"I have come to depend completely on the information that you so ably furnish...I sincerely appreciate your service. It has become very valuable to me." - Wally M.

Thanks to Wally M. for the kind words. I'm glad that the CDx3 Notification Service is helpful to you and many other subscribers like you.

And welcome to all of the new CDx3 Newsletter subscribers who signed up during August. This is your first issue of the CDx3 Newsletter, a free monthly newsletter devoted to the interests of CDx3 Preferred Stock investors.

I have a brand new Free Special Offer for you this month. I've been asked to make this offer many times but never have. It's a stunning offer so be sure to check it out under the Free Special Offer heading below.

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:


You're going to find the Last Month's CDx3 Investor Results article below very, very interesting. All investors want to find the highest return with the lowest risk; but how do you do that without having to spend days or weeks staring at arcane charts on your computer screen? Wonder no longer because I show you an easy, two-step method that allows you to identify, for a given risk level, the highest quality preferred stocks that "The Market" has underpriced.

Preferred Stock Investing is available in eBook (PDF) format and for half of the paperback's list price. The Special Announcement article provides a link to the book's publisher, BookLocker, who is offering Preferred Stock Investing in eBook format for $9.95 - no shipping fees and no sales tax. Download it now.

The CDx3 Company Spotlight this month highlights the largest public real estate developer in the United States, Simon Property Group - issuer of CDx3 Preferred Stock. Simon builds and operates shopping centers all over the world. If retail consumption is slowing down, you'd never know it by looking at the data this article presents on Simon's 2007 and 2008/Q1 financial results. The center's that Simon is opening left and right are nearly 100% occupied. Are you shopping at a Simon-owned shopping center?

In this month's CDx3 Question Of The Month article I take off my killer bee suit and go after a news media that would like us to believe that our banks are failing in droves. The U.S. banks that have failed this year are listed and I'll be surprised if you ever heard of any of them (with one possible exception, thanks to a certain U.S. Senator according to the Office of Thrift Supervision).

Subscribers to the CDx3 Notification Service receive their own monthly newsletter (CDx3 Research Notes) and this month's issue focuses on our new research showing that the "buyer's market" for CDx3 Preferred Stocks that we have been enjoying since June 2007 may be weakening. Can the three key indicators all be wrong or should preferred stock investors re-evaluate their end-of-year preferred stock purchasing plans? I'll report back to you in next month's CDx3 Newsletter

Identifying Underpriced CDx3 Preferred Stocks

The Market Is Not Always Right And I Can Prove It

You don't have to watch the market every day in order to identify potential bargains for CDx3 Preferred Stocks*. There's a simple two-step analysis that makes underpriced CDx3 Preferred Stocks jump right off the page, and I'm going to show you how to do it.

The foundation for this analysis is that all investors are looking for the same thing - the highest return for the lowest risk.

Usually, "The Market" (you and me) sets the market price of a CDx3 Preferred Stock in accordance with its perceived risk. But not always; some times The Market prices a CDx3 Preferred Stock too low, creating a buying opportunity for you. And that's where this analysis comes in.

The first step is to identify CDx3 Preferred Stocks -  which are, by definition, the highest quality preferred stocks available - where The Market appears to have misjudged the investment risk.

The Market assesses risk based on (1) knowledge of the facts and (2) emotions, such as fear or elation. Rating agencies, such as Moody's Investors Service, use a variety of statistical models to assess risk based on knowledge of the facts that leave out the emotion.

By comparing how The Market assesses the risk of a CDx3 Preferred Stock versus Moody's, one can quickly see inconsistencies. These inconsistencies represent opportunities for CDx3 Investors.

The "yield" of a CDx3 Preferred Stock investment at any point in time is a reflection of the risk of that investment as assessed by The Market. The Moody's rating of that same CDx3 Preferred Stock is the result of Moody's risk assessment.

Example: If you look at two CDx3 Preferred Stocks that have the same Moody's rating, you would expect that The Market has priced them such that they have the same yield (since the risk is the same, as assessed by Moody's). PSA-L (6.75%) and PSA-M (6.625%) from Public Storage both have an investment grade Moody's rating of Baa1. At this writing, the market price of PSA-L is $21.35 while that of PSA-M is $20.72. These market prices produce a "yield" of 7.9% for both PSA-L and PSA-M, as we would expect - same risk, same yield. The Market and Moody's agree.

Here is a chart that subscribers to the CDx3 Notification Service recently received that compares The Market's assessment of risk (yield) for select CDx3 Preferred Stocks to that of Moody's.

