Economy:
The FED went into panic mode last week, slashing the federal funds rate by .5%. Emergency rate cut is a 'sign of panic' from the Fed, Jim Cramer says
U.S. economy adds strong 273,000 jobs in February-MarketWatch The consensus forecast was for 165+K. At least through February, the coronavirus can not be shown to have had any discernible impact on the U.S. job market. U.S. jobless claims dip at end of February, no sign so far of layoffs tied to coronavirus - MarketWatch
Average hourly earnings increased by 9 cents in February. Over the past 12 months through February, average hourly earnings increased by 3%. The average work week increased by .1 hours to 34.4. The number of jobs added in December and January were revised up by a combined 85K compared to previous reports. With those revisions, job gains have averaged 243K over the past 3 months. Employment Situation Summary
The U-6 increased from 6.9% in January to 7% last month. Table A-15. Alternative measures of labor underutilization
Except for the U-6 number, all of the primary data was positive in this report.
ADP Moody's private payrolls February 2020 beat estimates (+183K in February vs. 155k consensus)
The FED went into panic mode last week, slashing the federal funds rate by .5%. Emergency rate cut is a 'sign of panic' from the Fed, Jim Cramer says
U.S. economy adds strong 273,000 jobs in February-MarketWatch The consensus forecast was for 165+K. At least through February, the coronavirus can not be shown to have had any discernible impact on the U.S. job market. U.S. jobless claims dip at end of February, no sign so far of layoffs tied to coronavirus - MarketWatch
Average hourly earnings increased by 9 cents in February. Over the past 12 months through February, average hourly earnings increased by 3%. The average work week increased by .1 hours to 34.4. The number of jobs added in December and January were revised up by a combined 85K compared to previous reports. With those revisions, job gains have averaged 243K over the past 3 months. Employment Situation Summary
The U-6 increased from 6.9% in January to 7% last month. Table A-15. Alternative measures of labor underutilization
Except for the U-6 number, all of the primary data was positive in this report.
ADP Moody's private payrolls February 2020 beat estimates (+183K in February vs. 155k consensus)
Weekly mortgage refinances spike 26%, with help from coronavirus Refinancing mortgages to lower monthly interest payments creates more disposable income that can be saved, spent or used to lower other existing debt obligations. For about a decade now, the mortgage refinancing tsunami has been a major positive factor for the U.S. economy.
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
Mortgage Debt Service Payments as a Percent of Disposable Personal Income -St. Louis Fed
Mortgage rates hit all-time low amid coronavirus concerns: Freddie Mac - MarketWatch
Mortgage Rates - Freddie Mac The weekly average for a 15 year fixed rate mortgage was 2.95%, with .8 fees/points, as of 2/27. The average will decline further in the next weekly update.
Trump demands that Fed 'further ease' after 50 basis point rate cut
Mortgage rates hit all-time low amid coronavirus concerns: Freddie Mac - MarketWatch
Mortgage Rates - Freddie Mac The weekly average for a 15 year fixed rate mortgage was 2.95%, with .8 fees/points, as of 2/27. The average will decline further in the next weekly update.
Trump demands that Fed 'further ease' after 50 basis point rate cut
Coronavirus may infect up to 70% of world's population, expert warns - CBS News
21 people test positive for coronavirus on California cruise ship, out of 46 tested so far - The Washington Post This is a different cruise ship than the one quarantined in Japan.
New CDC guidance says older adults should 'stay at home as much as possible' due to coronavirus - CNN
+++++
Trigger Even in Vix Asset Allocation Model:
In a comment published last Thursday, I declared a Trigger Event in my Vix Asset Allocation Model. Vix Asset Allocation Model Explained Simply With as Few Words as Possible (5/17/19 Post) This is a mechanical model based on history that does not permit any changes unless future history requires a change in its definitions.
The last TE was in 2015: What a Trigger Event Requires: Portfolio Positioning And Management As Of 9/1/15 - South Gent | Seeking Alpha
The Unstable Vix Pattern ushered in my that last TE did not last long with a Stable Vix Pattern (SVP) forming again in June 2016. The Recovery Period started on 10/5/15 and lasted until 12/11/15 whereupon the VIX snapped back into the Whipsaw action characteristic of an ongoing Unstable VIX Pattern. The second Recovery Period started on 3/1/16 and turned into a Stable Vix Pattern that lasted almost 4 years. Update For Portfolio Positioning And Management As Of 7/24/16 - South Gent | Seeking Alpha
The longest UVP started in October 1997 and lasted until January 2004.
The longest SVP started in May 1991 and lasted until October 1997: VIX and S & P Compared 1990 to 1997
Closing Price 3/6/20: VIX 41.94 +2.32 +5.86% That is a worrisome volatility number.
CBOE VIX Volatility Index-St. Louis Fed
+++++++
Markets and Market Commentary:
Crude oil accelerated its price collapse last Friday after Russia balked at OPEC's production cut proposal. Oil Price Dives as OPEC, Russia Fail to Agree on Output Cut | Business News | US News; OPEC's pact with Russia falls apart, sending oil into tailspin - Reuters WTI fell almost 10%. Russia's stance may be a negotiating ploy to cause Saudi Arabia and other OPEC producers to absorb more of the production cuts.
Oil plunges most since 2008 on unraveling Saudi-Russia alliance
The Fed is already behind the curve as Goldman says firepower could be half as much as usual - MarketWatch Goldman is expressing the group think hypothesis that lowering interest rates from extremely abnormal levels will actually work and needs to be done to stimulate the economy.
In a comment published last Thursday, I declared a Trigger Event in my Vix Asset Allocation Model. Vix Asset Allocation Model Explained Simply With as Few Words as Possible (5/17/19 Post) This is a mechanical model based on history that does not permit any changes unless future history requires a change in its definitions.
The last TE was in 2015: What a Trigger Event Requires: Portfolio Positioning And Management As Of 9/1/15 - South Gent | Seeking Alpha
The Unstable Vix Pattern ushered in my that last TE did not last long with a Stable Vix Pattern (SVP) forming again in June 2016. The Recovery Period started on 10/5/15 and lasted until 12/11/15 whereupon the VIX snapped back into the Whipsaw action characteristic of an ongoing Unstable VIX Pattern. The second Recovery Period started on 3/1/16 and turned into a Stable Vix Pattern that lasted almost 4 years. Update For Portfolio Positioning And Management As Of 7/24/16 - South Gent | Seeking Alpha
The longest UVP started in October 1997 and lasted until January 2004.
The longest SVP started in May 1991 and lasted until October 1997: VIX and S & P Compared 1990 to 1997
Closing Price 3/6/20: VIX 41.94 +2.32 +5.86% That is a worrisome volatility number.
CBOE VIX Volatility Index-St. Louis Fed
+++++++
Markets and Market Commentary:
Crude oil accelerated its price collapse last Friday after Russia balked at OPEC's production cut proposal. Oil Price Dives as OPEC, Russia Fail to Agree on Output Cut | Business News | US News; OPEC's pact with Russia falls apart, sending oil into tailspin - Reuters WTI fell almost 10%. Russia's stance may be a negotiating ploy to cause Saudi Arabia and other OPEC producers to absorb more of the production cuts.
Oil plunges most since 2008 on unraveling Saudi-Russia alliance
The Fed is already behind the curve as Goldman says firepower could be half as much as usual - MarketWatch Goldman is expressing the group think hypothesis that lowering interest rates from extremely abnormal levels will actually work and needs to be done to stimulate the economy.
Investors cannot sit on the fence after coronavirus stock rout - it’s time to buy stocks, Bernstein says - MarketWatch
Even a portfolio of 40% bonds won’t escape further coronavirus losses, MSCI says - MarketWatch
Even a portfolio of 40% bonds won’t escape further coronavirus losses, MSCI says - MarketWatch
Stocks could drop 40%, and this is how to get ready for it, says Nouriel Roubini - MarketWatch
Stocks haven’t bottomed yet, so wait for this signal, advises Charles Schwab strategist - MarketWatch
Skyworks Solutions lowers earnings forecast due to coronavirus - MarketWatch
GE COVID-19 impact, downbeat Q1 profit view - MarketWatch (While the first quarter negative impact is still evolving, GE estimates that the coronavirus outbreak will reduce first quarter free cash flow somewhere between $300M to $500M)
‘We are giving up on energy’, says Jefferies analysts, who compares beaten-down sector with ‘62 Mets - MarketWatch I am not giving up but remain extremely cautious when buying. It is important to recognize that energy stocks have been in a long term bear market that started in 2014. There is no indication that the negative fundamentals and charts will change anytime soon.
Coronavirus outbreak could cost airlines $113 billion - ABC News
Bond traders are betting the U.S. will converge with Europe’s ultralow interest rates - MarketWatch
Interest rates collapsed last week. The consensus opinion reflected in short term treasury yields is that the FED will soon cut the FF rate again.
CD Rates at Schwab as of 3/6/20:
Treasury Yield Curve March 2020:
Another .5% cut in the FF rate is highly probable on or before the April 29 meeting, with a 33% probability that the FED will restart ZIRP:
Countdown to FOMC: CME FedWatch Tool
The current range after the .5% cut last week is 1% to 1.25%. Federal Reserve Board - Federal Reserve issues FOMC statement
+++++
Portfolio Management:
S & P 500 All Time High at 3,393.52
Close on 3/6/20: 2,972.37
Point Decline from High = 421.15 points
Percentage Decline from High: -12.41
Status: Correction
Bear Market Point (-20% from high) = 2,714.82
200 Day SPX SMA Line as of 3/6: 3,051.82 (1 year Chart)
5% Below 3,051.82 = 2,899.23
P/E SPX GAAP Trailing 12 Months: 23.86 P/E & Yields
P/E. SPX Non-GAAP Forward 12 Month Estimated: 17.42
Ten Year U.S. Treasury Yield: .767% (parabolic spike down) U.S. 10 Year Treasury Note Overview
Dollar Index: 96.09 (declining since 2/20/20) DXY
Gold: $1,673.1 NY Spot 3/6 Gold Price
VIX: Unstable Vix Pattern after Trigger Event
I significantly pared my stock allocation last year and earlier in 2020. This year's reduction was accomplished mostly be eliminating stock funds. The eliminations of PRDGX and OTCFX together generated $43,124 in proceeds. Those proceeds are currently sitting in the T. Rowe Price U.S. Treasury MM fund. Item # 1 PRDGX (1/22/20 Post); Item # 1 OTCFX (1/15/20 Post) My only mutual fund left at that firm has not been touched, and I am more likely to buy than to sell: T. Rowe Price Capital Appreciation (PRWCX)-Morningstar
Currently, about 94-95% of my assets held in brokerage and mutual fund accounts are invested in high quality U.S. Tennessee municipal bonds; BBB+ and higher rated U.S. corporate bonds; U.S. treasury bills maturing within 1 year; FDIC insured CDs with maturities extending into 2022 using a ladder strategy; and cash in brokerage money market funds.
I will not be buying more bonds, treasury bills and CDs with the proceeds from maturing ones. Rates are just too low now.
I will be discussing a large number of commons stock purchases in my March 2020 posts which will increase my stock allocation by about 2% to 3% this month. Most of those trades will not be discussed here. That forecasted increase in my stock allocation will not go any lower and could only be revised higher with further material declines in prices.
I am doing a lot of what I call wave buying.
During a major decline day, I will go through my account positions at least twice daily and will buy some shares in most existing common stock positions as I scroll down the list. I then may buy more shares where the stocks are declining more than the S & P 500. Commission free trades make this approach cost effective.
Wave buying is inspired by John Templeton who bought 1 share of every stock trading below $1 during the depression. Sir John Templeton
For some stocks that are in a dive mode, I may make multiple 1 or 2 share purchases during a single day following the small ball purchase restriction. Those buys are generally in the most troubled sectors now, which include Hotel REITs, energy stocks and regional bank stocks. Those sectors have declined significantly more the S & P 500 during this correction.
SPDR S&P Regional Banking ETF (KRE) 1 Year Chart:
Starting on 2/24/20 and ending on 3/7/20, KRE has declined -18.62% compared to -7.74% for the S&P 500 ETF SPY. The energy ETF XLE is down 17.7% over the same period. Hersha Hospitality, a hotel REIT, declined by 21.82%. More carnage occurred during this short period in cruise stocks (E.G. Carnival -28.1%).
Sourced: DRIP Returns Calculator | Dividend Channel (includes dividend reinvestment in total return calculations)
In those hardest hit sectors, I do not anticipate a positive total return this year but am reasonably certain that the total return will be satisfactory given enough time that may stretch into the 2 to 5 year range.
It is not difficult to identify why these sectors are faring worse than the market averages. For the energy and travel related industries, which includes the Hotel REITs, investors are anticipating a major decline in demand. There is a point where price reflects a long term decline in demand rather than a temporary one caused by the coronavirus outbreak. And, IMO, that point has already been crossed with gusto.
Regional bank stocks are being crushed in price due to a long term forecast that central banks, including the Fed, will continue their extremely abnormal monetary policies for an extend period that will cause a relatively flight yield curve, either slightly elevated or inverted along the maturity spectrum. These policies will be expanded even though the evidence is already convincing that they will backfire in many ways. Has QE and negative nominal rates worked in Europe or Japan?
I am investing only in dividend paying stocks that generally have yields in excess of 4% using the small ball purchase rules. Each purchase is a small lot, generally ranging from 1 to 10 shares.
I have increased my exposure to preferred stocks and to leveraged bond CEFs as yield alternatives.
Since I am using the small ball purchase restriction, which requires that each future purchase be at the lowest price in the chain, each common stock buy reduces my average cost per share and increases my dividend yield.
I have hedged some of the purchases by buying QID on the powerful up days. I am going to quit buying more and will now simply look for an exit point before the VIX returns to below 26 movement. I have already liquidated TWM and SDS which were also used as hedges.
Until there is more clarity on the coronavirus outbreak's impact on the U.S. and other major countries, freaky and wild trading days up and down will be the rule rather than the exception.
+++++
Stocks haven’t bottomed yet, so wait for this signal, advises Charles Schwab strategist - MarketWatch
Skyworks Solutions lowers earnings forecast due to coronavirus - MarketWatch
GE COVID-19 impact, downbeat Q1 profit view - MarketWatch (While the first quarter negative impact is still evolving, GE estimates that the coronavirus outbreak will reduce first quarter free cash flow somewhere between $300M to $500M)
‘We are giving up on energy’, says Jefferies analysts, who compares beaten-down sector with ‘62 Mets - MarketWatch I am not giving up but remain extremely cautious when buying. It is important to recognize that energy stocks have been in a long term bear market that started in 2014. There is no indication that the negative fundamentals and charts will change anytime soon.
Coronavirus outbreak could cost airlines $113 billion - ABC News
Bond traders are betting the U.S. will converge with Europe’s ultralow interest rates - MarketWatch
Interest rates collapsed last week. The consensus opinion reflected in short term treasury yields is that the FED will soon cut the FF rate again.
CD Rates at Schwab as of 3/6/20:
 |
| Go Out 10 Years for 1.4% |
 |
| Collapses in Yields |
The current range after the .5% cut last week is 1% to 1.25%. Federal Reserve Board - Federal Reserve issues FOMC statement
+++++
Portfolio Management:
S & P 500 All Time High at 3,393.52
Close on 3/6/20: 2,972.37
Point Decline from High = 421.15 points
Percentage Decline from High: -12.41
Status: Correction
Bear Market Point (-20% from high) = 2,714.82
200 Day SPX SMA Line as of 3/6: 3,051.82 (1 year Chart)
5% Below 3,051.82 = 2,899.23
P/E SPX GAAP Trailing 12 Months: 23.86 P/E & Yields
P/E. SPX Non-GAAP Forward 12 Month Estimated: 17.42
Ten Year U.S. Treasury Yield: .767% (parabolic spike down) U.S. 10 Year Treasury Note Overview
Dollar Index: 96.09 (declining since 2/20/20) DXY
Gold: $1,673.1 NY Spot 3/6 Gold Price
VIX: Unstable Vix Pattern after Trigger Event
I significantly pared my stock allocation last year and earlier in 2020. This year's reduction was accomplished mostly be eliminating stock funds. The eliminations of PRDGX and OTCFX together generated $43,124 in proceeds. Those proceeds are currently sitting in the T. Rowe Price U.S. Treasury MM fund. Item # 1 PRDGX (1/22/20 Post); Item # 1 OTCFX (1/15/20 Post) My only mutual fund left at that firm has not been touched, and I am more likely to buy than to sell: T. Rowe Price Capital Appreciation (PRWCX)-Morningstar
Currently, about 94-95% of my assets held in brokerage and mutual fund accounts are invested in high quality U.S. Tennessee municipal bonds; BBB+ and higher rated U.S. corporate bonds; U.S. treasury bills maturing within 1 year; FDIC insured CDs with maturities extending into 2022 using a ladder strategy; and cash in brokerage money market funds.
I will not be buying more bonds, treasury bills and CDs with the proceeds from maturing ones. Rates are just too low now.
I will be discussing a large number of commons stock purchases in my March 2020 posts which will increase my stock allocation by about 2% to 3% this month. Most of those trades will not be discussed here. That forecasted increase in my stock allocation will not go any lower and could only be revised higher with further material declines in prices.
I am doing a lot of what I call wave buying.
During a major decline day, I will go through my account positions at least twice daily and will buy some shares in most existing common stock positions as I scroll down the list. I then may buy more shares where the stocks are declining more than the S & P 500. Commission free trades make this approach cost effective.
