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I'm writing an instablog - I know of a few people who have read some, but the main reason for writing it is to clarify my thinking (and likely confuse you) before I invest in something every month or so. And also to act as a journal I can review every so often. I work as a mental health nurse.... More
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  • All In The Name Of Tragedy 4 comments
    Apr 7, 2014 11:07 AM | about stocks: BWG, BPOP, GEQ, QQQX, CHW, RSO, OFG, OXLC, ETB

    In yet another example of my mind jumping from topic to topic, several comments on the chatrooms on this site over the last several weeks mocking bunkers by associating them with gold bugs got me to thinking and I started googling.

    I live in a tornado and hail prone area. Would these make sense? A cousin of mine in PA lived in an underground house before she divorced the bastard. All I remember are complaints about humidity and being terrified of the cows running towards me across a field to check me out (yes, cowboy movies and stampedes from the films influenced a kid under the age of ten) and a banana tree growing in the middle of the interior.

    Turns out that some of these companies make pretty swank tornado/bomb shelters at insane prices. And some are obvious rip-offs. And some are just plain-jane underground rooms. And here and there, there are companies that seem to actually provide a genuine livable underground structure that should provide decent security and storm protection for a reasonable price.

    Anywho. Mulling things around that I've learned over the last couple of weeks, why not build a shelter and then build a house over it? Could act as a man-cave basement at the minimum if nothing happens and if a tornado is on the way, have a place that can provide protection. Or defend against zombies or whatever the current end-of-the-world scenario is.

    Now. Instead of considering my adhd when it comes to projects and purchases and toys, let's consider my rules based monthly/likely investment.

    I decided to start including my 401k in these blogs. Pretty simple and boring - I put in up to 6% of my gross pay and the hospital matches a bit over 50% of that. I'm now fully vested. I have three reasonable cost funds to choose from (there are others, but they have expenses that are quite high for a mutual fund and they haven't really out-performed for that expense over any length of time).

    VTSMX (vanguard total stock market fund), VGTSX (vang. total intl stock market), VBMFX (vang. total bond fund). Yes, I know, these aren't in bracketed quotes, but SA doesn't list mutual funds.

    What I do is look at the 100 day relative strength of all three funds on barchart www.barchart.com/ ; I want my money to be in the one with the highest RS. But I also want it to be above the 300 day SMA. If none of the funds match this criteria, the cash goes to a money market account. I examine my current holdings once a month.

    This is the article that originally got me interested in this:

    seekingalpha.com/article/921541-this-sim...

    Here are a couple of papers that extremebanker was nice enough to point me to:

    papers.ssrn.com/sol3/papers.cfm?abstract...

    papers.ssrn.com/sol3/papers.cfm?abstract...

    which all indicate a nice out-performance in a very bad market, mainly by getting out of stocks and going to bonds when things start to go south.

    Since I started this 401k last May, I have not gotten a sell signal yet. So I've been basically indexing vtsmx ever since. At some point, things will change and maybe abruptly - that's when I find out if this strategy is worthwhile. And keep in mind that I just started contributing to that 401k a year ago, so this will not break my retirement if things don't work out for it.

    Anywho, on to my taxable account plans:

    Last year I broke even. Which sounds like it sucks (it did), but the good news is that I really had just started and was buying preferreds and other cefs that got slaughtered all the way until the turn of the year. And a lot of those have turned around since January and have actually been doing better than my total market fund.

    Most of the preferreds I bought below par and I keep a limit order to sell at about par value or sometimes for a 10% gain if I bought it quite cheap. I did screw up with a couple and bought at par value before the slaughter started last May.

    Over the last couple of weeks I sold off OFG.B and NRF.D. I put the money from OFG.B into (NYSE:GEQ) and the money from Northstar into GRH.C. GRH.C is risky, but reading company statements over the last couple of years indicates to me that they are slowly improving and hopefully won't go bankrupt before I can sell it for a decent profit and collect dividends along the way.

    Anywho, what to buy this friday.

    Like last month, not too many preferreds that I would like to buy. BPOPO is currently yielding 8.3% and is trading around $19 with a $25 par - but I already own a bit of bpopp and made some money on this one last fall. And bpop has yet to exit tarp. Possible their request could be denied. And it was fairly gut-wrenching to hold this and the ofg preferreds while all the articles came out describing Puerto Rico turning into Detroit.

    OXLCO is still my favorite preferred with a mandatory redemption in 9 years, but I bought into it around $23 and it's currently a dollar higher. And the market yield has dropped to under 8% and I already own a good chunk (third largest holding after psec and vtsmx). Might be worthwhile for someone who reads this to research it, though.

    RSO.B is one of the ones I initially bought at par value and doubled the position at the turn of the year and still pays a 9% market yield. I do not understand why this one hasn't gone up like the other ones I own, but I can be patient. Unfortunately, it's the fourth largest position I have!

    So, back to cef land.

    Preferred cefs still trade at a hefty discount, but I like to pick them out myself. There are still mreit type ones and option types at big discounts with good yields. Mreits make me nervous. I already picked up (JLA), (NYSE:ETB), (GEQ) in the last six months, so I've got some defensive option ones. How about other countries?

