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.

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

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 spend their next dollar on the highest bang- per- buck items defined as marginal utility divided by price.  Producers are doing the same or getting the most for their money with Mexico’s labor.  Mexican value added by labor is at least as good or higher than that of  UAW workers and the wage rate is lower.  Its a competitive market place and we should expect producers to try and beat their competition by as much as possible by allocating their productive resources so as to reduce costs and make the most money.  There is absolutely no reason not to recognize the comparatively greater value of Mexican labor in the auto industry.  To not recognize the efficiency gains and instead threaten tariffs on Mexico is completely missing the point about allocative efficiency gains from foreign production and trade.  This is not presidential behavior, but the kind of mediocre intellect expected of those without any education . . . which are also Trump’s constituents.  Not being able to separate Trump from the intellectual depravity of his non-competitive and isolationist constituents is troubling.

With that said, the coming election in 2020 places political constraints on upsetting the market with more tariffs or failing to finalize a trade deal with the Chinese that addresses intellectual property theft.  Thus, there is hope for market stability and for the bull market to continue.  Assuming we can stay long, consider FSUGY, HSII, KMDA, and KLYCY for growth.  Dividend growth stocks include AVH, CAPL, AYR, IMBBY, IPG, and LKSD.  ETFs to consider are PSJ, PXMG, XSW, and IGN.  Good investing!

Week 2 – 3:

Trump still doesn’t understand the economics of trade any more than Obama understood the nature of a market economy. Trump is ruining our economy through tariffs just like Obama ruined our economy with too many socialist based market regulations. If and when there is a recession, it will probably occur through negative effects on trade, just as we were heading into a recession at the end of Obama’s eight years. A Trump recession is not hard to see. Trump’s tariffs have already made it impossible for the Fed to reduce its balance sheet any further, leaving us vulnerable to the next economic downturn. The mechanics of a trade related recession occur through reducing economic activity because of new tariffs. Less economic activity will occur both domestically and abroad. Eventually jobs will be lost globally and domestically. Once that gains momentum, nothing will stop it from becoming worse, especially not the Fed. Of course, Trump will be pointing fingers at the Fed for reducing its balance sheet and raising rates, but the whole problem will be Trump.

Enter the socialist Bernie Sanders, probably after the next election. Bernie should write a book about why socialism doesn’t work. He clearly doesn’t understand why competitive market economies do work. He is not academically qualified to tell anybody anything about comparative economic systems. He just has a big ego and wants followers to drown in a sewer of poverty after succumbing to his sweet song of how everything we want will fall out of the sky at no cost. In reality, you have to give up something to get anything that is real. What will be given up to fund universal healthcare or Medicare for all and free college? Bet will be very vulnerable to attack because of a deeply weakened military at the very least. What about the wasted resources of free college which allows more students to complete valueless degrees. There goes a bunch of human capital down the drain. Moreover, what jobs will these students be able to get from a ruined market economy that is racked by higher taxation and socialist regulation? Will we have to go to guaranteed government jobs? If so, how much well will be lost overall? Bet everyone will love socialism then.

In the meantime, we still have a little room left in the bull market run, but probably not too much. Growth stocks to look at include AVID, EZPW, GIII, and CRMT. Dividend growth stocks include BKE, CAPL, PSXP, and WPP. The best ETFs are IGN, PXMG and FXL.

As for current market strategy. The market is again toping out in most sectors. Look for another pullback like at the end of 2018. I was 100% cash during that time and had money for the recovery that started at the very end of 2018. I’ll be looking to do that again, and fairly soon . . . say 3 – 5 months or so. In the mean time, good Investing!

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

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

Many investors tend to take profits from their good stocks (i.e., let their good dogs go) and keep their poorly performing stocks (i.e., their sick dogs) which means they will get nowhere. That said, if a stock gets too rich (a dog is too fat to run anymore) then sell it and hook up a new dog that is ready to run.

My own stock portfolio consists of the following stocks that are listed in order of their relative weight: FB, BRK-B, BABA, GOOG, AMZN, ALK, ARE, AWK, NGLOY, AMAT, AAOI, BA, CRHM, COR, KNOW, TZA, DPS, IFLY, EVE, EVV, ETE, FDL, GE, GNTX, HCP, HBM, IBM, IPHI, IDCC, SNOW, INTU, DVY, PHG, LTC, LRCX, MU, T, MKSI, VVD, ESNT, TSRO, UCTT, MPW, MSFT, MB, OHI, OME, OMI, PTC, PYPL, RCS, PAA, SPHD, QRVO, O, RIO, GG, RGLD, ROK, KRE, SDY, SCHW, SCHA, SCHD, XLK, SWKS, SNA, PSL,V, S, STAG, STM, RUN, TER, TSRO, TLLP, TXN, MMM, TCX, VLP, VIG, VTR, WFC, WPX, TEAM, CZZ.

Here are my recommended “sled dogs” of the week (February 6 – 10): DPS, KLIC, ZEN, TTML, and OSUR.  These are stocks I have in my own portfolio or that I plan to add.  I won’t tell you more about them (or the stocks in my own portfolio) because you MUST research them yourself before you decide to hook them up to your sled. That way, I am not responsible for how these “sled dogs” perform or how fast your sled might run. Be sure to retire them only after they get too fat and can no longer perform. Also, if a stock misses its expected top-line revenue or its expected earnings per share it may look like its being “mauled by a bear” (or perhaps a great many bears). If the long-run prospects don’t appear to outweigh the short-term damage, that stock (or sled dog) should be sold and replaced by a healthier one.

Recommended stocks to buy for the week of February 13 – 17:  VMW, NEWR, SKYY, FLEX, DE, WB, TASR, and CALB.  Stocks I sold:  NGLOY and HDSN.  My rationale for selling these two stocks is that base materials prices are being bid up by expectations and supply shortages rather than by demand.  There is also no new or increased demand from China.

I also added to my cash reserves and to my inverse beta stock TZA.  But, this is only because TZA was down at the time.  I plan to sell it when the market is down and TZA is up, otherwise I tend to accumulate too much at decreasing values as the market trends upward.

Recommended stocks to buy for the week of February 21 – 24 (Monday is President’s Day):  First, I want to recommend some stocks and funds that I use as a diversified foundation in my own portfolio.  In order of weight these are:  BRK-B, FB, AMZN, IBM, GE, MSFT, ALK, KNOW, PYPL, KRE, and SKYY.  I think that if you build a portfolio around these stocks you can’t go too far wrong . . . at least until they no longer perform, which for most of them, is a risk that is far into the future.  Second, stocks with high potential but that are also a bit more speculative are:  XCRA, CLIR, NMIH, and ELF.  Although each of this last group of stocks appear to have good long-run potential, please do your own research before hitching them to your sled.  I had recommended FANG but I am no longer doing so. The gas and oil sector is too week and even though Diamond Back is one of the best producers in the sector, sometimes that just isn’t good enough.

Also, I unloaded some of my precautionary inverse beta TZA while the markets were down and plan to add more at lower prices when the market is up.  “Look for low and outside, but watch out for in your ear.”

Recommended stocks for the week of February 27 – March 3: I intend to buy (or buy more of) the Chinese stocks WB and BABA, and BIDU. Also, I want to buy MELI, RP, EBS, OA, and ACIA. Good investing!

The post Discover February’s Weekly Top Stock Picks — All Free first appeared on MarchéEconomics.

The post Discover February’s Weekly Top Stock Picks — All Free appeared first on MarchéEconomics.