Jim Rogers shares his investing process...
As I (Porter) explained a couple weeks ago, legendary investor Jim Rogers recently appeared on an episode of Stansberry Radio Premium.
I wanted to offer more detail on one of the most important ideas Jim shared on the program – his investing strategy.
As longtime readers know, Stansberry & Associates is an independent research organization. When we do research on companies, we interview the executives... talk to the competitors... look at suppliers... and sometimes even hire independent outside experts to help us evaluate things outside our knowledge base.
Jim – who co-founded the Quantum Fund with George Soros in 1973 – is famous for his ability to thoroughly research his investments. So when he appeared on the show, I asked him to describe his research process... how he boils things down to the point where he's comfortable making an investment.
Jim said his strategy is similar to ours at S&A. Before he buys anything, he likes to know every single thing about it. He said:
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I learned at an early age ... that you have to understand the numbers or you're not going to understand the situation. I learned very early on Wall Street that if you read the annual report for a company, you'll do more than 98% of the people on Wall Street. And if you read the notes to the annual report, you're going to do more than 99% of the people on Wall Street.
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Jim also explained how he performed extensive calculations on everything from profit margins to receivables and inventories. By trying to learn everything he could about a company, he would often understand why numbers don't always look right…
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I would … try to know everything I could because you would often find anomalies when you see something in the numbers that doesn't look right. Why are those receivables so high? Why have those inventories gone up so much? Et cetera. So I always was a stickler for doing as many numbers as I could on any company, any industry in which I got involved.
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On a final note... I interview guests like Jim every week on my Stansberry Radio program. We've recently hosted renowned free-market writer Richard Maybury and legendary Asia investor Peter Churchouse. To learn more about the show and how to make sure you never miss an episode, click here.
– Porter Stansberry with Sean Goldsmith
Jim Rogers shares his investing process...
Famed investor Jim Rogers appeared on Porter's radio show a couple weeks ago. And as Porter discusses in today's Digest Premium, Rogers reveals the investing process that has made him hundreds of millions of dollars...
To continue reading, scroll down or click here.
Jim Rogers shares his investing process...
Famed investor Jim Rogers appeared on Porter's radio show a couple weeks ago. And as Porter discusses in today's Digest Premium, Rogers reveals the investing process that has made him hundreds of millions of dollars...
To subscribe to Digest Premium and access today's analysis, click here.
'The rise and fall of an elected representative'... Our newest World Dominator... Another bad sign for China's economy... China's 'shadow banking' sector... More government absurdity... An income opportunity only one in 1,500 Americans knows about...
I (Dan Ferris) kick off my presentation every year at the S&A Alliance meeting with a joke.
Life in the U.S. is as heavily politicized as ever. So a couple years ago, I cobbled together a little story from some jokes sent to me by a friend. It's about the rise and fall of a newly elected member of Congress. One of my colleagues at S&A recently posted it on YouTube. Have a look.
Last Thursday, S&A Editor in Chief Brian Hunt shared that I recently recommended a brand-new World Dominator stock to the Extreme Value portfolio. As longtime readers know, World Dominators are the safest stocks in the world. They're the No. 1 companies in their industry. And they have an unbeatable set of financial attributes that tell you they're safe and highly profitable... and will probably stay that way for a long time.
The traits are simple. World Dominators are consistently profitable in good times and bad... they gush rivers of free cash flow... they have excellent balance sheets, so they'll never have a financial crisis... and they reward shareholders through dividends and/or share repurchases.
Already, our newest World Dominator is proving to be controversial. Just this morning, a reader wrote in to say, "I think in this case the success formula for this new World Dominator member is too dependent on factors you haven't addressed, and you're bending your own rules for inclusion."
I promise you, I haven't bent any rules. I didn't need to. This company is a phenomenal business.
And there really are no rules, except the attributes of every World Dominator listed above. It'd take me about 20 seconds to show you how this company nails those traits, same as every other World Dominator.
