David Ellison
David Ellison is executive vice president of Hennessy Funds, Novato, California, and co-portfolio manager of the Hennessy Small Cap Financial Fund (HSFNX). HennessyFunds.com
This is a year of great opportunity…but also one for caution. The economy is reaccelerating…yet investors will need to look past large technology stocks to get the best returns. Short-term interest rates and inflation are coming down…but consumer loan rates are still high.
To help you with these challenges and more, Bottom Line Personal asked six of our top financial experts for smart moves that savers, investors and consumers can make in 2025…
The stock market looks pricey after two years of double-digit gains. But steady economic growth and strong corporate profits should help broaden the bull market to include undervalued areas. Consider the following…
The price of gold hit record highs in 2024, at one point even outpacing the S&P 500 index, thanks to several bullish forces. These include central banks around the world accumulating gold to limit their concentration in US dollars…geopolitical tensions in Ukraine and Middle East…and soaring US federal deficits that could raise inflation and erode the purchasing power of the US dollar over time. Historically, gold miners outperform whenever gold prices rise because their profits go up much faster than the actual costs of production. Yet gold-mining stocks have lagged. That’s unlikely to last as mining companies generate robust profits. To gain exposure to gold miners…
VanEck Gold Miners ETF (GDX) owns about 60 of the largest gold-mining and gold-royalty companies in the world, operating mostly in Australia, Canada and the US. Ten-year annualized performance: 8.3%.*
Bob Carlson is editor of the newsletter Retirement Watch. He is also a managing member of Carlson Wealth Advisors and former chairman of the board of trustees of the Fairfax County (Virginia) Employees’ Retirement System. RetirementWatch.com
Over the past few years, small- and midcap stocks in the financial services sector have struggled with a slow recovery from the COVID pandemic’s economic slowdown…defaults on commercial real estate loans…and deposit outflows following the failures of high-profile lenders such as Silicon Valley Bank. Valuations of small banks are cheaper than the overall market. Several catalysts should help boost earnings during a second Trump presidency, including more relaxed banking regulations, greater loan demand and more merger activity. Look for banks with experienced management teams and strong market share in their local or regional areas. Two attractive small banks now…
Banc of California (BANC) has $33 billion in assets and branches throughout Southern California. Management took advantage of the regional bank crisis two years ago to rescue and acquire its larger rival Pacific Western Bank. Recent share price: $15.32.
Eagle Bancorp (EGBN) has $11 billion in assets with a big loan portfolio in Washington, DC’s commercial real estate and office building market. It benefits as more companies require remote workers to return to the office. Recent share price: $26.86.
David Ellison is executive vice president of Hennessy Funds, Novato, California, and co-portfolio manager of the Hennessy Small Cap Financial Fund (HSFNX). HennessyFunds.com
The Federal Reserve has signaled its intent to continue trimming short-term interest rates. That means savers and fixed-income investors can no longer count on 5% yields on short-term bonds, US Treasuries and money-market accounts. Strategies…
The voracious demand for power in the US—driven by AI data centers and increased domestic manufacturing—is allowing companies in the energy and utility sectors to offer dividends of 5% or more and routinely grow their dividends by 3% to 8% annually. An energy company and a utility company that meet these criteria…
Brookfield Renewable Partners (BEP) is a utility with a twist. It is one of the world’s largest owners and operators of clean power, selling it to companies and other utilities under long-term contracts. Brookfield’s global portfolio consists of wind, solar and hydroelectric power as well as a 51% share in Westinghouse Electric, which makes small modular nuclear energy reactors (SMRs). Brookfield recently signed a deal with Microsoft to provide more than 10.5 gigawatts of carbon-free power to run the software giant’s data centers and other operations. Recent yield: 6.04%. Recent share price: $22.64.
Energy Transfer (ET), a master limited partnership, operates 130,000 miles of pipelines across 44 states for transporting crude oil and natural gas. With major storage and liquification facilities in Louisiana, Energy Transfer is well-positioned to benefit from the boom in liquid natural gas exports. Recent yield: 6.84%. Recent share price: $18.20.
