The 401(k) is one of the largest financial assets for most Americans. Under the scenario I (Porter) described yesterday, it's also one of the most vulnerable.
As I explained, President Obama wants to limit balances in "tax-preferred" accounts to an amount that can finance a retirement annuity of about $200,000 per year. In other words, the government wants to tell you how much money you're allowed to have when you retire... and where you can keep it.
Right now, you can have your 401(k) spread over three or four providers and the government won't necessarily have a clear picture of how much was in there.
Of course, that's subject to change if Obama gets his way. "Oh, we have to make sure that you're not over the limit we imposed," the government will say. "We have to know exactly how much money you've got and where you've got it." That's the prelude to finding unusual ways to tax you.
So how can you protect yourself? There are a number of things you can do... none are easy. We get lots of complaints about that, usually along the lines of, "Why can't I protect myself from the world's largest sovereign power without a huge hassle?" It's because the U.S. government is the world's largest sovereign power. Of course, it's not easy. That's how they want it.
One of the easiest things you can still legally do is to buy assets overseas. Buy land, a small company, or an apartment complex. If you buy assets overseas and structure them in a way that doesn't make any disbursements to you, you don't have to report it to the government.
I have some assets overseas. They're material but insignificant to my overall net worth. I don't have to tell anyone about them. I don't have to mention them on any government forms.
Historically, there are some tax-favored assets in America that politicians, for one reason or another, haven't gone after: timberland and farmland. If you buy those assets, you can usually do much better in the form of your taxes.
Timberland compounds tax-free every year because no one has figured out how to tax a tree. Yet I recently read that the governor of Maryland wanted to pass a tax based on the amount of rainfall your land received, which would do away with the advantages of owning rural agriculture and timber properties.
So there are things you can do. They're not easy. Some involve taxes and fees. That's the price you pay to protect what's yours. But the bottom line is the government will take whatever it wants. The best thing to do is to get your assets out of its reach... which means getting them out of the country in a way that doesn't require you to report it.
– Porter Stansberry with Sean Goldsmith
Keeping your assets in your own hands is getting harder every day.
In today's Digest Premium, Porter recommends a couple tried-and-true methods that will prevent what's yours from becoming someone else's...
To continue reading, scroll down or click here.
Keeping your assets in your own hands is getting harder every day.
In today's Digest Premium, Porter recommends a couple tried-and-true methods that will prevent what's yours from becoming someone else's...
To subscribe to Digest Premium and access today's analysis, click here.
The markets were expecting the worst from Apple's earnings announcement yesterday...
Shares of the blue-chip tech giant fell from around $465 per share last month to $390 per share last week – a big 16% haircut. (They're currently trading for just over $405.)
As we discussed last week, Apple suppliers were announcing lower earnings (presumably due to a lack of orders). One Asian technology publication alleged Apple had stopped placing component orders for its Mac series products.
So Apple's lackluster earnings were expected (though it still beat estimates). The company's fiscal second-quarter net income fell 18% to $9.6 billion... Sales increased to $43.6 billion from $39.2 billion the previous year.
The iPhone is Apple's most important product... It made up 56% of sales in the December quarter. In the most recent quarter, Apple sold 37.4 million iPhones, up from 35.1 million a year ago. But gross margins compressed to 37.5% from 47.4% a year earlier.
Apple traded down more than 1% today after surging 7%-plus in after-hours trading yesterday.
Apple has long been criticized for the $150 billion pile of cash on its balance sheet. Shareholders – including hedge-fund billionaire David Einhorn – want Apple to return more of that capital to investors. They got their wish yesterday...
Apple announced it would increase its share-repurchase program from $10 billion to $60 billion. It also increased its quarterly dividend 15% from $2.65 a share to $3.05 a share. The company now spends around $11 billion a year on dividends, making it one of the largest gross dividend-payers in the country.
Einhorn's fund, Greenlight Capital, was pleased with the announcement. A spokesperson for the fund said the following in a statement...
