Portfolio

Note: If a stock has gone beyond my buy-up-to price, do not buy into that position. Wait for me to issue a new recommendation, or wait for the stock price to come down. Only have 10 to 12 stocks in your portfolio at one time, and don’t put any more than 8.5% to 10% of your money into any one monthly portfolio recommendation. Only put 2% to 3% of your money into my Special Report recommendations. If a position doesn’t have a “Close Price,” it’s still active and we’re still tracking it. Can’t see the portfolio? Try the print preview

Weekly Archives

Your Edge as an Alpha Investor (click to expand)

April 8, 2020

Welcome to the Alpha Investor family!

I’m excited that you’re with us and grateful that you joined our newsletter.

My job with this service is onefold, and that’s to help you achieve your financial goals.

To do that, I want to share with you an investing approach that I spent four decades developing.

Every stock that goes into the Alpha Investor Report portfolio has to pass my three filters, which I call my Alpha-3 Approach.

In today’s video, I show you what those three filters are — and how using them gives us a huge advantage over other investors.

Simply click on the “play” button below to watch the video…

Turn Your Images On

To read a transcript of today’s update, click here.

Check out My Latest YouTube Video!

Before you go, I wanted to let you know that I released a new video on my YouTube channel.

In markets like the one we’re in, it’s all too easy to get shaken out of your positions. But it’s during times like these that Mr. Market offers you some of the best profit-making opportunities you’ll ever see.

In this six-minute video, I share with you why now isn’t the time to panic — it’s the time to invest.

Turn Your Images On

If you have any questions or concerns you’d like me to address in my next update, you can write my team at alphainvestor@banyanhill.com.

We’re always happy to hear from you.

Regards,

Turn Your Images On
Charles Mizrahi
Editor, Alpha Investor Report




Did We See a Bottom? (click to expand)

March 26, 2020

I hope you’re staying safe and, perhaps more importantly, maintaining your sanity if you’re in quarantine like me.

You might remember that I’m stuck in Peru at the moment. Well, we just got the announcement that the government is extending the country-wide quarantine for another two weeks.

So, as stir crazy as I am getting at the moment… I still have another three days left on the original quarantine, and then another 14 days on top.

I can’t complain. It could be a lot worse. We at least managed to escape to the ranch before the lockdown went into effect, so my prison cell is a large one. But I’m still itching to get back to a first-world internet connection…

But I digress.

The major market averages have been sharply higher over the past couple days. It’s what traders call a “rip your face off” rally.

But does this mean the bear market is over?

In a word, no.

This situation is evolving, and it’s hard to draw firm conclusions on what will happen next. But I can say this with a fair degree of confidence: I believe liquidity crunch has passed. The stock market collapsed this month, but the damage was far worse in high-yield corners of the market like equity REITs, mortgage REITs, pipelines and preferred stock.

Several mortgage REITs hit margin calls they weren’t able to meet because they couldn’t sell the bonds they owned… at any price. There was no one there to buy it. I saw plenty of issues I would have considered high-quality a month ago drop by 80%-90% in value. It was that bad.

Now that the Federal Reserve has stepped in, the credit markets are returning to something closer to normal and the higher-yield issues are reflating to something closer to a normal valuation.

That’s good. But over the following weeks, we’re going to get a better look at how much damage was done, particularly in the mortgage REIT and preferred stock space. Companies that had to unload their bonds to meet margin calls took hits to their balance sheets won’t be fixed overnight. Some – while perhaps not looking at bankruptcy – are looking at a permanent impairment on their portfolios.

So, while I think that the high-yielding sectors will continue to recover, the recovery might look a little more jagged from here.

Looking at the broader market, the S&P 500 is up nearly 20% from its recent lows. That’s fantastic!

However, the market would need to tack on another 30% from current levels before it hits new highs again.

It will hit new highs, of course. I don’t see it happening in the next year, though. It’s still unclear how long the world economy is going to be on effective lockdown and what the ultimate damage will be to corporate profits. We won’t know the full extent of the damage until earnings reports start trickling in next month.

And we shouldn’t forget that the market was looking a little bubbly at the beginning of this year. The Dow had no business trading near 30,000. That was a ridiculous valuation then, and it’s no less ridiculous now.

That said, there are still plenty of bargains out there. I still very highly recommend you look at the 10 stocks I recommended in the monthly issue and look to average in to them. I understand if you’re uncomfortable dumping all of your remaining cash into the market. I wouldn’t do it either. However, investing in 10% increments over the course of the next several weeks would seem like a solid idea.

