Last summer, CNN ran a story of a Fresno, California, commercial painter who learned that what was in a couple of boxes he paid $45 dollars for a decade ago could be worth more than $200 million.
According to CNN, “Art, forensic, handwriting and weather experts teamed up to conclude the 65 glass plates in the boxes were photographic negatives created more than 80 years ago by Ansel Adams, the iconic American photographer whose images of the West inspired the country.”
Admittedly, this is an extreme example of why many of us love garage sales: We love the thrill of finding valuable items at a fraction of the price we’d pay in a retail outlet.
The markets are the same way: While most investors pay “Tiffany” prices for the hyped-up stocks on the S&P 500, there are places where you can find bargains in the markets that will pay you huge dividends — if you know where to look.
One place you can find stock market bargains is known simply as…the Garage.
Few traders have ever ventured to (or are even aware of the existence of) Wall Street’s dimly lit trading annex known simply as The Garage. This NYSE annex won’t show up under the spotlight of the mainstream media. But it’s home to some of the market’s most undervalued, lucrative investment vehicles.
The very fact that the securities traded in The Garage aren’t on the mainstream marketing machine’s radar means that some of the best deals can be found there. Their prices haven’t been hyped through the roof. And because these securities aren’t being publicized, there’s also a good chance the money grubbing investment banks, brokers, and corporate management don’t have their hands in the cookie jar…
Which means a larger share of the returns from these investments go to individual investors like us.
Wall Street’s Tiffany-Priced Stocks Can’t Hold a Candle To These Garage-Sale Bargains
Some of the safest, highest-yielding investments found in The Garage are minibonds. What is a minibond? Basically, it’s a bond packaged to look and trade like a stock – at a price that’s actually within the reach of regular investors. Instead of paying $1,000 per bond and being forced to trade in lots of thousands or millions of bonds at a time, a minibond is much easier to buy, with face values typically around $25 or less.
This gives smaller investors the chance to enjoy the same benefits as big time bond traders – one of the biggest being that it’s much easier to evaluate the risk of a bond than a stock. Instead of factoring a myriad of market and company conditions, all you have to ask is “Will this company be able to pay its debt?”
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One example of this is Liberty Media’s minibond (PYL). I dug this one up in The Garage back in February of 2009 when it was paying a dividend of a little over 8%. Since then, its total return to date is 224%.
Compare that to Disney (DIS), a highly touted Wall Street stock which returned 69% and a miserly dividend of only 1 percent in the same period.
And PYL is still paying 7.6% today and is still a steal.
All we need for our minibonds is for the company behind any one of them to just be able to continue to pay its bills. Why rely on Wall Street promises that more folks will buy the latest edition of Snow White – when all we have to do is keep an eye on Liberty’s business lines to make sure they’re positioned to make their debt payments?
Big and steady dividends beat hold and hope promises every time. And you’re far more likely to find the former in the dark and dusty corners of Wall Street’s Garage.
If you’d like to see my entire list of 13 recommended minibonds — along with my entire retirement income portfolio of rock-steady securities yielding an average of more than 7.4 percent — try out a free trial subscription to my Pay Me Strategy newsletter.