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How You Coming on Your Goals?

Last Friday and again Monday I had quite a bunch of CDs reach there maturity date. These were all 5.15% issues–not a bad yield at all. Thus far in the last couple years (I’m guessing) I have kept cash balances (pure cash/money markets) low, buying either more CDs, treasuries or high quality agency/corporate bonds and this has served us well. You have to be in it to win it–and my goals are 7% returns overall. Investing now has been complicated by the availability of many options for decent returns–prior to 18 months ago there were few options with zero interest rates everywhere. Now I have funds from maturities of CDs–where to go?

I have already chosen where I am going with a large portion of cash–some Business Development Company (BDC) baby bonds in the 7.75%-8.50% area, some CEF term preferreds with yields to maturity in the 7% to 8% area and some decent (investment grade) preferreds or baby bonds with current yields in the 6% to 6.5% range. I will vary from this plan–in fact today (see below), but the point is the plan is to balance high quality and high yield to get to the 7% overall goal.

Anyway with portfolios again hitting new highs yesterday I feel good about where I am heading, but am ever mindful that there are so many black swan possibilities out there adjustments will have to be made. What could go wrong? No one knows—no one!.

Yesterday ‘Wilson’ in the comments suggested I look at the Energy Transfer 9.25% preferred (ET-I). I thought I owned that already—and I did. Somehow it got left off the ‘laundry list’–I have added it now. The initial buy was at $10.01 and it is now at $9.73 and I will add more of this high yield issue today. This is an interesting issue from the Crestwood acquisition–essentially non callable.

Interest rates are dead flat again today–right near the 3.9% area. It has been multiple days in a very tight range–always awaiting new economic news. We can expect no big movement in interest rates today because there is little economic news being released–just new home sales and consumer confidence and it would be unusual to see markets move on these items.

So I write about the wonderful gasoline prices we were seeing–obvious the kiss of death was writing about them. West Texas intermediate has jumped rather sharply in the last few days–now in the $75/barrel area–up from $68.xx. I guess it is easy come, easy go. The middle east situation is sure a problem and this has wide ranging implications–not just on energy, but a shutdown of the Suez canel/Red Sea area certainly can contribute to a flaring of inflation with increased shipping costs etc.

Equity futures are soft this morning–but nothing substantial–after 8-9 days higher there must be a pullback somewhere (maybe). There remains so much money in money markets that it seems it the potential for higher prices is strong. With money market rates remaining attractive a ‘parabolic’ move higher seems unlikely, but movement may continue higher as a slow drip of money finds its was to the equity markets–who really knows.

Well let’s go – see what the day brings.

27 thoughts on “How You Coming on Your Goals?”

  1. Stick to your plan. Don’t let FOMO win out. I haven’t reached my goals for this year, even though all accounts are up. I am trying to get fully invested but I want good investments at good prices. I missed a couple opportunities this past year. I am still about 1/3rd in MM funds.Some investments have moved past my price point and I either didn’t get full amounts or none at all.
    Most of the money funds are locked up in low ball bids. Even for me, FOMO has caused me to move up my ask on a few or cancel offers and move to something else. I tried to stay away from flipping this year although I have done some but not like last year when I was up 18%
    With the markets at all time highs, I have a feeling of unease, rather wait for the panic and blood in the streets.
    Here is a good example. Read the article and think about it. They missed the 2001 market crash and just got started when the GFC set in. That was a great time for value investing and picking up great deals, then they changed their investing plan and look what happened.

    1. Well with this comment made by you today, Charles, I blame you for the entire selloff in the markets at the close…. No question about it, it’s all your fault…….

      1. I took a hit yesterday myself 2WR One account was down $150.00 SOCGP down 3-1/2% and CUBB up 3-1/2% go figure, bank stocks up and ute’s down.

  2. I should have taken most of this year off. My preferreds only account did almost 15% in January and about 4% this month. February through November? Hmmmphh…

    My other income account is CDs and treasuries. I started ladder at 4.3% in November 2022 and I’ve ratcheted up to a mix with an average yield of 5.43%.

    My only complaint (which I have every year), is that due to tax loss harvesting, there are a dozen or so symbols that I can’t trade for 2 to 29 days otherwise I’ll trigger a wash sale. I stagger them, starting in late November in order to minimize the number of issues I’m voluntarily locked out of.

    It’s been a good year for income. Dare I utter this before the end of the year? Hmmm…

  3. Hoping gains last, but you know how that goes… up a tad over 10% yr to date.
    Historically, it seems like I get whacked down if I am near 15% for any period.

  4. Is the only way this can be called is if ET was bought for cash (or the super high conversion)? and in that cash buyout event would owners get back liquidation value of $9.13? Is that correct?


    1. That’s my understanding. I have the other preferreds and think I might switch to avoid future call, even though the current yield is higher on the others. I’m overweight on the common units too and like the sector and benefits of the type of investment.

    2. How are distributions treated for ET preferred? Are K-1s issued? Are these appropriate for IRAs? Thanks for anyones answers

      1. Raggs
        I’ve had the CEQP- in my IRAs for years.
        Unlike the majority of other MLP preferreds, the distributions are 100% UBTI.

        I have the the security in multiple accounts keeping the position size in the ballpark of 1,000 shares each.

