"We're now in the process of building one of the largest tops in stock market history. The result, I think, will be the most disastrous bear market since the '30s, and maybe worse," legendary market advisor Richard Russell wrote in his Dow Theory Letters this Monday.
Russell says we haven't exited the bear market that began in 2000... We've just experienced a series of stock, commodity, and real estate bubbles engineered by the Federal Reserve. Now, we're in the "dead zone," where the market will coax the bulls into buying until... crash. Russell believes the disintegration of fiat currencies will spark the plunge.
We're not as bearish as Russell... but we're sympathetic to the notion that the conventional "buy and hold" strategy that worked so well in the '90s isn't going to work in the coming decade. We're sure hundreds of thousands of investors who've seen their retirement portfolios go nowhere over the past decade are of the same mind... and are becoming even more worried as the market volatility has surged in the past several months.
If you're worried about "buy and hold," as we are, you should check out Jeff Clark's Advanced Income. It's times like this – with the volatility index soaring to extreme readings – that Jeff makes the most money with his trading strategies. We wouldn't be surprised at all to see a portfolio allocated to Jeff's positions safely return 20%-30% over the next 12 months.
In his latest issue, Jeff told readers his favorite oil indicator is currently flashing "buy." He saw the same situation set up in March last year. He recommended three trades. They returned 25%, 27%, and 30% in just one week. This time, Jeff expects to make at least 16% by next month.
If you'd like to sample the ideas behind Advanced Income, risk-free, we invite you to watch this free video. It explains how investors can earn thousands of extra dollars of income a month. Also, we are currently offering Advanced Income at a large discount, but only until tomorrow at midnight.
The euro barely budged today after George Soros' super-bearish comments in Berlin. Soros, the billionaire hedge-fund manager famous for his $1 billion short on the British pound, believes Germany's plan to cut the budget deficit and resist wage increases is threatening the European Union and its "patently flawed" currency.
Soros goes on to say Germany's attempt to responsibly balance its budget could even put democracy at risk. While we completely disagree with Soros' viewpoint – eventually some nation in the world will have to become fiscally responsible – such a strong statement from a prominent financial figure usually moves the market. The euro only fell 0.1% against the dollar.
Why? The big money in the euro short is screaming for the exits. Two weeks ago, hedge funds were short $13.4 billion of euro. Last week, the position decreased to $7.7 billion. You may remember Steve Sjuggerud telling True Wealth readers to exit the euro trade this month for that very reason:
The sentiment surveys show investors recently hit a record level of pessimism about the euro. Also, traders have bet against the euro in larger numbers than ever before – by far. The thing is, all these bets will have to be unwound... and the way they are unwound is with a "buy" order for euros.
Long term, we think the euro is doomed (as is every fiat currency). But a short-term recovery wouldn't surprise us.
In his April 2010 issue of Stansberry's Investment Advisory, "All the Oil in Texas," Porter recommended two companies operating in Texas' Eagle Ford shale (which could potentially become the largest oilfield in the U.S.). Porter expects the area will produce "hundreds of billions worth of oil and gas over the next 30-40 years." And with the sudden explosion of interest for shale properties and the subsequent billions of dollars being invested in the area, production should expand quickly.
Just yesterday, India's Reliance Industries announced a $1.35 billion deal with Pioneer Natural Resources for a stake in Eagle Ford. Reliance, India's largest publicly traded company, will buy a 45% stake in Pioneer's field. And this isn't Reliance's first shale purchase... In April, Reliance paid Atlas Energy $1.7 billion for a stake in its Marcellus Shale field.
Also, more familiar names – like BP, Royal Dutch Shell, and ExxonMobil – have invested tens of billions of dollars in the area. They're buying stakes in any company (or in Exxon's case, the entire company) with promising shale assets. Shale currently accounts for 15% to 20% of U.S. gas production, but is expected to quadruple over the coming years. Just like we saw with the early exploration firms in Iraq (Matt Badiali's recommended play, Addax, was bought out), the early companies with good infrastructure in Eagle Ford will make investors a fortune. Porter expects at least one of his recommended companies will be bought out.
To find out more about Stansberry's Investment Advisory and learn about these Eagle Ford plays, click here.
New highs: Porter's short sale of Barnes & Noble (BKS).
The "Trekkies" come out of the woodwork... feedback@stansberryresearch.com.
"If you are going to quote from Star Trek, need to get it right. It was Captain Piccard (Patrick Stewart) who used that expression, 'make it so, number one,' not Kirk." – Anonymous Trekkie
"You have praised such conferences as the Ira Sohn conference and the Value Investing Congress. I was curious what other investing conferences would be on your wish list if you were able to attend any of them that you wanted?" – Paid-up subscriber Chris
Goldsmith comment: The only conference I have to add is the Grant's Interest Rate Observer conference, which takes place twice a year in New York. Jim Grant attracts all of the best hedge-fund managers because they all read his letter. I've seen David Einhorn, John Paulson, Seth Klarman, Jim Chanos, and many others speak at the conference. Grant's conference and the two you mentioned are the three I attend. Of course, you could save the $4,000 entrance fee and read a recap in The Digest after the fact.
"I agree with the critic of college professors. There are as many bozos, percentage wise, on the Harvard faculty as in the general population. Some have such fragile egos that when someone modestly comes up with some fact they do not know, look out below. I put together a list of 8 ways to respond to a question when you don't know the answer. I learned numbers 6, 7 and 8 at Harvard.
"6. Disregard the question.
"7. Attack the validity of the question.
"8. Launch a personal attack on the person asking the question." – Paid-up subscriber Ken
Goldsmith comment: We've hired two Harvard guys to work with us... We fired both of them.
Regards,
Sean Goldsmith
Baltimore, Maryland
June 23, 2010