is terrific. It not only answers my questions, but also provides
an action path to any potential investor wanting to go the route
of Preferred Stocks investing."
Welcome to all of the
new CDx3 Newsletter readers who signed up during October. 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:
I have extended the availability
of the "Quick Guide To Preferred Stock Investing During A
Global Credit Crisis." The feedback from those of
you who have already read this 4-page Quick Guide has been huge
and very positive so I wanted to continue to make this important
document available to readers.
"Quick Guide To
Preferred Stock Investing During A Global Credit Crisis"
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 report. 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.
On October 7, 2008 the U.S.
Treasury announced that it was going to be investing $250
billion in custom-made preferred stocks issued by "healthy
institutions" - a select few banks that could meet the
Treasury's stringent criteria. The regulator is about to invest
billions in the very banks that they regulate. The Treasury is
no different from any other investor - they want to be sure that
they get their billions back. The banks that can make it
into this Treasury program are now essentially protected for the
next several years. In the Last
Month's CDx3 Investor Results article I will identify The
Protect Six initial banks that are issuers of CDx3 Preferred
Just after last month's
group subscriptions to the CDx3 Notification Service, I had
the pleasure of speaking at the monthly meeting of the Are We
Rich Yet (AWRY) investment group. The
Special Announcement article summarizes our meeting and
explains how just two people can form a group when purchasing a
group subscription to the CDx3 Notification Service (what's
The CDx3 Company Spotlight
article describes The Protected Six initial banks that were the
first to be admitted to the U.S. Treasury's $250 billion
preferred stock purchase program - all but one of which were
founded in the 1800's. Remarkably, and as required by the CDx3
Selection Criteria (Preferred Stock Investing, Chapter 1)
The Protected Six initial banks have never missed a preferred
stock dividend payment.
This month's CDx3
Question Of The Month article describes how well the CDx3
Income Engine has performed for CDx3 Investors during this
15-month credit crisis. The CDx3 Selection Criteria has filtered
out every one of the failed banks - IndyMac, Lehman, Freddie,
Fannie, Washington Mutual, Bear Stearns, New Century - and CDx3
Investors have not so much as missed a single dividend payment -
ever. How many investment methods can make that claim?
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 newly 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).
The market prices of the CDx3
Preferred Stocks issued by The Protected Six initial banks
soared as soon as the U.S. Treasury identified them on October
7, with some jumping up over 20%. Banks that the Treasury is
going to be investing in through this program are essentially
protected for the next several years. The second wave of banks
that the Treasury is going let inside their castle is going to
be announced during November. I will report back to you in next
month's issue of the CDx3 Newsletter.
Invests In Six CDx3 "Healthy Institutions" - The Protected Six
First Group Provides 9.6% Dividend Yield While Second
Group Readies For November Announcement
Out of 8,500
banks, the U.S. Treasury has essentially
protected nine "healthy institutions" for the
next several years, six of which are issuers of
CDx3 Preferred Stocks*. For those looking to
ride the recovery wave in banks, let me explain
how these "Protected Six" initial banks may be
just what you are looking for.
The Protected Six
initial banks are:
1. Bank of America
3. JP Morgan Chase
4. Merrill Lynch
(soon to be part of BofA)
5. Morgan Stanley
6. Wells Fargo
program description (see
describes the qualifying banks this way:
institutions have voluntarily agreed to
participate on the same terms that will be
available to small and medium-sized banks and
thrifts across the nation."
A second group of
qualifying banks is going to be announced later
Be careful here.
Only a small percentage of the preferred stocks
issued by these banks meet the ten CDx3
Selection Criteria*. Specifically, The Protected
Six initial banks have a total of twelve CDx3
Preferred Stocks* that are currently trading.
Prices Going Up:
This chart shows you the percent increase in the
market price of these twelve CDx3 Preferred
Stocks once the first wave of banks was
identified by the Treasury on October 7, 2008.
Between October 6,
the day before the Treasury program was
announced, and October 31, 2008 the market
prices for these twelve CDx3 Preferred Stocks
jumped an average of 10.26%.
average market price increased from $17.37 per
share to $19.10 - in three weeks. Two specific
issues jumping more than $3 per share.
Subscribers to the
CDx3 Notification Service received an email
message identifying the trading symbols of these
twelve CDx3 Preferred Stocks from The Protected
Six initial wave of banks.
have until November 14, 2008 to get into the
second wave of the Treasury program.
After the Treasury
applies their criteria and we wash them through
the CDx3 Selection Criteria, only some of these
additional banks are going to make the grade and
only some of their preferred stocks will survive
all of that filtering.
Once the resulting
CDx3 Preferred Stocks are identified,
subscribers to the
CDx3 Notification Service
will receive another email notice that
identifies the trading symbols and other
important information about each qualifying
preferred stock issue.
9.6% Still Available:
But don't think that you're too late, even for
these initial six banks. The average
annual dividend yield of these initial
twelve CDx3 Preferred Stocks, even after the big
October run up in their market prices, is still
a very-easy-to-warm-up-to 9.6%.
The Treasury knows as well as anyone else that
investors have been nervous about investing in banks.
