Not a surprise to most of us here to see the DJIA off about 2,000 points this week–easy come, easy go.
We are back to a realization that the economy pretty much sucks–of course it does. The question is always what it will do in a few quarters?
Companies stepping forward and talking about the future–in a realistic way, are bringing share prices back to earth.
The airlines as well as the cruise lines have traded at silly prices–no matter the bounce back in traffic–a doubling from near nothing is still pretty much nothing. Delta (DAL) today said they were looking to renegotiate credit terms with dire implications if they were unable to do so.
Royal Caribbean Cruises (RCL) traded to $75 just a few days ago–up from $22 a month ago!! RCL has no business–today, next month and maybe a few months from now. RCL is carrying a $12 billion market cap–with no business—WTH.
These companies are again need to go to the debt market and their credit ratings are being lowered–i.e. they are screwed if this recovery doesn’t come off perfect.
In the markets we care about–preferreds and baby bonds we are seeing more red than we have for months. The air is being let out of many of the junkier issues. You can see the losers here.
All the crap issues such as the Ashford Hospitality preferred are off significantly. The AHT preferreds are off 25% TODAY. Almost all the lodging REIT preferreds are getting the wood put to them. This is true of the mREIT preferreds as well.
I am not buying–just watching the ride down. Believe it or not there are only about 20 gainers out of near 500 preferred shares today. Even the utility preferreds and baby bonds are off 1-3%.
Will there be even better bargains ahead for income investors? Everyone has an opinion–none of us know for sure.