It’s still rough out there. Stay safe, and keep cashing those dividend checks!

Charles Sizemore


Investing for Life (click to expand)

March 19, 2020

Let me start by saying, I hope you all are being safe during this global pandemic that caught us all by surprise. Stay home if you can, wash your hands, sanitize commonly touched surfaces and spend some time with close family. Now, on to this month’s issue.

I would say we’re all becoming desensitized to the volatile moves in the market. It’s no longer surprising that, one, the S&P 500 is down 30% and, two, the speed in which it fell. It’s safe to say, this isn’t normal.

So, in this month’s issue, I’m gifting you a dose of stability. With stock prices moving as quickly as they are, it doesn’t seem wise to pick a single dividend stock I like. It could hit our stop loss tomorrow. Instead, I’ve put together a list of 10 income stocks I believe you can buy today and hold for the rest of your life, collecting the dividends.

One stock I recommend in this issue is Altria Group (NYSE: MO). It’s commonly seen as a tobacco company now, but in five years, I believe we’ll see Altria as a legal marijuana company given the direction its currently moving in. In the meantime, we can collect a nice 8.5% dividend from one of the oldest and most established companies in America.

Click here to discover the other nine stocks you can hold for a lifetime and simply collect the dividends.

And, remember to say safe. We will get through this.

Charles Sizemore


Trade Alert: Selling Three More Positions (click to expand)

March 17, 2020

I feel like a broken record, but here we go. After yet another market decline that was the worst since the 1987 crash, we’ve hit stops in more of our positions. So, please take the following actions:

Action to take: Sell your shares of the America First Multifamily Investors (NYSE: ATAX) at market.

Action to take: Sell your shares of Physician Realty Trust (NYSE: DOC) at market.

Action to take: Sell your shares of Philip Morris International (NYSE: PM) at market.


I’ll have the new monthly issue out in a few days. Until then, stay safe and take a deep breath. We’ll get through this!

Charles Sizemore


Trade Alert: Not a Fun Time to Be An Investor (click to expand)

March 13, 2020

Well, you were supposed to get a new monthly issue of Peak Income today. However, given the volatility in the market, everything I wrote is already obsolete. So, I’m pushing the monthly issue back a week to next Thursday.

This is gut-wrenching. In pockets of the market, this is every bit as extreme as the dark days of 2008. Yet, if you’re brave enough to stomach more volatility, I’m already seeing yields in the real estate sector I never believed I’d see again in my career.

I’m not a gun slinger, and I don’t believe in taking unnecessary risks. Slow and steady wins the race. But this looks like a nice time to go shopping or at least dip your toe in the water.

More details to come next week.

In the meantime, we do have one move to make. We hit our stop in Duke Realty (NYSE: DRE) yesterday.

Action to take: Sell your shares of Duke Realty (NYSE: DRE).

Stop losses only work when you honor them. On the other hand, given that the stock is down another 9% today along with the rest of the market, you might want to slow roll this one and see if the price recovers a little this afternoon.

Keep your chin up. We’ll get through this.

Charles Sizemore


Trade Alert: Sell IHD and MRRL (click to expand)

March 10, 2020

Well, after one of the largest one-day sell-offs in history, we shouldn’t be all that surprised that that we hit a few stop losses. Unfortunately, we hit our stops in the Voya Emerging Markets High Dividend Equity Fund (NYSE: IHD), the PIMCO Dynamic Credit and Mortgage Income Fund (NYSE: PCI) and the UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (MRRL).

So, please make the following moves:

Action to take: Sell the Voya Emerging Markets High Dividend Equity Fund (NYSE: IHD) at market.

Action to take: Sell the PIMCO Dynamic Credit and Mortgage Income Fund (NYSE: PCI) at market.

Action to take: Sell the UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (NYSE: MRRL) at marketbr>
I’ll have more to say on Thursday. In the meantime, hang in there. This isn’t our first correction, and it won’t likely be our last. This too will pass.

Charles Sizemore


A Long Slog (click to expand)

March 5, 2020

It looks like today is going to be another doozy. As I’m writing this, the Dow is down over 900 points.

Of course, it was up over a thousand points just yesterday and last Friday. Until this correction runs its course, volatility is the order of the day.

I’m not going to recommend we take any actions today, unless one of our stops gets tripped, which I’m not expecting. I’ve found on days like today, it’s generally best to take a step back. So today, I’m going to answer some questions that have been coming in.

Brian B. writes,

Can you post your sale recommendations at the close of the market vs in the morning?
I can promise that I’ll try!

