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"I am a new
subscriber to the CDx3 Notification Service and must say that
your service is the best organized and documented of any
investor service I have seen to date."
- Jim S.
Thanks to Jim S. for the kind
words and welcome to all of the
new CDx3 Newsletter subscribers who signed up during
June. 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:
CDx3NotificationService@us.emaildirect.com.
Here's a summary of the CDx3 Income Engine method
for investing in preferred stocks- select only the
highest quality preferred stocks, buy them when the
research says they tend to be low in price, hold
them until the market price tends to reach a high
point downstream and enjoy way above average
dividend income in the mean time.
In a nut shell, that's it.
The hard part, of course, is knowing the key
selection criteria and understanding when and why
the best time to buy and sell will tend to present
itself. That has been the focus of my
preferred stock research since 2002 and the results
are documented throughout Preferred Stock
Investing. Chapter 9 of the book presents
the investment results for every CDx3 Preferred
Stock since January 2001.
Looking for the highest quality preferred stocks
that are not issued by banks?
The Last
Month's CDx3 Investor Results article below explains how,
out of about 1,000 preferred stocks trading on
today's stock market, you can narrow the field
to the eleven star candidates.
These eleven non-bank CDx3 Preferred Stocks are
producing an average yield of 8.4% and are
available for about $21.50 per share right now.
And the best part is that subscribers to the
CDx3 Notification Service
receive this list every month - and we do the
work for them.
Get 'em while they're hot!
As described in this month's Special
Announcement article, Amazon has continued the Preferred
Stock Investing promotion that they started last month when
Borders split off. Amazon is offering Preferred Stock
Investing at a very special price and it also qualifies for
Amazon's free shipping program.
CDx3 Preferred Stocks are offered
by all sorts of great American businesses. Last month I
provided you with an update on apartment developer and operator
BRE. This month's CDx3 Company Spotlight
article introduces you to an example from the insurance industry
- W.R. Berkley - named as 2007's Best Managed Insurance Company
by Forbes magazine.
Investors are always wondering
which companies they should stay away from. This month's CDx3 Question Of The
Month article explores the apprehension that many investors
have been experiencing during this credit crisis, an example of
confusion created by the financial press and some help that
subscribers to the
CDx3 Notification Service
receive by the "CDx3 Do Not Buy List" and the 48 companies that
are named there.
For our new readers, there is a free calculator available
to you that allows you to correctly calculate the effective annual return of
preferred stock investments. The Free Special Offer
article below provides you with a download link. Keep an eye on this monthly CDx3 Newsletter
for announcements of future promotions of CDx3 products and
services.
At their June 24-25 meeting, the
Federal Reserve Board made it clear that their focus is moving
off of saving banks from this credit crisis back to inflation
fighting. Does that mean that the Fed now believes that
our country's banks can start handling increases in interest
rates? That's what the Fed will have to do to hold off
inflation. What will it mean for preferred stock investors
when the Fed starts raising interest rates again? I will
report back to you in next month's CDx3 Newsletter.
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CDx3 Bargain
Table Identifies 11 Non-Bank Opportunities
Average Yield For Non-Bank CDx3
Preferred Stocks Hits 8.4%
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Tired of reading
about the credit crisis yet? Investors looking
for an alternative to banks during this credit
crisis have found substantial diversification
opportunities with CDx3 Preferred Stocks*.
This
month, CDx3 Investors are considering eleven non-bank
CDx3 Preferred Stocks offering an average yield
of 8.4% (as of June 27, 2008)from six non-bank
businesses.
Why these eleven?
At any point in time, there are between 1,000
and 2,000 preferred stocks trading on the stock
market. Right now, there are about 1,000.
Of these, 25 reached a point in late June where,
research shows, their market price tends to be
relatively low, creating an opportunity for
buyers. Of these 25, eleven are non-bank issues.
So how is it that
CDx3 Investors are able to identify, out of
1,000 preferred stocks, the magic eleven that
are ripe for the picking right now?
Subscribers to the
CDx3 Notification Service
have it easy since they receive an email message
each month that identifies such candidates for
them on the "CDx3 Bargain Table" (what's
this?).
But for the do-it-yourselfers, the April 2008
update to Preferred Stock Investing shows
readers how its done. If you already have a copy
of Preferred Stock Investing, follow the
instructions on page 124 to download the update
- it's free to you. Or you can pick up your own
copy of Preferred Stock Investing
here.
