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.
Interview transcript with liquidity expert Michael Howell. There’s a link to the YouTube video, but I like reading so I can think about it.
https://fnarena.com/index.php/2024/10/03/interview-with-michael-howell-crossborder-capital/
As many times as I’ve listened to Howell, this is his very best explanation, and I think it’s really important.
It is a pretty interesting read I just wonder if a touch too pessimistic. I am pretty sure I can find really smart people getting interviewed from each decade going back to the 1950s who are also a touch too pessimistic and due to that failed to give solid advice.
It is our govt debt that seems to be the wild card in all of this compared to the past. I feel like taxes will be going up some day soon no matter who is in office. We cannot continue to spend like we do without it happening.
As for gold the last purchase of it I made was a Pamp 100 gram bar at 1700-1800 an ounce about 2 years ago. Maybe I should have bought more to add to the stash. Same with silver. As the prices have gone up I stopped buying. Last purchase was in the low 20s. As an ex coin collector I have seen the metals race up only to fall back too many times over the decades.
Can anyone tell me the variable rate formula for the NYCB debt issue due 11/06/28? cusip # 649445AC7 The current rate is 8.269% Thanks.
Looks like Fidelity has the benchmark formula as : 3M LIBOR + 278BP
Not sure about SOFR
3 mo sofr plus 3.04x ( per the last filing I looked at, from memory)
You are correct…next quarterly reset date 11.6.24
Good memory, lt: 3mS + 304.16 bps
NYCB’s most recent 10-Q, filed Aug 9.
It’s in Note 11: Borrowed funds.
Subsection “Subordinated Notes” (bottom of page 61):
(1) From and including the date of original issuance to, but excluding November 6, 2023, the Notes bore interest at an initial rate of 5.90% per annum payable semi-annually. From and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month Secured Overnight Financing Rate plus 304.16 basis points payable quarterly.
Some folks here like me occasionally receive ‘free’ or comp subscriptions to Seeking Alpha ‘MARKETPLACE’ services. ((and believe me I realize in life nothing is ever free.))
Anyhoo end of month ALL will be cancelled. All have to pay. So even an analyst who has a service and is a guest in a service for another analyst has to pay. Apparently there was great pushback on this, before they could have 5 comp subscriptions to give out. The initial pushback on ‘none’ moved this to 3. SA decided this was too complicated, so NONE.
The site is pretty much useless anymore, I follow a few authors over there who are good, most a waste. My reading there is driven by extensive tickers in 5 portfolios; what I own, what is HOT, a 2ndary hotlist, a pfd list and a commodity list of companies and futures on say copper etc.
Only two marketplace services have grown in subs there in the last year, most are down at least 10% or more. Funny in a mostly bull market for stocks/bonds/pfds etc.
After migrating there when Yahoo went all spammy and nuts around 2008 (17yrs) I find I am ‘migrating’ more to ‘ignore’ and fundamental 10Q type analysis that luckily my degrees help me sift thru. No free lunch, no easy way to invest or we’d all be as rich as Gridbird (lol.) .. fyi, no ‘gossip’ category put this here in case any of you get comp subs and haven’t been told by your service. Of course that could change, who knows. BeaBored
Thanks Bea, Still a lurker. I do like following your comments over there. Please keep them up.
I avoid clicking on anything free and I get a constant barrage of e-mails daily that I put into spam. So far they have left me alone. The worse is on my mobile the ads take up half the screen but I am near sighted anyway and just ignore. I don’t close the ad. Common sense tells me from doing so on Yahoo and MSN it sends a message back to big brother your not interested.
yes I find other sites too, Charles, give more timely updates on news releases that often lag by hours or a day on SA.. from what I understand most of their ops are in India now? cust service and ‘editors’ not sure, of course some in NYC and Israel. The world is ever changing of course. If the best/growing marketplace services are unhappy…what does that say about the place?? I see people moving to Substack and other sites to write. oh well. at least we have Tim and III. I get that ‘ad’ driven sites don’t really work anymore but there is a lot of competition for investment service dollars. Best to all. Bea
Charles: OT, but…
— You can turn off e-mails coming from SA within its website. It took some searching to find the right pages (a few) and a few tries before I got it under control. (For a while, SA would resubscribe me whenever I added a new ticker symbol.)
— You can set up sub-folders in your computer email client to intercept and hold mail from SA or anyone else. I redirect and park advertising mail in a “Shopping” sub folder. I check it as needed. You can easily mass delete from there.
— I don’t use mobile so I don’t know what your ad display issue is. On my desktop I use a combined adblocker / cookie blocker with carve-outs for safe sites. You could also try bumping your browser’s privacy and security settings up one notch from Standard to Strict. Just suggestions…
Hi Bea, I believe the number of free subscribers is still 3. All free subscriptions expire after one year, but an IG Leader can add back a free subscriber as long as they don’t exceed 3. I’m still waiting for other roles to be added such as analyst or admin, etc.
I guess we’ll see Robin I asked for clarity on the comp subscription so I can make other plans..perhaps my service has too many freebees and I am on the chop block! lol. Who cares really. I just have too much time on my hands in caregiving and it gives me something to do, I can watch Moo Deng vids on Threads instead!! Again nothing is ‘free’ for sure, there are expectations I found out and ‘friendships’ in one case in particular were superficial. And that is why I always keep my identity private on all social media esp financial!
BPYPO and BPYPP
Anyone own these two preferreds?
I own both in Wells Fargo brokerage account and the recent dividend payment was not the full amount that was declared even including foreign taxes that got withheld. I contacted Wells Fargo and they say they paid what Brookfield paid. I emailed investors relations a few days ago but have not heard anything back.
I am curious if others own these and if they received the full payment.
Thanks
Brett ….I am the unfortunate owner of 1000shrs BPYPP @ Schwab since 2019…..Full payment was made 9/27…divided into 2 payments………
$377.86 & $27.84
Hope this helps
Thanks. I didn’t receive the $27.84 as I am the unfortunate owner on 1000 shares also. Sounds like another call to Wells Fargo is needed.
Brett,
Like Eyeman, I received the dividend in 2 payments for the full amount. More concerning to me is that the payment I received for March, 2024 was also received in 2 portions with the primary portion being labeled as “Return of Capital”, which they have done a few other times over the last 3 years. Does that designation reduce the issued and callable value? I’d appreciate anyone willing to take me to school and explain this to me. I’ve done some research but felt the answer set seemd a little fuzzy.
Monk,
Looking back at my last three years of K1 forms for BPYPO and BPYPP the distributions amount have always been in the guaranteed payment for capital box. I don’t see any prior year return to capital. I have had return to capital happen on a preferred before with Hersha hospitality and it lowered by cost basis however when they redeemed the preferred when the company sold I got $25.00 a share which was the call value. In the end ……the return to capital on the dividend payments made me have more capital gains the year the preferred got redeemed. It was a long term hold so tax bill was better having dividend classified as return to capital.
Brett, appreciate the detailed reply. This is making sense via the K1 as indicated. It just got my attention that Schwab labeled this payment as Return of Capital for this last payment and not as a Dividend which has been its normal action outside of a couple of other payments the last few years. Thanks again for helping.
Monk,
When I held BPYPO and BPYPP (at Fido) I too received my dividends in multiple parts. I used BPYs notices to match up my amounts with what I saw in the notice. Here is the notice from BPYs pfds’ divs:
https://bpy.brookfield.com/sites/bpy-brookfield-ir/files/brookfield/bpy/tax-information/Tax%20Documents%202024/BPY%20Distribution%20withholding%20Q2%202024%20(003).pdf
If it doesn’t open up, you can grab it off their site. It’s found in the “Other Tax Materials” heading:
https://bpy.brookfield.com/bpy/preferred-units/tax-information
Quick question folks…… I hold FTAIP, having bought it a couple of months ago as a quick place to park some cash knowing it was going to be redeemed. If I sell it today rather than waiting for redemtion on 10/30 do I still get a piece of the floating dividend accumulating since early September? If I do per MBG’s comment in the post Some Interesting Redemptions I get 27 days rather than 44 days.
dj – If I understand you correctly it sounds as though you are asking if FTAIP trades with or without accumulated dividends. FTAIP is no different than any other baby bond/preferred – they do not trade with accumulated/accrued, BUT, you know why Mr. Market will pay 25.26 for it right now instead of just $25? It’s because he’s willing to pay you for some of the accumulated you would be entitled to if you held to the call date. So your answer is sort of a mixed bag – you’re not entitled to it, but you end up getting some of it thanks to Mr. Market.
2WR….. Ah, so if I sell now I get no accumulated divy, but if I hold till redemption I do. However Mr. Market will pay me 26 cents over par now. By my calculations it’s basically a wash if I go ahead and sell it! Tempted to go ahead and sell it and buy the other that is going to he recalled. I’ve made a whole chest freezer of steaks in two months time. It’s a little harder than than shooting fish in a barrel, but not much. Thanks! By the way hopefully you are far enough from the utter devastation Helene delivered to the Tennessee/ North Carolina mountains? Those folks got sent back to the 1700s with nothing. It’s terrible.
