It appears that Glenn is the only one who forgot to bring his walking stick on this, our 31st visit to the Pear Fair in Courtland in late July. It was Roni's first major outing since her appendix surgery a few days earlier, and although we didn't visit as long as in previous years, we still got to have our photo taken with the Pear Lady. Photo by Ben.
August 30, 2019: Labor Day weekend is upon us and just like that, summer is over. It all seems like a blur, especially seeing as how we began the season with best intentions to get things accomplished on our never-ending kitchen renovation. Yes, it has been more than a year since those first plans were sketched out and we commenced with expanding cabinets and demolishing outdated tile counters. Through lack of energy and interest, the project has languished since the beginning of the year, getting only fleeting attention during occasional bursts of inspiration on the part of our contractor — Glenn. But now, it appears, things are finally nearing an end.
It was great to have Ben join us for this year's excursion to the Pear Fair. Thanks to a generous work schedule, he was able to make the journey with us to Courtland and still be home in time for his afternoon shift. Photo by Glenn.
Ben checks out some of the offerings at the Friends of the Sacramento Library used book sale during the Pear Fair. Photo by Glenn.
We didn't spend very long at this year's Pear Fair, but that was plenty of time to indulge in some of our favorite goodies. Ben tries the pear strudel while Glenn works his way through some pear cobbler. Photo by Roni.
We always bring home a pie from the Pear Fair, and this year's was massive! We guessed this sucker weighed in at more than 6 pounds. Or perhaps that's how much weight we gained after eating it. Photo by Glenn.
It's been a week since Roni's appendix surgery and she's looking much better. She was feeling good enough for a walk out at the Big Break Regional Shoreline pier, aided by her trusty walking stick. Photo by Glenn.
Aug. 5 finds us back in Old Sacramento, where we grabbed lunch at Fat City Bar & Cafe. They have some amazing stained glass work on their ceiling. Photo by Glenn.
Lunch is served. They don't call the place Fat City for nothing. Photo by Roni.
Fat City is famous for its French onion soup. They must use about a pound of swiss cheese on top of each bowl. It is oh so good. Photo by Glenn.
After lunch there is time for a stroll along the Sacramento River. Not much boat traffic near the I Street Bridge on this warm afternoon. Photo by Glenn.
It's a weekday, so no excursion rides at the Old Sacramento railroad depot, but you can always pose for photos with the classic steam locomotives. Photo by Glenn.
A statue in Old Sacramento pays homage to the riders of the Pony Express. If you take the Sacramento Underground Tour, you will get to see one of the original Pony Express stops that is now hidden beneath the area's wooden boardwalks. Photo by Glenn.
Don't panic, advises CNBC's Jim Cramer, even on a day when the Dow loses 800 points as it did on Aug. 14. August has been an interesting month for our investments amid market volatility, but we're staying the course for the time being. Photo by Glenn.
The new kitchen floor is finally here. Phoenix inspects the Lifeproof vinyl planks while we lay them out for a test. Photo by Glenn.
With the new floor ready to go, it's time to remove the old one. We've been working a few days at scraping up the old linoleum and trying to remove the adhesive as we prepare the concrete surface that lies beneath. Photo by Glenn.
"I'm cute. Don't forget that." Phyre strikes one of his favorite poses on our sofa, probably as a way to distract us from the fact that he has been clawing at the cushions while he plays with a twisty tie he found. Photo by Roni.
Two can play at this cuteness game. Katy seems unusually relaxed this afternoon. Photo by Glenn.
We decided the new kitchen floor provides an opportunity to rethink where we want the cat litter box to be, and the answer was not in the laundry room. So we purchased this cat "washroom" that keeps the litter box discreetly hidden inside. Phe thinks it makes a good place for a nap. Photo by Glenn.
It looks like the cats are finally getting used to the idea of the new litter box arrangement. Phyre is a big cat, but he actually does fit all the way inside. Photo by Glenn.
This month's culinary travels finally bring us to Pittsburg, where we enjoyed a late breakfast at the New Mecca Cafe on Aug. 25. Glenn is enjoying his huevos rancheros. Photo by Roni.
A totem pole greets visitors to the Pittsburg Marina, which is where we went to walk off our New Mecca breakfast. Photo by Glenn.
