Investing

The Fed is going to keep interest rates near zero for the foreseeable future. With 10-Year Treasury yields around 3.5%, solid blue chip companies offering decent dividends become popular. Not only do they offer current income and the possibility of capital gains, they also have better protection against inflation than regular bonds. No wonder Warren Buffett wrote, “Buy American. I Am.” in The New York Times last October.  

However, the economy is still in the bottoming process. There is a potential risk for the economic to backslide. Which blue chips are relatively safe?

I use following 9 criteria to select relatively safe dividend stocks:

1.Yield>=3.5%
As an alternative to 10-Year Treasury, stocks need to have at least that kind of yield.

2. Market Cap >$2 billion
Generally speaking, the bigger, the safer. 

3. P/E and Forward P/E both <=20

****The following article is from our new guest contributer,  Hao Jin, CFA of Point Financial Advisor.  He will be contributing to the myWealth blog on an on-going basis.  Look for his profile later this week.

 It has been nice a rally, but it looks to me like we could easily see a 10% sell off in stocks. Considering that fact that we were on the verge of the next Great Depression this time last year and that the economy is still getting stronger things are really not too bad. 

I wrote an article a couple of weeks ago, in which I laid out some reasons as to why I thought that Warren Buffett is very misinterpreted and misunderstood. Buffett is indeed one of the greatest investors to ever walk the face of the earth, and his strategies and ideas carry tremendous weight.   He influences the influencers and very often his beliefs are taken out of context and therefore misunderstood and lead to stock bubbles.