After a few months of consolidation, it looks as if the money is starting to pour into the market once again. Still not too late to get aboard. This rally should continue for another 18 months to two years.

I still have some Enron stock. Is it gonna take off too?????

October is coming.

Dimwit-turd retired school teacher at the gun shop the other day stated this was obongos doing. BWAAHAHAHA, I told him, you're too stupid to breathe!

Don't be so sure. $10 trillion had to go somewhere. 😬

Where's that 'snork' icon?

Pass corporte tax reform and THEN you'll see a market rally that will last for a decade - unless they screw with it....

I went on to tell him that I shudder to think of the number of minds you've poisoned with your delusional thinking, left him with, your life's work must have been a waste as ALL of Oklahoma is still RED come election time, feels good don't it?

Ya done good!! Much more elequent than I would've been! memtb

So if you had 100k to put in the market now, where would you put it?

It will do a big correction soon.

I am taking out my profits and sitting on the cash I already have. A 7%-10% correction come about November will make me some money.













maybe

Dollar cost average into large Vanguard index funds. Let it ride and keep buying.

people that think they can predict the market that far out are delusional. But it's fun to watch.
But "my advisor" says so.

How many times a day should one check the market? A watched pot never boils!

Time to sell at the high.

when you copy and paste someone elses predictions,

At least provide a link , so they end up looking stupid rather than you.

Bingo.

It's been one hell of a ride, that's for sure.

30338 and RPhx are spot on.

Indeed it has, for years.

I have my entire portfolio invested with this guy's recommendations for the past 18 months:

https://seekingalpha.com/author/rida-morwa/articles#regular_articles


Our Strategy For Successful Investing

Our strategy remains to achieve an overall dividend yield of 7-9% and long-term capital gains. We seek to achieve our objectives by using the following strategy:

Keep closely monitoring macro-economic forces at play: they tend to dictate where the general markets are heading and which sectors will be winners or losers.

Be diversified into sectors and geographically. Our Core Portfolio provides a good example of diversification.

Be opportunistic. Buy into stocks and sectors that are undervalued and have a good potential upside.

Have a high allocation to sectors, rather than individual stocks, to hedge against risk. For example, high-yield exchange traded products (ETFs, ETNs and CEFs) are well diversified and can sometimes provide a more balanced risk approach than investing in an individual stock. Also, it is much easier to take a view on the outlook of an entire sector rather than on an individual company. This is a common sense approach to safe investing and is the main reason we have 50% of our portfolio allocated to exchange traded products.

Look forward - Past performance is not always a good indication of future performance. Stocks do not continuously go up or continuously go down.

Be patient: Our strategy includes buying undervalued stocks with a positive company-specific outlook and solid sectors' fundamentals. Sometimes we pick up stocks during a sharp pullback. These stocks may continue to fall in the short term because it is impossible to predict a bottom. In such cases being patient pays off as fundamentals tend to prevail.

Finally I encourage HDO members to understand well the securities and the sectors into which they are investing in order to have confidence in them. This helps avoid taking unnecessary losses due to panic selling if the markets turn against us.

Sincerely,

Rida Morwa, Philip Mause, & Jussi Askola

Bingo, bingo. Life is easy, don't make it hard. Oh yeah...leave the money in there for a few years and don't worry about it. If you made a sound investing decision, then there is no need to re-examine it every day/week/month.

Thanks, I try to be nice here on the 'fire, you've got to be extra nice trying to debate one of those idiots in person, would be so damn easy to go to jail.

With 100K I would put some in Emerging markets cause it went down 2% in two days. It should come back up in a week for a 2% kick off. Sprint Airlines is undervalued but it has no div. I bought some and regretted it so far. I think oil is going to do well in the next year or two. I have British Petroleum ( BP) and if you buy a bit high the Div. will help a lot 6.4% div. as of now. Royal Dutch Shell ( RDA-B) has about 6.5% div. also . I may also put some money in Energy Transfer Partners ( ETP) for a 10% div. It is oil pipelines. Oil will go up and the pipelines will be used to move it. It is very hard to find something undervalued right now.. Smallcaps are a bit undervalued but have already come up quite a bit in the last month. Vanguard madcap Value ( VOE) has lagged so it will most likely outperform the broad large cap index funds of a while anyway. VOE just may be my favorite ETF. I think the S&P 500 is a bit over priced due to the overweight of the TECH stocks and I think they will come down enough to hurt the whole fund. NO? If AT&T goes back down I will buy some more for the 5% div. , , maybe , but for now I think the market is high and I am saving to put $ 13K in our ROTH in only 3 months till the new year so I will most likely wait unless there is a deal that is a " OH HELLL YA" buy it deal but that is rare these days.

Dang, reading all that nearly gave me a headache glad i have folks that take care of all that complicated stuff for me.

Bumpus in da rumpus

All that money and he cannot afford a paragraph break!

, the content hurt me worse ;]

Yeah, it went to Democrat support groups, welfare recipients, and foreign banks.

The Fed is trying to suck their money back out of the system over the next few years. Don't fight the Fed, you'll lose every time.

Agreed, with minor edit.

Anything more "sophisticated" (HA!) than putting money into index funds requires a very high risk tolerance AND a willingness to lose a bunch, even in the long term.

The average stock market return over the last 100 years is right around 12%. All you have to do is put your money in and KEEP IT IN. The only people that get hurt on a roller coaster are the ones that get off before the end of the ride.....

Lol it appears I owe you a beverage of your choice gunner


That was good

the thunderbird school.
what we call it locally is the thunderbird school of international bartending.
I am not concerned about an average over the last 100year.
I am concerned about the next ten years given i am 70.
A fool and his money are soon parted.
There should be some concern of chasing dividend yields that high given the safe rate of return.
Oh well
these columns make me giggle.
if it was so friggin easy how come everyone isn't a multimillionaire?

Is a stock market boom a good thing now that Trump is in office, or does it still only help out the fat cats?

This is good advice for 90% of the little people. I wish I had followed it from an early age.

Ron, there are plenty of 70 year old + in the HDO system. If you are curious at all, I would recommend you sign up for the free two-week membership and get on the chat board and talk to all the other investors in your age category.

The reason is because people don't put money in the stock market and keep it there. It really, really is THAT simple. Pick a few mutual funds, put money in every year, and ride it out. In the long run, your money will double every 7 years.

This is Dow Jones since 1900:

That's what I've been doing since my timing luck is about as good as my luck with Remington bolt handles.

I bought into three large Vanguard index funds starting in March of 2008 - a perfect time to make a killing, right? I keep a spreadsheet showing how much has been invested in each fund and total current value. Starting in September and for over a year afterwards it was so depressing to look at that I quit putting a dollar amount in the “Current Value” column and just wrote “In the toilet”.

But I kept buying $X of each fund at the beginning of each month through thick and thin. Not huge amounts by some folks’ standards, but several hundred dollars total each month treated as a monthly bill just like a car payment or mortgage. Sometimes if I had a fair amount of surplus income at the end of a month (i.e. I hadn’t bought myself a new toy that month), I’d invest some more.

The current value slowly crawled out of the toilet and now 9 years later it’s looking pretty darn good.

If you invest $300 per month at the average stock market return of 12% from age 22 to age 67, you'll accumulate a $5.5 million retirement stash.

Now, watch, and some of the nay sayers will come on and say that inflation will turn that $5 million into something not worth worrying about, or that it can't be done, or that $300 per month is too much money. Shut up. It's less than half of your stupid car payment. Mow a few lawns every month, and you can retire a millionaire. For the price of basic cable, you can have a million $ retirement nest egg. There is no excuse.

That is the same thing Dave Ramsey says. Kinda funny hearing him say that.

Most folks can't save a nickle. That includes lots of folks I know. They'll spend money like it's going out of style, but when they run out of it, they are the biggest victims you've ever met. Every excuse in the book.

Yep, tons of folks like that. $800 smart phone but no investments or savings.

I ran the numbers about 1 month ago for a 23 yr old kid i worked with. I told him that $10 per day @ 7% gains average for 50 yrs will get you $ 1.8 million dollars. At 12% it will , like Dutch sais will get you $5.5 million dollars. That does not mean a whole lot cause I am 54 yrs old, but my 20 yr old son that has $ 5,500 in his ROTH and $ 1,000 in his taxable account, now you are talking about a kid that might be a millionaire when he is my age. My daughter, she is 25 and has $ 1,000 saved. Still better than many.

I am prohibited by various laws in describing what my life has been professionally since the 70's. Suffice it to say i had personal friends in those towers that came down in New York, and there is a reason for that.

All good but what does $1.8 million or, for that matter $5+ million, do for one in 2067? Make no mistake I retired at 53 thanks, in part, to the stock market. But a million dollars is not a lot of money years out.

It may not be a "lot of money" but it sure will be a "lot more money" than most folks will have saved up by 2067.

Seriously? SERIOUSLY? You are going to the inflation boogey man?

Ok, I'll play the game. The average stock market return NET OF INFLATION, over the last 100 years has been just under 7%.

So, as posted above, a $300 investment per month from age 22 to age 67 will net you a million of TODAY'S dollars at 7%. 15% of that will be the money you put in, 85% of that will be returns. That's 300 lousy dollars a month, never increasing your investing as you get older and your income goes up. In today's dollars, that 300 monthly investment is $42 in 2067. Friggen' peanuts.

I think a million of today's dollars would make for a much better retirement than throwing your hands up and counting on the government to provide for you, don't you agree?

Want to try something else? Ok, that 22 year old couple, instead of a $15,000 wedding, you put that $15,000 in two Roth's in an S&P index fund. At age 67, that'll be a coooooool 2.5 MILLION.

Yea, I know, that's only $360,000 in today's dollars. Better blow that in one day on bridezilla's whims.... (please engage sarcasm detector).

No, I guess, in 2067 $ 1.8 million won't be all that much , but $ 1.8 million will get you about $ 80 per year in dividends @ 4% div. That may not be enough to live off of then, but you have to remember the stock values should still be going up . Now, $ 300 a month for my 20 yr old son is a small fortune , but he is investing about $ 3,000 per yr and the day will come when he gets out of what he calls " Stupid college" he will be putting much more in. The kid is an investing machine and just loves it. Off the subject a bit but he has Visa, Delta Airlines, Walgreens and British Petroleum stock. He will do very well , God willing, of course.

We have been putting money in several funds before 911.

We lost over 80,000 in a short period of time after that.

The funds made it back in 8 years and now is doing between 5 to 8 % each quarter.

One thing i would recommend is don't look at it every day,the swings will drive you crazy.

She has only a few years to go till she has had enough crap,so the next few years should be profitable.

A million dollars today is not a lot of money to retire on, no? I don't even have to ask as I know. But what the kcuph do I know?

24k/year in Vanguard index funds for my 401k (hit the magic 50 two years ago). I'll think I'll be fine at age 70 when I start pulling money out...

Good work. How old are you and are you talking $50k, $500k or ?

Did you sell?

OO, what do you think of 5 mo of decreasing house signings? That forebodes rough times to me.

Are you talking about a decrease in new home sales?

So how do you kno you are at the end of the ride?

How's that Roman market doing?

When things get really dark and quiet.........

Yep. It ain't a loss until it has been sold.

I hear investors complain about losing money in their portfolio, but they have not yet sold. Just trying to determine the facts in plainsman case.

Long Term Investing Success

Rida Morwa - 1:53 - 2017
• The key is to be a long-term investor, especially in times of a unique bull market such as ours today. We are very lucky to be experiencing such a period in our lives.

I understand your argument but when the market hit 7000, I lost $125k. You can argue I didn't lose any shares but I did lose half the value of my portfolio. The good thing is, while a lot of people at work was running around like a chicken with their heads cut off and selling left and right or going to the target date funds, I was contributing 26% to my 401K. You can buy a lot of stuff when the price of everything drops in half.

When I started with this company in 2001, I rolled $40k over into their plan. I am now at $497k.It really isn't as hard as people make it out to be. You just have to want to retire comfortable more than want all the stuff you can't afford but finance.

few years ago in a conference room, and sat and listened to a man who represented one of the biggest mutual fund companies in the country. He had another guy with him to monitor what he said. He had some beautiful charts showing what x amount of dollars from 1929 up until a few years ago would have done. I started snickering. He asked why? I responded with what did that do from start date until after WWII, and what if i had needed that money prior to 40 years in the future, say a couple of years after starting this wonderful thing. Dead silence.
I remember reading a mutual fund prospectus one time that showed this wonderful performance over a ten year period. Only "problem" was one year after the original investment, it was down probably 50 to 60% and didn't come back and really rock and roll until the last two years.
So how many people are going to hold a item down that much for that length of time without selling. And there goes it isn't a loss until you sell. Sure, for tax purposes. but if you are down, you are down and youse don't got's as much dinero left. Good markets make everyone an expert, the real experts tend to be the ones that lost their butt and hopefully learned a little.
there is not real secret to the markets, but it is all different given ones age. My time horizon at age 70 isn't the same as age 30.

Nope we started putting more in.

It has payed off well.

Should have stated we lost 80.000 on paper.

Loosing $ 80,000 for a Texan is like dropping some chicken feed I hear. . Now from a normal guy from Wisconsin , that is real money.... Now, if a big drop does come, you will be better off leaving it in. A 50% drop doubles your dividends. Still would hate to see it. I lost 75% in 2000 . Put 7k into a tech fund in March , 2000. It took 10 yrs to get it back. Thankfully , it was only 7K and my house got payed off the day I put it in.

"The S&P500 is at 2516. Should we close above today, we will be heading to the 2525 level and then to the 2575. Before year-end we should be well above the 2600 level; hopefully above the 2700 level. This is one of the strongest bull markets I have ever seen, once in a lifetime!!"

"We realize that Property REITs and Midstream MLPs are not fully participating in the current rally, but the time WILL come. Patience will be very well rewarded!!"

Rida Morwa - 11:57 - 29 SEP 2017

and then we get to worry about the mid-cycle election year dip.......

is it about time for the average, main-stream investor to begin to put his toes in the water in relation to the bit-coin phenomenon? is it real? or is it too speculative for the average member of the rank & file?

Why is it going to continue to go up? This bull market has been on-going for the past 8 years! And it can't continue! I don't know when reality will set in and people will start selling and taking profits off the table, but when a drop does occur, it will happen fast.

see: http://fortune.com/2017/03/09/stock-market-bull-market-longest/

Remember Jim Glassman's book "DOW 36,000"?

This is a 1999 book by syndicated columnist, James K. Glassman and American Enterprise Institute scholar and former Federal Reserve economist, Kevin A. Hassett.[1][2] in which they argued that stocks in 1999 were significantly undervalued and concluded that there would be a fourfold market increase with the Dow Jones Industrial Average (DJIA) rising to 36,000 by 2002 or 2004.[3][4] The book was published in 1999, shortly before the dot-com bubble burst and the 2001 September 11 attacks, and had predicted that stocks would rise quickly to 36,000. Instead the DJIA fell dramatically. (from Wikipedia)

Yep, they ARE right - the S&P will eventually hit 36,000, only not in 2004. I'm still waiting.

"He had some beautiful charts showing what x amount of dollars from 1929 ...."

Keep in mind that many forecasters use 1929 as a benchmark to show how the market has grown (10.9% annualized) since then. BUT, using 1929 as a benchmark is a false start. The market had just plummeted (from all-time highs) and many large cap stocks were now small caps due to the decline. Also, the 10.9% annualized return also assumes that you reinvested all dividends (not spent them). The market goes up and the market goes down. All you an count on is history (that it has historically risen over time) and hope that it continues to do so. There are no guarantees!

We really have not had an 8 yr bull run. In 2007 the dow was 14,000. It tanked because the a hole media tried telling everyone the economy was going to crash and burn and we were going back to 1929. They did this to scare every numb nutted dipssshiit that Bush made the economy crash and we need a guy called Barack Obama . It worked like a charm. The dow tanked cause millions bought the BS. , they sold out in a panic thinking we they need to get the little money they have left . So , ten yrs ago it peaked at 14k. now it is 22K . So , since the peak happened 10 yrs ago the Dow only went up 4.75% per yr. This is not exactly what I would call over valued especially at 1% short interest rates . Mind you , during the Bush yrs the avr. short term interest rates were about 5% over the 8 yr Bush presidency . I dont think it is over valued . Also, November 2014 the Dow was 18,000. Two yrs later the Dow was not even 18,000 the day before Trump won. The Stock Market corrected but not like we are used to . It corrected up like it should have.

The market crashed because it was over-priced. Price/earnings multiples were way overvalued and the market recognized it. The market's health is not dictated by BS or media statements; the market is moved by large sophisticated institutional investors and market drops are the norm.

Technical Analysis

Rida Morwa - 1 Oct 2017

"The S&P 500 index traded in a narrow range all week riding along the 20-day moving average, before closing at a new all-time-high of 2,519. The fact that the index closed above the 2515 level (a key technical level) would suggest that we are likely to be heading next week to the 2525 level next week, and hopefully to 2575 level (or 2% higher from here) in over the next few weeks. The VIX volatility index (or "fear index") remains below key technical levels, suggesting that investors have a high level of confidence. To the downside, the index has plenty of support at the 2,492 level (1% below), which effectively acts as a "new floor" for the index.

"We are currently experiencing a "once in a lifetime" bull run that is likely to be highly rewarding; and we remind our members that we believe that it is best to remain fully invested to maximize your returns."

2-week free trial

I am all in plus one

Amazon 44%
Google 41%
Apple 10%
Netflix 3%
Facebook 2%
Union Pacific 1%
------------------------------
Total 101%

Rida Morwa 3:38 PM 2 Oct 2017

"To All Members, it looks like the S&P 500 will close above the 2525 level (which is very bullish) as we pointed out in our last market update. The VIX (Volatility Index) has been picking up in the past 2 hours, so investors are expecting some volatility in the next few days. ANY Pull-Back is a buying opportunity, although I should note that I do not agree we will see any price volatility or any price pullback. Our advise remains: STAY FULLY INVESTED. Those who are fully invested are likely to the rewarded the best."

$USA is an attractive CEF that captures all those "FANG" stocks in a basket, and pays a plump 8% quarterly dividend

This current bull market is only 4.5 years old!

https://www.bloomberg.com/view/articles/2017-09-22/there-s-nothing-old-about-this-bull-market

Pricey stocks. Union Pacific said to see revenue drop in
the next couple of quarters..will affect stock price.
but at 1% ..no effect if other picks do well.

Market Update - October 7, 2017

As we have been stating to our members for the past several months (and since early 2016), the equity markets are offering investors a unique opportunity, and perhaps a once-in-a- lifetime experience that most investors would hope for. The S&P 500 index this week has closed higher 8 days in a row for the first time since 2013 and has closed at all-time highs 6 days in a row for the first time since June 1997. Furthermore, the S&P 500 has been up 8 consecutive quarters for the fifth time ever. What's great is that the stock market has continued to defy historical precedence, with the S&P 500 rising 1.2% during the first trading week of October, which has traditionally been a grim one.

As we always remind our members, when the S&P 500 index breaks out to the upside, this is a very bullish technical sign, and usually means that there are more gains ahead.

The equity markets continue to be driven by strong fundamentals, including a synchronized global economy that continues to improve, and strong corporate earnings. The stock markets are the "mirror" of the Global Economy. When the global economy is doing well, equity markets thrive. The global economy is doing much better than it has in many years. Based on my analysis on the economic indicators, we are at the lowest probability of a recession since the financial crisis of 2008. Risks of a recession are virtually non-existent for the next 12 to 24 months.

By looking at the latest economic data coming from the United States, the ISM Manufacturing came in at 60.8, (versus a consensus of 57.8) and up from 58.8 in August 2017. This is the highest reading in 13 years.

While the manufacturing data came out strong, which is great, it is worth to note that the United States' economy is mostly a services-based economy. The U.S. economy features a highly-developed and technologically-advanced services sector, which accounts for about 80% of GDP. The U.S. economy is dominated by services-oriented companies in areas such as technology, financial services, healthcare, and retail. Therefore we should note that the ISM Non-Manufacturing Index (which mostly tracks the services industry) is one of the best indicators of the state of the U.S. economy. So let us have a look at the data released this week: The Non-Manufacturing Index was reported at 59.8, its highest reading in 12 years! Economists were expecting a reading of 55.2, and this is despite the fact that the two hurricanes have had some negative effect on business.

What lies ahead

The month of October is actually the 2nd strongest month of the year. And this week, the stock market definitely kicked off the month on the right foot. The month of November is the 3rd best and December is the 5th best month of the year. So in general, the 4th quarter is considered one of the strongest time of the year for equities, and it is usually very rewarding for investors. We expect that this quarter will be no different.

From a technical perspective, the S&P 500 index stands now at a psychologically significant 2550 level, which has been a level of resistance in the past couple of days. I anticipate to see a few days of consolidation before the markets can break out from this level. I believe that the index should reach the 2600 level (or 2% higher from here) fairly soon, and well before year-end. Longer-term, I anticipate that the index should reach toward the 3000 (or 17% higher from here) sometime next year. It is only a matter of time before we get better economic numbers that continue to propel this market to the upside. So long-term investors are set to be very well rewarded!

Members should note that the way up is unlikely to be in a straight line, and we may see some price volatility from time to time, or perhaps some minor pullbacks. But I would not count on any meaningful pullbacks, so it is best to remain fully invested.

Best course of action for HDO Members? . . . Rida Morwa

The world economy is enjoying its most widespread and fastest growth spurt since a temporary bounce back from the global recession in 2010, the International Monetary Fund said on Tuesday, as it released a series of upward revisions to its economic biannual forecasts.

In a rare upbeat World Economic Outlook, published at the start of the annual meetings of the IMF and World Bank in Washington, the fund added that the unexpectedly good news had further to run in 2018 and higher investment was also beginning to improve the longer-term economic prognosis.

The last time the global economy grew so fast was in 2010 as the world economy staged a temporary recovery from the 2008-09 financial crisis, so this year’s performance was significantly stronger, according to Maurice Obstfeld, chief economist of the IMF.

https://www.ft.com/content/2ba01f32-ada1-11e7-aab9-abaa44b1e130?mhq5j=e5

10 Oct 2017

"The economic outlook released today by the IMF is very bullish for the equity markets. We are technically in overbought territory, and the markets refuse to come down. I believe we will see the S&P 500 at the 2600 level fairly soon."

Rida Morwa

I wonder how the tulip futures are doing now days... J/K

bitcoins seem to be gaining strength, more or less? tulip futures, not so well, but they had their run, and profits & losses were taken.

i like the idea of precious metals such as gold, silver, lead, and now copper. if it can be dug out of the ground, it can be used for something, can't it?

Posted for discussion:

https://www.ftportfolios.com/Commentary/EconomicResearch/2017/10/2/stocks-won

I have been thinking about copper mining stocks myself, since those hurricanes and the subsequent rebuilding down there is going to keep demand strong for probably the next year or so.

there it is, supply & demand at the basis of nearly everything. and all the rebuilding needed in the south causes one to think about electrical wiring, gyp board, flooring including subfloors, carpets, etc. lot's to think about. and no, i do not work for home depot, lowes, etc.

GOLD AND SILVER COMING BACK

This guy sais equities are over bought. He might be right . The thing is though, it usually gets over bought for a year or so , then it comes down hard and fast. As for me. I am eyeing up a multi sector bond ( PONDX) It is a managed fund with a .79 % expense ratio. I think it would be good for a small portion in my ROTH in a few months . It only dipped 15% during the 2009 crash. Not to highjack the thread, but I am 54 yrs old now and this market is getting high and want to tame it down if a correction comes. Any ideas on bonds?

Here's what Rida has to say about fixed income during this bull market . . .

Bull Market: Reduce Fixed Income Allocation to 5%

Member – 23:50 – 5 SEP 2017
Rida you have generally advised a 10 percent allocation to fixed income. However, you now feel than fixed income may not be undervalued as much. I am currently down 3.44% in HDO but it would be a bit higher if I didn't hold fixed income. Have you stated a new percent allocation to fixed income? I really think that the fixed income stabilizes losses on days such as today and keeps one fully invested. Fixed income may limit long term appreciation for those with ice water running in their veins but for those of us who remember 2008-2009 fixed income allows one to sleep at night.

Rida Morwa - 08:15 – 6 SEP 2017
• I would recommend to reduce Fixed Income allocation to 5% instead of 10%, and that would include Preferred Stocks, Baby Bonds, and Fixed Income CEFs. I would increase allocation to equities in general, and growth stocks in particular. Good fixed income products include ADX, CN, IDE and BST. We would definitely recommend to increase fixed income allocation in case we view a risk of recession. However, we are currently in an economic expansion mode. This is not 2008-2009! Should we get there in a few years, there are many ways to maximize profits. I personally look forward for economic recessions and "bear markets". They offer investors one of the easiest ways to make money, and I plan to share how to do it with HDO members. However, we are unlikely to see any "bear market" in the next two or three years. So in the meantime, we take advantage by being fully invested, and by collecting hefty dividends.

Thanks Okie, I am at 7% bonds and all of it is HYD , a muni bond ETF than I bought in mid November and Christmas when it went way down. I have no regrets and brought me about 8-9% in about 10 months.

If " DA Trumpster " gets a tax overhaul the stocks will continue to go up. This is most likely going to reduce the bond prices. Why would anyone have a 2.% div. when ya can get thet in a month
in equities.

I just checked in to see what AssCrackJack had to say...oddly, silent. Ohh well.

Market madness continues. Global stocks gained another $800b in market cap this week. Now worth $88t, highest ever, and equates to 115% of global GDP! - Holegr Zschaepitz

This is a once in our lifetime opportunity to get in and secure our financial futures.

If it is 115% of GDP , doesn't that mean the stocks are over priced by 15%?

. . . why the Nasdaq hit an all-time high yesterday.





... and why we're seeing all-time highs in the stock markets of emerging market capital goods manufacturing countries like South Korea (EWY). These countries benefit from economic-related U.S. demand.




ATTN: OIL INVESTORS... YOU NEED TO UNDERSTAND THIS

As Senior Energy Policy analyst Joe McMonigle points out, Iran has added one million barrels of oil per day since sanctions were lifted as part of the Iran nuclear deal negotiated during the Obama administration. Brand-new U.S. sanctions on Iran could cripple this supply and push oil prices up.



... why S&P 500 sectors, like Technology (XLK) and Healthcare (XLV), are leading the index year-to-date. USA: another all-time closing high for the SP500 of 2555 yesterday.

It's awfully hard to argue that emerging market success is related to US market demand, when the Dollar has been dropping quite steeply (which has made my move into foreign stocks EXTREMELY rewarding -- with YTD returns of 38%). The dollar index has dropped more than 10% since December 2016, and I don't really expect it to reverse in the short term.

My point is that growth in emerging markets is NOT dependent on US markets, but rather has become self-sustaining. The US market is still very significant, but consumer markets in China, India, Korea, Japan, South America and even newly emerging countries such as Indonesia now are now, in combination, multiple times bigger than the US market. Because they start from a lower base line, growth rates are higher, and there's more money being made by companies there.

In my view, the growth in the US stock market is more driven by foreign growth than US growth. In 2012, about half the revenue of the companies in the S&P came from foreign sources. Logically, that means about half the US stock market value is derived from foreign growth rates. Foreign growth goes up, US companies benefit, US stock market goes up. US dollar goes down, foreign holdings go up, and the US stock market goes up.

When people say that the US stock market is "irrational" because the market is doing much better than the US economy, they are missing the fact that the US stock market is as much a global stock market as a US stock market. If you take away the half of the recent growth of the US stock market that is due to foreign income, I think it reflects the US domestic economy quite well.

Here is a link to a "Seek Alpha" article that takes the other side to this extended Bull Market. Interesting read . . .

"Consider the following. One characteristic that has historically defined bull markets in U.S. stocks is the strong correlation between rising stock prices and the net inflow of funds from retail and institutional investors into the domestic equity market. But according to data from the Investment Company Institute, what has been unique about today’s bull market dating back to its inception in 2009 is that we have seen a steady net outflow of funds from investors into the U.S. stock market. For example, since the start of 2015 – a time where stocks as measured by the S&P 500 Index (SPY) (SPY) have risen by +30% on a dividend adjusted basis – we have seen net outflows from domestic equity mutual funds and ETFs by retail and institutional investors of more than -$200 billion. This is the exact opposite of optimism, much less any sign of euphoria.

"So what then has been driving U.S. stock prices (DIA) higher for so many years? Easy money from global central banks and rampant corporate share repurchase activity that has more than offset the steady net outflows from retail and institutional investors throughout the post crisis period.

"Put more simply, the average investor never really returned to the U.S. stock market during the post financial crisis period with any sort of conviction in the first place. So what is going to cause them to dramatically reverse course and suddenly become euphoric before it finally comes to an end?"

https://seekingalpha.com/article/41...urce=LI&li_medium=liftigniter-widget

I agree with the above. A chunk of my "play" money has been in emerging markets for about a year and a half. Of course, the tech funds continue to flatazz kickazz, the other chunk of my play money....

Energy MLPs have been pulling back for months . . . my advisor believes we have hit bottom and are head back up tomorrow in a big way. Two ways to play it are AMZA and the 2X leveraged MLPQ. Here is what he just wrote on the chat board . . .

Rida Morwa - 16:48 – 26 Oct 2017
"I expect to see huge gains in the Midstream sector starting tomorrow. I believe that we are past the bottom here. Members who were patient are set to be very well rewarded!! I believe it is still a great time to add MLPQ tomorrow. I am personally going to add to most of my midstream positions tomorrow. I believe it is going to be a great ride to the upside. For HDO members who still can add positions to the midstream sector, tomorrow will be a great day to do so."

GE has been a falling knife for months. I wonder if it'll be a good longer term buy soon.

Friggin Amazon stock up 120 points today.

I tried to find an answer on your GE question, but no joy. It is really continuing to fall. Not sure why. But I would not buy here.

GE is falling because it's lost it's competitive soul. It went from Jack Welch to a administrator. It's like Steve Jobs and Apple. With Steve, great things (and a few disasters) happen on a yearly basis. Without Steve, nothing much happens. In business, standing still is failure.

"We can expect the bull market to run 8 to 10 more years," strategist Jeff Saut says.

- Investors are witnessing the second leg of the bull market, and stocks likely have eight to 10 more years to grow, strategist Jeff Saut says.

- "The second leg is usually the longest and the strongest. That's where earnings start to come on stronger and the economy improves," he says.

https://www.cnbc.com/amp/2017/11/07/the-bull-market-has-8-to-10-more-years-left-jeff-saut.html

Bring it on!

As long as the interest rates stay slow, PE's will stay high.

Watch wages. Once wages start accelerating, inflation will follow within a year or so. That creates inflation, which increases interest rates. Interest rates will kill the growth, which kills PE's.

In the meantime, it's a mid-cycle election year next year. Expect a correction. That's spelled B U Y I N G O P P O R T U N I T Y.

Bingo.

Quick Market Update - 18 Nov 2017

Rida Morwa

The S&P 500 index fell during the week, but found enough support at the 2550 level to turn around and form a hammer, which is a bullish sign. While this market is overextended by just about every metric we use, it is clear that the 2550 level is a major support level for the index.Therefore we believe that we are likely to go sideways for a few days to consolidate in order to build enough momentum to push higher. It is unlikely to see any significant pullbacks as most long term investors will not be interested in selling, since the risk to reward ratio simply won’t be there. Earnings season has been good, while macro-economic data across the globe continue to show strength, so that it is likely to continue to lift this market. It is also worth to note that when the US Congress will finally pass a tax bill, this should send stocks much higher.

In the short term, we should break above the 2600 level for the S&P 500 index, while the long-term outlook of the market (including the year 2018) looks healthy and promising.

thats what i like to hear. i have been quite happy lately.

And Rida says here is an indication that energy MLPs are getting ready to take off. They are currently dirt cheap with huge yields.

Increased Interest in the Midstream MLP space

It was noted that on Wednesday November 15, that there was some unusual options activities by bullish investors on the Midstream Alerian Index (AMLP). According to Jon Najarian from CNBC around 5,000 contracts of the January 10 calls in AMLP were traded in the first half of the trading session Wednesday. This confirms my thinking that the recovery in the Midstream sector could very well start before year-end. The video can be shown by clicking
HERE.

I saw my father buy $6k in MSFT that turned into $2M by 2000.
My father did not know what software was.

I bought Cisco and microsoft in the mid 1980s and lost money. How? I got whipsawed. I bought because it was going up and sold because it was going down.

I turned my life around in 1994 and started investing long term: msft, goog, and amzn.

There is nothing like averaging $1,500/day sitting on ones azz.

I found $5 in my old Carharts the other day so suck it. 😁

There is indeed something quite satisfying about making more in the market than at the day job..... Ah, the land of "critical mass". A good place to be.

Indeed though we choose our investment paths a bit differently, me being retired, we do understand a bit of success alike.

Insider buying at GE last week . . .


http://www.insidearbitrage.com/insider-transactions/?symbol=GE

Most people think they would be happy if they just had more money.
Once you get wealthy, you can't use lack of money as an excuse.
One of the most miserable identifiable groups are lotto winners.
The only lotto winners that are happy are those that continue working.
Money can make it harder to resist the vices of ego, sloth, alcoholism, etc.
If you are smart enough to get the money through wise choices, you should be wise enough to lead a righteous and humble life.
Happiness will follow.

agreed. I am a Matthew 6:33 guy, myself. I have plenty of money, because plenty is not an amount.

I didn't read this whole thread, but my Wal-Mart stock is flirting with the $100.00 mark again.

Rida Morwa
26 Nov 2017


Why is the "Bull Market" set to Continue?

