Money and Markets’ Issue 496 | August 2015

Stock Doldrums Concerns over currencies, wages, rate hikes, foreign weakness weigh on shares. Here’s what to do ...

SAFE MONEY REPORT

Inside this Issue ...

Since the stock market hit its bear-market lows back in March 2009, the money-making opportu-nities have been steady and con-sistent: Every stumble has been minor. Every correction has been shallow. Every pullback has been

bought. And every time, stocks have resumed their steady upward march.

That’s why I’ve committed more money to stocks for the past few years. It’s also why I’ve been avoiding pay-nothing, wildly overvalued government bonds like the plague, and why I’ve kept investments in alternative assets like gold at a minimum.

Highly rated, high-quality, high-dividend stocks —plus select companies with very deep value — have actually been better than alterna-tives traditionally thought to be “safe.”

But I’ve always been wary of getting too giddy about them for the simple reason that the bull market has relied so heavily onartificial support.

I’m talking about QE 1, 2, and 3 here; eu-ro-QE over there ... interest rate cuts around the world, ... more than 2,420 days of zero-percent interest rates in the United States ...

plus direct market manipulation in the form of outright stock buying by central banks in Swit-zerland, Japan, China, and other countries.

Those have all contributed substantially to the gains, with legendary investor and former Pimco head Bill Gross going so far as to say late last month that “all global financial mar-kets are a shell game.”

The question now is: Are problems that have long been papered over now coming home to roost? Those include concerns over currencies, wages, interest rate hikes, foreign economic weakness, and more — all weighing heavily on the markets in 2015, with most get-ting worse, not better.

So in this issue, I explain what has investors increasingly leery — and more importantly, what you should do about it.

Are Central Bankers LosingControl of the Markets?

For years, we’ve seen volatility suppressed and markets broadly tamed. The key factor be-hind that? Frequent, almost predictable inter-ventions by central bankers around the world. But now we’re seeing more and more signs that those officials are losing control:

Mike Larson, Editor

Strategies . . . . . . . . . . . . . . . . . page 8

Gold and Energy . . . . . . . . . . . page 10

Positions At A Glance . . . . . . . . page 11

Questions and Answers . . . . . . page 12

Safe Money Wise Investor. . . . . . page 4

Safe Money Ratings . . . . . . . . . . page 6

SAFE MONEY REPORTPage 2

In Latin America, currencies are suffering their worst declines since the panicky days of the Great Recession. The Brazilian real has plunged more than 21% year-to-date, while the Chilean peso has given up 44% of its value since mid-2013. The Mexican peso just hit a record low.

Factors behind the declines: A combination of falling commodity prices, political scandals in Brazil and Mexico, plus rising inflation.

In Asia, it’s not just the domestic Chinese stock market that’s gotten increasingly vola-tile. Warning signs are popping up everywhere about growth in the underlying economy.

Ford (F) just said Chinese sales will fall from year-ago levels for the first time since 1998. Baidu Inc. (BIDU), China’s equivalent to Google and Amazon, just plunged the most since 2008 amid weak sales.

A gauge of manufacturing activity slumped to a 15-month low in July. And banks that help finance China’s mammoth trading activity with other countries say business has tanked more than 20% from a year ago.

As a result, other countries in the region are suffering: Singapore’s economy shrank 4.6% in the second quarter, more than triple the rate expected by analysts. South Korea’s GDP growth decelerated sharply on declining exports and consumption, driving its won cur-rency to a three-year low. And Australia’s dol-lar has plunged more than 16% in two years, hurt by plunging demand for the iron ore and other commodities it exports.

As for Europe, Greece’s recent travails show the debt crisis there is far from over. The country bought some time by agreeing to the rough outline of a deal with its Europeancreditors in July.

But there are already signs the deal could come unglued, with the International Monetary Fund fed up and signaling it won’t participate in a new bailout.

Commodities are getting crunched. The broad S&P GSCI Commodity Index plunged almost 14% in July. That was this benchmark average’s seventh-worst month in its 45-year history. Other than lean hogs, every single commodity dropped, the most widespread loss-es since the September 2008 market meltdown.

And this is occurring despite the fact several central banks around the world have shifted into high gear. From South Korea to India, Russia to Poland, Switzerland to Sweden, they’ve been printing more money, cutting in-terest rates, or otherwise trying to stimulate growth ... but to little net effect.

Chinese stocks are crumbling. The major averages there swung almost 10% in value sev-eral times, and in one late-July day, fell by the second-most ever.

Central planners fired off every “bazooka” they could — bans on large insider sales, sus-pension of IPOs, tens of billions of dollars in added liquidity to brokers, direct stock pur-chases by government-backed funds, and more. But stocks tanked anyway.