Here's a summary of how
it works: First, be sure that you are
dealing with preferred stocks that meet the ten
CDx3 Selection Criteria (Preferred Stock
Investing, Chapter 1). This step alone
eliminates about 90% of the preferred stocks
trading on the market. We're only interested in
the highest quality preferred stocks.
Second, the Three
Rules of Market Price Predictability from
Chapter 5 of Preferred Stock Investing
tell us that, during this credit crisis, we
should only consider CDx3 Preferred Stocks
between two and eight quarters old. Any
younger and their market price may still be
climbing which is bad for buyers; any older than
that and the market price tends to be distorted
by what is called the "call date" (related
article).
So now we have
selected the highest quality preferred stocks
(CDx3 Preferred Stocks*) that are at a point
when their market price should no longer be
climbing or be distorted by the call date. Now
we're down to about fifty preferred stocks. But
we're not done yet. As buyers, we do not
want to pay any more than we have to. We
want to make our purchases when the market price
of a CDx3 Preferred Stock tends to be at a low
point so that we can get a real bargain.
And here is the magic
bullet: So when does the market price
of a CDx3 Preferred Stock tend to be at a low
point? This is where the Rule of Buyer/Seller
Behavior (Preferred Stock Investing, page
67) comes in. The market price of a CDx3
Preferred Stock tends to be the lowest during
the early days of each dividend quarter. So,
each month, we just want to consider CDx3
Preferred Stocks that are at the beginning of a
new dividend quarter. |
For July 2008, the
CDx3 Bargain Table received by subscribers to
the
CDx3 Notification Service
shows the resulting 25 CDx3 Preferred Stocks.
These are preferred stocks that meet all ten of
the CDx3 Selection Criteria, are of an age when
they tend to be favorable to buyers and are at
the beginning of their respective dividend
quarters when the market price tends to be at a
low point - time to consider buying.
11 From Non-Banks:
Of the resulting 25 CDx3 Preferred Stocks listed
on this month's CDx3 Bargain Table, fourteen are
issued by banks while eleven are issued by
non-banks.
As illustrated
below, this month's eleven non-bank CDx3
Preferred Stock candidates are from five non-bank
industry segments -
self storage, shipping centers, industrial
buildings, retail shopping centers and office buildings.
You can sure tell
who's hungriest for cash by looking at the above
chart. Banks are doing everything short of
opening lemonade stands to attract cash.
The eleven non-bank CDx3
Preferred Stocks on this month's CDx3 Bargain
Table offer an average yield of 8.4% while those
issued by banks are offering 10.0% (as of June
27, 2008).
CDx3 Investors
looking for investment grade preferred stocks
that are issued by companies that have a perfect
record of never having suspended dividend
payments on a preferred stock, but are nervous
about banks, should consider subscribing to the
CDx3 Notification Service.
As a subscriber, you will receive the CDx3
Bargain Table every month - we do the work
for you.
*CDx3
Preferred Stocks:
Regular preferred stocks have to meet each of
the ten CDx3 Selection Criteria (Preferred
Stock Investing, Chapter 1) in order to
qualify as "CDx3 Preferred Stocks." Here
are just three of the ten CDx3 Selection
Criteria that regular preferred stocks have to
meet in order to be considered CDx3 Preferred
Stocks; CDx3 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.
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Amazon Continues Promotion Pricing For Preferred
Stock Investing
$17.96 Promotion Price Continued
From June
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Last month I announced
that Borders had finally developed their own web site
and had ended the somewhat peculiar relationship that
they have had with Amazon.
Until a few weeks ago,
Borders had outsourced their online presence to Amazon
so shoppers who went to borders.com were actually
redirected to amazon.com.
When Borders split off a
few weeks ago, their new web site at
www.borders.com
offered Preferred Stock Investing among the new
site's stock investing book offerings. |
Amazon promptly
launched a promotion for Preferred Stock Investing,
offering the book for the special price of $17.96.
Amazon can end this
special promotion at any time, so if you've been
thinking about picking up a copy of Preferred Stock
Investing at a great price, now is the time.
Preferred Stock
Investing includes all of the resources that you
need to screen, buy and sell the highest quality
preferred stocks - CDx3 Preferred Stocks.
