tag:blogger.com,1999:blog-34685009455650501312024-03-21T18:18:59.495+08:00THE TRADERS CLUBBonds, Commodities, Copper, Currency, Energy, Equity, Euro, Finance, Financial Tips, Forex Trading Systems, Futures, Gas, Gold, Gold Sands, Investments, Hedge, Money Market, Oil, Options, Pound, Silver, Stock Markets, Swing Trading, US Dollar, Yen.Unknownnoreply@blogger.comBlogger600125tag:blogger.com,1999:blog-3468500945565050131.post-6690060673825815202010-09-29T07:46:00.000+08:002010-09-29T07:46:46.811+08:00THE DOLLAR IS GETTING FLUSHED DOWN THE TOILET<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKE8gTe03oqPSDeaWI8U-1vEBwnrTNAlINyydhxMh0vhyUDXW7ddp9U7Ju67eIpxRZdH3q-fvD-S9YO35bX6Og2TjzYfoATphv-hvzCl_5bUp-IA-oq_zrucS7CbY2mjRsKxXlUdJeQek/s1600/USD.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="246" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKE8gTe03oqPSDeaWI8U-1vEBwnrTNAlINyydhxMh0vhyUDXW7ddp9U7Ju67eIpxRZdH3q-fvD-S9YO35bX6Og2TjzYfoATphv-hvzCl_5bUp-IA-oq_zrucS7CbY2mjRsKxXlUdJeQek/s400/USD.gif" width="400" /></a></div><br />
<div style="text-align: justify;">The topic of the week in the precious metals market: "What's driving gold and silver prices higher and higher? Should I sell and take profits?"</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Today's chart is the driving force behind the hot topic. It's the past 12 months of trading in the U.S. dollar.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Last week, Ben Bernanke told America he's ready to do anything in his power to keep the U.S. economy inching along. This means he'll do anything to support asset prices like stocks and housing… even print up fresh money.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The market is reacting to Ben's idea by flushing the dollar. As you can see from today's chart, the dollar has been clobbered to its lowest low in more than seven months. Real "hard money" assets like gold and silver are soaring to their highest levels in decades as a result.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">That covers the first part of our topic. And the second? Sure… gold and silver are overbought in the short term. They're due for a "relief" correction. But our view is, take a page from China's playbook and use any weakness in the precious metals to buy more. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-47825119182229808602010-09-28T08:09:00.000+08:002010-09-28T08:09:37.368+08:00The U.S. takes another step towards an all-out trade war with China<div style="text-align: justify;">Legislation pressing China to raise the value of its currency is set for a vote in the U.S. House next week, as Republicans joined Democrats in expressing frustration that the yuan is appreciating too slowly.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"We cannot wait any longer to level the playing field for U.S. businesses and protect American manufacturing jobs," Democratic Leader Steny Hoyer of Maryland said yesterday after the Ways and Means Committee sent the bill to the full House.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The committee adopted the measure by voice vote after the panel's top Republican, Dave Camp of Michigan, voted with Democrats to back the bill. The full House will vote Sept. 29, said committee Chairman Sander Levin of Michigan, a Democrat.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The measure would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency. President Barack Obama's administration hasn't taken a position on the bill, said Natalie Wyeth, a Treasury Department spokeswoman. A Chinese central bank press official, who prefers not to be identified in accordance with the agency's rule, declined to comment in Beijing today.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The U.S. trade deficit with China widened to $145 billion in the first seven months of this year, from $123 billion for the same period in 2009. The expanding deficit, unemployment lingering at almost 10 percent and polls showing Democrats' seats at risk heading into the election added support for the bill, which has been discussed since 2005.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>Flexible Rate</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The yuan has strengthened about 2 percent against the dollar since June 19, when China's central bank said it would pursue a more flexible exchange rate. That rate of gain is "inadequate," Treasury Secretary Timothy F. Geithner told the panel last week. Pressure from lawmakers is helping the administration make the case to China to raise the value of the yuan, he said.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Lawmakers such as Camp say they are also frustrated with barriers China has raised to American imports and the piracy of copyrighted American movies, music, and software.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The currency dispute "is a proxy for the state of the overall U.S.-China commercial relationship," William Reinsch, president of the Washington-based National Foreign Trade Council, said Sept. 23 on Bloomberg Television. "I don't think it will have that big of an impact on the American economy."</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>China Operations</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Lawmakers fended off warnings from lobbyists representing companies such as Caterpillar Inc., Wal-Mart Stores Inc., and Citigroup Inc., who said the measure may lead to retaliation against U.S. companies operating in China and curb exports to the country. China may retaliate if the House passes the legislation, said Reinsch, who represents multinational companies such as Caterpillar.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"This could damage our efforts to 'sell American' and compete successfully in the growing China market," Representative Kevin Brady, a Texas Republican who heads the Ways and Means Committee trade panel, said before the vote.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, according to C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China's currency, which is undervalued by as much as 25 percent, is the most important trade issue facing the U.S., he said in testimony last week.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>Obama Meeting</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Obama pressed China's Premier Wen Jiabao in a two-hour meeting at the United Nations Sept. 23 to increase the yuan's value. Wen said this week that a 20 percent increase in the currency would cause severe job losses and trigger social instability in China.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"We cannot imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs," he said in New York on Sept. 22.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"We want to see that any legislation is consistent with our international obligations and consistent with the World Trade Organization and is in our interests," Jeff Bader, Obama's director for Asian affairs, said Sept. 23. He didn't say if this bill meets those tests.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Levin said yesterday the measure was redrawn to be consistent with WTO rules. It would let U.S. makers of products petition the Commerce Department for countervailing duties on Chinese products to compensate for the "subsidy" of a weak currency, according to documents released by the committee.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>WTO Rules</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The Commerce Department rejected such an argument in cases filed by paper and aluminum makers last month, saying that a weak currency isn't a subsidy to a specific industry, as required under WTO rules. The legislation when introduced by Representative Tim Ryan, an Ohio Democrat, would have required that the Commerce Department find that a weak currency is a subsidy. Revisions crafted by Levin removed that language and instead set out provisions intended to make such a finding more likely.