller bear a close facial resemblance to Reinhard Heydrich? 

A Trump administration strategy led to the child migrant backup crisis at the border - The Washington Post

Nothing that has or will be revealed will change republicans' willingness to give Donald another 4 years. And there is no chance that republican senators will vote to convict in sufficient numbers to remove him. 

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Supreme Court and DACA: 

Supreme Court Appears Ready to Let Trump End DACA Program  

Based on the questioning at oral arguments, the five republican Supreme Court Justices appear ready to give the republicans the green light to deport almost 700,000+ Dreamers to the countries that they left as children. 

I used the word "appear" since a decision can not always be predicted based solely on the Justice's questions during oral argument. 

Trump blamed the Democrats for his decision to end the DACA program. 

In a one sentence statement repealing Obama's executive order, Donald claimed that Obama exceeded his presidential powers by implementing the program without congressional authorization. 

That is rich coming from someone who believes the President can do almost anything (e.g. using funds appropriated by congress for certain projects on other projects that have not been authorized by Congress and specifically rejected for that purpose)

The 5 republican justices are IMO strong supporters of the Imperial Presidency doctrine, sometimes called now the "unitary executive" legal doctrine which is an inadequate description compared to Imperial Presidency.  

In their view, the issue before the Court is simple. Obama had the power to implement DACA and Trump had the authority to repeal it. 

To the extent that administrative law required Donald to give a reason, any reason would do, including one that was factually wrong or had no constitutional validity. 

An alternative route for the 5 republican Justices would be to hold that Obama did not have the authority to implement DACA and that Trump rightfully repealed it for that reason. I doubt this will happen since it would undermine their credibility particularly in their prior decisions granting the President extremely broad authority over immigration matters. (e.g. Trump v. Hawaii)

The republican justices are not IMO consistent in their opinions when dealing with hot button issues. The desired result is primarily based on political ideology which gives rise to inconsistent legal reasoning that is systemic in the republican mind. 

The least likely alternative would be for the 5 republican justices to dismiss the case on the grounds that the Court has no jurisdiction, similar to the recent holding in the political gerrymandering cases.   

The Dreamers legal argument rests on the proposition that Obama had the authority to implement DACA and Trump could only repeal that decision by providing an accurate, reasoned and legally sound explanation for doing so.  

Trump preferred to hide behind the argument that Obama's action was unconstitutional so he had no choice but to end it. 

I seriously doubt that he would end the program if he had to give a different reason closer to the truth. 

Theodore Olson, Conservative Stalwart, to Represent ‘Dreamers’ in Supreme Court - The New York Times

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All trades are commission free unless otherwise noted. 

1. Canadian Reset Equity Preferred Stocks: 

A. Bought 50 TRPPRH at C$11.11 (C$1 IB commission): 

Quote: TransCanada Corp. Cumulative Series 4 Stock (Canada: Toronto)

This is an average down: Item # 3 Bought 100 TRPPRH at C$13 (2/23/19 Post) 

I will drag and drop here parts of my earlier discussion: 

This Canadian reset equity preferred stock pays quarterly dividends at a  1.28% spread to the 3 month Canadian treasury bill.  

Issuer: TransCanada Corp.

Canada 3 Month Treasury Bill

The dividend yield will depend on the Canadian 3 month treasury bill yield at each 3 month reset date. 

At a 1.5% yield for that bill, the coupon becomes 2.78%. At a cost of C$11.11 per share, the yield becomes decent at 6.26% which is high for an investment grade preferred stock now. 

At a 4% yield for the 3 month Canadian bill, the coupon would be 5.28% which translates into a 11.88% yield at C$11.11. (.0528% coupon x. C$25 par value = C$1.32 annual dividend per share ÷ C$11.11 cost = 11.88%). 

The current yield is juiced due to buying the security at a deep discount to par value.  

  

As with other resets that float over the 3 month Canadian government bill, there is an option to convert the shares into another series. The other series pays the same spread, except the spread is over the five year Canadian treasury note and remains in effect for five years after the reset date.

Credit Ratings:  DBRS rates the preferred at Pfd-2L which is equivalent to a S & P rating of BBB-. S & P lowered the preferred shares to that same level last year: TRP Downgraded to P-2(low) by S&P « PrefBlog  

Par Value: C$25 

Since this security was bought at a deep discount to its $25 par value, the expectation built into the price is for a continuation of low short term rates for a long time. 

Last Round-Trip 100 Shares: +$C393.

