Selling begins....

[xray]

Here we go again....

 A blip to the upside where some investors will not bite and stay fully "cash". Might be acceptable if unfamiliar with the market low and high's played by the traders.....

 This is the time to look at our portfolio's and find the current winners and losers. The losers should either be sold or reduced in numb3r of shares to make more cash available (for investing later). The winners could be used for our continuing "SELL/BUYBACK" methodology where we capture some of our current CapGains and still maintain the winners in our portfolio. This technique was taught to us by some of the insiders who use it to get their initial money back that they invested early....

Example (used this morning): HGLB (analyzed much earlier on another string) 
... Sold all shares @ 10.70 ... CapGain was the "difference" between 10.70 and our "CURRENT" average market cost price in our portfolio times (x) # of shares
... Bought back all shares @ 10.70 with current NAV @ 13.07 (yesterday)

Something to think about....

One single opinion of the many I am sure....

Live Long and Prosper....

[xray]

Here we go again
Part #2:

This is the time to look at our portfolio's and find the current winners and losers. The losers should either be sold or reduced in numb3r of shares to make more cash available (for investing later). The winners could be used for our continuing "SELL/BUYBACK" methodology where we capture some of our current CapGains and still maintain the winners in our portfolio. This technique was taught to us by some of the insiders who use it to get their initial money back that they invested early....

Example (used this morning): HGLB (analyzed much earlier on another string)
... Sold all shares @ 10.70 ... CapGain was the "difference" between 10.70 and our "CURRENT" average market cost price in our portfolio times (x) # of shares
... Bought back all shares @ 10.70 with current NAV @ 13.07 (yesterday)

Part #2:
 Another example variation to follow for the above is using a "variable for the sell procedure above" (that some of us also use)....
 Sell 50% of all current shares of the security in portfolio and then buy back (other 50%) the required numb3r of shares (original amount we started with) at the current MktPrc. This will "reduce" the 10.70 to a lower numb3r (new average market cost price) for the security in the portfolio. And we then can start the process again until finally sold off at a much later date (in the future)....
The current MktReBuyPrc for adding shares is currently shown as 9.67-9.87 for the next Mkt correction....


Something to think about....
Good for "Income" oriented investors who currently capture both "Dividends + CapGains"....
One single opinion of the many I am sure....

Live Long and Prosper....

[xray]

Part #2
Continued"
Reference:

Part #2:
 Another example variation to follow for the above is using a "variable for the sell procedure above" (that some of us also use)....
Sell 50% of all current shares of the security in portfolio and then buy back (other 50%) the required numb3r of shares (original amount we started with) at the current MktPrc. This will "reduce" the 10.70 to a lower numb3r (new average market cost price) for the security in the portfolio. And we then can start the process again until finally sold off at a much later date (in the future)....
The current MktReBuyPrc for adding shares is currently shown as 9.67-9.87 for the next Mkt correction....

----------

 Interesting day yesterday (up and then went "negative"considerably) vs "TODAY" (currently lower again substantially):

 Yesterday, we had a very good market day for taking CapGains. With that said....

 Looking at my previous Part #2 statement, the "TIMING" of the market (which many of us can never seem to do properly and to our plan) worked well yesterday. The reason we always "SELL First" our securities (and then rebuy) is to get the maximum expected CapGain that we expect with the sale. We must then, again, look at the market to see what it is doing. If the market is about the same we can then rebuy @ the same MktPrc or to our own individual methodologies. If the market is going "DOWN" (like yesterday), we can then  "DELAY" our rebuy cycle until we can get the lowest acceptable MktPrc that we want to buy at....

Again, something to think about....
Good for "Income" oriented investors who currently capture both "Dividends + CapGains"....
One single opinion of the many I am sure....

Live Long and Prosper....

[xray]

uncleharley,richardsok,yogibearbull,steelpony10,rhythmmethod,Fearchar,retiredat48,steadyeddy,

 This is (again) the time to look at our current portfolio's and find the current losers. We should take notice if any of the securities in our current portfolio's went to a "NEW LOW" today with the current market "downdraft". The losers should either be sold or seriously reduced in the numb3r of shares to make more cash available (for investing later)....
 The importance of always holding "some" cash against our current portfolio's cannot be overstated (IMHO). If/when we use our "SELL/BUY" methodology, against our current portfolio's, we are in effect always using some of our cash (when taking our CapGains) to rebuy the security at the "higher" MktPrc. Currently, with the market crashing (Thank you Mr Fed's), our current rebuy's will be lower than what we had anticipated....

Something to again think about....

One single opinion of the many I am sure....
Live Long and Prosper....

[bugman]

All were red today....hard to choose;) I won't be selling into this mess. Been there before and will hold out with a good income of dividends coming in with about 25% cash on hand, and will await bottom feeding opportunities.

[xray]

uncleharley,richardsok,yogibearbull,steelpony10,rhythmmethod,Fearchar,retiredat48,steadyeddy,

 WARNING:
For Dividend oriented investors
 When doing our individual analysis this weekend on the market:

 Be alerted again to the "DIFFERENCE" between "DIVIDENDS & DISTRIBUTIONS" :

1... DIVIDENDS:
 Very stable in down markets and we can normally expect a single cut in our dividend during the year. Not
very good in "UP" oriented markets. Dividends are determined (usually) by the manager of the fund or CFO
based on current changing data during the year....

2... DISTRIBUTIONS:
 Very negative for many reasons in a "Continually driven down" market. Sometimes we see the following statement:

EXAMPLE: DENVER, April 8, 2022 /PRNewswire/ -- Today, the Board of Trustees (the "Board") for the Clough Global Equity Fund (the "Fund") has declared a monthly cash distribution of $0.1162 per common share, payable on the dates noted below. The Fund's managed distribution policy is set the monthly distribution rate at an amount equal to one twelfth of 10% of the Fund's adjusted year-end net asset value per share ("NAV"), which will be the average of the NAVs as of the last five business days of the prior calendar year.