Dj – buying called bonds at a premium as an alternative to money sitting in a money market is a boring game I play frequently but understanding how much premium to pay or how much is enough to give up to sell is another story for another time…. Been there done that on here before more than a few times..
And yes, we were spared here from Helene but the irony of it all is that if ever I succeed in getting this place sold, I’ll be heading to the Asheville area to a retirement community that I committed to 4 months ago… and my son lives in Asheville….. Despite what you’ve heard, it’s probably even worse, but thankfully my son’s house didn’t sustain damage but no indication when water and electric will be restored.. Cell’s been sporatic at best… My community fared better, and had generators to boot and now has electricity restored and water as well… So ironically my son and daughter in law have a place of respite from their electricless house because I’ve not yet been able to relocate
2wr….. I was thinking about loading up my camping gear and heading to the Great Smokies for a few days of peace and quiet, but any thoughts of that is gone now. I always stop in Biltmore Village and eat lunch both coming and going. My favorite restaurant had water up to the roof I think!
Yup. so I’ve seen…… Biltmore Village – the home of the ritziest McDonald’s in the entire nation……… I wonder if the grand piano survived…….
Dj,
You understand.
However, selling FTAIP and buying FTAIO is a bad idea:
FTAIO (the other one likely to be redeemed) closed today at 25.82.
If they redeem it on the earliest date (12/15/24), then at 25.82, you’ll take a $0.32 per share loss.
Pay $25.82 per share and receive $25.50 on redemption:
1. The final $0.50 per share dividend (div pay date = call date, so full divvy).
2. Redemption price of $25.00
If (like they’re doing with FTAIP) they redeem it AFTER the 1st call date, then you’ll get some accrued amount of the 1st floating dividend (or sell it in the market at a price above $25, as 2wr explained so well), but I’d say it would have to be at least 5-6 weeks (i.e., late January 2025) to accrue that $0.32 you need to avoid a loss.
mbg….. I agree buying it at $25.82 is nuts. Haven’t looked at recently and didn’t realize it was up there. I bought FTAIP right at par and will come out fine. FTAIO is not a good deal……..
I’ve got a question about asymmetric bets on the US presidential election. That is, bets that pay off more than they lose if one party wins. There’s a belief that the value of preferred stock in Fannie Mae and Freddy Mac is a positive value bet. If Republicans win they should double, if they lose, they’ll drop about in half, meaning it’s a good bet if the odds are 50:50. There’s a more complete description here: https://archive.is/o69l0.
The logic seems reasonable to me, although I haven’t acted on it yet. I’m wondering if anyone knows of any equivalent bets on a Democratic win that it could be paired with. Is there a similar play that pays 2x on a Democratic win while losing only .5x if they lose? If one can bet on both sides with positive odds, you’d seem likely to do well regardless of outcome.
Anyone have suggestions?
Short DJT or buy puts?
(But I don’t think there are any certainties about the future of Fannie/Freddy.)
Nathan
Interactive Brokers
Election Forecast Trading Starting Thursday at 5:15 pm ET
Pending regulatory acceptance, IBKR plans to launch trading in election contracts on Thursday, October 3, 2024 at 5:15 pm ET.
Wouldn’t that be a symmetric bet?
If the market prices it at 50/50, it would be roughly symmetrical.
Even so, it only takes one asymmetric bet on one side, and one can hedge it with a symmetric bet on the other side.
E.g., if one has a bet for $100 that pays off $200 on GOP win and $50 on Democrat win, then a separate $50 bet that pays $100 on Democrat win and $0 on GOP win can hedge that.
The plan to get 12% total return on investment grade preferreds in one year! Tim posted about buying BHFAN with the goal or expectation of achieving that. I decided to take a look at what would be required for that to happen. It is pretty simple math using 10/2/24 numbers:
BHFAN current yield = 6.29% (4 fixed dividends of 0.3359/todays close @ 21.36)
Ignoring dividend reinvestment we need 12%-6.29% = 5.71% capital gain
So the price would have to increase from 21.36*(1+.0571)= 22.58 by 10/2/25
IF the price increases that much, the current yield would be 5.95% for a reduction of
-0.34% which is not an earth shattering kind of move. Being investment grade, it is reasonable to consider this yield in relationship to the US Treasury 10 year plus a spread. Assuming the spread remains the same, the question is whether the UST10 falls by -0.34% in one year. While not 100% certain, my personal bet is that is has a >51% chance. Which begs the question about how other IG preferreds MIGHT change with the same -0.34% change in interest rates. Hint: many other IG issues would do similarly well or better. . . I can publish the list if enough people are interested.
IF and this a big if, interest rates fall by that much or greater, we should have another banner year in preferred land. Not as much in baby bond land though.
I bot 7.375 TRNT.PRC AT 25.16 which given 9/6 ex date is a stripped price near 25…the TRNT.PRC/pff pair is testing 3yr uptrend (outperformance)
TRNT.PRC??????????????
mj and 2wr,
I bet it’s TRTN-C. 7.375% coupon that closed at 25.16
Tex the 2nd,
Please publish the list.
Thanks
James F
Thanks for putting numbers on it! I’m wondering though why you have confidence that the 10-year rate is more likely than not to fall by that much or more in a year. As I mentioned in the other thread, the forward curve based on futures prices projects a 10 year rate up slightly after a year, then continuing to rise for the next 5 years: https://derivativelogic.com/forward-curves. Is there some likely event you think the futures market is missing?
Nathan,
1) Before I did this post, I did one as a reply to Tim’s original “Targeting 12%. . .” that questioned whether the gain would be achieved.
2) In this post, I said I was >51% confident, which is not a “bet the farm” number.
3) The question on whether UST10 will fall by that much is mostly tied into the “are we in a recession” or not call. There are lot’s of smart people on both sides of that forecast. If a recession is declared, then my confidence of a -0.34% drop in UST10 goes up to ~ 95%. If there is NO recession, my confidence goes down to maybe ~15%.
4) The accuracy of forward curves is less than perfect. If they were accurate, you would just position your portfolio 100% with interest rate futures, set back and become the next Warren Buffet.
5) BOTTOM LINE: if an investor does think a recession is imminent and/or believes the forward curves, then Tim’s 12% is a good bet. If there is no recession, then you should expect maybe the current yield of ~6.29% as the upside for one year.
Thanks for the great answers. I do appreciate your insight. You have a lot more experience here than I do, but this matches what I’m thinking. The one additional case I’m thinking of is that the increased probability of a wider war in the Middle East, Ukraine, or Taiwan might also increase demand for long term US treasuries even without a recession.
Tex, Sort of like tails you win or heads you win, just one or the other gives you out of the ball park or you get to second base.
Rates are going up: If rates are rising in this environment, I question whether the low in the 10 year was the day the fed cut.
I wish that were not the case as I have a lot of long term bonds, but it appears it is true.
Yes. Starting to look like the economy is more resilient than expected and long rates are rising to reflect that.
I wonder if 2s10s will invert again.
lt-
Rates are going up? How do you know? Cool if true.
I’d be willing to guess that back-end yields have settled in for now and might wander around. On the front end based on IRX (13-week bill index), there’s another rate cut expected, but not two, which I find interesting. IRX did a good job of anticipating the first two.
Yes, it’s my opinion the low in longer term rates was the day the short term rate was cut. I should have said long term and I lament it appears this way .
What the heck? :
“The board of directors of Edison International (EIX) today declared the following dividends, payable Sept. 15, 2024, to shareholders of record on Sept. 1, 2024:
A semiannual dividend of $26.875 per share on the 5.375% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series A
A semiannual dividend of $25.00 per share on the 5.00% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series B “
Gary,
Looks like they’re $1,000 liquidation value pfds that haven’t reached their reset date yet so they still pay at their current coupon rates.
$1,000 X 5.375% = $53.75 annual rate per share.
$53.75 / 2 = $26.875 semi-annual rate per share.
$1,000 X 5% = $50 annual
$50 / 2 = $25 semi-annual
This page shows the two EIX preferreds:
https://www.edison.com/investors/financial-reports-information/debt-preferred-information
According to the prospectuses,
EIX-A 5.375% resets on 3/15/2026
https://download.edison.com/405/files/202210/prospectus-supplment-fixed-rate-reset-cumulative-perpetual-preferred-stock-series-a.pdf?Signature=K12u1hLZZrQfQzrgEf8sb6lFHxo%3D&Expires=1727946840&AWSAccessKeyId=AKIAJX7XEOOELCYGIVDQ&versionId=Stq5PUupN_CM4hgzMaMjuekpD_IUzkNj&response-content-disposition=attachment
EIX-B 5.000% resets on 3/15/2027
https://download.edison.com/405/files/202210/prospectus-supplement-fixed-rate-reset-cumulative-perpetual-preferred-stock-series-b.pdf?Signature=Yj7j76su0b687GVbMEcbzutQ2jo%3D&Expires=1727964837&AWSAccessKeyId=AKIAJX7XEOOELCYGIVDQ&versionId=gdBQZAW_SDQVGPQNAF05ff7gVUxNnKSO&response-content-disposition=attachment
mbg
Thx- it threw me because they listed them separately, and they aren’t listed on quantumonline.
yw, Gary. I knew EIX only had the SCE pfds that trade publicly, but I checked QOL to be sure. Then I went to EIX’s website to find those two.
