LIVING OFF DIVIDENDS & PASSIVE INCOME

Even though the past few sessions in the stock market have been rather choppy, the yield on the 10 year treasury has steadily dropped over the past several weeks.

Ever since the subprime mortgage issue led to a global liquidity crunch and subsequent stock market correction, the yield has been steadily dropping. This means that large institutions have been selling equities and moving money into safe US treasuries. It doesn’t matter if they get only 4.5% (as of today’s closing price), but at least they know they’ll get the principle back.

There seems to be a repricing of risk in the market. Any stock that is deemed to be risky has dropped in the past 6 weeks.

On the other hand, safe stocks like Warren Buffett’s Bershire Hathaway (BRK) has been rewarded and its stock price is up nearly 10%.

Lets see how long this flight to safety continues. If you have the courage to be greedy when other are fearful, you can make a lot of money.

Happy Investing!

• Super-Hero Investments Just thought I'd share an interesting email: Jim Grant noted in his recent Interest Rate Observer that eight blue-chip companies now meet or exceed Ben Graham's strictest criteria for defensive investors: Pfizer, Nucor, Cooper Industries, Cintas, Tiffany, Archer Daniels Midland, Molex, and RadioShack. These are like superhero investments. Each has......
• Are Stocks A Better Investment Than Real Estate? According to this article in Money Magazine, stocks are a better investment, based on a study taking in account the years 1978 to 2004.While there are some valid points favoring stocks over real estate, I think it was a one sided arguement.Why choose a period where the stock market did......
• Best Trade of 2009 Almost exactly a year ago, I mentioned a paired-trade between the long-term Bond ETF (TLT) and short-term corporate/sovereign bond ETF (AWF).  I went long AWF and shorted an equal dollar amount of TLT. Last week, I closed the position after holding it for just over a year. When I entered......

• A Low Payout Ratio: Attributes Of A Good Dividend Stock Welcome to part III of my series examining the attributes of good dividend stocks.   When buying a stock for income, the safety of the dividend is of utmost importance.  Dividend cuts are frowned upon because they amount to an admission of defeat by management and show a lack of confidence......
• 120 Minus Your Age In Stocks: The New Asset Allocation Rule Of Thumb There's something comforting in following the crowd.  It is often said "it's better to fail conventionally than succeed unconventionally,"  which is why humans have always had a tendency to come up with general rules of thumb;  guidelines that while not perfect, provide as good a starting point as anyway for......
• Sunday Money Madness: Bootacular Edition Happy early Halloween! Welcome to yet another edition of the Sunday Money Madness Roundup. I hope you enjoy the posts presented below. Start browsing! Debt | Debt Leveraging: What Happens to a Joint Mortgage if One Partner Declares Themselves Bankrupt asks Debt Free Advice. Financial Wellness Project writes 5 questions......

[All content is copyright of Living Off Dividends & Passive Income]

Random Posts

• August 28, 2007 -- How The Carry Trade Really Works
• September 13, 2006 -- Yet Another Reason to Bail on the Dollar
• February 1, 2006 -- Free books on Amazon Credit Card
• April 17, 2007 -- Utah Economy Strongest in the Nation
• February 8, 2008 -- Good News For Canroys?
• February 7, 2008 -- Residential Housing To Drop Another 25%
• January 10, 2008 -- How The World’s Cheapest Car Is Bad For Your Wallet