Why You (Unfortunately) Can't Trust Your Broker

 
This makes me so mad, I want to scream…
 
I recommended a simple investment. Nothing exotic about it at all.
 
Then we got an e-mail from a subscriber… who was unable to buy this investment – a boring exchange-traded fund (ETF) – through her regular broker.
 
I believe her broker lied to her about why he wouldn't let her buy it. To top it off, the broker insulted me as part of his reason.
 
This could be an isolated incident. But I doubt it. And now I'm curious about how widespread this is… because signs point to a growing problem in the financial industry.
 
Last week, Bloomberg reported on what's REALLY going on here:
 
Morgan Stanley has a message for the exchange-traded fund world: Pay up. Or else.
 
The firm has told some fund issuers to pay a fee or risk having future offerings blocked from its sales network…

Look, I'm definitely not singling out Morgan Stanley here. I don't know which broker she tried to use. It could have been any of a number of firms. But if this is a problem in the industry, then it's likely going to get worse.
 
Here's what my reader wrote to us:
 
My broker will not allow me to buy this ETF. He told me their analysts performed due diligence… and as a result, their clients will never be able to buy an ETF released from [XYZ] Funds.
 
"Our firm does its 'due diligence' on various money managers… Your newsletter writer does not have the resources to do that…"
 
Can someone explain to me how it is that Steve can recommend an ETF so highly, and yet one of the big brokerage firms will not allow their clients to buy it?

This would be funny to me if it wasn't so darn terrible…
 
My reader thinks that I'm the bad guy, recommending an "unsuitable" product. Meanwhile, the reality is the exact opposite…
 
Here's the likely reality: This has nothing to do with high and mighty "due diligence" by the brokerage firm. Instead, it's a dirty mafia shakedown…
 
I understand the point of due diligence. If someone comes out with a triple-leveraged Bitcoin ETF trading in Dubai, I can understand why it wouldn't be approved for customers. But we're talking about a boring U.S.-stock ETF. It doesn't make sense.
 
I could be wrong about this, as I don't know the specific broker or the confirmed reason… But I think saying the brokerage did "due diligence" is to cover up the truth that it's "pay to play." The brokerage firm doesn't make much money when a customer buys ETFs. So it wants those ETFs to pay a fee, or risk being blocked.
 
There are other possible reasons… For example, the brokerage might have a better financial relationship with a different ETF firm. I don't know. I just know it's wrong in this case.
 
When I called management at the ETF about this issue, they were scared of being pointed out, for fear they won't ever be a part of the major firms… Even the shakedown fee (the payment) doesn't guarantee their fund will pass "due diligence." That's why I'm not naming the ETF in question.
 
Look, it's fine for a brokerage firm to try to make more money. But just be honest about it.
 
Don't lie to your customer about doing "due diligence" on a plain-vanilla stock fund, when the only reason you're not allowing your customers to buy it is because you want to make more money.
 
This broker is proving exactly why I am in business…
 
I am beholden to only one person – you, my dear reader.
 
The only way I get paid is through your subscription fees. If I don't do a good job for you, then I lose your subscription. The relationship is simple and clear.
 
My recommendations aren't restricted based on what some brokerage firm says. I don't have the temptation to choose a higher-commission product to recommend to you, because I don't earn any fees. I don't have to sell "in house" products, because there is no "house." In short, I am not beholden to my brokerage firm first, and my client second.
 
It's just you and me… I simply give you my best advice, treating you how I would want to be treated if our roles were reversed. If you like my work, then you renew your subscription. If you don't like it, then you walk away. Simple.
 
I have done this… for decades now. By putting readers first, our business has grown to what is probably the largest of its kind in the world.
 
So hopefully you can see why it makes me so mad when a brokerage firm stretches the truth to a customer and then blames me. It's wrong on so many levels.
 
Look, most brokerage firms will let you buy boring stock ETFs like the one I recommended.
 
If your brokerage firm won't let you buy a boring stock ETF, then you should consider that a red flag… And find another broker ASAP.
 
Good investing,
 
Steve
 
P.S. We just launched Stansberry Portfolio Solutions as a solution to this problem. Rather than requiring you to read all of our newsletters, decide which ideas are best, and allocate that into a portfolio, we're making it much, much easier for you. Porter, Dr. David Eifrig, and I are helping readers take all of the guesswork out of investing. Learn more about Stansberry Portfolio Solutions right here.

Source: DailyWealth

Dow 20,000 – Don't Chicken Out!

 
Don't make a big mistake, my friend. Don't chicken out!
 
I know you want to…
 
You know that the Dow Jones Industrial Average hit 20,000 last week – a new record high. And that makes you nervous.
 
You might think, "But it wasn't just the Dow, Steve – ALL the major stock indexes are trading at new highs." I know. And I know that makes you even more nervous.
 
But should you be scared? No.
 
Should you sell? No.
 
I made the exact mistake that you want to make today… only I made it in the late 1990s. I will not make that mistake this time around.
 
Please, learn from my successes and my mistakes today. You can steal my entire career's worth of learning, and profit from it. I hope you do!
 
Let me share the last 20 years of my big U.S. stock market calls, good and bad…
 
My good friend Porter Stansberry summed it up quickly in an e-mail he sent me last week:
 
Steve, Congrats on Dow 20,000…
 
I doubt there's anyone else in the entire world of finance that wrote what you did in January 2000 (that the market was in the greatest financial bubble ever and would soon collapse), and then was able to turn around and buy the bottom [in March 2009] with such conviction and ride it back up, all the way to Dow 20,000 (and maybe beyond). Bravo.

