M4 Support

Counting on a 300% gain in falling treasury bond prices

Posted July 20, 2012 at 12:05 am

via The Mad Hedge Fund Trader

Commodity prices can be roaring, but as long has globalization drives down wages at home, as it has for the last 30 years, their overall impact will be modest, at best. So add it all together, and you get an inflation rate that is stagnant at low single digits. You are obviously not working hard enough.

I am interested in all this because I have a dog in this fight. I happen to be short out of the money call spreads on the Treasury bond ETF (TLT). I also have more than a passing interest in the (TBT), a leveraged ETF that bets that the Treasury bond interest rates will rise and prices will fall. I used to think that a resurgence of inflation would take it from the current $14.50 to $200. I don’t believe that anymore. I instead think we will see a rise only to $43, which equates to a ten year Treasury bond yield of 4.10%, up from today’s 1.45%.

That is still a potential gain of nearly 300%, which is better than a poke in the eye with a sharp stick in this zero return world. And that middling profit will not be delivered by a reincarnation of the inflation beast, but by the sheer volume of issuance of bonds demanded by our enormous budget deficits.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "The Death of the Bond Vigilantes... "]


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Multiple cash-like investments

Posted July 9, 2012 at 6:10 pm

by J. Alex Tarquinio

Along with the now standard advice from financial planners to focus on large, dividend paying stocks and ultra-short term bonds, he’s advising clients to stash real estate investment trusts into the alternative asset portion of a balanced portfolio. Rosenberg has stopped recommending commodities, including gold, to clients. “Commodities are dead,” he says. “They expand with economic growth.” And that has become a scarce commodity recently.

Financial planners also advise sticking with a long-term strategy, especially when saving up for distant goals like your children’s college tuition or your own retirement. Yet the best of them are constantly tweaking their clients’ portfolios to adjust to the markets ups and downs.

* * *

The above portfolio allocator is from the Smart Money article link below. It is one of 12 portfolios, by allocation, based upon a ‘life-stage’ scenario (example of one shown above).

All portfolios, of course, have a few commonalities. One of which, is ‘cash‘ !

So, the question is: Where can you get cash-like investments outside of a boring savings account? Outside of low-yielding bonds?

Look no further than our ‘Where to Stash Your Cash‘ section inside the Vault.


[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Perfect Portfolios: Your Next Move in This Market…" ]


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A “backdoor” way to profit from the rise of China’s nouveau riche

Posted May 25, 2012 at 3:47 am

by Charles Sizemore

But you shouldn’t limit yourself to the world of ADRs.  Doing so may eliminate some otherwise great investment opportunities.

Consider BMW, which I mentioned above.  I love BMW for precisely the same reasons I like Daimler.  Luxury German cars are an aspirational status symbol around the world, but particularly in emerging markets.  I consider BMW a fine “backdoor” way to profit from the rise of China’s nouveau riche, and the company’s operating results have been nothing short of stellar even in the midst of a European debt crisis. 

BMW had record profits in 2011 and raised its dividend to a new record level.  More rises are likely.  I’d prefer the ease of buying BMW as an ADR, but I would be perfectly comfortable buying it on the German exchange as well.

Much the same could be said for the two fashion brands I mentioned above.  I love ADR-traded LVMH as an indirect bet on emerging market growth.  But if I love LVMH, why would I also not love Burberry or Prada?  All three companies are wildly profitable, have incredible brand equity and cater to the taste of high-income earners in Asia and elsewhere.

As capital markets become more globally integrated and information more dispersed, the barriers to buying and selling locally-traded shares are getting smaller. 

Most large, foreign blue chip companies publish their annual reports in an English version, and even for those that do not there is usually ample data available to help you in your decision making.   Reporting standards do vary from country to country, but this should be no impediment to a motivated investor willing to roll up his sleeves and do a little research.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "The Ins and Outs of International Investing" ]


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Dallas Mavs owner sees Facebook as a “trade” only

Posted May 25, 2012 at 2:53 am

by Steven Russolillo

Billionaire investor and Dallas Mavs owner Mark Cuban “likes” Facebook, but he doesn’t love it.

In a blog post, Cuban says he has snatched up 150,000 shares of Facebook. Specifically, he says he bought 50,000 shares at $33 a pop, 50,000 at $31.97 and another 50,000 at $32.50.

But he doesn’t have any plans of holding these shares for the long term. Far from it.

“It’s a trade, not an investment,” Cuban says. “Kind of like buying a Mickey Mantle, a Hank Aaron and a Barry Bonds rookie card knowing there is a card show in town next week.”

Facebook shares closed up 3.2% at $33.03. So, he’s in the money. The stock is still down 13% from its $38 IPO price.

Facebook’s trading debut last week was marred by technical glitches at Nasdaq, prompting the exchange to delay the social network’s opening trade by about a half hour. The confusion left investors unsure of whether their orders to buy and sell shares had been fulfilled.

