I will be adding a new link titled “Sandbox” in the right hand menu.
That link will get you to this page.
I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.
I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.
I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.
I happened to look at the charts of AGNC, PFFR and WFC-L today. All are sensitive to long rates and all look headed lower (not a prediction).
How much higher would long rates need to go to push rate sensitive stocks noticeably lower? Maybe not very much, say the 10-year holding above 4.5% and the 30-year above 5%. Just guessing.
r2s , My wife is the same age as our benefactor for this site. I’m 3 yrs younger and I have been slowly adding longer term dated holdings similar to what Mr. C mentioned above. I look to be more of a buy and hold investor. I doubt I will live long enough to worry about a lot of these holdings reaching maturity.
As long as we are comfortable living with the income the values can change and the capital loss is only on paper unless we sell.
I am looking at the big picture as to fixed income and what we are getting on a cost basis. Bessent has stated and I think the people he works with behind the curtain in the land of OZ are of the same mind and they want to lower the value of the dollar. I look at it as the same as inflation, the dollar becomes worth less so then it takes more dollars to buy the same thing.
Maybe we are going down the same road as Argentine and Greece but there will be a lot of other people with us in the same boat.
Good question you asked, are rate sensitive stocks headed lower and can we guess how much lower.
If I can start tiptoeing into marginal investment grade yielding 7% I can support my lifestyle and as the cost of living goes up I still will have room to be comfortable even if I have to cut back.
I see it as inevitable that in my lifetime there will be a lower standard of living for a lot of us. The promise being made by Bessent and company that we are building the groundwork for a better life by reorganizing the current status quo is in the future at least for the average Joe and Jill and that remains to be seen.
I have the same concerns as Tim Mcpartland about risking capital loss and holding a longer dated term preferred & BB but 7% is looking good to me right now to buy and hold. Just think, 3 or 4 years ago I bought SREA with a 5-1/2% YOC and thought it was a good investment.
Marketwatch headline:
“Oil prices jump after OPEC+ agrees to another sharp production hike”
Then- the first sentence: ” Crude prices are expected to fall in the long term as Saudi Arabia and other big oil producers move to regain market share.”
Yes-oil is higher today, but …why?
July production announcement maintained increased levels of previous two months rather than an even larger uptick that had been expected.
Russia/Ukraine was the reason I read.
I just thought the two thoughts in the article were contradictory- they expected prices to fall- made sense, while price was up- Ukraine could be it, I guess. Gas prices around here- up for a couple weeks- go figure, but then they do take advantage of vacationers.
Caution on JAAA, Janus Henderson AAA CLO ETF. There was a recent recommendation that III’ers consider holding this fund. The fund currently has 388 holdings, presumably ~ 100% of them are AAA rated, although I did not see that specific statement from Janus. I decided to take a look and see whether it might fit as a money market fund alternative. On an infinitesimally small sample, it did NOT behave favorably.
The one-week period from 3/31/25 through 4/7/25 was eventful. The broad market SP500 ETF (SPY) lost -9.83% in that one week. The preferred ETF (PFF) lost -4.81%. Both of these indicate rapid price declines. 3-month and 10-year US treasuries both had yield decreases meaning their principal prices went up.
So how you would expect a AAA rated, “short term” fixed income fund to perform? You would expect it to increase in value. Especially one with a very low duration. But that is NOT how JAAA performed. It lost -1.13%. You might say “that is not all that bad” which is true, but would disqualify it as a money market alternative in my book. Stated differently, it appears that the underlying AAA rated CLO’s did not perform as a model would suggest. And while you will pick up some incremental yield compared to money market funds, you are taking an unknowable amount of principal risk if the broad market heads south.
Also, of note, two other alternative ultra short-term US Treasury ETFs that are frequently mentioned on III, both had POSITIVE returns in the same period, just like a model would suggest.
BOTTOM LINE is not that JAAA is a bad choice or that Janus is misleading in how it characterizes the fund, but that you MIGHT be taking a lot more principal risk than you thought when you purchased it. We do NOT own it any account, nor will we be adding in any account.
Here are the pertinent facts in a CSV format:
Ticker, stated duration, 30-day SEC yield on 5/30/25, % total return change from 3/31/25 through 4/7/25
JAAA,0.17 years,5.48%,-1.13%
SGOV,0.11 years,4.17%,0.1%
BIL,0.15 years,4.11%,0.09%
UST 10-Year,NA years,%,-2.14%
UST 3-month,NA years,%,-0.79%
SPY,NA years,%,-9.83%
PFF,NA years,%,-4.81%
For the life of me I cannot comprehend how anyone would arrive at the conclusion that JAAA was ever a legitimate Money Market alternative. I’ve heard that on SA, I’ve heard it on this site. Its baffling. That being said, I have JAAA, its performance during the April Trump Tariff Tantrum was impressively good and well within the acceptable range in terms of drawdown at the worst of it.
Thanks for the color on this Tex!!!
No offense, but anyone that deems JAA as a MM alternative should really do more homework.
It’s a 100% credit fund.
Should it do better than most credit funds during downturns? yes
Is it a good option for those who desire liquidity, and a slightly higher yield than money market and are willing to hold through minor drawdowns? Yes
i have both SGOV and JAAA to hold cash. if i had to rank them on a 1-5 risk scale id put SBOV at a 1 and JAAA at a 1.5
SGOV deep dive video
https://www.youtube.com/watch?v=coGvIew0PxQ
Thanks. I still prefer SGOV. I can immediately raise cash and invest it if I see an opportunity. That is worth the 9 basis points to me.
I bought into SGOV and VBIL simultaneously in separate accounts and watched for a few months recently to try them on for size. Found VBIL more to my taste for a variety of micro-considerations. Sold the SGOV on Friday and kept the VBIL. YMMV
SGOV makes it easy for me to hold next to no cash on a daily basis compared to the amount I kept on hand when I was using a MMF as my cash alternative. I can easily believe the convenience earns me back more than a few basis points.
I’d like to know what will happen to SGOV when the Fed cuts. The market is good at anticipating cuts and gradually letting short-end yields fall in advance. No sign of that currently.
Any thought as to why SLMBP (SLM) has climbed $3 in 4 days, 3.17% on Fri?
After the glorious tariff announcement in early April it plummeted with most stocks- but climbed 20% quickly to match previous highs- now, new highs.
Are investors thinking higher for longer on Fed rates & jumping on this one?— SOFR +1.7% plus the sofr adjustment
Apollo/Slok credit market outlook chart book. Lots of goodies.
https://go2.apollo.com/2025/05/053125-Chart.pdf
“The push-pull between strong technicals and increasingly weakening fundamentals should continue in the medium term. Attractive all-in yields should keep demand for fixed income strong, especially if inflation cools resulting in a sustainable path to lower yields. These inflows will increasingly be met with weakening fundamentals as tariff uncertainty, which is weighing on consumer and business sentiment, starts to become evident in hard economic data.”
That matches my own feel for action at the long end of the yield curve. The 10-year over 4.5% and 30-year over 5% are attractive yields despite the threat of higher growth and inflation due to expectations for rising deficit spending, tax cuts, deregulation, etc. Yields have yet to blow out but are high enough to impact equities.
Jamie Dimon predicts an eventual blow out.
https://www.youtube.com/shorts/5IsK3SImMdA
WTH? Anyone else with ET_ portfolios show almost all red, -100%, weird balances?
They must be monkeying with software or something to do with EOMonth
Happened just now as I was doing my monthly spreadsheet update.
Back to normal–whew!
Does anyone use FLOT to hold cash? 5.43 % TTM
Spire Preferred SR-PA hit my bid with a market on close dump to end the month. Caught me by surprise. Is it common for preferreds to dump at EOM into an illiquid market?
Thanks for the heads up I just put a bid in… I am assuming it’s an ETF rebalancing…
From Torsten Slok today (Apollo Chief Economist):
The US sovereign CDS spread is currently trading at levels similar to countries that are rated BBB+, such as Italy and Greece.
https://www.apolloacademy.com/us-sovereign-cds-spread-at-bbb-levels/
Friday 9:45am NY …. Just saw on Bloomberg TV …. guest commented that a segment buried in Tax Bill currently in the House, would give the ability to levy a Divi / Interest tax on Foreign holders of U.S Securities.
Still has to go thru the Senate review-input.
Above source : Bloomberg TV.
Any posters heard of this part of Tax Bill ????
Yes Jim. I am writing from Italy. It has been talked about for days, today it was on the front page of the FT.
