Economy:
Coronavirus: US companies suspend operations, restrict travel as outbreak spreads
Coronavirus prompts automakers to evacuate workers from China, weigh factory delays
My initial reaction to this latest coronavirus outbreak, summarized in this 1/27/20 comment, was that the impact on the U.S. economy and U.S. corporate profits would be minimal, though 1st quarter earnings from U.S. companies with substantial operations in China would likely be nicked some. I mentioned that the SARS coronavirus outbreak, which also originated in China, resulted in 27 U.S. cases and no deaths. Most of the infections and deaths from that epidemic were in China.
There is a tendency for investors to overreact to these outbreaks based on prior history.
There are caveats for that opinion since the outbreak is still in its early stages. The most important caveat is the extremely poor healthcare system in China. Test kits for the virus and other supplies are in short supply. Most likely, China is substantially under reporting infections. Confusion and lost time: how testing woes slowed China's coronavirus response - Reuters; China coronavirus: hospitals turning people away as doctors say ‘home is best’ in many cases | South China Morning Post; Wuhan coronavirus: China faces severe shortage of test kits - Business Insider
Coronavirus prompts automakers to evacuate workers from China, weigh factory delays
My initial reaction to this latest coronavirus outbreak, summarized in this 1/27/20 comment, was that the impact on the U.S. economy and U.S. corporate profits would be minimal, though 1st quarter earnings from U.S. companies with substantial operations in China would likely be nicked some. I mentioned that the SARS coronavirus outbreak, which also originated in China, resulted in 27 U.S. cases and no deaths. Most of the infections and deaths from that epidemic were in China.
There is a tendency for investors to overreact to these outbreaks based on prior history.
There are caveats for that opinion since the outbreak is still in its early stages. The most important caveat is the extremely poor healthcare system in China. Test kits for the virus and other supplies are in short supply. Most likely, China is substantially under reporting infections. Confusion and lost time: how testing woes slowed China's coronavirus response - Reuters; China coronavirus: hospitals turning people away as doctors say ‘home is best’ in many cases | South China Morning Post; Wuhan coronavirus: China faces severe shortage of test kits - Business Insider
Bonds look like they are flashing a warning for global markets This assumes that the bond market is controlled by the Bond Ghouls whose collective "wisdom" about inflation and future economic growth is being flashed through bond prices and yields.
Put another way, is the bond market a free one controlled by investors, or a manipulated one controlled by central banks in developed countries worldwide.
I lean toward a bond market controlled by central bankers who are suppressing interest rates to negative nominal or real levels. Those are not interest rates that would be set by investors in a free market.
U.S. national debt projected to rise to $31.4 trillion by 2030: CBO - MarketWatch I would view that number as conservative. The train wreck is inevitable. The only question is when. Within the next decade, I am anticipating one annual deficit of more than $2 trillion during a recessionary period.
U.S. budget deficit to top $1 trillion in 2020 despite strong economy, CBO says - Reuters I do view it as extremely important long term that the annual budget deficits are near $1 trillion in the 11th year of an economic recovery. With extreme monetary and fiscal stimulus (spending and tax policies), the U.S. is only able to generate around 2% real GDP growth.
Put another way, is the bond market a free one controlled by investors, or a manipulated one controlled by central banks in developed countries worldwide.
I lean toward a bond market controlled by central bankers who are suppressing interest rates to negative nominal or real levels. Those are not interest rates that would be set by investors in a free market.
U.S. national debt projected to rise to $31.4 trillion by 2030: CBO - MarketWatch I would view that number as conservative. The train wreck is inevitable. The only question is when. Within the next decade, I am anticipating one annual deficit of more than $2 trillion during a recessionary period.
U.S. budget deficit to top $1 trillion in 2020 despite strong economy, CBO says - Reuters I do view it as extremely important long term that the annual budget deficits are near $1 trillion in the 11th year of an economic recovery. With extreme monetary and fiscal stimulus (spending and tax policies), the U.S. is only able to generate around 2% real GDP growth.
