ADX, AMCR, BWBBP, CADEPRA, DCOMP, EAI, EMP, EVRG, EXG, KBWY, KHC, IVZ, JHG, MGV, MRCC, MTB, ONB, REXRPRC, WTBA

Economy: 

30-year fixed mortgage rate just hit 8% for the first time since 2000 (10/18/23)

Existing-Home Sales Fell 2.0% in September (down 15.4% Y-O-Y)  

Architects report big drop in business; ABI September 2023: Architecture firm billings decline sharply - AIA The billings index fell to 44.8% in September, with any number below 50 indicating an ongoing contraction. Breaking ground on new projects, particularly office buildings, is going to slow down. 

Powell says inflation is still too high and lower economic growth is likely needed to bring it down

Treasury Yield Curve - October 2023: 

Real Treasury Yields: 

10 Year TIP Breakeven Inflation Rates: 

12/30/22: 2.3% (last business day in 2022)

Monday 10/2/23: 2.35%

10/20/23:  2.47%

An average normal spread for the nominal ten year treasury yield over the anticipated annual average inflation rate is about 2%, assuming the FED is not suppressing interest rates through abnormal monetary policies.  

A 2% spread would put the ten year treasury yield at 4.47% using the 2.47% breakeven inflation rate for the 10 year TIP as of 10/20/23. 

The fact that the ten year nominal closed at 4.93% yield yesterday is troubling given the anticipated inflation rate. 

Moving over a 2.5% spread to the predicted annual inflation rate is more worrisome IMO. (2.5% spread + 2.47% annual average inflation = nominal 10 year at 4.97%) 

Increase in 10 year real breakeven inflation rate this year .17%

Nominal 10 year yield on 12/30/22: 3.88%

Nominal 10 year yield on 10/20/23: 4.93%

Increase in 10 year nominal yield: 1.05%

Increase in 10 year nominal yield unexplained by inflation expectation: .88% or 83.8% of the total. 

While it is too early to reach a conclusion, most of the rise in nominal yields this year is most likely connected to those yields becoming untethered from inflation expectations. 

When that happens, the question is how high can yields go even if inflation expectations remain anchored near current levels. Could the ten year nominal treasury yield go to 6% with the annual inflation rate predicted at 2.4% over the next 10 years? Once the tether to inflation expectations is broken, unfavorable uncertainty about the future course of rates becomes a more dominant concern. 

The causes for the untethering could include the surge in new treasury supply, the anticipated federal government deficit spending requiring parabolic increases in supply until something breaks, and the probability that the government will default due to a failure to increase the debt ceiling which will result in credit downgrades.

For the fiscal year ending 9/30/23, the federal government ran a $1.7 trillion deficit. Joint Statement of Janet L. Yellen, Secretary of the Treasury, and Shalanda D. Young, Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2023 | U.S. Department of the Treasury  

China is currently a seller of U.S. treasuries but Japan and other foreign investors have been increasing their purchases. Foreign holdings of US Treasuries in August hit highest since December 2021 -data | Reuters 

Treasury Data - Foreign Owners of Treasury Securities by Nation China owned $859.4B in U.S. treasuries as of January 2023 and $805.4B as of August. The decline is sufficient to put at least some upward pressure on rates given the amount of new supply being sold by the treasury. 

GDPNow - Federal Reserve Bank of Atlanta As of 10/18/23, the Atlanta Fed's GDP model has 3rd quarter real GDP growth at 5.4%. 

Excerpt from Federal Reserve Board Publication: Household Finances.pdf:

The median leverage ratio, defined as household total debt to total assets, declined to its lowest level in two decades at 29.2%. 

An Update on the Health of the U.S. Consumer - Liberty Street Economics

There are several reasons why U.S. consumers have remained resilient notwithstanding problematic inflation: (1) the average wage increase over the past 12 months has exceeded CPI; (2) more discretionary income is being generated by savings; and (3) most households have refinanced their home mortgages at historically low levels and can use the savings to pay down other high cost debt, fund spending and/or increase investments. There are a very large number of households with 3% to 4% 30 year mortgages that are earning more on credit risk free savings.  

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills: $6,000 in principal amount 

I will not be buying any treasury bills next week. I am considering using all or most of the proceeds received from maturing treasury bills to fund stock purchases. 

Corporate Bonds: $5,000 in principal amount

Common Stocks: +$1,303.9

I have transitioned into a net buying mode for stocks. 

(consisting of $1,429.91  in purchase minus $126.11 in proceeds) 

Stock CEFs and ETFs: - $47.06

(consisting of $404.4 in proceeds minus $357.34 in purchases)  The CEF and ETF purchases will have a much higher weighted average dividend yield than the ETF sold.  

Net Inflow Stocks/Stock Funds: +$1,256.84

Realized Gain Stock/Stock ETF:  +$102.62

Equity Preferred Stocks = +$382.73 (weighted yield at 8.38%)

Provided my weighted average yield for preferred stock purchases continues to be near 8%, and the 10 year treasury is hovering near 5%, I will continue small ball buying somewhere between $300 to $500 per week.  

2023 Net Outflow Stocks and Stock Funds: -$36,218.73

I am permitted under my trading rules to be a net buyer of up to $36,218.23 in stocks and stock funds before year end. Only dividend paying stocks will be bought with the average weighted yield per week of more than 5%.    

++++

Putin and His Orwellian Empire of Misery: 

Ukraine uses ATACMS missiles to destroy Russian airfield after US sent them in secret - YouTube; Ukraine uses US-supplied ATACMS long-range missiles for first time - ABC News; Ukraine uses ATACMS for first time against Russian helicopters: The Frontline with Jerome Starkey - YouTube

Putin loses Black Sea dominance as Ukraine pushes back Russian missiles - YouTube

Russia Lost 1300 Soldiers Today! | Ukrainian War Update - YouTube Russia continues its suicidal assaults on Avdiivka.  

Ukrainian War Update - YouTube (other satellite images of recent successful Ukrainian attacks on Russian armaments and defense facilities)

Ukraine Targets Russia’s Big Guns to Blast a Path Forward - WSJ Ukraine's army is becoming very effective at destroying Russian artillery as discussed in this article. An independent group called WarSpotting has identified 177 Russian artillery and multiple rocket launchers destroyed by Ukraine since the start of its counteroffensive.  WarSpotting — documenting material losses in Russo-Ukrainian war (has satellite images of destroyed Russian armaments) This kind of news will never appear in the Alternate Universe created by Putin TV. 

Russia will target attorneys for imprisonment or even death who dare to represent people that criticize Putin. Russia targets lawyers for imprisoned opposition leader Navalny - The Washington Post That is just one small part of Putin's internal terrorist campaign. The ostensible reason given for targeting Navalny's lawyers is their purported involvement in what the Orcs call an extremist organization. The organization is known as the Anti-Corruption Foundation that publishes corruption information on Putin and his clique of Kleptocrats.   

