Month: November 2011

By Carla Pasternak, globaldividends.com

Looking for a steady direction in these markets? Forget it.

One day the news is great. Europe inked a deal, the U.S. economy is growing, and jobs are being added. The Dow Jones Industrial Average edges toward its largest monthly percentage gain in a quarter-century. Investors cheer the news and rotate with a vengeance into stocks, no longer seeking the relative safety of U.S. Treasuries.

But the euphoria is short-lived. The next day, stocks fall and Treasuries soar. Questions about the Eurozone deal and the agonizingly slow economic recovery in the U.S. weigh on investors.

That’s the bad news.

The good news is that even in this market dividend payers are proving themselves as one of the best places to invest. Many of the more conservative income securities are even seeing new highs. For instance, Magellan Midstream (NYSE: MMP) sits within two dollars of its 52-week high.

And while this market may seem tough to navigate, a simple strategy lets you take advantage of the ups-and-downs we’re seeing. Once you’ve assured yourself that the dividend appears safe, you can use the downturns to provide great entry points.

It’s during times like these that high-yielding income payers with solid fundamentals and positive long-term outlooks can become even more attractive — sometimes overnight. As the saying goes, you’ll see investors “throw the baby out with the bathwater” when the market panics. As the price of these securities falls, yields rise, making them appealing to bargain-hunters.

For instance, back in September, I placed a buy limit order below the market price for shares of ONEOK Partners (NYSE: OKS) — a natural gas pipeline carrier with a toehold in the hot natural gas liquids market.

I didn’t buy the shares right away, but about a week later, a downdraft in the market allowed me to add the shares to my High-Yield Investing portfolio at $43.50 — about 7% less than they closed at just two days before.

Since then, the shares have moved higher, closing at $49.11 on Tuesday, for a gain of more than 12% in just over a month.

And when the market rallies, we have a choice. We can use the rebounds to lock in gains and cut losses. Or if we’re investing for income, we can ride the volatility. So long as the dividend appears safe, we can pocket the dividends even while the share price bobs up and down like a cork in a turbulent sea.

Of course, dividend payers aren’t immune to the volatility. And they aren’t as stable as cash in a savings account. But cash won’t pay you 6%… 8%… even 10% or more year after year, and give you the chance to make a solid capital gain.

Good Investing!

Carla Pasternak’s Dividend Opportunities

P.S. — The investments we cover in High-Yield Investing are delivering some of the highest dividend yields on the planet. If you’re interested in learning more about the high-yielders we’re finding right now, you can view our latest presentation on the subject here.

Disclosure: StreetAuthority owns shares of MMP and OKS as part of its various “real money” portfolios.  In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading

Personal Transportation… America’s Real Addiction

by David Fessler, Investment U Senior Analyst
Wednesday, November 16, 2011

Not really. The real problem is that, as a developed society, we’re addicted to unencumbered transportation. That most often takes the form of the family car. Every errand, soccer practice and commute is largely done by automobile.

The family car enabled the great migration to suburban living that began right after the end of World War II, and is just now coming to an end.

It’s this suburban, personal transportation addiction, and the behavior patterns that are associated with it, that must be changed if we are to keep the “American Dream” from turning into the “American Nightmare.”

Experts predict that as little as a 10 percent disruption in the supply of U.S. crude oil would have devastating effects on our society. Rail, truck and air transportation would all be affected. Society as we know it would come to a grinding halt.

The large number of vehicles, their high rates of usage and their relatively high inefficiencies will all have to change. The problem is, nothing is currently being done in any large-scale way that will effect the change over the next 20 or even 30 years.

But It’s Not Just About More Fuel-Efficient Cars

By then, it may be too late, according to Randy Udall, in a program on urbanization that appeared on CNBC earlier this week. His comments are a stark reminder that we need to get going:

“We can double new-car efficiencies like we did between 1972 and 1985. We can do that again, and it’s probably job one.

“But there are other things we need to do. We need to re-invest in public transportation. We have to think, how are we going to get this incredible civilization from today to 2100? Nobody in the United States has a clue.”

