With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these… Read More

With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these stocks look expensive right now. AT&T and Verizon sport price-to-earnings, or P/E, ratios of 29 and 21, respectively — well above the S&P 500s historical average of 15. And while a 5% dividend yield might seem like a lot, in the telecom industry, you can find much higher yields… and at a much better price. For example, I’ve found a telecom that’s currently yielding 7.7%. It enjoys the same competitive advantages as both AT&T and Verizon, and better yet, it’s trading at a P/E ratio of less than 12, making it a much better… Read More

There was a period of time over the last couple of months where a form of corporate engineering dominated headlines. Apple was one of the most high-profile examples of companies taking advantage of this practice. But a number of other lesser-known firms were doing the same, either by relocating their operations abroad or acquiring an internationally-based competitor. I’m talking about tax inversions. #-ad_banner-#This practice has caused some controversy because it has allowed the companies to lower their taxable earnings in the U.S. and shift them abroad to countries with lower tax rates. Needless to say, the U.S. Government was not… Read More

There was a period of time over the last couple of months where a form of corporate engineering dominated headlines. Apple was one of the most high-profile examples of companies taking advantage of this practice. But a number of other lesser-known firms were doing the same, either by relocating their operations abroad or acquiring an internationally-based competitor. I’m talking about tax inversions. #-ad_banner-#This practice has caused some controversy because it has allowed the companies to lower their taxable earnings in the U.S. and shift them abroad to countries with lower tax rates. Needless to say, the U.S. Government was not happy — it wanted its tax dollars. But just over a month ago the U.S. Department of Treasury updated five sections of the tax code to make inversions more difficult to execute, and less profitable. The news from the Treasury tossed a wet blanket on the boom in tax inversions. The headlines began to wane and it seemed as if tax inversions were dead and gone. So last month as I was preparing the next issue of my premium newsletter, High-Yield International, I was surprised when I came across news of a small acquisition, where another company was planning to… Read More

It’s incredible how quickly things can change in the energy sector. #-ad_banner-#​Just 10 years ago fracking was still uncommon in North America. It took billions of dollars and millions of man hours to perfect the technology and make it economical and scalable. Today, the development of fracking — in tandem with the ability to drill horizontally underground — has enabled the United States to tap into vast oil and gas reserves that were previously inaccessible. In 2010 oil production in the United States had been in a steady decline for… Read More

It’s incredible how quickly things can change in the energy sector. #-ad_banner-#​Just 10 years ago fracking was still uncommon in North America. It took billions of dollars and millions of man hours to perfect the technology and make it economical and scalable. Today, the development of fracking — in tandem with the ability to drill horizontally underground — has enabled the United States to tap into vast oil and gas reserves that were previously inaccessible. In 2010 oil production in the United States had been in a steady decline for close to three decades. But a mere four years later, in the spring of 2014, America officially became the #1 oil producer in the world. Take a look at the incredible reversal in U.S. oil production in just the last four years. Source: U.S. Energy Information Administration That sharp reversal in America’s oil production did not go unnoticed by the global energy community. According to global energy services leader Baker Hughes, the number of fracking rigs used onshore in Europe and the Asia-Pacific region increased 10% in 2013. And… Read More

As an active income investor, I’m always jumping around between financial websites. While I peruse these sites, I run across many investment ads promising all sorts of results. Sadly, more often than not what I see is outright misleading advertising lining the pages. For every one method of income generation or investing that is legitimate and factually-based — there are ten others that are questionable. #-ad_banner-#So when I tell potential subscribers of my premium newsletter, Income Multiplier, that my readers and I have been able to generate returns of 7.6%, 8.5% and 8.9% in… Read More

