BIG Buying Opportunity?

Thursday, May 17. Seriously? Is this a big buying opportunity? This just came at me out of the clear blue…

“Sentiment has dropped to a rare level since the 2009 low,” Jason Goepfert wrote to his SentimenTrader customers last month.

On a scale of 0 to 100, investor sentiment sat at just 5, according to Jason. (That was as of April 13. It’s moved up a bit since then… but with the new reading at just 16 out of 100, it’s still pretty extreme.)

My jaw dropped when I read this. I never imagined that we could be nine years into a great bull market, and stocks could be THIS hated.

Jason’s scale comes from his “Advisor and Investor Model” – one of his key indicators. It is primarily built on surveys of investors and advisers.

The recent reading of 5 out of 100 means investor sentiment has been downright terrible lately, according to the surveys.

So… is this useful information? It is…

This indicator has only been below 10 just 14 times over the past 20 years (that’s excluding overlapping occurrences). The average gain just three months later was 8.5%… And stocks were higher 13 out of 14 times three months after it hit an extreme like we saw in April.

Eight percent gains in three months might not sound like much… but that’s a 39% compound annual rate of return. It’s hard to find any investing technique that comes close to gains like that.

When we talked about this recently, Jason told me that whenever you have extreme pessimism along with an uptrend – like we have today – the implications are really good for “at least the next several months.”

I agree!

At this moment, stocks are hated, and they are in an uptrend. Chances are good we won’t see this moment again in this bull market.

To me, this moment is likely a great buying opportunity.”

 

I (Harold) had identified a “lo-risk market entry opportunity” just about 6 weeks ago… and, I stepped up and was buyer, Big Time! I put a lot of our long-accruing cash to work, and… more importantly, I pushed our anticipated portfolio dividend income level up to 94% of the way to our goal. I fully expect to do a little more buying here soon, just to get us another percentage point, or maybe 2, of the rest of the way to our goal. I’ll tell you all about, right here, when I do.

Harold

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You Must Get This!

Wednesday, May 16. This JUST came my way, and I love it!

“It’s a simple question… And it has a simple answer…

What sort of return do you need from your portfolio to pay your bills or enjoy your retirement? $2,000 per month? $4,000? $8,000?

That’s the focus of nearly every investor. Whether you’re interested in spending wealth in your retirement, or building wealth for future use… investors focus on returns above all else. (emphasis mine)

Most people think that to generate eye-popping returns, you have to pump lots of money into small, “risky” stocks. Isn’t that what we’re always taught… that risk equals reward? The more risk you take, the greater your potential returns?

It’s true that owning volatile stocks can result in big gains (as well as big losses, if you’re not careful).

The problem is, most individual investors don’t understand risk at all…

This year, we’ve seen volatility spiking in stocks. Many folks equate volatility with risk. But the secret to generating big returns lies in managing risk and harnessing volatility.

So today, I want to talk about some ways to clarify your understanding of risk.

Rather than develop a complex, but flawed, analysis of risk… it’s more helpful for an investor to think of “risk” in a simpler form: How much could I possibly lose?”

And, on and on, that essay goes… But, what is the POINT of the entire screed? It’s about that effort to try to grow a nest-egg again. It seems that everyone everywhere is all about only trying to accumulate more, and to make it bigger! But, what if that didn’t even matter?!?!? Hunh?

I say it over and over again. In my retirement, I want INCOME! I don’t care how much money I have. I care about how much income I am going to receive. What if I could generate enough income, on a relatively passive basis, that I did not even need to somehow accrue multiplied millions of dollars, like everyone else seems to declare that you must have. That’s cRaZy!!!

Look, I have a personal retirement income goal. It is to replace all of our current net, take-home income. That’s it! After deducting for SSI, any pensions, any other retirement accounts like IRA’s. I know I can expect to derive X amount of dollars monthly in my retirement, and my wife can expect to receive Y. Adding X plus Y, we come up with a difference; Z, between our current take-home, and what we can expect from those other sources. Somewhere, somehow, some way, we need to generate Z amount of dollars in our retirement, if we’re going to replace all of our current net, take-home. It’s really just as simple as that!

So, right now, I know how much we want to receive. I know how much we can expect to receive from sources already in place, and I know the difference, or amount, we need to be able to generate on our own, apart from all of those other sources. And, since I started to invest for the income to fill that gap… we are presently 94% of the way to filling that entire gap. We fully expect to close the gap before another year passes, and we’re 4 more years until we are both retired. We planned. We are working the plan. And, it looks as if the plan will work to get us to where we want to be!

Here’s to your successful investing!
Harold F Crowell

Safe-Dividend Growers

Sunday, May 13. In my previous post, I listed 28 outstanding EPS growers. I’m just going to chart all the same 100 I gleaned those from, and post those having the most attractive stair-step patterns of historical dividend growth. Any that cross between both lists, I will especially highlight at the end.

