Week 1 -2 (Aug. 1 – 15):
There are changes to my personal portfolio from July. Specifically, I’m dropping EPR and CCMNX and adding PHD and BSL. These changes are now reflected in the updated portfolio.
Most stock analysts are weak at Open Economy Macroeconomics and tend to look only at the initial static effect on GDP from increased tariffs on China announced for Sept. 1st. This abstract view underestimates the vastness of the negative macroeconomic consequences of Trump’s tariffs. First, there is the uncertainty effect of erratic tariff policy that decrease investment and economic growth, second, there are specific industry effects on agriculture and technology (for which technology is another future growth driver), thirdly, there is increasing inflationary pressure in general that also puts upward pressure on longer-term interest rates which further hampers growth, fourthly, there is the effect of drawing in the Fed to support the tariffs which reduce our ability to fight the next recession, and finally, there are the initial static effects on GDP the brokers are pointing out. Be prepared, not surprised when the markets suddenly tank. Personally, I think a direct restriction on capital expenditure in China would be a better and stronger approach than tariffs and failed negotiations.
For those thinking that Fed rate cuts will temporarily lead to a boost in economic growth and the markets, which is certainly possible, I have some short-term recommendations from Zack’s rank 1 stocks. These stocks are expected to have about 30 to 90 days of increased relative performance and include: MTRN, ARNC, ENVA, OMP, DVA, and MTZ. Zack’s 1 ranked dividend growth stocks include NGLOY, BBL, BHP, FSUGY, PAGP, ARCC, and BCE. Currently, the top ranked ETFs are PSJ, VIG, JKH, FNY, and VOOG.
Alternatively, you could just hold my dividend re-investment funds and disregard the entire upcoming recession, which is essentially the Warren Buffet approach. In any case, Good Investing!
August 14 portfolio update:
Given recent market weakness I am dropping some funds from my personal portfolio that have smaller amounts of assets under management (AUM). These funds are MGF, FMY, PCM, and FFT. I am adding ETY because it is based on both domestic and foreign stocks. I have updated the portfolio from the July Stock and Fund picks with these changes.
August 15 portfolio update:
I am giving up on any positive long-term gains from MIE, a midstream MLP fund and deleting it from my portfolio of income earning CEFs.
Weeks 3 -4 (Aug. 19 – 30):
Trump is on the skids, meeting his Waterloo by trying the negotiate with the Communist Chinese. The Chinese win by never agreeing to any kind of a deal because that will end Trump’s re-election chances. This opens the door for the next socialist who, like Obama, will be good for gold prices. I’d look at stocking up on GGN because it pays a high monthly yield thanks to its low price and may offer capital gains while the Trump administrations circles the drain and the new socialist regime try’s to make everybody better off by increasing demand for everything through income redistribution while at the same time failing to pay for anything (making their proposals look good only on paper) and thereby destroying real production and supply. In other words, get ready for really long lines, wait times, and inefficiency.
Here is my updated monthly paying income and DRIP portfolio that is pretty much good for any scenario and includes GGN. I also added a risk-managed Eaton Vance fund (ETJ) to the mix.
