See three problems in three years and how to profit from a $10 billion war chest being built by major banks… what to do now that the fiscal cliff has been avoided and insights on how to invest during the looming battle over gun rights.
We had an unexpected high number of enrollments for next week’s Super Thinking + Investing and Business Seminar. What a great opportunity! The problem? Our scheduled meeting room was too small. Like a cascading fractal… life’s problem’s created by opportunity create more opportunity. This is the exponential power of positive!
In this case, the problem of a larger meeting hall brings opportunity in Eustis. Florida.
Merri and Mah at the Lake Eustis Park in Old Eustis.
This site has posted many messages about real estate value in Florida and especially in Lake County.
Like Ecuador… Florida real estate has one really big advantage… sunshine. Plus Florida real estate prices fell more than in many areas of the US… so they will rebound higher.
This creates a special opportunity we’ll look at in a moment. First back to Eustis…. because there is a special little known potential there in the name of the Lake Community Foundation.
In 2004, Florida Hospital Waterman relocated to a new site and donated its Eustis property to the Foundation. The revenue from the sale/redevelopment of the property is designated for charities and a comprehensive plan has been created.
The area is developing nicely but there is one large parcel (C) not yet sold and designated for a hotel.
This and the fact that Eustis is one of the few cities that has not allowed development along the waterfront makes it extra attractive for its small town (15,000 population) and natural feel.
Merri and I have been buying real estate in this area for over three years now. We took a stroll along Lake Eustis visiting restaurants.
While our friends and readers in the north and Pacific Northwest were struggling in the cold and snow, we enjoyed mid 70s and clear skies.
We dined outside at the Lake Eustis Deli.
There are numerous picnic tables and this is a perfect place for a casual lunch.
Eustis also offers some exceptional real estate values already without the little known benefit.
For example this house is offered for $199,000.
This is near the lake.
Here is a photo I took (with a telephoto lens) the six blocks from this house to the lake.
Yet it has been on the market for a year and I suspect it will sell for less.
We have asked our friend and real estate broker, Shirley Peacock, to have a list of Eustis properties for sale and to be available for seminar delegates.
We will look at how to spot value in problems at this weekend’s Super Thinking + Investing and Business seminar.
Here are a few examples we’ll review of recent problems and our positive take on each.
#1 Problem: Real Estate Collapse and hard to get mortgages. Winning Idea: Invest in real estate for rentals
A January 22, 2013 article in USA Today entitled “Rental Investors pant for next hot home market” tells how home shoppers are now seeing multiple offers, bidding wars and shrinking supplies of homes for sale as investors swoop in.
Major institutional investors are amassing a $10 billion war chest to pursue the single-family rental market, JPMorgan Chase estimated in a recent research report.
This site posted an article about investing in rentals in December 2011. Here is an excerpt.
Rentals are rising from the ruins.
From November 5, 2011 Economist article linked below “Rising from the ruins”
This site has promoted the idea of investing in necessities at this time… food… agriculture… shelter.
This site has always promoted the idea of having assets in more than one country.
Let’s look at why rental opportunities in North America must grow.
Excerpts from a November 5, 2011 Economist article “Rising from the ruins” explains why” The housing market still looks grim, but the rental side hints at recovery
THERE are two things everyone knows about American economic recoveries. The first is that the housing sector traditionally leads the economy out of recession. The second is that there is no chance of the housing sector leading the present economy anywhere, except deeper into the mire. In the two years after the recession of the early 1980s housing investment rose 56%; it is down 6.3% in the present recovery. America is saddled with a debilitating overhang of excess housing, the thinking goes, and as a result is doomed to years of slow growth and underemployment.
The economic landscape is unquestionably littered with the wreckage of the crash. Home prices languish near post-bubble lows, over 30% below peak. The plunge in prices has left nearly a quarter of all mortgage borrowers owing more than the value of their homes; nearly 10m are seriously delinquent on their loans or in foreclosure. The hardest-hit markets are ghost neighbourhoods, filled with dilapidated properties. Housing markets are far from healthy. Yet current pessimism seems overdone. A turnaround in sales, prices and construction may be closer than many imagine.
Rental markets, by contrast, look far stronger. America’s rental vacancy rate stood at 9.8% in the third quarter of 2011, down from a high above 11% in 2009. Vacancy rates in some cities are strikingly low—2.4% in New York City, for instance, and 3.6% in San Francisco—which translates into rising rents. Nationally, rents rose 2.1% in the year to August, in stark contrast to house prices (see chart 2).
