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Posts Tagged ‘investing strategy’

How to Beat the Market in 2017

As we start a new year, every investor should ask themselves this question: Did you beat the market in 2016? According to an article on CNBC “Most investors didn’t come close to beating the S&P 500”. The rationale is discussed as:

Bad market timing and poor stock picking kept most investors from fully reaping the gains of the bull market last year. “The average investor held too much in cash, was too concentrated in stocks that didn’t perform well and avoided financial stocks that rallied last year,” said Hart Lambur, co-founder and CEO of Openfolio, a social network with more than 70,000 members who share their investment portfolios.

The average investor on Openfolio had a gain of roughly 5 percent in 2016. That lagged the nearly 12 percent total return of the S&P 500, which includes dividends, by more than 7 percentage points last year. 

Part of the lag can be attributed to investors having a diversified portfolio. That is a good thing because it smooths volatility and can improve returns over long periods. Yet when you consider that a balanced portfolio of 60 percent U.S. stocks and 40 percent U.S. bonds would have generated roughly 7 percent last year, Openfolio investors still fall short by 2 percentage points.”

How can investors beat the market?

Our newsletter beat the S&P 500 handedly in 2016 with a 27.8% return! In reviewing the results we obtained from the perpetual covered call strategy during the past year. In terms of total return as tracked in the monthly spreadsheets, the average across all positions was 27.8% during 2016. In the past year ending 12/17, the S&P 500 only returned 12.75% and the DJIA returned 16.8%. Therefore, we more than doubled the S&P and beat the Dow Jones significantly while generated significantly more income. The average monthly income across our open positions was $152 for each position with 100 stock shares! AND this includes the cost of having a long put to protect against downside risk on each position.

The average cost of 100 shares across all positions was $5,278 which generated an average of $152 of income each month. A $50K portfolio will generate an average of $1500 per month while a $100K portfolio creates $3,000 every month! This is proof our income strategy works. We target a 2-3% return per month on average.

Join our investing community and beat the market in 2017!

How to make $3K in Extra Monthly Income

The year 2016 was another stellar year of total returns and monthly income. Our perpetual covered call strategy was a big winner.  In this strategy, we create a covered call position to sell monthly call options for income and buy a long dated put option to protect our downside risk.  The put cost is spread across several months so the cost is low per month and will only slightly diminish our monthly income.

As we close out 2016 and reset for 2017, we are reviewing the results we obtained from the perpetual covered call strategy during the past year. In terms of total return as tracked in the monthly spreadsheets, the average across all positions was 27.8% during 2016. In the past year ending 12/17, the S&P 500 only returned 12.75% and the DJIA returned 16.8%. Therefore, we more than doubled the S&P and beat the Dow Jones significantly while generated significantly more income. The average monthly income across our open positions was $152 for each position with 100 stock shares! AND this includes the cost of having a long put to protect against downside risk on each position.

The average cost of 100 shares across all positions was $5,278 which generated an average of $152 of income each month. A $50K portfolio will generate an average of $1500 per month while a $100K portfolio creates $3,000 every month! This is proof our income strategy works. We target a 2-3% return per month on average.

We had no losing positions in our perpetual call portfolio in 2016. We had 3 positions with returns greater than 40%and all but one with returns greater than 12.7% of the S&P 500 in 2015.

The table below shows the results for each perpetual covered call position during 2016. This table is the same information as displayed in the monthly tables for each position (based on owning 100 shares of stock and selling one covered call each month). This is for portfolio tracking only as subscribers will own more than 100 shares and sell like size amount of call options for income each month.

2016-covered-call-results

 

 

 

 

 

 

 

Click to enlarge chart

How to be a Multimillionaire

Grace Groner started her career as a secretary at Abbott Laboratories more than 80 years ago. Four years into her job, she purchased three shares of our company stock for just under $200. She held on to those three shares until she died, in 2010.

Those three shares alone made her a multimillionaire. She could thank the company dividend — and the miracle of compounding — for her $7 million fortune.

