https://seekingalpha.com/article/4332110-15-safe-blue-chips-to-buy-during-this-bear-market
ry Safe Blue Chips To Buy During This Bear Market
CFR, UMBF, ADM, CAT, GD, PH, CNI, GWW, MDT, SWK, TJX, ROST, CB, ADP and APD
The bear market so many have long feared is here. Stocks didn't just enter a bear market last week, they crashed into one with gusto.
COVID-19 panic, combined with worst oil crash since the Financial Crisis, have combined to create a perfect storm of fear, literally the second highest in 30 years.
However, regardless of when this bear market ends (and it surely will), great companies are always on sale, BUT especially when the market is panicking.
CFR, UMBF, ADM, CAT, GD, PH, CNI, GWW, MDT, SWK, TJX, ROST, CB, ADP and APD are 15 very safe blue chips who have collectively delivered 15% CAGR returns over the last 23 years.
From today's 25% undervaluation they could deliver about 17% CAGR long-term returns. Just don't forget to always use the right asset allocation for your needs, because when the bears roar on Wall Street, almost no stock is spared short-term pain

The utility sector (see for example XLU) has benefited from the drop in energy prices and has done pretty well compared to most of the other sectors (see https://stockcharts.com/freecharts/perf.php?[SECT] for example) , but I don't think it's going to be all roses for them. In particular, the power companies are going to have a huge drop in demand.
Sitting in Boston I think about National Grid, our local electric utility. --- B.U. and Northeastern between them have sent 100,000 students home, and that 's before you think about MIT, Harvard, the various U Mass branches and the smaller universities. These universities are not heating or lighting the dorms, the classroom buildings, the labs etc.
And then there's all the lights and heat not being used in the public schools, the parochial schools, the churches, (all of which have, in the past, been immune to recessions and are now closed).
Plus just the lights in restaurants and stores.
Of course, in some places there will also be lost sales to mfg plants.
Many, many years ago I used to teach something called the Leontieff Input-Output model ---- it is a matrix with all the industries across the top and down the side and the entries are the units of what one industry uses from another. (How much electricity does the auto industry use and how many autos/trucks does the electric industry use?) Leontieff won a Nobel Prize for this -but it also allowed people to ask questions like "what happens to GDP if there is a steel strike?" And it seems to me, that is what we need here. I don't know if any of the big forecasters are using this or not (& I certainly don't know the entries in the matrix).
Any thoughts? Anyone who would know this 'trickle down' effect?

@Starchild- @rono's "grip" is just fine, thank you, and has been for many years now.

I hope so, for his sake.

Lucky if back to even in 5 years but NOBODY knows. Many people will find they weren't comfortable with their current asset allocation. They will be re-balancing and pulling out of stocks as they get "back to even" or close to back to even so there will be major headwinds IMHO

Tweedy's newly-issued letter on markets and pandemics speaks sensibly. The firm reminds readers that it's more than a century old, so they have the experience to see occasional crashing-and-burning as part of the price of admission. They point out that the last 25 years has seen a long series of catastrophes - two currency meltdowns in the EMs, the Russian debt default, LTCM debacle, 9/11, the '07-09 GFC - and a market that's returned nearly 500%, cumulatively.
I rather liked their conclusion:

... at times like this, we actually begin to feel better about our prospects for future returns. That said, our and your ability to have a successful investment experience depends in large part on the willingness to “stay on the bus.” The ride can be bumpy, but you ultimately have to stay on board to have any chance of reaching your destination. As Margaret Thatcher famously said to George Bush Sr. just before the start of the Kuwait War in 1990, “Remember George, this is no time to go wobbly.”

On a passing note, I just been trying to add to my BIAWX holdings but thwarted by TD's $50 transaction fee. Their soon-to-be parent sells the fund NTF, so I'm trying to see if there's any flex available.
Take care, David

One of the most aggressive "allocators" I have run across is American Association of Individual Investors "Level three" portfolio. James Cloonan spends an entire book trying to prove that there has never been a period longer than five years where the market has not recovered.
I looked at SPY from it's peak in 2008 and discovered that in fact it took seven years if I remember. In the 1930s it took longer if you start at the very peak.
70 % is probably too heavy a stock allocation that close to retirement if he needs to live on the assets at retirement. It is probably too late to do anything, but I think this will rival the drop in 2003-2009 which was 45% so if it will torture him in the next seven or more years he could lighten up stocks, but no one can tell him when.
Will the market be higher sometime between now and when he retires? Probably but who knows?
THE WSJ has a chart of the price at various levels of PE but no one knows what the E will be. We are also seeing a dramatic de risking so the PE will clearly fall
I am on the pessimistic side and I think calls that this will be over in early summer are too optimistic. It may slow but will probably come back until their is an effective vaccine.
Having said that there will probably be a better time to reduce his equity exposure in the months ahead

Your friend need to review his retirement strategy carefully. It is still not too late since he has 6-7 years before retirement. He may consider using an asset advisor to guide his planning. In my humble opinion, his 70/30 allocation is too aggressive given the current market conditions. He should be reading the informative MFO articles from our Charles Lynn Bolin. Also he writes for Seeking Alpha.
Using target dated funds is a good starting point in his planning. Being well inform will keep him/her of making irrational changes in this moment of time.

