“I am a Series 7 registered representative and have been in business since 1988. This CDx3 service is the best money I have ever spent. Doug's expertise...research and materials are beyond anything I have ever encountered by a factor of 10, at least...His material is worth 10 times what he charges for it." - Jeff M., CDx3 Notification Service subscriber   MORE>>

Quick Summary

In This Issue...

Last Month's CDx3 Investor Results

Special Announcement

CDx3 Company Spotlight

CDx3 Question Of The Month

FREE Special Offer

Next Month's Sneak Peek

   
 

April 2010 Update to Preferred Stock Investing Now Available!

Readers of my book, Preferred Stock Investing, Third Edition, are entitled to free periodic updates to the preferred stock tables presented throughout chapter 15 of the book as long as the Third Edition is in print. Providing free periodic updates helps keep readers of Preferred Stock Investing up to date.

The April 2010 update to Preferred Stock Investing is now available!

And I am also happy to announce that as a special service to readers, the April 2010 update goes beyond an update to the preferred stock tables found in chapter 15. In this update I also take the opportunity to provide you with the results of the "CDx3 Income Engine" (the preferred stock investing method explained throughout the book) as implemented throughout the Global Credit Crisis (2007 - 2009). The nature of the preferred stock market since June 2007 deserves special attention and the April 2010 update to the book would not have been complete without wrapping up the method's performance during these historic (extreme) conditions.

Specifically, the April 2010 update to the Third Edition of Preferred Stock Investing includes updates to the following chapters:

  • Chapter 4, "The Global Credit Crisis": how the CDx3 Income Engine performed during the Global Credit Crisis for CDx3 Investors;

  • Chapter 15, "Results - How You Would Have Done": the list of CDx3 Preferred Stocks issued during 2009 and an update to the tables of previously issued CDx3 Preferred Stocks that were sold during March 2010 when the market for CDx3 Preferred Stocks returned to one favoring sellers; and

  • Chapter 18, "The CDx3 Notification Service": five new preferred stock investing resources have been provided to subscribers to the CDx3 Notification Service (my preferred stock email alert and newsletter service) since the Third Edition was published.

Preferred Stock Investing, Third Edition is one of the most highly reader-rated books of any kind available for sale in the United States (Amazon 4.5 stars). To receive the free April 2010 update to Preferred Stock Investing, Third Edition just follow the instructions on the first page of chapter 15 in the book.

If you have yet to pick up your copy of Preferred Stock Investing, Third Edition you can do so at any of your favorite online retailers (see retailers | see reader reviews). Please pick up your copy today then follow the instructions on the first page of chapter 15 to download the free April 2010 update.


Just Posted On The Preferred Stock Investing Reader's Forum: The SEC fraud complaint filed against Goldman Sachs in mid-April pushed the market prices of common and preferred stocks issued by our Big Banks down for a few days. The same thing continues to happen whenever a new headline appears. In an April 20 post to the Preferred Stock Investing Reader's Forum (my "blog") titled "Preferred Stock Investors To Benefit From Goldman Case" I describe how this SEC action against Goldman has created a short-term opportunity for preferred stock investors. (jump to Forum)

Preferred stocks purchased during the Global Credit Crisis are currently showing a substantial "unrealized" capital gain. But if market prices head down again, that gain starts to evaporate. The Last Month's CDx3 Investor Results article describes how you can convert that "at risk" capital gain into "protected" dividend income, all while lowering your risk. This maneuver delivers the best of both worlds that many preferred stock investors have been waiting for - pocket your preferred stock capital gains while maintaining your dividend income.  (jump to article)

In addition to the all new PreferredStockInvesting.com website that went online during April, there are two Special Announcements for preferred stock investors this month. First, subscriber's to the CDx3 Notification Service have their own exclusive website that is the most comprehensive resource available to preferred stock investors. This month, I provide you with a link to take a tour of the exclusive subscriber's website. Secondly, I have summarized some of the research from Preferred Stock  Investing and am making it available to brokers, financial planners and investment groups for free. (jump to article)

In the CDx3 Company Spotlight article I introduce you to Torchmark Corporation, a life and health insurance company, founded in 1900. Torchmark has an interesting history and very successful strategy that has resulted in increasing per share net operating income during very challenging economic times.  (jump to article)

