A New Type of Crime Will Cause This Industry to Soar

Editor's note: This week, we're interrupting our regular schedule for an interesting essay from our colleague and tech expert Jeff Brown, who explains why a new type of crime is setting one industry up for huge growth in the coming years…
 
In recent years, political protests turned violent have plastered the nightly news.
 
Riots in the nation's capital, Baltimore, Chicago, and even on university campuses have caught the attention of the average American.
 
But behind all this, a new crime wave is sweeping across the country… Unlike crimes of the past, this one can't be stopped with more locks, security cameras, or guards.
 
And these new criminals aren't desperate amateurs.
 
They're fully funded, sophisticated criminal organizations that function like normal corporations. Some even have human resource, accounting, and engineering departments.
 
I'm talking about the rising threat of cybercrime in the United States… This new criminal element is quickly becoming an epidemic as numerous companies and individuals fall victim.
 
Markets don't understand how severe this threat is yet, but they will. And that presents a unique opportunity for investors. Let me explain…
 
$3 Trillion Stolen by 2020
 
I attended seven conferences and several other tech-related events during the first three months of this year, including the RSA Conference. It's the major annual cryptography and cybersecurity conference of the tech industry. It has become massive, with 43,000 visitors attending.
 
The company that put on the conference, RSA Security, created and successfully deployed public key cryptography – the underlying technology that allows people to send encrypted messages back and forth.
 
The conference was a great place for industry meetings, but many of the presentations are highly "scrubbed." Companies aren't as open and forward-looking as they used to be.
 
The big boys like Microsoft (MSFT) and HP (HPQ) had almost nothing interesting to say. Their presentations were so generic and fluffy that I almost fell asleep.
 
But one aspect of Microsoft's presentation caught my attention…
 
Last year, businesses lost $1 trillion to cybercrime. And that's expected to grow to $3 trillion by 2020. That's right… In the next three years, the financial damage from cybercrime is expected to triple.
 
Cyberattacks on major companies have made news in recent years…
 
Cybercriminals attacked health insurance-company Anthem (ANTM) in 2015. The hack compromised tens of millions of customer accounts.
 
Search-engine giant Yahoo also suffered from numerous cyberattacks in 2016. The incidents forced Yahoo to renegotiate its merger with telecom titan Verizon Communications (VZ) as a result, losing $350 million in the process.
 
The Cybersecurity Industry Is Unprepared
 
These types of cyberattacks will continue.
 
Large cybersecurity firms can't keep up with the surge in cybercrime. Their product development is just too slow. And even if a firm could put in place all the safeguards necessary to keep networks and data safe, the defenses would be so burdensome that the organization wouldn't be able to function.
 
You can see the scale of cyberattacks for yourself through this interactive map.
 
That's why President Trump's administration's attention has turned toward the need to drastically upgrade its cybersecurity infrastructure. Under discussion is the need to have a dramatically stronger, more secure, and centralized information-technology architecture.
 
Retired Marine Gen. James Mattis, the current secretary of defense, said during his confirmation hearing in January…
 
I realize [cybersecurity] is a new domain, but that does not give us an excuse not to address it on an urgent basis.
Even the president is on record recognizing the need to expand cybersecurity measures. As a presidential candidate last year, Trump said…
 
We have to get very, very tough on cyber and cyber warfare. It is – it is a huge problem…
A Watershed Moment
 
As these attacks become more pervasive, companies capable of defending against these new criminals will surge in value. According to data from Zion Market Research, the global cybersecurity market is expected to reach more than $181 billion by 2021, with a compound annual growth rate of 9.5% for the next five years.
 
But despite this, the cybersecurity market is undervalued right now. Enterprises are too complacent. I believe we will see more large, public, expensive, and painful cyberattacks this year that will reignite this sector.
 
The bottom line is that 2017 is a watershed moment for the cybersecurity industry. The number of cyberattacks will grow exponentially in the next few years.
 
Companies capable of defending against these attacks stand to profit immensely. Investors could consider a "one click" way to gain exposure to the sector… like the First Trust Nasdaq Cybersecurity Fund (CIBR).
 
Regards,
 
Jeff Brown
 
Editor's note: While the cybersecurity market is set to boom over the coming years, Jeff has identified another emerging technology that he believes could change the game forever. He believes early investors could make as much as 10 times their money as this technology reaches mass adoption. Get the details here.
 

