WHERE IS THE YIELD?
A reoccurring occurrence on the television show the Simpsons is, Homer finding ways to figuratively torture his strait-laced neighbor Ned Flanders. For example: Homer will help himself to any of Ned’s tools from his garage without asking permission and subsequently never return them. Ned being the pious church-going forgiving guy bottles up his frustration and turns the other cheek. Ned…we feel your pain.
Central Bankers and the economic wizards of smart raided our toolbox over a decade ago and have not returned anything. Ultra-low interest rates have removed investment vehicles that we used to be able to use to help shore up individuals’ portfolios, today they are basically useless. Do I want to lend money to Uncle Sam for 10 years at below 2%?…Nope. The U.S. 30-year actually dipped below 2%.
We are not here to complain about the current situation that we feel is not going to change anytime soon. Currently, there is over $15 trillion in sovereign debt globally that is yielding negative interest rates. In fact, the volume of negative yielding tradable bonds has exceeded a third of all tradable outstanding. Owning bonds with negative interest rates means that you are guaranteeing yourself a loss if you hold the bond to maturity.
Are you asking yourself…Who in their right mind would buy something like this?
Honestly, I am actually surprised that governments did not figure out this racket years ago. The reality is that there are quite a few buyers that have no choice but to purchase these instruments, such as financial institutions, central banks, certain retirement plans and pensions funds to name a few. Governments make the rules and the rules say lend me money and I will pay next to nothing (United States) or less than nothing (Europe and Japan.).
Sorry folks I would rather stick a hot poker in my eye. The situation is, what it is. We at Markowski Investments don’t complain we deal with the terrain, and what we have done has put in to place a myriad of strategies to help our clients find the best safe yields available.
Everyone’s situation is unique and different, so we always avoid getting too specific unless we can speak with individuals one on one. Quite frankly, it is uncompliant and irresponsible to offer advice in such a haphazard fashion. Without getting into specifics what I can tell you is that we have…
- Built income driven portfolios utilizing fundamentally sound dividend paying stocks.
- Utilized portfolios of preferred stocks.
- Tapped into certain annuity products that pass our muster.
- Put together covered call portfolios and other option strategies to create additional income without adding risk.
- Real Estate Investment Trusts.
As Ned Flanders would say…”Okley dokely, how can I help you neighbor!” Please feel free to contact us when any questions you may have.
