Porter's Latest Project Will Blow You Away

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 The 2017 Stansberry Las Vegas Conference is in the books…
As Brett Eversole wrote in yesterday's DailyWealth, Kevin O'Leary – one of the "sharks" on the hit television show Shark Tank – kicked things off as the keynote speaker Wednesday.
Up next was Porter…
His presentation offered a behind-the-scenes look at the latest developments at Stansberry Research, including a review of several new publications and acquisitions.
Most notably, Porter introduced a brand-new project designed to address the two biggest problems and complaints we hear from our subscribers…
1.   They don't have enough time to follow everything we publish, so they're constantly missing out on great opportunities, and…
2.   They have too many positions and can't follow them all closely enough.
As Porter explained, he has dreamed for many years of offering our subscribers a simple, easy-to-use computer "terminal" that would allow you to easily access and manage all the financial research you receive.
Professional investors use a Bloomberg Terminal for this purpose. But access to a Bloomberg Terminal costs $25,000 per year and requires specialized hardware. And it's notoriously difficult to use. It simply isn't a realistic option for most folks.
 Porter's idea was to create something similar for individual investors…
It would be a computer application. It wouldn't require any special hardware or training to use. And it would offer access to the same kind of news and fundamental data – as well access to all your newsletter subscriptions and TradeStops – at a fraction of the cost.
We're pleased to announce it is no longer a dream.
This week, Porter introduced the Stansberry Terminal for the first time…

A sneak peek at the Stansberry Terminal.
As Porter explained, the ultimate goal with the Stansberry Terminal is to not only allow you to access all of our research easily and conveniently… but also to allow you to use all of the proprietary screens and models we've built, so you can find your own ideas, too.
Imagine being able to research, buy, and monitor all your investments… easily, simply, and all in one place. That is what the Stansberry Terminal is being designed to do.
We're planning to begin "beta" testing by the end of this year… And we hope to launch the Stansberry Terminal to the public in the first half of 2018.
Stay tuned for more information soon.
 Meanwhile, during his presentation at the conference, Steve Sjuggerud promised to reveal big news about his "Melt Up" thesis. He did not disappoint…
Steve reviewed his thesis to date, including an update on several of the market's "vital signs" he has been tracking. These include the advance/decline line, the S&P 500 Equal Weight Index, the small-cap Russell 2000 Index, financial stocks, and the Dow Jones Transportation Average, among others. Steve also introduced two new indicators that have predicted practically every major stock market top in history.
Steve noted that all of these indicators continue to give the "all clear" today. In fact, small caps, financials, and the Dow Transports each broke out to fresh all-time highs this week. This is an incredibly bullish sign.
And while it wouldn't be fair to conference attendees to share all the details yet, we can tell you that Steve's latest research suggests the Melt Up will continue even longer than he originally believed. And this means the gains could be even bigger, too.
In short, Steve believes the end of this bull market is coming… But we're not there yet. If you aren't already positioned to profit from the Melt Up, it's not too late.
Steve also shared his absolute favorite Melt Up opportunity today. He says it has more than 50% upside even if he's wrong… And it could absolutely soar if the rally continues.

Steve Sjuggerud offers an update on the Melt Up.
 Of course, we saw many other great presentations at the Stansberry Conference, too…
We heard from folks like Marty Fridson – the "dean" of high-yield debt – who shared his latest thoughts on the junk-bond market…
Grant Williams – publisher of Things That Make You Go Hmmm, one of the most widely read financial publications in the world – who explained why "this time is not different"…
Cullen Roche – founder of the Pragmatic Capitalism blog – who presented a contrarian view of U.S. Treasury bonds you've likely never heard before…
And many more.
One of the biggest benefits of the annual Stansberry Conference is getting to hear exclusive investment ideas like these before anyone else. And even though this year's event has ended, you don't have to miss out on all the information that was shared…
You can still get immediate access to high-definition video of all of this year's great speakers, presentations, and ideas via our online "All-Access Pass." And you can watch and re-watch these presentations whenever, wherever, and as often as you'd like until December 31. Click here to sign up now.
Justin Brill
Editor's note: Did you miss the annual Stansberry Conference in Las Vegas? Don't worry… It's not too late to access all of the best ideas and insights from the two-day event instantly on your computer… from the comfort of your own home. For a fraction of what it cost to attend in person, you can watch every single presentation today. Learn more here.

