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Editor’s Note: This week’s free Real Income Report issue is a cross post from Tim’s blog, The Off Wall Street Wanderings of a Curious Mind. But keep reading, because at the bottom, Tim is adding a new pick to the Income Portfolio!

Is this the year the new administration sails us all down the Lollipop River to the Candy Cane Castle with endless prosperity and happiness?

Will there be peace and tranquility in the Middle East?

Will the Fed follow the script and cut the Fed Funds rate back to zero, where it belongs?

Is this the year that China finally realizes that its true role is to serve as a manufacturing colony for US multinational corporations and buyers of massive amounts of US Treasuries, and quickly assumes that role as civilized men believe it should?

Will inflation hop back in its time machine and return to the 1970s where it belongs?

Will Congress stop trying to prove the brilliance of Milton Berle's suggestion that "You can lead a man to Congress, but you can't make him think"?

Will we finally prove that Hayek, Mises, Friedman, and even Keynes were merely morons with their fancy economic theories, and the true geniuses worthy of elevation to the pantheon of monetary immortals are Georg Friedrich Knapp, Hyman Minsky, and the greatest of economic thinkers, AOC, who developed the concepts of Modern Monetary Theory?

Will NVIDIA's market cap finally reach $1 quadrillion this year as it should? After all, that is only a P/E of about 56,000, which is quite reasonable given the growth opportunities the company will find once we reach singularity and begin to set up distribution networks around the galaxy.

Will all office buildings fall to zero this year so that I can finally buy one of those office towers on Brickell Avenue in Miami for $13.74 and a coupon from a $100,000 bar?

Will the global banking system collapse so that all nations turn gratefully towards the Hawk Tuah digital coin as the only reasonable solution?

Is this the year the Democratic Party realizes why the middle class has deserted it, and the Republican Party recalls that it stands for small government and fiscal restraint?

Will we hit Dow 500K this year?

Will we finally wake up to the threat they represent and put short sellers and value investors in prison where they belong?

Is this the year we replace badly needed statues in the Hall of Statues in the Capitol Building of forgettable folks like Robert Fulton, Norman Borlaug, and Philo Farnsworth with true American leaders like P.T. Barnum, Joe Granville, and Steve Comisar?

These are all complex issues; I have studied them late into the night. My canine companions and I sometimes stay up until almost 10:15 worrying about weighty matters some nights.

There is only one correct answer to all questions about politics, economics, and markets: I Do Not Know.

Anything other than that is speculation; some are more informed than others. A guess, in other words.

Here is what I have learned about forecasts and other guessing games regarding the financial markets.

First, foremost, and most notably, the fact is that they are not required.

You will make far more money responding to what markets do than trying to trade forecasts and opinions.

If bank stocks sell off, and everyone hates them, buying strong banks with management that avoids acts of gross stupidity should result in large profits.

If stocks are in an uptrend, a high-quality stock with solid growth is unlikely to plunge no matter how overvalued it appears.

No amount of cheerleading by the Instant Experts of the Internet can make an unprofitable story stock levitate forever.

No amount of intellectual fertilizer can force a trend to reverse.

Our lack of understanding of why a trend exists will not change the price.

No amount of doom and gloom, death-to-America, end-of-the-world blathering, no matter how loud, can keep a company with a solid balance sheet and growing income statements trading at absurd multiples of asset value and cash flow from being repriced higher or undergoing a significant resource conversion event (Whitmanese for takeover).

There is a difference between trading and investing.

Traders should trade trends, and investors should buy value.

When I talk about value, I am talking about deep value. An "undervalued relative to its peers" suggestion is right up there with the idea that ground arsenic looks like salt so you should put it on French fries.

If a stock is highly cyclical and looks cheap, but the business or commodity is in a strong uptrend, it is not cheap. The stock is probably very expensive as valuations are probably based on peak profits.

There are no market predictors on the Forbes 400 list.

Many investors and traders responded to the market's movements and made fortunes.

Everything shows up in either price or value.

That sentence, a large safety margin, and an affinity for exploiting volatility can make you rich.

This is why I have never had to tell my readers or clients to close a losing community bank trade.

It is the same reason that the bank stock I told readers to buy last year is up significantly today.

It is the same reason readers who followed our REIT guidelines have consistently made money.

It is the same reason our small-cap strategies have helped readers pile up huge gains.

There is a reason I have had subscribers stay with me for well over a decade.

There is a reason our portfolios have consistently had a high number of takeovers.

Over three decades of study, learning, and endless number crunching have taught me that you can grind all the moves and news down to a few simple principles and truths.

Applying these principles will give individual investors a huge "edge" over institutional investors and those who lack the discipline and patience to take advantage of them.

This is the point where someone usually pipes up and wants to know what I think will happen next year.

My answer, of course, is I do not know.

Here is what I do know:

Thanks to the post-election rally in bank stocks, there are not many bank stocks that fit our rigid criteria for the Bank and Credit Report.

There are still some issues in commercial real estate, and although conditions are improving, we are still very cautious about adding to commercial mortgage REITs.

Because of those same issues, Class A office buildings are cheap.

The same is true of high-quality hotels.

Everyone is starting to hate warehouses. This will create massive opportunities, as e-commerce is still growing, and the supply chain still needs more local storage space.

The numbers, not opinions, bias, or forecasts, combine to make me very bullish on single-family mortgages and mortgage REITs. If you do not own them, you should start buying the ones we suggest in the Bank and Credit Report.

Oil and Gas royalty trusts are cheap and getting cheaper. I have no idea what crude and natural gas prices will be in the short run, but the numbers suggest that they will move higher over the long run.

There are very few safe and cheap stocks right now.

Out portfolios are doing well.

Nothing is so priced that I feel compelled to tell you to sell.

So pure math, not forecasts or blah-blah BS, suggests that now is a good time to enjoy a continued strong uptrend with the stocks and assets we own, collect dividends and interest along the way, and enjoy the holidays.

Eventually, our good friends volatility and its pal Fear will show up and create new opportunities.

We can hang out with our old pals "Don't Know" and "Do Nothing" until they show up.

Portfolio Addition

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