06-JUNE 01-2021

BusinessGood morning.
The idea behind a K-shaped recovery is that for those who weren’t impacted by the pandemic, things would be fine.  For those impacted, life would get worse.
That’s shaping up in many ways.  First, many of the job losses during the pandemic were lower-wage jobs.  High-level employees at some companies were able to take mere pay cuts instead, sometimes even getting stock options.  With stocks up in the past year but wages flat, the real trouble is coming now thanks to inflation.
According to Apartment List, rents increased 2.3 percent from April to May, the largest increase since the company began tracking those numbers in 2017.  While renters are facing higher rent payments, property owners have now had a year to take advantage of ultra-low interest rates to refinance.  The longer these imbalances go on in the economy, the more prolonged the K-shape of the recovery is likely to be.

Now here’s the rest of the news:

Analysis: Chasing Yield, U.S. Private Equity Firms Nudge Up Risk on Insurers –Reuters Staff,Reuters
The shift has caught the eye of regulators and raised concerns about a cash crunch if asset managers had to liquidate large portfolios in a hurry to meet insurance claims… [Read Here]

June 01, 2020

Outperformance can go a long wayGood morning.
The market eked out another 3% gain last week despite a rocky finish.  It was an unusual week as big tech faltered early in the week and financials began to lead.
However, as the week closed, it was back to what has been working.  As we closed out the month of May’s trading last week, we’ll have a chance to see just how resilient the market will be to data as the summer doldrums begin.

Now here’s the rest of the news:

 

June 01, 2019

Innovation, investing and gold … that either stops your heart dead … or gets your adrenaline flowing!

Let’s be honest, who out there really thought we could continue this bull run on the same trajectory it’s been following for the last year?

The fact that we’re seeing 1,000-point swings on the Dow in single trading sessions only speaks to just how far we have overshot reason and how deep we’ve strayed into the land of irrational exuberance.

Any way you look at it, the speculators are getting scared.  Is there any way we should look at gold differently?  Gold, and the companies that produce it, prospers during times of caution.  That hasn’t change in eighty some-odd-centuries.  Last year there was a new development within cryptocurrencies.  A lot of people checked it out!  Now, before you get angry and close out this blog, or throw your tablet out the window, let me explain: Evolution

The biggest problem with cryptocurrencies, and the biggest problem with physical gold, have one single solution.  Cryptocurrencies are inherently unstable investments because their value is under question.  Gold is a questionable investment because it’s heavy, easily stolen, not so easy to transfer or liquidate, and expensive to protect.

Just how well is that one company mated a cryptocurrency that’s backed by gold?

You tell me!  I would love to hear your thoughts, right now … right here!

June 01, 2017

Rich and Famous

Most people who call themselves “investors” really aren’t.

The average “investor” is really a trader.  He buys a stock with the hope that at some point in the future, he’ll find someone who’ll buy it for more than he paid.  He’s trying to time the market.  “Buy low and sell high,” right?

More often, however, people can’t stand the uncertainty.  Watching the market flip and flop all over the place leads to bad decisions.  People buy high and sell low.

But there’s an easier way…

Many investors overlook the fact that your true wealth is your income.

I’ll bet you have some idea of the total balance of your brokerage account – even without looking it up.  But you probably can’t quote the annual dividends your portfolio generates.

That’s a blind spot many investors have.  And it’s a mistake.  You shouldn’t measure your wealth by the balance of your bank account, but by the income it generates.

Income is what you live on.  Income is what gives you the freedom to enjoy your days, take vacations, or provide for your family and others.

When you buy 100 shares of a stock that pays $1 a year in dividends, you’ve just set yourself up for $100 a year in income.  With a little bit of investing acumen, that income stream should rise.

And a dividend is even more than just an income stream… Dividends are vital to the overall returns of your portfolio.  According to studies, dividends have accounted for about 43% of the performance of stocks in the S&P 500 since 1926.

That means if stocks return 7% a year, about 3% of that is dividends. That makes for a big chunk of returns.

That difference grows over time (an effect called “compounding”).  An investor who collected and reinvested dividends from 1940 to today would have earned 10 times as much as an investor who collected the capital gains on stocks alone.

Simply put, paying dividends is exactly what the stock market is about.

After all, a dividend can’t be faked.  Companies can employ a range of accounting tricks to beef up earnings.  They can come up with new grand “strategic plans” to paint a bright picture for the company’s future.  At times, some even engage in outright fraud.

But a dividend comes as real cash, straight from a real bank account.  It can’t be faked, cajoled, or conjured.  Only companies with sound finan-cial footing and real profits can pay dividends.  By focusing on divid-ends, you’ll immediately ignore many of the junk stocks out there in the market.

And by focusing on one specific number, you can make sure that the company is likely to keep paying out its dividend…

It’s called the “dividend-payout ratio.”  This is the percentage of earnings the company pays out as dividends, usually on an annual basis.  You can find dividend-payout ratios for most stocks on Yahoo Finance under “Statistics.”

