Yellen Speaks!

Hey There Income Hunters,

Biden Treasury Secretary nominee Janet Yellen kicked off the move into her new post just as we knew she would …

To borrow a phrase from our recently departed 45th President: Bigly.

How about these quotes from her confirmation hearing this week …

“But right now, with interest rates at historic lows, the smartest thing we can do is act big.”

“We should have greater cooperation between the Fed and the Treasury, with both the monetary and fiscal policy working together and supportive. This is a good backdrop for risk sentiment.”

Yellen also played up green energy and infrastructure spending.

That drove metals up, oil up, dollar down … as you would expect with at least $1.9 trillion in stimulus cash coming very soon.

And with Yellen at the helm, I see that number rising to as much as $5 trillion by year’s end.

So …

On the Income Hunt
Everything that Yellen had to say was interesting …  

ESPECIALLY because an energy stock I have been tracking just bought a stake in the world’s largest solar developer …

  • Total (TOT) agreed to acquire a 20% stake in India’s Adani Green Energy, the world’s largest solar developer, for $2.5 billion.
  • Total is a unique multinational oil and gas (and renewables) company with a market capitalization of more than $120 billion…

AND they weren’t finished with that deal…

  • Total signed an MOU with Clean Energy Fuels (CLNE) to create a 50-50 joint venture to develop carbon negative renewable natural gas production facilities in the U.S. …
  • These strategic moves will help them achieve net zero emissions by 2050, while still delivering near-term performance in the oil market. 

I HAD to pull the trigger…

TOT trades at $45, which I have to be a  10% discount to my fair value. Morningstar has them at a 20% discount to their fair value …

I use a simple discounted cash flow analysis to calculate a fair value price. 

Here is the data from Power Income’s valuation model:

Next Question … Does TOT pass the Quality Test:

  • Dividend Safety: The $3.09 annual dividend payment only absorbs 48% of their net funds from operations… That works, as below the 60-70% range is good.
  • Dividend Growth: 7% growth and 7% yield is excellent. You want the total of the two to be 8-10%.
  • Total Debt/Equity: This shows their balance sheet strength and total debt is only 60% of equity. Anything under 100% is good.
  • Return on invested Capital: TOT averaged 7.5% over the past 10-years. That could stand to be a bit higher, but is acceptable — especially if their recent investments turn out as expected.

Based on the four factors above, TOT looks VERY strong.

Let’s also take a quick look at the market technicals:

I like to use the 200-day moving average as a momentum guide. Here TOT is trending higher within a channel (marked by the blue lines). I am confident it will rally to the top of the channel before mid-year. 

 My Trade


So I pulled the trigger and got my trade on for a $1.83 debit, which is a 2.7 to 1 

reward /risk ratio.

I chose the August expiration because I think oil will be above $60 by then, which will easily get TOT above $50.

As I’ve discussed elsewhere, the Biden administration is going to be HUGE for oil, which has already risen from $39.84 when he was elected to nearly $53 today. I expect that trend to continue.

Bringing It Home
Today, I gave you more detail on the analysis I go through to pick quality stocks.

It’s really important to do your homework. 

You can be right about the bigger picture but be wrong about a specific stock and end up losing money. That really stings. 

Remember it’s a top down approach. 

  1. Formulate your opinion on the big picture 
  2. Analyze the stocks in the sector you favor for quality 
  3. Analyze the technicals on the stock for optimal entry and exit points 
  4. Let it rip…

Please keep the feedback and questions coming!

Also, I have an important announcement.

⇒ I am working on a model portfolio of dividend stocks with an option program overlay that will help you build “Power Income for Life”.  

Stay tuned…

More to come.

Live and Trade With Passion My Friends,

Griff

Biden shooting for the moon with $2 Trillion Stimulus Package!

Hey There Income Hunters,

Richard Clarida and Lael Brainard from the Fed spent the day Wednesday strongly downplaying suggestions of an early slowdown on quantitative easing (bond buying).

That sent yields sharply lower. 

Then, just after 9 p.m last night, the US 10 Year Treasury soared almost 5 basis points, from 1.07% to 1.12%, in just a few minutes amid fears that $2 trillion could cause inflation to spike well above 2%. 

