Wed, May 20, 2015|Justin Brill

The latest IPO to fall...

The latest IPO to fall... Supreme Court rules on 401(k)s... Doc Eifrig's advice on retirement plans... Good news for Doc's readers... Introducing our brand-new service...

Longtime Digest readers know we're skeptical when the market falls in love with new public companies.

We've detailed some of the pitfalls to investing in recent initial public offerings (IPOs) with social-media website Twitter and mobile-camera maker GoPro.

One of the latest IPOs to hit the market is online marketplace Etsy (ETSY). The company hosts a platform for people to purchase handmade jewelry, artwork, and other goods from sellers.

Etsy's IPO valued the company at more than $2 billion. Shares began trading on April 16 at $31 and rose as high as $35.67, more than 100% above its IPO price of $16.

Yesterday, after the market close, Etsy announced its first earnings since going public. The company reported $58.5 million in sales, narrowly beating estimates of $58 million. But more important, it lost nearly $37 million in the first quarter, up from a $0.5 million loss in the same quarter of 2014.

Shares plunged 18% today. The stock is now down more than 50% from its highs in just more than one month.

Big news for 401(k)investors...

On Monday, the U.S. Supreme Court ruled that workers are not subject to a six-year statute of limitations when suing employers for choosing "imprudent" investments in their 401(k) plans. In other words, companies that offer poor investment choices can be held liable.

In this case – Tibble v. Edison – the employer was accused of allowing its plan provider to replace low-cost "institutional class" mutual funds with similar but more expensive "retail class" funds.

If you're invested in your employer's 401(k) plan, this is generally good news. The decision should encourage other companies to take a closer look at the fees their plans charge, and eventually replace expensive funds with lower-cost alternatives.

But you could still be throwing away money...

Our colleague Dr. David "Doc" Eifrig says keeping fees low is just one of the keys to maximizing your retirement savings. That's more important today than ever before. Doc explained why in the latest issue of Retirement Millionaire...

In the old economy, workers would stay with the same employer for decades and retire comfortably with a company-funded (or government) pension. The pension paid the retiree until they died, and sometimes even continued paying the spouse. Not anymore... Few workers have that luxury today.

Now, those "defined benefit" plans have been replaced with so-called "defined contribution" plans – the 401(k)s and IRAs that you fund largely yourself. In 2015, you need to grow the wealth on your own. Nothing is guaranteed, except the opportunity to defer some taxes.

So, you'd better know how to invest and manage your finances. It's one of the most important skills that will determine the quality of your retirement life.

Fortunately, it doesn't have to be complicated. More from Doc...

Can investing be hard? Keeping a constant eye on the markets, studying economics, staying on top of every trend without a misstep... that's time-consuming and confusing. So, yes... it's hard.

Worse, the 401(k) system is broken: Lack of guidance, poor websites, and limited investment options make most individuals' first foray into investing confusing. But you can't hide from it. No one is going to rescue your retirement for you.

The good news is it doesn't have to be so tough. If you don't want to be constantly thinking about your investments, you don't have to. If you barely understand how your 401(k) works, that's OK.

Doc laid out the simple steps anyone can follow to take control of their 401(k) and boost their lifetime returns by hundreds of thousands of dollars in just minutes. (Retirement Millionaire subscribers can access the issue right here.)

Doc also has some good news for income investors...

Readers of Doc's services know the key to safely building your wealth is to create a safe and growing stream of investment income. He says one of the best ways to do that is to invest in American businesses that have reliably distributed income to investors for decades.

Thanks to the decline in oil prices, one of Doc's "best buys" is on sale today...

Chevron (CVX) is one of the world's largest, most stable oil and gas companies. It's also what's known as a "vertically integrated business." That means it controls the entire process of taking oil from the ground and turning it into gasoline and other products. It owns the reserves... the exploration equipment... the wells... the trucks and pipes... the refining plants... and the gas stations where you buy fuel. It doesn't have to pay middlemen.

Because of the falling oil prices, Chevron is trading well below its usual valuation, and Doc thinks it's a fantastic time to buy. He explained the situation in the March issue of Retirement Millionaire...

Declining oil prices are pushing investors away from Chevron.

Chevron does produce oil, which makes it susceptible to price changes. But it also has refining and distribution operations, which gives it some insulation against falling prices. It also has a safer profile than its competitors. It has a low debt-to-equity ratio of just 13%... meaning it doesn't have a lot of loans it needs to pay interest on.

Oil prices appear to have turned around for now, though they could certainly head back down at any time. Either way, Chevron is a profitable company at a bargain price today.