“Buried deep in the more than 1,000-page tax-and-spending bill that President Donald Trump is muscling through Congress is an obscure tax measure that’s setting off alarms on Wall Street and beyond.
The item — introduced in legislation that passed the House last week as Section 899 and titled “Enforcement of Remedies Against Unfair Foreign Taxes” — calls for, among other things, increasing tax rates for individuals and companies from countries whose tax policies the US deems “discriminatory.” This includes raising tax rates on passive income, such as interest and dividends, earned by investors who are potentially sitting on trillions in American assets.
Cloaked in technicalities, the implication of the “revenge” measure, as it’s quickly becoming known, is clear to analysts: If signed into law, it would further drive away foreign investors at a time when their once ironclad confidence in Treasury bonds and other US assets has already been shaken by Trump’s erratic trade policies and the nation’s deteriorating fiscal accounts”.
The flip side was also suggested in a Truth Social post — early in the tariff tweet storm — the possibility of a “tariff” (tax) or duty on US holders of foreign investments. I have been cautious about foreign stocks, bonds and CD’s since I read the post. Taxes require new laws. Tariffs require a Sharpie.
“I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.” Truth Social, January 14
What exactly is “revenue that comes from foreign sources?” Ambiguity in the wording and so open to interpretation by the seers ( “what he really meant was…” vs “what he said was…”)
FWIW, a former White House adviser suggests the President said exactly what he meant. “But you wouldn’t just look at tariffs, you look at everything about how you can charge fees essentially, whether that’s on investment, whether that’s on other things of access to this country.” – Politico, Jan 15
Another worry bead for me. JMO. DYODD.
Doesn’t this require cloture, similar to a number of other provision in the bill like courts not being able to enforce contempt orders without a bond (which, stupidly , could be $1)?
LAST TRADING DAY OF THE MONTH – DNLG-B,
I know there are some on here who follow the possibilities for end of month fun and games handing us bargains due to mandated buying or selling of some typical III-centric issues….. I’m thinking DNLG-B might be one candidate tomorrow – UMBFP another…. DNLG-B had 3 times normal volume today and seemed to have a pattern of someone doling out small blocks so as to not overwhelm the market…. Perhaps they have more to go with less wiggle room tomorrow. Don’t forget DLNG-B is now CALLED for 7/25 and today it drifted down to 25.15 close.. Using tomorrow’s settlement to be conservative (as opposed to 6/2) 25.15 provides a 7.64% YTC using 10.18% as a dividend accrual rate. I bot all the way down today and ended up with an average cost of 25.15. I’ll be ready though if End Of The Month funny business goes on with forced selling….
thank you for the reminder, 2wr.
For those looking to capture the prcing gap,… ticker symbot is DLNG-B
Thanks for catching my typo
In a recent interview macroanalyst Julian Brigden opined that the dollar is in a secular bear market as happened 1985-1992 and 2001-2008. When I looked at the charts of dollar index DXY (USD against euro and yen) and euro and yen futures, I could see an easy path for DXY lower and euro and yen higher. Brigden is looking for a DXY low 75-80. Could it happen? Sure. Will it? No clue.
Where it got interesting is when Brigden stated that dollar bears are accompanied by equity bears. That holds true 2001-2008. The following period matched a dollar bull with an equity bull. Prior to 2000, I don’t see the correlation and don’t have DXY data to compare to the 1968-1974 secular equity bear. So, recent history supports Brigden but is not sufficient to generalize.
Brigden maintains that European investors have heavily invested in US assets for many years and have had the double gain from asset and dollar appreciation. Now the tables have turned to a double loss as both lose value against Europe. Those same (unhedged) investors are exiting the US, exacerbating the downtrends and leading to more of the same, says Brigden.
Overall, it’s an interesting narrative whose validity might not be known for years.
If I knew the tax consequences I would probably buy a few European stocks.
Charles, a few examples:
Switzerland 35%
Germany 26%
France 25%
Ireland 25%
Netherlands 15%
Greece 10%
United Kingdom 0%
there is some research which shows that european bank equities, over long periods of time, return slightly less than banks in the USA (10% vs 11 cagr), and you could think of them kinda like we think of the 5 Canadian banks. I occasionally buy Scandinavian banks (e.g. SVNLY – often pays a reasonable dividend) if the shares are cheap relative to their own recent pasts and the exchange is favorable, but avoid ABN and Deutsche and UK banks.
I’ve also have paid 2$ for a British pound, 1.4$ for a euro, and all the way down to 90c … we easily forget that wages here are also nominally much higher than the EU, and that dollar adjusted prices are also much more affordable there … e.g. dinner meal for my family of 5 in Ireland (expensive) is 100$, where in my own mid sized city a beer is now 8$ (++) and regular lunches are $15.
There is a cheese at Costco from the UK, and at the bottom of the gbp/usd it was cheaper than cheese from Wisconsin, which is odd. Lambs which travel 12000 miles from New Zealand are also half the price of lambs from Colorado … so, easy come easy go.
GSK
Not much to say, only that there is some additional complexity relating to the withholding tax on dividends and the currency conversion if you trade them in a currency other than USD.
But back-office platforms for most broker’s do that pretty well nowadays.
Two caveats.
1. Some are available on the pink sheets already in USD, but the trading liquidity is crap.
and
2. Some countries refund the taxes taken out on the dividends after like 5 to 10 years (Looking at you, Italy)
And be careful that the company you buy isn’t a PFIC.
RIV-A. Moodys A1. Matures 5/15/27. Trading at $23. Coupon 6%. YTM 11%.
That date is the 1st call date. The issue is perputual.
Opps…. yup, you right. I had wrong notes on the issue. Thanks
CALL NOTICE – DLNG-B Thanks to III we are aware of the call notice on DLNG-B for July 25, HOWEVER, I received a CALL NOTICE from ETrade that says the coupon dividend rate on this is 11.1813%….. That can’t be right can it? DLNG-B is currently floating but the formula is adjusted SOFR + 5.593 on Quantum. With SOFR being 4.328 on May 21, shouldn’t the accrual rate be 4.328 +.261+5.593=10.182, NOT 11.182 approx???? I have an email in to IR..
Anyone know for sure?
Looks like Etrade did a typo (11.1% instead of 10.1%). I concur with your math, 2wr.
The coupon on the most recent div (May 15 ex, May 22 pay) was 10.17614%.
The May 21 3-month SOFR would have to have been more than 5% to get a 11.182% coupon for the final (partial) div.
This was the most recently paid div:
The applicable distribution rate for each distribution period is determined every three months by the calculation agent for the Series B Preferred Units. The distribution rate for the Distribution Period was 10.176140% (which is the sum of the applicable Credit Adjusted Three-Month CME Term SOFR of 4.583140% plus a spread of 5.593%).
Federal court blocks Trump from imposing sweeping tariffs under emergency powers law
https://apnews.com/article/trump-tariffs-trade-court-0392dbd59f548e49ad4f64254ae3f94a
By LINDSAY WHITEHURST and JOSH BOAK
Updated 8:56 PM EDT, May 28, 2025
WASHINGTON (AP) — A federal court on Wednesday blocked President Donald Trump from imposing sweeping tariffs on imports under an emergency-powers law, swiftly throwing into doubt Trump’s signature set of economic policies that have rattled global financial markets, frustrated trade partners and raised broader fears about inflation intensifying and the economy slumping.
The ruling from a three-judge panel at the New York-based U.S. Court of International Trade came after several lawsuits arguing Trump’s “Liberation Day” tariffs exceeded his authority and left the country’s trade policy dependent on his whims.
Trump has repeatedly said the tariffs would force manufacturers to bring back factory jobs to the U.S. and generate enough revenue to reduce federal budget deficits. He used the tariffs as a negotiating cudgel in hopes of forcing other nations to negotiate agreements that favored the U.S., suggesting he would simply set the rates himself if the terms were unsatisfactory.
A more details report = https://www.reuters.com/world/us/us-court-blocks-trumps-liberation-day-tariffs-2025-05-28/
Barrons version: The U.S. Court of International Trade on Wednesday struck down tariffs imposed on virtually every country by President Donald Trump , ruling that he exceeded the authority granted to him under the 1977 International Emergency Economic Powers Act.
The Trump Administration had cited a state of emergency over trade issues as the legal basis for its 10% baseline tariffs and the additional so-called reciprocal tariffs that Trump announced on April 2 , which he labelled “Liberation Day.”
“The challenged Tariff Orders will be vacated and their operation permanently enjoined,” the court said.
Stocks appeared to welcome the news, with S&P 500 futures jumping 1.4% late Wednesday. The yield on the 10-year Treasury note rose to 4.521%.
