Bailing on Stocks and Buying Bonds

Trade continues to be a reason to sell stocks today and it again is benefiting income issues as the 10 year treasury is trading down at the 2.81% area.

We are not taking the lower 10 year treasury as a ‘serious’ move lower in rates and think rates will be moving higher once this temporary trade scare moves past us which it will within a day or two. We would be very cautious about thinking that any interest rate move lower is a permanent move–or the start of a trend.

In conjunction with this weeks move lower in interest rates we do note that perpetual preferreds and long dated maturity baby bonds have rallied back 50% of the losses from the last month. A good share of this is recouping losses from previous overreactions of the marketplace and is part of the normal pattern in income issues. Overeaction, a slow climb back higher and then a slower drift lower–kind of normal.

7 thoughts on “Bailing on Stocks and Buying Bonds”

  1. Tim, look forward to seeing what you think about the safety of the baby bonds. Leonard

  2. I reviewed their press release and it looks like they are taking some reserves for some old potential losses. While I don’t like to see this type of thing (obviously) that they came forward with it now is better than later.

    These baby bonds are the only debt the company has so 25 million on the books is not much for a decent little insurance company -by decent I am assuming they will perform as anticipated in 2018–they project a $2/share profit.

    Makes me wonder if the common shares might be a good flip at these overreaction levels.

    1. Yes, coming forward early is a plus (wish CLNS had done so). I hadn’t thought about a flip but yes, that might be a good angle too. BTW, I added a little more to WSR today.

      1. I bought 200 shares at $11.10 and have a sell order in for $12.20. Will see if I can do a quick flip.

        1. FYI, I gave up on the flip idea and sold at $11.05 for a slight loss. What bothered me about this trade is that there was no “dead-cat bounce” which I was hoping to catch a brief ride on, but it never materialized. Why not? Well, one never knows for sure but my hunch is because the short interest was very low (1.44% of float according to, there were not that many shorts jumping ship to run the price up quickly and even though volume was huge, relatively speaking, it appeared it was big buy limit orders sitting at around $11 and not willing to chase the price. Next week may offer more info on this company.

    1. Good catch Leonard–I didn’t see that, but it warrants a further look. At first glance it appears to be an overreaction.
      I see the baby bonds are ok.


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