Raising My Stake in Deere

The market is slowly grinding higher but it feels like the rally could peter out in the weeks ahead. February is traditionally a weak month for equities, and breadth of the sectors rallying is narrowing. It would be natural if the market took a breather while it consolidates its significant gains over the first six weeks of the year. In addition, we have the upcoming sequester cuts to get through and we need to assess the slowdown in consumer spending from the payroll tax holiday that expired at the end of last year. I continue to underweight consumer discretionary stocks due to this headwind as well as the implementation of the Affordable Care Act, which could raise costs and reduce margins for a wide swath of retailers and restaurants. The push to raise the minimum wage to $9 an hour will not help sentiment on this sector, either.

Unlike the average consumer, farmers are doing very well. 2012 was a stellar year for farm income due to the abundant issuance of crop insurance that mitigated the damage done by the massive drought over the summer, and crop prices were strong. The U.S. Department of Agriculture just came out with a report saying it believes 2013 will be the best year for farm income since 1973. Midwest farmland prices are also at record levels, rising 16% year over year in the fourth quarter alone (Notation 2). The balance sheets and income prospects for farmers have rarely been in better shape....244 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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