Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Open Thread: Lousy Week Edition (What Are You Buying/Selling?)
Sitting on 40% cash, but dipped a toe into DNI at 14.98 today. Last week another toe into SO at 40 Watching NKA, O, GOV, for tax deferred and BIP and VNR for taxable. Sorry this stuff didn't come up blue with an underline. Still learning.
Sold out of SUBYX and bought RNSIX. I'm looking more for downside protection from a stock-market correction than protection from rising interest rates. Time will tell.
Currently just watching as we are not yet through January. From my thinking fair value for the S&P 500 Index now lays somewhere around 1750 to 1760 range. I think what we are seeing are those investors that have levered up are now reducing the amount they have invested through the use of margin loans. I am not sure how much of the market itself is leveraged up but it would not surprise me if it were in the twenty percent range giving how much money the Fed has injected into the banking industry. Why loan it out when they can put it in play in the markets for a greater return?
I have built my cash position over the course of the past couple years. I figure as the markets deleverage this puts selling pressure in place and better valuations might be had over the next couple of weeks, months or even perhaps throughout the year. I still score the markets as currently being overbought. It might be some time in February before we see fair value perhaps longer.
My portfolio's target asset allocation is 20% cash, 25% income, 45% equity and 10% alternatives. Should the stock market pull back to an oversold condition I'll most likely reduce cash (up to 5%) and raise my equity allocation by a like amount. I have never made good money by buying when valuations were high and with the markets being overbought as we find them today. Currently, M*'s Market Fair Value Graph is showing stocks in general are overvalued by about two percent. It is linked below for those interested.
And, by both my Technical Analysis Model and by my P/E Ratio Model they also score the market overbought. Currently, my T/A charting still has the SPY price line above its 100SMA. Perhaps as more investors deleverage the markets will become oversold in the not to distant future and moving below the 200SMA. Remember fair value is a moving target and the 1750 to 1760 range of today might not be fairvalue by the close of next week. After all we are in the middle of corporate earnings and revenue reporting season. I am still with my earlier pick that the Russell 2000 will be the asset of choice for 2014. Small caps currently account for about six percent of my overall equity allocation and about 20% of the growth area of the portfolio. Their weighting might be increased as we move along through the year and if they should take a leadership role as I anticipate. It is just too early to determine which avenues I'll follow this year. Thus far, my fixed income sleeve followed by my two cash sleeves (demand & investment) lead the others.
As of Friday market close the short interest on the etf SPY was down to 2.0 days to cover. This could be, in part, because trading volumes have now increased and reccent volumes are now above the daily average. The details are linked below:
Watching OAK 58.88 -1.43 (-2.37%) and OZM 14.90 -0.59 (-3.81%) and the others mentioned for further price erosion.Looks like the smart money is buying up distressed Chinese debt,which may weigh on world markets as it becomes more exposed. Friday, Jan 24 10:40 AM Seeking Alpha.... Several bidding for stake in China Huarong A manager of bad debts, Huarong is expected to get plenty of business as waves of loans turn sour in China. The largest of the country's four bad loan managers, the company oversees assets of about $66B.The stock offering - previously reported as a stake of 15-20% - will allow Huarong to acquire more bad loans and forfeited assets. The profit comes as the company repackages the loans/assets and moves them to other buyers.Among a large number of those trying to get a piece are KKR, BlackRock (BLK), and Blackstone (BX), reports Reuters. First-round offers are due by mid-February. From Reuters... CINDA APPEAL Huarong's fund-raising plans come on the heels of China Cinda Asset Management Co Ltd's (1359.HK) $2.9 billion Hong Kong I P O in December. Cinda's stock has risen 43 percent above the offer price. Cinda's I P O attracted some of the biggest names in global investing as cornerstone investors to provide a solid structure for its I P O. They included Oaktree Capital Management Ltd (OAK), the world's biggest distressed debt trader, and Och-Ziff Capital Management Group LLC (OZM), who were among the 10 cornerstone investors to jointly plough $1.1 billion into the offer.
I'm not buying any equity funds right now. Still waiting for more of a correction. We haven't seen much yet. When we do correct, I'd like to add to my 2014 sector bet, global tech PRGTX, and to my international fund OAKIX. So, bring on the correction!! I could be very wrong, but I'm not going to be swayed into adding to EM's at this point. Plenty of room for EMs to drop more. I'll stick with the very small percentage I've held this past year.
