But while it’s nice to have a rising market that helps the stock prices of even many of the questionable and dodgy companies, don’t let it get to you. When it comes to your retirement, you can’t leave anything to chance. And that means not depending on a bull market for your investments.

Instead, you need to stay diligent and focus on companies that not only do well or better in bull markets but also hang in there and still perform during the inevitable stock market downturns. Most important are companies that pay nice dividends that keep rising over the years.

I’ve got just one of those companies for you. One that not only gets the benefits of a rising market, but also keeps humming during the downturns while paying a dividend yield that’s multiples of the average yield of the general stock market.

Meet The Manager

The fund management business is a good one. And I should know. I’ve had fund-management companies as customers of my banks and brokerage companies and made sure that they had access to the best execution and service I could provide.

I’ve also been a fund manager and enjoyed providing my customers positive returns while also providing for a nice stream of fee income for managing their money.

Know What’s Under The Hood

To know why a fund-management company works for you in both good and market challenging times, you need to know what’s under the hood of the business of managing money.

Fund-management companies attract and gather investment assets that then are invested based on the stated criteria of the fund companies — ranging from stocks to bonds both inside the United States and well beyond.

The key to being a successful fund company is not necessarily to be a good manager or even to get the best return on funds (although it helps), but rather to gain and hold on to a large and expanding base of fund assets.

Fees are levied on fund assets — the more assets, the higher the fee income.

Unlike hedge funds, pension fund fees are based on just how much is in the funds, not on performance.

So whether the S&P 500 goes up, down or nowhere, fund-management companies get their fat checks by skimming a little off the top of every dollar under their management control.

If the market is positive, it helps to raise more money for the fund-management companies, as well as growing it through positive market appreciation.

This is, of course, a great cash cow industry. While it benefits from general overall increases in balances, it still keeps pumping cash even during the dark and dire times of the markets. The key is to keep customers’ money in the fund during the downturns so that fee income keeps getting skimmed off the top.

World’s Best Bond Fund Manager

For more than a decade, I’ve been recommending the AllianceBernstein Global High Income Fund, trading on the New York Stock Exchange (NYSE, NYX) under the symbol AWF. The AllianceBernstein Global High Income Fund invests and owns one of the best collections of international government and select corporate bonds.

Under the leadership of the team at the fund-management company, the AllianceBernstein Global High Income Fund continues to generate a dividend that is paid monthly and amounts to a yield of more than 8.5 percent. That dividend has been rising by an average annual rate of more than 7.6 percent over the past three years alone.

And the fund isn’t just about the dividends but also the gains from the improving bond markets around the globe in which AllianceBernstein invests. In just the past 10 years alone, the fund has generated a return of more than 273.9 percent with an average annual return of more than 14.1 percent for all of those years.

The Best Continues Domestically

The fund-management company also has a great team of domestic-investment managers.

I’ve also recommended buying three tax-free municipal bond investment funds. You’ll earn higher nominal dividend yields and save money, since Uncle Sam won’t take a cut of your earnings. And with the municipal bond market rallying, there are also gains being made.

One of the three tax-free municipal bond investment funds that I’ve been recommending is the AllianceBernstein National Municipal Income Fund, which trades on the NYSE under the symbol AFB.

This fund is one of a select group of the market’s best municipal bond investment funds. It, too, pays well — and it does so each and every month, with a current dividend yield of about 6.1 percent.

But that 6.1 percent is worth a whole lot more to most investors who pay taxes to Uncle Sam each year. Because it invests in tax-free muni bonds, the 6.1 percent yield when adjusted for not owing taxes gets bumped up to more than 9.3 percent for those in the top tax bracket.

And like its global peer, it has done well. For the past decade, it’s generated more than 75 percent for investors (most tax-free), giving an average annual return of about 7 percent — which again is worth a whole lot more when bumping up for the taxable equivalent yield of more than 9 percent.

Fund Manager Find

These funds and a collection of others that are managed by AllianceBernstein around the globe continue to attract more investors’ cash, which, in turn, empowers the fund management company to produce more and more fee income for its shareholders.

AllianceBernstein Holding L.P. is a publicly traded company with its stock trading under the symbol AB. Its shareholders profit in both bullish and bearish markets from the fee income from its managed funds in two ways:

• The funds’ assets grow from market appreciation, giving AllianceBernstein more assets to earn more fee income from.
• As the funds do well, they attract more investors — not just for these two closed-end investment funds, but for the rest of the fund-management company’s products and services. The greater the amount of assets, the higher the fee income and the better the company fares.

But even in bear markets, as long as the company continues to hold on to its customer base and the funds under management, it will continue to earn fee income year in and year out. And with a stronger and improving customer-retention rate, the fund-management company should continue to perform well. In fact, in just the trailing year alone, investors have more than doubled their money.