The best way to look at the overall valuations of stocks is by looking at the Corporate "Earnings Yield" in comparison to the 10-year Treasury yield. The "Earnings Yield" is the percentage of profits that companies generate divided by their respective stock prices.

When the S&P 500 earnings yield and the 10-year Treasury yield are roughly the same, then one can conclude that the S&P 500 valuation is "fairly valued" or in equilibrium.

Obviously, today the S&P 500 earnings yield is 5.50% and the 10-year Treasury is yielding 2.32%, which is likely telling us that the S&P 500 continues to be reasonably undervalued, while the 10-year Treasury is - well - overvalued relative to the S&P 500 index. The high dividend stocks we own in our portfolio earn a dividend raging from 6% to over 14%, and the vast majority cover their dividends by over 100%; therefore the equivalent "earnings yield" for the stocks that we own is much higher than the S&P 500 index.

This also means that there is more risk in owning bonds and fixed income as interest rates are likely to keep going higher before we reach an equilibrium between the S&P 500 Earnings Yield and the 10-Year Treasury yield. This is one of the main reason that we recently recommended to our members to sell the vast majority of our Fixed Income CEFs. Bond prices are inversely related to interest rates, and as interest rates go up, Fixed Income prices (or Bond prices) go down. This will result in capital losses for most fixed income CEFs.

The S&P 500 index is up 15% for the year, and the index has gone the entire year without going into negative territory at any point (i.e. lower than its opening level on January 1, 2017). This is another sign of strength, as the index spent the entire year in the black. What is worth to note here is that going back to history (since the inception of the U.S. stock exchanges), there have only been 10 prior years where the S&P 500 went the entire year without trading into negative territory. What is notable is that the performance in each the following year after the S&P 500 goes an entire year in the black, the index traded higher the next year, nine times out of 10. On average, the next-year gains were at +12.52%.

Equities are the best place to be today. Remember, higher interest rates do not affect equities the same way as they affect bonds. The reason is that equities usually have earnings growth which, in the current low interest rate environment, outpace rising interest rates. Fixed Income do not grow their earnings; the income received is fixed by the "coupon rate".

Longer-Term Outlook for Equities

A combination of an improving global economy, a meaningful tax reform with cash repatriation will push Corporate Earnings and "Earnings Yield" even higher over the next 2 years. The biggest winners from big tax-cut legislation Congress could pass by the end of the year will be the shareholder class — people who own stocks and stakes in privately held companies. That’s because roughly 75% of the $1.5 trillion in net tax cuts being proposed would accrue to businesses.

Barring any unforeseen economic downturn, the S&P 500 index should reach the 2800 level and above (or 7.6% higher from here) during the year 2018. My target over the next 18 to 24 months is that the index should reach the 3000 level (or 15% higher from here.) We continue to recommend to our members to remain fully invested into equities. Long-term investors are set to be very well rewarded!

Quick Market Update

Rida Morwa
4 Dec 2017

I will start with a quick market update.

The month of December is typically one of the best months for equities. The current bull market is likely to continue throughout this month, fueled by positive global macro-economic data, in addition to further good news that the tax reform plan (corporate tax reduction and overseas tax holiday) will get finalized soon. Markets are betting that companies will use their new spare cash to help investors by purchasing boatloads of stock and beefing up their dividends. The additional cash in the hand of Corporate America will definitely help buybacks, which is very positive for equities; Buybacks make earnings per share, a key measure of profitability, instantly look better simply by reducing the number of shares in the ratio. Underlying profits don't even need to improve. The main beneficiary of the corporate tax reductions are equity investors (or shareholders) who will see the value of their investments go up due to the tax reforms.

During the last overseas tax holiday in 2004, companies leaned very heavily on buybacks.

Longer-term outlook: This raging bull market is likely to last at least a couple of more years, as economic indicators show that recession risks are at their lowest levels in years. However, members should note that it is not going to go higher in a straight line. We believe that we are likely to see around a 5% market correction sometimes in the first six months of 2018, but it is likely to be short-lived. Such a pullback will help the markets consolidate in order to go much higher. Our next target for the S&P 500 index is at the 2800 level, which we should see relatively soon (within the next six months), and then the 3000 level which we are likely to see before the end of 2018.

We recommend for our members to keep a long term outlook and we advise to remain fully invested. Even if we see a market correction of 5%, it may start at a much higher level from here, and the impact for those who are fully invested will not be much (if any.) It is always difficult to time the markets, and those who are fully invested, are collecting hefty dividends to wait for the markets to continue to go higher.

Finally, while the broad markets seem to be expensive (especially technology and growth stocks,) many high-yield sectors are trading at their cheapest levels in years and represent today deep "value sectors." This comes at a time when Amazon CEO Jeff Bezos, the newly minted richest person in the world, just sold more than $1 billion worth of his company's stock. The sale was made public in a filing posted Friday. In total, Bezos sold one million shares for $1,097,803,365.

We believe that any market volatility or pullback will result in investors re-allocating money into "value sectors" rather than pulling money out of the markets. This is a phenomenon we have seen last week as funds flowed out of technology stocks and into energy stocks, notably Midstream MLPs which were up 5%. Value sectors such as Midstream MLPs, Property REITs and BDCs continue to look pretty attractive today. Furthermore, the downside risk is limited compared to technology stocks, while the upside potential is enormous.

Everything I am reading and watching indicate 2018 to be another fine year.

Me too Ed! MAGA!!

Really nice write up here explaining how the new tax law will benefit Energy MLPs.

Summary

- The Midstream Oil & Gas sector has underperformed during the year 2017, and currently trading at its lowest valuations in years.

- The most recent weakness seen in the past few months can be attributed to uncertainty about the tax reforms, and investor fears that the new tax laws will disfavor MLPs.

- We will explain in this report why the new tax reforms should be favorable for MLPs and why the recent weakness presents a great buying opportunity.

- This research report was jointly produced with High Dividend Opportunities author Philip Mause.

Following much weakness during the year 2017, Midstream MLP space is starting to show strong signs of recovery in the past 2 weeks. The most recent weakness seen in the past months can be attributed to the new Tax Reforms, and investors' fears that the new tax laws could possibly be not kind to MLP investors. And we know very well that investors hate uncertainty and many investors have dumped MLPs exactly because of this reason.

In our report below, we would like to highlight why these fears are not justified, and why Midstream Energy MLPs, and other MLPs are likely to be favored by the new Tax Reforms.

Midstream oil & gas Master Limited Partnerships (or MLPs) are very attractive to income investors because the average yield on MLPs is about 8%, with many currently yielding more than 10%. The benchmark for the sector that is most widely used by investors is the Alerian MLP ETF (AMLP), which is an ETF that tracks 27 of the largest midstream MLPs and currently yields 8.1%. Since it is an ETF, it trades at its "Net Asset Value" with no premium or discounts involved. . . (Read More)

Dember 23, 2017

Rida Morwa

Our Long-Term Views for Equities

We have recently highlighted our long-term views on equities and we believe the S&P 500 index is likely to reach the 3000 level (or roughly 12% higher from here) during the year 2018.
Since we posted our bullish long-term views on equities, many banks and analysts have increased their price targets for the S&P 500 index. Most notably, Credit Suisse analysts posted on Wednesday December 21, that they expect the S&P 500 index will soar to the 3000 level by end of 2018. Credit Suisse joins a growing list of banks and analysts to predict the index will soar in 2018. This list includes JPMorgan Chase, Oppenheimer and Evercore ISI who have all upped their target for the index to the 3000 level or above for 2018 following news related to the new tax reforms.

One point to note about valuations is that equity prices have not been accelerating as fast as corporate earnings, which means we are not overvalued. Based on the latest Thomson Reuters projections, the expected S&P 500 earnings growth rate for 2018 is at 12%, and therefore it is reasonable to expect the equity markets to increase by at least the same percentage during the next 12 months.

I would like to add that the tax reform should benefit the U.S. economy over years, and not just in 2018. While some of the near-term benefits could be already priced into this market, the longer-term benefits such as companies (both domestic and foreign) repatriating money and building new plants in the United States will benefit jobs and reduce the trade deficit for many years to come. This should continue to fuel equities for several years. Personally, I see this bull market lasting at least another 3-4 years given that the economy is growing at its fastest pace since the 2008 financial crisis and taking into account the impact of tax reforms. This is indeed one of the best times to be fully invested into equities!

What is happening in the Bond Markets?

This week, the bond market prices crashed pushing yields on U.S. 10-year notes to their highest since March and closed the week with the 10-year yield at 2.49%. There are two reasons for the spike in the interest rate level:

The U.S. Fed hiked interest rates for the 3rd time this year, and stated that it projects to hike interest rates 3 times during the year 2018. The key interest rates are now in a range between 1.25% and 1.50%, and are expected to reach 2% to 2.25% by the end of 2018.
News about the tax reforms and their effect on the U.S. economy have raised investors' fears that inflation may creep higher going forward.
The above has sparked a selloff in most Fixed Income closed-end funds ("CEFs"), and even most "Municipal Fixed Income CEFs" were not spared.

Our take on higher interest rates: In general, I would expect inflation to rise in the next few months given the strength of the economy, however inflation pressures are unlikely to rise to significant levels and will remain below the U.S. Fed 2% target rate. It is worth to note that the Fed released a higher growth forecast and lower unemployment forecast - but didn't change its inflation forecasts at all. Even factoring in 3 rate hikes in 2018, we clearly remain in a low interest rate environment and I expect low rates to persist well into 2018.

What does this mean to the fixed income and equity markets? In an environment where economic growth is strong and inflation is trending higher, most fixed income products (or bond products) usually tend to under-perform. This is one of the reasons why we recently recommended to take profits on most of our Fixed Income positions. Price pressures on fixed income is likely to continue during the year 2018 and beyond, resulting in a negative outlook for fixed income products in general.

The impact of rising interest rates on equities is different. Rising interest rates which stem from a stronger U.S. and global economy does not impact corporate earnings much, especially given that the Fed will continue to exercise a cautious strategy as to not to derail the economic recovery. In fact, corporate earnings can significantly increase during periods of rising interest rates as long as economic growth (or GDP growth) remains higher than key interest rate levels. The final read on the 3rd quarter GDP growth was posted at 3.2%. This fastest growth in more than two years and the second consecutive quarter of 3%+ in real growth.

It is worth to note that Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari have been vocal opponents of further rate hikes due to the lack of core inflation and a flattening Treasury yield curve. Furthermore, on February 3, 2018, Jerome Powell will replace Janet Yellen as Chairman of the Federal Reserve, and he is widely expected to keep the same cautious fiscal policies followed by Mrs. Yellen.

As usual, we will be keeping a close eye on both Federal Open Market Committee (FOMC) meetings and on any statement from the individual Federal Reserve members, and will keep our members informed about any changes in our views on interest rates and inflation.

Update on the tax reforms and their impact on Property REITs

Like MLPs, Property REITs will be winners from the tax reform, and will be permitted to benefit from the new pass-through rules. The new tax reforms include a 23% deductibility to REIT dividends which will bring REIT taxation more in line with the taxation of other stocks, and will encourage investors to buy REITs into their taxable accounts instead of only in tax-advantaged accounts. This will unlock a vast source of capital which can now flow into REITs. This is very bullish for REITs going into 2018. Based on this, we will also be recommending new and undervalued Property REIT picks very soon.

Furthermore we are recommending to our members to overweight Property REITs and MLPs for the year 2018 with a recommended allocation of 20% to 25% for each of the two sectors.

Today was a monster day for Energy MLPs. They are taking off and about to tap burner!

3 Jan 2018
Rida Morwa

Market Update

As explained in my previous market updates posted in late December, renewed strength in the equity markets is likely to take place in early January, this is exactly what we saw yesterday and are seeing today. Yesterday, the S&P 500 index was up for the day by 0.83% closing at the 2965 level, and today futures indicate that the markets are going to continue moving higher. It looks like the markets are trying to build up the necessary momentum to break out above the 2700 level, a level that has proved to be resistive recently. A break above that level should take this market much higher, to reach towards the 2800 level which we are likely to see soon. Our target for the S&P 500 index for the year 2018 is above the 3000 level, so those who are fully invested are likely to be very well rewarded. This is the type of market that will maximize the returns for those who buy and hold.

Our portfolio is very well positioned to outperform this year, and we have started the year on a very strong note. Midstream MLPs and several of our Property REITs have started to see a clean and strong upward momentum. We expect momentum to pick up as money flows back into the MLP sector and out of many fixed income (such as Fixed Income CEFs) and preferred stock issues.

What is most notable is that there is renewed interest in the entire energy sector as a whole, and not only the midstream sector. This is not surprising as the energy sector and the basic material sectors are two sectors that tend to do well during periods of inflation and rising interest rates. Why is that? It is because the relationship between inflation and commodity prices tends to be a reverse relationship. When the dollar weakens (and can purchase less) the cost of materials, energy, and food tends to rise, and this results in more profits for energy and basic materials companies. If we add to this that energy stocks (both upstream and midstream) are trading at very cheap valuations, we get into a situation where these two sectors are set to outperform.



High Dividend Opportunities

Our Best Stock Picks for the Year 2018

Our portfolio is very well positioned going forward into the year 2018. We would like to share with our members our favorite stock picks for 2018 by providing below a shortlist of the best and cheapest Property REITs, Midstream MLPs, BDCs, and Growth stocks:

Favorite Property REITs
Diversified Exchange Traded Products

RQI - Yield 7.8% (This is a very strong buy)
KBWY - Yield 7.6% (This is a very strong buy)
LRET - Yield 8.4% (This is a very strong buy)
AWP - Yield 9.0%

Individual Stocks

LXP - Yield 7.3% (This is a very strong buy)
WPG - Yield 14.2%
VTR - Yield 5.3%
EPR - Yield 6.4% (This is a very strong buy)
SKT - Yield 5.4%
HT - Yield 6.4%
AHP - Yield 6.3%
====

Favorite Midstream MLPs
In the Midstream Space, our best picks are the following:

Diversified Exchange Traded Products (Which do not issue K-1s)

CBA - Yield 9.7% (This is a very strong buy)
MLPQ - Yield 17.6% (This is a very strong buy)
MIE - Yield 9.2%
AMZA - Yield 24.2% (Maximum recommended allocation of 2% of Portfolio.)

Individual Stocks (Issue K-1 tax forms)

ETP - Yield 12.8% (This is a very strong buy)
EPD - Yield 6.4% (This is a very strong buy)
AMID - Yield 12.4% (This is a very strong buy)
CEQP - Yield 9.5% (This is a very strong buy)
MMLP - Yield 14.3%
====

Favorite BDC Companies

BDCL - Yield 18.2%
NEWT - Yield 9.4% (This is a very strong buy)
ARCC - Yield 9.6%
====

Favorite High-Yield Growth Securities

BST - Yield 5.8% (This is a very strong buy)
HQH - Yield 8.7% (This is a very strong buy)
ADX - Yield 9.2% (This is a very strong buy)
USA - Yield 10.8% (This is a very strong buy)
IDE - Yield 6.9% (This is a very strong buy)
THW - Yield 10.3%
DVYL - Yield 6.7% (This is a very strong buy)
SDYL - Yield 5.0%
LMLP - Yield 12.0%
BX - Yield 6.0%
====
Reminder about diversification

A key to successful investing is to be diversified across all sectors we recommend. In addition to "value dividend stocks" that are the focus of our service, we strongly recommend to also diversity into "growth stocks" that were highlighted recently in the following Premium Post:

A Portfolio Balanced Between Value And Growth

We have also noted that some of our members have decided to only invest in those stocks and securities that are tagged as "must owns". This is not a good strategy, and we recommend against it, as it results in less diversification and increases the risks of the portfolio under-performing. The stocks tagged as "Top Buys" are as good as the "Must Owns". The only difference is that we see more short-term upside potential in the "Must Owns" as compared to the "Top Buys", but our long-terms views for both is the same.

Another huge day in the market. This is three in a row. I certainly hope all you investors are off the sidelines and in the game. This is a near once in a lifetime opportunity.

Stock is based on the value of a stock.

If taxes drop 10+ percent the value of all the stocks for corporations goes up... no suprise, just math

i'm still "all in", but getting a little nervous. Historically, I've gotten a little nervous about 15% from the top.

It's been a wonderful couple of days, however, after a wonderful, wonderful year. You don't get too many of these in a life time.

I too would be nervous if I was heavy into FANG stocks right now. They have had a great run, but institutional money is starting to switch over to the dividend paying value side, and MLPs, property REITs, and BDCs are starting to take off.

2018 looks like it can be a fun year like 2017.

How about that? Dow 25,000. NASDAQ well over 7,000. S&P within sight of 2,800. Ding, ding....... kaching!

wow! up 170 points now; been a good week

I was discussing with my wife last night that we need to re-up our umbrella policy.

At one time, I traded in the market a bit, buying and selling. Made some, lost some, but mostly came out ahead. I figure I'm too old to risk anything now, so I'm just letting the stocks and investments I have work for me. I'm taking a little play money out of a retirement account every month, but thanks to the market, the balance is holding it's own. It's good for everyone for the market to boom, but I'm a "don't put all your eggs in one basket" kind of person, and I strongly believe in diversification.

I am a bit wary of the continued gains - we've had record upward movement for the past 8 years. At some point, the market will stall and crash (perhaps as much as 40%, as it did in 2008 - see: https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets ). The party just can't keep on climbing. Some market watchers say the market would have to drop 40% for it to return to "fair value" (see: https://www.cnbc.com/2017/09/18/sto...percent-to-be-fairly-valued-advisor.html ).

Yes, I am pretty much fully invested, but I'm keeping about 15% in cash and near-cash for any opportunities that might arise.

Revel while you can, but keep in mind the ancient Greek fable of Icarus, the lad who flew too close to the sun and crashed when the sun melted the wax holding his wings together! It can't go on forever!

IMO, the eight years of the communist in the White House can be overlooked as far as counting toward an economic recovery. Nothing was happening during the Obongo regime, because he was trying his darnedest to upset the American Free Enterprise System. I look back only as far as Nov 2016 to count my eggs. That was the true beginning of the current Bull Market, and it is not too late to get on board.


This is from June 2016, from my financial adviser Rida Morwa:

The S&P 500 has been rallying over the past 3 months and is almost up 6%. The bulls have been driving the markets and have been challenging the 2100 level for the S&P. The 2100 level is a BIG deal. A close above 2100 keeps the bulls in charge and it would mean that the rally will continue.

What is driving the rally?

Strong economic data coming from the USA:

Retail Sales: Retail sales for April logged the strongest monthly increase since March 2015. Retail sales surged 1.3% in April, led by autos and non-store retailers.

Industrial Production: Industrial production increased by 0.7% in April easily beating consensus expectations, and posting its strongest advance since November 2014.

Housing: Perhaps the most important piece of economic data, sales of new single-family homes in the U.S. recorded strong gains in April rising to the highest monthly pace since early 2008, according to estimates from the Census Bureau and the Department of Housing and Urban Development. Home sales increased by 16.6% on a monthly basis and by 23.8% year-over-year. Sales increased for all regions except the Midwest. The April rate of sales was significantly higher than recent trends and exceeded all expectations (new home sales hit 619,000 units in April, versus the estimated 520,000 units). These results beat even the most optimistic forecast by more than 90,000 units.

I view that home sales are the best indicators for the state of the U.S. economy. In general, people would not buy new homes unless they are feeling more "wealthy" and have a positive sentiment about the economic outlook. Buying a new home is a long-term commitment and most buyers usually finance their purchases through mortgages and count on the stability of their earnings.

Market Outlook

I remain optimistic about the outlook of the U.S. markets, and I believe that 2016 is going to be a solid year. In my opinion, the markets are going to surprise investors by moving much higher, the same as recent economic data surprised most economic analysts. Barring any unforeseen economic or political event, I believe that the S&P 500 will reach a new all-time high in 2016 and is likely to close the year much higher than yesterday's level. The best course of action for the time being is to remain invested and not to listen to all the bearish noise which seems to have multiplied in the last month. There will always be bears around, and one day their time will come, but I do not think it is anytime soon. The good news is that the bears have kept many investors on the sidelines, away from the equities markets. This money is bound to come back and support the current prices. Most retail investors tend to jump in when it is too late. The way up for the S&P 500 is by all means not going to be a straight line. As long as U.S. and global economic fundamentals remain in favor of equity markets, any short-term volatility will create new opportunities for investors to add to existing positions.

Macro-economic analysis is key to successful investing

A successful investment strategy entails following long-term trends and seeks to capitalize on them. Global economic indicators are the main drivers for the stock markets and they tend to determine whether we are heading into a bull market or a bear market. Therefore I tend to place a lot of weight on the general economic conditions to determine where the markets are likely to be heading. While a large market pullback is always possible, it is unlikely that the U.S. will experience any recession soon, and therefore the risk of any bear market in the current environment is pretty slim.

I understand the reasons you cite, but I remain wary. Look at eh P/E Rations for the past 100+ years (see: http://www.multpl.com/shiller-pe/ ). they are getting a little high IMO. As Isaac Newton's Universal Law of Gravity says, "What goes up, must come down. When it does happen, no one knows, but it will occur.

IMO, this current Bull rally is a once in a lifetime opportunity for me. I too understand it will come to an end some day, but I am prepared to take advantage of that time as well.

Also, I too listen to what financial advisors say, but they are not prophets and all knowledgeable. My gut instincts have historically been pretty good and I trust them. Being retired and at my age (76) , my income is fixed and I can't contribute to a 401(k) nor an IRA, so the opportunity for replenishment of dwindled (tax advantaged) assets is lost. We have mid-7 digit investments which we don't touch (except for paying the RMD taxes) choosing to live off Social Security and pensions. Time is a friend for younger folks, not so much for older ones.

Take a look at these charts of the S&P as well as all three markets since WW2. The last data point is June of 2016. The markets are not expensive.




Comparing valuations to historical trendlines

Although traditional valuation parameters may be flashing yellow, unconventional trend-line analysis suggest the stock market still looks reasonable if not attractively priced. It is always useful to consider alternative thoughts and non-consensus approaches in assessing important investment questions. To this end, examining the U.S. stock market relative to its historic trends yields several unconventional insights regarding both overall stock market potential and also what investment factors (e.g., growth, value, capitalization, or price momentum) and sectors may lead the rest of this bull market.

Why use historical trendlines? U.S. stocks have oscillated about a stable trend since WWII. To the extent this stable trend remains persistent, it provides another methodology to judge potential risk and reward in the stock market. Relative to trend, U.S. stocks have been extraordinarily cheap three times since 1945:

- Immediately after WWII.
- In the aftermath of the high inflation 1970s.
- After the Great 2008 crisis.

Similarly, stocks appeared richly priced throughout the 1960s and during much of the time between the mid-1990s until the late-2000s.

Today stocks surprisingly appear reasonably-priced or even cheap relative to post-war trend despite being one of the longest and strongest bull markets of the post-war era, as shown in Charts 1 and 2 above, the U.S. stock market is still at worst fairly priced and even cheap relative to its post-war trendline.

Dividend Stocks Cheap relative to Trendline

Based on the historical trendline chart below, dividend stocks appear to be trading at multi-year low valuations:

Words of the wise!

I just looked at updated (forward looking) PE's a the first of the year. We're still running pretty close to 17, due to the wonderful increase in profit numbers we're seeing. Combine that with the current low interest rates, I feel we are more high than low.

Sure, we dropped 40% in 2008, but that was from PE's in the 30's, and much higher interest rates. I expect a correction in 2018, but would be a quite surprised if it was more than 20%.

At it's core, the economy has to grow substantially for the stock market to grow. Cheap, abundant, stable supplies of oil and gas, an increasing rate of technological innovation and stable global politics do provide that basis for economic growth. The stagnation under Obama held back a huge amount of corporate investments, leaving them with piles and piles of cash to potentially invest when the political (and tax) environment became favorable.

Keep in mind also that indexes all exhibit "survivor bias" in which companies that go out of business (e.g., Enron, MCI Worldcom, Compaq, TWA, Pan Am, Eastern Airlines, etc,) are dropped from the Index and are lost for historical reporting. This distorts the index and allows the result to be higher.

Whether Bush II should be blamed for the Great Crash or not, certainly Obama's policies are to blame for the Great Extended Recession.

The USA could have been growing at this rate just as easily 5+ years ago, had the govt wanted it to do so.

Oddly, had Zero let the markets and business perform as they wanted, the Democrats would have been pushing prosperity to all and Hillary or Bernie would have gotten elected.

The Trump Bump has turned into the Trump Train, and is proving Democrat economic policies to be absolute idiocy.

There is a lot of room to grow. There crash reset the baseline and Obama smothered the recovery. We have eight years of unrealized growth coupled with deregulation coupled with cheap domestic energy coupled with a relatively stable world. There’s a lot of positives going for the US economy. An America first policy will be an incredible driver of domestic growth. On the other hand the BRICK countries are going to experience depression if we become serious about America First.

As a fellow once told me......financial advisors and stock brokers are in the business to make money off of you.

We'll just have to wait and see. All markets that rise, go down at some point - we just can't time it. I am sure that the market will be higher five years from now.

As for America First, those Walmart shoppers are going to be hurt and Chinese goods disappear. Also, China's rise in the world economy was largely financed by all the goods that used to be produced in the USA and Europe (at higher wages); it has enabled China to not just improve its workers standard-of-living, but invest in other countries, including the US.

The Wall Street Journal's on-line Market Watch has an opinion that reads "Dow 25K! Here’s what it says about the stock market" see: https://www.marketwatch.com/story/dow-25k-heres-what-it-says-about-the-stock-market-2018-01-04

One statement in the article says "The hoopla surrounding Dow 25,000 is expected to garner attention, but doesn’t rival the euphoria that surrounded the Dow’s move through 10,000 in the late 1990s—an event that was hyped as the dawning of a new stakeholder economy but was instead part and parcel of a soon-to-pop tech bubble."
What bubbles are lurking out there now?

Another statement reads "The collapse of the tech bubble was followed less than a decade later by the financial crisis of 2007-2009, which saw the Dow plunge from a high of more than 14,000 in October 2009 to a bottom below 6,500 before stocks began a recovery that marked the beginning of the current bull market, which will mark its ninth birthday in March. "

Maybe it all went here:

https://inteldinarchronicles.blogspot.com/2018/01/delta-force-raids-obamas-estate-in.html


Delta Force Raids Obama's Estate in Thailand

1/01/2018 11:37:00 PM News

DELTA FORCE RAIDS OBAMA STRONGHOLD IN THAILAND

DECEMBER 27, 2017

During the pre-dawn hours on Christmas Day, Delta Force operators launched a precision strike against an Obama-controlled stronghold in Thailand, says an active Secret Service agent who claims President Trump green lit the operation following a series of telephone calls to United States military commanders and to Thailand Prime Minister Nik Bukharin.

A Delta detachment, known as 1-SFOD in the Special Operations community, flew from Okinawa, Japan to the United States Embassy in Bangkok, and held position while Trump cleared the incursion with his Thai counterparts.

According to our source, the Trump administration learned that Obama, by proxy, owned a mansion and a 400-acre estate on the outskirts of the city of Si Sa Ket, approximately 500 km from Bangkok. On paper, the land was owned by the allegedly defunct Solyndra Corporation, a startup solar company to which Obama gave 2.2 billion taxpayer dollars in 2009. Shortly thereafter, Solyndra declared bankruptcy, and the money vanished. Despite apparent poverty, Solyndra maintained real estate holdings valued at over 800 million dollars in a half-dozen Southeast Asian countries. The Trump administration connected the dots, linking Obama to the Thai property, after asserting Presidential privilege and subpoenaing flight records that demonstrably proved Obama had travelled to Si Sa Ket six times as president and an additional four times in the past year.

In a June 2009 edition of the Washington Beacon, conservative author Thomas Clearwater wrote, “Solyndra does not appear to be a legitimate institution, and is likely a shell company or slush fund used or owned by Obama to launder his dirty money.”

Our Secret Service source supports that contention.

“Obama holds real estate, vast sums of currency, and shadow companies across the globe, under many aliases. He doesn’t keep them in his name, as that would be too conspicuous. The administration has learned about many of them and has been working with foreign governments to seize Obama’s illicitly gained assets. Many of these nations are not exactly friendly to the United States; we don’t know what Trump offered in exchange for rights to seize assets in non-extradition countries or put special operations boots on the ground on foreign soil. I’m sure the price way high. Clandestine missions are occurring right now. The Solyndra mansion was just one of many,” our source explained.

At 3:00 am (local time), a pair of helicopters, including decoy craft, airlifted Delta to its destination. They found the mansion deserted; however, according to our source, the dwelling had been recently occupied. The unit commander discovered freshly chopped vegetables and lukewarm coffee in the kitchen; outside fresh tire impressions lead away from the compound. Someone, our source said, must have tipped off the occupants shortly before Delta arrived on scene.

Still, Delta did not leave the location empty-handed. They seized several encrypted laptops and over 200 million dollars in gold bullion, in addition to dozens of crates containing Chinese manufactured firearms and explosives. Moreover, and perhaps most disturbing, a maze of underground tunnels, ostensibly used for human trafficking, ran for miles in every direction beneath the surface. Having gathered all available evidence, they requested exfiltration and handed-off control to Thai law enforcement.

Under power granted by the ASEAN Declaration to Joint Action on Counter Terrorism, Thai officials confiscated the estate and all remaining possessions contained therein.

OO, one troubling aspect is as someone said, that everyone is predicting the market to go up. That was also the case with Hillery.

Not sure what to make of that statement; the DOW was nowhere near 14,000 at any time during 2009 if my google is right.

Maybe they meant to say October 2007?

200 mill in bullion?

Someone tell me, is this fact?

edit, False........

Verify first maybe?

Here is a recent related article on market valuation from billionaire hedge fund operator David Tepper.

David Tepper says market is as 'cheap’ as a year ago, bullish on Trump’s tax cuts

But then, a Warren Buffett story in Time says "Warren Buffett Says Years of U.S. Growth ‘Certainly Lie Ahead’ - see: https://www.bloomberg.com/news/arti...emains-optimistic-about-america-s-future

Maybe it will all continue, but i'm cautious.

The market will go up at least through 6/30/18.

Anyone heavily invested in tech stocks should have stop loss orders in place at 15% below what they are. They should be adjusted upward as the stocks rise.

If by bad Karma, the Dimicrats retake the Congress in 11/18 there will be a big crash in anticipation of undoing the tax law, impeaching Trump and opening the borders to more criminals. A civil war would also not help the market.

Cheap ARs and cheap 22rf and 223 ammo purchased now, could prove to be a good hedge against the fools allowed to vote putting the Dims back in charge.

Then again, we could get lucky and CA might leave the Union!

Today's New York Times has the following article "After Dow 25,000, the Party Has to End. But When?" see: https://www.nytimes.com/2018/01/04/...&region=top-news&WT.nav=top-news

It ain't ending today!

The Greenback continues to decline, which is unexpected given the rise in the US equities market. For exporters like me, that's a wonderful thing. Of course, it is highly inflationary (imports are more expensive, and more goods are exported, both resulting in inflationary pressure), and so is the tight labor market. In other words, if you're in bonds, you are going to take a big hit, as interest rates will be rising quickly rather than slowly.

So, the commie bastid is talking up the market after his enemy, Trump (R) becomes potus against Buffets advice. Interesting.

Buffett is a value investor (in the ilk of Benjamin Graham). His politics and investments do not coincide.

Very interesting about 200 million gold. I am not in the least bit surprised if were true, cause, were did all the money go? Solindra buys land all over ? That land should taken away and given back to the USA. Anyway, I can see a bull market for another 6 months to a year cause the tax cuts will have ripple affects all over. I am happy Rida Morwa thinks RETS will be the winners cause I loaded up on RETS ( VTR , OHI) and FCOM, ( Fidelity communications ETF's . These are all big companies that will benefit from the tax cut.

Hello again Larry.........

Favorite High-Yield Growth Securities*

BST - Yield 5.5% (This is a very strong buy)
HQH - Yield 8.5% (This is a very strong buy)
ADX - Yield 8.9% (This is a very strong buy)
USA - Yield 10.6% (This is a very strong buy)
IDE - Yield 6.8% (This is a very strong buy)
THW - Yield 9.8%
DVYL - Yield 7.1% (This is a very strong buy)
SDYL - Yield 5.1% (This is a very strong buy)
LMLP - Yield 10.8%
BX - Yield 5.8%
SXCP - Yield 12.5% (This is a very strong buy)

(For those who paid attention today . . . )

HDO: Market Update

Rida Morwa
Feb. 2, 2018 4:40 PM ET

Dear HDO Members,

Equities are under pressure today with all of the major indexes retreating below their respective 20-day moving averages, the first key level of technical support. The S&P 500 index was down 2.1% resulting in its biggest weekly drop since early 2016. There are two main reasons for the selloff today:

Technology and energy stocks accounted for much of the broad slide as major companies, including Apple (AAPL) and Google (GOOGL), and energy giant Exxon (XOM) reported earnings that seemed to have disappointed investors. Google had a one-time non-recurrent tax adjustment that impacted its quarterly earnings, while AAPL reported a record quarter, but investors seems to have focused on Iphone sales which were below forecast.

Adding to the selling today was the jobs report this morning which came in stronger than expected, as wages grew at their fastest pace since 2009. This sent the 10-year Treasury Bond yield to 2.82%, its highest level in roughly four years. Investors have become increasingly worried about more rapid interest rate hikes by the Fed spurred by higher inflation.



The VIX volatility index (or fear index) is up again today by 30% as nervousness has increased with investors wondering if there will be enough interest on this pullback for the bulls to dive back in.

Historically, February has been a volatile month for equities. The fact that the S&P 500 index did not hold the 2800 level makes me believe the worst selling is not over, and we could see acceleration in selling next week towards the 2720-2700 level.

