The Market Today
Feb. 11th 2016 News and Views:
There has been a huge global selloff in both Europe and Asia. American markets seem ready to follow suit. Here are some thoughts and suggestions.
1. There is a need for lower taxes. We need growth, and yes, it is growth that will bail us out of our problems. There are some people who do not believe that lowering taxes is the way to growth, small business creation, higher wages and overall economic well-being. They are wrong. If you want more profits, and all those items listed in the last sentence, get government out of the way.
2. Government is the problem. Government is overbearing, intrusive and debilitating. You can look at every problem we are having now, or have had in the past, and the blame can be laid at the feet of government. The housing crisis? Government. Higher taxes? Government. Banking failures? Government. Economic Slowdown? Government.
3. And speaking of Government-Type institutions, The Fed is wrong this time and almost every time. They get it wrong and their solutions hurt everyone. Raising interest rates, like they did in December is being felt negatively all over the world. The world is losing faith in Central Banks. They act like Communists of old, top-down control and manipulation. It is the climate we live in and for the foreseeable future their policies stick with us like stink on . . .
4. Oil and stocks seem to be running in tandem. The market will go down today. Wait and watch.
5. If you want to take advantage of this selloff, consider Utilities, high dividend paying stocks. For example, AT&T (T) has a yield over 5%. Yes, stocks are often paying higher yields than saving accounts and even US Treasuries. Many of these stocks can be used for Writing Covered Calls.
6. Oil is around $27 a barrel. We’ll look back on these days as the good old days. Gas prices are around $1.70.
7. This is good in many predictable and visible ways. Drive around and notice all of the trucks on the highways. My rule of thumb (not empirical in the least) is that when I see one truck to every five cars, the economy is okay. Yesterday, I was on I-5 near Seattle and I literally sat in my car counting. There was one truck (hauling, commercial, working) for every three cars. The news pundits want bad news to report, but many companies are doing just fine. Our economy may be weak, as it seems the worldwide economy is, but the human yearning for growth, profits (and riches) is strong.
8. Banks are suffering, but the low rates will end. It’s now to the point that you almost have to bring your toaster to the bank so they’ll take your money.
I want to get this posted, so I’ll do so, and then write more later. We need to address Stock Splits, Earnings, and the Three Things to Watch.