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Preferred Stock Investing-The Good , The Bad and The In Between
Old 09-06-2016, 04:40 PM   #1201
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Hope you don't mind, but what does the bold line mean ?

Cincinnati Bell Tel Co Deb 6.3%28, Make Whole Call


Be glad too... It was basically an "uncallable bond". This means if they want to call it they have to pay you all the interest up to 2028 maturity "to make you whole on the purchase". So par plus interest next 12 years worth...which means they wont call unless it is of real importance to them. So in 2028, ( if still a viable company) they will pay me $1000 for each of the 3 bonds I bought at $960 or so ( forgot already, ha!). Plus get the note interest every six months until then.


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Old 09-06-2016, 04:41 PM   #1202
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Ok, I couldnt help myself... Just a tiny trade for the heck of it... Vanguard had a 3 Cincinnati Bell senior unsecured bonds available as stragglers by themselves so I bought them at 95.87. Uncallable issued in 1998 and mature 2028, with yield to worst 6.78%.


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Sounds kinda interesting... I was thinking about doing a few bonds, but as mentioned by someone earlier the spread is pretty bad... however, I guess if you get the yield you want it really does not matter unless you have to sell for some reason...
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Preferred Stock Investing-The Good , The Bad and The In Between
Old 09-06-2016, 04:43 PM   #1203
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Sounds kinda interesting... I was thinking about doing a few bonds, but as mentioned by someone earlier the spread is pretty bad... however, I guess if you get the yield you want it really does not matter unless you have to sell for some reason...


I am dabbling, and only started tracking them after I got a good bond website, and Coolius explained the ropes to me...The spread on this one today I bought wasnt actually bad. It was right around a dollar. I played with a few others and they were tight also...But that KMI one last week was huge!

Texas, as far as not trading...That is why I bought this one...At 3k I wont have any reason to stress, so no reason to trade...It only cost me $6 to buy them. Im not a "valued client" so you may do even better.


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Preferred Stock Investing-The Good , The Bad and The In Between
Old 09-06-2016, 04:54 PM   #1204
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Running Man, I have always been a fan of your thought process and analysis... As you mentioned I have made the correct macro call the last several years on rates....But my land, I have been wrong on everything else... Fortunately the macro has been the trend I followed...I had NO IDEA that "yield chasing fever" would explode this year. I thought "lower for longer" meant a tiny uptick, just enough to protect my past call issues. Rates havent been "lower for longer" they have been "way lower for longer"..... So now, my crystal ball has developed a crack in it in relation to how going forward next few years preferreds will act...I am going to have to rely on your crystal ball now to help me through!


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Old 09-06-2016, 05:12 PM   #1205
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Strategy wise, I am thinking rates are not going anywhere for short term anyways (long end). But money can be lost by having past call issues trading above average market yield and getting hit with call losses. I dumped my CVB because of this and I will dump OSBCP after next divi or jump in price leading to divi at end of the month... My other past call issues are all under a divi above par with lone exception of my huge allocation to AILLI/AILNP.... That one is staying and I will take my chances...Largely out of fear of what I would buy with that cash...I may continue this little bond excursion by purchasing 3-5 of those KMI bonds...Just enough to grad some yield, but not enough to ever fret about...


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Old 09-06-2016, 05:17 PM   #1206
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I am going through the paper you linked and it was 1935, the year the FED first purchased government issued debt, that the 30 year bond began to not able to earn inflation over the next 30 years. So at this point savers were valued less than the economy and the FED was confident it could control the economy. Once WWII ended, even if the FED was interfering in the market, the trends were still showing an expected increase in inflation, just that the rate earned was insufficient to match the cost of inflation over the long term. Even though they, the FED lost control of inflation in the early 70’s to 1981 the 30 year bond held to maturity was never a huge loser to inflation during that entire period. Any 30 year treasury bought from 1968 onward earned more than average inflation over the period owned, something that could not be said during the non-inflationary days of the late 40’s, 50’s and 60’s. And this has continued for all 30 year bonds up till today. Trying to pick a falling knife is very dangerous, I prefer to wait until some of these long term averages begin to change course.
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Old 09-06-2016, 05:52 PM   #1207
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Until the past few months, I had not been a student of interest rate history prior to late 60s. I had no idea the in 1940s 10 year treasury trailed inflation at times by 600-800 or more basis points...Could you imagine the screaming going on with a 10 year trading at 2% and inflation running 10%? I also had no idea the Fed manipulated the market that much 70-80 years ago either.


