The futures markets in stocks were way up and way down overnight–but now are up by over 1/2%. A guessing person would say we will be seeing some pretty wide swings today.
Last week cost us personally around 2%–almost all of the losses on Thursday and Friday and they were biggest in perpetual preferreds–that should be no surprise.
Here is what we are doing today.
1st off we are doing nothing–we are going watch and see if stocks and bonds hold steady in here. I don’t care if stocks fall again–but I hope these moves are kept to the 1% area.
2ndly we are shopping in the short maturity issues-those maturing in the next 10 years.
We are also shopping in all utility and CEF preferreds and baby bonds.
The last area we are watching is the mREIT preferreds. Theses issues are offering plenty of value, but being perpetual they may have more volatility.
So our theme is quality and/or short duration with a sprinkling of perpetual preferreds. Some folks may remember that I have always tended toward the shorter maturity issues–baby bonds and term preferreds–this serves one well with wild markets, but you give up some coupon.
Everyone should note that many of the quality issues are still expensive–but they have a lot less call risk in them–so if they were a good buy at say $27 they are a bunch better at $25.50 (or whatever the number is).
The shorter maturity issues can be seen here (slow loading page). How about the Gladstone Investment 6.375% issue now at $25.35 and not callable until 8/2020 with maturity in 2025?
The utility baby bonds and preferreds are here. How about the Entergy New Orleans 5.50% (ENO) baby bond issue trading at $25.13. First callable in 4/2021 and rated ‘A’ by S&P? This is a first mortgage bond.
As far as selling–I don’t see anything that I plan to sell right now. I have plenty of dry powder and while I hold the Golar LNG Partners 8.75% (GMLPP) which got hammered, I bought only 200 shares. I also have an overweight in UMH-D–I plan to hold the issue. In spite of UMH being ‘hated’ I see little fundamental risk in the issue (although I ‘mark to market’ in my mind everyday–none of this ‘you don’t lose money until you sell–I have lost money on this position).