Hi, John.
You might want to check in with T Rowe Price. They have revised the glide path for their Target Date funds and have, for a number of years, recommended considerable caution in the years immediately before retirement. If I recall correctly, they allow for somewhat greater equity exposure after retirement than in the 2 years preceding it.
They have likely posted articles on the subject, but I don't have immediate access to them because I am sitting in the waiting room of an auto repair shop. No coffee. Too risky, they've concluded. Also, no one else in the waiting room.
David

@davfor Oahu? You're just in time for the flooding from the Kona Low. 4:30 p.m. and finally some sunshine here on the Windward side.

Molokai. East end condo. There has been a Flash Flood alert for the past 24 hours or so but the weather has been OK here today. The view is across the Paniolo Channel to Maui (Kapalu and the surrounding part of the island). We owned a condo on Molokai for about 15 years that we sold in 2015 or 2016 (I have never had what is commonly called a good memory). I have been missing the old Hawaii slowed down feeling of this island. So, I am here for a short stay....probably will be back for a longer period next winter. (We also lived in Kauai and built a house there during the mid-80's.) You are in Honolulu, yes?
By the way, here are 2 Fed statements from today:
https://federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm
https://federalreserve.gov/newsevents/pressreleases/monetary20200315c.htm

@Starchild- @rono's "grip" is just fine, thank you, and has been for many years now.

(I’m agnostic on the issue of duplicate links.)
More importantly - on the bond issue Catch raises, I’ve been searching for a word to characterize the present situation. A seldom used noun, “Confuscation” seems to best fit. The word is so rarely used that your spell-checker will likely try to override it.
Confuscation - Collins Dictionary: (1) n. “designed to confuse, e.g. a maze or puzzle” (link)
Just when everyone was expecting rates to decline forever in the lee of Fed rate cuts, bond rates have begun to rise. As Gomer Pyle would say, “Surprise, Surprise!”. The 10-year spiked from somewhere around 0.40% early in the week to near 0.90% at week’s end. That’s a doubling in less than a week’s time.
The Fed can try to set market rates with its peg on the overnight lending rate (and often succeeds), but there is no absolute guarantee longer rates will follow suit. Apparently, the “real world” bankers and bond vigilantes fear price inflation / depreciation of paper currencies more than the Federal Reserve does. I suspect this is all related to the repo and liquidity issues David and others have commented on in the past - but it’s a bit beyond my pay grade.
Bonds got hammered late in the week. If your bond fund has some credit risk (ie BBB / high yield) it probably held up better at week’s end as equity markets stormed ahead (good for lower rated bonds). The bloodbath Friday was more related, I think, to the high quality (rate sensitive) areas. By way of example, here’s one way it affected me: Over the past 7-10 days the nav on T. Rowe’s ultra-short bond fund TRBUX has tumbled from around $5.05 / $5.06 all the way down to $5.01 on Friday. That’s a huge decline for a sedate cash-equivalency fund like this one.
As Catch mentions, many other synergies investors had come to depend on over recent years decoupled last week as well. Miners suffered double-digit losses on several days (-13% on Friday alone). Absolute carnage. That move defied the prevailing wisdom among many gold “experts” that the miners were undervalued relative to gold. A lot of $$ was lost last week by those employing leverage to bet on miners outpacing the metals. Likely we haven’t yet seen all the fallout from that bust.

@VintageFreak and @catch22 Thanks, Catch, I read that thread. Re-read, actually, but this time, I paid attention. I was thinking and feeling the same thing: "nowhere to run to, nowhere to hide." Are the markets broken? We've been in a different world, along with Alice and the Mad Hatter and the Doormouse for quite a while, eh? Zero, or near-zero rates. Gov't stimulus everywhere, out the ying-yang..... This (former) bull has been propped-up continuously, for years, now. Savers are suffering. The divorce between Main Street and Wall Street. The gigantic gulf between workers and management. Diluted currencies. Outrageous public debt. And the beat goes on... About PTIAX: well, ya, it's still above zero. But it's full of less than prime stuff, and so, it was getting "killed." The common wisdom is that bonds move opposite of stocks. But low-quality bonds are more connected to the behavior of equities than AAA-rated stuff. I get that. :)

https://seekingalpha.com/news/3551661-gold-suffers-worst-week-in-eight-years
Gold bug not going well at least recently
Nothing works well now

http://www.wicz.com/story/41895546/heres-what-could-really-sink-the-global-economy-19-trillion-in-risky-corporate-debt
/Here's what could really sink the global economy: $19 trillion in risky corporate debt
Posted: Mar 14, 2020 2:32 AM CDT
By Julia Horowitz, CNN Business
Companies have spent the years since the global financial crisis binging on debt. Now, as the coronavirus pandemic threatens to push the world into recession, the bill could come due — exacerbating damage to the economy and feeding a meltdown in financial markets./
We may have to monitor the junk bonds closely, value declined significantly few wks. Difficult tell if they recover in short terms especially oil energy sectors

