Join Early Retirement Today
Closed Thread
 
Thread Tools Display Modes
Old 09-09-2019, 06:55 PM   #4541
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 2,691
Quote:
Originally Posted by Mulligan View Post
PB, yes there is currency risk, but I think of it as another way to diversify a bit, lol... Last 40 years it appears for the most time, CAD bounces between 72-78 cent range. But it has spiked and dropped more in periods that is for sure.
Heh - yep, but what has CAD bounced between when 5 year treasury is negative? Ah ha! That's all new soil being tilled and who knows what the range may be. Could be lower, but I guess could be higher too. USD->CAD now 1.32, but has been .94 (back in 07-08) and floated around .97/.98 for a while 2011-2012. But then again it's been 1.58-1.60 back in 01/02. So there is quite a "range" that may need to be considered.

Interesting to even consider negative rates. And people thought 12%+ was concern back around 1980.
bobandsherry is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-09-2019, 07:17 PM   #4542
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Bob, I am going to give you more to chew on...reach for the Tums already, lol... You buy EBGEF and come reset time the 5 year is negative 3%. Enbridge gonna come looking for you and throw you in debtors prison if you dont cut them their dividend check you owe them! [emoji44]
Mulligan is offline  
Old 09-09-2019, 07:56 PM   #4543
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 2,691
Hey Mulli - anything is possible I suppose. But negative 3% on 5 year money seems like that would be unrealistic, and then still 4.5 year window. And even if it is, that's only 18 basis points out of my pocket, that's still 2.82 percentage points better return than those with the 5 year bonds. Who knows what the trade price would be. Would someone then pay a premium for the security? So many uncharted variables. Maybe we go the other way like the 70's-80's and see 10%+ rates, egads!

Like I said earlier, if we see significant negative rates there's a lot more problems to be concerned about. Just think what will happen with all those fixed rate preferred's. Don't you think those have high risk of being redeemed as companies would be able to re-issue at much lower rates? Where would you park your pile of cash from those redemptions? No matter where, if you envision a negative 5 year then gonna be reaching into your pocket to park that money in some safe harbor.

And just think, last year we were concerned with what would happen in a rising rate environment
bobandsherry is offline  
Old 09-09-2019, 08:05 PM   #4544
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by bobandsherry View Post
Yeah, I have trading account at Fidelity too, not sure why but they don't let some of these OTC trades go through online. So I buy them with my "fun" money account I have at ETrade, can place online order without any issue.

Why'd you go with EBBNF vs. EBGEF?
I preferred the 3.15% spread over the treasury vs 2.82%... I'm in it for the long haul.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline  
Old 09-09-2019, 08:23 PM   #4545
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by Mulligan View Post
As AJ mentioned, your going to have to be aware of 15% withholding inside IRA....There are not supposed to but some do. And then they blame someone else and it may never get resolved. One is going to have to be aware of this and sellout if it cant be resolved. Its random brokerage to brokerage. I got mine figured out I think, lol. But my preference is holding in taxable and most of the monies from CAD are in taxable.
As far as EBBNF and EBGEF goes...Pick your poison. EBBNF has the higher kicker of 3.15%. While EBGEF has the longer duration protection from reset (2022 versus 2024). My preference is EBBNF but in reality a 50/50 spread is a more reasonable decision to spread out reset risk. But they all are going to move as if they reset each day...Crazy I know, but that is how they all largely trade.
For some reason I can't figure, the first guy that I talked to at Fido steered me to another guy on their international desk, who steered me to buy the issue on the Toronto exchange...ENB.PF.U... rather than EBBNF which I had on screen when I called. In think in part because the issues is more thinly traded on the OTC than on the TSX. I'm not sure if I got steered wrong or not but the commission was a lot higher... $90 vs $4.95 that I normally pay but it only reduces the yield by about 5 bps.

He did confirm that since I hold this in a tax-deferred account that the 15% withholding tax would not apply.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline  
Preferred Stock Investing-The Good , The Bad and The In Between
Old 09-09-2019, 09:53 PM   #4546
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Preferred Stock Investing-The Good , The Bad and The In Between

Quote:
Originally Posted by bobandsherry View Post
Hey Mulli - anything is possible I suppose. But negative 3% on 5 year money seems like that would be unrealistic, and then still 4.5 year window. And even if it is, that's only 18 basis points out of my pocket, that's still 2.82 percentage points better return than those with the 5 year bonds. Who knows what the trade price would be. Would someone then pay a premium for the security? So many uncharted variables. Maybe we go the other way like the 70's-80's and see 10%+ rates, egads!

