Week In Review: January 22 Version

Required Minimum Distribution

The weekly Schwab calls continued – but not due to any issues (for a change).  Last weekend we decided to pull the trigger on the entire 2022 RMD distribution, which requires manual intervention.  I still (and will probably always) have mixed emotions on these, but the alternative is far worse with a potential 50% tax and penalty hit.  Remembering that the goal of RMD transfers are the opposite of the typical buy-low, sell-high strategy, this year we moved mostly Starbucks (SBUX-new cost basis of $100.12 – prior basis $3.22) and a little Apple (AAPL-new cost basis of $173.07 – prior basis $126.49) to the taxable account.  The only saving grace was the timing – capital preservation in the IRA was maximized (for at least a week) as Friday’s close was $96.31 and $162.41 respectively.  The downside also being the timing as under normal circumstances the taxable account would have waited for the drop to make the purchases.  I suspect I may underperform the S&P for a month or so.  Oh well, it’s only a first world problem.


Automation On the Rise?

To provide an example of the inner workings of my thought processes (as if you asked for it), Thursday Janet Yellen was interviewed by CNBC.  Amongst several analysts, I had some issues with her comments, but coupled with Intel’s (INTC) Columbus announcement, my brain went down the proverbial rabbit hole.

Assume, if you will, that much of her commentary was as a Presidential cheerleader on a mission to placate the Progressive base and the main issue is to corral inflation (one of the Moderate base’s concerns).  Three presidential objectives were met with Intel’s decision – greater domestic control over a critical part of the supply chain, good paying manufacturing jobs and increased GDP through automation. 

While KLA Corporation (KLAC) will be a likely beneficiary of this project, I chose to take a broader view of the factory automation theme by adding to my ABB position.  This remains an ancillary position at less than 1% as it doesn’t pass muster with my inflation screen – but it does have some strategic possibilities besides capturing a little more of this years’ annual dividend.

Some Forward Progress

Continuing with the thesis I formed last year, I’ve been conducting a review of my holdings to essentially separate the wheat from the chafe – in essence, like Cramer’s take of “if you buy great American companies, not junk, you tend to do pretty well”.  So, the portfolio “de-junking” was forced to hit the pause button this week to allow the calendar to play catch up (wash rule avoidance).  I’ll probably refrain from selling banks and REITs through tax season to keep optionality in place for some buying.  All other sectors are fair game at this point.

The review process is time consuming due to source anomalies, whether Nasdaq or Seeking Alpha.  Often, data must be manually validated to determine if a dividend cut was real or a result of a stock split.  (This is but one of about five data integrity issues.)  Either source is minimally 95% accurate, I just want closer to 100% if buy or sell decisions are being made.  But time is one resource I have, particularly when the markets are so unsettled.  Once I complete the process, I will dedicate a post with the scoring and revisions.


In Summary

It appears dividends for the month will exceed last year we won’t be behind the eight-ball like we were in 2021. My watch list contains five positions to sell and one under serious consideration to buy so the downward trend in companies own is continuing. I’m in no rush to sell and will probably wait a little until the market recovers.

Hope your week is profitable!