After months (years ?) of doing nothing I finally scratched the itch yesterday and Wednesday, and let Fido loose. Small bits of Archer Daniels ADM, Boeing BA, BRKB, Canadian Nat CNI, Diageo DEO, Gen Dynamics GD, IBM, MMM, Plains All Am PAA. Probably the best thing this did was clear off crappy little notes all over the desk from 4 am "thoughts".
Maybe next time I just buy NOBL and sleep through

Yet the difference between a dividend which is a choice a company can eliminate at a moment's notice and a bond coupon payment which if stopped a company or, worse in this case, the U.S. government is bankrupt is light years.

@Crash Is CM's dividend safe? 7+% is an impressive yield.

I check with "Simply Wall Street" as well as Morningstar, when it comes to single-stocks.
"SWS" shows CM at an even deeper discount, -48.5% below NAV. They are showing the div as just a bit lower, at 6.82%. (But see below!) "Highly volatile" over the last 3 months, but EVERYTHING has been volatile, lately....The graph shows CM to be less volatile than the industry average, though it's a bit more volatile than the GENERAL market.
...Valuation is shown at greater than -50% discount. (NYSE dollars, not Toronto.) 4 out of 6 "analyst checks" are green, 2 are red. Those two are the PEG ration and the P/B.
"Fair Value" is pegged at $122.64. Price today is $52.22.
Analyst future growth forecast: not good, so you'd be buying it for the dividend. It's not NEGATIVE, just not much growth is forecasted. "Earnings" are rated as "quality." So I guess that means earnings at CM are not made up of non-recurring items that are exceptions to the rule.
Financial health: 6 out of 6 green check-marks. Long-term assets are much bigger than liabilities. On the specific spot showing the dividend, it is shown as 8.23%. (It goes ex-dividend on 25th March.)
"Yield vs. the Market:" 8.2 right now and in three years it is forecast to be 8.4.
The dividend is judged to be "stable" and "growing." Right now, 50% of earnings are paid out to shareholders, and 49% predicted in three years.
I hope all of this is useful. :)

Yes - the ship is tossing and floundering around looking for a port (reminiscent of “The Flying Dutchman” I was planning on seeing in May). I agree with @Catch22’s overall observation. Only a nut like me would try to predict. But here we go:
- Short rates have turned up since bottoming under 0.5% on the 10 year earlier. Finished at 0.8% today. The current conventional wisdom that U.S. rates will drop to 0 and than keep falling may be wrong. They may now be rising. Might relate to @Mark’s mortgage issue, as mortgage rates are closely linked to the 10 year treasury.
- Gold’s been hammered. Yet a lot of smart people have been high on it - Ray Dalio, Bill Fleckenstein, Mark Mobius among them. I’ve always thought gold was a manipulated market and this might be the “shakeout” of weaker hands in advance of another rise. Just a guess based on the easy money that’s flooded global markets for years.
- Equities. I’m amazed when people pour money into a fund that’s up 20, 30, 40% in a year’s time. Somehow that makes sense to them. But after a similar drop in value folks run away. Maybe that works for them. Wouldn’t for me.
Sorry - Diverging here. So I think (over the next year) it’s down for rate-sensitive bonds, up for the precious metals and sideways for global equities. The virus is nasty. Lot of unknowns. On the other hand - we haven’t been invaded by the Russians (physically), Trump hasn’t lobbed a Nuke at some little country (yet) and a spaceship from another planet hasn’t landed in Manhattan. (It just always looks that way.)
I’m beginning to rotate slowly out of RPGAX and back into DODBX. Risk reward factor is starting to favor the latter - especially if rates eventually rise, which they’ve long expected and positioned the fund for.
Best wishes. Stay well.

In fairness, this fund has under performed MAPIX for most of its existence (2011).
Here's that chart:
https://screencast.com/t/5rmnxOrz2
The fund has two new managers (less than 3 years). Here's the more promising three year chart.
https://screencast.com/t/5vP4hqnn
Maybe a combination of these two funds would be a thought.

What do you see that is truly cheap on an absolute basis? I bought a little bit of BEN a few days ago at $19.95 because I thought it looked cheap.....well it just got cheaper.
I think BUD looks cheap today with a 4% yield and at 12 times consensus earnings. It's 60% off of its high. People have been drinking beer for thousands of years -- don't think they'll be stopping soon.
Anybody see anything (quality) that looks truly cheap on an absolute basis?