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.
Is there a website that lists YTC and YTM of preferreds and bonds? I was hoping to avoid setting up my own spreadsheet.
Schwab’s bond page presents YTM and YTW (lower of the YTM or YTC) for bonds. I use a spreadsheet for preferreds and baby bonds. With some sorting and conditional formatting, it helps to color-code text and fields so I can stay focused on the best possibilities. I also use it track my results.
t would have to be a real-time spreadsheet- not likely.
FOR THE DYI:
https://dqydj.com/bond-yield-to-worst-calculator/
https://quantwolf.com/calculators/bondyieldcalc.html
https://digital.fidelity.com/prgw/digital/priceyieldcalc/
Thanks Gary and Goin2cali for the YTM and YTC info.
My .02 is that it is worth it to build out the spreadsheet and after you’ve done it from a few prospectuses it is fast. There is variation in different issues and my experience has been that websites often miss important subtleties but to each their own…
That kind of a spreadsheet wouldn’t be current unless you can automatically access today’s quotes– right? How useful with IPO info?
HWM/PR , Howmet Aerospace, which is an odd bird to say the least… just shot up over 6% for no discernable reason other than thinly traded. I got out at 69.50. 12 month high
nice trade .. HWMP/VCLT pair trading at multiyear high.. on a horizon going back to inception in april 2020 its about 1 sigma rich ..all time high was october 2022 where it was near 3 sigma rich
The odd part is that it goes back to early ’70s on e-trade chart – $50 par, coupon 3.75 – so was 7.5%, now 5.46%
What’s the attraction for buyers these days? Common has done well.
It a $100 issue, cumulative, QDI
Guess that chart was off. 100 makes sense- not much of a div, but cap gains could be good.
Will pass
thx
Still adding to SCE-J and VLYPN. Building those two positions out as prices allow. On quite a few days my lower bid does not get hit. On a day like this I can get some shares. Not sure if anyone cares but it is slim pickings for capturing a bit higher yield. If I wanted preferred at 5.9 to 6.5% IG… I could buy as much as I could handle but I am good with that right now. I would like some yield again and willing to take more risk.
good comment.,. regarding sce.prj its a ftf 9/15/25 sofr +300…it is my expectation that assuming a favorable outcome on the credit side that it will trade near parity (25) when it floats ..this implies a nearly 21% ytc
SCE-M (7.50 coupon) now trades 23.40 fwiw. Have a look at EIX 8.125 call protect til ’28 trading ~96. Floats 5yr tsy + 386.4 in ’28 cusip 281020AX5 …not recommendation but i have been a buyer. Also added to PBI.B this morning based on their ER last nite.
I got a large slug of SCE-M recently. I wanted to make a play on SCE-J’s characteristics at this stage compared to M. If SCE-J is not called it will be very comparable to M payment wise in a few short months. If races to par in expectation of a call that is good as well. It just seems to have a few more ways to exit out if things go well compared to M with a future call date way out there in 2028. Also if rates go up it can be a better payer.
Another thing is SCE preferred get paid before EIX stuff. But frankly I am unclear how to verify this for all situations. I am parroting another poster’s comments and probably remembering it poorly.
With that said.. it involves risk due to the fires. People need to be aware of this.
good comment.. although sce/prm is not ftf when sce/prj floats the pay rate may be comparable.. the sce.prm/vclt pair seems to have bottomed.. it went from near 2 sigma rich in early january to all time low in early february.. still trading 1.5 sigma cheap (1yr horizon)
Everyone belly up to the roulette wheel and place your bets. The bond desk at Fidelity is not showing offers on both SCE & Edison debt at this time. Only Edison bonds are listed. Prices are up and yields are down. Traders are betting Edison survives this to live another day. Of course, things can change in an instant. I own more of the SCE preferred than I want so I have stock to trade to lower my cost.
fc, here is the Weiss pages on this one, I’m sure you have done your DD, but posting for others in case they want to take a look:https://weissratings.com/en/bank/9396/industry-comparison
What I took from it:
– Non performing loans (to Capital) seems very high
– Liquidity, Asset Quality, and Profitability are sketchy, yet Stability seems very good. That confuses me a bit (caveat: I’m easily confused!!!!)
– Moved from a C+ ranking to a C- with last couple of years
– Dividend payout ratio seems high (~70% according to SA). Not alot of room if there is trouble.
Conclusion: Definitely earns its HY risky status on the preferred. Not going to buy now but will put on my watch list. Thanks for mentioning.
pig,
I do think common shareholders investors will be disappointed with the bank for many quarters to come as they go through their issues.
I think all the issues are now holding “them” back. The common shares. When it comes to the preferred though we are just interested in getting paid. Thus my conclusion was I would not invest in the common but I am good with the preferred. I think the whole bank melting down, like many feared from those handful from the recent past, is over when it comes to VLY.
If the bank was highly stable right now the yield would never be this high. I am betting they clean things up and improve slowly over the next few years. Most banks are on guard and have learned some valuable lessons from the last 3 years.
I guess just tossing out ideas I am acting on that pay more then the usual 5-6% a person can safely get. 8% is pretty darn juicy to mix in when you are able to.
fc, Yes I understood you were interested in the preferred, mentioned common div because its ability to pay that directly affects whether or not they can pay the preferred, certainly ok now, just with a higher payout ratio there isn’t much room for error. If common dividend cuts cut or eliminated, watch out below on the preferred, but yes totally agree with you, that’s why the yield is so high on the preferred. As I said, thanks for bringing this one up, will be watching this one for sure. I’m always interested in banks that are righting their ships. Scouring the numbers and getting in before others has been very profitable, so will keep operating like that.
Thanks for your posts pig pile.
Does anyone know why the weissratings website ceased to update info since August 2024?
The FAU business school and depositaccounts websites seem to continue updating information. Here are their two links:
https://business.fau.edu/departments/finance/banking-initiative/bank-exposures-commercial-real-estate/index.php
https://www.depositaccounts.com/banks/health.aspx
GnG. thanks for your links as well. To your question, once a year data dump? my best guess. Credit Unions seems to be on May 2024 as last update.
They seem to have updated news, so site still active, at least in some way.
Prior to the August 2024 update, weissratings was updating info about every month (if my memory serves me); perhaps sometimes every two or three months.
GnG, yeh I don’t know what’s going on
fc, what does Deposits say about Valley National?
I could not locate it on their website when I tried.
It should be this one as it has the same logo:
https://www.depositaccounts.com/banks/valley.html
The local bank I use for personal, biz, atm, etc.. has a B- with weiss. Hmm.
While deposit accounts says an A.
https://www.cnbc.com/2025/02/12/trump-says-interest-rates-should-be-lowered-to-go-hand-in-hand-with-his-tariffs.html
Rate cuts now seem unlikely unless recession factors increase That would be bad news. Or if spending cuts actually happen making monetary expansion less necessary and Inflation tames. But that would take awhile to play out and the Feed doesn’t normally act until they see the results.
The futures market now expects no rate cuts until December 2025.
The total of spending cuts would need to exceed the total of the discussed tax cuts for the spending cuts to have a positive impact.
Time will tell. I do not blame the fed for wanting to see what actually occurs versus the negative or positive “jaw-boning”. They need to respond to the data.
How’s that working ?
The bond market didn’t vote for anyone in the presidential election, and sure as heck seems, at least to me, close to rejecting tax cuts and tariffs.
A reminder of the Carville quote on his desire to being reincarnated as the bond market because you can intimidate anyone, seems appropriate.
WCC-A – NO SURPRISES – will be called in June. From Dave Schulz, EVP and CFO @ yesterday’s conference call stating the obvious in response to an analyst question:
“Yes, Tommy, we fully intend to redeem the preferred. That means that we’ll pay the two quarters’ worth of the dividend on that preferred stock. We will evaluate how we fund that redemption, whether it’s with a combination of cash on hand, borrowing against existing facilities or depending on the market, whether we would go out and issue an additional note. One thing to keep in mind, as we provided you with those key modeling assumptions for 2025, we have assumed a range on interest expense, which based on the current rate environment, it’s almost agnostic whether we use our existing facilities or we finance that with a new note.”
