This Is the Ultimate 'Melt Up Millionaire' Stock

 
Last June, Yahoo was kicked out of the Nasdaq 100 stock index…
 
The headline story was about Yahoo's demise.
 
Specifically, Yahoo failed to figure out how to create an "ecosystem" that people wanted to be a part of. Apple (AAPL), Alphabet's Google (GOOGL), Facebook (FB), and China's Tencent (TCEHY) developed ecosystems that people didn't want to leave. And they became the most valuable businesses in the world.
 
With these ecosystems, it's a winner-take-all type of thing… It doesn't matter who's No. 2 to Facebook. The market leader is the only one that matters.
 
As you know, I expect we're on the verge of a "Melt Up" in stock prices – where certain stocks become untethered from reality and soar to unreasonable heights.
 
And I think these ecosystem-related businesses will be the biggest beneficiaries… They should be some of the biggest winners in the Melt Up.
 
But everyone already knows Apple, Google, and Facebook… Are there any true ecosystems out there that most people don't know about? Yes!
 
The company that replaced Yahoo in the Nasdaq 100 is exactly what we're looking for…
 
I'm talking about MercadoLibre (MELI).
 
Yahoo couldn't build an ecosystem. But MercadoLibre did…
 
MercadoLibre is the largest e-commerce company in Latin America. It's the online leader in all 18 countries it operates in.
 
Online shopping is a relatively new experience, especially in cultures that are used to paying for things after they receive them. In Brazil (Latin America's largest market), e-commerce sales made up just 3% of total retail sales in 2015. That's nothing!
 
Acceptance of online shopping in Latin America has been slower than the rest of the world… But for MercadoLibre, it just means there's plenty of room for growth.
 
And what really gets me excited here is that the company's business model has shifted lately…
 
MercadoLibre is adding additional ecosystems. For example, the company created its own payment system called MercadoPago. This could be huge – like the PayPal (PYPL) of Latin America.
 
Brazil is the ninth-largest e-commerce market in the world. But only 9% of the population uses the Internet to make purchases or pay bills. MercadoLibre's payment system makes it easier for people to do everything from buying stuff to paying bills to paying each other.
 
In short, MercadoLibre already dominates on a continent that is in the early stages of adopting e-commerce. And it's building other ecosystem businesses to go along with it.
 
Sure, the company is relatively unknown in the U.S. today. But it already is THE dominant player in online commerce in Latin America – a segment that is certain to grow exponentially. And it's positioned perfectly to hold on to that dominant position.
 
If we can learn something from Yahoo's demise, it's that the company failed to build an ecosystem that users loved. MercadoLibre is doing exactly that.
 
Is the company expensive? Yes. Is it overpriced? Probably. Could it double from here if my Melt Up idea turns out to be right? Absolutely.
 
To me, MercadoLibre is exactly the kind of stock you want to own during the Melt Up.
 
Good investing,
 
Steve
 
P.S. For more on MercadoLibre, I suggest checking out this video interview with its co-founder and CEO, Marcos Galperin.

Source: DailyWealth

The Hidden Force Driving This Historic Bull Market

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 Folks in the mainstream financial media are enamored with the idea of a "soft landing"…
 
This is the idea that the Federal Reserve can pull its economic "levers" just so – gradually raising interest rates and slowly unwinding its quantitative easing program – and withdraw its unprecedented stimulus efforts without triggering a recession.
 
Unfortunately, history suggests this is unlikely…
 
According to the official record, the Fed has pulled off this feat just once before. Then-Fed Chairman Alan Greenspan doubled rates in 1994 without causing a recession (though you could argue the burgeoning tech boom may have had something to do with that).
 
Every other "tightening" cycle in its 100-year-plus history has been followed predictably by an economic slowdown.
 
 It's not hard to see why…
 
When the Fed cuts rates or otherwise eases monetary policy, it isn't simply "stimulating" the economy. It's also distorting the most important source of information in the economy. As Stansberry Research founder Porter Stansberry explained in the April 28 Digest
 
Money conveys critical information to entrepreneurs and consumers via prices. We learn about shortages from rising prices. We learn about gluts from falling prices. And every day, hundreds of millions of consumers, producers, investors, and bankers are using prices to make judgments about what they should do next with their money.
 
Trouble is, when the monetary system is being manipulated – when it's being inflated and controlled by the world's central banks – those prices we are all relying on become warped. As a result, more and more "noise" enters the channel – false information… prices that aren't real… prices that don't accurately reflect supply and demand… or risk…

 In other words, when the price of money is artificially lowered, bad things tend to happen…
 
Investors and entrepreneurs are incentivized to take more risk than they otherwise would… Businesses and consumers load up on debt that they otherwise couldn't afford… And lenders extend credit to borrowers they would otherwise avoid.
 
