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I find investments are very different and difficult in these extremely Interesting Times!! We hear whispers of manipulation. QE'S that have never been done before. Then we have a template experiment in Cyprus to see the worlds reaction. I just ask everyone to sit back and ask themselves "... More
  • Interesting Times For All Commodities And Investments!! Chapter 22........... 243 comments
    Jul 3, 2013 3:51 PM

    What started out as a small group discussing anything related to investing has grown extremely educational over the last few months.

    We have Authors, Financial Advisors, Seasoned investors, Experts in specific fields, and just the average Joe pitching in...

    Folks.. we are growing and posters like it. If you are new to investing then this site is for you.

    I am going to be the first one to admit that I haven't a clue when or if Gold and Silver will ever take off in price. I invested thinking they will though. Additionally I don't see much coverage or articles pertaining to the other commodities. So I started a blog where every commodity, and every investment is on the table for discussion. Even political questions. I only ask that you be courteous!!

    Someone posted the difference between being smart, foolish, and a moron. Well I have been all of the above and I will "man up" and admit it! However I came away from those experiences with both battle scars and knowledge.

    For years I have been reading basically any day now Gold and Silver will explode. I am by far a gold or silver bug. Yet somehow the can gets kicked down the road and I live to learn another lesson. Then Sprott's ETF'S (NYSEARCA:PSLV) are talked about as being safer then others (NYSEARCA:GLD) and (NYSEARCA:SLV).

    With all the QE'S basically not creating any new jobs what will be the consequences in the future?. Will we be "CYPRUSED "? Are we in a serious stock market bubble? Obviously we read daily about these concerns but what about other INVESTMENTS? Here is where most of us are uninformed and relish an education.

    Individual stocks are fine to discuss as well. All of us know that commodities should only be a % of your portfolio. I owned (NASDAQ:PSEC) and liked the dividend. Others may not ! So please feel free to entertain your picks and why!

    REE'S have been an interest for a few of us over the last couple of years. I had exposure to Lynas (OTCPK:LYSCF). Some posters might have questions about this group as well.

    If you disagree with a post please bring proof and display your argument. If you agree with a post, find one interesting, or have questions please feel free to respond. We must remember were all in this together. So if you want to talk politics and how it affects everyday life, fine with me!!

    Now if some have an opinion on Copper, Zinc, Palladium, etc. Do not hesitate to post that. Most of us might not understand the post but I am sure we'll be open to learning. Lumber might interest someone and I would like to learn why I should invest in it. PLEASE bracket any symbol as it also allows a reader to click on it and get some data.

    My part time job is a college and high school official so I can sit here and referee all day long. I honestly hope that ALL will be professional with their comments. So lets see who comes on board. Looking forward to what can become a nicely knit group of diversified investors.

    I have invited a few Authors whose work I admire to bring their expertise to the forum here as. Tom, Eric, Hebba, Doug to name a few, in no particular order, will drop in once in a while to voice their opinions. Please feel free to ask your favorite Authors to join in the discussion.

    These are highly recommended people that I suggest you follow as well. I have learned a ton from them and find their work both challenging and engaging. Two areas that I hope inspire people who normally don't post to now feel free to do so !!

    Now I also feel compelled to encourage the use of the like button. It is human nature that once someone posts and see the like button add up they will feel they made a valid point. Upon that feeling they will post again! So if you do like what someone posted, either a question or an answer PLEASE use it ! It might help our core grow exponentially as well

    LURKERS , we are waiting for you to post here too!

    We are living in some very INTERESTING TIMES !!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Post away !!

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Comments (243)
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  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Ok, I will open

     

    TACK and FEAR are running away with the trivia...

     

    Famous # 22 ???

     

    Will Egypt consider closing the canal??
    3 Jul 2013, 03:53 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    Jim Palmer, Baltimore Orioles, Hall of Fame
    3 Jul 2013, 04:14 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TACK

     

    Thinking of a football player. Palmer is a good one though. I have his picture hanging in my man cave with me and my wife when I sold signed sports memorabilia.. Great guy who spent 15 minutes with us !

     

    Think football...
    3 Jul 2013, 04:25 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    I'm a Baltimore native and just ran into him at Orioles last series in Tampa last fall, when we were staying at Vinoy Hotel, which happens to be where O's stay when in Tampa. We had a nice 10-minute chat at the front portico, as he awaited the media van to the game (does O's TV). Nice guy, and for someone 67 years old he was in amazing condition. I think he could still do Jockey ads.

     

    P.S. The only football player who comes to mind, as 22, if memory serves me is Emmitt Smith, aside from original-Baltimore-Colt, Buddy Young, whom I am sure you did not mean.
    3 Jul 2013, 04:32 PM Reply Like
  • dnorm1234
    , contributor
    Comments (1111) | Send Message
     
    Do you mean Dancing with the Stars champion Emmitt Smith? If I recall, he moonlighted as a NFL hall of famer.
    3 Jul 2013, 04:37 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    No the Suez Canal will not be closed. The military is capable of running it in the event of strikes. They have before. That is just the excuse being used for the run up in Brent prices.
    3 Jul 2013, 05:48 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    6:15 PM Crowds in Cairo are alarming and partly responsible for WTI crude pushing past $100/bbl, but Liam Denning reminds that Egypt is a net oil importer, and Suez Canal oil transit totals just 0.1% of global demand. The big picture doesn't support higher oil prices: U.S. commercial stockpiles are near 20-year highs, and emerging markets will continue to drive demand growth. Even as near-month futures have risen by ~$7/bbl in the past month, futures for 2016 and beyond have dropped. Comment! [Energy, Commodities, Global & FX]
    3 Jul 2013, 06:18 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    Dave meggett
    3 Jul 2013, 06:54 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    As expected, the Egyptian army deposed the Muslim Brotherhood today. The Suez is fine and was never in jeopardy. It was closed twice before 1971 ... but never since. Futures contracts longs set several records in the past four weeks, but should settle down depending on actions in Syria.

     

    Oil's Stress Premium price component is $14 today leaving much room for American Crude (and Brent) to head south...
    3 Jul 2013, 07:55 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    I sure hope so - short UCO with Oct. $33 puts!
    3 Jul 2013, 08:50 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    #22 Danny Ainge - Phoenix
    3 Jul 2013, 04:29 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Football - how about a kicker - Blanda, or are you talking Foosball?
    3 Jul 2013, 04:40 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » My pick is Emmett, so you decide who is better. Palmer or Smith. Ainge to me isn't in the same class as the other 2 .imo

     

    But Palmer did not have to be as nice as he was to me and my wife about 6 years ago. We were just vendors selling, but caught him backstage prior to opening and him, Don Sutton, and a few others were sitting around talking and invited us over. Louis Tiant was also there.

     

    Ok, Tack ..YOU choose. Palmer or Smith ??
    3 Jul 2013, 04:40 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Who scored more points? Blanda or Smith?
    3 Jul 2013, 04:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Besides I remember Blanda as a kicker. Kickers aren't football players. They don't even sit on the same bench with the rest of the team.. lol

     

    Smiths rushing yards imo will never be broken in todays 2 back set up by most teams..
    3 Jul 2013, 04:49 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    I have to recuse myself on the Palmer-Smith issue, due to bias.

     

    P.S. George Blanda was one hell of a football player, playing until 48 years of age. I'll never forget one game near the end of his career, when he was in his mid-forties, when he threw a last-minute TD pass, then kicked a 53-yard field goal as time expired to propel the Raiders to a come-from-behind victory. It was mythical.
    3 Jul 2013, 04:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Ok, Blanda it is. I am 56 years old so I really did not see his better days. You guys say he is the best, then well roll with it!

     

    Now we got FEAR, TACK, WMARKW, all bidding for the title !!

     

    Guess others aren't sports guys eh?

     

    Now we better get back to INVESTMENTS as CURLS will get mad at us !

     

    TACK, Enjoy your Birthday. If you are that old how was the signing of the Declaration? Crowded? HEHE ..
    3 Jul 2013, 05:26 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Hey....just some info on Blanda - that I did not know.

     

    "Blanda retired after the 1958 NFL season because of Halas' insistence on only using him as a kicker, but returned in 1960 upon the formation of the American Football League. He signed with the Houston Oilers as both a quarterback and kicker. He was derided by the sports media as an "NFL Reject", but he went on to lead the Oilers to the first two league titles in AFL history, and he was the All-AFL quarterback and won AFL Player of the Year honors in 1961. During that season, he led the AFL in passing yards (3,330) and touchdown passes (36). His 36 touchdown passes in 1961 were the most ever thrown by any NFL/AFL quarterback in a single season, until matched by Y.A. Tittle of the NFL New York Giants just two years later in 1963. Blanda's and Tittle's mark would remain the record until surpassed by Dan Marino's 48 touchdown passes in 1984. Blanda's 42 interceptions thrown in 1962 is a record that still stands.

     

    During 1962, he had two 400-yard passing days for the Oilers: a 464-yard effort against the Buffalo Bills on October 29, with four touchdown passes (winning 28–16); and 418 yards three weeks later against the Titans of New York, this time with seven touchdown passes in a 49–13 victory. Blanda passed for 36 touchdowns that season. On 13 occasions, he connected on four or more touchdown passes during a game, and on November 1, 1964, unleashed 68 passes for Houston against the Buffalo Bills.

     

    From 1963 to 1965, Blanda led the AFL in passing attempts and completions, and ranked in the top ten for attempts, completions, yards and touchdowns during seven consecutive seasons."

     

    He was pretty darn impressive in his day. Course, I don't know what number he wore back then.
    3 Jul 2013, 05:37 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    Speaking of being at the 1776 signing, here's a laugher, and an incredible, but true, story concerning our nation and it's Presidents, the family of one, in particular:

     

    I wonder how many people could possibly even imagine that two of John Tyler's (1790-1862) (10th President, 1841-1845) grandchildren, Lyon and Harrison (names after the President he succeeded), are still alive today, living in Virginia and Tennessee! No joke! They're in their '80's due to the longevity of the Tyler clan and very late May-December marriages.

     

    Think about that for a minute. Somebody you can sit down and talk with today can tell you that his grandad was born when George Washington was President, in his first term even! That means that their very own grandfather was probably of sufficient age to actually have living memories of George Washington as President, which he passed on to his grandchildren, no doubt! Heck, Thomas Jefferson was just a young whippersnapper. It's almost too mind boggling to contemplate.

     

    This is one of my all-time favorite incredible stories.
    3 Jul 2013, 05:42 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    George Blanda also quarterbacked. I used to follow him when he played for the Houston Oilers.
    3 Jul 2013, 05:50 PM Reply Like
  • dnorm1234
    , contributor
    Comments (1111) | Send Message
     
    >Guess others aren't sports guys eh?

     

    I think Tack edited his post with Emmitt Smith after me. But since it's his birthday, I won't tell anyone.
    3 Jul 2013, 05:53 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    dnorm:

     

    I guess i was adding that post script while you were posting, so you win the race to the county recorder's office. :-)
    3 Jul 2013, 05:58 PM Reply Like
  • dnorm1234
    , contributor
    Comments (1111) | Send Message
     
    >so you win the race to the county recorder's office. :-)

     

    I'll take it!
    3 Jul 2013, 06:02 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @DNORM

     

    I try to add some flavor once every chapter to let everyone show the *human* side of themselves. This way we can bust chops when were posting and kinda become friends as well.

     

    I have learned a lot here in 2 months, basically am changing my investment strategy because of people not afraid to post what they feel. Plus people have been doing this for way longer then I have. I am gracious for all that contribute . I am serious.

     

    I do not get paid a dime from doing this but the education has been priceless. If you find time go back to chapter 1 and read all 4k comments if you'd like. Half of mine are worthless, just thanking people for joining in !!

     

    We have KRUSTY, who is leaving for Africa for the summer, actually post that he LOST 5k in a trade! Now where do you see that in article comments?

     

    Keep an eye out as I usually start a new chapter between 100 to 150 comments and try to throw out a trivia question. Of course it is sports related..

     

    So I hope you stay around as I am trying to build a core and maybe one day someone will post something that even TACK will learn from.. lol

     

    @TACK

     

    That is a great story and I am sure that is true. Would love to sit and chat with that family at dinner. Wonder what they think about OBAMA??
    3 Jul 2013, 07:07 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @WMARKW

     

    Google is a wonderful thing huh?
    3 Jul 2013, 07:09 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Not sure, who has the most running yards in Football?
    3 Jul 2013, 04:44 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    O my goodness.....watch out for market dropping on Friday. The Belgian King abdicated !!!!!!
    3 Jul 2013, 04:44 PM Reply Like
  • dnorm1234
    , contributor
    Comments (1111) | Send Message
     
    I have to say, I'm enjoying the open, pseudo-live conversation that's going on in the blog posts here, thanks to Interesting Times.

     

    On the other hand, I follow a few of the authors that are now posting here. Having everyone posting on the same thread makes "My Feed" a little bloated. I wish there was a way around that...
    3 Jul 2013, 06:08 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @DNORM

     

    I only need 2 more people following me to hit 100.. Are you ? maybe a lurker can as well?

     

    Appreciate it as it would show my effort is working !!
    4 Jul 2013, 05:34 AM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    Some interesting charts, I'll let you draw your own conclusions:

     

    http://seekingalpha.co...
    3 Jul 2013, 06:13 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Not,

     

    he's written "scary charts" articles since early '12.

     

    His quote From earlier article "My overall analysis indicates a continuing elevated and growing level of danger."

     

    Warning after warning While the equity markets are considerably higher..

     

    he falls into the ---if i keep writing about it " eventually it will all come true" camp..
    3 Jul 2013, 07:10 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @FEAR

     

    Thanks for that info. You missed out on the trivia. Anyway who would you have picked??

     

    Gotta get this done before CURLS starts posting. I can't have 2 women in my life yelling at me at the same time..