Source: DailyWealth

Shark Tank's O'Leary Shares His Own Investing Techniques

"No one ever thought a show about business could ever become this popular," Kevin O'Leary told the crowd in Las Vegas.
O'Leary was Wednesday's keynote speaker at our annual Stansberry Conference. You probably know him as "Mr. Wonderful" from the Shark Tank television show. But he's also a knowledgeable investor in the markets, with his own line of exchange-traded funds (called O'Shares).
Shark Tank brings business owners together with potential investors – or "Sharks" – like O'Leary. He has built a portfolio of more than 40 businesses from the show. But on Wednesday, he explained to the audience that Shark Tank-style investing isn't how to build a long-term portfolio.
"It's not my Shark Tank persona, but the real dough is in this philosophy," he said.
O'Leary told the crowd how to build their own portfolio like he does. And the good news is that his method is simple. Anyone can do it.
Here are the details…
Every successful investor needs a set of ground rules – principles they plan to follow no matter what.
For O'Leary, the rules are simple…
First, every investment must pay a dividend. Cash is king, so you want to own investments that pay cash.
O'Leary looks for investments that pay a monthly or quarterly distribution. And only his gold and personal real estate holdings (homes he lives in) don't fit this requirement.
Next, you need to diversify. There are plenty of ways to make that happen. But Mr. Wonderful follows two simple ideas: Never invest more than 5% in any company. And never invest more than 20% in any sector.
Those two diversification rules mean you'll never own too much of one company or group of companies. It means diversification will allow one part of your portfolio to zig while the other zags.
With those rules in place, O'Leary explained how he invests for the long term in his family trust. The simplicity might surprise you…
Portfolio Percentage
Fixed Income & Real Estate
Stocks, bonds, cash, and gold. Simple, right?
His one additional idea is moving a good portion of your stock holdings outside of the U.S. He does it by investing 60% in the U.S., 20% in Asia, and 20% in Europe.
O'Leary has built a conservative portfolio. But it's one that should perform well for decades.
He told the crowd, "Preservation of wealth is all that matters." That means he's more interested in not losing money than shooting for the moon. And most investors are smart to listen to that advice.
Again, to echo O'Leary, "This is where the real dough is."
You don't have to be a genius to build your own portfolio like this Shark. Just follow Mr. Wonderful's simple rules…
Own investments that pay dividends. Diversify. And follow the simple, long-term asset allocation outlined above.
Good investing,
Brett Eversole
Editor's note: You can still watch Kevin O'Leary's full presentation online, plus all the expert talks from this year's Stansberry Conference, using our "All-Access Pass." This pass gets you "in the door," so you can replay each session – whenever, wherever – until December 31… But today is the LAST DAY to sign up. Click here to learn more.

Source: DailyWealth

We Could See 17% Gains as This Sector Recovers

Markets overreact…
It's a not-so-fun fact about investing… Stocks often soar further than is reasonable on good news, and they fall further than imaginable when news is bad.
But this fact has a positive side. You can profit from these overreactions. They often lead to major opportunities.
That's exactly what's happening, right now, in a specific area of the U.S. market.
Hurricane season sent property and casualty ("P&C") insurance companies plummeting. But history says the market is overreacting… And the reversal could mean gains of 17% over the next year.
Let me explain…
Last month, Hurricane Harvey flooded Houston. Earlier this month, Hurricane Irma devastated many parts of Florida – including where I call home. Hurricane Maria followed, doing awful damage to Puerto Rico.
The real harm inflicted on the people in these areas is the obvious tragedy of these storms. But hurricanes cause massive economic damage as well.
These days, a major storm can easily cost tens of billions of dollars. And who pays the bill?
Much of the loss falls on P&C insurers… And the sector absolutely tanked in the wake of these storms, which we can see in the PowerShares KBW Property & Casualty Insurance Fund (KBWP). Take a look…
The sector fell double digits in just a few weeks. But the reversal has already started, and history says big gains are likely from here.
You see, P&C insurers hit oversold levels based on their relative strength index ("RSI").
The RSI measures an investment's recent gains and losses. It signals when something is either overbought or oversold… which means a reversal is likely.
The P&C insurance sector hit an RSI of 22 earlier this month. That signals extremely oversold conditions… And it means big gains are likely to follow.
The table below shows what similar oversold levels have led to in the past, going back to 1989. Take a look…
After extreme
All periods
P&C insurers tend to soar after hitting oversold levels like we saw recently. Similar RSI levels have led to 9% gains in three months, 12% gains in six months, and 17% gains over the following year.
It's not unusual for P&C insurers to sell off after a major storm. But if the selling is overdone, it presents an opportunity to buy.
The sector is already recovering. It's up more than 7% since early September. But history says that's just the beginning.
These storms are devastating for our communities. But the financial markets are overreacting, based on history.
We could see a sustained rally from here. That recovery could result in double-digit gains over the next year… And shares of KBWP are a simple way to make the trade.
Good investing,
Brett Eversole