China and Russia criticize Israel as Xi and Putin set to meet for Belt and Road Forum Xi and Putin are two peas from the same pod. 

+++

Trump and His Party:  

RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination

RealClearPolitics - Election 2024 - General Election: Trump vs. Biden

The Chaos Party dodged a bullet by failing to elect Jim Jordan as Speaker. House Republicans are back to the drawing board after they dump Jim Jordan for speaker Several republicans in districts won by Biden in 2020 consistently voted against Jordan. Flood of GOP lawmakers hits the House speaker race (10 so far). The House can not function without a Speaker. No legislation can even brought to the floor for a vote. 

Sidney Powell: Former Trump attorney pleads guilty in Georgia election subversion case As part of the plea agreement, she agreed to provide truthful testimony relating to the actions taken by other defendants. 

Trump co-defendant Kenneth Chesebro strikes plea deal with Georgia prosecutors Chesbro, a Trump attorney, pled guilty to a felony count of conspiracy to file a false document and agreed to provide testimony against other defendants. Three of the charged defendants have now plead guilty in this Georgia election case.

Kenneth Chesebro: Pro-Trump lawyer pleads guilty in Georgia election subversion case, implicates Trump in fake elector conspiracy 

Trump fraud trial: NY AG wants evidence review after alleged lie A Forbes reporter claimed that Allen Weisselberg had lied under oath. Trump’s Longtime CFO Lied, Under Oath, About Trump Tower Penthouse The simple rule is to tell the truth when under oath or plead the 5th and refuse to answer.  

If Donald wins in 2024, anyone who decides to work in his administration will need to have a good lawyer filtering all communications from Trump, directly or indirectly, and providing legal advice on how to respond. Then, if the advice is to refrain from actions requested by Trump, either directly or through an intermediary, Trump will then fire that person and subject him to vicious public recriminations that may last for years. 

Another alternative is to commit numerous felonies and misdemeanors at Donald's urging and hope that "conservatives" will pay for the legal expenses which could easily run over $500K per person. 

For anyone with a lick of sense, the best and only sensible alternative would be to just say no thanks to a Trump job offer, since Trump will inevitably create deep financial and legal trouble for those implementing his demands or pandering to his whims and authoritarian nature. 

+++

Video: Rocket fired from Gaza makes sharp turn back before blast seen at hospital | CNN; Rocket from Gaza appeared to go astray, likely caused deadly hospital explosion - ABC News Looking at that video and reviewing other information, the rocket that hit the Gaza hospital courtyard was launched within Gaza by Hamas or its ally Islamic Jihad. The rocket clearly malfunctioned. Hamas knows that Israel was not responsible for the blast but will never admit it anymore than Russia will admit to the war crimes and crimes against humanity that are committed by Russians in Ukraine.

How the West—and Israel Itself—Inadvertently Funded Hamas - WSJ Hamas partially funded itself by stealing and then selling Western aid shipments. Hamas also taxes imports and exports and that tax revenue increases when more trade is allowed in and out of GAZA. Iran donates about $100M to Hamas annually to fund its military operations, preferring to spend that money to cause trouble and suffering in the Middle East rather than helping its own citizens.  

A Close Read of Hamas’s Hostage-Taking Manual - The Atlantic It is not surprising that Russia, China and Iran want a Palestinian state controlled by Hamas.  

+++

1. Small Ball Buys: 

I am mostly averaging down in small lots as dividend paying stocks remain under downside pressure. For the most part, I am decreasing my unrealized gain or increasing my unrealized loss with these purchases, while increasing my dividend yield based on lowering my average cost per share. 

I anticipate that dividend paying stocks will continue to decline at least for as long as the risk free yields continue to rise. 

I am going to refrain from buying treasury bills next week and may deploy all or most of the proceeds from maturing T Bills into dividend paying stocks. 

A. Added 5 ADX at $16.89; 5 at $16.62- Schwab Account: 

Quote: Adams Diversified Equity Fund Inc. (ADX) - Unleveraged Stock CEF

Cost: $167.04

New Average cost per share: $15.72 (40+ shares)

ADX is one of the few CEFs that survived the stock market crash in 1929 and the Great Depression. The first U.S. CEF was created in 1893, more than 30 years prior to the first open end mutual fund. Open Your Eyes To Closed-End Funds

ADX SEC Filings

SEC Filed Semiannual Report for the Period Ending 6/30/23 (Portfolio valued then at $2.4151+B with the cost at $1.4978+B) 

Sponsor's website: Adams Funds

Last Discussed: Item # 2.A. Eliminated Duplicate Position in ADX - Sold 20 at $17.65 - Fidelity Account (9/9/23 Post)  

Data Date of 10/11/23 Trade: 

Closing Net Asset value per share: $19.84

Closing Market Price: $16.9

Discount: -14.82%

Average 3 Year Discount: -14.55%

Sourced: ADX- CEF Connect  (Click "Pricing Information" Tab)

Top 10 Positions as of 6/30/23: 

Dividends: ADX generally pays a quarterly dividend of $.05 per share in the first, second and third quarters. The 4th quarter will include a capital gain distribution.  

Some Prior Sell Discussions: Item # 3.B. Sold 100 at $15.24 (5/22/19 Post)(profit snapshot = $112.32): Item # 2.C.  Eliminated ADX - Sold 107+ Shares at $13.63 (3/4/17 Post)($183.26); Eliminated ADX  - Sold 467+ Shares Update On Closed End Fund Basket Strategy As Of 7/28/15 - South Gent | Seeking Alpha (profit snapshot = $1,923.24, scroll to "Deletions/Reductions Since Last Update"); Item # 4 Pared ADX Again-Sold 143 Shares at $13.97 (8/8/14 Post)(profit snapshot = $427.9); Item # 4. Sold 116 ADX at $13.61 (6/14/14 Post)(profit snapshot = $319.38)

Realized Gains 2008 to Date: $3,239.71

I have been trading ADX since 1983, but do not have profit snapshots prior to 2008. There were realized gains that would have been entered on my tax returns prior to 2008. 

