What Buying Olive Oil In Italy Can Teach You About Value & Price

“Nowadays, people know the price of everything and the value of nothing.”

- Oscar Wilde, The Picture of Dorian Gray

While Wilde wasn’t talking about investing when he wrote this, it does make me think about the difference between the price of a stock versus the value of it.
If you’re reading this, you’ve undoubtedly spent time in the stock market and know that value and price are two very different measures arrived at by different means.
But that begs the questions, how do you know the value of a stock, and how do you know when to buy a stock that’s undervalued?
Sven Carlin, the analyst who writes our free newsletter Investiv Daily, set out to answer these questions in a fantastic article published this past Thursday, and I’d like to share it with you today.
In addition to Investiv Daily, we will soon be launching a new newsletter written by Sven, Global Growth Stocks. This paid newsletter will deliver a stock pick each month that has global market exposure and is on the verge of major growth that you can buy into now for a great value.
If you’re interested in learning more about Global Growth Stocks, I encourage you to add your name to the list via the link at the bottom of this article to receive updates on its upcoming release.
For those who do sign up for these updates, we will soon be giving you an opportunity to subscribe to Sven’s Global Growth Stocks at an incredible discount and before we release the newsletter to the general public, so keep your eyes on your inbox.
I’ve read through the first few issues of this newsletter, and I can assure you you won’t be disappointed by Global Growth Stocks and Sven’s monthly stock picks.
But enough about that, here’s Sven:

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November 17, 2016

What Buying Olive Oil In Italy Can Teach You About Value & Price

• Everybody knows the price of a stock, but few know the actual value.
• There are a few things that can help you when buying undervalued assets.
• To determine if you’re investing in a good undervalued investment, consider the company’s probability of bankruptcy.

Introduction
This summer, I was in Italy and buying some olive oil. As we use mostly olive oil in our kitchen, I bought 10 liters of this special oil, enough to last for a few months.
The seller came on a typical Italian scooter with the oil, and told me that the price was 100 Euro. I paid, and the seller and I continued on in a conversation about the sea, sunshine, boats, olives, and oil. The olive oil guy said that he and his family have 600 olive trees, it takes them a month to pick them in the Autumn and he usually gets about 3,000 liters of olive oil. I made the calculation and said that he makes 30,000 Euro a year just on his olives. He then corrected me that he usually sells it to locals for 7 or 8 Euros a liter, and only rarely manages to sell it to a tourist for more.
It was one of those moments in life when I felt both stupid and amazed. He didn’t even realize what he had just told me, he said “Ciao” and left me standing with my 10 liters of olive oil and 100 Euro lighter.
You might be wondering what olive oil has to do with investing. Well, there is a very important lesson to be learned here. I paid 10 Euros per liter because it was a price that reflects the value of the oil for me, what I didn’t know is that the price for locals was much lower.
With a little bit of research, I could have known the exact price of the oil, or what we all learn by watching the stock market. But what’s more important than the exact price of an asset is the value behind the asset we are buying. My olive oil situation is the exact opposite to what usually happens on the stock market, where people know the price of everything but the value of nothing.
How Do You Know The Value Of A Company?
This is the million-dollar question, but the answer can be reached.
In simple words, earnings are what give value to a company. As earnings grow, the value of the company will increase accordingly. The big issue lies in the time frame used for earnings and value. As businesses operate in cyclical economic environments, their earnings fluctuate accordingly. Therefore, Nobel Prize winner Professor Rober Shiller developed the Cyclically Adjusted Price Earnings ratio (CAPE), which uses average inflation-adjusted earnings from the previous 10 years.
The table below includes the 10-year earnings per share data on 5 companies that we’ll name later. Some are stable, and some are more volatile, but their averages are all positive.

Table 1: 10-year earnings. Source: Morningstar.

By attaching the historical mean CAPE ratio of 16.7 to the respective average earnings we get prices of $49.9 for company A, $74.23 for B, $34.21 for C, $21.10 for D and $60.45 for E.
Company A in this case is Rio Tinto (NYSE: RIO). Its price was often above $49.9 in the 10 years, but is currently still below it amidst the commodity bear market.

Figure 1: Rio Tinto 5-year stock price. Source: Yahoo Finance.

Company B is Johnson & Johnson (NYSE: JNJ), and its price was below its CAPE price back in 2013.

Figure 2: JNJ 5-year stock price. Source: Yahoo Finance.

Company C is Microsoft (NASDAQ: MSFT), and not surprisingly, its price was also below its current CAPE value back in 2013.

Figure 3: MSFT 5-year stock price. Source: Yahoo Finance.

The same story holds for company D, General Electric (NYSE: GE).

Figure 4: GE 5-year stock price. Source: Yahoo Finance.

While the stock price of company E, Consolidated Edison (NYSE: ED), was below its CAPE price back in December 2015.

Figure 5: ED 5-year stock price. Source: Yahoo Finance.