The Good News

Though there are still plenty of companies that will report earnings the next week or two, the most highly anticipated and visible stocks have already reported their numbers. Overall, most companies that reported so far had good earnings reports.

This pullback brings some much needed relief after the huge run that the equities have seen since President Trump was elected in late 2016. Major indexes are no longer in overbought territories but they are still up nicely for the year.

Putting things into perspective, a good jobs' report means that the U.S. economy is flourishing, which is bullish for equities in the long term.

I do not believe that we will see a market correction, and any selling towards the 2700 level for the S&P 500 index is likely to be short lived. The best course of action is to sit tight and weather the current market volatility. The markets should soon recover.

Sincerely,

Rida MORWA

Yep

Market Update

Rida Morwa
11 Feb 2018

The stock market went on a wild ride this week, with the Dow Jones Index closing down 1,175 points on Monday, its worst point drop in history. The index closed down 4.6% in that single day. The previous largest point drop for the Dow index had been 778 points in September 2008, in the midst of the financial crisis. I know many of our members are not used to this kind of market volatility and that it was a difficult week for all of us. I will attempt to explain in this report what happened this week, and why the market correction is likely to be over, and we should look forward for a much better performance going forward.

Why the increased volatility?

An uptick in the metric of labor costs (2.9%) created a concern about the danger of inflation and rising interest rates and a surge in 10-year Treasury rates. This is a bit ironic because during much of 2017 the greatest fear was the a flat yield curve was predicting a recession. The surge in 10-year rates should have dispelled that fear. At any rate, concerns about inflation (and, in some quarters, about an overreaction to inflation on the part of the Fed) led to a downtick in the market.

The drop was substantial enough to set off a chain of technical events. As stocks declined the metric of volatility began to increase. This increase led to actions within VIX Short ETPs (exchange traded products) which triggered a much deeper decline. The result of the increased volatility has resulted in the S&P 500 index enduring a market correction of 10% in a period of six days. There are several reasons for the markets to correct, but none of them should have resulted in a 10% general market pullback, except for one: Inverse Volatility Index products have malfunctioned in a very bad way, triggering a huge market selloff.

Volatility Inverse trading instruments such as the Velocity Shares Daily Inverse

VIX Short-Term ETN (XIV) - and their leveraged counterparts - usually go up in price significantly during periods of a strong bull market. These ETPs (exchange traded products) have gained a lot of popularity in 2017 and made tons of money for investors as the general markets saw virtually no volatility at all since the election of President Trump in November of 2016. Unfortunately, it looks like these products were designed in a very bad way, and in case price volatility picks up, they tend to lose a significant amount of their value. For example, the inverse VIX ETN (XIV) above lost 92% of its value in a span of 4 days (from Monday till Thursday of this week.)

Worse yet, the sponsors have to hedge their exposure by selling options (puts and calls) so that they can generate profits offsetting their obligations to fund investors when volatility stays low. When the market turns down and volatility starts to increase, the sponsors then have to hedge against losses on these options by buying puts or short-selling ETFs. Their heavy buying of puts and shorting ETFs drives up the price of puts and therefore drives up volatility and a self-reinforcing feedback loop process of increased volatility and declining stock prices is set up.

It is estimated that there are $4 billion worth of inverse VIX ETPs which is enormous. These instruments depend on computer generated trades to keep these products up and running.

It appears that these ETPs have not been well stress-tested. Instead, they were rushed to markets due to high investor demand, only to get crushed as a result of high-volume sudden moves such as we have seen in this past week.

What happened this week is total chaos: With heightened volatility, many of these inverse ETPs, all of the sudden were hit with "in-the-money put options" that they had never thought they will be hit with. Computers running these ETPs started generating trades in order to protect against losses as a result of these put options. From what it looks, these computers started "short selling" ETPs in order to protect themselves, and all hell broke loose: A disorderly shorting of ETPs by computer generated programs increased the market volatility and resulted in a 10% general market pullback.
The losses of investors in the ETPs were just the tip of a much bigger iceberg. The actions of the sponsors in protecting themselves by massive buying of puts drove volatility much much higher. This in turn triggered equity selling by volatility control funds and volatility limiting strategists. A great deal of investment is now governed by strategies which limit overall volatility by selling assets which become more volatile. The higher volatility generated by the sponsors of VIX shorting ETPs likely led to massive equity selling by entities using these strategies.

The evidence supporting the technical - rather than a fundamental - reason for the decline is that the decline affected virtually all stocks in the S&P 500 Index (the Index) and that it abruptly reversed course several times. Had the decline been due to a fundamental concern about higher interest rates, one would have expected differentiation among stocks and sectors with some stocks (banks and companies with large amounts of net balance sheet cash) rallying and others (stocks with large amounts of floating rate debt) declining more than the average for the index.

Why the worst is likely to be over?

There are several indicators that lead us to believe that the worst selling is over, and that the markets are ready to rebound again soon:

Some issuers of VIX inverse traded ETFs have announced that they will be closing these ETFs. This includes the ETF XIV which was issued by Credit Suisse, and will stop trading XIV on Feb 20, 2018. This is an indication that many of these ETFs have already liquidated most of their underlying "put options" holdings, and that there is not much left that would result in computer generated programs dumping more ETFs into the markets.

The S&P 500 index went down to its 200-day moving average, the 2539 level on Friday, which is a level of support, and strongly bounced back from that level.

The markets closed sharply up on Friday (the last day of the week). The S&P 500 index was up by 1.49%. Usually, when the markets close up sharply on Friday, it is a good sign that investors are comfortable holding positions over the weekend. This is a sign that it is likely that the market has already bottomed.

It's not unusual for the month of February to be a weak month for the stock market. Over the past 20 years, the market indexes have had some of their best monthly performances during the months of March and April.

On the other hand, there could still be some amount of money which remains invested in volatility control funds and strategies which could result in a continuation of volatility for a few more days, however it is likely that the worst is already behind us.

Finally and most importantly, the technical glitch and the market correction that we have seen which were the result of flaws in inverse ETFs do not have any impact on the state of the U.S. economy or on the global economy. Remember, bear markets usually happen as a result of weakness in the economy and clearly this is not the case today.

A Reliable Metric To Consider - Why the S&P 500 should close the year at the 3000 level or above?

Since November 2009, the S&P 500 Index has traded in a narrow dividend yield range of between 1.8% and 2.2% with a mid-point at 2.0%. It has traded in this range at times when the interest rate on 10-year treasuries was much higher than it is now as in 4/2010 (3.84%) and 2/2011 (3.64%). As recently as 1/2014, the rate was 2.88%. During this entire period, the range has held up. One of our authors (Philip Mause) has written numerous articles on this topic.

The dividends on the S&P 500 Index are now at the level of $50.30. This would imply a range for the S&P index of 2286 to 2794 with a mid-point at the 2515 level. The current dividend yield is 1.92% so we are slightly above the mid-range (which is less than 4% lower from here). A decline to the bottom of the range would take it down by 12.7%. However, we should note that given the strength of the economy, it is unlikely that the Index will fall below the mid-point and extremely unlikely it will fall below the bottom of the range. As time passes, the range will be constantly moving up because we are experiencing increasing earnings and dividends. On the other hand, in the very short term, it is possible that technical factors can overwhelm fundamentals and dominate trading.

A key thing to remember is that the range is constantly changing as dividends are increased. This year promises to be a big year for dividend increases due to at least three factors:

1. Strong corporate earnings.
2. Increased cash flow due to the tax reform measures.
3. Deregulation enabling banks (which currently have very low payout ratios) to increase their dividends.

Just in the last week, we saw the following dividend increases - Humana (HUM) by 25%, Blackstone (BX) by 93%, Allstate (ALL) by 24%, Prudential (PRU) by 20%, Primerica (PRI) by 25%. Barron's reported analysis indicating that Bank of America will increase its dividend by 60%. There are virtually no companies in the Index reducing their dividends.

A quite conservative projection would be a dividend level of $58 by year-end creating a range for the S&P 500 Index between 2636 and 3222 with a mid-point at the 2900 level. And - remember - dividends should continue increasing into 2019 and beyond. With the market being a forward looking mechanism, this lead us to believe that the S&P 500 index should close at or above the 3000 level by year-end. As a reminder, the 3000 level is also the price target for the S&P 500 index by most banks and analysts.

We believe that the worst is most likely over, and that we should look forward for the markets to start a good recovery from here and over the next few months. We urge our members patience and not to give up. We advise our investors to keep disciplined and patient as long-term investors are set to be well rewarded. If anything, the current markets correction offers an exceptional buying opportunity as this strong "bull market trend" remains fully in place.

Why did the stock market plung last week?

Lots of shenanigans going on!





"Whistleblower" alleges manipulation in key market volatility index

REUTERS - 10:20 AM ET 2/13/2018

(Reuters) - A scheme to manipulate Wall Street's fear gauge, VIX, poses risk to the entire equity market and costs investors hundreds of millions of dollars a month, a law firm on behalf of an "anonymous whistleblower" told U.S. financial regulators and urged them to investigate before additional losses are suffered.

The Washington-based law firm which represents an anonymous person who claims to have held senior roles in the investment business, told the Securities and Exchange Commission and Commodity Futures Trading Commission on Monday that he discovered a market manipulation scheme that takes advantage of a widespread flaw in the Chicago Board Options Exchange (CBOE) Volatility Index (VIX).

The CBOE Volatility Index measures the cost of buying options and is the most widely followed barometer of expected near-term stock market volatility.

"The flaw allows trading firms with advanced algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital," it said in a letter.

Those bets against volatility unraveled last week as the benchmark S&P 500 and the Dow Jones Industrial Average suffered their biggest respective percentage drops since August 2011.

Investors using exchange-traded products linked to the VIX were pummeled and two banks, Credit Suisse Group and Nomura Co Ltd, said they would terminate two exchange traded notes that bet on low volatility in stock prices.

Months of extended calm in the stock market has made selling volatility a lucrative affair, with ETPs attracting about $3 billion in investment.

When the VIX futures prices spike, these ETPs lose value, at which time the issuers of these products could liquidate the shares.

"We contend that the liquidation of the VIX ETPs last week was not due solely to flaws in the design of these products, but instead was driven largely by a rampant manipulation of the VIX index," according to the letter from the law firm.

The letter lacks credibility as it has inaccurate statements, misconceptions and factual errors, including a fundamental misunderstanding of the relationship between the VIX Index, VIX futures and volatility exchange-traded products, CBOE said in a statement to Bloomberg.

The SEC declined to comment, while the CFTC and CBOE were not immediately available for comment.


Stock market Volatility

Guys, isn't anybody old enough to recognize Wall Street profit taking? It will happen every time there's this kind of up-tick in the markets. Just the way it is. I choose to stay the course. Don't need to go after anything there, anyway. Likely won't for many more years. Probably be some more Wall Street profit taking between times.

I'm staying put right where I want to be. Moderate to high risk game for me, at least until I retire two years from now.

Quick Market Update - Feb 14, 2018

Rida Morwa

The markets look like they are holding pretty well given the high inflation numbers that were just announced. Consumer prices rose 2.1% over the past year, meaning that inflation rose more than economists had predicted. Such news would have sent the markets tumbling last week. This confirms our views that the worst of the selloff is over.

We explained the reasons for the market selloff last week which was triggered by the unwinding of large sums of money invested in Inverse VIX volatility products (ETFs and ETNs). Investors have been piling up large sums of cash since the presidential elections betting against volatility. This betting reached bubble territory last week, and the bubble burst and caused a market correction. We explained that most of the money shorting the VIX has either already exited or evaporated by last Friday. We also explained that the market correction looks like it is finally over.

Now finally the market has calmed down and investors have become rational. Slightly higher inflation due to a stronger economy is a good thing for equities. The VIX volatility index is down by 15%. Along with the move lower in the VIX the general markets are up with the S&P 500 index up now by 0.6%. The VIX volatility index has dipped below its 200-day moving average, which is a good sign.

All this looks to me very positive; the panic has subsided and it is likely that equities will resume their move higher. The next target for the S&P 500 index is the 2714 level which is the 20-day moving average for the index. To the downside the 2648 level should provide some support.

This bull market is based on fundamentals, and fundamentals almost always prevail. This market has still plenty of potential and we continue to believe that the S&P 500 index should reach the 3000 level before year end.

As we stated in many previous market updates, investors who buy and hold are set to be well rewarded. For members who still have some cash on the sidelines, this is a good time to put some at work.

thanks.

Market Update: 23 March 2018

Rida Morwa's High Dividend Opportunities


Market Update

As stated in our Premium Post yesterday, Federal Reserve Chairman Jerome Powell issued a dovish statement. The Fed raised interest rates by 0.25% as expected, and said that interest rates will only be hiked 3 times in 2018 instead of 4 times. The statement also said inflation remains tame and the Fed will allow inflation to run above the 2% target rate. So the Fed statement was definitely a dovish one and it clears the way for the next market run.

So why are the markets pulling back?

The big selloff in equities yesterday is the result of political news rather than economic news. The media has made a big fuss over tariffs on China. In our opinion, the media is blowing the situation out of proportion. This is our take on the situation:

Although the big trade story about intellectual property trade action against China spooked the markets, a more important development got little attention. The Trump Administration has decided to exempt Canada, Mexico, the EU, South Korea, Australia, Brazil and Argentina from the steel and aluminum tariffs. This means that roughly 2/3 of steel imports will be exempted and roughly 54% of aluminum imports will be exempted. This really reduces the impact of these tariffs and cuts back on the danger of a retaliatory trade war.

The trade war over China could have an impact on large multinationals that export to China. Still, this will not likely weigh as much as many investors fear. It is clear that the old way of doing business with China has not been constructive and that China has been taking advantage of the situation. Standing up to China could result in a more balanced trading relationship.

While there is fear that the Trump administration will wage war against all of the U.S. trading partners, this is clearly not the case. The Trump Administration has been willing to sit at the table with its NAFTA partners (Canada and Mexico) and come up with a constructive improvement of the NAFTA treaty. This is very relevant, because it shows that the U.S. wishes to improve trade rather than destroy its relationships with walls of protectionism.
Today there is panic by investors, and the markets are pulling back. However, sooner or later investors will come to their senses and realize that the situation is not as bad as it looks. I expect that the markets will fully recover and that the current bull market is set to continue.

The HDO Portfolio is Well Positioned

The good news for the HDO portfolio is that the vast majority of our portfolio will not be impacted by this trade war nonsense.

The Property REITs that we hold invest in real estate exclusively in the United States. What happens between the U.S. and China will not impact this sector. In fact, this sector could benefit from higher tariffs because it would make it more expensive to build new properties in the United States if raw materials become more expensive due to higher tariffs, and this would result in higher real estate prices.

Business Development Companies, just like Property REITs, do 100% of their business in the United States and will not be impacted by whatever happens in China.

Midstream MLPs own assets (storage and pipelines assets) that are all located in the United States and Canada. This sector will also not be impacted from international trade with China.

Our portfolio is very well positioned with cheap stocks that have the vast majority of their business conducted in the United States. The profitability of these companies have little to do with international trade.

Still, I believe that the current market panic will not last long, and the bull market should resume as soon as investors realize that the situation does not present any serious economic risk to the United States.

Potential Great News for BDC Companies

Last week, we posted to our members that Business Development Companies (or BDCs) are likely to benefit from a new provision that would allow them to borrow more money and increase their profits. While the entire BDC sector will benefit from this new provision, we highlighted two companies that would benefit the most which are:

+ Apollo Investment Corporation (NASDAQ:AINV) - Yield 9.6%
+ Ares Capital Corporation (NASDAQ:ARCC). Yield 9.6%

We also advised our members who wish to have a broad sector exposure to increase their position in UBS ETRACS 2x Leveraged Long BDC Company ETN (BDCL) with a yield of 19.8%.

It appears that the provision which will allow to increase permissible BDC leverage has been included in the large spending bill. The bill will probably pass this week in order to avoid a government shut down. Following the news, most of our BDC companies had a great day yesterday despite the huge market selloff.

+ ARCC was up 4.0%.
+ AINV was up 3.1%
+ BDCL was up 3.9%
+ PFLT was up 2.7%
+ MRCC was up 2.7%

I believe this is just the beginning. Should the law passes, BDC companies are likely to see a huge rally because it should allow these companies to increase their profits by 50% over the long term, and it would also result in huge dividend increases over the next few years. The potential is enormous! This bill has a good chance to pass and we will keep our members posted.

=====

Our Best Picks for the year 2018

We have posted recently our updated report on the best high-yield stocks and securities to buy for the year 2018. For those who did not have a chance to read the report, the following is the link:

Market Update For January 10, 2018 + Our Best Picks For 2018

===

Reminder about diversification

A key to successful investing is to be diversified across all sectors we recommend. In addition to "value dividend stocks" that are the focus of our service, we strongly recommend to also diversity into "growth stocks" that were highlighted recently in the following Premium Post:

A Portfolio Balanced Between Value And Growth

We have also noted that some of our members have decided to only invest in those stocks and securities that are tagged as "must owns". This is not a good strategy, and we recommend against it, as it results in less diversification and increases the risk of the portfolio under-performing. The stocks tagged as "Top Buys" are as good as the "Must Owns". The only difference is that we see more short-term upside potential in the "Must Owns" as compared to the "Top Buys", but our long-terms views for both is the same.

MARKET UPDATE - 31 March 2018

Rida Morwa's High Dividend Opportunities

Market Update

There has been a lot of market volatility recently. After logging one of the worst weeks in 2 years last week, the markets soared last Monday and the Dow index put in its 3rd highest point gain in history. But volatility in equities continues. There are several reasons for the recent volatility:

We should keep in mind that such volatility is normal. What was not normal is the extremely low volatility that we have experienced during 2017.
We are in a consolidation mode. The markets need to consolidate in order to move higher. History has shown that the more we consolidate, the higher equities will move when a breakout happens.

Negative headline news, including political and financial ones, with the latest being a trade war with China and the Facebook data breach. Many investors are thinking that free trade will come to an end and that the stock markets will crash. The reality is that the political media continue to blow things out of proportion and cause knee-jerk reactions by anxious retail investors.

The action on Thursday was positive with all of the major indexes higher. Perhaps the selling of the large cap tech stocks is nearing an end. The VIX volatility ended the day lower by over 13% which is an indication that nerves have somewhat calmed down. The fact that the market finished the day on a positive note bodes well for the new trading week and month after the long weekend. It's also going to help once earnings season gets underway as overall the numbers should be good.

Why the Bull Market is set to Continue

In fact, we believe that the outlook for equity markets remain very positive and we are likely to see renewed strength in the stock market for reasons we highlight below:

1- Low Interest Rate will persist

First of all, we have to remember that the Federal Reserve came up with a dovish statement last week, as we explained in our latest market update. Fed Chairman Jerome Powell hinted that there will be only 2 additional rate hikes this year, bringing a total of 3 rate hikes in 2018. This is a dovish statement as the markets were factoring in 4 rate hikes for the year. So this brings us to the conclusion that the Federal Reserve will remain accommodative and paints a picture of a less aggressive tightening policy.

Despite the recent interest rate hikes, and even factoring in future rate hikes, interest rates remain at historically low levels as we can note from the chart below depicting the US Fed Fund rates for the past 45 years.



We are constantly being bombarded with news that interest rates are exploding, and that higher rates are bad for equities in general and high-yield stocks in particular. Such headline news included that the 10-year treasury yield is going to hit above the 3% level soon. In our opinion, we will not get there as fast as many analysts are predicting and today the yield has retreated back to the 2.8% level.

The truth is that we remain in low interest rate environment and that will persist and will support the stock market going forward.

Importantly, most high-yield sectors have sold off hard on news that higher interest rates will impact profitability and cash flow. The fact remains that most high-yield stocks (including REITs, MLPs and BDCs) are reporting record earnings, and most stocks in the HDO portfolio are continuously hiking their dividends.

2- First quarter earnings season will be strong

The first-quarter earnings season will start in less than one month, and analysts are forecasting the S&P 500 companies earnings will grow by 17.2%. This is going to be the strongest earnings season since Q1 2011 and should lift the general markets higher. Of course, the higher the earnings are, the lower the stock market valuations get. This means that despite the big market run we have seen during the year 2017, valuations are still about the same as a year ago. Most equity prices are not expensive.

We are particularly optimistic about the high-yield sectors - most of which are in oversold territory - and we believe that the coming earnings season should dispel fears that high-dividend stocks are suffering from interest rate hikes. We expect to see strong earnings reports particularly in the Property REIT and BDC sectors. In fact, the Property REIT space has started to see a Strong Recovery, and this is likely to be just the beginning. As for the midstream MLP sector, it has become clear that FERC's decision will have a minimal impact on profitability and cash flows. But the sentiment is currently negative and this sector is likely to take more time to recover, so we advise our members some patience here. We will discuss the situation with the Midstream sector in more details in a separate Premium Report.

3 - Key Technical Support is still holding

At HDO, we do not rely on technical analysis to predict the market, but we use them as a confirmation for market trends. This analysis is particularly helpful as it can confirm whether we are still in a bull market or if we are heading into a market correction.

Despite the big selloff last Friday, we can claim with accuracy that the S&P 500 index held its 200-day moving average - almost to the penny - perfectly before the big rally on Monday.

This is a confirmation that the secular bull market remains intact. It looks like the equity markets are currently in a bottoming process and the uptrend should resume.

4- High Yield Sectors are performing well

The Technology sector has been the main loser as a result of the latest market weakness. We have been saying for months now that Technology stocks are expensive and that there is a downside risk. The good news is that "value stocks" have fared pretty well during this past week, despite the market turbulence. Property REITs, BDC companies and Midstream MLPs have been outperforming the markets. The reason is simple; these sectors are already cheap and any downside risk is limited, while the upside potential is great. The most notable gainers have been Property REITs which have been seeing a strong momentum. Still, after the recent rally, Property REITs are still cheap, and this sector is likely to be our biggest gainer for the years 2018 and 2019. We recommend that our members have at least a 20% exposure of the overall portfolio to this sector in order to maximize returns.

A Trade War is very unlikely to happen or to have a major economic impact.

Investors have been nervous about a potential trade war with China and its impact on the U.S. economy. Investors should understand the background and significance of the actions and should try to put the issue in perspective in order to assess its impact on stock valuation.

Of course, a major disruption in international trade would have very negative effects on the economy and on corporate earnings. Free trade with the United States has expanded under institutional frameworks which were actually largely the product of American design. In recent years, the merchandise trade deficit experienced by the United States has ballooned up to some $800 billion (it was roughly $100 billion in the 1990's). We do have services trade surplus of some $250 billion but that still leaves us with a huge overall deficit. It is discouraging that as oil imports have declined, the deficit has actually grown. Net oil imports (we import crude and export refined products) now constitute only 3% of total imports.

The United States is a very important consumer in a world economy with chronic excess capacity in many industries. US imports constitute 14% of all world imports. We generally pay for imports with dollars which are in high demand by foreign countries because of the dollar's role as a global reserve currency. Our position as the biggest buyer in what is essentially a "buyer's market" due to excess capacity should give the United States leverage in negotiations.

Having said this, the United States (and especially some important elements of President Trump's constituency) depend heavily on exports and could be seriously harmed if we were to face retaliation in a trade war.

The coal industry for example had a fairly decent year in 2017 (production was actually up year over year) and it was almost entirely due to a huge increase in exports.

The natural gas industry is ramping up LNG exports with the support of the administration.

Farm exports are absolutely essential to support our agricultural sector - we export huge quantities of soybeans, corn and wheat and are now exporting significant quantities of ethanol (essentially liquid corn).
Many of our international customers would just love to protect their own farmers by blocking our exports. And this would not play well at all in Trump Country.

The National Security Tariffs: President Trump's tariffs on steel and aluminum imports were asserted to be based on national security concerns. This quickly led to pressure to exempt friendly countries from the tariffs including: Canada, Mexico, South Korea, the EU, Brazil and Australia. Others (very likely Japan) should follow. As a result, some 70% of steel imports and 54% of aluminum imports should turn out to be exempt. The biggest loser in the process has been Russia which has not gotten an exemption and is a very large (the second largest) exporter of aluminum to the United States. These tariffs will have some economic effect but it will not be the disaster that some pundits predicted.

The China Trade Issue: China is a very large exporter to the United States (it accounts for 22% of US imports) but not a particularly large customer of the United States (only 8% of US exports). China runs an overall merchandise trade surplus (exports minus imports) of some $600 billion. China has periodically signaled that it would reorient its economy away from net exports and rely increasingly on domestic consumption as a source of demand but the large surplus continues.



It is not surprising that the Trump administration is seeking to recast the trade relationship with China. President Trump has threatened tariffs on some $60 billion of Chinese imports into the United States (this is probably roughly 12% of total imports from China). Various steps have to be taken to identify which products will be affected and to actually implement the tariffs.

The issue that seems to be the focus of concern is Chinese failure to honor American intellectual property rights. We have seen this issue before with video piracy and knock off luxury products. In its present incarnation, it is more of a patent protection problem with high-tech products and intellectual property.

The United States had a furious dispute with Japan (and South Korea) over a similar issue in the 1980's and 90's. It primarily involved allegations of theft of IP with respect to computer chips and the litigation went on for years. Despite a very contentious atmosphere, the dispute did not have any significant effect on the stock market or on economic performance.

There appears to be a level of anxiety when the Trump Administration takes any action on the economic front. In this case the market's tantrum does not appear to be justified. The dispute over foreign protection of American IP is not a new one; the issue has been in contention for decades. This will likely be resolved by technical teams from the two countries because it is a highly technical issue involving complex licensing deals, electronic patents, legal remedies, and the application of patent law.

It is extremely unlikely that we will be seeing anything like an all-out "trade war". Instead, the United States has options in a system in which it is generally dissatisfied by its role as the world's consumer of last resort; the US will be able to get its way on some of these issues because it has enormous leverage on other countries. These countries need to export to the United States more than the United States need to export its own products. It would be crazy for any country - including China - to tear down the house of international trade in this situation.

The Bottom Line - The trade situation with China has been blown out of proportion. This issue is neither a new one or a major one (as it only affects 12% of imports from China) and is very unlikely to have any significant impact on corporate earnings and should not affect valuations. It has been overblown by the media and it is not at all that big a deal.

Long-Term Outlook for Equities

Despite the current volatility, the outlook for equities remain constructive for the next 2 to 3 year at least. Today, the risks of running into an economic recession are at their lowest levels since the financial crisis of 2008. Rising corporate profits, an expanding global economy and a low interest rate environment will continue to provide a tailwind to the equity markets. We still believe that the markets should close the year 2018 much higher from here. Our target for the S&P 500 index is at the 3000 level (or roughly 14% higher from here). This is a market that is set to reward long-term investors. We advise our members to remain diversified across all the recommended stocks and sectors in our portfolio in order to maximize returns.

MAGA

MLP's are so cheap it is crazy. AMZA was $6.75 a week ago. All the REIT's are cheap but went up when the stock market was tanking this week. That shows that REITS are undervalued. MLP's however tanked with the market, making them insanely cheap.
Also, Asian markets went up today.

My plan is to retire in 4 yrs. I am still at a 70% stocks and 30% bonds. I have always been higher risk but with 4 yrs to go, I am starting to wonder about lowering the risk but, I hate to give up the returns.

I went with PONAX a few weeks ago . It is just off it's 52 week low. It is a Multi sector bond and pays 5% divies and pays them monthly. The price hardly varies at all but has gone up a little last week. I also have HYD. It is a Muni bond ETF. It pays about 4.3% and pays monthly. HYD is a tax free Muni bond. I made about $1,000 in divies last year , but somehow $9 ended up taxable so it is not taxed. If you sell for a profit then the profits are taxed.

I find market analysts like weathermen.
They are great at telling you what happened yesterday.

After running fairly high risk since 1986, upon retirement nearly three years ago at age 53 I reallocated and substantially went to index funds, short of company stock that is still being delivered. I no longer wanted to manage my investments daily as I had been. Retirement... I have been with Fidelity since 1986 and now run 45% US equities, 20% international equities and the rest in bonds/cash. Well there is real estate too, here in Texas and a couple of properties in north Idaho. The bobbles in the market have been absorbed fine and I am running very large growth every year. I ain't worried.

Booming means many things to many people.

AMZA has a average return of (- 16%) over the last three years. While the S&P is up 10% over the same time period.

https://www.marketwatch.com/investing/fund/amza/profile

[/quote]I went with PONAX a few weeks ago . It is just off it's 52 week low. It is a Multi sector bond and pays 5% divies and pays them monthly.
[/quote]


Make sure you deduct the 3.75 load fee and the 0.90% expense ratio from your return. Makes quite a difference...

http://www.morningstar.com/funds/XNAS/PONAX/quote.html

With Fidelity you dont pay load fees and the return has the .9% charge already. I wouldn't pay a load for any fund anymore , ever.

For those owning AMZA, what's the deal with AMZA dropping their dividend from $.52 down to $.11 on the last 2 payouts?

They went to a monthly pay. Nevertheless, the yield was cut.

Note on AMZA

Rida Morwa

AMZA just announced (Jan 2018) the following:

A dividend decrease from an annual rate of $2.08/share to $1.32/share. The new dividend yield is at 15.2%.

Furthermore, AMZA announced that the dividend will be paid on monthly basis at a rate of $0.11/share.

This is great news for AMZA as it results in a much better dividend coverage, as the return of capital (or ROC) to shareholders should be reduced significantly or even eliminated. AMZA is an ETF that trades at its "Net Asset Value," so any dividend reduction will not impact the price negatively. In fact, I spoke to AMZA's management about six months ago and I recommended that they take these two steps (changing the dividends from quarterly to monthly and reducing it). I am glad that they have implemented these two measures which makes this product a much better one. A reminder to our members that AMZA is different from most midstream ETFs/CEFs/ETNs in the fact that it is actively managed:

AMZA's management uses an opportunistic buying strategy which allows them to overweight stocks that have sold off for reasons they view unwarranted.

They also sell covered calls to boost profits.

This ETF is set to outperform going forward.

Thanks

Trying to understand why you are recommending a ETF that has gone from $24 share in 2015 to its current price of $6.84?

https://www.nasdaq.com/symbol/amza

Dividend play with a 300% equity loss?

With a management fee of almost 2%, 300% loss over the last three years, a one star rating from morning star and a reduction in dividend payout I would need a very strong argument to invest one nickle into this ETF.

If one is looking for a dividend play and is willing to take on some risk CIF pays a 9% dividend and has hovered around $3 share over the last five years. Caveat emptor

http://www.morningstar.com/cefs/xnys/cif/quote.html

t185 - Here is the original buy alert for AMZA in May 2016


BUY ALERT AMZA
- A Close Look At AMZA, An ETF With 20% Yield

May 14, 2016 10:28 AM ET•AMZA

Rida Morwa - High Dividend Opportunities

Summary

Buy Alert: InfraCap MLP ETF (AMZA).

+ InfraCap MLP ETF (AMZA) is an actively managed Exchange Traded Fund focused on the Midstream Oil & Gas MLP space. The managers are Infrastructure Capital Advisors.

+ AMZA is a relatively new ETF which started trading late 2014. The ETF currently yields close to 20%.

+ Over the past 3 months, AMZA achieved 38% total returns compared to 25% for AMLP.

+ A close look at this misunderstood ETF.

Dear Subscribers,

I would like to increase our Portfolio's exposure to the Oil & Gas midstream sector. I have prepared a report on a new ETF - InfraCap MLP ETF (NYSEARCA:AMZA) which currently yields close to 20%. In my opinion, AMZA is set to provide excellent returns over the next couple of years. It is worth to note that this ETF does not issue K-1s. It is set up as a c-corporation and therefore issues a 1099 form, avoiding tax complications.

For our International subscribers: AMZA is a good alternative to investing directly into MLP stocks, as some have reported that they are getting subjected to a large withholding tax on distributions paid by Master Limited Partnerships. Some subscribers from Asian countries informed me that their withholding tax is as high as 40%. AMZA, AMLP and MLPG are all tax efficient products and can be used as an alternative.

Note on the 20% yield: AMZA pays to investors an amount of $2.08/share every year. This comes to 19.7% yield. On certain finance websites, the yield shows as 11.69%. This would be the 12-month trailing SEC yield, which is computed by subtracting any "return of capital" to shareholders (Return of Capital represents unearned returns paid to shareholders in form of distributions). The 11.69% represents the dividends and income earned by AMZA over the past 12 months. AMZA paid some "return of capital" to shareholders in 2015; however no such returns were made during 2016. Therefore the reported SEC yield is not an indicator of actual distributions (which are 19.7%) or of future performance. I expect AMZA to keep outperforming in the future, as it has done over the past 3 months.

Buy Alert



Additional Notes on my article below: I was granted last Friday an exclusive interview with Infrastructure Capital Advisors, the managers of the AMZA ETF. Following my conversation with both the CEO Edward Ryan and the portfolio manager Jay Hatfield, I could judge that the team managing the ETF is professional and competent. They explained to me their strategy in details which I am sharing with subscribers.

The following is the full report.
++++++++++++++++++++++

Outlook for Oil and Gas MLPs

This is a follow up on a recent report posted on Seeking Alpha on the outlook of global oil supply and demand trends over the next 5 years. The report also includes the outlook and valuations for the largest oil & gas MLPs.

The conclusion of the report:"Despite the recent price rally in the oil and gas MLP space, the sector remains severely undervalued. The large MLPs have a 40% to a 75% upside which can be achieved over the next two to three years, in addition to the hefty distribution yields averaging around 10%."

For those who did not get a chance to read it, the following is the link:Master Limited Partnerships - Why The Current Rally Is Just The Beginning

InfraCap MLP ETF is an actively managed Exchange Traded Fund in the Oil & Gas MLP space, managed by Infrastructure Capital Advisors. The Fund is invested primarily in the U.S. midstream energy infrastructure sector.

