Buy low, sell high. Its the oldest investor slogan there isand the deadliest one, too!
You simply cannot afford to give in to this wisdom today, even though its tempting. Now that weve seen a couple of days of weakness, you might be wondering if the recent all-time high was a sign to selland if all-time highs are often signs to sell. But do that now and youll certainly leave huge incomeand upsideon the table.
Instead, now is the time to buy, especially closed-end funds (CEFs) paying dividends of 7% and up. Ill give you an example of one of these high yielderswhich drops its payout into your account monthlyfurther on.
Whats more, plenty of these funds are cheap today: as I write, 118 CEFs trade at discounts of 10% or more.
Before we get to that, lets look at why market timing is a recipe for disaster, even though this simple advice feels right on almost every level.
A Trap as Old as Money Itself
The market-timing temptation is easy to understand when you look at a chart of the markets performance in the last few yearsin hindsight, it looks pretty easy to buy when the market freaks out and sell at a peak.
A (Seemingly) Simple Play
But of course, you can only spot a peak (or a trough) in hindsight. And when you guess, you almost always guess wrong. Check out this chart up until July, when stocks broke to their highest point. At those heady levels, it sure felt like a correction was about to dropand soon!
Investors Who Fell for This Warning
But if you had sold when stocks broke out of the channel above in early July, you wouldve missed out on higher prices over the next five months, not to mention dividend payouts:
Missed Out on Gains (and Dividends)
So why doesnt market timing work?
Simple: because its natural for the market to be at an all-time high. You should chuckle whenever you see a headline that says Stocks reach a new record, because thats exactly what stocks are supposed to do!
And, historically, thats exactly what stocks have done.
Over the last 70 years, stocks hit all-time highs about one out of every 15 days. Whats more, stocks rarely go into bear markets after hitting all-time highs (this happened in 2000, 2007 and 2018, but those occasions represent just 4% of every all-time-high day over that period and less than 1% of all trading days.
It isnt the all-time highs that are rare, but the bear markets!
When all-time highs occur, stocks have a higher chance of going up to a new all-time high within a month or staying within 2% of the all-time-high level than they have of declining 5% or more. Thats why the markets long-term performance looks like this:
One All-Time High
Then Another
And Another
Over the last 50 years, US stocks have gained an average of 9.1% annually, making them one of the worlds best-performing assets. Thats because all-time highs arent a sign to sell, like with beanie babies, baseball cards or cryptocurrencies: theyre a time to buy.
118 CEFs Trading at 10% (or More) Off
What if youre worried about a long market lull, like the famous 10 years from 2000 to 2009, when stocks flatlined? While such downturns are unusual (200009 and the Great Depression are the only periods where this happened), if youre close to retirement and need cash from your investments, its a serious concern.
This is where CEFs are a big help.
CEFs are a kind of mutual fund that focuses on large dividend payouts. With an average payout of 6.9%, CEFs trounce the 1.8% dividends youd get with an index fund like the SPDR S&P 500 ETF (SPY).
And you dont have to sacrifice diversification or dig into risky small-caps to get that kind of yield. For instance, the Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) pays a 7% dividend yield. Large-cap stocks, like JPMorgan Chase (JPM), Verizon Communications (VZ) and Walt Disney Co. (DIS), make up about 75% of the portfolio. The rest is a mix of corporate bonds, mid-cap stocks and other investments. What makes EVT even more impressive is that its beaten the S&P 500 since its inception.
Huge Dividends and Market-Crushing Gains in 1 Buy
Besides high dividends and market-beating performance, many CEFs offer another benefit: discounts. Because their market prices can deviate from the net asset value (NAV) of their portfolios, some CEFs trade for less than their assets are worth. While EVTs strong historical performance means its now trading at about par to its NAV, there are other CEFs out there118 as I write thistrading at 10% or less than the actual value of their portfolios.
Most important, these CEFs deliver strong income thats invaluable if the market flatlines or pulls back. During the 200009 flat market, EVT kept on paying its investors, giving them the cash they needed without having to selland take the huge risk of trying to time the market.
8.8% Dividends, 20% Upside in 2020: Learn How Here
When I said there were other CEFs out there trading at discounts of 10% or more, I wasnt kidding. As I said, there are 118 CEFs with discounts that bigand even bigger.
And Im going to share my 4 very best CEF bargains with you right now. Not only is this quartet trading at a serious discount now, they also yield a massive 8.8%, on average!
In other words, when you put your cash into these 4 funds, youre essentially getting the historical return of US stocks in dividends alone, before we even get to any price gains. Its the perfect recipe for a flat market, and a key safety valve in a pullback.
And speaking of price gains, the discounts on these 4 funds are so big, Im fully expecting their prices to jump 20% by this time next yearnot including their huge cash payouts!
Full details are waiting for you now: simply click here and Ill give you everything I have on these funds: names, tickers, best-buy prices, my complete take on each funds managerall of my research!