According to the script. Seldom do we get an outcome so predictable. Friday had an amazing close and that gave strength to the bulls. Over the weekend Mr Obama said all the right things on Meet the Press. He didn’t really say anything new but he reignited his campaign promises. He really hasn’t waiverd from these.
So, the market discounted news from 3M and Tribune. And grabbed on to the auto bailout. It sure feels like we go to S&P 1000 but not in a straight line. There will be corrections, perhaps as early as tomorrow, but we still could have a two week rally. I am taking one day at a time.
Yield Ideas. I dislike chasing yield. It has never really worked out for me. Instruments with high yields usually get that way for bad reasons. With shares down 50%, however, there are some too, too tempting yield instruments around. Whether the dividends get paid over the next year is the question. For example, I doubled up on GE after they said the dividend was good into 2009. Nevertheless, I have a 7% moving stop on my shares. If I don’t get stopped out I have a 8% yield on cost plus whatever the stock does. So far, so good.
Richard Lehmann writes for Forbes on fixed income. He argues that the fixed market has been “reassured and can be expected to recover as a deepening recession drives down interest rates”. Read the rest of his column here: Where the Recovery Will Begin I am a nervous owner of Lehmann’s recommended UTF and am bidding, at lower prices, on PFD. Away from Lehmann’s ideas I am bidding on the convertible of Freeport-MacMoran Copper & Gold, FCXprM. This is convertible into 1.64 shares of common on May 1, 2010 and has a current yield of 20%. With FCX suspending their dividend on the common last week some investors may move to the convert. Indeed, the convert rose almost 16% today to $38.
Caution. Shares can be considered short-term over bought. This remains a trading market, not buy and hold. Should the auto deal not be announced this evening then all bets are off. If you play, be nimble. I am about 80% cash.
