The Only Advantage You'll Ever Get in the Financial Markets

 
There's one simple way you can make a fortune in the financial markets.
 
It's simple, but it's not easy…
 
First, you must understand the three advantages the market has over you. Stop trying to beat it at these things. You can't. You'll waste your time and your money…
 
The informational advantage: You need good information to succeed in the financial markets, but you'll never have more information about an industry or a public company than all the other investors in the market combined.
 
The analytical advantage: Financial markets are populated by armies of overeducated, workaholic geniuses who analyze every aspect of every stock, bond, and index while calculating square roots and standard deviations in their heads.
 
Again, you need good analytical skills to succeed in the financial markets, but you're not going to out-analyze the market.
 
The timing advantage: No matter what anyone tells you, you can't time the market. There are millions of people making individual market decisions every day. It's impossible to predict what they will do with any consistent accuracy.
 
Forget about the advantages you can't get. Instead, focus on the one that's readily available to all investors – individual and professional alike: the behavioral advantage.
 
To make plenty of money in stocks, you must behave better than the vast herd of investors.
 
Research firm Dalbar publishes an annual study on investor behavior called the Quantitative Analysis of Investor Behavior ("QAIB"). Every year since 1994, the QAIB has compared stock market returns over the previous decades with returns earned by real investors. The result is always the same: The market beats the investor.
 
For the 30 years ended December 31, 2015, the S&P 500 returned 10.4% per year, on average. Equity mutual fund investors earned an average return of just 3.7% per year.
 
Those investors didn't have as much information as the market, it's unlikely they were better-than-average analysts, and they definitely failed to time the market. They bought at the top and sold at the bottom (the primary behavior responsible for their awful returns).
 
Behavior made all the difference, and it was a huge difference… The S&P 500 turned every $10,000 invested into about $192,000 over 30 years. The average investor turned that $10,000 into just $29,000.
 
A single behavior – refusing to sell at market bottoms – would have multiplied profits nearly tenfold.
 
Investment legend Warren Buffett has often said that to succeed as a stock investor, you need to "be fearful when others are greedy and greedy when others are fearful." He means you need to buy at or near market bottoms and sell, or at least not buy, at or near market tops.
 
This is essentially the behavioral advantage. But I've thought about Buffett's quote a lot over the years, and his paradigm of waxing and waning greed and fear doesn't work for me. I've observed something different…
 
Financial markets don't really oscillate between greed and fear… Fear is the dominant emotional impetus in the market at all times. It's just magnified at big market tops and bottoms. People are afraid of not doing what everyone else is doing, at the top, the bottom, and every day in between.
 
Acquiring the behavioral advantage is simple (but again, not easy). Don't be afraid to move in a different direction than the herd.
 
You'll never banish fear entirely. Your biology won't let that happen. So maybe, like an old self-help book title said, you must learn to "feel the fear and do it anyway."
 
Good investing,
 

Dan Ferris

 
Editor's note: In the August issue of Extreme Value, Dan recommended a company that the vast herd of investors has left for dead. But he's confident this No. 1 retailer could be the next multi-bagger return. Get access to this name and all of Dan's research with a risk-free trial subscription to Extreme Value. Learn more here.

Source: DailyWealth

Five Essential Steps to Prepare for the Next Bear Market

 
"Stop scaring the pants off me," a reader wrote last week.
 
That's not my goal. Yes, I've told my readers my concerns about negative interest rates – a first in the 5,000-year history of civilization – and mounting sovereign debt.
 
But I'm not suggesting that you run to cash. That's rarely a smart move, even when yields aren't microscopic, as they are now.
 
It's just that we're seven years into the economic expansion (weak as it is) and seven-and-a-half years into this bull market, and – as the old saying goes – trees don't grow to the sky.
 
Are you prepared for the next downturn? You should be. But you should also be prepared to participate in this bull market as long as it continues.
 
What I'm saying isn't the least bit contradictory. Just take these five essential steps…
 

1.   Make your asset allocation more conservative.
How you divide your money up among stocks, bonds, real estate investment trusts, and other assets is your single most important investment decision. You make your asset allocation more conservative by reducing your exposure to equities. Just how conservative to make it is a personal decision based on your age, temperament, and risk tolerance.

