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Land of Milk and Honey
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Individual investor. Generally using index Mutual Funds or ETFs. Trying to diversify more (foreign in particular). Pick up tips & concepts, & learn more. I'm at alpha to keep a finger on the current moods & predictions... and so I notice up coming big financial news events before... More
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #23 195 comments
    May 5, 2014 11:34 PM

    I've set up this blog ...as a community place to share our investing ideas. Hopefully so we all gain more ALPHA!! It's a great way for my contacts to talk to each other at the same time, not just to me :).

    .

    All topics welcome. Investing, stocks, bonds, commodities, economy, politics about economy, and social (so we know who we're talking with). Please invite other investors! Stop by once in a while, or hang out all the time. Please post your questions, make a joke, or share your insights with us!!

    .

    My money has done well since I started this blog... so I'm hoping it adds value for everyone!

    .

    Only rules of the road are not to insult others, so state your view but don't call others names or put them down. Every view is valuable, if only to convince you, you are right!

    .

    This is Chapter #23. As the instablog gets long, I'll create a new blog & post a link at the end of the comments. Here's a link to the prior, #22: http://seekingalpha.com/instablog/11150861-land-of-milk-and-honey/2882293-best-ways-to-invest-whats-your-opinion-a-place-to-share-ideas-22

    .

    Links

    Regular poster Fear & Greed has instablogs outlining his ideas which are great! -- also SA articles!:

    seekingalpha.com/user/706857/instablog

    Regular poster User7 has instablogs with a specialty in CEFs & loves when ideas are shared!: seekingalpha.com/user/7415181/instablog

    Interesting Times has a fun Portfolio Challenge:
    seekingalpha.com/instablog/5038891-inter...-8

    Also his regular instablog: seekingalpha.com/instablog/5038891-inter...-50 It's more oriented to precious metals, & economic concerns (worries) than mine.

    As for the regular posters, you'll get to know us, if you hang around!!.

    Disclosure: I am long SPY, IWM, DIA, QQQ, LINE, CVX.

    Additional disclosure: ...and more... ask me if you're curious!

Back To Land of Milk and Honey's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (195)
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  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » -

     

    So what equities do you have your eye on... even if it's not a good buy in price right now.

     

    The market will either do down or up from here, and we'll all be wanting to buy... so it's a good time to get the watch lists ready!
    5 May 2014, 11:38 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    (LAZ)---- its weak today with the financials under pressure --
    Mid to upper 50-s as a target with a 2.5% yield . Superb earnings----last report & made a new high on Monday @ 50.60

     

    I'm waiting for earnings on a couple of other names that that report this week,, maybe another opportunity or two there .
    6 May 2014, 09:57 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    (GILD) - In my view -- the story is just beginning
    6 May 2014, 10:09 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    (MU) broke to another new high today --

     

    I believe it can be added on any pullback
    6 May 2014, 10:31 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » FG & everyone

     

    What about core holdings that haven't come up...? maybe not a buy right now, but good stocks for newer investors to keep an eye on for the next leg up, to build their core portfolios...
    6 May 2014, 10:34 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    L,

     

    "core" holdings that are inexpensive -- (JPM) (GS)

     

    they are weak now and are getting beat up --so they may get more inexpensive as they are tossed aside--

     

    scaling into these names at these prices is how an investor builds a LT position ...

     

    as an example the recent 20% decline that JPM sees in its trading revenue equates to approx .08 - .10 /share in earnings. That is on est. EPS of 5.60 or so for 2014 ...

     

    this isn't a call for a "trade" ---

     

    watch for a reversal in price action if you want to try and time and be more selective in your entry point ..

     

    I believe (GS) can get down to 150 where it has support and will be adding there ..

     

    Everyone can form their own conclusions as to whether this is meaningful
    6 May 2014, 10:56 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - To newcomers, I've moved onto Chapter #24, so come join us there!
    http://seekingalpha.co...
    8 May 2014, 05:36 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    (EZPW) (COH) (LULU) (ISRG) (FCA) (AKO.A)

     

    Every company on earth is on my watch list!
    6 May 2014, 04:16 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » Y

     

    Thanks!
    6 May 2014, 10:32 AM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    Southgent - the Morningstar chart you presented in the previous chapter is definitely not correct.

     

    For example, the section from the early 1970's to 1987. According to them there was 155 months for a 845% gain without a 20% decline. However from the fall of 1980 to the summer of 1982 the S&P dropped over 25%, with the S&P falling from 140 in Oct 1980 to 102 in August 1982. I didn't go back and look at other periods, but the chart is clearly wrong.

     

    http://bit.ly/1q8Fuwz
    6 May 2014, 07:40 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    DD: Good point.

     

    Yardeni shows a 27.1% down move in that period.

     

    Figure 4:
    http://bit.ly/1rpnonq

     

    I asked for an explanation in two comments to the Morningstar article, using the moniker "Gent1951" (comments 13 and 14). The Morningstar server treated my link to the Yardeni charts as potentially dangerous and refused to accept it. I then wrote another post giving the title of the Yardeni research so that it could be found by anyone interested.

     

    http://bit.ly/1g5bW9A
    6 May 2014, 09:00 AM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    Also it's clear the 1930's were wrong assuming Yardeni is correct.
    6 May 2014, 09:21 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    DD: I would bet on Yardini being correct, and his number from the early 1980s checks out.

     

    I used a YF long term chart of the S & P 500, moved the cursors to show the 1980 to 1982 period only in order to get a better view.

     

    Close on 11/28/1980=140.52
    Close on 8/12/1982: 102.42

     

    Down 27.1%

     

    The only way for the Morningstar chart to be "correct" would be the use of some funky numbers for the base points that eliminates that 27% down move.
    6 May 2014, 09:36 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    South

     

    Thanks for the info in the last chapter on the length of past bull markets.

     

    Here's a missive i wrote back in 11/13 where many were claiming that the bull market was "old " & tired

     

    Now as we go into '14 the cries will begin, as many soothsayers are already arguing that at 56 months (since the March 2009 low) this bull move is long of tooth. (Bull markets average 50 months in duration ) If you measure from those March 2009 lows, there is some truth to their cries. However, when studying the last 16-year range-bound stock market (1966 - 1982) one observes the NOMINAL price low came in December 1974, but the VALUATION-low (the cheapest P/E multiple, price to book value, etc.) did not arrive until August 1982. (S&P PE 7.7) & THAT date is the one used to measure the beginning of that secular bull .

     

    Now lets fast forward -- Similarly, the nominal price low for the recent 12-year range-bound market (2000 - 2012) was March 6, 2009. BUT given the valuation metrics used , we recorded the VALUATION low in October, 2011 (S&P PE 13.5) . Now measuring from THAT date shows the current bull market is only 25 months old . And that represents a quandary for the "Bear" argument ...

     

    It should be noted that the same folks that have predicted that this bull run will END in '13 have subscribed to the theory that the March '09 low was in fact the start of this latest bull run.. They held to that notion ALL year because of that fact. Calling tops, shorting the market , etc, etc.. They have been carted out feet first. Now, those that are left are moving the date for the END of this BULL move to early '14 citing the same "timing" element for their argument..

     

    I will now add ;
    Bottom line - its a secular bull market and that is what I am presently using as my backdrop for the equity market ..

     

    More on that topic in my update later in the week..
    6 May 2014, 09:45 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - U.S trade gap narrows in March

     

    March International Trade: The U.S. international trade deficit in goods and services -$40.4B vs. consensus of -$40.5B, -$41.9B in Feb. (revised)

     

    Is that a good or bad thing?

     

    What does export/input levels effect - including stocks?
    6 May 2014, 08:40 AM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    Since it was as expected it should have no impact.

     

    What the trade figures effect is the gdp number, but unless it's very different from expectations, it has no real market impact. In the long run it does impact the US$.
    6 May 2014, 09:22 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » DD

     

    thanks! That explains why I haven't heard much about trade balances... doesn't directly effect much (except maybe US$).
    6 May 2014, 10:57 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Covered all social media shorts here, twtr p yelp lnkd on the (TWTR) break to 35.
    6 May 2014, 09:49 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Replaced individual social media shorts with index shorts on (IWM) and Us financials.

     

    also short AMZN BAC GS
    6 May 2014, 10:03 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Interesting read

     

    http://bloom.bg/1g3eVz7
    6 May 2014, 10:42 AM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    Thanks, that is interesting.
    6 May 2014, 11:08 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    F & G: I have been making that same point to Macro recently in comments here. The FED now owns more than 50% of treasury notes and bond maturing between 2/15/37 and 5/15/42 and over 50% of a large number of other maturities.

     

    Click T Notes and Bond tab:
    http://nyfed.org/12yg38A

     

    The available supply for purchase by pension funds, foreign governments and other institutions is consequently insufficient to meet demand due to both the continued FED purchases (still at $25B this month) and their large existing ownership positions. Through both mechanisms, the FED creates an artificial shortage and drives up the price and lowers the yield, particularly on days when there is a risk off move. There are also a lot of long treasury ETFs that make it easy for non-traditional buyers of long treasuries to buy them easily, creating even more demand for those longer maturities.

     

    My last discussion of this phenomenon was in last Saturday's blog in the introduction section under "bonds":
    http://bit.ly/1g5vjPT

     

    In other words, it is more than just QE that is propping up bond prices artificially, but also the FED hogging supply of treasuries that are used as the benchmark for other rates.

     

    On that Morningstar chart that I linked, the blue and red graphs are clearly identified as "total return" numbers which would include dividends. It is not clear whether Morningstar is adjusting the S & P 500 price level by dividends (or some other number like CPI) in order to eliminate the 27% actual decline in the early 1980s, so that it can continue the bull move uninterrupted from October 1974 to October 1987.
    6 May 2014, 11:08 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    South ,

     

    I know u have -

     

    when i stumbled upon the article this morning -- I thought u wrote it !!
    6 May 2014, 11:29 AM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    AMLP went ex-dividend today. It's a pipeline mlp that pays a 6.2% dividend. I like it since you don't have to hassle with the special forms that you have to if you invested in individual mlp's - the manager takes the taxes out. The negative is you're paying the mgmt fee, but I like the diversity.

     

    If you're looking for growing income this is one to consider.
    http://bit.ly/1j8oYYN
    6 May 2014, 11:12 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    QE does not inflate bond prices. QE actually suppresses long bond prices by enticing investors further out the risk curve; which was always a prime objective.

     

    Hence; it is absolutely no coincidence as tapering continues; the riskiest segment of the equity market; IWM is weakening, and long bonds continue to rally; regardless of current economic data.

     

    I am trading these developments accordingly.
    6 May 2014, 11:18 AM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    Macro:

     

    This is illogical. I think you mean bond 'yields' not bond 'prices'.
    6 May 2014, 11:56 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    No; BC. I meant bond prices. In reference to yields, contrary to the consensus; QE drives long yields Higher by encouraging risk taking and "animal spirits".

     

    Removal of QE drives rates Lower -- as reduced risk appetite draws people back into bonds.

     

    This has happened at the conclusion of each QE cycle; I encourage you to study the charts overlayed with the QE cycles.
    6 May 2014, 12:09 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    Yes, I know the charts look a bit paradoxical, but the reason for that is that QE was considered good for growth. The growth expectation far outweighed what many think is probably only a small effect from QE on actual bond prices. Or at least that's what I thought the received interpretation was.

     

    I'm open to other interpretations but what you suggest seems illogical because if everyone thought that QE was artificially boosting yields (and really don't you think the Fed is aware of how QE works), then it would be a self-defeating policy and why would they even do that? Why would they do it three times?

     

    No, I think the reality is QE was pro-growth and that was the major effect (contrary to the purely short-term effect). This is why market monetarists are cursing the Fed for ending QE now when they believe it was never big enough in the first place. Remember, long bonds look really far down the road so the mechanical/functional effect of depressing yield is easily outweighed by the bigger picture.

     

    The people who thought QE was having a big short-term effect probably overestimated it and that's why the taper announcement resulted in overshooting what is probably the right rate (2.5% ish). Now, it's come back in. If the growth still depends on QE then maybe it'll come in more and the Fed will be forced to reverse. But they seem pretty content that it's self-sustaining now.

     

    My two cents.
    6 May 2014, 12:25 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    Macro:

     

    "The current purchase program has only a small effect – maybe 10-15 bps on the ten-year note. The market forces are much more responsible for the increase in long-term rates." - Jeff Miller
    6 May 2014, 12:28 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    BC: I would agree that it would make no sense for the FED to deliberately try to increase yields under the circumstances prevailing since March 2009. It would be an extraordinarily dumb monetary policy.

     

    The FED studies show that QE has lowered intermediate and longer term bond prices.

     

    The FED is holding an enormous part of the available supply as shown in the N.Y FED data and they are continuing to buy more. If more investors than normal are enticed to buy a dwindling supply of longer term bonds which has happened, just to find yield that is no longer available in shorter term maturities, then QE would have the impact of lowering yields by artificially inflating bond prices due to a combination of increased demand and a lower supply.

     

    The observations made in this ST. Louis FED paper explain how QE impacts longer term rates.

     

    http://bit.ly/14ycDBb

     

    There is also a cumulative impact from decreasing supply over several years. As a result of QE3, the FED started to buy $45B per month in treasuries in late 2012 ($540B every 12 months) and has just recently curtailed that buying to $25B while continuing to hold what is has purchased in the past.

