No more burgers at McDonald's... Buying in times of crisis has worked in the past... A 12% yield... 35% of Americans owe the debt collector...
Some McDonald's restaurants in China have gone vegetarian…
Several of the fast-food behemoth's restaurants in Beijing, Shanghai, and other cities have stopped serving meat after one of its largest vendors allegedly supplied expired products.
Illinois-based OSI Group LLC – the parent company of Chinese supply giant Shanghai Husi – said it was withdrawing all meat supplied by the company.
Local Chinese media released footage of Shanghai Husi employees extending the expiration date on already-expired meat on its way to McDonald's and other Chinese fast food outlets like KFC and Pizza Hut.
The negative press surrounding the fast food giant – partnered with lackluster earnings earlier this month – has sent McDonald's shares down…
While things are no doubt bad for McDonald's today, this will pass... And shares (which currently yield 3.2%) could prove to be a good investment at today's levels. These public relations hiccups – while sometimes disastrous – often provide good entry points into high-quality companies.
We've seen this situation play out several times before...
In April 2012, retail giant Wal-Mart was accused of paying bribes to Mexican officials in order to obtain construction permits. When the New York Times broke the story, shares of the world's largest retailer fell nearly 8%, from $59 to $54.50 in two weeks...
At the time, Dan Ferris updated readers on the opportunity in an Extreme Value...
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Today, Wal-Mart trades for more than $75.50 a share.
We saw a similar situation more recently with fellow retailer Target...
In January, hackers stole the credit card information and other personal information of more than 100 million customers. It was the largest retail hack in U.S. history... and a black eye for the company. But again, it proved to be a great entry point for Target. As Dan wrote at the time...
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Shares of Target fell 14%, from more than $64 in November to $55 in early February. They recovered to around $62 before March.
And let's not forget oil giant BP's Deepwater Horizon oil spill in April 2010. Shares fell 54%, from $50 to $23 within a four-month period. By the start of 2011, shares traded for more than $49.
So what do you think... Can a little tainted meat bring down one of the greatest consumer franchises in history? Our guess is no...
On the topic of high yields... Small Stock Specialist subscribers are now earning more than 12% a year on their initial investment in private-equity firm Kohlberg Kravis Roberts (KKR). Private-equity firms typically buy companies (using investors' money and debt), reorganize and improve them, and then sell them for a profit – often through initial public offerings.
KKR missed earnings expectations last week (mostly due to an accounting change)... But the future looks bright.
The company reported second-quarter earnings of $178.2 million, up $15.1 million from a year ago. And it boosted its second-quarter dividend to $0.67 per share, nearly 60% higher than it was this time a year ago. To date, KKR's total dividend is nearly 80% of what it was for all of 2013.
Private-equity firms thrive in today's economic environment... They're able to borrow lots of money at record-low interest rates to buy high-quality assets. And they can take advantage of rising asset prices to sell their portfolio companies into a willing market – and mark up the value of the assets on their books.
KKR says the good times are still going... In the coming months, KKR should make huge profits selling food-service distributor U.S. Foods to Sysco for $3.5 billion. It's also selling medical-device company Biomet to Zimmer Holdings.
"There's plenty left to go," said Scott Nuttall, head of KKR's global capital and asset-management group, on a call with analysts Thursday.
In the meantime, investors are enjoying KKR's massive 7.2% yield. Assuming the company maintains its $0.67-per-share quarterly payout, the yield going forward will be almost 11%... Readers who purchased on Frank's original recommendation in July 2012 will earn 19% a year on their initial investment.
More on the "disappearing middle class" – our theory that the Federal Reserve will wipe out the middle class... More than 35% of Americans have debts and unpaid bills that have been reported to a debt collector, according to a new study by social and economic research firm The Urban Institute.
Collection agencies go after all types of debt... credit cards, mortgages, phone bills... even parking tickets.
"Roughly, every third person you pass on the street is going to have debt in collections," said Urban Institute senior fellow Caroline Ratcliffe. "It can tip employers' hiring decisions, or whether or not you get that apartment."