Crap, Etrade charged $38 for the ‘re-organization of HTLFP to UMBFP – what a rip-off.
Still waiting for completion of my ROTH acct transfer from Fido- will be only a month on Wed. ( should finalize then) What a clown car circus ride.
I have 6 stocks that their system recognizes on the transfer list, but at the very end at Preview- they go red and have to be removed. Strangely, at least one exact same stock was moved ok in the TOD brokerage acct. Not sure I’ll get an answer out of them- one rep was going to forward them to the ‘back office’, etc and call me– but no call after almost a week.
But, I am hoping that getting away from nanny Fido will be worth it.
Are you sure you actually got charged $38 @ Etrade? I got 2 sets of $38 charges and reversals and questioned what was going on. Ultimately the charge was removed by the actions they already took…
Charged on 2/3- guess I better call about reversal- if possible.
thx
Made 4.1% in ALL/PRB since 12-31-2024. Cashed out. If I leave the money in the SGOV at the current 4.27% yield, it will exceed the annual dividend in ALL/PRB (IRA account) by the end of 2025. No short-term capital gains issues. Plus, I eliminated the call risk since I purchased in the $25.30’s.
Worried about US debt? David Kotok isn’t.
https://kotokreport.com/debt-deficits-cassandra/
Does he put his money where his mouth is? I don’t listen to people who don’t.
Who is Kotok? https://kotokreport.com/about/ Kotok is well-known and sensible. I value his opinion, but I don’t have to agree. The point of my post was his argument about US debt, which runs contrary to the popular narrative.
Hess Midstream HESM is down from 41-ish to 39-ish on a secondary offering at $39.45. May be of interest to some at the lower price. (These offerings and the accompanying price drops are a regular feature of HESM.) If you are not familiar with HESM or its parent, Hess Oil HES, do some reading first. HESM is higher yielding but much smaller in size than the big names. HESM Up 20% Y2Y, yield 6.7%. JMO. DYODD.
Bear isn’t this a MLP?
HESM is 1099 reporting, not K-1.
Existing HESM common unitholders will receive a final Schedule K-1 with respect to their ownership of HESM common units for the period from January 1, 2019 through December 15, 2019. Thereafter, each Hess Midstream shareholder will receive a Form 1099-DIV with respect to distributions received on Class A shares of Hess Midstream.
Furcal beat me to it. It is a great trivia question. Yes, Hess Midstream LP is indeed a limited partnership. But no, there is no K-1. “Limited Partnership” is HESM’s legal form of business organization. However, HESM has made an election to be taxed as a corporation under the tax code. Hence the 1099.
Another HESM trivia tidbit – a portion of the dividends are return of capital which can have advantages if you are retired and/or tax manage your investments. JMO. DYODD,
Thanks guys appreciate the follow up.
re HESM: a quick view from September.
https://www.etftrends.com/energy-infrastructure-channel/hess-midstream-cfo-growth-opportunities-balance-sheet-strength-shareholder-returns/
furcal
https://seekingalpha.com/article/4753148-hess-midstream-hess-issues-domination-continues
I’m a little leery of oil and energy investments right now. Oil is bouncing around 70.00 a barrel and holding but if it slips below 70 watch out. Yes I know spring and summer are just around the corner. Interesting news I came across about Gulf oil refineries put a hold on crude oil buys from Mexico. Seems they contain up to 6% saltwater which not only damages refinery equip. but yields less gas.
Anyway the Bakken area in the US is not a primary oil resource area and in the last downturn in the economy and drop in oil prices a lot of the production was shut in. The reason I mentioned saltwater is Hess midstream says its a part of their business to transport and dispose of it. As oil sits on top of saltwater in the underground formation and if the well is sucking up saltwater it means the straw is sucking up the last of the oil. How profitable it will continue to be to drill and transport oil in the bakken I bet some informed people can educate a guess. If the sale of HES to CVX goes through the HES Bakken oil fields will be sold off and HESM depends on this source of oil and gas for the pipeline.
Good morning, this is the latest from my friends at Myrmikan Research
https://www.myrmikan.com/pub/Myrmikan_Research_2025_02_11.pdf
“But in truth, should I meet with gold or spices in great quantity, I shall remain till I collect as much as possible, and for this purpose, I am proceeding solely in quest of them” – Christopher Columbus
Gold stocks are coming back to life. Value of the dollar, All I have to do is walk through a store like Trader Joe’s where probably 60% of the goods sold is from overseas. I enjoy New Zealand SB and have observed the price increases. So is it inflation or the value of the dollar? or is it one and the same?
I read some of that research, and I’m sorry AB,
But this doesn’t agree with what I WANT to happen, lol.
We may all be fooling ourselves with these 6% preferreds, but my hope is I die b4 the whole thing collapses. Maybe there’s a great argument for perpetual futures with a physical deliverable…if there is such a thing .
Of course, there’s a great argument there for carrying debt .
I had an interesting conversation with a Croatian who told me that he owned his home because years ago the debt on his home deflated to the cost of a cup of coffee.
I don’t believe any of this is an argument for BTC.
AB and I will disagree on this
Best to you sir!
It, I encourage you and everyone reading here to have their own thoughts and opinions; YOU are best to determine your portfolios risks and rewards for the present and future. I was interviewed multiple times the last few months about the Trump Administration’s effect on institutional and individual portfolio’s. Many of these interviews have aired nationally and I’m truly humbled anyone would seek out my opinions as none of us have a crystal ball
I have been steadfast the last 15 +/- or so years that the vast majority of investors in the United States 
should not buy individual equities and be allocated into 3 ETF’s for the growth portion of their portfolios (VOO, VHT and VTI) https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/
Physical gold (and other metals) to me is like building a new house, you have to start with a solid foundation before the walls can go up. With regard to Bitcoin; I use to have a large sign in my main offices in NYC and Jerusalem that read, “one great speculation is worth a lifetime of prudent investing”.
Wishing you all the very best of profitable investing, I am Azure
AB,
Thank you for the kind, even-tempered words as usual.
I agree on “one great speculation…”
It’s definitely true of how I made money. When I switched careers in 1998 and decided to become a proprietary trader, I had perhaps $15,000 to my name and another 12 payments due me of $4500 from the sale of my travel business.
It was a speculation that paid off in spades, and I was able to retire uncomfortably after only 3 years, so I stuck around another 9 to retire much more comfortably, with the GFC being the best period of my financial life.
During that time, and since, I focused on generating a monthly income from the money I saved. I should have taken on some equities exposure.
At 65, and with rates and equities up, I’ve largely decided not to change course.
Wile I do have 1% of assets in gold, I am fully exposed to a combination of US dollars and US real estate.
AB, I’ve read your comments about your purchases and you’ve bought $ denominated financials assets like munis in addition to physical assets.
I’m curious what your thoughts are on the value of the currency
It, thank you for your kind words and sharing your experiences; we all have such diverse backgrounds it’s so interesting to me to hear people share their journey. You stated “ I’m curious what your thoughts are on the value of the currency”? Are you refer to the US Dollar’s fiat currency or gold etc? I am flying out to speak at a conference in Europe with friends for a few days, so I may not be able to respond in a timely fashion. I am to return in 4 to 5 days, but may go to my friends home on Nevis and the WiFi connection wasn’t great the last time I was there. Be well and know I appreciate your kindness. BTW, has anyone heard from our friend Gridbird, I hope he’s alright and knows he is admired and wanted back on III. In Latin we say et ad lunam, retro, Azure
Azure, I wonder about Tex also. I hope he is well as we haven’t heard from him in a while.
AB,
yes, the USD.
