Economy:
Why economists are getting worried about 2021 The concern is that the first quarter will be negatively impacted by an uncontrolled Covid-19 surge linked to family gatherings for Thanksgiving and Christmas, resulting in more shutdowns and layoffs. The infection rate could easily be significantly higher than the rapid acceleration seen over the past 30 days. In addition, several federal assistance programs have terminated or are in the process of winding down by year end with no new stimulus plan in sight.
Home prices see biggest spike in 6 years in September
New claims for unemployment benefits for the W/E 11/21/20 were reported at 778K vs. consensus estimate of 730,000. U.S. weekly jobless claims The rise is probably due to the rapid rise in Covid-19 infections.
Personal Income and Expenditures for October:
Mnuchin clawback of Fed funds 'deeply irresponsible,' Biden team says | Reuters; Yellen would need Congress to approve use of clawed-back Fed loan funds, Treasury says There is IMO no legitimate reason for Mnuchin's decision. That leaves only a political one, and a petty one at that, based solely on Biden's victory. The Trump administration is salting the earth before leaving.
Advanced U.S. trade deficit in goods widens to $80.3 billion in October - MarketWatch
Black Friday online shopping on track to hit record, Adobe says Shoppers are skipping brick and mortar retailers.
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Markets and Market Commentary:
S & P 500 P/E Ratios as of Wednesday 11/25/20:
GAAP Trailing 12 Months: 41.34
Non-GAAP Estimated Forward 12 months: 25.95
Dividend Yield: 1.65%
Sourced: P/E & Yields
Shiller PE Ratio = 33.24
Market Cap to GDP - The Buffett Indicator - Updated Historical Chart (to 11/24/20)
Cramer calls this stock market 'the most speculative' he's ever seen
I discussed other valuation measures in an 11/26/20 comment.
The S&P 500 Could Jump 20% Next Year. Three Strategists Explain Why. | Barron's Goldman Sachs has a 4,300 SPX target by 12/31/21. That target is based on 2022 non-GAAP estimated SPX earnings per share of $195 and then placing a 22 multiple on that non-GAAP estimate. The forecast is based on a continued V-shaped recovery during 2021 whose dynamics will favor value stocks whose prices are more correlated to changes in the economy compared to growth stocks.
The average forward multiple using non-GAAP is closer to 15 starting in 1982. Yardini has a chart starting in 1982 that shows the average forward P/E at 15.3: Figure 5 Stock Market Briefing: Selected P/E Ratios
1982 marked the start of a 18 year long term secular bull market in stocks.
If I took the $195 earnings estimate for 2022, and slapped a 15 multiple on it, the S & P 500 would be at 2,925 or 712 points below its closing level yesterday and 1,375 points below the GS target for 2022. And those calculations assumes that it is appropriate to use forward estimated non-GAAP earnings; and that $195 is a reasonable estimate using that criteria for 2022 S & P 500 earnings.
One persistent Stock Jock delusion, similar to 81% of republicans believing Donald is honest, is that S & P 500 earnings estimates for the next 12 months are worthy of reliance when, almost invariably, those estimates are far too optimistic. I have documented in prior posts examples of estimates made as of 12/31 for the following year being too high by over 30% compared to the actual results. And that has occurred in a growth economy. I would expect the estimates to be way off that were in existence as of 12/31/19 for 2020.
And the 2020 recession raises another issue about using forward estimates using a robust growth year as the benchmark. In the real world, businesses have to navigate boom and bust years and long periods of slow growth. If I was buying a business, I would not value it at 22 times estimated earnings using a surge earnings year as the starting point.
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Portfolio Management:
In several recent posts and comments, I have discussed my current approach to the stock and bond markets.
To summarize, I will not buy $1K par value bonds (treasuries, municipals or corporates) due to abnormally low interest rates. Consequently, my entire bond portfolio is in a run-off phase.
I will selectively buy equity preferred stocks, including Canadian reset equity preferred stocks, and discuss in Item #1 below harvesting a profit in one of those.
I am wary of stocks.
To reduce risks flowing from new purchases, when risks are elevated for the stock market based on abnormally high multiples and other valuation criteria, I have resorted to my small ball trading system and have focused on stocks that have significantly higher dividend yields than the S & P 500 average. Most of the buys have dividend yields at my cost in excess of 4% though a few are closer to 3%.
The other risk mitigation technique is to concentrate purchases in rationally priced value stocks that pay those 4%+ dividends. That universe of selections is rapidly shrinking. Those stocks are generally in beaten down sectors that have not participated in the rally off the March lows until the past few weeks (e.g. regional banks).
In the last bubble that led to a 50% valuation reset in 2000-2002, I had decent alternatives to stocks. For example, the 3 month treasury bill rate was over 6% in 2000 but is now hugging zero.
3-Month Treasury Constant Maturity Rate-St. Louis Fed
So I have to adapt in a zero bound short term interest rate environment with brokerage sweep accounts and money market funds paying .01%.
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Trump:
For awhile, it looked like Dictator-Want-To-Be Don would have to be removed from the White House by Seal Team 6, but he appeared on Thursday to graciously offer to leave once the Electoral College makes the "mistake" of confirming Biden's win.
But then he tweeted that was not enough for him to vacate:
Maybe Seal Team 6 will need to stay on standby alert, or it may be necessary to use the 101st Airborne Division for the extraction. History of the 101st Airborne Division - Wikipedia
Don the Authoritarian wanted Americans to know, when and if he voluntarily leaves the White House, that would be a huge concession for him, because everybody knows "there was massive fraud" that led to Biden winning. Trump flips out on reporter: 'I'm the President of the United States!' YouTube
So massive in TrumpWorld that Demagogue Don can not prove a single fraudulent vote was cast using evidence that would be admissible in a court. Facts do not matter in Trump's America and never will.
Donald is correct in noting that almost 80% of republicans believe Biden won only through massive voter fraud.
I would note in response that is close to the 81% who believe Don the Con is honest, and a similar number of republicans view him as a role model for their children.
Those polling results say a great deal about those who hold those beliefs, confirming at a minimum their permanent residence in an Alternate Reality.
One Trumpster donor, who gave Donald's campaign $2.5M to prove voter fraud, has filed suit wanting his money back. Donor sues pro-Trump group over failure to prove voter fraud: 'Empty promises' | TheHill
Donald is not going to stop being the most prodigious spreader of fact free conspiracy theories and false narratives after leaving office.
He will continue his #1 worldwide ranking in both categories.
The main benefit is that world leaders and the diminishing number of U.S. citizens still tethered to reality can relegate Donald to the same status as Alex Jones, probably a few pegs below, and certainly no higher.
The Inside Story of Michigan’s Fake Voter Fraud Scandal - POLITICO
Trump has asked the republicans, who control Pennsylvania's state legislature, to ignore the certified election results and to appoint a slate of electors loyal to Donald. Trump asks Pennsylvania lawmakers to 'turn around' election results during GOP event in Gettysburg - MarketWatch Donald claimed the election was rigged; and that he actually won Pennsylvania "by a lot". Trump 2024: Most Republican voters want to see Donald Trump run for president again - MarketWatch
In Pennsylvania, a republican state court judge, Patricia A. McCullough, issued a temporary restraining order last week blocking further certification of the vote count pending an evidentiary hearing. That order was issued in connection with yet another republican lawsuit seeking the invalidate the election results. The PA Supreme Court lifted the injunction shortly after it was issued by the republican judge. GOP effort to invalidate more than 2.5 million votes in Pennsylvania dealt another setback - The Washington Post (the republican judge's order "threatens to disrupt the certification of every race in the 2020 general election; foreclose the seating of elected representatives; indefinitely postpone the December 1 start of the General Assembly’s term; undermine the will of the voters; and cast a wholly unwarranted cloud over Pennsylvania’s election results.")
Obviously, in Trump's America, even if there was a landslide victory for a democrat, the election is subject to reversal and cancellation by republicans.
Tucker Carlson is facing backlash from "conservatives"; Tucker Carlson Dared Question a Trump Lawyer. The Backlash Was Quick. - The New York Times; Tucker Carlson criticizes Sidney Powell for lack of evidence in election fraud claims - The Washington Post I would make two points in response. The backlash is not from "conservatives". The second is that the Trumpsters will attack anyone who even asks for proof supporting a conspiracy theory.