Cracks are appearing here at home. In the U.S., the Dow Jones Transportation Average just sank to a nine-month low. The Russell 2000 Index slumped to its lowest since February.

Four of the nine major S&P 500 sectors were recently showing year-to-date losses. Two oth-ers were virtually unchanged

What’s more, 65% of all publicly traded stocks are down at least 10% this year. By con-trast, last year, every sector except for energy racked up significant gains -- of as much as 24%. That shows how more and more market cracks are appearing here in the U.S.

Foreign Problems MountingAround the Globe

Meanwhile, multiple foreign crises are weighing on the global growth outlook andinvestor sentiment ...

by Mike Larson Page 3

began tracking in 1982. That underscores a key problem in the American economy: Six long years since the Great Recession officially ended, workers are still not getting paid sig-nificantly more for their efforts.

Echoes of Past Crises SuggestPossible Paths Forward

Add it all up — erratic currency moves, lackluster wage growth, economic weak-ness overseas, and concern over “Bloody Wednesday” turmoil set off by possible in-terest rate hikes, which leading Fed policy-makers have increasingly been hinting are right around the corner, and you have a po-tentially toxic cocktail for the markets. So how should we respond?

Well, history never repeats itself exactly. But what we’re seeing so far brings to mind the Asian/Russian Financial Crisis of 1997-1998.

Almost 20 years ago, countries like Thai-land and Indonesia got into trouble borrow-ing too much money from foreign creditors and spending like mad. Investors realized they were running up unsustainable deficits. So they dumped their foreign stocks, bonds, and currencies.

The U.S. stock market also stumbled initial-ly in the summer-fall of 1997. But that initial decline didn’t last long.

Then, it got worse: Over the course of 1998, the contagion selling spread to larger Asian nations like South Korea — and eventually to Russia. As more foreign markets collapsed, so did the highly leveraged, U.S.-based hedge fund Long-Term Capital Management.

Investors who owned emerging market as-sets during that period got crushed. That’s why I have largely stayed away from them in our model portfolio. But while you suffered a sharp, short-term correction if you owned top-notch U.S. stocks, you recovered rela-tively quickly from the slump.

Meanwhile, growth in most of Europe re-mains lackluster. Plus, Russia’s economy is shrinking at the fastest rate (around -4.4% in Q2, per government estimates) since the Great Recession, thanks to a currency collapse and falling oil prices.

Dollar Rise Plus Sluggish GrowthAlso Hindering Markets

One consequence of all the turmoil over-seas is a rising U.S. dollar — exactly what our economy does not need. It’s hurting our manufacturers, hurting corporate profits, and hurting dollar-sensitive industries like energy and mining.

As a result, GDP rose just 2.3% here in the second quarter. Yes, that was an im-provement from the first quarter’s revised 0.6% rate of growth. But it clearly missed forecasts for around 2.5%. Worse, business spending stunk up the joint, with ex-housing investment falling by 0.6%.

It’s not just one quarter’s malaise: Either GDP revisions show the U.S. economy has been growing less than expected ever since the Great Recession. Annualized growth be-tween 2011 and 2014 was revised down to 2.1% from 2.4%.

Finally, we just learned that wages and salaries grew only 0.2% in the second quarter, the slowest pace since the government

American Earnings Going Nowhere in This “Recovery”

Data Source: Bloomberg

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.02001 2003 2005 2007 2009 2011 2013 2015

Q2 Gain Worston Record!

SAFE MONEY REPORTPage 4

Disclaimer: Safe Money Report is s t r ic t ly an informational publication and does not provide individual, customized investment or trading advice to its subscribers. The money you allocate to speculative trading should be strictly the money you can afford to risk. While every effort is made to simulate the actual experience of subscribers, all performance figures must be considered hypothetical. References to examples of past performance are not intended to provide a total picture of positions results, and past results are no guarantee of future performance.

About the EditorFor Mike Larson biographical information, go to www.moneyandmarkets.com/experts/mike-larson

Copyright © 2015 by Weiss Research, Inc., Safe Money Report (ISSN 1086-251X), 4400 Northcorp Parkway, Palm Beach Gardens, FL 33410; 561-627-3300; Sales: 800-291-8545. Subscription rate: $198 for 12 monthly issues. Single issue price: $16.50. Publisher: Martin D. Weiss. Editor: Michael D. Larson. Research Supervisor: Amber Dakar. Staff: Marty Sleva, Mandeep Singh Rai, Richard Suwanprakorn and Julie Trudeau. POSTMASTER: Send address changes to Safe Money Report, 4400 Northcorp Parkway, Palm Beach Gardens, FL 33410.

