Amidst the United Kingdom exiting the EU and DOW Jones dropping each day after the Brexit; there is still a silver lining in all this stock exchange mess. There has been a history of raising with big percentages the year after. To add to Brexit, during Presidential election years, the market tends to drop then rise again. I look to see stock soar next year no matter who the president is. Right now seems to be an excellent time to buy stock and expand your portfolio. It is a good time to buy after a market plummet. If you decide to invest in some stocks soon, here is my top 5 stock choices.
Businessman holding a transparent screen with an inscription a top five. Business, technology, internet and networking concept.
The top five portfolio of common stocks I will put together whose stock is traded on the New York Stock Exchange will be on Warren Buffet’s top 10 list of dividends paid in 2016. According to The Street, each of Buffett’s top 10 “comprises at least 0.8% of his public equity portfolio and has a dividend yield of 2.5% or higher” (The Street, Page 2).
I think it is smart to at least take a look at Warren Buffett’s portfolio and the decisions the multi-billionaire is making. My first decision will be to add General Motors (GM) which pays $0.38 per share quarterly yielding 5.27% and a Beta of 1.73 providing great returns as of late. My second stock to add to my portfolio will be IBM (IBM) which pays out $1.40 per share and yielding 3.8%. The Beta for IBM is 0.71 revealing low risk and providing solidity and safety to my portfolio, but also decent dividends paid. My third stock to add to my portfolio will be Phillips 66 (PSX) which has recently increased their dividends to $0.63 and is yielding 3.2%. I honestly did not know anything about Phillips 66 until I found out that Warren Buffett has been purchasing hundreds of millions worth of stock with them. Phillips 66 is an energy manufacturing and logistics company with a Beta of 1.49 which is mostly betting on the four segments of midstream, chemicals, refining, and marketing and specialties.
My fourth stock will be Wells Fargo (WFC) which is a company with a long history of paying dividends. Wells Fargo lowered their dividends to five cents during the 2008 market crash, but has since increased it to $0.38 yielding 3.25% dividends. This stock is Warren Buffett’s second largest stock holding in his portfolio revealing some trust in this stock with a Beta of 0.94. My fifth stock I will be investing in will be Coca-Cola (KO) my favorite beverage to drink; as Warren Buffett says about Coca-Cola “I’m the kind of guy who likes to bet on sure things, no business has ever failed with happy customers – and you’re selling happiness” (The Street, Page 6). The Beta for Coca-Cola is 0.53 and paying dividends of $0.35 yielding 3.11%. Coca-Cola has paid quarterly dividends since 1920 and has increased dividends every year for the last 50 years. Warren Buffett owns over 400 million shares of Coca-Cola compiling 14.4% of his public equity portfolio.
My portfolio will have some solid ground to stand on with decent dividends paid per quarter. My portfolio also has a couple high risk high reward stocks which seem to show a promising return in the near future. My portfolio reflects Warren Buffett who is the billionaire known as “The Oracle of Omaha.” Many people follow his footsteps when it comes to investing.
In my portfolio each company will have a portfolio weight of 20%.
General Motors (GM) has a 0.346 beta weight in my portfolio.
IBM (IBM) has a 0.142 beta weight in my portfolio.
Phillips 66 (PSX) has a 0.298 weight in my portfolio.
Wells Fargo (WFC) has a 0.188 weight in my portfolio.
Coca-Cola (KO) has a 0.106 weight in my portfolio.
My overall Beta for my portfolio would be 1.08 revealling a relatively safe portfolio with some possible nice returns.
The gold standard monetary global system was the most prolific system ever created. From 1870-1914 the gold standard showed large GDP numbers around the world. Practically every country was showing growth in numbers not comparable today. In fact the comparison is not even in the same ball park. During this time, actual gold coins were being used for sell and trade. Most of the countries in the world had the same currency “gold” and would have no problem investing in other countries. GDP high numbers were a norm back then with percentages as high as 6-9% with various countries seeing even higher. Let’s look at China’s GDP before their recent crash; they were at a steady 7% and 9%. This was looked at by the world as amazing and un-speakable growth. Well before World War I, these numbers were the norm for every country. The gold standard is recognized as the most perfect system ever created.
The Bretton Woods monetary system was created after World War II and to address the economic difficulties some countries were partaking in. This system was to establish commercial and financial relations among countries in 1945. I wasn’t until 1971 when the United States terminated the convertibility of the USD to gold which is known as the “Nixon shock” and ended the Bretton Woods system. the USD was considered a flat currency while states began reserving the US dollar. This began a process of free-floating currencies, the US dollar and the Britain pound began the Floating Rate System where the market forces are what determine the exchange rate between two currencies. The floating system naturally adjusts and is isolated from shocks created from other countries. This gives government’s economic independence without the effects of external economic performances.
As we all know, China has seen better days. The stocks in China have fallen so hard that it is said to be the “weakest economic growth in a quarter century.” The yuan has continued to depreciate while the world is wondering if they will be dragging the entire world down with them. The economic exposure is so severe, people have worried about the end of days or the end of the world. For those reading these words who live in the United States of America, China’s collapse will not put us in a worse economic position. The United States is a $15 trillion dollar economy; that is $15 trillion coming in and $15 trillion going out. The business Unites States has with China is only $150 billion, not to say it’s not a lot of money, but $150 billion dollars is only 1% of our economic prowess.
The economic exposure has set Hang Seng China Enterprises Index on a trading level that puts a lot of pressure on future options mostly held by large banks like Bank of America and Merrill Lynch. It is possible the investors will begin to lose their principal if the levels of stock continue to fall. The stocks are predicted to fall even faster very soon. The large banks will respond to this economic risk and sell their futures to reduce their hedge. William Chan, the head of Asia Pacific equity derivatives research said “as the market goes lower from here, the downward move may accelerate. There will be a large amount of hedging in futures which dealers need to unwind.” The economic exposure could be seeing more economic crashing in the near future for China. We can only hope China will listen to the market and use their prideful communistic pressure against the market.