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apoplectic

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  • Investors Go Short On Singapore Stocks [View article]
    Reuters reported 6/19/15 that short interest on Singapore Stock Exchange had increased to 1.2% of the share float, based on Markit as a source.

    I believe that recent investor sentiment about Singapore stocks has been pessimistic, due principally to the growing awareness of the economic slowdown in China. That, together with blogs by Iceberg and Muddy Waters to question the accounting standards of Singapore-based Noble, may explain much of the increase in short-selling.

    The headline of the article is not to be taken literally, if 98.8% of the share float is not sold short.

    I am puzzled by the reference "Includes SGF", because the article makes no mention of SGF (Aberdeen Singapore Closed End Fund). To the best of my knowledge SGF does not sell short. As of October 2014 Annual Report, SGF investments did not include Noble.
    Jun 25, 2015. 12:43 AM | Likes Like |Link to Comment
  • Utility CEFs For Defensive Income [View article]
    Is there an ideal time to buy into a closed end fund comprised of utility stocks? Theoretically, the risks would be minimized when the yields on utility stocks are relatively high, and the prevailing sentiment of investors is that stocks (and utility stocks in particular) are not such an attractive investment.

    One indication of the sentiment for utility stocks is XLU. Historical price changes suggest that the risks of buying utility stocks were minimal during the period from August 2002 to April 2003, and again from January 2009 to July 2009. XLU may have reached a cyclical top in January of 2015, as investors began repricing utility shares on the expectation of increases in interest rates. Has XLU declined to a point where once again the risk of buying utility stocks is minimal?

    I am sure that opinions would vary.
    Jun 14, 2015. 09:27 AM | 1 Like Like |Link to Comment
  • Why My Nose Is Bleeding [View article]
    stoxfox,

    On your ladder of AAA rated munis, would it be correct to assume that "paying over 5" is your way of saying the taxable equivalent yield to call is over 5%?

    In my portfolio of munis, about one-fourth went to premium prices over 110% of maturity value... holding these bonds to maturity (in effect) would guarantee a "loss" of the premiums (at least $100 per $1000 face value). Would you limit bond buying to discount bonds? Is there a percentage of premium pricing on bonds at which you would sell opportunistically?
    Jun 11, 2015. 09:24 AM | Likes Like |Link to Comment
  • The Radical Gold Underinvestment By American Stock Investors Is Very Bullish [View article]
    "...[Gold] is the only major asset class strongly inversely correlated with stocks."

    I did a brief search of articles to see what data I could find on the inverse correlation. Now I wonder what data Adam Hamilton is basing his assertion on.

    Jeremy Siegel (Wharton professor) presented correlations over the period 1965 to 2013, approximately as follows:
    SP500 vs Gold 0.1
    SP500 vs 10 year Treasuries -0.3
    SP500 vs US Dollar -0.6

    In another article, published in 2012 (not sure who to attribute to) the correlations between SP500 and Gold were negative, and increased with the length of the time intervals being studied. During the years 1956 to 2010
    the correlations were:
    with monthly interval -0.03
    with annual interval -0.13
    with 3 year interval -0.37
    ...which led that author to conclude that the diversification benefits of holding gold can be better realized by long-term rather than short term holding.

    I believe that at times when both bonds and stocks fall in price, gold is unlikely to. And for that reason, I invest about 6% of my capital in precious metals and mines. (I think of these investments as my cutlery collection... as in "falling knives" that I have bought. <wink>.)

    However, if the reason to buy gold is to add to the portfolio an asset negatively correlated with the SP500 or Nasdaq100, there are alternatives where the negative correlation is obviously greater. Examples include non-levered short funds such as HDGE (managed) and PSQ (passive).
    Jun 7, 2015. 10:53 AM | 2 Likes Like |Link to Comment
  • The Biggest Threat To Your Retirement Portfolio: Mild Dementia [View article]
    Paul:

    I agree with your point.

