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(04-08-2021, 10:12 AM)fenders53 Wrote: (04-07-2021, 03:07 PM)stockguru Wrote: (04-07-2021, 02:58 PM)ken-do-nim Wrote: Are we looking at the same RA? It traded in the low 20s basically until it crashed and burned in March 2020, dropping to 13, and it has now climbed back up to 21. Also they haven't cut their dividend recently.
That's my point on RA. Its back to where it was and toped out at $22 which is where it is now. The 5 year high is $22 and with these monthly dividend stocks when they run up this much they tend to correct and give you better buying opportunities.
I agree with you on this. The risk reward is out of balance at the extreme ends of trading range. It may well be over a year from now, but US finances have never been here before. Old people hold these high yielders and they have a nervous trigger finger on the sell side at the first sign of trouble. Something will trigger a dip. The yields are high because their is always some financial engineering going on. I get why people are attracted to the monthly payout but a 4% yielding blue chip with a decent chance of a 5% capital appreciation is where the bulk of my income bets will be placed. The high yielders can pay off very nicely if you know when to trim or add shares. I'm out for now. The upside is just not there.
The 10yr/1yr yield curve has been higher than it is now for most of the past decade, yet STWD is trading near ATH. You'd think 10yrs had popped to 3% yield with 1yr at 0 based on the recent price action.
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(04-08-2021, 10:19 AM)Otter Wrote: (04-08-2021, 10:12 AM)fenders53 Wrote: (04-07-2021, 03:07 PM)stockguru Wrote: (04-07-2021, 02:58 PM)ken-do-nim Wrote: Are we looking at the same RA? It traded in the low 20s basically until it crashed and burned in March 2020, dropping to 13, and it has now climbed back up to 21. Also they haven't cut their dividend recently.
That's my point on RA. Its back to where it was and toped out at $22 which is where it is now. The 5 year high is $22 and with these monthly dividend stocks when they run up this much they tend to correct and give you better buying opportunities.
I agree with you on this. The risk reward is out of balance at the extreme ends of trading range. It may well be over a year from now, but US finances have never been here before. Old people hold these high yielders and they have a nervous trigger finger on the sell side at the first sign of trouble. Something will trigger a dip. The yields are high because their is always some financial engineering going on. I get why people are attracted to the monthly payout but a 4% yielding blue chip with a decent chance of a 5% capital appreciation is where the bulk of my income bets will be placed. The high yielders can pay off very nicely if you know when to trim or add shares. I'm out for now. The upside is just not there.
The 10yr/1yr yield curve has been higher than it is now for most of the past decade, yet STWD is trading near ATH. You'd think 10yrs had popped to 3% yield with 1yr at 0 based on the recent price action.
The level of deficit spending is going to get more insane. We'll see if they can soft land this thing or not when the time comes. I am not scared yet, but this will be tricky at some point. I sold my STWD a few weeks ago. It was a good trade. Thanks.
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(04-08-2021, 10:26 AM)fenders53 Wrote: (04-08-2021, 10:19 AM)Otter Wrote: (04-08-2021, 10:12 AM)fenders53 Wrote: (04-07-2021, 03:07 PM)stockguru Wrote: (04-07-2021, 02:58 PM)ken-do-nim Wrote: Are we looking at the same RA? It traded in the low 20s basically until it crashed and burned in March 2020, dropping to 13, and it has now climbed back up to 21. Also they haven't cut their dividend recently.
That's my point on RA. Its back to where it was and toped out at $22 which is where it is now. The 5 year high is $22 and with these monthly dividend stocks when they run up this much they tend to correct and give you better buying opportunities.
I agree with you on this. The risk reward is out of balance at the extreme ends of trading range. It may well be over a year from now, but US finances have never been here before. Old people hold these high yielders and they have a nervous trigger finger on the sell side at the first sign of trouble. Something will trigger a dip. The yields are high because their is always some financial engineering going on. I get why people are attracted to the monthly payout but a 4% yielding blue chip with a decent chance of a 5% capital appreciation is where the bulk of my income bets will be placed. The high yielders can pay off very nicely if you know when to trim or add shares. I'm out for now. The upside is just not there.
