income
Written by Dani, March 13th, 2012
Stocks appear to be topping, and may have already peaked. There was a relief rally last week which we believe had much to do with the appearance of everything being OK (activity from the Federal Reserve, the controlled default in Greece, etc.), and not with the fundamentals.
One reason for continued investor confidence is that Apple Computer (AAPL) stock has been soaring. Also, American investors especially seem to be excited that it appears that America is decoupling from the rest of the world and they hope this means that we won’t be as affected by adverse global trends. However, we still believe that there is reason to be concerned, because of what we’re calling the triple threat.
The triple threat is:
- Europe is in recession
- China’s economy is slowing down
- U.S. profit growth prospects are slowing as well
Also, equities are going up, along with oil and bonds going up as well, so this is a very unusual circumstance. Bonds rising in value are usually associated with depression and deflation, but the stock market is soaring. Something strange is happening here, and John Hussman wrote last week that is a bad time to invest too heavily, based on historical similarities, and we agree. We encourage all of our readers to check out his piece on the market trends, here.
This is a podcast summary. For complete details on the items discussed today, please listen to the full audio here.
Written by David, February 15th, 2012
As many of you know our firm focuses a large portion of our research on income oriented funds and we recently came across an excellent article on Seeking Alpha about different ways to calculate yield in both equity and fixed-income funds. It explains the differences between SEC yield, 12-month yield, distribution yield, and average yield to maturity. We highly recommend that income investors who use ETFs read this post.
Written by David, February 15th, 2012
“You have to make your money work for you.”
We’ve all heard this old adage, and to be certain, it is the key to income investing success. And while the truth of this statement can’t be argued, it’s definitely a lot easier to say than to actually do.
At Fabian Wealth Strategies, we take the concept of making your money work for you very seriously. But what does it actually mean to have your money working for you, and how can we help you achieve that noble goal?
Answering these questions is what our new report, The Ultimate Income Strategy, is all about.
As a fee-only investment advisor specializing in helping clients preserve their capital while also generating the income they need to live the life they desire, we take both of these objectives extremely seriously. However, conventional Wall Street wisdom usually pits the twin objectives of capital preservation and high income generation at odds.
According to the official party line, you can either A) preserve capital by sticking your money in “safe” investments that offer a pitifully low yield, or B) put your money at risk in dividend stocks and other high-yield equities and be willing to wait out the inevitable market declines that are inherent in these kinds of securities.
Well, we think this conventional wisdom is flawed, and we know there’s a better way to manage your income assets. You see, instead of the either-or choice of safety vs. yield, we’ve developed a strategy designed to maximize income while at the same time managing the various risks inherent whenever you put money to work in the market.
We call it our “Ultimate Income Strategy,” and when you’re finished reading this report, you should have a good sense of how the strategy works, and more importantly, how it allows your money to work for you.
If you’ve been trying to generate high income but have failed to keep your money safe from volatile market swings, then this report is aimed straight at you.
In The Ultimate Income Strategy, you’ll discover why the right mix of income-generating assets—along with the expertise to navigate in and around changing market conditions—are two key components of a truly successful income program.
By downloading this FREE special report, you’ll find out the secrets of how we manage an income portfolio to deliver the capital preservation and high yield every income investor is after.
So, take the ultimate step, and download your FREE copy of The Ultimate Income Strategy today!
Written by David, March 14th, 2011
Do you have idle cash languishing in a savings account or money market account earning less than 1%?
If so, you may be missing out on excellent opportunities to achieve both steady income and capital appreciation generated by your hard-earned assets.
The Federal Reserve and banks around the country have dropped the yield on short-term savings and money markets rates to rock bottom levels in an effort to stimulate the economy. Long-term CDs and Treasury bonds don’t give you the flexibility to keep your money liquid, and as such they represent a hazard if interest rates were to rise.
According to recent government data, the inflation rate in the U.S. is close to 1.6%, which means that your purchasing power is diminishing if you are not able to achieve a total return in excess of this baseline. And that’s the official inflation rate, which doesn’t take into account rising food prices and soaring energy costs.
