Posts Tagged ‘Dividends’

America About to Turn 238 – Rally Turns 2.5

Happy Birthday America! 

The markets are closed tomorrow and today is a half day but the trend is certainly our friend on the S&P as we haven't been below the 200 day moving average since December of 2011 (except a couple of very brief dips).  Though the average volume is about 30% lower than it was back then – it's still an impressive feat.  

Of course, if 10% of the market was manipulated before and the manipulators haven't left (they certainly haven't) – even if the level of manipulation remained the same, 30% of the 90% that wasn't manipulated (retail investors) did leave (possibly BECAUSE of the manipulation) and that means now manipulators control 10% of the remaining 70%, a 42% increase in manipulation!  Of course we know it's much worse than that because now the Central Banksters perform their own brand of market manipulation.  As noted by Salient Partners in a great article about PBOC Manipulation:

The explicit purpose of recent monetary policy is: to paper over anemic real economic growth with financial asset inflation. It’s a brilliant political solution to the political problem of low growth in the West, because our political stability does not depend on robust real economic growth. So long as we avoid outright negative growth (and even that’s okay so long as it can be explained away by “the weather” or some such rationale) and prop up the financial asset values that in turn support a levered system, we can very slowly grow or inflate our way out of debt. Or not. The debt can hang out there … forever, essentially … so long as there’s no exogenous shock. A low-growth zombie financial system where credit is treated as a government utility is a perfectly stable outcome in the West. 

So China has indeed learned the most valuable lesson of Capitalism – that money is a meaningless contstruct that can be freely manipulated to fit whatever narrative the Government wishes to spin and that debt is not to be feared, but embraced, especially by our Corporate Masters – because our National Debt becomes their Private Profits!  


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Defending Your Virtual Portfolio With Dividends (Members Only)

In uncertain markets, dividends can give you a critical investing edge.

As you can see from the chart on the left, just mindlessly investing in dividend-paying stocks can give you more than a 2:1 annual advantage in your investments

Of course, here at PSW, we teach the art of selling options premiums – something that turns virtually any stock into a "dividend" payer.  For example, MSFT is only a small, 2% dividend-payer but a fairly solid cash-machine of a stock that we don’t feel is likely to go bankrupt overnight so it makes for a nice safe staple in a long-term virtual portfolio.  But MSFT is also a very poorly-run company that hasn’t grown in 20 years but we can make it a much more interesting stock by simply selling covered calls.

For example, we buy MSFT for $24.23 and we sell the Sept $24 calls for .77.  This lowers our effective basis to $23.46 and selling the call puts us in no special danger – we are simply agreeing to sell MSFT for $24 on expiration day in September (the 17th).  Should the stock be called away from us, we make a .54 profit or 2.3% of our net $23.46 cash investment in less than 30 days.  That works out to a 26% annualized ROI and, even if we get called away, we can simply buy the stock again and again and sell calls every month.  Of course, you can optimize all this with timing and we favor stocks that are on sale – this is just a very simple example of how our most basic options strategy can drastically boost your annual returns on any stock in your virtual portfolio.

Let’s say you don’t want to mess around with MSFT every month.  You can simply sell the 2012 $22.50s for $4.40, that drops your net entry from $24.23 to $19.83 and getting called away at $22.50 would be a profit of 13.5% over 17 months PLUS you would be getting your .52 annual dividend so let’s call it .75 more for a total profit (if MSFT holds $22.50) of $3.42 or 17.25% – 1% a month certainly beats what the banks are offering these days!  Not as sexy as the 26% ROI you make by working the trade every month but you do get a built-in cushion that drops your break-even price to $19.83, which is a full 18% below…
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Rock Solid Yield: What others are suggesting for Solid Yielding Stocks.

Rock Solid Yield: What others are suggesting for Solid Yielding Stocks.