Source: DailyWealth

Think Stocks Are the Best Long-Term Investment? Think Again

 
The conventional wisdom says stocks have historically made for the best long-term investments.
 
But a new academic paper written by a number of economics professors titled "The Rate of Return on Everything, 1870-2015" reached a surprising conclusion.
 
Let me explain…
 
"Residential real estate, not equity, has been the best long-run investment over the course of modern history," the authors concluded.
 
In all my decades in finance, nobody has seriously challenged the notion that stocks are always the outperformers over the long run – until this paper.
 
The academics studied data from 16 advanced economies (not just the U.S.), going back to 1870, building new data sets as necessary.
 
Here's what they found:
 
In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7.5% per year.
 
Housing outperformed equity before WW1. Since WW2, equities have slightly outperformed housing on average, but only at the cost of much higher volatility and cyclicality.

The last part is the really important part… housing has delivered similar returns, but with much less volatility.
 
The researchers also point out that for the highest gains and the lowest risk, you REALLY want to own both assets. That's because they're uncorrelated, meaning one when zigs, the other doesn't necessarily zig or zag.
 
Specifically, the returns on housing and the returns on stocks have not been that correlated since World War II, the academics tell us. Therefore, you get "significant aggregate diversification gains from holding the two asset classes."
 
A few caveats…
 
•   It's hard to put their study into practice. You and I can't easily own residential real estate portfolios in 16 countries.
   
•   The total returns on housing INCLUDE rent, which historically makes up about half of the total return in housing.
    
•   This doesn't assume a mortgage… But most people have a mortgage, which changes the risk/reward profile dramatically.
I could go on with the caveats. And I have to admit I haven't spent a long time dissecting the paper yet. But doing that misses the point…
 
The big story out of this paper, to me at least, is that housing (including rent) might actually be a much better performing asset class than we ever thought.
 
It's also nice to see that it's been somewhat uncorrelated to the stock market since World War II.
 
Someday, the stock market will finally turn over and start to head down. The fall in stocks could ultimately be serious and long-lasting, as stocks are pretty darn expensive right now.
 
If the academics are right, housing could be a good alternative when stocks start to falter… delivering solid total returns, regardless of the stock market.
 
Good investing,
 
Steve
 
P.S. For the last few weeks, I've been secretly working on something I'm calling the "Melt Up Millionaire" Project. I can't share all of the details here just yet… But on Wednesday night, I'm hosting a free live event where I'll explain everything you need to know to make the biggest gains possible. Reserve your seat here.

Source: DailyWealth

Double Your Odds of Picking a Home-Run Stock

 
You're looking for a stock with big upside potential…
 
200%… 500%… maybe more.
 
This is what you do…
 
You start by looking for a "game changing" industry trend. Then, you find small- to medium-sized, rapidly growing businesses that are taking part in the trend. And finally, you make sure the company you buy is in a strong financial position.
 
Sure… the process involves a little more than that. But those are the basics. Yesterday, we detailed our three-step process for selecting these stocks.
 
And today, we're picking up where we left off…
 
We'll dig deeper into why you want to focus your efforts on finding smaller businesses. And we'll show you how this process works with recent examples. Once you see the numbers and charts, we know you'll see the benefits of our approach…
 
The Russell 3000 Index includes the largest 3,000 stocks that are traded in the U.S. Its constituents make up about 98% of the market value of all U.S.-based stocks… So it's often used as a gauge of the entire U.S. stock market.
 
Last month, we looked at the five-year performance of all the Russell 3000 companies that were larger than $1 billion five years ago. (Some of the businesses that were smaller than $1 billion did soar. But many of them were so volatile, you would have had a hard time holding on to them for long.)
 
Of those 1,149 companies, 267 (23%) had market values of more than $10 billion, while 882 (77%) had market values of less than $10 billion.
 
But among the top 100 performers, only 14 had market values of $10 billion or more, while 86 were smaller than $10 billion.
 
What does this mean?
 
It means that if you had selected a stock at random from the $10 billion-or-more group, your odds of picking a top 100 performer (after five years) were about one in 20. If you had selected a stock at random from the $1 billion-$10 billion group, your odds of picking a top 100 performer were about one in 10.
 
In other words, selecting from the group of smaller companies nearly doubled your chance of picking one of the top 100 performers of the past five years. That's a massive difference.
 
For an idea of the upper-end gains from this list, media-streaming giant Netflix (NFLX) came in first place. Its shareholders earned 1,536% over five years.
 
