It’s show time for the elections, and the volatility in the markets are as unpredictable as trying to predict who is going to be president for the next 4 years, or whether it will be possible to determine a winner any time soon after the polls close on Tuesday. Without a clear-cut victor, we think these market gyrations are likely to increase, and continue showing no clear sign of direction.
Maybe certain kinds of investors (or traders) prefer the wild ride that come with increased volatility, as high volatility also often presents some remarkably good windows for buying and/or selling securities. However, it seems that most investors don’t care for big bumps in the road, and are much happier with a slower, more conservative, and far less surprising trend in the markets.
This is especially true with older investors that are far more concerned with preserving wealth, than with those focused on (and often struggling) to make their money work harder for them. It is also a large part of the reason why bonds have traditionally played a prominent role in the portfolios of older investors.
However, in the current economic environment of Covid-19, shutdowns, and big business failures – not to mention (again) the political uncertainties – it appears that the risk to principal with debt defaults, bankruptcy and/or forced restructuring have added unprecedented levels of risk to the relatively low interest rates that might be earned owning corporate bonds.
Consequently, it is our belief that the (tax advantaged) dividends from by a basket of large and reputable blue chip companies in the S&P 500 appears to not only offer similar cash flow to what might be available in as interest paid on principle, but also allow for any growth in both equity and future cash flow that might result from either good company performance or widespread inflation.
In addition to this, we continue to see money move away from the bond market into the equity market. Furthermore, after considering the Fed’s stated monetary policies and it’s desire for higher inflation, the rapidly rising national debt levels of the USA and the broader weakness in the US economy, we believe that this current trend of big money moving from bonds to stocks will continue for a long time yet to come.
That said, it is also our belief that one of the best strategies to take advantage of this trend is Durig’s Dogs of the S&P. Similar to Durig’s Dogs of the Dow strategy, these aristocratic “Dogs” (or perhaps more accurately “Underdogs”) derive their name from a long term stock picking strategy devoted to stocks that: (1) are reliably paying dividends, (2) have fallen in price to where (3) their dividend yield exceeds that of their peers in the S&P 500.
What differentiates Durig’s approach is the weighting given to each of the chosen stocks and the regular (typically quarterly) selection adjustments and rebalancing made to the portfolio. No cost trading adds directly to the efficiency and effectiveness of this strategy, meaning that clients can diversify into this strategy for smaller amounts than a minimum that it might otherwise require.
However, because of the advantages of initiating this strategy gradually in strategic increments over a period of several weeks and in order to achieve the best weighting and diversification for your portfolio, Durig suggests committing $25k as an initial investment in this strategy.
Durig’s Dogs of the S&P Portfolio’s weak correlation to stock market indices act as a form of insulation from market volatility.
Getting Started with Durig’s Dogs of the S&P Portfolio
- Suggested Investment of 25k
- Discretionary Management only
- Low Annual fee of 0.50%
- No minimum investment period
- Your own segregated account is custodied at and brokered through Charles Schwab, which you always have 24/7 access to.
About Durig Capital
Durig Capital provides investors with a specialized, transparent fiduciary service at a very low cost. Our FX2 (Discretionary Management) Portfolio over time has greatly outperformed our FX1 (Non-discretionary) Portfolio, giving significantly higher (at times double) the returns of FX1. Our professional service enables access to a broad spectrum of bond, high yields, and lower price points that are often found in less efficient markets, but not evidenced in many bond services. Most of our client accounts are custodied in their own name at Charles Schwab, a large discount service provider that is SPIC insured. We also offer our unique highly successful “Durig Dogs” strategies to clients of other Registered Investment Advisors through segregated accounts at Charles Schwab. Please ask us to learn how this might work for you and your current advisor.
Disclaimer: Please note that all yield and price indications are shown from the time of our research. Our reports are never an offer to buy or sell any security. We are not a broker/dealer, and reports are intended for distribution to our clients. The high yield strategies presented in this review by Durig Capital may not be suitable for all investors. This is not investment advice from Durig Capital, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision.