One of the best means of racking up great yields is to knowwhen to buy when others are dumping and running for the exits.This is what our man Doug Casey used to call “crisis investing.”Blood in the streets means we can pick up stocks, bonds, fundsand other investments for dimes on the dollar. It also means that many of our own favorites are awash in thesame bloodbath; it’s not without some pain that we can gocarpetbagging. But if you follow along, we can get throughsome of the muck of the markets while bolstering our portfolio’s cash flows for the quarters and years to come.
Start with one of my key edicts of investing: Own plenty of investments that pay us well with lots of cash flow. Even ifthe market sends their stock prices into the cellar, if the companies are solid and the checks keep coming we can sufferthe near-term woes. Cash buys time. It’s as simple as that. And it’s not just for those who live off their portfolios. Cash piling up is the most certain way to grow portfolio values over time.
This brings us to edict No. 2: Pile up the cash you don’t need to spend and wait for buying opportunities. Too many folks on Wall Street talk about reinvestment the wrong way. They tout dividend reinvestment plans, or DRIPs, away for companies or their appointed brokers to automatically take dividends paid and immediately buy more shares. Theprocess is meant to help folks build up their portfolios in anefficient manner. But a DRIP isn’t the best way to accomplish that goal. Companies like DRIPs because they give them built-in demand for stock shares. And open-end mutual funds and those devilishexchange traded funds (ETFs) love them for the same reason.Brokers and financials love them because they provide a lockedstream of monthly or quarterly trades--all on autopilot. What results is a ready campaign to get more of us on board withthis process. But the real way to reinvest is to take the cash, pile it up in your account, follow the market prices for our investment picks and buy more when others are selling.