Again today, for the 3rd day in a row equities and bonds are tossing one hell of a party–giving me a chance to generate a little ‘dry powder’.
I sold my CMS Energy 4.20% preferred (CMS-C) which I held for 13 months and garnered a 20% profit (including dividends). Certainly it met the ‘safety’ standard, but at a current yield of 5.2% the yield is somewhat substandard. If I thought interest rates were going to keep plunging I would have kept it, but my thought is that is a temporary situation (maybe for 6 months or even a year) and higher rates are coming down the road.
Now is the time to ‘rearrange’ your holdings if desired. If we would get a setback of sorts in income issues I want to have some dry powder to buy and I have had darned little for months and months.
Let’s see if folks come to their senses and sell these markets off – at some point buy, buy, buy is going to turn to sell, sell, sell.
Normally this time of day I wake up in the middle of the night, but it’s 10:00 local time and I was reading Mott Capitol ‘s article were he was saying the equity markets were up last week because Treasury sales were lower than expected and the options market had bet that rates would rise on longer dated bonds , instead they dropped. I think I have this right? Now he is saying Treasury auction coming to market this week is going to be larger and if there is less buyers than the rates will rise. What should we expect for the equities markets? Will we see the party continue?
I unloaded some regional bank Pfds at a nice profit ; DCOM,CNOpA, CUBIpF
also unloaded most of NS the LP Units I held for a long time at a 3 point profit because I now have 1000sh of NSpB and NSpC ; a risk reducing measure .
Past week felt like COVID 2020. Bought a couple hundred VNORP earlier this week and sold them for $9 more a share than I paid for them. CTA-B was a helluva multiple flipper the past few days. It would bounce around a couple bucks almost daily the past few weeks. Pretty good flipping days the past week. A declining bond yield and hot market never hurts, lol.
I hate those two Cta A and B, callable at $100? Please take those 2 nightmares. They are so volatile. Mr Grid you like them?
Ha, King, I would at the right price. At their present yield they are basically in line with market yield of their credit ilk. They are just more volatile. And the volatility can be played to make nice quick trades as the bid ask price is typically wide. The trading fun is in between. But as a buy and hold since Fed started raising rates, it would have been a painful ride. But proportionally that really could be said for most fixed low par yielding issues over past couple years.
Owned these two nightmares for over 25 years and they never acted this crazy. Glad you can call it fun.Maybe it’s those bond vigalanties. We gotta find that guy. A man aching for the lash ( Fraiser)
Thanks mr, grid
Unfortunately, King you have held this during a 40 year downtrend in interest rates. This past 2 years has been the opposite. Plus illiquids on NYSE are more bouncier through random volume movements. There are only a handful of them and they tend to act this way over time.
Grid–Good job this week–nice time to flip some for you I am sure—what movement.
Congrats Tim! That’s a home run!
I had to do a double take. I own CMSC and for a second I thought it was only 4.2% yield at par. Nope. It is a baby bond I own paying 6.7% at my cost. I only have 110 shares of it, it is up 5.5% from my cost, but it is one of those positions where I just hold and do not think about it much.
Anything that yielded that low was sold off ages ago for the most part.
fc–yes that is a bit confusing with cms-c and cmsc. I bought it in the high 17’s and sold for 20.01 today.
At the high 17s, you were getting a yield of just under 6%. Why would you reference 5.2% in your reasoning to sell? Do you feel as though at 5.2% it has reached its peak price?
New, the 5.2% is based on a selling price of $20, I think. I did the same and sold half a position at $19.98 but plan to buy again if it drops to around $17. Good flip.
MFZ—yes correct 5.2 @ $20 and as I mentioned if I thought interest rates were going to move lower I could have held, but thinking while they may move some lower it won’t be dramatic.
New–5.2% is at $20/share. Rates may move some lower, but for now I think it is unlikely to be too much lower. If I thought rates were going to plunge could have held longer—we’ll see.