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">It's that change that won Camp's backing. "It does not presuppose an outcome," he said.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Forty-four Republicans had already signed on as sponsors of the original bill, and with Camp's support, lobbyists said they expect additional Republicans to vote with Democrats next week. That could help spur the Senate to take it up before lawmakers leave Washington to campaign for election, said Lloyd Wood, spokesman for the group of unions and manufacturers fighting for the bill.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"The bigger the vote in the House, the more pressure it puts on the Senate," Wood said.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Lobbyists for groups representing Wal-Mart and Citigroup faulted the panel for approving the measure.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Provoking tension with our trading partners doesn't come without costs, and we should choose our battles carefully," Stephanie Lester, vice president of the Retail Industry Leaders Association, which represents Wal-Mart, said in a statement. "It makes little sense to enact harmful policies that will spark a bilateral conflict over currency with one of our largest trading partners and fastest growing markets for American exports."</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-48295605492776247292010-09-24T21:01:00.000+08:002010-09-24T21:01:08.648+08:00A BIG NEW DEVELOPMENT FOR THE S&P 500<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEieOt6FsUQ8laxwKE_OArYY5oG5jE9BH0yKsKM5_XBfbSgUlAY5QZ7-R7svXi2A-F3xrgEmjk6qcUzJO_heIY8NL7QJu93hR06xsuVczdmpprcspiv_B5HqSZyHNCPy_ba-Qp1aVzjMsY0/s1600/S&P+500.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEieOt6FsUQ8laxwKE_OArYY5oG5jE9BH0yKsKM5_XBfbSgUlAY5QZ7-R7svXi2A-F3xrgEmjk6qcUzJO_heIY8NL7QJu93hR06xsuVczdmpprcspiv_B5HqSZyHNCPy_ba-Qp1aVzjMsY0/s400/S&P+500.gif" width="400" /></a></div><br />
<div style="text-align: justify;">The message from today's chart is, "We're back in bull mode."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Longtime DailyWealth readers know we check in from time to time with the S&P 500's 200-day moving average to gauge which way the "tide" is flowing for the stock market. A moving average is an indicator that computes the average price of an index over a given time period… In this case, it's the blue line overlaid on the chart below.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">There's nothing magical about the 200-day moving average. It's simply the most widely used "marking point" traders use to say if a market is in a bull trend or a bear trend. It's popular because it's popular.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from today's chart, the S&P spent much of 2009 and 2010 above the 200-day moving average. It then dipped below the average in May and has muddled along ever since. The big rally of the past few weeks, however, has taken the S&P above the average… and back into a bullish trend. Folks are taking Ben Bernanke at his word when he says he'll do anything to support asset prices. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-24284213178585347372010-09-24T06:18:00.000+08:002010-09-24T06:18:34.104+08:00AN OLD FRIEND FROM CHINA PAYS A VISIT<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiffnDu-qJAgYuGDUVvidPUN6gR_ydoBtBuldx_T5mBx7M-iFxnDzXehxZuAqSWNtkOpLfzkWOUUv_xOTYACoxNJlb8hT7cbeqmG4mbsLFk-sPBn0Hi2s0QxLtO-NoKr7wwaf9Xye5_gUs/s1600/China.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiffnDu-qJAgYuGDUVvidPUN6gR_ydoBtBuldx_T5mBx7M-iFxnDzXehxZuAqSWNtkOpLfzkWOUUv_xOTYACoxNJlb8hT7cbeqmG4mbsLFk-sPBn0Hi2s0QxLtO-NoKr7wwaf9Xye5_gUs/s400/China.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Today, we offer up one more "China confounds the skeptics" chart – one near and dear to our hearts. The chart displays the past five years of trading in one of China's largest airline companies, China Southern Airlines (ZNH).</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The Chinese stock market is one of our favorite markets to trade. Since China is the world's greatest growth story, it attracts an enormous amount of speculative trading capital. This makes stocks there boom and bust like crazy. You can ride 'em up, and you can ride 'em down.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In mid-2007, China stocks were in the middle of a historic boom. When this boom turned to bust, we picked on China Southern as a stock that would get crushed. The stock went on to fall from $35 per share to just $6 per share as our prediction came true.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">But as we've recently noted, high-profile "China plays" are surging right now… including our old friend China Southern. The stock is up 62% this year and sits at a 52-week high. We're sure this big boom will end brutally – just as the one in 2007 did. But for now, it's "game on" in Chinese stocks. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-41283787498898310952010-09-22T08:51:00.000+08:002010-09-22T08:51:44.243+08:00AMAZING PRICE STRENGTH FROM A BIG "CHINA PLAY<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDZGh9S1Vi-yNV9xuY2Zq-lrLiTkNyD8AU3nY13ktEVUqW45S9UmFsmns5W0-mqCjaArRjyYWhRvdepWXbj11QKBkH1-KpT0O246zfBHvyOHEnFCxRqY02LjaXuL4buStqYllqsy2ZnsI/s1600/980.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDZGh9S1Vi-yNV9xuY2Zq-lrLiTkNyD8AU3nY13ktEVUqW45S9UmFsmns5W0-mqCjaArRjyYWhRvdepWXbj11QKBkH1-KpT0O246zfBHvyOHEnFCxRqY02LjaXuL4buStqYllqsy2ZnsI/s400/980.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Everywhere we look these days, we see pictures of how China is confounding the skeptics…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Like most assets, Chinese stocks enjoyed a huge rally off their panic lows of late 2008 and early 2009. China's benchmark stock index nearly doubled in just six months. Then, the overbought market began drawing big-name skeptics – like legendary trader James Chanos – who think China is a huge bubble ready to burst.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Most Chinese stocks did correct early this year… but have since displayed impressive price strength to resume their bull trends. For example, consider New Oriental Education (EDU)…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">New Oriental is the largest private education company in China. The bullish case says, as China grows wealthier, it's going to pay up for more educational services. This makes EDU one of the highest-profile "China plays" on the market. As you can see from today's chart, the bull case is intact and the stock is soaring to new highs.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">You can be a China skeptic all you like. But make sure to "mind the market." Right now, it's voting the China story higher and higher. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-92026702729292497102010-09-15T08:10:00.000+08:002010-09-15T08:10:51.225+08:00WHILE U.S. STOCKS STRUGGLE, THAI STOCKS SOAR<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm9w8jBUVOBsTRmYon8fpOyoVf-WTy2GRmHXxGq3h4-ub2n5SJdbLoC7J5C4etfJNxNJvhIsoHfumxg7RunOe1fDknaqk1BQsxq0U4O99bOlzg2Bi_ZgAK9TVWN7DqMgMHmnxLxgAHAZU/s1600/Thailand.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm9w8jBUVOBsTRmYon8fpOyoVf-WTy2GRmHXxGq3h4-ub2n5SJdbLoC7J5C4etfJNxNJvhIsoHfumxg7RunOe1fDknaqk1BQsxq0U4O99bOlzg2Bi_ZgAK9TVWN7DqMgMHmnxLxgAHAZU/s400/Thailand.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Today's message from the market: It's a bull market in Thailand.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Thailand is a small country to the south of China, rich in resources and tourist destinations. It is just one of a handful of countries that Europeans never conquered.