Finding a Sure Thing In Uncertain Times

Written by Jason Simpkins
Posted November 5, 2020

The drama. 

It's almost too much to bear. 

And we knew it would be.

We all knew the 2020 presidential election would be a doozy.

We knew we couldn't trust the polls predicting a runaway win for Joe Biden. We knew it'd be close. We knew Donald Trump wouldn't go quietly if he lost. 

We knew our inefficient and outdated voting procedures would be tested by the pandemic that's knee-capped our country, as well as propaganda and misinformation from bad actors.

We knew the losers would be angry — perhaps to the point of committing destructive and violent acts. 

So none of that comes as a surprise.

Going forward, though, things look a lot murkier. 

The economy is ailing and the coronavirus strengthening as we head into the winter. But efforts to conjure up a second stimulus have failed and it's not clear if they'll ever bear fruit.

We don't yet know who the president is, but we know the government will be divided, with the Democrats controlling the House and Republicans controlling the Senate.

Can they coexist?

When Barack Obama won the presidency in 2008, Senate Majority Leader Mitch McConnell said outright: "The single most important thing we want to achieve is for President Obama to be a one-term president."

That set the stage for eight bitter years of partisan battles over stimulus packages, government funding, the debt ceiling, judicial appointments, bathroom breaks, the weather, where to eat lunch, control of the TV remote, etc.

Is that what's in store for Joe Biden, as well?

He's pledged to be a uniter and a healer who will reach across the aisle...

But will he ever be accepted by a Republican rank-and-file that's been further radicalized by the Trump presidency?

And how open to compromise is the far-left flank of the Democratic party, which has come to be dominated by socialists Bernie Sanders, AOC, and The Squad?

The conventional wisdom on Wall Street is that gridlock is good. That's been further evidenced by this week's market rally.

But is it?

When we're fighting for our lives against a pandemic... When our institutions are failing and in need of reform... When the country desperately needs to reunite to find some form of common ground... When our roads and bridges are falling apart... 

Is more gridlock what we need? Is that what's going to pull the economy out of the sewer?

I don't know. 

But again, what I do know is that more money will be conjured up and wasted. The government printing presses will continue to churn. The Fed will continue to act as a makeshift substitute for economic policy. 

The rich will get richer and the poor will get poorer. 

So then what's the investment play?

Gold, for one.

Gold prices surged over $2,000 per ounce in the summer. They corrected in September dropping below $1,900  per ounce, but now they're climbing higher again. 

I think they'll continue to do so as the economic threat posed by the pandemic and the consequences of government inaction start to register with the public and in the data. 

No doubt safe-haven buying has been the play for a while now and I think it'll stay in vogue as long as our government remains dysfunctional. 

The foreseeable future, in other words.

Utilities stocks, another traditional safe haven, are climbing, as well. That sector includes companies like Edison International (NYSE: EIX) and CMS Energy Corp. (NYSE: CMS). 

Edison also offers a 4.5% dividend yield, while CMS pays 2.5%. 

That's key, too, as the Fed's rock-bottom interest rates rob savers of any decent return. 

An index fund like the Dow Jones Global Select Dividend Index ETF (NYSE: FGD) would be another option. That yields 6% but it's more focused on yield than wealth preservation so it can be vulnerable to downturns. Nevertheless, it's a good option for income and the fact that it's a basket of stocks keeps some guardrails in place.

And to me that's the name of the game right now: low risk, high yield. 

Wealth preservation and inflation insurance through gold and other commodities. 

Given all we know and don't know, that's the best advice I can give right now.

Fight on,

Jason Simpkins Signature

Jason Simpkins

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Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of The Wealth Warrior, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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