News confirms: Housing is the place to be... Homebuilders at a 52-week high... Buffett's new housing bet... Steve's new website... "An A.O.P. Retirement"...
"Despite everything I've written over the past few years, I don't think most people understand just how extraordinary the opportunity in real estate is..."
Steve Sjuggerud led today's DailyWealth with the above note about real estate. Steve has been urging readers to buy real estate for years. Between low prices and record-low mortgage rates, Steve says housing is more affordable than ever.
The Digest team has done its part to spread the message about the value in real estate... On Monday, we told you how major private-equity firms are "loading the boat" on single-family homes. These are the world's smartest investors. They have access to the biggest and best deals in the world. And they're buying houses... hundreds of millions of dollars of houses each week.
The market continues to confirm what we've been saying month after month: Housing is the place to be. Yesterday, the PowerShares Dynamic Building and Construction Fund (PKB) hit a 52-week high. PKB is an exchange-traded fund that holds the country's biggest homebuilders and construction-related companies (like Home Depot and tools and equipment-maker Ingersoll-Rand).
KB Home, a leading U.S. homebuilder, is one of the best-performing stocks this year... It's up 140% year to date.
USG (the largest drywall manufacturer in the country), Whirlpool (washing machines), and Mohawk (carpet) are all trading at 52-week highs. These stocks are directly correlated to the housing market... And they're three of the largest and most important in the sector.
Legendary investor Warren Buffett is also bullish on housing. He's been buying Wells Fargo, which originates one-third of the mortgages in the U.S. He also owns Clayton Homes, which makes manufactured homes… and Acme Brick, Benjamin Moore (paint), and Shaw (carpet). But he still wants more exposure to housing...
Buffett's holding company Berkshire Hathaway has been buying up real-estate brokerages around the country under its HomeServices of America company. Now, Berkshire is partnering with Canadian firm Brookfield Asset Management (a major real-estate holder) to build a giant brokerage network. Brookfield will contribute 53,000 individual real-estate agents, who sold $72 billion of residential real estate last year. Berkshire's HomeServices of America will own the majority of the network... And it's rolling out a new brand, Berkshire Hathaway Home Services, next year.
Buffett has said he is bullish on the U.S. economy, and his Berkshire businesses are already seeing improvements in the residential property market. He expects they will hire around 8,000 people next year to cater for the increase.
This is not the first move for Buffett confirming his positive outlook on real estate. In October, he agreed to pay $1.5 billion for a home-loan portfolio from the bankrupt mortgage lender Residential Capital.
Steve says there's still time to take advantage of the real-estate boom... Mortgage rates haven't been this cheap in more than 100 years. Median home prices have dropped to 1970s levels. But as he points out, home sizes are up 39% since 1974. So the price per square foot adjusted for inflation and size needs to rise by 23% just to reach fair value.
Steve says this is the most awesome opportunity in American history. He's put together an extensive real-estate report with its own website called ValuableProperties.
In his report, he includes a detailed Valuable Properties user guide… which is broken into different sectors. These include his Top Five valuable properties, his Top 10 largest Real Estate "Micro Payments," the Top 10 cheapest Real Estate Companies, a variety of income-producing REITs, plus a whole host of other income plays. It includes hundreds of different companies. It's an outstanding resource.
If you want to get in on this real estate opportunity, you really should consider using Steve's website. You can get more details here...
Yesterday, I (Dan Ferris) told you about the huge opportunity in pipeline stocks. It's happening because of the huge boom in the U.S. oil and gas industry. All the new oil and gas needs to be carried to market, and we need perhaps $200 billion-$300 billion worth of new pipelines to do it.
Today, I'd just like to tell you about the tax advantages of owning pipeline stocks… and why we refer to the opportunity they represent as "An A.O.P. Retirement."
The pipeline stocks I'm talking about aren't regular corporations. They're what are known as "master limited partnerships," or MLPs.
These publicly traded companies engage in activities in the energy industry... operating pipelines, natural gas processing, refining, even exploration and production. As long as an MLP earns 90% of its revenue from these sources of "qualifying income," it pays no corporate taxes.
The MLP shareholders – called "unit holders" – pay the taxes... except that most MLP dividends are tax-deferred. A substantial portion of an MLP's dividend is usually categorized as "return of capital," not regular income. Most investors won't owe taxes on "return of capital" distributions until they sell their MLP shares.
Having taxes deferred on MLP distributions can work out quite well. In some cases, shareholders do not have to pay the tax at all... According to the website of the National Association of Publicly Traded Partnerships: "As long as your adjusted basis is above zero, tax on your distributions is deferred until you sell your units. [And] if a unitholder dies and the units pass to his heirs... the prior distributions are not taxed."