     

    Over an extended period of time, the FED has now taken over $2.2T of the available treasury supply off the market and is still adding to that huge pile. It simply would not make any sense to argue that this reduction in supply has decreased prices and raised yields.

     

    A recent study by McKinsey & Company dated in November 2013 titled "QE and Ultra-low Interest rates"
    A link to that study will not work but it can by found with a google search using the preceding title slong with the name McKinsey.

     

    As noted in that paper at page 8 and at pages 23-24, the consensus opinion is that central bank programs, which would include ZIRP and "Operation Twist", have reduced the ten year yield by 65 to 100 basis points, with Bernanke claiming 120 basis points. Footnote 9 at page 8 contains some references to other material discussing those estimates.

     

    Interestingly, the authors of that paper contend that it is not even conclusive that QE had increased equity prices (see pages 24-28)
    6 May 2014, 01:21 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Just to highlight yet another senior moment, I meant to say in the second paragraph (1:21 P.M comment) that the FED studies show that QE has lowered intermediate and long term bond "yields" by raising prices. Bond yields go down as prices go up of course.
    6 May 2014, 02:07 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    SG:

     

    Thanks for the information. I would note though that some of the estimates are accounting for the net impact of ZIRP, MEP, and LSAP (aka QE) not just LSAP and so that's not really apples to apples. I wasn't talking about ZIRP. Also, when you drill down to the individual studies listed in the footnotes (and chase them down to the original research), you can see that the median estimate is actually quite a bit lower. In particular, see Table 1 on page 6 of this paper:

     

    http://bit.ly/1j9vbDT

     

    Also, the larger estimates (closer to the number you have cited) seem to be outliers and have a very large margin of error (e.g. Bernanke's 2004 paper has 400 bps +/- 370 bps for Japan).
    6 May 2014, 02:38 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    BC: In my previous comment, I mentioned that the estimates included all central bank programs including ZIRP and Operation Twist. The forward guidance about keeping rates low for an extended period will also have an impact.

     

    I don't think any of those estimates would include a good number for what is happening now.

     

    The impact now flows from demand increasing at a time when the amount of withdrawn supply is coming close to its largest and most substantial level. A large amount of treasury debt is owned by the Social Security trust fund and other agencies and is not available for purchase on top of the $2.2+T now owned by the FED.

     

    Inter-governmental holdings total almost $5T.

     

    The increase in demand is flowing from a risk off trade due to perceptions among many large market participants that the stock market is overvalued at current levels.

     

    In my opinion, the impact on rates caused after withdrawing $2.2 trillion in supply and continuing to buy $25B per month will be greatest when demand increases for the shrinking supply. That is a basic market dynamic of supply and demand, rather than the factors impacting price discussed in the St. Louis Fed article for example.

     

    More fuel is added to the demand side of the equation after the recent GDP number and the potentially lower inflation numbers. For market participants who are waiting for the bottom to fall out, the recent GDP report, which may be revised into negative territory after the recent trade numbers, signals persistent deflationary pressure to them, and they dismiss the impact of weather or other variables impacting the first quarter GDP numbers. Consequently, they are buying more treasuries now. Then you have the hedge funds jumping on whatever is working now and/or borrowing cheaply short term and buying longer term treasuries.

     

    So, I would view the impact of QE to be the greatest on note and bond prices when the maximum amount of withdrawn supply meets that herd moving into that narrower opening.
    6 May 2014, 03:16 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    My feeling on banks; BTW:

     

    They are Done for this current cycle. Figure I'd just tell it the way I see it. Would''nt touch a US bank with a barge pole here, for a trade; or an investment.
    6 May 2014, 11:30 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Ok,, Lets revisit these after a while --

     

    (JPM) @ 53.76

     

    (GS) @ 155

     

    L,

     

    I know u like to be exact and pinpoint your entry points -- :)

     

    so my take on that would be 51 for (JPM) & 150 for (GS) and they probably will get there ....
    6 May 2014, 11:40 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Ummm...Aren't you long these already at a higher cost basis?

     

    --- -- never mind -----
    6 May 2014, 11:43 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    I'm not hear to answer your questions on my cost basis - sir ..

     

    Go to my blog -- its documented there --

     

    and I dont believe that has any bearing as to what LMH was asking --

     

    LT investor can buy into a stock or sector that is out of favor - without wondering if its going to be down in the next hour--

     

    it's usually a better way to invest for the long haul . If the LT story is still intact - but the market is having a knee jerk reaction to an event -- it usually spells opportunity --

     

    Everyone can form their own conclusions as to whether this is meaningful
    6 May 2014, 11:50 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    I personally think it goes to "credibility" -- if one is going to tout a stock on a public forum; they should reveal their existing position.

     

    I do -- thats just me -- Ie: I said the Banks are done for this cycle -- and I am short (BAC) and (GS).

     

    As I said "never mind".
    6 May 2014, 11:53 AM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    What, exactly, does "this cycle" mean? You think that banks have hit their highs until they decline precipitously in a new recession, or what?
    6 May 2014, 12:06 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Tack;

     

    I'm not bright enough to make such predictions -- but I am short them in size; and see a major move down developing.

     

    Good luck to all. I'm really; really happy if thats an unpopular call.
    6 May 2014, 12:22 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    I'll just say this:

     

    There's a big difference between rotation out of some absurdly-valued techs and the banking sector. A major sustained move down in banks (and other financials) is not compatible with any bullish equity positions in other sectors into which money has been rotating and on which you, yourself, have made bullish comments.

     

    So, you are going to have to decide whether you really believe a major bank-sector downswing is commencing, because, if you do, then, you should be jettisoning all your other equity longs.
    6 May 2014, 01:02 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Tack.

     

    Check my recent; repeated comments about my defensive positioning. I have lightened a number of longs days ago, although still have some; and substantially increased shorts. I am well, well net short here.

     

    Put it this way. I have easily double the bank short exposure that I do in Mreits long.

     

    I'll keep the remainder of my Natural gas and Mreit longs, I sold calls against (TCK) and (GILD)
    6 May 2014, 01:13 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    T:

     

    OK.

     

    MREITs will do peachy with falling rates.

     

    I still can't see any bank swoon lasting very long; otherwise, all the recent economic data is wrong, and we're headed south.
    6 May 2014, 01:21 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    I have a fair bit on conviction my heavy short exposure is right for this situation, at this time. It's been very stubborn but I think all indexes have some corrective activity.
    6 May 2014, 01:29 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Tack and Micro:

     

    After closing at $42.47 on 3/20/14, KRE, an ETF for regional banks, is now at $37.7 and has just crossed below its 200 SMA line. The decline is now in correction territory at 11%.

     

    Unlike JPM and the other big banks, those banks live off net interest margin. JPM's recent warning involved "trading" revenues.

     

    The rates to depositors can not go materially lower, so the non-money center banks need to have higher rates on their loans in order to increase their net interest margins.

     

    When rates were rising last year, regional banks did just fine based on a belief that higher rates would improve their net interest margins. Sectors that are frequently bought as bond substitutes (utilities and REITs) declined in price however. XLU went from over $41 in late April 2013 down to below $34 and a similar type move was made by VNQ.

     

    When the 10 year started to decline this year, for whatever reason, the knee jerk response was to take the electric utility and REIT sectors up and the regional banks down.

     

    The question is why have rates come down as the FED has started to taper. I would argue that there is an ongoing risk off move into treasuries by certain institutional and other large investors, who are worried about stock valuations. They are now chasing a dwindling supply of available treasuries to purchase which is driving up the price artificially given the amount taken off the market by the FED, and consequently the price is not based on matters related to the true interest rate determined by investors in a free market which does not exist now.
    6 May 2014, 01:51 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    credibility !!!! - please !!

     

    from U !!!!!!! --- that is absolutely laughable ---

     

    here's the link

     

    http://bit.ly/1kQlubB

     

    all documented and transparent...
    6 May 2014, 12:11 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    ...and not working right now.....
    6 May 2014, 05:38 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    This is turning into one really interesting day. The key level for (IWM) if anyone cares; is just below 110.

     

    Much below that likely draws in a whole lot more selling in all indexes, needless to say I have no bids in at all.

     

    I bought hundreds of out of the money June IWM puts to add to my shorts, not a bad idea for protection as well.....
    6 May 2014, 02:56 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    The herd is also selling the USD, as shown by the weakening in the U.S. Dollar Index (basket of 6 foreign currencies weighted in the Euro, lower means a weaker USD against that basket):

     

    http://on.mktw.net/1j9...

     

    This dollar decline is helping Emerging Market local currency bonds and stocks since the dollar decline takes some of the currency pressure off.

     

    The Brazilian Real is back above its 200 day SMA vs. the USD:

     

    http://yhoo.it/1j9OGvZ;range=1y

     

    The Vanguard EM ETF VWO is up about .45% as the S & P 500 declines with the Nasdaq composite and the Russell 2000 being hit even harder due to their excess valuations, which is a continuation of trends from April on down days. LEMB, an EM local currency bond ETF is up .36% as I write this comment.

     

    The Canadian Dollar is gaining strength but the CAD/USD is still below the 200 day SMA which is near .935.

     

    The AUD/USD is now above its 200 day SMA.

     

    http://on.mktw.net/1j9...

     

    6 May 2014, 03:46 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    S:

     

    FWIW, for all the heightened handwringing that's been going on, of late, given various rotations and the weakness of banks, the dollar and rates, the SPX remains still above its 50-day EMA (1858), and the 200-day EMA (1777) isn't even on the radar screen.

     

    Absent a whole bunch of negative fundamental data, this is going to be yet another in a long line of anxiety attacks that have no sustainable traction.
    6 May 2014, 04:08 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Tack: The 200 Day SMA for the S & P 500 and the VIX's continuous movement below 20 in a Stable Vix Pattern are always on my radar screen.

     

    The movements that I am describing is a herd movement, and is basically the reverse of what we saw starting in May 2013.

     

    The beneficiaries now are utility and REIT stocks, emerging market bonds and stocks, bonds and preferred stocks.

     

    The herd movement is not premised on an assessment involving longer term fundamentals for interest rates and stocks, but what can be tied up now into a pretty package and sold at the moment. The story is predicated on a belief that economic fundamentals are deteriorating in the U.S., rates will continue to decline, emerging market stocks and bonds will follow their currencies up as the USD weakens, and bond substitutes will look better due to their yields as the competition securities decline in yields (though they will sometimes act more like a non-dividend paying stock than a bond substitute due to market dynamics on some down days)

     

    This story line will start to change when we move deeper into the second quarter, with economic numbers improving. I doubt that this story will hold up when reality overwhelms it.

     

    I think you would see a different dynamic when more market participants believe that stocks represent better values than bonds long term, and that bonds began a long term bear market in July 2012 when the ten year hit a 1.43% yield.

     

    It is impossible for me at least to reconcile a 2.6% ten year treasury yield when the market based forecast of an average annual inflation rate is 2.2% over the next ten years. One of those numbers is just way off, and there is no reasonable doubt in my mind which number is off. The evidence indicates that the 2.6% number is artificially low by at least 1% due to the FED's abnormal monetary policies.
    6 May 2014, 04:34 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    S:

     

    I'm wondering where (not you) this rather "new-think" idea that emerging markets somehow operate in inverse fashion to the U.S. market/economy came from. It seems some new concept that the "linkage" is broken, and emerging markets can somehow prosper and advance, while America lags and fades. This has had some political overtones about it by some who propound such theories.

     

    Well, the reality is that if the U.S. tanks, everybody else goes down the chute at the same time. No robust Brazil and China economies, while America heads toward a recession. And, their markets would follow us down the hopper just as fast. You take the big horse off the front of the wagon hitch, and nobody's going anywhere.

     

    So, that leaves a dilemma. Either the U.S. isn't hitting the skids, and the market rotation we have seen makes eminent sense, or the U.S. is headed for trouble, and almost all the equity rotation we have seen is misplaced.

     

    You can't have a weakening U.S. picture and expect emerging markets, energy and commodities to prosper. yet, that's where all the equity-rotation money has been going since mid-March. Somebody' wrong.

     

    And, on the bond and Treasury side, either the economy is headed south, in which case the lower yields are easily explained, or the economy isn't headed south, but yields still are, not because of economic weakness, but because of a significant over-reactive sell-off in 2013, due to the usual misconceptions about the effects of QE and its tapering (i.e., it has no effects).

     

    So, while I can make the bond story work, whether things are staying the same, getting worse, or getting better at a continued low rate, I can't make the equity-rotation story work for both scenarios. Either rotating into growth-benefiting sectors, like EE, energy and commodities, makes sense because economic growth will remain unabated, or it's all a horrible mistake because they'll have plummet in a hurry if the U.S. is headed for negative economic times.

     

    Personally, I cannot find adequate justification for the latter.
    6 May 2014, 05:06 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    SG / T;

     

    I read a lot of people -- and I have not heard Once that anyone believes that economic fundamentals are expected to deteriorate. That is totally Not the herd expectation.

     

    I'd like to see a link to anyone credible; who believes anything but the party line of stable to improving growth.
    6 May 2014, 05:37 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    Well, the implication of your comment is that you do think they are or will deteriorate. If so, please explain why, fundamentally, not that markets are suggesting it.
    6 May 2014, 05:46 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    T;

     

    As I said before; I have no idea. I'm not that smart.
    I get myself in trouble when I try to overthink things.

     

    But I am sure it is not the base case whatsoever.

     

    Here's what I think; later this summer, it might become the base case, and we would be at lower equity prices, and I think when that belief Does become the base case, if it does, that might be a productive time to add growth exposure -- when expectations are lower, and anxiety higher.

