Today I posted Step #8 in my Special Report: 8 Steps to Protect Your Portfolio from the Global Debt Bomb. I recommended selling Deere (DE), Caterpillar (CAT), and BHP Group (BHP) out of portfolios ahead of rising yields i the bond market. (In the case of Deere, I said I would keep my position in my long-term portfolio but sell the position in my 12-18 month portfolio.) Here’s what I posted in my Special Report
I’ve hi-lighted the key characteristics of the coming global debt bomb explosion that investors MUST include in any plan to protect a portfolio from the explosion of this bomb.
In order to meet my 5 p.m. “in your inbox” deadline today, I’m going to give you the name of my 12 picks and the logic for dividing them into three groups that correspond, roughly, to when you should thinking about adding these stocks to your portfolio.
But I’m going to save the specific reasons for each one of these 12 stocks to tomorrow. I’ll add them to the standing Recession Special Report and create a separate “reasons” post then. I’d divide my 12 Recession Stock Picks into 3 groups.
Yesterday I owned the wrong stocks. Ford Motor (F) fell another 0.51%. Lithium producer Albemarle (ALB) dropped 1.39%. Deere (DE) gave up 1.38%. Today I owned the right stocks. Ford was up 3.55%. Albemarle gained 6.02%. Deere picked up 1.59%.
To get to my 10 picks for my Special Report: A New Core Portfolio for a New Market, let me start with the second half of that title, the new market part. Why do I think we’re headed into a new market–and what kind of stock is this new market likely to reward with gains? And then onto my 10 picks for a New Core Portfolio.
Expect a scramble this week as Wall Street tries to identify the winners from the $1.2 trillion ($550 billion in new money) infrastructure bill passed by the House of Representatives (finally) late on Friday night. President Joe Biden will sign the bill, which passed the Senate in August, early in the coming week. Frankly, the bill has been so long in the baking that I had forgotten what was in it. So I looked it up. (And I’ve suggested some potential stock market winners from this new spending.)
I found myself humming “I scare myself” this morning as the market continued its September selling. The Dan Hicks and the Hot Licks song pretty much sums up the market action this morning. We all know that stocks go down in September so we’re sending stocks downward. And we all know that September 17 is the Big Bad Day in the month so it’s unreasonable to expect a turn in sentiment before that date. But so far, I’d note, the selling seems “orderly” with the usual candidates bucking the trend and showing up in the green. It’s when those still in the green stocks start tumbling that I’ll really start to worry.
This COMPLETE version consolidates all the 3 parts, 3 buckets and seven picks posted serially for this Special Report
The $1.2 trillion infrastructure bill that the Senate passed today–roughly half of that represents new spending–still faces a tough go in the House of Representatives where progressive Democrats have criticized the measure as light on dollars to fight global climate change. That spending has been pushed into a second infrastructure bill, which would also include money for expanding Medicare and improving access to childcare among other “social” infrastructure spending, which the Senate actually took up today. Most political pundits think that efforts to pass a “social” infrastructure bill using reconciliation will be enough to secure all the votes needed to pass the traditional infrastructure bill in the House. The bill passed today would include more than $110 billion to replace and repair roads, bridges and highways, and $66 billion to boost passenger and freight rail. The plan includes an additional $55 billion to address problems in the U.S. water supply such as continued use of lead pipes despite conclusive evidence that lead in water pipes leads to cognitive impairment in children. It allocates $65 billion to modernize the country’s power grid and $7.5 billion to build out a national network of electric-vehicle charging stations. The bill earmarks $47 billion to respond to wildfires, droughts, coastal erosion, heat waves and other climate crises.
Long-term bucket pick #5: Deere (DE). Any stock that goes into a long-term bucket for a relatively conservative portfolio like this one, faces a tough test. You want the company to be tapped into some explosive long-term trend that will drive growth–but since this is a conservative portfolio you don’t want that trend to be totally or even mostly speculative.
Yesterday I started giving you specific picks so you can start to fill these buckets. I started with the short-term bucket, the most challenging of the three since it requires you to confront the current paucity of assets throwing off yields of even 2% head on. The goals for this bucket were maximum achievable safety since you don’t have much time in this bucket to recoup any temporary losses, a yield that’s as high as possible–anything over 3% these days is gravy. Remember that the higher the yield you can produce from this bucket, the less risk you’ll need to take in your portfolio, and predictable payments in actual cash (or cash equivalents). Remember that you want to be able to spend the returns from this bucket. Today I’m going to give you picks for filling out the third, the long-term, bucket.