I'm looking at what my best performing fund was over last week and it was PRFHX. It was even positive through yesterdays carnage and up .9% for the week. The HY muni is a fund I bought a couple weeks ago - thanks to the junk man (junkster). I'm considering adding more to it.
I'm looking at what my best performing fund was over last week and it was PRFHX. It was even positive through yesterdays carnage and up .9% for the week. The HY muni is a fund I bought a couple weeks ago - thanks to the junk man (junkster). I'm considering adding more to it.
Hi Mike,
As you know, PRFHX is up over 3% YTD. What criteria are you using in your consideration to add more to holding?
Being overweight cash might not be a bad thing should the market continue pulling back. Having a cash hord, say 25%, could indeed become a blessing. I am holding 20+% myself and my broker thinks that is too much. Told him perhaps so if I was in the accumulation stage of my life but my little fife was now built; and, I considered it part of my financial survial plan. And, besides it provides me an opportunity to venture into other areas beside the markets that I might profit in. I have some metorites that were found years ago on one of the family farms that sit on an old Indian trading path that ran form Richmond to Charleston. Although, I don't own this land I have access to it and I might just see if more of them can be found through a light minning and prospecting process. Thinking of taking an old small utility trailer putting a generator on it to power an electromatic field and then pulling this behind a tractor with a plow and or disk that turns the soil. With this, since most metorites are maganetic bingo I've got myself a metorite finder plus it will collect other iron objects too. I got some neat things I plan to venture into this year as I start my retirement. Besides the field needs to be plowed anyway. In the past we found them as kids walking behind the tractor or riding on top of the plow or disk just through visual sight. My grand father would run the tractor at a slower speed when we did this and he only tolerated us for so long. If he only new what metorites were worth today ... Well, I think he would have had a different perspective.
Reply to @TSP_Transfer: I don't have as much as I initially did, but OAK remains a very long-term holding for me. The only issue with it (as well as Blackstone and a few other private equity co's) is that it is an MLP, so you do have to deal with a K-1.
OAK is - I think a little more appealing than the others from the standpoint of its distressed focus, which will likely lead to better performance in distressed markets (whereas Blackstone, for example, top-ticked markets in 2008, buying Hilton and a couple other things at the very top.)
Reply to @hawkmountain: Still trying to decide between O and ARCP (and MNR and a few other REITs), but BIP remains a long-term holding (although not the top position it was at one point.)
Reply to @Old_Skeet: Oops, maybe I was unfocused as trying to post on my new phone (Google Nexus 5, upgrade from Google Nexus 4). I'm only capable of pondering so much at a time lol.
During the tumble this week, I bought WPC based on a good tip (thanks Scott). And based on the winter wonderland here in Cleveland, I bought a goodly position in a nice Italian red...Antinori. No doubt, it is a very short position, soon to be liquidated....going down quickly.
I am staying pat for now. My portfolio went down 1.07% this past week, and while none of us likes to lose value, I am pleased that I outperformed the major indexes. If we go down more then some opportunities may present themselves.
WPC remains one of my top holdings and I have no intention of selling it - it's a pioneer in this particular real estate space and I have a great deal of confidence in management, especially after the terrific (and terrifically lengthy) investor day speech last year. It's something that I could see holding for many years and just reinvesting dividends. The company's diverse portfolio will change over time and rents are adjusted up by CPI in most cases (and one could argue about CPI as a measure of inflation, certainly, but there is some level of protection against inflation.) The nature of triple-net, with tenants paying taxes and other such property expenses, so the tenant faces those potentially inflationary costs over time rather than the landlord.
The entire triple-net lease space is neat and I'm looking at other options, but WPC will remain the largest holding for me in terms of triple nets from the standpoint of management (they will hire industry consultants, have an outside/independent investment committee), diversity and this part from the investor day presentation:
"...If we're successful in that step and we think it is a good credit, we then move on to the asset itself. Is that asset critical to the company's business? And there are a lot of examples of net lease deals that get done in the United States, specifically single retail stores, which we would argue, any one of them is not critical to that tenant's overall success. So that's why you'll see in the U.S., we really don't focus too much on individual retail stores. If we do, do retail, we want to make sure that we get a group of retail stores. We try to tie them together on a single lease in the U.S. so that in bankruptcy, the tenant has less flexibility to cherry-pick the better stores. In addition, we would only want to tie up good stores on that single lease.