The obvious question is: Where’s the money going to come from to affect this change? It’s clear something has to be done. The cost of maintaining the roads, water, sewer and other infrastructure associated with 50 years of unchecked suburban sprawl has many city budgets on the verge of breakdown.

Infrastructure repair is the subject of another article. If cities are designed properly, suburban sprawl can be minimized, and mass transit can be designed to service neighborhoods.

Many people from the baby boomer generation are “scaling down.” They’re ready for smaller places to live, and many are ready to even give up their cars. The thought of higher density isn’t a problem for many of them.

The current generation of 20 to 30 year olds is much more social than their parents. They aren’t in a great rush to get married, either. They want to live near others their age. They’re willing to accept higher density right out of the chute, and living in cities appeals to them.

Reversing 50 years of suburban migration isn’t going to happen overnight. Major infrastructure projects will require funding, and that’s in short supply right now.

How to Play Re-Urbanization

As more and more people move from lower density areas to the cities, apartment owners and other city-based businesses will thrive. One of my favorite ways to play the urban real estate market is via companies that own large apartment and condo complexes.

Most are structured as real estate investment trusts, more commonly referred to as REITs. They’ll continue to do extremely well as boomers scale down and move to towns and cities.

It’s already happening. According to Reis, Inc. (Nasdaq: REIS), the real estate information company, the national apartment vacancy rate dropped to 5.6 percent, the lowest figure since late 2006.

That rising occupancy rate has landlords raising rents: An average of 2.4 percent over the past year. That translates directly to the bottom line of apartment REITs. But not all REITs are doing well. Here are two that are.

The first is Equity Residential (NYSE: EQR), up 11 percent year to date. In addition to further share appreciation potential, EQR currently yields 2.33 percent. EQR owns all or a portion of 451 properties located in 17 states and Washington, D.C. As of December 2010, its portfolio consisted of 129,604 dwelling units.

Another REIT to consider is Camden Property Trust (NYSE: CPT). Camden currently yields 3.27 percent. It owns 63,293 apartment homes in 188 multi-family developments across the United States.

Either of the two REITs mentioned above is a great way to play the coming re-urbanization of America. Perhaps you’re one of those thousands who are making the move to the cities.

Good investing,

David Fessler

Article by Investment U

By The Sizemore Letter

Lest I be accused of hero worship, I’ll spare readers another Warren Buffett lovefest article.  Yes, Buffett is a living legend, and yes, he is arguably the best investor of all time.  But these facts are nothing new, and there have already been more articles than I can count written about the man and his methods over the years.  Buffett has been elevated to something akin to a demigod in the minds of many value investors, and the art of investing like Buffett is a subject that has been thoroughly beaten to death by the financial press.

With all of this as a caveat, I’ll let readers in on a little secret:  I do like to keep tabs on what Buffett is buying or selling.

It is never a good idea to blindly ape the trades of another investor—even one with a track record like Buffett’s.  Due to the time lag in reporting with the SEC, an investor you follow may very well have sold the position you are copying by the time you buy it.  And what makes sense in that investor’s portfolio might make no sense at all in yours.

Still, given Buffett’s penchant for long investment time horizons, he’s a little easier to follow than most.  And, again, his track record over the years make him a man worth watching.

Imagine my pleasure this afternoon when I saw Berkshire Hathaway’s updated portfolio holdings for the third quarter of 2011 (see Warren Buffett’s portfolio).  Three out of Buffett’s five new additions were Sizemore Investment Letter recommendations.

Buffett initiated positions in SIL recommendations DirecTV ($DTV), Intel ($INTC), and Visa ($V).  His other two additions were pharmacy chain CVS ($CVS) and defense contractor General Dynamics ($GD).

While I was not invited to Buffett and partner Charlie Munger’s strategy sessions before these purchases were made (I’m sure my invitation was lost in the mail), I have a pretty good idea of what Buffett sees in DirecTV, Intel, and Visa.  Each is a leader in its respective industry, and all three benefit from durable, long-term macro trends.

Let’s start with DirecTV, the world’s largest provider of paid satellite television.  Given that TV-over-internet options like Netflix ($NFLX) and Hulu are increasingly crowding the turf of traditional paid TV—and given that the paid TV market in the United States is already saturated—Buffett’s choice here might raise a few eyebrows.