The book also lists all of
the CDx3 Preferred Stocks issued since January 2001.
Free downloadable updates are also included for book
readers including the most recent update that provides
the newest research regarding how to take advantage of
the current credit crisis using CDx3 Preferred Stocks.
To see Preferred Stock
Investing at various retailers, including Amazon,
click here. |
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Who Are
These Companies That Issue CDx3 Preferred
Stocks?
W. R. Berkley
Corporation (NYSE: WRB)
W.R. Berkley is a $4 billion
casualty insurance holding
company founded in 1967 and an
issuer of CDx3 Preferred Stock.
W.R. Berkley, headquartered in
Greenwich Connecticut, was named
Best Managed Insurance Company
by Forbes magazine in 2007.
W.R. Berkley, recently changing
its trading symbol from BER to
WRB, provides various types of
insurance, primarily in the
United States, including
commercial auto, professional
liability, workers'
compensation, property
liability, medical malpractice
and many others.
W.R. Berkley's CDx3 Preferred
Stock was issued on July 21,
2005, pays an annual dividend of
6.750% and has a current Moody's
investment grade rating of Baa3.
With a market price (June 27,
2008) of $21.95, the current
yield on this CDx3 Preferred
Stock is 7.69%.
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By
the end of 2007, W.R. Berkley
completed its fifth consecutive
year of achieving a return to
its investors in excess of 20%
after tax (source: W.R.
Berkley 2007 Annual Report).
These results prompted W.R.
Berkley to announce a 20% increase
in its common stock dividend on May 21, 2008.
On
June 3, 2008 W.R. Berkley
announced the formation of a new
company called FinSecure LLC.
FinSecure "will offer integrated
property and liability insurance
solutions for financial
institutions and financial
services firms" the company
says.
Seeing opportunity where others
dare not look is often the
secret to success. Time
will tell if W.R. Berkley's
expansion into the provision of
liability insurance to financial
institutions during this credit
crisis is well timed or not. But
there is no arguing that the
demand for such insurance is
there.
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How do I know which companies to
stay away from? -
Walter T.
Conflicting information often
leaves the individual investor
in a quandary. Especially during
this credit crisis, information
in the financial press would
have us believe that this
country's banks are as stable as
a Hollywood marriage when, in fact, the bank
failure rate is no higher this
year than it has historically
been (two small regional banks
have failed this year, out of
about 8,500 U.S. banks).
The conflicting information
available to individual
investors regarding Citigroup,
the country's largest bank by
assets, is a great example.
At the same time the financial
press is screaming 'look out
below', we also read the
following:
"...Citi shares are up 35% from
the low reached in March. And
the company is having no problem
raising the capital needed to
shore up the balance sheet. On
May 30, Citi raised $4.5 billion
in equity, 50% more than
originally planned, due to high
demand. In the last five months,
Citi has raised $41.5 billion.
This is big money we are talking
about. Less than 1% of
U.S.-listed companies have a
market capitalization greater
than $41.5 billion. The
confidence and demand for
Citigroup shares is quite
comforting." - Richard Young,
June 2008 Intelligence Report
And even though Moody's
Investors Service downgraded
Citi's preferred stock last
December, the resulting rating
was A1 - close to the top
of Moody's overall rating scale
and right in the middle of its
investment grade categories. Citi's four A1-rated CDx3
Preferred Stocks are currently
providing an average annual yield of
about 8.5%.
While publicly traded
companies report an enormous
amount of financial and
managerial information to the
Securities and Exchange Commission
(SEC), very few individual
investors have the technical
training (or patience) needed to
interpret the data. Long ago,
companies were formed and
staffed with analysts who do
have such training; these
companies are, of course, the
"rating agencies" such as
Moody's Investors Service,
Standard and Poor's, Fitch and
several others.
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The rating agencies digest the
public, and not so public,
information regarding the
activities of publicly traded
companies. This
information is combined with the
analyst's knowledge of the
specific industry within which
the company competes and a
rating is assessed that,
theoretically, represents the
creditworthiness of the company's
common and preferred stock.
Investors the world over then
use these ratings as a proxy for
investment risk. For better or
worse, these ratings are the
best assessment available to
individual investors. The
extent to which you, as an
individual investor, have
confidence in the ability of
these rating agencies to
accurately reflect investment
risk in their ratings is an
individual assessment that only
you can make. But ratings are
generally consistent across the
multiple rating agencies for a
given preferred stock and the
company that issued it.
