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Strategies & Market Trends : Young and Older Folk Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (337)	9/21/2021 1:55:08 PM
From: chowder	4 Recommendations Recommended By Cogito Ergo Sum Menominee red cardinal stardusting Read Replies (2) \| Respond to of 21876

Re: Middle Age Portfolio ... Portfolio Adjustments. This is a follow up to yesterday's adjustments. I made those moves in the last 15 minutes of trading and time ran out before I could complete the final move. I sold RIO to buy PCI. The following analysis had a good bit of influence in my final decision. The dividend simply isn't safe enough for me to stick with RIO. If it were a fixed distribution as opposed to a variable distribution, my opinion would differ. Rio's earnings will inevitably pull back from the stellar results reported since the onset of the pandemic. And with it, the variable-rate dividend payer will likely see its payout reduced in the year ahead. Rather than commit to a fixed dividend payment that remains stable or increases annually, Rio's dividend policy targets a 40% to 60% earnings payout ratio through an economic cycle. Falling Demand for Steel Likely to Reduce Rio Tinto's Variable Dividend ? Downgraded on September 20, 2021 Last week iron ore prices tumbled 20%, marking the worst week for the mineral since the financial crisis in 2008. The sell-off was stamped by China implementing production limits for steel, the primary use for iron ore, to help ensure blue skies for the upcoming winter Olympics in Beijing. However, global steel demand had already begun to wane, led by the cooling housing market in China, the world's largest consumer of steel. Concerns around the price of iron ore dropping over 50% since last May continue to accelerate. Evergrande, one of China's largest property developers, is teetering on insolvency, signaling a continued slump in demand for building materials in what has been the world's hottest market. Therefore, RIO is out PCI is in. PIMCO Dynamic Credit and Mortgage Inc: PCI The Fund will normally invest at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of mortgage-related securities and other debt instruments of varying maturities (the “80% policy”). PKO and PCI are going to be merged into PDI soon. Since the mergers will be on a NAV-for-NAV basis, it makes sense to swap into the cheapest of these funds at any one time, on a premium/discount basis. What this means is that right now, it is economically beneficial to swap from either PDI or PKO to PCI, as the spread in premium/discount valuations should converge to zero as the merger date approaches.