The two ways to get rich in stocks... There's no bull market like a junior resource bull market... How Badiali made 27 times his money in 2009... 'Stock options that never expire'... The seven best stocks to buy today...
There are two ways to get rich in stocks...
You either compound your money over long periods of time (a subject Dan Ferris covered in today's DailyWealth), or you buy in early to a major bull market.
Today, no sane person would say we're anywhere near the early stages of a bull market in U.S. stocks. The S&P 500 has more than tripled from its March 2009 lows. It has also gone nearly four years – 1,383 days, to be exact – without a decline of more than 10% (an official "correction").
The current winning streak is among the greatest in history. Take a look at this chart from our colleagues at Casey Research...
Despite the big gains, we still think there's big money to be made in some stocks. One sector in particular could triple your money – or even more – if you get in now. Our Editor in Chief Brian Hunt is saying certain investments could soar 500% in the coming years... And longtime readers know he is one of the most conservative investors here at Stansberry Research.
Before you dismiss 500% gains as impossible, consider the gains we've seen in biotech...
Digest readers know what Steve Sjuggerud says about biotech: "If you catch just one biotech bull market in your lifetime, you may never have to work again." As we discussed on Wednesday, the last few years have shown that's the case...
The iShares Nasdaq Biotechnology Fund (IBB) hit another new all-time high yesterday. It's up almost 60% over the past year... and nearly 410% over the past five years...
But biotech isn't the only sector that can gift you with an early retirement. You can also make an absolute fortune catching a major uptrend in the junior resource market. There is no bull market like a junior resource bull market.
The junior resource sector consists of small companies that explore for and develop resource deposits. These are the companies that search for the next big oilfield... the next big gold mine... the next great untapped copper or uranium deposit. They often have no revenue or earnings. They are teams of geologists out looking to hit it big.
As we've said several times in the Digest, when you catch a junior resource bull market, these stocks don't just double or triple... They can soar thousands of percent.
Consider this story from Stansberry Resource Report editor Matt Badiali (which he originally told in the January 22, 2014 Digest)...
In December 2008, I bought Kaminak Gold shares at just $0.06 each. Remember, at that point in time, folks had lost 90% of their capital in juniors. It was a scary thought to commit any capital to these companies.
I heard of two well-heeled investors who committed suicide due to their massive losses. There was a hopeless feeling in the air.
I knew the company well, knew the projects, and had full faith in the management. So I bought the stock. The stock doubled by January 2009. By June, shares hit $0.45... My wife thought I was a genius. But I knew better.
But a run from $0.06 a share to $0.45 was only the beginning for Kaminak. As Matt continued...
You see, this was the recovery of a market that fell for over two years. By the end of 2008, investors were so disgusted that they dumped everything. Funds had to sell anything that they could to pay investors who wanted out. That sent the whole sector spiraling lower.
The recovery from that bear market was fun. I bought early and eventually sold my Kaminak shares for $1.70 each... I made 27 times my money. When I cashed out, I suffered the best feeling any investor can have... regret that I hadn't bought a lot more shares.
During that period from 2009 through 2010, I put four companies into the Stansberry Research Hall of Fame, which holds the 10 best investments in the history of the company.
Take a look at this 15-year chart of the TSX Venture Exchange, the bellwether index for junior resource stocks.
We've written many times about how cyclical resource stocks are. As you can see, the TSX Venture has huge busts followed by equally impressive booms...
And today, junior miners are poised to boom. As Matt explained in his anecdote, buying a sector near the bottom is scary. The news at the bottom is always terrible. Your emotions will be against you.
But buying amidst extreme pessimism is how you make the greatest amount of money. Remember, Matt made 27 times his money in about one year.
We think we have a similar opportunity today. There is "blood in the streets" in junior resources. It's only a matter of time before they soar off their lows. But even if it takes more than 12 months, you can still make huge money.
Around the office, we often call these companies "stock options that never expire."
As you may know, a stock option is a type of security that offers massive upside. And we're not talking about "only 100%" upside. Stock options can return 10, 20, even 50 times your original investment. It's not uncommon for traders to turn $10,000 into $250,000 with well-placed option trades.
But while buying options gives you the potential to make giant gains, they come with some negatives, too. The biggest one is that options have finite lifespans. For example, you might buy an option contract in January that expires in June. If the outcome you expect doesn't happen by June (known as the "expiration date"), the value of your option will be worthless, and you'll lose 100% of the capital you place in the trade.
The best junior mining stocks have the same upside as stock options. It's not uncommon for professional mining stock investors to turn $10,000 into $250,000 by buying the right junior miner at the right time.
However, these junior miners are actual businesses. They don't "expire" like option contracts do. The right junior miners have plenty of cash on hand to fund their operations... which allows you to hold these stocks for years and get exposure to their incredible upside potential.
Because the upside of these "stock options that don't expire" is so great, placing just a small amount of your portfolio in them can produce incredible gains in a resource bull market. Placing just 1% or 2% of your portfolio in these stocks can result in a huge positive change to your overall net worth.
