Editor's note: The Digest team is taking a couple days off for the Thanksgiving holiday. You will receive the Digest, as scheduled, on Monday. Enjoy the holiday.
Everything's at a new high today...
Global infrastructure bellwethers Cummins (CMI) and Caterpillar (CAT) hit new highs. The largest oil services firm in the world, Schlumberger (SLB), hit a high. Restaurant stocks Panera (PNRA), P.F. Chang's (PFCB), and Chipotle (CMG) are at new highs. Retailers Amazon(AMZN), Tiffany (TIF), and Ralph Lauren (RL) are at new highs. Blue chips Coca-Cola (KO) and UPS (UPS) both hit new highs. Natural gas plays Magnum Hunter (MHR) and CARBO Ceramics (CRR), both S&A Resource Report recommendations, are at 52-week highs.
The market is acting as if all was well with the world. Volatility (as measured by the volatility index) is near its lowest point since 2007.
Stoking the flames... the government announced new claims for unemployment benefits fell 34,000 to 407,000 last week (economists expected 435,000 new claims). Of course, employment normally jumps around the holiday season. And a new report shows Americans' incomes rose 0.5% last month. Never mind the soaring cost of our goods...
And never mind Europe is imploding... Ireland announced an austerity plan to slash its deficit by $20 billion in four years. Will it work? The market believes it will. But we don't. Neither does former Irish Central Bank economist, David McWilliams. From Yahoo Finance:
"Irish banking shares will never – or not for a long time – be worth anything. The solution requires the total destruction of the existing share base," said David McWilliams, a former Irish Central Bank economist and European hedge fund manager.
McWilliams warned that deepening austerity would only drive Ireland back into a recession, reducing tax revenues and widening the deficit again.
Regardless, the rest of Europe still faces huge problems. At the Value Investing Congress in New York last month, Spanish value investor Francisco Parames, dubbed "the Warren Buffett of Spain," said the problems in Europe are worse than Americans (and likely most Europeans) could imagine. Parames manages $8 billion as chief investment officer of Bestinver Asset Management. His returns are incredible. He knows what he's talking about. Keep an eye on the major ETFs for both Spain (EWP) and Italy (EWI). Both funds are plummeting right now. Both countries will go bankrupt. It's time to be cautious...
We are still bullish on precious metals. And there's good news to report on that front... Matt Badiali's Phase 1 pick Almaden Minerals (AAU) announced drill results yesterday. We won't get into the technicals of the announcement, but it was positive. Here are Matt's views:
Drilling at Almaden Minerals' Ixtaca discovery is slowly outlining a large gold and silver system. The style of this deposit makes it likely to contain a high-grade "feeder" zone deeper in the system. The company will begin testing that theory soon. If it does, Ixtaca could be a major gold and silver discovery. However, we're still at an early stage in the exploration process.
Almaden screamed more than 25% today on huge volume to an all-time high (it's the biggest gainer on all U.S. exchanges today). Based on today's actions, we can guess the market likes Almaden's chances of "a major gold and silver discovery."
Phase 1 subscribers are up more than 70% on the recommendation in less than two months. And that's a small gain compared to the other junior miners Matt has recommended (though he expects Almaden to continue rising). Phase 1 subscribers made nearly 600% on ATAC Resources, more than 200% on Rainy River, 123% on Paramount Gold... And several other triple-digit winners in the past year. If you haven't already invested in the junior mining sector, don't worry. We think these stocks could go parabolic as the monetary crisis deepens. Notice gold and silver are both down today, but the mining stocks are ripping.
Three junior mining stocks in the Phase 1 portfolio are officially "buys." There are nine recommendations total. Buying an assortment of junior mining stocks today could be one of the best investment opportunities you'll see in the next decade. To access Phase 1, click here... (Alliance members can also get some of Matt's junior mining recommendations in his latest S&A Junior Resource Trader... You can access it under the "S&A Alliance Beta" header on the left side of the webpage.)
New highs: MAG Silver (MVG), HMS Holdings (HMSY), AmeriGas Partners (APU).
What are your plans for the holidays? feedback@stansberryresearch.com.
"I just made 50% on a corporate bond I held for just over 5 months. This was the June recommendation from True Income which Mike said would provide a 14% yield every year for four years. Why did I sell it early? I was able to sell it at a 10% premium to par plus the capital gain I made over the purchase price. That plus 5 months interest was close to a 50% gain. Who says investing in bonds isn't lucrative. Thanks Mike." – Paid-up subscriber Terry
Goldsmith comment: Thanks for the note, Terry. Mike's returns have been incredible. We truly believe buying high-yield bonds at a huge discount to par is one of the safest investments you can make... Especially when you've got an analyst as talented and experienced as Mike Williams crunching the numbers for you. A handful of Mike's True Income recommendations are a must for every portfolio. To learn more about True Income, click here...
Regards,
Sean Goldsmith
Baltimore, Maryland
November 24, 2010