If you want a safe and ever-growing stream of portfolio dividend income, these 24 issues have been doing just that, up to this point in time: ROST, CTSH, AOS, JKHY, TXRH, UNH, RTN, TJX, TSN, INTU, ICE, EL, MKTX, AFG, LRCX, STZ, CTAS, COST, DPZ, FDX, HII, G, LII and SYK.

So, what do we have by way of an overlap between the 2 lists? How ’bout these gems: ROST, CTSH, AOS, JKHY, TXRH, UNH, RTN, TJX, TSN, INTU, ICE, EL, MKTX, AFG, LRCX, STZ, COST, DPZ, FDX, HII, G, LII and SYK.

I own ROST, AOS, JKHY, UNH, AFG, LRCX and SYK among those listed. I’m really partial, and would most highly recommend ROST, AOS, UNH, TSN, ICE, MKTX, AFG, FDX, HII and SYK. Though if you were to take a position in each, but perhaps weigh more heavily those I most highly recommend, you might actually get a better result.

In any case, there is more than one way to do this. By that I mean, you could collect these kinds of companies as one might postage stamps. Buy shares in all of them, and any others that are also safe dividend payers and growers, but maybe didn’t make the current cut, but will find mention in the future.

I’m far from done here, because, as I have mentioned a number of times, there’s a whole ‘nother strategy, not tested and proven like this one is, that just may very well actually be better, and that is the one I’ve learned of from the Contrarian Outlook people on Long Island. It involves the purchase of high-yielding CEF’s (closed-end funds). I recommend you look into them. I currently take their Contrarian Income letter, and their CEF Insider letter, and I’m very seriously thinking of adding their Hidden Yields letter, too. Read about each one, and how they work. I think they’re on to something, and might well attain unto that goal I espouse, at a faster, and perhaps even a safer rate. In any case, I am employing both strategies, theirs and mine, and am rapidly closing in on our portfolio dividend retirement income goal. We’re at 94% now, and should attain unto our goal within the next 12 months!

Here’s to your successful investing!
Harold F Crowell

Looking for Good Stock Investments

Friday, May 11. I make no bones about it. I want safe-dividend growers. So, how do I find those?

I work with a software program that has incredible data within it. For one thing, nearly any fundamental criteria the program calculates is based on a bit of data it simply calls EPS. What they don’t openly tout to users, and really should make a great big deal of, is that the EPS number the program employs is bought from data provider Thomson Reuters and is the most valuable and useful data generated on Wall Street. It is the “Analysts’ Consensus of Forward-Looking Earnings Estimates.” It’s that bit of data Wall Street tends to hold close to is own vest, and does not readily share with others. They largely make their own investment decisions based upon it… and, it is certain that the large institutions, like the insurance and trust companies do. You can get it, if you’re willing to pay for it. T-R wanted $1,000 a month for this data.

Here’s how it is to be used to find the very best investments. First, you want to graph or chart the EPS data, and look at some 10 or more years of it, for the smoothest upwardly trending line, from the lower left, to upper right corner of the graph. Next, you want to graph a similar line for an average of all 500 companies in the S&P 500, then look for companies that have a smoother line than that of the 500, as well as one that rises at a faster rate. When you find EPS lines that are markedly smoother, and rise faster, you’re looking at a stock market winner!

So, I command the program to find stocks in the database with certain characteristics, and it gleans those from out of its database. I don’t name the program, because they insist I seek and secure their permission to identify them, and I told them I didn’t want their permission, so I won’t name them.

When I chart the stocks brought to me by the program, and graph years of EPS data, I see some real beauties. Let me list those for you, and then, I’ll conduct my second search criteria through the EPS beauties, to find those that safely grow their dividend at an incredible rate, again, well ahead of the average for all those companies within the 500.

Begin with this list of 28, and I’ll cut it down very soon. ROST, ACN, CTSH, AOS, JKHY, TXRH, UNH, EVR, RTN, TJX, TSN, DG, INTU, ICE, EL, MKTX, CRI, AFG, LRCX, STZ, OZRK, COST, DPZ, FDX, HII, G, LII, SYK.

Next, I’ll go through my search and list those having the best looking stair-step pattern of safe-dividend growth.

For the record, I currently own ROST, AOS, JKHY, UNH, AFG, LRCX and SYK from among the above listed issues.

Harold

So Blessed!

Saturday, May 5. Ever since I learned of the most incredibly savvy manner in which to invest; beginning with the idea of investing for retirement income, nothing has ever been the same! Yesterday was a case in point…

Email notification of our monthly brokerage statements came in, and just like this time every month, it’s like having Christmas all over again! The reason is so incredibly simple: Every month I get paid more and more money by those companies I’ve invested in for portfolio dividend income!