Newsmax and OANN are telling lies about the election as more people tune in
The Fake News President was unhappy with the decision of a republican federal district court judge dismissing his Pennsylvania election lawsuit as meritless. Trump vows to appeal judge's dismissal of Pennsylvania election challenge | TheHill; ‘This is simply not how the Constitution works’: Federal judge eviscerates Trump lawsuit over Pennsylvania results - POLITICO
America's Mad King had sought to cancel all mail-in ballots in PA. You'll Be Back "Hamilton" Jonathan Groff - YouTube
Trump appealed that decision to the U.S. Court of Appeals for the Third Circuit. Trump appeals Pennsylvania vote case seeking to block Biden
Interestingly, the appeal does not contest the dismissal for failure to state a legal claim, but instead appeals the court's decision denying Trump's motion to amend the complaint to include a fraud allegation that had been voluntarily deleted by Trump's prior attorneys. The relief sought by Trump in that Amended Complaint was to cancel all mail-in ballots.
Leave to file an amended complaint is a discretionary decision by the judge and understandably he denied the request under the circumstances.
This is not a serious appeal but provides the Fake News networks with an opportunity to mislead their viewers.
If Trump had proof of fraud that could withstand even minimal scrutiny in a court, he could have filed a new complaint with those allegations and sought to enjoin PA's certification, resulting in the republican controlled PA legislature appointing the electors. Trump Campaign's Third Circuit Appellate Brief, Explained | Law & Crime
This is just another example of the republicans actively trying to undermine the democratic processes which is a broad based political power strategy that goes far beyond voting.
The three judge panel of the Third Circuit dismissed that frivolous appeal yesterday. Federal appeals court denies Trump campaign effort to revive Pennsylvania lawsuit saying 'claims have no merit' The 21 page opinion, was written by Trump appointee Stephanos Bibas. The other two judges on the panel were appointed by other republican presidents.
In Harsh Rebuke, Appeals Court Rejects Trump’s Election Challenge in Pennsylvania - The New York Times; republished at MSN: In Harsh Rebuke, Appeals Court Rejects Trump’s Election Challenge in Pennsylvania
Jenna Ellis, Donald's attorney, claimed that the judiciary was part of a conspiracy "to cover up the allegations of massive voter fraud". Ms. Ellis has been very specific and clear on Trump's goal-throw out the choice made by the voters and allow republican legislators pick the electors.
Another group of "republicans", led my Congressman Mike Kelly who represents PA's 16th congressional district, filed a lawsuit in a PA state court requesting an injunction declaring mail-in votes illegal or, in the alternative, to direct Pennsylvania's republican controlled legislature to pick the electors. Pennsylvania Republicans Seek to Block Vote Certification
When the GOP's legal arguments are reduced to their essence, the common theme is not to count only all "legal" votes, as that party claims, but to cancel lawful votes that made it through their voter suppression efforts.
This is a link to this ruling: Memorandum Opinion
Lawsuits related to the 2020 United States presidential election - Wikipedia
PolitiFact | Trump again flat wrong with claims about Wisconsin voter fraud Trump's claims were rated "Pants on Fire".
PolitiFact | Fact-checking false claims about the 2020 election
The Facts on Trump's Post-Election Legal Challenges - FactCheck.org
Trump tweets string of falsehoods about Wisconsin absentee voters - The Washington Post
Trump Misinformation on Georgia Ballot Rejections - FactCheck.org
Georgia Secretary of State Raffensperger: Elections call for integrity
Fact-checking Trump’s cellphone rant of election falsehoods - The Washington Post
Opinion | What Makes Trump’s Subversion Efforts So Alarming? His Collaborators - The New York Times It goes beyond the fact that virtually all republican politicians enabled Trump's most recent attack on democracy. They have been doing that for 4 years. The real enablers are the ones who are the ultimate source of their power, the people who vote for them.
The republicans have not yet explained how votes were changed from Trump to Biden or to offer any proof which of course is never needed in Trump's America before making an accusation that undermines the faith in the democratic process.
Nor have they explained why the hand recounts in Georgia produced the same result as the Dominion voting machines, nor do they mention that the machines are tested before starting the count to ensure that the tally is accurate. Never let facts get in the way of a preposterous conspiracy theory sold to the gullible True Believers.
Even with the hand count proving the machine vote tabulation, the Trumpsters still claim that voting machines deleted Trump votes and changed Trump votes to ones for Biden. It is important to fully understand and accept as a given that facts and truth can not disprove a republican conspiracy theory formed without any evidence. That is not going to change when Donald leaves office.
Voting Machine Conspiracy Theories Harm U.S. Cybersecurity | Cato @ Liberty
It is interesting that republicans managed to convince hispanic voters in Miami-Dade county, that Biden was a socialist and resembled Hugo Chavez and Fidel Castro in some manner that lacked any accurate details. This successful effort at disinformation is remarkable since those two leaders have far more in common with Trump, including a perpetual flow of B.S., false narratives, authoritarianism and demagoguery.
The republican conspiracy theory that Hugo Chavez, who died in 2013, was somehow involved in manipulating voting machines used in the 2020 U.S. election is just the latest example of asinine fact free narratives intended to manipulate the brain dead. It is noteworthy that this conspiracy theory was spread by the so-called "conservative" media outlets. No real conservative would do so.
How Misinformation ‘Superspreaders’ Seed False Election Theories - The New York Times Republicans do not need assistance from Putin to spread false information about the elections.
The democracy hangs on — by just enough Fortunately, there were two reputable republicans in critical places in Wisconsin and Georgia. Otherwise, the anti-democracy party may have succeeded in stealing those elections. That thin veneer protecting the voting process will probably IMO be an even more rare exception in the future. Republicans have learned a lesson from the 2020 election. Put sycophants who will do what they are told at key places in the election machinery.
Dialing into Pa. GOP meeting, President Trump shows no sign of concession - ABC News
I read Donald's tweets last week. I did not see any written by him referring to the pandemic or any substantive issue. Donald repeatedly claimed instead that the election was rigged and stolen from him without of course presenting any evidence. Trump knows that his party lives in an echo chamber of false information and narratives that truth will never be able to penetrate.
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Trump's appointment of Michael Pack to head the U.S. Agency for Global Media was just another example of how an authoritarian operates. That U.S. agency oversees Voice of America and related networks like Radio Liberty and Radio Free Asia. Pack is a Trump loyalist who immediately was set out to end journalist independence and to fire oversight boards. Judge slaps down Trump appointee who has sought to reshape Voice of America and related agencies - The Washington Post The judge issued a preliminary injunction prohibiting Park from communicating with journalists or threatening them. The injunction was issued in this lawsuit: PI-Brief-Turner-v-USAGM.pdf It is not surprising of course that all 53 GOP senators voted to confirm Pack's nomination. U.S. Senate: U.S. Senate Roll Call Votes 116th Congress - 2nd Session
This article summarizes just another tactic used by the anti-democracy party. A dark money mystery in Florida state senate race
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Covid-19 Updates:
The pandemic remains firmly "under control" in TrumpWorld with only a few cases popping up here and there:
 |
| As of 11/27/2020 |
Fox News is mocking CDC guidance for Thanksgiving gatherings Thanksgiving will turn into a massive superspreader event with Fox "news" and Trump facilitating or encouraging that outcome. Fox is a superspreader of Fake News and conspiracy theories but it will look responsible compared to the emerging "conservative" Fake News networks.
White House Thanksgiving proclamation calls for Americans to 'gather' even as Covid-19 surges
Fox "news" bears significant responsibility for downplaying the pandemic that contributed to its rapid spread including but not limited to falsely comparing Covid-19 to the seasonal flu.
AstraZeneca Covid vaccine study results clouded by manufacturing error
Covid vaccine: CDC should warn people the side effects from shots won't be 'walk in the park' (participants in the Pfizer and Moderna trials experienced "high fever, body aches, bad headaches, daylong exhaustion and other symptoms after receiving the shots. While the symptoms were uncomfortable, and at times intense, the participants said they often went away after a day, sometimes sooner." The concern is that many will not return for the second shot, and a large segment of the population will refuse to take any.
