Author Archive: Michael Foster

I had an odd experience a couple weeks ago.

I met up with some money managers and financial advisors. They were discussing the same problem: how tough it is to beat the market.

Since I focus on closed-end funds, and since I know of many CEFs that have beaten the market thanks to smart managers (I showed you 16 whose average return has crushed the S&P 500 back in November), I found this discussion puzzling. I asked them what they thought about the CEFs that have beaten the market.

The responses were pretty much the same. “It won’t continue … they were lucky … they just beat the market for a short period … index funds will ultimately outperform.”… Read more

Remember early February’s stock-market rout?

I know. Seems like a weird question. It was just a few weeks ago, after all. But many folks seem to have forgotten how stocks fell 10% from their 2018 high in a matter of days:

Amnesia Sets In

As you can see, the benchmark SPDR S&P 500 ETF (SPY) is already recovering, and stocks are now up 3.3% for 2018. That’s still well below the 8% climb we saw in January alone, but it’s a solid return, and it means more (formerly) skittish folks will likely trickle their cash into stocks, keeping the market buoyant.… Read more

It’s all but official: the Federal Reserve will hike rates three times this year, and almost certainly four. If you want to protect your portfolio (and profit), now is the time to prepare.

I told you what’s driving this inflation surge—and how long it may last—in my article last Thursday.

Today we’re going to look at 2 high-yielding closed-end funds (with a massive 7.9% average income stream between them). But before we get to that, let’s kick in the doors on the most foolish myth in investing.

The Backward Fear That Handcuffs Investors

I’m talking about the ridiculous belief that higher interest rates are bad for stocks and corporate bonds.… Read more

If you’re worried inflation will sideswipe your portfolio, well, you have good reason to be.

Because make no mistake, rising prices will be the story of 2018. And if you want to protect your portfolio, you need to act now. I’ll show you how a little further on.

First, let’s go toe to toe with the inflation boogeyman, and see what kind of punch we can expect him to pack this year.

A Growing Threat

Starting late last year, the consumer price index (CPI) jumped, and the increase is accelerating as we start 2018.

Prices Heat Up

Of course, that’s probably not news to you; it’s been covered daily in the media.… Read more

There’s one question I’ve been getting from a lot of folks lately. You may have wondered about it yourself.

It’s simply this: “Is the stock market even safe anymore?” Or another, less anxious, variation: “How can I bank fast returns while slashing my risk?”

I have great news. As I wrote back on February 8, this selloff was way overdone, and now is the time to be buying—not selling!

Better still, there’s a class of totally ignored funds that fits the bill, and many of them are screaming bargains now. That puts us in line for a big, quick price pop while they pay us up front with a massive income stream.… Read more

Don’t panic.

One week ago, Elon Musk’s SpaceX launched Falcon Heavy, catapulting the billionaire’s Tesla Roadster into space. On the dashboard were two words made famous by Douglas Adams’s Hitchhiker’s Guide to the Galaxy: “Don’t Panic.”

(Read on and I’ll tell you why you should make these two words your mantra these days; how the “smart money” is playing the selloff; and reveal the one investment you need to—calmly—sell now.)

How to Keep Your Cool When Others Lose Theirs

As Musk’s Roadster orbited above, markets on earth were freaking out.

Look Out Below

In a matter of days, the 7% gains stocks racked up in less than a month were gone.… Read more

You know the old saying, “There are lies, damned lies and statistics”? Here’s another one for you: “There are lies, damned lies and charts.”

That certainly applies to the 8.6%-paying fund I’ll reveal toward the end of this article. If you looked at its price chart alone—which almost everyone does—you’d totally miss it!

And this dividend passes my 3-point “dividend safety check,” which I’ll also give you a little further on.

The Trouble With Stock Charts

The truth is, too many pundits have a point they want to prove, and they choose charts that prove that point. In some cases, they use charts that only tell half the story.… Read more

So stocks have had their steepest nosedive in seven years, and with the whipsawing market we’ve seen since, you might—might—be entertaining the knee-jerk urge to sell.

I have one word for you: don’t.

I’ll tell you why in a moment.

First, let’s look at why this panic happened, and where things go from here.

“It Means Nothing”

I’ve already fielded calls from worried family members and friends asking about their 401ks. When my mother emailed to ask if the Dow losing 1,100 points in a day was a big problem, I responded with three words:

“It means nothing.”

Of course, for everyday folks counting on stocks and bonds to fund their retirement, seeing a 4.6% drop in a day is horrifying—especially if you remember 2008, when such drops were the beginning of a horrific bear market that ended with a 50% decline in stocks.… Read more

In my years in the markets, I’ve seen some dangerous financial products come on the scene, but the two I’m going to show you in a moment might be the most dangerous.

No, I’m not talking about Bitcoin—although cryptocurrencies are pretty risky, since, as I wrote on January 1, most people don’t understand just how big a failure Bitcoin really is.

I’m talking about two new funds that have recently been released by BMO Capital Markets in conjunction with REX Exchange-Traded Funds.

Before I go into just how terrible these two funds are, let’s do a bit of digging into who BMO and REX are.… Read more

Preferred stocks are in the doghouse, and you just might be wondering whether this is the start of a buying opportunity.

Let me put that question to rest: it is.

Today we’re going to look at what’s behind this superb chance to buy, as well as 3 preferred-stock funds to consider: the Flaherty & Crumrine Dynamic Preferred & Income Fund (DFP), Flaherty & Crumrine Preferred Securities Income Fund (FFC) and John Hancock Premium Dividend Fund (PDT).

As you can see, all 3 of these funds are in the dumps.

A Steep Slide Down

But these are great funds, not only because of their sustainable 7% dividend yields and diversified portfolios, but also because this preferred-stock selloff is misguided.… Read more