I'll address this reader's concerns in Monday's Extreme Value weekly update. But for now, let me just say that I think this new World Dominator is the cheapest one I've ever come across because it's also the most misunderstood.
To give you an idea, this company is so cheap, you could remove the earnings from all but two of its products, and it would still be cheap. It traded for as little as five times earnings not long ago. It's popped back up, but it's still cheap today. This company could rise another 10% and I'd still urge subscribers to buy it.
I think the new World Dominator could double your money in a year or so. Most people think you can't make triple-digit profits on big, safe stocks, but it's not true...
Longtime Extreme Value readers have doubled their money on World Dominators like legendary investor Warren Buffett's Berkshire Hathaway, payroll-services king Automatic Data Processing, global beer giant AB InBev, and premium wine dominator Constellation Brands.
I've added two World Dominators each year to the Extreme Value portfolio over the past couple of years. But it's getting harder as the market goes higher and stocks grow more expensive. So far, we've only recommended two new stocks this year. (This is the first World Dominator.)
There's only one way to get our full report on the new World Dominator. You have to sign up for Extreme Value. My service isn't for everyone…. First, if you need more than a handful of deeply researched stock picks in the course of a year, you should pass on this one. Like I said, we only recommend our highest-conviction ideas, even if that amounts to three or four a year. But if you want to keep up with the best World Dominators to invest in, this is the only place to keep up.
Second, we do an exhaustive amount of research every month. So a subscription isn't cheap. But right now, we're offering folks a chance to sign up at a steep discount to its normal retail price. If you decide Extreme Value isn't for you after three months, you can cancel and receive a prorated refund (minus a 10% processing fee). We want you to be happy with our work. That's the only way we'll do business.
If you're still interested, you can learn more about a subscription by clicking here.
Today was another rough day for owners of "China-focused" assets.
Asia suffered a large selloff on news that the Japanese central bank is sticking with its current stimulus plans. And as we've noted in previous Digests, China's economy is slowing down. This reduces demand for basic commodities like iron ore and coal.
Brazil is a major commodity supplier to China. Its economy is tied to China's hip. The major Brazilian investment fund – iShares MSCI Brazil Capped Index (EWZ) – is getting crushed. It plunged more than 3% today to strike its lowest low since 2009...
Meanwhile, giant miners Rio Tinto and Peabody Energy reached new 52-week lows. And China's massive state-owned oil company, PetroChina, hit a new 52-week low.
As if owners of China-focused assets didn't have enough to worry about, credit-ratings firm Fitch Ratings just issued a report that warned against China's giant, unregulated "shadow banking" sector. The news service Reuters reports...
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China has tens of thousands of non-bank lenders that are providing increasing amounts of credit to businesses and government outside the mainstream, regulated banking sector, a situation that is stoking systemic risk, Fitch said.
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There is little visibility on where the money is going, who is lending it or what the credit quality of assets is, meaning traditional warning signs of trouble will not function properly.
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"It is a wild-west atmosphere in many respects and that is one of the reasons why we are so worried," Fitch Senior Director Charlene Chu told a conference in Frankfurt.
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So... you have the world's second-largest economy (China) running a giant, complex, unregulated banking scheme. We know China's government statistics are fictional. And we know the companies that supply the country with its raw materials are suffering big sales declines and falling share prices.
Meanwhile, the Western world's central banks are flooding the system with liquidity on a scale we've never seen before.
The old Chinese curse goes, "May you live in interesting times." Between China's complexity and corruption... and the Western world's grand monetary experiment, it's safe to say we're living the curse.
But when the going gets tough, the tough can always go work for the government. As Dorothy Dugger can tell you, it's a nice racket...
The Associated Press reports that Dugger, a California Bay Area Rapid Transit (BART) employee, earned more than $330,000 last year... despite not working one day for the public agency last year. The AP reports...