Biden’s Statements

“My priority is to get, first and foremost, a stimulus bill passed,” President-Elect Biden said earlier this week. He also highlighted that the historically low interest rates will bolster both the short-term and long-term growth outlook, saying it would “reduce our national debt burden and “if we don’t act now things are going to get much worse.”

Reduce our national debt burden!?

THAT is an interesting statement …

He can only mean that the package will be so pro-growth that GDP will soar and we can grow out of our debt burden by creating much higher wages and productivity, allowing for the debt to be paid off.

Let’s hope he is right.

Bringing it Home

How the Dollar reacts to this new stimulus is critical.

It has shown signs of a reversal in the downtrend (see chart below).

$2 trillion of new stimulus could turn the trend back down. That would be bullish for stocks, bullish for commodities and bearish for bonds …

So, stay tuned.

The chart below shows a “Positive Divergence” …which is a favorite technical indicator of mine and it signals a reversal in trend.

Here’s how it plays out…

  • The dollar index (DXY) made a new low (red circle in top panel)
  • The relative strength indicator (RSI), bottom panel, showed greater strength than the previous low. 
  • This is called a positive divergence between price and RSI and it is a powerful sign for a reversal in trend.

There are so many cross flows of information right now: Transition to a new administration, Covid-19 resurgence, Fed stimulus, fiscal stimulus, debt issuance and more …

The key is to prioritize importance based  on what the market perceives to be the most important driver

And NOW we know … it’s $2 trillion in fresh spending directly into the economy.

Live and Trade with Passion my Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

We Finally Got the “V” Recovery

Well, we have to hand it to Congress …

They are good at writing stimulus checks.

In less than 6 months, personal income has returned to pre-Covid levels. 

Take a look …

That’s great news for stocks, since a top choice for most households who receive checks is to invest in the stock market. …

In fact, CNBC reported that those earning between $35K and $75K annually traded stocks nearly 90% more than the week just before receiving their stimulus check. That number was 82% for those in the $100K-$150K range, while it was a 46% bump for those above $150K.

The bottom line is, A LOT of money is going into the market …

So, today I want to share 2 stocks that will benefit from the stimulus coming in the next couple of months.

Plus they will pay awesome income as a bonus.

First, up …

British American Tobacco (BTI): A leading, well diversified tobacco franchise. There is tremendous brand loyalty in this industry and BTI expects to reach $5 billion in revenues by 2025.

 A few things that I like about BTI:

  • Investment-grade rating w/ a strong balance sheet
  • Over a 7% dividend yield …  3x higher than comparable corporate bonds
  • Wide moat (an edge over competitors) formed by cost advantages
  • Morningstar rates them very high at a 30% discount to fair value

A tool I like to use is “fast graphs” because they provide great information on one graph.

The orange line below is key because it shows the price-earnings ratio generated by average growth.

This reveals just how undervalued the stock is …

Onto stock No. 2 …

Kinder Morgan Inc. (KMI): KMI has been one of the most resilient companies during the pandemic …

The stock has rallied 16% and announced a 3% dividend hike for next year.

AND it has much further to go with it’s fair value price up at $21. 

Bring It Home

Look, I love the energy sector and KMI has a lot of value at its current price.

And although I am not a smoker, BTI is a bullet-proof income tobacco company because they have cost advantages and customer loyalty.

Most of all, these are two stocks to own for the long haul because …

You get paid an incredible income payment year after year that you can reinvest and let the magic of compound interest create income for life.

That’s what Power Income and Income Hunting are all about!

Live and Trade With Passion my Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

Get Ready to Jump on This Breakout Trade

Hey There Income Hunters,

Here’s a secret … I use triangles to identify sideways consolidation patterns that may be close to completion and ready to breakout.

What does that mean?

Basically, trading chart triangles are an indicator that give me an edge. 

Why? Because they often point to a breakout continuation of a stock’s recent performance.

I never want to waste time and money getting chopped up in a corrective trading range … so I let the pattern develop.

Once a triangle is forming, I monitor it more closely and wait for a set-up I can lean on.

Triangles are great tools because they provide a structure to trade against with clear entry points, profit targets and stop-loss levels.

I’ll run through both ascending and descending triangles and show real examples of each.

Read this graphic first …

Enbridge (ENB) is a current example of an ascending triangle.

They also happen to be an excellent company in a sector that has been undervalued and is starting to trend higher. 

The fact that Morningstar has fair value 26% above the current price at $45 provides additional confidence on a continuation breakout.  