Source: DailyWealth

'Never Stand in Line to Buy Anything,' and Other Contrarian Investing Lessons

Steve's note: If you haven't heard yet, my publisher Stansberry Research has made a special deal with investment-newsletter legend Jim Grant – someone who Porter Stansberry says "has changed my life." In today's DailyWealth, we're sharing one of our favorite pieces of Jim's writing. And at the end of today's essay, we'll explain this incredible limited-time offer…
I've published more than 800 issues of Grant's Interest Rate Observer to date… That's more than 4 million words of market analysis.
I've made some good calls in that time (and yes, some bad ones). I've even gained some fame – at least in certain circles – for my more accurate predictions.
But more importantly, I like to think that I've become a knowledgeable student of "Mr. Market." I've lived through and analyzed manias and crashes. I've seen interest rates fall from 20% to zero – and below… I've seen the stock market sawed in half, and I've seen stocks rise far above any sane measure of valuation.
And through it all, every two weeks, I've shared my thoughts with a select group of readers. Many of them have been with Grant's since day one.
With that in mind, here are the 10 most important lessons I've learned in finance…
1.     The key to successful investing is having everyone agree with you — LATER.
The most popular investment of the day is rarely the best investment. If you want to know what's popular, look no further than the front page of your favored business journal… Or just tune in at your next cocktail party.
At Grant's, we seek profits where no one else is looking. We're happy to wait for the consensus to come to us. We've been contrarian since the beginning. In our minds, there's no better lens through which to view the market.
2.  You aren't good with money.
Because, in general, humans aren't good with money. We buy high and sell low because it's what comes naturally. It's difficult to control emotions. It's more difficult when money is involved.
But with detailed security analysis and an expert understanding of market cycles, you can minimize emotions when it comes to your portfolio.
3.    Everything about investing is cyclical
… including prices, valuations, and enthusiasms. And this will never change. The greatest investors develop a sense of when markets have reached euphoric levels – and when fear is crippling reason.
Where do you think we stand on that scale today?
4.     You can't predict the future. Nor can the guy who claims he can.
You can, however, see how the crowd is handicapping the future. Observing the odds, you can make better choices.
You can recognize the rhythms of market cycles. And with enough practice, you can profit from those cycles – or at least avoid disaster – as when we warned Grant's readers in our September 8, 2006 issue about a bubble in subprime mortgage debt… 11 months before the crisis began. And three years later, when we advised going long bank stocks before they rallied 250%.
5.     Every good idea gets driven into the ground like a tomato stake.
Exchange-traded funds (ETFs) were a great idea. They allowed investors diversified exposure to a number of markets for minimal fees.
Today, ETFs account for more than 23% of all U.S. trading volume with a total market value of more than $3 trillion. And the global ETF market is forecasted to hit $25 trillion by 2025.
Yes, ETFs allow investors to diversify into lots of markets for a little bit of money. But ETFs allocate money without consideration of value. And what happens when everyone rushes for the exits?
6.  Markets are not perfectly efficient.
This is because the people who operate them aren't perfectly reasonable. The debate over efficient markets has raged since the birth of public markets. Grant's comes down on the side of inefficiencies – of lucrative inefficiencies.
There will always be value in active management. It keeps the market honest. Active managers bid for companies that have been punished unjustifiably… And they apply selling pressure on egregiously overvalued, fraudulent, and dying companies. It's these inefficiencies – and Grant's longtime, historical understanding of them – that give our readers special perspective.
If markets were so all-fired efficient, why did the Nasdaq reach the sky in 2000? Or banks and junk bonds, the depths, in 2009?
7.  Patience is the highest-yielding asset.
Charlie Munger, Warren Buffett's longtime partner in Berkshire Hathaway, explained the importance of patience this way:
How did Berkshire's track record happen? If you were an observer, you'd see that Warren did most of it sitting on his ass and reading. If you want to be an outlier in achievement, just sit on your ass and read most of your life.
Let us only say that the point survives the exaggeration.
8.  Never stand in line to buy anything.
Here I have a confession to make. In January 1980, at the peak of the Great Inflation of the Jimmy Carter era, a line snaked out of the doors of a lower Manhattan coin dealer. The people in that queue were waiting to buy gold at what proved to be a generational high, $850 an ounce. I was in that queue. I've made plenty of mistakes since then. But that particular mistake I've subsequently avoided. Believe me, once was enough.
9.    Leverage is like chocolate cake: just a little bit, please.
Markets will always correct. They corrected after the Dutch tulip mania in 1630s. And they corrected after the subprime mortgage debacle in 2007. What do corrections correct? They correct the errors of a boom.
And when markets correct, they cause the most amount of financial pain to the greatest possible number of people.
You'll never know exactly when these corrections are coming. But if the creditors aren't calling your assets on the way down, you will live to fight another day. And if you happen to have cash on hand, you can make the greatest profits of your investing career.
"Don't overestimate the courage you will have if things go against you."
"Consider all the facts – meditate on them. Don't let what you want to happen influence your judgement."
"Do your own thinking. Don't let your emotions enter into it. Keep out of any environment that may affect your acting on your own reason."

