This page is set up for those that want to chat about various common stocks.
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12/10/2023
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Hedge fund sharks are circling Macy’s with a bid of $21 a share. In case you forgot Macy’s is an unpopular stock in an unpopular sector, retail. With a $5.8 billion price tag on a company that generated $1.2 billion of profit, the price seems too low, given Macy’s valuable real estate portfolio.
The real estate alone is conservatively estimated at $6 to $8 billion, more than the market cap of the company. Macy’s and its real estate have attracted PE interest before. Starboard Value estimated the real estate at $21 billion in 2021. (“Our extensive research indicates that: Macy’s real estate is worth approximately $21 billion, and possibly far more. “) Starboard thought Macy”s was worth 3x the latest PE bid. https://www.valuewalk.com/starboard-value-macys-inc-m/
We’ll see how this one plays out. PE reportedly controls a large chunk of Macy’s shares so we’ll see if they succeed in squeezing out the small shareholders with a low-ball bid. Some may remember how all that “worthless” Sears and K-Mart real estate suddenly went up in value after it changed hands,
The story is in the WSJ. Long M. JMO. DYODD.
GBLI – Global Indemnity. Off 15% as they had previously announced they were looking at a possible combination/merger with other companies and today they said they ended that search. Here are some relevant stats:
– Share price: $28.75 (12/7 close)
– Book value: ~$46
– Dividend: ~3.4%
– Business: Specialty commercial
– History: Up and down, mostly down. They’ve had a lot of trouble with some lines which they’ve exited.
– Organization: LLC – Can’t remember but you may get a K-1.
– My take: It’s a value play and if they can have a “normal” year of claims they would make a lot of money. Also, they’ve been able to keep the duration short in the investment portfolio and are now deploying to a bit longer term and higher yielding bonds.
Yes you get a K-1 from them, Looking to get back in where I was before a little lower than here.
As a deviation from my Preferred holding, I picked up some shares of Closed End Fund DNP which is sitting at a multi year low at $8.62. The fund is mostly a portfolio of utility stocks and has paid a steady dividend of 0.065 cents/share since 1987. I’ve read speculative comments on other sites that the share price drop may be due to year end tax selling, out of favor utility stocks, and that the dividend may be tough to cover down the road. To my eyes, it has made it though a lot of up and down markets unscathed over the past 35+ years and was a gamble I was willing to pick up. Time will tell.
Looking quickly it looks similar to UTG which has also never cut its dividend and focuses on utilities… I big difference however is that to date it looks as though 52% of DNP’s dividends for the year have come from return of capital…. NONE of UTGs divvy is from ROC, but a lot of it comes from a seemingly never-ending amount of long term cap gains…. you’d think they’d have to run out eventually……..
UTG is one of my core holdings. It uses leverage (approximately 20%) and is down about 12% from it’s 52 week high. But, I expect the price to slowly rise with interest rate drops. Current price looks to be an attractive entry level. Agree with 2whiteroses about the dividends.
Tobacco stocks are down today on the news that British American Tobacco BTI is writing down the value of some of its US brands by $31B. BTI has the biggest drop so far today, off about 9%. Altria Group MO, Philip Morris International PM and Imperial are also trading down. This is either A Great Buying Opportunity or Another Cause For Concern. BTI apparently does have other US brands not yet written down.
Tobacco stocks, always controversial, are popular with income investors because of their high yield, from ~6% to ~9%. Bears and bears wonder if the companies can raise prices faster than consumption drops. Vaping is a recent concern.
BTI YTD down 29%
PM YTD down 10.5%
MO YTD down 9.5%
IMBBY YTD down 6%
Disclosure: Small long position in tobacco. JMO. DYODD
Bear… I gave up earlier this year and sold my positions in BTI and MO. At this point, I just lost conviction that they’d be able to offset volume declines indefinitely with price hikes. I do still hold, and have added to, PM as they’ve been focusing on smokeless product and they have been vocal about a smokeless future. Lower yield, higher valuation, but I think there’s less chance they go away.