     

    We've had a Prozac market for a long time -- we need a healthy dose of anxiety and a new wall of worry to climb.

     

    How's that sound?

     

    PS: Even current equity prices would be low enough -- if we saw a healthy dose of anxiety / worry / higher VIX -- but I think lower prices are much more likely.
    6 May 2014, 05:51 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    T

     

    "Personally, I cannot find adequate justification for the latter."

     

    I'll add;
    Are we really going to fall apart with S & P earnings @ 120 ? ----- with a multiple of 16 that =1920 ,

     

    I already posted the Dow 30 earnings and they aren't very expensive .. at a PE of 14.7

     

    http://bit.ly/1iOhQBF

     

    I suppose one can make a case that earnings estimates are " this or that " and we can't count on the estimates. I've heard that before -- last year as a matter of fact.. and earnings came in @ $110 ,

     

    At the moment , I'm staying with the $120 number ....... and the first Q reports do not give any indication that things are drastically falling apart on the earnings front..

     

    I'm also looking at the LONG TERM charts of the RUT and the NASDAQ

     

    RUT is holding the 50 wk MA - until it breaks-- the LT trend is UP -- the bears will need a break below the Feb low - 1082 before they can raise their flags -- and affirm that the RUT will go lower.

     

    Same is true for the Nasdaq...

     

    Until i see a definitive break there--- all of the "noise" about how things are "falling apart" is just that "noise" .
    6 May 2014, 06:04 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Oh man; this is comical. Truly.

     

    You think earnings estimates lead, or follow stock prices?

     

    Lead; or follow the developing economic trends?

     

    Do insiders sell first, Then drop estimates; or vis versa?

     

    Who's the smart money -- the institutions now selling to retail -- that's the flow these days for at least the last 6 months -- or analysts with their estimates?

     

    Hint. Institutions were not big sellers for at least the first half of 2013, and retail were not big buyers. So 2013 is not a comparable example.

     

    (questions for anyone).
    6 May 2014, 06:13 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    To further put things into perspective

     

    the RUT is down 8% from it's high , & the NASADQ is down 6% ---from its high

     

    technically neither is in "correction" territory (10%),and these are the "speculative" areas of the market

     

    From the talk that is bandied about the naysayers one would think both are in a "bear" market ..

     

    6 May 2014, 06:20 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Tack;

     

    I get it now.

     

    As an amateur investor, I'm supposed to wait until my professional adviser tells me earnings estimates have been slashed multiple times; the economy is officially in recession, jobs are hemorrhaging, ect etc, and only Then am I supposed to get at all defensive.

     

    Or even better -- lets wait until the SPX is officially down 20%, then begin to sell -- never mind my average stock has likely lost 40% by that point.

     

    A lot more than that; if one had a portfolio full of momentum and NASDAQ growth stocks. I'm sure those folks are consoling themselves, with the knowledge the NASDAQ index is down only 6%.

     

    That's how the pro's do it, I guess.
    6 May 2014, 06:20 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    The story line that I discuss above has gained more adherents this year due to the continued anemic new home construction numbers and the surprisingly weaker than expected numbers. This has created a new source of treasury buyers other than the normal David Levy crowd who believe that the 10 year treasury will bottom at 1% due to deteriorating fundamentals over the next several years.

     

    I view this as a false story, as I noted above. I clearly believe that fundamentals are improving and will continue to do, with interest rates trending up rather than down over the next several years.

     

    The reasons for lower longer term rates this year have nothing to do with the fundamentals that normally determine interest rates in a free market.

     

    The reason for lower rates, as I have clearly stated, is a herd movement into treasuries occurring at a time when supply has been withdrawn in large amounts by the FED's asset purchases.

     

    The major source of that herd movement now is that more large investors believe stocks are overvalued after last year's 32+% increase. Those investors can be found spouting their opinions daily about lofty stock valuations, and that crowd speak has gone way beyond Hussman, Grantham and similar ilk.

     

    E.G.:
    Goldman Sachs: Stock Valuations Are ‘Lofty By Almost Any Measure’

     

    http://on.wsj.com/1jaCZoZ

     

    In fact, I have heard such talk here at SA from many commenters who are shorting stock indexes and buying TLT.

     

    Those who believe that the markets are overvalued, and future growth prospects do not not justify current multiples, are being joined in force by the crowd, call them the sky is falling contingent, that have jumped on some recent weak numbers (mainly the first quarter GDP report) and the persistently weak housing and inflation numbers, to gain new adherents.

     

    The consensus view is not expressed by Wall Street pundits and economists, or by financial journalists employed by Reuters and Bloomberg, but by those managing billions.

     

    When we move closer to a free market in bonds, unfettered by massive FED intervention distorting the market price for all bonds, this silliness of driving abnormally low rates even lower will be seen as the emperor wearing no clothes with a consensus establishing a causal linkage to the abnormal FED monetary policies.
    6 May 2014, 06:59 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    SG,

     

    We must read different sources. Other than myself, I'm scratching my head to think of anyone shorting stock indexes and buying TLT. Most have been trying to short TLT and are just starting to give up on that trade.

     

    The only commentators I have heard of short, are the perpetual gold, canned goods and guns crowd.

     

    Yes, institutions have been sellers -- but the "herd" is long, and hasn't considered anything else other than an accelerating economy, jobs, etc.

     

    I don't see any herd movement into treasuries by the millions of investors, and fund flows don't show it. See the allocation link I posted to tack above.

     

    All I read is stocks are cheap, room for expansion and higher PE's, tons of undervalued opportunities, etc.

     

    Thats consensus.
    6 May 2014, 07:21 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    @macro

     

    Yep i'm selling my entire portfolio now cause the S & P is off 1.2% from it's high

     

    did it ever occur to you that many here including myself didn't get into the market last month ..

     

    the NASDAQ and some of its components are up 30% or more

     

    some names have doubled or tripled and u wish to suggest that a 6% correction is the end of the world ..

     

    think again - it shows total ignorance of how an "Investor" operates

     

    FINALLY

     

    Bring your absurd rhetoric about me over to my blog and let these fine peoples live in peace
    6 May 2014, 07:23 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Tack: A lot of the EM movement last year and this year is due to currency.

     

    EM currencies were plummeting in the taper tantrum starting last May and have improved considerably since U.S. rates started to move down this year. So, in that sense, lower U.S. interest rates have led to higher EM currencies which have resulted in money flowing back to EM stocks and bonds as well as the funds priced in USDs going up due to the rise of EM currency values versus the USD. When looking at U.S. EM funds, the currency conversion will flow through into the price and it is necessary to separate out the gains from a rise in the local market from currency fluctuations.

     

    When EM currencies plummet, prices are impacted in two ways. Foreign sellers withdraw from those markets experiencing a rapidly declining currency and the currency devaluation flows into a price decline of a U.S. EM fund priced in dollars or any other fund priced in a stronger currency (e.g. Euro, British pound, etc)

     

    The price of VWO closed at $41.14 on 12/31/13 and at $41.24 today. So there has not been any improvement year to date unlike the bond proxies XLU and VNQ which are both up over 10%. Unadjusted for the dividend, XLU has risen from $37.97 to $42.67 today or 12.38%. VNQ has gone from $64.56 to $73.12 unadjusted for the dividend or 13.25%. I am sure that you have seen price improvements this year in bond CEFs and preferred stocks too.

     

    The improvement in VWO's price started after VWO sank to $37.29 on 1/29/14.

     

    U.S. rates had started to slide before then but EM currencies did not start to respond until the end of January as shown in the chart for CEW which is now trading above its 200 day SMA:

     

    http://yhoo.it/1g6BkM3;range=1y

     

    Some of these EM stock markets are not doing that well this year so far at least.

     

    Brazil's index in local currency terms close last year at 51,507 and has just managed to cross that level late last month:

     

    http://yhoo.it/1g6Bnr8;range=1y

     

    The Hang Sang and Shanghai indexes are down year to date:

     

    HANG SENG INDEX (^HSI)
    http://yhoo.it/1g6Bnra;range=1y

     

    SSE Composite Index
    http://yhoo.it/1g6BkM5;range=1y

     

    Russia is down a lot.

     

    India and Indonesia are showing some strength.
    6 May 2014, 07:36 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    MACRO: We are reading different sources. I do not recall many arguing that stocks are cheap and that there are tons of undervalued opportunities.

     

    The volume in TLT looks like there are more buyers than you. Volume has soared recently to 12.7+M shares last Friday and 11.56+M shares the day before.

     

    http://yhoo.it/1g6CqaE

     

    And there are many other long bond funds other than just TLT.

     

    Now, I did not look for very long for the current short interest in IWM. But based on the WSJ data as of 4/15/2014, there appears to be a few investors who have joined you in that short, since IWM is the third most heavily shorted security with over a 135+M shares sold short. All you?

     

    http://on.wsj.com/GPBwAi
    6 May 2014, 07:45 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Hahahahahahaha,

     

    You are funny.

     

    And love to put words in others mouth, like end of the world or selling one's entire portfolio.

     

    Don't think I ever said either of those things.

     

    Ever considered hedges, raising some cash, or adjusting to a slightly more defensive stance? That would be the extent of my advice, for long term investors.

     

    I am not interested in your version of professional financial adviser propaganda, other than as a possible contrary indicator.

     

    New highs for my account today. I'm quite happy with how the year is developing.

     

    Hopefully my perspective is valuable to folks. Ive been told numerous times, it is.

     

    Enjoy the day

     

    :)
    6 May 2014, 07:55 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    SG,

     

    What can I say. From both my work with different quantitative sentiment / market positioning sites like sentiment trader.com, which has reams and reams of data on many different ratios, and my reading on different sites, I am not picking up shorting anything as particularly mainstream, nor piling into government bonds.

     

    I don't dispute many other folks are buying TLT and selling IWM, but whoever they are they are not talking about it too much, so it doesn't appear public driven.

     

    Other than that -- I'm a very simple investor who attempts to follow the price action I observe.

     

    Your research is well done and I appreciate it.
    6 May 2014, 08:21 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    @ macro

     

    "Ever considered hedges, raising some cash, or adjusting to a slightly more defensive stance? "

     

    not @ 1.2% from all time highs on the S & p and not when the dow just made a new all time high last week ....
    if U havent noticed I'm not a "trader" , so once again your rhetoric is absurd ..

     

    & I'll add --- IF a LT investor followed that ill advice they would have wasted a lot of time and funds wringing their hands @ S & p 1600 all the way until the present -

     

    BECAUSE that is the SAME rhetoric that has been spouted over & over again .

     

    & exactly where have u been --

     

    --- Ever hear of selling calls against stretched positions , ever hear of harvesting profits ?
    did i not just post a comment today of what was contsined on my weekly update regarding that

     

    its all here -- it has been in my blog

     

    nothing to hide and all documented -

     

    http://bit.ly/1kQlubB

     

    bring the argument there -

     

    
    6 May 2014, 08:23 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    OK.

     

    I actually like hearing my rhetoric is absurd. I'm fine with that.

     

    I follow multiple indexes, not just the Dow. It's 30 stocks.

     

    When I'm widely agreed with, I'll get worried about my approach. Until then I will simply follow price action and my established macro themes.

     

    Enjoy the day and best wishes to all investors.
    6 May 2014, 08:31 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Macro: As I said, I see a barrage of statements everyday about investors claiming over valuation in stocks:

     

    "U.S. Still Most Overvalued Stock Market: BofA Survey"

     

    http://fxn.ws/1g6KbNK

     

    Sam Zell: Stock Market Is Overvalued
    http://bit.ly/1g6K9Wh

     

    'Almost every asset is overvalued': Apollo pro
    http://cnb.cx/1g6KbNM

     

    Why Stocks Are 43% Too Expensive
    http://onforb.es/1g6K9Wk

     

    Your trades are probably correct at this moment: long TLT for reasons other than you have given me, short IWM and short the Nasdaq bubble stocks which can turn against you quickly and for no good rational reason.
    6 May 2014, 08:54 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    SG

     

    Many ways to be an investor. I appreciate being able to learn from others.

     

    Certainly it is not 2000. And if you see my other comments, you will note I am a long term bull on both the economy and markets.

     

    Note as well, as cautious as I am, and well net short, I hold long term longs in Mreits, copper mining and natural gas, and no plans to sell them. They are secular, multi year plays.

     

    Perhaps, if investors are balanced and / or have defensive exposure, they don't have to change a thing, assuming we correct at all.

     

    On any good decline, I would reduce shorts and / or add to my longs. But am in no hurry.

     

    On interest rate surpression through QE, the rates I do see being suppressed are for corporate and junk bonds.

     

    Potentially, anyway. Just another wrinkle to consider.
    6 May 2014, 09:17 PM Reply Like
  • memshu
    , contributor
    Comments (587) | Send Message
     
    So

     

    where do you see the 10 year by the time your predictions come true? Say, by early 2015?
    7 May 2014, 03:00 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Mem: We have a great deal of data on how investor's price ten year treasuries going back decades. And, for almost all of that period, the FED was not engaged in QE and other abnormal monetary policies that interfered with a free market setting intermediate and long term interest rates.

     

    A rule of thumb would be a 2% to 2.25% spread over the anticipated average inflation rate.

     

    The break-even spread for the ten year TIP closed yesterday at 2.16%.

