There’s one investment you simply must not hold in this market crash—a highly speculative, high-yielding instrument called an exchange traded note (ETN).

Does the name sound familiar? That’s probably because it sounds like “exchange-traded fund,” or ETF. But an ETN isn’t like an ETF at all—and that’s a distinction many people fail to make.

So what’s an ETN, then?

It’s a highly leveraged, speculative instrument that lets investors access particular asset classes. In good times, ETNs can skyrocket. These, however are, er, more interesting times.

ETNs: Guaranteed Losses in the Coronavirus Crisis

As a result of the coronavirus selloff, ETNs aren’t just going to rack up big losses—they’re going to go to zero.… Read more

1929, 2008 and, now, 2020.

We’ve only seen this level of “selling pressure” three times since 1900. A limited sample size, sure, but we’re in ominous company. Anything and everything has been dumped in a panic liquidation to raise cash.

We saw a similar “global margin call” in late 2008. A year’s worth of selling crescendoed into a financial crisis grand finale that would eventually conclude in March 2009.

The good news then? If you held tight or, better yet, bought through the panic, you eventually did quite well. Let’s take the worst day of that year. On October 15, 2008, the S&P 500 slid 9% in one day.… Read more

Nearly every retirement portfolio on the planet is reeling from the coronavirus fallout. Recoveries are going to vary widely, however, depending on the safety of the dividends in each basket.

If your income stream is safe, then you’re well ahead of the game. When stock prices recover (and they will, as every bear market eventually gives way to a new bull), your portfolio is going to bounce right back. Assuming the payouts didn’t miss a beat, then you can rest assured you’ve got an uninterrupted income stream between now and then.

The bad news, however, is that cuts to dividend payouts have already started, with Ford (F) suspending its payout last Thursday.… Read more

Markets have freaked out over the coronavirus—but there’s good reason to believe they have overreacted—I gave you a few of these reasons in my March 19 article.

There’s another reason we need to talk about today: corporate earnings.

While it’s true that earnings expectations have fallen since the outbreak began, they haven’t fallen as much as you’d think. At the start of the quarter, analysts expected 4.4% earnings growth from S&P 500 companies. Now they’re expecting a 0.1% earnings decline.

That’s basically flat, and it’s better than the earnings declines we saw at the start of 2019, when stocks were rallying, so this news shouldn’t scare investors away.… Read more

A trio of reliable monthly dividend payers has been swept up in the pandemic panic. They could be the dirt-cheap buys that have dividend investors kicking themselves this time next year for not “backing up the truck” and buying every monthly paying share in sight.

These closed-end funds (CEFs) as a whole are far smaller than their mutual and exchange-traded brethren, and they’re about as sexy as a doorstop, so they go completely ignored by traditional financial media. But a couple dozen of these have exhibited some downright admirable performance while the rest of the market is tanking around them.

Better still?… Read more

To be sure, no one expected stocks to notch big double-digit losses in just two weeks, and while I don’t know when a rebound will happen (anyone who claims they do is lying), the economic numbers do carry a ray of light.

So let’s dive into them, and talk a little bit about the 18 funds in our CEF Insider portfolio, too.

Of Lizards and Dividends

First, there’s one thing we must not do at a time like this: follow our “lizard brain”: the primeval part of our thought process that tells us to flee when danger rears up, to keep our precious capital safe.… Read more

Last Thursday was the sixth-worst day on record for the S&P 500 (according to information from Nasdaq Dorsey Wright). Was. It’s already down to seventh place (yikes).

On Monday, it was quickly eclipsed by the third-worst day ever for the S&P 500 on record. Even in 2008, we didn’t have a single down day as severe as either of these days.

In fact, we’ve only had selling pressure this intense happen twice in the post-World War II era. The first was the October crash in 1987, and the most recent was in the fall of 2008.

Believe it or not (and most did not at the time), both were actually buying opportunities.… Read more

Beware of Wall Street “wisdom” now more than ever. Especially when it comes to the most commonly quoted maxim for retirement: it’s based on a rule that was never designed for times like these!

Enter the “Dividend Death Spiral”

I’m talking about the so-called “4% rule,” which says you should sell 4% of your nest egg every year in retirement.

Sounds simple, right?

Trouble is, it slashes your income stream and caps your upside in one go! It’s especially dangerous advice to follow in a downturn like the one we’re experiencing.

Let’s say, for example, you owned $200,000 worth of Johnson & Johnson (JNJ) shares, which pay $3.80 in dividends on an annualized basis, for a 2.9% yield.… Read more

Let’s set aside the noise and talk about the one thing that matters most in a volatile market like this: earnings.

According to recent FactSet data, analysts expect negative earnings growth in the first quarter of 2020. That’s no surprise, given the battering the coronavirus is laying on some sectors of the economy.

But even so, the projected decline as I write was still reasonable: just 0.1%. Things can still change, of course, but it’s important to note that this modest decline comes after a fourth quarter in which earnings grew following three straight quarters of declines—and despite analyst expectations of a 1.7% drop.… Read more

The stock market is in a full-blown panic, which means it’s time for us contrarian income seekers to go shopping.

Few firms have been spared from the “flash-bear” we are experiencing. It may be an ominous sign for the rest of 2020, too. So, if you are worried about the rest of the year, but you still need income from your investments, let’s consider some steady payers that are typically more stable than the broader market.

After all, when the markets begin to function properly again–and they will, no matter how shaky things seem at the moment–these are the types of dividend payers that we want in our portfolio (at cheap prices, too).… Read more