As the market begins to roll over, it becomes increasingly important to protect your portfolio. Of course, we advocate holding precious metals, like gold, that will hold their value in both inflationary and deflationary times – but some well positioned stocks should remain cornerstones of your portfolio as well. This type of company should boast a fundamentally stable business and a dividend stream to cushion investors in tough times, but also an element of growth that rewards investors in better times.

In the current market, some utility companies fit the bill. Withthe Obama Administration and the Federal Reserve pulling out all the stops to keep interest rates low, and many utility yields look attractive at current levels. Add in that a market pullback will likely initiate a flight to safety, and selected utilities could also offer substantial capital appreciation.

We don’t recommend going out and buying utilities at will, however, as all are certainly not created equal. Most will provide nice income streams, but the growth of that stream is largely tied to regulated rate increases. As we enter an exceptionally inflationary era, with interest rates rising (at some point), we point you towards those utilities that have an element of growth, so they can not only grow earnings – but grow their dividend payments as well, giving you a positive return in real terms.Read more...

Image via Wikipedia

In an ideal world, politics and economics would not mix, but even before Bill Clinton’s campaign manager coined the phrase, “It’s the economy, stupid,” politicians found they can win votes by interfering in the markets. Perhaps it’s only fair. After all, voters are quick to blame politicians for economic woes. At any rate, the latest example is the current subprime debacle that has now spread to the credit markets in general and is attracting the attention of politicians.

On Friday, perhaps in a belated attempt to boost his sagging popularity, President Bush announced that reforms were taking place at the Federal Housing Authority that are intended to help reduce foreclosures. While this may help a few homeowners, we doubt it will work as a political gamble.Read more...

Image via Wikipedia

Today’s geopolitical turmoil makes us think about Robert F. Kennedy’s famous rendition of a supposedly Chinese curse, “May you live in interesting times.” Certainly there is a lot of interesting political drama in the world today, in places such as the U.S., Mexico, Venezuela, Cuba, the U.K., and many other countries. Even more “interesting” is the appalling violence occurring in Iraq, Afghanistan, and elsewhere, not to mention natural disasters. We feel sad for the millions of innocent bystanders trying to raise their children in such “interesting” environments.

And speaking of environments, the global environment seems destined to be a lot more interesting in future years too, according to the recent report by the Intergovernmental Panel on Climate Change. It concludes that human activity will make the world a lot hotter and stormier in coming decades. Drier too, unless you live on a seacoast, in which case you’d better learn how to swim.Read more...