 Prior Calendar year indicates that we are collecting our distribution based on 12/31 performance data (last years good performance of GLO,GLV and GLQ in this particular case) and not the current years (2022) performance. We can expect the NAV of this particular CEF to continue to collapse and thus will drive the MktPrc lower than what we should normally expect....

 Add to this problem, that many CEF's (each month or each Qtr) will have a "VARIABLE" distribution amount issued to shareholders as they tie their distribution to their NAV's and can continually correct their distribution during the year (down in negative markets). Again, market prices will drop more than the usual during this period....

 In "UP" type markets, distributions will be in reverse to the above and we can then buy some good performing CEF's with a "INCREASING" distribution (except for the example shown above)....

Live Long and Prosper....

[xray]

Not an environment for current investing but remains the time to maintain our current portfolio winners and current  "CASH" for when the market turns (hopefully in our lifetime). Current analysis data had predicted that today could be a turning point (in either direction) and am glad that some of us only added shares in one security (GLP with their dividend increase). "Very" selective Buying is in order....

 Keep in mind that portfolio winners (with "ALL" of the market continuing to drop substantially) are defined as taking the average "DROP" in all of the MktPrc's (all securities in our portfolio) and then measuring that average against all of our individual securities. Gives us a hint (if we have been doing our homework in buying our securities with proper analysis methodologies) as to where we really stand in the current market....

 Not a time to panic as that has already started and will continue to happen....

 Good Luck to all....

Live Long and Prosper....

[richardsok]

Good posts, x. TY

[xray]

Bloomberg
Bank of America’s Hartnett Sees ‘Pain and Exit’ If S&P 500 Dips Below 4,000

Nikos Chrysoloras and Michael Msika
Fri, April 29, 2022, 10:36 AM

(Bloomberg) -- A drop below 4,000 index points for the S&P 500 will be a “tipping point,” which could potentially trigger a mass exodus from equities, according to Bank of America Corp. strategists.

Investors have already started fleeing stocks, with outflows from equity funds over the past three weeks adding up to the worst since March 2020, the strategists led by Michael Hartnett said, citing EPFR Global data.

The average S&P 500 entry point for the “huge” $1.1 trillion inflows into stock funds since the start of 2021 was 4,274 index points, which means that “pain and exit” requires a drop below 4,000 points, the strategists said in a note on Friday. That’s about 6.7% below the Thursday close.

Global stock markets have been struggling this year, as investors are grappling with fears of an outright recession and aggressive tightening by the Federal Reserve in response to surging inflation. The main U.S. benchmark is down almost 11% since January, a decline which adjusted for inflation is set to be the worst annual return since 1974, according to data compiled by Bloomberg.

Bonds have been suffering the brunt of this year’s investor exodus and world’s government debt is on course for the biggest loss since 1920, according to the BofA note.

“Epic” declines in bonds and stocks in 2022 reflect the “coming flip by central banks” from quantitative easing to quantitative tightening, BofA’s strategists said, adding that market sentiment is “just awful.” While a relief rally is possible, given the depressed sentiment and positioning, it won’t be a big rebound and investors should sell it, according to the note.

The strategists compare the current situation to the 1973-1974 period during Richard Nixon’s presidency and say high “inflation means Fed must tighten until it breaks the economy or the market,” the strategists, who have been consistently bearish on equities, said. “Until it does, asset prices must reset lower.”

----------

Live Long and Prosper....

[xray]

Reference My:
Not an environment for current investing but remains the time to maintain our current portfolio winners and current "CASH" for when the market turns (hopefully in our lifetime). Current analysis data had predicted that today could be a turning point (in either direction) and am glad that some of us only added shares in one security (GLP with their dividend increase). "Very" selective Buying is in order....
Keep in mind that portfolio winners (with "ALL" of the market continuing to drop substantially) are defined as taking the average "DROP" in all of the MktPrc's (all securities in our portfolio) and then measuring that average against all of our individual securities against that average. Gives us a hint (if we have been doing our homework in buying our securities with proper analysis methodologies) as to where we really stand in the current market....
Not a time to panic as that has already started and will continue to happen....

----------

 Add to this, after a quick quick review of the market (and my current portfolio) this morning, some securities were actually  "UP" in MktPrc and not following the market trend down. Other securities basically held their own. Good time for income oriented investors to do some analytical work this weekend to add some additional securities to our watch list for next week (IMHO)....

Good Luck to all....

Live Long and Prosper....

[xray]

FX Empire
Stock Market Crash Déjà Vu? Follow This Market Rotation Sequence
Ming Jong Tey
Sun, May 1, 2022, 5:20 AM

Since the topping formation manifested in January 2022, S&P 500 has dropped 14% off the peak with increasing volatility both to the upside and to the downside. This is mainly due to the unfolding of the Wyckoff distribution pattern (as explained in the video before the selloff happened in the past 2 weeks) and the stock market rotation where the smart money flows from the growth theme and the technology sector to the defensive sectors like consumer staple (XLP), utilities (XLU), health care (XLV) and the commodities including the energy sector (XLE).

Stock Market Rotation During Wyckoff Distribution

The outperformance in the energy sector since January 2022 is especially obvious. Since January 2022, S&P 500 experienced a selloff as a sign of weakness followed by a weak rally while the energy sector (XLE) rallied up to all time high (highlighted in green).

Since 21 April 2022 XLE had a biggest down wave (highlighted in orange), which is considered as a Wyckoff change of character to stop the uptrend into a consolidation or even a reversal. This is a significant event because this kind of the stock market rotation is similar to what happened during Wyckoff distribution in 2008 before the market crash.

In late 2007 S&P 500 formed a topping formation followed by a break down as a sign of weakness. In January till May 2008, S&P 500 had a weak rally up barely tested the axis line where the previous-support-turned-resistance while the energy sector (XLE) created a new high (as highlighted in green).

The next selloff in XLE (highlighted in orange) signaled a breakout failure, which is also a Wyckoff change of character that led to a reversal. This is similar to what’s currently unfolding in XLE as shown in the first chart. The market rotation sequence during the Wyckoff distribution phase is almost the same in 2022 and 2008.

