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Two Ways To Add Income to Your Portfolio as a Currency Investor


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October 13, 2011 By Leave a Comment

For the past 30 years, my grandfather has been living the retirement dream, thanks to a few strategic stock plays.

Here’s the interesting part: My grandfather never knew a thing about stocks. He didn’t know how to value them, or when to buy and sell.

But he did know the power of income.

You see, as a child of the Great Depression he saw stocks differently than we do today.
His generation didn’t buy stocks for the possible capital appreciation.

Instead, they bought stocks based on the dividend yield – and the consistency of that dividend.

They had lived through uncertain times, so they only trusted investments that offered fairly certain income.

That’s why now, as we find ourselves back in uncertain markets, you want to make sure your portfolio includes interest-bearing and dividend-yielding assets.

Passive dividend income arrives no matter what’s happening in Greece, or how long U.S. Federal Reserve Chairman Ben Bernanke decides to hold rates at record lows. It comes as long as the company remains strong.

Which means my grandfather’s strategy is worth copying.

How to Live Comfortably During Uncomfortable Times

My grandfather started with certificate of deposits (CDs) in the late 1970s and early 1980s. These were the high-interest days, so these CDs paid 16% to18% interest. He got that nice, passive “certain” income for as long as that party lasted.

Then once interest rates dropped and all his CDs matured, he looked for the next round of certain income. He had just retired from the telecom industry and believed AT&T Inc. (NYSE: T) was a good long-term play.

Best of all, AT&T paid a 6% dividend yield. So he wisely invested his CD income into AT&T stock and then sat back and waited.

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What the Euro Will Look Like in Five Years


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September 30, 2011 By Leave a Comment

Believe it or not, there was a time when investors saw the euro as the savior currency of the world.

People talked about how the euro would replace the dollar as the world’s reserve currency – and there was plenty of proof to support that opinion.

At the time, t he European Central Bank (ECB) had the right monetary solutions in place to fight inflation, while the U.S. Federal Reserve was struggling to keep inflation under control . That was another point for the euro, and a strike for the dollar.

So not surprisingly, central banks started replacing some of their U.S. dollar reserves with euros, and the euro became a second “reserve currency” for central banks.

The euro also soared past the dollar in just a few years. In fact, the euro shot up from 82 cents at its inception to $1.60 in less than 10 years.

Yes, it seemed that the planets were aligned for the euro to step up to the plate and become the world’s reserve currency.

But that’s because the euro had never experienced a real “rough patch,” or serious monetary crisis.

Fast forward to 2008.

The Euro Gets its First Test

Once the credit crisis was in full bloom in mid-2008, loans dried up and unemployment went to 10% in the United States and Eurozone.

That’s when the euro had its first real test.

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Two Protective Currency Plays to Make Ahead of the Looming Recession


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September 23, 2011 By Leave a Comment

There’s a hurricane headed for the U.S. economy, one that’ll send stocks tumbling and rip gains out of your portfolios – especially if you aren’t ready with some protective currency plays.

The “hurricane” I speak of is the looming recession.

You see, the U.S. gross domestic product (GDP) annual growth rate has fallen for the past four quarters. The last time that happened, in 2008, growth fell to a negative rate for the following six quarters.

So when the rate of growth starts to slope downward, and then stays in place for a couple of quarters, you can bet a recession is on the way.

Much like no one can prevent a hurricane, you as an individual investor can’t prevent a recession. But you can calmly prepare for it well in advance, so you’re ready for the worst – and that’s exactly what we’re going to do.

How to Defend Your Portfolio

There are four easy moves to make now to protect your investments from the looming recession:

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The Best Currency to Short Right Now


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September 16, 2011 By Leave a Comment

There’s never been a better time to be a short-seller.

Right now stocks are slipping and sliding all over the place, overall trending downward. And it doesn’t look like this downtrend is going anywhere soon.

Short-selling can help you protect your overall portfolio when stocks start sliding off the map. Also, you can earn some of the fastest profits from short-selling in “down” markets because markets drop a lot faster than they rise.

We saw that over the last few weeks as the Dow Jones Industrial Average and Standard & Poor’s 500 Index erased all their 2011 gains in a couple of days. That’s pretty common. In fact, it usually takes an index all year to gain 10% to 20%. Then it can drop as much as 30% in a week.

So if you were able to short stocks during those times, you would make a decent return for a full year within weeks, or even days.

However, it’s not always easy to execute short- sells in the stock market – which is why I always look for the best short-selling opportunities in foreign currencies first.

And I just found the ideal short-sell in the f orex market to play as markets fall.

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Central Bankers’ Next Panic Move


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August 30, 2011 By Leave a Comment

It may seem like panic in the stock markets just started this month, but the truth is governments and central bankers have been in “panic mode” since March.

We just didn’t see it in the markets until a few weeks ago.

But if you look back, you can tell central bankers were panicking because they kept intervening to manipulate their stock or currency markets.

Here’s a quick play-by-play of those panic attacks and the real messages behind them:

  • March 17 – Central bankers in the United States, the United Kingdom, Canada and the Eurozone all join forces with Japan to orchestrate a “coordinated intervention” to drag down the Japanese yen’s value.
    Translation: “Emergency! We have to do something about that “strong yen” or else Japan’s economy is doomed.”
  • Aug. 3 – The Swiss National Bank unexpectedly cut interest rates to “as close to zero as possible.” Swiss bankers said they would increase the supply of francs to money markets to curb their “massively overvalued” currency.
    Translation: “This “strong franc’ is killing us. Before long, no one will be able to afford our chocolates and fancy watches. We’ve got to do something. Let’s try shooting this “final bullet’ in our gun and see if that works.” (And, unfortunately for Switzerland, it didn’t.)
  • Aug. 4 – The Bank of Japan (BOJ) intervenes once again to push down the strong yen’s value by selling yen and buying dollars.
    Translation: “Ok, now we’re desperate. We’ve got to see this yen turn around or we’re toast!”
  • Aug. 8 – The European Central Bank (ECB) buys Italian and Spanish bonds.
    Translation: “We need to throw Italy and Spain a bone, even though we don’t have enough firepower to bail out Italy like we bailed out Greece. But we’ll put on our best poker face and try.”
    Translation: “Um, well we have to do something — let’s announce we’re keeping rates low. We were going to do that anyway.”
    Translation: “Well, we’ve tried everything else, let’s say everything is fine to calm the markets down! Then we can always dive into QE 3 next month or the month after if things get really bad!”

Nothing Has Worked

Did any of these emergency moves actually work? Did central bankers manage to stop volatility in the markets?

Heck no!

In fact, they made it worse. Investors have finally sensed panic from the guys in charge. That’s why so many stock and currency traders keep hitting the sell button and dumping all their holdings.

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