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Everyday I Ask Myself

Everyday I ask myself if I should ‘book’ profits in many of my current holdings.

Many, many issues bought in the December to April period have very tasty capital gains–anywhere from 4-20%. Of course there is a sprinkling of issues which are showing losses – most in the 1-2% area. These gains include many, many banking issues, lodging REIT issues and insurance issues. You all know which issues I hold since I post them, but specifically some of the bigger winners are preferreds from Jackson Financial (JXN), Lincoln Financial (LNC), Bridgewater Bank (BWB) and Associated Bancorp (ASB).

So each day as I ask myself ‘should I sell’, my response to myself is ‘what are you going buy?’ and ‘is there a high current risk in the issue?’. Thus far I haven’t located superior (better reward for the risk) issues to buy – although I can answer that with all the small banking issues that I own there is some risk. So for now I hold–although some small banking issues may be trimmed if I can located superior risk/reward opportunities.

Today we get the JOLTs (job openings and labor turnover report) at 9 a.m. (central). Every labor related economic stat will be scrutinized, if for no other reason than one can not help but believe that the Federal Reserve chair wants to see higher jobless numbers. I am convinced that job creation and joblessness is something Jay Powell wants (badly?) to see weaken–whether that happens or not is debatable.

Have you noticed oil prices? I noted them a couple weeks ago and they have continued to climb since that time–I see west Texas intermediate is trading around $81/barrel this morning. Relative to a year ago it remains way down–but since a month ago we are up $12/barrel–this is meaningful. So we will eventually see this feed through to inflation–whether it takes a month or 3 months is the question. Additionally we are seeing higher gasoline prices – locally I am seeing around $3.70 for 88 octane–if you are my wife who uses super premium in her SUV you are paying $4 to $4.40–ouch.

Well equity futures are soft this morning–will we have a rare down day? Each time in the last few weeks when the market has softened buyers step in to drive it higher yet. When I see earnings like Caterpillar (CAT) come in at a strong $1/share beat on estimates I am impressed – obviously inflation has been good to some company’s.

36 thoughts on “Everyday I Ask Myself”

  1. LNC had a earnings miss. I still don’t understand fully how to evaluate insurance companies. I sold mine aftermarket. I have a nice short term gain but now need to find short term loss to prevent IRS from taking. I can buy back in 30 days if the sell was a mistake or buy back 30 days if the sell was merited.

    1. TNT I read that. It was an improvement over 1st qtr. but still with the money they took in from issuing the preferred and bonds maybe they just haven’t invested all of it in new higher yielding investments.

  2. FWIW I am very long oil generally. I have a short options position on in September WTI futures which is about to expire. I am long the MLPs EPD & ET. Have a small position in XOM and am overweight US E&P firms OXY, HES, DVN, FANG, PR also a position in SLB. I also have a few pipeline & oxy notes.
    Energy for me is a sizable allocation.

    Each has it’s own story, but I feel that it is important to have exposure to the oil and gas sector. Income oriented investors should appreciate the dividend payout policies and free cash flow yields of these stocks.

    1. API yesterday:
      Crude -15.4 million (!!) vs. -900,000 exp.
      Gasoline -1.68 million
      Distillates -512,000
      Cushing -1.76 million

      And the Biden administration has stopped SPR purchases they just recently started.

      I’d say, all and all, it’s looking pretty bullish for O&G.

  3. Which would you rather have, EICB or MS PE ? I picked up some of the MS E this morning. Maybe giving up 3/4% for less risk?

    1. I was liking MS-E but then saw it may be called on 10/15/23 with a yield to worst of around 3.4%. Looks like that issue is the highest coupon of all outstanding. Depending on where rates go this fall. I am concerned with a call then or shortly thereafter.

      1. Proto – Still not much to yell and scream about but at today’s close of 25.19, if you take into account the .0896 of accrued you’re entitled to that’s embedded into the price, the YTC is actually 5.066% for 8/3 settlement.

        1. 2WR pretty much all I am doing now is just parking my money with something less risk to get through the next couple months. The market has run up the past 3 or 4 months I am considering which odds are greater, the market going up more or coming down.
          If I get the itch to buy something I’m not going to mess up too much

  4. I have a number of shares of common stocks in the same position in addition to some preferred shares. I wonder about doing the same thing with the common shares but for the most part haven’t. Take common stock gains gains and reinvest in preferred stocks? That is the question.

  5. Tim; I was kinda surprised how that new WFC issue kinda just flew right on over everybody’s head. Hardly no comments about it here at all. It has a 7.625% coupon and trades like a bond. I bought $80K at $102.5. Since Iam not a flipper Iam comfortable with it for the Long Haul. I can live with the reset rate in 5 years which is 3.6% + 5 Year Treasury.

    1. There were a few comments such as unlikely going to trade on regular exchanges like many other $25 preferreds typically discussed here. You cannot buy it at Schwab, Fidelity and Vanguard. I did buy some at IBKR (without telephone call) and aim to add.

      Even trading at $103-ish it would be a 7.4% yield…

    2. Chuck, do you know if the dividends from this issue are qualified or considered ordinary income?

    3. Hi Chuck – there was some discussion, but being a $1000 issue , which I don’t cover here much, the discussion was limited. Certainly it is a decent issue.

  6. I often sell gradually on the way up. It’s not All or Nothing. Especially since commission was removed from the equation. Book small profits then buy back if it drops.