It seems to me we are slowly moving away from the World’s reliance on the dollar.
Ad, AB please tell me after you’ve flown it, what airline and class of service…and what you thought of the seat and service. Thus far my favorite to Europe has been LH first. My least favorite is a long list
Economic/financial chaos is probable eventually. The U.S. will react to it when it happens. I seriously doubt we will be proactive in dealing with it. Our current political chaos prevents us from effectively being proactive. We will kick the can down the road for as long as possible. This article, although well laid out and logical, is really nothing more than an academic exercise in futility.
What do you folks think the chance of tax negotiations getting bogged down and treasuries getting temporarily out of control as occurred in the UK a few years back?
I’d like to hope this happens as we all know the bond market is in charge, but since the structure of our auctions requires primary bidders to bid, there’s zero chance of a failed auction.
I think it’s also unlikely because 98% of treasury debt is less than 10 years to maturity , so it really IS possible to control the long end. I’d bet government would act to prevent rates from skyrocketing …but there’s always hope.
Hawaii wildfire settlement moving ahead.
I am going to pass on existing preferreds for now. Keeping an eye out for new debt to see how the credit agencies are rating HE issues.
https://www.cbsnews.com/news/insurance-companies-maui-wildfire-settlement/
The market already priced in what a 4B settlement would result in from a credit risk perspective.
HE Preferred all generally traded higher today. You keep on waiting.
I just got done reviewing the HE preferred today and I felt they were not at rush out and buy prices. Long past that stage. Using HAWLM as an example the yield of 6.5% at current trading prices is no longer super interesting. I would need HAWLM under 14.50 easy to make me want to purchase more. I do not see that in the cards any longer.
SCE is the current play. HE’s time has passed for now. So basically the same sort of situation…. by the time things are ironed out a bit SCE-M will be above 26.
HE preferred was more distressed earlier on when I entered a position in the very low teens.
By the time SCE gets the all clear, those issues will more than likely also be fully priced out too.
I agree SCE preferred is currently more attractive.
long 1000 shares; i agree
will come back
Yes, I too brought HE when the settlement was 1st announced. Sold it when the Insurance Companies disputed which may or may not have been discussed.
As I posted, I will wait until I see the revised credit ratings and/or new debt to be posted. That’s what matches my desired risk/reward profile.
Lt posted on the Reader alert page, “what about ESGRO and ESGRP”
Yes it is coming up on the ex dividend but if you buy it now so close to the date you risk it falling more than the dividend you get. Consider that the buyout by 6th Street is supposed to happen in the 1st half of 2025 if I was being forward looking there is a lot of uncertainty about the preferred as there’s no indication they will be called or continue to trade on the open market and not go to the expert market. They are already at the top of chart for high price, good chance people will want to sell and not hold forever another 3 months.
I owned but sold the preferred and instead bought the common and the 2029? Bonds. I have about 10.00 a share baked into the common and a short term hold of the bonds if they are not called when the deal closes.
LT, Your post on annuity made me think to ask this question. I think but do not fully understand, one might purchase these annuities from an IRA and thereby delaying RMD until much later. No doubt I have this confused but would greatly appreciate all information.
I know nothing about IRA RMDs because mark-to-market traders in securities do not pay/owe self-employment taxes on earnings. Thus, there’s no pre-tax income deferrable.
People who trade futures for a living get 60/40 LTCG treatment on what might otherwise be termed earned income but I do believe SE tax gets paid. Could be wrong.
As to your question, it certainly seems interesting
I’m certainly no tax (or otherwise) expert, but I do not believe purchasing an annuity within an IRA has any impact on RMDs. The RMD is based the age of the account holder and the value of the account at the previous year’s end, not what is held within the IRA.
https://www.fidelity.com/learning-center/personal-finance/secure-act-2-qualified-annuities-rmd?ccsource=email_weekly_0116_1037578_127_0_CV3
I need to dive into this but clearly qualified excess annuity income can be used to satisfy RMDs No doubt, the devil is in the details.
That is more the removal of an unreasonable restriction, than an actual improvement.
It doesn’t change the fact that for most people, buying an annuity in an IRA is a bad idea.
You are paying for the tax deferral feature of the annuity, then getting no benefit from it.
David, I agree. I posted incorrectly. My head spins with all the products offered. The point of the original post should have said that purchasing an annuity outside of the IRA would allow excess income to be used to pay RMDs, allowing longer term IRA balances.
Interesting topic for sure.
The Fidelity example shows the annuity was purchased inside the IRA. To me, the example needs to factor in other income (cap gains, dividends, interest, pension, SS, etc) plus other scenarios where the RMDs are much larger and how tax brackets would be affected.
My personal opinion is that I’ll never buy an annuity within an IRA, except for MYGAs.
I don’t think that’s correct. The annuity purchased outside the IRA is non-qualified and income from it can’t be used to pay RMDs.
The example clearly shows an RMD on the annuity. Annuities don’t have RMDs unless bought in a qualified account like an IRA.
TNT-
Sounds like the outside annuity payout would allow payment of taxes on the RMD that you must take, but not affect what amount you have to take.
Unless I miss the point again.
that doesn’t sound right to me
better check the IRS pubs
The following article is a cut-and-paste from the Tax Foundation dated Feb. 4, 2025. It discusses the impacts of tariffs on the economy from both Biden and Trump, so I regard it as an economic analysis and not political.
“We estimate the tariffs on Mexico, Canada, and China proposed to go into effect on February 4, 2025, would shrink economic output by 0.4 percent and increase taxes by $1.1 trillion between 2025 and 2034 on a conventional basis, amounting to an average tax
increase of more than $800 per US household in 2025.
The first Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, amounting to one of the largest tax increases in decades.
The Biden administration kept most of the Trump administration tariffs in place, and in May 2024, announced tariff hikes on an additional $18 billion of Chinese goods, including semiconductors and electric vehicles, for an additional tax increase of $3.6 billion.
We estimate the imposed Trump-Biden tariffs will reduce long-run GDP by 0.2 percent, the capital stock by 0.1 percent, and employment by 142,000 full-time equivalent jobs.
Altogether, the trade war policies currently in place add up to $79 billion in tariffs based on trade levels at the time of tariff
implementation and excluding behavioral and dynamic effects.
Before accounting for behavioral effects, the $79 billion in higher tariffs amounts to an average annual tax increase on US households of $625.
Based on actual revenue collections data, trade war tariffs have directly increased tax collections by $200 to $300 annually per US household, on average. Both estimates understate the cost to US households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused.”
The list of Citi preferreds can be found here:
https://www.citigroup.com/global/investors/fixed-income-investor-relations/capital-securities
The trust term preferred C-N is a $25 issue, currently floating although the Master List shows it as fixed.
All the rest are $1000 issues that haven’t hit their call dates. When they do, they will float (older issues) or reset based on the 5- or 10-year yield. What is the likelihood of a call on the first call date? I would guess it’s high since there are no preferreds on the list that are past their call dates.
Where are they trading? I looked on FINRA at Series EE, coupon 6.75%. FINRA shows the last trade at 99.86, making the CY 6.76%. I didn’t calculate the YTC. You might compare it to new-issue big bank senior debt at 6%.
Thanks , That Citi Trust Preferred ( C-N ) is a Qtrly Floater that has been callable since 2015 & nothing.
It has a solid trading range above $29. into low $30’s
That C-N has been mentioned on their quarterly earnings calls as basically uncallable because it would be an explosion to Citi’s financials because of the special accounting treatment related to it.
Justin:
That “special accounting treatment” for Citi is that issue is grandfathered to count as regulatory capital.
No other Citi preferred can.
rock, I do own the 6.75 but I preferred the margin premium of the 3.875 v ~100 bps less margin on the 6.75. At the indicated margin I don’t think it’s as likely the EE gets called, especially if term premiums widen
Citi $100 preferred 172967NV0 at 98.05.
