I’m glad I have a full time job. I would be ripping my eyelashes out from boredom if I didn’t have a separate outlet to distract me from today’s low news feed and disjoint market action.
The most interesting thing I’ve come across today is France’s recent announcement of austerity (embrace slower growth). I would have typically counted the 5% slide in housing, but I saw that coming, so it wasn’t really a surprise, or interesting.
And the market itself is just not doing it for me right now. Too boring; I’m waiting for confirmation or error to point me in the right direction and there’s none of it happening here. Everyone is coasting into Friday, it seems.
Now, in my portfolio, there is one notable exception to today’s weak handed, disinteresting activity.
AWK is on a streak, up 2%.
This is interesting to me. If you’re looking for a place to allocate capital, the utility space still likely holds some good purchases. American Water is a quality name and I’m very much a fan of them, holding a good chunk of my net worth in their stock. They pay a decent dividend as well.
Good resistive position, should we start to break down lower. And also a good name that will continue to profit if we should start to punch higher. It’s worth considering, along with select other utility companies, just for their ability to turn a profit without being highly influenced by other economic activity.
Now I think I’m going to sneak off for an afternoon snack; maybe some bruschetta.
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I lightened up a tad on AEC and CLP and added to my already way overweight AWK position (part of the reason it is up today is Barclays initiated with overweight, $33 target). As schizy as the market has been, I wanted to have some cash available Friday, as my feeling is the clam isn’t going to announce anything of consequence, which means the market could take a quick crap. Most of my broker friends would actually prefer Bernank to quick propping it up and let it find it’s own bottom. The Fed may want to look like they are taking the position that the free lunch for banks is over and they don’t want to risk further inflation on food and oil as we draw closer to election time.
As for the REITs, I’m slightly concerned that the rental market is “as good as it gets”; reading stuff about the possibility of packaging foreclosed properties to sell to investment groups for rental purposes and how great rental property is right now. I’m also concerned with rentals being as high as they are, if interest rates continue down and/or Congress comes up with some super dealio to get houses moving again, these could get hit. Thoughts?
I really can’t think of a bearish argument for AWK, especially if interest rates stay low, as utilities should thrive under that scenario. I noticed on their website they had just been granted an interim rate increase in Iowa that will add $2M to the coffers. I continue to think there will be more communities forced to job out their water works if they can’t raise bond money for improvements.
I think with the House deadlocked, you aren’t going to be seeing a Congressional maneuver to prop up housing.
My target is for housing to continue to slide or hold at these levels through all of 2013. Maybe much of 2014. That’s a nice window of opportunity for the REITs to mint money. I think it is way too early to sell out right now.
Wait until we at least see some breath of life in the housing market. Then make the assessment and keep the finger on the sell button. Not before then.
Essentially, I agree; playing devils advocate more than anything. The REITs have been getting whipped around a lot more than I thought they would during these 500 down days and I’ve felt kind of stupid not having any cash. Just took off a bit in the updraft so I would have some loose change for the next smackdown.
Keep in mind too that most people don’t do any fucking research. They just see (5%) housing numbers slap across the screen and then abstain from buying or sell off any real estate related holdings they have.