So it follows that when the Fed eventually raises rates or tightens monetary policy, much of this activity no longer makes sense. The false signal is removed, and the economy slows as economic reality sets in and bad debts are wiped out.
 
 This perpetual teeter-totter is known as the "business cycle"…
 
And it's largely the Fed's doing.
 
To be clear, that doesn't mean we wouldn't see booms and busts without the Fed. So long as the economy is made up of humans and their emotions, periodic excesses are unavoidable. But without broad manipulation of money and interest rates, these would be far less severe.
 
This is bad enough. However, the Fed has managed to make it even worse.
 
 You see, for the past several decades, the Fed has refused to let even this process fully play out…
 
Instead, it has responded to every downturn – or perceived threat of a downturn – with more "easy money" than before…
 
The Fed's response to the emerging markets crises of the 1990s helped fuel the dot-com boom and bust. Its response to that recession led to the housing bubble and the global financial crisis that followed. And its response to that crisis – in concert with central banks around the world – has now created the biggest and most pervasive bubble the world has ever seen.
 
So no… we don't expect to see a soft landing this time around, either.
 
 
 Of course, inevitable doesn't mean imminent
 
As regular DailyWealth readers know, this boom could continue awhile longer. In fact, our colleague Steve Sjuggerud – who has "called" this bull market better than anyone we know – believes the "Melt Up" could run for another year or two before it finally ends.
 
Steve follows a number of long-term indicators that have warned of previous downturns many months in advance. And none of them are signaling danger at this time.
 
 Today, we can add another data point in favor of the bulls…
 
One of the biggest drivers of higher stock prices over the past few years remains intact.
 
Back in December, Congress voted to cut the corporate tax rate from 35% to 21%. As we explained, this lower tax rate – combined with the potential for a "repatriation holiday" – could lead to a surge in corporate share repurchases (or "stock buybacks").
 
And it looks like we're already starting to see that play out…
 
According to investment-research firm TrimTabs, U.S. companies have repurchased nearly $5 billion worth of shares per day through the first two-plus months of the year. That's double the pace from the same period in 2017.
 
Bloomberg reports that companies bought back more than $153 billion in February alone. That's more than any single month in history. All told, investment bank JPMorgan Chase (JPM) expects a record of more than $800 billion in buybacks in 2018, up from $530 billion last year.
 
 The numbers could be a major boon for investors this year…
 
After all, a falling share count means that each remaining share gets a bigger piece of the earnings "pie." And rising earnings-per-share – one of Wall Street's favorite metrics – could continue to drive the market higher.
 
But while this could be bullish for the market in the near term, it's important to remember that share buybacks are a double-edged sword. They're only beneficial to shareholders over the long term when a company buys back shares at a reasonable valuation.
 
And as Extreme Value editor Dan Ferris reminded us in a private e-mail this week, this is relatively uncommon…
 
Making good use of share buybacks requires a company to hold on to its cash when its stock is expensive. That's harder than it sounds. Think about how bullish investors were in 2007, right before the market peaked.
 
Then, when the market crashes, companies have to have the fortitude to go out and buy their own shares, hopefully at a discount to what the business is actually worth.
 
Think about how bearish investors were in early 2009. Corporate executives are just like everybody else. They bought tons of shares at the top in 2007 and very little at the bottom in 2009.
 
People are emotional, whether they're individuals managing a 401(k) or corporate executives making billion-dollar share buybacks.

 Worse, many companies are compounding this mistake today…
 
They're paying out more to shareholders in the form of dividends and buybacks than they're actually earning from their operations. And they're using debt to make up the difference.
 
Again, the reason isn't hard to understand. Thanks to central bank manipulation, debt is relatively cheap today. Management teams can "juice" their numbers by using buybacks to convert this debt into higher earnings per share.
 
And it surely doesn't help that many executives – whose compensation is often tied to these metrics – are actively incentivized to risk the long-term health of their companies in exchange for short-term boosts in share prices.
 
 Dan agrees…
 
With many stocks near all-time highs, Dan is wary of companies spending billions of dollars buying back shares today. As he explained…
 
The bottom line is buybacks are an investment, an allocation of capital. And the returns you get depend on the price you pay. So if you pay a horrendously high price, you're going to get a horrendously low return.
 
