The simple, easy way to protect yourself against the next financial disaster... Portfolio 'insurance'... Peace of mind 'if the crap hits the fan'... Your last chance to watch our Nashville event...
Editor's note: The stock market has suffered its biggest decline in two years. Chances of a global recession are rising. Experts are predicting rough economic times ahead. If you're concerned about these things, today's piece by Stansberry Research Editor in Chief Brian Hunt is a must-read. Below, Brian describes the simple, easy way to insure you and your family against financial disasters...
You wake up in the morning, turn on the news, and get a sick feeling in your stomach.
The stock market is crashing again. Another big Wall Street bank has failed. Your 401(k) has lost another 25%. It's bleeding value every week.
Your dream of early retirement is history. You've lost so much money in stocks that even a "regular" retirement is in jeopardy. If you live a long life, there's no way you'll have enough money.
This is the financial disaster scenario that terrifies a lot of investors. It's what kept people up at night during the 2008 credit crisis.
Could it happen again?
Could another crisis cause the value of the U.S. dollar to collapse?
Could the stock market suffer another epic decline?
Many people say the answer to these questions is "yes."
Fortunately, I don't need to know the answer to these questions... and neither do you.
The good news is that it's very easy to buy insurance against financial disasters like these. I personally own this insurance. Many of the smartest, wealthiest people I know own it, too. It could mean the difference between a comfortable, early retirement... or just barely getting by.
First, it's important to agree on what "insurance" is. In my book, buying insurance comes down to spending a little bit of money to hedge yourself against a disaster.
Throughout our lives, we spend a little bit of money on insurance and hope we never have to use it. For example, home insurance costs a small fraction of your home's value. Buy it and hope you never have to use it. Same goes for car insurance. It costs a fraction of your car's value, so you buy it and hope you never have to use it.
It's the same with investment insurance. You can buy "investment insurance" and hope to never have to use it.
There are hundreds of wealth and investment insurance policies out there. They involve intricate details, lots of forms to sign, and payment of big fees to advisors and salesmen (which are often the same thing).
I'd rather keep things simple and keep money in my pocket instead of a salesman's pocket.
Here's how you can do it... Put a small portion of your wealth in gold bullion.
That's it.
That's all it takes to insure yourself against a financial disaster.
No complicated insurance products. No big fees to pay. Just pay a small commission to a gold seller, store the gold in a safe place, and you're done.
Here's why this "insurance" is important...
Some popular market gurus are predicting a global depression, a collapse in the dollar, and a huge increase in the price of gold. The chances of them being right are relatively slim. People have been predicting the "next depression" for 30 years. The world just has a way of not ending.
However, the "doom and gloom" gurus bring up some good points. They aren't crazy. There are some big risks to our financial system. The U.S. government is spending way too much money on wars, Obamacare, welfare, and other programs. Europe and China's economies could decline and trigger a global recession. These are all real risks to your retirement account.
I'm no doom and gloomer. I think the economy will deal with these risks and keep growing. Again, the world just has a way of not ending like so many people believe it will. That's why I want to own stocks, bonds, and real estate. These assets will do well if the crap doesn't hit the fan.
However, I also want insurance in case I'm wrong and the potential disaster that some are predicting takes place. People would likely flock to gold in a global financial disaster... and cause its price to soar.
That's why it makes sense to buy gold as a form of insurance.
The good news is that you don't have to buy a huge amount of gold to have a good insurance policy. You can place just 5% of your portfolio into gold.
Let's say you have a $100,000 portfolio with 95% of it blue-chip stocks and income-paying bonds. You place the remaining 5% of your portfolio into gold. This gives you $95,000 in stocks and bonds and $5,000 in gold.
If the predicted financial disaster doesn't strike, your stocks and bonds will increase in value. Your gold will probably hold steady in price or decline a little. Since the bulk of your portfolio is in stocks and bonds, you'll do just fine.
But what if the financial disaster strikes? I've heard some top financial analysts say gold could climb to $7,000 an ounce in the financial-disaster scenario.
Let's say a financial disaster sends the value of your stocks and bonds down 50%. That would be a massive decline. Throughout history, only the worst, most severe bear markets sent stocks down this much.
This epic financial disaster would cut your $95,000 stock and bond position by 50%, leaving you with $47,500. But let's say this disaster also causes gold to rise to $7,000 an ounce. Right now, gold is $1,230 per ounce. A rise to $7,000 would produce a more-than-fivefold increase in the value of your gold. It would cause the value of your $5,000 gold stake to rise to about $28,455.
