APLE, NMFC, OTCFX, PEO, RLJ,

Economy: 

On a non-seasonally adjusted basis, CPI rose 2.3% Y-O-Y through December 2019. 

Core CPI also rose 2.3% Y-O-Y. 

Yardeni: No recession, steady economy and low inflation favor stocks in 2020 - MarketWatch Yardeni tends to be optimistic. 

Here’s how much it may cost to retire in each state in America - MarketWatch

Mnuchin says Boeing 737 Max grounding could slow US growth by a half point Mnuchin predicts that real GDP growth will be 2.5% in 2020. 

Budget deficit topped $1 trillion in 2019, the first time in 7 years Spending a trillion dollars of borrowed money will stimulate the economy. And, the U.S. economy is now addicted to annual trillion dollar budget deficit spending. Just cutting the annual deficit spending to $500B would cause a recession and probably a financial crisis.   

And what happens when the FED can no longer keep short and intermediate term interest rates below the inflation rate and the annual average service rises to 4% to 5%, a more normal range and about twice the current cost. When that occurs, the annual interest cost for federal government debt will exceed $1 trillion with no increase in the debt amount from current levels; which would be an absurd assumption to make when the debt amount is rising at $1T per year. 

In the last fiscal year ending 9/30/19, the federal government paid $574,587,783,463.63 in interest. The weighted average interest rate on all U.S. debt was 2.429% as of 12/31/19. Interest Expense on the Debt Outstanding; December 2019 Average Interest rate

Janet Yellen: The US-China trade war isn't over, and a tech fight risks dividing the world -- Trump’s trade deal with China won’t give many U.S. companies relief, as most tariffs will remain - The Washington Post

Trump’s trade deal with China won’t give many U.S. companies relief, as most tariffs will remain - The Washington Post

Phase one trade deal could be less than market hopes: 'Tariffs have now become a roach motel'

+++++

Markets and Market Commentary: 

JP Morgan Chase (JPM) earnings Q4 2019 crush estimates Bond trading revenue rose 86% to $3.4 billion.  

Citigroup earnings beat expectations on 49% fixed-income trading surge

The S&P 500 is now more overvalued than ever, per this measure - MarketWatch The measure is the price to sales ratio. S&P 500 Price to Sales Ratio Chart

‘This is nuts’ — one strategist explains why he just reduced risk by selling Apple, Microsoft and more - MarketWatch

Wall Street strategists recommend stable dividend-paying investments

Famed investor Byron Wien predicts Democrats will retake the Senate in 2020 - MarketWatch Byron Wien and Joe Zidle Announce the Ten Surprises of 2020 - Blackstone (prediction # 2) 

Best CD Rates Offered by Fidelity as of 1/15/2020: 

This is an improvement compared to 1 week ago when it was necessary to go out to 2025 for a 2% yield.  Now, I only have to go out 4 years to secure a yield lower than the current inflation rate. The annual real rate of return on a 4 year CD yielding 2% is likely to be negative before adjusting lower for any federal or state income taxes.  

+++++

Trump: 

Demagogue Don retweeted a photoshop image of Pelosi and Schumer wearing Islamic head coverings with a message that accused Democrats of "trying their best to come to the Ayatollah's rescue". Trump criticized for retweeting image of Pelosi, Schumer in Muslim attire | TheHill 

The White House Press Secretary Stephanie Grisham, who refuses to hold a press conference but regularly appears of Trump TV, defended Donald's tweets since he conveyed the truthful message that Democrats were on the side of terrorists. 

White House Press Secretary Grisham: “I think the president is making clear that the Democrats have been parroting Iranian talking points and almost taking the side of terrorists and those who were out to kill the Americans ”

Trump's retweet and Grisham's statement are of course reprehensible and disgusting, but that is the new normal in the U.S. that is either supported or condoned by tens of millions.    

Trump issued a warning to Iraq that it could lose its account at the NY Federal Reserve if it insists on a U.S. troop withdrawal. Iraq that it could lose New York Fed account if Troops are forced to leave: WSJ Donald's threats and frequent efforts to intimidate, directed at countries who are U.S. allies, will be his most enduring legacy in international relations and will a have a long term corrosive impact that will weaken U.S. standing in the world.  

