CASSANDRA'S HYPOTHESIS

In Greek mythology, Cassandra was the daughter of King Priam and Queen Hecuba of Troy. Her beauty caused Apollo to grant her the gift of prophecy. However, when she did not return his love, Apollo placed a curse on her so that no one would ever believe her predictions. In any case, Cassandra sees a lot of controversial things happening during the next few years. As Cassandra so aptly says...."Forewarned is Forearmed."

This Day in History

Monday, July 28, 2014

What Single Page Of An Investment Book Should You Read? | Seeking Alpha

When the topic of investing comes up in conversation, I'm often asked to recommend an investment book. Since I'm biased toward the value investing philosophy, one of Benjamin Graham's books always comes to mind. But what if I were to tweak the question a bit and not recommend an investment book, but only a particular page of an investment book? What single page above all other pages from a book on investing would I recommend.

Friday, July 25, 2014

Should You Invest In UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN? ??????? Seeking Alpha

Summary

  • ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN pays a "too-good-to-be-true" dividend.
  • Is MORL overly leveraged and too risky that you should avoid even with such a tempting dividend?
  • This article analyzes the performance of MORL since its inception and compares it to its underlying securities to show how its volatility risk and return stack up against its components.
UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (NYSEARCA:MORL) is thought to be a "too good to be true" investment, with extremely high dividend yield. Should you avoid MORL even if it can provide you with a stellar yield? At 20% dividend yield, if the stock price stays the same, it takes only three and a half years to recover all of the initial investment. It is indeed a temptation.

Thursday, July 24, 2014

Equity CEFs: New Kids On The Block | Seeking Alpha

Summary

  • New issue Closed-End funds (CEFs) can be expensive depending on how they come to market. CEF IPOs typically start at a premium whereas spin-offs can start at Net Asset Value.
  • Two new issue CEFs have recently come to market, one in the popular energy MLP space and one in the not-so-popular small & mid cap value space.
  • Though no one can be sure which sectors which will outperform going forward, just based on CEF premium and discount valuations, we can come to some investment conclusions.

Wednesday, July 23, 2014

ETF Deathwatch For July 2014: List Count Back Above 300 | Seeking Alpha

ETF Deathwatch membership rolls crept back above 300 this month. Thirteen additions and six removals combined to grow the list from 295 to 302. No closures occurred in June, and therefore all products coming off the list were due to health improvements.

Tuesday, July 22, 2014

15 Clean Energy YieldCos: Company Structure | Seeking Alpha

In the first article of this survey of yield cos, I looked at the possible reasons for the seemingly endless enthusiasm for US-listed clean energy yield cos. Here, I'll take a look at how these yield cos are constructed, and why investors should prefer one structure over another.

Monday, July 21, 2014

Closed-End Fund Advisors: Second Quarter 2014 CEF Review And Outlook | Seeking Alpha

Summary

  • Traditional CEFs Ended The Quarter with 585 Funds Totaling $270B with an average discount of -6.1% and yield of 6.8%.
  • BDC CEFs Ended The Quarter with 50 Funds Totaling $32B with an average discount of -0.17% and yield of 9.4%.
  • There Were 2 Traditional CEF IPOs and 2 BDC CEF IPOs During the Quarter: Raising $810M in Combined Assets.

Friday, July 18, 2014

Do Dividend Aristocrats And The Permanent Portfolio Make The Perfect Match? | Seeking Alpha

Summary

  • Find out if Dividend Aristocrats really improve the risk and return of the Permanent Portfolio.
  • The Permanent Portfolio was created by a former US presidential candidate and has a fantastic 4+ decade record.
  • The cash portion of the Permanent Portfolio can be viewed as inverse leverage.
  • Does volatility weighting assets improve Permanent Portfolio Performance?

Wednesday, July 16, 2014

Retirement: Are You Exposed To False Diversification Risk? | Seeking Alpha

Summary

  • Many retirement plans suffer from “false diversification” and could perform much worse than expected in a bear market.
  • A well constructed portfolio plan may be lacking two additional and crucial steps to protect your net worth in the next bear market.
  • Specific examples of possible risk exposure are provided.
  • Additional steps to improve your odds of long-term retirement planning success.

Monday, July 14, 2014

REM: Exposure To mREITs Without Having To Choose Just One - Seeking Alpha

Summary

  • What are mREITs? How do they function? Why should a dividend income investor want exposure to them?
  • The basics and constituent parts of REM.
  • Why REM ETF is a better choice than any single mREIT company from this REIT class and how REM solves the single biggest problem for the investor in mREITs.
  • Three strategies to employ to buy REM ETF, gain dividend income and further strengthen an income portfolio.
  • While the future as always is uncertain, dividend income investors should consider the REM ETF for high dividend yield and exposure to mREITs.

