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Does anyone have any input on Mike Williams "True Income" newsletter and the Secured Investment Contracts?
These Secured Investment Contracts supposedly have a specific amount of payout on a specific future date and a broker must purchase them for you after you supply some 9 digit code. Oh, and unless the company was to fail, those who hold these contracts are the first to be paid before general stockholders. Of course the ad makes these sound like the best investment since sliced bread...but what are they? Options? Penny stocks? A different class of stock? I've never heard of them, but most listed companies supposedly offer them.
Answers
2775 points
Oldman answered one year ago …
These are discounted (below investment grade) bonds that are senior secured debt...some pay periodic interest and have a 30% discount to face value, i.e., a Tribune Company (publisher) $1000.00 bond with an e.g., 5 % coupon, payable semiannually, is for sale (offered at )$700.00. So its current yield is (5/0.7) = 7.14%, and it will pay back 1000.00/unit at maturity, say in 2 years.
The bond's rating might be low enough to be considered "junk". However, the ratings and evaluations of the issuer are a function of the knowledge and experience of the newsletter's source...who may be sound or not. But, having said all that, the bankrupt company must pay its creditors, and bond holders are first in line, before preferred/convertibles. Bankrupt companies may never be able to pay all creditors, and may bonds are now worthless.
102 points
neolocutus answered 8 months ago …
I've heard that they are most junk bonds as well. yes, in theory you could earn your money back and alot more. But more likely, you'll just lose it all.
http://securedinvestmentcontracts.net/what-are-secured-investment-contract s/
102 points
rlbirkholz answered 7 months ago …
They are junk bonds. The only guarantee is that if they stay in business you get paid. So far over half of his recomendations have gone or are soon to go bankrupt and are very likely to pay nothing, no interest and no return of your investment. Unless you are a very experienced fixed income investor stay away from this money losing strategy
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