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Preferred Stock Investing-The Good , The Bad and The In Between
Old 05-27-2016, 02:50 PM   #701
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Preferred Stock Investing-The Good , The Bad and The In Between

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Those who own CNLPL, give yourselves a pat on the back.

Hitting close to new highs today - at $54.90, before settling back a little. As I write this, the bid is 900 shares @ $54.75, wow.

Sorely tempted to sell, but then the problem is how to replace the income stream, with comparable safety and reliability? Guess I'll hang onto mine....


Update: I could not resist - sold 35% of my position @ $54.95. I hope to buy back at the right opportunity in future, but feel a little sad, like a child going off to college.....


Excellent job of taking profits on the feeding frenzy, Coolius! I ditched a bunch but unfortunately around the $54 plus mark. I also recently took heavy profits on KTH. Been playing the "Hi" "Low" yield trades to spread my bets... This week I bought 500 shares each of GJT and GJP on the "Low" and 1000 of EGXKP on the "Hi"


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Old 05-27-2016, 02:58 PM   #702
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Well, got a partial order on KCC... then the price started to go UP....

Not quite half of what I was hoping to get...


Lost internet this morning due to storms and it just came back up... so kinda too late to do anything else... do not have any CNLPL, so could not do anything with it anyhow...
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Old 05-27-2016, 03:00 PM   #703
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I know you will, but be patient with it and dont chase.. If it wasnt so far above call, yield still screams it a buy... But that call risk has to be respected.


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Old 05-27-2016, 05:16 PM   #704
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I tried to mow got rained on so I quit. Lost all my golf matches this week due to rain. Oh well, I dug through my 3 accounts to see exactly what preferreds I have now. Here is what I got now... AILNP/AILLL, CNTHP/CNLPL, EGXKP, NGHCZ, UEPCO, CVB, CTWSO, BGLEP, GOODO, KCC, MNR-A, GLT, GJP, OSBCP.
Sold all my KTH when it bounced near $34 the other day...Greatly reduced CNLPL due mostly to dumb bids which have since got even worse. Used the money and a little sitting around to buy a big slug of EGXKP, and Smaller 500 doses each of GJP and GLT.
Despite mostly having 6% safe issuers, I have bought and flipped enough to already be up 7% this year. Sell the rip, and buy the dip on same issue or similar one and grind out more money. Though I must admit I dont do it to increase profits (though it has for now), I do it for entertainment. Its hard to get into trouble mostly flipping investment grades for other investment grades.


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Old 05-27-2016, 05:36 PM   #705
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I know you will, but be patient with it and dont chase.. If it wasnt so far above call, yield still screams it a buy... But that call risk has to be respected.


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WOW.... my order was filled after closing!!!

Got the 250 shares I wanted.....


OH... what was that website with the info Lost it when I got my new OS I did not want!!!
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Old 05-27-2016, 05:52 PM   #706
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WOW.... my order was filled after closing!!!

Got the 250 shares I wanted.....


OH... what was that website with the info Lost it when I got my new OS I did not want!!!


Did you mean this one?
http://quotes.freerealtime.com/dl/fr...ales&SA=quotes



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Old 05-27-2016, 06:00 PM   #707
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Did you mean this one?
Time & Sales - FreeRealTime.com



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No, got that... the one that has the description of the securities.... some income investing website...
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Old 05-27-2016, 06:17 PM   #708
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Old 05-29-2016, 12:18 PM   #709
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Bored at Mall, so thought I would explain my last 2 purchases in case one would be interested in understanding them ( not recommending them). I recently purchased 2 "synthetic floaters" GJT and GJP. 3rd party trusts whose certificates are backed ultimately by AllState and Dominion Energy. GJT has no floor and is 3 month treasury plus 80 bips GJP has a 3% floor at $25 par, and pays 3 month plus 1.15. Obviously these are trading way under par due to low rates and do no mature for another 18-20 years. They tend to move directionally with short term rates, GJT more so as it has no protective minimum floor. So these are my "risky" plays, betting on low end instead of long end. But my definition of risk I believe to be muted due to the fact the underlying bonds are safe.
There were dozens and dozens of these issued in the early 2000's but most have been called due to the asymmetric risk of the issues... Trust holders called all of the fixed ones at par and pocketed all the bonds and profits when long end dropped. The ones that are left are the adjustables which trade under par. No incentive for the trust to call and confiscate them. The only ones left I track are the AllState, Procter and Gamble,Dominion, and a Walmart one. A contrarian play. Look for a rate spike fear and then sell.. Of course if rates rise in 3-7 years these will still make good returns. I played GYC 2 weeks ago for a quick $500 profit holding 2 days buying 500 shares. The key is looking for a "dump day" and buy.
3rd party trusts do have other risks associated to it through counter party
Swaps, but the ones I have monitored have underlying bonds basically uncallable due to punitive buyout feature, which keeps the counter party derivative risk in check . Plus all of these survived the 08-09 crisis with no loss of income happening. I doubt much worse can be thrown at them.