By Ron Rutherford, courtesy of Sabrient

circa 1955:  Pinnacle Balanced Rock formation in Chiricahua National Monument, Arizona.  (Photo by Josef Muench/Three Lions/Getty Images)

In my last post, I opened the Rock Solid Yield category and briefly introduced you to Sabrient’s upcoming Platinum level subscriber product.  To further define the overall strategy, I will compare and contrast our approach to some worthy suggestions by others.

Perhaps Motley Fool might have some thoughts on the what are the Best Dividend Stocks for Beginners? The question they pose to the round table of contributors and associates is:

I’m just starting, know little, have about $500, and want a solid stock with dividends as my first position. What should I look for?

All the writers provided good suggestions and ideas but the best was provided by Dan Caplinger. For a small first time investor with very limited funds, ETFs could provide diversification and thus lower risks. The Motley Fool, as well as the Rock Solid Yield (”RSY”) portfolio, look for “solid fundamental stocks” which pay dividends for years to come and increase in value over that time. But from the list of stock suggestions, it became obvious that they were not picking stocks strictly based on dividend yield percentages, as most are under 5%, with only BP yielding a generous 9%.   Motley Fool’s advertising even promotes these ideas as 6 Secrets to Finding Dividend “Money Machines”.

6 Secrets of Dividend Investing:
How You Can Earn Great Returns with Less Risk

Finding the best dividend stocks takes some legwork and careful analysis.  However,  here is how you can find the best long-term performers:

1. Avoid the Highest Dividend Stocks — You can’t pick stocks by dividend yield alone.   Above-normal dividends are often a red flag of a company in distress. Studies have consistently shown that you will earn higher long-term returns by avoiding risky stocks with overly high dividends.

All six points made by the panelists are important considerations in making a Rock Solid Yield portfolio but “avoid” might not be the best describer of how to search out the best performing stocks.   I believe a more productive approach is  to be even more cautious and careful about higher paying dividend stocks. The higher the dividend yield,  the greater the scrutiny should be. The risks associated with BP stock from the oil spill are well documented by the media. However,…
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Basket of Income

Basket of Income

Courtesy of Allan 

Biotechnology Basket has triggered another idea, a Basket of Income Stocks that will pay a healthy dividend when the Trend Models are LONG, and yet will not share the risk of loss when the Trend Models say, "Exit, go to cash."   

The past few days I’ve been researching high-dividend paying stocks across diversified sectors, Bonds, Utilities, Oil & Gas, REIT’s and assorted other sectors.  The concept is to put together a basket of these income generating companies that is as non-correlated as possible and where the individual stocks have historically trended well under the trend following algorithm either on the Daily and/or Weekly Models.

The results so far are very encouraging and I expect to be trading this basket myself, especially as a conservative, low-risk strategy for the benefit of conservative, low-risk accounts.  As with the Biotechnology Basket, I’ll send it out to the email list first and eventually will post some if not all of the names here.

This is concept in beta phase right now, so all suggestions are welcome and encouraged.  Below are some ideas along with their Weekly Trend Models.  [click on charts to enlarge]

NLY – Yield 14.70%
  
 
NZT – Yield 11.20%
 
 
 SUI – Yield 10.20%
 
 
 
These are three examples of what I am looking for and will not necessarily be part of the Basket of Income. To be considered, I am looking for stable dividends and price histories that trend well.  Once in that group, I will look to diversify across uncorrelated (or at least, less correlated) sectors.

The goal will be to be collect the healthy payouts along with capital gains when the model is LONG and to be in cash on the sidelines when the model is SHORT, avoiding high risk periods characterized by weak and falling prices.   The Trend Models are ideally suited for trading these kinds of stocks.

 
Check out Allan’s site, and if you wish to subscribe, Allan is offering PSW readers a 25% discount.  Click here for the discount.  - Ilene 

 


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Where Have All The Divvies Gone?

Where Have All The Divvies Gone?

