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The Only Reason Stocks Might Be Attractive Today
As you know,
as far as stocks go, I’m about as bearish as it comes. However, if you’re
looking for income, stocks today are far more attractive than sovereign bonds.
Let me post a disclaimer on that statement:
stocks are MASSVELY overvalued today and we’re likely going to see a sharp
correction if not something worse before the Fed begins another round of money
printing.
However,
once this correction ends, those looking for income might want to consider
looking at high quality blue chip companies, MLPs, and other equity-based
investments that offer decent dividends, rather than bonds.
Consider
Exxon Mobil (XOM) compared to US Treasuries.
Exxon is
best known as an oil giant that produces “obscene” profits. However, its
history of producing income for shareholders is beyond stellar: XOM has
increased its dividend every year for the last 26 years.
Today, XOM
pays 2.2%. That’s more than you’d make lending to the US Government (buying US
bonds) for any period of time shorter than 10 years (the 10-year currently pays
2.95% while the 30-year currently pays 4.2%).
XOM also has
the following advantages over US bonds:
1) It
produces a good (oil) that people actually need
2) You
can have some clue about the nature of its balance sheet
3) There
are actual investors who want to own it (you don’t need the Fed/ Treasury to
perform a giant Ponzi scheme to keep it going)
4) XOM
isn’t run by politicians/ bureaucrats
Finally, and
most importantly, with XOM you’re buying an investment that isn’t clearly
bankrupt and destined to default in the near future.
In a world
of absolutes, I think XOM’s chart is extremely ugly and we’re likely going to
see a correction of some magnitude in the near future. However, investing in a
world of loose money is not about finding relative values. And on a relative
basis, today companies like XOM are a lot more attractive than US debt.
However,
across the board I am wary of the financial markets right now. Indeed, I
believe things are about to get REALLY ugly for many asset classes.
It’s clear
that the US economy has taken a sharp turn for the worse in the last three
months. Considering that we never had a recovery to begin with, I believe we’re
heading into a very, VERY rough patch here in the US.
Without
adjustments, the US economy LOST (not gained) over 100,000 jobs in April.
Nearly 30% of all mortgages in the US have negative equity. Food prices are
through the roof. And we’re actively raiding pension funds in order to fund
debt issuance.
In plain
terms, this is an absolute disaster. And as usual, stocks are the last to “get
it.”
Now is the
time to be preparing for what's to come. If you've not already taken steps to
protect yourself and your loved ones' finances from what's coming, I can show
you how.
On that note
if you’re not prepared to profit from the market’s correction, you NEED To
download my FREE report devoted to showing in painstaking detail how to make
SERIOUS money from a stock market collapse.
I call it The
Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a
wealth of information about portfolio protection, which investments to own and
how to take out Catastrophe Insurance on the stock market (this “insurance”
paid out triple digit gains in the Autumn of 2008).
Again, this
is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com
and click on FREE REPORTS.
Good
Investing!
Graham
Summers
PS. We also
offer a FREE Special Report on the inflation situation in the US. This other
FREE Special Report, The Inflationary
Disaster explains not only why inflation is here now, why the Fed is
powerless to stop it, and three investments that absolutely EXPLODE as a result
of this.
All in all
its 14 pages contain a literal treasure trove of information on how to take
steps to prepare AND profit from what’s to come. And it’s all 100% FREE.
To pick up
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Really, this guy has only been selling his newsletter in the past few weeks as he lost many subscribers due to his bad portfolio.
"4) XOM isn't run by politicians or bureaucrats."
Dude, you are the last person I would take advice from.
Really, that is totally ignorant-you sure you don't want to recant that statement?
Count how many times he lists FREE in the last few paragraphs.
Simple psychology says he is phishing.
I see your ad here pretty much daily... If you want us to read your FREE Special Report, you could just post it. The onus is on you to prove that you aren't simply phishing for contact info.
The MLP selection is a very good one. Gas cannot flow without the pipes getting a toll. Coal useage will be replaced by gas. The shippers and the buyers are both large businesses. No need to chase down a consumer or business user to get paid. The shipper owes the fees and they have gas in the pipe as collateral. Prices are up from 18 months ago but yields are still pretty good with lots of gradual increases in the future with expansion of the systems.
stock prices in real USD is the first issue in a global economy. If the USD falls 30% and stock prices stay nominally the same, in terms of global economy that a down price of 30%. So when we examine what the S&P does we must also look see how the USD is faring...as well the TRUE inflation indicator of the US economy and its relative position vis a vis competitive markets and moneys.
Terrible advice-at the Cramer level.
A bond is a bond and a stock is a stock. Who cares what the yield is if the price goes down.
Yeah, I read your justifications, don't agree with them. If you just don't like Treasury's just say so.
Where do i go to short the market? Which stocks do you pick and how far out do you short them?
If we know that this is going to happen, then I want to be able to capitalize on this and then load up on more silver.
If buying oil at 110 is the worst call you've ever seen, you ain't seen a hell of a lot.
Uh, there is no way in hell i would touch stocks, once the printing machine goes into insanity mode, because the movements will be at the whim of manipulators.... plus, all those stocks may become worthless, once the economy goes down the stagflationary toilet.
If anything, i'd use stocks NOW during this correction, to SHORT them.... reason being that it is a near certain bet right now, that everything will go down...... for this to work, it doesn't even matter if there will be QE.... if there is no QE, stocks deflate.... and for there to be QE, stocks also need to deflate. Lose-lose.... unless you short em, then it turns into win-win.
Graham Summers is bearish on stocks so we'd better buy the fing dip.
He bought oil at 110, which was the worst call I have ever seen!!!
the majority of market crashes have occured AFTER the market has been oversold...we are no where near oversold in nominal terms yet...so that is the good news
+1 What one would like the market to do and what it does are usually the opposite.
Never forget, Goldman has that special software and knows where every dollar is applied.
except we are oversold six straight down days. so I'd like to see a bounce before starting up shorts again
When you build a house of cards and describe some "blue chips" as promotional from your perspective, would you be able to relate which number of card is that in the deck of 52, or even 54 with jokers, 55 with the advertising.
then please explain how many need to be pulled out of the "house of cards" created by this tinking as perhaps but not certainly fictional. Then describe the foundation for your argument. Sounds a little like the infrastructure at #4 at Fukushima. Oops, it fell and the evac zone goes to 200 miles.
I don't mean to sound contrary, but I guess about things too. I never guess about my business though, that would be counterproductive.