But Warren Buffett's mentor Benjamin Graham had a good rule of thumb: An investor should never have more than 80% in stocks or less than 20%. So unless you have one foot in the grave and the other on a banana peel, don't get more conservative than that.

 
2.   Favor large-cap stocks over small-cap stocks.
History shows that large caps hold up better than small caps in a market downturn. (Just as small caps outperform large caps early in an upturn.) If you want to be even safer, opt for overweight mega-cap stocks. (Those are companies with a market cap of $100 billion or more.) A few examples are Wal-Mart (WMT), Apple (AAPL), Toyota (TM), and BP (BP).
 
3.   Favor value stocks over growth stocks.
Growth stocks are companies whose profits are growing much faster than average. Value stocks are companies that are cheaper than average based on price-to-sales, price-to-earnings, and price-to-book value. Value stocks offer a higher margin of safety – and hold up better in a bear market.
 
4.   Favor dividend-paying stocks over non-dividend-paying stocks.
Some companies are growing so fast that they need to use most or all of their cash flow to finance their growth, so they are unable to pay dividends. But companies that are mature, stable, and profitable generally do pay dividends. Those yields will support them in a down market – and provide you with an income stream.
 
5.  Tighten your stops.
I recommend a 25% trailing stop on longer-term positions and tighter stops on short-term trading positions. But feel free to run your stops tighter if you are older, have big gains, or are concerned about the tone of the market.

Just don't run those stops too tight. You want to give your stocks room to breathe. You want to avoid stopping out when a stock is still in a confirmed uptrend. (That generally means it is trading above both its 50- and 200-day moving averages.)

 
Why not just move to cash if the outlook for the market is cloudy?
 
This idea – called market timing – can seem like a good idea. After all, you can get out before the real trouble starts, and then get back in when the outlook improves.
 
Keep dreaming…
 
You may get out of the market, but it keeps going higher instead. Then, having missed the rally, you might be in for the next correction. That's not good. Yet stay out even longer – as some people have since the Great Recession – and you might never get back in.
 
Even if your short-term call is right and the market tanks the day after you move to cash, when will you get back in? Nobody rings a bell at the bottom either. Investors often feel so good about missing the downturn that they miss the upturn.
 
Plus, if you sell everything and go to cash, Uncle Sam is going to hit you with a huge tax bill on your capital gains.
 
So don't get out of the market. Just make your portfolio more conservative using the five steps I've outlined here. This way you're protected if the market goes down, but you're participating if the market keeps going up. That's what intelligent risk-taking is all about.
 
Good investing,
 
Alexander Green
 
Editor's note: Alex has discovered a recent law change that could allow you to collect a "cash rebate" on nearly everything you purchase this year – a new pair of shoes, lunch with friends, even an engagement ring. Best of all, the IRS says you don't need a receipt to collect your share. Click here to learn more.

Source: DailyWealth

How to Become a Millionaire Using Other People's Money

 
Rankin Hodgins had humble beginnings.
 
He was born in 1921 on a farm in Saskatchewan, Canada. He eventually went on to work in insurance and never made more than $65,000 per year.
 
In 1978, he started investing in the stock market. He began with $200,000 and borrowed another $18,000 from the bank.
 
By 2012, without ever adding to his account, Rankin's account was worth $6.6 million. That's an 11.8% compounded return.
 
So how did he do it?
 
His son Douglas answers this question in a book titled Millionaire Down the Road: Secrets of the Ultimate Tax-Efficient Investor.
 
Rankin was an ordinary, hard-working fellow. He was not a professional investor. But he did a few things right.
 
And he did one big thing that was – and remains – controversial…
 
First, he had a simple way of picking his stocks.
 
He looked for companies that were consistently profitable and growing all the time. He put a large portion of his portfolio into dividend payers like Canadian banks.
 
Then he left them alone to take advantage of the power of compounding. If you want to make really big gains, you have to understand how compounding works.
 
If you earn 20% per year, then $1 becomes…
 
The Power of Compounding
5 years
$2.50
10 years
$6.20
20 years
$38.00
25 years
$95.00
Note how the gains are back-end loaded. This is because you earn "interest on the interest" of your principal investment as time passes. After 10 years, you've made six times your money. But wait just 10 more years and you've made 38 times your money. That's a huge difference.
 
To leave your stocks alone, you need to suffer through all kinds of economic tides. Rankin's portfolio began when 6% interest rates were standard. Just four years later, they were more than 20%. And by 2012, rates had fallen so low that they had almost disappeared.
 
