That is exactly what I have been doing this morning–without any real success. Yes I am fussy about any buys right in here–we have no clue what is going to happen in the month ahead (or even the week ahead) so how can one go crazy with buying. To be the hero you go all in–but you darned well better be right or you will be the zero–and so will your accounts.
I reviewed all of my holdings because that is where I most likely would add at this time–if I was going to add and I certainly could if a dump happened with my holdings. Part of the problem I have is that I have at least 3 issues where I am overweight–and I feel good about them, BUT it only takes 1 bit of fraud or some other unlikely event to torpedo any position so I really am avoiding making more buys in these 3 issues. The issues are–
XFLT-A XAI Octagon 6.50% term Preferred
GGN-B GAMCO (Gabelli) Global Gold and Natural Resources Gold 5% perpetual
HNNZA Hennessy Advisors 4.875% baby bond
If we had a inkling that interest rates would be stable or heading lower the baby bonds from Affiliated Managers and WR Berkley would look mighty tasty for capital gains potential. But not yet in my mind, although a slow leg in to a position might be reasonable.
There will be no trading on stock and bond markets tomorrow – gives everyone a rest from wild movements. Today with the exception of United Health (UNH) markets are kind of quiet of course I said this yesterday before markets imploded so we will see what the next few hours brings.
I used the “hiding spot” theory in 2007 and it didn’t really work when spreads blew out in 2008/2009. Yes, in the end I got all my money back — but I would have realized some significant losses if I had liquidated to reposition into issues that I would have rather owned after panic selling. I would have been much better off sacrificing a little current yield in a Treasury Money Market and avoiding any potential mark-to-market losses.
af-
The only recession hiding spot that has provided yield, liquidity and cap gain has been treasuries purchased before the fall. MMFs are liquid and excellent for protecting capital, as are CDs though not liquid. T-bills are another option.
The current use of “hiding spot” seems to refer mostly to stocks with maturities out to 2028, the point being to get a yield and return of capital. They could be subject to MtM losses and are not cash equivalents.
I agree with your point: If you want funds available to buy at market bottoms, there’s nothing like cash and cash equivalents.
r2s, I do not base my investment decisions on technical analysis, but —
https://x.com/BergMilton/status/1910725421135782105
https://www.aaii.com/sentimentsurvey
Af,
Interesting survey. I see the potential for that to be a tracking of the herd mentality.
Milton Berg, I never finished signing up for X so I am blocked and fine with that. But I Googled him and found YouTube productions going back at least 3yrs that he has been a perennial bear.
Aug 3rd 2023 There’s strong evidence the market won’t do well
March 4th 2024 The stock market rally is really unhealthy and may correct soon
April 24th 2024 analyst perfectly timed the top in 2023 Says great Bear Market…..
This is hours of viewing and would re-enforce a negative viewpoint. Not what I want to do with my time.
The markets go up and they go down but I have seen trends like tides at the ocean. When the tide is coming in there are higher highs and higher lows as the market moves up. Then when the tide goes out there are lower lows and lower highs.
All you have to do is look at a lot of charts of stocks and you will see a 5 to 6 month decline downward. So the tide is going out.
I have a feeling we are going to see a few more lower lows before the tide turns. how long it takes for the tide to turn I have no idea.
Milton Berg got a buy signal on April 9 which is supported by the preponderance of bearish individual investors.
I am a long term seller of stocks accumulated in the 1970s and 1980s, but I have now paused those sales — even bought a little MRK and VZ. I’m looking to buy some investment grade perpetual preferred stocks but the spreads to the 20 year Treasury are far too narrow. It’s really not the technical indicators that influence me as much as my perception of current value and yield. I’ve always been attracted to low P/Es and dividends.
af,
Nice to hear from someone who has been around a while. Jealous in a way that you held onto those buys from the 70’s and 80’s
I started my entry into full time employment 79-80 and was starting to buy stocks then but that was my down payment for my entry into real estate.
The stocks you mention have over time slowly moved up in value over the years. I can understand the thinking after having lived through several drops in the market that it might be time to lock in some capital appreciation.
But I see you say you paused the sales. Funny MRK is one I got into recently and unfortunately too soon I realize as I am underwater right now. This an example of my thoughts that the tide is going out and we may see lower lows.
