NEW TRADES

On July 27 I sold several long time positions. I think we are in order for a downturn in the stock market.
Sold positions
Gabelli Utility Trust (GUT) $9.55 Held for 1 year and 7 months for a 19.7 percent profit
Wasatch International $23.36 Held for 3 years 6 mo. for a profit of 98 percent
Wasatch Strategic Income (WASIX) $11.29 Held 5 months for a loss of 1 percent
Wasatch Ultra Growth $25.89 Held for 5 years for a profit of 77 percent
Third Avenue Real Estate (TAREX) $32.93 Held 3 years for a profit of 91 percent
Third Avenue International (TAVIX) $24.54 Held 3 year 6 mo. for a profit of 60 percent
Third Avenue Small Cap Fund $26.66 Held 5 years 6 mo. for a profit of 101 percent
Netflix (NFLX) $17.26 Held 1 month for a loss of 12.7 percent
Sara Lee (SLE) $16.11 Held 1 year 6 month for a loss of 2 percent
Johnson & Johnson (JNJ) Held 1 year 3 months for a 6.8 percent profit

New Buys
HRPT Properties Trust (HRP) $9.28 pays a 8.9 percent dividend
Wells Fargo Cap IX (JWF)$21.60 pays 6.4 percent dividend
Flaherty Preferred Income (PFD) $15.30 pays 6.6 percent dividend
Short Dow 30 Pro Shares (DOG) $59.87

As you can see I sold several long time positions, most at a nice profit. Many of the positions I sold were mutual funds. My exposure to the stock market has dropped rather dramatically, but I feel I need to take some profits now rather than watch them evaporate in this choppy market. I still own several stocks, mostly large stable companies like Coca-Cola and GE.

My new purchases are nice dividend payers. The Wells Fargo Cap IX (JWF) is a preferred stock which is more like a bond than a stock. Preferred stocks are mostly issued at $25 per share and have a call date in the future where the company can buy them back at $25 per share. The call dates are usually around 5 to 10 years out from the issue date. The payout on dividend is $1.38 per year, which means that when it was issued at $25 per share it's dividend payout was 5.5 percent. You can now collect 6.4 percent if you buy at $21.60 because the payout never changes and if you divide $1.38 into $21.60 you get 6.4 percent. Now the kicker is someday it will be called at $25 per share which represents 15 percent upside from this price. So you can collect 6.4 percent with a guaranteed 15 percent gain on top unless Wells Fargo goes bankrupt, which doesn't seem likely. Preferred stocks are great to buy in an enviroment like this because you can collect your Quarterly dividend while you wait to be called. The underlying price will go down if interest rates go up and they will rise if interest rates go down. But you can never lose if you hold them until they are called.

Short Dow 30 Pro Shares (DOG) is a bet that the stock market will go down.

A lot of money I made in my sold positions is now held in a Money Market account, I'll collect my 4.5 percent until I find some buys out there, but right now there seems to be too much risk in the market for my taste.