And just like its great funds, it pays its shareholders a current dividend yield of 5.8 percent, making for a great cash-payer that’s getting noticed with a rising stock price. Buy some AllianceBernstein under 30 dollars a share.

— Neil George

My friend Brad Thomason gave me that advice a few years ago, and it stuck.

I’d asked him for his advice; I was interested in a tiny property-investment deal that I thought was a “slam dunk.” I called Thomason for his advice because he sizes up thousands of potential property deals similar to this one each year.

Based on Thomason’s advice, I didn’t do the deal. And I’m sure glad I didn’t.

If I’d done the deal, I would have been taking on a big headache that, in the long run, really wouldn’t have been worth it.

While the return percentage would have been high, the actual dollar return wouldn’t have been that high — particularly considering the amount of time and effort I would have needed to put in.

And that’s the crucial point.

I’ve repeated Thomason’s advice to myself (“Do you really want this particular headache?”) many times since then, and I’ve kept myself headache-free.

Last year, Thomason and I met up on the courthouse steps of a county auctioning off distressed real estate.

Dozens of properties sold, but we didn’t bite on anything. The best property sold had a tax-assessed value of $266,000, and it ended up selling for $40,000.

Buying a $266,000 property for $40,000 sounds like a good deal to me. It seems like you could have potentially made a 200 percent return on that property.

Thomason didn’t bid on it, and he didn’t lose any sleep over it. In his case, he didn’t need this particular headache. That deal would have been a small one for his business. It was nowhere near his office or any of his other operations. So he decided he didn’t need to spin his wheels on it.

I thought it showed restraint and judgment on Thomason’s part. He could have made a big-percentage return on his investment. But for his actual business, it wouldn’t have been that big a dollar return, relative to the time and effort required. So he passed.

The best investors and businessmen I know fully understand this idea, and they implement it every day. They know which particular headaches are worth taking on.

I remember a publisher in my industry telling me (more than once): “Steve, that’s a good idea. But since it won’t make $500,000, we can’t spend our time on it.”

He wasn’t being arrogant or condescending; he is simply a keen businessman. He understands the value of his time and the value of his employees’ time. This publisher had the restraint and judgment to know it was better to either improve my idea or find a bigger one, rather than waste time on a smaller idea.

I also worked for a billion-dollar New York hedge-fund manager, and he understood this concept. My marching orders were simple: Find any investment idea that can potentially make a profit of $25 million or more.

That’s easier said than done. But by having this mandate, the fund manager didn’t end up with 1,000 little investment ideas to watch. Instead, he ended up with a couple dozen ideas that he got to know really well.

The point is, just because an investment could make you a big return, doesn’t mean you should do it.

Remember that each business deal or investment you enter into is another “headache.” It will require effort to monitor and move forward. You have to ask yourself if this is the particular headache you want.

Thomason passed on the $40,000 deal. That will keep his head and his time clear for a larger property deal closer to his home that he’s excited about, one that could net his fund more than $1 million in profits over a couple years. I saw the publisher I wrote about pass up on certain profits as well.

They both were smart to do it.

The best investors and businessmen I know have a remarkable ability to say “no” to many likely profitable ideas, simply because they’re not worth the headache.

Once you take on this mindset, you’ll find that actual deals that are worth your time and hassle are rare. You’ll learn to take on projects only when they’re really worth it, and you’ll have the energy to make those deals count.

Good investing,

— Steve Sjuggerud

Editor’s note: If you’d like more insight and actionable advice from Dr. Steve Sjuggerud, consider a free subscription to DailyWealth. Sign up for DailyWealth here and receive a report on the five must-read books on investing. This report will show you several of the DailyWealth team’s must-read books, which will help you become a better investor right away. Click here to learn more.

Researchers at Oregon State University and Utah State University analyzed the decision-making processes of 135 entrepreneurs in high-tech industries to better understand the balance between persistence and knowing when to give up in business success. The researchers found that entrepreneurs often become emotionally attached to a project and resist focusing attention elsewhere, even when a more lucrative opportunity is presented.

“It’s escalation of commitment,” said Bobby Garrett Jr., an assistant professor of entrepreneurship at Oregon State. “When an entrepreneur has invested resources into a new business, they have difficulty letting go even when things go south or another opportunity arises.”

The researchers liken the psychology to that of someone losing money in a casino and realizing the odds are against him, but refusing to give up until he wins something.

“Someone who has spent one hour at the roulette table may think, ‘If I just stick with it, I can win,’” Garrett said. “An entrepreneur’s thought process is not dissimilar to this.”