Wave buying is inspired by John Templeton who bought 1 share of every stock trading below $1 during the depression. Sir John Templeton
For some stocks that are in a dive mode, I may make multiple 1 or 2 share purchases during a single day following the small ball purchase restriction. Those buys are generally in the most troubled sectors now, which include Hotel REITs, energy stocks and regional bank stocks. Those sectors have declined significantly more the S & P 500 during this correction.
SPDR S&P Regional Banking ETF (KRE) 1 Year Chart:
Sourced: DRIP Returns Calculator | Dividend Channel (includes dividend reinvestment in total return calculations)
In those hardest hit sectors, I do not anticipate a positive total return this year but am reasonably certain that the total return will be satisfactory given enough time that may stretch into the 2 to 5 year range.
It is not difficult to identify why these sectors are faring worse than the market averages. For the energy and travel related industries, which includes the Hotel REITs, investors are anticipating a major decline in demand. There is a point where price reflects a long term decline in demand rather than a temporary one caused by the coronavirus outbreak. And, IMO, that point has already been crossed with gusto.
Regional bank stocks are being crushed in price due to a long term forecast that central banks, including the Fed, will continue their extremely abnormal monetary policies for an extend period that will cause a relatively flight yield curve, either slightly elevated or inverted along the maturity spectrum. These policies will be expanded even though the evidence is already convincing that they will backfire in many ways. Has QE and negative nominal rates worked in Europe or Japan?
I am investing only in dividend paying stocks that generally have yields in excess of 4% using the small ball purchase rules. Each purchase is a small lot, generally ranging from 1 to 10 shares.
I have increased my exposure to preferred stocks and to leveraged bond CEFs as yield alternatives.
Since I am using the small ball purchase restriction, which requires that each future purchase be at the lowest price in the chain, each common stock buy reduces my average cost per share and increases my dividend yield.
I have hedged some of the purchases by buying QID on the powerful up days. I am going to quit buying more and will now simply look for an exit point before the VIX returns to below 26 movement. I have already liquidated TWM and SDS which were also used as hedges.
Until there is more clarity on the coronavirus outbreak's impact on the U.S. and other major countries, freaky and wild trading days up and down will be the rule rather than the exception.
+++++
Trump:
Trump campaign sues Washington Post for libel The only way to deter Trump's frivolous libel suits is to first win them, through a summary judgment, directed verdict, or jury verdict, and then sue both the party who filed the libel suit and the attorney who signed the complaint for malicious prosecution. Trump 2020 Sues 'Washington Post,' Echoing Suit Against 'New York Times' : NPR In most jurisdictions, a party who wins a malicious prosecution suit can recover their attorneys fees paid in defending the suit as an element of damages.
The Trump campaign is reportedly funding the lawsuit from donor contributions.
About one-half of republicans view the press as the enemy of the people. Half of Republicans Say Media Is Enemy of the People: Poll | Time Those folks have an authoritarian mindset.
Trump will use the libel lawsuits in an effort to suppress free speech and expressions of opinions that he does not like.
The Trump campaign also filed a libel suit against the NYT who published an opinion column that Donald did not like. Trump campaign sues New York Times in libel lawsuit on Russia coverage; Trump's Own Admission Makes His NYT Lawsuit 'Dead On Arrival'
Charles Harder is the lawyer representing the Trump campaign entity. He needs to be taught a lesson that filing a frivolous lawsuit can result in a 6 figure damage award against him.
Lawyers Rip Charles Harder for 'Absolutely Ridiculous' Letter | Law & Crime
Unfortunately, the large media organizations who are harassed for ulterior motives are satisfied with a lawsuit dismissal. Both libel suits are frivolous IMO and are filed for ulterior motives that are primary political.
Trump Averages 2.5 Conflicts of Interest Each Day, Says Ethics Group Study; New Report: Trump Has Accumulated 3,000 Conflicts of Interest - CREW
++
Trump praises CDC amid coronavirus outbreak, calls Washington governor 'a snake' during visit to agency Disgusting Don did not provide any reason that justified calling Washington's governor a "snake", nor did he explain why he was compelled to so when meeting with CDC officials. There is an explanation however. Donald has no justification and he was compelled to insult Washington's governor because he is after all Disgusting Donald-Jerk & Asshole Extraordinaire.
Governments Point Fingers Over Coronavirus as Death Toll Mounts
Coronavirus test kit delay pushes hospitals to make their own
Pence: U.S. does not have coronavirus tests to meet anticipated demand Doofus Don claimed last Friday that tests were available to anyone who needs one as New York city begged for them. Trump calls coronavirus test "perfect" and compares it to Ukraine phone call - CBS News; NYC begs for more coronavirus tests, claiming 'slow' federal action impeding response | TheHill
VP Pence says 21 people on the Grand Princess cruise ship off California coast have tested positive for coronavirus
Earlier in the week, Don the Con falsely blamed Obama for a shortage in test kits. Trump falsely blames Obama admin for hurting rollout of coronavirus test kits: Fact Check - ABC News
Twelve asymptomatic coronavirus cases registered on Nile cruise ship My hunch is that the number of COVID-19 infections currently exceed 1 million worldwide with a majority of those in Asia. The death rate would be much higher than currently reported as well. The confirmed death count only includes those who have been confirmed as having the virus.
Deadly 1918 flu pandemic’s lessons ignored in Trump’s coronavirus response, historian says - The Washington Post; The flu can kill millions. In 1918, a pandemic was fueled by World War I. - The Washington Post
The Spanish Flu had mortality rates close to what is currently estimated for COVID-19, though it is far too early in the coronavirus outbreak to arrive at a mortality rate.
WHO Study at page 12.pdf
The Woodrow Wilson administration initially played down the Spanish Flu pandemic. How the Horrific 1918 Flu Spread Across America | History | Smithsonian Magazine
Trump chief of staff Mick Mulvaney suggests people ignore coronavirus news to calm markets Mulvaney was fired yesterday and replaced with the Trumpster congressman Mark Meadows. The former GOP leader in the House, John Boehner called Meadows an "idiot". Maybe that is being too kind. “Idiots,” “Anarchists,” and “Assholes”: John Boehner Unloads on Republicans in Post-Retirement Interview | Vanity Fair
Trump rallies his base to treat coronavirus as a ‘hoax’ - POLITICO
Inside Trump’s frantic attempts to minimize the coronavirus crisis; Key Missteps at the CDC Have Set Back Its Ability to Detect the Potential Spread of Coronavirus — ProPublica
Would the media skew coronavirus coverage to damage Trump? Sure, say CPAC attendees-The Washington Post The so-called "Conservative Political Action Conference" is not a conservative organization. Referring to themselves as conservatives only sounds better than an accurate description.
Coronavirus rumors and chaos in Alabama point to big problems as U.S. seeks to contain virus (article highlights lack of preparedness)
Trump’s baffling coronavirus vaccine event-The Washington Post Doofus Don, who is actually ignorant about almost everything and an expert on everything in TrumpWorld, proved he was out-to-lunch again at a meeting with experts to discuss the potential for a coronavirus vaccine. Trump contradicted by task force health expert about coronavirus vaccine timing - CNN
The key to Demagogue Don's expertise on all subjects is to never actually learn anything which would require effort and only confuse the Duck and then to look and sound like he is an expert on all subjects when he is actually just spreading false information. Fortunately, the experts attending that coronavirus vaccine photo op corrected him in real time.
Trump campaign sues Washington Post for libel The only way to deter Trump's frivolous libel suits is to first win them, through a summary judgment, directed verdict, or jury verdict, and then sue both the party who filed the libel suit and the attorney who signed the complaint for malicious prosecution. Trump 2020 Sues 'Washington Post,' Echoing Suit Against 'New York Times' : NPR In most jurisdictions, a party who wins a malicious prosecution suit can recover their attorneys fees paid in defending the suit as an element of damages.
The Trump campaign is reportedly funding the lawsuit from donor contributions.
About one-half of republicans view the press as the enemy of the people. Half of Republicans Say Media Is Enemy of the People: Poll | Time Those folks have an authoritarian mindset.
Trump will use the libel lawsuits in an effort to suppress free speech and expressions of opinions that he does not like.
The Trump campaign also filed a libel suit against the NYT who published an opinion column that Donald did not like. Trump campaign sues New York Times in libel lawsuit on Russia coverage; Trump's Own Admission Makes His NYT Lawsuit 'Dead On Arrival'
Charles Harder is the lawyer representing the Trump campaign entity. He needs to be taught a lesson that filing a frivolous lawsuit can result in a 6 figure damage award against him.
Lawyers Rip Charles Harder for 'Absolutely Ridiculous' Letter | Law & Crime
Unfortunately, the large media organizations who are harassed for ulterior motives are satisfied with a lawsuit dismissal. Both libel suits are frivolous IMO and are filed for ulterior motives that are primary political.
++
Trump praises CDC amid coronavirus outbreak, calls Washington governor 'a snake' during visit to agency Disgusting Don did not provide any reason that justified calling Washington's governor a "snake", nor did he explain why he was compelled to so when meeting with CDC officials. There is an explanation however. Donald has no justification and he was compelled to insult Washington's governor because he is after all Disgusting Donald-Jerk & Asshole Extraordinaire.
Governments Point Fingers Over Coronavirus as Death Toll Mounts
Coronavirus test kit delay pushes hospitals to make their own
Pence: U.S. does not have coronavirus tests to meet anticipated demand Doofus Don claimed last Friday that tests were available to anyone who needs one as New York city begged for them. Trump calls coronavirus test "perfect" and compares it to Ukraine phone call - CBS News; NYC begs for more coronavirus tests, claiming 'slow' federal action impeding response | TheHill
VP Pence says 21 people on the Grand Princess cruise ship off California coast have tested positive for coronavirus
Earlier in the week, Don the Con falsely blamed Obama for a shortage in test kits. Trump falsely blames Obama admin for hurting rollout of coronavirus test kits: Fact Check - ABC News
Twelve asymptomatic coronavirus cases registered on Nile cruise ship My hunch is that the number of COVID-19 infections currently exceed 1 million worldwide with a majority of those in Asia. The death rate would be much higher than currently reported as well. The confirmed death count only includes those who have been confirmed as having the virus.
Deadly 1918 flu pandemic’s lessons ignored in Trump’s coronavirus response, historian says - The Washington Post; The flu can kill millions. In 1918, a pandemic was fueled by World War I. - The Washington Post
The Spanish Flu had mortality rates close to what is currently estimated for COVID-19, though it is far too early in the coronavirus outbreak to arrive at a mortality rate.
The Woodrow Wilson administration initially played down the Spanish Flu pandemic. How the Horrific 1918 Flu Spread Across America | History | Smithsonian Magazine
Trump chief of staff Mick Mulvaney suggests people ignore coronavirus news to calm markets Mulvaney was fired yesterday and replaced with the Trumpster congressman Mark Meadows. The former GOP leader in the House, John Boehner called Meadows an "idiot". Maybe that is being too kind. “Idiots,” “Anarchists,” and “Assholes”: John Boehner Unloads on Republicans in Post-Retirement Interview | Vanity Fair
Trump rallies his base to treat coronavirus as a ‘hoax’ - POLITICO
Inside Trump’s frantic attempts to minimize the coronavirus crisis; Key Missteps at the CDC Have Set Back Its Ability to Detect the Potential Spread of Coronavirus — ProPublica
Would the media skew coronavirus coverage to damage Trump? Sure, say CPAC attendees-The Washington Post The so-called "Conservative Political Action Conference" is not a conservative organization. Referring to themselves as conservatives only sounds better than an accurate description.
Coronavirus rumors and chaos in Alabama point to big problems as U.S. seeks to contain virus (article highlights lack of preparedness)
Trump’s baffling coronavirus vaccine event-The Washington Post Doofus Don, who is actually ignorant about almost everything and an expert on everything in TrumpWorld, proved he was out-to-lunch again at a meeting with experts to discuss the potential for a coronavirus vaccine. Trump contradicted by task force health expert about coronavirus vaccine timing - CNN
The key to Demagogue Don's expertise on all subjects is to never actually learn anything which would require effort and only confuse the Duck and then to look and sound like he is an expert on all subjects when he is actually just spreading false information. Fortunately, the experts attending that coronavirus vaccine photo op corrected him in real time.
The Trump Effect: An Experimental Investigation of the Emboldening Effect of Racially Inflammatory Elite Communication | British Journal of Political Science | Cambridge Core-( PDF download)
++++
Naomi Seibt, a climate skeptic dubbed the ‘anti-Greta,’ praises alt-right commentator Stefan Molyneux at CPAC - The Washington Post; Stefan Molyneux - Wikipedia CPAC would call Molyneux a conservative.
John Bolton blasts Trump's 'Obama-style' Taliban deal
EPA releases list of approved disinfectants to kill coronavirus, and why homemade sanitizer won’t work - ABC News
Coronavirus Health Official Warns People Not To Touch Their Mouths, Then Licks Her Hand
++++
Naomi Seibt, a climate skeptic dubbed the ‘anti-Greta,’ praises alt-right commentator Stefan Molyneux at CPAC - The Washington Post; Stefan Molyneux - Wikipedia CPAC would call Molyneux a conservative.
John Bolton blasts Trump's 'Obama-style' Taliban deal
EPA releases list of approved disinfectants to kill coronavirus, and why homemade sanitizer won’t work - ABC News
Coronavirus Health Official Warns People Not To Touch Their Mouths, Then Licks Her Hand
+++++
All trades are commission free except as otherwise noted.
All trades are commission free except as otherwise noted.
1. Small Ball Trades: Small Ball Trading Rules
A. Sold 11 AT & T at $38.21 (highest cost shares-used specific identification):
A. Sold 11 AT & T at $38.21 (highest cost shares-used specific identification):
T | AT&T Inc. Analyst Estimates | MarketWatch
SEC Filings
This trade was made prior to the volatility spike which started on 2/24/20. VIX Historical Comparatively speaking, AT&T 's stock has held up well during the ongoing correction.
Closing Price Last Friday: T $37.03 -$0.15 -0.40%
Profit Snapshot: +$73.88
Average Cost After Pare: $28.64
 |
| Snapshot Intraday 2/14/20 |
AT&T Inc.
Dividend Yield at $28.64 = 7.26%
Dividend Reinvestment: No. I may reconsider given the recent decline in the stock price and in interest rates.
Last Ex Dividend Date: 1/8/2020
I view this stock as a bond alternative.
Last Buy Discussions: Item # 4.A. Bought 5 T at $27.7 and 10 at $26.95-Used Commission Free Trades(1/16/19 Post); Item # 1.C. Bought 3 AT & T at $29.23-Used Commission Free Trade (11/18/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 4.B. Bought 10 AT& T at $30.17-Used Commission Free Trade (7/29/18 Post); Item # 1.B. Bought 5 AT & T at $31.14 (7/25/18 Post); Item # 2.A. Bought 10 T at $32.8; 2 at $32.29 and 3 at $31.97 (5/3/18 Post)
Last Sell Discussion: Item # 1.B. Sold 13 AT & T at $38.49 (10/30/19 Post) I discussed the third quarter report in that post.
Last Earnings Report (Q/E 12/31/19): SEC Filed Press Release
The decline in video subscribers continues to be a major negative:
 |
| 2019 4th Quarter |
B. Pared VTR-Sold 5 at $62.47 and 5 at $63.19; and Bought 5 at $51.6 and 5 at $49.3 :
Sells at $62.47 and $63.19:
Buys at $51.6 and 5 at $49.3:
Closing Price Last Friday: VTR $49.62 -$2.17 -4.19%
Quote: Ventas Inc. (VTR)
Website: Ventas-Healthcare Real Estate Investment
SEC Filings
2019 Annual Report
Portfolio Summary as of 12/31/19:
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 3.A. (12/14/19 Post)
Average Cost Before Pare: $56.81
Average Cost Per Share after Pares = $55.8
 |
| Snapshot Intraday 2/21/20 |
 |
| Closing Price 3/6/20 = $49.61 |
Dividend Yield at $53.66 = 5.91% (trading increased dividend yield from 5.58% at an average cost of $56.81)
Last Ex Dividend Date: 12/31/19
Dividend Information | Ventas
Last Earnings Report (Q/E 12/31/19): The Stock Jocks had IMO a far too ebullient reaction to this report: SEC Filed Press Release So I pared my already small position into that rally.
Closing Price 2/20/20: VTR $62.40 +$3.25 +5.49% (Volume= 5.267+M shares; Average Volume = 2.339+M shares)
Current Position: 25 shares
Purchase Restriction: Small Ball Rule
Lowest Price Paid in Current Chain: 5 shares at $49.3 (next purchase has to be below that price) Even though I was not impressed with recent earnings reports and future guidance, I may continue to add to my tiny position given the dividend yield and the lack of alternatives for income generation.
C. Added 10 SJR at $19.24; 10 at $18.95; 10 at $18.6; 10 at $18.2; 5 at $17.4:
Quotes:
USD: Shaw Communications Inc. Cl B NV (SJR)
CAD: Shaw Communications Inc. Cl B NV (Canada: Toronto)
Closing Price Last Friday: SJR US$17.87 -$0.09 -0.50%
Investor Relations
Shaw Communications Inc (USA) Profile | Reuters
Shaw Communications Inc Key Developments | Reuters
Last Buy Discussion: Item # 2.C. (2/8/20 Post) I discussed the last earnings report in that post and have nothing to add until I review the next report.
Only Sell Discussion: Item # 3.B. Sold 50 SJR at $20.85-Highest Cost Lot (11/27/19 Post)
Dividend: Monthly at C$.098542 per share (C$1.18 annually)
The Canadian dollar amount will be converted into USDs for SJR owners. If a U.S. citizen owns shares in a taxable account, Canada will withhold a 15% tax. Claiming Foreign Taxes: Credit or Deduction? | Charles Schwab
If I assumed that the CAD/USD conversion rate remained steady at .75, which assumption is made solely for illustrative purposes, the U.S.D. rate on C$1.18 would then be US$.885 annually per share. At a total cost per share of US$19.21, the dividend yield before taxes would be 4.6%.
