Tuesday, April 18, 2006

What We're Buying With My Wife's New IRA Funds (2005 Contribution)

We're establishing two new positions ($1k) in BEARX, a bear market mutual fund. The other new position is TC Pipelines LP (TCLP), a 6.8% dividend stock. All other transactions are building upon existing positions.

Here are the other transactions:
(1) Buy $250 in UMESX, Excelsior Energy and Natural Resources Fund
(2) Limit Order - 20 shares of BHP Billiton @ $43.88
(3) Limit Order - 40 shares of TC Pipelines LP (TCLP) @ $33.50
(4) Buy $250 in PCRDX, Pimco Commodity Real Return

Limit orders are set for 30-100 cents below current price. Thus, orders may or may not be filled.

Comments on above stocks:
(a) UMESX - I expect more record oil company earnings
(b) BHP Billiton - I expect the bull market in metals to out live the oil bull market
(c) TCLP - offers a 6.8% dividend, has record of increasing dividend at 3% average over last 5 years. Finally, Morningstar and the braniacs running the Yale endowment investment believe in it too.
(d) PCRDX - I feel that oil is going to at least $80/barrel by end of hurricane season, other commodity prices expected to remain reasonably strong. Be careful w/ this fund; the fund's method for investing is changing this summer because of an IRS ruling.

This will leave $275.40 left over (assuming limit orders processed) for later no-fee mutual fund transactions. Why so many commodity related stocks? Answer: The area is hot and overall we still have less than 10% of net worth in commodity related stocks and funds.

Investment decisions for 2006 ROTH IRA contributions are to-be-determined.


W.C. Varones said...

Don't buy the PIMCO!

Market Participant said...

TCLP is a publicly traded partnership. I would be *very* careful about putting it into an IRA. Partnership units also create a tax nuisance with their K-1 forms. But if you still want to own partnership units, I recommend Sunoco Logistics Partners SXL to go with your holdings of TCLP.

TCLP's dividends are considered to be "Unrelated business taxable income" UBTI which are prohibited in an IRA. You should consult an experienced tax accountant about this issue.