Posted on | May 9, 2011 | Comments Off
The recent run in stocks has made it difficult to find good value in the stock market especially considering the dividend yields that we would be locking in by allocating capital at current share prices for most stocks. Currently, the only stocks we are actively buying are those that are in our monthly DRIP plans. No large block accumulation will occur until more attractive entry points and yields are possible.
The Federal Reserve’s quantitative easing program is scheduled to end in June and investors should be watchful as this program comes to a close. There’s a great deal of evidence that suggests more quantitative easing in the future, but I’d expect at least somewhat of a break between rounds two and three. This could lead to heightened volatility and some possible buying opportunities at least in the short term.
The stock market has the feel of manipulation and Fed-induced raised prices. As fewer investors trust the market, it’s all the more evidence for the course of action that we suggest which is focusing on cash flow and dividends. This strategy will prove to be the best one over the coming years.