This is my issue. I base my stop losses on closing prices, and the market closes at 4 p.m. eastern. By the time I get the notification that the stop is hit, verify the data is correct and get the update written, the office is often closed and there’s no one there to send it out.

So, while it is my goal to get you the update as early as possible… it may be that “soon as possible” is the next morning. But to the extent I can hurry things up, I will certainly try.

Speaking of stop losses, Bryan L. asks:
I respect your adherence to stop-losses. But, this past week’s market craziness caused me to wonder if a blanket rule about stop-losses is really the best way to manage risk. It seems that if a stop-loss is hit, we ought to examine whether the price drop was because of market craziness/insanity or because of a problem in the underlying company. I am sure you have thought of this. But, I would like to hear what you think.
I hear what you’re saying and I understand. I’ve often thought the same myself. The problem is this: Trading rules are only effective if you etch them in stone and never break them. Once you relax your rules, you’ve set a precedent. You’ve broken the taboo. And then, it’s easy to make additional exceptions whenever it’s convenient… and next thing you know, your rules are meaningless.

I once had a hedge fund manager tell me that he could forgive any trader he employed for losing money. But he could never forgive them for failing to follow their own stated rules. For him, it was an issue of integrity, and I get it.

For you and me, it’s more about loss avoidance. Being strict on stops keeps us out of trouble. And if we get stopped out of a stock due to some sort of freakish market move (as opposed to company fundamentals), we can always get back in later once the dust has settled.

I would also add that I use stops based on closing values rather than intraday as this helps to filter out some of the craziest of the crazy moves.

And speaking of crazy moves, Dennis M. had some questions on the matter:

I’m a recent subscriber to Peak Income and have started transitioning into the portfolio. Some of the investments are obviously different now than when the Buy signal was given months ago.

Do you recommend buying all funds with the call “Buy at Market”? in the most recent Peak Income monthly newsletter, and not buying funds with the call label “Hold”?

Also, given the current down turn, do you recommend not buying anything until things sort out a bit?
Good questions, Dennis. If I have the stock rated as a “buy,” that means I still like it at its current price. I’d be perfectly comfortable putting in new money. If I have it rated as a “hold,” that means I’m content to hold on for a while and milk the dividend, but I’m not interested in adding new money unless the price dips a little.

As for the question about what to do now, that comes down to comfort level. If you’re not comfortable putting money at risk until volatility dies down, then stay on the sidelines. Personally, I welcome a little volatility like this, as it creates buying opportunities for us.

And finally, Mark M. writes,

Charles – I really appreciate your service and insight. In your last Peak Income update, you went a little into politics and how it may impact the portfolio. At the end you said:

We’ll see how this develops. I don’t need to tell you that a Sanders presidency would likely be the death knell of the bull market. The next few weeks of primaries should be interesting.

I understand your statement is not a judgement, but could you explain why a Sanders presidency (or really any non-Trump presidency) would cause the end of the bull market. I’m guessing it’s related to sentiment, which I understand is a driver in the stock market, but is the sentiment enough to overcome the actions of central banks to prop up the market?

Also, would you consider the end of the bull market to be a positive or negative impact for our portfolio? Dent research indicates that we NEED to reset debt in order to have a healthy economy. I understand the short-term issues with a bear market, but all Dent services promote investment opportunities in any market. So, I’m struggling to reconcile the larger demographic and central bank drivers with shorter term political affects.
One of the ironies of market history is that stocks actually perform better under democrats than republicans despite republicans historically having a more business-friendly reputation. There’s a lot of debate as to why that is, but more than anything, it comes down to expectations. If people are expecting too much from republicans, they inevitably get disappointed. Likewise, when they expect too little from democrats, they often get pleasantly surprised.

I don’t believe the bull market lives or dies with Donald Trump. Trump’s tax cuts and relaxed views on regulation have certainly contributed to the epic bull run, though low interest rates have probably contributed more. (It’s really an untestable hypothesis.)

Under a potential Joe Biden administration, banking and energy companies would likely come under greater scrutiny, which might affect earnings. But it’s not likely to torpedo the market.

Bernie Sanders is a different story, as he has plainly stated he wants radical change, which makes Mr. Market uncomfortable. I’m not a doom and gloomer, and we’ve had far worse presidents than Sanders over the decades. He wouldn’t break anything that couldn’t be fixed later. But stocks would likely suffer in the meantime.

That’s all I have this week. Keep your chin up… it’s rough out there.

Charles Sizemore


Trade Alert: Sell Nuveen Preferred and Income Term Fund (NYSE: JPI) (click to expand)

March 2, 2020

Well, last week’s volatility claimed one last casualty. We hit our stop loss in the Nuveen Preferred and Income Term Fund (NYSE: JPI). The shares are rallying hard today, so we’ll be exiting at a good price.

