The oil stocks that are thriving today... Why it's all about the spread... Gold is back in the black for the year... Billionaire Marks releases his latest must-read memo... How to think about liquidity... A billionaire's playbook... Rationing hand soap and Gatorade... 67 straight winners... Don't miss Doc Eifrig's live training session tonight...
One type of oil company is thriving despite the plunge in crude oil prices...
These are the companies that take crude oil and turn it into the useful stuff we need – like diesel fuel, gasoline, lubricants, jet fuel, and heating oil.
Shares of companies like Tesoro, Alon, Phillips 66, and Valero are ripping higher right now, in part because of cheap domestic oil prices versus oil prices abroad. More so than any other type of U.S. oil company, refiners can capitalize on the distorted oil market. Here's why...
Due to our outdated laws against exporting crude oil, we can't ship out unprocessed oil. That's causing the U.S. supply to increase, which is pushing domestic prices down. That means our U.S. benchmark crude oil price – West Texas Intermediate (or WTI) – fell below the price of the major world benchmark (Brent crude) by a large margin.
The image below tells the whole story...
The blue line in the graphic above shows WTI crude against Brent crude. Whenever the blue line dips below the black line, U.S. refiners can buy oil cheaper than their European competitors can. That setup has been in place since around 2011.
That's a huge advantage for U.S. refiners. These companies can buy cheap oil and export refined products to the rest of the world.
Briefly – from September to January – the gap between the two oil prices disappeared. It seemed like U.S. refiners would be back to a level playing field. But since January, the gap has returned.
Today, the gap sits at more than $6 per barrel. U.S. refiners can buy oil for 13% less than their European counterparts. With refining profits often measured in single digits per barrel, a 13% head start is huge.
Stansberry Resource Report subscribers have been profiting from this trend since October. They're up 43% on the major U.S. refiner that editor Matt Badiali recommended.
And these refiners can continue to make money even if oil prices rise... It's only important that WTI continues to trade at a discount to Brent. Even when oil was $100 barrel, U.S. refiners were making money because Brent was trading at $115 a barrel. Meanwhile, our favorite "crisis hedge" has had a strong week...
Regular Digest readers know we've written a lot about gold this year. We're bullish on the precious metal, particularly with countries around the world in a race to debase their currencies.
Our argument is simple: You can collect zero-percent interest in the bank (or pay banks for the privilege of holding your money)... or you can hold gold, which also yields nothing... but protects you from the reckless money-printing we're seeing around the world today.
January marked gold's strongest month since July 2013. And last month, we wrote that Stansberry Short Report editor Jeff Clark told his subscribers about "the first long-term buy signal for the precious metal since 2009."
And while gold and the U.S. dollar typically move in opposite directions, that trend has reversed. As Editor in Chief Brian Hunt explained to a reader recently…
|
With its latest move higher – up 4% in the last week alone – gold is back in the black on the year. And as Steve Sjuggerud told True Wealth Systems readers last month...
|
All of the signs point to physical gold being a good place to store some of your money today. Don't think of it as an investment. Think of it as real money.
If you're in the position to take us up on our advice, we recommend contacting Van Simmons at David Hall Rare Coins and Rich Checkan at Asset Strategies International. As always, we receive no compensation for recommending their services. They simply have a long track record of taking care of our subscribers.
Elsewhere in the market, Oaktree Capital co-chairman and billionaire investor Howard Marks just released his latest memo. Marks is one of the best investors on the planet. We read his writing religiously. Extreme Value editor Dan Ferris says Marks' book The Most Important Thing is one of the best books written on investing. And his Oaktree memos are must-reads.
In his previous memo, Marks discussed the current risk profile in the markets... and warned investors that it was time to pay more attention to risk. (We discussed it here.)
In his newest memo, Marks tackled the topic of liquidity. Most people define liquidity as how easy it is to sell an asset. Marks says, "the key criterion isn't 'can you sell it?' It's 'can you sell it at a price equal or close to the last price?'" He warned investors that while you think an investment may be liquid today, the situation can quickly change...
|
As the current bull market ages, keep this advice in mind. And make sure to read the full memo.
Yesterday, we mentioned the Heinz/Kraft deal involving private-equity firm 3G Capital and investing legend Warren Buffett. We also mentioned 3G is famous for its operating prowess. (If you're interested, 3G's operational bible is a book written by Bob Fifer titled Double Your Profits: In 6 Months or Less.) The Wall Street Journal also published an article discussing a major aspect of 3G's management process – zero-based budgeting. This requires managers to plan each year's budget as if there was no money the previous year... in other words, starting from zero. The typical method involves adjusting prior-year spending. That makes managers justify expenses each year.
