Fed Chairman Boromir

It is a strange fate that we should suffer so much fear and doubt over so small a thing. - Boromir, The Lord of the Rings

Trading Update IX

Closed all positions within my IRA. Sitting in cash.

Down 0.15% for the day, up 2.98% in 2022, and up 21.10% since I bought stocks in late December of 2020. (I'm also owed some dividends from all 3 tobacco stocks.)

I patiently await new opportunities. It is my hope that real rates will continue to rise and my next investment will be long-term inflation protected Treasury bonds (my preferred "safe" investment).

Right or wrong, this liquidation was triggered by the narrowing spread between the dividend yield on VPU (utilities fund) and the yield on the 10-year Treasury bond. At roughly 1%, it's way too narrow for my liking. Since I've earned more than the equivalent of a 10-year Treasury bond held to maturity (in just one year), I feel no great need to push my luck.

Side note: XBI continued to crash. Was my worst performer, by far, and I'd only held it two weeks.

Trading Update VIII

Sold half my shares of VPU @ 152.82 to buy XBI @ 115.30. Biotech has had a bad year so decided to bottom fish.

Trading Update VII

Sold all VDC @ 192.09 to repurchase equal weightings of KMI @ 16.06 and OKE @ 61.66.

In hindsight, selling pipelines in October to buy consumer staples was very kind to me. VDC gained a clearly unsustainable and somewhat surprising 5.3%. Counting missed high-yielding dividends, KMI lost 8.3% and OKE gained 1.1% since I sold.

Natural gas prices have fallen. That news should be priced in. I'm therefore comfortable reversing the trade and now own more shares of KMI and OKE than I otherwise would have.

Perhaps I should be more concerned about the virus and future mutations. However, even as a homebody introvert, I'm feeling the cabin fever. Can't stay isolated forever.

The Empire’s Funeral Bond March

Trading Update VI

Sold all KMI @ 17.80 and all OKE @ 61.94 to buy VDC @ 182.41.

Sold rapidly appreciating high dividend pipelines and replaced with slowly appreciating low dividend consumer staples. In a world where bull markets make geniuses out of everyone, might not exactly look like a genius move.

Clearly not looking to swing for the fences. Locking in a 13.9% gain might not seem like much, but that's almost the same gain that a 10-year Treasury bought today and held to maturity would net. And it only took a month. I don't want to be exposed to too much risk if the music stops playing, again. What can go up quickly, can also come down quickly.

That said, there should be a lot of upside for pipelines from here. I'm likely leaving a lot on the table (wouldn't be the first time). If I had a job to fall back on or I was more interested in growing wealth than preserving capital, I might have let it ride much longer.

Apocalypse Fatigue

It's been a rough month.

Our 25-year-old bird is sick. We took her to the emergency vet. She stayed overnight. We think she ate part of her cage. Ingested some metals. She's prone to seizures and these were the most violent we'd ever seen. Feathers and blood everywhere. Not good.

Took her to her regular vet for a followup. She was terrified and escaped their control long enough for even more feathers and blood. Ouch.

We've set up a hospital cage for her made out of a large plastic storage container drilled with holes and filled with towels. It's treating her well so far.

Meanwhile, we ordered a new large steel cage for her. We were fortunate to find one on sale, because they are not cheap. There are SO many out of stock right now. It was originally supposed to be delivered two days ago but there was a delay due to a train derailment. I kid you not. It arrived today and we put it together. Fortunately, that went well. She's not ready for her new and improved home, but it will be ready when she is.

In other news, it's not been a great month for the stock market. I'm still up 10% since I bought back in December, even with today's tobacco stock selloff. The decision to diversify out of utilities is still holding up well. Utilities are not reacting well at all to the rise in the 10-year yield. Had I stayed entirely in utilities, the gains would be cut in half. On a brighter note, still doing better than the 30-year Treasury bond. By. A. Wide. Margin. A 0.37% increase in yield x 30 years is roughly an 11% loss.

No more VPU specific reports. It's only 20% of my IRA now (and my IRA is a relatively small part of my net worth), so my motivation to track it closely just isn't there any longer.

Cabin fever is becoming apocalypse fatigue. Since 2020, it’s starting to feel like we're in the "what can go wrong, will go wrong" era. My hoarding tendencies are on high alert, with each new "out of stock", "shortage", "supply chain disruption", and "Covid" story adding to the personal drama. The drama is real. Any resemblances to the many fine disaster movies I often enjoy are hopefully entirely coincidental, military soldiers driving gasoline tanker trucks in Great Britain notwithstanding. *cringe*

And lastly, my posting frequency will most likely be somewhat reduced in the coming weeks. Looking to take a break. I will definitely continue to post trading updates, not that I have many trading plans. I’m comfortable with what I own. The next purchase will probably be more savings bonds at the start of the new year.

Oil and Natural Gas Extraction Employment per Capita

As a group, KMI and OKE have risen 9% since I recently purchased them. The high volatility, even when it works in my favor, makes me more than a bit nervous. A primary goal of mine is to not lose sleep over my investments. A secondary goal is to be especially fearful when investors are especially greedy. Are oil and natural gas investors being especially greedy right now? The following chart suggests that we are not.

I thouht about locking in some oil and natural gas gains and reducing my exposure today. After creating this chart, the feeling passed. There seems to be plenty of room left to run.

September 27, 2021
Nasdaq: US Oil & Natural Gas Rig Tally Rises for 3 Straight Weeks

Natural Gas Rig Count Declines in US: Natural gas rig count of 99 was lower than the prior-week count of 100. The count of rigs exploring the commodity was, however, higher than the prior-year week’s 75. Per the latest report, the number of natural gas-directed rigs is roughly 94% below the all-time high of 1,606 recorded in 2008.

This is definitely not investment/speculation advice. There's a reason why these stocks have high dividends and are so volatile. With great rewards come great risks. Only hindsight can show if the risk was actually worth it, and even then it might not be. If one bets their life savings on a triple or nothing coin flip, the math says it is a great bet. It would be little consolation if one loses though.