A Struggle for Direction
Here we are in September. So far, it’s not bad. But it’s not good either.
For the first week after Labor Day, the market has drifted lower. It’s no big deal. But stocks have been losing a battle they were winning in the summer. The bulls were eking it out then. Now the bears are prevailing, slightly.
This is where things can get tricky. If investors determine that stocks are melting down, the selling could be more serious. Several bank analysts have been coming out with negative views on the market including Deutsche Bank, Bank of America and Morgan Stanley. You can feel the consensus drifting negative.
I wouldn’t be surprised if the market takes the opportunity to confound everyone and move higher. But even if there is a selloff, it won’t be the worst thing. The S&P 500 is up over 90% since the bottom in March of 2020. We are due for a correction. I’m still bullish over the intermediate term and would regard weakness in the market as a buying opportunity.
For now, it’s kind of a wait-and-see kind of market. It’s not a great time to buy while a cranky post-Labor Day market searches for a narrative amidst a growing consensus of bears. At the same time, the lack of upward movement or any real market leadership makes call premiums weak.
Trades this month
August 20
AGNC August 20 $17 calls at $0.50 - Expired
OKE August 20 $57.50 calls at $1.65 – Expired
August 25
Purchase KKR & Co., Inc. (KKR) $64.31
September 1
Sold BIP October 15 $55 calls at $2.00
September 8
Sell USB October 15 $57.50 calls at $1.70 or better - Pending
Stock Portfolio Recap
AGNC Investment Corp. (AGNC)
Yield 9.0%
It’s still a waiting game on this mortgage REIT. The economy is still strong, and business is solid. The dividend should be safe. But the stock has been wallowing since hitting a high of almost 19 per share in June (Currently 16 per share). The problem has been the flattening yield curve as the 10-year Treasury rate has fallen. I believe that rate has fallen too far. It’s well below the pre-pandemic level amidst a strong economy and persistent inflation. BUY
Brookfield Infrastructure Partners (BIP)
Yield 3.6%
This infrastructure partnership has recently made new highs, which is why it was a good time to write the calls. The company is doing very well. Earnings should be strong this year and profits should get a further bump from the Inter Pipeline acquisition. But BIP has a pattern of pulling back after a surge. Plus, the market is in a very dicey time of year. We generated a high income while the getting was good. We’ll see what happens. HOLD
Enterprise Product Partners (EPD)
Yield 8.1%
It’s just been up one day and down the next. It just really isn’t getting anywhere. EPD has definitely leveled off after a great run after the vaccine announcement. Operationally, things are solid. Business should continue to improve in the recovery over the rest of the year and that huge dividend is safe. I don’t know when the great fundamental story will win out. But that huge dividend is safe in the meantime. BUY
KKR & Co., Inc. (KKR)
Yield 1.0%
This alternative asset wealth manager stock pulled back 8% from the high of early August. Yet the uptrend since the bear market lows of last year is still intact. It’s taking a breather right now. That makes this a good entry point for the stock because prospects are still excellent. Stock performance has blown away the competition over the last several years and recent results and new assets under management indicate that the superior performance should continue. BUY
NextEra Energy Inc. (NEE)
Yield 1.8%
This regulated/alternative energy utility stock has been staying strong and hovering right around the highs for the last month. The clean energy subsector really hasn’t rallied but NEE is benefitting from being a safe utility stock in an uncertain market right now. Utilities aren’t a bad place to be in the current market, but NEE is more than just a cyclical stock alternative. It’s a great way for conservative investors to play the huge growth in clean energy. HOLD
One Liberty Properties, Inc. (OLP)
Yield 5.9%
This diversified industrial REIT still looks good. It’s not lighting the world on fire, but it keeps trending higher ever so slowly. We’ll see how OLP navigates the likely choppy market ahead. There is massive demand for industrial properties and limited supply. The dynamic should last awhile and propel this stock higher. We’ll see how OLP navigates the likely choppy market ahead. BUY
ONEOK, Inc. (OKE)
Yield 7.0%
This midstream energy company is out of favor just like EPD. But earnings are growing faster, and the stock moves a lot more when things improve. I still think this stock has another good run in it before the end of the year. In the meantime. It still pays a very strong 7% yield while we wait. BUY
Qualcomm Corp. (QCOM)
Yield 1.9%
The performance of this low-yielding tech stock has been disappointing since it was added to the portfolio in May. I had hoped this one would generate high call premiums. But it hasn’t taken off again despite having two blow-out quarters. In the next few months the market should change personality at least a little. Hopefully, the reinvented investors will see the value in QCOM and it will get moving again. BUY
U.S. Bancorp (USB)
Yield 3.3%
This regional bank is on solid ground. Business is strong in every area except net interest income. The flattening yield curve is limiting profits by reducing the spread U.S. Bancorp earns on loans. But if that part of the business improves, the bank should be firing on all cylinders. I don’t see a lot of downside in the stock and if rates move higher USB could get another nice run. HOLD
Existing Call Trades
Sell NEE September 17 $80 calls at $3.50 or better
The stock has moved higher over the past month as cyclical stocks have floundered. The calls are currently selling well above the target price at $6.60. The stock price is just below 87 per share with just a little over a week to go before options expiration. It looks like it will certainly be called at this point. But we’ll lock in great return in a relatively short amount of time.