     

    Being a ref I have always told the coaches "yeah I might be blind, but I am not deaf "
    3 Jul 2013, 07:15 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    Thanks F&G,
    I just liked the charts. Didn't even read his comments. Nice to know...:o)

     

    Are the charts bogus?
    3 Jul 2013, 08:04 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Not,

     

    cant say that charts are bogus, but i stopped after reading some of the comments :)
    3 Jul 2013, 10:38 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Notrub: The Charts are not bogus but the author is picking and choosing ones that he believes supports a bearish thesis. Inherent in that process is a failure to analyze what is both important and central, as opposed to the immaterial and peripheral, and an unwillingness to consider any relevant and material information inconsistent with that underlying predisposition.

     

    For example, it is understandable that new housing starts tanked during the recent Near Depression and its aftermath given that the housing bubble was the primary cause for that event. It is consequently not surprising to see a slower recovery in new housing starts than in prior garden variety recessions unrelated to a housing bubble.

     

    The chart referenced by the author does show a clear uptrend in new housing starts, and this can reasonably be expected to accelerate since the housing stock has not kept pace with new household formation.

     

    A more balanced analysis would point out that housing prices are rapidly returning to trend line growth. The May CoreLogic report showed a 12.2% increase in its nationwide home price index, the largest Y-O-Y increase since February 2006 and the 15th consecutive monthly increase. That is far more important information than the slow recovery of new home construction.

     

    CoreLogic Report Shows Home Prices Rise by 12.2 Percent Year Over Year in May

     

    http://bit.ly/17XXJfv

     

    The recent employment reports also show a strong pick up in construction jobs. The recent ADP report claimed that 21,000 construction jobs were added in June.

     

    http://bit.ly/17XXJfw

     

    I would also note a post at the Calculated Risk blog that summarized a recent Deutsche Bank forecast that construction hiring could rise by 300,000 in this year's second half as new housing starts accelerate.

     

    http://bit.ly/17XXJfx

     

    A similar summary was made of a ML report on the same subject from February:

     

    http://bit.ly/17XXJfy
    5 Jul 2013, 02:02 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    Thanks for the replies SG & F&G,
    I ask about the charts because it helps with my current and long term view of what is going on world wide. As I explained in another post my "view" of things is in the 14 year period. I try to get as many different looks at what is going on I can and like hard numbers over opinion any day unless I don't understand what the numbers are telling me. What I "see" at present is world wide deflation. The only countries I see having less of an impact at present are the ones who's central banks are still in the process of keeping interest rates low mainly US, Japan, Germany and to a smaller extend Great Britain. China was in that camp until last month when they raised their interest rates on purpose and you see the effect that it has had on the Chinese economy in only one months time. Whether we like it or not China has been the economic engine worldwide since 2009 mainly because of its purchase of commodities. But over the last 4 years China has become a victim of their success. Wages have risen, a middle class has grown and its populace is looking at having the same lifestyle as the rest of the developed world. And, yet all of that looks to be wiped out in China's building bubble taking most of the middle class with it.

     

    So, what I am looking for is what will be the economic engine worldwide for the next 14 years? I see where the US could be in 20 years if it gets the infrastructure built to become a net exporter vice a current importer. Unfortunately, in the near term, the US is winning the race to the bottom as seen with the increase in value of the dollar versus other currencies. A stronger dollar doesn't bode well for exports. And, since the US dollar is still the world reserve currency it doesn't bode well for all the commodities that are priced in dollars. I know that oil has been the exception, so far. But, I see even oil falling in the near term because increases in world wide production due to the shale boom and decreasing demand. Again, with the right infrastructure natural gas is looking like the next energy boom world wide which as the switch takes place for power generation and vehicles, because of environmental regulations, will put more downward pressure on oil prices. Fortunately the US stands to benefit from that change, IF the US get the infrastructure right. And, it will be a slow process over the next 20 years as the world converts to natural gas, but, the process has already begun. BTW, the switch to natural gas will also have an impact on the ethanol business which isn't as cheap, isn't as clean burning, and only fits into the oil space. So as oil demand goes lower so will ethanol. Which leads to the whole "crop" market demand and price picture.

     

    Anyway, sorry for the wall of text. I am just thinking out loud. The short version is I am just looking for numbers trying to get a picture of where things are headed so I will know the better places to money to work for the next 14 years.
    7 Jul 2013, 09:02 AM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    SG,
    I have looked at the numbers on housing and on the face of things it does look encouraging. What the numbers have also shown me is that there is a change going on in US demographics. The US population is aging and unless the birth rate suddenly shoots up that is the trend to at least 2050.

     

    The effects of this demographic is seen in many areas. Some that I personally familiar with is the employment numbers. A lot of people that are in their 50s and older will not return to the work force especially the ones that have found over the last 4 years that they can "make it" on whatever sources of income they have available be it savings, retirement income, both public and private, social security, disability, etc. This is one of the reason that U6 has stayed so high since 2009. Also, the numbers have shown that this group of the population, 50 and older, are borrowing less and saving more because they are scared to death that they won't have enough to carry them during their retirement due to the low savings rate for the last 20 years and the losses they incurred during the last "great recession". The numbers tell the story that a lot of this group is in the part time employment picture when they do reenter the workforce. The bottom line is that until my generation and the boomers are gone I don't think employment numbers will return to what we considered healthy during our lifetimes????? Maybe 7% unemployment is the "new normal" until the baby boom generation works its way through??? The numbers tell me that these demographics will put a economic drag on the US for at least the next 40 years as each of these people changes from net producers to net consumers in the economy. I believe Japan over the last 30 years is a good case study on this demographic effect.

     

    Back to housing construction. I am not currently optimistic because
    1) Banks still aren't lowering their lending standards and home loans aren't increasing like they have before following a recession.
    2) I believe we have seen the last wave of fence sitters buying houses now with the rise in interest rates for 15-30 year loans. Which means even less demand in the future.
    3) Whether we like it or not the Federal Reserve's actions in purchasing of MBSs to keep the GSEs afloat has had a bigger impact than demand for housing and housing prices. I don't think anyone will know the full impact of that until the FED is out of the housing market and it has to stand on it own. As far as I can tell no one knows for sure whether the increase in prices is more due to the government building another bubble????
    4) Demand for the base materials to build homes is depressed. I would have to see a rise in wood prices before I would believe there is real demand for home construction. Unless that has changed and homes are no longer primarily built of wood???

     

    On the other hand the numbers have shown me that there is a "construction" boom in the process. Mostly in energy and transportation infrastructure. But, even here, steel prices are depressed. So I really don't know what to think????

     

    I do read the numbers/charts from Corelogic, ShadowStats, Calculated Risk and as many other resources as I can find including the many US government reports. Everything tells me IF the FED stops/slows down purchases the US is in the same boat as the rest of the world. Which basically means deflation, which means the FED is right back into the game???? I am looking for the world economic driver for the next 15 years, I just haven't found it yet????
    7 Jul 2013, 09:55 AM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Notrub: I do not see worldwide deflation. The only way to arrive at that conclusion is to distrust all of the government numbers and the market's forecasts for inflation over the next 5, 7, 10, 20 and 30 years embodied in the TIP prices for those maturities. Inflation expectations have ticked down some since the start of the year but have also started to rise some with the better than expected economic reports last week.

     

    At the present time, I would view the end of QE to be potentially more inflationary than its continuation. For example, I believe banks can be stingy on loaning money, even when sitting on an abundance of capital, when the loan carries an abnormally high amount of interest rate risk which is now the case for term loans.

     

    I am expecting the spigots to start opening up more when the banks can earn a larger net interest margin by making loans at higher rates. More money printing has not led to more loan activity and money velocity (transactions) with that excess money supply.

     

    There are some recent SA articles on this subject with the best being this one:

     

    http://seekingalpha.co...

     

    In addition, there is close to $10 trillion in cash sitting around earning nothing including almost $7 trillion in savings accounts. Eventually, when short rates are allowed to rise, there will be more spending/demand caused by an increase in consumer disposable income resulting from market rates for savings.

     

    Instead of deflation, based on the data and the market's consensus forecasts, I see an ideal low inflation number going out a decade or so into the future. The worst possible scenario for all of us long investors would be a repeat of what happened in the 1966 to 1982 period. An optimal inflation rate for stock investors is in my opinion the currently forecasted ten year average rate of 2.07% embodied in the pricing of the 10 year TIP. For stocks that are reliable dividend growers in the 5% to 10% range, the value of that dividend flow increases at such a low forecasted inflation rate compared to the kind of inflation numbers seen in 1966 to 1982.

     

    The strength of the USD is likely to continue in my opinion for a variety of reasons. One major reason is that our government's intermediate and long term interest rates are rapidly returning to normalized levels based on the belief that QE will soon end. The strength of the USD is also rapidly losing its negative correlation to the S & P 500 as I noted in another comment above.

     

    I would view the decline in cooper and industrial metals as an overall positive except of course for those companies who mine and sell those commodities.

     

    I also believe that we are in the early stages of a 25+ year super cycle for natural gas. Infrastructure is an issue particularly for transporting product out of the oil sands region in Alberta Canada into the U.S.. A major beneficiary over the coming decades will likely be the toll roads, companies that transport, store and process natural gas and natural gas liquids.

     

    A lot of our natural gas will be liquified and shipped overseas where it commands much higher prices. I noted in yesterday's blog, for example, that Husky expects natural gas to fetch between $11 to $13 mcf from its Liwan joint venture with CNOOC in the South China Sea:

     

    http://bit.ly/153Z9yZ

     

    Barron's noted the relatively low natural gas prices in the U.S. compared to other nations when arguing that this pricing advantage would provide an impetus to more manufacturing jobs in the U.S. over the coming decades.

     

    The Next Boom
    http://on.barrons.com/...

     

    That article is worth a read-subscription required however.
    7 Jul 2013, 11:31 AM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    Thanks for the replay SG.
    Good points on the savings currently earning nothing right now.

     

    I guess my thesis on deflation comes from the commodities. If they are not being used, thus driving prices higher, it is hard to see a pickup in inflation worldwide??? Even with the current run up in US interest rates the US cost of borrowing is comparatively low with the rest of the world. I have watched the FED try to exit QE 3 times now since 2008 and the charts speak for themselves as to the result on the US economy. What is different this time???? I just don't see what is going to cause inflation?

     

    I do believe as you have stated many times that the current round of QE has become counter productive, actually causing a drag on the economy. To me it speaks volumes that people are willing to keep trillions in savings that earn nothing rather than take a chance of losing more principle.
    7 Jul 2013, 12:22 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    SG,
    Thanks for the links. the first one hit the nail on the head. I didn't know you had made a new post on your blog. I'll head over and read that next.
    7 Jul 2013, 12:33 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    SG,
    I do see what you are talking about with interest rate normalization. I just can't see a timeline for that process until I know that the FED is no longer involved in the process. Like I said above, we are on the 4th iteration, if you count the "twist" program, of QE. What evidence is there that there won't be QE4 to start the whole process over again from scratch? Especially, seeing as BB is leaving in January? Even if one of the hawks replaces him wouldn't they restart QE at the first sign of deflation? Just like they have the last 3 times?
    7 Jul 2013, 12:41 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1479) | Send Message
     
    Notrub

     

    Looking for world economic drivers for the next 15 years?
    Some suggestions:
    1- water- the entire world has problems with water
    2- agriculture- growing population needs to be fed
    3- US aging population needs medicines- pharma industry
    4- mining- basic materials are in short supply with supplies out of sync with demand; the present mines are 80-100 years old with much lower concentrations
    5- energy- oil and natural gas are getting difficult to find and what ever is found is getting more expensive to extract
    6- energy alternatives- uranium, silver needed for solar, REEs
    Mining is having a hard time right now but unless we go back to live in caves, there will always be demand; even the beer companies are complaining of aluminum supply shortage for their beer cans
    I hope this helps
    7 Jul 2013, 06:46 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    My bet is on the continued rise of the working class. For example in China, one million rural peasants are relocating to the cities every month ... a long term trend which will continue another twelve years. Add in India, Brazil, Africa, etc etc.

     

    China will again become the world's largest economy in 2020. India in 2037.
    7 Jul 2013, 06:53 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1479) | Send Message
     
    Notrub
    I agree with you about QEs not been effective...even former Fed Volcker agrees with me in this 29 May 13 speech; I don't know if he was trying to sell a book or just getting old.
    The Federal Reserve has been asked to "do too much" to heal the U.S. economy and "will inevitably fall short," former Fed Chairman Paul Volcker cautioned Wednesday.
    http://cnnmon.ie/1817INF
    7 Jul 2013, 07:29 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    IT,

     

    I saw the trivia , but just drew a complete blank,, both were great but i have to go with emmitt smith :)
    3 Jul 2013, 07:31 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    I didn't grow up in the US and 22 means nothing to me. In Europe we do not retire numbers really.
    3 Jul 2013, 08:51 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TRUFFLE

     

    No mention of a retired number, just the Best athlete who wore that number. Soccer ( football) is fine as well.
    3 Jul 2013, 09:59 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Kaka - rupetedly.
    3 Jul 2013, 11:34 PM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    Happy 4th to everyone. Hopefully, we get back to investment talk soon. I am as big a sports fan as anyone I know but thought this forum was to exchange ideas on investing. With that said... GO RED SOX!
    3 Jul 2013, 08:56 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @RICH

     

    Fire away your investment question..
    3 Jul 2013, 10:00 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    EFTDailyNews - what's everyone's opinion on that site?
    http://bit.ly/18x77Gd
    http://bit.ly/18x7655
    http://bit.ly/18x77Gf

     

    All generally expecting lower market soon based on technicals.

     

    I knew there was some negative for Zerohedge, but boy was there a lot of specific. Like BD4, I think there can be something good on any site, but very glad to hear all the observations from over time.

     

    I've liked some EFT articles. Any observations?
    3 Jul 2013, 10:25 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @CURLS

     

    Include this on the READING CHAPTER if you like them.
    3 Jul 2013, 10:30 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » You just can't make this stuff up !!