     

    Subtract the current yield of the 10 year TIP=.45%

     

    http://1.usa.gov/yFD89A

     

    From the nominal 10 year yield=2.61%

     

    http://1.usa.gov/oLC2C9

     

    The normalized ten year treasury yield in a free market would be between 4% to 4.25.

     

    Even after the FED ends QE, hopefully by year end, it will still own a boatload of treasuries and will be continuing ZIRP into 2015, at least for the first half unless there is a problematic spike in inflation and inflation expectations. Those two factors (hogging supply and ZIRP) will restrain the movement toward normalized rates.

     

    Assuming inflation expectations remain about the same, close to average annual ten year rate of 2.2%, I now believe, based on my current forecasts, that the ten year will move into normalized rate territory in the later half of 2016.

     

    The normalized rate could be hit sooner based on the following variables: a quicker rate of actual inflation, a rise in inflation expectations, a return to a 1% or higher FF rate by year end 2015, better than expected economic news and demand for money, and particularly a FED decision to start selling some of the intermediate and longer term treasuries to reduce its bloated balance sheet.

     

    Previously, I underestimated the impact of the supply withdrawal when demand increases, a condition that puts an upward non-fundamental pressure on bond prices as the FED continues to be a massive buyer at a time when its holdings are reaching a maximum level. As I noted in order comments, the move down in rates this year is based on non-fundamental factors and has nothing to do with how the market would set interest rates in the absence of abnormal FED monetary policies.

     

    As to early 2015 or late 2014 for that matter, my forecast (guess?) now is that there will still be a range bound movement mostly between 2.6% to 3%. The rate will closer to the upper end based on better economic news (GDP, jobs, etc) as the year progresses which I what I anticipate. I would be looking for a ten year yield range between 2.9%% to 3.25% by 3/31/15, based on my generally positive worldwide economic outlook.

     

    That would still be a 1+% below normalized levels based on the market's current inflation expectations over the next ten years.
    7 May 2014, 09:05 AM Reply Like
  • memshu
    , contributor
    Comments (587) | Send Message
     
    SG

     

    perfectly sensible analysis - the only possibility you do not discuss is that of inflation actually falling/deflation - not as a result of recession (i agree that we will probably continue to see slowish growth) but as a result of continuing deleveraging in the economy (banking and consumers) not only in the US but also abroad ((European banks are deleveraging furiously - which the US ends up importing) and (possibly) rising USD and falling energy prices.

     

    my experience in Japan biases my expectations in that direction. which is why i am still leveraged holding a lot of paper with single digit yield (which I normally would never do).

     

    although every paper i hold is a kind of special situation and mispriced relative to comparable assets (for example, i hold a perpetual subordinate bond of bank of ireland yielding 8% while almost identical bonds of same issuer yield 5.5% - meaning that my bond is about 30% undervalued on relative basis) - and theory would predict that the mispricing/discount to comparable should protect me in the event of a general rise in rates/fall in bonds, experience teaches that when bonds sell off then all bonds sell off more or less in tandem, and holding the cheaper/higher yielding/mispriced paper actually does not protect one against the fall. (even if the higher yield cushions the fall a little, but come on, 2.5% per year is no cushion).

     

    so the question at hand - where will rates go and how soon - is really central to my portfolio.

     

    but let's say your projections pan out and inflation is in the 2% range and the 10 year moves up to 4% by 2016... when would you expect to lighten up on your current interest rate bets (such as your REIT and CEF investments) in expectation of rising 10 year yield?
    8 May 2014, 04:11 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Mem: It is difficult for me to look at a long term U.S. CPI and become rationally concerned about persistent deflation outside of another Great Depression event.

     

    http://bit.ly/13QQArt

     

    Starting in 1956, there has been only 1 year when the CPI dipped below zero and that was only a .4% decline in 2009. It took a catastrophe to get that number.

     

    http://bit.ly/WB2il7

     

    The inflation forecast embodied in the 10 year TIP pricing seems to be most reasonable forecast currently. The last reported Y-O-Y CPI was 1.5% and inflation will likely remain below 2% for another year or more. To arrive at a 2.2% annual average CPI over 10 years, the market has to be forecasting a higher than 2.2% average rate in the out years.

     

    In the aggregate American households have deleveraged (total debt to disposable income) and have substantially reduced their debt service costs (DSR ratio)

     

    Household Liabilities to Disposable Income:
    http://bit.ly/NLDpEX

     

    Debt Service Payments to Disposable Income:
    http://bit.ly/MiNM1D

     

    Americans are better spenders than savers, and consumer credit is starting to accelerate:

     

    http://reut.rs/SDpapf

     

    I have been selling bonds and preferred stocks into the recent interest rate decline. As an example, I sold for a profit a junior bond maturing in 2043, rated BB, when the yield sank to around 5.9%. I have sold a number of recently purchased equity preferred stocks when their yields fell below 7% at their then existing market prices. In both cases, the yield at the sales' prices were viewed as not worth the interest rate and credit risk. I am in a hyper active trading mode for long term bonds and potentially perpetual fixed coupon preferred stocks.

     

    As to REITs, they will react poorly to an interest rate spike caused by interest rate normalization. Their borrowing costs go up and their yield advantage compared to treasuries starts to evaporate.

     

    An interest rate rise due to an improving economy is a different animal for them. Then it becomes a question of balancing the positive items against the rise in rates. The positive items would include higher occupancy rates, the ability to raise rents faster, and the reduction or even elimination of rent concessions.

     

    I am a practitioner of dynamic asset allocation. If I start to see another burst in the interest rate normalization process, such as what happened starting last May, I will be selling bond CEFs and REITs.

     

    I will also be monitoring constantly all inflation data including CPI, the PCE price index, the Cleveland FED's median price index, the inflation expectations priced into the TIPs of all maturities, etc.

     

    If I see inflation expectations start to move consistently above 2.5% and then spurt to over 3%, I will be reacting to that development. On the other hand, if inflation expectations fall from current levels, I will react too. The reaction will be significant if I started to see some negative current CPI numbers coupled with the average annual CPI forecast over 10 years falling toward 1%.

     

    You are much braver than me buying Bank of Ireland subordinated debt. I was buying the Aegon and ING hybrids in the single digits in 2009.
    8 May 2014, 08:39 AM Reply Like
  • memshu
    , contributor
    Comments (587) | Send Message
     
    SG:

     

    i may be a braver man than you, but i accumulate grey hairs at a much faster rate... the bond i started buying at 75 in 2009 went first to 110 and then back down to 28 while the irish goobmint and the bank tried to disposess its holders in a semi-legal act of highway robbery. the holders of this one issue - a bunch of crusty British retirees - dont you **** mess with the elderly! - the bond had been originally issued by a british building society which BOI then took over - put up one hell of a fight and it was my great fortune not to sell in the course of the fight but add - my average cost is 66, current market price 165 and, if it ever were to pay what similar paper of the same banks pays, it should be 220 (it has a 13.375% coupon).

     

    like you i would probably sell anything with an under 7% coupon not so much because I am sure inflation is not dead but because on principle i try not to hold single digit paper. as it is, the aforementioned BOI piece of trash yields 8.1% in an appreciating currency (GBP) and everything else is higher than that - most of it, in fact, well in double digit figures. I do a lot of speculation in seriously malodorous paper, stuff like City of Kiev (the Paris of the Southeast eastern Europe) and Petroleos de Venezuela (the chief financing instrument of the people's Bolivarian revolution). these pretty much trade totally divorced from any considerations of inflation, shape of the interest curve, FOMC and whatever else resides colonizes the minds of the street bond dealers - trading them is an art in understanding what a bunch of corrupt politicians in some third world hell hole are most likely to do with the paper - pay or default. and while you try to sort that out you usually get around 13%+ current yield.

     

    but i do have a substantial exposure to upstream mlps because
    a) the business appears to me a pretty stodgy one (buy proven reserves in the ground, pump them out, sell the oil, go back and buy more reserves in the ground); it has nothing to do with exploration and is more akin to manufacturing - its all cost control, proper hedging and execution; and the 8 or so firms that do it do it very very well. i am exposed to the whole lot
    b) the units trading in the market are really a kind of super-subordinate financing instrument - they're not really equity, in that they represent no control (unit holders cant replace management or vote to change anything); and while i suck at equity, i have done well with sub paper in the past (famous last words), so, i tell myself I'm semi knowledgeable about what i am doing here
    c) the paper yields generally in excess of 9.5% and right now, today ARP, MEMP and QRE yield 10%+ - so you get paid for taking risk

     

    now... this business is interest rate sensitive because

     

    a) these companies do carry substantial debt (usually about 4x ebidta or about 2.5x cashflow)
    b) they are owned by a bunch of yield hungry retail who is not faithful to anything but his dividend

     

    with this in view... when you start to dump your REITs and CEFs ***DO WHISTLE, will ya?
    8 May 2014, 10:36 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    T;

     

    What anxiety? All I heard on TV was buy the dip.

     

    Not a whiff of concern.
    6 May 2014, 04:10 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    I don't watch TV. It's for entertainment, not information.

     

    http://bit.ly/mTnOjV

     

    http://cnnmon.ie/QxDqZ3
    6 May 2014, 04:26 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Tack;

     

    No offense; but both of those are so twitchy as to be useless indicators. I give them no weight whatsoever.

     

    I pay attention to what people Do -- not what they say.

     

    On the wrong day 40% of people will claim they don't like ice cream, but I'll bet most have it in their freezer.....

     

    http://onforb.es/1g6njOv

     

    Here's what they are Doing. Relative highs in stock allocations.

     

    All I heard on TV and on my pro trading blog; is "where do we buy the dip in twitter".

     

    Like, not here.
    6 May 2014, 05:43 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    I just threw them out there for fun. I laugh at sentiment indices.

     

    As to what they're doing? This market has never -- repeat, never -- been widely embraced. It's been evidenced by where liquidity preferences have resided, the endlessly low market volumes, the doubting dialogue from the nonprofessionals, etc. And, all the already-existent caution, cash, hedges, puts, etc., is why the market hasn't been able to gain the slightest downside traction.

     

    It's never been "overbought," except on some arcane technical measures, from time to time. People don't know what euphoria is, any more.
    6 May 2014, 05:52 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Yeah -- Prozac market -- not euphoria.

     

    I do think -- some of the professionals got a bit carried away. They were all in these momo stocks; now they are getting carried out.

     

    I agree with you -- I think we are more likely to get there, down the road (with the public) -- this is a possible mid-cycle "correction", pause, reset, whatever.
    6 May 2014, 05:55 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Tack

     

    "This market has never -- repeat, never -- been widely embraced. "

     

    every time i mentioned that there is a lot of "push back" from the 'doubters" -- it continues to be that way today -
    & it shows that we are in fact still in the early stages of a secular bull story

     

    now I'll add

     

    & when the naysayers finally "get it" - it will be time to reevaluate and move on ... 
    6 May 2014, 07:37 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    T;

     

    I am bullish on the economy long term -- because we need new capex -- everything is falling apart -- infrastructure -- energy boom; new housing, ect etc -- but we might need expansionary fiscal policy to get there.

     

    Lots of long term positives, but far too long term to affect my trade decisions in the short to intermediate term.
    6 May 2014, 06:02 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    I just spent the day in NYC. I've never seen so many people, so much traffic. Way worse than the last time I spent any time in the city, a few years ago. Must have walked almost 5 miles today.

     

    There is a shortage of real estate in NYC, especially the affordable under a million type. Real estate never did dip while every where else it was crashing in NYC.

     

    Of course, this likely means nothing. But I think NYC is thriving.

     

    Here in my town, we have less homes on the market than I've seen since around 2002. That would classify as a shortage. There is a large development that will be built starting soon. Over a hundred 55+ age homes and around 20 big homes priced over $1.5 million. I'm sure some of those homes will top $2 million. There is a huge office building on the property of over 400 acres. It's been vacant for years, soars 6 stories & is a quarter of a mile long. This building will be filled with shops, offices, a hotel, medical suites, a small hospital, surgical center, town center with library etc. It's going to be good for the town. I hope they put a golf course on some of that land.

     

    Anyhow, things are starting to happen here. We can feel the economy heating up, and it's been a long time.
    6 May 2014, 07:29 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    BlueSky: I am just familiar with several large southern metropolitan areas, particularly Nashville which is booming now. Growth is obviously accelerating in several major southern metropolitan areas. I see major new developments springing up all around Nashville.

     

    NYT Article on Nashville:
    http://nyti.ms/1avuxKq

     

    You also see the recovery manifested in property tax collections hitting records and growing at the fastest pace since the crash.

     

    http://bloom.bg/1jtFv6I

     

    There are a number of articles highlighting the boom trends in various localities due to a variety of factors:

     

    Forbes Article
    http://onforb.es/1jaTOjC

     

    In some places, it is directly related to the boom in natural gas and oil production, one of the many positive long trends.

     

    The Best Cities For Jobs 2014-Forbes
    http://onforb.es/1jaTMs1
    6 May 2014, 08:14 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    BSF

     

    I don't disagree with any of your observations, and I am long term extremely constructive, and very bullish on the future of the US.
    6 May 2014, 08:00 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - JBT, User7, Yair, Cwinn, Extremebanker, Meusa, Astarr, everyone else...

     

    In your reading do you have a sense that most are considering things overvalued, & hard to find a stock to buy?
    That big investors are moving out of stocks? Or retail investors are? Or into long term bonds?

     

    A lot of debate here of whether the market will correct generally past riskier segments like Nasq and small cap -- is centered around whether big investors are NOW finding the market overvalued.