The 10yr/1yr yield curve has been higher than it is now for most of the past decade, yet STWD is trading near ATH. You'd think 10yrs had popped to 3% yield with 1yr at 0 based on the recent price action.
The level of deficit spending is going to get more insane. We'll see if they can soft land this thing or not when the time comes. I am not scared yet, but this will be tricky at some point. I sold my STWD a few weeks ago. It was a good trade. Thanks.
Mine got called away, and the position was way above strike when it happened.
Fed will reinstate operation twist if the 10yrs get too high, as it risks the stability of the economy for the curve to get too steep.
Other than near-term transitory inflation from the stimulus (which likely vanishes by the end of this year), I don't see anything in the long term economic picture that is substantially different from the decade+ bull market after 2008, where the Fed consistently had difficulty hitting its 2% annual inflation target. If the Fed announced today that it was halting its support for the bond market, everything would crash immediately in a deflationary spiral rivaling 2008.
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Added OZK, AVGO and MO
Any thoughts on BMY and MRK ?
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(04-08-2021, 10:33 AM)stockguru Wrote: Added OZK, AVGO and MO
Any thoughts on BMY and MRK ?
Own them both and sell BMY puts literally every few weeks that expire worthless. I think they are both very safe but who knows what finally wakes up the share price. It's hard to imagine they don't have some upside. I've grown impatient with MRK so that probably means you should be buying soon.
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(04-08-2021, 10:32 AM)Otter Wrote: (04-08-2021, 10:26 AM)fenders53 Wrote: (04-08-2021, 10:19 AM)Otter Wrote: (04-08-2021, 10:12 AM)fenders53 Wrote: (04-07-2021, 03:07 PM)stockguru Wrote: That's my point on RA. Its back to where it was and toped out at $22 which is where it is now. The 5 year high is $22 and with these monthly dividend stocks when they run up this much they tend to correct and give you better buying opportunities.
I agree with you on this. The risk reward is out of balance at the extreme ends of trading range. It may well be over a year from now, but US finances have never been here before. Old people hold these high yielders and they have a nervous trigger finger on the sell side at the first sign of trouble. Something will trigger a dip. The yields are high because their is always some financial engineering going on. I get why people are attracted to the monthly payout but a 4% yielding blue chip with a decent chance of a 5% capital appreciation is where the bulk of my income bets will be placed. The high yielders can pay off very nicely if you know when to trim or add shares. I'm out for now. The upside is just not there.
The 10yr/1yr yield curve has been higher than it is now for most of the past decade, yet STWD is trading near ATH. You'd think 10yrs had popped to 3% yield with 1yr at 0 based on the recent price action.
The level of deficit spending is going to get more insane. We'll see if they can soft land this thing or not when the time comes. I am not scared yet, but this will be tricky at some point. I sold my STWD a few weeks ago. It was a good trade. Thanks.
Mine got called away, and the position was way above strike when it happened.
Fed will reinstate operation twist if the 10yrs get too high, as it risks the stability of the economy for the curve to get too steep.
Other than near-term transitory inflation from the stimulus (which likely vanishes by the end of this year), I don't see anything in the long term economic picture that is substantially different from the decade+ bull market after 2008, where the Fed consistently had difficulty hitting its 2% annual inflation target. If the Fed announced today that it was halting its support for the bond market, everything would crash immediately in a deflationary spiral rivaling 2008.
Have we ever deficit spent $5T in a year? That seems like where we are possibly headed, or something in that neighborhood. I don't remember the US doing that before.
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Sold PLTR CC expiring 4 weeks out.
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04-08-2021, 02:04 PM
(This post was last modified: 04-08-2021, 02:05 PM by vbin.)
(04-08-2021, 10:33 AM)stockguru Wrote: Added OZK, AVGO and MO
Any thoughts on BMY and MRK ?
I added BMY yesterday, have puts sold on both of them. Both are undervalued with margin of safety. Some big names have added MRK in their ports in past months.
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(04-08-2021, 09:42 AM)Otter Wrote: Added to ABNB
Don't they have 120 days lock up expiration coming up?
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(04-08-2021, 02:15 PM)vbin Wrote: (04-08-2021, 09:42 AM)Otter Wrote: Added to ABNB
Don't they have 120 days lock up expiration coming up?