| Stock/Fund | AUM | Monthly Div | |
| Income Funds (More stars= less risk) | |||
| FFC **** A/H, Stable div., EOM | $890.81M | 0.112 | PS, IG |
| HPS **** AA/BA, Steady div., BOM | $599.56M | 0.1222 | PS, IG |
| RQI **** AA/H, reit CEF, stable div., MOM | $1.6B | 0.0800 | Reit HQ fund of funds |
| PGZ **** L/AA, stable nav/div, MOM, OV $16-17 | $149.6M | 0.1100 | Reits, CMBS |
| NRO **** A/BA, entry priced, high return, MOM | $254.64M | 0.0400 | Newberger Bergman RE/pref. |
| ETJ ***** L/A, Steady div/Nav, EOM | 600.4M | 0.0760 | S, OW Risk managed, Sells Puts/Calls |
| ETB **** BA/A, Steady Payer, EOM | $421.81M | 0.108 | S, OW S&P 500 stocks |
| ETV **** B/AA, Steady Payer, EOM | $1.12B | 0.1108 | S, OW S&P 500 plus Nasdaq 100 |
| ETY *** A/AA, Steady Payer, EOM | $1.76B | 0.0843 | S, OW Domestic & Foreign |
| LSSAX ***** Z1, BA/H, stable nav/div, BOM | $1.19B | 0.0420 | ITB, AB |
| BKT **** L/H, stable nav/var. div, MOM | $391.71M | 0.0344 | ITB, IG, GB, AS |
| DMO ***** L/H, stable nav/div, MOM | $228.54M | 0.1600 | MBS (min80% CMBS & RMBS) |
| MCR **** BA/BA Mostly IG, Stable nav/div, MOM | $395.42M | 0.0580 | HYB, mostly IG |
| PPR **** BA/BA NIG top tier SSL, Stable, BOM | $823.23M | 0.0270 | Bank Loan, Senior Secured |
| BGT ***** L/BA, FR NIG SSL, Stable, MOM | $287.27M | 0.0668 | Bank Loan, Senior Secured |
| BSL **** BA/AA, Stable, defensive, EOM | $260.64M | 0.1110 | Bank Loan, Short dur., FR Senior Secured |
| PHD **** BA/A, Stable, Defensive, MOM | $257.77M | 0.0625 | Bank Loan, FR Senior Secured |
| FCT **** BA/A, Stable, Defensive, BOM | 367.4M | 0.0735 | Bank Loan, FR Senior Secured, 85% Util. |
| GDO **** BA/AA Mostly IG, Stable nav/div, MOM | $255.63M | 0.1010 | Diversified World Bond |
| BBN ***** ND/ND, Stable nav/div., MOM | $1.42B | 0.1188 | Taxable MB, IG |
| NBB **** ND/ND, Stable nav/div, MOM | $601.56M | 0.1030 | Taxable MB, IG |
| IOFIX *** A/AA, steadily rising nav/div, EOM | $3.05B | 0.0510 | MultiSecB, 80% AB, Growth |
| GGN *** ND, Nav/Div = f(gold), MOM | $612.11M | 0.0500 | Gold and Natural Resources |
| ZTR **** BA/L, large draw down/stable div., MOM | $263.72M | 0.1130 | Total Return S&B, mostly IG |
| UTF *** L/AA, large draw down/growth, MOM | $2.21B | 0.1550 | Util/Infrastructure, growth |
| DNP *** A/H, steady, defensive util, EOM | $3.69B | 0.0650 | Utilities |
| BME ***** L/H, Stable or growth, MOM | $405.3M | 0.2000 | Health/biotech, S, growth, OW |
| THQ **** A/AA, stable nav/div, MOM | $725.6M | 0.1125 | Healthcare, solid |
| DRIP | |||
| DIV | 0.1407 | ||
| VPGDX | 0.0544 | ||
| PEY | 0.0547 | ||
| PTY | 0.1300 | ||
| SPHD | 0.1479 | ||
| BDJ | 0.0467 | ||
| O | 0.2260 | ||
| LTC | 0.1900 | ||
| STAG | 0.1182 | ||
| MAIN | 0.2000 | ||
| BUI | 0.1200 | ||
| XSHD | 0.1001 | ||
| DHS | 0.2000 | ||
| OUSA | 0.0780 | ||
| BST | 0.1500 | ||
| Dividend or | |||
| Money Mkt | Interest rate | ||
| USAA MM ***** | 2.10% | ||
| ICSH ***** L/A, increasing nav/div., BOM | 0.1193 |
The table is meant to substitute for an immediate annuity in terms of guaranteed income, with the benefit that you get to keep you capital instead of paying it to the insurance company offering the stream of payments. The first thing after a symbol’s stars, more of which indicates greater safety, is the historic risk/ return so L/H means low risk high returns, for example. My July post explains more about the table. Feel free to use the table however you wish. For example, any of the income funds can be held as DRIP stocks if you just want all growth. You never have to sell the DRIP stocks either because they will just buy themselves up faster during a stock market sell-off. As always, good investing!