So, what do you do with that cash on the sidelines that’s earning next to nothing?
You put it in an actively managed income portfolio from Fabian Wealth Strategies.
Now more than ever, you need a conservative investment strategy designed to generate monthly income as well as preserve investment capital. At Fabian Wealth Strategies, our Steady Income portfolio is comprised of highly liquid investments with a balanced mix of dividend-producing stocks and investment-grade bonds.
Our proactive approach to asset management allows us to be flexible with the portfolio in the event that interest rates continue rise, or stocks abruptly turn lower. We accomplish this by monitoring our portfolios on a daily basis to determine what we believe is the best asset allocation mix to achieve your income-generating goals.
We welcome your calls at (800) 391-1118 to discuss how we can help you turn your idle cash into an income-generating machine.
Sincerely,
Doug Fabian
President, Fabian Wealth Strategies
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Fabian Wealth Strategies, Inc. is a registered investment advisor with the U.S. Securities and Exchange Commission. Doug Fabian is a registered investment advisor representative. The information expressed in this email is for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any specific security. Investing involves the risk of loss. Consider the risks, fees, and expenses before making any change to your investment portfolio.
Written by David, May 28th, 2009
The just-released 2009 Social Security Trustees Report shows that the recent economic woes have had a big negative impact on the Social Security budget. The report projects that by 2016 Social Security spending will exceed the revenue it receives each year from all of us.
But just how bad is the situation?
Social Security is a pay-as-you-go system, which simply means that the government takes your money and gives it to current recipients of Social Security benefits. The government, in effect, guarantees that it will confiscate (via taxation) money from one block of people (workers) and give it to another block of people (retirees).
Does this type of investment architecture sound familiar to you? If you are reminded of the Bernie Madoff Ponzi scheme, then you and I are on the same page. In essence, the Social Security system is basically just a very big version of a Ponzi scheme, and as long as the numbers work out everything should be okay.
But what if they don’t work out?
In the 1950s, the Social Security system’s worker-to-beneficiary ratio was approximately 16.5-to-1. However, now that the average lifespan has increased, the worker to beneficiary ratio has dropped to 3.1-to-1. Within the next two decades that ratio is expected to drop to 2.1-to-1.
I think you can see that in order to keep its Ponzi scheme going, there will either have to be more revenue raised—i.e., an increase in the Social Security tax—or a decrease in Social Security benefits, or a combination of both.
So I ask you this, why would you trust your retirement to a government-sanctioned, Madoff-style investment scheme?
The way I see it, the only person you can trust to look after your retirement is you, and that means it’s imperative that you take responsibility for stewarding every dollar you make.
Don’t let your retirement be determined by a Ponzi scheme. If you need help managing your retirement assets, why not consider active management of your income generating assets? At Fabian Wealth Strategies we have designed an income portfolio to help you preserve capital and generate the retirement income you need to live the life you deserve.
For more on how you can start maximizing your retirement efforts, click here.
Written by David, March 04th, 2009
Dividends are a great way to earn some extra income. You also can grow your principal through capital appreciation with good dividend-paying equities. One way to gain both of these benefits is through dividend-focused exchange-traded funds (ETFs). But the path to doing so has become increasingly treacherous for investors to follow as once-solid corporations struggle for survival. If you are an income-oriented investor, here are four simple tips on how to select these types of funds.
First, pick ETFs that hold stocks in stable companies with sustainable dividend yields. In this market, even traditional dividend-paying companies such as Bank of America, General Motors and Citigroup, have suspended their dividends because of poor performance. In 2008, 62 companies in the S&P 500 cut their dividends. To protect your capital and enjoy steady income, choose ETFs that invest in companies likely to continue paying dividends.
Second, find ETFs that are invested in cash-rich companies. As I have said many times before, in bear markets, cash is king. Cutting dividends harms the company’s reputation and typically hurts its stock price, as well as your principal. Find ETFs that hold stock in firms with fat cash positions and your dividends likely will keep coming.
