Surprise #1
Our next President will be…
Our next President will be…
Mitt Romney. By a landslide.
Now, everything needs to break just right
for Willard Mitt Romney to win big, but he has a real chance to thump
the incumbent, and carry in a lot of Republicans on his coattails.
Here’s why:
- The big fat target of George W. Bush is nowhere in sight
- Romney looks to be a competent candidate with strong support from the grassroots—unlike John McCain
- Unemployment and housing are twin disasters that have destroyed consumer confidence
- The 4-year debacle of Obama’s presidency (the loss of our AAA-credit rating, anyone?) is fresh in voters’ minds
- An economy on the rocks is crying out for a serious and proven executive
- And, most important of all, Romney will have a BIG money advantage.
Remember, Obama doubled the McCain’s
campaign spending--$760 million for Obama to $360 million for McCain—a
big factor in his historic win.
This cycle, Romney may raise over a billion, while it looks like Obama will have trouble even matching his war chest from 2008.
Add in the benefits to Romney from
gerrymandering in states that the GOP dominated in the 2010 cycle and
you can see why I’m optimistic that Mitt is the man, and he could win
going away.
Portfolio Action Plan : Sadly, I doubt Romney will really change the course this country is on.
He may appoint a few good judges, trim back
ObamaCare and tinker with the tax code, (Herman Cain’s 9-9-9 plan is a
good start, and even a 10-10-10 plan would be OK), all positive moves.
But this patient needs radical surgery not an aspirin and a pat on the head.
I have strong opinions on how to return
America to a growth path, but until the Tea Party gets more power and
the Federal Reserve has less, the Federal government will be an
obstacle, not an asset.
For the complete details on my plan to protect and grow your wealth, my team has put together a special report, entitled 10 Ways to Make a Safe Profit in 2012. This report normally sells for $49, but I’ll show you how to get it for free in a moment.
But first...
Surprise #2
Facebook’s failed IPO was no surprise
Facebook’s failed IPO was no surprise
I’ll go on record: Facebook’s value has already peaked. It’s only going lower from here.
Are you surprised? Did you really buy all
that hooey that Facebooks’ millions of users…plus the hours they spend
online…and the hype that Facebook is an indispensible part of modern
life…made it a good investment?
My definition of an investment includes
these factors as a starting point: You want companies built on strong
financial foundations, selling a product with great brand loyalty or no
substitutes, in markets with high barriers to entry, and ideally, a
government-mandated rate of return.
Let’s see where Facebook stacks up, shall we?
- Yes, they are financially strong, thanks to going public. But
don’t be fooled—the IPO was to cash out early investors. Facebook had
zero trouble raising capital in the private market and its share price
peaked long before it went public.
- Loyalty to Facebook is falling, thanks to boredom, faddishness and
privacy concerns. Let’s not forget that according to one estimate by a
leading anti-spam expert, 40% of Facebook’s accounts may have been
created by spammers. Puts a dent in revenue-per-user expectations, no?
- High barrier to entry? Don’t make me laugh. Only months prior to
Facebook's IPO, Zuckerberg paid $1 billion for Instagram, an
18-month-old start-up with no revenue and only 11 employees. The
company's only product is a basic social networking application built
around photo sharing. Facebook engineers could have created a similar
product over a long weekend, but Instagram already had 30 million users,
and threatened Facebook's dominance in social networking. That won’t be
the last threat, believe me.
- As for Facebook’s rate of return, it looks grim. At the $38 issue price, Facebook shares traded at 104X earnings. Apple, trades at only 14X earnings (closer to 10X if you back out the net cash on Apple's balance sheet). The Wall Street promoters tasked with peddling Facebook's shares successfully convinced investors that a company with murky plans to grow revenues—never mind earnings—was a better bet by a factor of 10 than Apple.
But Facebook is just a symptom of a much larger problem.
As a company with no “moat” around its
business, no barrier to entry, paltry earnings, no business model to
speak of and not a dividend in sight, it’s the very model of a company
you should avoid like the plague.
It is a speculation, not an investment. If you know the difference between those two words, you’re already ahead of 99% of investors.
Portfolio Action Plan :
You don’t want to have anything to do with
Facebook, Netflix, Groupon, or any other company that is in a
highly-contested market with few barriers to entry, okay?
A far better path is to stick with my favorite industries:
Consumer Staples: When I think about lasting brand loyalty, I think about names like Coca-Cola (KO, uninterrupted dividends since 1893), McCormick spices (MKC, 1929), Smucker’s jams (SJM, 1949) and Kellogg’s cereals (K, 1923). All are suitable for the conservative investor to buy today.
