Elevate My Market

It has been an extraordinary month of February for the U.S. stock market. It has received a steady stream of challenging if not outright gloomy economic news throughout the month. At the same time, corporate earnings growth forecasts for the coming year that were once positive by double digits only a few weeks ago have turned firmly negative. And the Chair of the U.S. Federal Reserve has made it rather clear, most recently in her testimony before Congress this week, that interest rates will soon be on the rise, most likely in June, which is earlier than market expectations. All the while, U.S. stock valuations have now crested the 20 times as reporting earnings mark on a trailing twelve month basis and are closing in on this frothy level on a forward basis too. But despite the fact that all of the news seems kind of gray, the U.S. stock market has only one place where it wants to go. It wants to go higher.

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Hawks Take Flight

U.S. Federal Reserve Chair Janet Yellen is scheduled to appear in front of Congress this week to present her semiannual testimony on monetary policy. And following a dovish interpretation by the markets of the minutes from the Fed’s Open Market Committee meeting in late January, investors should not be surprised if Ms. Yellen takes to the microphone on Tuesday and Wednesday with a more hawkish-than-expected tone about the Fed’s intentions for raising interest rates. The Fed wants to raise rates as early as June, and it seems they are running into a credibility problem in getting the markets to actually believe it.

Please click on the link to read more of my article on Seeking Alpha.

What, Me Worry?

U.S. stocks have registered new all-time highs this week. This, of course, is nothing new, as stocks have done so repeatedly for many years since the calming of the financial crisis back in early 2009. But what has been notable about this latest advance is that it has occurred in the face of markedly deteriorating fundamentals. While it has been a hallmark of the current six-year bull market, investors may find themselves increasingly ill served by simply looking past all worries as we continue through 2015.

Please click on the link to read more of my article on Seeking Alpha.

Stocks At The Crossroads: Breakout Or Breakdown?

The U.S. stock market has once again arrived at a critical juncture. Following a period of heightened volatility in December and a generally poor January, U.S. stocks have surged back to life since the start of February. Over the course of just two short weeks, the market has found its way from the bottom to the high end of a trading range that has been in place since November. And as we enter a new trading week at a crossroads, it is reasonable to consider whether stocks will fail at this level just as they did at the end of December or whether they are poised to breakout to the upside.

Please click on the link to read more of my article on Seeking Alpha.

A Cautionary Tale For Dividend Growth Investors

It is a cautionary tale for dividend growth investors. One of the key tenants of the strategy is that you must stay the course and not sell even following a major decline in the value of your investment, as the steady growing dividend payouts will more than compensate you for your wait until the price recovers. Of course, some stocks fall into correction for good reason and are forced to cut their dividend along the way. But even for those high quality companies that have proven the mettle to weather most any storm and maintain their dividend growth, history has shown they can still leave their investors waiting for decades before they recover their principal value. And even when factoring in the dividends paid all along the way, they can still find themselves underwater for a decade or more before finally crawling back to breakeven. So while the dividend growth investing strategy sounds ideal in theory, many have never had to carry it out in practice over an extended period of difficult market times. And Coca-Cola provides us with an ongoing example of this phenomenon still taking place today for stricken investors from many years ago.

Please click on the link to read more of my article on Seeking Alpha.


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