Stock picks for the 1st week of July, 2017 (July 3 – 7), with markets closed July 4, 2017.

The tech sell-off created buying opportunities. July, week 1 stock recommendations must include AAPL. I’d also consider TREE, TCMD, NTES, ANET, JD, JPM, CRIUF, and ARCC. ARCC is a large, solid business development company that pays about 9.3% and has also pulled back recently, making it a good buy. CRIUF is a Canadian utilities company that pays about 8% and offers dividend growth. Moreover, it is a defensive stock for those worrying about a stock market bubble. I also think the toy company Nintendo (NTDOY) is worth a strong look as it has a lot of hardware and games in its pipeline going into Christmas, analysts expect next years earnings to be huge, and it has sold off a bit recently. Good Investing!

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Stock picks for week 2 (July 10 – 14): I’d consider looking at OSUR as a growth stock. Then I’d consider the monthly dividend payers GAIN, MAIN, RFI, FFC, PPF, ETW, EXG and ETY as these also tend to increase in asset value over time. Quarterly dividend payers HQH, QQQX, and STK also tend to increase in value over time. Two of the best dividend growth stocks (i.e., rapid dividend growth) to buy are VLO and LRCX. LRCX has the greatest long-run asset appreciation potential as well.

Nintendo (NTDOY) looks as though it might be bottoming out. I’d watch for a double bottom or a “dead cat bounce” before climbing in too heavily. Most Analysts indicate positive increases in growth over the next two years that will eventually attract buyers. Before that, NTDOY is a toy company with a lot of new and really good stuff to sell going into Christmas. In particular, it has at least eight newly developed games. (I was just in Los Angeles where these games were on display and handily beat their competition.) I expect that it will eventually take off in a positive direction, but be patient in the meantime. Eventually, even the recent sellers will want to come back in.

Good Investing!

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Week 3 Stock Picks:

Stock tickers to research and consider adding to your portfolio for this week are AAOI, IMED, HACK, KTOS, JPM, C, KEM, IT, MKSI, FNG, and NLY. NLY is a highly recommneded, high yielding mREIT with good dividend coverage. The others are growth oriented stocks or funds. FNG is a brand new ETF based on FANG stocks that you should try to buy under $21.00.

The best returns from a global perspective are from first, emerging markets and second, Europe. The US stock market is still a bull market due to the slowest and weakest recovery on record, still low interest rates, and a reversal of socialist over-regulation. Thus, it is still a buy on the pull-backs market, but one in which you should target those stocks with the best opportunity to succeed. For example, KEM and AAOI are Zack’s rank number 1 stock recommendations and for that reason must be strongly considered. That said, all of my recommendations have a high probability of success and that is why I recommend that you consider them with the same level of expectation.

A note on Nintendo (NTDOY). One Seeking Alpha (SA) stock analyst expects it to reach $60 by this Christmas. I’d buy it before it again breaks $40.

Good Investing!

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July 2017, Week 4 Stocks to Consider: A solid growth fund for those not wanting to pick individual stocks is CLQZX. For stock pickers wanting growth, WUBA, TCEHY, EXTR, and OCLR are great stocks to consider (i.e., to research). Those wanting dividend growth stocks (i.e., the stocks grow in value so you have capital gains and their dividends grow in value as well so you have increasing yield on cost), then take a look at NTAP, BA, TXN, CC, and SRLP. More on the high yeild side, although they have a track record of increasing dividends are OXLC, TICC, PNNT, BX, and BPT.

Nintendo (NTDOY) appears to be comming off its bottom. It is not too late to get in. The remaining upside range from now until December is approximately 20% – 50%.

Good Investing!

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The post July 2017 Weekly Stock Recommendations first appeared on MarchéEconomics.

Here are some strategies that can reduce your worries.

1. The simplest strategy is to have a long-run time horizon that allows you to ignore short-run fluctuations in financial asset prices. Companies always move things and if you have invested in good ones, short-run downturns in the stock market are best ignored.

2. Buy a mutual fund or other fund that lags market turning points, especially the downward turning points. I once invested in TIAA-CREF’s real estate fund for exactly this reason. It always gave me time (it had a six-month lag in most cases) to get out of the market before suffering a substantial loss.

3. Allocate about 3 – 5% of your stock portfolio to a stock with an inverse beta. Beta coefficients tell you how correlated your stock is with the average. If a stock has a beta of 1.0, it is perfectly correlated with the average stock price. A beta of -1.0 will move exactly opposite to the average stock price. I use a stock (TZA) that is three times leveraged and has a beta coefficient of -3.4. While it reduces my gains, it also reduces my losses. Thus, it acts as a stabilizer. A severe down turn would result in significant capital gains in TZA that could then be used to invest in other stocks that went down the most and that will, presumably, increase the fastest when the upturn takes hold. Holding some low beta stocks in your portfolio will also reduce fluctuations in your overall stock portfolio and will reduce the amount of an inverse beta stock you may want to hold.

An additional active trading strategy you can use with an inverse beta stock like TZA is to sell some when the market is down and TZA is up and buy more TZA when the market is up and TZA is down. If you use this strategy, make sure to always keep a minimum amount (as determined by your own personal degree of risk aversion) of the inverse beta stock in your portfolio at all times.

4. You can also try and time the market but this is like driving on a curved road. You must be ahead of the market so as to enter the market downturn early and leave the market upturn early. This straightens the curves and results in a smoother (stock market) ride. However, entering a turn late (leaving the market when it is already down) or entering late (when the market is already up) will work poorly (pun intended). Since economists cannot predict economic shocks that cause severe downturns in the stock market (even a severe stock market crash that serves as the economic shock cannot be predicted), the only thing you can do is use trailing stops on all stocks so as to exit the market “soon enough.” Getting back in early is less difficult. You will recognize this situation as buying when everyone else is fearful. The converse of waiting for everyone to be complacent and overconfident at the market top will not work as well because, again, the shock that leads to a severe downturn will always be a surprise. Thus, you may exit too early and leave money you could have made on the table while waiting for a sell-off that may never occur.

5.  Diversify to reduce risk.  As indicated, low or negative beta stocks help in this regard.  You can also hold more money as cash (or buy more of an inverse beta stock)  if you think a downturn is an increasing risk.  I notice that Warren Buffet tends to hold more cash when he perceives more risk.  Holding index funds is another way to diversify.  Holding a balanced fund that has both stocks and bonds is another way.  Be aware that in an increasing interest rate environment characterized by economic growth stocks will tend to do well but bonds will be sold by the FED and lose value.  Conversely, during an economic downturn stocks will fall in value and bonds will be bought by the FED and increase in value.  Thus, evaluating balanced stock/bond funds during the “economic recovery” from the Great Recession in which the FED bought bonds will tend to favor those funds that hold relatively more bonds.  You can also diversify the stocks in your portfolio by making sure the top five stocks you hold are in different industries.  Last, you can increase the weight on a fund like VIG that only holds the stocks of firms that have increased their dividends every year for at least the previous 25 years and increase the weight on utilities and consumer staples stocks within your portfolio.

Unfortunately, risk and growth tend to be inversely related.  That is, increasing the amount of defensive stocks is likely to reduce the rate of growth of your portfolio.  On the other hand, as growth prospects increase risk may sometimes decrease.  That may explain why the legendary investor Warren Buffet converted billions of cash into stocks immediately after the recent presidential election.

The post Look Out Below! first appeared on MarchéEconomics.