This resets Feb 18, 2026 to 5 yr T +3.417.
I didn’t calculate the YTC but eyeballing , it should be ~5.80.
This seems like a better bet than the other C preferreds that have lower reset “add-on” to T rates.
seems like a $200k min
correction , the 200k min was just the offer I was seeing at the time at 97.95.
I bought a starter at 98.002
For the first time in 4 weeks, the Sunday night action in 10 Year Treasury Yield Futures is quiet, subdued, and non-descript: not much of a change all night so far. I like it, I’ll take it over yo-yo volatility any day!
Lost in the excitement about pennies: Sunday’s comments about Treasury debt and payments, first reported in Bloomberg. A few concerned, most not. (Last night, a small news item on The Other Website drew only 8 comments. This morning, an Op-Ed that no one will read.) The comments had no effect on Treasury pricing. Bloomberg Radio AM anticipates it will be explained away. A stray comment.
Earlier stray items – the curious Treasury Department entries in the rescinded list of 2600 grants / payments under OMB review. Not grants, popular investment tax breaks and a stray mention of debt payments. No explanations. (Someone here was worried about losing the muni tax exemption. I originally thought that was alarmist.)
I look at portfolio risk very differently than most here. I occasionally insure against low probability / high damage events. Since the market deems such events highly unlikely, the cost of insurance can be cheap. JMO. DYODD.
Bear-
That was a bit too cryptic for me.
Bear,
Yes, I am worried about muni exemption. Can you elaborate with a link
How do you insure?
Bloomberg today: President Donald Trump’s weekend comments regarding irregularities in Treasury payments were a reference to billionaire Elon Musk’s claims that the government had made improper transfers to contractors and grant recipients — not an expression of concern about payments to bondholders, the president’s top economic adviser said Monday.
“The Treasury secretary has found that the controls for spending of the previous administration were unacceptable, that they were sending money out without knowing where the money was going,” National Economic Council Director Kevin Hassett said during an interview with CNBC. “They were sending money out without flagging what it was for.”
The president on Sunday told reporters that there was a “problem” at the Treasury Department and indicated the US government might disregard some payments
MBNKP: From 4/01/2025 dividends will be paid at a floating rate of the Three-Month SOFR plus 6.46% per annum. At the present SOFR that would reset at 10.76%. Goes ex-dividend on March 17 and the dividend pay date is 1 April. Current yield is 7.93%. Current price is around $25.21 and the dividend is $.50. If it is called you would still be around $.29 ahead. If it isn’t called you should get at least one dandy dividend.
Jack, an interesting one. A lot like NEWT was a BDC then decided to be treated as a financial bank but no locations. Very small market cap on MFIN and this preferred is only 45 mil. It is perpetual so no guarantee it will be called.
I would think we might have heard something about a new preferred to get new money to call this ?
I don’t know if there is a plan in place to refinance this preferred with a new issue. If there is one it has not been publicized. Medallion Bank has an interesting taxi-cab history: https://www.monitordaily.com/article-posts/medallion-financial-stor/ Unfortunately I have been unable to find the prospectus for MBNKP.
> Unfortunately I have been unable to find the prospectus for MBNKP.
Here you go.
https://s25.q4cdn.com/511791073/files/doc_downloads/reg_filings/2022/Medallion-Bank-Offering-Circular-Series-F.pdf
Thanks very much for the Prospectus. It appears that the new rate will be recalculated for each dividend, and doesn’t reset for a longer time. That was what I needed the prospectus to see.
TIM _III
Is FLG-U (former NYCB-U Note ) listed somewhere?– just can’t find it.
If looking for mkt prx info my Schwab tiker is FLGpU …. Friday close $38.42 …. Divi Paid Feb 3 .7667c
May be looking for the info on our III site ……
I wish we could somehow help Tim make the sortable sheet better but I am not sure how with so many cooks in the kitchen. I find that spreadsheet to be more useful then the website lookup stuff.
Fc, I have no experience with spread sheets so I will stay out of the kitchen. What I would like to say is I like the layout of Tim’s spread sheets. For me the main info is there then I can go elsewhere for research.
Not sure what change of format you could do, but like I said I’m not a tech kind of guy.
What I mean, I know others want more detail. Nav , price to NAV, CAGR, FFC and on and on. This is fine but I’m getting overwhelmed by too much sensory input on charts.
Example I signed up for ADS analytical’s service. Paid what I consider a reasonable cost
His BDC spread sheet has basics header 2 columns, Pricing header 4 columns, valuation header 10 columns, Returns header 26 columns !!
there are 11 more headers with dozens of columns !!
My eyes are glazing over.
I don’t believe Tim makes enough donations on a free site to pay for his time as it is.
It is more just adding new preferred, missing ones, and other odd balls. Fixing mistakes, adding missing information, etc… A lot of financial websites with users like here do not have a way for users to make the site better. Thus the owner has to carry the whole burden.
It would requite some programming, adding trusted users, and etc.. but totally doable based on some modification being done to data and getting enough users to vote it into action. Thus no one person can ruin the pool of data. With the owner maybe being the final say when he reviews proposed changes every two weeks.
Fc, that sounds like reasonable changes. I know a few people have mentioned noticing missing info and wanting something added, not sure what review process would be needed. Not sure what could be done about removing delisted, called, or bankrupt stocks. Still nice to know just for reference. Quantum has them just listed and if you want more info you click to go to another page.
One change, I have gotten used to at work and other websites is having tabs at the bottom to limit how many rows say like 25 then you want to see the next 25 you click on the next tab. The all preferred list is getting very long to scroll down on.
I thought there used to be an “Errors and Omissions” page, but I haven’t seen it in a long time.
Personally, I like scrolling and would not want the spreadsheet split into pages. I also like seeing the delisted, called, BK on the spreadsheet, but maybe there could be a way to purge that data a year or 2 after the event; or scrub it to another page, like an archive of sorts.
Mark – The page you mention makes sense to this relatively new reader. I sent a couple of data corrections to Tim’s email, not seeing an obvious starting point in the headers. A dedicated page for submitting revisions/updates would be a good landing spot for Tim to work from.
ht–will come back to this in the afternoon–just heading out for 5 hours in the below zero weather.
Thank you, Tim. No rush.
There is already such a page: https://innovativeincomeinvestor.com/errors-and-omissions/ .
RS – Thank you for the link.
Tim and RS, thank you.
I used to see the link to “Errors and Omissions” on the home page. It used to be on the right margin, under the heading “Popular Pages” along with the others (“Sandbox Page”, “Reader Initiated Alerts”, …) but it appears to be missing there now.
I have been coding a long time, esp. with data aggregation/transformation related projects.
If there was an open source solution that provided functionality close to what is desired, it might be the easiest to implement and maintain and plug into this site if Tim was keen.
If there was some kind of standard of what everyone wanted and there was a shared document of tickers/google sheet/etcetera, I could write the code to perform the calculations on a schedule and upload to a shared location.
If people wanted the site to handle it, there is the hosting provider’s capabilities and costs to be concerned with.
Gary, I don’t think Tim ever followed the NYCB -PU so even though it is Flagstar now it never was on the list.
Thanks- that would explain it.
Hi Tim (or Innovative Income Investor!) ….. is it possible for you to freeze the header row like I do in my Google Sheets that track my investments? That way as we scroll down the rows we can always see what columns represent. Your sheets look a little different than mine, but I think you are using Google Spreadsheets too. You just have formatted them differently. I guess my short term memory is shot from age! Just a thought………
I am considering the AIRT preferred. It seems like a decent company, albeit highly leveraged. Wondering if any IIIers here like the issue.
Please add Boeing’s new preferred and Microstrategy’s new preferred to the master list.
