Dollar General makes a play... All-time high for this 'secret investment society' and its spinoff... Palladium hits a 13-year high... How to watch Porter's discussion with one of Tesla's founders...
We're not the only ones positioning ourselves to profit from the "disappearing middle class"...
As we've written many times in the Digest, the middle class is getting wiped out. Low interest rates and the Fed's money printing are allowing the wealthy to borrow money and buy stocks, real estate, and other hard assets.
But rising prices squeeze the lower-income wage earners, who have to pay more for everything while their wages stagnate or fall.
One way Porter and his analysts are poised to profit from this trend is through shares of discount retailer Dollar General (DG). The company has 11,000 stores across the country... And it plans to open another 700 stores this year.
Dollar General sells everyday goods people need at low prices... And due to its sheer number of locations, its stores are often located closer to its consumers than larger discount retailers like Wal-Mart.
For more on Dollar General pressuring Wal-Mart, be sure to reread the August 14 Digest.
Today, Dollar General offered $9 billion to acquire rival Family Dollar, besting the offer Dollar Tree made three weeks ago.
Dollar General is a better company than Family Dollar. It has better sales per store and sports better margins. Its stores are in better locations (thanks in part to its "build to suit" model, which forces developers to take on the risk for new stores).
Still, Stansberry's Investment Advisory analyst E.B. Tucker liked the idea of a Dollar General/Family Dollar merger. As he explained in the August 6 Digest...
|
As part of the deal, Dollar General CEO Rick Dreiling agreed to stay on to run the combined firm through May 2016. He had originally planned to retire in May 2015. He noted that he might not have announced retirement if he had known the Family Dollar deal was a possibility.
A Dollar General/Family Dollar merger makes more sense than Dollar Tree/Family Dollar. Dollar General and Family Dollar are in the same business... They sell everyday goods people need at low prices at neighborhood stores. Meanwhile, everything Dollar Tree sells costs $1.
The market likes the deal... Dollar General shares rose as much as 12% on the news.
Asset-management firm Brookfield Asset Management (BAM) just hit an all-time high.
Brookfield has approximately $200 billion under management in real estate, renewable energy, infrastructure (toll roads, sea ports, and gas pipelines), and private equity.
Brookfield is a sort of "secret investment society" – a way to invest your money with some of the world's best capital allocators. And Brookfield, led by CEO Bruce Flatt, has produced massive returns for investors over the decades.
That's one reason Extreme Value editor Dan Ferris recommended shares in April 2012. From that issue...
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Brookfield's latest quarterly results continue to demonstrate its excellent track record. The company's net income for the quarter increased to $1.6 billion. That's twice what it made in the same quarter last year.
Brookfield also reported a 24% increase in funds from operations – a metric real estate firms use that is comparable to free cash flow. This was largely due to increases in asset-management fees and gains from selling various assets.
Extreme Value subscribers are up 57%.
Dan also recommended Brookfield Asset Management because of its plans to spin off different companies...
When Dan first recommended Brookfield, the company was in the process of spinning off different business segments in an effort to create publicly traded subsidiaries. Brookfield planned to retain controlling stakes.
One of those spinoffs was Brookfield Property Partners (BPY), which owns and operates commercial properties across the world. BPY owns approximately 300 office and retail properties, 15,600 multi-family units, and 29 million square feet of industrial space.
BPY also reported solid earnings... Net income increased from $277 million in the second quarter of 2013 to $892 million last quarter. This was partially due to an increased stake in Brookfield Office Properties (BPO), higher leasing activity, and a stronger global property market.
Palladium is currently trading at $893 an ounce – a 13-year high.
More than 80% of the world's palladium comes from Russia and South Africa... As we like to say, going long palladium is going long political instability in these two countries – a safe bet.
South Africa is in the middle of mining labor strikes. The market fears that Russia is depleting its palladium supply... And that sanctions surrounding the Ukraine crisis could hurt Russia's palladium supply.
Palladium is mainly used in catalytic converters for automobiles. In addition to political instability, strong car demand is pushing prices higher.