There's no magic to buybacks. They can't turn a mediocre business into a great one. But they can turn a great one into a mediocre investment by making too many repurchases at too high a price.

 This is especially relevant today…
 
At this stage in the historic bull market, Dan says it's more important than ever to invest in companies with proven management teams that use buybacks wisely…
 
And he says he recently found one of the best he has ever seen.
 
Not only does this firm reward shareholders through a generous dividend and opportunistic buybacks, it also checks the box on each of Dan's other "five financial clues."
 
It gushes free cash flow… boasts thick margins… has hundreds of millions of dollars' worth of cash with zero debt… and generates a consistently high return on equity.
 
It's no wonder Dan is calling this company his "brand-new, No. 1 recommendation." In fact, he says if he had to put every penny of his life savings into one stock, this would be it. Learn more about this opportunity right here.
 
Regards,
 
Justin Brill
 
Editor's note: We're almost a decade into this historic bull market… It's getting harder and harder to find cheap stocks. But Dan recently found a stock that he predicts will become the first 20-bagger in Stansberry Research history. Dan says this is "the kind of stock opportunity you get once or twice in a lifetime, at most." Get all the details right here.

Source: DailyWealth

What I Learned From a $125 Million Investment Lesson

 
The portfolio held 70 stock positions… and I had no clue about most of them.
 
I had inherited $125 million in shares from a previous portfolio manager, and I hadn't yet gotten up to speed on the investments.
 
I thought I was "holding" these positions. However, by taking over the reins, I was effectively "buying" them all over again… And that was true for every moment that they were in the portfolio.
 
It was one of the most important investment lessons I ever learned. Today, I'll explain how it can help you…
 
Around 12 years ago, I became the manager of a $125 million hedge fund.
 
The fund had been around for three years. The previous manager had put together a diverse portfolio of stocks, bonds, currencies, and options across a dozen different markets and twice as many countries.
 
Each position – that is, every asset that the fund owned – had a history… a narrative, and a reason that it was there. It might have been because a stock was cheap, or the company's management was fantastic, or a big dividend was coming up, or that it was an unloved and beaten-up stock that was coming back into favor.
 
On my first day on the job, my boss told me, "I'd like you to look at every position in the portfolio. Learn the story, assess the valuation, and understand why it's in the portfolio. And then ask yourself if you would buy it today, right now. Because by having it in the portfolio, that's what you're doing."
 
At first, I didn't understand what he meant. A stock in the portfolio was a holding… So the portfolio was, well, holding it. It had already been bought at some point in the past. I told myself I wasn't the person responsible for the stock "being bought" now — someone else already had.
 
But he was right. Every position was taking up capital — actual cash — within the fund. If that cash wasn't being used for that position, it could be available to buy a different security.
 
Every holding came with an opportunity cost. And by holding a position, I was really "buying" that position — each and every day that it stayed in my portfolio.
 
This also makes sense outside of a stock portfolio.
 
Think of what you own – all your assets – and ask yourself: "If I had the cash value of this item in my hand, instead of the thing itself (whether it's a stock, a bond, a house, or a car), would I still buy it right now?"
 
Sometimes you don't have a choice. You need a place to live, so dreaming of what you'd do with the cash you'd receive from selling your house right now might be irrelevant. Your old car might not be worth much anymore, so you can't compare its current value with what you bought it for when it was new.
 
But you may own other assets that, if you could do it again, you wouldn't buy. You might be able to get something that suits your needs better. In the case of stocks or bonds, you might be able to put the money toward a different stock that has a better return potential or that pays a bigger dividend.
 
If you're holding on to a loser – whether it's a stock that's down, or an item that you don't need anymore – you're tying up valuable capital that you could put to better use. And each day you continue to own that asset – whether it's a boat or stock or wheelbarrow or ring – you're tying up money to own it… money that could be used for something else.
 
That's why every day, you are "buying" whatever you already own.
 
I learned the stories of the 70 securities in the portfolio. I ended up selling about half of them… And by doing so, I freed up the capital to buy other assets that I felt good about "buying" every day.
 
Good investing,
 
Kim Iskyan
 
Editor's note: Despite what hundreds of "experts" say, you only need five simple techniques to get started in another one of the best investments available – real estate. Kim's colleagues at Stansberry Churchouse Research have used these little-known strategies to amass an absolute fortune… turning one $10,000 investment into $12.8 million. Learn more about these five tips – and why you should invest in real estate – right here.
 

Source: DailyWealth

On the Edge of a 92% Boom

 
Booms and busts…
 
Investors tend to see them as black swans… or once-in-a-generation events.
 
