A triple-digit opportunity in the next stage of the "Bernanke Asset Bubble"
Saturday, January 11, 2014
There's not much value left in the U.S. stock market... The price-to-earnings (P/E) ratio of the S&P 500 is about 19 times today. Its historical average is about 15 times earnings. At a P/E of 18 or higher, U.S. stocks in general aren't a great bargain. And while there may be upside left, chasing U.S. stocks even higher is a risky proposition.
However, you can still find value outside the U.S.
Russian stocks, for example, trade for a P/E ratio of less than five. And history shows that when Russia gets this cheap, you can make big money. From Steve Sjuggerud's April issue of True Wealth...
Russian stocks soared the last time they were this cheap. Our database shows a 328% gain from 2001-2004 and a 167% gain from 2008-2011. We have the potential for a similar move right now.
Second, the dividend yield on Russian stocks is very high. That, too, has only been this high twice in the last 12 years – in 2001 and 2009. Those peaks led to an 83% gain in six months and a 119% gain in 15 months, respectively.
Steve believes we're about to see a central-bank-fueled boom in Russia... just as we've already seen in the U.S. and Japan. More from the April issue of True Wealth...
Russian President Vladimir Putin isn't happy with his central bank...
The country's outgoing central bank chairman Sergei Ignatyev had a problem... He's known as an "independent" central banker – one who doesn't bow to the wishes of his government. He has been committed to protecting Russia from inflation since he took over in 2002. And he's been praised for his handling of the global financial crisis in 2008.
But in Putin's Russia, you can't behave like this...
President Putin wants economic growth, period. And this old fuddy-duddy Ignatyev was more concerned with preventing inflation than following the wishes of Russia's president. So Putin "recommended" Elvira as the replacement.
Elvira, no doubt, will get the job, and she will do what Putin wants. That means interest-rate cuts are likely, as well as other measures to artificially stimulate the Russian economy.
The sequel to Abe's Revenge is happening in Russia... Putin will strong-arm the central bank to artificially create prosperity. (Hey, everyone else is doing it, why shouldn't Russia?) I expect a strong stock market rally in Russia over the next 18 months.
And Steve isn't the only one bullish on Russia. Legendary investor and market contrarian Jim Rogers says Russia is his top idea right now. From the June 3 DailyWealth...
[Russia] is a turnaround for Jim. He says he's been bearish on the country since he first visited it in 1966. And he still thinks the country's president, Vladimir Putin, isn't a model leader. "He grew up in the KGB. He took control in a silent coup with the KGB. And he has been running the place like a KGB thug..."
Jim might not like Putin... But he believes he may be trying to turn his reputation around. And that's good for investors...
"Maybe [Putin] doesn't like being treated as a KGB thug," Rogers says. "He understands there has not been great prosperity in Russia in the past few years... I have the view that international capital is welcome in Russia. And if you go there and you invest, you will find opportunities."
Jim's also excited because he sees Russia as a hated opportunity. Longtime readers know that I LOVE a hated investment. And Jim believes that's what we have today...
"Everybody hates Russia for many good reasons... including me for a long time. That's usually a place that you should look, when people hate a market. And so I am looking."
Jim is looking at all kinds of opportunities in Russia... including stocks, bonds, and currency. For the first time in his life, he's actually excited about what he sees.
We know it's difficult to buy stocks in a politically unstable country like Russia. Rogers called Russian President Vladimir Putin "a KGB thug."
Steve admits this is a "hold your nose and buy" trade. But these types of trades – the ones you make when nobody else is willing to touch them – are often the most profitable.
In his latest issue of True Wealth, Steve told readers about what he calls "the best investment in the world right now." It's a little-known way to gain exposure to Russia and keep your money in blue-chip foreign stocks in other countries like China and Brazil.
This particular investment is trading at a P/E of just five. (Remember, U.S. markets are trading for 19 times earnings.) It's yielding around 5%. And it's actually trading at a discount to book value (Warren Buffett's favorite measure of value, which is total assets minus total liabilities).
In other words, this investment is dirt-cheap... And it's paying 5% interest, while everyone in the U.S. is enjoying zero-percent interest rates.
As Steve wrote in his issue:
I don't have words strong enough to express it... The values here today are just crazy... These stocks in the table could all double – and they'd still be cheap! You can't say that every day.
Steve nailed it when he said the Federal Reserve's bond-buying and low-interest-rate policies would drive up asset prices in the U.S. He called the phenomenon the "Bernanke Asset Bubble." If you missed it, you have a chance to get in from the beginning as the bubble moves abroad...
In his latest issue of True Wealth, Steve explains his four favorite ways you can invest outside the U.S. stock market... giving you exposure in the countries Steve says will soar the most.
Among his recommendations is an emerging-market investment that Steve says could return $14 for every $1 you risk on it. Plus... it's a low-downside/high-upside investment that our editor in chief, Brian Hunt, called one of the "most ridiculously good investment ideas" he saw all of last year.
If you don't already subscribe, you can access Steve's report by signing up for a $39 one-year subscription to True Wealth. And if you decide Steve's research isn't for you within the first four months, we'll give you a 100% refund. Click here to learn more...
Friday, January 10, 2014This Could Be Disastrous for Your Portfolio By Jeff Clark
There's a big argument going on about the recent rise in interest rates. Some view the rise as a good thing. Other folks see things a little bit differently...
Thursday, January 9, 2014Our Top Inflation-Protection Advice for 2014 By Amber Lee Mason and Brian Hunt
You might think you can only get double-digit yields from risky stocks. But in DailyWealth Trader, we're earning that much or more on shares of Coke...
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