The ETF is relatively new and started trading on the New York stock exchange in October 2014, around the time when Oil & Gas MLPs were under severe selling pressure. The total assets of this ETF amounted to around $42 million. AMZA trades based on its Net Asset Value (NAV), which is reported on a daily basis by its manager.

The ETF pays $2.08 per share yearly, which gives it a yield close to 20%.

Holdings

This ETF invests primarily in first class oil and gas MLPs with the following characteristics:

1. Investment grade credit.
2. Stress tested to perform well regardless of oil prices.
3. History of earnings growth.
4. History of dividend growth.
5. Full cycle companies which can thrive in different phases of the oil cycle.

If we take a close look at the top holdings of AMZA, we find they are the same as those of the Alerian ETF AMLP (NYSEARCA:AMLP), however the weightings are different. The current top 10 holdings of AMZA are the following:



An actively managed strategy

AMZA is an actively managed ETF. Therefore it provides more added value to investors. The following is the strategy used by its manager to maximize income and growth:

Flexible allocation: AMZA managed to build a model to track MLPs that are undervalued or those with the best upside potential. They have flexibility to allocate investments to those companies that are best poised to outperform. For example they outweigh those companies who will benefit from mergers and acquisitions, or those which become severely oversold. AMZA management increased allocation on Energy Transfer Equity (NYSE:ETE) when the stock collapsed last February to the price of $4/share. ETE trades today close to $13/share. Finally, AMZA has a unique advantage because it can add the General Partners ((GPs)) of MLPs (Parent Companies of MLP companies) to their portfolio holdings. The General Partners also pay high distribution yields and many are not Master Limited Partnerships. GPs are added to the portfolio using an opportunistic strategy.

Use of leverage: AMZA has the flexibility to use leverage with a target of 20% to 25%. The added leverage helps the ETF to capture higher distribution yields paid by the underlying companies. This also enables it to pay shareholders higher distributions.

Writing covered calls: Finally, AMZA management uses a covered-call strategy to boost income. Covered calls can help reduce the ETF volatility during market turbulence. Also covered calls can be a good source of income during period of price stability.

Simplified Tax Accounting

Like AMLP, AMZA is taxed as a c-corporation. Therefore investors get the form 1099 and not K-1. This provides investors with an entry to the oil and gas MLP space without tax complications.

Why did AMZA underperform AMLP in 2015?

The ETF seeks to pay a steady distribution of around $2.08/share per year (current yield 20%) and to keep a stable Net Asset Value (NAV). Based on my analysis, management seeks to achieve this return based on the following 4 sources of income:

1. The distribution yield of the underlying stocks, which currently comes to 9%.
2. A 1.5% extra income from leverage.
3. Writing covered calls, which can possibly achieve around 2% return when the markets are not volatile.
4. It seems that management seeks to fund the shortfall of 6.2% from capital gains achieved on the underlying holdings to shareholders.

At first glance, the strategy used by the ETF seems logical, since most companies held in the portfolio are growing at a rate of 6% or more annually.

However, the fixed distribution, "regardless of the performance of the underlying portfolio", puts the performance of the ETF at risk during severe market downturns. This is exactly what happened in 2015. As the underlying stocks kept falling, the ETF had to sell a part of its holdings at low prices in order to return a steady distribution yield to shareholders. This led to a deterioration of NAV, which is the main reason why AMZA has underperformed AMLP.

Outperformance of the past 3 months

The strategy used by the ETF has finally paid-off. On a total return basis (including dividend reinvestment), AMZA has delivered almost 38% return over the past three months compared to only 25% return by AMLP.



Given the bullish outlook in the midstream oil & gas space, AMZA is likely to continue to deliver stellar results. I expect that the 20% yield paid by AMZA can reasonably be achieved by the fund managers and is unlikely to contribute to a reduction in NAV over a horizon of 2 to 3 years.

Conclusion: AMZA is well positioned for the future

I believe that AMZA started trading in 2014 in the worst environment. Therefore the past performance does not provide a good base for the great potential of this ETF.

AMZA operates best and outperforms when MLP prices are stable or going up. With quite a positive outlook for this space, AMZA is set to continue to outperform and generate additional returns to investors through options writing and through its opportunistic portfolio allocation. I believe owning AMZA in addition to AMLP, or as an alternative to AMLP, is a good strategy as it provides a managed aspect to this sector, and is likely to be a highly profitable investment.

As usual, I will keep you updated with market commentaries including any new "buy alerts" and "sell alerts".

A final note: Your comments and suggestions are always welcome. This helps me improve the service. Feel free to send me an internal message on Seeking Alpha, or contact me directly by email: [email protected]

Good investing,

Rida MORWA

Does Rida Morwa pay you a commission? Just curious.

Yup, up and down like a roller coaster... goes up and then he opens his mouth and down it goes again. cycle is getting more frequent lately, will be down below 20,000 by November elections at this rate.

Phil

I alway get a kick out of seeing rida morwa's name.
I believe he was a graduate of The thunderbird global school of management
locally we refer to it as the thunderbird school of international bartending.

I just bought another distressed property, I'm thinking ~35% RTI once I flip it. If the housing markets chits, my RTI will be about 7% renting it. I do have some fixing, painting, and lots of cleanup ahead of me though. My last flip just hit the market, should yield around 30%. Those numbers are excluding my sweat, but it works for me. I love stinky property deals.

BULL MARKET -- Dwyer observed in February that shock drops typically see stocks bounce and then retest the low as volatility begins to decline before moving on to new highs. https://www.marketwatch.com/Story/w...-04-17?&siteid=yhoof2&yptr=yahoo

No commission. I'm just a member of his investing site and try to share some of his investing philosophy with others who may be interested. I have done very well with my retirement portfolio following his advice. I started by signing up for his two week free look, and that convinced me to subscribe. Its really not very expensive and I made back my annual subscription the first week I started investing in his picks.

Rida Morwa - 16 April 2018
High Dividend Opportunities

Market Commentary

We will start with a market commentary:

Technical Analysis

A new week has started with the bulls in charge and all major indexes moving higher. The S&P 500 index has been consolidating in a trading range in between its 20-day moving average being the 2657 level and its 50-day moving average being the 2687 level. The bulls are hoping to close the index higher than its 20-day moving average, which will give some more steam for the markets and would create a short-squeeze on those shorting the markets. It seems that investors are hoping to see a continuation of the strong earnings momentum later on today as Netflix reports its earnings after the bell. The VIX volatility index is down by about 4% indicating that investor nervousness has calmed down and confidence continues to build. A close higher than the 2687 level would be very favorable for the bulls, and could mean that the overall consolidation is over and will eventually give way to massive buying.

General Outlook of Equities

First, I would like to say that there has been many pundits who are AGAIN making some noise about high market valuations and a possible "bear market" coming. I would like to respond that the equity markets in our view look very healthy, and the valuations are at very acceptable levels considering the current fast earnings growth. The current global economic environment is highly constructive to the long-term outlook for equities. It is our view that this bull market, despite its old age, should last for many more years. I will be dedicating a detailed report to our members supporting our view later during the week.

As for the year 2018, our target for the S&P 500 index remains at the 3000 level or roughly 12% higher from here. Patient and long-term investors should be well rewarded.

High-Yield Sectors

We are also seeing strength in most high-yield sectors today, and most notably in the Midstream sector and Property REITs.

Midstream Sector - First, the Midstream Sector is currently seeing signs of a strong recovery after having pulled back for reasons we explained that are not fundamental in nature, but rather due to uncertainties created by the FERC decision and the new tax laws. The individual Midstream MLPs that we hold in our Portfolio will see an immaterial impact from the FERC decision. I attribute the current recovery to 2 factors:

The sector has reached an oversold level and bargain hunters are putting new money at work to buy at the current attractive levels.

Most importantly, the current earnings season should confirm that the vast majority of Midstream MLPs will see a significant increase in their cash flows and possible increase in guidance because of high activity in the oil & gas sector in the United States. Furthermore, we should also get further confirmation that the FERC decision will have little impact on most of the Midstream MLPs.

I would like to also point out that we are likely to see some consolidation between the MLPs and their sponsors, with some MLPs converting to C-Corp. While this can result in some reduction in the dividend yields, overall such a consolidation should be very positive for the MLPs as it would result in significant tax savings. Furthermore, should the MLPs convert in C-Corp, then demand for these stocks is likely to significantly increase. When this happens, passive funds and institutional investors (which do not usually invest in MLPs) will be able to allocate large amounts of money to the merged C-Corps to hold on and collect the hefty dividends. This should result in much higher prices for the sector.

Property REITs sector - We have some good news for our Hotel REITs sector today with the mergers and acquisition activity lifting the whole sector. Today it was announced that Pebblebrook Hotel Trust (NYSE:PEB), a Hotel REIT, raised its bid for another Hotel REIT LaSalle Hotel Properties (NYSE:LHO). Increased merger & acquisition activity in the sector is due to generally low valuations. Hotel REITs are some of the main beneficiaries of an expanding economy, and despite this, valuations of this sub-sector remain one of the lowest in the space, with an average valuation of 10 times FFO.

Also, the Property REIT space in general is seeing strength today with the Vanguard Property REIT ETF (VNQ) higher by 0.8% today. I expect a good recovery in the sector as Property REITs start reporting and confirming a solid outlook for the year, especially the REITs that we hold in our Portfolio.

Note on USA

The CEF that we hold in our Core Portfolio, Liberty All Star Equity Fund (USA), declared a slight decrease in its dividend. The dividend declared was $0.17 instead of the prior dividend of $0.18. We should note that the dividend of $USA can vary as the fund pays about 10% of its net asset value in dividends per year. The last quarter was not very good for large cap & growth stocks, and resulted in $USA reducing slightly their dividends. I am very optimistic about the state of equities (including growth stocks that USA invests in) and I believe that we are still in a strong uptrend, and that USA should do very well for the next 2 years at least and hopefully raise their dividends again. Members should note that USA currently trades at a good discount to NAV of 7% and is a strong buy at the current level.

So I take it you are an accomplished investor and independently wealthy?



Rida Morwa

Research analyst, REITs, energy, Dividend income for retirees
Member Since 2015

I am a former Investment and Commercial Banker with over 30 years experience in the field. I have been advising both individuals and institutional clients on high-yield investment strategies since 1991. As author of “High Dividend Opportunities”, a premium subscription service at Seeking Alpha, my objective is to bring investors the most profitable and newest high dividend ideas, with special focus on the Energy sector. The service includes an actively managed model Portfolio targeting an overall dividend yield of 6-9% in addition to long-term capital gains. My research aims to maximize returns by identifying undervalued securities in the High Yield space.

In addition to being a former Certified Public Accountant ("CPA") from the State of Arizona, I hold a BS Degree from Indiana University, Bloomington, and a Masters degree from Thunderbird School of Global Management (Arizona). I am also a Certified Mortgage Advisor CEMAP, a UK certification. My Research and Articles have been featured on Seeking Alpha, Investing.com, ETFdailynews, and on FXEmpire.

For more information on how to subscribe to “High Dividend Opportunities” and gain exclusive access to the portfolio, live alerts and market commentaries, check the post: Introduction to “High Dividend Opportunities” on my Instablog or just email me at [email protected] .

I have made over 20% compounded annually for the last 24 years.

MSFT 1994
GOOG 2004
AMZN 2012

I know people making more money than me in real estate.


But I did that in the 90s.
If you own enough toilets, pretty soon you are replacing the sub flooring under a toilet every week end.
Low life people make the bath/shower overflow and rot out the bathroom floor.
You carry a caulking gun in the car and caulk around every tub you get a chance.

Good on you. We all get comfortable with what works for us. Some never seek it...

Ed this was my point a few weeks back in another thread where i said that everyone is financially, exactly where they want to be. Caught alot of grief on that one, but it is so true.

Excluding your sweat ain't a real RTI then. You're worth way more than that, whatever it is that you're doing. You have to count your sweat!

That rotten subfloor, the constant painting, repairing floors, etc. etc. etc. have kept me out of the rental marketplace. I know several who make an absolute killing doing it. But they are at the beckon call of their tenants 24 hrs a day and basically run a handyman service truck 5 day/week.

I haven't thought much about it but Okie is right, we are all exactly where we want to be financially. That's a good way of saying it.

I had 50 people waiting in line to fill out an application for one apartment in Seattle.
You never saw so many tattoos, pierced bodies, and mohawk haircuts.
The guy who got it was a very tall basketball player for the University of Washington. He was a very tall black from the caribbean. He got it because his coach, another giant black guy, was pressuring me that he could guarantee with his signature that I would always get the rent.
The guy went back to the caribbean and left all his junk. I called the coach about the last month's rent, but he had moved to Chicago.

I don't think real estate is right for me, but there is a book,
https://smile.amazon.com/How-Buy-Manage-Rental-Properties/dp/0671644238
~~"In that book is says to make rules with consequences and if anyone breaks the rules, give them the consequences.
You can have one rental and get an ulcer or have 100 rentals and run them like a business"~~

Real estate will teach you some of life's lessons.
Some of life's lessons can be painful.

I fixed bathrooms.
I took other people's junk to the dump.
I hired attorneys to evict renters who did not pay.
I dealt with people that are at the bottom of society.

18 years later....My stocks are up 0.65% today and I am about to visit my grandkids.

I am pretty positive I do not ever want to be a landlord. This month I rented a house from a neighbor for quite a bit less than he had in on the market for because he doesn't want to deal with "white trash" anymore. He's been burned by the last three renters. One would leave four kids under 12 alone for days on end. One moved out in the middle of the night several months behind. One snuck a dog into the basement and let it s#it all over. He's putting in new carpet as we speak.

Four bedrooms, two bath farm house, $550 a month. I'm putting one of my managers in it. He thinks he's getting a $1,000 a month benefit.......

Yeah, can't WAIT to get into the rental business. If I wanted to deal with that segment of society again, I'd ask for my old bar job back.....

If a renter pays on time and never calls for repairs, the landlord is very slow to raise the rent. That guy gets at least a 20% discount.

One thing I learned is to never arrange to meet a prospective tenant just because they called.
You can arrange they meet you someplace you were going anyway.
You can arrange to meet them if they call you 5 times.
But there are too many guys calling every house and apartment for rent in the paper and arranging to meet at everyone of them and showing up for none.

To rent a unit out is a big investment in time and money, so if you have a good tenant, make it worth his while to stay.

Market Update - January 10, 2018

Rida Morwa


Stocks pushed further into record territory Tuesday, and the Standard & Poor's 500 index's immaculate start in the year extended to a sixth day. The S&P 500 index broke above the 2750 level, which is an important area from a psychological standpoint. Given enough time I think that it will simply be yet another blip on the radar.

The market has been in a nice uptrend for months now, and the short-term charts look very similar as the S&P 500 continues to reach towards the 2800 level, a level I believe we will reach very soon, and possibly this month. Longer-term, I fully expect that the S&P 500 index will reach the 3000 level (or 9% higher from here), also fairly soon, within a few months or so.

This is a market that has been extraordinarily positive over the last year, and I see absolutely no reason for the momentum to slow down as buyers continue to dominate it. Using a "buy and hold" strategy continues to be the best course of action for our members.

Why Equities are still cheap?
Banks and analysts are returning from their extended holidays, and it seems that they have started revising earnings estimates higher and are upbeat, especially since fourth-quarter earnings should be the strongest in at least six years.

According to FactSet Research, the S&P 500 is projected to report average earnings growth of 11.8% in 2018, led by the energy sector (41.5%), and the materials sector (18.3%). If this holds, this will be the fastest earnings growth since 2011 -- bolstered by the highest expected profit margins in over 10 years.

Rising estimates are coupled with solid macro-economic data: The New York Federal Reserve now estimates that U.S. GDP is expanding at a solid rate of 4.0%, up from a previous estimate of 3.9%. Last quarter marked the longest sustained stretch growth rate of over 3.0% since the year 2004. And that strong economic tailwind continues to make an impact where it counts, which is the bottom-line of U.S. companies.

Many believe that stock valuations are getting stretched, but are they? In fact not. Interest rates (which greatly influence cost of capital and thus equity values) are still historically low. Furthermore, recent tax reform legislation is lowering corporate tax rates to 21% from 35%.

The value of equities is tied to the cash flows they can generate. Since lower taxes means higher profits, all else equal, the shares of U.S. companies are instantly worth more now than they were a few weeks ago before the tax reform bill was passed.

In fact, hedge fund manager David Tepper recently stated on CNBC that the market is "almost as cheap" entering 2018 as it was entering 2017.

We believe that double-digit earnings growth and the great opportunity to finally repatriate trillions in retained overseas cash means that 2018 is shaping up to be a great year for the equity markets. We are likely to see a wave of dividend hikes, in addition to stock repurchases which will drive equity prices higher. I would not be surprised to see a 10% to 20% returns for equities in the year 2018. It is a great time to be fully invested!

How to Invest in Energy and Basic Materials with High Yields?
As for energy and basic materials, these are just part of a bigger theme at play. Inflationary assets will be back in favor in the broader market. We think momentum will attract more momentum as the positive reflexive feedback loop leads into higher energy and commodity equity prices. For our members who like exposure to Energy and Materials, we strongly recommend to invest in the following 3 CEFs:

Blackrock Energy & Resources (BGR) - yield 6.2%
BlackRock Resources & Commodity (BCX) - Yield 6.2%
Voya Infrastructure, Industrials & Materials CEF (IDE) - Yield 6.8%
The above 3 CEFs will also be beneficiaries from President Trump's new infrastructure plans, and are a great addition to our Midstream MLPs which are also set to outperform in 2018. As a reminder to our newest members, our favorite Midstream MLPs include:

Diversified Exchange Traded Products (Which do not issue K-1s)

CBA - Yield 9.0% (This is a very strong buy)
MLPQ - Yield 14.8% (This is a very strong buy)
MIE - Yield 8.6%
AMZA - Yield 24.4% (Maximum recommended allocation of 2% of Portfolio).
Individual Stocks (Issue K-1 tax forms)

ETP - Yield 11.8% (This is a very strong buy)
EPD - Yield 6.0% (This is a very strong buy)
AMID - Yield 11.6% (This is a very strong buy)
CEQP - Yield 9.5% (This is a very strong buy)
BPL - Yield 9.6% (This is a very strong buy)
Note about Property REITs

The Property REITs sector is still showing some weakness but we are confident that this sector will outperform. Members should note that Property REITs are one of the safest asset classes around; investing in REITs is very similar to investing in real estate. In this case investors should maintain a long-term view and not worry about short-term price movements. Remember that in the past 20 years, Property REITs have outperformed almost every single asset class, and there is every reason to believe that this trend will continue:

Property REITs tend to outperform during periods of economic growth as occupancy rates and rent prices tend to increase.
Furthermore, Property REITs have an inherent protection against inflation and rising interest rates, which is the value of the properties they hold, which usually goes up in price along with inflation. Furthermore, most REITs are able pass the cost of higher interest rates to their tenants in form of higher rent.
Retail REITs have done relatively well over the past month, and most have had solid returns for the period. This sub-sector of property REITs remains very much oversold and has huge upside potential. We advise patience, as this sub-sector is likely to be a big winner as companies start their Q4 reporting. This holiday season was the best one in recorded history and retailers have done very well. A good example just announced this week: Target (TGT): The retailer announced that company sales in the holiday period grew 3.4%, compared with estimates of 0-2%. In addition, its fourth quarter EPS guidance topped views, and it reported a strong fiscal profit forecast as well. We think CBL, WPG, PEI, SKT and STOR are likely to see a big rally as they start reporting their earnings.

As a reminder, our favorite Property REIT and Commercial MREIT picks include:

Diversified Exchange Traded Products

RQI - Yield 7.8% (This is a very strong buy)
KBWY - Yield 7.8% (This is a very strong buy)
LRET - Yield 9.1% (This is a very strong buy)
AWP - Yield 8.9%
Individual Stocks

LXP - Yield 7.6% (This is a very strong buy)
WPG - Yield 14.8% (This is a unique opportunistic buy)
CBL - Yield 14.5% (This is a unique opportunistic buy)
VTR - Yield 5.5% (This is a very strong buy)
EPR - Yield 6.7% (This is a very strong buy)
SKT - Yield 5.5% (This is a very strong buy)
HT - Yield 6.3% (This is a very strong buy)
LADR - Yield 9.3% (This is a very strong buy)
====

Stay Diversified!
In order to achieve optimal returns, we urge our members to remain diversified across all the stocks and sectors in our Portfolio. This includes the Business Development Companies sector (or BDCs) and Growth stocks. our favorite picks are as follows:

====

Favorite BDC Companies
BDCL - Yield 18.5%
NEWT - Yield 9.7% (This is a very strong buy)
ARCC - Yield 9.6%
MRCC - Yield 9.9%
====

Favorite High-Yield Growth Securities
BST - Yield 5.5% (This is a very strong buy)
HQH - Yield 8.5% (This is a very strong buy)
ADX - Yield 8.9% (This is a very strong buy)
USA - Yield 10.6% (This is a very strong buy)
IDE - Yield 6.8% (This is a very strong buy)
THW - Yield 9.8%
DVYL - Yield 7.1% (This is a very strong buy)
SDYL - Yield 5.1% (This is a very strong buy)
LMLP - Yield 10.8%
BX - Yield 5.8%
SXCP - Yield 12.5% (This is a very strong buy)

Made 7% in just three weeks in January, then it took a dive that is still down for this year. Fortunately is getting close to even again.

I am up 1% so far for today
I am up 6.6% for the last week
I am down 2.9% for the last month
I am up 43.9% for the last year

This is twice as good as with obuma.

Bank On Infrastructure Growth With This 7.8% Yield CEF, Big Discount To NAV, To Benefit From Industry Tailwinds

Apr. 22, 2018
9:30 AM ET

Rida Morwa

Summary

+ The Trump Administration has released a $1.5 trillion infrastructure plan to upgrade America’s infrastructure.

+ Globally, around $3.7 trillion in investment will be required, per year, to meet the expected need between 2017 and 2035 – with aggregated total investment at almost $70 trillion.

+ This provides a natural tailwind to all infrastructure stocks, which may see a large inflow of new major infrastructure projects.

+ We are recommending gaining exposure through a diversified closed end fund that offers a 7.8% dividend yield, and comes with a 7% discount to NAV.

This research report has been produced together with Seeking Alpha author Julian Lin.


Strong Environment For Infrastructure In The United States

In February, the Trump administration released their long-awaited infrastructure plan.

The document noted:

"For too long, lawmakers have invested in infrastructure inefficiently, ignored critical needs, and allowed it to deteriorate. As a result, the United States has fallen further and further behind other countries. It is time to give Americans the working, modern infrastructure they deserve.”

Trump’s infrastructure plan calls for $1.5 trillion to repair and upgrade America’s infrastructure. $200 billion would come from federal spending with the rest coming from state and local governments, who would be expected to match the federal spending by at least a four to one ratio.



With the Trump administration heavily prioritizing getting this infrastructure bill passed, this creates a booming environment for infrastructure stocks. They have already taken a huge step this April, signing an administration memo to reduce review times on major infrastructure projects to two years, addressing what Trump considers “the horrible, and costly, and broken permitting process.”

Global Infrastructure Spending Needs
Infrastructure spending needs is not only confined to the United States. By 2040, the global population will grow by almost 2 billion people – a 25% increase. Rural to urban migration will continue with the urban population growing by 46%, which will trigger massive demand for infrastructure support. A recent report by McKinsey & Company’ projects that around $3.7 trillion in investment will be required, per year, to meet the expected need between 2017 and 2035 – with aggregated total investment at almost $70 trillion.

According to the report: “When it comes to investment in economic infrastructure, China remains the country projected to need the highest level of investment – at 34% of the almost $70 trillion pie. Eastern Europe will require around 4% while Western Europe will need around 10% of the total. The US, meanwhile, will need to invest around 20% of the total over the next 18 years – or close to $750 billion per year.”

Infrastructure Umbrella
The infrastructure is an extremely broad category, encompassing several sectors, including industrial, materials, transportation, communications, water, and electricity. We should note that most infrastructure stocks do not pay high yields. For income seekers, the best way to invest in infrastructure is through high-yielding closed end funds (or CEFs).

Clearly, infrastructure spending is set to increase at a fast pace both locally and internationally. Investors are set to be well served by allocating funds to infrastructure companies that are set to benefit the most.

Here readers should also note that many CEFs, which claim to be "infrastructure" are either "Oil & Gas Midstream" CEFs, or Utilities CEFs, and therefore their description can be misleading as they are not necessarily pure infrastructure Closed End Funds.

One of the best products through which to gain dividend exposure to the infrastructure sector is through the closed end fund (‘CEF’) Voya Infrastructure, Industrials and Materials Fund (NYSE:IDE).

Getting To Know IDE
IDE was incepted on January 26th, 2010. As stated in their semi-annual report, they seek to invest in companies with the following characteristics:
1. Good growth prospects,
2. resilient earnings potential across market cycles,
3. disciplined capital allocation management, and
4. strong competitive position.

IDE has a 1.22% expense ratio, which is very standard among closed end fund peers. IDE has paid a stable $0.29 quarterly dividend for the past six quarters. At recent prices of $15.10 per share, this is a 7.8% yield. The most recent quarterly dividend went ex-dividend on April 2nd and was paid out on April 16th.

Portfolio Composition

While the fund is diversified globally, it is primarily concentrated to the United States:



IDE has allocations to all industrial subsectors. In particular we like the heavy allocation to aerospace & defense:



The top ten holdings are made up of industrial blue chips including Deere & Co. (NYSE:DE), DowDuPont (NYSE:DWDP), and General Dynamics (NYSE:GD):



Call Options Strategy
The fund also seeks to reduce volatility through writing (selling) call options on select indices and/or exchange-traded funds (“ETFs”). The underlying value of the call options range from 15% to 50% of the portfolio. These calls typically have very short maturities (ten days to three months until expiration), are written “at the money,” and are sold directly through BNP Paribas Bank, Goldman Sachs International, and JPMorgan Chase Bank N.A. We can see a snapshot of their options portfolio below:



Through August 2017, the call options writing was a drag on the portfolio due to the premiums not covering the value of the calls upon expiration. However, this strategy can reduce price volatility and can increase the fund's earnings during periods when the markets are flat.

CONTINUED ON NEXT PAGE

Share Price Performance
Over the past 2 years, IDE has strongly outperformed the S&P 500 index on a "total return basis." With its focus on infrastructure, we believe that IDE is set to continue to strongly outperform going forward.



Dividend Coverage
The fund has distributed dividends through a combination of investment income and realized gains, with the majority coming from realized gains due to the low inherent yield from their holdings. We can see a breakdown of their quarterly distribution coverage below. In particular, we can see that they have not had to distribute any “return of capital” for the past four quarters:



(Chart by Author, data from CEFConnect)

Here, readers should note that equity CEFs are very different from "Fixed Income" CEFs and “Return Of Capital” (or ROC) for equity CEFs does not necessarily mean that it is bad or "destructive." These CEFs invest in equities and if they do not book the profits to distribute their dividends, this can result in a non-destructive ROC - which is in fact advantageous for investors as it would result in less income tax.

This is very different from "Fixed Income" CEFs where the investment income is predictable, and any ROC over and above income earned can be "destructive."

Valuation
Shares trade at around a 7% discount to NAV and a 1-year Z-Score of -1.5. Z-Score is calculated as (Current Discount - Average Discount)/Standard Deviation of the Discount. In short, this means that IDE is trading at a discount to its normal NAV discount by more than one standard deviation. We can see their historical NAV discounts below that IDE is trading at around its widest discount during the past 12 months, providing an attractive entry point:



Share Buyback Can Help Narrow The Discount
IDE has a history of repurchasing shares when NAV discounts persist. In the year ending February 28, 2017, the fund repurchased 526,321 shares, representing 2.7% of outstanding shares. At the time shares traded at a weighted-average NAV discount of 13.2% and per share price of $12.39. Readers can expect the fund to re-implement the share repurchase program should the discount prevail.

Risks
As with the vast majority of equity CEFs, there is a risk that capital gains (both realized and unrealized) do not cover the dividends. In such a case, the dividend could become destructive to the fund.

IDE is likely to underperform in case we hit a recession as infrastructure spending would likely to decrease. Having said that, currently the recession risks are pretty low, and this was confirmed by the Federal Reserve in their last statement.

Bottom Line
IDE is an excellent long-term hold to gain exposure to the growing infrastructure sector. This is an attractive purchase point with shares priced at a wide discount to NAV historically. With a very favorable macro-environment, this fund looks to provide investors with a stable high dividend yield and good potential for capital gains.

Another solid infrastructure CEF to consider is Cohen & Steers Infrastructure Fund (NYSE:UTF) with a yield of 8.7%, which we plan to cover in a separate research report soon.

If you enjoyed this article and wish to receive updates on our latest research, click High Dividend Opportunities

Note: All images/tables above were extracted from the CEF's website, unless otherwise stated.

Disclosure: I am/we are long IDE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I compare our present business climate and prospects for a long bull run of at least 16 more years, to the period that started immediately after the malaise of Jimmy Carter (+Obama) and ran through both terms of Reagan (+Trump eight years,) King George I (four years) and the first four years of Clinton. By eliminating excessive regulations, reducing taxes, and putting American businesses and workers first, Trump is setting up the American Free Enterprise to thrive like it has never thrived before. This is a wonderful time to be entering retirement with a portfolio of cash cows. Its great to be an American. And it is just getting started. If you recall, it took Reagan's first term for all the reforms to grab hold and turn around the Carter years of disaster. But Reagan's second term was truly a blessing from above.

That will necessitate Trump's re-election and a Pence term or two after that, if we are truly going to get a long-term bull market in place.

It is amazing how badly Zero and Co. could mess things up for the whole world's economies with just 8 years in office.

We cannot afford to tolerate lieberalism any more. They must be turned or turned out now.

This is exactly what I am counting on. Trump and Pence both with two terms. In these times of hatred and personal destruction, practiced by the democrats and the fake media, the next democratic President would be twice as bad as Obongo.

I pray that you can see the future, this would be outstanding!

16 years is when I want to retire.... so that could be a bad time for me. Hopefully all of the growth leading up to then will carry me through.

Market Commentary, May 1 2018


by Rida Morwa
High Dividend Opportunities

The month of May has started with investor pessimism on the rise which has kept a lid on the market. We have noticed in the past couple of weeks many companies beating analysts expectations just to see their prices decline. We are seeing a continuation of volatility as investors are finding new excuses to be nervous. The latest fears can be attributed to the following:

Tomorrow we should hear from the Federal Open Market Committee’s (FOMC) for the month of May an interest rate decision, which will be announced tomorrow at 2:00 p.m. Eastern Time. The two-day meeting has started and U.S. Treasury yields have been creeping higher on expectation of further rate hikes. I think that the Fed will not increase interest rates in May, but they are likely to signal an increase in June based on higher inflation.

According to Morgan Stanley, investors's expectations for future returns for equities are currently at an 11-year low, meaning they’re at their weakest level since before the financial crisis.

Apple (AAPL) will report earnings tonight and the response to their numbers could have some impact on where the market is headed in the near term.
I think that investors' fears are not justified:

First, I would like to say that while rising interest rates are a near-term threat to equities, they should not derail the current momentum. Despite the ongoing rate hikes, we are still in a low interest rate environment. High-yield stocks that we invest in remain the best investment alternative given that 10-year treasuries are still yielding less than 3%. Here I would like to emphasize the fact that most of our recommended stocks are reporting fast growth and increasing their dividend payout as they are benefiting from the current economic expansion. This is different from investing in bonds as bond yields do do increase with time.

Another point to note is that most stocks that we hold did not participate in the recent market rally, and therefore are currently trading at very low valuation multiples despite a very positive outlook. As an example, we are noticing renewed interest in the Midstream Space and Property REITs, as companies in these two sectors are seeing stellar earnings. Investors are finally realizing that higher interest rates have not impacted the earnings potential of these two sectors, and it is no surprise that we are seeing strength in these two sectors at a time when growth stocks appear to be weak.

Second, concerns about low returns for equities are unjustified. One has only to look at corporate earnings. Reported annualized earnings growth so far have been at a fast rate of 20%. For the first quarter of 2018, 53% of the S&P 500 companies have already reported, of which 79% announced a positive earnings-per-share surprise, and 74% reported a positive sales surprise. Should the 79% remain as the final number for the quarter, this will mark the highest percentage of positive surprises since the financial crisis as reported in the 3rd quarter of 2008.

Third, investors' pessimism is a good contrarian indicator for equities and could mean that markets are likely to continue to rally given the strong economic environment combined with corporate earnings growth.

While I suspect that market volatility will continue, I believe that the markets are set for a big rally over the next few months, and we should close the year much higher from here. The trick is to look at the big picture and keep a positive attitude, especially at a time when investors' pessimism is on the rise for reasons that are unjustified.

We are very well positioned for both high income and capital gains, and I believe that our portfolio is set to strongly outperform going forward.

I gained 1.3% today. One of the best days I ever had. My only bad was AT&T and Fidelity Communications ETF went down and Spirit airlines went down. Other than that , it was a very good day.

MARKET COMMENTARY - 12 May 2018

Rida Morwa

The U.S. equity markets ended this week higher recording their biggest weekly gain since March 2018. The S&P 500 index was up 2.4% for the week. This rally was mainly driven by both Energy and Healthcare stocks:

Drug makers and other healthcare companies climbed after investors sized up President Donald Trump’s latest plans to rein in drug prices and concluded any policy changes did not pose immediate threats to healthcare company profits.

