Opening Statement from the October 2015 Dividend Gems

Opening Statement from the October 2015 Dividend Gems

Originally published on October 18, 2015

Due to the high level of market risk, most of our recommendations from the September issue were focused on aggressive investors. As it turned out many of these recommendations were successful.

Notably, oil securities mounted an impressive rally along with oil prices and the general stock market. However, we remain cautious and advise active investors to trade oil securities when possible because we believe high volatility in oil securities will remain for some time. Oil pricing is up in the air and will depend on how OPEC handles things as well as the timing of a possible hard landing in China.

Current Assessment

On September 18^th the Federal Reserve announced its decision to keep interest rates unchanged in accord with our expectations. Notably, the Fed’s mention of weak inflation caused commodities and equities to sell off due to deflation fears. With little surprise, emerging market (EM) equities rallied after the Fed’s announcement, as it reduced capital outflows from the EMs.

Although we have repeatedly stressed that the timing of the first rate hike is not nearly as important as the pace of future rate hikes, we believe