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Hey There Income Hunters,
After a great weekend of wrapping presents and laying low with family and friends, I returned home to market crossfires coming from ALL angles:
- A new stimulus bill will pass!
- There’s a new COVID variant!
- Equity markets down 2%!
- Bank stock buy-backs have been reintroduced!
- Oil tanks 4%!
So, what do Income Hunters do in these situations?
We rise above the noise, take emotion out of the trade and stick to the rules of our game…
It’s a top-down approach that includes:
- Trading WITH the Fed
- Looking at Long-term Cycles
- A Focus on Investor Psychology
- Systematic Discipline
- Finding Short-term Opportunities
And we remember the core Power Income portfolio view:
- The Fed is trapped in a long-term debt spiral with only one way out — Inflation.
- It may take a while, but investor psychology will shift to exchanging cash for real assets.
- That’s when the Fed loses control of inflation and real assets SOAR.
And guess what? This stimulus package just got us one step closer …
So, overall, the news is positive — $900 billion more in currency will be created!
Right after the open, I added to the reflation trade choosing SLV, the silver ETF.
It is liquid and has liquid options.
There’s one other trade I want to share, as well. You will love the reward-to-risk ratio on this one and I’ll share a few fundamental secrets …
The Power of “Trading” Dividend Stocks
A big part of my reflation portfolio will be Energy infrastructure stocks (Master Limited Partnerships or MLPs) and Real Estate Investment Trusts (REITs).
MLPs and REITs are perfect structures for dividend income seekers because they’re awarded favorable tax treatments for distributing the majority of profits to investors.
An MLP I particularly like is Energy Transfer (ET), a solid player in the Oil & Gas and Transportation sectors.
More importantly, while their peers are cutting back on CapEx to continue paying their dividend, ET is cutting its dividend to continue its CapEx plan.
That is a BOON for Income Hunters focused on power trading using options.
We will happily pass on a 9% dividend income for a 7-1 reward-to-risk trade opportunity on a good company with a single digit price-to-earnings ratio.
Live & Trade w/ Passion My Friends,
PS – By the way, you can do to vol what Santa does to his reindeer: Harness up and take flight. And Option Pit’s Volatility Edge can help you soar into 2021. Get on board.
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