Sunday, July 13, 2014

Need 7-8% Yields In Retirement? Build Your Income Portfolio With Closed-End Funds | Seeking Alpha

Summary

  • Many retirees have income needs that exceed the 2-4% one might expect from dividend stocks.
  • Higher income yields can be had from several other asset classes including MLPs, BDCs, REITs and high-yield bonds.
  • An alternative -- or complement -- to these investment vehicles is a diversified portfolio of closed end funds which can provide income in excess of 7-8%.
  • An aspect of closed end funds that differentiates them from other investment choices is that they trade at discounts or premiums to NAV. I discuss some implications of this.

Saturday, July 12, 2014

What Does PIMCO's Bill Gross Think Of REITs and interest rates? | Seeking Alpha

Summary

  • Bill Gross is one of the most prominent assets mangers in history, overseeing nearly $2 trillion in mainly fixed income assets.
  • Under his rule, PIMCO has recently made public its outlook on future interest rate levels in the US, which is very different than what current market prices imply.
  • If Bill Gross is correct in his outlook, while the markets’ expectations will turn out wrong, all financial assets will be affected, with substantial potential pricing implications over time.
  • This will also affect REITs, which will potentially outperform, relative to current implied market expectations, since these imply higher rates and financing costs, than implied by Gross’s view.
  • Bill Gross may be right or maybe wrong in his outlook. Judging by PIMCO’s long term relative success, he has been more often right than wrong.

Thursday, July 10, 2014

Is Dow 17,000 Dangerously High???? This Comprehensive Review May Surprise You! | Seeking Alpha

Summary

  • The Dow Jones Industrial Average is not overvalued at 17,000.
  • Investors are best served when they understand that there is a significant difference between price and value.
  • Half of the 30 Dow Jones components are fairly valued.

Monday, July 7, 2014

Inside Forbes: Investment Guide 2014 - Top 20 All Time Gurus | Seeking Alpha

The Forbes special 2014 Investment Guide features the smartest plays from the world's best market minds as well as the best buy ETFs which will save you thousands of dollars over decades, and twelve ways to avoid the 3.8% ObamaCare tax. We distilled the timeless wisdom of twenty of the world's smartest investment gurus, including Carl Icahn, Warren Buffett, Sam Zell, David Tepper, and John C. Bogle, into specific suggestions for stocks, bonds, and funds to buy today.

Saturday, July 5, 2014

Is It A Good Time To Buy MLPs? | Seeking Alpha

Summary

  • Current yields are a big red flag.
  • Current Price/DCF ratios are a big red flag.
  • Other metrics indicate MLPs are not overvalued.
Is it a good time to buy MLPs (or Master Limited Partnerships) like Enterprise Products Partners L.P. (EPD) or Kinder Morgan Energy Partners, L.P. (KMP)? I believe that the answer is a context sensitive "it depends," and will list some of those contexts. The quick and dirty answer is "no - it is not a good time to buy." But there are metrics one can use to argue the opposite. It is my hope and expectation that readers will join the conversation in the comment section.

Thursday, July 3, 2014

China Takes Step Toward Freeing Currency from State Control - NYTimes.com

China has permitted banks to freely set their own exchange rates for the renminbi against the dollar in over-the-counter transactions — another step toward freeing the exchange rate from government control.
Banks were previously required to price the exchange rate they offered clients within 3 percent in either direction of the Chinese central bank’s midpoint on a given day.

The Two Century Dollar Short | Seeking Alpha

Any trader will tell you the trend is your friend and the overwhelming direction for the U.S. dollar for the last 220 years has been down.   Our first Treasury Secretary, Alexander Hamilton, found himself constantly embroiled in sex scandals. Take a ten dollar bill out of your wallet and you're looking at a world class horn dog, a swordsman of the first order. When he wasn't fighting scandalous accusations in the press and the courts, he spent much of his six years in office orchestrating a rescue of our new currency, the U.S. dollar.

Tuesday, July 1, 2014

Cheap And Profitable Canadian Value Screen With Yield | Seeking Alpha

Summary

  • Canadian stocks should continue to perform well, after outperforming the S&P 500 YTD.
  • The article provides a basic equity screen that combines cheapness with yield and profitability.
  • The screen provides 23 companies that satisfy its criteria.

