All hail Yellen... 'One of the most dovish speeches I have ever read'... Record margin debt... Negative interest rates on the horizon?... Gold wins the first quarter... Platinum spikes on South African strikes... Revenue is up in Macau... New highs for Devon and Targa...
The S&P 500 hit a new all-time high today...
And that's despite lackluster economic data. We can thank Federal Reserve Chair Janet Yellen and her dovish comments for that. Once again, we see that the Fed's leader has an itchy trigger finger, which can overpower any negative thoughts market participants may have... and bring in investors sitting on the sidelines.
Today's Institute for Supply Management Manufacturing report – which measures employment, new orders, and other economic factors – came in at 53.7. It was below expectations of 54, but still the second straight monthly increase. A reading above 50 is considered bullish.
Markit's U.S. Manufacturing Purchasing Managers Index (PMI) – a measure of economic health in manufacturing – fell from 57.1 in February to 55.5 in March. And HSBC's China manufacturing PMI was down from 48.5 in February to 48 in March, its lowest reading since last July.
David Zervos, Chief Market Strategist at investment bank Jefferies, gave our favorite review of Yellen's performance. As you can see below, her Chicago speech got two thumbs up...
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In other words, the Fed will continue to pump. Meanwhile, the market is levered and ready to ride the wave...
New York Stock Exchange margin debt (or money borrowed to buy stocks) hit a record $465.7 billion in February, up from $451.2 billion in January and $366.1 billion from a year ago.
Investors' willingness to borrow money is a function of record-low interest rates. You're not making anything sitting in cash, so you may as well buy stocks...
In today's DailyWealth, Steve Sjuggerud said we could see negative interest rates – meaning you would pay the bank to hold your deposits. It sounds crazy, but it happens. Denmark lowered its interest rates below zero in 2012. And both Switzerland and the European Central Bank recently discussed moving interest rates into negatives.
So what happens when rates go negative? More borrowing and higher asset prices. As Steve wrote...
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Gold was the best-performing asset of the first quarter. The precious metal's 7.2% rise outpaced stocks, bonds, crude oil, and silver.
Gold has long been a mainstay in our portfolio. We also think platinum is a great way to diversify out of the dollar.
We started telling you about the opportunity in platinum in late 2013 when it was trading around $1,330 an ounce.
Platinum usually trades at a substantial premium to gold. It's about 20 times rarer than gold (annual production is around 125-175 tons a year). And around 80% of the total production is used in automobiles (namely catalytic converters).
But what we really like about platinum is that it's a way to bet on political instability. The majority of production is mined in South Africa, Zimbabwe, and Russia. South Africa is currently experiencing mining strikes. Russia, as you may have heard, is in the midst of a tussle with Ukraine and the rest of the world.
Platinum prices rose to more than $1,430 an ounce today after Impala Platinum, one of South Africa's major producers, said it may begin buying the metal on the open market to meet deliveries. The mining strikes are killing production.
General Motors recalled another 1.5 million cars yesterday (in addition to the recall we wrote about in yesterday's Digest). Don't worry, the cars involved in the new recall don't turn off sporadically... They just lose power steering.
"Steering control can be maintained because the vehicle will revert to manual steering, but greater driver effort would be required at low vehicle speeds, which could increase the risk of a crash," GM said in a statement.
The latest round of recalls bring GM's total recalled automobile tally to 6.3 million for the year... And the company said it expects to take a $750 million hit due to the recalls.
When people lose faith in their money, they gamble. It turns out, that's true overseas, too... Gambling stocks soared today on news that Macau's first-quarter gross gaming revenue increased 19.8% from a year ago – versus expectations of 15%-17% growth for all of 2014. Casino operators MGM Resorts, Las Vegas Sands, and Wynn Resorts were up 2.5% or more on the day.
We wrote it, did you buy it? From the October 2012 issue of Stansberry's Investment Advisory...
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In that issue, Porter recommended shares of energy giant Devon Energy as a way to profit from America's shale boom – specifically, Texas' Cline Shale.
The Cline is 9,800 square miles. Porter and his team estimate the Cline has more than 30 billion barrels of recoverable oil. That's nearly 50% more than Texas' Eagle Ford Shale and North Dakota's Bakken Shale.
