VIDEO: The Gulf Between Winners and Losers Deepens
The broad market these days can be defined as a fluid situation.
While money is pouring out of some sectors and into others, there are dynamics at play creating a deep gulf between investment winners and losers.
In fact, Mike Larson, editor of Safe Money Report, says in this environment, you should expect this gulf to “be very wide for some time.”
He says that’s largely due to the Federal Reserve playing catch-up, as it tries to tame 9.1% inflation, a 41-year high:
We’re in an environment where — from both a political and financial perspective — the Fed is being forced to bring the hammer down on inflation.
They kept the policy too easy for too long and as we came out of the worst of the COVID pandemic — from an economic standpoint, anyway — we didn’t need all this stimulus still in the market.
Now, the Fed is having to rapidly respond when they could’ve been more gradual with its actions. They could’ve thrown a 25-basis point hike out there a while back, then waited a few months to see what would happen.
We’ve already seen one 75-basis-point hike, which the Fed hadn’t done since the mid-1990’s, and it looks like there’s another one on tap.
There’s even some chatter about a 100-basis-point hike at some point, which really hasn’t happened in the modern Fed policy-making era.
The central bank’s Board of Governors will meet this week, July 26 to 27, and we’ll likely get a clearer picture of how the Fed might proceed through the rest of this year.
In the meantime, investors can take decisive steps to benefit from market forces.
Mike, an income and dividends expert, continues to focus on companies with sound fundamentals in recession-resilient sectors.
Members of Safe Money Report are sitting on open gains of nearly 26% and 14%, with positions spinning off annual yields of 5.76% and 4.85%.
Resiliency is a crucial quality since Mike sees a recession hitting by “the tail end of this year, or early next year.”
It’s important to note that while rate hikes have had a sweeping negative effect on traditional assets like stocks and bonds, there’s one asset class that just hit its highest in 20 years because of hikes: the U.S. dollar.
In fact, because of its rising value, the U.S. dollar just reached parity with the euro. For perspective, at its high back in 2008, each euro bought $1.60.
In today’s special four-minute video segment, Mike explains how the U.S. dollar currently compares to other major world currencies, and how to prosper from its performance.
He says although many defensive Safe Money stocks may not be trendy, they’re the ones generating profits right now:
They may not be the most exciting or talked about — everyone wants to talk about EVs and things like that — but they’re the kinds of companies that are making you money as an investor and are going to attract money in this rising dollar, weakened economy environment.
At the end of the day, as an investor, you want to have a green number in your account statement rather than a red one.
You also have to keep in mind that when there is a rising dollar, it tends to hurt commodities, it tends to hurt precious metals, miners and other assets, so as the dollar has gone up, some of those sectors have started to pull back and take on some water, as well.
In this insightful video, Mike discusses:
- A long-standing winner in a recession-resilient sector.
- Two exchange-traded funds in promising areas of the market.
- A strong investment strategy amid uncertainty.
- When he thinks a recession will hit, and key criteria that he’s watching.
And much more.
The information in this short segment couldn’t be timelier. Just go to the video box above to watch it now.
Financial News Anchor
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