We still see the glass as half full, given likely decent global economic growth, healthy corporate p...
World MoneyShow Focuses on Income
10/24/2011 9:38 am EST
The World MoneyShow came to Chicago last weekend, bringing thousands of curious investors to hear speeches, seminars, and workshops on almost every aspect of investing.
It’s a spinoff of the famed Las Vegas and Orlando shows, which attract visitors from around the world. In the exhibit hall, the content was tilted toward technology to help traders of stocks, options, and futures, although there were the requisite displays from energy companies and precious metals firms.
The discussions were serious, starting with the opening panel (which I moderated) about the impact of high-frequency trading on the markets. On some days, these computer-generated orders amount to half the trading volume. Regulators have questioned whether they add to volatility, and have a negative impact on pricing.
Options trader and co-founder of Tastytrade.com Tony Battista took the other side of that premise, saying the influx of computer-driven volume is good for the market—narrowing spreads and making it easier for traders to get their orders executed. He pointed out that the market has traded in a relatively narrow band in recent months, strongly making the case for writing covered call options to increase portfolio returns.
(By the way, the intriguing Tastytrade.com is a must-watch, live Internet financial television show, created by Battista and ThinkorSwim founder Tom Sosnoff. It’s better than most of the financial shows on cable.)
Interestingly, the content of the three-day event seemed far more conservative than at the other shows, perhaps reflecting the mostly Midwest audience…or maybe because the enthusiasm for speculation has been tempered by the sideways, but volatile, market activity recently.
FDIC-Insured Foreign Currency CDs
There was heavy interest in the EverBank presentation, given by Frank Trotter, who co-founded the bank in 1990, and has guided its growth into a $12 billion institution.
The full-service bank offers all kinds of deposit accounts, and offers free debit-card usage, with a $60 payment (equal to most banks’ annual debit-card usage fee) if you open a new account. But the real attraction of EverBank is a unique foreign currency opportunity.
EverBank allows you to buy CDs and money-market accounts denominated in any of several foreign currencies or more than 20 baskets of currencies, diversifying your exposure to the US dollar. The CDs pay interest at the rates offered in those countries, but also expose you to currency risk—while maintaining your FDIC insurance coverage. For details, go to www.Everbank.com.
Trotter says that while interest in the euro has understandably waned in recent years, many depositors are opening accounts denominated in Chinese renminbi or the Brazilian real. While, the bank can’t deliver actual cash currency for those two countries, you can get the benefit of the trends which make those currencies stronger or weaker.
NEXT: Searching for Yield|pagebreak|
Searching for Yield
Once again, reflecting the nature of the crowd—mostly older investors looking to preserve capital and yet gain more income than traditional bank CDs offer—there was a large crowd for the luncheon panel, “The Best Income Plays for a Low-Yield World.”
The experts on the panel each offered five investment suggestions, some of which yield as much as 7% or more. But each agreed that chasing yield can be a dangerous game, and suggested diversifying these investments over a broad range of opportunities.
And each of them made clear—as I do—that these suggestions may not be appropriate for those who cannot afford risk. Or in my words, these ideas offer temptingly higher yields, but are not appropriate substitutes for “chicken money.”
For example, Mark Skousen suggested a Houston-based pipeline master limited partnership, with a 5.7% yield, that has increased its dividend every quarter. He also recommended the Gabelli Gold and Natural Resource Income Fund (GGN), listed on the NYSE, a closed end fund that invests in mining and energy companies and writes covered calls for income. It currently carries a 10.8% yield.
Richard Lehmann, publisher of the Forbes/Lehmann Income Securities Advisor newsletter, recommended Penn West Petroleum (PWE), a Canadian energy company (formerly a trust) with a 7% yield. However, he cautioned this should be purchased in an IRA to avoid complications with Canadian taxes on the dividend.
And for those willing to take on more risk, he highlighted an 11% yield on a partnership that owns container ships—and is dependent on the global trade.
Kelley Wright is managing editor of the long-running Investment Quality Trends newsletter, which recommends stocks based a screening tool for companies that have paid dividends for at least 25 years, as well as other criteria listed at the Web site.
His suggested investments include common stocks such as Altria Group (MO), yielding nearly 6%, and Philip Morris International (PM), yielding 4.65%. Of course, you have to be willing to invest in the tobacco industry.
But, he notes, even AT&T (T) with a yield of 5.95%, and Chevron (CVX) paying 3.2% make his list of investments with upside potential that give you a lot more return for your money than bank deposits. Of course, there is also a downside risk.
All MoneyShows are free and open to the public. (There are some events set aside for paying guests at the “Investment Masters” portion of the program.)
The next show is in Orlando, February 9 to 12 of next year. For investors it’s a veritable Disneyland of ideas, advice and enticements. Go to www.Moneyshow.com for more information.
There’s nothing like being overwhelmed with possibilities, warns show chairman Kim Githler, while suggesting that everyone go home and think calmly before jumping into any new investments. Good advice, and that’s The Savage Truth.
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