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Old 05-30-2016, 11:18 PM   #710
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quantumonline.com

Yes, thanks... I was going to say quantum something but DW was wanting to get out the door for our trip...
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Old 06-02-2016, 12:34 PM   #711
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For those who own Wells Fargo Preferred series L, WFC-L, I have attached a link to a SA article.

The comments are very revealing - shows a large % of the investing public still do not understand preferred stocks. They keep harping on the call issue, even when others point out that it is a "conversion call", and only possible if WFC common trades above $165 for 30 days ( it is about $50 right now ).

Many other commentators say they will wait for a lower price as it is bound to drop when interest rates rise. I heard the exact same arguments last year, when the stock was at $1,160 and before the December hike by the Feds. Very familiar argument - and likely to keep such folks on the sidelines for a long time, maybe forever.

Quarterly Buying Opportunity In A Wells Fargo Preferred Nears - Wells Fargo & Co. (NYSE:WFC) | Seeking Alpha

While I do not think there is much capital appreciation left in WFC-L, I am in it for the income and so long as it is above my cost basis, I am relatively unconcerned about the day-to-day price.

Definitely not selling, but would not be looking to buy more at this price.
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Old 06-02-2016, 01:39 PM   #712
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I'm about to retire and I need to decide whether to take a lump sum or a monthly pension payment. I'm leaning toward the lump sum, since (using a discount rate of 4.5%) the breakeven for taking the monthly payout is when I'm 88.

If I take the lump sum option, I might invest 25% or so in the kinds of preferred issues we've been discussing here. Perhaps 50% might be in dividend-paying stocks and 25% in corporate bonds.

I realize it might take a few months to get invested, but does such an allocation to illiquid preferreds seem imprudent? (These percentages would be of the lump sum payout. The percentage of our overall portfolio would be maybe a tenth of that.)
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Old 06-02-2016, 01:59 PM   #713
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I'm about to retire and I need to decide whether to take a lump sum or a monthly pension payment. I'm leaning toward the lump sum, since (using a discount rate of 4.5%) the breakeven for taking the monthly payout is when I'm 88.

If I take the lump sum option, I might invest 25% or so in the kinds of preferred issues we've been discussing here. Perhaps 50% might be in dividend-paying stocks and 25% in corporate bonds.

I realize it might take a few months to get invested, but does such an allocation to illiquid preferreds seem imprudent? (These percentages would be of the lump sum payout. The percentage of our overall portfolio would be maybe a tenth of that.)


This is above my pay grade, but I swear I know 3X as much as Ameriprise salesman, I mean advisors, based on my discussions with some (and that still isn't saying much). I can only offer thoughts not recommendations. Do you have other pensions or meaningful SS base support? That is a biggie in the scheme of things.
Yes, I violate every investing rule there is... Little diversification in companies and sector, all why buying past call over par issues.
BUT..... I dont even live off any of my investment money, nor ever plan to use it...Just today I flipped a 500 share issue of GJT which is a monthly paying STRAT preferred and pocketed $250 for 3 days..Easy HSA money..
But the reality is preferreds are the last in line of payment, except the common dividends. Eventually no profits......no preferred divi payment which equals a huge cap loss....That is why I stick to monopolies and a few trust preferreds which is debt and that is on the other side of the capital ledger. For example I snagged 400 shares of SIVBO which yields 6.7% past call and Baa1 rated by Moody's. No junk preferreds for me as a general rule.
Yes, I love my preferreds and investing in them, but no way would I give up my pension life support to attempt to manage a portfolio and live off it. I would want a base security level to live off and go from there... But that is just me.



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Old 06-02-2016, 02:30 PM   #714
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Unlike Mulligan, I have no pension. So I live off 2 streams of income - Social Security, and dividends from my investments.

SS only covers a third of what I need to maintain my quality of life, so the other two-thirds must be generated from investments - and these are mostly in the kinds of Preferred stocks that Mulligan describes.

I do have a ladder of investment grade corporate bonds, where maturities are staggered. These are all in IRA and ROTH.

I do feel comfortable with what I now hold, and will only seek to replace a stock should it be called. If not, I continue to enjoy the dividend stream.

