- Both ISM Manufacturing and Industrial Production have gone into contraction in recent months.
- When these two indicators are both in contraction, we are in or near a recession over 90% of the time.
- Recessions tend to align with bear markets in stocks, so assessing one's portfolio risk profile and potentially reducing equities may be appropriate at this time.
- Dividend stocks can be an excellent source of income that grows over time.
- An income-seeking investor should focus on stable dividend growth rather than yield.
- We pick some criteria to choose stocks with stable dividend growth and show how this portfolio has performed historically.
- In the last four FED tightening cycles, the interest rate on 30-year Treasurys hasn’t risen much, if at all.
- Long-dated Treasury yields usually converge as the Fed tightens and the 30-year yield is still more than 1% above the 5-year yield.
- Don’t be afraid to hold Treasurys in the face of rising short-term rates. They provide excellent diversification to an equity portfolio.
- The current price of gold is very close to the all-in sustaining cost to mine gold.
- In terms of diversifying a portfolio, gold helps reduce risk.
- Gold is not a productive asset, but it functions as insurance against inflation. That insurance is likely to become more valuable in the next 5-10 years.
- Shiller’s CAPE ratio can be used for long-term equity market expected returns.
- CAPE is currently higher versus the historical average, but this should not be used to predict a market top.
- Comparing CAPE to a simple trend-following strategy for market timing: value versus momentum.
- How inflation and interest rates are related.
- Fixed income ETFs' long-term returns driven by current yield.
- Some thoughts on Fed policy and its effect on long-term interest rates.
- Illustrating the benefits of diversification using SPY and TLT.
- Show how rebalancing annually can enhance returns
- Using volatility, Sharpe ratio and maximum drawdown to better understand portfolio construction.