Coming in at No. 100 was labeling and packaging leader Avery Dennison (AVY). It went from a $2.8 billion company in July 2012 to an $8.3 billion company. Its shareholders earned 252% over five years. That's right… 252%, at the low end of the list.
 
The message is clearFor the best shot at generating 200%-plus returns, think small.
 
Now, let's look at a couple of examples. We'll go back in time and put ourselves in the shoes of an investor in 2012.
 
As we mentioned, we start with a big industry trend…
 
Over the past three decades, the use of semiconductors has skyrocketed. Semiconductors are the little engines that power computers, smartphones, TVs, and lots of other electronic devices. Developments in this industry have changed – and continue to change – the world. It's a good example because the trend was well established prior to 2012…
 
According to World Semiconductor Trade Statistics, global semiconductor sales were $33 billion in 1987. By 1997, global sales hit $137 billion. By 2007, they were up to $256 billion. And in 2011, global semiconductor sales reached $300 billion.
 
You didn't need to be standing on top of a mountain to see this trend.
 
If you were looking at semiconductor stocks in 2012, you might have noticed that Intel (INTC), Broadcom (AVGO), and Skyworks Solutions (SWKS) were all doing well. Their market values at the time were $100 billion, $8.3 billion, and $1.1 billion, respectively.
 
All three companies passed our sales-growth test of 20% per year, on average, for at least two years. And all three were in strong financial positions, with far more cash than debt.
 
They were all "buys" in 2012… But as you can see in the chart below, the two smaller, rapidly growing businesses have far outperformed Intel over five years…
 
Depending on your stop-loss strategy, you might have stopped out of any of these positions in 2015, or you might still be holding shares today. Either way, you likely would have booked at least 200% gains with either Broadcom or Skyworks… and possibly much more.
 
Broadcom and Skyworks are just two examples of our powerful investing strategy at work. We've seen many others over the past five years. And we'll likely see many more in the years ahead.
 
Now you have the tools you need to find these big opportunities on your own.
 
Good investing,
 

Ben Morris and Drew McConnell

 
Editor's note: Ben and Drew recently found a stock with all the makings of a home-run investment. This fast-growing tech company is riding an evolving industry trend… And with 200%-plus upside, it's a fantastic setup for investors. Learn more about DailyWealth Trader – and how to access this trade – by clicking here.

Source: DailyWealth

Three Keys to Finding Your Next 200%-Plus Winner

 
Unless you buy right after a crash, you'll likely have to wait years – or even a decade – to make 100% or more on an investment.
 
That's OK, for the majority of your money. Building a fortune takes time… And folks who offer you ways to get rich quick are likely trying to get rich quick themselves, at your expense.
 
But you can safely boost your returns with the occasional, out-of-the-park home run.
 
Your profits on a stock that returns hundreds of percent could pay for a summer vacation… a new car… or maybe even a new house.
 
So we're going to show you one of the best ways to identify businesses with massive growth potential… and stocks that can triple your money or more.
 
Today, we'll take you through our three-step process for zeroing in on these investments. And tomorrow, we'll show you some examples of this powerful strategy in action.
 
Let's get started…
 
Our three-step process starts with a game-changing industry trend
 
Think about the products, technologies, or services that make life more convenient and enjoyable. The more people that use them, the better.
 
The growing trends of today will likely morph into the trends of the future…
 
To see how this works, think about smartphones. When Apple (AAPL) introduced the iPhone in 2007, few people understood the impact it would have. But you didn't need to understand it to know that it was growing in popularity. And if you used one back then, you likely had a sense that the game had changed.
 
The number of businesses that boomed – and are booming – on the back of this single, transformative technology is immense. And folks who invested in the trend have had dozens of opportunities to make incredible profits.
 
Once you come up with a game-changing industry trend, look for small- to medium-sized, rapidly growing businesses that take part in or support the trend.
 
Small businesses often have advantages over larger competitors. For one thing, it's easier for smaller businesses to grow rapidly…
 
For example, let's say you are considering Company X and Company Y for a potential investment. Company X is a $5 billion company that earns $1 billion in annual sales. Company Y is a $50 billion company that earns $5 billion in annual sales. Both companies are in the widget business, which has a total size of $100 billion.
 
Company X could double in size – to $10 billion – by taking market share from its competitors. But Company Y would have to take over the entire market to double its size. That's a lot less likely.
 