+++++
Markets and Market Commentary:
Health scares historically ‘buying opportunities’ for stocks, says JPMorgan - MarketWatch I would agree with that observation generally, but do not view the very minor decline last Monday as a "buying opportunity" given current valuations, the underwhelming economic data, the insignificance of the decline, and the 30%+ rise in the S & P 500 index last year when there was no SPX earnings growth.
Health scares historically ‘buying opportunities’ for stocks, says JPMorgan - MarketWatch I would agree with that observation generally, but do not view the very minor decline last Monday as a "buying opportunity" given current valuations, the underwhelming economic data, the insignificance of the decline, and the 30%+ rise in the S & P 500 index last year when there was no SPX earnings growth.
Stanley Druckenmiller says these 3 events ‘would definitely trigger a bear market’-MarketWatch; A Conversation With Stanley Druckenmiller - Full Show - YouTube (an overall positive outlook for stocks and some commodities in 2020) He recommended UK stocks. One way to broadly play U.K. equities is with the iShares MSCI United Kingdom ETF (EWU). (sponsor's website: iShares MSCI United Kingdom ETF | EWU)
Market's valuation and speculative activity much less extreme than it was in 1999
Market's valuation and speculative activity much less extreme than it was in 1999
Discover Q4 charge-off rate, loan loss provision increase-Seeking Alpha
The main reason for the stock market’s decline is NOT the coronavirus - MarketWatch
First Horizon Declares Quarterly Dividends-Increases Common Dividend by 7%
First Hawaiian, Inc. Reports Fourth Quarter 2019 Financial Results and Declares Dividend
Vodafone to sell stake in Egyptian unit to Saudi Telecom for $2.4 billion - Reuters
Apple beat the estimates for its 4th quarter E.P.S. and revenues. I view it as important that net income increased Y-O-Y which has not been case in several recent quarters:
The Stock Jocks did not care for the MMM report:
Close on 1/28/20: MMM $165.58 -$10.05 -5.72%
MMM did note that he was selling boatloads of masks. 3M boosts production of face masks amid spiking coronavirus demand - Business Insider 3M sees coronavirus boosting demand for face masks, as China projected to return to growth - MarketWatch The N95 mask may stop up to 95% of small particles. Coronavirus masks: Do they do any good?; There's been a run of surgical masks in the US because of the coronavirus scare. You don't need them, physicians say - CNN I have some in storage that were bought when I did some serious sanding last year.
++++++++
Trump:
Trump Tied Ukraine Aid to Inquiries He Sought, Bolton Book Says; New York Times: Bolton book draft says Trump tied Ukraine aid to political investigations This has been known for months. Republicans do not mind looking ridiculous denying the obvious while polluting the airwaves with demonstrably false statements. They have even mastered the art of looking serious and avoiding laughter when spewing garbage out of their mouths.
Donald claims Bolton is lying and he is telling the truth:
John Bolton’s bombshell gives the GOP a glimpse of its nightmare scenario Even though Bolton is an important fact witness, republican senators are desparate to keep him from testifying on the very issue that is central to the impeachment trial. Republicans Work to Hold Off Witnesses - The New York Times
Bolton shared concerns with Barr that Trump was giving favors to autocrats: report - MarketWatch; Bolton Was Concerned That Trump Did Favors for Autocratic Leaders, Book Says - The New York Times Donald certainly favors like minded authoritarians over leaders of western democracies.
'I believe John Bolton': Former Trump chief of staff John Kelly backs Bolton in Ukraine dispute So when it comes down to whether John Kelly is going to believe Donald or Bolton, he makes sure everyone knows that he believes Bolton over Trump.
