Dicey Markets Continue While Preferreds/Baby Bonds Hang Tough

With the sP500 tumbling hard today we always look for “spillover” to the sectors we invest in–and there essentially is none.

With the Chinese trade situation and the more nasty political tone we observe in Washington DC we are watching for a potential “throw the baby out with the bath water” moment. Right at this moment we have the average preferred and baby bond trading right at $24.83 which is to the penny where it began the week.

As most of us know a drop in common stocks of 1, 2 or even 4% over the course of a week is no big deal–but if we reach 2,3 or 4% drop in 1 day there is always a potential of the nervous nellies starting to bail out. Now, with the excepting of the usual suspects of some shippers and retail related REIT preferreds we are NOT seeing anything unusual–in fact when I look at the preferred volumes trading is quiet.

We do see the new TriState Capital 6.375% new issue trading on most venues now at $25.40 (OTC ticker TRSXL). We have entered an order at a bit lower price–probably too low, but we don’t plan to chase it if it shoots higher.

10 thoughts on “Dicey Markets Continue While Preferreds/Baby Bonds Hang Tough”

  1. TVIX seems to be a decent hedge as well (2x VIX). $21 has seemed to be a good spot to buy for me over last few weeks. Slowly building a position for a hedge. Thanks for the mention of SDS; I had forgotten about that ETF

    1. That will work, but I don’t like the Vix products. They ruined svxy. Vix gaps always get filled eventually. Gaps at 25 and 28. There’s your target.

  2. With energy getting hammered today, I was hoping my Enbridge preferred limit orders might be successful, but it didn’t happen.

  3. I took one look at the charts this morning and these song lyrics popped into my head.

    It’s a cruel, cruel summer / Leaving me here on my own / It’s a cruel, cruel summer / Now that you’re gone

    Makes me wonder how many investors have climbed aboard the ‘Sell in May and Go Away’ train?

    1. If you did not want to sell your income stream, you can hedge as I did above 2900 Spx and said so here in this forum. It’s not to late to do this as we bounce from oversold conditions. My portfolio has gone up in value with a small hedge in sds during this correction. ATB.

        1. For me hedging can be raising cash, options,bonds,and shorting Spx. I sell the weak links and usually buy TLt, sh, or sds based upon the TA. Below 2800 look out below. ATB.

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