If the global central bank experiment ends badly – and we're certain it will – the value of paper currencies will continue to plummet. The value of "real money" (gold) will soar. And buying these "stock options that never expire" now, while they are dirt-cheap, will end up looking like a genius move.
Again... the nature of the junior resource market makes it difficult for the average investor. These firms typically don't have earnings. They don't pay dividends. You can't screen for the best ones.
Instead of earnings or dividend yields, the junior resource sector is all about people. To succeed in this market, you must invest in people with track records of success... people who are working on projects with real potential. Achieving huge returns in this sector isn't about "what" you know... it's about "who" you know. If you don't invest with the right people, you're guaranteed to lose.
And there isn't another research firm as connected in this business as Casey Research. Led by multimillionaire speculator and best-selling author Doug Casey, Casey Research has decades of experience in this market. They know all the right people. They've been to all the most important projects. There might not be anyone on Earth more connected in the junior mining industry than Doug Casey.
There's a saying in the mining industry: "In the room, in the deal." And no one has been "in the room" as many times as Doug. He has been in the business for 40 years now. Everyone knows him by name.
For example, when resource investor Ian Telfer came up with the idea for Silver Wheaton, he called Doug and pitched it to him.
If you're not familiar with the company, Silver Wheaton is the world's biggest precious-metals streaming company. It's similar to a royalty company. Silver Wheaton collects money from more than 25 different silver and gold mines around the world. It's considered by many to be the "Rolls-Royce of silver stocks."
And one of Doug's biggest personal gains was with a company called Diamond Fields. He made an incredible 59,000% on the trade. He got into the deal because he is friends with a guy named Robert Friedland. If you don't recognize the name, Friedland is the founder of Ivanhoe Mines. He has an estimated net worth of more than $1 billion.
The point is, Doug – now our corporate partner – has built up a huge network of contacts... proven "boots on the ground" insiders who can share insight on these small resource companies... and who can testify that they have sound management teams and enough capital on hand to make money off their deals.
Recently, Doug and his staff produced a special report called "The Top 7 Stocks That Will Soar in the Coming Gold Rally." Right now, this is one of the most valuable lists in the investment world. Large investment funds often pay $10,000, or even $25,000, to get high-level, proprietary research like this report. But for a limited time, you can access it for a tiny fraction of the cost.
By taking advantage of this special offer, you will not only get the names and ticker symbols of the elite resource stocks worthy of your capital... you will also get specific instructions on when to buy, whether or not to expect a takeover, and how much of your portfolio you should allocate to these stocks.
We believe buying these stocks while prices are down – like they are right now – is one of the best speculations in the world today. If you want to make money in the junior resource space, these are the seven stocks you want to consider first.
The report also comes with a subscription to Casey Research's flagship newsletter, International Speculator. It's the premier junior resource advisory, read by individual investors and industry insiders alike.
Casey Research is about to double the price of this research. To learn more about International Speculator and see the incredible gains you can achieve in the sector (including one stock that returned more than 20,000%), click here.
New 52-week highs (as of 7/16/15): American Financial Group (AFG), ProShares Ultra Nasdaq Biotechnology Fund (BIB), Anheuser-Busch InBev (BUD), Chubb (CB), Cempra (CEMP), CVS Health (CVS), Dollar General (DG), eBay (EBAY), iShares U.S. Insurance Fund (IAK), SPDR S&P International Health Care Sector Fund (IRY), Prestige Brands Holdings (PBH), PNC Financial Warrants (PNC.WS), PowerShares QQQ Trust (QQQ), ProShares Ultra Health Care Fund (RXL), Scorpio Tankers (STNG), Valero Energy (VLO), and Alleghany (Y).
In the mailbag, e-mails continue to pour in with your takes on the state of the U.S. economy. Send your questions and comments to feedback@stansberryresearch.com.
"A much better measure is to look at real wage growth, i.e. growth after inflation. As you can see from the Bureau of Labor Statistics chart below, for the majority of people there has been no real wage growth in 15 years. Only the 90th percentile (and up) of earners have experienced any meaningful real growth. The median earner has been running in place, but I would suggest that someone keeps increasing the speed of the treadmill they are on, i.e. they have had to run faster and longer than 15 years ago just to maintain their place.
"I think Steve S. would say something like: It's not that our economy is good, it is just less bad than others. That being said, Doc's work is top notch. I look forward to reading each edition of Retirement Millionaire and Income Intelligence." – Paid-up subscriber Rob
"It would seem to me that it at least bears mentioning that the stock prices of many companies have been boosted of late by the buying back of their own stock... in many cases, with money they got from issuing bonds (DEBT). Isn't this kind of a Ponzi scheme? Companies borrow money at near zero % interest... buy back their own stock... drive the price up... exercise their generous options packages, and waterski behind their yachts.
"Eventually they have to close store locations... cut back hours (like the local Walmart here in WA... going from open 24 hours to closing from midnight to 6am) and cut dividends in order to make bond payments. This economy is a house of cards waiting for something to 'puff' and blow it all down. I hope Doc is right about the economy... but I fear he is wrong. Keep up the good work gents." – Paid-up subscriber Vince W.
Regards,
Justin Brill
Baltimore, Maryland
July 17, 2015
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