cash positions

[DOGS THAT BARK]

What is best vehicle for cash positions?
Cd's and money markets not an opinion.

Wasn't but a little over year the our bank gave 5% on new money in money market accounts--now just paying bit over 1%--wife and I had cd mature last week and re-entering not an option at current rates

Been looking for something short term (no longer than a year)--am considering tax free Ky bond fund.

Any suggesttions--would be happy with 3% guarantee return if thats possible.

 

[selkirk]

that is a good question, short terms rates will start going up again, a matter of time. wish there was tax free bonds in cdn. but that is probably a good option.

why not keep most of the money sitting waiting for better rates a put a small amount in higher more volatile invesments for higher returns....

PFF I shares SP preferred etf has a mer of .48% and has a high yield.

it is very very very volatile, $14.10 low high $38.99, currently just over 36. one major negative is that it will trade in line with the market, bull market it will go up, bear hits and it will go below 30, and maybe 25.

plus good yield, instant diversification, very liquid.


LQD I shares GS corporate bond fund, this yields less around 5%.

mentioned this months ago when we were talking fixed income alt. believe it was in the low 80s at the time.

high 104.60 low 76.05 close 103.

very liquid and investors should probably own some high quality corporates ?

negative, though to a small degree than the preferred than PFF would follow the equity markets, however to a smaller degree.

have large investments in Cdn. preferreds, they at one point were yielding 10%, good companies, still believe they are unpriced when compared to bonds. though these have rallied also.....harder to trade sometimes cdn. preferreds.

thanks
selkirk

 

[selkirk]

since these are volatile invesmtnets espcially compared to CDs, would only put a fraction in these investments.

also I would dollar cost avgerage into these over time. espcially the PFF.

thanks
selkirk

 

[DOGS THAT BARK]

Thanks as always Kirk--took your advice above on some cash inside brokerage accounts--

This is basically for money sitting in local bank. I always like having some I can get easily if investment -property or other situations arise.

Am considering this Tax free bond--(kytfx)
If you get time your thoughts on it would be appreciated.

on diff tangent-- I have meeting with banks "investment advisor" in 40 minutes.

Got call from bank shortly after I told them not to renew CD's and put in checking account--
Lady thought I might want to meet with their rep for some suggestions--told her I thought I be wasting his time--but later thought--what the hell--won't hurt to listen--also thought might be fun to see what type of sales spiels I get--will try to act even dumber than I am

I'm guessing he will try an hit me up with annuities (high commision product) .

 

[selkirk]

DTB it looks like a decent fund, rates highly.

the yield is around 4%, duration has increased from 4 years a acouple of years back, to 6 years currently.

the top 10 holdings have a longer duration for the most part. so a decent short /mid term muni bond fund.

expenses are resonable at .58% when considering it is a somewhat specialized offerring.
most of the holdings are rated AA, however probably best to check their top holdings to see if you are comfrotable, you may be familiar with the names... they are all above A.

as for advisors they often have some strange advice.
remember when a broker had a small account, Merrill Lynch left Canada, (They would always buy a brokerage at the top of the market, pay an amazing high price, say how they would be long term player in Canada, and the first downturn they would leave.) repeated this twice..

anyways had my account switched over to a firm, the broker, her top pick was a company with no earnings, or revenue, two other competitors and a potential product....told her that was my top short play. (it worked out well, company went broke, forgot brutal management.).

never had another meeting.

thanks
selkirk

 

[DOGS THAT BARK]

Thanks Kirk
--enjoyed your broker story also

 

[burnetto57]

FWIW

I have a friend of many years, very successful, re: speculation. May want to watch Pacific Asia Petroleum, currently around $2.16 per share, up from $0.54 abt 7 months ago. They are expected to make an announcement w/in next 7 days, possibly on Friday that will cause the stock to go up to around $3.30/ share.

This is one of those 'gem' stocks that's cheap enough for folks to buy a lot of shares and too cheap for the general investment person to pay attention to - yet.

It is expected to contnue to go up after a week from now and substantially over the next 10-12 months - but will flatten out in between fo a while.

Top investors like John Livikis have it at the top of their investment portfolio and are particularly intersested in this week to take advantage of the 'jump' and quick cash. I am not sellin anything here - but you can watch PFAP over the next week and imagine if you had a bunch of shares in it.

FWIW

KB :SIB

 

[DOGS THAT BARK]

Have a junior China oil stock silmiliar i've made good lick on since April (up 294%)---made note on it in China thread--


<TABLE id=yfi_columnar_data><TBODY><TR><TD class=" text_value">NEP</TD><TD class="">6.00</TD><TD class="">1,000</TD><TD class="">6000.000000$6,000.00</TD><TD class="">

0.28</TD><TD>-280.000214

$280.00</TD><TD>

4.46%</TD><TD>4480.000000

$4,480.00</TD><TD>

294.74%</TD><TD class="">1.52</TD><TD class="">6.56</TD><TD class="">N/A</TD><TD class="">-</TD><TD class="">14-Apr-09</TD></TR></TBODY></TABLE>

 

[DOGS THAT BARK]

Calling Mr Kirk

Another question -sir along same lines but a tad different.