Porter is right… That's what I've done. It was kind of him to notice. It has been a good run.
 
I've been bullish on stocks for this entire decade – basically non-stop since March 2009. And that was exactly the right thing to do. So people think I'm permanently optimistic on stocks.
 
However, I haven't always been "Mr. Sunshine"… The situation was completely different through most of the 2000s…
 
In my January 2000 newsletter, I wrote, "We are at the peak of most likely the greatest financial mania that will ever be seen in our lifetimes… and quite possibly the greatest ever witnessed."
 
I spent the 2000s looking for alternatives to stocks. I got a reputation as the "alternative asset" guy – the opposite of my reputation today! But again, that was exactly the right thing to do.
 
This next chart tells the story… It shows my True Wealth Value Indicator, which measures the price-to-earnings (P/E) ratio plus short-term interest rates.
 
You can see I called the top in January 2000 when stocks were at an expensive extreme… And I called the bottom when stocks were at a cheap extreme. Take a look…
 
Now take a look again… and see where we are today on this value indicator…
 
Are we at an extreme? No.
 
Is it time to get scared? No.
 
So I've gotten the big picture right since 2000… But what about before then?
 
That's where I made my big mistake (in my mind, at least). It's the mistake that I don't want you to make this time around…
 
What was my big mistake in the late 1990s?
 
I got worried about valuations… And I missed out on the fantastic performance of stocks during the final innings of the stock market boom.

Take a look at this chart…

 
Stock valuations went to record highs. And I got scared. We still did well for our readers, but if I'm honest with myself, I missed the opportunity.
 
I will not make that mistake this time around. And I hope you won't either.
 
Over the last 17 years, I've delivered a fantastic record of calling the big picture correctly.
 
Now we are set up for a situation that's similar to the late 1990s… where stocks can get expensive again.
 
Are you going to stay on board? Will you pocket the gains of the bull market's final innings?
 
Or are you going to chicken out?
 
Me? I plan on riding this market higher… Valuation is not at an extreme. And more importantly, we are nowhere near the levels of optimism or investor participation that are the hallmarks of market peaks.
 
My mistake was that I put too much weight on stock valuations in the late 1990s… and not enough weight on what investors were actually doing with their money.
 
I hope you can learn from my mistake… And I hope you will stay on board and boldly capture the upside, while your friends sit on the sidelines.
 
You will be glad you did!
 
Good investing,
 
Steve
 

Source: DailyWealth

Stocks Around the World Are Soaring to New Heights

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 "Dow 20,000" is here…
 
After several weeks of unsuccessful attempts, the Dow Jones Industrial Average finally broke above the 20,000 level this week.
 
As you can see in the chart below, the index of 30 of the "bluest" blue-chip stocks closed at a new all-time high on Wednesday… And it moved even higher on Thursday, ending that day at 20,100.91.
 
But this week's breakout wasn't limited to the Dow…
 
The blue-chip S&P 500 Index also closed at a new all-time high… The tech-heavy Nasdaq Composite Index closed at a new high… And even the Wilshire 5000 Index – considered the benchmark of the entire U.S. equity market – jumped to a record high.
 
 Perhaps most notable, the rally hasn't been limited to U.S. stocks alone…
 
The MSCI World Ex-U.S. Index – which tracks stocks across all 23 of the world's developed markets, excluding the United States – broke out to a new 52-week high as well (hat tip to financial blog The Reformed Broker)…
 
As we've discussed, U.S. stocks have been moving higher following Donald Trump's unexpected election victory in November.
 
But the chart of the MSCI World Ex-U.S. Index shows that stocks around the world are moving higher, too. And it suggests the recent rally has been driven by fundamental changes in the global economy, rather than the election alone.
 
 Contrary to conventional wisdom, our colleague Steve Sjuggerud says seeing stocks break out to new all-time highs tends to be an incredibly bullish sign…
 
He last explained this idea in November, as all four major U.S. indexes were setting new highs. As he wrote in the November 25 issue of DailyWealth
 
It was all over the news… "For the first time since 1999, all four major stock indexes hit all-time highs on the same day." I got calls from coworkers, family members, and good friends. They were all worried. "This feels like a bubble," they all said. "Is it time to sell?" NO. It's not…
 
Stocks perform fantastically after hitting new 12-month highs. We crunched the numbers. And the results were amazing.
 
You REALLY want to own stocks after a new 12-month high… And you really DON'T want to buy stocks after a new 12-month low. This table sums it up best. It shows the return 12 months after a new 12-month high or low. Take a look…
 
Since 1928
12-Month Return
% of Time
After 12-month high
7.3%
31%
After 12-month low
2.8%
11%
Not a new high or low
4.4%
57%
All periods
5.1%
100%
S&P 500 compounded annual gains
Based on monthly data, not including dividends
 Steve's call is exactly right so far…
 
The S&P 500 is already up around 4% since he wrote those words. But this is nothing new…
 
We know of no other analyst anywhere – and this means anywhere – who has been as steadfastly bullish (and absolutely correct) about U.S. stocks since the bull market began.
 
Time and again over the past eight years, Steve has told readers, "Don't worry"… "Stay long"… "Stocks are headed higher."
 