Each diamond on this chart represents a CDx3 Preferred Stock. The ten Moody's investment grade subcategories run across the bottom. CDx3 Preferred Stocks with the same risk rating should produce the same yield. Where The Market and Moody's agree on investment risk, the diamonds that you see above a given Moody's rating should be grouped together (such as those that Moody's has rated Aa3).

And notice that they are - expect for those rated A3 and Baa1 by Moody's. Note The Market's confusion at the Baa1 risk level; The Market has no idea how to assess the investment risk related to these CDx3 Preferred Stocks. Yields vary from 8% to 17%.

Now look at the A3 risk level. Moody's is saying that there are three CDx3 Preferred Stocks at this risk level (labeled A, B and C on the above chart). The Market does not agree. The Market is saying that CDx3 Preferred Stocks A and B have much more investment risk than CDx3 Preferred Stock C (the yield of A and B is higher because The Market has set their market prices lower than C even though Moody's is saying they all have the same risk level). 

This analysis has told us that either The Market or Moody's (or both) has blown the call at the A3 risk level. Either C is overpriced (producing a lower yield) or A and B are underpriced for the level of investment risk that Moody's is saying these CDx3 Preferred Stocks represent.

So which is it? That brings us to the second step where we take a closer look at the market prices of these three CDx3 Preferred Stocks.

The current "going dividend rate" for CDx3 Preferred Stocks is 8.729%. Since new CDx3 Preferred Stocks sell for a market price of about $25, we can draw a “constant yield line” on this chart showing a constant yield of 8.729%; just as a CDx3 Preferred Stock that pays 8.729% and sells for $25.00 yields 8.729%, so does a CDx3 Preferred Stock that pays a 6.5% dividend selling for a market price of $18.62.

CDx3 Preferred Stocks that occur on, or close to, the constant yield line can be said to be properly priced by The Market. The Market has overpriced those seen to the right of the line and underpriced those to the left of the line, given the risk as assessed by Moody's.

Remember, CDx3 Preferred Stocks A, B and C all carry the same investment risk (A3, according to Moody's).

Notice how CDx3 Preferred Stock C falls right on the constant yield line; this CDx3 Preferred Stock is being properly priced by The Market.

But look at CDx3 Preferred Stocks A and B. Given the level of investment risk (A3), these two CDx3 Preferred Stocks are currently being underpriced by The Market and, therefore, may represent outstanding purchase opportunities for CDx3 Investors.

So, one of the tools that CDx3 Investors can use to find real bargains is to (1) identify CDx3 Preferred Stocks that The Market appears to have mispriced at a given level of investment risk, then (2) see which of those are to the left of the constant yield line.

The result is the identification of CDx3 Preferred Stocks that The Market has underpriced, given the level of investment risk.

You can do this analysis on your own by following the steps I've laid out for you, or let us do it for you by subscribing to the CDx3 Notification Service. Subscribers, of course, also get to know the trading symbols of these CDx3 Preferred Stocks.

* CDx3 Preferred Stock: 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.

To be considered a "CDx3 Preferred Stock," regular preferred stocks must:

1.  be rated "investment grade" by Moodys;

2. be issued by a company with a perfect record of never having suspended a dividend on a preferred stock; and

3.  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.

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 Is Available In eBook (PDF) Format

At $9.95 eBook is $10 Cheaper Than Paperback, Download Immediately To Your Desktop

If you don't mind reading on your computer screen you can pick up a copy of Preferred Stock Investing for less than $10.

The industry format standard for electronic books (eBooks) is called Portable Document Format (PDF), invented by Adobe a few decades ago to solve inconsistencies between documents being read on Mac and Windows computers.

Since then, Adobe's PDF reading software (called Acrobat Reader) has come standard on almost every computer - Mac or Windows. So documents in PDF format can be read on either type of system.

If your computer somehow missed out and does not have Acrobat Reader, no problem. It's free and you can download a copy to your computer by clicking here.

BookLocker.com, Preferred Stock Investing's publisher, not only offers the book in paperback but also offers it in electronic, downloadable eBook (PDF) format.

 And the good news is that they only charge $9.95 (as opposed to the $19.95 paperback list price).

Plus, since you download the Preferred Stock Investing eBook to your computer instantly, there are no shipping charges.

And get this- since eBooks are in digital form, rather than being "tangible goods," there is no sales tax either.

$9.95 - that's all you pay.

To purchase Preferred Stock Investing in eBook format from BookLocker, click here.

If you want to print out a copy, you can do so on your own printer.


Who Are These Companies That Issue CDx3 Preferred Stocks?

