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Old 12-30-2014, 05:41 PM   #81
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I looked at this company a while ago but never pulled the trigger. This may be a good place to put some fixed income dollars. Looks like the price has a floor of $25 which was the issue price. Yields about 6.6% plus they are in the refining business and supply fuel from their Cenex stations.

CHS Inc. prices public offering of preferred stock at $25 per... -- ST. PAUL, Minn., Sept. 9, 2014 /PRNewswire/ --

It is definitely not your grandfathers farming coop. They got their fingers into everything. They are planning on building a $3 billion fertilizer plant in N. Dakota to take advantage of that cheap natural gas. I read they intended to call one of their earlier prefereds but the farmers who own the private shares and also own the preferreds too raised hell and wanted to keep clipping those 8% coupons so they decided to extend the life of that issue.


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Old 12-30-2014, 06:10 PM   #82
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It is definitely not your grandfathers farming coop. They got their fingers into everything. They are planning on building a $3 billion fertilizer plant in N. Dakota to take advantage of that cheap natural gas. I read they intended to call one of their earlier prefereds but the farmers who own the private shares and also own the preferreds too raised hell and wanted to keep clipping those 8% coupons so they decided to extend the life of that issue.


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I don't think too much wrong can happen with this co op as people will continue to eat and drive cars and trucks. They have two small refineries that are equipped to refine low quality crude oil (which is cheap) and own the pipelines and terminals. As long as they are not drilling for crude, the price risk is out.

Seems like a good place to park "bond money" until rates go up, especially for us older guys who can't be heavy in risk assets.
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Old 12-30-2014, 06:31 PM   #83
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Roughly 40% is in Penfed CD between 3% and 5%, 50% is in short term Sallie Mae (ISM/OSM) inflation adjusted bonds which pay 2%+ inflation. The other 10% is in misc.

Almost all of my fixed income assets mature in 2017 and 2018, I just hope we get back to normal interest rate environment by then,.
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Old 12-30-2014, 07:10 PM   #84
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Higher rates usually go hand in hand with higher inflation. After inflation and taxes it is usually near break even anyway.
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Old 12-30-2014, 07:48 PM   #85
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What was "normal" a decade ago, may not be "normal" again for many decades in the future.
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Old 12-30-2014, 08:43 PM   #86
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What was "normal" a decade ago, may not be "normal" again for many decades in the future.

Perhaps, but in the last 5 year central banks of the developed countries have injected what most experts have called an "unprecedented" amount of liquidity into the world's financial systems. You could go back hundreds of years and not find a decade where sovereign debt rates are this low

I'll be the first to admit that I've been dead wrong about interest rates since 2010 or so. Although in my defense I have plenty of company.
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Old 12-30-2014, 08:54 PM   #87
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Perhaps, but in the last 5 year central banks of the developed countries have injected what most experts have called an "unprecedented" amount of liquidity into the world's financial systems. You could go back hundreds of years and not find a decade where sovereign debt rates are this low

I'll be the first to admit that I've been dead wrong about interest rates since 2010 or so. Although in my defense I have plenty of company.
There was a period in the 40s and 50s with pretty low interest rates.

With global economic growth so low, threat of deflation here and there especially from overseas, etc., I just don't see how something different with interest rates can be expected anytime soon......

Maybe when US reaches full employment and we really start to see wage inflation. Labor shortage is a real possibility in the not too distant future.
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Old 12-31-2014, 01:56 AM   #88
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I was/am worried about rising interest rates undermining bond values.
Don't abandon bonds.
Don’t let rate fears scare you out of bonds
Why Bond-Bubble Fears Are Overblown | Financial Planning
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Old 12-31-2014, 05:51 AM   #89
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What was "normal" a decade ago, may not be "normal" again for many decades in the future.
it took us 40 years just to get to this point.
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Old 01-02-2015, 04:38 AM   #90
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Cash. No yield in bonds and down side risk.
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Old 01-02-2015, 07:13 AM   #91
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it took us 40 years just to get to this point.
Right, so it might take us 40 years to get back.
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Old 01-02-2015, 07:14 AM   #92
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Cash. No yield in bonds and down side risk.
No yield? Seriously?
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Old 01-03-2015, 04:43 AM   #93
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in the mean time with everyone shunning bonds especially the longer term bonds TLT THE LONG TRESEAURY BOND FUND WAS UP ANOTHER 25% THIS YEAR.

the 5 year bond in germany went negative return yesterday so all we need is a flight to safety and long term treasuries the red headed step child can soar again.


if i was a speculator i would bet the ranch on the long bond getting another good run up as soon as stocks falter.
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Old 01-03-2015, 06:20 AM   #94
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My experience has only been buying stocks/etfs/mutual funds in a brokerage account.
Do you buy preferreds directly like other stocks in a brokerage account ?
Or do you buy an etf of preferreds ?
I use PFF as a preferred vehicle. Exp ratio is 0.49% thru schwab.

Intuitively, I agree with others that if you have a sufficiently large fund with a long horizon, buying individual positions and bonds or preferreds is a better choice that funds or ETFs...but I lack the time to do that properly right now...especially as I'm still accumulating and would need to contestantly find the next position.
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Old 01-03-2015, 08:09 AM   #95
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I own some PFF which is an etf with an emphasis on financial (big banks) and it pays dividends quarterly I believe. I prefer PGX that is more diversified and pays monthly, and I have done extremely well with it as well as individual preferreds. In 2008, I moved $150k of my 401k into fixed income instruments outside of the plan which was lacking that AA. In October, after retiring, I moved another $100K and purchased exclusively more preferreds. Those preferreds are up $3.7k since October. My original fixed income account from 2008 is up $40K. Future performance is not guaranteed as the past performance, but current happiness is definitely still on the rise.
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Old 01-03-2015, 08:20 AM   #96
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our corporate bond funds still had a good year last year returning around 8% total return. out total bond fund returned 5.50%.

luckily we dumped high yield stuff early on ,that stuff was dismal not even returning 2%

so the plan stays as is until the picture changes.
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Old 01-03-2015, 09:26 AM   #97
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Yeah, I suspect that my emphasis on mitigating interest rate risk cost me about 150-200 bps of return on my total portfolio last year compared to just being in Total Bond as bonds had a pretty good year.
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Old 01-03-2015, 09:30 AM   #98
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usually when we all see the same thing on the horizon the markets love to disappoint the majority.

our newsletter held firm on holding high quality intermediate bond funds and returns were great. the fidelity corporate bond fund returned over 8.00%

fidelity total bond came in at 5.50% we held that too..
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Old 01-03-2015, 02:15 PM   #99
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My tax favored accounts contain Intermediate-term Index fund @ VG. Also I am using the STB fund in my taxable side as a back-up to cash that is stashed @ Ally in an online acct.

It's some kind of a plan...
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Old 01-03-2015, 04:03 PM   #100
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in the mean time with everyone shunning bonds especially the longer term bonds TLT THE LONG TRESEAURY BOND FUND WAS UP ANOTHER 25% THIS YEAR.

the 5 year bond in germany went negative return yesterday so all we need is a flight to safety and long term treasuries the red headed step child can soar again.


if i was a speculator i would bet the ranch on the long bond getting another good run up as soon as stocks falter.
Bond guru Gundlach is betting that way.

FTABX was up 10.75% in 2014 and took another jump on Friday.

I'm not letting go to of my longer term stuff or my intermedate term. My short-term position may be hit a little, but I'll ride that out.
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