Safe Income? In This Uncertain Market? You Betcha!
Way back in 1859, Charles Dickens wrote a passage that perfectly describes our current outlook for inflation…
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
Some economists believe inflation is needed right now. As The New York Times noted:
“Now might be a good time for modestly higher inflation, said the Harvard economist Ken Rogoff, who called for higher inflation to reset the economy after the housing bubble burst. You should think of inflation like the weather, he told DealBook. If it hasn’t rained for a long time, a major downpour is probably not a worry. A little bit of singing in the rain might be warranted.”
While Rogoff sees the best of times, others see the worst of times.
The Wall Street Journal observed…
“The June increase was nearly twice what economic forecasters predicted, which isn’t reassuring. The inflation optimists are dismissing the June increase as the result of “special” factors that are likely to ease. Used car and truck prices rose 10.5% in the month, accounting for about half the increase in core CPI. No doubt vehicle prices won’t keep rising at that rate, but then that’s also what we were told when they rose 10% in April. This won’t reassure the non-affluent Americans who buy used cars.”
That explains why less well-off families are more worried about inflation.
Source: NY Fed
Affluent households were relatively unconcerned about inflation in the spring. Now, they are concerned. And that should make the Fed worry. Affluent households have more discretionary income and can afford the higher prices for restaurant meals, new cars, and vacations. If inflation rises, they may delay spending if they believe inflation is transitory. That could lead to a recession.
How I’m Trading Right Now
We don’t know for sure what will happen, but one thing we do know is that the recovery is at a critical juncture. It’s a dangerous economy right now, and that makes for a dangerous market.
But there are some safer stocks that you and I can still trade. Among them is NextEra Energy, Inc. (NYSE: NEE).
NextEra is an energy company, formerly known as Florida Power & Light. The company focuses heavily on wind and solar energy projects, two initiatives that appear likely to gain traction from Washington D.C. That makes the stock an infrastructure trade, which has added safety.
The stock currently offers investors a dividend yield of about 2%. But with the strategy we use over at Maximum Income, we can do even better…
With our proven “market insurance” strategy, we just recently made a trade that allows us to earn immediate income from owning the stock. In this case, the income we earn will amount to a return on investment of about 2.8% — which beats what normal “buy-and-hold” investors would earn in an entire year. But best of all, we still have the chance to earn those dividends AND continue to repeat income-producing trades like this again and again…
I can’t think of a more useful strategy in an uncertain market like this, which is why I’m getting the word out to as many people as possible.