This year should mark the fifth-straight year of growth in U.S. auto sales. July sales volume was up 9% versus the same period a year ago.
Growing demand is straining global production... Precious-metals firm Johnson Matthey expects palladium to reach a deficit of 1.6 million ounces this year, a new high.
Palladium prices are up 25% this year, far outpacing platinum (up 6%), gold (up 8%), and silver (up less than 1%).
S&A Global Contrarian subscribers are enjoying the metal's recent rise. Editor Kim Iskyan showed a safe way to profit from the rising global demand for palladium. His subscribers are up about 10% since January.
On a side note, Kim is one of the speakers at our S&A Conference Series event in Los Angeles on Saturday... We know it's too late for you to attend in person, so we've arranged for you to be able to stream the entire show live from your home computer. More on that in a moment...
I looked over Kim's presentation this morning... Let's just say you won't get this kind of global perspective from anyone else.
Kim will discuss his travels to Kazakhstan, Argentina, Thailand, Russia, and other countries around the world... And he'll share the best opportunities he has found.
He'll also discuss the other countries he plans to visit.
I also got a sneak peek at Steve Sjuggerud's presentation... He's going to tell attendees when the final inning of the bull market is coming... And which assets you will want to own. (We're also giving a sample of Steve's forecast in today's Digest Premium. Click here to gain instant access.)
Kim and Steve's presentations should be terrific. But the highlight of the Los Angeles event for me will no doubt be Porter's conversation with JB Straubel – one of the cofounders of electric-car manufacturer Tesla.
It will be one of the first public speaking engagements Straubel will have made... And as regular Digest readers know, Straubel faces a tough critic in Porter.
Those are just a few of the top-notch presenters coming to L.A. And again... while you can't join us in person, we hope you'll watch the show from home.
Through this week, you can sign up for live access to our Los Angeles event... You'll see every presentation (and every surprise we have in store) in real time.
Plus, when you sign up for Los Angeles, we'll also give you online access to our final event of the year in Nashville, where former Congressman and presidential candidate Ron Paul and currency expert Jim Rickards will headline the event.
You can learn more about our Los Angeles event – and how to watch it live from home – by clicking here.
New 52-week highs (as of 8/15/14): Advent Claymore Convertible Securities and Income Fund (AVK), Brookfield Asset Management (BAM), Brookfield Property Partners (BPY), Consolidated Tomoka (CTO), Dolby Laboratories (DLB), Kinder Morgan Management (KMR), PowerShares QQQ Fund (QQQ), Skyworks Solutions (SWKS), ProShares Ultra 20+ Year Treasury Fund (UBT), Vanguard Inflation Protected Securities Fund (VIPSX), and W.R. Berkley (WRB).
In today's mailbag, one subscriber puts the value of money into historical context... and another writes in about the value of his Alliance membership. Send your thoughts to feedback@stansberryresearch.com.
"Three contestants in 1914 bet on the future value of money. Contestant A put 1 ounce of gold into a safe deposit box. Contestant B put $45 into a safe deposit box. Contestant C put $45 into savings instruments yielding 5%. In 2014 they compared notes: A's gold is worth $1,300. B has $45. C's account balance is $6,609." – Paid-up subscriber Erich Kellner
"I have been at this over 50 years, go all the way back to Hayden Stone Incorporated still have one of their business cards. Worked my way through every brokerage house in the country usually leaving under dire circumstances. 1997 was the last straw of association with the big brokerage houses, went to a discount broker and told my wife we make all the decisions. Turned out to be the best day of our investing lives.
"I should say that through all my trials and tribulations I made thousands of dollars, had to be good luck and timing. I knew that I did not have the expertise, knowledge, energy and time to figure out stocks. So the search began through the services to find one that would be a help in finding stocks to deal in.