Trump authorized Soleimani's killing 7 months ago, with conditions 

Esper said he 'didn't see' intelligence backing up Trump claim Iran was preparing to attack 4 embassies; Defense chief "didn't see" specific evidence of Iranian threat to embassies Any representation made by Donald has to be taken as false until proven true by reliable evidence.  

No warnings about an imminent attack was sent to U.S. embassies. State Department security officials weren't notified of 'imminent' threats to US embassies Why? There was no imminent threat. 

Canada's Trudeau: Iran plane victims would be alive had there been no regional tensions - Reuters (Trudeau: “I think if there were no tensions, if there was no escalation recently in the region, those Canadians would be right now home with their families.”)  

Russians Hacked Ukrainian Gas Company at Center of Impeachment  

+++++

I am focused on risk adjusted total return taking into account (1) the absence of any situational risks given my current net worth and lack of any debt, (2) my age (let's just say I have been drawing SS benefits for almost a decade now; (3) retirement status; and (4) the fact that my current interest and dividend income significantly exceeds my annual spending. Consequently, I am in a profit harvesting mode.    

1. Eliminated OTCFX: 

Quote: T. Rowe Price Small-Cap Stock Fund 

Profit Snapshot: +$7,784.97

The shares were owned for a long time. 

I started taking the dividends in cash several years ago. The dividend is paid annually and consists almost entirely of long term capital gains realized by the fund.  

Over the last 3 years, I received $3,246 in long term capital gain distributions.  

2017 $1,078.78

2018 $1,378.26

2017 $788.96

In those years, there was no distribution from dividend income which was eaten up by the fund's expenses. There were small distributions from short term capital gains. 

Future dividends will depend on the fund's ability to realize capital gains. 

I basically reached the point where I was pleased with the dividends and a realized gain on the shares now was just gravy. 

2. Small Ball Trades: 

A. Sold 50 NMFC at $13.95: 

Quote: New Mountain Finance Corp.   (NMFC)
Website: New Mountain Finance Corporation
SEC Filings
10-Q for the Q/E 9/30/19 List of investments starts at page 8.
Management: External

Closing Price Yesterday: NMFC $14.01 0.00 0.00% 

I received one quarterly dividend on this lot

Profit Snapshot: $26.7

Item # 2 Bought 50 NMFC at $13.42 (11/13/19 Post) I discussed the last earnings report in that post. 

Dividend: Quarterly at $.34 ($1.36 annually) The dividend has been at the same penny rate for 31 straight quarters.  

Last Ex Dividend: 12/12/19 

Last Earnings Report: New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2019 

Goal: Any total return in excess of the dividends

I still own 100+ shares in my Fidelity account where I am currently reinvesting the dividend but may go to payment in cash or eliminate the position due to the premium price to net asset value per share. Item # 2.A. Bought 100 NMFC at $13.37  (9/18/19 Post)

Net Asset Per Share History: 

9/30/19:   $13.35
6/30/19:   $13.41 10/Q at page 4

12/31/18:  $13.22
6/30/18:   $13.57
3/31/18:    $13.60 10-Q at page 3
12/31/17:  $13.63
12/31/16   $13.46
9/30/15    $13.73
12/31/14   $13.83
9/30/14    $14.33
12/31/13   $14.38
6/30/13    $14.32
12/31/12 $14.06 Sourced from 10-Qs

IPO Price: $13.75 Prospectus (filed 5/23/11)

Sell Discussions:

Item # 1.B. Eliminated NMFC-Sold 60 at $13.96 and 50 at $13.94  (2/9/19 Post)(profit snapshots = $42.77); Item # 1 A. Sold 50 NMFC at $14.06 (8/19/18 Post)(profit snapshot = $61.44); Item # 1 Sold Remaining 50 Shares of NMFC at $14.63 (11/1/14 Post)($5.88 profit on the shares); Sold 100 of 150 NMFC at $14.4773 (10/23/14 Post)($3.79 profit on the shares + 7 dividend payments); Item # 8 Sold Highest Cost NMFC Lot at $15.37 (9/14/2014 Post)($2.99 profit on the shares + 7 quarterly dividend payments/sold lot on 9/11/14) 

I have exited all prior position by selling the shares profitably, but that has been difficult.