XE: Convert CAD/USD. Canada Dollar to United States Dollar
At last Friday's closing price of $17.87, the dividend yield before taxes, using the preceding assumptions, would be about 6.6%.
Dividend Reinvestment: Yes
Average Cost Per Share Before Adds = US$19.68
Average Cost Per Share After Adds: US$19.21
Next Ex Dividend Date: 3/12/20
Current Position: 105+ shares
Maximum Position: 150 USD priced Shares + shares purchased with dividends (raised to 150 shares from 100 based on valuation and yield due to price decline) I may also buy 100 shares using my CAD stash on the Toronto exchange when and if the price declines below C$22. Closing Price 3/6/20: SJR-B.TO C$23.95 -C$0.12 -0.50%
Purchase Restriction: Small Ball Rule
D. Added 10 IVZ at $16.35; 5 at $15.88; 5 at $14.8;5 at $13.87 5 at $13.59 and 5 at $13.18 :
To reduce downside risks, I switched from 10 share adds to 5 shares.
Quote: INVESCO Ltd.
IVZ SEC Filings
Last Substantive Discussion: Item # 2.B. (2/28/20) I discussed the last earnings report in that post (Invesco Reports Results for the Three Months and Year Ended December 31, 2019)
Current Position This Account: 65 shares
Average Cost Per Share: $16.1
Highest Cost Lot: 10 shares at $17.81 Will be sold first using FIFO accounting
Maximum Position This Account: 100 shares + shares purchased with dividends.
Dividend: Quarterly at $.31 per share ($1.24 annually)
Invesco-Dividend information
Dividend Yield at $16.1 = 7.7%
Last Ex Dividend Date: 2/12/20
Dividend Reinvestment: Yes.
E. Added 10 FNB at $11.08; 5 at $10.49; 10 at $10 and 5 at $9.69 :
Quote: F.N.B. Corp.
SEC Filings
Closing Price 3/6/20: FNB $9.62 -$0.30 -3.02%
FNB | F.N.B. Corp. Analyst Estimates | MarketWatch
2020 E.P.S.. Consensus Estimate: $1.12
P/E at $9.62 and E.P.S. of $1.12 = 8.59
Investment Category: Regional Bank Basket Strategy
Regional bank stocks are out-of-favor due largely to net interest margin compression caused by the flat yield curve.
FNB is a disfavored stock in a disfavored sector. The dividend yield is over 4.99% based on last Friday's closing price and the P/E is 8.59 using the current consensus E.P.S. estimate for 2020.
My last transactions were to sell shares in two accounts. Item # 2.C Sold 31 FNB at $12.17 and Item # 2.D Sold 100 FNB at $12.17 (11/2/19 Post) I discussed the 2019 third quarter report in that post.
Last Buy Discussion: Item # 1.A Bought 30 FNB at $10.49-Used Commission Free Trade (1/9/19 Post)
Dividend History: Pathetic
FNB cut its quarterly dividend by 50% in 2009 and has not raised it since that slash. FNB, Stock Quote, Dividend Data, Dates and History - FNB Corp
Dividend: Quarterly at $.12 per share
Last Ex Dividend Date: 3/4/2020
Dividend Yield at $11.84 average cost = 4.05%
Current Position: 140+ shares
I do not have a maximum limit on my FNB position yet. I am just trying to lower my average cost per share in small increments.
FNB 5 Year Chart: Roller coaster going nowhere
A long standing problem is that the Board has allowed management to engage in empire building that has not produced E.P.S. growth. Net income has increased but earnings per share has stagnated over most of the past 10 or so years. There may be reason for hope with an upturn starting in 2018.
Empire building makes the Board and management feel more important and with a larger compensation pie, but frequently leaves the shareholders either no better off or worst off.
Financial Metrics 2014-2018:
Financial Metrics 2009-2013:
Sourced: 10-K at page 39
E.P.S. was reported at $.79 in 2012 and at $.63 per share in 2017.
Last Earnings Report (Q/E 12/31/19)
I have repeatedly discussed this regional bank for several years now:
E.G. Item # 5.A Sold 20 FNB at $11.42 (9/28/19 Post); Item # 3.A. Sold 30 FNB at $11.95-Used Fidelity Commission Free Trade (5/18/19 Post);Item # 1.A. Sold 50 FNB at $13.65-Used Commission Free Trade (9/5/18 Post); Item # 1.D. Sold 50 FNB at $13.9-Used Commission Free Trade (6/18/18 Post); Item 2.A. Sold 60 FNB at $14.59 (3/5/2018); Item # 4.A. Sold 100 FNB at $13.94-Satellite Taxable Account (10/23/17 Post)
FNB Realized Gains To Date: $1,341.65
Return on Average Equity for all U.S. Banks-St. Louis Fed
Return on Average Assets for all U.S. Banks-St. Louis Fed
F. Added 1 SLB at $30.72, 1 at $30.17, 1 at $29.65; 1 at $29.3; 1 at $27.53; 1 at $26.62 and 1 at $25.84; 1 at 24.19 and 1 at $23.55:
1 Share Adds Since Last Discussion:
This is an example of multiple 1 share purchases using the small ball purchase restriction. Energy stock purchases are now limited to 1 share adds given an acceleration in their bear market trend. Each purchase was made at a lower price than the last purchase. When more than 1 purchase is made during the day, the earliest one is listed first (e.g. the buy at $23.55 last Friday was made after the buy that day at $24.19) If the price falls below $20 I will increase the lot purchases to 2 shares until I hit my maximum limit of 50 shares + shares purchased with dividends.
This blue chip stock in the oil service sector is not going to work anytime soon.
SLB Closing Information on 3/6/20:
SLB Analyst Estimates
SEC Filings
Website: Global Oilfield Services & Equipment | Schlumberger
Average Cost Per Share Before Adds: $32.72
Average cost per share after adds = $ 31.24
Last Sell: Item # 4.A. Sold 5 SLB at $36.59 (11/23/19 Post)(highest cost lot)
The first 5 one share lot purchases replaced this 5 share lot at an average cost per share of $29.47.
Last Substantive Buy Discussion: Item # 1.A. Initiated Small Purchase Program for SLB: Bought 15 SLB at $33.95; 5 at $32 and 5 at $31.39 (9/7/19 Post)
Last Buy Discussion: Item # 2.B. Added 2 SLB at $31.02 (10/26/19 Post)
Dividend: Quarterly at $.5
Last Ex Dividend: 2/11/20
Dividend Yield at $31.24 Average Cost = 6.26 %
Dividend Reinvestment: Yes at less than $40 per share
Last Earnings Report (Q/E 12/31/20):
2019 4th quarter:
GAAP E.P.S. = $.24
Non-GAAP E.P.S. = $.39
Cash Flow From Operations = $2.3B
Free Cash Flow = $1.5B
Revenues: $8.2B (down 4% from 3rd quarter, but up from 2018 4th quarter)
Schlumberger Announces Full-Year and Fourth-Quarter 2019 Results
Maximum Position: 50 shares
Current Position: 31+ shares
Purchase Restriction: Small Ball Rule
Small Ball Rules
Highest Cost Lot in Current Chain: 10 Shares at $33.95 (will be soon when and if I can do so profitably)
Lowest Cost Lot in Current Chain: 1 Share at $23.55 (next purchase will be a 1 share lot at below $23).
10 Year Chart-Major Bear Market of Unknowable Depth and Duration:
G. Added 10 PPL at $32.66; 10 at $30.16 and 30 at $31.60:
History:
Quote: PPL Corp.
The three purchases add up to 50 shares and simply replace the 50 share lot recently sold a at $36.2 without missing a quarterly dividend date. Item # 1.D. (1/2/20 Post)(profit snapshot = $114.96 + one quarterly dividend payment)
PPL Corp. Analyst Estimates
PPL Investor Relations
I view this kind of trade to be a victory for the following reasons: (1) the purchases were bought at a lower price than the 50 share lot sold at $36.2 that was bought at $$33.9 (2) a profit of $114.96 was realized on the sold lot plus one quarterly dividend payment; (3) I have increased my dividend yield compared to holding the original 100 share purchase at $33.9; and (4) I bought 50 shares back without missing a quarterly dividend payment.
Last Buy Discussion: Item # 1 Bought 100 PPL at $33.9 (12/7/19 Post)(sold 50 at $36.2)
Dividend: Quarterly at $.415 per share ($1.66 annually)
Next Ex Dividend: Next Monday, 3/9/20
PPL Corporation Common Stock (PPL) Dividend History | Nasdaq
Dividend Growth: Slow
Average Cost Per Share = $32.71
Dividend Yield at Average Cost = 5.07%
Dividend Reinvestment: Yes, changed to reinvestment for the next dividend payment
Last Earnings Report (Q/E 12/31/19): PPL Corporation Reports 2019 Earnings
2019 Non-GAAP Income at $1.81B or $2.45 per share
"PPL plans to invest about $14 billion across its U.S. and U.K. businesses over the next five years as it continues to make the grid smarter and more resilient and as it reshapes electricity networks to reliably and efficiently enable more distributed energy resources, including solar power and energy storage."
Company Guidance:
PPL 5 Year Chart View stock as a bond substitute. Any realized gain on the shares is viewed as a victory.
Brokerage Reports (reports available to Charles Schwab customers):
Argus (1/10/20): Buy, reaffirmed $39 PT
Morningstar (2/19/20): 2 stars with a FV of $32
S & P (2/14/20): 5 stars with a 12 month PT of $40
H. Restarted BTZ-Bought 10 at $13.57:
Quote: BlackRock Credit Allocation Income Trust Overview-A leveraged bond CEF
Closing Price Last Friday: BTZ $14.34 -$0.01 -0.07%
SEC Filings
Last SEC Filed Shareholder Report (annual report for the period ending 10/31/19)
Sponsor's Website: BlackRock Credit Allocation Income Trust | BTZ (management fee high at .88% with gross expense ratio at 1.82% with interest costs)
Leveraged: Yes, at 27.1% as of 1/31/20 and at 28.62% as of 2/28/20
Leverage is limited to 33.333% under the Investment Company Act of 1940, as amended. During the Near Depression period and its immediate aftermath, a number of leveraged CEFs had to sell assets at the worst possible time in order to reduce leverage.
Scroll to General Risk Discussion for Leveraged Bond CEFs (Appendix section) at Update For Closed End Fund Basket Strategy As Of 8/14/15 - South Gent | Seeking Alpha
Number of Holdings as of 1/31/20: 910
Credit Rating Weightings (as of 12/31/19):
Data as of 2/28/20:
Closing Net Asset Value Per Share: $15.17
Closing Market Price: $13.7
Discount at $13.7 = -9.69%
Sourced: BTZ BlackRock Credit Allocation Income Trust-CEF Connect
Prior Sell Discussions: Sold 103+ at $13.4+ Roth IRA (5/8/17 Post)(contains snapshots of trading profits starting in 2010 through May 2017 = +$870.19); Item #1.B. (2/23/2019 Post); Item # 3.A. (4/4/19 Post)
Last Buy Discussions: Item # 5.A. Added 20 BTZ at $11.35 and 30 at $11.16- Used Commission Free Trades (1/16/19 Post) Those shares have been sold.
Dividends: Monthly, currently at $.0839 per share but variable over time (click distribution tab at CEF Connect link)
I. Restarted THQ-Bought 10 at $16.7; 5 at $16.58:
Quote: Tekla Healthcare Opportunities Fund (THQ)
Closing Price Last Friday: THQ $17.97 -$0.12 -0.66%
Healthcare stocks did receive a boost last week after Joe Biden came back from the dead, eliminated Elizabeth Warren from the presidential race and substantially reduced Bernie's chance to win the nomination.
Sponsor's Website: Fund Basics | Tekla Capital
THQ-CEF Connect Page
SEC Filings
Last SEC Filed Shareholder Report: Annual Report for the Period Ending 9/30/19
Holdings as of 12/31/19: SEC Filing
Leveraged: Yes (generally close to 22%)
Borrowings are based on a spread to the Libor rate as summarized at page 29 of the annual report, linked above) Leverage cost should consequently be coming down.
Data as of 2/28/20:
Closing Net Asset Value Per Share = $19.04
Closing Market Price: $16.64
Discount: -12.61%
Sourced: TEKLA HEALTHCARE OPPORTUNITIES FUND-CEF Connect
Last Sell Discussions: Item # 1.B. Sold Remaining THQ-61+ Shares at $17.5 (9/1/19 Post); Item # 2.A. Sold 53 THQ at $17.98(7/31/19 Post); Item # 5 Sold 100 THQ at $17.59-Used Commission Free Trade(7/7/19 Post)(contains 2017 profit snapshots =$555.56); Item # 2.C. Sold 232+ THQ at 17.59 (7/3/17 Post); Item # 2.D. Sold 118+ THQ at $18.7 in a Roth IRA Account (7/3/17 Post)
Last Buy Discussions: Item # 1 Bought 50 THQ at $16.5 (6/12/19 Post)
Purchase Restriction: The purchase price must be at a greater than 5% discount to net asset value per share and reduce my average cost per share.
Dividends: Monthly at $.1125 per share (ROC support)
Distributions | Tekla Capital Management LLC
Dividend Yield at $16.66 average cost = 8.1%
Last Ex Dividend Date: 2/19/20
Annual expenses, including interest costs on borrowed funds, were at 2.42% for the year ending on 9/30/19 (see page 23 of annual report). That is going to eat up most of the dividend and interest income since the fund owns a lot of non-income generating securities. The only way to support the dividend is through short and long term capital gains.
J. Added 5 BHB at $20.5 and 5 at $19.6:
Quote: Bar Harbor Bankshares
Closing Price Last Friday: BHB $20.36 +$0.40 +2.00%
Investment Category: Regional Bank Basket Strategy
I have nothing to add to my last substantive discussion. Item # 1.A. (2/5/20 Post) I discussed the last earnings report in that post.
Current Position: 80 Shares
Maximum Position: 100 shares + shares purchase with dividends
Purchase Restriction: Small Ball Rules (next purchase has to be lower than $20.5)
Highest Cost Lot in Current Chain (will be sold first when and if the sell is profitable): 10 shares bought at $24 on 1/16/20
Average Cost Per Share = $22.7
Dividend: Quarterly at $.22 per share ($.88 annually)
Dividend Yield at $22.7 = 3.88%
Last Ex Dividend Date: 2/14/20
BHB Trading Profits to Date: $4,187.54 (not likely to be increased anytime soon)
K. Restarted ING-Bought 50 at $9.14; 10 at $8.7 and 10 at $8.55:
Quote: ING Groep N.V. ADR Overview
Closing Price Last Friday: ING $8.46 -$0.29 -3.31%
I bought back the 50 shares recently sold at $11.8 and then bought 20 more at lower prices. I discussed that 50 share sell in my last post and have nothing to add here. Item # 1.B. Sold 50 ING at $11.8 (2/29/20 Post)-Item # 5 Added 50 ING at $9.96 (10/11/19 Post)
Next Semi-Annual Ex Dividend Date: 4/5/20 at US$.45
The annual dividend rate has been going up in Euros but will vary for the ADR owners due to the EUR/USD conversion rates.
Dividend policy & payments | ING
The next semi-annual payment which will go ex dividend on 4/5 and the last one for US$.24 would create a dividend yield of 7.68% at a $8.99 average cost per share.
Maximum Position: 100 Shares
Current Position: 70 Shares
Average Cost Per Share: $8.99
Prior Round Trip: Item # 2.B. Sold 50 ING at $11.75 (11/20/19 Post)-Item # 2 Bought 50 ING at $10.49 (10/5/19 Post)
2. Canadian Reset Equity Preferred Stocks:
A. Sold 50 AXPRI at C$25.13 (C$1 Commission):
Quote: AX-UN.TO
Profit Snapshot: +C$104.5
Item # 3.A. Bought 50 AXPRI at C$23 (12/16/18 Post)
Website: Artis REIT
Par Value: C$25
Category: Fixed-to-Floating Rate Equity Preferred Stock
Issuer: Artis Real Estate Investment Trust (Canada: Toronto)
Fixed Coupon: 6% through 4/30/23
Floating Rate: Greater of 6% or a 3.93% Spread to the Five Year Canadian Bond
Dividends: Cumulative
Dividend Yield at C$25.13 (sell price) = 5.97%
Floating Rate Reset: Every 5 years unless redeemed by issuer
Issuer Redemption Option: On 4/30/23 and on 4/30 of every 5th year thereafter
Artis REIT Confirms That It is in Discussions With Potential Suitors
I am somewhat concerned about what will happen with the preferred stocks when and if Artis is bought out by another company.
The worse case scenarios would be a going private transaction that results in the delisting of the preferred shares.
If Artis is acquired by its managers, who load the REIT up with debt to pay off the common unit owners, that is even worse.
It is unclear now what will happen, if anything.
B. Bought 100 PPLPRC at C$15.88 (C$1 commission):
Quote: PPL-PC.TO
Issuer: Pembina Pipeline
Last Earnings Report: Pembina Pipeline Corporation Reports Record Annual Results in 2019 I recently flipped the common shares. Item # 2. Eliminated PBA-Sold 100 at $38.69 (1/18/20 Post)-Item # 1 Bought 100 PBA at $34.34(12/11/19 Post)
This brings me up to 300 PPLPRC shares. The annual dividend payments on 300 shares will be C$335.85 to but excluding 3/1/2024.
Coupon: 4.478% paid on a C$25 par value to but excluding 3/1/2024 and then will reset for 5 years, if not redeemed at the issuer's option at that time, at a 2.6% spread to the five year Canadian government bond.
