Up—and then down.
I had heard we had some significant pauses on various tariffs late Friday–then over the weekend we had folks correcting this to be a partial pause in tariffs. Then if you follow DJTs tweets you became more confused.
From an investor point of view I am getting tired of all the balony. I have no confidence to make any purchases of preferreds or baby bonds unless they are really short maturities. Why should I put my capital at risk just to be jerked up and down day in and day out.
After starting the day out with the S&P500 up almost 2% we are now down to just 40 basis points higher on the day.
The 10 year treasury started off around 4.45% which was down 4 basis points from Fridays close–now we are at 4.41%. Can’t argue with lower rates since it has helped portfolios go green–but where they end the day, the week and the month is totally unknown.
I guess I will watch the ‘hiding spot list’ and try to buy some short maturity issues just to try to bump my yield by 1-2%, but the amount of dry powder I am willing to commit at this moment is pretty meager.
Tim, I’m not quite following the degree of concern you’ve expressed here, especially about longer-term holdings. Some of the utilities, for example, have maturities out 30 to 50 years – seems to me that, over their term, those have about the same prospects today as they will next week or last week or last year.
If the concern is, what is the best buy-in point, it’s usually really hard to catch the true bottom – and just as hard to catch the true top as a selling point. One idea I suggest in times of volatility is to establish a position by edging into it over a short period of time.
There seem to be a lot of good preferreds out there at present – many are seeing 6% yields, have the potential for capital gains if called, and many have very nice asset coverage ratios.
I found MBINM at less than par and bought some. A serial redeemer, and resets on 10/27.
John F Olsen – could be a good one, but is a little more on the ‘bubble’ relative to a call. On the other hand we don’t have a clue where interest rates will be in 18 months so maybe it stays ourstanding with a strong 9% (+/-) yield.
It is difficult, and almost impossible, to make long-term investment decisions now as the tariffs and other issues can change on an hourly basis. Some of the apartment REITs are looking fairly cheap right now – but they may also be a lot cheaper in a few more months.
For some of my extra cash, I’m looking at higher quality corporate bonds that mature from 2030 – 2035. Yields are anywhere from 5% to 6%, but could also go higher. However, I am expecting to hold these until maturity.
That’s where I’m at Captain. Corporate IG Bonds with an average portfolio maturity of 8.3 years. My range is 2029-2041 but I have a lot of bonds maturing in the 2033-2035 time frame. 67% are rated A or higher.
Richard – I’m in agreement with you. Sometimes I run my bonds a little longer as well. Regency Centers (REG) has some great bonds, along with the preferred stock. Also looking at some old Baltimore Gas & Electric bonds (now owned by Exelon), but think they are rated A1.
Just as a joke, maybe we can run some Kraft Heinz company bonds. Linda McMahon is promoting A1 now, but the bonds are rated lower at BBB. However, sales of A1 should do well over the summer.
Both of those have 2034 maturity issues that are right in my maturity wheelhouse. I’ve got them in my watch list but Regency Centers is a little more interesting. Baltimore G&E could be a decent bond however I think they are a little riskier. A lot of old service lines in the gas segment increases the risk of explosions. They had one in 2019 that took out a building. Fortunately, it was the weekend and no fatalities occurred. I prefer my regulated utility bonds to be a little less exciting. I avoid those in areas with wildfire risk also. I own 7 regulated utility bonds.
Hi Captain Lou, what other corporate bonds do you like BAA1-AAA from
2030 – 2035 ?
The BS in DC stops or I stay in my cash equalivalents. More BS will lead to more wild movements.
Bear market rallies are choppy and volatile.
I would be more concerned and want to follow credit spreads and liquidity in the credit markets than care about the S&P 500.
We are already at the point where Powell needs to turn on the QE valve. Just a question of when and how much pain beforehand. Throw in some yield curve control for good measure.
I am worried most about another devaluation.
