Not sure I agree with that. Here's the most recent stats of the S&P. Obama in 2009 was 26.5% but of course that came after the huge crisis in 2008 and the Fed's QE. Bush in 2001 was -11.9% and that was the first recession after the Clinton years. Clinton in 1993 was 10% and that was helped by the end of the savings and loan crisis. Bush I in 1989 was 31.5%. Reagan in 1981 was -4.9%. Carter in 1977 was -7.2%. So 3 out of 6 in modern times were up and 3 down.
Of course, this covers the modern times when our debt expanded by 20 times and inflation went from double digits to less than 2% and while the demographic trends put the baby boomers in their peak earnings.
One can understand why the markets sometimes react positively to a new president because people are hopeful and ready for a change and that optimism spills over into more spending etc. But several commentators have also noted that when the country is getting more pessimistic and hostile, that can have a negative effect on markets. I don't think this next election is going to be a uniting experience as both candidates are polarizing in their own ways.
I always wished I invested in MO, but couldn't get over the fact that their product killed so many people. I'm far from one of those investors who only invests in do-gooder companies, and one can make arguments against investing in a whole host of companies from defense companies to liquor to fast food and soft drinks, but MO is just one that I couldn't get over.
Gambler, I get what your saying about SFL. Since 2013, it has pretty much stayed between 11 and 16, give or take. And it really doesn't spend too much time in the 16 area.
I think now you and others are starting to get a feel for the know-it-all DH and why I think he is a jerk. He just can't help telling everyone when they are wrong while telling everyone how right he always is and how successful he is at investing. He's not really here to discuss others' views (despite his tribute to Shark) but rather to use it as an opportunity to blow his own horn. Probably blows himself too.
I have had this running debate with some posters on other boards as to whether to take a profit in a stock that could be a core holding because you like their business. It can help to look at long term charts to see if the stock will keep growing. MPW topped out twice around this level in 2013 and 2015. The good earnings report will prompt some new recommendations and some articles on s.a., so that could keep the momo going. I guess you have to figure out what your tax hit will be and what your breakeven price would be to re-enter the trade after you sold it (unless you have losses to offset). Assuming you had no losses to offset and your tax hit was 25%, your breakeven would be about $13 and while MPW could pull back some to work off overbought conditions, it could also just keep going up. Looks like there is support around $13.50, so it might never pull back to that breakeven level. Isn't one of the first rules of investing to let your winners run?
I bought GDO (the fund that invests in European debt) to take advantage of the ECB buying corporate debt and DPG (the global utility fund selling at a discount to NAV). I also added the Fidelity biotech fund a few weeks ago. While I am still bearish, the market can always find a reason to ignore fundamentals and the economy and go up, and in fact, at the end of previous bull markets, there is typically a blow off top.
I would avoid TVIX. On NYMT, their earnings were down and in their conference call they hinted that they may change their dividend policy, which could mean that a reduction is coming. While the market could react positively to a "right-sizing" of the divy to match their core earnings, I would think there's a better chance of a sell off which would give you a chance to buy it lower.
Thanks, but we don't care what you say you do because there is no way to prove it on a yahee message board.
And here is the post from Mar 16:
"Ok, in at $5.75. Also sold some low yield stocks that had reached RSI70 on the one year chart. Should be interesting from here."
Hey, we all can make a poor trade and then see the light of our mistake, but DH is almost Hillaryesque. He will now beat this drum on TVIX and people will think he was bearish on it from the beginning and forgot that he once bought it.
Didn't DH succumb to Gambler's recommendation and buy TVIX? I guess he has since sold it, but funny how he's now the expert on TVIX, but that didn't stop him from gambling on it.
