Stagg, I don't use stop limit orders because of how they work (as describe in many articles) For example, if WMC is trading at $15.30 and you put a stop limit at $15 and they announce an spo, the flood of sell orders may cause the market maker to move the bid ask right to $14.50 and your limit order may not get executed. Another risk is that there are algorithms called stop limit hunters that see where the limit orders are and manipulate the stock price down to take out the limits and then the stock bounces.back. A stock limit is just an order and there is no guarantee that it has to be executed if the stock gaps down.
But I'm happy to have others chime in.
stagg, the issue with stop loss orders is that in a decline the price could blow right past your order, and it will never get executed. We know that mREITs have to continually do spo's to raise money to grow their asset base and we know that they don't usually wait long when their stock starts to trade over a certain % over book value.
I like WMC and I pointed out the pros and cons of trying to trade this short term move. If I do decide to sell (and that decision is closely with today's move up) and they do an spo, I would buy back.
Plus, Friday is the jobs report day and if there is a stronger number, rates could pop higher and all interest sensitive stocks could get whacked.
So according to DH, the market is some kind of self-correcting mechanism that can sense overvaluation and that portfolio insurance or ETFs, leverage and credit default swaps and margin accounts would never turn a routine correction into a bigger decline, because the buyers would jump in. Yeah, just like the 2008 crash didn't stop until the Fed started QE and the SEC outlawed short selling on financial issues. Any even if a decline would produce a nice buying opportunity, does that mean everyone should keep buying now because at the worst the market will keep rising and a correction will only bring us back to the current level?
Most here have never experienced a secular bear market, but they have occurred. Why is it different this time?
WMC is up a little bit this morning and is approaching overbought territory with the RSI at 68. They (meaning the underwriters for the next spo) may try to push the stock up over$15.50 so that they can do an spo even though the next divy will be declared at the end of June and paid in July. There's no assurance that they will do an spo, but usually when an mREIT gets over book and they haven't done an spo for some time, they will pull the trigger to get some cash to invest in more assets. Higher rates will also give them more opportunities to invest in.
If you sell, the risk is that there is no spo and you miss the next divy. If you hold, you get the divy, but you the stock might decline some 4-6% for the offering. I don't know what I am doing yet, but am leaning toward selling if the price gets over $15.50ish.
Gambler, I sort of agree, but I think the Fed uses jawboning instead to try to curtail the stock market bubble. The real reason that they want to try to raise rates is so that they have room to cut them when the next recession occurs. They would rather not have to resort to QE to jumpstart the economy the next time that we have a recession. Remember, the Fed also likes to count the bull market as one of the limited successes that they had that was a result of their monetary policy (chiefly QE) even though the "wealth effect" mostly was to the benefit of the top 5% and was skewed heavily to the top 1% and above.
Gambler, I think you put to much credence in the Fed's jawboning. I do agree with you that they very much want to return to a normal rate structure just so that they can say that have returned to normalcy, but I doubt they even know how to make that happen in the current environment.
The market certainly has cooled a bit even with the small increase. Depending on which chart you look at, you can still see an upward sloping chart, or you can see one that is starting to go sideways or at least slow the rate of increase. The transports are clearly showing that the economy is not getting stronger. As some commentators have stated, the bull market does not have to end in a bang, but it could go out with a whimper.
It's amazing what some people post without seeing the irony of what they write. "People see what they want" including focusing only on a 1 year chart of the Dow. Why focus only on a 1 year chart and not the last 7 years? If one believes that Treasuries are in a bubble, it is hard to believe that stocks would be safe considering that most of the rise in stock prices have come from companies issuing debt to buyback their stock. If rates should rise from a decline in stock prices, it's hard to imagine the economy and the stock market not being affected. Pension funds would use such a rate rise to sell some stocks and move to bonds at those higher rates, since the economy would likely slow if rates rose and corporate profits would also be affected from any slowdown.