The researchers conclude, in a paper published in the International Small Business Journal, that entrepreneurs do best when they are comfortable with failure in the beginning of a business venture. Instead of taking on a particular project with the mind-set that failure is not an option, the researchers suggest that the best entrepreneurs plan for failure, which forces them to be open to exploring alternative paths to success.

But markets change, consumers and competitors adapt, and the things that used to be de rigueur are now quaint memories.

All the tech titans have been challenged to constantly lead the pack, or at least run with it, to stay viable. A great example has been Intel (INTC).

Since the dot-com bubble burst, the company has been fighting new low-power chip makers and a market that has become more of a commodities play (on silicon prices) than it has a technology play.

To that end, Intel has become more a dividend play than a growth play in the tech space as people switch from traditionally Intel-dominated markets like servers, desktops and laptops to smartphones and tablets. The stock is up slightly more than 20 percent in the past decade.

That’s not much growth. A stable 3.7 percent dividend, yes, but growth? Not much.

Yawnware Meets Vaporware?

We’ve recently seen the same thing with Apple. CEO Tim Cook is promising big things, but the question is whether he can deliver or whether Apple goes the way of Intel and becomes a cash-rich tech income stock.

When innovation becomes iterative and it’s simply about launching for sales, it’s tough to stay on the vanguard or appeal to customers who want to be on the cutting edge.

In a recent article in Money Morning, Michael Robinson addressed this very issue:

In Silicon Valley, there’s a term for products that a company makes bold statements about and always seem on the cusp of launching but never quite materialize — vaporware.

And believe me, over the decades there have been more vaporware companies than real ones.

What’s more, it’s not uncommon for once-respected names to become vaporware makers over time.

One of the big questions now is, with the death of visionary Steve Jobs, the growing Android base, and the next generation in smartphones, is the "Next Big Thing" for Apple Inc. (AAPL) nothing more than vaporware?

For investors slammed by the stock’s 39% decline from its 2012 high, the question is hardly rhetorical.

But I’m not here to ring the death knell for Apple.

My point is there is a tech titan that is still actually growing in its traditional markets and expanding into new ones, challenging the major players in these sectors and pumping money into research and development to maintain its cutting edge for decades to come.

What company am I talking about?

Google (GOOG).

This week at its annual developers conference, Google managed to move beyond the buzz of its 2012 bombshell, Google Glass, and announce that it’s going into the subscription music business against Pandora and Spotify.

This is going to make it tough for not only the two at the top, but also the smaller services hoping to crack into the big time. Although, there is the possibility that Google will add to market share by buying up some of the smaller players — or perhaps buying one of the bigger players.

For a while, Google has had a music service that’s more in the iTunes model available on Google Play; but this new service would broaden that concept. Word has it that the company has signed deals with Universal Music, Sony Entertainment and Warner Music Group to give people unlimited access to certain libraries of their songs for a fee.

Don’t Forget The Base

And while it’s broadening its commercial retail base, it hasn’t forgotten how it got to where it is.

It’s going back to its roots and innovating its core products. That’s encouraging. Many times, in a diverse technology company the dangers are never moving far enough from your core tech or are moving too far away from your core tech.

Google has neither of those challenges. And until recently, the only one that could match Google’s vision and research and development pipeline was Apple. Google can still be iterative as it expands, and that’s a very good thing.

For example, although it’s already the world leader in search, one of Google’s big stories at the developers conference was that its upgrading its search service.

And it’s upgrading its other big service, navigation and maps. Integrating more personal data and user data, Maps will offer a more personal and more information through photos and augmented reality information.

The Long Now

There’s a project going on in San Francisco developed by the Long Now Foundation to build a clock that will run for 10,000 years on its own.

The point of the project is to stretch our idea of technology from the “short now” of today and next month or next year to the “long now” of centuries or eons.

And these are the companies that will be able to endure as well. The companies that aren’t looking to hit every quarter’s numbers because they have their sights set on broader goals are going to be the companies that hit their numbers, because they’re not hamstrung by today’s goals and are working for tomorrow’s.

– GS Early

In the mid-1980s, the universe of publicly traded partnerships differed dramatically from the options available to today’s investors. With no limitations on what assets and operating businesses could adopt the MLP structure, the universe of publicly traded partnerships expanded rapidly and included restaurants, nursing homes, shopping centers, forest products and amusement parks. Even professional sports franchises got in on the action, with Boston Celtics LP raising $48 million in an initial public offering shortly after the team won the 1985-86 NBA championship.

Alarmed by the upsurge in companies converting to MLPs or spinning off assets into this tax-advantaged structure, Congress passed the Tax Reform Act of 1986 and the Revenue Act of 1987, which sought to prevent a diminution of the corporate tax base. This legislation requires publicly traded partnerships to generate at least 90 percent of their gross income from “qualifying” sources, the majority of which relate to the production, processing and transportation of oil, gas and other natural resources.