From the top pane, S&P 500 had a Wyckoff distribution formation formed by the end of 2021 followed by a break down in January 2022 as a sign of weakness (SOW1). The stock market breadth at that time also confirmed the bearish bias as I discussed in the video.

The subsequent price movements including the automatic rally (AR), potential upthrust after distribution (UTAD) and the sign of weakness (SOW2), which is still unfolding, are similar to 2008’s as shown in the bottom pane.

Now the S&P 500 is testing the last line of the support at 4100. Should 2008’s price structure be a decent analogue for reference, a last point of supply (LPSY) as a weak rally (highlighted in orange) can be expected before the market collapse.

S&P 500 Price Prediction When Market Crash

Check out the 2 bearish scenarios that lead to a market crash with the price target and what you can expect for S&P 500 to violate this crash (at least for the time being) in the video below.

Although there was presence of demand shown up last week in S&P 500, the bull needs to prove itskself to rally away from the vulnerable area and to at least commit above 4300 to avoid the bearish scenario to crash below 4100.

----------

Comment: Sorry chart was not available....

Live Long and Proper....

[xray]

bugman,richardsok,
Business Wire
New Residential Investment Corp. Announces First Quarter 2022 Results

Tue, May 3, 2022, 6:45 AM

NRZ
+8.91%

NRZ-PA
+1.10%

NRZ-PB
+0.70%

NRZ-PC
+0.28%

NRZ-PD
+0.69%

NEW YORK, May 03, 2022--(BUSINESS WIRE)--New Residential Investment Corp. (NYSE: NRZ; "New Residential" or the "Company") today reported the following information for the first quarter ended March 31, 2022:

First Quarter 2022 Financial Highlights:
GAAP net income of $661.9 million, or $1.37 per diluted common share(1)
Core earnings of $177.4 million, or $0.37 per diluted common share(1)(2)
Common dividend of $116.7 million, or $0.25 per common share

Book value per common share of $12.56(1)

"New Residential’s performance in the first quarter demonstrated the strength and balance of our company," said Michael Nierenberg, Chairman, Chief Executive Officer and President of New Residential. "Our diversified investment management company performed exceptionally well, generating a ~5% total shareholder return and growing book value by ~10% to $12.56 per share. We expect book value growth to continue in the second quarter given the upward move in treasury yields and the Fed’s expected policy actions," he added.

"With $1.7 billion of cash and liquidity coupled with the expected market volatility ahead, we should see terrific opportunities to deploy capital effectively and generate great returns for our shareholders in 2022 and beyond."

First Quarter 2022 Company Highlights:
Servicing & MSR Related Investments
Combined segment pre-tax income of $906.3 million (up from $118.0 million in Q4'21), including $845 million positive mark-to-market changes on our Full MSR portfolio(3)(4)
MSR portfolio totaled approximately $626 billion in unpaid principal balance ("UPB") at March 31, 2022 compared to $629 billion UPB at December 31, 2021(5)
Servicer advance balances of $3.1 billion as of March 31, 2022, down 7% from December 31, 2021

Origination

Segment pre-tax income of $25.9 million (down from $82.3 million in Q4'21)(3)(4)
Quarterly origination funded production of $26.9 billion UPB (down from $38.1 billion UPB in Q4'21)
Total gain on sale margin of 1.53% for the first quarter of 2022 compared to 1.65% for the fourth quarter of 2021

Residential Securities, Properties and Loans

Priced four securitizations representing approximately $1,197 million UPB of collateral, including inaugural single-family-rental securitization representing approximately $268 million UPB of collateral
Acquired $540 million of Non-QM loans
Grew single-family rental portfolio by 734 units

Mortgage Loans Receivable

Quarterly origination funded production of $691.7 million through Genesis Capital LLC, representing record quarterly volume
Priced inaugural residential transitional loan securitization representing approximately $345 million UPB of collateral

(1)
Per common share calculations for GAAP Net Income and Core Earnings are based on 484,425,066 and 485,381,890 weighted average diluted shares for the quarter ended March 31, 2022 and December 31, 2021, respectively. Per share calculations of Book Value are based on 466,786,526 and 466,758,266 common shares outstanding as of March 31, 2022 and December 31, 2021, respectively.
(2)
Core Earnings is a non-GAAP financial measure. For a reconciliation of Core Earnings to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Measures and Reconciliation to GAAP Net Income below.
(3)
Includes noncontrolling interests.
(4)
Includes mortgage company corporate expenses re-allocated from MSR Related Investments to Origination and Servicing segments.
(5)
Includes excess and full MSRs.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investor Relations section of the Company’s website, www.newresi.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.newresi.com.

EARNINGS CONFERENCE CALL

New Residential’s management will host a conference call on Tuesday, May 3, 2022 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Residential’s website, www.newresi.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-833-974-2382 (from within the U.S.) or 1-412-317-5787 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "New Residential First Quarter 2022 Earnings Call." In addition, participants are encouraged to pre-register for the conference call at dpregister.com/sreg/10166255/f2692aef34.

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newresi.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Tuesday, May 10, 2022 by dialing 1-877-344-7529 (from within the U.S.) or 1-412-317-0088 (from outside of the U.S.); please reference access code "4221662."

----------

Comment: Analysis data for NRZ has been extremely positive over the last 13wk period. Currently 10star (last 6wk period) in my world of analysis, Report card 100, power rating 100, Projection going forward 100. Analysis total score for past week was +374 (>279 required), Rf (Safety Risk factor for current Portfolio's) +0.316 (need >+0.310). We must keep in mind that this was once a "PENNY STOCK" (not for everyone). Current dividend (COB Friday's data) 9.62% and @ "increased Discount" to this current article....

Disclosure: Some of us continue to maintain a maximum allowable position in NRZ....

Live Long and Prosper....