Stocks that rocket higher often do so because of fantastic growth. That's why you want to look for the smaller players in a big trend.
 
As a guideline, look for companies that have a market value of no more than $10 billion. And they should be growing their sales and/or earnings by at least 20% per year, on average, for at least two years.
 
Lastly, it's important to only buy companies that are in a strong financial position. These companies have staying power, even if they hit speed bumps along the way.
 
Specifically, you want to find a business that has more cash than debt (or ideally, a company with no debt).
 
It's common for small companies to use debt to expand their businesses. But when the company uses an excessive amount of debt – far more than its cash on hand – small troubles quickly turn into big troubles.
 
If the industry or overall market turns lower, debt and interest payments don't disappear. But less money may be coming in. This can lead smaller, less-established businesses with too much debt to go bankrupt. If they have enough cash, though, they can weather the storm.
 
Even without an industry or market downturn, large interest payments drain cash that businesses need to operate. That's why it's important to find companies with more cash than debt.
 
This rule will eliminate most of the firms you consider… But it will leave you with the best potential investments.
 
To recap, look for game-changing industry trendssmaller, rapidly growing businesses that participate in these trends… and companies that are in a strong financial position. This three-step process will give you a great shot at finding your next big winner.
 
Tomorrow, we'll show you some examples of how this strategy has worked in action. Until then…
 
Good investing,
 
Ben Morris and Drew McConnell
 
Editor's note: Spot one of the market's "hidden gems," and you could triple your money – if you know what to look for. In their DailyWealth Trader service, Ben and Drew feature valuable insights, strategies for success, and low-risk trades with incredible upside. To learn more about a risk-free trial, click here.

Source: DailyWealth

North Korea Versus the 'Melt Up'

 
"Steve, I'm worried," a friend said to me over the weekend.
 
"I'm worried about North Korea," he continued. "Won't all of this North Korea stuff affect your stock market 'Melt Up' thesis?"
 
"Not at all," I said…
 
I didn't actually mean it would have no effect at all. I was simply trying to re-calibrate his thinking…
 
You see, I've seen this type of fear from thousands of investors – going back to when I started as a stockbroker specializing in international stocks a quarter-century ago.
 
Here's the first thing I've learned:
 
1.   Investors are always looking for a reason to NOT invest. You need to recognize this about yourself – and overcome it.
North Korea is a great reason to worry, if you want one. And it seems most investors (even if it's just subconsciously) want to find a reason not to invest. Of course, if North Korea isn't a good enough reason, I'm sure you'll find another…
 
Which reason not to invest is your favorite? Here are a few for you: Something about Trump… rising interest rates… something about China… something about the national debt… something about, well, you get the idea.
 
You can always find a reason NOT to invest. My best advice to you is to recognize this about yourself. I think it comes from our primal instinct to protect ourselves and avoid risk. You need to "override" this survival instinct – which is hard to do.
 
But think about it. Over the last eight years, there was always a reason NOT to invest. Meanwhile, the stock market has gone up every year for the last eight years, based on total return. Your primal instinct would have failed you the entire time.
 
North Korea might be your reason not to invest today. But I don't think it's a good one. Here's the second reason why:
 
2.   Investors usually don't understand that big global events are often NOT big stock market events.
Here's how to overcome this problem. Ask yourself one question:
 
"Will this event dramatically impact iPhone sales around the world?"
 
I'm not just talking about the current North Korea threat. I'm talking about any big global event…
 
For example, does an ISIS attack in the Middle East materially affect iPhone sales? It would unquestionably be tragic… But it probably won't affect the stock markets.
 
Global news stories MIGHT be big enough to shock the market for a day or two – even if they wouldn't significantly affect global iPhone sales. I'm not saying there's NO impact from big global events like these.
 
But typically, there's no lasting impact on the market.
 
Of course, I'm just using iPhone sales as an example here… The bigger point is, if a global event doesn't reach the point where it affects global commerce or the global financial markets, then it is often a "non-event" as far as the financial markets are concerned – and more often than you think.
 
You might have emotionally charged opinions about the global event. And you might wonder why these powerful opinions are not translating into powerful stock market moves.
 
To find out why, go back to this question: "Did that global event materially affect iPhone sales around the world?" If not, then you have your answer.
 
So… do I think North Korea will affect my stock market Melt Up thesis?
 