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Old 09-06-2016, 06:50 PM   #1208
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I read, it was to help the government pay off the war debt as low interest rates benefit a borrower.
Probably hurt my parents a lot as they were bond owner types and didn't trust the stock market due to the Depression.
I guess they should not have trusted anything...
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Old 09-06-2016, 07:08 PM   #1209
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I had to check, which I guess is a good problem to have. I don't have any KCC , but I do have the "dog with fleas" CBB.

I got it for 15 cents over par, so I'll hang on and hope it continues for a number of years, since a call won't cause me any loss of capital.
I do also like the QDI since I have it in a regular account.

It adds excitement to life
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Old 09-06-2016, 07:56 PM   #1210
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Well, I got the "dog with fleas" bond, Sunset. Dogs with fleas need to be loved too right?


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Old 09-06-2016, 08:11 PM   #1211
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Don't feel bad, Sunset & Mulligan. I have the dog with fleas as well.....

But the next Ex-Div is this coming Tuesday, that will offset my cost basis to below par. At that time, I will not be upset or concerned about a call.

I have a small position, so not too significant compared with the rest of the portfolio.
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Old 09-06-2016, 09:30 PM   #1212
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How long might it take before mnr-a redeems? Perhaps we get the Dec 15 div?


Youbet, I just read in new preliminary prospectus "C" will pay first divi, this December 15th. So this thing is gonna start trading fast... Which means MNR will have the proceeds very fast...Which means if they do what they stated....MNR-A could be getting its 30 day call notice fairly quickly.


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Old 09-06-2016, 10:07 PM   #1213
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Youbet, I just read in new preliminary prospectus "C" will pay first divi, this December 15th. So this thing is gonna start trading fast... Which means MNR will have the proceeds very fast...Which means if they do what they stated....MNR-A could be getting its 30 day call notice fairly quickly.


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Just looked and saw this...
today announced that it has priced a public offering of 5,400,000 shares of its 6.125% Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock")
Monmouth Real Estate Investment Corporation Announces Pricing Of Preferred Stock Offering - MarketWatch
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Old 09-06-2016, 10:14 PM   #1214
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Just looked and saw this...
today announced that it has priced a public offering of 5,400,000 shares of its 6.125% Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock")
Monmouth Real Estate Investment Corporation Announces Pricing Of Preferred Stock Offering - MarketWatch


A person will not get rich and famous buying this one, but I like it.


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Old 09-07-2016, 12:06 AM   #1215
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Until the past few months, I had not been a student of interest rate history prior to late 60s. I had no idea the in 1940s 10 year treasury trailed inflation at times by 600-800 or more basis points...Could you imagine the screaming going on with a 10 year trading at 2% and inflation running 10%? I also had no idea the Fed manipulated the market that much 70-80 years ago either.
Things were a bit different "back then", with respect to negative real rates impacting retirees. Many people are hit by all forms of inflation - but in the 40s, what were retirees buying? Appliances? A rare car? A rare TV set? Maybe some gas for the car, electric/natural gas, and about it? Very little medical costs to speak of. Far different lifestyle and way of life back then. People knew how to do without when they had to, and I would suspect a retiree way back then had a different set of circumstances. Also, people were drawing SS that hadn't put much into the system, so they effectively had "bonuses" to their retirement income. And back then, multi-generational households were still (somewhat) common, so very little housing expenses for a retiree living with their adult child.