Fast-forward to today and you can see that emerging markets have gotten hit just like they did back then. That includes currencies, bonds, and shares of many of the countries I mentioned earlier, particularly in Asia. Sectors heavily reliant on them like materials and, yes, energy have also been hurt.

But while U.S. transports, utilities, small caps, and other stocks are down, they haven’t gotten hit nearly as much as the Dow got hit in 1998. The financials also just hit a seven-year high. And the Nasdaq Composite Index managed to hit a fresh all-time high around 5,230 last month.

That said, my job in Safe Money is to err on the side of caution. I’m a conservative inves-tor at heart, and I take preserving your capital very seriously.

So when I see an increasing number of chal-lenges confronting the markets, and even the potential for a deeper sell off driven by the loss of central banker control, I take steps to adjust.

In the last couple of months, we’ve taken modest-to-double-digit profits on positions like Brookfield Renewable Energy Partners (BEP), Aircastle Ltd. (AYR), Macquarie In-frastructure Corp. (MIC), and Tenet Health-care (THC), and we’ve cut bait on losers like FreightCar America (RAIL) and Steel Dy-namics (STLD).

Those moves have helped raise more cash in the model portfolio. My most recent recom-mendations have also been in either A) Dra-matically beaten-down investments where the excesses have largely been wrung out or B) Relatively safer, higher-yielding namesin more-stable sectors.

I have additional moves to recommend else-where in this issue — all of which are designed to maximize safety and yield in an increasingly volatile market. See page 8 for specifics.

I also want to urge you to pay close attention for Flash Alerts and updates. Market conditions are getting bumpier and bumpier as central bankers lose control, and Bloody Wednesdays increase in frequency and severity. I’m watch-ing our model portfolio very carefully, and I think you should do the same for yours.

SAFE MONEY WISE INVESTOR

Wisely Watching WashingtonWashington wields great power when it

comes to your investments. That’s especially true in this era of increased regulation and rule-making in all kinds of industries.

So I’m wisely watching Washington more than ever before — and believe you should, too.

by Mike Larson Page 5

It will likely close or sell off some facilities as it struggles to restructure its $3 billion in debt amid plunging demand and prices for coal used to both generate power and make steel.

Companies involved in the natural gas, wind, solar, and even nuclear power industries are likely winners. That’s because the regulations provide ample incentives for the utility industry to shift aggressively toward using renewables, and to use natural gas as a powerful “bridge” fuel that’s much cleaner than coal.

Nat gas is already producing 291 million megawatt hours of power, almost double the 148 million a decade ago. Wind produces 45.6 million, compared with 3.7 million. Solar is up to 5 million from hardly anything in 2005.

Gas usage could rise by another third, at least, over the next few years — while renewable energy usage could rise even more. These are massive, tectonic shifts in the world of energy.

So yes, the regulations are sure to face legal challenges from the coal industry, certain states, and other interested parties. That means a Supreme Court challenge could ultimately loom, just as it did with Obamacare.

But just like Obamacare survived those challenges, and like health care companies started adopting to the new regulations long before they were 100% final, you’ll see much of the energy and utility industry changes get implemented in the meantime.

Bottom line: You recently bagged a small gain on Brookfield Renewable Energy Partners (BEP), one of the players in this sector. And I think that, in the future, we can do even better than that, given this latest regulatory push in Washington.

So my plan is to aggressively sort through the energy and utility sectors, and find some new promising investments for you.

Take health care. I mentioned several quarters ago that Obamacare would be a bonanza for hospital operators, drugmakers, and other health care companies, regardless of what you think of the program’s politics or economics. I was also fairly confident it would survive the Supreme Court challenges it faced.

So I recommended the hospital firm Tenet Healthcare (THC) last summer — and you just banked profits of up to 18.5% as a result. You should have also banked smaller combined gains of around 4.6% on Universal Health Services (UHS) in spring 2014.

Now, it looks like new Washington regulations could seriously impact the utility and energy industries. So I’m sitting up and taking notice.

Specifically, I’m referring to the Obama administration’s Clean Power Plan. The regulations just released by the Environmental Protection Agency (EPA), designed to “encourage much more clean energy production in the U.S.,” require the utility industry to cut carbon dioxide emissions from domestic power plants by 32% by 2030 (from 2005 levels). That’s up from a previous 30% reduction target.

The EPA admits the industry changes required to hit that target will cost $8.4 billion per year. Then they seek to justify this cost by saying the changes will also result in total benefits to things like public health of as much as $54 billion.