B. Added to AMCR - Bought 5 $8.93; 5 at $8.75; 5 at $8.59:

Quote: Amcor PLC

Cost: $131.33

Amcor PLC Profile | Reuters

AMCR SEC Filings

AMCR Analyst Estimates | MarketWatch

Website: Global Packaging Solutions | Amcor

SEC Filed Annual Report for the F/Y Ending 6/30/23

New Average cost per share: $11.14 (130 shares)

Dividend: Quarterly at $.1225 per share ($.49 annually)

AMCR Dividend History | Seeking Alpha

Yield at AC  = 4.4%

Last Ex Dividend: 9/6/23

Last Discussed: Item # 1.F. Added to AMCR in Schwab Account - Bought 5 at $9.34 (8/26/23 Post) I discussed the second quarter earnings report in that post. SEC Filed Press Release and SEC Filed Slide Presentation

Last Elimination: Item # 5. Eliminated AMCR in 2 Taxable Accounts - Sold 20 at $12.05 and 10+ at $12.03 (1/23/23 Post)(profit snapshots = $26.93)

C. Added to KHC - Bought 1 at $31.77; 2 at $31.5; 3 at $31.17; 2 at $30.9: 

Quote: Kraft Heinz Co.

Cost: $250.08

KHC Analyst Estimates | MarketWatch

KHC SEC Filings

New Average cost per share: $33.47 (30 shares)

Dividend: Quarterly at $.40 per share

Dividend History | The Kraft Heinz Company

Yield at New AC: 4.78%

Last Ex Dividend: 8/31/23 (owned 20 as of)

Last Earnings Report (F/Q ending 7/1/23): I discussed this report here: Item # 1.E. Added to KHC - Bought 5 at $35 (8/12/23 Post); SEC Filed Earnings Press Release for the F/Q Ending 7/1/23

Last Elimination: Item # 5.C. Eliminated KHC -Sold 5 at $42.44; 10+ at $42.33 (1/16/23 Post)(profit snapshots = $125.25)

D. Added to IVZ - Bought 5 at $13.2; 5 at $12.95; 5 at $12.75: 

Quote: INVESCO Ltd.  (IVZ)

Cost: $194.5

IVZ is an investment management firm that sponsors a large number of ETFs, CEFs, and mutual funds. The most well known ETF is probably QQQ.  Individual investor | Invesco US;  Invesco QQQ

Home | Invesco Corporate

Invesco Ltd. Announces July 31, 2023 Assets Under Management

Last Discussed: Item # 1.H. Added to IVZ - Bought 5 at $13.58 (10/7/23 Post) 

I discussed the second quarter's earnings report in this post: Item # 2.H. Restarted IVZ - Bought 5 at $14.22; 5 at $14  (9/30/23 Post); SEC Filing 

New Average Cost per share: $13.48 (30 shares) 

Dividend: Quarterly at $.20 per share

IVZ Dividend History | Seeking Alpha

Yield at New AC = 5.93%

Last Ex Dividend: 8/10/23

Maximum Position: 100 shares. 

Purchase Restriction: Each subsequent purchase will need to lower my average cost per share. 

Sell Discussions: Item # 4.C. Eliminated IVZ - Sold 20 at $19.5 (11/22/22 Post)(profit snapshot = +$69.66); Item # 1.E. Eliminated IVZ in Vanguard Taxable Account-Sold 10 at $18.91 (2/6/21 Post)(profit snapshot = $105.91); Item # 1.A. Sold 83+ at $17.3-Schwab Account and Item # 1.B. Sold 71+ IVZ in Fidelity Taxable Account  at $17.39 (1/1/21 Post)(profit snapshots = $330.88)

IVZ Realized Profit to Date: $506.45

Goal: 8% annualized total return which will require slightly more than a 2% annual realized gain on the shares. 

E. Restarted EVRG - Bought 2 at $47.78: 

4 Year History this Account 

Quote:  Evergy Inc.  (EVRG) - Utility Holding Company 

Operating Subsidiaries: 

10-Q at page 24 

The operating subsidiaries used first mortgage bonds to raise capital. 

In March 2023, Evergy Kansas Central sold $400M of 5.7% first mortgage bonds that mature in 2053. Prospectus; Bond Page | FINRA.org 

In April 2023, Evergy Metro issued $300M of 4.95% first mortgage bonds that mature in April 2033. Prospectus; Bond Page | FINRA.org This company was previously known as Kansas City Power & Light. 

EVRG Analyst Estimates | MarketWatch

EVRG SEC Filings

Evergy Inc Profile | Reuters

Investor Overview | Evergy, Inc.

Last Discussed: Item # 2.C. Eliminated EVRG - Sold 2 at $64.62; 8 at $64.5; 5 at $70.33 (4/14/22 Post)(profit snapshots = $262.91) Selling utility stocks made sense to me in response to the FED raising the FF rate. I discussed several eliminations in this post.  

Dividend: Quarterly at $.6125 per share ($2.45 annually), last raised from $.5725 effective for the 2022 4th quarter payment. 

EVRG Dividend History | Seeking Alpha

Yield at $47.78: 5.13%

Last Ex Dividend: 8/18/23

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release 

Revenues: $639.6M

E.P.S.  = $.78, down from $.84 in 2022

Adjusted E.P.S. = $.81, down from $.84 in 2022

GAAP to Non-GAAP Reconciliation for the 2nd Quarter and YTD through 6/30/23: 

Footnotes omitted

Reaffirmed 2023 GAAP and Non-GAAP E.P.S. Guidance: Both at $3.55 to $3.75

Reaffirmed Adjusted E.P.S. guidance of 6% to 8% growth through 2025.  

SU Bonds: I own 10 Evergy 2.45% SU bonds that mature on 9/15/24. Bond Page | FINRA.org (rated at Baa2/BBB+) Based on the current pricing of that bond, the YTM is higher than the dividend yield of the common shares. The SU bonds issued by the holding company will have a lower credit rating than first mortgage bonds issued by its operating subsidiaries. 

I may buy at least two FM bonds issued by an Evergy subsidiary using the proceeds received from that SU bond.  

The Evergy Central FM bonds are rated at A2/A. There are two maturities outstanding. 

Evergy Metro FM bonds are rated A2/A+. There are 8 outstanding. 

F. Restarted ONB - Bought 10 at $14.23; 5 at $13.97: 

4 Year History this Account: 

Quote: Old National Bancorp (ONB) - Bank Holding Company

Cost: $212.15

ONB Analyst Estimates

ONB SEC Filings

10-Q for the Q/E 6/30/23 

Old National Bancorp - Investor Relations

Investment Category: Regional Bank Basket Strategy

Last Discussed: Item # 4.D. Eliminated ONB - Sold  20 at $17.53 (7/29/23 Post)(profit snapshot = $69.01) I discussed the second quarter report in that post, which I viewed favorably. SEC Filed Earnings Press Release for the Q/E 6/30/23  

Last Buy Discussions: Item # 3.D. Bought 10 ONB at $13.45 (5/6/23 Post); Item # 1.H. Added 5 ONB at $13.7 (4/15/23 Post); Item # 1.B. Restarted ONB - Bought 10 at $14.23 (4/8/23 Post)

Average cost per share: $14.14 (15 shares)

Dividend: Quarterly at $.14 per share ($.56 annually)

ONB Dividend History | Seeking Alpha

The payout ratio is low for a bank. GAAP E.P.S. for the 2023 second quarter was reported at $.52, adjusted to $.54. The 2022 non-GAAP E.P.S. was reported at $1.96, Page 12 SEC Filed Earnings Press Release for the Q/E 12/31/22 

Yield at AC = 3.96%

Last Ex Dividend: 8/31/23

ONB Realized Gains to Date: $1,012.38 (# 21 in the regional bank basket strategy). 