There were also the gut-wrenching ups and downs of the market itself. Rankin lost 20% of his portfolio in the 1987 crash. He lost $750,000 in 2001, as the tech bubble deflated. And he was down millions of dollars in the financial crisis of 2008-2009.
 
But he stood pat. And his stocks eventually recovered.
 
As his son Doug notes:
 
How well we manage our emotional response in negative market conditions will go a long way in determining how successful we are as stock market investors, especially as leveraged investors.
Leveraged what?
 
Here we get to Rankin's big controversial secret: He borrowed money to invest. Sometimes he borrowed a lot of money. He was leveraged generally from 30% to 50%.
 
Consider an example… Let's say you have $100,000 to invest, but you borrowed half of it. That's 50% leverage. Now, interesting things happen when you have 50% leverage. It magnifies your gains as well as your losses.
 
A 10% gain on that $100,000 means you've made $10,000 on your $50,000. The leverage turns a 10% gain into a 20% gain for you. But a 10% decline becomes a 20% loss on your capital, too.
 
Of course, this is before interest expense. That's one reason why Rankin likes dividend payers – he used the dividends to pay the interest on his loans.
 
I can't recommend Rankin's use of leverage to you. If you're not careful, you could be wiped out. Investing in stocks is tricky enough without having to worry about that.
 
But the debt has another advantage, too: Rankin could deduct the interest expense from his taxes. And since he held on to his stocks, he deferred paying capital gains taxes. This is a tax-efficient way to invest. It's like having a boat with minimal drag, cutting through the water.
 
Over time, the advantages of Rankin's approach are remarkable. He had more than $5 million in accumulated profits after taxes. Starting with just $200,000. That's incredible.
 
I love stories like this, because it shows how everyday people can make a lot of money in stocks by doing some relatively ordinary things. Simple stock selection mixed with patience goes a long way.
 
Rankin added a kicker – he added debt.
 
In finance, there is a phrase: other people's money, or "OPM." Many wealthy people use OPM to get wealthy, including Warren Buffett. What do you think all that insurance money he collected up front and invested was? It was OPM.
 
Debt is OPM.
 
And Rankin's experience as an investor is a case study in why you might think about using some OPM yourself – if you aren't already.
 
Good investing,
 
Chris Mayer
 
Editor's note: Chris recently recorded a presentation detailing how to find the next big winner in the stock market. If you're looking for companies that can turn $10,000 into $1 million, you won't want to miss this. Watch it here… and be sure to stick around for a special offer for charter subscribers.

Source: DailyWealth

Your Biggest Question, Answered

 
I spoke with hundreds of subscribers at our Stansberry Conference in Las Vegas last week…
 
The most common question was some variation of: "When does it all end?"
 
Here are just a few examples of what I heard…
 
"When will the bad times arrive? When will the %^&* hit the fan? When will the world realize America's trillions of dollars of debt can't be repaid? When will the U.S. finally fail to pay its promises in entitlement spending? When… when… when???"
 
Rick Rule – president and CEO of Sprott U.S. Holdings – gave the best answer during his presentation…
 
"I've always confused two words in the English language," Rick said.
 
Those two words are INEVITABLE and IMMINENT.
 
All of the pressing questions I heard at the conference were inevitable… But none, in my opinion, were imminent. Think about that.
 
If you realize the difference between those two words, and if you have the courage to act, then you can make money in the next few years.
 
If you are frozen by fear – confusing the imminent with the inevitable – then I can't help you.
 
"Steve Sjuggerud taught me two things," Rick said in his speech. "The first is, DON'T BE AFRAID TO BE RIGHT… Be right, sit tight, and raise your trailing stops, Steve told me. Wonderful advice."
 
Thanks for the kudos, Rick… I couldn't have said it better myself.
 
Well, maybe my grandmother said it simpler… "Don't go looking for trouble," she used to say.
 
Look, I understand the fears. I understand the worrying.
 
You might think that you're just being early… that you're being safe, ahead of the crowd. But think about this…
 
As Rick said, "If you're four years early, you're not early. You're wrong."
 
Rick's advice is the same as what I often tell DailyWealth readers: Wait for the uptrend to buy, and raise your trailing stops to get out.
 