Doctors slam Ron Johnson over hearing on COVID-19 treatments Senator Johnson (R-WIS) is a pure Trumpster and, as such, is still angrily touting hydroxychloroquine notwithstanding overwhelming evidence that this drug is ineffective and may cause harm to some patients. During the hearing, Johnson pushed one of the republican conspiracy theories that doctors were not administering this drug because it was cheaper and consequently they would make less money. Fox "news" spread disinformation about this drug.
It is important to remember that the Alternate Reality of TrumpWorld has many creators but still requires tens of millions to accept the false claims as true in order to work.
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1. Canadian Reset Equity Preferred Stocks:
A. Sold 150 BMOPRS at C$19.10 (IB account):
Quote: BMO-PS.TO
Profit Snapshot: +CAD$805 or +US$618.46
Item # 1.A. Added 50 BMOPRS at C$12.67 and 50 at C$10.59 (4/25/20 Post); Item # 1.A. Bought 50 BMOPRS at C$17,85 (10/16/19 Post) My average total cost for 150 shares was C$13.72.
Investment Category: I classify the Canadian reset preferred stocks as part of my Equity Preferred Floating Rate Securities
Security: Reset Equity Preferred Stock
Dividends: Quarterly and non-cumulativeCurrent Coupon: 3.852% until 5/24/24
Resets: Every 5 years at a 2.33% spread 5 year Canadian government bond.
The prospectus can be accessed here.
Issuer: Bank of Montreal
Last Dividend Payment:
2. Small Ball:
A. Added 8 GLQ at $10.95:
Quote: Clough Global Equity Fund Overview
Closing Price 11/27/20: GLQ $12.62 +$0.06 +0.48%
"Having a global, flexible mandate, the Fund will invest at least 80% in equity and equity-related securities in U.S. and non-U.S. markets, and the remainder in fixed income securities, including both corporate and sovereign debt, in both U.S. and non-U.S. markets."
The fund will do some short selling as well.
Sponsor's Website: Clough Global - GLQ
Holdings as of 7/31/20 (SEC Filing)
Leveraged: Substantial
Last Discussed: Item # 1.C. Added 2 at $11.11 ( 10/24/20 Post); Item #1.H. Started GLQ-Bought 10 at $11.37; 10 at $11.18 (8/8/20 Post)
Average Cost Per Share this account: $11.08 (20+ shares)
Dividend: Monthly at $.1104 per share($1.3248 annually)
Supported by ROC (RETURN OF CAPITAL)
Return of Capital and CEFs - Fidelity; Return of Capital and CEFs: Part 3 - Fidelity
Yield at AC = 11.96%
Last Ex dividend: 11/19/20
Data as of 10/29 Trade:
Closing Net Asset Value Per Share: $13.17
Closing Market Price: $10.97
Discount: -16.7%
Sourced: GLQ- CEF Connect (Click "Pricing Information" tab)
Goal: Total Return (before ROC adjustments to cost basis) in excess of the dividend payments.
B. Added 10 EXG at $7.25; 10 at $7.1:
Quote: Eaton Vance Tax-Managed Global Diversified Equity Income Fund Overview
Closing Price 11/27: EXG $8.29 +$0.02 +0.24%
Sponsor's Website: Tax-Managed Global Diversified Equity Income Fund (EXG) | Eaton Vance
Holdings as of 7/31/20 SEC Filing
Last SEC Filed Shareholder report EXG (semiannual, period ending 4/30/20)
Last Discussed: Item # 1.P. Added 20 EXG at $7.4(10/24/20 Post); Item # 1.A. Bought 100 EXG at $7.42 (7/11/20 Post) I discussed in that last linked post some of the disadvantages of this fund.
Data as of 10/29 Trade:
Closing Net Asset Value Per Share: $8.17
Closing Market Price: $7.25
Discount: -11.26%
Sourced: EXG-CEF Connect (click "Pricing Information" tab)
Average Cost Per Share This Account: $7.38 (144+ shares)
Dividend: Monthly at $.0616 (annually at $.7392)
Substantial ROC Support
Return of Capital and CEFs - Fidelity; Return of Capital and CEFs: Part 3 - Fidelity
Yield at AC = 10.02%
Last Ex Dividend: 11/20/20 (owned all as of)
Dividend Reinvestment: Yes, in this account. I may start taking the dividend in cash when the discount to net asset value per share narrows to around 5%.
C. Added to SCM-Bought 5 at $8.15 (Fidelity Taxable):
Quote: Stellus Capital Investment Corp. (SCM)- a tiny BDC
Closing Price 11/27: SCM $11.40 +$0.10 +0.88%
Website: Stellus Capital
Management: External
10- Q for the Q/E 9/30/20 (summary of investments starts at page 6)
2019 Annual Report (risk factor summary starts at page 31 and ends at page 59)
Dividend: Quarterly at $.25 per share, reduced from $.34 per quarter earlier this year-paid in monthly installments.
Last Ex Dividend: 9/14/20
Last Buy Discussion: Item # 1.E. Bought 5 SCM at $7.41 in Fidelity Account (8/15/20 Post). I discussed the second quarter earnings report in that post.
Net Asset Value Per Share History:
9/30/20: $ 13.17 10-Q at page 2
6/30/20: $13.34
3/31/20: $11.55
12/31/19: $14.14
12/31/18: $14.09
12/31/17: $13.81
12/31/16 $13.69
12/31/15: $13.19
12/31/14: $13.94
12/31/13: $14.54
November 2012: IPO at $15 ($14.46 after underwriters discount)
Equity Offerings:
Last Earnings Report (9/30/20): Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2020
NII per share Q/E 9/30/20: $.27, down from $.31 for the 2019 3rd quarter
NII per share 9 months 2020: $.87, up 1 cent compared to same period in 2019
Asset Quality Claims as of 9/30/20:
I have recently pared my position in the Fidelity taxable account, which I will discuss in a subsequent post. I sold 20 shares at $11.08. The pare reduced my average cost per share to $8.15 in that account and increased my dividend yield to 12.27%.
D. Added to DBX-Bought 1 at $18.1; 1 at $17.79:
Quote: Dropbox Inc. (DBX)
Closing Price 11/27: DBX $19.54 +$0.43 +2.25%
Website: Dropbox
Investment Category: Lottery Ticket Basket
Last Discussed: Item # 1.C. Started DBX as a Lotto-Bought 5 at $19.1; 1 at at $19.1; 1 at $18.87; 1 at 18.7 (10/17/20 Post) I discussed the 2nd quarter earnings report in that post.
IPO: $21 in March 2018 Prospectus
The price signal sent by the current price compared to the $21 public offering price expresses meaningful doubt IMO, rather than certainty, that Dropbox will be able to succeed longer term against its competitors. The decline in price since the IPO is with the strong headwind of movement toward cloud based services.
Last Earnings Report (9/30/20): SEC Filed Press Release
"Net cash provided by operating activities was $200.9 million, as compared to $149.7 million in the same period last year. Free cash flow was $187.0 million, as compared to $102.5 million in the same period last year.
"Paying users ended at 15.25 million, as compared to 14.00 million for the same period last year. Average revenue per paying user was $128.03, as compared to $123.15 for the same period last year."
GAAP:
Non-GAAP:
Cash & Short Term Investments: $1.2265B
LT Debt: None
"GAAP gross margin was 78.8%, as compared to 75.5% in the same period last year. Non-GAAP gross margin was 80.0%, as compared to 76.7% in the same period last year."
E. Added to LGI-Bought 5 at $14.77:
Quote: Lazard Global Total Return & Income Fund Overview
Closing Price 11/27: LGI $17.23 +$0.13 +0.76%
SEC Filed Semiannual Report (period ending 6/30/20)
Holding as of 9/30/20 SEC Filing
(Cost= $202.388+M/Value=$259.436+M)
Last Discussed: Item # 1.K. Bought 10 LGI at $15.18 (8/15/20 Post)
Average Cost Per Share This Account: $15.1 (25 shares this account)
Dividends: Monthly at $.1065 per share ($1.278 annually)
Substantial ROC support
Yield at AC = 8.46%
Data Date of 10/30/20 Trade:
Closing Net Asset Value Per Share: $17.14
Closing Market Price: $14.76
Discount: -13.89%
Sourced: LGI-CEF Connect
F. Started SEM-Bought 5 at $20.98:
Quote Select Medical Holdings Corp.
