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Interest Rates Climb!!

Well yesterday the 10 year treasury hit a high of 4.365% which is where it closed–this morning it is trading a basis point lower. Honestly it doesn’t matter much because it could easily be 10 basis points higher or lower before the day is out. The FOMC will announce that they are skipping a rate increase this month, but Jay Powell will be very straightforward in his presser that they stand ready to raise rates in the future–we will see what the tone of this press conference brings us.

Equities are a little green this morning–1/4%, but once again this could change dramatically in the next 8 hours or so. Whether the market flies straight up or straight down there is nothing I can do about it – it will do what it wants.

Yesterdays disaster in the preferred stock arena was the Carecloud 11% perpetual preferred (CCLDP) and to a somewhat less degree the Carecloud 8.75% perpetual (CCLDO)–down around $8 and $2.50 respectively. Carecloud was previously Medical Transcription and I never understood why their preferred shares traded so strongly. I see no obvious news for the sell off BUT CCLD trades at just over $1/share with a market cap of $17 million–that alone is a huge warning sign. Obviously you had to be an aggressive investor to be holding these shares. Well we will see if these shares bounce back or not–for the holders I hope there is a bounce back, but it is hard to see it back to $25 with the common trading just over $1.

It’s the normal gig today–do nothing in the markets–just watch. I do have 4 good til cancelled orders in – 3 to buy and 1 to sell–doubt any of them will execute since my limit price is pretty low on the buys and the opposite on the sell. The sell order is one of the community bankers which I current have about a 7% gain in (5% capital gain and 2% dividend)–I’d like 2% more. The gain has been as high as 10-12% but I let that slip away.

Well let’s sit back and enjoy the show today–I hope it surprises me and is a quiet, boring day.

4 thoughts on “Interest Rates Climb!!”

  1. Crazy market- climbs higher before the meeting, gets good news as expected, than goes down – altho pretty typical for post Powell speak.
    Business as usual as the punditry prepares for the Nov round.

  2. Thanks, Tim
    The best lesson I have learned from this site comes from your frequent comments:
    ” Nothing to do today”
    “My GTC Buys and Sells are pretty far out of the money – I’ll just wait (collect my dividends) – something will hit sometime”

    Bill Gross – the PIMCO bond maven who retired a couple of years ago – when asked on a Joe/Tracy Bloomberg interview “are you a good trader?” responded
    “No, I’m a terrible short-term trader. When I buy/sell something and the price goes against me that day, I feel terrible. I’m great at seeing long-term trends, but way too emotional in the short run.”

    Me too.

    Your comments about “pick the right long term plan and then wait for it to happen” has become the core of my investment philosophy.
    It still bothers me when a buy/sell goes the wrong way right afterwards.

    1. For trading positions, to me, it’s not about perfect timing. That’s impossible.

      If I can pick up the equivalent of two dividends or more in a few days to weeks, I sell, as long as I can find another acceptable preferred that pays about the same dividend. If the sold issue continues upward, c’est la vie, c’est la guerre, c’est no more. I still collect the same yield and I have a cap gain booked. In that vein, I sold just ALL-H which has run up over the past 10 days or so and I’m still holding some ALL-I.

    2. Westie—it almost feels abnormal to not do anything on almost a daily basis but with ‘money’ paying over 5% it is the right thing to do for me right now – I am sure that will change. I’m a terrible short term trader—just need to keep the eye on the prize which is hardly ever attained in a month or two.

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