When Plenty Is Not Enough, Invest
Archives: Daily Issues
Issue #2247
- WEALTHY: A ridiculously simple rule about investing that Carl Yastrzemski taught me (Andrew Gordon)
- HEALTHY: The 3 best sources of Vitamin D (Jon Herring)
- WISE: Samuel Johnson on scarcity
ALSO IN THIS ISSUE:
- Is Michael’s blog headed for retirement? (Suzanne Richardson)
- A good reason not to overpack your bags (Bonnie Caton)
- It’s Good to Know… about a new way to pay for gas
- Add "pyrotechnics" to your vocabulary
From the desk of Michael Masterson…
My colleague Robert Ringer is one of the brightest personal development teachers in the industry. And if you read his books, you will see how strong and original his thinking is. As a fan of his writing, it’s no surprise to me that two of his books have been listed by The New York Times among the 15 bestselling motivational books of all time.
Robert Ringer is the real deal. His writings have helped guide millions of entrepreneurs, business owners, and individuals in all walks of life down the path to purpose, financial prosperity, peace of mind, vigorous health, a balanced life, and, above all, happiness.
I am happy to announce that you can now get Robert Ringer’s insights and advice FREE by signing up for his e-letter – A Voice of Sanity in an Insane World.
I can promise you this: It will be like nothing you’ve ever read before.
"Praise, like gold and diamonds, owes its value only to its scarcity."
Samuel Johnson
Kicking Off 2008 With ETR: When Plenty Is Not Enough, Invest
"You want me to do what?!"
I don’t usually respond to a request from Michael Masterson that way. But this time it sounded like he was asking for too much. He wanted me to give ETR readers a surefire way to make money off of their investments in 2008.
Now Michael had to know that 2007 was a topsy-turvy year for the market. And I’m sure he knew that the "junk and gunk" sectors that led the market up for much of the year – tech and oil – have led the market down over the past couple of months (with the help of big banks and investment houses like Merrill Lynch). And what more can be said about the subprime slime and the credit crunch catastrophe? It’s generated enough bad news on a weekly basis to make Wall Streeters afraid of their own shadows.
Wall Streeters don’t know what to invest in anymore. And that’s why they’ve fled into the safest investment haven there is: U.S. Government Treasury bonds. But as a result of all this crazy buying, the yield of T-bonds has been driven down to around four percent. (Bond yields move in the opposite direction of their price.) So if, as my "surefire" advice, I were to tell you to put your money in T-bonds, you’d barely be making above the rate of inflation.
That’s not what Michael had in mind.
But if Wall Street doesn’t know what to invest in, what made him think I do? How could he possibly have guessed that I do, in fact, have a great way for you to make money in 2008?
I sure don’t remember telling him about it. To tell you the truth, I was too embarrassed… because it is so simple.
But the results speak for themselves. It worked great in 2007. And I’m convinced that it’s going to work just as well in 2008.
You see, my "surefire" method is something we all learned by the third grade. I figured it out from trading baseball cards with my friends. Some cards were more desirable than others. For example, everyone wanted the Carl Yastrzemski rookie card – but, as far as I knew, only Frankie and Mike had one. Two cards and about 40 eight-year-olds who would do anything to get them. You can imagine the tempting offers Frankie and Mike got.
The lesson: In a shortage, the suppliers hold all the cards. (Sorry, I couldn’t resist.)
This is something so basic I hesitate to bring it up even now. As an investor, you probably want me to tell you how to take advantage of high interest rates overseas… or the weak dollar… or a country with a stock market ready to soar to new heights.
These are so-called sophisticated ideas, taking advantage of the latest little twists and turns in near and faraway markets. But they don’t beat investing into shortage situations. Hey, just because it’s a ridiculously simple concept doesn’t mean it can’t make you rich!
It has worked magnificently for me. And there’s no reason it can’t work for you.
It is the way I now choose most of the stocks I recommend to my subscribers. I could have begun doing it five years ago. It would have worked fine. Heck, it would have worked 50 years ago.
But now is the perfect time to adopt this simple investing strategy. Here’s why:
- Right now, we live in a resource-constrained world. It’s not just one thing – like oil. There are shortages across the board.
- Robust growth is everywhere you look. Europe, Asia, South America – economies are strong and growing and needing more energy, raw materials, and industrial inputs.
- Billions of people are being welcomed to the global economy. Huge swaths of population – from Eastern Europe to Russia to China and Vietnam – have joined the global economy and, for the first time, have a little cash in their pockets to spend on cars, TVs, and washing machines. For better or for worse, it’s putting extra demands on our energy and resource base.
- Mining isn’t what it used to be. The easy-to-mine stuff has already been discovered and exploited. What’s left is harder to get to and in more remote areas.
- Mining companies have more hoops to jump through. Throw in all the permitting and environmental regulations we now have, and getting a mine up and running is a long and arduous process.
