Investments Trade Log

[Chris]

Currently I've got some money in GOV and AGNC.

I notice that GOV's 2017 dividends were almost 50% return of capital. Prior years were also significant (42%, 37%, 36%). Any idea what that's about?

[Michael_00005]

I notice that GOV's 2017 dividends were almost 50% return of capital. Prior years were also significant (42%, 37%, 36%). Any idea what that's about?

I'm still working FT and don't have much time to research, but this guy seems to have a good grasp of the numbers at GOV: https://seekingalpha.com/article/413711 ... lding-reit

[George the original one]

We are talking about less risk George, not no risk. I would say there is a lot more risk in holding cash than putting money in several diversified dividend stocks.

You're new here, so you might want to have a look at my open history regarding risk-taking before making assumptions about my knowledge: viewtopic.php?f=3&t=975&hilit=leverage+experiment

AGNC dividend was $1.40 per quarter in 2011 ($0.46/month). They cut dividend a couple times before going to monthly payments in 2016 at $0.20/month. Today, in 2018, it is only $0.18/month. If you're looking for a reliable long term income, a -70% drop in income is a crappy track record. Short term, it might be worth the risk, but I'm retired, so dividend growth is what I'm looking for. Realize, also, that AGNC is a lending company known as a mortgage REIT, not a traditional REIT that holds properties. mREITS are highly leveraged and very subject to interest rate risk; a small interest rate movement has a significant impact on their ability to pay dividends as well as what happens with their portfolio's mortgage default rate.

GOV has been around longer than the record you can see on Yahoo finance or other locations. I considered and rejected them in 2012. They merged with First Potomac in 2017, which apparently allowed them to start a fresh exchange record... you might ask yourself why they felt that was a good idea.

Edit: Some safer, higher yield alternatives to cash are leveraged bond funds. I like VKQ (municipal bonds, so tax free) and PGX (short term corporate preferred stock).

[cmonkey]

Finally a nice little correction. This is the first time I've lost any substantial amount of capital value since starting this journey (currently down 1 year of expenses from 1 week ago) and it's not really that scary.

Edit - Make that a very nice correction!

[jacob]

For those whose portfolios are a bit more.. uhh.. nuanced, now is a good time to see what's dropping faster and what's dropping slower and perhaps what's holding and even rising. If the overall equity market keeps dropping, this is a good indication of where you'll end up. Note that since the marginal prices on the market tend to be traded with borrowed money "on the margin", margin calls are often met by selling those stocks with the most recent "bestest" performance. If they drop, it doesn't mean they're bad investments; just that desperate people desperately need the money.

One thing I did today was to calculate my portfolio betas. This can easily be done in googlesheets using =googlefinance(TICKER,"beta")*...

They come down to 0.73 for my "risk portfolio" (which is also my everyday dividend cash for a living portfolio) and 0.24 for my tax-deferred portfolio (which is the age 59.5 boost portfolio). They're about equally large, so my overall beta is about half of the market.

For indexers (and concentrated FAANG speculators), AMZN is helping to hold up the rest of the market today. There was some significant selling pressure on AMZN a few moments ago, where amazon dropped 5%+ over a few minutes because of lack of liquidity on the buyer side ... taking the rest of the market down with it for another 1.5%. AMZN has since recovered.

[George the original one]

The correction has been in motion for a couple days now. My rule of thumb typical pattern is 3 down days before a pattern change, but I can never estimate how long the pattern change will last and whether it will be bounce or flat.

[cmonkey]

One thing I did today was to calculate my portfolio betas. This can easily be done in googlesheets using =googlefinance(TICKER,"beta")*...

Do you mean beta for the day? I don't go that far but I do make a mental note each day on whether I beat the indexes or not. I probably should get some better metrics going.

[jacob]

What?! No. Beta is usually calculated as the (3-5 year) moving average of closing prices of the security vs the s&p500. If you plotted the two datasets, beta would be the slope. alpha would be the intercept. Googlefinance gives the 5yr slope.

Watching the individual positions daily gives a better sense of how the portfolio is reacting, but the actual calculation gives a number. The problem with relying on betas is that correlations change when market conditions change. For example, for my two portfolios, today's samplesize=1 beta was 0.92 and 0.33, respectively, thus suggesting that correlations for the day were up relative to the unusually smooth rise over the past ~9 years. Correlations will tend to increase when people need cash to cover---as explained above.

[jennypenny]

As GTOO said, two or three days don't make a trend. Gold isn't breaking out and small cap is holding up pretty well, so I'm not so sure 'this is it'. We'll see.

PML dropped more than other muni funds. If I can't find a reason for it, I might add to that position.