Current Yield at C$15.88 = 7.05%
I pick up a higher current with PPLPRC and have more upside potential on the shares given the discount to par value compared to AXPRI.
Last Ex Dividend Date: 1/31/2020, paid quarterly; cumulative
Last Discussed: Item # 1. Bought 50 PPLPRC at C$15.8 (7/3/19 Post)
Other Buy Discussions (shares still owned): Item # 1.B. Bought 50 PPLPRC at C$ 17.23 (5/25/19 Post); Item # 1.A. Bought 100 PPL.PR.C. at C$17.7 (3/23/19 Post)
One Round-Trip: Item # 2.B. Sold 100 PPLPRC:CA (6/1/17 Post)(profit snapshot = +C$496)
The prices for 5 year Canadian reset equity preferred stocks will generally decline with interest rates which has happened with the most recent downdraft.
However, while that may make sense for those that are about to reset for 5 years, or the preferred stocks who reset their coupons every 3 months at spreads to the 3 month Canadian government bill, the logic is not applicable for one that has just reset.
No one really knows what the 5 year Canadian bond yield will be 2024, when this Pembina preferred will reset its coupon, and the discount to par value juices the current yield to over 7% which looks good in today's rate environment.
3. Sold 1 Federal Realty 2.75% SU Maturing on 6/1/2023-In a Roth IRA Account ($1 Vanguard Commission, recently lowered from $2 per bond):
Profit Snapshot: $47.55
Item # 1.E. Bought 1 FRT 2.75% SU at a Total Cost of 96.977(3/22/17 Post). The YTM was then 3.292%.
The annual interest payment for this 1 bond was $27.5
Issuer: Federal Realty Investment Trust
Finra Page: Bond Detail (prospectus linked)
Sold at 103.201
YTM at 103.201 = 1.761%
Yield to Worst = 1.478%
Yield to worst assumes the issuer will redeem prior to the maturity date. For this bond, a yield to-worst that is slightly lower than the yield-to-maturity would indicate to me, without looking, that the issuer can redeem shortly before maturity without making a make whole payment. FINRA computed the YTM as 1.649% at 103.201.
I looked at the prospectus again after making this trade and FRT can redeem at par value on or after 90 days prior to the maturity date. The assumption being made now is that redemption at par value will occur 90 days prior to 6/1/2023 maturity date. For my purposes, I assumed that this bond will be redeemed in 2 years at par value, so I focused on the yield-to-worst number.
E.G. Item # 5.A Sold 20 FNB at $11.42 (9/28/19 Post); Item # 3.A. Sold 30 FNB at $11.95-Used Fidelity Commission Free Trade (5/18/19 Post);Item # 1.A. Sold 50 FNB at $13.65-Used Commission Free Trade (9/5/18 Post); Item # 1.D. Sold 50 FNB at $13.9-Used Commission Free Trade (6/18/18 Post); Item 2.A. Sold 60 FNB at $14.59 (3/5/2018); Item # 4.A. Sold 100 FNB at $13.94-Satellite Taxable Account (10/23/17 Post)
FNB Realized Gains To Date: $1,341.65
Return on Average Equity for all U.S. Banks-St. Louis Fed
Return on Average Assets for all U.S. Banks-St. Louis Fed
F. Added 1 SLB at $30.72, 1 at $30.17, 1 at $29.65; 1 at $29.3; 1 at $27.53; 1 at $26.62 and 1 at $25.84; 1 at 24.19 and 1 at $23.55:
1 Share Adds Since Last Discussion:
This is an example of multiple 1 share purchases using the small ball purchase restriction. Energy stock purchases are now limited to 1 share adds given an acceleration in their bear market trend. Each purchase was made at a lower price than the last purchase. When more than 1 purchase is made during the day, the earliest one is listed first (e.g. the buy at $23.55 last Friday was made after the buy that day at $24.19) If the price falls below $20 I will increase the lot purchases to 2 shares until I hit my maximum limit of 50 shares + shares purchased with dividends.
This blue chip stock in the oil service sector is not going to work anytime soon.
SLB Closing Information on 3/6/20:
 |
| Closing Price at $23.85, down $1.98 or -7.97%; 52 Week at - 42.33% |
SLB Analyst Estimates
SEC Filings
Website: Global Oilfield Services & Equipment | Schlumberger
Average Cost Per Share Before Adds: $32.72
Average cost per share after adds = $ 31.24
Last Sell: Item # 4.A. Sold 5 SLB at $36.59 (11/23/19 Post)(highest cost lot)
The first 5 one share lot purchases replaced this 5 share lot at an average cost per share of $29.47.
Last Substantive Buy Discussion: Item # 1.A. Initiated Small Purchase Program for SLB: Bought 15 SLB at $33.95; 5 at $32 and 5 at $31.39 (9/7/19 Post)
Last Buy Discussion: Item # 2.B. Added 2 SLB at $31.02 (10/26/19 Post)
Dividend: Quarterly at $.5
Last Ex Dividend: 2/11/20
Dividend Yield at $31.24 Average Cost = 6.26 %
Dividend Reinvestment: Yes at less than $40 per share
Last Earnings Report (Q/E 12/31/20):
2019 4th quarter:
GAAP E.P.S. = $.24
Non-GAAP E.P.S. = $.39
Cash Flow From Operations = $2.3B
Free Cash Flow = $1.5B
Revenues: $8.2B (down 4% from 3rd quarter, but up from 2018 4th quarter)
Schlumberger Announces Full-Year and Fourth-Quarter 2019 Results
Maximum Position: 50 shares
Current Position: 31+ shares
Purchase Restriction: Small Ball Rule
Small Ball Rules
Highest Cost Lot in Current Chain: 10 Shares at $33.95 (will be soon when and if I can do so profitably)
Lowest Cost Lot in Current Chain: 1 Share at $23.55 (next purchase will be a 1 share lot at below $23).
10 Year Chart-Major Bear Market of Unknowable Depth and Duration:
G. Added 10 PPL at $32.66; 10 at $30.16 and 30 at $31.60:
History:
The three purchases add up to 50 shares and simply replace the 50 share lot recently sold a at $36.2 without missing a quarterly dividend date. Item # 1.D. (1/2/20 Post)(profit snapshot = $114.96 + one quarterly dividend payment)
PPL Corp. Analyst Estimates
PPL Investor Relations
I view this kind of trade to be a victory for the following reasons: (1) the purchases were bought at a lower price than the 50 share lot sold at $36.2 that was bought at $$33.9 (2) a profit of $114.96 was realized on the sold lot plus one quarterly dividend payment; (3) I have increased my dividend yield compared to holding the original 100 share purchase at $33.9; and (4) I bought 50 shares back without missing a quarterly dividend payment.
Last Buy Discussion: Item # 1 Bought 100 PPL at $33.9 (12/7/19 Post)(sold 50 at $36.2)
Dividend: Quarterly at $.415 per share ($1.66 annually)
Next Ex Dividend: Next Monday, 3/9/20
PPL Corporation Common Stock (PPL) Dividend History | Nasdaq
Dividend Growth: Slow
Average Cost Per Share = $32.71
Dividend Yield at Average Cost = 5.07%
Dividend Reinvestment: Yes, changed to reinvestment for the next dividend payment
Last Earnings Report (Q/E 12/31/19): PPL Corporation Reports 2019 Earnings
"PPL plans to invest about $14 billion across its U.S. and U.K. businesses over the next five years as it continues to make the grid smarter and more resilient and as it reshapes electricity networks to reliably and efficiently enable more distributed energy resources, including solar power and energy storage."
Company Guidance:
Brokerage Reports (reports available to Charles Schwab customers):
Argus (1/10/20): Buy, reaffirmed $39 PT
Morningstar (2/19/20): 2 stars with a FV of $32
S & P (2/14/20): 5 stars with a 12 month PT of $40
H. Restarted BTZ-Bought 10 at $13.57:
Closing Price Last Friday: BTZ $14.34 -$0.01 -0.07%
SEC Filings
Last SEC Filed Shareholder Report (annual report for the period ending 10/31/19)
Sponsor's Website: BlackRock Credit Allocation Income Trust | BTZ (management fee high at .88% with gross expense ratio at 1.82% with interest costs)
Leveraged: Yes, at 27.1% as of 1/31/20 and at 28.62% as of 2/28/20
Leverage is limited to 33.333% under the Investment Company Act of 1940, as amended. During the Near Depression period and its immediate aftermath, a number of leveraged CEFs had to sell assets at the worst possible time in order to reduce leverage.
Scroll to General Risk Discussion for Leveraged Bond CEFs (Appendix section) at Update For Closed End Fund Basket Strategy As Of 8/14/15 - South Gent | Seeking Alpha
Number of Holdings as of 1/31/20: 910
Credit Rating Weightings (as of 12/31/19):
Data as of 2/28/20:
Closing Net Asset Value Per Share: $15.17
Closing Market Price: $13.7
Discount at $13.7 = -9.69%
Sourced: BTZ BlackRock Credit Allocation Income Trust-CEF Connect
Prior Sell Discussions: Sold 103+ at $13.4+ Roth IRA (5/8/17 Post)(contains snapshots of trading profits starting in 2010 through May 2017 = +$870.19); Item #1.B. (2/23/2019 Post); Item # 3.A. (4/4/19 Post)
Last Buy Discussions: Item # 5.A. Added 20 BTZ at $11.35 and 30 at $11.16- Used Commission Free Trades (1/16/19 Post) Those shares have been sold.
Dividends: Monthly, currently at $.0839 per share but variable over time (click distribution tab at CEF Connect link)
I. Restarted THQ-Bought 10 at $16.7; 5 at $16.58:
Quote: Tekla Healthcare Opportunities Fund (THQ)
Closing Price Last Friday: THQ $17.97 -$0.12 -0.66%
Healthcare stocks did receive a boost last week after Joe Biden came back from the dead, eliminated Elizabeth Warren from the presidential race and substantially reduced Bernie's chance to win the nomination.
Sponsor's Website: Fund Basics | Tekla Capital
THQ-CEF Connect Page
SEC Filings
Last SEC Filed Shareholder Report: Annual Report for the Period Ending 9/30/19
Holdings as of 12/31/19: SEC Filing
Leveraged: Yes (generally close to 22%)
Borrowings are based on a spread to the Libor rate as summarized at page 29 of the annual report, linked above) Leverage cost should consequently be coming down.
Data as of 2/28/20:
Closing Net Asset Value Per Share = $19.04
Closing Market Price: $16.64
Discount: -12.61%
Sourced: TEKLA HEALTHCARE OPPORTUNITIES FUND-CEF Connect
Last Sell Discussions: Item # 1.B. Sold Remaining THQ-61+ Shares at $17.5 (9/1/19 Post); Item # 2.A. Sold 53 THQ at $17.98(7/31/19 Post); Item # 5 Sold 100 THQ at $17.59-Used Commission Free Trade(7/7/19 Post)(contains 2017 profit snapshots =$555.56); Item # 2.C. Sold 232+ THQ at 17.59 (7/3/17 Post); Item # 2.D. Sold 118+ THQ at $18.7 in a Roth IRA Account (7/3/17 Post)
Last Buy Discussions: Item # 1 Bought 50 THQ at $16.5 (6/12/19 Post)
Purchase Restriction: The purchase price must be at a greater than 5% discount to net asset value per share and reduce my average cost per share.
Dividends: Monthly at $.1125 per share (ROC support)
Distributions | Tekla Capital Management LLC
Dividend Yield at $16.66 average cost = 8.1%
Last Ex Dividend Date: 2/19/20
Annual expenses, including interest costs on borrowed funds, were at 2.42% for the year ending on 9/30/19 (see page 23 of annual report). That is going to eat up most of the dividend and interest income since the fund owns a lot of non-income generating securities. The only way to support the dividend is through short and long term capital gains.
J. Added 5 BHB at $20.5 and 5 at $19.6:
Closing Price Last Friday: BHB $20.36 +$0.40 +2.00%
Investment Category: Regional Bank Basket Strategy
I have nothing to add to my last substantive discussion. Item # 1.A. (2/5/20 Post) I discussed the last earnings report in that post.
Current Position: 80 Shares
Maximum Position: 100 shares + shares purchase with dividends
Purchase Restriction: Small Ball Rules (next purchase has to be lower than $20.5)
Highest Cost Lot in Current Chain (will be sold first when and if the sell is profitable): 10 shares bought at $24 on 1/16/20
Average Cost Per Share = $22.7
Dividend: Quarterly at $.22 per share ($.88 annually)
Dividend Yield at $22.7 = 3.88%
Last Ex Dividend Date: 2/14/20
BHB Trading Profits to Date: $4,187.54 (not likely to be increased anytime soon)
K. Restarted ING-Bought 50 at $9.14; 10 at $8.7 and 10 at $8.55:
Quote: ING Groep N.V. ADR Overview
Closing Price Last Friday: ING $8.46 -$0.29 -3.31%
I bought back the 50 shares recently sold at $11.8 and then bought 20 more at lower prices. I discussed that 50 share sell in my last post and have nothing to add here. Item # 1.B. Sold 50 ING at $11.8 (2/29/20 Post)-Item # 5 Added 50 ING at $9.96 (10/11/19 Post)
Next Semi-Annual Ex Dividend Date: 4/5/20 at US$.45
The annual dividend rate has been going up in Euros but will vary for the ADR owners due to the EUR/USD conversion rates.
Dividend policy & payments | ING
The next semi-annual payment which will go ex dividend on 4/5 and the last one for US$.24 would create a dividend yield of 7.68% at a $8.99 average cost per share.
Maximum Position: 100 Shares
Current Position: 70 Shares
Average Cost Per Share: $8.99
Prior Round Trip: Item # 2.B. Sold 50 ING at $11.75 (11/20/19 Post)-Item # 2 Bought 50 ING at $10.49 (10/5/19 Post)
2. Canadian Reset Equity Preferred Stocks:
A. Sold 50 AXPRI at C$25.13 (C$1 Commission):
Quote: AX-UN.TO
Profit Snapshot: +C$104.5
Website: Artis REIT
Par Value: C$25
Category: Fixed-to-Floating Rate Equity Preferred Stock
Issuer: Artis Real Estate Investment Trust (Canada: Toronto)
Fixed Coupon: 6% through 4/30/23
Floating Rate: Greater of 6% or a 3.93% Spread to the Five Year Canadian Bond
Dividends: Cumulative
Dividend Yield at C$25.13 (sell price) = 5.97%
Floating Rate Reset: Every 5 years unless redeemed by issuer
Issuer Redemption Option: On 4/30/23 and on 4/30 of every 5th year thereafter
Artis REIT Confirms That It is in Discussions With Potential Suitors
I am somewhat concerned about what will happen with the preferred stocks when and if Artis is bought out by another company.
The worse case scenarios would be a going private transaction that results in the delisting of the preferred shares.
If Artis is acquired by its managers, who load the REIT up with debt to pay off the common unit owners, that is even worse.
It is unclear now what will happen, if anything.
B. Bought 100 PPLPRC at C$15.88 (C$1 commission):
Issuer: Pembina Pipeline
Last Earnings Report: Pembina Pipeline Corporation Reports Record Annual Results in 2019 I recently flipped the common shares. Item # 2. Eliminated PBA-Sold 100 at $38.69 (1/18/20 Post)-Item # 1 Bought 100 PBA at $34.34(12/11/19 Post)
This brings me up to 300 PPLPRC shares. The annual dividend payments on 300 shares will be C$335.85 to but excluding 3/1/2024.
Coupon: 4.478% paid on a C$25 par value to but excluding 3/1/2024 and then will reset for 5 years, if not redeemed at the issuer's option at that time, at a 2.6% spread to the five year Canadian government bond.
Current Yield at C$15.88 = 7.05%
I pick up a higher current with PPLPRC and have more upside potential on the shares given the discount to par value compared to AXPRI.
Last Ex Dividend Date: 1/31/2020, paid quarterly; cumulative
Last Discussed: Item # 1. Bought 50 PPLPRC at C$15.8 (7/3/19 Post)
Other Buy Discussions (shares still owned): Item # 1.B. Bought 50 PPLPRC at C$ 17.23 (5/25/19 Post); Item # 1.A. Bought 100 PPL.PR.C. at C$17.7 (3/23/19 Post)
One Round-Trip: Item # 2.B. Sold 100 PPLPRC:CA (6/1/17 Post)(profit snapshot = +C$496)
The prices for 5 year Canadian reset equity preferred stocks will generally decline with interest rates which has happened with the most recent downdraft.
However, while that may make sense for those that are about to reset for 5 years, or the preferred stocks who reset their coupons every 3 months at spreads to the 3 month Canadian government bill, the logic is not applicable for one that has just reset.
No one really knows what the 5 year Canadian bond yield will be 2024, when this Pembina preferred will reset its coupon, and the discount to par value juices the current yield to over 7% which looks good in today's rate environment.
3. Sold 1 Federal Realty 2.75% SU Maturing on 6/1/2023-In a Roth IRA Account ($1 Vanguard Commission, recently lowered from $2 per bond):
Item # 1.E. Bought 1 FRT 2.75% SU at a Total Cost of 96.977(3/22/17 Post). The YTM was then 3.292%.
The annual interest payment for this 1 bond was $27.5
Issuer: Federal Realty Investment Trust
Finra Page: Bond Detail (prospectus linked)
Sold at 103.201
YTM at 103.201 = 1.761%
Yield to Worst = 1.478%
Yield to worst assumes the issuer will redeem prior to the maturity date. For this bond, a yield to-worst that is slightly lower than the yield-to-maturity would indicate to me, without looking, that the issuer can redeem shortly before maturity without making a make whole payment. FINRA computed the YTM as 1.649% at 103.201.
