Weekend Edition
The Best of The S&A Digest
June 6, 2009
 Hunt has done it again. Longtime subscribers will remember the legendary stretch of trades Brian Hunt made coming out of the last recession in 2003-2004 in his first trading publication, Microcap Moonshots. For example, his Taser International pick made more than 150% in less than a year. His picks focused on small-cap stocks – companies with market caps of less than $250 million.
Hunt, now our editor in chief, has spent more than a decade figuring out how to optimize trades in these tiny stocks. His strategy is pretty simple: He only trades them when they're going up by leaps and bounds, which is about once every 10 years. It turns out, small-cap stocks always produce their best rallies following recessions – with hundreds of stocks going up 500% or more.
They are starting to soar again, so Hunt has come "out of retirement" to show us his best ideas. He's working with Tom Dyson on a new trading service, Penny Trends. We've been testing the service in "beta mode" with a few select readers. So far, the results are spectacular.
Dyson and Hunt have eight penny stocks in their portfolio, and every one is up. The lowest return is 18% in less than one week. The highest return is 153% in less than four months.
If history is any guide, these guys will recommend more than a dozen triple-digit winners over the next 12-18 months. Learn more here.
Here's a conflict that will be interesting to follow...
Paul Krugman, the famed-economist, New York Times columnist, and government apologist, says we have nothing to fear from the Fed's massive inflation of its balance sheet.
Krugman, who gets paid to write columns, is opposed in his position by an entire host of legendary speculators – men who get paid to make money in the markets. These real-life experts (Paulson, Einhorn, Rogers, and your humble editor) believe America has entered into a new period of rampant monetary inflation.
Recently joining the ranks of the inflation camp: Nassim Taleb, the brilliant mathematician and author of Black Swan, whose $6 billion hedge fund is now primarily positioned to capture inflation-related gains, including shorting U.S. Treasury bonds.
Who do you believe will be proven right, the academic policy wonk who writes for the New York Times or the moneygrubbers?
Despite the government's efforts, some of the old stalwarts are fading away... Citigroup was thrown out of the Dow Industrials Index, replaced by its former subsidiary, Travelers. And GM is out, with Cisco Systems taking its place.
GM is already starting to break up, selling its Hummer unit to a Chinese company. It was poetic that Citigroup managed the Hummer sale for GM, like one old beat-up drunk helping another cross the street.
Value investing legend Seth Klarman of hedge fund Baupost Group recently spoke at the annual Graham and Dodd Breakfast, saying long-term investors have lots of good opportunities. "When people start to give something away at a ridiculous price because they have to, not because they want to," Klarman said, "that's a good time to buy."
Klarman is buying "distressed" debt – the lowest grade of speculative-grade debt. The market views companies that issue these bonds as having a high risk of bankruptcy. But if you can accurately value the company's assets as more than its liabilities, you can collect 100% of your investment even in the case of bankruptcy. In a best-case scenario, you will collect double-digit yields and make hundreds of percent in capital gains when the bond matures.
Because the markets were so volatile this past year and no banks were issuing credit, investors expected distressed companies to default on their bonds... But fears were overblown, and now you can buy these bonds for pennies on the dollar and collect huge yields.
This is the type of investing environment our bond analyst, Mike Williams, waits for. Mike, our most senior analyst, who also earned a CFA designation, exclusively recommends distressed bonds in his advisory service, True Income.
Among the bonds Mike has recommended this year, one is up 99% already. Others have posted healthy gains, too – up 19%, 8%, 17%, and 32%. And all of these bonds have years left until maturity – meaning there are years left of safe, double-digit yields and capital gains.
An opportunity like this comes maybe once a decade. We urge you to take advantage. To learn more about our bond letter, True Income, click here...
Regards,
S&A Research
Stansberry & Associates produces the daily S&A Digest, which comes free with a subscription to one of our premium products. To learn more about a risk-free trial subscription click here. |
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S&P 500 |
|
|
Genworth Financial |
GNW |
+37.50% |
Legg Mason |
LM |
+30.03% |
CBS Corp |
CBS |
+27.79% |
Countries |
|
|
Russia |
TRF |
+10.52% |
Thailand |
TTF |
+6.87% |
India |
IIF |
+5.94% |
Sectors |
|
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Clean Energy |
PBW |
+7.62% |
Nanotech |
PXN |
+5.99% |
Defense |
PPA |
+5.83% |
Commodities |
|
|
Lead |
- |
+12.21% |
Aluminum |
- |
+10.74% |
Heating Oil |
- |
+9.17% |
|
S&P 500 |
|
|
Gannett |
GCI |
-15.87% |
Cardinal Health |
CAH |
-14.54% |
Valero Energy |
VLO |
-13.38% |
Countries |
|
|
Taiwan |
EWT |
-4.35% |
Turkey |
TKF |
-1.72% |
United Kingdom |
EWU |
-1.09% |
Sectors |
|
|
Gold Mining |
GDX |
-1.47% |
Biotech |
PBE |
-1.02% |
Oil Services |
PXJ |
+0.46% |
Commodities |
|
|
Hogs |
- |
-12.42% |
Cattle |
- |
-5.13% |
Natural Gas |
- |
-3.71% |
Source: Bloomberg and Yahoo, 5/28–6/4.
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