Pam Bondi and Eric Herschmann Defend Trump With Lies and Distortions at Senate Trial
Ken Starr, Literal Poster Child for Impeachment, Condemns Democrats for Impeaching Trump-Vanity Fair;
Trump defender Ken Starr gets mocked after giving stunningly hypocritical argument against impeachment – Alternet.org
Trump's impeachment lawyer Jane Raskin calls Rudy Giuliani a 'minor player' and a "shiny object"- The Washington Post Some pundits gave Ken Starr the Chutzpah of the Year award for his brazenly hypocritical statements relating to impeachments.
No one is capable of besting Donald for that award. That is impossible.
If the annual Chutzpah award was limited only to statements made during Trump's impeachment trial, Ms. Raskin probably edges out Starr with her bizarre defense that is contradicted by overwhelming evidence, but the decision is a close one.
Trump Tied Ukraine Aid to Inquiries He Sought, Bolton Book Says; New York Times: Bolton book draft says Trump tied Ukraine aid to political investigations This has been known for months. Republicans do not mind looking ridiculous denying the obvious while polluting the airwaves with demonstrably false statements. They have even mastered the art of looking serious and avoiding laughter when spewing garbage out of their mouths.
Donald claims Bolton is lying and he is telling the truth:
Bolton shared concerns with Barr that Trump was giving favors to autocrats: report - MarketWatch; Bolton Was Concerned That Trump Did Favors for Autocratic Leaders, Book Says - The New York Times Donald certainly favors like minded authoritarians over leaders of western democracies.
'I believe John Bolton': Former Trump chief of staff John Kelly backs Bolton in Ukraine dispute So when it comes down to whether John Kelly is going to believe Donald or Bolton, he makes sure everyone knows that he believes Bolton over Trump.
Pam Bondi and Eric Herschmann Defend Trump With Lies and Distortions at Senate Trial
Ken Starr, Literal Poster Child for Impeachment, Condemns Democrats for Impeaching Trump-Vanity Fair;
Trump defender Ken Starr gets mocked after giving stunningly hypocritical argument against impeachment – Alternet.org
Trump's impeachment lawyer Jane Raskin calls Rudy Giuliani a 'minor player' and a "shiny object"- The Washington Post Some pundits gave Ken Starr the Chutzpah of the Year award for his brazenly hypocritical statements relating to impeachments.
No one is capable of besting Donald for that award. That is impossible.
If the annual Chutzpah award was limited only to statements made during Trump's impeachment trial, Ms. Raskin probably edges out Starr with her bizarre defense that is contradicted by overwhelming evidence, but the decision is a close one.
Republican senators find Donald credible and trustworthy, while regarding those who provided testimony under oath regarding the Ukraine matter as unreliable or as having axes to grind.
‘The president did absolutely nothing wrong’ That is the GOP's position in a nutshell. The call with Zelensky was perfect, and requesting foreign interference in a U.S. presidential election is fine provided it is done by a republican President. The same conduct committed by a Democrat would be in most heinous impeachable offense in U.S. history, even surpassing Clinton's lie about having sex with Monica. It is important to keep in mind that the republican Senators voted to impeach Clinton for lying about an extramarital affair.
False Claim by Trump that Ukraine Got Aid 'Before Schedule' - FactCheck.org
Trump's False Tweet on Bolton - FactCheck.org
False and Misleading Claims at Impeachment Trial - FactCheck.org
Fact-checking the impeachment defense of Donald Trump | PolitiFact
Trump lawyer Sekulow says Trump’s hold on Ukraine aid is like Obama with Egypt in 2013. He’s wrong. | PolitiFact (rated mostly false)
Trump falsely claims House Democrats never asked Bolton to testify | PolitiFact
Fact-checking Donald Trump on libel law and prison | PolitiFact
Trump’s claim that he ‘saved’ pre-ex conditions ‘part fantasy, part delusion’ | PolitiFact Health Check (rated pants on fire)
Donald's non-stop lying is supported by the republican party and Trump TV.