I strongly believe that I will capture all of the upside that's left in this market by sticking with the uptrend.
 
Importantly, I will also be OUT of the market at the right time – before anyone even realizes the worst is arriving – by following my trailing stops.
 
As I mentioned, the question I heard most at the conference was, "WHEN???"
 
The answer lies in understanding the difference between inevitable and imminent. Understand it and follow it.
 
If you fail to appreciate the difference, you will be frozen with fear, and you won't make much money.
 
It's your call…
 
Good investing,
 
Steve
 

Source: DailyWealth

Today's Stock Market Volatility Could Lead to 15% Gains

 
Do you think this is it? The market is finally turning over for good, right?
 
I fielded those questions dozens of times in Las Vegas last week. I was there for our annual Stansberry Conference. And fear was in the air. But that's not surprising…
 
You see, the boring summer we had in the markets came to an end on September 9.
 
The S&P 500 fell 2.5% that day. It was the worst day for stocks in four months. And it ended a streak of 50-plus days in which stocks hadn't lost 1% or more.
 
I know that scared many investors. But today, I'll show that this is actually a good thing for stock prices.
 
In fact, gains of 15% over the next year are possible, based on history.
 
Let me explain…
 
Volatility is normal for markets.
 
Things go up and things go down. It's rare for U.S. stocks to spend a couple of months without a major daily loss. But that's exactly what happened recently.
 
From June 28 to September 8, the S&P 500 never had a daily loss of 1% or higher. That's a rare streak. But it ended when stocks fell hard on September 9.
 
Most folks would hear that and be scared…
 
Things used to be calm… But now they're hectic… I need to sell!
 
However, the typical reaction here is not the right one. Stocks have a history of moving much higher after similar ends to low volatility.
 
The most recent occurrence was actually in June of this year… And the S&P 500 is already up 6.5% since then.
 
We've seen this same situation 16 other times going back to 1985. Stocks were higher a year later in all 16 examples… Not once did they lose money.
 
Not only did stocks make money… they made a lot of money.
 
These volatility spikes led to big outperformances over the next year. The table below shows the returns…
 
 
3-Month
6-Month
1-Year
After volatility spike
2.4%
6.6%
14.5%
All periods
2.0%
4.0%
8.2%
The S&P 500 has had 8.2% annualized gains, on average, since 1985. But buying after these volatility spikes led to much better returns over the same period… gains of 6.6% over six months and 14.5% over the next year.
 
Those are major outperformances compared with the typical return on stocks.
 
This is certainly surprising. After all, you would expect stocks to fall when a period of extremely low volatility ends… But the opposite tends to occur.
 
Stocks just had their first 1% loss in more than 50 days. That's a rare event… But it's also a good thing for stocks.
 
History says double-digit gains are possible over the next year. And that means we want to stay long stocks today.
 
Good investing,
 
Brett Eversole
 

Source: DailyWealth

This Is the Single Biggest Threat to Your Investing Success

 
In nearly 20 years of firsthand market experience and a dozen years of helping tens of thousands of individual investors, I've learned there is one thing that threatens our investment success more than anything.
 
I'm going to illustrate it for you with a personal story…
 
Back in July 2014, I bought fast-food giant McDonald's (MCD) at around $94 a share. The risk looked low and my indicators suggested it had room to run.
 
Indeed, shares headed higher. I was up around 25% before I finally got stopped out on June 28 of this year during the volatility that followed the "Brexit" vote.
 
I got stopped out of the trade by $0.08. Yet despite my frustration, I never questioned my decision to sell, even though I only stopped out by pennies and the stock popped right back up.
 
But the market tested my patience even more…
 
Over the next three weeks, MCD shares rose more than 10%, from $116 to $128 with hardly a single down day the whole time…
 
Did I regret getting stopped out? Did this cause me to question using a stop loss? Not at all. I didn't give it a second thought.
 
You see, I've spent years studying investor behavior and emotion… And one emotion stands out above all others as the single biggest threat to our investment success: the fear of regret.
 
Notice that I didn't say "regret." I said "the fear of regret."
 
The fear of regret prompts us not to sell when we hit our stops.
 
What happened with my MCD trade is every stop-loss believer's worst nightmare. You stop out of a position by pennies… Then the stock rips 10% higher without taking a breather and makes you feel like a fool.
 
Right? Wrong.
 