That's exactly why their new preferred stock
purchase program is designed the way it is,
including the public identification of the
participants. In two waves, they are shining a
big bright light on specific banks and in so
many words declaring them "healthy institutions"
in order to sooth investor nerves. Not to
mention investing $250 billion in them.
18.78% Effective Annual
Return: All CDx3 Preferred Stocks
have a five year lifespan. Five years after
introduction the issuing company regains the
right to purchase your shares back from you at
$25.00 per share, regardless of what you
originally paid (this is referred to as a
The average market
price of these twelve CDx3 Preferred Stocks on
October 31 was $19.10. If called, that
means an average capital gain of $5.90 per share
on top of the average 9.6% dividend income that
you'll be making in the meantime. That computes
to an average effective annual return of 18.78%
(in the event of a call) from the twelve CDx3
Preferred Stocks issued by The Protected Six
initial banks - with more on the way on November
The data that I am
presenting here are intended to illustrate how The Market (you and me) is
reacting to the Treasury's preferred stock
purchase program and the implied protections
that come with it for banks that can meet the
the U.S. government ever wants to see their
billions again, the banks that are able to meet
this program's stringent criteria must not be
allowed to fail for the next several years.
Perfect Track Record: 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.
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?
If you've been
looking for a way to ride the bank recovery
wave, be sure to consider CDx3 Preferred Stocks
issued by the banks that are falling under the
implicit protection of the U.S. Treasury. This
is a historic opportunity for preferred stock
investors and one that is not likely to be
repeated again within our lifetime.
Investing provides readers with the
resources that they need to identify the trading
symbols of these specific CDx3 Preferred Stocks.
Or you can let us do the work for you by
subscribing to the
CDx3 Notification Service.
* 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 Moodys 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."
Are We Rich Yet (AWRY) Investment Group Learns About
CDx3 Income Engine
Group Subscriptions Open New
Possibilities For Savings
Last month I had the
pleasure of speaking to the Are We Rich Yet (AWRY)
investment group in the heart of Northern California's
The comfortable yet
elegant Syrah restaurant played host on an 80 degree day
to our discussion of my research regarding preferred
stock investing and the CDx3 Income Engine.
When I speak with groups I
usually do so in some sort of auditorium using a
microphone. But the smaller AWRY group venue allowed us
to have more two-way discussion - a real treat for me.
Most of the AWRY members
had read the Quick Guide To Preferred Stock Investing
During A Global Credit Crisis (download
free) so the
discussion was timely and informative.
We started with an
overview of the three objectives of my research: (1)
maximize revenue while (2) minimizing risk and (3) work,
and wrapped it up with a dissection of the credit
crisis, the U.S. Treasury's new preferred stock purchase
program and The Protected Six banks.
The timing of my meeting
with the AWRY group was particularly beneficial since
group subscriptions to the CDx3 Notification Service
were announced in last month's CDx3 Newsletter (see
If you belong to a group,
or want to form a group, and are interested in preferred
stock investing, the group subscription to the
CDx3 Notification Service is a huge money saver.
$240 for a 4-Member Pack means that you save money with
a group of two or more members (more
Brokers, Financial Planners:
Have clients interested in preferred stocks
(fixed-income investors)? We do all of the research and
work, you just forward the professional quality CDx3
email materials to them; add your own comments if you
wish. Expand your relationship with your clients.
Investment Groups: Tired of reviewing the
same old reports at your monthly investment group
meeting? Why not learn something new? Why now learn
about how to select, buy and sell the highest quality
preferred stocks? Make CDx3 Preferred Stocks part of
your group's portfolio.
Family membership: If there is even one other
person in your family interested in investing, you're a
Do something new and different and do it together!
Already a subscriber? All you need to
do is get a few friends together and have them split the
cost of a 4-Member Pack. Everybody saves!
Thank you once again to
the AWRY investment group for your interest in the CDx3
These Companies That Issue CDx3 Preferred
The Protected Six
One of the ten CDx3 Selection
Criteria (Preferred Stock
Investing, Chapter 1) is
that the issuing company must
have a perfect track record of
never having suspended a
dividend payment on a preferred
stock. When you look at the
dates that The Protected Six
initial banks were founded,
their accomplishment of a
perfect track record is truly
Founded in 1874, BofA is a $192
billion bank head-quartered in
Charlotte, North Carolina.
in 1812, Citigroup manages its
$74 billion global business from
New York City.
in 1823, JP Morgan Chase is a
$153 billion company and
probably the single largest
beneficiary of this credit
crisis being the proud new owner
of what use to be Bear Sterns
and Washington Mutual.
headquartered in New York City
and founded in 1820, Merrill
Lynch's $30 billion business
will be folded into its new
parent, Bank of America, in
stranger to adverse market
conditions, Morgan Stanley was
founded in 1935 in the wake of
the Great Depression and has
built its business into a $19
billion financial powerhouse.
in San Francisco, Wells Fargo
was founded in 1852 as a safe
place to put California gold and
is now valued at $111 billion
(and has a really cool logo).
The credit crisis delivered
Wachovia Securities into Wells
Treasury will select the second wave
of protected banks later this month.