Closing Price 11/27/20: SEM $24.65 -$0.15 -0.60%
"Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on number of facilities. . . .As of September 30, 2020, Select Medical operated 100 critical illness recovery hospitals in 28 states, 29 rehabilitation hospitals in 12 states, and 1,777 outpatient rehabilitation clinics in 37 states and the District of Columbia. Select Medical’s joint venture subsidiary Concentra operated 523 occupational health centers in 41 states. At September 30, 2020, Select Medical had operations in 46 states and the District of Columbia."
Key Developments-Select Medical Holdings
Closing Price Day of Purchase (10/30/20): $20.98, down $1.08 or 4.9%.
Prior to this purchase, I do not recall owning SEM's common stock, but I have owned its senior unsecured bonds during a period when I was speculating in junk rated bonds due to their yield spreads being unusually high compared to investment grade bonds. That was occurring mostly in 2011-2012.
SEM's debt level has made me nervous about owning the bonds and the lack of dividend was a turnoff for the common stock given the elevated risk associated with the firm's leverage and its dependence on Medicare as a source of funding.
10-Q for the Q/E 9/30/20 at page 15 (credit facility and bond debt =$3.403+B); Select Medical Corporation Announces Pricing and Upsizing of its Offering of an Additional $675 million of its 6.250% Senior Notes due 2026 (12/5/2019) rated at B- by S & P and B3 by Moody's. The Moody's report notes that deleveraging is "challenged by Select's use of debt to fund at least part of the acquisition of the remaining stake in Concentra".
I have the common stock on a monitor list and noticed the decline 4.9% decline on 10/30/20. I was busy doing other tasks that day so I spent only a minute researching recent news and consequently bought only 5 shares as a tickler to perform more research.
Stock Information as of 11/27/20:
SEM Analyst Estimates | MarketWatch
5 Year Financials:
Dividend: None
5 Year Chart:
Last Earnings Report: SEC Filed Press Release
"Earnings per common share was $0.57 on a fully diluted basis for the third quarter ended September 30, 2020, compared to $0.23 for the same quarter, prior year. Adjusted earnings per common share was $0.56 on a fully diluted basis for the third quarter ended September 30, 2020, compared to $0.33 for the same quarter, prior year. Adjusted earnings per common share excludes the gains on sales of businesses and related tax effects for the third quarter ended September 30, 2020. Adjusted earnings per common share excludes the losses on early retirement of debt and related costs, and their related tax effects, for the third quarter ended September 30, 2019."
G. Restarted CIO-Bought 20 at $6.3:
Quote: City Office REIT Inc. (CIO)
Closing Price 11/27: CIO $9.08 -$0.06 -0.66%
Website: City Office REIT
Our Properties-City Office REIT
2019 Annual Report SEC Form 10-K
Last Elimination: Item # 1.H. Eliminated CIO-Sold 20 at $8.3 and 10 at $8.52 (6/6/20 Post)(profit snapshot $34.64)
Last Buy Discussions (shares sold): Restarted CIO-Bought 10 at $7.3; 5 at $7 (3/28/20 Post); Item # 4.D. Added 5 CIO at $6.8 (4/4/20 Post)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Dividend: Quarterly at $.15 per share, reduced from $.23 effective for the 2020 2nd quarter payment.
City Office REIT, Inc. Common Stock (CIO) Dividend History | Nasdaq
Last Ex Dividend: 10/7/20
Yield at $6.3 = 9.52%
5 YEAR CHART:
Last Earnings Report (9/30/20): Released after my purchase.
City Office REIT Reports Third Quarter 2020 Results
I view the AFFO per share as the most relevant cash flow number for an office REIT:
 |
| AFFO Per Share $.23 |
CIO's Definition of AFFO:
Full Year 2020 Guidance:
Discussed at City Office REIT FFO beats by $0.05, beats on revenue (NYSE:CIO) | Seeking Alpha
Other CIO Sell Discussions:
Item # 1.C. Sold 10 CIO at $11.58 (5/17/2018 Post)(profit snapshot = $13.94)Item # 8 Sold 100 CIO at $13.5: Update For Equity REIT Basket Strategy As Of 7/28/16 - South Gent | Seeking Alpha (profit snapshot= $207.97);Item # 1. Sold 50 CIO at $12.38: Update For Equity REIT Basket Strategy As Of 3/7/16 - South Gent | Seeking Alpha (profit snapshot $61.04 plus one dividend
CIO Trading Profits to Date: $317.59
CIO Preferred Stock: I also own CIOPRA in several of my accounts. City Office REIT Inc. 6.625% Cumulative Preferred Series A ($25 par value).
Last Buy Discussions: Item # 1.A. Bought 20 CIOPRA at $20.6; 5 at $19.14; 5 at $18.6; 5 at $18.35; 5 at $17.5; 5 at $15.15; 5 at $13.56; 10 at $16.5(3/28/20 Post)
Sell Discussions: Item # 3.B. Pared CIOPRA in Schwab Account: Sold 10 at $24.47-Highest Cost Lots (8/22/20 Post)(profit snapshot = $55.99); Item # 6.A. Pared CIOPRA-Sold 10 at $21.17 and 10 at $22.25-Highest Cost Lots (6/6/20 Post)(profit snapshot = $22.17); Item # 1.A. Eliminated CIOPRA-Sold 50 at $24.77-Used Commission Free Trade (4/24/19 Post)(profit snapshot = $155.22); Item # 4.A. Sold 50 CIOPRA at $24.14-Used Commission Free Trade (3/17/19 Post)(profit snapshot = $20.86); Item 3.A. Sold 50 CIOPRA at $25.21 (1/27/17 Post)(profit snapshot = $146.97). CIOPRA realized gains to date are $401.21.
H. Started BCBP-Bought 10 at $9.2:
Quote: BCB Bancorp Inc.
Closing Price 11/27: $10.75 -$0.10 -0.92% (regional bank stocks retreated last Friday: KRE $49.43 -$0.72 -1.44%: SPDR S&P Regional Banking ETF, up from $41.15 close on 10/30/20)
Stock Information as of 11/27/20:
"Established in 2000 and headquartered in Bayonne, N.J., BCB Community Bank is the wholly-owned subsidiary of BCB Bancorp, Inc. (NASDAQ: BCBP). The Bank has 31 branch offices in Bayonne, Carteret, Colonia, Edison, Hoboken, Fairfield, Holmdel, Jersey City, Lodi, Lyndhurst, Maplewood, Monroe Township, Newark, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, three branches in Hicksville and Staten Island, New York."
Investment Category: Regional Bank Basket Strategy
BCBP Analyst Estimates | MarketWatch
Current consensus at $.90 per share for 2021.
Dividend: Quarterly at $.14 per share ($.56 annually)
BCB Bancorp, Inc. Declares Cash Dividend of $0.14 Per Share
Yield at $9.2: 6.09%
Last Ex Dividend Date: 11/5/20 (owned as of)
5 Year Financials:
Properties:
Owned Securities Available for Sale as of 9/30/20:
Last Earnings Report (9/30/20): BCB Bancorp, Inc. Reports Third Quarter 2020 Net Income of $8.3 Million; Strong Results for Loan Deferrals and Net Interest Margin
"net income of $8.3 million for the third quarter of 2020, compared to $2.7 million for the second quarter of 2020, and $5.2 million for the third quarter of 2019. Earnings per diluted share for the third quarter of 2020 were $0.47, compared to $0.14 in the preceding quarter and $0.30 in the third quarter of 2019. For the first nine months of the year, net income was $13.6 million, or $0.73 per diluted common share, compared with $15.9 million, or $0.91 per diluted common share, for the first nine months of 2019."
Tangible Book Value Per Share: $12.53
I. Started DDD-Bought 10 at $6; 5 at $5.8:
Investment Category: Lottery Ticket Basket
5 year Financials: Profits are not required apparently.
2019 Annual Report at page 25
5 Year Chart:
Last Earnings Report (Q/E 9/30/20):
3D Systems Announces Sale of Cimatron and GibbsCAM Businesses | 3D Systems ("purchase price of $65 million, subject to certain closing adjustments.")
J. Eliminated PFBI-Sold 25 at $12.31:
Quote: Premier Financial Bancorp Inc. (PFBI)
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: +$25.73 (includes prior sell)
Discussed at Item # 1.H. Started PFBI-Bought 10 at $12; 5 at $11.85, 5 at $11.4; 5 at $11.2 (10/3/20 Post); Item #1.B. Added to PFBI-Bought 5 at at $10.7 and Sold Highest Cost Lot at $12.75 (10/24/20 Post)
Dividend: Quarterly at $.15 per share
Last Ex Dividend: 9/15/20
Investment Category: Regional Bank Basket Strategy
Rationale: I did not like the third quarter report.
