My how quickly can Mr. Market change his tune. Since November 4th, at the peak of political uncertainty that resulted in the stock market falling for nine straight days (longest losing streak since 1989), and yet since then? The Nasdaq, S&P 500, and Dow Jones Industrial Average are up 6.07%, 9.26%, and 11.49%, respectively.
Indeed it appears the entire world has been whipped up into a post election Santa Trump mania, with the Dow now having risen for eight straight sessions, and just 89 points away from 20,000.
While many investors might find this cheery news, value focused, contrarian, dividend growth investors like me are miserable during this kind of market melt up. After all, before it started we had our picks of high-quality companies to invest in. REITs, energy stocks, pharma, industrial, agriculture, all were beaten down places to lock in solid yield for years to come.
And even when the Santa Trump rally started things remained on sale, including REITs, Pharma, energy, and tech. But alas we have now reached a point where REITs, while still relatively cheap, are no longer screaming bargains. Meanwhile expectations of strong fiscal stimulus in 2017 have sent industrials soaring, and now that OPEC and Russia say they’ll cut production, energy stocks are no longer the bargains they once were. Even Pharma and tech are now joining the terrible and seemingly unstoppable rise in share prices.
So what’s a dividend investor to do now? Hoard cash and pray for a correction? Not quite yet. While finding quality undervalued stocks is no longer easy, it’s also not impossible.
For example, REITs though now rallying, are a wide industry. For example, over the past few weeks Hotel, Office, and Industrial REITs have soared, BUT Mall, Healthcare, and triple net lease REITs are still way down on the quarter.