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5/30/24

Updated: Jun 3

Looks like a big down day. Usually we like those. Great days to be selling OM puts on our target businesses. But we have a fair amount of puts outstanding and limited cash to buy the businesses if they strike. Debt has always been my friend. Whether in real estate investing or the stock market we have generally bought debt at the right price and leveraged appropriately. Margin debt is expensive right now and with, in our estimate, geopolitical risks threatening equity markets now may not be the time to originate new debt. Incidentally, with the public sector demands for debt we are concerned that rates may actually be heading higher regardless of what happens with inflation. It just makes sense that with all the Federal government requirements for capital to support it’s enormous deficits and debt why wouldn’t that drive up costs in the credit markets generally?

 

Our accounts were with TD Ameritrade and they recently shifted to Schwab. We had negotiated a reduced margin rate with TDA but not sure where that stands with Schwab.  When things settle down we may look at other brokerage options like IBKR with substantially lower margin rates.

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7/23/24

As our readers know, we focus on acquiring those great American businesses that are Dividend Champions. DCs are the currently 145 businesses that have paid increasing dividends for at least 25 years. 

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