5 Stocks To Buy Since The Fed Didn’t Raise Rates

I have been investing in the stock market since I was a teenager and I am coming up on the Big 50 this September. I have lived through the go-go 80s and 90s where double-digit annual equity returns seemed like a given most years. Thanks to pro-growth policies and some good fortune, the domestic economy churned out three, four, and even five percent GDP increases like clockwork.

That does not mean there were not shocks to the market like the 1987 October crash, the Mexican Peso crisis of 1994, the Asian crisis of 1997/1998, or the Internet Bust of 2000. However, these seem mild to what has occurred over the past decade. The financial crisis was the worst economic shock since the Great Depression and we have been stuck in the weakest post-war recovery on record since the recession “officially” ended in June 2009. The last time the economy grew at a three percent or better clip was 2005, which seems a lifetime ago.

No major economy seems to have a found a way to accelerate economic growth; although, the huge increases in economic regulations imposed worldwide are certainly a key factor of why business formation and growth are so tepid. Key structural and labor reforms, as well as large and overdue infrastructure programs, have largely been ignored or have failed to be implemented both here, in Japan, and in Europe.

This has left the heavy lifting of trying to boost economic growth to the major central banks. Despite their best efforts, these monetary policies have largely failed to boost growth, however, these same policies have been a boon to asset values such as real estate, art, and of course global stock markets until recently. This has been a key factor in the acceleration of wealth inequality which has become a fashionable election year topic. These initiatives have also resulted in some numbers I never thought I would see in my lifetime.

The ten-year treasury currently yields 1.55%, within shouting distance of its all-time low of 1.39%. You only have to look at the chart below to see the downward trajectory the yield has followed over the last three years. The current yield on the US Treasury bond even looks generous compared to what is available overseas. The ten year German Bund actually went under zero percent last week. The Swiss yield curve is negative all the way out to the 30-year bond and the 10-year British Gilt hovers at just over 1.1% despite the U.K. being on the brink of voting to leave the European Union which would bring about a large economic disruption. Over $8 trillion, yes trillion with a T, of European sovereign debt now carries a negative interest rate. Both the European and Japanese central banks are in uncharted territory with their current negative interest rate policies.

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Disclosure: Positions: Long CLDT, DRH, HPT, ...

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