September 28, 2014

Funds on Clearance as Bill Gross Leaves PIMCO

Incase you don't know famous bond guru Bill Gross quit his position at PIMCO a major investment firm. This is the news story on his move. He left for Janus. As this news story was being digested lots of PIMCO funds began crashing as people sold. This really hit the closed-end funds the hardest. I was looking through the daily largest percentage losers on the NYSE. I found atleast 3 down almost double digits. Out of the ones I researched a couple stood out.

The first one is the PIMCO Corporate Income and Opportunity (PTY).  It traded down 6% Friday to 17.18. It isn't below net asset value (NAV) yet but still has a 7% yield now.

The second one is the PIMCO Income Strategy Fund (PFN). It lost 4% and is now at 10.31 which is a 5% discount to its NAV. It's sporting an 8% yield.

The other funds I looked at were heavy into mortgage related securities so I took a pass on those. I read that a lot of the PIMCO funds have traded at steep premiums to net asset value over the years so seeing some of these fall below NAV is a good opportunity.

September 24, 2014

What I've Been Doing And Looking At

Greetings from Bull Market USA. The bull market capital of the world. Where low interest rates reign forever! Wheeee! In all seriousness however, I don't think Japan's lost decade has much on our QE. We've done better in my opinion. A few years ago everyone was predicting something along the lines of a Japan post asset bubble collapse stagnation. That is what they had in the 90s. Our true collapse was really in the wake of the tech bubble bursting in the year 2000. Atleast when it comes to the economy and equites. Yes, that was the secular stock market bubble that had been going since the early 80s. So I don't think comparing Japan and the USA was really apples to apples anyway. The other expectation Austrian economists had was serious inflation following QE. There was definitely some inflation as evident commodity prices but the dollar inflation seems gone now. Just look at the gold price. Gold and the dollar are always completely inverse. Gold is still crashing. I'm not sure what is going to happen from here.

History would say that if rates stay low for a long period of time there will be significant inflation ala the 70s inflation. Only Paul Volcker could stop it when he effectively let the market set rates at 20%. Could you imagine that today? So far things are going pretty well with the macro here. Doesn't hurt to be hedged though.

To me a good hedge on low rates is to be long precious metals.  I actually bought some more silver bullion recently around $21 an ounce. I got some Engelhard Silver Rounds on I've always been pleased with my orders with them and I recommend them. They are one of the top 2 respected online metals dealers. So far I have Silver Eagles and the Engelhards. I'd like to get some gold Krugerrands soon and some Palladium.

I longed some emerging Asian stocks via the Fidelity Emerging Asia (FSEAX) mutual fund in my Roth IRA. I like the Goldman Sachs Emerging Debt Fund (GSDAX) also and have it on my watchlist along with the I-Shares International Real Estate Fund (IFGL). All of these funds have low expense ratios and similar or better performance vs their benchmark index.

High Yield Stocks
I also have some high yield equites on my watchlist. Whether stuff keeps falling or not these look good to me too. The first is my favorite REIT. It's not one of those sketchy adjustable rate mortgage REIT's or anything like that. Those mortgage REITs are going to blow up when rates go up. There's probably a reason they are all yielding 9 to 11%. I like these simple ones.

One like Sun Communities (SUI) which is just mobile homes and RV's that have great cash flow. Sun has increased the dividend consistently and currently is yielding around 5%. Shareholder equity has been growing the past couple years along with revenue and earnings. The chart is a breakout too.

UMH Properties (UMH) is the second REIT. UMH is yielding 7% and has a consistently rising dividend history along with revenue and earnings. This one has a smaller market cap at just $215 million.

Another high yield stock I like is Energy Transfer Partners (ETP). This is a diversified natural gas pipeline company that also sells gasoline and runs retail convenience stores. ETP's current dividend yield is 6%. The PEG ratio (price to earnings growth) is a very nice .69.