Anyone had any experience with secondary annuities? Someone gets hit by a bus, gets awarded a stream of income. But he wants a lump sum now, not the income stream. So the insurance company gives him a lump sum and sells the income stream for a lump sum at a discount. I’ve recently seen a bunch of these things paying a taxable 5% and 6+%, and backed by reputable companies like AIG, Allstate, Hartford and Prudential. There are even tobacco ones backed by companies like Liggett. They typically pay over 6% on the theory (?) that tobacco is worse than buses(??).
My mates tell me these secondary annuities are rock solid. They’re typically sold to alta kakas (i.e. me) who are (I use their words):
+ Looking for future income?
+ Looking to lighten the load of managing your portfolio?
+ Looking to avoid market volatility?
+ Looking for the safety of A rated insurance companies?
One of the brochures asks:
Why is the yield higher?
Answer: “The high yield available to you from SMAs stems from the seller’s need to sell their payments now and willingness to do so at a discount. The seller’s loss can be your gain.”
My suspicious mind tells me there’s a “gotcha” somewhere in this. But I can’t find it.
What am I missing?
All the bad news is gone and the market is about to skyrocket.
I have recently read article after article, statistic after statistic that show miserable news. Example: The Baltic Dry Index has plummeted to its lowest level in more than 30 years. (Click here.)
But why wreck your happy day? This morning Business Insider published a “Happy days are here again” piece. For what it’s worth:
All the bad news for stocks is starting to disappear
Stocks have been plagued by bad news since mid-December.
Constant macroeconomic challenges have pushed markets lower resulting in the worst start to a year ever in the US.
All of these negative narratives, however, seem to be passing the markets by according to Jim Reid, a strategist at Deutsche Bank.
“While we have major concerns about financial markets over a 1-3 year basis we can’t help thinking some of the negative catalysts that markets have had in the last two months are being becalmed,” he wrote in a note to client Wednesday.
Here’s a rundown of the major issues that have been plaguing markets and why Reid thinks they’re behind us:
+ Central bank instability: “First we had the ECB head-fake in December which is now likely to lead to strong action in 3 weeks time at the March meeting. Then we had a Fed hike that is not likely to be repeated anytime soon.”
+ High yield debt: “Then we had the US HY fund closures which haven’t really been followed up by a series of closures.”
+ China and its currency: “Over the New Year we had the renewed China FX depreciation which the PBoC’s Zhou indicated over the weekend is unlikely to be continued.”
+ Plummeting oil prices and bank contagion: “Also oil has stabilized to some degree after a horrible start to the year and the banks have attempted to build defenses against some of the more extreme attacks of the last two weeks.”
The biggest fear would be disappointing data from the major economies, but that doesn’t seem likely to Reid.
“However even here while data isn’t great (we never thought it would be) there’s no immediate signs that the US or European economy is nosediving,” he wrote.
This has led Reid to conclude that while it is “fragile,” the market seems to have found the bottom and should move up from here.
Stocks are up just over 3.5% over the past two days and futures just before the market open Wednesday are higher again.
If the market closes higher on Wednesday we’d cap the the first run of three consecutive up days in 2016.
Harry Newton who is still in Indian Wells, California where the major problems are sun (too much of it) and Canadian geese (too much pooping). My daughter’s Boston pipes burst because her boiler ran out of oil during the weekend’s record cold spell. She’s not pleased. Her mother is also not pleased at what the geese have done to our concrete walls and walkways. We unleashed Rosie (our 16lb Havanese) on the geese. But the female attacked. Meantime, Susan joined the fray, waving a large bright red towel, which the geese predictably ignored. Never a dull moment in Paradise. I’ve refrained from showing photos of the megatons of green Canadian Geese poop. Even I can show restraint, occasionally. Will Palmolive work on it?
Verizon has a nice 4.5% yield and a low P/E of 11.5%.
Best answer to goose and their poop is a shotgun. It works almost 100% of the time and also provides for dinner. Your local elitist’s won’t approve, since geese should be protected, while these neighbors munch on their fried chicken. Welcome to California.
I am very curious to get a response from anyone in the car business out there to this comment – I think Tesla will be a great short. Here is why: they only have one new vehicle that I am aware of coming out in 3 years. Therefore, what do current Tesla owners do when they want to upgrade or purchase a new Tesla vehicle. Whereas other car manufacturers give you oodles of choices. In addition, there will be a lot more competition in electric car market and oil prices are cheap. Now does Tesla make a great car and there is currently a high demand for Tesla’s but they don’t have the ability to meet this demand and they have a limited number of vehicles to sell in the near future. Not sure how this stock doesn’t drop in the next 6 months or so??