“If the average investor knew about them, they’d own them for sure…”
From Grant Wasylik and Tom Dyson in The Palm Beach Letter:
Warren Buffett loves one type of investment so much, he was recently fined $896,000 for misusing it.
You see, the “Oracle of Omaha” didn’t get in trouble for buying an illegal security, or insider trading, or anything sinister like that. It seemed like an honest mistake.
He may have just gotten so greedy about buying this favorite “billionaire asset” that he forgot to stay on top of securities laws. But it’s easy to see why Buffett loves this special asset…
This asset is so discreet, hardly anyone outside of elite financial circles knows about it. (It makes up less than 0.5% of the entire investment universe.)
It provides the upside of a stock… along with the safety of a bond. Specifically, it has three important attributes we love here at The Palm Beach Letter:
1. Steady income (higher than most stocks)
2. Significant appreciation potential
3. Safety of principal.
No traditional stock or bond provides all three of these attributes. But this investment does. It’s called a convertible bond. To learn more about how these little-known hybrid securities provide a mixture of yield plus equity exposure—how they “pay you to wait for growth”—read our next item…