Thu, Apr 10, 2014|Sean Goldsmith

Dare to be great...

Dare to be great... Lessons from an investment legend... How to export energy... China signs a major deal for U.S. gas... Putin has 'no alternative' but to halt gas shipments to Europe... How to become wealthy in seven years...

One of the world's best investors just explained how to outperform the market and your peers.

Howard Marks, chairman of asset-management firm Oaktree Capital, released his latest letter to investors. Oaktree manages around $80 billion. Marks started the fund to invest in distressed debt. He's a born contrarian obsessed with avoiding risk.

And he's wary of today's markets (as we outlined in the September 10 Digest), advising investors to "move forward, but with caution." In Marks' view, when investors stop worrying about risk – like in 2007 – look out below. Or, in the oft-quoted words of Warren Buffett, "be fearful when others are greedy, and greedy when others are fearful."

According to Marks' latest letter, you can achieve superior results in investing by being a contrarian. Invest in assets everyone else is ignoring or doesn't have the guts to buy... but only in situations where your potential gains are much larger than your downside risk. From Marks' letter...

The goal in investing is asymmetry: to expose yourself to return in a way that doesn't expose you commensurately to risk, and to participate in gains when the market rises to a greater extent than you participate in losses when it falls. But that doesn't mean the avoidance of all losses is a reasonable objective. Take another look at the goal of asymmetry set out above: it talks about achieving a preponderance of gain over loss, not avoiding all chance of loss.

Why should superior profits be available to the novice, the untutored, or the lazy? Why should people be able to make above-average returns without hard work and above-average skill, and without knowing something most others don't know? And yet many individuals invest based on the belief that they can. (If they didn't believe that, wouldn't they index, or, at a minimum, turn over the task to others?)

To repeat... Just holding your nose and buying unpopular assets isn't enough. You must assess the risk of entering the position...

No, the solution can't lie in rigid tactics, publicly available formulas, or loss-eliminating rules... or on complete risk avoidance. Superior investment results can only stem from a better-than-average ability to figure out when risk-taking will lead to gain and when it will end in loss. There is no alternative.

Marks' letters are always a great read. You can see his latest for free right here.

We told you about Stansberry's Investment Advisory recommendation Targa Resources in the April 1 Digest. The company is a "picks and shovels" way to profit from the ongoing U.S. shale boom. It takes the leftovers from oil and gas production and sells it as natural gas liquids (or NGLs). Propane and butane are the crown jewels of the NGL family.

The U.S. heavily regulates energy exports. But there are no regulations restricting NGL exportation. So Targa was a backdoor way to benefit from foreigners' need for cheaper gas.

Porter and his analysts explained the growing trend in the December 2012 issue...

Reuters recently released some interesting NGL export statistics. In 2006, the U.S. exported 68,000 barrels per day (bpd) of NGL. By 2011, NGL exports had increased to 249,000 bpd. Just seven months later, NGL exports briefly spiked all the way up to 321,000 bpd. About 200,000 bpd of this total was propane – the crown jewel of the NGL family.

Oil and Gas Investor, the industry news website, estimates the sustained level for propane export capacity is only around 175,000 bpd. Right now, demand for U.S. propane is so great, our country's NGL export infrastructure is literally running over capacity.

These facts mean two things to us... First, they mean that U.S. propane export prices are likely to remain robust because demand is clearly exceeding supply capacity. And second, somewhere out there, someone is surely building huge new gathering, processing, and export facilities for propane.

And the demand is still growing... China's biggest refiner, Sinopec, just announced a deal with U.S. energy company Phillips 66 to provide China with liquefied petroleum gas (LPG) – further refined propane and butane.

China is the world's largest consumer of LPG. It first purchased 3,530 bpd of U.S. LPG last year, according to Chinese customs data. And those deals were mostly done by small, private firms.

But the deal between industry giants Sinopec and Phillips 66 is a game-changer. They expect to start delivery in 2016 of around 34,000 bpd (a market value of about $850 million). Sinopec reportedly wants the LPGs to make petrochemicals.