JK, I agree and disagree. I agree that the charts look bad for most of the stock market indices, but we know that the charts can sometimes be fickle and all support or resistance can give way under the right circumstances (like the Fed announcing QE4). Some argue that this is a reason to ignore charts altogether, but no one can predict when extraordinary events like QE will occur, so the charts are better indicators of where the buying and selling will most likely occur. Of course the slow down in the averages is due to the fact that the Fed's balance sheet has been going sideways for the most part as most of QE has stopped (except for the reinvestment of principal), but as Prof Poole (former head of the St. Louis Fed) used to tell us, monetary policy works with a lag.
I disagree about the Fed pumping up the bond market (even though they own a huge portion of the outstanding debt) as I think long rates are staying low (the 10 year has been stuck below 2%) because of slowing growth. Also, there is a great demand for Treasuries by banks and finance companies that engage in hedging, and with less Treasury collateral available (because the Fed owns so much of it) that causes the prices to remain up even as we continue to run deficits.
I don't think one can say with a straight face that value/income stocks have been exactly unloved as many of the traditional income stocks like utilities and some equity REITS are trading at lower yields and higher p/e's than they historically have.
Stagg, it is good to have rules, but the beauty is in the eye of the beholder and you view them the way you want, not necessarily how they really are.
1. You claim to be an investor, but in reality, you trade your positions as much as anyone. You have had to sell several losers (there's nothing wrong with that). Your longest term holding is probably SFL, but aside from that, you don't have many long term holdings.
2. Your claim to have great research skills, but in essence you are just bottom fishing oversold high yield stocks without any appreciation for how those dividends are generated. Look at your investment in AVACF which is down again and for which you were recommending in the mid teens when the spot rate was clearly going down. We all make mistakes in research because none of us has access to 100% of the info.
3. Total Returns are just a rearview mirror. While some stocks have had great consistent performance over long periods, they usually aren't high yield stocks (SFL seems to be an exception).
Bob, it's really the same thing. You're assuming one has time between buying a stock to observe a change in business or market conditions to make them want to sell. Look at some recent experiences of some posters on this board: people are gambling on earnings and divy announcements and then the announcement is negative and the stock declines. There's no real time to sell without incurring a loss. Some have chased stocks with RSI's in clear overbought territory. Some just buy a stock like AVACF whose business is clearly still declining, but they made the wrong bet that it was going to bottom.
DH says quite correctly "Companies don't stop dividends because their stocks drop.. they stop them when their business fundamentals change."
That is the rub. Which companies are going to be the ones that stop paying their dividends? Many posters on this board are in the search for above average yield and some for more risky high yields. We have seen all too many times companies and whole sectors that have stopped paying dividends. Most of us got injured in the energy collapse, whether you owned MLPs that cut divies or things like SDRL. While BAC is still paying a divy, it's nowhere close to what it was before the crisis. I'm sure there are others.
If it was "so simple" then why have so many of us made mistakes buying stocks that cut their divies (including DH)?
Investing is about taking risks. One of the goals of this board should be to help people take the appropriate risks.
Search Wells Fargo Business Developement Company components. In google, it's a few links down the page. I tried to paste the components here:
Ares Capital Corp ARCC 10.31
American Capital Ltd ACAS 10.31
Prospect Capital Corp PSEC 9.95
Fs Investment Corp FSIC 9.15
Main Street Capital Corp MAIN 6.07
Apollo Investment Corp AINV 5.13
TPG Specialty Lending Inc TSLX 3.70
Golub Capital BDC Inc GBDC 3.50
Hercules Technology Growth Capital Inc HTGC 3.33
Solar Capital Ltd SLRC 2.96
TCP Capital Corp TCPC 2.91
Fifth Street Finance Corp FSC 2.91
New Mountain Finance Corp NMFC 2.77
Triangle Capital Corp TCAP 2.59
Goldman Sachs Bdc Closed End Fund GSBD 2.38
BlackRock Kelso Capital Corp BKCC 2.33