I looked at the prospectus again after making this trade and FRT can redeem at par value on or after 90 days prior to the maturity date. The assumption being made now is that redemption at par value will occur 90 days prior to 6/1/2023 maturity date. For my purposes, I assumed that this bond will be redeemed in 2 years at par value, so I focused on the yield-to-worst number.
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.
A $9 drop in WTI crude in early trading is contributing to a 123+ drop in the S & P 500 futures contract.
ReplyDelete2,840.25 -123.85 -4.18%
Last Updated: Mar 8, 2020 at 5:58 p.m. CDT
https://www.marketwatch.com/investing/future/sp%20500%20futures
The U.S. ten year treasury has started to trade at a .475% yield:
ReplyDeleteU.S. 10 Year Treasury Note 0.486% -0.281
Last Updated: Mar 8, 2020 at 10:02 p.m. EDT
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx&mod=home-page
The thirty year treasury has fallen below 1%.
U.S. 30 Year Treasury Bond
0.964% -0.324
Last Updated: Mar 8, 2020 at 10:03 p.m. EDT
https://www.marketwatch.com/investing/bond/tmubmusd30y?countrycode=bx
This is a panic now. It is possible that some calm will return when more players are participating during regular trading hours but it looks like Monday will be a messy, blood letting kind of day.
NIKKEI 225 Index
19,629.73 -1,120.02 -5.40%
https://www.marketwatch.com/investing/index/nik?countrycode=jp
Hang Seng Index
25,089.19 -1,057.48 -4.04%
https://www.marketwatch.com/investing/index/hsi?countrycode=hk
If my double short ETF QID rises more than 8% tomorrow, I will probably sell the position or at least pare it some.
S & P stock futures were halted tonight after triggering a circuit breaker at a -5% decline but appear to be trading now.
It looks like WTI will head below $30 per barrel soon. Saudi Arabia is going to make Russia pay dearly for refusing OPEC's production cut deal. In a world which already has too much crude and falling demand, Saudi announced its intention to start pumping a 1M+ more barrels a day and slashed its prices.
I did eliminate QID in one account before trading was halted 4 minutes after the open.
ReplyDeleteProShares UltraShort QQQ
$26.88 +3.26 +13.80%
Last Updated: Mar 9, 2020 at 9:34 a.m. EDT
I may try to sell a Tennessee municipal bond today, just to see if anyone will bite at a 20% premium to par value.
When trading resumes, I will do some small ball wave buying during the first hour.
Do you know where notification is posted about trading halts? After some googling, I can find general articles from the SEC and Nasdaq, but nothing about today.
ReplyDeleteLand: There was a trading halt shortly after the open when the S & P 500 declined 7%, which was sufficient to trigger a circuit breaker that halted trading below that level for minutes.
Deletehttps://www.cnbc.com/2020/03/09/sp-500-futures-are-frozen-after-tanking-5percent-heres-what-happens-when-circuit-breakers-kick-in.html
Even after the indexes started to trade, there were order imbalances in a very large number of stocks that kept them from opening until the floor specialist could reach a price equilibrium point. And there were probably individual circuit breakers implemented for particular stocks as well:
https://www.sec.gov/oiea/investor-alerts-bulletins/investor-alerts-circuitbreakershtm.html
The quote boxes at Schwab will indicate that a particular stock has been halted. Fidelity will just show no bids or ask prices even though other stocks are trading.
These events are relatively rare and I simply notice them by reading headlines at CNBC or Marketwatch or by finding out in my brokerage account.
Thanks! Ameritrade eventually put up a small note, about an hour after trading restarted.
DeleteNoticing, google's clock hasn't adjusted for DLS yet.
Bought 1/2 position of PPL 29.87. So not the bottom.
ReplyDeleteI need to get more comfortable buying just a couple shares at a time, now that there aren't fees.
The wave buying idea is interesting. Never heard of it before. Hard for me to implement because I don't have a great list of stocks owned. Will need to do buying with a list I create to buy into.
Generally, I'm not buying yet today. I've been buying on the way down. Now I'm wondering about giving more time for more down to set in.
Russell IWM is still the weakest index.
Land: PPL was ex dividend today so you will not be receiving that one for shares purchased today.
Deletehttps://www.nasdaq.com/market-activity/stocks/ppl/dividend-history
The price change shown at most brokers and financial websites do not reflect the dividend adjustment.
I completed wave buying in three accounts when the SPX was down over 5%. In one of those accounts (my Vanguard taxable account), I only started to buy stocks last week. The account was roughly evenly dividend between bonds and cash. Money market rates are going to plummet fast so I am nibbling in common stocks that pay dividends that generate over 5% yields after the price declines today.
In my Schwab account, where I sold QID this morning, I will limit my stock buying to the proceeds realized from that sell.
The ten year treasury yield is off its lows but still down over 20 basis points in yield to .56%.
The 30 year treasury yield is currently near .97%.
Those kind of rates are dictating what I am doing now while remaining extremely cautious with a capital preservation focus. The small ball wave buying is primarily a compromise between participating in risk assets (dividend stocks) and capital preservation. The flip side of the small ball trading system is that consideration is given to selling my highest cost lots profitably when and if the lots become profitable.
I have picked up this morning a few more leveraged bond CEF shares, though I would not call those purchases or any other ones as serious in the aggregate. E.G. I bought 35 GDO at $16.78:
Western Asset Global Corp Defined Opportunity Fund Inc.
$16.82 -0.70 -3.99%
https://www.marketwatch.com/investing/fund/gdo
Shoot. I try to be careful about checking. I would have bought ex-div but scottrade reduces the price on the way into market so you're getting the price you're buying. I don't know what ameritrade does. I didn't know any brokers didn't.
DeleteJust bought into my Roth. SPY, DIA, VYM in small amounts, 4-5 shares. Bought too soon on the falling knife happening.
I don't want to miss an opportunity on a 54 VIX day. But still feel like there'll be more down.
Charts I've seen in articles are that that additional down is likely to be small %s, 2-5%, after a large quick drop and high vix. Also, Ciovacco's video this week is mostly showing climbs after drops and not to panic, but he pointed out that after the VIX tops, the SPX has dropped for a couple more %s. I didn't do a backcheck but it looked true on those charts. Translates to not worrying too much about missing opportunity on VIX spike days.
As I typed, the indices are still falling. DIA & SPX at or over 8% down now.
My wondering is whether this is reflecting a change in expectations of a recession by the market. Or just panic selling. (It's so ordered though to be panic.)
Land: I did find selling orderly today. For example, there were penny spreads in the stocks that I was buying and not much jumping around over a brief time period measured in minutes. The tape and quotes seemed to be keeping up with real time transaction unlike a real panic event. During the October 1987 crash, the tape was delayed over 2 hours, customers could not contact their brokers, and brokers had no idea about where stock prices were in the unlikely event a customer got through.
DeleteThe amount of the dividend will be taken out of the price before trading starts on the ex dividend day. The problem is that the quoted prices at Yahoo Finance, Marketwatch and many brokers will not show a price with that adjustment. The price is correct, but percentage change and the change amount are wrong since there is no adjustment in those numbers.
For example, Marketwatch shows PPL closed at $29.11, and that is the correct closing price, but then it is claimed that the stock was down $1.99 today which is not correct. The stock was down $1.99 from the Friday close, minus the dividend per share of $.415 or down $1.575.
https://www.marketwatch.com/investing/stock/ppl
Someone on MSNBC was saying the dominance of machines might have made it smooth even with an unwinding.
DeleteIt hasn't been so before. I doubt machine use is that different since 2018-2019 trade pullback.
PPL is listed as opening Monday at 29.70. Closing 29.11 on Monday. That's a $.59 difference and is 1.99% drop. (Friday's close was 31.51. A $1.81 drop till open Monday ).
Monday's open is lower than Friday's close because the market opened lower.
So, the .415 reduction in price happens before market open on ex-div day, Monday? Or it's subtracted from end of day price? I'm definitely confused. But figuring this out is less time sensitive than focusing on buying/selling during these big moves. So I'll come back to this.
I had it figured out with scottrade. It was obvious. But isn't popped out as clearly when I look at ameritrade yet.
DeleteIf this is a Russian, Saudi oil war trigger... Trump didn't have influence over either of them? Seems to indicate (or confirm) that the influence is one way.
ReplyDeletePuzzling that Putin would let the markets crumble, so that it reduces Trump's chances of re-election, rather than make an oil deal.
The Russia-Saudi Arabia price war and production increases will hurt both governments and economies, even before taking into account the negative ramifications that blow back into other assets and tax revenue sources (e.g. stock profits). The only way that their actions can have a favorable impact is that their actions succeed in stopping growth in U.S. shale production and a non-temporary and substantially lower production from U.S. fields.
DeleteThe Trigger is still the coronavirus pandemic. The oil price/production war is a by product of lower demand resulting from the pandemic.
I had forgotten about their goal of reducing US presence. The power Putin gains from that, may in his view be more than, the power he estimates losing by making Trump look poor.
DeleteAnother mention on TV was that the market and rates down helps the rubble be (higher or lower). Production is in local rubles not US dollars. So it doesn't hurt their pricing and production if or as long as they can hit the dollar at the same time.
Another mention was sanctions from Congress, and payback. That seems too far removed and just someone filling up airtime.
The Extremely Stable Genius blamed the news media for the stock market rout today. The media, of course, had nothing to do with it.
ReplyDeleteWhen stock prices move up in a parabolic fashion as they have since Donald was elected, and valuations consequently become rich using historical valuation measures, a valuation reset can occur at anytime even without exogenous events coming into play. The coronavirus pandemic is one of those kind of events that can precipitate the valuation reset.
The media did not cause energy stocks to crater today with stocks like APA, OXY and MRO falling over or slightly under 50%. Demand for crude has been negatively impacted by the coronavirus pandemic Russia and OPEC failed to agree on any production cuts or even to extend the existing ones.
The huge decline in crude prices will help U.S. consumers but will be devastating to energy E & P and oil service companies.
Today's declines in yields makes new purchases of bonds, CDs, treasury bills and similar securities even more unattractive.
Consequently, I am going to have to find yield elsewhere and the stock market is the only place providing yield opportunities now.
It is important to be cognizant of the downside risk however. Several stocks that I own fell by more than 10% today. Earning a 5% yield is small comfort with the stock price fell enough in 1 day to wipe out two years of dividends, at least temporarily.
My approach will be to take measured risks by using the small ball purchase rules, limiting my purchases to small lots and averaging down only. I am not having to wait long to buy more shares at a lowest price in a chain. That is occurring during a single day. Every single stock position that I own is experiencing an increase in its dividend yield through implementing this strategy.
I did pick up my buying of leveraged bond CEFs today which sold off as individuals, the primary owners of those securities at least at the margin, panicked which is what they almost invariably do when stocks are tanking and bonds are rising in value. The cost of leverage for those funds, tied to floats over short term rates, will be coming down.
I also started buying some U.S. equity preferred stocks today after a long hiatus. I added 50 shares to 50 share position in both GNLPRB (at $24) and BRGPRA (at $24.65). I recognize that yield can only be found now with capital risks associated with it and that situation may persist for an extended period.
There is a possibility of a crash looming in the background. Today was sort of a mini one. In this context, I mean a day where buyers largely disappear, margin calls accelerate and even non-forced sellers are so panicky that any price will do. I did not feel that today except in certain sectors including energy stocks, regional banks, hotel REITs and other travel related stocks.
The VIX closed at 54.46 which is a most worrisome level:
54.46+12.52 (+29.85%)
https://finance.yahoo.com/quote/%5EVIX?p=^VIX
Other volatility indexes closed in similar territory:
E.G.
CBOE RUSSELL 2000 VOLATILITY IN (^RVX)
52.96 +10.55 (+24.88%)
https://finance.yahoo.com/quote/%5ERVX?p=^RVX&.tsrc=fin-srch
CBOE NASDAQ 100 Volatility (^VXN)
53.68+9.71 (+22.08%)
https://finance.yahoo.com/quote/%5EVXN/?p=%5EVXN
BDCs are being hit hard for 3 reasons. Their loans are junky-(not good in a recession), most have loans to energy companies; and the coupons for their floating rate loans are coming down rapidly. The bright side is that the borrowers will be less stressed with lower interest payments.
Still, I included several BDCs in my wave buying today and started a new small ball type position in a couple that I previously sold at higher levels.
Today was my largest $$ buying spree since the volatility event began late last month. I probably invested around $9K scattered over 30 to 40 stocks. I was keeping track of how many I was buying.
Time for the Old Geezer to take a nap.
Google glitches while I posted, so here it is again.
Delete"""There is a possibility of a crash looming in the background. """
The persistently high VIX from the start made it seem possible the market would go into the bigger crash event without first doing a real recovery (VIX under 20). Will be interesting to see how the market - and people's psychology - moves from here.
Looking at the charts of yield inversion and recessions, the timing of others makes it look like we are in a recession now. One that will be post-labeled after GDP or whatever it is, that needs to be down for 2 quarters, is measured.
There isn't unemployment yet, but that's a lagging indicator.
I don't know how much I bought. Some orders didn't fill. One of my tasks is to make a list, so I can spot what to sell into the rallies. I bought in three accounts.
Delete30-40 stocks - that's a lot of variety.
I meant the recession post as a question. Could we be in one already?
DeleteLand: The short answer is no but the odds of falling into a recession have increased with the coronavirus epidemic. GDP growth had turned negative in the 2019 4th quarter for countries like France, Italy and Japan and that was before the pandemic was under way. China will be at or near zero growth this quarter. U.S. growth will slow in the March and April quarters. I still believe U.S. GDP growth will remain positive in March and April, but am rationally concerned that negative numbers may start by May or June without substantial fiscal stimulus being implemented soon. Monetary stimulus is not going to work IMO.
DeleteThe Atlanta Fed's GDP model is predicting 3.1% real GDP growth in the 1st quarter.
https://www.frbatlanta.org/cqer/research/gdpnow.aspx
While that number is too high IMO, I believe that the U.S. real GDP growth will be over 2% this quarter with all months being positive.
The NY FED GDP model is far less optimistic than the one used by the Atlanta FED and currently predicts only 1.7% real GDP growth this quarter and 1.3% for the second quarter.
https://www.newyorkfed.org/research/policy/nowcast
Okay!! That was very clarifying. MSNBC person said fiscal policy takes about 6 months to implement. So it may rescue the future but won't be the immediate salve.
DeleteI didn't recognize who it was and don't know the veracity on how long it takes.
If true, AND also if recession starts, I thought maybe we'll be ahead of the usual ball, because the process of responding will have started sooner than it usually is in recession crisis.
Closing:
ReplyDeleteS&P 500 2,746.56 -225.81 (-7.60%)
200 Day SMA Point 3051 (using 1 year YF Chart)
5% Below 3051 = 2,898
Today certainly answered whether the market's going below 5% below the 200 day.
DeleteI suppose something to watch is whether it rallies and breaks upward or gets stopped by the 5% below or the 200 day MA itself. Currently futures are up 2.5 to 3% for a rally.
I listened over the weekend to an FG interview for Seeking Alpha (interviews of the investors seems to be a new thing.) By 20 month MA, he meant literally the value at each month calculated into MA. I still have no idea where to find it calculated. Conclusion, I'll wait to see if FG starts talking about bear market or confirmation of bull market environment. Since that's what he uses it for.
ProShares UltraShort QQQ (QID)
ReplyDelete$26.94 3.32 14.06%
https://www.marketwatch.com/investing/fund/qid
I eliminated today by QID position held in my Schwab account as previously mentioned. I sold at $27.06 shortly after the market opened. I still own QID shares in my Fidelity account.
I will use the double short ETFs only as short term hedges. The remaining QID shares will probably be sold when and if the price crosses above $29.
I used TWM, QID and SDS as hedges for some minor stock additions in February and into early March. Consideration will be given to buying one or more of them when and if the VIX returns to below 20 movement with external events still being problematic.
Quotes for the 2 U.S. equity REIT preferred stocks bought today which I have discussed in the past:
Global Net Lease Inc. 6.875% Perp. Pfd. Series B
https://www.marketwatch.com/investing/stock/gnl.prb
Bluerock Residential Growth REIT Inc. 8.25% Redeem. Pfd. Series A
https://www.marketwatch.com/investing/stock/brg.pra
One of the new bond CEFs added today was PPT:
Putnam Premier Income Trust
$4.92 -$0.28 -5.38%
https://www.marketwatch.com/investing/fund/ppt
CEF Connect data for this one has not been updated yet.
https://www.cefconnect.com/fund/PPT
Dividends are paid monthly with some ROC support. The dividend yield is currently over 8%.
I also took BTZ up from the initial 10 share discussed in this post to 100 shares.
And I am now back in JRI after eliminating the position earlier this year.
https://www.cefconnect.com/fund/JRI
This kind of news feeds the volatility:
https://www.cnn.com/2020/03/09/europe/coronavirus-italy-lockdown-intl/index.html
The hedges worked... I'm watching your trades but hadn't tried any.
DeleteI haven't made anything off this volatility yet.
Question today is whether I sell some of my indice buys from yesterday. Or hold until VIX goes below 20, which could be a while. I still have plenty of cash.
My earlier buys on the way down are way too high for even today's prices. SPY at $310, 311, 314, 302. Even Thursday's 292 is too high.
Hum, if there are dips today, it may be better to be a buyer than seller.
Writing it out makes it easier to just wait. Instead see if any individual shares seem well priced.