Item # 5.B. Sold 100 TRPPRH at C$14.2 (5/17/17 Post)-Item # 2. Bought 100 TRPPRH at C$10.25-Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 5/26/2016 - South Gent | Seeking Alpha

2. Lottery Ticket Basket Strategy-Small Cap Biotechs:

A. Bought 50 MNLO at $4.72 and 10 at  $4.39 -High Risk: 

Average Cost = $4.66 (6o shares) 

Quote: Menlo Therapeutics Inc.   (MNLO) 

Closing Price Last Friday: MNLO $4.36 

Market Cap: $104.6M

The most recent analyst action was H.C. Wainwright initiating coverage with a $11 price target. Menlo Therapeutics initiated with a Buy at H.C. Wainwright MNLO - The Fly This was before the merger announcement discussed below,

I discussed the 50 share purchase in a prior comment.  

Foamix (FOMX) and Menlo Therapeutics (MNLO) to Merge, Creating a Combined Company Focused on the Development and Commercialization of Therapeutics for Dermatologic Indications 

The CEOs for FOMX and MNLO discussed the combination here: Foamix Pharmaceuticals Ltd. (FOMX) CEO Dave Domzalski on Q3 2019 Earnings & Merger Announcement with Menlo Therapeutics Conference (Transcript) | Seeking Alpha (note the discussion on serlopitant's patent starting at the bottom of page 12)

Based on the volume and price of both stocks since the announcement, shareholders of both companies give the merger a thumbs down. 

Menlo will be the surviving company. Each FOMX share will be exchanged for .5926 MNLO shares and a contingent value right ("CSR") that may increase the number of MNLO shares received by FOMX shareholders upon consummation of the merger.

As I explained in my prior comment, the CSR is dependent on the Phase 3 trial results for Menlo's "serlopitant for the treatment of pruritus associated with prurigo nodularis ("PN"), with those results anticipated in March or April 2020. The details are discussed in the prior linked press release. 

My points about the CSR is that an increase in MNLO shares will be of little consolation to FOMX shareholders in the event serlopitant fails in the trials and there is no CSR linked to FDA's failure to approve serlopitant for the indications currently being evaluated in several trials including the one for pruritus associated with PN. Pipeline - Menlo Therapeutics

FOMX closed at $4.34 the day before this announcement and crashed 19.82% in response to it (11/11/19) which is understandable. The exchange offer was a take under the existing market price. 

My last purchase of Foamix Pharmaceuticals Ltd. (FOMX) was at $2.6 per share. Item # 4  (10/19/19 Post) 

Everything could work out just fine for FOMX shareholders in the event serlopitant is approved by the FDA for several indications. 

The merger does address a serious problem for both FOMX and MNLO. 

Both companies are tiny with no sales force prior to FOMX receiving FDA approval recently for its acne drug. 

Having more dermatology drugs to market will make it more likely that the combined company will be able to turn a profit. 

Concerns about becoming profitable may have contributed to FOMX entering into this agreement. 

FOMX investors are rightfully disappointed that the acquisition was not on better terms with an established drug company. 

FOMX investors are rightly concerned that the merger creates uncertainties about drug approvals. FOMX already has a FDA approval for its acne drug and is likely to receive approval for a drug treating rosacea on or before 6/2/2020. Foamix Receives FDA Approval of AMZEEQ™ Topical Minocycline Treatment for Millions of Moderate to Severe Acne Sufferers Nasdaq:FOMX; Foamix Announces FDA Acceptance of its New Drug Application for FMX103 Minocycline Foam for the Treatment of Moderate-to-Severe Papulopustular Rosacea

I have a few hunches based on recent developments: 

(1) FOMX experienced a surge in volume and price starting on 10/29/19, as previously noted. FOMX Historical Prices Both FOMX and MNLO have hedge funds as their major holders. FOMX Owners, MNLO Owners  

My hunch is that word leaked out that FOMX was in negotiation to sell itself, but the buyers who were driving up the price did not know the terms. If they had known the terms or even the name of the acquirer, they would not have been buying. 

(2) FOMX agreed to be acquired by a clinical stage biotech that had a market capitalization currently near $105M compared to FOMX at over $264M at its $4.34 closing price on 11/8. 

Why on earth would MNLO be the choice as the buyer? 

MNLO's market cap prior to the announcement is an indication that investor enthusiasm for serlopitant was well contained compared to what existed when MNLO floated its IPO at $17 per share back in January 2018. 

My hunch is that FOMX tried to find a more established buyer willing to pay a much higher price and was unsuccessful. 

The choice was then between going it alone or creating a larger company focused on dermatology drugs through the MNLO merger which makes sense provided MNLO's drug receives FDA approvals for multiple indications. 

(3) FOMX may be in play now that it has agreed to sell itself in what amounts to a take under. I doubt that a competing bid will be forthcoming at a price that will be accepted by the FOMX Board for the reasons discussed in (2). If one does not come soon, FOMX shares will need to be priced off the MNLO price. 