And operating costs in the Cline are about 50% cheaper than in the Bakken, making it the cheapest shale for oil production in the U.S.
Today, shares of Devon hit a new high. Porter's subscribers are up 16% on the recommendation.
Porter also recommended Targa Resources as a "picks and shovels" way to profit from the U.S. shale boom. The company doesn't actually produce oil... It simply takes the dregs from oil and gas producers and sells it. As Porter wrote in the December 2012 issue...
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There were two companies that fit the bill, but Targa was the best opportunity for investors. The firm was expanding and was backed by prestigious private-equity firm Warbug Pincus (which gave the firm access to capital). From the issue...
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Yesterday, Targa announced "preliminary adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization)" of $210 million – 60% higher than it was a year ago. The company also announced it believed export activity in 2014 would be higher than it thought.
Targa announced the construction of a $115 million "splitters" in Texas – a facility that splits condensate into its various parts – and it approved an additional processing plant to support producers in the Bakken and Three Forks Shale plays.
Shares rose 4% on the news... Stansberry's Investment Advisory subscribers are up 110% on the recommendation.
New 52-week highs (as of 3/31/14): Alcoa (AA), Becton-Dickinson (BDX), Chicago Bridge & Iron (CBI), Comstock Resources (CRK), Dorchester Minerals (DMLP), Devon Energy (DVN), Enterprise Products Partners (EPD), SPDR Euro Stoxx 50 Fund (FEZ), Corning (GLW), Johnson & Johnson (JNJ), Medtronic (MDT), Microsoft (MSFT), Penn Virginia (PVA), Superior Energy Services (SPN), Constellation Brands (STZ), Targa Resources (TRGP), ProShares Ultra Utilities Fund (UPW), and Utilities Select Sector SPDR Fund (XLU).
Two stories of big gains in today's mailbag... Send yours to feedback@stansberryresearch.com.
"[Never get rich buying stocks?] This is rubbish. I made my first million by buying Ultra Petroleum at $2.30 and selling 20,000 shares all the way up to $93 buying stable utilities. Never looked back." – Paid-up subscriber Mike Doel
"Up about 57-63% on my total Scottrade, mostly True Wealth Systems positions; BIB has been disappointing last few days. Went from about 250% to 177% gain as of Fri. For the most part, I was in a losing position until I subscribed to TWS/Stansberry products. Only one other very conservative newsletter has been good to me; stayed with CBST when Skousen told us to get out; made thousands on CBST, both on stock ($22 a share when I bought it – now about $77) and put options. Thank you thank you thank you.
"FYI, when I talked to my stock broker (Scottrade) I had a question and he looked at my account; told him how well I was doing with positions; gave full credit to Stansberry/Sjuggerud et al, and told him I was doing well because if you can read (and follow!) your!!! Newsletters, you get great results from Stansberry." – Paid-up subscriber C Locey
Regards,
Sean Goldsmith
New York, New York
April 1, 2014
How Rick Rule will profit from a water shortage...
Resource-investing legend Rick Rule is a noted bull on water stocks and water-related investments.
In today's Digest Premium, Rick shares some of the companies he owns that should profit from the coming water shortage he is predicting...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
How Rick Rule will profit from a water shortage...
Editor's note: When folks talk about investing in commodities, they're usually thinking about oil, agriculture, and precious metals. But there's another important commodity people take for granted: water.
In today's Digest Premium, we excerpt from an interview financial publication The Gold Report published with resource-investing legend Rick Rule. Rick is the Chairman of Sprott U.S. Holdings. He has made a fortune for himself and his clients by navigating the natural-resource cycles. And he shares some of his reasoning for being bullish on water as an investment below. (In the full interview, Rick also shares his views on junior gold-mining stocks. You can read the full interview here.)
For your readers in the West and the Southwest, water will be a real important topic of discussion. We've had a situation in the West and the Southwest where water has been priced politically, which means it has been delivered as a right irrespective of its supply and the cost of distributing it. The consequence of that has been gross misdistribution, which has worked as long as nature has cooperated. But nature this year has ceased to cooperate. We're going to see tremendous distortions in water pricing across the West and the Southwest, and that will have spinoffs in areas like food cost. The very low cost of food that Americans have enjoyed in the last 40 years has had to do with the subsidies afforded to farmers for water supply.
