WASHINGTON, March 15, 2013 – Still at CPAC today, so this one will be brief. But not so brief we can’t report this important bit of breaking market news, courtesy of CNBC. Flash! Mila Kunis, currently one of the Wicked Witches in Disney’s so-so new prequel film take on the land of Oz, and “the star of films such as Ted, Friends With Benefits and the TV series That ’70s Show told CNBC in London: “I’ve just started investing in stocks, which is new for me.” Market top! Sell everything! Game over!
Next to New York cabbies, whenever movie stars, particularly those who are still wet behind the ears when it comes to finance, start doing market prognostications, it is absolutely time to take profits. In the brief, associated video provided by CNBC, it’s true that Ms. Kunis pulls her punches when it comes to specific recommendations, and her remarks seem to indicate her recent investment decisions have been placed in her ear by a financial advisor.
Nonetheless, when Hollywood’s latest, brightest bits of tinsel start making market prognostications—and when CNBC feels obligated to report them—we know we’re either near or at an important market top. In other words, we feel that Ms. Kunis, without really meaning to, has just called the market top that all of the Maven’s smartest investment services (and the Maven himself) have long been searching for.
In the real world, it’s quadruple witching Friday and the market is unpleasantly down on a day when, allegedly, the Fed is scheduled to drop another helicopter load of Benjamins on Wall Street. (We suppose they’d drop Grovers if they could but $1000 bills and higher are generally no longer available.) The Maven has been trying to dump many of his winners (and a couple of his losers) today, but for some issues, trading is so thin that the bid-ask spread is 15-20 cents which illustrates a spectacular lack of volume.
With so little conviction on Wall Street here, it’s hard to bet one way or the other. So we’re selling stuff we’re nervous about holding a few others, but are still avoiding the decisive move of putting on shorts. Having tried that and failed at it a couple of weeks back, we’d just as soon see a little more conviction from the bears first. They’re growling loudly, all right, but up to now, this has been more like a metaphorical head-fake. We’ll wait until we see some money on the table.
So, with market action dull to crummy on a day that should see a lot of it, let’s head to today’s Maven moves.
Trading today’s market:
Much to our chagrin, our REITs have been weakening enough that, once we grab the latest dividend, we’re taking some of these positions off for now. Most irritating over the last two days has been the Armour REIT (ARR), an unusual vehicle that pays its dividend monthly which is nice when you’re looking for a little cash flow. Unfortunately, after a gargantuan secondary a couple of weeks ago that hammered the stock (always a danger in cash hungry REIT investments), it just reported lousy numbers, AND its second quarterly dividend cut in a row.
Starting Wednesday and following through with a vengeance yesterday, ARR was cut off at the knees by unforgiving REIT investors who felt the double whammy of a sinking stock and a slipping dividend—the latter being the main reason you invest in REITs to begin with.
Overall, we suffered a small loss on this one, although the dividends we’ve already received make the whole adventure pretty much a breakeven. But management of this REIT, which compensates itself very well, needs to be taken to the woodshed for poor recent, well, management. We’ll likely not return to this one again.
The secondary problem with ARR, though, is that in its way, it’s helping investors to reconsider dumping more of their REITs as a willingness to actually take on riskier stocks has risen over the last month, at least on paper, giving some credence to the Kunis theorem above by adding to it the force of the Greater Fool Theory. It’s a mess, and we’re paring back again, not only on REITs, but on MLPs, financials (weird news continues to dribble in from the latest Fed stress tests), and the oils and refineries since we’re allegedly awash in the gooey black stuff.
On the financials’ front, we’ve dumped our small position in Radian (RDN) although we’re eager to get back into that bond insurer whose clouds now appear to be parting a bit at last.
The market continues to be off this morning, with the Dow off between 48-60 points for most of this morning depending on when you look. We’ve looked and, along with the miserable Friday volume and Mila Kunis, we think the whole shebang is due for a rest, so we continue to take chips off the table. We could regret this Monday, but we don’t think so.
As for now, we need to get back to our CPAC reporting chores, so we’ll adjourn now. As for all of you out there, happy selling. Sell until you can get some sleep this weekend, and we’ll see if we can’t resume the adventure on Monday
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any ar500ticle under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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