The misery index goes up when there is an outside supply-side shock to the economy such as the oil supply shortages of the mid 70s and early 80s. It goes down when things are good. Supply-side effects, either from policy or from happenstance, now dominate the business cycle. For example, during the Clinton administration there was first a large tax increase and military expenditure cuts and Republicans swept into Congress, there were also large cuts to social programs. The resulting budget surplus was contractionary on the expenditure side (tax increases and expenditure decrease) but the increased utilization of computers in offices and low oil prices created dominate supply-side effects that produced a business cycle upturn. Unemployment and inflation, that is the misery index, went down and things were good.

These days we have to worry about the mix of government policies leading to an increase in the misery index and causing a recession. Protectionist trade policies slow production in the 30 to 40 percent of our economy engaged in international trade. All tariff costs have been forward shifted into US consumer prices which is inflationary. Less investment decreases growth in labor productivity which is also inflationary. It also limits future capital expansion and associated job growth which will eventually contribute to increases in unemployment. The Feds dovish accommodation of protectionist trade policies are inflationary, and because they push interest rates down stocks look overly attractive causing the stock market to overheat. The slowdown in trade related economic activity such as in transportation, sea port activity, and trucking and transportation will also lead to increased unemployment. The misery index, which will be creeping slowly upwards, will shoot up rapidly and a recession will ensue when the stock market crashes.

In the meantime, the market is still relatively safe and one can consider (that is, research) the following stocks for growth: MX, PERI, EVRI, FRTA, KBH, OESX, ARAY, TNDM, VCEL, TRUP, and ICHR. For dividend growth, take a look at: BMA, APAM, CMRE, BHP, CVX, GLP, MBT, SNR, PDCO, RCII, SPH, and WES. AS for the best ETFs, consider IVG, XLK, VGT, FTEC, and IYW. Of course if you want CEFs for income, then look at those in my previous spread sheets and pick only those selling at a market price that is less than their net asset value. You can find current NAV and price information on the Fidelity web site. Good investing!

The post February Stock and Fund Picks first appeared on MarchéEconomics.

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.

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.

The post July Stock and Fund Picks first appeared on MarchéEconomics.

Tariffs on Mexico that would go in effect on June 12 will be bad for Mexico, US companies staying competitive by operating in Mexico and the stock market, dovish Fed or not. Estimates of the cost of tariffs on consumers is now twice as much as the benefit from the tax cuts. This erodes any net gains from all positive supply-side policies (deregulation and tax cuts) already enacted. Global growth forecasts have decreased substantially as a result. The ensuing recession is not yet near, but should not come as a surprise when it occurs.

In the meantime, the Titanic is still afloat. The typical June bounce should be good for a few more days and maybe until June 12th or so. Long stocks to consider are EGAN, NOA, MBUU, ENVA, and TGH. Dividend growth stocks are BKEP, BBBY, EVC, PAA, PAGP, and PUK. The best ETFs are consumer staples (defensives): XLP, FSTA, and UDC. And this is the way it is, June 5, 2019. Good luck!

Week 2 (June 10 – 14):

JPMorgan warns of a ‘Trump Recession.’ “The trade war has so far offset all benefits of fiscal stimulus and, if continued, may lead to global recession,” wrote Marko Kolanovic, JPMorgan’s global head of quantitative and derivatives strategy. “If this recession materializes, historians might call it the ‘Trump recession’ given that it would be largely caused by the trade war initiative.”

