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Income, Stocks  | September 5, 2019

Recession Risk Is The Highest In 10 Years BUT Still The Lower Probability Outcome

A lot of investors are understandably worried about a recession in 2020 or 2021. It's true that recession risk, per models from the Cleveland and NY Fed, JPMorgan, Bank of America, Moody's, Jeff Miller, and Toronto Dominion Bank are all showing the highest 9-12 month contraction risk in a decade.

Here is what I use as the basis for my real-time 12-month recession risk, the model from the Cleveland Fed and Haver Analytics. Its estimates line up very closely (nearly exactly) with most other estimates.

The Cleveland Fed model is based on using the slope of the 10y-3m month yield curve (the most accurate one) to estimate GDP growth and 12-month recession risk, using historical data, for each month. Specifically, the Cleveland Fed uses the monthly average of the yield curve. The last update was August 29th and the next update is September 26th.

To convert this into a real-time model, I use the last three months of data to calculate how much risk changes per one basis point of inversion.

  • June to August: 6.3% increased risk/25 bp extra inversion = 0.25% per basis point
  • July to August: 8.7% increased risk/34 bp extra inversion = 0.26% per basis point
  • June to July: 2.4% lower risk/9 bp less inversion = 0.27% per basis point

Then, I take this 0.25% to 0.27% risk/bp of inversion and calculate what the Cleveland Fed's next estimate is likely to be IF the current inversion persists for a full month and becomes the new average.

  • current inversion (morning of September 3rd): 49.5 bp
  • extra inversion relative to last Cleveland estimate: 11.5 bp
  • increased recession risk: 2.9% to 3.1%
  • Approximate 12-month recession risk IF 49.5 bp inversion persists: 47%

It needs to be pointed out that, while such high risk has typically meant a recession was indeed coming (usually within 6 to 24 months), this is only a model. It tells what might happen if past economic/yield curve patterns hold.

My model, in particular, says that "IF current conditions persist, the bond market believes that there is a 47% probability of a recession beginning by October 2020".

Another way to phrase that is "even if we don't get a trade deal, as long as things don't get worse, there is a 53% probability that we avoid recession entirely in 2020."

However, when it comes to how I deploy fresh monthly savings (real money decisions), I don't rely on yield curve models at all, but rather on the work of David Rice and his Baseline and Rate of Change or BaR economic grid.

This tracks 19 leading economic indicators including the eight most sensitive ones (which decline fastest before recessions, including the 10y-3m curve).

Mr. Rice's economic grid measures how much the average of all 19 indicators is above their respective historical baseline as well as how quickly they are growing/contracting over time. Here's the three-month average of the mean of coordinates or MOC, for the current economic cycle.

This is what the grid looked like a year before the Great Recession started.

Note that the green LD point (those 8 most sensitive indicators) was slightly below the average of all the indicators and both points were indicating negative growth.

Here is the grid a month before the Great Recession began.

The average of all the indicators was barely above the historical baseline and the 8 most sensitive ones were virtually at zero (above baseline) and contracting at a rapid rate.

Here's what the US economy looks like today.

The last two weeks of economic reports have actually caused the average of all the indicators to increase from 26.3% to 26.9% above historical baseline. The rate of change has gone from slightly negative to neutral. The 8 most sensitive indicators (the green LD point) are not just above the MoC but indicating accelerating positive growth rates and have moved up 0.3% relative to two weeks ago.

In other words, as long as things don't get worse (they don't even have to get better), the most sensitive economic indicators (best recession predictors) are saying the economy is going to stabilize and possibly grow a bit faster than it is today, about 2% per year.

Here is how high above historical baseline the average of all the indicators was in the months leading up to the last three recessions. Mr. Rice himself has said that 20% above baseline on the MoC is when we should start to get nervous about a possible recession beginning within a year. With the 8 most sensitive indicators at 31% above baseline (and trending higher in recent weeks), there isn't significant cause for concern.

As part of my reasonable and prudent (for my personal needs/goals/time horizon) strategy for putting new monthly discretionary savings to work, I use the following table.

