Mid Day Ramblings

The equity markets continue to react to the administrations bluster on trade and it is a bit unnerving.  We are moving closer to the period when preferred stocks and baby bonds will begin to get sold in spite of interest rates which are moving a bit lower.

We just reviewed all of the income issues and there is, on average, no movement.  The problem we face is that if traders continue to move the equities up and down in a violent fashion mom and dad investor are going to panic and sell out of their preferreds and baby bonds.  On one hand this could create some bargains, but on the other hand selling begets selling and this could get a lot scarier than we want to see.  A 1000 or 1500 point down day would likely be enough to start this process as the headlines on the main stream media would spend way too much time covering it.

Investors should maybe keep some dry powder available in case bargains become available.  We have lots of the Arbor Realty baby bonds (NYSE:ABRN) being called later in April and if the unsettling in the markets continue we will leave the funds in cash for a week (or 6) to see if markets can settle a bit.

We will see how today’s close plays out.  We would like to see the DJIA close down only 200 points (or some such number), not a collapse from the current 400 point loss which would set up for settled trading Monday.  A collapse into the close may portend a very nasty trade day Monday.

12 thoughts on “Mid Day Ramblings”

  1. Unfortunately, Tim, it looks like your worst fears are being realized. Down 748 points on the DOW with an hour to go yet.

    Things sure beginning to look foreboding. I closed out many short put positions, most at moderate losses, as I do NOT want to go into next week with them.

    The few common stocks I own are all solidly underwater – looks like they will be dead money for the next few months – or even years. My strategy in such cases is to write covered calls to reduce the losses, and hope for a recovery to get out.

    1. Yes InspBudget–would really like to see some signs of life during the last 50 minutes. I own no common stocks so am down hardly at all–but this could change come Monday.

      If you are holding solid common stocks selling some covered calls is about what you can do to make the best of the situation.

      1. Yes, for that I am glad – the common stocks I own are solid companies with no fear of BK – LMT, HD, O, MO, D. They are companies I am confident will provide a dividend stream long after I am gone ( intending to leave them to my kids to squabble over )..

        However, bad news is that all of them are so thoroughly under water that if I write Covered Calls at original buy price, I reap only a few meager cents after commissions. Still, no other better alternatives at this time.

    1. in looking at any term dated preferreds or baby bonds or anything mandatory redeemed in the next 6 yrs, there is 0 movement and I don’t see any buys for today.

    2. You are fortunate–but we don’t want to push the selloff envelope–it will eventually get us all.

      1. Inspbudget and I would recomend you Tim buying some FIISO, if you dont want to see your income drop…It cant drop if it doesnt trade. The last trade was June 2017, lol. We just chuckle over this one and collect our 8% plus and watch paint dry.

        1. I have a couple of those items on the radar, but haven’t gotten around to trying to buy. I don’t want you guys to get pissed off if I snag some and you can’t control the float.

          I am watching the GDL-C us a nice 19 cents today–I have 300 shares now.

        2. Wow–with these terms I better check it out–or put in a very long GTC and see what happens. Had to dig deep just for this meager info from 1999.

          Holders of Series B-1 8.48% Preferred Stock are entitled to receive an annual dividend of $8.48 per share, which is cumulative and payable quarterly. Holders of Series B-1 8.48% Preferred Stock have no pre-emptive right in, or right to purchase or subscribe for, any additional shares of FII stock and have no voting rights. Accumulated dividends on the Series B-1 8.48% Preferred Stock do not bear interest, and the Series B-1 8.48% Preferred Stock is not subject to redemption. Dividend or dissolution payments to the Class B shareholders must be declared and paid, or set apart for payment, before any dividends or dissolution payments are declared and paid, or set apart for payment, to the holders of
          common stock. The Series B-1 8.48% Preferred Stock is not convertible into any other FII security.

          1. Its gold, Tim…Its genesis was this… About 180,000 shares were issued to insiders as a “goody bag” when the company went public in late 1990s. They were privately issued…Over the years a ticker was assigned to them as I guess people die or wanted to sell for whatever reason. They were issued non callable and cumulative. Of course in late 90s I guess they didnt think much about interest rates as who would have thought they would drop so much?

      2. I have been waiting for GAINO to drop. It traded 0 shares today! I did pick some up in the last couple of weeks on the last drop to $25.16. I think a bunch of Gridbirds own it. :-). I need to find their sock drawers and steal them. In the final minute.. I am now down .01% with a wash out.

        1. I own literally 1000’s of the various Gladstone issues (term preferreds only). They have been giving back a few cents here and there–I would be a buyer with any major drop.

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