Fixed-Income picks for TheOldEconomy Investors

Beyond Equity idea(s) for November

Preservation, income, and growth. At best, we can get two of three.

Think about a duck. It walks, it swims, it flies. However, the duck is not superior in any of those activities. It is simply good enough. In investing, “duck” instruments do not exist.

What about dividend stocks?

They are neither excellent growth prospects nor true income generators, and the principal is at risk. Bonds and preferred equity will do the job if the goal is income plus preservation; for growth, pick (common) equity and derivatives.

The price of duck versatility in investing is mediocrity.

If you want to achieve your market goals, you have to walk an extra mile. Do not settle for the most straightforward solution (nor for the most complex). Simply apply the optimal tool for the task.

Bonds are perfect for income generation and principal preservation at the expense of growth. Equity and derivatives are excellent growth instruments but come with higher default risk and no income. Set a goal and pay the price.

This is November’s report for Pro subscribers. It’s time for TheOldEconomy fixed-income ideas.

Back to the basics

Shipping, mining, and energy offer more than an adrenaline rush and sleepless nights. TheOldEconomy enterprises also issue attractive debt instruments for income-oriented investors.

In some cases, they have growth potential. Nevertheless, today’s article focuses on HTM ideas. Goal number one is a reasonable yield with adequate principal safety.

To understand the power of bonds, we must go back to the basics. There are two types of assets: ownership and contract. The first category includes private and public equity, collectibles, and real estate. You, as investors, own the asset or a fraction of it; hence, you are entitled to receive (part of) future net profits.