If you've been with us for long, you've likely heard this before. But you may be surprised to learn just how prescient some of his calls have been…
 
For example, Steve first turned bullish on U.S. stocks in March 2009, just days after the bear market bottomed… Of course, we didn't know this at the time. Stocks had fallen more than 50% over the previous 18 months, and most investors were panicking.
 
But Steve noticed the economy was quietly moving from "bad" to "less bad." And in the March 20, 2009 DailyWealth, he told readers unequivocally, "You want to own stocks, right now."
 
 In late 2010, after stocks had already rallied 50% off their bear market bottom, Steve remained bullish… In his October 9, 2010 DailyWealth, titled "Why EVERYTHING Is Up and Will Go Higher Still," he told his readers the bull market would continue.
 
In late 2011, after stocks had suffered their first major correction since the financial crisis, Steve again reassured readers the bull market would continue… Writing in the October 10, 2011 DailyWealth, Steve said history suggested that a "major bottom" in stocks was near. Again, he was right… In fact, stocks had already bottomed just days before.
 
As stocks continued higher in 2012 and 2013, Steve reaffirmed his bullish stance time and again.
 
When stocks suffered another correction in late 2014, Steve again called the bottom, nearly to the day. In the October 2, 2014 DailyWealth, Steve urged readers to "stay on board" because the final "innings" of the long bull market were still ahead.
 
And when stocks plunged in the summer and fall of 2015 – when many analysts were calling an end to the long bull market – Steve still remained bullish. As he wrote in the September 10, 2015 DailyWealth
 
This bull market in stocks is not even close to over yet. Stock prices should have much higher highs ahead, based on the weight of the evidence. Both the short-term picture and the long-term picture are just about perfect for higher highs.
Most recently, when stocks plunged again early last year – and investors were as bearish as they had been in years – he told readers not to worry because stocks were likely to move higher in 2016. As he wrote in the January 14, 2016 DailyWealth
 
We have some scary things happening right now in the financial markets. But you need to understand one thing: Fear is good…
 

You know the old saying… "Be fearful when others are greedy, and be greedy when others are fearful." (Warren Buffett said that… and Buffett is the greatest investor of all time.) Markets peak when investors are greedy – when nobody thinks you can lose money (like in real estate in 2006). And markets bottom out when fear rules – when everyone is scared.

The S&P 500 then went on to gain more than 18% through year-end.
 
The following chart puts these calls and others in perspective…
 
If you had followed Steve's FREE advice to buy stocks in 2009, and you had simply held on, you would've done incredibly well. The benchmark S&P 500 Index is up nearly 200% over that time. Folks who followed Steve's paid recommendations have done even better.
 
 In short, if you aren't reading Steve's research, you owe it to yourself – and your money – to give it try…
 
Normally, if you subscribed to each of Steve's advisories – True Wealth, True Wealth Systems, and True Wealth China Opportunities – you'd pay upwards of thousands of dollars per YEAR.
 
But for just the next few days, you can claim LIFETIME access to all of Steve's best advice and recommendations – as well as the best advice and recommendations from Porter, Dr. David "Doc" Eifrig, and the rest of the Stanberry Research team – for a fraction of the normal subscription costs… with our new Stansberry Portfolio Solutions.
 
Stansberry Portfolio Solutions is hands down the simplest, most convenient, and most affordable way to access our research that we've ever offered…
 
You'll not only get our best recommendations… you'll also get our best advice on how to "put it all together" to create a diversified portfolio. For the first time ever, it will make following our recommendations completely foolproof…
 
No more having to sort through dozens of e-mails each month… No more having to read through stacks of research… No more having to choose which of our recommendations you like best… And no more having to figure out how to incorporate those recommendations into a properly diversified portfolio. We'll do all the work for you.
 
Of course, if you actually enjoy reading our research, you'll still have that option, too…
 
In fact, for many of our readers, Stansberry Portfolio Solutions will give you access to even more of our research than ever before… including our brand-new Stansberry Newswire service, which will offer around-the-clock coverage of the world's financial markets, with updates available (if you desire) in real time.
 
It's completely up to you… With Stansberry Portfolio Solutions, you'll be able to choose exactly how much – or how little – of our research you want to see each month.
 
Best of all, you can try Stansberry Portfolio Solutions risk-free for a full 30 days. If it isn't right for you or you aren't 100% satisfied, we'll refund your payment in full. And if you're already a loyal subscriber, you could qualify for a significant discount off the normal cost of membership.
 
You can get all the details by clicking here… Or simply call our dedicated Member Services team at (800) 667-4214 during our regular business hours – Monday through Friday, 9 a.m. to 5 p.m. Eastern time – to learn more. You can also book a time to speak with them right here.
 
Regards,
 
Justin Brill
 
Editor's note: Stansberry Portfolio Solutions was designed with one goal in mind: to take all the guesswork out of safe, profitable investing… so you can finally "get there" and reach your financial goals. With Stansberry Portfolio Solutions, following our recommendations will be easier, faster, and cheaper than ever before. Click here to see for yourself.
 

Source: DailyWealth

Yet Another Great Opportunity That Nobody Is Talking About

 
Yet another stealth bull market is underway right now… And it's one you don't want to miss…
 
This bull market is strong. It isn't leaving any sector out…
 
I'm talking about a major uptrend in Chinese blue-chip stocks.
 
When most investors hear the word "China" they get worried. And when you add in Trump's recent rhetoric, investor fears grow even more. That's fine with me!
 