But they happen in the stock market more often than most people realize. And they're downright commonplace in the commodities markets.
 
Today, we've found one commodity that could be at the bottom of a bust cycle… and on the verge of its next boom.
 
This commodity is more hated than at any point in history. Everyone expects it to continue lower. And that's setting up a contrarian opportunity.
 
Last time around, it soared 92%. And we could be on the verge of similar upside right now.
 
So which commodity do investors hate? Which one have they completely given up on?
 
It's not oil or gold, or any other commodity that might come to mind right away. This opportunity is in coffee…
 
Coffee is dead to investors. It's more hated than ever before, based on one of our favorite measures – the Commitment of Traders (COT) report.
 
The COT report gives weekly insights into what futures traders are doing with their money. And based on history, when futures traders are all making the same bet, it's smart to take the opposite side of that bet.
 
Today, futures traders are betting on lower coffee prices. They haven't been this bearish at any previous point in history. Take a look…
 
Coffee has never been this hated before… But it has gotten close two other times in recent history. And both led to huge returns…
 
In 2015, coffee hit a similar extreme. Investors were sure the price could only head one direction… down. Instead, coffee soared 45% in just 10 months.
 
Amazingly, just a year before, there was a similar setup. In 2014, investors were once again betting on the demise of coffee. It didn't work out… Coffee prices soared 92% in just 11 months.
 
Now, it makes sense that coffee isn't popular among investors. Since its peak in late 2014, the iPath Bloomberg Coffee Subindex Total Return ETN (JO) – the simplest way to bet on coffee – is down more than 60%.
 
That has created extreme negativity… and it means prices could soar once the trend reverses.
 
As contrarian investors, this is exactly what we want to see.
 
Unfortunately, coffee is still in a downtrend today. When that changes, the upside potential is massive… And shares of JO will be the best way to make the trade.
 
Good investing,
 
Brett Eversole
 

Source: DailyWealth

Exactly How You Should Trade the Next Market Correction

 
Well… that didn't take long.
 
Back in January, my publisher, Stansberry Research, asked its top editors for our No. 1 predictions for 2018.
 
Mine was straightforward: "[In] the first half of the year… stocks will fall between 12% and 15% and remind investors stocks can indeed take a breather."
 
Then, early last month, the S&P 500 Index fell more than 10% from its recent high. That was just shy of my predicted range… But it was the first official correction we've seen since 2015.
 
The fear factor is high. Folks look at their trading accounts or 401(k)s and see thousands – or even tens of thousands – of dollars evaporated. They get upset about their returns. Many of my friends and colleagues have called me to ask what to do…
 
They don't usually like my answer: It's time to celebrate.
 
Most people don't want to hear that when the market is in the midst of selling off. But it's true. Let me give you three reasons…
 
    1. This is what stock markets do.
 
My prediction didn't rely on some magic indicator. It's just what you should expect the market to do.
 
Consider that we see a 15% correction about every other year. That means one happening within any given six months, like I predicted, is about a three-to-one shot.
 
If you can't handle the occasional pullback like this, you shouldn't be as invested as you are in stocks. That's just the truth. I'd suggest checking with your broker where you can earn 2.5% in a five-year certificate of deposit ("CD").
 
    2. You shouldn't cheerlead the market ever higher.
 
As a trader or investor, you should root for corrections to happen more often. That's your chance to snatch up more quality businesses at cheaper prices.
 
Blue-chip companies like Coca-Cola (KO) or Walmart (WMT) are the same businesses they were two months ago. But you can own a stake in those businesses for less today. You can get bonds or funds at a better price. Even entire countries and regions are on sale.
 
How is that a bad thing?
 
You can't have it both ways. For the past year or two, folks were concerned that valuations were too high and it was hard to find businesses that traded at valuations that they felt comfortable with.
 
Now, the market has fallen and stocks have repriced cheaper… and people are too worried that things are falling to buy in. More often than not, those are all the same people.
 
I understand that it's human nature to worry, but you'll never be happy if you can't figure out what you want. (Otherwise… CDs.) So unless you need the money today, you should cheer on declines in the market like this.
 
    3. The heightened volatility can earn us more money.
 
This applies to investors who use my favorite income strategy – selling options.
 
If you sell options, the higher the option price, the better. And when investors expect higher volatility, they pay more for options.
 
You can see in the price of the CBOE Volatility Index (VIX) – a market-wide measure of expected volatility – that this little market hiccup has traders preparing to pay more for options than they have in months.
 