Trading Strategy: Currently, I am a buyer at below $14.5 and will likely eliminate a position at $17+. Regional bank stocks are in a major bear market. The dividend yield for this stock is relatively low compared to other regional banks due to the lower dividend payout ratio.    

Other Sell Discussions: Item # 6.L. Eliminated ONB - Sold 10 at $19.72 in Fidelity Taxable Account and 10 at $19.7 in Schwab Account (11/8/22 Post)(profit snapshots = $77.59); Item # 1.H. Eliminated ONB-Sold 15 at $17.87 (2/13/21 Post); Item # 1 Sold 100 ONB at $13 (8/22/12 Post); Item # 1 Sold 50 ONB at $14.12 (7/16/13 Post); Item # 6 Sold 50 ONB at $13.05-Update For Regional Bank Basket Strategy As Of 6/6/16 - South Gent | Seeking Alpha; Item 2.A. Eliminated ONB-Sold 50 Shares at $18.55 (2/27/17 Post)(largest single gain at $312.97 bought at $12.25); Item # 4.A. Sold 10 ONB at $19.66 (7/29/18)

G. Added to KBWY - Bought 5 at $16.72: 

Quote: Invesco KBW Premium Yield Equity REIT ETF Overview

Cost: $83.6

Last Discussed: Item # 2.B. Added to KBWY - Bought 5 at $18.99 (7/22/23 Post) 

Sponsor's website: Invesco KBW Premium Yield Equity REIT ETF

Expense Ratio: .35%

New Average cost per share: $19.69 (35 shares)

Dividend: Monthly at a variable rate

I change my dividend option to reinvestment last Friday. 

Last 12 Dividends:  $1.44 per share

Yield at AC Using $1.44 annual rate: 7.31%

Last Ex Dividend: 9/18/23

Top 10 Holdings as of 10/19/23: 

H. Added to WTBA - Bought 5 at $15.79: 

Quote: West Bancorp Inc. (WTBA)

Cost: $78.95

West Bank, the operating bank for West Bancorp, has "six offices in Des Moines, Iowa metropolitan area, one offed in Coralville, Iowa, and four offices in Minnesota in the cites of Rochester, Owatonna, Mankato and St. Cloud". 

Investment Category: Regional Bank Basket Strategy

WTBA Analyst Estimates | MarketWatch

WTBA SEC Filings

10-Q for the Q/E 6/30/23 (information on owned securities can be found at pages 13-14)

New Average cost per share: $16.28 (20+ shares)

I have a duplicate position with a $15.79 average cost per share that I will eliminate when and if the price goes over $17. 

Dividend: Quarterly at $.25 per share, last raised from $.24 effective for the 2022 first quarter payment. 

WTBA Dividend History | Nasdaq

I turned off dividend reinvestment in the 2020 4th quarter after the dividend was reinvested at $20 per share. I turned dividend reinvestment back on effective for the 2023 4th quarter payment.  

Yield at New AC = 6.14%

Last Ex Dividend: 8/8/23

Last Earnings Report (Q/E 6/30/23): SEC Filed Earnings Press Release

Recent results have been negatively impacted by net interest margin and net interest income declines caused by interest expenses rising at a faster rate than interest income. 

Comparisons are to the 2022 second quarter. 

E.P.S. $.35, down from $.75

NIM: 2.02%, down from 2.93% 

Net Interest Income: $17.341M, down from $25.989M

Interest Expense: $22.01M, up from $4.658M 

NPA Ratio: .01%

For the share price to start and continue a recovery, NIM and net interest income will need to move higher on a persistent basis IMO. It is not possible to predict when that will happen. 

WTBA Realized Gains to Date: $1,307.87

Almost all of the gain originates from one trade. Item # 3.A. Sold 100 WTBA at $23.12 (4/29/17 Post)(profit snapshot = $1,146.24)-Bought 100 WTBA at $11.67 (6/29/13 Post)

I. Started JHG - Bought 5 at $23.73; 5 at $23.2: 

Quote: Janus Henderson Group PLC (JHG) 

Cost: $234.64

JHG is a global active asset manager with approximately US$322B under management as of 6/30/23. The company is headquartered in London but reports in USDs.  

This is my first purchase of the common stock. 

I discuss buying 2 JHG SU bonds in Item # 6.B. below. 

JHG Analyst Estimates | MarketWatch

Average cost per share: $23.46

Dividend: Quarterly at US$.39 per share ($1.56 annually), last raised from $.38 effective for the 2022 second quarter payment. 

JHG Dividend History | Seeking Alpha

Yield at AC: 6.65%

Last Ex dividend: 8/11/23

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Earnings Press Release for the Q/E 6/30/23 

GAAP E.P.S. = $.54, down from $.57 in the 2022 second quarter. 

Non-GAAP E.P.S. $.62, down from $.63

In USD Millions except for per share data.

Assets under Management: In USD Billions 

I have not owned a Janus mutual fund since I eliminated JABAX, a balanced fund, in 2014 Item # 6 Eliminated JABAX - Sold 227+ at $30.99 (8/16/24 Post)(profit snapshot = $1,336.03) The initial  purchase was  $3,500 made in October 2008 and another $1K in 3 purchase thereafter. 

J. Added to EXG - Bought 10 at $7.42; 5 at $7.13: 

Quote: Eaton Vance Tax-Managed Global Diversified Equity Income Fund Overview (EXG) - Buy/Write Stock CEF  

Cost: $106.7

I eliminated a duplicate positions earlier this year. Item # 5.C. Eliminated EXG in 2 Taxable Accounts - Sold 15 at $7.65; 10 at $7.72 (4/29/23 Post)(profit snapshots = $21.65, contains a snapshot of largest gain of $414.31 realized in 2013) 

Sponsor's website: Tax-Managed Global Diversified Equity Income Fund (EXG) | Eaton Vance

EXG SEC Filings 

Eaton Vance Tax-Managed Global Diversified Equity Income Fund - SEC Filed Semiannual Report for the period ending 4/30/23 

SEC Filing - Holdings as of 7/31/23 

Investment Category: Monthly Income Generation

New Average cost per share = $6.89 (153+ shares)

Dividend: Monthly at $.0553 per share ($.6636 annually), cut from $.0689 effective for the November 2022 payment. 