Like I said earlier, if we see significant negative rates there's a lot more problems to be concerned about. Just think what will happen with all those fixed rate preferred's. Don't you think those have high risk of being redeemed as companies would be able to re-issue at much lower rates? Where would you park your pile of cash from those redemptions? No matter where, if you envision a negative 5 year then gonna be reaching into your pocket to park that money in some safe harbor.

And just think, last year we were concerned with what would happen in a rising rate environment


Bob, Im not too worried negative rates...But there is away around the call redemption...Perpetual non callables, or busted convertibles. In theory they would just continue to rise. I got a couple of them like SLMNP and PPWLO. Also you can have issues like IPWLO that I snagged earlier in the year. 5% investment grade yield but at $83 in price and $103 redemption price....If they call that I wont shed tears with a 20% plus cap gain. I own a few like those also as diversity. I actually have about $25k each in IPWLO and SLMNP which is a defacto BBB- QDI preferred since senior unsecured from obligator LYB is BBB+.I also own more of these low yielding way below par issues so I could get some cap gains if redeemed.
EBBNF at 0% 5 yr is still a respectable 4.5% yield at my purchase price. Obviously an issue like TGAPF would yield better due to its 5.25% fixed floor. But it would be more apt to be redeemed if company was doing well.
Mulligan is offline  
Old 09-09-2019, 09:59 PM   #4547
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by pb4uski View Post
For some reason I can't figure, the first guy that I talked to at Fido steered me to another guy on their international desk, who steered me to buy the issue on the Toronto exchange...ENB.PF.U... rather than EBBNF which I had on screen when I called. In think in part because the issues is more thinly traded on the OTC than on the TSX. I'm not sure if I got steered wrong or not but the commission was a lot higher... $90 vs $4.95 that I normally pay but it only reduces the yield by about 5 bps.

He did confirm that since I hold this in a tax-deferred account that the 15% withholding tax would not apply.


PB, they wrung you through the wringer...EBBNF and EBGEF are not illiquid at all. The shares “flow through” to TSX exchange. I have never had a problem buying them or selling them. Have done it often. The key is just throw a nickel bone above ask price, and they scalp them off TSX and sell to you. I just pay normal transaction price of $6.95. It was free until my time just recently ran out on free trades. But this was TD and each brokerage can be different. Vanguard eventually banned them, but I am allowed to hold what I got. Ally has never allowed 5 ticker symbols ending in F to be traded..The ending “F” indicates “Foreign” issue as these stocks are not US registered securities.
Mulligan is offline  
Old 09-09-2019, 10:12 PM   #4548
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
You guys playing with Canadian preferred stocks should read (if your aren't already):

PrefBlog

It's updated every day. I follow Canadian Banks and their bonds and preferred stocks. Personally I would avoid rate reset preferred stocks. The burned a lot of retirees in Canada a few years ago. To make matters worse, when their coupon rest lower not only did the preferred stocks get chopped in half (or more), some companies started making tender offers 30- 40% below par.
Freedom56 is offline  
Old 09-09-2019, 10:34 PM   #4549
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by Freedom56 View Post
You guys playing with Canadian preferred stocks should read (if your aren't already):

PrefBlog

It's updated every day. I follow Canadian Banks and their bonds and preferred stocks. Personally I would avoid rate reset preferred stocks. The burned a lot of retirees in Canada a few years ago. To make matters worse, when their coupon rest lower not only did the preferred stocks get chopped in half (or more), some companies started making tender offers 30- 40% below par.


Freedom the naked ones are VERY volatile. And tank when yields sag. But they can only go down so far unless one is thinking negative rates are coming. Jan. 2016 is your base point...That is when CAD 5 yr hit 0.50%..Ebbnf for example touched $15 then. See once you get to a certain level, the adjustment sans the 5 yr yield would be higher by itself than a fixed perpetual would be at this point. So that would anchor them...For example it is $17.35 today. The reset is set off par not purchase price, thus the indicative yield would be higher. But I agree in that I am not overexposing myself here.
Actually though the minimum fixed floor resets have held up better than the naked resets. (This is the growing CAD trend now to mitigate your valid concern).
I will admit I bought a small amount of TCANF a few weeks ago when it traded around $10.40 CAD. If 5 yr ever went to 3% its yield would be 11.15% for an investment grade preferred. I will just hold these forever and let it play out at that low purchase price...Just think if we ever got an early 80s type 10% 5 yr it would pay 27% QDI...No, I am not holding my breath for that, ha.
Mulligan is offline  
Old 09-09-2019, 11:12 PM   #4550
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
Quote:
Originally Posted by Mulligan View Post
Just think if we ever got an early 80s type 10% 5 yr it would pay 27% QDI...No, I am not holding my breath for that, ha.
Remember I was one of the few people predicting that rates would invert and the 10 year would break through the 2016 low and the 30 year would break 2%. People like Jamie Dimon told investors to prepare themselves for a 10 year yield of 4.75% by then end of 2019. I still believe rates are going to go lower which will put a lot of strain on banks, especially the regional banks. Look what's going on with European banks. They are breaching their 2008 lows and the one's that haven't are about to.

