What Can You Do About Pensions?


What do you do if your pension goes stupid?

share chart

Valeant shares have fallen in the last year from over $250 to $26. Valeant chart from www.finance.yahoo.com (1)

Drug prices have soared in the last couple of years as Valeant drove up the prices for their heart medications and was a role model that taught other drug firms how to raise prices.

Valeant for example bought the rights to a pair of life-saving heart drugs.  The same day, they increased prices by 525% and 212%.  Neither of the drugs, was improved nor were there any investments in lab work, testing or anything good for patients. The only change was the drugs’ ownership to Valeant and Valeant’s management feeling that their only duty was to maximize the shareholder’s value.

Hats off the Valeant’s management for such a  good job, reducing shareholder’s value by about 90% in less than a year!

I would be seeing nothing but good from this.  Value would be a role model in how not to think short term and the fine line between creating profit and extortion.

Sadly there is a negative to this because the Valeant losses could hurt many retirement plans.

Workers in over 50 companies from such as Walt Disney Company offered the Sequoia Fund, Inc. as an investment option in their employee savings plans.  The Sequoia Fund was purportedly an exclusive manager with historical ties to Warren Buffett, closed to new investors for years.  Employees of these companies supposedly had a unique privilege to be able to invest their pensions in Sequoia.

Regretfully Sequoia’s largest holding, at one point last year more than 30% of its portfolio, was Valeant Pharmaceuticals.

The fund has underperformed 98% of its peers so far this year and hurt some retirement plans  at companies such as Disney, where Sequoia was among the most widely held investment.

What is the Lesson?

There are several lessons we can learn from this tragedy.   The first is that short term investment thinking is dangerous.  Valeant may be able to force these high prices on people. Their life depended upon it.  You can also make people do things they do not want when you put a gun to their head.  Neither form of inducement is correct. Both are coercion and when anyone pushes helpless people too much, for too long, there will be a pay back.

Keep these facts in mind when researching where to invest.  Companies need to provide a fair service as well as make a profit.

Also we should beware of hotshots and the Golden Boy Syndrome. Having been in the business almost 50 years now, I  have seen so many kings knocked off their throne.  Any time anyone acts as if they are doing you a favor taking your money… BEWARE!

What do you do?

We need to be masters of our own finances and the best way to do this is by continually looking for value.

This will often make you seem like a contrarian because the herd mentality creates and/or destroys value.  You may seem to be acting just the opposite of everyone else, but we are not.  Instead of following the money we are simply following the value.

For example we recently reported that gold has triggered a Re-Entry Rule at Trade Stops.com, one of the advisors we track.

share chart

Gold chart from www.finance.yahoo.com (2)

Gold and silver almost always have a small place in our portfolio as insurance, but how much of our money should we allocate to gold and silver as speculations?

Our friend Richard Smith, a PhD in mathematics, is the founder of Tradestops.com and he created a program to help us match our risk tolerance with our investment risk profile.

When our risk tolerance is out of line with the risk profile of our investments, we are more likely to make poor emotional rather than wise investmen decisions.

Richard sent me this note:

Today, what I’d like to bring to your attention, is how you can use the tools available in TradeStops to make some high level decisions about how to structure your own portfolio.

One nice benefit that we enjoy as investors today is the rich universe of ETFs that we have access to. We can use these ETFs to help us make some decisions around our personal asset allocation. GLD, for example, is the ETF that tracks the cash price of gold bullion.

There are lots of websites out there that offer tools to help you easily find ETFs of interest. One that I use regularly is ETF Replay. The Summary section of ETF Replay is a great place to browse around and find ETFs that represent asset classes that you might be interested in.

Browsing through the Summary pages of ETF Replay, I found the following ETFs of interest to me (note that when deciding between similar ETFs I tend to favor those with the highest Net Assets):

VTI: Vanguard Total U.S. Stock Market – (I opted for an ETF to capture the whole US stock market.)
IEF: iShares Barclays 7-10 Yr Treasury (7-8yr)
VEU: Vanguard FTSE All-World ex-US
VWO: Vanguard FTSE Emerging Markets
GLD: SPDR Gold Shares
USO: United States Oil Fund
LQD: iShares iBoxx Invest Grade Bond (7-8yr)
SHM: SPDR Short-Term Municipal Bond (2-3yr)
IYR: iShares Dow Jones Real Estate REIT
GDX: Market Vectors Gold Miners Equity Index

The above list is by no means exhaustive. It’s just a list of possible investment categories that captured my interest (and that had sizable net assets).

