A Market Thrashing–More to Come?

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Wow, what a market ass kicking took place today.  We are surprised–and about 1/2 pleased with how it all unfolded.  When we can get through a day like today with only a 11 basis point loss we can concentrate on what to buy next–instead of trying to cover our fannies.

The down draft in interest rates was so sharp we can now believe that most ‘players’ ‘get’ the big picture.  We can not move ahead much (if any) more without a global recovery and Europe and Asia are literally years away from that happening.  It should have been no surprise that Germanys factory orders were super bad–it is no different for them than it is for the U.S.–except they are literally in the middle of this storm.  How could anyone believe that Germany would be nearly unaffected–more fairy tales from the ‘economists’ and talking heads.  These are the same folks who insisted we would all have our heads handed to us when interest rates were raised–I recall David Faber on CNBC shaking his head and saying ‘you can’t say we didn’t warn them’ as if he was a nobel winning economist–instead of a news reader.  The economist all (or nearly all) kept saying rates where going up by June, 2015–bull cookies.

We are watching the REITs for investments–bargains.  In particular we are consideringStarwood Property Trust (ticker:STWD) who mainly deals in commercial mortgages andEntertainment Properties Trust (ticker:EPT).  Both of these toss off great dividends, are trading near 52 week lows and appear to have solid management teams.  If one were to sense a recession right around the corner we wouldn’t purchase these issues, but we believe that any recession is out at least a year (these things always take longer to develop than one might initially guess).  No doubt there are bargains being created in the REIT space.

Late today we bought a 400 share position (personal accounts) in MLP Breitburn Energy LP (ticker:BBEP) after it was slaughtered down by $2.50 in the last couple days on a secondary offering.  It is our intention to ‘flip’ the issue – hopefully in the next week for 50 cents or a $1 profit.  As mentioned earlier today ‘flipping’ is about boredom–not investing (or should we say we are just opportunistic).  There are no plans to buy energy issues to hold, although the MLP sector is getting cheap–but it may get cheaper in the near future.

We await the Cowen Group Senior Notes which we will likely buy.  The Cowen financials are pretty lousy, although they have glimmers of profits depending on the quarter.  I look at this as I did the Ladenburg Thalmann preferred which we have ridden up–a previously mismanaged company getting their act together.  If we buy Cowen it will have a ‘short leash’–any monkey business by the company and we would be out.

Real short term (like 1 day) we are looking for an equity bounce–watch the 10 year treasury rate for clues to future stock prices.  If we see the 10 year move higher by 5-10 basis points then stocks are heading up.  A move up in stocks with no move higher in interest rates means ‘show me’–no one takes the move seriously.

 

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