The point of these charts it to show you that more often than not, companies come close to or are even far below their long term cyclical values. The patient investor, by carefully accounting for long term value through earnings analysis, can easily grasp the cyclicality by buying when prices are below their normal market valuation. But undervaluation leads to another question.
When Should You Act If A Company Is Undervalued?
If the million-dollar question was how to value a company, the billion-dollar question is when to act on a found discrepancy between value and price.
Stock prices are usually below a fair value when there is something negative going on around the company. Unfortunately, this is the time when most people sell instead of buying stocks. By analyzing long term earnings and a company’s future prospects, it isn’t so difficult to estimate the value of the company.
The real question to be answered then should be, will this company go bankrupt? If the answer is no, then it is much easier to buy into a falling stock with high probabilities of nice returns as the sector or economy stabilizes.
A stellar example of this methodology is the Berkshire Hathaway’s (NYSE: BRK) acquisition of Burlington Northern Santa Fe Corporation back in 2009. Buffett seized an opportunity in the economic cycle, and bought the company at a low point for $35 billion. In the meantime, BNSF’s earnings have doubled and BRK has received more than $22 billion in dividend payments. Not bad for a $35 billion acquisition after 7 years.

Figure 6: BNSF dividend payments to BRK. Source: Bloomberg.

Conclusion
The main message of today’s article is that there is plenty of time and there will be plenty of opportunities to make smart investments. There is no need to rush into purchases just because the market tells you the price or because you think the price is below the value of something like in my olive oil case.
By buying only when the price is much lower than your assumed value you can sleep better and increase your long term returns.
By Sven Carlin

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Sven’s advice at the end of this article is solid: rather than just simply looking at the price of a stock, be patient and look for those stocks that are undervalued. It will require a bit more investigation on your part, but identifying an undervalued stock can result in incredible profits well worth the wait and the work.

I wish you and yours a very happy Thanksgiving this Thursday. Next Sunday we’ll be talking about turkeys. No kidding.

Don’t Be The Turkey...

On this the Sunday after Thanksgiving, ask yourself this question: have you ever considered the holiday to be a “Black Swan” event?
I assume most of you answered that question with a “No.”
If you have a turkey sandwich in front of you at this very moment, I apologize, but think about Thanksgiving from the perspective of that turkey you’ve enjoyed so much and ask yourself again if you’d consider the holiday to be a black swan event.
From the turkey’s perspective, Thanksgiving is the black swan event.
From birth, the turkey is fed and protected and fully expects that its lifestyle will continue indefinitely. But then Thanksgiving happens and the turkey ends up roasted and displayed on a platter, never having realized what was coming for it.
If you’re feeling empathy for the turkey right now, again, I apologize, but this exercise isn’t really about the turkey. It’s about recency bias.
We rely on habits every day. We eat the same foods, go to the same places, have the same schedules and behaviors day in and day out.
Habits, of course, make things easier for us, but our habit of having habits does something else to us called recency bias.
Humans are inclined to use our recent experiences as a baseline for what will happen in the future. This bias works just fine in our day-to-day, but when it comes to investing, it can trick us into making decisions we might not otherwise make.
Sven Carlin, the weekday contributor to our newsletter, recently wrote about recency bias in an article that asked readers to question if their brains were wired for investing. I encourage you to read his article. 
Sven cautions against relying on your recency bias in your investing and encourages readers to instead think in probabilities.
When the market is up—hello seven year bull market—we become convinced that it’ll never end and risk too much blindly assuming that the black swan event will never come.
Like our turkey from the beginning of this article, who bets everything on life continuing to be good without realizing Thanksgiving is approaching, investors bet everything on a market they think will climb forever without ever realizing the probability of the next big crash is increasing and that crash is around the corner.
Likewise when the market is down, we become certain that it will never climb back up. We cash out our portfolios and hide the cash in our mattress because recency bias tells us the market isn’t going back up.
Then we’re left sitting on a mattress filled with money that isn’t earning anything, missing the opportunity right in front of us.
Now this isn’t about predicting the timing of the next crash. It’s about thinking about the probability of the next crash and preparing accordingly.
Instead of considering as many factors as possible, and realizing that the market goes up and down, we get stuck in our recency bias rut and keep acting as though the situation we’re in now will never end.
But if we take the long view, recognizing that this bias exists, and prepare ourselves for the next crash or climb, we’ll be ready to take advantage of whatever market situation we find ourselves in.
Don’t be the turkey and stop letting habits and yesterday’s experience be what determines what you do with your money tomorrow.

