Tuesday, March 14, 2006

Some Updates

An update to my note of January 11 on income securities:

Between the middle of February and the beginning of March, I bought three lots of preferred stocks of closed-end funds: GAB-D, GUT-A, and RVT-B. Aside from my general considerations for buying income securities then, especially long-term ones, they were AAA-rated securities yielding nearly 6%. My past experience with similar securities from the same issuers was good; the same past experience and some guesses about future interest rates suggest that they may indeed be called as soon as they are callable, but since I got them at a discount, that's not the end of the world.

Had I been thinking clearly about the expected actions of the Bank of Japan and the possible ramifications I probably wouldn't have bought these securities just then, and I might not be in the market for any more right now, until the smoke clears, both in Japan and the United States.

If you are in the mood for strange income securities right now, you might want to look at BEG-B (BGEPRB). The coupon is 6.20%, S&P is giving Constellation's related common stock (CEG) 4 out of 5 stars at the moment, and Argus is calling it a buy for both 12 months and 5 years. As with any security callable in the near future, though, just make sure you get it at a dscount.

As to CHK and MFB:

I bought CHK, and didn't buy MFB. CHK is down a little, and if I remember correctly, MFB has gone nowhere. My feelings about both are the same as they were: CHK looks good to me for the medium and long term; MFB looks pretty good for the long term, but I haven't the faintest idea how to call a bottom on it.


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