A Simple Way to 'Paint Eyes' on Your Portfolio Today

The success of the 'i-Cow project'... Saving cows from lion attacks in Africa... A pack of 'lions' is stalking your savings today... The U.S. is charting new ground here... How to fool the Fed's lions... A simple way to 'paint eyes' on your portfolio today...

Folks didn't like this idea because it seemed too simple...

Back in 2015, Neil Jordan proposed a simple way to save the cows in southern Africa. At first, experts in the conservation and biology fields took the scientist to task for it.

One expert told BBC that it was "wishful thinking." The near-unanimous consensus was that Jordan's efforts would fail. And across the board, folks sarcastically wished him "good luck."

Even Jordan admitted in the beginning that the solution "does seem a bit wacky." And as he told BBC in September 2016...

I cheekily called our work the i-Cow project. It's the opposite approach to Apple in being a low-cost, non-technological solution.

But Jordan wasn't deterred. He started testing his idea to show others that it would work...

A year earlier, Jordan had been on a safari. During the adventure, he watched a lion slowly stalk an antelope... The lion spent 30 minutes inching toward its prey, which likely felt like an eternity. But just before it could pounce, something strange happened...

The antelope turned and looked at the lion. It looked directly into its eyes. And then, in that split second... the lion gave up and walked away. The antelope lived to see another day.

That's when Jordan realized this idea could help the farmers in Africa...

You see, the livestock industry is one of the primary ways to make a living in the region. But the farmers have a big problem... Lions often ambush and eat their cows in the fields.

Jordan couldn't force the cows to look at their predators like the antelope did... But he didn't need to. Jordan believed he had an even better solution to the farmers' problem...

He would paint eyes on the cows' butts in an attempt to fool the lions.

This is the kind of clean logic that experts often fail to produce. Something so simple couldn't really work, could it?

With all the farmers looking to save their cows, it didn't take long for Jordan to start his study...

The first group included 39 cows at a farm on the edge of a wildlife area in northern Botswana... And 23 of them got the eyes painted on their butts.

At the end of the initial study, the results were in... Lions killed three unpainted cows. But none of the 23 cows with eyes painted on their butts were attacked.

Of course, that was just one brief trial in 2015. And if you know anything about statistics, you know that's a painfully small sample if you want to draw a meaningful conclusion.

So Jordan didn't stop there... In fact, he just completed a four-year study using 14 herds that had recently suffered lion attacks – a total of 2,061 cows. Of the 683 eye-painted cows, none were killed by lions. Meanwhile, the predators killed 19 cows without painted eyes.

Now, this might sound crazy, but I (Vic Lederman) shared this story for a reason...

Much like what was happening to the cows in Africa, a pack of "lions" is stalking your savings today. I'm guessing you know this instinctively. Most folks sense that something strange is happening in the world of finance right now...

It's true that tech stocks are soaring... The tech-heavy Nasdaq Composite Index first reached a new all-time high in June. And it has just kept going... Today, the index is up an incredible 66% off its March bottom.

Despite that, and a similar new all-time high in the S&P 500 Index last week, the Federal Reserve has unleashed its "lions" to try to "save" us from a COVID-19 spurred economic catastrophe. However, in the end, it's just damaging the livelihoods of everyday Americans.

But fortunately, as I'll show you in today's Digest, you can take a few simple steps to guard against it... just like the painted eyes on the cows' butts saved their lives in Africa.

Before we learn how to protect ourselves from these lions, though, we must be able to spot them...

Here's what the lions look like from far away...

One chart sums it all up... It's a macro chart showing us that our foe is near.

I'm talking about the "M2 money supply" of the U.S. This chart tells you exactly where the economy is headed. Let's take a look at it together...

As you can see, the M2 money supply has jumped by 19% since the beginning of the year. That's a huge move!

Remember, M2 includes cash and checking deposits. But it also includes what economists call "near money." That's money in market accounts, mutual funds, savings deposits, and time deposits.

That means we've seen a massive spike in all the cash and cash-like assets that consumers use... And don't forget, we've also seen tech stocks soar to record highs in recent months.

Simply put, a ton of money is sloshing around right now. And that's exactly what the government wants.

We could get in the weeds here, but let's keep it simple... When the Federal Reserve buys stuff, it increases the money supply. And the Fed has been buying a lot of stuff lately.

The aim is to juice the economy. But in doing so, the eggheads in government have unleashed a pack of lions. And as I'll show you, these lions are targeting your savings...

