Goldsmith comment: Porter is tending to some serious matters 20 miles off the coast of Miami today... Assuming Homeland Security allows him back to shore, he will return to the Digest on Friday.
Why is Visa an inflation hedge? Visa operates the world's largest retail electronic payments network and manages the world's most recognized global financial services brand. Visa has more branded credit and debit cards in circulation than anyone else.
And... this is the key: The financial institutions that license their brand do so on the basis of transaction volume. The more money people spend on their Visa-branded debit and credit cards, the more money Visa earns. (This is important: Visa doesn't hold any of the debt put on those cards. It merely licenses the brand and receives a fee for processing the transactions.)
Ergo, the more money that exists, the more money Visa will make. It's perfectly correlated to inflation. And Visa has the most to gain from inflation out of all of the credit-card networks because it is the largest, by far. – June 2009 issue of PSIA
Porter recommended Visa, the world's largest electronic payments company, as another way to hedge your portfolio from inflation. So far, his thesis has proven correct. The stock is up 12% and hit a 52-week high today. But those gains are nothing compared to what his latest recommendation could return...
We're publishing Porter's latest issue of PSIA today. Porter says the asset he's recommending is the most attractive it's been in decades... Based on historical price ratios, this asset should already be nearly 300% higher than it is. And as the dollar loses its standing as the world's reserve currency, it should soar even higher... returning up to 600%. He says it is the "best hedge against a money crisis" you can buy, period.
If you're not already reading PSIA, I strongly recommend you try it out. Porter's made money on 10 of 11 recommendations so far this year... And if his latest trade goes in the right direction, it could be his biggest winner of all time. To learn more about PSIA, click here...
A massive apartment complex called Peter Cooper Village and Stuyvesant Town on Manhattan's east side is on the verge of default. The 56-building, 11,000 unit complex – acquired by Tishman Speyer Properties and BlackRock for $5.4 billion in 2006 – only has $33.7 million in interest reserves left to service its debt, which is costing around $16 million per month.
Investors who bought into the deal were confident Tishman could raise rents in the midst of a booming Manhattan real estate market, expecting income to triple to $336 million in 2011. It's currently only $139 million. Now, a struggling economy and a lawsuit hindering the owners' ability to convert rent-controlled apartments are killing the development.
Real estate research firm Realpoint estimates the property is only worth $2.1 billion – less than half its 2006 purchase price. At that price, all of the equity investors and many of the lenders – which include Government of Singapore Investment Corp, SL Green, and Hartford Financial – will be wiped out. The Florida State Board of Administration, which put $250 million in the project in 2007, has already written its investment down to zero.
As we pointed out last Wednesday, the huge rally in REITs is likely overdone... That investors are writing down commercial properties in Manhattan to zero – again, in Manhattan, not the outskirts of Phoenix or Las Vegas – only proves there's plenty of room to fall.
Fighting a market trend, no matter how lacking in fundamentals it may be, is futile. So in his latest S&A Short Report, published this morning, Jeff Clark went long... He recommended a trade from the one sector of the market that hasn't participated in the recent rally, yet still has a rock-solid business.
The company Jeff recommended is operating at 99.7% capacity, and earnings and revenue are soaring, but shares haven't budged this year... And its chart indicates it's setting up for a major break to the upside. If this stock hits Jeff's price target, his recommended trade will return 250% or more. To learn more about the S&A Short Report and access Jeff's latest trade, click here...
New highs: Morgan Stanley Emerging Markets (EDD), Market Vectors Gold Miners (GDX), Patterson-UTI (PTEN), Visa (V), Kinder Morgan Energy Partners (KMP), Intel (INTC), EnCana (ECA), POSCO (PKX), Yamana (AUY), Royal Gold (RGLD), Silvercorp Metals (SVM), Kinross Gold (KGC), Silver Wheaton (SLW), Sino Gold (SGX.AX), Eldorado Gold (EGO), Rex Energy (REXX), Encore Acquisition (EAC), International Tower Hill Mines (THM), Nevsun Resources (NSU).
Lots of praise in today's mailbag... The booze must be flowing. What's on your mind? feedback@stansberryresearch.com.
"Keep up the great work! Bought Rexx on Oct 5 and am up 25% on Oct 13. My IRA is almost back to where it was before the crash last year." – Paid-up subscriber Dave
Goldsmith comment: Glad to hear it, Dave. Matt has set up his Resource Report readers for huge gains on Rex and a couple other companies involved in what he calls the Illinois Project. Nonsubscribers can get the details here.
"Every day I look forward to receiving The S&A Digest. Not just for the recommendations but also for the stand you've taken for liberty and freedom. The phrase 'Home of the Brave and Land of the Free' – makes me cringe, angry and very sad. Knowing what this country could and should be and seeing where it is now is truly depressing. It's why, even after serving in the U.S. Armed Forces for 24 years 'protecting and defending the Constitution of the United States from all enemies, foreign and domestic' I've decided to move my family and assets, while I still have some, out of this country. I've learned that the enemy is our government and those who refuse responsibility and accountability for their actions – and I just can't take it any more – I won't take it anymore. And guess what? I don't have too. In my travels I've learned that 1) the United States is not the greatest country in the world – but it still sounds good to say it. 2) More freedom actually exists in other countries. Sounds good too. 3) With our national debt and record foreclosures and bankruptcies we are not the richest country in the world. 4) We no longer lead the world – we apologize to it. The exodus has already started. Over 1 million people a year move to Mexico from North America – and they ain't all Canadians." – Paid-up subscriber Jim
"In your S&A Digest today, you listed Johnson & Johnson (JNJ) as a new High. However, JNJ closed at around $61 today. On September 8, 2008 it closed at $72.22. Are you only reporting new highs for the year? If so you should clarify." – Paid-up subscriber Robert Divilio
Goldsmith comment: We report 52-week highs.
Regards,
Sean Goldsmith
Baltimore, Maryland
October 14, 2009