“Daddy. Can you come play with me in the playroom?” my four-year-old asked.

“Sure. I’ll be right in,” I said. “Once I get done unloading the dishwasher. Would you like to help me unload?”

“No thanks,” my daughter replied. No surprise, but one day I hope to catch her off-guard.

She walked to the playroom. Barely. And reappeared.

“Daddy. You’re taking for ages.”

For ages is the equivalent of forever in our house. I think. Then again, given her level of exasperation, she could be telling me I’m taking longer than forever.

She’d make a good bond trader. With long rates rising every day, few income investors want to hold any bonds for any amount of time.… Read more

The last time the Federal Reserve tried to taper its money-printing ways, the S&P 500 dropped 20% in 11 weeks.

I’m not sure if the sequel is going to be any kinder to “America’s ticker,” the SPDR S&P 500 ETF (SPY). It’s time to prepare.

The best time to sell speculative, profitless positions was last week. The second-best time is probably now, with Jay Powell set to stop his bond buying and start raising rates in the next couple of months.

I know many dividend investors are feeling smug, and rightly so. We made a bunch of money from Powell’s printing, and now our dividend darlings appear set to attract “basic” investors from the land of crypto and tech.… Read more

Today we’re going to make a couple crafty moves worthy of the canniest contrarian—and in doing so, we’ll grab reliable income plays other investors are snubbing (with outsized yields up to 8.6%).

These moves fly right in the face of the Federal Reserve’s planned rate hikes, potentially starting as early as March, but that’s the whole point: plenty of folks have let the fear of higher rates scare them off these investments. But as mainstream investors almost always do, they’ve taken things too far, nicely setting us up to grab these high yields and some price upside as 2022 unfolds.

Let’s start with our first move, which is into longer-duration bonds, and specifically closed-end funds (CEFs) that hold them.… Read more

It’s no surprise to us calculated contrarians—2022 is already looking like a volatile train wreck. With the Federal Reserve shutting off its money printer, cash is flowing away from the most speculative part of the stock market for the first time since early 2020.

Declines are likely to produce winners and losers. While profitless stocks are probably toast, dividend growers are likely to turn into darlings.

This is shaping up to be the year of the “dividend magnet.” If you don’t know what this is, here’s a crash course on the safest, surest way to make money from stocks in the months ahead.… Read more

These days, everyone’s in a tizzy about rising interest rates. But what if I told you that this panic is overblown—and it’s setting us up for some very nice windows to buy some top-quality high-yield funds throwing off payouts of 7% and up?

Why do I think it’s overblown? We’ll get into that below. But before we do, we should be careful to acknowledge that the early-2022 “crash” pundits are bleating about isn’t much of a crash at all:

You Call This a Crash?

The S&P 500 is down less than 2%, and while that isn’t great, it isn’t terrifying, either, especially when we zoom out just three months.… Read more

Well, that escalated quickly.

We contrarians have been ready for rising interest rates—and long-term rates have indeed begun the year with a moonshot.

The Federal Reserve has been a big buyer of US bonds since the spring of 2020. If it weren’t for this “whale” buying $80 billion in bonds per month, long rates would likely be higher already.

How much higher is anyone’s guess. But now that the Fed is “tapering” its monthly purchases from $80 billion all the way to zero, everyone is rushing to place bets. And income investors are speculating that a fair rate for the 10-year is higher than here.… Read more

I was waiting in line at the California DMV recently, idly flipping through my phone, when I ran across this headline:

There Are More 401(k) and IRA Millionaires Than Ever …

Fidelity Investments—apparently happy to share its customers’ financial info anonymously—says it has more than 750,000 seven-figure 401(k) and IRA accounts.

A chunk of money is great, especially when we can leave it untouched and let it grow. That was no doubt the “secret” of 99%+ of these retirement millionaires. They socked away money for decades and rode the market higher. (They didn’t chase the crypto du jour!)

Soon it will be time to convert the pile of cash into cash flow that can pay the bills.… Read more

Chinese stocks have cratered, and that might have you wondering if there are bargains to be had.

If you invest in closed-end funds (CEFs), which regularly offer yields north of 7%, you may also be wondering if CEFs that focus on China might be worth a look now, too—especially as these funds’ yields have popped as their prices have faded.

Let’s dive into the current state of play in China and answer these questions. Further on, I’ll give you my verdict on a China-based CEF throwing off an outsized 6.6% yield today.

Chinese Stocks Plunge: Value or Trap?

If you’re wondering where the pull some value investors are feeling toward China is coming from, this chart explains it.… Read more

Once upon a time, it was hard to find an income strategy much better than the idiot-proof “Dogs of the Dow.”

And hey, in this wild market in which the S&P can drop 2% in a couple of hours, this sounds pretty good. Let’s buy some blue chips and earn 3x more income than the broader market.

Which Dogs are paying the biggest dividends for 2022? As a group these battleship businesses are paying 3.8% versus just 1.2% for the broader market. We’ll review them in a moment. First, the Dogs of the Dow rules:

• Rule 1: After the final trading day of the year, identify the 10 highest-yielding stocks in the Dow.

Here’s my best advice as 2022 dawns: ignore the media’s constant bleating about inflation and supply-chain issues—these two boogeymen are nowhere near the threats everyone thinks they are!

In fact, terror-ridden headlines about either mark an opportunity for us contrarian income-seekers. So let’s go ahead and tap these investor fears for dividends yielding up to 10%, plus market-crushing returns as the crowd (inevitably!) comes around to our view.

Hints of a Supply-Chain Revival

More data will come in over the next few weeks to make things clearer, but so far there is one strong hint that the business press’s doomsday scenario—surging inflation, a stock-market correction and tighter corporate profits—just isn’t on.… Read more