Wrapping Up a Successful Month

A strong GDP release today sent stocks skyrocketing higher–good news is good news this week.  The strong growth was yawned at by the interest rate complex–a weird reaction. It appears that commodities and interest rates are taking their cue from the lousy global economy while the stock market believes that the U.S. can continue to operate in a vacuum–and who knows maybe it can do so.  

Funny this morning I received a email from JM Bullion (bullion seller) with the subject line saying something about silver in the $16.60/ounce range–and we thought wow–what is up?  We pulled up the commodity prices page and we were kind of shocked to see gold, silver and crude oil prices tumbling. Now this is the strange part—commodities are screaming deflation—the FED jawbones higher interest rates—Europe is in the shitter and the U.S. economy and stock market chug higher. Something is totally out of step here–economically speaking.  As much as we can see that markets are not in lock step we don’t really care. With the balance of October dividends now accounted for our model is up 10.57% YTD–and that is what we care about the most.  We continue to do minor tweaks as we find securities meeting our desire for short duration maturities and we are strongly resisting do anything foolish which will needlessly destroy capital–being one who loves poker, blackjack and gambling in general it can be tough to resist speculative issues.

We think that the best use of this Goldilocks timeframe is to continue to watch for short duration new issues (or old) to add to the portfolio with the knowledge that rates will in fact someday go up (at least we think so–but not soon).  Why would an income investor let themselves be lulled into the thought that rates are down forever and we can buy perpetual crap issues with great yields with consequences (a massive hit to net portfolio balance)?  We encourage investors to use this time wisely to reposition where necessary, based upon your own economic forecasts and factoring in your stage in life.  

Lastly a note on JM Bullion mentioned above. Yes we buy a little bullion.  We do this not as an ‘investment’, but more to have some currency on hand for ‘when the world nearly ends’ so we can get a loaf of bread.  We buy some silver rounds–but also some U.S. Silver Eagles, as the most beautiful coin in the world. The grandkids love to receive them as gifts. We only mention JM Bullion as we find them the least expensive dealer out there and they charge us no shipping.  They ship fast and are reliable.