      2. ET preferreds are K-1s issuers. I hold some in my IRAs (not sure whether that is appropriate, but I have done it for years). Hasn’t been a problem, but this is the first year I own the I series so I haven’t seen that K-1 yet.

        the ET preferreds I have owned for years issue very simple k-1s – single line item for guaranteed payments for use of capital (exact wording escapes me – but it is in line 4).

        1. Private–mine are in IRA’s as well. Never had any issue whatsoever–but I always hold modest sized positions.

        2. Have you ever sold ET preferred that was in IRA? if so was there different tax treatment. I assume that’s where the difficulty will be

  5. I snuck over 20% last week, so I am pleased, though I actually think last years plus 7% was a better year considering the head winds faced. Weird in the fact a lot of gains were the first 4 months and the rest basically in past month or so. Interestingly my overall yield average is just over 6% which is pretty much the same as during ZIRP. Trading was very good this year. For 15 years I said if I could get a 5% CD locked down I would. And a year ago last October I blew it and was ticked I hesitated and missed out. Then March came and I didnt blink this time. So a large chunk of my CDs are noncallable out to 2028. This lockdown money along with IBonds and some short TIPs have allowed me the freedom the past couple months to go long with perpetuals, well below par and those are climbing nicely now too.
    I still have some trading cash as winter is long, but am pleased to have my George Allen Washington Redskins “Over The Hill Gang” preferreds in place again. Looks like 17 of my 22 present preferreds were issued in the previous century.

    1. Excellent Grid and yes 7% UP last year would have been stellar in that environment.

    2. I should just have Grid manage my dough. He can keep 1/2 of the profits. Ha. I should be eeking out 9% by end of the year for realized gains (not unrealized), and most came at start of the year from the dumping from last Nov and Dec. The next wave was the dumping in the Spring. I usually hit 6%-10% of realized gains each year (investments I sell, divies, interest). In unrealized losses, I am down about 11%. These are mainly preferreds that are old where I bought at par in the cheap money era. Since rates are going up, I have been doubling down in that area. Then parking cash in what I think are pinned to par/low price volatility (WFC-R, STT-D, MS-E, ALL-B, CHSCL, EP-C, and others…). I usually try to have about 30% of portfolio for flipping/trading. That usually juices 2-4% of the annual return.

      1. Mr C you must be doubling down on CHSCL I’ve noticed it shows up in one account at the end of day as in the red for multiple days. I would add but I have reached my self imposed limit.
        Not sure the reason, recently x- dividend or concern it could be called or both.
        I like the recent change in the bylaws to add to the capital reserve up to 35%

        1. Charles, CHSCL is one of my larger holdings. I have about 12,000 shares. I havent doubled down recently because it has been in a sweetspot for a good while now. My shares owned are > 1 yr. Yield is north of 7%, and if you look at volatility, it swings under 1 yr of divies. Perfectly fits my investment objectives. My object is 6% per year and this is one of those that pushes the ball over the goal line. I know people that work for the company and they love the company and their job. It is also Minnesota based, so maybe I am biased.

          1. Well Mr. C I am still underwater with buys at 25.45 and 25.75 would buy more to flip, but my funds are all tied up now.

      2. Mr. C, your stash is bigger than mine. I doubt I could have come near 20% handling your stash.

        1. But while you are swinging the club on the back 9, or watching your golf buddies find their balls in the woods… you can buy the 100 yr old preferreds for me while I’m at work. :-). I did manage to wrangle some Ameren ones over the last few weeks before i start my day or at lunch.

          I do miss playing the game, although I have not played in some years. I was really fit. Why? I spent 70% of the time finding my balls.

          1. Mr. C, some of my best purchases have been on the golf course. Typically its after I hit a bad shot, I wait on other guys to hit while in golf cart pouting while looking at my stock watchlist on my phone. Some days that means I am looking often! Still ticked a bit about yesterday. I was actually home watching my watchlist and literally saw the bottom drop out of PLDGP right near $50 par. And within the 10 seconds it took to get into my Roth account to buy 10k shares went by the board and I barely got 200 on immediate upswing at $52. It was like it was almost a prearranged dump sell.

  6. Hey Tim,

    The middle east situation is a mess as always, but it’s part of the larger picture.

    The Russians and the Iranians are trying to push oil and gas prices higher for numerous reasons. They are using every geopolitical tension point where they have some influence – the Iranians – their proxies: Hamas in Israel, Houthis in Yemen, wont be surprised if we hear about Iraq as well. The plummet in oil and gas prices are bad for Putin’s strategy to fill in budget deficits with foreign currency and is also bad for right-wing parties in Europe supported by him, trying to capitlise on inflation in EU member states which support Ukraine.

    Overall I suspect there we will see a rise in geopolitical tensions in the next couple of months, because it’s election year in the US and in many western block countries which could have a big impact on world politics.

    1. Federalist–yes always messy–I guess probably for 100’s if not 1000’s of years. Guess we will need the frackers to ramps things up-which they will soon if the rise continues.

      1. Hah-hah, what goes around comes around. Well there won’t be any &investment$ in Russian energy for decades and more…I must say ex Chancellor Merkol ( who speaks Russian and knows its culture) led Germany down the wrong path and refuses to acknowledge so. Divesting from Russia will be costly.

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