Despite the dramatic changes that have occurred in the universe of publicly traded partnerships since the 1980s, the basic appeal of this security class to investors has remained the same: above-average yields and significant tax advantages. These qualities, coupled with the current market environment and investor psychology, explain the increasing popularity of publicly traded partnerships.

The Search For More Yield: MLPs And Investor Psychology

In a March 1987 article published in The Wall Street Journal, Barbara Donnelly wrote: “Investment bankers specializing in [master limited] partnerships say that in order to be competitive an issue must offer a current return of 9 percent to 10 percent.”

Twenty-five years later, it’s still all about the yield for many investors, especially as retiring baby boomers shift their focus from accruing assets to transforming accumulated savings into a reliable income stream.

But finding securities that offer above-average yields and reliable quarterly payouts has become increasingly difficult. With the Federal Reserve holding the Federal funds rate near zero percent, bank certificates of deposit and U.S. Treasury bills offer plenty of safety but negligible current returns. Meanwhile, yield to maturities in the U.S. corporate bond market ensure that issuers enjoy a relatively low cost of capital. Bond investors seeking a high current return, on the other hand, must focus on lower-quality credits.

Accordingly, yield-hungry investors have gravitated toward equities. Within the pantheon of dividend-paying stocks, MLPs have historically offered higher yields relative to utilities and real estate investment trusts (REIT).

The Alerian MLP Index, a capitalization-weighted basket of 50 energy-focused MLPs, yields 6.02 percent, whereas the Philadelphia Stock Exchange Utility Index sports a current return of 4.33 percent and the Bloomberg North American REIT Index yields 3.55 percent.

Meanwhile, many income-seeking investors remain scarred by the stock-market implosion that accompanied the global credit crunch and the Great Recession, a trying period that serves as a reminder of the risks involved in dividend investing. Few will forget the panic that ensued when the credit bubble finally burst, forcing corporate titans such as Bank of America Corp. (BAC) and General Electric (GE) to slash their quarterly dividends.

In contrast, energy-focused MLPs emerged from this extreme stress test largely unscathed, with the majority managing to maintain their quarterly distributions despite frozen credit markets, the worst economic downturn in a generation, and collapsing oil and natural-gas prices.

Midstream MLPs that derive the majority of their distributable cash flow from pipelines and other fee-generating assets proved the most resilient during these trying times, though upstream operators that hedged the majority of their production also weathered the storm.

More important, energy-focused MLPs have mitigated some of the pressure points that squeezed the group during the credit crunch and Great Recession.

Some MLPs that gather and process natural gas suffered when commodity prices plummeted. Gathering systems comprise small-diameter pipelines that transport natural gas from individual wells to the pipeline network and processing plants. This business line can come under pressure when the price of natural gas declines to levels that prompt producers to rein in drilling activity, a move that reduces new well connections and throughput on the gathering system.

Processing plants separate natural gas liquids (NGL) — a heavier group of hydrocarbons that includes propane, ethane and butane — from the raw natural gas. The degree to which this business is exposed to fluctuations in commodity prices hinges on how the processor structures its contracts with producers. At the time, the industry favored agreements that compensated processors based on the value of NGLs produced.

Chastened by this experience, MLPs that own gathering and processing assets have sought to shift their contract mix in favor of fee-based agreements that guarantee a minimum level of cash flow and limit exposure to fluctuations in commodity prices.

Publicly traded partnerships also faced liquidity constraints. Private investments in public entities (PIPE) became a popular way for MLPs to fund acquisitions and growth projects in 2006 and 2007.

In a PIPE deal, the MLP would sell equity directly to private buyers such as hedge funds at a discounted price. Although the lock-up periods associated with these transactions helped MLPs to avoid the knee-jerk selloffs that occur in secondary offerings, this source of funding dried up during the credit crunch and a wave of selling by liquidity-constrained institutional investors sent unit prices plummeting.

In the wake of the credit crunch, the majority of MLPs have shored up their balance sheets, replacing PIPE funding with credit facilities, bond offerings and secondary issues.

Not surprisingly, the financial-services industry has been quick to capitalize on investor demand for MLPs, offering more than 50 fund products that focus exclusively on this security class or allocate a significant portion of their investable assets to the group. Thirty-five of these funds have launched since 2010, a testament to investors’ demand for MLPs.

The marketing literature associated with these funds often touts the above-average yields offered by MLPs while extolling the reliable streams of cash flow generated by these toll-road businesses. This messaging has resonated with investors, while the fee revenue garnered from these fund products has been a bright spot for asset management firms.