That worry creates opportunity for us today…
 
To understand how broad this bull market is, you need to hear about what's happening right now in my True Wealth China Opportunities letter…
 
I started True Wealth China Opportunities in September to take advantage of the bull market I believed was coming. I predicted that hundreds of billions of dollars would flow into Chinese stocks in the next five to seven years. And my team and I put together a diversified portfolio of recommendations to get our subscribers there first.
 
Since last month's issue went out, EVERY SINGLE recommendation went up. That's 20 different recommendations – from high-growth tech stocks to boring bank stocks.
 
What should you buy in China? We've bought a little of everything…
 
If you want to take advantage of this stealth bull market in the safest possible way, then you want to buy China's major blue-chip companies (particularly the ones trading in Hong Kong, as they have more transparent accounting). These include China's major banks, insurance companies, telecoms, and oil companies.
 
These companies are often trading at single-digit price-to-earnings (P/E) ratios. And they pay massive dividends today. Some of these Chinese companies are among the top 20 largest businesses in the world… Yet they're incredibly cheap today.
 
In addition to the safe blue chips, I also like the high-growth tech stocks…
 
For example, this month tech giant Alibaba soared the most out of our China recommendations. Its share price increased 16.6% since our last issue. Alibaba reported outstanding results this week, as it grew revenue by 54% year over year. (Think about that… A $250 billion company grew revenue by 54%!)
 
Another example is Tencent… It's similar in size to Alibaba… and it had similar revenue growth – 52% year over year. I predict Tencent will become the world's largest company in the next five years. There's plenty of upside ahead.
 
Unlike the U.S. stock market, the major Chinese stocks (trading in Hong Kong) haven't performed that well as a group… They're still down roughly 30% from their 2015 peak – even after a solid start to 2017.
 
With poor performance for two years, and with Donald Trump's rhetoric, most investors have given up on China.
 
This gives us an ideal moment to get in… China is hated, and a stealth bull market just appeared over the last month.
 
Now is the time to take advantage of it.
 
I believe Chinese stocks offer our best chance for hundreds-of-percent gains over the next five years.
 
A basket of these blue-chip companies is the safest way to capitalize on the upside in China.
 
Check out Chinese blue-chip stocks. Better yet, put some money to work in them – today.
 
Good investing,
 
Steve
 
Editor's note: The recent uptrend in China is signaling the perfect chance to get into a market with a history of rallying triple digits… at some of the lowest prices in years. Don't miss out on these potential gains. Click here to learn more (this link does not lead to a long promotional video).

Source: DailyWealth

The Most Important Question You Need to Ask Yourself Today

 
I want to ask you an important question…
 
You may not have an answer right now. But by the end of the day, I hope that you do…
 
It will help you avoid making useless trading mistakes… and throwing away hundreds, thousands, or even tens of thousands of dollars.
 
The question is, "What's your plan?"
 
You can take that question a lot of different ways. But here's what I'm asking you today. It involves two parts…
 
First, do you have a short-, intermediate-, or long-term outlook on the markets you're involved in… like stocks, bonds, and commodities? How about the specific sectors within those asset classes… and even the individual stocks or commodities themselves?
 
You don't need an answer for every market or asset across every time frame… But you should have an answer for each, for at least one time frame.
 
After all, why would you own an asset if you don't think it's going to rise over some period of time?
 
Review your portfolio today. I suggest you immediately close out any positions for which you don't have a good answer. That's part one.
 
Second, does your exit strategy line up with your outlook? By this, I mean your stop loss. This should be the core of your trading plan…
 
A stop loss is a predetermined point at which you'll sell a position… no questions asked. Stop losses are designed to limit risk and to remove emotions from your trading decisions.
 
You can use a lot of different types of stop losses… But two of the most common – which I like to use in my DailyWealth Trader (DWT) service – are "trailing stops" and "hard stops." A trailing stop is calculated as a percentage below an asset's highest price since you've owned it. A hard stop is chosen before entering a trade and remains fixed.
 
Each has benefits and drawbacks. But whichever you chose, make sure your stop aligns with your outlook
 
For example, let's say you strongly believe that shares of XYZ Holdings (XYZ) – a medium-sized company with growing sales and earnings – will rise by at least 75% over the next three years.
 
If you want to weather the stock's volatility for three years, you're not going to use a 10% trailing stop. You'll get knocked out too quickly. You're also probably not going to use a 50% trailing stop. The 50% risk isn't worth a possible 75% reward.
 
Maybe a 25%-30% trailing stop would be appropriate. This way, your reward is at least 2.5 times your risk (75% divided by 30% = 2.5)… And you're giving XYZ "wiggle room" for normal volatility.
 
These details are important. But it's even more important that you stick to them
 
One of the biggest mistakes that both investors and traders make is that they get caught up in emotions and throw their stop losses out the window. Here's why you need to have both a time frame and a specific stop loss in mind when you open a position…
 
Let's say XYZ makes a big, 30% move higher in the first three months that you hold it. On top of that, the stock market in general jumps 15%. You get worried that there could be a correction over the next month… and that XYZ could fall 15% or 20%.
 
This is where most people say, "30% in three months is great. I'll sell now and buy back if there's a correction."
 
This may not sound so bad. But it's a huge mistake. First of all, you risked 25%-30% on this position… because you believed there was 75% upside. If you sell now, your position just went from a reward-to-risk ratio of 2.5:1 to about 1:1. You likely wouldn't have made that trade to start.
 