Courtesy of Joshua M Brown, The Reformed Broker

Mark Cuban once remarked something to the effect of "stocks that don’t pay dividends are like baseball cards – only worth what you could convince the next guy to pay for them."

Floyd Norris looks at some statistics on dividend declarations last year:

Divvies

Will stock investors who like receiving quarterly dividends have better news this year? S&P thinks yes, according to the article:

“The fourth quarter was in no way a good period for dividends, but compared to recent history it marks a significant improvement, and when added to the stabilization in increases, supports our belief that the worst is over for dividends,” said Howard Silverblatt, the senior index analyst at S.& P.

“Standard & Poor’s believes that the dividend recovery will be slow, and that it will take until 2012 to 2013 to return to where we were in 2007 and 2008,” he added.

The dearth of positive dividend news becomes even more vexxing in the context of our zero interest rate environment so let’s hope the rebound in payout increases happens.

Source:

As Dividends Have Fallen, So May They Rise (NYT)

 


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Educational Videos

The following is a collection of podcasts and videos from the Options Clearing Corporation and selected others.

The cover a lot of ground and new ones are occasionally added to their site.  They are not as good as the coursework from MarketTamer, who are Option Sage’s excellent group but these are free (as opposed to $99 a month with Sage’s PSW special) so take a peek at the subjects that interest you:

First up is a very good introduction to options basics from Adam Lass, a very good overview.  His next episode is the basics of call options – hopefully he’ll do more.  Then we have the podcasts from OCC: 

 

 
  Introduction to Financial Markets and Options Basics  View
 
 
  An Exploration of Basic Options Terminology  View
 
 
  Options Basics  View
 
 
 


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Q3 $100,000 Virtual Portfolio – The Income Producer

I recently went down to Florida to see my folks and found something disturbing as I talked to their friends.

We all know that many people who have been on fixed incomes lost 50% of more of their virtual portfolios during the crash but what I hadn't realized is how deeply this was impacting those retirees because their fund/pension managers have, for the most part, done nothing to adjust their investing strategies at the market bottom. 

The average American has just $88,000 when they retire but we're not talking about them – we are talking about the retirees we aspire to be – the upper percentile Seniors in like the ones in West Palm Beach and  Boca Raton, Florida.  The average couple there had closer to $1M in portflio assets before the crash and closer to $600,000 now.  Even so, that can cause quite an income adjustment for a retired couple

Fortunately most of these people own their homes and get free government health care (Medicare) so they are not as devastated as younger Americans who are still paying off their homes and just working on saving for retirement while trying to provide health care and education for their children.  With Social Security (another thing that is iffy for us younger Baby Boomers down the road) adding $2,000 a month, the average 6% rate of return on a balanced virtual portfolio of $1M was $5,000 a month plus $2,000 from SS = $7,000 a month, generally enough to pay taxes and bills for the house, eat out once in a while, support 2 cars, do a bit of traveling and even belong to a golf club (dues in the average high-end development are $15,000 a year). 

 

The idea, of course, is to do all this WITHOUT dipping into the $1M principal that's invested in stocks and bonds.  Then came the crash.  The S&P dropped from 1,500 to 666, down 55% in less than a year.  Suddenly the $5,000 a month that came from investments dropped to $2,500 a month or less.  Even worse, many classic virtual portfolio mainstays like dividend paying financial institutions and American manufacturing companies were among the worst hits with dividends being canceled and some financials going to zero so quickly there was no chance to…
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The Lost Decade

Well, six more months till the end of a rotten decade, and good riddance.

The Lost Decade

Courtesy of Jake at EconompicData

BusinessWeek reports:

There are still six months left in this decade, but it is not too soon to start drafting its obituary. Howard Silverblatt, senior index analyst at Standard & Poor’s, is already looking at the decade’s stock market legacy. It’s ugly. The S&P 500 is down 39.22% from Dec. 31, 1999 through Monday’s close.