Sunday, June 29, 2014

Bill Gross, Bondholders Battle The Fed, And Gold | Seeking Alpha

Summary

  • PIMCO believes that the Fed needs real rates to stay low to avoid a "financial earthquake" - this is what they term the "New Neutral".
  • The consequences of financial repression force bondholders to fight the Fed and thus increase leverage in the financial system and force real rates even lower.
  • Instead of investors leveraging themselves up to fight the Fed's financial repression, they should consider alternative assets that do well in leverage unwind situations like gold.

Saturday, June 28, 2014

In Home Loans, Subprime Fades as a Dirty Word - NYTimes.com

Martin and Cindy Arroyo knew they were not ideal candidates for a home loan.  She had gone through a foreclosure after losing her job, and he was finishing his M.B.A. and had not yet found his current position. But they had managed to put together a down payment of more than $550,000, or three-quarters of the asking price for a four-bedroom house in Los Gatos, and thought they would find a bank willing to lend the rest. They didn’t.  

Friday, June 27, 2014

Is This What America Has Come To?

There is no doubt you've heard about how poorly the city of Detroit, Michigan is fairing now that the automotive sector has all but closed up there.   Yesterday, news came that the city has started cutting off water to about 150,000 people. About half of the city's 324,000 water customers are delinquent on paying their water bill, so the city is turning off their taps. (Source: Financial Post, June 24, 2014.)

Thursday, June 26, 2014

Looking For A Bargain In Closed-End Funds? | Seeking Alpha

Summary

  • Absolute Discounts are a good start when looking for closed-end fund bargains.
  • However, CEFs sometime maintain the same discount level for years.
  • A better approach is look for funds that have discounts that are larger then their average discounts in the past.
  • In this article we examine the funds whose current discount are significantly larger then their 6-month average discount.

Tuesday, June 24, 2014

Why FuelCell Energy Is Set To Soar To New Highs???---- Seeking Alpha

Global fuel cell power company FuelCell Energy (FCEL) is on a terrific run this year. The stock has gained an impressive 74% so far this year, but it ran into a hiccup recently after reporting results for the second quarter. FuelCellfell 14% in just one day as its losses exceeded the consensus estimate.

2 Agricultural ETFs Are Best Hedge Against Dollar Depreciation And Rising Food Costs??? | Seeking Alpha

Summary

  • The dollar remains vulnerable to depreciation due to years of qualitative easing as well as Greenspan putting devaluation on the table.
  • The best ETFs to hedge against dollar depreciation are not metal or oil ETFs, but agricultural ETFs.
  • I'll discuss the application of Peter Lynch’s “local knowledge” to food prices.
  • Food prices are rising in part due to climate change effects including drought, too much rain, late planting due to snow, pests moving north, and too much heat.
  • The two agricultural ETFs, JJA and JJG, are comparable hedges against a weakening dollar and rising food costs, with a nod to JJA.

Monday, June 23, 2014

MORL's July Dividend Projected To Increase Significantly - Yield To Be 24.5% On A Monthly Compounded Basis - Seeking Alpha

Summary

  • My calculation suggests a $1.12 MORL dividend in July. On a monthly compounded basis, the effective annualized yield is 24.5%.
  • This is the highest monthly payment since April 2013.
  • The prospect for future MORL dividends is mostly a function of interest rates. Higher short-term rates would lower the dividend on MORL in two ways.

Saturday, June 21, 2014

Floating-Rate Senior Bank Loans: Safer, Higher Yielding Alternative To Short-Term Bonds - Nuveen Floating Rate Income Fund (NYSE:JFR) | Seeking Alpha

I first learned about floating-rate securities in 2013. I was intrigued by the concept of earning stable, premium-to-bond returns with less risk, but concerned about premiums to NAV for these typically closed end funds. In recent months, premiums have turned to (historically large) discounts and floating-rate senior bank loan funds have become a favored vehicle to gain material monthly income, 6%+ annualized. My favorite floating-rate bank fund is the Nuveen Floating Rate Income (JFR); for the purposes of illustration, I will use JFR data whenever possible.

Friday, June 20, 2014

Is There An Imminent Bear Market? Don't Ask | Seeking Alpha

Summary

  • As the market is celebrating its third anniversary without a single correction next month, investors are becoming increasingly worried that a significant correction or even a bear market is imminent.
  • However, no-one can time the market consistently. Humans tend to predict what just happened instead of what is about to happen.
  • There are still many experts waiting for the final collapse after the one 5 years ago. They cannot realize that the collapse occurred and is not going to happen again.
  • The current bull market has been fueled not only by the Fed but also by the great (once in a generation) expansion of the American companies abroad.
  • As history has taught us, the market advances to unprecedented highs every 10-20 years. The market currently seems to be in its first steps of its generational advance.

