Hi
@Catch22,
Thank you for the link ... short read on interest rates.
It appears that the tighenting of the yield cure presently is having an effect on most bank stock valuations as spreads narrow. If things go as anticipated (by the Fed) the long end of the yield cure should, in time, move upward with the short end as the FOMC raises interest rates at a measured pace. If not then things will generally not go well for us and perhaps a recession will be forthcoming. Currently, this has thrown cold water on my option three (bank stocks). However, I see option one (convertibles) continue upward as well as my option two (commodities). The Fed is having to print money to fund the government since it is short on tax receipts. This drives down the value of the dollar making the commodity play attractive, by my thinking. And, for convertibles, this is a soft play on the rising stock market. Generally, convertibles have a bond like floor and an equity like ceiling.
It will be interesting, for me, to see how my three interest rate options plays pan out as we move through the year. Currrently, the one I am most concerned about is bank stocks. If things materialize as the article states and as the Fed anticipates then bank stocks should come around as the long end of the yield curve rise and the yield spread increases.
If there is one thing I have learned in investing, through the years, everything does not work as planned. With this, I remain flexabile to make adjustments as I feel warranted. Since, the April
11th market close Old_Skeet's market barometer has moved from a reading of
158 indicating the S&P 500 Index was undervalued to the
17th close with a reading of
152 indicating the Index is now at fair value. We still have a ways to go on the barometer's scale to get to overvalued ... but, the way the market has moved upward the past few days it might not take long to get there.
Thanks again for making post.
Old_Skeet