Grace wasn’t abnormally lucky. Any investor who bought $1,000 worth of high-dividend-paying stock 75 years ago would have about $3 million today.

Are you ready to start your million dollar journey?

You can learn how to compound your money even faster than Grace. To do this, you need consistent returns to increase your dollars being compounded. Secondly, you need monthly income to accelerate the compounding effect. Lastly, you need an investment plan to achieve your goals.

Our monthly income subscribers are well on their way to financial independence. Here is the monthly returns from selling outs:

July:                 3.1%

August:            1.5%

October:          1.6%

November:      2.7%

These returns result in a 4 month return of 9.2% when compounded and near 30% when compounded annually!

Join the Monthly Income Plan today.

Are You a Penta Millionaire Yet?

In a recent article published in Barron’s, “Penta Millionaires: the New Rising Class” it discusses families with net worth over $5 million as a fast growing class in America. While this is correct about the changing of wealth, it still separates the wealthy from the other classes. While we all strive to attain our definition of success, the media continues to focus on the upper class. Let me share a secret with you, you can still have a productive and fun-loving life without being in the top income bracket. This is why we write a monthly income newsletter – to help those wanting to better their life and create a sustainable monthly income.

Here are some excerpts from the Barron’s article:

It is fair to say that at no time in history have so many Americans become so rich—or amassed their wealth so quickly. When John D. Rockefeller took title as the country’s first billionaire, in 1916, it was as rare an event as sighting a white whale, and seven decades later, the number of billionaires had still only reached 44. Since then, however, the ranks of the megarich have surged ahead with a caffeinated velocity.

At every level of the wealth pyramid, according to Penta’s research partner Boston Consulting Group, the ranks of millionaire and multimillionaire households have expanded. Last year, for example, there were 492 U.S. billionaires, meaning that 100 new billionaires were created in the past five years alone. But the most interesting trend is a little further down the pyramid: The number of households with more than $5 million in investible assets just crossed the one million mark, up 5% from 2014.

Flash forward to recent times. The rank-and-file rich have grown by just 5% a year recently, but this steady if modest climb over seven years has actually delivered better results. We now have a million-strong army of very rich emerging from the ho-hum, low-inflation economic growth that has been coupled with robust capital markets. Many have, in this calm environment, quietly sold off their private business or cashed in their stock-option windfalls.

At Get Rich Investments, we focus on creating stream of income to improve life and become financially independent. Once you learn how to create monthly income, you now control your own destiny. We have several investing strategies focused on low risk trade such as covered calls, selling cash-secured puts, buying monthly dividend CEFs and collecting divide3nds from world-class stocks. This is the way to increase your wealth on a monthly basis.

One strategy is the Put Call Dividend (PCD) Strategy where we sell puts for income to enter a position, then sell covered calls for income while collecting dividends. This creates three income streams from a single investing position. This positions the investor in a low risk position as you can continue to create option income each month by selling puts and calls on the same stock. If the market goes up – you make income. Same for when a stock pulls back – keep selling options for income. It is like collecting rent on a rental property each month – without the hassles of a tenant.

I can’t promise you will be a Penta Millionaire, but you will definitely create more income and move toward becoming financially independent.

Learn more about getting started on your wealth journey today.

Creating Multiple Income Streams with CEFs

An income investor has several investments available to create income streams. Most turn to dividend stocks and bonds to create consistent cash flows for their living expenses. While both of these investments will provide income, there are additional vehicles to produce money flows. One I like to use is closed-end funds or CEFs. These investments trade like stocks with a market price and can be easily purchased during trading hours on all stock exchanges.

Investors have nearly 400 CEFs to choose from that pay monthly distributions (see listing included). Simply, an investor can create a diversified portfolio of CEFs to create monthly income. Most investors should look at selecting five or more CEFs in different investment categories or type of objective. There are cases with investors creating numerous CEFs such as 30 funds to average one paycheck per day. I guess you can call this one check per day or daily paychecks.