Thank you and FIGHT ON
“U.S. added 143,000 jobs in January, jobless rate drops”
https://www.axios.com/2025/02/07/january-jobs-report-trump
A tweet discussing data on multiple job holders
https://realinvestmentadvice.com/wp-content/uploads/2025/02/jobs.png
From KIMCO’s qtrly report today:
“We also conducted a cash tender for the outstanding depositary shares, representing the 7.25% Class N Cumulative Convertible Perpetual Preferred Stock, successfully tendering for just over 22% of the shares and reducing the liquidation preference to $71.9 million.”
Probably reported before- but, officially, looks like they didn’t get much action.
New class-action lawsuits are asking the courts to decide a question policymakers have been debating—without resolution—for years: whether private equity is too risky to play a role in Americans’ retirements.
“Attorney Jerry Schlichter, whose firm Schlichter Bogard has reaped millions in pioneering 401(k) fee lawsuits, is now challenging deals in which companies including Alcoa, AT&T and Lockheed Martin unloaded their pension plans to insurer Athene Holding, part of alternative-investment giant Apollo Global Management”.
Saw this morning on WSJ Bankruptcy news. I hold some of the Athene securities. Will just watch for now.
Thank You TNT! I also own Athene securities. A former employer of mine, Bluelinx dumped my pension into an annuity.
This has been my biggest fear and criticism of P.E. the pensions don’t seem to be covered by any fiduciary duty to take care of the recipients of the pensions. There have been failures of companies managing the investments and pensions and they have been turned over to a government insurance pool and the burden shifted to the government with the result the pensions are cut.
Yet if there was a separate owner of the pension company they can walk away.
I’m not saying don’t let P.E. own these companies but there should be a law the parent company is liable.
Of course good luck with that. I work for a LLC that is owned by another co.
Is there any instance where a P.E. company has caused a pension to fail?
YES,
https://www.times-standard.com/2007/01/20/palco-seeks-debt-relief/
I went to college in Humboldt county so I followed this. Had friends whose parents worked for Pacific lumber
This article is about Pacific Lumber and Kaiser Aluminum. If you’re interested and can’t read the article Google them and pensions.
Maxxam is still in business
https://www.crunchbase.com/organization/maxxam
this is an interesting read
https://www.encyclopedia.com/books/politics-and-business-magazines/maxxam-inc
Thanks, Charles. It looks like those are just regular companies where their bankruptcy caused an issue with the pensions, is that correct? I was asking specifically if there was an instance where a private equity company, like APO or KKR or Blackstone, caused an issue with a pension.
I see what you are saying Rock. I’ll just go with my gut feeling for being a little mistrustful of P.E. handling pension benefits so I’ll leave it at that.
Once these private insurance companies conduct a pension buyout, they are putting a lot of the $ into private IG fixed income.. and yes, while they may have the same ratings, I don’t buy they are just as safe as the public companies.
This will continue to happen u til one of them breaks.
Thank you Charles, Maine, and Westie. I agree that there does need to be some regulation in this area and I would hope that it’s on the radar. Especially with insurance being regulated at both the state and federal level, they should be well aware of the P.E. acquisitions and the risks to policyholders. I just wish they would also consider protections for the preferred shareholders too.
Right behind you on that one Rocky
To Charles and Rocky: Charles your gut was correct.
https://www.pionline.com/article/19950515/PRINT/505150713/pacific-lumber-suit-reinstated-by-court. This behind a paywall so will not help
Pacific lumber swapped the employee pension plan for annuity. The insurance company that provided the annuity loaded up on junk bonds. The insurance company failed. There was another scandal that a company handling the liquidation of the insurance company made a bundle off the junk bonds.
https://casetext.com/case/kayes-v-pacific-lumber-co
This is the one you are looking for.
Thank you for posting.
Thanks Shareholder
https://archive.ph/6cQyq
Thank You 2WR, I think part of the pension mess started with laws passed in the Reagan era that allowed companies to fund the pensions with company stock. This started the Corporate Raiders in the 80’s buying companies with pensions that had funds over what was needed to cover payouts. They took the excess assets and even exchanged company stock for assets in the pension plans. PALCO was an over 100 yr old company that cared about the employees and long term forestry management I can’t think of too many companies who select cut trees and left others standing on a 80 to 100 yr harvesting plan.
Rocky
Chipping in without specifics to cite…..
When PE co’s buy ins companies, their general practice is to replace the ins co assets with PE assets. Ins co assets are generally priced at public markets – PE assets are priced by the PE company.
Liquidity and value may turn out to be markedly different if an ins co owned by a PE has to sell assets to meet claims.
— Westies summary is right, Google Annuity and Bermuda Triangle for more details.
— May not be a perfect example, but a Connecticut insurer owned by PE recently failed. As part of the court-ordered “rehab” and “moratorium” owners of policies above $300,000 will not be paid. (“Any amount exceeding $300,000 … will be not paid, regardless of who owns the polices or the number of beneficiaries.”) FWIW – that is well below max state guaranty levels due to a legal technicality.
A complicated backstory, the insurer was founded as a mutual in 1851, went public, hit hard times and was bought by a PE in 2016 through a subsidiary. PE added capital. The decline continued. PE refused to add more capital. What was left of the insurer was carved out from the PE subsidiary around 2019. PHL, the surviving insurer, is expected to run out of money in 2030. Reports are that there will be a 1.4 billion shortfall. IMHO, looks like the loss falls on the public and the policyholders here.
PHL had two captive reinsurance subsidiaries whose only business was to reinsure PHL’s liabilities. A headline suggests that this was a Bermuda Triangle gone wrong, but that article is behind a paywall so I can’t say. Trivia: I believe Phoenix had a BB at one point,
https://www.thinkadvisor.com/2024/05/22/connecticut-puts-phoenix-life-and-annuity-issuer-in-rehab/
https://www.afslaw.com/perspectives/alerts/phl-variable-insurance-company-placed-rehabilitation-connecticut
JMO, DYODD.
Hey Bear, your tale is another reminder to tread carefully when investing in insurance companies, or units that can be spun off without protection from the parent.
As an aside, my understanding is that the phoenix/ Nassau bond holders are no longer on the hook for the PHL losses.
This is from an AM Beat report in 2021:
“ The rating upgrades reflect the group’s improved risk profile and strengthened levels of risk-adjusted capitalization on a GAAP consolidated basis, as measured by Best’s Capital Adequacy Ratio (BCAR), due to the transfer of PHL Variable Insurance Company to a holding company that is not owned or controlled by Nassau Financial Group, L.P. or any of its subsidiaries.”
I don’t follow Phoenix or Nassau so I can’t say what their credit is. I don’t know if the Phoenix BBs are still around in the expert market.
I found some cheery talking points on Nassau (apparently not intended for the public, got to love the internet) that agree with your comments. I don’t buy bonds or as of yet annuities, but if I did, I wouldn’t buy Nassau. Its a trust thing, not a ratings thing. (I’m not entirely negative on PE owned insurers. I have done well with Athene and Aspen.) JMO. DYODD.
Bear & Maine a “New Phoenix” bond is listed on Baby bonds spread sheet on here. Thanks for the in depth detail. The money is estimated to run out in 2030 and the baby bond is due 2032 might be a lot of unsuspecting people holding that.
Also Grid and Azure Blue used to mention this one and it did not go to the expert market. At one point about 2yrs ago you could call the bond desk at Fidelity and have them look to see if any were on the open market. They were not always available so might take several calls. I don’t think Fidelity would do that now.
If Rocky’s interested I have the CUSIP
Just kidding Rock.
I think BearNJ is saying those bonds are Nassau and not Phoenix with the former being the sounder of the two. While Charles you seem to be saying they are part of the Phoenix companies which are in poor condition. Is that correct?
I am not sure how to check such a thing but I remember they were paying well when they went dark.
I really appreciate the links and warning on insurers.
looking at FHLB issuances the last few days, they are no doing new issues at SOFR MINUS 1 to 2 bps.
I’m not sure how long this has been going on but apparently the market is willing to earn less than SOFR on FHLB -guaranteed debt.