Third, beware of ETFs that have too much exposure to any single sector. Take a close look at the financial or energy sectors, since any ETF that follows these sectors could be down more than 50% in the last year — costing you much of your initial investment. Remember, when earnings fall sharply, dividend cuts often follow.
Finally, and possibly most important, do your homework before you buy any ETF. Know its holdings, find out if the fund is leveraged or not, check its past performance and make sure that it is well-diversified.
ETFs are a great and easy way to moderate risk in any portfolio, especially in times of volatility. Several studies have found that dividend-paying stocks held for the long run provide better risk-adjusted returns than low-paying ones. Also consider your appetite for risk and your short- and long-term financial goals. Then, invest accordingly.
Written by David, August 11th, 2008
After having just come back from the latest MoneyShow in San Francisico, I want to share with everyone the three presentations that I conducted for hundreds of individual investors.
ETF Strategies In a Difficult Market
Some pundits are saying that we are in a recession; others call it a mere economic slowdown. The answer in my opinion is what difference does this technical distinction make to you? The one thing everyone agrees on, bull or bear, is that were living in uncertain times. As a result, it is of utmost importance for us to take a cautious approach. These ETF strategies in a difficult market will teach you the importance of managing risk, having a sell discipline, and benefiting from new opportunities.
Structuring a Portfolio for Income and Safety
How do you get a decent income return without risking your principal? Are you tired of putting your money in poorly paying CDs or money market accounts? I reveal my favorite income producing tools in this presentation to boost the yield in your portfolio without taking on excessive risk. Learn how to use exchange traded funds, unit investment trusts, and closed end funds to properly manage your income assets.
Seven Secrets of Success for ETF Investors
In this presentation I reveal the seven secrets for successfully managing your portfolio using my favorite investment vehicle, exchange traded funds. ETFs are simple, easy, inexpensive, diversified, and fun. Learn how to manage any size portfolio using these proven methods to manage risk and maximize returns.
Written by David, July 29th, 2008
When the stock market is trending downward, it is difficult to know what to do. Amid the uncertainty is the proven benefit of owning dividend-paying stocks. Sure, the share prices of such stocks and equity ETFs can fall, but the dividend payments continue to generate income in both good and bad times.
Despite the current market gyrations, one intriguing new ETF that offers exposure to a growth-oriented foreign market and dividend income is the WisdomTree Middle East Dividend Fund (GULF). The new ETF began trading on July 16. The fund is based on the performance of the WisdomTree Middle East Dividend Index.
GULF gives investors exposure to approximately 70 dividend-paying companies listed in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar and the United Arab Emirates. If you’re worried that oil prices will resume their upward trajectory after their recent pullback, the countries featured in the GULF ETF should benefit economically from such a trend. Oil certainly is a key commodity for Middle Eastern countries and their economies but this fund is not dependent on the performance of just one sector. In fact, its biggest exposure is to Middle Eastern banks and other financial stocks. That sector accounted for 49.61% of the fund’s assets as of July 29.
The fund’s second- and third-largest sector holdings are telecommunications services and industrials, respectively. Telecommunications companies drew 24.56% of the fund’s assets as of July 29, while industrials took in 11.37%. Clearly, this fund is diversified in ways that focus on the region’s overall growth opportunities and the kinds of companies that will benefit from continued Gross Domestic Product (GDP) gains.
Kuwait is the nation that has attracted the most investment dollars of GULF. The fund has put 27.73% of its holdings into Kuwaiti companies, while the United Arab Emirates, with 18.12%, and Egypt, with 12.69%, round out the top three countries where GULF has placed its investment funds.
I am not recommending this new fund right now, as it still is trying to build its trading volume to the threshold of 100,000 shares a day that I like to see before pursuing such an opportunity. You may want to hold off on investing in GULF until its trading volume increases, and until we see its price performance for the first four-to-six weeks.
Still, I think the idea of mining for dividends in the Middle East is sound, and I will definitely be keeping a close watch on GULF for all of us.