These final three items, which I've included as a single lesson, are in quotation marks because I borrowed them from the late Bernard M. Baruch – one of the greatest investors who ever lived.
I know he won't mind (after a brilliant career in Wall Street and Washington, Mr. Baruch died in 1965, at the ripe old age of 94).
I came to know the great investor in the course of writing his biography. If you read enough, you, too, can assemble a circle of friends from the past as well as the present.
Jim Grant
Editor's note: Twice a year, Jim hosts the world's most exclusive financial meeting. It's typically reserved for his subscribers only – a "who's who" of the greatest investors on the planet. But for the first – and possibly last – time ever, Porter has arranged a way for you to attend. Get the details here.

Source: DailyWealth

You STILL Haven't Missed the 'Melt Up' Yet!

"Oh man, I already missed out on the 'Melt Up.' I should have bought exciting tech companies like Facebook and Google a year ago. Now, it's too late…"
I hear that all the time. But – my friend – you're wrong…
You haven't missed the Melt Up – at all.
In the last year, Alphabet (GOOGL) – the parent company of Google – is up nearly 16%. Facebook (FB) is up around 33%.
Those are good returns, for sure. But they don't tell the full story…
The surprising truth is that over the last year, the boring, old-school companies of the Dow Jones Industrial Average have beaten the "hip" tech names in the Nasdaq Composite Index.
Take a look…
Tech vs. Old School
12-Month Total Return
Dow Jones
These indexes are pretty darn different…
The five companies with the biggest weights in the Nasdaq are exactly what you would expect – the big tech giants: Apple (AAPL), Alphabet, Microsoft (MSFT), Facebook, and Amazon (AMZN).
Meanwhile, the companies with the biggest weightings in the Dow Industrials are old-school American businesses, for the most part: plane-maker Boeing (BA), investment bank Goldman Sachs (GS), manufacturing titan 3M (MMM), health-insurance provider UnitedHealth (UNH), home-improvement giant Home Depot (HD), and fast-food leader McDonald's (MCD).
Ninety-nine out of 100 investors would have guessed the tech-heavy Nasdaq would have beaten the old-school names in the Dow Industrials over the last year. But they would have guessed wrong.
The truth is, these two differing indexes have actually followed a fairly similar path over the last year. The Dow has just come out on top. You can see it in this chart:
This tells me that you haven't missed the true Melt Up stage yet – where the most speculative names separate themselves from the old-school names and take off.
That's what we saw in 1999… For almost half of the last year of the tech boom, the tech names and the old-school names tracked each other. But then things changed dramatically… Take a look:
By the end of the last 12 months of the dot-com boom, the tech-heavy Nasdaq was up more than 100% – meanwhile, the Dow delivered ZERO return.
Again, it's great that tech names have done well in the last year – but it's not surprising. Stocks are in a bull market. What's more amazing to me is that the old-school names in the Dow have outperformed the tech names in the Nasdaq.
And importantly, this tells me you haven't missed the Melt Up yet – the final months when the more speculative names start to blast off.
I believe that it hasn't even started yet… But it will…
You can offer up a lot of excuses for why you're not invested. But don't tell me, "I already missed out on the Melt Up." That excuse is no good with me.
You haven't missed it yet. So if you're not invested, you still have time to fix it. Get in, now…
Good investing,
P.S. I believe this could be the last great bull market we'll see in our lifetimes. And if you make the right moves today, you may never have to worry about money again. That's why I've put together the research to show you exactly how to capitalize on the Melt Up – and how to get out before it all ends. Click here to learn more.