    I would not be keen to buy an annuity at age 55. There is a gain in postponing the purchase of annuities. The insurance company has a statistical prediction for your life expectancy, say 84. If you buy an annuity at age 72 to 75, those annuitants with contracts with the same insurance company, who died before their time, in effect enhance your monthly annuity payments from day one, via the amount of fixed annuity payment the company will promise you at age 72-75. If you go ahead and die before your expectancy, then your annuity purchase will enhance the monthly payments of others who delay the purchase of annuities to an even later age than 72-75.
    Jun 6, 2015. 03:46 PM | Likes Like |Link to Comment
  • The Biggest Threat To Your Retirement Portfolio: Mild Dementia [View article]
    I have no legacy motive, so perhaps I have considered some of the same issues as Michael Chorost. My goals include freedom from want and anxiety. A related goal is for the second-to-die to die broke. (We prefer to "give with the living hand", and we both are members of a cremation society.)

    Beginning when I was in my early 30s, I thought of Investment Strategy as a series of 4 stages: Accumulation of Capital (until retirement);
    Living on the Income from Capital (early years of retirement -- in my case age 50 to 71);
    Dissipation (Annuitization... age 72 to 75)
    Living on annuities (age 76 until the death of the second-to-die)

    I noted that the article describes annuities as "abusive" and "sleazy". I agree that some annuities and some annuity sales people are. However, I believe that it will be possible to shop for annuities in the age 72-75 window and avoid high sales commissions. At the present time I regard Vanguard's 2% commission (incorporated into the quotation of annuity amounts) as "the one to beat".

    For me it will be an irrevocable decision to annuitize one-third of Capital per year over 3 years. I would not consider swapping one annuity for another, nor entertain any sales presentation whatsoever. The initiative should be retained by the annuity buyer 100%.

    There are many annuity products out there, with Variable Annuities presenting risk profiles that are quite different from a Fixed Annuity. I like the predictability, comparability, and lower cost of Fixed Annuities. I would opt for 100% of the payment to continue for the life of the survivor. I also would opt for a 3% inflation adjustment, because I expect the aging annuitants will have increasing costs (but if surplus income persists, my spouse and I can give increasing amounts each year with the living hand).

    Annuitization relieves the annuitant of risk/responsibility for investment management and transfers these to an insurance company. It would be misguided to expect the insurance company to assume these without being compensated. I believe that competition among insurance companies exists, and an annuity shopper can avoid egregious expenses and "sleaze".

    To that end, during 6 years prior to age 72, I would make an annual exercise of shopping the market for Single Premium Immediate Annuities per a purchase of $100,000. (Standardizing Monthly Payment, Fixed Income, 3% COLA, 100% to survivor, No guarantee period, accurate age of annuitant and survivor {+1 every year} ) After shopping the market without buying for 6 years, I think a person would be well informed to actually shop-to-buy over the following 3 years from age 72 to 75.

    It is a good idea to know what amount your state of residence guarantees for annuitants in the event of insolvency of the insurance company. In my state I would not buy more that $300,000 from any one company, but I believe the guarantee differs from state to state.

    Another aspect to research and discuss with spouse is long-term care ... what I would call "nursing home and assisted living contingencies". This may vary with your state of residence. In some states, based on ability to pay, some residents may be eligible for a subsidized care, with limits on their assets and the assets retained by the spouse remaining at home. It might be worthwhile to talk to a local expert on elder care to determine the best way in your case for the annuities of 2 spouses to be structured.

    Live Long and Prosper!
    Jun 6, 2015. 11:23 AM | 10 Likes Like |Link to Comment
  • The Sector Dips Portfolio: Which Utilities To Buy? [View article]
    PPL has spun off their merchant power biz into Talen Energy (TLN). The price of PPL understandably dropped ex-spinoff. The pure regulated utility investment in US and UK should have earnings that are more predictable.

    A 5-year chart comparing PPL to XLU shows PPL underperforming the utility index by a wide margin.