The upshot? There are more shortage situations and it takes longer to recover from them. As an investor, that’s great. There are more choices than ever and plenty of time to get into and out of these investments.
So, in a year when the Dow has been on the stingy side, what kind of returns can you expect from investing in companies that are taking advantage of shortage situations? No data is available to easily answer this question, but I can show you how such companies that I recommended in my Wealth Advantage and INCOME portfolios did in 2007.
- Carbon fiber manufacturer: up 3 percent
- Surface and underground mining equipment company: up 80 percent
- Diversified miner of copper, coal, iron ore, diamonds, and other minerals: up 80 percent
- Uranium company: up 220 percent
- Mid-sized integrated oil and gas company: up 3 percent
- Coal producer: up 20 percent
- Oil services company: up 7 percent
- Utility with oil and gas properties: up 40 percent
- Oil tanker company: up 40 percent.
- Water company: down 10 percent.
Of these 10 investments in my Wealth Advantage and INCOME portfolios, nine were winners. My overall return for the group was 483 percent. And my average return per stock was just under 50 percent.
And I’m not even including my solar stock recommendations, because solar modules aren’t technically in short supply. But the market for solar comes from the looming shortages in our traditional energy supplies, especially oil. One of my solar selections gained 240 percent and the other returned a profit of 142 percent.
As well as this group of shortage companies did, it could’ve done better, because a couple of these stocks have just recently turned the corner. For example, the carbon fiber company recently reported great fourth-quarter earnings, causing its shares to spike an amazing 20 percent. It’s shaping up to be my star next year.
If I were to tell you, "Invest in the stuff that makes money" – well, that’s pretty vague… and not very helpful. But investing in shortages is about as close as you can get to following that advice.
What’s easier to understand? If there’s not enough of something, the price goes up. And the supplier doesn’t have to spend money or effort chasing customers. They chase the supplier.
There’s just one thing, though. And it elevates the concept from the third-grade to the fourth-grade level.
Shortages come and go. So you can’t be backward-looking. Companies don’t make money on last year’s shortage. They make money on this year’s. And as an investor, you make money on next year’s shortage.
So let me share with you what I know from spending hundreds of hours dissecting the natural-resources sectors. The uranium shortage has seven or eight years to go. The oil shortage will gradually get worse. Carbon fiber will fall short of demand for at least five years, but it could easily be 10 or more. Water shortages tend to be local. That’s true overseas as well as here in the U.S. But the overall trend is a deteriorating water supply, especially overseas. Nickel and copper will be in short supply for at least another four or five years.
All shortage situations go through the same four basic stages. Knowing them will help you figure out when to get in and out of your investments.
Stage One: Dropping demand accompanied by low prices. There’s little capital investment in the sector.
Stage Two: Rising demand accompanied by increasing prices. Companies grow profits from rising prices.
Stage Three: More production comes online. Everything comes together during this phase. Greater volume and higher prices jack profits WAY up. It’s the high-point of the cycle.
Stage Four: Supply and demand rebalance. As production catches up to supply, prices stabilize and eventually fall. Production contracts as prices become less and less attractive.
The best time to invest? It’s not in Stage Three, when profits are at their highest. That’s too late. The company has already become a magnet for investors, driving its shares up. Plus, since investors are forward-looking, they’re already anticipating the excitement-dousing Stage Four and will soon begin selling their shares.
The latest stage to invest in would be Stage Two. But even better would be to invest toward the end of Stage One. This is when the company should be a screaming bargain, and good things usually begin to happen shortly thereafter.
As the cycle winds down, you’ll have plenty of time to get out of these companies before they’re in the "bust" part of the "boom-and-bust" cycle. But you need to know your stages. The end of Stage Three or the beginning of Stage Four is when you get out. It makes sense, yes? After all, by Stage Four we no longer have a shortage situation to play.
When we go to the store, shortages take money out of our pockets. But, as investors, we can earn that money (and more) right back. We’re living in the age of shortages. And knowing how to take advantage of it happens to be the easiest way to make money from investing.
[Ed. Note: ETR's Investment Director, Andrew Gordon, is the editor of INCOME, a monthly financial advisory service that uncovers income-generating stocks that promise safety (first and foremost), along with much-higher-than-average profit potential.]
"If You Knew Which Companies Were About to Be Taken Over, How Rich Would YOU Be?"
The life of a “Merger-Mercenary” is simple: they’re given information (by me), then they can make a single phone call and receive monthly checks for doing nothing while they’re waiting for the big fat payout from a corporate takeover.
These lucky few just enjoyed gains of 101%… 81%… 54%… and a host of other double digit winners this year alone.
And that’s on top of the 3-8% yields they’re getting from each of these companies!
Read this special report to find out how YOU can become a “Merger-Mercenary.”