Yes, and it may get cheaper, or may not.
I haven't historically had a lot of growthy picks in my portfolio, and have devoted more attention to that the past several months. Plan to hold 10+ years, so I expect price fluctuations in the first year of the holding to be largely irrelevant by the time I start drawing the positions down. Still gotta build out the positions when I have cash to do so, and ABNB was on the list today.
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(04-08-2021, 01:19 PM)fenders53 Wrote: (04-08-2021, 10:32 AM)Otter Wrote: (04-08-2021, 10:26 AM)fenders53 Wrote: (04-08-2021, 10:19 AM)Otter Wrote: (04-08-2021, 10:12 AM)fenders53 Wrote: I agree with you on this. The risk reward is out of balance at the extreme ends of trading range. It may well be over a year from now, but US finances have never been here before. Old people hold these high yielders and they have a nervous trigger finger on the sell side at the first sign of trouble. Something will trigger a dip. The yields are high because their is always some financial engineering going on. I get why people are attracted to the monthly payout but a 4% yielding blue chip with a decent chance of a 5% capital appreciation is where the bulk of my income bets will be placed. The high yielders can pay off very nicely if you know when to trim or add shares. I'm out for now. The upside is just not there.
The 10yr/1yr yield curve has been higher than it is now for most of the past decade, yet STWD is trading near ATH. You'd think 10yrs had popped to 3% yield with 1yr at 0 based on the recent price action.
The level of deficit spending is going to get more insane. We'll see if they can soft land this thing or not when the time comes. I am not scared yet, but this will be tricky at some point. I sold my STWD a few weeks ago. It was a good trade. Thanks.
Mine got called away, and the position was way above strike when it happened.
Fed will reinstate operation twist if the 10yrs get too high, as it risks the stability of the economy for the curve to get too steep.
Other than near-term transitory inflation from the stimulus (which likely vanishes by the end of this year), I don't see anything in the long term economic picture that is substantially different from the decade+ bull market after 2008, where the Fed consistently had difficulty hitting its 2% annual inflation target. If the Fed announced today that it was halting its support for the bond market, everything would crash immediately in a deflationary spiral rivaling 2008.
Have we ever deficit spent $5T in a year? That seems like where we are possibly headed, or something in that neighborhood. I don't remember the US doing that before.
As a percentage of GDP, we ran up larger deficits during WWII
https://fred.stlouisfed.org/series/FYFSGDA188S
We are beyond where we were with 2008, but many economists argued that the stimulus in '08 was simply not large enough, and the relatively anemic recovery (especially with jobs) in the first part of the 2010s lends some support to that notion.
Supposedly the proposed infrastructure bill is to be paid for by tax increases, so we will see how that shakes out in terms of the impact on the deficit or what, if anything, gets passed. From a deficit perspective though, infrastructure spending is commonly taught as one of the examples where it makes sense to issue treasuries, as the return on investment for infrastructure typically outweighs the cost of borrowing. It's the same reason companies issue bonds at historically low rates to fund investment in capital-intensive projects that are expected to boost earnings beyond the cost of borrowing.
I'm fine with the deficit spending undertaken for Covid stimulus under both the Trump and Biden administrations. It was a black swan event where unprecedented numbers of people lost their jobs through no fault of their own, so extraordinary measures were necessary to stabilize the economy. Failure to do anything likely would have resulted in a deflationary spiral and great depression.
Still don't see any signs that inflation is a risk in the medium term.
Long term, we are entering a period where the majority of Millenials enter their prime earning years, and generational transfers of wealth will occur on a large scale as the oldest Baby Boomers are reaching the end of their statistical life expectancy. That could certainly add some inflationary pressure to the economy over the next two decades that wasn't there for much of the past two decades. Suspect that will be more like the inflationary pressure that existed in the 1980s and 1990s, as the Baby Boomer generation hit the same stage in life (i.e., healthy inflation as economic activity grows). The economy really entered a lackluster phase (in terms of GDP growth) starting in the 2000s, as the oldest members of that generation began to retire and enter the draw-down phase of their economic lives.
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tl;dr
I am optimistic that, in the long term, the charts will continue to go up and to the right.
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