Publisher?s Note:
If there?s one universal goal that unites investors, it?s the peace of mind that comes with having a healthy, protected nest egg available when we or our loved ones need it most.
The good news is, there is truly an unlimited amount of profit that can be made in the markets. Just about anyone can become a success story by making consistently smart, safe decisions.
However, with the markets climbing to new all-time highs day after day, we?re faced with as many opportunities as questions about just how long the good times will last this time.
Because we?ve all seen too many flash crashes and bear markets, we know that there?s no time like right now to stock up on investments that can reward us regularly, both in good times as well as uncertain ones.
And so, a lot of you have been writing in, asking about our favorite, lowest-risk ways to participate in today?s market, without putting the wealth you?ve accumulated over a lifetime in harm?s way.
As our friend and colleague Nilus Mattive shared with you yesterday, there?s a wide universe of stocks that can work hard on your behalf by generating income for you every day that you own them.
Today, in the second of a four-part series, Nilus expands on that idea a bit further, showing you where you can find some of these hardworking stocks while giving you some insights that are both humorous and yet brutally accurate.
Enjoy this story, and I?ll rejoin you at the bottom with today?s top stories and a timely comment from reader Alex V. I think we can all relate to. ? Best wishes, Brad
Last week I found myself reading a news item with the following headline: ?Man Loses Life Savings Playing Carnival Game, Wins Giant Banana.?
I mean, how could anyone NOT want to hear that story, right?
In case you didn?t see it, here?s the gist ?
A 30-year-old New Hampshire man was at a fair when he started playing a game called ?Tubs of Fun.? His intent was to win a $100 Xbox Kinect.
After blowing $300 trying unsuccessfully, he did what any dedicated person might do ? he went home, grabbed the rest of his life savings ($2,300), and proceeded to toss all of THAT money into the carny?s bucket, too!
A day later the man returned to the carnival, and complained. He was refunded $300 ? plus a stuffed banana with dreadlocks.
Still unsatisfied, he filed a report with the local police requesting a deeper investigation into whether the game was rigged.
And in an equally strange ending to this bizarre tale, a website ended up reimbursing him for all his losses after the story went viral and garnered an outpouring of response from all corners of the Internet.
So What Does This Story Have
To Do With Investing? Everything!
Besides being one more piece of evidence that moral hazard is alive and well in America, this story illustrates the very idea of (literally) throwing good money after bad.
Heck, even when I was in elementary school I knew that carnival games were almost ALWAYS rigged in some way!
So, yes, the idea of a grown man squandering more than $2,000 on a ball-toss game ? for a prize worth $100 ? borders on the absurd.
Yet millions of investors do the same thing on a regular basis, with far-greater sums of money.
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| Sound investing is about
putting the odds in your favor. |
They succumb to the same deadly combination of impulse, miscalculated odds and a cavalier attitude toward their money ?
They take outsized risks for very small potential rewards ?
And once they?re deep in the hole, they start taking even BIGGER chances in the hopes of making things right again!
Obviously, I advocate a much-different approach. It?s a pretty simple two-step process, really:
Step #1. Set some cash aside for emergencies ? and not the kind that involve carnival games.
Having some money in reserve just helps you sleep well at night. Moreover, it also gives you the ability to hop on opportunities that pop up during short-term market swings.
It doesn?t matter to me whether you keep the money in cold, hard cash ? in an ultra-conservative money market fund ? or in some other physical asset like gold.
The point is just that you need to feel comfortable and prepared for life?s inevitable curveballs. Because only then are you ready to invest with confidence and for the longer term.
That brings me to ?
Step #2. Put the bulk of your wealth in investments that produce big streams of cash.
This is why I love dividend stocks so much. The very best ones kick off big ? and growing ? streams of steady income no matter what the market does in the short term. Meanwhile, high-quality dividend-payers also tend to rise handsomely over time.
Better yet, you can find solid dividends in just about every corner of the markets: blue-chip firms that sell big-name household products ? natural-resource companies that operate as Master Limited Partnerships ? high-growth technology companies ? and even plenty of far-flung foreign investments!
Of course, dividend stocks are just one example of the kind of cash-gushing investments I recommend focusing on.
There are also niche parts of the bond market that can hand you outsized returns with minimal risk. For example, I Bonds remain great investments at current rates. And I also continue to recommend high-grade corporate debt through low-cost mutual funds like Vanguard?s VFICX.
Plus, you can invest in real estate in all its various forms ? everything from individual properties to Real Estate Investment Trusts (REITs).