     

    Different posters are seeing it differently... so I'm curious what you all are seeing?
    6 May 2014, 10:20 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    50% of my funds are in China... I don't really consider the things you are discussing.

     

    I look at major monetary situations, currently very bullish almost world wide, and in that framework I pick the stocks I believe are most undervalued.

     

    I'm buying approximately no bonds, I had an idea recently so they were 10% of the portfolio but they increased in value and I'm not willing to accept 7% yields to hold 8 year paper.

     

    The U.S market will probably have a good year 2014-2015 but it won't be easy money like before.

     

    It's a stock pickers market in the US.
    7 May 2014, 06:01 AM Reply Like
  • User 7415181
    , contributor
    Comments (841) | Send Message
     
    LMH,

     

    Different focus for me than probably a lot of other folks. Preferreds have gone up a lot compared compared to the turn of the year.

     

    If you consider a cef a "stock", there are plenty that aren't overvalued - that's one reason I like to buy them at a discount. And if you dig around you can find ones that might be half-way decently managed. Over the last month or so it looks to me that global stock/bond funds are picking up steam.
    7 May 2014, 11:43 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » JBT

     

    You are long-term investing routinely, without concern for current valuations.

     

    ...what topics would help you if they were discussed here?

     

    For me, I'd like to understand different subsectors of the market better, (by understanding what everyone is holding and why, seems like a way to do that...)
    6 May 2014, 10:22 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    Hmmm.... I just soak it all in. :) I look for stocks that I feel confident I can put my money in, leave them alone, and make a decent return over a 10-15 year period. I don't like messing around too much with my portfolios - if I've sold anything, it is only either after giving that stock a year or three to excel (by excel, I mean ~10%+ value growth per year), or because I'm selling what I still consider a winner, but just want to put the money somewhere else (paying off all our bills, paying for our bathroom addition, etc.)

     

    I am not a sophisticated investor. I just try to buy what I know, and dividends are essential. Occasionally someone will mention a stock on here that will make me do some digging to see if it's a "fit", but 9 times out of 10 I'm just winging it on my limited knowledge and research.

     

    A monkey with darts, basically. :)
    6 May 2014, 11:14 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » JBT

     

    You'd done quite well, very well since 2009. Were you in the market before then? How did that compare for you -- with your dart throwing method?

     

    Also, I'd be interested over time... in hearing how you throw those darts and what they landed on. Could be quite educational. ... or is that entertaining, hum :). Just teasing.
    6 May 2014, 11:40 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - What is everyone else doing in their version of dart throwing...

     

    Astarr - are you getting ready for your Brazil trip yet?
    6 May 2014, 11:41 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    L,

     

    Prior to 2009, I had owned (HD) since 2006 (employee stock purchase program) - sold it in 2012. The bulk of my adds were made in 2009, June-August period.

     

    Other than that, from about '95 through '01 or '02, my family (when most of us still lived in WI) had an investment club. My oldest brother did the bulk of the research, and our meetings were more about the food and cards than they were about stocks. But I still learned a lot. When the club disbanded, I ended up making about a 60% gain on my invested cash.
    6 May 2014, 11:51 PM Reply Like
  • astarr66
    , contributor
    Comments (235) | Send Message
     
    LOMH,

     

    Brazil is still on! Will combine with a business trip. It will be crazy. I leave with 5 friends. My wife says to enjoy the experience, and make it a trip to remember.

     

    Re: the markets. There are always value stocks to find in any market. Eg Coach and TGT now.
    7 May 2014, 06:30 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    astarr66,

     

    Be careful - the most beautiful Brazilian women are men... ;)
    7 May 2014, 07:45 PM Reply Like
  • astarr66
    , contributor
    Comments (235) | Send Message
     
    You must mean Thailand instead of Brazil! LOL
    8 May 2014, 12:46 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - JBT

     

    Oh family secrets. Goes with the secret recipes DD & BSF were talking about? ...for food do you have any of those?

     

    So BSF also tells of learning from her father.

     

    What kinds of things did you learn (either of you)?

     

    My investing family consists of my parents trying stocks for a short time in '80's or '90's (when worldcom went under)... and now reacting to my every move with complete nervousness. ...so not much investing to learn there. Though my mom is good with money in general -- learned a lot.
    7 May 2014, 12:00 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    L,

     

    For our meetings, it was always steak or BBQ chicken on the grill. Growing up, we ate simple fare, so not many good recipes passed on. I will remedy that for my son, as I love cooking and have several of my own now that I will share with him, if he shows interest.

     

    My oldest brother got me interested in the stock market, and taught me what I know about valuation. He's a CPA now (used to be a chemist for a paper company, then a HS chemistry teacher), and still in the market, but is more of a trader, not a buy-and-holder.

     

    Mothers are good money teachers. Mine gave me my (borderline penny pinching) frugality.
    7 May 2014, 07:40 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    This a problem for the Fed.

     

    ECONX

     

    Q1 Productivity- prelim -1.7% vs -1.2% Briefing.com consensus; Prior revised to +2.3% from +1.8%
    Reading PanePark Item
    08:30

     

    ECONX

     

    Q1 Unit Labor Costs +4.2% vs +2.5% Briefing.com consensus; Prior revised to -0.4% from -0.1%
    7 May 2014, 08:38 AM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M

     

    This is why hiring isn't the blessing for stocks that many believe.
    7 May 2014, 08:53 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    T;

     

    I have always believed if we saw the jobs picture get better; the market would get worse. confounding most people.

     

    The economy and stock market are 2 different animals folks.
    7 May 2014, 08:59 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - BDCs

     

    Anyone following these - thoughts?

     

    (PSEC) - using rainyday funds to cover div. SEC review announced. It's down.

     

    (TCAP) - down too from a prior missed earnings
    (TCRD) - missed earnings too. Been falling like a knife for a while.

     

    Interest isn't covering the capital losses remotely at this point. Any thoughts?
    7 May 2014, 11:41 AM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    LMH:

     

    PSEC now crippled by SEC cloud. Uncertainty will cap any upside, and assuming SEC wins (a high probability), it could see a gap-down on the announcement, whenever it arrives. The time to buy, if any, will be upon any panicky gap down. Meanwhile, it's not time to oversubscribe.
    7 May 2014, 11:50 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    LMH: BDCs have been trending down even as interest rates have declined over the past several weeks. Many of the externally managed BDCs are now trading below book value (e.g. TICC, PNNT, PSEC, AINV, BKCC, NMFC)

     

    ARCC sold off after basically meeting expectations, which was a bad sign.

     

    I liquidated PSEC this morning in a trust account while I still had a $50 profit, viewing that BDC to be too risky now for that trust and was content simply to harvest that 12%+ dividend without losing anything on the shares.

     

    I am not making any change in my PSEC taxable account holdings, neither buying nor selling. I may change the reinvestment option from payment in cash to reinvestment.

     

    I own 100 shares in an IRA, bought at $10.2, and I may sell those shares when and if the price recovers some or I may just jettison them at anytime. I am just content in that account to receive the dividend and to break-even on the shares.

     

    I would generally agree with TACK's take on the SEC ruling as putting pressure on the stock. We are in disagreement about the attractiveness of BDCs as long term investments. You can get a flavor of that disagreement by going back to your Instablog #20 for posts around Apr 26 06:57 PM:

     

    http://seekingalpha.co...

     

    I noted there that TCAP was an internally managed BDC selling at a large premium to its net asset value per share which had not grown anywhere near as much as the market price. I do not own it.

     

    TCAP:

     

    Market price 12/31/07=$12.4
    Market price $12/31/13=$27.65

     

    NAV 12/31/07=$13.74
    Page 42 http://1.usa.gov/1rtM7oK
    NAV 12/31/13= $16.01

     

    The Lawrence Galler SA article today pointed out some conflicts and potential problems relating to PSEC's refusal to consolidate 50%+ owned companies.

     

    http://seekingalpha.co...

     

    I would add that PSEC's net asset value per share fell to $10.68 as of 3/31/14 from $10.72. This continues a long term trend for this PSEC which I noted in prior comments here.

     

    And, unless management states unequivocally that PSEC will cease selling stock while the price is below book value, then I would expect a continuous stream of stock sells via its ATM Program below net asset value per share lasting several months.

     

    As I have stated many times, I view all externally managed BDCs negatively for a variety of reasons, including the potential conflicts of interest and the extreme and undeserved compensation which I view as major negatives.
    7 May 2014, 12:40 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » SG

     

    Thanks SG.

     

    On BDCs being less attractive to you, I'd noticed that. I'd had a similar concern. (If I understood correctly), that as yields normalize to whatever extent they do... these higher risk high yield issues, will be less popular, and lose in price. If in for a long term with a gain already it'd be fine. But for purchasing down, it may be catching them just in time for a drop or lag of the market.

     

    On (TCAP), while that doesn't solve my problem :), it does give me a lot of good information on how to assess these & other similar types of stocks. The comparison to NAV is one T & User7 have mentioned too, but I think I haven't understood it well enough yet.

     

    Your views on externally mananged BDCs in interesting. I believe that's one reasons PSEC has been considered higher risk than some other BDCs for a while.
    7 May 2014, 12:54 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    LMH: For externally managed BDCs, their market price will be relatively close to net asset value per share. That is important to keep in mind.

     

    PSEC's market price will not stray to far above its net asset value, and then there will be periods when the price falls below NAV as now.

     

    Since that BDC and many other externally managed BDCs have shrinking net asset values per share, in contrast to a BDC like MAIN which is internally managed, there will be a continuous downside pressure on the market price over time.

     

    This can be seen by looking at long term charts of those BDCs.

     

    PSEC:
    http://yhoo.it/RrOYDy;range=my

     

    AINV:
    http://yhoo.it/RrOY6p

     

    Contrast those charts with an internally managed BDC:

     

    Internally Managed BDC MAIN:
    http://yhoo.it/RrOYTR

     

    Other common stock "bond substitutes" like utility and equity REITs have been rising in response to interest rates falling while BDCs have been declining. I don't think the rate normalization process is impacting share prices now for those common stock bond substitutes including BDCs. That could change at anytime as it did in May-September 2013.

     

    I view the downdraft in BDCs to be directly related to their many undesirable features that I have outlined here at SA and in my blog. I constantly criticize their managers and point out those undesirable features, even when I am nibbling at the stocks. After reading one of discussions about buying shares in one of them, you would come away with the impression that I just shorted the stock rather than nibbled on the long side. You do not see many common stocks have twenty five or so single pages describing the risks in an Annual Report.
    7 May 2014, 01:14 PM Reply Like
  • astarr66
    , contributor
    Comments (235) | Send Message
     
    SouthGent, what BDCs are internally managed? You mentioned MAIN as one of them. Thanks.
    7 May 2014, 06:32 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Astarr66: Most of the BDCs are externally managed with hedge fund like fees paid to the external managers, usually 2% of assets (including those assets purchased with debt) plus an incentive fee.

     

    Several of the successful internally managed BDCs will sell at significant premiums to net asset value per share. I highlighted the premiums of MAIN and TCAP here.

     

    The market recognizes and rewards the material differences, at least when the internally managed BDC persistently increases dividends, income and net asset value per share, compared to the internally managed ones whose market prices will hug a net asset value per share that will decline over time for most of them.

     

    However, the internally managed BDC is certainly not immune to bad investments.

     

    While the externally managed PSEC will likely be selling stock below net asset value soon, Main Street recently sold 4M shares at $31.5, a substantial premium to its 12/31/13 net asset value per share of $19.89.

     

    Triangle Capital is internally managed but its market price gains since 12/31/13 far outstrip the percentage increase in net asset value per share as I noted above.

     

    Home Page TCAP:
    http://bit.ly/1iYIGHn

     

    Another one is Hercules Technology Growth Capital- HTGC.

     

    http://reut.rs/1iYIJmp

     

    HTGC net asset value per share was reported at $10.58 as of 3/31/14:

     

    http://1.usa.gov/1iYIJmr

     

    The stock closed today at $14.32.

     

    At one time, I owned the common shares and switched to 200 shares of HTGZ, an exchange traded senior bond issued by HTGC with a 7% coupon and $25 par value maturing in April 2019. I was able to buy 100 at $24.6 in the Roth IRA, in effect turning that bond into a tax free one. Another 100 shares was bought in a taxable account at $24.63.

     

    I believe that the others are KCAP and MCGC, neither of which I follow based on past performance.

     

    KCAP
    http://reut.rs/1iYIGHr

     

    KCAP is selling near its last reported net asset value per share of $7.62. This one is an example of net asset value erosion ($13.98 as of 3/31/20008)

     

    MCGC
    http://reut.rs/1iYIJmt

     

    For the internally managed BDCs, MCGC and KCAP have suffered significant declines in NAV per share.

     

    As an aside, I thought that the externally managed BDC PNNT had a decent report after the bell. Net asset value per share increased to $11.13 per share from $10.8 as of 12/31/13. I recently bought just 100 shares.

     

    http://1.usa.gov/1iYIJmv
    7 May 2014, 07:57 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    I've reduced short exposure on that morning selloff; am much closer to neutral. I respect the continuing resiliency of the SPX / DOW here.

     

    Maybe it will be a "sideways" correction, basis SPX
    7 May 2014, 12:05 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » T

     

    Is it time to sell, to avoid that gap down? Would that be your approach?

