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Mr. James Dines: 11 Investment Candidates

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Publisher’s Note: With markets around all-time highs and valuations through the roof, we’re all going into 2020 wondering where to find opportunities. Today we’re bringing you Mr. James Dines’ breakdown of some possibilities from the latest issue of The Dines Letter.

Call it like you see it,

Nick Hodge

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“This bruising year for stocks is ending in an almost
unheard-of calm.”  — Bloomberg, November 16, 2019

Bloomberg’s “calm” ended with an explosion of buying. Investors attempting to profit by following Big Money’s moves need a plan. Below are 11 areas investors could consider:

1. Interest Income: Prospects are currently unfavorable. Deposit cash in a bank? With interest rates at historically low levels, banks pay too little. Government bonds’ yields are at the lowest in 2,000 years, as we have reported, based on Sydney Homer’s A History of Interest Rates: 2000 BC Until the Present. The book is available on Amazon (also useful as a substitute for a sleeping pill).

Bonds do at least deliver some current income, but there is a risk of loss when bonds are hit by the next cyclical decline. Corporate bonds are already historically high, in short-term uptrends, but they do poorly in recessions when the profits of their issuing corporations come into question. Buying an interest “stream” has those possibilities.

The big institutions that pay retirement benefits for pensioners, for example, are not receiving sufficient income from interest these days, and have little choice but to seek revenues elsewhere or to be at risk of not satisfying those payments. Such profitless safe choices induce normally cautious investors to risk speculating. Into what? Risky stocks, or so-called “high-income” bonds (junk bonds), that are at risk of defaulting? Payment-safe U.S. Treasury bonds pay 1-2%, yes, but are they vulnerable to a bear market for bonds when yields normalize higher?

2. Blue-chip stocks: During this eleven-year bull market, too many stocks are no longer cheap. And with an openly admitted economic “downturn” spreading worldwide, there is the growing risk of at least a recessionary bear market. A broad decline in stocks would catch many investors off guard these days. Leading averages have been buoyed by buying of blue-chips. Institutions keep buying stocks such as Apple (APPL) and Microsoft (MSFT) because they’ve been going up, but what happens when the music stops?

3. Base Commodities: Little current investor interest in commodities suggests an unexpected recession is nearing. Metals languish before recessions because ‘why hold copper metal,’ for example, ‘that does not produce any income?’

What is needed are mines with rising profitability. Yes, silver mines at the moment, then gold and others, and that will evolve. The probable continuing lack of interest suggests only selected investing opportunities here, hoping to buy others at lower prices later.

4. Energy: Along with a general worldwide glut, from fuels to solar, markets appear to be expecting price cuts and dividend reductions. Too many downtrends in these charts to attract us yet.

However, uranium will bounce back, if only for its use in national security. As a long-term geopolitical asset, governments will buy uranium mines for safety, and even defensively to neutralize other nations’ monopolies. Also atomic power reduces pollution. Shunning atomic power will someday be looked back on as a great American blunder. Indeed, Russia and China have been storming into atomic power plants while America dozes. Nothing new.

5. Real Estate: There are some opportunities, depending on locations. But it is notoriously cyclical, so real estate could again plunge as it did in the 2008 smash; which was only around a dozen years ago. A possible cause? Rising interest rates, or higher taxes, might be the inhibitors.

Eternity is the time period to the end of the universe, or the time it takes to pay off your house, whichever comes last.

6. Growth stocks: We recommended ZScaler and Atlassian, both respected growth companies, but after we luckily got stopped out of our “Probing Attacks,” they just fell out of the sky — along with increasing numbers of other growth stocks. Not a good sign. Has Big Money been selling because they see a bear market? Nvidia (NVDA) might be a good investment, but at a whopping $240 per share we’d rather wait for a cheaper price before recommending it.

7. Diamonds: A favorite refuge of the rich, but menaced by artificial diamonds. Also they are not readily liquid if you need to sell during hard times. Besides, the industry boast that “diamonds are forever” could now be claimed by gold.

8. Fine art: Notoriously illiquid in bear markets, now selling for such historically high prices that we suspect it’s Heaven’s way of notifying some collectors that they have too much money.

9. Utilities: Currently they’re at historic heights, albeit still in uptrends, due to desperation of institutions to get yield — of any amount, and at any price. Their relatively secure dividends tend to fluctuate with bonds. But at these high stock prices, are they rising toward a top? And would their current low dividend income match the risk of capital loss in a utility stock price plunge? Small potential gains are not worth the risk.

10. Historic havens: In fact, during last year’s market drops, gold and silver mining stocks often rose, evidence of haven buying! There is no income from gold bars or coins, so hold a few for personal safety, but gold and silver-mining shares are the prime havens! Perhaps a little diversification into platinum and palladium miners. Aforementioned Sibanye is the world’s largest platinum miner, and second-largest in palladium, but it is no longer at rock bottom so should be bought on dips.

