REALLY enjoyed reading your incisive [newsletter] article. What
a terrific analysis."
Welcome to all of the
new CDx3 Newsletter readers who signed up during November. This is your first issue of the CDx3 Newsletter, a free monthly newsletter devoted
to the interests of CDx3 Preferred Stock investors.
To be sure
that you continue to receive the CDx3 Newsletter each
month, please remember to add the following email address to
your email address book safe sender list:
The "Quick Guide To Preferred Stock Investing During A
Global Credit Crisis" is still available to readers
of this CDx3 Newsletter.
If you choose to let this historic
opportunity go by, do so because you feel that it is in your
best interest, not because you are uncertain about how to take
advantage of it.
This is a new four page report
that summarizes how to select, buy and sell the highest quality
preferred stocks during this global credit crisis.
Please download and read your free copy (PDF,
download now). You'll
be very glad you did.
Thank you for your interest in my
preferred stock research.
The government has found a way to
take a nine page proposal and turn it into 464 pages of legislation and weeks of hearings, leaving way too many
of us incredibly confused. The good news is that the component
of the U.S. Treasury's Troubled Asset Relief Program (TARP) that
pertains to us preferred stock investors is outside of the fray.
Under this two wave program, Treasury has now designated sixteen
CDx3 banks as "healthy institutions" and must be sure that The
Protected Sixteen banks stay afloat if Treasury ever wants to
see its billions again. I break out the program's components,
clear up the confusion and name The Protected Sixteen banks in
Month's CDx3 Investor Results article below. The 26 CDx3
Preferred Stocks from these sixteen banks are currently
providing an average annual yield of 10.9% to CDx3 Investors.
Amazon.com is no rookie when it
comes to putting up great deals for Christmas gifts. If books
are not the number one gift item for Christmas they've got
to be pretty close. In the
Special Announcement article I provide the details on
Amazon's Christmas promotion for my book, Preferred Stock
Investing. Rather than the latest romance novel, why
not give a friend or family member a truly unique book that may
very well provide substantial and lasting value? Written in
plain English for non-experts, Preferred Stock Investing
is now on big-time sale at Amazon.
The CDx3 Company Spotlight
article introduces you to the ten new CDx3 banks that the U.S.
Treasury added to the TARP program during November. These ten
CDx3 banks, together with the six identified in
last month's issue of the CDx3 Newsletter, make up
The Protected Sixteen banks now in the TARP program.
What do I mean by "protected" and
how long will the U.S. Treasury convey this "protected" status
on The Protected Sixteen banks? In this month's CDx3
Question Of The Month article I describe why the U.S.
Treasury is incented to protect The Protected Sixteen banks for
at least the next three years, but much more probably for the next
The Free Special Offer
article below provides you with a download link to what could be
the most important document you will read during this global
credit crisis. As a reader of this monthly CDx3
Newsletter, you obviously have an interest in preferred
stock investing. This recently published report is titled "Quick
Guide To Preferred Stock Investing During A Global Credit Crisis"
and is available to my readers for free (see link in the Free
Special Offer article below).
Subscribers to the
CDx3 Notification Service receive a report every month that
identifies CDx3 Preferred Stocks that are issued by a wide
variety of businesses - banks and non-banks - that are at a
point in time when, research shows, their market price will tend
to favor buyers. As the U.S.
Treasury has rolled out its $250 billion preferred stock
purchase program over the last couple of months, the average
market price of CDx3 Preferred Stocks has continued to rise.
Not just the ones issued by banks, but across the board - a
rising tide floats all boats, at least in this case. Will the
market prices of CDx3 Preferred Stocks continue to edge upward
for a second consecutive month? I will report back to you in next
month's issue of the CDx3 Newsletter.