The ruling also impacts the tariffs Trump imposed against China , Canada and Mexico for not doing more to prevent fentanyl from entering the United States . But tariffs related to aluminum, steel and autos were based on a separate national-security law and will remain for now.
In its decision, the court, which is based in Manhattan and comprised of a panel of three judges, sided with Democratic-led states and a coalition of small businesses that had sued the Trump administration.
“The decision halts the existing IEEPA tariffs. It also stops President Trump from increasing tariffs, including the threatened 145% tariffs on imports from China and 50% tariffs on imports from the European Union ,” said Arizona Attorney General Kris Mayes , who led the lawsuit along with the state of Oregon and several other Democratic states.
The ruling is a major setback for Trump who frequently talked about tariffs in glowing terms and saw them as his main leverage in extracting concessions from countries around the world. The administration is likely to appeal the ruling.
“Foreign countries’ nonreciprocal treatment of the Unites States has fueled America’s historic and persistent trade deficits. These deficits have created a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute. It is not for unelected judges to decide how to properly address a national emergency. President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness,” said White House Spokesman Kush Desai .
Governments around the world will be watching closely this case closely. The administration has sealed only one trade deal — with the United Kingdom . Any weakening of the president’s authority could give them an opening.
“So if you are a foreign government negotiating with the Trump administration about the IEEPA ‘Liberation Day’ tariffs, and the tariffs have now been struck down (pending a probable appeal), it may be time to recalibrate your negotiating position,” wrote Simon Lester , a longtime trade watcher and nonresident fellow for the Baker Institute International Economics Program.
Added Owen Tedford , an analyst at Beacon Policy Advisors : “It throws a huge wrench in any of the trade negotiations because now your 90-day timeline is completely messed up [since those tariffs may not hold]. This court is potentially giving other countries a huge win.”
Great Wednesday eve post of the court’s ruling by the three Republican appointed Judges.
May 28, 2025 . . . Fasten Seat Belts . . . Pre~Mkts are Nine hours away !!!!
Thanks 2WR for the fine recap …..
One of the judges was appointed by Reagan, one by Obama and one by Trump.
The “ court blocks tariffs by June1” contract on Polymarket had been at .04 .
A headline on Bloomberg has Goldman saying that Trump still has other tools to get similar results for the tariffs. I don’t have a Bloomberg subscription so I couldn’t read the article.
Stephen, On a mobile device click on the article to download then quickly turn on airline mode on the device.
Unfortunately.
https://www.cnbc.com/2025/05/29/trump-expected-to-find-a-workaround-after-trade-court-blocks-tariffs.html
Bought a few lottery tickets named pbi-prb at $19.53. Cumulative, redeemable, 8.54% yield, matures 3/7/2043. liquidation preference @25. Trading in the middle range between $17.31 and $22.61. Not sure about this one. Declining revenues but maybe a turn around.
I have been with the PBI-B for awhile , and am comfortable. My cost similar to you.
The Common ( PBI ) has done a round trip over past 13 weeks …. Feb-Mar arnd $10.50 to $11.00. May 28 close @ $10.32.
Recent low , early April arnd $7,50.
Seems that these PBI 6.70% Notes are secure.
I’ve mentoned this before: If you’re in Pitney for the long term (meaning you do give up liquidity), they also have 72447XAB3 Pitney Bowes 5.25% 1/15/37 that’s currently offered at 11% YTM, 62.75. There’s a truck driving spread between bid and asked on this one, with bid @ 60.25 (11.54). This issue is rated one notch below PBI-B by both agencies and that’s apparently because PBI-B has a dual guarantee of both PB and one of its subsidiaries, while this one is only guaranteed by Pitney Bowes. There are only 25 offered at this price and it’s the only offer out there at the moment…. Usually there are aobt 3 different lots offered and almost always small amounts like this……
Thanks, 2wr.
Moody’s and S&P each have PBI-B and the 5.25% note with the same ranking:
Moody’s = B3 for both.
S&P = B for both.
https://www.moodys.com/entity/611750/ratings/view-by-debt
See rows 6 and 7.
PBI-B (cusip 724479506) is right above 72447XAB3
If this is correct (same rating for each), seems to me the 5.25% note is the better investment for a long-term hold. Matures ~6 years sooner and has ~1.75% better YTM (~11% v ~9.2% for PBI-B)
IBKR does not allow buying this Bond due to “The outstanding amount being less than 25% of the original issue amount”, which, according to cbonds.com, is not true, as the outstanding amount is $500m, equal to the original.
Apologies if this is a repeat. I know I wrote a reply, mbg, but I don’t see that it posted.
My research is probably about a year old…. At that time there was a difference between the two as per rating, but I agree, there isn’t one now…. I remember having extensive conversations with one of the agencies about reasons for the difference in rating and that’s what they said. I also remember going back to read both prospectuses and spending more time than it was worth before discovering where it was fact that PBI-B had a dual guarantee including one from an obscure sub and the 5.25% issue did not…… Even then, it didn’t make sense to me why that was enough to cause a difference in ratings. I never noticed the change…. Given equal rating unquestionably the 5.25% is the far better deal providing you’re willing to give up liquidity… I was and bot, but I took the profit recently and got out over 64 a while ago… I’ve followed PBI for awhile now and this present management has made me a believer in what they’re doing to successfully turn this company around
I saw the 72447XAB3, tried but Merrill does not allow me to buy so i settled for pbi-b series.
So- Etrade’s & Fido’s best 3month US based bank CD rate is 3.35% vs us treas at 4.335%
When will they make it worthwhile to bother with a CD again?
Get a whopping 4.4% from India, China, and Israel banks….
But- not Israel at Fido.
Your 3.35% 3-month rate is incorrect by 1.00%.
OOPS- Messed up. They are almost the same.
For the record, a CD from a bank like Bank of China is NOT from a Chinese bank. I believe to even qualify to issue a CD you have to be a bank registered in the United States…. So this is officially a US bank affiliated with Bank of China, China. It has to be able to stand on its own…. Is it a technicality only? I don’t really know for sure…….
I’ll still go with non- foreign state controlled- if that’s the case.
While many foreign banks operate retail banks in the US that are separate US subsidiaries, The Bank of China that operates in the US as a retail-facing bank is a Chinese bank not a US bank. The BOC NY is a branch of the Chinese bank and has been FDIC insured since 1981. The FDIC currently lists BoC NY as “Insured Branches of Foreign Banks.” JMO. DYODD.
And that’s what I mean about not knowing whether or not the differentiation is anything more than a technicality….. we’re probably in agreement, Bear. I remember looking into this many years ago trying to understand how a foreign bank could be eligible to issue US CDs and seeing this technical differentiation…. I never was completely sure whether or not it was meaningful or not, just that it existed enough to be able to issue CDs..
We are in agreement. The only thing that is important is FDIC insurance.
The original 1978 FDIC rules required foreign banks with US retail operations to get FDIC insurance on their retail branches. Under a 1991 rule change, foreign banks were required to set up separate US subsidiaries to get FDIC coverage. Older banks, like BoC, (opened 1981) were grandfathered. My guess is that there are few grandfathered banks left.
By way of disclosure, I became an early customer of the Bank of China NY Branch (in the 80’s?) after reading a Forbes article encouraging its readers to give it a try. It was an experience. JMO. DYODD.
I have been buying new 1-year CD’s at Fidelity with a 4.3% yield. US Bank, JP Morgan, Bof A. etc.
reposting this here as I posted it under the wrong category:
GMLPF: Can someone please explain what happened here, as I don’t see why they stopped paying, based on financials of Hoegh.
I guessd whoever bought 100,000 at $4 after they stopped the dividend is just someone with more money than sense. I see that with gamblers in Vegas all the time.
Or it is someone with a lawyer on speed dial who can file a lawsuit and force them to redeem it for par and make a killing.
and on an unrelated note, I flagged a prospectus for Phoenix Energy that is paying a 10% coupon for their unlisted debt.
And today, I saw a youtube ad with the CEO trying to sell that same debt to the public…. First time I have ever seen that. That debt must be ludicrously risky for them to do that.
More money has been lost reaching for yield than at the point of a gun.” – Raymond DeVoe Jr
Isn’t GMPLF part of New Fortress?
How does Hoegh figure into this?
And where did they announce the suspension of dividends?
This has no trading market, so any announcement would come directly from New Fortress to the investors.
https://ir.newfortressenergy.com/gmlp
Gmplf was stripped of its assets, they were transferred… illegal and unethical but what are retail investors going to do… it’s why most of us get out of issues when they go private….. same issue with Esgro…. Going private. No way to monitor your investment… the dark side of preferred world…
So sorry, I was looking at HMLPF right next to GMLPF and pulled the wrong financials.
