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Quote of the Day

Thursday, July 31, 2014

July 31, 2014 --

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Dear Subscribers,

 

Today we received the following commentary from David Frazier, which we are reprinting as an update to the "Income Investor" series he wrote for Dow Theory Letters in late 2013 and early 2014. Mr. Frazier recommends selling all holdings he recommended in Dow Theory Letters except Gabelli Equity Trust Inc 5% Cum. Pfd. Series H (GAB.PH) and PowerShares Senior Loan Portfolio (BKLN). To repeat, he recommends keeping those two securities and selling the others he recommended. Please refer to his column from March 20, 2014 to see his model portfolio recommendations. All issues are up substantially at this point. Here is a brief commentary by Mr. Frazier on what he is seeing:

 

... The readings on some of the key indicators that compose my Tactical Asset & Sector Allocation Model flashed some warning signals over the past few weeks Another warning signal flashed today when the Institute of Supply Management - Chicago announced this morning that its Chicago Business Barometer declined by 10 points during July, "led by a collapse in Production and the ordering component." That's the biggest monthly decline in that leading indicator since October 2008.

 

Meanwhile my research indicates that the employment situation in the United States will weaken over the next several months. Any such development would likely lead to a deterioration in the housing market, the manufacturing sector and personal consumption expenditures. Hence, there's a good chance that the overall economy will also worsen over the next few months.

 

Because stock prices, in general, tend to move in the same direction as the overall economy, I advise you to get mostly out of stocks ...

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