Party On!!

Looking at the stock market futures this morning it is obvious that the Fed “put” is in play. You can hear the chant out of the stock people — easy money, easy money, easy money!

We all know that that this easy money will end badly–we just don’t know when. The government deficits are totally out of the control at over a trillion dollars per year. Many years ago it was opined that we are the next “Greece” because of the never ending deficit spending. Now we hear little talk about this problem–it is OBVIOUS to me that no action will be taken on spending until there is a crisis

In the meantime we will try to take advantage of the positive effects of the “easy money” on preferred stocks. Yesterday we bought a full position in the new Band of America 5.375% preferred. At $24.98 it was a reasonable buy, although the likelihood that we hold this one long is low–we see it moving to $25.50 in 30 days.

24 thoughts on “Party On!!”

    1. Hi Mike! New info like this can usually be found on the Reader Initiated Alerts link under Additional Links. That said the new Annaly Capitial temp symbol will be ACAXP. Welcome to Tim’s site, it is a winner and the folks here are truly helpful. Mike O.

    1. Today is ex divvy date. Maybe a sell-off by those looking to book the dividend before the security drops in price?

      1. No sure. It only pays around 7%, but is down 3% in 2 days. Almost seems
        like a big player cashed out some big profits. Thanks.

    2. I hold FFC and was wondering the same thing. However a quick look over at told me it was running at a 3% premium which is unusual for this fund. Whenever I see a sudden spike up in premium for any CEF, I figure it can (and usually is) be easily reversed and it was. Just normal noise for a closed end fund.

  1. Seems like most of the preferreds/baby bonds are getting expensive. It is hard to find a bargain out there.

    1. Kapil, everything is looking expensive right now and some investors are probably making some bad decisions to overpay on securities now. This afternoon, I sold off several hundred of my remaining BFS-C shares around $26.65. And while the security goes ex-dividend in about 10 days, it’s callable at any time at $25 per share. Plus, the security has already been partially called. Not sure who bought them today, but it may not end well for that investor if they are called next week.

      1. Same. I sold 3 issues this week with YTC of 2%, a year or so from call, and almost dead certs to be called.

        You don’t want to be buying this stuff.

        1. Bob-In-De, people are paying crazy prices for securities now. The YTC on the BFS-C issue is Negative and the BFS-D issue is trading at par value of $25 now (with a much lower coupon). Tomorrow I need to look at my portfolio again to see if anything else is getting out of hand. There have to be some novice investors out there that bought my shares today and have no idea the issue can be called with very little notice at par value.

          1. Always prudent to prune potential call losers. Yet some mystify. I remember having to place my first call in for a preferred as at the time it couldnt be bought online. Rep wasnt wanting me to buy it because it was $1 over par past call…I told him to let me do the thinking and buy it…That was 6 years ago and it was AILLL and its still trading.

            1. Grid, that’s what I am trying to do at the present time. But it is sure hard to replace these issues in the current interest rate environment! I agree with some of the older issues – and cannot fully understand why some of those have not been called and really boggles my mind.

              1. Kaptain, they are easy to replace…Just not at the yields we want, lol…I had an absolute field day in 2016-17 when interest rates went real low. A bunch of old preferreds were getting redeemed at prices higher than par prices. Most people didnt know this and I made it a cottage industry buying up call announced preferreds. Plus back then they didnt change the ticker like they seem to do now. Those were some easy money days. Unfortunately, any being redeemed now are par priced redemptions.

                    1. Believe I noticed it on Tim’s list of $50 and $100 preferred. Etrade and I think Mwatch are showing it as zeroed out — but maybe I got it wrong? If I did i’ll give myself a D minus.

                  1. D, That has always been wrong on that spreadsheet. It is so illiquid with a tiny float it might as well be though, lol…It and IPWLO are grey markets and the other sisters are pink sheets.

                    1. Thank you , Grid.
                      Sorry about that, Inspbudget.
                      I will go to the back of the class. D

                    2. That’s reassuring to hear. No problem, D – grey market and often OTC reporting leaves a lot to be desired.

                      Take FIISO, for instance. On my trading platforms – as well as on Yahoo and some othr places – it shows as zero, no bid, no ask, no volume.

                      Guess I’ve gotten so used to that I just don’t even look anymore; well a few weeks ago there was an ask for 100 FIISO at $144, IIRC – I did NOT buy them, LOL.

  2. The Fed is scheduled to sell another 35 billion in Treasury notes and mortgage backed securities over the next two weeks. While a reversal on interest rate policy seems to be expected, I wonder how the markets would react if the Fed stopped reducing its balance sheet.

  3. Equities @ highs, unemployment @ all time lows, bond yields dropping, economy chugging along…. sure lets cut!?!

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