Taking the elevator down | option overlay for returns | Sheaff Brock

Option Premiums Can Provide Additive Returns During the Elevator Ride

“Stocks often take the elevator down and the stairs up,” Sheaff Brock Managing Director Dave Gilreath comments, referring to the strong rallies following the stagnant markets in 2004–2005, 2011–2012, and 2015–2016. “The stock market often takes a breather before rallying up to a higher plateau,” Gilreath adds. With the Dow Jones “stuck” for the past year-and-a-half, he observes, it’s not unreasonable to anticipate another “stair-climbing” period. In an earlier First Trust Monday Morning Outlook report, Chief Economist Brian S. Wesbury, [...]

Sheaff Brock Refresher Course on Preferred Stock

Preferred Stock 101+

(Quick Preferred Stock “cheat sheet” coaching session for those “in the know,” but who could use a little reminder before investing): Companies raise capital by either borrowing money or by selling ownership. To accomplish that goal, they issue either debt or equity securities. As an alternative, by issuing preferred stock, a company combines the characteristics of both debt and equity. There are some advantages to a company that issues preferred securities: Issuing preferred stock as opposed to bonds keeps the [...]

two puppies | the difference between SPX and SPY | Sheaff Brock

SPY and SPX—What’s the Diff and Does the Difference Matter?

In a rather cryptic and historical intro to the subject of options, Yahoo Finance states: “When it comes to the battle of SPY versus SPX, the first may have more volume, but the second has more value.” Size comparison: The SPDR S&P 500 (NYSE symbol SPY) is, in fact, the most widely traded contract on option exchanges. The SPX S&P 500 index options have far lower trading volume, but each contract is ten times the size of a SPY. Underlying security: Underlying the [...]

Actively Sailing Showing Active Management of Portfolios | Sheaff Brock Investment Advisors

Staying Active with Preferreds

The Sheaff Brock Preferred Income portfolio is an actively managed strategy, and there are reasons why. With the two-part goal of generating income while preserving capital, Senior Portfolio Manager JR Humphreys utilizes both institutional and retail preferred shares. No question as to which side of the ongoing debate about the merits and shortcomings of active vs. passive management is exemplified in the Preferred Income portfolio. So, what is the distinction between active management and a passive approach? Passive investors buy an [...]

REIT Investing and the New Tax Law | Sheaff Brock

New Tax Law May Favor REIT Investors

The Tax Cuts and Jobs Act is set to deliver significant tax savings over the next decade, which might well help an already healthy economy, says JR Humphreys, portfolio manager of the Sheaff Brock Real Estate Income & Growth strategy. Here’s why, Humphreys continues: One of the central features of the tax bill is a 20% deduction on pass-through income. By law, REITs must distribute at least 90% of their income. And, since the REITs themselves do not pay tax [...]

Two Faces to Show Upside Volatility and Downside Volatility | Sheaff Brock

The Two Faces of Volatility

“Remember that there are two varieties of volatility. Downside volatility is the type to avoid, not generally upside volatility,” Craig Israelsen writes in Financial Planning magazine. Far from doing everything possible to avoid volatility, we should all want portfolios that have higher levels of upside volatility, Israelson asserts. Traditionally, one advantage of building a broadly diversified portfolio is reduced volatility of returns. When higher standard deviation results in impressive upside performance, that is hardly something to be upset about, he observes. The [...]

Talking with investment advisor about option strategies | Sheaff Brock

Are You and Your Advisor Talking About Options Strategies?

The study results represented good news for the Options Industry Council. The OIC had commissioned global research and consulting firm Cerulli Associates to find out how much interest and involvement there is among financial advisors when it came to including options in client portfolios. The report, published a year and a half ago, highlighted three important developments: One third of financial advisors were already using options in 20% of their client portfolios. Advisors expected to increase the use of options [...]

Option Overlay Strategies as Timely and Timeless | Sheaff Brock

Timely vs. Timeless—Option Overlays Strive to Be Both

With this month’s over-arching message being the power of TIME—the goal being to discuss investment tactics which are timely, yet which belong in portfolios based on timeless wisdom—the option overlay strategy becomes a particularly relevant topic. There’s nothing new about option overlays. In fact, as Institutional Investor explains, the majority of U.S. pension plans have adopted overlay techniques as part of their investment tactics. And, while in investment vocabulary, the term “overlay” can have different meanings, Sheaff Brock Managing Director Dave Gilreath [...]

Dividend Growth Investing | Sheaff Brock | Time and Money

Dividend Growth Investing in 2019

The new film release, “What Men Want,” is designed to recapture the box office success of the blockbuster Hollywood romantic fantasy of nineteen years ago, “What Women Want.” An investment-world equivalent might attempt to answer the question of “What Investors Want.” It appears the answer is asylum-with-growth-potential, given the tumultuous investment markets which marked the final weeks of the past year. Dividend growth investing, as seekingalpha.com explains, involves the researching and careful selection of high-quality companies that are capable of [...]

Income Investments in 2019 | Sheaff Brock Investment Advisors

Income Investments Take Center Stage Entering 2019

Income investments represent a popular “meme” for pundits these days, and for good reason. In offering innovative portfolio solutions for Sheaff Brock investors who want a balance between risk-avoidance and higher returns, income investments are taking center stage as we enter 2019. “After a tumultuous few weeks in the markets, the steady income offered by yield-focused investments looks very attractive,” Andrew Bary writes in Barron’s. The two drivers, Bary points out, are these: following the erratic market movements, the steady [...]