[xray]

Bloomberg
Big Stock Bears Say S&P 500 Bottom Still Another 700 Points Away
Vildana Hajric and Lu Wang
Tue, May 3, 2022, 8:27 AM

(Bloomberg) -- It’s a fact of life in struggling markets: someone is always saying things will get worse. According to a number of prominent equity strategists, they’re about to get a lot worse.

After extending its 2022 decline to 13%, the S&P 500 is in danger of an even deeper dive in the months ahead, according to the technical and macro research team at Strategas Research Partners. The group led by Chris Verrone is watching out for a slide toward the 3,500-3,700 area, a range that encompasses the gauge’s 200-week moving average and the midpoint of its entire rally from the 2020 pandemic bottom. A drop to 3,500 would represent a 16% loss from Monday’s close.

Such pessimism is echoed by Morgan Stanley’s Mike Wilson, who says the benchmark is at risk of falling to 3,460 should estimated profit growth start to turn negative amid recession concerns. Investors, clearly spooked, started pulling money out of equity funds in April. While the outflows pale in comparison to what they added over the previous two years, history shows that when selling gets rolling, it’s hard to turn back.

In the previous 10 instances when stocks endured deep losses in the first four months of a year, six saw the market extend its declines through December, and only two saw gains exceeding 10%, Strategas data show.

“2020 is the obvious exception, but down sharply through April has generally meant the rest of the year remains a grind,” Verrone wrote in a note. “Continue to proceed cautiously.”

Heightened volatility has gripped markets since January, when the Federal Reserve made clear its intentions to aggressively fight inflation. The central bank’s first rate hike in three years sent Treasuries into a tailspin and dented the appeal of the stock market’s biggest companies. War in Ukraine, renewed Covid lockdowns in China and other headwinds have upped the risk of a recession, adding to the turbulence.

After spending the first quarter buying the dips, some bulls are giving up after a tumultuous April. In the month through April 27, equity-focused funds saw $30 billion of outflows, data compiled by EPFR Global show.

Yet as bad as last month looked -- the S&P 500’s 9% drop was the index’s worst April performance since 1970 -- the charts show little sign of a bottom to Bloomberg Intelligence’s Gina Martin Adams.

The index’s 14-day relative strength index has yet to touch 30, a threshold signaling stocks have fallen too far, too fast. Meanwhile, the percentage of S&P 500 firms trading above their 50-day moving averages is hovering around 30%, well above levels that signaled the market’s troughs in 2020 and 2018.

“There’s just not a lot of evidence of pure capitulation in the market, which is usually what makes a bottom,” she said on Bloomberg TV. The mega-cap stocks remain a big drag, she added. “It’s just going to be very difficult for the index to gather any momentum.”

Verrone at Strategas agrees, saying six of the nine indicators he watches for a market low have yet to signal the all-clear. For instance, the Cboe Volatility Index, or VIX, has not breached 40 during the selloff.

Morgan Stanley’s Wilson says stocks have been trading “terribly” since the fall. While analyst estimates for S&P 500 earnings have stayed robust, Wilson says the recent equity rout reflects investor concerns that profit growth may have peaked in the first quarter amid inflation and lingering recession risks.

He sees the S&P 500 falling to at least 3,800, and as low as 3,460, or almost 700 points below Monday’s close.

“Stocks always lead the news,” Wilson wrote in a note. “First were the high-multiple stocks getting kicked around in November and December as they sniffed out the Fed’s aggressive pivot on policy in January. Now, they are figuring out that 1Q may be the last good quarter of earnings as higher costs and increased recession risks weigh on future growth.”

At MKM Partners, JC O’Hara is also cautious.

“Our longer-term equity indicators are not yet oversold enough to have a high conviction ‘buy’ call,” he wrote in a note. “We also believe managers have started to re-price stocks using recession-like multiples. If that is the case, we are still over-valued.”

While every recession is different, using 2020’s bottom as a guide shows the S&P 500 could drop another 22%, all else equal. Back then, the index’s price-earnings ratio touched 13.4, compared with a current multiple of 17.2.

A separate analysis by Nicholas Colas, co-founder of DataTrek Research, suggests that if the market discounts a 50% chance of a “garden-variety” recession, the S&P would only be considered “cheap” were it to fall another 20% from current levels.

“We still do not believe U.S./global equities have bottomed and continue to recommend caution,” Colas wrote in a note. “The only good thing about a bear market is that there are excellent returns available when they end. Until that point becomes clearer, however, risk is just another four-letter word.”

---------

Live Long and Prosper....

[uncleharley]

That sounds about right. I am already short the Q's.

[xray]

richardsok,
Your:
Just came across this morning's WSJ article addressing the much-discussed old notion that bear markets are unlikely to begin around year-end. December, of course, is the month of bonuses, which should give the market powerful boost as new moneys flow into millions of 401Ks.
If the notion has validity, this particular December strikes me as an opportune moment to build up protective hedges just ahead of 2022.

 Here is something more to think about against WSJ. Having been in the market for more years than we want to talk about, and since I currently have the market performance numb3rs, and speaking as a income oriented investor, 2018 was the only year with a 4th Qtr drop where many of us took it on the chin. 2017 was such a good year that when we look at 2017,2018, and 2019, 2018 continues to be (absolutely) nothing to talk about since we made a killing in the overall 3-year market timeframe....

Live Long and Prosper....

[xray]

‘You don’t want to own bonds and stocks’ in this environment, says legendary investor who called ’87 crash
Last Updated: May 4, 2022 at 6:39 a.m. ET
First Published: May 3, 2022 at 8:57 a.m. ET
By William WattsFollow

‘You can’t think of a worse environment’ for financial assets, says hedge-fund titan
‘You can’t think of a worse environment than where we are right now for financial assets. Clearly you don’t want to own bonds and stocks.’
That cheery conclusion comes courtesy of Paul Tudor Jones, the billionaire investor who famously called the 1987 stock market crash and who had previously raised alarm over mounting inflation pressures.

In an interview with CNBC on Tuesday, the hedge-fund manager said investors are in “uncharted” territory that should make capital preservation their top priority. The inflation backdrop is reminiscent of the 1970s, presenting challenges and raising questions about whether the current period is one in which investors will be “actually trying to make money.”