Last Earnings Report (Q/E 9/30/20):
"Premier realized net income of $5,624,000 (38 cents per diluted share) during the quarter ended September 30, 2020, a 10.3% decrease from the $6,267,000 of net income reported for the third quarter of 2019."
K. Started MJ-Bought 10 at $11.37:
Quote ETFMG Alternative Harvest ETF Overview
Closing Price 11/27: MJ $15.21 +$0.86 +5.99%
5 Year Chart:
I discussed this buy in a 11/5/2020 comment.
"Investment" Category: Lottery Ticket Basket
This buy was in response to growing marijuana legalization movement in the U.S.
In the recent election, voters in several states approved ballot measures legalizing marijuana used recreationally or medical purposes. Weed now legal in Arizona, New Jersey, South Dakota, Montana
I do not expect the companies involved in this industry to report GAAP profits anytime soon.
Sponsor's website: MJ - ETFMG® (has a map of current status of state legalizations)
Expense Ratio: .75%
Top Holdings as of 11/26/20:
I was previously more adventuresome in trading another marijuana ETF, priced in Canadian dollars and traded on the Toronto exchange. Horizons Marijuana Life Sciences Index ETF Overview (CA:HMMJ) Fortunately, I eliminated my last position before the price bubble burst, realizing a total gain of C$889.5. I last eliminated a position in January 2019: Item # 4.B Eliminated CA:HMMJ-Sold 50 at C$18.31 (1/30/19 Post)(profit snapshot =C$216); Prior Trade Snapshots (profit snapshots = C$673.5 consisting of C$418.5 for 50 shares and C$255 for 50 shares )
There was an irrational frenzy in marijuana stocks in 2018 that started with Canada's move to legalize use. MJ topped out in $43 to $45 range.
L. Added to OFS-Bought 5 at $3.97:
Quote: OFS Capital Corp
Closing Price 11/27: OFS $6.89 -$0.01 -0.14%
Last Buy Discussion: Item # 3.F. Bought 40 OFS with an Average Cost Per share of $4.18 (11/7/20 Post) I discussed the third quarter earnings report in a comment.
M. Eliminated Pfizer-Sold 6 at $36.69:
Quote: Pfizer Inc. (PFE)
PFE | Pfizer Inc. Analyst Estimates | MarketWatch
Profit Snapshot: $43.6
Dividend: Quarterly at $.38 per share
Pfizer Inc. - Stock Information - Dividend & Split History
I sold on the ex-dividend date.
I discussed the reason for selling PFE in a 11/5/20 comment. I did not want to fool with the spinoff of PFE's Viatris Inc. stock received as a result of combining its Upjohn subsidiary with Mylan.
Since the distribution of Viatris shares have now taken place, I will consider restarting a PFE position at a price lower than the current one. I may wait until after PFE cuts its dividend.
There may be a negative reaction when Pfizer cuts the dividend which will happen when Viatris shares starts paying a dividend next year. Previously, Pfizer made it clear that its payout after the spinoff will be adjusted down by the amount its shareholders will receive from Viatris which has previously stated that it will pay out 25% of its annual cash flow as dividends which is currently around $4B. Morgan Stanley's analyst estimates that Pfizer will raise the quarterly dividend by 1 cent next month and will then cut it by 10 cents when Viatris declares its first quarterly dividend in the 2021 first quarter. How a Growth-Stock Pfizer Will Pay Out Its Dividend | Barron's
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
GAAP E.P.S. $.39
Non-GAAP E.P.S. of $.72
Revenues: 12.131B down from $12.68B in the 2018 3rd quarter (note that Upjohn accounted for $1.916B of 2020 third quarter revenues)
I do not care for a company report that has a large differential between GAAP and Non-GAAP earnings, with the Stock Jocks paying attention only to the Non-GAAP number as they have been trained to do.
I actually pay attention to both numbers. Frequently, the non-GAAP numbers exclude actual cash expense or quasi-expenses (e.g. stock compensation) items that are recurring for the company or close to it. Another category is "asset impairment" which generally indicates that the company paid too much for an asset but forget about that as well.
For me, it just takes to much time to form an opinion about those adjustments and then decide what I am willing to pay for the stock using in part historical P/E ratios. And that is before I have to do a dive into existing drug sale trends, patent expirations for major drugs and the pipeline. So all of that does not prevent me from buying, but makes me more picky about price and limits my exposure to 100 shares or less.
Look at the GAAP E.P.S. Y-O-Y Comparison:
I randomly picked out a third quarter from the past. For the Q/E 9/30/2006, Pfizer reported revenues of $12.28B. GAAP E.P.S. of $.46 and non-GAAP E.P.S. of $.54. The company announced that it was going to perform a comprehensive cost reduction initiative to create a learner and more agile company for growth ahead. SEC Filed News Release
Prior Sell Discussions: Item # 4.A. Sold Remaining 33 PFE shares at $33.44 (8/13/2017 Post)(profit snapshot = $90.67); Item # 3.A. Sold 100 PFE at $34.03 (7/13/17 Post)(profit snapshot = $143.42); Item # 3.A. Sold 100 PFE at $34.65 (3/13/17 Post)(profit snapshot =$235.86); Item # 1 Sold: 100 PFE at $31.68 (5/17/14 Post)(profit snapshot = $282.12) Buy discussions are linked in those posts.
I would note that Pfizer's stock was selling at over $45 in June 2000. Look at the chart starting in 2000.
The growth through acquisition strategy, many of them being overpriced, has not been successful IMO in creating shareholder value.
N. Eliminated FBNC-Sold 11+ at $27.02:
Profit Snapshot: +$70.16
Investment Category: Regional Bank Basket Strategy
Last Discussed Item # 1.K. Restarted FBNC-Bought 5 at $21; 5 at $20.45; 1 at $20.08 (9/26/20 Post)
Rationale: I will generally consider paring or eliminating a position into a parabolic price pop, particularly when that occurs shortly after purchasing shares which was the case with FBNC. The price pop was caused in large part by S & P's announcement that the stock would be included in its S & P SmallCap 600 index. First Bancorp Added to the S&P SmallCap 600® Index
Close Day of Trade: FBNC $27.39 +$2.97 +12.16%
O. Continued Paring FDUS-Sold 20 at $13.75 (highest cost lot in Fidelity Taxable Account):
Quote: Fidus Investment Corp.
The lot was bought at $13.75, so there was no gain or loss. Item # 1.C
This pare reduced my average cost per share in this account to $9.24.
Yield at New AC: 12.99% (regular dividend only)
In my prior post, I discussed paring my FDUS positions in my Fidelity and Vanguard taxable accounts and have nothing further to add. Items 1.L, 1.M
I am probably in a holding pattern now.
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.
It's a strange pushme-pullyou place for the market. Vaccines and normalcy coming... while hospital beds and staff are running out and surges are happening.
ReplyDeleteNew management is coming. While the old is sabotaging.
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I haven't checked what style FG is using here in a few weeks. I need to.
I've been tempted to buy banks here. With the climb an indication of breakout. Not sure why there'd be any pullback to give a better price from here on out.
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I assume the killing of the nuclear weapon program designer isn't going to bother the markets since there's been no counter action over the weekend.
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My new Viatris shares from Pfizer show a profit. (3 shares I think at 6%.) I did not realize there was announcement of sending some payout to the new shares & reducing Pfizers.
Logically nothing changes. However, I'll start looking for a sell point.
For a while Pfizer was my stock that was doing superwell. I didn't take profits back at $45.
(What a name Viatris... couldn't find something easily pronounceable?)
Land: I do not have breath data from 2000, but the Wilshire 5000 Market Capitalization to GDP ratio, which is now higher than in 2000, indicates widespread over valuation as does other valuation measures.
ReplyDeleteAnd, when I drill down to specific large capitalization stocks that are slow earnings growth companies, I routinely see P/E multiples 25 times (or higher) forward 12 month non-GAAP estimated E.P.S.
I view the far higher than normal P/E multiples to be widespread among established companies that are in the S & P 500, with a few exceptions, and then you have the large number of crazy prices for new and unprofitable companies measured in the tens of billions.
