Well, 2016 has been a rocky road for stocks, with all of the major market indices down. But as of this moment, about 2 o’clock Friday, our portfolio has perfumed remarkably well. If you’ve been following my advice, you’re up over 1.5%.

Today I sold JNJ because even when the market bounced, this stock didn’t. It just kept on its downward trajectory. Like I said yesterday, when you make a mistake, admit it, dump the dog, and move on. Today we dumped the dog.

With the excess money, we are purchasing Archer Daniels Midland (ADM), the big agriculture concern that throws off decent dividends and looks to be coming off of a double bottom, from the looks of the chart:

We also bought more of SH. It looks like the bear is here to stay.

So with the sale of JNJ and the acquisition of ADM and more SH, here is the way the portfolio looks:

Stock        percentage
ADM        9.3
BNS         10.4
ENB         8.6
FNV         13.1
LTC         11.6
SH           23.6
TLH         12.2
YORW     11.1

I am closely monitoring BNS to sell. It has not responded very well to a slight bump in our Canadian Energy shares today. If it continues down on Monday, we may reduce our position.
Our superstar is SH, but lately FNV has sprung to life. I have Exxon (XOM), Coresite Realty (COR), and Verizon (VZ) on my watch list.

This gets to the question of, how exactly do you pick stocks? I recognize that out of the thousands of shares out there, I can’t be an expert in all of them. Therefore I start with where I think we are in the market cycle. By any measure, we are very late in a very old bull market:

That’s 7 years old, about as long as I can ever remember a market surging without taking a breath. And macroeconomic indicators haven’t been bullish. Factory orders, shipping, jobs data, consumer confidence-you name it, and it all looks bleak.

Plus, there’s a seat of the pants consideration as well. The only people I know who are really doing well in this economy are government employees, some small business owners, and medical personnel. Practically everyone I know relies in small or large part on tax money to earn their living. That’s a recipe for economic disaster. We have, in effect, gutted our manufacturing sector and told everyone they need to retrain themselves to work in bars, massage parlors, and as cashiers while we imported tens of millions of low skill, low IQ worker bees to further undercut native American labor, and all the while we printed money with gleeful abandon to line the pockets of the rich Banksters in Noo Yawk at the expense of Middle America. There’s a saying I like to use when it comes to the economy:

You may not get what you expect, but eventually you do get what you deserve.

We deserve a depression. Our government and Wall Street have worked very hard to bring that about, and I think it’s upon us now. Thus, my 23% position betting against the market (TLH).

Now, with that cheery assessment, we decide which sectors will do well. In a down economy, I look for booze (BF/B), staples (JNJ), medicine (LTC, JNJ), and utilities (YORW) to do well.

America will continue to spend money on war until we don’t have any money left. Therefore, I look at defense stocks. Right now, I like Raytheon (RTN) but it’s run up too far too fast and I think it’s gotten ahead of itself. Patience. It’ll come back to earth soon enough.

And, whether the economy is up or down, I look for out of favor industries-the kind that have been beaten down so far, it’s hard to imagine a recovery. IOW, “Buy when the blood is running in the streets”, as Lord Rothschild once so callously put it. So I looked at gold (FNV), oil (ENB), and Canada (BNS).

Then I look at which direction I think interest rates will head. Everyone thinks they’re going up, so I decided that they would probably go down or stay flat. Thus, I bought TLH. Here, I should remind everyone that I had a bigger reason than mere contrarianism to back this choice up. I had also considered that, since there had been no recovery, we couldn’t afford to raise rates further. We’ll see if that turns out to be right.

BTW, I looked at plenty of sectors that had been beaten down but which I think represent too much downside risk right now-they have, I believe, even further to fall. Therefore I avoided emerging markets for the time being.

Within each sector, I look for good, stable dividend yields because people fly to safety in a down market. I also read analyst’s reports and, particularly, take a look at the charts. I like to see a stock that is in a long term uptrend that is bouncing off of temporary lows, or try to catch a stock on a double bottom at the end of a long down trend (ADM).

I hope that a helps a little. Like I said, we’re ending the week on a great up note for our portfolio. Let’s hope the rest of 2016 treats us just as kindly!