Our bullish outlook for energy stocks and crude-oil prices has finally played out in the 2nd quarter, with Brent and West Texas Intermediate trading above $70 per barrel on a tightening supply-demand balance and, more recently, news that the Trump administration would restore sanctions on Iran. Energy stocks saw a big rally as result of higher oil prices.

US oil and gas producers continue to take market share, while surging activity levels and output in the Permian Basin mean that oil and natural gas produced in this area trades at a significant discount to comparable benchmarks. This blowout in regional price differentials signals a need for additional takeaway capacity to alleviate local gluts and deliver more volumes to areas of need. This is a great opportunity for our well-positioned Midstream MLPs to continue to see fast earnings growth over the next quarters. With improving balance sheets and solid fundamentals, we expect to see material gains in our Midstream MLPs during the second half of the year.

Earnings Season is almost over

Now that over 80% of the S&P 500 companies have reported their earnings so far, we are nearing the end of a very strong earnings season, one of the best we have seen in decades.

On average, the S&P 500 companies that have posted their 1st quarter earnings had results 7.1% better than analysts estimates. In fact, 78% of the S&P 500 companies have reported positive earnings surprises, and 77% reported positive sales surprises.

The earnings season was also very generous to our portfolio with many beating analysts' estimates and hiking their dividends. Just last night after market close, Newtek Business (NEWT), a BDC company we hold in our "Core Portfolio", declared a quarterly dividend of $0.42/share representing a 5% hike from its last dividend of $0.40/share. As many of our companies continue to surpass analysts' expectations, we expect more capital gains and additional dividend hikes to materialize. This month our "Core Portfolio" returned 4.2% on average, outperforming the S&P 500 index which returned 3.4% for the same period.

Another factor that has been playing in favor of U.S. equities is the softening of the US dollar against other world currencies. A weaker dollar is generally bullish for U.S equities for several reasons:

A weaker dollar tends to lift corporate profits, especially for those firms with a high share of foreign sales, which means U.S. companies that rely on exports will be supported by positive earnings outlooks.

With the dollar weakening and global growth solid, this makes the case for a narrower trade deficit, which means that a drag from widening trade deficit is less likely.

The main threat to equities comes from Europe. Italy’s Five Star Movement and the League, 2 populist and anti-establishment parties, are calling for a referendum to leave the Eurozone.

It is possible that negotiations will prevail and Italy will remain in the Eurozone. However, in case a vote materializes, we could see market volatility, similar to what we have seen during the Brexit vote; We are likely to see a market pullback, but I suspect that it will not last for a long time and could create some nice buying opportunities. We should note here that our portfolio's exposure is overwhelmingly exposed to the United States, and what happens in Italy will have little impact on the fundamentals of our stock picks. We are monitoring the situation in Italy closely, and will keep members informed accordingly.

The Technical Picture

The S&P 500 index has shown significant strength this week, breaking through the 2700 level which has been a level of resistance lately. We are finally out of the consolidation pattern that we referred to in our Market Update last week. By closing towards the top of the candle, the market looks as if it is ready to continue to go higher, eventually reaching the 2800 level in the short run.

If we can break above the 2800 level, then the S&P 500 index is likely to reach towards the 2900 level after that. The current technical breakout tells me that we are going to continue the overall uptrend, as pullbacks will continue to attract opportunistic investors. This confirms my views that the S&P 500 index should close the year at the 3000 level or above, however members should expect plenty of volatility until we reach that level.

To the downside, the 2600 level underneath should offer a “floor” for the S&P 500 index.

Both macro-economic and technical trends are favoring U.S. and global equities. Equities remain the best place to invest in today's market, and long-term investors are set to be well rewarded.

Market Commentary - May 17, 2018

Rida Morwa

Earnings season is pretty much over. Although the 10-year Treasury yield currently rose again and now stands at 3.11%, investors are getting used to the notion that rates are going higher. It is worth to note here that there will not be a Fed meeting for a while, so that is working in favor of the bulls.

By looking at the charts, the bulls remain in full control. They did their job the past two days as the S&P 500 index held right where it needed to be, above the 2700 level. The index remains above all key technical levels with the trend remaining strongly to the upside.

Some things also worth noting:

Tomorrow Friday is options expiration day which usually creates some market volatility. Despite this, the VIX volatility index is much lower today, down by 3%. This tells us that investors are comfortable holding equities at this point in time.

Small-cap stocks are taking the leadership position with the Russell Index (IWM) up 1.1% for the week compared to the S&P 500 index being flat for the same period. This makes a lot of sense as small-cap companies will be the biggest beneficiaries of the recently enacted corporate tax cuts. Larger companies will also benefit, but not as much, because they usually hire expensive tax accountants and use complex strategies to reduce their effective tax rate down; so the biggest tax impact will be felt in smaller cap stocks.

In general, small cap stocks are a good indicator as to where the general markets are heading. When I see strength in the Russell 2000 index, this tells me that equities in general are likely to be heading higher. This is a very positive sign.

Oil prices have reached $71.6/barrel and we are seeing strength in energy stocks. This is apparent in our Midstream MLPs which are currently seeing strong gains. I expect the rally in the midstream space to continue as the sector is still cheap and undervalued given a solid macro outlook and increased oil and gas production in the United States.

We remain bullish on equities. The short-term trading range of the S&P 500 index is at the 2700 level to the downside, and the 2742 to the upside. If we break above the 2742, we should reach the 2800 level fairly quickly. I think that later during the year we should be looking at a move to the 2900 level, followed by the 3000 level for the S&P 500 index (or 10% higher from here).

Following the strength in small cap stocks, I am increasing the "Buy Under" price of our position in UBS ETRACS Monly Pay 2x Leveraged US Small Cap High Dividend (SMHD). SMHD provides a leveraged exposure (200% leverage) to small cap high-yield stocks which we expect will continue to rally. The new "Buy Under" price was raised from $16.60 to $17.60. Note that this product is highly volatile and is only recommended for those members with a higher risk tolerance. SMHD currently yields 18.5% so the yield provides a very good compensation for the risk. Unfortunately for our risk averse investors, there is not a non- leveraged version for SMHD. In this case, we recommend to invest instead in WisdomTree US SmallCap Dividend ETF (DES), but the yield is only 2.9%. Still DES is a good investment and should provide some nice upside potential with little price volatility for our conservative members.

HDO: Market Commentary


Rida Morwa

Market Commentary - 1 June 2018

We are still trading in a tight range between the 2700 level and the 2740 level for the S&P 500 index. Investors have been quite tense lately for several reasons:

Increased volatility this week due to the situation in Italy.

Renewed talks about trade war: the U.S. slams China with $50 Billion worth of tariffs on Chinese imports.

New tariffs are now being levied against the European Union, Canada, and Mexico, including 25% tariffs on steel, and 10% tariffs on aluminum. The EU has already said that it is going to retaliate.

We are almost in the summer season when historically trading volumes become thinner and volatility increases.

At this point, the market looks exhausted due to investors' fears. I think it is hard to tell where this market is going next in the short term, because it is being driven on pure emotion rather than fundamentals.

We have also to keep in mind that fundamentals remain very strong through a combination of faster economic growth, lower taxes and higher oil prices which are padding the bottom lines of large businesses. First-quarter earnings have surged by 24.5% -- the fastest pace since 2010, making the S&P 500 index companies cheaper today than when they were a year ago based on Price/Earnings and earnings yield valuation. This is despite the big market run that we have seen over the past 12 months. Therefore the medium-term and longer term picture looks very bullish.

But it seems to me that there are too many weak hands in the markets, and it would not be such a bad thing if we see a short-term selloff that would flush them out. Any pullback from here would be short lived and would help this market to continue its uptrend higher as the fundamentals remain very strong.

We should note here that the current volatility is having little effect on our Portfolio as high-yield stocks are back in favor due to the markets pricing in much less interest rate increased by the U.S. Federal Reserve. The European economy is still in trouble and Japan is not creating enough inflation, so both of these large economies cannot raise interest rates. Therefore it's hard for U.S. interest rates to move significantly higher. A stronger U.S. Dollar is not helping either. So the Federal Reserve will be unwilling to keep raising interest rates as spreads between U.S. rates and International rates would be too much and it could derail the U.S. economy. We just have to look at the U.S. 10-year treasury interest rate which has pulled back to 2.82% after reaching 3.1% a couple of weeks ago. The 10-year is unlikely to go much higher from here. Of course, this is bullish for the high-yield space in general and for our portfolio in particular.

I still think that in the medium and long term, we are likely to see equities move much higher from here with the S&P 500 index reaching the 3000 level before year-end, but members should expect plenty of volatility until the end of the summer season. From now until then, we are likely to see the markets slowly "melt up" higher with occasional selloffs. These selloffs should be viewed as buying opportunities. The key here is not to get scared from headline news and to keep focused on market fundamentals. Fundamentals remain very strong and in favor of equities and fundamentals almost always prevail. Long-term investors are set to be very well rewarded.



Market Commentary - 2 June 2018

The month of May is over and it was a great one for US equities. The S&P 500 was up over 2%, which was the best month since January. Small caps stocks did even better with the Russell 2000 having rallied close to 6% for its best month since September of 2017. Our "Core Portfolio" had also a stellar month returning 6.2%, more than triple the returns of the S&P 500 index.

This past week has been a volatile one. Earlier in the week, the market pulled back significantly on concerns about economic and political risks coming from Italy. We explained in a report to our members that this is a low risk situation and that it will not impact the current bull market in equities that we are seeing in the United States. On Friday, the markets were up significantly for 2 reasons:

Solid employment report coming from the United States:

The US economy reached its lowest unemployment rate in 18 years after American employers added 223,000 jobs in May in a continuation of one of the longest periods of growth in the country’s recent history. U.S. hiring rose more than the forecast in May, and wages picked up, indicating the strong labor market will keep powering economic growth. This of course is proof that the U.S. economy is doing very well and provides a solid backdrop that should keep driving equities higher.

The situation in Italy is resolved for now: In Italy, a new government was sworn in on Friday, ending the country’s longest postwar political crisis. Mr. Giuseppe Conte was sworn in as a new Prime Minister who will be heading the ministers picked by Five Star and the League political parties. The new government have vowed to reboot the Italian economy through a mix of tax cuts and spending increases after the country had the slowest recent economic growth in the eurozone. So for now, the situation in Italy is resolved. At any rate, even if we were to see renewed tensions, it is very unlikely that the situation in Italy will have any impact on the economy or the equity markets in the United States.

Both the economic data of an improved growth outlook together with a solid double-digit earnings growth this year should continue to push equity prices higher by year-end. With the forward 12-month P/E ratio for the S&P 500 at 16.2 time, I believe that the valuations of equities are still inexpensive, and that this bull market has still plenty of room to run.

The Technical Situation

The S&P 500 index remains in a tight trading range between the 2700 level to the downside and the 2740 level to the upside. On Friday, the S&P 500 index rallied significantly, reaching towards the 2740 level, but this level seems to be of resistance once again. Looking at the charts, we have formed a nice-looking hammer. The hammer of course is a very bullish sign, and I believe that it’s only a matter of time before we break out to the upside above the 2740 level. Once we do so, the index is very likely to go towards the 2800 level. We have bounced from a major uptrend line, and this looks like a continuation of the overall attitude to the upside. Eventually we will reach towards the 3000 level for the S&P 500 index and I believe we will do so before year-end. However, members should note that this does not mean that there will not be significant pullbacks from time to time due to investors' sensitivity to geopolitical situations. The markets will continue to be volatile, but the trend is still strongly to the upside favoring equity investors.

Our "Core Portfolio" is very well positioned to deliver strong returns. The vast majority of the positions we hold remain significantly undervalued and are seeing strong earnings. My best advice is to be fully invested and not worry about daily fluctuations. This is a market that should handsomely reward those who buy and hold for the long term.

Orange Okie, thanks for posting this. I have only been investing for 3 yrs. I have learned a whole lot in that time, and learned very fast how to not invest. Rida seems right. Don't worry about Italy , those Italians are so lazy and useless it doesn't matter if they are there or not. ( I'm 1/3 Italian by the way so I can say that ) . But kidding aside, it matters very little. And about the weak hands, I profit very well from weak hand cause weak hands sell in a panic and that is when I have learned to buy. Anyone who sells in a market like this is a day trader or should no the investing. I am fully invested and will put in more, most likely Fidelity Communications ETF. in small amounts if it keeps dropping, or just put it in ITOT, ( Ishares total stock fund) . .03% exp. ratio. The news is too good to have a correction , there has to be some bad news like Iran bombing or something, ,, but then it's time to buy again . My son and I were talking about investing. He is 21 and has $9,000 in stocks. He said an investors degree is useless , you'd be better of being a physiologist . Peter lynch had a degree in Phycology. What does Rida think of AT&T stocks? I bought $5,000 worth last week. I'm up 1%. Later, ihookem.,

Rida is bullish on T.

Thanks Orange Okie , my brother in Christ that I never met. I thought he might be bullish on T . I can't see it going lower, and with a 6.2% rising dividend it has to be a buy by now. Many on Seeking Alpha are writing in saying it is Enron and GE bound. They might be right if half the country gives up their cell phones and cable. DOnt see that happening withought a real depression. Off the subject here , I was talking at the town dump about depressions I told them my grandpa almost lost the farm in the town the old guys were talking about but grandpas uncle gave the bank $600 bucks with a promise they'd never take the farm. grandpa payed interest only on the farm for 15 yrs. Mom picked dandelion leaves in Utica, NY. to fill the bowl of salad to have enough to eat. I dont see this happening anytime soon, if it does, the T is in trouble.

Market Commentary, June 15, 2018

Rida Morwa - High Dividend Opportunities

The Federal Reserve lifts 2018 Interest Rate Hike Outlook

In a widely anticipated move, the Federal Reserve on Wednesday lifted interest rates by a 0.25% point. However in a surprising statement, it signaled that there will be two more rate hikes of 0.25% each in 2018 instead of the initially projected single rate hike for the year. The reason for this is that the Fed is becoming increasingly bullish on the state of the US economy amid accelerating growth and rapid job creation. This should have created some panic in the equity markets, but instead the market was resilient and kept going higher. We can attribute this to three main reasons:

Although the Fed has more confidence that the U.S. economy is on the right track, they kept their GDP growth outlook at the same pace at 2% in 2020 and at 1.8% for the long-term. This means that the Fed does not see any signs that the economy could be over-heating in the next 2 to 3 years.



More importantly, although the Fed is seeing higher interest rates in 2018, they kept their interest rate hike forecast unchanged for the year 2020 (at 3.38%) and the long term run rate also unchanged at 2.9%. This means that interest rates might increase at a faster rate in the short term, but the pace will be reduced to compensate in the longer term.



In a statement on Friday, Federal Reserve Chairman Jerome Powell signaled growing optimism on the U.S. economy while trying to reassure investors that the central bank would not derail the country’s second-longest expansion by aggressively tightening monetary policy. The Fed statement, that it will remain accomodative, is very re-assuring.

So basically what this all means is that the Federal Reserve has more confidence in the U.S. economic outlook in the short and medium term, which is of course very bullish for stocks.

So this is the reason why the markets did not react negatively on Thursday and actually the markets were up on Thursday. Later in this report, I will explain why I am even more bullish on equities now and why this bull market is set to continue going very strong. But before, I will give my assessment on why I do not think the Fed is unlikely to raise rates more than one more time in 2018, and what the impact of all this will be on high-dividend stocks in general, and our portfolio in particular.

Why the Fed is unlikely to raise rates more than once more in 2018

I think that the Fed is being too hawkish and that they are likely to raise interest rates only one more time in 2018. This should not come as a surprise as the Fed has a history of giving a bullish outlook, only to lower this outlook later, as they have done several times in the past few years. In my opinion, at best we will only see one more rate hike in 2018 for several reasons:

Higher interest rates are basically a growth and inflation container. This hawkish comment will further flatten yield curves which will narrow bank margins and make it more expensive for home buyers to finance home purchases. This is likely to push inflation rate back below the Fed target rate of 2% very soon.

The U.S. Dollar is the preferred reserve currency for the world and it is the most widely used currency for global trade. Most emerging market companies have U.S. dollar denominated debt. Higher interest rates for the U.S. dollar currency will put a huge burden on emerging markets and will slow global growth. A slowing global growth is likely to threaten U.S. economic growth and will force the Fed to reconsider hiking rates in the short term.

As stated in previous "Market Commentaries", the spread between interest rates in the United States and the rest of the globe cannot keep on widening. U.S. Treasury Rates are not only dictated by the Federal Reserve but also by the markets. For example, the 10-year treasury bill is currently at 3% while the 10-year German bond yields are at 0.48%. This is a huge 2.5% difference. Something has to give in here. European interest rates are unlikely to rise due to relatively weak economic growth, and therefore investors are likely to shift money to buy U.S. treasuries instead of European bonds. This will put a cap on how much U.S. interest rates can rise.

Impact of the Fed Statement on High-Yield stocks

High-yield stocks tend to see a knee-jerk reaction each time there is talk about interest rate hikes. On Wednesday, the Property REIT index (VNQ) fell by 2%, the Midstream MLP index (AMLP) fell by 1.8%. On the other hand, the BDC sector index (BIZD) was up by 0.2% for the day. However we are already starting to see the knee-jerk reaction reversing. I would not be concerned if we see any weakness in the Property REIT and MLP spaces because it is likely to be temporary for the following reasons:

Property REITs: Property REITs tend to see their profits grow substantially when the economy is picking up as demand for real estate and rents tend to increase. Furthermore, higher inflation coupled with economic growth is a positive tailwind for Property REITs as they start seeing their Net Asset Value go up due to the higher property price that they hold in their portfolio. One just has to look at the last earnings reports for this sector. Most Property REITs had their best quarter ever in the 1st quarter of 2018 and most raised their outlook and hiked their dividends. Property REITs flourish in this type of environment. Should we see any weakness in this sector, I would consider this as a buying opportunity. I believe that all the REITs that we hold in our Portfolio are still significantly undervalued, and the potential for capital gains is enormous over the next few years. Therefore as long-term investors, any temporary weakness should not concern us. Actually, quite a few REITs are currently trading above our recommended "Buy Under" prices, and it will be an opportunity to add positions if we see a short-term pullback.

Midstream MLPs: The Fed is projecting that inflation will pick up which is generally positive for commodities and for oil price in particular. We expect oil price to remain at least around the current levels and with bias to the upside. If this happens, it means that oil and gas production in the United States should continue to increase, which is very positive for our midstream companies. The more oil and gas is produced in the Unites States, the more profits midstream companies make. In a sense, midstream companies provide a good hedge against inflation and rising interest rates. This sector is still very cheap with plenty of upside potential.

BDC Companies: Business Development Companies ('BDC') should see a mixed outlook from rising interest rates in the short term. Most BDC companies invest in loans that have variable interest rates, which means that when interest rates go up, they tend to make more money. While raising interest rates will increase margins (and profits) on those loans that these companies have already extended (and hold in their portfolios), newer loans are likely to be less profitable. The reason is due to the flattening yield curve; BDC companies tend to borrow based on short-term rates and lend based on long-term rates. With a flattening yield curve, it will be more difficult for BDC companies to achieve high yields. Still, I believe that the current flattening yield curve is a short-term phenomenon and we are likely to see it widening as soon as the U.S. Fed becomes less hawkish on future rate hikes. This is something I would expect to happen within the next 12 months.

I remain bullish on high-yield stocks and sectors, but I would like to remind our members to remain also well diversified into growth stocks, because the bull market rally in growth stocks (and especially technology) is not over yet. We have a good exposure to growth stocks through the following high-yield CEFs, and we recommend that our members have some exposure to them:

BST (yield 4.5%)
IDE (yield 7.4%)
ADX (yield 8.8%)
USA (yield 10.3%)
LMLP (yield 13.0%)
BX (yield 7.2%)
APO (yield 6.4%)
HQH (yield 9.1%)
BCX (yield 6.5%)

For those who are looking for capital gains, I would also recommend some direct exposure to the Nasdaq index through BST or through the Nasdaq ETF (QQQ). I think it is a good idea to have a 5% to 10% exposure to both BST and QQQ in addition to the other HDO stock picks.

Why I am even more bullish on Equities today

I recently posted in a Premium Report why I believe that this bull market is set to accelerate. For those who did not have a chance to read it, the following is the link:

"Why This Bull Market Will Accelerate, Massive Gains Ahead"

I am even more bullish today and I would like to add to my thesis above:

Mergers & Acquisition Activity will pick up: Just this week, a judge cleared AT&T (T)'s $85 billion acquisition of Time Warner (TWX). The approval of this merger is likely to spark a wave of new merger deals that should drive this market higher. More mergers means that investors have more confidence in equities. So now is the time for the next round of media merger mania and I expect that this will be very bullish for equities in general.

Fund managers start to pour money into US stocks, as profit outlook is the best in the world: With the European economy still fragile and the Chinese economy expected to decelerate, the U.S. economy remains the most healthy one on the globe. Funds managers have been underweight U.S. stocks but are now shifting their money back to the United States: global fund managers poured money into U.S. equities, over-weighting American stocks in June for the first time in 15 months, on a robust profit outlook. U.S. stocks are the place to be, and this is only the beginning. I expect that fund managers will continue to shift money to the United States which will help to drive this market much higher.

I believe that this bull market will accelerate and we should see massive gains over the next 18 months. For those members who recall, in 1994 the U.S. Federal Reserve raised interest rates by 2.5%, and still the U.S. markets had one of their best years ever. The Dow Index jumped by 33% in the following 12-month period, one of its best gains in a century. The bull market back then was due to an improving U.S. and global economy, similar to what we are seeing today. This is a market that should handsomely reward those who buy and hold for the long run, and we recommend that our members be fully invested at this point.

Our View on Where the Equity Markets are heading over the next two Years

Every week, we provide our members on our views on where the markets are likely to be heading in the short and medium term. We also recently published 3 reports detailing our views on where the equity markets are likely to be heading in the longer term (over the next two to three years), and why we remain very bullish on stocks. For our members who did not have the chance to read the report, the following is the link:

"Why This Bull Market Will Accelerate, Massive Gains Ahead" (Published on June 9, 2018)
"Our Long-Term Views On The Equity Markets - Why The Bull Market Will Continue" (Published on December 7, 2017)
"S&P 500 Likely To Reach 3000 In 2018 + Impact Of Tax Reforms On MLPs, Property REITs And BDCs" (Published on December 20, 2017)

The above reports are "Must Reads."

Our Best Performers in 2018

Below is a list of our best performing investments year-to-date (in 2018):

Market Commentary - June 23, 2018

Rida Morwa and Philip Mause - High Dividend Opportunities

I would like to start by saying that there is currently a lot of negative headlines about a trade war with China which has resulted in high market volatility and a lot of investor anxiety. I also saw on our Chat Board that some members are worried and considering taking profits on our positions until things calm down. We will explain why it is still the best time to be fully invested and that members should not be worried.

Summer volatility is normal: First, as we stated in the last "market commentary," I attribute the volatility and selloffs we have seen during the past week to an overbought condition rather than fears of a trade war. Furthermore, market volatility during the summer period is quite normal as many investors are on holidays, and thin trading can result in markets going up and down.

Trade war: Despite all what we are seeing in the news today, we believe that the U.S. and China are in the process of trade negotiations. Both parties are threatening to slap more tariffs on foreign goods in order to find a more favorable settlement. We are not in a trade war situation but just an escalation of tones that will eventually be settled. So far, President Trump has used this tactic a lot: plenty of threats and some action, only to lead to a good settlement. Let us remember that a tariffs war will hurt the heartland of the Republican party, and it is not to the best interest of the United States or Trump constituents for this to go out of control. I think it is only a matter of time until things calm down. After all, a trade war would have serious negative effects on regions and industries which contain important parts of President Trump's base. American farmers rely heavily on exports. Surprisingly, the coal industry has also come to rely heavily on exports - with roughly 15% of U.S. produced coal being exported. And, of course, manufacturers rely on complex supply chains which would suffer nasty disruption in an actual trade war. It is therefore, very unlikely that the Administration will allow things to get out of hand. What if they won't? Again, we would like to re-iterate my views that a trade war will not have any significant negative impact to the U.S. economy in the short or medium term. In fact, it may give it a short-term boost because it will increase demand for domestic products. Longer term, this is definitely a negative and will increase inflationary pressures and could derail the economy. But that will take at least a couple of years to see the impact. Therefore we do not believe that a trade war, even if it materializes, will be a threat to the current bull market.

Technical charts tell a different story: Despite the fact that the S&P 500 index fell initially during the week, the index found plenty of support around the 2750 level. A lot of "value investors" stepped in to buy the dip. By the end of the week, the index turned around to form an impressive technical hammer. Of course, a hammer is very bullish, and could signify that we are trying to break out above the 2800 level for the S&P 500 index. Once we break out from this level, we are likely to see a big rally that would take us to the 2850 level and then eventually to the 2900 level and next to the 3000 level. Also during the week, the Russell 2000 (the small cap index) and the Nasdaq index made new highs again, which is not a signal that the market is anywhere near to capitulate. For the S&P 500 index, the 3000 level is our target for the year 2018, and we think we may even close much higher. To the downside, even if we break below the 2750 level, there is plenty of support at the 2700 level for the S&P 500 index and I believe that is the "floor" for this market. If we break down to this level (which I believe is unlikely), it would be short-lived and we are likely to see a very fast recovery.

A healthy economy and corporate earnings will continue to drive this market: As a reminder, large market pullbacks and "bear markets" tend to happen when the U.S. and the global economy start to see declining growth. During such times corporate earnings start to decline and result in large market losses. Currently, the exact opposite is happening. The U.S. economy is growing at its fastest pace in years. The U.S. also now has the fastest growing economy in the world, according to the OECD, or at least the fasting growing economy among the industrialized nations. The risks of hitting a recession over the next two years, in my opinion, are close to nil. Successful investing requires keeping an eye on the large picture, and the large picture looks very bright. I urge members to always remember this when reading negative headlines, especially ones that have very little impact on the economy (such as negative political headlines, or headlines about trade wars that are currently being exploited by the media.)

Valuations are reasonable: Another situation that could result in a market pullback (or a bear market) are "asset bubbles." This is when markets or real estate start trading at excessive valuations. Currently, there is no evidence whatsoever that we have reached such a situation. The forward Price/Earnings ratio ('PE ratio') of the S&P 500 index is at 17 times. With corporate earnings growth estimates for the year 2018 at 22%, 'PE Ratios' have been contracting. Today the S&P 500 index is actually much cheaper than it was 12 months ago. During the past 12 months, the S&P 500 index was up only by 13% compared earnings growth of 22%.

Other reasons to be bullish: Despite the negative headlines, there is no sign that large institutional investors are selling. With the markets seeing resiliency, this indicates to me that large investors are not worried about the current headline news.

More money is flowing into the U.S. markets: I read several articles in the past two weeks in the "Financial Times" and the "Wall Street Journal" that institutional investors are pulling record amounts of money from the Asian and European markets, and redirecting these funds to the U.S. markets. The reason is that the U.S. economy is the healthiest large economy on the globe and provides a "safe haven" for investors. Also, we have to remember that China is seeing a flattening economic growth, while Europe is struggling with a very low inflation. This is a factor that should not be discounted by investors. U.S. markets are the place to be in the next two years, and we are likely to see continued investors' interest in U.S. stocks. This of course will result in higher stock prices and will continue to fuel the current bull market. The vast majority of our portfolio is invested in U.S. equities. However, we have a couple of equity "Closed End Funds" that have a partial exposure to the European and Asian markets. Our plan over the next two weeks is to re-allocate our funds by selling these CEFs and investing in other equity CEFs that have more of a U.S. exposure. One CEF that will be affected is the Aberdeen Total Dynamic Dividend Fund (AOD). AOD has over 40% exposure to non-U.S. markets. I know that we have recently recommended this fund, and we are currently at a "break even" situation, however recent news about fund outflows from foreign markets is likely to put some pressure on this CEF and I would rather we put our money to a better use. We will be sending a "Sell Alert" for AOD in the next few days and recommending another fund with more upside potential. In the meantime, AOD has been downgraded to "Hold" status.

Conclusion

Our best advice for our members is to remain fully invested in the stocks and securities that we are recommending. This bull market has still plenty of room to run, and likely for another two to three years at least. Secular bull markets don't come often, we have the opportunity to participate in a great one today. This is a market that will reward long-term investors, and especially the ones who buy and hold. Do not try to trade this market because it will result in lost opportunities. Hold on to your positions and keep the large picture in mind. Especially do not let negative headline news that are immaterial to the state of the economy get to your emotions. At "High Dividend Opportunities," we present every week a market commentary to share with you our views about the markets. If there are any events that we believe are worth to worry about, you will be the first to know. For now, hold on tight. The summer period will continue to be volatile, but this should not slow down the bull run. It is the best time to be invested in equities, and our portfolio is very well positioned for both high income and capital gains.

Have a great weekend!

Rida Morwa & Philip Mause

Market Commentary - July 2, 2018

Rida Morwa


Me and the little wifey went to Athens, Greece this past June to meet with Rida Morwa
and discuss investing. We spent most of our time eating seafood at Mediterranean
seaside restaurants and enjoying the beautiful weather.

The markets have been acting very resilient lately despite all the negative headline news about trade and tariff wars and about rising interest rates.

The S&P 500 index fell initially during last week, testing the 2700 level for support. It found plenty of support there and then bounced significantly, with both Thursday and Friday seeing extraordinarily bullish technical signals.

Today the markets are down again after news about Canada deciding to impose tariffs effective Sunday on $12.6 billion in U.S. goods as retaliation for the Trump administration’s new taxes on steel and aluminum imported to the United States.

The market also knows that there are interest rate hikes coming, but the U.S Federal Reserve seems to be cautious using a measured approach and therefore I think rate hikes will only have a limited effect on the economy and should not slow down earnings growth.

Technical Analysis
We have tested the 2700 level for the S&P 500 index again today, and it looks like we are holding on pretty well. Keep in mind that most of the selloffs recently have been the result of politicians aimless speeches that have no impact on the economy.

This market is showing a lot of strength and resiliency which is very understandable given a backdrop of solid economic growth and accelerating corporate earnings. In fact just today, economic data showed that the U.S. manufacturing activity has surged in June. The American factory activity accelerated for the 2nd straight month, signaling momentum in the U.S. manufacturing sector. The Institute for Supply Management said its manufacturing index rose to 60.2 in June from 58.7 in May. Numbers above 50 indicate activity is expanding across the manufacturing sector, while numbers below 50 signal contraction. The details of Monday’s report were largely upbeat, with the new orders, production and employment indexes increasing.

Furthermore, the fundamentals for the US economy are very strong in absolute and relative terms compared to other major economies, and as a result a lot of money is flowing into the United States, simply because it has nowhere else to go right now.

Because of this, I think that the market is going to go higher with the S&P 500 index reaching towards the 2800 level above pretty soon, and then to the 2900 level after that if we can get the break out.

Longer-term, I still have a target of 3000 for the S&P 500 index, most likely before year-end.

Catalyst for the market to go higher
The month of July has started which of course brings the beginning of Q2 earnings season, with thousands of companies set to report earnings over the next month or so. Expectations remain high, and I believe that we are going to see some stellar earnings reports, similar to what we have seen in Q1 2018. This should act as a catalyst for this market to start breaking out to the upside.

Market Leaders
Still this is a market that looks very bullish and on the cheap side with many nice buying opportunities. The S&P 500 index is actually cheaper today than it was 12 months ago with corporate earnings rising, compressing the Price/Earnings ratios. One of the most compelling opportunities today are in the biotech and healthcare sectors and I think this sector is ready to see a strong rebound, especially after Amazon (AMZN) said it was interested in expanding into healthcare. Two high-yield strong buys are:

Tekla Healthcare Investors (HQH) - Yield 9.3%. This is a CEF that invests mainly in biotech companies
Tekla World Healthcare Fund (THW) - Yield 10.9%. This is a CEF that invests in drug and healthcare companies.
I would like to thank HDO member Joshgi1 for sharing his bullish views and charts on the biotech sector recently.

Bottom line
Members should recognize that this market may look shaky at times and will continue to see plenty of volatility, especially during the summer months.

I urge our members to stay the course and to remain calm and fully invested in the stocks and securities we are recommending and not to worry about all the noise. This is a market that is set to reward long-term investors, sooner rather than later.

Well diversified here. Mutual funds, both domestic and foreign, bonds, real estate and cash works for me. March on...

Got out of ATHM (chinese) a couple of weeks ago and building up my cash position. Europe is starting to play ball but their economies are showing some cracks. PRC may turn into a bigger paper tiger than people realize. It's time to just watch. The end of summer is coming, a time when things tend to happen. A good stock to look at is SIX, buy on September dividend date. If you don't believe me look at the 5yr chart. As a plus their annual dividend is +4%.

The market has about a 10 to 15% risk discount built in right now. As soon as the Chinese kiss and make up, that uncertainty discount will disappear and the market will correct upward. The second upward move will happen as soon as the mid term elections are clear (and the GOP keeps the senate).

As usual, the Euro's can't get out of their own way politically, and I'm not putting much money there. It has too long a history of under performing.

1994 to 2016 I made 20% compounded annually off the stock market.
2016 to 2018 I have made 50% compounded annually off the stock market.

I started in 1994:
100% MSFT

I am currently:
52% AMZN
32% GOOG
13% NFLX

I am doing well for passive investing, but I was working at a company that was taken over by Mitt Romney's group [Bain] in 1994 and watched him make over 1000% in a year.

As with most everything, those who can do and those who can’t don’t.

SIX is really streaking. I would also recommend taking a look at FUN which is trading at a discount to NAV with a 5.46% yield.

I agree about the EU. The United States is where I am investing my money.

