Up, Up and Away!!

You can’t fight the Fed and you can’t fight a free spending congress. Never has it been truer than now.

One just as well forget that there will be a bad ending to this story–it hasn’t happened yet and may not end for years. On the other hand, global investors may decide in a week or a month that they need to be paid for the risk of buying government debt–and when this happens they won’t be settling for 1.70% on the 10 year.

In the mean time I have had (and likely you have as well) 2 great months in a row with a 1.1% gain for March. Even holding ample cash March was great. I know April will not turn out as well as my dividend income will be down quite a bit–the January, April, July and October dividend/interest cycle are my cash flow softspots.

I have done quite a bit of successful dividend capture moves during the last 2 months–and in a rising market almost always work well.

I have added my ‘watch list’–which is destined to grow in the near future, of some of the issues I watch and own for various dividend capture plays. I have put a permanent link on the top of the page. It is here.

11 thoughts on “Up, Up and Away!!”

  1. Someone I know who is experienced in the currency markets simply said “Our garbage is better than their garbage.”

    Look at the markets every day. US dollar still looking the best reserve currency out there and was on a streak for awhile.

  2. It seems to me it won’t take too much of an uptick in interest rates to put a lot hurt into the housing market and leave a lot of people underwater on their mortgages. Prices were I live now in Southern California are simply insane ($1M plus for even a modest home). I know it’s not 2008 with no doc mortgages and all, but even if new buyers are putting 10 or 20% down, they could easily lose it all. I sure hope we don’t relive 2008, but I don’t see how we avoid it. I think people are dreaming if they think the government can spend like they are and keep the lid on interest rates.

    1. Derek–many of these loans are closer to 2008 than you think–many, many 3% down sales going through. As an appraiser I can tell you it is scary times.

      1. Try Austin, just had a house go under contract for 130k over ask, with a list of 400!!!! Waived the appraisal. Probably California money coming in. When you print stock options, money is worthless.

        1. This must be an all cash offer, because lenders usually require an appraisal as a condition of the loan. Appraisals can also serve as a reality check on home prices…at least they’re supposed to.

      2. Tim, that is exactly the opposite of what a WSJ story said last week in an article entitled: “Need a Mortgage Loan? Good Luck. Lenders Are Tightening Standards.” The story claims that for both conventional and FHA loans, the average credit score has gone up year over year. Supposedly lenders are concerned that people that have recently lost their job will try to use their last pay stubs to falsely qualify for a mortgage.

        When I saw the WSJ story, my immediate thought was that Washington WILL come to the rescue for all of those folks that cannot get a mortgage today. You can just see them dragging people who cannot qualify today to testify in an open Congressional hearing. Ignoring the fact that we don’t have enough housing stock, it seems like a setup to return to pre 2008 mortgage writing policies. Congress and the regulators have the power to change Fannie/Freddie/FHA/VA underwriting policies in a heartbeat. We have 100% proof that Fannie and Freddie are too big to fail and WILL be bailed out. So they squander an extra trillion $’s or two. . . no big deal, just add it to the tab! Gotta get the housing party going again somehow.

        I am also hearing stories from realtor friends that many if not most sales are 100% cash deals. Seems to depend on which market you are in and lack of supply has a lot to do with it. Story about DR Horton selling an entire NEW subdivision to investors for CASH in Texas.

        Even if you do not have a WSJ subscription, you can listen to the story for free. . .

        https://www.wsj.com/articles/the-mortgage-market-is-roaring-but-lots-of-people-cant-get-a-loan-11617355802

        1. I would call BS on that. I get purchase agreements across my desk all the time and 3 percent down is common. When I stop getting requests back from underwriters to fix errors I make (and I make them all the time) on appraisals I know they are just jamming them through the system. On the other hand I suspect borrowers are somewhat in better shape now than back in 2008 perior–hopefully they are least have jobs.

  3. Sad to say I have not bought any preferreds in Q1. Net worth up 7% though so no complaints.

    Slowing exiting positions and trading into quality whenever possible. Building up powder for whenever.

    1. Bill W. Don’t mean to sound like a broken record, but I’m on your side of the boat. Up right at 9 % , year to date with 38% cash. Haven’t added a preferred since March of 2020, or anything “period” since a utility etf for income last October. my only activity since is 3 equity sales in ’21. Don’t see anything in the future unless things change considerably. Watching rates everyday and the calendar for my 1 year holding period in taxable account. Also no complaint but can this continue? Obviously not forever.

  4. Problem is 1.7 percent looks pretty good to several parts of the world, and why this could last longer than many expect.

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