[Michael_00005]

No worries, i was not making assumptions on your knowledge. The post was in reference to cash vs high dividend stocks. We're at very different places in regards to FI at the moment, nothing wrong with that, at some point I may be happy with a 6% return (PGX).

And by the way thanks for the info on AGNC. AGNC looks like it might be a better play, when rates are predicted to go down, rather than up... so i'll keep that in mind. Mostly my money is in international and emerging market index funds this year, I'm content riding those out for 2018.

[jennypenny]

Instruments like SVXY and UVXY are used by traders. They can be a lot more volatile than the market and can move more in line with traders than the market overall. Just FYI before anyone puts their money into them. Most traders fear getting caught in those overnight.

For example, here is SVXY after hours (currently down another $50+) https://www.nasdaq.com/symbol/svxy/after-hours

[George the original one]

You're new here, so you might want to have a look at my open history regarding risk-taking before making assumptions about my knowledge:

Maybe your making assumptions, about someone making assumptions on your knowledge... boy this is getting ridiculous. My post was a simple clarification. The post was in reference to cash vs high dividend stocks. We're at very different places in regards to FI at the moment, nothing wrong with that, at some point I may be happy with a 6% return (PGX).

You brought cash into the discussion and I haven't said a thing about cash. My original note was in post 4374 if you care to check:

I'm guessing the div. stocks will not drop like the rest of the market.

The real question when holding through a downturn is whether the dividends will be cut. And right now most dividend stocks are priced too high, so it's likely they will drop when the market drops... dividends, in general, are not that special when it comes to market price.

Basically what I'm saying is that holding dividend stocks through a market drop is not going to protect you from a market drop. And if there are wide-spread business reasons for the drop, then the dividends are at higher risk of being cut.

Therefore, if you're holding through a market drop, then it doesn't matter whether the stock pays dividends or not. As Jacob says, what's more important is what went up quickest and how badly people need cash. People selling do not hold the stocks merely because they're getting a dividend from them.

If you're operating solely on feeling without data to back up your moves, then good luck, because luck is the only factor you can point to.

[George the original one]

"The US Auto Industry is about to implode" - 12 minutes
Buildup of used car inventory due to cars coming off lease and its getting harder to qualify for loans
Baby boomers moving into phase of life where they buy less
Millenials don't shop like the Boomers
https://www.youtube.com/watch?v=b-9hX3H_9qI

[jacob]

Today was another good test for how how individual portfolios might hold up against the generic "market" in a generic downturn. It looked quite familiar cf. 2008/09.

https://finviz.com/map.ashx (note that interest rate sensitive sectors like utilities and REITs did better)

Everybody, please stare at this until you go blind But please use your out of focus hockey-vision and take it all in at once!!

Keep in mind that this is earnings seasons, so if you see something particularly green, double check to see if they came out with a positive surprise today.

Note that more than half of all reporting companies this season have still beat expectations. The main worry here is whether wage increases will translate into inflation causing inflation to translate into Fed hikes causing people to flee stocks and go into bonds (or utilities and reits). These are the first signs of inflation (CPI, not real world) seen in years! That's a pretty long chain of reasoning ... but people are rather trigger happy currently.

PS: Also, if we're not officially there yet... then it's pretty damn close to the -10% drop that is a correction. (I think the official verdict uses closing prices from the max closing... but all I have at hand is intraday, so...)

[cmonkey]

Both Dow and S&P just crossed 10% today, so yep.

[Seppia]

let's hope things get interesting.
For all the noise we are back to prices of just a few months ago (november for the usa and august for europe iirc), so not exactly bargain bin prices.
I like the trend btw.
According to my rules, it is business as usual unless we see another 15-20% drop, in which case I'll go in with half my cash cushion.

[IlliniDave]

jacob, that map is sort of neat, but even when I let my eyes blur no secret image like those 3-d "puzzles" that were popular 15 years ago appear. It just looks like a broad sell-off. My portfolio behaves pretty much like expected. Even though I have only a minority invested in the SP500 companies, I can use it as a proxy and multiply what it does by about 0.7 and usually be within one or two tenths of a percent. So without looking I'm probably down 2.8% or so. ETA: Okay, I checked, I was down 2.08% yesterday. So I'm "beating the market"!

The irreverent conspiracy nut in me thinks this is deep state manipulation to distract from the scandals simmering behind the curtain the MSM is trying to hold up.

I would like to meet the people who bought the little green islands on the map Wednesday.

