An amazingly reliable stock "buy signal"...
When it comes to investing in Asia, Peter Churchouse is a legend. He's the guru of information and insight for people looking to get involved in investing in Asia.
Years ago, he served as Morgan Stanley's head of research in Asia. He's been involved with Asia's property markets as a consultant, financial advisor, practitioner, and an investor for more than three decades.
That's why I (Porter) invited Peter and his son Tama to make a presentation at the S&A Editors Conference last month at the Greenbrier in West Virginia.
I also hosted him on a recent episode of Stansberry Radio, where I got his thoughts on the Asian markets. American investors, in general, aren't focused on opportunities in Asia, especially in things like Hong Kong real estate.
When I asked Peter what makes Asia so interesting for investors, he told me...
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When I first arrived in Hong Kong many years ago, I said to one of the young Chinese guys who was working with us, "What is it that makes this place tick?" And he said "Look, you'll learn soon enough that we really love and believe in a couple of things, one of which is gold, and the other is real estate."
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And I have to tell you that that's been pretty much proven correct over the last 25 or 30 years. But other than that, I think the pegged currency in Hong Kong has been a key factor in making volatility much greater in this part of the world. If you think about it, Hong Kong really has to adopt whatever [former Fed Chairman Alan] Greenspan or [current Fed Chairman Ben] Bernanke thinks in terms of interest rates.
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They have to adopt the U.S. interest rate policy because of the pegged currency. And that means, at times when the U.S. is in recession and has low interest rates, Asia is booming. What we need is higher interest rates to curb inflation.
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So you get this automatic volatility created by the pegged currency, which can be great if you're an investor and actually understand what's going on because you can make a lot of money on the way up in these cycles where we've seen prices go up 300%-400% over three or four years.
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One thing I had to ask Peter about was how to sell. It seems to be the most difficult part to investing in Asia. So again, I deferred to Peter...
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That's where good advice and living in the region gives you [an advantage]. Over time, you can actually see these cycles shaping up a lot more readily than if you're an outsider… We try to figure out where the peaks and troughs are. For example, before the 1997 crisis in Asia, we started pulling bets out of the asset markets and certainly in Hong Kong and Thailand because we could see that these asset markets were overcooked.
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There was a massive amount of supply coming on stream, and you had the sense that we'd gone too far. There needed to be a reversion to the mean at some point. And of course, we didn't foresee necessarily the Asian financial crisis, but we were already pulling out of our hard assets to some extent well before that actually happened.
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But Peter's expertise goes beyond just the Asian stock market. He's also an expert on Asian real estate. He told me he bought his first apartment in Hong Kong in 1984 and paid just $50 per square foot (in U.S. dollars). He still owns that property... and estimates it's probably worth close to $2,500 per square foot today.
As I mentioned in yesterday's Digest Premium, when I shared some insights from my conversation with the great commodities investor Jim Rogers... I interview guests like Peter and Jim every week on my Stansberry Radio program.
Peter appeared on the subscription-only version of my podcast, Stansberry Radio Premium… where I ask my guests to provide their best current investment ideas. To learn more about Stansberry Radio Premium, click here.
– Porter Stansberry with Sean Goldsmith
My conversation with the go-to source on Asian real estate...
Hong Kong real estate is dynamic and volatile... and an unusual way to consider investing. But many folks aren't familiar with it. In today's Digest Premium, Porter shares his recent conversation with Asian real estate guru Peter Churchouse...
To continue reading, scroll down or click here.
My conversation with the go-to source on Asian real estate...
Hong Kong real estate is dynamic and volatile... and an unusual way to consider investing. But many folks aren't familiar with it. In today's Digest Premium, Porter shares his recent conversation with Asian real estate guru Peter Churchouse...
To subscribe to Digest Premium and access today's analysis, click here.
An amazingly reliable stock 'buy signal'... U.S. oil production skyrockets... How 'stacked plays' will become a vast source of new production... 'Shocking' news of banking corruption... Greece gets another humiliating downgrade – who's next?...
U.S. oil production continues to boom...
In its just-released, widely followed annual survey, giant oil firm BP reports that the U.S. saw its largest-ever annual production increase in 2012. The report says that the U.S. produced 8.9 million barrels of oil per day... up 14% from 2011. U.S. oil output is at its highest point in two decades.
In an up-to-the-minute update on this idea, Porter and his research staff just told readers of Stansberry's Investment Advisory how profitable this boom has been for people in the right stocks...
As longtime subscribers can attest, no one has written more over the last three years about America's new energy boom than we have... Since early 2010, Porter has described how new drilling techniques were opening vast new natural gas and petroleum resources. These newly accessible domestic resources would not only free the U.S. from its reliance on imported oil... but make America one of the world's dominant energy suppliers.
To take part in that growing trend, we bought into natural gas infrastructure firm Chicago Bridge & Iron (CBI) a year ago. That position is up nearly 70%. We added Cheniere Energy (LNG) to the model portfolio last July. Cheniere is the first company to secure a license from the federal government to export natural gas. That position is up 93%. And in December, we recommended shares of Targa Resources (TRGP), one of the companies best positioned to meet the growing demand for exported natural gas liquids (things like propane and butane). We're up nearly 40% in just six months.