Something to read before you replay the “Bank Run” scene from the Jimmy Stewart’s Christmas classic, ” Its a Wonderful Life:” The FDIC’s November 29 Press Release. It brings the news that unrealized losses on securities held by the banks went up 22% Q2Q. Yup, up 22%, (A lot of low coupon paper out there. )
There is text, but no alarming chart, in the Press Release, only a happy chart showing that bank income is doing nicely, thank you, down only 3.4%. (The bad news chart is buried deep in the FDIC’s lengthy banking report as Chart Number 7. To keep you on your software toes, the “chart” downloads as an Excel spreadsheet. I don’t think I could find it again. )
Presumably the recent drop in rates and the Fed’s widely predicted 2024 rate cuts will help pull the banks out of the hole.
“Unrealized losses on securities totaled $683.9 billion in the third quarter, up $125.5 billion (22.5 percent) from the prior quarter. Unrealized losses on held-to-maturity securities totaled $390.5 billion in the third quarter, while unrealized losses on available-for-sale securities totaled $293.5 billion.” – FDIC, Press Release, 11/29/23
“Old man Potter will pay 50 cents on the dollar for every share you’ve got.”
“Better to get half than nothin’.” – Depositors, “Its a Wonderful Life,” 1946
“Old Jay Powell will pay 100 cents for every 50 of 30-yr 1.5% Treasuries you’ve got.”
“Better to get double than half ” – Bankers, Bank Term Funding Program, 2023
Disclosure: longer than I’d like to be in banks. JMO. DYODD,
I bought Ford (F). It felt right.
…..but it was wrong, lol
I am holding some of their baby bonds (F-D), just to get some diversity. Bought most about a month ago (about $2-3 less than current). still yielding over 7%.
I spent 20+ years as a automotive executive. There are so many variables impacting profitability that I know enough to not touch any of the automotive OEM stocks.
Ford is #3 in the list of stocks that have made my family the most money, behind only Apple and Microsoft. It’s all on when you buy.
Yes. Duration is the key. So much effort into short term trades. Yet, the simple advice to buy good companies at a fair price and hold, makes multi-millions.
The only “new” stock of significance that I own has been NVIDIA. Bought that in 2015. The others were purchased 1999-2003.
These holdings are now in family legacy trust accounts, ensuring their security.
I think one of the most important keys to investing is learning about deferred gratification. Once again, grateful to live in this country.
Somewhat related I guess, this article tells me that sometimes it’s better to be lucky than smart but, never-the-less, as you have suggested, you have to be in it to win it: https://www.benzinga.com/general/23/12/36051788/wall-street-banker-pays-2-million-sight-unseen-for-coal-mine-then-discovers-its-filled-with-37-billi
This is the guy from RAMACO Resources [METC}
https://nypost.com/2023/11/09/business/a-2m-coal-mine-in-wyoming-could-be-worth-37b/
Wall Street Banker Pays $2 Million Sight Unseen For Coal Mine Then Discovers It’s Filled With $37 Billion Worth Of Rare Earth Elements
He outbid me by $10.
Damn the luck.
Short news item in Market Watch about Pacific Premier Banc PPBI “repositioning” its balance sheet by selling off ~$1.3 billion of low yielding securities, (coupons ~1.3%) at a loss of about ~$180 million. Sale is out of its marked for sale portfolio. Intent is to redeploy assets.
So was this an odd time for PPBI to sell since interest rates have been dropping recently? Maybe not. It’s not a TBTF. Perhaps PPBI thinks Fed won’t renew its BTFP support program, which values underwater assets at par for borrowing purposes. The Bank Term Funding / protection program for the other banks is set to expire in March 2024. While the BTFP program seems to have prevented some bank runs there are reports of banks and insurers gaming the Federal back-up programs by arbitraging the low rates. Its not clear what the public sentiment will be if more exposes hit the news. It can be very lonely out there if the Fed’s not around.
“The tables are empty
The dance floor’s deserted”
— Frank Sinatra, Learnin the Blues
No position in PPBI. Generally long banks. Just my opinion. DYODD.
Note: Market Watch just changed the tone of its story by deleting mention of the low coupon rate from its story and added a mention of increased income. Accentuate the positive – Bing Crosby
Bear, I know of another bank that is in the process of selling off mortgages and securities that they plan to take a loss on for the 4th qtr. 800 mil worth they expect to close end of Dec. They also borrowed from the feds and need to pay back by March. I like seeing a bank being pro active and getting ahead of the curve. Bodes well and I am holding.
