Panic Selling? Not in Income Issues

I see MarketWatch has a headline of “Panic Selling Reached in the Stock Market”. Markets are off less than 2%–not sure any of us that were invested on Black Monday, 1987 would call the current fall a panic.

I am watching preferreds and baby bonds closely–and actually the average price is up 2 cents since yesterday. There are wiggles – plus and minus 1% in some issues, but that is true everyday.

What I am specifically watching for is the ‘baby getting thrown out with the bath water’–so far the baby is safe. Obviously this could change–but we need a real panic–multiple days to make that happen in a big way.

For the newer investors–take a deep breath–go get a coffee and resist doing anything crazy such as going to all cash–this too shall pass.

17 thoughts on “Panic Selling? Not in Income Issues”

  1. Here are the median % stats for today:
    Preferreds +.04
    Baby bonds +.04
    Equity REITS -0.27
    Mortgage REITS -.51
    MLP’s -1.61
    Precious Metals +0.59

    So broadly speaking exchange traded income securities had a relatively great day

  2. Preferred Panic BUYING? (not selling?):

    Huge bumps in preferreds like IPB (+4.4%) and KTH (+3.35%), bringing their
    yields down to 5.1% and 6%, respectively.

    1. Dan–I don’t have those in the data base right now–I believe they are third part preferreds-I need to get those in.

      1. Yes, they are third party, as far as I understand.
        Another big jump was in SOCGP, +3.87% , a traditional preferred.

        I don’t know how meaningful these jumps are, as these are traded with
        very low volumes, so it may be just one or a few of “panicky” buyers.

        1. Yes, Dan its hard to take a lot of daily stock in these movements. I got a nice chunk of SOCGP already. Im not spending todays price based profits yet, ha.
          But, compared to what is out there and its high quality credit grade, it certainly isnt way over priced compared to what is coming to market with less credit quality. The uncallable feature is a nice feature also in this environment.

  3. Baby getting thrown out with the bathwater is so true with preferreds. Preferreds can go a while without anything getting shaken out. But once they start to break, dislocations can happen and all of a sudden you see crazy non-sensical pricing like an issue that’s likely to get called going below stripped par. That’s when you want to have some dry powder to scoop up slam dunks.

    Not sure when that will happen next. We got a small taste of it with CMRE-C when the common crashed, and C went below par even though pricing of CMRE’s other preferreds and pricing of other container shipping preferreds indicated that C’s biggest risk was getting called.

    But, I like those sort of dislocation plays much better with IG preferreds.

    1. LI–things can change in an instant–I hope we don’t see the big downdraft, although I see common shares heading lower right now.

  4. Hi Tim; Hope that you are having fun in Scottsdale. Wish we were there with you. I have been investing and studying the market daily ever since I bought my very first stock way back in 1970. I can tell you without any reservation that we are a LONG WAYS from a true market selloff. I think most of your followers already know that. Multiple’s (PE’s) are still very stretched and a small selloff of 1, 2, 3% is nothing on the radar screen. There are a couple of stocks I actually would like to buy but they are still way too high. I did buy this morning 3,500 shares of MPLX however.

    1. Hi Chuck P–unfortunately I am back from Scottsdale–the weather was lovely and I could use more of it.

      Yes most of the readers are aware and can take care of themselves so to speak, but there are hundreds (or thousands) of folks we never hear from that do get panicked from time to time so I try to be the voice of calm.

      Maybe with a day or 3 of this stuff you can find some ‘deals’.

    2. RE: MPLX:
      I see this amazing claim today- from Brad Thomas / Div Sensei article :
      “The Safest 12% Yield On Wall Street” – in the body of the article.
      What a claim.

      1. Right–whoring continues–While they may be safe (on a relative basis) using the word safe and MLP in the same sentence should be a sin. This security was at 35.75 in the last year and now is at 23.92.

      2. I initiated a 1% position on Wednesday in MPLX. I think it’s a good value, but SAFE it is not.

    3. Chuck P — I know you like MPLX. I have been buying this issue lately and the price seems to be all over the place. Why do you think it is so active?

  5. Bear in mind that today is re-balance day for several preferred ETFs (which are mainly buying)

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