 Recession in 2026? Here’s My Take (and a 9% Payer to Profit) by Michael Foster, Investment Strategist My prediction for 2026? Strange as it may sound, given the wild headlines we’re seeing pretty much daily, I’m calling for more of the same. As I said a couple weeks ago, I expect around 12% returns from the S&P 500 this year. That’s why we’ve been adding to the equity CEFs in the portfolio of our CEF Insider service. Today I want to talk about one of our holdings, in particular: a 9%-payer called the Liberty All-Star Growth Fund (ASG). We’re zeroing in on this one because its discount to net asset value (NAV, or the value of its underlying portfolio) is the biggest it’s been in three years. As a result, we can buy ASG, and its portfolio of US blue chips, for around 90 cents on the dollar. That markdown helps reduce any worries around valuation as the market keeps rising higher. Bubble Worries Are a Plus for Us (and This 9%-Paying Fund) Remember that recession we were told had a 100% chance of happening back in 2022? Well, we’re still waiting for it. Meantime, US GDP rose 4.4% at the last reading for the third quarter, and our most up-to-date estimate, the Atlanta Fed’s GDPNow indicator is showing over 5% growth for Q4. These are strong numbers, especially with average annual growth around 3%. Then there’s AI, which continues to spread through the economy, boosting productivity as it does. When you account for the AI effect, the 13.4% return the S&P 500 has put up over the last 12 months (versus its long-term average of 10.6% annualized) makes sense. The market is simply telling us that it’s pricing in a bit of extra juice from this new tech. So we’re going to go ahead and let the mainstream crowd fret. The truth is, the numbers don’t support the idea of a bubble right now. That’s one reason for the 9.8% discount on ASG, which sports a high-quality portfolio of US blue chips like NVIDIA (NVDA), Microsoft (MSFT) and Apple (AAPL), as well as domestic-focused midcaps like property manager FirstService (FSV) and Pennsylvania retailer Ollie’s Bargain Outlet Holdings (OLLI). ASG Drops Into the Bargain Bin  That 9.8% discount makes ASG particularly compelling when you consider that its NAV has gained 11.5% annualized over the last decade. Something else many CEF investors don’t realize is that a discount like this helps keep a fund’s dividend stable. That’s because, when you calculate ASG’s yearly payout based on NAV, not the discounted market price, you get 8.1%. This is significantly below ASG’s yield on market price and an easier figure for management to cover. That said, the point is pretty much moot when you consider that the fund’s 11.5% annualized NAV return over the last 10 years means it has been out-earning that payout for a long time. Now, we do need to bear in mind that ASG’s management ties its dividend to NAV, with the stated goal of paying 8% of NAV as dividends a year, so the payout does float around some. But given ASG’s strong NAV performance, the dividend has been pretty stable for the last three years. Steady Payouts at a Healthy Discount Source: Income Calendar But all that said, there is a question we need to ask: After three years of the discount getting steeper, should we worry it will never go back to where it used to be? To answer that, we need to look at where ASG’s total NAV return has gone in that three-year span. And it’s been nowhere but up: ASG’s Short-Term Performance: Strong  Over the last three years, ASG has delivered about a 12% total NAV return, a bit above the 11.5% it’s posted over the last decade. Over the long haul, discounts like this tend to narrow in the face of such persistent strong gains. That makes this discount a sign that ASG is ripe for buying: The market will eventually reward this strong performance (and dividend). But if we buy today, we’ll get in at a discount before that happens. |
I used to be suggested this blog by my cousin. I’m now not positive whether this publish is written via him as nobody else understand such specified approximately my trouble. You are incredible! Thank you!
Thanks for the tips shared on your blog. Yet another thing I would like to talk about is that weight-loss is not supposed to be about going on a dietary fads and trying to reduce as much weight as you’re able in a couple of weeks. The most effective way to shed pounds is by using it little by little and obeying some basic recommendations which can allow you to make the most from the attempt to shed pounds. You may know and be following these tips, however reinforcing understanding never affects.
smile
In the grand design of things you actually secure a B+ with regard to effort. Where you misplaced me was first in the particulars. You know, people say, details make or break the argument.. And that couldn’t be more true here. Having said that, let me inform you exactly what did work. Your text is really powerful and that is most likely why I am making the effort in order to comment. I do not really make it a regular habit of doing that. Next, despite the fact that I can easily see the jumps in logic you make, I am definitely not certain of exactly how you seem to connect the details which in turn help to make the conclusion. For now I shall subscribe to your position but wish in the future you link the dots better.
Pretty great post. I just stumbled upon your weblog and wished to mention that I’ve really enjoyed browsing your weblog posts. In any case I will be subscribing in your rss feed and I am hoping you write once more very soon!
After research a couple of of the blog posts on your website now, and I truly like your approach of blogging. I bookmarked it to my bookmark website record and will likely be checking back soon. Pls take a look at my website as properly and let me know what you think.
You actually make it appear so easy with your presentation however I to find this matter to be actually one thing which I think I’d never understand. It sort of feels too complicated and extremely huge for me. I am looking ahead in your next post, I will try to get the cling of it!
Hello! I could have sworn I’ve been to this website before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely glad I found it and I’ll be bookmarking and checking back often!
Great post. I used to be checking continuously this blog and I am impressed! Extremely helpful information specifically the last section 🙂 I care for such information much. I used to be seeking this certain info for a very long time. Thanks and good luck.
What?s Happening i’m new to this, I stumbled upon this I’ve found It positively useful and it has helped me out loads. I’m hoping to contribute & aid other customers like its helped me. Great job.
This article is a refreshing change! The author’s unique perspective and thoughtful analysis have made this a truly captivating read. I’m thankful for the effort she has put into crafting such an educational and thought-provoking piece. Thank you, author, for offering your expertise and igniting meaningful discussions through your outstanding writing!
That is very fascinating, You’re an overly professional blogger. I have joined your rss feed and look forward to searching for extra of your great post. Additionally, I’ve shared your website in my social networks!
I think this is one of the most vital information for me. And i am glad reading your article. But wanna remark on few general things, The web site style is great, the articles is really excellent : D. Good job, cheers
Spot on with this write-up, I actually suppose this website wants rather more consideration. I?ll most likely be once more to learn far more, thanks for that info.
Heya i?m for the first time here. I came across this board and I find It truly useful & it helped me out a lot. I hope to give something back and help others like you aided me.
Hi, Neat post. There is an issue with your website in internet explorer, might test this? IE still is the marketplace chief and a huge portion of folks will pass over your great writing because of this problem.
Thanks for this wonderful article. One other thing is that many digital cameras come equipped with any zoom lens so that more or less of the scene being included by ‘zooming’ in and out. These changes in {focus|focusing|concentration|target|the a**** length are usually reflected in the viewfinder and on massive display screen right at the back of this camera.
There may be noticeably a bundle to know about this. I assume you made certain good factors in features also.