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We applaud Apple's decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder-friendly capital allocation policy and demonstrates the conviction of Apple's management and board in the company's future.
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Greenlight mentions "Apple's decision to borrow money." The firm is borrowing cash in lieu of repatriating the huge cash hoard it holds abroad... and subsequently paying taxes on it.
Apple is timing its buyback program well... Companies should buy back shares when they're cheap. And Apple shares look undervalued here...
Apple's enterprise value (market cap minus cash plus debt) is about $250 billion. At today's price, the company is trading for around five times enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA). Fellow Big Tech companies Microsoft and Intel trade for a slightly higher EV/EBITDA ratio. In other words, Apple shares are extremely cheap by that measure.
"You are middle-aged. Your net worth is meager. Your income is barely sufficient to meet expenses... And those expenses are going up. The Great Recession is looming. Economists are predicting things will get worse. What can you do?"
In today's DailyWealth, we republished an essay from our friend Mark Ford of The Palm Beach Letter. As we've mentioned in the past, Mark is one of Porter's mentors. And he's built several successful businesses (in addition to writing several best-selling books). If you're not pleased with your financial situation today, Mark lays out four simple steps you can take to get started building wealth.
You can read the full essay for free by clicking here.
Two weeks ago – just prior to gold's biggest two-day drop in 30 years – investment bank Goldman Sachs advised its clients to short gold. Gold then rose for the next five trading sessions before falling 0.9% to $1,413 yesterday. Goldman's clients made money on the advice... But the skeptics believed Goldman simply wanted to build a position in physical gold... and needed to drive the price down.
We can't know if that was the bank's intention. But this week, Goldman reversed its call for lower gold prices.
In a classic example of doubletalk, Goldman dropped its bearish stance while advising clients the precious metal could fall even more...
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Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane… as well as our economists' forecast for a reacceleration in U.S. growth later this year.
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In other words, Goldman is saying, "We're quitting the trade we recommended, but we think you should stick with it."
This is what we've come to expect from Goldman, which may have made as much as a 10% profit on its short call, according to Bloomberg.
This wouldn't be the first time Goldman has profited at the expense of its clients... The company also made a short bet on the subprime mortgage market in 2007. Doing so helped it make $1.2 billion, while the bank's clients – who were buying subprime mortgages from Goldman – took huge losses, according to a U.S. Senate report.
As Porter said in the April 12 Digest Premium...
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Why would anyone in his right mind ever do business of any kind with Goldman? How many times do you have to hear that Goldman has defrauded, defamed, or destroyed clients before you finally say, "Well, maybe it will be me next time"? I honestly don't know the answer. The people at Goldman seem to be grotesque caricatures of the world's most despicable people.
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The same question applies to Morgan Stanley, JPMorgan Chase, and the rest of those vipers. They trade on the gullibility and stupidity of their clients to enrich themselves. They do so from a fiduciary position where they're supposed to be representing their clients' best interests. It's abhorrent.
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We repeat the age-old question on Wall Street... Where are the customers' yachts?
According to recent data from North Dakota's Department of Mineral Resources, oil producers there are currently "flaring" – or safely burning off – more than 30% of excess monthly natural gas production.
But North Dakota just passed a bill to reduce flaring.
Oil and gas industry magazine Upstream says if the bill is signed into law, it will give oil producers tax exemptions if they collect at least 75% of the gas they produce. Instead of burning it off, the aim is to gather the gas and send it off for power generation or to manufacturers that use it as feedstock, such as fertilizer plants. According to the report, as it stands today, companies can flare off gas for up to a year without any tax or royalty obligation.
North Dakota is home to the Williston Basin, which includes the Bakken shale. It's massive and stretches across North Dakota and into South Dakota and Montana in the U.S., and Saskatchewan and Manitoba in Canada.
Bloomberg calls the Bakken shale the largest contiguous oil deposit in the U.S. Combined with the Sanish and Three Forks formations, it could be the biggest oil producer over the next 30 years.