My MCD trade was a good trade. I stayed in the position for almost two years – nearly two times longer than the average investor's position today. I made more than 25% (including dividends).
 
As a matter of fact, I was happy to stop out of the trade. That's my goal with every trade…
 
I want to hold on to a position until it hits its stop.
 
Over the years, I've learned the hard way that this is the best way to consistently make money in the stock market.
 
Did I leave some money on the table? Maybe. But it doesn't matter. What matters more than the outcome of a single trade is that I have a system for making investment decisions without the fear of regret. My system puts the odds in my favor… and I follow it.
 
The fear of regret is the biggest obstacle to our investment success. Overcoming it is the easiest way to improve your returns.
 
Good investing,
 
Richard M. Smith, PhD
 
Editor's note: Whether you're an experienced investor with multiple portfolios or just dipping your toes into the markets for the first time, Richard's TradeStops software includes all of the tools you need to succeed. It'll help you stay in winning trades longer… dump losers faster… and manage risk like the pros. And right now, you can get instant access to TradeStops for a full year at 50% off the regular price. Learn more here.

Source: DailyWealth

A Major Reason Why I'm Buying China Today

 
How do you know for sure when everyone has given up on an investment?
 
One simple answer is this: When the folks whose livelihoods depend on that investment recovering have given up… that's a true sentiment bottom.
 
I believe that's where we are in China today. And it's a major reason why I'm buying China right now. Let me explain…
 
I'm not sure a market can be more hated than the Chinese stock market is today…
 
I visited China back in June. We had several whirlwind days of meetings with everyone from institutional brokers to retail asset managers.
 
My goal going in was simple: to figure out what I could be missing… and to make sure the opportunity in China was really as good as I thought it was.
 
I went into these meetings sharing my positive thesis on China. I expected folks would be excited to see me – an American enthusiastic about China's prospects.
 
The reality was different…
 
I was the most optimistic person in nearly every meeting we had. The folks we met with were generally dejected… They basically "parroted" the American view that China's prospects weren't good.
 
In short, these folks who needed a stronger Chinese stock market, personally, couldn't even muster up a "Yeah, Steve, you're right." They had no enthusiasm. They were completely defeated.
 
And on the surface, they had solid concerns. But here's the thing…
 
None of their objections held up.
 
They worried about what you would expect them to worry about. They worried about things like global growth and how the Chinese government might handle stock market volatility.
 
But to me, all of these worries were really just excuses to be pessimistic.
 
You see, Chinese stocks have lost a lot of money over the past year, and the mood was gloomy.
 
For example, China's A-share market fell roughly 50% from mid-2015 to mid-2016. (The A-share market is China's "locals only" stock market.) That decline has created incredible opportunity in China. But no one on the ground can see it.
 
Recommending Chinese stocks after this 50% fall has been like pitching someone on the opportunity in U.S. stocks in 2009 – or real estate in 2011.
 
Sure, those were the best times to buy… But no one who had just experienced the bust was willing to listen.
 
That's what I saw on the ground in China… Even the Chinese don't believe in their market.
 
This is fantastic. It's exactly what I love to see before investing. When everyone expects the worst, it doesn't take great news to turn things around.
 
Even folks whose livelihoods depend on a Chinese recovery don't expect it to happen. And that's what a true bottom in sentiment looks like.
 
There are plenty of other reasons why I'm interested in China. But this might be the most hated market on the planet today. And that's a major reason why I'm buying.
 
Good investing,
 
Steve
 
P.S. I recently put together a presentation on the major takeaway from my China visit. The country is currently undergoing a technology revolution. And today, we have an opportunity to buy China's future tech giants with hundreds-of-percent upside. I urge you to check out the full details in my presentation right here.

Source: DailyWealth

The No. 1 Thing I Want From an Investment

 
Some people like to invest in stocks. Some people like to invest in real estate. Some people like to trade commodities…
 
But all I want is an investment that goes up every year, regardless of what's going on in the stock market.
 
Regular DailyWealth readers know we call these businesses World Dominating Dividend Growers (or "WDDGs"). WDDGs are often the No. 1 or No. 2 companies in their industries. And they have a history of rewarding shareholders with growing dividends.
 
Let me show you what I mean…
 
What you want is a chart that looks like this:
 
No, that's not a share-price graph. It's a picture of larger and larger amounts of cash placed directly into shareholders' pockets by a business that has paid higher and higher dividends each year.
 