Source: DailyWealth

Our Favorite Ideas Today – Live, From Your Couch

It's my favorite event of the year…
Once a year, we gather the best minds we know and ask them to share their best ideas. (We have some good fun, too…)
I'm talking about our annual Stansberry Conference. And I would like you to participate – from the comfort of your own living room. I will tell you how in a moment…
My goal in DailyWealth is to share ideas with you that you might not hear about in the mainstream world… I want to show you new ideas and new ways to make money. The upcoming Stansberry Conference will deliver… I guarantee it.
Every year, we invite a handful of "big" names that you know to share their big ideas. We also invite legends (to us) that you probably don't know yet… These are typically my favorite presentations. These guys look at life through different lenses, and they each share unique and actionable ideas. I love it.
Some of our featured speakers this year include the show Shark Tank's Kevin O'Leary… legendary investor Marty Fridson, known as the "dean" of the high-yield bond market… journalist and political satirist P.J. O'Rourke… and many more.
Of course, our Stansberry Research analysts share new ideas as well – ideas that haven't yet been shared with subscribers.
As you might imagine, this extraordinary event sells out quickly – and this year was no exception. So in order to bring this opportunity to everyone, we will "stream" the event – live – to your home computer.
If you can't join us in Las Vegas, you can watch the entire event online. You don't have to go anywhere. And you can enjoy it at your own pace. It all starts this Wednesday, September 27.
You won't want to miss it…
I can't wait to hear what many of my good friends have to say on stage – friends like Porter Stansberry and Dr. David Eifrig.
I also look forward to hearing from experts that I don't yet know. Plus, we have some extremely unique speakers lined up toward the end.
This year, I'm especially looking forward to hearing from somebody many people have never heard of… Senior Editor at The Economist magazine Kenneth Cukier. He co-wrote the book Big Data: A Revolution That Will Transform How We Live, Work, and Think. I think he's right about the future, and I look forward to hearing the latest from him.
It's going to be a great event, all around – as it always is.
I'll be speaking, too. I've been planning my presentation… And I can't wait to share this event with you, whether you're joining us in person, or watching and listening at home.
Again, my goal in DailyWealth is to deliver ideas that you won't likely hear about anywhere else – but could change your life, or end up making you a lot of money.
This year's Stansberry Conference will certainly do that… And you can participate from the comfort of your own home.
Again, the conference starts this Wednesday, September 27. To get all the details, click here.
Good investing,
Editor's note: If you tune in to the conference, you'll hear some of the best new ideas from our Stansberry editors… And we think you'll want to learn more. That's why when you sign up for the live stream, you'll get a special credit to put toward a new Stansberry subscription. It's a great chance to try out the publication of your choice, at a discount. Click here for more details.

Source: DailyWealth

A Massive $34 Trillion in Stimulus… What Has It Done?

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 The "great unwind" is here…
After months of speculation, the Federal Reserve formally made the announcement this week. It will begin to "taper" its $4.5 trillion balance sheet in October. As the Wall Street Journal reported…
The Federal Reserve indicated Wednesday… it would begin shrinking its portfolio of bonds next month, starting to close the books on an unprecedented and sometimes controversial policy experiment…
Beginning in October, the Fed will end its practice of fully reinvesting the principal payments of maturing into new bonds and instead allow $10 billion in holdings to roll off without reinvestment every month. Those amounts will increase by $10 billion each quarter to a maximum of $50 billion.

The central bank also said it expects to raise rates at least one more time this year. And Fed Chairwoman Janet Yellen used the occasion to confirm that the era of "easy money" is ending. More from the Journal
"The basic message here is U.S. economic performance has been good," Fed Chairwoman Janet Yellen said at a press conference after a two-day policy meeting that ended Wednesday. "The American people should feel the steps we have taken to normalize monetary policy… are well justified given the very substantial progress we've seen in the economy…"
Ms. Yellen said there was a "high bar" to resume reinvestments, and the Fed would only do so in the event of a "significant shock that's a material deterioration to the outlook."

 We remain skeptical…
The Fed and other central banks have thrown the monetary "kitchen sink" at the global economy. Yet growth remains tepid at best. And the price inflation they've been so desperate to create has yet to show up.
Despite its rhetoric, even the Fed doesn't know what will happen as it begins to remove this unprecedented stimulus. Maybe it's right… Maybe the economy will continue to grind higher even without support.
We believe the Fed's confidence is misplaced… And we're apparently not alone.
Strategists at Deutsche Bank believe that the Fed tightening – the beginning of what they've called "the great central bank unwind" – could ultimately trigger the next financial crisis. From their recent report titled "The Next Financial Crisis"…
When looking for the next financial crisis, it's hard to escape from the fact that we're seemingly in the early stages of the "great unwind" of global monetary stimulus at the same time as global debt remains at all-time highs following an increase over the past decade – at the government level at least – which has been unparalleled in peacetime history…

You slowly become anchored to believe the current situation is normal as it's persisted for so long now. However, it's anything but normal. Since the financial crisis, $10 trillion plus has been added to the balance sheets of the four largest central banks with over $14 trillion of assets now owned.