“Oh lord, won’t you buy me a Mercedes Benz!” And I need a 5%+ money market fund to get one. One of the common themes on III is along the line of “where can I park my short-term money to get a good return since 5% MM funds are going away?”
One alternative to consider: PSA-H
Consider all 14 of the currently trading PSA preferreds, ranked from highest current yield to lowest:
CSV format, ticker, coupon yield, current yield
PSA-H,5.6%,5.62%
PSA-L,4.63%,5.27%
PSA-I,4.88%,5.24%
PSA-J,4.7%,5.23%
PSA-O,3.9%,5.21%
PSA-P,4%,5.21%
PSA-Q,3.95%,5.21%
PSA-N,3.88%,5.21%
PSA-K,4.75%,5.2%
PSA-F,5.15%,5.16%
PSA-S,4.1%,5.15%
PSA-R,4%,5.12%
PSA-G,5.05%,5.09%
PSA-M,4.13%,5.09%
The current yield for the lowest 13 coupon issues ranges from 5.09% to 5.27%. Some issues are immediately callable and others have not reached their first call date, but the current yields are in a tight range. The outlier is PSA-H with its 5.62% current yield. Clearly the market is pricing it as if it will be imminently called. It’s first call date was 3/11/24, so they could call it today with a 30-day notice. In the meantime, it traded below par, aka $25.00 for the last few days. So, IF they did call it, you would get the 5.6% coupon plus a small capital gain. We do know that PSA is serial caller and they will call any issue the second they can float a new issue with a lower coupon yield. They have called ~ 14 issues in the last ~ 5 years. It is unknowable how soon PSA can issue a new preferred at maybe .25% lower interest for a 5.35% coupon. All of the preferreds are investment grade at A3/BBB+, which is not money market safe, but is one of the highest rated issuers of preferreds.
If it was NOT priced to be imminently called, it would be trading at @ 26.48 to match the highest yield, 5.27%, of the other 13 say. If that happened you would have a nice capital gain opportunity.
We own this in many accounts and might be adding more, but we are NOT whales moving the market price.
good comment..psa/prh/pff pair has seen psa/prh outperform for the last 3 years..however the pair went from near 3 sigma rich in may 2023 to near 3 sigma cheap today .. no sign of reversal
My favorite preferred stocks. Amazed there are still that many out there past the call date. These are less risky dependable. Not mentioned much here.
I hope they never get called. I need the eggs.
and now I see 14,000 shares to buy above last sale to be filled at the open–and there are 13 mins left. Tex, I think your posts move markets. I prefer some tax free bonds likely to be called.
LT, unknowable how much influence any III’er has to move the market. 45 minutes into the trading day, 8,553 shares of PSA-H have traded. Zero shares traded in the pre-market. Currently showing 24.95/25.00, so still attractive as a MM alternative.
Agree with buying munis likely to be called, but many people have IRAs/401Ks where tax free does not help. You need ~3.75% tax free yield to match a 5.6% taxable yield for highly taxed folks. If you live in a high tax state, you can forget about it. Even in low/no tax states, tough to find that that yield in size for investment grade in any maturity longer than ~ 6 months. Higher odds of higher returns with PSA-H imo for most cases.
LT – how do you track munis likely to get called? Seems pretty tough – even when you notice a refunding issue that identifies bonds to be called, it’s awfully difficult to happen upon any of the targeted maturities.
may be just me but comparing a perpetual preferred stock to a money market fund seems like a stretch
I am with you, mj
Money markets are extremely safe places to park money. Essentially no risk to principal*. Any of these other plays involving longer term issues carries some risk to principal (some are pretty substantial risks).
in many cases, all it takes is for the price to drop a few cents at the time you need the funds and you have lost money. Just doesn’t seem to me to be a good “deal” to chase a 0.1% yield improvement on cash I may need any day.
That all said, I invest in some short term things (like preferreds that “pegged to par” because they are likely to be called, etc). – but I view parking cash as something completely separate because I don’t want my ability to get my cash to be contingent on a stock price moving in the right direction. Maybe it is just the view of a few of us?
* Only one MM fund has “busted the buck” in this century (AFIK) – the reserve fund. I owned a minuscule amount of it (less than $20). it went under in 2008 because it held some Lehman paper (about 1% of its holdings), but folks panicked and drove it under.
I got something like $0.97 (per dollar) back pretty quickly, and the rest dribbled in. IIRC, we got back over $0.99 in the end.
As a result of that failure, the feds have strengthened the rules/protections for MM funds, so it is even harder for them to fail.
Private, my understanding is the Fed changed the rules a while back. Now the MM fund can freeze withdrawals for a limited number of days and can limit the amount that can be withdrawn at any one time to prevent a run on the bank so to speak. Also they are not required to return a 100 cents on the dollar.
MJT and Private, I posted this here on III, not on the “Investment Advice for Widows and Orphans” site. My assumption is that if you are here reading about prefs/babys/terms you understand there is always risk of capital loss. Yet, many posters here have posted along the lines of “what do I replace my 5%+ MM funds with.” And the difference is NOT chasing a 0.1% increased yield. MM yields are down and heading lower every time the fed cuts the funds rate. The largest Fido and Schwab MM’s are in the range of ~4.6% to 4.8% today. So a PSA-H with a 5.6% coupon is closer to a 1.0% advantage instead of the 0.1%. Let the Fed drop another 1.0% by year end and the advantage will go to ~ 2.0%. As long as investors understand the risks of any preferred compared to MM funds, I have no problem using them. Like I mentioned in the post, we hold PSA-H in many accounts. We literally do manage some accounts for widows and orphans and they do not hold it, gotta stick with sinking MM funds or others for them.
Would write more but have to go work on my post for the “Investment Advice for Widows and Orphans” site.
Tex, not so much for the ‘widows’, but you might be interested in this article from Visual Capitalists about where the ‘orphans’ generation is investing their money.
https://www.visualcapitalist.com/charted-the-most-popular-investing-strategies-by-generation/
If you’re looking for something with a 5%+ yield, you might want to check out WFC-L. It has a 7.25% coupon and currently offers a 5.85% yield, plus it’s QDI eligible. You mentioned PSA-H being subject to call—well, WFC-L is a busted convertible and now functions as a perpetual. Personally, I think rates will drop, and that could push the price up. I bought in last year and have seen nearly a 25% gain already. While WFC-L is lower rated, I feel pretty comfortable holding onto it long term.
I am calling WTFCP a 5yr 6.875% core holding now in my RothIRA w its 5yr T protection on float, it was xd today and my stink bid at 25.05 (no div) hit. SPAXX sweep is down to 4.60% looks like SGOV is still above 5% as it will lag. Hopefully WinTrust is not on Avi’s banks to fail list! lol.. omg the humanities sky is falling…. Bea
Avi is narcissistic and can never be proven wrong — that’s because he qualifies every prediction by saying “it might go up more before it goes down” and vice versa.
https://www.youtube.com/watch?v=VY3ruHbogo4
Bea-
I have a bunch of WTFCP but am expecting it to be called in July 2025. In the meantime, it seems likely to hug par and provide a safe-ish hangout with a nice yield.
Tex,
Great information. PSA-F,G,H all have coupons that are 5+% and are callable. PSA-G is currently priced at $24.73 vs PSA-F&H priced at $25.00. PSA has not issued a preferred since early 2022–probably a function of the available interest rates. Assuming that interest rates continue to be lowered, I am speculating that PSA-F, G, H will all be called. So, I am going with PSA-G to get the 5.05% coupon and the gain between current price and the call price. Worst case has me holding a high quality IG preferred at 5.05% coupon.
good comment psa/prg/pff pair has seen psa underperform since may 2023 going from 2 sigma rich to 1.5 sigma cheap (3 yr horizon) ..on absolute basis 25 seems to be top of recent range as being immediately callable combined with propensity of issuer to call limits upside even though underlying etf has rallied
I’ve been edging into PSA but I keeping going back to WFC-Z(4.75%,5.48%). I don’t know if I’m being complacent about Wells being a GSIB but they did not suspend preferred divs during 2008 as shaving common divs were enough.
EXPERT MARKET ACCESS: Call Stifel and open an account with a broker. The broker should be able to access EM stocks. Mine was able , but he’s an office manager …not sure if that makes a difference but I doubt it.
Buy away…..
Then kiss your liquidity goodbye
Thanks LT! Can you give us a sense of the commissions involved as well as account size minimums?
