Monday, March 9, 2020

Stocks Prices Bomb Yields Up



Monday March 9

I am sitting here Monday morning watching reports of humans fighting over toilet paper in Australia.

What is up with the hoarding of Charmin and Cottonelle? Panic is setting in over the virus outbreaks all over the world.

Add to that the new oil war instituted compliments of Saudi Arabia taking gas prices in my area down to 94.9

The cheapest it's been in decades. The problem is the stock market is selling off and investors are getting spooked.

Should we sell everything now before it gets worse? I'm sure all the post 2008 investors who've never experienced drops like this are second guessing all the stocks they hold.

Every asset class is getting bombed out. EVERYTHING! There is no shelter big enough to hide.

Big U.S. stocks are getting hammered the hardest. No dividend to support the price. In the case of a company like Tesla they don't make money.

How about crypto currencies? Safe right? What was supposed to be an alternative to fiat currency is also selling off big time. Bitcoin is down 20% this month and 10% in the last 24 hours as of Monday. I don't own any but my ears perk up when things sell off because I see the 'for sale' sign flashing.

When stocks go on sale we all run out of the store. Too cheap I'll come back when things cost more. Said no one ever but investors are fleeing.


Oil Collapses, Stocks Tank Big Time

I sold all my oil stocks slowly over the course of the last few weeks. Names like AOI, TCW, BDI, YGR, BTE, WCP, TOG,and ARX. Some for smallish gains and some at a loss.

The losses would have been even bigger had I hung on until today. I got lucky. Nobody knew the Saudis would get pissed off and bomb the oil market with a price cut and a production increase. NOBODY saw this coming. Matter of fact oil stocks were looking attractive after becoming a beaten down sector for so long.

An energy fund manager even recommended CPG as a top pick on Friday. It's now down 40%. I wonder how he's feeling today. CVE another market darling, down 51%. Is it a buy? Nobody really knows how low, low is. Do they?

Not to be.

OK so all of our portfolios are down 10% so what? We were up 30% last year. Or close to it.

Soon central banks around the world will cut rates further until we all go negative and flood the investment banks with liquidity. They have no choice. More money printing on the way count on it. Wait until they start buying up corporations to save them. Remember the government motors program? Wait for it.

Savers continue to get crushed. Trump has been calling for negative rates all year.

The good news is mortgages, loans and gas is getting cheaper. Maybe a middle class tax cut is coming. Who's paying for that? Government here in Canada is hooped and mired in debt. It's going to get worse.






Why I Invest for Yield

The yield on quality dividend growth stocks is now 400% higher than a 10 year bond. if you hold them in an open account you also have the tax advantage. Woot woot!

Lots of my dividend stocks have seen raises this year and more to come down the line. The yields on all my stocks up are up from last year. The prices are all down of course as a consequence. Bond yields are plunging that's why the cash difference between the two is up big time.

Where do you want to be as an income investor?

I am an income focused and obsessed investor.
Nothing has changed for me. I have steady and predictable income. Cash flow is king in my world.

Sure the price of my stocks have went down but the value they provide hasn't.

Their ability to pay me my dividends is unchanged.

It was a rough day for oil and gas investors especially. How long it will last who knows but quality companies are now going for fire sale prices. Will you be buying? If so when is your best guess to do that?

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2 comments:

  1. We're sending the same message, but many are tuned to a different channel. Their loss.

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    Replies
    1. So true! I can't imagine being an index ETF investor in this climate. The losses are even bigger because of quantity over quality approach.

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