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Since 1978 With a 32 Year Vacation

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    • FROM RICHARD C. YOUNG
    • THE FINAL INTELLIGENCE REPORT
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  • DIVIDENDS & COMPOUNDING
    • MIRACLE OF COMPOUNDING
    • DIVIDENDS
  • GRAHAM & RUSSELL
    • BEN GRAHAM
    • RICHARD RUSSELL
  • THE DOW AND THE LEADERS
    • DOW vs. S&P 500
    • DOW vs. DOW DIVIDEND PER SHARE
  • WELLINGTON MANAGEMENT COMPANY
  • YOUR SURVIVAL GUY
  • BANK CREDIT & MONEY
  • THE PRUDENT MAN

Now Is the Right Time to Make Dividends Your Ally

October 9, 2020 By Richard Young

For over five decades, the underpinning of everything I have written has been a foundation of dividends. It has served me well, and if you have followed my advice, it has served you well too.

Shortly after the dotcom bust, I wrote a segment titled, “Make Dividends Your Ally.” In it, I said:

Regarding dividends, corporate directors have deluded themselves for many years in two ways. First, they have been too concerned about double taxation. Many investors don’t care about double taxation because they are (1) saving in tax-deferred accounts or (2) need the dividend income in retirement. Second, directors believe that management can reinvest earnings so well that it just does not make good sense to pay out much to shareholders in the form of dividends. Nonsense. The track record of reinvestment just isn’t that strong.

Does that template apply to investors today? Yes. A number of today’s biggest companies don’t pay any dividends at all.

While many investors own equities paying no dividends, the Federal Reserve has lowered interest rates to near-zero levels, again. The 5-year treasury yield you see in the chart below illustrates the dire situation for America’s savers.

Alongside the treasury on the chart is the yield of Procter & Gamble shares. During the last 40 years, P&G has compounded its dividend, on average, 8.5%, and its stock price (not on the chart) by 10.5%. That’s the type of strong record retirees can build a portfolio around when they make dividends their ally.

Make dividends your ally today. For more on the benefits of dividend investing, download Dividend Investing: A Primer from Richard C. Young & Co., Ltd.

Filed Under: Dividends

Stock Market Investing for a Secure Retirement

September 25, 2020 By Richard Young

Here’s why I don’t follow the meaningless price or market capitalization stock market averages, especially the likes of the Dow and S&P 500.

  • The S&P 500 Index: only 50 of the biggest cap names account for more than 50% of the total S&P500 Index.
  • The Dow 30: only 10 of the highest priced stocks account for more than 50% of the total Dow Jones Industrial Average.

No thanks to index investing in either the Dow or the S&P.

Dick Young’s Investment Rules

Why savvy investors saving for a long and comfortable retirement should always follow RCY’s guide in crafting balanced portfolios:

  1. RCY: I rarely invest in stocks that (1) pay no dividend or (2) have not increased shareholder payout for years.
  2. RCY: I don’t like companies with high P/E ratios. In fact, stocks with single-digit P/Es are most appealing.
  3. RCY: Consumer expenditures account for $7 out of every $10 of real GDP, so I use Vanguard’s broad Consumer Staples ETF portfolio as a handy shopping list for many of my individual stock purchases. This allows me to craft portfolios with an average yield of nearly 3%
  4. RCY: I also insist on long-term annual dividend growth.

Over the long term, stock prices most often follow dividend increases upward.

Once you construct a conservative portfolio in a low interest rate environment like the one we face today, cash flow can be readily enhanced with a modest, replaceable draw from principal. By example, a client wanting a 4% annual portfolio draw can withdraw temporarily an additional 1% from principal annually.

Don’t forget, each year your portfolio receives more cash from increasing dividends, your yield on initial investment goes up. Talk about a winning hand.

Filed Under: Investing Strategies

How You Should Invest Today: Part II

August 27, 2020 By Richard Young

These two charts (below) on Dover Corp. and Procter & Gamble show you long-term compounded dividend and stock price growth for both.

In both cases, the long-term trend shows a pattern of consistent annual dividend growth matched with long-term stock price appreciation.

In Dover’s case, the dividend has compounded at an 8.9% rate of growth and the stock an even stronger and equally consistent 10.9%. For P&G the numbers have been 8.5% and 10.5%.

What you are looking at in both instances is decades of consistency, stability, and comfort for shareholders.

At our family investment counseling company, these are the only kind of companies we invest in for clients. Our master list of potential portfolio companies includes only companies with similar long-term records.