Playing the Enbridge Triangle

A breakout to the upside would occur above $34.28.

Depending on when it happens, your stop would be a breakdown below the bottom, ascending trend line.

Your profit target would be the width from the lowest point of the triangle to $34.28, which is roughly $7.

Now, let’s take a look at a descending triangle, which is much like an ascending triangle, just heading the other way …

A Recent Down Trade I Made in GLD

I caught an excellent down trade in GLD in November.

After a significant rally in GLD fueled by the Fed, I noticed the Fed put stimulus on hold, telling me GLD could correct. 

Sure enough, GLD traded off, broke below the 200-day moving average and formed a descending triangle.

I waited for a clear break and purchased puts on GLD.

I purchased the 173 Puts and two days later closed the position for a 90% return (or 16,000% annualized return).

Bring It Home

You want to have a tool box of technical indicators that help identify opportunities and, more importantly, help you manage your trades.

Classic patterns like triangles are extremely helpful.

I’ll share many more as real trades come along that prove the point. Maybe we’ll even start up #TechnicalTuesday!

Ping me with any questions. Until then …

Live & Trade With Passion My Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

A Wave of Cash is Coming

Hey There Income Hunters,

On Friday, President-Elect Biden said Congress must act quickly on a new stimulus beyond last month’s $908 billion package. 

It would tap into the $4 trillion in total economic assistance Congress has already devoted to battle the devastating pandemic.

So the gift of giving continues.

And just look what it meant for the year-on-year numbers for December. The updated Power Income Reflation Indicator has hit another trifecta …

Power Income Reflation Indicator Breakdown:

  • M1 Money Supply: This is consumers’ most readily-accessible cash.
  • Fed QE: Quantitative Easing is the Fed’s only tool with rates already at zero. The Fed buys bonds from banks and credits their accounts held at the Fed. Banks can then make loans to the public or use the funds for market activity. The majority goes into the stock market.
  • Fiscal Policy: This is the most powerful form of reflation because money is injected directly into the economy. Stimulus checks are a prime example.

The Fed continues to set record highs in money supply and the size of their balance sheet each month. This is fueling the S&P 500 to record highs. See below:

Watch for more Details on the Next Stimulus Package this Week

Here is what you can expect to see:

  • Another $1,400 in new stimulus checks 
  • $370 billion in student loans wiped out under Biden’s current plan
  • Potential for much greater student debt cancellations under the Schumer-Warren plan; as much as $1 trillion
  • Major transfers of wealth to low-income segments, which would be very positive for economic growth

Look for 4,200 S&P in the First Half of the Year

Here’s why …

US households have already received $1 trillion in aggregate — and nearly $70 billion of that remains as “excess savings.” That number will rise as the second round of fiscal stimulus kicks in. 

Meanwhile, wage compensation levels are already back to pre-Covid levels. 

Notice how long it took to recover in the 2008 financial crisis 

The bottom line is this …

With previous stimulus more than offsetting lost income, the coming Blue Wave stimulus will create excess savings and fuel major growth in GDP in 2021. 

Short-term Market Conditions:

In the short run, there is risk a more severe Covid-19 breakout could cause a minor correction in the S&P 500.

However, a 5% pullback towards the 50-day moving average would be a great buying opportunity. 

On any pullback, I look to add to my core portfolio of high-dividend REITs and Energy infrastructure stocks.

For ideas, review my recent editorials for Power Income stocks I love in both sectors

Live and Trade With Passion My Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk.  DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

Another Blue Wave Special

Hey There Income Hunters, 

A day after posting Medical Properties Trust (MPW) as a Blue Wave Special …

They were up 3%.

Gnarly.

Today, I have another one that will kill it in 2021 as a Tsunami of cash fuels Crude to $65 by year-end … 

There are multiple forces at work that will drive crude prices higher. As you can see below, Enterprise Products Partners (EPD) has a lot of catching up to do.


You know how much I love companies that build wide moats (otherwise known as advantages over competition).


In the Oil & Gas business, you do that by having quality assets, great location and quality contracts …

EPD stands out in each category.

You can tell by looking at a single ratio called: the Return on Invested Capital (ROIC).

Check this out… 

Steady returns year-after-year and they are still returning double digits as their capital cost has dropped.

EPD is expected to average 11% ROIC for the next 10 years.