MoC Distance Above Historical Baseline% Of New Monthly Savings Invested In Stocks% Of Stock Savings Invested In Defensive Companies
19.9% or below0%NA (all bonds, which are entirely defensive)
20.0% to 22.4%20%100%
22.5% to 24.9%40%66%
25.0% to 27.4%60%50%
27.5% to 30%80%33%
Above 30%100%NA (buy the best opportunities regardless of economic sensitivity)

Why have I set these cut-offs? Because sub 20% is the danger zone that might indicate a bear market is coming. My long-term plan calls for not touching what I own now (which is paying me over $16,300 per year in safe and steadily rising dividends) but storing up dry powder (bonds that go up or stay flat in bear markets) for four weekly buys during a bear market (S&P 500 closes 20% below all-time high).

  • one Super SWAN per week (off Dividend Kings Super SWAN watch list of 46 companies)
  • one high-yield deep value (MLPs like MPLX or ET might yield 10% to 15%), off the Dividend Kings Top Weekly Buy List
  • one double-digit dividend grower (tech gets priority since I'd like to be 25% in tech eventually)
  • BAM (up to 10% portfolio position)

This is why I use the best available macroeconomic data to modify my monthly allocation between bonds and stocks, to use a probabilistic and fact-based approach to determine how aggressively to deploy vs. store up dry powder.

30% above historical baseline is the "all clear" signal for me. That's because 32% above baseline is the highest we hit this economic cycle (Q3 2018) at a time the economy was growing over 4%. 30% above baseline likely indicates over 3% economic growth and indicates no recession is possible (bear markets unlikely barring crazy valuations).

2% to 3% economic growth would mean corrections still happen but are unlikely to turn into bear markets. This is the rationale behind owning some bonds, which can be sold during corrections to buy attractively-priced dividend stocks (off the various Dividend Kings watch lists).

If current conditions hold, then the 8 most sensitive indicators point to conditions improving. That would possibly allow me to deploy 100% of my monthly savings, via weekly standardized buys, into quality dividend stocks offering generous, safe, and steadily growing payouts. All trading at historically attractive valuations relative to their fundamentals and realistic long-term growth rates.

The Dividend Kings Approach To Valuing And Recommending Stocks

In summary, here is what our valuation model is built on.

  • 5-year average yield
  • 13-year median yield
  • 25-year average yield
  • 10-year average PE ratio
  • 10-year average P/Owner Earnings (Buffett's version of FCF)
  • 10-year average price/operating cash flow (FFO for REITs)
  • 10-year average price/free cash flow
  • 10-year average price/EBITDA
  • 10-year average price/EBIT
  • 10-year average Enterprise Value/EBITDA (factors in debt)

These metrics represent pretty much every company fundamental on which intrinsic value is based on. Not every company can be usefully analyzed by each one (for example, EPS is meaningless for REITs, MLPs, yieldCos, and most LPs). But the idea is that each industry appropriate metric will give you an objective idea of what people have been willing to pay for a company.

I line up the expected and realistic growth rates of companies with time horizons of similar growth, thus minimizing the risk of "this time being different" and overestimating the intrinsic value of a company.

8 Great Investing Ideas From The Dividend Kings Valuation/Total Return Potential Watch Lists

Let's start with four great defensive choices for anyone worried about Recession.

And here are four great choices for those who aren't.

Note that "defensive" does not mean "goes up in a correction" but merely "recession-resistant cash flow and USUALLY falls less than the broader market." You'll note that JNJ and ABBV (and the aristocrats) strongly outperformed the broader market during the worst correction in 10 years, by falling 4% to 10% less. Altria and BTI did not because sometimes negative company/industry sentiment can cause even deeply undervalued defensive stocks to act as if they were cyclical.

ABBV, BTI, MO, JNJ, Dividend Aristocrats, and Bonds During Late 2018 Correction

MINT, SCHZ, and SPTL, the 3 bond ETFs Dividend Kings own in our $1 Million Retirement Portfolio, went up 1.8% during that correction. Bonds are a non-correlated asset class to stocks (-0.25 weighted beta for those three), which is why you should only buy dividend stocks, even defensive Super SWANs and dividend aristocrats, for the stock portion of your portfolio.

Cyclical companies (economically sensitive), for the most part, fell as badly or worse than the broader market.

MPLX, SU, CAT, and BAM During Late 2018 Correction

Remember that cyclical and defensive just means economically sensitive/not sensitive. Any given stock during any given downturn can do anything. BAM is a financial company that usually does worse in corrections. But through early December 2018, it was actually up before it crashed just like everything else.