I put a good bit of our cash to work around the lo-risk market entry opportunity I identified one month ago. This creates an instant boost to our income, some of which gets realized right away.

So, how are things looking, and where do we now stand? Well, the math is as follows. Add up all the income that was derived from every source, and subtract that which had been received 3 months ago in January, as reported on those statements received early February. Then divide that difference by the January income amount; and, finally, multiply that product by 100, to generate the amount of the growth of your return over January’s. And the result is: April’s income was 26.90% greater than January’s! April’s income was larger than October’s, 6-months ago, by 78.07%. Last month’s portfolio dividend income had increased by 229.53%, or more than 3-fold over last July’s, 9 months back! And, finally, April’s income return over April of last year was a truly remarkable 343.52%!!!

That is more than a 4-fold growth of income! Now, understand, we’ve been putting cash to work at every lo-risk opportunity; and since, the 2016 presidential election, there has not been a good many of those. But, and this is the most important part, right here: If you get nothing else, you must grasp this… We established a retirement income goal, and that was to replace all our current take-home; 100% of it. And, as of this date, we now stand right at an incredible 94% of the way to that goal… 94 percent! Can you imagine how that makes us feel? I fully expect that we can achieve our goal before even one more year goes by… maybe even before this year goes out! Then, what am I going to do? You’ll see!

I’ve been so blessed, that I might be a blessing to others.

Here’s to your successful investing!
Harold F Crowell

How ‘Bout a Third Reason to be Bullish?

Tuesday, May 1. Go back the past couple of posts to see what “mom and pop” on Main Street, and the professional money managers on Wall Street think of this current market, and have done about it. Now, get a load of this tidbit of information…

“Bank of America Merrill Lynch conducts a monthly global survey of fund managers. In the most recent report, fund managers reported that they held 5.8% of their assets in cash. That’s the highest level since November 2001 – two months after the World Trade Center attacks…

That means through the financial crisis, recession, government shutdowns, Greece’s collapse, September 11, and all the other risky situations that have been in the headlines since 2001, fund managers held less cash than they do now.

Finally, let’s hear what Larry Fink has to say. Fink is the CEO of BlackRock, the world’s largest money manager, with $4.6 trillion in assets under management. It sees a lot of money flow around the world through its “Aladdin” transaction system that gives it an informational edge.

By Fink’s estimate, $50 trillion in cash is sitting on the sidelines. That’s an unfathomable number. It’s fifty-thousand-billion dollars. For comparison, the entire U.S. stock market is $25 trillion (as of 2015).

That’s an unprecedented potential wave of cash. Even a small amount moving into the market would send stocks soaring.”

I think we have ample reason to believe that this market is not done yet. It is sorting some things out and trying to figure out which end is up. When there’s this much caution already in existence; the odds that the top has been put in, and that we are entering another bear market strikes me as being pretty slim. I’m just sayin’…

Harold

Reason to be Optimistic

Monday, April 30. Yesterday, I posted a point that spoke strongly to me that this market is not about to become a bear. Today, I have another.

The first one was about Main Street… This one is about Wall Street. Get this:

“When investment managers get bearish together, it’s usually a good sign for stocks. And last month, one measure showed that investment managers are at their most bearish since 2016.

We can see it thanks to the National Association of Active Investment Managers (NAAIM). Specifically, the NAAIM Exposure Index…

This is a weekly survey of hedge-fund and mutual-fund managers. The survey asks what percentage of managers’ portfolios are in stocks. A zero means they don’t own stocks at all. A 100 means they’re fully invested. A score higher than 100 means they’re fully invested and then some – they’re buying with leverage.

This survey showed that investment managers were record bullish in December. But things have changed. The NAAIM Exposure Index fell to less than 50 last month… the lowest level we’ve seen since early 2016. Take a look…

We’ve seen a major decline in sentiment from investment managers in recent months… They moved from fully invested to just 50% in stocks in March.

The Exposure Index is up to nearly 80 since that low. But March’s low reading showed investment pros were the most pessimistic we’ve seen since February 2016.

It’s no surprise that markets have spooked the investment pros. Volatility is back. And we saw our first correction in years in February. Stocks have been bouncing around since then.

It’s tough out there. But March’s fall in optimism makes me excited. It tells me we haven’t seen the top in stocks yet.

We’ll know it’s a top when the investment pros are excited to see the market fall. You should be scared when they unanimously view a decline as a good thing… as a buying opportunity.

That hasn’t been the case this year. Stocks fell, and volatility rose… and the investment pros pulled out of the market. That’s a clear sign that stocks haven’t topped yet.

Importantly, the long-term trend is still up. Until that changes, the smart bet is to take the recent fall – and the fear from investment pros – as a buying opportunity.”

I’m of this opinion for now, myself. I believe we may get some more scare, but I’ll likely use it for further buying!

Harold