This is a great long-term hold … They will continue to increase revenues as oil prices benefit from less supply and greater demand as the year progresses. 

Two MORE nuggets for you:

  • EDP pays a $1.80 dividend that goes ex-div 1/28/21. The yield is 8.45% AND it grows at 3.34% a year for a total annualized return of 11.79%. This looks like a homerun stock in your long-term portfolio. 
  • Morningstar has the stock trading at a 16% discount. With Vol this low, I’m buying the 22 calls to June.

Remember …

If you want to have an awesome quality of life in retirement buying stocks like this, reinvesting dividends and letting compound interest grow your wealth exponentially is a tremendous strategy.

The Power Income Portfolio will deliver financial freedom…

Have a great weekend everyone and until next time, 

Live & Trade with Passion my Friends, 

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk.

 DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.

DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

Ride the Blue Wave with this Hospital REIT

Hey There Income Hunters,

The Democrats actually did it. 

They swept the Georgia Senate runoffs (as I predicted) …

And they’re already talking about the next stimulus package. In fact, it was part of the closing pitch that put them over the top.

So it’s time to scoop up stocks that will ride the Blue Wave to nice profits …

Medical Properties Trust (MPW) has been crushing it right throughout the Covid pandemic.

MPW’s portfolio consists of 385 properties with a combined 42,000 beds. Those are leased to 46 individual operators across 33 states and 9 countries around the world (and counting). 

Now, you know how much I love stocks that have room to rise plus offer a nice dividend.

This may be one you just put away for the long-term …

Check these dividend stats:

To get your total annualized yield you add the dividend and growth rate of the dividend.

So, you can expect a return of 9.32% going forward.

Plus, the payout ratio of 69% means MPW still has 31% of profits after issuing the dividend that it can use to to pay down debt or buy back shares. 

AND HOT OFF THE PRESSES!

MPW has just priced a public offering of 32M common shares at $20.05/share.

Estimated net proceeds of ~$618.1M will be used to fund acquisition of a portfolio of behavioral healthcare real estate assets in the U.K., for general corporate purposes and working capital.

Now is the time to buy as the price is 10% below fair value …

Sometimes you need to think longer-term. 

When valuations are the most expensive in history, eventually you go through long periods of low returns.

So, when you can buy long-term winners and capitalize on great annual returns you should.

Until next time …

Live & Trade With Passion My Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 

DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

Dropping to March Lows?

Hey There Income Hunters,

I was shocked to see the Fed pull back from their cautious stance on the economy in the minutes of the FOMC December meeting. 

I expected an announcement regarding an increase in bond purchases (QE) or even a move to cap long-term rates through a formal control of the yield curve.

Instead, the minutes revealed that the Fed may actually begin to reduce bond purchasing … beginning as early as the middle of this year.

They may be trying to stimulate spenders by changing to a more positive tone on the economy…

But the last time the Fed started to hint they were looking to pull back on QE the stock market had a major meltdown.

It was Q4 2018 and they had been scaling back on their bond purchases. The reduced stimulus forced investors to sell equity positions.

See below:

This time, the bond market is under pressure.

Supply is soaring and inflation is rising, causing bond returns to go negative. 

Without an expansion of bond purchases, the TLT bond ETF price could drop substantially.

There’s simply not much support against it, aside from March lows, unless the Fed buys.

Now, the bond market has been overvalued for months, so this could be an opportunity to jump on a quick slide down towards the 140 level (the level of support established by the March lows).

The Trade I’m Making

I am going to put on the 153/143 March 20 Put Spread on TLT.

It’s a 3-1 risk reward and I’ll get myself out on the trade if TLT closes above 154.77.

This is a “trade the Fed” play …

If they are not supporting bonds when they are overvalued and the technicals are bearish, it’s a green-light special.

As Income Hunters we want to find the trades that put the odds in our favor, then pull the trigger and have an exit strategy so we can execute efficiently.

That’s what we have here.

Live & Trade With Passion Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.


If Dems Complete Sweep! THIS Sector Is A Must-Buy

Hey Fellow Income Hunters,

President Biden has said businesses should be taxed and regulated more heavily. 

Dems having full control will:

  • Require a minimum 21% tax rate on all foreign earnings.
  • Raise the corporate tax rate from 21 to 28%.
  • Impose tax penalties on companies that ship jobs overseas.
  • Raise the minimum federal wage to $15 per hour.