Commissions? They make it up on the fly. I would approach the matter by establishing a relationship . Give the broker an account with some securities in it. I happen to have had a mid six figure account there for a number of years . That’s just my advice . Not really necessary but if you treat the guy / gal like a discount broker you’ll get discount service. I actually don’t j own what I’m paying .
Can they give you bid & ask, and how is the execution?
Are there any account maintenance fees?
Bid/ ask is what you see on IB .
I bid for 2000 shares and system showed 100 share bid. I’m still not clear if there’s a MM if MM would not be allowed to provide dealer quotes.
I don’t pay fees but I give the broker some business and have interesting conversations about his elderly clients . No names of course.
I was looking at SCE-H. It supposed to float starting 03/15/24 but it looks like it’s still paying the same distribution (the last ex-div was on 09/13). Does anybody know why is that.
Victor, It most certainly is not paying the same rate as March ’24 and before. It floated as it was supposed to.
And pig, even as rates continued to come down it will still be paying a higher rate than some other preferred. Backed by several million captive rate payers.
Charles M :
I am more than happy with my SCE-N shares. I have over a years worth of dividends in capital gains if I sold them, but then, there isn’t much to buy unless one would take on a lot more risk just to get the same 6.95%. The bond and CD markets are pretty much dead and MM’s are dropping to where they are just very short term places to hold some cash.
Victor, here’s the div history – the two most recently paid divs were floaters and the upcoming dividend floats too.
https://www.nasdaq.com/market-activity/stocks/sce.prh/dividend-history
Here is last week’s announcement of the upcoming floating div.
https://newsroom.edison.com/releases/edison-international-southern-california-edison-declare-dividends-6905095
good comment …i paid 25.03 for it..tks for show
2 sigma spam comment
LIBOR Era Ends September 30, 2024: Markets Brace for Major Transition
https://thefinancialanalyst.net/2024/09/05/libor-era-ends-september-2024-markets-brace-for-major-transition/
If we allow risk to be fear, then we are sure not to succeed. But, if we approach risk with proper planning and a good attitude, then most times we can minimize the risk and use it to our advantage. If you opt for a safe life, you will never know what it’s like to win
I am Azure
I imagine PennyMac will continue to ignore this and bypass SOFR.
KTBA:
KTBA: Does anyone know what broker will allow me to buy this expert market security?
7% CORTS seems a good buy.
Hey LT, you better move quick, because the KTBA price has increased a lot lately! Some folks have discussed access to EM brokerages. I think examples include odey or RBC. AFAIK, they will be “full service” and no online trades.
https://www.otcmarkets.com/stock/KTBA/quote#trade-data
Does anyone have anymore details on accessing the expert market issues? I must have missed the previous conversations.
Among other things, I’m curious about how much capital would you need to move to in order to gain access as well as the fees. TIA
Thanks, I’ll try rbc but first I’ll call a few full service brokers I know . The last time I called a full service broker on a stock it was Healthsouth at 12 cents and after ruminating on the issue most of the day Morgan refused the trade to “ protect me” against penny stocks. I was trying to buy a million shares. Ofc I would have sold at .24 but I like to say it went back to $20
Lt, and you retired from the business! You would think they could have you sign some paperwork saying they were not legally responsible. But a company I worked for, we had a contractor who did exactly that. The client wanted something done and he told the client it was wrong and instead of refusing had the client sign a disclaimer. The client sued and the Judge ruled even though the contractor had a do not hold liable contract he knew better and he shouldn’t have done it so the contract didn’t matter.
I could say more about projects I supplied and architects and designers involved.
Jeez, spellcheck typo… it’s Odeon, not Odey. I think Scott posted about this on the OTC / Expert Market link.
Thanks, Maine. I will give them a buzz Monday, but I didn’t consider calling Fidelity and asking if they can place the trade through their trade desk. I’m assuming anyone with accredited investor status is going to be given access to trade expert market.
While I did retire from the business I always segregated my trading account from my investment accounts as the former receives mark to market status and allows me to deduct the few expenses I have. It would come in handy only with a big loss.
On occasion I’ve had to buy investment securities through my trading account at IB and unless I transferred them out to the investment account at settlement or shortly thereafter I left them in the trading account. This has resulted in some unusual tax effects to my detriment as the munis in that account get marked up or down at the end of every year. As you may know a muni purchased at a discount result in ordinary income for the discount amount , at maturity, but I’ve been paying tax on the accretion each year. It’s a small amoun so I don’t worry about the tax effect.
Thanks LT, always good info…
Btw, my taxes have been a mess the last few years, am curious about setting up the account where it allows me to offsett expenses. Any specific resources you can reco to get more info?
BTW, I also think the NYCB bonds offer great value, esp for tax sheltered accounts. Last I looked, I slightly favored the felcor issue, more upside.
Have you looked into the old SJIJ and Phoenix issues? Those can also offer value, and both are available now (via bond desk) don’t need access to EM broker. The bid/ask can be wide.. but that’s fine if the price is right.
Oh, and I’m pretty sure fidelity doesn’t allow ANY trading in KTBA, only the EM names posted by Tex. I am 99% sure I have called and asked.
And while I haven’t trading EM names yet, I’ve poked around. I would be hesitant to post minimum $ or commissions here, as that info is likely confidential from the broker, don’t want to violate that trust.
Maine,
The only way to legitimately have trader tax status is to actually trade for a living. If you do hundreds of trades per year that doesn’t necessarily qualify you. My tax return has listed “ securities trader” since 1998 because I was registered in the industry ( series 7, etc ) despite not having any clients. I’ve been a firm trader, prop trader , and traded retail full time.
I would suggest you look at Green Trader Tax and read what Bob Green has to say but I don’t recommend calling him as he likes to get multiple professionals involved and it can be expensive.
Since I used a broker/ dealer firm’s leverage for many years, getting as much as 1000-1 leverage on my capital , there was always the chance of a massive loss I needed to deduct. I’ve had huge losses but managed to limit them to about 1 month’s income so the actual deductions aren’t that great. I think I missed out on long term capital gains treatment many times by leaving things in the trading account I wanted to treat as investments and while I probably could still have taken LTCG on those items , there was just so much trading that the cost of segregating it out for tax purposes ( in terms of my time and cpa time) was just not worth the struggle. Heck, I’m down to the last two weeks b4 filing now and am not finished.’
In short you’ll have to make a filing with IRS to change accounting methods and elect mark-to-market status.
anybody following NYMTI? First 3 month dividend was supposed to be October 1. No ex-div declared and doesn’t seem to be priced for a dividend. Hard to find any information.
I’m also waiting on this one. Quantum showing ex-dividend date is the same as the record date, I would think on Monday.
Hope so. I loaded up for the dividend capture it seemed underpriced for that But I don’t know all the details
.
martin and Rich,
https://www.nasdaq.com/market-activity/stocks/nymti/dividend-history
The NYMTI prospectus also says 10/1 pay date:
“Interest is payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, beginning on October 1, 2024, to the …”
We’ve seen that but it hasn’t been declared or priced accordingly and it’s supposed to happen at the next opening.. Makes it a concern that something else may be going on.
Martin and Rich,
Isn’t NYMTI a debt security? There would not be a declaration of “dividend” as the payment is a legal obligation and doesn’t require board action.
Mon. is the 30th. Relax…?
FWIW, I got a notice from IBKR stating ex is the 30th, so my guess is the 30th is correct. This is also the logical date as it started to accrue on 6/28.
but I’ve seen wrong info from IBKR before, so I wouldn’t be 100% certain. The prospectus is confusing, mentioning a record date of Sep 15th.
Martin-
Perhaps you were saying the declaration will be Mon, not payment.
Curious what percentage of the time that works. It would be a big violation for a broker to “ sell dividends” as a strategy for a client but that doesn’t mean it doesn’t work. I’ve noticed the effect where it seems the market sometimes “ forgets” about the accrued dividend or interest payment .
CMSC has an ex-date on 9/30 and it’s trading at or below the prices of CMSA and CMSD. It is probably a good opportunity to switch.
I had a conversation yesterday with a couple gentlemen. This may interest several others here. I’m looking at trying out what Private had mentioned he has done and it seemed like a good idea to start now. That is finding an asset manager to handle our accounts if I no longer can or want to. I liked Private’s suggestion of letting them handle one of our accounts and track the performance over several years. If things don’t work I need time to find another. The initial meeting was positive and I feel they know a lot more than myself , course they wouldn’t be in this business if they were not.
A couple sticking points that I had a hard time with.
It’s time in the market, not timing the market.
Being 100% invested, with maybe 1% cash equivalents
50/50 mix of stocks and bonds ( they were not specific, but they sounded like they considered ETD as hi yield bonds)
Everyone agreed we don’t have a crystal ball to see the future. But they expect 2 more rate cuts this year and more to follow. Short term they could be right. I have even said something similar.
Here is a major difference in thought and I could be wrong and just a stubborn old guy that hasn’t dealt with bonds a lot. So I will try to write this out to express it correctly.