NMFC Trading Profits to Date:  $143.57 (prior trades = $116.87)

DRIP Returns Calculator | Dividend Channel As of 1/8/20, the annual average total return was 9% over a five year period. ($10K grew to $15,386.24 or a total return of 53.86%)

B. Bought 20 RLJ at $16.85: 

Quote RLJ Lodging Trust (RLJ) 
SEC Filings 
Management: Internal
Property List as of 9/30/19: Page 14 10-Q 

Closing Price Yesterday: RLJ $16.61 -0.05 -0.30% 

Company Website: RLJ | Lodging Trust

"RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio consists of 108 hotels with approximately 23,170 rooms located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms."

Recent Property Dispositions: 

10-Q for Q/E 9/30/19 at page 31 ("$894.5 million of cash, cash equivalents and restricted cash reserves as compared to $384.8 million at December 31, 2018" at page 43)

RLJ Lodging Trust Completes Sale of 18 Non-Core Hotels (8/19/19 Press Release) 

RLJ Lodging Trust Announces Sale of Kingston Plantation for $156 Million (7/1/19 Press Release) 

"Buying Program" Plan: Up to 100 shares using the small ball purchase restriction-Small Ball Rules

On 1/7/20, Raymond James upgraded to outperform from market perform with a $20 PT.

Dividend: Quarterly at $.33 ($1.32 annually)

RLJ Lodging Trust Announces Dividends for Fourth Quarter of 2019 

Last Ex Dividend Date: 12/30/19

Dividend Yield at $16.85 = 7.84%

RLJ Chart Since IPO: Ongoing Bear Market

Most hotel REITs have been in a bear market over most of the past 5 years. In the selections made in the following chart, none of the stocks have a positive return based on price. 

The downtrend in stock prices reduces risk IMO while increasing the dividend yield compared to earlier periods. When a sector is in a bear market, and there are no signs yet in the stock charts that the downtrend is over, my buying approach will be governed by caution and some hair trigger trading on price pops. 

Recent Earnings Report (Q/E 9/30/19): 

The property dispositions described above led to lower Y-O-Y EBITDA and FFO. 

Share Buybacks: "During the third quarter, the Company repurchased 2.8 million shares of its common shares for $47.2 million at an average price per share of $16.94. Year-to-date as of November 7, 2019, the Company repurchased approximately 4.0 million shares of its common shares for approximately $68.0 million at an average price per share of $17.08. As of November 7, 2019, the Company's share buyback program has a remaining capacity of approximately $192 million."

RLJ Lodging Trust Reports Third Quarter 2019 Results 

C. Bought 5 PEO at $16.4:

Snapshot Includes Reinvestment of 4th quarter dividend Paid Last December

The 4th quarter dividend includes the capital gains distribution. All four quarters have a much lower regular dividend.

Quote: Adams Natural Resources Fund Inc. 

Sponsor's Website: Adams Funds
Historical Distributions 

PEO is a CEF that owns natural resource stocks. It come into existence shortly before the 1929 stock market crash.

Last Discussed: Item # 1.A. Bought 10 PEO at $17.58 (11/4/19 Post) 

Last Elimination: Item # 1 Sold 104+ PEO at $27.06 (8/10/13 Post)

Energy stocks have been in a bear market since mid-2014. 

Last SEC Filed Shareholder Report: Semi-Annual Report for the Period Ending 6/30/19 

Top 10 Holdings as of 9/30/19: 

CEF Connect Page for PEO

D. Bought 5 APLE at $15.71:

This was a test to confirm that Vanguard was in fact charging zero commissions for online stock trades.

Confirmation Excerpt

Quote:  Apple Hospitality REIT Inc. (APLE)

Closing Price Yesterday: APLE $15.78 +$0.03+0.19% 

Website: Apple Hospitality REIT
Hotel Map
APLE SEC Filings

"Apple Hospitality’s portfolio consists of 233 hotels with approximately 29,900 guest rooms located in 87 markets throughout 34 states. Franchised with industry-leading brands, the Company’s portfolio comprises 107 Marriott®-branded hotels, 124 Hilton®-branded hotels, one Hyatt®-branded hotel and one independent hotel."

