Learn the technique that has delivered 560% return for subscribers!
We just closed January 2021 with 91% winning trades bringing our EWO Impulse Strategy returns to 560%… and now you can learn how!
In March 2021, I'll be presenting Zig-Zag Mastery!... I consider this to be THE most valuable Elliott Wave Trading Class that I’ve ever put together… and by the way, as a Subscriber, you can attend for free!
So what is a ZIG-ZAG?... for those not familiar, it’s an Elliott Wave “Corrective” pattern that literally looks like a “Zig-Zag”. These patterns appear very commonly and if you know how to verify the trading setup, they can be a very reliable trading signal.
Session #1 - The Zig-Zag Trading Plan
Wednesday, March 10th at 8:00 PM EST
In this session, I will detail a complete Trading Plan for the Zig-Zag pattern. This will include the Zig-Zag Trade Setup, how to Qualify the Trade for acceptable Risk vs Reward, how to handle the Trade Entry, what to expect during the trade and how & why to exit the Trade.
Tomorrow, you could begin doubling your account every single month starting with one letter.
The letter will come from a 20-year trading professional named Ian Cooper. He says, “In 2017, following my trades you would be doubling even tripling your account some months. Let me show you how.”
He will show you exactly what to do... and he’ll give you the blueprint for just $1.
Fixed income investments should be a part of every investor’s portfolio. Fixed income securities have performed well since the historic ‘Great Bull Market’ began in the stock market in 1982. While the stock market produced its greatest gains in history during the 1982 to 2000 bull market, US Treasury Zero Coupon Bonds (‘Zeros’) out-performed the S&P 500 Stock Index by more than a six to one margin over the same period! Treasury Zeros continued to out-perform the S&P 500 Index for the following two years.
$10,000 invested in US Treasury Zeros in 1982 grew to $1,003,865 by 2002 versus a $82,064 growth for the S&P 500 Index over the same period.
During that time, common stocks had been at their most expensive levels in history up 98,900 percent since 1929 and therefore much more susceptible to a decline or below par performance. Unlike stocks, fixed income securities are under valued in relation to their historical levels and represent a good value.
Comparing Yields
One of the best ways to compare relative value between stocks and fixed income securities is to compare the earnings yield of stocks with the yield to maturity for fixed income securities. Earnings yield is calculated by dividing a company’s earnings by its share price (inverse of calculating a P/E ratio). For example, let’s say Cisco Systems share price declined from a high of 82 in 2009 to a price of 32 in January 2010. Cisco earned 41 cents per share over a 12 month period, which translates to an earnings yield of 1% (.41 divided by 38.00). This compares to a yield of 5.5% for ultra safe short-term US Treasuries. Even though Cisco had experienced a 50% price decline it is still over valued when compared to the yield of US Treasuries.
Historically Over Valued
In year 2000, stocks in the S&P 500 Index were priced at 45 times earnings, which was three times greater than the average historical P/E ratio of 15 and the most expensive level in history. This translated to a 2.2% earning yield. Compare this to risk free Treasuries that were yielding 6.0% or 270% more than stocks. Of course corporations on average have experienced 6% earnings growth which will increase the earnings yield of their stocks over time. However, it would take many years at a 6% growth rate for stocks to match the current yield of US Treasuries. The S&P 500 Index would have to decline to 550 to produce a 6.0% earnings yield, which is another way of looking at the current high valuation levels.
Investors who only have stocks in their portfolio are betting that their meager 2.2% earnings yield will always continue to be enhanced by a rising stock market. But what if the one-way bull market takes a pause and stocks go down instead? What if there is economic slowdown and corporate decline?
Over the past 70 years annual corporate profits have declined year over year about 33% of the time. In contrast, US Treasuries pay a fixed rate of interest and guarantee the return of your principal at maturity. The US Government has never missed a principal or interest payment, or defaulted on its loan obligations.
Fixed income investments are an important asset class and play a vital role on the road to financial success. With the high valuations and volatility in the stock market it would be prudent to include fixed income securities in your investment portfolio. Remember, when you lose 50% of an investment the next time out you have to make 100% just to break even!
What Are Bonds?
A bond is a long-term loan made by an individual to an institution, which agrees to repay the loan (or principal) at the maturity date plus periodic interest. When you buy stock you become a part owner in a company sharing in the profits through dividends and retained earnings. Of course profits are not assured. When you buy bonds you become a creditor and you profit from regular interest payments you receive on the loan until it is paid off.
There are basically three types of bonds: treasury, corporate and municipal. Treasuries are issued by the US Government, corporate bonds by US corporations, and municipals by state and local governments and their agencies.
Bonds are issued in denominations of $1,000. This is called their face or par value, which is the amount of the loan to be paid back when the bond reaches maturity. Maturities on bonds range from ten to thirty years. Bonds with maturities less than ten years are called notes. The interest rate the bond pays is the percentage of par value returned to the bond holder through periodic installments until the bond matures. For example, if a $1,000 bond is paying a coupon rate of 10 percent per annum, the bond holder would receive $100 each year in interest until the bond matures.
The current interest rate determines the price of a bond and is influenced by several factors. The first is the supply of debt being issued. When the demand by the government and corporations to issue debt is high then interest rates go up. When supply is low then interest rates normally go down. The second factor is the anticipated rate of inflation. When inflation picks up the prices of goods and services rises along with interest rates. This can make the value of existing bonds with lower interest rates less attractive. Conversely, slow inflation or deflation makes existing bonds more attractive.
Current Yield
The coupon interest or face value interest rate paid on a bond is not the same as its yield, which refers to the rate of return actually earned on the amount invested in the bond. The market value of a bond fluctuates over time and its yield can be higher or lower than its coupon interest rate.
Zero Coupon Bonds
Unlike conventional Treasury or corporate bonds, zero coupon bonds do not pay any periodic interest payment. They are purchased at a deep discount to their face value and return no interest to the investor until maturity. Generally, the further away the maturity date (one to thirty years), the steeper the bond will be discounted from face value.
The value of a zero coupon bond grows year by year until you are paid full face value when the bond matures. The difference between the fractional price paid initially and what is paid out at maturity is the ‘yield to maturity’. With zeros you do not have to reinvest your interest income each year because there are no periodic interest payments. The term ‘zero’ refers to the fact that you receive no current income. Zeros are for the investor who does not need current income. They are also free from state and local taxes.
Double Your Money – “Guaranteed”
When you purchase a US Treasury zero coupon bond, interest rates will fluctuate (and thus the value of the bond) during the hold period. If held to maturity, however, your profits are ‘locked in’ and you are a guaranteed winner. For example, the Treasury coupon bonds that matured in 2008 provided a guaranteed 50% return when held to maturity, and the 2012 zeros provided a guaranteed double (100% return) of your money regardless of the movement of interest rates after your purchase. If interest rates decline – you win. If interest rates rise – you still win!
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