I am no longer reinvesting the dividend. 

The dividend is supported by ROC. The cut in the penny rate merely reduced the amount of ROC support. 

Yield at Average cost per share: 9.63%

Last Ex Dividend: 10/20/23 (owned 148+ as of)  

Data Date of 10/17/23 Purchase: 

Closing Net Asset Value per share: $8.36

Closing Market Price: $7.42

Discount: -11.24%

Data Date of 10/20/23 Purchase: 

Closing Net Asset Value per share: $8.05

Closing Market Price: $7.09

Discount: -11.93%

Average 3 Year Discount:  4%

Sourced: EXG - CEF Connect (Click "Pricing Information" Tab)

EXG Page at Morningstar (rated 3 stars)

K. Added to MRCC - Bought 5 at $7.05: 

Quote: Monroe Capital Corp. (MRCC) - Externally Managed BDC with a poor operating history based on net asset value per share declines since the $15 IPO in 2013. 

Cost: $35.25

MRCC SEC Filings

10-Q for the Q/E 6/30/23

Last Discussed: Item # 1.C. Added to MRCC - Bought 5 at $7.17 (10/14/23 Post) 

Last Substantive Discussion: Item # 1.C. Added to MRCC - Bought 5 at $7.3 (8/26/23 Post) I discussed the last earnings report in that post. SEC Filed Press Release 

New Average cost per share: $7.49  (35 shares)

Company reported net asset value per share as of 6/30/23: $9.84

Dividend: Quarterly at $.25 per share

MRCC Dividend History | Seeking Alpha

Yield at New AC = 13.35%

Last Ex Dividend: 9/14/23 (owned 25 shares as of)

Goal: Any profit on the stock before ROC adjustments to the dividend cost basis + the dividends. 

L. Added to LXP - Bought 5 at $8.43; 5 at $8.20: 

Quote: Lexington Industrial Trust (LXP)

Cost: $83.15

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

LXP SEC Filings

10-Q for the Q/E 6/30/23

New Average cost per share: $8.98 (35 shares)

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

LXP Industrial Trust (LXP) Dividend History | Seeking Alpha

Yield at New AC = 5.57%

Last Ex Dividend: 9/28/23 (owned 20 as of) 

I discussed the last earnings report in this recent post:  Item # 1.D. Added to LXP - Bought 5 at $9.1; 5 at $8.6 (10/7/23 Post); SEC Filed Press Release 

LXP Realized Gains to Date: $1,957.8

Last Elimination: Item # 1.D. Eliminated LXP - Sold 20+ at $11.57 (2/13/23 Post)

M. Bought 1 MTB at $114.3: 

History This Account: 

I bought back the 1 share recently sold at $126.11, see Item # 2.C. below. I thought the negative reaction to the second quarter earnings report was a bit overdone. My enthusiasm is non-existent however.  

Quote: M&T Bank Corp. (MTB) 

MTB Analyst Estimates

MTB SEC Filings

Investment Category: Regional Bank Basket Strategy

Regional bank stocks are in a major bear market. I do not yet see any convincing signs that the bear market is about to end looking at the charts. The regional bank ETF is down about 50% from its January 2022 high. SPDR S&P Regional Banking ETF (KRE) Interactive Stock Chart - Yahoo Finance

Last Discussed: Item # 2.F. Restarted MTB - Bought 1 at $117 (4/22/23 Post); Item # 3.B. Eliminated MTB - Sold 4 at $182.75 (2/24/22 Post)(profit snapshot = $141.91); Item # 2.O. Eliminated MTB in Fidelity Account-Sold 1 at $156.25; 2.62 at $160 (11/5/21 Post)(profit snapshot = $42.52) 

The MTB price movement is not comforting. Note the MTB elimination at $182.75 in early 2022.  

Dividend: Quarterly at $1.3 per share ($5.2 annually), last raised from $1.2 effective for the 2023 first quarter payment. 

MTB Dividend History | Nasdaq

Yield at $114.3: 4.55%

Last Ex Dividend: 8/31/23

Last Earnings Report (Q/E 9/30/23): 

SEC Filed Earnings Press Release

Comparisons are to the 2022 third quarter. 

Net operating income: $702M, up from $700M

E.P.S. = $3.98, up from $3.53

Non-GAAP E.P.S.  = $4.05, up from $3.83

Consensus at $3.93 per Schwab 

There may have been some incorrect focus yesterday on the decline from $5.05 per share GAAP E.P.S reported in the 2023 second quarter. That E.P.S. number included a $.94 per share gain from selling a business. The adjusted number for the second quarter was $4.11. 

Net Interest income (an increasing focus of Stock Jocks): $1.775B, up from 1.679B, but down from $1.799B in the 2023 second quarter. 

NIM: 3.79%, up from 3.68%, but down from 3.91% in the 2023 second quarter. (1% of NIM comes from MTB's access to non-interest bearing deposits)

Efficiency Ratio: 53.7%, up from 53.6%

NPL Ratio: 1.77%, down from 1.89% (too high IMO) 

Charge off ratio: .29%, up from .2% (favorable)

ROTC: 17.41%, down from 17.89%

Tangible Equity per share: $93.99, up from $84.28

Average deposits increased 2% sequentially

Analyst Reports (available to Schwab customers):

Morningstar (10/18/23): 4 stars with a fair value estimate of $169 with a narrow economic moat. 

S&P (10/18/23): 4 stars with a 12 month PT of $150, reduced from $165 based on concerns about MTB's loan exposure to office properties. 

Argus (10/18/23):  Buy with a $158 price target which the analyst views as reasonable based on a 10.5 multiple to the analyst's 2024 E.P.S. estimate. 

MTB acquired People's United Bank in April 2022, formerly traded under the PBCT symbol. I profitably eliminated my PBCT position after the acquisition was announced but before consummation since I viewed MTB's stock to be overvalued. Item #3.A. Eliminated PBCT -Sold 62+ at $20.93 (2/24/22 Post)(profit snapshot = $580.1). I also discussed eliminating MTB in that post at $182.75. (Item # 3.B.) 

2. Small Ball Sells: 

A. Eliminated Duplicate Position in MGV - Sold 4 at $101.1: 

Quote: MGV | Vanguard Mega Cap Value ETF Overview

Profit Snapshot: +$93.51

Last Discussed: Item # 2.C. Pared MGV in Vanguard Account - Sold 1 at $102.52 (5/28/21 Post)(profit snapshot = $23.34) 

Last Buy Discussion: Item # 1.A. Started MGV-Bought 2 at $79.17; 1 at $78.69; 1 at $77.5; 1 at $75.77; 1 at $74.35 (10/3/20 Post)

Sponsor's website: MGV - Vanguard Mega Cap Value ETF

Expense ratio: .07%

Number of Stocks: 143

Dividends: Paid quarterly at a variable rate. 