Why The Oil Euphoria Won’t Last

This past Wednesday, OPEC finally reached consensus on oil production cuts agreeing to collectively reduce output by 4.5%, or 1.2 million barrels a day.
This sent oil prices soaring. By the close of the market Wednesday, crude prices had rallied over 9%—the biggest one day gain since February 12—and oil and gas producers had accounted for all of the day’s 10 best performers in the S&P 500.
But the euphoria surrounding this announcement that’s pushing prices higher won’t last.
The aim of the cartel’s production reduction are two fold: to end the oil supply glut and to get barrel prices rising again.
This new output reduction deal is contingent on both OPEC members living up to the agreement, and on the cooperation of non-OPEC oil producing countries. Countries like Russia and the U.S.
Despite prices still being less than half what they were just 2 years ago, prices have jumped from where they were at the start of the year, which will only make U.S. shale producers more eager to drill. It’s anticipated that U.S. shale fields could raise production within 4 months, with Texas coming online sooner to capitalize on its $900 billion Permian Basin.
Russia has said that it will cooperate with OPEC and reduce its output. The problem with this is that Moscow is notoriously hard to predict, and considering how much low oil prices have impacted the Russian economy, it isn’t hard to imagine a scenario where Russia takes advantage of marginally higher barrel prices, agreement be damned.
These two players aside, Morgan Stanley also sees an increase in investment from Asia to the North Sea, which will limit oil’s upside even further.
With the OPEC agreement taking affect on January 1, 2017, what I imagine we’ll see is oil advancing to around $60 per barrel early in the year, however, the reduction is only in effect for 6 months after which either OPEC members will agree to extend the agreement because the glut is still there as a result of the rest of the world not reducing output in the first six months of the year, or they won’t extend the agreement and soon after the glut will return in force. Either scenario will have oil retreating back to $50 per barrel by the end of next year, or potentially even slumping down into the $40 range.
Perhaps the agreement’s short time frame is a clever trick OPEC hopes will limit the upside for non-members inhibiting market-share gains especially in the U.S.
But taking a step back, with all things considered, the size of the cut, the timing of it, and the length of time of the reduction is all somewhat trivial in a 96 million barrel per day marketplace with or without non-OPEC member cooperation.
As the agreement doesn’t go into effect until the start of 2017, it’s member countries have been ramping up production in anticipation. Saudi Arabia’s production has increased to well over 10 million barrels per day. Other OPEC countries have followed suit—including Iran which is trying to reclaim its global market share and clout within OPEC that it lost under the western sanctions related to its nuclear program—making the glut far worse before the agreement goes into effect and setting it up to be less meaningful.
The 4.5% cut in production is a great headline, but adherence by member countries isn’t a given. The three big Persian Gulf producers, Saudi Arabia, Kuwait, and the United Arab Emirates, account for roughly 60% of the cuts and are expected to adhere fairly closely to it. But the other member producers may not adhere as closely to their production limits, and without that adherence, the cuts don’t have much teeth.
So it seems as though OPEC’s agreement is just noise meant to bring movement to crude oil prices in the short term, and drive a sentiment shift in oil and energy stocks.
The big problem with this strategy is that it is so focused on the short term. The glut will still exist, and its doubtful prices will ever rise to where they were two years ago. And the big problem with all of this supply, and part of the reason why the glut of oil exists in the first place, is that the demand just isn't there.
While it’s true that the glut in oil can be partially attributed to OPEC member states’ unfettered oil production since 2008—the last time a production output reduction was put in place—it’s also true that with rise of electric and more efficient gas-powered passenger vehicles, and solar and wind power, oil demand has begun to slow enough to make even the chief financial officer of Royal Dutch Shell, Simon Henry, predict that we’ll reach peak oil demand within 5 to 15 years.
Even the International Energy Agency (IEA) thinks oil demand from passenger cars, the biggest users of oil, has already peaked. In the IEA’s World Energy Outlook released in November, it doesn’t imagine the global demand peak coming before 2040, but their forecasts have underestimated growth in the renewables industry for the past decade causing me to think their forecast is a little too optimistic for oil and energy companies.
Add to this that global trade has already plateaued and it’s possible that with the rise of nationalist leaders such as President-elect Trump, we’ll see further declines in trade, reducing the demand for oil from the freight and maritime sectors.
Between the rise of electric passenger cars and renewable energy such as wind and solar, and the decline in demand from global trade, it’s hard to envision where demand will come from for oil. While it’s expected that emerging markets will drive future demand growth, I have to wonder if these markets will be able to drive it fast enough to depress the other apparent trends.
What it all comes down to is that in the long term, oil really doesn’t seem like a safe bet. And to me, it feels a bit like OPEC is fighting against history.
Having said that, though, I do believe that with all of this OPEC noise, there are some opportunities in the short term.
One such opportunity is U.S. Silica (SLCA).
I like SLCA because, while it’s in the oil and energy sectors, it isn’t dependent on producing fuel for passenger cars, the area where peak oil demand has already been reached. Instead, SLCA manufactures commercial silica used for fracking and other industrial processes.
Beyond its operations in the oil and gas industry, it also provides silica products for use in plastics, rubber, cleansers, paints, sealants, and fiberglass and other textiles. With its spread across these segments, when peak oil demand is reached in the coming years, SLCA won’t be in the kind of trouble pure oil producers will be.
SLCA has done really well this year. It bottomed out of a multi-year downtrend at the beginning of this year, rising from the low teens to just over $51 per share as I’m writing this.
Typically I wouldn’t recommend a stock that has been steadily rising like this one has, but I still think there is a fair amount of upside to SLCA and this week it set up an interesting opportunity.




Looking at SLCA’s chart over the last couple of months, you can see that this week it broke out of a correction, making for a great entry point for a breakout trader.
Furthermore, if the price can rise above its all-time high of $73.43—roughly 30% above where it is now—there is no more overhead resistance for SLCA.
You have to anticipate a correction before it gets there, but if you place a stop loss around $48 - $49—its low at the beginning of this week—and adjust that stop loss as the price rises, you should mitigate the risk.
Bottom line, betting on oil in the long term isn’t such a great idea. With demand weakening, oil and gas stocks won’t be a safe place to have your money within a few short years.
But there are opportunities in the short term, and companies like SLCA are a safer option than pure oil plays that are still benefitting from all the OPEC noise.

Defense Stocks Are Hot, But Think Twice Before Investing

I came across several news stories this week about global defense expenditures rising from $1.55 Trillion in 2015 to $1.57 Trillion this year, a substantial rise that reflects various geopolitical risks and uncertainties.
Immediately after reading a few of these stories, I looked at the charts for several defense stocks.
As I assumed they would be, all were on the rise. They had all been climbing for months.
When I sat down to write this article, I checked them again. And again as I suspected, prices had started to fall. Just days later.
Let’s take a look at Boeing (NYSE: BA):
When I checked Boeing’s chart on Tuesday, it was gaining, rising as high as $160.07.
When I checked Boeing’s chart today, Thursday, it had fallen, closing at $153.77.
This phenomenon—a stock rising for months in anticipation of an event then peaking on a news report and falling shortly after—is a perfect example of the old adage:

Buy the rumor, sell the news.