(4) When the two companies consummate the merger, and assuming the Phase 3 trial is clearly successful and FDA approval looks highly likely, a larger company may become interested in making an acquisition offer.  

3. Small Ball Adds:

A. Bough 2 DUK at $87.94 and  3 at $87.65:

Quote: Duke Energy Corp. (DUK)
DUK Analyst Estimates | MarketWatch

Last Discussed: Item # 5.A. Bought 10 DUK at $89.4 (9/1/19 Post) 

After my purchase, DUK moved higher in price and established a new 52 week at $97.37. DUK Historical Prices The price downtrend thereafter was due to an unfavorable reaction to Duke's third quarter earnings report, multiple price target downward revisions in response thereto, and a rise in longer term interest rates.   

Dividend: Quarterly at $.945 per share ($3.79 annually), raised from $.927 effective for the third quarter payment.  

The shares quickly earned back that dividend. 

Dividend Information - Our Company - Duke Energy

With this company, I anticipate a slow and steady rise in the dividend penny rate baring major negative developments that are non-temporary. Dividend increases, if they occur, are likely to happen effective for the third quarter.  

Last Ex Dividend: 11/14 (after purchases) 

Average Cost Per Share: $88.85 

Dividend Yield at Average Total Cost = 4.27% 

Dividend Reinvestment: No until I own 30 shares and the forward P/E is less than 15 at the likely reinvestment price. 

Last Earnings Report (9/30/19): I thought the report was fine, but agree with the price downdraft based on the recent rise in interest rates. 

SEC Filed Press Release

Current Position: 15 shares

Maximum Position: 30 shares + Shares bought with dividends

Purchase Restriction: Small Ball Rule 

B. Added 10 NEWM at $6.9; 10 at $6.6 and 10 at $6.36:

Closing Price Last Friday: NEWM $6.36 -$0.21 -3.20% 

Average Cost Per Share = $ 7.23

Chart: Falling Knife-Waterfall Formation 

Quote: New Media Investment Group Inc. (NEWM)

Strategy: Lottery Ticket Basket-High Risk

Last Discussed: Item # 3.A. Bought 50 NEWM at $7.6 (11/9/19) 

Dividend: The dividend penny rate will be revised down from the current $.38 per share rate next year. As previously discussed, the company claimed that the new rate would be $.19 quarterly or $.76 annually.  

Assuming the quarterly dividend will be $.19 per share, the dividend yield at my current total average cost would be 10.51%. 

Based on the price action since the Gannett acquisition was announced, which has only gotten progressively worse, investors are expressing substantial doubts about NEWM's future forecasts. 

Recent News: New Media and Gannett Announce Shareholder Approvals of Merger Agreement (the merger is expected to close on 11/19)

I have nothing to add to that discussion other than to note the price plunge shortly after that purchase. 

Current Position: 80 shares

Maximum Position: 100 shares 

Purchase Restriction: Small Ball Rule (20 shares left to purchase at lower prices, most likely in 10 share lots) 

Highest Cost Lot: 50 shares at $7.6 (likely to be sold when and if I can do so profitably after collecting at least 4 dividend payments)

The selling is overdone IMO, but I can not point to anything in the chart that indicates that it over.  

4. Eliminations and Pares:

I am reducing my stock allocation in part by selling some stocks that were losers that have for one reason or another moved into profit territory.

COTY is an example as is SNR discussed in the prior post.   

A. Sold 103+ COTY at $13.17:

Quote: Coty Inc. Cl A (COTY)
SEC Filings

Profit Snapshot:  $81.62

I discussed this sell in a comment. The profit was in the short term shares that were bought as part of the small ball averaging down process. 

Closing Price Last Friday: COTY $11.91 -$0.17 -1.45% 

Last Earnings Report: Coty Inc. Reports Fiscal First Quarter 2020 Results

Last Buy Discussion: Item # 1.E. Bought 20 COTY at $8.73 (9/7/19)

Prior Round-Trips: I was successful in prior small ball trades but struggled after restarting purchases with a 10 share purchase at $16.47. Item 2.C. Sold 10 COTY at $21.46 (2/19/18 Post)(profit snapshot = $45.85); Item 1.D. Sold 20 COTY at  $20.89 (1/28/18 POST)(profit snapshot = $80.61)

Dividend: Quarterly at $.125 per share  (annually at $.5)

Last Ex Dividend: 9/6/19 

B. Sold 10 CHIQ at $18.18: 

Quote: Global X MSCI China Consumer Discretionary ETF Overview

Profit Snapshot: +$33.1 (11/6/19 sell only)

Item # 5 Bought 10 CHIQ at $14.87 (6/15/19 Post) 

Sponsor's Website: MSCI China Consumer Discretionary ETF

Expense Ratio: .65%

Last Elimination: Item # 2.D. Eliminated CHIQ-Sold 71+ shares at $16.04 

I did add $100 to my position in the Matthews China Dividend Fund (MCDFX) last Friday.  