CDx3 Selection Criteria #5 (Preferred
Stock Investing, page 12)
requires that the issuing
company of a CDx3 Preferred
Stock have a perfect record of
never having suspended dividends
on a preferred stock. The
CDx3 Do Not Buy List provides
CDx3 Investors with a list of
companies that have violated
CDx3 Selection Criteria #5 by,
at some point in the past,
suspending dividends on a
preferred stock.
Subscribers to the
CDx3 Notification Service can access
the CDx3 Do Not Buy List from
the exclusive subscriber's web
site.
There are currently 48 companies
on the CDx3 Do Not Buy List.
Some are household names (Delta
Airlines) while others are more
obscure (Day International
Group).
Commonly known or not, CDx3
Investors know to avoid the
preferred stocks issued by
companies on the CDx3 Do Not Buy
List.
Thanks to Walter for the great
question. You will receive a
free copy of the CDx3 Special
Report "Dividend Accounting."
Click to submit your question.
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Free CDx3
Special Report Also Has Free Companion Excel
Calculator
See How To Correctly Calculate Your
Effective Annual Return - FREE
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The Preferred Stock Investing Reader's Forum provides a
free special
Excel spreadsheet calculator that you can use to
calculate the effective annual return (EAR) of your
preferred stock investments. The calculator allows
you to just plug in a few parameters from your preferred
stock (such as purchase date, purchase price, sell
price, etc.) and see what your effective annual return
really is, or will be if you sell.
 When
you initially download the EAR calculator, it is set up
using the Series A CDx3 Preferred Stock from Dominion
Re-sources (D-A) as an example. This is the same CDx3
Preferred Stock that is used as an example through-out the CDx3
Special Report titled "Calculating Your Rate Of
Return."
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As a
recipient of this monthly CDx3 Newsletter,
you are entitled to a FREE copy of "Calculating Your
Rate Of Return." So, get
them both - FREE - and use them together to
learn how to correctly calculate your rate
of return on this type of investment. To download your free copy
of Calculating Your Rate Of Return, just click on
the following email address:
CDx3Newsletter@PreferredStockInvesting.com.
No need to type anything in the body of the
message, just click the Send button.
You will receive an auto-reply email message
with download instructions for your free
CDx3 Special Report.
To see the entire library of useful and
educational CDx3 Special Reports, including
three sample pages from each one,
click here.
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Federal Reserve Contemplates Raising Rates
Are Banks Healthy Enough To Take The Hit?
One of the results of my preferred stock research
was the identification of three primary forces
within the U.S. economy that move the market price
of certain preferred stocks in a fairly predictable
manner. The direction of interest rates, for
example, is closely watched. The Federal Reserve
Board, at their June 24-25 meeting, left interest
rates alone, but made it clear that they are
prepared to start raising rates again if inflation
starts to set in. The downside, of course, is
that making money more expensive would be bad news
for banks during this credit crisis.
If the Fed begins sending signals that they are
favoring raising rates, will such an announcement
also mean that the Fed believes that banks are on
the mend? Remember, the last of the 2.5
million subprime adjustable mortgage loans that
triggered this credit crisis flowed through our
financial system this month (source: FDIC).
If the Fed signals that banks are, in fact, on the
mend we should see the dividend rates being offered
on their new preferred stocks start to come down off
of their current high rate of 8.875% (a rate closer
to 7% is more common).
And that begs the next question: if you were to
purchase one of today's 8.875% CDx3 Preferred
Stocks, now selling for about $22 per share, what do
you think is going to happen to the market price of
your 8.875%-er as the "going rate" falls back to 7%
in the future? The last time that happened in
2002, CDx3 Investors were selling their 8+%-ers for
over $27 per share (source: Preferred Stock
Investing, page 128).
In anticipation of lower rates (and the higher
market prices that tend to come with them), CDx3
Investors are scooping up today's high dividend
payers and will hold them until rates come back down
and prices go back up, setting themselves up for a
nice capital gain downstream while enjoying above
average dividend income in the mean time - the heart
of the CDx3 Income Engine.
I will report any signs that the current "buyer's
market" is weakening back to you in next month's
CDx3 Newsletter.
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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.
Then they can make up their own mind.
Many Happy Returns,
Doug K. Le Du
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