The following chart puts those figures in startling perspective…

 But the analysts also note that even this chart doesn't tell the full story…

If you also add in the record growth in government debt in the U.S., U.K., eurozone, and Japan, you get a total monetary and fiscal stimulus of nearly $34 trillion since the financial crisis. And what do we have to show for it? More from the report…
In the end, $34 trillion of stimulus and [quantitative easing] has delivered only very low growth, subdued inflation, and sky-high asset prices around the globe. This is unprecedented territory and how can anyone estimate what the fallout will be when we normalize again?…

History would suggest there will be substantial consequences of the move especially given the elevated level of many global asset prices… [Even] if the unwind stalls as either central banks get cold feet or if the economy unexpectedly weakens, we will still be left with an unprecedented global situation, and one which makes finance inherently unstable even if we are currently living in the lowest volatility markets on record.

They also worry that if this unwind fails, central banks will be left with little of their usual "ammunition" to stimulate the economy again. Like us, Deutsche Bank fears we could see even more extreme measures next time around…
Could the next recession be the one where policy makers are the most impotent they've been for 45 years or will they simply go for even more extreme tactics and resort to full on monetization to pay for a fiscal splurge? It does feel that we're at a crossroads and the next downturn could be marked by extreme events given the policy cul-de-sac we seem to be nearing the end of.
 Of course, none of this means a crisis is imminent… And even our own Stansberry Research analysts disagree about what likely comes next.
As regular readers know, Steve Sjuggerud believes the "Melt Up" will push stocks to explosive new highs before the bull market finally ends. On the other hand, Stansberry Research founder Porter Stansberry believes a devastating bear market could be just around the corner.
If you're among those who aren't sure what to make of today's market, we urge you to take a few moments to check out our colleague Dr. David "Doc" Eifrig's new presentation…
As you'll see, he just made a major announcement this week… and revealed what could be the second-biggest call of his publishing career. It involves a way to "have your cake and eat it, too"…
In short, Doc says you can use a few simple options strategies to safeguard your portfolio against the bear market Porter has predicted… and simultaneously position yourself for more upside if Steve is correct and the Melt Up continues.
If you have any money in the market today, you owe it to yourself to learn more. Click here for the details. (This link does not lead to a long sales video.)
Justin Brill
Editor's note: If you're uncertain about what's going to happen with the stock market, you're not alone. That's why Dave just went "on the record" with what may be the second-biggest call of his publishing career. See what he's saying – and learn about a special, limited-time offer to join his Retirement Trader service at a steep discount – right here.

