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DO YOU WANT OVER 10%???

April 22, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

I have had great success in the corporate bond arena, so when I saw this Citigroup bond offering, I jumped at the chance:

Citigroup (C) is offering a 10.50% coupon bond that matures in 2034.  (CUSIP 1730T0G78) but callable in 2015.

So why the high rate?  Well this is a teaser rate that changes in February 2016 but you can collect the high yield for two years.  When the coupon resets in 2016 the formula changes.  Hence the term floating rate bond.

The bond sells for $1000 each.  They are hard to get, so you will need to call your broker, and they will probably have to go out and search the market to see if there are any sellers.

There are advantages and disadvantages to this investment so ask your broker to describe these bonds, and make sure you understand them to determine if you want to make the purchase.  In terms of risk, unless Citigroup goes belly up (which is almost impossible), you will be ok.

There are additional offerings out there so if the Citigroup is not available, ask your broker for more options.

(With some exceptions, do NOT buy bond FUNDS.  Individual bonds as described above are the best route.)

We like business development companies (BDC) but they are getting hit.  This story is an excellent recap:

http://www.fool.com/investing/general/2014/04/22/getting-booted-from-two-major-indices-opened-the-p.aspx?source=iaasitlnk0000003

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DO YOU HAVE A SPARE $106,000??

April 10, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

Update Tuesday:  Long Term 401K Investors should sell all stock positions–see ‘Core Portfolio”.  Everyone else just hold your dividend payers.

Update Monday:  The market is higher today, BUT the trend is still down.  I suggest holding and watch the earnings reports as they come in.

Update Saturday:  The trend in the markets is still down.  Earnings are continuing next week and things could get rough.  It is possible we could see a 10% correction which would provide a good buying opportunity to buy stuff on sale.  The dividend paying investments in our portfolio are holding up well and I suggest doing nothing right now.  Just wait and watch….I would certainly NOT be buying anything right now.

The markets got whacked today, Thursday.  We are in earnings season with banks starting to report tomorrow.  The cynics among us, including myself, assume that some bad earnings numbers were leaked out today…illegally needless to say.  The technicals are telling me we are going down further.  Nothing you can do, just hold all positions.  Generally these pullbacks turn into buying opportunities.

Most Americans have no clue about the financial situation of the USA.  As long as they get their Social Security, food stamps, and other government handouts, what’s to worry about?  Just tax the rich and everything will be wonderful.  Wait until the checks stop arriving, and get set for rioting in the streets. Take a gander at the following in the Washington Examiner.

American workers would have to cough up a one-time “debt reduction fee” of $106,000 to pay off the nation’s debt that has grown 58 percent under President Obama, according to Harvard University’s Institute of Politics annual report on the USA.

The 91-page report provided to Secrets pegged the nation’s debt at $16.7 trillion, up from the $10.6 trillion inherited by Obama. “The debt has grown so quickly because of large and repeated annual deficits in federal spending,” said the report.

What’s more, the Annual Report of the USA, from the student at the Harvard Political Review and done in partnership with the American Education Foundation, found that food stamp usage has surged 77 percent during the recession and that Social Security benefits will be slashed 23 percent starting in 2033 unless Congress and the White House institute sweeping reforms.

The report is considered one of the nation’s authoritative independent analysis review of federal spending. One of the best benefits of the report is that the authors try to put huge numbers like the debt in perspective.

“Such large sums are difficult to conceptualize properly,” said the student authors in their report.

“If the federal government spent its yearly revenues exclusively on debt reduction and ceased all of its operations, it would take three of four years to pay down the debt. Or, the government could pay down the debt in one blow if it simply took more than $52,000 from every person living in the U.S., including children, the elderly, and the unemployed. If this one-time ‘debt reduction fee’ were levied only on those in the workforce, the cost would be over $106,000 per person,” warned the report.

It also revealed how desperate American families have struggled during the recession that struck at the end of the Bush administration and has lasted through Obama’s two terms: food stamp participation has surged 77 percent and funding more than doubled to $71.8 billion.