Now I can see what’s going on.
There is def a trading market. I see bid/ask on IB. $1x $1.50 traded 80,000
?
https://finance.yahoo.com/quote/HMLPF/
it is 16 a share and is still paying.
https://www.hoeghlngpartners.com/announcements-and-press-releases/press-release-details/2025/Hegh-LNG-Partners-LP-Announces-Cash-Distribution-for-the-First-Quarter-of-2025-on-its-8-75-Series-A-Cumulative-Redeemable-Preferred-Units–2025-D80Kel0xFd/default.aspx
Justin,
I was talking about GMLPF. They actually released a bunch of stuff today. Golar LNG
Justin,
aren’t you an attorney, or was that someone else I’m thinking of. I’d love to know the take of a biz lawyer on this.
yeah, I am, but a tax lawyer and not a securities lawyer, but I probably could look at a prospectus and give an idea on the odds of the success of one.
Unless it is a GSE, and payouts are at the whim of the CEO of the US…., even after losing in court and Congress not appropriating any funds for the payout….
OK , here’s my 2 minute review:
Golar LNG Partners is a “former affiliate” of GLNG.
It looks like they paid the preferred in 2024 then dividended up all the remainder to NFE.
OK , here’s my 2 minute review:
Golar LNG Partners is a “former affiliate” of GLNG.
It looks like they paid the preferred in 2024 then dividended up all the remainder to NFE.
https://ir.newfortressenergy.com/static-files/adc3861d-d64e-4a26-b589-b5952143c6d3
In Sep 24 they had almost no assets left. The market sure wasn’t trading for the last 6 months like it saw this coming, but it should have. GMLPF was recently 8.50-10
Dividends are cumulative.
Have they stopped paying them?
and it will get REALLY interesting if they stop for 6 consecutive periods, because then those preferred holders get to make some real noise.
There was reference in the annual to an agreement that NFE would pay the LNG Ptns obligations for 12 months. “Obligations” wasn’t the word used and I’m not going to spend more time on it.
Why 6 months?
We won’t hold you to your legal opinion because legal advice is something you actually have to pay for.
Justin, I am curious as to what “real noise” could be made? Sitting on the board? I don’t think that matters. I have always wondered if companies could add the preferred holders to the board while simultaneously adding positions to the board which dilutes any voting power. I think the NFE common holders have a case in that assets from NFE (which were upstreamed) were used to pay GMLPF. I hope there is some noise but I suspect there will be none.
NFE has not declared it will not pay the preferreds, simply have not authorized any payments.
File for breach of fiduciary duty and claw back the cash from NFE to redeem the preferreds at par.
But couldn’t NFE just declare bankruptcy then to get out of the obligation?
They’re in pretty sad shape as it is, based on their last earnings, although I didn’t dig, just based on the market reaction and a couple headlines.
I’ve been stuck with this dog since it went dark. And I’ve been tempted to load up on it to bring my cost basis near $5. I figure if they make an announcement, or pay the past dividend, it’ll pop and I can unload at something close to break even. On the other hand, it could just go to $0 and I’ll lose an additional $400……. My gambling plays rarely work out
The delisted Hoegh /HMLPF- expert mkt – no purchasing? Connection?
Taking a little poll here:
Do you think the 50% tariff on the EU actually goes into effect?
I’m leaning yes, because the prez can’t just keep threatening and then pulling back. He has to actually let a big tariff go through, and WSJ shows EU to be our biggest trading partner by far.
https://www.cnbc.com/2025/05/25/trump-50percent-tariffs-eu-july-9.html
Just another chance for those in the know in DC to play the market like a fiddle over and over- same tune. Reminds me of Charlie Brown trying to kick a football.
Sorry, but it just looks too obvious.
Guess the poll was late!
Doesn’t matter if it does or doesn’t. What matters is that policy statements and moves are erratic and unpredictable and that the reasons given don’t make any sense. At least that’s the public face of the mess. One can only hope that negotiations are more rational.
Perhaps it is not about policy or negotiations. It may just be about PR(for his base) to keep the issue of tariffs in the news.
He already has retreatedS according to Reuters.
I don’t believe anything because he will change his mind 5X in one week
C’MON, Trump Regime is ‘Cry Wolf’ to the entire world when it comes to tariffs and looks like chicken little the day after announcing!
lt
the tariff threat/walk back is just his negotiating tactic.
Trump TACO
https://www.cnn.com/2025/05/28/economy/trump-wall-street-taco-trade-nastiest-question
It shouldn’t work now that everybody knows it, but the market never learns…
Memorial Day always reminds me of my time in the Army. I was a 22-year-old 2nd Lt. right out of ROTC. After the 3-month basic training artillery program, I was assigned to a nuclear missile battalion in West Germany. Since the Allied forces totaled about 500,000 and the Soviet Bloc forces totaled 2 million, the plan was to launch a nuclear strike if Soviet forces were massing for an imminent attack.
After about a year, I was placed in charge of the security, transporting to the launch site and emergency demolition of all warheads if we were in danger of being overrun by Soviet forces. I was just a kid doing my job and not really giving any thought to the gravity of the situation. Once or twice a month, our unit was issued an alert from 7th Army Headquarters to deploy to our battle stations. Fortunately, nothing ever happened that caused us to arm the warheads. Since I’m now 82, it’s a distant memory, but still there.
QVCGP –
Item 7.01. Regulation FD Disclosure.
On May 23, 2025, QVC Group, Inc. (the “Company”) announced that its Board of Directors (the “Board”) has decided to suspend its quarterly cash dividend (the “Preferred Dividend”) of $2.00 per share for its 8.0% Series A Cumulative Redeemable Preferred Stock (the “Preferred Stock”), beginning with the quarterly dividend payable on June 16, 2025.
The Board’s decision to suspend the Preferred Dividend was made in response to numerous macro-economic factors, including continued cord-cutting, tariff headwinds, and current leverage levels. This decision reflects the Board’s focus and commitment on taking the necessary steps to strengthen the Company’s capital structure and enhance long-term value for its business, customers, partners, and investors. The suspension of these dividends will defer approximately $25 million in cash dividend payments per quarter. The Board intends to periodically reevaluate its determination with respect to the Preferred Dividend and will continue to closely monitor the Company’s financial performance and operating environment to determine whether it may be appropriate to resume such payments.
In accordance with the terms of the Preferred Stock, dividends on the Preferred Stock will continue to accrue and cumulate until such dividends are declared and paid. Additional details can be found in the Certificate of Designations related to the Preferred Stock filed as Exhibit 3.1 to the Company’s Form 8-A filed with the Securities and Exchange Commission on August 27, 2020.
This Current Report on Form 8-K is being furnished to the Securities and Exchange Commission under Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD and shall not be deemed “filed” for any purpose.
I’ve removed the duplicate post but could only delete the one under my wrong handle….. Yes it’s me, plain old 2whiteroses…. screwed up how I posted my handle….
2WR—I own 200 shares of this dog. I kinda think it’s over. You got any opinion?
I was holding on to 100 for a long while just to see how it pans out, however, I bailed at 17.12 when the last quarterly came out……. with the macro-environment the company is in, it seemed a pretty hopeless situation…… the saving grace factor imho, could be them being able to pull some kind of rabbit out of a hat somewhere from within the impossibly complex corporate structure.
At least they posted a news release about suspension pf the dividend. So far not a word about GMLPF that I know about. I suspect that one is toast also.
C’MON, Trump Regime is ‘Cry Wolf’ to the entire world when it comes to tariffs and looks like chicken little the day after announcing!
Retail investors overreact to daily news blurbs especially the emotional partisans.I ignore them, or play against them when it gets wild..
I sold half of my holding of NMFCZ today for the same cost I purchased it at 25.30 The other half I kept has a lower cost.
Just feeling with the elevated interest rates I needed to trim a few BDC preferred even if I was getting 8% yield. Just seems like this has been falling and could be heading lower. There is always a opportunity to buy it back since the call date is about 3 years out.
Can anyone explain this- related to NEE-R ;
“The Series M Debenture will initially bear interest at a rate of 4.60% per year and is due 9/1/2027. The Series M Debentures are subject to reset and re-marketing on the fifth business day preceding 01/01/2025 and ending on 08/19/2025.”
