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Closing Out Another Decent Week

After weeks of decent gains it seems like maybe we move forward for the next 10 days with dependence on dividends and interest to move our account balances higher. Interest rates may well be at a level which will be sticky until the January 30/February 1 FOMC Meeting. This morning we have rates up 7 basis points to 3.47%.

Today we had no real economic news to move markets–but Monday we do have the leading economic indicators for December and on Tuesday we have the S&P manufacturing and services indicators. Each of these are semi-important numbers and will figure into the Fed rate hike on 2/1–although this hike is getting pretty well baked in at 1/4%–personally I thought 1/2% would be the right number based on strong employment–but I am very much in the minority on that number.

Today I am going to pull up my accounts and go through them and make sure I am balanced the way I want to be balanced. I have some full positions in some dicey issues that I may want to shift to some higher quality issues. For instance I hold plenty of the Eagle Point Credit 6.50% term preferred (ECCC) which has gotten a decent bounce back this month and I may want to trim it a bit and move it to one of the community banks–not sure what I will do.

18 thoughts on “Closing Out Another Decent Week”

  1. Tim..Have a nice weekend, Now,, this is the best place
    to be.. .Bargains, income , low risk, and your help… Ty. Georges

    1. Tom–I think it is simply a perception of eroding business while they invest massive amounts of capital. It doesn’t help that the bond is long dated maturity out in 2057. Honestly the financials are decent–but perception is reality.

  2. After having the pick of the litter for quite a while there I am finding it hard to adjust to this new higher level of pricing. PSA preferred shares I was buying 3-4 weeks ago are now 10% higher from my cost basis. Now this is not something to truly complain about but I did expect to have a longer period of time to buy at lower levels than today. After all we have barely started 2023. So I can picture myself taking a break for a while until I can figure out which way the wind is blowing. Just humor myself by reinvesting div/interest/distribs as they come in and start preparing for tax time. Need to get 1099s done this month and it just keeps on coming after that. I definitely do not feel like filing for extensions and dragging it out like last year.

    1. After a rally I’m thinking Sell, not Buy. That 4% on Sweeps is a lure that entices selling of close calls. Though I’ve unloaded only a modest amount so far. More upside could be coming in the short term.

      1. Martin G – I am a poor market timer so normally am better off just staying close to fully invested–but certainly the big gains are tempting.

        1. Tim, at least now we can all get about 4.25% +/- in a Federal money market fund/yacht in the harbor while we are awaiting some bargains. Have a great weekend, A

          1. AzureBlue–so true and certainly very nice to see real money getting earned while waiting. Have a great weekend AB.

      2. I have been in your camp, Martin. A few trades but more sells in total. I think I only have 5 or 6 perpetuals now. Letting some live floaters and term dated issues ride for time being. Im pruned down about as far as I will go. Sitting in short term CDs and Tbills and some cash. I just dont see a lot of upside in some issues I like. In fact considering whats going on, I probably would be pleased in total with liquidating and taking the gains and adding it all to a 1 yearTbill.
        But that isnt any fun!

        1. “But that isn’t any fun!” Quote of the day. If we’re making nickels on trades just add nominal trading profits to yield and it doesn’t look so risky to stay in the game. Also it’s harder to stay on top of things from the sidelines. Sometimes I’ll keep a small holding just to continue following that issue.

          1. I think its harder to stay on top of it myself too. One must also not let perfect get in the way of good or it gets even harder to pull the trigger while sitting out. But when one can draw 4% plus sitting on the sidelines they are at least compensated for being patient. If one is more inclined to safety is a present 5.75% ish IG perpetual better than a 4.7% CD or 1 yr Tbill? Definitely a personal question.
            The budget ceiling standoff is an interesting situation. I wonder how close they will push the envelope. The last time they went to the brink in 2011 it rolled the market 18% I read. This may bring opportunity as the edge gets closer in June….Or not, who knows.

    2. fc—yes it is tough to find the bargains now–but some areas I am either full position or overweight need to be rebalanced some. Sold some of my ECCC just now–now to find something to buy.

      On the other hand as Martin G suggested below maybe it is time for heavier selling–I am not much of a market timer though so if I sell I likely would end up with too much cash after not reinvesting.

      1. I am curious why you decided to sell ECCC at around $21.70, which currently is yielding 7.5% and has a call date of 6/2024.Don’t you think the upside price
        potential gain of $2 -$3 a share if interest rate stabilize outweighs any downside risk?

        1. etsfl, if that was the maturity date, that would be a great buy, but it is not. That is simply a potential call date, but in this rate environment… you could own for another 8 yrs.

          1. Thats is true,but I would not mind holding for 8 years while earning an annual return of 7.5% on my original investment and than collecting an additional $3.30/share

            1. Right, it depends on your view and risk tolerance. I did take a peek at cefconnect for ecc (whether it is accurate or not for this fund, i don’t know). But years of declining nav, 15% + price premium, annual expense ratio seems high, > 30% leverage, the investment not being rated, small cap, … and in an increasing rate environment with possible recession that is typically not great for lenders. Lastly, the above doesnt give me a feeling that the risk reward is there. I would want what the common has and closer to 16%, but that is just me. Too much risk, but that is my own perspective.

              It probably doesnt help that I was buying Bank preferreds that were IG rated near 7% a few weeks ago.

    3. Thanks FC for the reminder.

      Getting 1099s out always seems to sneak up on me.

      Most of our companies are offshore, so we have local people to handle taxes (and no 1099s anyway). I have reminders programmed to bug me about 1099s for the couple of little US operations I do myself, but it always seems like a surprise. It is ridiculously simple (few keystrokes), so I used to get them out first week of January, but I have slipped since the pandemic started. I will get them all out this weekend.

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