The 10-year Treasury note touched its second-lowest yield before regaining some ground to finish at around 1.51%. The 30-year Treasury was offering a yield of 2.234% last week.  Those meager yields mean that despite grousing about elevated stock valuations and poor corporate quarterly results, investors aren’t finding a lot of safe options to put their money and eke out a decent return. Bespoke statisticians say 41% of stocks on the S&P 500 offer a richer yield than the so-called long bond, or 30-year note. And more than 60% pay a better yield than the benchmark 10-year note. A great alternative is investing in CEFs.

CEFs have some differences compared to stocks such as they have a publically known net asset value or NAV. The NAV is the sum value of the funds holding or intrinsic value. The CEF may trade at a market value that us different than the NAV. This makes it easy for investors to determine if the fund is trading at a premium or discount to its true value or NAV. As an investor, you want to purchase CEFs at a discount to NAV as this can be like buying a $1 of assets for $0.90 or whatever the discount to NAV. Who doesn’t want to buy funds at a discounted price or on sale!

To create a successful CEF portfolio, an investor should create a diversified portfolio of monthly paying CEFs trading at a discount to NAV. The investor can reinvest some dividends to increase their payments over time. This investing strategy can be used to replace income from employment or to supplement other types of income.

The Western Asset Emerging Markets Debt Fund (ESD) is a closed-end fund that invests in bonds issued by emerging-market governments and corporations. As income investors, we love the 8.5% yield… And as value investors, we love that the fund is available for an 13% discount to its NAV. On top of that, bonds are traditionally safer investments than stocks, even in emerging markets. ESD has an extremely diverse portfolio of 235 different holdings. Its largest country allocation, Mexico, only accounts for 13% of its portfolio. And 97% of its holdings are denominated in U.S. dollars.

How would you like 10 monthly income checks from your portfolio?

Subscribe today for more monthly income checks… you will make your money back on your first investment.

 

 

How to Earn Double Digit Income from Investing

Financial independence is based on creating enough income to fund the life you choose to live. Most people works their entire life to reach this point. This is not a slam on working for a living as I have been there and actually enjoyed many of the jobs I have occupied. There is a plan to create regular monthly income by investing in a low risk strategy. This is not any get rich overnight schemes or buy some penny stocks and hope they hit it big. I will show you how many are achieving additional income by following a simple plan to achieve the financial results that are seeking.

Today, I prefer to create income from what I will share with you in this writing – create income by selling options and collecting dividends on high quality dividend stocks. My simple objection when starting was to capture $1 million dollars from the market by using this market strategy. I am enjoying this journey and hope you have a big goal to achieve in your financial life. Think about it – to make millions in the market using option strategies. You should be getting excited about the possibility of making this kind of money!

The face of retirement in America has changed radically in recent decades. People are living longer. Pensions are increasingly rare. Add in market volatility, as well as questions surrounding the long-term feasibility of Social Security, and it’s no wonder many people feel anxious about funding their retirement.

If you were a newly hired employee at a Fortune 500 company in 1998, you likely had access to a defined benefit plan. But, by 2015, only 20% did. Over that same seventeen year stretch, 23% of Fortune 500 employers froze their primary DB plan and 15% closed DB plans to new hires. Today, the responsibility of financing your retirement is likely to fall squarely on your shoulders.

There are numerous ways to invest for income. Most often investors look to dividend stocks and bonds to generate income. Stock dividend yields can produce 3-5% or more of income on an annual basis. This is a good source of income usually payable on a quarterly time period. Some investors, like our group at getrichinvestments.com, sell call options on stocks to create covered call trades. These trades allow investors to collect the premium from the option calls sold on owned stocks. We target monthly returns between 1-3% and frequently make more on good months. I also exercise an additional strategy for income. I will sell put options on stocks to collect option premium. I find this not only creates income but it also decreases my market risk.

Some advisory services charge $3000 to $5000 per year for this service.  We don’t make our income from subscribers’ backs – we conduct the same strategy and trades as our readers.  We provide a great professional service to help investors create monthly income at a very reasonable price.