Not callable, but matures 9/01/25, so what’s the catch here? Paying 8.36%,
$50 oar now $39.35
Is it not a deal? – Thx
meant: $50 PAR now 39.35
Lots of complexity here, that I didn’t even attempt to understand, like what you get when the debenture matures, but I did read this on the front page of the prospectus:
The purchase contract will obligate holders of Equity Units to purchase from NEE, no later than September 1, 2025 for a price of $50 in cash, the following number of shares of NEE common stock (subject to anti-dilution adjustments):
•
if the applicable market value of NEE common stock is equal to or greater than the threshold appreciation price of $111.10, 0.4500 shares of NEE common stock;
•
if the applicable market value is less than the threshold appreciation price of $111.10, but greater than the reference price of $88.88, a number of shares of NEE common stock having a value (based on the applicable market value) which is equal to $50; and
•
if the applicable market value is less than or equal to the reference price of $88.88, 0.5626 shares of NEE common stock.
Since NEE is now less than or equal to reference price of $88.88 (67.76) if conversion happened today, wouldn’t you get NEE stock worth $38.12 for your 39.35 investment? Doesn’t that go a long way to justify the price @ 39.35? I’ve never liked mandatory conversion securities so I didn’t bother to look at this thoroughly but maybe this is saying it ain’t so cheap???? NO DD done at all, so take this for what it’s worth…
2WR I did the Cliff notes version by reading Quantum-on-line and I came to a similar conclusion. But there was something else I didn’t understand.
“pays a contract adjustment rate of 2.326% per annum.”
I decided I’m no expert to give an opinion, so waited for someone else to chime in.
After my bad experience with AQN ‘s mandatory conversion preferred I stay away from them.
2WR & CHARLES M-
That is a lot of jargon for sure- but it appears conversion is up to the holder- and there seems to be a cut-off date of 9/1/25– so maybe that’s the end of conversions?
Not sure what ‘re-marketing ‘ is- ending 8/19/25
No idea what it means that it is ‘due 9/1/2027’ ( with maturity 9/1/25)
I did figure out that the coupon total is 2.326 + 4.6 = 6.926 total ( appears in another Unit one I own or owned)
Too many Qs, so will avoid–unless someone has definitively good news about it.
–Thanks
Re-marketing is when the issuer sells the entire debt issue underneath the Units to someone else and takes the money and either buys a Treasury STRIP or distributes the proceeds to the investors who hold the units.
In this case, since this is a mandatory convertible, and you HAVE to buy the common shares on the conversion date, if there is a successful remarketing of the debt, everyone will be buying a Treasury STRIP that matures on September 1, 2025, whether they like it or not.
No one linked the prospectus, so what I said above is based on what has happened in the past, and not the details for this particular security.
Here’s a monthly schedule of the public debt. I stand corrected: 13.3% is longer than 10 years.
file:///C:/Users/17029/Downloads/MonthlyStatementPublicDebt_Entire_202504-1.pdf
From the notes at the bottom,
$525,000 has been gifted this year to pay down the debt
After figuring out how to listen to Bloomberg on the IB app, I just got finished walking 6.7 miles, up and down a few pretty nice hills.
I did not place a trade in 2:11:09, burned 611 active calories and have only to put 30 minutes on the bike this afternoon to reach my 900 active calorie daily goal …which has been hit for 382 consecutive days.
This life extension thing I’ve embarked on means I need to make sure the income covers expenses longer so I’m buying mostly TIPS this month and if the real yields stay up here I’ll keep buying. Ofc, not wearing sunscreen may result in shortening my life.
lt-
I respect your dedication & efforts. I do various exercises when I get up, try to do my wgt machine every other day, and ride my bike around for 20 min or more each day. I don’t know anyone else in their 80s, let alone 70s or 60s that really exercise, so I feel I am staying ahead of the losing game, especially at just passing 7yrs in remission from CLL ( a blood leukemia). Doc says- make it to 10 and it’s considered a technical cure, although there isn’t a real ‘cure’– I’ll take it.
Maybe you could decrease your calorie target by taking in 450-900 calories less per day, if your body can really spare them — just a thought
Of course, losing fat cells & their caloric content is a diff ballgame.
as Spock says -LL&P
I’m closing in on 70. I walk/jog (depending on the soreness of the Achilles in my right leg) 10-12 miles three times a week and I hit the gym for 90 minutes of weights twice a week. If it’s raining on my walk day I go to the Kroc Center and walk the track or sit on the spin bike for a couple of hours. My wife says I’m obsessed. I’m just trying to stay in shape. I don’t drink and I don’t smoke so I basically have no fun. Had my yearly physical last week. Doc says I’ll probably live into my 90’s based on my health. That presents an investment dilemma. I probably should have more equity exposure. Right now I’m 100% corporate bonds.
Congrats. The 24 hour Fitness closed in Henderson, which forced me to even better EOS. Much better equipment, and I like being around much younger people. I get to stare !
You’re doing an excellent job. I can’t seem to stop eating: Even on the max dose of a weight loss drug, I’m taking in 3200-3500 calories per day.
I’ll have to cut back while traveling to Europe this coming week as it’s a 17 hour odyssey to get where I’m headed. I take my own food on the flights, but deign to enter another country with food.
I had an early morning flight on my last trip so I got up at 3 am to ride the exercise bike.
I’ve lost height–used to be almost 6 feet , now closer to 5’10, and weight is 165 -172 depending on the time of day, up a bit over the past few weeks and I’m hoping it’s due to weight lifting.
I find the apple watch pretty accurate on calorie burn
Part 1 of 2
(Re-posted with hopefully correct editing.)
Introduction:
Annual report on the Justin Bank Preferred Portfolio- (JBPP). (Maybe III will add a link for all of the JBPP posts which would make it easier to understand the history.) Two years ago, on 5/22/23, I started the JBPP portfolio based on the excellent suggestion from III’er Justin. (1) Banks and their preferreds/babys were beaten down in part due to the failure of Silicon Valley Bank. Several other banks were viewed as being on the ropes and headed for imminent failure. I used a methodology to buy one preferred share/baby bond from each of 48 banks. The thought was that one or more might fail, hence go to zero, but overall, the survivors would bounce back and outperform the broader preferred sector.
JBPP was intended to be a Ron Popeil, “set it and forget it” portfolio without ever making a trade. Issuers had a different opinion and have called several issues, forcing additional purposes in order to stay fully invested. Here are the changes to date:
PACWP became BANC-F when PacWest was purchased on 12/1/23
C-K was called on 11/15/23 (IRR= 8.56%) and replaced with WFC-R
FNB-E was called on 2/15/24 (IRR= 22.33%) and replaced with SYF-B
WFC-R was called on 3/15/24 (IRR= 5.85%) and replaced with NYCB-A on 3/18/24
FGBIP was bought with excess cash on 3/19/24
UCBIO ticker changed to UCB-I on 7/26/24
HTLFP bought by UMB and became UMBFP 1/31/25
Facts:
Happy to report that the JBPP DID outperform the broad preferred ETF index, PFF, which holds ~ 440 issues both over the last one and last two years. Zero of the original 48 JBPP holdings went to zero, aka bankrupt. The JBPP one year (IRR) was 6.3% compared to PFF at 1.6%, which is significant. Corporate junk bonds (USHY) did outperform JBPP. JBPP outperformed the higher quality US Treasury 1–3-month SGOV. The UST 10-year yield has increased significantly since the original purchase date, so not surprising the long-term US Treasury ETF (TLT) has lost money both in the 1 year and 2-year periods.
One-year results- 5/22/24 through 5/22/25
CSV format: Issue, ticker, IRR
Invesco QQQ Trust,QQQ,13.48%
Spdr S&P 500,SPY,11.45%
iShares Broad USD High Yield Corporate,USHY,8.42%
Justin Bank Preferred Portfolio, JBPP,6.31%
iShares 0-3 Month Treasury Bond, SGOV,4.82%
iShares Preferred and Income Se, PFF,1.62%
iShares 20+ Year Treasury Bond, TLT, -4.09%
The JBPP two year (IRR) as 14.3% compared to PFF at 6.4%, which is also significant. Indicates that most of the outperformance occurred in the first year, but was still strong in the 2nd year.
Invesco QQQ Trust, QQQ,24.14%
Spdr S&P 500,SPY,19.57%
Justin Bank Preferred Portfolio,JBPP,14.33%
iShares Broad USD High Yield Co,USHY,9.65%
iShares Preferred and Income,PFF,6.36%
iShares 0-3 Month Treasury Bond,SGOV,5.14%
iShares 20+ Year Treasury Bond,TLT,-4.8%
Since inception, the portfolio has received ~ $143.63 in dividends/interest which is 16.5% based on the original purchase price. The brokerage currently allows automatic dividend reinvestment on 40/49 issues. The largest gainer is TFINP which has 1.1805 shares for a 18.1% increase. In that sense, this is a dividend growth portfolio through an unconventional way. This is something you cannot do with conventional bonds and/or CD’s which is particularly important when you are receiving 20 to 50 cent payouts. You would need to have about a $50k portfolio to receive $1k payouts per quarter to buy 1 CD per quarter, all with some hassle compared to DRIPing.
