Last Friday and again Monday I had quite a bunch of CDs reach there maturity date. These were all 5.15% issues–not a bad yield at all. Thus far in the last couple years (I’m guessing) I have kept cash balances (pure cash/money markets) low, buying either more CDs, treasuries or high quality agency/corporate bonds and this has served us well. You have to be in it to win it–and my goals are 7% returns overall. Investing now has been complicated by the availability of many options for decent returns–prior to 18 months ago there were few options with zero interest rates everywhere. Now I have funds from maturities of CDs–where to go?
I have already chosen where I am going with a large portion of cash–some Business Development Company (BDC) baby bonds in the 7.75%-8.50% area, some CEF term preferreds with yields to maturity in the 7% to 8% area and some decent (investment grade) preferreds or baby bonds with current yields in the 6% to 6.5% range. I will vary from this plan–in fact today (see below), but the point is the plan is to balance high quality and high yield to get to the 7% overall goal.
Anyway with portfolios again hitting new highs yesterday I feel good about where I am heading, but am ever mindful that there are so many black swan possibilities out there adjustments will have to be made. What could go wrong? No one knows—no one!.
Yesterday ‘Wilson’ in the comments suggested I look at the Energy Transfer 9.25% preferred (ET-I). I thought I owned that already—and I did. Somehow it got left off the ‘laundry list’–I have added it now. The initial buy was at $10.01 and it is now at $9.73 and I will add more of this high yield issue today. This is an interesting issue from the Crestwood acquisition–essentially non callable.
Interest rates are dead flat again today–right near the 3.9% area. It has been multiple days in a very tight range–always awaiting new economic news. We can expect no big movement in interest rates today because there is little economic news being released–just new home sales and consumer confidence and it would be unusual to see markets move on these items.
So I write about the wonderful gasoline prices we were seeing–obvious the kiss of death was writing about them. West Texas intermediate has jumped rather sharply in the last few days–now in the $75/barrel area–up from $68.xx. I guess it is easy come, easy go. The middle east situation is sure a problem and this has wide ranging implications–not just on energy, but a shutdown of the Suez canel/Red Sea area certainly can contribute to a flaring of inflation with increased shipping costs etc.
Equity futures are soft this morning–but nothing substantial–after 8-9 days higher there must be a pullback somewhere (maybe). There remains so much money in money markets that it seems it the potential for higher prices is strong. With money market rates remaining attractive a ‘parabolic’ move higher seems unlikely, but movement may continue higher as a slow drip of money finds its was to the equity markets–who really knows.
Well let’s go – see what the day brings.