No Signs of the Bear

Dividend Digest 273, June 10, 2015

Utilities, often considered to be the most safe and conservative sector, got whacked for a 4.1% loss last week. There is nothing safe, conservative, or defensive about that. The Russell 2000 Index of small-cap stocks, often considered to be a barometer of investor aggressiveness, outperformed the Dow 30 by 2.1% last week. Nothing conservative about that, either.

Instead of celebrating, investors began getting nervous a few weeks ago as the market was hitting new highs. The logic being: we are in the sixth year of a bull market and there is nowhere to go from here but down. Those may indeed be valid reasons to be nervous, but so far, there have not been any signs of a new bear market getting underway. In fact, the underlying signs have been painting a much different picture.

Small-cap stocks are showing strength. Micro-cap stocks are outperforming small-cap stocks. Traditionally safe dividend-paying segments like Utilities and Real Estate are performing poorly. Defensive segments like Consumer Staples and Blue-Chip stocks are lagging the market. Biotech stocks are zooming, and bonds are faltering.

Ron Rowland, All Star Investor, www.AllStarInvestor.com, 800-299-4223, June 8, 2015

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