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

This Two-Minute Market Move Could Make You Rich

This Two-Minute Market Move Could Make You Rich[Revealed] How to generate instant income from the stock market. Over and over again. At will. This technique is so powerful – and safe – we’re guaranteeing you can use it to generate $1 million (or more) in retirement cash. And we’ll even send you a $1,000 check to kickstart your journey. Go here for details.

 

Investment Summit: Conversation With a Stock Sherpa

By John Persinos on February 27, 2017

I asked our resident investment guide Jim Pearce a few questions about the state of the markets today.

Jim is chief investment strategist of Personal Finance and Breakthrough Tech Profits. He also serves as director of portfolio strategy for Investing Daily.

In addition to being a stock guru, Jim is an avid cigar aficionado (as you can deduce from the photo below). Jim will be quick to tell you, cigars are a pleasurable way to relax and expand your mind. At my urging, he lit up and ruminated on the latest portents from Wall Street.

John Persinos: A lot of analysts are predicting a correction in 2017. Can we dodge the bullet this year?

Jim Pearce: I think a correction is inevitable this year as soon as it becomes apparent Trump won’t be able to deliver on all his promises, most likely in the second or third quarter.

You need to start thinking differently if you want to survive the next downturn. Life has been good for stock market investors of all stripes, but that may soon change.

Many pundits also expect a recession. Do you agree?

Not necessarily. There is a very wide gap between the “huge” growth Trump is predicting and negative growth in GDP, so we can have a stock market correction without a recession.

How can investors protect themselves?

Reduce exposure to stocks, increase exposure to hard assets and cash, and only own stocks that have proven they can generate profits without government intervention — for example, Apple (NSDQ: AAPL).

What types of assets or sectors seem particularly vulnerable right now?

Health care is the most vulnerable since nobody (including Trump) really knows what the replacement for the Affordable Care Act will end up looking like. Mortgage real estate investment trusts (REITs) also are at risk, since they could suffer the double whammy of higher borrowing costs and lower demand from investors if interest rates run up too fast.

How should readers calibrate their portfolios to account for further Fed tightening?

Dump bonds, increase cash, and avoid momentum stocks since future earnings will be discounted at a higher rate.

Even in this frothy market, do you detect any bargains?

In this market, “bargain” is a relative concept. Some tech stocks are still reasonably priced, and equity REITs should benefit from rising asset values as inflation picks up steam.

What are your recommended portfolio allocations?

I recently adjusted the PF Asset Allocation to 35% stocks, 30% hedges, 25% cash, and 10% bonds.

Emerging markets are bouncing back. Do you see opportunities abroad?

Emerging markets tend to have several very strong years followed by one very bad year, so I think the short-term prognosis is not so good for them but after that we should see another rally.

I’ll be shocked if Trump doesn’t trigger a major trade war with Asia, so some of those smaller countries could be hit pretty hard in the near term.

To what degree do you think inflation will emerge this year?

We saw from the latest Bureau of Labor Statistics report that the rate of change in the Consumer Price Index has tripled over the past five months, and retail sales were also up in January so inflation is definitely on the rise. That’s why I am dumping bonds and buying hard assets in my asset allocation model.

The inflation fires ignite…

Ben Shepherd, an analyst with Investing Daily, agrees that inflation poses an increasing threat. He warns that years of low inflation have made investors complacent, but recent BLS statistics are a wake-up call. As Ben puts it:

“You should add inflation protection to your portfolio now, before inflation becomes manifestly obvious to the investment herd and the prices of these hedges increase.

Gold is the traditional haven in times of rising prices. The most convenient and cost-effective way to gain exposure to gold is through exchange-traded funds that hold physical bullion.”

Ben also recommends real estate, especially REITs. He explains:

“The key is being selective and sticking to quality REITs. One rock-solid REIT is Realty Income, which has paid more than 550 consecutive monthly dividends. Realty Income now yields just over 4% and has a proven ability to successfully navigate rising interest rates.”

Indeed, Jim Pearce saw fit to add Realty Income (NYSE: O) to the PF Growth Portfolio on October 23, 2013. Since then, Realty Income has generated a total return of 71.86%.

Want to smoke a cigar with Jim?

If so, seats are going fast for our 2017 InvestingSummit. This is the only time this year you’ll be able to personally hear from our team of highly-respected investment analysts, and hear their best money-making ideas. Bottom line: You’re guaranteed to walk away with AT LEAST 11 actionable ways to make more money. Click here to reserve your spot.

 


You might also enjoy…

 

12 Stocks Virtually Guaranteed to Go Up in 2018

You may not believe it, but I have a calendar in my hands right now that tells me the exact date and time when a few stock are practically guaranteed to go up. 

Twelve of them, in fact.

And if you were to invest in them following the simple buy and sell instructions found in this calendar…

You could be making $1,181… $11,814…. and as much as $190,916 more than by using a “buy-and-hold” strategy.

And here’s the best part…

I’m giving away a few copies of this calendar to interested investors (First come, first served).

With this calendar, you could get higher profits with less risk.

Click here to get the full story, and to claim your copy.

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.

Stock Talk

  1. avatar
    Jerry Martin Reply March 2, 2017 at 11:06 AM EDT

    What hedges do you recommend as of today?