JK, you said that last time and NS rallied right to the 50 dma line at 40 and then proceeded to decline over 12 points. It's rallied to just under $32, but that's right at resistance and the 50 dma is at 36.
Today the market is up because of Japan going negative on interest rates and effecting the USD/JPY carry trade cross. But the US GDP number for 4q was 0.7%. The algos are having fun today, but next week is a new month.
Contrafund has had a pretty good long term record, but even so, he has had losing years. He was down in a three year period from 2000 to 2002. He's likely suffering with his AAPL WFC, DIS and Berkshire picks. AMZN is getting hit after a revenue miss. One could do worse with a fund. After the bear is over, it will probably make a good pick.
It's no secret that the bear market started last summer when high yield spreads started to blow out. It started in the energy patch and moved into the rest of the high yield sector. A slowing economy exacerbated the decline in high yield spreads. The correlation between high yield bonds and high yield stocks should be clear by now. So the question is where does the decline in high yield bonds stop. For this we look at HYG and its chart. HYG actually peaked in April 2014 at 87.5, corrected and then peaked again in June/July 2015 right at that same level of 87.5 (creating a nice double top). It is now 78.87 and the chart has turned down, and we are below the 50 dma at 80. The RSI is 47 so we are not even close to being oversold (although it reached oversold levels 3 times since last summer).
HYG started a big move in Oct 2011 from about 62.5. There looks like there is some support at 72.5 (about another 9% down), but one can't discount that the whole move up from 62.5 is not given back entirely. That would be another 20%
vin, I checked my Fidelity account and there is a way to get prices on individual bonds. There is a screen that you can insert the company name without having to know the cusip.
Sarge, you said the same thing about the Watch and ApplePay and AppleTV. None of those matter. The biggest profit and revenue generator is the iphone. Even the computers and ipads don't matter.
They have already bought back millions of shares AT HIGHER prices and they had to issue debt to do it because they can't take their cash from overseas without paying tax.
This is not about being a naysayer. It's about recognizing that all great stocks have a period where they go flat or down.
Someone mentioned the other day that as the phones get better, they last longer and so people don't need to refresh as much. This happened with PCs and software with Microsoft and Dell and ended their great growth stories.
I doubt the bottom is in for high yield. There will be a rally, but that will be a head fake, or an opportunity to get out.
Biotech has been getting killed since Aug. Do they own a bunch of biotechs? Also, as the market declines, if they own stock in private companies for which an IPO was the exit, that may be more difficult.
With respect to PSEC, take a look at the seeking alpha article on KCAP to see how CLO's work. Most BDCs own CLO's and this article explains some of the risk that they have and why the losses don't show up until later.
BDCs like all financial companies, usually don't write down their assets until the year-end audit when the accounting firms test management's assumptions. Usually when a stock loses 50% of its value, that is indicative of a problem.
Pale, you might not be old enough to remember when Exxon got into making computers or when Xerox bought an insurance company or when Coke bought a movie studio.. The point is that when great companies go on a tangent and get into things that they don't have expertise in, that is what gets them into trouble. We think because Company X is so successful at what they do, that they can do anything better than any other company.. Is Apple really going to make a better car than BMW or Lexus or Ferrari and is it going to be cheaper? Are they just going to outsource the production to Chinese workers the way they outsourced the assembly of their phones? A car is not just a bunch of software.
The ones saying that Apple will rule again, are the same folks who didn't sell it at $130 and didn't see the issues that resulted in its recent decline.
For the record, I would consider owning it around $75 because technically there wouldn't be much more downside and the yield would be decent. at that price.
mud, you may want to compare the yield on the preferred to the yield on VNR's debt. I know Etrade has a screen in which you can see some debt prices just by putting in the name of the company (with other brokers you need the actuall cusip) Theoretically, the debt should trade at a lower yield since it is higher up the capital structure.
I just checked Etrade and they list the VNR 7.875% bond yielding between 76% and 81% based on the bid and ask of between 14 and 16 cents on the dollar.. This tells me that the preferred stock is way overvalued.
Nothing against Bob or others who buy preferreds, but retail investors don't usually compare the preferreds against the other securities in the capital structure. But the debt always tells the truth of what's really going on with the company because the debt traders have big money at risk and tend to be more sophisticated than retail who buy preferreds based on yield.
Our resident expert on buying distressed debt is syzygyzys so maybe he can weigh in on whether I have this backwards.