CAT is a dividend aristocrat, a group that normally does better than the market (aristocrats fell 4% less than the S&P 500). But recession fears caused CAT to fall a lot more. And Suncor, a future dividend aristocrat (in nine years), crashed along with oil prices which bottomed 40% below October levels. But MPLX, a midstream MLP actually slightly beat the market, likely because its cash flow is more stable (long-term, volume committed contracts on about 70% of its cash flow) and it was already so undervalued at the time.

If you want to maximize the chances of outperforming, the market during corrections

  • buy above-average quality companies (recession dividend cut risk is usually under 1% on those)
  • buy undervalued companies
  • buy defensive companies
  • buy companies growing faster than the market's historical 6.5% CAGR rate

If you're looking for more great long-term investing ideas, including cyclical (economically sensitive) stocks that are likely to roar higher if we avoid recession (the likely outcome), then this is where the rest of this article comes in.

Morningstar Is A Good (But Not Perfect) Place To Start Looking For Good Ideas

Morningstar is typically (though not always) a good starting location for blue-chip income investing ideas. That's because they are 100% focused on long-term fundamentals, rather than 12-month price targets like most sell-side analysts (the ones that issue "buy, sell, hold" recommendations). Most of their fair value estimates are reasonable (though not always, more on this in a moment). So, here are all my blue-chip watch list stocks that Morningstar estimates are at least 20% undervalued.

Note that Morningstar is currently switching analysts on many companies, making some of these price/fair values questionable if not downright absurd (SWK is NOT 52% undervalued). For the above table, stick to the analyst based estimates (don't have a "Q").

But you can't just look at any one analyst's fair value estimate and know if it's a good buy. That's because every company has its own risk profile, and differing business models mean that a 20% discount to fair value of a highly cyclical company (like commodity producers) isn't the same for one with very stable and recession-resistant cash flow (like a consumer staples company).

This is where looking at Morningstar's star ratings is a good next step. These ratings, which correspond to buy, strong buy, and very strong buy recommendations, factor in a company's risk profile, industry trends, management quality, and Morningstar's definition of "Moatiness" (which I sometimes disagree with but are for the most part on the money when it comes to corporations).

Morningstar's moat definition is based on their belief that a company can maintain returns on invested capital above its weighted cost of capital (using their assumptions plugged into the CAPM model) for 20 years or longer (wide moat) and 10 years or more (narrow moat). I look for competitive advantages that allow returns on invested capital above the industry norm and above the cash cost of capital (what matters more to the ability to grow dividends over time).

Here are my watch list companies that Morningstar considers 4- or 5-star buy and strong buy ratings.

You'll note that there a lot more 4 and 5 star stocks than ones trading 20% or below Morningstar's estimates fair value. That's because Morningstar is adjusting for quality, safety, and overall cash flow stability (via their uncertainty ratings). This is why Dominion Energy (D) is a 4-star stock despite being just 8% undervalued per Morningstar's estimate.

However, while a 4 or 5 star Morningstar stock is USUALLY a good long-term investment, it's important to remember that some of the company's recommendations can be far off the mark. Dividend Kings uses a 100% pure F.A.S.T. Graphs powered historical valuation method that only looks at historical and objective data and sometimes disagrees with Morningstar.

Typically, these disagreements are minor. Sometimes, they are not. For example:

CompanyMorningstar Fair ValueDividend King's Historical Fair Value
3M (MMM)$188$188
Microsoft (MSFT)$155$100
Apple (AAPL)$200$165
Nike (NKE)$98$66
Home Depot (HD)$170$199
Simon Property Group (SPG)$195$206
American States Water (AWR)$70$43

Morningstar usually has similar estimates as us for most sectors, but popular momentum stocks (like many tech names) they often appear to try to justify rich valuations. For example, they assume much faster growth at Microsoft which will justify a 40% multiple expansion, which implies that Microsoft's growth rate in the future will be 14% CAGR (not impossible but on the upper range of probable).

For Nike, Morningstar straight up assumes a DOUBLING of the historical PE, despite growth rates that are merely in line with its historical norms. Dividend Kings lines up realistic future growth rates (based on fundamentals, management guidance, and analyst consensus) with time periods in which the company's fundamentals and growth rates were similar to what's likely, and then assumes the same average valuation multiples will apply to this year's expected results (since the fundamentals and growth rates are similar).

I don't know how Morningstar estimates that American States Water is worth $70 but regardless it's a 1-star "sell" according to Morningstar. That's a sentiment Dividend Kings shares.

