As predicted by myself, and just about every other pundit in the universe, overnight the US Federal Reserve kept interest rates on hold.
Not surprisingly, Wall Street rallied, jumping over 160 points, and the Nasdaq closed at yet another record high.
Quoted on Reuters, UBS portfolio manager Alan Rechtschaffen said…
“We are in a pretty good environment for stocks… When you are comparing things to the low interest rates we have, things can look attractive that wouldn’t look attractive in a normal interest rate environment.“
He’s stating the obvious, of course.
In comparison to US interest rates of just 0.25%, just about EVERYTHING looks attractive except for cash.
Even US Federal Reserve Chairperson Janet Yellen agreed, saying asset valuations are “not out of line with historical norms.”
Here in Australia, our cash rate is a comparatively high 1.5%.
But perhaps for not much longer, with the AFR saying yesterday that most economists expect the RBA to cut the cash rate at least once more, with many tipping two moves lower.
I’m no maths genius, but by my calculations, that could bring the RBA’s cash rate down to just 1%. Likely next year…
Buy EVERYTHING indeed… except term deposits, and for me at least, mining stocks!
Yesterday I publicly swore off buying mining stocks… the same day an article in the AFR said top fund manager Paradice Investment Management had taken big stakes in many of the highest flying stocks in the All Ordinaries index.
Yep, you guessed it… all were mining stocks.
Bradken (ASX: BKN), up 341% year to date.
Galaxy Resources (ASX: GXY), up 187% so far this year.
Beadell Resources (ASX: BDR), up 221% in 2016.
Maca Limited (ASX: MLD), up 131% year to date.
Saracen Mineral Holdings (ASX: SAR), up 150% so far in 2016.
With returns like that on offer, why wouldn’t you invest in mining stocks?
Each to their own. Unlike most other sectors, to be a successful investor in mining stocks requires exquisite timing.
And nerves of steel, because the time to buy mining stocks are when the days are darkest.
I’m happy to leave that game to the experts. The people who make the site visits. Who meet the management. Who know the sectors, and the key drivers. Who watch these things like hawks.
I simply don’t have the time, or the inclination, to invest in mining stocks, notwithstanding that we ALL love a massive winner.
There’s more than one way to skin a cat. And my way is to follow the experts at our own Motley Fool advisory services.
Like me, they don’t touch mining stocks.
They prefer the Warren Buffett way — pay a fair price for a wonderful company, run by a great management team, and sit back and let time, and compounding returns, be your friend.
The results have been outstanding, with the scorecards for all five of our Motley Fool Australia advisory services comfortably out-performing the All Ords index.
Yesterday I wrote about how our resident dividend expert Andrew Page’s recommendation of Retail Food Group (ASX: RFG) was up over 60% for the Motley Fool Dividend Investor scorecard.
Nice going, Andrew.
What I neglected to mention — and I was reminded as such — was that our resident growth stock expert, Scott Phillips, was ahead of even Andrew on Retail Food Group.
His recommendation of RFG, to members of his Motley Fool Share Advisor service, is currently up over 175%, with a bullet.
Move aside, Andrew…
I’m a lazy investor.
I want someone to just tell me what do. What to buy. When to buy. When to sell.
And although I love my dividends, I also love my capital gains, especially when they involve me doing nothing but letting my winners run.
Scott Phillips has an uncanny knack of picking such winners, including one that’s up over 700% for the Motley Fool Share Advisor scorecard.
Nice going, Scott… and thanks, because I’m on board for the ride, too.
No mining stocks. No speculative penny stocks. Just great companies trading at fair prices. The perfect “lazy investor‘s” stocks.
Scott dropped me a note yesterday….
“I think you’ll like this week’s new buy recommendation.“
He’s right. I do like it. And just for the record, in accordance with our own internal trading rules, I am precluded from buying the stock until at least two full trading days after it is revealed to Motley Fool Share Advisor members.
The company ticks all the boxes of a classic growth stock, one you could stick in the bottom drawer and pull out in five years time, finding it might have doubled, trebled or even more.
Profitable. Attractive profit margins. Growing quickly. It even pays a fully franked dividend.
Find out its name by grabbing a 12 month membership to Motley Fool Share Advisor. I’ve even gone ahead and knocked up to 60% off my already low price. Click here to start now.
Although not cheap, even Janet Yellen might agree its valuation is “not out of line with historical norms.”
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
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Of the companies mentioned above, Bruce Jackson has an interest in Retail Food Group. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691).