Stocks have stumbled in 2022 as Treasury yields have soared from low levels, with investors attempting to get a grip on a Federal Reserve policy that is now expected to deliver outsize interest rate increases and rapidly shrink its balance sheet as it plays catchup with inflation running at a four-decade high. Investors increasingly fear the backdrop could lead to a recession as the Fed tightens monetary policy in an effort to get inflation under control.

Both stocks and bonds suffered a miserable April, with the S&P 500 SPX, +2.99% sliding nearly 9% and the JPMorgan U.S. Aggregate Bond ETF JAGG, +0.59% dropping almost 4%, according to FactSet data.

Rising yields have taken a particular toll on technology and other growth stocks, with the Nasdaq Composite COMP, +3.19% down nearly 20% year to date through Monday and more than 20% below its November record finish, leaving it in a bear market. The S&P 500 was down 12.8% so far this year and slipped back into a market correction last week, while the Dow Jones Industrial Average DJIA, +2.81% was off 9% year to date.

----------

Comment: Found the last paragraph useful in looking at our portfolio's for any comparisons. "CASH" on hand appears to be the warning. Yesterday, some of us (income oriented type investors) reduced our cash to 25% with some very selected buying into the undervalued securities. Expect a somewhat down day today for some correction to the big run up yesterday. Computer analysis suggests that any security up >$0.25 (in MktPrc's) were sustainers for our current portfolio's while those less than that were something to think about. Some securities were up a lot but those securities were always considered "bargains". Penny stock KYN did very well yesterday, even though it has moved out of our penny stock status (>$10)....

Live Long and Prosper....

[xray]

Fortune
Wall Street’s dark day finishes with a bloodbath as the Dow falls over 1,000 points in stocks’ worst day since 2020
Will Daniel
Thu, May 5, 2022, 1:18 PM

U.S. stocks nosedived on Thursday, more than wiping out gains from Wednesday’s rally as investors continue to digest the Federal Reserve’s first half-point rate hike since 2000. The Dow Jones industrial average sank 1,063 points or 3.12%, and the S&P 500 dropped 3.56%, while the tech-heavy Nasdaq fared even worse, tumbling 4.9%.

It was the worst showing for U.S. stocks since the start of the COVID-19 pandemic in March of 2020, when the Dow cratered 1,191 points in its largest drop since the financial crisis of 2007 and 2008. To put that in perspective, the 2020 drop may have rivaled some of the most dramatic drops from the 1929 onset of the Great Depression, although data from nearly 100 years ago is either hard to come by or not comparable.

Big tech names like Amazon and Apple were under particular pressure on Thursday, sliding 7.5% and 5.5%, respectively.

E-commerce and retail companies also experienced sharp declines as weaker-than-expected quarterly earnings furthered investors’ concerns that the e-commerce boom that has marked the pandemic is starting to wane.

Shares of eBay and Wayfair fell over 12% and 25%, respectively, while Etsy dropped 16.8%.

Fears of a U.S. recession are rising as traders worry that Fed officials may struggle to fight four-decade high inflation.

“We are still not out of the woods yet, as there is still too much uncertainty over how the Federal Reserve’s actions will tame inflation without causing a recession,” Zach Stein, the chief investment officer of climate change-focused investment adviser Carbon Collective, told Fortune.

Stein said that investor concerns that have triggered a stock market correction in recent months—including inflation, the Russia and Ukraine war, and surging oil prices—continue to plague markets.

The Fed took a 75 basis point rate hike off the table on Wednesday, with Chair Jerome Powell noting that an aggressive rate hike of that level is "not something that the committee is actively considering" in his post-meeting press conference.

Still, Powell promised to be “highly attentive” to inflation, arguing that bringing it down is “essential.”

The Fed chair left the possibility of further 50 basis point rate hikes in June and July open while downplaying the prospect of a 75 basis point hike, said Scott Ruesterholz, a portfolio manager at Insight Investment. For the first time in years, he told Fortune, the Fed’s “growth mandate and sensitivity to markets are taking a backseat."

As a result, investors are now staring down the most aggressive tightening of U.S. monetary policy since 2000 as the Fed looks to reduce its nearly $9 trillion balance sheet by $95 billion a month by September.

"With CPI currently at 8.5%, many have been concerned about the Fed being well 'behind the curve'. We can visualize this using the famous 'Taylor Rule', which estimates optimal policy rates," Ruesterholz added. "Using a version that uses unemployment and core inflation as inputs, the recommended policy rate is nearly 6%, and was well higher than the Fed’s policy rate for much of 2021."

Fed watchers (and critics) like Mohammed El-Erian have been calling on the central bank to raise rates and combat rising inflation for months, arguing a cost-of-living crisis is hurting Americans. But now that the Fed has turned more hawkish, markets are beginning to falter, only furthering the debate around the possibility of a U.S. recession.

"The case for a recession hinges on the argument that persistent inflation will force the Fed to raise rates enough to cause a recession to control it (similar to former Fed Chair Paul Volker’s fight against 1970s’ stagflation)," Ruesterholz said. "However, not only do we expect inflation to slow, we also believe that the U.S. economy remains in a good place fundamentally."

The bond market also continued to sell-off on Thursday, pushing U.S. 10-year Treasury yields to over 3% for the first time since 2018.

The bearish turn from stocks and bonds had Maneesh Deshpande, Barclays’ head of U.S. equity strategy, arguing that cash may be the safest place for investors as market turmoil continues.

“I think the upside is limited from here,” Deshpande said in a Thursday interview with CNBC. “There’s almost nowhere to hide…ultimately, I think cash is probably the safest place right now.”

Bitcoin and other top cryptocurrencies also experienced a sharp selloff as the sector continues to trade in lockstep with stocks. The world’s leading digital asset sank 8.7% as the total cryptocurrency market cap fell roughly 7.7% to below $1.7 trillion.

----------

Live Long and Prosper....