On a personal note, I'm sure others may have profited from buying distressed preferred stocks, but I have lost on the two times that I have bought distressed preferred and I didn't know it was becoming distressed until it was too late . Had I known to compare against the debt prices, I might have learned something. But as they say experience is the one thing they don't teach you. Good luck.
Kee, aren't you worried about energy exposure. Some of the big banks finally admitted it. Not sure that has been fully priced in, although both JPM and WFC have dropped about 20% since Dec. Then there is the flat yield curve.
Every time KNOP rallies to the 50 dma, it turns around and heads back down. Many stocks are doing that. I wouldn't buy anything with that kind of pattern unless it breaks the 50 dma with authority and holds it.
Some posters have poo poo'd technical analysis, but with fundamentals in free fall, you have to base your buys and holds on something besides hopium.
Boeing seems to have hit a 2 yr support level, but they did miss by a big amount.
As I said on another thread, AAPL has real risk of falling to $75. They will no doubt jump in here and buy shares to try to stem the tide, but the tide has changed.
Sarge, I have been trying to tell you for the last 6 months, but you did not want to believe me. It happens with every great growth stock. Their growth cools. Apple had an unprecedented run, but until they find the next product to resurrect that growth, it is now turning into a value play and value plays don't attract the same type of investors as the momentum plays. No doubt they will be buying back shares around the $95 level, but there is considerable technical risk down to the $75 level.
BTW, nothing that you posted above has any bearing on the stock. Apple = iphone = China. That is all that has mattered for now.
Kee, it was Gundach's turn on the Barron's roundtable. He said high yield spreads would continue to blow out. People keep thinking that high yield stocks have nothing to do with high yield bonds, but they are wrong and are learning the hard way.
NYMT is not a property REIT. They own mortgages and some very subordinated mortgages and preferred interests in borrowers. Do you even know what that means? We don't have to have a financial crisis to cause pain in mortgage REITs as they are very levered plays. A flat yield curve also doesn't help. Commercial real estate doesn't always go straight up and is correlated with the strength in the economy. If the economy weakens, expect commercial real estate to weaken also and commercial mortgage REITS to weaken.
And who is to say whether we are in a panic now or a much worse one is to come? The market is down about 10% and you are calling this a panic?
Kee, if you have a gain, you should take it. There will be other opportunities to reenter the position even if it is at a higher level and you know what the trend looks like. Remember with high yield stocks, while people like to quote their yield as if it is a bond in which the yield accrues each day that you own it, in reality you only "earn" the yield on the run up into the ex date. Of course, you need to time your trade. The stock could bounce on an earnings release even though they have already said things are on track. I have noticed that NRZ follows the technicals more than a lot of stocks so you may want to pay attention to its diffferent resistance levels.
Just another comment from an anonymous message board poster with no way of verifying that they even own NYMt. One thing is true however, the poster has blind faith in the company without knowing anything about their business. Probably owned Kodak and Kmart and just trusted the market.
Kee, there are plenty of commentators who write about the different relationships in the market. They have the benefit of having studied market history, economic stats, fundamental earnings trends and current sophisticated trading strategies which are impacting the market. Most are saying we still have more decline to come. They write that bear markets don't just end with a violent bear market rally.
One thing I was thinking about was the strength in the dollar. It has gone up plenty and we know that trees don't grow to the sky. When the dollar starts to reverse that is when oil is going to reverse and because so many funds are long the dollar, the reversal could be significant and lead the supply/demand fundamentals.
since many are trying to determine whether there is a bottom, here is a piece I saw today:
On Wednesday, the S&P 500 probed below the August 2015 and October 2014 lows a
t 1867 and 1820 on the move down to 1812. This intra-day drop of 3.67% did not trigger an intra-day NYSE ARMS panic reading of 2.0 or more and we have not gotten any closing ARMS above 2.0. This suggests that the decline was orderly and not capitulation. This is unlike the late September and late August lows of 1872-1867, which coincided with panic readings for daily closing ARMS of 2.0 or more
I have heard of the ARMS reading but don't know where that is published regularly.
Exactly. The average stock is down more than 20% so those who keep pretending that there is no damage because the market-weighted averages have held up are just mistaken. Apple reports on Tuesday. It could save the market for now, or it could restart the decline. Let's be clear, some stocks have still turned in good results, like VZ as Bob mentioned. Some sectors are better insulated than others.