Exercise Your Shareholder Right To A Second Income
After the pain and suffering caused by the global financial crisis, not to mention the losses many investors experienced, a lot of people still feel disillusioned with Wall Street.
Maybe you’re one of them. I don’t blame you if that’s the case.
After all, the crisis we experienced wasn’t a market anomaly. It was a house of cards built by large banks, risky traders and short-sighted government policies that came crashing down on our heads.
But if you’re one of the many investors who has used this painful experience as an excuse to sit out of the market, my advice to you is stop. It’s one of the worst mistakes you could make with your portfolio.
#-ad_banner-#
In fact, I would argue that if the events of the financial crisis taught us anything, it’s how incredibly important it is for individual investors to take charge of their own portfolios.
One of those ways is to exercise the certain rights and freedoms that go along with stock ownership.
Unfortunately, most shareholders rarely exercise their full rights.
As one of the fathers of value investing, Benjamin Graham (also Warren Buffett’s mentor), wrote in his classic book “Security Analysis”:
“It is a notorious fact, however, that the typical American stockholder is the most docile and apathetic animal in captivity. He does what the board of directors tell him to do and rarely thinks of asserting his individual rights as owner of the business and employer of its paid officers. The result is that the effective control of many, perhaps most, large American corporations is exercised not by those who, together, own a majority of the stock but by a small group known as ‘the management.'”
You see, as shareholders of publicly-traded companies, most people don’t realize they are entitled to a say in things like company mergers and dividend policy. And if you own enough shares, you can even fire management or take over the company, driving change yourself.
That is what wealthy “activist investor” Carl Icahn is famous for doing.
But your voting rights are just the first of many rights you have as a shareholder. Some companies offer additional privileges.
For instance:
— If you own at least 100 shares of Ford (NYSE: F), then you are eligible to buy one of their vehicles for only 4% above the employee discount.
— Longtime Berkshire Hathaway (NYSE: BRK-B) shareholders have known for years that they can get discounts on everything from GEICO insurance to Borsheim’s jewelry to Nebraska Furniture Mart when they attend the company’s annual shareholder meeting.
— If you’re a shareholder of Coca-Cola (NYSE: KO) or 600 other companies, you can arrange access to a unique “1-800” number that lets you buy more of those companies’ stocks without brokerage commission costs.
— As an IBM (NYSE: IBM) shareholder, you can get 25% off pre-owned PC’s with free shipping and extended warranties. You also have a shareholder discount code, which gives you an additional $50 off your purchases.
There are numerous other “perks” that companies offer shareholders. But while these little perks I’ve just mentioned are nice to have, there’s another important shareholder “right” you’re entitled to that’s far more important than any of these: a second income.
As a shareholder, you’re entitled to earn extra income from the stocks you already own. And no, I’m not talking about dividends, either. The truth is, you can earn income from most stocks on the market, regardless of the company’s dividend policy — and all you have to do is own at least 100 shares.
Let’s say I own 100 shares of Apple (NASDAQ: AAPL). At the time I’m writing this, shares trade for about $125.
Now, let’s say I offer to sell my little stake for $132 per share within the next four weeks. That would give me a nice little profit, but there’s a catch. The person on the other side of this agreement has to pay me upfront (say, $150) for the right to buy my shares in the future.
It’s that simple.
In the following four weeks, if Apple doesn’t rise to $132, I don’t have to sell my shares. I simply keep my upfront payment of $150, walk away and repeat this process again and again as much as I want.
On the other hand, if Apple does go above $132, the investor takes me up on my offer and buys my shares. That’s okay, too. I just booked a modest gain plus the $150 upfront payment.
It’s the closest thing to a “win-win” you’ll find when it comes to investing.
I like to think of it as a way of “renting” my shares. I collect a monthly income from the stocks I already own — much like a rental home.
Currently, there are more than 4,000 stocks listed on U.S. exchanges that let you take advantage of this shareholder right.
And that’s what my service, Maximum Income is all about. Each month, it helps you exploit this shareholder right so you can squeeze as much money out of the stocks you own as possible. There’s a lot more to learn about this, and if you’re curious, I invite you to check out this special presentation.
This article was originally published on ProfitableTrading.com: Exercise Your Shareholder Right to a Second Income