"I think that I went through all of them until I started watching Stansberry for about a year or so. Realized that I was on to something and that is why I am an Alliance member. Never knew anything about options but you make it so easy and I have made a bunch. I wish I knew what I was doing I could probably make some really serious money. By reading your articles I have learned so much and feel fairly comfortable going forward, something I never had before. Your articles that travel the world are very interesting and informative, love the Retirement Millionaire. Got a ton more stories but this is enough for now." – Paid-up subscriber Richard Dunkel
Regards,
Sean Goldsmith
August 18, 2014
Why stocks could soar from October 2014 to April 2015...
If history is any indication, the stock market is set to soar starting in October. In today's Digest Premium, Steve Sjuggerud discusses this phenomenon...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
Why stocks could soar from October 2014 to April 2015...
We're not the only ones positioning ourselves to profit from the "disappearing middle class"...
As we've written many times in the Digest, the middle class is getting wiped out. Low interest rates and the Fed's money printing are allowing the wealthy to borrow money and buy stocks, real estate, and other hard assets.
But rising prices squeeze the lower-income wage earners, who have to pay more for everything while their wages stagnate or fall.
One way Porter and his analysts are poised to profit from this trend is through shares of discount retailer Dollar General (DG). The company has 11,000 stores across the country... And it plans to open another 700 stores this year.
Dollar General sells everyday goods people need at low prices... And due to its sheer number of locations, its stores are often located closer to its consumers than larger discount retailers like Wal-Mart.
For more on Dollar General pressuring Wal-Mart, be sure to reread the August 14 Digest.
Today, Dollar General offered $9 billion to acquire rival Family Dollar, besting the offer Dollar Tree made three weeks ago.
Dollar General is a better company than Family Dollar. It has better sales per store and sports better margins. Its stores are in better locations (thanks in part to its "build to suit" model, which forces developers to take on the risk for new stores).
Still, Stansberry's Investment Advisory analyst E.B. Tucker liked the idea of a Dollar General/Family Dollar merger. As he explained in the August 6 Digest...
|
As part of the deal, Dollar General CEO Rick Dreiling agreed to stay on to run the combined firm through May 2016. He had originally planned to retire in May 2015. He noted that he might not have announced retirement if he had known the Family Dollar deal was a possibility.
A Dollar General/Family Dollar merger makes more sense than Dollar Tree/Family Dollar. Dollar General and Family Dollar are in the same business... They sell everyday goods people need at low prices at neighborhood stores. Meanwhile, everything Dollar Tree sells costs $1.
The market likes the deal... Dollar General shares rose as much as 12% on the news.
Asset-management firm Brookfield Asset Management (BAM) just hit an all-time high.
Brookfield has approximately $200 billion under management in real estate, renewable energy, infrastructure (toll roads, sea ports, and gas pipelines), and private equity.
Brookfield is a sort of "secret investment society" – a way to invest your money with some of the world's best capital allocators. And Brookfield, led by CEO Bruce Flatt, has produced massive returns for investors over the decades.
That's one reason Extreme Value editor Dan Ferris recommended shares in April 2012. From that issue...
|
Brookfield's latest quarterly results continue to demonstrate its excellent track record. The company's net income for the quarter increased to $1.6 billion. That's twice what it made in the same quarter last year.
Brookfield also reported a 24% increase in funds from operations – a metric real estate firms use that is comparable to free cash flow. This was largely due to increases in asset-management fees and gains from selling various assets.
Extreme Value subscribers are up 57%.
Dan also recommended Brookfield Asset Management because of its plans to spin off different companies...
When Dan first recommended Brookfield, the company was in the process of spinning off different business segments in an effort to create publicly traded subsidiaries. Brookfield planned to retain controlling stakes.
One of those spinoffs was Brookfield Property Partners (BPY), which owns and operates commercial properties across the world. BPY owns approximately 300 office and retail properties, 15,600 multi-family units, and 29 million square feet of industrial space.
BPY also reported solid earnings... Net income increased from $277 million in the second quarter of 2013 to $892 million last quarter. This was partially due to an increased stake in Brookfield Office Properties (BPO), higher leasing activity, and a stronger global property market.
Palladium is currently trading at $893 an ounce – a 13-year high.
