Q: I cannot seem to find enough info on the web to determine if NXRT can keep up the ~7% dividend. What does your research reveal as to the probability of continued dividends at $.206/share? Might be time add to my position.

J: It’s an apartment REIT. They have good coverage of the dividend from FFO so it’s probably pretty secure unless they see massive vacancies for some reason. I don’t seen anything like that on the horizon. It’s just very thinly traded so easy to push the price around.

Q: thanks [for your Warren Buffett bear market post] jesse..
but bonds very high too.. maybe reduce stock exposure and hold some cash too..
btw grantham thinks stocks can rise another year before bust..
so moderation is wise

J: Bonds are high relative to what?

Q: Hello Jesse

Even though gold is on a 5 year low, because interest rates are going to increase over the next 2-3 years, what will cause prices of Gold to increase during the same time frame ?

It will really help to have the pros/cons of all our positions in a separate section on the website for quick reference.

Thanks for all your research!

J: First of all, do you mean short-term or long-term rates? The Fed may raise short-term rates. They may not. If they do they may be forced to lower them again soon. The economy is by no means strong right now. Having said that, contrary to popular belief gold usually rises during a rate hike cycle (because it usually sells off in anticipation of it like it did this time). If they don’t raise that’s probably even more bullish for the metal, in my opinion.

I’m sorry to say, we just don’t have the time right now to create a Cliff’s Notes for the content I’m putting up. We may be able to at some point in the future, though. For now, you’ll just have to read the full reports as they come out.

Q: Just wondering if you have considered options on any of the gold miners? I am newer to options but they certainly seem cheap if you (we) are bullish on the GLD sector in general…

J: Generally if I want to own something I’ll just buy the stock. Options can be very tricky. I’ve seen lots of smart people be right and still lose money in options. As Jim Rogers says in Market Wizards, 90% of options buyers lose money. Those are not odds I like to test on a regular basis.

Q: I keep hearing warnings about a coming crash in the high yield bond market from some high profile market gurus. What are your thoughts about if and when that will happen? Although no one has said it, my personal opinion is that, if it happens, the most likely catalyst will be bankruptcies in the fracking business brought on by low oil prices. Might be interesting to dig up an indicator to help track it??

I think there is some precident in the 80s when Saudi dropped their price down to about $10 to drive all the stripper well operations in the US out if the market. I believe that was a big part of the banking problems during that time. I suspect the individual failures were not newsworthy until the banks started failing.

As Dennis Miller says, “I could be wrong.”

J: I agree. See my comments in this week’s chart book. The bond market is pricing many of the bonds of these companies as if they are going bankrupt even though the stock market doesn’t. Weird disconnect there that may be a great place to fish for profits on the short side.

Q: These miners are driving me crazy. Bought some more 2 days ago and they go down. Would love a parabolic rise.

J: I know it can be frustrating but try to have some patience. They are doing everything they should be right now. See this week’s chart book.

Q: You have mentioned that you don’t have a hard stop to close out losing positions but what is your absolute total you would stop at ? And what are your time line horizons for short and intermediate term ?

J: Not sure what you mean by “absolute total.” Stops really depend on what sort of trade it is. If it’s just a straight short-term trade I’m pretty quick to stop out. If it’s a longer-term investment I rarely use a stop at all. I’d rather wait until fundamentals or just time tells me I’m wrong.

Short-term for me is about a couple weeks to a couple months. Intermediate is probably less than a year. Long-term is anything over a year.