[xray]

bugman,richardsok,uncleharley,

Home Markets In One Chart
In One Chart
Based on 19 bear markets in the last 140 years, here’s where the current downturn may end, says Bank of America
Last Updated: May 7, 2022 at 8:15 a.m. ET
First Published: May 6, 2022 at 10:37 a.m. ET
By Barbara KollmeyerFollow

Just $3 for every $100 invested has left the stock market, says the bank.
At nearly the halfway mark in a volatile year of trading, the S&P 500 index is down, but not out to the point of an official bear market yet.

According to a widely followed definition, a bear market occurs when a market or security is down 20% or more from a recent high. The S&P 500 SPX, -0.57% is off 13.5% from a January high of 4,796, which for now, just means correction territory, often defined as a 10% drop from a recent high. The battered Nasdaq Composite COMP, -1.40%, meanwhile, is currently down 23% from a November 2021 high.

That S&P bear market debate is raging nonetheless, with some strategists and observers saying the S&P 500 is growling just like a bear market should. Wall Street banks like Morgan Stanley have been saying the market is getting close to that point.

But should the S&P 500 officially enter the bear’s lair, Bank of America strategists led by Michael Hartnett, have calculated just how long the pain could last. Looking at a history of 19 bear markets over the past 140 years, they found the average price decline was 37.3% and the average duration about 289 days.

While “past performance is no guide to future performance,” Hartnett and the team say the current bear market would end Oct. 19 of this year, with the S&P 500 at 3,000 and the Nasdaq Composite at 10,000. Check out their chart below:

BOFA GLOBAL RESEARCH

The “good news,” is that many stocks have already reached this point. with 49% of Nasdaq constituents more than 50% below their 52-week highs, and 58% of the Nasdaq more than 37.3% down, with 77% of the index in a bear market. More good news? “Bear markets are quicker than bull markets,” say the strategists.

The bank’s latest weekly data released on Friday, showed another $3.4 billion coming out of stocks, $9.1 billion from bonds and $14 billion from cash. They note many of those moves were “risk off” headed into the recent Federal Reserve meeting.

While the Fed tightened policy as expected again this week, uncertainty over whether its stance is any less hawkish than previously believed, along with concerns that the central bank may not be able to tighten policy without triggering an economic downturn, left stocks dramatically weaker on Thursday, with more selling under way on Friday.

The strategists offer up one final factoid that may also give investors some comfort. Hartnett and the team noted that for every $100 invested in equities over the past year or so, only $3 has been redeemed.

As well, the $1.1 trillion that has flowed into equities since January 2021 had an average entry point of 4,274 on the S&P 500, meaning those investors are “underwater but only somewhat,” said Hartnett and the team.

----------

Comment: Reviewing my current volatility of a normal investors (income oriented) portfolio in the current market under the following analysis rules:

1... Securities in current portfolio not new in portfolio for less than 10 market days
2... Income investor using basic Buy/Hold type investing
3... uses "value" only investing methodology
4... analyzes current portfolio not greater than 14 days old
5... proactive in making changes to portfolio when data indicates to do so
6... reactive when analysis follows market analysis and makes the required changes
7... reviews "Quarterly analysis data" for changes similar to what Mutual and CEF funds do when they change their portfolio's

Current Status Results:

35% of portfolio's "up" this past week
72% of portfolio's should be at "neutral" (plus/minus $0.25 from past week)
28% of portfolio's "down" from past week (> $0.25 from past week)....

 We should keep in mind that dividend paying securities do "NOT" drop (as much) like regular securities and many investors change their strategy and "start" investing in dividend securities when any serious market drop is occurring (especially in "unknown" type markets where market direction is very questionable. Some cash always needed in portfolio's to take advantage of any panic type selling (IMHO).... 

One single opinion of the many I am sure....

Live Long and Prosper....

[uncleharley]

"Looking at a history of 19 bear markets over the past 140 years, they found the average price decline was 37.3% and the average duration about 289 days."

That quote from BofA strategists coincides with a strong support level on my weekly chart for the S&P. That area coincides with a 61.8% Fibo retracement level and is also an area that attracted above average trading volume on the way up. It is also just below a previous top. My thought is that domestic inflation & geopolitical factors as well as another potential Covid pandemic will drive the market to the next level which is to test the bottom of the 2020 selloff. Either one is a credible call, we shall see in the fullness of time. BTW, their timeline calls for a nice Santa Claus rally late this year. That will be nice.


stockcharts.com/h-sc/ui?s=$SPX&p=W&b=3&g=0&id=p35308650206&a=524485138&listNum=86

[xray]

bugman,richardsok,uncleharley,

Why Rising Rates Helped New Residential Increase Its Book Value
By Brent Nyitray, CFA - May 7, 2022 at 7:10AM

KEY POINTS

New Residential is a diversified mortgage company.
Mortgage servicing accounted for much of the company's profits.
The dividend looks safe at the moment.
Motley Fool Issues Rare “All In” Buy Alert

NYSE: NRZ
New Residential Investment Corp.

Market Cap
$5B
Today's Change
(-2.34%) -$0.26
Current Price
$10.87

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Not all mortgage companies had a bad quarter.

The first quarter of 2022 was supposed to be particularly brutal for mortgage originators and mortgage real estate investment trusts (REITs). The Fed has begun a series of increases in the Fed Funds rate designed to put the brakes on rising inflation. At the same time, the Fed is preparing to let its holdings of mortgage-backed securities decrease.

Rising rates are bad news for mortgage originators, and reduced demand for mortgage-backed securities is bad news for mortgage REITs. New Residential (NRZ -2.34%) managed to report an increase in earnings and book value per share. So what are they doing differently?

A highly diversified mortgage company
New Residential operates three basic businesses.

First, it invests in mortgages and mortgage-backed securities and earns interest income from these investments. This is the typical mortgage REIT model.
Second, New Residential operates a mortgage origination business where it purchases completed loans from independent mortgage originators and then sells them into the market via securitization transactions.
Finally, New Residential is a mortgage servicer, and this business line accounted for much of the company's earnings in the first quarter.