More than 80% of the world's palladium comes from Russia and South Africa... As we like to say, going long palladium is going long political instability in these two countries – a safe bet.
South Africa is in the middle of mining labor strikes. The market fears that Russia is depleting its palladium supply... And that sanctions surrounding the Ukraine crisis could hurt Russia's palladium supply.
Palladium is mainly used in catalytic converters for automobiles. In addition to political instability, strong car demand is pushing prices higher.
This year should mark the fifth-straight year of growth in U.S. auto sales. July sales volume was up 9% versus the same period a year ago.
Growing demand is straining global production... Precious-metals firm Johnson Matthey expects palladium to reach a deficit of 1.6 million ounces this year, a new high.
Palladium prices are up 25% this year, far outpacing platinum (up 6%), gold (up 8%), and silver (up less than 1%).
S&A Global Contrarian subscribers are enjoying the metal's recent rise. Editor Kim Iskyan showed a safe way to profit from the rising global demand for palladium. His subscribers are up about 10% since January.
On a side note, Kim is one of the speakers at our S&A Conference Series event in Los Angeles on Saturday... We know it's too late for you to attend in person, so we've arranged for you to be able to stream the entire show live from your home computer. More on that in a moment...
I looked over Kim's presentation this morning... Let's just say you won't get this kind of global perspective from anyone else.
Kim will discuss his travels to Kazakhstan, Argentina, Thailand, Russia, and other countries around the world... And he'll share the best opportunities he has found.
He'll also discuss the other countries he plans to visit.
I also got a sneak peek at Steve Sjuggerud's presentation... He's going to tell attendees when the final inning of the bull market is coming... And which assets you will want to own. (We're also giving a sample of Steve's forecast in today's Digest Premium. Click here to read it.)
Kim and Steve's presentations should be terrific. But the highlight of the Los Angeles event for me will no doubt be Porter's conversation with JB Straubel – one of the cofounders of electric-car manufacturer Tesla.
It will be one of the first public speaking engagements Straubel will have made... And as regular Digest readers know, Straubel faces a tough critic in Porter.
Those are just a few of the top-notch presenters coming to L.A. And again... while you can't join us in person, we hope you'll watch the show from home.
Through this week, you can sign up for live access to our Los Angeles event... You'll see every presentation (and every surprise we have in store) in real time.
Plus, when you sign up for Los Angeles, we'll also give you online access to our final event of the year in Nashville, where former Congressman and presidential candidate Ron Paul and currency expert Jim Rickards will headline the event.
You can learn more about our Los Angeles event – and how to watch it live from home – by clicking here.
New 52-week highs (as of 8/15/14): Advent Claymore Convertible Securities and Income Fund (AVK), Brookfield Asset Management (BAM), Brookfield Property Partners (BPY), Consolidated Tomoka (CTO), Dolby Laboratories (DLB), Kinder Morgan Management (KMR), PowerShares QQQ Fund (QQQ), Skyworks Solutions (SWKS), ProShares Ultra 20+ Year Treasury Fund (UBT), Vanguard Inflation Protected Securities Fund (VIPSX), and W.R. Berkley (WRB).
In today's mailbag, one subscriber puts the value of money into historical context... and another writes in about the value of his Alliance membership. Send your thoughts to feedback@stansberryresearch.com.
"Three contestants in 1914 bet on the future value of money. Contestant A put 1 ounce of gold into a safe deposit box. Contestant B put $45 into a safe deposit box. Contestant C put $45 into savings instruments yielding 5%. In 2014 they compared notes: A's gold is worth $1,300. B has $45. C's account balance is $6,609." – Paid-up subscriber Erich Kellner
"I have been at this over 50 years, go all the way back to Hayden Stone Incorporated still have one of their business cards. Worked my way through every brokerage house in the country usually leaving under dire circumstances. 1997 was the last straw of association with the big brokerage houses, went to a discount broker and told my wife we make all the decisions. Turned out to be the best day of our investing lives.