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">We're solid Thailand traders at DailyWealth. Back in 2008, Tom Dyson and I met with Thailand's brilliant pro-market minister of finance, Korn Chatikavanij in the Parliament House of Thailand. And Steve recommended the thinly traded Thai Fund (TTF) to listeners of our exclusive Off the Record conference call service just months ago. As you can see from today's chart, the fund has soared since then… up 35%.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The story behind the Thailand rally comes down to a huge trend we've been highlighting for several years: the trend of the "work hard, save money" Asian economies growing in prosperity while the "vote for handouts and taxes, pile up debt" economies of Europe and the U.S. muddle along. This is the most important economic trend in the world… and will remain so for decades. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-81663119661655783752010-08-29T12:42:00.000+08:002010-08-29T12:42:39.378+08:00THERE ARE NO BARGAINS IN GOLD THIS YEAR<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV5-Ay3vdQ-QAUjiNqSK6t-EOMsfWICIoOiSzSU5VJ2ejPkUB_tjUAFOPGluNSrEO8JpmAyQjXodq0BJ5PKzRzPsMb37qDq0u27h_xdmytlqIq-DkfEsMn7Oy132JLjX7qnByv7B1jE2Q/s1600/Gold.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV5-Ay3vdQ-QAUjiNqSK6t-EOMsfWICIoOiSzSU5VJ2ejPkUB_tjUAFOPGluNSrEO8JpmAyQjXodq0BJ5PKzRzPsMb37qDq0u27h_xdmytlqIq-DkfEsMn7Oy132JLjX7qnByv7B1jE2Q/s400/Gold.gif" width="400" /></a></div><div style="text-align: justify;">This week's chart is a picture that has frustrated lots of gold bargain hunters. It shows the past year's trading in gold.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Gold is one of the world's most volatile assets. It is impossible to accurately value. You can't say "I'll pay 10 times earnings" for gold like you would with a stock. You can't say "I'll pay eight times annual rent" like you would with a property. Gold tends to trade on wild swings in investor fear.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">That's why many seasoned investors expected gold to endure a substantial correction after its massive 2009 rally… or after its similar rally this year. They expected to add to their gold holdings well off the short-term high… at short-term bargain prices.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">But as you can see from this week's chart, there's no gold bargains to be had this year. Gold is not suffering natural selloffs after rallies. Instead, small price declines now trigger huge buying interest from Asia, the Middle East, and giant institutional investors… folks who want to diversify assets out of paper and into "real money." For those looking to buy more gold, we say, don't worry much about the current price… just keep accumulating ounces. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-65432973000359782142010-08-27T05:54:00.000+08:002010-08-27T05:54:22.550+08:00Jim Rogers: Interest rates are dangerously low<div style="text-align: justify;">China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Everyone should be raising interest rates, they are too low worldwide," Rogers said in a phone interview from Singapore. "If the world economy gets better, that's good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">China's central bank hasn't increased rates since November 2007. In the U.S., the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 percent, where it's been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 percent.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Policy makers in Malaysia, South Korea, Taiwan, and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The global economy is at the risk of prolonging a recession after reports over the past two days showed U.S. home sales plunged by a record and Japan's export growth slowed for a fifth month in July, he said.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"We never got out of the first recession," Rogers said. "If the U.S. and Europe continue to slow down, that's going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can't bail us out."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Rogers, who predicted the start of the global commodities rally in 1999, said he was short emerging markets and stocks and long on commodities.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Commodities will go above their old high sometime in the next decade even if they only grow 5 to 6 percent annually," said Rogers, who is a consultant for the Dalian Commodity Exchange.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Rogers said he would resume buying China's stocks if they were to tumble as they did during the aftermath of the global financial crisis in 2008, when they plunged 65 percent. "I haven't bought since the fall of 2008," he said. "It it were to happen again, I hope that I'm smart enough to buy again."</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-11486519653217062422010-08-26T07:46:00.000+08:002010-08-26T07:46:11.209+08:00China could force the world to give up oil<div style="text-align: justify;">Today, China uses 10% of the world's oil. Its neighbor, South Korea, uses just 3%. If China were to use as much oil per person as South Korea - which figures show could happen quickly - it would eat up over 70% of the world's supply.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Global oil output has increased by just 1% a year since 1975, so there's little chance that these demands could be met through conventional means. If China continues its rapid growth, the world could be forced to find alternative sources of energy sooner than anyone expects.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-81166440019580492112010-08-25T07:54:00.000+08:002010-08-25T07:54:35.979+08:00AN EXTREME LESSON IN SUCCESSFUL TRADING<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHYVjVMWhBd2574V5g-yVINmiReJ_WlbhBUmWLuHy6Trm6t-zl7RlJNjge9dzg-8nLiDZ1sZ8QYBBpv6wN-HOQw-BhriuKBTgtDNrAmFM_PLeq4xXLVwnvG6BO1YbgTrofGpJiHEP4VbI/s1600/Oil.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="235" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHYVjVMWhBd2574V5g-yVINmiReJ_WlbhBUmWLuHy6Trm6t-zl7RlJNjge9dzg-8nLiDZ1sZ8QYBBpv6wN-HOQw-BhriuKBTgtDNrAmFM_PLeq4xXLVwnvG6BO1YbgTrofGpJiHEP4VbI/s400/Oil.gif" width="400" /></a></div><br />
<div style="text-align: justify;">As we look around the commodity market this week, we're reminded again why it pays the trader to be a "connoisseur of extremes."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Longtime readers know we're always on the hunt for assets in an "extreme" condition. For example, in December 2008, we wrote a bullish note on crude oil, pointing out the extreme reading in the oil/gold ratio.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Gold and oil tend to respond similarly to economic conditions, but the price between the two occasionally gets extremely out of whack. Thanks to worries about a Great Depression Part II back in 2008, oil sold off heavily. This made it incredibly cheap versus gold.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Oil went on to nearly double in price in the next few months… and turned our recommendation of oil-service stocks into a big winner. But as you can see from today's two-year chart, that oil rally stalled out in the $70-$85-per-barrel range… and the fuel is now struggling below its 200-day moving average, a widely used gauge of whether an asset is in a bull trend or bear trend.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Here's the moral of this story: When you're looking for trading ideas, stick with assets in "extreme" conditions… like extremely oversold and cheap, or extremely overbought and expensive. As this example shows, big gains accumulate in a hurry when things get "less extreme" for a given asset. After that, it's a hard dollar…</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-33555137322396127372010-08-24T08:09:00.000+08:002010-08-24T08:09:21.704+08:00THE GOLD STOCK DIVERGENCE CONTINUES<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYDozo7TOPONKaIL6Jc9OFA_2xjdWgNgfyVW9DsYUBNq0lJ29gyp3_jY2pXvImsNwyuIRynX_8soJWvQz0xTf2CTXgc2v2EXj9RcIZL-65BMPjdgfBr7nZxfKScf57IYyTEQAL_2u5AF4/s1600/Gold.