Monday, August 2, 2021

Trading Update

Sold some VPU @ $145.69 to buy BTI @ $37.67, PM @ $100.47, and MO @ $47.97. New IRA asset allocation now looks like this.


Didn't want to sell VPU, but needed to do it in order to buy these three tobacco stocks. The trade was inspired by this post (and quite a few before it) at Credit Bubble Stocks. The temptation to buy has been growing over the past few months, and I finally pulled the trigger.

Part of the appeal of VPU is the addictive nature of electricity combined with relatively high dividends. Adding the addictive nature of nicotine and even higher dividends to the mix seems like more of the same. As an added bonus, it offers more diversification (and potentially greater rewards). I'm no longer relying on just one industry. I anticipate holding all of these investments for at least a decade.

If you are curious as to why I overweighted BTI, I was intrigued by its ultra low 0.14% short interest (according to TD Ameritrade, as of 7/15/21). Shorting a stock with an 8% dividend yield is not for the faint of heart. You better know something that others don't. Apparently, not many think they do. If so few traders want to sell shares they don't own, perhaps I should be willing to buy more. And so, I did.

This is not investment advice.

Friday, July 30, 2021

VPU Performance v.007


Months Elapsed: 7
Total Growth: 8.78%
Annualized Growth Rate: 15.51%
Distribution Yield (TTM): 2.90%

It's just climbing that wall of worry. Thankfully, not much drama nor reasons for regrets. At least not yet.

I Would Walk 500 Miles


And I would walk 500 more, and I would walk 500 more, and I would walk 500 more, and I would walk 500 more. In 2021. Maybe.

6.9 x 365 = 2,518.50

Would definitely be a lifetime personal best to walk that many miles in a single year. Might happen. Feet are holding up well so far. Very motivated. Using OluKai flip-flops almost exclusively. Spotify and audiobooks help too.

Saturday, July 24, 2021

Timing the 5-Year Treasury Note Yield’s Return to Normal

The following chart shows the natural log of the 5-year yield. When using natural logs, constant exponential growth is seen as a straight line. I have added two such straight lines in red for your amusement.


At its current yield of just 0.71%, at what point did it ever become abnormal? After all, its natural log is currently centered between the two trend lines. What could be more normal than that?

Monday, July 19, 2021

The Sarcasm Report v.287

For those who have $500,000 to invest, I want to tell you about an exciting opportunity that has suddenly appeared in the Treasury markets. And unlike Fisher Investments, this opportunity is provided absolutely free to loyal readers of this blog! There are no fees structured for me to do better as you do better! You will keep 100% of the profits!

As seen in the following chart, this exceedingly rare opportunity can be found in the 1-year Treasury note.


No, it's not the 17% in 1981. I can understand the confusion. Please allow me to zoom in closer.


No, it's not the 6% in 2000 nor the 5% in 2007. This is a current opportunity. Let me zoom in closer.


No, it's not the 2.5% from 2018. Don't we wish. One last zoom should clear this up.


Behold the miracle! After hitting a lifetime low of 0.04% in early June, the yield has risen to 0.07% today! That's an unprecedented 75% increase in less than two months!

If you have $500,000 to invest, gone are the days when you could safely earn $200 per year. Now it's $350! That's almost one dollar each and every day! Do not let this once in a lifetime opportunity pass you by!

As a side note, our pets haven't been this excited about one of my sales pitches since they attended one of my investment timeshare seminars. They endured four hours of presentations for the free dog treats, but it was so worth it. Just look at those smiling faces!

Saving Hope?


Saving despair.

Friday, July 16, 2021

Interest Rates, Inflation, and Shipping Containers

If the news says interest rates are rising, that's a forward looking opinion. It is not a fact. It is a prediction. In sharp contrast, if the news says interest rates have been rising, that’s a verifiable backward looking fact.

As examples, when the temperature recently hit 110 at my home, I would never have said that the temperature is high and rising. 110 was the peak. When a submarine reaches the surface of the ocean, no sane person ever says that the submarine is high and rising. The submarine is obviously done rising.

So why does the news do it with interest rates? It’s subtle. It’s biased. And I wonder if anyone else notices that an opinion often sneaks in there where a fact should go.

If it was so easy predicting where interest rates were truly headed then we could all become heavily leveraged bond day traders and never lose money. And yet, plenty of bond traders do lose money. I suspect most money is lost betting on what the news implies is obvious, while the professionals and algorithms take the other side of those trades.

One would think that since interest rates had been falling for 40 years, the burden of proof would be on those predicting the long-term reversal to rising interest rates. And yet, for at least the past 20 years, the burden of proof has always been on the “Japanificationists” as they continue to simply predict more of the same.

And on that note, I offer my opinions and predictions of more of the same.

1. Although inflation is running temporarily hot, we are not returning to 1970s style interest rates anytime soon, if ever, at least in my lifetime. Bet on long-term interest rates north of 3% over the long-term at your peril.

2. The recent growth of inbound loaded containers into Los Angeles and Long Beach (as seen here) is ridiculously unsustainable over the long-term. The recent growth of shipping costs into Los Angeles and Long Beach is therefore also ridiculously unsustainable over the long-term. Any price inflation seen inside those fully loaded containers due to extreme growth in the number of containers and their associated shipping costs is therefore also ridiculously unsustainable.

3. I don't want to sell anything, buy anything, or process anything inside those shipping containers when a sustainable reality hits. I don't want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed. Yes, I'm having a Say Anything moment. Pent-up demand can easily lead to pent-up demand destruction. I want no part of the latter. We did overshoot to the downside as the pandemic hit. We are overshooting to the upside now. We can easily overshoot to the downside again (like a pendulum with little dampening), especially if the Fed feels the need to fight transitory inflation.



This is obviously not fantastic investment advice. If it was so easy giving fantastic investment advice then we could all become heavily leveraged traders and never lose money. Right? Seriously.

Sorry to bring up heavily leveraged traders twice in the same post. I guess I just have historic margin debt as a percentage of GDP on my mind. Shouldn't be a problem in a temporarily overheating economy filled with sure things like SPACs, NFTs, cryptocurrencies, and Tesla though. What's the worst that could happen?

Sunday, July 11, 2021

The Sarcasm Report v.286


What if you don't pay well? Same story?


Was it cause and effect? Or simply a coincidence?


Is it really paradise? Or just an illusion?

By not clicking on the links to these stories in my Google news feed today, we're left with more questions than answers. Sorry about that.