Strength in the market for rentals is beginning to seep into the more troubled owner-occupied sector. Rising rents help housing markets heal on both the supply and demand side, by encouraging renters to consider buying and through the movement of supply into the rental market, easing the glut of houses for sale. The Obama administration hopes to take advantage of better rental conditions to unload some of the more than 200,000 foreclosed-on homes held by the two government-sponsored mortgage giants, Fannie Mae and Freddie Mac, and the Federal Housing Administration (which account for roughly half of all such inventory), on to investors who may rent the properties out.
Rental-market strength is also rousing a long-dormant building industry. New housing starts rose 15% from August to September of this year, driven by a 53% surge in new structures containing five units or more. In the three months to September construction employment rose by 29,000 jobs. The sector is still some 2.2m jobs below its pre-recession peak, and new hiring there would help a dismal labour market.
Problem #2: The Fiscal Cliff. Winning Ideas: Borrow Yen. Invest in dollars. The cliff was bound to be avoided and the dollar to rise. The yen was obviously too strong.
A December 12, 2012 message at this site said: Yen leverage has remained a wonderful overall long term strategy for 20 years. Yen interest rates have normally been near or under 3% for 20 years! Any loan that was invested for more than 3% enjoyed pure extra profit!
Now the yen is too strong again (in my humble opinion). Plus as you see below yen interest rates now are as low as 2%.
If I am correct, this is a good time to short the Japanese yen.
There are two easy ways to make this short yen speculation… one is through ETFs.
The way to short the yen is to borrow yen and use the loan to make investments that earn more than 3% in currencies that are likely to rise against the yen.
Since that article the dollar has risen from 82 yen per dollar to 90 yen per dollar bringing a double digit profit in a month.
Dollar yen chart at www.finance.yahoo.com
Problem #3: Government buying ammunition. Winning Idea: Shares in Alliant Techsystems (NYSE: ATK).
Chart of ATK shares at www.finance.yahoo.com
Shares of ATK have risen from $57 to $66 per share since we wrote: I stumbled across ATK because of a potential problem. Numerous readers began sending me copies of websites headlines like this: Fears that federal authorities are preparing for mass civil unrest have increased after it was revealed that the Department of Homeland Security is planning to buy a further 750 million rounds of ammo in addition to the 450 million rounds of hollow point bullets already purchased earlier this year.
The buzz is that the current administration is afraid of civil unrest in the USA and is arming up.
Perhaps so but my thinking focused on value instead of anarchy. Instead of asking… is this true or not… what is the government’s intention… I asked… Who will make all that money?
For a fact… there is very little I can do about the government or its expenditures. There is a lot I can do in my own actions and investing.
So I looked and found this news at fiance.yahoo.com: ATK Delivers 2 Billion 7.62mm Rounds to the U.S. Army from the Lake City Army Ammunition Plant (LCAAP). ATK Delivers More than 350 Million 5.56mm Enhanced Performance Rounds Using Modernized Production Line Equipment . ATK Receives $131 Million in Small-Caliber Ammunition Orders
Over the past 10 years, the company produced an average return on equity of 31.51% by using financial leverage.
ATK debt is high but during the recession it never had problems with debt service. All these facts suggest that the shares of ATK are good value.
A little investigation found that stocks in the defense sector have been selling at historically cheap valuations and that ATK shares were selling a ratios far below the industry average. ATK Price/Earnings is 6.2 compared to an industry average of 13.2. ATK Price/Book is 1.3 compared to industry average of 3.0 and its Price/Sales Ratio is 0.4 compared to 0.8.
The 10 year average P/E ratio for its shares has been 18% but is currently below 10% about half the ten year average.
These facts coupled with recent events in the Middle East suggest even more spending will be for defense.
Share the world’s problems and how to gain the power of positive to turn them into opportunity this weekend in Eustis, Florida.
Multi Currency Value Investing Seminar
Turn $250 into $51,888… in Four Years or Less.One (of eleven) sessions at our October 17-18, 2015 Value Investment Seminar is about silver and gold and how conditions that created fortunes in 1986 are much the same now.
Turn $250 into $51,888… in Four Years or Less. If someone offers you this, I would normally say “Run from them as fast as you can!”
Yet in 1986. This is exactly what I wrote in a report that told how to borrow to buy silver.
I have to admit. I was wrong. Readers who followed the report made more than that amount in less than four years.
Here is a photo of that ad in 1986.
Conditions for silver’s recovery are similar to 1986 now.