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYDozo7TOPONKaIL6Jc9OFA_2xjdWgNgfyVW9DsYUBNq0lJ29gyp3_jY2pXvImsNwyuIRynX_8soJWvQz0xTf2CTXgc2v2EXj9RcIZL-65BMPjdgfBr7nZxfKScf57IYyTEQAL_2u5AF4/s400/Gold.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Our chart of the week shows the "gold stock divergence" we highlighted months ago is still in place.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">For much of 2010, gold stocks and the broad market increased at roughly the same pace. Then, when the market stumbled in April, the two diverged. The broad market kept falling. But gold stocks remained solid, supported by the incredible strength in gold.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from the "performance chart" below, this divergence is still in place. Gold stocks (the black line), are showing positive returns and climbing. The S&P 500 (the blue line) is showing negative returns and falling.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Gold stocks are typically viewed as a riskier asset… so it's incredibly bullish action for them to remain so steady in the face of terrible stock market weakness. Stay long "the golds." </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-46768706795055485052010-08-23T08:36:00.000+08:002010-08-23T08:36:26.714+08:00HOW CHINA GUARANTEED THE PRICE OF GOLD<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmGZY13VilFQy96yCN_CRfKY8UlxUMeoG7QNni1kGeaL3vHK6NRBCx8fzqToITUWwHFQS41O2xPkbJwFzjOWI727jnP0JFz-ToZdRsx3z654dPIRyJFUihrqbg_zAHWWWVtFSElEHwbaM/s1600/China.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmGZY13VilFQy96yCN_CRfKY8UlxUMeoG7QNni1kGeaL3vHK6NRBCx8fzqToITUWwHFQS41O2xPkbJwFzjOWI727jnP0JFz-ToZdRsx3z654dPIRyJFUihrqbg_zAHWWWVtFSElEHwbaM/s400/China.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Almost a year ago, we introduced a unique "worth pondering" idea for gold investors… the idea that China was guaranteeing your gains in gold investments.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Around this time, the Chinese government was in the headlines for encouraging its citizens to buy physical gold and silver. China has trillions of dollars of currency reserves… A tiny portion of this could be directed to supporting the gold price to ensure the government's "buy gold" recommendation was a good one. We called this situation a "whopper of a backstop" for gold.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Looking at the recent action in gold leaves us more and more convinced that Asian buying, led by China, has created a huge floor of support for the oldest form of "real wealth."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">You see, gold typically goes through major corrections after extreme moves up, like those staged in late 2009 and early 2010. But as you can see from today's chart, gold is refusing to decline much after these recent rallies. Declines are now weak… and are met with a surge of buying interest. Much of that is coming from your "gold sponsors" in China. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-57690653764365689822010-08-22T09:38:00.000+08:002010-08-22T09:38:58.301+08:00Make 10 Times Your Money without Taking Big Risks<div style="text-align: justify;">Investing is like tennis. It's a loser's game.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Think of the difference between professional and amateur tennis players. Professionals win points. Amateurs lose them. When weekend warriors play tennis, the losers determine who wins. They hit the ball into the net. They whack it out of bounds. And they routinely double-fault on their serves. That doesn't happen nearly as much in pro tennis, with its long rallies and pinpoint shots.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Most investors are like amateur tennis players. They lose money in stocks because of their own behavior. There's no opponent outplaying them. <b style="color: red;">They beat themselves.</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">DALBAR, a Boston-based research firm, compared the returns from market index funds with returns real investors earned in equity mutual funds…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">From 1989 to 2009, market index funds returned 8.3% per year. If you compound $10,000 at that rate for 20 years, you'll wind up with just under $50,000 – five times your money. For buying an index fund and doing nothing else, that's a great return. No research necessary. No thinking required. Just buy and wait. It couldn't be easier, and you get five times your money, pretax.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The only problem with that 20-year, five-times-your-money return is that almost nobody earned it.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Real, flesh-and-blood investors investing their own real, hard-earned money made significantly less than 8.3% per year over that time. On average, individual investors in U.S. equity funds earned just 3.3% per year. At that rate, $10,000 grew to just $19,150 in 20 years. They didn't even double their money – in 20 years! Most investors just can't hit the ball back over the net.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Most real investors investing their own real money perform even worse relative to the overall market in bull markets. During the great bull market to end all bull markets from 1984 to 2000, DALBAR found equity mutual fund investors made 2.57% per year, with market index funds compounding at 12.22% per year.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The age of the daytrader treated investors worse than most periods. Investors ran around the court faster than ever, swinging like mad, only to hit more balls out of bounds and into the net than ever, turning a $10,000 investment into just $15,000 during the biggest bull market in history. Had they simply failed to lose, they'd have turned $10,000 into just over $100,000.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>Investors could have made 10 times their money in 16 years by refusing to overmanage their own money – by letting stocks do the work for them.</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">A large dose of humility would help most investors make more money in stocks. For starters, most investors just shouldn't buy individual stocks. They should buy index funds and plan to hold for decades. Almost everyone else should build a diversified portfolio of only the highest-quality names and plan to hold them for at least 10 years.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>If you can't hold on for a long time, be prepared to take losses.</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In my Extreme Value newsletter, I have a list of the world's best companies that are currently trading at absurdly cheap prices. I've mentioned a few here before: Microsoft (MSFT) and ExxonMobil (XOM) are two of my favorites.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">These and stocks like them are an excellent start on a diversified portfolio that could earn you 10 times your money – remember, that's 12.22% per year for 16 years. Most stocks like this will compound your money at single-digit rates. But one or two could produce enormous returns.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">You don't need to take on big risks to earn that kind of return. All you need to do is wait. To master the loser's game, you must be patient. You must master time itself.