I’ll give a more thorough update on Thursday. But for now, take the following action:

Action to Take: Sell shares of the Nuveen Preferred and Income Term Fund (NYSE: JPI) at market.

Charles Sizemore


Sell Stamps.com (Nasdaq: STMP) (click to expand)

February 28, 2020

Well, it seems that the bear hasn’t stopped growling. One day after getting stopped out of Shell Midstream Partners (NYSE: SHLX), we’ve also been stopped out of the ClearBridge Energy Midstream Opportunity Fund (NYSE: EMO).

I hate this because I consider it a wild overreaction. It doesn’t really matter what I think, though. We have rules in place specifically to protect ourselves from wishy-washy thinking and to prevent small losses from escalating into larger ones.

So, sometime this morning….

Action to take: Sell your shares of the ClearBridge Energy Midstream Opportunity Fund (NYSE: EMO) at market.

Hang in there. This is one of the fastest corrections we’ve ever seen in history, but hysteria like this tends to burn out quickly. It may very well be that it gets a little worse before it gets better. But this too will pass.

Charles Sizemore


Worried About Coronavirus? Check out Emerging Market Stocks (click to expand)

February 20, 2020

I’m a patient investor. I like to give my positions room to run, and I’m comfortable risking a few bumps along the road.

But I have to say, even I’m surprised by how well our emerging market positions have held up during the biggest Asian health scare in years. Recent estimates have the coronavirus chopping a good trillion dollars off the global economy this year, and China in particular will likely be scaling back its growth estimates.

A Portfolio Update

Yet, you’d never know anything was amiss by looking at the performance of the Voya Emerging Markets Fund (NYSE: IHD). We’re up about 1% in the position, which we added just weeks before the coronavirus scare first hit the headlines.

Now, 1% isn’t exactly a windfall. But I’m happy to be sitting on profits at all given the circumstances.

This is the beauty of value investing. When you buy assets cheaply enough, bad news – even pandemic bad news – is mostly priced in. It sounds cliché, but there comes a point when the selling gets exhausted because there is no one left to sell. Emerging markets hit that point last year, which is why I was so excited to own them.

I’m no Pollyanna. I realize that if the virus scare gets out of control and drags us into a bona fide recession, emerging market stocks will fall further. But given the pricing we got back in December, I would expect any damage to be minimal.

I believe energy stocks are at a similar juncture. Investors are sour on the sector because they see a glut of production that isn’t going away any time soon. And longer-term, green energy is a major threat to traditional fossil fuels. The cheaper solar and wind energy get, the more they’ll cramp the turn of oil and gas producers. And if that isn’t enough, institutional investors are starting to look at oil and gas stocks the same way they looked at tobacco stocks or blood diamonds a generation ago- as pariah investments.

In the last monthly issue, I went into detail as to why the rumors of the demise of oil and gas is greatly exaggerated. Natural gas, in particular, will be a critically important and growing part of our economy for the foreseeable future.

The ClearBridge Energy Midstream Opportunity Fund (NYSE: EMO) hasn’t done a lot since I recommended it. It’s been bouncing around in a tight range.

So, if you haven’t bought shares yet, this is a good opportunity. Collect the 11% dividend yield and enjoy what I expect to be a truly epic rally.

In Other News…

Elsewhere, the election season continues to take interesting turns. I don’t like to get political in Peak Income, but to the extent that policy proposals can affect our portfolios, it’s worth mentioning.

Prior to last night, Michael Bloomberg had been rising in most national polls, and he was viewed by many as an electable, business-friendly moderate that would be strong enough to neutralize the hard-left Bernie Sanders wing of the party.

Well, after last night’s debate performance, I think Bloomberg is done. I don’t see him recovering from a performance that bad.

Meanwhile, support continues to slip away from Joe Biden, and Pete Buttigieg doesn’t poll well in several critical states. This means it’s looking more and more likely that Bernie Sanders will take the nomination.

Now, four years ago, I would have said that Bernie winning the presidency would have been ridiculous. But that was before another unlikely candidate – Donald Trump – took the prize.

At this point, I think it’s fair to say that anything is possible. An angry electorate has been proven to be unpredictable.

We’ll see how this develops. I don’t need to tell you that a Sanders presidency would likely be the death knell of the bull market. The next few weeks of primaries should be interesting.

That’s all I have for this week.

Until next time, keep cashing those dividend checks!

Charles Sizemore


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