++
Trump and Lev (not in prison yet) Parnas:
Trump reportedly caught on tape ordering removal of Ukraine ambassador; Parnas recording shows Trump talking with indicted businessmen the President has said he doesn't know
Donald asked Lev (not in prison yet) Parnas how long Ukraine could last against Russia without U.S. military aid. Parnas was apparently the Duck's go to expert on the Ukraine along with Showboat Rudy.
While Donald has repeatedly claimed he does not know Lev Parnas and has never talked to him, the tape proves that he both knows Parnas and has carried on a long conversation with him. The fact that Donald lies all of the time about everything is nothing new however. Lying works just fine for him so why stop?
++
The Trumpster senator from Tennessee, Marsha Blackburn, has repeatedly attacked the patriotism of Lt. Colonel Alexander Vindman. Pentagon vow to protect Lt. Col. Alexander Vindman tested after Marsha Blackburn attacks veteran
Marsha is a career, Know Nothing politician who soundly defeated Phil Bredesen in 2018 with this kind of commercial flooding the airways.
Caravan | Marsha Blackburn for US Senate - YouTube
Bredesen, a moderate, was a successful businessman before becoming a respected two term governor of Tennessee and a successful two term Mayor of Nashville.
Senator Marsha Blackburn Criticized for Mid-Impeachment Trial Fox News Interview Leaving the chamber while the trial is in session is punishable by imprisonment.
Just more proof that Donald is a genius: President Donald Trump on Elon Musk: I was worried about him, because he's one of our great geniuses - YouTube
The new Trumpster senator from Georgia, Kelly Loeffler, blasted Mitt Romney for wanting Bolton's testimony during the impeachment trial: GOP senator: Romney trying to 'appease the left' with impeachment witnesses | TheHill
Loeffler is concerned about a primary challenge from representative Doug Collins who is a far right reactionary whose most memorable statement, which needs to be etched on his tombstone, was that Democrats love terrorists. Republicans are running two candidates in the 2020 Georgia Senate race - Vox
I regard Collins, along with Andy Biggs, Scott DesJarlais. Louie Gohmert, Paul Gosar, Jim Jordan, Steve King, Mark Meadows, Devin Nunes and Lee Zeldin, to be the leading GOP intellectuals in the House and certainly representative of that tribe's core beliefs. Collins is probably more beatable in the general election provided the democrats can find a strong candidate.
‘The president did absolutely nothing wrong’ That is the GOP's position in a nutshell. The call with Zelensky was perfect, and requesting foreign interference in a U.S. presidential election is fine provided it is done by a republican President. The same conduct committed by a Democrat would be in most heinous impeachable offense in U.S. history, even surpassing Clinton's lie about having sex with Monica. It is important to keep in mind that the republican Senators voted to impeach Clinton for lying about an extramarital affair.
 |
| Head on a pike for Shifty Schiff? |
False Claim by Trump that Ukraine Got Aid 'Before Schedule' - FactCheck.org
Trump's False Tweet on Bolton - FactCheck.org
False and Misleading Claims at Impeachment Trial - FactCheck.org
Fact-checking the impeachment defense of Donald Trump | PolitiFact
Trump lawyer Sekulow says Trump’s hold on Ukraine aid is like Obama with Egypt in 2013. He’s wrong. | PolitiFact (rated mostly false)
Trump falsely claims House Democrats never asked Bolton to testify | PolitiFact
Fact-checking Donald Trump on libel law and prison | PolitiFact
Trump’s claim that he ‘saved’ pre-ex conditions ‘part fantasy, part delusion’ | PolitiFact Health Check (rated pants on fire)
Donald's non-stop lying is supported by the republican party and Trump TV.
++
Trump and Lev (not in prison yet) Parnas:
Trump reportedly caught on tape ordering removal of Ukraine ambassador; Parnas recording shows Trump talking with indicted businessmen the President has said he doesn't know
Donald asked Lev (not in prison yet) Parnas how long Ukraine could last against Russia without U.S. military aid. Parnas was apparently the Duck's go to expert on the Ukraine along with Showboat Rudy.