How do I get access to back
issues of the free monthly
newsletter? I'm specifically
interested in how the system has
performed over the past few
CDx3 Preferred Stock sales
through June 2007 brought CDx3
Investors an effective annual
return between 12-15 percent.
You can see examples in past
issues of the CDx3 Newsletter
here to view the archive).
Start with the oldest issue and
just take a quick look at the
headlines and tables in each
Last Month’s CDx3 Investor
Results article (first article
in each issue).
Since June 2007, dividend rates
have been increasing and market
prices falling (the Rule of
Preferred Stock Investing
page 61), creating a very strong
“buyer’s market” for CDx3
Dividend Income Now:
Currently, the average dividend
rate being paid by newly issued
CDx3 Preferred Stocks is 8.84%
so we have been buying, rather
than selling (in order to
calculate the return on an
investment, per Carl's question,
there has to be a sale).
CDx3 Investors are purchasing
these high-payers for market
prices less than $25 per share,
boosting yields even further
(dividends are paid quarterly
based on $25, regardless of your
actual purchase price; so any
purchase price below $25 boosts
your actual return. Purchase
prices for most CDx3 Preferred
Stocks are currently $20-$22 per
Once the credit crisis plays
through, and these dividend
rates start to come back down,
the market prices for these high
dividend payers that CDx3
Investors are buying now are
expected to substantially
it this way: say you
were to purchase a CDx3
Preferred Stock today that pays
an 8.5% dividend for $23 per
share. A year from now, if new
issues are coming out at 7% for
$25 per share, what do you think
is going to happen to the market
price of your 8.5%-er?
rates come back down, the market
prices of previous high payers
will tend to increase (Preferred
Stock Investing, page 61).
That’s when you look to sell
(using the Target Sell Price as
a guide, Preferred Stock
Investing page 85).
My point is that, since June
2007 CDx3 Investors have been
buying, not selling ; selling
will come later. In the mean
time, we’re making great fixed
If you’d like to know how
buyer's of CDx3 Preferred Stocks
are taking advantage of the
current credit crisis
conditions, there is an article
in the April 2008 issue of the
CDx3 Newsletter (see
that explains when the best time
to make a purchase is most
likely to occur and why.
If you have the book
Preferred Stock Investing,
you can receive a more detailed
step-by-step explanation by
following the Special Note on
the top of page 124 to receive
your free update to the book.
The update includes an expanded
description of purchasing CDx3
Preferred Stocks during this
Later: Using the
method described there to
purchase CDx3 Preferred Stocks,
the average effective annual
rates, if called, for the last
several months are: July, 15.3%;
August, 21.3%; September, 19.9%;
October, 15.9% (source:
CDx3 Research Notes).
So, in answer to your question,
12-15% until June 2007; since
then we’ve been buying the
highest dividend paying CDx3
Preferred Stocks that we’ve seen
in years for bargain basement
prices and are looking forward
to selling them for a nice
capital gain once rates come
back down (and market prices for
them go up accordingly). In the
mean time, we’re making 8% to
11% in dividend income.
Subscribers to the
CDx3 Notification Service
receive an email message
whenever there is a buying or
selling opportunity for the
highest quality preferred stock
issues - CDx3 Preferred Stocks.
Please do not let this historic
opportunity pass you by.
Thanks to Carl J. for the great
question. You will receive a
free copy of the CDx3 Special
Report "Dividend Accounting."
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 all of the
resources needed to do so without the CDx3 Notification
The 15-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 can not 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
(2007/08), 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 just published a "Quick
Guide To Preferred Stock Investing During A Global
This is an important and timely document that all who
are interest 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.
Second Wave Of U.S. Treasury Program Is Upon Us
What Additional Banks Will The U.S. Government Essentially
Protect For The Next Several Years?
At the close of last month's CDx3
Newsletter I asked what the effect
of the Treasury's Trouble Asset Relief
Program (TARP) was going to be. The
program is intended to put a trampoline
under the financial system, but would
banks bounce back or bust right through?
As the Treasury has now rolled out the
first phase of their program, we can say
that, without a doubt, the effect on The
Protected Six CDx3 banks has been
extremely positive. The market prices of
the CDx3 Preferred Stocks issued by The
Protected Six went through the roof as
soon as the Treasury identified the CDx3
banks that were included in the initial
Since the Treasury is investing tens of
billions in these banks by purchasing
custom-made preferred stocks from them,
these specific banks are essentially
protected for the next several years (at
least until the Treasury gets their
While the requirements for banks to
participate are stiff (the government is
only going to invest in banks that they
know are going to be around), additional
banks - the second wave - have until
November 14, 2008 to try and move behind
the protective walls of the U.S.
The Treasury's preferred stock purchase
program has created an enormous and
historically unique opportunity for CDx3
Preferred Stock investors.
You now know the identities of The
Protected Six initial banks and the "Quick
Guide To Preferred Stock Investing
During A Global Credit Crisis" (download
free, 4 pages)
explains how to use the CDx3 Income
Engine to take advantage of this unique
But who will the lucky banks be that the
U.S. Treasury allows to join the program
by November 14, 2008?
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