While the interest rate cut and the following news conference from Jay Powell is obviously important I am looking at it more as entertainment. Just sit back and watch. Yesterday markets moved in a fairly wide range in the end they went no where. Today they are not moving at all–a very narrow range.
Many of the seasoned folks on this website know that there is nothing you can do except watch – you can’t buy or sell anything that might be helpful – you can only plan and invest looking at longer trends and at this moment that is that interest rates are trending down and with what we know TODAY this will continue. So we can watch data day in and day out without reacting to any singular piece of information and follow a longer term plan–ALL SUBJECT TO CHANGE with multiple pieces of information.
All my investment accounts are flat today–a disappointment always, but honestly accounts can’t rise like they have been forever. Income investors have had a heck of a run lately and we may have to shift some holdings to keep getting capital gains–i.e. buy low coupon, higher quality issues where there is upside to the share price–ASSUMING a continued trend lower in the 10 year treasury. Lots to ponder–but none of it urgent as we are well invested. We’ll see where we go.
Looks like ‘sell on the news’ prevailed – indexes neg after run-up.
I agree Gary. It is a sell on the news for day traders. In the mean time we have companies redeeming their preferreds for lower coupons, Fed lowering rates, fixed investments climbing in values. If you look at your accounts on an hourly and daily basis, then it is easy to get caught up in day trading and ultimately buying high and selling low. Longer term trends is where I focus and it has worked out very well for several years. So as a longer term investor, it doesn’t pay for me to sell on a day like this, and hope/pray that investments I am watching go down, and then try or put in low ball bids in the hope that things go lower. In the mean time, i am out of the market, with no dividends/interest payments, and then glued and stressful for that buy/sell and if it took place.
Today, the market sold off, but the undervalue of my investments continue to exist, and hence I was up .2% and another several thousand $ in paper gains (which is great, but I am holding).
Mr Conservative, I liken it to Hank Stram’s famous quote in the Super Bowl about “matriculating the ball down the field”. Pretty much what we are doing at this point. 🙂
Like they say about the weather- wait a bit… all major indexes up today.
Whiplash anyone? My portfolio barely moving positive today.
ATHs again in my accounts as they “viagra” today. holdings like CTA-B, LXP-C, LANDP have been scorching hot for he last couple of months. Even my bonds – things like the 2029 MAIN 6.95%…crazy.
Right Yazzer. Bank stocks, BB’s, REIT preferreds, storage preferreds, investment grade preferreds with ~5% coupons, etc, and diversifying to 98 investments. Been buying a lot earlier this year with expectations of rate cuts. It has paid off. I am close to $500,000 in gains this year, and it keeps going up. With retiring in about 6 years, and with more anticipated rate cuts…. I am going to sit and watch as Tim said. Let it ride for a good while. I dont think I can beat future yield on purchases for anything.
Nice job!
Just for fun, I looked back at my account history and saw that I sold shares of CTA-B at $119 in November 2020. I don’t know if we’re heading back to those types of prices again but I think I’m just going to be content to hold for now.
DW – yeah – I saw those numbers for CTA-B on the charts – luckily I had never owned it but bought earlier this year in the 68s based upon discussion here on this site – now pushing 78s! It’s a $120 par issue I believe so possibly could get back there again – at least $100 or a bit more if the rates continue to track downward.
Yeah, but Athenes have always been higher in yield then comparable credits /issues. Do we trust them not to abandon say AHL’s?
Athena is a bigger company than many of our Bank positions. I’m very loaded with them… Just saying.
APO parent to ATH and AHL
I’d be far happier if they combined all under Apollo
Just sitting here & listening to the speech by Powell. I would just say for the “retirees” that only buy CD’s, they are officially SCREWED.
Agreed. Anything over 9 months or so now is very unattractive and in another 1-2 quarters, it will all be unattractive with time duration down to the 1 month.
I have a ton of CDs maturing between now and the EOY – had some further out but getting called earlier – will need to figure out where to park those funds which is probably about 25% of my current portfolio.
Discover has a 12mo CD at 4.5% as of now. I have no CD positions personally. The rate on their h/y savings which I keep a small bal has dropped to 4.2%. Bot and sold a lot yesterday restructuring some things all in the Roth and TradIRA.
Don’t blink or you might miss it but Everbank savings right now is still paying 5.05%…. They also have a 4.50 1 yr CD and also a 4.70% 9 month.
ECC under 20 still
cap gain?
yield
and CEF structure
don’t go crazy with size of position
good CY
ECC
series D
hate CS symbols 6.75 perp
my bad
For the cash part of your accounts: I don’t normally do last minute and I don’t normally do short CDs, but there is an opportunity to effectively arbitrage / do a rate lock on your MMF’s (lower) tomorrow rate by switching a part of your MMF funds into 3 month brokered CDs yielding 4.85%. If your MMFs are currently yielding 5% in a few short days they will be around 4.50 to 4.75. So IMHO 4.85 in insured short paper will begin to look good. FWIW, you can occasionally still catch some 3-month brokered CDs at 4.90%
Essentially you are moving out the curve a bit. An ultra short 1-3 bond ETF might do this for you, but that’s a wait-see. Some ETFs seem to be at the 1-month end. FYI – I run cash and equities separately. JMO. DYODD.
Let’s say you gain 25bps on $100,000 for 3 months. That’s a $62.50.
I checked Fido’s US Treas lists just before the announcement today- and after.
The 3 mo thru 1 yr dropped 2 basis pts, and 2 thru 20yr dropped 5 to 6 pts. CDs: let games begin
Bear; I have a small position in CSHI which works well for me. An enhanced 1-3 month ETF.
“may have to shift some holdings to keep getting capital gains–i.e. buy low coupon, higher quality issues where there is upside to the share price”
Wise words from the master…..
Pounding the table on these IG low coupons long maturity. Just don’t pay too much. Sell the any jumps in price if you wish. You can just relax and hold too for now. Not whole portfolio of course. Easier to achieve divorsification too.
Wait too long and the institutions will gobble the IG paper up on the lower and less sloppy price hill./mound or the EZ money.