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Friday File: Pot Dividend Surges, plus thoughts on gold and “bargains”

A couple buys in the Real Money Portfolio this week, plus notes on IIPR, Sprott, WRTC, Osisko, Nokia and 3M... among others.

By Travis Johnson, Stock Gumshoe, June 14, 2019

There’s no more cyclical stock than a semiconductor stock, and we’re seeing the whipsaw slash through that market now as trade sentiment weakens and pundits begin to see some weakness in the economy, particularly in the employment numbers, and the Federal Reserve fuels that uncertainty by essentially promising a rate cut in their attempt to make sure we never have to have a bear market again. If you want to gauge the market’s sentiment about the global economy and the trade war, you need look no further than the Philadelphia Semiconductor Index — the iShares ETF (SOXX) charts that sentiment pretty well, and looking at it on a log scale helps to emphasize the “relative jitteriness” (sorry for the technical term) in the markets about the economy and trade since March:

The economy, of course, is still churning along “mostly fine” as far as we know — it’s a sugar high fueled by debt-binge government spending, of course, but that has often been true over the past 40 years, mostly spending on military, tax cuts and health care that continue to promise voters that they can get much more than they are willing to pay for (as long as they don’t mind saddling their children and grandchildren with the debt service obligations, which will likely consume the majority of the federal budget by the time my kids are thinking about having children).

I’d keep my position firmly in the middle of the road on this big picture stuff… Don’t get overly confident, but there’s no reason to start paying attention to the doomsayers too much, either — they’ve been saying essentially the same thing for 40 years about the unsustainable US economy, and over time they’ve mostly been wrong… even though, of course, things do sometimes get ugly for years at a time (not, sadly, at the time when you or I would precisely predict).

You can see why the Federal Reserve is so focused on increasing the inflation rate — inflation used to be the bogeyman, the frightening creature that reared its head in the 1970s and 1980s and made prices jump 15-20% in a year, now it’s one of the few things in the economics playbook that we think might save us from long-term stagnation. If we get inflation to 3-4%, the dollar weakens a little faster and we get to repay the debt with a ...

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