Abnormally low interest rates now and for years to come will be used as justifications for historically higher multiples which is understandable. Compressing bond yields below the rate of inflation makes them highly unattractive for investors; and low inflation and interest rates make future earnings growth more valuable now.
The fact that bonds and other fixed income investments provide negative real rates of return before taxes will cause investors to buy more stocks as the only game in town.
All of that does not mean that the businesses are being rationally priced now based on reasonably forecasted earnings which already include a lift for lower financing costs but do not yet factor a tax increase.
Instead, suppressing interest rates and relatively low inflation over an extended period will cause a price bubble that will eventually pop, a price parabola collapsing upon itself and major indexes are in a parabola spike up now.
But there is no sign yet that the upside momentum off the March lows is about to end.
More upside may be the path of least resistance in a world awash in cash earning next to nothing.
One way to create a bubble in stock prices is to make other alternatives for cash unattractive, which central banks have done and are expected to continue doing, just like improvidently granted mortgage loans fueled a home price bubble in 2000-2007 period.
There are a few external issues that could reverse the upside momentum. It is not clear whether a sufficient number of people will actually take 2 vaccine shots after experiencing unpleasant symptoms after the first one, or how many will even take the first one. There is a possibility that the virus will still be raging through next year. A more important issue is whether inflation will rise enough to force the Fed to raise rates.
Great framework answer. That helps a lot.
DeleteThat's true that a lot of regular old companies have high PEs. Not priced as nosebleed and PE high as the tech covid crowd. But their pricing HAVE been factors when I look to buy. There's one set of the market that still hasn't rallied. But that's the set where individual stocks may not survive, or may take several years to truly recover. Plus banks for some reason.
We still haven't seen the bankruptcies impact in the economy.
If vaccines don't get this under control by mid-next year, that will change the exuberance. Definitely true. I've been assuming it would. Also assuming that people will take the vaccine in spite of the antivaxxer hype.
(When, how did that become a right wing thing. I used to argue it with earthy crunchy lefties telling me the latest miracle herbal cure for whatever ailed me.)
If GOP holds Congress, there won't be more money. That unknown makes a big difference going forward. While I'd like to see DNC hold it, that seems like a big long shot.
(Then again, I've read that on Palor they got the brilliant idea they'll punish Georgia for not supporting Trump enough, by calling for a boycott of the vote.)
Land: Another consideration is that the GOP will salt the earth.
DeleteThe first indication will be whether the republican senators offer any stimulus package that is meaningful, particularly given the expiration of certain programs by year end. Mnuchin refused to extend the FED programs after 12/31/20 which he could have done and the FED thought needed to be done.
The most important consideration for the senate republicans now IMO is that Biden fail as President. If that means millions of Americans will suffer, and the economy grows at a slow pace or even craters, then that is a small price to pay in their calculations. What is important? Regaining absolute power by winning the Presidency in 2022, increasing their majority in the senate and regaining control over the House.
I cited an article in the Covid section that both the Pfizer and Moderna vaccines caused many participants to have Covid like symptoms for up to a day. If that proves to be widespread, many will not come back for a second shot.
And, I doubt that more than 60% would get the first shot, probably fewer when more become aware of the side effects. Effectiveness, while high in the trial, may not last that long and may prove lower when given to tens of millions.
I have a hard time seeing one of the democrats winning a Georgia senate seat. In the suburban areas, there were a lot of Biden votes that were solely anti-Trump votes. Georgia is still a republican leaning state. I suspect a lot of those Biden voters cast their down ballots for republicans and will do so again.
The likelihood is high that it will be GOP Congress and an impediment operation.
DeleteI would feel better if there were machine checks in KY and SC to make sure counts matched paper trails. With Trump yelling what is usually projection "machine manipulation"... and the even small chance McConnell can be ousted, it'd be worth it.
But I digress.
I heard the 2022 map is good for Dems. I hope so.
I don't see myself as a good judge of what people will do with the vaccines. I've run 102 for days after a pneumonia vaccine. So when it's only a bad day, I think I got off light. How long it lasts seems to be data we have no information on at all at this point. Considering we can't get a high % to vote, even by mail, 60% seems like the top limit.
The effectiveness is likely being tested on good subjects, not on vary vulnerable, or high risk. But 90% is a nice starting point.
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I put in an order to sell most of my PFE at 38.20. I missed the 38.8 spike this morning.
The deciding factor is the 101% payout ratio. Companies get that high without cutting, but you've pulled up wording pointing to a cut.
It could rally from here on it's vaccine, but this is currently at it's high end. I thought of selling during the announcement rally but didn't spot a reason to.
Finished Mary Trump's book. It adds a info. It was obviously written in a time frame. I would have included more summary directly about his character & his father's and done so earlier in the book, rather than done a straight timeline. Also more specifics on cheating people and the system if she knew it. Glad I wasn't in that family.
This had me nauseous enough. So since the Woodward book sounds worse that way, I'll skip it for now.
This is another rotation day, back to tech and growth.
VIX is at 21 and not up much today for the amount of market sell off.
Land: Regarding Pfizer's payout ratio, the 100% or so dividend payout ratio is based on GAAP earnings which are significantly lower than the non-GAAP version as I discussed in this post. So that gets back to the question of how much an investor is willing to ignore when GAAP results are reduced by items claimed to be extraordinary.
DeleteThe problem with Pfizer is that the sum total of what it paid for acquisitions, starting with Warner Lambert in 2000, is significantly greater than the current market cap. The Warner Lambert acquisition was the only large one that worked out IMO, primarily due to gaining control over 100% of Lipitor's profits, up from 50%.
Drug companies need to grow through in house drug development, rather than through expensive acquisitions.
Pfizer's heyday was in the 1980s and 1990s, and it has been a dud since 2000 except as a trading vehicle and bond substitute IMO.
The Democrats have a chance to pick up a senate seat in PA and NC in 2022. Both incumbent GOP senators are retiring. The Dems will need to find someone better than Cal Cunningham to run in NC.
I read FG's last blog. He is still in a perma bull frame of mind which has worked since the S & P 500 index bottomed at 666 in March 2009. It has certainly been better to be a perma bull, brimming with optimism, than a perma bear since August 1982, provided the investor can deal with the cyclical bear markets by refusing to panic and by buying into the blood in the streets occurrences.
IMO, he is too dismissive of concerns about a double dip recession caused by the negative economic impacts flowing from no new stimulus deal after the old one expires next month and further shutdowns due to the out-of-control pandemic.
I would not conclude the economy is out of the woods due to the current uptick due in significant part to the fiscal stimulus and the FED loan program that Mnuchin just axed. The unemployment numbers may easily start turning back up next month and in the first quarter.
The question is what happens when more people lose their jobs and go on unemployment with no extra benefits, no new stimulus checks, and the expiration of the FED lending program killed by Mnuchin.
Brain malfunction in the first paragraph of my last comment: "GAAP results are increased" not reduced.
DeleteChairman Powell is making it crystal clear that he disagrees with Mnuchin's salt the earth strategy in response to Biden's win.
https://www.cnbc.com/2020/11/30/powell-stresses-importance-of-lending-programs-calls-economic-outlook-extraordinarily-uncertain.html
I agree with Powell that there is a great deal of uncertainty about the near future. The Stock Jocks are in their 100% certain mode predicting nothing but blue skies dead ahead and only perma bear Cassandras are expressing concerns.
Donald is very upset with Governor Kemp (R) of Georgia for refusing to cancel lawful votes.
https://www.cnn.com/2020/11/30/politics/brian-kemp-brad-raffensperger-trump/index.html
Don the Authoritarian keeps saying that he is not being allowed by the courts to prove his fraud allegations.
His lawsuits make a general allegation of fraudulent votes but do not plead any specific details which is required when pleading fraud. He has not yet to my knowledge offered any evidence that would be admissible in court proving that 1 fraudulent vote was cast but nonetheless wants republican officials and/or a court to throw out lawful votes that were cast in accordance with applicable state laws.
I am aware of a claim that 7 dead people from various states voted. When I last checked that one, one woman was alive and did vote and 3 others did not vote and were dead. One woman did die before returning a ballot and the vote was for Trump (possibly illegally made by her husband). There are also some people who lawfully cast a mail-in ballot and who have passed since that time. There was one case where a man, a registered republican, filled out a ballot in the name of his dead mother and he was arrested for committing a felony.