I can assume that Mr. Buffett’s rationale was the same as my own:  DirecTV is a direct play on rising living standards in the fast-growing markets of Latin America, where it already has 11.1 million subscribers (vs. 19.8 million in the United States).  Latin American revenues were up 46 percent in the 3^rd quarter, due primarily to subscriber growth.  But even in the United States—where everyone already has paid TV service in one form or another—revenues were up 8 percent.  Not bad, given the precarious financial situation of the average American.  DirecTV is also very reasonably priced at just 10 times expected earnings.

Moving on to Intel, my only question to Buffett is “What took you so long?”

Intel absolutely dominates the market for computer processor chips.  But this very strength is what has caused investors to shun Intel.  You see, the PC is dead.  Smart phones and the iPad killed it.  And given that Intel is still quite weak in the mobile market, the company is resigned to be a slow-growth behemoth.  Who wants to own a dinosaur like Intel?

That story would seem to make sense at first.  The problem is that it’s simply not true.

The PC is far from dead.  Smart phones and tablet computers are growing at a much faster rate, of course.  And the PC market does depend more heavily on the corporate and enterprise market, which is not in the best of shape in this economy.  But tablets and smart phones do not replace a computer for most users.  And in most emerging markets, PCs are still very much a growth industry.

Intel’s revenues and earnings are growing at 28 percent and 17 percent year over year, respectively.  And that is in near recessionary conditions.  Meanwhile, the stock trades at just 9 times expected earnings and yields 3.4 percent.  At current prices, I consider Intel a safer investment than most AAA-rated bonds.

Finally, we come to Visa.  Visa and rival MasterCard ($MA)—also a Berkshire holding—have become somewhat trendy of late, but it wasn’t like that for most of the year.  Regulatory uncertainty cast a pall over credit card stocks, as did fears of a consumer slowdown.  Yet investors who were, in Buffett’s words, greedy when others were fearful did quite well in Visa and MasterCard.  Both are among the best-performing stocks of 2011.

Visa and MasterCard benefit from two powerful macro trends—the transition to a global cashless society and the rise of the emerging-market middle class.  As electronic payments become a larger share of commerce, credit and debit cards—as well as newer payment methods such as PayPal—will increasingly replace cash and checks.  And while this process is well on its way in the United States and other developed markets, it is only just beginning in most emerging markets.  This is a trend that will be with us for a while.

Visa trades for 14 times expected earnings, which is a bargain for a company with Visa’s brand, financial strength and growth prospects.

DirecTV, Intel, and Visa are all long-term holdings of the Sizemore Investment Letter.  And while Buffett’s reasons for purchasing may have been very different from our own, we’re glad to see the Sage of Omaha sharing our enthusiasm.

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.

By ForexYard

The BoE is one step closer towards additional quantitative easing (QE) with the release of the Bank of England’s inflation report. Growth is expected to be flat as austerity measures weigh on the UK economy. Deterioration in the global outlook will also keep UK growth limited. The statements have markets expecting another round of bond buying from the BoE and could lead to declines in sterling.

Economic News

USD – US Inflation Continues to Decline, QE3 Could Follow

Inflationary pressures are declining in the US economy, a phenomenon that could lead the Fed to begin another round of quantitative easing (QE). For the fourth consecutive month headline inflation fell with the October numbers showing a -0.1% m/m contraction. Year-over-year CPI was up 3.5%. Core inflation was in-line with consensus forecasts, climbing by 0.1% in October and up 2.1% y/y. Leading the decline in prices were raw material costs while the cost of food rose only 0.1% for the smallest gain since the beginning of the year.

The decline of inflation is in-line with the most recent Fed forecasts, a topic Bernanke has stressed multiple times. Traders should focus on how the Fed will address a drop in US prices. As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps traders should look to the crude oil markets for a sign of what is to come.

Yesterday spot crude oil prices broke above $100 for the first time since July, adding more than 1/3rd of its value since the October low. During QE2 commodities and the commodity currencies such as the AUD and CAD were some of the strongest performers versus the USD. Dollar bulls should take note.