The offer in 1986 was for a report called the Silver Dip that showed how to borrow 12,000 British pounds (US$18,600) and use the loan to buy 3835 ounces of silver at around US$4.85 an ounce.
This chart from Kitco (1) tells the story.
Silver had crashed in 1986, I mean really crashed, from $48 per ounce. As prices decreased from early 1983 into 1986, total supply had fallen to 449.7 million ounces in 1986. Mine production was restricted by the low prices at this time, with silver reaching a low for this period of $4.85 in May 1986. Secondary recovery also was constricted by these low prices.
Then silver’s price skyrocketed to over $11 an ounce within a year. The $12,000 was now worth $42,185.
The loan was in pounds and in May 1986 the dollar pound rate was 1.55 dollars per pound. So the 12,000 pound loan purchased $18,600 of silver. The pound then crashed to 1.40 dollars per silver. The loan could be paid off for $13,285 immediately creating a $5,314 profit. So the profit grew to $47,499 in just a year.
British 12,000 pounds gets US$22,800. Then the pound crashed again to $1.50 and could be paid off at $15,700 for another $7,660 profit or a total profit of $55,099 in only three years. Of course there was interest on the 12,000 pound loan, but this was less than 10% or $3,600 for the three years. In other words, there was $51,599 profit in three years. That’s remarkably close to the promise.
Yet there is a really big question. Would we have made this profit, had we taken the loan and invested in the silver?
There was plenty of potential for loss as well as profit. After rising from $4.85 to $11 per ounce, the silver price crashed again, clear back to below $5.00 an ounce and the investment was again worth about $12,000. The British pound fluctuated dramatically against the US dollar so there was plenty of room for loss as well as profit in the currency shifts.
Silver & gold charts from stockcharts.com
This historical chart of silver shows why conditions may be set for a spike in the price of silver. Note in the chart above that the huge profit in 1986 came from the second spike in a head and shoulders pattern. The bubble peaked in the late 1970s, but traders and commodity conditions sucked speculators back in for what is called a “Dead Cat Bounce”. This type of price recovery comes for no reason other than the price has fallen so much.
The dead cat bounce created huge and quick profits in 1986. We have the same scenario for silver prices now.
The price of silver reached a speculation driven historic high (over $50 an ounce) about four years ago and has since plummeted to prices that are almost back to 1987 levels.
If history repeats itself, expect silver prices to rise sharply in the next one to three years. Then there is a great risk that the price will crash again. Investors can again expect to double, triple, even quadruple their speculation in as little as a year.
But then investors must take that profit! The profits in silver will be quick and history suggests that these profits will not last long.
This is why the “Silver Dip 2015” will be one of the seven portfolios, the most speculative, we will study at our October 17-18 Investment Seminar in Jefferson, North Carolina..
This is also why I am releasing a new “Silver Dip 2015” report.
This report is exclusively available to subscribers of our Purposeful Investment Course and our Value Investing Seminar delegates.
This silver speculation is so time sensitive with such fast profit (but also loss) potential that I will not offer it to readers who have not received the education in Pi or at the seminar. We will cover when and who should and should not speculate and how to limit losses and take profits.
The same conditions are in place for gold and the Silver Dip looks at both speculations in silver and gold.
There is also another, much safer, once every 30 year opportunity that I have described in a short, but powerful report “Three Currency Patterns for 50% Profits or More.” This report shows how to earn an extra 50% from currency shifts with even small good value investments. The mathematics behind the idea of this investment strategy are currently extraordinary. Currency diversification has always been important for safety, but right now a multi- currency opportunity is brewing and has more profit potential than we have seen in over three decades.
Our Investing Seminars started 32 years ago when one of the best set of three currency and equity conditions ever existed. Over these decades, our semi annual seminars have updated what’s going on in global investment markets and what to do. Yet in all those years, few times have conditions offered as much long term opportunity as in 1982. The Dow alone rose from 1,000 to 14,000 in that period.
Then the cycle ended. Warren Buffet explained the importance of this ending in a 1999 Fortune magazine interview. He said: Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!
Now three of the great economic conditions have returned.
Conditions have come together just as we saw at our first seminars in the 1980s. The US dollar, the US stock market and the price of oil are acting almost exactly as they did in the early 1980s. Knowing these conditions and why they have merged and what to do about them can help you create a fortune.
