The good news is: we have other options. Folks like Doug Casey saw a great void in the retail market, and investment newsletters began to flourish.
Fast forward to 2013… I asked our team of analysts for tips on looking where no one else was. We started our search with a basic premise: maximizing income and appreciation while avoiding catastrophic losses.
With modern tools, an analyst can put in a few variables and get a list of candidates without breaking a sweat. That works well until everyone picks the same investments. Real research takes a lot more time and effort.
With that said, here are four tips for finding hidden gems.
- Being #1 is not always an advantage. In our special report Money Every Month, we ranked the top dividend-paying stocks by dividend yield and payment date. It is common to stop at the stock with the highest yield. But there are a lot of good companies further down the list. They may pay a smaller dividend, but they are just as solid and much less volatile. If there is less money pouring into these stocks, there is less risk of losing dividend income if the stock tumbles and everyone exits.
- Big does not always mean bad. There are some large companies that have a strong worldwide presence with a good dividend yield. While they may not be the #1 name in the industry, they do very well. These stocks don’t necessarily have tiny dividends—just not enough to catch the eye of yield-starved investors. It just takes time to find the right ones. It can be done; I know because we have some in the Money Forever portfolio.
- Find investments where potential growth outweighs interest-rate sensitivity. If the primary driver in market price is not solely the dividend, the investment won’t be as affected during a period of rising or dropping interest rates as it might be otherwise.In the Money Forever portfolio, we have a convertible bond fund with a good yield, but its performance is affected by the performance of the underlying stocks. The one we selected has a large share of defensive stocks in sectors we are comfortable with, thereby reducing risk and raising the potential for appreciation.
- Understand how various sectors react in a down market with rising rates. Concentrating on defensive sectors reduces risk. A company can have good dividends with growth and appreciation, but it might be a terrible investment in a downturn. The financial sector is a prime example: The dividends are good, and a strengthening economy can make the sector grow, but those dividends won’t pay off if another 2008 is just around the corner.The term “bond bubble” is being tossed around a lot lately. Should this bubble burst (much like the real estate bubble before it), the financial sector will be dramatically affected.
It has been five years since interest rates tumbled. We don’t need any more proof to know the political class is either unwilling or unable to fix the problem. We can’t sit around and wait for the good old days to come back, nor can we afford to just follow the crowd. We have to deal with our problem to have enough for retirement and make it last.
Sometimes laughing at yourself can be humbling; it can also be a great learning experience. I recently had an exchange with one of our regular readers; he wanted to know if our premium subscription was worth the money. With my marketing background, I have always believed that you should put the value before the cost.
We discussed how our team is educating readers on subjects they are unlikely to read about elsewhere. And the Money Forever portfolio is doing quite well, to boot. Some subscribers have mentioned that their gains have paid for our services for many years to come. I told this particular reader that the current promotional price is $8.25/month, and if we can’t bring more value than that to our subscribers, we wouldn’t be in business. His response was humbling: “Gee, I didn’t know that was the price. Had I known that, I would have signed on weeks ago.”
So much for my marketing expertise!
On a trip to Vermont, we cut a short video outlining what we’re all about and how we fit in to the big picture—your big picture. I urge readers to take a few moments to watch. The best part is this: You can sign up for the subscription, download my book, and all our special reports and back issues. If, after you read through them, you decide this is not for you, you can cancel within 90 days and receive 100% of your money back. And you can keep the material as our thank-you for looking us over.