–Roger S. Conrad

Roger S. Conrad is co-founder and co-editor of Energy & Income Advisor, your complete guide to energy investing.

Crowdfunding allows people with good ideas to present their business plans to a mass audience of investors, along with incentives to financially back the project that veer away from interest, stock or profit shares, which are more traditional ways to attract investors.

Now, websites like Kickstarter, the most widely recognizable crowdfunding platform, and others, like the smaller ClickStartMe, give people with ideas the potential to raise money by convincing others to contribute small donations. The idea is to rack up a high number of small contributions with the promise of returning the favor with a small gift once the project is complete, rather than going to a bank or vice capital firm in search of a large lump sum with strings attached that could make or break the idea.

“With crowdfunding, most donors expect something in exchange for their financial support,” said Kendall Almerico, CEO of ClickStartMe. “Rewards are best when they are personal or unique to a project.”

Most crowdfunding platforms allow as many reward options and corresponding donation requirements as the person seeking capital wishes to list. Usually, the larger the donation amount, the more tangible the reward. Donors could also pay for experiences, like meeting the project creators or being a part of the project in some way. Rewards are best when they are personal or unique to a project, according to crowdfunding experts.

While crowdfunding is not much different than entrepreneurs of yesteryear pitching business ideas to uncles and grandparents at the family reunion, the number of possible supporters who can be reached in the online incarnation is near limitless thanks to online social networking.

Crowdfunding sites do charge a modest fee, but with a solid project plan and a savvy rewards incentive for donors, most start-ups have nothing to lose.

If you have an idea, and you think crowdfunding may be what you need to make it a reality, check out the sites below:

• Kickstarter: Has raised a total of $220 million from 61,000 launched projects so far and is browsed by thousands of people (potential investors) daily. To protect project creators from facing obligations despite lack of funding, the site returns all donations if the pre-set funding goal for a project is not reached.
• Indiegogo: Uses PayPal as the payment option for receiving funds and includes a funding plan called Flexible Funding, which allows projects to receive donated funds (for a higher fee) even if the project has failed to reach the funding goal.
• ClickStartMe: In addition to creating a platform for people to find funding for their ideas, for a price ClickStartMe provides services to help spread the word about projects via social networking and other outreach efforts.

It’s easy to see how the situation developed. Most successful people didn’t start that way. In their young-adult years, they did the responsible thing and bought the insurance they needed. The purchases generally were made through mass market insurers and agents. The trouble is the insurers and brokers didn’t grow in the same direction as the clients.

Now, the clients are successful professionals and business owners with significant investable assets, homes and businesses. Their needs aren’t being met by mass-market insurers and agents. That’s why these clients are paying too much yet are underinsured.

Insurers and brokers experienced in dealing with successful people often can reduce costs while improving coverage across the board, according to the ACE survey. A majority of brokers surveyed said they typically reduce a new client’s premiums by 5 percent.

Here are the actions typically overlooked by successful people who haven’t had an experienced adviser comprehensively review their coverage in recent years.

Increase deductibles. Raising deductibles reduces premiums. Low deductibles make some sense in the early adult years when cash is tight and there isn’t a cushion of savings. But later in life, many people can handle a higher deductible when there is a covered incident. Unless you’re very accident prone, you’ll save more money long-term by raising deductibles to reduce premiums. You can do the math for individual policies; but generally if you avoid a claim for a few years after raising the deductible, the premium savings in the ensuing years will make up for owing the higher deductible. Avoid a claim even longer, and you come out ahead.

Safety discounts. Many people have loss-prevention or safety devices that qualify for insurance discounts, or they easily could obtain the devices. Burglar alarms and leak-detection systems are two common examples of features in the homes of many successful people that they don’t think to notify the insurer about. An insurer or broker who is used to dealing with this group will first go through a checklist of such devices to ask which ones the client has and then will advise which additional features would be cost-effective to obtain.

Consolidation. Discounts are available when a person or household purchases more than one policy from the same insurer. Some insurers that specialize in one type of coverage will form a partnership with insurers in other specialties to offer consolidation discounts. When you’re using more than one insurer, research the discounts available for consolidating coverage at one of them.

Umbrella liability. Most people don’t have enough liability coverage. Their only coverage is the standard limit in the homeowner’s insurance. As a successful person, you’re a target for lawsuits based on actions taken by you and your family. Even inaction can result in a lawsuit alleging you negligently failed to remove a hazard or take other action. Umbrella liability insurance is relatively cheap and will protect the assets accumulated over your lifetime. Some professions are more vulnerable to lawsuits than others. The more activities you engage in, the more likely you are to be sued for something. Even a public service or charitable activity, such as serving on the board of a homeowners’ association or youth athletic league, can result in a liability.