This number had been sofr+ as long as I can recall. Good site to bookmark as it’s real-time
https://www.fhlb-of.com/ofweb_userWeb/pageBuilder/new-bond-issues-48
Thanks, Lt. I didn’t believe it, but you’re right. From Schwab, the following are the range of FHLB bonds callable in May:
FHLB 4.375% 08/07/2026 Callable
3130B4V32
Recently Issued
05/07/2025 @ 100.00000
FHLB 6.15% 02/12/2055 Callable
3130B4YE5
Recently Issued
05/12/2025 @ 100.00000
To each their own, I guess.
lt-
It never occurred to me to wonder how FHLB coupons are set. I either like them or I don’t. Could you please explain in more depth? I didn’t understand your point.
What I have noticed is the trend for the highest coupon new issues to have short call-protected periods well less than a year. This I very much dislike.
Rock,
I’ve really only been watching these since the 2023 regional bank crisis because at that time you could get a good sense for the $value of bank and insurer ( biggest members of FHLBB along with credit unions ) assets that were pledged . I recall seeing $35 or $50 billion in issuances on a Friday afternoon and issuances tied to SOFR were SOFR plus 10-15 bps.
I guess the point in perhaps there’s a lot of liquidity in the banking system
I see they categorize their call features as “Bermudan,” “American,” or “European.” I’ve never heard calls categorized that way… Do you happen to know definitions of these? I guess it really doesn’t matter much given the terms don’t seem to used much in the wild that I know of, but what do the pigeon-holes mean?
I did end up finding this: https://corporatefinanceinstitute.com/resources/derivatives/american-vs-european-vs-bermudan-options/
I learned the hard way what “American” options are when (early in my options trading career) I was rudely surprised by having the underlying put to me before expiration by the counterparty to a put contract I had sold to open. Don’t ask me how (since I am trading in the US) I hadn’t understood that risk before. Live and learn.
You may end up liking how versatile they can be. TastyTrade on YouTube has tons of free options content that is pretty good if you are looking for more info.
VLYPN is becoming more interesting as it gets closer to par again. The bank seems to be improving things slowly. CRE is an issue but they seem to have a better handle on it compared to the recent past. Everyone was screaming doom and gloom as you recall. Turning into more of an issue for the common shareholders and growth of the stock then an issue for preferred.
You get > 8% until 2029. Since it is a fixed rate reset after 2029 you get 5 yr treasury + 4.182% which is on the more generous side. I added a bit to my already existing position.
Mr. Kashkari Minneapolis FED comment Feb 07:
Fed is committed to get inflation down to 2%.
Rate increases could also be about fiscal deficits.
Economy is strong and businesses are optimistic.
Policy is in a good place; Fed can “wait and see.”
Seeing aside policy questions, disinflation should occur.
Treasury yields rising after Fed cuts is counterintuitive.
Expects the Fed funds rate to be “modestly lower” at the end of this year, but always depends on data.
CME Fed Watch Site % Probabilty of FF at Future Mtgs ….
May Mtg @ 4.25% = 63%
June Mtg @ 4.00% = 45%
Kashkari: Treasury yields rising after Fed cuts is counterintuitive.
Maybe for him, but it was anticipated by others.
I just want to open up this topic if anyone is interested in discussing and sharing their insights, as people here are a wealth (haha) of information: Preferreds are a small % of my portfolio. I’m early retirement w/portfolio 60% stock 40% fixed income, cash. Can’t pull the trigger on a financial advisor because even though they are smarter than I am, I can’t see how they will bring me 1% more, which is what they charge. Curious is people feel this allocation is too conservative and i think it’s good to ask here because I’m assuming some of you use fixed income for almost all your investment returns (income plus growth)? I generate more income than i spend so in that sense i do get a % of my annual growth from preferreds and bonds. BUT many advisors say u should go 70% stocks in early retirement and sell some off annually for cash flow. I can’t wrap my head around that. Any thoughts about portfolio balance and topics mentioned above would be greatly appreciated.
@Franklin – This is not financial advice. These are only my opinions.
What’s right is what works for you. I wouldn’t worry about what others say. If you wanted to see an advisor, see a true hard dollar, fixed fee-only one that you can engage for a one-time portfolio check-up. It will take time, and it won’t be cheap. I do not believe an advisor will add 1% per year at the same risk level… they may earn 1% more, but they’re taking more risk. I was an institutional consultant in my prior life and we’d be happy to add 30bps. The value of a good advisor is in keeping you (or committees) from doing dumb things.
If the income portion of your portfolio is paying all your bills+, does it really matter how much you have in equity? Does an extra 0.5-1% of return make that much difference to your happiness or does the extra risk cause you to worry or lose sleep? Those are the questions you need to ask yourself. There’s too many variables to your particular situation to say if 60/40 is right. There’s nothing wrong with being 70/30 and selling off stock each year to pay expenses… there are no one size fits all rules… except diversification.
thanks mrinprophet. that’s very helpful
Also retired , I have had a similar %age mix as you on Preferreds & Stks. for some yrs.
For myself, I have used only a few of the new issue Pfrds for months.
Floaters I have used have done well despite the reset peg going down.
Several examples, with close to or under $25.
WTFCP …. WTFCM …. BML-H …. CIM-A …. CIM-C
All above are $25 par items.
Posters on this site have also pointed to many special sitns items that are worth a close look. Great site…. nice values get mentioned.
Agree with what is being said especially by Mr. Prophet. My experience comes from my wife’s account with T Rowe. She had no advisor except an assistant manager at where she worked. Her 401k allowed investments in company stock and mutual funds. The mutual funds were growth funds. The mix was 1/3rd company stock, 2/3rds mutual funds. Not counting capital gains, the 401k was producing about 1-1/2% income. The only way she could take out 5% was to sell stocks. At the point she started withdrawing her account was down 18%
Now the difference between a 401k and transferring over to an IRA is you can decide which holdings to sell.
I don’t know what the right mix of stocks and income is for anyone else if you factor in risk.
I do know the several money managers I talked to thought 12 to 13% return could be had safely but no guarantee and of course they got their flat fee and an added commission if they did make that 12 to 13% return I just thought that return was too high a risk for me. Of course if there was a loss they didn’t earn the extra commission.
Right now this account is down about 2% in the last 3 months including income and my wife’s withdrawals.
I could see this dropping 10 to 15% in a crash. This is a concern as Joel A referred to.
With the mix of growth stocks, preferred, BB and bonds she is getting a return of about 6%
So just switching to laddered CD’s and treasuries is going to lower the risk but possibly drop the income to say 4%?
So in a market crash almost everything drops. ( what goes up must come down) Some more than others. But in a recovery some things recover more quickly. We saw that in the Covid crash.
I can adjust the risk by dumping the growth and some of the Canadian stocks, although I had been hoping for a recovery in these before I sell.
As others mention, everyone is different and you need to do what you feel comfortable with. I also am retired. In my situation I try to look at how many years the money has to last. I have a paid off house so figure when its time to go into senior / assisted living, the sale of my house will cover most of this expense. So my conservative estimate is I need to cover my expenses for another 20 years before that time hits. Between pension / SS / investment income I can cover my expenses today. Therefore I look for minimum risk/growth and more safety and have thus moved 80% into fixed income. My fixed income is largely preferred stocks (about 20 stocks), bond funds (mostly SGOV), and some CEFs (DNP, UTG). My growth/stock bucket are a few ETF funds (SPY, JEPI,JEPQ). I feel this should cover inflation, reduce my risk, and keep me safe. Good luck
thanks JustRetired, this is prob a dumb question but do u reinvest the SGOV dividends, or use them as income to spend?
