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When a normally boring income-related sector catches fire, I don't start buying more. I start looking for the exit.
In a falling stock market, all the best income investments – like real estate investment trusts (REITs) and master limited partnerships (MLPs) – are no-go areas. Worst of all, the Fed won't raise interest rates while the economy is weak. This leaves us with interest-free bank accounts and 1% CDs.
The Monthly Dividend Trust performs better than any bank account, CD, or Treasury bond... yet its consistent results make it one of the safest places out there.
The thing I hate most about this advice is that it suggests you should hand over 100% your wealth and savings to the Wall Street machine. It suggests you aren't capable of managing it yourself.
I tell my 12% Letter readers to stick with preferred stocks issued by the very strongest companies with large cash balances. This way, I know they'll get their money back no matter what happens in the economy or the stock market. We're able to earn 8% yields on average with this approach.
Don't touch the usual high-yield vehicles. I'm talking about REITs, income trusts, master limited partnerships, municipal bonds, and high-yield funds. Many of these investments will end up worthless. Forget them.
The fundamentals call for a much lower valuation for the euro... or even a complete disintegration of the currency union.
With so many people interested in buying cheap foreclosures, there are still many real estate bulls out there. We're nowhere near the end of the bear market in real estate.
This is not an environment for buying stocks or commodities, for example. As Britain, France, and the rest of the world's largest economies cut back on spending, corporate profits will fall. Demand for commodities like copper, cement, oil, and steel will also decline.
We've been buying these high-income stocks for years in my newsletter The 12% Letter. And I've been getting frantic e-mails from my subscribers about this rumor. Many of my subscribers are retired. They live off dividends. They can't afford a 25% pay cut. "It'll destroy my standard of living," one reader wrote.
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