That helps us. We can earn nearly double the returns we would have without the rise in volatility – and we'll be buying the underlying shares for lower prices, too.
 
So what do you do now?
 
You don't need to do anything. Remember, you prepare for a downturn before it happens by owning a diversified group of high-quality businesses with specific exit strategies.
 
The technical aspects of investing aren't that difficult to understand… It's our natural inclinations and temperament that are so hard to overcome.
 
We want to run and hide. We want to find an answer. We want to do something.
 
Resist the panic. Take a breath and look at how this market can be advantageous to you.
 
Our best evidence suggests that broader declines don't happen often without an accompanying recession. Today, the global and national economies are about as strong as they've ever been.
 
Other than that, all sorts of assets are trading for lower prices… and options are selling at higher volatilities. Take advantage of it.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Until tomorrow, you can claim one free year of Dave's Retirement Trader service, which normal, everyday folks have been using to safely generate thousands of dollars in extra income every month… Like Aric G., who tells us he uses Dave's advice to collect an average of $10,000 per month. Learn more about this powerful strategy right here.

Source: DailyWealth

This Will Cause the Next Leg Higher in the 'Melt Up'

 
The biggest gains in a stock-market "Melt Up" typically happen in tech stocks…
 
One important indicator we track tells us that they could absolutely soar from here – leading the entire market higher with them.
 
Let me explain…
 
Tech-stock investors got spooked during the market correction earlier this year.
 
Real-money bets on tech stocks fell off a cliff… Specifically, futures traders became extremely bearish on tech stocks for the first time in nearly two years.
 
That's great news for us… You want to buy tech stocks when investors are scared of them. And based on history, today's setup could mean gains of as much as 30% in tech stocks over the next year.
 
The Nasdaq 100 Index is historically THE major tech-stock index. It holds 100 of the largest companies listed on the Nasdaq stock exchange. The Nasdaq's top seven holdings are the largest tech stocks – like Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) – which make up nearly 50% of the index.
 
The important news is, traders gave up on the Nasdaq 100 Index after the recent correction.
 
That's based on the Commitment of Traders (COT) report. The COT report is a "real money" indicator. It tells us what futures traders are doing with actual dollars.
 
As longtime readers know, it's a fantastic contrarian tool. You see, when futures traders are all making their bets in one direction, the opposite tends to occur. As contrarians, we want to bet against the crowd.
 
Right now, the crowd is the most bearish on tech stocks than it has been in two years. Take a look…
 
When the line on the chart is rising, futures traders are bullish on the tech-heavy Nasdaq 100. The opposite is also true: When it's falling, futures traders are bearish.
 
As you can see, the COT report shows we recently hit a multiyear low.
 
Interestingly, the last four times traders were this bearish were great times to buy technology stocks. Take a look at what the Nasdaq 100 did after these extreme levels…
 
Extreme
1-Year Return
9/14/2010
17.7%
6/28/2011
12.1%
11/20/2012
31.7%
5/10/2016
30.6%
It's been a bull market for the past nine years… But these are fantastic results even considering that.
 
The Nasdaq 100 has jumped an average of 23% in a year after similar hated extremes. History is clear: We really want to own tech stocks now.
 
As the Melt Up continues, I believe a similar result isn't just possible… it's likely.
 
If you're thinking about adding tech stocks to your portfolio, this signal suggests that now is the right time to pull the trigger.
 
Good investing,
 
Steve
 
P.S. Tech stocks aren't the only area of the market that will soar during the Melt Up. That's why I recently decided to temporarily re-open my Melt Up Millionaire portfolio to the public. It's the absolute best way to squeeze the biggest gains out of the final innings of this historic bull market… and it comes with an incredible guarantee. Get the details here.

Source: DailyWealth

Where to Invest in the Best Rental Houses

 
"Steve, rental houses here at the beach are a terrible idea," my friend Brad Thomason told me last week.
 
"If you want a REAL income on a rental house, you need to go to Cleveland, Tennessee."
 
Brad would know.
 
He has done more unique real estate deals than anyone I know. (He guessed the number was around 15,000.)
 
I have made A LOT of money listening to Brad.
 
When I was on the courthouse steps at the bottom of the housing crisis, buying distressed real estate at auction, I would call him on my way there for final words of advice. Some of the deals I made at those auctions earned me hundreds of thousands of dollars.
 
"Think of every property you buy as buying another headache," Brad told me a long time ago. "You have to ask yourself… Do you really want THIS PARTICULAR headache?"
 