Simon Property Group, Inc. (NYSE: SPG)

Simon Property Group, issuer of CDx3 Preferred Stock, is an S&P 500 company and the largest public real estate company in the United States.

Headquartered in Indianapolis and weighing in at over $22 billion,  Simon develops and operates retail shopping malls, Premium Outlet centers, The Mills, community/lifestyle centers and international properties.

According to Simon's web site, it currently owns or has an interest in 383 properties throughout North America, Europe and Asia with 261 million leasable square feet of space.

In 2007, Simon's opened eight new projects - three in the U.S., three in Europe and two in Asia - all of which are nearly 100% leased.

During the second quarter of 2008, Simon has ramped up even more. Revenues grew 7.8% for the quarter and 6.5% year-to-date. The company opened Pier Park in Panama Beach, Florida (900,000 square feet), Hamilton Town Center in Noblesville, Indiana (950,000 square feet) and Changshu IN CITY Plaza in China (466,000 square feet).

Other projects to be operating soon include Northshore Mall in Boston, Orlando Premium Outlets in Orlando, Ross Park Mall in Pittsburg, Tacoma Mall in Tacoma and University Park Mall in South Bend.

If the economic slow down has people staying out of shopping malls, you'd never know it by looking at Simon's financial statements.

Particularly successful has been the Simon Gift Card program that allows people to purchase a Simon Gift Card off of Simon's web site and use it at any store in any of their shopping malls. This program alone brought in over $500,000 to Simon last year.

With almost 400 properties, there is likely to be a Simon mall near you. Are you shopping at a shopping center owned by an issuer of CDx3 Preferred Stock? Click here to find out (cool interface).

I keep reading about bank failures. Are banks that issue CDx3 Preferred Stock failing? - Carmen C.

There have been a grand total of 10 bank failures this year and the CDx3 Selection Criteria (Preferred Stock Investing, Chapter 1) filtered every one of them out; none of them currently, or in the past, issue preferred stocks that qualify as CDx3 Preferred Stocks.

There are 8,451 FDIC-insured banks in the United States (source: FDIC). In my view, that's about 8,000 too many.

Rather than have a more manageable number of strong banks, we ended up with a massive number of tiny banks many of which struggle from one month to the next to meet regulatory requirements. And an equally massive infrastructure for managing and overseeing them.

Many of our banks are local or community banks that were born some decades ago based on a local need, such as a new factory going in with new workers who were going to be needing new homes and shopping centers. But once the local need went away, many of these local banks have been clinging on ever since, thinking of new and creative ways to stay afloat year after year.

During the current credit crisis, the news media has had us all believing that banks are failing left and right. Keep in mind that this is the same news media that told us to be concerned about the dangers of florescent light fixtures if their electricity came from nuclear power plants (1970's), the human-chomping perils of approaching killer bees (1980's) and sneak-up-on-you-while-you-are-sleeping brain tumors that we would all get from using cellular telephones (1990's).

And when I say that there have been 10 bank failures (out of nearly 8,500) this year, that includes IndyMac. IndyMac was taken over by the Office Of Thrift Supervision (OTS) earlier this summer after a U.S. Senator wrote a (public) letter to the OTS saying "please do what you can to help out IndyMac."  

This letter, according to the OTS's after-action audit report, caused IndyMac to fail since depositors made a stunning $1.3 billion in withdrawals essentially all at once following the publishing of the good Senator's letter to the OTS.

Here are the other nine U.S. banks that have failed this year (see how many you have heard of):

Integrity Bank of Alpharetta, Georgia (August);

Columbian Bank and Trust, Topeka, Kansas (August);

First Priority Bank of Bradenton, Florida (August);

First National Bank of Reno, Nevada (July);

First Heritage Bank of Newport Beach, Calif. (July);

First Integrity Bank of Staples, Minnesota (May);

ANB Financial of Bentonville, Arkansas (May);

Hume Bank in Hume, Missouri (March); and

Douglass National Bank in Kansas City, Missouri (January).

As serious as a bank failure is, the fact is that most frequently these local banks, and the accounts within them, are simply transferred to another willing financial institution. Integrity Bank, for example, closed on Friday, August 29 and was reopened September 2, the very next banking day, as part of Regions Bank (who is an issuer of CDx3 Preferred Stock). "Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance" said the FDIC.

This credit crisis is not over yet, and there will probably be more bank failures this year and maybe even beyond.  But the next time you read a news article that implies that you should be afraid of massive failures of U.S. financial institutions, first check to see if there are killer bees swarming around your back door.