Plus, this is a three-year position. It doesn't make sense to close it out based on a possible one-month move. The time frames that guide your actions should match up with your expected time in a position.
 
Folks who sell in these scenarios often don't get back in. They miss out on a great opportunity to make 75%… one that was already going their way.
 
If you sell XYZ after a 30% gain, then place a similar trade that goes against you, your loss will nearly wipe out your entire gain on XYZ.
 
Over time, this is a losing behavior…
 
With many investment and trading strategies, your win rate isn't going to be much more than 50% or 60%… And that's if you're doing well. If you close out a trade when your gain equals your initial risk (like in the XYZ example), you're condemning yourself to terrible long-term returns.
 
In order to make big profits in the market, you need to follow the golden rule of trading: Cut your losers and let your winners ride.
 
Having a clear plan from the get-go – with your time frame in mind and your stop loss set – allows you to follow that rule.
 
Plan your trades. And trade your plans. You'll save yourself from making big mistakes… And your investment account will thank you.
 
Good trading,
 
Ben Morris
 
Editor's note: You can make sure you have a plan for every investment with a risk-free trial to Ben's DailyWealth Trader service. DailyWealth Trader helps you use safe trading strategies to generate a LOT more income… and market-beating returns. This week alone, Ben made two recommendations that could earn up to 43.4% and 26.7% annualized gains. Click here to learn more.

Source: DailyWealth

Follow These Two Rules to Hold on to Your Long-Term Winners

 
Twenty-five years ago, a back-office snafu cost me $6,000. The worst part is, it didn't stop there…
 
I owned Oracle (ORCL) and Microsoft (MSFT) in my IRA, and both were sold out of my account. By the time I realized they were gone, the stocks had tripled.
 
I kicked myself for not catching the error earlier. That was mistake No. 1.
 
My second mistake was even costlier…
 
I consoled myself with the thought that the stocks had risen so much, they couldn't possibly go any higher.
 
And that mistake cost me $130,000.
 
Let me explain…
 
Microsoft went on to rise 3,000%… and Oracle grew by 9,900%.
 
In my early investing years, I missed out on other profits in similar ways. I would close out of stocks for quick 20%-30% gains… only to see shares rise tenfold in the following years, or even more. For me, those missed winners have always "hurt" more than losers.
 
After missing out on so many long-term winners, I became determined to learn a method that would help me hold on to them longer.
 
The key question I asked myself was this: How do you know which winners you should hold for the long haul and which winners you should sell quickly?
 
This question drove me to study the common traits of superstar stocks.
 
I examined hundreds of stock charts. But I couldn't find a common denominator on the technical side.
 
That meant there had to be a fundamental reason why these stocks would go up thousands of percent.
 
I had to find it…
 
Along my journey, I stumbled upon an investment book called Common Stocks and Uncommon Profits. Phil Fisher wrote it in 1958.
 
Fisher was a West Coast money manager with a fabulous track record. (His son, Ken Fisher, went on to become a billionaire money manager.) Phil Fisher had an uncanny knack for both buying and holding stocks that would turn into massive winners.
 
The most important thing I learned from Fisher came from a one-sentence passage in his book:
 
If the company is deliberately and consistently developing new sources of earning power, and if the industry is one promising to afford equal growth spurts in the future, the price-earnings ratio five or 10 years in the future is rather sure to be as much above that of the average stock as it is today.
 
There are two key takeaways from this one passage:
 
•   Is the company developing new sources of earnings power?
    
•   Is the industry promising to afford equal growth spurts in the future?
 
If the answer to both questions is yes, then you've found yourself a potential long-term winner…
 
Let me give you an example of how these two rules work using a stock we own in the Palm Beach Letter portfolio.
 
We bought Nvidia (NVDA) back in December 2015. Subscribers who got in when we recommended the stock are now up nearly 218%.
 
As a younger hedge-fund manager, I might have sold out of NVDA by now to lock up some quick profits. But I'm in no hurry to sell it because it fits Phil Fisher's two rules.
 
Let me show you…
 
1.   The company must be developing new streams of income.
Nvidia started off making graphics cards for computer games. But over the years, Nvidia has expanded its revenue streams by making chips that enable artificial intelligence, autonomous driving, and cloud computing.
 
Not only that… but Nvidia is making a push into the content-streaming space. It's about to launch a service that will let you play high-end PC games on a regular computer.
 
Nvidia estimates a potential 1 billion PC users would love to play computer games but can't because of cost. High-end gaming rigs cost more than $2,000. But streaming games brings the cost way down.
 
It's like borrowing your friend's top-of-the-line computer… only this machine lives in the "cloud." It works just like streaming a movie on Netflix, and the starting price is the same… $7.99 per month.
 
This new business could be even more lucrative for stockholders than when Netflix started out.
 
That's because the global PC gaming industry is twice the size of the movie industry. That's not a typo. The global PC gaming industry is bigger than the movie-streaming and traditional Hollywood box office industries.
 
This one business alone could be worth billions.
 
So, it's clear that Nvidia meets Fisher's first rule of creating new streams of future revenue.
 
Now, let's move on to his second rule…
 
2.   The company's industry must show long-term growth prospects.
Remember, Nvidia has grown from selling just graphics cards to now providing artificial intelligence, autonomous driving, cloud computing, and PC game streaming.
 