Have sold several stocks and seriously considering liquidating most of the sell 1/2 keep 1/2 and putting proceeds in bonds for the long term vs short term as we discussed above.

When time permits would like a couple of recommendations please-no hurry.

Looking for steady-safe postions you can buy and forget about. Been looking myself nd have position in TIPs --would like something not tied to our treasuries if thats possible.
Thanks

 

[selkirk]

bonds are a very important part of any portfolio. I have over the year often overlooked and should have had more bonds. also there are great buying opportunities to pick up debt, late 2008 was a great example, companies that were paying 5% were for a short period of time offering 10%, and 7-10% on preferreds.

Bonds
would not expect large returns from bonds this year or next, probably just the coupon which is nothing to write home about...however would build up bonds, slowly....in 2008 late, when most equity went through the floor, many bonds held up well, (bonds dropped to but not the same extent)

1. would not go into long term bonds, 20-30 years...in most cases... inflation is slowly movng up
so interest rates will also move up... not very much if at all but they probably rise from here...
also in most cases you are not paid for taking increased risk of going long...ie. long term bonds, move much more when interest rates move up or down.

2. you can look for bonds at you discount broker, would only look for bonds 10 years or less, give or take a year, and that have an A rating or better.
no lower than A

3. do not buy bonds that trade at a huge premium. ie bond at par $100, quote, some can trade at $120 or up....when the bond comes due I have a capital loss, also if you can buy bonds close to par or at a discount you have a chance of a capital gain, and not risk loss by early redemption.

will post about bond etfs with some suggestions, and the pros and cons, versus regular bonds..

I own bonds and bond etfs.

thanks
selkirk

 

[djv]

DTB did you check some munies or corporates. Like FLTMX or PRWBX. Both did not lose a dime last year.

 

[DOGS THAT BARK]

Hey Dave--we got a great tax free muni here in Ky KYTF. Will use it in lieu of CD's as they renew and transfer everything not in tax free retirement accounts in it. will transfer CD's as they come due. looking to cut my and wifes capital gains to close to 0 before next year.

looking to put bout 50% of my retiement funds in bonds and foreign currency--Have some in TIPS and waiting for a couple from Kirk. Looking to divvy the other 50%
75/25 between div paying stocks/small cap emerging markets.

My fun will come from the 25% EM


<TABLE><TBODY><TR><TD class=symb-td>

</TD><TD> </TD><TD class=price-td></TD></TR></TBODY></TABLE>

 

[djv]

Yes your starting to get up there in the age ware security matters a lot.

 

[selkirk]

this is just the first part, it will be clear, as we narrow some of these down and also list a few indivual bonds.

I like bond etf there are some advantages and disadvantages to them...discuss later.

in the next post will post some etf that deal with high yield, and corporate debt (high quality).
then see how they fit in an income porfolio.

had a friend who phoned me today he bought 50,000 of an Brookfield infastructure bond, due in 2036, for 7%... to long for me, but he does these on a regualr basis...


thanks
selkirk



US ETF Bond
1.

EMB $102.31 high 104.43 low 77.56
Exp ratio .60%
US $ debt of emerging markets, linked to JP Morgan EMBI Global index, 20 countries, rated B- BBB+
Only 10% are rated A-
Countries like Russia, Brazil, Turkey, ect.

PCY Power shares
US $ debt, 22 countries, 15% A-
Average duration 7.32 years
Expense ratio .50%
Close 25.60 high low 19.40 26.79

Note there are a couple of others in this category but some are new, and much lower volume.

2.
Preferred and convertible ETFs, there are others again lower volume and one is just about the US financial sector, most of the preferred etfs have large amount of this anyways?

PFF
High low 38.13 14.18 close 37.92
Monthly div.
Expense ratio .48%
Tracks US SP preferred index


PGX Powershares preferred
High low 13.78 6.09 close 13.68
Expense ratio .50%
Tracks the Merril Lynch preferred securities index.


CWB convertibles
High low 38.99 30 close 38.67
Tracks 110 holdings, out of potential 114, must be over 500 million issue size, in the US. Barclay convertible capital index.
Lower yield but you get an equity kicker in convertibles.
Expense ratio .40%

 

[DOGS THAT BARK]

Thanks Kirk--I have never looked into bonds much before--one thing I've noticed on these and others-- The wide range between high and lows make them appear to be almost as volitile as stocks--am I correct on this assumption?

On foreign currancy's above--thought you'd find article I came across this morning of interest --


<LI _extended="true">Russia diversifies into Canadian dollar. Russia's central bank announced yesterday that it has begun buying Canadian dollars and securities as part of its efforts to diversify its foreign exchange reserves. Analysts believe other emerging market central banks may follow suit in diversifying away from the U.S. dollar and into other commodity-linked currencies and assets, including the Australian dollar. As of December, Russia's forex reserves stood at $439B and were evenly split between dollars and euros.