Thanks to the bond yield crash in recent weeks, American States Water is in a dangerous bubble. It's gone from a heck of an irrational rally to straight-up tech bubble like irrational exuberance.

This is one of the best dividend stocks in the world, a level 11/11 Super SWAN, a dividend king, and sports the longest dividend growth streak in America (64 years and counting). At the right price, AWR is a must-own stock. That time is not today.

Almost 50 times earnings for a water utility that has grown at 8% over the past decade and which analysts expect to grow 9% over the next five is insane. First of all, a realistic growth range for AWR is 4% to 9% (analyst consensus is pushing boundaries of the possible). This is a regulated industry where 9% growth over time (longer than five years) is a pipe dream.

AWR is currently the most overvalued (117% above historical fair value) dividend king and Super SWAN. Next year's 4% expected growth means its fair value will rise from $43 to $44 or $45. It's trading at $93.

Here's what that means in terms of total return potential for anyone foolish enough to buy it today.

In the BEST CASE scenario, AWR achieves the 9% CAGR EPS growth analysts expect and assuming it returns to its 10-year average PE of 22.7 (sky-high for a utility but that's what the market has paid for this high-quality company in a low-interest rate world) investors would achieve -4% CAGR total returns. That's even factoring in rapidly growing dividends, which currently yield 1.4% (lower than risk-free 10-year US Treasuries).

The low end of a realistic total return range is -9% if it grows at a more normal 4% rate, and assuming the market grants it the low-rate era average PE of 22.7.

AWR's current valuation is so extreme that multiple compression (to a 22.7 PE) could result in a -14 CAGR headwind.

How can you tell whether or not Morningstar's valuation estimates and star ratings are reasonable or totally off the mark (other than becoming a Dividend King member and looking at our exclusive company valuation/total return potential lists)? One good way is to look at objective valuation metrics, which is where we turn to next.

Price-To-Earnings Vs. Historical Norm

While no single valuation method is perfect (which is why DK uses 10 of them), a good rule of thumb (from Chuck Carnevale, the SA king of value investing and founder of F.A.S.T. Graphs) is to try not to pay more than 15 times forward earnings for a company. That's the same rule of thumb that Ben Graham, the father of value investing considered a reasonable multiple to pay for a quality company.

This is because PE ratios are the most commonly used valuation metric on Wall Street and 15.0 PE being a reasonable price for quality companies is based on Mr. Carnevale's 50 years of experience in asset management valuing companies. He bases that on an earnings yield of 6.7% (inverse of a 15 PE) being roughly equal to the 200-year return of the stock market.

Chuck's historical P/E valuation approach has made him a legend on Seeking Alpha and, according to TipRanks, one of the best analysts in the country when it comes to making investors money.

Chuck usually compares companies to their historical valuation ratios, and he's ranked in the top 1.4% of all analysts tracked by TipRanks (based on the forward 12-month total returns of his recommendations). While 12 months is hardly "long term," the point is that Mr. Carnevale is a fantastic value investing analyst and his historical valuation-driven approach is beating 98.6% of all bloggers/analysts, including 5,200 that work on Wall Street.

Here are dozens of blue-chip companies with forward P/Es of 15 or less AND their five-year average PEs. Note that some industries are naturally prone to lower multiples (such as financials) due to more cyclical earnings. Which is why you want to compare their current PEs to their historical norms (Morningstar offers 5-year average PEs, but 10 years is better for factoring in industry/sector downturns).

Keep in mind, P/E ratios for MLPs, REITs, and YieldCos are not a good indication of value since high depreciation results in lower EPS. Price/cash flow is the better approach with such pass-through stocks.

Note that historical PEs, depending on the time frame, can give a false signal when it comes to valuation. For example, EOG Resources' (EOG) 590 5-year average PE is due to the oil crash resulting in low earnings. It's not an indication that the current PE is going to expand anywhere close to those levels (Morningstar considers it modestly undervalued).

But as I just said, PE is not appropriate for some stocks, such as REITs, YielCos, MLPs, and LPs. Similarly, you want to make sure that the historical PE ratio makes sense. For pharma like ABBV, Bristol-Myers (BMY), Amgen (AMGN), and Pfizer (PFE), adjusted earnings are more appropriate, and the 5-year average PE is skewed by large one-time charges.