Land: If the Lord had told me on 2/24 to wait until yesterday to buy, I would have been grateful but alas those communications never seem to happen. In other words, I do not know how bad it will get when I start to buy into a volatility event but I just keep buying on the way down. This one started on 2/24/20:
Deletehttps://finance.yahoo.com/quote/%5EVIX/history?p=%5EVIX
Consequently, when I started to buy into the volatility event, each trade became a loser but only small ones given the tiny buys. I also start out really small in day total. For several days my total common stocks buys were around $500 to $1000 per day and then I peaked yesterday at close to $10K. I was clued to my computer for most of the day doing research and entering buy orders. I doubt that I will buy anything today unless the market falters. So I am controlling my risk through limiting the amounts invested in each stock and during each day, starting off slow when the volatility event is in its early stages and then building up as the duration increases.
I doubt that any of my common stock buys made between 2/24 and last Friday are up, though the buys from yesterday are up today so far at least.
Buying during a volatility event will work in the event markets turn sharply higher as they did after August 2015, February 2018 and December 2018 volatility spikes:
https://fred.stlouisfed.org/series/VIXCLS
They will not work over the short or possibly even the intermediate term at least when the volatility spike turns into a cyclical or long term secular bear market.
So I'm doing the same thing... makes me feel better about it :).
DeleteOnly difference is that I didn't buy small enough at first, and am now buying too small. That came from FOMO that comes from prior mistake of not getting back in enough after prior events.
Also I am not very good at figuring out individual stocks or even sector etfs yet. So I buy more indices. That has limits.
Something odd today. Maybe an opportunity?
DeleteVYM is up barely 1% at times SPY is up 2.6%
VYM is value. Spy is blended. I tried entering value into the search box and they seem fine similar to SPY or even more than. I haven't found a really great comparison index yet like spdr (googled that and it returned fidelity.)
The list of stocks it contains might be a clue. But...?
VYM is ex-div today. That's part of it, I imagine.
DeleteOn ex-divs, I see it,
DeleteThe streaming lists of quotes use the incorrect % and $ down as you described!
The individual stock page profiles use what I assume is the right % & $ down.
For VYM it's coming to $76.41 starting price of the day. Closing day before was $76.97, so dividend of $.56.
The only part that's still unclear is .56 is $2.24 a year. But the profile shows trailing div of $3.40 /year.
For an ETF divs vary. That seems like a lot of variation.
The mismatch between streaming and individual completely baffled me today. I wouldn't have seen what it was about if you hadn't posted that comment. Also I would have bought VYM higher than I meant to.
Land: I do not own VYM. It is ex dividend today. It is being weighted down by its exposure to banks and energy stocks. Financial sector exposure was at 18.7% as of 1/31 vs. around 13.8% for Vanguard's S & P 500 ETF (VOO) which has a 24.2% weighting in information technology.
DeleteOverall, I am finding today to be a major disappointment after the DJIA rallied almost 1000 points earlier. It seems that it is a major struggle for the Stock Jocks to keep SPX from going negative again. The cold water thrown on the earlier exuberance was the Trump administration saying it was not there yet on a fiscal stimulus program.
https://www.cnbc.com/2020/03/10/coronavirus-trump-plan-for-economic-response-not-ready-officials-say.html
I did go back into my wave buying when the averages turned negative. I may do more when and if the bottom falls again later in the day. I am not going to spend more than $5K today since I do not like the action so far. If I hit $5K in common stock buys today, that would be 1/2 of the $10K treasury bill that matured today.
It is psychologically easier for me to buy in my Vanguard taxable account which had no common stocks 10 or so days ago, with the account being cash dominant in 2 Vanguard MM funds and a large bond allocation, primarily Tennessee municipals.
Land: The VYM quarterly dividend varies. The 3rd and 4th quarters tend to be the largest penny amounts with the 1st being the lowest. The penny rate for this quarter was $.5544, which was down from $.6516 in the 2019 first quarter. I do not know what accounted for that Y-O-Y decrease for the first quarter.
DeleteThe dividend yield calculation should take the last 4 quarterly payments and divide by the current price, but I will frequently see a calculation that simply multiplies the last payment by 4 which results in a wrong dividend yield calculation when the penny amounts are variable.
Check the "distributions" tab for VYM at the Vanguard website.
I will need to keep in mind that the div of often just the last one x4.
DeleteI need to get more used to these various sites. I used to use Vang only 1x a year to assess where to add my roth money to. That was before their big re-work. That is a good idea to use their div tab.
Definitely a lot of selling into the rally today. Now that it shook out, buyers are back.
I can't imagine this is the big bottom. Maybe a mini-rally for now (or it won't rally). With this much cancelled, this can't be the top of the impact.
Media keeps saying the problem is uncertainty. But it's also that earnings will be less, if everyone is staying at home.
I looked but didn't buy this morning. Put in some low orders that haven't filled.
Put in one for SNY but changed my mind. That stock is susceptible to news headlines, and policies. Could be down when it gets hit and I'd have no good way out. Chart isn't that low compared to the last year. I'm going to wait for an entry point that it can't be ignored. (Or buy as the correction is ending...)
There was a big divergence in performance today between investment grade corporate bonds and U.S. treasuries.
ReplyDeleteiShares Investment Grade Corporate Bond ETF (LQD)
$131.01 -$3.26 (-2.43%)
https://finance.yahoo.com/quote/LQD?p=LQD
iShares 7-10 Year Treasury Bond ETF (IEF)
$121.48 +$1.08 (+0.90%)
https://finance.yahoo.com/quote/IEF/?p=IEF
I mentioned BTZ in a prior comment which has a large concentration in BBB rated corporate bonds. Even though this ETF owns bonds with close to 65% investment grade, it suffered a net asset value per share loss today of $.58. The share price decline of $.55 was in line with that loss in NAV per share.
https://www.blackrock.com/us/individual/products/240168/
The reason for the underperformance of BBB rated bonds relates to fears about credit risk. Along with other dominant fears now, the recession risk fear is palpable. Passing fiscal stimulus measures now may ease those concerns.
The iShares Aaa - A Rated Corporate Bond ETF (QLTA) also declined today by 1.12%:
$56.78 -$0.64 (-1.12%)
https://finance.yahoo.com/quote/QLTA?p=QLTA&.tsrc=fin-srch
The SPDR Bloomberg Barclays High Yield Bond ETF (JNK) declined by 4.66%.
https://finance.yahoo.com/quote/JNK/?p=JNK
The iShares Preferred and Income Securities ETF (PFF) declined by 3.74%:
https://finance.yahoo.com/quote/PFF?p=PFF
The Invesco Taxable Municipal Bond ETF managed a 1 cent gain.
https://finance.yahoo.com/quote/BAB/?p=BAB
That one skews toward A or better rated bonds and has a relatively long duration at 10.22 years.
https://www.invesco.com/us/financial-products/etfs/product-detail?ticker=BAB
I've been wondering what the bond and other yield rates are telling.
DeleteI was at the craft show on the weekend. Attendance was maybe 1/4 of the usual. It was thought to be because of cancellations from the virus.
ReplyDeleteTonight I was at my last outing for a week (unless I need to food shop). I felt comfortable with precautions taken by the program, and knowing it's not natively airborne, but in coughing and breathing on you. I'm glad I went (Purim, really well done play). But everything and anything else is cancelled. There's now I think 6 confirmed cases in my county A few more in neighboring. Instructions for over 60 year olds to stay home from the governor. I'm now behind at working on my buy list and listing what I did buy, but glad I went out and enjoyed, before it's more spread.
We are almost at a bear? SnP down 19%, DOW 19.8%
ReplyDeleteLand: The high in SPX was at 3393.52 and the close yesterday was at 2,728.81. I calculate a 19.59% decline and assign some significance that the decline has not yet crossed 20%. The Stock Jocks may be able to muster some buyers to stop the downward spiral.
DeleteProgram trading frequently plays a leading role in major up and down days and that has been the case starting in the 1980s. The first time that I became aware of how important computer program trading had become was during October 1987 when the DJIA lost 22.6% in one day.
https://business.time.com/2012/10/22/25-years-later-in-the-crash-of-1987-the-seeds-of-the-great-recession/
Interesting. That spot stopped the market again today.
DeleteWith computers programmed, that's a mind set programmed in, not accidental.
Wishing I'd done better at buying during the mid-day drop. None of my orders filled. Just didn't get enough on yesterday and today's rounds of down.
News said (paraphrased) the reverse back up was from "nice words" from Trump reassuring on the policies, even though they aren't going to happen.
Too bad he can't talk a virus into believing him.
I expect tomorrow to be up or down.
I was looking at the year-to-date performance of two U.S. treasury ETFs this morning. It is hard to believe since the yields were already so low going into 2020:
ReplyDeleteTLT: +30.31%
https://www.ishares.com/us/products/239454/ishares-20-year-treasury-bond-etf
ZROZ: +40.87%
https://www.pimco.com/en-us/investments/etf/25-year-zero-coupon-us-treasury-index-exchange-traded-fund/
ZROZ is a zero coupon treasury with an effective duration of 27.1 years. The weighted average maturity is also 27.1 years. A treasury ETF that owns treasuries that make current interest payments with a weighted average maturity of 27.1 years would have a significantly shorter duration than ZROZ and would consequently be less sensitive to up and down movements in rates.
https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/duration
I was able to do some more buying today. There was a lot of strange happenings today.
ReplyDeleteFor example, earlier this year I sold 100 PBA at $38.69.
Item # 2
https://tennesseeindependent.blogspot.com/2020/01/axpra-enb-fhn-oxy-pba-rlj-tef.html
At one point today, PBA was down $6.16, hitting an intraday low at $18.81 and then rallied to close at $24.96:
DAY RANGE $18.81 - $27.71
https://www.marketwatch.com/investing/stock/pba
For the most part, selling in January and February looks smart and buying into the volatility event looks dumb at least for now.
Investment grade corporate bonds had another bad day:
iShares Investment Grade Corporate Bond ETF (LQD)
$128.07 -$2.94 -2.24%
LQD was joined by the treasury ETFs to the downside, unlike the divergence yesterday.
iShares 7-10 Year Treasury Bond ETF (IEF)
$119.25 -$2.23 -1.84%
https://www.marketwatch.com/investing/fund/ief
Leveraged bond CEFs will report declines in their net asset values per share later today.
Investors need to take their meds and possibly smoke a lot of pot before coming to work tomorrow -at least in the legal states which will not include Tennessee in my lifetime.
Regional bank stocks had been smashed to smithereens but today managed a strong rally off of extremely depressed levels:
SPDR S&P Regional Banking ETF
$39.71 +$2.62 +7.06%
https://www.marketwatch.com/investing/fund/kre
They continue to face as a group negative headwinds from the yield curve and some loans in the energy sector are dicey. Two advantages is their cost for deposits will be declining rapidly and their owned securities have probably gone up in value.
The VIX had one of those days where its decline was IMO out of sync with the S & P 500 rally.
CBOE Volatility Index 47.41 -7.05 -12.95%
https://www.marketwatch.com/investing/index/VIX?mod=MW_story_quote
Normally I would expect a larger percentage decline in the VIX with a 4.94% rise in SPX.
This is an anomaly. I pointed out a similar type anomaly in a March 2, 2020 comment:
CBOE Volatility Index 33.42 -6.69 -16.68%
S&P 500 Index 3,090.23 +136.01 +4.60%
https://tennesseeindependent.blogspot.com/2020/02/ahtpri-axpra-dpg-eaf-ffbc-hban-ing-rdsb.html?showComment=1583189037993#c350372319560378585
And the VIX had a greater percentage decline that day with a smaller rise in SPX compared to today.
I don't think anything substantively has changed in the real world. Investors are just trying to adjust to new realities. The most important new reality for me is that bonds, CDs and treasury bills are loathsome in their yields now and I am consequently being forced to take more risks for non-loathsome yields.
The day after March 2 was down. It didn't get below March 2nd rise. But was followed with another leg down.
DeleteAnything can happen now. This could stabilize and go up. But these discrepancies are notable.
Futures are down a bit now. I thought the Pence press conference went well and made it sound like fiscal policy is coming soon. So I expected to see lots MORE green.
Land: A payroll tax cut would have the most direct positive impact on consumer spending and the impact would occur quickly. However, consumer spending is not the problem now. FED rate cuts and U.S. fiscal stimulus is not a cure for the coronavirus or the actual economic impacts occurring worldwide now.
DeletePence is not someone who is unworthy of attention IMO. I would prefer though having him speak on these matters than Donald who insists on contradicting the medical experts and provides incoherent and inconsistent messaging.
There is opposition to major stimulus efforts among republican senators.
https://www.cnn.com/2020/03/09/politics/senate-gop-economic-stimulus/index.html
The Stock Jocks can become at least temporarily optimistic whenever politicians start spending even more borrowed money. Federal budget deficit spending of $1 trillion per year is stimulative compared to balancing the budget. Increasing the budget deficit to $1.2 trillion is even more stimulative. The FED has at least managed to reduce the government's debt servicing costs. This will end up in a massive fiscal train wreck in the future, but who cares now.
Hilton(HLT) withdrew its 2020 guidance after the close today due to the coronavirus pandemic.
ReplyDeletehttps://seekingalpha.com/news/3550379-hilton-withdraws-q1-full-year-outlook-due-to-coronavirus?mod=mw_quote_news
I do not own that one.
Yesterday, the hotel REITs Sotherly Hotels (SOHO) and Park Hotels & Resorts (PK) withdrew their 2020 guidance.
https://seekingalpha.com/news/3549993-sotherly-hotels-and-park-hotels-resorts-withdraw-guidance-on-coronavirus-impact
I do not own SOHO but am buying 1 share lots of PK. Hotel REITs are in free fall.
On 1/28/20, which seems like ages ago, I sold 5 PK at $23.05. The close today was at $14.16 and that was after a gain of $.55.
https://www.marketwatch.com/investing/stock/pk
My courage in the Hotel REITs is at a low ebb.
I noticed that I could buy HTPRD at $18.88 this afternoon. Rather than buying 50 shares or 100 shares as I have done in the past, I bought 10. This 6.5% preferred stock closed at $18.86:
https://www.marketwatch.com/investing/stock/ht.prd
The yield at that price is 8.62%. (.065% x. $25 par value = $1.625 annual dividend per share divided by $18.86 price - 8.616%).
I eliminated my last position in that preferred at $25.67 on 1/31/20.
Item # 2. Eliminated HTPRD-Sold 50 at $25.67 (a Roth IRA Account):
https://tennesseeindependent.blogspot.com/2020/02/hban-htprd-mfc-rdsb-rlj-xom.html
I have repeatedly traded that preferred stock and $18.88 is probably the lowest price that I have ever paid for it.
Dividends are cumulative and can not be deferred unless Hersha first eliminates the common share dividend.
Just to be clear - I was not implying that Pence tends to sound trustworthy and capable. Only that the multi-person presentation sounded normal, maybe even convincing that the doctors & officials had things moving along properly (like testing now available). The bar isn't high these days. (Sigh.) So it seemed like it'd be received well by the market.
ReplyDeleteThose are stunning free fall prices. While the market is forward thinking, I have a hard time believing the full fallout from the virus is counted into the banks, hotel reits, and airlines. Hope investors take your marijuana advice for their own sake!
I seem to be too late for the stocks that will win in this - home entertainment, grocery over restaurants.
CNN's replaying a clip from the presentation. I forgot about this part. Pence said to a media question "in our line of work, you just shake hands when people want to." It was a moment of insanity. Way to set an example.
ReplyDeleteEarlier today, Andrea Merkel made a dire prediction about coronavirus infection rates:
ReplyDeletehttps://www.msn.com/en-us/news/world/coronavirus-live-updates-merkel-warns-that-two-thirds-of-germans-could-become-infected/ar-BB1115OJ
If that prediction proves to be accurate or anywhere close for the world's population, then a worldwide recession will happen and is just waiting a few weeks or months to start.
She also apparently stated according to Reuters that there was no need for a German stimulus plan.
https://www.reuters.com/article/health-coronavirus-germany-merkel/merkel-sees-no-need-now-for-stimulus-plan-to-counter-coronavirus-sources-idUSL8N2B35Z4
Stocks are unable to mount two consecutive rally days. Yesterday's gains may be wiped out today based on pre-market declines.
E-Mini S&P 500 Future Continuous Contract
2,780.00 -85.80
Last Updated: Mar 11, 2020 at 8:10 a.m. CDT
On Merkel's prediction:
Delete"beyond the worst case scenario. It’s not even a severe case scenario. It’s an apocalyptic scenario and assumes no actions by governments and individuals. It also assumes the virus in Germany lasts longer than it’s even lasting in China, the virus’ home."
https://www.forbes.com/sites/kenrapoza/2020/03/11/why-angela-merkel-is-wrong-on-her-coronavirus-infection-prediction/#2375360d4af5
The article contradicts itself. If USA flu is 15% it's saying C-V will need to be 4xs as much to be at Merkel's estimate of 2/3s of population. But for a virus that doesn't have built in immunity, that's possible.
DeleteUses death rate over 6% but points out some countries have it under 1%.
German weather is much colder than USAs and prone to colds in winter.
Author is an investor and doesn't consult a doctor in the article. Merkel likely didn't get her comment out of thin air.
Very glad to have counter articles to her fearful prediction. Not sure what to believe.
The Stock Jocks seemed surprised that the World Health Organization slapped the pandemic label on the global coronavirus outbreak.
ReplyDeleteGoldman Sachs is saying that the bull market in stocks is kaput and sees the S & P 500 index falling to 2,450 by midyear.
https://www.marketwatch.com/story/goldman-says-coronavirus-will-end-bull-market-for-stocks-sees-sp-500-falling-another-15-2020-03-11?mod=mw_latestnews
S&P 500 Index 2,747.03 -135.20 -4.69%
Last Updated: Mar 11, 2020 at 1:10 p.m. EDT
https://www.marketwatch.com/investing/index/spx?mod=home-page
That would be fine with me. And, it is good to remind people that stocks are not always a money making machine.