Blunt and to the point. Companies who deal in long term debt. Banks, BDC’s REITS , PE, etc. bought and have held low yield debt for 10 or twelve years. Now the last two years rates rose and they were stuck holding this unless they sold at a discount / loss and rolled the money into new instruments. With rates coming down a rising tide lifts all boats. We have seen it with an older utility preferred paying 4% In contrast new debt has come to market the last 2yrs and it had to be issued at higher rates.
Several people on this forum myself included have seen bonds go up in price to the point a lot are over par. ($1,000.00 face value)
If rates go down even farther, these newer bonds should go even more above par. and older ones will get closer to par.
Sounds good right? but short term rates are not the same as long term rates.
If we go into a slowdown or even a recession the thinking goes rates will get cut even farther to stimulate the economy. We are seeing it happen right now in China.
Here’s the sales pitch. which return would you rather have, 10% annual or 6% ? No guarantee you will get that 10% but with 30% hedging you can limit your loss to 10 or 15% of your holdings. BTY, shooting for 10% return includes covering their expenses so actual return has to be higher.
I asked them about defensive or contrarian investing. They said they have done quite well following the herd in stocks like Apple, Tesla, Google, Meta, Netflix, Amazon, Nvidia etc. They did say they look at the fundamentals like P/E and all the other metrics and prices don’t make sense but feel let your winners run.
P.S. the account I am offering to let them manage is 2/3rd cash and 1/3 preferred and one common. That one common generates 1% positive to negative returns daily and is responsible for that account being up 27% year to date.
Final analysis, not just this account. Is their acumen good in both a bad market and a good market to make it worth hiring as an asset manager? Be aware I don’t consider a 10 to 15% drop the end of the world, panic mode sell everything.
Charles M……. My backup is my daughter and son. Both are pretty sharp cookies. Granted them rights to my accounts a while ago in case the unthinkable happens. Both are very accomplished at handling financial affairs (I trained them!) and secure financially.
DJ couple things. My kids call me dad, but they came with the marriage. Their dad left them when they were 10 and 12 and never kept in contact. Only my daughter lived with us for 2yrs after we were married and then left home. My son never lived with us. It’s hard for people who grew up independent to consider the idea of taking on the burden of caring for someone else let alone their finances. I have heard a few horror stories and experienced it myself with my father-in-law. My son is sharp and good with his hands but I don’t know about finances and prefer not to talk about it with him or his wife. My daughter is sharp and a great manager in her type of business but at 52 she hasn’t contemplated her own retirement even and having had a bout with cancer we might outlive her. I have talked a little with her but her focus is short term and on herself as it is with any of the me generation.
The only ones out of the whole family I might consider and show the ins and outs of managing money are our 2 other granddaughters but they live two states away.
After seeing my sis and my wife step up to the plate and take care of one of their parents or finances or both. I know what a burden it can be.
Charles M…… Guess I am lucky / blessed with our kids. I know a lot of couples who can’t.
Hope they can provide some history of success (not sure if privacy would omit that) — or, maybe you have friends recommending them. Verify & maybe trust (?)
My two sons ( early 40s *& early 50s) are great- they are already set to inherit everything ( they are also set to inherit quite a bit from other parents) so I’m not worried for them. They can either let what I have ride for a while and then find help or make their own decisions. The Roth can be taken as needed- soon or on the schedule of the IRS.
I’d feel bad if I set up mgmt for them and it went south big time.
Charles
I’d keep shopping, it sounds like a hard sell pitch to me.
I would prefer a manager who is more consultive and listening to your views and needs.
Great discussion Charles. I’m 58 and have managed my investments for 40 years. The thought of turning things over is nauseating to me. I get mad at myself for making mistakes, but gosh if someone else messed up an account I’d be furious.
With that said, at some point in the future I’ll need someone to at least be on standby if I either no longer want to manage my accounts or simply can’t. We’ve moved away from my home town, so I really don’t know anyone where we currently live. I do have some good connections, so could probably get some referrals when I decide to interview a prospect.
For me, I would not go with a firm that follows the herd. We’ve come too far and the market is too high to be involved. That’s just my opinion and maybe the market will never go down again (someone just posted something to this affect here). But I’m comfortable with very modest returns and live a pretty basic lifestyle. I just don’t want to take a step back. Good luck!
Rocky, agree. Someone who started training in 2007 didn’t have anything starting out to lose and has mostly only seen the good times.
Charles, I suggest you consider a “Robo Advisor.” This is a good fit for many people that do not want to manage their funds, due to a lack of time or interest or expertise. All of the major brokerages have them and the costs are generally less that using advisors like you are considering. They all use ETF’s and automatically rebalance for investment or tax harvesting reasons. Tax harvesting can make a material difference in taxable accounts.
Schwab has an interesting option that transforms a robo managed account into a simulated annuity. It does NOT offer a guaranteed return like an annuity, but manages the account to make its final payout based on whatever life expectancy you put in. Statistically it should outperform an annuity with lower costs and higher payouts.
You can try one of these for very low initial funding, pocket change for most III’ers. I think they are a great choice for a wide range of investors.
Betterment and Wealthfront are the two firms that offer them in addition to all of the major brokerages. I have NOT affiliation with any of them, nor a strong preference on which one you chose.
Thanks Tex, Schwab is where the test account is now.
I don’t see the point of a typical Roboadvisor that holds ETFs. That just has you paying fees on fees. (If the Robo did direct indexing it might make sense, but I haven’t seen a product like that.) Most people should be able to find a single low cost ETF that implements their desired investing strategy for a hands off account. It seems to me that VOO, VTI, or a target date fund would be fine for the vast majority of these accounts. If you want to get fancy, a 2 ETF portfolio should do it. I don’t think a 10 ETF Robo portfolio is going to pay back its AUM fee.
(I am also highly skeptical of the Schwab Intelligent Income product. A complicated and expensive solution to a non-problem.)
David, I agree that an investor can achieve similar goals without a roboadvisor. You can either do a single ETF or move up the complexity scale. An example of one step up in complexity is the “Couch Potato Portfolio” from Scott Burns which is a 50% broad stock etf and 50% broad bond etf, divide your account balance by two and rebalance one time per year.
There are many free ETF porfolios that use more asset classes, for example The Mama Bear Portfolio which uses 9 different assets, but they recommend rebalancing say every 3 months. And on and on. . . just depends on how much effort the investor wants to put in.
Link to Mama Bear Portfolio:
https://muscularportfolios.com/mama-bear/
You said: “I am also highly skeptical of the Schwab Intelligent Income product. A complicated and expensive solution to a non-problem.” I am interested in any less complicated, less expensive solutions to this issue.
The very old people I know are not looking for any more fixed amount per month income. They would like a replenishment model where they can depend on having a certain balance in their checking accounts. It would be great if someone offered an automated, tax aware version of that service.
David, I think what Tex was suggesting with using a Robo adviser set to model or be annuity like would be close to what you are talking about. Actually with known and unexpected expenses I would prefer having a little extra than what is needed so it can be swept into savings and that way I have easier access and a little peace of mind knowing I have a cushion I can do something with or cover the unexpected. I have enough at Schwab to be able to talk to someone in the concierge service so I will follow up with that idea next week.
Tex was talking about the Schwab Intelligent Income product:
https://www.schwab.com/automated-investing/intelligent-income
I was explaining why I don’t think it’s useful.
Thank you David for providing the link, I mean that. I am not familiar with everything Schwab offers. I was thinking or understanding Tex to mean a Robo advisor to take over managing the account so I Googled that and came up with this.
https://www.schwab.com/intelligent-portfolios
Your link makes more sense.
Honestly, All this AI stuff is just in its infancy and probably has kinks that need worked out. I was thinking and wouldn’t be surprised that these professional money managers use these same tools for advice and to make it easier to do their job and charge you for doing that.
The test portfolio I wanted an advisor to take over I have one more stock to sell when it gets to what I paid for it so I have a break even cost plus dividends and it has one trading stock I just sold Friday. The balance is BB and preferred I don’t mind if they liquidate to convert to a managed account.
This account is one I don’t plan on taking an RMD for approximately 5yrs.
I was thinking that Tex’s suggestion of a Robo advisor is an inexpensive way to see if that is an option that is workable. I didn’t realize it could be refined even more to a managed account set to distribute income.
The PIA that I have is I like what the holdings are right now in my wife’s IRA and the income it’s producing and at some point I turn it over to a asset manager who assures me that they can achieve the same income by reshuffling the deck and I have to have the faith they know what they are doing. Now in a quick review of Schwab’s site it did look like one of the options under managed accounts allowed you to pick individual stocks but I could be imagining that. I have to go back and look.
Tex, interesting link. I looked at the Papa Bear portfolio too. Interesting discussions about ETF’s here and on SA. I noticed Brian Livingston says it keeps losses small during Bear markets and under performs S&P 500 during bull markets but superior performance over a whole bull bear cycle. His picks seem geared more to growth rather than income.
