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Subsea 7 SA Message Board

  • flfedwatcher flfedwatcher Aug 25, 2013 10:41 AM Flag

    Interest rates?

    With the housing numbers, and what I expect to be soft employment numbers coming up, have rates stopped their upward movement?

    If rates stay where they are, or move downward (I expect the TLT to get back to 109-111, but that's a guess), there's a lot of good plays in the mkt.

    The first place to look would be housing. We all know the names there.

    Another place would be the REITs, which have been hammered. My favs have always been the healthcare REITs. HCN and VTR are the 2 biggies. HCN is down from 80 to 60, and yields 5%, while VTR is down from 84 to 62, and yields about 4.5%.

    My fav small caps in this are are OHI, down from 38 to 29 and yielding 6.5%, and SBRA, down from 32 to 23, and yielding 5.9%. OHI has increased their divi every Q for the last 4 Qs, and has never decreased the divi, from what I see.

    Another choice would be the BDCs. BX is highly recommended in this grp, PSEC, TICC, etc. These companies provide funding to mid tier companies, take an equity interest, wait a year or 3, and then divest the holding.

    The most aggressive plays would the mortgage REITs. Plays like OAKS, down from 15 to 10, and currently yielding 18%, paying monthly divis, could pop. Old standby's, like NCT, which has held it's price bcse of an increased divi, could also move up based on it's 12% divi.

    All these plays are based on drops to the interest rates on LT instruments, and I watch TLT to keep on top of that. I think the selling has been overdone, because the economy is not getting better, corp profits are being won at the expense of employment, and after the corp execs line their pockets with the stock option money gained from rising stock markets, they will realize that there's too few consumers with jobs to drive the economy upward.

    It's an ugly cycle we have gotten ourselves into, and it's not ending this yr or next.

    I said for a long time we would have QE for years to come, and while I can imagine less QE, I can't imaging less QE to the point of a 4% LT treasury.

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    • a gamble....TBT used when you think rates going up...Up most of week then tanked Frida 2.20% y while TLT GAINED 1.09%....not ETFs to play for any time or at all...they contain too many complex factors. Perhaps when a clear path starts which willl be based on a more consistent direction.

      • 1 Reply to nncy_drk
      • Rates dropped Fri after the housing rept. Large investors are insulated from the real world, the real world is ugly, people losing jobs still, or getting pushed to part time. The last UE rept was clear on this, but people only see the headline, not the ave wage, or the # of hours worked...

        JMO, rates have topped for the yr...

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