While Donald has repeatedly claimed he does not know Lev Parnas and has never talked to him, the tape proves that he both knows Parnas and has carried on a long conversation with him. The fact that Donald lies all of the time about everything is nothing new however. Lying works just fine for him so why stop?
++
The Trumpster senator from Tennessee, Marsha Blackburn, has repeatedly attacked the patriotism of Lt. Colonel Alexander Vindman. Pentagon vow to protect Lt. Col. Alexander Vindman tested after Marsha Blackburn attacks veteran
Marsha is a career, Know Nothing politician who soundly defeated Phil Bredesen in 2018 with this kind of commercial flooding the airways.
Caravan | Marsha Blackburn for US Senate - YouTube
Bredesen, a moderate, was a successful businessman before becoming a respected two term governor of Tennessee and a successful two term Mayor of Nashville.
Senator Marsha Blackburn Criticized for Mid-Impeachment Trial Fox News Interview Leaving the chamber while the trial is in session is punishable by imprisonment.
Just more proof that Donald is a genius: President Donald Trump on Elon Musk: I was worried about him, because he's one of our great geniuses - YouTube
The new Trumpster senator from Georgia, Kelly Loeffler, blasted Mitt Romney for wanting Bolton's testimony during the impeachment trial: GOP senator: Romney trying to 'appease the left' with impeachment witnesses | TheHill
Loeffler is concerned about a primary challenge from representative Doug Collins who is a far right reactionary whose most memorable statement, which needs to be etched on his tombstone, was that Democrats love terrorists. Republicans are running two candidates in the 2020 Georgia Senate race - Vox
I regard Collins, along with Andy Biggs, Scott DesJarlais. Louie Gohmert, Paul Gosar, Jim Jordan, Steve King, Mark Meadows, Devin Nunes and Lee Zeldin, to be the leading GOP intellectuals in the House and certainly representative of that tribe's core beliefs. Collins is probably more beatable in the general election provided the democrats can find a strong candidate.
++++++++
All trades are commission free except as otherwise noted.
All trades are commission free except as otherwise noted.
1. Small Ball Trades:
A. Pared HTA-Sold 10 at $31.31:
A. Pared HTA-Sold 10 at $31.31:
Quote: Healthcare Trust of America Inc. (HTA)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: +$44.34
Last Substantive Discussion: Stocks, Bonds & Politics: Item # 2.B. Sold 10 HTA at $30.81 (11/28/19 Post) I discussed the last earnings report in that post.
Current Position: 30 Shares with an average cost per share of $26.88.
Dividend: Quarterly at $.315 ($1.26 annually)
Last Ex Dividend: 12/31/19
Dividend Reinvestment: No, IMO, the stock is expensive based on P/FFO, FFO growth rates and dividend growth rates.
B. Eliminated PFXF-Sold 110 at $20.51:
Quote: VanEck Vectors Preferred Securities ex Financials ETF
Profit Snapshot: +$52.05
Sponsor's website:VanEck Vectors Preferred Securities ex Financials ETF
Expense ratio: .41% (after a .05% waiver until at least 9/1/20)
Considering I can buy U.S. preferred stocks without paying a commission, I have a hard time justifying paying a fee for an index fund.
Dividend: Monthly at a variable rate
Last Ex Dividend: 12/30/19
C. Pared SKT-Sold Highest Cost 10 Share Lot at $16.73:
Quote: Tanger Factory Outlet Centers Inc.
SKT popped on 1/22/20 due to its prospective inclusion in the S & P 600 small cap index. CIT Group Set to Join S&P MidCap 400 and Tanger Factory Outlet Centers to Join S&P SmallCap 600 That kind of pop has nothing to do with the fundamentals and is frequently short lived.