Last month we wrote about how we had ordered five boxes of Lifeproof vinyl planks to replace our outdated linoleum floor. We were excited to bring home the cartons from Home Depot until we opened them and discovered that the color wasn’t all we’d hoped it would be. So after much debate we decided to return that order and try again with another color. This time we went with Woodacres Oak, which in addition to having more shades of gray that matches our cabinets better also only comes in one width. This latter attribute was the main stumbling block affecting our purchase decision. A few of the Lifeproof styles come as multi-width planks, which can add some variety to the appearance of the finished floor and offer more flexibility during installation. The planks we used in Ben’s bathroom a couple of years back had this feature and we liked it. The Copperhill planks we originally bought for the kitchen were also multi-width. The Woodacres Oak, unfortunately, is not, but ultimately we decided the color was closest to what we wanted, so we ignored this detail.
We also decided that five boxes of planks might be too many for our small kitchen, so we chanced it and went with four the second time around, figuring we can always order another box if we need one. We had only seen 4x4-inch samples prior to getting the full shipment, so we were eager to put a few of the planks on the floor when we got them home from the store. These we liked much better, which was a good thing as we didn’t want to return the heavy boxes a second time.
The good thing about the vinyl planks is that they can be installed right over an existing floor in many cases. We had planned to do this in the kitchen, but two things stopped us: first, the linoleum was coming up in a couple of spots beneath the stove and dishwasher, which meant we would have to trim it back anyway. Second, the clearance between the top of the refrigerator and the cabinet above it is so tight that adding a quarter inch with the new floor might mean the fridge would no longer fit. Silly as it sounds, the eighth of an inch thickness of the old linoleum might make all the difference, so Glenn decided to remove the existing floor first.
* * * * *
B
ECAUSE WE SEEM to be good at making a tough job as difficult as possible, Glenn decided to start scraping off the old linoleum with a putty knife. Bear in mind that this linoleum had been in place since 1987, and apparently the installers used the strongest adhesive they could find to bond the material to the concrete foundation. So what Glenn thought he could accomplish in a couple of days wound up taking most of a week to complete.
It quickly became evident that the putty knife literally wasn’t going to cut it, and that better tools were necessary. Roni checked YouTube to see how others had tackled this job, and she found that one popular option was to use a multi tool with a scraper blade. So it was back to Home Depot we went in search of the least expensive option we could find.
Glenn had talked about getting a multi tool on several occasions over the years, but he never saw the need to pop the cash for a tool that might only get occasional use. The kitchen floor project changed his mind, particularly as he huffed, puffed and sweated his way through the job with that old paint scraper amid some of the hottest days of the year. The Dremel Multi-Max tool we found proved to be affordable at $99, and a flexible scraper blade attachment added $15 to the bill. Roni also thought Glenn needed something better than the worn out putty knife, so we also picked up a heavy duty hand scraper blade.
Once he got the hang of how to use it, having the multi tool did make the job much easier. Glenn alternated between using the electric tool to loosen patches of the floor, then the manual scraper to pry up large sections once they’d been started. It still took a few days of work, mainly because Glenn had to stop and rest frequently due to the physical exertion required to pry up the linoleum. This aging body isn’t getting any younger!
The biggest challenges were how to remove the linoleum from beneath the stove and refrigerator. The stove was the easier task, requiring us to prop up its front feet long enough to slide the scraper blade underneath. For the fridge, it meant moving the beast away from the wall and leaving it in the kitchen just an inch from the sink counter. That left just enough room to wriggle in behind it and work, so Glenn was able to get into the tight space and pry up the remaining floor once the other parts of the room had been finished. Roni doesn’t like the thought of relocating the fridge to the dining room for any length of time, so this will probably have to be the solution while Glenn replaces the floor, tiles and grouts the wall, and finishes off work on the adjacent counter that couldn’t be completed a few months ago.
With all the old linoleum removed, it was time to figure out what to do with the adhesive and bits of backing paper that remained on the concrete. The vinyl planks are pretty forgiving once installed, but it is best to get the subfloor as smooth as possible to avoid uneven areas. We tried using the scrapers, both mechanical and handheld, to clean up the remnants, but they couldn’t handle the job. Next we bought some adhesive stripper from the home improvement store, and although this helped clean up the concrete a bit better, it still left much to be desired. Finally Glenn decided that good enough was good enough, so he pulled out his detail sander with the coarsest paper he could find and sanded smooth the entire floor. There is still quite a bit of paper and adhesive attached, but much less than before. The installation of the new planks should begin next month.