The underlying reason for predicting a recession is that Pres. Trump does not understand foreign trade. He is an isolationist and wants tariffs for any reason. He actually stated that his tariffs produce a comparative advantage in trade. This statement reflects his ignorance. Comparative advantage results from having the lowest opportunity cost for a given exported good or service. There are two different causes, either of which is sufficient. First, endowments of minerals, oil, low-cost and productive labor, or land suitable for given crops, etc. vary from country to county. Second, know-how and technology in production vary greatly from country to country. For example, Arkansas has a lot of hard-pan land for growing rice and the best rice growing technology in the world. Consequently, Arkansas has tow sources of comparative advantage resulting in the lowest unit cost of rice in the world which allows it to export rice at a high profit. Moreover, many if not most rice producers in Arkansas are millionaires. Thus, wages by themselves do not explain comparative advantage. Unfortunately, Trump’s tariffs which lead to retaliation make it less profitable and more difficult for Arkansas to export rice. In other words, Trump’s tariffs have decreased Arkansas rice growing comparative advantage, reduced wealth and economic activity related to growing rice, and made Arkansas rice producers worse off. Similar negative effects from Trump tariffs are spreading far and wide among many other producers as well.

If Trump had put tariffs on Mexico into effect on Monday the markets would have sold off dramatically. There was little gained from threatening them and the harm done to US manufacturers using high bang-per-buck (productivity divided by wages) Mexican labor to stay competitive, such as the automobile industry, would be disastrous.

Instead of tariffs that risk recession because they are nothing more than chopping a whole in the other end of a canoe, the ban on doing business with Huawei is the route the Trump administration should take with any high tech US firm doing business in China. That is, just ban US high tech firms from doing business in China. China is a communist country and as such must steal technology. Trying to make any kind of deal with them to not steal technology is a fools errand. Trump will end up with China simply finding another method to steal US technology. Ceasing business in China does not remove their need to steel, but it makes it harder to do. That is far better than making a deal and leaving the door wide open for China to develop another method of easy technology theft.

The current business cycle is already indicating a near top which will, with Trump’s tariffs, soon lead to a downward trend. The stock market will peak soon after the business cycle (economy) and then sell-off quickly as it predicts the ensuing recession. There is still time to invest, but you must keep an eye on the inevitable path the business cycle and stock market will take. Consumer staples ETFs such as XLP, FSTA, and UDC are your best bets. Good Investing!

Week 3 (June 17 – 21):

The overall economy is weaker thanks to tariffs and investors tend toward defensive positions. This creates a possible opportunity going forward. The opportunity is based on the fact that Pres. Trump has one path to a second term: First, the Fed must cut rates, probably in July. Second, there must be a trade deal with China that follows the rate cut. The first condition is likely, the second is anyone’s guess and may come only after another round of tariffs on Chinese exports. If the rate cut and trade deals both happen, the market will go up and positioning oneself a bit more aggressively now may pay off. That said, consider the following Zack’s No. 1’s with VGM = A scores: ERIC, NOA, MBUU, RIO, CSL, and HIBB. Dividend growth stocks are: PAGP, PHI, GEO, APAM, RIO, and BBL. The best ETFs for more aggressive positioning are PXMG, JKH, PSJ, VIG, VOT.

Keep in mind that any trade deal with China is a political move rather than anything substantive. The Chinese will still steal our technology. Moreover, just like Obama ruined economic growth by regulating markets that he did not understand, Pres. Trump does not understand international trade. He is more likely to continue his misguided tariff polices (analogous to Obama’s over regulation) until global and domestic economic growth deteriorate into a global recession. Luckily, this may be a consequence that is still a few years away. In he meantime, good investing!

Week 4 (June 24 – 28):

You have two ways to play the market, either wait for Trump to fail with the Chinese and the markets to fall or hope for a deal so that the markets will go up. A Fed rate cut will probably occur in July regardless of the China pissing contest. My view is that Trump’s failure to negotiate for a mutually beneficial outcome and strengthen global friendships and instead rely on making enemies and trying to win at others costs cannot be expected to succeed. That leaves the Fed to add liquidity to the swirling toilet bowl and slow down or mitigate the stock sell-off. Thus, until a see a post sell-off situation or a completely different geo-political environment, I am playing it safe. For those with a more optimistic outlook, consider the growth stocks NOA, TGH, MBUU, RIO, DIOD, HBB, and KELYA. Dividend growth stocks to look at are: ABR, APAM, CMP, EPD, EVC, GEO, NCMI, and SUN. Growth oriented ETFs are JKH, IWP, and FNY. These will also be excellent investments after a sell-off. In the meantime, good Investing!

