Opening Statement from the March 2015 issue of Dividend Gems

Opening Statement from the March 2015 issue of Dividend Gems

First published on March 13, 2015 for subscribers to Dividend Gems

We have been discussing several themes in recent months.

First, we have been advising investors to prepare for what we felt would be a new economic period by trimming down and in some cases, selling positions on strength in order to raise a good deal of cash for future opportunities.

As previously discussed, despite the recent strength in the global equities markets, we continue to see weakness in Europe, Latin America, South Africa, Russia, Australia, Canada, many parts of Asia. Meanwhile, the risks continue to mount in China. Thus, this is no time to be adding new money into the market other than for short-term trading purposes.

Second, we have been discussing the price collapse in crude oil, pointing out that we believed this would represent a good period to enter oil stocks, specifically CVX and COP. However, we advised investors to take profits when they came, buy after large selloffs and sell after rallies. We also pointed out the need to be patient.

Third, we pointed to the recent defense sector rotation into Utilities in early January during the stock market selloff. We discussed that we felt this was temporary and cautioned investors not to chase these stocks. We felt Utilities would sell off soon. This is precise what we have seen over the past several weeks.

Fourth, we have discussed that the collapse in oil prices has already led to a reduction in earnings estimates of oil companies in the S&P 500. Due to the recent market rally combined with these downward revisions in earnings we see some valuation issues. This...

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However, we still believe earnings will remain strong and the bull market will persist in 2015. The main variables to watch out for continue to be interest rates, China and Europe.

Overall, based on all of the major variables under our examination, we see