    Another one I wrote about last time so I'll just copy paste again:

    "(NASDAQ:CHW) - one of the cefs I sold off in the Roth account and I've owned on and off for a couple of years. About half equities, some convertibles some bonds. Global. Over a 13% discount right now, pays monthly and a bit over a 8% distribution rate. Even with all the European craziness and problems over the past few years, the nav keeps creeping up and the market price has started to diverge more."

    Actually the discount is currently 11% and they just increased the distribution a bit to make it a 9% market yield. Probably my first pick.

    Another copy/paste from a previous writing:

    "(NYSE:BWG) - Ouch. Only started up in 2012 and the nav went up and now it's back to where it started. Currently at a 14% discount and close to a 9% market yield. It's listed as a global fund, but you might notice that most of its holdings are emerging market debts. Comparing this to other funds I examined today, I like that I don't see Venezuela govt bonds as a primary holding. Turkey also seems limited. Does have Portugal, but they don't seem to be inclined to have a civil war or coup (friend of mine has been quite correct on a number of global issues over the years - he does help draw up rules-of-engagement - he also visited Turkey on a cruise this year and told me that you could tell people were ready to overthrow Erodogen - I'm inclined to trust his judgment - and note that I don't know much about Turkey one way or the other, I just like to avoid investing in places that might end up resembling Detroit).

    Another reason I'm looking at this one is that they raised their distribution last year. And the brief look I've taken is that the eps is greater than the current distribution."

    It's risen in price since I wrote that (and briefly held and sold for a slight profit), but the distribution is still over 8% and it's still at a 14% discount. And I could add to what I previously wrote that I don't see Russian or Ukraine debt as top ten holdings like other funds I looked at this morning.

    Remember the above when I was talking about the momentum and relative strength that I use for the big funds I have? I ran the same screen on the nav of bwg and chw. I'm not going to use the same criteria to buy because these cefs only have a hundred holdings or so compared to a broad index fund.

    But for those who might be interested, the nav of chw has been above the 300 day sma for months. The nav of bwg just broke above that mark today. Good signs for both. I'm just liking chw a bit better because I'm more familiar with it having owned it off and on for a couple of years.

    As usual, I'll edit in what I end up buying on Friday. And update ahead of that date if I see something else that looks appealing.

    And an edit for 4/8:

    Browsing around I came across this -

    (cefl) - this article does better justice to it than I could:

    seekingalpha.com/article/2129673-is-it-s...

    And the ex-date is tomorrow. Still giving it some thought. Main risk that I can see in the prospectus is that the price hits $5 or drops 60% in a month then it can automatically be redeemed. I briefly owned a similar fund for mreits, MORL last summer and couldn't take the volatility. This one might be less volatile as it's based on a pretty broad array of cefs, but no guarantees.

    Stocks: BWG, BPOP, GEQ, QQQX, CHW, RSO, OFG, OXLC, ETB
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  • User 7415181
    , contributor
    Comments (877) | Send Message
     
    Author’s reply » I just wrote an addendum to this that was as long as the original post. It got deleted somewherst between the "check spelling" button and the "submit" button. I cannot find it in my history-of-the-internet for today, so I'll just post the basics since I will not spend another thirty minutes to an hour writing.

     

    Woman's car broke this am on the way to work. Will not be able to put as much in the taxable account tomorrow since I want to pay the credit card off.

     

    Over the last week, sold off (jla), (jdd), (bui), grh.c, nrf.d, arr.b, bpopp. All at a slight profit - grh.c was at a pretty good profit for holding for eight days and was not planned, but luck.

     

    I will take a capital gain of many months worth of dividends if there's something else worth buying upon a sale.

     

    Proceeds divided evenly between (chw) and (bwg) today. (cefl) was a purchase two days ago.

     

    Preferred stocks that I've bought into over the last year have been spiking recently. Perhaps people are thinking that the market is topping.

     

    If it is, the fixed income funds I picked up should do nicely. If the market continues to go up, then my vtsmx should continue to do nicely and I'll collect 8%+ distributions on the other stuff in the meantime.
    10 Apr 2014, 12:49 PM Reply Like
  • User 7415181
    , contributor
    Comments (877) | Send Message
     
    Author’s reply » And not that anyone read this or will, but I figured out my paycheck finances today and did have enough money to purchase something (car repair was not as bad as I feared, although we will have to get another car for her probably sooner than I wanted to, so we'll have to budget for it over the next several months).

     

    (CSQ) - US based version of chw with about half equities and some convertibles and bonds thrown in the mix. Another one that calamos just increased the distribution on. Not at as big a discount as I would like, but second place in the calamos funds line up. One nice thing about the calamos funds is that they pay out in the middle of the month, so even though I missed buying before the ex-dates for April, I don't have to wait that long before I get distributions in May.

     

    And, for me at least, it's easier to tolerate market grumpiness when you're seeing income to your account every couple of weeks.
    11 Apr 2014, 12:57 PM Reply Like
  • DBuckroyd
    , contributor
    Comments (2) | Send Message
     
    Doug Are you still bullish about ETB with it's discount rate less than .5%
    Don Buckroyd
    7 May 2014, 12:13 PM Reply Like
  • User 7415181
    , contributor
    Comments (877) | Send Message
     
    Author’s reply » I am not Doug Albo. But thank you for dropping by! I sold off ETB two weeks ago (along with some other stuff) - had some credit card stuff to pay down.

     

    I knew the discount had narrowed from when I bought it last fall, but not by that much!
    7 May 2014, 12:24 PM Reply Like
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