Wednesday, June 18, 2014

What Janet Yellen Is Trying to Tell Us - NYTimes.com

Ms. Yellen, less than half a year into her job leading the central bank, is already adept at saying a lot of words while conveying minimal new information. But if you read between the lines of her comments, she is clearly tilting toward the latter. She displayed no hint that her rate-increasing trigger finger was getting itchy.

BlackRock's Move To Monthly Distributions Could Narrow Discounts In These Closed End Funds | Seeking Alpha

Summary

  • The shareholder friendly move to monthly distributions could increase investor interest and narrow discounts.
  • Many BlackRock equity option closed end funds have high yields and large discounts but group performance has disappointed.
  • Equity option funds generate income and reduce volatility. These are attractive traits in the current low yield environment.

Tuesday, June 17, 2014

How To Manage A Closed-End Fund Portfolio Like An Expert, Beyond The 'CEF Trifecta' | Seeking Alpha

Summary

  • What's next once you learn how to tell if a CEF is 1. a good value, 2. has a sustainable dividend and 3. the manager is performing well?.
  • How many CEFs in a portfolio give the ability for alpha, but avoid being too concentrated?.
  • When does relative value swapping of a CEF (even a munis) make sense on an after tax basis?.

Monday, June 16, 2014

How Does REM Pay That 15% Dividend? - iShares Mortgage Real Estate Capped ETF (NYSEARCA:REM) | Seeking Alpha

Summary

  • REM has been paying a dividend yield around 15%.
  • This level of dividends in inconsistent with the yields of funds with similar portfolios.
  • My calculation of the next REM dividend suggests a significant decline from recent quarterly dividends.
  • REM is still a good way to collect high yields, if you are comfortable with interest rate risks. However, be prepared for a reduction in the dividends in coming quarters.

How To Outlive Your Money; A Lesson From Canada | Seeking Alpha

Summary

  • Canadian policy mandates that retirees remove 7.48% in their 72nd year. That level of drawdown is a recipe for retirement disaster.
  • The 4% drawdown rule may not apply in current conditions. 3 may be the new 4 when it comes to spending rates in retirement.
  • We'll examine the likely outcome of withdrawing at that high rate over the next couple of decades.
  • We humans are living much longer, and adjustments have to be made. How do we make our money last as long as we do?

Friday, June 13, 2014

Why Do Investors Keep Buying 'Actively' Managed Funds? | Seeking Alpha

Important question here by Larry Swedroe from last week. If we know that active managers are very bad at trying to beat the market then why do investors keep giving them assets? This is no small topic, but I'll try to summarize my views here.

Thursday, June 12, 2014

In Most States, Unemployment Rates Haven’t Bounced Back - NYTimes.com

Five years since the end of the recession, many states still haven’t returned to, or neared, their previous levels of unemployment. And though many states have seen significant drops in rates, much of the improvement can be attributed to workers dropping out of the labor force altogether.

Sandstorm Gold: This Cash Flow Machine Is Well Positioned To Outperform - Sandstorm Gold Ltd. (NYSEMKT:SAND) | Seeking Alpha

Summary

  • Sandstorm Gold has one of the most solid balance sheets in the gold sector, with over $110 million in cash, zero debt and $100 million line of credit available.
  • The company is a gold streamer - not a miner. Streaming has several advantages over traditional mining, including fixed cash costs forever and no ongoing CAPEX requirements.
  • Sandstorm provides exceptional leverage to the price of gold and lower risk; the company appears to have learned from its mistakes and is poised to outperform.
Sandstorm Gold (SAND) is a small-cap gold company with a pretty unique business model: the company gives capital to miners who are looking to build a mine and in return, Sandstorm receives a gold stream that gives the company the right to buy gold at a fixed price per ounce, for the life of the mine.

Tuesday, June 10, 2014

Earn A 9% Yield With This MLP ETF - Yorkville High Income MLP ETF (NYSEARCA:YMLP) | Seeking Alpha

Summary

  • ETFs focused on investing in master limited partnerships are increasing in number and many offer yields of 5% or more.
  • As the only MLP ETF indexed to Solactive's High Income MLP Index, Yorkville High Income MLP ETF is currently the highest yielding MLP ETF with a yield of around 9%.
  • This ETF is structured as a C corporation which carries with it some unique tax and accounting rules that investors need to be familiar with.

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