"The U.S. shale boom could lead to a fresh way of developing China's petrochemical sector," said Mao Jiaxiang, deputy head of China Petrochemical Consulting, Sinopec's research division.

So far, the Middle East has cornered the Chinese LPG market, with 80% of 2013 imports. But the low cost of U.S. gas could disrupt the Middle East's dominance.

And China's demand is only growing... Energy consulting firm FACTS Global Energy estimates U.S. LPG exports could triple from last year to 2020 to around 635,000-795,000 bpd. China has already lined up 100,000 bpd of U.S. exports starting around 2016. But FACTS says China's total LPG imports could hit 500,000 bpd by 2020.

In yesterday's Digest, S&A Global Contrarian editor Kim Iskyan noted the likely escalation of the Ukraine crisis, which he said could lead to Russia turning off the country's gas supply...

So it's looking increasingly likely that Russia might turn off the gas taps in coming weeks. Ukraine can't pay. Funding from the International Monetary Fund won't be rerouted to Russia to pay Kiev's energy bill.

Today, Russian President Vladimir Putin said Europe was leaving Russia "no alternative" but to halt gas supplies to Ukraine and Europe. In a letter to European leaders, Putin said energy giant Gazprom had the contractual right to force Ukraine to pre-pay for gas contracts... "and in the event of further violation of the conditions of payment, will completely or partially cease gas deliveries." He noted Russia's Ukraine gas subsidy was worth $35.4 billion over the past four years. This is the strongest sign yet that Russia may turn off the taps.

Every week, the mainstream media publishes another article on how much money you should have already saved for retirement...

According to JPMorgan Asset Management's recently released 2014 "Guide to Retirement," anyone who is 50 years old and making $100,000 a year should have saved $390,000.

By the time you hit 65, JPMorgan says you should have $890,000...

But the truth is, there are 16,000 Baby Boomers reaching retirement age every day who don't have anywhere near that kind of cash in their retirement accounts.

A new study by the nonprofit research group Employee Benefit Research Institute shows that one in three workers has less than $1,000 in savings. Sixty percent report they or their spouse have less than $25,000 when they reach retirement.

And according to Wells Fargo, right now, many people are more worried about paying day-to-day bills than planning for retirement. We want to make sure you're not one of those people...

Cash-strapped folks nearing retirement age think the way to close the gap is throwing Hail Marys – like buying "hot" growth stocks in hopes of huge gains. But it rarely works. The path to wealth, at any age, is much more deliberate.

Porter's mentor and friend of S&A Mark Ford noticed these disturbing habits from surveying readers at the Palm Beach Letter.

Mark has started and owned dozens of businesses. He has written more than a dozen books, some of which became New York Times bestsellers. He has invested in stocks, bonds, and real estate. Today, he told DailyWealth readers that he generated $6 million in passive income in the past year from these investments. (You can read that essay here.)

Mark's study showed many Palm Beach Letter subscribers weren't wealthy – at least, not as wealthy as they wanted to be – and the subprime crisis had devastated many of his subscribers.

But you're not earning anything in your bank account today... Bond yields are at record lows. Folks are forced to take on more risk, fueling the stock market to new all-time highs.

That's why Mark started the Palm Beach Wealth Builders Club. Mark's goal for the club is simple: To give its members all the tools they need to become financially independent in less than seven years. And by tools, he means not only principles and guidelines, but also step-by-step directions. According to Mark...

The idea was to go beyond what I was doing with my Creating Wealth column. In those essays, as you know, I write about the lessons I've learned and the insights I've gained during the 30-odd years I spent accumulating wealth.

I hold nothing back in these essays. I tell you everything I know. But I can't do more than explain the principles and provide general guidelines. I can't take you by the hand and walk you toward wealth in these short essays.

The Palm Beach Wealth Builders Club has that handholding as its goal. And I know we've succeeded with that goal. I have been writing about business and wealth development for about 13 years now. I've written 14 books, including several best sellers, and more than 3,000 essays.