What this means is that, as a rumor starts to spread of an event or announcement, whether through media or insider gossip, traders buy the rumor as though the event or announcement has already happened. In other words, they build the event into the price of the stock in anticipation of an event leading to a rising stock price.
When the event or announcement happens, the trading catalyst is in the past and the traders who drove the price higher in anticipation sell their positions and the stock falls.
Traders familiar with this pattern can make huge gains anticipating this type of trend, but that’s easier said than done.
The reason is that once the event or announcement takes place, less-experienced traders are temped to hold onto to the stock because the event added value to the company, forgetting that it was already priced into the stock well before the event ever happened, then finding themselves in a losing position.
But if you recognize the pattern and pay attention to the rumors, and can put aside your emotions to avoid the mistake of holding on too long, you can do quite well.
In our example with defense stocks, rumors about increased global expenditures began circulating in April of this year.
If we take Boeing again as our example, its stock price closed at $126.96 on April 1. If you had invested then and sold at the top on Tuesday at $160.07, you would have made 26% on your investment, catching the upside of the anticipatory trend and truly buying the rumor and selling the news.
But since we’re now past the catalyst—the announcement that global defense expenditures have risen—what is there to do?
Considering the geopolitical risks that pushed defense spending higher are still present—and that the U.S. has just elected Donald Trump, who has promised to increase military spending in the nation with the highest military expenditures by far—it wouldn’t be surprising if defense stocks continue to rise.
If we compare a handful of defense stocks, we can see that they have all been on a pretty steady climb since 2009.
Realistically, most of these stocks are overvalued. Instead of buying defense stocks now after the news that military spending is increasing world-wide, wait for a correction and better valuations.
It’s clear that after the Tuesday high this week that these stocks have started to come down, and this may be the beginning of a correction that would make defense stocks more attractive.
I’ll be keeping an eye on General Dynamics (NYSE: GD). General Dynamics has a healthy dividend, and isn’t as overvalued as some other defense stocks.
Defense revenue accounts for roughly 60% of GD’s total revenue, and the company is also exposed to the steadily growing market for private jets.
Considering its lower valuation relative to its peers, and that the company is exposed to a potential continuation of the ramp-up in military spending, I think it’s likely that the stock will outperform.
General Dynamics also boasts a strong balance sheet and has widened its operating profit margin since 2013, a trend I expect will continue on in the next several years.
Keep an eye on defense stocks and wait for a correction as it will make for a great buying opportunity in a sector that is sure to continue its climb.
As for that old adage, pay attention and watch for rumors. If you read something enticing, do some research to verify the beginning of a trend and get in on it early. And don’t forget to ditch your emotions and sell when the news finally breaks.

This 1 Chart Proves Dow 50,000 is Inevitable

 

Dear Reader,

Take a good look at this chart of the stock market dating back to 1897…

 

See the repeating pattern?

Bull market … bear market. Bull market … bear market…

For the last 120 years, this pattern has never been interrupted. And right now this pattern proves that we are entering a new bull market.

According to Wall Street legend Paul Mampilly…

 

“This chart proves that this next bull market will be bigger than
every other bull market in U.S. history … combined!
The Dow is going to 50,000.”

 

Mind you … Paul is not some permabull, stock market cheerleader.

In fact, he accurately predicted the 2000 and 2008 collapses well in advance … helping him make $38 million in the last stock market crash alone.

In a new video, Paul breaks down this chart and explains exactly how everything will rapidly unfold as this new bull market mints more millionaires than any other time in history.

In fact, Paul has three stocks that he says you should buy today … stocks that could be the next Wal-Mart, JDS Uniphase and Dell, which made investors 27,504%, 28,894% and even 91,863% during the last bull market.

But hurry … the stock market is already hitting new highs.

You need to buy these stocks now.

"Artificial Intelligence" Is Crushing

Buy And Hold Investing

Dear Reader,

What I’m about to share with you might come as a complete shock but it’s absolutely true.

Did you know that the most profitable investing strategy ever has nothing to do with company or market fundamentals?

In fact, one Ph.D. of finance Cliff Asness discovered this market beating phenomenon back in 1994 while completing his thesis at the University of Chicago.

Today he has built one of the fastest growing hedge funds in the world amassing $42 billion in only 13 years.

But he wasn’t the first to discover this incredible secret. There are a handful of ultra-wealthy, cutting-edge traders who started using it long before 1994.

Their annual compound returns are simply mind boggling, far surpassing those of Warren Buffett, Carl Ichan, and David Tepper.

For example...

Ed Seykota turned $5,000 into over $15 million in only 15 years (300,000%)

Michael Marcus turned $30,000 into over $80 million (266,000%)

And John Henry used it to become a billionaire and now owns a stake in the Boston Red Sox.

Their strategy is very “unorthodox.” They don’t care about balance sheets, P/E ratios, or return on equity. If you ask them, they might chuckle and tell you none of that stuff matters.

All they care about is price and price trends. That’s right, each one of these traders made their fortune as a trend following momentum based trader allowing price to dictate all of their trading decisions.