The anti-democracy party is simply trying to undermine democratic processes and institutions necessary for a properly functioning democracy. I would just come to terms with those facts.
PFE does have a high div which makes it attractive. But as you're pointed out that the price has come down. It's the result of that, which isn't a good fundamental's sign.
DeleteCunningham was a big disappointment. He ran on family values and integrity but had a lack of those.
Those are all good points on the economic crunch here. There's that carrot that it doesn't matter because the end of covid is coming.
... but once a recession has been triggered, does it take on a life of it's own? In other words, if the crunch until covid is over triggers a 2nd part to this recession, will the end to covid stop the recession or do recessions build on themselves?
Trump is certainly stress testing the hunt for fraud. He's shown what doesn't exist quite nicely. It'd make a good cartoon if it wasn't so sad.
That undermining of democratic processes, I've wondered if Putin is still pulling strings and getting destruction he wants.
One of my banks closed a branch for 2 days because a teller tested positive for covid.
Land: Both Putin and Donald have the same objectives, which includes (1) stoking and inflaming divisions that already exist in the U.S.; (2) undermining America's faith in voting results; (3) antagonizing U.S. allies in a variety of ways while coddling dictators; (4) pursuing policies that are inconsistent with American values; (5) promoting clearly anti-democracy and authoritarian policies and actions and (6) turning people away from accurate sources of information that enable false narratives to take root and to grow exponentially. Donald has already done more home to America's democracy and democratic processes than Putin could ever hope to do. My list is very long.
DeleteWhile both Russia and Demagogue Don have pursued the same objectives, which are not in America's national interest and would not be supported by any true conservative, there is no direct proof that Russia is pulling Donald strings but only that Donald's conduct and words are consistent with and furthers Russian interests and objectives.
I am with Dan Coates on this issue.
https://www.axios.com/bob-woodward-book-trump-putin-russia-dan-coats-b3994f91-8791-4fdc-9adb-ad093141592b.html
Maybe a smoking gun will turn up down the road. Trumpsters would never believe it anyway.
The double dip recession is just a possibility now, but I would not dismiss it as highly unlikely, nor would I characterize one as more probable than not. I would put the odds somewhere in the in between netherworld.
"Economists fear a "double dip" recession is coming soon"
https://www.cbsnews.com/news/recession-double-dip-2021-economist-fears/
I agree with Coats. I expect Trump gets ideas feed to him from Putin. He's not bright and laps up whatever's said to him with a few complements included. Also Trump's beholden to Putin or his extended circle over his finances.
DeleteBad timing on PFE, sold 2/3s yesterday. I should have given more weight to the gap up being strength in the short term.
Even if the recession double dips, does it matter much since that will disappear after the virus does?
Land: The Stock Jocks probably view a double dip recession, when and if one occurs, as just another brief downturn that will be quickly turned around with vaccine rollouts. My read is that they are placing next to nil odds that a double dip recession will happen.
DeleteMy suspicions about Trump being Putin's Manchurian candidate did not start with the Steele memo since I gave almost no credence to the golden shower claim, though I recognized that Donald was capable of such an act.
My suspicions started to form shortly after his meeting in Helsinki in 2018, where Donald met with Putin in private and then held a news conference disparaging U.S. intelligence agencies on their Russian election interference findings and giving credence to Putin's denial.
https://www.bbc.com/news/world-europe-44852812
That caused me to put some prior activities and words relating to Russia or business dealing with Russians into a different context.
For me Helsinki placed a framework to evaluate Donald's subsequent conduct and words and his activities prior to that meeting with Russians that were made public afterwards or became more widely available so that they came to my attention.
"as just another brief downturn that will be quickly turned around with vaccine rollouts. "
DeleteIsn't that accurate? Even if there's another dip, the economic damage will be undone with the vaccines? Seems like even if there is a double dip, it's not worth any worry.
I've suspected Trump of Russian association since the "Russia are you listening." Knowing a sociopath tells you what he's doing, it sounded like he was doing that.
I think what Putin has on Trump is financial. Not some embarrassing recording. Trump's put up with a lot of embarrassment for his positions. So it's not something embarrassing that would likely blow over. It's more essential to his existence, such as finances or staying out of jail.
Land: The Stock Jocks could easily have a different reaction to their current nonchalance when the economic data starts to turn ugly again. And, it is not certain that the vaccines will turn the economy back up quickly given (1) vast numbers will not take it; (2) delays caused by the enormous logistical problems in delivery and administering the vaccine to those willing to take it; (3) possible unwillingness among many to take the second shot after experiencing side effects from the first and (4) the level and duration of protection is not yet known.
DeleteSo I am concerned about the future course even though a total lack of concern is now the prevailing consensus opinion.
The question for me always comes down to how to allocate when the Stock Jocks are close to 100% certain about a future outcome while I am more pessimistic at 60%/40% in favor of the positive prediction.
I certainly think keeping 15% dry in case of a downturn is a good idea.
DeleteAlso we're still in VIX unstable model phase. I suspect it will play like it has before, under 20 will be the time to sell.
The model doesn't tell whether under 20 will turn into 3 months and clear sailing.
So it's a little harder to tell. External clues are used then.
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But question is, if the vaccine is successful, doesn't it mean the recession will go into recovery?
I've been trying to figure out if recessions feed into themselves, so that once they start, it doesn't matter if the cause stops because the reduced business feeds into other businesses being effected which keeps the recession going, after the cause itself is no longer a cause?
Land: I have been buying into volatility spikes like the one experience in March and to a lesser extent the spikes in May, June-September 2020.
DeleteThose buys have worked out and I have started to pare many of those positions.
The VIX Model suggests that consideration be given to lightening up when the VIX starts to move below 20 after the March 2020 Trigger Event. The Model does not offer an opinion on whether the movement below 20 will continue long enough to form a Stable VIX Pattern or will spike again into the high 20s and potentially higher indicating a continuation of the Unstable Vix Pattern, with that kind of spike occurring during a significant decline.
Recessions can feed on themselves under the right circumstances that normally involve inadequate monetary and fiscal measures to shorten the cycle and to keep it from turning into something more ominous. The Great Depression is an example when a likely recession resulting from the stock market crash was turned into a worldwide depression lasting a decade due to highly inappropriate actions by the Federal Reserve and other central banks as well as a totally inadequate response from the Hoover administration. A depression could have started in 2008 with the wrong policy responses.
The current situation is dicey and hard to predict as to multiple possible outcomes.
My gut, the body part that is reckless enough to make future predictions, tells me that the Stock Jocks do not fully understand the negative aftershocks from the first recession, and consequently dismiss them, nor are they taking into account how consumers will react next year and thereafter from the fears and emotional scars cause by the pandemic. In short, just another example of seeing Blue skies dead ahead when the future is far more murky and possibly unpleasant.
Ah, so the impact of a double dip depends on policy with it. We had the injection of liquidity. Going forward, if GOP has Congress, and McConnell doesn't die of whatever's making his hands blue, it's going to be hard to get the needed, same policy GOP would have issued if they had the WH.
DeleteI agree with the stock jocks that consumers will come back in most areas. People use spending to self-sooth.
The huge question is whether people have savings to spend. So many people were harmed.
There are a few areas of long term change in spending style. More tech & online, some differences in how travel is done. Many people will gain weight as they eat at social gatherings they've been missing out on.
Divorces will go up for the 1st few years when it's easier to move out. What businesses does that benefit? Addictions and anxieties will need to be treated.
Land: Both fiscal and monetary policies are needed to stimulate an economy during a recession. The Fed has gone super accommodative and will remain so with unlimited QE and ZIRP, though its main street lending program was just knee capped by Mnuchin.
DeleteThe savings rate numbers have been high but those numbers have been skewed up by government transfer payments (e.g. stimulus checks and supplemental unemployment benefits)
https://fred.stlouisfed.org/series/PSAVERT
After accounting for those temporary benefits, those aggregate savings numbers may simply indicate that the top 25% have increased their savings in response to the pandemic. It is hard to know using aggregate data how much the bottom 75% have increased savings and those are the households that spend a far higher percentage of their income and whose spending supports the economy more.
If anyone wants to predict what will happen with a republican senate majority, the last 6 years of the Obama administration will provide the best evidence.