I've also created or co-created more than a dozen specific programs for acquiring wealth. But I've never been involved in anything as big and exciting as the Palm Beach Wealth Builders Club.

In the March 31 Digest, I mentioned a few of the topics Mark covers in the Wealth Builders Club. He shows you how to build multiple income streams... "There is no faster or surer way to become wealthy than by creating extra income and allocating it toward one's investments," he says.

Mark explains his methods for owning rental real estate, which has contributed a large portion of his wealth. But it's not just about starting businesses... Mark also explains how you can "retire next year"... He tells you about some of the most beautiful and inexpensive places in the world where you can retire (with a gorgeous home on the water, a driver, and a private chef). He also shows you, step by step, how to build a million-dollar business from the ground up... starting with just $25,000.

These are just some of the ideas Mark and his team cover in the Wealth Builders Club. And they're still creating more content to add even more value for Club members and to help readers become financially independent in seven years or less.

If you're interested in learning Mark's methods for building great wealth, you need to act quickly... Until midnight Eastern time tonight, the Palm Beach Letter is holding its first membership drive of 2014. And as part of the drive, it's offering a $750 savings on a one-time membership fee. For full details, click here to see Mark's invitation before the offer expires.

Great Minds Wanted, Wicked Pens Adored

Stansberry & Associates Investment Research is hiring an assistant editor for the S&A Digest and S&A Digest Premium. We're looking for someone with an eye for quality content and a passion for finance.

This is an opportunity to communicate daily with one of the largest lists of financial readers in the world. And you'll work closely with the Digest editors – Porter Stansberry and Sean Goldsmith.

The ideal candidate is a voracious consumer of financial news and analysis, has a keen mind, lives and breathes the world's markets, and writes great stories. Formal experience is preferred, but may not matter, depending on the candidate.

If you've ever wanted to make a living reading, writing, and thinking, please send us:

• A writing sample. Tell us about an investment opportunity. We're interested in the fundamentals of your best idea, not something that's based solely on charts. Macro ideas are welcome.

• A basic resume. Tell us what you've done before. We admire people who aren't afraid of hard work or odd jobs.

• Your income requirements. While we prefer candidates who are willing to work for free, we expect to pay handsomely for qualified employees.

No other information is necessary. Send via e-mail – with the subject line "Digest Editor" – to: stansberryresume@gmail.com.

New 52-week highs (as of 4/9/14): Anheuser-Busch InBev (BUD), Dorchester Minerals (DMLP), Enterprise Products Partners (EPD), Energy Transfer Equity (ETE), SPDR Euro Stoxx 50 Fund (FEZ), Intel (INTC), Johnson & Johnson (JNJ), Eli Lilly (LLY), Superior Energy Services (SPN), ProShares Ultra Utilities Fund (UPW), and U.S. Commodity Index Fund (USCI).

One reader made money on both recommendations we discussed in yesterday's Digest. Kudos to you! Send your thoughts to feedback@stansberryresearch.com.

"When I saw the title for today's S&A Digest, 'Phase 1 take over... triple digit gains in 10 months...' I knew instantly it was VOCS. Because of your generous open house offer back in November – VOCS, along with others were stocks I added to my portfolio or what I call a 'watch list.' I liked the case presented by Frank Curzio and agreed VOCS was a golden ticket. 5 months later I'm 116%, at which point I sold half of my position. I liked Porter's initial recommendation on APC but added APC to my watch list. Long story short there- I picked up APC after the stock was throttled following the judge's ruling, now I'm up 21% on that position.

"I write to you- deeply appreciative for all the S&A team does. You provide me information I wouldn't otherwise have access to, BUT you present your work as such which allows me the opportunity to learn and make my own decisions. Which will stay with me forever. Thank you." – Paid-up subscriber Kevin McCormick

Regards,

Sean Goldsmith

New York, New York

April 10, 2014

How to raise rents 10% in six months...

This week, we've featured insight from George Huang, a former S&A colleague who now works as a founding partner of a private-equity firm focused on single-family housing.

In today's Digest Premium, George discusses why investment firms are aggressive in raising their rental prices...

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.