Closing Price Day of Trade (1/22): SKT $16.52 +$0.59 +3.70%
Closing Price 1/28/20: SKT $14.95 +$0.12 +0.81%
Profit Snapshot: +$14.41
Average Cost Before Pare: $14.49
Average Cost After Pare: $14.36
 |
| Snapshot Intraday on 1/22/20 |
Since my last discussion, a SeekingAlpha post mentioned that an index fund with a heavy weighting in SKT may be forced to unload a "chunk" of its shares. Popular ETF may be forced to unload chunk of Tanger Factory stake - SPDR S&P Dividend ETF (SDY)-Seeking Alpha; see also discussion in this MarketWatch article.
Only Round-Trip: Item # 1.A. Sold 50 SKT at $16.85 (9/28/19 Post)
I also own 50 shares in my IB account. Item # 3.A. Bought 50 SKT at $14.44 (10/23/19 Post)
Dividend: Quarterly at $.3575 raised for the current quarter from $.3550 ($1.43 annually)
Dividend Yield at Average Cost: 9.96%
Next Ex Dividend Date: 1/30/2020 (tomorrow)
Dividend Reinvestment: Yes in this account and no in the IB account.
Last Earnings Report (12/30/19: This report was released after I sold this 10 share lot. Tanger Reports Fourth Quarter And Full Year Results
FFO declined to $.59 per share from $.64 for the 2018 4th quarter (4 cents of the decline was attributable to asset sales that reduced the FFO comparison)
"Consolidated portfolio occupancy rate was 97.0% on December 31, 2019, compared to 95.9% on September 30, 2019 and 96.8% on December 31, 2018."
"Approximately 94% of the Company's consolidated square footage was unencumbered by mortgages"
"FAD payout ratio was 70% for 2019"
2020 FFO per share guidance is currently at $1.96 to $2.04
The 2020 guidance highlights the ongoing problem:
This report was released before the open on 1/27/2020.
Closing Price on 1/27/20: SKT $14.83 -$0.70 -4.51%
Tanger wrote down the value of its Jeffersonville, Ohio property by $37.6M during the quarter. The original cost of that property was 114M with another $11.683M in subsequent improvements. Page F-59 There was a $49.7M write-down for this property in the 2018 third quarter. 2018 3rd Q Earnings Report
It is impossible for me to see how that property cost 114M to build. Jeffersonville, Ohio - Google Maps The parking lot was practically empty when the google car took its snapshots.
SKT is a stock that is frequently recommended in SeekingAlpha articles. The most prominent bull is Brad Thomas who published today yet another favorable article which is not yet behind SA's paywall. Tanger Factory Outlet Centers: The Safest Dividend Is The One That's Just Been Raised - Tanger Factory Outlet Centers, Inc. (NYSE:SKT) | Seeking Alpha The frequency of his upbeat SKT articles seems to increase as the stock declines in price.
5 Year Chart:
5 Year Annual Average Total Return Through 1/28: -13.57%, total return = -51.77%
DRIP Returns Calculator | Dividend Channel
So far at least, I have a total return in excess of the dividend yield.
Key to that result is a recognition that SKT has serious current and long term issues. Anyone buying shares needs to recognize those issues and to accept that the market's assessment, reflected in the preceding chart, is rational and fact based.
D. Started Small Ball "Buy Program" in PBCT-Bought 10 at $16.03:
History in this Account:
Quote: People's United Financial Inc (PBCT)
PBCT Consensus Analyst E.P.S. Estimates
Investment Category: Regional Bank Basket Strategy
Prior Round-Trips:
Item # 3.A. Eliminated PBCT-Sold 101+ at $17.57(5/22/19 Post)(profit snapshot = $182.26)-Item # 3.A. Bought 100 PBCT at $15.65(11/28/18 Post)
Item # 4 Sold 100 PBCT at $14.61 (9/21/13 Post)(profit snapshot = $298.47)-Item # 1 Bought 100 PBCT at $11.47 (6/14/12 Post)
PBCT Trading Profits to Date = $480.73
Dividend: Quarterly at $.1775 per share ($.71 annually)
Dividend History | People's United Bank
Last raised from $.175 effective for the 2019 first quarter. I would not label that $.0025 per share increase as a dividend hike since it is below the inflation rate. The rate was at $.1525 in the 2010 first quarter.