Finalizes Program, Designates 126 "Healthy Institutions"
Only 16 Pass CDx3 Filter - "The
Protected Sixteen" Offer 26 CDx3 Preferred Stocks
The U.S. Treasury’s Troubled Asset Relief
Program (TARP) is very important for preferred
stock investors to understand as it has created
what, in all likelihood, is the largest single
preferred stock investing opportunity that we
will see in our lifetimes. It’s no secret that
the market prices of bank stocks (including bank
preferred stocks) are at an all-time low. But
which ones are safest?
are looking to ride the recovery wave in
financials, you need to understand how the TARP
program has affected the market for the highest
quality preferred stocks – CDx3 Preferred
There are three components to the $700 billion
TARP, one of which is critical to preferred
stock investors as it is this component that is
driving, and will continue to drive, the
preferred stock marketplace for the next three
to five years.
The first component is a $350 billion set aside
for the next administration (subject to change). Nothing is
happening with this half of the TARP funding so,
for now, ignore it.
The $350 billion half that is in play has been
divided into the two remaining components of
TARP. $250 billion is being used for Treasury’s
preferred stock purchase program (officially
called the Capital Purchase Program).
What About Me!?
The remaining $100 billion is still up for grabs
so everyone from auto makers to real estate
associations to hairdressers has been vigorously
waving their “What About Me” flags. Don’t let
the press coverage confuse you; the debate over
the remaining $100 billion does not involve the
$250 billion preferred stock purchase program
and is not what has created the
once-in-a-lifetime opportunity for preferred
The $250 billion preferred stock purchase
program is being doled out in two waves. The
first wave was implemented during October then
the second, and final, wave in November.
In October, Treasury took the lion’s share ($200
billion) and purchased custom-made preferred
stocks from nine “healthy institutions” (as
Treasury has termed banks that are able to
qualify for the program) with each bank
receiving $25 billion in cash (Bank of America
received $15 billion and Merrill Lynch, which
BofA is in the process of acquiring, received
Other banks were given until November 14 to
prove to Treasury that they too were worthy of
Treasury’s investment. Out of this second wave
of applications, Treasury has approved 117
additional “healthy institutions” (and may
approve more if there's need and cash left
Institutions: Out of 8,500 banks,
Treasury has now approved a total of 126 (nine
from the first wave plus 117 from the second)
into their preferred stock purchase program (as
of November 26, $161 billion in cash had
actually been distributed to 53 banks with more
on the way-
the U.S. Treasury ever wants to see their
billions again, the “healthy institutions” that
Treasury has allowed into their program cannot
be allowed to fail for the next several years.
These banks are essentially now “protected”
(wondering for how long?
see the CDx3 Question Of The Month article below).
These 126 “healthy institutions” were further
subjected to the ten CDx3 Selection Criteria (Preferred
Stock Investing, Chapter 1). This additional
filtering eliminated three of the original nine
banks from the first wave (producing “The
Protected Six” mentioned in
last month’s issue of the
CDx3 Newsletter) and all but ten
of the banks from the second wave during November.
The Protected Sixteen:
That’s right; out of 8,500 U.S. banks, Treasury
narrowed the field down to just 126 to let
behind the walls of their castle. Then, of these
remaining 126 “healthy institutions,” the CDx3
Selection Criteria eliminated 110, leaving what
I refer to as The Protected Sixteen
Bank of America, BB&T, Capital One,
Citigroup, Citizens, Fifth Third, JPMorgan,
KeyCorp, M&T, Merrill Lynch, Morgan Stanley,
PNC, Regions, SunTrust, US Bancorp and Wells
Subscribers to the
CDx3 Notification Service know that the CDx3
Selection Criteria have had a perfect track
record throughout this credit crisis. The CDx3
Selection Criteria have successfully filtered
out every financial institution that has failed
during this credit crisis. CDx3 Investors knew
to stay away from Washington Mutual, IndyMac,
Freddie Mac, Fannie Mae, Bear Stearns, New
Century and Lehman Brothers from the beginning.
Those who invest in CDx3 Preferred Stocks
haven’t missed a single dividend - ever.
