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apoplectic

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  • Can You Live Off Of Dividend Growth Income In Retirement? [View article]
    From age 58 to 65 (start of Medicare benefits) I would expect significant increases in the cost of health insurance. I don't know whether the assumed $70,000 per year for expenses is so granular as to select a strategy for health insurance and model the cost. In my experience, retiring at 50, continuing in an employer-sponsored health insurance program, the wife and I absorbed double-digit increases in annual premiums. Eventually we moved one spouse (the super-healthy one) over to a high deductible insurance policy. There were no claims from age 54 to 65 on this policy, but the annual deductible was $3500. (And even though the company never paid on a claim, they were charging $525 per month for one person insured during the last year before Medicare eligibility.)

    In our experience there was a need for more dentistry after the teeth had 50 years on them. So basically there is a choice awaiting this couple: "Do you want to keep your teeth?" Spoiler Alert: If they want to keep their teeth, it would be very expensive. But if they don't, that would be expensive too!
    Aug 28 09:07 AM | 2 Likes Like |Link to Comment
  • Electric Utilities Might Belong On Your Sell List [View article]
    Coincidentally, I recently sold all my electric utility stocks, except for ED and a smaller position in PNW. As Dividend Sleuth rightly observed, this liquidation will result in a reduction in dividend income and capital gains taxes. (My gains were about 35% ... which I thought was "ok" on utility shares. Like the man said, the easy money already has been made. By somebody... LOL.)

    As a risk-averse retiree, I do not see other equity investments that are priced attractively at this juncture. I intend to park the proceeds in a low-cost municipal bond fund. Since the duration of the fund portfolio is less than 3 years, I do not anticipate significant losses, if interest rates go up.
    Aug 20 09:30 AM | Likes Like |Link to Comment
  • Housing Relates To Income More Than Credit Now [View article]
    Economic commentary at NAHB website attributes slow home building activity to supply constraints on labor and building lots. Anecdotally the fracking gas boom has recruited a large number of workers who might otherwise have joined housing construction crews.
    Aug 20 09:08 AM | Likes Like |Link to Comment
  • The Coming Market Crash And The "Trigger" [View article]
    I checked the info about "Portfolio Margin" on the websites of ETrade and TDAmeritrde. Basically margin is set at the amount the broker believes is "the largest loss identified" on stress testing the portfolio.
    TDAmeritrade gives the example of a diversified stock portfolio of $65,235 requiring a margin of $9,785.25 (15% margin). Mind you, an account has to be $125,000 minimum to start Portfolio Margin. And if the account value drops below $100,000 the Portfolio Margin eligibility would be finished.

    Still, the methods of Portfolio Margin look like they could increase the leverage of certain brokerage accounts quite a bit... with the increased risk of margin calls and forced selling, should the stocks drop by more than 15%.
    Aug 10 09:10 AM | 2 Likes Like |Link to Comment
  • Midyear Update: Petroleum & Resources Hopes Exxon And Chevron Join The Game [View article]
    Based on information at etf connect, there were a couple occasions which in retrospect look like good times to sell PEO. Approximately 2000 the price dropped from $30 ish to $20 ish. Approximately 2008 the price dropped from $40 ish to $20 ish.

    Coincidentally with these declines in PEO share price, the NAV also tumbled.

    A long-term holder might not have been perturbed by these price declines, because income continued (distribution of long term capital gains near the yearends as well as dividends from the portfolio). I think PEO makes an interesting equity income alternative, because the big distribution at yearend comes in a month with major heating and holiday expenses of the household.

    I don't know about the 1980's, but since 1994 PEO discount has been less than 5% on 5 occasions.... and more than 15% on 3 occasions. At the 52-week low, PEO price was $25.39 and nav was $29.86, for a discount of 15.87%

    In the year 2000 the discount was over 20% for a brief period.

    The 5 year average discount is 13.24%. Historically investors (supply and demand for PEO shares) have produced discounts that range from about 5% to about 20%.