As an active income investor, I’m always jumping around between financial websites. While I peruse these sites, I run across many investment ads promising all sorts of results. Sadly, more often than not what I see is outright misleading advertising lining the pages. For every one method of income generation or investing that is legitimate and factually-based — there are ten others that are questionable. #-ad_banner-#So when I tell potential subscribers of my premium newsletter, Income Multiplier, that my readers and I have been able to generate returns of 7.6%, 8.5% and 8.9% in as little as 53 days, it’s understandable that such claims might be received with a little bit of skepticism. So that’s why in today’s essay I want to explain how my Income Multiplier system works. No fluff — just facts. To put it simply, we sell options on high-quality stocks to generate income. I’ll explain more about how we do this in a moment, but first let me begin by showing you my track record. These are all of my closed trades since inception.   Income Multiplier Closed… Read More

Third-quarter earnings season was an unmitigated disaster. With the economy stumbling along due to weakness in Europe and China, and margins reaching a multi-year cyclical high, more than a few companies disappointed the Street with weaker-than-expected earnings or guidance.   This list includes bellwethers like McDonald’s Corp. (NYSE: MCD), Caterpillar Inc. (NYSE: CAT) and even seemingly invincible technology juggernauts like Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG), all delivering results short of expectations that sent… Read More

Third-quarter earnings season was an unmitigated disaster. With the economy stumbling along due to weakness in Europe and China, and margins reaching a multi-year cyclical high, more than a few companies disappointed the Street with weaker-than-expected earnings or guidance.   This list includes bellwethers like McDonald’s Corp. (NYSE: MCD), Caterpillar Inc. (NYSE: CAT) and even seemingly invincible technology juggernauts like Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG), all delivering results short of expectations that sent shares and estimates tumbling lower.     These disappointing results mirrored a larger trend. Total S&P 500 earnings for the quarter were down 2.2% from last year, the first year-over-year decline in more than three years. Total revenue is also down 3.6%, with just 38% of companies reporting revenue surprises. Although analysts are still calling for 3.5% earnings growth in the fourth-quarter and 7% earnings growth in 2013, it’s clear the private sector is facing some serious challenges in the face of slow economic growth.#-ad_banner-#   But despite these obvious headwinds, there… Read More

After the financial and economic implosion of 2008, many companies were forced to implement drastic operational changes to stay competitive and profitable. That included increasing productivity, reducing labor resources and lowering capital spending to build cash and liquidity. These strategies had a big effect on earnings, and now the S&P 500 is on the cusp of returning to peak earnings last seen in 2007. #-ad_banner-#But while that big… Read More

After the financial and economic implosion of 2008, many companies were forced to implement drastic operational changes to stay competitive and profitable. That included increasing productivity, reducing labor resources and lowering capital spending to build cash and liquidity. These strategies had a big effect on earnings, and now the S&P 500 is on the cusp of returning to peak earnings last seen in 2007. #-ad_banner-#But while that big rebound in earnings has been great for stocks (the S&P 500 has more than doubled from its low in March 2009) it also has the private sector sitting at the top of a multi-year expansion in margins and record profitability. Take Coca-Cola Co. (NYSE: KO), for example. The company’s operating margin exploded higher out of the recession in 2009 all the way through 2011, climbing from a 10-year average of 21% to an all-time high above 33% in July of 2011.  What Coke… Read More

Billionaire bond manager Bill Gross calls it the “new normal.” Most economists agree with him. And it’s changing the way many people invest. In the past 30 years, the U.S. economy has seen an unprecedented expansion, driven by productivity and credit gains. But now that the debt party is ending, the consensus among economists is for an extended period of slower growth.#-ad_banner-# Slower growth will make it harder… Read More

Billionaire bond manager Bill Gross calls it the “new normal.” Most economists agree with him. And it’s changing the way many people invest. In the past 30 years, the U.S. economy has seen an unprecedented expansion, driven by productivity and credit gains. But now that the debt party is ending, the consensus among economists is for an extended period of slower growth.#-ad_banner-# Slower growth will make it harder for the country to pay its debt.  Since the early 1800s there have been 26 instances of debt-to-GDP going above 90%. Multiple leading economist found that when the debt-to-GDP ratio goes that high, growth is typically reduced by an average of 1%.  This is a troubling sign for the U.S. economy. Our ratio just passed the 100% mark. Another devastating effect of too much debt is the duration of slow growth. In 20 of the 26 cases studied, slower growth lasted for more than… Read More