The CDx3 Question of the Month is presented both here and on the Preferred Stock Investing Reader's Forum. If you visit the Forum you can test your knowledge by clicking on your answer to the question. You will receive an automatic email that provides you with the correct answer and my explanation. Or you can just read the answer in the below CDx3 Question of the Month article. This month's question relates directly to the topic of the Last Month's CDx3 Investor Results article - how to convert your "at risk" preferred stock capital gains into income generating shares before market prices go back down. Specifically, when interest rates go back up (2011?), what tends to happen to the market prices of preferred stocks?  (jump to article)

Why wait until next month's CDx3 Newsletter to find out what is going on in the preferred stock marketplace? Throughout the month I post regular research articles on the Preferred Stock Investing Reader's Forum and make them available to you for free. In the Free Special Offer article below I provide you with a link that allows you to receive my posts via an email message rather than having to visit the Forum to see what's new. Any time a new article is posted, you will receive a message in your email inbox automatically - free. (jump to article)

Coming Up For Preferred Stock Investors: While the SEC/Goldman dust-up has been creating some great short-term buying opportunities for preferred stock investors, the Greek debt disaster is really adding icing to our cake. On days when there are big headlines about both stories, check the market prices of the highest quality preferred stocks issued by our investment banks for bargain buying opportunities. The current issue of CDx3 Research Notes, my special newsletter just for subscribers to the CDx3 Notification Service, has the list of the 11 specific preferred stocks that you should be watching. (jump to article)

I look forward to reporting back to you in next month's issue of the CDx3 Newsletter.

For New Readers...

Welcome to all of the new CDx3 Newsletter readers who signed up over the last month. 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.

What Is A "CDx3 Preferred Stock?"

CDx3 Preferred Stocks are regular preferred stocks that are able to meet the ten selection criteria described in chapter 7 of my book, Preferred Stock Investing.

Applying the CDx3 Selection Criteria eliminates about 90% of the regular preferred stocks trading on today's stock market leaving just the highest quality issues.

For example, here are three of the ten CDx3 Selection Criteria:

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

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."

Who Am I?

I am a preferred stock researcher and author of the book titled Preferred Stock Investing. I also publish two monthly newsletters that describe my ongoing preferred stock research. My academic background is in economics and statistics. I retired from my position as Managing Director at one of the world's largest management consulting firms in 2002 to focus on preferred stock research. I do not sell preferred stocks nor am I a stock broker or financial adviser. As a researcher, I research the market price behavior of the highest quality preferred stocks and write to you about my observations.

 

   
 

Have It Both Ways - Pocket Your Capital Gains Without Losing Dividend Income

Here's How To Put Your Crisis-Era Capital Gains To Work Earning Dividends Right Now

The Global Credit Crisis delivered historically low market prices for historically high dividend rates on the highest quality preferred stocks ("CDx3 Preferred Stocks" - see sidebar at the top of this newsletter).  Since prices have now recovered we are looking at enormous "unrealized" capital gains in our brokerage accounts. Because of two specific characteristics of preferred stocks, there is a simple maneuver that allows preferred stock investors to simultaneously (a) pocket these capital gains and (b) reduce their overall investment risk while simultaneously (c) leaving their dividend income unchanged. If you've been wondering how to pocket your preferred stock capital gains without reducing your dividend income, keep reading.

The two characteristics of preferred stocks that we can use to accomplish this magic are:

1. We all know that market prices rise and fall over time (generally with interest rate changes). Now that prices have recovered, our unrealized capital gains are at risk of shrinking when prices start to fall off again. Unrealized capital gains, sitting in your brokerage account, change with market price fluctuations which puts those gains at risk of evaporating;

2. On the other hand, preferred stock dividends are paid to you based solely on the number of shares that you own regardless of market price fluctuations or your original purchase price.

That means that dividend income from preferred stocks is less at risk than the unrealized capital gains that we are sitting on. So if we can "convert" our unrealized capital gains into dividend-generating shares, our risk profile goes down substantially.

What I am about to show you is how to convert an "at-risk" unrealized preferred stock capital gain currently sitting in your brokerage account into fixed dividend cash that is not affected by market price fluctuations - and do so without changing your income. And I am going to use real data from two real CDx3 Preferred Stocks to show you how this is done.