As you look at each one of these industries, I don't think you need to be a rocket scientist to know that the demand for them is just getting started.
 
Based on Fisher's two criteria, NVDA could double in price again. All told, that will be a sevenfold increase from our original entry price. And that's why I won't sell it now.
 
So, if you want to hold on to long-term winners, and not sell them prematurely, remember these two simple questions:
 
Is the company developing new sources of earnings power?
 
Is the industry promising to afford equal growth spurts in the future?
 
By applying a little common sense, you can start using Fisher's timeless wisdom to uncover your own massive winners.
 
Regards,
 
Teeka Tiwari
 
Editor's note: Teeka and his research team just released an urgent report on the next long-term winner you won't want to miss. It's an exciting new tech trend with incredible growth prospects, just like those Fisher described. Click here to learn more.

Source: DailyWealth

I Can't Resist a Hated Investment – Here's a New One

 
You know me by now – I can't resist a "hated" investment…
 
I went "all in" on stocks in 2009, then did it again on real estate in 2011. It worked out fantastically.
 
When I find a truly hated investment, I can hardly hold myself back.
 
But sometimes, holding back is necessary. And that's the hard part…
 
You see, often a "hated" investment takes a lot longer than you expect to start coming around…
 
So ideally, you need enough patience to wait for it to start to turn. As Tom Petty sang, "the waiting is the hardest part." But if you can wait, you can set yourself up for a trade with the perfect characteristics – low downside risk, and huge upside potential.
 
We have one of those trades setting up today…
 
Normally, I would reserve a setup like this for my paid subscribers. But I thought I'd share it with everyone today…
 
The opportunity is in the British pound…
 
The British pound was trading near $1.50 (U.S. dollars) in June… Then, the people of Britain surprised the financial world when they voted to leave the European Union. By July, the British pound fell to a record degree of "hated," judging by the activity in the currency futures market.
 
Britain's currency has continued to fall ever since. It's been hated for seven months. The currency hit a new low of $1.20 last week.
 
But now, after seven months, we may finally be seeing the turn in the British pound…
 
Just last week, the British pound had its biggest one-day move in more than 24 years. The pound went up 3% in a day. Now, you might think you should buy after a decline, not a big move up. But history tells us that huge one-day rallies often signal the start of uptrends in the British pound.
 
Let me briefly show you…
 
Going back to 1971, 3%-plus moves in the pound led to positive gains in the pound over the following three months and six months, most of the time. The biggest loss was only -2% in six months. And the biggest gain was 28% in six months.
 
The British pound is hated today. And now, after a huge one-day move, it looks like we may have the start of an uptrend…
 
You can put a low-downside, high-upside trade in, based on this…
 
For your downside risk, set your stop loss at last week's low of $1.20… That's about $0.05 away. If the pound falls to less than that, then I am wrong.
 
Set your profit target at three times your risk… So if you're risking $0.05 on the downside, take profits when you're up $0.15. Exit the trade in six months, or when you hit your profit target, whichever comes first. (You are welcome to use leverage to your comfort level.)
 
This is the type of setup I look for… a hated investment, showing strong signs of an uptrend.
 
It's worth a speculation… But trade smart. Don't hesitate to follow your stop loss. We can't win them all, and this won't be the last hated trade I'll share with you.
 
Investing and trading are about having small losers and big winners – they're not about winning on every trade.
 
Have fun with it!
 
Good investing,
 
Steve
 

Source: DailyWealth

This Extreme Warning Sign for Oil Prices Is Flashing Again

 
In 2014, oil prices crashed.
 
They fell a staggering 58% in seven months, from $107 a barrel all the way to $45.
 
Could you have seen it coming? Was there a warning sign? Yes!
 
One indicator we track predicted the crash in oil prices. And now, for the first time since 2014, this warning sign is flashing again…
 
When this signal hits a new record and starts to fall, the price of oil goes down as well…
 
Last time, that's exactly what happened. The warning sign peaked in late June 2014. At nearly that exact moment, oil hit a high over $107 per barrel… Then it crashed to $45 over the next seven months.
 
So what is this warning sign?
 
It's the actions of "large speculators" trading oil on the futures markets. Tracking what they do is important – but only at extremes.
 
You see, when these large speculators are placing a record number of bets, the market they're betting on is often near its peak.
 
Take a look at the chart below. In 2014, large speculators were betting on higher oil prices. It was an all-time record in optimism – by far. So in hindsight, it's no surprise that the price of oil crashed dramatically after such a huge extreme…
 
Notice that I said it "was" an all-time record. I said "was" because the oil warning sign hit a NEW all-time record near the end of 2016. Large speculators have literally never been this optimistic about oil prices.
 
You can see what happened next… Oil hit a new 12-month high at the same time. And the price of oil has since turned down.
 
This is just one indicator… But the last time around, it was prophetic in predicting the oil-price fall.
 
Why does this indicator work so well? It works because it shows you when everyone who wants to buy has already bought…
 
It's simple math. For a market to go higher, you need more buyers than sellers. When the buyers dry up, the price is in trouble.
 
And that's where we are today, based on this warning sign.
 
I can't give you any special insights into oil itself, or the latest OPEC deal. Oil prices could go up for any number of reasons.
 
But I don't want to debate those. I want you to be aware that a powerful warning sign is flashing right now…
 
Large speculators are literally more optimistic about the price of oil than they have been – EVER.
 
Based on this fact alone, I would not speculate on a higher price of oil.
 