Sell BIP October 15 $55 calls at $2.00 or better
We didn’t get a chance to sell the USB calls at the targeted price after the point at which you received the update. But these BIP calls sold above 2 per call after the update was issued. The calls are above that price now at 2.73 per call and are worth selling here if you have not already done so.
So far, the post-Labor Day market has been just a little bit crummy.
Stocks have drifted slightly lower over the past week. While that’s nothing alarming, it is a reversal of the summer market where stocks were drifting slightly higher. It could be that the balance has been tipped toward the negative.
| CIA STOCK PORTFOLIO | |||||||
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| AGNC Investment Corp. | AGNC | 01/13/21 | $15.52 | $16.08 | $17.00 | 8.96% | 9.70% |
| Brookfield Infrastructure | BIP | 01/13/21 | $50.63 | $57.42 | $53.00 | 3.55% | 16.66% |
| NextEra Energy, inc. | NEE | 2/24/21 | $73.76 | $84.58 | $80.00 | 1.82% | 16.41% |
| Enterprise Product Partners | EPD | 3/17/21 | $23.21 | $22.29 | $25.00 | 8.08% | 0.15% |
| U.S. Bancorp | USB | 3/24/21 | $53.47 | $56.54 | $55.00 | 3.32% | 7.33% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $143.41 | $140.00 | 1.90% | 7.54% |
| ONEOK, Inc. | OKE | 5/26/21 | $52.51 | $53.49 | $60.00 | 7.00% | 3.54% |
| One Liberty Properties, inc. | OLP | 7/28/21 | $30.37 | $30.67 | $33.00 | 5.87% | 0.99% |
| KKR & Co., Inc. | KKR | 8/25/21 | $64.52 | $63.32 | $68.00 | 0.92% | -1.86% |
| EXISTING CALL TRADES | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| NEE Sep 17 $80 call | NEE210820C00080000 | Sell | 8/11/21 | $3.50 | $5.00 | $3.50 | 4.75% |
| BIP Oct 15 $55 call | BIP211015C00055000 | Sell | 9/1/21 | $2.00 | $2.70 | $2.00 | 3.95% |
| USB Oct 15 $57.50 call | USB211015C00057500 | Sell pending | $1.16 | $1.70 | 3.18% | ||
| as of 9/13/2021 | |||||||
| SOLD STOCKS | |||||||
| Security | Ticker Symbol | Action | Entry Date | Entry Price | Sale Date | Sale Price | Total Return |
| Innovative Industrial Props. | IIPR | Called | 6/2/20 | $87.82 | 9/18/20 | $100.00 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95.00 | 7.30% |
| U.S. Bancorp | USB | Called | 7/22/20 | $36.26 | 9/18/20 | $38 | 3.42% |
| Brookfield Infras. Ptnrs. | BIP | Called | 6/24/20 | $41.92 | 10/16/20 | $45 | 8.49% |
| Starbucks Corp. | SBUX | Called | 8/26/20 | $82.41 | 10/16/20 | $88 | 6.18% |
| Visa Corporation | V | Called | 9/22/20 | $200.56 | 11/20/20 | $200 | 0.00% |
| AbbVie Inc. | ABBV | Called | 6/2/20 | $91.04 | 12/31/20 | $100 | 12.43% |
| Enterprise Prod. Prtnrs. | EPD | Called | 6/24/20 | $18.14 | 1/15/21 | $20 | 15.16% |