KEY DATA POINTS

Market Cap
$5B
Day's Range
$10.71 - $11.09
52wk Range
$8.98 - $11.81
Volume
3,075,648
Avg Vol
5,738,286
P/E (ttm)
4.74

Mortgage servicing rights are an unusual asset because they increase in value as interest rates rise. Here is how they work. When a mortgage loan is completed, there are two assets that can be split off and sold separately. The first is the loan itself, which an investor would hold to collect the monthly payments. The second is the mortgage servicing right, which represents the right to handle the administrative tasks of the mortgage for a fee.

Mortgage servicing performed well in the first quarter
The mortgage servicer handles the mundane tasks on behalf of the ultimate investor in the mortgage loan. The servicer sends out the monthly bills and statements, collects the money and forwards it to the investor, ensures that property taxes are paid on time, and deals with the borrower if the loan becomes delinquent. If the borrower ends up defaulting, the servicer takes care of the foreclosure.

In exchange for performing these functions, the servicer earns a fee (usually about 0.25%) or one-quarter of one percent of the outstanding mortgage balance per year. If the borrower makes the monthly payments on-time servicing is a pretty easy job. A servicer handling a $400,000 mortgage will get paid about $1,000 per year.

When interest rates rise, the servicer can expect to get that servicing fee for a longer time. This is because it won't make sense for a borrower to refinance the loan because rates are higher. Nobody is going to refinance a 3% mortgage with a 5% one. This makes the servicing worth more.

For New Residential, servicing accounted for 60% of revenue in the first quarter, which was split between servicing fees and an increase in the value of its servicing portfolio. In the fourth quarter of 2021, servicing accounted for only 28% of revenue. Total servicing revenue increased from $310 million in the fourth quarter of 2021 to $1.03 billion in the first quarter of 2022.

The dividend is well covered

This increase in mortgage servicing also drove a 10% increase in book value per share to $12.56 per share. The $0.25 quarterly dividend was well covered with $0.37 per share in core earnings. At current levels, New Residential pays a dividend yield of 8.7%, which is pretty solid considering the earnings. The entire mortgage REIT and mortgage origination sector is suffering from a tough macroeconomic environment and dour investor sentiment, but New Residential managed to increase book value per share by 10% amid rising rates. New Residential is worth a look for income investors.

----------

Disclosure: Some of us are continuing to hold a full (allowable) position in NRZ....

Live Long and Prosper....

[xray]

Worth repeating {IMHO}:

WARNING:
For Dividend oriented investors
When doing our individual analysis this weekend on the market:

Be alerted again to the "DIFFERENCE" between "DIVIDENDS & DISTRIBUTIONS" :

1... DIVIDENDS:
Very stable in down markets and we can normally expect a single cut in our dividend during the year. Not
very good in "UP" oriented markets. Dividends are determined (usually) by the manager of the fund or CFO
based on current changing data during the year....

2... DISTRIBUTIONS:
Very negative for many reasons in a "Continually driven down" market. Sometimes we see the following statement:

EXAMPLE: DENVER, April 8, 2022 /PRNewswire/ -- Today, the Board of Trustees (the "Board") for the Clough Global Equity Fund (the "Fund") has declared a monthly cash distribution of $0.1162 per common share, payable on the dates noted below. The Fund's managed distribution policy is set the monthly distribution rate at an amount equal to one twelfth of 10% of the Fund's adjusted year-end net asset value per share ("NAV"), which will be the average of the NAVs as of the last five business days of the prior calendar year.

Prior Calendar year indicates that we are collecting our distribution based on 12/31 performance data (last years good performance of GLO,GLV and GLQ in this particular case) and not the current years (2022) performance. We can expect the NAV of this particular CEF to continue to collapse and thus will drive the MktPrc lower than what we should normally expect....

Add to this problem, that many CEF's (each month or each Qtr) will have a "VARIABLE" distribution amount issued to shareholders as they tie their distribution to their NAV's and can continually correct their distribution during the year (down in negative markets). Again, market prices will drop more than the usual during this period....

In "UP" type markets, distributions will be in reverse to the above and we can then buy some good performing CEF's with a "INCREASING" distribution (except for the example shown above)....

Live Long and Prosper....

[xray]

Interesting analysis data for the past week. A lot of are currently using the "SELL/BUY-BACK" (Selby) technique (using our cash reserves similar to what some insiders are doing) to reduce our portfolio "Average MktPrc cost basis" and increase our overall portfolio dividends percentage (as well as preparing us for the next CapGain (Mkt turnaround). With that said....

  Current analysis data (COB Friday) indicates that the market has "sharply" returned to a "BUYING" situation. We don't know if this will continue but the current Selby "OPPORTUNITY" appears too good to ignore (sets a "new" baseline going forward for some of us who do not like the volatility of the current market). Some of us used a lot of cash but the current resulting Selby's looks very promising. My current analysis data (single opinion of course) indicates a 7.42 "BUY NOW" indicator (7.00 minimum requirement required) for our undervalued securities passing our current analysis. The market Rf (risk factor for buying) has risen to +0.476 from +0.246 previously....

 The market continues to be negative for many selective securities (with low dividends <7% or no dividend) but is seen as very good for selective dividend securities (>9%) that have been oversold (with better book values or Growing/fast Recovering NAV's in a negative market) and passes our extensive analysis. Dividend portfolio's appear to have "jumped" this past week in dollar value with some securities "reversing course" from their previous continued negative course ....

 Looking at current insider buying activities, insiders are both buying and selling. FSK, as a single example, had a recent insider buy 9,000sh @ 21.61, while FSK was reporting a "increase" in their NAV (1st Qtr) from 18.96 to 19.03. FSK is increasing their dividend to $0.68/Qtr ($2.72/Yr) from their previous $0.62/Qtr (2.52/Yr). Their x-div dates have announced as 6/13 with a payday of 7/5. Current dividend (COB Friday) is currently 12.57% and is shown to be undervalued [as many others are). FSK closed on Friday @ 21.79....