Expect more huge production numbers in the coming years... and more gains for "picks and shovels" companies like those in Porter's portfolio. And expect to hear the words "stacked plays" more and more...
In today's edition of S&A's free e-letter Growth Stock Wire, Matt Badiali, editor of the S&A Resource Report, describes how "stacked plays" are becoming a vast, hidden source of new production in the United States. Drilling technology is improving every year. We're tapping oilfields on top of oilfields. Matt reports...
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Longtime readers know that shale fields are responsible for an incredible boom in oil and gas production. These deposits come in the form of thin layers of oil-soaked rock.
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If you could see them exposed in a cliff, the rocks would look like layers in a cake... And sometimes, several layers of the cake hold oil and gas. We call that a "stacked play."
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These stacked plays are great for oil and gas producers. They can drill into several oil reservoirs from a single point on the surface. Take the Spraberry/Wolfcamp formation in West Texas, for example...
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Officials from Pioneer Resources (PXD), which owns approximately 730,000 acres in the area, boast that Spraberry/Wolfcamp could be the world's second-largest oilfield, with 50 billion barrels of recoverable oil. That's an astonishing volume of oil... more than the Bakken, more than the Eagle Ford, and more than Alaska's iconic Prudhoe Bay.
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Make sure to read the full story in today's Growth Stock Wire. You'll see how "stacked plays" will become a much bigger story in the next few years. And you'll access a list of the companies with the best "stacked play" exposure. Look for huge production increases from these firms.
The latest news from the world of big banking...
According to Bloomberg, traders from some of the world's largest banks have manipulated foreign-exchange rates to profit at the expense of their clients. Traders who requested anonymity told reporters that firms are "front running" client orders... and making profits ahead of large trades. Bloomberg reports...
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The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain's markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.
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"The FX market is like the Wild West," said James McGeehan, who spent 12 years at banks before co-founding Framingham, Massachusetts-based FX Transparency LLC, which advises companies on foreign-exchange trading, in 2009. "It's buyer beware."
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Large banks are screwing clients in a complex market? This is shocking. In other shocking news, the sun rose in the east, a dog chased a mailman, and a politician lied. In other words, this comes as no surprise to regular Stansberry & Associates readers.
But in case you're not aware, one of the major steps in an investor's education is realizing that most every large financial institution is not in the business of helping the little guy. It's in the business of raising money for corporate clients by selling stocks and bonds. It's in the business of trading ahead of clients... both big and small.
When the investor realizes this, he becomes much more skeptical. He becomes much less likely to jump into "hot ideas" pitched by brokers and salesmen. He becomes much more likely to follow the golden rule of investing: Don't lose money.
Another story in the financial news today: Financial index provider MSCI downgraded Greece from "developed" market status to "emerging market" status.
To most professional investors, the words "emerging market" bring to mind second and third-world nations where you absolutely don't want to drink the water. We're talking about places like Pakistan. That's where Greece is now.
Since its financial crisis began, Greece has failed to meet various financial soundness criteria that qualify nations for "developed" market status. Greece is the first developed nation to be downgraded to emerging-market status by MSCI.
By the time the European crisis is over (which will be years), Greece won't be the only emerging market on the continent. Europe is taxing, spending, regulating, and borrowing its way into long-term decline. As our friend Doug Casey says about Europe's decline and China's economic rise, "Europe will mainly serve as a source of houseboys and maids for the Chinese." You can read Doug's "big picture" take on China and Europe for free by clicking here.
Which European country is next in line for a humiliating downgrade? Is it Spain, with its 27% unemployment rate and high debt levels? Is it France, which is now taxing the successful out of the country and attacking bookseller Amazon for being "destructive" to book stores? Send your pick for the next European bankruptcy to feedback@stansberryresearch.com.
As you may have read in a recent Digest, Dan Ferris has found a new World Dominator that is cheap enough for Extreme Value readers. But this isn't your average World Dominator recommendation. Dan says it's "the cheapest World Dominator I've ever seen."
We described how important this statement is. Dan's track record with World Dominators is simply incredible. Over the past five years, Dan has recommended 15 World Dominators. All 15 positions have produced a profit. As of yesterday's close, they are up an average of 54%. An aggressive World Dominator recommendation from Dan is one of the most reliable single-stock "buy signals" in the world.
New 52-week highs (as of 6/11/13): Ligand Pharmaceuticals (LGND).
Quiet day in the reader mailbag... Haven't we done something to anger you lately? Drop us a line at feedback@stansberryresearch.com.
"I read and reread every thing you send me with my subscriptions. Once in-a-while someone gets a little carried away with their personal political points of view but I can choose to ignore them which I do. I am still a 'daily learner' and hope to continue that practice. I was a professional educator, meaning teacher, for forty years. I learned early on you can teach your best but you can't force someone to learn. I hope to continue receiving your very best. Thanks." – Paid-up subscriber Don
Regards,
Brian Hunt
Delray Beach, Florida
June 12, 2013
My conversation with the go-to source on Asian real estate...