It was good advice… And I've relied on it many times since then. Today, I'll share some of his latest advice with you…
 
When we caught up recently, I asked him where the best opportunities in rental houses are… and if he has any simple advice for someone getting into buying rental properties.
 
Here are a few thoughts from Brad, after having done some 15,000 real estate deals.
 
1.   Your best opportunity for high income today
"The best opportunities for rental income are in Middle America. You can buy a house in Mississippi or Indiana for $90,000 and rent it for over $1,000 a month."
 
2.   Use the "1% Rule" when buying to rent.
"Use this simple test… If you can rent out a $200,000 house for $2,000 a month, then you can probably make good money on it. That's the 1% Rule – 1% a month. If not, then you might struggle to make money on it. Don't rely on capital gains. They may not arrive."
 
3.   Think beyond your hometown when buying a rental property.
"Real estate investors think they have to buy a property in their hometown. You don't! You are much better off buying in Middle America with high income potential and paying a property management company. It doesn't make sense to buy a rental property in California just because it's close to you, even though it has a terrible return."
 
Brad is both extremely smart and experienced in making money from real estate deals.
 
If you follow his three ideas, I'm confident you'll do well earning a high return on your rental properties. If you go against his ideas, realize that you're limiting your upside potential relative to what's out there…
 
Good investing,
 
Steve
 
P.S. For more on Brad Thomason, check out this web page right here.
 

Source: DailyWealth

A Powerful Way to Make Market Volatility Work in Your Favor

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 We're inching closer to "war"…
 
Last week, President Donald Trump announced a plan to impose tariffs on steel and aluminum imports. He said the tariffs of 25% for steel and 10% for aluminum would apply "broadly" and "without quotas" to all U.S. trading partners.
 
Congressional Republicans and several members of Trump's own administration immediately opposed the proposal. This led many to believe that he would reconsider…
 
But then, Gary Cohn – the president's top economic adviser, and one of the plan's biggest critics – stepped down Wednesday. And it didn't take long for Trump to push forward…
 
He implemented the measures Thursday – though with one noticeable change. Initially, Trump said no countries would be exempt. That's no longer the case. From the Wall Street Journal
 
"We're going to show great flexibility" by considering exempting military allies, Mr. Trump said, and he started by excluding Canada and Mexico immediately. Earlier in the day, he indicated Australia, which he called a "great country" and a "long-term partner" could also eventually be exempted.
 Nevertheless, Trump remains steadfast on his key campaign promise to "help" the steel industry. Now that the tariffs are official, we see a few reasons for concern…
 
First, the plan is unlikely to meet its objectives.
 
You see, Trump is right about one thing… The U.S. steel and aluminum industries have been decimated. Data from the American Iron and Steel Institute and the Aluminum Association show these two industries employ just 300,000 Americans in total today.
 
That's less than 0.1% of the U.S. population.
 
Tariffs or not, that's not likely to change anytime soon.
 
Despite the rhetoric, not all of these job losses can be blamed on outsourcing. Technology has played a significant role. For example, the U.S. steel industry has shed roughly 80% of its jobs since its peak in 1953. Yet, U.S. steel production has fallen by less than half from its peak.
 
Meanwhile, companies that have outsourced jobs still have little incentive to bring those jobs back. And it would take decades to rebuild that capacity even if they wanted to.
 
 In other words, only a tiny number of Americans can possibly benefit, while the rest of us will bear the costs… And they could be significant.
 
Why? Because higher steel and aluminum prices don't just mean higher profits for the companies that produce these materials… they also mean higher costs for any companies that use these materials in production.
 
These companies have two choices: Take the hit to earnings, which could lead to job losses in other industries… or pass these costs on to consumers, in which case you can expect to pay more for items ranging from new cars and trucks to beer and canned goods.
 
In other words, these tariffs could ultimately be little more than "a tax hike the American people don't need and can't afford," as Utah Sen. Orrin Hatch put it on Monday.
 
 That is bad enough… But the real risk is that these moves trigger a "trade war" – a vicious cycle where other countries retaliate with measures of their own. In fact, the European Union ("EU") is already preparing to enact its own tariffs on several U.S. products. As Bloomberg reported this week…
 
Targeting 2.8 billion euros ($3.5 billion) of American goods, the EU aims to apply a 25% tit-for-tat levy on a range of consumer, agricultural and steel products imported from the U.S. if Trump follows through on his tariff threat, according to a list drawn up by the European Commission and obtained by Bloomberg News…
 
The list targets imports from the U.S. of shirts, jeans, cosmetics, other consumer goods, motorbikes and pleasure boats worth around 1 billion euros; orange juice, bourbon whiskey, corn and other agricultural products totaling 951 million euros; and steel and other industrial products valued at 854 million euros. The Brussels-based commission, the EU's executive arm, discussed the retaliatory measures with representatives of the bloc's governments at a meeting on Monday evening.
 
