The Excitement Of Playing It Safe

The stock market is currently operating in rarely traveled territory. We recently entered the seventh year of what has been the third longest bull market in history. And given that we are doing so in what has continued to be a generally lackluster economic recovery with corporate earnings growth now slowing and the Federal Reserve threatening to raise rates, many investors are understandably concerned as to whether the good times for the market will soon come to an end. Of course, one could have easily made this same argument over the last several years only to be frustrated by the stock market’s persistent rise in spite of it all. This has left some investors feeling conflicted. For while they would like to continue to participate if indeed we see today’s bull market rise to become the second longest in history by this time next year, they also do not wish to get caught in the maelstrom of the next bear market that could arrive at any time. What is such an investor to do? Fortunately, the market has a select group of companies that have shown the ability to perform well during the good times while also weathering the storm during the bad times. In short, investors can realize a great deal of excitement over the long term by playing it safe.

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

Stress Test For Dividend Growth Investors

A surge of newly minted dividend growth investors has flooded into the stock market over the last several years. Their arrival has been driven in large part by necessity, as zero interest rates for more than six years running have forced many retirees and individuals living on fixed incomes that would have otherwise been parked in FDIC insured certificates of deposit into the stock market in a desperate search for yield. Fortunately, the stay for these generally low risk tolerant investors has been most fruitful thus far, as their time has been filled with nothing but steady gains with relatively low price volatility. Unfortunately, the generally placid environment for stocks over the last several years has for many of these investors also bred a false sense of confidence – in some instances outright hubris – for it has obscured the meaningful underlying risks that not only continue to fester under the market surface but have also been building the longer the current bull market runs. Given that many of these relatively new dividend growth investors have never experienced any other market circumstance other than rising stock prices, it is worthwhile for these same individuals to stress test their portfolios to ensure that they are truly comfortable with the risks that they are taking in dividend stocks today.

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

Graying Bull

The stock market is looking tired. After a furious bull market rally that has run for more than six years now, any extended period of consolidation is more than understandable. This is particularly true given the fact that underlying economic fundamentals remain dubious at best and valuations remain at historical peaks with corporate earnings now on the fade. But with global central bank liquidity still freely flowing, the fuel undoubtedly exists to continue propelling markets higher. Thus, the lingering question as we look out over the remainder of the year including the seasonally weak period from May to October is the following: can stocks continue their improbable rally for yet another year, or will the graying bull finally expire.

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

Where In The QE Have We Seen This Before?

A familiar pattern is repeating itself once again in global bond markets today. The German 10-year government bond yield, after recently falling to as low as 0.05%, has suddenly exploded higher. Just two months after the launch of QE by the last major holdout in the European Central Bank, German bund yields have gone from threatening to cross over into negative territory to levels that are now meaningfully higher than prior to the program. Does this mean that European QE is all of the sudden not working? Not at all, as this is just the latest in the lather, rinse, repeat pattern of how these futile QE programs filter their way through global capital markets.

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

Keeping Perspective

The U.S. stock market rally during the post crisis period seemingly will never end. It is already the third longest bull market in history, and what is particularly remarkable is that it has come in the immediate aftermath of what has been the worst financial crisis since the Great Depression. Of course, the U.S. stock market owes much of its gains over the last many years to the very remedies provided by policy makers to try and fix the global economy from the crisis, so perhaps these gains are less remarkable than they are artificial and ultimately unsustainable. As a result, you may be among the group of investors whether you are currently allocated to the market or not that believes in your heart and mind that all of this will end badly, yet in the meantime you are watching the stock market rise day after day. What is such an investor to do? Hold your nose and dive fully back into stocks, thus exposing oneself to the risk of buying at the top? Or continue to stand back and watch the stock market endlessly rise for what could be a few more years?

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


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