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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
To be sure
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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.
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
The foundation for
this analysis is that all investors are looking
for the same thing - the highest return for 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.
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
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
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
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.
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.
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
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
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
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 consistently applied selection criteria
takes the emotion out of your investing
decisions and leaves you with the highest
quality preferred stocks - "CDx3 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
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
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.
- that's all you
purchase Preferred Stock Investing in eBook
format from BookLocker,
you want to print out a copy, you can do so on your own
These Companies That Issue CDx3 Preferred
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
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.
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%
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
economic slow down has people
staying out of shopping malls, you'd
never know it by looking at Simon's
Particularly successful has been the
Simon Gift Card program that allows
people to purchase a Simon Gift Card
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.
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
Click here to find out (cool
I keep reading about bank
failures. Are banks that issue
CDx3 Preferred Stock failing? -
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
There are 8,451 FDIC-insured
banks in the United States
(source: FDIC). In my
view, that's about 8,000 too
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
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.
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)
brain tumors that we would all
get from using cellular
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,
Columbian Bank and Trust,
Topeka, Kansas (August);
First Priority Bank of
Bradenton, Florida (August);
First National Bank of Reno,
First Heritage Bank of Newport
Beach, Calif. (July);
First Integrity Bank of Staples,
ANB Financial of Bentonville,
Hume Bank in Hume, Missouri
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
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.
Of Preferred Stock Investing For September
September Subscribers To The CDx3
Notification Service Will Receive Free Signed
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
An automatic email whenever a new
CDx3 Preferred Stock is introduced; we
do the screening for you (see
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
to the exclusive subscriber's web
site that provides an enormous
amount of information on CDx3 Preferred
catalog of CDx3 Preferred Stocks
complete with CDx3 Spec Sheets on each
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
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
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
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