Live Long and Prosper....

[xray]

uncleharley,richardsok,yogibearbull,steelpony10,rhythmmethod,Fearchar,retiredat48,steadyeddy,

My:
(Previous posting)
Looking at current insider buying activities, insiders are both buying and selling. FSK, as a single example, had a recent insider buy 9,000sh @ 21.61, while FSK was reporting a "increase" in their NAV (1st Qtr) from 18.96 to 19.03. FSK is increasing their dividend to $0.68/Qtr ($2.72/Yr) from their previous $0.62/Qtr (2.52/Yr). Their x-div dates have announced as 6/13 with a payday of 7/5. Current dividend (COB Friday) is currently 12.57% and is shown to be undervalued [as many others are). FSK closed on Friday @ 21.79....

-----

InvestorPlace
Mid-Cap Stocks to Buy for Big Yields
Stavros Georgiadis
Wed, May 25, 2022, 7:49 PM

These mid-cap stocks to buy now offer very high dividend yields and a price forecast with plenty of upside potential.
FS KKR Capital (FSK): A financial services firm with a history of strong profitability at a very attractive valuation.

Mid-cap stocks have slightly outperformed the broader U.S. stock market as measured by the S&P 500 in 2022. In a year with elevated volatility and major risks ahead, this outperformance signals that investment opportunities exist everywhere, but stock picking is tough. The S&P MidCap 400 measures “the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.”

At the close of the U.S. stock market on May 20, the S&P MidCap 400 had losses of 16.1% compared to a loss of 18.1% for the S&P 500. It is not a huge difference, but it shows mid-cap stocks offer returns that can be better than the overall index.

FS KKR Capital (NYSE:FSK) is a financial services firm specializing in investments in debt securities. The forward dividend and yield are $2.72 and 13.2%, respectively. FSK stock is trading now at a P/E ratio of 3.4x.
Back in 2018 through 2020, the quarterly cash dividend was 19 cents. In June 2020, it was raised to 60 cents and then 65 cents in September 2021. It dipped to 62 cents in December 2021, but it was raised to 68 cents to be paid in June 2022.
Its sales growth is volatile, but its profitability is strong. In the past five years, the company was unprofitable only in 2020. In 2021, it reported net income growth of 474.1% to $1.5 billion.
For the first quarter of 2022, FS KKR Capital reported a net investment income of 77 cents per share. That was a quarterly increase of nearly 17% compared to 66 cents per share for the quarter ended Dec. 31, 2021.
Analysts are bullish, as the one-year target of $23.06 offers upside potential of 11%.

Live Long and Prosper....

[xray]

xray,uncleharley,richardsok,yogibearbull,steelpony10,rhythmmethod,Fearchar,retiredat48,steadyeddy,

 Appears that five different insiders have bought into FSK (17,000sh in May) with a high mktPrc of 21.92....



Live Long and Prosper.... 

[xray]

 We are now separating the "investors" from the "Gamblers". For the gamblers, there is some panic currently ("severe" drop in their current mkt portfolio value) vs the investors currently seeking "OPPORTUNITY"....

 There will always be winners and losers in the market. Hopefully we are not hurting (when we are comparing previous and current nav's and book values). We "NEVER", as investors, look at current falling MktPrc's as they will always "VARY" with the "climate". Currently, we are (unfortunately) in a short traders, gambler "correction" cycle and we just have to be patient and ride it out similar to 2008/2009. If we have been investing (and analyzing) wisely, the ride down will be followed with another ride up but this time our dividends and distributions will be much higher going forward. Our undervalued securities will "rise" very quickly in the future "UP" cycle that we will be expecting.... 

 Good luck to all....

Live Long and Prosper....

[uncleharley]

30 yr Mtg rates are currently at 6.28%. Some of the Pimco CEF's had large positions in MBS's.

[Deleted]

Wow!  I did not know mtg rates were at 6%+

[anitya]

Crossed 6% on Friday. The PIMCO CEFs lost 1% or more NAV on Friday (adjusted for div ex date on Friday).

[xray]

xray,uncleharley,richardsok,yogibearbull,steelpony10,rhythmmethod,Fearchar,retiredat48,steadyeddy,
My 5/7 post:

Comment: Reviewing my current volatility of a normal investors (income oriented) portfolio in the current market under my following ("SECURITY HITS NEW LOW") analysis rules:

1... Securities in current portfolio not new in portfolio for less than 30 market days
2... Income investor using basic Buy/Hold type investing
3... uses "value" only investing methodology
4... analyzes current portfolio not greater than 14 days old
5... proactive in making changes to portfolio when data indicates to do so
6... reactive when analysis follows market analysis and will make the required changes
7... reviews "Quarterly analysis data" for changes similar to what Mutual and CEF funds do when they change their portfolio's

Completed Analysis Status Results (COB 6/15):

10% of portfolio's "continues "as is" plus adding additional shares 
25% of portfolio's continues at "neutral - "as is" - continue with current MktPrc's & dividends/distributions (including cash)
55%* of portfolio's "Completed "Selling/Buyback" at the lower MktPrc's + current cash availability
10% of portfolio's "down" & (Selling 2 securities for lack of performance in a down market - RIV/TWO)
* Sell/BuyBack definitions were previously posted.... 

 We should keep in mind that dividend paying securities do "NOT" drop (as much) like regular securities and many investors change their strategy and "start" investing in dividend securities when any serious market drop is occurring (especially in "unknown" type markets where market direction is very questionable. Some cash is always needed in our portfolio's to take advantage of any panic type selling (IMHO)....

One single opinion of the many I am sure....

Live Long and Prosper....

[xray]

75% CASH similar to 2008/2009....
 However, always however's, we should be ready to get back into our favorites (by analysis) at the "BARGAIN" prices. Only our best performing securities should be continually held IMHO....

 Rebuilding our portfolio's should be a easy task when the BOTTOM is observed (hopefully in our lifetime)....

Live Long and Prosper....