From the industrial and office perspectives, are those facilities important to the company? If it's an office building, is it a headquarter building? Is it an R&D facility, which even if the company gets in trouble, it's core to their business and they're going to need it when they exit bankruptcy? In the manufacturing space, is this their team manufacturing facility? So we look at -- where are we here, let's go back to -- yes, so we -- again, we look at the asset itself, make sure it's important to the tenant."
There are a number of great triple net REIT leases, but I think WP Carey to me really has a focus on essential real estate, including some gems such as the Kraft HQ and the NY Times Building.
WP Carey's non-traded CPA funds have also had a pretty remarkable track record over the years.
The other triple-net REIT that I am looking at that is a triple net REIT that no one really talks about (despite being nearly 50 years old) is Monmouth, although the risk with that is 52% of Monmouth's income is tied to Fedex. I'm looking at Monmouth, Realty income and ARCP, and may add one or more of those, but it would be a small position vs the larger WPC position.
Given the way the market is, I could see adding more to WPC at some point soon, as well.
I have a small collection myself of less than 100 lbs that were found many years ago when I was a teenager. I have one that weighs about 7.5Lbs. When I was a freshman in college back in the late 60's my family was offered $100.00 a pound for it from a chemist with Celeanse Corp. My late father felt if this person, that he knew well, was willing to pay that for it then it was probably worth more. The problem I see with collecting these items is finding a good market for them. If it was not that I felt there was a good possibility that there were more where these came from then I would not be making this venture with my cousin. Years ago we used magnets fasten to boards that were carried by two people and we literally walked the plowed rows carrying it between us. Because a lot of meteorites are magnetic indeed it would locate them. The big one that I referenced above was located by our magnetic board technique. The meteorites that we found were not the type of rock than is normally found in our area and have all the properties of most rocks ID'ed as meteorites. A burnt crust is most important along with starring.
I have provided a couple of links below that details what kind of value meteorites might have along with some ways to identify them.
Reply to @scott: Thanks Scott...this commentary is very helpful, though actually off of the general mandate for this site. But...I think that investment conversation would take primary consideration here, and Mr. Snowball might not object.
My overall REIT positions include this, plus O and HCN. I think that includes a pretty decent and fairly broad sampling of this asset class.
Reply to @Old_Skeet: From my thinking fair value for the SP500 is somewhere around 1100-1150. Not that it will get there any time soon and may not get there at all given the Feds apparent new mandate to pump stocks for the " wealth effect". This market is about as overvalued as you can get outside of the bubble in the late 90s into 2000.
I have always invested in real estate. During the slowdown in the year 2008, my interest was in real estate only. In the present scenario, real estate market is showing some steady growth. To read more about Real estate market click here.
I have always invested in real estate. During the slowdown in the year 2008, my interest was in real estate only. In the present scenario, real estate market is showing some steady growth. To read more about Real estate market click here.
Comments
Last week another toe into SO at 40
Watching NKA, O, GOV, for tax deferred and BIP and VNR for taxable.
Sorry this stuff didn't come up blue with an underline. Still learning.
Currently just watching as we are not yet through January. From my thinking fair value for the S&P 500 Index now lays somewhere around 1750 to 1760 range. I think what we are seeing are those investors that have levered up are now reducing the amount they have invested through the use of margin loans. I am not sure how much of the market itself is leveraged up but it would not surprise me if it were in the twenty percent range giving how much money the Fed has injected into the banking industry. Why loan it out when they can put it in play in the markets for a greater return?
I have built my cash position over the course of the past couple years. I figure as the markets deleverage this puts selling pressure in place and better valuations might be had over the next couple of weeks, months or even perhaps throughout the year. I still score the markets as currently being overbought. It might be some time in February before we see fair value perhaps longer.