    1. Martin G – I do the same. I have a couple GTC orders in to lighten up on a couple small bankers – we’ll see if they execute.

  7. 3mo CDs looking less desirable with my Western Alliance (thru Raisin) paying
    5.2% vs 5.3 on a 3 mo. ( for those with a lot of cash in taxable accts wanting shorter holding times) I have several CDs maturing in a month or so- will do more of them, but most in the IRA & ROTH are in SNOXX, BIL, or SGOV.

    1. Gary – I had hoped we would get a little boost with the Fed Funds – bu thus far 5.55% from JPM on a 1 year is the best I have seen – and it is callable in 6 months.

  8. I do similar and looked at LNC-D to sell as it’s in the low $27s range. But, I hesitate because it goes X-DIV in 11 days so I am holding so far in order to collect that divvy. That said, TLT is down nicely today (yields up) so, who knows? My kingdom for a crystal ball!

    1. Bingo yazzer – one of my big gainers. The divi plus where else can I get that yield have held me back from selling some of it.

  9. I have more money in SGOV right now that I’ve ever had, ST Treasuries 5.28%. That’s good enough for me right now.

    1. Me as well – just picked up a 9-month maturity for 5.4% replacing DUK-A I sold at $25.16 which I had purchased in the $23s.

      1. Yes, true. I normally am all in on the market, win or lose. Something smells different right now. Running back thru my holdings last 25 yrs, I’ve never been this out of the market (out of the market by maybe my definition only). 21% in ST treasuries, 15% ST CDs, 10% LT CDs, 10% individual A rated Corporate Bonds. The rest is smattering of some higher quality REITs, preferred bank preferreds, and high quality CEF preferreds picked up in the March tantrum. Strange times. Although I must say, my income has skyrocketed this yr. But my holdings have become……boring. lol. Time to hit the golf course with Grid.

        1. Pig, remember the good old days when we were pushing the peddle to the medal? Becoming distant memories isnt it. Like you, cant complain despite putting the oars in the boat and just floating along. I noticed I only have 2 true QDI perpetuals anymore. Still have my floating debt baby bonds and a couple short duration stuff. I dont really have exact numbers in my head, but if you use CDs and treasuries interchangeably, I probably mirror you fairly tight percentage wise. As some 10 yearish duration debt yields keeps drifting north, I keep slowly adding in that area.
          Definitely been focusing more on getting my football season win totals and NHL season point totals lotals…along with my golf game. Shortened my backswing less than Rahms and had my best score this year with 5 birds. There is hope,

          1. I remember you sending me on hours long rabbit hole searches, lol. No complaints here, taking a breather for once. I could use a little DMRRP right about now. I am actually sitting on IG turned perpetual annuity CTGSP now and it seems forever. I have a special document saved instructions for the family. NEVER SELL CTGSP!!!!! lol.

  10. Tim, I am a newbie compared to your proven experience.
    I offer the following for an additional view, not necessarily a universal one.

    Take a look at Bollinger Bands and 200/50 RSI to help answer the question: “My gut feels I’ve had a good run. Is now the time to sell?”
    If the price is at/near the 80% upper limit, I generally sell.

    I also look at the same numbers for buying. That can work on a Value basis, hasn’t worked so well on a Growth roll like we’ve had this year

  11. Tim,
    Was there other times this year you trimmed your positions? like back in Feb. after the run up in Nov and Dec.? Then when banking issues fell in March you got back in April and May? Who says you have to stay the course right now?
    Where is the dividends on the stocks, are you going to lose one or two if you sell? but as you say, where do you go? Who says you have to rotate into another issue? MM is decent right now to hold your cash in. Ask yourself how steady the issues you hold have been in these ups and downs. Do you watch TY-P ? or are you going to keep a closer eye on EICB?
    Then there is sector rotation, what is the next beaten down sector that will recover or which is the next sector to fall or is there maybe a market wide drop.
    Dirty Harry, “Ask yourself, Do I feel lucky? well do ya punk”

    1. Charles – I don’t think much this year. Back early last year I trimmed bunches at the top and started buying CDs and treasuries—this year have sold very, very little. I own TY-P but don’t watch it much except on days it moves $1 or so because those are days my bottom line moves. EICB I plan to hold for a long time, but it is a small position.

  12. I rang the register on my 4500 shares of ET/C and 6500 of ET/D yesterday. I took the 24% and 43% IRRs as I thought they’d reached fair value. But, I have a question.

    I put in sell all orders with a limit of 25.10 for both. Within a minute of close, they executed and the C shares sold at 25.16, despite spending most of the day at 25.05. I’m happy they sold higher, but I can’t figure out why. The only thing that makes sense to me is that someone put in a big “market at close” order and the price just ran. Any thoughts? Thanks!

      1. I see some of those MOC trades on big volumes (hundreds to thousands of shares) at the end of months once in a while too.

        What is weird is that I keep small volume GTC sell orders on a few issues I am flipping at small volumes (under 50 shares) and I get MOC fills at prices higher than the prices “all day” and the trades don’t show up in the trading data.

        Odd because I often have much larger volume GTCs on the same issues at similar prices and they get jumped over. I am not complaining about it. I assume it is just my broker cleaning up odds and ends at the end of the day. – I will take the additional (small) profit, but it is odd and unpredictable.

    1. Mrinprophet – it is weird. Sometimes I put in a limit buy order at the ‘ask’ (if I want the issue for sure) and it will execute a nickel or dime below the ‘ask’ – I always wonder why no one wants my nickel or dime.

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