Post-financial disaster, you're left with $75,955 ($47,500 from stocks and bonds + $28,455 from gold). The disaster still hits you, but not nearly as hard. Your insurance played a big role in limiting the damage.
But what if you think the chances of financial disaster are higher than "unlikely"? What if you're more worried than the average Joe?
If you are, simply increase the "insurance" portion of your portfolio. Instead of a 5% position in gold, you could increase it to 20%.
If the previously mentioned financial disaster were to strike your $100,000 portfolio weighted 80% in stocks/bonds and 20% in gold, the math works out like this:
The 50% decline in your $80,000 stocks/bond position leaves you with $40,000. Gold's increase to $7,000 an ounce makes your $20,000 gold position increase to $113,821.
Your large gold insurance position actually produces a net gain in this scenario. You're left with $153,821... an increase of more than 50%.
As you can see, the larger your gold-insurance policy, the better you do in the financial-disaster scenario. But if the financial disaster doesn't strike, you won't benefit as much because you hold less money in stocks and bonds, which do well if the economy carries on. And keep in mind... it would take a serious financial disaster to send stocks down by 50% and gold to $7,000.
Depending on what you think the chances of financial disaster are, you can adjust your gold-insurance policy. It all depends on your goals and beliefs.
Think the chances of disaster are slim? Consider a gold-insurance policy equivalent to 1%-5% of your portfolio. Think the chances of disaster are high? Consider a gold-insurance policy equivalent to 20% of your portfolio.
Are the "gloom and doom" gurus right? Is the financial disaster around the corner? I don't know the answer. Nobody does. But if you buy some "investment insurance" in the form of gold, you don't need to know the answer. It's simple. It's easy. It's low cost.
You buy gold and hope to never have to use it. You'll do fine if things carry on. You'll do fine if the crap hits the fan.
And the peace of mind you get from owning gold "insurance" is worth even more than the money it could save you.
At Stansberry Research, we've found many Americans are woefully underprepared for financial and personal disasters. Most people don't realize that they are taking extraordinary risks with their finances, health, and homes.
What if there's another large-scale terrorism attack on U.S. soil... or a major flu pandemic... or an economic crisis that disrupts the entire fabric of our society? Who do you think your family is counting on in the event of a crisis?
Whether you know it or not... whether they've told you this or not... your family is counting on you. Do you have a plan in case the power goes out for a week or more... or if you don't have access to running water for two weeks?
Do you know what to do if the banks close for an extended period of time... or if it's not safe to go outside because of some type of health epidemic?
If you don't have a good plan for these scenarios, I have something special for you to pay attention to today.
You see, our own Dr. David "Doc" Eifrig has put together a fascinating presentation on something he calls the "Doctor's Protocol." It's a simple four-step plan that will ensure you are ready for just about any type of crisis.
I strongly, strongly encourage you to take a look at Doc's work. It's a real eye-opener.
It will help you look at the world in a different way. It will give you more confidence on a day-to-day basis and will help you sleep better at night. It will make you a much more valuable member of your community... and it could literally save your life. You can access Doc's informative presentation, free of charge, right here.
One last note... We're in Nashville, Tennessee hosting our final Stansberry Conference Series event of the year. It's going to be one of our best ones yet. The keynote speaker is former Congressman Dr. Ron Paul. We'll also hear from currency expert Jim Rickards, Agora founder Bill Bonner, and Porter. We hope to see you there. And while it's too late to buy a ticket for the event, you can still watch all of the presentations from the comfort of your home. Click here to learn more.
We'll also be live tweeting the event for the first time ever... so be sure to follow us on Twitter. Be sure to head over to our page on Facebook and post your comments live during the conference, too. The official conference hashtag on Twitter and Facebook is #SCSNash (for Stansberry Conference Series Nashville). After the event is over, we hope to post a recap on our company's official LinkedIn page.
New 52-week highs (as of 10/16/14): none.
Our Stansberry Conference event is taking place tomorrow in Nashville, Tennessee. Did you attend in person or watch it online? What did you think? Give us your honest assessment at feedback@stansberryresearch.com.
