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Use Friday Wisely to Position Portfolios

Very early (4 a.m.) in the day it looks like we will have a strong opening to equity markets–too strong as far as I am concerned. But we can use Friday to continue to do work on our portfolios.

I did do a bit a nibbling yesterday on investment grade issues–but I did no selling and I still have a few perpetuals that I would like to sell–so I will consider doing it today.

Using the S&P500 as a reference I have to believe that we are a long way from the bottom of the market. If one was to assume that we had down GDP in the 1st quarter of say a few percent, but then a fairly massive drop in the 2nd quarter of 10% or even more–is there anyone out there that truly believes that we will have anything short of a substantial recession?

Why are airlines still priced high–relative to the situation? Delta is $24/share this early a.m.–shouldn’t it go to $5 or $10? I think the only reason is because of government bailouts–not sure that should hold shares prices up–these bailouts are going to come with many strings attached. As a side note Compass Airlines, who is a regional air carrier for Delta and American Airlines announced yesterday that they are closing down.

Why are all the indexes off just 30%? Is there really going to be a V bottom? Not sure that is possible–it makes no sense. I know in my small town I expect maybe 25% of the small businesses to fold–they were mostly making it just day to day prior to Covid 19.

Anyway there are no answers to my questions–but it would seem that equity markets will take a turn lower soon because economic slowdowns of the magnitude I think are coming are not baked into these markets.

I will continue to position and nibble as opportunities present themselves–but I will keep plenty of powder available.

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