We never even consider companies without long-term records of dividend growth.

I have been writing about consistency, stability, and compound growth for five decades. And underpinning every report has been a foundation of dividends.

When you concentrate on dividend growth and stability, you never have to think about capital appreciation. It will take care of itself as my charts on P&G and Dover Corp. demonstrate, as long as the dividend is growing.

So, the easy lesson in this second part of my “how to invest today” series is to make dividends your password to investing both now and in future years.

Read Part I here.

Filed Under: Investing Strategies

How You Should Invest Today: Part I

August 20, 2020 By Richard Young

Charles Dow created the Dow Jones Industrial Average (DJIA) in 1896.  Originally the Dow had 12 companies:

American Cotton Oil; American Sugar; American Tobacco; Chicago Gas; Distilling & Cattle Feeding; General Electric; Laclede Gas; National Lead; North American; Tennessee Coal and Iron; U.S. Leather; U.S. Rubber

Not one of the original 12 DJIA stocks remain today as DJIA components.

That tells you the first couple of things you need to know in becoming a successful long-term investor.

First to remember, any stock average or index is not static, but is a revolving door. That is why I have never been interested in comparing my own investment record nor that of my clients against any average or index.

Second, most are either market capitalization (S&P 500) or price (Dow 30) weighted. Why would I want to consider my own investing program in comparison to two groups of stocks organized in a format that I would not dream of deploying myself?

So, where do you start? It is quite easy: Concentrate on diversification, dividends, compounding, and, above all, patience.

For something that doesn’t sound too hard, in my experience over five decades in the business of counseling investors, this seemingly easy menu is almost impossible for the individual investor to grasp.

In Part II of my series, I will help you get on just the right track to begin your journey as a comfortable and successful long-term investor.

Filed Under: Investing Strategies

US Dollar Craters vs Swiss Franc

August 13, 2020 By Richard Young

Since last spring, my clients and I have been buying Swiss francs and lately Swiss franc denominated, dividend-paying equities.

What’s behind the dollar’s collapse? Too many dollars relative to Swiss francs are being printed. It’s no more complicated than that.

It is the Fed who is responsible for debasing the currency.

The Fed’s “private club” was introduced by Woodrow Wilson, America’s worst president, in 1913.

Since then, the Fed has increasingly muddled with the economy in total opposition to its original intent.

I have written often that I would return the Fed to its founding principles prior to shuttering it for good.

In the meantime, the dollar will remain on thin ice.

Filed Under: Investing Strategies

Every Investor Must Have a 5/10% Gold Hedge

August 11, 2020 By Richard Young

Jeff Deist of LewRockwell.com writes abridged:

Fed Bugs are people with a faith-based belief in the power of central banks (and central bankers) to engineer economic growth using “monetary policy, “despite decades of history and current evidence to the contrary. They believe tinkering with inputs and rates and velocity and flows somehow makes us richer in terms of productivity, goods, and services. They believe in financial alchemy, as economist Nomi Prins puts it, rather than precious metals.

They believe paper has value so long as government issues it and legislates its use.

Central bankers almost by definition are Fed Bugs, but so are most monetary economists, financial journalists, and politicians. And they all hate gold with a passion.

The reasons why are multifarious, but ultimately flow from their fundamental resentment of any money they do not control and cannot design. Central planning requires central money, and gold stands apart by it very decentralized nature. It is indifferent to human conceptions, and can be discovered and summoned from the earth only with tremendous risk and effort. It cannot easily be manipulated or destroyed, and its value cannot be decreed (though they try mightily). It is unchanging, unyielding, and stubbornly at odds with the political visions of Fed Bugs.
And so they hate it.

Gold quietly serves as a lingering rebuke of the entire political fiat money project—even as central banks are forced by circumstances to buy and hold it as collateral, as the ultimate hard currency and liquid asset for their balance sheets. In fact, central banks steadily bought or repatriated huge amounts of physical gold in recent years, despite the supposedly strong world economy prior to the Covid crisis.

Nixon eliminated the right of foreign governments to redeem US dollars for gold in 1971.

Jeff Deist is president of the Mises Institute, a tax attorney, and a former staffer for Ron Paul.

Filed Under: Investing Strategies Tagged With: precious

Monetary Heart Attacks Likely to Lead to S&P 500 Crash

August 6, 2020 By Richard Young

My charts (the Fed’s EKG) on high powered money and M2 growth point clearly to undisciplined chaos at the Fed.

Do you see any instance of such chaos in preceding decades? No!

