Happily, June has been good to my portfolio, and aside from taking some gains in one stock (WWE) that has appreciated sharply this year and adding a bit more GE (I’ve made the mistake of chasing this stock down before, but now I think we must be near a bottom, though a turnaround seems far off and the break up plan is hardly assured of success) and General Mills (again, a stock that’s fallen on weak outlook numbers but sports a dividend yield that makes up for the modest growth prospects) I’m mostly standing pat.

That’s because rising interest rates, as I’ve said before, could really dampen the appetite for dividend stocks. And the government’s most recent inflation data should be a cause for concern. (Personal consumption inflation came in at 2.3% in May, after reaching the 2% annual rate in April. Two months may not make a trend, but I doubt these numbers are an aberration.)

I know, I came of age in the late 1970s and early 1980’s. I remember “stagflation.” I remember when double digit rates on 30-year mortgage loans seemed normal. Heck, I may even have been getting double digit interest income on bank CDs (though admittedly, I can’t recall the specifics). I’m hopeful that we won’t see anything as disconcerting as double digit inflation and interest rates, but policy makers in Washington certainly seem to be doing their best of increasing the risk of stagflation in the future.

So, when I add to my holdings or take a look at a new dividend stock this week, I find myself wanting to push the “pause” button. I’m not one who tries to time the market, but there are occasions when I think I might as well sit on my investment thesis for a few days, weeks or months and see how the macro economic environment evolves.

 

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