This is just a quick follow up to my last post wherein I provided some insight into what we could expect from today’s CPI report. My rather simple regression-derived estimate for the month over month change was spot on. My estimate for the annual change was high.
…Today, the U.S. Bureau of Labor Statistics released its latest report on the Producer Price Index (PPI). In about 9 hours, they will release its latest Consumer Price Index (CPI) report. The PPI report came in slightly worse than expected, and the market responded accordingly with a 0.32% drop. The market is hoping for a good CPI report because that would be an indication that the Fed’s rate increase and monetary tightening policy to address rampant inflation is working. In fact, the market really wants a stellar report. That would be cause for the Fed to reconsider its aggressive policy and avert a deep recession.
I believe the market is going to be disappointed.
…At 4:10 pm, on October 10, 2022, Legget & Platt Inc [LEG] issued a press release announcing a reduction in their estimate of earnings for 2022 and some business acquisitions. I only noticed this after-market news release because there was an inconsistency between my spreadsheet, that uses the day’s closing price, and a certain exhibit of TD Ameritrade’s website that displays where prices have landed after all post-close trading is complete.
In just 10 minutes, LEG’s share price fell from the day’s close of $34.68 to $31.10, or -10.3%.
We’re in a bear market and an economic recession. The market has lost a quarter of the value it has built up in over a century in just three quarters of a year. But 10% in 10 minutes for a single company? I was intrigued.
…Unless my acquisition price is markedly different than the previous trading day’s close, I will not be providing purchase confirmations for market orders going forward. The portfolio and performance pages have been updated. The average cost of MMM has been changed on the performance page. Previously the portfolio had eight shares from one purchase at a price of $124.75 per share. Today, I purchased three more shares at $111.69 per share. My average cost now reads $121.19. The calculation is simple.
Averaging down is a form of dollar cost averaging. Sometimes averaging down gets a bad rap. Royal Dividends will be employing this approach frequently and doing it for the right reasons, in a way that makes sense. Look for a more detailed post on this topic in the near future.
There are eleven stocks in the Royal Dividends portfolio, what I call the Portfolio for the Ages. Let’s look at the portfolio and note some of the characteristics it possesses:
So, what’s next?
…Too many years ago, my friends and I had tickets to see a triple bill of Cheap Trick, REO Speedwagon, and Foghat at the New York State Fair. The real interest for me and another one of my friends was Foghat, a band that could effortlessly combine blues and sleazy rock ‘n’ roll. We got to our seats and then immediately learned that Foghat would not be performing that night. I cannot remember why or whether a reason was even given, but our mood tanked immediately.
…I’m going to take advantage of the Labor Day Sale prices that materialized on Friday. Check this space later this weekend to find out which company it will be. I can tell you one thing, there is a 50% chance Tuesday morning’s purchase for the Portfolio for the Ages won’t be a Dividend King!
Today, the portfolio received $7.74 in cash, courtesy of the Black Hills Corporation [BKH]. Like a proud shopkeeper who frames the bill from his first sale, I feel like a post commemorating the event is in order.
There will be at least a couple of posts in the near future, about how to best reinvest dividends and the benefits of receiving dividends during bear markets and economic recessions.
Black Hills just paid its quarterly dividend of $0.595 per share for the fourth time. That means, we can expect their next quarterly dividend to be even more. I’m looking forward to it.
There has been a lot of debate over the past few weeks. Investing experts have been taking sides, are we in a bear market rally or have we already found a market bottom and begun a new bull run? The answer is in. We enjoyed a rally within a bear market, and it’s over. That’s right, I’m calling it. Just as there are corrections within a longer running bull market, there are rallies within bear markets. In my post on August 9, 2022, entitled “Yield Curve Inversion”, I put forth my own opinion – that we were already in a recession. This afternoon reinforced that notion.
…This past weekend I narrowed my choice for this week’s acquisition to two companies. National Fuel Gas Company [NFG] and Computer Services Inc. [CSVI]. The deciding factor turned out to be that NFG had been rising in price this year and CSVI had been struggling. I assumed CSVI would be either the same price next week or perhaps even lower. So, I decided to add NFG to the portfolio and add CSVI later.
NFG dropped about a dollar by close of today. CSVI went up 50%.
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