The Facebook IPO destroyed investor sentiment at a time when confidence was already extremely low, Cuban says.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Mark Cuban Likes Facebook, Hates What it Did to IPOs" ]


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The Dirty Harry portfolio

Posted May 22, 2012 at 3:08 am

by Brett Arends

There’s a saying on Wall Street: There’s no such thing as a safe investment, only one whose risks aren’t yet apparent. Investors keep learning it all over again. J.P. Morgan Chase stock, anyone? Best Buy?

How about some Greek government bonds? After all, they’re members of the euro zone now, they should be fine!

At least here you’ll know you’re gambling. And you’re getting paid for the risks.

So, in the words of Clint Eastwood’s steel-nerved Inspector “Dirty” Harry Callahan: “You’ve got to ask yourself a question. ‘Do I feel lucky?’ Well, do ya, punk?

1. Uranium Participation Risk: High

If you’re looking for cheap fuel, this is it. Uranium prices have collapsed 30% since the Fukushima tragedy in Japan last year. A pound of uranium traded for $140 in 2007. Today: $52.

Since Fukushima, governments have scaled back plans for new reactors. Germany is going nuke-free. But it’s not the whole story. World energy demand is expected to rise 40% over 20 years. Getting there without more nuclear reactors will be especially tough. Meanwhile, the world hardly mines enough uranium to feed the reactors that already operate. Uranium is well below replacement cost.

Uranium Participation is a Canadian closed-end fund which owns physical uranium in a warehouse, the way a gold fund owns gold. The stock, which trades under the symbol “U” on the Toronto Stock Exchange and as “URPTF” in the Pink Sheets over-the-counter market, trades for about 20% below the net asset value.

4. NovaGold Resources Risk: High

Way out in the Alaskan wilderness, in the far, far northwest, is an area known as Donlin Creek. There is gold in them thar hills. Lots of it.

Developers say they’ve found at least 34 million ounces of “proven and probable” reserves—with a gross value today of $54 billion—and there is almost certainly much more.

The Donlin Creek gold project is 50%-owned by Barrick Gold, one of the world’s largest gold-mining companies, and 50%-owned by NovaGold, a small one. At $5 and change a share, NovaGold is valued at $1.7 billion.

It will be many years—maybe eight—before Donlin Creek actually starts producing its first ounces of gold. There is many a slip between cup and lip.

Gold exploration is famously exciting for investors, and not always in a good way. In this case you are taking a flyer on production, and on the future of gold prices.

Some really smart people have joined the gamble on this stock, including hedge-fund managers Seth Klarman and John Paulson and Fidelity Investments’ star fund manager Will Danoff. Speculative, but fun.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Five Risky Plays That Could Make Your Day" ]


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When investing and human behavior collide: Painful lessons learned from millions lost

Posted May 21, 2012 at 4:29 pm

An Open Letter To Anybody Who Has Lost Significant Money in the Markets

by Barry Goss & Brad Wajnman, Co-Founders M4 Research    
Co-Contributors: Deron Desautels, Membership Manager; Heather Vale Goss, Associate Editor

Under the Education & Ideas folder inside the Vault, we have an article titled: “Why HYIPers Keep Speculating In Pork Bellies.”

In it, Barry outlines the departing wisdom he got, from a grizzled ol’ commodity trading veteran of 30 years, named Richard.

This mentor of his — for 6-months — practically dragged him back into his office by the back of his shirt collar to throw down some departing raw “money-growing secrets” as he called them.

Whether it was out of a sheer desire to instill final lessons of the game of money upon him, or just out of an ‘I owe him this much so he can pass it on’ yearning, we can’t say for sure.

However, what we do know, without question, is this:

Human psychology 301 lets us predict our foibles, one of which is that the embarrassment of our inabilities (represented by our mind fooling itself into seeing instant riches upon our doorstep) can vastly outweigh our thinking and reasoning ability to humbly ask questions.

Questions are powerful. Actually, to be more dramatic, they are cardinal to your existence. To re-quote Jeffrey Gitomer of The Sales Bible fame, with a twist:

“They are to ‘risk-capital’ [sales] as breath is to life. If you fail to ask them, you will die. If you ask them incorrectly, your death won’t be immediate, but it’s inevitable. If you ask them correctly, the answer is… a likely return ON capital [sale].”

One head-scratching question that Richard asked Barry one fine day in the summer of ’94 is:

“So why do so many people lose money trading in the markets while others consistently make hundreds of thousands — even millions — of dollars each year?”

Richard certainly had some answers to his own question. After all, when you have that much experience doing something, and doing it well, you can’t help but notice things.

And, without sounding trite or having you picture us as the proverbial strict ruler-in-the-hand teacher, if you’re spending any amount of your time or money participating in speculative, higher-risk investing vehicles (the kind, ya know, where your return is solely based off the price movement of a tradable asset, and not so much on the sustained long-term value of the asset), you’d better have eyes wide open.

Now, before we continue with our tongue-in-cheek perspective below, you should know that throughout this article, you will find links to articles and reports we’ve written that give insights and lessons learned based on our experience with investments and growing our money (or, in some cases, attempting to do so without success).

We have learned the hard way — just as you may have too — that sometimes our expectations aren’t reached; and, sometimes our worst fears come true.