So how can you put a trend following strategy to work in your portfolio?

In today’s computer-driven world it’s virtually impossible for the average investor to trend follow without the aid of a computer algorithm that detects early… and lasting trend changes.

There are simply too many variables to track to know which companies are seeing unusual institutional money flows, which is what creates sustainable and fast rising stock prices.

My business partner Jesse Webb is an expert trend-following trader with 20 years experience. Prior to Co-founding Investiv, he managed money for high net worth individuals at one of the largest banks in the country.

His experience at the bank gave him an inside knowledge into how institutions think, allocate money, and make trading decisions.

Armed with that data he spent 10 years and over $500,000 developing a web-based computer-driven algorithm which tracks institutional money flows and alerts subscribers to the strongest trending stocks in both bullish and bearish markets.

New Gold Law to Impact 1.6 Billion People

 

Dear Reader,

 

If you want to get incredibly rich, just take these three simple steps...

 

Take out your calendar... 

 

Circle December 31...

 

And make this one simple move on gold, quickly.

 

By this precise date, a powerful global organization is scheduled to make a stunning announcement...

 

One that will send shockwaves through the gold market, virtually overnight.

 

And it has nothing to do with a dollar collapse, negative interest rates, or economic instability.

 

Instead, it involves a single catalyst that could send $3 TRILLION flooding into the yellow metal.

 

It could be the single most lucrative 24 hours in the history of the markets!

 

But we’re NOT recommending you buy bullion, coins, or ETF’s.

 

In fact, we’ve found an unusual gold trade that will deliver 27-times more gold profits.

 

That means for every tiny jump in gold, you could see massive returns.

 

Already, the legendary investor Doug Casey – our firm’s founder – has multiplied his money 7-times over in 2016... and gold is only $1,350.

 

So imagine the kind of fortunes up for grabs as gold surges to $5,000.

 

If we’re right, this trade could turn every $10,000 into a million-dollar nestegg. And that’s just for starters...

 

The profits could be life-changing.

"Artificial Intelligence" Is Crushing

Buy And Hold Investing

Dear Reader,

What I’m about to share with you might come as a complete shock but it’s absolutely true.

Did you know that the most profitable investing strategy ever has nothing to do with company or market fundamentals?

In fact, one Ph.D. of finance Cliff Asness discovered this market beating phenomenon back in 1994 while completing his thesis at the University of Chicago.

Today he has built one of the fastest growing hedge funds in the world amassing $42 billion in only 13 years.

But he wasn’t the first to discover this incredible secret. There are a handful of ultra-wealthy, cutting-edge traders who started using it long before 1994.

Their annual compound returns are simply mind boggling, far surpassing those of Warren Buffett, Carl Ichan, and David Tepper.

For example...

Ed Seykota turned $5,000 into over $15 million in only 15 years (300,000%)

Michael Marcus turned $30,000 into over $80 million (266,000%)

And John Henry used it to become a billionaire and now owns a stake in the Boston Red Sox.

Their strategy is very “unorthodox.” They don’t care about balance sheets, P/E ratios, or return on equity. If you ask them, they might chuckle and tell you none of that stuff matters.

All they care about is price and price trends. That’s right, each one of these traders made their fortune as a trend following momentum based trader allowing price to dictate all of their trading decisions.

So how can you put a trend following strategy to work in your portfolio?

In today’s computer-driven world it’s virtually impossible for the average investor to trend follow without the aid of a computer algorithm that detects early… and lasting trend changes.

There are simply too many variables to track to know which companies are seeing unusual institutional money flows, which is what creates sustainable and fast rising stock prices.

My business partner Jesse Webb is an expert trend-following trader with 20 years experience. Prior to Co-founding Investiv, he managed money for high net worth individuals at one of the largest banks in the country.

His experience at the bank gave him an inside knowledge into how institutions think, allocate money, and make trading decisions.

Armed with that data he spent 10 years and over $500,000 developing a web-based computer-driven algorithm which tracks institutional money flows and alerts subscribers to the strongest trending stocks in both bullish and bearish markets.

Is This Junior Mining Company Your Next 10-Bagger?

 

 

Dear Reader,

What I’m about to reveal to you is, in my option, the trade of the next decade.

In fact, the last time this happened the share price of this company shot up from $0.27 cents to $7.50 in just over two years.

Do the math:

That turns $10K into $267K and $50K into over $1.3M.

I believe today’s opportunity is even bigger - and I’m not alone.

One Wall Street titan, who is arguable the single greatest investor of all time (hint: not Buffett), has just invested $1.2 billion of his own personal money into this opportunity.

And no it’s not a gold and silver mining play. Most of those have already jumped hundreds of percent this year and are short-term overbought.

This specific junior miner hasn’t seen it’s share price move just yet. I'll explain why.

For now it's giving you the chance to buy near the bottom, but it is urgent. Once this company begins to move it will happen very quickly.

 

After 87 years, Finally…
The Greatest Wealth-Building Opportunity of Our Lifetime is About to Begin!

 

Dear Reader,

Market highs are masking the economic crisis that's brewing... but if you prepare now, it could be the single greatest wealth-building opportunity you will ever live to see.

You have two choices…

You can choose to capitalize on this once-in-a-lifetime event and build epic amounts of wealth that will make all of your retirement dreams come true…

Or you can bury your head in the sand and insist that we aren’t in a bubble and watch in horror as your savings are wiped out… forcing you to work well into your 70’s…

Even worse, you might not be able to retire at all and wind up a burden to your friends and family.