Bear, I know of another bank that is in the process of selling off mortgages and securities that they plan to take a loss on for the 4th qtr. and net 800 mil worth from the sale they expect to close end of Dec. They also borrowed from the feds and need to pay back by March. I like seeing a bank being pro active and getting ahead of the curve. Bodes well and I am holding.
There is some chatter that US Cellular is attracting some interest from the big 3 telcos. USM is controlled by Telephone and Data Systems. TDS and USM common both pretty much doubled when the “shop around” news first came out in August.
TDS has two preferred issues outstanding, -U ans -V, both beaten up and both with healthy double digit QDI yields, around~11%. Pros: since apparently only USM, the sub, not TDS, the parent, is up for sale, go dark is not an issue at this point and the TDS preferreds may get a boost if TDS gets an influx of cash. Cons there may be no deal, TDS is a lackluster performer and there is family control. Disclosure: holding but not adding here. Just my opinion. DYODD
I agree and am looking into it now. The common jump I missed. But this reinforces the pref’s IMHO to almost a safe investment. But there is complex wording in the backside of these. I’m hoping someone can figure it out here. But I’m guessing these move back to almost par if something transacts.
I dont quite know what to think here. Are they selling the entire entity or just towers and such in pieces? And if they do sell USM, what is really left of the company? A scrawny landline and cable outfit?
Moodys stated if they sold USM and returned the cash to shareholders it would be big credit downgrade. That wouldnt benefit the preferreds. Or would they use the money to pay down debt and spend heavily into their remaining tiny entity? That wouldnt help much either. In todays world 6% capital off preferreds is cheap. With the bulk of their entire revenue and EBITA generated from USM, what is left of the company if they jettisoned entire business?
Interesting situation to see how it goes.
Dan Loeb just disclosed his purchase of TDS and T Mobile. Berkshire’s Todd bought Sirius. Both are arbitrage plays as far as I can tell.
I am evaluating Tapestry and Capri for arbitrage. Entered into Capri when SEC inquiry (expected) and earnings released.
Happy I added to NVIDIA and MSFT. I buy monthly.
I assume you mean these two guys have bot or added to positions on these names, right? There’s nothing on the table for Loeb to buy either one of the two companies or BRK to buy SPNT, is there? I don’t see anything, but then again, I’ve spent the day outside for the most part……
2WR, Yes. That is what I meant. Sorry for confusion. Loeb I think owns majority of float available however most of the company still owned by family. I can only suspect he will want the company sold for profit. Berkshire bought Sirius for the arbitrage between the two securities issued.
I am increasing my exposure to Capri for arbitrage.
I saw this. Just before I bought more of the TDS-V. I feel pretty safe with these and expect good ROI. Might be adding more, not sure why others are not piling in?
One cannot know all that might be going on behind the scenes but for what is visible my reason would be: Ba3/B
At 11%+ it does have a smokin’ yield on it. Good luck with the position.
Anyone looking at DLNG? They have eliminated over 25% of their debt in the last 4+ years under refinancing terms in 2019 under a 5-year agreement.
Solid industry, low price to book, and positive EPS. 6 older ice-breaker ships under contract, and they recently announced new higher contracts for two ships when their contracts expire in a couple of years. They seem to be keeping up with maintenance, and even older ships have a good resale value. No common stock dividend while reducing debt.
Plenty of risks and problems. They certainly have a huge Russia war/Gazprom problem that can’t be overstated. They will need to refinance their debt next year, which will be at higher rates. They are in a cyclical risky business, and the loss of even 1 ship could be devastating. They have demonstrated no fiscal restraint in the past, and there is no guarantee they have learned anything for the future. They are an offshore company with murky financial controls. They could decide to incur more debt by buying more ships. They have two costly preferreds in DLNG-A (9.0%) and DLNG-B (8.75%, but it floats in 2 weeks above 11%).
On the upside for the common stock, they could reinstate a dividend next year, which will boost the common. They could get bought like many of their competitors, although their preferreds (DLNG A and B) could suffer (I plan to trim my positions next year just in case). Current price is $2.54, and book value is $8+ depending on the source. I expect any buyout will be below book value. I have a small position below $2.60.
This is definitely a high risk, so DYODD. But, things will change next year, and I think (hope) those things will be good for the common. However, I only put my play money into this one.