Learn how to gain this potential (we’ll review three ways to accomplish this at the seminar) in the Keppler Good Value Country Strategy with ETFs (Country Index Exchange Traded Funds). For example there are currently ten good value developed markets, Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom. You can easily create a diversified portfolio in each or all of these ten countries with Country Index ETFs.
We review Country Index ETFs at the seminar and look at specific portfolios you can create to tap into these three economic conditions.
We’ll review seven portfolios at the seminar, starting with a Primary Portfolio which consists of equal amounts of country ETFs in each of Keppler’s good value ranked markets, with a weighting of 70% in developed markets and 30% in emerging markets. This is, an easy to start, very slow trading, safe and secure, worry and stress free portfolio that still has excellent profit potential.
The second and third and fourth portfolios are the Primary Portfolio with trailing stops. One portfolio uses a 25% trailing stop, one 20% trailing stop and one uses the smart stop system created by Dr. Richard Smith. This system uses algorithms that provide alerts when to sell and when to reenter shares.
The fifth is a derivative of the Primary Portfolio that replaces ETFs with and or includes income producing equities.
The sixth is a Disaster Portfolio to protect wealth if events around the world become really unglued. The seventh portfolio is the higher risk, leveraged portfolio that includes some speculation in currencies and commodities.
The goal of this study is not to recommend any one portfolio or approach but to help subscribers to understand the characteristics of each so they can better determine how to invest themselves based on their financial means, needs, experience and skills.
Gain the importance of experience & mathematics. Invest better than a hedge fund manager.
As a run up to my 50th year of speaking and writing about savings and investments around the world I decided to ask my friends who are mathematical and legal geniuses to share a weekend with us to cut through the fog of rapid change and learn how to beat the systems that can seem so bewildering.
Hedge Funds were the fashionable place to invest in the 1990s, but since then their performance has been falling.
However some hedge fund managers succeeded for one simple reason. A Telegraph article “How can we avoid the next financial crisis? Urgently listen to those who foresaw this one” explains why a few managers succeeded, when it said: It’s no coincidence that the biggest winners of the downturn – John Paulson, Paolo Pellegrini and Jeffrey Greene – were approaching 50 years of age. They retained vivid memories of past real-estate problems. Youth was a detriment to pulling off the greatest trade ever and to preparing for the downturn.
The successful hedge fund investors succeeded where most failed because of their experience.
I’ll provide the 50 years of experience at the seminar. I have been through the rise of gold to over 800 an ounce (in the 1970s) and silver to $48. I experienced the stock market’s bear that began in 1968, the Black Monday crash in 1987 when the Dow had its biggest one day drop ever and the dotcom bubble as well as the collapse in 2008. I worked my way though the first dollar devaluation in 1971, the Plaza Accord arranged dollar collapse and two major downturns in the Japanese yen, plus invested through the 1970s, 1980s and late 2000 recessions.
We’ll share how these experiences which prepares us for our investments now.
Michael Keppler provides the Math.
The idea of using math to find good value equity investments led me to ask mathematical analyst, Michael Keppler, to join us in the Blue Ridge for the seminar.
Michael is a brilliant mathematician. We have tracked his analysis for over 20 years. He continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return. He compares each stock market’s history. From this, he develops his Good Value Stock Market Strategy. His analysis is rational, mathematical and does not cause worry about short term ups and downs.
Red Lining Your Investments
According to Keppler’s analyses, an equally-weighted combination of good value markets offers the highest expectation of long-term risk-adjusted performance. His mathematical predictions have been eerily accurate as the red line below shows.
Each quarter Michael shares with me (and other professional investors) his “Total Return Predictions”.
Click on chart to enlarge.
This chart shows the entire real-time forecasting history of Keppler for the KAM Equally-Weighted World Index, he started in 1993. Keppler continually shows what his mathematical formulas predict for markets four years ahead. These numbers are based on mathematical relationships between price and value over the previous 15 years moving forward in monthly increments. In this way Keppler uses numbers to continually adjust to the ever-changing market norm.
Keppler’s chart includes two remarkable episodes. The first in the period when global equity markets peaked and crashed over a five-year period from 1997 to 2001. Keppler’s Equally-Weighted World Index predictions stayed above the upper forecast band and accurately predicted the recovery and how much global markets would rise.
The second remarkable period started in October 2008, when again Keppler’s forecasts accurately showed where markets would reach as they fell below the lower forecast band.
Imagine the extra profit professional investors have today when they invested in these depressed good value markets before they again rose.
Keppler’s projections now indicate that global markets are expected to rise from between 2.1% and 13.0 % in the next three to five years.
