No--My wife and I don't want to move to Nj. We live here because we want to . Sometimes its tough, but it is healthier. We moved here 26 years ago and my wife had congestion from the air pollution in NY. That stopped as soon as we moved here. When we visit our daughter who lives in NY she starts coughing again.
Using Nat gas up here is an impossibility and would be more expensive because there are no pipelines bringing gas to our area. the closest gas line is about 100 or more miles away and its not coming in my direction. In fact its not coming at all. We could use propane--But that costs more than Oil and I would have to buy a new heating system and any appliances I wanted to change
I haven't plowed my driveway since we moved here and I really don't plan on starting now at my age.
You don't realize-Your suggestion on my cutting my expenses are to make me fit into the government's statistics that are pure fantasy Dollar cost of RE taxes are partially dependant on potential Dollars that could be received on a sale. If you have a house thats worth $500K or $1 M you should pay more taxes than I do, because my house isn't worth anywhere near that on the open market.
Yes we have more snow here than you do. We have a roof rake, to pull the snow down from the roof so it doesn't get too heavy and collapse the roof. We let the snow slide off the garage and it piles up on the sides to a point where sometimes the piles of snow on the ground meets the snow sliding off the roof so it is like a giant igloo.
Everyone lives where they want and either they adapt or they move
Check your credit card statements and checking account. - You talk about the utilities that went down- Well mine went up here in Vermont. Real Estate taxes were just reassessed 40% higher higher for a house thats worth less last year. Gas prices we know are way up. They just raised the gas tax about .07 a gallon a few months ago. Food prices are in no mans land. W 7 S used to cost about $40 to $50 a quarter. Now they are about $160 to $180 a quarter. Home heating oil costs about $700 to $900 a month in the winter. Used to be about $350 a month. My electric bill is about $210 a month. Another factor to consider is that to earn the extra money to keep up with my costs has raised my income and that requires higher tax payments. Taxes are a large portion of the equation.
You said----- Going by the government figures for 2004-2014 (current) the average rate of inflation has been 2.34%. Strung out over 10 years, for every $1.00 you spent back then you would be spending $1.29 compounded at today's numbers. Everyone has their own spending habits and it looks like your's increased greatly in retirement.--------Thats your problem- Would you expect the govt to give you true figures.You are going by the gov't figures and accepting them as gospel fact. And because my ACTUAL FIGURES are almost double the gov't statistics you are saying that my spending habits have increased greatly in retirement.
It costs me $38 to plow my driveway. Sometimes its twice in one day. I've had bills for $400 or $500 per month in the heart of winter. Once or twice a winter I have to hire a guy with a bucket loader and dump truck to dispose of the accumulated snow to make room for the next snow storm that's coming in a few days if not sooner. Thats a $100 or $150.
My expenses are what they are because thats what it costs me to live here in Vermont. And thats not what the gov't says it is in their statistics.
I agree with what you said--except you understated the realities of life when you said----
---What little inflation we've had over the past few years would not have been covered by those investments. What happens when inflation goes up to 3-4%, or higher.-------
My wife and I are retired 11 years and I can give you the following info on our spending between then and now.
For every $1 we spent in 2003 (the year of our retirement) we spent $2.29 in 2013. Thats not "what little inflation we had" THAT'S A LOT OF INFLATION. And people better prepare for 20 or 30 years of retirement because if you are alive one day after you spent the last of your money you won't be a happy camper.
What people don't realize is the long retirement requires continued earning by your money if you aren't working. And with expenses rising you will need more and more money and earnings. And that will mean more and more taxes to be paid by the continuing earnings increases. At age 70 1/2 you will be forced start taking IRA RMD's which will bump you up into higher brackets requiring more taxes on for example 85% of your SS less deductions because of higher AGI and if you are unlucky, being subject to the AMT.
The IRA was sold to the public with a tax deduction up front and a promise of lower tax rates at retirement when you will earn less. Well --it don't work that way.
If for example ---If I spent $50K for total expenses in 2003 and in 2013 $114.5 K . Somewhere I had to generate that additional income and that income is taxed, so a part of that isn't even spent on me, It's given to the government.
Today people better start doing some serious planning about their future.
Also, trading creates a lot of additional transaction costs, and a lot of taxes on short term trades, and a lot of work finding the investments and then selling them to look for others to replace the income you give up when selling. Personally, I live off my investments and I rarely trade.
You gloss over the most important part of your plan. The part where you say --"and no disasters to derail our plan" Even with "a great wife" and "good planning" sometimes the most important part is to have luck to avoid sickness-disabilities and even death of a loved one that seem to creep into many people's lives to derail or delay plans.
How someone deals with disasters in their everyday life is more important .
Martha: I'll bet that you aren't 70 1/2 and are required to take RMD's out of tour IRA every year. You will be forced to sell an ever increasing percentage of your IRA securities each year and pay taxes on the RMD's. If you sell MLP's in the IRA's to get the cash to withdraw from the IRA's you will probably be singing a different tune.
----So, to ask the question another way, what do you all think of the long-term future of BDCs?-----
Let me ask the question differently-- How long have you been investing in the market? And truthfully how good or bad have you done in that time frame? Do you understand the Tax Laws? How old are you, and what are your goals?
My wife and I are retired for almost 11 years (July 1 2003) I can give you a few tidbits to get you thinking.
1) You will be spending more in retirement than while you were working- So you need to accumulate enough money and keep it growing and not depleting the principal because modern medical science will keep you living a lot longer than before and the longer you live without working the more money you will need coming in without working to pay the increasing taxes in addition to and before your needs.