As a preferred stock holder I follow this site and it has been discussed on here the ETF PFF. How it sometimes has a loss when an over par preferred gets called and there is a loss of unrealized capital gains. Because it’s a basket of stocks the loss averages out. Second, the Papa Bear system gives weight to which ETF’s did best the prior month with the suggestion to split between 3 ETF’s.
This suggests letting your winners run. The advisors I talked to had a similar game plan. The issue I have with this thinking is where are we at in the bull / bear cycle? The lowering of short term rates complicates the matter but people have a short term memory. Yes REIT stocks have been doing good lately as the storm clouds seem to be lessening but there has been too much extend and pretend and kicking the can down the road to I wonder what may happen in 2025 and 2026. I’m not trying to time the market, more like trying to guess which inning we are at in the cycle.
Over on SA there have been several articles like splitting 100,000.00 into 10 ETF’s with the comments for or against holding that many.
Here we have talked about doing our own ETF by buying stocks in different sectors and Tim’s list is a good example, although he does mention he might be too concentrated in several sectors.
My conclusion is spreading risk out with a ETF which has a basket of stocks is good and it reflects what I have done, although I may have a little too many and be concentrated in a few sectors.
I have an interesting dilemma as I am looking for safe growth and growing income to re-invest for the next 5yrs and my wife’s accounts geared for safety and income.
The Robo advisor I guess is one way of getting over my unease of letting someone else manage my money.
I ran a 6 month trial with the Schwab Intelligent Income product–low 5 figures. System has a mandatory 15% cash balance and the max yield was about 4%–neither of which was acceptable to me. My prior experience with investment advisors was not to my liking. And they charged 1.0% of monies under management. As fiduciaries, I believe they have become even more limited in what investments they are allowed to make.
My alternative approach is establishing a couple of SWAN accounts with low coupons (approx 4-5%), IG preferreds that have a current yield of approximately 6% and should never be called–preferreds issued during the low interest rate years, prior to the covid crisis and mandatory redemption dates 20+ years out. Establishing a target percentage of preferreds of banks, insurance, utilities, illiquids, CEF’s and other. And a target percentage of stocks, ETFs, CEFs, and an income fund. Schwab allows me to transfer a fixed dollar amount monthly to my bank checking account that is slightly under my average monthly yield. By maintaining a small cash amount in the Schwab account, I don’t have to worry about the variation in actual monthly yield.
I will watch performance for the next few years and tweak as necessary. Also teaching my financially minded son how to invest in preferred stocks in case it becomes necessary to replace anything that might be called.
Larry, thanks for your real life comments on using the Schwab Intelligent Income product. It clearly has a few negatives, so I guess the question is how it compares to an insurance company annuity? Hopefully there is a better alternative that allows a 100% automated approach. There are a gazillion options that we IIIer’s think are better if you relax the constraint and require human intervention. There is a reasonable percentage of society that does not or will not or should not do any interventions on financial accounts required to get consistent payouts. Consider that investors that hold individual preferreds/babys/terms maybe represent .01% of the US investing age population. That would be ~30,000 investors out of ~300 million USian’s. And the .01% might be generous on the upside. So what do you do for the other 99.99%?
Hopefully some other III’ers know of better alternatives. . . .
Once again, I have no affiliation with Schwab.
Tex, I have a similar approach to what Larry is doing, I have no ETF’s or income fund but have been looking. I hold mostly preferred and BB’s but have started to move a little into CEF and BDC’s and common. I have a few bonds and term holdings from 5 to 8yrs out and a few mandatory call holdings that are 30 to 40 yrs out and I have actually reduced those due to uncertainty.
I like that Schwab keeps 15% in cash even if it’s at only 4% as I am currently at 18%.
You ask if there are better ways? I would like it If someone out there had a Robo advisor that just took over what I have in my account and monitored for negative events of individual holdings and set a threshold to sell if there is trouble and replaced holdings as they were called with a similar quality holding.
I’m a generation younger than you and surmise that many of the people in your circumstances have large unrealized gains on common stock that is likely to simply be bequeathed and have the basis stepped up. While these are great accumulators, they are also golden (brass?) handcuffs, since it is unwise to actually sell the shares.
The only consideration, for me, is if the family will have enough money to pay for long term care in the event of an unfortunate circumstance. Otherwise, regular midwestern (protestant) behavior will just continue as normal. i.e. ostentatious spending will be frowned upon and personal habits will remain more or less the same.
If you had 5m, and invested 1/10th of it in common stock and were able to experience again what your generation realized then in another 35-40 years you’d have another massive sum (50m, 10m in todays dollars?) far larger than needed to begin with which you could not sell because of the step up basis considerations.
While there are several untouchable investments that look like this in my family portfolio, if I can cash flow long term care for my parents without selling in a down market, that’s what really matters. That’s the reason for using the instruments discussed here. Everything else is just noise.
It’s nice to think that investing 10k in CET or some other common stock today will pay for the education of my grandchild. That’s a forgone, behavioral, conclusion though. Long term care will ruin most retirees before any of that matters. Being able to have half risk on and half risk off investments and pay for long term care applies only to the top 5% of families.
(Kiplinger – thanks, father in law (RIP), for the subscription)
People with the top 1% of net worth in the U.S. in 2025 will have $11.6 million in net worth
The top 2% will have a net worth of $2.7 million
The top 5% will have $1.17 million
The top 10% will have $970,900
The top 50% will have $585,000
I’ve learned a ton from this site and appreciate the chance to read all of your respective thoughts. thanks
— Best advice I read today: “… regular midwestern (protestant) behavior will just continue as normal. i.e. ostentatious spending will be frowned upon and personal habits will remain more or less the same.” My parents lived through The Great Depression and I inherited the DNA – I am sympatico.
— Kiplinger subscription – LOL – I once wrote myself 10 investing rules to always remember. One was having a Kiplinger subscription, Forgot the other nine.
the description you give is my paternal grandfather, and I’m pretty far removed from the farm and his world, but the sentiment is strong amongst my immediate peers. I even worked for the Lutheran ministry but still encourage my friends to indulge a little. nice food, a German sport sedan, a trip to the old world in normal fashion. I don’t make more than 100k per year with spouse but already feel like the prince of Denmark because of the sacrifices my parents and grandparents made.
I’m in my mid 60″s and over the last several years have thought about how I would position our accounts for the time that will ultimately come where I can no longer manage them any longer. While I have two bright intelligent daughters, neither of them has shown any interest in learning how to invest and their husbands don’t have much knowledge either. I have talked to different assets management companies over the years and have never been impressed with any of them as they are more focused in creating a portfolio with a number of ETF’s and calling it good. Also, as with all businesses the person you set up the account with and have faith in, will most likely not be there 5 years down the road. My accounts put out enough income that should easily cover my wife and I’s long term care when we finally need it, so what I will probably do is when the time comes is work with my lawyer to have wording in our trust that states that none of the investments can be changed or sold while my wife and I are alive and the income only used to care for my wife and I. Once my wife and I are gone the kids can do anything they would like with what remains, but if they had full control while we were alive I would be concerned that an “Investment Advisor” could convince them that the needs for my wife and I could be met with a small portion of our portfolio and the rest could be free’d up for motorhomes etc., which I think would probably have a very bad ending for all involved.
As someone who already lives with their mother in law (I do like her!), the thought of spending any time with her and my children in a motorhome gives me heart palpitations. Absent someone to keep an eye on things, a robo advisor or trust seems perfectly viable, but it’s unfortunate to not be able to share something you think about with someone else. In that way, my father and father in law gave me a gift greater than the money itself, but a humble understanding of the way the market works and how debt bonds people to each other.
Charles M; Iam sure you asked them about their “fees”. I would suggest getting 2 or 3 references and how long they have had their account managed by them as well as what type of returns they have gotten over the last 3, 5, & 10 year periods of time. Have you ever seen “The Stats” on trying to time the market?? I have and its amazing if you miss out on the best 5 or 10 days how huge the difference can be. Iam not a believer at all in trying to “TIME THE MARKET”. Actually, I believe its next to impossible.
Good points Chuck. .82 flat rate of the account plus a smaller % over the year I believe. On the sales pitch they pulled that card on timing the market and missing out on the 10 best trading days. It’s a fact and pretty impressive.
The point I am stubborn about is I want income and yield first then I don’t mind collecting a little growth after that.
I was talking to a friend yesterday and he is 8 yrs younger and wants to retire in 5yrs. In his divorce he had to split his savings 50/50 with his wife and he figures it put him back 3yrs on retiring. He is a nurse and with doing overtime he makes 160,000.00 a year and has to fund his own retirement. He has the same savings as my wife and me.
Two different scenarios. I am looking at generating income and safety with the hope that if the market stumbles my accounts recover sooner. My friend is in a growth mode and he still has time if his accounts take longer to recover.
Example: In March 2020 I lost close to 30% in value I switched strategy and reallocated (sold) and did like Tim and others here and bought good quality BB’s and preferred and I was back up 6 months later while the stock I sold were still underwater. My wife on the other hand had COST and 2 growth funds and even though COST recovered she was still down 18% in Aug. 2021.