 

[selkirk]

Heard about Russia buying Cdn. dollars, agree with the article, many of these emerging market central banks, and central banks around the world, hold US dollars, US dollars and US dollars... there is a thought that China, India, Russia, will be adding to their positons in other currencies, ie. Canada, Aust., a basket of currencies, and also gold and other precious metals, they will still own a large amount of US dollars, but helps to spread around to other currencies, and metals, even if it is only 5-20% of currency reserves.

well for the most part Bond funds are safer, however there are some that have higher risks, and some that are more closely tied with the equity markets...also late 2008 happened and that was not only an equity crisis, but first an credit crisis.

next post talk how to make some of these into a portfolio, and the last couple have far lower beta, and are less volatile..LQD and BND.

ironic though that the high yield, almost did as well as LQD corporate (high quality debt.)

thanks
selkirk





The high Credit market or Junk bonds, or high yield or?

Okay now this is not the safest but these belong in most income portfolios, just not to much, a little bit goes a long way?when these do well you wish you had it all in these, and when a bear market hits?..THE HORROR?..

JNK
38.99 high low 40.21 25.55
etf follows Barclay High Yield index 80%
expense ratio .40%
monthly div

HYG
87.60 high low 90.29 61.50
etf follow IBOXX Liquid High Yield 90%
expense ratio .50%
monthly div

Corporate Bonds and general bond funds

LQD
105.76 high low 107.25 90.51
Etf follow IBOXX liquid investment grade
100 bonds or less
expense ratio .15%
Monthly div

This bond was always thought to be a very convervative selection, and probably is, but you have to be carefull since they only hold 100 of the most liquid largest size corporate bond issues?this ran into trouble when two little firms called Lehman and AGF bit the dust. That is the problem with a small index, if a couple fail you feel it?. Still not bad, for a small holding in a fixed income portfolio?.could have been a core position but then 2008 happened.

BND Vanguard Bond Fund
79.53 high low 80.33 75.72
expense ratio .14%
etf follows Barclay Capital US aggregate bond index

holds Tresuries, mortgage backed, asset backed, int. dollar bonds, ect.

This etf holds over 1500 bonds, actually around 3000 bonds, this can be used by most US investors as their general bond fund, etf.

note : was going to include a graph by the economist that showed we are now at 2000 etf from close to zero in 1993...time flys....

 

[selkirk]

okay will add a few int. etf. now a portfolio of bond etf. for a fixed income portfolio or part of one...later can talk about + / - compared to buying a single bond

BND not a bad choice for a universal US bond fund...note: would buy this one and the rest of them slowly, if iinterest rates rise then bonds go down...also if there is another credit scare...

still would slowly build up a positon and BND can be a good universal bond fund for most US investors. 3000 bonds nice was to hold a little bit of everything.

LQD would wait until the situation on the US banks is clear, do not believe trading will be taking away from them, but that can be a big scare, so a small position until we know the outlook on US banks ie. taxes, restrictions on trading, (which is a far bigger issue than a new tax).

HYG and JNK, have owned HYG and still own some, though most I know trade JNK. you would only have a small amount but the extra yield is nice...note: during market corrections these go on sale, so during a sell off start to slowly build a position.....the positon overall would be small.

more closely tied to the equty markets than LQD and BNS, though 9% is not bad.

EMB and PCY is almost similar to HYG and JNK though it is int. and emerging markets...this is lower credit ratings and political risks. again better to own in up markets, would slowly build a postion in on during a sell off....

again this a small weighting as sometimes emerging debt can go through the floor. good yield and a chance of credit improvements...small weighting.

PFF now if you were in Canada would tell you to buy select preferred, if you like the issue, or the preferred etf, there is one is Canada.

on Friday this dropped by 1% and PGX dropped by .7%, until I feel better about the banks, or you believe the worse of the sell off is over, would not pick any up.

note: if the banks correct more, this not a bad way to start to buy into the sector, you do not get the chance of equity on the upside, but you could get a nice yield and good price gain...

however for now wait and watch...for Canadian investors preferreds would be a buy/hold.

CWB is a convertible preferred, and most of these or many are bank or fincial convert, so again the same as the preferreds.

these pay a lower yield but you get the equity kicker, (they convert into common equity)....so these are the most closely tied to equtiy.

BND and LQD act the most like bonds.

CWB are still worth getting in an income portfolio, though would again as you may get a buying opportunity with a sell off, in the banks...

ie. on Friday went down 2.8%, a few more days like that.....small positon, and built up slowly.

later will look at indivual bonds, and a couple more stable int. etf.

thanks
selkirk

 

[djv]

I would like to add two that have been very good to me. Im not in either now. PCM very safe. GDF more risk but good rewards.