Which is why I’m urging you to get your copy of The Sale of a Lifetime: How the Great Bubble Burst of 2017 Can Make You Rich today... and read it all the way through.

And if you’ve never read one of my books before, here's what to look forward to…

“Harry Dent is the reigning expert on demographic trends, how they impact the economy and why we are in for continued tough times. But this book shows that he is also an expert on bubbles throughout history and shows why this one is the most global and trumps all others. This is a must read!”

– David Stockman
Former Reagan Administration Director of Management and Budget
Author, The Great Deformation: The Corruption of Capitalism in America

 

“This book is important for investors but also for anyone interested in the problems facing our economy.  Harry Dent does an excellent job of illustrating how historic bubbles are relevant for contemporary times. The read will challenge you to think, but that’s a good thing given the challenges at hand.”  

– Dr. Lacy Hunt
Ph.D. Economist
VP, Hoisington Investment Management Company

 

“Harry Dent’s demographic and cycles research helps to create a quantifiable platform and level of confidence from which any investor can plan their financial future years in advance. This latest work ramps that up. A must read!”

– James O. Lunney, CFP®, CEP
CERTIFIED FINANCIAL PLANNER
Professional Certified and Estate Planner
Author of Surviving the Storm (McGraw Hill)

 

“Deciphering demographics and cycles is the key to economic prediction. There is no one on this planet that has a greater knowledge of this subject than Harry S. Dent Jr. His lifetime’s dedication to this work combined with his incisive ability to identify these patterns has led to an incredible number of successful predictions. There are more to come! With his unique understanding of economic bubbles together with their consequences, only a fool would ignore what Harry has to say!”

– Andrew Pancholi

Markettimingreport.com

 

“Unlike a lot of economists, Harry Dent has a different view of the world markets because of his demographics and cycles research. He has made some great predictions. In his book, The Great Boom Ahead, he made 19 predictions. He was right about 18 of them. The 19th one happened quicker than he thought it would!”

 

– Mike Robertson
Host, Straight Talk Money Radio, 02/09/15

 

“From the moment I picked up Harry from Sydney airport for his first tour to Australia in 2011, the media was in a frenzy. His incredible insight (but often rebellious views) on the future of the world economy is intoxicating. Harry Dent showed to me that he is a straight shooter – he will not accept any incentive to change his view. His only interest is to tell the truth, based on his in-depth economic and demographic research. He’s not your typical economist.”

 

– Greg Owen
CEO of GOKO Management Sydney, Australia
Founder and Promoter of Secure the Future

 

“If Harry can see this coming – and this is just mathematics – why is no one talking about this?”

 

– Grant Williams
Author of Things That Make You Go Hmmm
Real Vision TV

 

Dow 24,000 Is A Virtual Lock - It Could Even Hit 27,000 Over The Next 12 Months

 

Dear Reader,

I know Dow 27,000 is a bold statement... ...and the global economy is riddled with problems...

Interest rates have seen one of their fastest and biggest spikes in history, rising 88% in only 6 months.

The US National debt continues to spiral out of control.

The Wall Street Journal recently reported that Chinese banks are hiding more than $2 Trillion in loans used to build “ghost cities” and empty apartment buildings.

And President Trump is an isolationist whose trade policies may not be good for the economy.

But none of that matters - at least not right now.

Markets can and do ignore what seems like logical fundamentals for very long periods of time.

John Maynard Keynes said it best when he said: “The market can stay irrational longer than you can stay solvent.”

At these lofty levels, I’m not advocating that you buy and hold for the long term.

You need to be nimble and ready to profit once the market turns down. Some of the largest fortunes in history have been earned in a crashing market.

But I don’t believe moving to cash and sitting on the sidelines and missing out on another 7,000 point potential rise is the best course of action either.

That’s why I’m advocating you use this simple and safe strategy - a strategy which has crushed buy and hold investing...

...and by such a wide margin that billions of dollars from Wall Street’s most prominent hedge funds are now flooding into this exact strategy.

Chinese Assault on USD begins… 2017 Collapse Imminent?

 

Trending News: Chinese Assault On USD Begins... Trump, Former U.S. Congressman Issue the Following Warnings:

- Former U.S. Congressman: 'The End is Coming'
- Chinese Yuan to Replace The US Dollar by Spring of 2017?
- Federal Government to Steal our 401Ks & IRAs to Solve Fiscal Crisis?
- Warning: Economists Expect an  80% Stock Market Crash to Strike in 2017
- National Debt Hits $19 Trillion,  Total value of IRA’s $23 Trillion… is your retirement account safe?

- Former U.S. Congressman Warns of Imminent Currency Collapse by end of 2017

- Trump Warns US Financial Collapse Is Coming
- IRS Loophole Now Allows You to Store Your IRA/401k at Home

- How to Invest for the Imminent Dollar Collapse
- These Billionaires Are Betting BIG on a 2017 Market Collapse

THE Rare Metal for Investors in 2017

Investors would be wise to turn their attention to this breaking new development in the metals market.

With Trump at the helm...

There's a critical... RARE... natural resource about to meet a supply and demand squeeze that could make it double in value in 2017.

And, though in our The Best Kept Secret Of The Electric Car Boom report we see lithium rising higher, it's NOT lithium.

