Wednesday December 18, 2013
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SHORT TERM Possible pullback.
LONG TERM Bullish
(Update: Wait for lower prices. Now $13.50) PennantPark Floating Rate Capital is a business development company that invests primarily in floating rate loans. It is going ex-dividend today and typically you would expect a decline in the value. If you have not already purchased floating rate securities, (that I have repeatedly suggested here), you should buy PFLT at (hopefully) lower prices. Sometimes we do not see declines after the ex-dividend date. But whether PFLT goes up or down, I suggest you buy….or add to existing positions. I think $13.65 is a good buy price. (Update: You should be able to buy lower than the $13.65.)
Now is the time to eliminate interest rate risk in your portfolio. Rates are going up. Unfortunately nobody knows exactly WHEN. I suggest selling your mid and long term bond FUNDS and start looking at floating rate loans.
Here is a discussion of floating rate loans from SeekingAlpha.com: “While bonds of every stripe carry exposure to rising rates, bank loan funds are floating rate securities, meaning the rates on the underlying loans are re-set every 30 to 60 days. That means that their prices have almost zero sensitivity to interest-rate fluctuations, a metric known as duration. (Example: If a bond fund has a duration of 5.25, a 1% rise in interest rates will cause the value of the fund to decline by 5.25%.)
But because bank loan funds regularly and frequently adapt to rate changes, they have virtually no sensitivity to them. Hence, their duration is effectively zero. As rates rise, so will the yields of these funds. That said, they might not rise immediately, due to a rate “floor” that could exist on some of the underlying loans. But, really, who cares if you miss a single-point increase when the yield is already so good?”
The corrupt big “O” Administration refuses to send anyone to jail………..you can’t make up this crap.
NEW YORK — JPMorgan Chase & Co. can’t stop writing checks to the federal government. The nation’s largest bank may, according to a person familiar with the matter, soon pay about $2 billion to settle investigations into its dealings with Bernard Madoff, the notorious fraudster whose epic Ponzi scheme collapsed five years ago.
This next payout would come as the ink was still drying on a landmark $13-billion settlement the New York company struck with state and federal authorities in late November. That settlement — the largest ever paid by a single company to the government — involved shoddy mortgage investments sold by JPMorgan as well as two troubled banks it gobbled up during the housing meltdown in 2008.
JPMorgan’s looming Madoff settlement centers on breakdowns in its compliance systems, and how the bank failed to alert U.S. authorities about suspicious activity in Madoff’s accounts at the bank. Financial institutions are required by law to have sufficient checks in place to detect questionable transactions and report them to the government.
The office of Preet Bharara, the U.S. attorney in Manhattan, and the office of the comptroller of the currency have been investigating JPMorgan’s dealings with the bank. JPMorgan has said in regulatory filings it is cooperating with the probes.A deal with Bharara’s office would come in the form of a so-called deferred prosecution agreement, an unusual criminal penalty but one that stop shorts of requiring JPMorgan to plead guilty, according to the person familiar with the negotiations, who was not authorized to speak publicly.
Philomena is one of the best movies of the year. I recommend you see it. …if for no other reason than to see Judi Dench. What a fabulous actress. The story line is truly fascinating. Don’t miss it.
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This blog discusses dividend paying investments that I find appropriate for myself…..and for investors seeking dividends and income. I am not an investment professional. You must do your own research before buying any position. All gains or losses that you realize are based on your choices.