The post June 2019 Stock and Fund Picks first appeared on MarchéEconomics.

Trump trade woe’s continue. When companies buy high bang-per-buck (Productivity divided by cost) resources in foreign countries like Mexico, such as with our automobile industry, it maximizes output per cost or, equivalently, minimizes cost per unit of output. In other words, our automobile industry becomes more competitive by using Mexico’s production resources. China has a communist government and cannot be traded with or used for production because the cost of stealing our technology outweighs the benefit of high bang-per-buck production resources. Trump, the isolationist, wants production in China to continue under his negotiated conditions or to be reallocated to the US where low-bang-per buck resources would destroy our comparative advantage in trade. Instead, why not incentivize resource reallocation from China to Mexico. By doing that, we stay competitive and technology theft by government direction will no longer occur. Mexico’s economy will be greatly improved and the incentive to migrate to the US greatly reduced. Mexico may be so grateful it may offer to build Trump’s wall. Unfortunately, Trump’s thinking that Mexico is somehow stealing our automobile and other industry trade prevents him from choosing this strategy. Because Trump fails to understand optimal resource allocation and the sources of comparative advantage in trade that lead to increased US exports, he will make the US and the rest of the world worse off. He may even cause a global recession so get ready.

In the meantime, the best Zack’s number 1 stocks are AU and TALO. The best dividend growth stocks are APAM, AVAL, and NBLX. Pure growth stocks are GLDD and HTZ and the best ETFs are PXMG and FXL. As for myself, I’ll be heavily weighted toward cash. Eventually, like at the end of 2018, that strategy will lead to a buying opportunity while at the same time preserving capital. Good investing!

Week 2 – 3:

Why can’t we just stop dealing with a communist government’s inability to conduct free market trade? They really don’t want to engage in free market trade, which should be clear enough already. Instead, simply incentivize all US companies to cease doing business in China and be done with it. As it is, Trump is trying to cut a hole in the Chinese end of the trade canoe. In other words, the main effect of tariffs or taxes is to distort prices and trade flows which harms both parties about equally, so get ready for some higher prices. To me, it’s like watching a dual where both parties take ten steps, turn, and then shoot themselves in the head. On top of this idiocy, Trump wants to put more tariffs on autos and Mexican production . . . again trying to cut a whole in the other end of the canoe. Ultimately, this must end badly, but just not right away.

In the meantime, some long positions in growth stocks might include: ERIC, NOA, RYI, TGH, MBUU, QD, and SSL. Top ETFs are PSJ, FCOM, and PXMG. Dividend growth stocks to consider include: BMA, APAM, PUK, ad NCMI. Good investing!

Week 4 (May 25 – 31):

People generally underestimate the negative supply-side tax increase policy of increased tariffs and isolationism. It is estimated to cost the average household about $800 per year which offsets the corporate and income tax decreases about equally. Reduced producer regulations remain the only net positive so the pricing in of negative trade effects aren’t trivial and may occur in subsequent rounds of adjustment. Assuming the tariff policy doesn’t lead to a global recession in the short-term, this represents a possible overcorrection and buying opportunity within the domestic economy. Thus you should consider some dividend growth stocks to research and watch such as USAC, GLT, EPM, AEG, VSAT, GTLS, FSI, CNMD, and ABR. Strong growth stocks include NOA, RYI, TGH, VRNT, QD, OSIS, GPI, CUB and JCOM. Some good ETFs are XLP and XLV. A long-term growth mutual fund to consider is CPOBX. Good investing!

The post May Stock and Fund Picks first appeared on MarchéEconomics.

