3 things to watch right now:
- Europe situation resolved (for now) – investors will smile all the way to the bank
- Stocks set to rally on what’s important – earnings and better than expected economic news
- Continued negative investor sentiment will push market up that wall of worry
Another day, another roller coaster ride. If the market were a human being, they’d be a complete emotional wreck, seeing a whole team of psychiatrists and on a multitude of medications. In today’s market, confusion is the order of the day to say the least.
Europe has been in our face the most. However, the thought that the new kings of Europe, Merkel and Sarkozy would not come to grips with the situation, at least in the short term, was….well unthinkable. Germany needs the EU as much as the EU needs Germany, we all know that. Now that the Greek/eurozone crises off the front page, for a little while at least, the market can now focus on what matters most – earnings and economic data.
- Earnings move stocks and they have been stellar yet again
- Economic news has beat expectations, not great but better than expected. Last week we learned that GDP grew by 2.5% in Q3 as well as an impressive rise in durable goods orders.
- Negative investor sentiment – the market loves to go up when nobody thinks it can, and right now nobody thinks it can, so it climbs that wall of worry.
- You don’t fight the Fed! The continuation of QE Mini-Me and the probability of a QE3 will give this market some legs.
This is not to say that the world’s economic problems are fixed. Absolutely not. These problems will come back to haunt us again in force sometime next year. The world is deleveraging fast and furious and by year end the majority of Baby-Boomers will be past 50 and therefore well past their peak spending years. Both of which will hamper demand and grind our economy to a slog through the mud at best. These issues as well as what to do in this type of market are discussed in detail in "Facing Goliath: How to Triumph in the Dangerous Market Ahead," so read it if you haven’t already. We are in a temporary reprieve which is long overdue and is going to feel really good. Just don’t get carried away.
Aggressive investors not needing income and comfortable with volatility can focus on the strong growth names for trading over the next few months such as Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), McDonalds (NYSE:MCD), General Electric (NYSE:GE), Cisco Systems (NASDAQ:CSCO), Intel Corporation (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) as well as the banks such as JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) and especially gold through SPDR Gold Shares (NYSEARCA:GLD) or Market Vectors Gold Miners (NYSEARCA:GDX) and silver with ProShares Ultra Silver (NYSEARCA:AGQ) and Silver Wheaton (SLW). The trend is to the upside, just be trade out before the good news goes away and expectations rise.
Most investors should stick with the mantra of Invest for need, not for greed and stick to the “sweet spot”. Income and dividends is still where the best opportunities lie to get the best returns with the least danger possible. Getting equity returns without equity risk is always our goal. Currently we are finding great yields of 8, 9, 10%+ in Preferreds, MLP’s and now higher grade Corporate bonds, which are (finally) firming up, so there is no reason to take chances with your family’s security. If you’re not collecting dividends and income in this market, you are just gambling. I talk about these very issues in depth along with specific actionable ideas on my latest Fox Appearance in their New York studio, so be sure watch the short video. Also, see these suggestions:
Tutor Perini Corp (TPC) - 7.625% 11/1/18 yielding 9.8%.
Colt Defense - (CLTDEF) is a corporate bond at 8.75% of 2017 yielding over 18% (cusip 19686TAC1).
Ally PrA – 11.5% There are three very attractive Ally Bank Preferreds yielding around 10%. Ally is 91% government owned, so they’re not going anywhere.
Ally PrB – 12%
Compass Diversified Holdings (NYSE:CODI) - 11% yield (cusip 2045Q104)
Terra Nitrogen (TNH) – 10 1/4% yield. Makes and markets farm products. One of the few hot sectors in our economy. It is yielding 8%.
Legacy Reserves LP - (LGCY) – yielding 9+%
Vanguard Natural Resources - (VNR) – yielding 9+%
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.