No. It's a reason to worry… but not a reason to worry about the stock market.
 
When we come across a global event that will materially affect iPhone sales, then you can legitimately worry. Until then, don't worry so much about your investments. You'll be better off, I promise.
 
Good investing,
 
Steve
 

Source: DailyWealth

'We Expect Over 100% Gains per Year'

 
It sounded like an outrageous prediction when he said it…
 
"Uniphase is one stock you don't want to miss," my friend and colleague Porter Stansberry wrote. "We expect over 100% gains per year."
 
It might have sounded outrageous… But in hindsight, Porter underestimated how much the stock could go up – and how quickly…
 
Porter wrote this on March 1, 1999. Uniphase soared from about $100 a share at the time to about $1,200 a share at its peak a year later.
 
"Uniphase is already growing its earnings at over 40% a year," Porter said. "But don't forget to watch your stop losses. We recommend using a 25% trailing stop. (If the stock falls more than 25% off its highs, sell it.) Remember what Bill Gates says about the high-tech world: 'Microsoft is always two years away from extinction.'"
 
Porter traded the stock in the best possible way. He recommended the stock around $100. It went to around $1,200. It then fell 25% to around $900… And he said to get out.
 
Readers who followed his advice could have turned $10,000 into roughly $90,000 in a year.
 
Ah… but how many people followed his advice and sold?
 
I would bet that less than 50% followed his advice to sell. (Honestly, I'd bet that MOST people DID NOT sell.)
 
"Calling an audible," as they say in football – overriding the coach's play call – cost those people a lot of money…
 
It actually cost some of them everything…
 
Take a look:
 
By the summer of 2001 – a little less than two years after the peak – shares of Uniphase fell below where they started when Porter recommended them.
 
And they kept falling. And falling. And falling.
 
This was a brilliant trade by Porter. A brilliant trade is made up of two parts… a great "buy" and a great "sell."
 
Readers who only took his buy advice, and not his sell advice, lost all of their profits. In many cases, they ended up with losses – which is incredible when you think about it. But it's true.
 
I tell you this story because I believe today will turn out to be a time like 1999, where certain tech stocks can soar higher than anyone can imagine – and then crash beyond any reason.
 
How you handle the ups and the downs will determine whether you walk away with a fortune or walk away with less money than when you started.
 
Porter and I have used trailing stops since we started writing investment newsletters together in 1996. Back then, we set simple trailing stops based on simple numbers, like 25%.
 
Today – with the help of our good friend Dr. Richard Smith – we do it in a much smarter way. We typically use "smart trailing stops" from his TradeStops service. Smart trailing stops change over time as volatility changes. So now, our trailing stops are based on volatility – the more volatile a stock, the wider its trailing stop.
 
In the next few months, you will likely hear a lot about the "Melt Up" in stocks, and the following meltdown. What should you do to participate in the Melt Up – and limit your downside risk in the meltdown?
 
The answer is simple: You should do what Porter did in 2000 – and use a trailing stop. You can use any type of trailing stop you see fit – just use one! And follow it!
 
Good investing,
 
Steve
 
P.S. While you can use any trailing stop you want, I believe that TradeStops has done the best homework on which types of trailing stops work best. I urge you to look into Richard's "smart trailing stops" at Tradestops.com. And you can learn how to sign up right here.

Source: DailyWealth

Is Steve's 'Dow 50,000' Prediction Just a Clever Marketing Gimmick?

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 As you've likely heard, tensions with North Korea took a turn for the worse this week…
 
On Monday, the country's state-run media warned the U.S. it would "pay dearly" for imposing a new round of U.N. sanctions over the weekend.
 
On Tuesday, the Washington Post reported that the country may have already developed a small nuclear weapon that could reach the U.S. And President Trump had apparently heard enough. As Bloomberg reported…
 
President Donald Trump ratcheted up his rhetoric against North Korea to an unprecedented level Tuesday, warning Kim Jong Un's regime will face a devastating military strike if it continues threatening the U.S.
 

"North Korea best not make any more threats to the United States," Trump told reporters in Bedminster, New Jersey. "They will be met with fire, fury and, frankly, power the likes of which this world has never seen before."

It was unclear exactly what Trump had in mind. It also wasn't clear whether this was a planned statement or simply another off-the-cuff remark.
 
Regardless, the markets took notice…
 
Traditional safe havens like U.S. Treasury bonds rallied this. Gold and silver – our favorite "chaos hedges" – were up sharply. And the Volatility Index (VIX) – the market's so-called "fear gauge" – surged higher.
 
