Just Not Worth It: Stay Away From American Realty

It’s the start of June—one of three best months to be alive—and yet, I’m stuck reading through the shenanigans that CEO Nicholas Schorsch is pulling at American Realty.

I’m still sorting through it all, but my initial impression is this: it appears that he can receive $92 million over the next five years simply for delivering 7% total returns and beat a group of selected peers by six percentage points annually over that time frame. As a reference point, the REIT pays out a $0.0833 monthly dividend, which is a dividend yield of 8.05% based on current prices. In other words, if the price of the stock remains static and the dividend payout remains the same, the first leg of that performance hurdle would be automatically met right now.

Really, the scary thing is that, Schorsch was unrepentant when reached for comment by the Wall Street Journal. Describing his Read the rest of this article!

The Best 401(k) Investments: Small-Cap Value Funds

From 1926 through 2019, small-cap value stocks have delivered investment returns of 12.8% annualized. Even from 1990 through the present, the results are still an astounding 11.4% annualized. The reason for small-cap outperformance over the long haul is that a few companies in a small-cap index today will become the mega-cap stock of tomorrow, and a whole lot of money gets made by owning a small little piece of the companies that grew from small to large.

For instance, the T. Rowe Price New Horizons Fund has delivered 11.79% annual returns since its inception on June 3, 1960. A $3,400 investment when the fund opened, which is the purchasing power equivalent of making a $10,000 investment today, would be worth over $3.5 million today. An important reason why that fund historically outperformed is that it purchased Wal-Mart stock in the late 1970s and held onto it through the early 1990s. … Read the rest of this article!