To sum it up - yes, it would suck, but more palatable to endure negative rates when you have a different lifestyle and basket of goods back then, versus now.
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Old 09-07-2016, 05:45 AM   #1216
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Who retired back then? Or even lived long enough to retire then? I was referring to the affluent guilded class who were the only people who could afford to buy these...Maybe people with the last name.... Moorebonds! I know you got a lot of this income stuff... Lets see inflation run 5-8 times your yield on your money and see if you are not howling!


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Old 09-07-2016, 12:36 PM   #1217
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The articles that Mully posted in response to my earlier post on interest rates not going up were very interesting to me. In particular this chart:


Now about the article and the chart, which only appears to have an annual update, which I think may be enough when investing for long term trends:

1) It was written in June 2013 as a means to warn of low interest rates and the upcoming rise in the 10 year treasury back to 4 percent. The 10 year rate was about 2.2% at this point and since has fallen to 1.55%. However in short order the 10 year rate did move swiftly to 2.9% just over the 50 month average before falling back again. Despite what the article states at the time it was published the 50 month average was 2.67% not 4%. However the average contained the advance as it did a similar advance in August 2013 and the mini advance in December of 2015 from which we have had an acceleration down in rates.

2) It is a 50 month moving average of the 10 year treasury rate and since 1926 the 10 year rate has only changed it’s primary trend twice! This is an amazing amount of directional control maintained by the Central Banks. The predictable nature of interest rate moves makes decisions in the financial industry much easier and helps contain unexpected losses.

3) The chart is informative because it holds the net actions of the FED and investors. Swift up moves away from the average inevitably is leading to calls to action by authorities which moves interest rates back into control by usually overdoing the action, low interest rates have been met with slow gradual increases with the exception of 1836 when the Bank of England announced it expected to raise interest rates from 3 to 5 percent which then led to the panic of 1837 and continued financial turmoil into the 1840’s.

Until one would see a directional trend in the 10 year treasury rate and the 50 month moving average I think expecting a move above it because of economic factors is ignoring the counterbalancing control Central Banks are exerting to preserve an economic system that relies on favorable outcomes for the financial sector. Right now the largest holders of US government debt are banks, insurance companies and Central Banks. It is against their interest to allow rates to rise very much. Increases I think will be small unless the Central Banks lose control as was the case in the late 70’s and early 80’s. Large moves have been to come either back to the trend or else a move in the current trend away from the average. More likely is the Fed to gradually allow interest rates to rise, causing a slow change in trend direction to the upside, equally possible is an onset of a new recession and interest rates could take a plunge to negative territory, something Central Banks are now willing to do that was not conceived possible through most of history.
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Old 09-07-2016, 12:53 PM   #1218
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RM, Do you think Central Banks are worried or even concerned about a massive unrealized dollars in the trillions losses if rates on their books head back to zero or above?


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Old 09-07-2016, 12:58 PM   #1219
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FYI- There is a huge 2000 share dump left of IPWLK at $101.60....It goes exD next week of $1.41...... No call announcement... I didnt get in at real cheap price Moorebonds did last week, but I am willing to accept the small risk here... I bought 100 shares... I eventually plan on lightening my AES-C load in next couple months, so buying now will work for me. I was getting too light in my go to "ute preferreds". At around 5.5% hope is it will not called. Really about the only ute preferred QDI that is above 5% without being WAY above par and their are only 3-4 of them anyways.


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Old 09-07-2016, 08:23 PM   #1220
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Youbet, I just read in new preliminary prospectus "C" will pay first divi, this December 15th. So this thing is gonna start trading fast... Which means MNR will have the proceeds very fast...Which means if they do what they stated....MNR-A could be getting its 30 day call notice fairly quickly.


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Thanks. I recently purchased 200 shares a bit above par and need about a 50% pro-rated div to break even.
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