Interest rates are sharply higher again this morning with the 2 year treasury yield in the 4.25% area and the 10 year treasury yield now in the 3.78% area.
We will have more pain ahead in preferreds and baby bonds–and in some sectors we are going to have ‘bargains’–BUT will we have better bargains ahead–yes we most definitely will have and it will be painful in the mean time..
This is the most difficult time in the markets for those (like me) that hold lots of preferreds and baby bonds–but it can lead to the most financially lucrative gains in ones income portfolio. This is the time when things are scary and an investor has to resist being in the ‘buy high, sell low’ camp. Yesterday I saw losses of 1/2% in the portfolio and expect the same today–it hurts
Today I will mostly watch, but may take a few teeny tiny nibbles on some high quality preferred issues–we’ll see. I almost certainly will add a few treasury bills – 3 and 6 month maturities.
Buckle up and stay strong.