Recall back about 3 years ago that I posted on this thread that something is going on this this retail sector and things are not as healthy as Wall Street believes. Shops were empty but retail stocks were rallying. That sector 3 years later has caused so much pain and is about to cause even more of a bruising.

The bottom line is that there is too much consumer debt out there for rates to move higher. People on this board are by nature more financially responsible and assume subconsciously that the rest of the world is like them. But the vast majority are clueless when it comes to personal finances and are under severe financial stress due to excessive debt. You have to ask yourself who is going to fuel consumption going forward, the savers or the people drowning in debt.
Freedom56 is offline  
Old 09-10-2019, 05:54 AM   #4551
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by Freedom56 View Post
Remember I was one of the few people predicting that rates would invert and the 10 year would break through the 2016 low and the 30 year would break 2%. People like Jamie Dimon told investors to prepare themselves for a 10 year yield of 4.75% by then end of 2019. I still believe rates are going to go lower which will put a lot of strain on banks, especially the regional banks. Look what's going on with European banks. They are breaching their 2008 lows and the one's that haven't are about to.



Recall back about 3 years ago that I posted on this thread that something is going on this this retail sector and things are not as healthy as Wall Street believes. Shops were empty but retail stocks were rallying. That sector 3 years later has caused so much pain and is about to cause even more of a bruising.



The bottom line is that there is too much consumer debt out there for rates to move higher. People on this board are by nature more financially responsible and assume subconsciously that the rest of the world is like them. But the vast majority are clueless when it comes to personal finances and are under severe financial stress due to excessive debt. You have to ask yourself who is going to fuel consumption going forward, the savers or the people drowning in debt.


That is why I roughly stay between 50-100% ute preferreds. But then again I always have. I dont allocate much to the higher risk. Still rates are going to stay historically low, but I think we can see some leveling off here. Wage increases starting to pick up, fully employed, economy is still chugging along.
Mulligan is offline  
Old 09-10-2019, 06:00 AM   #4552
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Another US currency based issue trading on TSX through OTC is ALTGF (Altagas Series C). It is a naked reset 3.58% adjustment plus 5 yr USD Tbilll. Resets in 2022.

For each five&year period after the Initial Fixed Rate Period (each a “Subsequent Fixed Rate Period”), the holders of Series C Shares shall be entitled to receive, as and when declared by the Board of Directors, fixed cumulative preferential cash dividends, payable quarterly on the last day of March, June, September and December in each year, in the amount per share determined by multiplying one&quarter of the Annual Fixed Dividend Rate (as hereinafter defined) for such Subsequent Fixed Rate Period by US$25.00. The Annual Fixed Dividend Rate for the ensuing Subsequent Fixed Rate Period will be determined by AltaGas on the applicable Fixed Rate Calculation Date (as hereinafter defined) and will be equal to the sum of the United States Government Bond Yield (as hereinafter defined) on the applicable Fixed Rate Calculation Date plus 3.58%. See “Details of the Offering”.
Price to the Public
Per Series C Share .................................................. .........................................U...S..$2 5.00
T o t a l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U. . . S . . $ . . 2 . . 0 . . 0 , 0 0 0 , 0 0 0
Underwriters’ Fee(1) US$0.75
U S $ 6 , 0 0 0 , 0 0 0
Net Proceeds to AltaGas(2) US$24.25
U S $ 1 9 4 , 0 0 0 , 0 0 0
2
The Series C Shares shall not be redeemable prior to September 30, 2017. On September 30, 2017, and on September 30 in every fifth year thereafter, AltaGas may, at its option, upon not less than 30 days and not more than 60 days prior written notice, redeem for cash all or any part of the outstanding Series C Shares by the payment of US$25.00 per Series C Share plus all accrued and unpaid dividends (less any tax required to be deducted or withheld by AltaGas). See “Details of the Offering”.
https://www.altagas.ca/sites/default/files/Series-C.pdf
Last trade on TSX was $17.95 and the Altagas preferreds go exD 9/13.
Mulligan is offline  
Old 09-10-2019, 08:59 AM   #4553
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 2,691
Quote:
Originally Posted by pb4uski View Post
I'm not sure if I got steered wrong or not but the commission was a lot higher... $90 vs $4.95 that I normally pay but it only reduces the yield by about 5 bps.
Doesn't sound right. I can buy right on ETrade as regular OTC limit order transaction. Deed is done, but something to keep in mind next time.
bobandsherry is offline  
Old 09-10-2019, 12:44 PM   #4554
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Yeah.... I wonder if it is Fidelity or perhaps the guy who answered the phone at Fidelity was uninformed.