Europe may expand the group of targeted American goods should Trump also follow through on a related pledge to impose a 10% duty on foreign aluminum. The list obtained by Bloomberg on Tuesday relates only to steel countermeasures.

 And the fallout could be much worse… That's because China is also in the mix.
 
China's foreign minister, Wang Yi, said on Thursday that the country doesn't want a trade war, but that it would have to make a "justified and necessary response" if provoked.
 
But remember, China isn't just one of America's biggest trading partners… It's also one of the biggest holders of U.S. Treasury debt.
 
The federal deficit is expected to soar over the next few years. The Treasury will need to issue a ton of new debt. Meanwhile, the Federal Reserve – the largest buyer of Treasury debt over the past decade – is now selling.
 
Continued demand from large foreign buyers – led by China – will likely be critical to keep interest rates from soaring. China knows this, too… If push comes to shove, this situation could get ugly quickly.
 
We'll reserve judgment until all the details emerge…
 
But no matter how these events shake out, we expect greater volatility in the months ahead. Proper risk management is absolutely critical.
 
Be sure to have a trailing-stop loss or other well-defined exit strategy for every position you own… stick to reasonable position-sizing… and make sure some of your money is diversified into assets outside of the stock market.
 
 We also urge you to take one additional step…
 
Our colleague Dr. David "Doc" Eifrig's favorite trading strategy is tailor-made for volatile markets… He has used this simple, yet powerful strategy in his $4,000-a-year Retirement Trader advisory to rack up an unbelievable 95% win rate over the last eight years.
 
This strategy is incredibly versatile. It can help you make more money, while taking less risk, in virtually any market environment. It works incredibly well in big bull markets, as Doc's Retirement Trader track record shows. But this strategy works even better during periods of higher volatility, making it an ideal addition to your investing toolbox today.
 
To be clear, this strategy involves options. And we know that can be intimidating. If you're like many folks, you may believe options are too risky or too complicated to learn.
 
But please don't let that stop you from learning more…
 
You see, Doc's strategy is far from that. It can actually be less risky than simply buying a stock. And it isn't nearly as complicated as you probably think.
 
Doc says he can teach almost anyone – regardless of age, education, or background – to use it successfully in just minutes. In fact, he recently walked one of our colleagues – a novice investor with zero options-trading experience – through this strategy, which allowed her to collect $210 in just three minutes.
 
So if you're willing to try something new, we urge you to act now… For a limited time, you can claim a free year of Doc's Retirement Trader service. Get all the details right here.
 
Regards,
 
Justin Brill
 
Editor's note: Last week, Doc walked one of our colleagues through her first trade using the Retirement Trader strategy. She used it to collect $210 in just three minutes. See how it's possible – and how you can get a free year of Retirement Traderright here.
 

Source: DailyWealth

The Upside From February's Correction

 
I have some fantastic news for you…
 
Today, stocks are selling at 2015 prices.
 
If you thought you missed the great run-up in stock prices over the past two years, think again…
 
Now you have a second chance.
 
I'm not kidding…
 
I don't mean that the major stock indexes are at their 2015 levels. We know that's not true.
 
So let me explain to you what I do mean. It's pretty simple…
 
Last month, stocks fell further than 10% for the first time in years.
 
But it's not just that prices fell. There's more to it than that…
 
Stocks are now at valuations we haven't seen in years.
 
This creates opportunity. And it's a good sign for our "Melt Up" investments in the coming months.
 
Stocks haven't been cheap in a while. That's no surprise after a nine-year stock market boom. But market valuations just got a double whammy…
 
First, stocks corrected, as I explained above. A 10% decline – all else being equal – means stocks are 10% cheaper than they were before. The market has come back a bit since the February bottom, but it's still below all-time highs.
 
But that's not the only thing that happened…
 
On December 22, President Donald Trump signed a tax overhaul into law. It dramatically lowers corporate tax rates. And that has led to much higher earnings estimates for 2018.
 
Bloomberg now estimates that S&P 500 Index earnings will grow 27.3% over the next 12 months
 
That's a huge growth number. And a good chunk of it will likely come as a short-term bump, thanks to the tax overhaul.
 
