Some days you think you can understand the movement in the stock market while other days, like today, you have to scratch your head a bit and simply go with the flow.
After 2-3 strong days where our somewhat conservative portfolios rose by almost 2% one would think that some ‘backing and filling’ would be normal –it doesn’t happen. One can’t argue with strong gains–it gives one comfort to start the year off with a bang and a chance to do a little selling into the strength to rebalance the portfolio–the problem being that the items you want to rebalance into just keep going higher–I’m not chasing them for the most part.
The employment report today with 312,000 jobs being created was almost beyond belief–and maybe they are incorrect and will be adjusted next month. BUT the thought was a modest report–in the 175,000 area would play into the FED pause theory–but 312,000 doesn’t play into that story very well. Also the .4% wage increase would imply wage inflation–we had written about our belief that was wage inflation was coming, but finally tossed in the towel last month on the wage inflation story line.
So with todays rally in the equity markets it looks like for now ‘good news’ is actually ‘good news’–never mind that next week traders/investors might change their mind and decide ‘good news’ is ‘bad news’ and that they should sell everything off–I guess we will find out.
For now, as we mentioned earlier this week, we have done some rebalancing in the portfolios to alleviate some overweight positions. In particular we sold off some of our Gladstone Investment 6.375% term preferred (GAINL) where we had way too many shares. We did manage to snag a couple issues before the buying drove prices too high. We have purchased a modest position in the Brookfield Property REIT 6.375% perpetual (BPRAP) which has a current yield of over 7% so that boosts income just a bit. Additionally, we have added the VEREIT 6.70% month pay preferred (VER-F) at a nice price with a current yield at purchase of over 7%. Right now we are trying to sell just a bit of the GasLog Partners GLOP-C issue where we are overweight–we got a little ambitious on this one when it IPO’ed and need to get it right.
Everyone should enjoy the ride because I’m sure there is a fair chance the ride will end soon.