Published on March 27, 2017 by

Here’s the hard truth staring in the face of all income investors (or conservative investors seeking more than a pitiful CD or money market rate of return for their core investment portfolio): yields from traditional sources are embarrassingly  low---the top rate for a 1-year CD as of this writing is 1.2%.

And no matter what the mainstream press is blathering about, rates aren’t going up anytime soon.


Private pension funds are teetering, along with federal, state and local pension programs. The total indebtedness of the federal government alone has been estimated to be approximately $220,000,000,000,000 (that’s TRILLION) by Prof. Laurence Kotlikoff of Boston University. It’s money that will never be fully repaid.

If the federal government were to let interest rates rise by very much, it’s servicing costs for this mountain of debt would burst the already unsustainable debt bubble even quicker. This won’t be allowed to happen.

Holding down these debt service costs means, among other things, authorizing minimal increases to programs like Social Security, military pensions and so on to overcome the effects of the COLAs (cost of living allowances) built into them.

Think about it: the 2016 Social Security COLA was 0.0% and in 2017 the COLA was .03%. Does this make sense when true inflation, as demonstrated on the excellent website, is running around 9% annually?

Of course not, but it saves the government untold billions of dollars to be used to take care of crony capitalist donors and the politically correct programs favored by the governmental bureaucracy. For that reason, the suppression of interest rates isn’t going away anytime soon.

Here’s how bad the situation has gotten: Nobel Laureate Robert Shiller developed an investment metric called CAPE (Cyclically-Adjusted Price to Earnings Ratio). CAPE measures stock market value while taking into account business cycles and inflation. CAPE is currently projecting a negative -1.3% return on stocks over the next 10 years. So, for the buy and hold investor, it’s going to be a double calamity as interest rates collapse and dividend income from the stock market does the same. Unless------ 

What’s really been needed is a way to derive income from the Standard and Poor’s 500 Index. This index is comprised of the valuations of 500 large, publicly traded companies found on the Dow Jones and NASDAQ exchanges. Typically, investors buy shares of a mutual fund or index ETF (exchange traded fund) that owns these companies and holds on for the long term. Not anymore. Twice during the last 16 years the stock market tanked 50%. If your portfolio was clobbered as a result, you know how painful those kinds of losses are.

But the intriguing thing about the S&P 500 is an etf called SPY that can actually  be used to avoid the big losses and take advantage of market volatility to effectively pump out income far in excess of CDs and money markets.


By timing the intermediate term trend of the S&P 500 using the index etf whose symbol is SPY. And---this is critical---by coupling it with an inverse S&P 500 index etf whose symbol is SH. It’s called an inverse etf because it makes money as the S&p 500 goes down in value.

What this allows you to do is profit when the S&P is trending up (SPY), move to cash when the market is choppy and consolidating and thereby avoid losses, and then make substantial profits when the market is going down (SH). By continually avoiding big losses and always remaining in a profit mode no matter which direction the market is trending, you are effectively creating your own, personal cash machine that allows you to take out profits at whatever time is convenient---or reinvest them to really start pumping up your account.

And the profits can be steady and much higher than other income approaches you may be trying. Oh, and did I mention you may also receive dividends from time to time if you own the etf when they are declared; this could add up to several % more earnings every year.

Thanks to tools, such as the above mentioned etfs, and very sophisticated technical indicators that used to be available only to “black box” investors like hedge funds, insurance companies, too-big-to-fail banks, etc., it’s now possible to design an investment program that will help you greatly increase your income potential (at our shop we have a goal of + 10.5% per year and have averaged well above that) and protect you in any financial weather you may encounter.

Additionally, a program like this leaves you in charge of your money, not someone else who may, or may not, have your best interest at heart.

It’s a terrific way help insure that you get to live a dream retirement—not be left dreaming about retirement. We call our approach The S&P 500 Income System ©.

Complete details concerning this strategy and its genesis, along with some free special reports you’ll find beneficial, are available over at our site. Please stop by when you have time. We promise you it will be worth it.


J Michael 

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