You’re looking for sustainability in a dividend-payout ratio…

For example, a dividend-payout ratio of more than 100% is, by definition, not sustainable.  At that pace, the company will eventually run out of money.  Usually, a dividend-payout ratio of more than 100% is due to an accounting quirk that has reduced the company’s earnings on paper for a quarter or two.  Less often, it may indicate a special dividend was paid in the last year.

Of course, a dividend-payout ratio that’s too low suggests the company isn’t returning much money to shareholders.

As a rule of thumb, payout ratios in the range of 30% to 60% suggest that the company pays a generous dividend that still leaves some breathing room in the case of short-term market fluctuations.

It’s also helpful to read statements from management to find its “targeted” dividend-payout ratio.  When management announces a target and hits it consistently, it shows the company has the earning power to stay on track.

If a dividend-payout ratio makes you leery, it’s a sign to dig deeper.

The dividend-payout ratio can tell you a lot about an investment – including whether the company delivers consistent payouts.  And that’s vital for anyone investing in income.

Here’s to our health, wealth, and a great retirement,

REW

IMG_0712
Come From Aways, Do You?

More Posts

09-SEPTEMBER 18-2021

Ten Ways To Foster Innovation In order to compete effectively, we must look for new and better ways to accomplish our mission.  We must find creative methods to delight our customers.  And we must find innovative strategies for getting more done with fewer resources. With things changing as rapidly as they are, doing things the old way won’t be profitable for very long.  To grow, we must be constantly innovating. An innovative company attracts and keeps better employees.  People want to be part of something creative.  It’s stimulating and it’s fun. Here are ten things you can do to foster

09-SEPTEMBER 17-2021

Good morning. We’re fans of following company insiders when they buy their own shares.  That’s because they only buy if they see a good value going forward.  Most company insiders are partially compensated in shares, so they have plenty of reasons to sell, from portfolio diversification to big spending bills like a second house or divorce. Overall, buying with company insiders produces excess returns compared to the market.  But they’re not the only insider group out there. Consider Congress.  Last year, two senators sold off stocks after an early hearing on Covid and before the big crash.  House Speaker Nancy

09-SEPTEMBER 16-2021

Good morning. Yesterday marked the 13th anniversary of the collapse of Lehman Brothers, a “victim” of over leverage on the US housing market.  Yesterday also marked the day when Evergrande, a Chinese real estate firm, stated that it wouldn’t pay interest on its already-collapsing bonds. For years, many have warned about the size and rate of China’s real estate buildup, from empty cities to investment homes that sit unused (one of the few places where citizens can park cash).  While we’re optimistic that the damage can be contained to China and not impact global growth too much, we also can’t

09-SEPTEMBER 15-2021

Good morning. We’ve warned for weeks that stocks are at elevated levels, and that a modest pullback would be likely.  Now, however, investor sentiment has gotten heavily bearish, for more than just a small pullback. That’s somewhat concerning, as fears of a market pullback could lead to enough profit-taking and cash-raising that it becomes a self-fulfilling prophecy.  However, a market so quick to get so bearish could also be a sign that there’s still a major rally ahead.  Bull markets don’t die when investors get fearful.  Rather, it’s when investors get so bullish that they go all-in at record highs.

09-SEPTEMBER 14-2021

Good morning. With Labor Day weekend over, oil prices should be trending down.  The summer driving season in North America is over, and it’s largely an American phenomenon.  However, expectations for a potentially colder-than-average winter are keeping a bid under oil prices right now. At a time when traders typically expect lower prices going forward, oil is now at a 5-week high and trending higher.  And Bank of America analysts see crude oil pumping as much as $100 per barrel under an exceptionally cold winter scenario.  It’s likely that gas prices may remain higher for longer than expected, and can

09-SEPTEMBER 13-2021

Good morning. Last week, Treasury Secretary Janet Yellen warned that the measures underway to preserve cash at the US Treasury were likely to run out in mid-October.  Unless Congress acts to raise the debt ceiling, there could be a potentially debt cliff where a number of government programs simply don’t get paid. That’s a scenario that nearly unfolded in 2011. 10 years ago, it also provided the stock market with a flat return for the year and a closest thing to a selloff since the housing crisis two years before that.  Last week’s market weakness may be starting to reflect

09-SEPTEMBER 12-2021

Here’s to a better YOU … and now … Today’s DarrenDaily Recap Sunday.  A collection of the weeks videos from Darren Hardy.  Enjoy! Describing its beauty!!!  Fishing boats on the River Gwaun at Lower Town in Fishguard on the Pembrokeshire coast in Wales,U.K. It doesn’t matter how you get there … only that you come to visit! September 12, 2020 Whew! This year has definitely been one for the books. Between the “illness”, unrest, and just general uncertainty 2020 can move anytime! But, you know what really helps me when things get super overwhelming? Gratitude. Staying focused on the things

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment

Send Us A Message