IBRX was up again today. Still holding 2/3rd of what I bought over the last year. Not adding more at this point, because it’s 60 to 180 days before the FDA needs to respond or has to respond. The drug does what it is supposed to do with little to no toxic side affects for bladder cancer. Only reason it was not approved was the outside manufacturer quality control. Too much excitement and from stock flippers and they can lose interest just as quickly and the stock nose dive an lose half its value.
This is for 2WR
“Promise me, son, not to do the things I’ve done
Walk away from trouble if you can
Now it won’t mean you’re weak if you turn the other cheek
I hope you’re old enough to understand
Son, you don’t have to fight to be a man”
Title of the song is appropriate for my circumstances when it comes to common stocks.
I took over handling my wife’s account, and one investment I made I take responsibility for, that is investing in common stocks that pay no income. Actually only one, the other one is a bank that pays a dividend. That’s it 2
On a few income stocks that are down at least while I hold I am getting paid, two come to mind MGR and GJH
At any point in time your account can be up or it can be down. In general over a year this account has been down about 1-1/2% this includes the income that has come in and my wife withdrawing 3% in the last 11 months.
Besides the several income holdings being down, the one common stock has been a major contributor to the loss. As of yesterday, IBRX recovered enough in one week that I was able to sell 1/3rd of the position for a 10% profit in 8 months of holding. The rest is still underwater. I was averaging down until I didn’t want to take on more risk. As of this morning the account is up 1/10%
which is nothing.
If this was a business, I would expect that inventory to turn over 5 or 6 times in 8 months at a profit. One turnover in 8 months for 10% is poor business and bad risk.
So heed those words young investors, “Son, don’t do what I have done”.
What pushed me over the edge towards ETFs was exactly the problem you describe. Having a handful 10-20 stocks the volatility of just a couple of stocks can cause trauma.
Majority (80-90%) of my common stock portfolio got parked in VTI (Total Stock Market Index). Been set and forget ever since.
The expense ratio is very low since it’s just a tracking ETF but the yield is less than a mm fund and for $10,000 I don’t get many shares so it’s not going to move the needle much.
I’ve also been shifting to funds lately to add ballast to the portfolio and make it easier to run. Specifically, PEY and SCHD are pretty broad based and emphasize yield. Also, I’m old and eventually all this will fall into the hands of my wife and kids., none of whom have the time or inclination to do what we on the message board do to keep our portfolio healthy. The funds set it on autopilot. They just need to scoop out or reinvest the cash and I’m sure they’ll figure out that part . Full disclosure: I haven’t given up on individual stocks as I recently bought JXN and added to my O holdings. Also have recently added to RNP, a high yielding real estate focused fund.
Hey JerseyVinny,
As I set up the plan for my investments to be inherited, I went down a different path which I suggest to anyone who is planning to pass on significant money to a spouse who won’t/can’t manage investments: do her a favor and find a fiduciary wealth manager for her now. If you are managing the investments, you are likely in a MUCH better position to find and vet a good manager than she will be once you are gone.
I have been asked to help sort out dozens of estates over the years, and watching widows with the “deer in the headlights” look when they realize they have to deal with investments convinced me to get a money manager to protect my wife who has absolutely no interest in managing investments.
It took a couple of years to find the right person. We went through a few candidates and even started having a couple manage funds before I dropped them. I finally ended up with someone we have known personally for decades. We both meet with him periodically and she is very comfortable with him (one of my primary requirements). My recommendation to her is that when I go, she should take him all the brokerage statements and let him take over managing everything. She knows it will cost her a little money and that the returns won’t be quite what I have been making, but the money will be pretty safe and she won’t have to stress about it. Taking that stress off is worth it (IMHO).
During the course of setting up the relationship with our guy, I decided to let him manage a slice of our assets (about 20%). He doesn’t make as much for us as I do, but he is much more conservative and a good “anchor” for me when I start taking too much risk. Having him onboard managing a slice of our money should make a transition to him managing everything a lot easier.
Anyway, just a suggestion.
Thanks for the post Private. We had found a fiduciary manager, but I have a certain distrust after having experiences at Edwards Jones and one I can’t remember when I was younger. Not that it was bad, but their ideas were not in line with mine at the time. This person has several clients who had been with Bernie Madolf so I guess if they are willing to trust another advisor after that..
