June already?! We will soon be hitting the half-way mark for the year and the overall market cant make up its mind. All eyes will continue to be on the US Fed this month whether the threats to raise interest rates carry any weight. Most economists and investors seem to think that the Fed will not raise rates, but at the same time – they seem to add a caveat saying that a 0.25% move does not change much.
As we’ve noted, the time to raise was years ago and the Fed missed the boat and raising the rates now will only jump-start the next recession. To which I say, bring it on. I have been building cash position in my portfolio and cleaning out some of my weaker names that I have no confidence in (see my recent sells here). A market downturn should be welcomed by most long term investors as it provides us with a great investment opportunity.
On the home front (Canada), things are continuing to mozy on. The oil crash and the wildfire in Alberta has left the overall market in shambles, while people continue borrowing beyond their means and buying houses they cannot afford. We continue to wait for a housing crash hoping to possibly move on an investment property.
Outlook for June 2016
As things stand, there are a lot of headwinds facing the economy. Potential recession/depression troubles still exist. The bond market, commodities market, transportation market, manufacturing market indices are all sending very strong signals that all is not well in the world. Some sectors are seeing an “earnings recession”. It is for this reason that gold and silver, typical safe havens, has done well in the last couple of months. Generally speaking, things haven’t changed much since my Outlook for 2016 (from January) post. Be sure to check it out for further investment ideas.
One sector where I’ve finally started making a move on after staying on the sidelines are the precious metals. I recently shared our plan for a Multipronged Approach to Investing, where I disclosed that I will not be limiting myself to the DGI (Dividend Growth Investing) model. This expands my horizons a bit looking for undervalued or momentum plays for companies that typical get dropped by DGI screeners. Earlier this week, I also disclosed the first move in this space in the beaten down sector…a streaming company – Silver Wheaton Corp (SLW.TO). We will continue to look at this sector closely and more purchases can be expected.
I am currently reading and learning a lot about the mining industry. Its a space that I do not understand well, and I hope to build my knowledge up from scratch. The commodities are hated right now, and have been for a while, but the moves in Q1 2016 have been promising. Perhaps this is the start of a new bull market? Or is it a dead cat bounce? No one really knows…but I think its a good time to start loading up some shares in the sector as its one area I find presents good opportunities.
As it stands, our current portfolio diversification is as shown below:
June is expected to be a slow month when it comes to dividend increase announcements. I am expecting only one company to announce an increase our portfolio.
- Realty Income Corp (O) – last increase was 0.25% in Mar 2016
What are your thoughts on the stocks mentioned here? Do you own them or are they on your watchlist? What do you think of the current market levels and buying here? Make sure to leave a comment below as I value reading your questions and comments.