Today has more of a panic feel in several sectors including nursing home and hotel REIT stocks, regional banks, energy and oil service stocks and CEFs. Most other REIT sectors are being trashed as well including the industrial REITs. That may be related to concerns that trade will decline significantly.
I had a few stocks that fell below my lowest purchase price, GOOD is one example, that allowed me to buy a few shares using the small ball purchase restriction. After selling my highest cost lots , I only had 31+ shares left in one account (Fidelity taxable) before starting to buy again. The lowest price in that account was at $16.79 excluding a few dividend reinvestments. I am now up to 46+ shares.
Sunday, March 3, 2019
Item # 1.C Pared GOOD First by Eliminating Position in Schwab Account-Sold 50+ at $20.88
Item 3 1.D. Sold Highest Cost GOOD Lot in Fidelity Account-30 Shares at $21.36 (used commission free trade):
https://tennesseeindependent.blogspot.com/2019/03/observations-and-sample-of-recent.html
Gladstone Commercial Corp.
$16.14 -$1.19 -6.87%
Last Updated: Mar 11, 2020 1:08 p.m. EDT
https://www.marketwatch.com/investing/stock/good
Definitely... entering a new "emotional" phase. The buy the dip isn't gone yet, but there's less certainty around it and more focus on how this will play out (i.e. it will have an impact, that's getting real.)
ReplyDeleteAny rally while the virus isn't under control, will be met by some selling. On the flip, apparently there are people still sending money to advisors for when it's time to get back in.
Lots of MSNBC talking heads are buying here but gingerly. Usually that's the turning point. Doesn't feel it to me. The numbers aren't even in yet, on how many cases (since testing hasn't been happening) or job layoffs. There's still talk about "if we need to do social distancing." We ARE going to need to do something.
I reacted to today with the thought - patience. I've been reacting with more anxiety to get in and not miss out. If my mind set's shifting, I would think others are. (Though I'm never good at being typical.)
Maybe I'm missing some grand bottom, but I'm taking chancing on that. If I missed it, I'll join the exuberance when it shows up.
I expect another leg down.
Question is whether market will see a recovery period first. I don't think so. But will watch for that.
An actual likely stimulus package will cause a big rally like the idea of one did yesterday.
This will be different from other financial crises. The cause is known and specific and it's ending will be identifiable. That limits total damage done (amount not yet known). It makes it possible to hit a firm recovery spot.
This isn't phase 2 yet (I don't think) but it's testing supports. MSNBC person had low Monday or Friday at 2734.
I imagine it will hug that for a while, maybe a few days or so. Rally off it first. But when more news comes, can it really stay above that bear demarker line?
I suppose it's possible we'll somehow escape what's happening in Italy (or German expectations), and see a quick decline.Also possible that China's coming back to life will become the next story and end the market reaction.
Someone had 30% down at 2350. By then though it will be an obvious crash.
My original thought that, because it's a virus, so can't be doubted like financial "data" with hushed stories, and because VIX was so high during Trigger event, ...That this might go straight into Phase 2 without a recovery period unlike any time before.
It won't do well for getting out first. However, I still have a lot of cash. So it will work fine for me. Better if I could get some out of course.
While market's down and there's buying into strength... valuations still seem high. Market isn't that far down for after a parabolic move. That makes it harder to buy.
I can see myself going through all this and not figuring out how to increase my portfolio, while not panicking. Hum.
A question comes to mind. If Trump or Pence keep shaking hands and get this virus or McConnell... what will the market think? Hoping Biden doesn't get it.
More places around me are shutting down events. A few more emails received today.
You had the bear line at
Delete""Bear Market Point (-20% from high) = 2,714.82""
So it's not below that yet. MSNBC's 2734 was just the low the other day, which it is now below.
Matters where it closes.
Land: For SPX, I do have the bear market line at 2,714.82. I would not count on that index staying above that line.
DeleteThe bear market line for the DJIA was at 23,654.86 and it was pierced to the downside today:
Dow Jones Industrial Average $23,553.22 -1,464.94 -5.86%
There is an ETF that owns only the DJIA components:
SPDR Dow Jones Industrial Average ETF Trust (DIA)
$235.84 -$14.63 -5.84%
https://www.marketwatch.com/investing/fund/dia
There are several reasons for the DJIA to be down slightly more than SPX from their respective all time highs. Boeing is one reason. It has over a 6% weighting in the DIA ETF. Also, a major component of the DJIA's information technology weighting is IBM. And the weightings in financials is slightly higher than SPX.
I executed several wave "buy programs" late today.
I am mostly averaging down in existing common stock positions. About all that I can say now is that my dividend income will be higher this year compared to 2019.
Just about everything is in dive mode so lowering my average cost and increasing my dividend yield only requires the willingness to enter an order. I have no idea about how many orders I entered today, but the number may be somewhere in the 80 to 110 neighborhood.
As far as ETFs go, I started back building a position in PFXF. Preferred stock pricing is currently in disarray. I restarted a position in DES after selling out at a much higher level no long ago.
I am considering restarting MGC.
https://www.marketwatch.com/investing/fund/mgc
I did some scattered small ball buying in a few leveraged CEFs. I bought small odd lots in several equity REITs today. I nibbled on some BDCs that have been torched.
South Gent,
DeleteYou had a really busy day today for "...the number may be somewhere in the 80 to 110 neighborhood....".
No one can time the bottom so I think it is wise to take your small ball strategy averaging down. Maybe pick 1-2 shares of BRKB and average down?
Re. preferred stock pricing in disarray some analysts attributed it to forced selling by funds. Glancing the chart PFXF was lower in December 2018. Would it not be more profitable to pick only among those that dropped the most?
Y: I am up to 40 PFXF shares with a 10 share buy today at $18.4. A few weeks ago, I would buy a 100 shares but now I am building up to a 100 share in ten share lots. That tells you something about my risk assessment now, and represents a dramatic change in that assessment and the odds that prices will deteriorate further.
DeleteE-Mini S&P 500 Future Continuous Contract
2,609.50 -130.80 -4.77%
Last Updated: Mar 11, 2020 at 9:09 p.m. CDT
I know that I will not be able to pick the bottom in the securities that I am buying, so I buy small and only average down. I can keep doing what I am doing now every day for the next two decades if necessary.
Tomorrow will likely be another really bad day.
There is just too much bad news after hours, including the suspension of NBA games, Italy closing all businesses other than groceries and pharmacies, and the suspension of travel from continental Europe to the U.S.
And, I would note that Tom Hanks and his wife have both tested positive.
https://www.marketwatch.com/story/tom-hanks-says-he-and-wife-rita-wilson-have-tested-positive-for-coronavirus-2020-03-11?mod=mw_latestnews
Sean Hannity told the brain dead today that it was all a fraud concocted by the Deep State designed to spread panic, to hurt the economy (meaning Trump's election chances) and to suppress dissent somehow.
https://www.nytimes.com/2020/03/11/us/politics/coronavirus-conservative-media.html
As to individual REIT preferred stocks, I added 15 HTPRD to the 10 shares bought yesterday that I mentioned in a previous comment. Both the 15 and 10 share buys are highly unusual for that preferred stock where I had previously bought in 50 or 100 share lots. Again, I view the risks as elevated. Hotel REIT stocks are cratering as are the common shares. I have not looked at the MREIT preferred stocks. I was considering today a 50 share buy of GNLPRB but the spreads were too wide and the trading suggested more downside will happen soon.
I also added some GNL common which cratered down to to $16 intraday. I forgot how many, maybe 2 five share lots. That is one that I recently sold at higher prices.
Global Net Lease Inc.
https://www.marketwatch.com/investing/stock/gnl
I did place an order to sell my remaining QID far above its close today. The remaining position is around 50 shares.
ProShares UltraShort QQQ
$26.09 2.09 8.71%
https://www.marketwatch.com/investing/fund/qid
Most of my attention tomorrow will be focusing on pricing anomalies in higher quality corporate bonds, something that I have not done for several months.
Another stock recently sold that fell below the lowest price in the chain today was NRZ, which I recently pared. I bought 10 somewhere well below $14.
Starwood (STWD) may do the same tomorrow. I last sold at $25.96 and expect the price to go below $20 tomorrow.
Y: The preferred stock market is in chaos today. I entered a limit order to buy 10 GNLPRB at $17.7 and it was filled. There is also chaos in the exchange traded bond market.
DeleteThat's the same as GNL-B?
DeleteThis isn't feeling like a bottom.
More like a new spot to go up and down around.
Land: Brokers and financial websites will have different symbols for preferred stocks.
DeleteAt Schwab, for example, the symbol would be GNL/PRB.
At Marketwatch, the symbol is GNL.PRB:
https://www.marketwatch.com/investing/stock/gnl.prb
At Yahoo Finance, the symbol is GNL-PB.
$17.24 -$4.54 (-20.85%)
As of 1:15PM EDT.
https://finance.yahoo.com/quote/GNL-PB?p=GNL-PB
Trading is chaotic with wide bid and ask prices.
The coupon is 6.875% paid on a $25 par value.
At $17.24, the yield would be about 9.97%. Marketwatch has the yield wrong since the first coupon payment made by this preferred stock was for a partial 3 month period covering the period from November 26, 2019 to December 31, 2019. This preferred stock was sold to the public at $25 late last year.
I discussed it in Item # 2.B.
https://tennesseeindependent.blogspot.com/2019/12/bif-eaf-nwhuf-ptlc-reet-rdsa-sret-vt.html
Thanks!!
DeleteOn indices - in this environment, is the common wisdom to buy more into those that have sunk more or done better?
ReplyDeleteNasdaq QQQ is still declining less.
Small caps IWM still declining more.
DIA doing worse than SPY, maybe because of BA.
There were just too many negative developments and vibes today for the Stock Jocks to handle without having a sell and flee response.
ReplyDeleteThe day started off bad with Angela Merkel's dire prediction about the coronavirus infection rates reaching 60% to 70% in Germany.
Prior to that statement being made, I had linked in this post an article where a Harvard guy, Marc Lipsitch, one of the top experts on viruses, claimed infection rates could reach 40% to 70% of the world's population.
https://www.cbsnews.com/news/coronavirus-infection-outbreak-worldwide-virus-expert-warning-today-2020-03-02/
Hearing a claim by some Harvard guy that the Stock Jocks do not know is going to become magnified when a world leader makes a similar claim and then cause a panic.
Not to fear, though, it was only a few days ago that Donald, Larry Kudlow and Kellyann Conway assured us that everything was under control here in the U.S.
https://www.salon.com/2020/03/09/joe-scarborough-slams-arrogant-boastful-and-lying-kellyanne-conway-for-false-coronavirus-claims_partner/
https://www.politico.com/news/2020/02/25/kudlow-white-house-coronavirus-117402
Then after the Stock Jocks were already having an anxiety attack from Merkel's statement, the WHO classified COVID-19 as a pandemic which should have surprised no one but apparently was a shocker to the Stock Jocks who must of cease reading the news headlines a month ago.
Then, throwing fuel on the panic, major stock indexes fell into bear market territory after destroying all major support levels as if they were not even there.
At least I stayed awake today. I probably had over 100 orders, all small ball. Several positions became eligible for purchase for the first time today after falling below the previous lowest price in the chain.
CBOE Volatility Index
53.90 +6.60 +13.95%
The corporate bond market was in disarray IMO today, at least from the perspective of a retail Fidelity brokerage customer.
Correction: The DJIA is in a bear market. SPX is down 19.217% from its high.
DeleteThis article uses closing levels.
https://www.marketwatch.com/story/stocks-will-fall-into-a-bear-market-if-the-dow-and-sp-500-close-below-these-levels-2020-03-09?mod=home-page
I will use the high points irrespective of when they happen during the trading day.
"""At least I stayed awake today. """
ReplyDeleteI slept a lot of the day. I've had a slight throat tickle since my Monday night outing, funny muscle sensations. I do not think this is coronavirus. Just some random bug trying to decide if I'm a nice host.
I did no buying today. I decided to wait. It got harder to stick with that near the end. Had I been quick enough, I would have bought SPY at 270.80 when it went below the 20% bear line. I might have another a chance another day!
Several stocks were bought today after the price fell below the lowest price in the chain using the small ball purchase restriction.
ReplyDeleteI mentioned GOOD in an earlier comment. I bought 3 five share lots in that one today. My new lowest cost number is $15.70.
Another one, where I sold down to just 20 shares, was the BDC TPVG. My new lowest cost number for TPVG is now at $10.70 but the position is only 30+ shares now.
TriplePoint Venture Growth BDC Corp.
$10.63 -0.70 -6.18%
https://www.marketwatch.com/investing/fund/tpvg
FDUS is another example where I recently sold lots. The new lowest cost number in my Fidelity account is $11.5. The stock goes ex dividend tomorrow.
https://www.marketwatch.com/investing/stock/fdus
With some irrational pricing in the corporate bond market, opportunities may soon develop for some BBB+ or better buys. So I will be monitoring now what is happening on a daily basis.
An example is that someone managed to buy 25 Entergy Mississippi 3.1% first mortgage bonds maturing in 2023 at below par value today. The bond is rated A2/A. I own several already.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C615858&symbol=ETR3940736
This FM bond has infrequently traded down to around 96 but has been trading over par value for over a year now.
The 3 year treasury bond close today at a .58% yield.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
The 25 bond lot sell was likely an individual investor. I am starting to wonder whether margin calls are impacting price decision in lightly traded $1K par value bonds.
My order to sell QID was filled at the open. The price was $29.6.
ReplyDeleteBefore the open, stock futures triggered the circuit breakers again.
After the open, the decline of 7%+ triggered a trading halt for 15 minutes.
https://www.cnbc.com/2020/03/11/futures-are-steady-wednesday-night-after-dow-closes-in-bear-market-traders-await-trump.html
Thoughts on the financial offer?
ReplyDeleteThe market isn't ecstatic about trillions of $ of Fed buying of bonds.
Started to be - and changed their mind?
McConnell's announcement that Congress is making plans fell sort too.?
South Gent,
ReplyDeleteI sold my SDS position today as well. I bought it too early and held for too long. You probably sold yours a long while ago. I am still learning the art of hedging.
Y: I do not discuss double short ETF transactions in the blog since most individual investors need to steer clear of them altogether. They can be toxic when held to long. I will occasionally briefly mention them sometimes in the comment section.
DeleteI sold every TWM, SDS, and Quid share profitably but there were a number of lots in each position. Most of the profits were concentrated in the lots bought in February before the volatility spike started. I will now only consider buying back some shares when and if the VIX returns to below 20 movement and I view the move up in stocks as irrational based on an evaluation of the then existing circumstances.
If you sold at a profit, then the timing did not hurt. I have to use them as hedges since I only have cash accounts and do not trade options or futures.
What's the ETF to take advantage of the home buyers decline?
ReplyDeleteMSNBC posted it but I didn't switch glasses in time to catch the moniker.
Any individuals a better buy in housing?
Land: I am not sure what you mean. There are housing related ETFs.
Deletehttps://www.marketwatch.com/story/heres-the-segment-of-the-economy-that-may-benefit-from-fears-of-coronavirus-analysts-say-2020-02-15?mod=mw_quote_news
That article discusses Hoya Capital Housing ETF (HOMZ) that declined over 11% today:
https://www.marketwatch.com/investing/fund/HOMZ?mod=MW_story_quote
The Ishares U.S. Home Construction ETF (ITB) will have more liquidity:
https://www.ishares.com/us/products/239512/ishares-us-home-construction-etf
If the ETF owns stocks, then it is cratering. The Stock Jocks are not making any distinctions now.
The Utilities sector ETF (XLU) declined over 10% today as did the REIT ETFs:
https://www.marketwatch.com/investing/fund/xlu
https://www.marketwatch.com/investing/fund/vnq
The kind of market action that we are seeing will clobber just about everything.
S&P 500 Index
2,480.64 -260.74 -9.51%
CBOE Volatility Index (^VIX)
75.47+21.57 (+40.02%)
That number reminds me of October 1987 and October 2008. It has the potential to turn into a crash as I observed a few days ago when the readings had not yet gone into orbit
That comment was in this post on 3/9 at 4:12:
https://tennesseeindependent.blogspot.com/2020/03/axprica-bhb-btz-fnb-ivz-ppl-pplprcca-t.html?showComment=1583788337882#c7389451585056317533
Bought bits of various major indices. IWM, SPY, QQQ in regular and ROTH & 401k.
ReplyDeleteA little SOXX.
Didn't get these super low moments on much.
I need to switch strategy. Find some solid companies in the very beatup sectors. Start picking up some positions.
I'm beginning to have "fear of missing getting my cash in before a rally." But really expect another leg down & running out of power for when it's super bargain time, will be the problem. Have about 1/2 my investment money left in cash (need to check).
VIX is so high. Is this phase 2? If so does past patterns include a significant crash at some point forward, i.e. more opportunity?
The wide spreads would indicate something of that sort.
A bill passing next week - will cause a rally? Good to get in some buys in before it? But I can't tell anymore.
Today was another 100 trade day for me. All trades were buys and I branched out into exchange traded bonds during the day. Trading was chaotic with large percentage declines for many junior and senior unsecured bonds.
ReplyDeleteFor example, I bought 50 THGA at $22.51:
Hanover Insurance Group Inc. 6.35% Sub. Deb. due 2053
$22.79 -$1.6929 -6.91%
https://www.marketwatch.com/investing/stock/thga
My sell transactions in that junior bond have been over $25 with no recent purchases since I will not buy when the price is over the $25 par value.