GBP – BoE Prepping for Additional Quantitative Easing

With yesterday’s BoE Inflation Report the UK central bank took one step closer towards additional quantitative easing. The report suggests near-term growth will be affected by both UK austerity measures and headwinds in the global economy. The central bank forecasts GDP to increase by only 1% throughout 2012. They also expect a reversal of inflationary pressures. CPI currently stands at 5.1% y/y while the BoE forecasts CPI to fall below the 3% target the central bank keeps to 1.3% in 2013.

With the depressing outlook for the UK economy the BoE is likely increasing market expectations for additional easing of UK monetary policy via bond purchase. This would likely weigh on sterling in the near-term. The GBP/USD has support at the October 18th low of 1.5630 with resistance coming in at the bottom of the late October-early November consolidation at 1.5860.

JPY – BoJ More Pessimistic on Global Economy

In its Monetary Policy Statement the Bank of Japan reduced its economic assessment of the Japanese economy but also spent a large amount of time devoted to the global economic environment. The interest rate was kept unchanged between 0-0.1%, in-line with consensus expectations.

The USD/JPY was stable yesterday, trading in a tight 30 pip range. However, the pair continues to drift lower towards its all-time low of 75.55. But first the pair will need to close below its 55-day moving average at 76.95. Initial resistance remains at Monday’s low of 76.80 with resistance at 77.50 from the mid-October consolidation, followed by the trend line from the 2007 high which comes in at 79.25.

Crude Oil – Crude Oil Market Signals QE3 on the Way

Spot crude oil prices have peaked above the psychological barrier of $100 and have extended gains following the release of stronger than expected industrial production numbers and inflationary data that showed prices in the US declined more than forecasted. Crude oil prices have been on a tear since the end of October, rising over 33%

The quick appreciation in spot crude oil prices may be based on two assumptions; a recovering US economy and expectations of QE3 from the Fed. Yesterday data showed US industrial production in the month of October rose 0.7% on consensus forecasts of 0.4% growth. This comes on the heels of stronger retail sales data released on Tuesday.

Declining inflationary pressures in the US may also force the Fed to act to curb any threat of deflation. Data released on Wednesday showed consumer prices fell in October with CPI contracting by -0.1% m/m on forecasts for 0.0%. This follows Tuesday’s PPI numbers that showed producer prices declined by -0.3% in October.

As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps the gains in crude oil prices suggest markets are already pricing in QE3.

Technical News

EUR/USD

The resilience of the EUR has led many traders to adopt the strategy of selling the EUR/USD on rallies. The key resistance level is 1.3860 from the early November consolidation pattern. This is also the 50% retracement from the late October to early November downtrend (1.4246-1.3483). Approaches to this key level and the pair may run into selling pressure. Both monthly and weekly stochastics continue to move lower and initial support may be found at 1.3650, followed by last week’s low of 1.3480. A break here could open the door to 1.3145 from the October low. Additional resistance is located at the 200-day moving average at 1.4105.

GBP/USD

Sterling has been met with selling pressure on approaches to its 200-day moving average which comes in at 1.6140. This moving average comes in just above a bull flag pattern located on the daily chart. The support line of the chart pattern falls from the October 26th low and has a potential measured move of 480 pips which makes the August high at 1.6615 a convenient target. Should the pair fail to break out of the consolidation pattern, support may be located at 1.5850 as well as 1.5680.

USD/JPY

Yen strength has reemerged after a period of little movement. The USD/JPY may find support at its 55-day moving average at 76.95 though the one way movement in the price action hints at additional declines in the pair. Additional support may be located at 76.10 from the bottom of the September consolidation with a final destination at least the all-time low at 75.63. Resistance may be found off of the September high of 77.85 while the long term downtrend from the 2007 high is located at 79.30.

USD/CHF

The USD/CHF made a breach but failed to make a significant move above the 0.9080 resistance from the October 20th high. An additional push higher will likely target the October high of 0.9310. Traders should also have their eye on the 20-month moving average which comes in at 0.9450. Initial support is located near 0.8950 followed by the November low of 0.8760.