2) For every $1 we spent in 2003 we spent $2.29 in 2013. Take a guess what it will cost in 2023
3) If you are successful in the market your biggest expense will probably on taxes on the RMD's from an IRA
4) Roth IRA's should be used wherever possible as opposed to regular IRA's because of the current tax laws. But don't be surprised if that is changed down the road, in a similar fashion to when they put a means test on taxability on SS payments.
There is a lot of decisions to make and everyone is different because their abilities to create money is different--even with the same stock sometimes. A good BDC example is ACAS with the financial meltdown from 2008 to currently. Some investors lost everything they had, others are struggling, still losing after these six years. Still others made a million or millions of dollars and are poised to make millions more going forward. So the real answer is how good are you and not how good is the long-term future of BDC's?
Sometimes trying to outthink the market is counterproductive.
The decisions you have to make are--
1) Whether to buy PSEC in the first place
2) Whether you want to maximize your position by buying more and/or dripping the dividends over a long term period.
3) If the answers to #1 and #2 are positive you would probably be better off by dripping the dividends. No one can consistantly pick the bottom price to buy and you will miss dividends by not owning the dripped shares on a regular basis.
it might be more advantageous for the price to remain where it is now for the next 2 days until all those that are dripping the dividends get the additional shares locked in at these low prices. low prices mean more shares for the dividend dollars arriving tomorrow and/or friday. Since I'm buying, i prefer a lower price per share. Makes the dividend dollars stretch and get more shares and/or fractions.
I prefer to sit back and relax and make the extra bucks by accumulating the dividends into additional shares with out the transaction costs or potential extra taxes due on the sales and continually hoping I am doing it right.. Now I do nothing and let it be right by itself.
Much less stress-Much more profit-Much less to do- It's almost time for my afternoon nap.
Bigbear: The bright side of "being underwater" is it gives you the opportunity to add additional shares and reduce your overall cost basis, and even more important accumulate more shares and receive more monthly distributions. And if you have the ability to drip the dividends each month you can continue to increase the share count and dividends quicker.
The opportunity appears to be here at this time.
Also don't forget we pay in advance for the shares. They get them for free with no up-front money. In fact there is no money cost at all as long as they don't exercise them. I believe it would be foolish on their part to exercise the options pay the money and taxes and have to sell a big chunk of the shares to pay their costs of the shares and then have money in the game just like us. They if the shares drop in price--They lose money because they paid for them. And they have no advantage like they have now.
Also don't forget in 2008-9 during the financial collapse their options went way under water--But they had no money invested on them. So the cut them into strips and used them for toilet paper. Then management issued themselves mountains of new options at about $0.50 to give them the incentive to keep working for the company to survive and to make themselves Millions and Millions of dollars on the new free options.
I don't remember them handing you or me any Zero cost virtually free options. Don't forget they made Malon Wilkus $7,000,000 margin call go away with new virtually free shares.
I won't go so far as to say they created the crises of 2008-9 deliberately, But I will say that they figured out a way to ENRICH THEMSELVES ABOVE AND BEYOND THEIR WILDEST DREAMS after they saw the chaos that occured
A regular monthly $0.21 distribution was announced after the market closing today.
X-div is May 29, 2014 and distribution is payable on June 13,2014.
If one has the ability to drip the distributions, the investment can compound in value faster over time.
Did you mean $20 NAV or $20 Share Price? At the current $14.50 SP they already have $325 M profit with an $8 Average strike price.
Thanks Jeffy and Bellard for the in-depth answers to my question. I did more digging and found that ARR has sold the bulk of their 25 and 30 year mortgages to buy 15 year securities. Obviously they took a big hit on prices in doing so but the shorter term securities should be less volatile in a rising interest rate enviornment going forward. It appears to be stabilizing in the $4+ level and hopefully it might make a good entry point for my grandson. Once again, thanks for your time and effort.
Good luck and best regards
We have gone from a known entity (The share buyback) to an unknown entity (Possible restructuring) to seeking advice from a known Self serving hedge fund (Goldman Sachs) Thats similar to Goldilocks asking the Big Bad Wolf for directions to go to her Grandmothers house.
And the stock is trading down. Does anyone wonder why?
Let's everybody face facts. Some people lost a lot of money here. Some people bought after the meltdown and made a lot of money here.
However ACAS stock is still currently trading at a 70% discount to pre crises days in 2008 while the overall market is trading at new all time highs.
Management gave us a plan over 3 years ago that was working for our benefit. And now they stopped the working plan and hired Goldman Sachs to tell them what to do.
I also knew an older man. He was my father-in-law and I remember back in 1960 he owned 50 shares of Disney that he bought at $28 and it went up to $35 giving him a gain of about $350 and he was so afraid of losing that $350 that he wanted to sell. He talked to me about it and I suggested he hold. But he was so nervous that he finally did sell and saved his $350 gain.
That 50 shares from 1960 are today 19,200 shares with a market value of $1,543,488 after dividends over all those years.
Same story-different stock-different ending
Ribi & Donedealer;
Yes why not do both? I would like to know--- Why stop the buy-back when it was dragging the price up to catch an ever increasing NAV without a tax liability. The reason it didn't reach the increasing NAV was because of the traders that kept selling to skim off short term profits. IMHO Management should have increased the share buy back with all available funds. They were making money with free options. We were making money with the price chasing the NAV.
The only ones that probably weren't happy were management's oversized ego's. I wonder how much it will cost the shareholders to pay Goldman Sachs to come up with a n opinion that will coincide with management's current GAME plan.
And if this doesn't work, what's next Malon? Goldman Sachs didn't do too well in the 2008-9 meltdown when they had to run to Warren Buffett for a $5 billion bailout loan Lets get an opinion from Lehman Brothers or Bear Stearns. Somehow we survived better then these guys--WHY ARE WE PAYING GOLDMAN SACHS FOR THEIR EXPERTISE?