Warren Buffet thinks that the low-interest environment creates a situation in which stocks are NOT overvalued and that there are good buying opportunities out there. Also, the general consensus is that there are more positives than negatives that might affect the stock market in the near term. That said, some analysts continue to stress the likelihood of a significant short-run correction and that holding cash is the best hedge.
Stocks for Week 1: For growth consider TRLFF, EDIT, CERN, IMED (a health tech ETF), TNA (small cap 3x leveraged bull), FAS (3x leveraged financial bull), VERI (on a pull back), ACLS, COST, and PANW. For dividends and growth consider LIT, CMP, THO, GLPI, CTRE, COR, MBT, UG, and CG.
A strategy that keeps you mostly in cash and that still maximizes dividends is to use high yielding monthly dividend funds (e.g., CHI, EXG, LDP, etc) and order them in terms of their ex-dividend and record dates throughout each month. Then you can put some of your money into those that earn money in the first third of the month, the second third of the month, and the last third of the month. You must buy a fund the day before its ex-dividend date and hold it until the day after the record date. Finding funds at a discount also helps because you don’t want to lose capital value that offsets your dividends.
By putting money into those that earn in t he first third of the month, you can keep a lot of money on the sidelines and then recover that money after you sell, plus you will get the dividends on the pay-date. You can continue this through the month (2nd and last thirds) and always keep money on the sidelines and still earn the level of dividends you would have earned by holding all your money in these same funds during the entire month. Moreover, if the market corrects you will always have lots of cash to buy funds and stocks at lower prices. Good Investing!
Week 2:
I still think a small correction is coming. Probably, it will just be from the upper part of the channel of bull market growth to the bottom of the channel. Most likely it is a buying opportunity which, in turn, will make it shallow and short-lived. Ignoring it is probably the best strategy. Within that context, growth stocks to consider are: ISRG (which just split and is now more affordable), ICHR, and HTHT. Dividend growth stocks to consider are: STZ, HASI, LVS, RTN, and ABBV. A high dividend play is HMLP (9.1% yield). Good Investing!
Week 3 (Oct 16 – 20):
Economic fundamentals and earning season are supporting the market. Any correction, even on individual stocks on your radar, is most likely a buying opportunity. For growth, consider looking at CTAS on a pull back, ASYS, CE, PBE, IVW, IVE, PZI, MZOR, CCASX, BOX, UCTT, HUBS, and WB. For dividend growth stocks, consider TXN, CE, CNI, and ADI. I recommend cutting back on any high yielding ETFs if you think a stronger correction is comming. You might also want to consider GBTC, a Bitcoin Investment Trust, if you want to take on some risk with the possibility of increased reward. Good Investing!
Week 4 (10/23 – 10 31):
We had about a 0.5% correction on Wednesday the 25th. It was nearer to 0.1% at midday but lost steam after that. I bought TVIX in the morning when the stock market opened down and sold it arround noon when it peaked. Consequently, I made about as much as I lost.
The correlation between interest rate increases and dollar strength were related to the direction and size of Wednesday’s correction. There were also some earnings disappointments, especially with AMD. On the other hand, the economy and earnings in general continue to maintain their underlying strengths and the stock market remains bullish in the near and long-terms. That said, a correction within the upward sloping growth bands of the major indexes from the upper band (where stocks are now) to the lower band that would amount to as much as 15 – 17% on the downside is possible. More likely, we might get a 3 – 5% correction because buyers would soon step in. It would be healthy if we did get such a correction and investors should just ride it out, but still have cash on hand for buying on any significant pull-back. I’d also cut back on high-yielding ETFs and emphasize my recommended growth stocks and dividend growth stocks and funds instead.
New Growth stocks and ETFs (these are not in the base stock portfolio and not mentioned before) to take a look at are: ALB, AIEQ, AVH, DXL, LEA, URL, EMQQ, XBT, ROBO, MU, NTRI, LOGI, AJRD, FTEC, and XT. Reliable dividend paying ETFs, some with the potential for significant long-run growth, are KBWY, PFXF, BDCS, LQD, LEAD, and IDV.
Be sure to look at charts over the previous year and check for corresponding earnings rates of growth. Growth stocks with consistent annual earnings growth rates within a 25% to 60% range are the ones to focus on. Then set back and let the sled dogs run. Good Investing!
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