     

    http://huff.to/14OSKHX

     

    Who owns it ? Anyone want to guess??
    3 Jul 2013, 10:33 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    NSA
    3 Jul 2013, 11:35 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    Probably the British Secret Agency.
    3 Jul 2013, 11:43 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    7:27 PM TransDigm (TDG) announced special dividend of $22.00/share. For shareholders of record July 15. Payable July 25. Ex-div date July 11. (PR)

     

    I'll be buying 100 shares on the 9th and I will be selling it on the 16th. for the $2200 dividend on JUL 25. It closed at 153.70 today.
    3 Jul 2013, 10:50 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    You want to create short term loss and transform it in the dividend?
    3 Jul 2013, 11:00 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    Truffle,
    Good point. Guess it would be better to just hold on to it until at least after the GE deal in November.
    3 Jul 2013, 11:34 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    Probably - and hope that the dividend drop is recovered and than some. Haven't followed this though.
    3 Jul 2013, 11:45 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    (TDG) doesn't usually pay a dividend. Their last was 23OCT12 and it took until 3MAR13 for the price to fully recover.
    4 Jul 2013, 12:16 AM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    BTW, I will probably be gone after Friday until options expiration. Have a nice holiday.
    4 Jul 2013, 12:18 AM Reply Like
  • Common Guy
    , contributor
    Comments (79) | Send Message
     
    Happy Independence Day for all here! Nice sunny day to spend with family, not all is money, for me my biggest wealth is the love of my kids and wife.
    4 Jul 2013, 08:15 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Common,

     

    Well said , the things we too often take for granted... health & happiness to all on this holiday ...
    4 Jul 2013, 09:21 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COMMON GUY

     

    Newlywed..lol....Everyone enjoy today ! Time to get sunburn ,, Happens every year,
    4 Jul 2013, 11:53 AM Reply Like
  • deercreekvols
    , contributor
    Comments (9262) | Send Message
     
    Elgin Baylor gets my vote for the number 22...Emmitt Smith gets my second place vote...Jim Palmer comes in a distant third

     

    Trying to catch up with the comments....Happy 4th to all
    4 Jul 2013, 11:11 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Employment figures were great as far as I am concerned,

     

    Now is anyone having a problem with their SA on loading saying it is a long script constantly?
    5 Jul 2013, 08:49 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    IT,

     

    yes i noticed issues with SA this morning also,, last few minutes seems fine...
    5 Jul 2013, 09:19 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » I know today we should have less volume then normal due to the holiday but did anyone expect a stronger response to the jobs report?

     

    When I hears the number at 8.30 I expected a 200 point gain. But we only have around 80 points, interest rates rising, gold selling off.

     

    Humm..
    5 Jul 2013, 09:39 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    IT,
    not surprised at all, lot of this is already "baked in" and market is still wrestling with our new 'interest rate" scenario.

     

    Probably stay in this trading range 1560 - 1650 or so until we break either way . Technically may be struggling here at the 50 day MA 1625 ..
    Good market for picking spots and selling calls -- lots of action , volatility , but in the end no real movement..
    5 Jul 2013, 09:46 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    @ IT

     

    Pre-hours it SP was up 3/4%. Then started coming down after 8:45 or 9:15. So I guess the reaction to the positive report was negative. I was wondering what else was impacting... maybe Europe's situation?

     

    @ FG

     

    Doesn't selling calls require some movement to the put or get side?
    5 Jul 2013, 10:17 AM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    curls:

     

    It's all 100% interest-rate phobia. Incredible that slightly higher interest rates, due to rapidly improving economic numbers, have market concluding the economy is suddenly going to stop in its tracks.

     

    I can't predict the day and hour, but we'll see a big reversal off of this selling, especially in many issues feared as sensitive to rates, which will prove not to be.
    5 Jul 2013, 10:30 AM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    Gold & Silver almost always sells off when there is "Thin " trading lately. It's an opportunity to push those rascally metals back tgo where they belong. The Dark Ages . LOL
    5 Jul 2013, 10:40 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Curls,

     

    My comments on covered call writing from June here in chapter 10

     

    " (EBAY) is my latest covered call play. Bot EBAY 6/5 @ 52.15 , Sold the July 52.50 calls for $2.16.. If EBAY is above 52.50 on July 20 ( expiration day) , the yield is 4.7% for holding the stock for 6 weeks . If it is below 52.50 my yield is 3.8% for the same 6 weeks, and I own the stock at an effective price of $49.90. "

     

    So far that position looks fine with EBAY trading @ 53.25
    IF expiration was today i would garner the 4.7% in a 6 week period for putting on the position.

     

    You can see from the comment what the other possible scenarios might be..

     

    If in fact we might be in a "flat market" this strategy will work to collect income.. I.E June 5 when i put this position on S & P was at 1608, today we are at 1620 , lots of action in between but little movement..

     

    Its a good intermediate term strategy that i employ with a percentage of my portfolio..

     

    I call it my "rent a stock " strategy, on the one hand u have to "like" the underlying company, BUT have to be willing to have it "called away" , so u can't fall in love... Lots of folks can't get their arms around that concept , therefore its not for all..

     

    Good luck
    5 Jul 2013, 11:05 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    @ FG

     

    I do remember this. I have to learn more about options before I can fully get it... I'm getting closer to that chapter in Stan Weinstein's book!

     

    Basically if price is below $49.90, a 4.3% drop, in 6 weeks it's a loss. Otherwise it's a win in either direction. Current prices, your stock will get called away & you'll have to be willing to let it go, "sniff, sniff." If price is under $52.50, you keep the call-cost of $2.16, at 3.8% & the stock, which may be under bot price of $52.15 but not under total return price of $49.90.

     

    Looks like fun. Glad ebay's going where you need it to!
    5 Jul 2013, 01:08 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    @ Tack

     

    Well that makes it clearer. So economy improved enough for rates to edge higher, so market worried about slight rates increase effect on stocks instead of the positive environment for business. But, but, but they should conclude then the Fed can't taper so it's good news... So good news is bad news, is good news, is... No wonder I can't grasp this all very quickly.

     

    And then the market did get happier...

     

    Now it's just stuck below the 1625 MA50 that @FG mentioned.
    5 Jul 2013, 01:15 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @CURLS

     

    Does this make it unclear then?

     

    "It's so darn consistent it almost looks like they are making it up," says Bank of Tokyo's Chris Rupkey, after today's payroll report (with revisions) puts the last 3 months of job gains at 196K, 199K, and 195K. Noting Bernanke wants to see gains near 200K for a 6-month period, Rupkey says the taper is "locked and loaded for September."
    5 Jul 2013, 01:19 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: The rise in rates today is just another example of the ongoing interest rate normalization process. The market is constantly assessing and re-assessing when the FED will start to taper and then end its assets purchases which have skewed intermediate and long term rates to abnormally low levels across the entire bond credit spectrum.

     

    In this process, all bonds will be negatively impacted by a rise in treasury rates primarily based primarily on their duration. The losses in bonds will be unlike other previous interest rate rises due to an improving economy triggering inflation concerns. Inflation expectations have been going down some as the ten year treasury has risen from 1.66% on 5/1/13 to 2.72% as I write this note. As noted in prior posts, I view the normalized 10 year treasury rate to be 4% to 4.25% based on the current inflation expectations that are priced in the 10 Year TIP. The normalized rate is simply the estimated free market rate that would exist without the FED's asset purchases.

     

    In a routine rise in rates caused by traditional criteria, I would expect a junk bond fund to perform better than a treasury with a comparable duration since the credit risk component of the yield would be decreasing as a result of the more favorable economic environment. But junk bond funds are going down now in sympathy with the entire bond complex in an amount predicated on their duration, just like all other bonds including treasuries. The junk bond fund JNK is down 1.04% at the moment and has an average duration of 4.62 years, while the investment grade bond fund LQD is down 1.29% with a slightly longer duration of 7.56 years.
    5 Jul 2013, 02:30 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @SOUTH

     

    Are you suggesting that investing in (JNK) or (LQD) is a good or bad investment decision right now?

     

    Or no suggestion at all?
    5 Jul 2013, 02:39 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    IT: All bonds funds will go down in value during the ongoing rate normalization process. I am saying that better opportunities to buy those two funds would likely be in the future. No one can make a definitive statement since there are other future possibilities including a worldwide synchronized economic slowdown that delays the end of QE. I view those other possibilities as low probability events. Consequently, I do not own JNK or LQD and would consider scaling into LQD in about 12 months by purchasing small lots commission free from Fidelity.

     

    One risk of a bond mutual fund or ETF is redemption risk. Money has been flowing out of those funds. This can cause the managers to sell bonds at lower prices than prevailing earlier in the year, locking in a lower net asset value per share. If net redemptions continue, this negative cycle can continue. It does not matter whether the fund is selling those bonds at a profit or loss to meet redemptions when focusing on the decline in net asset value per share. Either way, a lower profit or a new loss, the net asset value per share is declining and the market price will reflect that decline.

     

    I expect QE to end by the 2014 second quarter.

     

    I am scaling into leveraged bond CEFs by buying no more than a $1000 per week. Unlike the bond mutual fund or ETF, there is no redemption risk for a CEF. The manager can hold the bond positions until maturity. And, it is not unusual to see now declines in market price being about twice the percentage decline in net asset value per share. My add for this last week, bought today, was 50 shares of the leveraged bond CEF ERC at $14.09. I have just finished the write up discussing that purchase for my post to be published tomorrow. In that post, I noted the following pertinent information:

     

    "Unadjusted for Dividends:

     

    Market Price 5/1/13 $16.83
    Market Price 7/3/13 $14.39
    Decline: -14.5%

     

    Net Asset Value 5/1/13 $17.48
    Net Asset Value 7/3/13 $16.17
    Decline: - 7.49%%
    Adjusted for $.2 in Dividends: - 6.35%
    5 Jul 2013, 02:52 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Curls,

     

    Another position I put on today ;
    Bot (LVS) @ 52.36 Sold the AUG 52.50 calls for $2.32 ,If LVS is 52.50 or higher on Aug 17 (expiration) , yield works out to 4.5% on a holding period of 42 days , annualized yield approx. 48% or so.. ...
    If not, I own for a net price of $50.02, something I would be OK with..

     

    LVS is one that I like for long term, already own it in portfolio , shares purchased today are in addition to that :)

     

    U can follow that and see how it turns out ..
    5 Jul 2013, 03:29 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    south:

     

    There's been no differentiation of balance sheet mechanics or actual interest-rate risk, just rapidly escalating panic selling. Today, we may have seen some capitulations.

     

    Issues, like BDC's and equity REITs, have been decimated right along with long-duration fixed-rate bonds, as if they both operated on the same principles. Of course, they don't, but rationality has been on vacation.

     

    This has been painful for holders of any of these securities, but sure does provide some bargain prices for anyone who wishes to make a new acquisition.
    5 Jul 2013, 03:35 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: The BDC's seem to be holding up well today, or at least the ones that I own. The market seems to be making a distinction between BDCs and bond funds today. I own only a small position in one equity REIT so I am just waiting for better prices in that sector.

     

    The BDC will largely be favorably impacted by an improving economy that will hopefully cut down on the number of defaults. I have not studied how a BDC like PSEC might be impacted by rising intermediate and long term rates when short rates remain anchored near zero. To the extent that many of their loans have floating rate provisions, those are tied to short term rates like 3 month Libor and frequently have minimum rates anyway.

     

    PSEC 10-Q Starting at Page 7
    http://1.usa.gov/13yybAa

     

    I would have to admit that PSEC's descriptions of those loans do not make a lot of sense to me. For example, the first one, Airmail, is described as Libor +9% with a 3% floor. If that Libor +9% is meant to be a current rate, then the minimum 3% floor would be a meaningless and superfluous addition. I am curious whether anyone knows for certain what is meant by that abbreviated description.

     

    When discussing the impact of rising rates on BDCs, it is important to make a distinction in what rates are rising and which are remaining anchored by ZIRP near zero which would include all of the short term rates.

     

    For now, I see a rise in intermediate and long term rates to be only slightly negative for the BDCs, primarily by making the low cost senior debt issuances more expensive and increasing the likelihood of more share issuances in lieu thereof. I do not think that a 2.7% 10 year treasury is any more competitive with PSEC's dividend yield of over 12% than a 2% or a 3% yield. Whatever is meant by PSEC's descriptions of the loan terms, the LIBOR float is not meaningful now in any event and will likely remain irrelevant for at least a couple more years due to a continuation of ZIRP.
    5 Jul 2013, 04:01 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    south:

     

    The Libor floor means that the base rate upon which the kicker is added cannot drop below the specified percent. That means, for example, that in the case of Airmall, PSEC's minimum interest rate due on the loan is 12%, regardless of whether Libor is below 3% or even goes to zero or negative. Of course, if Libor rises above 3%, then the loan rate is adjusted upwards.

     

    BDC's should be in the sweet spot, currently, as during the past few years they have taken advantage of the historic low rates to issue long-term fixed paper and pay down revolvers, so they are more immune to changes in short-term rates, as it affects their own funds. Many BDC's have issued equity, as well, mostly at prices above their book values. So, from a funding standpoint they are in an excellent position.

     

    On the lending side, approximately 80% of their loans are on a fixed-rate basis. When each of these loans adjusts upwards depends on where the Libor floor, for example, was set versus actual Libor. Until Libor rises about the floor rate, no adjustment occurs. However, any sigificant increase in short-term rates just expands their margins.

     

    Furthermore, as can be seen with PSEC and most other BDC's, they usually take additional positions, with convertible loans, convertible preferreds and warrants to give them healthy windfalls anytime a client company is IPO'd or acquired in a private sale. The current improving conditions, responsible for the rate pressure to begin with, all work to BDC's advantage.

     

    It's rather ironic to see regional banks exploding higher, while BDC's have been sold (talking about more than today) because their stories are similar, only the BDC's position is better than regional banks on both the funding and lending sides of the respective businesses.
    5 Jul 2013, 04:22 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: In the case of the Airmail loan, the coupon amount is likely to remain fixed at 12% based on your explanation. Consequently, the current rise in interest rates will not change the rate. It will be several years, most likely, before the short term Libor rates cause a bump in that 12% coupon due to a rise above 3%. So far all of those loans that have a reset provision based on a rise in LIBOR over a minimum level, the current rise in interest rates is not providing any increase in the coupon amount.