And the average debt reported to collections is $5,178, based on September 2013 records.
The funny thing is, credit-card debt as a percentage is actually declining... According to the American Bankers Association, it's at its lowest level in a decade. And only 2.4% of credit-card accounts are overdue by 30 days or more, compared with the 15-year average of 3.8%.
Still, a similar number of folks are being turned into collection agencies for bad debts... why?
"There is not the income growth to save and they have to make survival decisions," Eric Salazar, manager for credit-counseling agency Greenpath, told Yahoo. "You make the decision to pay for the roof over your head and to feed your family and that's all you can afford to do."
A high percentage of people in western and southern states – like Texas, Las Vegas, and Florida – have delinquent debt. In other words, as we explained yesterday, while living expenses are rising across the board, wages are stagnant...
Bill Bonner, founder of S&A's parent company, Agora, is watching the same trend.
Longtime readers will recognize Bill's name. He's among our favorite writers on history, politics, and economics. And we have featured many of his best essays in our weekend Digest Masters Series...
After 35 years in the industry, Bill is finally writing his own monthly newsletter. He just released the first two "beta" issues yesterday. Here's what he wrote:
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Bill and his publishers are still working out the details for his new letter. It's not for sale anywhere. But there is one way to get your hands on it... and on Bill's just-published book.
No one has ever published a book like this before. I'll let Porter share the details...
My friend and business partner Bill Bonner is one of the most remarkable men in America today.
He'll be the first to admit he's not a great businessman. Or a very good investor. And he's probably an even worse manager.
Yet despite these "flaws," Bill is one of the richest men in America – worth nearly $1 billion.
He owns nine houses... hundreds of thousands of acres of land... and has business operations in 18 countries. He's a New York Times bestselling author... and was named a European "Honorary Ambassador" for his work.
Not many people know that, without Bill Bonner, Stansberry & Associates wouldn't exist. And I almost certainly wouldn't be nearly as successful.
Not only did Bill help me launch my company... He also taught me an incredible secret.
It's a way of seeing things... A kind of wisdom that's far beyond what others teach... what others even understand. And it has made him, his partners, and many of his employees – and basically anyone who listens to him – rich.
For years, I've been telling Bill to share this big idea with everyone... And he has finally done it. It's in his latest, just-published book.
Please understand... Bill's unique philosophy isn't merely about money. But it will allow you to understand the markets – and every other type of human endeavor – in a whole new, and vastly more accurate, way.
This idea completely changed the course of my life.
If you want to be a better investor, you must read this book. If you want to be a better parent... a better spouse... a smarter consumer... a better businessman, a better manager... read this book.
Like I said, Bill's secret is about much more than making money...
| • | It's a secret that helped me find an incredible wife years ago – and also helped me find other important people in my life, including my business partners, and people who manage my various assets. |
| • | This secret also helped me build one of the biggest financial-publishing businesses in the world – using an approach that no one else in the industry had ever tried. |
| • | Because of this secret, I've been invited backstage at rock concerts... gotten to meet my lifelong heroes like T. Boone Pickens... (and soon, Laird Hamilton)... Have had great investment deals and ideas essentially handed to me... Have been a guest at some of the most exclusive clubs in the world, including August National, the Dallas Petroleum Club, and Nassau's One and Only Club... and more. |
Of course, I'm not the only one who has benefited from this secret.
Bill's unique take on the world has helped dozens of people I know personally become millionaires. And now Bill is sharing his secret in a brand-new book.
Please note: This book is not yet available on Amazon or anywhere else.
It won't be for sale until next month. And when it does go on sale on Amazon, you'll only be able to get a paperback version at first.
But I figured out a way for you to get a hardback copy, plus a huge special bonus: Access to Bill's new monthly newsletter, published by Bonner & Partners.
No, I'm not giving this book away. It's not part of any free offer or anything like that. You have to buy it with your own money.
