March 9, 2016
BUY Limit order good till cancel $25.07 for ELB. 5.9%
March 5, 2016
Funny quotes: The markets take the stairs up, but the elevator down.
We suggested you place an advance order on AFSS and it filled on Friday. We are purchasing a small amount. You can buy under $24.50.
We are watching numerous “bond like” positions to buy BUT the possibility of interest rate increases pose a problem: rising rates could hurt us. So we are extremely cautious right now. HOLDING CASH is a good option for conservative investors who follow this blog: which is targeted to retired folks who want to maintain their principle and get a decent income.
We view stocks as high risk right now at these lofty prices. Yes of course they can go higher but we are not taking the bait.
The LONG term trend in stocks is DOWN: believe it or not. We continue holding primarily bond instruments and some gold, in addition to oil which has been rising: the increase in oil is simply a short squeeze and this is NOT the time to buy oil: the long term trend is still down.
From the New York Times: (We have been buying corporate bonds)
Conservative, risk-averse investors find themselves in a hard place. As long as interest rates remain negative for the bonds of major countries like Germany and Japan, it will be difficult for American bond yields to rise much. The safest investments, like 10-year Treasury notes, are providing extraordinarily low yields — only about 1.9 percent. Junk bonds, with higher yields, are risky when the economy is under stress, Ms. Jones of Schwab says. “We’re pointing our clients toward a middle ground — investment-grade corporate bonds,” she said. They provide a modicum of safety and somewhat better yields than government bonds do.
Rule #1: Never buy an annuity.
“In an interview with Reuters Jennifer Ablan after DoubleLine Capital’s February flow figures were released (it was a $2.2 billion inflow) , Gundlach said the firm is now considering closing out some of its long positions in the stocks that they purchased three weeks ago.
Is the bond trader now just a closet equities daytrader? We wond’t know, but since the S&P 500 has jumped 8% in that period, why not takes some profits.
“That’s what we’re talking about,” Gundlach said about booking some gains after their short-term rally.
Gundlach still maintains that the U.S. stock market is in a bear market but had made those equity purchases because the conditions in the second week of February with “wickedly negative equity sentiment were such that risk/reward favored a potential tradable rally and also made such a low allocation less advisable.”
The time to buy the dip, however, has passed: “I am bearish. There are just wiggles and jiggles in the markets.“
March 3, 2016
Don’t expect a lot of action today as the jobs report comes out tomorrow—Friday. We have been suggesting that you stay out of the stock market for so long our hair hurts. Altho stocks have been rising, volume is declining, the highest probability is a coming decline. Do not get suckered into the stock market right now at these high prices.
We continue holding primarily bonds and bond equivalents. We wait for the right prices to buy AFSS, CTAA and EBAYL….in addition to numerous others that strike our fancy…scroll down for additional comments.
Heard about all the bad car loans????????
The chart below was posted by David Stockman, and it shows how the delinquency rate for subprime borrowers has hit the highest level since 2009. In fact, we are not too far away from totally smashing through the previous highs that were set during the last crisis…
February 25, 2016
(Update: Place Buy Limit order (good till cancel) for AFSS at $24.62…it may take weeks to get to that price. This is AmTrust Financial, an insurer. Also watching CTAA for possible buy.)
We are buying a Southern Power investment grade corporate bond that pays 3.89% and matures in December 2025. The Cusip is 843646AM2. HOLD to maturity. Southern Power is a subsidiary of the huge Southern Company. Once again the yield is not great but we like the safety.
Southern Company subsidiary Southern Power has completed the issuance of $1 billion aggregate principal amount of Green Bonds, becoming the first investment-grade electric utility in the United States to offer this type of security to support investment in sustainable generation. The inaugural Green Bond issuance underscores the company’s innovation commitment as the Southern Company system further develops the full portfolio of energy resources.
eBay is issuing a new investment grade baby bond. Everyone knows eBay so we will not describe the Company. The issue will start trading any day now and pays 6%. Try and get this around $25. We are buying small amount to start. Ticker: EBAYL
Another view on the ‘death cross’:
Instead, what arrived in the stock market on Wednesday was the ‘real death cross’. This is where on a major market index like the S&P 500 Index, the 200-day moving average has fallen below the 400-day moving average. And this death has now come to pass for only the eighteenth time in the past ninety years. In short, it is a rare event.
Past history has shown that unlike its tamer and more well known sibling in the ‘death cross’, the ‘real death cross’ is typically followed by more meaningful declines a vast majority of the time.