We’ve had several interesting discussions about yield in recent weeks.
When I was a broker, some of our most significant competition for investment dollars was from the banks.
A lot of retirees and near-retirees did not want to take a lot of risks when they could earn up to 7% from a fully insured bank Certificate of Deposit.
They knew they would get all the money back, and they never spent a minute worrying about how the S&P 500 or Dow Jones indexes were doing that day.
These risk-averse folks would rarely even consider a REIT or a muni bond fund.
They liked their bank, they trusted their bank, and they knew Uncle Sam had their back if their bankers decided to be stupid.
The bad news is those options no longer exist.
These days you need to think differently and explore the corners of the market that no one else is even thinking about if we’re going to find good yield without taking on massive risk.
Let’s get started…
We are well into the new year now, and the prediction game is reaching something of a frenzy.
By this point, I’ve read several hundred market predictions for 2020, and there is something of a consensus.
GDP growth will be around 2%, interest rates will remain low, stocks will provide single to low double-digit returns, and unless something goes horribly wrong in the economy, Donald Trump will be reelected.
There are very few people expecting a strong pick up in volatility or risk in the year ahead which makes me want to sit around with some very smart people and a bottle of bourbon to consider possible black swans that may occur in the next year to two with the potential for life-changing profits.
Now, I’ve made some money by making black swan bets on events that no one thought could happen where the math of the probability and payout calculation lined up correctly.
However, I’ve never made a nickel on a prediction in the stock market whether it was my own or someone else’s.
Making the type of precise projections that the Wall Street strategists and TV pundits make strikes me as a colossal waste of time and brainpower.
I prefer to find strategies where the numbers indicate I have a very high probability of trouncing the market, and that’s exactly what I’m going to show you today.
Let’s take a look…