T20YM: Time to Pick Em'

It’s been over six months since I penned my Best in Breed Dividend Stock series for Seeking Alpha. For the majority of that time, the markets have been on an unsustainable trend upwards. I have refrained from writing individual analyses as I simply did not trust the multiples being awarded to equities. I couldn’t bring myself to recommend stocks at such lofty levels. Lucky for us, there was the end of July and first week of August …

Pardon me while I chuckle.

How did you not see this coming? Let’s break down just some of market headwinds we have seen over the last two months; the end of QE2, lingering effects of the Japanese earthquake and tsunami, a growing European sovereign debt crisis, and increasingly negative U.S. economic data points. Just how bad were those U.S data points? How about a Q1 GDP revision down to .4% and Q2 GDP coming in at whopping 1.3%? Let’s not forget the July ISM number plummeting to 50.9%, its lowest reading since August of 2009. Sprinkle in some truly dreadful employment numbers and you have a surefire recipe for disaster. Anyone who is blaming this on the debt ceiling debate is fooling themselves. There’s a reason companies are sitting on oodles of cash and not hiring. There’s a reason why companies have been conservative with their Q3 guidance. The world’s economy is slowing down. We need to accept this as fact and allocate capital accordingly.

So with all that doom and gloom how can I possibly recommend investing in equities? Look, things are bad, but the world is not ending. Even if we slip into another recession, the S&P doesn’t need to trade down to 900. Companies are still making money and equities are the only investment with any chance of generating alpha. This correction has brought stocks back to reality. I still don’t think stocks are cheap but at these levels I am willing to put some money to work.

Check out the stocks I selected here