     

    Unlike the banks, the BDCs are not receiving any direct benefit from the rise in intermediate and longer term interest rates. This is an important distinction. The banks are able now to issue new fixed term loans at higher rates as their cost of funds remained anchored near zero. There is an immediate improvement in net interest margin by issuing a fixed term year loan at 4.75% compared to 3.25%. Loan demand is also improving which means more profit as net interest margins expand.

     

    And, the main cost of funds for regional banks is what they have to pay for deposits which is stuck near zero. You may want to look at some average CD rates for the banks now.

     

    http://bit.ly/ydyTZ6

     

    A five year average rate CD rate for national banks is at .5%. There is a period before the "5":

     

    http://bit.ly/11HyB4L

     

    The higher intermediate and longer term rates for new loans are consequently just about pure profit falling to the bottom line.

     

    The banks have also refinanced their debt at low rates. Most of the higher cost TPs have been redeemed, for example, and replaced in many instances with low yielding senior debt.

     

    Theoretically at least, an improving economy may cause some BDC borrowers to seek out and to secure loans from cheaper funding sources. More competition for loans could eat into some of these fat coupons that they now enjoy.

     

    Needless to say, a 12% current coupon rate, which could even go higher, says a lot about credit risk. The banks may start to cherry pick some of the more credit worthy BDC customers.

     

    Most of the regional banks that I buy have non-performing loan losses at less than 1% of total loans and that number has been dropping and will likely continue lower until the next recession rolls around. While I have not looked recently at the data, I do recall that an average default rate for BDC loans will generally fall between 3% to 5%.
    5 Jul 2013, 04:52 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    south:

     

    Which of these would you rather have?

     

    Regional Banks:
    0.5% funding cost
    4.75% loans
    0.5-1.0% defaults

     

    BDC's:
    2-4% funding cost
    12% loans
    large capital-gain income on client sales and IPO's
    3-5% defaults*

     

    * that default rate seems way out of line, as Barron's says the rate is less than 1% "Well, a surprising nugget in the Barron's piece claims that the loan-loss rate for BDCs is a refreshingly low 0.7% a year." http://bit.ly/11nVMGi

     

    For me, anyway -- even if the defaults were 3-5% -- the choice is easy.
    5 Jul 2013, 05:09 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TACK

     

    I think that article from Motley should belong on our READING Chapter.

     

    I will cut and paste if for you.

     

    Hope you had a nice day yesterday.
    5 Jul 2013, 05:19 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: I do have a position in PSEC, somewhere around 600 or so shares, but I recognize its many disadvantages which will keep a lid on its share price.

     

    There must be a lot of investors that disagree with what you label an "easy" choice.

     

    My regional bank basket which is my largest sector "bet" was up 2.2% today or over $1,200 and is up about $4,0000 since I last posted my basket on 6/24/13. I will generally keep a $40,000 to $50,000 exposure to that one sector. I focus on dividend yielding bank stocks. My overall dividend yield, based on my cost, is well over 4% and growing, and those are qualified dividends. The BDC does not pay much, if any, qualified dividends.

     

    PSEC was unchanged today. ARCC declined 4 cents. TICC declined 4 cents. TCPC fell 19 cents. I own all of those. It certainly has been a easy choice this year between my BDCs and my regional banks, a really easy one and not the same one you suggested above.

     

    What could anyone be thinking, out to lunch, brain dead, proof once again of an inefficient "efficient market" thesis?

     

    BDC's are constantly issuing a stream of stock and debt to replenish their coffers since their capital is flying out the door in distributions to shareholders. Most banks retain at least 50% of their capital to grow the business. That is a huge difference. You pay a price for the higher current dividend. The market looks further out into the future then the next dividend payment.

     

    BDCs will frequently issue stock at below net asset value per share. PSEC is a serial offender in this respect. Why do they do it? There is an inherent conflict in the interests of the shareholders and the managers whose compensation is based in part of the amount of assets.

     

    More Assets=Even More $$ Added to Already Hedge Fund High Compensation Levels

     

    Many of the BDCs, particularly PSEC, have been rapidly growing assets over the past year or so through common stock and bond issuances and have just started deploying that abundance of new capital.

     

    What will the loan losses look like in two or three years even without a recession? These loans are not being made to stellar credits. All of these loans would be rated deep into junk if there were rated by anyone.

     

    The funding cost for the banks would not be .5%. About $7 trillion is currently in savings accounts earning almost nothing. Checking accounts pay even less than savings which are already near zero. The .5% rate is for an average 5 year CD, not a signficant funding instrument for banks. Many loans, like auto loans, will have much larger rates. I was using the 4.75% average rate for the 30 year mortgage, which is a major part of the business mix for the regional banks to be sure.

     

    How have the BDC's net asset value per share stacked up over the past 5 or 6 years. PSEC's net asset value per share was at $10.71 on 3/31/13, down from $14.81 on 3/31/2006 when the company had slightly over 7 million shares outstanding:

     

    http://1.usa.gov/14T5Cgo

     

    The inability to grow net asset value per share is a red flag in my opinion. Asset value per share has been trending down rather than up.

     

    Those repeated stock offerings have a cost too and are not free money, though computing that equity cost number is subject to complexity. For every share issued, there is more money flying out the door in dividends and less of a claim for existing shareholders on retained earnings, if any.

     

    The coupons on the PSEC fixed rate bonds are between 4% to 7%:
    Page 84:‎http://1.usa.gov/13yybAa

     

    The senior convertible debt has relatively high cost coupons ranging from 5.375% to 6.25%:

     

    Pages 81-82.

     

    That is really high cost convertible debt.

     

    I would be interested in your source that shows the BDC real cost of capital at 2 to 4%. I would think that it is far higher than that number when all costs are included in the computation. I would guess about 7%-9%. I will look for some sources that include the cost of equity capital over the weekend. The debt costs are obviously higher than 2% to 4%.
    5 Jul 2013, 08:00 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @SOUTH

     

    Have you, or do you mind listing what Regional banks you like at the moment that do pay a dividend for those who want that income stream for dividends reinvested for future years?

     

    Maybe some symbols it you don't mind.

     

    Thanks
    5 Jul 2013, 08:43 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    IT: I have a list of my holdings as of 6/24/13 that is contained in a table posted in the following linked blog. The table can be expanded just by clicking it. The table includes the yields at the then current market price numbers shown in the table:

     

    2. Update for Regional Bank Basket Strategy
    http://bit.ly/14H8vAK

     

    I will discuss in tomorrow's blog selling 50 shares of ONB, and I liquidated another 50 share lot, BHLB, at $28.74 today, which will be discussed in the blog posted a week from tomorrow. Otherwise, I still own the shares listed in that table. I realized a $338.12 LT gain on the 50 shares of BHLB.

     

    I keep a running total of the gains and losses in this basket strategy in another Gateway Post that discusses the basics of this particular basket strategy. Dividend yield is expected to provide about 40% of the total return over the life of this strategy expected to last another 4 to 8 years.

     

    REGIONAL BANK BASKET STRATEGY GATEWAY POST
    http://bit.ly/WbVA5R

     

    I have a monitor list of another 200 banks, mostly small ones, that I will consider adding to the basket. I am now close to full, meaning I am more likely to pare than to add. The two recent sells were among my lowest yielding stocks in the basket.

     

    I am far more comfortable with the small banks who weathered the recent Near Depression without taking TARP money or cutting their dividends. Today, my largest gainers were two more recent adds that do not fit into those favorable metrics, HBAN and KEY, both of whom had serious troubles and missteps but who appear to have turned a corner for the better. I have some banks in the basket like MBVT which barely suffered a hiccup during the Near Depression and whose non-performing loans are generally less than .5% to total loans.

     

    http://1.usa.gov/17n5if7

     

    NPLs as a percent of total loans (non-performing loans=NPL)
    0.31%

     

    NPAs as a percent of total assets (non-performing assets=NPA)
    0.20%

     

    ALL as a percent of NPLs (allowance for loan losses; also known as the coverage ratio)
    345%
    5 Jul 2013, 09:19 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    South:

     

    Below (from http://www.ycharts.com) are the five-year total returns (price & dividends) for various BDC's as well as various regional banks. I did no cherrypicking, but merely listed various issues from each group on my own tracking list. Now, I ask you, which group would you prefer to own?

     

    The results indicate, among other things, the enormous power of dividend compounding, especially at higher yields. That's where BDC's excel; they just keep cranking out year after year of prodigious yields, and over time this has an inexorable effect on total return. Regional banks, on the other hand, are much more dependent on price moves.

     

    P.S. And, keep in mind that these results are even after the recent 10-15% decline in BDC prices over the last two months, while regional banks have increased 10-15% during the same period.

     

    PSEC - 56.61%
    TICC - 257.4%
    FSC - 89.80%
    TCRD - 50.93%
    TCAP - 324.1%
    MAIN - 267.2%
    ARCC - 246.4%
    MCGC - 82.02%

     

    STI - 6.09%
    FITB - 92.04%
    RF - 6.57%
    KEY - 18.12%
    HBAN - 72.93%
    MTB - 97.21
    PNC - 51.94%

     

    I've been an investor in financials for a very long time, and it's become apparent to me that the seemingly "safer" plays of banks -- regional or national -- based on business metrics that one might think safer on the surface -- consistently underperform the BDC's supposedly higher-risk portfolios. This comes as no surprise to me because that's a central tenet of my entire investing philosophy, developed over a long time, i.e., there is no safety in perceived "low risk," only lower returns. When things are bad, the regional banks get killed, too, but when things are good, the BDC's run circles around them.
    5 Jul 2013, 11:03 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: Why not do a three year comparison and take out the funky action in 2008-2009 when I could have bought ARCC for $3.4 a share:

     

    http://yhoo.it/11oB60P

     

    I would add that your monitor list for regional banks needs a great deal of more thought. HBAN and KEY were recent adds to my regional bank basket but I would not have bought them as part of the regional bank basket in 2008-2010. I am not interested in MTB and RF is way off my radar except as a Lottery Ticket purchase. FITB is similar to KEY and HBAN in that it had serious missteps but is improving now.
    5 Jul 2013, 11:13 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    south:

     

    Ycharts only shows the total-return nums for five years, and keep in mind that July 2008 was before the meltdown, not when shares were being given away free. And, in any event, it's the same period for both groups of stocks, so there's no favoritism.

     

    The simple fact is that BDC's simply outperform vanilla banks. They're perceived as riskier and more volatile, and, probably day to day, they are, but over time they deliver excellent performance.

     

    You may not agree with my conclusions from my own decades of investing (and I know your history is as long), but my experience is that people pay a high price in lower yield and lower returns for imagined safety that's not really there. All the higher-yielding, "lower-quality" issues outperform over time, and, ironically enough, when a panic sets in, and all correlations go to one, the supposedly safe stuff gets obliterated, just like the "junk," so the premium paid for the "insurance" of imagined higher quality is often wasted.
    5 Jul 2013, 11:20 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: I believe that other services have a three year return and the bear market started before the meltdown. I really do not consider prices for 2008-2009 to signify anything other than a once in a lifetime buying opportunity. What will the future bring going forward?

     

    My links below are to Morningstar data.

     

    The 3 year annualized total return for ARCC is line with the S & P 500 at 19.98% through 7/5/13, but the ARCC would be less tax efficient given the tax issues associated with its dividend providing a lower tax adjusted total return unless held in a retirement account. The rate of return has slowed down with the past year resulting in a 16.78% total return.

     

    http://bit.ly/10EYO6m

     

    The annualized total return for PSEC over three years is lower at 15.41%. The S & P 500 had an annualized return of 19.4% over the same period.

     

    KEY's annualized total return, with very little dividend support, over the past three years is 19.77%, far more tax efficient since the gain would be a LT capital gain taxed at 15% with some qualified dividend support.

     

    TICC's total annual return over three years is 16.6%, and 10.12% (less than the dividend yield) over 1 year:

     

    http://bit.ly/10EYLHU

     

    TCAP is certainly a standout over the past 1, 3 and 5 years:
    http://bit.ly/10EYLY8

     

    KEY is up 58.71% over the past year:

     

    http://bit.ly/10EYO6o

     

    HBAN is at 18.43% for 3 years and 35.05% for one year. The disparity in favor of the banks is increasing when using 1 year time spans,

     

    http://bit.ly/10EYLYa

     

    My largest dollar gainer in the regional bank basket was one that I would not have guessed, a 150 share position in RNST, a bank based in Mississippi, that rose 65.52% over the past year and 24.61% annualized over the past three years. I recently sold that one for over a $1400 gain. (up 2.45% today):

     

    http://bit.ly/10EYLYc

     

    My Blog Item # 4
    http://bit.ly/119WqWV

     

    Some of the banks have surprised me in how well they have done which is one reason for using the basket strategy. I may be able to identify a number of winners but I may have excluded many of the what turned out to be the best ones by narrowing the list.

     

    Rather than killing my regional banks during good times, the BDCs are for the most part getting trounced over the past year in total return data.
    5 Jul 2013, 11:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » "All the higher-yielding, "lower-quality" issues outperform over time, and, ironically enough, when a panic sets in, and all correlations go to one, the supposedly safe stuff gets obliterated, just like the "junk," so the premium paid for the "insurance" of imagined higher quality is often wasted"

     

    Correlations go to one? What does that mean????

     

    Glad you two are having this discussion.. Great stuff !!
    6 Jul 2013, 12:31 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » TACK and SOUTH

     

    I got a PM from @RICHONSILVER and he posed a few questions that I think is better then me trying to answer. First I ask is can you guys take it down a notch and explain whatever he asks as elementary as possible?

     

    Actually both of you have invaluable experience and may take for granted that what you two know may go over the heads of some of us.

     

    Not sure when he will post his question, or quotes you 2 have made, but I would appreciate the simplest of answers as well.

     

    Thanks guys!!
    6 Jul 2013, 12:53 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » TACK and SOUTH

     

    Let me add that you guys have those 40 plus years of experience and some here have 4 weeks!!

     

    So please patronize us as the questions might seem foolish to both of you but if ONE person asked me I bet HALF that follow this have the same concerns.