Here in California, there are now several water districts whose allocation of water from the state and federal government is zero. Growing, as an example, almonds or pistachios or plums – pick a crop, really – in the summer in California with zero water allocation is very difficult. This is going to be a subject that is going to play very large among investors. It's something that Sprott has been involved in through my own efforts for two decades. It's something that we're trying to get a lot more involved with in the next two or three years.
California had a pretty good drought in 1977 that caused us to do things like flush our toilets on alternate days and not wash our cars. It had much more profound economic consequences than that. The interesting thing for Californians to note is that since 1977, two important things have changed: There are 12 million more of us with our straws in the sponge, but the sponge hasn't increased at all. At the same time, the safety valve Californians had from the Colorado River is gone. The consequences will be very dramatic.
Since 1977, people have moved to places like Phoenix, Tucson, Salt Lake City, and Las Vegas. We don't have the ability to overdraw our allotment anymore. The way that we got out of the predicament in 1977 is not a way out this time. It's going to have profound consequences. I don't know what they are, but it's going to have profound consequences...
These are companies I own as opposed to companies that I recommend to your readership. I own J.G. Boswell Co. (BWEL), which is the largest of the California corporate farmers; Limoneira Co. (LMNR), which is a grower and developer in Ventura, Calif.; and PICO Holdings Inc. (PICO), which is the Physicians Insurance Company of Ohio, a water-rights owner in Nevada and Arizona.
– Rick Rule
How Rick Rule will profit from a water shortage...
Resource-investing legend Rick Rule is a noted bull on water stocks and water-related investments.
In today's Digest Premium, Rick shares some of the companies he owns that should profit from the coming water shortage he is predicting...
To continue reading, scroll down or click here.
Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)
As of 03/31/2014
| Stock | Symbol | Buy Date | Return | Publication | Editor |
| Prestige Brands | PBH | 05/13/09 | 337.4% | Extreme Value | Ferris |
| Constellation Brands | STZ | 06/02/11 | 300.0% | Extreme Value | Ferris |
| Enterprise | EPD | 10/15/08 | 275.6% | The 12% Letter | Dyson |
| Ultra Health Care | RXL | 03/17/11 | 238.3% | True Wealth | Sjuggerud |
| Fluidigm | FLDM | 08/04/11 | 201.0% | Phase 1 | Curzio |
| Ultra Health Care | RXL | 01/04/12 | 195.5% | True Wealth Sys | Sjuggerud |
| Altria | MO | 11/19/08 | 179.6% | The 12% Letter | Dyson |
| Hershey | HSY | 12/06/07 | 179.4% | SIA | Stansberry |
| McDonald's | MCD | 11/28/06 | 177.3% | The 12% Letter | Dyson |
| Ultra Nasdaq Biotech | BIB | 12/05/12 | 171.4% | True Wealth Sys | Sjuggerud |
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals |
| 2 | Extreme Value | Ferris |
| 3 | The 12% Letter | Dyson |
| 1 | True Wealth | Sjuggerud |
| 1 | Phase 1 | Curzio |
| 2 | True Wealth Sys | Sjuggerud |
| 1 | SIA | Stansberry |
Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)
| Investment | Sym | Holding Period | Gain | Publication | Editor |
| Seabridge Gold | SA | 4 years, 73 days | 995% | Sjug Conf. | Sjuggerud |
| Rite Aid 8.5% bond | 4 years, 356 days | 773% | True Income | Williams | |
| ATAC Resources | ATC | 313 days | 597% | Phase 1 | Badiali |
| JDS Uniphase | JDSU | 1 year, 266 days | 592% | SIA | Stansberry |
| Silver Wheaton | SLW | 1 year, 185 days | 345% | Resource Rpt | Badiali |
| Jinshan Gold Mines | JIN | 290 days | 339% | Resource Rpt | Badiali |
| Medis Tech | MDTL | 4 years, 110 days | 333% | Diligence | Ferris |
| ID Biomedical | IDBE | 5 years, 38 days | 331% | Diligence | Lashmet |
| Northern Dynasty | NAK | 1 year, 343 days | 322% | Resource Rpt | Badiali |
| Texas Instr. | TXN | 270 days | 301% | SIA | Stansberry |