But as I just said, PE is not appropriate for some stocks, such as REITs, YielCos, MLPs, and LPs. Similarly, you want to make sure that the historical PE ratio makes sense. For pharma like ABBV, Bristol-Myers (BMY), Amgen (AMGN), and Pfizer (PFE), adjusted earnings are more appropriate, and the 5-year average PE is skewed by large one-time charges.

Price/Cash Flow Vs. Historical Norm

While earnings are usually what Wall Street obsesses over, it's actually cash flow that companies run on and use to pay a dividend, repurchase shares, and pay down debt. Thus, the price/cash flow ratio can be considered a similar metric to the P/E ratio but a more accurate representation of a company's value. Chuck Carnevale also considers a 15.0 or smaller price/cash flow ratio to be a good rule of thumb for buying quality companies at a fair price. Buying a quality company at a modest to great cash flow multiple is a very high probability long-term strategy.

Again, comparing a company's price to cash flow against its historical norm can tell you whether it's actually undervalued. Dividend Kings uses 10-year average cash flows and Morningstar only offers 5-year averages. For cyclical companies, sometimes that can cause skewed results (which is why we use longer time periods and as many of our 10 valuation metrics as are industry-appropriate).

Here are all the companies on my watch list with price/cash flow of 15.0 or less.

You want to use several valuation metrics in concert to ensure that any false signals are eliminated (which is why DK uses up to 10). For example, both Philip Morris (PM) and AbbVie are trading at steep discounts to their historical price to cash flow multiples and as you can see Morningstar considers both to be 5-star buys today (Dividend Kings agrees enthusiastically and has been steadily buying both for our portfolios).

PE/Growth Ratio (Growth At A Reasonable Price)

According to Chuck Carnevale, a 15 PE is prudent for most companies, even slow-growing ones. But if a company is able to grow especially fast (over 15% over time) it deserves a higher multiple. That's because the compounding power of time means a company that grows at a faster rate can generate many times greater wealth and income for you.

How Much Your Money Will Grow Based On Company Growth Rate And Time Period

Long-Term Growth Rate (OTCPK:CAGR)10 Years20 Years30 Years40 Years50 Years



Note that this table is simply meant to illustrate a point. It's not actually possible for any company to grow 50% annually for 50 years, which would mean earnings and cash flow growing nearly 1 billion fold (it would have to literally take over the world).

Most investors, depending on their needs (and ideal asset allocation), can likely achieve 5% to 10% returns over time. Warren Buffett is the greatest investors in history, with about 21% CAGR returns over 54 years.

Since 2000, the S&P 500's earnings growth has been about 6.5% CAGR, which is why a company that can realistically grow much faster may be worth a higher than normal PE (or price to cash flow). This is where the PE/Growth or PEG ratio comes in.

While this method is limited by what growth assumptions you use, it's a quick and dirty way to screen for potentially attractive dividend growth investments when used in conjunction with other methods. The S&P 500's PEG ratio is currently 2.6 to 2.8 (depending on the growth estimates you use). A PEG of 1.0 or less is generally excellent.

Here are my watch list stocks with PEGs of 1 or less, as estimated by Morningstar's forward growth forecast.

PEG is a good way to strive for "growth at a reasonable price" or GARP. However, the obvious flaw is that it's based on forward projections that can be wrong (FDX is almost certainly not going to grow at 30% over time). All valuation metrics have their limitations, which is why you shouldn't rely on just one.

Screening a company via all of these approaches can minimize the chances of overpaying for a quality name (make sure to check that earnings and cash flow are growing so you don't buy a value trap by mistake).

For example, Caterpillar clears nearly all these screens making it a great deep value buy.

  • Dividend King's Historical Discount To Fair Value: 31% (very strong buy)
  • Morningstar estimated discount to fair value: 29%
  • Morningstar star rating: 4 (strong buy)
  • PE: 10.1 (vs. 17.5 modern low-rate era average)
  • Price to cash flow: 9.9 vs. 9.1 historical average
  • PEG: 0.7 (based on 14.1% CAGR analyst consensus for next five years)

On top of that, you get a generous 3.5% yield - most "high-yield" funds and ETFs pay around 3% for a level 11/11 Super SWAN dividend king with management guiding for 7% to 9% CAGR dividend growth for 2020 through 2022. Mind you that's even with the current trade war, which isn't likely to end next year.