ETR Insider Report: What’s Going to Happen to Michael Masterson’s Blog?
Fans of Michael Masterson’s blog can breathe a sigh of relief. The blog is going to be better than ever this year.
In the past six months, Michael’s been working on his latest book and traveling around the world. Add to that the recent holidays, and he hasn’t been blogging as much as usual. So avid blog readers who have been missing his personal reports on the blog will be glad to hear the blog is up and running again for 2008. In fact, in case you missed it, Michael wrote his first blog entry for the new year yesterday. (Read it to find out what’s causing a big buzz around the ETR office these days.)
For a while there, the future of the blog was uncertain. Michael said he was going to drastically cut back on his writing for ETR this year. And he considered discontinuing the blog altogether.
“What about your fans?” Alexis Siemon, ETR’s Search Engine Marketing Specialist, pointed out. “People depend on reading your thoughts on the blog every week.”
At first, having just finished Ready, Fire, Aim, Michael was just plain exhausted. But after the holiday break, he realized that he’s still full of great ideas that he wants to share with ETR readers and blog readers alike. So fortunately for everyone who loves to read his blog, Michael has agreed to continue to update the blog every week.
Blog readers can directly respond to – and question – Michael’s unconventional ideas. They can interact with each other about issues that matter to them. They can get to see a slightly less restrained side of Michael. And they can learn all about the very latest projects Michael is working on. So make sure you check back regularly to read his uncensored thoughts about building wealth and business.
Why It’s Almost Impossible to Get Enough Vitamin D From Your Food
By Jon Herring
You might recognize that sun exposure is the best way to meet your body’s vital need for vitamin D. But you might not know that, apart from supplements, it is the ONLY way.
Studies have shown that we need a bare minimum of 3,000 to 5,000 International Units (IU) of vitamin D per day, from all sources. This is easy to achieve if you consistently spend time in the sun. But it’s almost impossible to get from your diet.
That’s because very few foods naturally contain vitamin D. And those that do provide only a small amount. A 3.5 ounce portion of salmon contains just 360 IU. The same amount of tuna contains just 200 IU. One egg delivers just 25 IU. And fortified foods are no help. For example, to get the bare minimum amount of the vitamin D you need (without help from the sun), you would have to drink 30 glasses of fortified milk each day. No thanks!
The best and most concentrated food source of vitamin D is cod liver oil. One tablespoon contains about 1,200 to 1,400 IU. Cod liver oil is also a rich source of vitamin A and the antioxidant coenzyme Q10. It is also one of the very best sources of beneficial omega-3 essential fatty acids.
[Ed. Note: Jon Herring, a copywriter for Early to Rise, is co-author, with Dr. Al Sears, of the book Your Best Health Under the Sun. Discover how the healing power of sunlight can improve your mood, increase your fitness, and protect you against dozens of diseases, including cancer, heart disease, and diabetes. Click here to learn more about Your Best Health Under the Sun.]
Travel Tip: Reduce Your Risk of Lost Luggage
By Bonnie Caton
"30 million bags are mishandled globally each year," estimates the Bureau of Transportation Statistics, and about 1 million bags were lost, delayed, or damaged in air travel in the U.S. last year.
One common hold-up: Your bag can be delayed if Transport Security Administration (TSA) inspectors open it – and have trouble closing it back up.
So when you’re traveling by plane, try not to pack too much into one suitcase. If you have to sit on the bag to get it closed, leave something out.
(Source: tsa.gov)
[Ed. Note: Bonnie Caton is the newest member of AWAI's Travel Division. For 93 more time-saving, money-making travel tips, click here. Find deals, ensure a smoother trip, and even find out how to get paid for your travels.]
It’s Good to Know: A New Way to Pay for Gas
Shell gas stations are testing a new way to pay for gas. Biometric systems allow customers to pay with their fingertips. A scanning device links their fingerprint to their checking or credit card account.
Ten convenience stores in Chicago already offer this service, but corporate sources say that only about two percent of customers are using it. Despite this, the Petroleum Marketers Association of America reports that scanning devices like these will become a standard way to pay in the near future.
(Source: Associated Press)
Confidential Report: Disillusioned Trader Opens "Money-Floodgates" to YOU…
Rob Banks Legally… With an Inside Job!
Are You Ready for a "Smash and Grab" on the World’s "Hidden" Money-Mountain?
Great! The getaway car’s leaving…
Word to the Wise: Pyrotechnics
"Pyrotechnics" (pie-ruh-TEK-niks) is another way of saying "fireworks." The word is also used for a brilliant display of rhetoric, wit, or virtuosity in the performing arts.
Example (as used by Jed Perl in a New York Times review of A Life of Picasso by John Richardson):"… Richardson is juggling so many people and themes and events with such aplomb that readers may not quite realize what literary pyrotechnics are involved."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2008
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