Market Commentary - July 7, 2018

Rida Morwa
The markets continue to show signs of strength and resiliency despite dramatic trade headlines. Just this week, the United States and China imposed new steep tariffs on tens of billions of dollars of each other's exports. US tariffs of 25% are targeting more than 800 Chinese products worth $34 billion including industrial machinery, medical devices and auto parts. China immediately responded with tariffs on over 500 US products including SUVs, meat and seafood.

Despite all this, the S&P 500 index found plenty of support at the 2700 level during the past few weeks and refused to go below as investors kept buying the dip. As we have been stating in several of our market commentaries, the markets are cheap today and provide an opportunistic entry point. Of course, the economic and market fundamentals which are the main drivers for equity prices are very strong and point to a continued strong market rally. The fact that the markets have been so resilient lately tells me that we are likely to see some significant market gains from now until year-end.

On the economic front, the latest positive economic news came from the jobs report on Friday. The non-farm payrolls report for June beat economic forecasts, with steady hiring and low unemployment showing that the labor market continues to be an area of strength for the U.S. economy. As a reminder, the jobless rate dropped to 3.8% in May, its lowest level in 18 years. It hasn’t been lower since 1969.

Other economic aspects are also picking up steam, with projections pointing to economic output rising more than 4% in the 2nd quarter for the first time since 2014. Rising consumer spending, manufacturing output and exports are expected to have contributed to the gain.

Another very positive aspect relating to the solid jobs report on Friday is that wage increases remained contained, meaning that inflationary pressures are still under control. This in turn means that the Federal Reserve will not be in a hurry to raise key interest rates again this year, which of course is bullish for equities. This helped the markets see a strong rally on Friday, with the S&P 500 index rising by 0.85% closing at the 2760 level for the week.

More about the Fed and rising interest rates: I believe that the Fed officials will continue to be accommodating for other reasons than just a tame inflation rate. The Fed is aware the current trade escalations can potentially have a negative impact on economic growth in the longer term, and therefore they are likely to remain on the cautious side. Furthermore, the Fed does not wish to push short-term rates higher than long-term rates - a so-called inversion of the yield curve - that could potentially have a negative impact on the economy. Therefore I believe that further rate hikes are unlikely to be as fast as initially anticipated by the Fed. We remain in a very constructive environment where low interest rates and robust economic growth are set to propel the stock market higher.

Earnings Season starts next week!

The nice move higher in stocks on Friday comes just ahead of the beginning of the earnings season that will kick off late next week when some of the major banks report their numbers.

The forecasted earnings growth for the S&P 500 companies is at 20.5% for the 2nd quarter of 2018 compared to a year ago. This is a tremendous earnings growth, and we should not rule out that many companies are likely to keep beating their estimate during the 2nd quarter as we have seen in the 1st quarter. This earnings season could be the catalyst that investors are looking for in order for this market to break out to the upside once again.

S&P 500 Trading Range

We have finally broken out from the 2750 level for the S&P 500 index, which has been of massive resistance lately. This opens the door for the index to go higher and likely to reach the 2800 level soon. To the downside, the 2700 level is the "floor" for this market, and I believe it is highly unlikely that we will break below this level during the year 2018.

Bottom Line

This bull market is set to continue for the next two to three years at least, supported by strong fundamentals including a solid economic backdrop.

Institutional investors continue to pour money in the U.S. markets and we believe that U.S. equities are set to be the best-performing asset class through year-end. This is because the U.S. growth outlook remains the strongest among all developed nations given the recent tax cuts, fiscal spending stimulus and low interest rates that will carry well into 2019, and possibly beyond.

It is good to see that many analysts are starting to raise their year-end forecast for the S&P 500 index and now Wall Street consensus forecast is for the S&P 500 index to reach the 2959 level by year-end. I am happy with this consensus as the 3000 level has been our target for the index since the beginning of the year.

In fact, I am raising our target for the S&P 500 index and believe that we are likely to close well above the 3000 level by December 2018, possibly at the 3200 level. Here, I would like to remind our members that the late cycle of the bull market tend to be the strongest one, and this is when the markets tend to see increased momentum resulting in huge gains. The late cycle of the bull market typically lasts one to two years, but in our case, I believe that we are likely to have three years or more of highly attractive returns. The reason is that the markets are still relatively cheap, there is no investor euphoria and no sign of asset bubbles whatsoever. I would start getting worried when we see one or more of these signs. For now, this bull market is alive and set to continue to accelerate.

It is indeed a great time to be fully invested, and I am happy to be sharing this unique period of time with our members! The best course of action is to be fully invested in the stocks and securities we are recommending in order to maximize both income and capital gains. This is a market that is set to greatly reward long-term investors.

Sectors set to outperform

We strongly favor having a balanced portfolio that is exposed to both growth stocks and value stocks. Our favorite sectors include:

Infrastructure stock (Industrial and Materials): To which we have exposure through both equity CEFs and individual stocks.

Healthcare: To which we have exposure through two CEFs (HQH and THW). We have highlighted these two positions again last weekend, and this week the sector has seen tremendous gains with HQH up 6.1% for the week and THW up by 2.5%. I believe that this is just the beginning of the rally and for those who do not have exposure, both HQH and THW are highly recommended. HQH is definitely a "must own" with a recommended allocation of 3% of the overall portfolio. The healthcare sector remains one of the cheapest growth sectors around, and the upside potential is enormous.

Property REITs: After seeing one of their best earnings season ever in Q1 2018, this sector is back in favor. The Property REIT ETF (VNQ) has returned 10.4% in the past 3 months alone, and it remains very cheap. We are recommending that our members have a at least a 20% allocation to this sector.

Energy Stocks: To which we have exposure through our Midstream companies and through the Energy "closed-end fund", Blackrock Energy & Resources (NYSE:BCX). The Oil price has been spiking lately, but we are seeing a delayed reaction in the midstream space. We believe it is just a matter of time until this sector is back into favor, and we are likely to see tremendous gains, similar to what we have seen in the Property REIT space recently. We are also recommending that our members have at least a 20% allocation to this sector.

Technology: Technology stocks are not cheap, but they are seeing both fast earnings growth and price momentum. We believe that the momentum is likely to continue. We have a direct exposure to Technology through the equity CEF BlackRock Science and Technology Trust (BST). We rate BST as a "must own."

We continue to recommend being underweight medium & long-term bonds, and bond-like stocks and sectors that are set to under-perform during periods of strong growth and rising interest rates. These sectors include utilities and telecommunications. Our portfolio has no direct exposure to Utilities, and only one exposure to Telecom through AT&T (T). Following the merger with Time Warner, AT&T is no longer a pure telecom stock, and now this is a highly undervalued company with tremendous growth prospects.

Market Commentary - July 12, 2018

Rida Morwa - High Dividend Opportunities Retirement Income

We continue to hear a lot of “doom and gloom” when it comes to the politics and the stock markets, but the resiliency is obvious. Yesterday, we have more trade sanction news with the United States imposing tariffs on a further $200 billion of imports from China, in what is viewed by the media as an escalation of the trade war between the two economic powers. The new list of Chinese goods that would face 10% in tariffs includes frozen meats, live and fresh fish and seafood, butter, onions, garlic and other vegetables, fruits, nuts, metals, and a massive list of chemicals, as well as tires, leather, fabrics, wood and papers. The new tariffs are not expected to go into effect before the end of August.

This move comes after the Trump administration already initiated $34 billion worth of tariffs on China just last week. China threatened to retaliate if these new tariffs were to take effect.

Despite all of this, the equity markets continue to show strong signs of resiliency. The selling so far has been contained yesterday with all of the major indexes remaining above all key technical levels. Also the VIX volatility index, while higher by 5%, was still below all key technical levels, so certainly they are not showing any major concerns.

I attribute the selling today to an overbought market condition rather than trade worries. Remember as well that the S&P 500 index got closer to major resistance support here, within 5 points of that important 2800 level earlier this week before profit taking appropriately kicked in.

I believe that it is only a matter of a short time for the markets to break out to the upside again with the S&P 500 index seeming to be ready to reach towards the 2800 level. Once we break above that level, it’s likely that we are going to go much higher, reaching towards the 2850 level, and then to the 2900 level relatively soon. Short-term pullbacks continue to represent buying opportunities.

To the downside, there is plenty of support for the S&P 500 index at the 2770 level underneath, and most certainly the 2750 level will offer plenty of support as well.

It would be surprising to see a major pullback before Friday when the earnings season kicks in as we will have the earnings reports from 4 major banks, including Wells Fargo (WFC), JPMorgan (JPM), Citigroup (C) and PNC (PNC).

Reasons why the Markets are Resilient

As stated in many of our previous market commentaries, there are many reasons why the U.S. markets are acting resilient. I will touch on some of these points again:

The U.S economy is in great shape: The U.S economy continues to fire on all cylinders with GDP growth to be near or slightly above 4% in the 2nd quarter and at 3.2% for the year 2018 (significantly higher than the growth rate of 2.4% for 2017). The Federal Reserve noted last week that they believe that the economy is strong and that future inflation will stay contained. This is exactly what the employment report published last Friday showed: The numbers were strong and much higher than expected (213,000 net jobs created in June, significantly higher than the 200,000 average net jobs created over the last 12 months). The jobless claims is now at 45-year low. The labor force participation rate is also rising which is very encouraging. Still wage gains remain moderate, adding support that the Fed sill move slowly raising rates. This is what one can describe as the perfect Job's report which is very positive for U.S. equities.

Earnings Season Expected to be strong: I fully anticipate blow-out results for the 2nd quarter earnings reports which start this week. Earnings growth expectations for the S&P 500 companies are running at above 20%. If achieved, this will mark the second highest earnings growth since Q3 2010 (when it was at 34% right after the financial crisis). As noted above, banks will be the first to report, and it is worth noting that this sector has not performed well over the past few weeks, and therefore expectations are low coming into Friday morning earnings releases. So we are likely to see earnings come above expectations. As far as expected revenue growth, the sectors that are set to outperform are: Energy (revenue growth of 19.9%), Basic Materials (growth of 13.2%), Technology (growth of 12.3%), and Property REITs (growth of 10.4%). Yes, Property REITs will be among the fastest growing sectors as far as revenues are concerned, which will come as a surprise to many. We will address why we are particularly bullish on Property REITs later on in this report. The sectors that are set to under-perform include Telecommunications and Utilities, two sectors we have been advising our members to avoid. We have no direct exposure to these 2 sectors except for AT&T (T) which has become a growth company following the merger with Time Warner, and we believe is significantly undervalued.

US companies share buyback at record levels: U.S. companies are flooded with cash from the recent tax cuts and from record earnings, and are using this cash to buy back their own shares to reward shareholders. For the 2nd quarter of 2018, US public companies announced a whopping $436.6 billion worth of stock buybacks. Not only it is the highest level ever announced in the U.S. history, but it nearly doubles the previous record of $242.1 billion, which was set during Q1 2018. This puts the S&P 500 companies on track to repurchase as much as $800 billion in stock during the year 2018, a record that would eclipse the year 2007 when stock buybacks were at their height. The buyback boom is great news for U.S. equities; when companies repurchase vast amounts of stock, this tends to boost share prices as demand for the stocks increase. It also results in increase in profits/share for companies that do share buybacks. Furthermore, this would make it very difficult for the markets to go lower as it would require an avalanche of selling to achieve that. This is another key reason why we are bullish on U.S. equities in general.



Mergers and Acquisitions: More than $2.5 trillion in mergers were announced during the first half of 2018, the vast majority of which are related to U.S. companies. This is a record high and underscores that companies are not worried about geopolitical tensions but rather focused on growth. More mergers mean that investors have more confidence in equities, and it also means higher equity prices. Just after hours yesterday Broadcom (AVGO), the massive semiconductor supplier, announced that it has reached a definitive agreement with CA Technologies (CA), a major IT management software and solutions provider. The deal is worth $18.9 billion in cash with CA’s shareholders to receive a 20% premium on their shares. As merger and acquisition activity continues to pick up, I expect this will be very bullish for equities.

U.S. Equities, the best place to invest: With strong U.S. growth leading the global expansion and powering corporate earnings, the latest reports from fund managers show they have been downgrading their outlook on global equities (including Europe and Japan) and upgrading their outlook on U.S. equities. This means that more cash inflows to the United States will help support equity prices higher. While many see some risk in trade war escalation, it seems that there is a consensus that things will settle down over time as the U.S. and China are likely to eventually settle their differences. I agree with this view and I believe that the current escalation is all about negotiation for a better deal. Once the two economic powers see eye to eye, we are likely to experience a huge market rally that should last for a long time.

Best course of action for our members: We continue to be very bullish on U.S. equities and recommend that our members be fully invested in the stocks and securities listed in our Portfolio. With or without near-term settlement on the trade issues with China, this bull market is set to continue going strong and reward handsomely investors who buy and hold for the long term. A settlement between the U.S. and China, when it comes, will be the icing on the cake.

Thanks Okie, I red Rida mentioned Telecom is a bad idea except AT&T . I have about 5% portfolio in AT&T and am disappoint it keeps going down. It has to be undervalued though. I just bought it for $32.29 and its down more. As for Utilities , I have about 1% of my portfolio and only about 6% bonds and I got those Muni bonds 1 1/2 yrs ago and they were cheap then and have done about 9% in 18 months. I have a bit of PONAX , a multi sector fund that is now about bottomed out so it seems like I am close to Ridas recommendation.

Rida also recommends Verizon. T is a real bargain right now.

Wish I would have bought Verizon instead. I would be way ahead by now. T should come back soon though.

4.1 GDP, MAGA!!!!! The market dropped Friday for no reason at all. Monday should be a good day if investors have half a brain left.

Market Commentary - July 29, 2018

Rida Morwa - High dividend Opportunities

As we posted in our last detailed market commentary, U.S. equities continue to look very bullish as investors buy each and every dip. Both macro-economic and market fundamentals will support this market to go much higher. A combination of the following factors is a Goldilocks scenario for equities:

The U.S. economy is growing fast.

Corporate earnings growth is estimated at 20%, running at their fastest pace since the last financial crisis. Interest rates remain at around historical lows.

U.S. equities are a magnet to international investors because America is the healthiest economy on the globe with the most promising returns of investment. Mergers and acquisition activities are helping the market climb higher.

The latest positive economic news come on Friday for the United States: GDP figures were exceptionally strong with GDP growth reaching 4.1% (inflation adjusted). This is the fastest quarterly growth since the year 2014 and almost double the growth rate of Q1 2018. This report is supportive of our views that the U.S. economy is currently firing on all cylinders.



On the technical side, all U.S. equity indexes remain above key levels which is bullish. The trend remains strongly to the upside. We believe that the S&P 500 index will be looking to reach the 3000 level fairly soon. To the downside, the index has plenty of support at the 2800 level and we doubt that we will break below this level.

This bull market has still plenty of room to run, and my target for the S&P 500 index is to close the year 2018 well above the 3000 level (or 5.7% higher from here.) In fact, I recently raised our target to the 3200 level for this year (or roughly 12% higher from here).

Also as stated in the last market commentary, with or without near-term settlement on the trade issues with China and other countries, this bull market is set to continue going strong and reward handsomely investors who buy and hold for the long term. Any settlement will be "icing on the cake". In fact, talks about trade sanction settlements with Europe sent the S&P 500 index soaring earlier this week.

As our long-term members know, our detailed market analysis have helped us over the past 3 years predict the market movements to stay ahead of the game. In fact in our Premium Report posted on October 15, 2017, we stated:

We believe that potential gains for the markets when the tax reforms bill passes are enormous, and are likely to push the S&P 500 index well above the 2800 level in 2018 (or roughly 10% higher from here.)

At that time the index was trading at the 2500 level and there was a lot of pessimism in the markets. Today, we have reached well above the 2800 level and we are more bullish than ever on this market.

We advise our members to remain fully invested in the stocks and securities that we are recommending. Those who buy and hold for the long term are set to be very well rewarded!

As a final note, we are approaching the month of August where historically this month has been volatile due to low trading volumes as most investors are on holidays. We expect price volatility and we advise our members not to worry about it. This is just normal for this time of the summer.

Why did High-Yielding Stocks Fall in Friday?

Following the release of exceptionally high GDP numbers on Friday, high dividend stocks and notably Property REITs took a big hit. The reason is that it seems investors are worried that the Federal Reserve may get more aggressive in hiking interest rates, and we got a knee-jerk reaction on Friday.

I am definitely not worried about the Fed getting more aggressive. If we dig deeper into the numbers, we find that a 4.1% rise in GDP growth is unlikely to be sustained because there were some non-recurring items that were reflected in this quarter. The non-recurring items include increased purchasing of U.S. goods by overseas buyers in order to stockpile ahead of the implementation of trade tariffs, and so they are likely to subtract from growth in the following quarters. So future GDP growth data will remain strong but not as strong as the last quarter, and I am pretty sure that the Federal Reserve knows this and they are unlikely to get aggressive. Furthermore, a fast growing economy (and GDP) are great for many dividend stocks, including Property REITs, Midstream MLPs and BDCs. As GDP growth accelerate, this generates more demand for products and services that REITs, MLPs and BDCs provide. The key to successful investing is to pick those companies that grow their earnings at a rate faster than both inflation and interest rate growth rates.

Reminder about Property REITs and Rising Interest Rates

As we have noted in many of our Premium Posts, Property REITs tend to outperform during periods of rising interest rates, when the rising interest rates are the result of a growing economy. Property REITs have an inherent protection against inflation and rising interest rates, which is the value of the real estate portfolio they own. Real Estate prices tend to go up in price as inflation picks up. Furthermore, most Property REITs tend to see an increase in their occupancy levels and in their rents as the economy improves.

Again, let us look at some history. The last time the Fed aggressively raised rates was between June 2004 and August 2006, when short-term rates marched all the way from 1.00% to 5.25%. Guess what happened to real estate stocks back then?

The Vanguard Property REIT index ETF (VNQ) returned close to 60% for the period (a period of little over 2 years).



What is worth to note here is that during this period, the U.S. economy was in expansion mode, similar to what we are seeing today.

Many Property REITs posted record earnings in Q1 2018 and boosted their dividends, and we are confident that Q2 2018 will be the same. We hold in our portfolio some of the best Property REITs around, and we are confident that they will strongly outperform. Any weakness in the REITs that we recommend is a buying opportunity.

My stocks are doing well.

Today the S&P lost .5%. I gained .16% because of REITS. When the market sees trouble REIT's do very well. If REITS dont do well I figure I will just collect divies at a discount and let my growth funds like my madcaps ( VOE and IJH ) do the work along with my S&P 500 funds .

Which REITs are you guys buying?
I picked up a little more T and SNAP today.

CLF.

I have not bought any REITS since they started going up in March. I bought them in January ( a little too early) and February when they were really down. I bought FREL ( Fidelity Realestate ETF) OHI, VTR ( hospitals) O, WPC . I sold some OHI and bought a Pimco bond ( PONAX) and wish I didn't.

The market is always unpredictable. Just when you get confident, something happens, investors panic and head to the door.

In my case, I am heavily invested in equities (about 80%) and advisors keep trying to get me to pull back to about 30%. At my age (77), I agree that 80% is rather high, but we don't need the money for living expenses, so I'll just let it ride. The market will eventually recover after a fall.

There is a new REIT service starting up on Seeking Alpha . . . the Author's Name is Jussi Askla and he is being assisted by Rida Morwa. I have read Jussi since he joined Rida's team and would recommend him to anyone who would like High Yielding REIT Opportunity ideas.

LINK to High Yield Landlord

"HYPO, our high yielding portfolio, is designed to maximize total return through fundamental value investing targeting undervalued real estate securities. As of 07/31/18, it has a dividend yield of 8.4% with a conservative 78% payout ratio despite a yield that is double the index. Beyond the dividends, HYPO's holdings are trading substantially below intrinsic value which provides both a margin of safety and capital appreciation potential. Risk is mitigated through ample fundamental diversification, and we believe it is positioned to outperform."

I like REITS but you have to buy them cheap. Look at what happened to real-estate in 2008. Yikes. I would hate to buy at the top of that one but buying at the bottom would mean an early retirement. February was a good time to buy , , , at least as of now it is. Most rich people made their first million from real-estate.

hookem . . . Jussi and Rida only recommend REITS that are trading at significant discounts to NAV. The legacy rate is being extended for the next 100 people to sign up or until 15 Aug. Whichever happens first. I joined because I want to increase my portfolio to REITs

HDO: Market Commentary + Views On Rising Inflation And Risks Of Stagflation

Aug. 11, 2018 7:40 AM ET
Rida Morwa

Summary

+ Turkey Sanctions And Acceleration Of U.S. Inflation.

+ Inflation Is 'A Beast With Big Ears'.

+ Our Views On Rising Interest Rates.

+ Why High-Yield Sectors Are Still Set To Do Well.

+ Keeping An Eye On Stagflation.

Finally we saw some market selling which is most welcome as all the major indexes have been stretched and in need of some relief. Even the VIX ended the day higher by over 16.7% as investors contemplate the possibility of price volatility. We should note that at this point, the vast majority of companies that could have any kind of significant impact on the market have reported earnings, so company related market volatility is out of the picture. So what happened on Friday to spook the markets?

1- Turkey Sanctions: News of additional sanctions by the United States against Turkey sent the Turkish currency tumbling by 14% on Friday, and had lost more than 40% of its value this year. President Trump is stepping up pressure against Turkey for the release of Andrew Brunson, a pastor from North Carolina after he has been detained in Turkey. This has sent shockwaves across the globe and caused many international currencies tumbling in sympathy, including the South African rand, Argentine peso and Russian rouble lower by between 1.5% and 3.5%. Investors have started retreating from riskier intentional asset classes. We also noted that European banks with high exposure to Turkey and its economy suffered sharp share price falls. The S&P 500 index ended the day down by 0.5%, the London FTSE down by 1%, German DAX down by 2%, and Hong Kong down by 0.9%.

2- Acceleration of U.S. Inflation: The second piece of news that resulted in the selloff on Friday relates to the release of U.S. inflation figures that showed signs of acceleration. Core inflation, which strips out volatile energy and food prices and which is closely followed by the Fed, increased by 2.4% year-on-year in July and up from 2.3% in June. That was the fastest annual pace of core inflation since September 2008. This figure was above market forecasts of 2.3%. This of course raised concerns among investors that the U.S. Fed is likely to continue hiking rates, with many analysts now viewing that the Fed will increase interest rates two more times in 2018 (in September and December), rather than just one more time for the year.



The high-yield sector pulled back sharply on Friday following this news. This has been the normal reaction in the past 2 years. As soon as there are talks about rate hikes, REITs, MLPs, BDCs, Fixed Income and Utilities, all take a dive.

What is causing this fast inflation?

News media quickly noted that the reason for the inflation is due to a humming U.S. economy. Of course, rising inflation means that the economy is doing very well, which is very true. In fact, U.S. GDP grew at a 4.1% annual rate in the 2nd quarter, the strongest quarter since 2014, and economists project growth will clock in at 3% for the full-year 2018. Also unemployment is at historically low rate of 3.9%. But are there other factors contributing to this rise in inflation?

Inflation is a 'Beast with Big Ears'

When I was attending college in the 1980s at Indiana University, I had one of the best economic professors who used to describe inflation as a 'Beast with big ears".



The reason is that while rising cost of goods and services are contributors to inflation, inflation expectation (and not just rising costs) are the main drivers for a higher inflation. When people hear that inflation is coming, they are likely to factor in any expected rise in cost into their budgets. Sure, the consequences of higher tariffs did not yet creep into the system, but expectations have. US steel and aluminum prices are up by more than 30% and 10% respectively since the start of the year, as producers and their customers began to price in the tariffs. US consumers are already paying more for products from recreational vehicles to soda. Examples: Coca Cola and General Motors, among others, have already announced price increases. Therefore, it is likely that tariffs have partially contributed to the sharp rise in inflation. By the time higher tariffs gradually filter through to producer and consumer prices, we are likely to see more pick-up of inflationary pressures, and I would imagine that to happen next year.

As investors, it is not within our scope to take a position on to whether President Trump's strategy of dealing with what is viewed as unfair trade practices is the correct one or not. Our job is to examine the consequences of such a decision on the investment and market climate.

Our views on rising interest rates

The Federal Reserve is in a very difficult position today. Economic growth is strong, and inflation is picking up. But the risks to the global economic recovery have clearly increased following the trade war actions. The Fed is compelled to act, as rising prices are now eating up much of Americans’ wages gains, restraining their ability to spend in the future. However we should note that while increasing interest rates might work when inflation is the result of a tight labor market and an overheating economy, it will just not work in case inflation is the result of higher tariffs. Also note that while we are seeing a recovering economy, there are no signs that it is an overheated economy, and it is still fragile.

Higher tariffs result in two things:

1. Tariffs and retaliatory tariffs tend to increase the costs of products to the end consumer pushing up inflation. Ironically, it may get the inflation the Fed would like to see, but it would just be in the wrong place and for the wrong reason.

2. Tariffs will also decrease demand for U.S. exports and curb economic growth. In effect, they have a similar impact of higher interest rates. The Fed uses higher interest rates to slow down the economy by increasing costs to borrowers, which in turn puts a lid on how much they can grow.

So in effect higher tariffs can result in both higher inflation and slower economic growth.

Should the Fed continue to aggressively hike interest rates, this will further reduce economic growth and will not impact the inflation caused by the higher tariffs. In the end, we get a shrinking economy from shrinking trade, plus rising interest rates, plus higher inflation - a situation called stagflation.

Stagflation is a phenomenon whereby the economy is seeing a persistently high inflation and persistently low economic growth. Yes that is pretty scary and I hope we never get there.

We do not have to look back far in history to see the impact of stagflation. President Nixon implemented across-the-board tariffs of 10% in the 1970s which coincided with a painful period of stagnation. During this decade, inflation rate reached over 11%, unemployment rates over 8%, mortgage rates reached 9%, and GDP growth was negative. Equity markets fell 10% in the 3 months after US President Richard Nixon imposed the tariffs in mid-1971.

The U.S. economy's recovery was long and painful. The recovery from stagflation in the 1970s and 1980s can be attributed, at least partially, to the transition from the Greatest (Great Depression) Generation to the Baby Boom Generation. The Baby Boom generation contributed to a growing population with increased spending and consumption needs. In today's aging global population and decreasing birth rates (in the US and elsewhere), we do not have this luxury anymore, and any recovery is likely to be much more painful.

Bottom Line

The bottom line is that I believe the U.S. Fed is well aware that the economic conditions are still fragile.

+ Economic growth in Europe and Asia is slow, and in some cases non-existent.

+ Even growth, where it exists, is fragile due to an aging global population coupled with decreasing birth rates.

+ Trade tariffs are a clear risk that could derail the global economy.

The best course of action for the U.S. Fed is to remain cautious, and they are likely to remain so through a gradual and less aggressive rate increases. We are set to see at least one rate hike in 2018, and possibly two, but also a deceleration of rate hikes in 2019 and later. Current Fed Rate Fund are at 2%. Fed officials see the long-run funds rate at 3% to 3.4% which is lower than they were historically, including during the 2008 financial crisis over 5%. This is reassuring because it provides proof that officials are aware that the situation today is very different from the past. We probably won't to see in our lifetime rates go back up to 5% or above.

High-Yield Sectors Set to do Well

We believe that the type of low global economic growth, combined with relatively low interest rates, will keep demand high for high-yield products and sectors. As we can see from the chart below, current interest rates, despite recent rate hikes, are still very low.



High-yield stocks may see price weakness from time to time, but barring an economic recession, many high-yield sectors that can grow their income and dividends, are likely to deliver solid returns if held for the long term. Those include BDCs, Property REITs, Midstream companies, Renewable high-yield energy, and other high-yield growth stocks. Again, the key here is to invest in the right dividend stocks that can grow their income at a rate higher than the rate of inflation. This is the type of securities we like to invest in at "High Dividend Opportunities". Patient investors are set to be well rewarded.

Technical Analysis

The S&P 500 index rallied significantly during the week, but by the time we finished the week, the index has given back most of the gains. The index tried most of the week to rally to fresh new highs but has failed. In fact, by looking at the charts, the index seems to be forming a shooting star, which is a negative sign in the short term. This means that we could have temporary reached a high due to overbought conditions, and that we may pull back from here. Note that a pullback is actually necessary; the markets need to build up momentum in order to move higher. To the downside, the 2800 level (1.1% lower from here) for the S&P 500 is likely to provide a strong support, and I think it is difficult to break down below. Longer term, we remain bullish on equities and our target for the S&P 500 index remains above the 3000 level by year end.

What if we Do reach Stagflation?

It is too early to speculate if we will reach stagflation anytime soon, and it will also depend on the actions of the Federal Reserve. Our hope is that the trade war will resolve itself, and that this risk to the global economy will be removed once for all; but this is a situation that we will keep a close eye on. Should we get there, income investors need to be prepared to make significant changes to their portfolios. Fortunately, the markets do offer some very high-yield investments that can be very profitable during such periods. We will discuss one such investment in a special report soon.

Market Commentary - August 28, 2018

Rida Morwa High Dividend Opportunities

U.S. equity markets closed sharply higher on Monday with the Dow rapidly approaching a record high and the NASDAQ Composite hitting 8000 for the first time in history. Also, the S&P 500 index finally broke out from its prior high and is closing in on the 2900 level, something we have been predicting for quite some time now. The market is firing on all cylinders.

What drove the equity markets yesterday is news that a tentative US-Mexico trade deal is likely to be reached. The new deal would rewrite parts of NAFTA, in a three-country trade deal that includes Canada. We expect that Canada will also sign on the agreement and this will remove a lot of economic and political uncertainties that the recent trade war escalations have brought.

Of course, this also shows that President Trump trade war escalations have been more of a negotiating tool rather than a protectionist behavior that many have accused him of. In fact, this strategy has proven to be successful so far. This also opens the door for the possibility that a trade deal could be struck with China soon, which will also be bullish for equities.

In the meantime, the smart money is ignoring all the recent negative news-feed about President Trump and rightly so. As we keep reminding our members, political events have had little or no effect on equities. Remember that the main drivers for equities are macro-economic data, corporate earnings and the general health of the global economy. This is something we wrote about in November 2016 (in the midst of the elections and the uncertainty it brought to investors), right before this leg of this very strong bull market has started. The S&P 500 was at time trading at just below the 2100 level. Today the S&P 500 is close to the 2900 level (or 38% higher). We argued in our report entitled (The Bubble Of Cash On The Sidelines Is Getting Bigger) that no matter who won the elections, the equity markets are set to strongly outperform because we were in the right macro-economic environment combined with low interest rates, low market valuations, and plenty of cash sitting on the sidelines.

We always remind our members that keeping the health of the global economy in check consists of more than 50% of the "due diligence" needed for successful investing. And this is the reason why we provide frequent macro-economic and technical analysis so that we can stay ahead of the game (i.e. be prepared to remain fully invested during bull markets and take defensive positions during "bear markets").

Where do we go from here?

We are still in a strong bull market supported by strong macro-economic fundamentals, a low interest rate environment, and corporate profits continuing to look healthy and accelerating. While many believe that equities look expensive, the fact of the matter is that only few stocks are looking expensive with many sectors still trading at very cheap valuations. This is a point we will touch on later in this report.

The main trend for equities remain strongly to the upside. As stated in many of our premium reports, the S&P 500 index is set to close above the 3000 level by the end of the year (or 3.8% higher from here), with a good likelihood of reaching the 3200 level before December 31, 2018 (or 10.7% higher from here).

Our view is that this bull market has still plenty of room to run in the next 2 to 3 years for several reasons which include that we are reaching the end of the interest rate hike cycle (as we explained in our latest report on MORL - which is a must-read for those who did not get a chance to read it yet), combined with the factor that the latest stages of the bull markets tend to be the strongest ones where most of the large gains tend to be realized in a relatively short period of time. I believe that this final leg of the bull market is likely to last longer than its historical averages, and through the year 2020 and possibly the year 2021.

The best course of action

We advise our members to remain fully invested in the stocks and securities we are recommending as this market is set to reward those who buy and hold for the long term.

I hope that our market updates and commentaries have been helpful to our members. We have been taking a view that the S&P 500 will hit the 2900 level then the 3000 level since January of this year, when we posted our "Market Update" on January 30, 2018 at the following post:
HDO: Market Update, January 30, 2018

That was at a time when many market pundits were bearish on equities, and when most investment firms were recommending to their clients to under-allocate funds to equities.

====

Why Do we Use a 'Value Investing' Strategy?

We are long-term investors, and value stocks tend to outperform growth stocks in the long run. We can see the long-term performance of Value Stocks versus Growth stocks in the chart below:



Since this leg of the bull market started in November 2016, growth stocks have been on a non-stop rally, and currently trade at highly excessive valuations. We should note that the leadership in the U.S. equity markets during the year 2018 has been confined to a narrow group of tech stocks. In fact, Amazon (AMZN), Netflix (NFLX) and Microsoft (MSFT) account for 71% of the S&P 500 index total returns so far this year. Apple (AAPL), Facebook (FB) and Google (GOOG) account for another 27%.

That means these 6 stocks, by themselves, have contributed 98% of the market's returns this year. If we back these 6 stocks out of the S&P 500 index, the index would actually be almost flat for the year. This is because while the S&P 500 index might hold 500 different stocks, 450 of those have little to no influence on returns. While the major averages might be near record highs, but it's not quite so rosy for all the stocks. About 50% of all stocks trading on U.S. exchanges have posted returns of 0% or are in negative territory for the year 2018, with many stocks being substantially in negative territory. This comes at a time when the tech heavyweight are trading at very lofty valuations and carry substantial risk. This is the reason why many managed funds (including mutual funds) have under-performed the S&P 500 index during the year 2018. I would not count on these high-growth stocks to keep delivering 50%+ annual returns in the future. Sooner rather than later value stocks (including value dividend stocks) will come back roaring.