I'll also show you how to quickly find the trading symbols of these CDx3 Preferred Stocks, but for now let's just refer to them as preferred stocks A (that you are going to be selling) and B (that you are going to be buying). Remember as I walk you through this maneuver that I am using real data for real CDx3 Preferred Stocks for this example.

STEP 1: Sell Preferred Stock A

Look down the "Gain" column on your brokerage statement and find a preferred stock that currently has a gain (i.e. today's market price is greater than your original purchase price). For this example I will refer to this preferred stock as Preferred Stock A (PFD-A).

Let's say that during the Global Credit Crisis you purchased 100 shares of PFD-A for $20 per share and PFD-A has a 7.875% declared dividend rate ("coupon rate"). So you have a $2,000 investment in PFD-A.

A preferred stock that has a 7.875% declared dividend rate pays $1.97 per year in dividend income ($25 x 7.875%) per share regardless of the market price. That's $0.492 per quarter for every share that you own of PFD-A in fixed dividend income.

So your 100 shares of PFD-A are currently generating $49.20 per quarter in dividend income for you. Again, with preferred stocks this $49.20 in dividend income is fixed by the number of shares you own (100) and is not affected by market price fluctuations. So when we are done with this example we want to be sure that we are still earning at least $49.20 in quarterly dividend income; we want to collect our capital gains without reducing our income.

Now let's say that here in 2010 the market price of PFD-A has recovered to $25 per share. Since you originally paid $20 per share, and the shares are now selling for $25, you are looking at an unrealized capital gain of $5 per share ($500) staring back at you from your brokerage statement.

As nice as it is to look at, this capital gain is unrealized; it is doing nothing productive for you whatsoever. It is certainly not earning you any income.

The only way to cash in that $500 is to sell the shares; but selling the shares puts an end to the great dividend income. What we want is to cash in the $500 capital gain without reducing our dividend income.

STEP 2: Buy Preferred Stock B

Selling your 100 shares of PFD-A for $25 per share generates total proceeds of $2,500. This sale converts your unrealized capital gain to cash (you "realize" your $500 capital gain when you sell).

At today's price of $25 per share, PFD-A has a current "yield" of 7.875% (yield% = ($25 x 7.875%) / $current-market-price).

Using the $2,500 now in your pocket, you are going to purchase another CDx3 Preferred Stock (PFD-B). But instead of buying 100 shares of PFD-B, you are going to purchase enough shares of PFD-B such that they generate at least $49.20 per quarter in dividend income for you, the same as you were earning with PFD-A.

As it turns out, there is an easy way to identify such a preferred stock for your purchase. All you have to do is find a preferred stock that has the same current yield as PFD-A (7.875%). Let's say that you find PFD-B that has a declared dividend rate of 7.0% and is currently selling for $22.25 per share (more on how to quickly find these purchase candidates in a moment).

With the $2,500 from your sale of PFD-A you can purchase 113 shares of PFD-B at today's market price of $22.25 per share (again, these are real numbers; nothing is made up here). Where you use to own 100 shares of PFD-A, you now own 113 shares of PFD-B. You have now "converted" your $500 capital gain, that was at risk of evaporating when prices head back down again, into 13 additional dividend-generating shares of PFD-B.

But what about your dividend income?

Shares of PFD-B pay $1.75 per year in dividend income ($0.438 per quarter). So the 113 shares of PFD-B that you just purchased earn you $49.49 per quarter in dividend income (113 x $0.438), which preserves the dividend income that you were making when you owned 100 shares of PFD-A.

Bottom Line Results: Convert "At Risk" Capital Gain To "Protected" Dividend Paying Shares

The crisis-generated unrealized capital gains that preferred stock investors currently have in their brokerage accounts were generated by incredibly low market prices during the Global Credit Crisis and the spectacular market price recovery of high quality preferred stocks since then.

But the unrealized capital gains that we see in our brokerage accounts are "at risk" since market prices go up and back down over time.

The 2-step maneuver described here allows you to convert your unrealized capital gain, which is exposed to the risks of fluctuating market prices, into a stream of dividend income that is protected from such fluctuations (since preferred stock dividends are based on the number of shares that you own, not prices).

