By Rida Morwa: One common criticism of high-yield investments is that they are high-yielding for a reason, making them risky. Often, there is a reason why a security has a super high yield. However, just because the market dislikes or fears a particular investment does not mean it is a high-risk investment. With our “Income Method”, we search for investment opportunities that pay a substantial dividend that is well covered by the business s operations, but that the market disfavors for the wrong reasons. This strategy combines immediate-income and value investing.
The Difference Between Perceived Risk and Actual Risk
Perceived risk is a subjective assessment of risk or uncertainty, based on our limited perspective. Others perceptions will influence ours, and actual probabilities of adverse events may differ significantly. The market is often a key determiner of perceived risk. A recent sell-off, or misunderstood earnings news, or persistent negative sector sentiment can al