Let's compare that WDDG graph with a chart of the S&P 500 from 2000 through 2016.
 
It's important to understand that you cannot safely rely on the stock market's action as a source of investment return. No share prices march straight up forever. But everyone can invest in businesses with a history of consistently rising dividends. That's why investors who want to make consistent returns from stocks need to focus on dividends… and relentless dividend-growers like WDDGs.
 
Now, investors love dividend stocks these days. That drives up their prices a bit. The best WDDGs don't always have very high current yields. Microsoft (MSFT), for example, is a WDDG – the one from our first chart. It yields around 2.8%. That's not very impressive when compared with some of the other dividend-paying stocks out there.
 
But real income growth – the type that always goes up – can be achieved by reinvesting those dividends.
 
Let's take a look at Microsoft to see just what reinvesting in shares with a growing dividend can do…
 
Microsoft started paying a dividend in 2003. Since then, it has grown the dividend every year (except for a small drop in the crisis year of 2009 – and it came back stronger than ever). For the last five years, Microsoft has increased its dividend by nearly 19% a year… And I see no reason for growth to slow down.
 
Microsoft has a decent current yield. But you can build that into a much-better-paying retirement nest egg…
 
For example, say you buy 100 shares at $50 per share. Total cost: $5,000. The stock yields about 2.8%, and the dividend has been growing at 19% a year, so let's be conservative and assume that slows a bit to 10%.
 
At the end of the first year, you'll receive $140 in dividends ($5,000 x 2.8%). Since Microsoft raises its dividend 10% in Year 2, you'll earn $154 in dividends.
 
Repeat this process for 10 years, and you'll make $363.12 in dividends in the 10th year. That's a 7.3% dividend yield off your initial $5,000 investment… or a 7.3% "yield on cost."
 
So with Microsoft, you'll be earning 7.3% over your cost within 10 years… And in 20 years, you'll be earning an astounding 18.8% over your original cost.
 
Even so, you can earn more. The yield above is what you'd get if you took the dividends as cash for spending. Instead, when you plow them back in, buying extra shares through reinvestment, you'll earn an even higher rate of return. Take a look…
 
Let's assume you buy 100 shares at $50 each and reinvest all of your dividends. Assuming 10% annual dividend growth and 5% annual share-price growth, you could turn an initial investment of $5,000 into more than $35,000 in just 20 years…
 
No. of Years
Total Value
0
$5,000.00
3
$6,825.70
5
$8,043.03
10
$12,481.83
20
$35,355.69
A rising dividend payout is one of the strongest ways to build wealth in finance… But as you can see, sitting back and letting your reinvested dividends earn their own dividends grows your investment dramatically.
 
Get started today, and you'll tap into an incredible income stream that rarely goes down.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Doc has found a great "one click" way to invest in a basket of high-quality dividend-paying stocks. Today, he rates it a "strong buy." You can get instant access to this name and all of Doc's research with a risk-free trial subscription to Retirement Millionaire. Learn more here.

Source: DailyWealth

This Little-Known Company Will Soon Be the Largest in the World

 
I have a prediction for you…
 
A little-known Chinese company will become the world's largest company within the next five years.
 
The company is already worth more than $250 billion… That makes it the world's 10th-largest company by stock market value. But you ain't seen nuthin' yet…
 
I believe it'll continue to grow at record speed, which is exactly why I predict it'll soon be the world's largest.
 
Let me explain…
 
With more than $250 billion in value, this company is already a global giant. And when a company starts to reach the size of General Electric or Johnson & Johnson, it's easy to assume that the company is getting too big… You might think that its "high growth" era must be coming to an end soon.
 
But that's not the case with this little-known company. It's still growing as fast as a tiny startup…
 
For example, the company's quarterly earnings report came out last month. Sales were up 52% last year, and earnings were up 47%. That kind of growth is unbelievable… and it likely won't slow down much in the next couple of years.
 
With a growth rate like that, you can see why I expect this little-known Chinese company to become the world's largest company – moving from 10th place to first.
 
What's truly amazing to me is that almost nobody in the U.S. has even heard of this company. But basically everyone I met on my trip to Beijing and Shanghai over the summer can't live without what it does – you can't do business in China without it.
 