My portfolio's target asset allocation is 20% cash, 25% income, 45% equity and 10% alternatives. Should the stock market pull back to an oversold condition I'll most likely reduce cash (up to 5%) and raise my equity allocation by a like amount. I have never made good money by buying when valuations were high and with the markets being overbought as we find them today. Currently, M*'s Market Fair Value Graph is showing stocks in general are overvalued by about two percent. It is linked below for those interested.
http://www.morningstar.com/market-valuation/market-fair-value-graph.aspx
And, by both my Technical Analysis Model and by my P/E Ratio Model they also score the market overbought. Currently, my T/A charting still has the SPY price line above its 100SMA. Perhaps as more investors deleverage the markets will become oversold in the not to distant future and moving below the 200SMA. Remember fair value is a moving target and the 1750 to 1760 range of today might not be fairvalue by the close of next week. After all we are in the middle of corporate earnings and revenue reporting season. I am still with my earlier pick that the Russell 2000 will be the asset of choice for 2014. Small caps currently account for about six percent of my overall equity allocation and about 20% of the growth area of the portfolio. Their weighting might be increased as we move along through the year and if they should take a leadership role as I anticipate. It is just too early to determine which avenues I'll follow this year. Thus far, my fixed income sleeve followed by my two cash sleeves (demand & investment) lead the others.
As of Friday market close the short interest on the etf SPY was down to 2.0 days to cover. This could be, in part, because trading volumes have now increased and reccent volumes are now above the daily average. The details are linked below:
http://shortsqueeze.com/?symbol=spy&submit=Short+Quote
And, yes ... I am still pondering!
Old_Skeet
Friday, Jan 24
10:40 AM Seeking Alpha....
Several bidding for stake in China Huarong
A manager of bad debts, Huarong is expected to get plenty of business as waves of loans turn sour in China. The largest of the country's four bad loan managers, the company oversees assets of about $66B.The stock offering - previously reported as a stake of 15-20% - will allow Huarong to acquire more bad loans and forfeited assets. The profit comes as the company repackages the loans/assets and moves them to other buyers.Among a large number of those trying to get a piece are KKR, BlackRock (BLK), and Blackstone (BX), reports Reuters. First-round offers are due by mid-February.
From Reuters...
CINDA APPEAL
Huarong's fund-raising plans come on the heels of China Cinda Asset Management Co Ltd's (1359.HK) $2.9 billion Hong Kong I P O in December. Cinda's stock has risen 43 percent above the offer price.
Cinda's I P O attracted some of the biggest names in global investing as cornerstone investors to provide a solid structure for its I P O. They included Oaktree Capital Management Ltd (OAK), the world's biggest distressed debt trader, and Och-Ziff Capital Management Group LLC (OZM), who were among the 10 cornerstone investors to jointly plough $1.1 billion into the offer.
http://www.reuters.com/article/2014/01/24/us-huarong-investors-idUSBREA0N0HF20140124
NKTR, LGND, SGEN, CBST, SCMP
I'm looking at what my best performing fund was over last week and it was PRFHX. It was even positive through yesterdays carnage and up .9% for the week. The HY muni is a fund I bought a couple weeks ago - thanks to the junk man
As you know, PRFHX is up over 3% YTD. What criteria are you using in your consideration to add more to holding?
Mona
Being overweight cash might not be a bad thing should the market continue pulling back. Having a cash hord, say 25%, could indeed become a blessing. I am holding 20+% myself and my broker thinks that is too much. Told him perhaps so if I was in the accumulation stage of my life but my little fife was now built; and, I considered it part of my financial survial plan. And, besides it provides me an opportunity to venture into other areas beside the markets that I might profit in. I have some metorites that were found years ago on one of the family farms that sit on an old Indian trading path that ran form Richmond to Charleston. Although, I don't own this land I have access to it and I might just see if more of them can be found through a light minning and prospecting process. Thinking of taking an old small utility trailer putting a generator on it to power an electromatic field and then pulling this behind a tractor with a plow and or disk that turns the soil. With this, since most metorites are maganetic bingo I've got myself a metorite finder plus it will collect other iron objects too. I got some neat things I plan to venture into this year as I start my retirement. Besides the field needs to be plowed anyway. In the past we found them as kids walking behind the tractor or riding on top of the plow or disk just through visual sight. My grand father would run the tractor at a slower speed when we did this and he only tolerated us for so long. If he only new what metorites were worth today ... Well, I think he would have had a different perspective.