Join us today to create your own million dollar journey.  Get started here.. monthly income newsletter

The Secret to Great Investment Returns

People ask me all the time what is the real secret to great investing returns.  They have lost faith in the talking heads on TV who are selling their latest investments hyped as the place to be in today’s market.  Often times these investments only separate the investor from their money. I have a proven strategy that is more rational so any investor can generate income by investing in great companies. My premise is cash doesn’t lie so when you have it in hand (or in your investing account), you know you have made money.  Probably the two most important attributes to making money on a stock investment is (1) buying a great business model; and (2) buying at the right price. I constantly see investors buying a great business but at a price too high to ever generate a return.

I have this thought leadership built into my investing strategy. One, I only buy great blue-chip stocks that have validated profit margins and competitive advantages. Many refer to these stocks as market dominators because they have well recognized brands such as Walmart, Intel and others. Two, I look to invest in these great companies at the right price. My research will point me to these stocks trading below fair value. These are the companies that will give us market beating returns with lower than average risk.

We further lower the purchase price by selling puts on the great stocks we want to own. Each month or so, we will sell a put options at the money to collect premium income. This premium income lowers the purchase price with each sell until the stock gets put to us. For example, selling an option put for $1.00 per contract in 3 consecutive months gives the investor $3.00 or $300 in cash. If the stock is trading at $40 per share, the put selling drops the investors cost to $37 per share ($40 – $3 = $37) In the meantime, the investor is earning an average of 1-3% each month in income.

This is the power of this strategy – creating income streams while buying great businesses at a discount price.

Learn more here: Monthly Income Newsletter

 

Dividend Growth with 60% Upside

Trinity Industries (TRN) – Stock Summary

The stock pays a modest dividend yield of 1.07% but it has significant dividend growth potential in the coming years.  The Company has a 5 year average dividend growth rate of 13.40% with dividend growth of 36.36% in the last year.   The dividend will continue to grow as the EPS growth for next year is projected to be 27.23%.  EPS growth in the last quarter was 59.49% compared to the same quarter from a year earlier.  The stock has an equity summary score of 9.9 out of 10 for a VERY BULLISH outlook among analysts.  The stock is reasonable priced with a price to sales ratio of 1.07.

The stock is projected to have earnings of $5.92 in 2014.  Based on a PE of 15, the stock has a 12-month price target of $89, an increase of nearly 60% in the next year.

Trinity Industries, Inc. has declared a quarterly dividend of $0.15 per share on its $1.00 par value common stock. The quarterly cash dividend, representing Trinity’s 199th consecutively paid dividend, is payable January 31, 2014 to stockholders of record on January 15, 2014.

Recent Earnings

Trinity Industries, Inc. announced earnings results for the third quarter ended September 30, 2013, including the following significant highlights:

  • Record quarterly earnings per share of $1.26, a 58% increase year-over-year
  • Anticipates fourth quarter earnings per common diluted share of between $1.24 and $1.34 and raises full year 2013 earnings guidance to between $4.55 and $4.65
  • Rail Group receives orders for 5,610 new railcars during the third quarter resulting in a backlog of 40,050 units with a value of $5.1 billion
  • Structural wind towers business receives orders with a value of $442 million, extending production visibility through 2015
  • Company repurchases approximately 540,000 shares of its common stock during the quarter at a cost of $23.9 million
  • Available liquidity at the end of the third quarter of approximately $1.2 billion

Trinity Industries, Inc. reported net income attributable to Trinity stockholders of $99.6 million, or $1.26 per common diluted share, for the third quarter ended September 30, 2013. Net income for the same quarter of 2012 was $63.2 million, or $0.80 per common diluted share.

New Developments

Trinity Industries Inc. announced on 1/10/2014 that it  has acquired the assets of WesMor Cryogenic Companies through a newly formed subsidiary.  WesMor specializes in the manufacturing, repair, and rehabilitation of cryogenic containers that store and transport LNG and other industrial gases with initial expected annual revenues of approximately $25 million. The transaction includes the acquisition of a manufacturing facility in La Porte, Texas, and three service facilities located in La Porte; Slidell, Louisiana; and Port Washington, Ohio.

