By: Dividend Sensei
The 28% overvalued market is priced for nothing ever going wrong again. Today there are nine risks that could bring about a 10% to 20% correction.
The biggest short-term risk is the debt ceiling drama that economists such as Moody’s think could bring about another Great Recession.
The good news is that the prospect of 9 million job losses and a 33% market crash wiping out $15 trillion is so horrible that it’s not likely to actually happen.
However, it might take a 10% to 20% rapid slide in stocks to force Congress to do its job and prevent the stupidest recession in history.
Today three blue-chips represent three defensive high-yield aristocrats you can buy at 2% to 24% discounts, that offer 3.9% to 7.4% very safe yields.
Analysts expect each to at least double in the next 5 years, and all have proven reliable income sources even during the two worst recessions in 75 years.
Starting or adding to a position in each today is reasonable and prudent, as is setting follow-on limits to buy more should we get a December 2018 style correction.