As mentioned, gold and silver are great safe havens, and many of their stocks even pay dividends, which should rise along with bullion prices. Demand for both will rise due to currency fears as governments are undeterred from printing money irresponsibly, eventually triggering a flight to haven’s safety and increasing value. A hyperinflation would create even more demand for the havens.

11. Pot: Cannabis will still be in demand as a cheap form of entertainment, medicine, and additives. But this brand-new industry is too new for its companies to pay dividends, and remains hampered by legality and tax-obsessed governments worldwide. Nonetheless, at today’s low pot stock prices, and certainty of growing demand, surviving pot stocks will attract long-term money.


James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including “Goldbug!,” in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines’ highly successful investment strategies have been praised by Barron’s, Financial Times, Forbes, Moneyline, and The New York Times, among others.

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Better Buy: AGNC Investment or Annaly Capital?

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Welcome news regarding elevated inflation is prompting signals that there may be a slowdown in the Federal Reserve’s pace on interest rate hikes. With longer-term interest rates beginning to fall, mortgage real estate investment trusts (REITs) are once again getting attention from the investment community. Mortgage REITs struggled over the past year as rising rates caused the value of their investment portfolios to decline, which translated into big declines in book value per share.

Surprisingly, these REITs still managed to maintain their dividends, and the yields have become quite attractive (provided they can be maintained). The biggest names in the mortgage REIT space are Annaly Capital (NLY -0.41%) and AGNC Investment (AGNC -0.60%).

Given all the news recently, which one is the better buy right now?

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Image source: Getty Images.

Mortgage REITs are a different animal than the typical REIT

REITs traditionally focus on developing real estate properties such as apartment buildings, office buildings, or shopping malls. They then rent out the units to tenants. Their earnings generally come from the spread between the rents they collect and the interest they pay on the debt that financed the buildings.

Mortgage REITs don’t buy properties; they buy real estate debt (i.e. mortgages). They typically use borrowed money to build their portfolios, and their earnings are the difference between the interest they earn on the mortgage-backed securities and the interest they pay on their debt. In many ways, mortgage REITs’ operations are closer to a banking model than the landlord/tenant model that characterizes the typical REIT.

AGNC invests in mortgages guaranteed by the U.S. government

AGNC Investment invests primarily in mortgage-backed securities which are guaranteed by the U.S. government. For the most part, this means AGNC invests in mortgages guaranteed by Fannie Mae and Freddie Mac. Since the principal and interest payments are backed by the U.S. government, AGNC Investment takes very little credit risk, and the interest it earns on these securities tends to be lower. That lower risk also means lower returns. AGNC then uses a lot of borrowed money (think of it like margin on your stock account) to generate a double-digit dividend yield.

Annaly has a more diversified portfolio of assets

Annaly invests in agency mortgage-backed securities, but it also buys loans that are not guaranteed by the government. These loans pay higher rates of return, but they also tend to have a higher potential for downside. Annaly is a big investor in loans that are ineligible for a government guarantee. These loans are often referred to as non-QM and are often made to professional real estate investors and the self-employed borrower.

These non-QM loans are nothing like the bad old subprime loans of yesteryear. They require sizable down payments and proof that the investor will be able to pay the loans with rental income. So the risk is somewhat mitigated.

Ultimately, the decision on Annaly versus AGNC depends on the economic forecast. AGNC Investment will probably outperform Annaly if we head into a recession, since it won’t have to worry about credit losses from the resulting rise in loan defaults. AGNC will also be better protected if housing prices begin to fall. That said, Annaly has a much more diversified portfolio of assets, which helps it outperform in most interest rate environments.

However, Annaly will be more exposed to potential credit losses if the economy enters a recession. If housing prices fall, it will negatively affect the value of its non-QM loans if delinquencies begin to increase. Annaly also holds a large mortgage servicing portfolio, which is a stable source of additional income and acts as a hedge if interest rates rise.

Watch the book value per share

At current levels, AGNC Investment is trading right around book value per share of $10.04 and has a dividend yield of 14.4%. A bet on Annaly is a bet on a drop in interest rate volatility, which will probably happen once the Fed ends its tightening cycle.

Annaly is trading at a premium to its book value per share of $19.94; however, it has a better dividend yield of 16.6%. As a general rule, mortgage REITs trade right around book, so it usually pays to buy them at a discount to book, not a premium.

Despite Annaly’s higher yield, I like AGNC better, as home prices are beginning to decline, which will weigh on Annaly’s credit-sensitive book. I also don’t like buying mortgage REITs above book value. All this means I think AGNC Investment is the better buy at the moment.

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Core Asset Wealth Management Launches Socially Responsible Investment Strategies

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Core Asset Wealth Management is a financial management company. Recently, the company has incorporated SRI and Gene Therapies into its services.

Seoul, South Korea–(Newsfile Corp. – December 3, 2022) – Core Asset Wealth Management approaches socially responsible investing (SRI) in the latest development and seeks to maximize investment returns while avoiding companies that harm the environment or society.