“We need a 63.79% advance just to break-even for the decade,” Silverblatt says. That’s not going to happen by Dec. 31. “The last negative decade was the 1930s, -41.77%,” according to Silverblatt. Annualized, stocks lost 5.12% so far this decade; in the 1930s decade of the Great Depression they lost 5.26%.

 

chart of lost decade

 

Things actually aren’t that bad, the S&P 500 is down "only" 28% through Monday for the decade (for some reason Business Week doesn’t include dividends, which makes no sense).

Hey, look at the positive… including dividends, we only need a 39% return to break-even.

Green Day- Good Riddance (Time of Your Life) Live 

 


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Wild Weekly Wrap-Up

What a wild week that was!

We got such a good sell-off last Friday that we went 1/2 covered into the weekend on our DIA puts (a little bearish) but we had already cleaned up on quick short plays on the Dow and USO and we were very much in cash but still making bullish plays at the time.  I did a 3-part series on dividend-paying stocks over the weekend, elaborating on the 21 dividend payers we picked that Tuesday along with our $104,340 Virtual Portfolio (used to be $100,000) so we had no shortage of bullish ideas but it didn't take us long this week to turn pretty bearish.

Last Friday morning (22nd), ahead of the holiday weekend, with the Dow at 8,323, I sent out an early alert to members saying: "I’d go long on the Dow here but frankly I’m just not in the mood today.  Still full covered on long DIA puts  and still in the DDMs but just hanging out and watching today since you can’t take the action seriously anyway."  Our plays that day ran the gamut:  We sold BAC July $10 puts for $1 (now .66), took a TBT spread that has been a wild ride but right back where we started and an ICE bull call spread ($90/$100, selling $90 puts $2.33, now .57) that is right on track.  All that came before 11:33 on Friday, where I rightly called a top at 8,342.  We made nice profits on DIA puts and took an EXM and T hedges that are doing well.  One of our best plays on Friday was the USO $32 puts at .80 we took into the weekend, those cashed out Monday morning at $1.05 (up 44%) – those USO trades were followed through in detail in our Members Only post: "Stupid Options Tricks - The Salvage Play."

As I mentioned, we have been mainly in cash for over 2 weeks now so mainly we're just taking small opportunities and having fun while we wait for the market to break one way or the other.  One article I wrote over the holiday weekend was a timely update to "How To Vacation-Proof Your Virtual Portfolio," something anyone not in cash needs to take under strong advisement and DO NOT miss the very generous free video lesson from Sage's Market…
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Atomic Testing Tuesday

Welcome back everyone! 

I hope you all had a nice holiday weekend.  PSW provided the Kindle crowd with some great beach reading with and update of our now $104,340 Virtual Portfolio, a 3-part series called "Hedging Your Way To Healthy Dividends" and our very timely "How To Vacation-Proof Your Virtual Portfolio" with an on-line lesson from Option Sage's Market Tamers.  All this sudden interest in North Korea's nuclear test didn't catch us unaware as Tyler reported on this Sunday night!.  Hey, the markets never sleep and neither do we!  

36 hours later, the North Korea nuclear test is still the top story and global markets are down and the dollar is bouncing as a flight to safety BUT IT'S NOT NEWS…  Come on people – this has been going on for more than 15 years with these guys, are we really going to freak out every single time we hear that North Korea has nuclear capabilities? REALLY???  Hey, I can write tomorrow's fear headlines today:  Iran doesn't like us, the Middle East may erupt in violence, the Taliban are still a threat.  Oops, looks like I got scooped on that last one by Defense Secretary Robert Gates, who decided that this weekend would be a good time to inform us that "the momentum in Afghanistan is with the Taliban, who are inflicting heavy U.S. casualties and hold de facto control of swaths of the country.

At the suggestion of some of his staff, Mr. Gates has begun referring to himself as the "secretary of war," saying that shows he and his department have no higher priority than the conflicts in Iraq and Afghanistan.  "If people begin to absorb the fact that we've got several dozen very dangerous terrorists in our jails right now…maybe a little greater perspective would be brought to the issue," he said.  Do not make the mistake of assuming anything Gates says is not carefully planned and coordinated – he was previously the director of the CIA, just like Poppa Bush (who he served under)!

