Goldilocks Markets Continue
By: Tim McPartland,
June 23, 2014 10:30 pm
We could say these markets are ‘boring’—and they kind of are, but in general ‘boring’ is good for us. It is pretty nice really just collecting dividends without having to worry about skyrocketing interest rates (and corresponding falling income stocks). We are starting to get complacent—dangerous–dangerous. Sitting back and thinking this is how the markets will be forever likely will end badly someday. Of course there are so many potential issues sitting out there–from Iraq, to general terrorism, to energy prices and to marginal economic growth everywhere that one can find plenty to worry about, but it seems that no one is worrying about anything. No matter the news it seems it is overlooked, but we know this can change in an flash and when the markets change there is not necessarily any change, economically speaking, but just the same markets will crash or rally.
We continue our methodical changeover to shorter maturity vehicles where possible, while also looking closely at some REITs for possible purchase. Additionally we need to review all of our preferreds more closely and consider sales of those that have large capital gains and are heading toward being a year out from potential call (when they will likely begin to give back some capital gains in anticipation of potential redemptions).
So this period of ‘boredom’ provides an opportunity to try to fine tune holdings while waiting for big changes in market perceptions (I mean the 10 year treasury will not be 2.6% forever) and prices.