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Dugger, 57, cashed in nearly 80 weeks of unused vacation time, drawing paychecks and full benefits. During that period, she earned nearly two extra months of vacation, received management bonuses and medical insurance, and boosted her pension benefits by more than $1,000 a month for life.
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When she left BART's payroll in December, she began to draw an annual pension of $181,000, according to the newspaper.
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Dugger said she was entitled to the money because she earned more than 3,100 hours of unused vacation time during two decades with the light-rail agency.
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"It was time I earned my whole career at BART," she said. "It's a cost of having the option" to save the vacation until the end of a career, she said.
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The value of her unused vacation days soared after she took the top job in 2007 and received a raise of nearly $100,000 a year because the unused time-off was paid at her final, highest pay rate — not her rate when the time was accrued, records show.
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Some taxpayers are outraged with Dugger's gaming of the system. But we guess just as many are angry that they didn't think of it first. As we've covered many times, this is the silent war being fought all over America. It's the tax receivers versus the tax payers. And the tax receivers are enjoying a blowout victory.
It's no wonder shooting for a fantastic government-employee pension is so attractive. Public employees' pensions are backed by the government, which we know is happy to raise taxes and print as much money as it needs to keep the masses happy. Meanwhile, private companies need to actually fund their pensions. And those private corporate plans are in jeopardy. A recent story from the Washington Post highlights how many companies are being forced to close down their pension plans.
The reason? Pension obligations are calculated using the future value of money, which is pegged to the interest rate on corporate bonds. But because Federal Reserve Chairman Ben Bernanke has driven interest rates to historic lows, these future pension obligations have now skyrocketed... making it unfeasible for many companies to keep offering this perk.
While most of us don't have pensions, the other income alternatives aren't much better, either. For example, the latest data on 10-year Treasurys shows a yield of 2.09%.
So where can you turn nowadays for yield? Well, you might want to look into the alternative investment our colleague Tom Dyson recently discovered.
In short, it's a tax-free account that pays out four to five times more than long-term CDs. It's also completely "off Wall Street"... in that you don't have to report to the IRS. But chances are, you've never heard of it before. That's because government heavily restricts the advertising of these accounts, although at least six U.S. presidents (including John F. Kennedy and Franklin Delano Roosevelt) had one.
As a result, only an estimated 0.07% of the population (one American in 1,500) has an account. Tom put together a special (and free) video that explains what he learned about this underground investment. He was so impressed with the data he gathered that he's now put 20% of his personal wealth into this single idea. He also put together a video where you can learn more about opening one of these high-yield, off-the-grid savings accounts. You can click here to watch it.
New 52-week highs (as of 6/10/13): iShares Germany Index Fund (EWG), Prestige Brands Holdings (PBH), short position on iShares Barclays 20+ Year Treasury Bond Fund (TLT), and Wells Fargo (WFC).
Have you made alternative pension plans? We'd love to hear from you about it. Write us at feeback@stansberryresearch.com.
"I think many folks would like to know 'how' Doc achieved such a high level of consecutive successes. He has a lot of experience and I wanted to tap into it. I think I told you once that I wasn't giving up on learning to be proficient with puts and calls. I don't think I have enough money to learn half of what Doc knows about puts and calls." – Paid-up subscriber B.M.
Ferris comment: We get a lot of questions about the remarkable streak Dr. David "Doc" Eifrig is on in his trading service, Retirement Trader. He's closed 118 consecutive positions for a gain… and he's still going strong.
Last fall, when his streak was still at 81 consecutive positions closed for a profit, we published a series of Digests describing what he does. You can read it here.
"Porter, your rant about the dying dollar was about a year ago. In the last year, the dollar has been going sideways for the most part. This all reminds me of your rant about Fannie and Freddie years ago, in that they didn't die right away. It now looks like the dollar has done its sideways dance and is headed in the direction that you forecast." – Paid-up subscriber R.J.
Regards,
Brian Hunt and Dan Ferris
Delray Beach, Florida and Medford, Oregon
June 11, 2013