Might there be exceptions down the road,
especially during this historic credit crisis?
Sure. But, to date, there has not been. How many
investment methods can make that claim?
26 CDx3 Preferred
Stocks*: The Protected Sixteen have a
total of 26 CDx3 Preferred Stocks* currently
trading and provide an average annual yield of
10.9%. If you are looking to ride the recovery
wave in financials, these 26 CDx3 Preferred
Stocks* from The Protected Sixteen banks provide
a historic and unique opportunity for your
Treasury is still
considering adding more banks to the program. I
will report back to you if additional CDx3 banks
are allowed behind the walls of Treasury's
* CDx3 Preferred
Stocks: CDx3 Investors are only
interested in the highest quality preferred
stocks and there are lots of pretenders to weed
out. Applying the CDx3 Selection Criteria (Preferred
Stock Investing, Chapter 1) will eliminate
about 90% of the regular preferred stocks
trading on today's stock market.
For example, here
are three of the ten CDx3 Selection Criteria
that regular preferred stocks must meet to be
considered "CDx3 Preferred Stocks:"
1. be issued by a
company with a perfect record of never
having suspended a dividend on a preferred
2. have the "cumulative"
dividend requirement, which means that in the
unlikely event that the issuing company misses a
dividend payment to you (which I have never seen
happen with a CDx3 Preferred Stock), they have
to make it up to you later; they still owe you
the money; and
3. be rated "investment
grade" by Moody's Investors Service.
Having specific and
consistently applied selection criteria takes
the emotion out of your investing decisions and
leaves you with the highest quality preferred
stocks - "CDx3 Preferred Stocks."
Preferred Stock Investing Goes On Christmas
Sale At Amazon.com
Amazon Knocks $2 Off Of Regular
Price Just In Time For Holiday
This credit crisis has
created enormous opportunity for those willing to look
under the right rocks. Financial analysts, writers and
expert investors have been screaming over the last few
months that the time is right to jump into preferred
The Three Rules of Market
Price Predictability (Preferred Stock Investing,
Chapter 5) explain why the market price of the highest
quality preferred stocks behaves the way it does, even
during this historic credit crisis.
Investing shows readers how to screen, buy and sell
the highest quality preferred stocks. And Chapter 9
lists every qualifying preferred stock that has been
issued since January 2001. Book readers are also
entitled to free periodic updates.
Investing is written in plain English for
non-experts. The book makes a great gift for any friend
or family member who might be interested in learning
something unique about investing.
And get this: Amazon has Preferred Stock
Investing on sale right now for $17.95, about $2 off
of the book's regular retail price (offer subject to
change at Amazon's discretion). And Preferred
Stock Investing qualifies for Amazon's free shipping
Order now to ensure delivery by December 24, 2008.
These Companies That Issue CDx3 Preferred
Added To Last Month's
Six, This Month's Ten Round Out "The Protected Sixteen" Banks
last month's issue of the
Newsletter I spotlighted the
initial six CDx3 banks selected
by the U.S. Treasury for their
$250 billion preferred stock
Adding to the six from last
month, Treasury named an additional ten
CDx3 banks during November. With one
exception, these multi-billion
dollar regional banks are
between 90 and 160 years old:
was founded in 1906 and has
grown its Winston-Salem, North
Carolina business to over $15
shows that Capital One's "What's
In Your Wallet" ad campaign has
made it second only to Bank of
America in brand recognition.
Republic Bancorp was founded in
1871 and remains headquartered
in Flint, Michigan.
Third Bancorp, established in
1862, is a $5 billion bank
headquartered in Cincinnati,
in Cleveland, KeyCorp operates
about 1,000 branches in 13
states and was founded in 1849.