Old_Skeet
OAK is - I think a little more appealing than the others from the standpoint of its distressed focus, which will likely lead to better performance in distressed markets (whereas Blackstone, for example, top-ticked markets in 2008, buying Hilton and a couple other things at the very top.)
WPC remains one of my top holdings and I have no intention of selling it - it's a pioneer in this particular real estate space and I have a great deal of confidence in management, especially after the terrific (and terrifically lengthy) investor day speech last year. It's something that I could see holding for many years and just reinvesting dividends. The company's diverse portfolio will change over time and rents are adjusted up by CPI in most cases (and one could argue about CPI as a measure of inflation, certainly, but there is some level of protection against inflation.) The nature of triple-net, with tenants paying taxes and other such property expenses, so the tenant faces those potentially inflationary costs over time rather than the landlord.
The entire triple-net lease space is neat and I'm looking at other options, but WPC will remain the largest holding for me in terms of triple nets from the standpoint of management (they will hire industry consultants, have an outside/independent investment committee), diversity and this part from the investor day presentation:
"...If we're successful in that step and we think it is a good credit, we then move on to the asset itself. Is that asset critical to the company's business? And there are a lot of examples of net lease deals that get done in the United States, specifically single retail stores, which we would argue, any one of them is not critical to that tenant's overall success. So that's why you'll see in the U.S., we really don't focus too much on individual retail stores. If we do, do retail, we want to make sure that we get a group of retail stores. We try to tie them together on a single lease in the U.S. so that in bankruptcy, the tenant has less flexibility to cherry-pick the better stores. In addition, we would only want to tie up good stores on that single lease.
From the industrial and office perspectives, are those facilities important to the company? If it's an office building, is it a headquarter building? Is it an R&D facility, which even if the company gets in trouble, it's core to their business and they're going to need it when they exit bankruptcy? In the manufacturing space, is this their team manufacturing facility? So we look at -- where are we here, let's go back to -- yes, so we -- again, we look at the asset itself, make sure it's important to the tenant."
There are a number of great triple net REIT leases, but I think WP Carey to me really has a focus on essential real estate, including some gems such as the Kraft HQ and the NY Times Building.
WP Carey's non-traded CPA funds have also had a pretty remarkable track record over the years.
The other triple-net REIT that I am looking at that is a triple net REIT that no one really talks about (despite being nearly 50 years old) is Monmouth, although the risk with that is 52% of Monmouth's income is tied to Fedex. I'm looking at Monmouth, Realty income and ARCP, and may add one or more of those, but it would be a small position vs the larger WPC position.
Given the way the market is, I could see adding more to WPC at some point soon, as well.
Hi Dave,
Thanks for the question.
I have a small collection myself of less than 100 lbs that were found many years ago when I was a teenager. I have one that weighs about 7.5Lbs. When I was a freshman in college back in the late 60's my family was offered $100.00 a pound for it from a chemist with Celeanse Corp. My late father felt if this person, that he knew well, was willing to pay that for it then it was probably worth more. The problem I see with collecting these items is finding a good market for them. If it was not that I felt there was a good possibility that there were more where these came from then I would not be making this venture with my cousin. Years ago we used magnets fasten to boards that were carried by two people and we literally walked the plowed rows carrying it between us. Because a lot of meteorites are magnetic indeed it would locate them. The big one that I referenced above was located by our magnetic board technique. The meteorites that we found were not the type of rock than is normally found in our area and have all the properties of most rocks ID'ed as meteorites. A burnt crust is most important along with starring.
I have provided a couple of links below that details what kind of value meteorites might have along with some ways to identify them.
http://geology.com/meteorites/value-of-meteorites.shtml
http://meteorites.pdx.edu/meteoriteid.htm
I hope this helps.
Old_Skeet
US Equities. 40.07%
Intl Equities. 26.23%
US Bonds. 14.25%
Intl Bonds. 5.77%
Cash. 7.69%
Alt. 5.99%
Regards,
Ted
Stocks/Options 73.39%
Fixed-Income 16.02%
Mutual Funds 10.24%
Cash 0.35%
My overall REIT positions include this, plus O and HCN. I think that includes a pretty decent and fairly broad sampling of this asset class.
Press
A personal ReMax ad link ??? So, is this you, a friend or; or a random selection?