Ideas for the Income Portfolio

I recently had three very important conversations. One had to do with the woeful status of the Baltimore Orioles' starting pitching. The other two focused market-related topics. A 1976 interview with Ben Graham that floated around the Internet this weekend focused on the mechanical value formula he developed after he retired. Graham said that a simple quantitative measure of picking stock using low price-to-earnings ratios and low debt-to-equity ratios had outperformed the market in the 60 years leading up to 1976. Tobias Carlisle and Wesley Gray updated the study in their excellent book Quantitative Value. They found that since 1976, the strategy has continued to work with a compound annual return of more than 17%.

The third conversation has to do with the almost desperate need for income investors to find suitable securities. Intense buying has lifted many of the traditional alternatives to unsustainable levels. The Wall Street commission machine is in overdrive creating products, many of them potentially toxic, to feed the need for income. I am frankly surprised that retirees in need of income are not staging furious rallies at the Federal Reserve and Capital Hill as government policies have destroyed their retirement plans....475 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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