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-13361152450265508792010-08-21T10:29:00.000+08:002010-08-21T10:29:13.238+08:00BUFFETT BUYS INTO THE INCREDIBLE JNJ UPTREND<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSnNIzAvvwznSAAX4kZ5HuzfsfTXI2AFhCTl8NZI3bbwifkbUDYv5p_gab-A3I6h3tyf3aSkntRIPEK1hPO9e1Q79WpWVPZTgMKlYXTAh63ETRUWQj26VogRklCynOKvdaB1HNgpexYTQ/s1600/Warren+Buffet.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="250" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSnNIzAvvwznSAAX4kZ5HuzfsfTXI2AFhCTl8NZI3bbwifkbUDYv5p_gab-A3I6h3tyf3aSkntRIPEK1hPO9e1Q79WpWVPZTgMKlYXTAh63ETRUWQj26VogRklCynOKvdaB1HNgpexYTQ/s400/Warren+Buffet.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Big guru news this week: The world's best investor, Warren Buffett, is taking advantage of the investment system we introduced back in March.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The system is to buy shares of "World Dominator" health care stock Johnson & Johnson (JNJ) when it goes on sale.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">JNJ has all kinds of attributes the seasoned investor demands from a stock. The company owns a suite of world-class brand names, like Listerine, Band-Aid, Neutrogena, Splenda, Rogaine, and Tylenol. It earns high profit margins. It sports a bulletproof balance sheet. And its dividend payout is as consistent as the sunrise.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">JNJ is such a strong business that its shares tend to decline significantly only when investors lose faith in the stock market and capitalism. Such declines occurred in 2000, 2002, and 2008. All were opportunities to load up on JNJ shares and enjoy the resumption of its uptrend. Something like this is on Buffett's mind… The super investor spent the last quarter upping his stake in JNJ by 73%. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-79648795665770404882010-08-20T08:30:00.000+08:002010-08-20T08:30:39.900+08:00China's deliberate escape from the dollar continues<div style="text-align: justify;">China more than doubled South Korean debt holdings this year, spurring the notes' longest rally in more than three years, as policy makers shifted part of the world's largest foreign-exchange reserves out of dollars.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Korean Treasury bonds held by Chinese investors rose 111 percent to 3.99 trillion won ($3.4 billion) in the first half of the year, data from the Seoul-based Financial Supervisory Service show. China should allocate some reserves to "financial assets in major Asian economies," Ding Zhijie, a former adviser to China's sovereign wealth fund, said in an Aug. 16 interview.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"The significance of both the dollar and euro has declined because of the global financial crisis and the European debt crisis, while the role of some emerging-market currencies rose," said Ding, dean of finance at Beijing's University of International Business and Economics.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">China's holdings of Treasuries fell 6 percent in the first half to $843.7 billion, Department of Treasury data released this week show, making it harder for President Barack Obama to finance record debt sales to sustain the U.S. economic expansion. Societe Generale SA predicts Chinese KTB purchases, which accounted for 19 percent of foreign inflows in the first half compared with 10 percent last year, will spur further gains.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"At this rate China may buy about 4 trillion won of KTBs by year-end, and that's a big deal," said Christian Carrillo, the Tokyo-based head of fixed-income strategy at SocGen, France's second-biggest bank. "That will be bullish for the market. It'll create a severe demand-supply imbalance in the KTBs, pushing yields to fall even more aggressively."</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>Bond Returns</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">China's holdings of South Korean notes account for little more than 0.1 percent of its $2.45 trillion reserves. The increase in the first six months compares with $20.1 billion pumped into Japanese debt.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">KTBs have handed investors a 5.6 percent return this year in dollar terms, delivering a profit every month, according to an index compiled by HSBC Holdings Plc. The advance marks the best winning streak since March 2007. U.S. Treasuries have gained 7.9 percent, according to the Bank of America Merrill Lynch U.S. Treasury Master Index.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Diversification should be the "basic principle" of reserve management, Yu Yongding, a former adviser to the People's Bank of China, said in an interview this month. Allocations to dollars in official reserves fell in the first three months, to 61.5 percent from 62.2 percent in the final quarter of 2009, the International Monetary Fund said June 30.</div><div style="text-align: justify;"><br />
</div><div style="color: red; text-align: justify;"><b>'Safe Haven'</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The value of KTBs owned by China totaled 1.87 trillion won on Dec. 31, up from 79.6 billion at the end of 2008, FSS data show. Foreigners' total holdings increased by 18.6 trillion won in 2009 and climbed 11.3 trillion to 67.8 trillion in the first half. That's equivalent to 6.3 percent of South Korea's outstanding government debt.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"The number of long-term investors who view Korean bonds as a new safe haven has increased," Kim Jung Kwan, director of the Ministry of Strategy and Finance's government bond policy division, said in an interview last month. "Korean bonds are attractive in yields and liquidity, as well as for diversification purposes."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">South Korea's benchmark three-year bonds reversed earlier losses, with yields reaching a two-month low of 3.72 percent as of 2:38 p.m. in Seoul, while the rate on similar-maturity U.S. debt was 0.77 percent. The three-year KTB futures contract rose 18 ticks to 111.53. Dollar-denominated returns may be boosted by gains in the won, which will strengthen 3 percent to 1,140 versus the greenback by the end of the year, according to the median estimate of 20 analysts surveyed by Bloomberg.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Higher yields offered by KTBs and potential won appreciation would offer an attractive alternative to U.S. Treasuries for China," said Matthew Huang, a Singapore-based fixed-income analyst at Barclays Capital Plc. "Their total holdings are a drop in the pond relative to their total reserves."</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-1882571638029463852010-08-19T08:28:00.000+08:002010-08-20T08:28:51.281+08:00A "MARKET-APPROVED" SHORT SALE<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIKWo-op4MDEEgzmubcs65y_2Egt5NzKC-dp7rULGBlcTq3eLpFTdm4DYvdgEjqVvkI5V9idZbjX3-v7MCj4l8y0xPGxpGbWVyTDuDK3csSbdlQB0yPSyoEcW8W26PCcbe4prlC-Exx2A/s1600/Stock+Market.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIKWo-op4MDEEgzmubcs65y_2Egt5NzKC-dp7rULGBlcTq3eLpFTdm4DYvdgEjqVvkI5V9idZbjX3-v7MCj4l8y0xPGxpGbWVyTDuDK3csSbdlQB0yPSyoEcW8W26PCcbe4prlC-Exx2A/s400/Stock+Market.gif" width="400" /></a></div><br />