The original portfolio yield was 7.68%. With the increased share count on the DRIPPED issues, the current yield is 8.73% based on the original purchase price. Three variable/reset/fixed to float, etc. issues have lowered payouts since purchase. All of them were based on LIBOR/SOFR 3 month. One issue, SNV-E, which resets on the US Treasury 5 year has increased its payout.
On a total return basis, all issues are positive. 7 out of 49 have total return < SGOV’s, 5.14%. On price only, 8 out of 49 are down. Range is from -0.88% down to -8.23%. These issues are mostly the Too Big To Fail, large banks, headlined by JPM, BAC and STT. In hindsight, this is more obvious. At the time the portfolio was constructed, the fear was that smaller banks would NOT survive. OTOH, we properly could have assumed that the TBTF were just that and would NOT be allowed to fail. Lesson learned.
Opinion sections as opposed to facts:
1) Pure guess is that JBPP will continue to outperform PFF. If you were considering an allocation to PFF or any other broad bases preferred ETF, you could buy a JBPP portfolio. It would take a lot more effort and patience, but is doable.
2) In hindsight, ignoring hard to borrow fees, you could have shorted the TBTF issues and went long on the smaller banks. Not perfect, because you would have to pay out the dividends along the way.
3) Going forward, IF and it is a large IF, the UST 10 year continues to rise, JBPP along with PFF and broadly speaking all preferreds will fall. If that is your personal most probable forecast, prepare for more ugliness.
4) My highest probability going forward is that UST 10 does not go a lot higher and stay there. The assumption is that if UST substantially increases, the US would go into a recession. Possibly one or more of the small banks fail, but highly unlikely the Fed/Treasury would let widespread bank failures propagate. Stated differently, I expect JBPP to fall at some point in the next ~ 12 months.
5) Bottom line IMO: Buy JBPP now and in the future and you will likely outperform PFF for many years to come.
6) Obviously, all of these opinions might be 100% INCORRECT.
(1) Justin says: 05/18/2023 at 10:31 pm I haven’t checked recently, but are there any regional banks where the preferred stock is in the single digits per share, but the common is priced way higher, like at least 20-25 a share?
I am interested in knowing if any other individuals would be interested in adding a III page for “Set It/Forget It/Retirement”. Intended for individuals retired or nearing retirement who are concerned about their ongoing ability to actively manage their investment portfolio and for whatever reason prefer to not turn the portfolio over to a broker.
The page would be similar to Sock Drawer but expanded to include etfs, cefs, common stocks, bond funds, and other dividend paying investments. The primary focus to be stable income with less concern with total return. and market price fluctuations. Preferreds with very low probability of being called in the next 20-30 years because of the gap between their face value and market value or a long dated mandatory call date or no call date. And if called would result in a sizable capital gain.
I fall in this category and am in the process of adjusting my portfolio and developing my wife’s portfolio. It would be beneficial to have the input of others on specific investments and the target portfolio weighting for an individual investment and weighting for market segments. I am currently targeting 3% for an individual entity and 10% for a specific market segment, and a 6.5% average return on costs.
Thoughts please.
Larry, I like the idea. But everyone would still have to DYDD to make sure it’s right for them and their safety zone.
The range you have seems a little low on the lower end. We know over time short term rates are going to change. So locking in a 30, 60 or 90 day CD means you have to be monitoring the funds or let them roll over on that portion of your holdings.
I am just going with the SGOV for short term.
I have been watching common stocks and who knows what can happen over time to the stock price or the Long term future of the company and their ability to pay a steady dividend, but I have found several with 3 to 4% return and low P/E that history says may reward you with capital gains.
Others talk about annuities, etc.
I am liking your idea of trying to set up something that works with minimal oversight and not turning the accounts to a money manager.
Last thought, the 10% you mention for the high end seems doable with some ETF’s that use options or leverage. But there I have no experience and am cautious that those kinds of return can be maintained over a long period of time.
Charles, I agree with your thoughts and that everyone would have to DYODD. A significant benefit in this investment approach is that the principal investment amount passes on to your heirs, whereas with an annuity there may be little to no principal amount to pass on.
LARRY-
I like your idea, but, I think it would be good to have good selections of each type, and let each investor build from there. An over-arching plan won’t work for very many of us, but the building blocks would be useful.
I would like to eventually ( near future) have my portfolio set-up so that when it is divided between my two sons, they might be able to avoid having to do much care of it since neither are very savvy on investing.
Gary, you are correct. The 10% is in a business segment. The 3% is in a given company. The intent is to have a portfolio that requires little to no maintenance for my wife, children or myself when I am no longer capable of actively managing it.
Individuals would have to DYODD.
LarryL: I’m right there with you. My full investment in a (single entity limit) is 2%. I try to limit my exposure to one market segment but find it difficult to find the best risk/reward and thus I’m too heavily invested in the preferred of JPM, MS, GS, KEY, WFC, in other words “financials”.
I recognize this and as more of my Treasury & Agency bonds are called or mature, I’m on the search to replace the 5.5 to 6% yields outside of the bank/financial industry. 20% of the portfolio is in SWVXX or FLOT at the moment.
Can I diversify my portfolio with reasonable risk & get a yield between 6-7% with some income growth built in? I know I’ll need to use CEF/ETF/Common to diversify and to reach my targets. It would be beneficial to have the input of others here that are in the process or have already built their retirement portfolios.
Cj, seeing your post I realized I misunderstood. I was thinking yield not percent of each asset class, my bad.
In my case I definitely need to simplify.
Going by Tex’s rules and counting multiple holdings for the same company as a total % I am no more than 4% in any one company. Trying to spread the risk, I hold in one account about 70 different bonds preferred, common and bb.
I definitely want to get this down and I think ETF’s and cef’s are probably going to be the way to go.
I too feel I am over invested in financials and want to cut back and broaden my investments in other sectors. I find people who have been in a field of work tend to know that field better than the average investor.
Someone I follow on that other site has made me feel more comfortable about holding insurance companies and some investments outside the US.
This is the same thing I like about this site.
It is interesting to note that all of us appear to be limiting our investment in any one business entity to the 2-4% range. And that we are equally concerned with diversifying our investment portfolio and investing in business segments in which we are not that knowledgeable–My background is in manufacturing and banking.
I noticed that Tim has 40% of his Laundry List investments in CEF/Specialty Finance. I would like to understand his justification and comfort level with being so heavily invested in a given market segment.
Yes, such a page could be very helpful. Have been trying to do the same as want to reduce the number of our holdings but also sustain weightings among different categories of assets. Look forward toward your initial suggestions. sc
Larry, I have no problem with III (Tim) setting up a “Set It/Forget It/Retirement” (SIFIR) page, but the premise might not be a good idea. A few concerns:
1) Let’s assume the SIFIR portfolio has a number of individual stocks, bonds, ETFs, preferreds, etc. I do not think it is a good idea to task non financially interested family members to manage a portfolio like this. Even if the goal was SEFI, it will confuse the heck out of them. And it WILL require some amount of active management over a long enough time frame, say 10 to 30 years. Some percentage of investments we think are rock solid today, will inevitably fall out of grace over a long enough period. I am looking at you General Electric.
2) Let’s assume that one of the goals is to live off of portfolio income, then pass down the principal to the next generation aka kids when you decease. In that case, a major objective of the portfolio might be to grow principal over the long term, say 10-30 years. That would tilt the portfolio more toward long term capital gains as opposed to short term income. And the choices of what assets to own would likely be very different, particularly if the assets were held in a taxable account.
3) Over the same 10-30 years, IF and it is a big IF, inflation substantially picks up and stays up, then darn near all fixed income investments will suffer a permanent loss of principal WITHOUT the ability to recover. Common stocks would also suffer, but over the longer term have to ability to grow and recover principal values. Not saying this inflation scenario will occur, but it has a non-zero probability.
4) None of these potential issues mean you should or have to turn the portfolio management over to someone and pay the 1% of assets annual fee.