Last 4 Dividends: $2.64 per share

Yield at $101.1 using $2.64: 2.61%

Last Ex Dividend: 9/21/23

Top 10 Holdings as of 8/31/23: 

MGV – Vanguard Mega Cap Value ETF-Morningstar (rated 5 stars) 

Performance is based on investment category. 

The total return in 2022 and so far this year has been poor. MGV  Performance  Numbers– Morningstar

B. Eliminated MTB - Sold 1 at $126.11:

Quote: M&T Bank Corp.

I bought back this share at $114.3, see Item #1.M. 

Profit Snapshot: +$9.11

I discussed the third quarter report in Item # 1.M. above. 

This is a discussion of the second quarter report which I had written up prior to the release of the third quarter earnings. 

Q/E 6/30/23: SEC Filed Press Release

GAAP Net Income: $867M, included a $157M after tax gain from the sale of a business.  

GAAP E.P.S. = $5.05

Non-GAAP E.P.S. = $4.11 (excludes $.94 profit from the sale of business)

Performance numbers skewed higher by the $157M one time profit. 

NPL Ratio: 1.83% (too high)

Charge Off Ratio: .38%

Credit Loss Reserve Build: $150M

Owned Securities as of 6/30/23: 

10-Q at page 12. 

3. Treasury Bills Purchased at Auction: 

For those living in states that tax CD interest income, buying treasury bills in a taxable account is a better option now for two simple reasons. A state cannot tax treasury interest payments and the yields are about the same (or slightly higher for the treasury bills). Fortunately, Tennessee does not have a state income tax so the after tax yield is not relevant for me. 

Schwab Brokered CD rates as of 10/17/23 

A. Bought 5 Treasury Bills at the 10/19/23 Auction: 

56 Day Bill

Matures on 12/19/23

The total value of maturities in December 2023 is $98K, which is too crowded. I will not be buying another 2 month bill maturing that month.  

Interest: $41.2

Investment Rate: 5.459% 

B. Bought 1 Treasury Bill at the 10/18/23 Auction: 

I had one 5.5% CD mature in this account and used the proceeds to buy this 4 month T Bill. 

119 Day Bill 

Matures on 2/20/24: 

Interest: $17.7

Investment Rate: 5.542%

4. U.S. Equity Preferred Stocks:

Preferred stocks have been hammered by the rise in interest rates. 

Generally, I would expect a preferred stock to have a dividend yield at a 2% to 4% spread to the ten year treasury yield, though there will be exceptions at higher spreads based on temporary mispricing due to low trading volumes, volatility in the stock market, a fear about the ten year yield continuing to rise, and/or credit concern issues. 

For my weekly purchases, I am currently targeting a weighted yield at a 3% to 3.5% spread to the 10 year treasury yield. Some purchases will be higher and a few slightly below that range.   

REIT preferred stocks will generally pay non-qualified dividends. That is generally the case for pass through entities that are not taxed at the corporate level. Some of the dividend may be sourced from ROC. 

Bank holding company preferred stocks will pay qualified dividends which can make their after tax yields more attractive to high marginal tax rate investors compared to the pass through entity preferred stocks. The downside is a zero price, or very close to it, when and if the FDIC seizes the operating bank.  

I generally disfavor preferred stocks as an asset class.  As an "equity" security, there is no ownership interest in the business. The fixed or variable rate coupon, a bond like feature, does not have bond protections and priority in the capital structure is below all bonds. 

I will consequently be extremely cautious in adding to my allocation. 

Advantages and Disadvantages of Equity REIT Cumulative Preferred Stocks  

Advantages and Disadvantages of Equity Preferred Floating Rate Securities

A. Added 3 BWBBP at $16.16: 

Quote: Bridgewater Bancshares Inc.  5.875% Preferred Series A (BWBBP)

Cost: $48.48

Issuer: Bridgewater Bancshares Inc. (BWB) - A Bank Holding Company

BWB Analyst Estimates | MarketWatch

BWB SEC Filings

Buy Discussions: Item # 3.B. Added to BWBBP - Bought 5 at $16.85 (9/9/23 Post); Item # 5.C. Bought 10 BWBBP at $18; 2 at $17.46 (8/5/23 Post)

Dividends: Paid quarterly, qualified and non-cumulative. 

New Average cost per share: $17.38 (20 shares)

Par Value: $25 

Coupon: 5.875% paid on the $25 par value 

Yield at New AC: 8.45%

Last Ex Dividend: 8/14/23

Prospectus

Issuer Optional Redemption: On or after 8/17/26

Maturity: None, potentially perpetual 

Stopper Clause: Standard

B. Added 5 CADEPRA at $16.75: 

Quote CADE-PA 

Cost: $83.75 

Issuer: Cadence Bank  (CADE)  

CADE Analyst Estimates | MarketWatch

Last Earnings Report (Q/E 6/30/23): Cadence Bank Announces Second Quarter 2023 Financial Results - July 24, 2023 (net income of $111.7M; NPL Ratio = .5%; NPA Ratio = .34%; Coverage Ratio = 288.28%; Charge off ratio = .16%)

Last Discussed: Item # 2.E.Bought 10 CADEPRA at $17.85 (7/22/23 Post) 

Equity Preferred Stock

Dividends: Paid quarterly, qualified and non-cumulative 

Coupon: 5.5% paid on a $25 par value

New Average cost per share: $17.47, rounded up.

Yield at New AC = 7.87%

(Coupon of .055% x. $25 par value = $1.375 annual dividend per share ÷ $17.47 AC per share = 7.87%)

Yield at $16.75: 8.21%

Optional Call: On or after 11/20/24

Maturity: None, potentially perpetual

Stopper Clause: Standard

C. Added to DCOMP - Bought 10 at $15 - Fidelity Account: 

Quote:  Dime Community Bancshares 5.5% Non-Cumulative Preferred Series A Stock Overview

Cost: $150

Issuer: Dime Community Bancshares Inc. (DCOM) - A Bank Holding Company

DCOM SEC Filings

DCOM SEC Filed Earnings Press Release for the Q/E 9/30/23 

I have a small ball position in the common stock. Most of my $2,616.27 in realized gains occurred when the bank was known as Bridge Bancorp. Item #  2.E. Added to DCOM - Bought 7 at $18.79 (6/10/23 Post) Bridge Bancorp (BDGE) acquired Dime Community Bancshares and then changed its Dime Community Bancshares and changed its symbol to DCOM from BDGE. 