Now, you still might not see how this is supposed to be a pack of lions...

Think about it this way...

Imagine that you own shares of the "Best Company in the World." You love this company. And for the most part, it has provided you with solid returns over the years.

But then, to handle an emerging crisis, the company issues new shares. And in total, the company grows the number of its shares outstanding by 19%.

Your shares have been diluted. You're stuck holding the bag.

That's exactly what the federal government is doing right now... It's diluting your U.S. dollars.

Astute readers might point out that the U.S. government isn't alone in these efforts today. They might argue, "What does it matter if the U.S. dilutes its currency a bit if everyone else is doing it?"

It's a fair question... The rest of the world's central banks are taking similar actions to combat the economic fallout from the COVID-19 pandemic. But there's a big difference...

The reality is, the U.S. is charting new ground here. It's in a world of its own...

For comparison, the eurozone's M2 money supply has only risen by 6%. That's still a big jump... But it means our dilution is greater than theirs.

In other words, unless something dramatic changes, our buying power is going to decrease against the euro. And it'll decrease against the currencies of everyone else who hasn't diluted as much, too.

The U.S. topping the eurozone in this key statistic is all we need to know... America is flooding its market with cash.

It's scrambling to save itself from the economic slowdown caused by the COVID-19 pandemic. And at least so far, other major economies haven't had to do it to the same extent.

This action is also unprecedented... Wharton economist Jeremy Siegel describes it as the biggest increase we've seen in the money supply in 75 years.

It's historic. And like it or not, it's now part of the fabric of our monetary system.

Fortunately for us, we've spotted this massive shift early. And that's important...

You see, in the case of our earlier "Best Company in the World" example, our shares were diluted immediately. But when it comes to the U.S. economy, it takes time to feel the effect of dilution...

That means you still have time to act. And I'm urging you to act right now. This is a pack of lions you don't want to mess with...

The lions unleashed by the Fed are extra hungry...

It's bad enough that the Fed has unleashed a pack of lions on savers. But that's not all the central bank has done...

The Fed has also slammed interest rates to near zero. And once again, the reason is to juice the economy.

But for you, that simply means your money is getting eaten away from two sides. Gross.

On one side, low rates are keeping your cash from working for you through earning interest. And on other side, the increasing M2 money supply is diluting the dollars you do have.

This double whammy isn't going away anytime soon. The Fed has made that explicitly clear... Chairman Jerome Powell has said that he will keep rates near zero for as long as it takes.

That alone should spook savers... It means Powell is OK with savers taking a haircut when the U.S. economy gets moving. But that's not all the Fed is planning to do...

Today, Fed watchers agree almost universally that the central bank will soon formally raise its inflation target...

You cannot ignore this...

The inflation target is the Fed's way of determining how "hot" it wants the economy to get. And in years past, the Fed's main focus was preventing the economy from overheating.

Now, the Fed is shifting gears... And the policy focus is shifting from "inflation is scary" to "maybe we could use some more inflation." True to form, the Fed is using "Fedspeak" to communicate this as loudly as it can to the markets.

Fedspeak might be hard to understand at times. But this time, the message is as clear as it gets. Let me provide the translation... "If you stay sitting in cash while we do everything in our power to juice the economy, you get what you deserve."

It sounds ominous. And that's because it is...

The Fed has unleashed lions on savers. And they're darn hungry.

But the good news is, you don't have to get eaten... You can fool these lions. And it only takes one "wacky" trick to do it... It's as simple as painting eyes on your butt.

That's right – it's time to 'paint eyes on your butt' today...

My colleague and boss, Dr. Steve Sjuggerud, knows many investors think that sitting in cash is a "safe bet." But in reality, when the market is on the move, it can lose you money.

Today, that's truer than ever...

The Fed has stacked the deck against cash savers. Or as I like to say it, they've unleashed the lions. But thankfully, protecting yourself is as simple as painting eyes on your backside.

Right now, you can use a simple technique to paint eyes on your portfolio today. It's an ideal way to make sure your savings doesn't get eaten by lions in the months ahead...

Buy real estate.

Really, it's that simple. And in truth, nearly any hard asset will work... gold, silver, and more. But there's something special about real estate that you need to know...

You see, the Fed's actions are great for the real estate sector...

Let's start by looking at those low interest rates...

Steve went over this idea in detail in his May issue of True Wealth. (If you're a subscriber, you can read the full issue right here.) We'll cover the basics today...

