Does Anyone Ever Get to Ring the Bell at the New York Stock Exchange Twice?

If you are a pro in the National Football League, your dream is to wear a Super Bowl ring. If you are a pianist, you haven't made it until you've played Carnegie Hall. If you are an entrepreneur in business, you want to ring the opening bell at the New York Stock Exchange. There is no feeling like looking down on the exchange floor at 9:30 a.m. NY time and knowing the whole world is about to start trading. I know the feeling because I experienced it myself when I rang the bell the morning of November 14, 1996 listing The Learning Company, the largest publisher of educational software in the world on the NYSE.

I never thought I'd get a second chance to do it again but that is exactly what is going to happen tomorrow morning, Tuesday, July 28, when I along with my O'Shares team are on the NYSE balcony ringing the bell again celebrating the listing of our new ETF OUSA.

What is OUSA? It is an Exchange Traded Fund that I created for my Family Trust.

Here is why:
Years ago my mother taught me never to invest in a stock that did not pay a dividend. She believed in getting paid while you wait and the facts back her up. During the last 40 years, over 70% of the markets return have come from dividends, not capital appreciation.

When you invest the only free lunch you get is diversification. For example I never let any one stock position become more than 5% of my portfolio or let a sector of the economy, like energy, become more than 20% of my holdings. The best way for me to achieve this is to buy a mutual fund or ETF that only contains dividend paying stocks as long as it abides by my 5% and 20% rules of investing.

1. ETF's can have low fees and be very cost effective and there are over 1,700 of them on the market so I asked my team to find me one that I could invest in and would provide me with the following:
2. I want low volatility. Find me stocks that over the last 10 years have been 20% less volatile than the stock market. This reduces my risk.
3. My family lives off dividends. Currently stocks in the S&P 500 yield around 2% and that's not enough for me. I want close to 3%, that's 50% more dividend yield than the S&P 500 provides today. My stocks have to be good dividend payers.

Because I invest for the long term, I want quality companies with good balance sheets that are growing their dividends not cutting them. One of the problems in looking for high dividend yielding stocks is that if you are not careful you can get caught in a value trap. When a stock price declines because the business is doing poorly the dividend yield goes up. That's bad because weak businesses eventually cut their dividends. You want to avoid companies like that so your investment discipline must always be testing the quality of their income statements and balance sheets to make sure they remain investible.

These three rules are very important to me. I made the assumption that out of the approximately 1,700 ETF's currently trading, my team could find a few that fit my rules. I was amazed when they couldn't. There are over 50 dividend paying ETF's on the market today. Unfortunately for me most of them are first generation market capitalization weighted indexes. In other words the larger the company becomes, the bigger the portion it represents of the ETF regardless if its business is doing well or poorly.

I don't just want to own a stock just because its big and it pays a dividend. I only want the quality companies that have good balance sheets and whose business are growing. The other reason I don't want to invest in a market cap weighted ETF is because over time just a few holdings, maybe as few as 8 or 10 can represent over 50% of the portfolio. That's way too much concentration in a few positions for me. I said earlier that diversification is the only free lunch in investing. If you don't stick with that rule it's not a matter of will you get hurt-it's only a matter of when.

Bottom line? I have a fair amount of capital to put to work but I could not find an ETF that fit my investing rules so I asked my team to make one for me.

They approached the team at FTSE/Russell one of the largest market index firms in the world and asked them to create an index that abided by my dividend, low volatility, and quality rules. O'Shares was born.

Our first ETF is OUSA a basket of 142 mid and large cap USA stocks that made the cut. That means 358 stocks in the S&P 500 are not good enough for my investment dollar, and I'm OK with that. Now through OUSA I own a well-diversified basket of high quality stocks that pay me a monthly distribution and as long as they meet my stringent rules (and the OUSA index tests them every year!) I plan on owning them forever. I'm not telling you what to invest in, but now you know where I'm putting my family's money.

Because I wanted OUSA to be liquid and available to any investor in the world I listed it on the New York Stock Exchange, the premier ETF trading platform in the world.

That's why I'm on the NYSE balcony with the O'Shares team ringing the bell to celebrate the OUSA listing on the NYSE. If my mother were alive today, she would be standing right beside me. After all, these investment philosophies were all hers in the first place! She would have definitely been an OUSA investor and in a way she is!

Before you invest in O'Shares Investment funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal.

Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The fund may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. The Fund's emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities. See the prospectus for specific risks regarding the Fund.

Past performance does not guarantee future results. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns.
O'Shares Investment funds are distributed by Foreside Fund Services, LLC. Foreside Fund Services, LLC is not affiliated with O'Shares Investments Inc. or any of its affiliates