The market is trying to price in the Trump trade protectionism policies.  It has been doing that since January of this year.  The only other politician advocating trade protectionism is Bernie Sanders.  This tells you that such a negative supply-side policy is going to be no good.  Let’s hope that Trump comes to an accord with the Chinese and the EU before we have a global recession.  In the meantime, do like that banks are doing and hold cash (ICSH and JPST) that currently pay about 2.5%.  The problem was never the Fed raising rates.  The Fed must now re-evaluate continuing to raise rates because of the negative effects of trade protectionism which are showing up sooner rather than later.   

Trade protectionism is analogous to promoting lazy and fat kids at a school track meet that are otherwise not competitive.  The good athletes must now miss the track meet and stay in school to do extra homework (e.g., they face retaliatory tariffs).  Only competitive exporting industries will invest and add jobs but retaliatory tariffs make this impossible.  Import competing industries are the lazy fat kids that are not competitive.  No one will buy their stock nor will there be more investment and hiring even with trade protectionism.  Net job loss and higher prices for producers and consumers will be the only results. 

This is consistent with supply-side policies that either increase or decrease the misery index (inflation plus unemployment).  Pro supply-side policies reduce the index while anti-supply side policies like trade protectionism increase it.  (Forget the Philips curve that assumes a trade-off between inflation and unemployment.  It is less relevant old school Keynesianism that assumes the government can manage the economy.  I’ll bet the Fed and Trump cause a recession instead.)

Of course, lets not forget that Bernie Sanders would combine trade protectionism with more business regulations (Like Obama) and higher taxes (Hillary) with the idea that we’ll all be better off under socialism.  Let’s hope the market never has to price in those policies as well.  But don’t hope too much.  Socialists are now the only environmentally oriented candidates and they will get a lot of votes as a result.  Too bad the republicans can’t pull their heads out of the sand about global warming.  Eventually we all face its consequences and must deal with it.  Don’t want to think about the wrecked economy we’ll have if socialists are the only ones taking action. 

Week 2 (Dec. 10 – 14):

If you are still in equities or bonds, you must feel as though you are stuck in the La Brea tar pits.  Soon you will be dead.  If, on the other hand, you have heeded my advise, you are in cash (e.g. ICSH or JPST) and safe.  Only those who are safe will be in position for future opportunities.  Unfortunately, skeletal remains recovered from the tar pits are many.  And that’s the way it is for the second week of December 2018.    

Week 3 (Dec. 19 – 20):

Things looking this bad, including the government shut down, can only mean its time to look at buying some stocks and funds. You might look at MBUU as a growth stock and XLV as a fund to consider. For dividends, consider PTIAX. These are all Zacks #1s.

Week 4 (Dec. 24 – 31):

Trump trade policy headwinds are the only problem causing market uncertainty. Moreover, it is the only problem the Fed has with normalizing its balance sheet by selling credit assets. In other words, Trump is in the way and not the Fed. Given that is the case, the steep sell-off in the markets has created some opportunities. I would take a look at stocks such as JLL, SNE, and RUSHA for growth. Consider the ETF HDV for dividends and growth. Purely dividend growth stocks are DM, GNL, and BRG. These are all Zack’s #1s with good value, growth, and momentum scores. Happy New Year and Good investing!

The post December Stock and Fund Picks first appeared on MarchéEconomics.

The October sell-off has created opportunities for stock pickers.  On the other hand, Friday’s hot inflation read means the market is now sure of a Dec. Fed rate hike.  As Warren Buffet warns,  “Interest rates are like gravity to stocks.”  A more mechanical rationale for this phenomenon is that the higher the interest rate the higher is the discount rate on expected future earnings for stocks.  This simply lowers their present values.

If you’re cautious like me, simply hold cash or near cash funds that pay a dividend tied to short-term interest rates.  Cash isn’t going to change its value much, if at all.  The dividends, however, will increase along with Fed rate hikes.  This will also tend to increase the value of these funds over time.  For example, you can hold JPST, ICSH, USFR, and FLOT and be safe given the markets increased volatility.  Moreover, a severe sell-off leaves you holding money that you can then convert into opportunities in much lower stock prices.

