Juggling Dynamite

Since May highs, North American stock indices have weakened modestly, with the Dow down over 3%, the S&P down 2.6% and the Canadian TSX 4.4%. In reality however, broad indices mask the impact on individual sectors. As shown below, the percentage of stocks in the S&P 500 closing above their 200 day moving average is falling, and suggests more weakness may lie ahead.

Since January, interest sensitive sectors have fared much worse with Dow Utilities -14.8%, Dow Transports -10.5%, Telecom index -10.6% and REITs -13.7% so far.  See:  Trendless market showing weak spots.

Unfortunately it is dividend paying sectors–the one’s most widely held by retirees and others looking for “conservative” income investments–that are some of the most outrageously overvalued in today’s low interest rate environment. They are also the assets into which brokers, mutual funds and long always advisers have herded clients the most.

This is why the next bear market, will be so brutally hard on individuals following conventional investment advice.

As a reminder, the below chart is what dividend stock out-performance looked like (in blue) versus the broad market (in red) during the 2007-09 bear market:  the S&P lost 45%, and dividend stocks ‘only’ 36%.  ‘Solid investments’ for whom?

Imagine, indigenous plants are more nutritious and efficient to grow than non-native crops.  Who would of thunk…See this excellent article:  The rise of Africa’s super vegetables

“Indigenous vegetables have a host of desirable traits: many of them are richer in protein, vitamins, iron and other nutrients than popular non-native crops such as kale, and they are better able to endure droughts and pests. This makes the traditional varieties a potent weapon against dietary deficiencies.”  And not just for poor people.  For everyone.

Reminds me of this segment my ND friend, Dr. Steve Rallis did recently on Dandelions.  How dumb is it that we in North America, poison our yards trying to kill this naturally occurring, free, miracle food.  If we get to live long enough, we may actually grow wise.

See:  Dandelions, nasty weed or powerful medicine.

Nomura Senior Independent Client Advisor Bob Janjuah discusses the U.S. economy and interest rates. Here is a direct video link.