That being said, you should know that we have a combined 50 years of direct experience in this industry. When you add on the wisdom of mentors long past, it probably nears 100 years’ worth of wisdom (er, “caution” is more like the word we were thinking).

Most of the time, losses boil down to a few simple sins. Simple, we say… but not so much easy to employ. Humans are humans after all, and for every old man in Las Vegas still hitting on seventeen at the BlackJack table, there will be a middle-aged woman driving ten miles out of her way to use a $.50 coupon on milk.

Yup, some people never learn. Sure, we get that at times the problems can be traced to the system, market, or trading approach itself but most of the time, in our experience, it all boils down to our own flawed and reckless human behavior.

More on that shortly…

Continue Reading…


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Like beer? Here’s how to invest in it

Posted May 18, 2012 at 1:03 am

by Charles Sizemore

Suds stocks fall into one of two categories:

Megabrews with world-dominating brands — companies like Anheuser-Busch InBev (NYSE:BUD), Molson Coors Brewing Company (NYSE:TAP) and SABMiller (PINK:SBMRY).

Smaller companies that produce mostly craft beers, such as the Boston Beer Company (NYSE:SAM), the maker of the popular Sam Adams, and Craft Brew Alliance (NASDAQ:BREW), which makes smaller brands Kona and Red Hook.

Either option can make a fine investment choice, but you should understand that the rationales for buying are very different.

BUD, TAP and SBMRY essential operate a megabrand beer cartel. Their businesses are safe and relatively stable, though not particularly exciting.

They also tend to be fairly recession-resistant. If anything, consumers often trade down from more expensive craft beers to cheaper mass-market beers when times are hard. For investors just looking for consistent returns, this kind of consistency is attractive.

SAM and BREW, being smaller and nimbler, are better growth stories. SAM in particular has enjoyed fantastic earnings growth in recent years, and its niche placement as a seller of premium beers allows it to generate higher returns on equity.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Beer Stocks: Crack One Open" ]


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1% – 3% per month STABLE ROI – you keep all the profits

Posted May 17, 2012 at 3:50 am

from the M4 Research team

Did your trading or investing account earn you 42% profits (or more) in 2011?

Would you like to join a fully-catered automated service with investors who did?

We are proud to be the managing publisher of an investment service that takes automated forex trading to the next level.

This service provides full-scale hosting and monitoring of the trading system as an all-inclusive package. Its unique programming provides risk-mitigated trading by focusing on only one currency pair.

With an exclusive member area also included in the subscription rate, subscribers receive access to monthly webinars, tutorials, and more.

The best part is, you pay a flat subscription rate — no matter how large your account grows — and you keep all the profits for yourself.

If you’re even remotely intrigued, be sure to watch this video in its entirety….



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5 reasons to own Facebook for the long term

Posted May 14, 2012 at 3:50 am

by Robert Peck

As an ex-Wall Street Institutional Investor ranked analyst, I’ve written on many stocks and IPOs before, including: LNKD IPO (here), BankRate IPO (here), and even a piece on Facebook back in 2007 where I argued Yahoo! needed to buy Facebook (here) for $6-7b.  

Importantly on Facebook, I think when one looks at the company’s potential, it’s paramount that one thinks bigger picture and longer term – this post is predicated on this.  

In the essence of being succinct, below I point out my Top 5 reasons I’m bullish on Facebook long term, as well as my Top 5 concerns.  There are an endless number of items for each list, but I think these items sum up the major points.

1 – Facebook is a Force Majeure @ 900m Users – Facebook dominates one of the largest forces on the Internet, Social.  It clearly embodies everything we do that’s social from posting pictures, to sharing our real time thoughts, to connecting with old friends, to making new friends.  

It reflects how we behave offline and exemplifies how social behaviors pervade much of what we do on a daily basis.  Facebook is the king of one of human’s most basic communication needs – sharing.  Further, the company has managed to expand outside its own website or app.

3 – Mobile Monetization is Just Starting – Facebook grew revenues ~45%  in the most recent quarter – that’s impressive.  However, what is most astounding, is that >50% of its monthly users visit the platform via a mobile device and these users haven’t been monetized yet.  Facebook is just starting to monetize >50% of its user base!  Imagine the lift in the financials from not only growing the users, but by merely monetizing over one-half of the current un-monetized base.

[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "The Facebook ($FB) IPO – the Enormous Upside Potential" ]


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Prudent guidelines for buying facebook stock

Posted May 4, 2012 at 1:36 am

by Jack Hough

Facebook’s initial public offering is slated for May 18, the Wall Street Journal reported Thursday. Between now and then, management will go on its “roadshow” to explain its strategy to potential investors, and excitement over the deal is likely to grow.

The IPO details suggest a valuation of $77 billion to $96 billion, and shares could easily open much higher than the offering price. So Facebook may sell for 10 times revenues or more by the time ordinary investors buy in, more than five times as expensive as the average stock.

Then again, the statistics say not to buy scratch-off lottery tickets, but states will nonetheless sell more than $30 billion worth of them this year.

For Facebook fans who care more about the “how” than the “why” or “why not”, here are some guidelines:



[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "The Right Way to Buy Facebook" ]


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