Retirement Ready Income Programs

Stock Market: Thirteen Months Down, And Now... Brexit

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As the stock market enters the fourteenth month of struggling to find a catalyst for renewed upward momentum, investors owe it to themselves to take a long look at some perspective formulating groups of numbers... since the turn of the century:

Perspective Formulating Numbers, Group One: The S & P 500 is down 2.2% from the All Time High (ATH) achieved May 21st 2015, and up just 1.9% in 2016. At thirteen months, this "malaise" is the longest (but not the deepest) correction since the financial crisis ended March 9th 2009.

An intraday low of 1810.10 (-15%) was struck on February 11th.

Since its 2007 ATH, nearly 9 years ago, the S & P is up 34.5% (less than 4% per year) while producing annual dividends of less than 1.5%. Approximately 20% of the S & P companies pay no dividend at all, and less than 65% are worthy of an Investment Grade Value Stock designation.

Since the end of 1999, the S & P 500 has gained less than 3% per year.

Perspective Formulators, Group Two: The Investment Grade Value Stock Index (IGVSI) is down 3.1% from its 5/21/15 ATH, but up 9.6% in 2016. NASDAQ, by the way, is roughly 3% below where it was 17 years ago.

Since its 2007 ATH, precisely 9 years ago, the IGVSI is up 43.8% (nearly 5% per year) while providing approximately 3% in dividends. All IGVSI stocks are dividend payers, none are NASDAQ, and all are ranked B+ or better by S & P... i.e., Investment Grade Value Stocks.

The IGVSI had corrected roughly 18% by February 11th; it did not exist in 1999... but check out the link below, under "Superficial Observations".

Perspective Light Bulb, "On" Switch, Numbers, Group Three: The WCMSI (an index of Closed End Income Funds (CEFs), both taxable and tax free,) is up 7.9% since 5/21/15 and up 10.9% thus far in 2016;  it was down just 3.7% through 2/11/16. 

Since 2007, and throughout the financial crisis, the dividends paid on WCMSI CEFs has averaged somewhere between 7% and 9% per year (possibly more); more dividends were raised, it seems, than reduced during the debacle. 

For the second time since the financial crisis, CEFs have rallied into nearly full portfolio turnover position, with profits taken at one-year's-income-in-advance compound interest rates. 

Today's tax free yields average around 5.3%; taxable about 7.4% (after all fund  expenses). These are the lowest yields we've experienced since the CEF rally that ended in November of 2012.

  • Note that these income engines are only available in self-directed investment programs, not ETFs, not Mutual Funds, and not in most 401ks... especially now that the DOL is taking the income out of retirement planning.

Superficial Observations: 

Both investment "buckets" (growth purpose and income purpose) of Market Cycle Investment Management program have outperformed the S & P 500 in the nearly ten years surrounding the financial crisis, based on the raw numbers above. Monthly payments to retirees have been paid from income, not principal, throughout.  

The IGVSI was down 11% less, and the WCMSI 30% less, than the S & P 500 at the bottom of the financial crisis. 

Fluke? Check out the numbers from 1999 through 2009, "The Dismal Decade".

Conclusion: What's the "take away" from these numbers? 

Clearly, an investment program balanced between the highest quality companies (ranked by S & P) in the "Growth Bucket" and a wide variety of historically "income dependable" CEFs, either taxable or tax free, would most likely have outperformed the S & P 500 alone by a considerable margin thus far in the 21st century. Ya think! 

Dilemma: If you tell "Your Gal", "Guy", or Employer that you would like this kind of high quality growth and income program, they won't even know that it exists... and will have no incentive from their financial institutions to find it for you. 

For the vast majority of 401k participants, it's even worse... the regulators have concluded that quasi retirement programs must be low cost, even if that precludes the development of any spending money at all. 

Solution: Ask "your person" how much real monthly income you will be receiving at retirement without selling shares or units, without reducing your principal, and without buying the annuity of the month. 

Reasonable objective: A program that will produce historically secure dividend and interest income in excess of the amount you will need to live on (and to pay Uncle); a program capable of growing your income in retirement, after the salary deduction and employer matching contributions have left the building. 

The "retirement readiness" credo: 

Neither stock market downturn nor higher interest rates will have a significant negative impact on my retirement income; they could, in fact, allow me to grow that income even faster! 

Retirement Ready Income Programs
2971 Maritime Forest Drive
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494
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Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

Please join the private article mailing list or Call 800-245-0494 for additional information

Risk Management: Income, 401k, and IRA Programs

Take a tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:


In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 

Associated Content:
WALL STREET'S EVEN DARKER SECRET: 8.63% TAX DEFERRED INCOME - SPECIAL REPORT: As of Close of Business May 8th, no less than 57 multi-year experienced, Taxable Inc...
WALL STREET'S DARKEST SECRET: 6.3% TAX FREE INCOME - Special Report: As of Close of Business May 8th, no less than 53 multi-year experienced, Tax Free In...

Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.