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Our Top Inflation-Protection Advice for 2014

By Amber Lee Mason and Brian Hunt, DailyWealth Trader
Thursday, January 9, 2014

One of the biggest concerns we hear from readers is:
 
If the U.S. government is hell-bent on destroying the value of the dollar, how do I protect myself?
 
In a world of 0% interest rates on savings accounts and ultra-low rates on Treasurys, it's hard to prevent your wealth from eroding away.
 
The answer is to find safe, alternative sources of higher income. That could mean getting a raise at work... starting a new business... collecting tax-free yields from municipal bonds... or using world-class businesses to produce 10%-20% yields every year.
 
You might think that's impossible... You might think you can only get double-digit yields from risky stocks. But in DailyWealth Trader, we're earning that much or more on shares of Coke.
 
Coke is one of the world's greatest companies. It owns many of the world's most valuable and powerful brands. It has terrific profit margins and a history of relentless dividend growth.
 
Today, it pays a 2.8% dividend yield. But if you use a strategy we've shared with our readers, you can multiply that income five times over...
 
You can do it by selling covered calls.
 
If you haven't tried this strategy yet, keep reading... It's more than worth your time to understand the basics.
 
When you sell covered calls, you can collect cash upfront for agreeing to sell your shares for a higher price. You give up some of your potential capital gains for guaranteed income and added safety.
 
This practice isn't for gamblers reaching for the moon. This is for folks interested in a safe, double-digit annual income stream.
 
You can read more about how it works right here. But here's what the numbers look like with Coke...
 
Right now, you can buy Coke for just under $40 per share. You can then sell the March $40 calls for around $1. That produces an instant "yield" of 2.5%.
 
That might not sound like much. But if you use this strategy for a year, the gains will add up...
 
The calls expire on March 21, 10 weeks from now. If the stock has moved higher by then, you sell your shares at $40. If the stock stays where it is or moves lower, you keep your shares... and you can sell another round of calls. Making this trade five times in a year will produce a 12.5% return.
 
Add in Coke's annual dividend, and you're collecting more than 15% on a world-class stock.
 
If you're worried about earning enough to beat inflation, an annual yield of 15% will more than do it.
 
That's why selling options on the world's best stocks is one of our top inflation-protection ideas for this year.
 
Good trading,
 
Amber Lee Mason and Brian Hunt




Further Reading:

"Many individual investors tune out immediately when they hear 'options,'" Sean Goldsmith writes. "'It's too risky,' they say. 'It's too complicated... It's not for me.'" But in this success story, he shows how almost any investor can use options to invest with lower risk... and earn profits that are "far greater than what's possible by just owning the stock outright."
 
Dr. David "Doc" Eifrig also says selling options is neither too risky nor too complicated. "No other strategy offers a chance to safely profit, no matter what happens to stock markets," he says. "I truly believe it's one of the most valuable investing skills you can learn." Learn more in this interview with Doc.

In The Daily Crux
Market Notes
Natural gas exporter Cheniere Energy breaks out to a new all-time high.
 
A huge uptrend for generic drugmakers... Mylan and Actavis (formerly Watson) soar 100%-plus in two years.
 
Beaten-down ag giant Potash jumps to its highest level in five months.
 
Online businesses are booming... Google, Baidu, and Yahoo hit new multiyear highs.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1837.49 0.0% +26.1%
Oil (USO) 33.15 -1.3% -2.4%
Gold (GLD) 118.12 -0.6% -26.4%
Silver (SLV) 18.83 -1.5% -35.9%
U.S. Dollar 81.05 +0.3% +0.9%
Euro 1.36 -0.1% +4.0%
Volatility (^VIX) 12.87 -0.4% -5.5%
Gold Stocks (^HUI) 201.00 -1.6% -52.7%
10-Year Yield 2.99 +1.7% +59.9%

World ETFs
Symbol Price
Change
52-Wk
USA (SPY) 183.52 +0.0% +28.6%
Japan (EWJ) 12.04 +0.2% +26.4%
Israel (ISL) 16.67 +1.0% +26.1%
Taiwan (EWT) 13.93 +0.0% +6.2%
Russia (TRF) 15.05 +0.3% +3.4%
Canada (EWC) 28.62 -0.1% +1.1%
India (IFN) 19.81 +0.1% -1.7%
S. Korea (EWY) 60.73 -0.4% -1.7%
Singapore (EWS) 12.86 +0.5% -3.2%
China (FXI) 36.43 +1.1% -7.3%
S. Africa (EZA) 61.04 -1.7% -10.8%
Lat.America (ILF) 35.28 -1.1% -18.3%

Sector ETFs
Symbol Price
Change
52-Wk
Biotech (PBE) 38.65 +1.1% +60.8%
Alt. Energy (PBW) 6.72 -0.2% +59.4%
Media (PBS) 26.29 -0.6% +55.0%
Defense (PPA) 31.04 +0.1% +47.9%
Health Care (IYH) 118.09 +1.0% +39.1%
Retail (PMR) 34.34 -0.3% +37.9%
Consumer Svcs (IYC) 120.92 0.0% +37.4%
Industrials (IYJ) 100.04 -0.1% +35.2%
Transportation (IYT) 130.65 +0.4% +34.8%
Big Tech (QQQQ) 87.31 +0.2% +32.8%
Software (PSJ) 36.44 0.0% +31.5%
Financials (IYF) 80.53 +0.3% +29.6%
Semis (PSI) 18.57 -0.2% +27.5%
Telecom (IYZ) 29.66 +0.0% +24.4%
Construction (PKB) 22.12 +0.2% +23.4%
Nanotech (PXN) 7.66 +1.5% +23.6%
Water (PHO) 25.82 -0.2% +22.6%
Insurance (PIC) 19.01 +0.1% +18.3%
Basic Mat (IYM) 80.44 +0.5% +15.4%
Utilities (XLU) 37.46 -0.5% +10.4%
Real Estate (IYR) 63.73 -0.2% +0.0%

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