With continuous volatility and uncertainty in the global economy, I have been meaning to put together a post about dividend paying stocks.  The reason behind this is simple, dividends are spendable cashflow in your pocket without lifting a finger.  Cash is king during tough time, and unlike capital gain, “strategically” and properly invested for yield actually feeds you throughout the year whether your stock price is up or down.  Historically speaking, about 40% of the total market return of S&P 500 is attributable to dividends, and dividend was the main reason for investing in the old days, not capital appreciation.

With bond prices rising to bubble level, and the continue depressing equity market, the spread between equity yield and bond yield is as high as it has been for years.  It makes a lot of sense for investor to look for terrific company with the ability and history to maintain and increase dividend payment.

Morgan Stanley just came out with its top US Dividend Ideas:

1. General Electric(股票代號: GE), yield 3.4%

2.Pfizer(股票代號: Pfe), yield 3.9%

3.Philip Morris International(股票代號: PM), yield 3.7%

4.Colgate-Palmolive(股票代號:Cl), yield 2.5%

5.Honeywell International(股票代號: Hon), yield 2.7%

6.Marathon Oil(股票代號: Mro), yield 2.9%

The six names are in different sectors, I think Jim Cramer would applaud that this is a diversified portfolio.  The free cash flow and payout ratio are healthy.  Philip Morris International just issued an earning warning, but other than that, these companies have long payment and dividend increase history.  This is purely a sharing of Morgan Stanley’s recommendation.  No comment is made on the valuation of each stock.  Strong dividend couples with covered call strategy is part of my choices of defensive strategy.

 

This past Wednesday, the Fed has recommitted to operation twist at least through the end of 2012.  The operation twist contains the selling or redeeming of 3 years or less maturities’ bonds on fed’s balance sheet, and use the sales proceed to purchase treasuries with maturity of 6-30 years.  The twist comes from artificially lowered longer term interest rates due to the Fed’s purchase.  Because of the fact that fixed mortgage lending rates in the U.S. are closely tied to the 10 year treasury yield, it is deemed this policy is beneficial to the mortgage refinancing market.

The Fed is also committed to the maturity extension program.  It means that the Fed has previously purchased agency-debt and agency mortgage backed securities, and will continue to recommit all the cashflow from these securities to more agency debt and and agency mortgage backed securities purchase.  This will also further lower the long term interest rate by providing support and liquidity for the agency debt and mortgage backed securities market.

During a news conference, Chairman Bernanke has reiterated the fed’s commitment of keeping short term interest rate low until at least 2014.  Here is the Fed’s press release.

It seems that the Fed is opting to wait for signs of further global and U.S. economic slow down(meaning  bad job numbers) to decide on the next round of Quantitative Easing.

The continuation of maturity extension program and operation twist are probably necessary but may not be as effective as when they were around for the first time.  It is well known in finance and real estate mortgage business insider that those home owners that could refinance, already refinanced, therefore, unless there is a further lowering of underwriting standards, I really do not see refinancing and lowering borrowers’ cost of mortgage can further stimulate the economy significantly.  Lowering 25 basis points does not have the same effect of lowering borrowing cost by a 100 basis points.  Disposable income will not be impacted by much in the short term considering there is usually high closing cost associated with mortgage refinancing.

The other half of the picture is by lowering interest rate, the Fed hopes that it acts as a stimulation to the housing market, spurring buying interests and home prices.  However, this half of the picture relies largely on two other factors, employment and to a lesser extent at least currently, in my opinion, household formation.  Without stable paying jobs, it is difficult to have a consistent new crops of buyers to absorb the housing inventory.  On top of that, shadow inventory is still a digestive issue that will take at least a few more years to work through the system.

On the other hand, I sincerely believe that many Asian countries housing markets have become somewhat frothy because of the economic expansion in the Asian economy, those places that have seen the greatest gain during the past 10 years with an unbalanced affordability will be most dangerous to some type of slow down.  Beware my friends, forever rising housing prices is an urban legend, that the 99% main streeters can’t afford to gamble away on.