I like the suggestion of trying a advisor with 20% and building trust then by the time I am done with handling it myself or not able my wife can have someone she can let take over.
I have had 2 problems with the subadvisor approach:
1. It’s very hard to get an advisor to consider your whole portfolio in managing the allocations of their piece of it. You have to be able to define their job such that they can do it without looking at everything else, because even if they say they will do that, they won’t.
2. It doesn’t take much trading by the advisor to ruin your tax strategy for the year. (And if the advisor isn’t doing any trading, it’s really hard to justify paying them.)
Good thoughts David,
The way I handle them is:
1. I don’t ask him to take anything into consideration from the part. I manage. I want him to do his thing with his piece without him trying to “react” to my actions. Only “rule” I give him is “no cash, no bonds”. Lots of advisors look to something like a 60/40 or 80/20 split between equities and bonds. I told him I will do the fixed income for both of us – you just do equities in your part. FWIW, I will probably talk to him about bonds at our next review. World is changing.
If I wanted him to look at my piece in detail, he would be basically managing the whole thing – or at least “leaning” his piece to counterbalance me. Not what I want.
That said, when we have our reviews, he tells me his strategies and I try to articulate my strategies and get his feedback. Luckily, I have known him and worked with him on community projects long enough that he can be very blunt with me (i.e. tell me why my thinking is stupid – and he does). I don’t always take his advice/feedback, but I do try to park my ego and listen.
2. I only let him manage IRAs and Roth accounts, so tax issues are pretty manageable (the bulk of our overall holdings are still in those kinds of accounts). Only real tax issue most years is whether/how much Roth conversion to do.
I was discussing this same “money manager” topic on another board and someone asked me how to pick a money manager. I thought I might share that here. (if this discussion goes on any more, we should probably move it to the Sandbox).
I confess, I found my guy kinda by dumb luck (or my wife’s prayers – if she prays for something, get out of the way…). I had been through several guys (people affiliated with brokers, fischer, etc.) and I couldn’t find anyone that fit. I was talking to friend, and he mentioned someone I had known for a lot of years socially. Turns out he is a fiduciary money manager who had just the right background for us, and we have worked with him for fifteen years now. He leads a small firm, and we also know his more junior folks, so we should have continuity if our guy retires.
So, it is unlikely everyone will have a friend like that, so I asked a couple of people who are way smarter them me about how to find a good money manager and both recommended some recent articles from a group down in Monterey (think “Pebble Beach crowd”) :
This one is from a couple of weeks ago:
https://tinyurl.com/k936efmk
and this one is from this week (I will post part 2 when it gets published).
https://tinyurl.com/yt2dscp5
Hope that is helpful.
As a woman, please try to recognize the continual bias towards females. My female friends are certainly nothing like described here. That being said, I do understand that one cannot suddenly pilot the plane and safely land. I would suggest spouses not familiar with financial planning also work with the portfolio and financial advisors. There are many good spreadsheets and documents which we have in our safety deposit box. “Where is the money?” “Things to do when I die”, “Apple legacy key and such”. These documents have been reviewed by spouse, attorneys, advisor and sons. I am not social security age yet but am a practical person that loves my family.
It is very difficult to find a trustee for estate. I also have friends that we trust; however, they are around my age. In my case, I realized I was avoiding making difficult decisions by punting to friends (CPAs, etc.). We have interviewed multiple trust companies. It is not easy. Most trust companies will not handle foreign assets or esoteric stocks. A compromise I am making is placing assets the trust departments will not handle into separate trust and allowing my sons to be co-trustee. Upon our death they will need to understand these assets. Leaving them under the trust companies assets would require immediate sell and that is not financially the wisest to do. Another complication is incapacitation. Then the trust company must step in and one must decide on their roles, who has the durable power of attorney, etc. Anyone that has worked and has assets is faced with this along with the sunsetting of the estate tax exemption. Hopefully all have taken advantage of this exemption and utilized. If anyone has an answer to all this, it would be wonderful. I suspect not.
Hi TNTowanda,
Apologies if I sounded like I was perpetuating bias against women. In this discussion, I have been mostly talking about my personal experience, and I am a man. I talk about “my guy” because he is a man. I also have couched my suggestions in the context of talking to men because that is where this conversation started (I probably should have shifted gears to a more general audience, but I am not that smart). I certainly think women should do the same planning and are completely capable of doing it – so I am sorry if I sounded like I was implying anything different.