Recently, equipment finance company Element Financial Corporation (ELEEF) announced that it has entered into a strategic alliance agreement with Dallas-based Trinity Industries, Inc. (TRN) , a railcar manufacturer and lessor, to provide lease financing for up to US$2 billion worth of railcars over the next two years.  Under the terms of the Agreement, Element will be presented with “preferred opportunities” to enter into lease financings for a diversified fleet of railcars, including new railcars to be manufactured by Trinity , existing railcars from Trinity’s lease fleet as well as secondary market purchases.

Trinity Industries, Inc. recently announced that its subsidiary, Trinity Railcar Repair, Inc., has acquired the assets of Seaboard Railcar Repair (“Seaboard”). Seaboard provides a full range of services for both tank and freight railcars ranging from standard maintenance and program modifications to specialized cleaning, blasting, lining, painting, inspection and testing. The transaction includes the acquisition of two maintenance facilities located in Oklahoma and North Carolina with access to a number of major railroad interchanges. The assets and results of operations of this acquisition will be reflected in the Rail Group for financial reporting purposes.

Trinity Industries, Inc., headquartered in Dallas, Texas, is a diversified industrial company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. Trinity reports its financial results in five principal business segments: the Rail Group, the Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group, and the Energy Equipment Group.

Drive this Stock to 40% Gains while Increasing Dividends Each Quarter

Income investors should look at this stock for a growing dividend, increasing earnings per share and a 40% potential upside in stock price.  The Company has increased dividends for 11 straight quarters, increased EPS 21% in latest quarter and trades at a current price to sales ratio of 0.27.

Penske Automotive Group (NYSE: PAG), an international transportation services company, announced the highest third quarter and nine months income from continuing operations and related earnings per share in company history.   For the third quarter 2013, income from continuing operations attributable to common shareholders increased 21.0% to $66.0 million and related earnings per share increased 21.7% to $0.73 per share when compared to adjusted figures for the same period last year of $0.14 per share.

The big auto retailer logged a 12% jump in 3Q same-store sales, outpacing larger rival AutoNation (AN), and service-and-parts margins also rose strongly.  But average profit/car sold was essentially flat from a year ago for both new and used vehicles. Nonetheless, Sterne Agee says, “PAG’s luxury and import portfolio, concentration in the UK market (34% of revenue) and the company’s ability to improve cost accounted for the better-than-expected financial performance. We expect the positive trends to continue in 2014.”

On October 23, 2013 Penske increased its dividend by 6.3%.  Commenting on the dividend, Penske Automotive Group

President Robert H. Kurnick, Jr., said, “Our Board of Directors is pleased to offer our shareholders a 6.3% increase in the quarterly dividend to $0.17, demonstrating the continued confidence we have in the strength of the auto retail marketplace and in our ability to continue growing our business.”

Penske has increased dividend s for 11 straight quarters as the dividend paid in Q2 2011 was $0.07 per share.  Today (Q4 2013), the Company is paying $0.17 per share for this quarter.  This is an increase of 143% over a little more than 2 years.  Penske has a 5-year average annual dividend growth rate of 13%. The Company has a current dividend yield of 1.5%.

Penske is projected to have earnings of $2.73 per share in calendar year 2013.  The Company is projected to grow earnings by 15% to $3.15 in 2014.  Carmike is projected to increase EPS by another 10% to $3.45 in 2015.

The stock has an equity summary score of 7.9 out of 10 for a BULLISH outlook.  Thomson Reuters consensus has a buy rating of 2.3 on the stock.  Penske Auto Group (NYSE: PAG) has a 12-month price target of $63.00 which is an increase of 40% from the current trading level.

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, is an international transportation services company, operating retail automotive dealerships, Hertz car rental franchises and commercial vehicle distribution. The company currently operates principally in the United States, Western Europe, Australia and New Zealand, employs approximately 17,000 people worldwide and is a member of the Fortune 500 and Russell 2000.