    My sense is that the entrenched management of PEO is not going to be moved "open-end" the fund. They may buy deeply discounted shares on the open market. They seem to be resolute that the promise of 6% distributions will keep most of the shareholders satisfied, and there will never be enough disgruntled shareholders to challenge the existing board. I understand Adams Express (a ditto closed end fund) would have more votes than any other shareholder under any scenario for board election.

    So the status quo will remain, with PEO an alternative for a long term flow of distributions sourced from the petroleum and petrochemical industries. Strategically, I believe it is important to decide on a price low enough to buy PEO in order to expect above average future returns. I would peg that price at $27 and change. Possibly this price will be seen after PEO goes ex dividend in November.

    This is not investment advice. I am expressing personal opinion only.
    Aug 8 10:18 AM | Likes Like |Link to Comment
  • Retirement Strategy: Is It Time To Dump Everything? [View article]
    Jim Skelton - Para Bellum 16:

    You verbally warned readers to take heed of Elaine Garzarelli's "crash and burn in a drug-fueled haze".

    I can't say that I have avidly followed her career, but hers has been one of some significant achievements. After her call of the 1987 crash Elaine Garzarelli developed a celebrity status, which some may have envied. Lehman let her go in 1994. She established Garzarelli Capital, which continues as a going concern. The website of Garzarelli Capital claims that since 1982, Elaine Garzarelli has fairly accurately called the tops and bottoms of the SP 500.

    While I do not know Garzarelli's current market outlook, I read on Reuters that as of November of 2013 she was accurately bullish.

    I thought your input was not-so-wonderful, to the extent that you had nasty things to say. And of what relevance is your opinion of Elaine Garzarelli to the discussion?

    Aug 4 08:49 AM | Likes Like |Link to Comment
  • Picking Up Yield In The Recent Energy Sector Decline [View article]
    My previous comment should read: Synthetic Crude (NYSEARCA:SCO) which is light, not WCS, which is heavy.
    Aug 3 01:50 PM | Likes Like |Link to Comment
  • Picking Up Yield In The Recent Energy Sector Decline [View article]
    Obviously there is a time and place for energy equities in a portfolio. As to petroleum, right now I feel the time is "later", primarily because I foresee supply increasing more rapidly than demand. Gulf coast refiners in the US would probably benefit, if the price of WTI is weaker than the price of gasoline at the pump. However, I think the best times to invest in the sector are when WTI crude prices are high and rising.

    Western Canadian Select upgraded by Syncrude may have long-term prospects of rising prices, as transportation constraints are relieved in coming years. My preferred way to participate is COSWF, which made a 2-year low of $17.76 in late January 2014.

    Also, I believe Uranium is another fuel which will see rising spot prices. Again looking to Canadians, URPTF (Uranium Participation) represents ownership of uranium already mined and in storage. Changes in the spot price of uranium have a fairly direct influence on the price of these shares. No yield.

    Disclosure: long COSWF and URPTF, as an inflation hedge.
    Aug 3 01:22 PM | Likes Like |Link to Comment
  • Retirement Strategy: Is It Time To Dump Everything? [View article]
    The article certainly prompted some interesting responses. I agree with Regarded Solutions that this is not the time to sell everything, but I have been gradually taking profits in equities.

    As a retiree I am quite risk averse. I thought risk in the equity markets was quite low in the spring of 2009, and I believe it to be quite a bit higher now.

    On the matter of Investor Greed versus Fear, I would be more interested in the CAPE as an indication of investor fearlessness than CNN's meter. CAPE is now about 26. It has been higher historically on occasion (28 at the 2007 peak, 44 at the 2000 peak, etc.) The Cyclically Adjusted P/E is elevated now. Over the coming decade, therefor, I expect that total returns from equities will be depressed.

    Today's environment presents higher risk and lower prospective returns. So, I believe this is a good time to raise some cash, preserving capital until such time as the environment becomes more favorable to equity investment.

    The problem I have with CNN's meter is that it changes from fear to greed and back quite often. Since January of 2012 I see 5 peaks in greed (over 80 on the CNN scale) and 4 peaks in fear (under 20).

