Ways to Play “Bad” Earnings from “Good” Companies

Investors have relentlessly bashed the likes of McDonalds, IBM, Coca Cola, etc. lately for lackluster (to put it lightly) earnings and forward guidance suggesting such companies (stocks) are un-ownable.  To view such companies through the single prism of equity ownership is a very short sighted investment philosophy.  Simply adjusting your strategy along the capital structure allows an investor to participate in earnings of high credit quality companies though their fixed income instruments.  Owning bonds or preferred shares of those companies offer significant yield spread over treasury earnings, thus allowing you to wait out whatever turn around, cost cutting, etc. that knocks the stock around and earn some retirement income on the side.

Jamie Cox

November 5, 2014

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