     

    I do sincerely appreciate this because @rich is someone who I do correspond with and I have asked him if he EVER had a question to please PM me because I am sure he isn't alone.

     

    Honestly , if he posts a few questions like he did to me I really did not know the answers yet you two will rattle off the responses very quickly I am sure.

     

    I hope both of you don't mind answering them., I am looking forward to an education for sure!!
    6 Jul 2013, 01:12 AM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    "Correlations going to one" means that in times of severe market distress investors don't differentiate between market sectors, individual companies or even the relative positions of securities in the capital structure of a firm (i.e. senior debt, junior debt, preferred, common); instead, they sell everything, of often at similar rates.
    6 Jul 2013, 11:34 AM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    What two questions are we talking about?
    6 Jul 2013, 11:35 AM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    IT: You are quoting one of Tack's comments. I can only explain what I understand him to mean.

     

    During a stock bear market, just about every stock will go down in value. A general rule of thumb is that a downdraft like the one experienced after Lehman's failure in September 2008 will take about 90% of stocks down with it. In that sense, the movement of most stocks will be correlated to the downside.

     

    A regional bank stock will be going down in value just like a Business Development Corporation like PSEC.

     

    Assuming the BDC continues to pay a dividend and the investor uses that dividend to buy shares, the long term total return would be enhanced by buying shares at abnormally low prices. For example, Ares Capital plunged below $4 at one point in March 2009, with shares now trading near $17. The use of its generous quarterly dividend to buy shares in early 2009 would have been optimal for a long term investor interested in total return.

     

    While most stocks will be positively correlated to the downside during bear markets, there will be major differences in the decree among stock sectors and individual stocks within each sector. My first buys in March 2009, as I rotated significantly back into stocks, were in the consumer staple area, where I have the most comfort.

     

    Generally, consumer staple stocks would be declining during a bear market and would not in that sense be providing a safe haven. Their decline would be less severe compared to a highly cyclical company who slips into negative earnings territory.

     

    I discussed that phenomenon in my blog when I bought the ETF KXI in early March 2009, which owns consumer staple stocks worldwide.

     

    This is a link to the long term chart that highlights the decline and the opportunity:

     

    iShares Global Consumer Staples ETF Chart :
    http://yhoo.it/1a1ie8q

     

    And there will be major differences in price action within industry sectors. In the September 2008-March 2009 period, banks like BAC and Citigroup were hammered to near zero, and for good reasons.

     

    A large number of smaller community banks did not cut their dividends and even raised them in many cases during that period. Many of those banks did suffer a decline in their share prices but those declines were not warranted based on operating results and were nonetheless far less severe. In many cases share prices have recovered to pre-2008 levels. I doubt that BAC shares will recover to $54 anytime soon.

     

    Long term BAC Chart:
    http://yhoo.it/1a1ieoI

     

    There will be major differences in price declines depending on the quality of the security.

     

    While Ares Capital hit $3.37 in March 2009, I was able to buy Pepsico in March 2009 at a tad under $50. Would you prefer owning PEP or Ares during that period of angst and despair?

     

    ARES Capital chart:
    http://yhoo.it/11oB60P

     

    So I disagree with any argument that the market does not recognize differences in quality. Just compare the chart of Nestle, another one that I bought in March 2009 with a typical BDC long term chart:

     

    NSRGY (U.S. Pink Sheet Exchange: 1 ADS=1 Ordinary)

     

    http://yhoo.it/1a1ih48

     

    Or General Mills:
    http://yhoo.it/1a1ieoL;range=my

     

    Or Pepsico:
    http://yhoo.it/1a1ih4a

     

    Long Term Chart of the BDC PSEC:
    http://yhoo.it/1a1ieoN
    6 Jul 2013, 11:43 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TACK

     

    I will let him post them. One was for SOUTH. One was a general question about BDC'S..
    6 Jul 2013, 11:53 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @SOUTH

     

    That is why a ton of people are reading and trying to understand both of you. MAYBE there isn't any correct ONE answer. That is why I asked @RICH to ask as many questions as he would like because I am sure some other followers are thinking the same thoughts !
    6 Jul 2013, 11:58 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    @ IT

     

    Rather than ask South & Tact to guess what needs more simple explanation for some readers ... let's let people post their questions.

     

    If they are lurkers, then maybe you can ask what's not clear to you. (And we all know I ask things!)

     

    Also, I find often as I'm writing out a question, I figure out that answer (& then don't have to ask), so I hope people will join in with their questions & thoughts.

     

    My current question is, what the heck was the rapid rise in the middle of the day, then a buy-off at the end of the day?
    6 Jul 2013, 01:37 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    IT:

     

    Action was very choppy allweek: http://yhoo.it/y13la5;range=5d;compare=;ind...

     

    Not sure it indicates much of anything.
    6 Jul 2013, 01:51 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Curls,

     

    Lots of preset "trading programs" key in on moving averages. There is plenty of action around them and in the case of Friday my guess is that some "buy" programs were set off late in the day when the S & P 50 day MA cleared the 1626 level. Then a quick run to 1632 in the final 15 min. followed. Conversely my guess is that there were "sell" programs triggered earlier in the day when the averages rallied there, then fell back.. Guess u can say in the end the buy programs won out..

     

    In the end not much of anything can be made of these short term swings, unless u are day trading..
    6 Jul 2013, 01:54 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @CURLS

     

    Sorry if I did not make it clear, @RICH WILL BE asking the questions. I don't expect anyone to guess what they are. I was just writing in advance asking that they simply answer them.
    6 Jul 2013, 01:57 PM Reply Like
  • tampat
    , contributor
    Comments (1366) | Send Message
     
    Trying to explain every intraday bounce and fall is a good way to drive yourself coo coo for Coco Puffs.
    Could be a news release so minor its only heard among the day traders or in the pits, could be technical, could be someone had a bad day dream and jerked himself awake and hit the sell button. Really no sense trying to account for it unless you are a very short term day trader watching every tick.
    6 Jul 2013, 01:59 PM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    Tack,

     

    I need to find a window of time where I can write the questions in a few posts and then will wait for replies. As IT suggested I, and many in here I would think, just do not have the experience or knowledge you do. In fact, some of your posts ar so far above my head I am not benefitting from them. I have some experience reading and following PMs but these BDCs for instance are brand new to me and sound great so i am anxiously trying to learn in here and other websites.

     

    If you are willing to play "free instructor" now and then I, and I am sure others would greatly appreciate it. Time is spotty right now Middle of a Saturday) so I intend to submit my questions later today when things mellow out. Thanks... ROS
    6 Jul 2013, 02:02 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TAMPAT

     

    You are indeed correct. I have people post they just bought a long term investment, maybe for 15 years, then ask the next day why did the stock drop?

     

    Long term you monitor it mainly every 6 months I am guessing, and just forget about it. Like you said if you wake up in the morning and look at the stock you might as well become a day trader imo.

     

    My IRA investments I look at monthly just to update the dividends on a spreadsheet, I could care less what the daily price is. Maybe I am wrong..
    6 Jul 2013, 02:03 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Curls-100: When viewing the terrain from my mountain top, these squiggles during a day, week or months are just not relevant except to traders.

     

    The question is not what causes a movement intra-day, but whether or not powerfull and long term economic conditions are aligning and coalescing to support a long term secular stock bull market. I believe that the weight of the evidence supports that proposition. The rest is just noise that detracts you.

     

    At any given moment in time, there is a tug of war occurring between sellers and buyers. The first reaction yesterday was to take stocks up after the jobs report which was not only better than expectd, but also contained upward revisions for the two prior months.

     

    The sellers then quickly gained the upper hand. Why were they selling?

     

    Some may have been taking profits by selling into strength.

     

    Others are fearful that better economic news will cause the FED to taper earlier than previously expected by them. The concern is that stocks will not react well to normalized interest rates even when those rates are still abnormally low by historical standards and benign for stocks.

     

    The sharp move up near noon E.D.T. is characteristic of buy programs based on something which, if known to me, would be viewed as meaningless.
    6 Jul 2013, 02:13 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    Thanks for all the ideas!! That helps!

     

    I'm considering doing some day trading, or short term swing. (As a part of my overall plan.)

     

    Also, understanding big middle of the end or end of the day moves, has taught me a lot about how this all works. Such as discovering it's $Russell adjustment day, or quadruple witching...

     

    ...or this info that likely computers reacted to the MA. (I think some of this stuff can be played for small gains, or at least it helps understand what's what with a swing deal.)

     

    Small ticks aren't possible to decipher, but obviously large in-unison movements intrigue me. The automation makes for movements that are completely different than they used to be in the past.
    6 Jul 2013, 02:20 PM Reply Like
  • Notrub
    , contributor
    Comments (1404) | Send Message
     
    That is why I called my way of investing boring, IT. I only look at prices when a stock gets called or it is the end of my covered calls and I need to figure out what strike to use next. Other than that I don't really pay attention to the prices unless I have cash sitting on the sidelines and am looking for a stock to hit an entry point. Once the cash is deployed it is back to once a month for strike prices.

     

    It would drive me nuts obsessing over every little move in the markets....:oP
    6 Jul 2013, 02:43 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @NOTRUB

     

    Nothing boring about making money!
    6 Jul 2013, 02:51 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    "Correlations go to one? What does that mean "

     

    @ IT
    I took that to mean that when the water level goes DOWN,then all the boats go lower at the same time.
    6 Jul 2013, 07:22 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    CoinK: A positive or negative correlation will use the number 1 as signifying perfect correlation.

     

    Profit From Asset Correlations - WSJ.com
    http://on.wsj.com/12b4mqh

     

    In asset allocation, it would be rare to find perfect negative (-1) or perfect positive (+1) correlation, except on a fleeting basis, nor will there be perfect correlation among securities within the same sectors. Instead, asset classes will generally have weak to strong positive or negative correlations with other asset classes.

     

    It is simply incorrect to refer to asset classes and individual securities moving to one correlations.

     

    After the Lehman failure in September 2008, certain classes of income securities issued by financial institutions that are junior in the capital structure had strong positive correlations. An equity preferred stock and the more senior trust preferred security (in effect a junior bond) issued by Bank of America, for example, declined into the single digits, but those declines were based on the faulty common assumption that there was a high probability of an FDIC seizure which would render both of those securities worthless, hence the similar prices. I would not confuse that event with the typical manner in which correlations between asset classes and individual securities within those asset classes normally work.

     

    You can see what is an asset correlation matrix looks like by going to one of these sites:

     

    http://bit.ly/10rKOwz

     

    A discussion of asset correlation can be found at

     

    Vanguard's Pamplet: Dynamic Asset Correlations: The Implications of Portfolio Construction
    http://bit.ly/10rKOwr

     

    And in several of my older posts including this one:

     

    Stocks, Bonds & Politics: Instability & Volatility in Asset Correlations

     

    http://bit.ly/10rKLRo

     

    A recent example of how the correlation between two assets is changing involves the U.S. Dollar and the S & P 500, drawn on a typical correlation -1 to +1 chart:

     

    http://read.bi/WyCews

     

    This article at Forbes shows periods where the S & P 500 and a 5 year treasury note had varying decrees of positive correlation and then periods of negative correlation:

     

    http://onforb.es/12b4mXp

     

    Understanding the reasons for low, mild or high positive or negative correlations can be extremely helpful in portfolio construction.
    6 Jul 2013, 08:34 PM Reply Like
  • tampat
    , contributor
    Comments (1366) | Send Message
     
    "My current question is, what the heck was the rapid rise in the middle of the day, then a buy-off at the end of the day?"

     

    curls,

     

    Here is an answer for your question.

     

    http://seekingalpha.co...
    7 Jul 2013, 07:37 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    Thanks Tampat!

     

    I've read Joseph Stuber's articles. He's big on conspiracy theories. I'm not & in general, find much of his explanations not that compelling. I agree with him that there's questions of why some of the movements in the market, & maybe some manipulation by those with bigger money. I'd be convinced it's for their own purposes, not on behalf of anyone else. This time his theory is along those lines. I'm curious what everyone else thinks?

     

    At the least he shows (with charts) & supports my observation that the market movements are often not making much sense at all.... appear to be coming out of the blue, often in opposite directions than one would expect.
    7 Jul 2013, 09:03 AM Reply Like
  • extremebanker
    , contributor
    Comments (2107) | Send Message
     
    SG1951:

     

    You have noted on several occasions you hold over 400 positions with a lot of those positions being funds holding hundreds of securities themselves. Do you consider this critical to your performance strategy? Do you try to match a benchmark or just earn over 6% after taxes? Do you consider so many positions detrimental or advantageous to your portfolio?

     

    Your style appears to me to be mostly mean reversion or the contrarian approach. Please correct me if you don't agree. I have noted a few of the funds you hold have underperformed. Do you consider yourself to invest by one strategy or many?

     

    Hope you had a great holiday week!
    7 Jul 2013, 09:35 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @EXTREME

     

    This is a very valid question. I am curious what the answer will be. Learning new stuff daily for sure..
    7 Jul 2013, 09:50 AM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    ExtremeBanker: I will generally perform much better in bear markets than in bull markets due to my cautious nature. And, given my current status, it is not necessary for me to shoot the lights out. Capital preservation and income generation are more important to me now than capital appreciation. My objectives would generally be in that order

     

    I posted snapshots of the three and five year returns performance returns in my main taxable account, calculated by Fidelity, for the period ending 10/31/2011. The IRA account was up 100% with far fewer securities over a three year period ending October 31, 2011 while the main account, with over 200 securities and an abundance of cash, was up 73.32% over the same period.

     

    http://bit.ly/U1amOe

     

    In taxable accounts, my goal is to hit a 6% inflation adjusted return after taxes. I will just calculate the CPI component using the BLS annual data. I am relatively good at keeping my taxes down by focusing on qualified dividends and long term capital gains and harvesting losses when appropriate to offset short term capital gains.

     

    It is easier for me to accomplish that objective when I lose a whole lot less during bear markets than most investors, which is invariably true. I would give myself an "A" as a bear market investor.

