Author Archive: Brett Owens

Be careful how you buy your bonds. The most popular tickers have four “fatal flaws” that’ll doom you to underperformance at best, or at worst leave you hanging in the event of a market meltdown!

Let’s pick on the widely followed and owned iShares iBoxx High Yield Corporate Bond ETF (HYG) as an example. It has attracted nearly $17 billion in assets because:

1. It’s convenient and as easy to buy as a stock.
2. It’s diversified (for better or worse, as we’ll see shortly) with 1,188 individual holdings.
3. It pays well, at 6% today.

The accessibility of funds like HYG appears cute and comfortable enough.… Read more

If you’re a dyed-in-the wool dividend investor (like me!), you’ve likely taken a look at the big gains folks are reaping on AI stocks … and resigned yourself to missing out on the whole thing.

After all, most AI stocks, like Alphabet (GOOGL) and NVIDIA (NVDA), yield 0% (or close to it!). And we simply demand a dividend before we buy anything.

The good news is we don’t have to miss out—instead, we’re going to go one floor up from the “first-level” options that most folks buy to the “penthouse” of AI investments: tech-focused closed-end funds (CEFs)!

The beauty of CEFs is that by going with these high-yield funds (8%+ payouts are run-of-the-mill in CEF-land), we don’t have to sell the blue chips we currently own!… Read more

These unloved stocks yield between 6.9% and 21.4%. These are big dividends, but not the main reason we are discussing this ignored five today.

Each of these names is so unliked by the Wall Street suits that they have serious upside potential.

How could that be?

These shares are heavily sold short.

Short selling is a way to bet against a stock. To do so, one must borrow the shares and sell them today. In hopes of buying back at a lower price tomorrow.

What happens if the stock goes up tomorrow? And rises the next day? And so on?… Read more

Happy Valentine’s Day, my dear contrarian. On this day of love and (let’s be honest) fake affection, we are going to take a pass on the Hallmark holiday and focus on something more profitable.

Disgust.

Natural gas did it again! It fell below $2 per million BTUs. These washout levels typically represent a floor for nat gas prices.

Every time it drops below this $2 linoleum level, the price eventually pops and tests the ceiling. Now that we have this ideal setup again, let’s back up the truck!

Death, taxes and the cyclical nature of natural gas are the only three things we contrarians can be certain about!… Read more

Look, we’re going to get a slowdown here in America this year—two years’ worth of rate hikes are going to hit home. Fact.

So I’m going to suggest we do something you might find a little bit weird: buy US stocks. But not any US stocks—and certainly not “dividend-dud” ETFs like the ever-popular SPDR S&P 500 ETF Trust (SPY)!

No way.

Instead we’re shopping in the small(er) cap aisle, for stocks in the midcap range kicking out surging dividends. We love these overlooked US-based dividend plays now because:

They’re cheap: while SPY has soared 19% in the last year, midcaps have treaded water, with the Vanguard Mid Cap ETF (VO)—in orange below—up just 4%.… Read more

When the Wall Street cheerleaders actually dislike a stock—well, that sure commands our contrarian attention.

Today we’ll cover one of my favorite traditions, which is fading the opinions of analysts. You know, the guys who typically slap a Buy rating on everything they see?

It sounds counterintuitive, but we don’t want Buy ratings on our stocks. Give us Holds and Sells and general apathy. Or, even better, disgust.

When every analyst rates a stock a Buy, it feels “safe” to purchase. But really, it’s anything but. With nobody left to upgrade, there is nothing to do but wait for the dreaded downgrade.… Read more

Me: “Let’s find companies with lots of debt and buy them. And make a lot of money.”

You: “Wait, what?”

(Nod as always to the late, great Norm Macdonald.)

Hear me out. Last week, plain vanilla investors threw a midweek fit when Federal Reserve Chairman Jay Powell said something we contrarians assumed already: No rate cut coming in March.

The Fed decides the Fed funds rate. This often cues the two-year Treasury yield to follow. (Yes, sometimes, the two-year leads. As always in economics and relationships, it’s complicated.)

We can debate who leads who, but the key is that the Fed controls short-term rates, but the bond market determines long-term rates.… Read more

If we can say one thing about the rest of 2024, it’s this: We’re looking at a stock-picker’s year here—and folks who try to play it with vanilla ETFs will have a tough time.

Just look at the state of play in front of us.

The Fed is trying to thread a needle, and if economic numbers come in too hot or too cold for Goldilocks, well, good luck holding something like the SPDR S&P 500 ETF Trust (SPY)!

In an environment like this, a good plan is to zig when the market zags.

To do so, we’re targeting stocks in the bargain bin with “recession-resistant” strengths such as steady revenue from clients who must buy their services no matter what.… Read more

Magnificent Seven? Tired.

Dividend Six? Wired.

Plain vanilla investors fawn over chipmakers and AI stocks. They hope they can buy them high, and sell them higher.

Contrarian income investors like us? We focus on the companies that support the AI hype. The “pick and shovel” providers. A “Dividend Six” that plays on AI and pays $26,000 to $41,500 in dividends alone on a $500K stake.

With that we’ll say move over, Magnificent Seven—a term coined by Bank of America’s Michael Hartnett (and inspired by the classic Sturges Western) to describe the market’s predominant tech names.

Those stocks? Microsoft (MSFT), Apple (AAPL), Facebook parent Meta Platforms (META), Amazon.com… Read more

Ten years ago, the city athletics director wrote:

Hi Guys,
I need to place an order for championship softball shirts. It should say West Sacramento’s Summer 2014 C/D Division Champions. Bad Decisions.

Bad Decisions was our team name, a nod to our personnel. I mean that in the most endearing way possible, of course. A lineup filled with guys light on responsibility (at the time) who enjoyed the postgame rehydration process as much as the in-game competition:

With two kids, my postgame rituals are different these days. First, a trip out can only occur after our final YMCA basketball game on Saturdays—my third and final game to coach that day.… Read more