'The fastest pace since 2009'...

'The fastest pace since 2009'... Steve was right again... A crisis in the bond markets... 'The biggest advantage you have over Wall Street'...

Sales of previously owned U.S. homes just hit their highest level since 2009...

According to Bloomberg, closings on existing properties rose 5.1% to an annualized rate of nearly 5.4 million last month. The percentage of first-time home-buyers also rose to 32%, the highest level since September 2012.

The article noted that recent employment gains and rising incomes – combined with the prospect of higher interest rates in the near future – could be encouraging more folks to buy homes. From Bloomberg...

"Incomes are doing better and more people are working," said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut. Stanley correctly forecast May sales. "I would imagine we'll continue to see better demand from first-time buyers."

Excluding November 2009, when demand was bolstered by the expiration of a homebuyer tax credit, sales last month were the strongest in more than eight years.

Prices are starting to rise, too. The median price of an existing home rose to $228,700... up 7.9% from a year ago. More from Bloomberg...

Prices have been bolstered by a dearth of supply on the market. While the number of previously owned homes for sale rose 1.8% in May to 2.3 million, at the current sales pace, it would take 5.1 months to sell those houses. That's down from 5.2 months at the end of the prior month.

"With inventories still tight, prices are moving up," [National Association of Realtors chief economist Lawrence] Yun said at a press conference as the figures were released. "We need more supply."

This is exactly what our colleague Steve Sjuggerud has been saying...

Longtime Stansberry Research subscribers know Steve was one of the first analysts to predict a rebound in housing... and he's still bullish on housing today. In the July issue of True Wealth – just published Friday – Steve updated readers on his latest thoughts on home prices...

House prices are driven by the most basic law in economics: supply and demand. When supply of something is low and demand is high, prices go up. Higher prices eventually bring out more supply, and the market reaches "equilibrium."

That's the theory, anyway... The reality is, homebuilders are driven by greed and fear... They don't stop building once we've reached equilibrium. They keep building and building, until we reach the point where we have way too much supply and not enough demand. Then prices fall. That's what happened when housing started to crash seven years ago.

Right now, there's no supply, and there's high demand. This means higher prices are coming.

But low supply is just one of the reasons Steve is bullish on housing today. In all, he says there are five big reasons home prices are likely headed much higher from here. Here's more from Steve...

The situation is just amazing. To sum it up: Houses are incredibly affordable right now. House prices are still down from their highs eight years ago. Mortgage rates are not far off of record lows. After seven years of underbuilding, there's no supply. Relative to the investment alternatives out there, housing is an incredible deal.

In short, we can hardly dream up a better setup for higher home prices ahead. You need to be a part of it.

Regular readers know buying a home is one of Steve's top recommendations in the U.S. today. But if you've already bought a home – or aren't in a position to do so today – Steve recommended another great option on Friday. As he explained...

It is truly incredible... You end up owning houses for 21% below market value... You'll get paid rent (after expenses). You won't have to do a single thing to maintain these houses (that work will all be taken care of for you by professional management). You won't pay closing costs when you buy or sell. And you can get in or get out in a day, at almost no cost at all.

Steve calls it "the ultimate real estate deal" available today. If you aren't a True Wealth subscriber, you can learn more about a risk-free trial subscription right here.

Regular Digest readers know we've been covering the recent volatility in global bond markets. Now, global regulators believe it could get much worse...

According to news service Reuters, regulators are worried bond markets could go haywire if the Federal Reserve and other central banks begin raising interest rates as expected.

The International Organization of Securities Commissions (IOSCO) – which includes market "watchdogs" from more than 100 countries – is reportedly reviewing the structure of the bond market for potential "liquidity" problems. From Reuters...

"We know that significant structural changes have occurred in the bond market," IOSCO Chairman Greg Medcraft told a news conference on the sidelines of the body's annual conference...

The bond market has been buoyed by central banks buying up debt to inject money into a sluggish economy. As economies recover, central banks like the Federal Reserve are looking to raise rates, but hints of this have already sent bonds into bouts of extreme volatility or "taper tantrums."

"When the water goes out, what is this thing going to look like? I think a healthy skeptical review of liquidity is important," Medcraft said.

Our colleague Dr. David "Doc" Eifrig has been following this situation, too. He warned his readers of exactly this risk last month in the May issue of Income Intelligence...

The bond market has changed over the last five years...

In the past, big banks acted as "market makers." A market maker facilitates trades between buyers and sellers... maintaining both a bid and an ask price... and it makes money on the difference between the two, called the "spread."

Sometimes, a market-maker bank would step in to buy when others wanted to sell and sell when others wanted to buy. That helped keep markets stable.

Due to new regulations following the financial crisis, many of the big banks have quit the business. It's no longer profitable for them. And as Doc explained, this has had an unexpected effect on the bond market...