You might not have heard of it… But I guarantee that America's biggest names know all about it. Companies like Apple, Google, and Facebook are trying to copy its products as we speak. In the end, I predict this company will come out ahead… It will ultimately be bigger than them all.
 
The company is called Tencent.
 
Tencent's business is owning the screen time of China's population. By "screen time," I don't mean television screens. I mean the screens that the Chinese use for nearly everything – their smartphone screens.
 
This is where folks spend their time. This is where folks read and watch TV. It's their main source of entertainment. And Tencent's commanding control of screen time is why it will grow to be the world's largest company.
 
Take basketball, for example. Thanks in large part to retired NBA star Yao Ming's success, basketball's popularity has exploded in China in recent years. And if you're interested in watching an NBA game, Tencent owns the broadcasting rights throughout China.
 
Tencent runs several social networks, which currently have more than 800 million active users in total. The company also runs a massive payment network with roughly 300 million active users.
 
In short, everything in China revolves around smartphone screens. And no one owns screen time more than Tencent.
 
That simple fact is why Tencent's incredible growth can continue. And it's why I predict it will become the world's largest company within the next five years.
 
Good investing,
 
Steve
 
P.S. Tencent is just one of many ways I recommend putting money to work in China today. I believe the long-term opportunity is so great that I recently put together a presentation where I explained all of the details. I believe we're looking at 500% upside over the next few years. I urge you to watch my free presentation by clicking here.

Source: DailyWealth

My Big China Prediction Is Finally Coming True…

 
"$400 billion will move into Chinese stocks based on a decision today…" I wrote in DailyWealth in 2015.
 
The big decision would have triggered hundreds of billions of dollars to flow into Chinese A-share stocks over the next five to seven years. But in June 2015, the decision I expected was not what we got.
 
Again, in June 2016, I expected it to happen. And again, it didn't.
 
Then, late last week – out of the blue, and with NO media publicity or fanfare – we saw the first proof that what I've been writing about is coming true, and SOON.
 
It will be the biggest story in finance over the next five to seven years… Yet shockingly, NOBODY is talking about it.
 
I am certain I am right about this idea.
 
Earlier, I got the prediction right but the timing wrong… And now it's finally time to take advantage of it.
 
What is this big story? Let me briefly explain…
 
China is the world's second-largest economy. And its local stock market is the world's second-largest stock market. The crazy thing is, NOBODY owns local Chinese stocks (known as "A-shares")…
 
This HAS to change. Here's why…
 
Typical global-fund managers own the world's stock markets roughly according to the size of those stock markets. So the U.S. is their largest holding, then Europe, and so on.
 
The crazy part is, global-fund managers currently allocate roughly ZERO percent to Chinese A-shares.
 
Why? Because their benchmark indexes allocate roughly zero percent to Chinese A-shares.
 
When the benchmark indexes change to include Chinese A-shares, global-fund managers will be forced to buy them. Lots of them. Hundreds of billions of dollars' worth. It's as simple as that.
 
So here's what happened last week…
 
The leading provider of global indexes is a company called MSCI. Last week, with no fanfare, MSCI announced the creation of 20 (20!) new indexes that will include Chinese A-shares. These new indexes reflect the first inclusion of Chinese A-shares in MSCI's major indexes – all the way up to its world indexes!
 
The first part of the story from MSCI tells us everything we need to know…
 
MSCI is pleased to announce the upcoming launch of 20 new illustrative indexes, reflecting the effect of a potential 5% partial inclusion of China A-shares into the MSCI Emerging Markets Index…
 
The new illustrative indexes will be launched in late September 2016. More details on the new indexes will be shared at launch date.

BAM! All right!
 
This is the moment I've been waiting for…
 
Chinese stocks have finally "made it" to the big time… They will be included in the MSCI Emerging Markets Index. They will also be included in MSCI's All-Country World Index.
 
The crazy part is, nobody cares. Nobody is talking about it – yet.
 
This is a big moment. Hundreds of billions of dollars will flow into Chinese stocks over the next five to seven years.
 
Get your money there first.
 
Good investing,
 
Steve
 
P.S. Last week, I put together a free presentation that shows you exactly how to get some of your money into China as quickly as possible. I believe that folks who move at least some money there quickly stand to make as much as 500% or even 1,000% over the next few years. This is the best trade in the world right now. To learn more, click here.

Source: DailyWealth