The Wild Card

AUD/USD

The Aussie dollar is struggling to maintain a bid in this risk off environment. Yesterday the pair held at the support level from Thursday’s low of 1.0050. Falling daily and weekly stochastics point to additional declines and a break here could trigger stop loss selling. Forex traders may see a break of the initial support test the August low of 0.9925. Resistance is found at the top of the consolidation pattern from the November high which comes in at 1.0350.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Many seasoned investors are saying that the long term outlook for western economies has never been so troubled. With analysts saying that we should brace ourselves for a recovery that will take at least five years if not ten, a lot of investors will be asking themselves if they need to try a new approach. Specifically, what about investing in China?

Veteran investors like John Templeton were great fans of investing outside of the US. Templeton took the plunge into Japan in the 1960s having watched it with keen interest for many years before that. We all know that China has been doing well and has the fundamentals that should support growth in its economy for decades to come, but few retail investors have ventured into Chinese stocks. For many ordinary investors, it’s still too alien for them.

Investing in Chinese companies needn’t be any different to investing in European stocks. You just need a bit of orientation and to know where to get information to research your stocks.

Which Stock Market?

There are three stock exchanges in China

• Hong Kong
• Shanghai
• Shenzhen.

Hong Kong is the most established market and the most liquid. The chances are that your broker account will already allow you to buy stocks from Hong Kong.

Shanghai is already the world’s fifth largest exchange and in the future will be the one to watch. China’s largest companies and many enterprises controlled by the state have shares listed on this market. There are two classes of shares, ‘A’ and ‘B’. ‘A’ class shares are denominated in renembi and only locals or approved foreign entities can trade in them. ‘B’ class shares are denominated in US dollars and are available to a much wider range of foreign investors. For the time being though, retail investors will struggle to access the Shanghai market. However, most of the widely traded stocks on Shanghai also have listings in Hong Kong or have ADRs that are traded on the NYSE or NASDAQ.

Shenzhen is also a large exchange with a combined market capitalization of $1.2 trillion. However, its companies tend to be smaller, higher risk and almost entirely chinese based. An analogy would be that Shenzhen is China’s Nasdaq, while Shanghai is its NYSE. The exchange also operates the class ‘A’ and class ‘B’ share system. The novice to the chinese market would be well advised to avoid stocks on this exchange to begin with.

Which Sectors?

While the Chinese economy has been booming, some sectors are less solid than others. Property and Construction for example has seen some boom and bust cycles and is currently coming to the end of another bubble. Sectors that are supported by China’s demographics and long term development trends are far more likely to be appealing to western investors looking for long term steady performance

The sectors that could appeal as a consequence are utilities and energy. They are less subjected to pricing bubbles and underpinned by solid demand growth. Every person that moves from the country to an urban environment will need utilities, and as their economic value grows, so will their demand for energy. They are also sectors that are easy to understand wherever you are in the world. The peculiarity of China however is that some energy prices are fixed by the state which can impact financial performance.

Which Companies?

For investors that follow the Warren Buffet and Benjiman Graham school of investing and are after solid long term stocks, a good place to start are the indices compiled by Hang Seng, because their constituents are the region’s bluechip stocks. The most well known Hang Seng index is that of the top stocks on the Hong Exchange. However, Hang Seng also compiles the ‘China A Industry Top Index’ which covers 50 chinese companies which it thinks most represent the performance of commercial China. These companies are mainly listed on the Shanghai stock exchange, but many have dual listings in Hong Kong as well. Research material and news about all of these companies is quite widely available in English.

Keeping up to date

Once you’ve familiarized yourself with these stocks, you need to keep up with business developments in China. At Asian Business Daily we research news about business in China and other Asian countries and pick out the stories that we think would be of most interest to western investors. We try to offer a more granular level of news than might be available through the normal western channels.

Asian Business Daily wishes you many successful investments!

Source: ForexYard

In a sign of market stress European bond yields continue to rise with the spread between German and French 10-year bonds climbing to an EMU high of 195 bp. This has kept pressure on the EUR with the EUR/USD making a new overnight low. Today investors will be measuring the success of bond auctions from both France and Spain.