The republicans will once again become fiscal conservatives and obstructionists. They will refuse to approve increases in the debt limit unless there are significant cuts to federal spending.
The key over the next several weeks, as it relates to another stimulus package, may be whether the Democrats can rein in Pelosi and come up with a package that can peel off two or more senate republican votes from McConnell.
Someone needs to tell Pelosi that she does not control what can become law and her bargaining position is not that great.
Her bargaining leverage will improve some if the democrats win both Georgia senate seats but I will believe that when and if it happens.
The Stock Jocks tend to avoid worrying about bad things that may happen which is one way to go through life. Wait until the bad thing happens, deal with it then, and otherwise ignore all of those what if worries.
I don't know why but Pelosi isn't coming down. For a while it didn't matter because McConnell was so low it was pointless. But now she's used to her position, and not shifting.
DeleteThe GOP wlll want to crash the economy under Biden and said "see we told you" with their fingers crossed behind their backs.
"Opinion: Sky-high stock prices make sense, Robert Shiller says"
ReplyDeletehttps://www.marketwatch.com/story/sky-high-stock-prices-make-sense-robert-shiller-says-11606838599?mod=home-page
Marketwatch has moved to a partial paywall. For the most part, I can still access articles possibly due to my Barron's subscription. Both publications have common ownership.
I have discussed for years how low interest rates can impact stock multiples.
It is the expectation that interest rates will remain low for an extended period that will have cause multiple expansion rather than just the present level IMO.
Shiller and his colleagues came up with a valuation measure that they call ECY that basically compares bond and stock valuations.
The ECY is calculated by inverting the CAPE ratio to come up with a stock yield and then subtract the current yield of the ten year treasury inflation protected bond (currently a negative number) The ECY is currently at 4% indicating that stocks are superior to bonds. I did not need the ECY to confirm that conclusion.
"The ECY is close to its highs across all regions and is at all-time highs for both the U.K. and Japan. The ECY for the U.K. is almost 10%, and around 6% for Europe and Japan. Our data for China do not go back as far, though China’s ECY is somewhat elevated, at about 5%."
I would add a caveat. This argument in favor of stocks is dependent on central banks continuing to suppress yields below the inflation rate for many years to come and the inflation rate remaining abnormally low as well. Those conditions render stocks capable of growing earnings and dividends more valuable than when interest rates and inflation are significantly higher.
I would also be careful in drawing too many conclusions from stocks are better than bonds when bonds really, really suck.
Pacific Biosciences of California, Inc. (PACB)
ReplyDelete$17.95 +$2.14 (+13.54%)
https://finance.yahoo.com/quote/PACB?p=PACB
PACB is one of my Lottos that I have recently discussed in comments.
My position is 30 shares bought at $8.9.
https://seekingalpha.com/instablog/434935-south-gent/4877990-update-for-healthcare-basket-strategy-of-5-9-16
I have no training that would enable me to evaluate PACB's products or future prospects. So I really have no clue whether the current price is within a fair valuation range, too expensive or too cheap given the future prospects.
That lack of knowledge is just one reason for classifying the stock as a Lotto. The company does not pay a dividend and GAAP profits may come at some point in the future. Those are two more reasons why PACB is a Lotto.
The bottom line is that I have no foundation to make an informed decision on hold or sell now.
The price and volume signals, as well as a recent successful stock offering, indicate institutional interest in this stock even as the price goes up.
The volume today, with the stock up close to 13% for the entire day, was 6,607,435 compared to an average of 4,347,266.
After recovering from its March lows, a parabolic price spike up started in July near $4 per share:
https://finance.yahoo.com/quote/PACB/history?p=PACB
Maybe I will allow a coin flip to make the call.
It is not like any decision will mean anything, but I hate losing a 100% unrealized gain after having an unrealized loss for almost the entire period that I have owned this one.
++++
AMCX experienced a small pop a few days ago after being added to the S & P 600:
https://www.prnewswire.com/news-releases/concentrix-set-to-join-sp-midcap-400-amc-networks--the-aarons-company-to-join-sp-smallcap-600-301180845.html
Closed today at $32.36
https://finance.yahoo.com/quote/AMCX/history?p=AMCX
Last Discussed: 9/26/20 Post
Item # 1.I. Started AMCX-BOUGHT 1 at $25.02; 1 at $23.75; 1 at $23.39; 1 at $23.15; 1 at $23; 1 at $21.99; 2 at $21.9; 3 at $21.4; 2 at $21.17; 2 at $20.9; 1 at $20.32 and Sold 1 at $25.12:
https://tennesseeindependent.blogspot.com/2020/09/aiq-amcx-cxp-cznc-fbnc-fcpvx-mgc-ppt.html
From Heather Cox Richardson:
ReplyDelete"As soon as news broke of the new bipartisan bill, McConnell shot it down. Instead, he will insert exactly what he wants into the upcoming government funding bill, which Congress must pass by December 11 or face a government shutdown. This forces Democrats either to do what he wants or to shut down the government, a solution that is usually political poison.
McConnell’s new plan has no state and local aid and only one month of jobless aid, but it has liability protection for businesses."
Toronto-Dominion Bank (TD)
ReplyDelete$54.96 $0.19 +0.35%
Last Updated: Dec 3, 2020 at 11:37 a.m. EST
https://www.marketwatch.com/investing/stock/td
I own 43+ TD shares.
TD reported earnings earlier today and the Stock Jocks initially had a more positive response than now, with the shares trading up to $55.28.
Press Release:
https://www.newswire.ca/news-releases/td-bank-group-reports-fourth-quarter-and-fiscal-2020-results-816947392.html
TD was recently downgraded to underperform at Bank of America.
TD's third quarter earnings were juiced by a "net gain on sale of the investment in TD Ameritrade of $1,421 million ($2,250 million after tax or $1.24 per share)."
"At closing, in exchange for the Bank's approximately 43% ownership in TD Ameritrade, the Bank received an approximately 13.5% stake in Schwab."
Charles Schwab Corp. (SCHW)
https://www.marketwatch.com/investing/stock/schw
All amounts in the report are expressed in Canadian Dollars.
Excluding that gain, adjusted E.P.S. was $1.6, up from $1.59 in the year ago quarter.
Return on common equity – adjusted 13.3%
Efficiency ratio – adjusted 54.2%
Total Capital ratio 16.7%
ADJ.Return on tangible common equity 17.9%
I am reinvesting the dividend.
So the sale of Ameritrade is good for the TD bank? That's what that seems to amount to.
DeleteThey are losing future income by selling off the business.
True Contrarian blog and newsletter’s chief executive officer, Steven Jon Kaplan... is expecting a pullback soon.
Based on insider trading, and dollar and TLT and VIX forming bases to go higher.
He thinks this is overall a bear market like 2000-2003, so may be excessively bearish.
https://www.marketwatch.com/story/a-severe-drop-is-imminent-this-3-musketeers-stock-market-is-signaling-says-contrarian-strategist-11606824335
"Kaplan expects it will take four or five months to flush out investors who bought shares at prices that were too high and reward the insiders who were getting out, before a rebound starts."
Many other articles bullishly talk about going to 4000, such as JPM Chase's expectations.
Interesting from your comment (last blog?) that FG is still bullish, which has been a good position for a long time.
Land: I would like to see a 50% decline in S & P 500.
DeleteI am not trying to guess now when that will happen. I am addressing what I can control given my capital preservation objectives and opinions about market and individual stock valuations.
There have been 3 of those 50% or so declines since I started to invest, with the last two happening starting in 2000. The first one was in 1974.
My best guess is that major declines will occur more frequently going forward than in the past due to what I would broadly characterize as financial instability.
I believe the period of financial instability, generally caused by too much debt, started with the Asian Contagion in 1997.
I am managing the relatively small stock portfolio (as a percentage of brokerage assets) with a strong risk mitigation strategy that has several parts.
The November stock price surges allowed me to exit several stock positions at a profit where I previously had unrealized losses, sometimes measuring several hundred dollars. I will be discussing some of those in upcoming posts.
November was my best month this year as the market rotated to value stocks.
My focus remains largely on out-of-favor dividend paying stocks.
For many of the positions bought this year, I have already jettisoned my highest cost lots.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2020/12/bhb-caty-cnp-fisi-flo-fnf-hbnc-irm-kr.html