Who wins and who loses here? Coal is a major loser, no doubt about it. Utilities have already been shuttering coal plants and abandoning the dirtier fuel in droves, and these new regulations will only accelerate the shift.

As a matter of fact, the coal meltdown claimed its latest victim earlier this month when Alpha Natural Resources filed for Chapter 11 bankruptcy. The Virginia-based company operates 60 coal mines in five U.S. states, and it joins several other competitors who have already gone broke.

SAFE MONEY REPORTPage 6

In Weakening Market, StickWith Staples

How weak is this market? Our Weiss Ratings tell the tale.

Between July 2013 and July 2014, for instance, our “buy” ratings across most S&P sectors were rising nicely. The total number of buy-rated stocks in health care rose almost 6%, while materials saw roughly 4% more buys. Moreover, the number of buys jumped more than 17% in telecom, 21% in utilities, and 35% in energy.

But in the past year, that progress has gone “Poof!” Every single sector except for financials and healthcare has seen deterioration. Buys are down more than 3% in information technology, 7% in consumer discretionary, 8% in industrials, 11% in materials, and a whopping 55% in energy.

So I’m looking at one relatively safe sector that should act as a port in the storm – consumer staples.

Some of the best and worst of the bunch can be found in the tables to the right. Egg producer Cal-Maine Foods (CALM) and drug store Walgreens Boots Alliance (WBA) were among the top-rated names, at “A+” and “A”, respectively. Meanwhile, on the other side of the scale, Natural pet food provider Freshpet (FRPT) and Midwest regional grocery store chain Roundy’s (RNDY) ranked worst, at E+ and D.

I’ll be digging through more of these highly rated names in the weeks ahead to see if any merit adding to the model portfolio. In the meantime, one company that’s a bit below the top 10 (but still solidly in the “Buy” category) is the subject of my Strategies column this month.

SAFE MONEY RATINGS TODAYSAFE MONEY RATINGS TODAY

C+

10 Best Consumer Staple Stocks

A+

A+

A

A

A

A-

A-

A-

A-

A-

1

2

3

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Cal-Maine Foods, Inc.TICKER: CALM

Natural Health Trends Corp.

TICKER: NHTC

Walgreens Boots Alliance, Inc.TICKER: WBA

Vector Group Ltd.TICKER: VGR

SpartanNash CompanyTICKER: SPTN

Fresh Del Monte Produce Inc.TICKER: FDP

The Kroger Co.TICKER: KR

USANA Health Sciences Inc.TICKER: USNA

Ingredion IncorporatedTICKER: INGR

Archer-Daniels-Midland CompanyTICKER: ADM

Source: Weiss Ratings, Inc. Stocks ratings are based on data from

July 31, 2015; A = Excellent, B = Good, C = Fair, D = Weak, E = Very Weak

by Mike Larson Page 7

SAFE MONEY RATING TRENDSThe chart and table you see below are based on

data from our Weiss Ratings stock model, which objectively weighs the risk and reward of invest-ing in 9,858 stocks traded on U.S. exchanges.

Each trading day of the year, our model gen-erates and updates ratings that range from A+ to E-. As with all our ratings, A = excellent, B = good, C = fair, D = weak, and E = very weak. Moreover, among our stock ratings, A and B are equivalent to “buy;” C can generally be interpret-ed as “hold;” while D and E are akin to a “sell.”

Our Ratings Distribution chart shows you many buys, holds and sells our model is cur-rently identifying. The tally for the begin-ning of August was 2,754 buys, 3,183 holds, and 3,921 sells.

This month, I’m also including percentage figures for each category – and changing the historical table so it reflects percentage figures rather than raw numbers. That should make it easier for you to understand how ratings trends are changing over time.

Neutral

Neutral

Neutral

-

Buy Hold Sell TrendCurrent 27.9% 32.3% 39.8%

1 Month Ago 28.0% 32.4% 39.6%

3 Months Ago 27.9% 31.5% 40.6%

6 Months Ago 28.6% 30.6% 40.8%

E+

D

D

D

D+

C-

C-

C-

C-

C-

1

2

3

4

5

6

7

8

9

10

Freshpet, Inc.TICKER: FRPT

Roundy’s, Inc.TICKER: RNDY

Elizabeth Arden, Inc.TICKER: RDEN

Avon Products Inc.TICKER: AVP

Boulder Brands, Inc.TICKER: BDBD

Fairway Group Holdings Corp.TICKER: FWM

Castle Brands Inc.TICKER: ROX

Inventure Foods, Inc.TICKER: SNAK

Dean Foods CompanyTICKER: DF

Alliance One International, Inc.TICKER: AOI

Source: Weiss Ratings, Inc. Stocks ratings are based on data from

July 31, 2015; A = Excellent, B = Good, C = Fair, D = Weak, E = Very Weak

10 Worst Consumer Staple Stocks

2,7543,183

3,921

Buys Holds Sells

Ratings Distribution

(27.9%)(32.3%)