In all my years in the market, I’ve never heard of such an incredible track record. The IPO prospectus from high-frequency trading firm Virtu Financial reveals that in the past four years, the company has lost money in exactly one of 1,238 trading sessions. J.P. Morgan didn’t have a single losing day in 2013. Bank of America notched a perfect performance of its own in the first quarter of 2013. #-ad_banner-#Clearly, Wall Street trades and invests its own money a lot differently than the “buy and hold” strategy it preaches to… Read More

In all my years in the market, I’ve never heard of such an incredible track record. The IPO prospectus from high-frequency trading firm Virtu Financial reveals that in the past four years, the company has lost money in exactly one of 1,238 trading sessions. J.P. Morgan didn’t have a single losing day in 2013. Bank of America notched a perfect performance of its own in the first quarter of 2013. #-ad_banner-#Clearly, Wall Street trades and invests its own money a lot differently than the “buy and hold” strategy it preaches to its clients. One of the best-kept secrets they use is selling options. Does that sound scary? Intimidating? If it does, there’s a very good reason for that: That’s exactly how Wall Street wants it. Wall Street works very hard to keep one of its most powerful income strategies out of the hands of regular investors. Because what most investors don’t realize is that selling puts isn’t just one of the most conservative options strategies… it’s one of the lowest-risk investment strategies in the entire market — more conservative than owning… Read More

If you’ve seen the H&R Block commercial on television recently, you know that it starts with a concession worker putting $500 on every seat in every stadium across every professional sport… that represents $1 billion dollars that went unclaimed by taxpayers last year. Now imagine that instead of $500 on every seat, its $2 million on every single seat in every single stadium across all professional sports… That adds up to $790 trillion dollars. To put that amount into perspective, that’s more than 21 times… Read More

If you’ve seen the H&R Block commercial on television recently, you know that it starts with a concession worker putting $500 on every seat in every stadium across every professional sport… that represents $1 billion dollars that went unclaimed by taxpayers last year. Now imagine that instead of $500 on every seat, its $2 million on every single seat in every single stadium across all professional sports… That adds up to $790 trillion dollars. To put that amount into perspective, that’s more than 21 times larger than the total value of all the stocks in the world. That’s what many investors are leaving on the table by not venturing into the world of options. If you’ve read my previous essay about how investors can earn a 24% annualized yield from Verizon (NYSE: VZ), then you know I’m talking specifically about put options. Simply stated, put options are one of the safest ways investors can use options to generate income. We do this by targeting safe, reliable stocks — many of… Read More

Check out this headline, “Study: Preschoolers Better at Figuring out How Gadgets Work than College Students.” At first, it had me scratching my head. How could this be possible? But then I figured it out. Preschoolers were more open-minded. They were willing to think outside of the box to solve problems. #-ad_banner-#The Wall Street Journal quoted the research team saying “the best and brightest college students acted as if the machine would always follow the common and obvious rule, even when we showed them how it might work.” That says a lot about human nature. Human beings build barriers to… Read More

Check out this headline, “Study: Preschoolers Better at Figuring out How Gadgets Work than College Students.” At first, it had me scratching my head. How could this be possible? But then I figured it out. Preschoolers were more open-minded. They were willing to think outside of the box to solve problems. #-ad_banner-#The Wall Street Journal quoted the research team saying “the best and brightest college students acted as if the machine would always follow the common and obvious rule, even when we showed them how it might work.” That says a lot about human nature. Human beings build barriers to change. The older we get, the more close-minded we become. It also provides a lesson for investing. The common and obvious rule is that buying stocks is a good way to build wealth. But the unconventional rule says that there is an even better way. You see, clinging to just one strategy and resisting evolution in a dynamic market can be costly, even downright risky. Imagine playing chess and sticking only to one strategy… it might work for a couple of games, but as your opponent evolves and realizes your one strategy, you may never win another game. Yet, we’re… Read More