    Has PPL given guidance on the effect of the spin-off on future dividend payments? If PPL continues the same dividend per share or raises it this year, the yield seems relatively attractive when the price of PPL stock is less than $31.75 IMHO
    Jun 3, 2015. 04:34 PM | Likes Like |Link to Comment
  • A Major Downturn Is Inevitable: Here Are Some Ways To Bet On The Coming Decline [View article]
    HDGE is actively managed, with John Del Vecchio as Portfolio Manager, and Brad Lamensdorf as Trading and Market Strategist. I understand that Del Vecchio has been professionally analyzing stocks with a view to short-selling since 2001. He has written about his "forensic" method of ferreting out baloney earnings reports. Brad Lamensdorf sometimes writes articles that appear on Seeking Alpha.

    I believe both managers have expressed a view that HDGE can play a useful role as a hedge which is intended to be negatively correlated with SP500. The expenses are quite high. HDGE declines in value except when there is a rapid decline in equity prices... the sort of event John Hussman refers to as "vertical drops" and "air pockets".
    Jun 1, 2015. 11:15 PM | Likes Like |Link to Comment
  • What Can EverBank Teach Us About Bank Of Internet? [View article]
    EVER priced a secondary stock offering at $17.95 in March of 2015. I consider that price indicative of the level which major shareholders would like to distribute shares at ... In the fullness of time I would not be surprised by a lower price.
    Jun 1, 2015. 03:07 PM | 2 Likes Like |Link to Comment
  • The Sector Dips Portfolio: Which Utilities To Buy? [View article]
    My risk tolerance and investment horizon is, of course, different from others, and this should not be construed as investment advice, or a recommendation of any sort.

    I am comfortable hedging my portfolio of global equities (including a timber REIT as well as US, Canadian and Australian stocks, and closed end funds with portfoios in Russia, Poland, Turkey and Singapore) 33% with short etfs. In other words, if my equity portfolio market value is $100,000 I would maintain $33,000 in short etfs.

    Trading today, there is HDGE at $10.77 and PSQ at $54.95

    These are not intended to be held for the long run, but rather for their negative correlation with the SP500 and Nasdaq 100. If the stock indexes go on to higher highs, these shorts will definitely be a drag on the portfolio's total return. On the other hand, if there is a sell-off in the equity markets (bringing utility share yields up to a level I may consider worth the risk), then I would expect a gain on the short hedges.

    An equity index fund, or a do-it-yourself portfolio of "Dividend Achiever" stocks is what I had in mind as securities with higher potential returns over a 50 year span compared to utilities.
    Jun 1, 2015. 10:25 AM | Likes Like |Link to Comment
  • The Sector Dips Portfolio: Which Utilities To Buy? [View article]
    Utilities, represented by XLU, have been selling off since January 2015. Why?

    Is it a "dip" in a secular bull market? Time will tell. I believe the article assumes that 15-20% off the January highs would constitute a good entry point for buying selected utilities. I am curious why it's 15-20%. During 2 previous market declines (9/2000 to 2/3003 and 10/2007 to 2/2009), I believe XLU bottomed out approximately 40-45% below the previous highs.

    All other things being equal, it makes sense to buy utilities at a time when risk is relatively low (lower P/Es), and potential return is relatively high (higher dividend yields). I am in agreement with the author on this point. But is now the time? In my opinion, this is a good time to be taking profits in utility stocks.

    I might question why an investor in the third decade of life, conceivably blessed with a 50-year investing horizon, would allocate capital to utilities at all. I say this because there are securities other than utility stocks where the 50-year compound return would be significantly higher than utility stocks. After a 5-10 year interval the return could be negative, but I would be confident of a significant positive return over 50 years.