"I should say that through all my trials and tribulations I made thousands of dollars, had to be good luck and timing. I knew that I did not have the expertise, knowledge, energy and time to figure out stocks. So the search began through the services to find one that would be a help in finding stocks to deal in.
"I think that I went through all of them until I started watching Stansberry for about a year or so. Realized that I was on to something and that is why I am an Alliance member. Never knew anything about options but you make it so easy and I have made a bunch. I wish I knew what I was doing I could probably make some really serious money. By reading your articles I have learned so much and feel fairly comfortable going forward, something I never had before. Your articles that travel the world are very interesting and informative, love the Retirement Millionaire. Got a ton more stories but this is enough for now." – Paid-up subscriber Richard Dunkel
Regards,
Sean Goldsmith
August 18, 2014
Editor's note: If history is any indication, the stock market is set to soar starting in October. In today's Digest Premium, Steve Sjuggerud discusses this phenomenon...
I (Steve Sjuggerud) like to go with what works in the markets...
The simpler the indicator, the better. The more time-tested the indicator, the better. On those two counts, not much can beat investing legend Jeremy Grantham's Presidential Election Cycle Indicator.
In short, based on history, stocks have not had a losing year during the third year of a U.S. presidential term, as I'll explain.
When I first heard of this indicator, I thought it sounded a bit ridiculous – investing based on the presidential election cycle. Surely this couldn't be useful. The truth is, if Grantham wasn't so enthusiastic about it, I probably wouldn't have given it a chance.
But then I crunched the numbers myself... and the results were shocking...
Using Grantham's way of doing it, with data going back to 1932, it turned out the Election Cycle Indicator is extremely accurate... Take a look:
|
Year
|
Return*
|
% of losing years
|
|
Year 1
|
-0.7%
|
50%
|
|
Year 2
|
-3.3%
|
50%
|
|
Year 3
|
26.2%
|
5%
|
|
Year 4
|
6.9%
|
20%
|
|
* Not including dividends
|
||
The numbers in this table are just crazy...
The conclusion is, just about all the gains in the stock market come during Year 3 of the election cycle.
The rest of the years are all basically a wash with each other... Years 1 and 2 are both losers... and Year 4 simply makes up for the losers of Years 1 and 2, plus a little bit.
Yes, Year 3's gains are amazing. But its "win rate" is even better... It has only had one losing year since 1932 – and that was a loss of 1%. That losing year would actually be a winning year if you count dividends. So with dividends, Year 3 has had a perfect track record since 1932. It's hard to argue with success like that.
I tell you this because, according to Grantham's math, the magic Year 3 is about to start...
But this is August... so how can I say Year 3 is about to start? In Grantham's version of the indicator, you start your "years" at the end of the third quarter (instead of at the end of the calendar year).
That means we're only a few months away from the best time, historically, to own stocks. Grantham's "Year 3" starts soon... specifically, on October 1.
Grantham crunched even more numbers on this indicator... and he found something interesting...
He found that, particularly in the last 50 years, nearly all of the returns in his "Year 3" came in the first seven months... from October 1 through the end of April.
Astoundingly, Grantham also found that the U.S. election cycle has similar results in Japan and Europe. When OUR election cycle is in Year 3, those foreign markets go up... a lot.
Long story short, Grantham's Election Cycle Indicator is about to kick in. This Indicator has been flawless since 1932, when you include dividends. And according to Grantham, the majority of the profits happen in the first seven months.
So you really want to be invested in stocks from October 2014 through April 2015.
– Steve Sjuggerud
Editor's note: Between now and the end of April 2015, Steve believes the stock market will have a big tailwind from the Fed and the election cycle. But what happens next? On Saturday, August 23, he will share his predictions at the S&A Conference Series event in Los Angeles.
We'll also hear from S&A editors Frank Curzio and Kim Iskyan... 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.
Why stocks could soar from October 2014 to April 2015...
If history is any indication, the stock market is set to soar starting in October. In today's Digest Premium, Steve Sjuggerud discusses this phenomenon...
To continue reading, scroll down or click here.