Hey, you wont catch me complaining. The reasons people are citing for
Wednesdays monster stock rally (490 points on the Dow!) might be dubious and
short-lived. But up is up, and Im just glad to be a good deal richer now than I
was when I turned the office lights off last Friday night. Still, its a bit
perplexing that the market can plunge one week, then soar the next with so
little change in the underlying economic fundamentals. As far as I can see,
yesterdays announcement of another money-pumping operation by the worlds central
banks doesnt really add much to the mix. Will it resolve Italys debt problem or
anybody elses, for that matter? Basically, the central banks have bought a
little time for their most-favored clients, the commercial banks. If, however,
the over-indebted European governments dont follow through promptly by cleaning
their fiscal houses, this stopgap measure will flop, like so many others. The
continent is facing a long-term solvency problem, not merely a short-term
liquidity problem. Our leaders in Washington had better start tackling our own
budgetary issues pretty soon, or well be next. Yesterdays spike lowered my
10-year projected return for the U.S. stock market to 7.2% annually, including
dividends. Thats not ruinously bad, but remember: Stocks require you to accept a
lot of volatility. Why put up with the Dows wild weekly and monthly swings when
you can earn 7.7% up front with DoubleLine Total Return Bond Fund (MUTF: DLTNX
)? Since inception in April 2010, DLTNXs share price has fluctuated, month to
month, about one-sixth as much as the S&P 500 Index while producing a bigger
total return! Whether on an absolute or a risk-adjusted basis, youre getting a
far better deal with DLTNX. With that introduction, you can see why its
difficult for me to work up much enthusiasm for chasing the stock market higher
after the moonshot of the past three sessions. If you just cant suppress the
urge to buy, though, make it a safe household name like Clorox (NYSE: CLX ). CLX
gave up its early gains Wednesday after word spread on the Street that activist
Carl Icahn further trimmed his stake in the company during the quarter ended
Sept. 30. However, Icahns machinations are of little interest to us now that he
has dropped his takeover bid. If Clorox gets acquired, the knight in shining
armor probably will be a much bigger player than Icahn most likely, somebody in
the Unilever (NYSE: UL ) class. I'm buying CLX right now for the plump 3.7%
dividend, which has been increased 34 years in a row. As Benjamin Graham, the
father of value investing and mentor of Warren Buffett, said: One of the most
persuasive tests of high quality is an uninterrupted record of dividend payments
going back over many years.
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