Wild Swings Continue! Model Tweaks

It is obvious to us that trading types are in charge of these markets, stocks and interest rates, as none of us more conservative investors are contributing to these big drops and corresponding up moves.  Now we are ‘so happy’ because the Fed is going to be ‘patient’ when moving interest rates–give me a break.  None of their patience changes the fact that the global economy teeters on recession and deflation.

Yesterdays soaring stock market is cheered by all and it will be followed up today by a strong opening–no one can turn down a nice gain in values, certainly not us.  MLP’s are swinging wildly and they are hard to resist–we always think we are smart enough to pick the beaten down issue that will rise like a phoenix–but seldom are we that smart so we will stay away this year.  There is SO MUCH more to be written on the energy story that won’t play out for months that any move is way premature.

As previously noted we followed through on our plans and unloaded BDC Pennant Park Investment (ticker:PNNT) and took the opportunity to sell Cedar Realty Trust preferred (ticker:CDR-B) as well.  Neither of these moves speaks to the individual issues sold, but are more on our theme of shortening durations and moving out of areas that have performed weakly (and likely will continue to perform weakly).  Cedar Trust preferred was a lower yielding issue (7.06%) in the model so we move that to cash for now.  All the BDC’s have performed weakly and are selling well below NAV and if the global economy weakens further they are at risk of further drops.