I am not on Social Security yet either, but almost all of the estates I have helped settle have been for men of my parents’ or grandparents’ generations who left wives behind. Cultural norms were different for them, and I have had to deal with things as they were.
In the case of my wife, I certainly married up. She is far smarter and more organized than I will ever be. She runs a school for several hundred (mostly immigrant/migrant) students and she knows every one by name, and their families, and their situations…. She is the head of a regional charity, she has managed a PR firm, etc. etc. In the couple of years we lived in Hong Kong, she ran a 1500 member women’s charity. She can make spread sheets sing and has managed millions of dollars in budgets. It isn’t that she couldn’t manage investments – she simply has no interest. She knows our money manager and is happy to socialize with him, but I have to all but drag her to reviews with him because she has “better things to do”. She is the one who is the keeper of the documents you mention for our family (she says I would just mess them up). She also manages our bills, insurances, etc. – I traveled so much early in our marriage (40 years) that she took that on and confiscated my check book because I just kept missing things (one of the happiest days of my life!).
Point of irony – my wife just asked me what I was writing (as a lead in to “why aren’t you making dinner”) and when I told her, she laughed at me. She reminded me that all of the CFOs of every company I have ever owned or started is/was a woman, because “you need a woman to boss you around”.
I created a company with my daughter about 10 years ago where she is CEO and every one of the dozens of other people in the company (other than me) is a woman. It wasn’t planned, it just worked out that way. Amazing vibe – I just sit back and watch it go. The CFO of that company used to threaten me with bodily harm on a regular basis (and she probably could have done it – she was quite an athlete). She would tell me to just leave them alone and they would figure it out (and they always did). Unfortunately, she passed away last month – which is one reason this whole topic has been “top of mind”.
Finding someone to act as a trustee sure can be difficult. My daughter is now the trustee (after my wife and I) for our family trusts, but when my kids were younger I had a similar challenge. I just couldn’t get comfortable with bank trust departments (too many idiots and they changed every five minutes), and as you said, they wouldn’t handle anything offshore or remotely complicated.
My wife ended up sweet-talking an international tax attorney we know into taking on the job (I think she worked on his wife) on condition that I would do the same for them. That was great for us because he could understand our offshore businesses/assets. Luckily, neither of us ever needed to actually do anything for the other’s trusts. Unfortunately, his adult special needs son passed away last spring, so most of their trusts were terminated and I was released.
Anyway, I apparently need to go make dinner – so, again, apologies for my tone and for how long this post has gotten.
Private thank you for the posts. I think it was several years ago here on Tim’s site that people discussed why they manage their own investments was that certain ETF’s and mutual funds do have low costs but they don’t stay on top of changes in what they hold. Good example would be the recent issue with Riley or a preferred trading over par that gets called and suddenly drops to par.
All the points that TNT brought up I am glad she listed them.
The points about trustee and a executer I have had both good and bad experiences first hand.
My wife’s sister took her father to the family attorney and had the Will changed, had all the assets and real property put in her name and emptied the bank accounts.
The lawyer was a decent guy and he suspected my father in law was being manipulated and he left part of the will unchanged that said all the property in the house belonged to the other 3 sisters. We spent 450.00 to talk to Les Tillum a attorney who told us the estate was under a million and wasn’t worth the money or the mental stress to fight it.
On my parents estate my sister was an Angel absolute Angel. She was care giver for our mother and the trustee and made sure everything was split evenly.
In our current situation i’m not sure any of our family members are up to the task so I would consider a bank’s trustee to be more competent and even handed than any family members so the trade off is worth considering.
Private, Thanks for an elegant response. I think it very common in relationships for one partner to take on duties while the other parties takes on other duties. That works until it doesn’t.
TNT, I think some of it is just “non awareness anecdotal bias”. I even get in constant trouble from my lady for referencing our cat as a “he or his” when its a female cat.
I have a circle of about 50 friends/couples or so close enough to where I know in general their investment styles. Only one other really is a “stock trader”. The rest is mostly real estate, index funds, CDs, or lean on financial advisors. So the guys in my circle arent really anymore attuned to this stuff than their wives are.