* * * * *
O
NE LAST LOGISTICAL hurdle to getting the new floor in place involved what to do with the laundry room. For the past decade we have had a stackable washer and dryer, which despite their space saving qualities are nearly impossible for us to move. Before we got our first units we redid the whole laundry room, which included covering the existing linoleum floor with some cheap linoleum we got in a prepackaged roll. This we attached with vinyl paste. Hindsight being what it is, this has turned out to be one of the worst choices we could have made. The paste hasn’t held well, leading to the vinyl peeling up on the edges. The vinyl has also ripped from our previous attempts to move the stacked washer and dryer.
The space we thought we were gaining by stacking the washer and dryer was soon lost when we decided to move our garbage and recycling bins there to get them out of the kitchen. And then there was the kitty litter box. We have used the laundry room to keep the box in even before stacking the washer and dryer, but that doesn’t mean we like the arrangement. It is stinky, cluttered and unsightly, especially with three cats. The litter that invariably gets kicked out of the box winds up getting tracked into the kitchen and elsewhere in the house; it was a primary culprit in the deterioration of our old kitchen floor, with the clay pebbles scratching the linoleum. Glenn wanted a better solution before having the same thing happen to the new floor.
So it was back to the internet for ideas, and Roni eventually discovered an enclosure on Amazon that we both liked. The idea was that we could hide the box inside a piece of furniture that could be placed elsewhere in the house, getting it away from the kitchen completely. Problem solved? Well, it would depend on how the cats took to it.
The so-called “cat washroom” came to us unassembled for around $140. Glenn put it together in an afternoon, and when it next came time to change the litter box we relocated it to the inside of the cabinet and placed it in the entryway adjacent to the living room. There was some initial confusion and curiosity on the part of the cats, but once they realized their box was no longer in the laundry room and the cabinet could be used for the same purpose, they readily made the transition. Mostly. Katy took a little bit longer to get used to the dark enclosure, so we had to coax her by locking Phoenix and Phyre in the bedroom a few times to give her a little more privacy.
Does this mean we’ve found our answer to getting the litter box away from the kitchen? We’ll have to check back in a few weeks once we decide if we can live with the aroma in our living space. Roni is now convinced that we should extend the kitchen floor into the laundry room, which wasn’t part of the original plan because it would involve moving the stackable appliances. We may do the part we can reach easily and save the rest of the floor for the dreaded day we eventually have to move the washer and dryer.
* * * * *
A
UGUST WAS A particularly challenging month for our investments, as increased volatility, falling interest rates and panic surrounding the China trade war all conspired to put financial markets on a roller coaster ride. There were multiple days when the Dow moved triple digits, including one particularly nasty session Aug. 14 that saw the benchmark stock index fall 800 points — its fourth worst single-day point loss in history.
Was this the start of the much anticipated recession, or just another hiccup in the midst of a bull run that began more than a decade ago? Should we take all our chips off the table and stuff our money under the mattress until the chaos subsides? Everyone has a theory about what it all means, and eventually all theories are correct. The real question is what lets you sleep best at night, and the answer clearly depends on your appetite and tolerance for risk.
In our case, being dividend investors, we are fully committed to staying in the markets regardless of conditions. This means we don’t spend a lot of effort trying to time the swoons and rallies, but rather look for opportunities to keep acquiring good dividend-paying companies when shares are on sale and yields are highest — and there were several bargains to be had in August for those with the cash to invest (which has been our biggest problem lately.)
Our largest purchase this month was also our most accidental one, when Macy’s (M) turned in an unexpectedly poor earnings report the morning of Aug. 13 that sent its stock sharply lower. We had a standing buy limit order in our taxable brokerage for $18.20, but when the markets opened that day and the share price rocketed lower, we picked up 100 shares at $16.50 each. Yes, we said we love buying stocks on sale, but sometimes you wish you’d waited; this was one such case, as the stock has since tumbled to a low of $14.20 and will likely fall more before the November earnings call.
Not to worry, because now that Glenn has a little experience trading options he immediately sold a covered call against those M shares to hopefully make back some of the loss if the stock continues to decline through the end of the year. A crash course in covered calls, for the uninitiated: First, you must own 100 shares of the stock (that’s the “covered” part) for each call contract you “write” (or sell.) In doing so, you are granting the call buyer the right to purchase your shares from you by a certain date at a specific price; as the call writer, you determine what that strike price and expiration date is. You sell the chosen option at market price and immediately receive a premium payment. You are making a bet that the price of the stock will move lower or remain relatively unchanged. If the stock price closes below your strike price on the expiration date, the option is “out of the money” and the call writer gets to keep the shares and 100 percent of the option premium. If the stock closes above the strike price, the call writer may still be able to capture some of the option premium by repurchasing the option, or he must sell the underlying stock as per the contract.
