Looking on the Bright Side

I’ve tried 2 or 3 times to write this blog post. Each time, I end up not liking the tone/direction and I put it aside and don’t publish.

The stock market has had a bit of an interesting couple of weeks.

While January and half of February was a great for me, the stock market has basically been down since then.

So here we are in April, and I’m about 8% down year-to-date. Not great, but not as bad as it could be. I can partly thank the fact that my investments are outside the United States which have done better. But nobody is immune from the carnage.

I own a decent amount of things I considered “safe”, such as preferred shares. I own Brookfield Property (BPO) Preferreds for one. BPO fell hard on Friday. I don’t quite understand. Maybe some big investors need liquidity to buy other things or pay off margin calls. I was thinking about selling my preferreds to hold on to more cash, but I won’t sell on such a red day. These things are paying 11% dividends at the current price and 14% dividends on my cost. That’s worth holding onto.

I also own Financial 15 Split Corp (FTN) Preferreds and North American Financial 15 Split Corp (FFN) Preferreds. They are both down slightly. Again, maybe people need liquidity. Maybe they think the common stock will stop paying its dividend, but the preferreds have never missed on. My yield is around 9% on that. I might consider selling to raise some cash for later.

I do own some US Treasury covered call ETFs (MPAY). That’s gone up, not fallen. Another potential source of cash. Do I want to own treasuries if inflation comes back? Right now, there is a “flight to safety”. But even China and Japan could end up selling their treasuries and the flight goes the other way. I’ll sell MPAY when the market opens.

My hunch is that US stocks have a “down year” this year, say -6% down. And then go back to having a good year next year (+10% up).

So I have no plans to sell any of my S&P and international stock funds. Just hold onto those.

And if I can get the cash from MPAY, FFN and/or FTN, maybe buy the dip with that. Plus I do have some cash laying around somewhere.

I hate that Warren Buffet quote. Hate it! “Buy when there is blood in the streets.” I wonder if Warren Buffet is buying anything.

So my plan, in the short term, is to raise some cash and tip-toe into the market. I won’t catch a falling knife, but I think the long term (10+ year) future of the international stock market is positive. I am not a day-trader. But I like opportunity when it presents itself.