My two ultimate contrarian bets...
My ultimate contrarian bet is buying aluminum stocks today...
I (Brian Hunt) first got bullish in the sector in October 2013. As we wrote in the October 21 DailyWealth Trader:
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I didn't think things could get any worse for Alcoa. As you can see from the chart below, Alcoa has recovered from its three-year bear market (jumping from $8 to almost $11 today).
But I think it still has a long way to go... Shares will rise more on general strength in the U.S. economy and increasing demand from China. Economic growth stimulates demand for things that require aluminum... things like airplanes and cars.
Another contrarian idea: The U.S. economy could boom over the next two to four years.
How many people are saying that? You'd get laughed off the stage at most investment conferences for suggesting that could happen. After all... what about unemployment? What about Obamacare? And the rising government debt?
Sure... all those things are problems. But we've had problems like those for 40 years. Heck, the problems are so bad that even I don't want to believe my own contrarian idea. But the trend of massive and synchronized global central bank stimulus could make the U.S. and global economy boom for years... before all the nasty things actually create big problems.
Now... to be clear... I'm not predicting the boom will happen. I'm just suggesting that it's an "out there" contrarian idea. Most investors would laugh at the suggestion. The idea would enrage folks and challenge the consensus belief. And anti-consensus beliefs are often the ones that make you the really big money.
You can trade this "anti-consensus" belief by owning U.S. stocks that deal in copper mining, shipping, and aluminum production. Buy 'em and set a trailing stop... just in case the trend turns down. Risk a little... for the potential to make a lot.
– Brian Hunt
My two ultimate contrarian bets...
Today's Digest Premium features the last installment in our series from S&A Editor in Chief Brian Hunt. In it, he shares his two ultimate contrarian bets today...
To continue reading, scroll down or click here.
Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)
As of 01/15/2014
| Stock | Symbol | Buy Date | Return | Publication | Editor |
| Rite Aid 8.5% | 767754BU7 | 02/06/09 | 674.3% | True Income | Williams |
| Prestige Brands | PBH | 05/13/09 | 439.5% | Extreme Value | Ferris |
| Constellation Brands | STZ | 06/02/11 | 280.3% | Extreme Value | Ferris |
| Enterprise | EPD | 10/15/08 | 250.1% | The 12% Letter | Dyson |
| Ultra Health Care | RXL | 03/17/11 | 224.0% | True Wealth | Sjuggerud |
| Ultra Nasdaq Biotech | BIB | 12/05/12 | 193.6% | True Wealth Sys | Sjuggerud |
| GenMark Diagnostics | GNMK | 08/04/11 | 189.2% | Phase 1 | Curzio |
| Fluidigm | FLDM | 08/04/11 | 183.3% | Phase 1 | Curzio |
| Ultra Health Care | RXL | 01/04/12 | 183.0% | True Wealth Sys | Sjuggerud |
| Altria | MO | 11/19/08 | 180.7% | The 12% Letter | Dyson |
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals |
| 1 | True Income | Williams |
| 2 | Extreme Value | Ferris |
| 2 | The 12% Letter | Dyson |
| 1 | True Wealth | Sjuggerud |
| 2 | True Wealth Sys | Sjuggerud |
| 2 | Phase 1 | Curzio |
Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)
| Investment | Sym | Holding Period | Gain | Publication | Editor |
| Seabridge Gold | SA | 4 years, 73 days | 995% | Sjug Conf. | Sjuggerud |
| ATAC Resources | ATC | 313 days | 597% | Phase 1 | Badiali |
| JDS Uniphase | JDSU | 1 year, 266 days | 592% | SIA | Stansberry |
| Silver Wheaton | SLW | 1 year, 185 days | 345% | Resource Rpt | Badiali |
| Jinshan Gold Mines | JIN | 290 days | 339% | Resource Rpt | Badiali |
| Medis Tech | MDTL | 4 years, 110 days | 333% | Diligence | Ferris |
| ID Biomedical | IDBE | 5 years, 38 days | 331% | Diligence | Lashmet |
| Northern Dynasty | NAK | 1 year, 343 days | 322% | Resource Rpt | Badiali |
| Texas Instr. | TXN | 270 days | 301% | SIA | Stansberry |
| MS63 Saint-Gaudens | 5 years, 242 days | 273% | True Wealth | Sjuggerud |
My two ultimate contrarian bets...
Today's Digest Premium features the last installment in our series from S&A Editor in Chief Brian Hunt. In it, he shares his two ultimate contrarian bets today...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
China's currency is approaching a record... How to buy the yuan... European blue chips hit a new high... $4.3 trillion for BlackRock... Fink is bullish on the U.S... Investors shun the dollar for riskier assets... Bad year for retailers...
China's currency, the renminbi (aka the yuan), is about to pass a milestone against the U.S. dollar...
"We expect the yuan to pass the number 6 against the dollar, marking a new era for the currency and coinciding with faster [renminbi] reforms and liberalization," Justin Chan, co-head of Asia-Pacific markets for the bank HSBC, told the Wall Street Journal.
What Chan is saying is that the dollar is poised to fall to be worth less than six renminbi. The dollar was at 6.05 renminbi by late this afternoon...