Bank Corp. was founded over 150
years ago in western New York
and is still headquartered in
Buffalo. This $6.5 billion bank
primarily serves the
Financial, in the process of
acquiring National City (using
their TARP cash), was founded in
1922 and operates its $17
billion business from Pittsburg,
Financial Corp. was born out of
the consolidation of three
southern banks from the late
1800's. Now a $7 billion
institution, Regions is
headquartered in Birmingham,
is an Atlanta, Georgia
headquartered bank established
in 1891. This $10 billion bank
uses its 1,600 banking offices
to service its southeastern U.S.
Bancorp, founded in 1929, is
headquartered in Minneapolis and
has grown its business to be a
$47 billion regional financial
report back to you if Treasury
selects additional banks that meet
the CDx3 Selection Criteria.
How long will the U.S.
Treasury "protect" these banks? -
If the U.S. Treasury wants to
see their billions again, the
"healthy institutions" that they
allow into their $250 billion preferred
stock purchase program cannot be
allowed to fail (as witnessed by
Treasury's separate bailout of
Citigroup last month). The
custom-made preferred stocks
that Treasury received in return
for their cash included two
provisions that fix the length
of time that Treasury is
incented to protect their
Provision #1: The
custom-made preferred stocks
that The Protected Sixteen have
sold to the U.S. Treasury have
what is called a three year call
date. What this means is that
the banks regain the right to
"call" (purchase back from
Treasury) the preferred stock
shares three years from now;
until then, the banks must
continue to pay Treasury the
dirt-cheap 5% annual dividend
declared on these preferred
stocks. As long as the banks
stay in business, Treasury will
continue to receive the 5%
annual return on their
investment for at least the next
Provision #2: Once
the call date arrives three
years from now, the banks will
have to decide whether or not
they want to call (buy back)
these custom-made preferred
stocks from Treasury. As much as
I'm sure the banks would like to
get the government out of their
business, the fact is that 5%
money is dirt-cheap and the
banks are much more likely to
continue using that money for a
far greater gain within their
Put another way, if the
Treasury's cash is costing the
banks 5%, but the banks can use
that money to make, say, 6.5%,
why would the banks return the
cash to Treasury (by calling the
preferreds)? To put a cap on the
length of time the banks can use
their money, Treasury inserted a
provision that after five years
the dividend rate on these
preferred stocks almost doubles,
up to 9%.
3 To 5
Years: These two
provisions - the three year call
date and the increase in the
dividend rate at five years -
fixes the length of time that
Treasury is going be incented to
protect these banks from
failure, if Treasury wants to
ever see their billions again.
Because of these two provisions,
the government must do
everything they can to protect
The Protected Sixteen banks for
at least three years, but much
more probably five years.
here's the really great part:
The 26 CDx3 Preferred Stocks
that are currently trading from
The Protected Sixteen banks all
carry call dates that occur
sooner than five years from
now. That means that, to the
extent that the government
protects these banks from
failure, these 26 CDx3 Preferred
Stocks enjoy that "protected"
status for their entire
So, that means that the 26 CDx3
Preferred Stocks that are issued
by The Protected Sixteen banks:
are issued by banks that have
met the “healthy institution”
criteria of the U.S. Treasury’s
Capital Purchase Program; plus
meet the additional ten CDx3
Selection Criteria, narrowing
the list to just the highest
quality preferred stocks from
these banks; and
fall under the “protected”
umbrella of the U.S. Treasury
for the remainder of their
lifecycle since they have a call
date that will arrive prior to
that of the custom-made
preferred stocks that The
Protected Sixteen banks have
issued to the U.S. Treasury.
I really hope that you are
paying attention to this.
Not being familiar with your
personal financial goals,
resources and risk tolerance, I
cannot say whether investing in
any of these securities is in
your best interest; only you can
make that decision.
But if you have been looking for
a strategy to ride the recovery
wave in financials, Treasury's
$250 billion preferred stock
purchase program has created a
truly unique combination of
events that I would encourage
you, as a preferred stock
investor, to consider.