The critical part is focusing on lower-risk, higher-reward strategies that pay you through thick and thin. After all, you can?t retire on stuffed bananas!
Best wishes,
Nilus
P.S. I?ll be back with another piece tomorrow at this same time. In the meantime, Brad wanted me to remind you that Sean Brodrick?s newest presentation about investing in junior-resource companies comes offline at 11:59 p.m. TONIGHT ? and, along with it, a special offer to subscribe to Sean?s Junior Resource Millionaire service at a steeply discounted price. So if you haven?t yet claimed your potential $1,195 reward just for watching, click here now so you don?t miss out!
Now, let me turn it back over to Brad for today?s market highlights ?
***
In Other Market News:
- Low prices at the pump boosted retail sales by 0.1% in April, after a 0.5% decline in March. ?The big positive here is that the declines in gas and food prices appear to be freeing up cash for spending in other places,? opines Mark Vitner, senior economist for Wells Fargo. ?The first few months of the year were dominated by the rise in the payroll tax. After having to stretch their budgets early in the year, consumers have a little newfound cash.?
- Retailers whose fortunes are tied to the housing market are also seeing some improvement. Vitner warns, however, ?This is not a game-changing report for consumer spending.?
- The House of Representatives recently passed the ?Full Faith and Credit Act,? which prioritizes Treasury debt payments and Social Security payments in the event the U.S. hits its debt ceiling. While Treasury debt and S.S. would be protected, unemployment benefits, Medicare payments, and salaries for military personnel and air-traffic controllers would not be protected, drawing criticism from some.
- Alan Binder, a professor of economics and public affairs at Princeton University, points out: ?Ending the Treasury?s legal authority to float more debt means the budget must be balanced immediately. Even if you think balancing the budget is a sensible long-run goal, balancing it in a day is a horrible idea.?
- Web surfing is becoming more social, thanks to advances and increased competition in software, browsers and functionality. Apple?s Safari controls 59% of the mobile-browsing market thanks to the popularity of the iPhone, while Microsoft?s Internet Explorer controls 56% of the desktop market. Google?s Chrome has just released software to allow developers to add voice recognition to their websites and to allow users to sync their Google notes directly with their Google Drive storage service.
- With new ?add-ons? and apps that feature games and third-party software from a home screen, Jay Sullivan, COO of Mozilla, says browsing ?will be more lively, quick and fun.? Mozilla has rolled social media integration for its Firefox browser and is working to convince website developers to adopt a new identity system called Persona, which would eliminate passwords.
- Verizon Wireless, a joint venture between Verizon Communications (which owns 55%) and Vodafone Group (45%), will pay out a $7 billion dividend to its owners, down from $8.5 billion last year. This distribution, payable June 25, comes as a surprise to Verizon Chief Executive Lowell McAdams, who had hinted Verizon Wireless might not pay a dividend this year.
- Verizon is encouraging Vodafone to sell its 45% stake in the venture. One Citigroup analyst said the timing of the dividend payment suggests a deal is not imminent, but they ?still ascribe a 55% probability? of a buyout within 12 months.
***
Thanks to Nilus for today?s lead story, and thank you to our readers for your insights, questions and other feedback. Keep your comments coming!
I enjoy hearing what you have to say, and giving you the information you need to make the best-possible investing decisions for your own account.
Alex V. writes:
?I think Bill Gross (who declared an end to the bond bull run) has anticipated the fact that Bernanke and the Fed have to remove the foot from the pedal. There are those who say the landing will not be soft. Let us see what other central banks do also.
?Improper pricing of certain values in assets exists as a result of the sustained relaxed and stimulative monetary policies that have been maintained steadily for so long. Good luck, and safe landing.?
Alex, we are in agreement here! Keep watch, because we are currently hard at work preparing a special presentation about the bear market in bonds and the ramifications it can have for our readers. Make sure to keep your eyes peeled; it?s shaping up to be fantastic.
And remember, I headed up the research team (which included Nilus Mattive, the writer of today?s lead story as well) that predicted, as early as last summer, the peak of the bond market to occur this year. So, we?ve been watching this move for a good long while.
Let us know your view on bonds, fixed assets and income-paying stocks. You can reach us at feedback@uncommonwisdomdaily.com.
Good Luck and Happy Investing.
Brad Hoppman
Publisher
Uncommon Wisdom Daily
Source: http://www.uncommonwisdomdaily.com/investing-in-carnival-games-16258
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