Another good reason to invest in "value stocks" is that they tend to be less risky, and less prone to investor speculation and related euphoria. Having lived through the dot.com bubble crash of the year 2000, I am very skeptical when it comes to investing in stocks that come with a Price/Earnings ratio of 20 time or above. I just do not like this kind of risk, and this is where our value approach has originated. At the time of the dot.com bubble crash, many of the high-flying tech stocks lost 90% of their value and more.

There is a very strong case to be made for allocating to value-oriented strategies in 2018 and beyond, especially at a time when growth stocks are trading at extreme premiums to value stocks, and the dispersion in market multiples is well above the long-term average. The performance of value stocks has tended to be disconnected from economic and market cycles and therefore they tend to be much better investments in the long term.

While many market pundit keep posting that equities are expensive, this is just not the case for most "value stocks", including the high-dividend "value stocks" that we invest in. Such sectors include Property REITs, BDC companies, Midstream MLPs, Renewable Energy Stocks, some Utilities stocks, and other high-yield stocks that have been out of favor since the beginning of this rally in November 2016.

With a view that we are nearing the end of the interest rate hike cycle, we believe that many of those sectors that have been neglected by investors are set to see renewed interest and a strong run. Our views is that too many interest rate hikes have been factored into many of the high-yield sectors, even into those that tend to perform well during periods of rising interest rates. We believe that our portfolio is set for a strong out-performance over the next 2 years at least.

Market Commentary - Sept 9, 2018

Rida Morwa - High Dividend Opportunities

There has been some recent market volatility which has got some of our members worried. Here I would like to remind investors that September is known for being a tough month to navigate. Historically, it has been one of those months that see a high volatility and pullbacks. What is not helping is escalation of trade tensions between the United States and China, with President Trump has just threatened to escalate trade war with Beijing if it does not make concessions. Trump's administration said that it could move “very soon” to impose tariffs on $200bn in imports from Beijing, with levies on a further $267bn in products “ready to go on short notice”. This would imply that the entirety of Chinese imports in the US would be subject to higher tariffs.

It is my personal view that this type of escalation is likely to put pressure on both the Chinese and the U.S. to reach an agreement soon.

Even if that does not happen, U.S. equities are unlikely to be affected much, as U.S. equities remain the best place to be for both U.S. and international investors. Economic data from the U.S. remains overwhelmingly positive compared to other international economies. Just this Friday, the August jobs report came in above expectations. The U.S. economy created 201,000 nonfarm payroll jobs for the month versus the 191,000 estimated. Average hourly earnings rose 2.9% for the month on an annualized basis, the highest since April 2009. So the U.S. economy is clearly firing on all cylinders.

From a technical perspective, the bulls are still putting up a good fight with buyers stepping up on each pullback. This doesn't mean the market is out of the woods yet; but every time the bulls are threatened they come up with a response. This comes at a time when the VIX volatility index continues to show some nervousness, and the NASDAQ index has gone from most favorite status to the least favorite one recently which could also make it tough for the overall market to climb as big tech stocks are an important part of the S&P 500 index.

Therefore it makes a lot of sense for this market to see some sort of pullback because it has been grinding higher for so long. However, there is a lot of support underneath, especially near the 2800 level for the S&P 500 index, and I really believe this level should provide plenty of support. Therefore, I expect any further pullback to be relatively shallow. I do not see signs that we are going to see a market correction similar to what we have seen in late 2016. We are still in a nice and strong uptrend line, and I think it will continue to attract a lot of investors in case we pull back further.

My best advice here is not to try to trade this market. Any potential good news could send this market soaring and those who sell and try to buy back are likely to miss on opportunities. Remember that the last three months of the year (October through December) are usually the best months of equity markets, and we are likely to see a continuation of this market rally during the 4th quarter. It is also my opinion that we are likely to close the year much higher from here, and most likely well above the 3000 level for the S&P 500 index. Therefore, this is a market that should reward patient investors. Even tech stocks which are currently seeing some pressure are likely to recover and see renewed strength. For those who do not have exposure to tech, I advise to start building a position in BlackRock Science and Technology Trust (BST) with a yield of 5.3%. This CEF is likely to reward investors with both yield and capital gains.

As for international equities, we continue to see weakness in both Europe and China for different reasons. In Europe, Brexit uncertainties are causing investors to be nervous, while in China, a combination of weak economic data and threats of trade wars have caused Chinese equities to take a huge hit. Still, I see value in China stocks and this is why we added a China CEF with technology exposure to our portfolio recently.

I remain bullish on equities for the next two years, and very hopeful that the high-yield sector will outperform the general markets given a period of three or more years. I am mostly bullish on Property REITs, mREITs and BDCs. I believe that the value high yield space is a very good hedge against the current market volatility and it is best to be mostly invested in value stocks rather than growth stocks as our portfolio is currently positioned.

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Market Commentary, September 19, 2018

Rida Morwa

Following the recent news of trade war talks with President Trump’s administration announcing the introduction of 10%-tariffs for Chinese imports on another $200 billion, I have received many messages from members concerned about a possible market pullback or correction. My report today is to continue to express my bullish views on equities, and to reassure members that the best course of action is to remain fully invested.

Yesterday (on Monday), we saw investors dumping of some large cap tech stocks as the primary reason the NASDAQ was lower while the Dow and S&P held fairly well.

Today investors are back buying the same names that were under fire yesterday with the bulls showing once again that they remain in charge of the action. Each time we see any pullback, even on potentially very negative news like today, buyers step in to take advantage of the opportunity, and rightly so. We are in a very strong bull market supported by solid fundamentals, including valuations that are in general not excessive, and certainly not in a bubble territory. The U.S. continue to be the best place for investors right now, and international funds continue to flow towards U.S based equities.

It is unlikely that we will see any significant pullback from the China news. In my opinion, the escalation with China is bound to speed up trade negotiations and we are likely to see some sort of settlement soon, which will be the icing on the cake for this market. Even if trade tensions continue, this will only slow down the upside trend, but should not stop or reverse it.

On the technical side, I think there is plenty of support for the S&P 500 index at the 2890 handle, and of course the 2880 handle after that. In general, this is a market that I think will continue to try to grind higher and will reach towards the 3000 level fairly soon. I think we will continue to see the occasional pullbacks, but there are plenty of areas where investors are willing to step in as the US economy is outperforming every other economy in the world right now.

As a value investor, I do not like technology stocks too much because of higher general valuations, but even technology stocks are not yet overvalued, and likely to continue to go higher too. Of course, the HDO portfolio is mostly invested in value stocks, most of which did not participate in the current market rally which started in November 2016. I believe that this strategy is a wise one to follow because it gives us some downside protection (value stocks do not go down in price much in case of a general market pullback), and should maximize our returns going forward.

Remember that value stocks tend to outperform growth stocks in the longer term. This comes at a time when value stocks look very cheap compared to growth stocks and it is only a matter of time until we see value outperform growth.

Another good reason to invest in "value stocks" is that they tend to be less risky, and less prone to investor speculation and related euphoria.

While many market pundits keep posting that equities are expensive, this is just not the case for most "value stocks", including the high-dividend "value stocks" that we invest in. Such sectors include Property REITs, BDC companies, Midstream MLPs, Renewable Energy Stocks, some Utilities stocks, and other high-yield stocks that have been out of favor since the beginning of this rally in November 2016.

What to Expect from Equities Going Forward

We are still in a strong bull market supported by strong macro-economic fundamentals, a low interest rate environment based on historical rates, and corporate profits continuing to look healthy and accelerating. We have shared our views with our investors that our target for the S&P 500 index is 3000 level for the year 2018 (which we shared with our investors on December 20, 2017). Now that we are very close to this target, our views is that we are set to close the year above the 3000 level (or 3.8% higher from here), with a good likelihood of reaching well above this level.

Our best advice for our members is to remain fully invested and not worry about all the market noise. Selling now is likely to result in missed opportunities as I expect this market to continue to rally for the next one to two years, and creating a significant upside to investors.

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What is behind the market selloff and should we worry?

High Dividend Opportunities
by Rida Morwa
Oct. 11, 2018 9:49 AM ET

The markets have been selling off sharply with US stocks suffering their worst fall in 8 months. As I stated in a previous market commentary, we are likely to see some market volatility in October, and this is exactly what is happening.

The tech-heavy Nasdaq Index dropped yesterday by 4.1%, its biggest one-day decline since June 2016, while the S&P 500 index fell 3.3%, its worst day since February. The S&P 500 index has fallen five days in a row — its longest losing streak since President Trump was elected in November 2016. So what is behind this decline and should we worry? First, I will go over the reasons behind the price decline:

1- Bond Yields: As I stated in Tuesday's market update: The U.S. 10-year Treasury yields moved sharply up last week by 0.2%, reaching a 7-year high of 3.25%. This seems to have spooked investors and the price decline hit the high-yield space first, and then the general markets. Usually, higher interest rates by the U.S. Fed should be viewed as positive because this is a vote of confidence that the U.S. economy is doing very well. However, the magnitude of the bond yields movement has resulted in panic.

2- VIX Volatility Bets: Some investors are greedy, and when the markets look very bullish, some decide to short the VIX volatility indexes to make a quick buck. If you recall what happened in February 2018, there was a huge investors money shorting the VIX Index (or volatility indexes). Of course, when we see market turbulence, volatility spikes, and those who are short the VIX get ripped to shreds. Back in February 2018, there was enormous amount of investors who were shorting the VIX, which caused a huge market turmoil. This was exacerbated by the collapse of two exchange-traded notes that bet shorting the VIX futures. Of course, when these investors try to cover their bets, this causes volatility to spiral even higher. I believe that a similar dynamic have come into play this week. Data from the Commodity Futures Trading Commission indicates that investors are once again shorting VIX futures to the greatest degree since January 2018. Unfortunately, some investors have a very short memory, and I believe that those shorting the VIX have been trying to cover their positions once again, and this has resulted in a huge market decline yesterday.

3- Computer generated trades: In our days, there are many computer-powered investment strategies that systematically scale their market exposure according to volatility. So when markets are up and volatility is down, the programs start buying stocks, but when markets turn choppier they sell. These computer generated trades tend to exacerbate both routs and rallies, and I believe they have also contributed to the market declines in the past few days.

4- Global growth Concerns: While the U.S. economy is firing on all cylinders, there has been lately concerns about economic growth elsewhere in the world. The President of the European Central Bank Mario Draghi has pointed to rising protectionism as the “major source of uncertainty” to the Eurozone economy as the latest data coming from Europe shows lower business confidence and slowing exports. Furthermore, the International Monetary Fund (the IMF) this week cut its growth forecasts for most countries for this year and in 2019.

My Take on the above

Nothing from the above four factors point to fundamental weaknesses that should cause investor concerns about owning equities. First, as we have noted above, rising interest rates in the United States is a sign that the U.S. economy is healthy. Furthermore, this extreme fear of rising interest rates comes at a time when interest rates remain close to historical low levels, and companies are still able to borrow at low rates that enable them to achieve highly attractive returns. Below is a chart that depicts Fed Funds Interest Rates for the past 50 years.



As we can see above, we are at historic lows, and investors' concerns in my opinion are overblown.

Furthermore, both the current rout caused by VIX investors and computer generated trading are short-term factors that have no impact on stock fundamentals.

Finally, concerns over trade war and economic growth should resolve itself. The U.S. just struck a trade deal with Canada and Mexico. I believe that we will also see a similar deal done with China when the right time comes. Even if this does not materialize, the U.S. economy is unlikely to be affected in the short and medium term. In fact, this could result in faster economic growth in the U.S. in the next couple of years. Of course, if the trade situation with China is not resolved, this would increase recession risks in the United States, but that would take some time, and not before two to three years at least.

Most importantly, despite the recent market gains, there are no indication that we are in a market or asset asset bubble such as a house price bubble, which can contribute to a market crash. Valuations for the S&P 500 index remain at acceptable levels, while valuations in several high-yield stocks and sectors are close to their lowest in years.

What Comes Next?

I think in the very short term, we are likely to see a continued volatility; however we are clearly in oversold territory and we are likely to see a rebound soon. There are plenty of bargains around, especially in the high-yield space.

The most important point to note is that the fundamentals remain strong for equities, and technically, this bull market remains in place. I believe that in a few days, the uptrend should start again and in a couple of months, all of this would have been forgotten. I strongly advise our members not to panic. I do not foresee a market correction, and even if I am wrong, the worst case scenario is that we will see a mini-correction similar to what we saw in early 2016 which only lasted for three months and was followed by a quick market recovery. But I really doubt that we will get there.

Finally we have to take into account that the 3rd quarter earnings season will start in just a few days. I believe that this will be the catalyst to see a strong recovery and a continuation of the current market rally.

What Assets are most at risk?

Here, I would like to add that the assets that are most at risk are long-term bonds. Our portfolio has no direct exposure to long-term bonds, and we have been recommending to avoid those for well over a year now. The vast majority of our "Core Portfolio" (and other recommended stocks and securities) are equities as opposed to fixed income (or bonds). They are revenue- and earnings-driven investments. As the economy grows, these stocks should see their revenue and cash flow grow, and are set to outperform.

Another strategy that investors should follow is overweight U.S. stocks, and this is exactly what we have been doing. The U.S. economy remains the strongest and fastest growing economy among developing nations, and U.S. equities remain the best place to be invested in. Note that most high-yield stocks and sectors provide a pure U.S. exposure including Property REITs, BDCs, Mortgage REITs, and Midstream MLPs. We are overweight all of these sectors in our Portfolio. We have no direct exposure to foreign equities except through the China CEF Templeton Dragon Fund (TDF), and I recommend to keep holding this one. First we got into it at an opportunistic price - Second TDF is mostly exposure to growth stocks - and Third, it does provide us with some diversification.

About High-Yield Stocks and Sectors

Yesterday, we saw the decline in high-yield stocks and sectors much lower than that of the general markets. In fact, at a time the S&P 500 index closed down by 3.3% and the Nasdaq by 4.1%, Property REITs were only down by 1.4%, Midstream MLPs by 1.9%, and BDCs by 1.3%. In fact, our "Core Portfolio" performed much better than the S&P 500 index and was down by only about 2%. As I have stated previously, these are value sectors, and value sectors are cheap and their downside tend to be limited when the markets are down or in case we see a market correction (again a market correction at this point is unlikely in my opinion).

With the 3rd quarter earnings season kick-start in just a few days, I have very high expectations for our recommended stocks to post some stellar earnings. This should help drive the prices higher. I am most bullish on Business Development Companies ('BDCs'), and Midstream MLPs, and Property REITs, which are set to report record quarterly sales and earnings over the next six weeks. Also, I expect many Property REITs to boost their dividend yield.

I am very optimistic about our portfolio in the longer term. In today's very low interest rate environment, high-yielding stocks remain very attractive to income investors as there are very little alternatives to get such investment returns. Demand for dividend stocks will only increase in the future as the general population grows older and more people enter the retirement age.

In my opinion, the yields that we are seeing today will not last very long. As demand for high-yield products grows over the next few years, yields are bound to compress. Therefore it is my opinion that taking advantage of the high yields offered today is an opportunity.

Conclusion

I remain very bullish on the prospects of a strong 3rd quarter earnings season, as well as a continuation of the current bull market. I believe that our portfolio is in a very good position to outperform over the next few months and through the year 2019. I urge members to keep a long term view and not get discouraged by the recent volatility. The general markets are still in a strong long-term uptrend, and this bull market is set to continue. Long-term investors should be very well rewarded. The best aspect of investing in dividend stocks is that no matter what happens to equities in the short-term, we keep collecting high-income until the markets recover.

I have very similar portfolio as he does it seems. In the two says the S&P lost 5.3%, but I only lost 3.96%. I went with high divi stocks and bought when they were near their 52 week lows. I usually dont gain as much like today the market did 1.4% ? but I only gained .95% I like a steadier investment plan. If the market goes down , I will likely make more money due to the higher yield in divies. My portfolio has about 10% bonds, ( a non traded REIT) ( big mistake) , some PONAX and a tax free muni bond.

Mattress Firm and Sears going under. Wally and Target in pain. Looks like time for pain to me. Campbells in trouble.
The deep state illuminati has pulled its money waiting for the crash to clean investors before they step back in and get the cycle going again.

Schietts fixing to get serious.

https://www.businessinsider.com/retail-bankruptcies-list-this-year-2018-4#tops-markets-11

https://www.cheatsheet.com/money-career/great-companies-on-the-brink-of-death.html/

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Market Madness Creates Buying Opportunities

The general markets including high-dividend stocks and sectors have pulled back sharply in the past few days as a result of panic selling. The main reasons?

1- Spiking bond yields.
2- VIX Volatility Bets
3- Computer generated trades
We explained in details the reasons for this pullback in a recent article posted here on Seeking Alpha entitled:

What Is Behind The Market Sell-Off And Should We Worry?


Rida Morwa, Marketplace Contributor
Comments3752 | Following
Author’s reply » I would like to also point out that the discounts that we are offering today are grandfathered for life. This means that if you decide to subscribe today, will continue renewing your membership indefinitely at the current low rate, regardless of any future rate increases.
Therefore, I would recommend to followers and readers to consider the yearly membership because it results in much more savings in the long term. The rate will increase soon to $499 per year, so locking it now at the low rate of $441 per year makes a lot of sense.
NEW | 14 Oct 2018, 05:19 PM

CLF....

Volatility: Market Correction or Temporary Pullback?

28 Oct 2018

By Rida Morwa
High Dividend Opportunities (2-week free trial membership)

The markets have been very volatile lately and we have seen a significant pullback in the past few weeks. I know that many of you are feeling anxious about the recent market volatility. I understand it completely. It is very difficult to have a down day, and we have had several days of panic selling this month so far, and our portfolio was clearly impacted by this panic selling.

On Friday, almost all the financial news media started flashing that the "S&P 500 index is now officially in correction territory." The media likes to flash negative news, and this is one of them too. The definition of a market correction is usually a pullback of 10% to 20% from the most recent highs.

The S&P 500 index reached its all-time highs on September 20, 2018 when it closed at the 2931 level. On Friday, it closed at the 2659 level - or down 9.3% in a period of less than 40 days. So, we are still in a market pullback, but not officially in a "market correction" as the news suggests.

In this report, I will explain the difference between "market corrections" and "bear markets," and share my views on the current state of equities, including the best course of action for our members. First, let us look at some definitions.

Definition of "Market Correction" and "Bear Market"



• A "Market correction" is defined as a drop of at least 10% or more for an index or stock, from its recent high.

• A "Bear market" is defined as a 20% or more decline in stock prices. So officially we are not in a "market correction" yet, per its definition.

Quick statistics about "Market Corrections" and "Bear Market."


Source: High Dividend Opportunities

Some things to Know about Market Corrections

• Stock market corrections happen often (about once a year.)

• They tend to happen for no specific reason.

• Market corrections rarely last long (about four months.) They also take another four months to recover. So, after a period of eight months from the start of the correction period, stocks fully recover.

• Corrections mostly happen when small stocks significantly lag large-cap stocks.

• They should only matter for short-term traders, and not long-term investors.

• In most market corrections, on the chart there is a sharp V-shaped recovery, with very little bottom-building or retracing.

• Stock market correction is often a great time to pick up high-quality companies at an attractive valuation.

When did the last 'Market Correction' Happen?

The last market correction we had was in December 2015 and ended in February 2016, lasting less than three months. The markets fully recovered and made back all their losses (a full recovery) in May 2016, or in less than five months after the correction has started. That means a full recovery and the indexes were all back up to the levels they were before the correction has started. This is a very short period of time for those who are invested for the long term, and even immaterial.

More about 'Market Corrections'

Note that there have been five official market corrections for the S&P 500 index since the bear market of 2009 (or seven corrections if we count the 9.8% and 9.9% drops.) That is on average once a year, as we can note from the chart below.



Note also that none of these market corrections have resulted in a "bear market."

So, what is behind the current pullback

There are many reasons behind the current pullback which we have explained in a recent report. In my opinion, the biggest reasons for this selloff are:

1. Profit-Taking and Stop Losses: The pullback was triggered by some investors taking profits, while others having "stop losses" in place that created a wave of selling.

2. VIX Volatility Bets: The selling was accentuated by VIX Volatility Bets. Some investors are greedy, and when the markets look very bullish, they decide to short the VIX volatility indexes to make a quick buck. Of course, when we see market turbulence, volatility spikes, and those who are short the VIX get ripped to shreds. Data from the Commodity Futures Trading Commission indicates recently that investors are once again shorting VIX futures to the greatest degree since January 2018. Those shorting the VIX have been trying to cover their positions once again, and this has added to the recent market declines.

3. High-Frequency Algorithms: High-frequency trading algorithms (or automated computer trading programs) have become a big problem lately. These computers can generate millions of trades per second to take advantage of market movements, and they tend to exaggerate market movements either to the upside or to the downside.

4. The emerging market drama and an uncertain political climate: Adding to the anxiety is what is being portrayed about the state of the emerging markets, and the current political climate in the United States just before the mid-term elections.

Are We Going to see a "Bear Market"?

During the past 70 years, there has been eight "bear markets." Statistically, they occur about one out of every 7.7 years and last on average 19 months, or roughly about 1.5 year as shown in the table below:


Source: High Dividend Opportunities and Business Insider.

"Bear Markets" do not happen often, and they usually happen due to fundamental "macro-economic" problems which include:

1. An economic recession in the United States, or in another major global economy such as Europe or China.

2. An asset bubble, such as a stock price bubble or real estate price bubble.

3. Technology stock speculations, and technology stock bubbles.

4. Aggressive interest rate hikes, whereby bond yields become so high that it is more profitable for investors to buy bonds instead of stocks.

5. Spike in commodity prices, which impacts economic growth. Example, spike in oil prices, wheat, corn, steel and other metals' prices. The reasons is that rising commodity prices usually result in increased inflation pressures and slows down the economy.

Note: Bear Markets in the distant past used to last for a longer time. The Federal Reserve has been more active in the past 30 years to contain any "bear markets". Therefore the "bear market" pullbacks and subsequent recoveries over the last 30 years has lasted shorter than in the past, and we have adjusted our figures as such.

The table below summarizes the specific reasons that past bear markets have occurred:


Source: High Dividend Opportunities

It is worth to note that none of these specific reasons that have historically caused a "bear market" are available into today's macro-economic environment.

So, trying to predict a bear market just based on statistical occurrences (or once every 7.7 years) does not make much sense. Here we should look for specific reasons. Therefore, the fact is that theoretically we can remain in a secular bull market for a very long time (much longer than the average 7.7 years) provided that the reasons for a "bear market" to happen are not there.

Since the historical reasons that have triggered a "bear market" in the past are not present today, it is our opinion that a "bear market" scenario today or over the next 12 months is highly unlikely.

This is why we remind our investors that keeping the macro economic outlook in check represents more than 50% of the due diligence required for successful investing.

Are we going to see a 'Market Correction?’

Again, market corrections are defined as a 10% to 20% market pullback, and they tend to happen for no particular reason. So yes, it is possible to see a market correction. Here fundamental analysis does not mean much.

The most important thing to note is that the major indexes are still holding well, and have not broken the major uptrend lines yet (which are the 20-month moving averages.) But we can’t dismiss the terrible price action lately, so we have to watch and wait.

However, if we break below, then we may see accelerated selling with the possibility that equities can pull back by another 3% and up to 10% from here. I am watching very closely the 20-month average support S&P 500 index of 2625. Note that a temporary dip below 2625 is also not a trigger point for a market correction. We have to see a clear confirmation that we have gone below this level.

Therefore, so far, we are still in a market uptrend, and a market correction may or may not happen. It is too early to take any action and we will discuss later what our options are in case we get into a market correction.

What to Do in Case of a Market Correction?

Again, market corrections do not last a long time. They usually only last on average four months, and we tend to see a full recovery after another four months. This pullback started about one month ago, so if it continues, we have probably another three months to go. If history repeats itself, in another seven months, we should be back where we were before this pullback has started, or around the 2932 level for the S&P 500 Index. That is assuming we hit a correction, and that is not for sure yet!

So here are several options that our members can choose from based on their individual objectives and risk tolerance.

1. Weather the storm: Since corrections do not last long, and they tend to recover fairly quickly, waiting until the storm passes is a perfectly acceptable option. This is the great thing about being invested in high-yield stocks. We collect high yields until the markets readjust and we do not have to worry about short-term volatility.

2. Raise cash and buy lower: This is trickier, especially that we are in an environment that is very favorable to equities, and it is difficult to pinpoint how severe the market correction will get. It is even more tricky because market corrections are usually followed by a swift recovery (a V shape recovery), so there could be some missed opportunities. Still, in case the market correction is confirmed, we will advise to sell some of our riskier positions (example, some of the leveraged UBS products) and we will attempt to buy them back at lower prices, thus capturing not only a lower price, but an even higher yield.

3. Hedge with Inverse ETFs: A third good option is hedging with inverse ETFs. The Direxion Daily S&P 500 Bear 3X ETF (SPXS) is an inverse ETF which moves up by 3% for each 1% loss in the S&P 500 index. Due to the leveraged nature of SPXS (three times leveraged,) a 10% position provides a 30% protection to the overall portfolio. We may also advise to use SPXS as a hedge against a market correction.

Still, I do not wish that this report be a source of panic. It is only a word of caution, and there is No Action to be taken, especially for those who are long-term investors and are into our dividend/income portfolio for the long run. Selling now may result in unnecessary losses.

Despite all of the above, we remain optimistic, and here is why:

Why We remain Optimistic

1. Fundamentals remain solid: As we can read from the paragraph above, none of the reasons behind the current pullback relate to fundamental macro-economic weaknesses, and therefore the chances of a large market pullback are low. The U.S. economy is booming and performing at its best in decades, interest rates remain around their historical lowest levels, and corporate earnings growth is around all-time highs and still accelerating.

2. Not everyone is spooked out of the market. Many of the recent down days have been on very light trading volume. That means that there are relatively few investors who are moving the market right now. What this can also mean is that the major players could be taking advantage of low volume and picking up the stop losses that we referred to above. It is very possible that they are taking advantage and buying.

3. Strong Corporate Earnings: The earnings results we are seeing today are still some of the strongest I have witnessed in my lifetime. According to analysts, the S&P 500 companies should post a 19.5% annual earnings growth and 7.4% annual sales growth for the 3rd quarter.

4. Small Business Optimism is at All-Time highs: Continued growth and a strong economy have small business optimism reaching post-recession highs. I tend to put a lot of weight into small business sentiment because it is one of the best indicators of how the U.S. economy is faring. The key theme of the 2018 Small Business Growth Index is that strong business growth has driven small business optimism to its highest point in survey history, with men leading optimism for the first time - and we know that men tend to be generally the most pessimistic of the two genders!

5. Elections Uncertainties: Currently, mid-term elections have got many investors worried. In just a few weeks, Americans will head to the polls for these elections. No matter who wins, this whole process will be over with, and life should get back to normal. A big uncertainty will be out of the way. Remember that historically, the performance of equities has had little to do with which party is in power, and more to do with the economic situation. The U.S. economy will continue to be in a very good shape after the elections.

6. November and December are great for Equities: While October has been tough for the stock market, the months of November and December are usually some of the best months for equities. During the last two months of the year pension funding and annual bonuses and gift giving increases. These fund inflows tend to lift equities across the board. As a result, November and December are typically two of the strongest months for the stock market. I expect that this year will be no different.

Bottom Line

It’s hard when the prices are falling like this but in situations like this patience is required. The long-term outlook for stocks remains overwhelmingly constructive. Even if we hit a correction, the odds are that it will not last very long. Let us have a look at what the last correction of (2015-2016) brought through this chart:



As we can see from the chart above, the market correction only lasted less than three months with a full recovery (100% recovery) following another three months. So, in less than six months, the prices were back to where they started up with, and this gave in to the BIGGEST bull market rally seen in many years. Should we correct, this bull market is likely to see a very fast and strong recovery which should give way to new market highs.

The bottom line is that the best approach is to wait and see. NO ACTION IS NEEDED for now. I believe it is best to remain fully invested. To sell prematurely now may result in unnecessary losses. Again, riding this storm is a viable option as recession risks are very low, and chances of a bear market are also slim. As usual, we will keep you posted with the best course of action and the best recommendations for our portfolio.

All the Best

Rida Morwa

Market Commentary December 2, 2018,
U.S. China Trade Truce
2 Dec. 2018 8:34 AM ET

Rida Morwa's - High Dividend Opportunities

While the markets continue to be volatile, this week's price action showed more conviction to the buy side. The S&P 500 index closed on Friday at the 2760 level, up by 4.7% for the week which is remarkable. The bulls are trying to build on recent gains. It's not necessarily all signals clear but the major indexes are certainly in better shape than they were just a few sessions ago. While we are still in a correction mode, the technical picture looks much more positive. The bulls have managed to take control of the 20-day moving average for the S&P 500 index which is currently at the 2717 level. The next step is for the bulls to clear the 200-day moving average which stands at the 2761 level. The bulls are also hoping to get into the holiday spirit as we approach the December holiday season. The month of December has been historically positive for stocks as we typically see a year-end rally, often referred to as the Santa Claus rally. So now we have gone from the bears being in complete control to the bulls starting to have some grip over the situation. It should become clearer in the next two weeks if this market correction is over, or whether it will last a bit longer. It will all depend if the bulls can add on to the recent gains.

Again, I would like to re-iterate my views that what we have been seeing in the past two months is just a "market correction", and it is unlikely to turn into a full blown "bear market". Typically, "bear markets" (as defined as a market pullback in excess of 20%) tend to happen primarily as a result of an economic recession. Today, this is definitely not the case. The Commerce Department reported this week that third-quarter GDP was a stunning 3.5%, thanks partly to strong corporate profits. Consumer spending has also increased at a 3.6% rate during the quarter. The job market remains a very positive data point now. Thanks to the long-awaited corporate tax cut and deregulation, policies are more pro-growth, making the United States one of the best countries to be invested in.

Other reasons that can result in a "bear market" include commodity price spikes (such as oil price spikes), aggressive Fed tightening, and extreme valuations in equities or in real estate prices (or price bubbles). Today, none of the ingredients for a "bear market" are present.

The Current Market Correction is Unlikely to Last

As stated above, what we have been seeing is a market correction, and such corrections typically do not last long. On average, "market corrections" last only four months and tend to be followed by a swift and strong recovery. We are already past two months of the current market correction, and therefore it could end anytime now. Also it is good to keep in mind that following a market correction, equity prices tend to go back up to their initial level before the pullback within a period of four months. The situation today reminds me of the last correction we had in late 2015 and early 2016.

Let us have a look at the last correction of (2015-2016) through this chart:



As we can see from the chart above, the market correction only lasted less than 3 months with a full recovery (100% recovery) following another three months. So in less than six months, the prices were back to where they started up with, and this gave in to the BIGGEST bull market rally seen in many years.

Interest Rates will not go much higher

The market recovery this week was the result of hits by the Federal Reserve Chairman Mr. Powell. His comments reassured the markets this week and most commentators have focused on the short term impact of his statement that interest rates are nearly back to "normal" - meaning that there is not going to be many interest rate hikes going forward. Of course, the very fact that the market shot up in response to his comments demonstrates that the Fed is "back in the saddle" and can make statements and, if necessary, take action to forestall the kind of meltdown that we had almost exactly 10 years ago in 2008. This message alone suggests that the liquidity panic of 2008 is now in the rear view mirror and unlikely to recur.

But there is a much more important and more pervasive message in the Powell statement. In order to tease this out, we must return to fundamentals. Equity valuations should be based on the discounted present value of projected long term cash flow. The formula's accuracy depends heavily on the selection of the correct discount rate to apply to the stream of future cash flow. That discount rate is often selected with reference to interest rates.

Powell's statement is most important not because of its short term impact but because it sheds light on the average level of interest rates over a cycle. If Powell is saying that a short rate of 2.5% and a 10 year rate of 3.5% is the "new normal" top rate at the top of the cycle, then we have a range that will probably run between 1% and 2.5% on the short rate end and between 1.5% and 3.5% on the 10 year end. Thus, the AVERAGE RATES OVER A CYCLE may be as low as 1.75% on the short end and 2.5% on the ten year end.

This has major implications for equity valuations as lower pervasive interest rates over an entire business cycle require the use of a lower discount rate in equity valuations thus leading to higher share prices. Put another way, if the average ten year rate over a cycle is 2.5%, then paying 25 times current cash flow (for a yield of 4.0%) for the equity of a slowly but steadily growing company looks very attractive. The bottom line is that investing in equities remains one of the best alternative for investors looking for income.

Dividend Stocks Back in Focus

The markets have been factoring in a lot of interest rate hikes by the Fed, and this is clearly not the case. As a result, high-dividend stocks have been weak during the past two years and they will be the biggest beneficiaries from stabilizing interest rates. As stated in many of my previous market updates, the year 2019 should be the last year we will see interest rate increases, and the Fed is likely to reduce interest rates again in the year 2020. The reason is simple. While the GDP growth rate is currently at 3.5%, it is expected to slow down significantly in the year 2019 and 2020. The explanation is that the first year of a tax cut (which took place in 2018) will boost after-tax incomes and GDP. However, once this plays out, the stimulus fades and the economy falls back to a slower pace. Therefore the current inflationary pressures that we are seeing in 2018 should dissipate in the coming two years, thus removing the reasons for the Fed to hike interest rates. Another reason why the Fed will become more dovish is that global economic growth (excluding the United States) is struggling, and could pose a threat to the U.S. economic continuing recovery. For example, Europe is struggling from Brexit concerns and the French political instabilities.