Now I’m going to build a Watch Only portfolio of the above ETFs (starting with 1 share each) with $100,000 in cash and then run that through my Risk Rebalancer tool to get a rough idea of how $100,000 could be allocated across the above investment classes.

Here’s how it all came out (sorted by VQ% ascending):

Tradestops

Click on image to enlarge.

As you can see in the above, GLD and GDX together add up to just under $10,000 which is about 10% of this $100,000 portfolio. (Note that I’m disregarding the SSI indicators for this exercise.)

Interestingly, this is a VERY low volatility portfolio overall, with 88% of the assets in low volatility investments.

Tradestops

Now I didn’t go through this exercise because I think that you should allocate your assets as I have above. It’s just an example. I want you to go through this exercise yourself, so that you start to build your own position in gold and gold miners in a pre-meditated way.

Given your portfolio size and your asset class preferences, approximately how much should you be looking to invest in gold and the gold miners?

Think about it. Play around with some numbers in TradeStops using some ETFs as proxies for asset classes. The absolute worst thing you could do would be to buy more gold or gold stocks than you are comfortable buying. If you do that, you will very likely get stuck in a losing position (if the rally peters out) or take your profits too soon (if this is indeed the beginning of a new bull market).

You need more than just hope. You need a plan … and you need to stick to your plan. That, more than anything, is what will ultimately determine your success.

Richard M. Smith, PhD
CEO, TradeSmith
Founder, TradeStops.com

Richard’s advice above makes good sense and I recommend that if you are an investor,  subscribe to the professional version of Tradestops. Get full details here.

Gary

(1)  finance.yahoo.com – VRX

(2)  finance.yahoo.com – GLD

Why Leverage Silver ETFs

Turn $250 into $51,888… in Four Years or Less?

I first spotted an opportunity in 1986.   Two short term distortions (in the price of silver and the strength of the British pound) created potential for huge profits.  I wrote in a report (called the “Silver Dip”) that told how to borrow British pounds to speculate in silver and earn over $50,000 profit.  That’s the headline I used then in 1986, “Turn $250 into $51,888… in Four Years or Less”.

The report showed how to take borrow overpriced British pounds and invest the loan in under priced silver.   $250 was required to set up the loan.  No other cash was needed to borrow the pounds.

Readers who followed the report made $46,299 on the no cash investment in only one year

Then in 2015 I spotted the same distortion again.  The British pound was overvalued.  Silver was undervalued. 

I quickly issued a report… the “Silver Dip 2015” that looked at how similar conditions to 1986 had fallen into place.  The price of silver had reached a six year low.  The British pound strength was rising.  The dollar per pound rate was $1.55 per pound, exactly the same as in 1986 and the silver/gold ratio rose over 80 just as in 1986.

That report revealed the iShares Silver Trust, a silver ETF  and during the year after issuing this report, the share price rose from $13.57 per share to $19.60 in 2015.

The rise in the silver price created a nice profit.   The currency and leverage tactics within the strategy turned the nice profit into a very nice profit.

A $10,000 (6,451 British pounds) loan purchased 736 shares at $13.57.  In 2015 the shares rose to $19.60 and were worth $14,425 (up 44.25%).

Those profits were spectacular by any stretch of the imagination but turned out even better because the profits above excluded the forex profit.

In 2015-2016 , the British pound dropped almost exactly as it did 30 years ago!  The British pound fell from $1.55 per pound to $1.33 per pound.

At $1.33 per pound, the 6,451 pound loan only required $8,575 to pay back the loan.  This created an extra $1,425 forex profit.

When the opportunity appeared again last year, I updated the report to  “Silver Dip 2018”.

The 2018 report showed how the opportunity for this speculation was even better than it was in 2015.

Yet the profits have not yet arrived.  This allows me to make an amazing no-risk guaranteed offer to you.

Silver Dip 2019 includes profit calculations for 2019 and I offer you the report “Silver Dip 2019” with a year long guarantee.