Thanks to these two factors, stocks just hit their cheapest level in years, based on forward price-to-earnings ratios (P/E), which take current stock prices and divide them by next year's earnings estimates.
 
You can see the big change in the chart below. Take a look…
 
In short, valuations fell by 16% in just a few weeks. And they're still cheaper today than they've been in a year…
 
No, the market isn't dirt-cheap today. A forward P/E in the 17 range is still historically expensive. But the market is a better value today than we've seen in a while. You have to go back to 2015 to find a time when the forward P/E ratio averaged 17 for the year.
 
And that's a good sign heading into the Melt Up.
 
You see, as regular readers know, I've been calling for a final blastoff in stock prices… a "Melt Up" before the market has its "Melt Down."
 
I expect the market will rise to much higher valuations in the Melt Up. During the tech boom, the S&P 500's P/E ratio soared above 30.
 
Those valuations can certainly happen again. And if they do, anyone buying today – after a big step down in valuations – has major upside.
 
The correction was scary and painful. But today, you can buy into stocks at 2015 valuations. This sets us up for significant upside potential if I'm right about the Melt Up.
 
So my advice remains the same… Stay long stocks.
 
Good investing,
 
Steve
 

Source: DailyWealth

Use the '95% Win Rate' Strategy to Outsmart a Market Correction

 
The stock market recently underwent a wild gyration.
 
On February 5, the Dow Jones Industrial Average lost nearly 1,200 points, about a 4.6% fall. And Wall Street's "fear gauge" – the CBOE Volatility Index (or "VIX") – soared by more than 100%.
 
I know plenty of smart market watchers and professionals who say we're on the verge of a sudden and dramatic decline. It could happen today… tomorrow… or several months from now. Others say the market could go up 50%, or even 100% or more before it tops out.
 
This could be one of the most uncertain periods in market history…
 
And that's not good for average investors.
 
Most of us are hardwired to follow the herd…
 
A part of the brain called the amygdala drives this response. It consists of two tiny structures deep in the brain that connect emotions and fear. This is the so-called "fight or flight" system.
 
When individuals don't follow the crowd, their amygdalae start firing. It makes them feel nervous… even sick to the stomach. This was useful in prehistoric days. Our ancestors found safety in numbers when they needed to avoid predators. But it will lead you astray when investing…
 
I saw exactly this during the market collapse in 2008.
 
On September 29, 2008, the Dow fell nearly 7% in one day… Investors left the market in droves. By the end of 2008, trillions of dollars were pulled from the stock market.
 
Within a few months, a new bull market began.
 
If you threw in the towel and sold your stocks on the way down, or near the bottom in spring 2009, you weren't alone. Many otherwise sensible people did. They were simply following their hardwiring…
 
And most of these same people waited far too long to get back into the market, too. So even though they've done well the last few years, they're probably kicking themselves for missing out on the really big gains.
 
Since 2009, the entire S&P 500 Index has returned around 300%, including reinvested dividends.
 
I don't have a crystal ball. I don't know where the market is going next. But I do know how you can protect your portfolio from a market decline… and stay invested for the majority of any remaining market upside.
 
For the past eight years in my Retirement Trader letter, I've shown regular investors how to make this bull market work for them. We've collected safe and steady income on some of my favorite stocks. In fact, we've closed winning positions around 95% of the time.
 
We've racked up these consistent winners by selling options. This has been our go-to strategy… our single-best way of "trading for income" in retirement.
 
It's a way of protecting the stocks in your portfolio from a dramatic crash, while still enjoying the majority of the market's remaining upside.
 
Best yet, this strategy is particularly effective when the market has been on a long bull run and valuations aren't cheap anymore… like what we're seeing right now.
 
You can put on this type of trade on almost any major stock that you likely have in your portfolio.
 
I'll bet you own at least five – maybe even a dozen or more – of these stocks already. And if you're nearing retirement and sitting on significant gains, you don't want to give those gains back… But you also don't want sell now and miss out on more upside if this bull market continues.
 
If you're interested in insuring your portfolio from a market correction – while also taking advantage of the end of the bull market – I'm hosting a special demonstration of how this strategy works. The broadcast goes live tonight. I hope you'll join us…
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: Dave's "Eifrig Income Method" works no matter what the market is doing – but the rewards are even greater when volatility skyrockets. Tonight at 8 p.m. Eastern time, he'll show a complete beginner how to use this technique to collect hundreds of dollars – instantly – with a single trade. This demo is free to watch, but spots are filling up fast… Click here to learn more.

Source: DailyWealth