I bought IBM in 2002 it took 4yrs to recover to the price I paid for it. PCG-A took one year to recover. Then I didn’t need the dividend income and could wait for a recovery. Being in the market full time even with hedges like these guys are talking about and what I consider a frothy topping of the market I’ll stick to picking stocks on a individual basis, call it market timing if you want. Even these advisors consider the value metrics out of wack for these growth companies so one of two things have to happen. They grow their sales and profits really fast or the stock price comes down to be more in line with P/E and earnings growth.
Trade idea: NYCB sub debt trading OTC 649445ac7 due 11/6/28 ,
fixed to float at term sofr plus 3.04 (from memory) and should be floating now,
The yield premium over NYCB preferreds is substantial. Prfds are low 7’s
This is likely (depending what the fed does) is 8.45-10. the 8.45 would be at 3 pct sofr.
I’ve been long since 87.50 with a hedge on the preferreds and that has not worked, however I have a big profit on both preferred and the bond from when everyone though they were being taken over by FDIC and the common and preferred crashed well b4 the debt.
I’ve been both long and short this stuff this year
US market can’t have a large fall! Interesting podcast with Michael Green, who you may not have heard of. He is Chief Strategist and Portfolio Manager at Simplify Asset Management which is an ETF house. He is most famous for correctly forecasting the crash of the VIX funds a few years ago when he was managing Peter Thiel’s money. The exact profit was undisclosed but likely in the $250 million to $1+ billion on that one trade.
Mike is also semi famous for arguing about the “perpetual bid” under the US stock market, due to “passive” index buying, regardless of price and/or valuation metrics. He recently did a podcast with RIA manager Alex Shahidi presumably to talk about why he is negative on bitcoin. Three main takeaways from the podcast:
1) Does NOT believe bitcoin is a long term viable asset
2) Talks about the perpetual bid of the US equity markets
What was new to me was:
3) Makes the point that the US equity markets will NOT be allowed to catastrophically fall for the simple reason that so many USian’s retirements depend on it. Says that the government would have to stop in and bail out the markets in some way, similar to bailing out the TBTF banks in the GFC. Which prompts the question, how far would they let it go before stepping in?
I have no affiliation with Alex, Mike and/or their firms but found the podcast thought provoking.
Link to the podcast if you want to invest an hour, also available for free on iTunes:
https://insightfulinvestor.org/episode/-39-Michael-Green-The-Bitcoin-Bear-Case.html
I have been thinking the same for quite some time, PLUS, not just retirement accounts, but the US markets prop up a good part of the world’s markets – if we fail, there would be very major consequences world-wide.
Tex, you might be interested in The Rise of Carry, which came out a few years ago. It argues that the S&P 500 itself is the world’s largest “carry trade” (broadly defined). If the S&P 500 trade ever unwinds, it will be a disaster.
Cervantes, thanks for the book recommendation. I have not read it but will do so. Will be interesting to see how their arguments line up with Michael Green’s.
Why does the market always have to catastrophically fail (crash) to go down in some people’s view? Nothing wrong with a good old fashioned slow grind down month after month, year after year until bottom is hit. Isn’t it always what we do not expect?
FC, I suspect that are many III’ers like me that were around on 10/19/87 when the DOW fell ~ 23% on that Monday. Marty Zweig called it the Friday night before on Wall Street Week with Lou. Nobody else that I know of thought that percentage loss was possible in a single day. Electronic interconnectivity of markets made it possible. Of course they put the “circuit breakers” in place after that, which in theory would slow it down. Might not be the highest probability for a drop, but it ain’t zero chance either. . . Of course there are some traders that would love a drop like that. Easy money for them, while the vast majority of traders would be in pain. . .
For the record, some of our accounts have a beta of ~ .1 which hopefully insulates them from the worst. . .
Tex I loved watching Wall St Week with Louis Rukeyser.
A Poem of Undervalued Value (Written by Gemini about my favorite preferred today)
A yield of eight, a promise sure,
A security, both safe and pure.
Issued by a fund, of ’40’s date,
A shield of law, to mitigate.
Maturity, a half-decade’s span,
A call in ’26, a guiding hand.
Yet, here it sits, unloved, unknown,
A hidden gem, its value shown.
Why does it linger, in the dark?
A puzzle, a perplexing mark.
Perhaps it’s new, or simply old,
A secret, waiting to unfold.
So let us shine, a spotlight bright,
On EICC, a worthy sight.
A yield so sweet, a safety net,
A value, that we can’t forget.
You can have the combo of “8% plus worry”
or go with the GAM 5.95% prfd and have “5.8% plus call risk”
I’m too old to be tripped up by one of these. If there’s anything I hate more than low yields, it’s the possibility of losing money.
Since marijuana stopped relieving anxiety for me about 30 years ago, you can guess which one I took.
Here’s some money nonsense courtesy of my restless brain.
Since Oct 2023 Treasury has been issuing new debt with a larger than usual proportion of bills. The effect was to drain money from the Fed’s RRP facility, where MMFs had been storing excess cash, and push it into bills and financial market liquidity.
Now things have changed. The RRP is close to empty and bills ain’t paying what they were in the recent past. It wouldn’t be surprising to see short rates fall even with or below long. And the lower short-term yields mean less cash flow to reinvest. I think this particular form of market juicing is over. Still, the interest payments on the debt remain high.
The Fed might choose to stop QT next year about the time the RRP hits zero. China has announced monetary stimulus and is discussing fiscal stimulus. Will the party ever end?
Sen. Elizabeth Warren is urging the Federal Reserve and Office of the Comptroller of the Currency (OCC) to scrutinize New York Community Bancorp (NYSE:NYCB) more closely.
–SA News
The stock is up over 6%
Also from SA:
Barclays upgraded New York Community Bancorp (NYSE:NYCB) to Overweight from Equal Weight after a string of major moves this year — such as replacing management, reevaluating credit, and restructuring its balance sheet — puts the bank on more secure footing.
Good times ahead 🙃
HE WHO IS QUICK
TO BORROW,
IS SLOW TO PAY…
Moody’s Warns Growing Deficits Could Take a Toll on US Credit Rating
https://finance.yahoo.com/news/moody-warns-growing-deficits-could-231127273.html
That pesky rating agency! Don’t they understand that as long as you own the money printing press you can borrow ad infinitum? Moody’s needs to study up on MMT and realize that what’s been right for centuries is now just archaic thinking……. Sniff, sniff can you smell the sarcasm?
I don’t see myself as a gold bug. BUT, the central banks sure seem to be buying a lot of the yellow stuff. Just saying.
The Bank of England was selling at the bottom back around 2000, so central bank buying could be a contrarian indicator.
I’ve had eyes on NEWT since the insiders bought shares.
So, I picked up a few hundred shares at 11.98
I also have 400 shares of NEWTH
Like many of you, I transitioned to Preferreds once my CD’s matured.
My interest income is lower, but the recognized cap gains have more than made up for that.
I also bought 4 month CD’s under 5% yield.
Good luck all
Newman-
How can interest income be less than from CDs?
Less interest from less CDs
Should I be counting Pref distributions as Interest too?
CD’s pay interest, Preferred stocks pay dividends, but BB’s pay interest. At least that is what I think it is.
I thought you were speaking generically- as in ‘income’.
Should have kept it to myself 😉
I collect it, plus divs, distributions, and cap gains… might be missing something.
Back to my coffee….
thx
Newman …. . Well, a dollar is a a dollar no matter whether you call it interest or a dividend in my eyes!
After taxes in a non-retirement account, for me a dollar of qualified dividend is 80 cents while a dollar of interest is 68 cents.
this is a big deal for me as well
QDI is a huge deal for me outside my IRAs
what’s everyone best current ideas for securities that qualify for QDI?
Smart to move expiring CDs to Pfds and BB at very good rates. You won’t find the good rates in CDs and TBills soon after the next couple of Fed tax cuts. Load up on the 9% BB while you can get them. The prices should jump well above par when the Fed cuts rates and investors are looking for high yields.
BB price increase is limited by redemption date YTM. The perpetuals below par have more price upside though they’ve already made much of their moves up..
REgarding FEC,
The preference for odd lots to receive cash in the tender has been removed per an article on yahoo finance. I guess someone tweeting the preference isn’t appreciated
649445ac7 NYCB jr sub debt due 11/2028 YTM is over 10%; this adjusts to term sofr plus 304.16, but even with a 3% sofr the yield is close to 9.
So, right now the yield is well north of the preferred and the BONUS securities, which are in the 7’s and don’t have a short maturity (NYCB A and U)
Vanguard won’t permit purchases. No info either.
Moneymaking idea:
Many funds do buybacks of fund shares when they are trading at a discount to NAV .I’m not sure if Korea Fund still does this but for many years I had a friend who would buy shares and tender them into the buyback offer. I’m sure this would work with other funds.
