Author Archive: Michael Foster

When most people think about the soaring stock market, they’re really only thinking back to the end of 2022, when it feels like it all started.

I know. 2022. A year we’d all like to forget.

But looking back only that far ignores the fact that the S&P 500 is a long-term wealth generator—a really long-term wealth generator, in fact. Over the last century, it’s posted a 10.6% annualized return.

Over the last 10 years, it’s done even better, returning a robust 14.6%.

I bring this up because it’s easy to lose sight of that these days, with the news cycle constantly amping up the fear, most recently on worries about an AI bubble.… Read more

When it comes to our favorite income investments—8%+ yielding closed-end funds (CEFs)—there are a lot of misconceptions out there.

It’s critical that we put those right, because they’re causing some investors to miss out on CEFs, and the big (and often monthly) dividends they provide. And I know I don’t have to tell you that in turbulent times like these, high payouts like those are a lifesaver.

Two of the biggest misunderstandings surrounding these funds are:

• CEFs have higher expense ratios than passive funds, and …
• You’re better off to buy stocks, such as Microsoft (MSFT), direct, on the open market, than through CEFs.

I often get asked about crypto. My response often surprises people: I don’t spend a lot of time thinking about it.

That might sound odd given crypto’s massive popularity (though many holders are no doubt regretting their buys these days, given the swan dive Bitcoin and its ilk have been on).

Nope, I avoid Bitcoin because I (and readers of my are interested in dividend income. And you won’t find any of that in crypto. Plus it’s far more volatile than we’d like. All of this is why, when we want tech exposure, we look to CEFs holding top-quality tech stocks.… Read more

It never ceases to amaze me how many investors confuse investing with straight-up gambling.

Of course, we income investors know that gambling is a one-way ticket to losses (the house always wins, after all!). That’s why we always focus on long-term wealth creation (and a solid income stream) at my CEF Insider service, whose portfolio yields nearly 10% on average as I write this.

Nonetheless, with stocks having soared the way they have, it’s easier, even for normally prudent investors, to get caught up in dangerous speculation. That’s especially true when gambling seems to be everywhere these days.

Even though—a funny aside—gambling actually hasn’t grown as a percentage of Americans’ earnings in the last 25 years.… Read more

I’ve seen a lot more news stories trying to do something that seems a bit weird these days: stoke anger between generations.

I bring this up because it’s an example of why, when it comes to picking stocks (and 8%+ paying closed-end funds), we simply can’t trust the media anymore.

Why? Because many outlets are so focused on generating emotional responses (and the clicks that go with them) that they’ve gotten far away from what really matters: the real data behind what they’re saying.

With that in mind, we’re going to look at a data-driven indicator that tells us whether or not it’s a good time to buy.… Read more

It’s been a long time since we talked about pandemic bargains, but believe it or not, there’s still a big one out there.

I do think it’s finally on borrowed time, though, which is why it’s on our radar now.

I’m talking about publicly traded real estate investment trusts (REITs). What we’re looking at with REITs is a classic “buy the dip” play with a (very!) long buy window indeed. Here’s a snapshot:

REITs Trail Stocks Post-Pandemic …

Over the five years since the depths of the pandemic, the S&P 500 (shown by the popular index fund in purple above) has posted a 106.5% total return, as of this writing.… Read more

Selling on fear is a habit that’s so easy to fall into (especially now!). But giving in to it could cost you a lot: as much as $2,300 on every $10K invested.

And if you’re investing for income (as we are!), you face a double hit.

Not only do investors almost always get the timing wrong, but they cut off their income stream, too! When you’re holding our favorite income plays, closed-end funds (CEFs) yielding 8%+, it’s especially damaging.

I mention this now because I was reading a recent report from Morningstar that put the potential damage from this mistake into dollars and cents.… Read more

Today we’re going to run a simple “rinse and repeat” trade that—time and time again—gives us income investors what we all really want:

High—but sustainable—dividends, plus a nice capital gains “bonus.”

In other words, the full package of income and upside. In investing, this combo goes by the name total return, and it’s what we really need to focus on to build a portfolio that lets us retire with true peace of mind.

Most investors know this, but then quickly forget it when they run up against a stock with a massive yield, like the 21.1% (!) payout on Prospect Capital Corp.… Read more

If you’re retired (or planning your retirement—which, of course, we all are!), I have great news: You can probably take a lot more out of your nest egg every year than you think.

I’m talking about safely withdrawing 8% or more from your portfolio—without the prospect of living a lot longer than your money does!

We can thank an unlikely wealth generator for this turn of events: AI.

Before you ask, no, I’m not talking about putting a chatbot in charge of your finances! I’m talking about a low-key way the tech is helping retirees (and near-retirees) boost both their investment income and their net worth, leading to that huge 8%+ withdrawal rate we just talked about.… Read more

Treasury Secretary Scott Bessent is arguably the biggest stock-market cheerleader in American political history. And that fact is throwing a floor under stocks in a way few people realize.

It’s another reason to buy stocks now—or better still, stock-focused closed-end funds (CEFs). Because when things get rough, we can count on Scott to temper policies that might otherwise ruffle the markets.

This sounds like a minor thing, but it’s key in a market like this, which I see as still having room to run, even though, yes, valuations are getting stretched.

The Stock Market Indicator

To get at the moderating effect of Bessent’s presence, we need to start with President Trump, who has a long history of caring about the stock market, even though his career was in private real estate.… Read more