Learn about Keppler’s projections and about Asset Allocation from Michael Keppler in person at our Value Investing Seminar October 17 & 18 in Jefferson, North Carolina.
Our October seminar will be at the Jefferson Landing Country Club.
Enjoy the autumn leaf change and learn how to survive and prosper with value investments.
Jefferson leaf change view.
Learn amazing tax benefits as well. I have invited my tax preparer, Conrad Oertwig, to join us.
Seven of tax secrets that Conrad will share include:
* How Dutch-treat entertainment allows you to deduct your own meals.
* How to entertain for business and help the charity of your choice because a charity sporting event produces double the deduction of a business meal.
* How one magic word can allow you to deduct your daily transportation costs between your home and another work location.
* How to earn an extra $11,425 by using antiques as office equipment.
* How to gain $12,976 by using two vehicles for business.
* How to reduce tax by having a second office in the home.
* How to travel by cruise ship and deduct up to $680 a day.
Plucking common sense from the tax law is time consuming and difficult work. For more than 25 years, Conrad has gained great satisfaction by helping his clients extract tax dollars from the tax law. He has over 400 tax savings tips and will share some of the most important lessons at the seminar.
To help you get an early start on tax savings, I will send you Conrad’s report “7 Secrets to Paying Less Tax… for the One-Owner Business” when you enroll in the seminar. I’ll also send you “The Silver Dip 2015” as soon as it is released.
Join Michael Keppler, Conrad Oertwig, Merri, and me, plus video presentations by Leslie Share, Eric Roseman, Thomas Fischer and Richard Smith. The “Value Investing Seminar” looks at how to protect purchasing power and pensions with value investing. The course teaches how to add safety and create profits by spotting multi currency and global equity cycles through good value mathematics.
Hear from other speakers via video. The seminar will include online presentations including:
One way to protect our wealth and freedom is to have a good attorney who understands how to use appropriate planning so you can also be protected rather than hurt by the tax laws.
Leslie Share: How to use and benefit from US tax law living overseas and for wealth preservation.
Leslie has been our friend and adviser of more than 30 years, and I have asked him to speak to the seminar online at the October Value Investing seminar. Leslie is an attorney in Coral Gables, Florida who specializes in general, corporate and international taxation, estate and gift tax planning, internal revenue service matters at the agent and appeals level plus most important, he specializes in wealth preservation.
He has the highest possible Peer Review Rating by Martindale-Hubbell, Florida Super Lawyers and The Best Lawyers in America.
Leslie is the type of attorney who can help gain asset and wealth protection if you live in the US or abroad.
The best way for boomers to protect their wealth is with good value income producing shares. Not everyone can wait for their assets to grow. Many need investments that create income now.
Eric Roseman: How to select good value income producing shares.
I have worked with Eric for decades and use his ability to select good value income producing shares. Understanding the intrinsic value of any equity is an elusive concept, but one of the best ways to assess value is by looking at the income it generates. Eric is a master at sniffing out the shares that provide a good income now as well as potential appreciation later. Learn from his strategic ideas for current market conditions.
Thomas Fischer: The impact of multi currency leverage leverage on portfolios.
Thomas Fischer has been a friend and investment adviser for nearly two decades. As a former currency trader in Germany and London, he has a keen sense of currency fundamentals and how and when to use leverage.
Richard Smith: How to overcome the behavior gap with Trailing Stops.
Dr. Richard Smith, founder and CEO of TradeStops. Richard earned a PhD in Math and Systems Science, and even he had to learn the hard way that it takes more than intelligence to win in the game of investing. He has spent the last 10 years researching and developing algorithms and services that give individual investors the tools they need to remain in their personal investing comfort zone, and to succeed! With his background in mathematical theories of uncertainty combined with his own investing and trading experience, Dr. Smith understands risk management and how to use it as a self-directed investor to master the market.
Finally at the seminar I’ll review the 50 Golden Rules of Investing. Learn how to protect against shady investment advice, unreasonable and hidden fees. Learn how to protect yourself from your own emotions. Learn when it is best to buy shares and determine which type of share is best for you. Find out how to avoid the loss fear syndrome and stop getting caught by great sounding stories that can rob your wealth.
Share my 50 years of experience. Gain advice that is sterling as we head towards my golden anniversary of writing about saving, finance and investing. Our value investing seminars are filled with valuable information but we have fun and take time to relax and socialize as well.
We look forward to joining us this October.
Saturday, Sunday, October 17-18, 2015, Jefferson, North Carolina.