Source: DailyWealth

The Simplest Way to Protect Your Money From Wall Street Scams

"Dividends don't lie."
It's one of my favorite Wall Street sayings. Accountants can mess with a company's books in all kinds of ways, but they can't fake a cash payment. And if a company can pay a dividend, it's almost always making money.
In the past 20 years, we've seen Merrill Lynch's Henry Blodget touting stocks he privately dismissed as crap (actually, his term was worse)… Bernie Madoff mailing phony account statements to hoodwink clients ou­t of $18 billion… corrupt lenders building a multibillion-dollar firm based on worthless "liar" loans… and that's just a sample. There's nothing new about accounting fraud.
The irony is, protecting yourself from these convoluted shell games is simple… Demand a cash dividend from your investments. It's hard to pay shareholders year after year if you're cooking the books…
A dividend is money a company pays its shareholders. Every quarter, the company counts its earnings and pays out some portion to its owners (the shareholders). Essentially, it's your cut of the profits.
Focusing on dividend-paying stocks is one of the great secrets to building wealth. I've covered this many times… But it is just as important today. That's because, fortunately, the market is giving us a rare chance to load up on some of the world's greatest dividend payers at good prices.
Many investors dismiss dividends. In fact, some alleged professional stock pickers refuse to even consider companies that pay a dividend. After all, they argue, the company should be plowing all the money back into the growing business. If the company reinvests the cash in itself, the company can grow even bigger, right? Wrong.
Here's what investors who only focus on capital gains are missing: Nearly half of your total long-term returns from investing in stocks come from dividends.
Sure, you want the company to use some of its earnings to grow… But you also want to get your money back along the way. In fact, among the most important rules to investing (along with asset allocation and position sizing) is defining your exit strategy – how will you get your money back?
When you invest in a small startup, you're happy to let your money grow as the business grows. But what happens when the growth slows? Do you sell the stock?
Not if it's still a good business. You don't want to lose out on reaping the success of the business as it evolves into a larger, steadier company.
Dividends are a simple way to pay back owners who've invested in the business. By keeping some of the money and paying the rest to shareholders, dividend-paying companies can continue their growth while rewarding shareholders at the same time.
Right now, I love those rewards. We have a rare moment in modern history when the yield on dividend-paying stocks matches the yield on 10-year U.S. Treasury notes…
As investors reach for income and safety, they've bid down the yield for 10-year Treasury notes to historic lows – now about 2.25%. I understand the rush to safety. But giving $1,000 to the government to get $22 a year for 10 years is a poor choice, especially when there's no upside.
If you want to wait to earn $220 over 10 years, so be it. But you can do better by looking at other securities paying that same 2.2% yield or higher… investments that can offer you all the capital-gain potential of a stock and a growing income stream.
For example, last month, I recommended real estate investment trust Realty Income (O) to readers of my Income Intelligence advisory. We locked in a 4.3% annual payout. Realty Income has raised its dividend for 79 quarters in a row… nearly 20 years. It's almost impossible to have a business better managed than that.
When companies like Realty Income establish a decades-long history of paying out money to shareholders, it reflects their commitment to managing the value of the business through down times and up times.
The No. 1 fear of retirees is that inflation will erode the value of their money. If you're on a fixed income like Social Security, it's imperative to own securities that will keep up with future prices and pass some of that growth back to investors. Dividend growers are your best answer here. And as I mentioned, they have a built-in safety mechanism…
In the past 30 years, I've seen Wall Street lie and cheat… from Blodget to Madoff. The simplest, most effective way to fight back is to demand a dividend. Companies that pay dividends are sending you real money – and dividends don't lie.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Dave often shows his readers how to collect the equivalent of a year's worth of dividends in just a few months. His latest trading strategy is designed for steady returns – and reduced risk. It's the perfect way to safely position yourself to capture the upside left in this bull market… Click here to learn more.

Source: DailyWealth

When Stocks 'Just Can't Go Higher'

The video-streaming company Netflix (NFLX) has been on a tear. Its stock has risen 210% in the last four years. It trades for 70 times earnings.
The company sports that lofty valuation despite facing competition from other services – including Internet giant Amazon's (AMZN) streaming service. It spends a half billion dollars a year on advertising.
At such an inflated price, Netflix shares can't go much higher. It doesn't take a financial wiz to see that. Should you sell? Should we short the stock?
Alas, those Netflix stats were from the end of 2012… not today.
Since then, Netflix has risen to trade at 218 times earnings. Its number of subscribers has more than doubled in five years, from 27 million to 104 million. Revenues tripled, and earnings per share have grown 20 times over.
Shares of Netflix have returned 1,255% over the period… even when they looked like they "couldn't go higher."
The point here is a lesson learned by many investors the hard way: Never short a stock based on valuation.
You can place a bet that a stock will fall – this is known as "shorting" – because its business is about to die, or in rare cases, because you've unearthed fraud.
But if you think a stock will fall just because its price is high, you've got a good chance of getting burned…
A study of more than 400 short positions held by activist investors showed that the ones made due to alleged fraud fell an average of 30% – making a profit for shorts. The ones based on valuation rose 3%, leading to a loss.
Valuations don't have a ceiling. They'll always go higher than you think.
As respected hedge-fund manager David Einhorn puts it, "[We refuse] to sell short anything just because its valuation appeared silly. We reasoned that twice a silly valuation is not twice as silly. It is still just silly. Kind of like twice infinity is still infinity."
I'm not in the business of making short bets. But I bring this up because so many people expect a market crash for the very same reason – valuation
The S&P 500 Index trades at about 21 times earnings today. That's high, no doubt. And if you turn on CNBC or other media, the bears are out in force calling for the next big crash.
However, a high valuation isn't enough to turn the market.
The underlying factors are simply too healthy.
The most recent gross domestic product (GDP) growth number came in at a booming 3%. We know that unemployment is low at 4.37%, and the economy is creating around 200,000 jobs each month.
When you turn to businesses, per-share sales for the companies in the S&P 500 keep rising to new highs… and so do earnings per share.
Bears point out that companies are buying back shares, making the growth less impressive. But when I'm out in the world, I see full trains, packed planes, busy restaurants, and folks out shopping.
Earlier this year, I spoke with a contractor who said he could start a project for me in a month. But I put off the work. Today, I can't get him, or anyone else, to show up for at least six months.
The economy is not on the verge of a collapse. The stock market is going up and up because lots of investors see what I see.
Let's turn back to valuations for a moment and look at previous peaks in the market…
From 1990 to today, on a quarterly basis, stocks have spent about 30% of the time with a valuation higher than today. The peak in the 1990 bull market was 26. In 1999, it peaked at 29. (The peak in the depths of the Great Recession was a little different – it spiked because earnings fell, not because stock prices rose).
To match those peaks, stocks could still rise another 23% or 38%, respectively.
And given that earnings are rising, stocks can rise even further to meet those peaks.
Now, we don't mean to say the market will make that sort of gain before it falls… We just don't make those sorts of predictions. For that matter, the rising earnings we're seeing today could help valuations normalize.
Either way… valuation alone is not a sign of a market crash.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Dave is breaking out the ideal trading strategy for today's rising valuations. It's designed to "guardrail" your portfolio against a sudden market drop… while keeping you positioned for more upside as this historic bull market rips higher. Click here to learn more.