(39.8%)

SAFE MONEY REPORTPage 8

SAFE MONEY STRATEGIESThird, implement a stop loss on your 100-share

position in The Fresh Market (TFM). I recommend a price of $28. That will help protect you if the margin and sales growth concerns that are swirling around the high-end grocery chain get worse, while still allowing you to profi t if the shares can stabilize here and then turn higher.

Fourth, buy 20 shares of Clorox Co. (CLX) at the market. The company makes its name brand Clorox bleach and counter wipes, as well as Glad garbage bags, Pine-Sol floor cleaner, Fresh Step cat litter, and Hidden Valley salad dressings and dips.

Like McCormick & Co. (MKC), Clorox is a “Steady Eddie” company that’s been in business for 102 years, its products are probably lining your pantry shelves and the space under your sink right now. Unlike discretionary products, nearly all households have to buy them regardless of how the economy is performing.

Operationally, Clorox just reported adjusted fourth-quarter earnings per share of $1.44. That easily topped the average estimate of $1.37. Gross margin expanded by almost three percentage points, while sales eclipsed forecasts, led by cleaning products.

Clorox now sees full-year revenue rising by as much as 4% excluding the impact of currency moves. The solid results and optimistic forecast helped push the stock to a fresh all-time high in early August. That’s a strong technical buy signal, one that dovetails nicely with Clorox’s healthy “Buy” grade from our Weiss Ratings.

So even as you raise cash elsewhere in the portfolio, make this 20-share purchase of CLX.

Portfolio Update1. Douglas Dynamics (PLOW) — You

should have added shares of this snow removal and turf treatment equipment maker last month, and you’re already off to a great start. That’s because the stock soared in the wake of strong second quarter earnings.

Raise Cash and “Raid the Pantry” for Safety and Profi t in Today’s More Challenging Market Recommendation 1. Sell all shares of WEX Inc. (WEX) at the market.

Recommendation 2. Sell all shares of Sonic Corp. (SONC) at the market.

Recommendation 3. Buy 20 shares of Clorox Co. (CLX) at the market.

Don’t let the performance of the major averages blind you to what’s happening to the average stock. I’m seeing broader deterioration behind the scenes, with many more names joining energy stocks in the dog house.

In response, I’ve spent the past couple months recommending you bag profits and cut some losers.

Now, it’s time to raise even more cash — and make one move that’ll help you “raid the pantry” for more potential profits. That will position you even more defensively for today’s more challenging market:

First, exit your position in Wex Inc. (WEX). The payment processing firm’s most recent earnings weren’t up to snuff, and it’s among the more vulnerable companies to a global economic slowdown. At today’s prices,I estimate you’ll take a loss of about 2.4%.

Second, sell your position in Sonic Corp. (SONC). I still like the long-term outlook for this growing fast-food company. But we need to raise cash in the model portfolio, this sell off deepens. At today’s prices, figure a modest hit of around 2.8%.

by Mike Larson Page 9

I’m tracking open gains of around 9.8% already. Hold for more, or buy 100 shares if you don’t own any yet.

2. Zoetis (ZTS) — Shares of this animal health firm are continuing to climb gradually, handing you open gains of around 5.7% at last check. The potential for M&A is a key driver — with either ZTS getting bought out or ZTS buying someone else.

Indeed a Bank of America analyst cited improving industry fundamentals and M&A speculation as a reason for putting ZTS on its “US1” list late last month.

The firm carries a $63 price target on the stock, which sounds achievable to me. So hold your 70 shares, or buy that many atthe market now.

3. Barnes Group (B) — The aerospace industry continues to grow at a steady pace, something that bodes well for Barnes. The firm said aerospace sales rose 3% year-over-year in the second quarter, with aftermarket parts sales up “significantly.” Sit tight with your 60 shares, or buy them now.

4. Magna International (MGA) — Speaking of mergers and acquisitions, Magna got even more active last month. The global auto parts giant said it would buy privately-held Getrag of Germany for $1.9 billion. That will dramatically expand Magna’s auto transmission business, because Getrag employs 13,500 and operates 23 manufacturing plants worldwide.

If you own 60 shares of MGA, hold. If not, go ahead and buy them now. But also implement a stop loss on this position at $51 to help mitigate downside risk.

