It is a rarity to have gains in preferred stocks like we had in January–the gain was in the 8% area on the average share. Personally I lagged the market by 1.5% as I have an allocation to CDs and shorter maturity treasuries. I am sure many outperformed me since I spend too little time jumping on bargains and rotating around to maximize returns–my market timing typically is bad–so no use chasing around.
Today is the day–I am more interested in Chair Powell’s news conference than in the rate hike announcement as it is a foregone conclusion that the hike is 1/4% – if it is more or less the markets will be very wild. So the unknown is how hawkish will the news conference come off.
Yesterday was a nice day with the S&P500 up 1.5% based upon economic numbers indicating inflation is trending lower. The 10 year treasury yield continues in a relatively narrow range–now (6 a.m. central) at 3.48% down 3-4 basis points from yesterday–I suspect we could see a breakout (down or up) of the 10-15 basis point range we have been in for a few weeks with today’s FOMC rate hike and news conference.
I am back to the do nothing mode. With a bit of cash now available for investing (and earning near 4% for waiting) I will wait for some shares to go on sale–if rates remain in this area and no bargains appear I will forfeit 2% or so on my cash holdings–oh well.
I pretty much just hung-on during Jan- did sell a couple that I had concerns about with take overs, etc. For the month, ended up 6.7% on my stocks, and some extra from my SNOXX cash holder.
The Fed will be interesting today– err just saw 1/4% increase- mkt not changing – what they expected, I guess.
A grand month indeed! I probably lagged just about everyone here, but I’m happy with my 3% gain. My port maybe different than some others because I don’t have a company pension and hence not even a portion of it is “play money.” Me and the Mrs. retirement depends on it so I’m 90% cd’s, IG bonds, short-maturity preferreds and some HY floaters. Like others I did buy into the “raging” bargains late last year, but they’re mostly all sold now. I take “solace” in my 3.8% gain last year when millions of retirement accounts had 20% haircuts. 6.8% over the past 13 months and a current 6.50% average portfolio yield is just dandy considering the environment. It’s great for all of us too that wealth destroying inflation seems to be coming down.
GRJoel–everyone is different for sure. We have 2 General Mills pensions and 2 Soc Securities – and 2 jobs to boot. But you are right that most of us didn’t take the giant elevator down–I would be literally sick if I road tech issues down 20, 30 or 50% down–age just doesn’t allow for recoveries from those type of losses. Nothing at all wrong with a 3% gain in a month.
GR, Sounds to me like you exceeded benchmarks and then some. So you are an income investor needing a wink and a nod towards capital preservation also. You just navigated the worst 12 month income period in over a generation and you managed to increase your forward income, increased your capital base, and all with minimal volatility. I think that is outstanding!
BTW, you arent the only one behind Tims returns (sorry Tim ya aint in last as at least two are behind you) as I only clipped 6% this month. I had some great trades, but I have CDs, IBonds, and a fair amount of 2 year corp debt that really drags the returns down. Im a pensioner so although I can afford to be more aggressive with what I have, but I find myself protecting last years nice gains as they were hard earned.
Thanks Grid,
Other than my silly foray into WBD, I indeed did not participate in last year’s volatility. In all the big down days last year my accounts more often than not squeeked out a small gain and never went down more than .3% in one day (exluding WBD and the CDR-B hatchet job which cost me .8%).
My sister plays Sudoku to help keep the brain healthy and I manage investments. My brain is healthier than hers – ha!
I nicely exceeded January’s average gain preferred gain of 8%. That’s because in November and December I positioned myself in lower priced inv grade issues ($15-$17) because I believed (hoped?) that when the group turned, those that lost the most on the way down would gain the most.
I’m having a really hard time with buying more of these issues that have rallied anywhere from $1.50 to $3 in such a short period of time. Good swaps have been hard to find because in an up move, everything moves up relatively linearly, as compared to those hard down days where illiquidity and sellers often creates larger disparities within groups. I hope that today’s Fed move will provide some clarity (or even some volatility) but I doubt that it will. What to do, what to do? (rhetorical question).
I also use Ameritrade and as JG mentioned, their money markets settle overnight which is problematic because it hampers buying. One could use margin overnight but at 13+ pct, that’s self-defeating. I’d also appreciate it if anyone can suggest a better method for garnering more than basis points on free cash.
Tim, first of all, I want to thank you for such a lovely site, and all your insights. I should also thank all of the other contributors that I read. I discovered this site a few months ago, but find myself coming here more and more, so thank you very much.
I also have enjoyed January, and much to my displeasure, I too have been lightening up as the month wore on. Yes, too much strength too fast. I also cannot comprehend why a bird in hand of 4% money market is making me itch so much to put it back into higher and riskier ventures. Now I have only taken like 12% out, it’s still plays on my mind.
So I use two main brokers, Fidelity and TD Ameritrade. Fidelity is easy with their cash money market and sometimes when it’s high I move it into the Spartan money market. But I don’t have a good recourse for TD, and it’s only lately that it really matters. So I have taken to buying SWVXX. But I’m lazy and find that annoying, plus it hampers, putting in some limit buy orders. Anyone have a better method with either broker? Last and least, I notice the wrong maturity date on RILYO, the year should be 2024, not 2025. It’s right on its main page, but wrong in both list of bonds. I’m sure this is the wrong place to mention it, but I couldn’t find an alternate way.
Anyway, thanks so much again and good luck to all this year. JG
Yeah, I slightly lagged the S&P 500 in January – it being roughly +7.5% and my portfolio +6.6% but I am not complaining because I outperform on downdrafts. I’d rather limit draw downs than beat the markets upside.
Cheers to that !!
Rules for investing:
Rule 1: Protect Capital
Rule 2: See Rule 1
Rule 3: Slow and steady wins the race
Full disclosure, I have broken rule 1. (Heavy sigh ………..shakes head)
Powell better be careful or he’ll become the dog with no teeth. All bark, no bite. 32 trillion in debt and a fed government spending like a manic -depressive in a mania phase. Now’s the time to get those rates up.
The rate of inflation growth may be slowing down, but many people have already sustained a significant blow to their budgets over the last 2 years and another episode of rampant inflation might be it for them.
I expect tough talk from Powell in lieu of a 50 base point increase and a sharp down day.
Stephen–I agree–something like ‘we won’t hesitate to increase rates if inflation moves higher’ blah blah blah. Not certain of a market reaction though.
Am I the only one who has come to believe that the market’s first reaction is now generally reversed and overwhelmed in the next day. The first reaction is becoming the Captain Peachfuzz of predictors?
When the market moves on daily news blurbs it often corrects soon after.