October 20: The status quo seems like endless doom and gloom. Yet, we know with certainty that bear markets always end. Moreover, it’s end will come as a surprise to most. One possible scenario is that inflation continues to abate and the Fed pivots and announces an end to large rate hikes. Suddenly, earnings growth and job creation are enough to send the stock market soaring. Thus, you don’t want to sell. On the other hand, killing inflation requires reducing aggregate demand down to equal the rate of growth of supply which may go too far. The underlying economy goes into negative growth and earnings disappear causing the stock market to crash even further. Now you wish you would have sold everything.
Most likely reality will be in-between these too scenarios and the market will have already priced in as much negativity as it expects will occur. Since an individual cannot know the future and the market has already priced expected value in, by the time you sell it would almost certainly be too late and the market would already have bottomed. Then, you would probably miss most of the rally to the upside. So why worry. Now is simply the best time to put more money to work.
Here are some stocks to consider for growth: KOS, VIST, PARR, NEX, TTE, DINO, JBL, WHD, CNM, and PERI. For growth and income consider: HSBC, SQM, WMB, ARCC, KRP, and YY. Over the previous 3 months, the best performing ETFs were: VDE, SLE, and IGN.
As I have revealed my most favored strategy of rotating through CEFs (Closed End Funds) before, I will point out that selling one CEF at a premium and buying another similar CEF at a discount tends to reduce your downside risk over the course of a bear market such as this. Selling one at a small loss and buying one at a bigger discount or loss does the same thing, but it also reduces your capital gains if your account is an ordinary investment account and not a tax protected one such as an IRA Either way, It always gets you more shares of a similar fund at a higher yield which tends to increases your income over time. There are some risks, but on the average it is a good way to earn money in retirement.
As always, Good Investing!
