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Just Treading Water and Waiting

Markets are pretty quiet waiting on the FOMC to make their 1 p.m. (central) announcement on interest rates. Of course there is no doubt in anyone’s mind that the announcement will be NO CHANGE. The CME FedWatch tool shows the probability to be 99.5% for no change. Any deviation from this would set markets ablaze (one way or another)

Even the current odds for a pause at the March meeting is 69.6%–of course the amount of data that will be released before this meeting is substantial so these odds will swing a bunch before the meeting.

We will get a decent read on how the economy is functioned tomorrow when the advanced read on GDP for the 1st quarter will be released–of course the number will be revised twice after that reading so honestly tomorrow is just a best guess.

Yesterday I did unload the lions share of my preferreds in Brighthouse Financial (BHF) (details on the ‘laundry list page). I booked losses of capital on both issues I held, but it has almost always been my policy to exit issues with even a small chance of any delisting and with the company planning to sell themselves I don’t want to hang around. This is NOT because I would expect an affect on dividend payments, but instead is because of the high probability of loss of capital in the share price.

The last time I had a similar situation was with Enstar (ESGR) , which announced they were being sold to Sixth Street–an alternative asset manager, in July 2024. I exited my shares in the Enstar 7% preferred (ESGRO) at $23.83 on the announcement and shares now trade at $20.65–it could take multiple years to recoup $3/share and I don’t need the stress of the unknown outcome in my life.

Well now it is time to ‘wait’ for 3 hours and see what Jay Powell brings to us.

9 thoughts on “Just Treading Water and Waiting”

  1. I’ve added a little today to some current positions (some GTC orders hitting) … NEE.N, PRS, T.A … all yielding just below 6%. No extravagant purchases, just topping up a bit with intentions to slowly increase income. I’m happy earning around the 6% area

    1. Just..
      Curious at your “below 6%” threshold
      All my 2025 purchases are either yield in the 6’s with maturity 2030 or shorter and priced below/not much above par
      or
      7% yield and up for perpetuals

      If/when the risk premium rises – it is currently at historic lows – won’t you face capital losses? – unless interest rates fall as much or more than the rise in the risk premium [possible]

      1. Westie,

        You may be correct regarding potential capital loss. But these are companies I I am very familiar with and trust (my wife actually worked in the executive suite at Prudential and I have close friends that were high up at Nextera). I pay little attention to maturity as I typically buy and hold (not trade) and just look for extra income I can count on to compliment my SS and pension. I learned a long time ago to not get greedy and avoid trying to squeeze for every last penny. So 6% has always been OK.

        As for potential capital losses, my heirs can deal with that when I am gone. Oh, one other non-pertinent bit of info – the name I use here (JustRetired) really does not accurately describe me – I started investing when I was 21, and was able to retire more than 20 yrs ago when I hit 53. I must be doing something correct as my overall portfolio is still above where it was when I retired and have now mostly shifted away now from growth to income.

        1. JustRetired-
          Trading doesn’t work for me, so I generally buy ’em and hold ’em. My portfolio earns 6.2% and is mostly conservative. I’m able to reinvest all of the income, so I’m getting a wonderful lesson in compounding.

          “As for potential capital losses, my heirs can deal with that when I am gone.” LOL…same here.

  2. Liquidity is important to me, more so than income. (There are a lot of alternatives out there.) I prefer to exit when Go-dark is a risk, doubly so because of Fidelity’s unreasonable trading limits. I happily sold ESGRO at a small loss: the total return after dividends was positive. I almost stayed in Golar then barely escaped when it started changing back and forth from NoDark To GoDark minute to minute. Exiting was a good decision. JMO. DYODD.

  3. Would now be the time to repurchase ESGRO. ESGR looks stable and growing.8% yield plus possible capital gains

      1. Not a merger, rather acquisition by Sixth Street and other PE Groups. Acquisition approved in Nov 2024 and closing by mid of 2025.

        1. Another 4 months probably and I will earn 10.00 a share for holding about 6 months. I voted to approve and bought when others panicked and sold. I also bought SUM when people bailed and since it’s been within.25 of the buyout I sold for about 1.75 a share profit.
          This is why I follow M&A I made more on Sum since I could buy more shares around 50.00 compared to 327.00 for the ESGR

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