You may feel strongly that oil prices will go higher in the long run. That's fine. However, you should trade carefully, based on this warning sign.
 
Until these large speculators get washed out – which might only take a couple months – I strongly recommend limiting your bets on rising oil prices.
 
Good investing,
 
Steve
 
Editor's note: If you're betting on higher oil prices, you're simply gambling right now. If you'd rather take all of the guesswork out of investing, we've designed a new program to help you expertly allocate your entire portfolio. Click here to learn more.

Source: DailyWealth

The Easiest Way to Reach Your Financial Goals

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 A big "thank you" to everyone who joined us for our Stansberry Portfolio Solutions reveal earlier this month…
 
We had a fantastic turnout, and the early feedback has been incredibly positive.
 
We expected it to be one of the most important events in our company's 18-year history, and we're grateful so many of you took time out of your busy schedules to attend.
 
If you weren't able to join us, don't worry…
 
Today, we're going to share some of the highlights of our new product. And we've prepared a special, limited-time replay for folks who would like to see our recent presentation in full.
 
 We kicked things off with an important question…
 
How did you do last year?
 
It was a wild year in the markets, but if you followed our advice closely, you should've done pretty well.
 
Yet we've heard from many subscribers who didn't do as well as they would have liked… or worse, didn't do as well as they needed to do to reach their financial goals.
 
If you're among them, you have two options. You can keep doing what you've been doing… and simply hope that somehow – some way – you'll get a better result this time…
 
Or you can finally commit to take responsibility for your financial future… to begin to make money from the research you've purchased… to finally "get there" with your investing in 2017.
 
 This can be easier said than done…
 
In our experience, most investors fail because they don't properly manage risk.
 
Few financial-research firms will admit it, but the reality is most of your success or failure as an investor has little to do with the individual investments you buy. Instead, it's determined by asset allocation (how you spread your portfolio around)… position sizing (how much you put into any particular position)… and your exit strategy (when you sell).
 
And until you begin to manage risk properly, it will be nearly impossible for you to be successful.
 
Of course, if you've been with us for long, you've heard this before. If fact, you probably know exactly what you need to do to become a better investor. But still, year after year, you've failed to put it all together.
 
We get it. You're busy. You likely have a full-time job or other responsibilities that take up most of your time. The last thing you want to do at the end of the day is make investment decisions.
 
Maybe you have plenty of time but struggle with "information overload"… or you have trouble keeping emotions out of your investment decisions.
 
Or maybe you simply aren't that interested in investing. You'd rather go to the dentist than read investment research, but you do so because you don't trust – or can't afford to hire – a broker or asset manager to do it for you.
 
These are all valid, common reasons individual investors fail to meet their goals.
 
In the past, we couldn't do much to help these folks. But we can now offer a solution…
 
 Stansberry Portfolio Solutions is designed to make following our advice completely foolproof…
 
It will allow any investor to achieve the kind of results we know are possible with our research.
 
As we explained during our recent event, this new product combines our best investment research with precise allocation and position-sizing recommendations. For the first time ever, we can show you exactly how to use our research to create a safe, diversified portfolio that even a novice can follow.
 
And it will solve two of the biggest, most common problems we see…
 
 New investors often put far too much money into individual positions…
 
They'll fall in love with a single – often speculative – recommendation and put a huge portion of their portfolio in it.
 
Sometimes this works out. The stock soars, they make a fortune, and they're thrilled. But often, it doesn't. When the stock falls, they lose their shirts.
 
Stansberry Portfolio Solutions will finally allow us to help you solve this problem. Now you'll know exactly how much to buy of any position.
 
 It will also finally address our biggest subscriber complaint…
 
We currently publish as many as 200 new recommendations every year across all of our publications.
 
Many folks tell us they have trouble deciding which of these recommendations to buy, and which to sell to raise cash. And the more of our services you read, the bigger this problem can become.
 
With Stansberry Portfolio Solutions, we'll do all the work for you… and select the best opportunities from across our research.
 
 You'll also get access to our brand-new Stansberry Newswire service…
 
This service will follow our portfolios 24 hours a day, seven days a week, and provide constant updates however you want them – via text, e-mail, or off our website – and as often or infrequent as you like.
 
 Finally, and most important, we've made this service affordable for practically any investor…
 
The reality is, we know if you don't use our research properly – if you're unsuccessful with your investing – you're unlikely to stay with us for long.
 
In other words, your success is important to our success… So we want to give as many subscribers as possible the chance to reach their financial goals.
 
Regardless of which level you choose, you'll pay just a one-time fee for lifetime access to both the portfolio and all the underlying research… for just a fraction of the cost of subscribing to the same services individually. After that, you'll see only a small yearly maintenance fee.
 
You'll also get a full 30 days to try it and make sure it's right for you. If you aren't 100% satisfied, we'll refund your payment in full.
 
Stansberry Portfolio Solutions is truly the easiest, fastest, and most affordable way to use our research we've ever been able to offer. We hope you'll try it and see for yourself.
 
You can get all the details on a subscription – and watch a full replay of our recent live event – by clicking here.
 
Regards,
 
Justin Brill
 
Editor's note: Have you taken the time to organize your investments? Do you seem to always put too much money in the wrong stocks and not enough in the right ones? When it comes to your portfolio, are you simply guessing? Are you unhappy with your results in the market? If you answered "yes" to any of those questions, we have the solution for you. Get the details here.
 

