One of the few sectors that I am concerned about and so I keep a low profile
I have kept ARCC for a long time but have not often added to it. Same story for my BX.
Just very recently added GSBD due to some reports I came across and then when I did some research it supported those reports.
As noted before ... this sector has been in a sweet spot for a very long time considering the history .
Even professionals get complacent after a while when everything goes right and the profits roll in.
Many employees have never live though a really bad time.
Already I see some red flags and more just over the horizon. Might be an encore from 2006--2009 . Many have placed the history in the back of the file.
So I am not selling. .. we could very well see a respectable run up in BDC stock prices peak out as the last hurrah before the rug gets pulled out from the stock prices. I suggest you do a little homework how many went bankrupt or got forced into mergers. Or just never completely recovered from the ordeal. Like NLY had been recommended a lot by analyst ..including Jim Cramer on TV.. that was when NLY was trading in the mid $20's and after the sharp drop it has never recovered and now trades as a single digit stock. Just used this as an example because there were many companies that suffered the same fate or worse that today their names have forgotten due to bankruptcy or mergers changing their name.
This might not happen. But why stay in ignorance of the possibility?
Please do not run off and do something quick and silly. On the other hand do not stay complacent and only wake up when the steamroller has run over you.
Anyway that is why I only own three risk taking financial stocks ... I do own a few bank stocks but I do not fit them into this sector but they too can be touched by the above views just not as much. But you do remember that the banks had to get the FED to bail them out. Banks got saved ... stock holders did not.
Small and mid size businesses have already been put through a stress test... some closed up and locked their doors. A second wave of hardship could be a domino disaster causing many not able to sell out when no buyers want to buy. Solid mortgage firms find way too many not able to keep their payments up ... and no one interested to buy them out. If that domino gets big enough the lenders to these companies will be against the wall and a hard place themselves..
The process starts with Inflation that gets loose and goes out of control. Odd how ofter storm clouds can look so innocent over the horizon with golden edges in the sunlight . Suddenly beyond belief their deluged is flooding and sinking your portfolio and dooming those who have margin accounts at their limit.
Or we can all get together and sing "Happy Times are Here Again". and reassure yourself by Alfred E. Newman "What me worry?"
this public service message brought to you by..