InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

Get rich from the world’s most BORING stocks

Get rich from the world's most BORING stocksWhen you buy these dependable Steady Eddies, you’ll see why “boring is beautiful.” You’ll fall in love with the 39 “stodgy” stocks currently in my portfolio… because they’ve racked up an average gain of 455%. That’s enough to turn $10,000 into a staggering $55,500! These “yawners” can slam the door on your money worries. Click here to get started now.

 

When Stimulus Runs Out

By Jim Pearce on June 10, 2016

Mohamed El-Erian just echoed his gloomy economic forecast. Instead of using his “The New Normal” term for worldwide slow growth that he branded seven years ago, this time he used a new phrase: the “T-junction.” El-Erian’s T-junction means an economic intersection where you can’t go forward because the path we’ve been following—an economy pushing slowly forward on the benefits of central bank intervention—is a dead end.

He’s not alone in predicting a world close to stalling out, economically speaking. But given his considerable reputation (former PIMCO chief, current Allianz guru, and eerily-accurate, high-finance shaman) his voice is heard above the chorus of Wall Street soothsayers. To hear El-Erian tell it, “within the next two years, we’re not going to be able to maintain the world we’ve maintained for the last five to seven years.” And that’s a world kept spinning by the Fed’s massive cash infusion via Quantitative Easing.

If he’s right, then the next U.S. President will have a tough row to hoe. Depending on how deft the POTUS is pulling the economic levers, we could either “pivot from low growth into recession,” or “if the political class responds, we can pivot to something much better,” El-Erian said.

I usually only hear this much “pivot” talk during a college basketball game. El-Erian didn’t spell out who he meant by “the political class,” but I bet, aside from the President, it includes Fed chair Janet Yellen, a handful of influential congressmen, and perhaps a Supreme Court justice or two. And the Oracle El-Erian, unfortunately, didn’t say exactly what they can do to achieve “something much better.” I guess that’s because right now nobody knows what that is, even El-Erian.

But we can guess El-Erian would like to see some of the following ensure more growth and greater economic stability: a higher minimum wage to keep more families above the poverty level; a more progressive tax system that redistributes wealth more evenly; and less reliance on central bank stimulus to keep the economy expanding.

Pulling those levers requires political cooperation, which is why El-Erian called out the political class in his statement. To his way of thinking, the ruling business elite have been running the economy for the past decade, and have managed to squeeze everything out of it they could for their own benefit. Now it’s up to government to legislate a square deal for everyone else.

As an investor, you may be wondering what you can do to protect your portfolio in case the decision makers driving the financial bus make the wrong turn at the T-junction. If the terms El-Erian used to illustrate the penalty for going the wrong way – recession and instability – come true, then having a diversified portfolio that includes large-cap stocks that pay a healthy dividend will be critical to avoiding a financial pileup.

In fact, my IDEAL Stock Rating System is ideally suited for identifying companies that should stand up to El-Erian’s worst-case scenario. If we do suffer a downturn in our economy, then the stocks you want to own are those that pay a high dividend can increase their operating cash flow, and are priced at a discount to the rest of the market. You can find out which ones they are by visiting our S&P 500 Data Table which includes the IDEAL rating for every single company in the index.

 

 

 


You might also enjoy…

 

Obscure Tax Law Forces This Company to Pay Out 90% of its Profits

A 50-year-old loophole is forcing one company to pay out $9 of every $10 it makes from ironclad contracts with the U.S. Government.

In fact, over the past seven years, it’s made payments ranging from a few dollars… to tens of thousands of dollars… 30 times. Without a single cut! 

Most folks don’t even know this company exists, but the ones that do are making a mint.

Like Ted B., who’s set to receive a check for $1,096 just a few days from now.

Merrill H., a 58-year-old from New York, has collected over $3,385 so far. 

And retirees Beth and Terry P. have raked in $16,555.

I’ve put together a special report that will give you all the details, including simple instructions on how to get your name on the payout list before the next cutoff date.

You can get your copy here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.