Source: DailyWealth

Three Clues to Finding the Next 100-Bagger

 
I get one question from readers over and over again…
 
Why invest in stocks if the world is going to pot?
 
I'm going to cite one piece of remarkable evidence I uncovered in my own massive study of the stock market's biggest winners.
 
I call these winners "100-baggers" (stocks that returned 100-to-1). And after spending three years and $138,000 to investigate them, I discovered they all have certain features in common.
 
As for the world going to pot, let's agree that there is plenty to worry about. And the stock market is not cheap.
 
The S&P 500's "CAPE" ratio (a stock valuation measure designed to smooth out earnings volatility) has only been this high or higher three times in the last century – right before the crashes of 1929, 2000, and 2007. That means many stocks are expensive.
 
But just because a stock market index like the S&P 500 is pricey doesn't mean there aren't good values out there. Unless you're a buyer of the index itself, it is not relevant to the business of finding great stocks today.
 
Let me give you a historical example…
 
The 17-year stretch from 1966 to 1982 was dead money for stocks – or so many people would have you believe. The Dow Jones Industrial Average basically went nowhere. And if you factor in the period's high inflation, the performance was even worse. Based on this, you might think that you didn't want to be in stocks at that time.
 
But here's what my research on 100-baggers found: There were 187 stocks you could've bought between 1966 and 1982 that would have multiplied your money 100 times.
 
In fact, during that 17-year stretch, you'd have had at least a dozen opportunities each month to multiply your money 100 times if you just held on.
 
In some cases, you didn't even have to wait very long. Southwest Airlines (LUV) returned more than 100 times in about 10 years beginning in 1971. Leslie Wexner's L Brands (LB), owner of Victoria's Secret, did it in about eight years starting in 1978. In 1966, you could've bought H&R Block (HRB) and turned a $10,000 investment into $1 million in less than two decades.
 
So the indexes can tell you what kind of environment you are in. But they don't predict what will happen to individual stocks.
 
It's certainly harder to find great opportunities in highly priced markets. And it's easier to find big winners at market bottoms (but perhaps not so easy to make yourself buy them, as fear is rife at such times). These facts should surprise no one.
 
Southwest Airlines, L Brands, and H&R Block had something in common…
 
•   Southwest Airlines recorded $6 million in sales in 1972. By 1975, it did $23 million in sales. And by the end of the decade, it hit $200 million in sales.
   
•   L Brands had sales of $210 million in 1978. It hit $1 billion in sales in 1980. By the end of the 1980s, it hit $5 billion in sales.
   
•   H&R Block did just $14 million in sales in 1967. In 1975, it passed the $100 million mark in sales.
See the pattern here?
 
All three were small companies with lots of room to grow.
 
For larger companies, the condition of the economy can be a constraint. They depend on broad-based economic growth. It is hard for Coca-Cola (KO) or McDonald's (MCD) to grow faster than the overall economy because they're already so big.
 
It's really just a matter of scale.
 
McDonald's did about $25 billion in sales in 2015. To double that number, it would have needed to sell an extra 5 billion Big Macs the next year. Granted, this is an oversimplified example, but you get the idea.
 
But it's not as hard for a small company to increase its sales by double, triple, or more.
 
Not all small companies become big companies, of course. But after studying more than 360 companies that have become 100-baggers, I have a few basic clues to look for…
 
1.   The ability to expand into national and/or international markets.
Think about the three big winners above. You had a small tax preparer, an airline, and a retailer. All three started as local, or regional, businesses. And all three grew into national brands. To get those big returns, even in lousy economic environments, you need to have room to grow.
 
2.   Strong returns on the capital invested in the business.
If you invest $100 in a business and it generates a cash profit of $20, that's a 20% return on equity, or "ROE." You don't need to know a lot about finance to know that is a very good return.
 
Nearly all of the stocks in my 100-bagger study were good businesses by this measure. They earned returns of 20% or more.
 
H&R Block, for example, earned astronomical returns on its equity – especially in the early days. Its ROE was more than 30% in most years. For L Brands, ROE was over 25% for years and years. And low-cost Southwest Airlines had – and still has – among the best economics of any airline.
 
Which brings me to the final – and perhaps most important – clue I'll share with you today…
 
3.   The ability to reinvest profits and earn high returns again and again.
This one is just math. If you can earn 30% on your equity and reinvest your profits and earn 30% again… well, the dollars start to pile up really fast.
 
Time
Value
Year 1
$1.30
Year 5
$3.70
Year 10
$13.80
Year 20
$190.00
After 10 years, you'll have 14 times what you started with. After about 18 years, you'll have a 100-bagger. This is how you power through bad economic times.
 
Finally, there is a great Charlie Munger quote I want to share because it shows the importance of this concept of ROE…
 
Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return – even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you'll end up with a fine result…
So there you have it. Even though the overall market looks expensive, remember that you are not buying the market. You're buying individual stocks.
 
That's why you should look for great small-cap stocks with the traits I've shared above.
 
If you find a business that can earn 25% or so on its capital over many years, what happens to the overall market won't matter.
 
Sincerely,
 

Chris Mayer

 
Editor's note: Chris is looking for investors to join him in the search for 100-baggers. In his newest investment advisory, Chris Mayer's Focus, he's building a concentrated portfolio of small companies with the potential to become the next Apple – the kind of companies that can fund your retirement with just one win. To get started, click here.

Source: DailyWealth