Home coverage limits. Agents report that most people have inadequate coverage for when a home is fully or substantially destroyed. It likely will cost more to rebuild your home than the home’s market value, especially if it is older and would need to be brought into compliance with current building codes. Building codes generally are more detailed and more expensive to comply with. When a home needs substantial rehabilitation or improvement, it often has to be brought in compliance with current building codes.

Personal property coverage. Standard homeowner’s policies have limited coverage for the contents of a home. The standard coverage formula is fine for young adults with few personal possessions to replace. But the cost of replacing the contents of your home likely is far more than their current value and probably much more than the standard policy limit would cover.

Protection from the uninsured. You or a family member could be harmed by a person without insurance or assets to pay for the damages. Be sure your auto policy in particular has adequate uninsured motorist’s coverage.

It’s easy to fix these shortcomings. Meet with an insurance agent who is experienced working with well-off people. If you’re like most people, you’re likely to end up with more complete coverage at a lower cost.

– Bob Carlson

[Editor's Note: The following post is by TDV Editor-in-Chief, Jeff Berwick]

On April 11, The Dollar Vigilante went public stating that shorting Japanese government bonds (JGBs) was an effective means of “profiting from The End Of The Monetary System As We Know It” (TEOTMSAWKI).

Less than a month later, on May 10, after a month replete with numerous halts of the market over intraday crashes, JBGs had their worst day in the past five years. Yields rose higher by 11 basis points to 70 basis points in the 10-year bond and ended up 10 basis points higher on the day.

And, of course, the value of the bonds is inverse to the interest rate. That is a 16 percent rise in the interest rate level in a matter of hours. That is a massive move in the bond market.

An Accident Waiting For A Place To Happen

Traders should take note of JGB prices. On April 4, the Bank of Japan (BOJ) made the announcement that it intended to double the money supply and buy government bonds roughly equaling $80 billion a month. Does this number sound familiar? It should, since the U.S. Federal Reserve’s own quantitative easing program is roughly $85 billion a month. An important point to remember is that the Japanese economy is only one-third the size of the U.S. economy, but its own quantitative easing program equals that of the United States. To say Japan is “doubling down” on the same failed policy approach it has taken for the past 20 years would be a bit of a misnomer. This is Japan’s “all in” move, as I try to keep the gambling metaphor rolling. A gamble is exactly what this is, a very big gamble with no precedent in economic history.

What are the consequences of rapidly increasing government spending, monetizing $80 billion a month in debt and flooding the market with yen? It is hard to miss the headlines as the yen on the futures exchange is now trading at below 100 yen to the U.S. dollar for the first time in four years.

Here is some news that you won’t read in the mainstream financial papers. JGBs are trading lower now than they were after the April 4 BOJ announcement that they would buy a massive amount of JGBs. Huh? How can that happen? If the BOJ announced it would be a huge buyer of JGBs, then how can the price be going down? Well, it has. Since the April 4 announcement, 10-year JGB futures have hit downside circuit breakers no less than seven times as sellers overwhelmed the market with orders.

The Return Of The Bond Vigilante

Why are bonds trading lower? Think about this from a prudent lender’s point of view, and you will have your answer. If I give you yen and you give me a security (bond) that says you will give me back my yen with interest in 10 years, then why would I sit with that security and let you pay me back with a devalued currency? Well, in Japan bondholders appear to be speaking with their market participation. Bond holders are doing exactly what they should be doing. Bond holders should be liquidating bonds and converting money out of yen into non-yen-denominated securities and investments (note all the mergers and acquisitions activity from Japanese companies in the past seven months as the smart money runs — not walks — out of Japan and the yen).

How can the savers in Japan be sitting idly by and watching the purchasing power of their savings being destroyed? We are on the first chapter of a very ugly time in Japan where policymakers’ decisions will strain the very social fabric of the country. We will have a front-row seat to the failings of the Keynesian economic philosophy. It will not be pretty for Japan. And it could very well be the first major event in TEOTMSAWKI.

Surviving And Profiting From TEOTMSAWKI

We have many strategies to survive TEOTMSAWKI including things like precious metals, preferably with a significant amount of them internationalized to protect from political risk (see Getting Your Gold Out Of Dodge) and foreign real estate, such as at Galt’s Gulch in Chile.

Those are mostly defensive.

In order to profit from TEOTMSAWKI, we also have speculative bets on things like gold mining stocks. We also think that shorting Japanese government debt could bring spectacular returns over the coming years.

How To Short Japanese Government Debt

The tricky part to making massive gains with shorting JGBs is that you need to understand all the risks and intricacies of the futures market. Very, very few people have enough experience to do this safely, and we don’t recommend you do it on your own.

