Here’s How I Invest My Own Retirement Cash

Brett Owens, Chief Investment Strategist
Updated: March 13, 2017

It’s a question I get a lot, both from members of my Contrarian Income Report service and folks who drop by our ContrarianOutlook website:

How do you invest your own nest egg?

I’ll answer it in just a moment.

I was reminded of this question again last week, when I was looking at the returns of the Vanguard Dividend Appreciation ETF (VIG)—and thinking about how dead simple it would be to beat the fund’s return over the long haul.

All it would take is the slightest bit of research.

Big on Hype, Short on Performance

VIG is one of the best cases I’ve seen of an investment taking an inherent advantage and getting nothing out of it.

The fund tracks the NASDAQ US Dividend Achievers Select Index, which includes 184 companies that have raised their payouts annually for at least 10 years. …
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The 2 Worst Dividend Aristocrats to Buy Now

Michael Foster, Senior Analyst
Updated: March 10, 2017

In a crazy bull market like this, you may feel like it’s impossible to lose.

That’s a dangerous feeling. Because there are a few loser stocks out there—although admittedly there are far more winners than losers.

Still, if you’re holding on to one of the big loser stocks right now, you can’t be blamed for feeling bad about it. How can you be losing money when the S&P 500 is up a whopping 18% from a year ago?

You might even be thinking about giving up on stocks. You might think the market is rigged and there’s no way for anyone off of Wall Street to compete.

That, too, is dangerous thinking.

Wall Street isn’t rigged. If it is, why have so many hedge funds lost billions in the last few years and underperformed index funds? …
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2 Retirement-Killing Mistakes Investors Make (and How to Avoid Them)

Michael Foster, Senior Analyst
Updated: March 9, 2017

I know I don’t have to tell you that risk management is one of the keys to successful long-term investing.

But here’s the strange thing: most responsible, risk-conscious investors underperform the market—and not by a little.

Why?

Because the reality of risk management is not the conventional wisdom frequently peddled by financial advisors. They warn that taking on too much risk will threaten your life savings, so you need to choose an extremely conservative fund and invest for the long term.

That’s close enough to the truth to sound convincing—but unfortunately it’s wrong. (I’ll show you two funds that upend the “conventional” wisdom—and deliver consistent market-beating gains—in just a moment.)

Here’s the real secret to growing wealth by investing: understand the markets, understand the
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This Popular Advice is Costing You Big Dividends

Brett Owens, Chief Investment Strategist
Updated: March 8, 2017

Dividend stocks are different animals. If you practiced “buy and hope” in your previous investing life, there are some habits you should leave behind.

Using a “stop loss” is one of them. In theory, stop losses limit downside while letting winners run higher. If a stock closes below a certain price, or drops a certain percentage, the “stop” will make you sell before things get worse. Instead of holding a stock all the way to zero, you’re forced to book gains (or at least cut losses) early.

It sounds like a no brainer. Why wouldn’t we want downside protection on all of our positions?

Many advisors and pundits agree, and argue that a stop loss should always be used. Several subscribers have written in asking me where they should place their stops. …
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Popular Preferred Share Funds Paying 4-5%: 1 to Buy, 2 to Sell

Brett Owens, Chief Investment Strategist
Updated: March 7, 2017

One question I field all the time is, “Should I own preferred stocks?” and my answer is always the same: “Yes, yes and yes.”

But after that, things get tricky.

When most investors think of investing in preferred stocks, they think about popular funds like the iShares U.S. Preferred Stock ETF (PFF) or the PowerShares Preferred Portfolio (PGX). But despite yields near 6%, these mainstream preferred stock funds are the wrong way to go. Instead, I suggest you take my lead and look at outside-the-box preferred-stock options like the three high-yield picks I have in store for you today.

But first – why preferred stocks?

Preferreds are high-yield stocks that are often referred to as “hybrids” because they’re not common stock, and they’re not debt … but they borrow features from both. …
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This 5-Stock Portfolio Crushes the S&P 500

Brett Owens, Chief Investment Strategist
Updated: March 6, 2017

Most investors still don’t understand dividend stocks.