Last Buy Discussion: Item # 2.D. Added to DCOMP - Bought 10 at $13.85 (6/10/23 Post) 

Last Sell Discussions: Item # 2.I. Eliminated DCOMP in  Schwab Account - Sold 10 at $22.3 and Item # 2.J. Eliminated DCOMP in Vanguard Taxable Account - Sold 15 at $21.77 (2/5/23 Post)(profit snapshots = $47.55); Item # 2.A. Pared DCOMP in Fidelity Account - Sold 30 out of 80 at $25.8 (1/9/21 Post)(profit snapshot = $170.85); Item # 2.B. Sold 10 DCOMP at $21.14 and 10 at $22.06-Highest Cost Lots Fidelity Taxable Account (9/5/20 Post)(profit snapshot = $26.23) 

The price decline during 2022 was caused by the increase in interest rates. 

The price decline this year can be attributed to both a continued rise in rates and generalized credit risk concerns applicable to bank holding preferred stocks caused by the FDIC seizing the operating banks of 3 bank holding companies after deposit runs. 

Prospectus

Par Value: $25 

Coupon: 5.5% paid on the $25 par value

Yield at $15 per share: 9.17% (.055% coupon x. $25 par value = $1.375 annual dividend per share ÷ $15 total cost per share = 9.1667%)

Placement in the Capital Structure: Equity preferred stock, senior only to common stock and junior to all debt. 

Dividend: Paid quarterly, qualified and non-cumulative. 

Stopper Clause: Standard. (see pp. S-16 and S-17 of the prospectus). This clause enforces the preferred shareholders' preferential claim to cash against only the common stockholders. The common stock dividend has to be eliminated before eliminating the preferred stock dividend.  

Issuer Optional Call: On or after 2/15/25. Given the low coupon, I would not currently anticipate that this security will be called in 2025. To be called, the ten year treasury yield would probably need to fall to less than 2%, probably closer to 1.5%, and DCOM would need to have a credit risk profile that would enable it to call DCOMP and refinance at a materially lower coupon.  

New Average Cost per share: $18.47

Yield at New AC: 7.44%

After paring DCOM in my Fidelity taxable account, selling 30 out of 80 shares at $25.48, I kept 50 shares whose purchase was discussed in this 8/2020 post. Item # 2.A. Bought 10 DCOMP at $20.68; 10 at $20.3 ; 5 at $20.26; 5 at $20.09; 70 at $20.09 (8/1/20 Post)

Last Ex Dividend: 8/7/23

Dime Community Bancshares, Inc. 5.5% Preferred Stock (DCOMP) Dividend History | Seeking Alpha

Realized Gains to Date DCOMP: $244.53

D. Started REXRPRC - Bought 5 at $20.1: 

Quote: REXR-PC 

Cost: $100.5

Equity Preferred Stock

Issuer: Rexford Industrial Realty Inc. (REXR) 

I previously owned two other REXR equity preferred stocks: REXRPRA, which has been called, and REXRPRB which is still trading. Item # 3.B. Sold 50 REXRPRA at $23.2 (1/27/2017 Post)(profit snapshot = $17.97, just clipped 1 quarterly dividend + a profit); Item # 3.A. Sold 30 REXPRB at $24.99 (profit snapshot = $49.82)

REXRPRC Prospectus 

Coupon: 5.625% paid on a $25 par value. 

Yield at $20.1: 7%

Last Ex Dividend Date: 9/14/23

Next Ex Dividend: 12/14/23

Dividends: Paid quarterly, non-qualified and cumulative. 

REIT preferred stock will pay cumulative dividends. Bank holding company preferred stocks will pay non-cumulative dividends. 

Stopper Clause: Standard.

A stopper clause enforces the preferred shareholders superior claim to cash compared only to the common shares. It is called a stopper clause since it stops the company from deferring a cumulative preferred dividend, or eliminated a non-cumulative one, while continuing to pay a cash common share dividend.  

Issuer Optional Call: On or after 9/20/24

Maturity: None, potentially perpetual.   

REXRPRB and REXRPRC are functionally equivalent IMO as to their respective material terms. The credit risk is identical. Both preferred issues are in pari passu with one another. Both have the same superior claim to cash versus the common shares, and both are inferior to all bonds in the capital structure. Both pay cumulative and non-qualified dividends. While the coupons are slightly different, with REXPRB at 5.875%,  the more important comparison is yield at total cost when choosing one or the other. When I bought REXRPRC, the current yield was slightly higher at prices prevailing when I place this trade. 

Trading Strategy: Averaging down in 5 share lots, with each subsequent purchase required to be at the lowest price in the chain. Consider to sell price at >$23.     

5. Exchange Traded First Mortgage Baby Bonds: 

Investment Category: Exchange Traded Baby Bond, part of the Exchange Traded Bond category. 

I am going to continue buying the first mortgage baby bonds issued by Entergy operating subsidiaries (EAI, ELC and EMP) in my Schwab account until I hit 100 shares for each FM bond. Currently I am buying in 5 share lots, with each subsequent purchased being at the lowest price in the chain. 

These potentially long duration FM bonds are going to keep going down in price for as long as the 30 year treasury bond rises in yield. 

Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity, Quoted on an Investment Basis -St. Louis Fed The yield has returned to where it was in 2007. Starting with the Near Depression through the Pandemic period up to March 2022, U.S. interest rates throughout the maturity spectrum were IMO suppressed by the FED and were not market derived rates.  

I will refrain from buying those 3 baby bonds in two other taxable accounts until I hit my limits in the Schwab account. 

The maximum position in all taxable accounts for each is 300 shares. 

A. Added 5 EMP in Schwab Taxable Account - Bought 5 at $20.5: 

Quote: Entergy Mississippi LLC 4.9% First Mortgage Bonds Overview

Issuer: Wholly owned operating subsidiary of Entergy Corp. (ETR).

ETR 10-Q for the Q/E 6/30/23 (Entergy Mississippi results can be found at pages 133-146)

Last Discussed: Item # 7.A Added to EMP - Bought 5 at $21.16 (8/26/23 Post) 

New Average cost per share this account: $21.69 (35 shares)

Yield at New AC = 5.65%, rounded up.

Next Ex Interest:  12/28/23

Prospectus

Par Value: $25

Coupon: 4.9% paid on the $25 par value 

First Mortgage lien on substantially all assets

Trades Flat

Maturity: 10/1/2066

Issuer optional Call: Call protection expired in 2021. Issuer may call at par value + accrued and unpaid interest. 

B. Added 5  EAI at $20.1; 5 at $19.85: 

Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)

Cost: $199.73

Prospectus

Callable at any time now at par value + accrued and unpaid interest. 