So the end result is that you have converted your crisis-generated unrealized capital gain into protected dividend-generating preferred stock shares, lowering your overall risk profile, without reducing your income.

How To Find The Right Preferred Stocks

To do this maneuver you need to know (a) which preferred stock to sell and (b) which preferred stock to buy such that your "at risk" unrealized capital gain ends up being converted to dividend-paying shares without changing your dividend income.

Your selling candidates are identified for you in your brokerage account. Preferred stocks listed with an unrealized capital gain are candidates to sell for this maneuver. Your brokerage account will also list the current yield of these issues.

Identifying the candidates to purchase is just as simple. You are looking for preferred stocks that have the same (or better) current dividend yield as the preferred stock that you have decided to sell.

Where can you find a list of the highest quality purchase candidates?

Each month subscribers to the CDx3 Notification Service (my preferred stock email alert and research service) receive the "CDx3 Bargain Table" that shows CDx3 Preferred Stocks that are at a point in time that tends to favor buyers (relatively low prices). The monthly CDx3 Bargain Table shows the current dividend yield for each issue. The table at right presents the current CDx3 Bargain Table (edited for presentation here). The fourth preferred stock listed is the PFD-B issue used in the above example.

Once I had decided to sell PFD-A, which has a current yield of 7.875%, it was a simple matter to then look down the Dividend Yield column on the current CDx3 Bargain Table and find an issue with a similar current yield (the fourth issue listed shows a yield of 7.865%, close enough for our purposes here).

Having access to the CDx3 Bargain Table allows subscribers to quickly and easily convert your preferred stock capital gains into protected dividend income. This benefit alone is easily worth the price of a subscription to the CDx3 Notification Service. See the interesting testimonial quote at the top of this CDx3 Newsletter. The CDx3 Notification Service is the most comprehensive resource available for preferred stock investors.

Do not allow your unrealized preferred stock capital gains to evaporate. Subscribe to the CDx3 Notification Service (see reader comments) today.

 

 

 

 

 

 

 

 

 

 

To Protect Your Capital Gains,

Convert Them To Dividend-Generating Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS*

$500 At-Risk Capital Gain Is Converted To 113 Dividend-Generating Shares Without Reducing Income

Subscribe For Trading Symbols

*Above data values are from actual CDx3 Preferred Stocks

 

 

 

 

 

 

CDx3 Bargain Table

Ending April 2010

  

Subscribe For Trading Symbols

 

 

   
 

Tour The Subscriber's Website: The Most Comprehensive Resource Available

Preferred Stock, Company And 24/7 Marketplace Information In One Place

The subscriber's website provides subscribers with the most comprehensive resource available for preferred stock investors, including the CDx3 Discussion Group - the only online forum just for preferred stock investors. See the testimonial quote at the top of this CDx3 Newsletter and you'll see what I mean!

The design of the subscriber's website is a direct result of specific input from subscribers through our Continuous Improvement Program.

The subscriber's website is the vault within which I keep research information regarding selecting, buying and selling the highest quality preferred stocks ("CDx3 Preferred Stocks"), the companies that issue them and the marketplace that they trade within.

Once a subscriber signs onto the subscriber's website, the CDx3 Preferred Stock Market Dashboard is presented. The Dashboard provides these seven feature boxes, each of which provide their own focused information, both current and historical:

 

Trend Box: contains charts that illustrate current trends in the marketplace for the highest quality preferred stocks;

Buyer's Box: lists new, currently trading and former CDx3 Preferred Stocks;

Seller's Box: use this feature box to access the current and past CDx3 Seller's Calendars;

CDx3 Income Engine Box: presents key pages from Preferred Stock Investing regarding selecting, buying and selling the highest quality preferred stocks;

Subscriber's Forum Box: the point of entry to the new CDx3 Discussion Group, the only full featured online discussion forum just for preferred stock investors;

Research Box: provides access to the current and past issues of our preferred stock research newsletters - CDx3 Research Notes and the CDx3 Newsletter. Also allows you to access today's real-time preferred stock news feed, document library and the CDx3 Reading List; and

CDx3 Video Channel Box: presents CNBC video interviews with the CEO's and other leaders from the companies that issue CDx3 Preferred Stocks.