In the meantime, some growth stocks you might want to consider are ARC, CRC, MOS, and USAK.  Growth oriented ETFs to look at include JJOFF, BJO, HDV, XLV, IHI, DGRO, and MGV.  Two good dividend growth stocks are AUO and MCY.  Good investing!

Week 2 (Nov. 12 – 16):

When you don’t like the market, be defensive.  In other words, making money requires positioning for the prospect of belter opportunities.  I am holding only ICSH, JPST, and FLRN.  If the market improves and doesn’t crash I will look at SPHD, PEY, and BST.  The main problem is that tariffs will drive the global economy into a recession and take the US with it.  The Fed can only accelerate this process by raising interest rates too fast.  They probably won’t though as they are aware of the global economic slowdown caused by tariffs.  However, failing to raise rates as expected will send a bad signal to the markets.  A crash might follow.  If you expect a crash, be in cash!  Good investing!

Week 3 (Nov. 19 – 23):

The market will either get better, get worse, or stay the same.  To end getting worse, there must be large volume and disorganized or panic driven sell-off.  Until then you must wait by holding cash in the form of ICSH, FLRN, JPST, USFR, and TFLO.  The Fed looks only at the economy to see if tightening and unloading its balance sheet assets continue to make sense.  To the stock market it looks like the Fed is taking the punch bowl away from market partiers.  That’s why you continue to hear from brokers things like, “. . . the Fed knows nothing!”  I’d ignore that.  The Fed must dampen inflation expectations by being a bit overly aggressive, not invert the yield curve, and sell its financial assets to keep the economy from overheating in the short-run.  It’s only the short-run that it can manage. So ignore that noise about the Fed.

The real problem is that Trump’s tariff policies are probably going to cause a global recession from which the US can not escape.  Dealing with the Chinese is required, but be done differently so as not to adversely effect our main trading partners in the EU.  Having the Congress take away  Chinese most favored nation (MFN) status would be a better strategy.  Prohibiting our companies from engaging in joint venters with the Chinese would be another.  Incentivizing companies to move their international operations to countries other than China is yet another strategy.  One could go on but you get the point.

If you want to consider a short-run growth stock try CONN.  Another thing to consider is the iShares Evolved Health care staples ETF which uses the symbol IEHS.  Otherwise, hold cash.  In the long-run, interest rates may continue an upward trend as the Federal budget will soon be comprised of only nondiscretionary entitlement expenditures such as Social Security.  All discretionary expenditures such as military funding will then require additional borrowing.  If a socialist is elected president, then there will be even more discretionary expenditures associated with government income redistribution that will require even more borrowing.  Moreover, the supply side of our economy will be destroyed and this represents our tax base.

This will put us in a situation like Greece.  Already, our gross national debt is above 100% of our economy’s GDP.  Before Obama, it was only 50%.  Naturally, Obama’s Keynesian fiscal stimulus expenditures not only failed to pay themselves back, they made everything worse.  Because of the rise of socialists, this situation is more likely to repeat itself than not.  Thus, you might want to just hold cash forever.  On the other hand, if the stock market gets low enough opportunities may once again appear.  Until then, good investing!

Week 4 (Nov. 26 – 30):

The Fed has softened up and considers the secular decline in the neutral discount and Federal funds rate targets as near.  That leaves the problem of trade protectionism of the Trump administration as the remaining headwind and major global problem.  Markets are on edge as the G-20 summit begins.  If China and the US have a more or less pleasant meeting, then the market should react positively.  Still, don’t expect a deal.  Eventually, trade protectionism that continues  will lead to a world-wide economic collapse.  Already the negative effects of employment loss in export industries and higher production and consumer costs (inflation) are showing up in the US.  Things can get much worse as continued protectionism will simply support a continuation of this trend.

