Don't forget the bright spots...

 Falling oil prices and the energy sector's recent nosedive have stolen headlines. But despite the carnage out there this week, we wanted to share some happy thoughts today... and remind you that some stocks are still marching to new all-time highs.

We also want to share one of the greatest ways to collect income on earth... It's a way to earn large cash payments from things you use and encounter in the course of your everyday life – a water fountain, for example. We call it "hidden income." But we'll touch more on that later.

 If you've been watching the 52-week highs list we publish at the bottom of every Digest, you've seen a plethora of World Dominators making the list.

Extreme Value editor Dan Ferris coined the term to describe a select group of companies that dominate their respective industries. Most World Dominators gush an extraordinary amount of free cash flow, then pass much of it along to shareholders through ever-growing dividends and share repurchases.

These are names we've all heard before... like soda giant Coca-Cola, software icon Microsoft, and discount retailer Wal-Mart, to name a few.

 World Dominators are some of the safest ways to compound your long-term wealth. But Stansberry Research subscribers complain about us recommending these "boring," cash-gushing businesses.

It's a paradox we've faced since starting our company some 15 years ago. Despite our constant hounding to invest in "boring" opportunities like World Dominators, municipal bonds, utilities, and health care companies, the truth is that most of you are looking for a hot stock tip.

But we know that if every day, we convert just one of you into a fan of "boring" businesses like the ones we've mentioned, we're doing our job.

 Today, Extreme Value research analyst Mike Barrett sent us a note about World Dominators... and why there are things about these businesses that you probably never knew...

 If you've watched TV over the past few months, you've undoubtedly seen the following Geico commercial... There are several versions, but one basic script: One actor notes that "15 minutes could save you 15% on car insurance." The other actor responds, "Everybody knows that."

I bet many seasoned Stansberry Research subscribers feel the same way about World Dominators. We've been discussing them for eight years. When we write about them, we imagine you reading it and saying, "Everybody knows that."

Today, I (Mike Barrett) am going to discuss three things I'll bet you didn't know about World Dominators.

 Let's start with Cisco. Today, 75% of the Internet runs on the networking giant's routers and switches.

What you didn't know is that a similar opportunity to be the "great connector" is once again emerging for Cisco in cloud computing. Today, companies everywhere are generating huge amounts of data. The most sensitive, mission-critical data is often stored in a company's own private data center. Other less important data can be stored privately or in public cloud services, such as those operated by Amazon and Microsoft.

According to CEO John Chambers, the current challenge is similar to the one Cisco solved 20 years ago... While public and private clouds are proliferating, they're based on different technologies that don't necessarily talk to each other.

Earlier this year, Cisco launched a set of software tools called "Intercloud" to help companies easily shift and customize data between private and public cloud services. Intercloud is Cisco's response to a growing challenge: Companies want to seamlessly move their IT workloads across the cloud without compromising security.

Cisco recently announced 30 new partners for Intercloud, which now spans 50 countries and 250 data centers, making it the world's largest interoperable network. It's a safe bet that companies will continue to generate more data... and that demand for Intercloud will continue to grow.

 Next up is the World Dominator of mass merchandising, Wal-Mart.

You probably know the company is America's largest grocer (by a wide margin). But what you might not know is that the grocery business is typically low-margin and low-growth... unless you're selling food labeled "organic."

According to scientists and professors from Academics Review, organic sales have risen 3,400% over the past 24 years. It's the fastest-growing consumer trend in modern history.

Foods labeled "organic" are typically more expensive to grow. Farmers must meet strict criteria that often preclude the use of synthetic pesticides, genetically modified seeds, and growth hormones. In exchange, consumers accept that organic foods will be more expensive than traditionally grown alternatives.

Earlier this year, Wal-Mart attempted to defy this logic. The company – along with its organic supplier, Wild Oats – decided to offer an entire organic product line... without the organic price premium. Consumer-products publication Consumer Reports found that Wal-Mart's organic products were up to 50% cheaper than comparable products at other supermarkets.

