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April Stock and Fund Picks

Week 1  April is starting off well.  Still have doubts about Trump's trade policies, especially towards Mexico.  The China problem centers around forced technology transfer, or simply technology theft by a communist government.  We should never have let any of that happen.  But Mexico is simply a producer with higher bang- per- buck labor resources.  Any resources value per dollar is its productivity or value added divided by its price.  That's the same principle as when we expect consumers to…

November Stock and Fund Picks

Week 1 (Nov. 1 - 9): 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…

October Stock and Fund Picks

Week 1 (October 1 - 5): 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…

Free Stock Picks for June 2018

Week 1 (June 1 - 8):   The economy is just right.  Short-term calm and low volatility usually create a "smart-money" outflow and a short-term dip that you should buy . . . maybe by tomorrow.  Consider the growth stocks GTES, and OFG.  Look at the ETFs:  XLI, PSCI, and XSD.   Good dividend growth stocks are CVRR, STX, HCLP and TRTN.  No one can predict the future or the next recession so all attempts to do so are merely…

May Market Beating Stock and Fund Picks

Week 1 (May 1 - 4):  Uncertainty about the Fed, a flattening yield curve, and China trade issues are offsetting strong earnings and a higher rate of economic growth.  The result is a trading range for stocks.  Eventually, something must give and the market will head one way or another.  Hopefully, that will be another leg up.  For growth stocks, consider DAN and HUN.  The best ETF is EWS and the best mutual fund is FKCSX.  The best dividend growth…

Pugonomics 101 for Investors

I have two pugs.  I am not their master.  Instead, I work for them.   They are well cared for and appear grateful.  this is not trickle down economics, for which, by the way, there is no existing theory.  Given the arrogance and outright laziness of my pugs it seems more like trickle up economics. The analogy holds for investors.  When you buy a fund or stock you are using your financial capital to hire firms and fund managers to…

March 2018 Stock State

March 1st Update: Headwinds from trade wars are on the way.  This, as indicated in the February Stock State, is our biggest stock market worry. Why are tariffs on steal and aluminum such a problem?  Trade theory, not stock market talking heads, is the answer.  Tariffs on specific commodities imposed by a large nation such as the US will effect the global price by reducing demand from a large (the US) importer.  This hurts all steal and aluminum manufacturers in…

February 2018 Stock State

February 12 update: The correction or pull-back of about 10% is running its course.  Much of the attention focused on headwinds created by higher interest rates (as the 10 year government bond heads for 2.9% is an overstated concern.  Imagine you are flying a small airplane into a headwind.  The FED has helped you (the stock market) fly faster by buying government bonds (and other dept) to keep interest rates lower.  This builds up the FEDs balance sheet.  Unwinding the…

February Stock and Fund Picks

Week 1 (Feb. 1 - 9): I am always amused when I hear a stock described as "poised for explosive growth."  It's a catchy line but the same holds for any stock in the market.  Odds are, you will be right some of the time.  The only thing I will say about my stock picks is that they are subject to rigorous research and systematic screening and that some of them, even in the short-run of only a month, will…

Activist Monetary Policy Conundrum

Recently, many economic and FED commentators point out that if we have a recession we will need a tighter FED balance sheet and higher interest rates in order to fight the recession using stimulative monetary policy.  At the same time, others have pointed out that if interest rates get to high it will cause a recession.  This leaves us with a logical conflict.  If the FED actively manages the economy to have higher short-term interest rates and thereby be in…