Fishin'

Elvin Bishop wrote and recorded this song in 1974 on the album "Let it Flow". Although it wasn't a huge commercial success, it's one of my all time favorite albums. I especially like the song "Fishin'" because it refers to my favorite activities: catching fish, eating fish, and drinking good whiskey. Even though the song is "tongue in cheek" it features some amazingly talented musicians such as Charley Daniels on fiddle, Dickey Betts on electric guitar, and Sly Stone on the organ. The album peaked at #100 on the Billboard 200 chart. Rolling Stone magazine described the album as "Too laid back for its own good". I never liked Rolling Stone magazine anyway. They are too arrogant for their own good. When fishing for stocks to add to my portfolio, I take a bottom fishing approach. I like to find out of favor stocks that yield a respectable dividend and trade at attractive valuations (P/E). So how do I find these potential buys? Almost every online brokerage has a stock screener feature. All you have to do is set your parameters and a list pops up of stocks that fit. I recently ran a screen of stocks with above four percent yields and under 10X P/E ratios. The results showed 169 stocks with these attributes. Not suprisingly, most stocks in the list were banks and financials. This sector has been declared as uninvestible by many analysts but I think there is opportunity there. One benefit of a high dividend yield is current income from an equity investment. Another benefit is that the dividends are tax advantaged when compared with interest income from bonds and CD's. I like the notion that I get paid to hold a stock until it returns to its historical valuation. The high interest rate environment has hammered regional and community banks hard. They have investment and loan portfolios that are yielding below current interest rates. To compound the problem, deposits are flying out the door in search of a higher yield. Banks also have to pay more for their deposits to halt the exodus. It's a difficult time for bankers. They need to make some tough decisions like selling assets at a loss and borrowing money from goverment agencies at a high interest rate. Why would I buy a stock in such a troubled industry? First, cheap valuation, second, high dividend yield, third, likelyhood of takeover activity, fourth, our goverment generally acts to prevent failures, and lastly, interest rates are at or near a peak. Lower rates will give most banks some breathing room and will stimulate loan demand. Banks aren't the only stocks I'm fishing for either. Disney is an interesting story also. The parks part of the company is going gangbusters but the media business is a drag on earnings. With the stock in the low 80's. I will be watching it to buy more. I believe Robert Iger will eventually get it right. If he can't do it nobody can. They currently don't pay a dividend so I will just nibble on this one. My stock screener list also included some energy stocks like Diamondback Energy and Northern Oil and Gas. There was also a pharmacuetical company in the mix which was surprising because of the buzz around weightloss drugs. Sometimes when a new product or technology is introduced to the market, some great companies suffer because they don't offer the latest like AI or GLP-1 agonists. This can result in some great fishing for under valued investments. By using a stock screener tool, investors can identify some great bargains lurking on the bottom of the pond. Value investing has always been a better style than Momentum investing for me. I look for long term stocks with great businesses and good dividends. Investing, just like fishing, is a laid back activity for me.