Interest Rate Signs Increasing in Size | Managing Interest Rate Risk for Preferred Stock Income | Sheaff Brock Investment Advisors

Managing Interest Rate Risk in a Preferred Stock Portfolio

If I invest in preferred stock for the income just when interest rates are rising, won’t I be setting myself up for losing money? “Not necessarily,” contends JR Humphreys CFA, CAIA, Senior Portfolio Manager at Sheaff Brock Investment Advisors. Humphreys explains that, “increasing interest rates is usually the result of an improving economy that could lead to credit rating upgrades for the preferred equity, resulting in a higher price.” Many investors have the perception that preferred securities are highly interest-rate [...]

A couple holding hands | stock market positive feedback may lead to lasting relationships | Sheaff Brock

Stock Market’s Ratio of Positive to Negative Feedback has been Spectacular

In improving team performance through feedback, corporate consultants Jack Zenger and Joseph Folkman report in the Harvard Business Review, the ideal praise-to-criticism ratio is 5:1. Negative feedback grabs attention, they concede, and has the power to change behavior, but it does not make people put forth their best efforts. Only positive feedback truly motivates vigor, determination, and creativity. In his book “What Predicts Divorce,” John Mordechai Gottman finds essentially the same thing in marriage—the single biggest determinant of wedded [...]

dice showing buy, sell, or panic | investor classes market volatility | Sheaff Brock

The 3 Classes of Investors; Only 1 Can Afford to Avoid the Game

The head of behavioral science at Morningstar, Dr. Stephen Wendel, describes investors in simple terms: There are those wealthy enough to meet all their financial goals with cash and then there’s everybody else. Members of the first class need not bother themselves with market volatility; the other two classifications of investors face an unavoidable trade-off, Wendel explains. Type #2 stay in the market, running the risk of failing to generate sufficient returns to meet their financial goals. Type #3 derail [...]

stock market drop and market correction | Sheaff Brock

Just How “Unprecedented” is This Drop? Just How Scared Should I Be?

“Dow plunges 1,033 points and sinks into correction,” the money.cnn.com headline practically jumped off your computer screen February 8th. Now what? you wonder. Yes, the pundits have been saying for some time now that a correction was overdue, that we investors have been waxing complacent, and that what goes up must eventually come down. Is this the beginning of The End? Whoa….When it comes to stock market corrections, the word “unprecedented” is simply incorrect when it comes to describing the [...]

Sheaff Brock | Index Income Overlay | covered calls | net unrealized appreciation | financial planning

Planning Conversation Can Net Unrealized Appreciation Benefit

It’s right there in Section 402 (e)(4)(B) of the IRS publication—that part about net unrealized appreciation. Without having in-depth planning conversations with their advisors, clients might miss out on important tax benefits. In an interview with our SheaffBriefs editor, Sheaff Brock Senior Vice President of Investments Christy Jordan pointed to the following statement in the IRS Code: Section 402(e)(4)( B) provides that in the case of a lump sum distribution which includes employer securities, there shall be excluded from gross income the net [...]

active management of individual stocks | Sheaff Brock

What Do Active Managers Do (That Index Funds Don’t)?

There are many people espousing the use of index funds, ETFs or other passive products, instead of using a firm like ours that provides active management of individual stocks (or like our sister company, Salzinger Sheaff Brock, that uses active management with a portfolio of ETFs and mutual funds), Sheaff Brock Managing Director Dave Gilreath reflected in an interview with our SheaffBriefs editor … It’s an old, old debate about which way to manage investments is better—you know, the active [...]

Young Bull | Sheaff Brock | bull stock market

This Bull May be Younger than You Think!

For investors worried that the stock market is so high that it has to be headed for a drop, Sheaff Brock Director Jim Murphy wants them to know he’s not having any of it. “At Sheaff Brock, we believe this is a ‘market of stocks,’ not a ‘stock market,’” he explains. Translation: The big upward price movement in the Dow has been primarily driven by its most expensive stocks, specifically the FANG (Facebook, Apple, Netflix, Google) and Microsoft. There are [...]

Sheaff Brock Investment Advisors | portfolio managers offer offense, defense, and special teams for investors

Building All Aspects of Gameday Strategy

Like a well-run football team, portfolio managers should consider offering long-term investors all three facets of game strategy: offense, defense, and special teams. Marv Levy, former head coach of the Buffalo Bills who led the team to an unprecedented four consecutive Super Bowl appearances, explained, “There’s these parts to football—offense, defense, and special teams. You’d no more ignore special teams than you would ignore offense and defense.” He further defined these three different areas of focus, which are all going on [...]

Sheaff Brock Investment Advisors | Indianapolis | Preferred Stock Performance | Asset Class

Will Higher Interest Rates Huff and Puff Your House Down?

Ever since (think back approximately a year-and-a-half) rates began their slow upward movement, income investors have experienced a certain degree of worry about the “big bad wolf” blowing down their carefully constructed investment “abodes.” Thankfully, as Sheaff Brock senior portfolio manager JR Humphreys, CFA, CAIA explains, if you’ve “built” for the longer term (planning a longer holding period), there may be little reason for concern. In fact, Humphreys pointed out in an October interview with our SheaffBriefs editor, since December [...]

Sheaff Brock | rising interest rates | Dave Gilreath Sheaff Brock | income-bearing investment strategies | REITs | Preferred Stocks

Do Rising Interest Rates Put Investors Behind the Curve? It Ain’t Necessarily So.

Rates are rising. They will likely keep rising; accept that and adjust, is the message astute investors should be receiving. Rates are rising. They will likely keep rising; accept that and adjust, is the message astute investors should be receiving. When we compare the rates on U.S. Treasury bonds now to those of one year ago, Sheaff Brock Managing Director Dave Gilreath observes, at every maturity, rates are higher now by 60 to 95 basis points. Actually, he adds, U.S. 10-year [...]