Time to Evaluate Holdings

With a breather in the downdraft in stocks and interest rates on pause–for now–it is a great time to once again review holdings to see if there are issues that you are laying awake nights worrying about.

While most of the folks we hear from on the website are fairly seasoned in their investing we have many, many newer investors stopping in and reading comments and many of them likely panicked and sold yesterday–using the “buy high and sell low” technique which is pretty normal for newer folks.

It is very likely we will see some more downdrafts in these markets in the days and weeks ahead related to the corona virus, or affects on companies because of the virus, so better to have too much cash than to lay awake nights worrying.

20 thoughts on “Time to Evaluate Holdings”

  1. I have made small adjustments only. One big buy that I will name once I’m done buying.

    Not a lot of cash to work with but that “problem” will be solved when STT-C goes away soon. By then, the bargains may be back.

  2. I have certainly tweaked some of mine. Always erroring to safety. An interesting play now is old reliable EP-C. Made $2 cap gain flip and bought back 635 shares today well over a buck lower and still wont miss the interest payment. I had to hit odd lot sub 100 shares to shake some of them though but bought back between 49.68 and .85. It could go lower but under par is good with credit quality and duration limit. Something to consider if won is kinda of brave or weak brave, ha.
    I took remainder UMH-D dog proceeds and an unfortunate 10 cent loss selling AHH-A to get them all, but gladly will do that to get back in here under $50. It could lower, I bought a big slug at $49 less than 2 months ago.

  3. FFC Down a further 3% today, so down about 8% in past 5 days, effectively wiping out over a year’s yield. Is there some news I am not aware of?

    Can someone share their thoughts on why a quality CEF investing in preferreds is down so much, so quick?

    1. RE: FFC

      The CEF market is like that. It goes from undervalued (relative to NAV) to overvalued very quickly. Right now FFC is trading almost right at NAV.

      Use cefdata.com to watch prices relative to NAN and historical premia and discounts.

      FFC is an excellent fund. Buy it when it’s cheap. Cheap means trading at a large discount to NAV relative to its past discount.

      It’s an “OK” buy now but I would not be “all-in” at present price/NAV.

      Let irrationality in CEF pricing be your friend.

      1. Looked at FFC, kinda put off by the 2.52% expense load, is that normal for a closed end fund? Is the posted distribution yield real?

    2. The simple answer is leverage. Leverage magnifies portfolio performance in both directions.

  4. Shipping on sale. Everybody selling and shorting GMLP then the good results today but since the market is weak just a little rebound. Adding GMLPP and HMLP.

    1. Added to my CCL position yesterday. Will put in a limit order for today as well.

      This is a golden opportunity to get into solid tavel/leisure reasonably. Investors have short memories.

    2. Over the last week, in the shipping preferred/baby bond area, I have purchased:
      TNP-C @ $25.40
      GSLD @ $24.90
      CMRE-E @ $25.75

  5. I took no action yesterday. I’ve made mistakes before and for me it’s best to act cautiously when we have the type of events we have had the last few days. I did sell a China fund a few weeks ago that has saved me 4%. I’ll buy back when things calm down. My most volatile holding, a US growth fund was down 3.8% yesterday. Even after that loss I’m up 6% YTD so it’s not so bad.
    Today is a good day to evaluate holdings as Tim has said.

    1. Also noticed one of my preferred limit buy orders executed yesterday morning after a month long wait so that was nice benefit of the panic.

  6. Good advice Tim. I took profits in TLT, but it can run a little higher. The lower trend line on the 10 year could get us to around 1.25%. We shall see, ATB.

    1. Also, the fed will cut rates as the bond market is screaming for it. If they don’t cut rates, look out below.

  7. Good morning Tim; Hopefully you got my email from yesterday. Its worth taking a look at. Anyway, this is what the experts call a “BLACK SWAN”. It finally flew over and hit America. Now this morning the talking heads on CNBC are saying a 74% chance of a rate cut in June and another 63% chance of a second cut in Sept. If that comes to fruition that 4.75% coupon by those 3 blue chippers will have looked like a proverbial “Good Deal”. LOL Somebody yesterday said I must have a “High Risk Portfolio”. Not true, its just that Iam blessed and it has grown well over the last 45+ years and a black swan event “Takes No Prisoners”. Hope everybody has a good day and I also hope to see a decent preferred come out soon worthy of a buy for the long haul.

    1. Hi Chuck P,
      Not sure I agree with your use of “black swan”. My understanding is a black swan is something completely unexpected, and we are blindsided by it. 9/11 was a black swan. I saw an article the other day that referred to “white swans” – something we’ve seen coming. I agree, yesterday’s selloff was somewhat surprising in terms of magnitude, but I think we could see the swans on the horizon. While some may be caught off guard, in truth, we’ve had weeks to prepare.

      Not trying to minimize your $64K hit. My portfolio took about 1.5% hit. I feel pretty good about that in comparison to the 3.5% the DOW lost. My former portfolio (before massive reorg a few month back) would have seen probably 4%+ decline. Granted, I’m still about 1/2 in cash, but overall, I’m happy with the changes I’ve been making. Most of them because of this site. THANKS TIM!!!!! And of course, everyone else on here who I follow with great interest.

    2. Chuck- I’d have to agree with Mark as a “Black Swan event” has to be relative unforeseeable event with the key element of surprise (Rumsfeldian unknown unknown). Nobody, nobody should be taken aback that the market is tanking but it’s no fun swallowing 5 digit losses back to back.

      I’m holding onto all my preferreds for dear life b/c they’ll come back in style after rate cuts. Having this board makes the bleeding bearable that there is a larger community of preferred investors. Thanks Tim for hosting us.

  8. Hi Tim
    I sold and bought yesterday.
    It was not a case of buy high and
    sell low, as I had gains on all sales. A day like yesterday pointed out the ” achilles heels ” in my portfolio and I did my best to correct them . I intend to do the same today on a much lesser scale. I ‘thought’ I had a conservative portfolio, other than a single spec., and found out that it was not conservative enough,
    so I went to work on it. It’s always
    a wake up call for me to find out
    I had not done a good enough job, even though I had spent 14 months attempting to rearrange the deck chairs. Live and learn.
    Many changes I made were based on info I learned RIGHT HERE !
    Thanks, howard

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