04-23-2020, 08:32 AM
(04-23-2020, 04:49 AM)fenders53 Wrote:(04-22-2020, 03:49 PM)Otter Wrote: If the market retests the March lows, it is going to be the companies that rebounded to within 10% of all-time-highs that are going to take the biggest beating. A number of sectors have not recovered meaningfully from being taken out to the woodshed. The only one of those that I didn't invest in today was Energy.Since we are speculating.... I agree with some of the points.
Some of the retail and office REITs may well be priced where they should be because of the rent horror story. There will be closures and rent in arrears for some time to come if it ever gets paid at all. REITs were frothy before the CV. Not certain brick and mortar is dead though. If there is liquidity there will be new renters eventually. Anyway I don't see all of them as a steal yet. They look correctly priced with the limited data available.
I have no idea if the market will retest MAR lows due to the epic FED intervention. I do think some sectors will test their lows though. The stimulus will save some, but it can't be endless or we will have monetary problems. The attempt to save small BIZ was ineffective so far, and that will trickle up IMO. I think persistent unemployment is a real risk. IF we do crash MSFT and AMZN and the usual defensives may still be a safer place than the beaten up stocks. Airlines, autos and energy are clearly damaged, and there are a lot of supplier companies downstream that are going to feel it for many quarters. You can add more industries to that list. There are way too many companies sitting near their DEC 19 prices.
As investors we need transparency from corporate leadership and I am not so sure we get it for another quarter.
I still think Dividend Kings/Aristocrats 50% off their highs are a better value and safer play than those within 10% of their highs.
I'm not investing in airlines, dry bulk shipping, or other companies/sectors that have never been able to put two nickels together for more than a couple years (or months) at a time.
On the REIT front, I think some aren't going to be okay. I think FRT, NNN, and O are about as safe a play as it gets in the sector, given their long track record, high quality property portfolios, and the fact that they had the best credit ratings before this all started (and should continue to have the best in the sector). Their cost of capital will remain lower than competitors.