The Bakken now produces more than 700,000 barrels of oil per day, up from less than 50,000 barrels per day five years ago.
One byproduct of oil production is natural gas. The dramatic increase in the volume of natural gas being flared off is a symptom of how cheap natural gas is domestically... and of U.S. producers' inability to export gas to markets like Europe and Asia, where it draws a higher price.
Here's what Porter wrote in the April issue of his Investment Advisory...
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Millions, and even billions, of dollars of these fuels are simply being torched at the wellhead today in the U.S., simply because we have more than we need and it's currently impossible to export these fuels to parts of the world where they are commonly used for both on-grid electrical power generation and automotive fuel.
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Remind people about this flaring when they argue against free trade for energy. The simple fact is that we're not able to use all of the energy we're producing today. So it's being wasted rather than being used to generate a profit for our industry and a massive competitive advantage in trade.
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The shift America is making from energy importer to leading energy exporter is the most important trend in the world's economy. Understanding these events as they continue to unfold will give you a massive edge as an investor.
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In the long run, the transportation bottlenecks in the natural gas complex represent the best opportunity for investors. This opportunity began about a decade ago, as natural gas production began to grow.
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Porter and his team of researcher have identified one way around this bottleneck that allows investors to profit from the spread between domestic and export prices today – natural gas liquids (NGLs). These liquid hydrocarbons – like propane, butane, and ethane – can be captured and exported today.
And in the December issue of his Investment Advisory, Porter and his team recommended one company involved in NGL export. He predicted this company "will be one of the best recommendations in the history of our newsletter." Four months later, readers who took his advice are already up 42%.
Out of respect for his Investment Advisory subscribers, we can't share the name of this company.
And this company is just one of several energy-related stocks in Porter's model portfolio. He and his team have been covering the global energy trends in great depth. They've developed the Global Oil Value Monitor, which tracks more than 70 companies. Learn more about a subscription to Stansberry's Investment Advisory – and how to gain access to the company he believes will be one of his best-performing recommendations ever – by clicking here.
New 52-week highs (as of 4/23/13): ProShares Ultra Nasdaq Biotechnology Fund (BIB), Wisdom Tree Japan Smallcap Fund (DFJ), Wisdom Tree Japan Hedged Equity Fund (DXJ), iShares iBoxx High Yield Corporate Bond Fund (HYG), iShares Nasdaq Biotechnology Fund (IBB), SPDR S&P International Health Care Fund (IRY), ProShares Ultra Health Care Fund (RXL), SPDR Utilities Sector Fund (XLU), V.F. Corp. (VFC), Pepsico (PEP), Johnson & Johnson (JNJ), Eli Lilly (LLY), Prestige Brands (PBH), Automatic Data Processing (ADP), Hershey (HSY), DCP Midstream Partners (DPM), Enterprises Products (EPD), Procter & Gamble (PG), Wal-Mart (WMT), Target (TGT), and GenMark Diagnostics (GNMK).
In today's mailbag… two subscribers who are wary of Wall Street and the government. Perhaps our musings aren't falling on deaf ears... Send your e-mails to feedback@stansberryresearch.com.
"If [Goldman Sachs] advised clients to short gold can't help but wonder if they are on the other side of the trade. Then again, they'll shill for US gov't anytime. They know where their bread gets buttered." – Paid-up subscriber David Y. Cantwell
"I did the right thing for the past 40 years, set aside money in my IRA, and invested it well. The balance in my IRA is now twice the $3 million amount which President Obama believes is "fair". My fellow boomers who didn't save are now going to penalize me. There will be a hefty tax to withdraw shares like CBI and BAM out of my IRA. But I will continue to hold them in my taxable account. Within five years I will recoup the tax because these companies will build hundreds of thousands of dollars in shareholder value – mostly untaxed because they pay small dividends." – Anonymous
Regards,
How to protect your assets from governments' attempts to steal them...