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Why Bother to Buy Now

I’m not even hunting for ‘bargains’ today–what is the point of looking to buy unless you are locking in some short maturity baby bonds or term preferreds?

Income issues are pretty much all red today–fortunately only by nickels and dimes for the most part. The 10 year treasury is at 4.55% and in my mind is going to go higher – whether it be from stronger than expected economic news or from the massive supply from the treasury.

I see JPM still has a 5.75% 1 year callable CD hanging out on eTrade–I’m not even interested in that since my modest cash levels are getting 4.98%–which isn’t to shabby while ‘waiting’.

Housing numbers were soft today–but I wouldn’t call them a disaster–675,000 new houses sold versus 695,000 forecast. Consumer confidence softened a bit–but honestly all things considered 103 versus 105.5 expected and 108.7 last month isn’t really terrible–with gas prices, interest rates and the Washington clowns you would think folks would retrench further.

Well let’s see how the last 3 hours play out today — with the S&P500 down 1% anything could happen.

26 thoughts on “Why Bother to Buy Now”

  1. I’m a trader. I don’t like to exit the market too much because then there’s nothing to trade. Trading ptofits typically make up for paper losses though maybe not until the next bounce. With steady dividend payers the only real losses are defaults and bankruptcies.
    Party on, Garth.

  2. Buying! Four adds to existing positions on intra-day down-spikes at/near 52-week lows. Instantly re-upped all of them.

    No idea where rates are headed and am investing accordingly.

    1. Yeah, I had a couple GTC buy orders hit on some existing thinly traded positions today as they traded down

      1. Excellent Mav. Been a long dry spell but they are hitting again. We’ll be on this to the nadir of the cycle, whenever and wherever that is.

    2. At this stage anytime dividends, distributions, and interest roll in I just reinvest. CTA-A was purchased today. Just a tiny bit to open the position with what I had in two accounts. A good diversification BBB preferred. 6% yield. I pray they redeem it one day but I doubt it.

      Yes.. the account value can go down and has, but what I earn keeps going up as long as I do not take on too much risk and blow up a position.

      These two accounts were meant to be operated this way and only time will tell how it plays out. Just stick to the plan. The way I explain what I am doing is to say to my wife that someone(s) owe us XXX.xx per day. Diversified, minimize risk but don’t be too conservative, and reinvest the income.

      1. fc..Yes, and as long as your free cash flow percentage exceeds the inflation rate over time, you are pretty much golden IMO

        1. Lucky, no idea what inflation will be like 6 months or 2yrs from now. I can’t worry about something that hasn’t happened yet.
          If you told me the silver I bought in 1986 at about 8.00 an ounce was only going to be worth 19.00 after sale to dealer 37 yrs later I probably would have went out and bought ATT stock

          1. Charles..We don’t know what inflation will look like in the future, for sure. I think fc was referring to the compounding effect of reinvesting regular distributions as opposed to capital appreciation of investments that depend solely on price appreciation for profits. The cash flow keeps increasing even if the prices don’t.

            1. Lucky,

              I have other accounts that are invested in more traditional ways. Mostly maxed out every year retirement accounts for my wife and i. But yes that is the concept here. Let things compound. Use time as your friend. Keep paying the taxes out of pocket for as long as I can without withdrawals from the accounts.

          2. Charles, if you had told me that the silver I was selling in Jan. 1980 for $140 an ounce would only be worth $8 in 1986, I would have fallen over (I was shocked that it dropped $100 by April).

            Proof once again that God sometimes watches over fools. I was an idiot college kid who (with my then business partner) put every nickel we had into buying up physical silver retail – (people bringing in coins, jewelry, grandma’s silverware) and selling it to the smelter. I sold our last load the day before the market crashed. Pure, dumb, luck. (I have probably told this story here before).

            1. Deja vu Private. I ran into a lady one time I don’t remember when, Who told me she had worked at a business in LA that smelted Silver and Gold and she remembered the time people where selling everything. The family silverware , the coffee service, etc. She said they had carts and barrels lining the hallways they had so much stuff.

  3. I just sold my 2 weakest holdings at a small loss accounting for dividends:
    BOH / A
    RIV / A

    I don’t see how they move up from here without alot of risk waiting for rates to fall.

      1. Thanks to my friend, Gridbird, I own quite a few shares of NSS. Because its Flex rates, the non QDI (it is a baby bond, hence safer than NS-A, B, C, D. Preferreds). Because it is extremely difficult to buy ZIONL from Schwab without calling the broker, I decided to by NSS yesterday with my daughter’s IRA from CALL from AMM-A. Yes, it actually moved up more today. Another preferred small bank is from Tim’s CNNEP. Yes, I saw a recent article (probably SA_ reporting strong earnings for the latest Q report). I quickly bought just 150 shares. I placed a baby position of limit order at 22.62, Looks like it will not be filled. Last trade $23.23 with only 47 minutes before market close. In theory, MS-I is safer. BUT, MS probably was downgraded by some so called analysts. Yep, CNNEP is hidden jewel found by Tim no doubt. Thank you. Tim, I do understand why you took quick profit on the likes of HTLFP. Today, it stopped sliding, probably from STRICT no argument no DD followers or lurkers of your Best Income Investing. I kept all my shares of HTLEP. I own also UCBLP a lower coupon and probably weaker small bank. I use comparative price chart of the common bank share prices. Your CUBI does seem to have the implied balance sheet from the chart. I do not own any CD with recent near death events. I use my own sense to modify my cardiac meds, but will see one of my cardiologists this afternoon. I swim nearly daily, that keeps me alive.