Imagine earning a great income in the last couple decades of your life, incurring no tax liability on it, and then passing the units along to your heirs... who will incur no liability on your distributions. That's why we call this opportunity in pipeline stocks "The A.O.P. Retirement." A.O.P. stands for "American Oil Pension."
We think this opportunity will produce a massive, growing, and safe stream of income for many years to come. So we've created a 32-page report called "An A.O.P. Retirement."
In the report, we explain the oil and gas boom. We give you full details about what MLPs are and why you should considering owning them. We'll detail how we used our proprietary seven-step model to find the MLPs that best create shareholder value. And we identify the seven safest, best-run MLPs.
One of our seven criteria is to recommend only those MLPs that pay out the majority of their distributable cash flow to their shareholders. We did that so we could find the MLPs that do the best job of paying out a large, growing income stream. There are six other points our model covers, which we explain in simple, easy-to-understand language.
Only subscribers to The 12% Letter can get access to the report. Fortunately, The 12% Letter is very affordable. And if you read it for four months and decide it's not for you, you can keep the report and still get a full refund. So there's really little risk here. If you're interested in finding out the details of "An A.O.P. Retirement" (without watching a promotional video), click here.
New 52-week highs (as of 10/31/12): Sandstorm Metals & Energy (SND.V), Yamana Gold (AUY), and Southern Copper (SCCO).
In today's mailbag... a couple readers chime in on Porter's bullish oil outlook. Send your e-mail to feedback@stansberryresearch.com.
"I couldn't care less what some analyst said, if Porter said oil prices are going to fall then they are going to fall." – Paid-up subscriber Russ
"For the first time in my memory, empty rail oil tankers are being stored on side trackage along Interstate 5 south of Seattle. For most of the past 5 years, it has been empty lumber rail cars stored here.
"I think this change is a harbinger of what is coming... either oil tankers will be bringing more crude to the refineries/ports north of Seattle OR more refined products from said refineries heading south etc. OR more crude will be brought to said refineries and shipped out of the new port being added by Shell at said refineries as crude or refined products.
"All of these three possibilities mean that the pipelines cannot keep up with production of oil within the USA and they will resort to rail. Better for [railroad] BNSF as well as for pipeline companies. Keep up the good work." – Paid-up subscriber Joe
Regards,
"Despite everything I've written over the past few years, I don't think most people understand just how extraordinary the opportunity in real estate is..."
Steve Sjuggerud led today's DailyWealth with the above note about real estate. Steve has been urging readers to buy real estate for years. Between low prices and record-low mortgage rates, Steve says housing is more affordable than ever.
The Digest team has done its part to spread the message about the value in real estate... On Monday, we told you how major private-equity firms are "loading the boat" on single-family homes. These are the world's smartest investors. They have access to the biggest and best deals in the world. And they're buying houses... hundreds of millions of dollars of houses each week.
The market continues to confirm what we've been saying month after month: Housing is the place to be. Yesterday, the PowerShares Dynamic Building and Construction Fund (PKB) hit a 52-week high. PKB is an exchange-traded fund that holds the country's biggest homebuilders and construction-related companies (like Home Depot and tools and equipment-maker Ingersoll-Rand).
KB Home, a leading U.S. homebuilder, is one of the best-performing stocks this year... It's up 140% year to date.
USG (the largest drywall manufacturer in the country), Whirlpool (washing machines), and Mohawk (carpet) are all trading at 52-week highs. These stocks are directly correlated to the housing market... And they're three of the largest and most important in the sector.
Legendary investor Warren Buffett is also bullish on housing. He's been buying Wells Fargo, which originates one-third of the mortgages in the U.S. He also owns Clayton Homes, which makes manufactured homes… and Acme Brick, Benjamin Moore (paint), and Shaw (carpet). But he still wants more exposure to housing...
Buffett's holding company Berkshire Hathaway has been buying up real-estate brokerages around the country under its HomeServices of America company. Now, Berkshire is partnering with Canadian firm Brookfield Asset Management (a major real-estate holder) to build a giant brokerage network. Brookfield will contribute 53,000 individual real-estate agents, who sold $72 billion of residential real estate last year. Berkshire's HomeServices of America will own the majority of the network... And it's rolling out a new brand, Berkshire Hathaway Home Services, next year.
Buffett has said he is bullish on the U.S. economy, and his Berkshire businesses are already seeing improvements in the residential property market. He expects they will hire around 8,000 people next year to cater for the increase.
This is not the first move for Buffett confirming his positive outlook on real estate. In October, he agreed to pay $1.5 billion for a home-loan portfolio from the bankrupt mortgage lender Residential Capital.
