Who Ever Said Investing was Easy?

By: ,

We are now seeing a true disruption to the equity markets as foolish people finally wake up to the reality of the global marketplace.  We have written about it every week or 10 days for months and months–how can the U.S. go it alone, economically speaking, while the rest of the world teeters on the verge of recession?

We know that Japan is toast–the most heavily indebted economy in the world (over 200% debt to GDP) and that Greece and all of Europe isn’t much better. Add to that the substantial slowdown that China is (and will be) experiencing and you have the makings of the next recession.  

As we write we try to not be negative, even though we can see the obvious in the statistics that we research.  It is always about ‘timing’–you can have the right idea, but if your timing is off it doesn’t help to have a strong, believable story (I mean Peter Shiff has been doom and gloom for 3-4 years–if you shorted his timing you would be broke by now).

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Now we don’t want to get off on a long tangent of ranting so we will simply stick to a couple of thoughts.  Energy related issues are still extremely dangerous as some of them will not be around in a couple months–you better have the solvent ones in your portfolio.  MLP’s will be turning into bargains–but mostly we will leave them alone–for now.  BDC’s are struggling–we have been getting notes from readers on them and we agree they are more dangerous today then they were yesterday–there is oil and gas exposure in the portfolio’s of many of the BDC’s.  We are evaluating our positions and may begin to sell some off.  REITs have been doing well–for now we like them.

For the feaful income investor we encourage a study of our 2014 Short/Medium Duration Income Portfolio – maybe a similar group of holdings works for you.  A current yield of 6.67% with less volatility–in the 2 months since we composed this group the value has never moved more than 1/2% in a single day.

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