5) Here are a few alternative approaches to consider.
a. Use a “robo-advisor” that all big brokerages now have. They charge maybe 0.25% to 0.35% per year, but handle all of the investment decisions using low-cost ETFs.
b. Roll your own robo-advisor portfolio with simple instruction requiring minimal financial skills for your heirs. For example: “One day per year, rebalance to have x% of ETF1, y% of ETF2, z% of ETF3, etc. Scott Burn’s Couch Portfolio is the simplest form of this. It holds two ETF’s.
c. Setup the portfolio today to have a large bond/baby bond component that will mature in the next 10 to 30 years. Use the proceeds as the income, but have any unneeded portion invested into long term capital gain type common stocks intended for the heirs.
d. Construct the portfolio today with ETFs with a tilt towards long term growth and capital gains. Then once per year sell whatever percentage you need for income, say it is 7%. Since this is a lot higher than the Bengen 4% rule says you can safely withdraw, statistically the portfolio value will eventually go to zero, much like an annuity.
There are other factors, but once again, I would caution against the premise of setting up a SIFIR portfolio.
Tex, You’re being too conservative with the management costs. The 3 retirement managers I talked to wanted a flat fee plus a percent with the total closer to 3 to 4%
This meant that to get the return of 5 to 6% that some people here are comfortable with the account would need to be invested in a mix of holdings generating 10% or more.
One team I talked to spread investments over 10 ETF’s and had 3 of these that used options to protect the account in case of a major dislocation in the market.
Hat’s off to our Vets & Service.
Regards to many of the comments on this Sandbox page, and other III pgs,
with all that has been evolving this year, the portfolio strategies’ review topic is really spot-on.
For the Macro picture, with aging pop and trend to higher rates & resetting of world economics, daily comments / investmnt ideas that our posters provide is really timely.
Tex, Thanks for your comments. You and I can agree that a “Set It/Forget It/Retirement” (SIFIR) approach is not for everyone.
My primary objectives: 1) generate 6-7% in annual dividends (target 6.5%); 2) capital preservation; and 3) minimal to no ongoing maintenance of the portfolio as I age. If I generate 6.5% in cash flow and live on 5.5%, I have room to adjust for inflation and investments that fall out of favor over time. Growing principal is not an objective. Heirs would have the option of maintaining the portfolio or selling it and dividing the monies (the latter being the most probable outcome).
An annuity would provide 6-7% in cash flow, but it would not preserve capital. A “robo-advisor” would preserve capital, but provide approximately 4% cash flow (I have investigated this option and even run a 6 month, mid-6 figure trial with the Schwab Intelligent robo-advisor). There a several alternatives that can provide 4% cash flow, including a 1% annual fee broker who because of being a fiduciary is limited to targeting a 3-4% annual return. I have failed in my attempts to find a broker who focuses on preferred stock. I am also vehemently opposed to an investment approach that would have me sell investments once per year for needed income—works great in years when the market is up / not so good in years when the market is down.
I believe that most of the III subscribers are here because they are 1) looking for a higher return, 2) having less than satisfactory experiences with brokers, 3) looking for input from like-minded investors.
The ETF approach is a potential solution that is worthy of consideration. 6.5% in annual dividends would be possible with a combination of ETFs and income funds such as PFFD, JEPI, PFFA, SCHD, UTG, FBND, etc. I would have to get comfortable with the thought of having 20+% of my portfolio in a single investment long term. My current approach is to limit my investment in a single company or equity to 3%. But, I am getting comfortable with a 5% target with some highly rated ETFs and income funds.
My current thinking is to have 60-70% in IG / long maturity dated / low probability of being called Preferreds/BBs with 10% in each of several market segments: banks, insurance, utilities, CEFs, illiquids, etc. The remaining 30-40% invested in ETFs, CEFs, income funds and individual stocks. Because individual stocks are less predictable long term (i.e. GE), I am limiting my investment to 1% or less in each of a very few selected stocks. If and when portfolio adjustments are required, monies to be re- invested in one of several highly rated ETFs.
I continue to believe a SIFIR page is worthwhile, if for no other reason than to discuss alternatives on portfolio management as we grow old gracefully but lose confidence in our mental ability to actively manage a high dollar portfolio on an ongoing basis.
Thanks Larry, you have put a lot of thought into this and I am grateful for your sharing.
Fed Funds Mkts … Friday arnd 7:30am NY …. First FF cuts Sept ….
Fed Watch Site : Sept to 4.00% @ 51%
Fed Funds Futures CME : October @ 4.12% rate
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Individual returns for all 49 issues in 2WR’s special CSV format:
Ticker, purchase date, # of shares, Pref/Bay, Type of dividend, coupon yield, total return from purchase date through 5/22/25, notes
BANC-F, 5/22/23, 1.157, Pref, Reset, 7.75%, 179.6%, Changed from PACWP on 12/1/23
VLYPP, 5/22/23, 1.154, Pref, FixFloat, 6.25%, 75.2%, FF effective 6/30/25
CNOBP, 5/22/23, 1.12, Pref, Reset, 5.25%, 64.2%, R effective 9/1/26
WAL-A, 5/22/23, 1.122, Pref, Fixed, 4.25%, 63.7%,
FLG-A, 3/18/24, 1.08, Pref, Fixed, 0%, 32.1%, Name changed from NYCB-A
DCOMP, 5/22/23, 1.164, Pref, Fixed, 5.5%, 53.4%,
SNV-E, 5/22/23, 1.149, Pref, Reset, 5.88%, 48%, R effective 7/1/24. payout increased
UCB-I, 5/22/23, 1.157, Pref, Fixed, 6.88%, 47.5%, Ticker changed from UCBIO on 7/26/24
FULTP, 5/22/23, 1.154, Pref, Fixed, 5.13%, 44.5%,
ASB-F, 5/22/23, 1.158, Pref, Fixed, 5.63%, 44.5%,
AUB-A, 5/22/23, 1.137, Pref, Fixed, 6.88%, 42%,
EFSCP, 5/22/23, 1, Pref, Fixed, 5%, 41.6%,
TFINP, 5/22/23, 1.181, Pref, Fixed, 7.13%, 41.3%,
ZIONP, 5/22/23, 1.129, Pref, Variable, 5.51%, 41.2%, V effective now, payout lowered
TFC-I, 5/22/23, 1.124, Pref, Variable, 6.22%, 38.8%, V effective now, payout lowered
FHN-F, 5/22/23, 1.149, Pref, Fixed, 4.7%, 37.6%,
CCNEP, 5/22/23, 1.14, Pref, Fixed, 7.13%, 36.5%,
FGBIP, 3/19/24, 1, Pref, Fixed, 0%, 20%,
WSBCP, 5/22/23, 1.148, Pref, Reset, 6.75%, 34.7%, R effective 11/25/25
WTFCM, 5/22/23, 1.146, Pref, FixFloat, 6.5%, 34%, FF effective 7/15/25
MBINN, 5/22/23, 1, Pref, Fixed, 6%, 32%,
HWCPZ, 5/22/23, 1, Baby, Fixed, 6.25%, 32%,
ONBPP, 5/22/23, 1, Pref, Fixed, 7%, 30.2%,
KEY-K, 5/22/23, 1.145, Pref, Fixed, 5.63%, 29.3%,
UMBFP, 5/22/23, 1.131, Pref, Reset, 7%, 29.3%, HTLFP bought by UMB 1/31/25
WAFDP, 5/22/23, 1, Pref, Fixed, 4.88%, 29.1%,
TCBIO, 5/22/23, 1.156, Pref, Fixed, 5.75%, 28.8%,
CUBB, 5/22/23, 1, Baby, Fixed, 5.38%, 28.7%,
MSBIP, 5/22/23, 1.169, Pref, Reset, 7.75%, 26.1%, R effective 9/30/27
OZKAP, 5/22/23, 1.146, Pref, Fixed, 4.63%, 23.4%,
RF-E, 5/22/23, 1.132, Pref, Fixed, 4.45%, 21.2%,
MTB-H, 5/22/23, 1.106, Pref, FixFloat, 5.63%, 21.1%, FF effective 12/15/26
SYF-A, 5/22/23, 1.166, Pref, Fixed, 5.63%, 20.7%,
FCNCP, 5/22/23, 1.112, Pref, Fixed, 5.38%, 20.3%,
FITBO, 5/22/23, 1.12, Pref, Fixed, 4.95%, 19.9%,
GS-A, 5/22/23, 1.145, Pref, Variable, 5.55%, 19.9%, V effective now, payout lowered
HBANP, 5/22/23, 1, Pref, Fixed, 4.5%, 17.3%,
WBS-F, 5/22/23, 1.121, Pref, Fixed, 5.25%, 15.6%,
CFG-E, 5/22/23, 1.134, Pref, Fixed, 5%, 15.3%,
SYF-B, 2/20/24, 1.104, Pref, Reset, 0%, 8.5%, FF effective 5/15/29
COF-N, 5/22/23, 1.113, Pref, Fixed, 4.25%, 13.8%,
BOH-A, 5/22/23, 1.035, Pref, Fixed, 4.38%, 12.6%,
WFC-D, 5/22/23, 1.105, Pref, Fixed, 4.25%, 10%,
CFR-B, 5/22/23, 1.127, Pref, Fixed, 4.45%, 8.9%,
MS-O, 5/22/23, 1.121, Pref, Fixed, 4.25%, 5.5%,
USB-Q, 5/22/23, 1.124, Pref, Fixed, 3.75%, 5.1%,
BAC-P, 5/22/23, 1.121, Pref, Fixed, 4.13%, 2.8%,
STT-G, 5/22/23, 1.102, Pref, FixFloat, 5.35%, 2.5%, FF effective 3/15/26
JPM-M, 5/22/23, 1.098, Pref, Fixed, 4.2%, 2%,
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Individual returns for all 49 issues in 2WR’s special CSV format:
Ticker, purchase date, # of shares, Pref/Bay, Type of dividend, coupon yield, total return from purchase date through 5/22/25, notes
There are two other scenarios where JBPP might suffer if multiple banks go belly up.
