| The markets continue to be tumultuous and
| |
| | selling them now. It's quite easy to
|
| we're seeing the markets re-test the lows
| |
| | build the case for buying them.
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| that were reached in August. Since
| |
| | Another group of securities that haven't
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| October 29th, the S&P 500 is down 8.5%,
| |
| | been fairing well lately is the
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| the Russell 2000 is down 10.7% and the
| |
| | closed-end bond funds. Typically, bond
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| emerging markets are down over 15%. Even
| |
| | funds do well when the stock market is
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| energy stocks are getting hit hard.
| |
| | falling and interest rates are going
|
| Should you be selling stocks, gritting
| |
| | down. Credit-related panic selling,
|
| your teeth and hanging on or be stepping
| |
| | though, has driven the price some quality
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| up to the plate and buying?
| |
| | shares down 8-10%. Will the credit crunch
|
| To answer that question, you can't just
| |
| | adversely affect these holdings?
|
| look at the headlines or your account
| |
| | I don't think it will. There are
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| value and decide whether or not action
| |
| | closed-end funds with attractive
|
| should be taken. The market headlines are
| |
| | portfolios of bonds that can be purchased
|
| based on averages. Movements of the
| |
| | for less than the underlying costs of the
|
| bigger companies in the averages can
| |
| | bonds themselves. For instance, a
|
| easily skew the performance. The
| |
| | sovereign government fund isn't going to
|
| financials have been getting hammered
| |
| | be adversely affected by the sub-prime
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| lately and financials make up a large
| |
| | mortgage situation, yet these shares have
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| part of the S&P 500.
| |
| | been sold-off just like everything else.
|
| Of course, that doesn't mean that other
| |
| | But they continue to pay their dividends
|
| stocks are immune. Investors (and
| |
| | and have yields over 6%.
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| traders) can panic when they see the
| |
| | With the 10-year U.S. Treasury now
|
| decline of the averages and they sell
| |
| | yielding less than 4%, these are very
|
| everything. And sell they have.
| |
| | attractive yields. As market fears
|
| The decision to buy, sell or hold
| |
| | subside, investors looking for a higher
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| shouldn't be based on the overall market.
| |
| | level of income will once again recognize
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| It shouldn't be based on fear or greed. I
| |
| | these securities and move money back into
|
| believe we need to look at individual
| |
| | them. That should bring a recovery in
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| holdings to determine which action we
| |
| | their share prices. In the meantime, we
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| should take.
| |
| | continue to earn over double the 10-year
|
| I don't know of anyone who has stopped
| |
| | Treasury note.
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| using their telephone or internet based
| |
| | In short, if we just look at the headline
|
| on the recent decline in the market.
| |
| | numbers of the major stock market
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| You'll continue to use it and you'll
| |
| | averages, it's easy to come to the
|
| continue to pay your phone bill month
| |
| | conclusion that we should get fearful,
|
| after month. That's money the telephone
| |
| | sell off stocks and move a large part of
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| companies can use to grow their
| |
| | the portfolio to cash. When you dig below
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| businesses and to pay dividends. Rural
| |
| | the headlines and do some research you
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| telephone companies also receive
| |
| | see that there are high-quality,
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| subsidies from the U.S. Government. This
| |
| | defensive companies that make sense to
|
| represents a very stable cash flow.
| |
| | continue to hold and to buy more.
|
| To say that differently, a rural
| |
| | I've just highlighted a few examples. The
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| telephone company's ability to pay their
| |
| | market downturn, in my opinion, has also
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| dividend usually isn't affected by the
| |
| | created some attractive opportunities in
|
| economic cycle. That's one reason I
| |
| | growth-oriented companies. In particular,
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| regularly use them in my clients'
| |
| | I like companies that are part of
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| portfolios.
| |
| | longer-term global trends. For instance,
|
| That hasn't prevented a sell-off of these
| |
| | global growth and the need for
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| rural telephone carriers of late. Those
| |
| | alternative energy have spurred
|
| buying these stable companies now are
| |
| | tremendous demand in several industries.
|
| handsomely rewarded by higher dividend
| |
| | Those stocks are now very attractive.
|
| yield (many now in the 6-10% range).
| |
| | The key is to not run with the herd. When
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| The underlying businesses of these
| |
| | everyone is rushing for the exits, those
|
| companies haven't changed. Their ability
| |
| | brave enough to stay behind can pick up
|
| to pay and increase their dividends
| |
| | some real bargains. I believe that now is
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| hasn't changed. So it's hard to justify
| |
| | one of those times.
|
