income investing in a global debt crisis roger s. conrad aaii washington 2012
TRANSCRIPT
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INCOME INVESTING IN A GLOBAL DEBT CRISIS
ROGER S. CONRAD
AAII WASHINGTON 2012
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WHERE WE STAND
• INVEST FOR 2012, NOT 1932
• NO INFLATION
• US ECONOMY GROWING SLOWLY
• SENTIMENT BETTER BUT SKITTISH
• STRONG WILL SURGE, WEAK WILL STUMBLE
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CHEAP MONEY
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STOCKS FIRST
• ONLY LIVABLE YIELDS
• DIVIDEND GROWTH ACCELERATES
• CONSERVATIVE IS COOL
• DIVERSIFICATION AND BALANCE OFFSET RISKS
• MUST LIVE WITH VOLATILITY
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ECONOMIC SENSITIVE
• NOT FOLLOWING INTEREST RATES
• RE-PRICING RISK TO DIVIDENDS
• RALLY BEGAN IN OCTOBER: NOT EVERYTHING IS A BARGAIN NOW
• WATCH REVENUE RELIABILITY, NEAR-TERM DEBT
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HOW THEY RATE
• BUY THE BUSINESS
• PAYOUT RATIO: WHAT IS PROFIT?
• DEBT: WHAT’S COMING DUE?
• REVENUE: RELIABLE AND TRANSPARENT
• VALUE AT PRICE
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WHERE THE BUYS ARE
• UTILITY BEDROCK
• MLPS: PROFIT IN PIPES
• HIGH YIELD COMMUNICATIONS
• CONSERVATIVE CANADA
• BARGAINS DOWN UNDER
• BIG YIELD HUNTING
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MLP PROFITS
• ,MASSIVE DEMAND FOR SHALE
• A LACK OF INFRASTRUCTURE
• CHEAP CAPITAL
• INVESTMENT = DIVIDEND GROWTH
• BEST: GEL, ETP, BPL, NS
• WATCH THE PRICE: EPD, KMP
• A WORD ON TAXES
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UTILITY BEDROCK
• CAPITAL SPENDING + REGULATORY SUPPORT = HIGHER PROFITS, DIVIDENDS, SHARE PRICES
• BEST: EXC, D, WTR
• KEY RISK: WATCH THE REGULATORS
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THE DATA EXPLOSION
0
1020
3040
5060
7080
90100
$Bil Revs
199520020052007200820092017
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BETTING ON CONNECTIVITY
• GLOBAL CONNECTIVITY BOOM
• BIG PLAYERS BENEFIT MOST
• HIGH YIELDS ABOUND
• T, VZ, WIN
• KEY RISK: TRANSITION FROM 20TH CENTURY WIRES
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CANADIAN YIELDS
• LEGACY OF INCOME TRUSTS = THE DISCIPLINE OF DIVIDENDS
• SOLID COUNTRY/SOLID CURRENCY
• RETURN TO DIVIDEND GROWTH
• COMING TO NEW YORK
• AT, JE, STB, PWE
• PBNPF, BRPFF
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BARGAINS DOWN UNDER
• SOLID COUNTRY/SOLID CURRENCY
• DIVIDEND FRIENDLY/RESOURCE RICH
• APA (APAJF), TLS (TLSYY)
• A WORD ON FOREIGN DIVIDEND TAXES
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BIG YIELD HUNTING
• RISK PERCEPTION DRIVES PRICE
• RISK CAN BE OVER-PRICED
• BARGAINS BEST WHEN GLOOM IS GREATEST
• TEF, NMM
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AVOIDING BLOWUPS
• AVOID CARRIED INTEREST MLPS, LONG MATURITIES, BLACK BOXES
• KEEP UP WITH YOUR COMPANIES
• LEAVE EMOTION OUT OF IT: NO POLITICS, NO AVERAGING DOWN, NO STOPS
• CUT LOSSES
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FOR MORE INFORMATION
• www.utilityforecaster.com
• www.canadianedge.com
• www.mlpprofits.com
• www.australianedge.com
• www.pfnewsletter.com
• www.RogConrad.com
• hoodie, fever