Week 1 (July 1 – 5):

As opposed to just kicking the can down the road and giving the Chinese spy company Huawei a life-line, the bullish bias in the market has interpreted the trade truce with China as an actual trade deal . As you know, I’m not in favor of doing any business with the Communist Chinese government or it’s enterprise front Huawei. The Fed rate cut is still on the table and this feeds into the bullishness of the current market. Also, there are many investors that are positioned defensively which means there is lots of money that can be more aggressively allocated if conditions appear favorable.

But just now the foolish Trump administration advanced the idea of new tariffs on the EU. The reason is that Airbus is subsidized and that hurts Boeing. The WTO has authorized countervailing tariffs, but they apply only to Airbus and are intended to offset the advantage of subsidies. Unfortunately, the badly misguided Trump administration sees the WTO ruling as an excuse to put tariffs on a whole array of EU products. This caused the market rally to pause this morning. As Arthur Laffer (a well known supply-side economist) points out, tariffs are a bad thing in the long-run. As an anti-supply-side policy they slow economic activity in the US and around the globe. Already, they have more than offset the positive supply-side effects of US tax cuts and regulatory relief. This will only get worse. The US domestic economy is slowing down and the tariffs, which constrain the Feds ability to reduce its balance sheet in preparation for the next recession, will eventually put us into that recession . . . and with a Fed that has been badly compromised in its ability to offset the recession’s negative effects.

In the meantime, we are still in the short-run. Moreover, the short-run and long-run or only subjectively interpretable periods for which there is no way to predict when one period becomes the other. Thus, one can only keep an eye on relevant data such as declining forward looking market indicators . . . which are starting to diminish consistently. For a short while after an economic downturn occurs, the market will continue to climb before it turns negative as well. This gives us some time, possibly a year or two, before things might turn ugly . . . unless, of course, these tariffs come to an end and we return to the path of globalization, increased domestic and international competition, and long-run economic growth.

Given that long-run (i.e., risk-on) investment is still warranted by the underlying bullish character of this market, consider growth stocks such as TGH, RIO, BBL, CMTL, DIOO, and HIBB. Dividend growth stocks such as OAK, CNSL, PAGP, GEO, SUN, VZ, and NGL are also good bets. A good ETF to bet on is JKH. Good investing!

Week 2 – 3 (July 8 – 19):

The Fed Chief’s testimony made it clear that the Fed must offset the negative effects of Trump’s tariff policies. Since Trump is erratically and unpredictably applying tariffs towards non-trade related issues, investment is declining rapidly. Business investment is the leading aspect of economic growth that increases physical capital, increases the need for labor and jobs, and increases productivity. Productivity, in turn, decreases prices and increases real wages. Uncertainty over when and where tariffs will be applied means that businesses are uncertain about where to move their supply chains or what to invest in. Uncertainty means businesses don’t invest . . . much like when Obama was throwing regulations around erratically and unpredictably. Remember that the Fed had to maintain a zero Federal fund rate then as well. Thus, domestic economic growth is being hampered and upward pricing pressure is growing. That said, no recession is yet in sight and the stock market still appears in good shape. In fact, a lot of money is in risk-off assets and the “all-in” characteristic of a market top does not yet exist.

Growth stocks to look at include RIO, OMP, BBL, BHP, and HIBB. Dividend growth stocks are BBL, CNSL, OMP, and OAK. The best ETFs are PSJ, JKH, and VIG. Good investing!

Week 4 (July 24 – 31):

I decided to include my personal portfolio for generating monthly income and portfolio growth. All stocks and funds are monthly payers and growth comes from those stocks and funds I hold for dividend reinvestment. Growth then occurs from stock/fund appreciation, dividend growth, and dividend compounding. Since growth must occur over the long-run it doesn’t matter what the state of the economy actually is in the short-run.

Monthly Paying Stock or Fund Symbols

Income Funds (More stars = less risk)

FFC **** A/H, Stable div., EOM

HPS **** AA/BA, Steady div., BOM

RQI **** AA/H, Reit CEF, stable div., MOM

PGZ **** L/AA, stable nav/div, MOM, OV $16-17

NRO **** A/BA, entry priced, high return, MOM

ETB **** BA/A, Option Writing, S&P 500 stocks

ETV **** BA/AA, Option Writing, S&P 500 and Nasdaq 100 stocks ETY *** A/AA, Option Writing, Domestic and Foreign stocks

LSSAX ***** Z1, BA/H, stable nav/div, BOM

BKT **** L/H, stable nav/var. div, MOM

DMO ***** L/H

MCR **** BA/BA Mostly IG, Stable nav/div, MOM

GDO **** BA/AA Mostly IG, Stable nav/div, MOM PPR **** BA/BA NIG top tier SSL, Stable, BOM BGT ***** L/BA, FR NIG SSL, Stable, MOM PHD **** BA/AA, Bank loan (Short duration, Senior FR, EOM BSL **** BA/A, Bank loan (Senior FR, Health Care/Util.), MOM

BBN ***** ND/ND, Stable nav/div., MOM

NBB **** ND/ND, Stable nav/div, MOM

IOFIX *** A/AA, steadily rising nav/div, EOM

GGN *** ND, Nav/Div = f(gold),

ZTR **** BA/L, large draw down/stable div., MOM

UTF *** L/AA, large draw down/growth, MOM

DNP *** A/H

BME ***** L/H, Stable or growth, MOM

THQ **** A/AA, stable nav/div, MOM

DRIP (Dividends Re-invested)

DIV

VPGDX

PEY

PTY

SPHD

BDJ

O

STAG

MAIN

BUI

XSHD

DHS

OUSA

BST LTC

Money Market Funds

ICSH ***** L/A, increasing nav/div., BOM

Notes:  Basically 4 categories follow any stock or fund’s symbol:  Risk/Return, Characteristics, and part of the month it goes ex-dividend.

(1) Number of stars designates my feeling for safety of investment principle, the more stars the better.

(2)  Risk/Returns are L = low, BA = below average, A = average, AA = above average, H = high.  For example, any fund with a low risk/high return would be designated L/H.

(3), Fund or stocks long-run characteristics such as “increasing nav (net asset value)/div (dividend),” IG or NIG stand for “investment grade,” or “not investment grade.”

(4) Beginning 1/3 of the month is BOM, middle 1/3 is MOM, and end of month is EOM.

Also, OV means that it is currently overvalued.  In fact, all funds are CEFs that sell either at premiums or discounts so finding an entry point to buy is a critical step.  Those that had steep selloffs at the end of last December (2018) or from 2007 – 2009 are also better buys during a sell-off.  Still, that may not happen when you want and if you are intending to hold and re-invest, then when you buy matters less because they will simply buy themselves up faster during a selloff and should also quickly regain their pre-selloff prices.  Thus, there is no need to sell them.

The top set of funds are the ones I use to generate monthly income.  The DRIP section are stocks/funds that I intend to hold for growth through appreciation, dividend re-investment, and dividend growth.  If no income is needed, any of the income generating funds can be held for compounding through dividend re-investment.  That said, a fund with a low (L) or below average (BA) return is less likely to grow like one with an above average (AA) or high (H) return.