We see that the futures markets are showing stocks with a modest upward tilt this morning. Also interest rates are moving a bit higher as investors regain their composure a bit. I expect that while we may see tamer markets for the balance of the week, we are likely to see some multi hundred point moves–up and down.
Yesterday was a day when we saw preferred stocks and baby bonds move lower in a ‘baby tossed out with the bath water‘ move by investors heading for the exits to the safety of government bonds and/or cash. We note about 75% of issues moved lower yesterday, although most issues were lower by less than 2%.
Newer investors need to remember that we will have days that intuitively you would think income issues should move higher because interest rates are falling–but instead they fall. Yesterday was one of those days. Capital preservation was on the mind of some–maybe believing that the “worst is yet to come”. The key is to get positioned “comfortably” in your portfolio. This is something I have worked on for literally years and I am now in a spot where I feel good about what I hold and intend to hold through market turbulence. We saw our cumulative portfolios fall by around $300 yesterday, which is a rounding error, and was a surprising small loss for a wild day.
We did purchase some Saul Centers (NYSE:BFS-C) 6.875% preferred yesterday (NYSE:BFS-C). We made 1 purchase at $25.15 and a second at $25.10. This issue, which was a 5 million share issue, but 3 million shares were redeemed last year, is unrated. The next dividend payment is 10/15 so this is simply a move to capture a dividend (or 2 if we are lucky) prior to the likely redemption of the issue. NOTE that this was not an original idea, but one which was discussed on various message boards–I are more than happy to steal a good idea and this one was available all day yesterday–and maybe will be again this morning. Like always there is no guarantee this will work out like I hope so this is not a recommendation for anyone to follow suit.