All rally’s now are looked at suspiciously as nothing has really changed for a few days–the UK has rearranged the deck chairs a bit and we had the Empire State manufacturing index come in pretty soft–maybe that is all we need for a relief rally.
My accounts are green–about time. I nibbled more CHS preferreds and have a low ball order in for a little Ready Capital (RC-E) which has not executed, but that is fine as it will come to my price eventually (I think).
The 10 year treasury yield is off just 3 basis points today–but maybe we will see some drifting in yields this week–giving us a little relief for a few days. Will still need rates to move slowly–up or down–we won’t see so much daily/weekly damage if we can just move slowly.
I have been using this website for over a year now. I want to thank all of you, starting with Tim, for the very educational dialog. I haven’t said much because I don’t yet think I have much worth to offer the group. I do wish to point out that in any endeavor, irrespective of one’s profession, it is times of stress like these when one learns the most valuable lessons. Disclosure: Based on the education gained, I have taken this opportunity to sell losers and trade equal capital into inv. gr. issues at equal or higher yield.
Again, thank you all, and best wishes.
George Tyson
George, No one here – though it’s a talented bunch for sure – started out knowing more than you do now. Sure everyone here is wishing for your success.
Tim,
You said or maybe hoping it will be a calm week. I have been looking for an opportunity to sell the last of our COST. This stock has 10.00 price swings in a day and last 3 months it been in decline, hitting lower highs before falling back and hitting lower lows. I set limit orders at 486.00 then moved it down to 477.25 and it still didn’t hit. With the last few weeks of market volatility, I was getting concerned then yesterday I read a Simply Wallstreet report that insiders had only sales and no buys for the last qtr.
I reset my limit at 466.25 and filled in partials today until complete.
No regrets if the stock moves up the rest of the week.
Some people here who have a longer time horizon to build up their portfolio have commented they are looking at common stocks again. COST is paying 3/4% dividend. With 5 months to go for when I hope to retire, I need more than that for income.
All rallies are to be sold until we revert back to long gamma and change the trend back to bullish.
Hold my nose and continue to nibble on investment grade.
Can you give a top 5 or 10 safest preferred list? I bought the TY’s you mentioned a week or so back. new to preffereds.
Thanks!
bob–I will put something together in the next day or two.
Good luck, Tim, I wish you well! Safe can mean a zillion things lol..Safe in terms of getting dividend paid? Safe in terms of getting capital back? Safe in terms of relative stable pricing? Safe in terms of not getting bought out and waldenized or expert marketed, or delisted? You have your work cut out, ha!
For example I suspect TY- is one of the safest preferreds…in terms of being paid. But its down 20% YTD. NSS is a credit quality flea bag dog quality wise, but its only down 2.34% YTD and if you include interest payments received its positive on the year. Im afraid some times one poses a question and really hasn’t defined what they exactly are looking for.
Here’s another example of safe but down 20% and short term maturity too, my good old TVA notes….I just bot TVC today at 20.60 average. 2.134% due 6/1/28 maturity and AAA/AA+ due to agency status. It’s down 20% YTD too… It’s also a YTM of 5.90% for a US agency issuer assuming I did the calculation right…. That’s 123 basis points cheaper than comparable TVA bonds in the big boy market and 27 basis cheaper than the 11 month longer TVE. Safe? Well as US Treas goes, so goes agencies so no reason to believe it won’t be subject to more downside when the Fed strikes again, but still, it’s a toe-in position that from the safe in getting your capital back point of view could hardly be better…. Fit my maturity range too.
But I assume you are like me, 2WR, slap on a maturity date that one assumes they will still be alive, and its a lot more palatable. I have bought several 2-3 year duration ute debt bonds that are down already, but I dont care as Im getting my principal back at maturity. Its just opportunity cost loss assuming I was a bit more patient, but I knew exactly what I signed up for when I bought, and that is what I am going to get.
You summed it up pretty good, Grid…..I have to always keep that in mind when I’m marking to market on some of these issues – that despite the paper losses, I’ll get exactly what I bot into originally come maturity, that is as long as I don’t mature before my notes do…
Im starting to toe into duration bonds now, a bit at a time. Only my local area utes that I trust. I feel compelled to honor a commitment. For last 10 years I have thought, if any extended senior secured or unsecured ute bonds ever creep over 6% Im in. I hesitated but at 6.2% I finally caved. Just slowly buying, just bought 5k more of a 2033 Empire District bond a bit over 6.3% today. Hope they drop a bit more so I will be induced to buy more. If I wind up in bonds eventually down the road, so be it. But I suspect the urge to trade will keep that from occurring ha.
safe meaning will be paid come heck or high water at par with a decent rate.
everything’s onsale now of course; just trying to get my feet wet with preferred. bought the EPRF and FPF etf and cefs.
Bob, since you are a newbee, just trying to fine tune your thoughts. You are aware that paying and “at par” are not automatically mutually compatible. There are preferreds today that have paid for almost 80 years and not missed a payment, and have not seen par since they were issued or at least in 50 years. I would assume if both are a priority you really can only look at term dated preferreds and short duration baby bonds. As those are the only ones that can possibly satisfy the latter criteria. But some of those arent of the best credit quality so that is something one must work around also.
I added a 2yr noncallable wells fargo cd at 4.5% from Fidelity…thats part of my don’t invest it money
Energy keeps running away from me, so today I set up a monthly T-Bill/Note ladder for next year. Easy to do at TDA. It’s part of my don’t invest it stupidly money.
Tim….thanks for the update….you prefer one over the other for CHS…I already own L and N….might add …thanks…Craig
Craig–not really a preference–I just stick to stuff under $25–I have the M–the highest current yield.
Tim, https://www.chsinc.com/about-chs/news/news/2022/09/14/chs-patronage-inc says the CHS intends to distribute $500M in cash patronage and $500M in equity redemptions in calendar year 2023.
How will they do that?
In looking at their latest 10-Q, https://www.sec.gov/ix?doc=/Archives/edgar/data/823277/000082327722000030/chscp-20220531.htm, from May, I see they had $369M in cash and $1.801B in long-term debt. Even after wiping out their cash, they’d have to increase their debt load by 35%. I guess they could do some sort of equity issuance, but wouldn’t that be just raising money from the same folks to whom they’re issuing cash patronage or whose equity they’re redeeming?
I’m sure I’m missing something obvious, but what? How do it work?