There's always one king to rule your portfolio empire…
This "Beat the Fed Stock" Is Hiding on Your Kitchen Table
On Wednesday, the Federal Reserve boosted rates yet again — taking the benchmark Fed Funds rate to its highest level in 22 years.
The move wasn't a surprise — Fed Chair Jerome Powell has been pretty clear about the central bank's "keep-boosting-til-something-breaks" assault on inflation.
And in one of the sessions he holds with reporters after each Fed meeting, Powell's rhetoric contained enough clarity to tell us that rates could go higher still.
As we talk to you here, there's a 20% chance the next hike will happen in September.
Source: CMEGroup
A 30% chance in November.
Source: CMEGroup
And a 28% chance in December.
Source: CMEGroup
But no matter what Fed policymakers do next, I don't trust them.
Just look at the chart below, as you can see people are falling victim to buying high and selling low:
But what if you could predict where Tesla stock will be next month TODAY?
For over six years now, we at TradeSmith have been developing a cutting edge A.I. algorithm called An-E (short for Analytical Engine) that can predict future stock prices with astonishing accuracy.
And our A.I. stock-picking marvel is finally ready for public use, including its latest prediction on Tesla.
What I mean here is that the Fed has traditionally been run mostly by academics and economists who haven't spent a single day running a real business and have never managed money for clients.
I grant you, there are exceptions.
But the Fed is an imperfect institution — meaning the risks of overshooting or undershooting its targets for the economy and the financial markets are much higher than most investors want to admit.
And that's the real issue here… the real lesson… the real takeaway: You never want to put your financial future into someone else's hands.
You don't want to trust them to take care of you.
Despite the aggressive campaign, the Fed's target goal of 2% hasn't been attained. And even the "brain trust" in Washington says that inflation could remain "elevated" until 2025.
So we want to take control.
To tune out what the Fed says about the economy's health, about jobs, about prices, and about asset classes like stocks…
And find our own true edge by actively seeking income.
Like owning dividend-paying shares.
Now, I realize some investors view dividend stocks as B-O-R-I-N-G.
But thanks to my many decades in this business, I disagree. I know that dividends are an essential element of any winning investing strategy.
That's especially true in times of rising prices when inflation is eroding your purchasing power day after day. Stocks that regularly increase their dividends beat the market by a wide margin during inflationary periods.
And there's one easy way to cherry-pick these winning investments.
Profits on the Kitchen Table
One way to find a winner is by turning to "buy-what-you-know stocks."
These are the investable companies that produce goods and services that you use each day in your own home.
One of my favorites is J.M. Smucker Co. (SJM).
It produces the Jif peanut butter and Smucker's strawberry jam for the PB&Js in the lunchboxes of schoolchildren across the country.
Its Folgers Coffee has an estimated 35 million drinkers, filling up their coffee cups to start the day or their travel mugs to power through the night shift.
And its Milk-Bone biscuits are the treat of choice for many a beloved dog.
Over the last year, the stock price has held up well — showing SJM's power in an inflationary environment — climbing 17.6% as of this writing compared to a 13.5% gain for the S&P 500.
In a free July 10 report to our TradeSmith Daily readers, we shared that Tesla could add billions of dollars in revenue by creating a business that sells its AI chips and technology.
On July 19, Tesla CEO Elon Musk announced that his company is in early discussions to license its self-driving technology to a major automaker.
Boom.
But it seems like most people haven't caught onto the significance of this announcement yet, as Tesla is having an earnings "hangover" with the stock price dropping 5% in five days.
But that's okay.
Because one of our top-tier analysts created a system that follows what some of the smartest and wealthiest "Big Money" players are doing with stocks like Tesla. So YOU can piggyback off their trades and have the chance to create your own successful results potentially before everyone else catches on.
Our Health Indicator was created so you can identify investment opportunities at a glance and know if they deserve your hard-earned money.
A stock in our Health Indicator's Yellow Zone means to "proceed with caution," a stock in the Red Zone means to "stay away," and a stock in our Green Zone is like seeing the green light on a traffic signal: "Go."
SJM is in our Green Zone.
What I also like about SJM is it's relatively low-risk status as an investment.
Our Volatility Quotient (VQ) — which is another great tool that lets you know if an investment is for you at a glance — classifies SJM as a "Medium Risk" at 16.03%, which is pretty close to being a low-risk investment.
VQ Level Breakdown:
Up to 15% = Low Risk
15%-30% = Medium Risk
30%-50% = High Risk
50% and above = Sky-High Risk
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Now, let's get to the income payments.
Owning shares of J.M. Smucker Co. is a way to offset the ill effects of inflation eroding your savings.
Americans lost $6.8 trillion in stock-and-housing wealth last year, meaning even with the stock market rally we've seen this year, many people are still trying to play catch up from everything they lost in 2022.
Part of that "catch-up plan" is generating consistent income — through dividend payouts.
J.M. Smucker Co. currently has a respectable yield of 2.77%, which equates to dividend payouts — income — of $4.24 per share.
Bottom line: Owning the right dividend stocks to generate income is critical to your investing success. And by knowing the importance of finding income-generating opportunities, you won't have to be reactive to the Fed. You will have your gameplan in place… prepared for whatever is thrown your way.
Good investing,
Mike Burnick Senior Analyst, Ultimate Income
P.S. Just a few short months ago, TradeSmith'sAn-E (short for Analytical Engine) turned the investing world on its head with its scarily accurate A.I.-generated stock price predictions…
Today, that same machine learning program is poised to rescue the millions of Americans who are in desperate need of extra income.
That's because An-E has just taken its 76% win rate with stock picks and bumped it up to a stunning 97% backtested win rate with income investing…
Basically giving you the chance to collect extra income from the market any time you want.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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