What can you invest in if you think the market is fragile and you don’t like the direction the world is going?

Before this recent correction, the market had risen nearly 70% from the low point in 2009 without much evidence of economic improvement. It’s hard to believe that the market reflects reality when values can change so much with so little real improvement. The fact is that the market has not been reacting to news, its been over-reacting on the upside and the downside.

Many investors are conditioned to ignore short-term volatility in order to capture the value created by the long-term the growth of the economy. But if the economy is not growing, there is no reason for the market to grow — even over the long run.

Until the world’s economies start growing again, I think stock prices will be volatile and the underlying trend will be flat. This is why I think it makes sense to look for stocks that will pay a good dividend while we are waiting for economic growth to resume.

One of the stocks that fit this profile is Penn West Energy (PWE). Penn West Energy is the largest holding of Chris Rees. Chris’ Marketocracy track record is impressive. Over the past almost 10 years, he has averaged 25.5% a year while the market has been flat. That is why I often use his model portfolio for clients in separately managed accounts.

PWE’s dividend yield is 8%. But unlike many stocks that pay high dividends, there is also the potential for a significant capital gain. Read More...