Marketplace Roundtable #61: Richard Berger On Engineering Income In Your Investing
Richard Berger joins the Marketplace Roundtable Podcast to discuss his investing experience as reflected in the Engineered Income Investing service. Berger's goal is to produce "a nice, healthy high yield with as low a risk as possible." To do that he first identifies high-quality companies to invest in, such as dividend aristocrats. In the next step he appraises fair value through a variety of tools. Then it's a simple matter of looking at the current market price to determine whether it presents an opportunity to invest. Options strategies provide further boosts to income.
The biggest lesson Berger has learned in his investing career is "it is absolutely impossible for anybody to predict the future." The key is to make sure one is paid for taking on risk and can monitor the holdings on an ongoing basis. "Avoid trying to seek out home runs," he says. "They're few and far between and for every home run you do hit, you'll have far too many failures."
For the immediate future, Berger expects interest rates to remain low, which should help risk assets. Investors should take advantage of this to allocate to securities that offer income and the possibility of capital gains. Berger likes consumer staples such as General Mills (GIS), Clorox (CLX), Procter & Gamble (PG). Some industrials companies should also do well and an options strategy can hedge out a lot of the risk. The options strategy has come in particular use where the merger between Sprint (S) and T-Mobile US (TMUS) merger is concerned. Berger explains this on the podcast.
Topics Covered
2:30 minute mark - Investing strategy
5:15 - What type of screening do you do?
7:45 - Something you've learned from investing
9:15 - What is something you learned over the past year?
12:30 - Prediction for coming months
16:00 - How did you get into investing given your background?
22:15 - Can lower interest rates help oil prices?
26:00 - What sectors do you like right now?
29:30 - Cash secured put strategy
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