 

Take A Tour: The website's Tutorial has several components to it, including a description of the site's features. I have made a copy of the website's feature tutorial available to you. Click on the below link to take a quick tour of the subscriber's website Dashboard.

Click here to view the subscriber website's feature Tutorial

Preferred stock research is very hard to come by. The CDx3 Notification Service is intended for individual investors as well as groups (investing clubs, brokers, families or groups of friends) and all information is provided in plain English for non-experts. If you want to get serious about your preferred stock investments, maybe it's time for you to subscribe to the CDx3 Notification Service too (see reader comments).


Brokers And Investment Groups: New Meeting Materials Now Available

As the most comprehensive research service available for the highest quality preferred stocks, all of the large, and many smaller, brokerage firms subscribe to the CDx3 Notification Service.

My Preferred Stock Investing Group Materials are intended for brokers with a group of clients or self-directed investment groups that are interested in learning something about preferred stock investing.

The Preferred Stock Investing Group Materials include a slide show (27 slides, PowerPoint Show format) and an accompanying handout that provides my commentary for each slide. The handout is available in color and black and white (PDF format) for easy printing.

The materials include my tips regarding how to select, buy and sell the highest quality preferred stocks and summarize much of the research from my book, Preferred Stock Investing. Specifically, the materials are organized into three parts:

Part 1: Approach and Objectives To Preferred Stock Investing

Part 2: How and When To Buy and Sell Preferred Stocks

Part 3: Preferred Stock Investing Resources

To request the Preferred Stock Investing Group Materials just send an email request to:

InvestmentGroupMaterials@PreferredStockInvesting.com

You will receive an auto-reply email message with current download instructions.

 

 

 

The CDx3 Preferred Stock Marketplace Dashboard

We Do The Research, You Make The Decisions

 

 

Subscribe To The CDx3 Notification Service

 

 

   
 

Who Are These Companies That Issue CDx3 Preferred Stocks?

Torchmark Corporation (NYSE: TMK)

Torchmark is a $4.4 billion insurance company founded in 1900 and headquartered in McKinney, Texas. Torchmark sells very specific life and health insurance products to a segment of the population that many of their competitors have vacated - the middle-income market. 46% of U.S. households (51 million) are in the $25,000 to $75,000 income range, but most financial institutions and insurers target the 27% of households with income exceeding $75,000.

Torchmark's strategy has been to segment the middle-income market around specific demographics and sell specifically tailored insurance products under highly reputable and recognized brand names into those segments. You can see the net operating income per share results on the first chart here. Torchmark has been successful at improving this key metric even during the most trying of economic times when middle-income Americans, Torchmark's primary customers, are suffering near-record unemployment.

Few know that Torchmark is the owner of American Income Life Insurance Company, First United Life Insurance Company, Global Life and Accident Insurance Company, Liberty National Insurance Company, United American Life Insurance Company and United Investors Life Insurance Company.

Life insurance premium revenue accounted for 62% of total premium revenue during 2009 and 38% coming from health insurance premiums. Uncertainty related to recent healthcare legislation suggests some risk regarding Torchmark's healthcare segment.

Another reason behind Torchmark's 100+ year success is its conservative investment strategy. Torchmark makes money the same way that other insurance companies make money. They collect premiums against insurance policies and, to the extent that they do not have to pay out claims, they invest the cash.

While many of Torchmark's less conservative competitors pursued the risky investments that we have read so much about over the last three years, Torchmark's investments are primarily in investment grade, fixed maturity securities with no direct exposure to sub-prime or Alt-A mortgages, default credit swaps or derivatives.

As itemized in this second table, 93% of Torchmark's investment portfolio is in investment grade, fixed maturities. As of December 31, 2009, this fixed income portfolio had an average life (years to maturity) of 21.3 years with an effective yield of 6.44% (source: Standard & Poor's Stock Report, May 1, 2010).

Learn more about Torchmark: Company website | Profile | Upgrades/Downgrades | Recent News.

Reader Note: The purpose of the CDx3 Company Spotlight article is to give you a sense of the types of companies that issue CDx3 Preferred Stocks. Companies that appear in the CDx3 Company Spotlight either currently, or in the past, have issued CDx3 Preferred Stocks. Since I am not familiar with your financial goals, resources or risk tolerance, my mention of these companies here should not be taken as a recommendation by me for you to buy, or not buy, securities issued by these companies. Companies can issue multiple series of preferred stocks, some of which may meet the CDx3 Selection Criteria while others do not.