Indeed, payday will arrive.

The table indicating my own program of gold buying gives you a look at one of a number of moves I made last spring to balance myself for the inevitable comeuppance.

At our family investment counsel firm, we emphasize ongoing strategy discussion, featuring new issue corporate bonds, dividend-paying Swiss franc denominated stocks, and currency and especially high US dividend-paying blue chips. Our laser-like concentration is on companies that have increased their dividend for decades.

 

Filed Under: Investing Strategies

Dump All Low Yielding US Treasuries Now

August 5, 2020 By Richard Young

Today we have a situation where the Fed has forced individual investors with life-time savings to subsidize corporate buybacks, acquisitions, and Wall Street banking industry borrowing and speculating. It’s what I call de facto robbing and stealing.

In reality, the Fed is nothing more than a private club to favor corporate and banking elites.

When the Federal Reserve was first established in 1913, Congress directed it to “furnish an elastic currency, to afford means of rediscounting commercial paper” and to establish a more effective supervision of banking in the U.S.

The Fed’s duties should have been left there. But no …

On 27 October 1978, President Jimmy Carter signed into law the Full Employment and Balanced Growth Act. The act requires the chairman of the Federal Reserve to connect the monetary policy with the president’s economic policy.

I would look to nullify the act in its entirety.

If the Fed is retained, its purpose should be confined to the narrow founding definition, and nothing more.

My two charts (below) indicate the circus climate the Fed has promoted today. Whenever interest rates stand below 4%, the economic and monetary system is out of whack.

Twice this century the Fed has allowed rates to sink below 4%. On the second of the two rebounds this century the Fed did not allow rates even to return to a more natural 4%.

Early this spring my family investment counsel firm sold all of our Treasurys. I also sold all of mine.

Today we are laser focusing on new issue corporate bonds, high-yielding blue-chip equities, Swiss franc denominated assets, and gold.

The Fed is attempting to control both the quantity and price of money. Bad things will happen and misguided individual investors will once again pick up the tab as the general stock market crashes in shock.

Filed Under: Investing Strategies

RCY’s Brand New Investing Program – 100% Swiss

July 31, 2020 By Richard Young

The Fed has created a disastrous asset bubble that will extend for years.

Read my series on Ron Paul to gain the full flavor for what is transpiring.

I devoted a large section of my 1987 book to inflation, gold, and Switzerland. Through the decades, I have been a big investor in both Swiss assets and gold.

In the month of August, 100% of my personal investing will be in Swiss Franc-denominated assets.

Click here to view my Swiss chart pack.

The Swiss Way

I have written in the past of the Swiss Confederation and its weak central government form (the presidency is a ceremonial office and rotates). The office has no powers above the other six members of the Swiss Federal Council. The entire Federal Council is considered a collective head of state. Switzerland is a neutral country with a low crime rate and a powerful national defense system. Instead of fielding a large standing army, Switzerland requires every man to undergo military training for a few days or weeks a year throughout most of his life. Each man is required to keep his assigned automatic rifle at home at the ready. The Swiss are powerful believers in individual liberty and freedom. They believe that there is no need for a higher legal authority to check people’s initiatives. In fact, federal court in Switzerland is not allowed to rule on any constitutional matter at the national level. The Swiss are all about keeping things at the cantonal level. Keep it local is the key in Switzerland.

There is a lot to learn for Americans from “the Swiss way.” Switzerland’s model is precisely the weak form of central government intended by our Founders. The best outline of what a constitutionally strong form of federal republic looks like is Ron Paul’s Liberty Defined. The chapter on “Empire” alone will amaze you.

Read more about The Swiss Way here.

Filed Under: Investing Strategies

My 10 Point Investment Plan: Pretty Much the Same as Back in 1990

July 28, 2020 By Richard Young

Back then I offered subscribers to my investment strategy report a ten-point investment guide for the long term.

The basic plan is today, thirty years later, pretty much unchanged.

  1. Make capital preservation your number one target
  2. Make dividends the cornerstone of your core equity portfolio
  3. Never forget the power of compound interest
  4. Make equities, not bonds, your core holdings.
  5. When general market conditions are horrible, and most folks are selling, aggressively buy your dividend stocks
  6. Use automatic withdrawal programs for retirement income
  7. Don’t trade in and out
  8. Remember the words full faith and credit.
  9. Never invest based on predictions. Invest based on relative value only.
  10. Be well organized, always have a plan, practice patience.

Filed Under: Investing Strategies

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