 Is this the start of the first meaningful correction in nearly two years?
 
Or simply another speed bump on the way to new highs? Unfortunately, it's too soon to be certain. But regular readers know we believe it's simply a matter of time before a correction arrives. As Porter noted in the August 4 Digest
 
How much longer can this go on? No one knows. But for the first time since 2010, we're now hitting levels on our complacency indicator that suggest a market correction is imminent
 
This indicator hasn't warned about every correction. (It correctly warned about seven of the last 10.) But it hasn't produced any "false positives," either. In other words, while it doesn't spot every correction before it arrives, when it has told us that a correction is coming, the correction always does. (To be perfectly accurate, one of the resulting corrections only saw a decline of 8.4%. All of the others were in excess of 10%.)
 
You can see the key threshold level in the chart above. Drops in measures of fear below this level (30) always indicate a correction or bear market within 12 months. We don't know if the warning signal we're getting now means that the "big one" is imminent, or if we are only going to see a "small" correction. But we know something is coming. We know it's coming soon.

 While we're prepared for a correction in the near term, we've also discussed why we believe the Melt Up will continue. In short, we don't yet see the telltale signs that accompany the end of a speculative boom…
 
Valuations are stretched, but not outrageous… investors are far from euphoric… and the market's "vital signs" remain healthy today.
 
And yet, we know many readers still aren't convinced.
 
We understand… Putting those arguments aside, this bull market is certainly getting "long in the tooth." It has already run for more than eight years – making it the second-longest bull market in history – and the major U.S. indexes are up hundreds of percent from their financial crisis lows.
 
How much longer can the rally reasonably go on? Is Steve Sjuggerud's "Dow 50,000" prediction even possible… or is it just a clever marketing gimmick?
 
If you're among the skeptics, the following chart is for you. It compares today's bull market with the longest bull market in history. And it suggests Steve's forecast isn't as far-fetched as it may have initially appeared…
 
As you can see, despite its impressive run, the current bull market is dwarfed in both length and total return… From its post-crash low in December 1987 through the dot-com peak in March 2000, the S&P 500 Index rose nearly 600%. That's more than two times the return of this bull market so far.
 
You can also see that the two bull markets have followed a remarkably similar trajectory so far. This suggests significant gains could remain ahead.
 
For example, when compared with the timeline of the 1987-2000 bull market, today would fall in late April 1996. As the folks at Bespoke Investment Group pointed out this week, warnings about "excesses" in the stock market were starting to appear at this time. But it was still seven more months before then-Fed Chairman Alan Greenspan's "irrational exuberance" speech in December 1996… and four more years before the bull market finally peaked.
 
Of course, we aren't saying the current bull market will continue to follow this path. There are no certainties in the market. But it shows that Steve's Dow 50,000 prediction – representing a 100%-plus rally from today's levels – isn't just possible… It has happened before. And again, this was just the blue-chip S&P 500… The tech-heavy Nasdaq Composite Index more than tripled over the same period.
 
In other words, if you still aren't positioned to take advantage of this possibility, you could miss out on the biggest gains of this entire bull market. Click here to learn more.
 
Regards,
 

Justin Brill

 
Editor's note: Steve recently prepared a brief presentation detailing how to maximize your profits during the final leg of the Melt Up… and how to know EXACTLY when to sell your stocks. You can view it right here (without having to sit through a long promotional video).

Source: DailyWealth

The Single Most Important Rule for Buying Investment Real Estate

 
If you want to be successful in real estate investing, you absolutely must get one thing right.
 
I have invested in all types of real estate over some 40 years – and this factor has a bigger impact on property price than any other.
 
I'm talking about a property's location…
 
It is the oldest cliché in real estate. But there's more to it than meets the eye…
 
The particularities of location are infinite. How do you judge the desirability of one position over another? How do you assess human nature? What really drives people to pay more for the same piece of property in one location versus another – not only now, but in the future?
 
When it comes to location, a few simple ideas have worked for me repeatedly over decades of investing in real estate in many different cities.
 
Like this…
 
  1.  Buy in "suit and tie" areas.
I buy properties in places where people wear a suit and tie when they go to work.
 
Does that sound a bit elitist? Perhaps. But this makes my life so much easier. People who wear a suit and tie to work are usually in higher-paying jobs. Therefore, as upwardly mobile white-collar workers, they can typically pay more to buy or rent a property.
 