Today is a good test for me. It is the day I'm scheduled to look at converting my 2018 nondeductible IRA to Roth, meaning I would be peanut buttering the converted money over a handful of narrow sector funds to maintain approximate equal weighting, all of which are down about 10% this week I'd guess. Will I stick to my plan or chicken out? I'm telling myself if things are sharply down this morning I'll buy.

Next Thursday is the bigger test. It was the day I wrote down to sell 5% of the US equities in my main account to buy bonds as part of my glide path. The map doesn't go back 3 years, but that's about how long it's been since I bought US equities, so I'm still playing with house money. But it feels like I'd be selling at a loss.

It is indeed starting to feel like late 2007. The appearance of volatility without a tangible cause known to the Main St/Mom 'n Pop guys like me. If rot appears somewhere in the system we're in for a bad couple of years. If it's just a periodic 10%-20% wring-out in the markets, I might get to retire on schedule.

Second ETA: According to iDaveSim 3.0 if this continues my long-term prospects may actually begin to improve, especially if I work an extra 6-12 mos. and get more money shoveled in at lower PEs (caveat: my sim's new baseline branch assumes a mean reversion over the next 17-18 years, and it's better if it happens quickly than if it happens gradually).

Third ETA: No worries about my company adding to wage-driven inflation based on the new tax structure. Got an email form the CEO recently. They are making a 3-comma dump into the pension fund (Yay!), Increasing incentive-based bonuses for upper-middle management and higher (people above me), increasing dividends and buybacks, increasing capital and R&D expenditures, and for the little guys they are expanding the educational assistance program. If they are increasing the "raise pool" they did not announce it. They are increasing the token profit-sharing program for the rank/file by an unspecified amount, but even if they boosted it by a significant percent relative to where it is now, it is still tiny compared to the payroll.

[Astra]

... but people are rather trigger happy currently.

...not to mention all the algorithms that do the bulk of trading. Wage report data feeds into them and it's enough to flip the switch on some positions.

[cmonkey]

I ran my numbers this morning for each account since the peak on Jan 26th, and the IRAs are not beating the indexes while my Roth, Taxable and HSA are beating the indexes, for a net of about .5% beating so far. So not bad for my first time.

I'll be honest, I'm not very excited by this so far as I don't have any funds to invest at the moment and we are only back to mid November pricing...

[bryan]

"The US Auto Industry is about to implode" - 12 minutes

I'm bullish on "vans", though. Haven't analyzed the van market to make a play yet, though (I've figured it would mean ultimately needing do something more than just going long/short a security..).

Certainly I anticipate auto makers jumping into the leasing game even more (or operating their own sub-businesses e.g. taxi), especially if autonomous driving functionality takes off.

New Sprinter announcements in the last week, including an electric version for 2019!! The new US model will be gasoline powered instead of diesel (hmm) and will be made in the new plant in SC (cuts out a tarif tax, at least). Apparently not yet determined when the eSprinter might show up to the USA or what range it will offer Their press release also specifically mentions something about meeting some market demand of people living in vans (already closed that tab..).

A big part of the new models are all the different value-adds, like

Mercedes Pro, a telematics system that communicates between fleet manager and driver, providing vehicle status, vehicle logistics, fleet communications, maintenance management, accident recovery and a digital vehicle log. The web-based service enables managers to optimize a driver's efficiency by providing a vehicle's location, fuel level and maintenance intervals in real time. The system can even track the items in the Sprinters cargo hold. This allows companies to load the vehicle efficiently and track inventory, and provides an efficient way to alert a driver about job changes and reroute the van to guarantee to timely deliveries. The driver can access Mercedes Pro via a smartphone app, allowing for the locking or unlocking the doors. This is useful on jobsites where the driver may not be with the vehicle, but another worker needs to access something inside.

and a similar story for the van living crowd. Unknown if a base model (without such stuff) will be available. In the last four years with Uber, blockchain/trusted computing applications of ownership and smart contracts, autonomous driving trends, and the market kind of sucking for selling cars, I anticipate it's a necessary move to keep making money by getting into other businesses (e.g. taxi or short term rentals) more directly. Basically manufactures will attempt to short-circuit middle-men (or put differently, vertically integrate more?), if they must, and such a "Mercedes Pro" system is the least that is necessary. This sort of thing is not limited to the auto industry, but it seems they are the most hungry for it.

Will Amazon threaten to make their own vans? Or partner directly with a few auto manufacturers? I guess it means being short UPS, USPS, FedEx etc.

Anybody else see where Uber et al lobby that "autonomous vehicles in dense urban areas should be operated only in shared fleets"? See "Full Circle" at https://www.bloomberg.com/view/articles ... ets-bigger Uber is so seriously overvalued it's stupid..