Are you feeling richer?...

Are you feeling richer?... Weakest wage recovery since WWII... One billionaire is worried about 'real class warfare'... Taser soaring on Ferguson fears... Why gold should soar... An investing mistake you're likely making... One of the safest 5% yields around...
 

 The S&P 500 is approaching another all-time high... 10-year Treasury yields remain below 2.5%... Apple broke $100 a share today... Home prices across the country are rising.

 

However, while you're likely feeling wealthier, most of America is struggling...

 

 While stocks are up nearly 200% since their 2009 lows and the real estate market has recovered, the real value of hourly wages has risen just 0.5%, according to data from the Bureau of Labor Statistics (BLS) and compiled by Bloomberg. That's the weakest growth since World War II... Increases in past expansions averaged 9.2%.

 

Meanwhile, the rich are getting richer... The top 20% of U.S. households saw their incomes grow by an average of $8,358 a year between 2008 and 2012. Meanwhile, the lowest 20% of households saw a $275 annual decline, according to the BLS.

 

 It's hard proof of the disappearing middle class (which we discussed yesterday in connection with discount retailer Dollar General's bid for competitor Family Dollar). And we're not the only ones sounding the horn on this economic trend.

 

Billionaire hedge-fund manager Paul Singer – far from your tinfoil-hat-wearing blogger – wrote about the phenomenon in his second-quarter letter to investors. Singer is best known today for his battle with Argentina over defaulted debt.

 

 Singer discussed the Federal Reserve's goal of creating inflation through low interest rates and quantitative easing... But he notes inflation is measured using "a combination of things owned by the well-offs." Here's an excerpt from Singer's letter (courtesy of CNBC)...

 

We believe that if and when inflation passes from a phenomenon that affects only a certain list of assets (a growing list, presently a combination of things owned by the well-off plus a number of things that are basic necessities) to a widespread 'in-your-face' phenomenon affecting the cost of living of almost the entire population, then the normal yardsticks of risk, return and profit may be thrown into the garbage can.   These measures may be replaced by a scramble by citizens and investors to preserve value on a foundation of shifting sand, together with societal unrest that may make the current politically-useful 'inequality' riffs, scapegoating of the '1%' and complaining about those 'millionaires and billionaires' who are not 'paying their fair share,' look like mere warm-ups for real class warfare.

 

 A source in New York City told us a major private-equity firm recently purchased a high-end security guard business (staffed by ex-military) because it's worried about social unrest.

 

 This isn't fear-mongering... We simply want you to understand these risks are real – and getting more serious by the day, as the Federal Reserve maintains its loose monetary stance.

 

Just look at shares of Taser International (TASR). Taser is best known for its stun guns... But it also makes wearable cameras for law enforcement.

 

And markets believe orders will soar as unrest continues in Ferguson, Missouri surrounding the recent police shooting of Michael Brown... There's no footage of Brown's death, and calls of foul play abound. Taser's cameras could solve these issues going forward. The market seems to be taking notice...

 

 

 Back to Singer... He does see one obvious way to profit from what's happening around the world today: gold. More from his letter...

 

The world is on a seemingly one-way trip to monetary debasement as the catchall economic policy, and there is only one store of value and medium of exchange that has stood the test of time as 'real money': gold. We expect this dynamic to assert itself in a large way at some point.   In the meantime, it is quite frustrating to watch the price of gold fall as the conditions that should cause it to appreciate seem more and more prevalent. Gold may not exactly be a 'safe haven' in the sense of an asset whose value is precisely known and stable. But it surely is an asset that, in a particular set of circumstances, becomes a unique and irreplaceable 'must-have.' In those circumstances (loss of confidence in governments and paper money), there are no substitutes, and the price of gold may reflect that characteristic at some point.

 

 What percentage of your portfolio is in U.S. stocks?

 

We would wager it's far too much...

 

According to asset-management giant Vanguard, U.S. investors hold about 70% of their stock market funds in U.S. stocks. However, U.S. stocks make up 49% of the global market cap for stocks. And the U.S. is only responsible for 19% of the world's gross domestic product (GDP).

 

It's a phenomenon called the "home-country bias." Most investors are heavily overweight stocks from their home country. It's a basic behavioral error in investing.

 

 If you're a U.S. citizen, you probably also have a job, own property, and have other interests in the U.S... further concentrating your wealth into a single country's economy.

 

The point is, you should invest some of your money outside of the U.S. And with the S&P 500 trading around 20 times earnings and yielding less than 2%, you can find much better value and higher yields elsewhere.

 

Doc Eifrig discussed this topic in the July 23 DailyWealth, titled "A Big Investment Mistake You Don't Know You're Making." From that essay...

 

Although I still see upside in U.S. stocks, it's clear that we're not in the early stages of this bull market anymore. But overseas is a different story...   The table below shows the average price-to-earnings (P/E) ratio and dividend yield for 20 developed economies...   Country P/E Ratio Dividend Yield Norway 11.4 4.4% Spain 24.1 4.3% Australia 20.0 4.0% Finland 22.0 4.0% Sweden 15.9 3.4% United Kingdom 22.8 3.2% New Zealand 18.6 3.1% Portugal 35.0 3.0% France 25.6 2.9% Switzerland 20.0 2.9% Hong Kong 13.0 2.9% Netherlands 23.9 2.8% Singapore 14.4 2.8% Canada 31.4 2.7% Italy 317.2 2.7% Belgium 16.0 2.6% Germany 18.1 2.5% Japan 14.7 1.9% United States 20.3 1.8% Greece 9.0 0.4% Source: Star Capital, iShares

 In the July issue of Income Intelligence, Doc recommended a way to collect a yield of nearly 5% investing in some of the world's greatest companies... And you're buying these companies at a price-to-earnings ratio of 14 – a significant discount to the S&P 500's 20 times earnings.

