I've spent the last couple of weeks in the States, visiting the Fool Global HQ offices, just outside Washington DC.
No talk of our unfair budget. No angst about the plunging iron ore price. Little concern about China.
America has its own problems, of course, not that you'd know it walking about the nation's capital. Restaurants were full. Shops were busy. People were working.
By and large, the same goes for Australia. We have some problems — including the high cost of living, magnified by our stupidly expensive house prices — but in the whole scheme of things, we're doing pretty darn well, thank you very much.
Not that you'd know it…
Blame it on lying, deceitful politicians, as usual. Life is definitely a whole lot better when they are OFF the front pages of the newspapers.
Ahhh… the budget.
It wasn't the horror budget we thought it might be — although I can't imagine the 48 year old lifelong brickie is looking forward to lugging heavy bits of clay up and down ladders aged 69.
It was just an unfair budget, full of broken promises.
Seems Australians don't like paying more tax. Or lying politicians. Go figure.
Life goes on. Budgets come and go. Do you remember the 2013 budget, and the abolition of the baby bonus?
My point, precisely.
In any case, the budget is unlikely to have any substantial or lasting impact on our economy. Take the boss of DuluxGroup (ASX: DLX) who said ($) in the AFR…
"A lot of the fundamentals are actually in quite a positive position. We've had relatively high levels of population growth over the last couple of years and that's set to continue. We've got historically low interest rates, we've got relatively low levels of unemployment, we've got a…robust property market."
If you can't trust British Paints (one of Dulux's brands), who can you trust?
So fret not, Foolish readers.
Fret not about the budget.
Fret not about rising interest rates.
Fret not about a market crash.
Even the bears admit defeat
On that last point, even the bears acknowledge a market crash is not imminent, as highlighted by Ashok Jacob, one of Australia's top investment advisers.
In an interview ($) in the AFR, Mr Jabob admitted he was a "fully invested bear," saying…
"…the reality is that while you have excess liquidity and there is no inflation, asset prices have to keep going up."
Party on. If it's good enough for the experts, it should be good enough for you too.
Right on cue, overnight US markets climbed, with small-cap and internet stocks leading the way… good news for my personal holdings in Facebook and Google.
Party time. And about time too!
Here in Australia, our market is down a little today, dragged lower by the iron ore price plunging below US$100 a tonne for the first time in two years, and a further slump in consumer confidence.
Blame it on the politicians, I say.
Iron ore crash
2014 hasn't been pretty to pure iron ore play stocks like Fortescue Metals Group (ASX: FMG), Mount Gibson Iron (ASX: MGX) and Atlas Iron (ASX: AGO), down 21%, 27% and 35% respectively so far this year.
Regular readers of Motley Fool Take Stock will have avoided iron ore stocks like the plague, given our repeated warnings that the underlying price of the commodity could only fall.
It's what happens when increased supply meets falling Chinese demand.
You don't need to be a rocket scientist to work these things out… although it never ceases to amaze me how smart people still manage to get burnt chasing high risk mining stocks.
Is it the good old Australian gambling gene that just can't be suppressed?
Or greed?
Or hope prevailing over logic?
2014 — the year of the stock picker
Collectively, investors had such a wonderful 2013.
The S&P/ASX 200 rose 15%, building on the 14.6% gains of 2012.
But 2014 is tougher going. Almost five months into the year, the index is flat. The spark has gone out of bank stocks. In the face of the falling iron ore price, BHP Billiton (ASX: BHP) has been surprisingly resilient, yet its stock has gone nowhere in 2014.
Yes, Foolish readers. You're going to have to work a little harder for your money, and your stock market gains, in 2014. It's a stock pickers market.
Looking down the list of winners so far in 2014, it's hard to decipher a trend. Sadly for you, buying a holding a basket of four banks just isn't going to do it for you this year.
One stock doing very well in 2014 is Fairfax Media (ASX: FXJ), up a very impressive 63% year to date.
Who'd have guessed it? An old media stock thriving in a new media world.
One person who DID guess it is our very own Scott Phillips.
Fairfax is up almost 200% since our Motley Fool Share Advisor stock picker extraordinaire highlighted the company in The Sydney Morning Herald in October 2012.
Well done Scott.
As a reminder, Scott and co-analyst Andrew Page recently revealed their 3 best buys now stocks for May, exclusively to Motley Fool Share Advisor subscribers.
One of those companies has a Fairfax ring to it — a once great company going through some tough times, the shares down almost 40% from their 2013 high.
Don't get me wrong — 200% gains in such a short period of time are unlikely, but substantial gains in the years ahead are likely, and you'll be paid an attractive dividend while you wait.
Good old dividends. Reliable, juicy, fully franked and growing. In this low interest rate environment, it doesn't get much better than buying, and holding a dividend powerhouse.
Speaking of interest rates, prominent economist Saul Eslake yesterday ditched his forecast that the Reserve Bank will cut interest rates further this cycle.
He now expects interest rates to be on hold for the rest of 2014, the whole of 2015, with gradual hikes beginning in the first quarter of 2016.
Whatever the timing, two things are abundantly clear…
1) Low interest rates are here to stay.
2) The dividend stock party has some serious legs.
The dividend yield that puts term deposits to shame
Speaking of dividends, a stock I've had my eye on for some time is listed micro-cap fund manager Contango MicroCap (ASX: CTN).
Like Dulux, they too see little direct investment impact from the budget, portfolio manager Bill Laister saying in a recent update…
"We don't think the budget materially changes the outlook for the economy or interest rates and we continue to expect growth to improve over the next 12 months, which will support the microcap space."
Trading around $1, Contango shares trade at a 10% discount to their net asset value, the kicker being their forecast 7.3% dividend yield.
With such dividend yields on offer, who needs term deposits?