<div style="text-align: justify;">A special note for traders out there: One of Porter Stansberry's favorite "short sale" candidates is breaking down…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In today's age of government bailouts and boondoggles, we encourage trading-oriented readers to become familiar with the concept of short selling. A "short sale" is a trade that allows you to profit as a stock decreases in price, rather than as it increases in price. Few analysts are as skilled at finding these "headed lower" stocks than our colleague Porter Stansberry.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In just the past few years, Porter has nailed the bankruptcy of General Motors, Freddie Mac, and Fannie Mae. Porter targets businesses with declining revenues, obsolete business models, and big debt loads – businesses like USA Today publisher Gannett (GCI). Porter notes the newspaper publisher competes in a low-margin business that is suffering declining revenues… all the while trying to service a huge debt load.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from today's chart, the market likes Porter's thesis. After surging 800% off its March 2009 panic bottom, Gannett now sports the chart of a rocket that has run out of fuel. The stock has sputtered from $18 per share to $13 in the past four months. It just broke down to its lowest low in six months on massive selling volume. Trend followers, here's one to play on the downside… </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-8914063030181968992010-08-18T08:23:00.000+08:002010-08-18T08:23:10.561+08:00Emerging markets guru Mobius: Global recovery is leaving the U.S. behind<div style="text-align: justify;">The global economic recovery is "well in place" and may accelerate as growth in developing nations counters a slowing pickup in Japan and the U.S., according to Templeton Asset Management Ltd.'s Mark Mobius.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The so-called <b style="color: red;">BRIC markets of Brazil, Russia, India, and China, </b>as well as Turkey and South Africa, will drive the recovery, said Mobius, who predicted the bull-market rally in emerging markets in March 2009. The MSCI index of 21 developing nations has doubled since it bottomed out in March 2, 2009.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Goldman Sachs Group Inc. and Pacific Investment Management Co. Chief Executive Officer Mohamed A. El-Erian said this month there's at least a 25 percent chance of the U.S. falling back into a recession, while the Federal Reserve flagged a weaker- than-anticipated recovery in the U.S. Mobius said increasing liquidity will help shield developed economies including the U.S. from a so-called double-dip recession.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"That's the U.S., but the rest of the world is moving in a different direction," Mobius, who oversees about $34 billion as Singapore-based executive chairman of Templeton's emerging markets group, said in a Bloomberg Television interview. "Going forward, the numbers will get better and better."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Japan's gross domestic product expanded an annualized 0.4 percent in the three months ended June 30, while the U.S. economy grew at a slower-than-estimated 2.4 percent annual pace, data released this month showed. While China's growth slowed to 10.3 percent during the quarter from 11.9 percent in the January-March period, that was enough to help the economy overtake Japan as the world's second-largest.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>'Not Too Bad'</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Even if we see a slowdown in China from 10 percent to 8 percent, that's not too bad," Mobius said. "If it goes to 5 percent, we'll get worried."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The stronger recovery in emerging economies has helped stock markets outperform those in developed nations. The MSCI Emerging Markets Index rose 0.3 percent as of 2:05 p.m. in Singapore, trimming its losses this year to 0.1 percent. The MSCI World Index was up 0.1 percent after having slumped 5.3 percent in 2010.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"Given that there won't be a double dip, we still think that there will be a continuing bull market," Mobius said. "Valuations are not as reasonable as they were at the beginning of 2009 and at the end of 2008. We can find opportunities, but they're not as easy."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">In China, Templeton Asset Management is "selectively" seeking out consumer and manufacturing stocks as corporate earnings benefit from a shift in the economy's dependence on exports to domestic spending, according to Mobius. He's "not too interested" in the nation's banks, citing the prospect of an increase of as much as 20 percent in non-performing loans.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Brazil remains his top pick among developing nations, he said, citing the nation's natural resources and a shrinking income gap. He favors the nation's banks and raw material producers including Vale SA, the world's third-biggest mining company.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-5816617086697728112010-08-17T08:32:00.000+08:002010-08-17T08:32:16.742+08:00A CLASSIC PETER LYNCH WINNER<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdOt0048PPsQb45oHg2rtLZf6X5ajZHHBTRO37fiyu0z5X2bky1rhbAO58O7DMOf_d0Mn-pZubWBs97HzerpBlJhCt98K7DVeOyiciHajIxcRHmTMMW3ElpZxYyi8LJEIcyreqiv2Dplw/s1600/Stock+Market.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdOt0048PPsQb45oHg2rtLZf6X5ajZHHBTRO37fiyu0z5X2bky1rhbAO58O7DMOf_d0Mn-pZubWBs97HzerpBlJhCt98K7DVeOyiciHajIxcRHmTMMW3ElpZxYyi8LJEIcyreqiv2Dplw/s400/Stock+Market.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Our chart of the week displays that, in addition to tobacco companies, another business has shrugged off the recent market weakness and terrible job numbers.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">That business is home movie rentals. Specifically, home movie rentals from Netflix (NFLX).</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Netflix strikes us as a classic "Peter Lynch stock." The phenomenally successful money manager Lynch became famous for his love of investing in companies that earned the loyalty of friends and family. These days, most people we know are huge fans of Netflix and its easy-to-use red envelopes. We count ourselves as users. Ordering The Good, the Bad, and the Ugly online beats standing beside a smelly guy at Blockbuster.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from our chart of the week, this easy-to-use business is soaring right now. Revenue for the most recent quarter rose 27% from the same time period one year ago. The stock is up from $40 per share last summer to $130 today… and it's one of the few stocks able to strike a new 52-week high amid this week's huge selling pressure. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-17009242649733216762010-08-16T08:09:00.000+08:002010-08-16T08:09:23.774+08:00IT'S STILL A BULL MARKET IN CIGARETTES<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIR514_1QGc0iQJxqIkR5ek4xUGOv25r0Q5dPBlmEHDM9Q7ukQeFoDdD1W_fDnl2-932ngM4hlrwy5kZY0XQA8PPfacZxr00RPUHUo64nCDHZB0D_8Xd5-H-wvahSyqjLkRmyB3M2QRWE/s1600/Stock+Market.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="165" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIR514_1QGc0iQJxqIkR5ek4xUGOv25r0Q5dPBlmEHDM9Q7ukQeFoDdD1W_fDnl2-932ngM4hlrwy5kZY0XQA8PPfacZxr00RPUHUo64nCDHZB0D_8Xd5-H-wvahSyqjLkRmyB3M2QRWE/s400/Stock+Market.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Despite weak job numbers, weak earnings, and recent stock market weakness, today's chart says it's still a bull market in cigarettes.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">We often poke fun at faddish investment ideas like solar and wind stocks. Instead of chasing these ideas, we say focus long-term investment in dominant businesses with fat profit margins and excellent brand names. Focus on stocks like the world's biggest cigarette maker, Altria (MO).</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">We've written bullishly about cigarette comanies many times in DailyWealth (check out a few pieces here and here). While it's easy to understand Marlboro's incredible brand power, most people don't understand the government loves it when folks buy Altria cigarettes. The government is even more addicted to the huge taxes it collects from Altria than Altria's customers are addicted to its product.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">This addiction produces the chart you see below… the past 12-month's action in Altria shares. While stocks around the world have sold off in the past week, Altria has climbed to a new 52-week high, all the while kicking off huge dividend payments. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-30443032059128202882010-08-15T08:04:00.001+08:002010-08-16T08:06:36.830+08:00THE BIG MONEY IS STILL SELLING<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5_NqxWOTbsROrJAJTUQ2WUGkyZO4jKX3iJlnM-bh_7ld-p82pktvozC7jHetNMK6bNR8Vd6cFSUDfVExQGK_Crj2DDeHWU9ERZtXlpUxvbbYKJ56cdUZAww6r1aMwF3NsYxHNnS1Jkro/s1600/stock+market.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="375" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5_NqxWOTbsROrJAJTUQ2WUGkyZO4jKX3iJlnM-bh_7ld-p82pktvozC7jHetNMK6bNR8Vd6cFSUDfVExQGK_Crj2DDeHWU9ERZtXlpUxvbbYKJ56cdUZAww6r1aMwF3NsYxHNnS1Jkro/s400/stock+market.jpg" width="400" /></a></div><br />
