“The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.”

-Benjamin Graham

There is a new world order. You can like the present administration, or detest it, but there is no arguing with the fact that a new world order is quickly evolving. President Trump is rapidly pushing the world into new places, and no one can rationally argue with that fact.

I do not talk about this today to concentrate on politics, but to assure you that our current political environment is going to have a significant impact upon our financial markets. This will be true for both the stock and bond markets, as well as the position of the Dollar in the world’s currency markets. Consequently, in my opinion, investors must re-examine their current holdings and re-examine where they are going to invest, to achieve a successful outcome.

“The most reliable way to predict the future is to create it.”

-Abraham Lincoln

First, let’s examine the “Magnificent Seven” and you will realize that the word “Magnificent” is no longer applicable. AI or “Artificial Intelligence,” has also begun to stagnate as it is no longer about how it will affect the business world as it is already affecting both the stock and bonds of the companies that are involved in it so that economic significance of it is dwindling at our current high valuations. The play here has been one of appreciation, and not income, and appreciation is drying up quickly, in my view, as the markets have been both “Trumped” and “Tariffied.”

Even the bond markets have been significantly impacted. The consumer price index (CPI) rose 3% for the 12 months ended in January, the U.S. Bureau of Labor Statistics reports. Inflation increases were broad-based in January, economists said, including for consumer staples like groceries and energy. Some economists worry that broad disinflation is over, as President Donald Trump's policy agenda, around tariffs and immigration, may raise prices this year. The jury is still out on this one, in my opinion.

Inflation jumped in January on the back of higher prices for consumer staples like groceries and energy. Some economists worry inflation has become entrenched above the Federal Reserve's target, even as President Trump’s policies around tariffs and immigration threaten to exacerbate inflation. The January reading is up from 2.9% in December. It marks the fourth consecutive month of increases in the annual inflation rate, when it was up just 2.4% in September.

Consequently, the return on bonds is marginally higher than our Inflation rate and I mean marginally. Further, most bonds pay semi-annually which is not helpful for seniors and retirees and pension funds who need money monthly, to pay their bills.

Looking back over the past month, according to Bloomberg data, we have seen the DJIA decline -0.37%, the S&P 500 decline -0.01%, while the NASDAQ was up just 0.41%. Personally, I do not expect the direction to change anytime soon as Trump lays out his new policies and as the Fed seems to be in no rush to lower rates anytime in the near future.

This is why I have been and continue to recommend two things. The first being “Caution” and the second being to change your investment strategy from “Appreciation” to “Income.” All of the funds and Reit’s that I use presently pay monthly, which allows for the compounding of interest, and also the ability to move quickly to adjust to the rapidly evolving economic world that currently surrounds us. In fact, some of the monthly paying funds that I use now yield over 20% and some of the monthly paying tax-exempt funds are in the 7.00-8.00% range.

“We are made wise not by the recollection of our past, but by the responsibility for our future.”

-George Bernard Shaw

So, I suggest that you stop. Take a deep breath, and re-examine your holdings, before your holdings begin to re-examine the worth of your portfolios. The economic world and the markets are changing rapidly, and “Caution” continues to be the byword of my faith.

“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”

-Warren Buffett

Mark J. Grant

Chief Global Strategist

Colliers Securities

Mark.Grant@Colliers.com

U.S. 954-999-0933