Roger Conrad is cofounder of the investment-publishing company Capitalist Times, McLean, Virginia, and co-editor of Energy & Income Advisor newsletter. ConradsUtilityInvestor.com
As yields on cash and short-term bonds fall this year, retirees can lock in guaranteed cash flow, no matter how the financial markets perform or how much inflation rises in the future. They can invest in a staggered portfolio of Treasury Inflation-Protected Securities (TIPS) that mature at regular time intervals. TIPS offer the same risk-free backing of the Federal government as traditional US Treasuries. The difference: The yields on TIPS are derived from a formula that includes a base coupon rate paid by the government, plus daily adjustments to the principal amount tied to changes in inflation. Biannual coupon payments increase as the accrued principal increases. TIPS are a good deal now because the base rate on 10-year TIPS has risen in recent years to 1.95% and soaring US deficits could be inflation-elevated for the next decade. How to build the ladder…
For a 10-year TIPS ladder, BlackRock’s iShares launched a set of defined-maturity TIPS ETFs last year, consisting of 10 funds that invest in TIPS with maturities from 2024 to 2033.
For a longer ladder, buy individual TIPS through your brokerage firm or TreasuryDirect.gov. TIPS are issued in five-, 10- and 30-year terms, and are sold in increments of $100. The website TIPSLadder.com can help you determine exactly how much you’ll need to produce the desired yearly income in your desired time frame.
David Enna is founder of the financial website TIPSWatch.com, which tracks developments in the US government-bond market. He is based in Charlotte, North Carolina.
Consumers pressured by high mortgage and auto-loan rates can save thousands of dollars on major purchases.
If you are a seller: You still are in the driver’s seat due to limited inventory and strong demand, especially in desirable locations. I expect the median US sales home price to rise 2% to 3% this year, after going up 3% to 4% in 2024. Sellers will need to factor in the current “lock-in” effect—does it make financial sense to sell your home, even with prices near record highs, if you have to exchange your sub-3% mortgage for a much higher one to purchase your next house?
If you are a buyer: Optimize your chances in what continues to be a challenging and competitive environment. The average home remains on the market only about 25 days. If you find your dream house, be ready to move on it quickly. Make sure your credit and finances are in good shape. Know what your maximum price is and what factors are deal breakers. I expect rates on 30-year fixed mortgages to come down, but the decline is unlikely to be smooth. Plan and budget for the low-to-mid-6% range.
Keith Gumbinger is vice president of HSH.com, a mortgage information and research website. HSH.com
New-car buyers: Put off a purchase until financing rates fall—or at least be prepared to put down as much cash as possible. While prices on new cars fell just 0.8% year-over-year (through November 2023), the average annual percentage rate (APR) on new-car loans was recently 6.8% for 68 months and the average sticker price was $50,554. Dealers still have vehicle inventory shortages, so incentives are limited. Luxury vehicles, big SUVs and trucks sell for thousands of dollars under manufacturer’s suggested retail prices (MSRPs), but economy vehicles under $32,000, such as the Ford Maverick and Honda Civic, are going for $300 to $400 under MSRP.
Used-car buyers: It may be the best time ever to consider an electric vehicle (EV). The glut of EVs on the market means that you can purchase a three-year-old Tesla Model 3 for $25,000 versus $32,000 one year ago. Other heavily discounted used EVs: Ford Mach-E… Hyundai IONIQ 5…Kia EV6.
For gasoline-powered vehicles: Prices on three- to four-year-old cars have fallen 3% year-over-year and now cost an average of $28,2715. You’ll find the best deals on three-year-old large- and mid-sized SUVs and trucks. Examples: Nissan Armada…Nissan Mirano…and Ford F-150.
Ivan Drury is an auto industry analyst and director of insights at the consumer automotive information site Edmunds.com, Santa Monica, California.
*All performance figures are from Morningstar, Inc., as of December 18, 2024. For current pricing, go to Morningstar.com. Bottom Line Personal recommendations are meant for five- and 10-year horizons—not for immediate profits.