Chevron has increased its dividend for 27 consecutive years, making it a member of the prestigious "Dividend Aristocrats." Plus,it has paid a dividend every year forthe last100 years.

Today, shares trade for just 11.5 times earnings and yield nearly 4%. Doc currently rates Chevron a "strong buy" in his Retirement Millionaire portfolio. But he isn't the only one who thinks shares are a steal today...

Last week, Chevron Director John Stumpf made the biggest individual "insider purchase" of the last decade. Stumpf is also the CEO and chairman of major bank Wells Fargo (WFC). He paid $19.5 million for 180,000 shares.

As author Peter Lynch famously wrote in his classic investing book, One up on Wall Street...

There are many reasons insiders might sell. They may need the money to pay their children's tuition or to buy a new house or to satisfy a debt. They may have decided to diversify into other stocks. But there's only one reason that insiders buy: They think the stock price is undervalued and will eventually go up.

Of course, company insiders aren't always right... but they do have access to a lot of "insider" information that most individual investors don't... like how business is going in the current quarter, new contracts, or the board's commitment to paying and/or raising its dividend.

By investing nearly $20 million of his own money, Stumpf clearly has confidence in Chevron's ability to see its way through the oil downturn. He's "putting his money where his mouth is" – a lot of it.

He also stands to generate a massive stream of income if he's right...

At the current yield, those shares represent a dividend payment of nearly $200,000 each quarter. Over the last 10 years, Chevron has increased its dividend by an average of 10% per year. If the company continues that pace, Stumpf will be receiving nearly $500,000 every quarter in just 10 years.

Even better, he'll be earning a yield of 10.5% on his original investment (known as the yield on his cost basis). Earning a double-digit dividend yield on one of America's biggest, most stable businesses in today's zero-percent world? That's a no-brainer.

This shows the power of investing in the right businesses that consistently raise their dividends year after year. Investors can earn huge income streams in just a few years.

Doc calls this strategy the "Dividend Boost," and he published a special report explaining that anyone can take advantage of it. Following this simple program, Doc says individual investors could earn at least 35% dividend yields on their initial cost basis.

If you're interested in a safe and easy way to earn more income, be sure to check it out. You can access this special report– as well as Doc's 401(k) recommendations– with a subscription to Retirement Millionaire. Learn more right here.

A quick note to end today's Digest...

You may have heard by now that we're launching a brand-new trading service called the Professional Speculator this Friday...

Done right, speculating can lead to life-changing gains. But for most people, it's nearly impossible to profit on a consistent basis. Sure, you might get lucky here and there... But doing it over and over requires far more than luck.

That's why we were thrilled to partner with Paul Mampilly, who has a proven track record of successful speculation. Since 2008, Paul has quintupled his net worth through small, little-known stocks. He booked gains of 2,539% on a company called AVI BioPharma... 696% on ARIAD Pharmaceuticals... and 355% on Exact Sciences, to name just a few.

Paul doesn't have to work for a living anymore. But we're excited that he agreed to write for Stansberry Research. And we think Professional Speculator could end up being one of the most successful trading advisories in our industry.

Until recently, you would have never had access to Paul's expertise (unless you were a high-net-worth individual who invested with Kinetics Asset Management, the $25 billion fund he used to co-manage).

But now, you'll be able to profit from all of Paul's best recommendations. You'll have a chance to get in on little-known companies with early stage breakthroughs... companies with hundreds-of-percent upside. And Paul – who won the Templeton Foundation investment competition in 2009 – will lead the way.

If you're interested in learning more about the Professional Speculator, keep an eye out for details later this week.

New 52-week highs (as of 5/19/2015): Activision Blizzard (ATVI), WisdomTree Japan SmallCap Dividend Fund (DFJ), WisdomTree Japan Hedged Equity Fund (DXJ), Esperion Therapeutics (ESPR), KraneShares E Fund China Commercial Paper Fund (KCNY), and ProShares Ultra Technology Fund (ROM).

In the mailbag, a question about investing in real estate through the stock market. Send your queries to feedback@stansberryresearch.com.

"What are your recommendations for accessing the real estate boom you mention, via the stock market. In particular, are there any suitable ETFs?" – Paid-up subscriber John F.

Brill comment: As we noted in the April 16 Digest, Steve Sjuggerud recommends private-equity firm Blackstone Group (BX) as a way to invest in real estate through the stock market. The company is the largest owner of single-family homes. His True Wealth subscribers are sitting on a 258% gain as of yesterday's close.But hestill rates it a buy today.True Wealthsubscribers arealso up 110% on the iShares U.S. Home Construction Fund (ITB), which is another way to profit from the boom in real estate.

Regards,

Justin Brill
Delray Beach, Florida
May 20, 2015