     

    With dividends so far included, I could get out now even or slight loss.
    7 May 2014, 12:09 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    L,

     

    Same boat as you, in re: (PSEC). Divs are declared through the remainder of the year. I'll ride it and see what happens. It is only 2.3% of my holdings, so it doesn't cause me too much concern, either way it goes.
    7 May 2014, 12:15 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    LMH:

     

    Personally, I have/had a sizable position in PSEC, all the way back to when it sold in the high $7's. It's been a great company and probably still is.

     

    Nonetheless, as I know how these kind of uncertainties can sometimes play out, I was inclined to lighten up this morning and see how it goes. If the issue gets resolved without undue harm, then, depending on the price at that time, I may add back shares. And, if it gets plastered on more SEC news, I'd almost certainly buy.
    7 May 2014, 12:24 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » T

     

    Thanks. I sold at $10.50. So .5% loss incl. divys, since bought in Feb.

     

    Seems to me when news get announced, stocks go down - but then often sit steady for a short while before the next drop down. ...like (PSEC) is doing today.

     

    Helps to have your clarity of words around it...!

     

    On (TCRD) I'm down 12%. What's going on with it? Chart is down and more down for a while now. More % down on BDC down days. Less % up on BDC up days.

     

    (TCAP)'s better than (TCRD), but not doing well either.

     

    Any ideas on what's happening? Or thoughts on how to handle.
    7 May 2014, 12:31 PM Reply Like
  • astarr66
    , contributor
    Comments (235) | Send Message
     
    I own 10 BDCs in my Roth and let the compounding do their magic. Imagine the YOC after a few decades!
    7 May 2014, 06:35 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    Agree with all of the above. Like Tack says I too might certainly buy more if it gets hammered.

     

    Interesting few days.
    7 May 2014, 07:05 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » JBT

     

    I'm tired of stocks tanking & being underwater on news after they were up. I'm setting stops on ones that are up. If I'd done that with PSEC, I'd be better off, same with (MU), and (TGT) after last week's gains. So stopping (CVX) at $120. Everything else is underwater except some indices...
    7 May 2014, 12:25 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    LMH:

     

    I can tell you, from long experience, that setting stops on new buys is a bad idea. If you are so nervous about something that any intervening decline would sour you, then you should not buy it in the first place.

     

    Secondly, stops rarely protect against bad news because the news almost always arrives in non-market hours, so the drop is priced in at the open, and one sells at a gappy bottom, not at their stop price.

     

    Lastly, it's routine for market makers to "go fishing" for stops, in order to pick up some cheap shares, which they then turn around and sell at a profit. They can easily accomplish this by orchestrating some momentary low bid to trigger stops, then they scoop them up.

     

    The bottom line is that if you set stops on any new positions, you are almost assured to regularly losing money. Stops should only be considered, if at all, on highly-appreciated, high-yielding stocks, where one may wish to maintain the holding for the dividend, but not follow it down in price. For any issues with big gains, absent such yield issues, I never apply stops; I just decide it's time to thin or sell, and do it, and redeploy the capital.
    7 May 2014, 12:31 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    LMH, I think you need to work on the "mental" side of investing, when you make an investment you must ignore short term price movements, certainly a stock dropping 20% should alert you, as maybe something has changed and you should re review your previous decision and assumptions.
    If you believe that nothing has changed you should welcome the new price.
    Imagine you were going to buy a house, suddenly the price of the house dropped 20% would you be happy or sad?

     

    Nothing material has changed about (MU) (TGT) or (CVX) since you purchased them, until you believe you can make a true business evaluation, and value evaluation of a given company it will be hard to gain this confidence.

     

    Were you in the markets 2006-2009?

     

    When a stock I own goes down I am happy, I bought (COH) for a 2% allocation at $47.5, for me the drop is very good news. It has allowed me to sell $40 puts on the name, now for me the price of (COH) becomes a super bargain at $36 if it ever gets their it will be 20% instead of 2% of my portfolio.
    7 May 2014, 12:49 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » Yair

     

    If my house value dropped 20%, I'd be bothered (assuming I even looked.)

     

    I don't need to work on the mental side. I need to work on how to communicate here so what I'm saying comes across correctly. These stocks ALL dropped 18%. When it's one or two out of a bunch, fine. When it's the same up 6%, then some out of the blue significant story-changing 18% drop from that top...

     

    Yes I owned stocks from 2006 to 2009. As i've said before, it didn't even dawn on me to consider selling. So no, i'm not a nervous nellie. I also owned & held through 2 prior crashes.

     

    If after they've climbed, I stop a loss on original principal, I may get stopped out... and prevented from being in something I apparently didn't understand that well. Or that changed a lot. While staying in those that are acting like their original story is the same, up, down, but normal action.

     

    ...this really is about how to judge and get out when the story has changed.
    7 May 2014, 01:06 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » Yair

     

    I do think you have some excellent points.

     

    " how to judge and get out when the story has changed. "
    Is a mental thing. It's just a slightly different kind of mental thing. I think happens when you're new to picking, and doing it for the first time in not a bull environment... and significant news hits several buys.
    7 May 2014, 01:25 PM Reply Like
  • extremebanker
    , contributor
    Comments (1747) | Send Message
     
    LMH:

     

    Most of my investments are in funds. Exchange traded, closed end and mutual. I do buy individual securities when they have been slammed more than 20%.

     

    Most of my portfolio is mechanical or rules based. I track about 30 different funds and invest in those with better relative strength when they are above their 200 day average.

     

    This rules based approach does not require as much due diligence as investing in individual securities. Volatility is substantially reduced by selling when the 200 day average is violated.

     

    It makes for less conversation but works for me.

     

    7 May 2014, 02:53 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    L,

     

    I liked what Yair said. What he wrote is how I approach it.
    7 May 2014, 09:37 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » T

     

    Agreed, you can't set a stop on a new position. It has to have climbed first. It's all but one of my positions have been up 6% at some point - and are now all underwater. If I set at 2% up, I'd sell only on bad news driving it down.

     

    So (CVX) is up 12% at $126. I've set one at $120, so it should only hit if I'm not paying attention when some bad news happens to -really- drive it down. I'm fine with letting it ride over a very long time, & will remove the stop if it comes down because the market starts to come down.

     

    So my stop thinking is only on shares that have gained enough for an in between stop point.

     

    How does this sound compared to your experiences?
    7 May 2014, 12:42 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    LMH: I have never entered a stop order for a variety of reasons.

     

    If I am uncomfortable with the current price, my approach is to liquidate or pare the position, i.e., take profits.

     

    Most of the time, I am buying blue chips at what I consider to be a good value. If the price goes down 10% or even 20% based on no material negative development, I will buy more and rarely take a full position with one order anyway. I mentioned my two 50 share COP purchases earlier this year as an illustration with the second 50 share lot bought at $63.68 shortly after I bought the first 50 share lot at $68.87.
    I would have bought a few more shares if the price has gone below $60. My valuation of the shares had not changed as the market price went down.

     

    With a stop order, you could have the market blow through it for non-fundamental reasons. The most recent hideous example was the flash crash which caught a lot of stop orders and turned them into market orders below the stop price. That was just a temporary market phenomena that simply cost investors money who had stop orders triggered by it.

     

    There are a bunch of articles written about that flash crash and stop orders, some here at SA.

     

    http://seekingalpha.co...

     

    That was just an extreme example of a market event taking the price quickly below the stop order. There can be other non-fundamental reasons that trigger a steep and quick decline which is why a human needs to make the decision on whether to sell rather than a computer.
    7 May 2014, 12:57 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    On a company like CVX, if you thought it was a great deal at $120, you should think it's an even better deal at less.

     

    I just have learned that stops almost never served me in a positive manner. You may believe that, or you can conduct your ow experiments. I have a very large and diversified portfolio, and, presently, not a single stop order.
    7 May 2014, 01:14 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Lmh,

     

    I'll agree with all that has been stated about "stops"

     

    I never use them -- I have many mental triggers and caution lights on all of my charts.

     

    You will get "whipsawed out' of positions that as Yair mentioned , where there is no fundamental change in the company -- but the overall market is reacting to some event or headline.. this is where the babies are thrown away - and opportunities arise ------

     

    I.E. (MU) hit a new high in Feb @ 25.5 , sold off to 21 when the markets got weak , then hit a new high@27 on Monday ..

     

    so if u can time that - good luck -- at the end of the day ----MU is up 28% in 7 weeks - in an overall flat market .. that kind of performance can make an investors year.. and in a diversified portfolio adds performance when a sector is being sold for one reason or another ---- i.e the financials --- & down the road we just might see the pricing we are seeing on those names today to be inexpensive ---

     

    With (MU) the investors that added during the sell off are in real fine shape now..

     

    a contrast to those having their shares stopped out down at the lows only to see the shares higher today ..
    A stock like (CVX) which is a LT hold for me - I may sell calls there if i think its stretched -
     but its a core holding that has a 10% div growth rate in the past 10 years and that makes up for a lot of "trader noise" during the course of the year.
    7 May 2014, 01:25 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    Once I have researched a stock & taken a position, then like SG if it drops in price I buy more. As long as the company's business model is still making $, then I will hold it & continue to add on dips.

     

    I've held many stocks for years, and come out making money on them even tho they dropped in price at first.

     

    (GE) fell after I bought it (remember when it was a $50 stock?) I continued to buy, especially when it fell under $10, I "backed up the truck." That was sweet. Meanwhile, the dividends kept rolling in. I still hold it in my retirement portfolio. I never stopped buying (GE) even as it fell under $50. The problems (GE) had are now mostly gone (GE Capital, good riddance to that).

     

    Another stock that took awhile to make $ for me was (TM). I held this stock for years, continuing to add to it. Sold out of the entire position when it topped $130 and banked a very nice gain plus dividends over the years.

     

    Consider that (TCAP) (PSEC) (TCRD) all pay high yields. I'm not selling any of my shares at the moment, but may add later. Meanwhile those dividends keep rolling in.

     

    Short term ups & downs do not matter so much to me. Investing for the long term gains has worked very well. As long as you are investing in quality, you don't have to worry about losing the entire position. Even after a major disaster like 2008, using the incoming dividends and adding new money during the dip has been very profitable.

     

    Naturally everyone has their own game plan.
    7 May 2014, 01:29 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    Also never use stops. There is always the risk of another flash crash.

     

    If you buy a good company, a substantial dip is a buying opportunity.

     

    It all depends on my time frame, what other stocks are in my portfolio & of course DD before I start a position. Last year, at a family party a relative was going on & on about (WFM). I never bought the stock for the simple reason that I think their prices are too high, and there is plenty of competition. After today, feeling very thankful that I do lots of research before buying anything. It was around $50 back then, fallen to $38 today. Some would buy it at this price, but not me.

     

    Another stock that I did consider was Target, after the disaster they had last year. However, after shopping at the local store just before Christmas, it fell off my wish list. The store was empty - hardly any customers. Bad sign to me. Plus, I already own enough retail in my portfolio. I would not buy Target right now either. Just saw that the old CEO was fired, and the interim guy doesn't want to stay "long term." However, if you are in this stock I would not sell at a loss. Rather stay the course, add more after the price stops falling & wait it out. In time, I'm sure it will rise again.

     

    As always, "YMMV" **** your mileage may vary
    7 May 2014, 01:43 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    I think (TGT) is attractive here, but that's just my non-expert opinion. I don't see how a CEO departure will change foot traffic or sales materially unless he's a complete disaster. I actually did trade it successfully before thanks to the idea from FG. The credit card debacle was brutal but I just used that to reduce my cost basis and then ending up exiting the position very successfully around 62 recently. I'm not sure about jumping back in because I was just in that name and I don't want to jinx the success I had with it, but superstition aside it is attractive. Also, this is the sort of name where you could hold for a long while and just enjoy the dividends.
    7 May 2014, 02:24 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    BC,
    Agree,

     

    TGT is a div aristocrat - good companies will get it right -

     

    This story will play out over time ---
    7 May 2014, 03:08 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    BC,

     

    Agree on (TGT). Added twice in the high 50's earlier in 2014. Would add again if it gets closer to $55.
    7 May 2014, 07:09 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - BC

     

    If I'd set a stop, and gotten out on the news slide, I'd have bought back in here or in a few days after the news digested.

     

    Selling off on his step down didn't make sense to me, since he's obviously part of the past troubles.

     

    It appears he promised double digit dividend increases for the next year and that's what's thought to be in jeopardy? I'm not saying it makes sense. Just that it's the only concern I've heard.
    7 May 2014, 08:58 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    L,

     

    But that's timing and hindsight is always 20/20. Have to agree with the other posters above on not using stops. Market seems rigged at times, see (NRF) drama last week, so I don't want a stop 'hanging' out there.
    7 May 2014, 09:42 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - CW

     

    Yair describes what a lot of folks do. He also hit on one problem -- I'm new to assessing companies and bought when I was even newer to it. So it makes it hard to be confident. And of my 7 purchases, 6 hit 12% down.

     

    On timing with TGT, I was picking up on something. That's probably why it bugged me....

     

    ...last two weeks TGT climbed like it was suddenly doing well; sense of relief came over it. (Not over me, over the stock.) Looking now (and it's with trader perspective), I'd bet there was insider trading running it up... ahead of this news. If I'd set a stop, when it went down on the news, it would have been a good trade. Then I could buy back in after the first drop. Don't care if it drops more after that... but it's that I picked up on something... so it bothered me to get caught flat footed on it.

     

    But because I'm in it long term, just didn't want to act on it... let it ride. Which is what I did and am doing.