In these days of casual work clothes, you'll have to give this point a bit of latitude. But I always buy in locations where white-collar workers want to live.
 
2.    Buy close to transport – or where transport is being planned.
Your "suits and ties" need to get to work.
 
New transportation infrastructure, like underground rail, can be a major value-enhancing factor, especially in big cities where getting to and from work can be a major hassle.
 
3.  Look out for rezoning.
As cities grow, increasing pressures on existing resources often make land increasingly valuable. Recognizing this, municipal authorities may dramatically increase how many people can occupy a particular piece of land.
 
For example, low-rise warehouse areas in the middle of a city may be rezoned for high-rise offices, apartments, hotels, or retail.
 
Authorities are making more "use" of land by rezoning it from industrial buildings to residential or commercial spaces in many areas around the globe. Look out for locations that could be moving from industrial to mixed-use zones, and you could be on to something.
 
4.  Do the walk test.
A lot of people invest without checking out the property or the neighborhood. This is a terrible idea. Unless you don't care whether your real estate purchase makes money, you absolutely must "kick the tires" before you buy anything. Walk and walk and walk some more to get a feel for the neighborhood, the shops, the people, the streets, everything. Seeing is believing – go take a look.
 
5.  Use local knowledge.
You can research any location from anywhere in the world, thanks to the Internet. But if you want to find the best locations, you'll need some local knowledge to back up your research. By asking a local, you might find a location you hadn't considered before, or realize a location isn't as great as you thought.
 
For example, buying a property next to a cemetery might not be a big deal in the West. But in China, where buyers take Feng Shui (that is, harmonizing with your surrounding environment) seriously, a property next to a cemetery would be a horrible investment. Chinese investors wouldn't be interested. It's unlikely you'd find this information out on a basic web search, but any local would know.
 
To sum up… whenever you're looking to invest in real estate, remember that location is the one thing you can't get wrong. It's the first step to successful real estate investing.
 
Good investing,
 
Peter Churchouse
 
Editor's note: You can find more of Peter's insights in the Asia Wealth Investment Daily, a free daily e-letter that gives you a look behind the curtain at the world's most important ideas in business, economics, and investing. His expertise is the perfect guide to making smart financial decisions and avoiding costly mistakes. Click here to sign up.

Source: DailyWealth

FINALLY! A Good Setup in Gold Stocks

 
Could it finally be time to get back into gold stocks?
 
We actually – finally – have a good setup for gold stocks right now… if you're bold enough for it.
 
Let me explain…
 
I just got home from "the gathering of gold bugs" – the Sprott Natural Resource Symposium in Vancouver.
 
Last July, when I spoke to this group, I told them that I had sold all of my gold stocks the day before the conference. You could have heard a pin drop in the audience. But it was exactly the right thing to do…
 
Gold stocks began to crash at that point. The main gold-stock fund, the VanEck Vectors Gold Miners Fund (GDX), fell from around $31 to about $19 in the second half of 2016 – a fall of nearly 40%. Many smaller gold stocks fell even more.
 
All the way down, gold-stock investors wanted to know if I was buying back in yet.
 
For the second half of 2016 and the first quarter of 2017, my answer was always the same: "No… because gold-stock investors haven't given up on gold stocks yet."
 
"But you don't get it Steve," I heard back. "Gold-stock investors will never give up."
 
Gold-stock investors are a stubborn bunch. Gold stocks started falling last August, and gold-stock investors kept buying all the way down. It took until April for them to finally give up on gold stocks and start selling.
 
The chart below tells the story. It shows the shares outstanding for GDX…
 
When the shares outstanding are rising, it typically means investor demand exceeds supply – in short, investors love gold stocks. And when this number is falling, it typically means investors are throwing in the towel.
 
You can see that gold-stock investors finally started giving up on gold stocks in April – and they've continued to give up. This is good. It's part of what I want to see…
 
If you've read my writing in the past, you probably know the setup I look for in a trade…
 
You know I want to buy what's 1) cheap, 2) hated, and 3) in the start of an uptrend.
 
So the question is… are we there yet? Do we finally have a great setup for a trade in gold stocks?
 
Sort of.
 
It appears that gold stocks are finally hated, based on the chart above.
 
However, when you look at a chart of GDX, it's hard to make a compelling case that we're in the start of an uptrend.
 
