August turned out to be an important rally-extending month. The U.S. stock market recovered from its July malaise (down 1.05%) and gained 3.89% in August. The market achieved this excellent performance despite the on-again off-again Russian/Ukraine conflict. While the situation in the Ukraine remains a major concern, markets worldwide have come to the conclusion that neither side wants an escalation that could jeopardize long-term economic recoveries. However, given the mercurial nature of the leadership of both sides, this situation bears close monitoring. And if the situation deteriorates, we may take defensive actions to protect our gains.
Meanwhile, economic data continues to show slow but steady positive trends. As a result, the stock market continues its rally mode of the last 5+ years. September begins the last quarter profits reports, which should be mostly positive. As such, we see no need to change our TSOA retirement account allocation models.
Our Fun Stocks Index continues to perform well with Discovery Communications (DISCA) effecting a two-for-one stock split in August. We encourage our readers to continue to accumulate shares of the holdings in our Fun Stocks Index. We also strongly urge readers to accumulate the excellent travel stocks that we pointed out in our July 2014 blog.
For income-oriented investors who want to benefit from rising hotel rates and stronger demand, especially from a growing well-heeled aging population who wants to travel, we encourage a position in Ashford Hospitality Trust (AHT). AHT is a Real Estate Investment Trust (REIT) that owns high-end hotels (Hyatt, Marriott, Hilton, etc.) and pays a nice dividend of 4.19%. We believe that AHT can generate capital gains, and its dividend can increase over time.
Please note: Jim Tso and his clients own shares of AHT.