Saturday, February 13, 2010
We've been telling our friends for months that sooner or later the U.S. Treasury secretary would come out and publicly say something ridiculous in defense of the U.S. dollar – much like a banana republic's finance minister on the eve of devaluation.
Last weekend, we got our first actual taste... On Sunday, Geithner said the U.S. "will never" lose its triple-A credit rating. Never is a very long time. And if you believe the representative of a bankrupt government, there's a bridge in Brooklyn you should look into buying...
Watching Geithner lie through his teeth reminded me of July 2008, when Fed Chairman Ben Bernanke assured us Fannie Mae and Freddie Mac were "adequately capitalized" and "in no danger of failing." One month earlier, I'd written an issue of my newsletter (Porter Stansberry's Investment Advisory) titled "Freddie Mac and Fannie Mae Are Going to Zero."
I was watching Bernanke's testimony on TV in a hotel room on the 30th floor of the Four Seasons Hotel in Las Vegas. I could literally see more than $100 million worth of bankrupt real estate from my window – more than enough to bankrupt both Fannie and Freddie. As an investor, I had a simple choice to make: I could believe a government bureaucrat, who is in charge of running a paper money system backed by nothing but confidence... or I could believe audited financial statements and my own two eyes. I chose the latter.
More recently, I've been warning investors both our government and our biggest conglomerate (GE) are broke. Moody's seems to agree with me, warning the current deficits are unsustainable. Geithner and Bernanke will undoubtedly beg to differ. However, anyone who has ever paid interest on any debt before is welcome to simply look at the numbers and ask themselves a few basic questions...
How can so few taxpayers be expected to repay more than $20 trillion worth of debt? How can a democracy where most people don't actually pay taxes ever be expected to run a balanced budget? Why would anyone expect America to repay its debts when millions of our consumers and a large number of our biggest companies are going bankrupt?
Just last year, John Paulson, the hedge-fund manager who made billions shorting subprime mortgages and billions more going long banks, had to turn investors away as his returns on assets under management skyrocketed. Now, he's facing the opposite problem...
Paulson launched a gold fund on January 1 to profit from inflation. After months of investor meetings and even investing $250 million of his own fortune into the fund, he's only raised $90 million. This is partially because his flagship fund is already 10% invested in gold. And his current investors see no reason for additional exposure to metals. Still, the fact that investors aren't rushing into the fund is a bullish sign for gold. We've got more room to run.
Our Phase 1 researchers uncovered what could be the single-largest technology story of our time. The U.S. government, more than 100 major corporations, 10,000 small businesses, and (as I explain below) even China have already started using what we call "the $59 computer." And this little-known technology is on the verge of a mainstream breakout. MIT experts say it could be "the biggest revolution since the Internet." Early investors will make a fortune.
Gartner, a highly regarded technology research firm, expects the market for the $59 computer will reach $150.1 billion in 2013. That's 25% larger than the entire portable personal-computer market in the U.S. And what will be the major driver for this growth? China... Chinese officials are considering spending some of their $600 billion stimulus on rolling out the $59 computer into more than 100 Chinese cities.
Most mega-technology companies, like Dell and Hewlett-Packard, are already producing the $59 computer. And U.S. retailer Best Buy is rolling the product out in its stores. But you can't make huge returns investing in these big players. Instead, we've found a tiny company, only $300 million in market cap, that produces the key software running on the $59 computer. It owns 16 patents on its software and is already receiving contracts from major players like HP, Microsoft, Sony, etc. One major technology executive says this company's patents are "like a license to print money."
This investment isn't for everyone. It's a small and speculative stock. But if you're interested in a realistic chance of making more than 10 times your money on a single stock pick, we think this is your best chance of the year. For the full story on the $59 computer, click here.
Date Range:2/4/2010 to 2/11/2010
Date Range:2/4/2010 to 2/11/2010