5. TreeHouse Foods (THS) — Yes, there is even more potential M&A impacting your holdings. Reuters confirmed late last month that TreeHouse is one of the bidders for the Ralcorp unit of ConAgra Foods (CAG).

The division makes private-label food products for grocery stores and other customers, and TreeHouse could get it for a bargain-basement price because CAG is a very motivated seller. So sit tight with your 75 shares, or buy that many now.

6. McCormick & Co. (MKC) — This spice and seasonings company continues to deliver for you, with shares hitting an all-time high in July. It recently raised its full-year earnings per share projection, and management pledged to pursue more “bolt on” acquisitions to boost growth over time.

Stick with your 100 shares, or buy them if you don’t own any yet. Estimated gains: Up to 24% If you don’t have a stop on this position, put one in at $74.50 this month.

7. GNC Holdings (GNC) — GNC dominates the health supplement and diet retailing business, and it has been struggling a bit lately due to challenging sales and margin trends. But the stock took off like a rocket recently after the company said it would shift increasingly toward a franchise-based rather than company-owned store base. The move should help boost sales and earnings.

The stock just broke through key technical resistance around $48-$50. That puts the old highs from 2013 in play. So hold on tight, or buy 80 shares if you’re not on board. I’m tracking gains of around 6.7%.

8. Fiserv (FISV) — Fiserv is like the little engine that could in the bank technology sector. It generates consistent sales and earnings growth, with adjusted profit of $228 million, or 95 cents per share, in the second quarter. The company also forecast full-year organic revenue growth of around 5%, and the stock set a marginal new high last month.

If you own 50 FISV shares, hold them. If you don’t, buy them. The stock just hit another new all-time high, handing you open gains of around 14.5%.

SAFE MONEY REPORTPage 10

SAFE MONEY GOLD & ENERGY

Wall Street throws in the towelon energy. Why you should NOT make the same mistake.

But here’s the key: Even with the energy sec-tor as a whole getting killed, we’ve managed to make some decent money by finding the gems.

You should have pocketed profits of up to 1.6% and 9.8% on Brookfield Renew-able Energy Partners (BEP), including dividends. Plus, the generous dividends and improved performance out of Northern Tier Energy (NTI) have helped push your total returns there to as much as 11.3%.

That doesn’t mean we’ve completely dodged a bullet. Ferrellgas Partners (FGP) has pulled back in recent weeks, while Noble Energy (NBL) has been a clear disappointment.

But you’re still collecting a generous divi-dend on FGP, one that was just increased to 51.25 cents per share. That’s good for an indi-cated yield of around 9.7%.

And at these bargain levels, it’s hard to ar-gue that NBL doesn’t already reflect a large amount of bad news.

Still, to help control overall risk and raise more cash in the model portfolio, I recommend you sell 30 shares of NBL at this time. That will leave you with 60.

Hold the rest of your energy positions, or buy them if you’re just coming on board. You’ll find recommended allocations on this page to the left.

Also stick with your $5,000 allocation to gold bulliont for safety and long-term potential.

Keep in mind the table assumes you have $100,000 to invest overall. Feel free to increase or decrease the size of the positions accordingly, depending on how much money you are com-mitting to the Safe Money recommendations.

Recommendation 1. Sell 30 shares of Noble Energy, Inc. (NBL) at the market.

Wall Street suddenly hates energy. So they’re throwing in the towel, dumping the baby with the bath water. But I think they’re making a huge mistake.

In fact, it’s precisely because of their deep disdain for energy that I believe now is pre-cisely the worst time to sell.

I saw exactly the same phenomenon — in reverse — back in the mid-2000s. Then, instead of energy, it was housing stocks, mortgage stocks, REITs, and virtually any kind of investment real estate. And instead of red-eye hatred, Wall Street’s overwhelming emotion was starry-eyed love.

And then, like today, I was one of the few lonely voices in the wilderness, recommending precisely the opposite of the Wall Street crowd.

I shouted from the rooftops that real estate market was going to crash, while everyone from the Chairman of the Federal Reserve to the average Wall Street analyst said that bears like me were “nuts.”

Now, I look at energy and I see the same thing happening again, in reverse. You can’t give many of these stocks away.