C. Pared HT Sold 35 at $14.72: 

Quote: Hersha Hospitality Trust Cl A (HT)
Company Website: Hersha Hospitality Trust
Our Hotels | Hersha Trust

Closing Price Last Friday: HT $14.49 -$0.08 -0.55% 

Profit Snapshot: $34.98  

Purchases were not discussed.

I am mentioning this small ball trade in order to discuss a new version of small ball trading that was formulated after Schwab and Fidelity implemented commission free trades. 

Category: Equity REIT Common and Preferred Stock Basket Strategy

Dividends: Quarterly at $.28 per share ($1.12 annually)

Dividends - Hersha Hospitality Trust

Last Ex Dividend: 9/27/19

Last Earnings Report: I discussed the report in this comment.

Hersha Hospitality Trust Announces Third Quarter 2019 Results 

Trading Strategy: Small Ball 

In this kind of small ball trade, I am buying a dividend yield stock at a depressed price. 

The stock is selected in part because I am willing to hold it longer term, if necessary, and buy more at lower prices. 

However, the primary purpose is to sell at a profit and harvest one or more dividends. 

In this example, I elected to harvest the profit now, rather than to wait for the next dividend date in late December. 

Part of that decision is related to owning more HT shares in another account where I anticipate a holding period greater than 1 year and the harvesting of at least 4 quarterly dividend payments. 

I currently own 80 HT shares in another account. Item # 2.A. Bought 30 HT at $13.92 (9/11/19 Post); Item # 4.A. Bought 50 HT at $16.27  (7/7/19 Post)

I also own HTPRD, an equity preferred stock issued by Hersha. I am down to owning just 50 shares. 

HT Trading Profits to Date: $357.19

Prior Round-Trips: 


Item # 2.B. Sold 50 HT at $19.02-In a Roth IRA Account (4/23/18 Post)-Item # 4.A. Bought 50 HT at $17.37-In a Roth IRA Account (3/1/2018 Post)

Item # 2.C. Sold 10 HT at $19.11-Used Commission Free Trade (4/23/18 Post)-Item 4.B. Bought 10 HT at $16.83 Used Commission Free Trade (3/1/2018 Post)

Item # 2.B. Sold 50 HT at $18.58-Used Commission Free Trade (2/8/18 Post)-Item 5.B. Bought 50 HT at $17.41 (12/18/17 POST)

Strategy: I will continue with my small ball buy program in my IB account, but will periodically try to trade small lots in either my Fidelity or Schwab accounts when the entry point is less than $14 per share and particularly when there is a price downdraft shortly before the ex dividend date that is greater than the dividend penny rate.  

5. Long Term Bond Basket Strategy-Tennessee Municipal Bonds: 

A. Bought 5 City of Knoxville 3% Electric Revenue Bonds Maturing on 7/1/42:  

The Fidelity confirmation includes the brokerage commission as part of the price. I bought the bond at 100.41. A $1 per bond commission will raise the total cost number by .1 to 100.51.  

With a constant stream of redemption proceeds from maturing CDs, treasury bills and corporate bonds, the after tax yield options in those instruments have gone from undesirable to extremely undesirable.

Instead of redirecting proceeds into those types of securities, I am buying some Tennessee municipal bonds that provide me with a tax free yield higher than the taxable yields for comparable maturity treasuries. 

This particular purchase is an example.  

Tax Free Current Yield at Total Cost of 100.51 = 2.985%

Emma Page

Tennessee is a public power state. Distribution electric systems are either rural electric cooperatives owned by their members or owned by cities. Power is bought from the Tennessee Valley Authority owned by the U.S. government.  
  
Ratings: Aa2 by Moody's and AA by S & P

S & P downgraded the issuer's credit rating from AA+ to AA last May. 

Optional Call: On or after 7/1/25 at par value + accrued and unpaid interest 

Security: 

I am classifying this bond as potentially long term. It is too soon to form an opinion on the likelihood that the issuer will exercise their redemption right on or after 7/1/25. 

I am fine with both an optional redemption on 7/1/25 or anytime thereafter or no redemption until maturity in 2042. There is no chance that 

I will have to sell this bond at an inopportune time to pay expenses. 

Moreover, given the liquidity problem with the Tennessee municipal bonds that I own, I make the purchase with the assumption that I will hold until maturity or the issuer's optional redemption prior thereto. 

I am interested in the almost 3% current tax free yield. 

This purchase is an average up. I previously bought this same bond at 95.692 in September 2017:

Price Includes $10 Commission ($1 per bond but with $10 minimum commission at Schwab)

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.