 

Torchmark Corporation

Net Operating Income Per Share

Source: Torchmark Insurance Conference Presentation, February 23, 2010

 

 

 

Torchmark Corporation

Investment Portfolio, 12/31/2009

Source: Torchmark Insurance Conference Presentation, February 23, 2010

 

   
 

When interest rates go up, what happens to preferred stock prices? - Preferred Stock Investing Reader's Forum.

Knowing something - anything - about the future market price behavior of an investment that you are considering is the Mother Lode of investing. And with CDx3 Preferred Stocks, we know quite a bit and we know it in advance. This knowledge allows preferred stock investors to time their buying and selling activities to take advantage of known factors that move preferred stock market prices up and down over time.

CDx3 Preferred Stocks have a five-year lifespan - the period between the issue's introduction (the IPO date) and its "call date" five years later. The call date is when the issuing company regains the right to purchase your shares back from you (and pay you $25.00 per share in the event that they do so).

During this five-year period prior to the call date, the market price of a CDx3 Preferred Stock will tend to follow three specific rules - the Three Rules of Market Price Predictability from Preferred Stock Investing, chapter 3. One rule is for the short-term within a dividend quarter, a second for the longer-term prior to the call date and a third rule that tells us about how the market price will behave as the call date approaches (the "end-term").

These three rules were put to the ultimate test during the Global Credit Crisis and performed perfectly; market prices performed just as the Three Rules of Market Price Predictability said they should.

Many preferred stock investors are in it purely for the great dividend income; that is, they are buy-and-hold investors. Even if they could earn three, four or five quarters worth of dividend income by selling and collecting a big capital gain, they simply do not want to take the time needed to do so. These preferred stock investors will consistently see annual returns between 6.5% and 9.0% while expending very little effort beyond determine their next purchase candidates (a list of which is provided to subscribers to the CDx3 Notification Service).

But other preferred stock investors can use the Three Rules of Market Price Predictability to not only time their purchases, but also their selling activities. Since CDx3 Preferred Stocks produce fixed annual dividends in the 6.5% to 9.0% range, selling at the right time and adding on a nice capital gain allows these investors to consistently push their effective annual return over 10% (chapter 15 of Preferred Stock Investing presents an itemization for every CDx3 Preferred Stock issued since January 2001 showing these results).

What makes this possible is that the direction of CDx3 Preferred Stock market prices is related to the direction of interest rates throughout the U.S. economy. Knowing how this relationship works, and knowing it advance, gives preferred stock investors an enormous advantage for timing their buying and selling over time.

The question this month for preferred stock investors: When interest rates go up, what happens to preferred stock prices? 

Your choices:

(A) They go down, opposite of the direction of interest rates
(B) They stay about the same since the dividend return is known and fixed

(C) They go up with interest rates.

The correct answer to this question is (A): As interest rates go up (namely the federal funds rate), the market prices of preferred stocks will tend to go down (creating buying opportunities); the two move in opposition to each other. The reverse is equally true; when rates go back down again, market prices will tend to come back up (creating selling opportunities).

The federal funds rate is currently near-zero and has been held there by the Federal Reserve to help stimulate the economy. Analysts are in general agreement that this key interest rate is likely to be going up some time within the next six to twelve months.

That means two things for preferred stock investors: (1) once rates start heading up again, new CDx3 Preferred Stocks will be issued at higher dividend rates and (2) market prices of older, lower-paying existing issues will tend to trend lower. This will create a "buyer's market" (in 2011?) where CDx3 Preferred Stocks that pay increasingly higher dividends are able to be purchased at increasingly lower market prices.

Since CDx3 Preferred Stocks pay your dividends based on the number of shares you own, and not the current market price, your income remains the same regardless of these market price movements; the market price movements create buying and selling opportunities over time. They do not affect your dividend income.

This is the Mother Lode of investing. We know how the market price of CDx3 Preferred Stocks is going to behave and we know it in advance. We also know that interest rates will change multiple times over any five year period so those following the preferred stock investing method described throughout my book, Preferred Stock Investing, are able to time their buying and selling activities accordingly, consistently producing effective annual returns in excess of 10% (see Preferred Stock Investing, chapter 15 for itemization).


