You read right No matter what the opponents tell, there is still room for improvement in stocks after a 22% jump in 2017.
Before we got these three funds (dividend yield as high as 8%), I would like to tell you why the stock outlook for this year will disappear.
We then want to “pick our spot” to highlight the two fastest growing sectors in this soaring market (we pick 3 funds) for the highest bonuses and upside!
So let’s get started …
Why the bull market will continue to run at ’18
I do not need to tell you that in 2018 the stock market has come out of the door, starting from the fastest year since 2003.
If you’ve been sitting on the sidelines for weeks and wondering if you still have time to go in, do not worry: yes. As almost every important economic indicator tells us that the U.S. economy is strong and U.S. companies are stronger, as I wrote on January 8, the stock market just started to set the price for that boom.
Let’s start with revenue growth.
In 2017, we saw a 9.6% gain in revenue, which is a dramatic increase from the almost flat 2016 profit. Analysts expect earnings growth to accelerate to 11.8% again by 2018.
Better yet, the benefits of all the divisions are well dispersed. However, FactSet estimates that technology, finance and materials will lead the way, with profit growth of at least 13% this year.
What drives all these profit margins?
In three words: American consumers.
The average U.S. household net worth has risen in 2017, resulting in a “wealth effect” that means Americans are spending more comfortably than last year. At the same time, U.S. debt levels have shrunk, leaving more room for spending.
That’s the job market.
Unemployment in the United States was historically low at 4.1%, while joblessness continued to be sluggish.
What most people fail to notice is a more exciting economic trend: the number of working people.
Labor Force Participation Rate (LFPR) refers to the percentage of the total population who are willing and able to work. The Great Recession of 2007-09 undermined this indicator, bringing it to its lowest point since the 1970s.
But keep in mind that this indicator includes all Americans of all ages and the baby boomers are experiencing a series of retirement tides beginning in 2006 when the oldest baby boomer age reached 60. The lives of Americans between the ages of 25 and 54 look much better.
More Americans at work means more Americans can spend, which means higher sales and profits for U.S. companies
So how can we profit from this trend?
Emerging economy, the two major industries
Let’s start with the young people we just discussed. What do they want to buy?
It is obviously a possibility that consumers freely choose items, such as clothes and movie tickets. You can reach these companies through the Consumer Discretionary SPDR ETF.
Obviously, another important group is technology.
Young people like gadgets and gadgets are more ingrained in society. Such a wealthy young man is good news for Apple and Amazon.
These shoppers also help component manufacturers such as Nvidia and Intel (INTC) as well as software developers such as Activision (ATVI) and Adobe (ADBE). Visa (V) and Mastercard (MA) will also be boosted as well as Google (GOOG) and Facebook (FB) will also be boosted and consumer goods makers will promote their products.
You can get all of these shares through technical division SPDR (XLK), but I have a few better options.
… and 3 high-yield funds lead
All three of the funds I’m going to show you are well-known CEFs: the first two are technology funds: the BST and the Seligman Hi-Tech Fund in Colombia.
Both companies paid attractive dividends, yielding 5.5% for BST and 8% for STK. But which one is better to buy?
While STK’s high yield is impressive, there is an important factor that gives BST a 2% discount on its net asset value (net asset value or fund portfolio value). This is a much better deal than STK, which trades at 6.3% above NAV.
BST’s discounts (and its advantages) make it more attractive (less risky) than an overvalued STK.
In addition to high tech, you can also invest in a wide range of consumer stocks with Tri-Continental Corporation (TY), which has been listed on the CEF since 1929!
The fund is not welcome at all – its 10.7% discount to net worth is the seventh-largest U.S. equity fund tracked by CEF insider trading services. However, this unwelcome reason is a bit silly: the rate of return is low. With only 4.6% of investors’ income, TY’s dividend payout is not much bigger than some high yield stocks.
But this only means that the market has underestimated the assets of the fund. Since TY’s portfolio may benefit throughout 2018, its low-cost portfolio is now particularly attractive.