Author Archive: Michael Foster

“Buy low, sell high.” It’s the oldest investor slogan there is—and the deadliest one, too!

You simply cannot afford to give in to this “wisdom” today, even though it’s tempting. Now that we’ve seen a couple of days of weakness, you might be wondering if the recent all-time high was a sign to sell—and if all-time highs are often signs to sell. But do that now and you’ll certainly leave huge income—and upside—on the table.

Instead, now is the time to buy, especially closed-end funds (CEFs) paying dividends of 7% and up. I’ll give you an example of one of these high yielders—which drops its payout into your account monthly—further on.… Read more

Let’s dive straight into a trap I’ve seen many investors make in the past. And falling into this pitfall again today could cost you a 7.7% dividend in 2020, and considerable upside, too.

It involves China’s stock market, which gives all indications of being a bargain today. Too bad it’s anything but!

China Equities Get a Beatdown

Truth is, there do seem to be some screaming bargains in China-focused closed-end funds (CEFs) these days—like the Templeton Dragon Fund (TDF), which trades at a 12.1% discount to NAV. Or the Morgan Stanley China Fund (CAF), which sports the same 12.1% deal.

But many Americans have been lured into the China story in the past decade, when it looked like the Red Dragon would finally lurch ahead of the US … only to have it end in tears.… Read more

There’s one word that strikes utter terror into the hearts of many investors: leverage.

But it really shouldn’t—and today I’m going to show you how to make sure you’re using leverage the right way, while minimizing your risk and reaping the biggest gains you can.

As you probably know, closed-end funds (CEFs) commonly use leverage to amp up their investment returns (and their dividends, which boast an average yield of around 7%). That’s fed their strong gains this year, as the Federal Reserve rolled out three consecutive rate cuts:

CEFs on a Tear

The CEF Insider index tracker has shown double-digit gains across the board, with equity CEFs slightly outperforming the S&P 500’s 26% year-to-date gains.… Read more

Today we’re going to dive into a corner of the market where 6%+ dividends are everywhere. What’s more, the funds behind these payouts have crushed the S&P 500 for decades—even during the financial crisis.

I’ll also introduce you to a specific fund that’s throwing off a 6.7% payout every month, and should be on any income investor’s radar. More on that shortly.

First, I’m talking about real estate—and in particular a group of closed-end funds (CEFs) that hold high-yielding real estate investment trusts (REITs), companies that own properties ranging from seniors’ homes to cell towers.

Yes, real estate—the sector at the heart of the subprime-mortgage crisis.… Read more

Members of my CEF Insider service often tell me they’d love to know a lot more about the people at the helm of closed-end funds—the good, the bad and the ugly.

It makes sense: after all, when you buy a CEF, these folks play a huge role in whether you notch a big gain (and income stream) or, well, not so much.

An Insider’s View

As one of the few analysts who focuses solely on CEFs—especially smaller CEFs, with market caps of $1 billion or less—I’ve had several conversations with managers at CEF companies from across the market.

A common theme?… Read more

I’ve been getting worried emails from investors lately, and most are about one of two big fears:

1. That a 2008-style market collapse and recession are on our doorstep, and …
2. America’s spiraling debt will drive it into bankruptcy.

So today I’m going to give you my take on both.

Investor Worry No. 1: Is a Recession Looming?

The first question: are we headed for a recession? This one nearly broke my inbox during the late 2018 pullback, when I said that drop was a timely buying opportunity.

Not only has growth remained above 2% this year, but low unemployment, rising sales for US companies and higher incomes have all continued, without triggering inflation.… Read more

There’s nothing worse than watching your cash drain away in a downturn—especially if you’re near retirement and don’t have the time to bounce back. That’s why I’m hearing so much fear these days that 2020 could be another 2008.

Luckily, there’s a simple way to protect your nest egg. It involves 17 unique funds that let you hold the S&P 500 companies you know well, but with two key differences:

• Steady returns: These 17 funds have delivered an annualized 8%+ in dividends and gains over the past decade.
• Massive dividends: at an 8.1% average dividend, these 17 funds hand you cash payouts 4.5-times bigger than the average S&P 500 stock.

Where are we to put our money in this levitating market—and how do we dodge the (many) overpriced stocks (and funds) ready for a fall?

Today I’m going to answer both questions, with one group of investments that are way overvalued—even though they look like bargains. Buy these “value traps” and you’re primed for a fast double-digit plunge (or worse).

Then we’ll move on to a group of 10 closed-end funds (CEFs) that are the opposite—most folks wrongly think these conservative, steady-Eddie buys are tapped out, but they’ve still got plenty of gains (and dividends up to 10%!) ahead.

Earnings and Share Prices Part Ways

I say “levitating market” because we’re seeing stocks soar—up 24% year to date—while that gain doesn’t, at first blush, seem supported by earnings: third-quarter profits are down 2.4% year over year, and have been down for three quarters in a row.… Read more

I’m going to show you my favorite (perfectly legal) way to pay 0% tax on your dividend income.

To show you the big savings this could mean, let’s look at two fictional investors who are nearing retirement: Jane and Janet.

We’ll assume both are single, are earning $50,000 per year and live in a state with no income taxes. Now let’s assume Janet has taken the so-called “right” path, as suggested by her financial advisor, while Jane has steered her own course. A quick look at both will show how that “right” path can create a hefty tax problem.

Let’s say Janet put a million dollars in the Vanguard S&P 500 ETF (VOO) because she’s been told that a low-cost index fund is best for retirement.… Read more

There’s a quiet shift happening in the market—and today I’m going to show you how to tap it for further gains. (And I’ll reveal a closed-end fund paying a safe 6.9% dividend, too).

What’s more, this simple move will help insulate your nest egg from a flare-up in the trade war (still very much on the table despite chatter about a “Phase One” deal with China) and other overseas dangers that could take investors by surprise—especially those who simply buy an S&P 500 index fund and hope for gains.

It starts with a pattern that’s emerged in the latest earnings numbers.… Read more