Harvard said that from the beginning of the recession in late 2007, average monthly participation in the program jumped to historic levels and an annual bill of $30.4 billion.

The news isn’t much better on the Social Security front: “Without reform, Social Security beneficiaries will face a 23 percent benefit cut in 2033.

Here’s the real story on Obammercare:

http://www.thefiscaltimes.com/Columns/2014/04/10/Two-Studies-Raise-Red-Flags-Obamacare-s-First-Round

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BUYING EXG 9%

April 1, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

(Evaluating YYY for possible BUY)

(60 Minutes caused a ruckus about the ‘rigged’ stock market.  Well I’m not sure it’s rigged but sure as H it is manipulated.  This is OLD news.  So should we care?  I don’t think we should as long as you stick with dividend paying investments.  Let the big stock market day traders and hedge funds worry about how fast their orders are filled.)

(Just remember this:  there is no way they are going to let this market collapse with the upcoming elections in November.  Are you kidding me.)

That NitWit Yellen is now talking about extending QE.  So we may NOT see higher rates for a long time, and the markets should continue higher.  Only in America……wow talk about manipulation.  Stay invested, but always keep in mind this money printing by the Fed will cause a huge Crash….someday.

PSEC:  I suggest buying more up to 5% of the portfolio………this is a good opportunity.

I doubt that many readers of this blog are familiar with “covered calls”.  In actuality covered calls are somewhat complicated but put very simply they are a way to receive more income than just the dividends paid by the stocks.  In other words, you get high yield but the risk in increased.  So I suggest small positions to start.

(I have provided a link below to an excellent article from SeekingAlpha.com that describes how they work.  The author presents 12 funds that you can evaluate.)

So why would you want to invest in these things?  Well, higher yield of course.

A word of caution:  unless you are an experienced trader, you never, never, never want to get into the covered call game on your own.  You are competing with experts and your chances of losing money is huge.  So you want to get into funds that we are talking about here.  They have the experts and they will do the work for you.  So let’s look at some possibilities.

I have owned CII Blackrock Enhanced Capital and Income for years, and years, and more years!  The yield is around 9%.  The article that is linked below gives you several investments from which to choose, one of which is CII.

I suggest you review EXG the Eaton Vance Tax Managed Global Diversity Fund paying over 9%.  They have 136 holdings and they invest only in indices, not stocks, which I feel is a positive aspect.  You could also add to the position when it goes ex dividend in the middle of April.  The price today is $10.10.  Note that if we see much higher interest rates later this year or next year, we may want to sell this thing.

http://seekingalpha.com/article/1874451-assessing-covered-call-closed-end-funds-to-enhance-retirement-income

Additional article:  http://seekingalpha.com/article/2134233-in-times-like-these-consider-covered-call-etfs

Movies.  Captain American.  What a fun time.  Strongly recommended.

The Associated Press-GfK survey finds that 26 percent of Americans support the Affordable Care Act.

Amazing Stuff:  “To fix the unemployment rate, a government basically has two big options: create jobs, or change the definition of what unemployment is. What did our government do? You guessed it. They swept the dirt under the carpet… changing the way unemployment rate is calculated…and they redefined unemployment as “number of Americans receiving unemployment benefits”.

Stopped receiving benefits?

It doesn’t matter that you haven’t had a job since Clinton… in the state’s eyes, you’re NOT unemployed.
But when you follow the method the government used to calculate unemployment rates before the 1990s, the shocking rate is more than 3 times bigger – or 24%… far more than we had even during the Great Depression, and close to that of countries on the verge of total collapse, like Spain.”

Link to prior post.

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PREPARE FOR RISING INTEREST RATES

March 29, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

In looking at the charts and technicals it is becoming increasingly evident that we may be looking at a 5-10% pullback in the stock markets within the next 6 months.  Predicting stock markets is a fools game but we need to be aware of whats possible.

The Fed and Yellen are set on tapering, and we may see rising rates in the future.  I have said here on numerous times that if the Fed tapers, the market will decline.  But…..we have as yet not seen any huge change.

In addition you historically also have pullbacks before midterm elections and we may get it.