A Roskill market analysis agrees "demand will grow at a higher rate than supply" for this other metal...

With MIT forecasting by 2020 demand could be THREE times higher.

Now, here’s the scoop...

This metal will soon see MAJOR production bottlenecks.

Part of that is due to the fact 90% of it is buried deep beneath the Congo... in hand dug mines... in a notoriously unstable region of the world.

But we've uncovered about as perfect an investment as there is in one of the most stable countries in the world... Canada.

This is the metal to watch in 2017...

And this little-known company acquiring mines of this other metal could rise multiples higher.

Dear Reader,

What I’m about to share with you might come as a complete shock but it’s absolutely true.

Did you know that the most profitable investing strategy ever has nothing to do with company or market fundamentals?

In fact, one Ph.D. of finance Cliff Asness discovered this market beating phenomenon back in 1994 while completing his thesis at the University of Chicago.

Today he has built one of the fastest growing hedge funds in the world amassing $42 billion in only 13 years.

But he wasn’t the first to discover this incredible secret. There are a handful of ultra-wealthy, cutting-edge traders who started using it long before 1994.

Their annual compound returns are simply mind boggling, far surpassing those of Warren Buffett, Carl Ichan, and David Tepper.

For example...

Ed Seykota turned $5,000 into over $15 million in only 15 years (300,000%)
Michael Marcus turned $30,000 into over $80 million (266,000%)
And John Henry used it to become a billionaire and now owns a stake in the Boston Red Sox.

Their strategy is very “unorthodox.” They don’t care about balance sheets, P/E ratios, or return on equity. If you ask them, they might chuckle and tell you none of that stuff matters.

All they care about is price and price trends. That’s right, each one of these traders made their fortune as a trend following momentum based trader allowing price to dictate all of their trading decisions.

So how can you put a trend following strategy to work in your portfolio?

In today’s computer-driven world it’s virtually impossible for the average investor to trend follow without the aid of a computer algorithm that detects early… and lasting trend changes.

There are simply too many variables to track to know which companies are seeing unusual institutional money flows, which is what creates sustainable and fast rising stock prices.

My business partner Jesse Webb is an expert trend-following trader with 20 years experience. Prior to Co-founding Investiv, he managed money for high net worth individuals at one of the largest banks in the country.

His experience at the bank gave him an inside knowledge into how institutions think, allocate money, and make trading decisions.

Armed with that data he spent 10 years and over $350,000 developing a web-based computer-driven algorithm which tracks institutional money flows and alerts subscribers to the strongest trending stocks in both bullish and bearish markets.

Dear Reader,

In today’s email I promise I won’t try and sell you anything.

Rather, I’m going to share with you a safe way to increase your wealth 15-fold.

That’s right I’m talking about turning every $1,000 into $15,000 with minimal risk.

Over the last 50 years the U.S. stock market has been one of the best performing stock markets globally.

Between 1980 and 2000, the S&P 500 climbed from 100 points to 1500 points (not including dividends)

One of the biggest contributing factors to such incredible growth was a long stable period of relatively high economic growth averaging around 4%.

Unfortunately, the US will never experience that same kind of growth without a major “economic reset” first - which will be painful.

No President Trump can’t save the day.

However, over the coming decade I believe there will be an incredible opportunity to substantially increase your wealth investing in the fastest growing emerging markets.

India currently has a population of 1.29 billion which is expected to increase to 1.64 billion by 2065.

The average GDP per capita is $1,820, which is 29 times lower than the average US GDP per capita of $51,486.

Yet the Indian economy has averaged 7.7% GDP growth over the last 10 years.

The low starting point of the Indian economy and aggressive growth rate is creating the perfect opportunity for enormous growth.

The Indian economy still has to grow 3.7 times just to reach the development level of China, which currently has a GDP per capita of $6,416.

China still needs to increase 8 times to reach the GDP of the U.S.

So there is tremendous opportunity to create wealth in both China and India as well as other emerging markets.

But this kind of growth won’t come without challenges, and neither did the massive growth the U.S. economy experienced over the last 50 years.

Fears about China and India should be cast aside when looking at the longer term perspective.

Not to mention, the challenges the developed nations of the U.S. and Europe face are much more daunting than those faced by emerging markets.

Beginning in mid February we will be launching a new stock picking service called Global Growth Stocks focused on the fastest growing emerging markets.

Markets that will generate 10-bagger after 10-bagger and even several 100-baggers.

This service will be run by a professional hedge fund manager and Ph.D. in finance and will be for serious investors only - preferably with $50K or more to trade with.

Bullish On Gold? We Are.

Gold had a great 2016 right up until the election in November.
The big run on equities after the election was largely driven by speculation on what Trump might do for the economy. With the prospect of economic growth—and thus inflation—good news for stocks and the dollar, gold was crushed.
Fast-forward to 2017, and gold is outperforming everything. The yellow metal is now up 4% so far this year—compare that to the Dow Jones Industrial Average’s 0.7% gain, and the S&P 500 index’s 1.4% gain—in a clear signal that the post-election exuberance has waned.
That excitement that had pushed stocks to new highs on the hope of new fiscal stimulus, tax cuts, and looser regulations, seems to now have been replaced by want for details and doubt over whether Trump can deliver.
Of course, Trump isn’t the only reason for the good news for gold.

If You Don’t Own Gold, You Know Neither History Nor Economics

• The bull case for gold is getting stronger for monetary, fundamental, and technical reasons.
• Gold miners offer a positive asymmetric risk reward opportunity.
• However, in the short term, anything is possible.

