No matter how much I ‘hope’ that interest rates have peeked out–they have no respect for me and keep going higher.
For this week we are off about 20 cents on the average share which pretty much brings us to even for the last 2 weeks since we had a 18 cents gain last week.
The normal movement in prices when interest rates move up is prices fall and as rates stabilize prices, which have likely over-reacted, start to creep back up until we reach the point where rates again move higher and prices move lower again–at a less ‘panicked’ pace. So this is the cycle we are in now.
So what does one do in these markets? I have been mostly sitting on my hands. I say mostly because I did add to 2 positions this week. I added to my Liberty Broadband 7% cumulative position and added to my Assurant 5.25% baby bond position–both in small quantity–lots of time to build positions and maybe at slightly better prices.