So, what do you do?.  Sell everything and go hide in the corner?  Of course not.

Maintain what you have but realize we could see declines.  I would certainly be very selective on what you are buying….but some sectors like business development companies are looking good to purchase.

In dividend investing you hold positions and collect the dividends.  Quality positions will go up and down but unless there is some major change and the company blows up they will hold within a range.  Speaking of blowing up I bought LNCO last year and it continues to drop.  We all make mistakes, but I am holding this dog for the 10% dividends….the company is not going to go bankrupt.

Now, let’s talk interest rates.  A lot of the smart people are expecting higher rates in mid 2015.  But again, let’s talk historical trends.

If the Fed does not begin to raise interest rates until 2015, that does not mean that bond yields cannot further increase in 2014. Yields can rise when the perception of rising interest rates change.  You could see rates rising at the end of this year.

So, again, what do you do?  Buy floating rate bond funds, which I have talked about before.

Another important point:  you should be selling any mid and long term bond funds that you own.  Rising rates are not good for long term bond funds.  We do hold a short term bond fund but that will eventually, most likely, be sold.  Gold is heading down but a year from now you will be glad you owned GGN.

If not so sad, it would be funny:  “Ir is impossible for a US president to be irrelevant, but Obama is testing the proposition.”  NY Post

Link to prior post.

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YOU HAVE TO WATCH INTEREST RATES. PFLT AND BKLN

March 25, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

Last week that nit-wit Yellen (Fed President) roiled the markets.  She talked about rising interest rates and the markets have still not recovered.  Yesterday we took a roller coaster ride and our dividend paying investments took a tumble.

Rates will be going up but WHEN is the question..it could be next year or the year after.  Many advisors I follow feel that the economy is so bad that we will NOT see higher rates anytime soon.  So who is right?

High interest rates will hurt dividend payers and you need to know when to SELL.  Don’t just buy and hold.  And keep in mind that we typically see corrections before mid-term elections which are coming up in November.

So what do you do.  Continue holding your positions.  Watch floating rate bonds, a topic I have talked about frequently.  We hold PFLT in the Core Portfolio…paying almost 8%.  You can also buy BKLN but pays only 4%.

PowerShares Senior Loan Portfolio (BKLN) is a bank-loan fund ie “floating rate funds”.  The rates on the loans are reset every 30 to 60 days and the duration is low.  This is exactly what you want if you think interest rates are going up.

Here is more information from SeekingAlpha.com:  “While bonds of every stripe carry exposure to rising rates, bank loan funds are floating rate securities, meaning the rates on the underlying loans are re-set every 30 to 60 days. That means that their prices have almost zero sensitivity to interest-rate fluctuations, a metric known as duration. (Example: If a bond fund has a duration of 5.25, a 1% rise in interest rates will cause the value of the fund to decline by 5.25%.)

But because bank loan funds regularly and frequently adapt to rate changes, they have virtually no sensitivity to them. Hence, their duration is effectively zero. As rates rise, so will the yields of these funds. That said, they might not rise immediately, due to a rate “floor” that could exist on some of the underlying loans. But, really, who cares if you miss a single-point increase when the yield is already so good?”

There will be short term fluctuations in the BDCs for probably a few months.  You have to buy these as a LONG term investment meaning a year or more.

ALSO if you own mid and long term bond Funds, SELL them.

Last week I suggested you read Earth An Alien Enterprise by Timothy Good.  This has to be one of the most fascinating books I have read in decades.  If you have not paid attention to this UFO phenomenon you really need to get up to speed.  The stories of sightings and interactions are absolutely stunning.

Liberal main stream media hurting:  “The Nielsen Media Research data show that the biggest decline came at MSNBC, which lost nearly a quarter (24%) of its prime-time audience. CNN, under new management, ended its fourth year in third place, with a 13% decline in prime time,” states the report.

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CALLING ALL MILLIONAIRES!

March 17, 2014

Go to “Core Portfolio” for current holdings.  Hit “+Follow” at top of page to follow this blog.

SPY 1846.00

Update:  I expected a market decline if the Fed tapered.  And that is what we are getting so far.  Hold tight.  Do nothing for now.

