The FED – Much Ado About Northing
By: Tim McPartland,
As suspected would be the case the build-up to the FED announcement was much greater than the event itself. While the media is now spinning the FED statement and press conference as ‘dovish’ we read it as more of the same. We watched the Yellen press conference and we saw nothing to make us think anything had changed—interest rate decisions will be data dependant (so she says)–period!! Obviously we will be watching employment and GDP data closely to confirm what we believe will be a September rate hike–we think Yellen is bound and determined to get rates higher then assuming the economy stays reasonably vibrant (all this remains to be seen–and vibrant is in the eyes of the beholder).
As mentioned we will be watching economic releases closely, but our investing strategy will not change for the time being. We continue to focus on shorter duration instruments while keeping our eyes open for ‘bargains’–whenever/wherever they present themselves. The last obvious bargain (at least at the time we thought it was obvious) we found and bought was NGL Energy (ticker:NGL) which was on 4/23/2015 with a follow up position taken on 5/1/2015. This has turned out to be a very good performer–up more than 10% on the initial position and up over 8% on the follow up position (counting the receipt of 1 dividend on both positions)–all within 60 days. We think that we have mostly read the market correct YTD. Minimal trading, minimal perpetual preferreds and keeping our cash levels reasonable (remember having too much cash on hand will kill your returns).
While the above seems ‘boring’ to some and there are investors that just have to ‘trade’ in and out of issues every week we look at it as a big time and money waster to over trade–we just aren’t that smart. We are hoping to get to over a 4% YTD gain by the end of the month and it won’t happen by ‘trading’–just by holding investments steady and collecting dividends and interest.