Source: DailyWealth

'Return-Free Risk'… Should You Invest in This Popular Trade?

Investors are buying more government bonds right now than at any time in the last year…
Should you join them?
"Bonds drew in money for the 26th straight week," Reuters reported last week, "as investors hungry to earn a return rushed into U.S. Treasury funds, which enjoyed their biggest inflows in 62 weeks."
Before you follow the crowd and rush into government bonds, consider this…
Government bonds around the world pay next to nothing.
If you lend your money to the Japanese government for the next 10 years, you will earn literally nothing. In Switzerland, the story is even worse. Take a look…
10-Year Gov't Bond
Interest Rate
Who wants to earn zero percent for 10 years?
In college, I was taught that government bonds in developed countries – particularly the U.S. – are safe, and should be thought of as having a "risk free" rate of interest.
We were taught that all other interest rates should be based on this rate… and that in exchange for increased risk, other rates should be somewhat higher than the risk-free government bond rate. (Your 30-year mortgage rate is a good example. Its rate is usually a percentage point or two higher than the 30-year government bond rate.)
"Hmmm," I thought, sitting in the classroom… "Is this really true? Is a government bond really risk-free?" The lesson didn't sit well with me, but I accepted it as the way things are in finance.
Today, you have to wonder how risk-free a government bond really is. It comes down to some simple math…
The U.S. government is in debt for roughly $20 trillion dollars. And America has about 125 million households. If you divide one number by the other, you can see that the government owes $160,000 per household. (Of course, it's not the government that's going to pay that… It's you and me.)
It's hard to call something "risk free" that has racked up $160,000 in debt for every household in America.
Japan's government, which pays essentially no interest on its bonds, owes even more than the U.S. – around $185,000 per household.
So, will buying a Japanese or U.S. government bond truly deliver a risk-free return?
"The risk-free return in government bonds could turn out to be a return-free risk," legendary investor Jim Grant has said many times over the years.
When I read those words for the first time many years ago, I thought, "Wow, that thought couldn't have been expressed any better."
Jim is probably the biggest legend and the most respected guy in the investment newsletter business. (He's humble, too… He won't take credit for the phrase "return-free risk," but he doesn't know where he heard it first.)
I was fortunate to have a private dinner with Jim, Bill Bonner, Porter Stansberry, and a couple other folks not long ago. I was intimidated by the brainpower in the room, and the knowledge of history. And I loved every minute of it.
Jim has got it right. You need to change your thinking about government bonds…
For decades, government bonds have had a reputation for risk-free return. But today, the story is different…
Governments owe trillions of dollars. And they pay next to nothing in interest. So stop thinking of government bonds as delivering a risk-free return…
You should think of government bonds today as "return-free risk." Then, you should reassess exactly how much of that return-free risk you want to own in your portfolio.
Good investing,
P.S. As you may have seen in our Weekend Edition, Porter has spent more than a decade trying to get our best subscribers access to Jim's work… And now, after meetings in New York and Baltimore, he has finally done it! Best of all, Porter says he is willing to take on the risk for you to check everything out. Don't delay – this could be the only time we're ever able to make this deal available… Get the details right here.

Source: DailyWealth