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Musings of the Day, 2/10/26:
The reason why Reminiscences of a Stock Operator from the early 1900's is still my favorite investment book of all time is that it is a constant reminder that while market dynamics change over time, what is CONSTANT is human GREED & FEAR.
The incredible FEAR in CLO Equity CEF's right now is something I've not seen since the depths of COVID and is largely due to misunderstandings of the underlying dynamics.
CLO Equities themselves have been facing a highly unusual juxtaposition of NII compression (from Spread Compression due to too much CLO $ chasing too few Broadly Syndicated Loans) and Credit FEARS (First Brands, et. al. and now AI). How can these two opposing forces persist for long?
Meanwhile, because CLO Equity CEFs are at the tail end of a 3-level "compound volatility" train where BSLs, CLO Equities, and CLO Equity CEFs are all marked-to-market, the irrational FEAR of the markets presents incredible gifts from time to time.
I have written extensively about this topic, so if you'd like to learn about this opportunity and cut through the noise, have a look:
Recent interview about this dynamic:
I have also been writing detailed, near-daily commentaries:
$ECC $EIC $OXLC