        1. johnkcal
          I have bought and sold several thousand shares of ZIONL on schwab both using streetsmart edge and using their all in one ticket on the website. I have never had to call about this.

          Next time you call Schwab, ask them to walk with you through a buy and see what their systems are messing up. They are in the process of “re-imagining” all of their tools, and a lot are just broken.

        2. John, many CDs have a death provision to break the CD contract. It should be shown in the individual banks CD contract before purchasing. If that was the concern for not purchasing.

          1. My daughter is still focused on “dry oranges”, real estate residential rental. Yes, our rent was significantly under the market. Nonetheless, the repairmen of all kinds demand steep labor cost. For plumbers, they make more money than a cardiologist for sure. The best of Plumbing with fully equipped van plus his cute Asian girlfriend who accompanies him, set up a canopy so that he would not have work in hot sunlight (he told me that she is also tax deductable for his biz). Last time, he told me “please do not call me for any job under $600. NSS a bond gives more than 11% per year not QDI of course, I am betting that NS will not call due their high dividend rate preferreds. ZIONL need Schwab income group to buy via ZION common, then you click a link and then buy. Way too much problem for me with my condition. I need to swim and experiment with Amlodipine small dose because of Varsartain at low does of 40 mg gave me vertigo and then fell down 3 times at home, with bruises all over. FYI: Schwab tends to post dividends/interests one day later than FIDO or Vanguard. My MMP got called. I hate to bet all on EPD or tiny amount of MMP’s acquires OKE (drastic down as MMP lost its symbol today). Hence, NSS. I had boughgt quite a few ZIONL from FIDO as some other called. CCNEP got expensive, my limited buy was not even close as they had a great quarter. CUBI got darn good Q report as Tim correctly concluded. Then am I holding already too much of this jewel. Gasoline price at Costco up, probably due to production cut by Putin and the God awful crown prince of Saudi Arabia. So, I must follow Warren Buffett. He got tons of dirty oil, Chevron and XOM plus COP. I hate to buy ET because the native Americans treat me right when I travelled to their land and got sick. SO, EPD in retirement already topped out UBIT fear. Some non IRA. I did not sell small positions of Brookfield renewables. Some VDE (Vanguard). NSS still looks best with some CALL risks. Safe Bulkers continue to perform well along with most of the shippers (beware of GLOP preferreds, original owner has just the mother GLOG-A (I have small positions). GSL-B best balance sheet as I recall from Tim’s assessment. Price action suggest no problem with CMRE high coupons. Not so for ATCO the old Seapan and groceries perferreds CDR C. HMLPD. QRTEP. My guess: HMLPD, QRTEP probably more risk than CDR-C or ATCO. I am not big in selling at signficant losses. Perhaps the biggest risk is follow Putin and climate change. Wish our Southern gentleman would risk his impeccable impeccable reputation to CRY OUT in Day One Climate Change. Such a gentlemen. Sad. I thank you and Tim. Look at the equity market, what we have seems good bests IMHO.

            1. Most people wouldn’t complain about a cardiologist unclogging the heart and the usurious rates they charge (many times for not even showing up – a friend who had heart surgery saw a bill from the cardiologist for stopping by and saying hi for $5000 and another when they didn’t even show up).

              Of course we think that a plumber, doing blue collar work, simply aren’t worth paying what they charge – because blue collar and we look down on that kind of work.

        3. There are several of the TBTF which are fixed to float. WFC Q floated then was called. I believe R is next. Buy it right you’ll be fine. BUT if it’s not going to jump to 9 soon then there’s not much incentive to buy a pfd paying 6 when you can get 5 to 6 with 0 risk. Why risk a lot to earn a little?

          All the MS pfds are fixed. I E F K maybe a couple more. They trade flat w little reward.GS STT WFC FITBI all have interesting pfds. Down the quality ladder AHL SNV CFG VLYP and others all have pfds paying 9+. I never have liked CUBI its just too small for my comfort and Sidu and in my book management is an open ended Q.

          As for CD penalties I’m extremely frailer with these from days of old. Each bank is on their own. They get to keep all the money they collect w/o paying income tax. In other words if they have a penalty they don’t make exceptions on individual hardship basis. Except maybe full disability.

          I sold millions of MBNA five year CDs. The rate was so high, you could get out after 12 months and still have earned more than the 1 yr rate. …3 month penalty…..

    1. If your MM isn’t paying at least 5.00 look elsewhere……

      PCOXX 5.38 Federated Hermes MM

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