As socially responsible investing has evolved into Environmental, Social, and Governance support, Core Asset Wealth Management is facilitating its clients with sustainable investment strategies. As the name implies, it is an investment process that considers environmental, social, ethical, and governance issues before allocating funds. All investors want to see their portfolios grow, but not at the expense of ethical practices, society, or the environment. Popular sustainable industries have recently included solar, wind, waste management, and water filtration.

Core Asset Wealth Management investment planning is not just about finding ethical and socially responsible companies to invest in but also about taking an activist role by using their voting rights to affect change.

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The company is focusing on Gene Therapy. It delivers an innovative yet controversial area enticing to invest in due to the possibility of curing previously incurable diseases. However, many ethical issues arise from the processes used, such as animal testing and the resulting changes that can occur in our DNA.

Core Asset Wealth Management uses many different socially responsible investment vehicles that can be used with Wealth Management. Stocks and bonds are always readily available, but applying the various SRI filters can be overwhelming and time-consuming. Socially responsible mutual funds and exchange-traded funds are more accessible ways to participate in SRI investment. For accredited investors, more customized SRI investments are available such as hedge funds, venture capital, and private equity funds.

Furthermore, Core Asset Wealth Management focuses on Ethical investing and shunning companies that test their products on animals, provide harmful effects, or regularly engage in fraudulent or deceptive practices.

By avoiding investments in these companies, Core Asset Wealth Management sends a message that they disagree with their unethical operations and support businesses that improve their lives and community. Ethical Investments provide the opportunity to apply their moral beliefs to the company’s Retirement Planning and other accounts. Core Asset Wealth Management Ethical Investments meet environmental, social, and ethical criteria to be included in various socially responsible investment (SRI) vehicles. These investments are divided into multiple categories based on their grade of green qualifications to help potential investors evaluate their options.

With new developments, Core Asset Wealth Management has come up with the following additional services:

Green Investments – Light

Light green investments are the lowest part of the ethical investment scale. This responsible investing filter avoids gambling, military, defense, nuclear energy, “sin” related companies, and weapons manufacturers.

Green Investments – Medium

Medium green investments are in the middle and apply a more rigorous filter that avoids oil and gas companies and alcohol and tobacco.

Green Investments – Dark

Dark green investments apply the strictest filters for investment ethics. They screen out companies that are active polluters, ignore social issues and focus on renewable energies like solar, recycling companies, and water purification investments.

About the Company – Core Asset Wealth Management

Core-Asset Wealth Management provides financial analysis and consulting to a broad range of retail clients and businesses. It also facilitates its client with Account Management, Market and Media Analysis.

Potential clients should visit the official https://acg-wealth.com/ for further updates.

MEDIA DETAILS:
COMPANY NAME: Core Asset Wealth Management
Client Name: Timothy Houston
Contact number: +822 3782 6980
E-mail: info@acg-wealth.com
Website: https://acg-wealth.com/

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/146692

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Turkey’s CHP Vows $100 Billion of Direct Investment If Elected – BNN Bloomberg

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(Bloomberg) — Kemal Kilicdaroglu , the leader of Turkey’s main opposition party, promised to bring $100 billion of direct investment if elected to power in the elections scheduled for June next year.

“There will be at least $100 billion of direct investment in the first three years of our government,” Kilicdaroglu said in Istanbul on Saturday, speaking at an event at which the CHP unveiled some of its economic, political and social policies.

He also said his government would secure an additional $75 billion investment in the first three years, from pension funds and wealth funds abroad, among other resources.

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The event dubbed “The CHP’s Second Century Vision” included speeches from Kilicdaroglu’s top economic aides and prominent economists, including Massachusetts Institute of Technology professor Daron Acemoglu. 

Faik Oztrak, CHP spokesman and deputy chairman responsible for economic policies, said the party would appoint a central bank governor who is “respected by the whole world.” The governor’s aim would be to permanently bring down inflation to single digits, he said. 

Incumbent central bank governor Sahap Kavcioglu is frequently criticized by the opposition over his failure to rein in inflation. Annual consumer prices in October accelerated to over 85%, the highest in almost a quarter century. 

Under pressure from President Recep Tayyip Erdogan, who is fixated on economic growth ahead of elections, the bank has cut its interest rate for four straight meetings, lowering it to 9% last month.

Read more: Turkey Slashes Interest Rate in Line With Erdogan’s Demand

Erdogan is a self-proclaimed enemy of high borrowing costs and he has fired three predecessors of Kavcioglu for clashing with him on monetary policy. Acemoglu said inflation would be lowered only through “normalization” in monetary policy and by fixing policies on interest rates.

“Turkey’s company and bank balance sheets also need to improve. If companies and banks have negative balance sheets they can’t make new investments. And Turkey needs significant new investments,” he said. “This will again be fixed with the right monetary policy, right financial policy and resources.”

©2022 Bloomberg L.P.

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