    Are utility investors acting on a strengthening conviction that yields will be higher in the near future? We have had roughly 35 years of declining interest rates. Not surprisingly, there is now a huge level of indebtedness globally. If investors expect higher rates, they will bid lower prices for utilities.
    May 31, 2015. 09:07 AM | Likes Like |Link to Comment
  • Singapore's Greatest Strength Could One Day Turn Against It [View article]
    Political and economic leadership has been a critical factor in Singapore's development as an independent state over the past 50 + years. The late Prime Minister Lee Kuan Yew promoted innovation in export industries, and he was ruthless (and thus comparatively successful) in eradicating public corruption.

    The Singapore citizen population is aging, and it is not naturally reproducing itself, and so the door is open to immigration. About 40% of the population is noncitizen. There have been and probably always will be differences of opinion about the fairness with which foreign-born workers are compensated and treated, but I foresee that Asians with skills and mobility will continue to come to Singapore, looking for a better life. And meanwhile labor shortages will be chronic.

    Innovation is a remarkable feature of business in Singapore, considered the world's second-free-est economy. For me, this is a compelling reason to consider investing in Singapore equities. The Singapore Economic Development Board estimates that 1 in 10 of working-age people in Singapore have either started up a business or are trying to become an entrepreneur.

    The same board will spare no effort to facilitate a multinational corporation setting up in Singapore. Most often a western-based corporation can be interested in a secure and comfortable base for efficient export to China.

    Recently, the slowdown in China has resulted in pessimism for the business outlook in Singapore. I view the present time as a reasonable entry point. Singapore stocks can swing widely from lows to highs and vice versa. My chosen vehicle was not the EWS etf but the Aberdeen Singapore (closed end) Fund SGF, which I recently bought at a discount greater than 12.4%. In my opinion, the discount is unlikely to persist at greater than -13%

    I am stating my opinion only. Nothing herein is to be construed as investment advice.
    May 29, 2015. 10:02 AM | Likes Like |Link to Comment
  • Chinese Stocks Are Cheap, Hong Kong Stocks Are Even Cheaper [View article]
    TK,

    I agree with your points on the history, but I would not say the adversarial relationship was made in USA. Regardless of who may be blamed for it, the adversarial relationship may result in unexpected problems for US investors in Chinese securities.
    May 26, 2015. 09:04 AM | Likes Like |Link to Comment
  • Chinese Stocks Are Cheap, Hong Kong Stocks Are Even Cheaper [View article]
    Additionally there is a long-term adversarial relationship between China and the USA, currently simmering in regard to the South China Sea.

    It may be possible for US investors to back ethnic Chinese business acumen without the baggage of the communist party in China, per se. I am considering SGF the Aberdeen Singapore Fund (closed end). I believe Singapore GDP is forecast to grow 3.5% or so annually to 2024. About half the portfolio of SGF is financials, as I recall. The fund's annual expenses seem high to me.

    Singapore investor sentiment seems quite pessimistic at the present time. But I think it could get worse before it improves. I personally would be interested in SGF at bit lower price: I'd wait for at least 13% discount to NAV.
    May 22, 2015. 09:49 AM | 1 Like Like |Link to Comment
  • Why Cash Is King [View article]
    Interesting article and discussion!

    Several commenters have mentioned the issue of how to time the deployment of cash after equity markets correct... for instance, what if you are too early and end up with paper losses? Or too late and miss the best opportunity to buy stocks?

    An investor in individual stocks can avoid this problem by maintaining a watch list of stocks with a target buy price for each stock. The target buy price might be based on historical lows, or a target dividend yield, or a defined percentage discount from a specific price that was a recent high or perhaps a secondary offering price. Or, it may based on a history of heavy insider buying below a certain price. There are many alternative approaches, and if the universe of targeted stocks is rather extensive, then a "conservative" method for an individual stock would be to compare target prices using several alternative approaches, and set target at the lowest price result.

    By this method, cash is deployed as individual stocks drop to specific prices. Limit buy orders good for 60 days "automate" the acquisitions. It is not an attempt to time a market bottom in say SP500, but rather to acquire at prices where the prospective future returns are relatively high...
    May 18, 2015. 02:57 PM | 1 Like Like |Link to Comment
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