SAFE MONEY REPORT

Safe Money Report Overall Position Performance

SMR S&P500

Gold Bullion $1,088.06 11/8/1999 11/8/1999 4 $289.75 $4,352.24 $3,193.24 275.52 Hold (Buy $5,000 worth at the market)

Guggenheim Enhanced Short Duration ETF (GSY) $50.04 10/7/2013 10/7/2013 100 $50.14 $5,120.57 $106.57 2.13 Hold (Buy 100 shares at market)

Ferrellgas Partners, L.P. (FGP) $20.59 3/10/2014 2/9/2015 200 $24.06 $4,718.00 ($94.00) (1.95) Hold (Buy 200 shares at market)

SPDR Barclays Short Term Corporate Bond ETF (SCPB) $30.51 4/14/2014 4/14/2014 200 $30.79 $6,202.60 $44.60 0.72 Hold (Buy 200 shares at market)

McCormick & Company, Inc. (MKC) $82.61 6/9/2014 4/6/2015 100 $72.57 $8,455.00 $1,198.00 16.51 Hold; Stop-loss $74.50 (Buy 100 shares at market)

Northern Tier Energy LP (NTI) $25.60 6/9/2014 8/11/2014 150 $26.93 $4,305.00 $265.50 6.57 Hold (Buy 150 shares at market)

The Fresh Market Inc (TFM) $30.56 9/19/2014 9/19/2014 100 $37.14 $3,056.00 ($658.00) (17.72) Hold; Stop-loss $28 (Buy 100 shares at market)

DTE Energy Company (DTE) $79.09 11/10/2014 11/10/2014 50 $83.85 $4,058.00 ($134.50) (3.21) Hold (Buy 50 shares at market)

The Boston Beer Company, Inc. (SAM) $234.78 11/10/2014 11/10/2014 20 $266.07 $4,695.60 ($625.80) (11.76) Hold (Buy 20 shares at market)

WEX Inc. (WEX) $101.19 12/8/2014 4/6/2015 40 $103.66 $4,047.60 ($98.80) (2.38) Sell at market

TreeHouse Foods, Inc. (THS) $81.82 1/12/2015 3/9/2015 75 $85.98 $6,136.50 ($312.00) (4.84) Hold (Buy 75 shares at market)

Sonic Corp. (SONC) $30.16 2/9/2015 2/9/2015 100 $31.21 $3,034.00 ($87.00) (2.79) Sell at market

Fiserv, Inc. (FISV) $87.75 2/9/2015 2/9/2015 50 $76.66 $4,387.50 $554.50 14.47 Hold (Buy 50 shares at market)

Magna International Inc. (MGA)2 $54.86 3/9/2015 3/9/2015 60 $53.05 $3,318.00 $135.00 4.24 Hold; Stop-loss $51 (Buy 60 shares at market)

Barnes Group Inc. (B) $38.86 3/9/2015 3/9/2015 60 $39.60 $2,338.80 ($37.20) (1.57) Hold (Buy 60 shares at market)

Zoetis Inc. (ZTS) $48.85 3/9/2015 3/9/2015 70 $46.29 $3,425.31 $185.01 5.71 Hold (Buy 70 shares at market)

PowerShares International Corporate Bond Portfolio (PICB) $26.14 3/9/2015 3/9/2015 300 $26.47 $7,917.96 ($23.04) (0.29) Hold (Buy 300 shares at market)

iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) $8.91 3/9/2015 3/9/2015 150 $11.10 $1,336.50 ($328.50) (19.73) Hold (Buy 150 shares at market)

Noble Energy, Inc. (NBL) $34.01 3/9/2015 4/17/2015 90 $48.63 $3,077.10 ($1,299.60) (29.69) Sell 30 shares at market

GNC Holdings, Inc. (GNC) $50.89 4/6/2015 4/6/2015 80 $47.87 $4,085.60 $256.00 6.68 Hold (Buy 80 shares at market)

Bank of Montreal (BMO) $55.49 4/17/2015 4/17/2015 50 $65.27 $2,807.91 ($455.59) (13.96) Hold (Buy 50 shares at market)

iShares Latin American 40 ETF (ILF) $26.79 5/4/2015 5/4/2015 50 $32.28 $1,355.60 ($258.40) (16.01) Hold (Buy 50 shares at market)

Novartis AG (NVS) $103.57 6/8/2015 6/8/2015 30 $101.44 $3,107.10 $63.90 2.10 Hold (Buy 30 shares at market)

Douglas Dynamics, Inc. (PLOW) $23.36 7/13/2015 7/13/2015 100 $21.27 $2,336.00 $209.00 9.83 Hold (Buy 100 shares at market)

The Clorox Company (CLX) $116.85 8/10/2015 8/10/2015 20 - - - - Buy 20 shares at market

YTD Total Return (%)* (3.17) 2.84

Current Value ($) as of 8/4/15

* Including dividends. 1Assumes reinvestment of all distributions; initial purchase and combines any subsequent purchases as an average of all shares. 2Magna International Inc. 2 for 1 stock split; effective March 25, 2015. For any remaining funds not invested in our recommended stocks and mutual funds, we recommend a Treasury-only money market fund for safety and liquidity, so that this cash is readily available for reinvestment.