Introduction
I’ve borrowed the title of today’s article from Ray Dalio, the manager of the $150 billion Bridgewater hedge fund.
Historically I have been against owning gold as it is not a yielding asset. However, after seeing how the global monetary base expands and will probably expand further when the next recession comes along, it’s a good time to contemplate an investment in gold as a hedge against human stupidity and greed.
Today, I’ll elaborate on the bull case for gold, the risks, investment options, and why I think some of those options have extremely positive asymmetric risks.
The Monetary Case For Gold
We are now almost nine years into the expansive part of the economic cycle. The current market sentiment is in greed mode, consumer sentiment is at levels not seen since before 2008, and valuations are at historically extremely high levels. In such an environment, nobody thinks about a recession. Unfortunately, a recession will come along. I don’t know when, but I know that when it comes it is going to take the world by surprise.
Don’t worry, it isn’t going to be bad because governments will do the only thing they know, increase monetary stimulus in order to stimulate the economy. The problem is that governments around the world don’t have more space for normal monetary easing through lower interest rates because interest rates are close to zero.

Figure 1: The “Gas in the tank” is close to empty. Source: Bridgewater.

Now, if you think the FED will manage to significantly increase interest rates before the next recession comes, here is some data that might change your mind. Higher interest rates immediately tighten credit which leads to lower investments, spending, and GDP. The pending home sales index was down 2.5% in November. If interest rates continue to climb, there will be less demand for homes.







Figure 2: Pending home sales index. Source: National Association of Realtors.
Higher interest rates have immediately impacted business investments. Investments are currently only 66% of the 2015 peak and if interest rates continue to climb, this percentage will be even lower.

Figure 3: Domestic business investment. Source: FRED.

If you think you see a pattern in the above figure telling you that when business investment declines a recession is around the corner, don’t worry because economists don’t forecast a recession for now as positive sentiment is extremely high.
If you’ll allow me some irony, it looks like the global economy is addicted to low interest rates and nobody wants to go to rehab. Fortunately, there are central banks that will continue to provide liquidity at any cost in case of a crisis. As interest rates are close to zero, they will have to use new monetary tools, likely in the form of “helicopter money.”
When that happens, gold will be a good place to be.
As more money becomes available, it should be worth less, and gold should be worth more.

Figure 4: Central banks’ balance sheets and gold price. Source: Goldcorp.

The price of gold has diverged from this pattern in the last 4 years as economies have strengthened, but it should return to the mean when turmoil comes along.
The Fundamental Case For Gold
As gold prices have been declining for the past 4 years, investments in the industry have severely declined and new gold discoveries are at historical lows due to the fact that the low hanging fruit has been mined.

Figure 5: Exploration is not replacing the gold produced. Source: Randgold.

Less successful exploration leads to lower grades which consequently leads to higher production costs and eventually less supply.

Figure 6: Expected gold supply. Source: Randgold.

The fundamental case has its risks. On average, all-in sustaining production costs come in at below $1,000 per ounce for the major gold producers and cash costs are even lower, so there is more space for gold to decline, especially if the global economy continues to do well.
The Technical Case For Gold
After four bad years, gold has reached a bottom and the 2016 rally looks like the start of a new bull market, especially if the above described economic scenario develops.

Figure 7: A technical view on gold. Source: McEwen Mining.

However, gold will always be gold and its price will be driven by sentiment in the short-term. Therefore, expect anything and position yourself accordingly. Dollar cost averaging is a good strategy, read more about it here.
Investment Vehicles
There are several ways to invest in gold.
The lowest risk option is to buy gold directly or through an ETF like the iShare’s Gold Trust (IAU). IAU is up 8.88% year-to-date.
A more volatile investment would be to invest in gold miners. The iShares MSCI Global Gold Miners ETF (RING) tracks the performance of a basket of global gold miners. The ETF is up 62.57% year-to-date which shows the increased volatility miners have compared to physical gold. But, RING is getting close to historical lows again.

Figure 8: RING – Global gold miners ETF. Source: iShares.

If the bull scenario for gold develops, the gold miners ETF could easily return to the values from 2012 which would triple your investment. As you can lose 100% in the worst-case scenario where all gold miners go bankrupt—something very unlikely—and gain more than 200%, this is where the positive asymmetric risk situation comes from. Of course, only a fraction of your portfolio, that you can afford to keep volatile, should be invested in gold miners.
If you are certain about where gold prices will go in the next few months, then a great investment would be the Direxion Bull (NUGT) and Bear (DUST) Gold Miners 3x Shares ETFs, but expect a crazy ride for sure.

Figure 9: Direxion Daily Gold Miners Index Bull 3X. Source: Nasdaq.

Investors who prefer a precious metal used in the industry should read our article on silver available here.
By Sven Carlin

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I’ve written about Mr. Carlin before in these Sunday Editions, and I have to say, you’d be hard pressed to find daily content of the caliber that Sven delivers for free anywhere else.
If you haven’t already subscribed to Investiv Daily, click here to add your email address to the list to receive each of Sven’s posts direct to your inbox.
We’re also gearing up to launch a paid newsletter by Sven, Global Growth Stocks. I’m particularly excited about this newsletter because it looks for growth stock opportunities that have significant exposure to emerging markets, the kind of stocks that I think every investor ought to have in their portfolio.