Steve says there's still time to take advantage of the real-estate boom... Mortgage rates haven't been this cheap in more than 100 years. Median home prices have dropped to 1970s levels. But as he points out, home sizes are up 39% since 1974. So the price per square foot adjusted for inflation and size needs to rise by 23% just to reach fair value.
Steve says this is the most awesome opportunity in American history. He's put together an extensive real-estate report with its own website called ValuableProperties.
In his report, he includes a detailed Valuable Properties user guide… which is broken into different sectors. These include his Top Five valuable properties, his Top 10 largest Real Estate "Micro Payments," the Top 10 cheapest Real Estate Companies, a variety of income-producing REITs, plus a whole host of other income plays. It includes hundreds of different companies. It's an outstanding resource.
If you want to get in on this real estate opportunity, you really should consider using Steve's website. You can get more details here...
Yesterday, I (Dan Ferris) told you about the huge opportunity in pipeline stocks. It's happening because of the huge boom in the U.S. oil and gas industry. All the new oil and gas needs to be carried to market, and we need perhaps $200 billion-$300 billion worth of new pipelines to do it.
Today, I'd just like to tell you about the tax advantages of owning pipeline stocks… and why we refer to the opportunity they represent as "An A.O.P. Retirement."
The pipeline stocks I'm talking about aren't regular corporations. They're what are known as "master limited partnerships," or MLPs.
These publicly traded companies engage in activities in the energy industry... operating pipelines, natural gas processing, refining, even exploration and production. As long as an MLP earns 90% of its revenue from these sources of "qualifying income," it pays no corporate taxes.
The MLP shareholders – called "unit holders" – pay the taxes... except that most MLP dividends are tax-deferred. A substantial portion of an MLP's dividend is usually categorized as "return of capital," not regular income. Most investors won't owe taxes on "return of capital" distributions until they sell their MLP shares.
Having taxes deferred on MLP distributions can work out quite well. In some cases, shareholders do not have to pay the tax at all... According to the website of the National Association of Publicly Traded Partnerships: "As long as your adjusted basis is above zero, tax on your distributions is deferred until you sell your units. [And] if a unitholder dies and the units pass to his heirs... the prior distributions are not taxed."
Imagine earning a great income in the last couple decades of your life, incurring no tax liability on it, and then passing the units along to your heirs... who will incur no liability on your distributions. That's why we call this opportunity in pipeline stocks "The A.O.P. Retirement." A.O.P. stands for "American Oil Pension."
We think this opportunity will produce a massive, growing, and safe stream of income for many years to come. So we've created a 32-page report called "An A.O.P. Retirement."
In the report, we explain the oil and gas boom. We give you full details about what MLPs are and why you should considering owning them. We'll detail how we used our proprietary seven-step model to find the MLPs that best create shareholder value. And we identify the seven safest, best-run MLPs.
One of our seven criteria is to recommend only those MLPs that pay out the majority of their distributable cash flow to their shareholders. We did that so we could find the MLPs that do the best job of paying out a large, growing income stream. There are six other points our model covers, which we explain in simple, easy-to-understand language.
Only subscribers to The 12% Letter can get access to the report. Fortunately, The 12% Letter is very affordable. And if you read it for four months and decide it's not for you, you can keep the report and still get a full refund. So there's really little risk here. If you're interested in finding out the details of "An A.O.P. Retirement" (without watching a promotional video), click here.
New 52-week highs (as of 10/31/12): Sandstorm Metals & Energy (SND.V), Yamana Gold (AUY), and Southern Copper (SCCO).
In today's mailbag... a couple readers chime in on Porter's bullish oil outlook. Send your e-mail to feedback@stansberryresearch.com.
"I couldn't care less what some analyst said, if Porter said oil prices are going to fall then they are going to fall." – Paid-up subscriber Russ
"For the first time in my memory, empty rail oil tankers are being stored on side trackage along Interstate 5 south of Seattle. For most of the past 5 years, it has been empty lumber rail cars stored here.
"I think this change is a harbinger of what is coming... either oil tankers will be bringing more crude to the refineries/ports north of Seattle OR more refined products from said refineries heading south etc. OR more crude will be brought to said refineries and shipped out of the new port being added by Shell at said refineries as crude or refined products.
"All of these three possibilities mean that the pipelines cannot keep up with production of oil within the USA and they will resort to rail. Better for [railroad] BNSF as well as for pipeline companies. Keep up the good work." – Paid-up subscriber Joe
Regards,
Sean Goldsmith and Dan Ferris
Baltimore, Maryland and Medford, Oregon
November 1, 2012