Rate cuts are finally here. So will we actually hit that vaunted “soft landing” everyone’s been talking about?

Well, I’ve got a (contrarian, naturally!) take that I know most people haven’t thought about—especially since last week’s jumbo 50-point rate cut dropped:

What if we hit a “no landing” scenario, where the economy ticks along and inflation comes back?

I’m bringing up that unpleasant idea because, usually in a rate-hiking cycle like the one that just ended, the central bank pushes the Fed funds rate higher until it breaks something. 

But this time, it’s not clear it has.

In fact, when it looked like it finally had—when Silicon Valley Bank and friends crumbled to dust in March 2023—Jay blinked, and pumped liquidity into the market through the back door, a move we’ve referred to as “Quiet QE” here many times before:

The Fed Didn’t Break Anything This Time—That May Be a Problem

With that in mind, last week’s oversized cut was understandable: The Fed has been keen to take its foot off the brake for a while now.… Read more

At my CEF Insider service, a fund’s discount to net asset value (NAV, or the value of its underlying portfolio) is one of the first things we look at when deciding whether to issue a buy call.

That’s because it can tip us off to a bargain-priced CEF, just like price-to-earnings (P/E) ratios do for regular stocks. But as with P/E ratios, the discount to NAV is not the be-all and end-all when it comes to making a buy decision.

The Discount to NAV Is Just the First Step in Our Research …

It’s easy to see why some investors put too much weight on the discount to NAV, though.… Read more

$500K can be enough money to retire on. Even as early as age 50!

The trick is to convert the pile of cash into cash flow that can pay the bills. I’m talking about $38,513.22 per year in dividend income on that nest egg, thanks to 8% average yields.

These are passive payouts that show up every quarter or, better yet, every month. Meanwhile, we keep that $500K nest egg intact. Or, better yet, grind that principal higher steadily and safely.

Got more in your retirement account? Cool—more monthly dividend income for you!

We’ll talk specific stocks, funds and yields in a moment.… Read more

When choosing between closed-end funds (CEFs), you might be tempted to put a lot of focus on fees. That makes sense. Nobody likes high costs eating into their returns.

But there’s more to CEF performance than just the expense ratio, and if you focus on buying the funds with the lowest fees, you might leave a lot of money on the table.

Because the truth is, there’s no clear relationship between fees and long-term returns. A CEF’s portfolio and the skill of its managers play a far greater role in determining its success than fees alone.

Breaking Down the Data: No Simple Relationship Between Fees and Returns

Let’s start with the data.… Read more

Discounted closed-end funds (CEFs) are perhaps the sweetest dividend deals that Wall Street offers. I mean, where else can we find a 9.9% yield trading for 87 cents on the dollar?

By offers I mean overlooks! The spreadsheet jockeys can’t be bothered with Neuberger Berman Next Generation Connect (NBXG). Or its 9.9% dividend. Or its 13% discount to its net asset value (NAV).

Why not? NBXG only has a market cap of $957 million—too tiny a capital pool for the big fish to stash cash. So, these “index huggers” lazily pile into SPY instead.

We individual investors, on the other hand, can make a nice living (and retirement) in this cozy contrarian corner of the income market.… Read more

Interest rates are (finally!) set to fall. As they do, we’re going to bag bargain-priced 8%+ dividends from a pattern we can set our watches to at times like this.

I’m talking about the mainstream crowd’s habit of “reaching for yield” when Powell & Co. drop rates, eroding yields on CDs, Treasuries and the like.

As these investors go on the hunt for higher payouts, I expect them to flock to closed-end funds (CEFs), one of our favorite income plays, thanks to the 8%+ yields these funds kick out.

But of course, we need to make sure we’re front-running the crowd into the right CEFs: those with high, safe, and ideally monthly payouts, while sidestepping the many dogs out there.… Read more

Sometimes as income investors we face a situation that sounds like a good problem to have: We have to pick among a group of very impressive investments!

That’s obviously much tougher than, say, picking between a stock or fund with a winning record and another with a losing one.

But when you think about the investment choices you’ve made over the years, I think you’ll find that picking between options that seem equally good is actually what you’ve had to do most of the time.

To get into how to make a call when you face this situation, we’re going to use my favorite high-income plays: closed-end funds (CEFs), which routinely yield 8%+.… Read more

Let’s talk about a “rich guy loophole” that you and I can take advantage of—and bank dividends up to 12.5%.

And no, I’m not going to ask for your most recent tax return or W2. These are perfectly legal “backdoor” divvies trading between $10 and $20 per share. A sweet setup by Congress has these payers yielding between 10.5% and 12.5%.

The secret is the business development company. BDCs provide capital to small and midsized businesses. These firms often invest alongside or after venture capital. They are “kinda sorta” like private equity firms, but available to everybody (as in, we don’t need a half million in liquid assets to invest).… Read more

With stocks back in “climb” mode (at least for now!), it could seem like a good time to look for a hedge against the next downturn.

If you’re looking for hedges that also pay big dividends, you might be considering resource funds—especially those in oil and gas, or maybe even gold.

Today I’m going to show you why you should resist this strategy, or at least be very careful about it. Closed-end funds (CEFs), which yield 8.3% on average today, are my beat at my CEF Insider service, so I’ll use CEFs (which we love, especially outside the resource space!)… Read more

One year ago, I wrote to you that it was time to buy bonds again. The “index huggers” who only know SPY thought we were nuts for talking fixed income.

The popular narrative at the time (which aged like boxed wine) was that interest rates would rocket to the moon in order to contain inflation. Or help the government fund its ballooning deficit. Or some line of reasoning.

When rates rise, bond prices fall. Hence, the prevailing vanilla sentiment was that bonds were for bums.

We original thinkers disagreed. We reasoned—correctly—that rates fall when recession fears grow. Period.… Read more