When 3G bought Heinz – which had already been cutting costs – it reduced headcount by another 1,480 employees (or 4% of its workforce), shuttered several factories, and grounded corporate jets.
Likewise, when 3G took control of booze giant Anheuser-Busch in 2008 (after being a major shareholder in the acquiring brewer, InBev), it grounded corporate jets, made managers fly coach, and cut corporate freebies like tickets to sporting events.
But the cost-cutting goes much further. From the Journal...
|
As we said yesterday, Kraft is in for some shakeups. And we expect the bottom line to benefit.
Dr. David "Doc" Eifrig's streak just hit 67 straight winners. In total, Doc has recorded 208 out of 210 closed positions for a win since we launched Retirement Trader in April 2010. It's the greatest track record in the history of our business. That's why Doc has received an "A+" or better every year in Porter's annual Report Card.
Not only is Doc's winning percentage astoundingly high... he's also consistently making his subscribers large gains. His average return on closed positions is 9.3% (or 49.7% annualized). His strategy is to make readers a fortune via hitting lots of singles and doubles. He isn't swinging for the fences.
And this week, Doc has been releasing free videos to our readers to share some of the strategies and secrets behind Retirement Trader. We released the first video Monday, followed by videos on Tuesday and Wednesday.
But tonight is the grand finale. At 8 p.m. Eastern time, Doc will host a live online training session.
As we've noted this week, Doc is advising his subscribers to "buy the dips" when the market sells off. And the overall market is down around 2.5% since last week. I spoke with Doc this morning. He said he would tell everyone tonight whether it's time to put money to work or wait for a larger selloff.
In general, Doc is bullish today. He thinks the market will continue marching higher, potentially becoming the longest bull market in history. So if you find a good entry point to sell put options, you could pocket thousands of dollars in the next week alone.
If you've never watched one of Doc's live sessions, we encourage you to sign up. In addition to sharing his thoughts on the market today, Doc will explain the strategies and systems he has used to make readers a fortune in Retirement Trader.
Plus, if you show up for the demonstration at 8 p.m. and watch it until the end, Doc will send you a valuable "freebie"... your own personal copy of the Black Book of Retirement Trader Secrets. In it, Doc shares his favorite tools for helping double (or triple) the gains you're making in the market. You can sign up to watch the free session by clicking right here.
New 52-week highs (as of 3/25/15): Allianz (AZSEY) and Valero Energy (VLO). In the mailbag, a question on gold and praise for the Stansberry Alliance. Do you have a question you've been dying to ask Porter? Send them to feedback@stansberryresearch.com. "With the impending rate increase in US, shouldn't we short gold and other precious metals instead? Why are all the calls in the past few months from Stansberry staff to pile into gold, silver, etc?" – Paid-up subscriber K.S.
Goldsmith comment: We view gold as cash. As we explained in today's Digest, we think right now is a good entry point to buy physical gold as disaster insurance. Nobody can accurately predict a bottom in gold prices, and due to our long horizon, we aren't losing sleep over a $20- or $30-per-ounce move when building our gold stashes.
Whether or not the Fed raises interest rates, the damage has already been done. Much like every other central bank in the world, the Fed has debased our currency through quantitative easing, even though the dollar remains the world's reserve currency. Regardless, we believe gold will be much higher in the future than it is today.
"I'm a retired orthopedic surgeon in my late 70's and a paid up Alliance member from nearly its onset. For years, in fact, from age 16 I was investing in the stock market. Began with a gift of $100 from a friend of the family. Long story short I have made small fortunes and lost small fortunes in the intervening sixty years. Performance could be blamed on the fact that I was busy with my profession and trying to do two things at the same time or rather three; raised seven children on a ranch. Obviously investing suffered because I was unwilling to give my patients anything less than my full attention. My wife and partner is credited with raising the children and running the ranch.
"Since Alliance, my investments have been consistently profitable especially with Doc Eifrig's tutelage. Even though experienced in futures and options even before Alliance I fully appreciate what Doc has taught me and have benefited greatly. I am totally impressed with his dedication and brilliance and read every word. Let me also admit that I read all of the Alliance letters and appreciate them all... but Doc's are my favorite.
"How well have I done? I can't give a number total over the years but I am extremely pleased. Between 'Alliance' and Elliott Wave International, I've got the right tools for guiding me to the 'finish line' and leaving the family financially secure. I have to admit I enjoy the game and especially since finding Alliance with its fine management and excellent writers.' – Paid-up subscriber Karl Singer
Regards,
Sean Goldsmith
Baltimore, Maryland
March 26, 2015