     

    Without question I am a better bear market manager of money than a bull market investor. If the S & P 500 gains 20% per year for five years, I am likely to trail that return. In 1999, a robust year for stocks, I doubt that I owned any but then I missed the 50% downdraft in 2000-2002 and had capital to invest at a better valuations.

     

    During the 12 months ending 5/31/13, which have been generally bullish for stocks, my main Fidelity account was up 14.33% with cash near a 20% weighting contributing nothing of course to that return. I am fine with that result given the decree of risk undertaken to achieve it. Risk is controlled by a variety of techniques including the cash allocation, widespread diversification among asset classes, paying attention to issues like negative and positive correlations among asset classes, avoiding significant exposures to securities deemed to have a heightened risk profile (e.g. junk bonds) and limiting my exposure to each individual company based on my personal risk assessment.

     

    I look down before I look up.

     

    I have also been hurt recently by several categories of income securities including bond CEFs. I noted in this weekend's blog for example adding 50 ERC at $14.09 after my 350 share position in that account had gone from around a $500 unrealized gain to a current $350 unrealized loss over the past several weeks. Those kind of up and down movements are happening to me all over the place.

     

    I have recently been receiving an uplift from the allocation to regional bank stocks, while my overall stock allocation has been contributing to good returns this year. I may have 40 or so regional bank stocks. One reason for the dispersal is risk management. Another is that I am frequently surprised by the ones that out perform. An example is RNST, where I recently harvested over a $1400 gain on 155+ shares. I would have excluded that one altogether if I had focused on five or ten names for a variety of reasons which are rational and sound.

     

    So my 1 year performance number was lower than the 19.66% return over the same period, without dividends, generated by the S & P 500, but well still well above my goal nonetheless.

     

    And my return of 14.33% was achieved with less risk exposure and far less volatility than a 100% allocation to the S & P 500. I would have been closer to the S & P return with cash earning 4% compared to nothing.

     

    I will use an abundance of stock and bond funds as overlays to my individual securities. I will move the total allocation to them up and down based on my tactical allocation approach. An important example of tactical allocation was the widespread elimination of those funds in 2007 as a means to reduce my stock allocation and to increase both my cash allocation to 30+% and to initiate an allocation of close to $50,000 in short term "A" or higher rated investment grade bonds which were then mostly sold in February 2009 to fund my initial increase to stocks in March 2009 as noted in my daily blog entries from that time period.

     

    So I have not sold for example any GE or Intel shares bought after Lehman's failure but I will reduce my stock allocation by jettisoning a stock CEF. I will also periodically sell some funds for underperformance which recently led to the jettisoning of the stock ETW for example.

     

    I am also focused on income generation for an entire portfolio with a constant stream of distributions flowing into the accounts. I would prefer to have that happening than placing all of my funds in stocks yielding in aggregate 2% or 3%.

     

    The income generation gives me downside protection, which I view as extremely important, and provides a source of funds for investment during the worst possible times.

     

    I was for example investing that cash flow in early October 2008 even when I thought the financial system was on the verge of collapse. And it turned out fine with many of those securities doubling and tripling in value over the next year or two. My GE and Intel purchases were made with that cash flow:

     

    See Snapshots at
    Snapshot of GE and Intel Purchases with Cash Flow
    http://bit.ly/TPnuT9

     

    Click to Enlarge
    7 Jul 2013, 12:19 PM Reply Like
  • extremebanker
    , contributor
    Comments (2107) | Send Message
     
    SG1951:

     

    Thanks for your gracious and informative remarks. I also consider myself a better investor in bear markets rather than bull markets. I also under perform during strong bull markets due to allocation to uncorrelated assets. I outperform over long periods of time because I have been able to sidestep ugly bear markets in 2008 and 2000 thereby having extra cash to buy shares once the bear was over.

     

    I assume you use your VIX timing model to beat the bear. I prefer moving averages, crossovers and percentage of 52 wk hi ratio. The point is to raise cash when the bear rears his ugly head and to stay invested when it is nothing but noise going on. One simply has to develop a personal DEFINITION OF A BEAR MARKET they are comfortable with. I will have to correct a previous statement I made since I said I thought you were mostly a contrarian investor. Since you use a VIX timing model to time the market that would classify you as a trend investor also.

     

    I own many less positions than you although I use ETF's and funds a lot so I feel I have broad diversification. I also like to buy individual securities when the bear is roaring and use more funds when the bull is running. I think we share a similarity here. I feel that I am a trend investor when the bull is in swing and a contrarian when the bear is roaring (in stocks or bonds). I am definitely a top down investor. GETTING THE ALLOCATION MORE OR LESS CORRECT IS MUCH MORE IMPORTANT TO ME THAN PICKING SECURITIES.

     

    I also manage a bank stock portfolio at work. The holding company I work for does not pay taxes on 70% of qualified dividends and bank stocks are usually my choice since it is something we understand.

     

    Hope you have a great holiday and weekend!
    7 Jul 2013, 07:03 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Curls.
    I'll stick with my earlier explanation , regarding the MA , Buy , Sell programs.. That is what took place on Friday ..

     

    Joseph Stuber, He's been wrong on the markets - period.

     

    I haven't run across another author here on SA who is continually wrong,like this man . He is still advocating a three digit S & P by year end and as he says a very good chance for the S & P to revisit the all time lows- this year !

     

    Believe what he says at your own risk ...

     

    7 Jul 2013, 08:38 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    F&G

     

    Thanks! I'll be keeping on eye on it... and learning! This whole concept adds a dimension to the investment opinions available to me (pun intended?).
    8 Jul 2013, 12:11 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    F&G

     

    You put it more bluntly, but my conclusion from first article onward was that I didn't agree with his conclusions. Nor do I think conspiracy theories (which he's fond of) can be surmised with evidence of "well it's possible." .

     

    I thought your MA buy explanation fit well... and added to my list of "concepts" I've been keeping.
    8 Jul 2013, 12:17 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Curls,

     

    I've had many discussions here on SA with Mr Stuber, overall I believe he is a very intelligent individual, however his calls on the markets are sorrowfully wrong.. I've run into a lot of people like him, over the years in the markets, extremely articulate & knowledgeable so much so that they can't see the "simple" things that control markets.

     

    I actually have a little side bet with him , where back in March - April i stated that we might see the S & P re visit the 1490 area this year , he countered with somewhere in the 900's and a good chance of revisiting the all time S & P low in 2013..

     

    Then again he just may be the type that pounds the table for a catastrophe like 2008, until it actual happens , then proclaims he was right all along -- LOL
    8 Jul 2013, 10:06 AM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Yes on the script issue. Just started to annoy me on virtually all clicks of reviewing new posts on articles previously viewed. I have checked for a few fixes, but it seems to be SA related. SA takes a lot of memory, I am not sure why.
    5 Jul 2013, 09:20 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Guys

     

    I suggest writing SA to let them know. I did as I had this problem all week!!
    5 Jul 2013, 09:28 AM Reply Like
  • Stilldazed
    , contributor
    Comments (3173) | Send Message
     
    Hi Guys,
    I used the IE browser and had the problem. I have since downloaded the Fire Fox browser and the problem has gone away..
    5 Jul 2013, 01:10 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    I have a problem with google charts & shockwave plugin freezing using Firefox. Not with SA yet. Generally (haven't done it myself yet), downloading new updates to shockwave/adobe helps with bugs like that. Also download the updates to the browser may do it.
    5 Jul 2013, 02:07 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    I've noticed this for almost a year with Mozilla SeaMonkey ... especially when running over twenty browser tabs. If very irritating, almost always goes away with a windows reboot. Closing & reopening browser not a workaround.
    5 Jul 2013, 02:19 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    @ Freddy

     

    Sounds about right. For a browser 20 tabs is a lot if they're interactive, so it doesn't surprise me when it starts up like that on me. Programs have to release memory, & often don't do it well, so problems accumulate. Stuff like that, which a re-boot fixes.

     

    With a browser close, there's still some service for it running in the background so it doesn't clear out properly. Yep, frustrating....

     

    Also Scottrade uses java for it's streaming quotes, & if you don't close it down yourself (it times out), the thing doesn't close properly, and you have to go to control panel & clear cache. It's an idiotic programming error that should have been fixed many releases ago...
    5 Jul 2013, 02:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » "Panicky selling grips the mortgage REITs (REM -3.5%) as Treasury yields soar following the payroll report. American Capital (AGNC -6.9%), (MTGE -5%), Annaly (NLY -6.9%) Chimera (CIM -4.9%), Armour (ARR -3.9%), Invesco (IVR -2.7%), CYS Investments (CYS -3%). CYS' Kevin Grant was public a month ago about being a happy buyer as yields rose - a bit early on that call."

     

    Unfairly getting spanked??
    5 Jul 2013, 09:44 AM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    Some MREITs down 35-45% from recent highs. Looks way overdone, but who knows where the panic will subside. Actual earnings reports will likely send issues higher, as things can't possible be as bad as imagined.
    5 Jul 2013, 10:02 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4203) | Send Message
     
    Agree but I thought that way earlier already. Sitting on nice paper losses......
    5 Jul 2013, 02:50 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » I guess we are seeing the panic selling as employment numbers seemed good now investors worried about tapering again?

     

    Dow only up 20 points???
    5 Jul 2013, 10:14 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2888) | Send Message
     
    IT today is a "zombie day" for the markets (Friday trading day after a Thursday holiday). Low volume makes this a tricky day for telling what the heck is going on. Can you believe the DOW was only 12,471 last Nov. 16? Crazy how much the market is up since then.

     

    Good jobs report means the Fed might taper sooner, so that's why the market is going nowhere? It's going to be like this for awhile. Until the economy shows there is no doubt that we have recovered, which may not be for a couple of years.....people are nervous. I'm in it for the long haul, just looking for bargains whenever we go lower. I won't be buying today though. Then there's those traders that don't want to be left holding the bag over the weekend, so I think we might trend lower today.

     

    As long as there's no real bad news over the weekend, Monday should be back to business as usual. I've heard earnings won't be that great. I'm not so sure, I'm expecting consumers to push retail numbers higher, especially for restaurants. There's this so-called "shadow economy" that is contributing to that. Interesting read

     

    http://yhoo.it/1cYUgdy;_ylt=AjpoSACN5jq4tCWf...
    5 Jul 2013, 10:36 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (2888) | Send Message
     
    ugghhh sorry about that link. the story was about "2 trillion shadow economy not counted in jobs numbers" on yahoo finance. It's about all the people working, and they are legally working, but their income isn't counted. Cash for your lawn guy, cleaning lady etc. So basically there are lots of people with money that are out there shopping, eating out, going to movies that will make the financial reports stronger for those retail business than what the labor participation rate (which is only 62 % of the population) would indicate.
    5 Jul 2013, 10:42 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » EMPLOYMENT NUMBERS FROM TODAY !!

     

    "More waiters, bartenders and part time than ever.
    360,000 new part time workers, and lost 240,000 full time.
    The loons are in complete control of these "markets".

     

    I just copied someone's post from another article!!
    5 Jul 2013, 01:25 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    FOMC is almost certain to announce taper mechanics in Sept: "only" $600 billion in more QE3 purchases over next nine to twelve months ... with reserve for reversal should conditions warrant.
    5 Jul 2013, 02:24 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (4513) | Send Message
     
    Freddy, where do you get your information about the FOMC "is almost certain to announce taper mechanics in Sept.?"

     

    Thx.
    7 Jul 2013, 11:19 AM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    They're guidance this year has been very close to that indicated by my TRI model. Mine is more optimistic on UR-3 and theirs on GDP. Their hesitancy to raise rates mirrors my long-term prognosis: worse times ahead in the 2013-2015 time frame as Congress whittles the federal deficit by $369 billion. My study of fiscal multipliers says with Structural GDP mired at -3% today, Real GDP will really suck in such an environment....

     

    GDP & SGDP outlook charts: http://bit.ly/pfbeJm
    7 Jul 2013, 07:01 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @FREDDY

     

    So are you anticipating a recession, a correction, or nothing with the markets ??
    7 Jul 2013, 07:50 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    No Recession 'til 2024. The market is well balanced today. It will continue to have the same surges and corrections it's had for the last fifty years. That said, I believe it's a secular bull market ... not bear. If PER stays reasonable, the next major bear market will accompany the 2024-27 Severe Recession.
    7 Jul 2013, 11:24 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Fred,

     

    agree with the secular bull thesis as I've stated both here in this blog and elsewhere on SA, I haven't gone out that far (2024) - I like to take my macro views in shorter "chunks" of time, but overall the LT trend is decidedly UP. Your comments are interesting and food for thought.
    8 Jul 2013, 09:53 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (4513) | Send Message
     
    Freddy, your chart you posted says we are "mired in a Structural Greater Depression" yet you state we are in a secular bull market. Are you basing your bullish attitude on other data? or on what data?

     

    TIA...

     

    8 Jul 2013, 01:05 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    In short, the market since 2009 has been responding to the economy seen on the ground and the historic profitability of corporations who are increasing revenues but with million less employees. As they rehire, profits are being damped. There is no reason to believe the next ten years will not bring more of the same ... hence a secular bull market.

     

    OTOH, most Americans do not seem to realize that the underlying economy from Nov/2006 to date has been a Structural Greater Depression with an avg Structural GDP of -8.4%. This compares to -9.7% avg SGDP from 1939-33. This difference is Congress this time used $6.5 trillion in Deficit spending to avert the dire event. SGDP today is -3%. American cable news media likes to brag the USA is doing better than Europe but the truth is the latter will have balanced budgets in ten years whereas your federal gov't will still have a $1.4 trillion deficit and $23 trillion debt.

     

    The market at this juncture is reflecting this artificial economy ... not the underlying disaster-in-waiting...