No question is dumb. I let all dividends go to cash in my brokerage account (Merrill Edge). About every three months I will move money to my checking account to cover anticipated expenses for the upcoming quarter. Anything above what I think I need, I make a decision on what to do with it … leave in cash, add a few shares to something I already own, or maybe start a position somewhere else. But lately I seem to be adding excess cash to buy more SGOV … it’s the safest thing out there. As I’ve said at other times, I don’t want to get greedy, just stay ahead of the curve.
Franklin,
I’m at 100% fixed income because I found until my recent concern the municipal tax exemption will go away, my taxable equivalent yield on AAA securities is north of 7.5% with 0 variability in income. I don’t think about risk in my fixed income portfolio. However, I don’t sleep well…but not due to investment risk!
In my pre-retirement days I was a full-time trader, so to me stocks are for trading.
I’m not looking to get super rich,. Barring high inflation, massively excess mortality (I have annuities through life insurers), nuclear bombs falling or a big rock from space hittting , I’ll be fine financially
Lt, you gave me an opening. Stocks are for trading. Well yes and no. This web site is about ideas for income so trading comes into it.
I have heard some people on here talk about holding stocks long term. But again I think these long term holders trade their hold to get the cost average down. At some point they are playing with the house’s money.
This might sound crazy coming from me, but I’d like to hear from others what they consider a long term hold? 1st, exclude any stock not paying a dividend. Yes I know i’m never going to buy the next Google with that rule.
Here’s the kicker that i’m have a problem with. Trying to set the targets to sell. Easy to set buy targets, just pick a price you’re willing to pay.
I was thinking something like estimate a top range the stock seems to be bouncing up against and sell half the stock to lock in profits. Keep doing this until you decide to keep it as a long term hold.
Yes I know this sounds funny coming from someone who has been investing 40yrs but then I never was a buy and hold investor, heck I never even bought bonds until the last few years.
Oh, this is in regards to a stock like ADM, WHR etc.
Charles
I fell in love with the concept of Sock Drawer first encountered here.
Holdings that you believe in – for whatever reason – go into Sock Drawer.
Pay no attention to their market valuation changes
My other “drawers” are:
Bonds (includes prefs with Maturity earlier than 2030)
Pref Stocks other than above
Momentum (for trading)
%’s of Total are:
Bonds 67%
Prefs 22%
Momentum 4%
Sock 7%
Stormy weather Westie
Agreed, when you mentioned ” SockDrawer ” my memory chip kicked in.
Maybe my 10 yr old Dell is in need of a tune !! I used to check our sites Sock Drawer weekly. Haven’t seen a post since last June.
Or maybe ….. holding those posts …. close to vest !!
Had to be more S-D posters than our Grid.
Jim some of those Sock Drawer socks are hard to get and Fidelity is making it harder.
I used to keep my grandfathers watch in the stock drawer, now its in a safe.
Until I can be sure I can move some of my socks to another drawer I’m being judicial in what I am holding.
sold T and ENB when the yield got below the bond yield. can always buy again. will build adm position slowly and sell if it goes to 3% again. won’t sell epd and et but might hedge them.
Thanks J, good suggestion on a rule to use. Look at current yield of the stock as a sell indicator. Helps if they keep increasing the dividend.
bill gross went on the record saying he trimmed mlps. that makes sense to me. the equity premium disappear. why do I want et at 6.5 when the preferred share pays 7.2? (I can’t sell it because the tax liability, but I don’t have to buy more, either). I’ll take their word for it that they’re gonna raise the distribution by 3% per year, but that still means it will take several years to catch up to the preferred share. since so many of these dividend payers are so levered, there needs to be a margin of safety or equity premium. I did the same thing with my local utility (evrg). I have a weighty vz position, but I think I’ll sell it if it gets to 6 again, and since it’s the only one with any equity premium left, it might get there. I think general mills is getting attractive too, and their managers are more sensible and less vicious than adm…
Ask Tim what he thinks of GIS. I wouldn’t be surprised if he holds it in one of his other portfolios.
Jb I looked at Westar 20yr bond yielding 5.7% at last sale. I would rather own the EVRG common
evrg is fine it’s just too expensive now. I bought in the high 40 and sold around 58. I know they have an aggressive div increase policy but if the price is wrong the forward returns aren’t gonna amaze. I’ll add that the bonds I compared were far less duration but of course the curve changed and the long bond is only slightly less volatile than the share. I enjoyed all the gis workers I met and I think they have their priorities right and are probably the best place to work in the industry and tim can opine about the merits of the shares if he wants
If you follow Bill Gross on X, one will read the many responses asking about the recapture when selling? Bill always ignores. If you are not adding to your MLP, I would caution one to ensure your basis is positive.
I check the basis and top up the position. one could have made so much money without the dividend this year that the recapture might have been meaningless and just all ltcg. I can’t think of anything to replace it with so I just will use it as part of estate plan. I think ET and EPD are in better shape than ENB and aside from a nice lick on EQT I keep my overall energy allocation around 10% and reinvest the distributions in bonds or preferreds. mplx seems overvalued and I’m not sure the marathon holders are forever gonna allow it to remain separate and may litigate (eqt and etrn really hosed the shareholders but no one seemed to care, so who knows)
J, I stopped at 200 shares on EPD as it keeps me below getting in trouble with the IRS if I sold. I could trade since it seems to be hitting its 52 week highs and as you suggested around a 6% yield might be a good stop out. But my actual return having bought between 24 & 25 is a good income I would hate to give up.
I also own a couple ENB preferred, probably the same as 2WR that are 5 yrs resets off the 5yr US treasury bond and fixed for the next 5 yrs that are giving me good income I would be loath to give up.
I like the reset preferred from the tbtf banks better than ENB preferred at this price. if the enb preferred went wonky again I’d buy it a few bucks lower. the leverage for enb seems to get worse. I am way over weight on epd and et and will have a basis of zero in six years because I bought them in 2021 but still think it’s overbought and might put a collar on it with options. the “correct” price seems like it should be 250bps above the bond which I think is about 15-20% below current price….I knew they were essentially unsellable but looking at the cap gain and knowing they’ll get pummled in a recession isn’t awesome….hell I was happy when ET made it to 15 so who cares I guess.
Jb, I can’t remember which Canadian energy company is trying to move over to power generation and electrical transmission but maybe I am dreaming. I approve of being forward looking and as demand for oil declines and electrical increases I would be ok if that company had to leverage itself. Of course the issue then becomes you’re competing against Black Rock and Brookfield.
Could you name a few resets for tbtf banks ?
I bought the State Street 1000 increment 6.7 f2f from last year for 101 (trades at 102). looks like the just issued another a 6.45 at par. Capital one, BOA, and GS issued similar securities. the resets are like 260 (+- bps T5, which is fine, I guess)
I would just be conscious of sequence of returns risk, which is taking a bit downside hit early in retirement. As others mentioned, maybe for yourself where the income portion of your portfolio is covering your expenses then the worry about the equity side kind of goes away because it’s a very long term holding. With all that said, certain parts of the equity market are at crazy valuation levels, but that’s just my personal opinion. Good luck!
I don’t think that many financial advisors are smarter than you. Most just follow cookie cutter allocations and make portfolios overly complicated to keep you trapped. Very few probably add an additional 1% benefit to compensate for their fees except in cases where an investor is totally incapable of doing it themselves.
If you still want professional advice consider contacting an advisor that charges by the hour rather than by assets under management. It might cost you a one-time fee of a few hundred to a few thousand dollars.
Another option is hang out over at the Bogleheads forums. Lots of disdain there for fee structures based on assets under management. Theory is make portfolio as simple as possible. Be aware of the dogma there that tends to avoid any fixed income securities other than TIPs and total bond market index funds. But, you can learn alot about asset allocation, fund selection, and confidence in being a DIY investor and then can customize what you learn to build your own portfolio that you are comfortable with and have confidence in. Just my $0.02.
Franklin re Allocation %
I struggled with the % issue as you have.
I also was on the 70% stocks ratio – I died a thousand deaths in the market downturns. Those fear emotions led me to make exactly the wrong decisions that everyone else makes.
