Kind of uncharted territory as we head through what some analysts are calling "the greatest bull market ever". I think that might be going a bit far, at least in the MFI world.
I wrote back in mid-August that my MFI Index was nearing correction territory. It was down 7.3% from the end of June 2017. In 2015 my MFI Index was down almost 9%. So if it has been the greatest bull market of all time, it has left a pretty good swath of value stocks behind,
So it may be uncharted in how long can it last? But For value stocks, we have some catching up to do. I am hopeful that that catching up is by value stocks going up, rather than growth stocks going down.
Catching Up
I think value stocks are catching up, although it has been such a rocket-fuel first two weeks it is hard to tell. But my MFI Index is up 5.3% through 8 trading days this year. I note it was only up 4.7% ALL of 2017. And the M&A I predicted this year? I see where PBI has been approached by Carlyle Group and popped 13% yesterday.
I see some people taking money off the table as the market has gone too far and too fast. But I am not so sure that is the case. Anyone who heard Warren Buffett the other day needs to have a good think about what he said.
- market is not overvalued as long as interest rates stay low and
- The impact of lowered corporate tax rates is huge.
So definitely watch the 10 year yield. But I doubt Powell will be much more hawkish than the dovish Yellen.
Here is my MFI Formula tranche I started at start of year:
| 1/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AMGN | $177.11 | $181.96 | $0.00 | 2.7% | 2.8% |
| GME | $18.06 | $19.96 | $0.00 | 10.6% | 2.8% |
| GILD | $71.64 | $79.06 | $0.00 | 10.4% | 2.8% |
| HRB | $26.34 | $26.08 | $0.00 | -1.0% | 2.8% |
| OMC | $72.81 | $74.32 | $0.00 | 2.1% | 2.8% |
| Totals | 4.9% | 2.8% |
So definitely trending with the 5.3% for MFI Index.
Bond-Like Investments
You can tell there is some concern about interest rates and rate hikes. Look at some of my bond-like investments the first 2 weeks:
| Dividend Stocks | Current | 2018 Change | 12/30/17 Price | Yield |
| OIBAX | 6.01 | 0.8% | 5.96 | 4.0% |
| JQC | 8.17 | -0.6% | 8.22 | 7.0% |
| EVG | 14.30 | -0.3% | 14.35 | 6.4% |
| RLJ-PA | 26.43 | -2.2% | 27.01 | 7.4% |
| OCSI | 8.46 | 0.7% | 8.40 | 9.0% |
| DSL | 20.77 | 2.9% | 20.19 | 8.7% |
| O | 53.28 | -6.6% | 57.02 | 4.8% |
Even my dividend index, if you pull out the equities and MLPs is down 1.7%:
| Ticker | 12/30/2017 | Current | Dividend | YTD Change |
| VNQ | 82.98 | 79.23 | - | -4.5% |
| RQI | 12.65 | 12.09 | - | -4.4% |
| TCO | 65.43 | 62.69 | - | -4.2% |
| SLG | 100.93 | 95.73 | - | -5.2% |
| T | 38.88 | 36.48 | 0.49 | -4.9% |
| VZ | 52.93 | 52.11 | 0.56 | -0.5% |
| CHL | 50.54 | 49.87 | - | -1.3% |
| DTEGY | 17.66 | 17.42 | - | -1.4% |
| DSU | 11.70 | 11.64 | - | -0.5% |
| HIO | 5.07 | 5.08 | - | 0.2% |
| MUB | 110.74 | 110.21 | 0.21 | -0.3% |
| PRHYX | 6.76 | 6.79 | - | 0.4% |
| NEA | 13.75 | 13.63 | - | -0.9% |
| JNK | 36.72 | 36.92 | 0.17 | 1.0% |
| VWITX | 14.13 | 14.07 | 0.03 | -0.2% |
| PHMIX | 9.09 | 9.05 | 0.03 | -0.1% |
| UTG | 30.94 | 30.58 | - | -1.2% |
| XLU | 52.65 | 50.55 | - | -4.0% |
| DUK | 84.11 | 79.28 | - | -5.7% |
| EIX | 63.24 | 62.32 | - | -1.5% |
| PFF | 38.07 | 38.19 | 0.18 | 0.8% |
| JPC | 10.34 | 10.23 | - | -1.1% |
| WFC-PL | 1,309.99 | 1,277.50 | - | -2.5% |
| TIP | 114.08 | 113.27 | 0.21 | -0.5% |
| SHY | 83.85 | 83.75 | 0.08 | 0.0% |
| TLT | 126.86 | 124.31 | 0.26 | -1.8% |
So early returns tell you that things that are not inflation sensitive will struggle.
Looking Forward
I continue to sit on my hands, but will be making some changes at start of February. One area I am thinking about adding exposure is copper. Read a great report about how copper supplies are not keeping up with demand. But not sure... pretty happy with where my portfolio sits right now, all-in-all.
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