Sometimes, you just have to unplug. I know it’s very difficult to do but, if you listen to any news of any kind, you’re going to come away thinking the sky really is falling. Or, on a day like last Friday, the sky’s the limit.
As I was preparing this weekly email, I review several articles from various news feeds and try to find something that is encouraging. The attached article was one of the only ones that gave the bad and the good. Things look bad in some areas of the economy and good in other areas.
One thing stands out, that being we are living in the world of very low interest rates. So far, the U.S. still has some sort of yield on savings accounts, treasury bonds and money markets. However, it’s hard to plan a budget around 1% interest rates on some or all of your savings. Conversely, the dividend rate on the S&P 500 is almost 2%, higher than the yield on a 20-year treasury bond. And, the dividend rate for our current portfolios is about 3%.
So, we stay the course, investing in large companies paying a good and rising dividend with stock buyback programs and solid management. Add to that, the options overlay that can generate +/- 7% extra cash flow and we will continue to enjoy what historically has been market returns that consistently outperform inflation by a wide margin. Please remember investing in equities has risk and past performance is no guarantee of future returns.
On a final note, I quote Michael Lewis, a financial author of several best-selling books including “The Big Short”. And I quote, “How many times does the end of the world as we know it need to arrive before we realize that it’s not the end of the world as we know it?”
Should you have any questions or wish to talk, please call our office or email me at the email shown below. In the meantime, I hope you have a great week!
PS: Always remember, investing in equity markets has risk and past performance is no guarantee of future results.