Monday, December 1, 2008

At least PNC's dividend will produce a 3% yield

If PNC doesn't cut their dividend payout, and they haven't telegraphed that possibility, then I will earn a 3% dividend on my investment while I lick my NCC wounds and hope that any deal that PNC got gets reflected in its stock price. So far PNC is stuck in the financial stock downward spiral and hasn't signaled that the market sees any great benefit in acquiring NCC at a bargain price. Since this deal looks like it will go through I'm rooting for the bankers at PNC. I also am hopeful of a few pennies of recovery through settlement of class action suits against NCC's director's liability insurance coverage.

In my current state of paralysis it is very hard to commit cash to any investment class. On Friday I wrote covered calls on almost all of my long positions and pocketed some cash. These will either expire and I'll still own the stock or we'll see another bear market rally, as today shows last week was one, and I'll gladly be taken out before the eventual decline. Outside of call writing i'm frozen. I can find very good companies selling for private company multiples of cashflow, but every time I've bought I've been sliced by the proverbial falling knife. Corporate bonds are sporting very nice yields over treasuries as are preferred issues, but I haven't pulled the trigger yet. Waiting seems the best decision.

The only bright spot on the horizon is that after offsetting gains taken earlier in the year by taking some current losses, I intend to withdraw as much as I can from my IRA to use all of my deductions and pay zero tax. I never contemplated being able to distribute IRA earnings without being taxed, but I'll take small gifts any day and, lately, i need small gifts to make up for market losses.

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