Opening Statement from the July 2020 Intelligent Investor (part 1)

Opening Statement from the July 2020 Intelligent Investor (part 1)

Originally published on July, 2020

Overview

As a result of the unprecedented support from Washington and the Fed, equities investors have generally discounted many of the longer-term risks stemming from the COVID-19 economic shutdown. Perhaps the only consideration made by investors for ongoing risks has been reflected in their strong preference for high-tech stocks which are viewed as less risky with respect to COVID-related risks. Accordingly, the Nasdaq continues to hit new record highs.

In some regard, price multiples have expanded as a result of the persistent low interest rate environment. Even after factoring in this important consideration, we believe many earnings estimates are excessive. Regardless, moving forward, we believe the big tech names (AAPL, MSFT, NFLX, AMZN, NFLX, PYPL, etc.) will continue to outperform. Finally, drug makers and biotech firms should also perform well for obvious reasons.  

A low interest rate environment creates a challenging investment environment for dividend investors. The problem of low interest rates is most apparent for retirees and other investors seeking safe investments with reasonable yields.

As we have emphasized for several years, this is a golden period for dividend investors who are able to minimize risk while navigating economic turbulence. Thus, we strongly recommend Dividend Gems as a supplement to the Intelligent Investor. ..