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How to Get Rich Despite the Fed

Posted June 25, 2019

Your favorite unelected global power player, the Federal Reserve, decided to jack up the market when unemployment is at all-time lows, the DJIA is at all-time highs, and the national debt is over $22 trillion.  

When deficits are running at $1.2 trillion a year, or 4.4% of GDP — which is far higher than the average over the last 50 years — you don’t need more money printing.

But when all you have is a printing press, the natural inclination is to hit “CTRL+P.”

It makes sense. Why not spin another bubble? After all, BlackRock doesn't own all the houses yet.

But I’m not here to talk about the complete destruction of the middle class and the social enrichment of the uber-elites.

No, I’m on your side, and I’m here to give you some tools to fight back. If you ask the world’s greatest investor what the most powerful factor in investing is, he replies without hesitation:

“Compound interest.”

Dollar, Dollar Bills, Y'all

It is obvious and true to have your money work for you instead of working for your money.

You know this because you are smart. But then again, I’m smart, and I painted my deck this weekend without shaking up the five-gallon bucket. Now I have two shades of deck. I know you stir the paint before you lay it on — I’ve been painting stuff for 35 years...  

That said, sometimes it is worth revisiting the fundamentals.

Today, I'd like to add dividends to the idea of compounded interest. There are many blue-chip stocks that pay 2% or 3% dividends — Microsoft (NASDAQ: MSFT), Disney (NYSE: DIS), McDonald’s (NYSE: MCD), and JPMorgan Chase (NYSE: JPM) are my favorites.

If you have a long time horizon, say 5, 10, or 40 years, these are the stocks you want to own. In five years, that MCD 2.28% dividend will pay you 6–8% on your original investment just due to growth. That’s one way to protect yourself from Chairman Powell and his falling interest rates.

Cash Money

Here’s another way to look at it: The total return for the S&P 500 since June 2009 was 218.58%.

That’s an annualized return of 12.28%.

But if you reinvested your dividends, you’d be up 287.39%. That’s an annualized return of 14.50%.

Here is another way to look at it.

The SDPR S&P 500 ETF (NYSE: SPY) was introduced in 1993. In its first full year, the fund paid out a grand total of $1.10 in dividends per share. Based on the year-end price in 1993, that was a dividend yield of around 3.8%.

If you jump ahead to 2018, the SPY paid out $5.10 in dividends per share on the year. This was a lower yield than 1993, at 2.1%. However, if you purchased shares of SPY in 1993, you would now be earning almost 18% on your cost basis in dividends.

From 1993 through 2018, the dividend grew over 360%, or 6.1% per year. And that is counting two devastating market crashes.

But maybe you don’t have 30 years, or perhaps you want more bang for your buck today. Well, I’ve found a company with a price to earnings of 4.62, quarterly earnings growth of 79%, and a forward dividend of 12.61%.

Not for PC Jackwagons

I know what you are thinking: “What’s the catch? There is no way that stock can be that good.”

You’re right. There is a catch. The company I’m talking about is in the coal industry. That means it brings electricity to poor brown people in faraway lands...

For example, India’s annual coal demand rose 9.1% last year. Consumption by India’s utilities, which accounted for three-fourths of the total demand, rose 6.6% to 760.66 million tonnes. You see, India’s Prime Minister Modi pledged to bring reliable power to all of India.  

India has the largest population of un-electrified houses in the world. That's 300 million people living in the dark. If you don’t have electricity, you don’t care what Birkenstock-wearing, patchouli-smelling, retrograde tree-huggers think about coal. Besides, it is cleaner than burning dung, which they use now.

The upshot of this is that coal exports from the U.S. will continue to grow, and because the market thinks coal is dead, you can get a fantastic dividend yield.  

Buffett also said, “Find the lie in the market and exploit it.”

Coal is it. It’s time you started to get rich. Click here now.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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