PennantPark Investment Corp PNNT 1.75
Medley Capital Corp MCC 1.52
THL Credit Inc TCRD 1.37
PennantPark Floating Rate Capital Ltd PFLT 1.22
TICC Capital Corp TICC 1.04
Fidus Investment Corp FDUS 0.96
Capital Southwest Corp CSWC 0.85
Fifth Street Senior Floating Rate Corp FSFR 0.83
Gladstone Investment Corp GAIN 0.81
Capitala Finance Corp CPTA 0.80
Monroe Capital Corp MRCC 0.73
Triplepoint Venture Growth BDC Corp TPVG 0.70
Gladstone Capital Corp GLAD 0.67
Garrison Capital Inc. GARS 0.64
Medallion Financial Corp TAXI 0.63
Newtek Business Services Corp NEWT 0.60
MVC Capital Inc MVC 0.56
Solar Senior Capital Ltd SUNS 0.55
Horizon Technology Finance Corp HRZN 0.51
Stellus Capital Investment Corp SCM 0.49
Alcentra Capital Corp ABDC 0.49
KCAP Financial Inc KCAP 0.46
American Capital Senior Floating Closed Fund ACSF 0.41
OFS Capital Corp OFS 0.36
CM Finance Inc CMFN 0.27
WhiteHorse Finance Inc WHF 0.25
Oha Investment Corp
And to think you could have sold them at $130 when I first started debating with you. We all let our pride get in the way of making better investment decisions, and sometimes opposing views on these message boards make us dig our heels in further.
DH still doesn't understand (after all these years) the myth of the money on the sidelines. At all times, stocks are owned by someone. When institutions sell, someone has to buy what they are selling. The issue is at what price is the selling done. The institutions could sell (or sell overvalued names) and wait to get back in when the market is much lower (after all the margin calls are settled), which is what they did in 2009. But that doesn't mean that the market has to stay at current high levels. No one is arguing that the market will stay down forever. The argument is that it will fall until it reaches a better value (or when the Fed, like the Japanese central bank, comes in to buy up stocks in order to keep confidence up).
As for inflows into 401k's, DH must not understand demographics and the tidal wave of money that is set to come out of 401ks for the baby boomers. As JK pointed out yesterday, the younger generation is underemployed and has less participation in 401k's and pensions, yet the younger generation has higher debt costs for school and other costs like housing. The older generation is living longer and spending their money on assisted living and medical costs. The younger generation may inherit wealth from their parents or grandparents (if they don't spend it first) and maybe that money finds its way back into the market.
Again, if DH was so confident in the market, then why isn't he 100% invested, and the reason is because he knows it is overvalued and the risk of it declining is high and growing. He says it hit a double bottom in March, and yet he didn't go 100% fully invested then. Why not? Sometimes people like to talk a good game, but when it comes to betting with their own chips, they are more risk averse than how they talk.
I love getting to point out the mistakes DH keeps making in his arguments. First, DH doesn't seem to realize that it is an entirely new game. This isn't the same game that Warren Buffet is used to playing. Warren never had to deal with negative interest rates or HFT's or computer algos until recently. If the only thing that matters is corporate earnings, then why is the market up when earnings have declined for 3 quarters in a row and the p/e is 23 and near all-time highs? Why does the market go up when the central banks issue some statement about "doing what it takes" on the same date that earnings or economic news is negative? DH speaks of the long term but apparently he doesn't remember the 1930's. Sure we came out of that with a little war or two, but there was a decade of stock market underperformance.
DH does acknowledge the problem with the national debt, but he's confident it will be dealt with. The way it is going to be dealt with is the way Japan is dealing with theirs, which is to have the central bank buy up all of the ETFs and stocks to keep the market up and hope that they eventually can generate enough inflation to inflate the debt away. Still hasn't worked, but there are those, like Krugman, who think we just need to do a little more.
The proof is in the pudding. The Fed ended QE (except for the reinvestment of principal) in late late 2014 and shortly after that the US stock market went sideways while corporate earnings went down. Where's the correlation with earnings again?
Finally, if DH was so confident, why was so much of his money in TIPs and cash. He likes to talk big that he fully believed in the stock market recovery, then why didn't he put 100% in the S&P, or even triple positive ETFs.