If you are determined to make a trade in gold stocks, I can suggest a low-risk, high-return trade for you to put on today.
 
Take a look at this chart. It tells the story…
 
You can see GDX's big fall in late 2016. But this year, something unusual has happened: Every time GDX has fallen to $21, it has recovered and bounced higher.
 
So your good trade "setup" today is to buy GDX, and use a hard stop of $21. If GDX CLOSES any day below $21, sell it the next day.
 
Your downside risk is about 5% from today's levels. But your upside potential is many times that.
 
An ideal setup to me is anytime you can create a situation where your upside potential is three times your downside risk. With downside risk of about 5%, you're looking at pretty darn good setup. Your upside potential far exceeds your downside risk in this trade.
 
Let me be straight with you… I am not bold enough to take this setup – yet. But it's getting pretty darn close. It's a "good" setup in gold stocks… not great, but good.
 
If you've been waiting for a good setup to buy gold stocks, you finally have one.
 
If you're bold enough… and IF you are willing to follow your exit strategy, you could do pretty darn well on this trade.
 
Good investing,
 
Steve
 

Source: DailyWealth

The Only Two Reasons to Hire a Financial Planner

 
Over the years, I've railed against paying so-called "experts" for things you can do yourself. More often than not, they're simply plugging your info into a computer program or spreadsheet that spits out an answer. It's usually worse than useless.
 
In general, you know what the best, most sound financial decisions for your life are…
 
But we've talked to several folks in different life stages. And there are two specific situations when you might consider hiring your own financial planner…
 
First, hiring a planner can be helpful if your time is limited.
 
For many people, researching financial planning is overwhelming or too time-consuming to put in the amount of effort you need.
 
Now, I love to comb through news and market reports and find the absolute best places to put my money (and where to recommend putting yours), but I realize not everyone enjoys that. Maybe you don't feel that you have the time to do the proper research or to hash out the best savings vehicles for your kids' education.
 
Second, if you're experiencing big changes in your life, sometimes getting a professional opinion is worth the time and money.
 
If you're thinking about retirement planning, a planner can help you figure out your goals and plan investments and savings to get there. Similarly, if you're starting a family, you may want to consult a planner about college-savings options. If you shift to a new, higher tax bracket or receive a large inheritance and want to make sure you're making the most of your finances, you might also consider a planner.
 
Now, if you do decide to use a planner, do your homework.
 
Your friend, neighbor, or co-worker might know "a guy" you should see. But it's vital that you do your own research before choosing the best planner for you and your situation.
 
The two biggest points to keep in mind are these…
 
1.   Figure out what you want to accomplish and choose the type of planner appropriately.
|There are several types of financial planners out there, each catering to different needs. Understanding what goals you want to accomplish will help. Some planners specialize in taxes, others in estate planning or retirement. Still others are more general and can offer guidance across several fields. Make sure to ask about specialization before making an appointment.
 
As for types of planners, you'll see Chartered Financial Analysts (CFAs), Certified Financial Planners (CFPs), and Certified Public Accountants (CPAs) – these are the three with the best experience, testing, and continued training from nationally recognized organizations.
 
Next, do a background check. This is a person you're going to entrust with lots of sensitive information. I recommend starting with a service like BrokerCheck.
 
2.  Understand your costs.
Some financial planners act on their own and remain apart from bigger brokerages or institutions. Some banks even offer financial-planning services.
 
There are three common three types of compensation: fee only, commission only, and commission and fee. Fees range from fixed-rate, flat, hourly, percentage, or performance-based. Get a good idea of what you'll need to pay for different levels of service from your planner.
 
You also need to know if your planner will receive compensation based on what they tell you to buy. For instance, if your planner works through a brokerage like Fidelity or T. Rowe Price, they may get paid for recommending in-house funds.
 
Fee structure and conflicts of interest should all appear in the basic disclosures from the planner. If they're not in there, find someone else.
 
I've said it over and over… No one will take better care of you than you.
 
That said, we all need a little help sometimes. If you fit one or both of these categories and have the money available to hire a planner, do a little research… instead of blindly going to the guy your neighbor recommended.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Dave says President Trump is about to authorize "bonus checks" that will put $2.3 trillion in the pockets of millions of everyday American investors like you. To claim your payment on this one-day cash event, you must act before the upcoming deadline. Watch this brief video presentation for all of the details.

Source: DailyWealth