Quality Stocks At 52-Week Lows Are Great Screening Candidates

I maintain a watch list that takes every company I track and applies an 11-point quality score based on dividend safety, the business model, and management quality. All dividend stocks can be ranked 3-11, and my watch list (about 200 companies) only includes those with quality scores of 8 and higher.

  • 8: Above-average quality company, seek 15% discount to fair value or better, limit to 5% to 10% of invested capital.
  • 9: Blue-Chip company, limit to 5% to 10% of invested capital and seek 10% discount to fair value.
  • 10: SWAN stock, buy with confidence at 5% or greater discount to fair value or better, limit to 5% to 10% of invested capital.
  • 11: Super SWAN (as close to an ideal dividend stock as you can find on Wall Street), fair value or better, limit to 5% to 10% of your invested capital.

A score of 7 is average quality, which means about a 1% probability of a dividend cut during a recession, based on how much S&P 500 dividends have been cut in past economic downturns.

I've programmed that watch list to track prices and use the 52-week low as a means of knowing when a blue-chip or SWAN stock is within 5% of its 52-week low and potentially a Buffett-style "fat pitch" investment. This means a quality company is:

  • Trading near its 52-week (or often multi-year) low
  • Undervalued per other valuation methods
  • Offers a high probability of achieving significant multiple expansion within 5 to 10 years and thus delivering double-digit long-term total returns over this time period

Another method you can use is to target blue chips trading in protracted bear markets, such as sharp discounts to their 5-year highs. Buying a company at multi-year lows is another way to reduce the risk of overpaying and boost long-term total return potential.

In the above table, I've set it up to show all the methods we've discussed today. You can thus see that most of the above companies are potentially fantastic long-term buys, based on many important valuation metrics, including Morningstar's qualitative ratings (of management quality, moat, and margin of safety).

This is what I mean by "fat pitch" investing, buying them when they are at their least popular ("be greedy when others are fearful"). It doesn't mean buying some speculative, small company, with an untested business model in hopes it becomes the next Amazon (AMZN).

The goal is simply to buy quality blue chips, whose fundamentals are firmly intact, and whose valuations are so ridiculously low, that modest long-term growth can deliver 15% to 25% CAGR total returns as the market realizes its mistake.

Mind you, it can take a long time for coiled springs like these deep value blue-chips to pop (sometimes five to 10 years), but as long as their business models remain intact and they keep growing cash flow and dividends, they eventually will which is why seven of the nine best investors in history have been value investors.

Bottom Line: Don't Let A Few Troubling Economic Indicators Scare You Out Of The Market

Yes, the yield curve is inverted and US manufacturing has been hit hard by the trade war. But manufacturing/industrial output accounts for just 25% of US GDP meaning that strong consumer spending has thus far kept America growing at a healthy 2%. The latest economic reports indicate this is likely to continue.

The Atlanta Fed's economic model, based on the latest data as it comes in, estimates 2% growth in Q3. That lines up with the overall analyst consensus which has been gradually rising over the last few weeks.

The more conservative NY Fed model similarly expects about 2% growth in Q3.

Don't let the media scare you about recession risk. Even going off the yield curve (the only sensitive leading indicator that's flashing red right now) there is a 54% probability we avoid recession in 2020.

As long as consumers stay confident and keep spending, and the labor market remains robust, then the overall economic outlook will remain strong and no bear market is likely.

  • FACT: we are NOT in a recession today (growing 2%)
  • FACT: no matter how many yield curves invert or how badly, unless the overall economic data deteriorates no recession is possible
  • FACT: without recession, bear markets are far less likely (we've had just two non-recessionary bear markets since WWII)

Yes, things might change in the future, but I'll let you know if it does. In the meantime, there are dozens of great companies worth buying today, both defensive and cyclical.

I'm personally content to steadily buy quality companies offering generous safe and steadily growing dividends, each week, while not checking my portfolio value (I call this portfolio value sobriety). My annual dividend income keeps rising at an impressive rate (over $16,300 so far) and there are only five things that really matter in life

  • family
  • friends
  • fundamentals (economic and those of the companies you own in your portfolio)
  • fido (pets in general)
  • food (shared with family and friends)

So, stay calm, focus on the facts (and not media fear about what might happen to them) and never forget that a properly constructed portfolio, with appropriate asset allocation and equity risk management, will keep you safe during future recessions and bear markets.

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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