As you may be aware, President Obama wants to limit balances in "tax-preferred" accounts to an amount that can finance a retirement annuity of about $200,000 per year. In other words, the government wants to tell you how much money you're allowed to have when you retire.
These plans are a classic first step toward legalized theft. First, the government regulates how much people can contribute to their nest eggs. It says, "There's just no reason for you to have more than $3 million in your 401(k) because everyone can afford retirement at $200,000 a year." That's what an annuity would cost for that income.
I (Porter) know $200,000 may seem generous to many people. But this idea should be a nonstarter for anyone who's worked hard and done well for himself. It's no one's business how much of your own money you choose to spend.
The idea is to get people to support these kinds of reforms because they won't suffer the consequences. Politicians will tell voters, "Vote for me, and I'll push through this tax or that reform. It will take away your neighbors' 401(k)s. But don't worry: It won't hurt you."
If you vote for a politician who favors higher taxes, asset confiscations, or taking power and property away from your neighbor… you better watch out.
As soon as that policy is in place, the neighbor the politicians planned to tax will flee. He'll move to Switzerland or find another way to deprive the government of its plunder. If he was smart enough to make a fortune, chances are good he will have been smart enough to safeguard it.
Once the government realizes it can't generate the revenue it expects because your neighbor has disappeared… it will turn its attention to you. The policy you supported will end up exploiting you. The only people that principle ends up helping are those in power. This is how every socialist government develops... and how every society collapses.
Income tax was only meant to apply to the very wealthy when it was initiated. And it was never supposed to be more than a 1% tax. Within 10 years of its origination, of course, the government was taxing incomes at rates up to 90%.
So this is the first step: The politicians will tell people, "We're not going to allow the rich to safeguard their savings with a 401(k) program. We'll only take money from them. They can afford it."
And shortly thereafter, you'll hear them say, "Well, that didn't work, so now we have to tax all 401(k)s. Yeah, I know we promised we wouldn't, but we need to. So we're going to."
It's interesting… It was only a few years ago that the government revamped the rules on Roth IRAs. It used to be the wealthy couldn't use them because they allowed people to deposit after-tax dollars and compound their savings tax-free. And retirees could withdraw their funds tax-free, too. It was really a huge boon for people. It was a great program.
Now they've loosened the rules so people can effectively put all their savings in these accounts. Of course, once you've done that… the government will know exactly how much you've got. And they can change the rules and tax it.
These are all classic bankrupt-government and socialist-government moves. They have happened in every other country in the world and they'll happen here, too. And it's a terrible sign for the future of our country.
– Porter Stansberry with Sean Goldsmith
While the mainstream media is focused on gold and the bombings at the Boston Marathon, investors are hearing little about one of the biggest bull markets in the world right now...
We're talking about the bull market in biotechnology stocks.
In yesterday's edition of DailyWealth Trader, co-editors Amber Lee Mason and Brian Hunt commented on the huge gains generated by their position in the ProShares Ultra Nasdaq Biotech Fund (BIB)... about 50% in five months.
This month, impressive clinical trial results have boosted the sector... sending the Nasdaq Biotech Index to its highest level in a decade. While the gains in BIB are impressive, Amber and Brian say there is a much bigger story here than just the investment gains...
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[A] biotech bull market isn't like a bull market in retail stocks or utility stocks. As we've mentioned before, biotech bull markets can produce 300%... even 500% sector-wide gains. They can produce individual winners of 1,000%-plus. They can develop into wild, speculative, "super" bull markets.
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The investment public just loves a sector filled with promises of cancer cures and miracle drugs. These promises can draw in billions of investment dollars in a hurry.
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When a strong tailwind blows at the biotech sector's back, even turkeys fly. Even "middling" biotech players can jump 100% or 200% in a year. High-quality companies with breakthroughs jump much higher. These kinds of bull markets bring to mind legendary investor Jim Rogers' quote, "Markets often rise higher than you think is possible."
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Will we see giant gains from this biotech bull market? We can't know the future. This rally could stall in 2013. It could scream higher for years. All we can do is acknowledge the extremely strong price action that's taking place right now... and take positions when we find good risk/reward setups.
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We'll continue to search the market for great new trades here... But for now, stay long the big win in BIB. Despite the big gains this sector has registered, it's not "front page" news. It hasn't drawn widespread investor participation. But it likely will.
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Shares of software giant Microsoft jumped 3.6% yesterday – a huge one-day move for a blue-chip stock – on news that activist fund ValueAct had bought $2 billion in stock...