Now, liquidity in bonds has dried up. By liquidity, we mean the way that investors can buy and sell bonds quickly and at low transaction costs. When markets become illiquid, it can lead to wild swings and big, instantaneous jumps in prices. A single hiccup in bond markets could lead to a "liquidity crisis."

In a run-of-the-mill bear market, you just have a downward trend... When enough investors are selling bonds, it drives down prices. Falling prices lead more investors to start selling. We see that all the time. A liquidity crisis goes even further. It's like a classic run on a bank... Without sufficient liquidity, the sellers don't just see lower prices... they see no prices. Since no one wants to buy bonds at this particular time, the price for them effectively becomes zero.

This is a big problem for mutual funds and Wall Street money managers... As a liquidity crisis begins, investors start demanding their money back. So the funds need to sell their bonds to pay the investors back. But the market isn't functioning properly. The prices of bonds drop even more.

While this situation sounds frightening, it can actually be an incredible opportunity for individual investors who are prepared...

In a liquidity crisis, bonds don't suffer any damage to their real value... It's simply the price that collapses. As long as the issuing company doesn't go bankrupt, they'll continue to pay interest payments and principal at maturity.

Here's the crazy part. Everyone knows that these assets will quickly return to their prior prices. But only individual investors like you can take advantage of situations like these. It's the biggest advantage you have over Wall Street.

With panicked investors demanding their money back, hedge funds, mutual funds, and banks know these bonds are a steal. But they simply can't buy them. Any cash they have is needed for investor redemptions or meeting margin calls. As an individual investor, you don't answer to anyone but yourself. You don't have to provide quarterly updates or report the daily values of your assets.

As Doc explained, only the Federal Reserve has the same freedom... and it didn't hesitate to take advantage of the opportunity during the financial crisis...

The Fed made billions in profit by buying up mortgage bonds when no other investor would (or could) touch them in 2008.

In a liquidity crisis, you (and the Fed) can buy up cheap bonds... while professional investors watch with jealousy.

While Doc is still bullish on stocks and the economy in general, he believes the recent volatility in bonds could be the beginning of the next "liquidity crisis" in the bond market. If it is, be sure to keep Doc's advice in mind.

And if you'd like to know exactly how Doc is preparing, be sure to check out the May issue of Income Intelligence. In addition to explaining how the next crisis is likely to play out, it also walks readers through everything they need to know to buy when the time is right. Click here to take advantage of a risk-free trial subscription.

New 52-week highs (as of 6/21/15): Altius Minerals (ALS.TO), CVS Health (CVS), Dollar General (DG), iShares Core S&P Small-Cap Fund (IJR), and ProShares Ultra Health Care Fund (RXL).

One subscriber discusses the virtues of investing in blue-chip World Dominators... and another asks about investing with a short time frame. Send your questions and comments to feedback@stansberryresearch.com.

"Shortly after subscribing to your newsletter, about four years ago, I assembled a portfolio of your recommended world dominating, dividend growing companies (about 20). I invested equal amounts in each company so I could easily see and compare the results. Since I am well into my 70's I did not reinvest the dividends. The results are increases value from about 25% to well over 100%. I consider this very good for a near risk free, sleep well at night investment! Had I reinvested the dividends the results would have obviously been much greater. I could not be more pleased with this approach to long term investing. By the way, I highly support your dividend reinvestment recommendation for the younger investor." – Paid-up subscriber Chuck Kimball

"Because of unfortunate life circumstances (serious medical issue, graduate school debt, divorce, etc.), I have come late to the game of investing. Before starting, I thought it wise to pay off all my debts, which I've done. But because of my late start, what I've managed to save and invest is small (think: 5 figures). Following the advice in two of your publications, I've had what I consider to be great success: I'm up about 25 percent overall in 4-5 years.

"Unfortunately, I have only about 5-6 years to go before retirement, which has made me a bit impatient, so here's my question: With such a short timeline, how long is it wise to wait before selling a stock that appears to be a loser? Right now, I'm giving new stocks I've bought, based on recommendations from those two publications of yours, only about 3 months to appear in the green before selling them. Reasonable? Unreasonable? I'd give them more time if I had it to give, but I don't." – Paid-up subscriber Richard Bingler

Brill comment: We can't give individual investment advice, but we have a few thoughts...

First, we do believe in cutting your losses and letting your winners ride. The easiest way to do this is with trailing stops. Even the best investors can't reliably predict a stock's movement over a short time frame... so most don't even try. A tight trailing stop will help keep your losses small and keep the emotions out of your investments.

Second, if you're in a positionwhere you feel the need to "speed up" your returns, it's unlikely that investing alone will get you where you want to be. Instead, you may want to focus on increasing your income or redesigning your retirement.

Regards,

Justin Brill
Baltimore, Maryland
June 22, 2015