Next Ex Dividend Date = 1/30/20 (tomorrow)
Yield at $16.03 = 4.43%
Last Earnings Report (12/31/19): People's United Financial Reports Fourth Quarter Net Income of $137.5 Million, or $0.31 per Common Share
There was a negative reaction by some analysts to this report. On 1/17/19, D A Davidson cut to neutral from buy; JP Morgan cut is price target to $17.5 from $18; and Stephens cuts its PT to $15.5 from $16 while maintaining its equal weight recommendation.
I do not have access to those reports.
I can only offer that those negative reactions were unwarranted IMO.
I would agree that PBCT and other regional banks continue to face net interest margin compression due to a flat yield curve. A $17 to $18 price for 2020 would be about the most that I could reasonably justify based on a continuation of the flat yield curve.
The likely continuation of that issue causes me to use the small ball rules.
In a richly valued market, PBCT's P/E multiple and dividend yield provides all the reason that I need to start a small ball buying program.
As previously discussed, there is a possibility that the FED will lose control over the intermediate and longer term interest rates due to a persistent rise in inflation while stubbornly continuing to anchor short term rates at or below current levels. That scenario, while not likely this year IMO, is possible.
Based on recent inflation numbers, I would currently guess that this scenario has about a 1 in 4 chance of occurring within the next 18 months.
A spurt in the ten year yield in 2013 was sufficient to generate a 47.4% total return for the S&P Regional Banking ETF (KRE). The 10 year treasury yield topped out a 3.04% yield on 12/31/13. 2013 Daily Treasury Yield Curve Rates
Current Position: 10 shares
Maximum Position: 100 shares + shares purchased with dividends
Purchase Restriction: Small Ball Rules
E. Added 5 RDSB at $56.75:
RDS.B Analyst Estimates | MarketWatch
Stock Information as of 1/28/20 (Intra-day):
Current Position: 15 shares
Average Cost Per Share = $57.21
Maximum Position: 50 shares
Purchase Restriction: Small Ball Rule (best to be cautious IMO when the stock sector is in a long term bear market of unknown duration and depth).
The most important consideration for me when nibbling on large cap energy companies now is to drill into my head that they are in a bear market of uncertain duration and depth. That will largely define how I will structure purchases.
The second consideration is that they are not long term buy and hold stocks but do generally have significant bull and bear cycles as reflected in this RDS/A chart starting in 2005 which uses monthly price data:
Dividend: Quarterly, currently at $.94 per share ($3.76 annually)
RDS.B Dividend History
Last Ex Dividend: 11/14/19
Last Eliminations: Item # 2 Eliminated Royal Dutch After Profit Warning-Sold: 52+ RDS/A at $70.85 and 51+RDS/A at $70.83 (1/28/14 Post)(profit snapshots = $325.89)-Item # 1 Bought 50 RDS/A at $68.93 (February 2013), Item # 1 Bought 50 RDS/A at $68.93 (February 2013)
This is one of the stocks where the common stock dividend is substantially higher than the yield on the long term senior unsecured debt. For example, a Shell International Finance 2.375% senior unsecured bond maturing in 2029 closed yesterday at a 2.314% YTM. That issuer's bonds are guaranteed by Royal Dutch Shell PLC and are rated Aa2 by Moody's.
2. Short Term Bond/CD Ladder Basket Strategy:
February 2020 Maturities
SU = Senior Unsecured Bond ($1K par value per bond)
FM = First Mortgage 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
Secondary Market: Treasuries Bought Commission Free at Below Par value
All corporate bond purchases made at less than par value.
Secondary Market: Treasuries Bought Commission Free at Below Par value
All corporate bond purchases made at less than par value.