    I followed the link to the Gallup study. By the way the link does not go directly to the Gallup Item... It goes to a different Gallup survey about Americans' attitudes toward the stock market. But I found the survey results referred to, dated May 8, 2013. Gallup did find that 52% of American households owned stock, down from the pre-recession level. Gallup's interpretation was that unemployment explains it. Fewer American households have the savings, in other words, to invest in the stock market. Gallup's interpretation does not attribute it to fearfulness about equity markets.

    My sense is that for those who do have the ability to invest in stocks, the price appreciation since March of 2009 has been noticed, and they bought stocks, not only with cash but extensively on margin as well. Now, I see discussion about how much higher the stock indices can go before the "overdue correction". Personally, I feel I can afford to miss out on the price appreciation which may be expected.

    My comments here are not investment advice. I am respectfully discussing an article and comparing the author's views to my own perceptions of markets.


    Jul 29 10:41 PM | 1 Like Like |Link to Comment
  • HCP: Decidedly More Affordable After CEO Got Fired [View article]
    October 2, 2013, The day before the news about Mr Flaherty's termination came out, HCP closed at $41.77 ... Recently (July 8, 2014) HCP closed at $41.33 It is true that the day the news came out, HCP stock dropped nearly 5%, but it seems to me that the share price has pretty much recovered by now.

    Flaherty was President, Chairman and CEO. There were fewer checks and balances in that arrangement than there would have been had there been two persons in those roles.

    I imagine the severance payments to Mr Flaherty would have been in excess of $13,000,000. I am curious what the actual amount was.
    Jul 10 08:02 AM | 1 Like Like |Link to Comment
  • Getting The Returns Without The Risk [View article]
    Excellent thought-provoking article. The recommendation for a "retiree" of a 1-7 year bond ladder would perhaps be suitable for an individual with no intention of dissipating (or decumulating) wealth and thus not planning to "die broke".

    Highly rated GO municipal bonds, or water & sewer revenue bonds, with adequate call protection might be the optimal categories for after tax yields relative to risk of default. I would add that prudent diversification would require at least 20 issuers, with a maximum of 2 issuers per state. As an additional filter, I would try to avoid issuers where political corruption is a recorded fact.
    Jul 8 01:52 PM | Likes Like |Link to Comment
  • Protecting Your Income Portfolios In Today's Market: Consider Defensive Utility Stocks [View article]
    This was an excellent article, and I feel the discussion of it has been insightful.

    For several years I have been long Steady Eddie and SO. Also, I believe it is a good idea to diversify utilities geographically, because weather can be a b**ch for some regions and a boon to other areas during any given year.

    To use a baseball metaphor, I think of ED and SO as consistent hitters ... not for home runs, but for Runs Batted In.
    Jun 28 06:04 PM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Mike,

    I started investing during the SBC incarnation of the company in 2002. I DRIPed dividends until early 2006, at which time my average cost was $27.02 per share. In 2008 and 2009 I made some further lump-sum purchases... True, it may be a while before I feel the value (current yield) is attractive.

    A whiff of inflationary expectations or a shift to higher interest rates could be the catalyst to bring a fat pitch opportunity into being.
    Jun 19 11:18 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    I would probably be interested in adding to my position in T at a lower price, say $30 and change.

    Assuming "healthy" dividends go on increasing by 4 cents per year over the coming decade, I reckon that the discounted present value of T dividends will decline by 3 cents per year. This because I am assuming a 4% annual inflation rate, and thus discounting the future stream of dividends by 4%
    Jun 19 10:08 AM | Likes Like |Link to Comment
  • Enhancing Retirement Income With A Portfolio Of Covered Call CEFs: Part I [View article]
    Based on the Q&A dated May 1 on the Nuveen Investments website, the change of JLA into QQQX will change the option writing strategy

    FROM constant 100% overwrite of a portfolio that is 50/50 SP500 and Nasdaq
    TO dynamic overwrite ranging from 35% to 75% (target average 55%) of a portfolio of only Nasdaq stocks.
    Jun 15 01:10 PM | Likes Like |Link to Comment
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