APLE  5 Year Chart: Bear Market Starting in January 2018 (possible bottoming in a $15-$16 channel trading range)

Recent Analyst Actions: 

12/16/19: Janney initiates APLE with a buy and an $18 PT

11/7/19: Wells Fargo lifted PT to $15.5 from $15 and maintained market perform rating.  

Last Buy Discussion: Item # 3 Added 40 APLE at $15.6-Fidelity Account (7/10/19 Post)

Last Sell Discussions:

Item # 5.A. Sold 50 APLE at $19.6 (12/18/17 Post)

Item # 6.B. Sold Highest Cost Lot in Schwab at $19.22 (10/19/17 Post)

Last Earnings Report (Q/E 9/30/19): Apple Hospitality REIT Reports Results of Operations for Third Quarter 2019 

APLE sold 9 hotels in March 2019 that negatively impacted Y-O-Y operating numbers. Apple Hospitality REIT Completes Sale of Nine Hotels The company is in the process of selling 3 more. 

Capital Improvement Expenditures: 

Dividend: Monthly at $.10 per share

Apple Hospitality REIT Announces January 2020 Distribution 

Dividend Yield at a TC of $15.71 = 7.64%

Last Ex Dividend Date: 1/2/20

Dividend Reinvestment: Yes

3. Sold 1 Wisconsin Electric 2.95% SU Maturing on 9/15/21-In A Roth IRA Account: 

The seller paid me $9.75 in accrued interest. The bond was sold at 101.471. The Fidelity confirmation snapshot shows 101.371 which is the proceeds number after a $1 brokerage commission. 

FINRA Page: Bonds Detail (prospectus linked)

Issuer: Wholly owned subsidiary of WEC Energy Group Inc. (WEC)

Profit Snapshot: +$20.68

Item # 2.B. Bought 1 Wisconsin Electric 2.95% SU at a TC of  99.303 (10/14/18 Post) 

Sold at 101.471
YTM at 101.471 = 1.895%
Proceeds at 101.371

The issuer may redeem this bond at par value without making a make whole payment on or after 6/15/21, or 3 months prior to maturity, which will likely happen: 

Consequently, yield-to-worst would be the appropriate total return number going forward, and it would be less than the YTM of 1.895%. 

I previously sold this bond at 101.7.  Item # 3.B.(9/18/19 Post) 

4. Cash Flow Into Fidelity Account on 1/15/2020: 

The problem revealed by the following snapshots relates to proceeds received from maturing short term bonds given the elevated stock price levels and abnormally low interest rates for short term fixed coupon securities. 

I also owned the Broadcom SU, Duke Energy Florida first mortgage bond, and the Arizona Public Service SU in other accounts, so the problem is actually larger than shown in the second snapshot above. 

The National Rural Utilities SU maturing in 2027 and the 2024 Goldman Sachs SU are 1 bond lots that pay interest monthly. 

Another 1 bond lot shown above are the BP bond that matured today  

The other National Rural Utilities SU maturing in 2022 is a 2 bond lot that also pays interest monthly, as do many of the bonds from this issuer. 

The Bridgewater Bank CD is just 1 CD that pays monthly. 

The Dow Chemical, Highwoods Realty, Virginia Electric Power and Black Hills, and Federal Realty senior unsecured bonds are 1 bond lots that pay semi-annually. 

The Arizona Public Service, Duke Energy, and Broadcom bonds that matured today were 2 bond lots as is the Kroger 2021 SU. 

The snapshots include small common stock positions in 4 equity REITs and 1 hybrid REIT:  AHT (hotel); APLE (hotel/monthly dividends); GNL (industrial);  JCAP (storage); and STWD (hybrid).

A preferred stock quarterly dividend paid by the hotel REIT Ashford Hospitality (AHTPRI) was also received in this account. This was on 50 shares, with another 100 owned in other accounts. 

I received the position on a tiny OXY odd lot as well, which has now been reduced to just 4 shares recently bought at less than $40. Closing Price Yesterday: OXY $47.24  +$0.67 +1.44% 

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.