The shares tendered are pro-rated UNLESS you hold an odd lot. So, if you own 99 shares the tender typically says you’ll have all of your shares scooped. If the fund is at a significant discount this is just free money.
I haven’t had the time to look at this recently, but the strategy would be to buy an odd lot on the last day of the offer and tender by what’s known as “guaranteed delivery.” This is merely a protect of the tender position where the broker is guaranteeing to deliver the shares at settlement. Guaranteed delivery is the same method used for delivering shares in a merger tender where you purchase shares at the last possible moment.
If anyone knows of any fund buybacks of NAV discounted shares, I would appreciate a post and we can make sure the terms call for purchase of the entire amount of an odd lot.
At one point in time we thought about opening hundreds of accounts and tendering each with an odd lot, but my securities lawyer said this was fraud.
I would have thought it was merely smart.
FEC is doing a tender.
https://x.com/blondesnmoney/status/1834682425265602773?s=46
ZTR – Based on this press release from March, 2024, it looks as though the parameters for a second tender have been met based on cefconnect data and should be upcoming shortly although I do not see any updated info stating so – https://www.sec.gov/Archives/edgar/data/836412/000119312524084792/d823267dex99a5i.htm
Virtus Total Return Fund Inc. Announces Tender Offer Program
HARTFORD, CT, March 11, 2024 – Virtus Total Return Fund Inc. (NYSE: ZTR) (“the Fund”) today announced that its Board of Directors has approved a series of actions intended to enhance shareholder value, provide shareholders with an additional source of liquidity for their investment, and provide the potential to reduce the Fund’s trading discount to its net asset value per share (“NAV”) over time. The actions approved by the Board of Directors are:
A tender offer (“Tender Offer”) to acquire up to 10% of the Fund’s outstanding shares in exchange for cash at a price equal to 98% of the Fund’s NAV (net of expenses related to the Tender Offer) as of the close of regular trading on the business day immediately following the day the Tender Offer expires.
The Tender Offer will commence on April 2, 2024 and expire on May 1, 2024, unless extended. If the Fund’s shares are trading at a premium to the NAV on March 29, 2024, no Tender Offer will be conducted. Additional terms and conditions of the Tender Offer will be set forth in the Fund’s offering materials, which will be distributed to the Fund’s shareholders.
If more than 10% of the Fund’s outstanding shares are tendered, the Fund will purchase its shares from all tendering shareholders on a pro rata basis, based on the number of tendered shares at a price equal to 98% of the fund’s NAV (net of expenses related to the Tender Offer).
Two additional conditional tender offers:
A first conditional tender offer for up to 10% of the Fund’s then outstanding shares at a price equal to 98% of the Fund’s NAV if the Average Trading Discount1 of the shares is equal to or greater than 12% during the consecutive 180 calendar day period beginning 30 days after the expiration of the Tender Offer.
A second conditional tender offer for up to 10% of the Fund’s then outstanding shares at a price equal to 98% of the Fund’s NAV if the Average Trading Discount of the shares is equal to or greater than 10% during the consecutive 180 calendar day period beginning April 1, 2025.
Further information about the Tender Offer will be announced at a later date and set forth in the Fund’s offering materials. If the provisions for a conditional tender offer are met, the Fund will provide additional information about such offers. This announcement is not a recommendation, an offer to purchase, or a solicitation of an offer to sell shares of the Fund.
1 Average Trading Discount means the simple average of the trading discounts and premiums, if applicable, calculated using the NYSE closing market price of the Fund’s shares on each day the NYSE is open for trading.
I need some help understanding when the floaters look at 3M SOFR to determine the paid dividend. I own NLY-F and looked at that one. The prospectus states they will determine the quarterly dividend on the “dividend determination date” and go on to define that at length in terms I struggle to understand! I see Annaly issued a press release on 8/7/24 stating the dividend for F that is payable on 9/30 to shareholders on record 9/2. I don’t understand how they determined the early August date as the dividend determination date! So how do you calculate the date? We are entering a period where SOFR will be changing as the Fed plays with the Fed Funds Rate. Any help greatly appreciated….
Looking at NLY-F prospectus https://www.sec.gov/Archives/edgar/data/1043219/000119312517236659/d417558d424b5.htm#srom417558_10 the language you need is under Description of the Series F Preferred. To generalize, you’ll ALWAYS find the info in the Description of XY or Z section of any prospectus
P S-23 gives you the answer, but yes you have to translate the gobblygook into plain English to understand…. When it says, “LIBOR will be the rate (expressed as a percentage per year) for deposits in U.S. dollars having an index maturity of three months, in amounts of at least $1,000,000, as such rate appears on “Reuters Page LIBOR01” at approximately 11:00 a.m. (London time) on the relevant Dividend Determination Date” and also “‘Dividend Determination Date’ means the London Business Day (as defined below) immediately preceding the first date of the applicable Dividend Period,” you have to understand that the first date of the applicable Dividend Period also means the payment date of the last coupon… So in other words, the next Dividend Period will begin on 9/30, a Monday. That means that the Dividend Determination Date will be on Friday, 9/27. Since this is talking about LIBOR, it states it’s officially determined at 11 AM London time… I don’t know of term SOFR varies anything more than once a day, so I’m not sure if 11 am specifically London time is still meaningful. So once you know 3 month Term SOFR rate is on 9/27 (you can know on that day) you can apply the formula of 3 month Term SOFR + .2616 + 4.993 and come up with what the coupon payment will be for 12/31.
Does that clear up the mud at all?
I’m still trying to find the redemption announcement for ETI-P. The company just declared the dividend on it and there was no mention of a redemption and can’t find it on their website. The only thing I saw was the notification from Fidelity. Has anyone seen the actual redemption notice from the company?
It is certainly not trading as though a call is imminent.
Well, it is today.
Here’s an arb idea, albeit a costly one:
DJT is $12.40
DJT warrants are 7.40 exercisable at $11.50 , nominally expiring in 2028
for time premium of $6.50.
The cost of shorting the warrants is about 300% apy at Fidelity, about .06 per day.
here’s the rub: The warrants can be cancelled subject to 30 days notice.
I cannot think of a spac –but there likely are a few–where the warrants have NOT been cancelled.
Given the lockup has expired DJT will likely cancel the warrants soon as they represent potential additional shares.
As a trade, you’d be betting the arb spread narrows. I saw this as a trade yesterday when DJT was down $1 and the warrant only .20.
If you wanted to be on cancellation, it would need to occur within 109 days to make money.
I’m ambivalent here, but if the spread widens a little more I’d take a shot with two ways to make money… spread naturally narrowing or cancellation of warrant.
In 2020 and 2021 I made a ton of cash– in the 7 figures– arbitraging spacs against their warrants . It was crazy time. I lost $110,000 on only 2000 shares of CCIV and it’s warrants before making 300k on it.
After the DJT deal was announced the stock went to $175 and the warrant was only $75.
This type of arb requires severe risk management and isn’t for everyone.
That kind of investing reminds me of a childhood friend who was an excellent pool player, but was poor and from the wrong side of the tracks.
When we were in our teens and I had my driver license plus access to Dad’s vehicles (think farm trucks) I would drive him to local poolrooms in the area to play men nineball for money. I would watch the action of the games. It was fun to do. Most of the time my friend won. The days he didn’t he would suddenly quit and say lets go. He always bought gas and whatever I wanted at the poolroom. One day I asked him his philosophy about gambling since it never seemed to bother him when he lost. He stayed he always went to play with x amount of money in his pocket that he deemed “extra”. If he lost it he put up his stick and it was time to go. Never thought more about it. That applies to this type of investment. Only play with money you can afford to lose and quit when it’s gone. Don’t add more and dig a hole. Personally I’m well enough off to live comfortably in retirement but don’t have the excess cash to play like this. I’ll stick to the less risk tried and true. Have fun though!
DJ,
You and I are likely in the same boat…I separate investing from trading. The trading account has trader tax status so I can deduct all net losses, The investing account is mostly AAA munis. It generates the income.
However, since all of the money I’m investing came from trading over the past 26 years(with perhaps 60 % during the financial crisis) I do take some calculated risks. I’ve never had a losing year in the trading accounts, so the tax status really only helps with biz deductions.
As I was saying I don’t see DJT v warrants as a great trade here.
The only visible signs I succeeded are a nice house and 3 cloned copies of my previous dog
I take more risk than AAA munis, but over the last couple of decades there has not been any wipeouts. On another note my childhood pool shooting friend and I drifted apart as as the song says ” a rich man goes to college and the poor man goes to work”, not that my family was wealthy either. Had a mother who was determined her kids were going to have advantage of a college degree she had not. We still ran in to each other occasionally and had good times remembering those days. Recently he passed away. Will miss those times we did cross paths. We all are getting older …… Time for me to do the weekly chore, vacuum the house!
This is clever. I have found lots of new ideas here that have spawn derivations that I try and sometimes implement. Could you share the mechanics of some of how the successful plays you made went?