Finally encountered a wealth advisor who offered me the mantra that has steadied me ever since:
“If market moves bother you, you do not have the right allocation.”
In my case, 70% was too high.
I’m now much closer to 1/3 equities.
As he promised, I now see downdrafts as opportunity rather than disaster.
In that light, I mentioned yesterday that I had sold off all of my BHFAN and most of my SCE Trusts. I did that because I was pestered by the possibility that I had been “wrong” in buying them. My remaining SCE holdings now can go up or down – I’m cool with either way.
In short, find that allocation balance that meets your desired quality of life, not what someone else says you should do.
Don’t discount neglect. The little IRA I opened in 1995 and totally ignored since has appreciated > 3000%.
I would add up social security, 401-K and pension if any and match them against your needs to determine what kind of income draw you need your portfolio to generate. Reinvest the excess. Compounding works.
60-40 is standard. 70-30 is fine. I don’t use a fixed ratio. I add risk when I get too conservative and vice versa. I hope for an expected return on a new position that is above my benchmark minimum 4% draw. I do own a lot of dividend stocks.
I gave up bonds when I retired and substituted cash and preferreds for the 40 part. Bonds had higher minimums and wide spreads on resale. Preferred are more liquid and more bite-sized. The theory: Bonds will protect when stocks go down. That’s not been my experience. Which is: when interest rates go up, stocks crash, bonds drop. Cash in a crash: lets go fishing.
Selling off your portfolio annually for cash flow, some do it. I don’t. I’d rather harvest a smaller crop than sell the seed corn. JMO. DYODD.
BearNJ
I too have preferreds, but also baby bonds and CEF bond funds making up a large portion of the “40” part of my 60/40 portfolio. Most of these positions were “ideas” picked up on this site and SA.
Franklin,
I am running up to retirement too.
Personally, I have a fiduciary money manager who manages a slice of our portfolio. I like him as a “backstop” and as someone to keep me better grounded (we talk regularly). the returns on his accounts is less than on mine, but he is more conservative than I am (and I am fine with that). His portfolios do better in rising markets, mine do better when things drop. I think of him as a way to diversify. I try to diversify what I own – but I am the “common point of failure” for everything I choose. He is a way to diversify that decision making.
More importantly, my “guy” is a big part of my estate plan.
My wife (who is VERY smart, has run several charities, was in commodities trading, now runs a school in a very poor area) has absolutely no interest in investments, and wants nothing to do with managing them. If I were to die tomorrow, there is no way she would take over managing our portfolios (or would want to). so, I found a money manager she knows and trusts, and my advice to her is to just have him take over managing everything when I die.
I decided to go down this path because I have apparently become the “go to guy” among friends, family and clan members to help folks settle estates.
I have seen too many people (mostly wives) who have been stuck with investments when their spouse dies and they have no idea what to do. Heartbreaking to see that “deer in the headlights” look when they realize it now all falls to them.
Even in the investor community (like this board) I hear people (mostly men) who say “I have it all set up so all she has to do is X for the rest of her life (whatever he says will allow her to keep doing what he has been doing).
Unfortunately, I think they often just don’t seem to think through whether their spouse (who isn’t getting younger) has/will continue to have the ability or desire to manage investments. (not calling out anyone in particular, just seems to be a common theme).
In many cases, these surviving spouses end up looking for a money manager and just don’t have the “tools” or experience to do so. I keep thinking how much better it would have been for their husband to have found someone who could manage to the family’s goals. Again, not always the case, but I have seen it enough to make me think.
So, that got me looking for an advisor. Back in my 30s-40s, I tried out several advisors (from brokerages, etc.) but didn’t like them. Then, I discovered that a guy I had known for years (mostly through some charitable stuff we do) is a fiduciary money manager. I like how he works, and my wife has known him for decades now, so I think she will be comfortable working with him. My current task is to find his replacement because he will probably retire within the next few years. He has made some suggestions, and I am talking to a couple of them.
So, my one piece of advice if you decide to look for an advisor is to find one who is a fiduciary. they have no investments to sell you and they have to put your interests first.
As others have said, you should do what you are most comfortable with and whatever fits our financial plan.
Apologies for the long post.
Sorry to hear you’re looking again private. The one thing I guess you didn’t consider was the longevity of your advisor.
When I came here I had to take a physical for a new job. I liked the doc and decided to have him as my GP. was good for years then my company changed insurance and I had to change. when I got married and on my wife’s insurance I found out I could go back to my old pill pusher. He retired about 4yrs ago and shut down his business. Finding doctors when you’re older is not as easy.
As you know, I have been looking for a financial advisor but paused the search.
Somewhat the same situation. About 4yrs ago I did an internet search and found a website I wish I had pinned. It wasn’t trying to sell me something just listed fiduciary advisors in our area and allowed you to look up if there had been any FINRA actions against them.
Found one who had a perfect score, does work for a local church and even told me he has clients who had been Bernie Madoffed. My wife really liked him and he did a flat fee. I even had a good feeling. But I wasn’t ready at the time to trust someone else. Not sure I can find him again.
I think he had an assistant and he was a one man show so now I’m afraid I would have the same issue you are having now.
Note to myself. I finally found the website I was looking for if anyone is interested. I found this
https://www.napfa.org/
I also found the person and business I talked to 4 yrs ago.
Now I decided I needed to follow my own advice about doing due diligence.
This has caused me a little concern. So maybe I am not looking in the right locations on the web to find what certifications this person holds.
The website above doesn’t seem to link to any certifications for the investment advisors they list. Which is my concern.
Also be aware, some of these businesses are only advisors and not linked to any brokerages so they can’t handle assets directly .
Franklin…… Got me to wondering how I stack up after reading your post. I have never engaged a financial advisor either. My wife has in the past wanted to go to a couple of “free” talks by local ones and we wound up at another “free” one on one meeting. They all pretty viewed my approach as “unusual” as I largely avoided common stocks and was heavy in preferreds, baby bonds, and notes. For that matter my wife doesn’t really understand my investing either and would prefer to move everything to CDs and credit union savings accounts earning zilch. Anyhow here is my breakdown: 10% of my portfolio are in four utilities stacks which I purchased over 15 years ago. Another 10% is spread among seven REITS and BDCs (ARCC and NLY are the big ones). The remaining 80% is all Preferreds, Baby Bonds, and Notes. I have a philosophy of not buying anything unless it pays a dividend. I was self employed for decades and built my portfolio over those years. For many years it was 100% invested in Vanguard’s S&P Index 500 fund
until I fled the market before the great Financial Crash of 2008 – 2009 to Vanguard’s Ginnie Mae fund. There I sat for some time waiting for the shoe(s) to drop and wondering if I was crazy. Well, they did! After the dust settled I decide to try my hand at income investing and set up a brokerage account. I still remember the first individual stock purchase I made. Didn’t sleep for several nights worrying about it….. Eventually I screwed up my courage and bought another, then another, all while reading everything available about investing for income. The internet was growing and I found a column published by Malcom Berko and bought several equities he discussed. They all turned out pretty good for me. Eventually found Tim’s first site and and thought it was wonderful. So here I am today on his second site. Due to my investment (wisely maybe?!?) we are able to live a nice lifestyle in retirement by supplementing our SS monthly from the dividends. It earns a lot more than we need, so I re-invest the excess periodically. As a result the portfolio is growing, NOT declining. All those financial sessions my wife dragged me always talked about not taking more than 4% so you would not exhaust your retirement savings. So far ,knock on wood, I see the opposite as my portfolio is growing! My portfolio overall is earning just under 8%. I hold most things to redemption unless I see the company starting to struggle financially. I have two wonderful children who are pretty savvy financially (and very trustworthy) and have set them up as agents on my portfolio and they are able to carry on if something happens to me as my wife would be lost. Think I wondered off the subject, but maybe this somewhat answers your question?