My book, Preferred Stock
Investing, provides the
information that you need to
screen, buy and sell the highest
quality preferred stocks. For
those who would rather receive
an automatic email message when
there is a buying or selling
opportunity coming up, we offer
CDx3 Notification Service.
Thanks to Barry B. for the great
question. You will receive a
free copy of the CDx3 Special
Report "Dividend Accounting."
Click here to submit your question.
"Preferred Stock Investing During A Global
Thank You For Your Interest In Preferred
Stock Investing And The CDx3 Income Engine
CDx3 Newsletter readers have been with me for
quite some time. And from the email that I receive I
know that many of you have read Preferred Stock
Investing and have implemented the CDx3 Income
Engine on your own (the book includes the
resources needed to do so without the
The 16-month long credit crisis has shaken our financial
system and everyone who is invested in it (which is just
about everyone). Even though the CDx3 Selection
Criteria, day after day, have successfully filtered out
every failed bank for over a year now, and even
though there has not been so much as a missed dividend
for those who have invested in CDx3 Preferred Stocks,
there's still some anxiety.
And that's what concerns me the most. As a researcher, I
have an enormous volume of data regarding the market
price behavior of CDx3 Preferred Stocks.
I cannot only explain this market price behavior but I
have the data needed to support my observations. Chapter
9 of Preferred Stock Investing includes the
investment results, using the CDx3 Income Engine, for
every qualifying preferred stock issued since January
Whether market prices are driven down by uncertainty
related to war (2002) or by a global credit crisis
(2007-09), the market prices of CDx3 Preferred Stocks
behave in certain ways at certain times.
To thank you for your interest, and to provide you with
some very timely insights, I have published a "Quick
Guide To Preferred Stock Investing During A Global
This is an important and timely document that all who
are interested in using the highest quality preferred
stocks to benefit from this credit crisis should read.
Understanding the CDx3 Income Engine is more important
now than ever.
Enjoy reading the
Quick Guide and thanks again for your
interest in my preferred stock research.
Market Prices Jump Up For CDx3 Preferred Stocks
Coincidence Or Have CDx3 Preferred Stocks Rebounded Off Of
The CDx3 Perfect Market Index, which is
available on the exclusive web site (take
for subscriber's to the
CDx3 Notification Service, is a
proprietary metric that measures the
direction and magnitude of changes in
the marketplace for CDx3 Preferred
A value of 100 is a theoretical "perfect
market." Values less than 100 indicate a
"seller's market" characterized by
overall market prices that are above
"par" ($25 per share).
A CDx3 Perfect Market Index value that exceeds 100
indicates a "buyer's market" which is characterized
by increasing dividend rates on new CDx3 Preferred
Stock issues and, correspondingly, market
prices below par (this is the Rule of Rate/Price Opposition,
Preferred Stock Investing, page 61).
Increasing dividend rates available at lower market
prices - a buyer's market.
The CDx3 Perfect Market Index has only
indicated an overall increase in market
prices five times since June 2007 with
the strongest indicator coming last
month, November 2008. Is the TARP
program already working, sparking the
long awaited recovery in financials or
was this a coincidental one-time price
I'll report back to you in next month's CDx3
Remember, I'm not a stock broker;
I'm not trying to sell preferred
stocks to you; and I don't sell
investment advice. I'm an
investment researcher with an
economics and statistics
background who has developed a
simple way to earn a respectable
return at very low risk. And I've
written it down in
Preferred Stock Investing.
I'm hopeful that you find these
Newsletters interesting, and
will consider learning more by
purchasing my book, Preferred
Stock Investing or by subscribing to
CDx3 Notification Service.
take a look at
www.PreferredStockInvesting.com. And don't forget
FREE SPECIAL OFFER.
someone who might be interested in simple,
low-risk investing for non-investment
experts? Have them send an email
they will automatically
begin receiving this monthly CDx3
next month (plus a
CDx3 Special Report) - all FREE.
Many Happy Returns,
Doug K. Le Du