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A Second Up Day On Deck

The futures markets are up over 1% at 6 a.m. central after a strong showing on Monday.

Each time equities bounce strongly the discussion by all the ‘smart folks’ is about the ‘bottom is in’. Of course this discussion has been happening for a month and each time the smart folks are wrong. Whether the bottom is in is of only minor consequence to me–although I like to see common equities move higher because they sometimes ‘drag’ preferreds and baby bonds higher–it soothes the ‘nervous nellies”

I see the 10 year treasury right at 4%–so fairly stable from yesterdays close (4.02%)–hoping this will remain in a 5 basis point range to help income issues –again it would sooth the ‘nervous nellies’.

Yesterday I nibbled the CHSCM 7.10% reset rate perpetual preferred issue with a current yield of 7.56% as well as the 6.50% Ready Capital perpetual (RC-E) with a current yield of 8.92%. I have no plans to buy today–but one never knows what opportunities will present during the day. My cash position remains very small, but yet adequate to continue nibbling.

7 thoughts on “A Second Up Day On Deck”

  1. For those buying the CMS reset rate shares (M and N), just wondering why those versus the fixed rates (L, O, and P)? The resets are capped at 8.0% so the upside seems somewhat limited. Obviously, prices bounce around a lot so the yield can be quite different on the various shares. I tend to be buy and hold so I’m thinking longer term if rates come back down. I own a small position in the L shares I was lucky enough to get a few days ago <$25.

  2. This is a loaded question probably. But what is considered a “typical” nibble? I am sure everyone has a different outlook, but just curious. While we are asking what is considered a”full position”? To me a full position is 1000 shares @ $25 per share . A nibble would be a couple hundred shares or less …..

    1. Loaded, yes, and ultimately meaningless:
      What is your total portfolio value?
      What is a full position?
      How much do you like what you’re “nibbling”?
      What is the ask compared to a true back-up-the-truck buy?
      and and and.
      My nibbling–unlike, say, Grid’s, Tex’s and others here–is more of a specific gut-feel for my SWAN equities, e.g., EPD, which I nibbled on today after Tudor Pickering downgraded it to hold and it fell to >7.5% yield.
      So why or how much or when or what I nibble–while perfect for me–would, I suspect, be of little or no value to anyone else.


      1. Just to piggyback off Camroc, whose wisdom is always solid. He is right, it can mean anything. I would suggest percentage being more commonality as opposed to amount. Camroc could buy me out and sell me into slavery and still have plenty of dough to blow.
        A full position typically means 2%-5% of ones portfolio, probably for most on the lower side. So nibbling would mean buying in amounts that is slowly heading for that full position, if that is a goal. But many times we buy with no intention of getting a full position. For example I have nibbled on PSB preferreds a few days ago, only about 300-400 shares each of a couple issues. I have no intention of getting a full position there. But its all up to individal as Camroc said. Heck I know one guy who would only buy 200 shares of any issue. And would just buy a lot of them. He never would buy more than 200 though that probably measured as a tiny speck on his portfolio.

        1. Thanks Gridbird! I figured this was loaded question, but went ahead and asked it. A full position amounts to 2% of my portfolio in ” normal” years, but with the decline most of us have experienced this year that needs to be adjusted maybe. I like to spread it around so no one equity can hurt too much.

  3. Tim,
    Been over on SA and reading the talking heads over there. Still too much enthusiastic talk about trading and market seeing a bottom with a possibility of another bounce in the market like we had in August. Talk that investors have already factored in another rate hike from the Fed and that nothing will happen when they announce. People pointing to the banks earnings are up so its an indication other sectors of the economy will report decent earnings.
    I agree with you, I need to slow down and nibble. I bought both CHSC M & N in the last 2 weeks.
    GJH is a perfect example of the need to be patient If you look at the 10yr chart it sold off in the panic in 2008 & again in 2009, Then again in 2014 & 2015 and 2020 now its doing it again.
    We are in the internet era when we expect things to happen now! we get inpatient when things are moving slowly.
    The comments in the articles I read showed more logic that the writers of the articles. We have yet to see inventory growth slowing, mark downs and finally an increase in bankruptcies, I have my doubts about , Lyft, Uber, Shopping Cart,
    Beyond Meat, and numerous retail chains like BBB, Cost Plus, J.C Penny, Kohl’s etc

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