In the meantime, those that want to be in the market might look at TITN and ABG as potential growth stocks to add.  A good dividend paying ETF is HDV.  Some defensive oriented ETFs that pay monthly are SPHD and PEY.  I also like JRO, DHS, and PDT for dividends and growth.   Three good dividend growth stocks are VLO, MO, and T.    A defensive but growth oriented ETF is IEHS.  The preferred stock LDP is now at a substantial discount to NAV and pays over 8%.  I would continue to hold cash or near cash funds like TFLO, JPST, ICSH, and USFR as the largest part of your portfolio.  These will reduce portfolio volatility and produce monthly dividends.  Good investing!

The post November Stock and Fund Picks first appeared on MarchéEconomics.

Fed interest rate hikes are the new source of market volatility.  Cramer says that he doesn’t like this market.  Given his experience, that’s a big red flag.  Cramer also suggests that the sell-off has begun.  Another red flag.   Generally, stocks do well during rising rates until, of course, the Fed goes too far.  Right now the Fed is still below a neutral discount rate or Fed funds rate target.  Thus, while the Fed is still accommodative, at some point the sell-off will be overdone and buying will once again dominate.  Once the Fed hits neutral, which shouldn’t be for about a year or so, then you will want to be much more wary.

I will only recommend a few stocks under these circumstances.  BPT is still going up strongly so you might just ride that for a while.  Others worth holding are near money’s such as MINT, USTB, FLTR, and ICSH.  These last ones pay 2 – 3% and are tied, more or less, to the Fed funds rate.  Thus they will pay more when the Fed increases rates.  BPT is an oil royalty trust and pays about 16% as a dividend.  You can still get that for October.  Moreover, it is going up along with expectations for higher oil and gas prices.  Leveraged inverses like TVIX and TZA are also possible as long as you are around to keep an eye on them.  That’s all I have for now.  Good investing!

Week 2 (Oct 8 – 12):

The selling is over or nearing an end.  Wednesday and Thursday created opportunities in my view.  If you think that buying a whiskey distillery just before the end of prohibition would have made you rich, then buying marijuana stocks now should also make sense.  October 17 and November 1 open the scope of the pot markets substantially.  During the sell off on Wednesday and Thursday I started positions in two ETFs,  HMLSF and MJ, which increased on Friday by 4.26% and 4.92% respectively.   I also bought the companies ACBFF, CGC, MMNFF, and TGODF which had respective Friday increases of 8.13%, 5.62%, 29.44%, and 8.94%.  I’d say that was pretty good money for the week!  If any of these stocks or funds pull back next week, you may want to consider building similar positions.  I think the long-run potential includes returns of 50% – 500% through 2019.  That is my advice for this week.  Good investing!

Week 3 (Oct. 15 – 19):  

The market may still be setting up for more selling so be ware.  Can’t yet call the bottom because what selling is still going on is pretty tame and organized.  Sold my cannabis stocks into Monday’s early morning buying and realized about a years worth of gains in just a few days.  Once Canopy (CGC) gets down to around $40, I’ll probably start to buy back in.  In the meantime you might want to research some growth stocks such as ANDE, SNDR, ARCB, and GLP.  A good ETF for the long-run but that measures market sentiment in the short-run is IHI.  I am watching IHI for an indication of the market bottom.  Other ETFs for long-run growth are XLV and VHT.  Some good dividend growth stocks to consider are ENLK and ARLP.

If you start any new positions I’d move slowly until the market looks healthier.  That might be when people either get used to higher nominal interest rates which were held at zero for far too long.

The reason they were so low for so long was that market socialist policies on the supply side of the economy during the previous administration slowed economic growth which led the Fed to try stimulating the economy on the expenditure side.  We were heading into another recession before the last election.  If Hillary had won we’d be there now.  After the last election, we had two supplied side positives (tax cuts and less regulation).  Then we added a negative supply-side policy involving trade obstruction (i.e., tariffs or equivalently tax increases).  Now we have another negative effect due to Fed tightening that adds even more uncertainty.  Yet, the Fed cannot slow interest rate increases much because it still has to unwind its balance sheet to get back to normal.  Selling off its financial assets lowers there prices and increases market interest rates.  Unwinding will take quite a while.  Thus, get used to this situation and the market volatility it causes.  Once there is over selling among stocks, there will be opportunities.  I’d keep ICSH and MINT loaded up and used to take advantage of market opportunities like the previous few weeks among pot stocks.  In the meantime they will reward you with increasing dividends because their returns are directly related to the Fed Funds rate.  Be sure to buy them on their ex-dividend dates which are the first of each month so as to get more shares for your money and preserve your capital.  Good “opportunistic” investing!

