So far this morning, after a weak opening, stocks leaked a bit toward noon and have since settled a bit. I’m not sure what happens next and don’t really care at the moment as I believe, following up my post from last week regarding our need for a “reset,” that governments and central banks will continue to try to prop up the global economy based on thoughts and ideas from the 1950s.
I expect more stimulus spending and central bank printing. However, I am curious as to how that would be perceived – and where the repercussions will show up. Last time we did this, stocks rose and commodities took off. We’ve had a few up moves recently as
investors dip buyers tried to time a Fed announcement. THAT folks, by the way, is market timing – the kind that gets you killed. Charting and trend following are not market timing – but they have their own risk parameters to be dealt with.
Income investments continue to hold up well. I constantly talk about the MLP’s, preferred stocks, large cap dividend payers like Verizon and such. Don’t forget to check those small cap dividend payers. Many are UP in this messy market and still paying. I think they’re better spotted individually rather than in a small cap dividend fund as overreaction to earnings announcements and global news tends to rock particular stocks up and down at different times.
Also, gold exposure could be helpful. I am playing this with bullion and small positions in well-funded gold prospect generator stocks. These companies find projects, then partner with big companies (who pay the development costs) then they share profits. Owning small positions is like a call option on gold that doesn’t expire and if for some reason I’m wrong, my cost is small. Also, if gold runs up, I will likely trade large cap miners.
Interestingly, another asset that might benefit from money printing is getting a weather-related jump start. Agriculture, particularly wheat and corn, which have been in the dumps, have rocketed higher. If this weather-related bullishness transfers to a money printing trade, these crops might really run. We’ll have to see.
I or my clients own the following positions mentioned in this column: AMLP, PFF, VZ, GLD, PHYS