In this case, Glenn sold an in-the-money January 2020 13 call against Macy’s when the stock was trading at $16.52, which means that he expects it to fall to around $13 a share before then. He received a premium of $352. At the close of August, the value of the option had fallen to $227, meaning that it currently shows a profit of $125 (before trading fees.) If Glenn were to buy back the option today, he would close the contract with the profit and still have the 100 shares of stock, for better or worse.
That’s the way covered calls are supposed to work, if you are the seller. Now for how they don’t work…
We bought 100 shares of Target (TGT) back in January at a cost of around $69. On the morning of Aug. 21, the company reported earnings that sent shares roaring higher, topping $100 for the first time ever — a 20 percent spike in a single day. It was exciting, to say the least, but would it last? Once the euphoria of a solid earnings call starts to fade, share prices tend to ease lower for a dew days. In anticipation of this, Glenn sold an Aug. 30 99 covered call for a $415 premium, betting he would be able to recapture at least some of the option before expiration.
That didn’t happen.
When he sold the call, the stock was just below $102 a share. It marched higher from there. Aside from a brief period on the day he wrote it, the option was never profitable. By Aug. 30, expiration day, TGT shares were trading at $107 and the price of the option was too expensive to repurchase. Rather than lose more than $400, Glenn allowed the option to expire in the money and sold his shares for $99. He still got to keep the call premium and will receive $9,900 for the sale of the stock, which is still a profit of more than $3,400 from the initial purchase.
Because we are interested in dividends, losing TGT will cost $264 in annual income, based on its current dividend rate. However, by replacing it with another stock that pays an 8.7 percent dividend (PCI), we can receive the same annual income for around $3,200 — less than the total profit we received from TGT — and still have $7,100 to buy something else. What that something else is and when we will buy it remains to be determined, but at least now we’ll have some cash going into September.
* * * * *
S
O FAR, GLENN has found options trading to be a mixed bag. He has sold a couple of small winners that expired out of the money, but also chickened out and bought back two options at the wrong time when he feared he might lose his shares — both would have been successful had he left them alone. Furthermore, conducting options trades through Vanguard is relatively expensive compared to other brokerage houses, and because of his experience level (a month) Glenn is not currently allowed to sell puts or engage in more complex strategies that veteran traders take for granted. While it is nice to have the ability to sell options as a way to bring in extra income, it may not be something we do often because of the risks involved, and because it’s generally better to buy and hold shares than to constantly trade them.
Our one other purchase during August was to pick up 30 shares of Alliance Resource Partners (ARLP), a coal company that we already own a substantial stake in. Coal may be a dying industry in the U.S., but it is second only to oil and natural gas worldwide as an energy source, including in India and China. It isn’t going away for the foreseeable future, even though the markets have priced it as if it is. Green New Deal? Only if you are referring to this stock’s 14 percent payout ratio.
Meanwhile, the issues with Ben’s brokerage account finally got sorted out and he is now set up with Vanguard. He received his five shares of Grocery Outlet (GO) stock that we transferred to him. Hopefully it will be the first step on his own successful investing journey.
* * * * *
R
ONI HAS BOUNCED back reasonably well since her emergency appendectomy a month ago. The bills are still trickling in, but it looks like the damage to our pocketbook won’t be too bad. Figuring out Kaiser’s bills can be a challenge at times, so we continue to wait for any last-minute surprises.
As part of her recovery, Roni has been trying to get out for light exercise ranging from yard work to walks around the neighborhood. On Aug. 2, we went to Sacramento so she could attend a seminar offered by the California Special Districts Association, then afterward we spent the afternoon at Old Town checking out the gift shops and enjoying lunch at Fat City Bar & Cafe. A visit to Pittsburg on Aug. 25 started with a late breakfast at the New Mecca Cafe and then a two-mile walk around the nearby marina.
Glenn and Ben have continued their every-other-day walks around the neighborhood, and the results have been showing on the scale. Glenn is down about 14 pounds from June, his lowest weight in nearly five years. Because of his growing interest in investing, he has been waking up at 6:30 each weekday morning to keep tabs on the markets. While he has never been a “morning person,” there are signs that he might eventually transform into less of a night owl. Time will tell. Speaking of which, it is time to put this newsletter to bed.
