Author: Innovative Income Investor

I wouldn’t be one bit surprised if common stocks end up sharply lower this week–‘sell the news’. Is the cut 25 or 50 basis points (CME Fedwatch now says 50 basis points)? Do investors read the cut as economic weakness ahead or just a move to try to maneuver a soft landing? Who knows for sure but I would be really surprised to see little movement in markets–in particular equity markets. We could see some movement in treasuries–but I would think it would be in the shorter maturity issues–the 10 year treasury maybe just a little movement. Who knows really – no one, but I am ready now for whatever happens. How am I getting ready–by doing NOTHING–what does one do to get ‘ready’?

If one wants to lock in some of the safe yields in CDs and treasuries you should probably begin to do it today. Yesterday I received a call notice on a JPMorgan 5.4% callable CD–oh well I had it for 9 months, but you can be certain that callable issues will be called in short order in particular if we get a 50 basis point rate cut.

Yesterday once again we saw preferreds and baby bonds move quickly higher in price–the best of the bargains have been gobbled up and the number of issues in which I have 3-10% gains (some more and some less) has grown. I have 1 issue I am watching in the sock drawer which may need to be sold as it has been moving above $25 and if rates fall too much it will be called–and if it moves to $25.50 I will sell some or all the position (WR Berkley 5.7% debentures WRB-E).

I added a few more shares yesterday to my 8.75% Carlyle Credit Income Fund (CCIA) term preferred position. No capital gains is expected–just adding a little bit of the tasty 8.5% yield.

Probably no buying of preferreds and baby bonds for the next couple days–just going to sit back and watch.

Almost everywhere I turn I see folks saying it is time to get into preferred stocks.

Now even Brad Thomas is pushing preferred shares—I guess better late than never. This is not on Seeking Alpha but is on the Wide Moat Research site, which as I understand Brad no longer owns, but is owned by flea bag publisher Marketwise. For entertainment value the article is here.

At a minimum these drum beats for owning preferreds are giving all us holders continuing nice gains.