I (Sean Goldsmith) asked our resident value expert Dan Ferris – who holds Microsoft in both his Extreme Value and 12% Letter portfolios – to comment on the action...
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ValueAct is Jeff Ubben's firm. He's spoken at the Value Investing Congress once or twice. He's impressive. He made an excellent long case for Moody's a while ago... It's turned out well so far.
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Also, he doesn't like to fool around with broken businesses. And they do a lot of work before they buy.
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I'm hoping they'll make headway on the excess capital front. I've been banging that drum since last November, and plan to do so again this November if the situation hasn't changed (which is a good bet!).
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But if a big shareholder with the money to access the proxy mechanism can get involved... who knows?
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As you can see from the following chart, Microsoft shares have ripped higher this year...
You may have seen headlines yesterday saying sales of U.S. homes unexpectedly fell in March. We've long chided the mainstream media for presenting headlines that don't get to the heart of a story... And True Wealth editor Steve Sjuggerud, our resident housing bull, addressed these issues in today's DailyWealth.
In short, Steve believes U.S. housing prices will soar to record highs as world governments continue printing trillions of dollars. It's part of his "Bernanke Asset Bubble" thesis – that the government's loose money policy will boost asset prices across the board.
And despite its recent run-up in price, Steve still believes housing is a great value, thanks to 3.5% 30-year fixed mortgages.
Here's what he wrote today...
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"Previously Owned U.S. Home Sales Unexpectedly Fell in March," Bloomberg reported yesterday.
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Most economists take an "agnostic" view on housing ... But some economists saw the latest news as proof the housing market isn't really coming back.
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I disagree completely...
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My thesis is that housing is in the early stages of an incredible boom fueled primarily by low interest rates...
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I believe house prices in America will soar beyond what anyone can imagine.
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Getting back to this supposedly "bad" news reported yesterday... Yes, it's true, specifically the NUMBER of previously owned homes that were sold fell by 0.6%. But that's less than a percent... no big deal.
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The more important thing is, what is happening to the PRICE?
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"The median price of an existing home rose 11.8 percent, the most since November 2005," Bloomberg reported yesterday... "to $184,300 last month from $164,800 in March 2012."
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The fundamentals in the housing market are still strong. Supply is at a 13-year low... and demand is soaring. In short, Steve says we're still in the early stages of this bull market.
On a similar note, Dr. David "Doc" Eifrig's favorite bank, Wells Fargo, recently announced it's ramping up its mortgage operations.
Wells Fargo is already the country's largest mortgage lender, originating nearly 30% of all U.S. mortgages last year. And while some of its competitors – like JPMorgan, the No. 2 lender – are cutting jobs, Wells Fargo is looking to expand...
Wells Fargo began construction on a building that will expand capacity at its West Des Moines facility by 28% (265,000 square feet). The project, which will house an additional 1,800 workers, will cost $100 million. The company has also been expanding its mortgage operations in Arizona, Georgia, and the Pacific Northwest.
For more on Wells Fargo, and why legendary investor Warren Buffett is also a fan of the bank (he's its largest shareholder), be sure to reread the July 17 Digest.
New 52-week highs (as of 4/22/13): ProShares Ultra Nasdaq Biotechnology Fund (BIB), Wisdom Tree Japan Smallcap Fund (DFJ), iShares Nasdaq Biotechnology Index Fund (IBB), ProShares Ultra Health Care Fund (RXL), V.F. Corp. (VFC), Coca-Cola (KO), Pepsico (PEP), Johnson & Johnson (JNJ), DCP Midstream Partners (DPM), ONEOK (OKE), Union Pacific (UNP), CVS Caremark (CVS), Walgreens (WAG), and GenMark Diagnostics (GNMK).
In today's mailbag... More subscriber stories about the gold and silver market... Are you "backing up the truck" yet? Let us know here... feedback@stansberryresearch.com.
"I live in New Zealand and you can get bullion here but the premiums on 1 oz. silver is about 25%. $30 for a $24 coin? I'd love to buy but I'm not going to pay that kind of mark up. I'll wait until the market cools off a bit." – Paid-up subscriber Gary Alvarez
"I think the mailbag & the comments are great. That said, way too many folks are calling for a bottom now. Sorry. Bad news. Gold will break $1,000 and Silver will break $19.00. At that time, exact bottom or not, this person will back up his truck and reload for more. I've held a large position since 2004 which I haven't touched and will not touch. Remember, there are times such as this that it is best to do nothing at all. But again, if it breaks the all important psychological number of 1000 I'm going in with two large hands. Thank you for all you've written. Porter, you're the best." – Paid-up subscriber Eric
Regards,
The first step toward legalized theft...