<div style="text-align: justify;">Some of that big money we've been monitoring for the past few months returned yesterday… to sell.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The stock market enjoyed a 10% rally from early July to early August. But during the rally, there was little buying enthusiasm from huge institutional investors like mutual funds, pension funds, and insurance funds. A healthy bull market can only take place with strong buying interest from these mega players.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Below, we look at the recent price and volume action in the benchmark S&P 500. As you can see, the S&P suffered several high-volume selling periods in May and June (A). The subsequent July rally was marked by tepid buying volume (B).</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Now note the past few days of negative action, which came on stronger volume (C). The index also sliced through its 200-day moving average… a "line in the sand" many investors use to demarcate bull and bear markets.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Although we're eternal optimists here at DailyWealth, we can only interpret this "weak buying, strong selling" trend as bearish action. We'll need to see a big money buying rally before we change our view… </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-54597902678554887722010-08-14T19:50:00.001+08:002010-08-15T19:52:43.542+08:00YOU WON'T BELIEVE WHAT COUNTRY IS SOARING RIGHT NOW<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnAxNG_9r1JNS7cLLmEQ5QoYTIuwRfLARVI7OzqTwyh2tb4wG5Nwb_TTi6HGfPZYbEWwCL_VoCaNax6x-B3gnRbBKrO8m1L3pBY2-TMn9MLdwwBfMFXsO00t8Z_XucB60jOWsT6LYcuVc/s1600/Cloumbia.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnAxNG_9r1JNS7cLLmEQ5QoYTIuwRfLARVI7OzqTwyh2tb4wG5Nwb_TTi6HGfPZYbEWwCL_VoCaNax6x-B3gnRbBKrO8m1L3pBY2-TMn9MLdwwBfMFXsO00t8Z_XucB60jOWsT6LYcuVc/s400/Cloumbia.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Today, we'd like to give a big kudos to Casey Research and their work on Colombia…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">To make extraordinary investment returns, you've got to be willing to put your money in investments the average investor avoids. This can simply mean buying out-of-favor assets. It can also mean investing in countries like Colombia.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As our friend Andrey Dashkov of Casey Research noted in the March 6, 2010 DailyWealth, Colombia is shedding its reputation as a dangerous drug haven to become one of the world's hot spots for natural resource investment. Although it's far from U.S. levels of safety and security, Colombia is reducing crime and adopting free-market measures… which are helping the country go from "bad to less bad" in the eyes of investors.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">You can read more about this "bad to less bad" situation in Casey's Energy Report. For a picture of it, we look at the past year's trading of the Global X/Inter Bolsa FTSE Colombia 20 Fund (GXG). This fund is one of the few pure Columbia plays available to U.S. investors. Its major weightings are in Colombia's large oil and banking concerns.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from the chart, GXG is enjoying a tremendous uptrend… and has gained 35% in this year alone. This is a major adjustment of investor attitudes toward what some used to call the world's largest "narco-democracy." </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-6575508362759314012010-08-13T08:22:00.000+08:002010-08-13T08:22:57.605+08:00"The U.S. is bankrupt and we don't even know it..."<div style="text-align: justify;">Let's get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.</div><div style="text-align: justify;">What it can and must do is radically simplify its tax, health-care, retirement, and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: "Directors welcomed the authorities' commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: "The U.S. fiscal gap associated with today's federal fiscal policy is huge for plausible discount rates." It adds that "closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>Double Our Taxes</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It's also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>Is the IMF bonkers?</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>'Unofficial' Liabilities</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Based on the CBO's data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our "official" debt and our actual net indebtedness isn't surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities "unofficial" to keep them off the books and far in the future.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions "loans" and called our future benefits "repayment of these loans less an old age tax," with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The fiscal gap isn't affected by fiscal labeling. It's the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>$4 Trillion Bill</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">How can the fiscal gap be so enormous?</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today's dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: "Something that can't go on, will stop." True enough. Uncle Sam's Ponzi scheme will stop. But it will stop too late.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><b>Worse Than Greece</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates, and consumer prices. This is an awful, downhill road to follow, but it's the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Some doctrinaire Keynesian economists would say any stimulus over the next few years won't affect our ability to deal with deficits in the long run.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">This is wrong as a simple matter of arithmetic. The fiscal gap is the government's credit-card bill and each year's 14 percent of GDP is the interest on that bill. If it doesn't pay this year's interest, it will be added to the balance.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Demand-siders say forgoing this year's 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no-pain, all-gain "solutions." </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-32342308643408476162010-08-12T08:14:00.000+08:002010-08-12T08:14:13.965+08:00THE BIG MONEY ISN'T BUYING THIS RALLY<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg239vviTh5SpSFpkNIuQlFxC4ZGwndmKYpVEWSGyuiCNeAB52B5Pdmex9oe1TtbSEebFpxNmOGgAfs6pgFqLWOK36LbdfwA88CVLNbs3KKdPQ1OvG1cWg68h8kFe8Rh4cTZ_OvPXd7zao/s1600/Stock+Market.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="377" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg239vviTh5SpSFpkNIuQlFxC4ZGwndmKYpVEWSGyuiCNeAB52B5Pdmex9oe1TtbSEebFpxNmOGgAfs6pgFqLWOK36LbdfwA88CVLNbs3KKdPQ1OvG1cWg68h8kFe8Rh4cTZ_OvPXd7zao/s400/Stock+Market.gif" width="400" /></a></div><br />
