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Bond Investing

What the “Experts” on TV Won’t Tell You

The money media is in its panic-creating mode…

The topic this time is recession. And this most recent effort by the talking heads to keep you glued to the tube to sell advertising space, not to advise you, should serve as a wake-up call for all investors.

Here’s why…

It seems as if everyone who can have a microphone pinned to them is being asked by financial network interviewers to weigh in on the probability of a recession in 2020 or beyond.

And the opinions are coming from those who vary widely in terms of education, training and experience in the money business.

Those who are actually qualified to render an opinion on the direction of the economy (economists, analysts and business leaders) don’t market-time. Instead, they make sure they’re prepared for a recession at all times.

Market experts who start to see signs of a recession quietly prepare by shifting more assets into corporates and dividend-paying stocks – not by screaming that the sky is falling.

Those who have no background in the money business are the ones who appear to be pushing the idea that a recession is coming tomorrow – and feeding small investors’ panic.

I’m taking a little bit from Alexander Green’s thinking here. We have low inflation, low interest rates, 2% growth, historically low unemployment, 7 million jobs we can’t fill and wage growth, and consumer confidence is through the roof.

(Note: You can read pieces from Alex by visiting the site of our sister e-letter Liberty Through Wealth.)

And recent retail numbers indicate consumers (consumer spending is 70% of our economy) are confident and are spending money.

Can somebody please tell me how any of this is reason to panic-sell? The answer is none of it is.

What is most distressing about this situation is that investors – all kinds of investors – pay attention to this “doom and gloom” speculation as if it makes any difference.

As I have said for decades, if you hold investments that are well within your risk tolerance for your age and for your ability to assume risk from sell-offs and corrections, even a full-blown recession shouldn’t be a concern.

For income investors, corporate bonds with solid cash flow and earnings growth and dividend-paying stocks that have consistently grown their dividends offer the stability, income and potential capital gains that the over-50 crowd has to have.

But more to the point of a possible recession

Conservative, income-producing investments give their holders the confidence to ignore all the media’s scare tactics and stay where they’re making money: in their stocks and bonds.

If you’re over 50 and you haven’t yet begun to age adjust your portfolio to one where the day-to-day and even month-to-month market fluctuations are irrelevant to you, you’re sticking your neck too far out on the risk curve.

When we reach the point in our lives where we don’t have the time left to recover from one of the few givens of the markets – sell-offs – we must shift gears and own only those securities that can weather all markets.

For most of us, our cowboy investing days are over. It’s time for a big dose of market reality, or get used to being the victim of the media’s recession and bear market scare tactics.

Adapt or perish!

Good investing,

Steve


About

Somewhat of a renaissance man, Steve worked as a professional broker and has been an active trader of bonds for more than two decades, specializing in ultra-short-maturity corporate bonds. But before entering the investment industry, Steve was a naval aviator, flying fixed-and rotary-winged aircrafts, and also served as a surface warfare officer. Steve’s regular video series featured on Wealthy Retirement called “Slap in the Face” Award is some the most amusing investment content we republish.

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