We suggest you use an expert like a financial adviser or broker, but only if they truly are experts in the field. Most brokers and advisers do not know how to trade these markets to limit risk, and many people can lose their shirts if it is done wrong.

That’s why we suggest you look to an expert to manage this trade. We’ve identified one of the most suitable as being Tres Knippa of ShortJapanDebt.com. Not only is he an expert futures trader, but he intricately follows and focuses solely on shorting Japanese government debt and operates managed accounts for suitable clientelle.

For The Dollar Vigilante subscribers, we’ll be conducting an in-depth interview with Knippa this week to lay out all the risks and rewards.

What we are seeing in Japan may be the first return of bond vigilantes to the bond markets since the 1970s. We’ll be watching closely as things progress for the first major crack toward TEOTMSAWKI… and hoping to profit immensely from it.

“My daughter is only 16,” the man said. “Why are you sending this stuff?”

The manager apologized profusely and offered a vague explanation. The man nodded and left. A few days later, the manager, who was bothered by the entire situation, called the man to once again offer apologies.

“Well, it appears that I complained too soon,” the man said. “Evidently, there are some things going on in my house that I wasn’t fully aware of. My daughter is due in May. So I guess my only question is how you knew before I did?”

The manager again offered a vague explanation, but the truth is that retailers like Target have complicated algorithms that carefully analyze massive amounts of purchasing data. They can discern buying patterns and draw highly specific marketing conclusions.

In this case, the man’s daughter had bought a number of items in one transaction that expectant mothers tend to buy. Armed with this data and other customer information, the retailer can send out highly targeted marketing material — material designed, in this case, to create a strong bond with a potentially lucrative long-term customer.

Today, retailers are very careful with this sort of customer information. They still analyze the data and they still make these sorts of conclusions, but they will include other offers to mask the intention of the targeted campaign — a coupon for dog food, say, or patio furniture and other seasonal items.

The truth is retailers like Target (TGT), Wal-Mart (WMT), J.C. Penny (JCP) and others use “Big Data” to know exactly the kind of ads to get in front of you. But what they don’t want is consumers to know just how much they know about them. Just think how much I could tell about you by examining what you bought at the grocery store. If you think that loyalty card is there to give you a discount, think again. This is how supermarket mailings are eerily matched to the same stuff you typically buy.

As an investor, all you need to know is this: Information is the most important and valuable commodity on Earth, and it always has been.

The only difference is that now an entirely new industry is arising that promises to change the way we eat, play and live – and, perhaps most importantly for investors, how we do business.

Today, the ability to use massive amounts of data and strain it into something resembling intelligence — even for something as mundane as what you buy at the grocery store — is a large, growing and dynamic industry.

Essentially, it is the job of a Big Data to store large amounts of information, enable its easy analysis and aid in the presentation of the data’s results.

In 2010, Big Data was a $3.2 billion industry. But research firm IDC expects it to grow more than 428 percent to $16.9 billion by 2015. That’s a scorching 40 percent per-year growth rate.

So what is the best way for investors to capitalize on this opportunity?

Massachusetts-based EMC Corp. (EMC) is the 800-pound gorilla of Big Data, with $50 billion of market capitalization and annual revenues in excess of $20 billion. It’s admirably profitable.

There’s just one problem. With the company as large as it is today, the company’s growth prospects have diminished somewhat, though they ought to mirror the industry’s growth going forward.

Another option is a much smaller company, Emulex Corp. (ELX). This company has a market capitalization of $529 million — about a hundredth of EMC’s. The share price during the past 52 weeks has been volatile, with a low of $5.72 and a high of $8.67. Its recent price of $5.84 puts it near the bottom of its range for the year.

Even with the stock’s recent losses, the company’s fundamentals are favorable. Revenues last year came in just above a half-billion dollars (a record), which represents a 9.9 percent compound annual growth rate during the previous three years. The balance sheet shows a modest amount of cash, no long-term debt and roughly static shareholder equity for the past several years.

Action to Take –> Big Data has scope; it touches every sector of the economy. I expect companies like EMC and Emulex to be at the forefront of this technology, pushing the outer bounds of what we thought was possible with data — and delivering substantial profits for investors in the process.

– Andy Obermueller

P.S. – Just one high-capacity data storage device — like the ones EMC and Emulex make — contains more data than existed on the planet just three years ago. And in five or 10 years, it’s possible that maybe only three or four companies will own 99 percent of the data storage market. In a recent issue of Game-Changing Stocks, I gave a review of four stocks in this space that I think could profit from a golden age for Big Data. To learn how to get this issue and also get my latest report for more groundbreaking investment plays, click here.