Are those of you who use Fido for your preferred portfolio easily able to do OTC transactions? Just checking in case I do something similar I can push the rep harder.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline  
Old 09-10-2019, 03:43 PM   #4555
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,642
RE: EBBNF - having been charged 15% foreign tax on the dividend at Schwab in my IRA.

I spoke to Schwab's Global Trading Desk today and the agent told me that the agreed upon tax exemption in an IRA is a function of the stock prospectus published by the company. The agent seemed very clear on that ruling and even looked it up.
__________________
*********Go Astros!*********
aja8888 is offline  
Old 09-10-2019, 04:04 PM   #4556
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by aja8888 View Post
RE: EBBNF - having been charged 15% foreign tax on the dividend at Schwab in my IRA.



I spoke to Schwab's Global Trading Desk today and the agent told me that the agreed upon tax exemption in an IRA is a function of the stock prospectus published by the company. The agent seemed very clear on that ruling and even looked it up.


So has issue been resolved yet Aja? This is an international treaty...The trouble is brokerage blames intermediary who takes it out at the source before brokerage receives money. Its a blame game...A few people stated they had to fill out a Canadian form to get it resolved...ERRAF had same issue with me and another guy. I wasnt as persistant as they said it wasnt their fault. Another guy made repeated calls until they fixed the issue. And that mixed my problem also.
Mulligan is offline  
Old 09-10-2019, 04:10 PM   #4557
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,642
Quote:
Originally Posted by Mulligan View Post
So has issue been resolved yet Aja? This is an international treaty...The trouble is brokerage blames intermediary who takes it out at the source before brokerage receives money. Its a blame game...A few people stated they had to fill out a Canadian form to get it resolved...ERRAF had same issue with me and another guy. I wasnt as persistant as they said it wasnt their fault. Another guy made repeated calls until they fixed the issue. And that mixed my problem also.
Schwab thinks the issue (my call) is resolved. I mentioned the treaty, etc...go nowhere. For the small amount involved, I'm not going to spend time trying to get resolution in my favor. If they are actually going to pay the tax for me, I'll just deduct it on my tax return.
__________________
*********Go Astros!*********
aja8888 is offline  
Old 09-10-2019, 05:18 PM   #4558
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by aja8888 View Post
Schwab thinks the issue (my call) is resolved. I mentioned the treaty, etc...go nowhere. For the small amount involved, I'm not going to spend time trying to get resolution in my favor. If they are actually going to pay the tax for me, I'll just deduct it on my tax return.


You could deduct it because of your mandatory IRA withdrawal I assume?
Mulligan is offline  
Old 09-10-2019, 05:38 PM   #4559
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,642
Quote:
Originally Posted by Mulligan View Post
You could deduct it because of your mandatory IRA withdrawal I assume?
I would guess? I have never owned foreign stocks before. Schwab is paying it out of my IRA and Canada is receiving it so I can assume it's at least reportable as being paid? Whether or not it's a "deduction"....I don't know at this point.
__________________
*********Go Astros!*********
aja8888 is offline  
Old 09-10-2019, 05:51 PM   #4560
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,008
Quote:
Originally Posted by aja8888 View Post
I would guess? I have never owned foreign stocks before. Schwab is paying it out of my IRA and Canada is receiving it so I can assume it's at least reportable as being paid? Whether or not it's a "deduction"....I don't know at this point.
My opinion (worth zip) is that it's not deductible, just as a stock loss is not within an IRA
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


» Quick Links

 
All times are GMT -6. The time now is 06:40 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.