Conservative. Smart. Investing.
Economic Phase: 5-3 in favor of continued Expansion. Specifically indicating Phase 2 (late Expansion). No change from last month end.
Retirement ETF Portfolio: BUY signal for XLU (SPDR Utilities). No SELL signals
Article from this week’s Barrons magazine that validates the proposal that you buy and hold a core set of dividend-producing stocks for the long term. This concept is what underlies the Miley Income Fund.
Some of you may have noticed the significant declines in VIPS and BABA. As I told you a few weeks ago, I was surprised by the outsize gains in VIPS and advised you to take some profits if you have them in this stock. And in this past week, that proved to be prescient as VIPS (and BABA) have declined because of a large hedge fund being forced to liquidate their holdings due a large margin call. I am still positive on both stocks, and would advise holding them if you have them. On BABA, be advised that the Chinese government has had some run-ins with the founder Jack Ma, but I doubt that the government will push much further, since BABA is a key source of both pride and revenue for the country. As for the rest of the stocks, stay the course, and I believe you will be rewarded over the long term. And also note that the fund is diversified into 20 stocks giving a 5% weighting to each stock, thus lessening the impact of any one stock crushing the performance of the entire fund.
Did you see Biden saying, “no one making under $400,000 will see their taxes go up”? A reporter then asked his press secretary if he meant individuals or households. She said “households”. Well, second grade arithmetic says that it is now $200,000 for singles! Just wait until they go down that slippery slope and say no, we meant $200,000 for households ($100,000 for singles) and so on. Better save at least some of the “COVID Relief” check you got (or didn’t get) to pay for higher taxes. The government giveth and the government taketh away!
The latest post by George Dagnino posits that we are well into a Phase 2 expansion phase in the economy. He warns that at some point expansion will begin to slow down causing a natural beginning to Phase 3, or the contraction of the economy, this time due to being so overheated.
The 1.9 Trillion Dollar “COVID Relief” Bill has passed. If only “COVID relief” was actually true about this abomination. Here are some highlights (or “lowlights” depending on your point of view):
So, how should this affect the affect the “Miley Growth Fund” and the “Miley Income Fund”?
As for the “Growth Fund”, be prepared for more volatility and the fund may turn negative for a period. But the fund is intended for medium to long term investors, so I believe that the fund will still outperform the S&P for 5-10 years. And if you have been lucky enough to buy VIP Shop Holdings (VIPS), I would recommend that you take some profits, since the stock has exceeded my expectations by growing at over 50% in the short period since I picked it.
On the “Income Fund”, it has outperformed the “Growth Fund”, mainly because of the presence of several financial stocks like Jefferies Financial Group (JEF). Financials have been going up lately because of the rise in interest rates. As for the poor performers like Pfizer and Merck, I am disappointed, but the stocks pay a healthy dividend, so sit back and collect your dividends and don’t worry.
As for asset allocation today, the traditional 60-40 mix of stocks-bonds is in trouble since interest rates are on the rise. If you are using aggregate bond fund like AGG, I would recommend investigating some actively managed bond funds or perhaps a real estate investment trust like Reality Income Corp (O). Another alternative would be to lighten your bond index fund allocation to 30% and move the remaining 10% into Treasury Inflation Protected Securities (TIPS) and/or into mortgage-backed securities with a fund like GNMA. Moves like this should smooth out your returns. And if you have a 401k, I recommend that you utilize a Stable Value Fund for the 10% allocation – these funds are backed by insurance companies and pay a much higher return than money market funds.
So there you have my current commentary, please feel free to comment or write to me directly.
Dan