Friday File: Another Shopping List Item, a Boring Buy, and some general updates

Weekly note for the Irregulars -- mostly about my personal portfolio this time, plus a new watchlist stock.

By Travis Johnson, Stock Gumshoe, September 18, 2015

So… the Fed failed to do anything, which I guess means that the wild predictions about the end of western civilization hitting us on September 18th are going to get pushed off again. Maybe we’ll soon start to see ads about how the next Greater Depression will start on October 28, or December 16…. or, for the converging cycles folks, I guess it could happen at any moment.

Meanwhile, the actual interest rate that matters, the 10-year note (that’s what so many loans and investment models use as an input or a comparator), is back down closer to 2% again. The era of cheap money is not over yet, and whether it ends this year or in ten years is beyond our ability to predict… I wouldn’t buy any long-term bonds, but neither would I bet on interest rates rising sharply.

For now, though, you’ve probably noticed what this means — it gives the interest rate-sensitive stocks a little bit of a reprieve, especially because most of them got clobbered last month, and gives the bank stocks a headache. REITs and BDCs and MLPs all took a sharp turn higher the moment that the Fed announced they weren’t yet changing the Fed Funds rate, most of them quickly moderated after that but are still up nicely… which, really, just gets most of them back to about where they were in mid-August, before that most recent swoon.

There’s still opportunity in REITs, I think, particularly those who have the potential to increase their dividend steadily without being terribly cyclical (like the healthcare REITs, including DOC and MPW which I added a bit to last week). I continue to not be all that worried about REITs in a slowly rising rate environment — but nothing really changes about that with the latest delay from the Fed, they’re almost certainly going to raise short-term rates eventually but the bond market isn’t forcing the issue or seeing any inflation in the future… so defensive income investments are perhaps not as doomed as so many folks expect.

The banks and insurance companies, though, are unhappy. They’ve been dreaming about a return to rising rates that might help to create some more room to maneuver for banks when it comes to net interest margin (the difference between what they have to pay for capital, from savers and others, and what they ...

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