1. Long term rates go higher, commercial real estate gets marked down further resulting in more commercial loans defaulting. In additional the banks that hold a lot of low coupon yield bonds on their books have to mark them down further. My personal opinion is that the Fed/Treasury is hades bent on NOT letting this happen.
2. Long term rates go at LOT lower, due to the country entering a severe recession. In that case, all kinds of bank loans default at a higher rate, causing more small bank failures. Recall that Too Big to Fail banks will be just that and not allowed to fail, but as we have seen, smaller banks are not protected. My personal opinion is that the Fed/Treasury also is hades bent on NOT letting this happen.
Obviously we hold all of these issues since this is a real money portfolio. We do not plan to sell any issues come hades or high water. If that changes I will make a post. PS, we were literally in the middle of Hurricane Harvey and did NOT sell anything, but that is a story for a different time.
This does prompt the question: What would cause us to sell JBPP? Worth some thought, but defer for the sake of brevity.
When you look at the detailed individual holdings, something really stands out IMO. It is pretty obvious in hindsight, but I did not highlight it BEFORE the original purchases. The best performers were the issues most likely to go BK at the time, whereas the worst performers, i.e. lowest gain were least likely to go BK. Poster children for this are PACWP which became BANC-F is up 129.9% and at the opposite extreme is JPM-M which is only up +4.9%. Stated differently, investors forecast ~ 0% probability of JP Morgan-Chase going belly up while assigning much higher probability ~ 50-70% for PacWest Bancorp and Valley National to go BK.
PS, I am working on a different, non-bank, real money diversified 1 share each portfolio which I will post/track if there is any interest.
Current holdings in a “CSV” format for ease of importing into a Google Sheet or Excel Spreadsheet. (I previously posted detailed instructions on how to do each of those imports.)
Header row:
Ticker, buy date, # of shares, pref/baby, type, coupon yield, total return, comment
BANC-F, 5/22/23, 1.07, Pref, Reset, 7.75%, 129.9%, Changed from PACWP on 12/1/23
VLYPP, 5/22/23, 1.082, Pref, FixFloat, 6.25%, 48.7%, FF effective 6/30/25
DCOMP, 5/22/23, 1.085, Pref, Fixed, 5.5%, 42.6%,
ASB-F, 5/22/23, 1.082, Pref, Fixed, 5.63%, 39.5%,
EFSCP, 5/22/23, 1, Pref, Fixed, 5%, 39.2%,
CNOBP, 5/22/23, 1.054, Pref, Reset, 5.25%, 39.1%, R effective 9/1/26
TFINP, 5/22/23, 1.09, Pref, Fixed, 7.13%, 37.2%,
UCBIO, 5/22/23, 1.079, Pref, Fixed, 6.88%, 35.8%,
SNV-E, 5/22/23, 1.067, Pref, Reset, 5.88%, 33.1%, R effective 7/1/24
ZIONP, 5/22/23, 1.059, Pref, Variable, 5.51%, 32.8%, V effective now
WAL-A, 5/22/23, 1.067, Pref, Fixed, 4.25%, 32.2%,
FHN-F, 5/22/23, 1.077, Pref, Fixed, 4.7%, 29.7%,
MBINN, 5/22/23, 1, Pref, Fixed, 6%, 27.5%,
FULTP, 5/22/23, 1.079, Pref, Fixed, 5.13%, 26.4%,
GS-A, 5/22/23, 1.074, Pref, Variable, 5.55%, 25.7%, V effective now
KEY-K, 5/22/23, 1.074, Pref, Fixed, 5.63%, 25%,
HWCPZ, 5/22/23, 1, Baby, Fixed, 6.25%, 24.5%,
WSBCP, 5/22/23, 1.074, Pref, Reset, 6.75%, 23.4%, R effective 11/25/25
HTLFP, 5/22/23, 1.074, Pref, Reset, 7%, 23.3%, R effective 7/25/25
MSBIP, 5/22/23, 1.082, Pref, Reset, 7.75%, 22.9%, R effective 9/30/27
TFC-I, 5/22/23, 1.055, Pref, Variable, 6.22%, 22.2%, V effective now
WTFCM, 5/22/23, 1.074, Pref, FixFloat, 6.5%, 21.9%, FF effective 7/15/25
AUB-A, 5/22/23, 1.06, Pref, Fixed, 6.88%, 21.9%,
CCNEP, 5/22/23, 1.06, Pref, Fixed, 7.13%, 20.5%,
ONBPP, 5/22/23, 1, Pref, Fixed, 7%, 19.8%,
CUBB, 5/22/23, 1, Baby, Fixed, 5.38%, 19%,
FCNCP, 5/22/23, 1.048, Pref, Fixed, 5.38%, 18.9%,
OZKAP, 5/22/23, 1.073, Pref, Fixed, 4.63%, 18.7%,
RF-E, 5/22/23, 1.066, Pref, Fixed, 4.45%, 18.1%,
WAFDP, 5/22/23, 1, Pref, Fixed, 4.88%, 17.4%,
WBS-F, 5/22/23, 1.052, Pref, Fixed, 5.25%, 17%,
TCBIO, 5/22/23, 1.078, Pref, Fixed, 5.75%, 16.5%,
WFC-D, 5/22/23, 1.045, Pref, Fixed, 4.25%, 16%,
SYF-A, 5/22/23, 1.084, Pref, Fixed, 5.63%, 15.7%,
FITBO, 5/22/23, 1.057, Pref, Fixed, 4.95%, 15.4%,
HBANP, 5/22/23, 1, Pref, Fixed, 4.5%, 13.8%,
CFG-E, 5/22/23, 1.066, Pref, Fixed, 5%, 12.7%,
MS-O, 5/22/23, 1.06, Pref, Fixed, 4.25%, 12.2%,
COF-N, 5/22/23, 1.049, Pref, Fixed, 4.25%, 10.8%,
CFR-B, 5/22/23, 1.063, Pref, Fixed, 4.45%, 10.7%,
FGBIP, 3/19/24, 1, Pref, Fixed, 6.75%, 10.7%,
MTB-H, 5/22/23, 1.045, Pref, FixFloat, 5.63%, 10.4%, FF effective 12/15/26
BOH-A, 5/22/23, 1, Pref, Fixed, 4.38%, 10%,
USB-Q, 5/22/23, 1.062, Pref, Fixed, 3.75%, 8.3%,
STT-G, 5/22/23, 1.043, Pref, FixFloat, 5.35%, 7.9%, FF effective 3/15/26
BAC-P, 5/22/23, 1.059, Pref, Fixed, 4.13%, 7.8%,
JPM-M, 5/22/23, 1.042, Pref, Fixed, 4.2%, 4.9%,
SYF-B, 2/20/24, 1.019, Pref, Reset, 8.25%, 2.1%, FF effective 5/15/29
NYCB-A, 3/18/24, 1, Pref, Fixed, 6.38%, -2.5%,
Posted this in error, going to start over.
Thanks for this. I’d like to see the non-bank portfolio as well.
Tex, I would like to see your non bank list also.
Would like to see the non-bank list. I am staying away from US banks currently as the SVB crisis demonstrated that regulators can and will zero an investment in bank equity or preferred shares during periods of financial stress.