Today Spain (09:30 GMT) will auction up to EUR 4 billion in 10-year bonds and France (10:00 GMT) will auction up to EUR 7 billion. Successful auctions may help to restore short-term confidence but disappointing results may lead to European bonds being sold off once again. Another threat to keep in mind is the possibility of a clearer to increase margins required to trade Spanish bonds.

Additional data releases will come from the UK with retail sales (09:30) and from the US the Philly Fed Manufacturing Index (15:00).

Read more forex trading news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Today forex trading is greatly enhanced by automated trading systems or forex trading robots. They not only allow access to the forex market, find counterparts for making transactions, perform analysis, but also help to make forex trading decisions, which is very important.

There a lot of forex trading systems available in the market now, and all of them differ in their prices and the levels of difficulty. Accordingly, some of them appear to have more advantages over the others. The benefits of forex automated trading systems are invaluable for any forex trader, however, at the same time it is important to keep in mind that no forex trading robot can guarantee 100% of successful trades.

AD: Want to have Forex analysis tool a.k.a. Metatrader plugin which can automatically collect important Forex market information and displays in real time on the chart? You can easily download the free MT4 plugin Fx Pulse on Forexeasystems.com.

Forex automated trading systems are computer programs working according to a predefined set of criteria that allow determining the most profitable trades in the forex market. Forex trading robots search for trading signals – these are currency price trends, economic news and spread discrepancies – in order to find the beneficial opportunities for forex trading.

One of the main virtues that forex automated trading systems have is that they eliminate the psychological and emotional factors they may have an impact on one’s trading decisions. Since they are applications powered by algorithms, the approach forex trading robots provide is cold and strictly logical and works according to the preset trading parameters. To err is human, as the saying goes, and using forex automated trading systems helps to avoid a great many mistakes, as far as forex trading is concerned.

What is more, currency trading is a very challenging and demanding activity that requires constant attention and devotion, while in fact the majority of forex traders have other occupations and interests besides forex trading. Forex automated trading systems which do forex market analysis, plot charts and watch economic and political news can save a lot of time and efforts that otherwise a forex trader was supposed to make. Actually, a forex trader can just leave the computer on and walk away doing his/her own business, and the forex trading robot keeps scanning the forex market in search of profitable forex trading opportunities.

In conclusion, it must be mentioned that while choosing forex automated trading systems that suits him/her best, a forex trader can sometimes try a couple different trading robots – selecting “your” forex trading system may take some time. But it shouldn’t discourage a forex trader, because after he/she has found the forex automated trading system that is right, the trading process many in many cases become much more effective, profitable, safe and enjoyable.

Written by Alexander Collins, the CEO of Forexeasystems. Forexeasystems.com is the most comprehensive resource for automated forex trading information and choosing a profitable forex currency trading system.

Join Forexeasystems on Google+ at https://plus.google.com/101464848506138381916/

By MoneyMorning.com.au

What if everything you thought you knew about investing turned out to be wrong?

What if your diversified investments of portfolio stocks won’t give you the best growth over the long term?

What if a house isn’t… as safe as houses?

And what if holding 100% of your assets in gold and/or silver (the “crazy Midas” investment approach as our old pal Dan Denning calls it) won’t give you complete protection when the financial system finally collapses?

When things go bad, everything will go bad. It’s just some investments will be worse than others. So you’ve got to position yourself to make sure your investments aren’t in the “worse” basket…

Yesterday we looked at the table of returns from Super Ratings:

Click here to enlarge

The best performing investment asset class of the past 10 years is the Australian Share Index. It has returned an average 6.98% per year.

That’s OK.

Trouble is, if you look at the chart below, it’s easy to see that the best days for stock market returns could be behind you:

And as each month passes since mid-2009 without stock market gain, the impact of the 2003-2007 bull market recedes.

Then there’s housing. According to the official numbers from the Australian Bureau of Statistics (ABS), house prices in the eight Australian capital cities have averaged an 8.73% annual gain since 2002.

That’s pretty good. But that’s the gross number. When you consider most home buyers can only afford to buy a house with a mortgage, the net return is much less.

Then there’s our old friend, gold…

Since 2001 it has made an average annual gain of 19.1%.

That’s the best of the bunch.

Of course, only a tiny number of Aussie investors will have gotten the benefit of that gain. Because most investors have been brainwashed into thinking shares and housing are the best places to put your cash… rather than gold.

