In spite of all the consternation in the stock market preferred stocks and baby bonds are hanging tough, although the average share price has now given back 7 cents on the week. Of course averages are not always meaningful–they tell us there isn’t a broad based selloff going on now, but certainly there are individual issues that are weaker.
I haven’t done anything much all week–mostly just watching, although I had a Good til Cancelled sell execute for the 6.75% UMH-C, which I had bought on 4/24 for $24.91 after it had fallen on the announcement of a reopening of the issue. The issue went ex on 5/14 for around 42 cents/share and I sold it for $24.91 yesterday. We are happy with a 1.5% gain (net), but this issue may well go higher.
With the 10 year treasury as low as 2.16% earlier today and all the trade friction around the globe we are slowly coming to believe that late this year or early next year we are going to fall into a recession. Certainly the economic data doesn’t show this to be the case now, but the tariffs at some point will have to be built into prices–slowing demand, or alternately, companies will have to “take the hit” in their margins. No good can come of the friction.
I have not changed my investing plans at all YET. Just keep holding all of my “base” positions for now and doing a little dividend capture if an opportunity arises. It is likely that we will move to a bit more conservative stance until we can figure out the economic picture.
Lastly one needs to watch energy prices. Anything related to energy will become a dicier holding if we get a slowing economy. Talk of long term contracts and hedging don’t mean much to me at all. Some of you will recall that upstream (producers) MLPs always touted contracts and hedges back in 2010-2015–most of them went broke. You simply can not economically hedge all the risk. Caution is warranted.