February 10, 2014
SPY 1796.00 Go to “Investments Core Portfolio” for current holdings.
SELL WPZ It appeared WPZ would be a long term holding, but the charts are not looking good. It paid good dividends but the price is looking weak. I am getting out at the same price I paid. I am not going to sit around and wait for potential bombs to drop on my head. Better safe than sorry. Better choices are EPD, MEMP and VNR but all are trading higher..I would wait for any potential pullbacks.
(Update Thursday: The market is running out of steam. I suggest doing nothing right now but if we get significant pullbacks in issues I want, we should buy. If you do not own GGN you can buy a little. Long term the direction is up.)
The markets are in limbo awaiting testimony from the new Federal Reserve Chair Janet Yellen when she delivers her first testimony as Fed chair before Congress this week. I would not expect anything to happen until her words are analyzed.
Back in January I suggested GGN, a gold fund that is paying 11%. We are seeing nice increases. I think gold is going much higher.
PowerShares Senior Loan Portfolio (BKLN) is a bank-loan fund ie “floating rate funds” a topic I have talked about frequently. The rates on the loans are reset every 30 to 60 days and the duration is low. This is exactly what you want if you think interest rates are going up this year. It only pays 4% but is a BUY anywhere close to $24.80.
(I have repeatedly recommended you read The Aftershock Investor, an updated book. I just noted that this interview was posted today.) Rbert Wiedemer, best-selling author of “The Aftershock Investor,” says the so-called recovery is “100 percent fake.” Wiedemer explains, “If you look at the amount our economy has grown last year, our GDP grew 2% or $350 billion, but we borrowed over $700 billion. That tells you right there that we are borrowing more than we are even growing. Our entire growth is due to government borrowing . . . it’s a fake recovery.” Wiedemer, who has totally rewritten and updated his book, goes on to say, “It would be great if we would adjust our economic figures for stimulus. What would the figures really look like if you took the fake money and borrowed money away?” It is supported heavily by printed money of over a trillion dollars last year. We’re not talking about what’s driving the recovery we are getting, and it’s powered by massive money printing and massive money borrowing. Yes, we are getting some recovery, but it is not driven by something that is sustainable.”
On the bond market, Wiedemer contends, “The only way you can keep interest rates low is to print money, and you are printing money to buy bonds. Ultimately, that’s not going to work. If printing money could do all the things they say it can do without creating inflation then . . . why don’t we get rid of taxes? We could print the money instead. The money we are printing, ultimately, will create inflation.” Overall, the bond market has turned and turned for good, and you are going to have inflation. That’s really going to be a problem for the bond market.”
On the stock market, Wiedemer says, “Fundamentally, stocks should reflect earnings, and last year, stocks were up 30% and earnings were up about 3%. So, we’re way out of line with corporate reality, and we’re way out of line with economic reality.” What’s happening is the feeling of the Fed’s got my back, printing a lot of money. Some of that money has to go into the stock market. . . . So, there’s been this feeling the Fed can boost us up . . . yes, the Fed can boost us up, but it is not the basis for long term economic recovery or a long term stock market recovery. As I say in my book, it’s the basis for a long term huge, huge explosion.”
On gold, Wiedemer says to not believe the false narrative that gold is a “risky” investment. Wiedemer contends, “Let’s look at gold since 2000. Up 12 years in a row, every single year. That’s risky? Can stocks say the same thing, you got to be kidding. . . . It did fall 30%, that’s a big drop . . . we’re still up over 300% from where we were in 2000. Can we say that about stocks? No way, we’re now about where we were in 2000 . . . I might add, on the NASDAQ, you are significantly below where you were in 2000. . . . Let’s put this into perspective. When did anyone in the mainstream media say gold was a great investment? What you are hearing is a huge bias not borne out by the facts.”
On the Federal Reserve, Wiedemer says, “You are actually getting negative growth. The Fed knows this. They just don’t talk about it because their job is to be a cheerleader. They want to try to make everybody feel good and that their policies are working. If those policies don’t work, what’s the Fed going to do? What are we going to do? It’s a bigger issue, but bottom line here is I think the banks are safe in the sense the Fed can bail them out, but there will come a point when the Fed can’t and won’t, and that’s when you got a bigger problem.”
For anyone who thinks we’ve seen the worst of the bad economy—think again. Wiedemer predicts, “The big one is coming . . . we’re just pumping up the bubbles, and all that’s going to do is make them a lot worse when they pop. . . . You are just putting more gun powder under the house . . . that’s a big mistake long term.”
Lesson of the Day. Many younger investors get caught up in the stock trading mentality. They listen to Cramer or some other nut job on CNBC and feel like they are somehow trading experts. They buy the hot stock of the day like Apple, Twitter, Facebook or IPO. Do NOT do this. First of all you don’t understand the risks in single stock investing. And you are paying commissions on every trade which usually consists of a small number of shares, so you pay more commissions when you buy another small number of shares. Even worse, you don’t know when to sell. This mindset is a loser’s game. One highly experienced trader once told me that unless you have six months of training and experience, AND have LOST $50,000, you are not a trader!! Don’t fool yourself into thinking you are smarter than the markets. Stay with dividend paying exchange traded funds etf’s and funds. There is a reason I do not recommend single stocks on here……..I have learned from experience!!!
Amazing Stuff. (endoftheamericandream.com) “So while many Americans may say that they theoretically want something to be done about the national debt, when push comes to shove they don’t actually mean that. You see, the reality of the matter is that about 128 million Americans get money from the federal government every month. That accounts for the majority of all government spending. Anyone who tries to take those goodies away is going to be hated. So we are going to continue down this crazy path until the system completely crashes someday.”
“Massive money printing eventually causes rising inflation; rising inflation eventually causes rising interest rates; and rising interest rates are not going to be good for maintaining this fake, stimulus-based economy.” (The Aftershock Investor)
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This blog discusses dividend paying investments that I find appropriate for myself…..and for investors seeking dividends and income. I am not an investment professional. You must do your own research before buying any position. All gains or losses that you realize are based on your choices.