     

    Someday the reality of an imminent treasuries yield surge and austerity crisis will be obvious and that is when a bear market should come to pass (2024).
    8 Jul 2013, 07:10 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @FREDDY

     

    So what is your opinion on holding physical gold and silver?
    8 Jul 2013, 08:30 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    hint: the Bank of Canada dumped all its gold two decades ago and we switched to interest bearing instruments...
    8 Jul 2013, 11:41 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @FREDDY

     

    I am not so good at hints, but I am guessing you do not like either gold or silver (physical ) then?
    8 Jul 2013, 11:47 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (4513) | Send Message
     
    Thanks Freddy, agree on the underlying economy. The data is not there, or twisted to make people think the economy is stronger, when it's not (like the last unemployment report counting part-timer's because of Obamacare).

     

    Regarding gold and silver, all Central Banks have been sellers the entire run up in price because of the various Washington Agreements. Can't say their timing was good for most of those years. We'll see what the future holds, but Central Banks need to keep some gold to give the illusion that the currencies they print have some sort of backing.

     

    Cant' really say I am as bullish on the stock market as you and F&G, but I do see momentum and take note. Things can turn on a dime and I think they will for reasons most don't even see at present, just like most didn't see 2007 coming.

     

    Doesn't mean gold and silver will skyrocket, but I am making the case for much higher prices in the years ahead in what I write, even though I am and will be for a bit, dollar bullish.

     

    Thanks again.
    9 Jul 2013, 12:08 AM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    Canada's currency has gained 60% agin the USD since 2002. So nobody needs any gold if they get their sh*t together...
    9 Jul 2013, 05:00 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (4513) | Send Message
     
    Gold's up 173.85% versus the Canadian Dollar the last 10 years. So nobody needs currencies if they get their sh*t together.

     

    It's not all black and white.

     

    It's ok to diversify and have a little insurance.
    9 Jul 2013, 12:07 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    A lot of Dealers in the Gold Coin,Silver Coin market are beginning to see some real profits in the "Hobby" again ,it's a process of moving from a Bullion driven market back to the collectors of real collectible coins. They have been sitting on the sidelines with the exception of their bullion deals (Which many of them eschew).Now the dealers that are in the money on inventory items are able to sell the "Good Stuff" once again . Just making an observation at the coin shows. This is GOOD for Coin dealers in general,because the clientele are the better educated (In terms of Coins) than just bullion buyers. It has been out of balance for more than 6 years and it's now coming back to where it works best. Eventually Gold & Silver will be higher again but hopefully not real fast and not too soon.
    5 Jul 2013, 10:50 AM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    I'll take real fast and real soon. I am not a coin collector. I collect silver and the only reason I do so in both stock and physical form is to watch its value increase... so the sooner and higher, the better - sorry collectors :-)
    5 Jul 2013, 10:00 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COINS

     

    So it is a good time to list my 2006 collectors ASE'S 3 PIECE SET in a 70 grade I guess?
    5 Jul 2013, 10:57 AM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    Not applicable to your coins IT . Sorry,I am talking about coins like CC dollars from the 1800's for instance.Yours are considered "Modern"
    5 Jul 2013, 02:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COINS

     

    So then if I can grab a 45 % profit on my *modern* coins as you classify them I should take it? I do have Morgan's, Peace, Redfield's, etc. as well.

     

    They are my hobby coins as you say.
    5 Jul 2013, 02:46 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8229) | Send Message
     
    I used to collect coins as a kid. I just love stuff like that. I once checked, & had nothing of notable worth, but it was fun. ...my oldest, one buffalo nickel, fairly rubbed off so not much in condition. Something fun about history in your hand.
    5 Jul 2013, 03:01 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    I love Redfield's ! Do you know the story on those?Paramount holders . Do you have the Redbox or the Black?
    5 Jul 2013, 03:05 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    @Curls I was born in the 50's and every Buffalo Nickel I had was spent on a Baby Ruth or for a Reese's Cup because that was the price in the early 60's :) And Mercury Dimes,same problem,I used those in the Coke machine that had a door on it and you would pull out the one you wanted after letting go of your Dime into the slot.
    5 Jul 2013, 03:21 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COINS

     

    Redbox !!..Also have a few coins from that hoarder from Vegas who was killed. Binion Morgan and a Peace dollar set !

     

    Waiting for a good price on a Carson City dollar to add to my collection. Guys on TV are too expensive.

     

    I also have the whole set of ASE'S from 1986 till now, all the pennies from 1909, no(S) ONE THOUGH..lol Yup, I am a hobby collector as well.
    5 Jul 2013, 03:38 PM Reply Like
  • Stilldazed
    , contributor
    Comments (3173) | Send Message
     
    Coins,
    Yeah, me too. Sometimes it was a chest refer, you slid the bottle of your favorite beverage across the slots to the release point at the lower right of the box and put in your dime to release it.
    5 Jul 2013, 03:41 PM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    IT ,Good stuff ,Paramount ,Redbox MS-65
    5 Jul 2013, 07:28 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COINS

     

    Yup !! I am a newbie to the hobby, about 5 years now. But I do enjoy it !

     

    I know I really won't make much money on it, so it will just get passed down. But nice to pull em out and show family and friends!
    5 Jul 2013, 07:44 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @COINS

     

    Might add I have a run of 30 dates I believe of the Indian cents as well,,,

     

    State quarters, now collecting Park quarters, but do have vintage coins too ..My favorite are the Peace dollars but I know most like the Morgan's.

     

    Have to dig them up from my yard though, can't remember what I bought over the years at coin shows..

     

    I flipped that 2012 Anniversary set that you bought straight from the mint. Bought 5 sets at $299 per I believe and got over $650 per. It was easy money although I was on hold waiting for almost an hours for a Mint rep to take my order.

     

    Never flipped before and wasn't even sure what I could sell them for but that was worth an hr's wait! Not sure when the next hot item will come out and do the same with,

     

    Oh, I also have one of those Lincoln sets that had the one silver piece, 4 2009 pennies, the Declaration of Independence which TACK witnessed signing, a picture of Lincoln, and a COA! only 50K WERE MADE and that was an issue as their website kept going down, phones were busy. Plus it only cost I think less then 60 bucks.??

     

    Saw one at a show and guy wanted $600 bucks for his. I asked him if he wanted to buy mine for $500? No nibble.. lol But I am keeping it for my daughters graduation present when she finishes her Masters as she loves Lincoln and history. If you know the set it comes in that brown case??
    6 Jul 2013, 01:27 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » http://huff.to/14Y3p2Q

     

    Are the Republican's correct?

     

    Interesting remarks...
    5 Jul 2013, 01:10 PM Reply Like
  • tampat
    , contributor
    Comments (1366) | Send Message
     
    "Are the Republican's correct?"

     

    They are, sometimes, about some things, but their actions seldom matches their rhetoric, and, not to be partisan, this is the case for both parties, which plays a big role in why things are as they are and will be worse further down the yellow brick road.
    These people are not problem solvers, they are power seekers using whatever means necessary to get it and hold onto it.
    Thats the crux of the problem.
    5 Jul 2013, 01:57 PM Reply Like
  • Stilldazed
    , contributor
    Comments (3173) | Send Message
     
    tampat,
    If I understood you correctly, I agree. Neither party is interested in the good of the country, only in remaining in power and protecting personal interests.

     

    They all take an oath to protect and defend the Constitution (from all enemies, foreign and domestic) and yet work diligently to undermine, ignore or bypass it.

     

    Example: What part of "shall not be infringed." in the 2nd amendment is so hard to understand?
    5 Jul 2013, 02:05 PM Reply Like
  • tampat
    , contributor
    Comments (1366) | Send Message
     
    dazed,

     

    It appears you understood perfectly.
    5 Jul 2013, 02:23 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » Did anyone eve hear who bugged the Ecuador embassy in London?

     

    Gotta tell you NY is steaming hot . Got my usual July 4th sunburn yesterday at the pool, just can't be bear to have the sun hit my skin today.

     

    For those lucky to tan right away I am jealous. lol

     

    Obviously I am not Italian.
    5 Jul 2013, 02:27 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    I spent many summers racing a Snipe class sailboat from my home club in Woodstock. The season opener was always a Memorial Day regatta across the border in East Lansing Michigan and that was my first burn of the year. Being of Hungarian heritage, I was well tanned by the July1/4 holidays. I have good memories of NY's Finger Lakes circuit...
    5 Jul 2013, 02:54 PM Reply Like
  • deercreekvols
    , contributor
    Comments (9262) | Send Message
     
    Spent many summers at Keuka Lake, one of NYs Finger Lakes.
    Beautiful place, in my opinion. Sailed a Sunfish a few times, but spent more days fishing.
    6 Jul 2013, 08:58 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    FYI, my best performing sector investment continues to be regional banks. I noted in a prior chapter that many of those stocks rose in value on 6/20/13 when the overall market was tanking. That was a tell and their out performance has accelerated since that time.

     

    I have used the rally to sell two 50 share positions in my basket which is a normal trading tactic that I use or at least try to follow-sell something into strength.

     

    The S & P 500 is up about .81% as I write this note. This is how some of my regional banks are doing, many of which are setting new 52 weeks highs:

     

    CBU +2.24%
    FMER +2.33%
    FNB +2.48%
    HBAN: 3.41%
    KEY: 3.94%
    TRMK: 2.5%
    VLY: 2.62%
    WASH: 3.64%
    WBCO 2.09%

     

    The general belief among investors is that the rise in intermediate and long term rates will be a net positive for those regional banks, insofar as it will increase their net interest margins, the main driver of operating earnings, particularly when they continue to pay depositors almost nothing due to a continuation of ZIRP. Also, loans volume, and loan losses, will likely improve with improvements in the economy. The main negative is that available for sale securities are likely declining in value.

     

    I publish in my blog once a month an update of my current positions in the regional bank basket. At current prices, I will not be adding and may continue paring into next week.

     

    Updated Tables for the Lottery Ticket and Regional Bank Basket Strategies/Bought 50 FNB at $11.25
    http://bit.ly/14H8vAK
    5 Jul 2013, 03:10 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » SA WROTE ME TO SAY THEY AREA AWARE OF THE PROBLEM AND HOPEFULLY WILL HAVE IT FIXED BY THE END OF NEXT WEEK!
    5 Jul 2013, 03:52 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    As per the norm , if it isn't negative it doesn't get much attention ,,However after a recent spike to around 22 on June 24, the ViX has retreated once again to 14.89. Now sits below its 50 & 200 day MA. An area that has been its resting place during most of this rally .....
    5 Jul 2013, 06:18 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    F & G: A one day spike in the VIX to over 20 is just irrelevant. It is even more irrelevant to have a bleep over 20 for just two days followed by a return of continuous movement below 20.

     

    The VIX hit 20.49 and 20.11 on a closing basis on June 20th and 24th respectively which is nothing more than noise.

     

    Historical Prices:
    http://yhoo.it/15lqQ8P

     

    The only important signal being given by the VIX is its continuous movement below 20 since September 2012, the date that I start the Stable VIX Pattern formation, and secondarily to its even more stable movements below 15.

     

    As I have noted in numerous blogs, the Stable Vix Pattern has been associated historically with significant gains in the stock market, all of the gains, while its counterpart the Unstable VIX Pattern is characteristic of an up and down movement in stocks going nowhere over a long period.

     

    Historic Stable Vix Pattern Periods:

     

    VIX and S & P Compared 1990 to 1997 (green light in 1991)
    http://bit.ly/XIe6mR

     

    Vix Charts from 2004 2005 2006 Stable VIX Patterns Phase 1 and Phase 2
    http://bit.ly/YsaseY

     

    This model has a certain amount of street creed with me since it correctly gave a Get Out of Dodge signal in August 2007:

     

    VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern

     

    http://bit.ly/12K50f1

     

    And, in retrospect, it would have given a warning to lighten up in stocks before the October 1987 crash using the then existing volatility index for the S & P 100 (VIX data for the S & P 500 starts in 1990)

     

    http://bit.ly/YsauDJ
    5 Jul 2013, 10:05 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    South,

     

    Agreed a one day spike as we saw with the Vix is irrelevant,,

     

    I tried to highlight the fact that, the one day spike , caused "headlines" and an overreaction, while the recent drop goes relatively unnoticed..
    I believe its important to promote that investors pay atttention to what the market is tellig us , rather than get excited about the 'noise".
    6 Jul 2013, 08:10 AM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Can anyone explain why Diesel fuel prices have recently dropped to the same or lower than regular gasoline prices. For as long as I can remember there has been a $0.40 -$0.50 premium on diesel fuel prices vs. regular?
    5 Jul 2013, 11:56 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Wmark,

     

    good question, i "googled" it and got this link http://1.usa.gov/Md6CG2

     

    Looks like diesel has about a .30 premium to gas... ?
    6 Jul 2013, 08:19 AM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
     
    When Crack Spread is over 48 cents, refiners make lotsa gasoline. When below, the profit margins favour diesel. Crack Spread has recently declined to 52cents from 60cents in February.

     

    gasoline price components chart: http://bit.ly/wCA3RY
    6 Jul 2013, 08:47 PM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    OK here goes...

     

    Here is my first point of confusion.. stockgent said:
    "The BDC does not pay much, if any, qualified dividends.
    The market looks further out into the future then the next dividend payment. BDCs will frequently issue stock at below net asset value per share. PSEC is a serial offender in this respect. Why do they do it? There is an inherent conflict in the interests of the shareholders and the managers whose compensation is based in part of the
    amount of assets."

     

    Now forgive me for being simple here but if you owned PSEC for the past 4-5 years, the stock price has stayed within the $10-12
    range and sits near the middle of that right now($10.76). As long as you leave the cash from your original shares in there you are generating that high dividend and collecting monthly if you wish. So what does he mean by "The BDC does not pay much, if any, qualified dividends."
    He continues to seemingly put down PSEC. Again, I don't understand enough here but if I buy a dividend stock I do not expect the base price of the stock to soar primarily because the money comes in and goes out to stockholders fast… but isn't that the point here?

     

    If I buy a BDC I am not expecting to double my money on the stock price. I give them my money, they use it and it generates interest
    like a bank except with some of these BDCs you get 10-12% return instead of the 2-3% at a bank.
    6 Jul 2013, 08:13 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    rich:

     

    You've sized it up pretty well.