     

    Also, I bought 7 stocks. 6 of them went up 4-6%...then down 12% (or TGT was 6% down). Only one (CVX) hoovered for a couple months then climbed.

     

    If 6 of anyone's first 7 purchases were 12% down, after being up 6%... it'd make you want to rethink keeping a little of those gains... or changing your plans a little... (My ETFs are mostly positive.)
    7 May 2014, 11:12 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    So fun exercise...

     

    I know not all of you would ever consider a growth online company as a stock holding...

     

    But assuming you did, what is your entry price for (ASOS)
    7 May 2014, 01:29 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    What's the symbol? I tried asos and there were no stocks with that symbol.
    7 May 2014, 01:54 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    Try (OTC:ASOMF), (OTCPK:ASOMY)
    7 May 2014, 01:56 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    According to Yahoo finance profiles both are UK online fashion and beauty retailers. - looks to be the same company but the symbols trade at different prices. What't up with that?

     

    In either case I looked up their financial data on Morningstar and revenue is growing at a compounded rate of 50% for the past few years - very impressive, with earnings not as consistent.

     

    It's not the firm I'd typically buy, but if I had to stick my neck out I'd say a max of about $45 - 60 times probable F' 2014 earnings of around 75 cents.
    7 May 2014, 02:38 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    Sorry, yes http://bit.ly/1qf31vZ

     

    For the link, my GF absolutely is nuts about their prices/products and every girl around her the same.

     

    It's low prices means it has world wide appeal, it is an interesting case.
    7 May 2014, 02:41 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » -

     

    I appreciate how respectful the comments have been. For someone new -- and buying in during a sideways, not bull market -- it's harder to gauge. So I'll take it all in and process it, and do my figuring. I'm sure will have more questions!
    7 May 2014, 01:42 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    I've mentioned the E & P energy plays from time to time -- I added (PXD) last December @ 177 - http://seekingalpha.co...

     

    & then I highlighted the name and added it to a list of stocks that i though had a chance to outperform in '14
    http://seekingalpha.co...

     

    Another example of "stops",why i dont use them --- rather believing in the story-- while the markets churn

     

    (PXD) rallied to 200 in March then dropped to 180 with market weakness

     

    Today it is responding to stellar earnings last night and is up
    5% today - $10 to $208 --

     

    the story is intact - & my price target is still $230 , since this past quarter was actually hampered by bad weather in the midwest that suspended drilling activity at times, the forward guidance and earnings are in place .

     

    its up 15% in 2014 in a flat market ..

     

    7 May 2014, 01:42 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    I exited (INTC). I should have sold at 27 but missed it. Then I should have sold at 26.5 but missed that too. Oh well, I'm out now.
    7 May 2014, 02:55 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Throwing in the Towel; I'm wrong.

     

    On a micro- scale I was right and made good money; on the financials and broader market I believe I'm wrong.

     

    The SPX has had everything thrown at it and more; and there are persistent bids. I've covered my short exposure and increased my energy exposure. I'm impressed with the SPX strength. Looks like a sideways consolidation.

     

    Small caps etc are still weak, however I don't feel like getting squeezed out -- so will cover now.

     

    Thought we'd crack today, we didn't. It is what it is.
    7 May 2014, 03:35 PM Reply Like
  • Tack
    , contributor
    Comments (14267) | Send Message
     
    M:

     

    I surprised you're surprised.

     

    The liquidity picture and fundamentals still favor equities. The recent rotational moves, as opposed to across-the-board selling, should be an important signal, especially as the money has flowed to sectors that would be especially weak in a reversing economy.

     

    It seems that the Treasury moves have confused some, as it's been seen as a signal that money was preparing for defense. But, in fact, the Treasury moves have been occasioned because belatedly it's being recognized that last year's taper-talk panic was misplaced and the yield market was oversold. Adding, perhaps, has been some European money nervous about Ukraine. But, none of this has indicated anything about the U.S. economy, per se.
    7 May 2014, 03:50 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    M:

     

    Any tips on how to trade? Even though I am more of a long-term investor than a trader, I would like to learn more. Do you have favored technical indicators?
    7 May 2014, 03:58 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    BC -- How to trade. Thats a rather large question. I've been doing it for 15 years -- so its so much about study and experience.

     

    Its a combination for me of following all different asset classes and their correlations, sentiment; price action, fundamental data -- as I say thats a complex question. Many different styles.

     

    And I still get it quite wrong ; as I expected a real crack today. Perhaps Yellen reassurance; perhaps Ukraine -- doesn't really matter.

     

    I can tell you a lot of traders like got fried today, and because I've seen this so many times -- a rally for no apparent reason -- I reduced my shorts a lot on this mornings selloff. (actually most of them.)

     

    A lot of it is experience and intuition -- the whole morning the selloff didn't pass the "smell test".
    7 May 2014, 04:11 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Tack,

     

    You are not likely to agree, but I think today's rally may have been sparked by Yellen's signal in her speech that higher inflation rates than the Fed's target, would be tolerated and even welcomed.

     

    Hence they will again be quite slow to tighten. Higher inflation is good for equities, for awhile, until the market decides the fed is potentially behind the curve.

     

    I am reading a few rumbles about that very topic.

     

    Hence if the Fed truly wants an inflationary outcome, I'll keep playing along and increase my energy and materials exposure even more.

     

    There's an article today in SA, about this topic, and possibly bond vigilantes showing up if they don't approve of the Feds lax view on inflation.

     

    We will see, in that case we won't correct until led by bonds first.

     

    Always interesting, this game.
    7 May 2014, 09:28 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Nasdaq down only 10 or so -- amazing.

     

    Really; I saw a 100 point decline setting up in the nasdaq, with all the weakness in the stocks. I shorted it more than once, finally covered when the SPX held like a rock.

     

    Whatever the reason; I will simply say "thank you" for the short side trades, and move along.

     

    Must be a ton of liquidity, to see the IWM have a major breakdown this morning, and power right back. Huge reversal even while social media ect still pounded.

     

    Rotation, Rotation.
    7 May 2014, 03:59 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    M,

     

    I went with the rotation into the EM's as discussed on this blog. My (EWZ) has had a nice gain just over 9% since April 1.

     

    You still have any stake in MBT? It had a 5% jump today.

     

    You have any thoughts on whole foods? Big drop today.
    7 May 2014, 09:22 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    CW,

     

    No, I got out at 16.50. Annoyed and not sure what to do @ MBT. Sure smelled like an actual invasion was coming. Still might be, my worry was the US would delist the ADR as a sanction. Don't think it's priced for that, so I'm going to stay on the sidelines for now.

     

    Well done on Ewz. I am not in that as I expected, the existing president to win the election, a clear negative. Still expect this, but it's closer now. With a better president brazil would be a much better long term investment.

     

    I'm on the EM sidelines for now. Focused on energy and some materials.

     

    Whole foods, which I considered shorting awhile ago, is lumped in with high PE growth stocks, and none of them are working. Also perhaps competition and food inflation.

     

    I will likely add some ag stuff to my energy names. Looks like the Fed really, really wants a high inflation outcome.
    7 May 2014, 09:48 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    I don't know if whole foods is one to sit on for a bit and see if it falls a little further or jump in now. I'd like to get in and get out. Definitely not a LT hold.
    7 May 2014, 09:52 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Cwinn ,
    when i see that type of drop - and look at the chart today - for me --- its in " no mans " land

     

    & question where is the technical support

     

    with these situations , i like to see some stabilization in price action before i would consider jumping in

     

    & then i would go back to look at their fundamental story..

     

    I haven't followed so i am at a loss on this one at the moment
    7 May 2014, 10:03 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    FG,

     

    When I see a drop like that it gets my attention. Hope to have some time tomorrow to follow up on it. Thanks.
    7 May 2014, 11:45 PM Reply Like
  • Eudaimonia
    , contributor
    Comments (893) | Send Message
     
    (WFM) is overpriced even after another 20-30% drop.
    8 May 2014, 12:14 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    from bespoke group

     

    http://bit.ly/1iYkdBW
    7 May 2014, 05:15 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    F & G: I took the plunge into RIG last Monday (5/5) but bought only 30 shares at $42.86. Since I am now running about 2 weeks behind in discussing my trades, I will not be discussing that purchase in my blog for two more weeks.

     

    The market seems to like the earnings report released after the close today.

     

    I see two reported numbers. Excluding some items, adjusted profit was $1.43 a share or $1.25 without those adjustments. The consensus was for $1.02 but I am not clear whether the analysts routinely exclude the extraordinary items for RIG or attempt to forecast GAAP earnings.

     

    I decided to split my exposure in this sector between RIG and ESV, buying 30 shares of each rather than 50 shares of one or the other

     

    As to the Bespoke numbers, it makes no sense to me why individual investors would buy any treasury note or bond at their current yields. Even after the huge rise since March 2009, there are plenty of stocks with long histories of raising their dividends that have higher current yields than the 2.6% fixed coupon 10 year treasury yield.

     

    .
    7 May 2014, 08:14 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    South

     

    I saw the (RIG) report after hours and was pleased -

     

    waiting to hear the conf call tomorrow to see if the board voted to increase div from 2.24 to $3 ...

     

    Right now its a 5% yield without the increase ,,

     

    I also own (ESV) - I was reluctant to own both in the same sector - but the yields here are so good - I couldn't resist -- These will be great LT holdings because of those dividends .....

     

    The bespoke report is telling --- as u stated an investor can find plenty of alternatives to a t bill ....
    7 May 2014, 08:43 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » SG

     

    Did you have concern that rigs are over produced so it will keep the sector of deep seadrilling down?
    7 May 2014, 08:52 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    LMH: I still have the concerns previously discussed by me here, and consequently limited my total exposure to the drilling sector.

     

    One way that I control risk is to set limits on the total amount invested in a company. The negative issues that I discussed earlier about drillers here are reflected in my low exposure limit.

     

    For drillers, I decided to invest up to $3,000. I have a current limit of $10,000 for the securities issued by one company (common, preferred and bonds).

     

    I invested only $1,285.8 in RIG's common plus the broker's commission. Sometimes when I buy a small amount and hold for a long time, I am surprised by the ultimate gain. My first investment was HCA soon after it went public in the late 1960s, when it owned one small hospital near Vanderbilt. I bought 20 shares and financed that purchase with my earnings working for my Dad during my "summer vacations". I worked my way up to $2 per hour or maybe the raises over time were just tied to minimum wage increases.

     

    I chronicled my Dad's response when I asked for a raise to $2.25 per hour in this post:

     

    Learning the Value of a Dollar
    http://bit.ly/TrX6jQ

     

    I digress.

     

    I also decided to buy both RIG and ESV. This is also based on a risk assessment. I always look down before I look up.

     

    We all remember the DeepWater Horizon incident that proved so costly. Transocean owned that rig. By buying both drillers and splitting my total investment (up to $3,000) between them, I reduce that kind of event risk some.

     

    I would add the DeepWater Horizon event to my list of concerns about this sector.
    7 May 2014, 09:23 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    L,

     

    That's why I'm loving my (PDS), as it makes new highs after new highs, along with (ECA) and (BIR) and (POU).

     

    All 4, new highs, (again) today.

     

    Of course I can't pick stocks for investment....lol.
    7 May 2014, 09:39 PM Reply Like
  • CWinn1970
    , contributor
    Comments (377) | Send Message
     
    "Of course I can't pick stocks for investment....lol."

     

    Funny, I try to check in before I get on the treadmill at the gym to see what you're shorting. Seems at least one of the names is discussed on the TV. Helps pass the time!
    7 May 2014, 09:47 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    CW,

     

    I am not short anymore. They beat my social media / momo shorts like rented mules, it was a great run, but the SPX is too strong for my liking, so I'm out of the short business for now -- at least for more than a short swing.

     

    Too dangerous. The groups I would short are all oversold now. Even the IWM fought back.

     

    I see 1900 + as likely on the SPX. Amazing the resilience to any decline.

     

    Those 4 long names above are all tied to natural gas and oil, and that's no accident I think they are flying. The Fed wants inflation.
    7 May 2014, 09:58 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Macro: I have some familiarity with Paramount Resources, POU.TO, though I do not have sufficient information to make an informed judgment about it.

     

    I know that the price has skyrocketed, going from around 23 (9/2012) to over 60 today:

     

    Chart Link for Anyone Unfamiliar with this Stock:

     

    http://yhoo.it/1itxMnc;range=1y

     

    The current consensus estimate for 2014 is $.27 and $1.69 in 2015.

     

    http://yhoo.it/1itxOeA

     

    Does the current and forward P/E cause any concerns?

     

    The chart also looks like the stock price has entered into a parabola to me. I always sell into what I call dangerous parabolas, defined generally as a price move that is not supported by traditional criteria for valuing a business (e.g. 1999) The only questions are timing and whether I pare gradually or liquidate all at once.

     

    Both BIR and POU are owned in very small amounts by the Canadian ETF iShares S&P/TSX Capped Energy Index ETF-XEG.TO, and I own 200 shares of that ETF bought on the Toronto exchange with my CADs.

     

    http://bit.ly/1itxMDs

     

    Those two companies are not owned by the U.S. listed Guggenheim Canadian Energy Income ETF, ENY, which I also own:

     

    http://bit.ly/17JGcko

     

    I currently own SU and CNQ and have taken my profits in Husky and Enerplus.

     

    I also own 100 shares of Enbridge Income Fund Holdings -ENF.TO, which has done well since my purchase at C$23 last November and it pays monthly dividends like your Canadian REITs. I own over 10 of those.
    7 May 2014, 10:19 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    SG,

     

    In a word, no. Earnings power like POU is about to generate, with the projects they have coming on line, doesn't come cheap.