 You can submit your own preferred stock question: Submit your question.

 
 

CDx3 Income Engine

Average Annual Results

2001 - 2009

Source: Preferred Stock Investing, chapter 15 as updated April 2010

 

   
 

Preferred Stock Market Research Now Available All Month Long - Free

Automatic Email Delivery Of Preferred Stock Market Research Now Available

Readers do not have to wait until next month's issue of the CDx3 Newsletter to stay plugged into the market for high quality preferred stocks. Preferred stock research articles, marketplace observations and preferred stock news from the financial press and other information are posted to the Preferred Stock Investing Reader's Forum (my "blog") throughout the month.

To receive articles by email automatically without having to visit the Forum, click here

 A separate window from FeedBurner (a Google service) will open on your screen. Enter and verify the email address that you want articles from the Forum to be emailed to as instructed. And don't worry - you'll never receive any spam from me and your email address will not be shared.

By receiving the articles as I post them via email, you do not have to visit the Forum in order to stay plugged into my research regarding the marketplace for the highest quality preferred stocks.

You are also invited to visit the Forum and comment on my articles.

Please accept my invitation to receive articles by email and visit the Forum 

 
 

 

   
 

Goldman/SEC Dust-Up, Greek Meltdown Create Buying Bargains

Number Of Specific High Quality Preferred Stocks To Watch: 11

One of the effects of the Global Credit Crisis was to transfer trillions of dollars in debt that was in private hands onto the balance sheets of governments and their central banks all over the world. Under this kind of pressure, the weakest show their cracks first.

Greece has been living well beyond its means for over a decade, largely due to huge increases in public employee payroll and pension benefits coupled with massive increases in government spending and widespread tax evasion. Greece's national debt has ballooned to 115% of its Gross Domestic Product (source: European Commission). U.S. banks have essentially zero exposure to Greek debt so in real dollar terms, these events appear to mean very little to us. Of more interest will be the effects on the dollar/euro exchange rate and the upward pressure these events may put on U.S. domestic inflation, which is the one thing we really do not need right now.

Coincidently, at the same time that the Greek tragedy is unfolding, the SEC is pursuing a very public fraud complaint against Goldman Sachs. Whatever the merits of the case, political or factual, I have noticed that the market prices of financial stocks, including preferred stocks issued by investment banks, take a quick dip with each new headline in this case.

I first noticed this in the days following the SEC/Goldman announcement in mid-April and posted an alert on my blog on April 20 (see my blog). You can receive articles that I post on my blog for free throughout the month by clicking here.

On days when there are big alarming headlines regarding both the Greece and SEC/Goldman stories, check the market prices of the highest quality preferred stocks issued by our investment banks. Some real bargains have presented themselves for a day or so when such headlines appear, creating some spectacular short-term buying opportunities for preferred stock investors; the more alarming the headline the better.

Looking for a quick way to identify the highest quality preferred stocks issued by U.S. investment banks? The current issue of the subscriber's newsletter, CDx3 Research Notes, identifies the top 11 issues to watch. The Greece/SEC/Goldman drama will not last forever. The EU and IMF will help Greece out and the SEC and Goldman will settle. Don't get left out. Subscribe to the CDx3 Notification Service (see reader comments) today.

I look forward to reporting back to you in next month's issue of the CDx3 Newsletter.

 

 

 

 

 

 

 

 
   
 

Learn to screen, buy and sell the highest quality preferred stocks by purchasing the third edition of my  book, Preferred Stock Investing (see retailers). The book identifies the resources that you need to be a very successful CDx3 Investor completely on your own. If you would rather we do the research and calculations for you I offer the CDx3 Notification Service (see reader comments).

Chapter 15 of Preferred Stock Investing includes a list of all of the CDx3 Preferred Stocks issued since January 2001 and the investing results you would have achieved had you invested in them using the CDx3 Income Engine.

And readers also receive free periodic updates to the preferred stock lists in chapter 15 as long as the Third Edition of the book is in print.

Please take a look at www.PreferredStockInvesting.com. And if you know someone who might be interested in simple investing for non-experts please 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) 2010 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.