As you can see from the chart below, the yuan has steadily strengthened against the dollar:
Steve Sjuggerud explained why this was happening and why he's bullish on the renminbi in the November issue of True Wealth... The currency was cheap (43% undervalued according to The Economist). And the chart above shows the dollar falling against a strengthening renminbi.
Plus, investment legend Jim Rogers – who believes the renminbi will replace the dollar as the world's most important currency – said he believes the currency could appreciate up to 500%.
From the November True Wealth:
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As the yuan continues strengthening against the dollar, Steve's recommended way to play the trend – the PowerShares Chinese Yuan Dim Sum Bond Fund (DSUM) – will continue rising. The fund holds a collection of bonds issued outside of China, but in the Chinese currency. (That's what "dim sum" refers to.) It hit a 52-week high yesterday.
True Wealth readers are up about 2% on the recommendation... And they're collecting 3.3% in dividends (generated by the bonds' interest payments) while they watch the renminbi appreciate against the dollar.
In the same issue, Steve explained how the Bernanke Asset Bubble – rising asset prices from the Federal Reserve's money printing – was moving offshore. And he showed how you could buy the best companies in Europe for a fraction of the cost of their U.S. counterparts:
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The investment Steve recommended, the SPDR Euro Stoxx 50 Fund (FEZ), is a collection of the biggest and best companies in Europe – like oil company Total, financial-services giant Allianz, and engineering and technology conglomerate Siemens.
In the issue, Steve showed subscribers a list of nine of Europe's biggest companies... all FEZ holdings. The average price-to-earnings ratio of these stocks was only 11.3 – 19% cheaper than the average ratio for the benchmark S&P 500 U.S. stock index. And the average yield is more than 4% (double what you can earn in the U.S.).
FEZ hit a 52-week high yesterday.
The world's largest asset-management firm, BlackRock, announced solid earnings today.
BlackRock charges fees to manage assets. So the more money under management, the more money BlackRock makes. And due to the Fed's money printing, more money is making its way to BlackRock.
The asset manager ended 2013 with a record $4.3 trillion in assets... BlackRock's fourth-quarter profit jumped 24% to $841 million, beating estimates. The stock rose as high as 4.2% on the news to an all-time high.
BlackRock founder and CEO Larry Fink appeared on CNBC this morning to share his thoughts on the economy today...
Fink said he's seeing investors trying to minimize the risk of rising interest rates by shifting into high-yield, short-duration bonds.
Also, Fink is bullish on the U.S. economy. "The U.S. is going to get stronger, primarily because we more rapidly fixed our banking system," he said. "We're getting better because our companies are sitting on a lot of cash. And I believe the outlook in the United States is stronger, so you're going to see more investing in capital expenditures in 2014 than you have in 2013 and 2012."
A survey by BlackRock showed the big money is reaching for yield by getting into alternative assets...
"Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets and rising correlation between stocks and bonds," Robert Goldstein, the head of BlackRock's institutional-client business, said in a statement.
To reach for yield, investors are focusing more on private equity, hedge funds, and real estate.
BlackRock surveyed 100 institutions... Nearly half plan to raise their exposure to real estate. And nearly 40% considered investing more in real "hard" assets, like infrastructure. Around one-third of respondents planned to reduce their cash position to find better returns elsewhere.
So individual investors are moving into high-yield bonds... The big, institutional money is looking for higher returns with more exotic investments in alternative asset managers and real estate. Nobody wants to sit in cash...
The Fed's efforts are working... People are shunning the dollar for riskier assets. But this all sounds familiar...
2014 has started off rough for U.S. retail...
Last week, department-store operator Macy's announced it is firing 2,500 people and closing five stores.
Today, shares of electronics retailer Best Buy fell nearly 30% after the chain announced a disappointing holiday quarter. Discounts failed to attract shoppers, Best Buy management said.
And one of our favorite retail whipping boys, J.C. Penney, announced it would fire 2,000 employees and close 33 stores – despite saying last week that it was "pleased" with its holiday performance.
New 52-week highs (as of 1/15/14): Altius Minerals (ALS.TO), American Homes 4 Rent (AMH), Blackstone Group (BX), CF Industries (CF), Diebold (DBD), Energy Transfer Equity (ETE), SPDR Euro Stoxx 50 Fund (FEZ), Cambria Foreign Shareholder Yield Fund (FYLD), Gladstone Capital (GLAD), Intel (INTC), SPDR International Health Care Fund (IRY), Ligand Pharmaceuticals (LGND), NVE Corp. (NVEC), ONEOK (OKE), Sturm, Ruger (RGR), ProShares Ultra Technology Fund (ROM), RPM International (RPM) Skyworks Solutions (SWKS), United Technologies (UTX), Virginia Mines (VGQ.TO), and Wells Fargo (WFC).
In today's mailbag, a question on trailing stops... Any questions we can answer for you? Let us know at feedback@stansberryresearch.com.
"I have a couple positions that seem to be getting on the verge of extremely overvalued. I know you all generally suggest 'letting your winners run.' I have been tempted to sell and take my profits so to speak. Do you suggest tightening up the trailing stops under these conditions? This might prove to be a good topic for an article because there are probably many people in this situation. Maybe a compare and contrast with just selling outright and tightening of trailing stops? I would appreciate a good viewpoint or two." – Paid-up subscriber Erik
Goldsmith comment: It's important to follow the exit plan as outlined by each editor. They'll update you to any changes in their exit strategies.
Regards,
