WhereToGoWithYourMoney

1、Where To Go With Your MoneySavings deposits, no longer sacrosanct in the world s banks and free of confiscatory taxation, suggest stuffing your mattress makes immediate sense but isn t the long term solution. Actually, in the U.S. alone, there are trillions of invested assets poorly structured for p

2、erformance.Fixed-income holdings by private pension funds are way above trend, near 40 percent of assets. Twenty percent is a more rational number. I figure some $1 trillion could flow into equities over the next year or so from bonds. Individuals, with $15 trillion in equities were as high as 60 pe

3、rcent of assets during the Internet craziness of 2000. I see 55 percent as the logical number going forward; not the present 45 percent. This swing flows another $1.5 trillion into the stock market. Serious money.My case is the Big Board stands reasonably priced, and no alternative investments make

4、much sense today. In 2009, for the first time in my life, I bought municipal bonds and preferred stocks, mainly bank preferreds then selling on parity with their common stock.Of late, they ve taken the kick out of the booze.Lest we forget, you could ve bought $25 par bank preferreds selling in singl

5、e digits.High-yield bonds, BBB with 10-year duration, sold to yield 9 percent. Currently, their yield to maturity or first call is nearer 2 percent. There are no 7 ?percent preferreds around.They ve been called, and replaced with 5 ? percent paper even for low -quality credits, mainly in leveraged f

6、inancial houses like Schwab, Prudential and Citigroup.I don t want to leave out contemporary art which has sustained a great bull run these past 5 to 10 years. Not just trophy art collected by Russian oligarchs. Warhol, Francis Bacon, Richter, Koons, Franz Klein even Picasso are best left to these m

7、aniacs with no sense of connoisseurship. But, canvases at the $500, 000 price range now go for millions. I thinking of Joan Mitchell, Pierre Soulages, Jenny Saville and Cecily Brown. mSounless you re savvy with research capacity where inhell can you go? Kenya,Indonesia, even Brazil or China? I don t

8、 think you want to do that. These are macro playswhere you have to be comfortable with their corporate accounting, currency and theprevailing party in power. Then you analyze specific properties.The American stock market, compared with 20 European bourses, using Value Line arithmetic index, shows gl

9、aring outperformance. Let Europe (and England) wallow in sdeflationary fiscal constructs. GDP goes nowhere and unemployment, particularly for high school graduates holds at a dismal 20 percent or more.When I enter a country with high-teens joblessness, I take off my watch and my countesssheds earrin

10、gs, bracelets and her necklace. I ve learned this the hard way in Sicily, even Naples.Let s face the facts! You ain t got nowhere to go. Might as well surf the top 25 names in theS&P 500 Index. Google, Exxon Mobil, Microsoft, General Electric, Apple et al. Look at all major sectors in the index

11、and decide whether they are likely to prosper in a tepid business cycle. Assume interest rates remain low with inflation minimal. Pent-up demand for housing and autos keeps us humming.Can you deal with ass-biting issues of sequestration, higher taxes and corporate boardrooms playing it so conservati

12、vely in terms of capacity expansion? If you pass on this can of worms, take a good look at pharmaceuticals and other sectors pretty much immune to politics, taxes and the business cycle.I hold major overweights in biotech houses like Gilead Sciences, Celgene and Biogen Idec. Not only are earnings pr

13、ospectively explosive, but patent protection on major drugs extends out for most of this decade. Analysts diverge on how to value these properties. Many use a dividend discount model, but I prefer the straight price-earnings ratio yardstick. My assumption is enormous free cash flow accumulation is r

14、einvested at a high rate of return plus aggressive share buybacks.The Fed s analysis of capital adequacy among big banks actually surprised me. I didn trealize Bank of America held the wherewithal for a $5 billion buyback as well as calling itspreferred stock at a $5.2 billion face number. Obviously

15、, they ll issue a new preferred witha 5.5 percent dividend, callable in five years. The $5 billion stock buyback suggests Iworrie d excessively about their litigation reserves for Countrywide Financial-pufti in s muftithe mortgage market.The noise over JPMorgan Chase s Whale gambit is old noise. How

16、 many times do youdiscount such a trading faux pas? Morgan s board raised the quarterly dividend by nearly 30 percent, joining the 3 percent yield club among big cap properties. I see JPM going into 2014 with dividend paying capacity over 30 percent higher, at least $2 a share, a 4percent yield, plu

17、s additional share buybacks. This stock has $60 a share written all over it.Just be patient.Citigroup s token buyback of $1.2 billion is meaningless. Maybe, they re waiting toeliminate all their Bad Bank assets. Hopefully, they re reserved for the worst. Where Igoing with all this is anyone getting

18、his feet wet after years of abstinence should look atthe 25 to 50 largest properties in the S&P 500 Index. Ragamuffins need not outperform.I ve red penciled stocks like Microsoft, Exxon Mobil and Apple. GE and IBM know how toplay the“ be kind to shareholders” game with the banks now quick studie

19、s. mViable stocks with rising dividends, just as long as they yield 3 percent or more going in, are bond surrogates for AAA corporates, 10-year, even 30-year Treasuries which yield 2.7percent, 2 percent and 3.2 percent, respectively. Who woulda believed this construct 5 years ago? Chances are no cha

20、nge for the foreseeable future (2 years).Don t overlook pharmaceuticals, many yielding 3.5 percent and likely to increase payout ratios while they work off patent expirations on blockbuster drugs. Pfizer, which is anactive financial engineer, performs admirably. I ve added Eli Lilly and Johnson &

21、; Johnson to my list of low pressure plays.Sky high multiple plays like VMware and S which have moved contrapuntally, leave me cold. VMware is a big flop while S is up 100 percent over 12 months. My compromise rests in mid-teens growthies like Google, EMC and Qualcomm. GARP (growth at a reasonable price) is a viable gambit.In short, macro forces favor equities. The Fed has restored family wealth to its pre-recession high-water mark and individual and institutional debt-eq