But I promise you, it's worth much, much more than the small price you have to pay.
To see my full summary of Bill Bonner's brand-new book, and to get your own hardback copy, plus something from Bill that might be even more valuable than this new book, go here.
New 52-week highs (as of 7/28/14): Apple (AAPL), Activision Blizzard (ATVI), SPDR S&P BRIC 40 Fund (BIK), WisdomTree Japan SmallCap Dividend Fund (DFJ), Dolby Laboratories (DLB), Dorchester Minerals (DMLP), ProShares Ultra MSCI Emerging Markets Fund (EET), EMC Corp (EMC), Enterprise Products Partners (EPD), Nuveen Quality Preferred Income Fund 2 (JPS), Mandalay Resources (MND.TO), Royal Gold (RGLD), and Verizon (VZ).
More positive feedback from an Alliance member... And a subscriber throws down the gauntlet to Porter. Send your e-mails to feedback@stansberryresearch.com.
"Thank you for being a great Guru. Need the instructional information you hand out daily. Much appreciated. I'm so glad found your site so many years ago. It took a while before I became an Alliance member, but happy I did. Work full time, so not able to enjoy every move in the market, but that's O.K. Have to have my patience on and once and a while call my broker and say what's up, why didn't you get me in on my limit order. Don't want to think of where I would have been with out your instructions and teaching. On my way to a million. Thanks a million. Ha dry humor." – Paid-up subscriber K.H.
"It would be wise to watch your back. As much as I enjoyed your '9 Days' series, and excellent it was, this series of articles from Bryan comes nipping at your heals! I rarely print Digest essays for quick reference material, but the 7/25 issue is going there as I type!" – Paid-up subscriber Gary
"How can I re-read Porter's nine-day series? No wonder Stansberry & Associates is the largest financial publishing firm in the world." – Anonymous
Goldsmith comment: We're working on compiling all of Porter's Digest series in one place. In the meantime, you can access his individual essays – from June 17 to June 27 – on the Digest website.
Regards,
Sean Goldsmith
July 29, 2014
Why Russian stocks will always trade at a discount...
In today's Digest Premium, S&A Global Contrarian editor Kim Iskyan explains why Russia will always remain a risky investment...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
Why Russian stocks will always trade at a discount...
Editor's note: Yesterday, S&A Global Contrarian editor Kim Iskyan shared his thoughts on how sanctions would affect Russian markets. In today's Digest Premium, he explains why Russia will always remain a risky investment...
So far, sanctions against Russia haven't worked.
As I've said before, Ukraine is a red-line issue for Russia... To Russian President Vladimir Putin, keeping Ukraine in Russia's control is a question of vital geopolitical security. Putin is prepared to put up with a world of pain. For now, Russia can fund its own businesses that are locked out of foreign markets – not forever... but for a while. And Putin's popularity in Russia is sky-high. It will take time before sanctions on Russia will have any significant economic effect.
Meanwhile, Russia's involvement in Ukraine is getting deeper and deeper, with reports that Russia is firing weapons. And at the same time, the U.S. is increasing its aid to Ukrainian forces. There's a real risk of a proxy-fought war... We're one step away from something much bigger that could really spook markets – markets that are priced for perfection today.
Russia's stock market trades at a price-to-earnings ratio of around five, compared with 12-14 times for most other emerging markets. Russia's stock market trades at a significant discount, in large part because of the high level of political risk. And now, it turns out that this discount was correct...
In the bigger picture... Russia's economy is headed toward a recession. The country is held hostage to the commodities cycle. Weak institutions, rickety laws, and a single person (Putin) holding an excessive amount of power is a recipe for disaster. This all undercuts Russia's long-term stability. Trade stocks in Russia? Sure. Invest in them for the long term? Forget about it.
– Kim Iskyan
Why Russian stocks will always trade at a discount...
In today's Digest Premium, S&A Global Contrarian editor Kim Iskyan explains why Russia will always remain a risky investment...
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