When it comes to bigger dividends, real estate investment trusts (REITs) have benefitted from this drive for income. Prices for REITs have been soaring as investors have been seeking out the tax-advantaged dividends paid by them as well as taking advantage of recovering segments of the underlying real estate property assets.

Just take a look at the general market for REITs tracked by the Bloomberg REIT Index (BBREIT).

Year to date, the REIT market has been climbing by some 16 percent, continuing an upward trend that’s been going on for the past year. With the additional benefits of the higher dividends, the total return for REITs is running at an annual rate of more than 55 percent.

But just because the market is up big doesn’t mean that you should throw your investment cash at it, chasing returns and dividends.

Instead, investing in REITs and real estate companies is just like any other business. You need to understand what you’re buying and why, and don’t just say you’re buying it because it has a good dividend.

With REITs going up in price, yields for the broad market have been coming down. The average yield for the Bloomberg REIT index is now down to 3.24 percent.

That said, there are still plenty of real estate trusts with bigger dividend yields as well as the strong potential for further gains from underlying property assets; but we all need to understand what’s a value and what’s worth the risk.

Let’s start with some gauges for evaluating REITs, starting with the underlying value of their net assets. Book value, the net measure of the properties relative to liabilities, has continued to rise across the market.

The market’s bidding up many of the stock prices of the overall REIT market has, in effect, ramped up how much of a premium it will pay for the average REIT.

Right now, the U.S. average is sitting at more than 2.5 times the underlying net assets. That’s a hefty premium, as it wasn’t that many years ago when that measure was less than half of the current market.

Seeking big-bargain REITs with a discount to their underlying book of property assets is extremely hard and now will more likely result in a stock that has measurable trouble.

Even those that trade at a discount to the average premium over book value must prove their worth in order to justify the premium. Investors need to see that the underlying properties are generating rising revenues, thus justifying eventually higher prices and values.

To find a REIT that’s still valued below the average for the general market with a higher level of revenue growth, I want you to look no further than one of my favorite companies in the commercial real estate market. W.P. Carey (WPC) is set up as another form of a pass-through like a REIT via the limited liability company (LLC) structure, which provides all of the benefits of REITs with added tax benefits for investors.

The company is the leader in sale and lease back transactions of major commercial buildings from administrative to distribution to retail properties. It operates in the United States and other select markets.

Sale and lease back deals are an innovative means for companies that own real estate to liquefy it, allowing them to release cash and capital on their balance sheets for other more productive uses.

The deals typically go like this. Say Amazon (AMZN) owns a distribution center. Rather than let it sit on the company’s balance sheet, it will sell it to W.P. Carey and then lease it back.

Amazon frees up cash for further business development, and it benefits from tax deductions of lease payments made to W.P. Carey each year.

W.P. Carey gets a quality property asset from a known company and turns around and books a long-term lease (known as a triple-net lease), while the tenant (in this case, Amazon) pays all the expenses of the property from maintenance to utilities to taxes.

During times of business struggles, W.P. Carey buys deals at good prices. Later, during more flush times, it can lease the properties at higher rates and gain the appreciation of the underlying property values over time. The company has been doing this for decades. At first, it operated privately. Then, in the late 1990s, the company brought out a publicly traded company to broaden its investor base.

I became a fan of the company not long after it came to the public market on the New York Stock Exchange under the symbol WPC in 1998. In addition, I got to know the company firsthand in great meetings with management and discussions with the founder, William Polk Carey.

Carey, who died recently, was a great real estate investor. He educated and trained the team that continues to carry out the transactions of the company.

The results continue to come in. With revenues up more than 14.1 percent and assets soaring by more than 200 percent, the company is building up its book of assets and making them pay well. It’s generating a dividend flow that’s up more than 20 percent in just the past year alone.

The average REIT’s return on assets is less than 1.8 percent; W.P. Carey’s is more than 2 percent. The average REIT’s return on shareholder equity is barely above 4 percent; W.P. Carey’s is more than 4.7 percent.

While the dividend has been rising consistently over the past three years in terms of overall cash paid, the stock price has been running up as well. The current yield, sitting at 4.34 percent, is much better than the average for the REIT market at only 3.24 percent.

From a price performance basis, the overall return for W.P. Carey is up more than 394 percent in just the past 10 years alone nearly twice the return of REIT markets overall.

Since its listing in 1998, W.P. Carey has generated an overall return of more than 920 percent. That means the company has been delivering an average annual return of more than 16 percent for each and every year in the market. That dividend is still good and still rising.

Since W.P. Carey owns the right real estate in the right locations at the right prices and stays focused on shareholders, it might be the right stock right now for your portfolio under 85 a share.

— Neil George