"My little portfolio is ok, bought some Gold and Silver about 3 weeks ago with no counterpart risk that are doing ok. Bought a put option about a month ago on SPY SP500, it took a big bounce in the wrong direction and I was down 35 percent, above my stop loss, so sold so I could play another day. What a dilemma, right after I sell it goes in my favor, I would be pushing up against almost a 300 percent gain if I had stuck it out. So the stop loss didn't work in my favor this time. I like those world dominators, price is down, but fundamentally nothing changed with the companies, and that will still hold true the further they fall. Holding out right now to add to the dividend reinvestment portfolio in the near future and fair prices." – Paid-up subscriber Steve
"So the St. Louis Fed prez is the trial balloon for a return to overt stock-propping through quantitative easy money. Could you script a more obvious handout to Wall Street? What, now a run-of-the-mill correction is too unsettling to bear? Laissez les bon temps rouler!" – Paid-up subscriber L. Forbish
"I was struck by Dave Horn's comments, because my experience has been so similar. I also use the TradeStops service, and I've also exited positions that hit their stops without reservation. This is easier to do with reasonable position sizes and good overall portfolio gains, so I don't get attached to any one position. I've placed collars on some other positions, as Doc Eifrig has suggested. This not only helps me sleep better, but enables me to consider new buying opportunities from a fresh perspective. Since I love to learn, I read all of those missives from Porter and lessons from Steve and Doc.
"Like Mr. Horn, I've been saving more than half my income for a number of years. That's possible for several reasons: I work very hard, but enjoy what I do in a profitable business that I started. My wife and I live well below our means, true to Thomas Stanley's description, and I drive a 7-year-old Toyota (again like Mr. Horn). Having bought a home near the market lows and financed it at record-low mortgage rates, my after-tax cost of housing is far below most of my friends. All this means we've been able to give generously to charities, and help our nephews and nieces financially as they start families and careers. And I've just disclaimed my share of an inheritance so my siblings will receive a larger distribution – quite a surprise to them. I just hope you folks at Stansberry will keep up the good work." – Paid-up subscriber Dan Fylstra
Regards,
Brian Hunt, Editor in Chief
Delray Beach, Florida
October 17, 2014
The best and worst oil stocks to own today...
Oil prices have gotten crushed in the last month... and the pullback has taken shares of most oil companies down with it.
In today's Digest Premium, Porter and his research team discuss the selloff... and offer the names of the 10 strongest and 10 weakest oil stocks in today's market...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
The best and worst oil stocks to own today...
Editor's note: Oil prices have gotten crushed in the last month... and the pullback has taken shares of most oil companies down with it. In today's Digest Premium – adapted from this week's Stansberry Data update – Porter and his research team discuss the selloff... and offer the names of the 10 strongest and 10 weakest oil stocks in today's market...
We've never seen a month like this before...
The average market cap of the 103 exploration and production (E&P) companies we monitor has plummeted 22% since last month. This is by far the single largest monthly decline since we began publishing our Stansberry Data Global Oil Value Monitor back in November 2012. The previous largest monthly decline was 8% in April 2013. More than half of the companies in our monitor are trading at or near 52-week lows.
Oil prices have fallen another 13% since last month. Brent crude oil, the global oil benchmark, dropped below $85 per barrel, hitting its lowest level since June of 2012. The price of West Texas Intermediate (WTI) crude oil, the U.S. benchmark, dropped to around $82 per barrel, down from $95 a month ago.
Despite the lower prices, oil and gas production in the U.S. continues to soar to record levels. We told you last month that the U.S. Energy Information Administration raised its estimate for 2015 crude oil production to 9.53 million barrels per day. As we said, this could prove conservative given that we hit 8.5 million barrels per day in June and July this year. Either way, daily production looks set to threaten the record of 10 million barrels per day set back in 1970, according to data compiled by the U.S. Energy Information Administration.
The entire sector is selling off. For some, it's for good reason. Many of these companies are saddled with excessive debt levels. Some of these companies won't be able to afford the interest payments on their debt if oil prices continue to fall. Revenues are flat or shrinking and many will have to borrow more at higher rates just to fund current operating and capital costs. For some, that will lead to a spiral of debt, which could put their ongoing business at risk.
The number of companies whose debt now exceeds their equity has risen to 32 – up from 20 last month. This is the highest number we've seen so far on our monitor. Some companies have already filed for bankruptcy. Others are sure to follow.
