Author: Innovative Income Investor

I was a bit surprised when stocks opened up higher today–with the soft close last night I thought it might move lower, before a bounce was attempted.

The good part about the stock selloff is that it is fairly ‘orderly’. No panic, just folks moving out of what was already an over valued marketplace. Of course it is unpredictable what will happen when a cluster of corona virus folks are found throughout the U.S.–hopefully rational behavior will rule.

Like interest rates we need slow moves lower in interest rates and stock prices–speed kills. While the talking heads on the boob tube want to make yesterdays and todays selloffs a ‘plunge’ they obviously weren’t around in 1987 when every news reader on the old Financial News Network (FNN) was literally green–they were truly scared shitl— (no cussing allowed). Down 23% in 1 day is truly a plunge–I remember it well.

I actually did a little speculative buying today–not my nature, but the risk reward seems ok. I bought a few hundred shares in the Golar LNG Partners 8.75% perpetual (GMLPP) and I added more shares of the pig UMH-D 6.375% perpetual–a dividend capture gone bad-but I am patient and have lots and lots of dry powder so am willing to hold it for a while. Lastly I added some shares of VER-F 6.70%–a monthly payor that I already have bought and sold a number of times. Hopefully I won’t regret these buys–but they are minor in the big picture of things and I will lose no sleep over them.

Average $25 preferreds and baby bonds are off today around 15-20 cents so we are at least getting pricing down to where it is more tolerable for us potential buyers.

The equity close today was kind of soft–but not in a panic sort of way. Tomorrow should see less movement, but I wouldn’t be surprised to see a mildly down opening–assuming we don’t have new reports of large virus outbreaks in the U.S., or Europe (or Africa) overnight in which case it’s anyone’s guess.

There were lots of preferreds down 1-2% today–in lodging REITs, energy shippers and even in the CHS (Cenex Harvest States) issues–which were over valued anyway.

Shippers were off 36 cents today–with LNG shippers really slammed. Golar LNG Partners 8.75% preferred (GMLPP) was off $1.08 to close at $20.97. Shares were at $26 only 3 weeks ago. I see the company announces earnings tomorrow. They had other negative news in late January which is buffeting these shares as they opened a large ‘at the market offering’ of these shares.

We end the day down 19 cents on the average $25 preferred and baby bond. Banks were off 19 cents, Investment grade off 16 cents, mREITs just 5 cents with CEF preferreds off just 7 cents.

$25 issue prices are now lower than anytime since late December.

Even though we have seen the DJIA off over 1000 points there is no reason to lose your cool. With the website down for 5 hours I lost my cool about the downtime, but I haven’t been excited at all about the DJIA fall. Like all security moves the ‘fear of the unknown’ is a big factor–and that is what we have now–lots of unknowns–about growth and about the progress of the corona virus.

I don’t like to see “red” in my accounts, but thus far today no significant damage has been done–down maybe a few 1/10’s%–but I hold almost no common stocks which is where I see some real damage being done. Cruise lines, shippers, container owners, oil and gas–real damage with many 8-10% losers.

I mentioned container owners Triton International (TRTN) and CAI International (CAI) last week and that if I owned those shares I would be studying my options. CAI is off around 8% today and Triton around 3-4%. TRTN preferreds are off 1-2% today, but the CAI preferred are hanging tough.

I am concerned with interest rates–the Fed has no real dry powder to help the economy (if it needs help–not sure it does). Today’s overnight REPO was normal at around $40 billion so no special overnight liquidity being announced–I suspect the Fed is watching closely, but resisting any extra REPOs–or maybe it is just that the primary dealers have not requested liquidity.

Today I did buy some of the new Priority Income Fund 6.625% term preferred (PRIFF) as it tumbled down into the low $24.30’s. I bought a full position and will see where we go from here–this would be a flip only as I already own the 7% PRIF-D issue.

Buckle up for the close today–if the markets fall into the close look for a weak open again tomorrow. If we get a bounce of a couple hundred points into the close we could see a bounce tomorrow morning. We need to watch for overnight news on any corona virus outbreaks in Africa where it would be a true disaster.