With one exception which I thought was funny. One of our couple friends the wife just recently retired 4 years ago from a career in finance working with Dean Witter and ending up retiring from Merrill managing other peoples money. She told me she refused any client under $5 million because they were the ones that panicked all the time any time the market dropped. The ones with more wealth didnt worry and bother her all the time….A while back I proceeded to try to pick her market brain and see what her thoughts were. And she said, “I am sick of that $h!t. I dont follow it anymore. The day I retired, I moved our assets to an advisor and he handles all our money.”
Her husband, my golfing buddy, probably doesnt even know where the money is at. He says she gives him a weekly “cash allowance” for his golf and beer activities and that is all he knows and cares to know about.
TNT,
We share your challenges re a Trust manager. Being transparent, many of our friends’ consternation notwithstanding, I believe a part of our own trepidation is the aversion of thought to paying someone to do a job I feel we can do better ourselves. That’s challenged of course by the notion we may have better things to do than spend too much time in front of a computer trying to tick off another few percentage points here and there. The other part is I really like doing it.
Not knowing the entirety of your situation but recognizing similarities with our own would share the following:
1) Have heard excellent feedback re Goldman and MS. If engaged, I would for multiple reasons opt for a Trust “team” rather than a single manager. My older son uses an MS team and has had consistently positive feedback.
2) I have ongoing in-depth conversations with my partner regarding our investments. Among the least obvious benefits is the “surprise” “brilliant” feedback you may receive on points you may not have considered or that could be viewed differently. Originally with zero finance background, my partner can now critically evaluate credit risk, credit spreads, duration, equity derivatives and most-recently historical yield curve expectations and now knows her way around a basic income stmt and balance sheet. In an “aging” scenario you allude to, this in-home cross-check will be valued over-time like an aging fine wine.
3) Your sons. Many do not like to discuss finances with their children. We have taken the other path and have normalized the dicussion with them. It’s a very infrequent conversation – but they are aware and have time to understand their own responsibilities that will someday – and maybe unexpectedly – land at their feet. Like you we have extensive spreadsheets for them, updated quarterly, with all the info…the what, where, why and how of it all. We too have sons and are fortunate in that one of them started in IB 14 years ago, and via exposure to our’s, the 2nd son has adopted similar financial disciplines and understanding of his own repsonsibilities to his family and someday to us. It’s been accretive for him and therefore by extension for us. Regarding the durable: The durable goes to one son, the directive to the other. They know and they understand. One for the brain, the other for the heart.
My current base case is at some point the boys take over mgmt, which with provisos may be well-before our sell-by-date, and which may include handing it over to Goldman or MS. I’m comfortable with that being their call.
For fun: The joke in the family re the one with the brain…if we get past a certain age and sneeze, he’ll say, “yeh, they had a good run, pull the plug” hahaha. So the directive goes to the one with the heart.
Best to you with your decision-making.
Alpha, We do share many similarities. I have spoken with the trust folks at MS (flew up with the local guy). Agree they are very sharp. Our estate leaves our attorney (who is only 40) as the protector so it gives me comfort if a change needs to be made he will facilitate. Our sons are still in their 20s and neither married. Too many unknowns at present to make them successor trustees. We also have a tender hearted son that I worry marrying the wrong woman could harm him financially; therefore legacy trust with corporate trustee. (It is tragic what I have seen. Recently, a son took distribution from his legacy trust and built an incredibly expensive home in Aspen; the wife now in divorce is taking most of the assets including that home. )
And finally, we recently met as a family with our estate attorney. The sons will circle back again with him. My husband has a good awareness of our situation if I should pass or become incapacitated. He strongly prefers a corporate co-trustee with our CPA firm advising on an hourly basis.
These are difficult topics but personally, I think both spouses and children should fully understand. Our dear friend is now being sued by her stepchildren as their father failed to communicate with them. He (in my view) faltered on a basic responsibility; though in totality he was a good person. The legacy he has left is one of anger, hatred and mistrust.
TNT, We’re helping each other here. I read your post twice. A lot of good info and advisories. Yes two wonderful daughters-in-law joined the clan in the last two years. The unthinkable, however improbable, is still a possibility.
We have been planning to make the adjustments and you just landed a well-placed elbow.
Thanks to everyone for sharing, been up 16 / 18 hours straight and just landed after a 10-1/2hr. Flight. Still 8 hours to go before we get home.
