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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • The Hedge Against Wile Coyote-Esque Moments. 0 comments
    Oct 23, 2012 7:42 PM

    As I look over my watchlist, I see that quite a Wiley-Coyote esque event happened today. It looks like stocks had some moment of clarity, realizing they were standing off the lip of a cliff, and hence proceeded to plunge several hundred feet to a new state of inertia hehe.


    Either way, however, one sees it, I was similarly surprised by the survivors who managed to flap their hands fast enough to get back to the cliff face,and proceed up the to the next peak in this chain of stock activity.


    Amongst these champion arm-flappers are, a shipping name, not too surpising, NMM(Navios Maritime..) , Templeton Asia Growth, lead by the masterful Mark Mobius(I don't know how that ever goes down honestly), the good old "Corrections Corp of America(NYSE:CXW) with a surprising .52% gain, and somewhat notably, a couple of investments I see as a somewhat good beta-normalizing hedge, which also have a decent payout.


    What two investments are these, well they are two very cheap Credit Suisse, Dividend paying Funds per se. They pay about 3 or 4 cents per month and cost about 3-4 dollars each. They're kind of convenient portfolio balancing tools in a high yielding payout portfolio imho, because they still have a somewhat attractive payout, but have a beta of less than 1, so they in essence, help reduce the kind of high portfolio beta one can end up with in a high yielding portfolio.


    They're utility as a beta hedge one could say is only eclipsed by a somewhat more expensive investment(5x), offered by Nuveen which is simillarly concerned with high yielding bond and or muni's which is around 15 dollars and has an attractive yield, and a beta of .4, which is really even more effective in bringing a high yield beta which could scare away some 1-dimensional analysts, and which in-turn give on the ability to sleep extra soundly, if not all the time, while making a constant dividend income that is disproportionately large relative to one AUM, or in this case, assets personally invested, or whatever. Unfortunately, it looks as though the nuveen investments price was a little ruffled today, but I'm pretty sure its dividend would still make up for it, even if inexplicably the QE upward momentum somehow fizzled out, and stocks remained at this level into the foreseeable future.


    If we're looking at the movie-theatre fire moment's beginnings than I guess savvy portfolio construction is a little irrelevant as people might have to get out of things eventually at "fire sale prices". Either way, I was happy to see that my happy hedges had survived the forest fire, and that the little family of credit suisse-hedge hogs had gone on to succeed in their little woodland creature life irregardless of the spreading flames sweeping through their neck of the woods.

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