This bond was trading over $25 yesterday until about 3:00 P.M. E.S.T and started to decline thereafter and closing at $24.48. I had it on my watch list today.
I have links to my THGA discussions in a post where I discussed buying 2 Hanover Insurance 4.5% senior unsecured bonds maturing in 2026 which I still own.
Item # 3.A.
https://tennesseeindependent.blogspot.com/2018/06/observations-and-sample-of-recent_7.html
I bought the SU bond at less than par value. The SU bond last traded on 3/6 closing at 112.54, which creates about a 2.203% YTM at that price.
I found today's market to be chaotic. That was particularly true in securities where individuals dominate trading, at least at the margin, which includes CEFs, exchange trade bonds and preferred stocks.
The Hotel REIT stocks are starting to price bankruptcy possibilities or elimination of the common share dividends. The prices for Hotel REIT equity preferred stocks are also reflecting bankruptcy odds or, at a minimum, a deferral of dividend payments.
That is not to say that any of them will do what is feared now.
Regional bank stocks are being priced as if a recession is a certainty, with non-performing loans and charge-offs skyrocketing. I can not make any sense of the prices other than with those assumptions being taken as certain.
Investment grade bond ETFs are continuing to decline:
iShares Investment Grade Corporate Bond ETF (LQD)
$117.94 -5.91 -4.77%
https://www.marketwatch.com/investing/fund/lqd
The ETF which owns Build America Bonds, which is far more heavily weighted in A or better rated bonds than LQD, declined by
5.64% today:
https://www.marketwatch.com/investing/fund/bab
That took down a CEF that owns those bonds as well:
Nuveen Taxable Municipal Income Fund (NBB)
$19.39 -$1.57 -7.48%
https://www.marketwatch.com/investing/fund/nbb
I have bought and sold NBB many times and did not have a position before today. I bought 20 at $19.4 which is how I am doing my orders now-breaking up a potential 100 share position into multiple smaller orders and then averaging down.
My last sell was at $19.84. Trading profits are at $516.12. This fund has a long duration.
https://tennesseeindependent.blogspot.com/2019/01/observations-and-sample-of-recent_20.html
CEF Page:
https://www.cefconnect.com/fund/NBB
The record high for the S & P 500 was 3,393.52, hit intra-day on 2/19/20:
ReplyDeletehttps://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC
Today's close at 2,480.64 represents a 26.9% decline from that high point or what is traditionally called a bear market.
I will divide bear markets into cyclical bear markets and long term secular ones. It is too early to know what the current one will end up being in the fullness of time.
I started to invest in a long term secular bear market in both stocks and bonds. The bear market in stocks started around 1/1/1966 and ended in early August 1982. My first stock was bought around 1968. During those long cycles, there will cyclical bear and bull markets. There can be one catastrophic event in those cycles which I define as a 45+% decline over a relatively short period off a recent high. My first one of those occurred in 1974. Those events can occur at the beginning of the long term bear cycle (e.g. 1929 or 2000-2002) or during one (e.g. 1974). For a buy and hold investor in the S & P 500 stocks, who reinvests the dividends, the end result is pretty consistent over the cyclical bull and bear cycles within the confines of a long term bear market. The result is an annual average total return adjusted for inflation of -1 to -7%. A -2% annual average return would be my ballpark estimate going into one now.
The S & P 500 annual average total return (assumes dividend reinvestment) starting on 1/1/1966 through July 1982 was -1.813% per year adjusted for inflation but before taxes.
https://dqydj.com/sp-500-return-calculator/
If I plugged in the numbers starting in March 2000 through February 2009, the SPX total annual average return (dividends reinvested) adjusted for inflation was -6.9557%. In that bear cycle, there was a bull cycle roughly between late 2002 to October 2007, but the gains were overwhelmed by what happened thereafter, so I characterize that up period as a cyclical bull market within the parameters of a long term bear market.
The money is most easily made in the long term secular bull markets that generally average 14% to 17% annual average total returns.
If I started the calculation on 3/1/2009 and ended it in February 2020, the annual average total return was 14.536% adjusted for inflation. That is about as good as it gets. When the up period is long, as it was until this month, euphoria takes root and valuations become stretched. It then only takes some event to cause a valuation reset that will be painful. Recessions will always throw cold water on stock multiples that forecast only blue skies until the end of days.
South Gent,
ReplyDeleteThank you for the great insight.
What do you think is the likelihood of "A -2% annual average return..." for this new secular bear market, given the macro environment, i.e., high level of debt in both private and public sectors, trade war, coronavirus, a damaged energy sector, ....etc.?
Y: The problem with my classifications of bull and bear markets is that it takes time to know whether the current change in direction is a cyclical bear market within the parameters still of an ongoing 11 year long term secular bear market or the beginning of a long term secular bear market whose duration will be far longer.
DeleteAt the start it does not make much different how I classify it since the SPX is down 26.9% and that is painful.
The 1987 crash was an example of short term cyclical bear market that did not terminate a long bull market run that started in early August 1982 and ended in February 2000 that produced a SPX annual average total return of 15.425% adjusted for inflation.
SPX still produced a positive return in 1987 notwithstanding the crash created bear market in October.
https://www.macrotrends.net/2526/sp-500-historical-annual-returns
The market enjoyed a robust rally over the catastrophic event lows in 1974 for a couple of years, but that was just a cyclical bull move still within the parameters of a long bear market. The same was true for the rally in 2003-2007.
The classification does become important after the indexes bottom. Do I sell the ensuing rally and then wait for a bear market to reassert itself or hold for a longer term bull cycle.
My inclination now is to use my small ball trading system that makes decisions for me.
I will consider selling my highest cost shares when I can do so profitably which would require a significant rally given the latest carnage and buy when the price falls below the lowest price paid in the chain.
So I am selling the rips and buying the dips which is a trading strategy more likely to succeed in a long term bear market that has periodic powerful bull market counter rallies that do not return the market to the high points. I am also reducing risk through small ball lot purchases. The buy and hold strategy is more appropriate for the long term secular bull markets.
A few stocks came back below the lowest price point today including Dominion (D) and (DUK) so I added a few shares.
South Gent,
ReplyDeleteRe. "At the start it does not make much different..." this is important. And I like "selling the rips and buying the dips" to make a safer entry into the market.
Your insight is invaluable!
Another stock that fell below my lowest price point in the current chain is Enbridge. However, I was more timid than extremely timid in responding to the price decline, buying 1 share at $25.79 and 1 at $26.31 and 1 share at $27.23. The pipelines will be hurt by producers shutting down production, and it is impossible to say now how bad that will become. Still I will become more adventuresome with further declines in prices. By that I mean 2 to 5 share buys.
ReplyDeleteEnbridge Inc.
$25.96 -$5.23 -16.77%
https://www.marketwatch.com/investing/stock/enb
Prior to the volatility event, I had been paring my position and was down to 23+ shares.
I last sold just 8 shares at $42.46. This one involved selling my shares bought with dividends.
Item # 1.B.
https://tennesseeindependent.blogspot.com/2020/02/dpg-enb-gnl-igr-nrz-sret.html
Earlier this year, I sold 17 at $40.21:
Item # 3.B.
https://tennesseeindependent.blogspot.com/2020/01/axpra-enb-fhn-oxy-pba-rlj-tef.html
Prior to today's buying spree, the lowest price lot in the current chain was a 2 share buy at $29.95 (3/20/18)
Selling shares bought with dividends profitably is one of my capital preservation strategies and fits into selling the rips and buying the dips which is a bear market strategy and one that I use during Unstable Vix Patterns. Those prior ENB sells were made during the Stable Vix Pattern and a bull market in stocks.
"""I am selling the rips and buying the dips"""
ReplyDeleteQues: Is ONE difference that in a bull market you buy the rips (buy into upward momentum). (While in unstable VIX, sell into the rips.)
(I have not yet learned ability to buy into rips.)
All that multiple small lot buying and I got only 12.5% of my funds into the market. Total investable money in stocks is 56%. I have more buying to do!
Futures are green up by 2.5-3% because a legislative relief package is being claimed as "in good shape, may vote tomorrow."
Rough figuring, I'm down 10% since 3/1. I had a lot in cash and a bond, and that's why. Question is whether I can make up for mistaken past time out of the market, by getting in now while the getting is good.
"""Your insight is invaluable! """
I agree!!
I am getting a much better sense of well, everything. I'm aiming to use that in the future and to help my nieces.
Ques: When you talk about bears and limited returns (ex, 1.2%), do you see a path to where these buys on the way down are stuck for years and years, not just a couple years?
Is that part of why you're insisting on good divs?
Land: The small ball strategy that I am using now is properly characterized as buy the dips and sell the rips. It was primarily implemented as a capital preservation strategy that attempted to balance what I viewed as increased equity risk due to valuations and excess optimism with income generation in excess of the inflation rate.
DeleteIt is largely a mechanical strategy. For example I noted yesterday that Duke (DUK), Dominion (D) and Enbridge (ENB) were below the lowest price paid in my chain so I added some shares. I recently sold Duke at over $100 and mentioned that sell in a comment. That is the sell the rip part of the small ball strategy.
Given the magnitude of the decline, I will not be able to sell anything recently bought anytime soon, since consideration is given to selling the small lots only when I can do so profitably.
I am buying only dividend stocks. Almost all positions are in a dividend reinvestment mode currently as a means to force averaging down whether or not I want to do it.
We are going to experience counter rallies to declines. I would watch for a SPX rally that actually takes the index above the recent high in what I would call a convincing manner. The rallies now are sold and the pattern is one of descending highs and lows.
The last rally started at around SPX 2,746 (3/9/2020) and took SPX up to 2,882 (3/10) and then the bottom fell out again. The previous high/low move in the recent decline took SPX down to 2,954 (2/28) and the rally thereafter petered out at 3,130 (3/4). I do not currently anticipate that SPX will move back above 2,882 in a convincing manner over the next several weeks. A rally up to that level would most likely be sold until there is clarity on the coronavirus epidemic being under control with clear evidence that infection rates have hit their peak.
Terminology that I use to classify bull and bear markets attempts to place current events into some larger historical context.
ReplyDeleteA decline in SPX of 27% off a recent high is a bear market. There has not been a decline over 20% since the market bottomed in March 2009. SPX came very close to a 20+% decline in both 2011 and in 2018. The decline that started in the 4th quarter of 2018 was about 19.8% and bottomed at a 2,351.10 close on Christmas Eve. It looks like that level may be at least be a temporary barrier to a further decline, a line in the sand that the Stock Jocks will try to defend. Yesterday's close was at 2,480.
So when you put the current decline in recent historical perspective, SPX was still 129 points above its closing level on 12/24/18. The decline was painful only because the Stock Jocks were reaching for the sky when SPX hit its high at 3,389 less than 1 month ago.
Using Yardeni's historical data, the 1987 crash resulted in a 33.5% SPX decline with most of that occurring on just 1 day.
ReplyDeleteFigure 3:
http://www.yardeni.com/pub/sp500corrbear.pdf
Yet SPX finished the year in the green.
I do not agree precisely with his numbers but they are close enough.
During the long term secular bull market that started in 1949-1950, lasting until around 1/1/1966, there was 2 cyclical bear markets: 1957 at - 20.7% and 1962 at -26.4% (figures 8-10). There were in addition 6 corrections if I count the one in 1950. Yet during the period starting 1/1/49 through 12/31/1965, the average annual S & P 500 total return was 14.183% adjusted for inflation.
Using history as a guide, I have to classify the entire period from 1949 to 12/31/1966 as a long term secular bull market even though there were two cyclical bear markets and 6 corrections.
So the mere fact that a cyclical bear market happens does not mean the end of a long term secular bull market. It may be just a pause and reset or the start of a long term secular bear market lasting for years. The longest bear market in my lifetime was about 865 weeks starting in 1966. In that bear, the two major asset classes, stocks and bonds, were both in a long term bear market.
Thanks for your insights and perspective. Your ability to keep the bigger picture in mind is so valuable at times like this!
DeleteWith the market up and happy about the bill passed... is today a day to chase the rally and buy in some more at the prices already up by 5-6%?
ReplyDeleteI can't do very much selling since almost nothing is in profitable range yet.
Today's rally is weak and well off the intraday highs. Stock buyer's lack conviction.
ReplyDeleteS&P 500 Index
2,527.63 +46.99 +1.89%
DAY RANGE 2,522.87 - 2,632.24
That is almost a 100 point swing down from the intraday high.
Another stock that reached a buy point using the small ball purchase restriction is ARCC. My previous low point was at $14.86 and I just bought 5 shares at $14.
Ares Capital Corp.
$14.02 +0.17 +1.23%
https://www.marketwatch.com/investing/stock/arcc
The purchase at $14.86 was made on 12/21/18, near the apex of the market's decline which was hit on 12/24/18.
I have adopted as of yesterday the small ball "buy program" for U.S. equity preferred stocks and exchange traded bonds.
ReplyDeleteIn a prior comment, I mentioned a 10 share buy of GNLPRD which brought me up to 110 shares. The 50 share buy THGA would qualify using the small ball even though the amount is higher. THGA is a junior bond currently rated Baa3 by Moody's, as I recall, and I am more comfortable with owning it than most equity preferred stocks issued by equity REITs who are paying out all or close to it of their cash flow to common shareholders.
The reason for small ball in preferred stocks is that pricing is chaotic. Some issuers including the hotel REITs are likely to be under financial stress for several months and that is the best case scenario.
An example of a jumping bean equity REIT preferred stock is CIOPRA which I have bought and sold in the past.
City Office REIT Inc. 6.625% Cumulative Preferred Series A
$19.14 -$1.7553 -8.40%
VOLUME: 4.9K (individual trading)
DAY RANGE 18.76 - 21.56
52 WEEK RANGE $18.76 - $28.14
https://www.marketwatch.com/investing/stock/cio.pra
The 52 week range shown above did not catch my odd lot buy of 5 shares at $18.6. That was my third purchase today.
My first small ball buy was 20 shares at $20.6 which seemed reasonable to the Old Geezer.
My second small ball buy was 5 shares at $19.14 which seemed more reasonable. The third buy was at $18.6. The blended average cost of those 3 buys is $20.02. The next buy has to be under $18.6 using the small ball purchase restriction which is applicable for this bungee jumper.
The current yield at a total cost of $20.02 is 8.27%.
The bid/ask spread is large.
My last trade was an elimination:
Item # 1.A. Sold 50 CIOPRA at $24.77-Used Commission Free Trade:
https://tennesseeindependent.blogspot.com/2019/04/observations-and-sample-of-recent_24.html
The posts discussing other sells are linked in that post. Those sells were at $24.14 and $25.21.
I would characterize the Canadian preferred market as even more chaotic with a strong downward bias.
I wonder what the market expected from Trump's announcement? It rose into it.
ReplyDeleteThen he came out and within his first sentence, it started dropping. As he continued, SnP formed a red downward line. The timing, that immediately as he opened his mouth it dropped, is striking. There wasn't a wait for content even though it rose going into this.
Now it's bouncing back while he's still talking. I guess he's managing complete sentences.
Land: The private sector has already geared up to reduce the spread of COVID-19 through the mass cancellation of sporting and other events.
DeleteDonald at least seems resigned now to recognizing the seriousness of the pandemic.
South Korea is performing over 10K tests per day. The U.S. is trying to do its first 10K. That problem is at least on the way to being rectified.
Today was another 100 trade day mostly before the strong upswing in the last 26 minutes. Those kind of fast movements, where the DJIA went from 21,807 at 3:34 E.S.T. to 23,185.62 at the close, are most likely caused by programs rather than real buyers looking for bargains based on fundamental analysis.
CBOE Volatility Index
57.83 -17.64 -23.37%
All my buying is in small lots though I did move up to 50 shares in a few names. I started a small ball program in my Vanguard taxable account for PPL when the price slid below $26 as I recall. That one was down and trading around $25.38 at 3:34 and closed at $27.42 up 2.97%.
I ventured into more preferred stocks and exchange trade bonds today. The pricing volatility was just wild with volume amounts indicating that it was individuals behind the incoherent price moves.
I also bought a few shares in stocks that I have not previously traded, but noticed that their price decline was so robust that I decided to start one of my small ball trading programs.
An example is Matthews International Corp. Cl A (MATW):
$22.44 2.31 11.48%
DAY RANGE 19.45 - 22.49
52 WEEK RANGE 19.45 - 40.49
I had 3 buys: $21.5 which seemed reasonable at the time, then $20.5 and finally at $19.81
https://www.marketwatch.com/investing/stock/matw
I became acquainted with that one when I filled out an application for bronze medallion with the Veteran's Administration for my Dad's gravestone. He was in WWII after marrying my mother a few days before Pearl Harbor. The medal was free and was made by MATW so I looked at the company and decided to pass anywhere north of $30 for a variety of reasons, including too much debt. When I do that kind of initial analysis, I will place the symbol in a YF monitor list that may have 250 symbols at the moment. I scanned that list and notice a number of stocks that were well within my consider to buy range and then started to buy them.
I let myself get pulled in. I bought IWM at 10% up at 20.16. About 1/2 a positions worth if it was an individual stock. Oh well. I'll learn to wait. That was my only activity today.
ReplyDeleteThe range was stunning from SnP 250 to 270
So, you did a wiser management of today than I did.
ReplyDeleteDo you think this may go back down again before heading into an melt up?
On another note, I believe that unless there's real recession indicators (beyond what's closed and down now,) once this under a decent plan to eventually get control, the market will recover and move into a stable vix pattern again. It may take a little longer to get back to highs. But the deep opportunities will be over.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2020/03/fhn-ftsprm-jri-oxy-pbct-pfxf-rnwca-scm.html