Week 4 (Oct. 22 – 31):

Selling before the midterms in November has probably ended.  That is the only uncertainty handled.   The Fed and Tariff policy remains.  Because of this, I think the systemic risk in the market is the government.  It offsets deregulation and tax cuts so that there is nothing left to propel the market forward other than economic fundamentals and earnings.  These are still fine.  Technical analysis suggests that the market is 1) oversold and that money must be put to work and 2) that there is likely more severe selling that will occur in the near future.  This is not a clear message so beware!

Consider the growth stocks ENVA and HSII if you feel safe enough to invest.  ETFs to consider for dividend income are HDV and OUSA.  An ETF for growth in healthcare is XLV.  My personal preference is to just hold ICSH and wait for its dividends to increase along with short-term interest rates.  Once the Fed causes a market crash that is yet more severe than we experienced in October, start looking for stocks with PE multiples below 15 with good future earnings potential.  If we get a trade deal with the EU and China, start looking sooner.  Gee, what market uncertainty could there still be?  Good luck and good investing!

The post October Stock and Fund Picks first appeared on MarchéEconomics.

Trade is still a negative while just about everything else (eg., domestic economy and GDP growth, relatively low real interest rates, and company earnings) are positives.

On a different issue, I don’t get why the NFL allows anyone to take a knee during the national anthem.  There are a billion and one things to protest and every player can take a knee for one reason or another such that no one stands.  This disrespects the nation and that we have free speech.  In other words, protest is what our nation represents and kneeling merely protests your own right to protest.  Too many knocks to the head perhaps?

On to stocks and funds.  Buy ATEYY, CONN, and RNR for growth.  Check out OSB for dividend growth.  A great ETF to consider is JSMD.  If you want to put money into a monthly paying mutual fund that is highly ranked and that always pays its dividend then consider FLARX.  FLARX yields 3.85% and tends to hold its value.   Other monthly paying cash or near cash related funds to consider are BLW, USAIX, and ICSH.  Good investing.

Week 2 (Sept. 10 – 14):

Watching stock indexes turn red with more tariffs.  Will there be any more positive news on this front?  Probably a deal with Canada, and then maybe the EU.  Both would be a welcome relief. I don’t think it matters with China that we get a deal.  I’d like to see all our firms doing business in China reallocate entirely to anywhere else.

As for investments, consider GNRC, ATEYY, and OXINF for growth.  Recommended dividend growth stocks are BGCP, ARLP, BGSF, GES, MCY, GLNCY, and OSB.  Growth oriented ETFs are IHI, FXL, XLM, and VGT.  Dividend ETFs with payouts directly related to increasing short-term interest rates are BLW, BGT, FRA, EFT, JRO, and JFR.  Mutual funds with returns related to short-term interest rates are BLDRX and BFRKX.  Two high paying dividend growth stocks that hold up will under economic downturns are MO and PM.  That’s all for this week.  Good investing!

Week 3 (Sept. 17 – 21):

Between now and when the negative effects of trade obstruction show up in economic data there is only the midterm elections.  Election noise will lead to market volatility and opportunity.  There may also be a year-end Santa rally.  Without trade deals as promised, trade effects will manifest themselves as job losses and greater inflation.  This will happen about the time economic stimulus from de-regulation and tax cuts begin to fade and interest rates rise to higher levels.  Prepare to exit the market at that time.  Holding cash at higher interest rates will be increasingly popular and funds like MINT, ICHS, and EFT will help in that regard.