| Altria Group | MO | Called | 6/2/20 | $39.66 | 1/15/21 | $40 | 7.31% |
| U.S. Bancorp | USB | Called | 11/25/20 | $44.68 | 1/15/21 | $45 | 1.66% |
| B&G Foods Inc, | BGS | Called | 10/28/20 | $26.79 | 2/19/21 | $28 | 4.42% |
| Valero Energy Inc. | VLO | Called | 8/26/20 | $53.70 | 3/26/21 | $60 | 11.73% |
| Chevron Corp. | CVX | Called | 12/23/20 | $85.69 | 4/1/21 | $96 | 12.95% |
| KKR & Co. | KKR | Called | 3/24/21 | $47.98 | 6/18/21 | $55 | 14.92% |
| Digital Realty Trust | DLR | Called | 1/27/21 | $149.17 | 7/16/21 | $155 | 5.50% |
| EXPIRED OPTIONS | |||||||
| Security | In/out money | Sell Date | Sell Price | Exp. Date | $Return | Total % Return | |
| IIPR Jul 17 $95 call | out-of money | 6/3/20 | $3.00 | 7/17/20 | $3.00 | 3.40% | |
| MO Jul 31 $42 call | out-of-money | 6/17/20 | $1.60 | 7/31/20 | $1.60 | 4.03% | |
| ABBV Sep 18 $100 call | out-of-money | 7/15/20 | $4.60 | 9/18/20 | $4.60 | 5.05% | |
| IIPR Sep 18 $100 call | in-the-money | 7/22/20 | $5.00 | 9/18/20 | $5.00 | 5.69% | |
| QCOM Sep 18 $95 call | in-the-money | 6/24/20 | $4.30 | 9/18/20 | $4.30 | 4.82% | |
| USB Sep 18 $37.50 call | in-the-money | 7/22/20 | $2.00 | 9/18/20 | $2.00 | 5.52% | |
| BIP Oct 16 $45 call | in-the-money | 9/2/20 | $1.95 | 10/16/20 | $1.95 | 4.65% | |
| SBUX Oct 16 $87.50 call | in-the-money | 10/16/20 | $3.30 | 10/16/20 | $3.30 | 4.00% | |
| V Nov 20 $200 call | in-the-money | 9/22/20 | $10.00 | 11/20/20 | $10.00 | 4.99% | |
| ABBV Dec 31 $100 call | in-the-money | 11/18/20 | $3.30 | 12/31/20 | $3.30 | 3.62% | |
| EPD Jan 15 $20 call | in-the-money | 11/23/20 | $0.80 | 1/15/21 | $0.80 | 4.41% | |
| MO Jan 15 $40 call | in-the-money | 11/25/20 | $1.90 | 1/15/21 | $1.90 | 4.79% | |
| USB Jan 15 $45 call | in-the-money | 11/25/20 | $2.00 | 1/15/21 | $2.00 | 4.48% | |
| BGS Feb 19 $27.50 call | in-the-money | 12/11/20 | $2.40 | 2/19/21 | $2.40 | 8.96% | |
| VLO Mar 26 $60 call | in-the-money | 2/10/21 | $6.50 | 3/26/21 | $6.50 | 12.10% | |
| CVX Apr 1 $95.50 call | in-the-money | 2/19/21 | $4.30 | 4/1/21 | $4.30 | 5.02% | |
| AGNC Jun 18 $17 call | out-of-money | 4/13/21 | $0.50 | 6/18/21 | $0.50 | 3.21% | |
| KKR Jun 18 $55 call | in-the-money | 4/28/21 | $3.00 | 6/18/21 | $3.00 | 6.25% | |
| USB Jun 16 $57.50 call | out-of-money | 4/28/21 | $2.80 | 6/18/21 | $2.80 | 5.24% | |
| DLR Jul 16 $155 call | in-the-money | 6/16/21 | $8.00 | 7/16/21 | $8.00 | 5.36% | |
| AGNC Aug 20 $17 call | out-of-money | 6/23/21 | $0.50 | 8/20/21 | $0.50 | 3.00% | |
| OKE Aug 20 $57.50 call | out-of-money | 6/23/21 | $3.50 | 8/20/21 | $3.50 | 4.75% | |