Current Quote ($) as of 8/4/15

Initial Open Positions Cost ............ $95,875.60 Open Positions Value .................... $97,674.48Open Positions Total Return Since Initial Purchase Date (%)*1 .....................1.88YTD Open Position Total Return(%)* ..........(2.41)

POSITIONS AT A GLANCE Initial Purchase

DateMost Recent Trade Date

# of Shares

Avg. Cost Basis Per Share ($) $ Gain/Loss

Total Return (%)

Current Recommendation (What to do if you don’t own it.)Company Name (Ticker)

Disclaimer: Safe Money Report is strictly an informational publication and does not provide individual, customized investment or trading advice to its subscribers. The money you allocate to speculative trading should be strictly the money you can afford to risk. While every effort is made to simulate the actual experience of subscribers, all performance fi gures must be considered hypothetical. References to examples of past performance are not intended to provide a total picture of positions results, and past results are no guarantee of future performance. The table includes all open positions recommended in the monthly Safe Money Report newsletter or fl ash alerts. Entry and exit prices are based on the closing price of the security 3 days after. Source: Bloomberg. New Subscribers: Follow the recommendations. As of 07/20/12 fl ash alert trades are fi lled using open market prices following the release of the trading issue. Data date: 8/4/15

SAFE MONEY REPORT by Mike LarsonPage 12

A. Absolutely! The U.S., Japan, and other ad-vanced nations are having trouble coping with ag-ing populations, the need to cover uninsured and/or indigent patients, and more. Indeed, national health spending is starting to accelerate again after a couple of years of very subdued growth.

But my mission is not to recommend fi xes, it’s to help you make money with relative safety. And from an investment standpoint, the increased amount of money being directed at hospitals, pharmaceutical fi rms, medical supply companies, and similar fi rms should be supportive of share prices. That’s why you should have bagged gains of up to 18.5% on Tenet Healthcare (THC) in July, and why I’m optimistic about other holdings like Novartis AG (NVS).

Q. What are your feelings aboutPuerto Rico? — B.

A. In last month’s issue, I talked about how many U.S. muni bond funds own Puerto Rican debt — and how you may be exposed to losses as a result. Things haven’t gotten any better since then, with the U.S. commonwealth offi cially de-faulting on one of its many bond payments at the beginning of August.

It’s going to take a long time for Puerto Ri-can offi cials, hedge and mutual fund managers that own bonds, and potentially even legislators in Washington to sort through this mess. So until there’s greater clarity on how and when the is-land’s debt will get restructured, and how much investors will get in return, stay away from indi-vidual Puerto Rican bonds, or mutual funds and ETFs overloaded with it. Ditto for any munis that are either long term or low rated.

Q. What do you think of gold, and ETFs like the SPDR Gold Shares (GLD) here? — L.M.

A. Bullion is still a long-term hold for a small portion of the model portfolio. But don’t add more exposure. When the yellow metal can reverse its two-year downtrend, I will revisit.

SAFE MONEY READERS’ Q&AQ. The last couple of Safe Money picks (ILF

and BMO) have struggled. What are your pro-jections for them in light of that? — G.L.

A. Concerns over oil prices and global growth have weighed on both. But now they’re at dirt-cheap valuations and negative sentiment is grossly overdone. So all it would take is a small dose of positive news to kick off a big bounce. That’s what I’m expecting to get before long. And because they also represent only a small portion of the overall portfolio, wecan afford to sit tight.

Q. With so many portfolios holding 40% in bonds, but you saying not to buy govern-ment bonds or municipals, what do you think of “ladders” — maybe using the Guggenheim BulletShares Corporate Bond ETFs? — V.Y.

A. I have no issue with 40% of your money in fi xed income. It’s what kind of fi xed income that matters, and long-term bonds looks like a big bad move to me. Reason: Yields are far too low to cover your huge risk of principal loss when interest rates rise.

But there’s no problem buying fi xed income ETFs and mutual funds that have much shorter-term maturities and low durations (a measure of interest rate risk). Specifi cally, I would stay away from bonds or bond funds that have maturities and durations of more than three years.

The Guggenheim ETFs are some of the many that give you this choice. Just be sure to stick with the ETFs that hold bonds maturing in 2016, 2017, and 2018.

Q. I feel that the U.S. is entering a health care bubble, spending too much money as a percentage of GDP. Have you looked intothis question? — E.L.

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