In the meantime, the market and the economy looks solid.  Consider the stocks CBD and RHHBY for growth.   For dividend growth look at MCY.  Excellent growth oriented ETFs include IHI and BBH.  For the increasing interest rate environment, start looking at the ETFs EFT, FLTR, PPR, ICHS, MINT, and VRP.  Alternatively, a good mutual fund for rising rates is EABLX.  Good Investing!

Week 4 (Sept. 24 -28):

Anybody question whether September is a typically slow month for the stock market?  Glad it’s over.  Looking ahead to October, consider ZUMZ, VRS, GES, and TITN for growth.  Dividend growth stocks to take a look at are XAN and PAGP.  Additional growth oriented ETFs you may want to consider are FXL, VONG, and SPYG. As for growth oriented mutual funds, consider AGOZX and NYSAX.  Good investing!

The post September Market Beating Stock Picks first appeared on MarchéEconomics.

Back from 3 plus weeks of vacation.  The office staff is back to work.

Here are some pictures taken during my time away from my computer.  Guess where?

Growth stocks to consider:  SNDR, VRS, VSI, and ZBRA.  SNDR pays a small dividend.  New dividend growth stocks for your retirement portfolios might include OSB and GLNCY.  The best ETFs are JSML, RZG, and VIOG.

The collapse of the Turkish currency that makes them less able to pay foreign denominated debt obligations is hurting the markets.  The IMF will likely come to the rescue soon, which is typical in a currency crises.  Expect the situation to die down at some point.  In the mean time, good investing!

Week 3 (August 20 – 24):

Busy and Tia are recommending that you consider the following growth stocks:  ARC, HNGR, and NOA.  For dividend growth, consider:  T, LADR, BGCP, CQH, MIC, NEWT, VNOM, and WPP.  The best growth ETFs are JSML, RZG, VIOG, and SLYG.  ETFs for dividend growth are DVY, DHS, RDIV, and PEY.  If you live in California and want to earn 5.28% while avoiding both California and Federal Taxes, consider BFZ.  Good Investing!

Week 4 (August 27 – 31):

The faster Trump moves to negotiate and undue his trade obstructionism the faster will the economy and the stock market grow.  At the moment trade obstructionism is putting on the brakes.  Luckily the economy and earnings have strong enough momentum on their side to overcome the brake.  Given that, consider looking at  BRSS, VRS, OSB, and VSI for growth.  OSB is also an excellent addition to anyone’s dividend growth portfolio.  High risk, high growth ETFs are BBH and RZG.  BBH focuses on biotech stocks and RZG focuses on the S&P Small Cap  600 for pure growth.  That’s all I have for August.  Football season is underway.  Good investing!

The post August Market Beating Stock Picks first appeared on MarchéEconomics.

If Pres. Trump makes a trade deal to reduce tariffs (taxes on imports) it will be pro supply side along with the earlier tax cuts and deregulation.  If he stays protectionist, economic growth will slow, both domestically and globally.  The later problem may even lead to a recession.  Within that context of uncertainty, I’ll recommend the following growth stocks:  AY, GLNCY, GBX, MRO, NCS, CIVI, and CONN.  Strong dividend growth comes with GLNCY.  Also, EQIX offers strong dividend growth although it is relatively expensive.  Strong ETFs for long-run growth are RZG, JSML, and PSCH.  Good Investing!

Week 2 (July 9 – 13):

In the U.S., markets seem to have priced in the negative effects of the trade war versus the positive effects of earnings and economic growth.  This means that the overall market will end the year about where it is now.  Stock picking is even more important as only a handful of “other than average” stocks will handily beat the market.  For growth, consider ORN.  For dividend growth consider BHR, CQH, CNXM, and CLNY.  The best growth oriented ETFs include FDN, PSCH, and PNQI.  Good investing!

The post Free Market Beating Stock Picks for July first appeared on MarchéEconomics.