<div style="text-align: justify;">To recap, a healthy bull market is driven by the buying power of mutual funds, hedge funds, and insurance company funds. These investors control multibillion-dollar portfolios. Only with strong buying enthusiasm from these folks can a real bull market flourish. Today's chart shows anything but enthusiasm…</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Our chart displays the past six months of trading in the Dow Industrials investment fund (DIA). This is a basket of America's biggest, most important companies. Below the price chart, you'll find a window displaying the fund's daily trading volume. The red bars represent trading volume on days the fund declined. The gray bars represent trading volume on days the fund advanced. The taller the bar, the greater the volume.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see below, trading volume boomed during the May selloff (A)… and selling power remained strong through the final tough days of June (B). Now note how the recent rally has come on tepid volume (C). Some of this "where's the big money?" action can be attributed to money managers taking their summer vacations. But even taking vacations into account, this is a bearish lack of buying interest. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-91184214449698172272010-08-11T07:46:00.000+08:002010-08-11T07:46:23.608+08:00New Chinese rating agency could wipe out S&P, Fitch, and Moody's<div style="text-align: justify;">Guan Jianzhong, the head of one of China's three big credit rating agencies, sees the criticism of Standard & Poor's (MHP), Fitch Ratings, and Moody's Investors Service (MCO) for their role in the global financial crisis as creating an opportunity. He wants his firm, Dagong Global Credit Rating, to enter the U.S. market. "Without a challenge to the status quo, the big ratings agencies won't improve their methodologies on their own," says Guan, who is Dagong's chairman.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Dagong, which has never rated a company outside China, made a splash with its first analysis of international sovereign debt, which it issued on July 11. The report, covering 50 nations, awarded the Chinese government a higher credit rating, at AA+, than the U.S., the U.K., and Japan. Guan says the results highlight the differences between Dagong's approach and that of its rivals. The established agencies, he says, tilt their ratings to reflect "their beliefs and ideology" and the "interests of the borrowing countries" in the West. They place too much emphasis on the nature of a country's political system, the independence of the central bank, and per capita gross domestic product.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Dagong, in contrast, focuses on a country's fiscal health, foreign currency reserves, and ability to create wealth. The big developed countries like the U.S., Britain, and Japan, says Guan, use "over 90 percent of the world's credit resources, but their GDP growth doesn't contribute a lot to the world economy, especially after the financial crisis."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">A graduate of Shanxi University of Finance & Economics, Guan worked in finance in New York for several years before returning to China. He became Dagong's chairman in 1998. Last month he was elected director of the government-backed industry group, the China Securities Credit Rating Committee.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Dagong was founded in 1994, a decade after state-owned firms were allowed to issue bonds in China. In December 2009 it spent 10 million yuan ($1.48 million) to prepare and submit an application with the U.S. Securities & Exchange Commission to become a recognized ratings firm. The SEC will hold a hearing on the application in September. The SEC has granted recognition to 10 ratings firms, with only two based outside of North America, both in Japan.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">"They certainly picked a good time—global confidence in the existing ratings agencies is probably at an all-time low," says Tom Orlik, China economist at Stone & McCarthy Research Associates in Beijing. Yet it's not clear that Dagong has developed the credibility to compete globally. "Whether they'll be able to successfully push that outside of China, where's there's deep suspicion about the cozy relationship between government and companies, is difficult to foresee," says Orlik.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Like S&P, Moody's, and Fitch, Dagong is paid by the companies it rates. Guan says issuers, especially politically connected companies, also shop around among mainland agencies for the best rating. Gaun says his firm does not allow government connections to influence its ratings. "We want to be an internationally renowned credit-rating agency," he says. "Because of this, we can't provide ratings that aren't independent."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">During a time of market anxiety over big budget deficits in the U.S. and Europe, Dagong could become a powerful player given China's trade surpluses and enormous foreign exchange holdings. "It's to their benefit that they're adding the voice of the world's largest global creditor," says William Hess, managing director at China Analytics, an economic research firm in Beijing. "If and when [Chinese investors'] funds start to follow the ratings coming out of China, then that's something that would really make markets sit up and notice."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">It takes time to establish that kind of presence. Dagong should focus on China to "build up their reputation and influence," says Wang Yang, co-head of fixed-income research at UBS Securities (UBS) in Beijing. "At this point, I don't think they are ready to expand globally."</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The bottom line: With Western credit ratings firms under fire, China's Dagong sees an opening to expand in the U.S. and other foreign markets.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3468500945565050131.post-47261792131065371262010-08-10T09:46:00.000+08:002010-08-10T09:46:37.049+08:00THE MARKET LOVES THE "CONTRARIAN'S COMMODITY"<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgA5F8qQNkx5EA9_AdMUpKpdIGKKQCuqjk_pTJpTLRd7EkU9nf7oAcHhlqo68cOggANPKZg-Vni9Ek98_hOGKWHWzj5zVpM646NDdzcHPvw_7ol4D6XGukkCVTmfEAKC9nLrTzNpdGsVcE/s1600/Natural+Gas.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="181" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgA5F8qQNkx5EA9_AdMUpKpdIGKKQCuqjk_pTJpTLRd7EkU9nf7oAcHhlqo68cOggANPKZg-Vni9Ek98_hOGKWHWzj5zVpM646NDdzcHPvw_7ol4D6XGukkCVTmfEAKC9nLrTzNpdGsVcE/s400/Natural+Gas.gif" width="400" /></a></div><br />
<div style="text-align: justify;">Early this year, we began recommending oil's clean cousin, natural gas. Natural gas is used to produce fertilizers, plastics, and various chemicals. It's also a major source of fuel for firing electrical power plants and heating homes.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">We call natural gas the "contrarian's commodity" because huge new domestic gas supplies have come online recently… which has sliced the price of "natty" by more than 60% since 2008.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Our thesis is not that a big rally in natural gas is in the cards… simply that the fuel is done falling and the situation for natural gas prices is getting "less bad." This allows our preferred vehicles for gas investment – U.S. royalty trusts – to pay out fat distributions.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">As you can see from today's chart of royalty payer San Juan Basin, the market likes this idea. Since our recommendation, San Juan has enjoyed a steady uptrend… and has kicked off large monthly yields… all the while producing a commodity at blown-out levels. We love it when a plan comes together… </div>Unknownnoreply@blogger.com0