June 5, 2016 Surprise

Risk/Reward Vol. 309

THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.

Last week's holiday and this week's familial obligations have precluded me from publishing two consecutive editions. That stated, I share with you the following.

Had I written an edition last week it would have recorded my certainty (shared in most part by Mr. Market) that the Federal Reserve would raise rates in June or July. I also would have reported that Mr. Market had positioned himself for such an event and that I likely would not sell in advance of those meetings despite previous statements to the contrary.

Friday's miserable jobs report has taken a June increase off the table, at least according to the odds makers at the CME. Moreover, the folks at Goldman Sachs are now questioning whether a move in July makes sense. From the action in the stock market on Friday, it appears that Mr. Market may have shed his fascination with the Fed as the plummeting of odds that an increase will occur did little to move the needle. Both the Dow Jones Industrial Average and the S&P 500 stayed within a very tight trading range all week. Both are up just over 2% for the year

On a personal level, I continue to do well as the rate on the 10 Year Treasury Bond has stayed well below 2% and the price of oil has stabilized near $48. Moreover, the price of natural gas has risen slightly which has increased the value of some of my pipeline plays. The modest portfolio I started in late April is up over 3.2% with energy plays OKE, PAA, ETP, KYN and DPM, preferred stock funds HPI and HPF and real estate investment trusts STAG and CIM leading the way. Moreover, this portfolio averages over 7% in annual dividend payments, many of which are paid monthly. Combined with the profits I took in early April, this year's performance is better than I expected---at least so far. I don't like being a trader, but buying and holding in a market bloated by eight years of zero bound interest rates is not prudent for a person at my stage in life.