My brain was so fried thinking about how to approach what’s going on, I told my husband I was going to wait for Tim to put down some guide posts. Even the last Howard Mark’s memo was Nobody Knows (Yet Again). If the wise elders don’t know, well I certainly don’t know any better and will ride a little longer in short treasuries.
Last year, Druckenmuller and Paul Tudor Jones said the treasuries were uninvestable. I think they meant the long end. During the Volcker era, I read that safe corporate bonds actually had a lower rate than treasuries.
Sorry h-ster—I wish I could come up with a dependable plan.
No need to apologize Tim. I’m still going to follow your lead and hang low. That is a reasonable plan. I think keeping up physical and mental health shielding ourselves from the tariff damage is more important than trying to collect a few more dimes and nickles. I’m just grateful that the interest rate is still as juicy as it is.
h-ster–just wish I could get excited about something other than hiding out. All depends how conservative one is I guess–and I’m pretty conservative
Topping off some previous buys: TPGXL, DTW, CTA-B, RIV-A
Honestly speaking, I’ve been investing for about 40 yrs now. Have never known a time of certainty. These are definitely interesting days, but I don’t think I’m anymore worked up about this time than others, although the Dot.com bubble bothered me somewhat. As per usual I keep buying through all market conditions, always. Its worked out great for me over the years. Last week took advantage of yield spikes in 20 Yr Treasury and actually doubled my holdings in 10Yr TIPS. Looking for more yield spikes to maybe top it all off. Realize I’m a perhaps different investor than most of the legion of doom here on this site, but I just do what works for me, and try my hardest not to blame anybody but myself for any losses I might incur.
Pig, I actually sold some into the recovery in the market and bought while the market was panicking. Down to about 15% cash which for me is fully invested. I increased my wife’s income and am still looking at rotating some of our holdings. Some holdings are in the red, but the dividends are still coming in.
Seeing preferred and common equity hitting new lows tells me we an’t seen nothing yet.
Yeah, the Dot com bothered me because I was younger and depressed about the capital losses as I had a different focus then. Now with a focus on income and not so much growing the pot I have less to worry about.
Charles, I guess I’m as prone as anybody to a slip up but I don’t have a clue where the market or rates are headed. I don’t claim to know whats going to happen and I certainly do not listen at all to the breathless hysteria seen on the financial channels or online. I’d listen to Louis Rukeyser though. That’s one guy I really miss. Probably because he was the big honcho at the outset of my investing career. He’d be flummoxed by all these crazy PE’s that we see nowadays though.
pig pile, I’m further down the spectrum than even you are. My retired income account which is full of perpetuals which would have been down 5.5% this year had I been passive.
Between my long dated IWM puts bought as a hedge and my active shorting of other preferreds from the same issuers, I’ve cut that -5.50% loss down to a 2.1%.
With those gains, I dollar cost average into my long positions. It’s exhausting but it has to turn sooner or later. And if not, at least my income base is increasing.
If you want to bump up your yield 1-2% with a really short maturity, how does 9/30/25 sound? ATH-C has a 6.375% coupon, a yield slightly higher yield at the moment. It doesn’t mature on 9/30, but if not redeemed, it would reset to 5Y T + 5.97%. If you see a screaming buy between now and 9/30, I would think the price would stay pretty close to $25. Athene ratings have improved since the preferred was issued: https://ir.athene.com/financial-information/ratings
I am once again interested in municipal. I might be able to snag > 5% without it being hospital or education. I already own some housing so I want GO, airport, water, seaport/terminal, or what not. Diversify.
I saw 5.5 for a deminimus go bond this morning for a 3 year tenor. That’s getting close to October 2023 vibes.
I sold quite a chunk into this morning’s rally and parked in SGOV for now. I agree with those pundits saying the bottom won’t be here till SPX 4100-4500.
i’ve been using the hiding spot list and just making very small buys.
cd’s at 4 percent are safe but not really getting you much after inflation.
thanks for providing the list. very helpful
Ditto – I have bought 4 of the HS list just to have a “safe” place to park some cash that’s not earning 4%. Unfortunately many of these are small volume so FIDO makes me take very small nibbles.