2 Union Pacific 1.8% SU 2/1 (bought 2/18 and 12/16)
2 Berkshire Hathaway Energy 2.4% SU 2/1 (b. 6/18)
2 Select Income* 3.6% SU 2/1 (bought 7/18)
2 Pacific CDs 1.9% 2/3 (4 month CDs)
2 Synchrony Fin. 2.7% 2/3 (bought 2/19)
10 Treasury 56 Day 1.549% IR (bought at auction)
10 Treasury 28 Day 1.527%IR (bought at auction)
2 Treasury Bills 1.915% YTM 2/6 (secondary market 9/19)
3 Treasury 3 Mo 1.573%IR (bought at auction)
2 Ameris BK 1.9% CD 2/11 (4 month CD)
10 Treasury 56 Day Bills 2/11 1.569% IR (bought at auction)
1 BP 2.3125% SU 2/13 (bought 1/19)
2 Synchrony Fin. 2.7% 2/3 (bought 2/19)
10 Treasury 56 Day 1.549% IR (bought at auction)
10 Treasury 28 Day 1.527%IR (bought at auction)
2 Treasury Bills 1.915% YTM 2/6 (secondary market 9/19)
3 Treasury 3 Mo 1.573%IR (bought at auction)
2 Ameris BK 1.9% CD 2/11 (4 month CD)
10 Treasury 56 Day Bills 2/11 1.569% IR (bought at auction)
1 BP 2.3125% SU 2/13 (bought 1/19)
1 Wells Fargo 2.35% CD MI 2/14 (2 year CD)
2 Treasury 1.375% Coupon 2/15 (secondary market purchase)
1 Citigroup 2.4% SU 2/18 (bought 5/18)
2 Treasury 1.888% IR 2/20 (6 Mo bought at auction)
3 Treasury Bills 1.906% YTM (secondary market)
2 East West CDs 2.4% 2/22 (9 month CDs)
2 Treasury 1.888% IR 2/20 (6 Mo bought at auction)
3 Treasury Bills 1.906% YTM (secondary market)
2 East West CDs 2.4% 2/22 (9 month CDs)
2 American Express 1.85% CDs 2/24 (30 month CDs)
10 Treasury 28 Day Bill 1.527%IR (bought at auction)
10 Treasury 28 Day Bill 1.527%IR (bought at auction)
5 Treasury 1 Yr Bill 2.559% IR 2/27 (bought at auction)
2 East West BK. 1.7% CDs 2/27 (2 month CDs)
2 Reliant Bank 2.4% CDs MI 2/28 (9 month CDs)
2 Homestreet 2.45% CDs 2/28 (9 month CDs)
2 Treasury 2.25% Coupon 2/29 (secondary market)
2 Treasury 1.375% 2/29 (secondary market)
2 East West BK. 1.7% CDs 2/27 (2 month CDs)
2 Reliant Bank 2.4% CDs MI 2/28 (9 month CDs)
2 Homestreet 2.45% CDs 2/28 (9 month CDs)
2 Treasury 2.25% Coupon 2/29 (secondary market)
2 Treasury 1.375% 2/29 (secondary market)
* Now an Office Properties (OPI) obligation
$88K
I lost 17 bonds to early issuer redemptions that would have matured in 2/2020, with the issuers making make whole payments:
* Early Redemption December 2019: 6 Laboratory 2.65% SU 2/1 (b. 2/18, 3/18, 4/18, 2/19)
I lost 17 bonds to early issuer redemptions that would have matured in 2/2020, with the issuers making make whole payments:
* Early Redemption December 2019: 6 Laboratory 2.65% SU 2/1 (b. 2/18, 3/18, 4/18, 2/19)
** Early Redemption August 2019: 6 HCP 2.625% SU 2/1 (bought 11/18; 2/18; 2/19)
*** Early Redemption August 2019: 5 FedEx 2.3% SU 2/1 (bought 1/18 AND 2/19)
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.
