Investors have been bemoaning the extended rally by growth and momentum stocks for years considering value has been meaningfully underperforming (value stocks are still up a lot, just not as much as growth). However, there’s been a significant market style rotation going on in recent weeks whereby the fastest “revenue growers” have sold-off hard. Pundits have also recently been obsessed with the idea of a coming recession, and view the rotation as the beginning of the end (or as chicken little would say, “the sky is falling.”) This week’s Weekly reviews the rotation, identifies attractively priced opportunities, and shares some common sense wisdom on the current market environment.
This week’s Weekly doubles as our monthly performance update. We first compare the dueling narratives on interest rates from the Federal Reserve versus the President, and then consider whether your investments were impacted by your decision to believe one story or the other. Next we review the recent performance of our three investment strategies (including every single position). All three strategies continue to deliver market-beating performance and deliver high income for investors. We also share several attractive investment ideas.
This particular Closed-End Fund (CEF) offers a big 8.3% yield, and it is currently trading at an attractively large discount to its net asset value (NAV). This article explains why this particular CEF presents a very attractive buying opportunity, and we also review the risk factors that investors should be aware of. If you like high-income and less downside risk, this one is worth considering.
REITs had been an extremely popular asset class up until the first half of 2016 when they took a turn towards significant underperformance. And as blind-value-chasers beat the REIT cheerleading drum, there are reasons to believe they could continue to underperform for decades. For example, REITs are no longer the attractive “bond proxy” as interest rates are now increasing, and these heavily-debt-reliant businesses could face tremendous headwinds if rates were to eventually rise back to over 15% as they were in the early 1980s.