When the markets start factoring in lower interest rates, demand for high dividend stocks is set to increase, resulting in higher prices. Therefore, my best advice is for our members to focus on high dividend stocks with superior fundamentals, which is exactly what we target here at "High Dividend Opportunities". Many dividend stocks, and even fixed income products are ripe for the picking in the coming weeks, and we will be highlighting some new investment options to our members.

The Best Course of Action for our Members

This market correction is likely to be over very soon, and the bull market is set to continue. However, the stocks and sectors that have led the recent bull market will not be the same. During the past two years, growth and technology stocks saw the biggest gains, but as the economy slows down and interest rates settle, high dividend stocks and sectors are set to outperform. Our best advice is to remain fully invested in our recommended stocks and securities, while keeping a longer term view. This is a market that should reward those who are patient. One of the most rewarding feature of investing in high yielding stocks is that we get paid handsomely to wait until the current turbulence settles and works itself out.

Just Announced: A Positive Step about the U.S.-China Trade Negotiations

It was just announced that a temporary "trade war" truce was reached by President Trump and the Chinese President Xi, after a working dinner involving the two presidents and their top advisers in Argentina, following the end of the G20 world leaders summit on Saturday. According to the terms of the deal outlined by the White House, the US will not ratchet up tariffs on more than $200bn of Chinese goods from 10% to 25% in January, as had been planned. Meanwhile, China would move to purchase a “very substantial” amount of farm, energy and industrial goods, though the amount was not specified, in order to reduce the trade gap with the US.

So this economic truce should open the door for more negotiations and an eventual final settlement. As I have been highlighting in previous market updates, it is to the best interest of both the U.S. and China to resolve their differences, and President Trump has been a good negotiator so far. I expect that a permanent solution will be found soon, and that should be very bullish for equities. Very positive news for this weekend!

The Fed meeting next week could result in a boom or bust for the stock market . . .

Watch the PRC and their real estate bubble. When it pops it won't be pretty. Their economy is more fragile than people think.

I'm keeping things simple. About 90% in index funds/mutual funds, and will work until the Dumpster leaves office. Probably longer, given how fast the noose is tightening.

By PRC are you referring to China or Canada? 😁

China

I have 10-20% more in bonds to even out the swings, somewhat.

Japan, Inc, redux?

Not sure if the analogy holds, completely. At one time, the real estate value of the Greater Tokyo area was larger than the Continental US. While China has a great big huge heaping pile of non performing debt, the numbers I see are not in the order of Japan, Inc in the 80's.

That said, I agree that China is a house of cards on a table in a train.... And Trump's not beyond pulling the emergency brake if it suits him.

A Market Bottom Could Be Very Near

By Rida Morwa
23 Dec 2018

High Dividend Opportunities

How To Navigate The Current Volatility
I have been getting many messages from members worried about the current market volatility and asking me what would be a "worst case scenario". Note that I remain optimistic for many reasons, but I will address in this post all the possible scenarios and several courses of action that can be considered. I will also highlight the reasons why members should stay the course.

A Market Bottom Could Be Near
The Nasdaq Index is officially in "bear market". The index closed on Friday down 3% lower at the 6,333 level, resulting in a 21.9% drop from its all-time high of 8,109.69 hit on August 29. The widely accepted definition of a "bear market" is a drop of at least 20% from a recent peak.

The S&P 500 index is down by 17% from its all-time-highs recorded on September 21, 2018. So we are about 3% away from being officially in a bear market. What is very interesting in this case is that another 3% down is a major support trendline that goes back to the year 2010. This is a level that bulls will defend with all their might. Please have a look at the chart below depicting the chart of the S&P 500 index ETF (SPY):


Chart courtesy of HDO member

The purple line is the 50% retracement from the 2016 lows. The black thin line is the 200 Moving Average. The red line shows a VERY established trendline that is a MAJOR support level. The green line shows a pattern of decreasing volume on every violent pullback since 2011.

This technical chart is as good as it ever gets. It appears that an incredible buying opportunity is coming VERY soon.

Need a Bigger Picture Than SPY? The NYSE index is composed of 2800 Stocks. See Anything Interesting Here?


Chart courtesy of HDO member

So we could very well be at the bottom of this correction.

So what are the chances of being officially in a "bear market" for the S&P 500 index?

Before I go any further, I would like to highlight again that this pullback is more the result of negative sentiment rather than negative fundamentals. We have also showed in the charts above that we might be already near a bottom. But what in the unlikely event this line does not hold?

Here it is important to note that today we do not have the "triggers" for a typical bear market to happen. Historically, "bear markets" have happened in the past for the following reasons:

- An economic recession in the United States, or in another major global economy such as Europe or China.
- An asset bubble, such as a stock price bubble or real estate price bubble.
- Technology stock speculations and technology stock bubbles.
- Aggressive interest rate hikes, whereby bond yields become so high that it is more profitable for investors to buy bonds instead of stocks.
- Spike in commodity prices, which impacts economic growth. (For example, spike in oil prices, wheat, corn, steel and other metals' prices.)

The reasons is that rising commodity prices usually result in increased inflation pressures and slows down the economy.

Below is a table that depicts bear markets since the year 1940 and the reasons behind them.

Last 8 bear markets

The table below provides statistical percentages for the reasons (or "ingredients") that triggered past bear markets:



Clearly today none of the above ingredients or triggers are available. The most frequent trigger for a bear market is an economic recession. Economic recessions are scary because during recessions, companies start to struggle and post less profits. This results in a deterioration of the underlying fundamentals, and corporate profits start to decline. But this is not the situation today. The state of the U.S. economy is solid and enjoying a period of low unemployment and low inflation. According to the Fed Chairman himself, he said that GDP for the year 2019 will be healthy, and that growth will be above average and his assessment of the economy is 100% correct. We will not see a recession in 2019. So the most frequent trigger for a bear market is non-existent.

Other reasons that could trigger a bear market include extreme valuations, high commodity prices and aggressive rate hikes. We also do not have any of these other triggers today: Valuations are very reasonable if not low, commodity prices are very low based on historical standards, and interest rates remain around their all-time lows. However, we do have fears that the Fed may be overly aggressive in its rate hikes, although these fears are overblown.

Could a 'bear market' happen without it having the normal 'triggers?'

Yes it is always possible. Markets can be irrational an do not always function based on logic. So there is always a possibility to see one.

What if a bear market happens?
Because we do not have the "triggers for a typical bear market, if it happens, it will be a relatively mild one and unlikely to last long, simply because macro-economic factors do not support it. Remember, the current pullback has little to do with fundamentals and more to do with negative investors' sentiment.

How low can we go?
I want to be clear again: Not only we do NOT have a confirmation that a "bear market" will happen, there is a big chance that we are at 3% near the bottom. Still, I have done extensive research in the past few days and compared notes with many market experts and technical analysts. There is a consensus that if the markets overshoot to the downside, the maximum that the S&P 500 index will reach is around the 2200 level - or about 8.9% lower from here. While this might scare some, we should note that even in a case of a "bear market", the worst is most likely behind us.

Best Course of Action in Case the Markets Overshoot to the Downside

In case we officially hit a "bear market" there are several options:

1- Do nothing and ride-out the volatility

For income investors, it is a perfectly fine strategy to do nothing and ride out the market volatility (whether we continue in this market correction or whether we see a mini bear market.) However, this is only true if investors are not on margin, and do not need to draw down funds from their portfolio. So I advise all members: avoid being on margin (PLEASE NEVER USE MARGIN, this is very risky and can result in substantial loss of money.) Also, investors are always advised to have enough non-invested cash reserves to cover any shortfall between their income (including dividend income) and their living expenses. The great part about investing in dividend stocks is that in the current situation, the portfolio will continue to generate a good level of income regardless of how the markets are doing, and the dividends can be used to cover part or all of the living expense, depending on the level of your dividend income.

2- Raise Cash by Selling Lower Yielding Stocks

A second strategy that members can implement immediately is to look into selling some of the lower paying dividend stocks and parking the funds in cash. While this will lower your overall income for a while, you will gain flexibility and have the opportunity to buy back these same dividend stocks at a higher yield in case we continue to go lower. The risks in this strategy is that it is possible that we may not go lower, and therefore you may have to buy back the shares at a higher price. So using this strategy in moderation is recommended.

3- Use Hedges to Limit Losses and Maximize Profits

Some investors like to use hedges to limit short-term losses and benefit from market declines. Such hedges include investing in inverse ETFs that go up in price when the markets go lower. However such a strategy is risky, especially now because we might have already reached a bottom. At any time the markets could experience a very sharp snap-back rally that can whipsaw those who are using these hedges. We will consider recommending some hedges in case a "bear market" is confirmed.

Please understand that there is no "one size fits all" solution. Each individual has their own set of circumstances to consider. While I can offer general advice, it is important to evaluate your personal circumstances before you take any action.

Dividend Stocks Set to Outperform
Heading into the New Year, there is two main factor that we need to be aware of:

Earnings will be decelerating in every quarter of 2019. This isn’t too surprising considering the phenomenal earnings in 2018. For the 4th quarter of 2019, the S&P 500 companies' earnings are expected to slow to an annual pace of 17.4%, down from 28.2% in the third quarter. That is still fast, but considerably slower than 2018.

Interest rate hikes will also decelerate or even stop altogether. If we look at the 10-year treasury yields, they pulled back from 3.2% to 2.8% meaning that investors are already factoring in lower inflation and lower interest rate expectations.

What this means is that there is a massive leadership change underway. Lower earning growth coupled with lower interest rate expectations provides a very favorable backdrop for high dividend stocks and sectors. So it will be imperative for income investors to identify those high yielding dividend stocks that will be able to grow earnings and cover their dividends, even in a situation where the economic growth slows.

The High Dividend Opportunities Buy List is already heavily weighted in such stocks.

With the 10 year treasury yields below 3% and the dividend yield on the S&P 500 is only 2%, high yielding stocks of 6% and above will be in high demand. Yield-hungry investors will continue to pour into dividend stocks. Furthermore, over the next few years, thousands of people in the United States will reach retirement age, and will be looking to re-allocate to high dividend stocks. The aging population phenomenon is not only affecting the United States, but this is a global trend. Retirees across the globe are looking for yield, and there is no better place to invest than the United States.

Overall, because of decelerating earnings and sales environment for the stock market, investor speculation in risky technology companies is expected to slow down. Companies with stable and recurrent cash flows offering big dividend payouts to shareholders will lead this market.

To Sum it All Up
The prices of equities today are factoring a deep recession and a disaster scenario which is unlikely to happen. The stock market will rebound, and good stocks always bounce back. It is only a matter of "when". We have made the case in the above charts that we could be near a bottom, which represents and great buying opportunity. A recovery could start as soon as next week.

Even in a bad case scenario where a "bear market" materializes, it will be the result of an overshoot to the downside and I do not expect it to last more than a few months.

I remain optimistic about the state of equities, and lots of money will be made from these levels. Bargain hunting is already happening behind the scenes by institutional investors. "Smart money" have been buying under the surface which tells me that the bottom is near. There are currently many high-yield opportunities in the markets and we will continue to look for the best ones and recommend them to our members. Stay tuned!

So with maybe one or two more interest rate hikes next year.....

You only lose if you sell. And, you only gain if you sell. (grin)

Buckle up boys.

Obama handed these clowns the keys to a great-running Ferrari and they're gonna crash it. Greeaaat.

No kidding.


..with a 5pt. harness


...and a helmet.

Rolling Blunder, do us all a GREAT favor for Christmas, shoot all your offspring then eat a Glock. The world and certainly this Site will be a better place...

Who would of thunk that Obama's economic recovery was built on sand?


Things have been slowing for awhile now. All my indicators are pointing towards pain but I really hope I am wrong.

if you really believe that, you live in a bubble..........you are out of touch with reality.....bob

unless the companies you have stock in go under.........bob

Yeah and considering that even after a massive correction the Dow is still up 3,000 + since Oblamer left office!

The big investors are cashing in. Unfortunately us small guys are taking a ride as well. I think the Fed raising rates has had a negative impact on the market. Is it on purpose to remind Mr. Trump about who is in charge ?? Do they want another recession ? Apparently. The Fed is just another occupant of the swamp.

When the market finds a bottom the rise after the new congress gets in will be huge. The only thing that will screw it up again will be the Fed and the democrats in the House. Mr. Trump is going to be Mr. Trump. Factor it in.

kwg

It's officially a bear market after today's losses.

I sold about 15% of my equities and put it into into cash as the above was posted. Today, I began "bleeding" it back into the market.

Yeah, and the S&P 500 Index, a better barometer of the overall market, went from 900 to 2200+ while Obama was president. The S&P has gone up only from 2238 to 2351 from Jan 2017 until today's close.

On January 20, 2017, the DJI was 22785; today (12/24/2018) it closed at 21,792, or DOWN 933.

It's funny how all the ones who brag about how great Trump has been for the market are the same ones who are clueless about it when there is a thread on investing or planning for retirement.

You better check your figures Dumb Ass

https://www.nasdaq.com/article/stock-market-news-for-january-20-2017-cm736061

Obamas economy was built on 0% interest rates and an 85 billion dollar per month QE program. Not many people know that the feds are paying back 50 billion a month what Obama spent on foolishness like buying cars from people for $4,500 just to dump sand down the oil fill tube to watch them freeze up and then send them to the auto grave yard. Talk about a fine running car and then ruining it. I bought a $2,500 car July 2017 and it runs just fine ( 04 Malibu Classic.) it gets me sick to know we had a government that would drain cars and call it QE. Now the feds want to pay it back on Trumps watch ? He gets the blame for this? Yes, the Feds are part of the swamp, that is for sure. I sold 1% of my portfolio today for cash cause I wanted a small tax loss harvest , which brings up another reason the market is selling. I may sell more this week, wait a few weeks and buy something else back for a tax loss. If I'm doing this , how many other millions are too?

Let's see:

1. On January 20. 2009, when Obama took office the Dow Jones Index was 7550.
see: https://www.investopedia.com/ask/answers/101314/where-was-dow-jones-when-obama-took-office.asp

2. On January 20, 2017, wen Trump took office, the DJI was 19,827.
see: https://markets.businessinsider.com/news/stocks/closing-bell-january-20-2017-2017-1-1001683234

3. On December 24, 2018, the DJI closed at 21,792.
see: https://www.marketwatch.com/?link=MW_Nav_FP

OK, I was wrong. The DJI is up 1,965- my bad. Sorry.

So I get it, if we would just impeach orange bad man, the market would be all better? I am not convinced that this is a liberal plot to kill the market. They would do it...

2. On January 20, 2017, wen Trump took office, the DJI was 19,827.
see: https://markets.businessinsider.com/news/stocks/closing-bell-january-20-2017-2017-1-1001683234

3. On December 24, 2018, the DJI closed at 21,792.
see: https://www.marketwatch.com/?link=MW_Nav_FP

OK, I was wrong. The DJI is up 1,965- my bad. Sorry.

This was all you needed, why the extra paragraph Dumb Ass?

The S&P closed exactly on the support at 2351. Thursday's battle between bulls and bears will decide if this is the bottom, or do we go lower. Next level of support is the old 2016 breakout area of around 2160 (orange dotted line)

The stock market has always been, and always will be, very volatile. There are the ups and downs, and the Bears and the Bulls, and so and so forth. It doesn't matter who's president, or who's not, because that's just how it always has been.

Now, to play the devil's advocate........if Trump got the credit for the market doing so well over the past few years, then shouldn't he also be blamed when it tanks? Obama would have been, as well as any other president, but the Trumpkins want Donald to be off limits from any and all criticism.

I don't know who to blame, but it is concerning for those of us who have money in the market. Maybe t grew to fast the last few years, and it's time for a correction. All I know is that I'll just ride it out like I've always done.

James, I think one needs to separate the market from the economy. The markets did OK during obongo's rule, but the economy sucked because of his oppressive regulations. The markets did just fine because of QE/free money for eight years.

The Market accelerated when Trump was elected, in anticipation of his campaign promises going into effect. QT has taken it's toll on the market under Trump, but the economy is roaring because of the reversal of the Obongo stangle hold with regulations.

To borrow a phrase from our former governor Edwin Edwards. I'm not turning against Trump unless he is found in bed with a dead girl or a live boy. The Democrats would certainly be glad to drive the market down to make Trump look bad. All it takes is a little chaos. If we can get past this little budget battle and poor old Ruth gets replaced maybe things will settle down.

Wonder when we'll get our triple a credit rating back?

Sure tired of all this winning.

MAGA?

Far too complex an assignment for those whose only true desire is the reinstallation of a marxist regime in the USA.

Which is the same thing that Trump wants, hence him looking to fire the head of the Federal Reserve Board.

Im sure he would love 0% interest rates but he NEVER had them. Almost the day he was elected Janet Yellen talked about inflation all of the sudden. If President Trump would have hired a puppet to run the fed, we'd be at 0% with 85 billion in QE. The Dow , with no exageration could be at 30,000 by now. Although, that is not good. Mr Powell is doing what should have been started when the dow hit 8, or 9,000 and the last president knew very well he would be out of office when the [bleep] hits the fan. President Obama handed a disaster to the next president. That is not the way a president should act. Had Hillary won, almost a sure bet we would see nothing for interest rates and QE still on the march. This is very unfair to President Trump, , , and it doesnt help that CNN ETC inever gave Ptesident Trump any credit for the great gains last year in the DOW but are going full blast to blame him for a bear market.

The Federal Reserve is a private corporation. The President has no power over who works there.

what i'd like to see discussed, but apparently no interest, is a year of jubilee.

it's been brought forth in the past, but gained no real ground with the rank & file.

actually, it's almost an impossible thought, given how the financial world is structured.

a year of jubilee? why, that's a heresy, even heretical at this time in the development of the vorld?

a world without debt? the third world, second world, first world and all the citizens with no debt today.

just us humans, the urth, the trees, the cropland, the rivers, lakes, the oceans, the atmosphere, and taxes.

Microsoft
Apple
Google
Amazon?

And yet, what I said was true. Kinda makes your head explode, huh? Truth is funny that way.

Trump's early "successes" WRT the economy are minimal, simple, straight-line extrapolations of the booming Obama economy. Look at a graph. Any dumbshït- even YOU, Jorge- could've had that level of "success".

Now go eat yourself even fatter.

Don't underestimate the confidence Trump brought to the economy, especially the housing market. Land development is a long process and not something an investor jumps into without confidence that the market will be stable for several years minimum. I was building specs for some wealthy investors 1-2 at a time. After the election, within a week they both cleared me to build 5 at a time. They wouldn't have done that if Hillary had been elected. Profits in 2017 & 2018 are double 2016. Back to what they were in 2004-2007.

Forrest, (JO) put the blunt down. The Magic Negro did nothing.

Bristoe you need to do some homework on who appoints the Fed and who can fire the chairman.

Can he President fire the Federal Reserve Chairman? This is apparently an unknown or untested question.

"The law says that he can only remove a member of the Fed's Board of Governors “for cause.” And most legal scholars basically may think that that means you can't remove the head of the Fed just because you don't like his policy-making decisions." see: https://www.marketplace.org/2018/12/24/economy/trump-firing-fed

FIXT.

The day before trump was elected the Dow closed at 17,888, Nov 7th,2016. It’s not all doom in gloom yet! My BIL is in investments for very wealthy people on the east coast, and he says that those on the sidelines with large sums to reinvest are like crack heads ready to jump back in. Just waiting for the right signal.

And it jumped from 17,888 to 22785 after trump was elected dumbass!

Bristoe, the president hires the Chairman Of The Federal Reserve Board. I am sure he can fire them too. I dont know where you get that idea from Bristoe. It is a private entity but the press hires and he can fire , I am sure of it.
and as for Jeff O, 2% GDP is not a fine running Ferrari, it is a ho hum economy. President Obama barely got a 2% GDP in his 8 yrs , and I am not sure it was even that good. He ran his economy on 0% rigged interest rates and had to borrow 85 billion dollars a month for 8 yrs to keep the car running. Jeff O, these people can't run anything . Michelle Obama was given the opportunity to do something but she tried and couldn't even run an Elementry school lunch menu. My son complained and brought a bad lunch for most of his school lunch. He said he was given things to eat that he never even saw before. They even took his chocolate milk away!!! At least they were drinking 1% when it was chocolate. My God, what a bunch of losers. My son said it sucked. Small portions, and no taste, and much of it ended up on the landfill. As soon as the Obamas were gone the schools started doing away with her luck menus. Obamas are socialists, you know, the same ideas as Venzuela .

I wonder how much of this is due to insurance companies selling off stock to pay for claims arising from the CA fires and the various hurricanes?

I'm getting ready to buy in March. Unless something BIG happens, like Trump out of office, I'm guessing things will be at their lowest by then, and it will recover enough to make me a good lick. My crystal ball is working again. I found some salvage parts.

Hookem, my wife has been a school food service manager for 20 years. She told me, during the Moochelle era that she could no longer prepare the food the children were used to in Oklahoma, and the food they and the parents preferred. The kids were forced to take Moochelle's new "healthy food" and that they just walked over to the trash can and emptied their trays, without touching a bite.

Tyrone, the insurance companies, by law, are required to hold cash reserves to pay for these catastrophic claims.

Not a bad day today!

While the Fed is in theory "independent", they reside deep within the swamp of D.C.. Their disdain for POTUS is showing by raising rates during an economic boom - with crocodile tears about an over-active economy. They are out to kill the Trump economic boom. All the while other swampers in the business media circles are warning about a "recession" in 2019. This same body of swamp dwellers kept interest rates near zero for years - to protect ZERO and his bullcrap legacy. The Fed needs an investigation and Powell is needed as an accountant at Wally World. Larry Kudlow should be the new Federal Reserve Chair.
The FED is an independent as Peelosi and Schmucher are!

The FED was originally started and put in place to oversee that banking had the necessary funds to remain solvent on their lend/deposits ratio. Like most all other controlling entities out there it’s taken on a life of its own.

Interesting question... When he is publically calling out the Fed and asking them to NOT raise rates because they are going to kill the economy, and inflation is not in problem territory, but they raise rates anyway.... should he get the blame? With the media doing everything they can to set Trump back, causing uncertainty in people, do you not think this has an effect?

I think it is foolish to point a finger at any one thing over a long term. When Trump got elected the market went on a run, so that was an obvious factor. He managed the economy to an higher level of performance than the democrats though possible. There are a lot of factors that can affect an economy and a market. It takes a big picture view and there is still a lot of guess work.

Today was a good day to be an investor....

‘Twas so.

I believe I posted "Im buying" last week,,, and I did,,,,

Lap dances ?
Grins

If they are big enough of an investment/return

Only idiots fail to realize that the market drop is a Propaganda Corps driven event manipulated by George Soros.






No, it's not an unknown question. The last president that decided to go against the FED was made an example of on November 22, 1963. No one has seriously fuct with them since.

Why the Stock Market Likes Trump - The Power Of Deregulation
Jan. 8, 2017 7:47 AM ET

Rida Morwa
High Dividend Opportunities

Summary
1. U.S. equities have been soaring for many reasons, including expectations of reduced regulations by the Trump Administration.
2. Mr. Trump is appointing a virtually unprecedented number of businessmen to high positions where they will be able to temper the enthusiasm of regulators.
3. The United States is about to have the most "business friendly" administration in the developed, if not the whole world.
4. Quite suddenly, owning a part of a business operating in the U.S. has become more attractive because of the likelihood of a more business friendly regulatory and tax environment.
5. The power of deregulation should not be under-estimated, and it can have an enormous impact on the U.S. economy.

Below is a general report whereby HDO co-Author Phil Mause and I explain our views on the "power of deregulation", and why we remain optimistic for the year 2017.
===
Depending upon the index used as a metric, the stock market is up nearly 10% since Donald Trump's election less than 2 months ago. This would equate to a gain rate of 60% per year and so it is remarkable given that, on the night of the election, as the returns started to look good for Trump, the futures market seemed to panic at the prospect of his election. The dollar also seems to be strengthening which would normally undermine the stock market because a stronger dollar makes it harder for large international companies to produce gains in dollar denominated earnings. Why is the market moving up and, more importantly, where will it go when Trump takes office? This article will try to analyze the impact of Trump's election on equity valuations.

The article is agnostic on the public policy merits of the regulatory issues discussed but focuses only on what anticipated changes in regulatory policy will mean for equity investors.

The Nasty Realities of Investing - There is an expression in constitutional law - "the power to tax is the power to destroy" - which suggests that investors are at the mercy of the government. High enough tax rates will destroy the ability of virtually any investment to generate after tax cash flow. New Jersey homeowners are painfully aware of the impact of ultra-high property taxes on real estate values and it is not hard how virtually any investment could be rendered valueless by taxation.

A companion quote - "the power to regulate is the power to destroy" - would be equally true. Onerous enough regulation can easily put a business out of action. It is, of course, true that a certain amount of business regulation is absolutely necessary. In the areas of worker safety, environmental protection, and consumer protection it is essential that the government correct certain "market failures" and intervene. However, there is a tendency for regulation to become overly restrictive as regulators focus on a single objective and fail to balance it against other legitimate interests. It may well be that the "sweet spot" of optimal regulatory balance can be reached only after a sequential political debate between administrations imposing excessive regulation followed by an aggressive roll back.

Co-Author Philip Mause shares with us: "I spent part of my career in the world of electric utility regulation and I saw investor owned utilities cower at the power of state regulators to set rates and federal regulators to license nuclear power plants. In one situation, an electric utility was whipsawed into bankruptcy by the refusal of one regulatory agency to license a completed nuclear power plant combined with the refusal of another regulatory agency to allow the utility to recover the costs of building the plant."

Regardless of one's view of the merits of business regulation, in certain cases the economic impact of regulation on equity value is hard to deny. New Yorkers are very familiar with the impact of rent control on building valuations. The biotech space is constantly alive with "event driven" speculation on potential decisions by the FDA. The drug companies will prosper or shrivel up and die based on decisions concerning Medicare reimbursement. An oil & gas Midstream MLP is undermined by being told that a 91% complete pipeline can't be finished until a new environmental impact statement is prepared. And the list goes on and on and on.

The Real Class Divide - Class divisions in the United States are often described as being based on income but a more fundamental dividing line is the line between owners and everyone else. However, whether or not they are super-rich, owners of equities (shareholders) are on the "capitalist" side of the line - as are owners of income producing real estate, privately held businesses and farms. Because "the power to regulate is the power to destroy", these owners are at the mercy of government regulators whose decisions can undermine the value of their assets to the point of worthlessness. While countries like Venezuela and Cuba actually expropriate assets by simply taking them away without compensation, regulators in the United States can do the same thing by publishing notices in the Federal Register. Active investors who try to calculate valuations of equities become aware of this potential. Investors from around the world are constantly on the alert for "friendly" and "unfriendly" regulatory climates. Oil companies spend millions assessing the relative political risk of expropriation in various countries before committing capital. We can remember that - in the valuation of electric utilities - "regulatory environment" was a key metric.

Wealthy people are constantly faced with the dilemma of "where to put my money" so that it will be safe from rapacious tax collectors, greedy politicians, and overzealous regulators. One good example to look at is the United Kingdom which is a tax friendly country for certain ultra-rich people who can elect to pay a "flat-tax" on their non-UK income; this not only save the ultra-rich massive amounts of taxes, but also removes the burden of tax filing and worries about tax audits. London today has bigger collection of millionaires than any other city in the world, which has helped lift the U.K. economy.

The Class Divide is between those who have experienced or are threatened by this form of regulatory expropriation and those who are not. And the officials who usually design and enforce government regulation are almost universally in the latter category. In many cases, they may not even appreciate the impact of regulatory decisions of the viability of businesses. In other cases, they may not care or consider the fact relevant to their regulatory policy.

The Dilemma of Democracy - The dilemma of Western liberal capitalist democracy is the risk that 60% of the voters will elect politicians who take the wealth of the other 40% and distribute among their constituents. Of course, our constitution forbids the "taking" of property without just compensation. But - as noted above - the government doesn't have to expropriate property to destroy its value. It can take a variety of tax and regulatory actions which have the same result. Regardless of the public policy merits of the numerous regulations imposed on business - such as employee benefits, anti-pollution policies, and banking regulations; their impact upon equity valuation is often very obvious and very negative. It is very easy to back into creeping confiscation through the ever expanding reach of the regulatory Leviathan.

The United States - As great as this threat is here, it is generally much worse in other developed economies, such as France or Italy where we hear horror stories about the degree of regulation and a highly complex tax structure. This is prompting many of the young and ambitious youth to immigrate, and use their talents to start their businesses elsewhere.

On a relative basis, the United States is certainly not the "worst house on the block" although its rating in the Index of Economic Freedom could certainly be better. On the other hand, the Obama Administration had very few businessmen in its higher ranks and tales of onerous regulations were not unusual. The concern was compounded by an aggressive use of executive orders on a variety of issues. While it certainly can be argued that the policies of the Obama Administration helped pull us back from the abyss of a deflationary recession and thereby benefited American business substantially, the business community did not always see the Administration as a friend and perceptions are of critical importance.

Trump - The election of Trump is perceived as favorable to the ownership class for several reasons. Trump is a career businessman with an appreciation of the danger that regulation can undermine the value of businesses. He is appointing a virtually unprecedented number of businessmen to high positions where they will be able to temper the enthusiasm of regulators with an appreciation of the need to consider the impact on real world business operations. In this regard, Carl Icahn - an activist investor who is particularly sensitive to preserving and enhancing the value of corporate equity - is apparently charged with a kind of "Regulatory Czar" role and should be able to roll back onerous regulations in a variety of areas. It may not be an overstatement to assert that the United States is about to have the most "business friendly" administration in the developed, if not the whole, world.
Quite suddenly, owning a part of a business operating in the United States has become more attractive because of the perceived likelihood of a pervasively more business friendly regulatory and tax environment.

Perhaps as importantly, the way in which Trump was elected demonstrates that American voters do not vote by class and that less affluent voters do not seem to harbor ambitions to expropriate the assets of the ownership class. The "Democratic Dilemma" discussed above does not seem to exist in the United States or, at least, seems temporarily somnolent. Capital is relatively safe from creeping expropriation - at least for now.

This perception may affect foreign investors looking for "safe havens" as well as U.S. investors. This may explain the strengthening of the dollar and the appreciation of the stock market. If I were a wealthy investor in a troubled part of the world or an area bedeviled by policy uncertainty (e.g., China and Brexit), the United States could be seen as a very attractive destination for my assets.

Risks - Investors should not expect that the markets to keep going up at the rate of 5% a month; and it will not be a surprise if we see a period of consolidation or perhaps a small pull-back. A great deal will depend upon the tone set in the early days of the Administration. There is the ever-present danger that Trump could stumble into a market killing trade war. The Obamacare "repeal" could inject troubling uncertainty into what has become one of the largest sectors of the economy by making it unclear what it will be replaced with. And the general uncertainty concerning the direction of public policy under Trump creates a certain degree of risk for equities. But all of this must be put in context. On balance, it is reassuring that a group of seasoned businessmen with an appreciation of these dangers of excessive regulation will be huddling as these decisions are made. And investors from around the world may see these risks are preferable to what they face back at home.

Conclusion - The power of deregulation should not be under-estimated, and it can have an enormous impact on the U.S. economy. If implemented with an appreciation for the legitimate concerns which led regulation to be imposed tempered by an effort to minimize the impact on business to that which is truly necessary, it will make product and services cheaper, and more competitive (which will offset the effect of the rising U.S. dollar). It will also help attract new investments and foreign money, and stimulate economic growth. Deregulation is one of the main reasons why the markets have been soaring. The fact that U.S. small cap stocks (Russel 2000 companies) have been outperforming can also be explained by expected deregulation; most of small cap stocks represent smaller companies, most of which exclusively operate in the U.S.

The U.S. Economy is the only global economy which is currently seeing a solid outlook. We expect China's economic growth to continue to slowly decelerate, while Europe is struggling to keep its growth rate above zero.

The year 2017 is likely to be a solid year for U.S. equities. Investors are better off overweight U.S. equities and underweight Europe and Asia. We favor "pure" U.S. companies to global ones.

And that is why my Insurance company filed for bankruptcy 2 weeks ago. Merced Insurance.

Okie, the election of Trump was indeed good for the market and for the economy, and I've never said anything otherwise. BUT...he's no different from any other president that has served........if he's going to be given credit for the good, then he must also shoulder some responsibility for the bad. That's just how it works. I think that some of the uncertainty over some of Trump's policies have played a part in the market losing some ground as of late. The robust economy has kept it from losing even more, and he get's credit for that. He is almost into his third year now, which means that good or bad, he owns the economy and what happens.

The point of that article, penned shortly after Trump was elected, is to demonstrate that it is the policies of the administration that creates the business climate to boost and build a solid, long term economy, such as we enjoy now. The "deregulation" has been a huge benefit to business. The market does not effect the profit and cash flow of the business. The economy has never been strong in our lifetimes. That is all Trump. Earnings reports have been spectacular for the past two years and the end is not in sight. What the market does, in pricinging these companies, is not the fault of Trump. He has done his part.

The market goes up - the market goes down. Many analysts predict a downward trend for 2019, some predict a severe drop. We'll just have to wait and see.

I am invested in value/income securities/equities, so whether the market price goes up or down, my monthly/quarterly income remains steady.

Same here, Okie, only with the exceptions of holding several + stocks that I picked up during the panic selling of 2008-09 . Those are 3 baggers.

Just curious, what is your lifetime?

Born in 1952 under the Eisenhower Administration, but I am making a general statement in comparison to the current strength of this economy in which we now live. Probably the Reagan economy was the beginning of 16 years of pretty good economic strength.