Pipelines: Oil, gas and natural gas
have to get from point A to point B economically, and boring old
pipeline companies are unbeatable at moving the stuff. Because most of
the big boys are organized as master limited partnerships, you get a
nice tax-deferred benefit from owning these babies in a taxable account,
too. My top pick for August pays 7.9% tax-deferred.
Railroads: There is ZERO chance
anyone in this environmentally-sensitive, NIMBY world of ours is
building new railroad tracks anytime soon. That’s music to the ears of
all my favored railroad plays, who can move freight, coal and
agricultural goods at a fraction of the price the truckers have to
charge.
Utilities: Is there anything better
than a hefty dividend, fueled by a government-guaranteed monopoly and a
government-mandated minimum return on investment? No wonder utilities
are dominating my buy list right now. Plug in now! 
For my favorite stocks in each of the 4
above sectors, you’ll want to get your hands on that special report I
mentioned earlier. It’s called
10 Ways to Make a Safe Profit in 2012, and it’s yours free when you give my Intelligence Report a risk-free test drive. More on that in a moment.
10 Ways to Make a Safe Profit in 2012, and it’s yours free when you give my Intelligence Report a risk-free test drive. More on that in a moment.
Now let’s turn to…
Surprise #3
China… our unexpected ally?
China… our unexpected ally?
That’s right…despite being polluting,
anti-democratic, anti-freedom, computer hacking, currency manipulators,
the Chinese will play a bigger role in helping the U.S. economy than any
other country over the next two decades.
How can this be? Haven’t we been told China
is stealing our jobs, intimidating our allies and cozying up to every
America-hating dictator from Iran to Venezuela?
The truth is China’s policy of “grow
exports at all costs” has been a real boon to our economy. After all,
they are letting us trade our practically worthless paper money for real
goods!
And no matter how much we debase our
currency with Ben Bernanke’s zero-interest rate policy, they still want
all the dollars (and Treasury bonds) they can get.
In fact, I wouldn’t be surprised to see
China (which has not proven to be an expansionist power in modern times)
and even Russia as natural allies of the U.S. a couple of decades from
now.
Thanks, China!
Portfolio Action Plan :
China is helping our economy, but let’s not
lose sight of reality here. I wouldn’t own a single Chinese stock if
you put a gun to my head. They face cutthroat competition at home, party
bureaucrats still have too much sway over their business decisions, and
I’ve yet to see a balance sheet I trust.
Worst of all, very few pay a reliable dividend.
Avoid them all, and make sure none of your mutual funds own Chinese stocks, either.
Surprise #4
Rumors of a Housing Comeback Have
Been Greatly Exaggerated
Rumors of a Housing Comeback Have
Been Greatly Exaggerated
More bad news: Housing is as good as it’s going to get.
You can safely ignore people like the
Freddie Mac VP who said that “[housing] has now turned a very large
corner,” or the managers at Blackstone who have dropped $300 million so
far on foreclosed housing.
Housing is going nowhere fast.
The only people buying houses right now are
millionaires who are immune to price shocks and first-time buyers who
have no existing mortgage and can take advantage of the rock-bottom
interest rates on loans to move into foreclosed properties.
Everyone in the middle is still hunkering
down—too worried about their jobs and the state of the economy to take
on a new mortgage, no matter how cheap that dream house looks. It’s a
bloodbath out there, especially among Americans over 50:
- Foreclosures are at an all-time high in this group—600,000 as of June
- Another 625,000 are at least 3 months behind on their mortgage
payments—no wonder the number of people simply handing over the keys and
walking away from their home (“jingle-mail” in real estate business) is
still on the rise
- 3.5 million older Americans are underwater on their mortgage
- Just 4.4 million previously-occupied homes were sold in June—a far cry from the 6 million number that represents a healthy homebuying market
So, no, housing is not about to lead us out of this quagmire.
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Me, I have ZERO debt. No mortgage. No
business loans. No car loans. No credit card debt. Follow my lead, if
you want to survive what’s ahead.
Portfolio Action Plan :
Don’t buy the hype about a comeback in
housing and don’t buy housing stocks, banks or any other investment that
is going to get killed when interest rates go up. Rates can’t be held
down by the Fed’s fancy footwork forever. When they start to rise, the
little bit of housing good news we have today will vanish.
10 Ways to Make a Safe Profit in 2012
has all the details on the very few banks I do recommend. All have paid
dividends since the 1800s, are stronger than any of the “too big to
fail” Wall Street behemoths, and never took a penny of TARP bailout
money!
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โดยRichard Young
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