A High Yield CEF Trading at a Double Digit Discount

For CEF Investors seeking income, they may want to evaluate Liberty All Star Equity Fund (USA).  This fund has a current distribution rate of 6.97% and still trades at a 10% discount to net asset value (NAV). While the fund is setup for income purposes, it has produced a year-to-date market return of 20% and a one year return on NAV of 29%.  This performance has landed this fund in the top25 CEFs through year to date results.

USA has a 1-year Z statistic of -1.71 while indicates it has a reasonable value compared to past discount of price to NAV.  The fund uses no leverage and no return of capital through distributions.  Here is the recent fund information.

 

 

Fund Style: Large-Cap Core

Investment Managers:
Value Managers:
Matrix Asset Advisors, Inc.
Pzena Investment Management, LLC
Schneider Capital Management   Corporation
Growth Managers:
Cornerstone Capital Management LLC
TCW Investment Management Company

 

Top 20 Holdings at Month-End
(31.9% of equity portfolio)

(Rank   from previous month)

1

Google, Inc., Class A (2)

2.5%

2

QUALCOMM, Inc. (1)

2.4%

3

Schlumberger Ltd. (4)

2.1%

4

JPMorgan Chase & Co. (3)

2.1%

5

Salesforce.com, Inc. (5)

1.8%

6

Amazon.com, Inc. (13)

1.6%

7

Citigroup, Inc. (6)

1.6%

8

Morgan Stanley (9)

1.5%

9

Devon Energy Corp. (11)

1.5%

10

Bank of America Corp. (7)

1.5%

11

Hewlett-Packard Co. (17)

1.5%

12

MetLife, Inc. (8)

1.4%

13

SunTrust Banks, Inc. (12)

1.4%

14

Microsoft Corp. (14)

1.4%

15

American International Group, Inc.   (16)

1.4%

16

Visa, Inc., Class A (15)

1.3%

17

Starbucks Corp. (10)

1.3%

18

Chesapeake Energy Corp. (18)

1.3%

19

Precision Castparts Corp. (22)

1.2%

20

State Street Corp. (20)

1.1%

Holdings are subject to change.

 

Monthly Performance
Performance

NAV

Market   Price

Discount

Beginning of month value

$6.20

$5.41

12.7%

Distributions (Ex-Date October 30)

$0.10

$0.10

End of month value

$6.37

$5.72

10.2%

Performance for month

4.54%

7.58%

Performance year-to-date

27.03%

27.94%

The net asset value (NAV) of a closed-end   fund is the market value of the underlying investments (i.e., stocks and   bonds) in the Fund’s portfolio, minus liabilities, divided by the total   number of Fund shares outstanding. However, the Fund also has a market price;   the value at which it trades on an exchange. If the market price is above the   NAV the Fund is trading at a premium. If the market price is below the NAV   the Fund is trading at a discount.

Returns for the Fund are total returns, which include dividends, after   deducting Fund expenses. The Fund’s performance is calculated assuming that a   shareholder reinvested all distributions and exercised all primary rights in   the Fund’s rights offerings. Past performance cannot predict future   investment results.

Performance will fluctuate with changes in market conditions. Current   performance may be lower or higher than the performance data shown.   Performance information shown does not reflect the deduction of taxes that   shareholders would pay on Fund distributions or the sale of Fund shares. Shareholders   must be willing to tolerate significant fluctuations in the value of their   investment. An investment in the Fund involves risk, including loss of   principal.

 

Net Assets at Month-End   ($millions)
Total $1,111.6
Equities $1,090.0
Percent Invested 98.1%
Sector   Breakdown (% of equity portfolio)*
Financials 25.2%
Information   Technology 18.9%
Consumer   Discretionary 15.6%
Energy 15.0%
Health Care 10.2%
Industrials 7.3%
Consumer   Staples 4.9%
Materials 2.3%
Utilities 0.6%
Total Market   Value 100.0%
*Based on   Standard & Poor’s and MSCI Barra Global Industry Classification Standard   (GICS).

 

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