This isn’t good for Big Tech (Amazon, Google and Facebook) OR Businesses that rely on low-wage jobs and foreign imports (i.e., McDonalds).

However!

The Big Winner is the sector Power Income has been touting regardless who is in the White House …

And the Winner Is …

Real Estate Investment Trust (REITs) 

REITS are corporate-tax exempt and 90% of its income must be distributed to shareholders.

They’re also an ideal real estate investment for many reasons, including …

  • REITs use scale to get leverage, meaning lower mortgage rates than investors could get themselves. 
  • Investors own real estate without being tied to a specific property and they can liquidate their holdings at any time. 
  • REIT total return performance has beaten the S&P 500, other major indices and the rate of inflation over the past 20-years!

4 BIG reasons to move into REITs

1. Reversing the Trump Bump

When Trump put through the corporate tax cut back in 2017, investors allocated funds away from REITS into growth stocks.

It hurt REITS (VNQ), but benefitted the S&P 500 (SPY), up 19%, and tech stocks (QQQ), up 31%.

Check it out …

Now, if corporate taxes are hiked, the REIT tax exemption becomes more valuable…

2. Democrats will Even the Playing Field  Retail

  • Imposing more taxes and regulations on e-commerce firms would allow retail REITS to gain some ground versus online players.
  • This would indirectly benefit shopping center and mall REITs which lease space to retailers. Good examples include Tanger Factory Outlets (SKT) and Kimco Realty (KIM).

3. Increase Domestic Production

  • Biden appears to be in agreement with Trump’s protectionist stance on trade policy. He wants to impose tax penalties on businesses that ship jobs abroad.
  • It benefits industrial REITs that own manufacturing facilities, warehouses, and distribution centers. Great examples include Prologis (PLD) and PS Business Parks (PSB).

4. Fewer Tax Incentives to Move out of High-Tax States

  • Biden has proposed to raise or eliminate the cap in state and local tax deductions, which would lower the incentives to move into lower-tax states.
  • Many office, apartment, and retail REITs are heavily invested in these high-tax states including Federal Realty Trust (FRT) and AvalonBay (AVB). 

Democratic control of the Senate will drive investment flow out of bonds and into high dividend yielding REITs

Check out this spread (note the yellow portion below):

REIT performance over the past 20 years has beaten the S&P 500 Index and other major indices AND beat out inflation, therefore INCREASING your purchasing power!


A GREAT REIT PLAY

Iron Mountain (IRM) – 9.05% base line annual yield plus 35% price gain potential. 

IRM provides solutions that include secure records storage, information management, digital transformation, as well as data centers and cloud services. 

They own a real estate network of more than 90 million square feet across more than 1,480 facilities in 50 countries. 

Let’s look at IRM’s Fundamentals: 

Graphical user interface, text, application

Description automatically generated

As IRM proves their new digital business model the stock could easily trade at $38/share.

That would add more than 35% capital appreciation on top of a 9% annual return and over 9%-plus annual growth in that dividend.

Assuming just 5% dividend growth and zero price appreciation, you still get:

  • 2x in just over 6 years
  • 4x in 11 years
  • 10x in 25 years

Now let’s see how Georgia plays out!

Live & Trade With Passion My Friends,

Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

A Gold Miner That Will Strike It Rich

Hey There Income Hunters,

All lights are green on the 2021 reflation trade. (As a reminder, that’s when you sell bonds in anticipation of new issues with higher yields.)

Here’s an update…

  • M1 money supply, the pool of most readily available cash, is growing exponentially. 
  • This is a major sign that consumers are moving all savings into bank checking accounts so it is available for immediate spending. 
  • The savings rate has been decreasing every month. This shows unemployed Americans need to tap into savings to pay bills.
  • This data illustrates the need for the Fed to keep the printing press rolling, which will continue to fuel real asset prices.

The BTG Trade Strategy

BTG is a stock I own outright. It’s a long-term hold and it crushes the competition in all critical metrics: Dividend yield, P/E, and ROTC and Debt/Cap

Check it out …

A low P/E and high ROC is a lethal — in a good way — combination. Great value and profitability in a sector where the price of output (GOLD) is in a secular Bull Market (meaning influencing factors could be in place for multiple years) …

Nothing more to say …

Other than back up the truck on this one …

Live & Trade with Passion My Friends,


Griff


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.