The fact is that in our history there comes a point when corporate profits and corporate margins peak and stocks become overvalued. That doesn't mean we get a crash or a financial crisis, but a regular old-fashioned bear market, like we get every 7-10 years. Those insisting that this time is different seem to be seeing what they want to see.
Pale, I'm just looking at the chart. It could still start to find a bottom as the RSI is now oversold at 25, but I might wait until they announce their next dividend come July just to be sure there is nothing going on with the fundamentals.
First, the downgrade came from Goldman, enough said. I would pay more attention to the ratings of Credit Suisse or Wells. I have been out of TRGP since the beginning of the year because I thought they might struggle to keep up the dividend growth and that the street would punish it for missing, but I was a tad too hasty in getting out an missed the rebound. That being said, I might become more interested as it approaches the high 80's. That should be the bottom. There will always be the possibility that someone makes them an offer or that they buy NGLS to keep this from sinking too far.
No, Ed still aim, aim, aim, aim before I shoot on O. Looks like it is holding the $46 level so that might mark a base. Nothing is really grabbing my interest but Factoids has a new article out on health care stocks with some dividend grower names to check out.
Any one looking at EVEP? Over $500mm coming in the door in July or about $11 per share (there will be tax consequences to unitholders for the gain from the sale of their midstream unit).
SC4, I have a bunch of closed end munis. I try to stick to the ones with the largest discounts to NAV. You can find the symbol for the NAV by inserting an x before and after the stock symbol. The WSJ also posts the discounts and there is a nuveen site with that info. There are some Van Kampen funds trading at close to 10% discounts and yielding in the mid 6's.
As the 10 year has moved up in yield, many of the munis have sold off some, broken through their 50 dma and approaching their 200 dma. There has also been much new supply of muni bonds hurting prices. I have been a proponent that the Fed can't raise the Fed funds target because of the amount of excess reserves still in the system and that the economy will weaken, but today I saw a WSJ story on increased bank loans to business so perhaps the economy may get stronger after all.
SC4, I own ETE from way back, but I also added some in the $50's. I think I saw that one of the brokerage firms had a $95 target on it. You could do like Kee does and own both ETE and ETP, one for growth and one for income, but your total return will likely be higher with ETE. Also, you never know when ETE will take another run at TRGP and NGLS.
I've been in this since it was spun out and while they did raise the distribution over time before the recent cut, the stock price declined from $28 to under 20 even before the industry cratered starting last October. So I wouldn't exactly say that the PPS was maintained. The chart definitely has a downward slope. Perhaps it's time to invest in those reading glasses.
I would not call it a red flag. Partnership taxation is very complex. As I recall from a long time ago, limited partners have an "inside basis" and an "outside basis" or a basis attributable to the assets of the partnership and a basis attributable to the partnership as a whole, so one's individual gain or loss will depend on when they owned their units and at what price.
There might be more general tax discussion in one of their original prospectuses.
What? Increased their dividend and maintained their PPS? So that cut from $2.40 to $1.30 is a raise and I'm just misreading it?? That decrease in share price from $28 to $7 was a split that I missed?
Just the same, would you believe anything that they projected? Remember their projection when they filed their SEC registration statement in connection with the spin off and then 2 weeks later reduced their distribution. Like they didn't know ARP was going to be forced to cut their distribution.
Bayman, I might wait on WMC as it is nearing its highs and the risk of an spo increases. It's been some time since their last spo, which I think was last year and the book at quarter end was $14.55ish.
That's a good question and probably worth calling them. I thought I might have read on some other boards something about unitholders on the last day of the month are attributed the income and gain for that entire month.
It sounds like you are trying to avoid the gain that will be attributed to unitholders. I believe the gain will be reported as a long term capital gain, in which case it should be reported in the appropriate box on the K-1 and flow into your Schedule D where it will be taxed at your long term cap gains rate.
The risk of trying to avoid the tax hit from this sale is that they announce an acquisition with the proceeds after you sell your units and the stock price pops by more than the tax hit you would have avoided.