Thanks to Carmen C. for the great question. You will receive a free copy of the CDx3 Special Report "Dividend Accounting." Click to submit your question.

Free Copy Of Preferred Stock Investing For September Subscribers

September Subscribers To The CDx3 Notification Service Will Receive Free Signed Paperback

The CDx3 Notification Service is, by far, the most comprehensive information resource for the highest quality preferred stocks anywhere.

Here's what allows me to say that; as a subscriber, for only $180 for an 18 month subscription you'll receive:


An automatic email whenever a new CDx3 Preferred Stock is introduced; we do the screening for you (see sample);

A monthly calendar that shows the dates that, research shows, are the best dates to consider selling CDx3 Preferred Stocks that you may own for a capital gain; just check the market price on those dates to see if selling is the right move for you;

Your own monthly newsletter CDx3 Research Notes that allows you to "look over my shoulder" as my preferred stock research is ongoing;

Access to the exclusive subscriber's web site that provides an enormous amount of information on CDx3 Preferred Stocks (take tour);

A massive catalog of CDx3 Preferred Stocks complete with CDx3 Spec Sheets on each one (see sample).


You'll know all about each CDx3 Preferred Stock such as dividend payment dates and amounts and even, as research shows, the market price to look for when you are considering selling downstream (called the Target Sell Price).

And much, much more.  To read more about the CDx3 Notification Service, click here.


Now here's the best part:  For the first time ever, those who subscribe to the CDx3 Notification Service (offer limited to new individual subscribers only) during September 2008 will receive a free copy of Preferred Stock Investing.

Preferred Stock Investing, published last year, explains the CDx3 Income Engine and teaches you how to screen, buy and sell the highest quality preferred stocks.  And your copy will be the signed paperback edition - absolutely free.

But that's not all.  When you subscribe to the CDx3 Notification Service you will also receive the CDx3 Special Report "Trading Over-The-Counter" absolutely free as well (see sample).

To take advantage of this limited time offer, click here to subscribe to the CDx3 Notification Service and provide your shipping address with your payment information. You will receive your free copy of Preferred Stock Investing within 3-7 postal days (US Postal Service shipping only).


Three Key Indicators Say Higher Market Prices Are On The Way

Could They All Be Wrong?

Since June 2007 the marketplace for CDx3 Preferred Stocks has been a "buyer's market;" that is, a market where you can purchase the highest quality preferred stocks - CDx3 Preferred Stocks - paying above-average dividend rates (8.5%+) for less than $22 per share. Led by cash starved banks, this buyer's market has pushed yields on CDx3 Preferred Stocks over 10% in many cases. High dividend rates available at bargain basement prices - a buyer's market.

During August, however, subscriber's to the CDx3 Notification Service received a report from me that identified three key indicators that were all indicating the same thing - that higher market prices of CDx3 Preferred Stocks may be on the way.

Knowing this (and way in advance) is really important for preferred stock investors since the direction of the marketplace can influence the timing of buying and selling actions.  If, for example, your investment plan calls for buying into one of these 8.5%'ers around year end, the indicators that subscribers are now looking at are starting to suggest that you may want to consider making that purchase sooner rather than later.

Could these key indicators all be wrong simultaneously or should CDx3 Investors start re-evaluating their plans for year end purchases? - I'll report back to you in next month's CDx3 Newsletter.

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 monthly CDx3 Newsletters interesting, and will consider learning more by purchasing my book, Preferred Stock Investing or by subscribing to the CDx3 Notification Service.

Please take a look at www.PreferredStockInvesting.com.  And don't forget about my FREE SPECIAL OFFER.

Know someone who might be interested in simple, low-risk investing for non-investment experts?  Have them send an email message to CDx3Newsletter@PreferredStockInvesting.com and they will automatically begin receiving this monthly CDx3 Newsletter next month (plus a CDx3 Special Report) - all FREE. 

Many Happy Returns,

Doug K. Le Du

Copyright (c) 2008 by Doug K. Le Du

CD Times 3, CDx3, CDx3 Income Engine, CDx3 Investor, CDx3 Portfolio, CDx3 Preferred Stock, CDx3 Perfect Market Index, CDx3 Bargain Table are trademarks of Doug K. Le Du.  All rights reserved.

Company logos are trademarks of the indicated companies. Service Marks (SM) are service marks of the indicated companies.

DISCLAIMER: The content of this CDx3 Newsletter is to be regarded as educational, rather than advisory.  There can always be exceptions to trends and/or generalizations that may be discussed herein.  Consider your financial resources, goals and risk tolerance before investing. You, and not Doug K. Le Du, are solely responsible for your own investment decisions.