Trade

Bought IAR at $5.24 today. It's cheap as dirt. Why, I don't know. I guess the yellow pages business always goes down during recession. On top of that, they have a lot of debt. The good news is that their revenue was only down 1% last year. So, they don't have the same problems with ads that newspapers have. Also, they pay out a 25% dividend. They have more than enough money to make debt service payments and continue their dividend. Their cushion is about $1.57 per share. On last years' earnings of $2.94, they could lose 50% of earnings and still pay out easily.

This is a no brainer.

In other news, the CMBX and ABX indexes have continued showing record losses in the commercial and residential mortgage markets. In addition, Fannie and Freddie mortgages have caught the flu as well, with spreads over Treasuries at 20+ year highs. The Fed is between a rock and a hard place. The inflationary blowback from lowering rates has sabotaged their original intention of easing liquidity. The result is that 30-yr. mortgage rates are higher than a year ago. The Fannie and Freddie bond spreads bear watching. If they gap out enough, then Fannie and Freddie will be out of business until they're bailed out.

Who knows what a can of worms that will be. I'll worry about that when we come to it. Until then, the question I ponder is, "when is it time to take some profits off the table?" Not yet, I believe, because the Fed had nothing left to prop up the markets in my opinion. Well, not exactly. They could always trot Treasury Secretary Hank Paulson out with a sad clown mask to say, "We no longer believe in a strong dollar." The problem is that no one believes them anyway. As a working strategy, I'll wait for the investment banks to announce earnings, and buy on any terrible news. Unless the VIX spikes to 30 first. Another day like today will do it.