In an orderly selloff common stocks (down 500 on the DJIA) are taking quite a drubbing today. We have just reviewed all the preferred stocks and baby bonds and find them overall very stable.
The day started off with long term interest rates a few basis points higher and we thought might happen this week, but it didn’t take long for the flight to safety to start and rates are trading right where they ended last week–2.74%. While we are seldom concerned with the fall of common stocks there is a point where selling spills into preferreds and baby bonds as nervous nellies move to treasuries. We have not reached that level of concern with income investors as of yet–it normally would take 3 or 4 days of heavy selling to start to panic them.
For now we sit tight watching–no need to even consider any type of buying or selling.