BG06052009
NO MORE SONG AND DANCE
Just because the S&P 500 might be up a tick or two doesn’t mean that you need to pile back into the usual suspects on Wall Street.
By Neil George
By now you’ve heard and/or read the news. Yep, the market crash is all over. The S&P 500 index is up a whopping 0.06 percent so far for the year. Yes – that’s right, the stock market is now up for the year. And if you add in accrued implied dividend yield of the index – the return for the year soars even further to some 0.98 percent.
And you were getting so morose over how the market was treating you so badly.
The band is not just warming up – its already playing and the pitchmen from brokerages, banks and mutual funds are on stage doing their best full on performance – all in the hopes that you’ll buy back into the stock market like nothing really changed.
Forget of course that the same S&P 500 index of the stock market is down some 34 percent over the past 12 months – and the Dow and Nasdaq Composite are down just as much if not more for the same 12 months – it’s all about what bits of information can be touted to get you to buy stocks again.
Yet, don’t think that the all clear signal has been blown. And even if it has – do you really want to just wade right back into the same usual stocks that got too many folks into too much trouble in too short a period of time?
How about looking not just what’s recovered – but what has been working well not just so far this year – but for the past several years.
It’s a nice little collection of five investments. Five core investments that I’ve been writing about for more than the past decade and five core investments that I continue to tell folks that want to list that they need to own before any other investment is bought.
They are five stocks that pay you. And these five stocks that pay you to own them – don’t just pay a trifle 2, 3, or 4 percent as are usually touted by market song and dance men when they’re doing their dividend dances – but instead how about getting paid month after month after month dividends paying you around 9 percent.
So, if you were to take 100,000 bucks from your portfolio and buy into my five stocks that pay you to own them – you’d be getting checks coming in month after month of 750 dollars or 9 grand a year. And after the next decade – just like the past one – those checks would add up to nearly doubling your investment in these five stocks.
Now, you would think that there would be countless pitchmen out there telling you to buy these stocks. But really, other than me – I don’t know a soul that writes or talks about them – and if they do – they’ll tell you that they just can’t be that good for you and your portfolio.
Meanwhile – they’ll roll out the usual suspects of the S&P 500 which over the past 10 years are down over 40 percent in price while the average total return for my five stocks is up over 140 percent. And so far this year – my five stocks that pay you aren’t just up like the anemic S&P 500 – but soaring by an average return of over 14.5 percent.
What are my five stocks?
Are they on some funky foreign market? And what can the catch be?
Well, how about the New York Stock Exchange (NYSE) and there isn’t a catch – well, except one.
They look and trade like stocks – but they are actually closed end bond investment funds.
You know them as the Pimco Strategic Global Income (NYSE: RCS), the Templeton Emerging Markets Income (NYSE: TEI), the AllianceBernstein Global High Income (NYSE: AWF), the Blackrock Income Opportunity (NYSE: BNA) and the Western Assets Emerging Markets (NYSE: EFL).
These trade just like a stock – because they are stocks. And their assets generating the income to pay for those dividends are primarily government bonds from around the world.
And get this – they trade at a big discount of 9 or more percent below the book value of the assets of these investment companies.
No song and dance here – all you need to do is look at them for the long haul like I do. Stress-test them like I do – meaning – look at how they pay and perform year after year during all economic and market times. Sure, they bounce around the stock market – yet all along the way for the years and years that they keep operating – they keep paying you to own them.
And that’s exactly what you need right now.
One fellow that did do one heck of song and dance routine died at a mere 52 years. For some 46 weeks a year – five nights a week – Danny Gans did his shtick on some of the best stages in Las Vegas.
And if you’re heading out to join me this coming week in Las Vegas for the Moneyshow – perhaps when you see the ubiquitous billboards for Danny you’ll perhaps give a little nod of appreciation for one effective entertainer.
Neil George is editor By George.
The above is only opinion and does not represent and/or offer to buy or sell any security and/or any financial advice. The opinions contained may not be suitable for all investors who should consult their own financial adviser before making any investment or other decisions. I may own some of these same securities noted in accounts under my control or for my benefit.
Errors/Omissions: I always welcome being called on facts, figures and commentary from readers and look forward to your feedback. I can be reached by email at njgeorge@att.net or njgeorgejr@gmail.com or at 01-314-616-3325.