     

    And there is no better management than Clay Riddell, who founded the company, and is a billionaire, btw, because he has founded and built up several energy companies.

     

    Better than some paid manager like the master of disaster at bank of America.

     

    I expect the 2015 numbers to only go higher, and then 60 won't look so expensive. There is no froth, because the canadian energy sector has been sleeping for years, and POU is practically unknown even in canada.

     

    I'd only wish I'd bought it sooner, instead of the low 50's.

     

    Jmo of course.
    7 May 2014, 10:37 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    This will make a few of us happy.

     

    Gilead Sciences announce $5 bln share buyback program (78.77 +0.45)
    Co announced that the Board of Directors has authorized a repurchase of up to $5 billion of the company's common stock. This is in addition to a separate $5 billion buyback program announced in January 2011, which has approximately $2.9 billion remaining in the plan and is expected to be completed by September 2014. The new program expires three years after the completion of the current repurchase program. Purchases may be made through the open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated transactions or other means as determined by Gilead's management and in accordance with the requirements of the Securities and Exchange Commission.
    7 May 2014, 05:48 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    Sometimes this seems true. Enjoy!

     

    http://bit.ly/1iYM0lO
    7 May 2014, 08:22 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    D,

     

    For sure. To think what I missed by not getting my CFA. I'm forever regretful I can't understand these big words, and my permanent loss of status.
    7 May 2014, 09:34 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » DD

     

    It was funny, lol. All with a straight face.
    7 May 2014, 11:22 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    DD,
    and then there are guys/gals that come to work everyday to provide the best info they can for their clients .. :)
    7 May 2014, 09:03 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    No offense to you intended; I thought most reading this blog would find it funny.

     

    I know how hard some professionals work; I used to be a Wall Street analyst. In my seven years with the WS firm I didn't have a losing year - the only analyst who could boast that record - and considering our high retail commissions that was a feat. But for the most part I found too many of my counterparts unimaginative and lemmings - and willing to opine on subjects they knew nothing about.

     

    Our chief economist is now with BNP Paribas. He once was asked a question about the ag markets and regulation (my specialty) during his weekly spiel on the broacast system. He gave an answer that was wrong imo. The next day I was asked the same question during my weekly broadcast and gave a completely different answer. I never referred to his answer during my talk, but he called me almost immediatedy after and castigated me for disagreeing with him. He felt I should have backed him up. I told him he didn't know what he was talking about and why. It turns out I was right. But unfortunately I've seen too much of his type of off the cuff analysis and sloppy research to have reverence for most.

     

    How often have you heard an economist or strategist say "I don't know" or "that depends on x, y and z"? I can't recall the last time I heard one of those answers. They always seem so sure of themselves, don't they?
    7 May 2014, 09:27 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    DD,

     

    none taken :) I guess i wanted to point out there is good & bad in every industry ;)

     

    and also agree about the folks that 'wing it " and are just looking for their paycheck---- they're everywhere :) and that is a black eye for all ....

     

    best of luck to you :)
    7 May 2014, 09:40 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    DD

     

    They all said to buy the dip in twitter the last 10 points.

     

    And then unapologetic.

     

    You see the downgrade on fireye today -- from I think 80 to 50? Lots of value.

     

    This is after the stock gets crushed by earnings, and is trading at $27. Straight down from 70.

     

    Wish I had shorted that one.
    7 May 2014, 10:16 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    M - there are so many I wish I had shorted. I even said to hubby a couple months ago I had to sit on my hands to stop myself from shorting stuff. Trouble is I hate shorting stocks (had no problems at all with commodities) since it seems to me the market can remain irrational for far longer than I have the stomach to stick with it. What I should have done is sell the first rally after the charts broke down - at least at that point I would have known when to stop myself out.
    8 May 2014, 08:46 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    DD;

     

    It's tough game, and stressful. Glad I'm done with it for now as we blast off here.
    8 May 2014, 10:07 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    My book as of the close -- in addition to the 4 Nat gas / oil focused names above in the post to L, I am long AAPL again, will hold through the split at least, increased my (GILD), and the the 2 mortgage reits, and one materials junior I've had for awhile, a bit speculative. (OTCPK:IVPAF).

     

    I also plan to buy a smaller Canadian energy name tommorrow as a 5th play on that theme.

     

    No shorts at all -- done -- so now the major top for the next 3 years is likely in place, LoL.

     

    Commence selling..........
    7 May 2014, 10:08 PM Reply Like
  • Stephen J Melnykevich
    , contributor
    Comments (1300) | Send Message
     
    I like PM (full position already for me), BP, CVX, AFL (full position for me already)in that order.

     

    Waiting on JNJ, V, and PG to go much lower to add to make full positions or start a position (pg).
    7 May 2014, 11:41 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » Hi Stephen. Welcome!!

     

    How did you come by the blog?

     

    (JNJ), (V) and (PG) are core holdings for a few people here. Any particular entry points in mind?
    8 May 2014, 12:10 AM Reply Like
  • Stephen J Melnykevich
    , contributor
    Comments (1300) | Send Message
     
    JNJ : ideally 75-85 but $90 realistically
    V. :$175 - 185 though that may require market drop
    PG : always trades at premium so current prices but a drop to $70-75 would have me fill a whole position immediately
    8 May 2014, 01:04 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    Hi Stephen, nice to see another DGI investor.

     

    Sometimes you have to just go ahead & buy the great stocks. I've been buying some in small amounts, adding whenever there's a dip. Sadly, we don't see many dips in stocks like (JNJ) (MMM) (KMB) (PG) etc. (PG) has been flat for some time. I think it will see some upside soon.

     

    Other stocks, I just jump in & buy as many shares as possible, if the price is good. We had a good dip at the beginning of the year. But now it seems everyone wants to buy the blue ribbon quality dividend stocks.

     

    Do you follow Carnevale, Fish, or any other DGI guys? They have really helped me to become a better investor.

     

    Since switching to DGI stocks, my portfolio is doing better. The dividends are nice too.
    8 May 2014, 08:01 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    (PG) is sort of flat for me, only up 5.3% last year. My cost is $80, bought last year. So I haven't seen much gain yet. If it does go down under $80 I would consider buying more. One of those companies that is a core position for me.
    8 May 2014, 08:06 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2137) | Send Message
     
    (JNJ) another top notch company. Wow if it goes down that much I'll buy more too.

     

    (V) is doing very well for me. Bought it last year, I think for more than your price.

     

    Sometimes the market does give us good entry points.
    8 May 2014, 08:10 AM Reply Like
  • Stephen J Melnykevich
    , contributor
    Comments (1300) | Send Message
     
    @BlueSky

     

    It's good to see you fellow DGI Investor and NY Giants fan!

     

    I completely agree that sometimes you just need to go and buy stocks like JNJ, PG etc. I feel that JNJ is slightly overvalued right now but PG might be a good purchase here although I'd like to see it lower first. My JNJ purchase for 2/3 of a full posiiton was much lower around the 90 range. It may get back there if the market drops.

     

    I do follow Carnevale, Fish, the David's, etc. All great authors and commentators. Huge wealth of knowledge.

     

    My portfolio consists of 50% in AAPL (I am going to slowly ween out and bring that down over the next year or two and put proceeds into other DGI stocks), KO @32 is a full position, I won AFL and PM as full positions. I have partial positions in CVX, BP, V, JNJ and a bio play with TNXP.
    8 May 2014, 10:40 AM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    This comment is more for the younger crowd here.

     

    Over the past several decades, I have observed irrational pricing of blue chip companies. This occurs in two phases.

     

    In a long term secular bull market (1949-1966/1982-2000), there will be a blow off phase when investors lose all pricing discipline in what can only be described as delusional group think. Even the best companies with long term track records will be priced at clearly indefensible prices.

     

    When that happens, and it will happen, the investor needs to make a decision as to what kind of investor they are going to be: sell and buy back later when the inevitable massive price adjustment occurs, pare the position, or hold.

     

    In 1999, I sold.

     

    There are many who held their blue chips into that parabolic rise in the late 1990s or the late 1960s for one reason or another. A frequent reason given is the growth of dividends. However, it would have been possible to generally buy twice as many, or more, shares in 2002 or 1974 with the proceeds realized from selling in 1998-1999 and substantially increase the dividend flow.

     

    The second example involves the end of a long term secular bear market. The first thing that happens to the blue chip price in 1999 is that it gets cut about in half. Then the price will meander within a much lower price channel for a decade or so, as earnings grow and dividends are increased at a steady clip. Near the end of that long cycle, you could not give the stock away for a 10 multiple, and sometimes lower. This is the other end of irrational buying and the one where buying needs to accelerate.

     

    I used JNJ's price as an example of the multiple expansion and the multiple compression cycles in a May 2010 post:

     

    "Large Cap Valuation Strategy"
    Scroll to Item # 3. Multiple Compression for Many Large Cap Stocks/Long Term-Large Cap Valuation Strategy

     

    http://bit.ly/UowheR

     

    JNJ did not hit the truly asinine valuations achieved by many blue chips back in 1999. Several went over 40 TTM P/Es.
    8 May 2014, 09:07 AM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    Nasty day in energy names. I'm assuming its mainly due to the Gulfport meltdown; anyone see anything different?
    8 May 2014, 04:04 PM Reply Like
  • dancing diva
    , contributor
    Comments (2584) | Send Message
     
    http://bit.ly/1l396Gj

     

    http://bit.ly/1l396Gq

     

    The only things I saw was in the technicals. On the daily chart it had just about gone parabolic.

     

    And on the weekly yesterday - remember today backed off - we were getting close to the top end of the pennant.
    8 May 2014, 04:15 PM Reply Like
  • Robert Duval
    , contributor
    Comments (6006) | Send Message
     
    DD,

     

    I think energy has a chance to go truly parabolic, aka 2007, as the Fed is pushing higher inflation --- especially if we do get an accelerating economy -- it is easy to see 120 oil and 6 + gas.

     

    The rotation into energy is early. If -- a big if -- investors move into energy in a big way for inflation protection -- we could see a big late cycle move.

     

    Of course-- just a thesis -- but I am a super bull -- especially on natural gas. So in a sense I don't care what happened in the short run.
    8 May 2014, 05:17 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    Agree on both fronts-- energy names had been attracting money lately and along comes gulfport and their was a reason to sell..

     

    In my view Gulfp0rt is an isolated case-- other energy names have had stellar reports and kept or raised guidance ...
    8 May 2014, 04:37 PM Reply Like
  • South Gent
    , contributor
    Comments (4311) | Send Message
     
    Macro: I am surprised Gulfport is trading anywhere near its closing price today. And, this gets back to the issue that we discussed yesterday. Is today's closing price for GPOR at $59.36, down $13.98, make any sense when the 2014 consensus is $1.12 and 2015 is at $1.67, and the company just missed the last quarter estimate by 1 cent.

     

    The investors in major energy companies are not going to be paying much, if any attention to what is happening to these small fry who are drilling in a few places like GPOR's Utica shale play.

     

    I view the slight downdraft today in COP, XOM, CVX, etc to be more related to profit taking after a significant run up in prices since February.

     

    Now, just to make myself sick, my mush of a brain remembered GPOR and I had a faint memory of buying it once. I used the Google Search Box at my blog and found that I had indeed bought 50 GPOR as a Lottery Ticket back in 2009. I paid $4.2:

     

    http://bit.ly/1jFCq5X

     

    One of the staff members here at HQ, probably Left Brain, sold the shares at $7.09 in June 2009. Left a few bucks on the table.

     

    Profit=$128.24 (59% in 4 months which is way too tempting for out LB)

     

    Snapshot at
    Lottery Ticket Strategy
    http://bit.ly/TkDIoK
    ***********

     

    F & G:

     

    Do you have any thoughts about what happened to RIG today? I read the transcript and nothing jumped out at me to explain the large reversal after the opening?
    8 May 2014, 04:44 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6443) | Send Message
     
    South

     

    I also read the transcript and saw nothing that would explain the price action..

     

    In fact,, it appears the div increase to $3 is on the table and will be voted at the shareholders meeting next week...

     

    maybe another victim of Gulfport .... every energy name i have and follow was down today
    8 May 2014, 04:59 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - (LINE) was up today compared to it's dividend. Ex-div drop today would be .75% but it ended only .4% down.

     

    I've been saying last few days that (LINE)s about to start recovering. So far, so good...

     

    That's the only positive energy I see.
    8 May 2014, 05:30 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    L,

     

    I wish it would drag (LNCO) along with it...
    8 May 2014, 05:32 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - JBT

     

    Was (LNCO) up on some days that (LINE) wasn't?

     

    Sometimes it takes day or two for one or the other to catchup.
    8 May 2014, 05:34 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4014) | Send Message
     
    L,

     

    The charts are similar in movement, but there's a big %'age difference on the y-axis. On the one year, (LINE) is down ~18%, while (LNCO) is down ~28%.
    8 May 2014, 05:41 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » JBT

     

    Oooh. Sorry to hear it :(. Shortly after I bought (LINE), I kept reading that (LNCO) was priced less for the same dividend. I never checked what that meant. ...but is that catching up? That's counting from the very top - was LNCO up more at the top?
    8 May 2014, 05:45 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Author’s reply » - Next chapter #24 ----> this way

     

    http://seekingalpha.co...
    8 May 2014, 05:35 PM Reply Like
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