 

In short, this is one of the best, safest places you can earn a large yield today. Think about it... Would you rather own a portfolio of junk bonds yielding a record-low 5%, or a portfolio of stable companies with a long history of paying steady dividends?

 

To access Doc's top income idea today, you must be an Income Intelligence subscriber. You can try a 100% risk-free trial to Income Intelligence by clicking here.

 

 

 New 52-week highs (as of 8/18/14): Apple (AAPL), Automatic Data Processing (ADP), Brookfield Asset Management (BAM), SPDR S&P BRIC 40 Fund (BIK), Consolidated Tomoka (CTO), Dollar General (DG), Dolby Laboratories (DLB), EMC Corp (EMC), Flinders Resources (FDR.V), Microsoft (MSFT), Pepsico (PEP), PowerShares QQQ Fund (QQQ), ProShares Ultra Technology Fund (ROM), Steel Dynamics (STLD), Union Pacific (UNP), and W.R. Berkley (WRB).

 

 Are you holding too much in U.S. stocks? Have you diversified your portfolio globally? Let us know what's working for you at feedback@stansberryresearch.com.

 

 "This does not completely change the result of Mr. Kellner's experiment but 1 ounce of gold was priced at $20.67 in 1914 so one could have purchased nearly 2.2 ounces of the yellow metal. Not a bad use of $45. And you never would have had to worry about banking panics or inflation. To each his own though – If you prefer paper money and fractional reserve banking let me know how that works out for you in 2114." – Paid-up subscriber Ross Slaneff

 

Regards,

 

Sean Goldsmith

August 19, 2014

 

What Kim Iskyan saw from the ground in Thailand might surprise you...

 

Back in June, just days after Thailand's army declared martial law and attempted to overthrow the government, S&A Global Contrarian editor Kim Iskyan touched down in hopes of unearthing potential investment opportunities.

 

In today's Digest Premium, he shares what he saw on his trip...

 

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

What Kim Iskyan saw from the ground in Thailand might surprise you...
 

Editor's note: Back in June, just days after Thailand's army declared martial law and attempted to overthrow the government, S&A Global Contrarian editor Kim Iskyan touched down in hopes of unearthing potential investment opportunities. In today's Digest Premium, he shares what he saw on his trip...

 

 

 One of my jobs as editor of the S&A Global Contrarian is to travel all over the world looking for places where the buildings are burning and there's blood in the streets... places where everybody is so negative, there's no one left to sell.

 

If a nation has fallen on hard times... is in the midst of a crisis... or has a full-blown revolution on its hands, I'm going to travel there. That philosophy has led me to visit Russia, Kazakhstan, Kyrgyzstan, South Africa, Zimbabwe, Iran, Ukraine, Mongolia, Argentina, and Thailand.

 

 Days before my trip to Thailand, the country's army had declared martial law and staged a coup, trying to overthrow the government.

 

The front pages of the Financial Times and the Wall Street Journal had pictures of protestors clashing with police. It looked like all of Bangkok was about to go up in flames.

 

When I got off the plane in Bangkok, someone handed me a piece of paper. It read: "The National Peace and Order Maintaining Council have enforced a curfew order from 22:00 to 05:00."

 

As I told my S&A Global Contrarian subscribers, I had never visited a country where the military was trying to overthrow the government. Here's what I wrote...

 

I didn't know what to expect. Camouflaged militia bristling with military hardware on every corner? Fields of barbed wire in downtown Bangkok?   Photos in the international media showing angry protestors screaming into the scared faces of policemen cowering behind large plastic shields stirred my imagination.

 

 So imagine my surprise that when I went there, I didn't see a single protest...

 

I saw no soldiers, no tanks... not even any police. During my entire time in Thailand, I saw nothing remotely out of the ordinary.   Of course, every coup is different, but Bangkok was just another city going about its regular business. I didn't see any protests while I was there. And as far as I could tell, Bangkok under martial law was just like Bangkok any other day... except that because of the curfew, the day ended at 10 p.m... and there was no CNN or BBC to watch, as a number of television channels were blocked after the coup."

 

 Presumably, I didn't go to the right places. But it was really quiet. My point is that the reason behind that sentiment is often the perception that Thailand was a mess, with protests, violence, and everything else. The reality is, it's not usually that way. What is perceived as dangerous is often not that dangerous at all... if you know the areas to avoid.

 

In every big city and in every country, there are plenty of places where you don't want to go. There are plenty of places I would rather be in Moscow than in New York, for example. (Porter might say the same thing about Baltimore.)

 

So, despite all my travels to some of the world's most treacherous countries, I have never felt my safety was in danger at any point.

 

– Kim Iskyan

 

 

Editor's note: Kim will share more of the secrets behind his S&A Global Contrarian approach this Saturday at the S&A Conference Series event in Los Angeles. He'll break down his strategies and share pictures from his "boots on the ground" experiences.

 

We'll also hear from S&A editors Steve Sjuggerud and Frank Curzio... master speculator Doug Casey... Indian-stock guru Rahul Saraogi... and many more. It's too late to buy your ticket... but you can watch the event from the convenience of your own home. Click here to learn more.

What Kim Iskyan saw from the ground in Thailand might surprise you...

 

Back in June, just days after Thailand's army declared martial law and attempted to overthrow the government, S&A Global Contrarian editor Kim Iskyan touched down in hopes of unearthing potential investment opportunities.

 

In today's Digest Premium, he shares what he saw on his trip...

 

To continue reading, scroll down or click here.