So which companies on our list are in the most trouble? Which are the strongest? In the below table, we have ranked the top 10 companies in our monitor based on financial strength and weakness. We used several measures to come up with our list, including debt-to-asset ratio, interest coverage ratio (which tells us if a company's earnings cover its interest expense), credit rating, and working capital ratios. The top 10 weakest companies, ranked by discount or premium to total asset value, are:
|
Ticker
|
Company
|
Interest Coverage Ratio
|
Debt-Asset Ratio
|
Enterprise Value $MM
|
Asset Value $MM
|
Discount / Premium
|
|
END
|
Endeavour
|
0.5
|
58.3
|
550
|
1,533
|
-64%
|
|
KWK
|
Quicksilver Resources
|
0.6
|
169.6
|
498
|
1,059
|
-53%
|
|
SARA
|
Saratoga Resources
|
-0.1
|
75.2
|
143
|
239
|
-40%
|
|
HK
|
Halcón Resources
|
6.5
|
60.2
|
4,168
|
5,729
|
-27%
|
|
BPZ
|
BPZ Resources
|
-0.7
|
51.8
|
308
|
407
|
-24%
|
|
FST
|
Forest Oil
|
0.9
|
80.3
|
788
|
997
|
-21%
|
|
XCO
|
EXCO Resources
|
1.3
|
64.1
|
1,929
|
2,356
|
-18%
|
|
PQ
|
Petroquest Energy
|
1.9
|
57.1
|
674
|
740
|
-9%
|
|
MPO
|
Midstates Petroleum
|
1.2
|
73.7
|
2,225
|
2,243
|
-1%
|
|
MHR
|
Magnum Hunter
|
-1.2
|
43.0
|
2,239
|
1,963
|
14%
|
We expect that many of these companies will struggle to survive a prolonged period of low oil prices. Endeavour is already in bankruptcy. And we believe others are headed that way.
The top 10 strongest companies (also ranked by discount or premium to total asset value) are:
|
Ticker
|
Company
|
Interest Coverage
Ratio
|
Debt-Asset
Ratio
|
Enterprise
Value $MM
|
Asset Value
$MM
|
Discount /
Premium
|
|
STO
|
Statoil
|
24.1
|
20.5
|
87,684
|
147,018
|
-40%
|
|
CEO
|
CNOOC
|
22.3
|
21.2
|
79,386
|
106,897
|
-26%
|
|
CVX
|
Chevron
|
95.8
|
9.0
|
223,748
|
262,045
|
-15%
|
|
OXY
|
Occidental Petroleum
|
114.5
|
9.7
|
74,055
|
70,293
|
5%
|
|
XEC
|
Cimarex Energy
|
39.0
|
17.9
|
10,737
|
8,399
|
28%
|
|
GPOR
|
Gulfport Energy
|
3.6
|
11.2
|
3,903
|
3,032
|
29%
|
|
SWN
|
Southwestern Energy
|
29.6
|
20.7
|
13,474
|
8,887
|
52%
|
|
EOG
|
EOG Resources
|
13.2
|
17.7
|
51,454
|
33,302
|
55%
|
|
PHX
|
Panhandle Oil & Gas
|
68.5
|
34.7
|
429
|
247
|
74%
|
|
EPM
|
Evolution Petroleum
|
99.2
|
0.0
|
261
|
65
|
301%
|
Please note that we are not recommending any of these stocks. We're simply identifying those that have the best financial resources to survive lower oil and gas prices. We're always looking for the best E&P opportunities at the cheapest prices. Today, the markets are punishing all E&P companies. If oil prices continue to slide, it is likely these stocks will continue to drop further. But the strongest will survive. And the best will thrive into the future. The companies that believed in the notion of peak oil and grew by financing with excessive debt will not.
– Porter Stansberry with Bryan Beach, Brett Aitken, and Mike DiBiase
Editor's note: Each week, Porter and his research team send a select group of subscribers a detailed analysis of their favorite sectors. Stansberry Data provides these subscribers with all the numbers Porter's team use to analyze every major oil explorer, "trophy asset," capital-efficient company, and insurance firm in the market.
The only people with access to this information are Stansberry's Investment Advisory lifetime subscribers. You can access all of Porter's research forever with a low one-time fee. Learn more about this offer – including a four-month, risk-free trial – by clicking here.
The best and worst oil stocks to own today...
Oil prices have gotten crushed in the last month... and the pullback has taken shares of most oil companies down with it.
In today's Digest Premium, Porter and his research team discuss the selloff... and offer the names of the 10 strongest and 10 weakest oil stocks in today's market...
To continue reading, scroll down or click here.