After we rest up from our vacation I want to go over this again. Hope everyone has had a good weekend,
That’s a long day Charles! Good luck with the jet lag!
My cost basis in Microsoft is $25/share. I never sold (and it didn’t pay dividends). My children and grandchildren will inherit. I preach the same thing: Invest at a young age; eat beans if you have to but build wealth for your family. No inheritance just buy and hold with the gratitude that I as an American female have this opportunity. My NVIDA cost basis is similar. Looking at equities on a daily/monthly/yearly basis will not build wealth. Many times I was told to sell as I could get better returns, blah, blah, blah. The tax efficiencies of buying and holding cannot be beat. Do your research and invest. Funds are great too and I hold many. Personally, I don’t know anyone that became wealthy on fixed income alone.
TNT listen to the women in the house, they have a long term view of things. But there comes a time you no longer want to work or can work, at that point the money quits coming in. Then your money has to work for you and pay you an income. My wife worked for Costco for 30yrs and bought her company stock at market price with 10% matching from the company in her 401k. She started out buying COST at 8 to 10.00 a share.
But 356 shares of stock only pay a dividend of 1,452.00 a year. Not quite enough to live on when your seventy years old. With about 1/2 the IRA invested in preferred, ETD, and bonds its generating about $49,000.00 a year now and the IRA is still worth the same a year later even after she has pulled out 3%
My wife is not as mad at me as she was a year ago when I sold the COST stock. It at depends where you are at on the journey through life.
SO, yes I agree common stock is appopriate if your younger.
Charles. I agree which is why I stated start early and eat beans! I am curious as to why your wife is not managing her own hard earned assets? She should! And I love my Costco stock, doubt I will ever sell. Another reason to love equities they allow me to focus on income generating work. I doubt I will ever not be doing something as I take joy in challenging myself.
Funny you should ask. I started out in about 1982 with investments. Did some myself and tried a investment manager ( Edward Jones) invested in a stock purchase plan with Georgia Pacific which I used to buy my first house, did a 401k with another employer and when I was laid off I transferred it to a IRA in 2012 right before the company went BK
I used to read the Wall St journal and when I had an early account witn TD I would read the paper booklet of stocks they sent me every month front to back.
My wife on the other hand had a union job with the retail clerks union that she saved only 10,000 after 8 yrs
And then her 401k with COST
I try explaining what I am doing and her eyes kinda glass over. On the other hand my eyes start glassing over when she starts talking about one of the 2yr old great grandkids giving her mommy a funny face just like her momma did when she was 2
I grew up in a more rural area and the local credit union had on offer CDs. So every 2 months or so I would lock in another 5yr CD @ 11% minimum required $500.
In around 1991 or 2 CD rates had really dropped. So I started looking around for alternative investments. Had to travel 3 hours with a bag of cash to the major city to put money on deposit at a national bank which offered at that time mutual funds. After reviewing the funds on offer I picked an all stock index mutual fund with the ultra low MER Rate of 4%.
After 2 years of receiving 3-4% returns which was below CD rates. I found out this same national bank had a brokerage service starting up. So I got an account. With my annual fund report in hand for the past 2 years found out the top 25 stocks equaled 45% of the AUM of the fund.
So after waiting 2 weeks for my money to transfer into the brokerage. I called up the broker and bought the exact same 25 stocks exactly allocations as the fund and waited.
Miraculously performance improved to 8-9% per year.
On my statement it also listed cash. Even though I had not made a deposit in the account for over a year. So I called up the brokerage thinking a mistake had happened. It was explained those are dividends and its my money. So I asked what I could do. The agent then enrolled me in the dividend reinvestment plan.
This rural farmers life was never the same again.
I disagree, your common stock allocation should not be based on age, it should be bucketed. Everything beyond the 10 year bucket should be in common stock. As I’ve mentioned, a 70 year old should be budgeting to live for another 30 years.
HIFS – Hingham Institution for Savings (Microcap Regional bank)
Specialized mortgage lender with commercial lending operations in San Francisco. Recently this area has been in the news for big property value write downs.
Net interest margin has compressed into oblivion due to deposit problems.
No analyst coverage which also can cause stocks to be left out in the cold like orphan children in distress.
Think this will by a flyer once rate cuts take place. Have taken no position but appears to be a highly efficient lender stuck in bad circumstance.