Bottom line: the global economy is sluggish.  In my opinion, the Fed is very selective in firing its weapons because the timing is especially important because of two things: the Fed is running out of options and misfiring has dire consequences; and the failure of the Fiscal side to function due to gridlock.  My dear readers, don’t get excited over Fed accommodation, because that is exactly the sign of a bad economy.  Good luck navigating, and learn to protect yourselves with flexible, powerful, options strategies.

 

 

國際信評機構穆迪在今天宣佈調降15家銀行評等,調降級數介於1至3級不等.  這當中不乏美國幾家大家常在交易的大銀行: Bank of America(股票代號: bac), Citi(股票代號: c), Goldman Sachs(股票代號: gs), Morgan Stanley(股票代號: ms), JP Morgan Chase(股票代號: jpm).   下調的原因是這些銀行皆相當容易受到”市場波動性影響”且存有資本市場活動內的鉅額虧損風險。  我在幾個禮拜前也有做過 MS 摩根士丹利的技術分析, 也提到了13 元是非常重要的支撐, 在之後它有不錯的回調, 一路回到14塊左右, 直到今天信評調降, 美國銀行股都是呈現大跌的情況。    大家可以關注這幾支銀行股最近的走勢,摩根士丹利依舊可以以13塊來做為進出場指標性的考量。  JPM 現正卡在200均線上, 也很適合關注它。  GS 本來在突破$97.5的時候會進場不過因為今天的負面新聞, 看來還需要在等等多觀察。

 


** 這雖然這不是選擇權交易, 不過由於又是前一天才說完, 第二天就立刻動盪得還不錯, 所以只是想心情分享一下嘍.
** 此圖是日線圖, 圖中是不是有漂亮的長期打底啊. 如果拉遠一點, 是5年的長期打底, 之前2月底的一次大突破後, 整個大拉回retest, 可以再考慮進場. 自6月起這兩次回測點後的反彈, 光是1口基本的standard lot就都有個約 USD$2000 的動盪. 一般交易師在任一次下個3~5口, 爽度可想而知啦. 更爽的是, 第一般車沒搭到的, 它還願意等你, 再回來給一次機會. 第二次如果再不抓住機會就太對不起它的好心了, haha. 目前策略是, Move my (profitable) stops and let the winners run!! Run “Forex” Run!! LOL
*

 

今天在factory data表現不好的帶領之下, 三大指數都是一路走低, 賣壓沉重, 基本上一整天沒有抬起頭過, intraday data 三條pivot point全破. 這跟我之前的分析有較大的差別, 所以今天要提醒大家如果你有進sell naked put 或是bull put credit spread, 要開始注意止損, 不論你是用兩倍或是三倍premium止損, 或是你也可以用200天均線或是之前提的Russell 2000 Index(股票代號: RUT) 730左右的支撐底部都可以, 雖然還不倒退場止損的時候, 但是一定要開始特別關注了.

這也是我過去將近一年來第一次部位接近比較危險的距離, 對於我sell naked put or credit spread的策略而言, 一年之中大約會有一次或是兩次這樣的情形, 只要止損的好, 傷害不會太大, 以比較簡單的sell naked put來說, 如果的止損在當初進場premium的兩倍, 就算你一年發生兩次, 一年下來你仍然有8個月的獲利(兩次的虧損會抵掉兩次的獲利所以12-2-2=8), 假設保守的每月3-5%, 一年也有穩穩的24 – 40%的回報, 但是如果你不止損而是硬坳, 一, 兩次的虧損就可能會給你巨大的損失, 所以作選擇權賣方, 最最重要的是止損.

不論是頭肩頂還是頂肩頭, 技術分析還是基本面都只是提供trading plan需要的資訊, 沒人能100%預測市場, 所以只要好好的做資金分配, 止損守紀, 長久下來還是可以穩定獲利的. 關注一下這個交易, 看看是不是需要止損!

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