The Frugal Investor Market Commentary 2/11/16: Seeking Opportunities in a Struggling Market

February 11th, 2016 by Anchor Bay Capital's Investment Team

[grwebform url=”https://app.getresponse.com/view_webform_v2.js?u=BOdmh&webforms_id=3594105″ css=”on” center=”off” center_margin=”200″/]The stock market opened lower today and opportunities are plentiful if you are a contrarian.  What I mean by this is one might not see across the board selling as a real negative but as an opportunity to acquire stocks at a lower price. As you may know, I am a believer in the “GARP” (Growth at Reasonable Prices) principle of investing.  This means that I look for companies that are somewhat undervalued and have solid sustainable growth potential.  While the phrase “buy low and sell high” is certainly familiar to most, the question is always, “When do we find the low?”  In my opinion, “buy-low” resonates now with the market down almost 15% from its 52 week high (Dow Jones Industrial Average).  Some in the media believe we may very well be at or near the bottom. That being said; when I find a bargain in stock prices I will purchase it without concern of which direction it will go from here in the short term.

The investment opportunities that I’m currently pursuing are the rich dividends currently being offered by some of America’s best run companies. I’m seeing dividends with yields in excess of 4% in an environment of a 1.6% ten year US Treasury Note.  Dividend income remains an important component of our portfolios, especially with yields in fixed income remaining so low.

As you examine your investments in the context of your overall financial plan, there are other bargains to be aware of in this economic environment.  Please take a moment to consider your current mortgage rate. With the ten year Treasury Note at 1.6%, low rates may very well provide an opportunity to refinance. Additionally, consider any auto loan that you presently have or that you may be considering. Auto loans from your local credit union should be available at less than 2%.

Finally, please be patient with your investment objectives as a well-designed portfolio will survive through whatever volatility the stock market offers.

Scott Spiering

Chief Portfolio Manager