But you and Westie have similar thoughts on looking at investment grade companies with low P/E’s
We have upper 6 coupons w IG under par…. We have 8%+ CY floaters dipping under par. 6 1/4’s at 23. And you dont see value??
I am just going to continue to be patient and let the opportunities reveal themselves. I did get rid of some positions that I bought a couple of days before though. I could buy them all back at the right price of course.
What I don’t like is when Mr. Market grinds bonds lower. When you get lower highs on a rally and lower lows, I get concerned. This can drag on and can make it difficult to trade since winners become few.
When I think about the basics I see ST;
1. We haven’t seen massive defaults (yet)
2. Inflation still a problem IMHO.
3. Yields seem to be workable as long as we don’t have ZIRP NIRP or negative rates.
4. The yield curve is finally looking somewhat more normal. There is now a term premium and no weird kink (bulge) in the intermediate spot on the yield curve.
I think a lot of tension lately is because of the unknown. Companies now are not giving guidance or giving bi-bifurcated financial scenarios. There is some dart throwing right now. I’ll ride it out like everybody else and change when conditions change.
YMMV DYODD
SLD
KBWY
XOP
RIV-A
BOT
GDX
PHYS
RLJpA 7.8% is a perpetual
have been accumulating – CY8.50
If credit risk blows up, you’ll really get this one on sale. Anywhere between $15-20
Searching, Searching, Searching-Tim I think that’s a great title for a pertinent discussion in this market as I’m seeing what I feel are some compelling bargains if you search in the right places. For example (these I already own but have been adding to them in the last couple of weeks) ATHPRA-$23.60, RLJPRA-$23.75, and HWCPZ-$22.79, and ATLCP-$22.83 -IMHO all are quality companies with very low default possibilities, decent yields, and excellent opportunities for significant capital gains. The first three listed above were all trading above $25.00 only a few weeks ago-what has fundamentally changed within these companies since then I would ask? I think its been said a “lot of babies thrown out with the bathwater lately” just doesn’t make any logical sense with some of these preferreds and baby bonds.
Great investing to All,
Bill
Good title Tim !
Hope Bear reads this.
I have been searching for something he posted about SLG. It stuck in the back of my mind and I can’t find his post. I looked on the common and the REIT board and it wasn’t there.
The SLG comment is posted under the topic, “Headlines of Interest for Holders of Preferred Stock and Baby Bonds” dated April 16
https://innovativeincomeinvestor.com/headlines-of-interest-for-holders-of-preferred-stock-and-baby-bonds-33/
Thanks Bear,
No problem – there is a homeowners insurance comment for you on the topic / page, Market Pukes On Tariff News/Jay Powell Speech. Scroll down bit.
https://innovativeincomeinvestor.com/market-pukes-on-tariff-news-jay-powell-speech/
I’m going to print that out and research it.
Seems like income issues gradually coming back to life. My account is still down 1.5% from ATH. Starting to see what’s really going on here. This isn’t a trade war it is a trade negotiation. Also pressure on Russia via China to end the war in Ukraine. If we do end up with some residual tariffs they won’t be inflationary. Rather, like so often in markets with initial reaction being dead wrong, I believe tariffs are actually deflationary. If prices could be raised without decreasing demand then sure it would be inflationary, but you would have to have a massive boom going on to support that. Instead you raise prices and demand falls off cliff, volumes implode, and trade come down resulting in less growth overall and recession. The narrative out of the deep state/globalist/CCP is that we are going to get both a recession and inflation. How? That’s just propaganda. And neither party can win this trade war, politically, in the long run so most likely outcome is negotiated settlement (and probably some printing to stabilize markets along the way) which means markets actually end up higher in 6 months.
Now that’s a contrarian view few are positioned for!
The European Central Bank seems to agree with your analysis Dan, they cut their rates again to 2.25%, citing the same reasons (tariff uncertainty, market volatility, lower growth) that Powell mentioned yesterday. In fact this is the seventh cut the European Central Bank has made since they started cutting last year.
So much for no politics, Dan. Minor point: Deep State? Put that in the category of Santa Clause and the Easter Bunny.
I think it’s pretty much impossible to avoid discussing politics when discussing this market. You are correct though Franklin, I should try harder.