The key takeaway is, low rates mean you get more for your money in real estate. A lot more. The numbers are crazy...

Imagine you plan on buying a house. You can afford a $2,100 monthly payment.

With interest rates at 3%, you can afford a $500,000 house at that monthly payment. Not bad! But as interest rates go up, your buying power is reduced...

If you take it to the extreme, it's easy to see why rates are so important. In 1983, interest rates hit a whopping 13.24%. Suddenly, a $500,000 house would cost you $5,625 a month.

Yikes!

In fact, with interest rates that high, your buying power would be more than cut in half. To stay near your monthly payment target, you'd need to buy a house for roughly $187,000.

But as you know... that's not the world we live in today.

The Fed is going to keep rates near zero for as long as it takes to get the economy moving. And that means your buying power is at a historic extreme.

Now, some folks might look at the massive move in tech stocks and think I'm crazy for pitching real estate...

Don't get me wrong... Tech stocks are great. And they're seriously on the move right now. I urge you to make an appropriate allocation to them with your overall portfolio.

Once you've done that, you need to find a place to grow the base of your assets. And that doesn't mean it has to be boring... That's why we recently created True Wealth Real Estate.

The purpose of our newest publication is to help regular investors, like you, put their money to work in exciting ways through the real estate sector. Steve and our team designed True Wealth Real Estate to be the real estate investing guide that folks actually want.

There are no high-priced seminars... or any other kind of convoluted process needed to get the details. We simply write up the most compelling and actionable investment opportunities that we identify in the real estate sector... and deliver them to your e-mail inboxes once a month.

The real estate deals we write about are only open to limited amounts of investment. And the allocation on these deals goes incredibly fast. You don't want to miss out on the one that's the perfect fit for your portfolio.

In this month's True Wealth Real Estate issue, we've revealed an opportunity that taps into the very core of modern consumerism. And as crazy as it sounds, COVID-19 has been a massive tailwind in this sector.

So if buying a second house or a rental property seems too complicated... don't worry. There are still incredible real estate opportunities out there. And with a little know-how, you can put your cash to work in them.

Beyond that, we've also assembled a portfolio of stock recommendations that are specific to the real estate space. These recommendations are companies and funds that we've identified as best-positioned to take advantage of this long-term trend.

Together, the investment opportunities and stock recommendations make True Wealth Real Estate one of the best ways to grow your wealth while also defending against the Fed's lions. If you're not already a True Wealth Real Estate subscriber, I encourage you to learn more about how you can still become a "charter member" for our newest service right here.

Simply put, the government is going all in to try to keep the economy afloat. That makes sitting on cash one of the riskiest things you could be doing with your money today.

In response, we've designed a product specifically to exploit this environment. And it involves a simple technique you can use today to paint eyes on your portfolios...

Buy real estate.

This solution might seem simple, but it'll prevent you from getting eaten by the Fed's lions in the months ahead. And along the way, it will help you grow and preserve your wealth.

New 52-week highs (as of 8/24/20): Alibaba (BABA), Booz Allen Hamilton (BAH), Alphabet (GOOGL), iShares U.S. Home Construction Fund (ITB), JD.com (JD), NetEase (NTES), Procter & Gamble (PG), Rollins (ROL), ProShares Ultra Technology Fund (ROM), Scotts Miracle-Gro (SMG), Vanguard S&P 500 Fund (VOO), and Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP).

In today's mailbag, feedback on yesterday's Digest about the new realities of work. What's on your mind today? Tell us at feedback@stansberryresearch.com.

"I retired a bit over five years ago at age 62. So I am really glad I'm not having to deal with that aspect of this pandemic (more like 'plan'demic IMHO). I have been striving to keep my life as normal as possible, despite all the CRAP going on around me!

"I have been going kayaking once a week since mid May, doing some hiking, and trying my best to eat a healthy diet and work out 4-5 days a week for an hour. I'm doing my best to keep my immune system healthy so if COVID 19 does find a home in my body I won't even know it (hopefully symptom free)!

"I was talking with two friends after Church recently. Both of them sold businesses they had built and owned for many years and retired about two years ago. They both told me they are very happy they sold their businesses when they did so they are not having to deal with all the mandates, restrictions, shutdowns, and risk of possible bankruptcy, etc.

"So from the perspective of three retirees, it is a good time to be retired!" – Paid-up subscriber Don K.

Good investing,

Vic Lederman
Jacksonville, Florida
August 25, 2020