“If the profits recommended in the report don’t arrive by the end of the year, I’ll give you a complete and full refund”.

That’s right if the tactic described in Silver Dip 2019 do not hit their target, you don’t have to pay a thing for the report.

Investing in silver ETFs leveraged with margin loans may create extraordinary profits in 2019.

The “Silver Dip 2019”  shows how to easily make an ideal speculation for almost any amount.   The report shows when and how to get margin loans in dollars, British pound, Japanese yen or euro.

In fact you learn how to borrow in 23 different currencies, even Russian rubles, so you can choose the weakest currency with the lowest interest rates.

Low Interest Loans

Interest on the loan won’t eat up profits.  The “Silver Dip 2019” shows how to borrow many currencies right now for less than 2%.

The Silver Dip is only exercised when conditions are absolutely ideal.  Value investors never push this rule.  Investment and speculative markets are full of rumor, conjecture (a lot of it false) and hidden agendas.  The Silver Dip relies instead on a really simple theory… that the price of gold should rise about the same rate as other basic goods and the rise and fall of silver’s price should maintain a parity with gold.  When that parity is out of balance (as it has been since August 2018) silver’s price is ready to explode.

The “Silver Dip 2019” explains how to speculate in silver ETFs plus outlines the following:

  • How to use the Silver Dip strategy without adding a penny of cash if you already have investments.
  • How to invest as little as a thousand dollars in silver if you do not have a current investment portfolio.
  • Why this is a speculation, not an investment:  who should and should not speculate and how to limit losses and take profits.
  • Three reasons why conditions are excellent for better for a Silver Dip now.
  • Three different ways to invest in the US or abroad.
  • How to buy gold and silver or platinum with or without dollar leverage margin accounts.

The “Silver Dip 2019” also contains four matrices that calculate profits and losses so investors can determine cut off positions in advance to protect profits and/or losses.  The report also looks at how to switch time horizons for greater safety.

Rising interest rates make the stock market highly dangerous in the short term. “The Silver Dip 2019” shows how to create a safe, diversified good value stock portfolio and use it to generate much higher returns with a little controlled speculation in silver.

Learn how to beware of certain brokers and trading platforms, how to choose a good bank or broker and how silver profits are taxed.

The report includes a complex comparison of silver’s price with other costs of living from 1942 to today to help determine its real value.

Finally, learn why and how to use advisers to manage profits from silver dips.

Current circumstances could cause the price of silver to rise rapidly at any time.  Do not delay reading this report.

The Silver Dip sold for $79 in 1986.  Due to savings created by online publishing (we have eliminated the cost f paper and postage), we are able to offer this report for $39.95.

Order now by clicking here.  Silver Dip 2019  $39.95

The benefit of 50 years experience in watching markets, metals, bonds, interest rates and currencies, I have learned many special pricing situations to watch for.

These special opportunities do not appear every day.  That’s why they are special.

Unless you have seen them come and go, it’s hard to see them coming again.

That is why I was willing to wait for years for silver to be in a special pricing position.

Our courses and reports are about finding good value and they have been helping astute readers find value investments, again and again for 50 years.

The “Silver Dip 2019” report shows a current huge opportunity.  I continuously watch for aberrations in currency and precious metal markets.   Sometimes a rare quirk, such as the currency distortions, low cost loans and low silver price  offer potential for profit, with very little risk of long term loss.

Investors who speculate on these aberrations at the correct time can make fortunes.

The time is now.

Success is almost guaranteed.  In fact an 89 year study showed a 99% change of success when sequence distortions are worked in a certain way.

We are stalking precious metal opportunity now.

The trap is set. We are waiting…

This opportunity is explained in the report “Silver Dip 2019”.

You can order the Silver Dip 2019 here for $39.95

Here is why there is no risk for you.  The report is 100% guaranteed.

I do not sell book, reports and courses.  I offer benefits.  If  the Silver Dip 2019 does not bring you the benefits you expect, just let me know any time in 2019 and I’ll send you a quick, no questions asked, full refund.

I can’t promise that silver’s price will rise in 2019 but  I can guarantee you’ll be fully satisfied with the report or… you can have your money back in full.

You can order the Silver Dip 2019 here for $39.95

Gary