Stocks like WFC-L fit the bill well, they do not have a call date, and the "conversion call" requirement is easy to see coming ( the common MUST trade at around $165 for 30 days or more ). And in the meantime, a 6.1% income stream fully qualified.

I do appreciate the need for a well diversified portfolio in retirement, but at this time I am certainly not in that category.

As I get along in age, I intend to shift funds into Vanguard Index funds so that DW will not be concerned about investing - she has no interest now, and not likely to change.
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Old 06-02-2016, 03:53 PM   #715
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Unlike Mulligan, I have no pension. So I live off 2 streams of income - Social Security, and dividends from my investments.

SS only covers a third of what I need to maintain my quality of life, so the other two-thirds must be generated from investments - and these are mostly in the kinds of Preferred stocks that Mulligan describes.

I do have a ladder of investment grade corporate bonds, where maturities are staggered. These are all in IRA and ROTH.

I do feel comfortable with what I now hold, and will only seek to replace a stock should it be called. If not, I continue to enjoy the dividend stream.

Stocks like WFC-L fit the bill well, they do not have a call date, and the "conversion call" requirement is easy to see coming ( the common MUST trade at around $165 for 30 days or more ). And in the meantime, a 6.1% income stream fully qualified.

I do appreciate the need for a well diversified portfolio in retirement, but at this time I am certainly not in that category.

As I get along in age, I intend to shift funds into Vanguard Index funds so that DW will not be concerned about investing - she has no interest now, and not likely to change.


We PM and discuss often, and I dont think you give yourself enough credit. In my opinion you are quite diverse and also hold a safe conservative portfolio that yields good income. But you havent been sharing with me your hidden opulent lifestyle...SS covers only 1/3 your income? My Dad and his wife don't even spend all of their monthly SS income. And touching investment income? Well that isnt happening as long as Dad is alive. I was on him again today about and shut me down...He said "Son you dont know how hard I worked to make this money. I am not letting it go!"



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Old 06-02-2016, 04:32 PM   #716
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.......My Dad and his wife don't even spend all of their monthly SS income. And touching investment income? Well that isnt happening as long as Dad is alive. I was on him again today about and shut me down...He said "Son you dont know how hard I worked to make this money. I am not letting it go!".......
Then he needs to "invest in gold" to take it with him..

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Old 06-02-2016, 04:34 PM   #717
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We PM and discuss often, and I dont think you give yourself enough credit. In my opinion you are quite diverse and also hold a safe conservative portfolio that yields good income. But you havent been sharing with me your hidden opulent lifestyle...SS covers only 1/3 your income? My Dad and his wife don't even spend all of their monthly SS income. And touching investment income? Well that isnt happening as long as Dad is alive. I was on him again today about and shut me down...He said "Son you dont know how hard I worked to make this money. I am not letting it go!"

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More grandkids = increased spend down of SS funds. Add 50% more for granddaughters.
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Old 06-02-2016, 05:00 PM   #718
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My working career is much shorter than typical, because I moved to the US from another country in my late 30's due to a job promotion transfer.

And my wife has not worked in the US because we had kids at the time. Plus her credentials would not be accepted here unless she took qualifying exams which would be a hassle with 2 very young ones.

We made a decision that so long as my income allows us to live in LBYM status, she would stay home with the kids and instill in them strong values morally & spiritually. She never went back to work.

As such, the SS amount is much smaller than for one who has worked since college graduation.

Fortunately, I have no grandkids as my children are not yet married.
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Old 06-02-2016, 05:08 PM   #719
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Fortunately, I have no grandkids as my children are not yet married.
You are fortunate (for now). Mulligan's Dad needs to heed this if they have them.
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Preferred Stock Investing-The Good , The Bad and The In Between
Old 06-02-2016, 05:43 PM   #720
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Preferred Stock Investing-The Good , The Bad and The In Between

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You are fortunate (for now). Mulligan's Dad needs to heed this if they have them.


He is "old school" once you turn 21 no more gifts. I am a bit harsh...When you have zero health care costs, paid off home (bought a new 1700 sq ft ranch 7 years ago, but they are cheap here around $160k) paid off cars (one new), and only likes his wife's home cooked meals (they are excellent) there really isnt much to spend money on for their needs. He has a brand new John Deere mower so he thinks anything else is a waste of money.
Sunset, he has talked about that too. He says he needs to be cremated, a waste of money to have a funeral!

Added thought...My Dad might sound a bit tight, but he is nothing to my friends Dad. Leaves in an old $40,000 small farm house and shut off heat to bedrooms to save money. And he is a multi millionaire himself. The generation of people who lived in houses without running water and accumulated money over a lifetime through hard work and saving, are just not going to turn the spigot on late in life where I live.
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