     

    The paragraph you quoted does suggest a decided bias against BDC's. To address its specific points:

     

    -- BDC's only pay qualified (15% tax rate) dividends on gains they make from equity investments in client firms. Most of the money they make is interest and not subject to the dividends qualification. My response: so what? When I invest I want companies to make me the highest profits possible, regardless of taxation issues. Many a bad investment was made, or sometimes not sold, because of attempts at tax avoidance. The best way to avoid taxation is not to make any money.

     

    -- "The market looks out further than the next dividend payment." Yes, it does, for any and all investments, so?

     

    -- "BDCs will frequently issue stock at below net asset value per share" This is the clue that BDC's are not well understood. BDC book values are calculated on a GAAP basis and have no bearing on taxable realized gains. Money invested and interest received is what produces gains (BDC's usually don't trade loan paper, so its paper value holds less meaning), and, as BDC's are required to distribute 90% of gains, they cannot retain earnings and avoid the need to raise more capital. They issue shares at below-book values because the actual returns on their invested equity justify it. They would gain nothing by being held hostage to paper book values.

     

    -- The claim that BDC's operate like hedge funds and that their managers are raking off funds for "assets under management" is without any foundation that I can ascertain. Compenaion arrangements vary, and many BDC principals are significant shareholders in these enterprises.

     

    In essence, BDC's are similar to venture capitalists, except that their focus is not on start-ups, but on private companies with operating histories, who need funds for operation and/or expansion. This is typically called "mezzanine finance." BDC's make their money by making nice spreads on loans, as well as taking equity or warrant positions in client companies, which pay off handsomely (and qualified) if/when the companies are merged, bought out or IPO'd. Also, of note is the fact that industry-wide, BDC's loans are over 80% on a floating-rate basis, so they are hedged against higher rates.

     

    6 Jul 2013, 08:35 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @RICH

     

    Takes courage to tell the truth. I commend you for this !! Great job and I hope others will give you more food for thought as well,
    7 Jul 2013, 02:59 AM Reply Like
  • CoinsK
    , contributor
    Comments (3683) | Send Message
     
    I agree ,don't sweat the fact that others know more than us Rich. I used to shoot pool with some VERY good players,I learned so much more from them than the guys that I could beat. : )
    7 Jul 2013, 08:57 AM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    My next question on the same subject is....

     

    My big question with any BDC is how strong is it for long term survival? If I buy enough shares of a BDC at around 10% dividend to generate say 200-300 dollars per month then I take those payments to help me live (I am disabled and therefore at a low income level so my IRA is a huge consideration for my future). Of course you have to be careful at tax time because it is income but with that understood I am bringing in 200-300 bucks a month because they are using my money from the original stock purchase. My primary risk concern with a BDC is how secure is the principal investment? Is it worth risking that amount of money to generate a couple hundred dollars a month dividend? Perhaps a day will come when I sell the stock and end the dividends. If at that point I
    get all my original money back I consider that a win. Am I wrong? If the stock price is a little higher, then its that much more a win situation. Am I missing something here? Do you expect a big return on the original investment you put in to a BDC or is it like I said, you pretty much expect the dividends and take back a similar amount when you sell the stock as you put in.
    6 Jul 2013, 08:18 PM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    rich:

     

    The issues you raise are broader than your comments suggest.

     

    First off, regarding BDC safety, not a single BDC went bankrupt during the 2008 crisis. Two were bought out by other BDC's, but none went under. That aid, BDC's, as a class, are among the most volatile of investments and during 2008, numerous high-quality BDC's lost 80-90% of their value. The good news is that they, mostly, kept paying oversized dividends and have recovered some or all of their lost share values.

     

    But, how many small, retail investors would have the fortitude to ride that excursion down and up without bailing out at steep losses. this is a question one must ask.

     

    I would consider myself a very experienced and rather sizable investor, and I have never had more than 12% of my total assets committed to the BDC sector and those investments have been spread among 8-10 companies. So, you can readily see that my exposure to any one firm is quite limited, so even a catastrophe would have containable impact. Therefore, I would strongly counsel you not to over-invest in the sector (I'd say 15-20% max, or less) and never, ever over-invest in any one firm.

     

    Regarding "principal," BDC's are not a bond or a bank deposit. When you buy a stock, its price can wander all over the place, and BDC's often do. The more critical assessment is whether the BDC can keep cranking out high-yield income because if it can, then it's not all that important if/when the price rises, or even if it falls for a while, as long as that income just keeps flowing out. They are, primarily, "income engines," not capital-gain plays.

     

    Now, of course, if you hold any investment long enough, you do want the price to rise and/or income stream to get larger because the effects of inflation are relentless, and one's purchasing power would decrease if the income stream didn't rise over time or the share price gain, so it could be harvested and invested in another higher-yielding investment.

     

    Hope that helps.
    6 Jul 2013, 08:49 PM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    "BDC's, as a class, are among the most volatile of investments and during 2008, numerous high-quality BDC's lost 80-90% of their value. The good news is that they, mostly, kept paying oversized dividends and have recovered some or all of their lost share values."

     

    OK, so aside fromn a few BDC investments that lost share values during a horrendous year in out market, most are good investments… Is that a fair statement? .. because that is a huge, huge consideration for me. I am just afraid to put $20k into a company, with the intention of leaving it there 10+ years and collect monthly dividends only to have turn into an Enron overnight.
    I would consider myself a very experienced and rather sizable investor, and I have never had more than 12% of my total assets committed to the BDC sector and those investments have been spread among 8-10 companies. So, you can readily see that my exposure to any one firm is quite limited, so even a catastrophe would have containable impact.

     

    OK, so you confirm that you "need money to make money." I appreciate that but I am one that simply cannot stand in your shoes financially
    and I believe most in here can't either. It's like talking to Alex Rodriguez about playing baseball in little league. Do you wish to
    bring yourself down to a level to teach less fortunate and/or less knowledgable investors or would you prefer to simply address those
    in the forum much closer to your investment and financial status? Please understand I have no problem with that. I am a professional photographer (albeit pretty much retired) and I would not spend a whole lot of time chatting with people about where the shutter button is or how to load the camera… so I am not asking you to waste your time. I am really looking for those more experienced and knowledgable members in here that wish to share and have a genuine desire to teach those in the beginner level, especially those of us who are limited in investment funds looking to learn and make good decisions.
    7 Jul 2013, 01:46 AM Reply Like
  • Tack
    , contributor
    Comments (16142) | Send Message
     
    rich:

     

    The only comment I can offer is that I often sense that some with less capital or income wish to find some magical way to have outsized gains, but without risk or volatility. That beast doesn't exist. So, one must decide what level of risk one can bear in one's own situation, and it's never advisable to over-reach, trying to magnify income or gains.

     

    In particular, the types of investments that are more volatile require more management and experience, not less, so it's not really appropriate to think of committing sizable funds to one or two BDC's, then coming back in ten years to see how they did. It's just not that simple.

     

    If one wants to place money safely in accounts and have no worries, then, the kinds of dividend growers mentioned by South, like GIS, PEP, and others are better suited. Their yields won't set the world on fire, but you have little fear of seeing your principal get decimated by adverse events.
    7 Jul 2013, 10:34 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @TACK

     

    Excellent advice for all readers. You just have to be realistic or you will get eaten alive !!
    7 Jul 2013, 11:25 AM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    Nice informative response, thank you Tack. As I said in my previous post, I am well aware there is no "simple, no risk" solution but there are wise moves and not so wise ones. My plan is to work my IRA by breaking it up into the 10% annual allowance. I am not necessarily going to have 10 different investments but I do have to work with 10% at a time. Last year I dedicated the entire 10% to PSLV and thus far lost 40% of the investment. This is the one investment I am not cringing over with that drop because I am confident a rebound is on the horizon and I am in it for several years to come. I am so convinced of a nice silver comeback that I plan to allocate more funds this November if PSLV stays below $10. After that I want to start in with a BDC. I may buy into a few over time but just one this time is what I expect to break into the dividend area with.
    Regarding BDCs I keep going back to the PSEC which has kept its price between $10-12 for several years with few moves outside that range. If that is producing a dividend around12% I think that is an amazing opportunity moving forward. Up to this point I asked general questions about the BDCs so now I would like to get specific. For those of you familiar with BDCs and in particular PSEC, what are your thoughts and expectations for the future? If I read several of you are confident this one will likely stay the course, keep a range of $10-12 and continue to produce a dividend around 12% then I am likely going to do some averaging down with PSLV and start a small participation in PSEC. I will use the dividends to re-invest in more of the same and next year probably add more of that one and perhaps include a second BDC.
    My grand plan moving forward is to have about 15% of the portfolio in silver (PSLV is my choice), 20-25% in BDCs and unsure where I will go after that. However, I have two years to figure that out and a lot can happen in that period of time. In the meantime the remaining chunk of the IRA is sitting in two funds which pretty much move in unison with the S&P.
    I guess for the immediate future I want to find one or two good BDCs to move forward with keeping in mind they are intended to be long term purchases. Thanks again to all.

     

    ROS
    7 Jul 2013, 01:33 PM Reply Like
  • richonsilver
    , contributor
    Comments (245) | Send Message
     
    I don't mind admitting that much of the talk in here is over my head... about 19 floors in a 20 story building over my head but what posts I do understand are informative and this seems to be a good place to learn. If there are other websites that the newbie may benefit from regarding BDCs and/or investing as an individual I would also take those suggestions. I have a simple situation... I am permanently disabled, have one IRA (plus social security) that will allow me to survive over the next 20-30 years (if I am blessed to live that long). I want to learn about good investments keeping in mind I am in my early 50s. I don't have an abundance of time to build up the portfolio at 2-3% a year and i certainly cannot afford a big hit either. I know there is no rick-free easy solution but i am looking for smart moves. I am looking for a little income if possible and ways to build the portfolio over the next 15-20 years.
    I realize I am on my own with my firm stand on silver and the 15-20% it will represent in my portfolio but other than that, I am hoping to learn which ways to go. I get 10% of my IRA every November to re-allocate, so the 11 months prior to November each year is my time to learn as best I can. I have 7 years before I can remove money from the IRA but would like to leave it alone as long as i can so the investments within can keep growing.
    Thanks to all who respond... ROS
    6 Jul 2013, 08:24 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (9517) | Send Message
     
    Ros,

     

    I'm getting in late here on this conversation , so if i missed any facts here , i apologize in advance,

     

    I will offer one simple solution, don't invest in anything that u don't fully understand.

     

    Is there anything wrong with investing in a company that has paid dividends for 25 or more years and grows its dividend annually. ?

     

    Plenty of them around , most of these are EZ to understand , and have been around forever..

     

    Just my .02

     

    Good Luck!
    7 Jul 2013, 08:55 PM Reply Like
  • deercreekvols
    , contributor
    Comments (9262) | Send Message
     
    Anyone take in a holiday weekend movie?
    Looking forward to the numbers on Monday. Lone Ranger is getting beaten 3 to 1 by Despicable Me 2 from early reports.
    I am long DIS and LGF so I have a rooting interest.
    Despicable Me 2 was packed- (I took my daughter on the 4th-rainy day movie) Lone Ranger was not as crowded from what I could see and I did peek in!
    6 Jul 2013, 09:02 PM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @DEER

     

    Actually our town had it's fireworks show Saturday night, we were celebrating TACK'S birthday !!
    7 Jul 2013, 02:58 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14747) | Send Message
     
    Author’s reply » @DEERCREEK

     

    Care to put your vote on the line in the next chapter?
    7 Jul 2013, 07:52 PM Reply Like
  • South Gent
    , contributor
    Comments (5625) | Send Message
     
    Tack: Needless to say, I did not find myself in agreement with your comments. I would add that I own somewhere near 600 shares of PSEC. My view of BDCs are based on reality.

     

    (1) I understand that you are not concerned whether a dividend is taxed at 15% or at the highest marginal rate of a taxpayer. That would be a legitimate point only for taxpayers who are under a 15% marginal rate or who hold the BDC in a retirement account, where most of mine are owned.

     

    Taking 35% of a dividend compared to 15% would be deemed material by most people who are so impacted by that distinction. A 20% diminution in the value of a dividend through taxation would be relevant.

     

    2. BDC Manager Compensation:

     

    You must be kidding. Your statement: "The claim that BDC's operate like hedge funds and that their managers are raking off funds for "assets under management" is without any foundation that I can ascertain."

     

    Everything in the PSEC compensation arrangement is hedge fund like.

     

    Let's look at the arrangement for the PSEC managers. You can then tell me one that is substantially different from this compensation arrangement. I am going to quote from PSEC's last 10-Q filing. They have a base fee and two kinds of incentive fees.

     

    "The base management fee is calculated at an annual rate of 2.00% on our gross assets (including amounts borrowed)"

     

    Quotes on Management Fees can be found in the most recent 10-Q starting at page 54:

     

    http://1.usa.gov/13yybAa

     

    So, am I incorrect in noting that the managers have an incentive to increase net assets through more debt and common stock issuances that may not be in the interest of existing shareholders as to the amounts?

     

    In fact, that potential conflict is noted by PSEC in its multi-page discussions of risks!.

     

    The statement that I actually made on this point, rather than Tack's usual mischaracterization of what I said, is confirmed by PSEC in its discussions under these headings:

     

    "Potential conflicts of interest could impact our investment returns."

     

    "Our incentive fee could induce Prospect Capital Management to make speculative investments."

     

    "We may be obligated to pay our investment adviser incentive compensation even if we incur a loss."

     

    Pages 38-39 PSEC Annual Report
    http://1.usa.gov/13OaJ2a

     

    I would urge anyone to read the entire description of risks, made by any BDC, before listening to anyone trying to soft pedal or minimize those risks. The risk discussion for PSEC starts at page 28 and ends at page 52 (Single Spaced Pages)

     

    Lets continue on the management fee issue with this quote:

     

    "The total base management fees incurred to the favor of the Investment Adviser for the three months ended March 31, 2013 and March 31, 2012 were $18,966, and $8,949, respectively. The fees incurred for the nine months ended March 31, 2013 and March 31, 2012 were $48,500, and $25,985, respectively."

     

    So the base management fee is increasi