Why?

Because they spend way too much time obsessing over one figure—the dividend yield—and ignore stocks with payouts below some arbitrary number, say 2%, which is about what the SPDR S&P 500 ETF (SPY) pays.

Consider Visa (V), a stock that gets zero love from the dividend crowd, no thanks to its 0.69% trailing-twelve-month yield, which has gone nowhere for five years:

Visa’s Dividend Downer

But if you’ve ignored Visa because of its low yield, you’ve missed out big time—this “boring” chart is actually a sign of powerful growth.

Because what it’s really showing us is that investors have been bidding up V’s share price in lockstep with its payout hikes (because you calculate yield by dividing the annual dividend by the current share price). …
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5 Snubbed Utilities With 20% Gains Ahead

Michael Foster, Senior Analyst
Updated: March 4, 2017

Utilities are a particularly enjoyable sector for income investors because they offer sustainable and growing dividends—if you choose the right companies.

This boring and predictable model means utilities tend to attract risk-averse investors who jump out during times of extreme caution—even when there’s really nothing to be cautious about. That’s why the Utilities Select Sector SPDR ETF (XLU) erased much of its 2016 gains in the second half of the year, when the months leading up to the presidential election led to market panic.

Surprising Volatility

What’s even more interesting is that utilities continued to fall even after Donald Trump won and the so-called “Trump rally” began. Utilities only really began to recover in full at the start of 2017, meaning utility investors are sitting on 20% gains from the start of 2016 to today, excluding dividend payouts. …
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3 Recession-Proof REITs With Yields up to 7.6%

Brett Owens, Chief Investment Strategist
Updated: March 3, 2017

Healthcare real estate investment trusts (REITs) are at the crossroads of some very powerful investing themes that make them a one-two punch of potential growth and extremely generous yield. Today, I want to show you a trio of these double-threat dynamos that pay secure dividends up to 7.6%.

I love healthcare because it’s broadly unbeatable as a recession-proof investment. Plus the aging of the baby boomers is driving spending through the roof. Consider this: 10,000 baby boomers are reaching full retirement age every single day. No wonder, then, that the Centers for Medicare and Medicaid Services projecting that annual healthcare spend will grow 5.8% every year through 2025!

And healthcare is already a powerful total return performer. …
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The One Mistake Investors Can’t Stop Making

Michael Foster, Senior Analyst
Updated: March 2, 2017

Let’s face it: people make a lot of stupid mistakes.

You see it every day: they turn on to the freeway without signaling. They fall for obvious scams. They throw money away on useless things.

But here’s the good news: It’s possible—even easy—for savvy investors to profit from humanity’s lousy judgment.

How? By being a contrarian.

Contrarian investing means heading away from the crowds: buying heavily when everyone is fleeing in fear and selling when everyone says the asset is a sure thing. (I’ll show you 2 unloved funds ready to pop—plus 2 overbought names ready for a fall—in just a moment.)

Contrarian investors bet big against housing in 2007–08, like hedge fund mogul Michael Bury, who became famous thanks to the film The Big Short.
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Why Big Oil is Still a Big Dividend Trap

Brett Owens, Chief Investment Strategist
Updated: March 1, 2017

There are, literally, a billion reasons to avoid the energy sector right now.

Hedge funds now own a billion barrels worth of bets that crude oil prices are heading higher. Problem is, these guys are usually wrong – especially when they wager with such conviction!

In April 2014, I warned that then-$103 crude oil was due for a drop. U.S. crude oil inventories were at 5-year highs, yet money managers were “net long” 336,000 contracts on crude oil future. They were doubling down on the goo at the worst possible time.

When oil prices began to roll over, hedgies were forced to liquidate their bad bets in unison. It took them almost two years to clear their books, as they lightened up on their bullish bets until mid-January 2016: …
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