Now, that’s just a snapshot over a relatively short period of time – nine or 10 years. And who’s to say gold will be the best asset over the next 10 years? Maybe it will. But maybe it won’t.

The Case for Diversified Investments

The point we’re making is this: the mainstream view is that diversified investments across many investments within an asset class and across different asset classes, is the best way to create wealth.

In fact the opposite is the case.

Sure. If you’re lazy… Or you just don’t care… Or you figure the government will pay you a wage in retirement, then go ahead, diversify.

But if you want to build genuine wealth, your best shot is to weight your investments towards the asset class that offers the best chance of making the best future return.

Sounds easy right? If only it were that easy. Trying to pick the best performing asset is hard. If you believe the guys at the Gold Symposium, the best place to stick your cash is gold and silver.

If you believe the mainstream commentators, they’ll tell you the stock market is the best place to invest. Because, they say, historically it always has been (even though it hasn’t, but they forget that).

The same goes for the property spruikers. If you believe them then it’s always the right time to buy property because house prices double every 7-10 years… except they don’t.

So, where should you invest your money if it’s not in diversified investments?

While it’s hard to pick the right asset class, setting your portfolio to benefit from it isn’t. And it’s something you can act on right away.

We’ll explain all tomorrow… including the unusual inspiration behind this simple yet rarely followed investing approach.

Cheers.
Kris.

Related Articles

Totally Standard Hyper-Inflation

Is There Any Upside for Gold Investors?

The Gold Bubble and China

What a 2,300 Year-Old Coin Reveals About Gold

Gold Investing Far From a Bubble

From the Archives…

The Onward March of the State
2011-11-11 – Kris Sayce

Lose a Shirt, But Gain a Wardrobe
2011-11-10 – Kris Sayce

Neither a Borrower Nor a Seller Be…
2011-11-09 – Kris Sayce

Roman or Zimbabwean
2011-11-08 – Kris Sayce

Lighting a Match to Inflation
2011-11-07 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

Diversified Investments Gone Wrong

Different types of foreign exchange or forex options on hand help equity and futures traders gain an access to the currency option market. Equity traders can make use of exchange-traded options to make great profits while futures traders can capitalize on currency future options. Over-the-counter (OTC) options and binary options are two other forms of currency option trading. Each and every form of foreign exchange options is intended for hedging as well as speculation. You can avail education and research over the internet to learn how to trade options in a profitable manner.

forex options are available to the trader with a web-based stock brokerage account facilitated for trading options. Exchange-traded options or ETFs can be traded in the identical fashion as equity options. Comprehensive education is extended by the International Securities Exchange or ISE by means of a website dedicated to currency options. At this site, trading tools and on-line dealing are offered free of charge to the trader. The NASDAQ also owns a website with updated news events, analyses and informative resources. Both the aforesaid exchanges provide ETF trading with loads of assistance for new and veteran traders.

The Chicago Mercantile Exchange, owned by the CME Group, is the biggest regulated and most diverse derivatives marketplace in the world. Currency futures options are heftily traded here and accessible to the trader with a futures trading account. Futures option trading is usually more complex and may not be well suited for the beginners. Enlightening materials are on offer via the CME Group. However, an in-depth understanding of such options derivatives must be gained before venturing into this extremely cutthroat and complicated market.

Over-the-counter forex options are not provided by the brokers in the USA, but they are in great demand in several other nations. These options are traded much similar to spot foreign exchange and are able to be traded within the same account. The comparative easiness of managing OTC options makes them an appropriate pick for hedging spot forex positions.

Binary option trading is the least difficult variety of trading currency options and is apposite for beginners. Brokerage firms over the internet that are expert in binary options give assistance in the form of enlightening resources and practice accounts. Binary trading is the most straightforward to educate yourself on, and just a petite investment is needed to create an account.

Numerous alternatives are on hand in the currency option market and the trader must be well-versed in FX option trading on the whole. The capability to trade the options effectively is dependent upon the trader’s expertise in interpreting the underlying asset. Fundamental as well as technical analysis techniques must be employed to predict future movements in spot price before putting an option trade.

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