If the issuer does not exercise its optional call right, the bond matures on 9/1/2066. 

New Average Cost per share: $21.43 (60 shares)

Yield at New AC: 5.69%, rounded up. 

Next Quarterly Ex Interest date: 11/29/23

I discussed this exchange trade first mortgage bond in my last post and have nothing further to add here. Item # 7.A. Added to EAI in Schwab Account - Bought 5 at $20.62; 5 at $20.36 (10/14/23 Post) 

6. Corporate Bonds: 

A. Bought 1 Dominion Gas 3.6% SU Maturing on 12/15/24 at a Total Cost of 97.435: 

Issuer: An indirect subsidiary of Berkshire Hathaway. Dominion Gas was sold by Dominion Energy to Berkshire in November 2020. 

Berkshire has a 92% interest in Berkshire Energy that owns several utilities, including PacifiCorp, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company, and BHE GT&S, formerly known as Dominion Gas. BHE GT&S owns 3 interstate natural gas pipelines, gathering and storage pipelines, operates 17 underground gas storage facilities, and is an industry leader in natural gas liquefaction. Berkshire Hathaway 2022 Annual Report at page K-8; BHE GT&S | Home

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/A

YTM at Total Cost: 5.918%

Current Yield at TC = 3.695%

B. Bought 2 Janus Henderson 4.875% SU Maturing on 8/1/25 at a Total Cost of 97.818:

Issuer: Janus Henderson Group PLC (JHG) 

JHG Analyst Estimates | MarketWatch

JHG SEC Filings 

SEC Filed Earnings Press Release for the Q/E 6/30/23 

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 6.178%

Current Yield at TC = 4.958%

C. Bought 2 Ally Financial 4.625% SU Maturing on 3/30/25 at a Total Cost of 96.521: 

Issuer:  Ally Financial Inc.  (ALLY) 

ALLY Analyst Estimates | MarketWatch  

SEC Filed Earnings Press Release for the Q/E 9/30/23 (GAAP net income of $269M with non-GAAP at $252M)

ALLY SEC Filings 

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB- 

YTM at Total Cost: 7.196%

Current Yield at TC = 4.79%

YTM: The YTM takes into account the $34.79 profit per bond that would be realized when and if the bond is paid off at maturity. The annual interest payment per bond is $46.5. 

Market Discount as Interest Income: It is my understanding the $34.79 "profit" per bond is not treated as a capital gain, but as additional interest income in what the IRS calls "accrued market discount". Downloading my 1099s into TurboTax, the market discount numbers will appear on a form called "Additional Information" and the total will be carried into Schedule B as interest income. 

This is that schedule from my 2022 tax return: 

In the real world, that is $745 in profits, but the government will tax that profit as interest income. I have not researched this issue. This kind of tax issue makes my head hurt. I simply regard it as the government maneuring to collect more tax revenue from higher income taxpayers by classifying long term capital gains as interest income.   

I had to take a course on Federal Income Taxation. I attended the first day, heard a professor talking in a monotone, turning already boring material into some kind of sadistic ritual on the students. I wanted to shout "please stop, make it stop". I did not come back until I took the final exam and made a "C", regarding that as a victory since my entire effort involved about 3 hours reading J.K. Lasser on Income Taxes the day before the exam.  

7. Current Corporate Bond Strategy: 

I did not buy any bonds in 2021 and a  low allocation to corporate bonds between 2009 through the first half of 2022. This was a response to the FED's Jihad Against Savers that started in 2008 and lasted into 2022. 

As discussed in 2008 posts, I significantly reduced my stock allocation in 2007 and used the proceeds to buy investment grade corporate bonds. The short term investment grade bonds were then yielding over 5%. This was more of a preservation of capital move as my concerns about subprime and Alt-A mortgage defaults increased throughout 2007.  In addition, I developed the VIX Allocation Model in 2007; and it flashed a Trigger Event in August 2007 that added to my angst about stocks. 

In February 2009, I sold all but 2 of the corporate bonds bought in 2007 and redirected the proceeds back into stocks as previously discussed here. 

I resumed bond buying in 2022 and accelerated the purchases in the second half and into this year. Most of those bond purchases will mature in the 2024-2025 time period. The apex of my bond ladder is in 2024. The large number of corporate bond maturities in 2024, almost all purchased at discounts to par value, will increase my interest income next year from coupon payments and realization of the market discounts upon redemption. A few bonds were bought at par value under Fidelity's initial corporate bond offerings. 

I am not concerned about short term bonds going down in price before they mature, since there will not be any need to sell any of them at a loss. I am more concerned about where short term rates will be in 2024 and beyond when I will receive proceeds from the ones that I now own.  

Corporate Bond Maturities in 2024 as of 10/20/23 (Treasury and CD maturities are excluded here)

January: $39K

February: $41K 

March: $59K

April: $37K

May: $44K

June: $61K

July: $15K

August: $16K

September: $61K

October: $18K 

November: $38K

December: $13K

Total $350K

I needed to gather this information, which was previously inchoate in my mind only, since it will impact my allocation shifts in the coming months. 

Part of the proceeds received in 2024 from redeemed corporate bonds will be redeployed into purchases of dividend paying stocks, corporate bonds maturing in 2025 and 2026, and treasury bills. 

Currently almost 85% of my Fidelity account is in bonds and treasuries:   

The "Other" category would include preferred stocks.  

About 80% of the bond allocation noted in the previous snapshot consists of treasury bills and investment grade corporate bonds maturing within the next two years, with more than 80% maturing between next Monday through 12/31/2024.  

My Vanguard taxable account is about 50% in the Vanguard Federal MM fund currently yielding about 5.29% with a compound yield of 5.42%.    

The Schwab taxable account is heavy into short term treasury bills, bought at auction and maturing within 1 year, and CDs with staggered maturities over the next two years.  

I am in a position to assume more stock risk in exchange for more dividend income. 

I will be buying up to $10K in corporate bonds that mature in October and December 2024 before year end. After those purchases, I will not be adding to my 2024 corporate bond allocation which is already high.    

8. Bought 1 TIP at the 10/19/23 Auction-Roth IRA Account: 

5 Year TIP 

Matures on 10/15/2028

Coupon: 2.375%

Priced at a Small Discount to Par: 

Real Yield with OID = 2.44%

Auction Information:  

The settlement date is 10/31/23 which is an unusually distant in time from the auction date. Some accrued interest will be paid by the buyers to account for the later than normal settlement date.

In all accounts, including TIPs owned in Roth IRA accounts, I have only $11K in principal amount maturing in 2028. The dollar amount currently allocated to bonds drops off a cliff after 2025.  

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 sale 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 my family members.