We have been playing for the dollar bounce over the weekend so this is just great for our oil shorts as well as our overall market posture, as we were looking for another catalyst to push us to a lower level test and last week's Cheney/Obama virtual debate was
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ValueWalk

Pence On The Latest Jobs Report And Coronavirus Outbreaks

By Jacob Wolinsky. Originally published at ValueWalk.

CNBC exclusive: CNBC transcript: Vice President Mike Pence Speaks with CNBC’s Wilfred Frost on “Squawk on the Street” today on the latest jobs report and coronavirus outbreaks

Q1 2020 hedge fund letters, conferences and more

WHEN: Today, Thursday, July 2, 2020

WHERE: CNBC’s “Squawk on the Street”

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Vice President Mike Pence and CNBC’s Wilfred ...



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Zero Hedge

BLS Admits "Survey Error" Continues, Resulting In Artificially Lower Unemployment Rate

Courtesy of ZeroHedge View original post here.

Last month we reported that in a report full of statistical glitches and outright errors, the BLS itself admitted that a "misclassification error" led to the May unemployment rate being as much as 3% higher than reported. Well, guess what: despite knowing it was openly misrepresenting what is the most important US economic data, the BLS continued reporting numbers that contained a "miscl...



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Phil's Favorites

Citigroup Has Made a Sap of the Fed: It's Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards

Courtesy of Pam Martens

The first thing you need to know about Citibank and its parent, Citigroup, is that they have an extensive rap sheet. (See here). The second thing you need to know is that Citigroup is a serial predator that perpetually promises its regulators that it’s going to reform, but never does.

The third thing you need to know is that Citigroup has made a sap out of the Federal Reserve – not once, but twice. During the last financial crisis of 2007 to 2010, Citigroup ...



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Kimble Charting Solutions

Nasdaq 100 Relative Strength Testing 2000 Highs

Courtesy of Chris Kimble

The tech bubble didn’t end well. BUT it did tell us that the world was shifting into the technology age…

Since the Nasdaq 100 bottomed in 2002, the broader markets have turned over leadership to the technology sector.

This can be seen in today’s chart, highlighting the ratio of Nasdaq 100 to S&P 500 performance (on a “monthly” basis).

As you can see, the bars are in a rising bullish channel and have turned sharply higher since the 2018 stock market lows. This highlights the strength of the Nasdaq 100 and large-cap tech stocks.

...

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Biotech/COVID-19

Which drugs and therapies are proven to work, and which ones don't, for COVID-19?

 

Which drugs and therapies are proven to work, and which ones don't, for COVID-19?

We are slowly figuring out which drugs and therapies are effective against the new coronavirus. Anton Petrus / Getty Images

Courtesy of William Petri, University of Virginia

I am a physician and a scientist at the University of Virginia. I care for patients and conduct research to find better ways to diagnose and treat infectious ...



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The Technical Traders

Long-Term Consumer Discretionary Winners

Courtesy of Technical Traders

I was live on TD Ameritrade TV talking about consumer discretionary, staples, and utility sectors. Explained is a unique crossover on how some discretionary stocks are also becoming a consumer staple.

Get My ETF Trade Signals, Entry, Targets, and Stop Levels – CLICK HERE ...

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Chart School

US Dollar with Ney and Gann Angles

Courtesy of Read the Ticker

Where is price going, is there strength or weakness in the chart?


Previous Post on the US Dollar : Where is the US Dollar trend headed ?


The question is always what will the future price action look like ?


This post will highlight the use of lines generated by angles. Not trend lines, as trend lines require two known points on a chart, where as angles require only one known point and a angle degree to draw a line. The question then becomes how is the angle degree determined.



There are two theories: ...

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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.