Business consulting firm Grand View Research expects the organic segment to continue growing almost 16% per year in the U.S. That means the market for organic products could double to $70 billion before 2020. And it's obvious to us that Wal-Mart will be a prime beneficiary of that growth.

 The third World Dominator I'll talk about today is IBM. Fortune magazine recently reported that 90% of the banking industry, 80% of the airlines industry, and 70% of all enterprise data flows through the tech giant's IT infrastructure. This isn't groundbreaking information... Everybody knows IBM is a dominant provider of IT services.

But what you probably didn't know is that IBM is also a leading owner of patents related to graphene, the world's thinnest, most conductive material. It's 200 times stronger than steel, but it's stretchable, transparent, and impermeable. Think of it as a heavy-duty, high-tech version of cling wrap. Eventually, it will be used in wearable and foldable technological devices.

Bloomberg recently reported that IBM holds 21% of graphene patents in the U.S. That's more than twice the amount of graphene patents held by Samsung, another technology leader spending heavily on graphene research and development. If and when the promise of graphene is unlocked, it's likely IBM will play an important role.

 Speaking of IBM, the World Dominator recently signed several major deals...

Yesterday, IBM signed a deal with the world's largest advertising firm, WPP. IBM will run WPP's cloud operations as part of a seven-year, $1.3 billion contract.

And on Monday, IBM announced a multibillion-dollar services agreement with Dutch bank ABN AMRO to manage the IT infrastructure responsible for the bank's global operations. The agreement includes the implementation of a private IBM cloud and simplification and standardization of ABN AMRO's existing IT landscape, including mobile computing.

Last month, IBM announced a similar seven-year, $1.3 billion deal with German airline Lufthansa.

 In the October 21 Digest, we discussed how IBM is transitioning from a hardware company to a specialized software company. We advised you to avoid getting caught up in the company's quarter-to-quarter action...

Over the past 10 years, annual revenues have come in between $91 billion and $107 billion. But gross margins have steadily improved from 37.4% in 2004 to 48.6% in 2013. And net income has nearly doubled over that time frame, rising from $8.4 billion in 2004 to $16.5 billion in 2013. Better margins mean IBM's management had more money to distribute to shareholders. Over the past 10 years, annual dividends increased more than 500%, from $0.70 to $4.40. At the same time, IBM also reduced its share count more than 40%... from 1.7 billion shares to less than 1 billion today. When IBM buys back shares, it's like giving each shareholder a bigger piece of the pie.

 Legendary investor Warren Buffett is also loading up on shares of IBM while they're on sale...

In the third quarter, Buffett's Berkshire Hathaway holding company bought 304,034 shares.

That brings the company's total stake to about 70.5 million shares... worth approximately $13 billion, or 7% of IBM. It's Berkshire's fourth-largest position.

Like the Extreme Value team, Buffett recognizes the tremendous value in IBM shares today... And he plans to take full advantage.

In his 2011 annual letter to shareholders, Buffett made a "wish for IBM's stock price to languish for five years"...

If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon.

 As we said in the beginning of today's Digest, we also wanted to share one of the best income-generating strategies in the world...

Dr. David "Doc" Eifrig has loaded up his Income Intelligence portfolio with some of the best income-producing assets available. He holds shares of World Dominators, municipal bonds, and other income investments, like master limited partnerships and business development companies. We think Doc's portfolio is one of the best and safest collections of income investments available.

And Doc just released a brand-new special report for Income Intelligence subscribers titled "The Guide to Collecting Hidden Income in America." This report will show you how to collect huge income from the mundane things happening around you every day.

Doc shared some of his thoughts on "hidden income" in today's DailyWealth...