Market Outlook:  Possible pullback but long term bullish.

Gold is looking good but we may get a pullback.  Hold what you have and we could get a buying opportunity down the road.

(Update:  BDCL is still declining, wait and buy at lower prices…I would not be shocked to see a $27 price….in any case buy the BDCs.  BDCS is another lower risk option.  The momentum is still down on the BDCs try to get at lower prices.)  The BDCs are also a buy, including PSEC and BDCL...buy BDCL UNDER $28.00.  Keep watching HTGY and buy only if it gets very close to $25.00……this thing is tanking and it may take a week or two to get down to $25.00.  I am starting to watch T to buy, pays a good dividend. (AT&T)

From SeekingAlpha.com:  “BDCs have fallen for 3 straight weeks and are now hitting 6 month lows (as a group) and I believe this is a buying opportunity. They may continue to fall but at some point will rebound because the recent weakness has nothing to do with BDC fundamentals and is more of a technical drop in prices that investors should be ready to take advantage of.BDCs continued to fall last week in response to being removed from certain indices. Again this is a technical drop in pricing that investors should see as an opportunity and has nothing to do with the fundamentals of BDCs. I’m sure there will continue to be volatility as discussed in last week’s newsletter. Investors should also keep in mind that the Fed statement will be out later today with another potential $10 billion reduction in monthly bond purchases and hopefully guidance regarding interest rates.”

Maybe I can eventually get into the 5% club:  “Having liquid assets of $1,000,000 places folks in the top 5% of everyone in the USA.”  (If you have reached this level hit ‘leave a comment’ and tell us your story.)

I have always been fascinated by UFOs.  Are we really being monitored and visited by aliens from far off galaxies?  Do the world’s governments know a lot more than what they are telling us?   Is organized religion a total fabrication?  If you have an interest in this topic, I strongly recommend you read this book:  Earth An Alien Enterprise by Timothy Good.  It’s going to blow ur mind.  The discussion on the UFO propulsion systems is stunning.

This is by far the most riveting account of the UFO mystery that I have ever read.  The UFO programs on TV don’t even begin to tell you what is really going on.  Get this book now.  A good web site:  http://www.openminds.tv

Go to prior posting.

Go to “HOME” (top of page) for the most current posts.  

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BUY BUSINESS DEVELOPMENT COMPANIES

March 13, 2014

Go to “Investments Core Portfolio” for current holdings.

SPY 1872.00

Short and Long Term Outlook:  Bullish

HTGY is a baby bond for BDC Hercules Technology Growth Capital (HTGC).  IF, and only if, this gets down to $25.00 you should buy.  Pays almost 7%.  Do NOT buy unless you can get this for $25.00 or pretty darn close to 25.

BDCL is an Exchange Traded Note that contains numerous Business Development Companies.  This would be an excellent choice for those with small portfolios as you can gain exposure to a large number of BDCs with a small investment.  The BDCs have been dropped from the S&P indices and prices have been tanking.  This is a good time to BUY into the BDC arena.  Try to get BDCL at $28.00 or less…..pays almost 15.%.  Update Friday:  BUY!!

PSEC is a BDC in our core portfolio and you should be buying now.

Hre is a link to more BDCs to review:

http://seekingalpha.com/article/2039403-apollo-investment-should-it-be-upgraded

As far as the markets, the big money is waiting for the Fed’s meeting next week.  They want to see what Yellen says.  I don’t see a lot of action for the next week.  Just continue buying dividend paying investments when they are on sale.

If you bought GGN our gold position back in January you are one happy camper.  Continue to hold.

LNCO Update.  This position has been a disaster for me.  I own too much and didn’t sell when I should have.  Don’t make these mistakes!!  If you own LNCO hold it for the dividends.  But do NOT buy any.  The Company will not go under, and you will eventually get back your money in the way of dividends, and then you could sell it.

And they want you to think the economy is so great:  “On Friday, we were told that the U.S. economy added 175,000 jobs during the month of February.  That sounds pretty good until you realize that it takes almost that many jobs each month just to keep up with population growth.”

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