A water fountain is like many things in your everyday life. It can be used to generate lots of extra income for you and your family. This income is reliable... and available to anyone. You simply have to know how to look for it. Now back to the water fountain... Each time someone uses a water fountain or a toilet... a water bill must be paid. Water and sewer systems are often built by local municipalities. The tax revenues that your city and state collect from these things can be turned into your very own "hidden" income. And you'll also get to earn that income tax-free. You do it by buying municipal bonds, also known as "munis." Muni bonds are loans to local governments. By buying a muni bond, an investor loans a municipality cash to build roads, schools, or other public buildings. In exchange, the government promises to send investors regular interest payments. At the end of the bond's life, they also return the initial "principal" investment.

 Muni bonds are only one example of the hidden income opportunities Doc has found. In his new special report, he also shares a way to get the IRS to pay you nearly 8% a year... how to earn more than 4% a year from trees... and how to collect nearly 9% a year from the local businesses in your area.

Doc's special report comes free with a subscription to Income Intelligence. For just $49, you'll gain immediate access to Doc's portfolio of income investments... and his brand-new special report on collecting hidden income.

If you decide Income Intelligence isn't right for you, we also offer a four-month, 100% risk-free trial. Learn more here.

 In today's mailbag, two subscribers write in with their thoughts on subscriber David Paul's comments from yesterday's mailbag. E-mail us your opinion on the topic at feedback@stansberryresearch.com.

 New 52-week highs (as of 12/2/14): American Financial Group (AFG), Amgen (AMGN), Deutsche X-trackers Harvest China A-Shares Fund (ASHR), ProShares Ultra Nasdaq Biotechnology Fund (BIB), Bristol-Myers Squibb (BMY), Berkshire Hathaway (BRK), Chubb (CB), Cisco (CSCO), WisdomTree Japan Hedged Equity Fund (DXJ), Express Scripts (ESRX), Fidelity Select Medical Equipment & Systems Fund (FSMEX), Intel (INTC), Eli Lilly (LLY), Medtronic (MDT), 3M (MMM), Altria (MO), ONE Gas (OGS), PepsiCo (PEP), Procter & Gamble (PG), ProShares Ultra Health Care Fund (RXL), and Alleghany (Y).

 "I happen to agree with reader David Paul's comments on the value of rare coins in a crisis reverting closer to just bullion value. I also agree with your comments about the potential for rare coins to soar in value far beyond the intrinsic bullion. My thought experiments say it will all depend on the type, severity and length of the crisis. In other words, which one of Jim Rickard's 'snowflakes' causes the avalanche and how severe it is.

"In an extreme crisis, it may turn out that food, clean water or medical supplies are far more valuable, and scarce, than gold of any type. In that scenario, it would likely be dangerous to try and use hard currency to purchase needed items, even if they can be had. Imagine being in an environment like Ferguson squared and calmly trying to buy food or gas with gold coins. Quite a large target you would be." – Paid-up subscriber John Plumberg

 "I tend to agree with David Paul regarding the price of collectible coins when the dollar finally trashes – the value of these coins will tend toward the value of the metal they contain. The analogy Goldsmith made, 'So to say a rare collectible coin will revert to its melt value during crisis is like saying a Picasso will revert to the intrinsic value of the canvas and paint.' is not applicable because in the case of rare gold coins, it is made up of two components – the price of the metal in it and the perceived value of the coin's rarity, beauty, etc. In the case of a Picasso, the price of the material on which it exists is zero. Its only value is the perceived value attached to the painting." – Paid-up subscriber Luis Anderson

Goldsmith comment: Of course the metal in a rare coin has value... But it's inconsequential. A 1913 Liberty nickel sold at auction in January 2013 for $3.2 million... How much of that, do you think, was due to the value of the nickel?

There's a $5 gold piece coming up for auction in the next few months. They expect it to bring between $8 million and $10 million. That coin weighs less than one-quarter of an ounce... The intrinsic value of the metal in that coin is about $300.

Meanwhile, rare stamps sell for millions of dollars. What's the intrinsic value there? And don't you think paintings are valued on their rarity and beauty? Collectibles are an asset class all their own.

Regards,

Sean Goldsmith and Mike Barrett

December 3, 2014